Exhibit 10.3
INFORMATION TECHNOLOGY
SERVICES AGREEMENT
between
HAWAIIAN AIRLINES, INC.
and
ELECTRONIC DATA SYSTEMS CORPORATION
INFORMATION TECHNOLOGY SERVICES AGREEMENT
THIS INFORMATION TECHNOLOGY SERVICES AGREEMENT, dated as of February 1,
1997 is between Hawaiian Airlines, Inc. ("Hawaiian"), and Electronic Data
Systems Corporation ("EDS").
RECITALS:
WHEREAS, the parties desire to enter into an agreement whereby Hawaiian
will purchase from EDS, and EDS will provide to Hawaiian, certain hardware
and systems software, installation and support services, all as described in
this Agreement; and
NOW, THEREFORE, in consideration of the premises and the terms and
provisions set forth in this Agreement, the parties agree as follows:
Article I
Agreement, Term and Definitions
1.1 Agreement. During the term of this Agreement, EDS will provide to
Hawaiian, and Hawaiian will purchase from EDS, a client/server-based
passenger revenue accounting system consisting of licensed EDS-Developed
Software, Third Party Hardware and Third Party Software (collectively, the
"System") and related services, including the installation of the System,
development of certain interfaces and the provision of documentation,
training and maintenance for the EDS-Developed Software, all as more fully
described in this Agreement and in Schedule A (collectively, the "PRAS
Services"), and all upon and subject to the terms and conditions of this
Agreement.
1.2 Term. The term of this Agreement will commence as of the date of this
Agreement (the "Effective Date") and will continue until the earlier of (a)
May 1, 2003 or (b) the date upon which this Agreement is terminated in
accordance with Article XI.
1.3 Definitions. For purposes of this Agreement, the following terms will
have the following meanings:
(a) "Business Day" is any day other than a Saturday, Sunday,
Federal holiday or Hawaiian holiday.
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(b) "Change in Scope" is (i) the addition, deletion or
material change of (1) the PRAS Services, or (2) any
feature or functionality of the System or any Deliverable
or portion thereof, (ii) a material change in any
Milestone, (iii) a material variance from the
requirements outlined in the Specifications, or (iv) a
material departure from Hawaiian's core business
practices.
(c) "Deliverables" are any tangible and intangible products
and results identified as such in Schedule B and
specified as such in the Project Plan.
(d) "Documentation" means the documentation described in
Section 4.4.
(e) "EDS Charges" means the charges described in Article IX
and Schedule C.
(f) "EDS-Developed Software" means (i) EDS*PRAS as described
in Section 1 of the Specifications, and (ii) the
interfaces and additional functionality to EDS*PRAS
developed by EDS in accordance with Section 2 of the
Specifications.
(g) "EDS Development Tools" means any Software development
tools, know-how, methodologies, processes, technologies
or algorithms used by EDS in creating the EDS-Developed
Software that are based upon the trade secrets or
proprietary information of EDS or otherwise owned or
licensed by EDS.
(h) "EDS*PRAS" means EDS' proprietary passenger revenue
accounting system containing the functions and features
described in Section 1 of the Specifications.
(i) "Final Acceptance" has the meaning set forth in Section
2.4(c).
(j) "Hawaiian's Office" is the following Hawaiian office
location: 0000 Xxxxxxx Xxxxxx, Xxxxx X000, Xxxxxxxx,
Xxxxxx 00000.
(k) "Milestones" are the dates on which each Deliverable is
scheduled to be delivered to Hawaiian for user acceptance
testing and which are identified as such in Schedule B
and/or the Project Plan.
(l) "Phases" are, collectively, the Definition and Analysis,
Business Design, Construction and Testing, and
Implementation phases, each as more fully described in
Section 3 of Schedule A.
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(m) "Software" means the expression of an organized set of
instructions in natural or coded language, contained on a
physical base of any nature, that must be used on
automatic data processing equipment devices, peripheral
instruments or equipment, based on digital technology, to
make them operate in a certain manner and for certain
purposes.
(n) "Specifications" are the specifications for the
functionality of the EDS-Developed Software as described
in the Specifications Document dated February 1, 1997,
which may be modified or amended from time to time in
accordance with Article VI of this Agreement or in
connection with Section 3 of Schedule A.
(o) "Third Party Hardware" is the hardware described in
Section 1(C) of Schedule A, as may be modified in
accordance with Section 4.1.
(p) "Third Party Software" is the Software described in
Section 1(B) of Schedule A, as may be modified in
accordance with Section 4.1.
Other capitalized terms used in this Agreement are defined in
this Agreement in the context in which they are used.
Article II
System Installation
2.1 Project Plan. As soon as feasible but no later than
ninety (90) days after the Effective Date, EDS will, with the cooperation and
assistance of Hawaiian, develop and deliver to Hawaiian a written work plan
(the "Project Plan") at a mutually agreed upon level of detail identifying
the implementation schedule, activities, Deliverables and Milestones required
to complete the System in accordance with this Agreement and the
Specifications and to provide the PRAS Services in accordance with the terms
of this Agreement. At a minimum, the Project Plan will more specifically
describe and incorporate the Milestones and Deliverables generally described
in Schedule B and will specify each party's tasks in connection with the
implementation of the System. The tasks indicated in the Project Plan will
include (a) the installation and testing of the System processing unit, disk
drives, EDS-Developed Software, Third Party Hardware and Third Party
Software, and (b) Hawaiian's provision of the local area network
infrastructure, including central printers and communications equipment. The
Project Plan may be updated from time to time as necessary to reflect and
document any changes in functionality, implementation schedule, scope and
charges mutually agreed upon by EDS and Hawaiian in accordance with Article
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VI of this Agreement. EDS and Hawaiian agree to work together to minimize
disruption to Hawaiian's work environment and to provide a smooth
implementation. EDS and Hawaiian acknowledge, however, that some disruption
may occur.
2.2 System Installation.
(a) Upon delivery of the Project Plan to Hawaiian in
accordance with Section 2.1, and Hawaiian's written
acceptance of the Project Plan, which acceptance (i)
shall be given within seven (7) calendar days after
Hawaiian's receipt of the Project Plan from EDS, unless
Hawaiian reasonably withholds acceptance and indicates
the reasons therefor, and (ii) shall not be unreasonably
withheld or delayed, each party will perform its
respective tasks outlined in the Project Plan in order
for EDS to deliver to Hawaiian the System and related
Deliverables in accordance with the Project Plan.
(b) Subject to the limitations set forth in this Section, EDS
will provide, and is committed to the delivery of, the
System in accordance with the schedule set forth in
Schedule B, which schedule may be modified from time to
time by mutual written agreement of the parties to
accommodate any Changes in Scope requested by Hawaiian
and agreed to by EDS. Hawaiian and EDS understand and
agree that EDS will not be liable (financially and
otherwise) for any delays in the schedule caused by
events and circumstances beyond the reasonable control of
EDS, including without limitation, (i) the nonperformance
of Hawaiian's obligations under this Agreement, (ii) the
nonperformance of any third party, including delays in
the delivery of the Third Party Hardware or Third Party
Software by third party vendors, (iii) those force
majeure events and circumstances described in Section
13.4, (iv) delays resulting from any Change Order, but
only to the extent set forth in such Change Order, or (v)
any changes to the System that EDS may be required to
make pursuant to airline industry or government mandates.
2.3 Reliance on Hawaiian's Information. Hawaiian understands and agrees
that EDS may rely on the accuracy and completeness of information provided by
Hawaiian to EDS relating to, among other things, (a) interface requirements,
specifications and data concerning Hawaiian's applications and systems, as
more fully described in Section 7.6, and (b) information provided by Hawaiian
for inclusion in the Project Plan and the Specifications, including without
limitation, Hawaiian's process descriptions, data stores/flows, and data
models for tables, reports and screens. During installation of the System,
EDS and Hawaiian will cooperate with each other in good faith to identify and
resolve issues that are based upon
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identification of new information that affects the obligations of the parties
under this Agreement. If the information provided by Hawaiian is not
accurate, such inaccuracy will be deemed to constitute a Change Order Request
pursuant to Article VI, and EDS will be permitted to recover any and all
costs incurred and adjust all applicable schedules set forth in this
Agreement and the Project Plan resulting from such inaccuracy.
2.4 User Acceptance Testing. Hawaiian will have the opportunity to review
each Deliverable in Phases in accordance with the time periods and procedures
described in this Section 2.4.
(a) The review period for the Definition and Analysis Phase
(as described in Section 3 of Schedule A) will be seven
(7) calendar days; however, Hawaiian will use reasonable
efforts to complete its review in less than seven (7)
calendar days. Unless, during such review period (and
any subsequent review period as described in this
subsection), Hawaiian identifies to EDS in writing a
failure of the Definition and Analysis documentation to
substantially conform to the provisions set forth in
Section 2 of the Specifications, the Definitions and
Analysis Phase will be deemed automatically accepted by
Hawaiian. If Hawaiian provides EDS with written notice
of a valid nonconformance in accordance with this
Section 2.4(a), a new review period of no more than
seven (7) calendar days will commence after EDS has
corrected and redelivered the Phase to Hawaiian.
(b) The review period for the Business Design Phase (as
described in Section 3 of Schedule A) will be seven (7)
calendar days; however, Hawaiian will use reasonable
efforts to complete its review in less than seven (7)
calendar days. Unless, during such review period (and
any subsequent review period as described in this
subsection), Hawaiian identifies to EDS in writing a
failure of the Business Design to substantially conform
to the Definitions and Analysis documentation, the
Business Design Phase will be deemed automatically
accepted by Hawaiian. If Hawaiian provides EDS with
written notice of a valid nonconformance in accordance
with this Section 2.4(b), a new review period of no more
than seven (7) calendar days will commence after EDS has
corrected and redelivered the Phase to Hawaiian.
(c) The review period for the Construction and Testing Phase
(as described in Section 3 of Schedule A) will be
fourteen (14) calendar days; however, Hawaiian will use
reasonable efforts to complete its review in less than
fourteen (14) calendar days. Unless, during such review
period (and any subsequent review period as described in
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this subsection), Hawaiian identifies to EDS in writing
a failure of the EDS-Developed Software to substantially
conform to the Business Design, the Construction and
Testing Phase will be deemed automatically accepted by
Hawaiian. If Hawaiian provides EDS with written notice
of a valid nonconformance in accordance with this
Section 2.4(c), a new review period of no more than
fourteen (14) calendar days will commence after EDS has
corrected and redelivered the Phase to Hawaiian. The
review period(s) for the Construction and Testing Phase
will constitute formal user acceptance testing.
Hawaiian's actual acceptance of the Implementation Phase
of the Phase 2 Implementation Deliverable shall
constitute "Final Acceptance" of the System.
(d) If the Hawaiian Project Manager and the EDS Project
Manager disagree in good faith with respect to whether a
Deliverable substantially conforms in all material
respects to the applicable documentation, the dispute
will be resolved in accordance with Article X of this
Agreement.
(e) Corrections to a Deliverable that are related to an EDS
error or omission shall be made at EDS' cost.
Corrections to a Deliverable that are related to a
Hawaiian error or omission shall be made at Hawaiian's
cost and costs incurred by EDS as a result of delays
caused by Hawaiian shall be borne by Hawaiian.
Article III
Warranty and Maintenance Support
3.1 Correction of Nonconformance to Specifications During
Implementation. For the period commencing with the first day
after the first Deliverable begins operation in Hawaiian's
production environment until the day the last Deliverable
begins operation in Hawaiian's production environment (the
"Warranty Period"), EDS warrants that each Deliverable will
operate in all material respects in accordance with the
Specifications for that Deliverable. The parties expressly
acknowledge and agree that Hawaiian's sole and exclusive
remedy for any breach of this warranty is as set forth in
this Section 3.1.
(a) Remedy. As soon as practicable after discovery of a
failure of a Deliverable to conform to the
Specifications during the Warranty Period, Hawaiian
shall deliver to EDS a written, detailed description of
the alleged nonconformance. EDS shall have the right to
use reasonable efforts in good faith to identify the
cause of the alleged nonconformance and to deliver to
Hawaiian, without additional charge to Hawaiian, the
necessary correction, if any. Upon offer by EDS, and
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written acceptance by Hawaiian exercisable in Hawaiian's
reasonable discretion, EDS may refund the portion of the
EDS Charges paid by Hawaiian to EDS for the portion of
the Deliverable related to the nonconformance. The
amount of any such refund will be mutually determined by
the parties. If Hawaiian elects not to accept such
refund, EDS will remain obligated to deliver a
conforming Deliverable in accordance with this
Agreement. The methods and techniques for correcting
nonconformances and implementing corrections will be at
EDS' sole reasonable discretion.
(b) Hawaiian-Caused Nonconformances. To the extent any
alleged nonconformance is caused by (i) any maintenance,
modifications, enhancements, updates or improvements to
any Deliverable made by Hawaiian, or a third party acting
on behalf of Hawaiian, (ii) improper or unauthorized use
of the EDS-Developed Software, (iii) any hardware or
Software changes not provided or approved by EDS (iv)
hardware or Software that, although approved by EDS, is
defective or malfunctioning, (v) improper or defective
installation or implementation of EDS-approved hardware
or Software changes performed by a party other than EDS,
(vi) the use of any Deliverable in combination or
connection with hardware or Software not listed in
Sections 1(B) or 1(C) of Schedule A or approved by EDS,
or (vii) changes to data/file layouts received from
Hawaiian or external sources, then Hawaiian shall pay
EDS, at [Confidential Treatment Requested] for
identifying and correcting the alleged nonconformance
during the Warranty Period.
(c) Exceptions. Except as stated in the Specifications, EDS
does not warrant that the functions of the System will
meet Hawaiian's business requirements. The parties
acknowledge that operation of the System will not be
uninterrupted or error-free. Subject to Section 8.6,
EDS will have no responsibility with respect to
Hawaiian's data or data files.
3.2 On-going Product Maintenance and Support. During the period
commencing with the day after the last Deliverable begins
operation in Hawaiian's production environment until
termination of this Agreement for any reason (the
"Maintenance Period"), EDS will provide the following product
maintenance and support services (the "Maintenance Support
Services"):
(a) Standard Support Services. EDS will provide Hawaiian
with user support accessible via pager 24-hours a day,
seven (7) days a week. EDS will use reasonable efforts
to return each such page for services within two (2) hours
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after EDS actually receives such page from
Hawaiian, subject to those events and circumstances
described in Section 13.4 and EDS personnel having
immediate access to telecommunication services. In
addition, Hawaiian will be provided with a back-up
telephone number for use in case Hawaiian is unable to
reach EDS personnel via the standard support pager
number. The standard support services will be provided
either by telephone or in written format and will
consist of providing consultation and advice on problem
diagnosis, troubleshooting and identification of Bugs
(as defined in Section 3.2(c)(i)) in the EDS-Developed
Software. The parties agree to classify and prioritize
requests for this standard support service, as follows:
(i) "Critical" means a situation where a major problem
impacts the functionality of the EDS-Developed
Software and is significant in terms of the
operation of the EDS-Developed Software, such as the
inability to audit sales or calculate revenue. EDS
will commence efforts to correct Critical problems
within one (1) Business Day after receipt of a
request for support from Hawaiian, and will
diligently pursue a remedy to the problem.
(ii) "Non-urgent" means a situation where a minor problem
causes a minor inconvenience to Hawaiian, including
without limitation, improper printout or display,
misspelled error messages and documentation errors.
EDS will commence efforts to correct Non-urgent items
within a reasonable period of time after any Critical
problem is corrected. After all Critical problems
are corrected, EDS will then diligently pursue a
remedy to Non-urgent problems. EDS will notify
Hawaiian of the status of any Non-urgent problem
within three (3) Business Days after receipt of a
request for support from Hawaiian.
(b) Bug Fixes and Problem Coordination. Hawaiian shall
notify EDS of any Bugs in the EDS-Developed Software and
specify in writing the reason the EDS-Developed Software
does not perform in conformance with the then-current
Documentation. EDS' sole responsibility relating to any
Bugs will be to use reasonable efforts to correct the Bug
and promptly initiate work toward developing a Bug Fix
(as defined in Section 3.2(c)(ii)) consistent with the
classification and prioritization schedule set forth in
Section 3.2(a). After EDS develops the Bug Fix, EDS will
provide the Bug Fix to Hawaiian by transmitting or
shipping sufficient programming and operating
instructions to remedy the Bug. EDS will include a
correction to the Bug in subsequent releases of the
EDS-Developed Software.
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(c) Definitions. For purposes of this Section 3.2, the
following terms will have the following meanings:
(i) "Bug" means a failure of the EDS-Developed Software
to conform in all material respects with the
then-current Documentation. Any nonconformity
resulting from (1) any maintenance, modifications,
enhancements, updates or improvements to the
EDS-Developed Software made by Hawaiian, or a third
party acting on behalf of Hawaiian, (2) improper or
unauthorized use of the EDS-Developed Software, (3)
any hardware or Software changes not provided or
approved by EDS, (4) hardware or Software that,
although approved by EDS, is defective or
malfunctioning, (5) the improper or defective
installation or implementation of EDS-approved
hardware or Software changes performed by a party
other than EDS, (6) the use of the EDS-Developed
Software in combination or connection with hardware
or Software not listed in Sections 1(B) or 1(C) of
Schedule A or approved by EDS, or (7) changes to
data/file layouts received from Hawaiian or external
sources, shall not be considered a Bug.
(ii) "Bug Fix" means either a Software modification or
addition that, when made or added to the
EDS-Developed Software, establishes material
conformity of the EDS-Developed Software to the
then-current Documentation.
(d) Releases. From time to time, EDS may, at its option,
issue, at no additional charge to its then-current
EDS*PRAS maintenance customers, industry standard changes
or general releases designed to enhance the operating
performance of EDS*PRAS without changing the functions of
EDS*PRAS, as described in Section 1 of the Specifications
(a "New Version"). Each New Version will fully support
and be operable with all functions and features set forth
in the Specifications. In such event, during the
Maintenance Period, EDS will provide to Hawaiian one (1)
copy of any New Version, at no additional charge,
together with a copy of any related Documentation
(including installation instructions). If Hawaiian
desires EDS' assistance in the installation and
integration of such New Version into Hawaiian's
then-existing System, EDS will do so at [Confidential
Treatment Requested] for such services and as an
additional service subject to the provisions of Section
4.8. For purposes of this Agreement, the term "New
Version" shall not include (i) improvements,
modifications or enhancements to EDS*PRAS that provide
new or expanded functionality or performance features, or
(ii) new or enhanced functionality or performance
features to EDS*PRAS that EDS develops for another
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customer. If EDS develops new or enhanced functionality
or performance features to EDS*PRAS for another customer
and such functions and features are not confidential or
subject to other contractual restrictions, EDS will (i)
permit Hawaiian to review such functionality or features,
and (ii) make such functions and features available to
Hawaiian as an additional service subject to the
provisions of Section 4.8.
(e) Hawaiian Misuse or Error. EDS reserves the right to
charge Hawaiian at [Confidential Treatment Requested]
for any requested services related to investigation
and/or correction of problems or malfunctions relating
to the EDS-Developed Software that were caused by or
contributed to by (i) any maintenance, modifications,
enhancements, updates or improvements to any Deliverable
made by Hawaiian, or a third party acting on behalf of
Hawaiian, (ii) improper or unauthorized use of the
EDS-Developed Software, (iii) any hardware or Software
changes not provided or approved by EDS, (iv) hardware
or Software that, although approved by EDS, is defective
or malfunctioning (v) the improper or defective
installation or implementation of EDS-approved hardware
or Software changes performed by a party other than EDS,
(vi) the use of the EDS-Developed Software in
combination or connection with hardware or Software not
listed in Sections 1(B) or 1(C) of Schedule A or
approved by EDS, or (vii) any changes to data/file
layouts received from Hawaiian or external sources.
(f) Remedy. EDS will use reasonable efforts in good faith
to repair or replace the EDS-Developed Software or any
New Version it distributes to the extent that they do
not conform in all material respects with the
then-current Documentation. The methods and techniques
for correcting nonconformances and implementing
corrections will be at EDS' sole reasonable discretion.
Hawaiian's sole and exclusive remedy for any damage or
loss relating to the Maintenance Support Services or the
EDS-Developed Software shall be either (1) replacement
of the affected portion of the EDS-Developed Software,
or (2) successful re-performance of the Maintenance
Support Services, and, if neither option is reasonably
available, EDS shall refund to Hawaiian that portion of
any EDS Charges paid by Hawaiian to EDS relating to the
applicable Maintenance Support Services, which refund
will be determined by mutual agreement of the parties.
EDS does not warrant that the Maintenance Support
Services will render operation of the EDS-Developed
Software uninterrupted or error free.
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3.3 Proration Software Maintenance. For purposes of this Agreement, the
term "Proration Software" will mean the Software that will (a) utilize
industry information and user data to identify the proration method to be
applied to the itinerary and (b) apply the identified method to determine the
appropriate coupon values. The Proration Software is a sub-contracted
portion of the System. During the term of this Agreement, EDS will obtain
from the Proration Software vendor, and provide to Hawaiian at no additional
charge, maintenance support for the Proration Software. Hawaiian will be
responsible for the maintenance of all data as it pertains to negotiated
agreements with other airlines.
3.4 Third Party Hardware and Third Party Software.
(a) With respect to the Third Party Hardware and Third Party
Software components of the System, EDS will assign to
Hawaiian, where permitted, or enforce for Hawaiian's
benefit (without resort to litigation or other dispute
resolution process) any warranties or indemnities extended
to EDS by the applicable vendors.
(b) EDS represents and warrants that (i) the Third Party
Hardware will not be used or refurbished hardware, and
(ii) on the date title is transferred to Hawaiian,
Hawaiian will receive good and marketable title to the
Third Party Hardware, free and clear of any lien or
encumbrance by or through EDS.
(c) EDS represents and warrants that EDS has the right to
grant Hawaiian the license to the EDS-Developed Software,
as described in Article VIII, without, to EDS' actual
knowledge, infringement on intellectual property rights of
third parties.
(d) EDS will acquire first year maintenance support for the
Third Party Software and the Third Party Hardware
(excluding the User Equipment described in Schedule A)
from the applicable third party vendor. EDS will
administer such first year maintenance services in a
manner consistent with the terms and conditions of the
applicable vendor agreement. Resolution of any
maintenance issues will be handled in accordance with the
applicable vendor agreement, and any remedies relating to
any service problems will be the remedies set forth in the
applicable vendor agreement. Although EDS will make
recommendations to Hawaiian as to future levels of
maintenance services, Hawaiian will be responsible
(financially and otherwise) for ongoing maintenance and
support of the Third Party Software and Third Party
Hardware after expiration of the first year maintenance
support described in this Section.
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3.5 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR
IN THE SPECIFICATIONS, EDS MAKES NO OTHER REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING
THE MERCHANTABILITY, SUITABILITY, ORIGINALITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE OF THE EDS DEVELOPED SOFTWARE, THE SYSTEM OR THE SERVICES
PROVIDED BY EDS UNDER THIS AGREEMENT.
Article IV
Other PRAS Services
4.1 Hardware and Software Procurement.
(a) EDS will procure and deliver, or cause to be delivered, to
Hawaiian's Office the Third Party Hardware and Third Party
Software, in consideration of the EDS Charges set forth on
Schedule C. Prior to purchasing any such hardware and
Software, EDS will review with Hawaiian the detailed
descriptions of the actual Third Party Software and Third
Party Hardware to be procured by EDS. If Hawaiian desires
that EDS purchase additional hardware or Software (in terms
of quantity, upgrades, functions, features or capacity),
then EDS will do so subject to the parties reaching a
mutual agreement in accordance with the provisions of
Article VI.
(b) The Third Party Software includes a database management
system by the vendor "Sybase". If product support for the
Sybase SQL Server is actually discontinued (as opposed to
an announcement of such discontinuation) during the term of
this Agreement, then EDS will develop and issue a new
release of the EDS-Developed Software that will utilize
another industry standard database management system. EDS
will provide such new release to Hawaiian prior to the
actual discontinuation of product support for the Sybase
SQL Server. EDS will consult with Hawaiian regarding the
selection of the new database management system; however,
EDS will have the right to decide which new database
management system will be utilized. If Hawaiian has not
made significant modifications or enhancements to the
System (other than those described in the Specifications or
effected through the provisions of Article VI), EDS will
pay for all costs associated with the development and
shipment of such new release to Hawaiian. If Hawaiian has
made significant modifications or enhancements to the
System (other than those described in the Specifications or
effected through the provisions of Article VI), EDS will
(i) perform the development services necessary to convert
the EDS-Developed Software so that it may utilize an
alternative database management system as an additional
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service to Hawaiian subject to the provisions of Section
4.8, and (ii) charge for such services only the
incremental, additional development and conversion costs
attributable to such modifications or enhancements at
[Confidential Treatment Requested] for such services.
(c) If, during the term of this Agreement, support for the
version of a particular Third Party Software product is
discontinued by the applicable vendor, then, prior to
discontinuation of such support, EDS will develop and issue
a new release of the EDS-Developed Software to Hawaiian
that will utilize the new version of the applicable Third
Party Software, and EDS will pay for the costs associated
with the development of such new release. If Hawaiian has
made significant modifications or enhancements to the
System (other than those described in the Specifications or
effected through the provisions of Article VI), EDS will
(i) perform the development services necessary to convert
the EDS-Developed Software so that it may utilize the new
version of the applicable Third Party Software as an
additional service to Hawaiian subject to the provisions of
Section 4.8, and (ii) charge for such services only the
incremental, additional development and conversion costs
attributable to such modifications or enhancements at
[Confidential Treatment Requested] for such services.
4.2 Conversion Specifications. EDS will provide to Hawaiian the file layout
information required for preparing conversion files and converting Hawaiian's
existing data into the System. Hawaiian is responsible for completing the
physical data file conversions and providing EDS with the conversion files
pursuant to Section 7.12.
4.3 Training. In accordance with a mutually agreed upon schedule, EDS will
provide a "train the trainer" session per Deliverable for up to twenty (20)
Hawaiian employees (the "Hawaiian Trainees"). Such "train the trainer"
sessions will not exceed two (2) Business Days per Deliverable. During user
acceptance testing, EDS will provide further informal training support to the
Hawaiian Trainees, on an as-needed basis. The Hawaiian Trainees shall
possess experience and training in PCs and Windows Software, and shall
possess a basic background and knowledge of passenger revenue accounting
processes or systems. Although EDS will demonstrate for members of
Hawaiian's MIS department how to operate EDS*PRAS, Hawaiian shall be
responsible for obtaining adequate training with respect to the Third Party
Hardware and Third Party Software. The "train the trainer" training sessions
will be held on Hawaiian's premises and Hawaiian will provide adequate
facilities for such training at no cost to EDS. Hawaiian will be responsible
for any travel-related expenses incurred by Hawaiian in connection with its
employee's attending such training sessions.
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4.4 Documentation. The Documentation will consist of a User Guide and a
Technical Guide for the EDS-Developed Software. The Documentation will be
available in hard copy and in electronic format. EDS will provide updates to
the Documentation for, and concurrently with, any subsequent modifications
and/or enhancements made available to Hawaiian. At Final Acceptance, all
Documentation will conform to the Specifications. EDS will deliver to
Hawaiian documentation relating to the Third Party Hardware and Third Party
Software as received from the applicable third party vendors.
4.5 Consulting Services. If requested by Hawaiian, EDS will provide
consulting services related to any process reengineering efforts or other
initiatives of Hawaiian in connection with the implementation of the System.
Any such consulting services will be provided as an additional service at
rates to be mutually agreed upon by the parties and subject to the provisions
of Section 4.8.
4.6 Airline Tariff Publishing Company (ATPCO) Data. During the term of this
Agreement, EDS will obtain and provide to Hawaiian the ATPCO data required
for operation of the System. EDS will obtain and provide such ATPCO data
only with respect to (a) domestic flights originating and ending within the
United States and Canada, and (b) international flights originating or ending
in North America. Such ATPCO data will consist of (a) domestic local fares,
(b) domestic joint fares, (c) domestic full map routings, (d) domestic market
routings, (e) domestic automated rules/footnotes for North American fares,
(f) domestic footnotes for North American fares, (g) international fares
to/from North America--published and constructed (unpublished) fares, (h)
international automated rules/footnotes for fares to/from North America (i)
international arbitraries to/from North America, and (j) international full
map routings for fares to/from North America. EDS will transmit such data to
Hawaiian over such telecommunication lines deemed appropriate by EDS. The
parties acknowledge and agree that EDS shall not be responsible for the
content of the ATPCO data. The EDS Charges for the provision of such data
are described on Schedule C.
4.7 Year 2000 Issues. The EDS-Developed Software will be written to address
year 2000 issues. EDS' services as described in this Agreement do not
include any changes, modifications, updates or enhancements to any existing
Hawaiian Software or to the Third Party Software that may be necessary to
cause such Software to (a) operate and produce data on and after January 1,
2000 accurately and without delay, interruption or error relating to the fact
that such Software is operating on or after 12:00 a.m. on January 1, 2000, or
(b) accept, calculate, process, maintain, store and output accurately and
without delay, interruption or error, all times and/or dates, whether before,
on or after 12:00 a.m. January 1, 2000, and any time periods determined on
the basis of any such times and/or dates.
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4.8 Additional Services. In addition to the services EDS is
otherwise obligated to provide under this Agreement, EDS will
provide such additional services or resources as Hawaiian may
reasonably request from time to time, on such terms and
conditions, including price and scope, as the parties may mutually
agree upon in writing. The charge for performing enhancements to
the System as an additional service is set forth on Schedule C.
Article V
Project Management
5.1 Project Personnel and Project Management. EDS will lead the
installation of the System, working in conjunction with the designated
representatives or personnel of Hawaiian. Hawaiian and EDS will each provide
appropriate personnel resources with the specific knowledge required to
complete the System and the PRAS Services. EDS will have a core project team
assigned to the project, with other EDS personnel who will supplement the
core project team from time to time as their particular skills are needed,
including System consultants, systems engineers and database engineers. EDS
will track the progress of the System installation and the PRAS Services
against the Project Plan, Milestones, Change Orders and other issues. EDS
will have oversight and management responsibility for any third party vendors
required by EDS to perform its obligations under this Agreement or the
Project Plan. Hawaiian will be responsible for the performance of any
services provided by Hawaiian's third party vendors to EDS in connection with
the System or the PRAS Services. If any third party vendors provided by
Hawaiian do not perform in accordance with the reasonable standards of EDS,
and after any such vendor has been given a reasonable opportunity to cure
such nonperformance, EDS shall be relieved of any obligations under this
Agreement to the extent such third party vendor's failure to so perform
adversely affects EDS' ability to properly perform those obligations.
Upon Hawaiian's reasonable request, EDS will furnish Hawaiian with certain
information resulting from security checks performed by EDS, including drug
tests, relating to all EDS personnel and contractors that EDS assigns to this
project and who will be physically onsite at Hawaiian's Office (the "Onsite
EDS Personnel"). Hawaiian reserves the right, exercisable in its reasonable
discretion, to reject any Onsite EDS Personnel that Hawaiian deems an
unacceptable risk based on the security-related information provided by EDS
to Hawaiian.
5.2 EDS Project Manager. EDS will designate and maintain a representative
of EDS (the "EDS Project Manager") who will be an employee of EDS and who
will (a) serve as the primary point of contact for Hawaiian in addressing
issues relating to the performance of EDS' obligations under this Agreement
and the Project Plan, (b) be authorized to act generally
15
as the primary point of contact for Hawaiian in dealing with EDS and to
coordinate EDS' provision of the PRAS Services pursuant to this Agreement and
(c) have the necessary authority to act on behalf of EDS with respect to any
matters arising under this Agreement or under the Project Plan. Hawaiian may
reasonably rely on the decisions, actions, instructions and/or information
provided by the EDS Project Manager.
5.3 Hawaiian Project Manager. Hawaiian will designate and maintain a
representative of Hawaiian (the "Hawaiian Project Manager") who will be an
employee of Hawaiian and who will (a) have oversight responsibility for
directing Hawaiian's resources in support of this Agreement, (b) serve as the
primary point of contact for EDS in addressing issues relating to the
performance of Hawaiian's obligations under this Agreement and the Project
Plan, and (c) have the necessary authority to act on behalf of Hawaiian with
respect to any matters arising under this Agreement or under the Project
Plan. EDS may reasonably rely on the decisions, actions, instructions and/or
information provided by the Hawaiian Project Manager.
5.4 Project Status Reporting. Until Final Acceptance, EDS will provide
project status reports, upon a mutually agreed schedule and level of detail,
to the Hawaiian Project Manager.
Article VI
Change Control
6.1 Change Request Procedure. Unless EDS and Hawaiian otherwise
agree, each Deliverable will be completed in accordance with the
Project Plan. If, prior to the day the last Deliverable begins
operation in Hawaiian's production environment, Hawaiian should
desire a Change in Scope, the following procedures will apply:
(a) The Hawaiian Project Manager will deliver a written
notice (a "Change Order Request") to the EDS Project
Manager specifying the proposed Change in Scope and the
purpose or objective sought with the proposed Change in
Scope. Within a reasonable period of time, but no later
than fifteen (15) Business Days after EDS' receipt of
the Change Order Request, EDS will deliver to the
Hawaiian Project Manager a written response to the
Change Order Request (such response, a "Change Order
Response") specifying whether the proposed Change in
Scope is feasible.
(b) If the proposed Change in Scope is feasible, the Change
Order Response will specify (i) the statement of work of
the requested Change in Scope, (ii) any necessary
16
revisions to the Project Plan or the Milestones, and
(iii) the additional charges payable to EDS for the
performance of the Change in Scope.
(c) If the Change Order Response provides for an additional
charge to Hawaiian with respect to the implementation of
the proposed Change in Scope, such additional charge
will be reflected in the Change Order Response on a time
and materials basis, based on an hourly rate of
$[Confidential Treatment Requested], plus out-of-pocket
expenses, for enhancements (including custom
modifications, updates, and improvements) to the System.
Hawaiian and EDS will work together in good faith to
limit the aggregate Changes in Scope and the charges
therefor to $[Confidential Treatment Requested] or less.
(d) Within fifteen (15) Business Days after receipt of a
Change Order Response, the Hawaiian Project Manager and
the EDS Project Manager will meet to determine whether
the parties mutually desire to proceed with the Change in
Scope.
(e) If the Change Order Response indicates that the Change
in Scope will not affect the Project Plan or result in
an additional charge to Hawaiian, EDS will implement the
Change in Scope in accordance with the Change Order
Request. If, however, the Change Order Response
indicates that the Change in Scope will affect the
Project Plan or EDS' charges for completion of the
Project Plan, then the EDS Project Manager and the
Hawaiian Project Manager must each provide written
approval (a "Change Order") to the Change Order Response
to authorize the implementation of the Change in Scope.
(f) Upon execution by the Hawaiian Project Manager and the
EDS Project Manager, Change Orders will be deemed to be
part of this Agreement, and the parties will immediately
modify, as applicable, the Project Plan, the
Specifications, the Deliverables, the Milestones and the
EDS Charges.
(g) If any Change Order provides for an increase in the EDS
Charges, Hawaiian will pay EDS such charges in accordance
with a mutually agreed upon schedule. In the absence of
such schedule, Hawaiian will pay EDS such charges in
accordance with the provisions of Article IX of this
Agreement upon the approval of the applicable Change
Order.
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Article VII
Hawaiian Responsibilities
During the term of this Agreement, to enable EDS to perform the PRAS
Services, Hawaiian will, on a timely basis and at no charge to EDS, perform
its obligations described in the Project Plan, this Section and elsewhere in
this Agreement.
7.1 Support of EDS Methodology. Hawaiian will support and participate in
the use of EDS' systems and methodologies for the project management, design,
development, implementation, operation and maintenance of the System,
provided that EDS has previously identified and reviewed these systems and
methodologies with Hawaiian.
7.2 General Cooperation. Hawaiian will make available, as reasonably
requested by the EDS Project Manager, key decision makers, personnel (whether
management, technical or user), information, approvals and acceptances as
necessary for EDS to perform its obligations under this Agreement and the
Project Plan on a timely basis. At a minimum, Hawaiian will make available
to EDS the Hawaiian Project Manager and one additional resource that has this
project as its primary responsibility and that possesses sufficient knowledge
of Hawaiian's passenger revenue accounting policies, procedures and
operations.
7.3 Hawaiian Facilities. Commencing on the Effective Date, Hawaiian will
provide to EDS such space, office furnishings, janitorial service, telephone
service (including equipment and voice mail), utilities (including air
conditioning) and office-related equipment, supplies and duplicating services
at Hawaiian's Office as EDS may reasonably require to provide the services
described in this Agreement (collectively, the "Hawaiian Facilities"). EDS
will have access to the Hawaiian Facilities twenty-four (24) hours a day,
seven (7) days a week and will comply with Hawaiian's reasonable security
procedures while on the premises of the Hawaiian Facilities. Such Hawaiian
Facilities will be equivalent to the space provided to similar Hawaiian
employees. At a minimum, Hawaiian will provide the work space necessary for
the EDS project team to effectively perform the PRAS Services, an
office/conference room for the EDS Project Manager and project team and a
reasonable amount of space to accommodate the installation efforts, including
testing and training. With respect to the telephone services, Hawaiian will
only be responsible for long distance charges made by EDS or its
subcontractors that originate from Hawaiian's Facilities.
7.4 Site Preparation. EDS will advise Hawaiian as to the requisite
environment for the System. In accordance with the schedule set forth in the
Project Plan, Hawaiian, with the
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advice of EDS, will (a) prepare and maintain the space at Hawaiian's Office
in accordance with vendor specifications and all applicable codes, statutes,
regulations and standards, and (b) provide all necessary power, power
stabilization measures, air conditioning, physical security measures and
environmental modifications required for the installation or utilization of
the System.
7.5 Access and Use Rights. Hawaiian will provide EDS with the right to
legally and physically access, use and operate any Hawaiian-owned or licensed
Software, data (such as tariff information from the Airline Tariff Publishing
Company and sales information from the Airline Reporting Corporation),
hardware or equipment in connection with the System and any services to be
provided to Hawaiian by EDS under this Agreement. Prior to the Effective
Date, Hawaiian will take, at Hawaiian's expense, all necessary actions to
obtain from third parties any consents, approvals or authorizations necessary
for EDS to legally and physically access, use and operate any Software
licensed by Hawaiian, data, hardware or equipment used in connection with the
System and the services to be provided to Hawaiian by EDS under this
Agreement. Hawaiian shall acquire, at its expense, and provide to EDS any
third party data and information required for operation of the System, such
as PNRs (passenger name records), Weekly OAG Flight Schedule data, data and
sales information from the Airline Reporting Corporation, the Bank Settlement
Plans identified in the Specifications and the following International Air
Transport Association (IATA) data, in electronic format, (a) Quarterly
Prorate Factors, (b) Daily Bankers Buying Rate, (c) Monthly 5-DAY Rates, (d)
Annual Maximum Permitted Mileage (MPM)/Ticketed Point Mileage (TPM), and (e)
Semi-annual Agency Master.
7.6 Software Interfaces. Hawaiian shall provide the information necessary
for EDS to identify interface requirements and define interface
specifications to the Hawaiian-operated and third party-operated applications
and systems identified in Section 2 of the Specifications. Hawaiian shall
provide the test data necessary to ensure that such interfaces meet the
provisions of Section 2 of the Specifications. Hawaiian shall develop and
implement all changes to the Hawaiian-operated and third party-operated
applications and systems required to interface with the System, other than
those changes and interfaces related to the Third Party Software, those
described in the Specifications and those effected through the provisions of
Article VI.
7.7 Network; Telecommunication Equipment and Services. Hawaiian will
provide and maintain on an ongoing basis the local area network, network
operating environment, telecommunication equipment, facilities and services
required for the System, including without limitation, the current NOVELL or
Windows NT local area network environment, print facilities and services, and
any other necessary infrastructure/network components.
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7.8 Supplies. Hawaiian will provide all tapes and electronic, optical and
paper media required for operation of the System.
7.9 Flight and Hospitality Privileges. Hawaiian will provide EDS personnel
who are traveling in connection with EDS' responsibilities related to the
installation of the System or the PRAS Services with round-trip, positive
space passes for Hawaiian flights. EDS agrees that the EDS personnel and
subcontractors will not displace any revenue passengers on any Hawaiian
flight. If EDS personnel are required to travel in order to perform the PRAS
Services, and cannot obtain a seat on a Hawaiian flight on a timely basis,
then Hawaiian shall reimburse EDS for all reasonable airfare incurred by EDS
under such circumstances, provided that EDS has used reasonable efforts to
notify Hawaiian. In addition, Hawaiian will use its reasonable efforts to
make available to EDS personnel who travel in connection with the PRAS
Services any hotel and/or corporate apartment discounts available to Hawaiian.
7.10 Application Systems Maintenance Support. At least three (3) months
prior to delivery of the first Deliverable, Hawaiian will assign personnel to
(a) assist EDS in user acceptance testing, including the development of user
test cases and scripts and (b) begin training in maintenance procedures for
the System. Commencing with the day the first Deliverable begins operation in
Hawaiian's production environment, Hawaiian will provide application systems
maintenance and all operations support for the System, which will include
executing and monitoring production job cycles.
7.11 Training. EDS will make available to Hawaiian the training materials
used by EDS to train Hawaiian's trainers. Following the training sessions
described in Section 4.3, Hawaiian will be responsible for training Hawaiian
users and other Hawaiian personnel to properly use the System and for
providing training materials to its personnel. EDS will assist Hawaiian in
the original preparation and development of such training materials.
7.12 Conversion Files. Hawaiian will provide EDS with the necessary
conversion files, based upon EDS' specifications, to be used during
installation of the System, as more fully described in the Project Plan.
7.13 Business Recovery. Hawaiian understands and agrees that EDS has not
undertaken by this Agreement to perform business recovery services or
functions (such as disaster recovery services) with respect to the System or
with respect to Hawaiian's data used in connection with the System. Prior to
implementation of the System, EDS will make general business recovery
recommendations to Hawaiian. If requested by Hawaiian, EDS will assist
Hawaiian in developing, testing and implementing a business recovery plan and
capabilities at
20
[Confidential Treatment Requested] for such services and as an additional
service subject to the provisions of Section 4.8.
Article VIII
License, Proprietary Rights, Data Confidentiality
8.1 License of EDS-Developed Software. Subject to the provisions of this
Article VIII and provided that this Agreement is not terminated in accordance
with Article XI, EDS grants to Hawaiian, and Hawaiian accepts from EDS, a
world-wide, nontransferable and nonassignable (except as otherwise provided
herein), nonexclusive and perpetual license to operate, in object code form
only, the EDS-Developed Software and any New Versions accepted by Hawaiian.
For purposes of this Section, the term EDS-Developed Software includes the
related Documentation.
(a) Hawaiian will use the EDS-Developed Software only in
connection with its own internal accounting operations
(including code-share partnering arrangements with other
airlines, but only to the extent such arrangements are
part of Hawaiian's internal accounting operations) and
not to process the data of any other person or entity.
In addition, Hawaiian and each Participating Approved
Affiliate (as defined below) may use the EDS-Developed
Software to process the internal accounting operations
of a Participating Approved Affiliate (including
code-share partnering arrangements with other airlines,
but only to the extent such arrangements are part of
Hawaiian's or the Participating Approved Affiliate's
internal accounting operations), but not to process the
data of any other person or entity; provided, however,
that, if the aggregate annual gross passenger revenue of
all Participating Approved Affiliates (measured as
provided below) exceeds $[Confidential Treatment
Requested] EDS shall receive an incremental license fee
from Hawaiian for the increased use of the EDS-Developed
Software. The amount of such incremental license fee
will be (i) $[Confidential Treatment Requested] in the
event the aggregate annual gross passenger revenue of
all Participating Approved Affiliates (in each case
measured by the twelve-month period immediately
preceding the date such entity first became a
Participating Approved Affiliate (the "Measurement
Criteria")) is $[Confidential Treatment Requested] or
greater but less than $[Confidential Treatment
Requested], or (ii) $[Confidential Treatment Requested]
in the event the aggregate annual gross passenger
revenue of all Participating Approved Affiliates (in
each case measured pursuant to the Measurement Criteria)
is $[Confidential Treatment Requested] or greater. Any
$[Confidential Treatment Requested] license fee made by
Hawaiian to EDS pursuant to clause (i) of this Section
21
shall not be credited against any subsequent obligation
of Hawaiian to make a payment under clause (ii) of this
Section. Under no circumstances, whether as a result of
multiple transactions or otherwise, will Hawaiian be
obligated to pay EDS an incremental license fee of (1)
more than $[Confidential Treatment Requested] in the
event the aggregate gross passenger revenue from all
Participating Approved Affiliates does not exceed
$[Confidential Treatment Requested], or (2) more than
$[Confidential Treatment Requested].
(b) Except as otherwise provided in this Section, Hawaiian
may not install or permit any use of the EDS-Developed
Software on any equipment that is not operated for the
sole benefit of, or owned or leased by, Hawaiian.
Hawaiian may provide third party contractors with access
to the EDS-Developed Software and/or permit the use of
the EDS-Developed Software on equipment that is owned or
leased by a third party contractor so long as:
(i) Neither the third party contractor nor any of its
affiliates directly competes with EDS in the
development, integration, implementation or
maintenance of passenger revenue accounting systems
for airlines, and such contractor is not an entity
for which EDS can demonstrate a reasonable concern
over its financial condition or business practices.
(ii) The third party contractor is an entity located within
the United States.
(iii) The third party contractor uses the EDS-Developed
Software solely for the benefit of Hawaiian and/or
one or more Participating Approved Affiliates and
will not sell, license, allow access to or otherwise
disclose the EDS-Developed Software to any other
party.
(iv) The third party contractor executes a reasonable
confidentiality agreement with EDS containing use
(including, if applicable, intellectual property
infringement indemnities) and confidentiality
provisions consistent with the use, confidentiality
and, if applicable, intellectual property
infringement indemnity provisions of this Agreement,
including the provisions of this Section 8.1. The
execution of such an agreement with the third party
contractor will not relieve Hawaiian of its
obligations with respect to the EDS-Developed
Software.
22
(c) Hawaiian may make and operate unlimited copies of the
EDS-Developed Software in object code form (or as to
Documentation, in hard copy form), provided that each of
the copies is operated only at Hawaiian's then-principal
United States office, the principal office of each
Participating Approved Affiliate, or at such other
Hawaiian location as EDS consents to in writing in
advance, except as contemplated by the provisions of
Section 8.1(b).
(d) Neither Hawaiian nor any Participating Approved Affiliate
will remove from the object code of the EDS-Developed
Software, or use a copy or reproduction technique that
has the effect of removing, any EDS copyright or
proprietary notices or any other designations as EDS may
reasonably require to indicate that the EDS-Developed
Software is proprietary to and the trade secret of EDS.
(e) Hawaiian will not, and will not permit its or its
Participating Approved Affiliates' employees, agents or
representatives to, sell, assign, lease, license,
sublicense, transfer or disclose to any third party
(except as required to be disclosed pursuant to a
requirement of any governmental authority or any
statute, rule or regulation, provided that Hawaiian
gives EDS notice of such requirement prior to any such
disclosure) the EDS-Developed Software, or copy or
reproduce the EDS-Developed Software, except as provided
in this Section. Hawaiian will not allow any third
party to access the EDS-Developed Software without the
prior written consent of EDS, except as provided in this
Section. If Hawaiian or a Participating Approved
Affiliate merges with or into another entity, or if
Hawaiian decides to sell all or substantially all of its
assets, then the surviving entity of such merger or the
assignee of such asset sale will be entitled to assume
this license, provided that:
(i) EDS is given prior written notice of such merger or
asset sale, and such notice states whether (1) the
entity merging with or into Hawaiian or any of its
Participating Approved Affiliates, or (2) the
assignee and any of its respective affiliates (as
approved in accordance with this Section) will use
the EDS-Developed Software. Hawaiian (or the
surviving entity (if not Hawaiian) or assignee, as
applicable) shall permit EDS, or its designated
representative, to perform periodic audits of
Hawaiian's (or the surviving entity's or assignee's
or their respective affiliates') records to the
extent necessary to verify whether (1) the entity
that merged with or into Hawaiian or any of its
Participating Approved Affiliates, or (2) the
assignee and any of its respective affiliates (as
approved in accordance with this Section) is using
the EDS-Developed Software.
23
(ii) Neither the entity that Hawaiian is assigning the
license to or merging with or into, nor any of such
entity's affiliates, directly competes with EDS in
the development, integration, implementation or
maintenance of passenger revenue accounting systems
for airlines, unless EDS consents in writing in
advance to such merger or asset sale, which consent
will not be unreasonably withheld or delayed.
(iii) EDS can not demonstrate a reasonable concern over
such entity's financial condition or business
practices.
(iv) EDS is entitled to charge, and the surviving entity
or assignee will pay EDS, an incremental license fee
(in the amount set forth below) for the EDS-Developed
Software, if (1) the surviving entity or assignee
and/or any of their respective affiliates (which meet
the criteria set forth in Section 8.1(i) below as it
relates to the surviving entity or assignee), other
than Hawaiian or a Participating Approved Affiliate,
begin to use the EDS-Developed Software after such
merger or sale for its or their own internal
accounting operations and do not have a separate
license agreement with EDS (collectively, the
"Acquirer and the Acquirer's Participating Approved
Affiliates"), and (2) the aggregate annual gross
passenger revenue of the Acquirer and the Acquirer's
Participating Approved Affiliates (as measured by the
Measurement Criteria applicable to the Acquirer and
the Acquirer's Participating Approved Affiliates),
plus, the aggregate annual gross passenger revenue of
the Participating Approved Affiliates (as measured by
the Measurement Criteria) [Confidential Treatment
Requested]. In the case of a merger in which
Hawaiian or a Participating Approved Affiliate is the
surviving entity, the annual gross passenger revenue
of the non-surviving entity and/or the non-surviving
entity's affiliates (which meet the criteria set
forth in Section 8.1(i) below as it relates to the
non-surviving entity and which begin to use the
EDS-Developed Software after such merger for
its/their own internal accounting operations and do
not have a separate license agreement with EDS) (such
non-surviving entity and its approved affiliates are
collectively referred to herein as the "Merged Entity
and the Merged Entity's Participating Approved
Affiliates") shall be added to the sum specified in
subsection (2) of this Section 8.1(e)(iv) for
purposes of this Section.
The amount of such incremental license fee will be (A)
$[Confidential Treatment Requested] in the event the
aggregate annual gross passenger revenue of (I) either
24
the Acquirer and the Acquirer's Participating Approved
Affiliates or the Merged Entity and the Merged Entity's
Participating Approved Affiliates, as applicable, and
(II) all Participating Approved Affiliates (in each
case measured by the Measurement Criteria) is
$[Confidential Treatment Requested] or greater but less
than $[Confidential Treatment Requested], or (B)
$[Confidential Treatment Requested] in the event the
aggregate annual gross passenger revenue of (I) either
the Acquirer and the Acquirer's Participating Approved
Affiliates or the Merged Entity or Merged Entity's
Participating Approved Affiliates, as applicable, and
(II) all Participating Approved Affiliates (in each
case measured by the Measurement Criteria) is
$[Confidential Treatment Requested] or greater. Any
$[Confidential Treatment Requested] license fee made by
the surviving entity or the assignee pursuant to clause
(A) of this Section shall not be credited against any
subsequent obligation of the surviving entity or
assignee to pay under clause (B) of this Section. Any
payment made by Hawaiian pursuant to clause (i) of
Section 8.1(a) above shall be fully credited against
any subsequent obligation of the surviving entity or
assignee to pay under clause (A) of this Section, and
any payment made by Hawaiian pursuant to clause (ii) of
Section 8.1(a) above shall be fully credited against
any subsequent obligation of the surviving entity or
assignee to pay under clause (B) of this Section.
Under no circumstances, whether as a result of multiple
transactions or otherwise, will the surviving entity or
assignee be obligated to pay EDS an incremental license
fee of (1) more than $[Confidential Treatment
Requested] in the event the aggregate gross passenger
revenue from (I) either the Acquirer and the Acquirer's
Participating Approved Affiliates or the Merged Entity
and the Merged Entity's Participating Approved
Affiliates, as applicable, and (II) all Participating
Approved Affiliates does not exceed $[Confidential
Treatment Requested], or (2) more than $[Confidential
Treatment Requested].
(v) The assignee in an asset sale agrees in writing to be
bound by all the terms and conditions of this
Agreement to the same extent as Hawaiian.
(f) Hawaiian will not, and will not permit its or its
Participating Approved Affiliates' employees, agents or
representatives to reverse engineer, reverse compile,
decompile or otherwise recreate the EDS-Developed
Software.
25
(g) If any portion of the EDS-Developed Software should come
into the possession of an unauthorized third party for
which Hawaiian is responsible, Hawaiian will, at its
expense, use reasonable efforts to retrieve such material
and, if unsuccessful in such efforts, will reimburse EDS
for all reasonable expenses incurred by EDS in attempting
to retrieve the materials.
(h) Hawaiian acknowledges that EDS has informed it that the
EDS-Developed Software is the valuable property and trade
secret of EDS, that any violation by Hawaiian of the
provisions of this Section would cause EDS irreparable
injury for which EDS would have no adequate remedy at
law, and that, in addition to any other remedies which
EDS may have, EDS will be entitled to preliminary and
other injunctive relief against any such violation.
(i) For purposes of this Section, the term
"Participating Approved Affiliate" shall mean:
(i) At any time during the term of this license, (1) an
entity that owns directly or indirectly 51% or more
of the issued and outstanding voting equity of
Hawaiian ("Hawaiian's Parent"), (2) an entity that
Hawaiian's Parent directly or indirectly owns 51% or
more of the issued and outstanding voting equity,
and (3) an entity that Hawaiian owns directly or
indirectly 51% or more of the issued and outstanding
voting equity; and
(ii) An entity that uses the EDS-Developed Software for
its own internal accounting operations and, together
with its affiliates, does not directly compete with
EDS in the development, integration, implementation
or maintenance of passenger revenue accounting
systems for airlines; and
(iii) An entity that has executed a ratification
agreement agreeing to be bound by the terms and
conditions of this Agreement.
8.2 Software Ownership. EDS and Hawaiian acknowledge and agree that EDS
retains all right, title and interest (including without limitation
copyrights and patent rights, if any) in the System, the EDS-Developed
Software and any New Version, except for those rights specifically granted to
Hawaiian in Section 8.1 hereof. The license of the EDS-Developed Software
granted to Hawaiian excludes any and all EDS Development Tools used by EDS in
creating the EDS-Developed Software, unless the EDS Development Tool is
embedded in the EDS-Developed Software. EDS retains all right, title and
interest in and to any EDS Development Tools, and all output generated
therefrom, and Hawaiian will have no interest or claim therein.
26
8.3 Risk of Loss and Assignment of Hardware and Third Party Software. Risk
of loss with respect to the Third Party Hardware and the Third Party Software
described in Schedule A will pass to Hawaiian upon delivery to Hawaiian. The
title or license, as applicable, for each item of Third Party Hardware and
Third Party Software will pass to, or be assigned to, Hawaiian upon full
payment of such items to EDS. With respect to the Third Party Software, EDS
will, in a timely manner, either arrange for a direct license between
Hawaiian and the applicable vendor, or a sublicense with EDS, to use such
Software. Hawaiian agrees to execute any such license or sublicense required
by the applicable vendor.
8.4 Other Customers, Residual Knowledge and Independent Development. EDS
will have the sole right to market and license to third parties the System,
the EDS-Developed Software (including any New Version) or any system similar
in scope and function to the System, and nothing in this Agreement will limit
or restrict EDS from doing so. Subject to EDS' obligations under Section 8.6
(which Section does not in any way limit EDS' ability to market the features
and functions described in the Specifications), EDS will be free to use the
ideas, concepts or know-how developed during the course of the development of
the System and the performance of the PRAS Services that are in non-tangible
form and may be retained by EDS employees.
8.5 Hawaiian Data. Hawaiian data shall remain Hawaiian's property.
Hawaiian hereby authorizes EDS to have access to and to make use of
Hawaiian's data as is appropriate solely for the performance by EDS of its
obligations under this Agreement.
8.6 Confidentiality. Except as otherwise provided in this Agreement, each
of the parties agrees that all confidential documents, the EDS-Developed
Software, the Specifications, the Documentation and any information
(including all computer code and related materials) received or otherwise
obtained from the other party pursuant to this Agreement, whether before or
after the Effective Date, shall be, and shall be deemed to have been,
received in strict confidence and shall be used only for the purposes of
carrying out the obligations of, or as otherwise contemplated by, this
Agreement. Without obtaining the prior written consent of the other party,
neither party shall disclose any such information to any third party, and
each party will disclose such information only to such of its officers,
employees and agents that have a need to know such information for the
purposes contemplated by this Agreement; provided, however, that this Section
shall not prevent a party from disclosing any such information that (a) is or
becomes generally available to the public other than as a result,
27
directly or indirectly, of a disclosure by such party or by other persons to
whom such party disclosed such information, (b) is already in the possession
of such party without being subject to another confidentiality agreement, (c)
is or becomes available to such party on a non-confidential basis from a
source other than the other party or its representatives, provided that such
source is not bound by a confidentiality agreement with the other party, (d)
is independently developed by such party without the use of the other party's
confidential information, or (e) is required to be disclosed pursuant to a
requirement of any governmental authority or any statute, rule or regulation,
provided that such party gives the other party notice of such requirement
prior to any such disclosure.
The parties acknowledge that Hawaiian may determine to file this Agreement
with the Securities and Exchange Commission (the "SEC") and relevant stock
exchanges (the "Exchanges") pursuant to the regulations and rules of the SEC
and the Exchanges. In connection with any such filing, Hawaiian will seek
confidential treatment of certain portions of this Agreement (which
confidential treatment cannot be assured). EDS will assist Hawaiian in the
preparation of the request and will reimburse Hawaiian for all reasonable
fees, costs and expenses (excluding attorney's fees), up to $1,000, related
to the electronic filing of such request via XXXXX (as such term is defined
by the SEC). The parties agree to work together in good faith to minimize
the fees, costs and expenses related to such filing.
8.7 Source Code Escrow. Hawaiian may, at any time after Final Acceptance
and at its option, require the establishment of a source code escrow with an
independent third party experienced in these transactions (such as Data
Securities International, Inc.). All costs associated with the creation and
administration of the source code escrow that are charged by the escrow agent
shall be borne by Hawaiian. Upon receipt of Hawaiian's written notification
of its election to establish a source code escrow, EDS shall, at Hawaiian's
expense in accordance with the terms of Article VI, promptly cooperate in all
reasonable respects, including without limitation, (a) executing escrow
documentation with reasonable and customary terms and conditions, (b)
delivering full and accurate source code for the then-current version of the
EDS-Developed Software, and (c) delivering source code to the escrow agent
for each subsequent New Version of the EDS-Developed Software concurrent with
its issuance and release. The escrow instructions will include a provision
instructing the escrow agent to deliver the source code to Hawaiian in the
event of EDS' bankruptcy, cessation of business or EDS' discontinuation of
maintenance and support for EDS*PRAS. The parties agree that, if such source
code is delivered to Hawaiian, it will be subject to the same licensing terms
set forth in Section 8.1 of this Agreement. Hawaiian further agrees to use
the source code for the sole purpose of maintaining and supporting the
EDS-Developed Software for the benefit of Hawaiian and/or any Participating
Approved Affiliates.
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Article IX
EDS Charges
9.1 Compensation to EDS. In consideration for the System and the PRAS
Services, Hawaiian shall pay to EDS the charges set forth on Schedule C (the
"EDS Charges"). The EDS Charges shall be subject to adjustment (a) in the
event of a Change Order, as provided in Article VI and (b) for cost of living
increases, as provided in Section 9.5. Charges for any partial month will be
prorated on a per diem basis.
9.2 Travel/Out-of-Pocket Expenses. Except as provided in Section 7.9, EDS
will be responsible for the EDS travel-related expenses incurred in
performing the PRAS Services. However, Hawaiian will pay, or reimburse EDS
for, the reasonable out-of-pocket expenses, incurred by EDS in connection
with a request by Hawaiian that EDS travel in connection with any additional
services or with the prior approval of Hawaiian. EDS will furnish to
Hawaiian receipts related to travel or out-of-pocket expenses over $75.00.
9.3 Time and Methodology of Payment. Hawaiian will pay EDS all amounts due
under this Agreement by wire transfer to a bank account designated by EDS.
Any amount due EDS pursuant to this Agreement will be due and payable 15
(fifteen) calendar days after Hawaiian's receipt of an invoice from EDS. Any
amount due EDS pursuant to this Agreement that is not paid when due and
payable shall thereafter bear interest until paid at a rate of interest equal
to the lesser of (a) 2% per annum more than the prime or base rate
established from time to time by Citibank, N.A. in New York, New York, or (b)
the maximum rate of interest allowed by applicable law.
If Hawaiian disputes in good faith whether an invoice is accurate or proper,
then Hawaiian will pay EDS the charges described in Sections 1, 2 and 5 of
Schedule C, and pay any other charges listed on such invoice that Hawaiian
disputes in good faith into an interest bearing escrow account (the "Escrow
Account") established as follows:
(a) The Escrow Account will be opened by the parties in the
name of the parties at a major national bank selected by
the parties.
(b) The Escrow Account will be established pursuant to an
escrow agreement that provides that the funds therein,
including accrued interest, will be disbursed to EDS
and/or Hawaiian, as applicable, in accordance with the
mutual agreement of EDS and Hawaiian or an arbitration or
judicial decision binding on EDS and Hawaiian.
29
(c) After resolution of any dispute with respect to which
funds were placed in the Escrow Account, and after
payment from the Escrow Account of all amounts, if any,
due to EDS with respect to that dispute, any remaining
portion of the funds which were placed in the Escrow
Account with respect to that dispute, including
undisbursed accrued interest thereon, will be promptly
paid to Hawaiian.
(d) Subject to Section 9.3(c) above, to the extent funds
which were placed in the Escrow Account with respect to
any dispute are not sufficient to satisfy any award or
mutually agreed amount due to EDS with respect to that
dispute, Hawaiian will promptly pay to EDS the balance
due, including any interest computed in accordance with
this Section.
(e) The prevailing party shall be entitled to reimbursement
from the non-prevailing party for fees and costs
incurred by the prevailing party in connection with the
Escrow Account.
9.4 Taxes. There will be added to any amounts due under this Agreement, and
Hawaiian shall pay to EDS at the times Hawaiian pays such amounts due under
this Agreement, amounts equal to any taxes, however designated or levied,
based upon such amounts due, or upon this Agreement or the System or other
services and items provided by EDS pursuant to this Agreement, or their use,
including state and local privilege or excise taxes based on gross revenue,
sales and use taxes and any taxes or amounts in lieu thereof paid or payable
by EDS in respect of the foregoing, exclusive, however, of EDS' franchise
taxes and taxes based on net worth or net income of EDS.
9.5 Cost of Living Adjustments. The portion of the EDS Charges relating to
the Maintenance Support Services shall be indexed to the Consumer Price Index
for All Urban Consumers, U.S. City Average, for All Items (1982-84 = 100), as
published by the Bureau of Labor Statistics of the U.S. Department of Labor
(the "CPI"). If, on each anniversary of the first day of month sixteen of
this Agreement (measuring from the Effective Date), the CPI for the calendar
month immediately preceding such day (the "Dollars Current Index") is higher
or lower than the CPI twelve months prior thereto (the "Dollars Base Index"),
then, effective as of such anniversary, the EDS Charges (excluding the
value-based payments described on Schedule C) shall be increased or decreased
by the percentage that the Dollars Current Index increased or decreased from
the Dollars Base Index subject to a maximum increase or decrease in any one
year of [Confidential Treatment Requested]%. If the CPI is no longer
published or is substantially changed, then Hawaiian and EDS will substitute
another similar mutually agreeable measure for the CPI.
30
9.6 Bonus Payments. If EDS delivers either the Phase I Implementation
Deliverable or the Phase II Implementation Deliverable to Hawaiian more than
thirty (30) calendar days prior to the date of the applicable Milestone (as
identified in Schedule B and as may be adjusted in accordance with the terms
of this Agreement), EDS will be entitled to a bonus (per Deliverable) from
Hawaiian, payable as provided below, in an amount equal to the product of (a)
the number of full months between the date of the applicable Milestone (as
adjusted, if applicable) and the date the applicable Deliverable was first
delivered by EDS to Hawaiian for user acceptance testing (the "Bonus Delivery
Date"), as may be adjusted in accordance with the following sentence, and (b)
$[Confidential Treatment Requested] per Deliverable. For purposes of this
bonus calculation only, if during user acceptance testing, Hawaiian delivers
to EDS written notice of a valid nonconformance (as determined in accordance
with Section 2.4), then EDS will have fourteen (14) calendar days from the
date the parties mutually determine that such nonconformance was valid to
correct and redeliver the Phase to Hawaiian. Hawaiian and EDS shall each act
in good faith to determine as promptly as practicable whether a reported
nonconformance is valid. If EDS corrects (as mutually determined by the
parties in accordance with Section 2.4) and redelivers the Phase within such
time period, then such fourteen day period will not be added to the Bonus
Delivery Date for purposes of the bonus calculation above, and accordingly,
the original Bonus Delivery Date will remain in effect. If EDS does not
correct and redeliver within such time period, then the period of time
(measured from the determination date of a valid nonconformance) it takes EDS
to actually correct and redeliver the Phase (in accordance with Section 2.4)
will be added to the Bonus Delivery Date for purposes of the bonus
calculation above. Hawaiian agrees to pay EDS any such bonus immediately
after Hawaiian's actual or deemed acceptance of the Construction and Testing
Phase of the Deliverable to which the bonus relates.
Article X
Dispute Resolution
10.1 Dispute Resolution. The parties agree to resolve any dispute
relating to this Agreement as set forth below:
(a) Negotiation. If any dispute between the parties of any
kind or nature occurs, then, upon the written request of
either party, each party will appoint a senior
representative whose task will be to meet to resolve
such dispute. Such representatives will discuss the
dispute or controversy and negotiate in good faith
towards resolution of the dispute or renegotiate the
applicable section or provision of this Agreement
without the necessity of formal proceedings.
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(b) Arbitration. If the designated representatives conclude
in good faith that amicable resolution through such
continued negotiation of the matter is not likely to
occur, then, upon the request of either party, the
dispute will be settled by final and binding arbitration
conducted by one or more arbitrators in accordance with
the Commercial Arbitration Rules of the American
Arbitration Association then in effect (the "Rules").
Unless otherwise mutually agreed upon by the parties, the
arbitration hearings shall be held in the City of Los
Angeles, California. The arbitrators shall allow such
discovery as is appropriate, consistent with the purposes
of arbitration in accomplishing fair, speedy and cost
effective resolution of disputes. The arbitrators shall
reference the rules of evidence of the Federal Rules of
Civil Procedure then in effect in setting the scope of
discovery. Judgment upon the award rendered in any such
arbitration may be entered in any court having
jurisdiction thereof, or application may be made to such
court for a judicial acceptance of the award and an
enforcement, as the law of such jurisdiction may require
or allow; provided however, any such award rendered by
the arbitrators shall be strictly in conformance to, and
in accordance with, the terms and conditions of this
Agreement.
10.2 Exclusive Remedy. Other than any action necessary to enforce the award
of the arbitrators, the parties agree that the provisions of this Article X
are a complete defense to any suit, action or other proceeding instituted in
any court or before any administrative tribunal with respect to any dispute,
controversy or claim arising under or in connection with this Agreement.
Nothing in this Article X prevents the parties from exercising their rights
to terminate this Agreement in accordance with this Agreement.
10.3 Continued Performance. If the parties are in arbitration for any reason
(except if the Agreement has been terminated), EDS will continue to perform
its obligations under this Agreement during the arbitration proceedings, but
only to the extent that Hawaiian continues to pay EDS in accordance with this
Agreement during the arbitration proceedings.
Article XI
Termination
11.1 Termination for Cause.
(a) The parties acknowledge and agree that delivery of each
Deliverable in accordance with the Milestone dates set
forth in Schedule B is important to both parties. In that
regard, EDS agrees to use reasonable efforts to keep
appropriate resources on this project, unless this
32
Agreement is terminated for any reason. If, and to the
extent caused solely by EDS, either the Phase I
Implementation Deliverable or the Phase II Implementation
Deliverable is (1) actually delayed by more than
[Confidential Treatment Requested] after the date of the
applicable Milestone (as identified on Schedule B and as
may be adjusted in accordance with the terms of this
Agreement) (an "Actual [Confidential Treatment Requested]
Delay"), or (2) first delivered to Hawaiian prior to an
Actual [Confidential Treatment Requested] Delay (the
"Original Delivery Date") and, after adding all
Adjustments (as defined in the following paragraph), such
adjusted delivery date results in a delay of more than
[Confidential Treatment Requested] after the date of the
applicable Milestone (as identified on Schedule B and as
may be adjusted in accordance with the terms of this
Agreement) (a "Deemed [Confidential Treatment Requested]
Delay), then, Hawaiian may elect to terminate this
Agreement by giving EDS written notice of such
termination, provided that Hawaiian makes such election
within thirty (30) calendar days after the Actual
[Confidential Treatment Requested] Delay or the Deemed
[Confidential Treatment Requested] Delay, as applicable,
unless the parties otherwise mutually agree.
For purposes of this termination provision only, if EDS
delivers a Deliverable to Hawaiian prior to an Actual
[Confidential Treatment Requested] Delay, and if during user
acceptance testing, Hawaiian delivers to EDS written notice
of a valid nonconformance (as determined in accordance with
Section 2.4), then EDS will have twenty-eight (28) calendar
days from the date the parties mutually determine that such
nonconformance was valid to correct and redeliver the Phase
to Hawaiian. Hawaiian and EDS shall each act in good faith
to determine as promptly as practicable whether a reported
nonconformance is valid. If EDS corrects (as mutually
determined by the parties in accordance with Section 2.4) and
redelivers the Phase within such time period, then the
Original Delivery Date will remain in effect. If EDS does
not correct and redeliver within such time period, then the
period of time (measured from the determination date of a
valid nonconformance) it takes EDS to actually correct and
redeliver the Phase (in accordance with Section 2.4) will be
added to the Original Delivery Date (an "Adjustment") for
purposes of determining a Deemed [Confidential Treatment
Requested] Delay.
(i) Remedy Due to Lateness of Phase I Implementation
Deliverable. If Hawaiian terminates this Agreement in
accordance with Section 11.1(a) due to the lateness of
the Phase I Implementation Deliverable, then EDS shall
promptly [Confidential Treatment Requested].
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(ii) Remedy Due to Lateness of Phase II Implementation
Deliverable. If Hawaiian terminates this Agreement in
accordance with Section 11.1(a) due to the lateness of
the Phase II Implementation Deliverable, then (1) EDS
shall [Confidential Treatment Requested].
(iii) Sole and Exclusive Remedy. Hawaiian and EDS expressly
acknowledge that the remedies and damages set forth in
this Section 11.1(a) represent the parties' negotiated
agreement as to any losses or damages to Hawaiian
resulting from EDS' late delivery of either
Deliverable as described in Section 11.1(a).
Accordingly, Hawaiian agrees that the remedies and
damages described in this Section 11.1(a) constitute
Hawaiian's sole and exclusive remedies and damages
relating to late delivery of a Deliverable and
Hawaiian will not seek any other remedies or damages,
in contract or otherwise, related to such late
delivery.
(b) If, during the Maintenance Period, the EDS-Developed
Software fails to conform in all material respects to the
then-current Documentation, and EDS can not substantially
cure such failure within a reasonable period of time
after being given written notice specifying the default,
then Hawaiian, by giving written notice to EDS, may
terminate this Agreement as of a date specified in the
notice of termination.
(c) If either party materially defaults in the performance
of any of its duties or obligations under this Agreement
(except for a default in payments to EDS and the default
specified in Section 11.1(a) or (b)), and does not
substantially cure such default within sixty (60)
calendar days after being given written notice
specifying the default, or, with respect to any default
which cannot reasonably be cured within sixty (60)
calendar days, if the defaulting party fails to proceed
within sixty (60) calendar days after being given such
notice to commence curing said default and thereafter to
proceed with all due diligence to substantially cure
such default, then the party not in default, by giving
written notice to the defaulting party, may terminate
this Agreement as of a date specified in the notice of
termination.
11.2 Termination for Nonpayment. If Hawaiian defaults in the payment when
due of any amount due to EDS pursuant to this Agreement and does not cure
such default within ten (10) calendar days after being given written notice
of such default, then EDS, by giving written notice of such default to
Hawaiian, may terminate this Agreement as of a date specified in the notice
of termination.
34
11.3 Termination for Insolvency. If either party to this Agreement becomes
or is declared insolvent, is the subject of any proceedings relating to
suspension of payments or its liquidation, insolvency or for the appointment
of a receiver or similar officer for it, makes an assignment for the benefit
of all or substantially all of its creditors, or enters into an agreement for
the composition, extension, or readjustment of all or substantially all of
its obligations, then the other party hereto, by giving written notice
thereof to such party, may terminate this Agreement as of a date specified in
the notice of termination.
11.4 Rights Upon Termination. If Hawaiian terminates this Agreement (a) in
accordance with Section 11.1(c) for breach of the warranty provision set
forth in Section 3.1, or (b) in accordance with Section 12.1(a)(ii) for
intellectual property infringement, then, in accordance with such Sections,
Hawaiian will return the EDS-Developed Software to EDS and EDS will refund to
Hawaiian the portion of the EDS Charges paid by Hawaiian to EDS for the
EDS-Developed Software. Upon termination of this Agreement for any reason
(except as described in Section 11.1(a)), then, in addition to any other
rights that either party may have, (a) Hawaiian shall promptly (i) return to
EDS all copies of the Deliverables and the EDS-Developed Software for which
Hawaiian has not fully paid (full payment shall include payment of the
value-based payments described on Schedule C), and (ii) return to EDS all
Third Party Hardware and Third Party Software for which Hawaiian has not
fully paid, and (b) EDS will promptly return to Hawaiian all copies of
Hawaiian's confidential information and any Hawaiian data. Further, EDS will
be under no further obligation to provide the System or the EDS-Developed
Software.
Article XII
Indemnities and Liability
12.1 Intellectual Property Indemnity.
(a) EDS Developed Software.
(i) EDS will defend any action brought against Hawaiian
and/or any Participating Approved Affiliate to the
extent that such action is based on a claim by a
third party that the EDS-Developed Software (which,
for purposes of this indemnity, includes any third
party Software code embedded within the
EDS-Developed Software), or any part thereof, (1)
infringes a copyright perfected under a United
States statute, (2) infringes a patent granted under
United States law, or (3) constitutes an unlawful
disclosure, use or misappropriation of another
35
party's trade secret or other intellectual property
rights. EDS will bear the expense of such defense
and pay any and all costs, expenses, losses,
judgments, fines, damages and attorneys' fees that
are finally awarded by a court of competent
jurisdiction and attributable to such claim or
result from a settlement thereof, provided that
Hawaiian and any Participating Approved Affiliates
notify EDS promptly in writing of the claim and that
Hawaiian and any Participating Approved Affiliate
allow EDS to fully direct the defense or settlement
of such claim. Failure to provide such notice shall
only relieve EDS of its obligations under this
Section if and to the extent that EDS is prejudiced
thereby. EDS shall not be responsible for any
settlement or compromise made without its consent.
(ii) Should the EDS-Developed Software, or any part
thereof, become, or in EDS' opinion be likely to
become, the subject of a claim by a third party of
infringement of a copyright or patent or other
intellectual property right, EDS will use reasonable
efforts to procure for Hawaiian and any Participating
Approved Affiliates the right to continue using the
EDS-Developed Software, or replace or modify the
EDS-Developed Software to make its use under this
Agreement non-infringing. If neither option is
reasonably available in EDS' judgment, (1) Hawaiian
and any Participating Approved Affiliates shall
return the EDS-Developed Software to EDS, (2) EDS
shall reimburse Hawaiian for all amounts paid to EDS
for the EDS-Developed Software, and (3) the rights
granted under this Agreement shall terminate, subject
to Section 13.13.
(iii) EDS shall have no liability to Hawaiian and/or any
Participating Approved Affiliates under this
Agreement (1) to the extent that any claim of
infringement is based upon the use of the
EDS-Developed Software in connection or in
combination with hardware, equipment, devices or
Software not listed in Sections 1(A) or 1(B) of
Schedule A or approved by EDS or used in a manner
for which the EDS-Developed Software was not
designed, and (2) for maintenance, modifications,
updates, enhancements and improvements to the
EDS-Developed Software made by any party other than
EDS. This Section states EDS' entire obligation to
Hawaiian and/or any Participating Approved
Affiliates regarding infringement.
(iv) Hawaiian will indemnify EDS in like manner, and to
the same extent and subject to the same exceptions as
above, for claims against EDS that arise from
modifications, updates, enhancements and improvements
36
to the EDS-Developed Software made by Hawaiian or
third parties acting on behalf of Hawaiian.
(b) Software Provided By Hawaiian. Hawaiian agrees to defend
EDS against any action to the extent that such action is
based on a claim that Software, or any part thereof,
provided and owned by Hawaiian, (i) infringes a copyright
perfected under a United States statute, (ii) infringes a
patent granted under United States law or (iii)
constitutes an unlawful disclosure, use or
misappropriation of another party's trade secret or other
intellectual property right. Hawaiian will bear the
expense of such defense and pay any and all costs,
expenses, losses, judgments, fines, damages and
attorneys' fees that are attributable to such claim and
finally awarded by a court of competent jurisdiction.
With respect to any third party licensed Software
provided by Hawaiian, Hawaiian will assign to EDS, where
permitted, or enforce for EDS' benefit (without resort to
litigation or other dispute resolution process) any
warranties or indemnities extended to Hawaiian by the
applicable vendors.
12.2 Cross Indemnities.
(a) Hawaiian and EDS each will be responsible for damages to
their respective tangible personal and real property
(whether owned or leased), and each party agrees to look
to their own insuring arrangements with respect to such
damages. Hawaiian and EDS each waive all rights to
recover against each other for any loss or damage to
their respective tangible personal property (whether
owned or leased) from any cause covered by insurance
maintained by each of them, including their respective
deductibles or self-insured retentions. Hawaiian and
EDS will each cause their respective insurers to issue
appropriate waivers of subrogation rights endorsements to
all property insurance policies maintained by each party.
Each party will give the other party written notice if a
waiver of subrogation is unobtainable, or obtainable only
at additional expense. If the party receiving such notice
agrees to reimburse the other party for such additional
expense, the other party shall obtain such waiver of
subrogation. If a waiver is unobtainable or if a party
elects not to pay the additional expense of a waiver, then
neither party shall waive their insurers subrogation
rights.
(b) Hawaiian and EDS each will be responsible for claims for
the death of or personal injury to any person (including
any employee of either party), and claims for damages to
any third party's tangible personal or real property
(whether owned or leased), in accordance with the common
law of the jurisdiction in which such claim is alleged to
37
have occurred. Each party will indemnify, defend and
hold harmless the other party from any and all claims,
actions, damages, liabilities, costs and expenses,
including without limitation, reasonable attorneys' fees
and expenses, arising out of claims for which the
indemnitor is responsible under the preceding sentence.
12.3 Indemnity Procedures. Notwithstanding anything herein to the contrary,
no indemnity obligation set forth in this Article XII shall apply unless the
party claiming indemnification notifies the other promptly of any matters in
respect of which the indemnity may apply and of which the notifying party has
knowledge and gives the other party full opportunity to control the response
thereto and the defense thereof, including, without limitation, any agreement
relating to the settlement thereof. Failure to so provide such notice shall
only relieve the indemnitor of its indemnity obligations if and to the extent
that the indemnitor is prejudiced thereby.
12.4 Limitation of Liability.
(a) If EDS shall be liable to Hawaiian for any matter
relating to or arising in connection with this
Agreement, whether based on an action or claim in
contract, equity, negligence, intended conduct, tort or
otherwise, the amount of damages recoverable against EDS
for all events, acts or omissions shall not exceed in
the aggregate $[Confidential Treatment Requested]. Such
dollar limitation of liability, however, shall not apply
to [Confidential Treatment Requested]. In those
instances only, the dollar limitation of liability shall
be the amount of the refund. In no event will the
measure of damages include, nor will EDS be liable for,
any amounts for loss of income, profit or savings or
indirect, incidental, consequential, or punitive damages
of any party, including third parties.
(b) The limitations set forth in Section 12.4(a) shall not
apply to claims covered by the indemnification obligation
set forth in Section 12.1(a)(i).
(c) The provisions of this Section shall survive termination
of this Agreement for any reason.
12.5 Contractual Limitation Period. No claim or cause of action
that accrued more than two years prior to the filing of a suit or
claim in arbitration may be asserted against EDS.
38
12.6 Acknowledgment. Hawaiian and EDS expressly acknowledge that the
limitations contained in Section 12.4 represent the parties' agreement with
respect to the allocation of risks between the parties, including the level
of risk to be associated with the provision of EDS' services pursuant to
this Agreement as related to the payments to be made to EDS for such
services, and each party fully understands and accepts such limitations.
Article XIII
Miscellaneous
13.1 Approvals and Similar Actions. Where agreement, approval, acceptance,
consent or similar action by either party is required by any provision of
this Agreement, such action shall not be unreasonably delayed or withheld.
13.2 Relationship of Parties. EDS, in furnishing the services described in
this Agreement to Hawaiian, is acting only as an independent contractor. EDS
does not undertake by this Agreement or otherwise to perform any obligation
of Hawaiian, whether regulatory or contractual, or to assume any
responsibility for Hawaiian's business or operations. EDS shall not be
considered or be deemed to be an agent, employee, joint venturer or partner
of Hawaiian, and no other relationship is intended or created by and between
EDS and Hawaiian.
13.3 Restriction on Hiring. Each party agrees that, during the term of this
Agreement and for a period of two years thereafter, it will not, except with
the other party's prior written consent, solicit for its employment, employ,
engage as an independent contractor, or otherwise obtain the services of any
person employed then or within the preceding twelve months by the other party
if that person was involved in the performance of this Agreement.
13.4 Force Majeure. Each party shall be excused from its nonmonetary
performance obligations under this Agreement for any period, and the time of
any performance shall be extended as reasonably necessary under the
circumstances, to the extent that such party is prevented from performing, in
whole or in part, its obligations under this Agreement, as a result of acts
or omissions by the other party or an act of God, natural disaster,
hurricane, governmental authority, war, civil disturbance, court order, labor
dispute, third party nonperformance or any other cause beyond its reasonable
control, including without limitation failures or fluctuations in electrical
power, heat, light, air conditioning or telecommunications equipment or lines
or other equipment. Such nonperformance shall not be a default under this
Agreement or a ground for termination of this Agreement.
39
13.5 Compliance with Laws. In performing its obligations under this
Agreement, neither party shall be required to undertake any activity that
would conflict with the requirements of any applicable statute, rule,
regulation, interpretation, judgment, order or injunction of any governmental
authority.
13.6 Attorneys' Fees. If any legal action or other proceeding is brought for
the enforcement of this Agreement or any arbitration award, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any
of the provisions of this Agreement, the prevailing party will be entitled to
recover reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
13.7 Media Releases. Each party will coordinate with the other party
regarding any media release, public announcement or similar disclosure
relating to this Agreement or its subject matter and will give the other
party a reasonable opportunity to review and comment on the content of such
release, announcement or disclosure prior to its release. EDS may reference
Hawaiian as a customer, however, EDS will not otherwise use this Agreement as
an advertising tool without the prior consent of Hawaiian, which consent will
not be unreasonably withheld or delayed. This Section does not alter the
restrictions on the disclosure of confidential information set out in Section
8.6 of this Agreement and will not be construed so as to delay or restrict
either party from disclosing any information required to be disclosed in
order to comply with any applicable law, rule or regulation.
13.8 Notices. Wherever under this Agreement one party is required or
permitted to give written notice to the other, such notice, (a) if delivered
personally, shall be deemed given when delivered in hand to an appropriate
representative of the other party, (b) if delivered by mail, shall be deemed
given three (3) days after being mailed by United States mail, registered or
certified mail, return receipt requested, postage prepaid, and addressed as
described below, or (c) if delivered by telecopy, shall be deemed given when
sent to the fax number set forth below and confirmed (with the notice
concurrently mailed as provided above):
40
In the case of EDS:
Electronic Data Systems Corporation
0000 Xxxxxx Xxxxx
Mail Stop H3-6C-46
Xxxxx, Xxxxx 00000
Fax Number: 000-000-0000
Phone Number: 000-000-0000
Attention: President, Air Transport Services SBU
With a copy to:
Electronic Data Systems Corporation
0000 Xxxxxx Xxxxx
Mail Stop H3 3A-05
Xxxxx, Xxxxx 00000
Fax Number: 000-000-0000
Phone Number: 000-000-0000
Attention: General Counsel
In the case of Hawaiian:
Hawaiian Airlines, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx X000
Fax Number: 000-000-0000
Phone Number: 000-000-0000
Attention: Executive Vice President/CFO
With a copy to:
Hawaiian Airlines, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx X000
Fax Number: 000-000-0000
Phone Number: 000-000-0000
Attention: General Counsel and Corporate Secretary
41
Either party may from time to time change its address, fax or phone number
for notification purposes by giving the other party prior written notice of
the new address and the date upon which it will become effective.
13.9 Severability. If any provision of this Agreement is held illegal,
unenforceable or void, then both parties will be relieved of all obligations
arising under that provision, but only to the extent the provision is
illegal, unenforceable or void, it being the intent and agreement of the
parties that this Agreement will be deemed amended by modifying such
provision to the extent necessary to make it valid and enforceable while
preserving its intent or, if that is not possible, by substituting therefor
another provision which is valid and enforceable and achieves the same
objectives.
13.10 Amendment. This Agreement may not be modified, changed or amended
except by a written instrument executed by each of the parties to this
Agreement.
13.11 Waivers. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver
shall be effective only if it is in writing and signed by the party against
which such waiver is to be asserted. Unless otherwise expressly provided in
this Agreement, no delay or omission on the part of any party in exercising
any right or privilege under this Agreement shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right or
privilege under this Agreement operate as a waiver of any other right or
privilege under this Agreement nor shall any single or partial exercise of
any right or privilege preclude any other or further exercise thereof or the
exercise of any other right or privilege under this Agreement.
13.12 Entire Agreement. All Schedules attached to this Agreement, the Change
Orders and the Project Plan are incorporated into, and expressly made a part
of, this Agreement. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter of this Agreement and
supersedes all prior and contemporaneous agreements and understandings,
whether written or oral, between the parties with respect to the subject
matter of this Agreement, and there are no representations, understandings or
agreements relating to this Agreement that are not fully expressed in this
Agreement.
13.13 Survival. Each party's obligations under Sections 8.1, 8.6, 12.1 and
13.3 and any other provisions of this Agreement that should survive in order
to effectuate the intent of the parties will survive and continue after
termination of this Agreement.
42
13.14 Export Compliance. The System and the PRAS Services are subject to any
United States laws, rules, regulations, orders, treaties and other
restrictions that may be imposed from time to time on the exportation or
re-exportation of technical data, or of information about technical data.
Hawaiian will not export or permit the re-export of the System or the PRAS
Services (a) in violation of any such restriction; and (b) without obtaining
the appropriate export license from the Government of the United States. EDS
may restrict Hawaiian's export or re-export of the System or the PRAS
Services if Hawaiian will not agree to additional license provisions
necessary in the sole discretion of EDS to adequately protect EDS'
intellectual property rights; if the destination country does not adequately
protect intellectual property rights; or if Hawaiian will not agree to fully
comply with the applicable laws of the destination country.
13.15 Binding Nature and Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Neither party may assign this Agreement
without obtaining the prior written consent of the other party, which consent
will not be unreasonably withheld or delayed.
13.16 Third Party Beneficiaries. Except as otherwise provided herein, this
Agreement is for the benefit of the parties hereto and is not intended to
confer any rights or benefits on any third party, including any employee,
creditor or affiliate of either party.
13.17 Governing Law. This Agreement shall be construed in accordance with,
and the rights of the parties shall be governed by, the laws of the State of
Hawaii without regard to the principles of conflicts of laws.
13.18 Certain Construction Rules. The Article and Section headings and the
table of contents used in this Agreement are for reference only and in no way
define, limit, extend or describe the scope or intent of any provisions of
this Agreement. In addition, as used in this Agreement any reference to a
"Section," "Article," or "Schedule" is a reference to a Section or Article of
this Agreement or a Schedule attached to this Agreement.
13.19 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which taken together
shall constitute one instrument.
43
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Agreement as of the date first set forth above.
HAWAIIAN AIRLINES, INC. ELECTRONIC DATA SYSTEMS
CORPORATION
By:__________________________ By:___________________________
Name:________________________ Name:_________________________
Title:_______________________ Title:_________________________
By:__________________________
Name:________________________
Title:_________________________
44
SCHEDULE A
SCOPE OF SERVICES
EDS will provide the following System and PRAS Services:
1. The System. EDS will provide the System as described in this
Agreement in accordance with its System Life Cycle Phases, as described in
Section 3 to this Schedule A.
A. EDS-Developed Software. The Software developed by EDS to meet
the Specifications, as such may be modified in accordance with Article VI
of this Agreement or in connection with Section 3 of this Schedule.
B. Third Party Software.
1 Sybase SQL Server (with user license for up to 60 users)
1 Sybase SQL Manager
1 Sybase SQL Monitor
1 Oracle database management system license for 10
concurrent users, if necessary for the Proration Software
1 Maestro for UNIX (job scheduler)
C. Third Party Hardware.
Server
1 9000/800 HP UNIX K class Server with uninterrupted power supply
and CD ROM
User Equipment
60 Pentium PCs, with 16MB of RAM and 100 Mhz or faster processors,
Windows 95 operating environment, and 15" color monitors
60 Network Cards
D. Interfaces. EDS will develop the required automated interfaces
between the EDS-Developed Software and the Software applications identified
in Section 2 of the Specifications.
The parties acknowledge and agree that EDS may substitute any item of
Third Party Software or Third Party Hardware for a similar or better
product after consultation with Hawaiian.
A-1
EDS and Hawaiian will diligently work together in good faith to select and
implement appropriate Third Party Software and Third Party Hardware that will
enable an average on-line response time of [Confidential Treatment Requested]
for the System utilizing the PCs (as described in Section 1(C) of Schedule A,
or as modified by mutual agreement of the parties in accordance with Section
4.1) connected directly to the server (as described in Section 1(C) of
Schedule A, or as modified by mutual agreement of the parties in accordance
with Section 4.1) bypassing Hawaiian's local area network/wide area network
capabilities. The average response time calculation will (a) include all
responses executed at the PC workstation and those that require the System to
communicate with the server described above, (b) exclude reports and large
database queries, and (c) exclude delays caused by (i) scheduled downtime,
(ii) circumstances that constitute a force majeure event under Section 13.4,
and (iii) a Hawaiian act, omission or failure to perform under this
Agreement. Hawaiian will be responsible for the local area network
requirements and activities related to the System and for the overall
operation and performance of the System after final implementation.
2. PRAS Services. The PRAS Services are the services described in
Article IV and Section 3.2.
3. Description of System Life Cycle Phases.
A. Definition and Analysis Phase
EDS will analyze Hawaiian's current environment in order to determine the
requirements for implementing the System for Hawaiian. This Phase will
include further defining the functionality described in the Specifications,
and reaffirming or modifying, as necessary, the Project Plan.
B. Business Design Phase
During the Business Design Phase, EDS will address those functions of the
System that will be newly developed or customized for Hawaiian. EDS will
develop detailed business requirements for new functions to be developed for
Hawaiian (the "Business Design").
C. Construction and Testing Phase
During this Phase, EDS will translate the designs and specifications of the
newly developed functions of the EDS-Developed Software, as described in
Section 2 of the Specifications, into the System. EDS will develop and then
unit and system test such Software; develop technical operation/installation
documentation; develop user guides for operations; and develop training
materials. Hawaiian will conduct user acceptance testing of the System with
assistance from EDS in accordance with mutually agreed upon test scripts and
the provisions of Section 2.4 of this Agreement.
A-2
D. Implementation Phase.
This Phase, which will begin after Hawaiian has approved user acceptance
testing, includes the installation of the Deliverable into the production
environment, moving programs and conducting any agreed upon conversions.
A-3
SCHEDULE B
MILESTONES AND DELIVERABLES
As of the Effective Date, and unless otherwise mutually agreed to by
Hawaiian and EDS, the Project Plan will include the following
Milestones and Deliverables:
Deliverable Milestone
Phase 1 Implementation [Confidential Treatment
Requested]
Phase 1 Implementation is the sales audit function of the System
completed and available for Hawaiian's user acceptance testing by the
Milestone date. The sales audit function includes the following:
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
Deliverable Milestone
Phase 2 Implementation [Confidential Treatment
Requested]
Phase 2 Implementation is the full System completed and available for
Hawaiian's user acceptance testing by the Milestone date. The
remaining functions include the following:
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
B-1
SCHEDULE C
EDS CHARGES
1. Monthly Charges. During the term of this Agreement, EDS will
charge, and Hawaiian will pay EDS, the following monthly charges
in accordance with Article IX:
Calendar Month of the Agreement Monthly Charge
February 1997 $[Confidential Treatment Requested]
March 1997 through January 1998 $[Confidential Treatment Requested]
February 1998 through April 1998 $[Confidential Treatment Requested]
May 1998 through May 2003 $[Confidential Treatment Requested]
Each monthly charge will be invoiced on the first day of the
month.
2. Third Party Hardware and Third Party Software Charge. EDS will
charge, and Hawaiian will pay EDS, a charge of $[Confidential
Treatment Requested] for the Third Party Hardware, Third Party
Software, and maintenance support as described in Section 3.4(d),
which charge will be invoiced to Hawaiian at the time the order
for such hardware and Software is placed.
3. Value-based Payments.
(a) EDS will charge, and Hawaiian will pay EDS, the value-based
payments described below, which payments reflect the value that
the System brings to Hawaiian. The value-based payments will be
calculated as follows:
The System will track the total monetary amount of all Exceptions
(as defined below) identified by the System during each month.
From February 1998 through April 1998, Hawaiian will pay EDS a
monthly value-based payment equal to [Confidential Treatment
Requested] during the prior month.
From May 1998 until expiration of this Agreement by its terms,
Hawaiian will pay EDS a monthly value-based payment equal to
[Confidential Treatment Requested] during the prior month.
C-1
The value-based payments will be capped at an aggregate amount of
$[Confidential Treatment Requested] paid to EDS and, after such
aggregate amount of value-based payments has been paid to EDS,
Hawaiian will have no further obligation to make value-based
payments to EDS.
(b) For purposes of this Section, the term "Exceptions" shall
mean any apparent deviation from, or failure to conform to,
Hawaiian's rules, procedures, policies and tariffs for selling
and/or issuing Hawaiian airline tickets, which deviations or
nonconformances were identified by the System and made by a travel
agent, wholesaler or such other non-Hawaiian person or entity
selling and/or issuing airline tickets on behalf of Hawaiian.
Such Exceptions shall include without limitation the following
activities:
A reported ticket sale for less than the applicable fare
A reported commission greater than the applicable commission
A reported fare class that is different from the booked fare class
An invalid form of payment was used
Where a fare basis requires the ticket to be issued within a given
time period from when the reservation is made and such ticket is
not issued within that time period
A reported ticket exchange or ticket refund was greater than the
corresponding ticket sale amount
A ticket refund has been improperly issued
A ticket sale has not been reported
Receipt of a flight coupon that had been previously used
The appropriate penalty amount was not collected
(c) In order to facilitate the computation of these value-based
payments, Hawaiian shall provide EDS, on an ongoing basis and in a
manner reasonably acceptable to EDS, (i) the monthly Sales Audit
Results report generated by the System, which report summarizes
the total Exceptions and the total monetary amount of such
Exceptions identified for that particular month, and (ii) access
to and use of the System. Hawaiian shall permit EDS, or its
designated representative, to perform periodic audits of
Hawaiian's records to the extent necessary to verify the results
and/or processes of the System.
C-2
4. Change Orders. Immediately after execution of a Change Order,
EDS will invoice Hawaiian for the services and/or products that
are the subject of that particular Change Order, and Hawaiian will
pay EDS the amounts stated in such invoice in accordance with the
provisions of Section 9.3.
5. Airline Tariff Publishing Company (ATPCO) Charges. During the
term of this Agreement commencing with the seventh month after the
Effective Date, EDS will charge, and Hawaiian will pay EDS,
$[Confidential Treatment Requested] per month for the provision of
the ATPCO data and information to Hawaiian, as described in
Section 4.6 of the Agreement.
C-3
