Document:

Exhibit
10.42

 

2003 EMPLOYEE PROFIT
SHARING PLAN

 

Purpose

 

The purpose of the 2003
American Airlines Employee Profit Sharing Plan (“Plan”) is to provide
participating employees with a sense of commitment to, and direct financial
interest in, the success of American Airlines, Inc.

 

Definitions

 

Capitalized terms not
otherwise defined in the Plan will have the meanings set forth in the 1998 Long
Term Incentive Plan, as amended (the “LTIP”).

 

“AMR” is defined as AMR
Corporation.

 

“Adjusted Investment” is
defined as the sum of American’s notes payable, current maturities of long-term
debt and capital leases, long-term debt, capital leases, Present Value of
Operating Leases, and stockholders’ equity, and any accounting adjustments or
extraordinary or unusual items which may be added or deducted at the discretion
of the Committee and are approved by the Board of Directors of AMR.

 

“Affiliate” is defined as
a subsidiary of AMR or any entity that is designated by the Committee as a
participating employer under the Plan, provided that AMR directly or indirectly
owns at least 20% of the combined voting power of all classes of stock of such
entity.

 

“American” is defined as
AMR less AMR subsidiaries other than American Airlines, Inc. and its
subsidiaries.

 

“Average Adjusted
Investment” is defined as the sum of Adjusted Investment as of 12/31/02,
3/31/03, 6/30/03, and 9/30/03, divided by four.

 

“Calculated Amortization
of Operating Leases” is defined as the amortization expense associated with the
Capitalized Value of Operating Leases as if such leases were accounted for as
capital leases, and is determined by the straight-line method over the lease
term.

 

“Capitalized Value of
Operating Leases” is defined as the initial present value of the lease payments
required under American’s aircraft operating leases over the initial stated
lease term, calculated using a discount rate of Prime plus one percent.

 

“Committee” is defined as
the AMR Incentive Compensation Committee.

 

1

 

“Fund” is defined as the
profit sharing fund, if any, accumulated in accordance with this Plan.

 

“Plan Earnings” is
defined as the sum of American’s pre-tax income, interest expense, aircraft
rental expense, and any accruals for American’s Pilot Variable Compensation
Plan, Employee Profit Sharing Plan, Incentive Compensation Plan, and any other
plan that might be created, at the discretion of the Committee, less Calculated
Amortization of Operating Leases and any accounting adjustments or
extraordinary or unusual items which may be added or deducted at the discretion
of the Committee and approved by the Board of Directors of AMR.

 

“Present Value of
Operating Leases” is defined as the present value of the lease payments
required under American’s aircraft operating leases over the remaining lease
term, calculated using the discount rate of Prime plus one percent.  Amounts for 3/31/03, 6/30/03, and 9/30/03
are computed by determining the difference between the Present Value of
Operating Leases as of 12/31/03 and 12/31/02 and allocating that difference
evenly over the four quarters of 2003.

 

“Prime” is defined as the
base rate on corporate loans posted by at least 75% of the 30 largest U.S.
banks which is published daily in the Wall Street Journal.

 

“Qualified Earnings” is
defined as base salaries paid during the Plan year, overtime, holiday pay,
skill premiums, longevity pay, sick pay, vacation pay, shift differential,
overrides and license premiums and does not include payments such as travel and
incidental expenses, moving expenses, relocation allowance (COLA), payouts from
any retirement plan, disability payments, workers compensation payments,
imputed income from certain travel service charges or life insurance, or other
benefits provided by American, nor does it include any special one-time
monetary awards or allowances, lump sum payments, or incentive compensation or
profit sharing payments.

 

“Return on Investment” or
“ROI” is defined as Plan Earnings divided by Average Adjusted Investment,
stated as a percentage.

 

Eligibility for
Participation

 

In order to be eligible
for a profit sharing award, the individual must:

 

•                  Have worked during the Plan year as a
regular full-time or part-time employee at American in a participating
workgroup (flight attendant, reservations, coordinator/planner, airport agent,
sky cap, support staff, management levels 04 and below).

 

2

 

•                  Have an adjusted seniority date prior
to July 1st of the Plan year. 
An individual’s Qualified Earnings from the time worked at American will
be included in the award calculation.

 

•                  Be employed at American or an
Affiliate at the time awards are paid. 
If at the time awards are paid under the Plan, an individual has retired
from American or an Affiliate, has been laid off, is on a leave of absence with
re-instatement rights, is disabled or has died, the award which the individual
otherwise would have received under the Plan but for such retirement, lay-off,
leave, disability or death may be paid to the individual or his/her estate in
the event of death, at the discretion of the Committee.

 

Notwithstanding the
foregoing, however, an employee will not be eligible to participate in the Plan
if such employee is, at the same time, eligible to participate in:

 

i)                 the
2003 American Airlines Incentive Compensation Plan for Officers and Key
Employees,

ii)              the
Pilot Profit Sharing Plan (as implemented in 1997),

iii)           any
incentive compensation, profit sharing, commission or other bonus plan for
employees of any division of American, or

iv)          any
incentive compensation, profit sharing, commission or other bonus plan
sponsored by an Affiliate.

 

Awards under the Plan
will be determined on a proportionate basis for participation in more than one
plan during a Plan year.  Employees who
transfer from/to Affiliates or any other plan described above during a Plan
year, and satisfy eligibility requirements, will receive awards from each plan
on a proportionate basis.

 

The Profit Sharing Fund
Accumulation

 

Performance will be measured
by ROI and the Fund will accumulate based on that performance.  The Fund is established at 1% of Qualified
Earnings when ROI is equal to 6.4%.  The
fund will accumulate on a straight-line basis at the rate of 0.583% of
qualified earnings for each additional point of ROI.

 

The profit sharing fund
will not exceed an amount equal to 8% of Qualified Earnings at levels of ROI
above 18.4%.

 

3

 

Award Distribution

 

For eligible domestic
employees (where domestic means the United States, Puerto Rico and the U.S.
Virgin Islands), individual awards will be distributed based on an employee’s
Qualified Earnings for the Plan year multiplied by the appropriate percentage
of Qualified Earnings based upon the ROI achieved for the Plan year. The
percent of Qualified Earnings used for Fund accumulation and award distribution
will be the same.

 

A portion of the Fund
will be allocated for eligible international employees (employees other than
those in the United States, Puerto Rico and the U.S. Virgin Islands) based on
the aggregate of all eligible international employees’ Qualified Earnings as a
percentage of the aggregate of all eligible employees’ total Qualified
Earnings.  This portion of the Fund will
be set aside for distribution at the discretion of the American officer(s)
responsible for such international employees, subject only to the Committee’s
approval.

 

Administration

 

The Plan will be
administered by the Committee which is comprised of officers of American
appointed by the Board of Directors of AMR. 
The Committee will have authority to administer and interpret the Plan,
establish administrative rules, determine eligibility and take any other action
necessary for the proper and efficient operation of the Plan.  The amount, if any, of the Fund shall be
based on a certification of ROI by AMR’s General Auditor.  A summary of awards under the Plan shall be
provided to the Board of Directors of AMR at the first regular meeting following
determination of the awards.

 

Method of Payment

 

The Committee shall
determine the method of payment of awards. 
Subject to the terms of the Plan, awards shall be paid as soon as
practicable after audited financial statements for the year 2003 are available.

 

General

 

Neither this Plan nor any
action taken hereunder shall be construed as giving to any employee or
participant the right to be retained in the employ of American or an Affiliate.

 

Nothing in the Plan shall
be deemed to give any employee any right, contractually or otherwise, to participate
in the Plan or in any benefits hereunder, other than the right to 

 

4

 

receive payment of such
award as may have been expressly determined by the Committee.

 

In the event of any act
of God, war, natural disaster, aircraft grounding, revocation of operating
certificate, terrorism, strike, lockout, labor dispute, work stoppage, fire,
epidemic or quarantine restriction, act of government, critical materials
shortage, or any other act beyond the control of American, whether similar or
dissimilar,  (each a “Force Majeure
Event”), which Force Majeure Event affects American or its Subsidiaries or its
Affiliates, the Committee, in its sole discretion, may (i) terminate or (ii)
suspend, delay, defer (for such period of time as the Committee may deem
necessary), or substitute any payments due currently or in the future under the
Plan, including, but not limited to, any payments that have accrued to the
benefit of participants but have not yet been paid.

 

In consideration of the
employee’s privilege to participate in the Plan, the employee agrees (i) not to
disclose any trade secrets of, or other confidential/restricted information of,
American or its Affiliates to any unauthorized party (ii) not to make any unauthorized
use of such trade secrets or confidential or restricted information during his
or her employment with American or its Affiliates or after such employment is
terminated, and (iii) not to solicit any current employees of American or any
subsidiaries of AMR to join the employee at his or her new place of employment
after his or her employment with American or its Affiliates is terminated.

 

The Committee may amend,
suspend, or terminate the Plan at any time.

 

5Exhibit 10.43

 

2003
INCENTIVE COMPENSATION PLAN

FOR OFFICERS AND
KEY EMPLOYEES

 

 

Purpose

 

The
purpose of the 2003 American Airlines Incentive Compensation Plan (“Plan”) for
officers and key employees is to provide greater incentive to officers and key
employees of American Airlines, Inc. to achieve the highest level of individual
performance and to meet or exceed specified goals which will contribute to the
success of American.

 

Definitions

 

Capitalized terms
not otherwise defined in the Plan will have the meanings set forth in the 1998
Long Term Incentive Plan, as amended (the “LTIP”).

 

“AMR” is defined
as AMR Corporation.

 

“Aggregate
Target Awards” is defined as the arithmetic sum of the Target Awards for all
Plan participants.

 

“Affiliate” is
defined as a subsidiary of AMR or any entity that is designated by the
Committee as a participating employer under the Plan, provided that AMR
directly or indirectly owns at least 20% of the combined voting power of all
classes of stock of such entity.

 

“American” is defined
as AMR less AMR subsidiaries other than American Airlines, Inc. and its
subsidiaries.

 

“Committee” is
defined as the Compensation Committee of the AMR Board of Directors.

 

“Competitors”
is defined as Continental Airlines, Delta Air Lines, Northwest Airlines, United
Air Lines and US Airways.

 

“DOT
Rank” is defined as American’s relative rank with respect to the Competitors in
the category of arrivals+14 (A+14) as determined by the U.S. Department of
Transportation (DOT).  This cumulative
ranking is based on DOT’s aggregated A+14 data for the period December 1, 2002
through November 30, 2003, inclusive. 
To the extent that at any point during the year a carrier ceases to
participate, it will be excluded from the entire year.

 

1

 

“Engagement
Scores” is defined as American’s overall engagement score on the employee
opinion survey and American’s rating versus the National Norm, each reported as
a percent annually.

 

“Fund” is defined
as the incentive compensation fund, if any, accumulated in accordance with this
Plan.

 

“Measure” is
defined as Net Income, DOT Rank, Survey America Rank, or Engagement Score.

 

“Named Executive
Officers” is defined as the officers of American who are named in the AMR proxy
statement for the year in which awards under the Plan are paid.

 

“National Norm” is
defined as a national sample of employees in firms with 1,000 or more
employees.

 

“Net Income” is
AMR net income including any accounting adjustments or extraordinary or unusual
items which may be added or deducted by the Committee.

 

“Qualified
Earnings” is defined as base pay as of December 31 of the Plan year, holiday
pay, sick pay, and vacation pay, but does not include such things as travel and
incidental expenses, moving expenses, relocation allowance (COLA), payouts from
any retirement plan, disability payments, workers compensation payments,
imputed income from certain travel service charges or life insurance, or other
benefits provided by American, nor does it include any special monetary awards
or allowances, lump sum payments, or incentive compensation or profit sharing
payments.

 

“Survey
America Rank” is defined as American’s relative rank with respect to its
Competitors in the categories of 
“Retained Preference”, “Overall Travel Experience”, “Overall Ground
Service”, and “Overall On-Board Services” in the coach cabin as reported in
Plog Inc.’s Survey America.  The Survey
America ranking is based on cumulative data for American and the Competitors
for the period October 1, 2002 through September 30, 2003, inclusive.  To the extent that at any point during the
year a carrier ceases to participate, it will be excluded from the entire year.

 

“Target
Award” is defined as the award (stated as a percentage of Qualified Earnings)
for an eligible participant when target levels are achieved on all
Measures.  The Target Award is
determined by the participant’s job level.

 

Eligibility for
Participation

 

In order to be
eligible to participate in the Plan, an individual must be an officer or key
employee (as designated by American’s Chairman and CEO) of American.  Additionally, the individual must have been
employed by American or an Affiliate as an officer or key employee for at least
three consecutive months during the Plan year. 
The three months service requirement may be waived in cases of
retirement in accordance 

 

2

 

with American’s
then applicable pension plan, prior to completing three months of service.

 

During a Plan
year, individuals with less than twelve months eligibility in the Plan may be
eligible to participate in the Plan on a pro rata basis, at the discretion of
the Committee.  In addition, the
Committee, at its discretion, may permit participation by officers and key employees
of Affiliates who have been so employed by the Affiliate for at least three
consecutive months during the Plan year.

 

Notwithstanding
the forgoing, however, an officer or key employee will not be eligible to
participate in the Plan if such officer or key employee is, at the same time,
eligible to participate in a commission, incentive, profit sharing or other
bonus compensation program sponsored by American or an Affiliate, unless the
Committee otherwise decides.

 

In order to
receive an award under the Plan, an individual must satisfy the aforementioned
eligibility requirements and must be an employee of American or an Affiliate at
the time an award under the Plan is paid. 
If at the time awards are paid under the Plan, an individual has retired
from American or an Affiliate, is on leave of absence with reinstatement
rights, is disabled, or has died, the award which the individual otherwise
would have received under the Plan but for such retirement, leave, disability,
or death may be paid to the individual, or his/her estate in the event of
death, at the discretion of the Committee.

 

The Incentive
Compensation Fund

 

The Fund is
comprised of three components: financial, employee and customer.  The employee and customer components have
various Measures (see below).  Each
Measure has a threshold (performance below this level earns no award), target
and maximum percentage of Aggregate Target Awards that may be earned, as
follows:

 

	
  Component

  	
   

  	
  Threshold

  	
   

  	
  Target

  	
   

  	
  Maximum

  	
   

  
	
  Financial

  	
   

  	
  16.50

  	
  %

  	
  66

  	
  %

  	
  132

  	
  %

  
	
  Employee

  	
   

  	
  8.50

  	
  %

  	
  17

  	
  %

  	
  34

  	
  %

  
	
  Customer

  	
   

  	
  12.75

  	
  %

  	
  17

  	
  %

  	
  34

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  37.75

  	
  %

  	
  100

  	
  %

  	
  200

  	
  %

  

 

For each Measure,
the Fund will accumulate on a linear basis between each of the points defined
in the following tables.

 

Financial Measure:

 

The financial
measure is based on Net Income.  At a
threshold Net Income of $125 million, the Fund will accumulate 16.50% of
Aggregate Target Awards.  Higher Net
Incomes will result in higher percentages of Aggregate Target Awards as
follows:

 

3

 

	
  Net Income

  	
   

  	
  % of
  Target Awards Earned

  	
   

  
	
  $

  	
  125

  	
   

  	
  16.50

  	
  %

  
	
  $

  	
  310

  	
   

  	
  33.00

  	
  %

  
	
  $

  	
  495

  	
   

  	
  49.50

  	
  %

  
	
  $

  	
  680

  	
   

  	
  66.00

  	
  %

  
	
  $

  	
  935

  	
   

  	
  99.00

  	
  %

  
	
  $

  	
  1,190

  	
   

  	
  132.00

  	
  % (Max)

  

 

Employee
Measures:

 

The
employee measures will depend on Engagement Scores.

 

	
   

  	
   

  	
  Threshold

  	
   

  	
  Target

  	
   

  	
  Maximum

  	
   

  
	
  Engagement Score

  	
   

  	
  5

  	
  %

  	
  10

  	
  %

  	
  20

  	
  %

  
	
  Engagement versus
  National Norm

  	
   

  	
  3.5

  	
  %

  	
  7

  	
  %

  	
  14

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  8.5

  	
  %

  	
  17

  	
  %

  	
  34

  	
  %

  

 

At
a threshold Engagement Score of 74%, the Fund will accumulate 5% of Aggregate
Target Awards.  Higher scores will
result in higher percentages of Aggregate Target Awards, as follows:

 

	
  Engagement Score

  	
   

  	
  % of
  Target Awards Earned

  	
   

  
	
  74

  	
  %

  	
  5.00

  	
  %

  
	
  75

  	
  %

  	
  7.50

  	
  %

  
	
  76

  	
  %

  	
  10.00

  	
  %

  
	
  77

  	
  %

  	
  15.00

  	
  %

  
	
  78

  	
  %

  	
  20.00

  	
  % (Max)

  

 

At a threshold
Engagement Score of 5% below National Norm, the Fund will accumulate 3.5% of
Aggregate Target Awards.  Higher scores
will result in higher percentages of Aggregate Target Awards, as follows:

 

	
  Percent below National Norm

  	
   

  	
  % of
  Target Awards Earned

  	
   

  
	
  5

  	
  %

  	
  3.50

  	
  %

  
	
  4

  	
  %

  	
  5.25

  	
  %

  
	
  3

  	
  %

  	
  7.00

  	
  %

  
	
  2

  	
  %

  	
  10.50

  	
  %

  
	
  1

  	
  %

  	
  14.00

  	
  % (Max)

  

 

In the event the
Employee Opinion Survey is not conducted during the plan year measured, AA’s
Engagement Score and Engagement versus the National Norm will be calculated at
target.

 

4

 

Customer Measures:

 

Customer
Measures will depend on DOT Rank and Survey America Rank.  Each of the five components (retained
preference, overall travel experience, overall ground service, overall on-board
service and DOT A+14 rankings) is measured separately.  For each Measure, at a threshold rank of
fourth, the fund will accumulate 2.55% of Aggregate Target Awards.  A higher rank will result in higher
percentages of Aggregate Target Awards, as follows:

 

	
  Rank

  	
   

  	
  % of Target Awards
  Earned

  	
   

  
	
  Fourth

  	
   

  	
  2.55

  	
  %

  
	
  Third

  	
   

  	
  3.40

  	
  %

  
	
  Second

  	
   

  	
  5.10

  	
  %

  
	
  First

  	
   

  	
  6.80

  	
  %
  (Max)

  

 

 

The following scorecard
illustrates this.

 

2003 Incentive
Plan Scorecard

 

	
  Measures

  	
   

  	
  Weight

  	
   

  	
  Threshold

  25%

  	
   

  	
  50%

  	
   

  	
  75%

  	
   

  	
  Target

  100%

  	
   

  	
  150%

  	
   

  	
  Maximum

  200%

  	
   

  	
  Example

  Score(1)

  	
   

  
	
  Shareholder

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  - AMR net income

  	
   

  	
  66

  	
  %

  	
  $

  	
  125M

  	
   

  	
  $

  	
  310M

  	
   

  	
  $

  	
  495M

  	
   

  	
  $

  	
  680M

  	
   

  	
  $

  	
  935M

  	
   

  	
  $

  	
  1,190M

  	
   

  	
  66.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Weight

  	
   

  	
  25%

  	
   

  	
  Threshold

  50%

  	
   

  	
  75%

  	
   

  	
  Target

  100%

  	
   

  	
  150%

  	
   

  	
  Maximum

  200%

  	
   

  	
  Example

  Score

  	
   

  
	
  Employee

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  - engagement score on opinion
  survey

  	
   

  	
  10

  	
  %

  	
  n/a

  	
   

  	
  74

  	
  %

  	
  75

  	
  %

  	
  76

  	
  %

  	
  77

  	
  %

  	
  78

  	
  %

  	
  5.00

  	
  %

  
	
  - AA engagement vs. national
  norm

  	
   

  	
  7

  	
  %

  	
  n/a

  	
   

  	
  5 below

  	
  %

  	
  4 below

  	
  %

  	
  3 below

  	
  %

  	
  2 below

  	
  %

  	
  1 below

  	
  %

  	
  5.25

  	
  %

  
	
   

  	
   

  	
  17

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  10.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Weight

  	
   

  	
  25%

  	
   

  	
  50%

  	
   

  	
  Threshold

  75%

  	
   

  	
  Target

  100%

  	
   

  	
  150%

  	
   

  	
  Maximum

  200%

  	
   

  	
  Example

  Score

  	
   

  
	
  Customer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  - retained preference

  	
   

  	
  3.4

  	
  %

  	
  n/a

  	
   

  	
  n/a

  	
   

  	
  4th

  	
   

  	
  3rd

  	
   

  	
  2nd

  	
   

  	
  1st

  	
   

  	
  3.40

  	
  %

  
	
  - overall travel experience

  	
   

  	
  3.4

  	
  %

  	
  n/a

  	
   

  	
  n/a

  	
   

  	
  4th

  	
   

  	
  3rd

  	
   

  	
  2nd

  	
   

  	
  1st

  	
   

  	
  2.55

  	
  %

  
	
  - overall ground service

  	
   

  	
  3.4

  	
  %

  	
  n/a

  	
   

  	
  n/a

  	
   

  	
  4th

  	
   

  	
  3rd

  	
   

  	
  2nd

  	
   

  	
  1st

  	
   

  	
  2.55

  	
  %

  
	
  - overall on-board services

  	
   

  	
  3.4

  	
  %

  	
  n/a

  	
   

  	
  n/a

  	
   

  	
  4th

  	
   

  	
  3rd

  	
   

  	
  2nd

  	
   

  	
  1st

  	
   

  	
  5.10

  	
  %

  
	
  - DOT A+14 ratings

  	
   

  	
  3.4

  	
  %

  	
  n/a

  	
   

  	
  n/a

  	
   

  	
  4th

  	
   

  	
  3rd

  	
   

  	
  2nd

  	
   

  	
  1st

  	
   

  	
  3.40

  	
  %

  
	
   

  	
   

  	
  17

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  17.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fund as a% of Target

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  93.25

  	
  %

  
																								

 

(1)
Based on performance results in shaded areas

 

5

 

Allocation of
Individual Awards

 

The Chairman and
CEO of American, in consultation with the COO, executive and senior vice
presidents of American, will determine awards for non-officer eligible
employees based upon the eligible employee’s performance.  Unless otherwise determined by the Chairman,
an award under the Plan to a non-officer eligible employee, when combined with
any other award for the Plan year whether such other award is under an
incentive compensation, commission, profit sharing or other bonus compensation
plan, may not exceed 100% of such eligible employee’s base salary.

 

The Committee, in
consultation with the Chairman and CEO of American, will determine awards for
officers of American, including the Named Executive Officers.  The awards for officers (other than the
Named Executive Officers) will be equal to the appropriate Target Award, plus
or minus any adjustments for individual performance.  To the extent that an award to a Named Executive Officer includes
a partial payment relating to a Measure (other than Net Income), such partial
payment will be paid from the general operating funds of American.    An award under the Plan to an officer may
not exceed the amount set forth in Section 11 of the LTIP.

 

The aggregate of
all awards paid hereunder will not exceed the lesser of: (2.0 times the Fund at
Aggregate Target Awards) or (50% of the total base salaries of all eligible
participants in the Plan).    In the
discretion of the Committee, the Fund may not be fully distributed.

 

Administration

 

The Committee
shall have authority to administer and interpret the Plan, establish
administrative rules, approve eligible participants, and take any other action
necessary for the proper and efficient operation of the Plan.  For participants other than the Named
Executive Officers, the Committee reserves the right to adjust the calculation
of each Measure at its discretion. 
Notwithstanding anything to the contrary contained herein, no awards
will be made under the Plan unless awards are also made under the 2003 American
Airlines Employee Profit Sharing Plan and the 2003 Pilot Variable Compensation
Plan for members of the Allied Pilots Association.  The amount, if any, of the Fund shall be audited by the General
Auditor of American based on a certification of Net Income by AMR’s independent
auditors.  A summary of awards under the
Plan shall be provided to the Committee at the first regular meeting following
determination of the awards.  To the
extent a Measure is no longer compiled by the DOT, Survey America, or American
as applicable, during a Plan year, the Committee will substitute a comparable
performance measure for the remainder of the Plan year.

 

6

 

Method of Payment

 

The Committee will
determine the method of payment of awards. 
Except as provided herein, awards shall be paid as soon as practicable
after audited financial statements for the year 2003 are available.

 

General

 

Neither this Plan
nor any action taken hereunder shall be construed as giving any employee or
participant the right to be retained in the employ of American or an Affiliate.

 

Nothing in the
Plan shall be deemed to give any employee any right, contractually or
otherwise, to participate in the Plan or in any benefits hereunder, other than
the right to receive payment of such incentive compensation as may have been
expressly awarded by the Committee.

 

In the event of
any act of God, war, natural disaster, aircraft grounding, revocation of
operating certificate, terrorism, strike, lockout, labor dispute, work
stoppage, fire, epidemic or quarantine restriction, act of government, critical
materials shortage, or any other act beyond the control of American, whether
similar or dissimilar,  (each a “Force
Majeure Event”), which Force Majeure Event affects American or its subsidiaries
or its Affiliates, the Committee in its sole discretion, may (i) terminate or
(ii) suspend, delay, defer (for such period of time as the Committee may deem
necessary), or substitute any payments due currently or in the future under the
Plan, including, but not limited to, any payments that have accrued to the
benefit of participants but have not yet been paid.

 

In consideration
of the employee’s privilege to participate in the Plan, the employee agrees (i)
not to disclose any trade secrets of, or other confidential/restricted
information of, American or its Affiliates to any unauthorized party and (ii)
not to make any unauthorized use of such trade secrets or confidential or
restricted information during his or her employment with American or its
Affiliates or after such employment is terminated, and (iii) not to solicit any
current employees of American or any subsidiaries of AMR to join the employee
at his or her new place of employment after his or her employment with American
or its Affiliates is terminated.

 

The Committee may
amend, suspend, or terminate the Plan at any time.

 

7

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