EXECUTIVE TERMINATION BENEFITS AGREEMENT
Exhibit 10.130
THIS EXECUTIVE TERMINATION BENEFITS AGREEMENT (this “Agreement”), dated as of the 25th day of
March, 2008, is among AMR CORPORATION, a Delaware corporation, AMERICAN AIRLINES, INC., a Delaware
corporation (collectively the “Company”), and XXXXXXXX X. XXXXX (the “Executive”).
W I T N E S S E T H:
WHEREAS, the Company considers it essential to the best interests of the Company and its
stockholders that its management be encouraged to remain with the Company and to continue to devote
full attention to the Company’s business in the event an effort is made to obtain control of the
Company through a tender offer or otherwise;
WHEREAS, the Company recognizes that the possibility of a change in control and the
uncertainty and questions which it may raise among management may result in the departure or
distraction of management personnel to the detriment of the Company and its stockholders;
WHEREAS, the Company’s Board of Directors (the “Board”) has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and dedication of members of the
Company’s management to their assigned duties without distraction in the face of the potentially
disturbing circumstances arising from the possibility of a change in control of the Company;
WHEREAS, the Executive is a key executive of the Company;
WHEREAS, the Company believes the Executive has made valuable contributions to the
productivity and profitability of the Company;
WHEREAS, should the Company receive any proposal from a third person concerning a possible
business combination with or acquisition of equity securities of the Company, the Board believes it
imperative that the Company and the Board be able to rely upon the Executive to continue in his
position, and that the Company be able to receive and rely upon his advice as to the best interests
of the Company and its stockholders without concern that he might be distracted by the personal
uncertainties and risks created by such a proposal; and
WHEREAS, should the Company receive any such proposals, in addition to the Executive’s regular
duties, he may be called upon to assist in the assessment of such proposals, advise management and
the Board as to whether such proposals would be in the best interests of the Company and its
stockholders, and to take such other actions as the Board might determine to be appropriate.
NOW, THEREFORE, to assure the Company that it will have the continued undivided attention and
services of the Executive and the availability of his advice and counsel notwithstanding the
possibility, threat or occurrence of a bid to take over control of the Company, and to induce the
Executive to remain in the employ of the Company, and for other good and valuable consideration,
the Company and the Executive agree as follows:
1. Change in Control
For purposes of this Agreement, a Change in Control of the Company shall be deemed to have
taken place if:
(a) any person as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as
amended from time to time (the “Exchange Act”), and as used in Sections 13(d) and 14(d) thereof,
including a “group” as defined in Section 13(d) of the Exchange Act (a “Person”), but excluding the
Company, any subsidiary of the Company and any employee benefit plan sponsored or maintained by the
Company or any subsidiary of the Company (including any trustee of such plan acting as trustee),
directly or indirectly, becomes the “beneficial owner” (as defined in Rule 13(d)-3 under the
Exchange Act, as amended from time to time) of securities of the Company representing 15% or more
of the combined voting power of the Company’s then outstanding securities; or
(b) individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) consummation of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the acquisition of the assets of another
corporation (a “Business Combination”), in each case, unless, following such Business Combination,
(i) all or substantially all of the individuals and entities who were the beneficial owners,
respectively, of the then outstanding shares of common stock of the Company and the combined voting
power of the then outstanding voting securities of the Company entitled to vote generally in the
election of directors immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
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such transaction owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries), (ii) no Person (excluding any employee benefit plan
(or related trust) of the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 15% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination, and (iii) at least a majority of
the members of the board of directors of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Incumbent Board, providing for such Business Combination; or
(d) approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.
2. Circumstances Triggering Receipt of Severance Benefits
(a) Subject to Section 2(c), the Company will provide the Executive with the benefits set
forth in Section 4 upon any termination of the Executive’s employment:
(i) by the Company at any time within the first 24 months after a Change in Control;
(ii) by the Company or the Executive for “Good Reason” (as defined in Section 2(b)
below) at any time within the first 24 months after a Change in Control; or
(iii) by the Company or the Executive pursuant to Section 2(d).
(b) In the event of the occurrence of a Change in Control, the Executive may terminate
employment with the Company and/or any subsidiary for “Good Reason” with the right to benefits set
forth in Section 4 upon the occurrence of one or more of the following events (regardless of
whether any other reason, other than Cause as provided below, for such termination exists or has
occurred, including without limitation other employment):
(i) Failure to elect or reelect or otherwise to maintain the Executive in the office
or the position, or a substantially equivalent office or position, of or with the Company
and/or a subsidiary, as the case may be, which the Executive held immediately prior to a
Change in Control, or the removal of the Executive as a director of the Company and/or a
subsidiary (or any successor thereto) if the Executive shall have been a director of the
Company and/or a subsidiary immediately prior to the Change in Control;
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(ii) (A) A significant adverse change in the nature or scope of the authorities,
powers, functions, responsibilities or duties attached to the position with the Company
and/or any subsidiary which the Executive held immediately prior to the Change in Control,
(B) a reduction in the aggregate of the Executive’s annual base salary rate and annual
incentive compensation target to be received from the Company and/or any subsidiary, or (C)
the termination or denial of the Executive’s rights to Employee Benefits (as defined below)
or a reduction in the scope or value thereof, any of which is not remedied by the Company
within 10 calendar days after receipt by the Company of written notice from the Executive
of such change, reduction or termination, as the case may be;
(iii) A determination by the Executive (which determination will be conclusive and
binding upon the parties hereto provided it has been made in good faith and in all events
will be presumed to have been made in good faith unless otherwise shown by the Company by
clear and convincing evidence) that a change in circumstances has occurred following a
Change in Control, including, without limitation, a change in the scope of the business or
other activities for which the Executive was responsible immediately prior to the Change in
Control, which has rendered the Executive substantially unable to carry out, has
substantially hindered Executive’s performance of, or has caused the Executive to suffer a
substantial reduction in, any of the authorities, powers, functions, responsibilities or
duties attached to the position held by the Executive immediately prior to the Change in
Control, which situation is not remedied within 10 calendar days after written notice to
the Company from the Executive of such determination;
(iv) The liquidation, dissolution, merger, consolidation or reorganization of the
Company or transfer of all or substantially all of its business and/or assets, unless the
successor or successors (by liquidation, merger, consolidation, reorganization, transfer or
otherwise) to which all or substantially all of its business and/or assets have been
transferred (directly or by operation of law) assumed all duties and obligations of the
Company under this Agreement pursuant to Section 9(a);
(v) The Company relocates its principal executive offices, or requires the Executive
to have his principal location of work changed, to any location that is in excess of 50
miles from the location thereof immediately prior to the Change in Control, or requires the
Executive to travel away from his office in the course of discharging his responsibilities
or duties hereunder at least 20% more (in terms of aggregate days in any calendar year or
in any calendar quarter when annualized for purposes of comparison to any prior year) than
was required of Executive in any of the three full years immediately prior to the Change in
Control without, in either case, his prior written consent; or
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(vi) Without limiting the generality or effect of the foregoing, any material breach
of this Agreement by the Company or any successor thereto, which breach is not remedied
within 10 calendar days after written notice to the Company from the Executive describing
the nature of such breach.
(c) Notwithstanding Sections 2(a) and (b) above, no benefits shall be payable by reason of
this Agreement in the event of:
(i) Termination of the Executive’s employment with the Company and its subsidiaries by
reason of the Executive’s death or Disability, provided that the Executive has not
previously given a valid “Notice of Termination” pursuant to Section 3. For purposes
hereof, “Disability” shall be defined as the inability of Executive due to illness,
accident or other physical or mental disability to perform his duties for any period of six
consecutive months or for any period of eight months out of any 12-month period, as
determined by an independent physician selected by the Company and reasonably acceptable to
the Executive (or his legal representative), provided that the Executive does not return to
work on substantially a full-time basis within 30 days after written notice from the
Company, pursuant to Section 3, of an intent to terminate the Executive’s employment due to
Disability;
(ii) Termination of the Executive’s employment with the Company and its subsidiaries
on account of the Executive’s retirement at or after age 65, pursuant to the Company’s
Retirement Benefit Plan; or
(iii) Termination of the Executive’s employment with the Company and its subsidiaries
for Cause. For the purposes hereof, “Cause” shall be defined as a felony conviction of the
Executive or the failure of the Executive to contest prosecution for a felony, or the
Executive’s willful misconduct or dishonesty, any of which is directly and materially
harmful to the business or reputation of the Company or any subsidiary or affiliate.
Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated
for “Cause” hereunder unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than three quarters
of the Board then in office at a meeting of the Board called and held for such purpose,
after reasonable notice to the Executive and an opportunity for the Executive, together
with his counsel (if the Executive chooses to have counsel present at such meeting), to be
heard before the Board, finding that, in the good faith opinion of the Board, the Executive
had committed an act constituting “Cause” as herein defined and specifying the particulars
thereof in detail. Nothing herein will limit the right of the Executive or his
beneficiaries to contest the validity or propriety of any such determination.
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This Section 2(c) shall not preclude the payment of any amounts otherwise payable to the
Executive under any of the Company’s employee benefit plans, stock plans, programs and arrangements
and/or under any Employment Agreement.
(d) Any termination of employment of the Executive, including a termination for “Good Reason,”
but excluding a termination for “Cause,” or the removal of the Executive from the office or
position in the Company or any subsidiary that occurs (i) not more than 180 days prior to the date
on which a Change in Control occurs and (ii) following the commencement of any discussion with a
third person that ultimately results in a Change in Control shall be deemed to be a termination or
removal of the Executive after a Change in Control for purposes of this Agreement.
3. Notice of Termination
Any termination of the Executive’s employment with the Company and its subsidiaries as
contemplated by Section 2 shall be communicated by written “Notice of Termination” to the other
party hereto. Any “Notice of Termination” shall indicate the effective date of termination which
shall not be less than 30 days or more than 60 days after the date the Notice of Termination is
delivered (the “Termination Date”), the specific provision in this Agreement relied upon, and will
set forth in reasonable detail the facts and circumstances claimed to provide a basis for such
termination including, if applicable, the failure after provision of written notice by the
Executive to effect a remedy pursuant to the final clause of Section 2(b)(ii), 2(b)(iii) or
2(b)(vi).
4. Termination Benefits
Subject to the conditions set forth in Section 2, the following benefits shall be paid or
provided to the Executive:
(a) Compensation
The Company shall pay to the Executive two times the sum of (i) “Base Pay”, which shall be an
amount equal to the greater of (A) the Executive’s effective annual base salary at the Termination
Date or (B) the Executive’s effective annual base salary immediately prior to the Change in
Control, plus (ii) “Incentive Pay” equal to the greater of (x) the target annual bonus payable to
the Executive under the Company’s Incentive Compensation Plan or any other annual bonus plan for
the fiscal year of the Company in which the Change in Control occurred or (y) the highest annual
bonus earned by the Executive under the Company’s Incentive Compensation Plan or any other annual
bonus plan (whether paid currently or on a deferred basis) with respect to any 12 consecutive month
period during the three fiscal years of the Company immediately preceding the fiscal year of the
Company in which the Change in Control occurred.
(b) Welfare Benefits
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For a period of 24 months following the Termination Date (the “Continuation Period”), the
Company shall arrange to provide the Executive with benefits, including travel accident, major
medical, dental, vision care and other welfare benefit programs in effect immediately prior to the
Change in Control (“Employee Benefits”) substantially similar to those that the Executive was
receiving or entitled to receive immediately prior to the Termination Date (or, if greater,
immediately prior to the reduction, termination, or denial described in Section 2(b)(ii)(C)). If
and to the extent that any benefit described in this Section 4(b) is not or cannot be paid or
provided under any policy, plan, program or arrangement of the Company or any subsidiary, as the
case may be, then the Company will itself pay or provide for the payment to the Executive, his
dependents and beneficiaries, of such Employee Benefits along with, in the case of any benefit
which is subject to tax because it is not or cannot be paid or provided under any such policy,
plan, program or arrangement of the Company or any subsidiary, an additional amount such that after
payment by the Executive, or his dependents or beneficiaries, as the case may be, of all taxes so
imposed, the recipient retains an amount equal to such taxes. Employee Benefits otherwise
receivable by the Executive pursuant to this Section 4(b) will be reduced to the extent comparable
welfare benefits are actually received by the Executive from another employer during the
Continuation Period, and any such benefits actually received by the Executive shall be reported by
the Executive to the Company.
(c) Retirement Benefits
The Executive shall be deemed to be completely vested in Executive’s currently accrued
benefits under the Company’s Retirement Benefit Plan and Supplemental Executive Retirement Plan
(“SERP”) in effect as of the date of Change in Control (collectively, the “Plans”), regardless of
his actual vesting service credit thereunder. In addition, the Executive shall be deemed to earn
service credit for benefit calculation purposes thereunder for the Continuation Period. Benefits
under the Plans will become payable at any time designated by the Executive following termination
of the Executive’s employment with the Company and its subsidiaries after the Executive reaches age
55, subject to the terms of the Plans regarding the actuarial adjustment of benefit payments
commencing prior to normal retirement age. The benefits to be paid pursuant to the Plans shall be
calculated as though the Executive’s compensation rate for each of the five years immediately
preceding his retirement equaled the sum of Base Pay plus Incentive Pay. Any benefits payable
pursuant to this Section 4(c) that are not payable out of the Plans for any reason (including but
not limited to any applicable benefit limitations under the Employee Retirement Income Security Act
of 1974, as amended, or any restrictions relating to the qualification of the Company’s Retirement
Benefit Plan under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”))
shall be paid directly by the Company out of its general assets.
(d) Relocation Benefits
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If the Executive moves his residence in order to pursue other business or employment
opportunities during the Continuation Period and requests in writing that the Company provide
relocation services, he will be reimbursed for any expenses incurred in that initial relocation
(including taxes payable on the reimbursement) which are not reimbursed by another employer.
Benefits under this provision will include assistance in selling the Executive’s home and all other
assistance and benefits which were customarily provided by the Company to transferred executives
prior to the Change in Control.
(e) Executive Outplacement Counseling
At the request of the Executive made in writing during the Continuation Period, the Company
shall engage an outplacement counseling service of national reputation to assist the Executive in
obtaining employment.
(f) Stock Based Compensation Plans
(i) Any issued and outstanding Stock Options (to the extent they have not already
become exercisable) shall become exercisable as of the date on which the Change in Control
occurs, unless otherwise specifically provided at the time such options are granted.
(ii) The Company’s right to rescind any award of stock to the Executive under the
Company’s 1988 Long Term Incentive Plan or the Company’s 1998 Long Term Incentive Plan (or
any successor plan) shall terminate upon a Change in Control, and all restrictions on the
sale, pledge, hypothecation or other disposition of shares of stock awarded pursuant to
such plan shall be removed at the Termination Date, unless otherwise specifically provided
at the time such award(s) are made.
(iii) The Executive’s rights under any other stock based compensation plan shall vest
(to the extent they have not already vested) and any performance criteria shall be deemed
met at target as of the date on which a Change in Control occurs, unless otherwise
specifically provided at the time such right(s) are granted.
(g) Split Dollar Life Insurance
The Company shall pay to the Executive a lump sum equal to the cost on the Termination Date of
purchasing, at standard independent insurance premium rates, an individual paid up insurance policy
providing benefits equal to the benefits provided by the Company’s Split Dollar Life Insurance
coverage immediately prior to the date of the Change in Control.
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(h) Other Benefits
(i) The Executive shall have all flight privileges provided by the Company to
Directors as of the date of Change in Control until the Executive reaches age 55, at which
time he shall have all flight privileges provided by the Company to its retirees who held
the same or similar position as the Executive immediately prior to the Change in Control.
(ii) The Executive, at the Executive’s option, shall be entitled to continue the use
of the Executive’s Company-provided automobile during the Continuation Period under the
same terms that applied to the automobile immediately prior to the Change in Control, or to
purchase the automobile at its book value as of the Termination Date.
(iii) The Company shall pay to the Executive an amount equal to the cost to the
Company of providing any other perquisites and benefits of the Company in effect
immediately prior to the Change in Control, calculated as if such benefits were continued
during the Continuation Period.
(i) Accrued Amounts
The Company shall pay to the Executive all other amounts accrued or earned by the Executive
through the Termination Date and amounts otherwise owing under the then existing plans and policies
of the Company, including but not limited to all amounts of compensation previously deferred by the
Executive (together with any accrued interest thereon) and not yet paid by the Company, and any
accrued vacation pay not yet paid by the Company.
(j) The Company shall pay to the Executive the amounts due pursuant to Sections 4(a), 4(g) and
4(h)(iii) in a lump sum on the first business day of the month following the Termination Date. The
Company shall pay to the Executive the amounts due pursuant to Section 4(i) in accordance with the
terms and conditions of the existing plans and policies of the Company.
5. No Mitigation Obligation
The Company hereby acknowledges that it will be difficult and may be impossible for the
Executive to find reasonably comparable employment following the Termination Date. Accordingly,
the payment of the severance compensation by the Company to the Executive in accordance with the
terms of this Agreement is hereby acknowledged by the Company to be reasonable, and the Executive
will not be required to mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise, nor will any profits, income, earnings or other benefits
from
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any source whatsoever create any mitigation, offset, reduction or any other obligation on the part
of the Executive hereunder or otherwise, except as expressly provided in the last sentence of
Section 4(b).
6. Legal Fees and Expenses
(a) It is the intent of the Company that the Executive not be required to incur legal fees and
the related expenses associated with the interpretation, enforcement or defense of Executive’s
rights under this Agreement by litigation or otherwise because the cost and expense thereof would
substantially detract from the benefits intended to be extended to the Executive hereunder.
Accordingly, if it should appear to the Executive that the Company has failed to comply with any of
its obligations under this Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable, or institutes any
litigation or other action or proceeding designed to deny, or to recover from, the Executive any or
all of the benefits provided or intended to be provided to the Executive hereunder, the Company
irrevocably authorizes the Executive from time to time to retain counsel of Executive’s choice, at
the expense of the Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including without limitation the
initiation or defense of any litigation or other legal action, whether by or against the Company or
any director, officer, stockholder or other person affiliated with the Company, in any
jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive’s entering into an
attorney-client relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship shall exist between the Executive and such
counsel. Without respect to whether the Executive prevails, in whole or in part, in connection
with any of the foregoing, the Company will pay and be solely financially responsible for any and
all reasonable attorneys’ and related fees and expenses incurred by the Executive in connection
with any of the foregoing.
(b) Without limiting the obligations of the Company pursuant to Section 6(a) hereof, in the
event a Change in Control occurs, the performance of the Company’s obligations under this Section 6
shall be secured by amounts deposited or to be deposited in trust pursuant to certain trust
agreements to which the Company shall be a party, which amounts deposited shall in the aggregate be
not less than $2,000,000, providing that the reasonable fees and expenses of counsel selected from
time to time by the Executive pursuant to Section 6(a) shall be paid, or reimbursed to the
Executive if paid by the Executive, either in accordance with the terms of such trust agreements,
or, if not so provided, on a regular, periodic basis upon presentation by the Executive to the
trustee of a statement or statements prepared by such counsel in accordance with its customary
practices. Any failure by the Company to satisfy any of its obligations under this Section 6(b)
shall not limit the rights of the Executive hereunder. Subject to the foregoing, the Executive
shall have the status of a general unsecured creditor of the
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Company and shall have no right to, or security interest in, any assets of the Company or any
subsidiary.
7. Continuing Obligations
(a) The Executive hereby agrees that all documents, records, techniques, business secrets and
other information which have come into his possession from time to time during his employment with
the Company shall be deemed to be confidential and proprietary to the Company and, except for
personal documents and records of the Executive, shall be returned to the Company. The Executive
further agrees to retain in confidence any confidential information known to him concerning the
Company and its subsidiaries and their respective businesses so long as such information is not
publicly disclosed, except that Executive may disclose any such information required to be
disclosed in the normal course of his employment with the Company or pursuant to any court order or
other legal process.
(b) The Executive hereby agrees that during the Continuation Period, he will not directly or
indirectly solicit any employee of the Company or any of its subsidiaries or affiliated companies
to join the employ of any entity that competes with the Company or any of its subsidiaries or
affiliated companies.
8. Successors
(a) The Company shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Executive to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of such successor entity to
enter into such agreement prior to the effective date of any such succession (or, if later, within
three business days after first receiving a written request for such agreement) shall constitute a
breach of this Agreement and shall entitle the Executive to terminate his employment pursuant to
Section 2(a)(ii) and to receive the payments and benefits provided under Section 4. As used in
this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and delivers the Agreement provided for in this
Section 8 or which otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive dies while any amounts are payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be
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paid in accordance with the terms of this Agreement to his devisee, legatee or other designee
or, if there is no such designee, to his estate.
9. Notices
For all purposes of this Agreement, all communications, including without limitation notices,
consents, requests or approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days after having been
mailed by United States registered or certified mail, return receipt requested, postage prepaid, or
three business days after having been sent by a nationally recognized overnight courier service
addressed to the Company (to the attention of the Secretary of the Company, with a copy to the
General Counsel of the Company) at its principal executive office and to the Executive at his
principal residence, or to such other address as any party may have furnished to the other in
writing and in accordance herewith, except that notices of changes of address shall be effective
only upon receipt.
10. Governing Law
THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF DELAWARE.
11. Miscellaneous
No provisions of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the Executive and the Company. No
waiver by either party hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or any prior or
subsequent time. No agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are not set forth
expressly in this Agreement (or in any employment or other written agreement relating to the
Executive). Notwithstanding any provision of this Agreement to the contrary, the parties’
respective rights and obligations under Sections 4 and 6 will survive any termination or expiration
of this Agreement or the termination of the Executive’s employment following a Change in Control
for any reason whatsoever. Nothing expressed or implied in this Agreement will create any right or
duty on the part of the Company or the Executive to have the Executive remain in the employment of
the Company or any subsidiary prior to or following any Change in Control. The Company may
withhold from any amounts payable under this Agreement all federal, state, city or other taxes as
the Company is required to withhold pursuant to any law or government regulation or ruling. In the
event
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that the Company refuses or otherwise fails to make a payment when due and it is ultimately
decided that the Executive is entitled to such payment, such payment shall be increased to reflect
an interest factor, compounded annually, equal to the prime rate in effect as of the date the
payment was first due plus two points. For this purpose, the prime rate shall be based on the rate
identified by Chase Manhattan Bank as its prime rate.
12. Separability
The invalidity or unenforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall remain in full
force and effect.
13. Non-assignability
This Agreement is personal in nature and neither of the parties hereto shall, without the
consent of the other, assign or transfer this Agreement or any rights or obligations hereunder,
except as provided in Section 8. Without limiting the foregoing, the Executive’s right to receive
payments hereunder shall not be assignable or transferable, whether by pledge, creation of a
security interest or otherwise, other than a transfer by his will or by the laws of descent or
distribution, and in the event of any attempted assignment or transfer by Executive contrary to
this Section 13 the Company shall have no liability to pay any amount so attempted to be assigned
or transferred to any person other than the Executive or, in the event of his death, his designated
beneficiary or, in the absence of an effective beneficiary designation, the Executive’s estate.
14. Effectiveness; Term
This Agreement will be effective and binding as of the date first above written immediately
upon its execution, but, anything in this Agreement to the contrary notwithstanding, this Agreement
will not be operative unless and until a Change in Control occurs. Upon the occurrence of a Change
in Control at any time during the Term (as defined below), without further action, this Agreement
shall become immediately operative. For purposes of this Agreement, “Term” means the period
commencing as of the date first above written and expiring as of the later of (i) the fifth
anniversary of the date first above written or (ii) the second anniversary of the first occurrence
of a Change in Control; provided, however, that (A) commencing on the fifth anniversary of the date
first above written and each fifth anniversary date thereafter, the Term of this Agreement will
automatically be extended for an additional five years unless, not later than 180 days preceding
each such fifth anniversary date, the Company or the Executive shall have given notice that it or
the Executive, as the case may be, does not wish to have the Term extended and (B) subject to
Section 2(d), if, prior to a Change in Control, the Executive ceases for any reason to be an
employee of the Company and any subsidiary, thereupon without further action the Term shall be
deemed to have expired and this Agreement will immediately terminate and be of no further effect.
For purposes of this Section 14, the
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Executive shall not be deemed to have ceased to be an employee of the Company and any
subsidiary by reason of the transfer of Executive’s employment between the Company and any
subsidiary, or among any subsidiaries.
15. Counterparts
This Agreement may be executed in one or more counterparts, each of which shall be deemed to
be an original but all of which together will constitute one and the same agreement.
16. Prior Agreement
This Agreement supersedes and terminates any and all prior Executive Termination Benefits
Agreements by and among Company and the Executive.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of
the day and year first above set forth, thereby mutually and voluntarily agreeing that this
Agreement supersedes and replaces any prior similar agreements for such termination benefits.
| AMR CORPORATION |
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| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
| Xxxxxxx X. Xxxxxxxx | ||||
| AMERICAN AIRLINES, INC. |
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| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
| Xxxxxxx X. Xxxxxxxx | ||||
| XXXXXXXX X. XXXXX |
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| /s/ Xxxxxxxx X. Xxxxx | ||||
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AMENDMENT TO
EXECUTIVE TERMINATION BENEFITS AGREEMENT
EXECUTIVE TERMINATION BENEFITS AGREEMENT
THIS AMENDMENT TO EXECUTIVE TERMINATION BENEFITS AGREEMENT (the “Amendment”), dated as of the
17th day of November, 2008, is by and between AMR CORPORATION, a Delaware corporation, AMERICAN
AIRLINES, INC., a Delaware corporation (collectively, and either of, the “Company”), and Xxxxxxxx
X. Xxxxx (the “Executive”).
W I T N E S S E T H:
WHEREAS, the Company and the Executive have heretofore entered into an Executive Termination
Benefits Agreement (the “Agreement”), addressing issues related to possible Change in Control; and
WHEREAS, certain provisions of section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), apply to the Agreement and require amendment of the Agreement, which is intended to
be accomplished through the execution of this Amendment, which is effective as of the date of
original execution of the Agreement;
NOW THEREFORE, the Company and the Executive agree that the Agreement is hereby amended as
follows:
1. Section 1 of the Agreement is hereby amended by the addition of the following language, at
the end thereof:
Notwithstanding the above, a Change in Control shall be deemed to have occurred
only if the event is also a change in ownership of the Company, or change in
effective control of the Company, or change in ownership of a substantial portion of
the Company’s assets, in each case as defined in Treasury Regulation 1.409A-3(i)(5)
or successor guidance thereto. For such purpose the specified percentages in
Treasury Regulation 1.409A-3(i)(5)(v), (vi) and (vii) or successor guidance thereto
shall be utilized, rather than any elective percentage.
2. Section 3 of the Agreement is hereby amended by the addition of the following sentence, at
the end thereof:
“No termination of employment shall be deemed to have occurred under this
Agreement unless and until such termination of employment or separation from
employment constitutes a “separation from service” under Treasury Regulation
1.409A-1(h) or successor guidance thereto.”
3. Section 4(a) of the Agreement is hereby amended by the addition of the following sentence,
at the end thereof:
“This payment is subject to section 409A of the Code and to the payment delay
provision of Section 4(j), with respect to a “specified employee” as described in
section 409A(a)(2)(B)(i) of the Code and Treasury Regulation 1.409A-1(i) or
successor guidance thereto.”
4. Section 4(b) of the Agreement is hereby amended by the deletion of all language
following the first sentence thereof and substituting in lieu thereof the following
language:
“The Employee Benefits subject to this Section 4(b) are governed by
terms of the applicable Employee Benefit plans not in conflict with this
Section 4(b), may not be liquidated or exchanged for any other benefit, and
the amount of any such benefits provided in one taxable year of the
Executive shall not affect the amount payable in any subsequent taxable year
of the Executive. The Company will pay the cost of such Employee Benefits,
some portion or all of which may be taxable to the Executive, together with
an additional amount such that after payment by the Executive, or his
dependents or beneficiaries, as the case may be, of all taxes that may be
imposed on the recipient of such Employee Benefits, the recipient retains an
amount equal to such taxes. Any amount paid as a cash reimbursement shall
be paid not later than the last day of the taxable year of the Executive
following the taxable year of the Executive in which the expense was
incurred. Any tax reimbursement under this Section 4(b) must be paid not
later than the end of the taxable year of the Executive following the
taxable year of the Executive in which the Executive paid the relevant
taxes. The benefits or cost thereof payable under the applicable Employee
Benefit plans will be reduced to the extent comparable welfare benefits are
actually received by the Executive from another employer during the
Continuation Period (i.e. Company coverage shall be “secondary”) and any
such benefits actually received by the Executive shall be reported by the
Executive to the Company.”
5. Section 4(c) of the Agreement is hereby amended and restated in the entirety, to provide as
follows:
“Retirement Benefits
If the Executive is not completely vested in the Executive’s currently accrued
benefits under the Company’s applicable Retirement Benefit Plan and Supplemental
Executive Retirement Plan (“SERP”) in effect as of the date of Change in Control
(collectively, the “Plans”), regardless of the Executive’s actual vesting service
credit thereunder, an amount shall be payable under this Section 4(c). In addition
to such amount, the Executive shall be deemed to earn service credit for benefit
calculation purposes under the SERP for the Continuation Period described in Section
4(b). The benefits to be paid pursuant to the SERP shall be calculated as though
the Executive’s compensation rate for each of the 5
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years immediately preceding his retirement equaled the sum of Base Pay plus
Incentive Pay. Any benefits payable pursuant to this Section 4(c) that are not
payable out of the Plans for any reason (including but not limited to any applicable
benefit limitations under the Employee Retirement Income Security Act of 1974, as
amended, or any restrictions relating to the qualification of the Company’s
applicable Retirement Benefit Plan under section 401(a) of the Code), shall be paid
directly by the Company out of its general assets. Any amount payable under this
Section 4(c) that is not paid under the Plans due to the fact the Participant is not
fully vested will be calculated as required under the SERP for payment of SERP
benefits (including calculation, time and form of payment). If the Executive is a
“specified employee”, as defined in Treasury Regulation 1.409A-1(i) or successor
guidance thereto, on the date of the Executive’s separation from employment, payment
of the amount described in this Section 4(c) shall be subject to Section 4(j).”
6. Section 4(d) of the Agreement is hereby amended by the by the addition of the following two
sentences, at the end thereof:
“Payment under this Section 4(d) for expenses shall be made not later than the
last day of the taxable year of the Executive following the taxable year of the
Executive in which the expenses were incurred. Payments for tax reimbursement shall
be made not later than the end of the first taxable year of the Executive following
the year in which the tax payment was made.”
7. Section 4(e) of the Agreement is hereby amended by the addition of the following sentence,
at the end thereof:
“Payment for such services will be made not later than the end of the taxable
year of the Executive following the taxable year of the Executive in which the
expenses were incurred.”
8. Section 4(f)(ii) of the Agreement is hereby amended by the insertion of the words “or the
Company’s 2003 Employee Stock Incentive Plan (or any successor plan)” following the reference to
the “Company’s 1998 Long-Term Incentive Plan (or any successor plan).”
9. Section 4(h)(i) is hereby amended by the addition of the following language, at the end
thereof:
“The flight privileges subject to this Section 4(h)(i) are governed by the
terms of the applicable flight privilege rules of the Company not in conflict with
this Section 4(h)(i), may not be liquidated or exchanged for any other benefit, and
the amount of any such benefits provided in one taxable year of the Executive shall
not affect the amount payable in any subsequent taxable year of the Executive. Any
amount paid as a cash reimbursement shall be paid not later than the last day of the
taxable year of the Executive following the taxable year of the Executive in which
the expense was incurred.”
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10. Section 4(h)(iii) is amended by the addition of the following sentence, at the end
thereof:
“Such payment shall be made within 75 days of the date of employment separation,
subject to Section 4(j) to the extent applicable.”
11. Section 4(i) of the Agreement is amended by the addition of the following sentence, at the
end thereof:
“Payments under this Section 4(i) must be made within 75 days of the end of the
calendar year in which the Executive’s termination of employment occurred, subject to
Section 4(j) to the extent applicable; provided that this Section 4(i) shall not be
effective to the extent it would result in impermissible acceleration of any amounts subject
to section 409A of the Code.”
12. Section 4(j) is hereby amended and restated in the entirety, to provide as follows:
“(j) Time of Payment of Certain Benefits.
Payment of amounts under Sections 4(a), 4(c), 4(h)(iii), and 4(i) shall be made
in a single lump sum within 75 days following the Executive’s separation from
employment, and in any event not later than 75 days after the end of the taxable
year of the Executive in which the separation from employment shall occur; provided
that if the Executive is a “specified employee”, as defined in Treasury Regulation
1.409A-1(i) or successor guidance thereto, as of the date of termination from
employment, any such payments, to the extent subject to section 409A(a)(2)(B)(i) of
the Code, shall not be made until the first business day following the date of the
6-month anniversary of the Executive’s separation from employment.”
13. Section 6(b) of the Agreement is hereby amended by the addition of the following language,
at the end thereof:
“In the event the Executive’s employment is terminated, any payment by the
Company or any such trust shall be made pursuant to this Section 6(b) within 75 days
following the date of the Executive’s separation from employment. No such transfer
to a trust shall be made to the extent it shall trigger the excise tax under section
409A(b)(3) or (4) of the Code.”
14. Section 7 of the Agreement is amended by the addition of new Section 7(c), at the end
thereof:
“(c) The Executive and the Company shall cooperate to assure that payments made
under this Agreement do not trigger the excise tax penalties of section 409A of the
Code, and, notwithstanding anything to the contrary in this Agreement, if any
payment under this Agreement to a “specified employee”, as
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described in Treasury Regulation 1.409A-1(k) or successor guidance thereto
shall constitute “deferred compensation” as defined in Treasury Regulation
1.409A-1(b) or successor guidance thereto, as determined by counsel to the Company,
such payment shall be deferred until the first day after the 6 month anniversary of
the date of the Executive’s separation from employment, except for payments
described in Section 4(b), 4(d), 4(e) and 4(h)(i).”
15. Section 14 of the Agreement is hereby amended by the addition of the following sentence,
at the end thereof:
“The provisions of this Agreement specifying payment dates that differ from
applicable dates in the Agreement prior to its amendment shall be deemed to
constitute a change in time of payment and/or method of payment as permitted under
Internal Revenue Service 2006-79 as revised by Internal Revenue Service Notice
2007-86 and shall be interpreted consistently with such guidance, including the
requirement that it is not applicable to a payment due in the current taxable year
of such change.”
16. Except as amended hereby, the Agreement shall remain in full force and effect. This
Amendment is effective as of the original effective date of the Agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment be executed and delivered as of the
day and year first above set forth.
| AMR CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
| Xxxxxxx X. Xxxxxxxx, Corporate Secretary | ||||
| AMERICAN AIRLINES, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
| Xxxxxxx X. Xxxxxxxx, Corporate Secretary | ||||
| /s/ Xxxxxxxx X. Xxxxx | ||||
| Xxxxxxxx X. Xxxxx | ||||
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