SOFTWARE DEVELOPMENT, MAINTENANCE AND LICENSE AGREEMENT

SOFTWARE DEVELOPMENT,
MAINTENANCE, AND LICENSE AGREEMENT


This Software Development, Maintenance, and License Agreement (the "Agreement") is entered into as of the 31st day of December 1996, (the "Effective Date"), by and between SABRE Decision Technologies, a division of The SABRE Group, Inc. ("SDT") and Hawaiian Airlines, Inc. ("Hawaiian").


RECITALS


A. Hawaiian desires to obtain a Yield Management system by acquiring via license SDT's yield management Software known as AIRMAX VN-TM-.


B. Hawaiian desires to obtain from SDT consulting and maintenance services in connection with the Software.


C. SDT desires to provide such Software and services pursuant to the terms and conditions stated in this Agreement.


NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:


DEFINITIONS


"ACCEPTANCE" shall have the meaning identified in Article 1.03.


"CPI" shall refer to the Consumer Price Index which is the U.S. Department of Labor all cities average reflecting an inflation index.


"DELIVERY" shall mean the date upon which SDT delivers the Software to Hawaiian for installation and testing.


"DEVELOPMENT(S)" shall mean any work which is based on the Software as Delivered including, but not limited to, updates, enhancements, revisions, modifications, reproductions, adaptations, versions or expansions performed by SDT on behalf of Hawaiian.


"DOCUMENTATION" shall mean the documentation accompanying the Software as described in Article 1.04.


"HAWAIIAN'S AFFILIATES" shall mean (i) an entity that owns, directly or indirectly, more than 50% of the issued and outstanding voting equity of Hawaiian ("Hawaiian Parent"), (ii) an entity that Hawaiian's Parent owns, directly or indirectly, more than 50% of the issued and


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outstanding voting equity, (iii) an entity that Hawaiian owns, directly or indirectly, more than 50% of the issued and outstanding voting equity, and/or (iv) with the advance written approval of SDT, which shall not be unreasonably withheld, any third party organization that Hawaiian or Hawaiian's Affiliate may choose to operate revenue management for the internal operations of Hawaiian and/or Hawaiian's Affiliate.


"PER DIEM" shall mean SDT's standard charge to compensate its employees and/or contractors for meals, lodging, and incidental expenses incurred in connection with the performance of any services hereunder outside the Dallas/Fort Worth area. The Per Diem amounts will be adjusted from time to time according to the rates as published by the US government for federal employees traveling on government business in the particular city where the work is performed ("OCONUS").


"PROJECT" shall mean the development and implementation of the Software as described in Exhibits A, and C (if Hawaiian chooses to exercise the option granted in Article 3.01(b)) and any amendments thereto.


"SOFTWARE" shall mean AIRMAX VN-TM- (which shall contain the functionality as more fully described in Exhibits A and C (if Hawaiian chooses to exercise the option granted in Article 3.01(b))) and the Group Evaluation Module (more fully described in Exhibit A), including any trade secrets, algorithms, ideas, concepts, methods, techniques, and solution methodologies contained therein. The term Software shall also include Documentation.


"STANDARD RATES" shall mean during 1997, the following SDT hourly billing rates:


JOB TITLE RATES (USD)
--------- -----------
Technical Writer 87.50
Consultant 117.50
Senior Consultant 155.00
Principal 190.00
Senior Principal 235.00
Vice President 462.50


Such rates are subject to increase by no more than the increase in the CPI established on January 1st of each year of this Agreement or 3% per annum whichever is less.


"TRANSPORTATION EXPENSES" shall mean confirmed first class tickets from LAX-HNL-LAX when space is available at the time of booking; otherwise, tickets shall be coach class, for all SDT representatives in connection with this Agreement which will be provided to SDT by Hawaiian without cost to SDT, as well as reasonable local transportation expenses and air transportation expenses for


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travel between DFW and the nearest Hawaiian U.S. gateway (LAX) incurred by SDT in connection with this Agreement. SDT shall make all reasonable efforts to plan trips in advance to secure the lowest fares possible.


ARTICLE I
IMPLEMENTATION


1.01 SITE SURVEY. SDT shall conduct a site survey ("Site Survey") for the purpose of developing a formal implementation plan. The Site Survey will be conducted by an SDT representative in Hawaii and will require meetings with Hawaiian groups necessary for SDT's information gathering.


1.02 DELIVERY AND CUSTOMIZATION. SDT shall Deliver the Software to the Site (as defined below) pursuant to the time frames contained in the Implementation Plan defined in Exhibit D except as varied by mutual written agreement between Hawaiian and SDT ("Delivery"). The detailed implementation plan, which shall be consistent with Exhibit D, shall be developed jointly by Hawaiian and SDT and shall fully define the scope of all SDT deliverables and all Hawaiian dependencies. The Software shall conform in all material respects with the functionality described in Exhibits A and C (if Hawaiian chooses to exercise the Group Tracking option granted in Article 3.01(b)). A detailed Functional Specification describing the Group Tracking module will be made available to Hawaiian well before the beginning of the 18-month option exercise deadline defined in Article 3.01(b).


1.03 INSTALLATION, TESTING AND ACCEPTANCE.


(a) After Delivery, SDT shall install system Software, third party software and hardware at the Site ("Installation") pursuant to the time frames contained in the Implementation Plan included in Exhibit D. The hardware and third party software configuration provided by SDT in the Site Survey report is based on SDT's experience in installing AIRMAX at numerous sites and represents SDT's best estimate for the configuration suitable for Hawaiian given the current operating conditions. SDT provides no warranty of the hardware and third party software configuration and assumes no liability therefore. Hawaiian shall provide all reasonable and necessary assistance as requested by SDT during such Installation.


(b) After Installation, SDT shall perform systems testing to determine material conformity of the Software with the functionality described in Exhibit A. Hawaiian shall provide all reasonable and necessary assistance as requested by SDT during such systems testing.


(c) Hawaiian shall perform user acceptance testing of the Software at the Site (as identified in Article 2.04) for a thirty (30) calendar day period, pursuant


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to mutually agreed upon test scripts and in accordance with Exhibit B, to confirm material conformity of the Software with the functionality identified in Exhibit A. SDT shall provide twenty (20) working days of assistance to Hawaiian during such user acceptance testing. Hawaiian shall notify SDT immediately of any material non-conformities between the Software and the functionality described in Exhibit A. SDT shall make corrections in any such material non-conformities of the Software to the functionality identified in Exhibit A and re-submit such previously non-conforming portion for re-testing. Acceptance shall take place when the Software materially conforms to the functionality identified in Exhibit A or when the Software is put in productive use, whichever is earlier ("Acceptance"). Suspension of the Acceptance Testing period due to a significant number of Level A problems shall mean that SDT shall re-deliver the Software at which time the user acceptance period will recommence for a period of thirty (30) calendar days with SDT support on-site of twenty (20) working days.


1.04 DOCUMENTATION. SDT shall also provide a reasonable number of copies of the following documentation: System Administration and Operations Guide, Training Guide, and User Guide. At Hawaiian's request, SDT shall provide electronic copies of the same documentation in Macintosh Framemaker format. If Hawaiian requests further detailed documentation, SDT shall provide same on mutually agreeable terms and conditions. The Documentation and updates thereto will conform in all material respects with the Specifications.


1.05 TRAINING. SDT shall provide training and education at SDT's expense, excluding Transportation Expenses and Per Diem, in Honolulu, Hawaii which will be paid by Hawaiian, to no more than sixteen (16) Hawaiian employees (eight (8) per formal training class) in the use of the Software as follows: three (3) weeks of user training consisting of two, one (1) week formal training classes and one (1) week of informal training, two (2) days of systems training for Hawaiian's IT staff, and a one day Yield Management Seminar.


1.06 PROJECT MANAGEMENT. SDT shall be responsible for allocation of its personnel and resources in the provision of services hereunder. All SDT personnel assigned to the Project shall be subject to Hawaiian's reasonable approval and will comply with Hawaiian's rules and regulations while on-site. SDT shall, at SDT's expense, furnish Hawaiian with the qualifications of all personnel and contractors SDT assigns to the Project, including security related information that may be deemed essential by Hawaiian.


1.07 HAWAIIAN DEPENDENCIES. Hawaiian will provide, at its own expense, telecommunications access to Hawaiian's current operational systems


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and communications environment. Hawaiian will obtain system software, hardware items and all third party software as described in the configuration list to be created during the Site Survey. Hawaiian will be responsible for executing with the applicable vendor (prior to delivery of the third party software and hardware), and abiding by the terms of, any applicable third party license agreements associated with the third-party software items listed in the configuration list to be created during the Site Survey. SDT will assist Hawaiian in coordinating support from the vendors of hardware and third party software including participating in joint telephone calls. Hawaiian shall be responsible for (1) maintaining all third party software up to the latest version level used by SDT and (2) maintaining all hardware. Hawaiian shall prepare the Site according to SDT's and manufacturer's specifications. Hawaiian shall provide SDT, upon request, all necessary data, resources, personnel and facilities to support SDT's services provided hereunder. Any delay in the provision of such support which increases costs or efforts of SDT hereunder, shall result in commensurably increased charges to Hawaiian.


ARTICLE II
SOFTWARE LICENSE


2.01 GRANT. SDT hereby grants to Hawaiian, subject to the terms and provisions of this Agreement and Hawaiian remaining in compliance with its obligations therein, a limited, non-exclusive, non-transferable, perpetual right and license to use the Software executable code and Documentation (for Hawaiian's internal operations and for no other purpose) strictly in accordance with the terms of this Agreement. Such license shall also enable Hawaiian's Affiliates to use the Software and Documentation for their own internal operations (provided that any independent third party organization (referred to in Clause (iv) of the definition of "Hawaiian Affiliates" above) may only use the Software for the internal operations of Hawaiian and Hawaiian Affiliates within the scope of Clauses (i), (ii) or (iii) of such "Hawaiian Affiliates" definition and not it's own internal operations) including the control of Hawaiian designated inventory under any code share arrangements with other airlines. Hawaiian shall ensure that any such third parties have signed a confidentiality obligation with equivalent terms to those that apply to Hawaiian under this Agreement. Notwithstanding the foregoing SDT shall have the right to concurrently terminate the right and license granted herein in connection with SDT's termination of this Agreement for Hawaiian's breach pursuant to Article 7.02 hereof and Hawaiian shall immediately return all Software and other proprietary information to SDT.


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2.02 SOFTWARE COPIES. Hawaiian may make copies of the Software for its own internal use on Hawaiian workstations connected to the main operating system, and for back-up data security purposes, but Hawaiian must inform SDT of how many copies have been made. Hawaiian shall reproduce and include on each copy and on each partial copy of the Software any copyright notice and proprietary rights legend contained on or in the Software, as such notice and legend appear on or in the original.


2.03 MODIFICATIONS. Hawaiian shall make no modifications, alterations, developments or derivative works of the Software. Hawaiian shall not reverse engineer, disassemble, compile, reverse compile or decompile the Software. Hawaiian is permitted to supply data to the Software, modify data used by the Software and extract data from the Software.


2.04 SITE. SDT shall install the Software at a single site at the offices of Hawaiian Airlines, Inc. in Hawaii, (the "Site"). Hawaiian may move the Software to a new Site at any location in the United States at Hawaiian's discretion and expense.


2.05 EXPORT OF SOFTWARE. Any re-export of the Software by Hawaiian must be done in compliance with U.S. Department of Commerce regulations.


2.06 BLANK.


2.07 ESCROW AGREEMENT. Hawaiian may, at any time and at its option, require establishment of a source code escrow. All costs associated with the creation, administration, access and update of the source code escrow which are charged by the third party escrow agent shall be borne by Hawaiian. Within sixty (60) days of the date of this Agreement Hawaiian and SDT shall (a) select a mutually acceptable independent third party which would serve as the source code escrow agent, and (b) agree upon the form and content of the escrow agreement, required deliveries and all other reasonably related matters. In the event the parties cannot agree within one hundred and twenty (120) days, either party may submit this to binding arbitration.


2.08 NO SUBLICENSE. Except with respect to an Hawaiian Affiliate, Hawaiian shall not transfer, assign, or sublicense this Agreement or the license of the Software or any component thereof to any person or entity, whether by operation of law or otherwise, without the prior written consent of SDT.


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ARTICLE III
FEES AND CHARGES


3.01 LICENSE FEES.


(a) Hawaiian agrees to pay to SDT license fees in the amount of Four Hundred Ninety Five Thousand United States Dollars (US$495,000), as per payment schedule in Article 3.06(a).


(b) GROUP TRACKING OPTION. Hawaiian will have the option, upon prior written notice to SDT, to acquire a perpetual executable code license for the AIRMAX-TM- Group Tracking Module, as more fully described in Exhibit C, and Hawaiian will pay SDT additional license fees in the amount of Fifty Thousand United States Dollars (US$50,000) and additional Implementation Fees in the amount of Five Thousand United States Dollars (US$5,000), as per the payment schedule in Article 3.06(d). This option shall become available twelve (12) months from the Effective Date of this Agreement and must be exercised within thirty (30) months from the Effective Date of this Agreement. If the Software is not delivered for any reason by the original Delivery date identified in the Implementation Plan (Exhibit D), the thirty (30) month option exercise deadline shall be automatically extended by the number of days between the original Delivery date identified in the Implementation Plan and the date of actual Delivery. Upon receipt of written notice that Hawaiian intends to exercise this option, SDT and Hawaiian shall develop a reasonable implementation plan specific to the Group Tracking Module.


3.02 IMPLEMENTATION FEES. Hawaiian shall pay SDT for implementation efforts (excluding implementation of the connection of the Software to the revenue accounting system) the firm fixed price of Three Hundred Eighty Thousand United States Dollars (US$380,000) as per payment schedule outlined in Article 3.06(b). SDT would be pleased to negotiate with Hawaiian a mutually agreed implementation fee for the connection of the Software to the Hawaiian revenue accounting system.


3.03 MAINTENANCE FEES. For Maintenance Services, Hawaiian shall pay SDT, in advance, a monthly maintenance fee of Three Thousand Seven Hundred Fifty United States Dollars (US$3,750) ("Maintenance Fee") commencing at the end of the Warranty Period (defined in Article 8.04 below). The Maintenance Fee is subject to adjustment from time to time by no more than 3% per annum or the increase in the U.S. Department of Labor Consumer Price Index, all cities average ("C.P.I."), from the CPI established as of January 1, 1997, whichever is less.


3.04 TRAVEL EXPENSES. Hawaiian shall pay SDT, in addition to all other amounts identified herein, Per Diem charges, as defined in the Definitions section of this Agreement. The Per Diem amounts will be adjusted from time to time


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according to the rates as published by the US government for federal employees traveling on government business in the particular city where the work is performed ("OCONUS").Additionally, Hawaiian shall pay Transportation Expenses as described in the Definitions section of this Agreement.


3.05 DEVELOPMENT ENVIRONMENT. SDT shall be permitted to use the hardware and third party software described in the configuration list to be created during the Site Survey, which shall be shipped to the offices of SDT in Dallas/Fort Worth initially for the purpose of performing the development work. Thereafter, Hawaiian shall arrange shipping of such hardware and third party software to its own Site at Hawaiian's expense.


3.06 PAYMENT SCHEDULE.


(a) License fees shall be due and payable in sixty (60) equal monthly payments of Eight Thousand Two Hundred Fifty United States Dollars (US$8,250), with the first such payment due upon Acceptance.


(b) Implementation/Customization fees shall be due and payable as follows:


Thirty three percent (33%) upon execution of this Agreement,
Thirty four percent (34%) upon Delivery of the Software,
Sixteen percent (16%) upon Acceptance of the Software ...