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EXHIBIT 10.42(a)
Grant #
CAREER EQUITY PROGRAM
DEFERRED STOCK AWARD AGREEMENT
This AGREEMENT made as of ((GRANTDATE)), by and between AMR Corporation, a
Delaware corporation (the "Corporation"), to ((FIRSTNAME)) ((LASTNAME)) (the
"Employee"), employee numBER ((EE)).
WHEREAS, the stockholders of the Corporation approved the 1998 Long Term
Incentive Plan at the Corporation's annual meeting held on May 20, 1998 (such
Plan, as may be amended from time to time, to be referenced the "1998 Plan");
and was approved by the shareholders of the Corporation
WHEREAS, pursuant to the Career Equity Program adopted by the Board of
Directors of the Corporation (the "Board"), the Board has determined to make a
Career Equity Program grant to the Employee of Deferred Stock (subject to the
terms of the l998 Plan and this Agreement), as an inducement for the Employee to
remain an employee of the Corporation, and to retain and motivate such Employee
during his employment with the Corporation.
NOW, THEREFORE, the Corporation and the Employee hereby agree as follows:
x. Xxxxx of Award. The Employee is hereby granted as of ((GRANTDATE1)),
(the "Grant Date") a Deferred Stock Award (the "Award"), subject to the terms
and conditions hereinafter set forth, with respect to ((SHARES)) shares of
Common Stock, $l.00 par value, of the Corporation ("Stock"). The shares of Stock
covered by the Award shall vest in accordance with Sections 2, 3, 4, 5, and 6
hereof.
2. Vesting - Normal Retirement or Early Retirement. Subject to Section 5,
in the event of the termination of Employee's employment with the Corporation
(or any Subsidiary or Affiliate thereof) on or after the Grant Date due to
Normal Retirement (which is defined as retirement from employment with the
Corporation, or any Subsidiary or Affiliate thereof, at or after age 60), the
shares of Stock covered by the Award shall become fully vested.
In the event of the termination of the Employee's employment with the
Corporation (or any Subsidiary or Affiliate thereof) on or after the Grant Date
due to Early Retirement (which is defined as an early retirement from employment
with the Corporation, or any Subsidiary or Affiliate thereof, at or after age 55
but before age 60), the shares of stock covered by the Award shall vest in
accordance with the following schedule:
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Percentage of
Award
Age Vested
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55 85%
56 88%
57 9l%
58 94%
59 97%
Employee will receive prorata vesting for each full month of employment in
partial years.
Share certificates for the number of shares covered by a vested Award
(whether in full or partial) shall be issued and delivered to the Employee on or
about the date of Retirement.
Notwithstanding anything to the contrary contained herein and for the
purposes of this Award, in order to be eligible for the benefits hereunder
associated with Early Retirement, the recipient must be entitled to receive
early retirement pension benefits under the then existing policies of the
Corporation, Subsidiary or Affiliate, as applicable.
3. Vesting - Death or Disability. Subject to Section 5, in the event of
the termination of Employee's employment with the Corporation (or any Subsidiary
or Affiliate thereof) on or after the Grant Date due to the Employee's death or
Disability, the shares of Stock covered by the Award shall vest at a rate of 20%
for each full year of employment with the Corporation (or any Subsidiary or
Affiliate thereof) after the Grant Date (with pro rata vesting for each full
month of employment in partial years). In such case, share certificates for the
number of shares so vested shall be issued and delivered to the Employee (or, in
the event of the Employee's death, the Employee's designated beneficiary for
purposes of the Award, or in the absence of an effective beneficiary
designation, the Employee's estate) within 60 days after the Employee's death or
Disability.
4. Vesting - Termination Not for Cause. If the Employee's employment with
the Corporation (or any Subsidiary or Affiliate thereof) is terminated on or
after the Grant Date by the Corporation (or any Subsidiary or Affiliate thereof)
other than pursuant to Section 5, the shares of Stock covered by the Award shall
vest at a rate of l0% for each full year of employment with the Corporation (or
any Subsidiary or Affiliate thereof) after the Grant Date (with pro rata vesting
for each full month of employment in partial years); provided, that no shares of
Stock shall vest under this Section 4 if the Employee has not been employed for
at least one full year after the Grant Date. Share certificate(s) for the number
of shares that vest pursuant to this
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Section 4 shall be issued and delivered to the Employee (i)in five equal annual
installments with the first installment being made one year after the date of
such termination or (ii) in one share certificate, to be issued within 90 days
of the date of such termination, in each case, at the option of the Corporation;
provided, however, that in the event of such termination, vesting of the shares
under the Award as provided herein may be predicated upon the Employee agreeing
to such terms and conditions as required by the Corporation, including, but not
limited to, non-competition and non-disclosure agreements.
5. Vesting - Termination for Cause; Other. In the event that (a) the
Employee's employment with the Corporation (or any Subsidiary or Affiliate
thereof) is terminated for Cause; or (b) the Employee terminates his employment
with the Corporation, or any Subsidiary or Affiliate thereof, (other than for
reasons of Retirement or Disability); or c) the Employee becomes an employee of
a Subsidiary that is not wholly owned, directly or indirectly, by the
Corporation; or (d) the Employee takes a leave of absence without reinstatement
rights, unless otherwise agreed in writing between the Corporation and the
Employee; or (e) the Employee is no longer a management level employee at the
time his/her employment with the Corporation (or any Subsidiary or Affiliate
thereof)is terminated, then all shares of Stock covered by the Award shall be
forfeited.
6. Vesting - Change in Control; Potential Change in Control. In the event
of a Change in Control or Potential Change in Control of the Corporation, shares
under the Award shall vest in accordance with the l998 Plan or its successor.
7. Elective Deferrals. At any time at least l2 months prior to the date
of the Employee's Retirement, the Employee may elect in writing, subject to
approval by the Corporation, to voluntarily defer the receipt of the shares of
Stock covered by the Award for a specified additional period beyond the date of
the Employee's termination of employment (the "Elective Deferral Period"). Any
shares deferred pursuant to this Section 7 shall be issued to the Employee
within 60 days after the end of the Elective Deferral Period. In the event of
the death of the Employee during the Elective Deferral Period, the shares so
deferred shall be issued to the Employee's designated Beneficiary (or to the
Employee's estate, in the absence of an effective beneficiary designation)
within 60 days after the Board receives written notification of death.
8. Transfer Restrictions. This Award is non-transferable otherwise than
by will or by the laws of descent and distribution, and may not otherwise be
assigned, pledged or hypothecated and shall not be subject to execution,
attachment or similar process. Upon any attempt by the Employee (or the
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Employee's successor in interest after the Employee's death) to effect any such
disposition, or upon the levy of any such process, the Award shall immediately
become null and void, at the discretion of the Board.
9. Miscellaneous. This Agreement (a) shall be binding upon and inure to
the benefit of any successor of the Corporation, (b) shall be governed by the
laws of the State of Texas and any applicable laws of the United States, and (c)
may not be amended without the written consent of both the Corporation and the
Employee. No contract or right of employment shall be implied by this Agreement.
If this Award is assumed or a new award is substituted therefore in any
corporate reorganization, employment by such assuming or substituting
corporation or by a parent corporation or subsidiary or affiliate thereof shall
be considered for all purposes of this Award to be employment by the
Corporation. In the event Employee does not forward to the Corporation, within
the applicable period, required taxes with respect to any Award distributed
pursuant to this Agreement, the Corporation may withhold from any payments to be
made to the Employee by the Corporation (or any Subsidiary or Affiliate
thereof), an amount(s) equal to such taxes.
l0. Securities Law Requirements. The Corporation shall not be required to
issue shares pursuant to this Award unless and until (a) such shares have been
duly listed upon each stock exchange on which the Corporation's Stock is then
registered; and (b) a registration statement under the Securities Act of l933
with respect to such shares is then effective.
The Board may require the Employee to furnish to the Corporation, prior to
the issuance of any shares of Stock in connection with this Award, an agreement,
in such form as the Board may from time to time deem appropriate, in which the
Employee represents that the shares acquired by him under the Award are being
acquired for investment and not with a view to the sale or distribution thereof.
ll. Incorporation of l998 Plan Provisions. This Agreement is made pursuant
to the l998 Plan and is subject to all of the terms and provisions of the l998
Plan as if the same were fully set forth herein. Capitalized terms not otherwise
defined herein shall have the meanings set forth for such terms in the l998
Plan.
l2. Participation in Long-Term Incentive Plans. If at the time of i)
Employee's Retirement from the Corporation (or any Subsidiary or Affiliate
thereof) or ii), the termination of Employee's employment with the Corporation
(or any Subsidiary or Affiliate thereof) for reasons contemplated by Sections 3
or 4, the Employee has received payment(s) under the terms of a long-term
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incentive plan(s) adopted by any Subsidiary or Affiliate of the Corporation, the
Employee agrees that in lieu of the shares of Stock that have vested pursuant to
this award, the Employee will receive shares of stock having a fair market value
as of the vesting date equal to the positive difference, if any, between the
fair market value (as of the vesting date) of the shares of Stock that have
vested hereunder and the aggregate nominal value of the payment(s) made under
such long-term incentive plan(s).
13. Payment of Performance Return Payments and Dividend Equivalents;
Voting Rights.
(a) Performance Return Payments. Subject to the terms and conditions set
forth in the attached Schedule A, Performance Return Payments (as defined in
such Schedule A) shall be paid annually on or about the date as may be
designated from time to time by the Board or any committee thereof (the "Payment
Date") on all or a specified portion of the shares of Deferred Stock covered by
this Award, as set forth in such Schedule A, based on: (i) a deemed investment
rate equal to the Corporation's Rolling Average ROI as defined and determined in
accordance with the terms and conditions set forth in such Schedule A ; and (ii)
the value of the Stock as determined by the Board, or any committee thereof,
pursuant to Schedule A.
In addition, the Employee shall be entitled, subject to the consent of the
Board, to elect to defer receipt of such Performance Return Payments in
accordance with the American Airlines, Inc. 1987 Executive Deferral Plan or its
successor plan.
(b) Dividend Equivalents. The Employee shall also be entitled to payment
of an amount equal to (i) the amount of any dividend declared per share on the
Corporation's Stock after the Grant Date and prior to issuance to, or forfeiture
by, the Employee of the shares of Deferred Stock covered by this Award,
multiplied by (ii) the number of unissued and unforfeited shares of Deferred
Stock covered by this Award, provided (y) that the amount of any such dividend
equivalents shall be offset by the amount of any Performance Return Payments
paid under this Award within the preceding 11 months and (z) that, unless the
Board otherwise decides prior to the dividend payment date, such dividend
equivalent payment shall be automatically deferred and treated as additional
shares of Deferred Stock, subject to the same terms and conditions that apply to
the related shares of Deferred Stock with respect to which such dividend
equivalents were initially payable.
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(c) Voting and Other Rights. The Employee shall have no ownership rights,
including voting rights, with respect to the shares of Deferred Stock covered by
this Award unless and until shares of stock are actually issued to the Employee.
* * *
EMPLOYEE AMR CORPORATION
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X. X. XxxXxxx
Corporate Secretary
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Schedule A
Performance Return Payments
1. Performance Return Payments may be paid on a percentage of the shares
covered by the Award, such percentage to be established, from time to time,
by the Committee.
2. The price of those shares, if any, subject to Performance Return Payments,
will be as determined by the Board, or any committee thereof, and will
approximate the then existing price of the Stock on the New York Stock
Exchange.
3. The five-year rolling average return of investment of AMR Corporation (the
"ROI"), as referenced in Section 13 of the Agreement, will be calculated as
soon as practical following the end of the Corporation's fiscal year. In
determining ROI, the following definitions will control:
The Measurement Period is the five most recent fiscal years.
AMR is AMR corporation.
COMMITTEE is the AMR Compensation Committee.
PLAN RETURNS is the sum of AMR pre-tax income, interest expense, and any
accounting adjustments or extraordinary or unusual items which may be
included or excluded at the discretion of the Committee and approved by the
Board of Directors of AMR, or a committee thereof.
ADJUSTED INVESTMENT is the sum of AMR's notes payable, current maturities
of long term debt, current maturities on capital leases, non-current long
term debt, non-current capital leases, and stockholders' equity and any
extraordinary or unusual items which may be included or excluded at the
discretion of the Committee and approved by the Board of Directors of AMR,
or a committee thereof.
AVERAGE ADJUSTED INVESTMENT FOR A FISCAL YEAR is (i) the sum of Adjusted
Investment as of December 31 of the immediately prior fiscal year and
Adjusted Investment as of September 30 of the fiscal year for which the ROI
is being calculated (ii) divided by two.
ROI FOR A FISCAL YEAR is Plan Returns for fiscal year divided by Average
Adjusted Investment for the same fiscal year, stated as a percentage.
ROI FOR THE MEASUREMENT PERIOD is the sum of ROI for each year of the
Measurement Period divided by five.
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4. In the event of an Employee's termination of employment with the
Corporation (or any Subsidiary or Affiliate thereof) for reasons of death,
Disability, or Retirement, Performance Return Payments, if any, which are
paid on or around the first occurrence of the Payment Date after the date
of death, Disability, or Retirement, shall be paid to the Employee (or, in
the event of the Employee's death, the Employee's designated beneficiary
for purposes of the Award, or in the absence of an effective beneficiary
designation, the Employee's estate) at the rate of 8 1/3% for each full or
partial month of employment since the Payment Date of the preceding year.
For the avoidance of doubt, no Performance Return Payments shall be made to
an Employee if the Employee's employment with the Corporation (and any
Subsidiary or Affiliate thereof) terminates for factors set forth in
Section 5 of this Agreement.
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