Exhibit 4.1
AMR CORPORATION
PILOTS STOCK OPTION PLAN
ARTICLE 1. ESTABLISHMENT
AMR Corporation, a Delaware corporation and the Allied Pilots
Association, as the representative of the Pilots of American Airlines, Inc.,
hereby establish the "Pilots Stock Option Plan", as set forth herein. The
Pilots Stock Option Plan provides for the grant of Stock Options to purchase
a total of 5.75 million shares of Stock. The Stock Options will be granted
in two installments. The Plan will be part of the Basic Agreement, will
become effective as of the Signing Date.
ARTICLE 2. DEFINITIONS
For the purposes of the Plan, the following terms will be defined as set
forth below and, when the defined meaning is intended, the term is
capitalized.
2.1 "American Airlines" means American Airlines, Inc., a Delaware
corporation and wholly owned subsidiary of the Company.
2.2 "Association" means the Allied Pilots Association.
2.3 "Basic Agreement" means the basic collective bargaining agreement
together with all effective amendments, supplemental agreements, letters of
agreement and letters of understanding between American Airlines and the
Association, in existence on the Signing Date and as may be modified or
supplemented after the effective date.
2.4 "Board" or "Board of Directors" means the Board of Directors of the
Company.
2.5 "Committee" means the Committee referred to in Article 3 of the
Plan.
2.6 "Company" means AMR Corporation, a Delaware corporation, or any
successor corporation.
2.7 "Exercise Period" means the period of time between the date a Stock
Option becomes exercisable and the tenth (10th) anniversary of that Stock
Option's Grant Date, when the Stock Option expires.
2.8 "Fair Market Value" means, as of any given date, the mean between
the highest and lowest quoted selling price, regular way, of the Stock on the
New York Stock Exchange or, if no sale of Stock occurs on the New York Stock
Exchange on such date, the mean between the highest and lowest quoted selling
price, regular way, of the Stock on the New York Stock Exchange on the last
preceding day on which a sale occurred.
2.9 "Grant Date" means the date on which the Stock Options are awarded
under the Plan. The initial Grant Date will be the date agreed upon by the
Company and the Association, which date will be the Signing Date; provided,
however, the initial Grant Date will not be earlier than twenty (20) days
after the date the Association has certified the number of Stock Options each
Participant will receive on the initial Grant Date under the Plan. The
second Grant Date will be August 31, 1998.
2.10 "Option Price" means the price at which a share of Stock covered by
a Stock Option may be purchased, as specified in Article 6 below.
2.11 "Participant" means a Pilot who is a recipient of an award of a
Stock Option under the Plan.
2.12 "Pilot" means a pilot designated by the Association to receive an
award of a Stock Option under the Plan.
2.13 "Plan" means the Pilots Stock Option Plan.
2.14 "Signing Date" means the date of signing of the Basic Agreement.
2.15 "Stock" means the Common Stock, $1.00 par value per share, of the
Company.
2.16 "Stock Option" means the option to purchase shares of Stock granted
pursuant to Article 6 below. All Stock Options granted pursuant to the Plan
will be deemed "non-qualified" and not intended to be incentive stock options
under Section 422 of the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
ARTICLE 3. ADMINISTRATION
3.1 THE ADMINISTRATOR. The Plan will be administered by a Committee
comprised of three persons. Two persons will be appointed by the Chairman
and Chief Executive Officer of the Company. The third member of the
Committee will be the President of the Association or his designee.
3.2 THE COMMITTEE'S AUTHORITY. The Committee will have full authority
to construe and interpret the Plan, to establish, amend and rescind
appropriate rules and regulations relating to the distribution and exercise
of Stock Options under the Plan, to administer the Plan, and to take all such
steps and make all such determinations in connection with the Plan and the
Stock Options granted hereunder as it may deem necessary or advisable to
carry out the provisions and intent of the Plan, provided that any decision,
determination or action of the Committee with respect to the Plan will be
consistent with the terms of the Plan; further provided , unless any
decision, determination or action of the Committee is required by law, no
decision, determination or action of the Committee will impair the economic
benefit of a Participant's Stock Option. All actions to be taken pursuant to
this Article 3.2 will be decided at a duly constituted meeting of the
Committee. A majority of the members of the Committee will constitute a
quorum, and the act of a majority of the members present at a meeting
at which a quorum is present shall be the act of the Committee. At all
meetings each member of the Committee shall have one vote. No vacancy among
the representatives, by resignation or any other reason, will impair the
powers of the remaining representatives to administer the affairs of the
Plan. Notice of all meetings will be given to each member five (5) business
days prior to the meeting date. The Committee may delegate its authority
hereunder.
3.3 DISPUTE RESOLUTION. Disputes arising out of decisions,
determination or other actions of the Committee with respect to the
interpretation, administration or application of the Plan will be subject to
the grievance and System Board of Adjustment procedures of the Basic
Agreement.
ARTICLE 4. STOCK SUBJECT TO THE PLAN.
4.1 STOCK RESERVED. The total number of shares of Stock reserved and
available for distribution under the Plan will be 5.75 million, subject to
adjustment as provided in Article 4.2. Such shares may consist, in whole or
in part, of either authorized and unissued shares or treasury shares.
4.2 CERTAIN CHANGES IN CORPORATE STRUCTURE. In the event of any merger,
reorganization, consolidation, recapitalization, stock dividend, stock split
or other change in corporate structure affecting the Stock, the Company, in
its sole discretion, will make such adjustments as it deems necessary to
reflect such change so as to prevent the diminution or enlargement of a
Participant's rights, including but not limited to, adjustments in the
aggregate number of shares reserved for issuance under the Plan, and
adjustments in the number and option price of the shares subject to
outstanding Stock Options granted under the Plan, provided that the number of
shares subject to any Stock Option will always be a whole number. Numbers of
5 or below will be rounded down. Numbers of 6 or above will be rounded up.
If any of the foregoing events occur affecting the Stock and there is an
adjustment to the then outstanding non-qualified stock options under the last
paragraph of Section 3 of the Company's 1988 Long Term Incentive Plan (or the
corresponding provision of any successor plan) for officers and key
employees, the Stock Options under the Plan shall be adjusted in a manner no
less favorable to the Participant than the adjustment for the then
outstanding non-qualified stock options under the last paragraph of Section 3
of the Company's 1988 Long Term Incentive Plan (or the corresponding
provision of any successor plan).
ARTICLE 5. ELIGIBILITY.
The Association will determine the Participants and the number of whole
shares of Stock subject to Stock Options to be awarded to each Participant on
each Grant Date.
ARTICLE 6. STOCK OPTIONS.
6.1 GRANT. On the initial Grant Date, the Company will award Stock
Options covering an aggregate of 3,000,000 shares of Stock to the
Participants, as specified in Article 5. On the second Grant Date, the
Company will award Stock Options covering an aggregate of 2,750,000 shares of
Stock to the Participants as specified in Article 5. A Participant's Stock
Option will entitle the Participant to purchase from the Company a specified
number of shares of Stock at the Option Price.
6.2 NONTRANSFERABILITY. A Stock Option granted pursuant to the Plan
will not be transferable by the Participant otherwise than by will, by the
laws of descent and distribution, or by a written designation referred to in
Article 7.2 below, and is exercisable during the Participant's lifetime only
by such Participant.
6.3 OPTION PRICE. The Option Price for the first installment of Stock
Options will be $10.00 below the Fair Market Value of the Stock on the
initial Grant Date. The Option Price for the second installment of Stock
Options will be the Fair Market Value of the Stock on the second Grant Date.
The Option Price will be the price payable by the Participant for a share of
Stock upon the exercise of a Stock Option. The Option Price will be subject
to adjustment in accordance with the provisions of Article 4.2 hereof.
6.4 OPTION EXERCISE DATES AND TERM. Subject to Article 7 hereof, a
Stock Option granted to a Participant will be immediately exercisable on the
first business day following the Grant Date, and the Stock Option will expire
on, and no shares of Stock may be purchased thereunder after the tenth (10th)
anniversary of its Grant Date.
6.5 EXERCISING STOCK OPTIONS. To exercise a Stock Option, the holder
thereof must give irrevocable notice of the exercise to the Company or one or
more third parties designated by the Committee, identifying a whole number of
shares of Stock (which will not be less than the lesser of (a) 1 share of
Stock or (b) the number of shares of Stock subject to such Participant's then
exercisable Stock Option) with respect to which such Stock Option is being
exercised. The Option Price for the Stock Option being exercised must be
paid in full prior to issuance of the Stock. The Committee may, from time to
time, in its sole discretion establish administrative procedures relating to
the exercise of Stock Options, provided that such procedures are consistent
with the terms of the Plan.
6.6 WITHHOLDING TAXES. The Participant will be required to pay to the
Company, or make arrangements satisfactory to the Company regarding the
payment of, the amount of any foreign, federal (including FICA), state, or
local taxes of any kind required by law to be withheld with respect to the
exercise of a Stock Option.
6.7 PAYMENT. Payment of the Option Price and any tax withholding
obligation must be made by cashier's check, through electronic funds transfer
or through a broker-assisted Stock Option Exercise pursuant to procedures the
Committee may, in sole discretion, establish from time to time. No shares of
Stock will be delivered to the Participant until all such amounts have been
paid. Notwithstanding anything herein to the contrary, the Company will
permit and provide for the exercise of a Stock Option without the prior
payment of the Option Price and any tax withholding obligation, provided
arrangements satisfactory to the Company have been made for full payment of
such amounts (the foregoing to be deemed a "Cashless Exercise"). The
Participant will be responsible for all brokerage commissions, interest and
other expenses, if any.
ARTICLE 7. NONFORFEITABILITY OF OPTIONS AND TRANSFER UPON DEATH.
7.1 NONFORFEITABILITY. The Stock Options which are awarded to a
Participant will be nonforfeitable and exercisable at any time during the
Exercise Period.
7.2 DEATH. In the event of the death of a Participant during the
Exercise Period, the estate of such Participant, or other person designated
by the Participant, will be entitled to exercise any Stock Option awarded to
Participant to the same extent as a Participant who remains in active
employment with American Airlines.
ARTICLE 8. MISCELLANEOUS.
8.1 GOVERNING LAW. The Plan, and all awards and agreements made
hereunder, will be governed by and construed in accordance with the Railway
Labor Act, and the laws of the state of Texas without giving effect to the
principles of conflicts of laws thereof.
8.2 GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein includes the feminine; the plural includes the
singular; and the singular includes the plural.
8.3 NO RIGHT TO EMPLOYMENT. The adoption of the Plan will not confer
upon any employee of American Airlines any right to continued employment with
American Airlines, nor will it interfere in any way with the right of
American Airlines to terminate the employment of any of its employees at any
time.
8.4 RIGHTS OF PARTICIPANTS. Nothing in the Plan or in any Stock Option
granted under the Plan will confer upon any Participant or his executors,
administrators or legal representatives any of the rights of a stockholder of
the Company with respect to the shares of Stock subject to a Stock Option
until the Participant has given notice of exercise and has paid in full for
such shares.
8.5 PURCHASE FOR INVESTMENT AND LEGALITY. On or before the Signing
Date, the Company will file a Registration Statement on Form S-8 (a
"Registration Statement") pursuant to the Securities Act of 1933, as amended
(the "Securities Act") covering the Stock to be offered pursuant to the Plan
and will use its best efforts to maintain such registration at all times
necessary to permit holders of Stock Options to exercise them. In the event
there is no Registration Statement on file, the Participant, by acceptance of
any Stock Option granted under the Plan, will represent and warrant to the
Company that the purchase or receipt of shares of Stock upon the exercise
thereof will be for investment and not with a view to distribution, provided
that such representation and warranty will be inoperative if, in the opinion
of counsel to the Company, a proposed sale or distribution of such shares of
Stock is pursuant to an applicable effective registration statement under the
Securities Act or is, without such representation and warranty, exempt from
registration under such act.
The obligation of the Company to issue shares of Stock upon the exercise
of a Stock Option will also be subject, as conditions precedent, to
compliance with applicable provisions of the Securities Act, the Securities
Exchange Act of 1934, as amended, state securities laws, rules and
regulations under any of the foregoing and applicable requirements of any
securities exchange upon with the Company's securities are listed. The
Company will use its reasonable best efforts to take all actions necessary
and appropriate to satisfy each of the foregoing conditions.
The Company may endorse an appropriate legend referring to the foregoing
restrictions upon the certificate or certificates representing any shares of
Stock issued or transferred to a Participant upon the exercise of any Stock
Option granted under the Plan.
8.6 CHANGE IN CONTROL PROVISIONS. In the event of a Change in Control
of American Airlines (as described in Section 11(b) of the Company's 1988
Long Term Incentive Plan) all Stock Options not yet granted on the date of
such Change in Control will be granted, pursuant to Article 5, on the date of
such Change in Control at an Option Price equal to the Fair Market Value of
the Stock on such date.
8.7 AMENDMENTS. The Plan may only be amended or modified in writing as
agreed by both the Company and the Association.