Exhibit 10.53

 

AMENDED AND RESTATED
EXECUTIVE TERMINATION BENEFITS AGREEMENT

 

THIS AMENDED AND RESTATED EXECUTIVE TERMINATION BENEFITS AGREEMENT (this
“Agreement”), dated as of the 13th day of June, 2002 is among AMR CORPORATION, a
Delaware corporation, AMERICAN AIRLINES, INC., a Delaware corporation
(collectively the “Company”), and JEFFREY C. CAMPBELL (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;

 

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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

 

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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

 

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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
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;

 

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(ii)                                  by 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;

 

(iii)                               by the Executive pursuant to Section 2(d);
or

 

(iv)                              by the Company or the Executive pursuant to
Section 2(e).

 

(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;

 

(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

 

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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

 

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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

 

(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

 

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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 wilful
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

 

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“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.

 

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)                                 Notwithstanding anything contained in this
Agreement to the contrary, in the event of a Change in Control, the Executive
may terminate employment with the Company and any subsidiary for any reason, or
without reason, by providing Notice of Termination pursuant to Section 3 during
the 30-day period immediately following the first anniversary of the first
occurrence of a Change in Control with the right to the benefits set forth in
Section 4.

 

(e)                                  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

 

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Termination is delivered (the “Termination Date”), the specific provision in
this Agreement relied upon, and, except for a termination pursuant to Section
2(d), 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 three 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, plus (iii) ”Performance Returns” equal to the highest annual
payment of performance returns paid to the Executive 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.

 

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(b)                                 Welfare Benefits

 

For a period of 36 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

 

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“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 plus Performance Returns.  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

 

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.

 

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(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

 

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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.

 

(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.

 

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(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.                                       Certain Additional Payments by the
Company.

 

(a)                                  Anything in this Agreement to the contrary
notwithstanding, but subject to Section 5(h), in the event that this Agreement
shall become operative and it shall be determined (as hereafter provided) that
any payment (other than the Gross-Up payments provided for in this Section 5) or
distribution by the Company or any of its subsidiaries to or for the benefit of
the Executive, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar right,
restricted stock, deferred stock or the lapse or termination of any restriction
on, deferral period or the vesting or exercisability of any of the foregoing (a
“Payment”), would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being considered
“contingent on a change in ownership or control” of the Company, within the
meaning of Section 280G of the Code (or any successor provision thereto) or to
any similar tax imposed by state or local law, or any interest or penalties with
respect to such tax (such tax or  taxes, together with any such interest and
penalties, being hereafter collectively referred to as the “Excise Tax”), then
the Executive shall be entitled to receive an additional payment or payments
(collectively, a “Gross-Up Payment”).  The Gross-Up Payment shall be in an
amount such that, after payment by the Executive of all taxes (including any
interest or

 

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penalties imposed with respect to such taxes), including any Excise Tax and any
income tax imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payment.

 

(b)                                 Subject to the provisions of Section 5(f),
all determinations required to be made under this Section 5, including whether
an Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required to be paid by the Company to the
Executive and the amount of such Gross-Up Payment, if any, shall be made by a
nationally recognized accounting firm (the “Accounting Firm”) selected by the
Executive in his sole discretion.  The Executive shall direct the Accounting
Firm to submit its determination and detailed supporting calculations to both
the Company and the Executive within 30 calendar days after the Change in
Control Date, the Termination Date, if applicable, and any such other time or
times as may be requested by the Company or the Executive.  If the Accounting
Firm determines that any Excise Tax is payable by the Executive, the Company
shall pay the required Gross-Up Payment to the Executive within five business
days after receipt of such determination and calculations with respect to any
Payment to the Executive.  If the Accounting Firm determines that no Excise Tax
is payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Company and the Executive an opinion that the
Executive has substantial authority not to report any Excise Tax on his federal,
state or local income or other tax return.  As a result of the uncertainty in
the application of Section 4999 of the Code (or any successor provision thereto)
and the possibility of similar uncertainty regarding applicable state or local
tax law at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (an “Underpayment”), consistent with the calculations
required to be made hereunder.  In the

 

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event that the Company exhausts or fails to pursue its remedies pursuant to
Section 5(f) and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible.  Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.

 

(c)                                  The Company and the Executive shall each
provide the Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the case may be,
reasonably requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determinations and calculations contemplated by Section 5(b).  Any determination
by the Accounting Firm as to the amount of the Gross-Up Payment shall be binding
upon the Company and the Executive.

 

(d)                                 The federal, state and local income or other
tax returns filed by the Executive shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the Excise
Tax payable by the Executive.  The Executive shall make proper payment of the
amount of any Excise Payment, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment.  If prior to the filing of the Executive’s federal income tax return,
or corresponding state or local tax return, if relevant, the Accounting

 

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Firm determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.

 

(e)                                  The fees and expenses of the Accounting
Firm for its services in connection with the determinations and calculations
contemplated by Section 5(b) shall be borne by the Company.  If such fees and
expenses are initially paid by the Executive, the Company shall reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.

 

(f)                                    The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service or any other taxing
authority that, if successful, would require the payment by the Company of a
Gross-Up Payment or any additional Gross-Up Payment.  Such notification shall be
given as promptly as practicable but no later than 10 business days after the
Executive actually receives notice of such claim and the Executive shall further
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid (in each case, to the extent known by the Executive). 
The Executive shall not pay such claim prior to the earlier of (x) the
expiration of the 30-calendar-day period following the date on which he gives
such notice to the Company and (y) the date that any payment of amount with
respect to such claim is due.  If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:

 

(i)                                     provide the Company with any written
records or documents in his possession relating to such claim reasonably
requested by the Company;

 

(ii)                                  take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including without

 

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limitation accepting legal representation with respect to such claim by an
attorney competent in respect of the subject matter and reasonably selected by
the Company;

 

(iii)                               cooperate with the Company in good faith in
order effectively to contest such claim; and

 

(iv)                              permit the Company to participate in any
proceedings relating to such claim;

 

provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such contest and payment
of costs and expenses.  Without limiting the foregoing provisions of this
Section 5(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 5(f) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any

 

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Excise Tax or income or other tax, including interest or penalties with respect
thereto, imposed with respect to such advance; and provided further, however,
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which the contested amount
is claimed to be due is limited solely to such contested amount.  Furthermore,
the Company’s control of any such contested claim shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

 

(g)                                 If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 5(f), the Executive receives
any refund with respect to such claim, the Executive shall (subject to the
Company’s complying with the requirements of Section 5(f)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto).  If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 5(f), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial or refund prior to the expiration
of 30 calendar days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of any such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Company to the Executive pursuant to this Section 5.

 

(h)                                 Notwithstanding any provision of this
Agreement to the contrary, if (i) but for this sentence, the Company would be
obligated to make a Gross-Up Payment to the Executive, (ii) the aggregate
“present value” of the “parachute payments” to be paid or provided

 

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to the Executive under this Agreement or otherwise does not exceed 1.15
multiplied by three times the Executive’s “base amount,” and (iii) but for this
sentence, the net after-tax benefit to the Executive of the Gross-Up Payment
would not exceed $50,000 (taking into account both income taxes and any Excise
Tax), then the payments and benefits to be paid or provided under this Agreement
(including any stock based compensation pursuant to Section 4(f)) will be
reduced to the minimum extent necessary (but in no event to less than zero) so
that no portion of any payment or benefit to the Executive, as so reduced,
constitutes an “excess parachute payment.”  For purposes of this Section 5(h),
the terms “excess parachute payment,” “present value,” “parachute payment,” and
“base amount” will have the meanings assigned to them by Section 280G of the
Code.  The determination of whether any reduction in such payments or benefits
to be provided under this Agreement is required pursuant to the preceding
sentence will be made at the expense of the Company, if requested by the
Executive or the Company, by the Accounting Firm.  The fact that the Executive’s
right to payments or benefits may be reduced by reason of the limitations
contained in this Section 5(h) will not of itself limit or otherwise affect any
other rights of the Executive other than pursuant to this Agreement.  In the
event that any payment or benefit intended to be provided under this Agreement
or otherwise is required to be reduced pursuant to this Section 5(h), the
Executive will be entitled to designate the payments and/or benefits to be so
reduced in order to give effect to this Section 5(h).  The Company will provide
the Executive with all information reasonably requested by the Executive to
permit the Executive to make such designation.  In the event that the Executive
fails to make such designation within 10 business days of the Termination Date,
the Company may effect such reduction in any manner it deems appropriate.

 

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6.                                       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 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).

 

7.                                       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

 

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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 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 7(a) hereof, in the event a Change in Control
occurs, the performance of the Company’s obligations under this Section 7 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 fees and
expenses of counsel selected from time to time by the Executive pursuant to
Section 7(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 7(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 Company and shall have no right
to, or security interest in, any assets of the Company or any subsidiary.

 

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8.                                       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.

 

9.                                       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

 

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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 9 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 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.

 

10.                                 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 such as FedEx, UPS, or Purolator, 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.

 

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11.                                 Governing Law

 

THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.

 

12.                                 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, 5 and 7 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 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

 

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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.

 

13.                                 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.

 

14.                                 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 9.  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 14 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.

 

15.                                 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

 

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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(e), 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 15, the 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.

 

16                                  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.

 

17                                  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

 

 

 

 

 

By:

/s/ Donald J. Carty

 

 

 

 

 

AMERICAN AIRLINES, INC.

 

 

 

 

 

By:

/s/ Susan M. Oliver

 

 

 

 

 

JEFFREY C. CAMPBELL

 

 

 

 

 

/s/ Jeffrey C. Campbell

 

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