Management Services Agreement

MANAGEMENT SERVICES AGREEMENT


BETWEEN


AMERICAN AIRLINES, INC.


AND


THE SABRE GROUP, INC. 2


MANAGEMENT SERVICES AGREEMENT


TABLE OF CONTENTS


ARTICLE 1 -- DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . 1

ARTICLE 2 -- TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Stated Term . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Renewal . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Transition Assistance . . . . . . . . . . . . . . . . . 2

ARTICLE 3 -- SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1 Schedules . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Standard of Care . . . . . . . . . . . . . . . . . . . . 2
3.3 Manner and Place of Performance . . . . . . . . . . . . 2
3.4 Recipients of Services . . . . . . . . . . . . . . . . . 3
3.5 Subcontracting Services . . . . . . . . . . . . . . . . 3
3.6 Information Regarding Services . . . . . . . . . . . . . 4
3.7 Legal Services . . . . . . . . . . . . . . . . . . . . . 4
3.8 Warranty Disclaimer . . . . . . . . . . . . . . . . . . 4

ARTICLE 4 -- SERVICE LEVEL . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Continuation of Level . . . . . . . . . . . . . . . . . 4
4.2 Semiannual Changes in Level . . . . . . . . . . . . . . 4
4.3 Procedure for March 1 Level Change . . . . . . . . . . . 5
4.4 Procedure for September 1 Level Change . . . . . . . . . 5

ARTICLE 5 -- DISCONTINUANCE OF OPTIONAL SERVICES . . . . . . . . . . . . 6
5.1 Procedure . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Service Level and Price of Discontinued Services . . . . 6
5.3 Impossible Optional Services . . . . . . . . . . . . . . 6
5.4 Transition Assistance . . . . . . . . . . . . . . . . . 6
5.5 Reinstatement of Discontinued Service . . . . . . . . . 7

ARTICLE 6 -- SERVICES OBTAINED FROM OTHERS . . . . . . . . . . . . . . . 7
6.1 Mandatory Services . . . . . . . . . . . . . . . . . . . 7
6.2 Upon Discontinuance . . . . . . . . . . . . . . . . . . 8
6.3 Before Discontinuance . . . . . . . . . . . . . . . . . 8


ARTICLE 7 -- PRICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3
7.1 Cost Allocation . . . . . . . . . . . . . . . . . . . . . 8
7.2 Annual Pricing . . . . . . . . . . . . . . . . . . . . . . 9
7.3 Disagreement on Mandatory Service Pricing . . . . . . . . 9
7.4 Annual Price Effectiveness . . . . . . . . . . . . . . . . 9

ARTICLE 8 -- PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.1 Invoices . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.2 Payment . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.3 Method of Payment . . . . . . . . . . . . . . . . . . . . 10
8.4 Interest . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.5 Nonpayment Notice . . . . . . . . . . . . . . . . . . . . 10
8.6 Dispute of Invoice . . . . . . . . . . . . . . . . . . . . 10

ARTICLE 9 -- RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.1 Record Keeping . . . . . . . . . . . . . . . . . . . . . . 11
9.2 Examination . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE 10 -- CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . 12
10.1 Confidential Information . . . . . . . . . . . . . . . . . 12
10.2 Excluded Information . . . . . . . . . . . . . . . . . . . 13
10.3 Standard of Care . . . . . . . . . . . . . . . . . . . . . 13
10.4 Permitted Disclosures . . . . . . . . . . . . . . . . . . 13
10.5 Required Disclosures . . . . . . . . . . . . . . . . . . . 13
10.6 Title to Information . . . . . . . . . . . . . . . . . . . 14
10.7 Survival; Return . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE 11 -- PARTIES' RELATIONSHIP . . . . . . . . . . . . . . . . . . . . 14
11.1 Independent . . . . . . . . . . . . . . . . . . . . . . . 14
11.2 Employees . . . . . . . . . . . . . . . . . . . . . . . . 14
11.3 Authority and Enforceability . . . . . . . . . . . . . . . 15
11.4 Third-Party Consents . . . . . . . . . . . . . . . . . . . 15
11.5 Third-Party-Related Arrangements . . . . . . . . . . . . . 15
11.6 Further Assurances . . . . . . . . . . . . . . . . . . . . 15

ARTICLE 12 -- PARTIES' REPRESENTATIVES . . . . . . . . . . . . . . . . . . 16
12.1 Representatives' Authority . . . . . . . . . . . . . . . . 16
12.2 Designation . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 13 -- TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.1 Termination Events . . . . . . . . . . . . . . . . . . . . 16
13.2 Nonexclusive . . . . . . . . . . . . . . . . . . . . . . . 17
13.3 Consequences of Termination . . . . . . . . . . . . . . . 17
13.4 Survival of Rights and Obligations . . . . . . . . . . . . 19


ii 4 ARTICLE 14 -- LIABILITY AND REMEDIES . . . . . . . . . . . . . . . . . . . 19
14.1 Warranties . . . . . . . . . . . . . . . . . . . . . . . . 19
14.2 Nonconforming Services . . . . . . . . . . . . . . . . . . 19
14.3 Actual Damages . . . . . . . . . . . . . . . . . . . . . . 20
14.4 Indemnities for Certain Breaches and Other Matters . . . . 20
14.5 Time for Claims . . . . . . . . . . . . . . . . . . . . . 23
14.6 Offset . . . . . . . . . . . . . . . . . . . . . . . . . . 23
14.7 Equitable Relief . . . . . . . . . . . . . . . . . . . . . 23
14.8 Exclusive Remedies . . . . . . . . . . . . . . . . . . . . 23
14.9 Waiver of Remedies . . . . . . . . . . . . . . . . . . . . 23
14.10 Cumulative Remedies . . . . . . . . . . . . . . . . . . . 23
14.11 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE 15 -- FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . 24
15.1 No Breach or Liability . . . . . . . . . . . . . . . . . . 24
15.2 Notice of Excusable Delay or Failure . . . . . . . . . . . 24
15.3 Efforts to Overcome . . . . . . . . . . . . . . . . . . . 24
15.4 Extended Delay or Failure . . . . . . . . . . . . . . . . 24

ARTICLE 16 -- DISPUTE RESOLUTION MATTERS . . . . . . . . . . . . . . . . . 24
16.1 General Procedure . . . . . . . . . . . . . . . . . . . . 25
16.2 Continued Performance . . . . . . . . . . . . . . . . . . 25
16.3 Parties' Agreement . . . . . . . . . . . . . . . . . . . . 25

ARTICLE 17 -- EXPENSES AND TAXES . . . . . . . . . . . . . . . . . . . . . 25
17.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 25
17.2 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 25

ARTICLE 18 -- COMMUNICATIONS . . . . . . . . . . . . . . . . . . . . . . . 27
18.1 Form . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
18.2 Addresses . . . . . . . . . . . . . . . . . . . . . . . . 27
18.3 Effectiveness . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE 19 -- ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE 20 -- AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . 29

ARTICLE 21 -- INTEGRATION . . . . . . . . . . . . . . . . . . . . . . . . . 29

ARTICLE 22 -- SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . 29


iii 5


ARTICLE 23 -- SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE 24 -- GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE 25 -- COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . 30

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ATTACHMENTS:


DEFINITIONAL APPENDIX


DISPUTE RESOLUTION APPENDIX


SCHEDULES OF SERVICES


iv 6


MANAGEMENT SERVICES AGREEMENT


This Management Services Agreement is between American Airlines, Inc., a Delaware corporation, and The SABRE Group, Inc., a Delaware corporation, effective on July 1, 1996.


BACKGROUND


The Parties are wholly owned subsidiaries of AMR, and AA has provided management services to SG or its subsidiaries or predecessors. Because AMR's ownership of SG may be reduced, the Parties wish to state formally the terms on which certain management services will continue to be rendered by AA to SG and its subsidiaries.


AGREEMENT


The Parties agree as follows:


ARTICLE 1 -- DEFINITIONS AND INTERPRETATION


Various terms used in this Agreement are defined in the Definitional Appendix; the defined terms used in this Agreement begin with a capital letter. Various interpretative matters for this Agreement are also set forth in the Definitional Appendix. The Definitional Appendix is an integral part of this Agreement.


- --------------------------------------------------------------------------------


ARTICLE 2 -- TERM


2.1 Stated Term. This Agreement commences on the Effective Date and
will continue in effect until 11:59 p.m. on June 30, 1999, unless
terminated earlier by one or both of the Parties in accordance with
Article 13.


2.2 Renewal. The Parties may consent to successive one-year renewal terms
by following this procedure: If SG wishes to renew the term of this
Agreement, it shall Notify AA of that intention by March 31, 1999 and
the same date of each subsequent year. If AA wishes to concur with
that renewal, it shall Notify SG of that concurrence by April 30 of
that year. If no Notice of intent to renew or no concurrence is
given, this Agreement will Expire when the then current term expires.


2.3 Transition Assistance. For up to 180 days after Expiration, AA shall
comply with SG's reasonable requests for assistance in engaging or
training another Person or Persons to


Management Services Agreement


7
provide, and for records and other information relating to, the
Services rendered by AA immediately preceding that Expiration. SG
shall reimburse and pay AA's Transition Expenses in accordance with
invoices submitted to SG by AA. Articles 8 and 18 shall apply in this
situation as though this Agreement had not Expired. AA may cease
providing transition assistance, immediately upon Notice to SG, if SG
has not paid the amount described in a Nonpayment Notice by the tenth
Business Day after the Nonpayment Notice was given. If the records or
other information provided by AA are Confidential Information, Article
10 shall also apply as though this Agreement had not Expired.


- --------------------------------------------------------------------------------


ARTICLE 3 -- SERVICES


3.1 Schedules. AA shall render, and SG shall pay for, the Mandatory
Services and, to the extent not discontinued in accordance with this
Agreement, the Optional Services during the effectiveness of this
Agreement. The Services are described on the Schedules, which are an
integral part of this Agreement. The Services described on Schedules
I through IV are Mandatory Services; the Services described on the
other Schedules are Optional Services. Neither Party may unilaterally
change any Service or separate any one or more of the Tasks that
constitute a Service.


3.2 Standard of Care. AA shall use the same care in rendering the
Services as it uses in rendering services to AMR itself and the
other subsidiaries of AMR. Further, AA's care in rendering the
Services shall be at least equal to the care that it has used in
providing each Service to SG or any of its subsidiaries or
predecessors before the Effective Date.


3.3 Manner and Place of Performance. AA shall render each Service in
accordance with any terms (including any time period) described on the
corresponding Schedule or any applicable SLA, though AA has full
discretion about how to render each Service as that Service is so
described. AA is not obligated to render any Service or Task in the
same manner (such as using the same personnel or other assets of AA)
as it previously rendered that Service or Task, whether before or
after the Effective Date. Each Service will be performed at AA's
offices or the other place or places it was rendered most recently
before the Effective Date, except as described in the corresponding
Schedule or Subcontracted in accordance with this Agreement. SG and
the SG Companies shall afford access to their respective premises as
necessary or reasonably appropriate to permit a Service or Task to be
rendered.


3.4 Recipients of Services. The Services shall be rendered solely to, or
for the direct benefit of, SG and the SG Companies. Neither SG nor
any SG Company may assign, license, or otherwise transfer or provide,
whether for or without consideration, any right to any Service, in
whole or in part, to any Person other than SG or any SG Company. SG
or any SG Company may, however, provide any other Person (whether for
or without consideration) any product or information of SG or any SG
Company resulting or derived from any Service or Task, to the extent
not prohibited by Article 10.


Management Services Agreement
2 8
3.5 Subcontracting Services. AA has Subcontracted certain of the
Services, in whole or in part, before the Effective Date; the
Schedules indicate those Services that are Subcontracted and
the corresponding Subcontractors as of the Effective Date. SG
consents to that Subcontracting and those Effective Date
Service Subcontracts and Subcontractors. AA's Subcontracting
after the Effective Date, however, is subject to these terms:


(a) AA may, without any consent or approval of SG,


(i) Subcontract any Service, in whole or in part, to any
Person, including any Affiliate of AA,


(ii) amend any Service Subcontract, or


(iii) cease to Subcontract any Service, in whole or in part.


(b) SG shall have no indemnification obligation under Section
14.4(b) regarding any Service Subcontract, other than an
Effective Date Service Subcontract, entered into by AA without
SG's Reasonable Consent. Also, if AA, without SG's Reasonable
Consent, enters into any amendment to


(i) an Effective Date Service Subcontract, or


(ii) any other Service Subcontract to which SG had given
its Reasonable Consent,


SG shall be liable under Section 14.4(b) only for any Damages
of AA or any of its Indemnified Agents that would have
resulted without that amendment; that is, SG shall not be
liable under Section 14.4(b) for any increase in Damages that
results from an amendment of that kind.


[INFORMATION OMITTED - CONFIDENTIAL TREATMENT REQUESTED]


AA shall remain responsible for the rendering to SG of any Service
that is Subcontracted, in whole or in part. Also, except as described
in Section 14.4(b), AA shall be solely responsible for its obligations
to the Subcontractor (including any applicable Subcontract Termination
Penalty) under each Service Subcontract.


3.6 Information Regarding Services. Each Party shall make available to
the other Party any information required or reasonably requested by
that other Party regarding the performance of any Service and shall be
responsible for timely providing that information and for the accuracy
and completeness of that information. But a Party shall not be liable
for not providing any information that is subject to a confidentiality
obligation owed by it to a Person other than an Affiliate of it or the
other Party. A Party shall not be liable for any impairment of any
Service caused by its not receiving information, either timely or at
all, or by its receiving inaccurate or incomplete information from the
other Party that is required or reasonably requested regarding that
Service.


3.7 Legal Services. The Service described in one of the Schedules as
"legal services" consists of AA's making the Legal Staff available for
engagement by SG and the SG Companies for their legal matters. The
engagement, services, or withdrawal of any of the Legal Staff


Management Services Agreement
3 9
regarding a particular legal matter for SG or any of the SG Companies,
as well as certain of the Prices for those legal services, are
governed by and subject to the Legal Staff's professional or ethical
obligations and the Legal Rights Agreement.


3.8 Warranty Disclaimer. AA MAKES NO REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, REGARDING ANY SERVICE OR TASK OTHER THAN AS STATED
IN THIS AGREEMENT. AA SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES,
INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, REGARDING THE SERVICES.


- --------------------------------------------------------------------------------


ARTICLE 4 -- SERVICE LEVEL


4.1 Continuation of Level. AA shall provide substantially the same Level
of each Service, and each Task, as it provided to SG or its
subsidiaries before the Effective Date, except as otherwise agreed in
accordance with this Agreement. The Parties' entering into this
Agreement does not negate or modify any SLA in effect on the Effective
Date.


4.2 Semiannual Changes in Level. The Level of any Service may be changed
semiannually by the Parties' agreement, so long as that agreement
includes a mutually acceptable corresponding Price for the changed
Level of Service. A change in the Level of a Service shall be
effective only on and after


(a) March 1 if the Parties agree, and enter into an SLA for that
Service, by the preceding December 1 in accordance with
Section 4.3, or


(b) September 1 if the Parties agree, and enter into an SLA for
that Service, by the preceding June 1 in accordance with
Section 4.4.


A change in the Level of any one or more Tasks that constitute a
Service shall be deemed a change in the Level of that Service.
Seasonal or other normal fluctuations in a Service or Task shall not
be deemed a change in the Level of that Service.


4.3 Procedure for March 1 Level Change. If the Parties agree by September
1 that there should be a March 1 Level Change, AA shall reflect that
proposed change in its Price Proposal due as of October 1 for that
Service; accordingly, if the Price will differ because of the proposed
March 1 Level Change, that Price Proposal shall include both the Price
for the following January and February and the Price for the following
March through December. Otherwise:


(a) If AA proposes, by Notice to SG by October 1, a March 1 Level
Change, AA shall reflect that proposed change in its
corresponding Price Proposal due as of October 1 for that
Service. Upon SG's request, AA shall also submit to SG by
November 1 a Price Proposal for an unchanged Level of that
Service or for any other March 1 Level Change that has
otherwise been agreed upon by the Parties.


Management Services Agreement
4 10


(b) If SG proposes, by Notice to AA by October 1, a March 1 Level
Change, AA shall respond in writing by the following November
1. To the extent that AA agrees with the proposed change, its
response shall include a revised Price Proposal for that
Service reflecting a March 1 Level Change to which AA would
agree.


Neither Party is precluded from proposing, and the Parties are not
precluded from discussing and agreeing to, between October 1 and the
following December 1, any change in the Level of any Service and the
corresponding Price. If the Parties do not agree upon a change in
Level and the corresponding Price of a Service by December 1, the
Level of that Service shall continue unchanged at least through the
following August.


4.4 Procedure for September 1 Level Change. If the Parties agree by April
15 that there should be a September 1 Level Change, AA shall submit
to SG a corresponding Price Proposal for that Service by the following
May 7. Otherwise:


(a) If AA proposes, by Notice to SG by April 15, a September 1
Level Change, AA shall concurrently submit to SG a
corresponding Price Proposal for that Service for the
following September through December; SG shall then respond in
writing by the May 7 following the submission of that
proposal.


(b) If SG proposes, by Notice to AA by April 15, a September 1
Level Change, AA shall respond in writing by the following May
7. To the extent that AA agrees with the proposed change, its
response shall include a revised Price Proposal for that
Service, for the following September through December,
reflecting a Septem ...