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<SEC-DOCUMENT>0000950134-01-002483.txt : 20010323
<SEC-HEADER>0000950134-01-002483.hdr.sgml : 20010323
ACCESSION NUMBER:		0000950134-01-002483
CONFORMED SUBMISSION TYPE:	10-K405
PUBLIC DOCUMENT COUNT:		22
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010322

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AMR CORP
		CENTRAL INDEX KEY:			0000006201
		STANDARD INDUSTRIAL CLASSIFICATION:	AIR TRANSPORTATION, SCHEDULED [4512]
		IRS NUMBER:				751825172
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K405
		SEC ACT:		
		SEC FILE NUMBER:	001-08400
		FILM NUMBER:		1576557

	BUSINESS ADDRESS:	
		STREET 1:		4333 AMON CARTER BLVD
		CITY:			FORT WORTH
		STATE:			TX
		ZIP:			76155
		BUSINESS PHONE:		8179631234

	MAIL ADDRESS:	
		STREET 1:		4333 AMON CARTER BLVD
		CITY:			FORT WORTH
		STATE:			TX
		ZIP:			75261-9616
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>d84957e10-k405.txt
<DESCRIPTION>FORM 10-K FOR FISCAL YEAR END DECEMBER 31, 2000
<TEXT>

<PAGE>   1
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

[X]  Annual Report Pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934 For fiscal year ended December 31, 2000.

[ ]  Transition Report Pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934


Commission file number 1-8400.
                       ------

                                 AMR CORPORATION
- --------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                                    75-1825172
- ---------------------------------          -------------------------------------
  (State or other jurisdiction             (I.R.S. Employer Identification No.)
of incorporation or organization)

       4333 Amon Carter Blvd.
          Fort Worth, Texas                               76155
- ---------------------------------------    -------------------------------------
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code (817) 963-1234
                                                   --------------

Securities registered pursuant to Section 12(b) of the Act:

      Title of each class                  Name of exchange on which registered
- ---------------------------------------    -------------------------------------
Common stock, $1 par value per share              New York Stock Exchange
9.00% Debentures due 2016                         New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

                                      NONE
- --------------------------------------------------------------------------------
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 16, 2001, was approximately $5,190,797,127. As of March
16, 2001, 153,619,329 shares of the registrant's common stock were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Form 10-K incorporates by reference certain information from
the Proxy Statement for the Annual Meeting of Stockholders to be held May 16,
2001.

================================================================================


<PAGE>   2

                                     PART I
- --------------------------------------------------------------------------------

ITEM 1.  BUSINESS

AMR Corporation (AMR or the Company) was incorporated in October 1982. AMR's
operations fall almost entirely in the airline industry. AMR's principal
subsidiary, American Airlines, Inc. (American), was founded in 1934. American is
one of the largest scheduled passenger airlines in the world. At the end of
2000, American provided scheduled jet service to more than 169 destinations
throughout North America, the Caribbean, Latin America, Europe and the Pacific.
American is also one of the largest scheduled air freight carriers in the world,
providing a full range of freight and mail services to shippers throughout its
system.

       In addition, AMR Eagle Holding Corporation (AMR Eagle), a wholly-owned
subsidiary of AMR, owns two regional airlines which do business as "American
Eagle" -- American Eagle Airlines, Inc. and Executive Airlines, Inc. Business
Express, Inc. was merged into American Eagle Airlines, Inc. in December 2000.
The American Eagle carriers provide connecting service from eight of American's
high-traffic cities to smaller markets throughout the United States, Canada, the
Bahamas and the Caribbean.

       AMR Investment Services, Inc., a wholly-owned subsidiary of AMR, is
responsible for the investment and oversight of AMR's defined benefit and
defined contribution plans, as well as its fixed income investments. It serves
as manager of the American AAdvantage Funds, a family of mutual funds with both
institutional and retail shareholders, and provides customized fixed income
portfolio management services. As of December 31, 2000, AMR Investment Services
was responsible for management of approximately $22.9 billion in assets,
including direct management of approximately $10.5 billion in short-term fixed
income investments.

       Effective after the close of business on March 15, 2000, AMR distributed
0.722652 shares of Sabre Holdings Corporation (Sabre) Class A Common Stock for
each share of AMR stock owned by AMR's shareholders, thus distributing its
entire ownership interest in Sabre. As such, Sabre has been treated as a
discontinued operation in Item 6 - Selected Consolidated Financial Data, Item 7
- - Management's Discussion and Analysis of Financial Condition and Results of
Operations and Item 8 - Consolidated Financial Statements. In addition, the
discussion in the other Items of this Form 10-K relates primarily to American
and AMR Eagle.

       On January 10, 2001, the Company announced three transactions that are
expected to substantially increase the scope of its existing network. First, the
Company announced that it had agreed to purchase substantially all of the assets
of Trans World Airlines, Inc. (TWA) for approximately $500 million in cash and
to assume approximately $3.5 billion of TWA's obligations. The Company's
agreement with TWA contemplated that TWA would file for bankruptcy protection
under Chapter 11 of the U.S. Bankruptcy Code and conduct an auction of its
assets under the auspices of the Bankruptcy Court. During the auction, other
credible offers would compete with the Company's offer. TWA filed for bankruptcy
protection on January 10, 2001. In conjunction therewith, the Company also
agreed to provide TWA with up to $200 million in debtor-in-possession financing
to facilitate TWA's ability to maintain its operations until the completion of
this transaction. The amount available under this facility was later increased
to $330 million. As of March 19, 2001, approximately $289 million had been
provided via the debtor-in-possession financing.



                                       1
<PAGE>   3

       The auction of TWA's assets was commenced on March 5, 2001, and recessed
to March 7, 2001. During the recess, the Company increased its cash bid to $625
million and agreed to leave in the TWA estate certain aircraft security
deposits, advance rental payments and rental rebates that were estimated to
bring approximately $117 million of value to TWA. The Company expects that the
increase in the Company's bid will be more than offset, however, by the benefit
to the Company of the reductions in rental rates the Company has negotiated with
TWA's aircraft lessors. On March 7, 2001, TWA's board selected the Company's bid
as the "highest and best" offer, and on March 12, 2001, the U.S. Bankruptcy
Court, District of Delaware, entered an order approving the sale of TWA's assets
to the Company. Consummation of the transaction is subject to several
contingencies, including the waiver by TWA's unions of certain provisions of
their collective bargaining agreements. The approval of the U.S. Department of
Justice (DOJ) was obtained on March 16, 2001. Certain parties have filed appeals
of the Bankruptcy Court's sale order, and have sought a stay of the transaction,
pending the appeals. A provision of the Bankruptcy Code will permit the Company
to close the transaction, despite pending appeals, unless a stay is granted. If
a stay is granted, the Company would anticipate that the appeal process would be
expedited. Upon the closing of the transaction, TWA will be integrated into
American's operations with a continued hub operation in St. Louis.

       Secondly, the Company announced that it has agreed to acquire from United
Airlines, Inc. (United) certain key strategic assets (slots, gates and aircraft)
of US Airways, Inc. (US Airways) upon the consummation of the previously
announced merger between United and US Airways. In addition to the acquisition
of these assets, American will lease a number of slots and gates from United so
that American may operate half of the northeast Shuttle (New York/Washington
DC/Boston). United will operate the other half of the Shuttle. For these assets,
American will pay approximately $1.2 billion in cash to United and assume
approximately $300 million in aircraft operating leases. The consummation of
these transactions is contingent upon the closing of the proposed United/US
Airways merger. Also, the acquisition of aircraft is generally dependent upon a
certain number of US Airways' Boeing 757 cockpit crew members transferring to
American's payroll.

       Finally, American has agreed to acquire a 49 percent stake in, and to
enter into an exclusive marketing agreement with, DC Air LLC (DC Air). American
has agreed to pay $82 million in cash for its ownership stake. American will
have a right of first refusal on the acquisition of the remaining 51 percent
stake in DC Air. American will also lease to DC Air a certain number of Fokker
100 aircraft with necessary crews (known in the industry as a "wet lease").
These wet leased aircraft will be used by DC Air in its operations. DC Air is
the first significant new entrant at Ronald Reagan Washington National Airport
(DCA) in over a decade. DC Air will acquire the assets needed to begin its DCA
operations from United/US Airways upon the consummation of the merger between
the two carriers. American's investment in DC Air and the other arrangements
described above are contingent upon the consummation of the merger between
United and US Airways.

       As a result of the above transactions, and for several other reasons,
American and American Eagle have initiated an impairment review of certain fleet
types in accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." This review could result in an impairment charge to be taken by
the Company in 2001. The size of any resulting 2001 charge is not presently
known, but may be significant.

COMPETITION

Most major air carriers have developed hub-and-spoke systems and schedule
patterns in an effort to maximize the revenue potential of their service.
American operates four hubs: Dallas/Fort Worth (DFW), Chicago O'Hare, Miami and
San Juan, Puerto Rico. Delta Air Lines and United Airlines also have hub
operations at DFW and Chicago O'Hare, respectively.

       The American Eagle carriers increase the number of markets the Company
serves by providing connections to American at American's hubs and certain other
major airports. The American Eagle carriers serve smaller markets through
Boston, DFW, Chicago, Miami, San Juan, Los Angeles and New York's LaGuardia and
John F. Kennedy International Airports. American's competitors also own or have
marketing agreements with regional carriers which provide similar services at
their major hubs.


                                       2
<PAGE>   4



       In addition to its extensive domestic service, the Company provides
international service to the Caribbean, Canada, Latin America, Europe and the
Pacific. The Company's operating revenues from foreign operations were
approximately $5.8 billion in 2000, $5.2 billion in 1999 and $5.3 billion in
1998. Additional information about the Company's foreign operations is included
in Note 13 to the consolidated financial statements.

       The domestic airline industry is fiercely competitive. Currently, any
carrier deemed fit by the U.S. Department of Transportation (DOT) is free to
operate scheduled passenger service between any two points within the U.S. and
its possessions. On most of its domestic non-stop routes, the Company faces
competing service from at least one, and sometimes more than one, major domestic
airline including: Alaska Airlines, America West Airlines, Continental Airlines,
Delta Air Lines, Northwest Airlines, Southwest Airlines, TWA, United, US Airways
and their affiliated regional carriers. Competition is even greater between
cities that require a connection, where as many as nine airlines may compete via
their respective hubs. The Company also competes with national, regional,
all-cargo and charter carriers and, particularly on shorter segments, ground
transportation. In addition, on all of its routes, pricing decisions are
affected, in part, by competition from other airlines, some of which have cost
structures significantly lower than American's and can therefore operate
profitably at lower fare levels.

       The majority of the tickets for travel on American and American Eagle are
sold by travel agents. Domestic travel agents generally receive a base
commission of five percent of the price of the tickets they sell. This amount is
capped at a maximum of $50 for a domestic roundtrip itinerary and $100 for an
international roundtrip itinerary. Airlines often pay additional commissions in
connection with special revenue programs. Accordingly, airlines compete not only
with respect to the price of the tickets sold but also with respect to the
amount of commissions paid.

       The growing use of electronic distribution systems provides the Company
with an ever-increasing ability to lower its distribution costs. The Company
continues to expand the capabilities of its Internet website - AA.com - and the
use of electronic ticketing throughout the Company's network. In addition, the
Company has entered into various agreements with several Internet travel
providers, including Travelocity.com, Expedia, priceline.com and Hotwire. The
base commission for sales through Internet travel providers is significantly
lower than traditional travel agencies.

       International air transportation is subject to extensive government
regulation. In providing international air transportation, American competes
with foreign investor-owned carriers, state-owned carriers and U.S. airlines
that have been granted authority to provide scheduled passenger and cargo
service between the U.S. and various overseas locations. American's operating
authority in these markets is subject to aviation agreements between the U.S.
and the respective countries, and in some cases, fares and schedules require the
approval of the DOT and/or the relevant foreign governments. Because
international air transportation is governed by bilateral or other agreements
between the U.S. and the foreign country or countries involved, changes in U.S.
or foreign government aviation policies could result in the alteration or
termination of such agreements, diminish the value of such route authorities, or
otherwise adversely affect American's international operations. Bilateral
agreements between the U.S. and various foreign countries served by American are
subject to frequent renegotiation. In addition, at most foreign airports, a
carrier needs slots (landing and take-off authorizations) before the carrier can
introduce new service or increase existing service. The availability of such
slots is not assured and can therefore inhibit a carrier's efforts to compete in
certain markets.

       The major U.S. carriers have some advantage over foreign competitors in
their ability to generate traffic from their extensive domestic route systems.
In many cases, however, foreign governments, which own and subsidize some of
American's foreign competitors, limit U.S. carriers' rights to carry passengers
beyond designated gateway cities in foreign countries. To improve access to each
other's markets, various U.S. and foreign carriers -- including American -- have
established marketing relationships with other airlines. American currently has
code-sharing programs with Aer Lingus, Air Pacific, Alaska Airlines, Asiana
Airlines, China Eastern Airlines, EVA Air, Finnair, Gulf Air, Hawaiian Airlines,
Iberia, Japan Airlines, LanChile, LOT Polish Airlines, Qantas Airways, Sabena,
SNCF, Swissair, TACA Group, the TAM Group, TAP Air Portugal, Thalys and Turkish
Airlines. American Eagle also has code-sharing programs with Continental
Airlines, Northwest Airlines, TWA and Midwest Express, in addition to
code-sharing with some of American's code-share partners. Certain of these
relationships also include reciprocity between American and the other airlines'
frequent flyer programs. In addition, the Company expects to implement or expand
alliances with other international carriers, including British Airways, Cathay
Pacific Airways,


                                       3
<PAGE>   5

China Eastern Airlines and Qantas New Zealand, pending regulatory approval. In
the coming years, the Company expects to develop these programs further and to
evaluate new alliances with other international carriers.

       In February 1999, American, British Airways, Canadian Airlines
International Limited (Canadian), Cathay Pacific Airways and Qantas Airways
formed the global alliance ONEworld(TM). In September 1999, these five founding
members were joined by Finnair and Iberia. Also, in June 2000, Aer Lingus and
LanChile joined the ONEworld alliance. The ONEworld alliance links the networks
of the member carriers to enhance customer service and smooth connections to the
destinations served by the alliance, including linking the carriers' frequent
flyer programs and access to the carriers' airport lounge facilities. Following
the acquisition of Canadian by Air Canada, Canadian terminated its membership in
ONEworld in June 2000.

       The Company believes that it has several advantages relative to its
competition. Its fleet is efficient and quiet, and is one of the youngest fleets
in the U.S. airline industry. It has a comprehensive domestic and international
route structure, anchored by efficient hubs, which permit it to take full
advantage of whatever traffic growth occurs. The Company believes American's
AAdvantage frequent flyer program, which is the largest program in the industry,
its More Room Throughout Coach program and its superior service also give it a
competitive advantage to its competition.

REGULATION

GENERAL The Airline Deregulation Act of 1978, as amended, eliminated most
domestic economic regulation of passenger and freight transportation. However,
the DOT and the Federal Aviation Administration (FAA) still exercise certain
regulatory authority over air carriers. The DOT maintains jurisdiction over the
approval of international codeshare agreements, international route authorities
and certain consumer protection matters, such as advertising, denied boarding
compensation and baggage liability.

       The FAA regulates flying operations generally, including establishing
personnel, aircraft and security standards. As part of that oversight, the FAA
has implemented a number of requirements that American is incorporating into its
maintenance program. These matters relate to, among other things, inspection and
maintenance of aging aircraft, corrosion control, the installation of upgraded
digital flight data recorders, enhanced ground proximity warning systems, cargo
compartment smoke detection and fire suppression systems, McDonnell Douglas MD
80 metal-mylar insulation replacement, and required inspections of General
Electric compressor spools. Based on its current implementation schedule,
American expects to be in compliance with the applicable requirements within the
required time periods.

       The DOJ has jurisdiction over airline antitrust matters. The U.S. Postal
Service has jurisdiction over certain aspects of the transportation of mail and
related services. Labor relations in the air transportation industry are
regulated under the Railway Labor Act, which vests in the National Mediation
Board certain regulatory functions with respect to disputes between airlines and
labor unions relating to union representation and collective bargaining
agreements. To the extent American continues to increase its alliances with
international carriers, American may be subject to certain regulations of
foreign agencies.

      In April 1998, the DOT issued proposed pricing and capacity rules that
would severely limit major carriers' ability to compete with new entrant
carriers. In January 2001, following a multi-year investigation and public
docket concerning competition between major carriers and new entrant carriers,
the DOT restated its concerns with competitive practices in the industry, but
declined to issue specific competitive guidelines. In its statement of findings
and conclusions, the DOT reiterated its view that it had both the authority and
the obligation to prevent what it considers to be unfair competitive practices
in the industry, and indicated its intent to pursue enforcement actions on a
case-by-case basis. To the extent that future DOT enforcement actions either
directly or indirectly impose restrictions upon American's ability to respond to
competitors, American's business may be adversely impacted.

       As described in Item 3. Legal Proceedings, the Antitrust Division of the
DOJ and several purported classes of private parties are pursuing litigation
alleging that American violated federal antitrust laws when competing with new
carriers. Although the Company believes that the litigation is without merit,
adverse court decisions could impose restrictions on American's ability to
respond to competitors, and American's business may be adversely impacted.


                                       4
<PAGE>   6


AIRLINE FARES Airlines are permitted to establish their own domestic fares
without governmental regulation, and the industry is characterized by
substantial price competition. The DOT maintains authority over international
fares, rates and charges. International fares and rates are also subject to the
jurisdiction of the governments of the foreign countries which American serves.
While air carriers are required to file and adhere to international fare and
rate tariffs, substantial commissions, overrides and discounts to travel agents,
brokers and wholesalers characterize many international markets.

       Legislation (sometimes referred to as the "Passengers' Bill of Rights")
has been discussed in various legislatures (including the Congress). This
legislation could, if enacted, (i) place various limitations on airline fares
and/or (ii) affect operating practices such as baggage handling and overbooking.
Effective December 15, 1999, the Company, as well as other domestic airlines,
implemented a Customer Service Plan to address a number of service goals,
including, but not limited to (i) lowest fare availability, (ii) delays,
cancellations, and diversion events, (iii) baggage delivery and liability, (iv)
guaranteed fares, (v) ticket refunds, (vi) accommodation of customers with
special needs, (vii) essential customer needs during extraordinary delays,
(viii) flight oversales, (ix) Frequent Flyer Program - AAdvantage, (x) other
travel policies, (xi) service with domestic code share partners, and (xii)
handling of customer issues. In February 2001, the DOT Inspector General issued
a report on the various carriers' performance of their Customer Service Plans.
The report included a number of recommendations which could limit American's
flexibility with respect to various operational practices. In February 2001, a
bill proposing an "Airline Customer Service Improvement Act" was introduced in
the United States Senate. In addition, other items of legislation have been
introduced that would limit hub concentration, reallocate slots at certain
airports and impose higher landing fees at certain hours. To the extent
legislation is enacted that would inhibit American's flexibility with respect to
fares, its revenue management system, its operations or other aspects of its
customer service operations, American's financial results could be adversely
affected.

       Fare discounting by competitors has historically had a negative effect on
the Company's financial results because the Company is generally required to
match competitors' fares to maintain passenger traffic. During recent years, a
number of new low-cost airlines have entered the domestic market and several
major airlines, including American, implemented efforts to lower their cost
structures. Further fare reductions, domestic and international, may occur in
the future. If fare reductions are not offset by increases in passenger traffic,
cost reductions or changes in the mix of traffic that improves yields, the
Company's operating results will be negatively impacted.

AIRPORT ACCESS In 1968, the FAA issued a rule designating New York John F.
Kennedy, New York LaGuardia, Washington Reagan, Chicago O'Hare and Newark
airports as high-density traffic airports. Newark was subsequently removed from
the high-density airport classification. The high-density rule (HDR) limits the
number of Instrument Flight Rule (IFR) operations - take-offs and landings -
permitted per hour and requires that a slot support each operation. In April
2000, legislation was signed to (i) eliminate slot restrictions at New York's
John F. Kennedy and LaGuardia airports in 2007, (ii) shrink Chicago O'Hare's
slot day from 0645 - 2114 hours to 1445 - 2014 hours starting July 2001, and
(iii) eliminate Chicago O'Hare slots in July 2002. The Company does not expect
the elimination of slot restrictions to have a material adverse impact on the
Company's operations and its financial condition or result of operations.

       Pursuant to the Wendell H. Ford Aviation Investment and Reform Act for
the 21st Century (Air 21 Act), slot restrictions were lifted for service to/from
LaGuardia and certain cities classified as small and non-hub airports (new
service cities). This increase in service is to be operated by regional jets. As
a consequence, the Company and other carriers increased their service at
LaGuardia to the new service cities. In December 2000, the DOT held a lottery
for LaGuardia slots for service to the new service cities in order to ease
congestion at the airport. The congestion was a direct result of the growth of
Air 21 Act slot operations. While the Company has scaled back its service to the
new service cities to/from LaGuardia, it is not anticipated that this reduction
will have a material impact on the Company's operations and its financial
condition or result of operations.

       At December 31, 2000, the net book value of the Company's slots at New
York John F. Kennedy, New York LaGuardia and Chicago O'Hare airports was
approximately $183 million. Currently, the FAA permits the purchasing, selling,
leasing or transferring of slots except those slots designated as international,
essential air service or Air 21 Act. Trading of any slot is permitted subject to
certain parameters. Most foreign airports, including London Heathrow, a major
European destination for American, also have slot allocations. Most foreign
authorities do not permit the purchasing, selling or leasing of slots.


                                       5
<PAGE>   7


       Although the Company is constrained by slots, it currently has sufficient
slot authorizations to operate its existing flights and has generally been able
to obtain slots to expand its operations and change its schedules. However,
there is no assurance that the Company will be able to obtain slots for these
purposes in the future because, among other factors, domestic slot allocations
are subject to changes in government policies.

ENVIRONMENTAL MATTERS The Company is subject to various laws and government
regulations concerning environmental matters and employee safety and health in
the U.S. and other countries. U.S. federal laws that have a particular impact on
the Company include the Airport Noise and Capacity Act of 1990 (ANCA), the Clean
Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the
Safe Drinking Water Act, and the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA or the Superfund Act). The Company is
also subject to the oversight of the Occupational Safety and Health
Administration (OSHA) concerning employee safety and health matters. The U.S.
Environmental Protection Agency (EPA), OSHA, and other federal agencies have
been authorized to promulgate regulations that have an impact on the Company's
operations. In addition to these federal activities, various states have been
delegated certain authorities under the aforementioned federal statutes. Many
state and local governments have adopted environmental and employee safety and
health laws and regulations, some of which are similar to federal requirements.
As a part of its continuing safety, health and environmental program, the
Company anticipates that it will comply with such requirements without any
material adverse effect on its business.

       The ANCA recognizes the rights of airport operators with noise problems
to implement local noise abatement programs so long as they do not interfere
unreasonably with interstate or foreign commerce or the national air
transportation system. Authorities in several cities have promulgated aircraft
noise reduction programs, including the imposition of nighttime curfews. The
ANCA generally requires FAA approval of local noise restrictions on aircraft.
While American has had sufficient scheduling flexibility to accommodate local
noise restrictions imposed to date, American's operations could be adversely
affected if locally-imposed regulations become more restrictive or widespread.

       American has been identified by the EPA as a potentially responsible
party (PRP) at the Operating Industries, Inc. Superfund Site in California.
American has signed a partial consent decree with respect to this site and is
one of several PRPs named. American has also been identified as a PRP at the
Beede Waste Oil Superfund Site in New Hampshire. American has responded to a
104(e) Request for Information regarding interaction with several companies
related to this site. At the Operating Industries, Inc. and the Beede Waste Oil
sites, American's alleged waste disposal volumes are minor compared to the other
PRPs at these sites. In 1998, the EPA named American a de minimis PRP at the
Casmalia Waste Disposal Site in California.

       American, along with most other tenants at the San Francisco
International Airport (SFIA), has been ordered by the California Regional Water
Quality Control Board to engage in various studies of potential environmental
contamination at the airport and to undertake remedial measures, if necessary.
SFIA is also seeking to recover its past costs related to the contamination from
the tenants.

       The Miami International Airport Authority is currently remediating
various environmental conditions at the Miami International Airport (the
Airport) and funding the remediation costs through landing fee revenues and
other cost recovery methods. Future costs of the remediation effort may be borne
by carriers operating at the Airport, including American, through increased
landing fees and/or other charges since certain of the PRPs are no longer in
business. The future increase in landing fees and/or other charges may be
material but cannot be reasonably estimated due to various factors, including
the unknown extent of the remedial actions that may be required, the proportion
of the cost that will ultimately be recovered from the responsible parties, and
uncertainties regarding the environmental agencies that will ultimately
supervise the remedial activities and the nature of that supervision.

       In 1999, American was ordered by the New York State Department of
Environmental Conservation to conduct remediation of environmental contamination
located at Terminals 8 and 9 at New York's John F. Kennedy International
Airport. American is seeking to recover a portion of the related costs from
previous users of the premises.


                                       6
<PAGE>   8
       Also in 1999, the Company entered a plea agreement with the United States
government with respect to a one count indictment relating to the storage of
hazardous materials. As part of the plea agreement, the Company was placed on
probation for three years and has adopted a comprehensive compliance program. To
the extent the Company fails to abide by the terms of the probation or its
compliance program, the Company's operations may be adversely impacted.

       American and Executive Airlines, Inc., along with other tenants at the
Luis Munoz Marin International Airport in San Juan, Puerto Rico, have been named
as PRPs for environmental claims at the airport.

       American Eagle Airlines, Inc. has been notified of its potential
liability under New York law at an inactive hazardous waste site in
Poughkeepsie, New York.

       AMR does not expect these matters, individually or collectively, to have
a material impact on its financial position, results of operations or liquidity.

LABOR

The airline business is labor intensive. Wages, salaries and benefits
represented approximately 37 percent of AMR's consolidated operating expenses
for the year ended December 31, 2000.

       The majority of American's employees are represented by labor unions and
covered by collective bargaining agreements. American's relations with such
labor organizations are governed by the Railway Labor Act. Under this act, the
collective bargaining agreements among American and these organizations do not
expire but instead become amendable as of a stated date. If either party wishes
to modify the terms of any such agreement, it must notify the other party in the
manner described in the agreement. After receipt of such notice, the parties
must meet for direct negotiations, and if no agreement is reached, either party
may request the National Mediation Board (NMB) to appoint a federal mediator. If
no agreement is reached in mediation, the NMB may declare at some time that an
impasse exists, and if an impasse is declared, the NMB proffers binding
arbitration to the parties. Either party may decline to submit to arbitration.
If arbitration is rejected, a 30-day "cooling off" period commences. During that
period, a Presidential Emergency Board (PEB) may be established, which examines
the parties' positions and recommends a solution. The PEB process lasts for 30
days and is followed by a "cooling off" period of 30 days. At the end of a
"cooling off" period, the labor organization may strike and the airline may
resort to "self-help", including the imposition of any or all of its proposed
amendments and the hiring of workers to replace strikers.

         American's contract with the Association of Professional Flight
Attendants (APFA) became amendable on November 1, 1998. The parties reached a
tentative agreement in mid-1999 which the APFA membership did not ratify.
Negotiations between American and the APFA continue with the assistance of a
mediator appointed by the NMB. Those mediated negotiations will continue in
April 2001. At the request of the NMB, the parties have agreed to a blackout of
communications concerning the substance of the talks for the time being.

         American's agreement with the Transport Workers Union (TWU) became
amendable on March 1, 2001. American and the TWU have been negotiating changes
to the agreement for several months. In response to the formal opening of
negotiations between the parties on February 27, 2001, certain members of the
TWU engaged in an illegal work action at New York's John F. Kennedy airport and,
to a lesser extent, New York LaGuardia. This illegal work action adversely
impacted American's operations. On March 1, 2001, American obtained a temporary
restraining order against the illegal work action, and subsequently operations
at those airports returned to normal. On March 13, 2001, the U.S. District
Court, Southern District of New York, refused to issue a preliminary injunction
against the TWU, but cautioned the parties that adherence to the law to avoid
unlawful service interruptions was required.

       In 1997, American reached an agreement with the members of the Allied
Pilots Association (APA). The agreement becomes amendable August 31, 2001.


                                       7
<PAGE>   9


       The Air Line Pilots Association (ALPA), which represents AMR Eagle
pilots, reached agreement with AMR Eagle effective September 1, 1997, to have
all of the pilots of the Eagle carriers covered by a single collective
bargaining agreement. This agreement lasts until October 31, 2013. The parties
have the right to seek limited changes in 2000, 2004, 2008 and 2012. If the
parties are unable to agree on the limited changes, they also agreed that the
issues would be resolved by interest arbitration, without the exercise of
self-help (such as a strike). ALPA and AMR Eagle negotiated a tentative
agreement in 2000, but that agreement failed in ratification. Thereafter, the
parties participated in interest arbitration. They are awaiting the decisions of
the arbitrators.

       The Association of Flight Attendants (AFA), which represents the flight
attendants of the Eagle carriers, reached agreement with AMR Eagle effective
March 2, 1998, to have all flight attendants of the AMR Eagle carriers covered
by a single contract. The agreement becomes amendable on September 2, 2002.
However, the parties have agreed to commence negotiations over amendments to the
agreement in March, 2001. The other union employees at the AMR Eagle carriers
are covered by separate agreements with the TWU which were effective April 28,
1998, and are amendable April 28, 2003.

         With respect to the series of transactions described on pages 1 and 2
involving TWA, United/US Airways and DC Air, certain aspects of those
transactions are dependent upon the resolution of matters with the unions
representing the affected employees. The transaction with TWA requires, among
other things, that TWA's unions agree to waive certain provisions of their
current collective bargaining agreements as a condition to American's purchase
of the TWA assets. The DC Air transaction contemplates that American's flight
attendants and pilots would crew the aircraft involved in the wet lease
arrangement. The APA filed a grievance on March 13, 2001 seeking to arbitrate
whether the DC Air transaction would violate certain provisions of the
collective bargaining agreement between American and the APA. Finally, the union
representing American's pilots will need to resolve seniority integration issues
concerning US Airways pilots in conjunction with the aircraft asset transfer
from United/US Airways to American.

FUEL

The Company's operations are significantly affected by the availability and
price of jet fuel. The Company's fuel costs and consumption for the years 1998
through 2000 were:

<TABLE>
<CAPTION>
                                                                 Average
                                                                Cost Per
                                                                  Gallon,     Percent of
             Gallons                          Average Cost      Excluding        AMR's
            Consumed           Total Cost      Per Gallon       Fuel Taxes     Operating
Year      (in millions)      (in millions)     (in cents)       (in cents)     Expenses
- ----      -------------      -------------     ----------       ----------    ----------
<S>       <C>                <C>               <C>              <C>           <C>
1998          2,922             $1,604             54.9             50.2         10.3
1999          3,084              1,696             55.0             50.4         10.2
2000          3,197              2,495             78.1             72.8         13.6
</TABLE>

       The impact of fuel price changes on the Company and its competitors is
dependent upon various factors, including hedging strategies. The Company has a
fuel hedging program in which it enters into fuel swap and option contracts to
protect against increases in jet fuel prices, which has had the effect of
dampening the Company's average cost per gallon. During 2000, the Company's fuel
hedging program reduced the Company's fuel expense by approximately $545
million. To reduce the impact of potential continuing fuel price increases in
2001, the Company has hedged approximately 40 percent of its 2001 fuel
requirements as of December 31, 2000. Based on projected fuel usage, the Company
estimates that a 10 percent increase in the price per gallon of fuel would
result in an increase to aircraft fuel expense of approximately $194 million in
2001, net of fuel hedge instruments outstanding at December 31, 2000. The above
analysis excludes any impact of the proposed transactions discussed on pages 1
and 2. Due to the competitive nature of the airline industry, in the event of
continuing increases in the price of jet fuel, there can be no assurance that
the Company will be able to pass on increased fuel prices to its customers by
increasing its fares. Likewise, any potential benefit of lower fuel prices may
be offset by increased fare competition and lower revenues for all air carriers.


                                       8
<PAGE>   10


       While the Company does not anticipate a significant reduction in fuel
availability, dependency on foreign imports of crude oil and the possibility of
changes in government policy on jet fuel production, transportation and
marketing make it impossible to predict the future availability of jet fuel. If
there were major reductions in the availability of jet fuel, the Company's
business would be adversely affected.

       Additional information regarding the Company's fuel program is included
in the Outlook for 2001, Item 7(A) - Quantitative and Qualitative Disclosures
about Market Risk, and in Note 6 to the consolidated financial statements.

FREQUENT FLYER PROGRAM

American established the AAdvantage frequent flyer program (AAdvantage) to
develop passenger loyalty by offering awards to travelers for their continued
patronage. AAdvantage members earn mileage credits for flights on American,
American Eagle and certain other participating airlines, or by utilizing
services of other program participants, including hotels, car rental companies
and bank credit card issuers. American sells mileage credits and related
services to the other companies participating in the program. American reserves
the right to change the AAdvantage program rules, regulations, travel awards and
special offers at any time without notice. American may initiate changes
impacting, for example, participant affiliations, rules for earning mileage
credit, mileage levels and awards, blackout dates and limited seating for travel
awards, and the features of special offers. American reserves the right to end
the AAdvantage program with six months' notice.

       Mileage credits can be redeemed for free, discounted or upgraded travel
on American, American Eagle or participating airlines, or for other travel
industry awards. Once a member accrues sufficient mileage for an award, the
member may request an award certificate from American. Award certificates may be
redeemed up to one year after issuance. Most travel awards are subject to
blackout dates and capacity controlled seating. In 1999, certain changes were
made to the AAdvantage program so that miles do not expire, provided a customer
has any type of qualifying activity at least once every 36 months.

       American accounts for its frequent flyer obligation on an accrual basis
using the incremental cost method. American's frequent flyer liability is
accrued each time a member accumulates sufficient mileage in his or her account
to claim the lowest level of free travel award (25,000 miles) and such award is
expected to be used for free travel. American includes fuel, food, and
reservations/ticketing costs, but not a contribution to overhead or profit, in
the calculation of incremental cost. The cost for fuel is estimated based on
total fuel consumption tracked by various categories of markets, with an amount
allocated to each passenger. Food costs are tracked by market category, with an
amount allocated to each passenger. Reservation/ticketing costs are based on the
total number of passengers, including those traveling on free awards, divided
into American's total expense for these costs. American defers the portion of
revenues received from companies participating in the AAdvantage program related
to the sale of mileage credits and recognizes such revenues over a period
approximating the period during which the mileage credits are used. The
remaining portion of the revenue is recognized upon receipt as the related
services have been provided.

         At December 31, 2000 and 1999, American estimated that approximately
6.5 million and 5.4 million free travel awards, respectively, were expected to
be redeemed for free travel on American. In making the estimate of free travel
awards, American has excluded mileage in inactive accounts, mileage related to
accounts that have not yet reached the lowest level of free travel award, and
mileage in active accounts that have reached the lowest level of free travel
award but which are not expected to ever be redeemed for free travel on
American. The liability for the program mileage that has reached the lowest
level of free travel award and is expected to be redeemed for free travel on
American or other participating airlines and deferred revenues for mileage
credits sold to others participating in the program was $976 million and $827
million, representing 14.0 percent and 14.1 percent of AMR's total current
liabilities, at December 31, 2000 and 1999, respectively.

       The estimated number of free travel awards used for travel on American
was 2.8 million in 2000, 2.7 million in 1999 and 2.3 million in 1998,
representing 9.2 percent of total revenue passenger miles in 2000, 9.3 percent
in 1999 and 8.8 percent in 1998. American believes displacement of revenue
passengers is minimal given American's load factors, its ability to manage
frequent flyer seat inventory, and the relatively low ratio of free award usage
to revenue passenger miles.

                                       9
<PAGE>   11


OTHER MATTERS

SEASONALITY AND OTHER FACTORS The Company's results of operations for any
interim period are not necessarily indicative of those for the entire year,
since the air transportation business is subject to seasonal fluctuations.
Higher demand for air travel has traditionally resulted in more favorable
operating results for the second and third quarters of the year than for the
first and fourth quarters.

       The results of operations in the air transportation business have also
significantly fluctuated in the past in response to general economic conditions.
In addition, fare initiatives, fluctuations in fuel prices, labor actions and
other factors could impact this seasonal pattern. Unaudited quarterly financial
data for the two-year period ended December 31, 2000 is included in Note 14 to
the consolidated financial statements.

       No material part of the business of AMR and its subsidiaries is dependent
upon a single customer or very few customers. Consequently, the loss of the
Company's largest few customers would not have a materially adverse effect upon
AMR.

INSURANCE The Company carries insurance for public liability, passenger
liability, property damage and all-risk coverage for damage to its aircraft, in
amounts which, in the opinion of management, are adequate.

OTHER GOVERNMENT MATTERS In time of war or during an unlimited national
emergency or civil defense emergency, American and other major air carriers may
be required to provide airlift services to the Military Airlift Command under
the Civil Reserve Air Fleet program.


                                       10
<PAGE>   12


ITEM 2.  PROPERTIES

FLIGHT EQUIPMENT

Owned and leased aircraft operated by American and AMR Eagle at December 31,
2000, included:

<TABLE>
<CAPTION>
                                                                                                                      Weighted
                                                                                                                       Average
                                      Current Seating                       Capital       Operating                       Age
       Equipment Type                   Capacity(1)          Owned          Leased         Leased          Total        (Years)
- -----------------------------        ----------------        -----          -------       ---------        -----      ---------
<S>                                  <C>                     <C>            <C>           <C>              <C>        <C>
AMERICAN AIRCRAFT
Airbus A300-600R                        192/250/251             10             --             25              35             11
Boeing 727-200                              138                 55              5             --              60             24
Boeing 737-800(2)                           134                 51             --             --              51              1
Boeing 757-200                              176                 58             13             31             102              8
Boeing 767-200                              165                  8             --             --               8             18
Boeing 767-200 Extended Range               158                  9             13             --              22             14
Boeing 767-300 Extended Range           190/207/228             32              7             10              49              8
Boeing 777-200 Extended Range         230/237/252/254           27             --             --              27              1
Fokker 100                                 56/87                66              5              4              75              8
McDonnell Douglas MD-11                     238                  7             --             --               7              8
McDonnell Douglas MD-80               112/125/127/129          128             22            126             276             13
McDonnell Douglas MD-90                     135                  -             --              5               5              4
                                                             -----          -----          -----           -----          -----
   Total                                                       451             65            201             717             11
                                                             =====          =====          =====           =====          =====
AMR EAGLE AIRCRAFT
ATR 42                                       46                 20             --             11              31             10
Embraer 135                                  37                 33             --             --              33              1
Embraer 145                                  50                 50             --             --              50              2
Super ATR                                  64/66                40             --              3              43              6
Saab 340                                     34                 22             57             --              79              9
Saab 340B Plus                               34                  -             --             25              25              5
                                                             -----          -----          -----           -----          -----
   Total                                                       165             57             39             261              6
                                                             =====          =====          =====           =====          =====
</TABLE>

(1)    American's current seating capacity includes the effect of aircraft
       reconfigured under the Company's More Room Throughout Coach program.

(2)    The Boeing 727-200 fleet will be removed from service by the end of 2003.

       For information concerning the estimated useful lives and residual values
for owned aircraft, lease terms for leased aircraft and amortization relating to
aircraft under capital leases, see Notes 1 and 4 to the consolidated financial
statements.

       The Company has agreed to sell its McDonnell Douglas MD-11 aircraft to
FedEx Corporation (FedEx). The remaining seven MD-11 aircraft will be removed
from service by December 31, 2001 and delivered to FedEx in 2001 and 2002.


                                       11
<PAGE>   13



       Lease expirations for the leased aircraft included in the preceding table
as of December 31, 2000, were:

<TABLE>
<CAPTION>
                                                                                     2006
                                                                                     and
Equipment Type                         2001     2002     2003     2004     2005   Thereafter
- --------------                         ----     ----     ----     ----     ----   ----------
AMERICAN AIRCRAFT
<S>                                    <C>      <C>      <C>      <C>      <C>    <C>
Airbus A300-600R                         --       --       --       --       --       25
Boeing 727-200                           --        2        3       --       --       --
Boeing 757-200                            2        2       --        3       --       37
Boeing 767-200 Extended Range            --       --       --       --       --       13
Boeing 767-300 Extended Range            --        1       --       --        4       12
Fokker 100                                2        3       --       --       --        4
McDonnell Douglas MD-80                  11       13        5        2       14      103
McDonnell Douglas MD-90                   5       --       --       --       --       --
                                       ----     ----     ----     ----     ----     ----
                                         20       21        8        5       18      194
                                       ====     ====     ====     ====     ====     ====
AMR EAGLE AIRCRAFT
ATR 42                                    8       --        3       --       --       --
Super ATR                                 3       --       --       --       --       --
Saab 340                                 --       --       --       --       21       36
Saab 340B Plus                           --       --       --       --       --       25
                                       ----     ----     ----     ----     ----     ----
                                         11       --        3       --       21       61
                                       ====     ====     ====     ====     ====     ====
</TABLE>

       Substantially all of the Company's aircraft leases include an option to
purchase the aircraft or to extend the lease term, or both, with the purchase
price or renewal rental to be based essentially on the market value of the
aircraft at the end of the term of the lease or at a predetermined fixed amount.

GROUND PROPERTIES

American leases, or has built as leasehold improvements on leased property, most
of its airport and terminal facilities; certain corporate office, maintenance
and training facilities in Fort Worth, Texas; its principal overhaul and
maintenance base at Tulsa International Airport, Tulsa, Oklahoma; its regional
reservation offices; and local ticket and administration offices throughout the
system. American has entered into agreements with the Tulsa Municipal Airport
Trust; the Alliance Airport Authority, Fort Worth, Texas; and the Dallas/Fort
Worth, Chicago O'Hare, Raleigh/Durham, Nashville, San Juan, New York, and Los
Angeles airport authorities to provide funds for constructing, improving and
modifying facilities and acquiring equipment which are or will be leased to
American. American also utilizes public airports for its flight operations under
lease or use arrangements with the municipalities or governmental agencies
owning or controlling them and leases certain other ground equipment for use at
its facilities. During 1999, the Company began construction of an approximate
$1.3 billion terminal facility at New York's John F. Kennedy International
Airport, which the Company expects to fund primarily through future tax-exempt
financing.

       For information concerning the estimated lives and residual values for
owned ground properties, lease terms and amortization relating to ground
properties under capital leases, and acquisitions of ground properties, see
Notes 1, 3 and 4 to the consolidated financial statements.


                                       12
<PAGE>   14


ITEM 3.  LEGAL PROCEEDINGS

In connection with its frequent flyer program, American was sued in several
purported class action cases currently pending in the Circuit Court of Cook
County, Illinois. In Wolens et al. v. American Airlines, Inc. and Tucker v.
American Airlines, Inc. (hereafter, "Wolens"), plaintiffs seek money damages and
attorneys' fees claiming that a change made to American's AAdvantage program in
May 1988, which limited the number of seats available to participants traveling
on certain awards, breached American's agreement with its AAdvantage members.
(Although the Wolens complaint originally asserted several state law claims,
only the plaintiffs' breach of contract claim remains after the U.S. Supreme
Court ruled that the Airline Deregulation Act preempted the other claims). In
Gutterman et al. v. American Airlines, Inc. (hereafter, "Gutterman"), plaintiffs
also seek money damages and attorneys' fees claiming that the February 1995
increase in the award mileage required to claim a certain AAdvantage travel
award breached the agreement between American and its AAdvantage members. On
June 23, 1998, the court certified the Gutterman case as a class action.

       In February 2000, American and the Wolens and Gutterman plaintiffs
reached a settlement of both lawsuits. Pursuant to the agreement, American and
the plaintiffs agreed to ask the court to consolidate the Wolens and Gutterman
lawsuits for purposes of settlement. Further, American and the Wolens plaintiffs
agreed to ask the court to certify a Wolens class of AAdvantage members who had
at least 35,000 unredeemed AAdvantage miles as of December 31, 1988. In
addition, American and the Gutterman plaintiffs agreed to ask the court to
decertify the existing Gutterman class and to certify a new Gutterman class of
AAdvantage members who as of December 31, 1993 (a) had redeemed 25,000 or 50,000
AAdvantage miles for certain AAdvantage awards and/or (b) had between 4,700 and
24,999 unredeemed miles in his or her account that were earned in 1992 or 1993.
Depending upon certain factors, Wolens and Gutterman class members will be
entitled to receive certificates entitling them to mileage off certain
AAdvantage awards or dollars off certain American fares.

       As part of the settlement, American agreed to pay the Wolens and
Gutterman plaintiffs' attorneys fees and the cost of administering the
settlement, which amounts were accrued as of December 31, 1999. In consideration
for the relief provided in the settlement agreement, Wolens and Gutterman class
members will release American from all claims arising from any changes that
American has made to the AAdvantage program and reaffirming American's right to
make changes to the AAdvantage program in the future. On May 2, 2000, the court
preliminarily approved the settlement and authorized sending notice of the
settlement to class members. On September 28, 2000 and February 23, 2001, the
court heard arguments and took evidence concerning the fairness of the
settlement and the request for fees by the plaintiffs' attorneys. The court has
not yet finally approved the settlement agreement or the plaintiffs' fee
request.

       On July 26, 1999, a class action lawsuit was filed, and in November 1999
an amended complaint was filed, against AMR Corporation, American Airlines,
Inc., AMR Eagle Holding Corporation, Airlines Reporting Corporation, and the
Sabre Group Holdings, Inc. in the United States District Court for the Central
District of California, Western Division (Westways World Travel, Inc. v. AMR
Corp., et al.). The lawsuit alleges that requiring travel agencies to pay debit
memos to American for violations of American's fare rules (by customers of the
agencies) (1) breaches the Agent Reporting Agreement between American and
American Eagle and plaintiffs, (2) constitutes unjust enrichment, and (3)
violates the Racketeer Influenced and Corrupt Organizations Act of 1970 (RICO).
The as yet uncertified class includes all travel agencies who have been or will
be required to pay monies to American for debit memos for fare rules violations
from July 26, 1995 to the present. Plaintiffs seek to enjoin American from
enforcing the pricing rules in question and to recover the amounts paid for
debit memos, plus treble damages, attorneys' fees, and costs. Defendants' motion
to dismiss all claims is pending. American intends to vigorously defend the
lawsuit. Although the Company believes that the litigation is without merit,
adverse court decisions could impose restrictions on American's ability to
respond to competitors, and American's business may be adversely impacted.


                                       13
<PAGE>   15


       On May 13, 1999, the United States (through the Antitrust Division of the
Department of Justice) sued AMR Corporation, American Airlines, Inc., and AMR
Eagle Holding Corporation in federal court in Wichita, Kansas. The lawsuit
alleges that American unlawfully monopolized or attempted to monopolize airline
passenger service to and from Dallas/Fort Worth International Airport (DFW) by
increasing service when new competitors began flying to DFW, and by matching
these new competitors' fares. The Department of Justice seeks to enjoin American
from engaging in the alleged improper conduct and to impose restraints on
American to remedy the alleged effects of its past conduct. The case has been
set for trial on May 22, 2001. American intends to defend the lawsuit
vigorously.

       Between May 14, 1999 and June 7, 1999, seven class action lawsuits were
filed against AMR Corporation, American Airlines, Inc., and AMR Eagle Holding
Corporation in the United States District Court in Wichita, Kansas seeking
treble damages under federal and state antitrust laws, as well as injunctive
relief and attorneys' fees. (King v. AMR Corp., et al.; Smith v. AMR Corp., et
al.; Team Electric v. AMR Corp., et al.; Warren v. AMR Corp., et al.; Whittier
v. AMR Corp., et al.; Wright v. AMR Corp., et al.; and Youngdahl v. AMR Corp.,
et al.). Collectively, these lawsuits allege that American unlawfully
monopolized or attempted to monopolize airline passenger service to and from DFW
by increasing service when new competitors began flying to DFW, and by matching
these new competitors' fares. Two of the suits (Smith and Wright) also allege
that American unlawfully monopolized or attempted to monopolize airline
passenger service to and from DFW by offering discounted fares to corporate
purchasers, by offering a frequent flyer program, by imposing certain conditions
on the use and availability of certain fares, and by offering override
commissions to travel agents. The suits propose to certify several classes of
consumers, the broadest of which is all persons who purchased tickets for air
travel on American into or out of DFW since 1995 to the present. On November 10,
1999, the District Court stayed all of these actions pending developments in the
case brought by the Department of Justice. As a result, to date no class has
been certified. American intends to defend these lawsuits vigorously.

       On March 1, 2000, American was served with a federal grand jury subpoena
calling for American to produce documents relating to de-icing operations at DFW
since 1992. American has produced documents to the grand jury, but is not able
at this time to determine either the full scope of the grand jury's
investigation or American's role in the investigation. American intends to
cooperate fully with the government's investigation.


                                       14
<PAGE>   16



ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Company's security holders during the
last quarter of its fiscal year ended December 31, 2000.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following information relates to the executive officers of AMR as of
December 31, 2000.

Donald J. Carty             Mr. Carty was elected Chairman, President and Chief
                            Executive Office of AMR and American in May 1998. He
                            has been President of American since March 1995.
                            Prior to that, he served as Executive Vice President
                            of AMR from October 1989 to March 1995. Except for
                            two years service as President and CEO of Canadian
                            Pacific Air between March 1985 and March 1987, he
                            has been with the Company in various finance and
                            planning positions since 1978. Age 54.

Robert W. Baker             Mr. Baker was elected Vice Chairman of AMR and
                            American in January 2000. He served as Executive
                            Vice President - Operations of American from 1989 to
                            January 2000 and a Senior Vice President of American
                            from 1985 to September 1989. Prior to that, he
                            served in various management positions at American
                            since 1968. Age 56.

Gerard J. Arpey             Mr. Arpey was elected Executive Vice President -
                            Operations of American in January 2000. He is also
                            an Executive Vice President of AMR. Mr. Arpey served
                            as Chief Financial Officer of AMR from 1995 through
                            2000 and Senior Vice President of American from 1992
                            to January 2000. Prior to that, he served in various
                            management positions at American since 1982. Age 42.

Daniel P. Garton            Mr. Garton was elected Executive Vice President -
                            Customer Service of American in January 2000. He is
                            also an Executive Vice President of AMR. He served
                            as Senior Vice President - Customer Service of
                            American from 1998 to January 2000. Prior to that,
                            he served as President of AMR Eagle from 1995 to
                            1998. Except for two years service as Senior Vice
                            President and CFO of Continental Airlines between
                            1993 and 1995, he has been with the Company in
                            various management positions since 1984. Age 43.

Michael W. Gunn             Mr. Gunn was elected Executive Vice President -
                            Marketing and Planning of American in January 2000.
                            He is also an Executive Vice President of AMR. He
                            served as Senior Vice President - Marketing from
                            1985 to January 2000. Prior to that, he has served
                            in various management positions at American since
                            1970. Age 55.

Thomas W. Horton            Mr. Horton was elected Senior Vice President and
                            Chief Financial Officer of AMR and American in
                            January 2000. Prior to that, he served as a Vice
                            President of American from 1994 to January 2000 and
                            has served in various management positions of
                            American since 1985. Age 39.

Anne H. McNamara            Ms. McNamara was elected Senior Vice President and
                            General Counsel in 1988. She served as Vice
                            President - Personnel Resources of American during
                            1988. She was elected Corporate Secretary of AMR in
                            1982 and of American in 1979 and held those
                            positions through 1987. Prior to that, she served as
                            an attorney since 1976. Age 53.

Charles D. MarLett          Mr. MarLett was elected Corporate Secretary in
                            January 1988. He joined American as an attorney in
                            June 1984. Age 46.


                                       15
<PAGE>   17


EXECUTIVE OFFICERS OF THE REGISTRANT (CONTINUED)

       There are no family relationships among the executive officers of the
Company named on the preceding page.

       There have been no events under any bankruptcy act, no criminal
proceedings, and no judgments or injunctions material to the evaluation of the
ability and integrity of any director or executive officer during the past five
years.


                                       16
<PAGE>   18


                                     PART II
- --------------------------------------------------------------------------------

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The Company's common stock is traded on the New York Stock Exchange (symbol
AMR). The approximate number of record holders of the Company's common stock at
March 16, 2001 was 13,250.

       The range of closing market prices for AMR's common stock on the New York
Stock Exchange was:

<TABLE>
<CAPTION>
                                 2000                       1999
                       -----------------------     -----------------------
                         High           Low          High           Low
                       ---------     ---------     ---------     ---------
<S>                    <C>           <C>           <C>           <C>
QUARTER ENDED
March 31               $67 3/8       $30            $71 7/16      $53 3/16
June 30                 37 7/8        26 7/16        74 5/16       60 9/16
September 30            34 11/16      26 1/8         72 3/4        52 13/16
December 31             39 3/16       27 15/16       68 1/2        53 9/16
</TABLE>

       Effective after the close of business on March 15, 2000, AMR distributed
0.722652 shares of Sabre Class A common stock for each share of AMR stock owned
by AMR's shareholders. As a result of the dividend, AMR's stock price was
adjusted from $60 9/16 to $25 9/16 by the New York Stock Exchange after the
market close on March 15, 2000 to exclude the value of Sabre. The pre-March 15,
2000 stock prices in the above table have not been adjusted to give effect to
this distribution.

       No cash dividends on common stock were declared for any period during
2000 or 1999. Payment of dividends is subject to the restrictions described in
Note 5 to the consolidated financial statements.


                                       17
<PAGE>   19


ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
(in millions, except per share amounts)
- ---------------------------------------------------------------------------------------------
                                        2000       1999       1998(2)     1997(2)     1996(2)
                                      -------     -------     -------     -------     -------
<S>                                   <C>         <C>         <C>         <C>         <C>
Total operating revenues              $19,703     $17,730     $17,516     $16,957     $16,249
Operating income                        1,381       1,156       1,988       1,595       1,477
Income from continuing operations
   before extraordinary loss              779         656       1,114         809         901
Net earnings                              813         985       1,314         985       1,016
Earnings per common share from
   continuing operations before
   extraordinary loss:(1)
     Basic                               5.20        4.30        6.60        4.54        5.23
     Diluted                             4.81        4.17        6.38        4.43        4.88
Net earnings per common share:(1)
     Basic                               5.43        6.46        7.78        5.52        5.90
     Diluted                             5.03        6.26        7.52        5.39        5.59
Total assets                           26,213      24,374      21,455      20,287      20,004
Long-term debt, less current
   maturities                           4,151       4,078       2,436       2,248       2,737
Obligations under capital leases,
   less current obligations             1,323       1,611       1,764       1,629       1,790
Obligation for postretirement
   benefits                             1,706       1,669       1,598       1,527       1,483
</TABLE>


(1)  The earnings per share amounts reflect the stock split on June 9, 1998.

(2)  Restated to reflect discontinued operations.

       No dividends were declared on common shares during any of the periods
above.

       Information on the comparability of results is included in Management's
Discussion and Analysis and the notes to the consolidated financial statements.


                                       18
<PAGE>   20



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

AMR Corporation (AMR or the Company) was incorporated in October 1982. AMR's
principal subsidiary, American Airlines, Inc. (American), was founded in 1934.
AMR's operations fall almost entirely in the airline industry.

RESULTS OF OPERATIONS

AMR's net earnings in 2000 were $813 million, or $5.43 per common share ($5.03
diluted). AMR's income from continuing operations before extraordinary loss in
2000 was $779 million, or $5.20 per common share ($4.81 diluted). The results
for 2000 include the following special items: (i) a gain of $57 million ($36
million after tax) from the sale of the Company's warrants to purchase 5.5
million shares of priceline.com Incorporated (priceline) common stock, (ii) a
gain of approximately $41 million ($26 million after tax) from the recovery of
start-up expenses from the Canadian Airlines International Limited (Canadian)
services agreement, and (iii) a charge of $56 million ($35 million after tax)
for the Company's employee home computer program.

       AMR's net earnings in 1999 were $985 million, or $6.46 per common share
($6.26 diluted). AMR's income from continuing operations in 1999 was $656
million, or $4.30 per common share ($4.17 diluted). A labor disagreement that
disrupted operations during the first quarter of 1999 negatively impacted the
Company's 1999 results by an estimated $225 million ($140 million after tax).
The results for 1999 also include the following: (i) American's December 1998
acquisition of Reno Air, Inc. (Reno) and AMR Eagle's March 1999 acquisition of
Business Express, Inc. (Business Express), (ii) a gain of $83 million ($64
million after tax) on the sale of AMR Services, AMR Combs and TeleService
Resources, which is included in discontinued operations, (iii) a gain of
approximately $213 million ($118 million after taxes and minority interest)
resulting from the sale of a portion of the Company's holding in Equant N.V.
(Equant), of which approximately $75 million ($47 million after tax) is included
in income from continuing operations, (iv) a gain of $40 million ($25 million
after tax) from the Company's sale of its investment in the cumulative
mandatorily redeemable convertible preferred stock of Canadian and a $67 million
tax benefit resulting from the tax loss on the Company's investment in Canadian,
and (v) a charge of approximately $37 million ($25 million after tax) relating
to the provision for certain litigation items.

REVENUES

2000 COMPARED TO 1999 The Company's revenues increased approximately $2.0
billion, or 11.1 percent, versus 1999. American's passenger revenues increased
by 11.4 percent, or $1.7 billion. American's yield (the average amount one
passenger pays to fly one mile) of 14.05 cents increased by 7.1 percent compared
to 1999. For the year, domestic yields increased 7.5 percent while European,
Latin American and Pacific yields increased 9.9 percent, 4.2 percent and 3.8
percent, respectively. The increase in revenues was due primarily to a strong
U.S. economy, which led to strong demand for air travel both domestically and
internationally, a favorable pricing climate, the impact of a domestic fuel
surcharge implemented in January 2000 and increased in September 2000, a labor
disruption at one of the Company's competitors which positively impacted the
Company's revenues by approximately $80 to $100 million, and a schedule
disruption which negatively impacted the Company's operations in 1999.

       American's domestic traffic increased 2.7 percent to 78.5 billion revenue
passenger miles (RPMs), while domestic capacity, as measured by available seat
miles (ASMs), decreased 1.6 percent. The decrease in domestic capacity was due
primarily to the Company's More Room Throughout Coach program. (The Company's
More Room Throughout Coach program reconfigures American's entire fleet to
increase the seat pitch from the present industry standard of 31 and 32 inches
to a predominant seat pitch of 34 and 35 inches.) International traffic grew 6.8
percent to 38.1 billion RPMs on capacity growth of 3.1 percent. The increase in
international traffic was led by a 12.2 percent increase in the Pacific on
capacity growth of 2.5 percent, an 8.5 percent increase in Europe on capacity
growth of 6.7 percent, and a 4.1 percent increase in Latin America on capacity
growth of 0.4 percent. In 2000, American derived approximately 70 percent of its
passenger revenues from domestic operations and approximately 30 percent from
international operations.


                                       19
<PAGE>   21


       AMR Eagle's passenger revenues increased $158 million, or 12.2 percent.
AMR Eagle's traffic increased to 3.7 billion RPMs, up 10.7 percent, while
capacity increased to 6.3 billion ASMs, or 10.9 percent. The increase in
revenues was due primarily to growth in AMR Eagle capacity aided by a strong
U.S. economy, which led to strong demand for air travel, and a favorable pricing
environment.

       Cargo revenues increased 12.1 percent, or $78 million, due primarily to a
fuel surcharge implemented in February 2000 and increased in October 2000 and
the increase in cargo capacity from the addition of 16 Boeing 777-200ER aircraft
in 2000.

1999 COMPARED TO 1998 The Company's revenues increased $214 million, or 1.2
percent, versus 1998. American's passenger revenues increased by 0.1 percent, or
$12 million. American's yield of 13.12 cents decreased by 2.7 percent compared
to 1998. For the year, domestic yields decreased 1.1 percent, while European,
Pacific and Latin American yields decreased 7.2 percent, 6.0 percent and 4.5
percent, respectively. The decrease in domestic yield was due primarily to
increased capacity, the labor disagreement during the first quarter of 1999, and
the impact of international yield decreases on domestic yields. The decrease in
international yields was due primarily to weak economies in certain parts of the
world, large industry capacity additions and increased fare sale activity.

       American's domestic traffic increased 2.1 percent to 76.4 billion RPMs,
while domestic capacity increased 4.1 percent. The increase in domestic traffic
was due primarily to the addition of Reno. International traffic grew 4.6
percent to 35.7 billion RPMs on a capacity increase of 3.1 percent. The increase
in international traffic was led by a 44.2 percent increase in the Pacific on
capacity growth of 44.1 percent and a 5.7 percent increase in Europe on capacity
growth of 7.3 percent, partially offset by a 1.9 percent decrease in Latin
America on a capacity decrease of 5.1 percent. In 1999, American derived
approximately 70 percent of its passenger revenues from domestic operations and
approximately 30 percent from international operations.

       AMR Eagle's passenger revenues increased $173 million, or 15.4 percent.
AMR Eagle's traffic increased to 3.4 billion RPMs, up 20.9 percent, while
capacity increased to 5.6 billion ASMs, or 26.1 percent, due primarily to the
addition of Business Express in March 1999.

OPERATING EXPENSES

2000 COMPARED TO 1999 The Company's operating expenses increased 10.5 percent,
or approximately $1.7 billion. American's cost per ASM increased by 10.5 percent
to 10.38 cents, partially driven by a reduction in ASMs due to the Company's
More Room Throughout Coach program. Adjusting for this program, American's cost
per ASM grew approximately 7.2 percent. Wages, salaries and benefits increased
$663 million, or 10.8 percent, primarily due to an increase in the average
number of equivalent employees and contractual wage rate and seniority increases
that are built into the Company's labor contracts, an increase of approximately
$93 million in the provision for profit-sharing, and a charge of approximately
$56 million for the Company's employee home computer program. Aircraft fuel
expense increased $799 million, or 47.1 percent, due to an increase of 42.0
percent in the Company's average price per gallon and a 3.7 percent increase in
the Company's fuel consumption. The increase in fuel expense is net of gains of
approximately $545 million recognized during 2000 related to the Company's fuel
hedging program. Depreciation and amortization expense increased $110 million,
or 10.1 percent, due primarily to the addition of new aircraft, many of which
replaced older aircraft. Maintenance, materials and repairs expense increased
$92 million, or 9.2 percent, due primarily to an increase in airframe and engine
maintenance volumes at the Company's maintenance bases and an approximate $17
million one-time credit the Company received in 1999. Commissions to agents
decreased 10.8 percent, or $125 million, despite an 11.4 percent increase in
passenger revenues, due primarily to commission structure changes implemented in
October 1999 and January 2000, and a decrease in the percentage of
commissionable transactions.


                                       20
<PAGE>   22

1999 COMPARED TO 1998 The Company's operating expenses increased 6.7 percent, or
approximately $1 billion. American's cost per ASM increased by 1.5 percent to
9.39 cents. Wages, salaries and benefits increased $327 million, or 5.6 percent,
primarily due to an increase in the average number of equivalent employees and
contractual wage rate and seniority increases that are built into the Company's
labor contracts, partially offset by a decrease in the provision for
profit-sharing. Aircraft fuel expense increased $92 million, or 5.7 percent, due
to a 5.5 percent increase in the Company's fuel consumption and a 0.2 percent
increase in the Company's average price per gallon. The increase in fuel expense
is net of gains of approximately $111 million recognized during 1999 related to
the Company's fuel hedging program. Depreciation and amortization expense
increased $52 million, or 5.0 percent, due primarily to the addition of new
aircraft, partially offset by the change in depreciable lives and residual
values for certain types of aircraft in 1999 (see Note 1 to the consolidated
financial statements). Maintenance, materials and repairs expense increased 7.3
percent, or $68 million, due primarily to the addition of Reno and Business
Express aircraft during 1999. Commissions to agents decreased 5.2 percent, or
$64 million, despite a 1.2 percent increase in passenger revenues, due to the
benefit from the changes in the international commission structure in late 1998
and the base commission structure in October 1999, and a decrease in the
percentage of commissionable transactions. Other rentals and landing fees
increased 12.3 percent, or $103 million, due primarily to higher facilities rent
and landing fees across American's system and the addition of Reno and Business
Express. Food service increased $65 million, or 9.6 percent, due primarily to
rate increases and the addition of Reno. Aircraft rentals increased $61 million,
up 10.7 percent, primarily due to the addition of Reno and Business Express
aircraft. Other operating expenses increased $342 million, or 12.0 percent, due
primarily to increases in outsourced services, travel and incidental costs and
booking fees.

OTHER INCOME (EXPENSE)

Other income (expense) consists of interest income and expense, interest
capitalized and miscellaneous - net.

2000 COMPARED TO 1999 Interest income increased $59 million, or 62.1 percent,
due primarily to higher investment balances. Interest expense increased $74
million, or 18.8 percent, resulting primarily from financing new aircraft
deliveries. Interest capitalized increased 28.0 percent, or $33 million, due to
an increase in purchase deposits for flight equipment. Miscellaneous - net
increased $38 million due primarily to a $57 million gain on the sale of the
Company's warrants to purchase 5.5 million shares of priceline common stock in
the second quarter of 2000 and a gain of approximately $41 million from the
recovery of start-up expenses from the Canadian services agreement. During 1999,
the Company recorded a gain of approximately $75 million from the sale of a
portion of American's interest in Equant and a gain of approximately $40 million
related to the sale of the Company's investment in the preferred stock of
Canadian. These gains were partially offset by the provision for the settlement
of litigation items and the write-down of certain investments held by the
Company during 1999.

1999 COMPARED TO 1998 Interest income decreased $38 million, or 28.6 percent,
due primarily to lower investment balances throughout most of 1999. Interest
expense increased $21 million, or 5.6 percent, resulting primarily from an
increase in long-term debt. Interest capitalized increased 13.5 percent, or $14
million, due to an increase in purchase deposits for flight equipment throughout
most of 1999. Miscellaneous - net increased $50 million due primarily to the
sale of a portion of American's interest in Equant in 1999, which resulted in an
approximate $75 million gain, and a gain of approximately $40 million from the
sale of the Company's investment in the preferred stock of Canadian. These gains
were partially offset by the provision for the settlement of litigation items
and the write-down of certain investments held by the Company during 1999.


                                       21
<PAGE>   23


OPERATING STATISTICS

The following table provides statistical information for American and AMR Eagle
for the years ended December 31, 2000, 1999 and 1998.

<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                                                             ---------------------------------------
                                                              2000            1999            1998
                                                             -------         -------         -------
<S>                                                          <C>             <C>             <C>
AMERICAN AIRLINES
   Revenue passenger miles (millions)                        116,594         112,067         108,955
   Available seat miles (millions)                           161,030         161,211         155,297
   Cargo ton miles (millions)                                  2,280           2,068           1,974
   Passenger load factor                                        72.4%           69.5%           70.2%
   Breakeven load factor                                        65.9%           63.8%           59.9%
   Passenger revenue yield per passenger mile (cents)          14.05           13.12           13.49
   Passenger revenue per available seat mile (cents)           10.17            9.12            9.46
   Cargo revenue yield per ton mile (cents)                    31.31           30.70           32.85
   Operating expenses per available seat mile (cents)          10.38            9.39            9.25
   Operating aircraft at year-end                                717             697             648

AMR EAGLE
   Revenue passenger miles (millions)                          3,731           3,371           2,788
   Available seat miles (millions)                             6,256           5,640           4,471
   Passenger load factor                                        59.6%           59.8%           62.4%
   Operating aircraft at year-end                                261             268             209
</TABLE>


LIQUIDITY AND CAPITAL RESOURCES

Operating activities provided net cash of $3.1 billion in 2000, $2.3 billion in
1999 and $2.8 billion in 1998. The $878 million increase from 1999 to 2000
resulted primarily from a decrease in working capital.

       Capital expenditures in 2000 totaled $3.7 billion, compared to $3.5
billion in 1999 and $2.3 billion in 1998, and included aircraft acquisitions of
approximately $3.1 billion. In 2000, American took delivery of 27 Boeing
737-800s and 16 Boeing 777-200ERs. AMR Eagle took delivery of 24 Embraer 135
aircraft and five Embraer 145 aircraft. These expenditures, as well as the
expansion of certain airport facilities, were funded primarily with internally
generated cash and the $559 million cash dividend from Sabre Holdings
Corporation, except for (i) 11 Boeing aircraft which were financed through
secured mortgage agreements, and (ii) the Embraer aircraft acquisitions which
were funded through secured debt agreements.

       At December 31, 2000, the Company had commitments to acquire the
following aircraft: 66 Boeing 737-800s, 23 Boeing 757-200s, 20 Boeing
777-200ERs, 146 Embraer regional jets and 25 Bombardier CRJ-700s. Deliveries of
all aircraft extend through 2006. Future payments for all aircraft, including
the estimated amounts for price escalation, will approximate $2.7 billion in
2001, $1.6 billion in 2002, $900 million in 2003 and an aggregate of
approximately $1.3 billion in 2004 through 2006. In addition to these
commitments for aircraft, the Company expects to spend approximately $1.0
billion in 2001 for modifications to aircraft, renovations of - and additions to
- - airport and off-airport facilities, and the acquisition of various other
equipment and assets, of which approximately $855 million has been authorized by
the Company's Board of Directors. The Company expects to fund its 2001 capital
expenditures from the Company's existing cash and short-term investments,
internally generated cash or new financing depending upon market conditions
and the Company's evolving view of its long-term needs.



                                       22
<PAGE>   24



       On January 10, 2001, the Company announced three transactions that are
expected to substantially increase the scope of its existing network. First, the
Company announced that it had agreed to purchase substantially all of the assets
of Trans World Airlines, Inc. (TWA) for approximately $500 million in cash and
to assume approximately $3.5 billion of TWA's obligations. The Company's
agreement with TWA contemplated that TWA would file for bankruptcy protection
under Chapter 11 of the U.S. Bankruptcy Code and conduct an auction of its
assets under the auspices of the Bankruptcy Court. During the auction, other
credible offers would compete with the Company's offer. TWA filed for bankruptcy
protection on January 10, 2001. In conjunction therewith, the Company also
agreed to provide TWA with up to $200 million in debtor-in-possession financing
to facilitate TWA's ability to maintain its operations until the completion of
this transaction. The amount available under this facility was later increased
to $330 million. As of March 19, 2001, approximately $289 million had been
provided via the debtor-in-possession financing.

       The auction of TWA's assets was commenced on March 5, 2001, and recessed
to March 7, 2001. During the recess, the Company increased its cash bid to $625
million and agreed to leave in the TWA estate certain aircraft security
deposits, advance rental payments and rental rebates that were estimated to
bring approximately $117 million of value to TWA. The Company expects that the
increase in the Company's bid will be more than offset, however, by the benefit
to the Company of the reductions in rental rates the Company has negotiated with
TWA's aircraft lessors. On March 7, 2001, TWA's board selected the
Company's bid as the "highest and best" offer, and on March 12, 2001, the U.S.
Bankruptcy Court, District of Delaware, entered an order approving the sale of
TWA's assets to the Company. Consummation of the transaction is subject to
several contingencies, including the waiver by TWA's unions of certain
provisions of their collective bargaining agreements. The approval of the U.S.
Department of Justice was obtained on March 16, 2001. Certain parties have
filed appeals of the Bankruptcy Court's sale order, and have sought a stay of
the transaction, pending the appeals. A provision of the Bankruptcy Code will
permit the Company to close the transaction, despite pending appeals, unless a
stay is granted. If a stay is granted, the Company would anticipate that the
appeal process would be expedited. Upon the closing of the transaction, TWA will
be integrated into American's operations with a continued hub operation in St.
Louis. The Company expects to fund the acquisition of TWA's assets with its
existing cash or short-term investments, internally generated cash or new
financing depending on market conditions and the Company's evolving view of its
long-term needs.

       Secondly, the Company announced that it has agreed to acquire from United
Airlines, Inc. (United) certain key strategic assets (slots, gates and aircraft)
of US Airways, Inc. (US Airways) upon the consummation of the previously
announced merger between United and US Airways. In addition to the acquisition
of these assets, American will lease a number of slots and gates from United so
that American may operate half of the northeast Shuttle (New York/Washington
DC/Boston). United will operate the other half of the Shuttle. For these assets,
American will pay approximately $1.2 billion in cash to United and assume
approximately $300 million in aircraft operating leases. The consummation of
these transactions is contingent upon the closing of the proposed United/US
Airways merger. Also, the acquisition of aircraft is generally dependent upon a
certain number of US Airways' Boeing 757 cockpit crew members transferring to
American's payroll.

       Finally, American has agreed to acquire a 49 percent stake in, and to
enter into an exclusive marketing agreement with, DC Air LLC (DC Air). American
has agreed to pay $82 million in cash for its ownership stake. American will
have a right of first refusal on the acquisition of the remaining 51 percent
stake in DC Air. American will also lease to DC Air a certain number of Fokker
100 aircraft with necessary crews (known in the industry as a "wet lease").
These wet leased aircraft will be used by DC Air in its operations. DC Air is
the first significant new entrant at Ronald Reagan Washington National Airport
(DCA) in over a decade. DC Air will acquire the assets needed to begin its DCA
operations from United/US Airways upon the consummation of the merger between
the two carriers. American's investment in DC Air and the other arrangements
described above are contingent upon the consummation of the merger between
United and US Airways.

       American has $1.0 billion in credit facility agreements that expire
December 15, 2005, subject to certain conditions. At American's option, interest
on these agreements can be calculated on one of several different bases. For
most borrowings, American would anticipate choosing a floating rate based upon
the London Interbank Offered Rate (LIBOR). At December 31, 2000, no borrowings
were outstanding under these agreements.


                                       23
<PAGE>   25


       AMR (principally American Airlines) historically operates with a working
capital deficit as do most other airline companies. The existence of such a
deficit has not in the past impaired the Company's ability to meet its
obligations as they become due and is not expected to do so in the future.

OTHER INFORMATION

ENVIRONMENTAL MATTERS Subsidiaries of AMR have been notified of potential
liability with regard to several environmental cleanup sites and certain airport
locations. At sites where remedial litigation has commenced, potential liability
is joint and several. AMR's alleged volumetric contributions at these sites are
minimal compared to others. AMR does not expect these matters, individually or
collectively, to have a material impact on its results of operations, financial
position or liquidity. Additional information is included in Note 3 to the
consolidated financial statements.

NEW ACCOUNTING PRONOUNCEMENT Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities", as amended (SFAS 133), was adopted by the Company on
January 1, 2001. SFAS 133 requires the Company to recognize all derivatives on
the balance sheet at fair value. Derivatives that are not hedges must be
adjusted to fair value through income. If the derivative is a hedge, depending
on the nature of the hedge, changes in the fair value of derivatives will either
be offset against the change in fair value of the hedged assets, liabilities, or
firm commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The adoption of SFAS 133 did not have a material impact on the Company's net
earnings. However, the Company recorded a transition adjustment of approximately
$100 million in accumulated other comprehensive income in the first quarter of
2001.

OUTLOOK FOR 2001

The Company is cautious in its outlook for 2001. On the revenue front, the
primary concern is a slowing U.S. economy. American's strong revenue performance
the past several years was marked by a growing U.S. economy coupled with a
modest increase in industry capacity. Our revenue performance in 2001 will be
dictated by how well the industry manages that relationship going forward.

       Absent the TWA, United/US Airways and DC Air transactions, American's
capacity in 2001 is expected to grow about three percent, slightly less than the
industry average. AMR Eagle's capacity will grow about 11 percent, reflecting
the delivery of 31 new regional jets (RJs). Should the demand for air travel
slow more quickly than expected, both carriers have the flexibility to further
accelerate the retirement of certain older aircraft to keep the Company's
capacity growth in line with general economic conditions.

       With the transactions, if approved, the Company expects to strengthen its
position in several key domestic markets. The TWA transaction will provide
American with a hub operation in St. Louis which will serve to strengthen the
Company's position as an east/west carrier. In addition, these proposed
transactions will allow the Company to gain additional slots and real estate at
New York's Kennedy and LaGuardia airports, Washington Reagan, Boston and other
major airports across the domestic system. At the same time, the Company will
continue to improve the regional airline feed to American by strengthening AMR
Eagle with the replacement of turboprop aircraft with RJs and the expansion of
connecting service at Chicago O'Hare, DFW and key East Coast cities. The Company
has reached agreements with three regional carriers feeding TWA in St. Louis.
These agreements will provide for continued feed traffic from St. Louis should
the TWA transaction be approved.

       On the international front, the Company will continue to pursue its
relationship with Swissair/Sabena, and its bilateral agreement with EVA of
Taiwan -- coupled with the Company's existing Asian carrier alliances -- will
allow the Company to strengthen its presence in several Asian markets. The
Company is also working to make the ONEworld alliance pay off in more
significant ways, in part by strengthening its relationship with British
Airways.


                                       24
<PAGE>   26


       Pressure to reduce costs will continue, although the volatility of fuel
prices makes any prediction of overall costs very difficult. Excluding fuel
expense and the impact of the Company's More Room Throughout Coach program, the
Company anticipates an increase in unit cost of one to two percent driven
primarily by higher labor and aircraft ownership costs. On the labor front, the
Company has or will have all three of its union contracts open for negotiation
in 2001. The expected result is upward pressure on labor rates. Aircraft
depreciation and maintenance, materials and repairs expense will also be up,
reflecting 2000 and 2001 aircraft deliveries. Other expense lines will see
volume-driven increases and inflationary pressures. Partially offsetting these
expected increases, the Company anticipates future reductions in distribution
costs due to reduced commission expense and increased penetration rates for
electronic tickets. And although oil prices are largely expected to decrease in
2001 as compared to 2000 levels, the resulting benefit will be offset by lower
fuel hedging gains in 2001 from the Company's fuel hedging program.

       Lastly, as a result of the proposed TWA, United/US Airways and DC Air
transactions, and for several other reasons, American and American Eagle have
initiated an impairment review of certain fleet types in accordance with
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
This review could result in an impairment charge to be taken by the Company in
2001. The size of any resulting 2001 charge is not presently known, but may be
significant.

FORWARD-LOOKING INFORMATION

The preceding discussions under Business, Properties, Legal Proceedings and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contain various forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which represent the Company's
expectations or beliefs concerning future events. When used in this document and
in documents incorporated herein by reference, the words "expects," "plans,"
"anticipates," and similar expressions are intended to identify forward-looking
statements. Forward-looking statements include, without limitation, expectations
as to results of operations and financial condition, including changes in
capacity, revenues and costs, expectations as to future financing needs, overall
economic projections and the Company's plans and objectives for future
operations, including its ability to successfully integrate into its operations
assets the Company may acquire in its previously announced transactions with
TWA, United/US Airways and DC Air, and plans to develop future code-sharing
programs and to evaluate new alliances. All forward-looking statements in this
report are based upon information available to the Company on the date of this
report. The Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events
or otherwise. Forward-looking statements are subject to a number of factors that
could cause actual results to differ materially from our expectations. The
following factors, in addition to other possible factors not listed, could cause
the Company's actual results to differ materially from those expressed in
forward-looking statements:

UNCERTAINTY OF FUTURE COLLECTIVE BARGAINING AGREEMENTS AND EVENTS The Company's
operations could be adversely affected by failure of the Company to reach
agreement with any labor union representing the Company's employees or by an
agreement with a labor union representing the Company's employees that contains
terms which prevent the Company from competing effectively with other airlines.
In addition, a dispute between the Company and an employee work group (outside
the confines of a collective bargaining agreement) could adversely impact the
Company's operations.

ECONOMIC AND OTHER CONDITIONS The airline industry is affected by changes in
international, national, regional and local economic conditions, inflation, war
or political instability (or the threat thereof), consumer preferences and
spending patterns, demographic trends, disruptions to the air traffic control
system, consumer perceptions of airline safety, costs of safety, security and
environmental measures, and the weather.

COMMODITY PRICES Due to the competitive nature of the airline industry, in the
event of any increase in the price of jet fuel, there can be no assurance that
the Company would be able to pass on increased fuel prices to its customers by
increasing fares.


                                       25
<PAGE>   27


COMPETITION IN THE AIRLINE INDUSTRY Service over almost all of the Company's
routes is highly competitive. The Company faces vigorous competition from major
domestic airlines, national, regional, all-cargo and charter carriers, foreign
carriers, low-cost carriers, and, particularly on shorter segments, ground
transportation. Pricing decisions are affected by competition from other
airlines. Fare discounting by competitors has historically had a negative effect
on the Company's financial results because American is generally required to
match competitors' fares to maintain passenger traffic. No assurance can be
given that any future fare reduction would be offset by increases in passenger
traffic, a reduction in costs or changes in the mix of traffic that would
improve yields.

CHANGING BUSINESS STRATEGY Although it has no current plan to do so, the Company
may change its business strategy in the future and may not pursue some of the
goals stated herein.

GOVERNMENT REGULATION Future results of the Company's operations may vary based
upon any actions which the governmental agencies with jurisdiction over the
Company's operations may take, including the granting and timing of certain
governmental approvals (including foreign government approvals) needed for
code-sharing alliances and other arrangements with other airlines, restrictions
on competitive practices (e.g., Court Orders, or Agency regulations or orders,
that would curtail an airline's ability to respond to a competitor), the
adoption of regulations that impact customer service standards, and the adoption
of more restrictive locally-imposed noise restrictions.

UNCERTAINTY IN INTERNATIONAL OPERATIONS The Company's current international
activities and prospects could be adversely affected by factors such as
reversals or delays in the opening of foreign markets, exchange controls,
currency and political risks, taxation and changes in international government
regulation of the Company's operations.

INDUSTRY CONSOLIDATION The Company has announced a series of transactions with
TWA, United/US Airways and DC Air (see page 23). These transactions are subject
to a number of conditions and there can be no assurance that they will occur as
planned. If these transactions do not occur and yet other U.S. carriers merge or
create or expand marketing alliances, such mergers or new or expanded marketing
alliances could adversely affect the Company.




                                       26
<PAGE>   28



ITEM 7(A).  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS

The risk inherent in the Company's market risk sensitive instruments and
positions is the potential loss arising from adverse changes in the price of
fuel, foreign currency exchange rates and interest rates as discussed below. The
sensitivity analyses presented do not consider the effects that such adverse
changes may have on overall economic activity, nor do they consider additional
actions management may take to mitigate its exposure to such changes. Actual
results may differ. See Note 6 to the consolidated financial statements for
accounting policies and additional information. In addition, the following
analyses exclude any impact of the proposed transactions discussed on page 23.

AIRCRAFT FUEL The Company's earnings are affected by changes in the price and
availability of aircraft fuel. In order to provide a measure of control over
price and supply, the Company trades and ships fuel and maintains fuel storage
facilities to support its flight operations. The Company also manages the price
risk of fuel costs primarily utilizing swap and option contracts. Market risk is
estimated as a hypothetical 10 percent increase in the December 31, 2000 and
1999 cost per gallon of fuel. Based on projected 2001 fuel usage, such an
increase would result in an increase to aircraft fuel expense of approximately
$194 million in 2001, net of fuel hedge instruments outstanding at December 31,
2000. Comparatively, based on projected 2000 fuel usage, such an increase would
have resulted in an increase to aircraft fuel expense of approximately $131
million in 2000, net of fuel hedge instruments outstanding at December 31, 1999.
The change in market risk is due primarily to the increase in fuel prices. As of
December 31, 2000, the Company had hedged approximately 40 percent of its 2001
fuel requirements, approximately 15 percent of its 2002 fuel requirements, and
approximately seven percent of its 2003 fuel requirements, compared to
approximately 48 percent of its 2000 fuel requirements and 10 percent of its
2001 fuel requirements hedged at December 31, 1999.

FOREIGN CURRENCY The Company is exposed to the effect of foreign exchange rate
fluctuations on the U.S. dollar value of foreign currency-denominated operating
revenues and expenses. The Company's largest exposure comes from the Canadian
dollar, British pound, Japanese yen, Euro and various Latin and South American
currencies. The Company uses options to hedge a portion of its anticipated
foreign currency-denominated ticket sales. The result of a uniform 10 percent
strengthening in the value of the U.S. dollar from December 31, 2000 and 1999
levels relative to each of the currencies in which the Company has foreign
currency exposure would result in a decrease in operating income of
approximately $33 million and $39 million for the years ending December 31, 2001
and 2000, respectively, net of hedge instruments outstanding at December 31,
2000 and 1999, due to the Company's foreign-denominated revenues exceeding its
foreign-denominated expenses. This sensitivity analysis was prepared based upon
projected 2001 and 2000 foreign currency-denominated revenues and expenses as of
December 31, 2000 and 1999.

INTEREST The Company's earnings are also affected by changes in interest rates
due to the impact those changes have on its interest income from cash and
short-term investments, and its interest expense from variable-rate debt
instruments. The Company has variable-rate debt instruments representing
approximately 29 percent and 21 percent of its total long-term debt,
respectively, at December 31, 2000 and 1999, and interest rate swaps on notional
amounts of approximately $158 million and $696 million, respectively, at
December 31, 2000 and 1999. During 2000, the Company terminated interest rate
swap agreements on notional amounts of approximately $425 million. The cost of
terminating these interest rate swap agreements was not material. If interest
rates average 10 percent more in 2001 than they did at December 31, 2000, the
Company's interest expense would increase by approximately $11 million and
interest income from cash and short-term investments would increase by
approximately $15 million. In comparison, at December 31, 1999, the Company
estimated that if interest rates averaged 10 percent more in 2000 than they did
at December 31, 1999, the Company's interest expense would have increased by
approximately $10 million and interest income from cash and short-term
investments would have increased by approximately $11 million. These amounts are
determined by considering the impact of the hypothetical interest rates on the
Company's variable-rate long-term debt, interest rate swap agreements, and cash
and short-term investment balances at December 31, 2000 and 1999.


                                       27
<PAGE>   29


       Market risk for fixed-rate long-term debt is estimated as the potential
increase in fair value resulting from a hypothetical 10 percent decrease in
interest rates, and amounts to approximately $148 million and $156 million as of
December 31, 2000 and 1999, respectively. The fair values of the Company's
long-term debt were estimated using quoted market prices or discounted future
cash flows based on the Company's incremental borrowing rates for similar types
of borrowing arrangements.

INVESTMENTS The Company is subject to market risk related to its ownership of
approximately 1.2 million depository certificates convertible, subject to
certain restrictions, into the common stock of Equant, as of December 31, 2000
and 1999. The estimated fair value of these depository certificates was
approximately $32 million and $136 million as of December 31, 2000 and 1999,
respectively, based upon the market value of Equant common stock.

       In addition, the Company holds investments in certain other entities
which are subject to market risk. However, the impact of such market risk on
earnings is not significant due to the immateriality of the carrying value and
the geographically diverse nature of these holdings.


                                       28
<PAGE>   30

ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                           Page
                                                           ----
<S>                                                         <C>
Report of Independent Auditors                              30

Consolidated Statements of Operations                       31

Consolidated Balance Sheets                                 33

Consolidated Statements of Cash Flows                       35

Consolidated Statements of Stockholders' Equity             36

Notes to Consolidated Financial Statements                  37
</TABLE>



                                       29
<PAGE>   31

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
AMR Corporation

       We have audited the accompanying consolidated balance sheets of AMR
Corporation as of December 31, 2000 and 1999, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 2000. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

       We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

       In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of AMR
Corporation at December 31, 2000 and 1999, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.

                                                ERNST & YOUNG LLP

2121 San Jacinto
Dallas, Texas  75201
January 16, 2001, except for Note 15,
   for which the date is March 19, 2001.


                                       30
<PAGE>   32


AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                       ------------------------------------
                                                         2000          1999          1998
                                                       --------      --------      --------
<S>                                                    <C>           <C>           <C>
REVENUES

   Passenger - American Airlines, Inc.                 $ 16,377      $ 14,707      $ 14,695
             - AMR Eagle                                  1,452         1,294         1,121
   Cargo                                                    721           643           656
   Other revenues                                         1,153         1,086         1,044
                                                       --------      --------      --------
     Total operating revenues                            19,703        17,730        17,516
                                                       --------      --------      --------
EXPENSES

   Wages, salaries and benefits                           6,783         6,120         5,793
   Aircraft fuel                                          2,495         1,696         1,604
   Depreciation and amortization                          1,202         1,092         1,040
   Maintenance, materials and repairs                     1,095         1,003           935
   Commissions to agents                                  1,037         1,162         1,226
   Other rentals and landing fees                           999           942           839
   Food service                                             777           740           675
   Aircraft rentals                                         607           630           569
   Other operating expenses                               3,327         3,189         2,847
                                                       --------      --------      --------
     Total operating expenses                            18,322        16,574        15,528
                                                       --------      --------      --------

OPERATING INCOME                                          1,381         1,156         1,988

OTHER INCOME (EXPENSE)
   Interest income                                          154            95           133
   Interest expense                                        (467)         (393)         (372)
   Interest capitalized                                     151           118           104
   Miscellaneous - net                                       68            30           (20)
                                                       --------      --------      --------
                                                            (94)         (150)         (155)
                                                       --------      --------      --------
INCOME FROM CONTINUING OPERATIONS BEFORE
   INCOME TAXES AND EXTRAORDINARY LOSS                    1,287         1,006         1,833
Income tax provision                                        508           350           719
                                                       --------      --------      --------
INCOME FROM CONTINUING OPERATIONS BEFORE
   EXTRAORDINARY LOSS                                       779           656         1,114
INCOME FROM DISCONTINUED OPERATIONS, NET OF
   APPLICABLE INCOME TAXES AND MINORITY INTEREST             43           265           200
GAIN ON SALE OF DISCONTINUED OPERATIONS, NET OF
    APPLICABLE INCOME TAXES                                  --            64            --
                                                       --------      --------      --------
INCOME BEFORE EXTRAORDINARY LOSS                            822           985         1,314
EXTRAORDINARY LOSS, NET OF APPLICABLE INCOME TAXES           (9)           --            --
                                                       --------      --------      --------
NET EARNINGS                                           $    813      $    985      $  1,314
                                                       ========      ========      ========
</TABLE>


- --------------------------------------------------------------------------------
Continued on next page.


                                       31
<PAGE>   33


AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(in millions, except per share amounts)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                                           --------------------------------------
                                              2000           1999          1998
                                           ---------      ---------     ---------
<S>                                        <C>            <C>           <C>
EARNINGS APPLICABLE TO COMMON SHARES       $     813      $     985     $   1,314
                                           =========      =========     =========

EARNINGS PER SHARE:
   BASIC

     Income from continuing operations     $    5.20      $    4.30     $    6.60
     Discontinued operations                    0.30           2.16          1.18
     Extraordinary loss                        (0.07)            --            --
                                           ---------      ---------     ---------
     Net earnings                          $    5.43      $    6.46     $    7.78
                                           =========      =========     =========

   DILUTED

     Income from continuing operations     $    4.81      $    4.17     $    6.38
     Discontinued operations                    0.27           2.09          1.14
     Extraordinary loss                        (0.05)            --            --
                                           ---------      ---------     ---------
     Net earnings                          $    5.03      $    6.26     $    7.52
                                           =========      =========     =========
</TABLE>

- --------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.


                                       32
<PAGE>   34

AMR CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except shares and par value)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                             December 31,
                                                          -------------------
                                                           2000         1999
                                                          -------     -------
<S>                                                       <C>         <C>
ASSETS

CURRENT ASSETS
   Cash                                                   $    89     $    85
   Short-term investments                                   2,144       1,706
   Receivables, less allowance for uncollectible
     accounts (2000 - $27; 1999 - $57)                      1,303       1,134
   Inventories, less allowance for obsolescence
     (2000 - $332; 1999 - $279)                               757         708
   Deferred income taxes                                      695         612
   Other current assets                                       191         179
                                                          -------     -------
     Total current assets                                   5,179       4,424

EQUIPMENT AND PROPERTY
   Flight equipment, at cost                               20,041      16,912
   Less accumulated depreciation                            6,320       5,589
                                                          -------     -------
                                                           13,721      11,323

   Purchase deposits for flight equipment                   1,700       1,582

   Other equipment and property, at cost                    3,639       3,247
   Less accumulated depreciation                            1,968       1,814
                                                          -------     -------
                                                            1,671       1,433
                                                          -------     -------
                                                           17,092      14,338
EQUIPMENT AND PROPERTY UNDER CAPITAL LEASES
   Flight equipment                                         2,618       3,141
   Other equipment and property                               159         155
                                                          -------     -------
                                                            2,777       3,296
   Less accumulated amortization                            1,233       1,347
                                                          -------     -------
                                                            1,544       1,949
OTHER ASSETS
   Route acquisition costs and airport operating and
     gate lease rights, less accumulated amortization
     (2000 - $498; 1999 - $450)                             1,143       1,191
   Other                                                    1,255       2,472
                                                          -------     -------
                                                            2,398       3,663
                                                          -------     -------

TOTAL ASSETS                                              $26,213     $24,374
                                                          =======     =======
</TABLE>

- --------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.


                                       33
<PAGE>   35


AMR CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except shares and par value)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                         December 31,
                                                                     ----------------------
                                                                       2000          1999
                                                                     --------      --------
<S>                                                                  <C>           <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                                  $  1,267      $  1,115
   Accrued salaries and wages                                             955           849
   Accrued liabilities                                                  1,276         1,107
   Air traffic liability                                                2,696         2,258
   Current maturities of long-term debt                                   569           302
   Current obligations under capital leases                               227           236
                                                                     --------      --------
     Total current liabilities                                          6,990         5,867

LONG-TERM DEBT, LESS CURRENT MATURITIES                                 4,151         4,078


OBLIGATIONS UNDER CAPITAL LEASES,
   LESS CURRENT OBLIGATIONS                                             1,323         1,611

OTHER LIABILITIES AND CREDITS
   Deferred income taxes                                                2,385         1,846
   Deferred gains                                                         508           613
   Postretirement benefits                                              1,706         1,669
   Other liabilities and deferred credits                               1,974         1,832
                                                                     --------      --------
                                                                        6,573         5,960

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Common stock - $1 par value; shares authorized: 750,000,000;
     Shares issued: 2000 and 1999 - 182,278,766                           182           182
   Additional paid-in capital                                           2,911         3,061
   Treasury shares at cost: 2000 - 30,216,218; 1999 - 34,034,110       (1,865)       (2,101)
   Accumulated other comprehensive income                                  (2)           (2)
   Retained earnings                                                    5,950         5,718
                                                                     --------      --------
                                                                        7,176         6,858
                                                                     --------      --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $ 26,213      $ 24,374
                                                                     ========      ========
</TABLE>

- --------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.


                                       34
<PAGE>   36


AMR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                               Year Ended December 31,
                                                                          ---------------------------------
                                                                           2000          1999        1998
                                                                          -------      -------      -------
<S>                                                                       <C>          <C>          <C>
CASH FLOW FROM OPERATING ACTIVITIES:
   Income from continuing operations after extraordinary loss             $   770      $   656      $ 1,114
   Adjustments to reconcile income from continuing operations after
     extraordinary loss to net cash provided by operating activities:
       Depreciation                                                           928          864          830
       Amortization                                                           274          228          210
       Deferred income taxes                                                  461          183          268
       Extraordinary loss on early extinguishment of debt                      14           --           --
       Gain on sale of other investments, net                                 (57)         (95)          --
       Gain on disposition of equipment and property                           --          (15)         (19)
       Change in assets and liabilities:
         Decrease (increase) in receivables                                  (169)         261         (185)
         Increase in inventories                                             (111)        (140)         (36)
         Increase in accounts payable and accrued liabilities                 579           42          343
         Increase in air traffic liability                                    438           84          128
       Other, net                                                              15          196          144
                                                                          -------      -------      -------
              Net cash provided by operating activities                     3,142        2,264        2,797

CASH FLOW FROM INVESTING ACTIVITIES:
   Capital expenditures, including purchase deposits
     on flight equipment                                                   (3,678)      (3,539)      (2,342)
   Net decrease (increase) in short-term investments                         (438)        (253)         348
   Acquisitions and other investments                                         (50)         (99)        (137)
   Proceeds from:
     Dividend from Sabre Holdings Corporation                                 559           --           --
     Sale of equipment and property                                           238           79          262
     Sale of other investments                                                 94           85           --
     Sale of discontinued operations                                           --          259           --
   Other                                                                       --           18           --
                                                                          -------      -------      -------
              Net cash used for investing activities                       (3,275)      (3,450)      (1,869)

CASH FLOW FROM FINANCING ACTIVITIES:
   Payments on long-term debt and capital lease obligations                  (766)        (280)        (547)
   Proceeds from:
     Issuance of long-term debt                                               836        1,956          246
     Exercise of stock options                                                 67           25           85
     Short-term loan from Sabre Holdings Corporation                           --          300           --
     Sale-leaseback transactions                                               --           54          270
   Repurchase of common stock                                                  --         (871)        (945)
                                                                          -------      -------      -------
              Net cash provided by (used for) financing activities            137        1,184         (891)
                                                                          -------      -------      -------
Net increase (decrease) in cash                                                 4           (2)          37
Cash at beginning of year                                                      85           87           50
                                                                          -------      -------      -------
Cash at end of year                                                       $    89      $    85      $    87
                                                                          =======      =======      =======
ACTIVITIES NOT AFFECTING CASH
     Distribution of Sabre Holdings Corporation shares to AMR
        shareholders                                                      $   581      $    --      $    --
                                                                          =======      =======      =======
     Payment of short-term loan from Sabre Holdings Corporation           $    --      $   300      $    --
                                                                          =======      =======      =======
     Capital lease obligations incurred                                   $    --      $    54      $   270
                                                                          =======      =======      =======
</TABLE>

- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.


                                       35
<PAGE>   37


AMR CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in millions, except share amounts)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                      Accumulated
                                                             Additional                  Other
                                                   Common     Paid-in      Treasury   Comprehensive Retained
                                                   Stock      Capital       Stock        Income     Earnings       Total
                                                  -------    ----------    --------   ------------- --------      -------
<S>                                               <C>        <C>           <C>        <C>           <C>          <C>
Balance at January 1, 1998                        $   182     $ 3,104      $  (485)     $    (4)     $ 3,419      $ 6,216
Net earnings and total comprehensive
  income                                               --          --           --           --        1,314        1,314
Repurchase of 14,342,008 common shares                 --          --         (944)          --           --         (944)
Issuance of 2,495,148 shares from
   Treasury pursuant to stock option,
   deferred stock and restricted stock
   incentive plans, net of tax benefit of $17          --         (29)         141           --           --          112
                                                  -------     -------      -------      -------      -------      -------
Balance at December 31, 1998                          182       3,075       (1,288)          (4)       4,733        6,698
Net earnings                                           --          --           --           --          985          985
Adjustment for minimum pension
  liability, net of tax expense of $1                  --          --           --            3           --            3
Unrealized loss on investments, net of
   tax benefit of $1                                   --          --           --           (1)          --           (1)
                                                                                                                  -------
       Total comprehensive income                                                                                     987
Repurchase of 14,062,358 common shares                 --          --         (871)          --           --         (871)
Issuance of 955,940 shares from
   Treasury pursuant to stock option,
   deferred stock and restricted stock
   incentive plans, net of tax benefit of $4           --         (14)          58           --           --           44
                                                  -------     -------      -------      -------      -------      -------
Balance at December 31, 1999                          182       3,061       (2,101)          (2)       5,718        6,858
Net earnings                                           --          --           --           --          813          813
Adjustment for minimum pension
  liability, net of tax expense of $3                  --          --           --           (5)          --           (5)
Unrealized gain on investments, net of
   tax expense of $2                                   --          --           --            5           --            5
                                                                                                                  -------
       Total comprehensive income                                                                                     813
Distribution of Sabre Holdings
  Corporation shares to AMR shareholders               --          --           --           --         (581)        (581)
Issuance of 3,817,892 shares from
   Treasury pursuant to stock option,
   deferred stock and restricted stock
   incentive plans, net of tax benefit of $11          --        (150)         236           --           --           86
                                                  -------     -------      -------      -------      -------      -------
Balance at December 31, 2000                      $   182     $ 2,911      $(1,865)     $    (2)     $ 5,950      $ 7,176
                                                  =======     =======      =======      =======      =======      =======
</TABLE>

- --------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.




                                       36
<PAGE>   38


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

1.     SUMMARY OF ACCOUNTING POLICIES

BASIS OF PRESENTATION The consolidated financial statements include the accounts
of AMR Corporation (AMR or the Company) and its wholly owned subsidiaries,
including its principal subsidiary American Airlines, Inc. (American). All
significant intercompany transactions have been eliminated. The results of
operations, cash flows and net assets for Sabre Holdings Corporation (Sabre),
AMR Services, AMR Combs and TeleService Resources have been reflected in the
consolidated financial statements as discontinued operations. Unless
specifically indicated otherwise, the information in the footnotes relates to
the continuing operations of AMR. All share and per share amounts reflect the
stock split on June 9, 1998, where appropriate. Certain amounts from prior years
have been reclassified to conform with the 2000 presentation.

USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.

INVENTORIES Spare parts, materials and supplies relating to flight equipment are
carried at average acquisition cost and are expensed when incurred in
operations. Allowances for obsolescence are provided, over the estimated useful
life of the related aircraft and engines, for spare parts expected to be on hand
at the date aircraft are retired from service, plus allowances for spare parts
currently identified as excess. These allowances are based on management
estimates, which are subject to change.

EQUIPMENT AND PROPERTY The provision for depreciation of operating equipment and
property is computed on the straight-line method applied to each unit of
property, except that major rotable parts, avionics and assemblies are
depreciated on a group basis. The depreciable lives used for the principal
depreciable asset classifications are:

<TABLE>
<CAPTION>
                                                            Depreciable Life
                                                            ----------------
<S>                                                         <C>
       Boeing 727-200 aircraft                              2003(1)
       Other American jet aircraft                          20 - 30 years
       Regional aircraft and engines                        16 - 20 years
       Major rotable parts, avionics and assemblies         Life of equipment to which
                                                               applicable
       Improvements to leased flight equipment              Term of lease
       Buildings and improvements (principally on           10-30 years or term of lease
          leased land)
       Furniture, fixtures and other equipment              3-20 years
       Capitalized software                                 3-10 years
</TABLE>

(1)   Approximate final aircraft retirement date.

       Residual values for aircraft, engines, major rotable parts, avionics and
assemblies are generally five to 10 percent, except when a guaranteed residual
value or other agreements exist to better estimate the residual value.

       Effective January 1, 1999, in order to more accurately reflect the
expected useful life of its aircraft, the Company changed its estimate of the
depreciable lives of certain aircraft types from 20 to 25 years and increased
the residual value from five to 10 percent. It also established a 30-year life
for its new Boeing 777 aircraft, first delivered in the first quarter of 1999.
As a result of this change, depreciation and amortization expense was reduced by
approximately $158 million and net earnings were increased by approximately $99
million, or $0.63 per common share diluted, for the year ended December 31,
1999.


                                       37
<PAGE>   39


1.     SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

       Equipment and property under capital leases are amortized over the term
of the leases or, in the case of certain aircraft, over their expected useful
lives, and such amortization is included in depreciation and amortization. Lease
terms vary but are generally 10 to 25 years for aircraft and seven to 40 years
for other leased equipment and property.

MAINTENANCE AND REPAIR COSTS Maintenance and repair costs for owned and leased
flight equipment are charged to operating expense as incurred, except engine
overhaul costs incurred by AMR Eagle Holding Corporation (AMR Eagle) and costs
incurred for maintenance and repair under power by the hour maintenance contract
agreements, which are accrued on the basis of hours flown.

INTANGIBLE ASSETS Route acquisition costs and airport operating and gate lease
rights represent the purchase price attributable to route authorities, airport
take-off and landing slots and airport gate leasehold rights acquired. These
assets are being amortized on a straight-line basis over 40 years for route
authorities, primarily 25 years for airport take-off and landing slots, and the
term of the lease for airport gate leasehold rights.

PASSENGER REVENUES Passenger ticket sales are initially recorded as a component
of air traffic liability. Revenue derived from ticket sales is recognized at the
time service is provided. However, due to various factors, including the complex
pricing structure and interline agreements throughout the industry, certain
amounts are recognized in revenue using estimates regarding both the timing of
the revenue recognition and the amount of revenue to be recognized. Actual
results could differ from those estimates.

ADVERTISING COSTS The Company expenses the costs of advertising as incurred.
Advertising expense was $221 million, $206 million and $196 million for the
years ended December 31, 2000, 1999 and 1998, respectively.

FREQUENT FLYER PROGRAM The estimated incremental cost of providing free travel
awards is accrued when such award levels are reached. American sells mileage
credits and related services to companies participating in its frequent flyer
program. The portion of the revenue related to the sale of mileage credits is
deferred and recognized over a period approximating the period during which the
mileage credits are used. The remaining portion of the revenue is recognized
upon receipt as the related services have been provided.

STATEMENTS OF CASH FLOWS Short-term investments, without regard to remaining
maturity at acquisition, are not considered as cash equivalents for purposes of
the statements of cash flows.

STOCK OPTIONS The Company accounts for its stock-based compensation plans in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25) and related Interpretations. Under APB 25,
no compensation expense is recognized for stock option grants if the exercise
price of the Company's stock option grants is at or above the fair market value
of the underlying stock on the date of grant.


                                       38
<PAGE>   40


2.     INVESTMENTS

       Short-term investments consisted of (in millions):

<TABLE>
<CAPTION>
                                              December 31,
                                            -----------------
                                             2000       1999
                                            ------     ------
<S>                                         <C>        <C>
Overnight investments and time deposits     $  361     $   --
Corporate and bank notes                       906      1,173
U. S. Government agency mortgages              442         94
Asset backed securities                        361        145
U. S. Government agency notes                   --        234
Other                                           74         60
                                            ------     ------
                                            $2,144     $1,706
                                            ======     ======
</TABLE>

       Short-term investments at December 31, 2000, by contractual maturity
included (in millions):

<TABLE>
<S>                                         <C>
      Due in one year or less               $  994
      Due between one year and three years   1,104
      Due after three years                     46
                                            ------
                                            $2,144
                                            ======
</TABLE>

       All short-term investments are classified as available-for-sale and
stated at fair value. Unrealized gains and losses, net of deferred taxes, are
reflected as an adjustment to stockholders' equity.

       During 1999, the Company entered into an agreement with priceline.com
Incorporated (priceline) whereby ticket inventory provided by the Company may be
sold through priceline's e-commerce system. In conjunction with this agreement,
the Company received warrants to purchase approximately 5.5 million shares of
priceline common stock. In the second quarter of 2000, the Company sold these
warrants for proceeds of approximately $94 million, and recorded a gain of $57
million, which is included in Miscellaneous - net on the accompanying
consolidated statements of operations.

       At December 31, 1998, the Company owned approximately 3.1 million
depository certificates convertible, subject to certain restrictions, into the
common stock of Equant N.V. (Equant), which completed an initial public offering
in July 1998. Approximately 1.7 million of the certificates were held by the
Company on behalf of Sabre. During 1999, the Company acquired approximately
400,000 Equant depository certificates from other airlines. In addition, based
upon a reallocation between the owners of the certificates in July 1999, the
Company received an additional 2.6 million certificates, of which approximately
2.2 million certificates were held for the benefit of Sabre. In connection with
two secondary offerings by Equant in February and December 1999, the Company
sold approximately 2.7 million depository certificates for a net gain of
approximately $118 million, after taxes and minority interest. Of this amount,
approximately $75 million is included in Miscellaneous - net and approximately
$71 million, net of taxes and minority interest, related to depository
certificates held by the Company on behalf of Sabre, is included in income from
discontinued operations on the accompanying consolidated statements of
operations.

       As of December 31, 2000 and 1999, the Company holds approximately 1.2
million depository certificates with an estimated market value of approximately
$32 million and $136 million, respectively. The carrying value of the Company's
investment in the depository certificates as of December 31, 2000 and 1999, was
approximately $20 million, and is included in other assets on the accompanying
consolidated balance sheets.




                                       39
<PAGE>   41


2.     INVESTMENTS (CONTINUED)

       In December 1999, the Company entered into an agreement to sell its
investment in the cumulative mandatorily redeemable convertible preferred stock
of Canadian Airlines International Limited (Canadian) for approximately $40
million, resulting in a gain of $40 million, which is included in Miscellaneous
- - net on the accompanying consolidated statements of operations. In addition,
the Company recognized a tax benefit of $67 million resulting from the tax loss
on the investment, representing the reversal of a deferred tax valuation
allowance since it is more likely than not that the tax benefit will be
realized. The valuation allowance was established in 1996 when the investment
was written-off because, at that time, it was not more likely than not that the
tax benefit of the write-off would be realized. During 2000, the Company
recorded a gain of approximately $41 million from the recovery of start-up
expenses (previously written-off) from the Canadian services agreement entered
into during 1995, which is included in Miscellaneous - net on the accompanying
consolidated statements of operations.

3.     COMMITMENTS AND CONTINGENCIES

       At December 31, 2000, the Company had commitments to acquire the
following aircraft: 66 Boeing 737-800s, 23 Boeing 757-200s, 20 Boeing
777-200ERs, 146 Embraer regional jets and 25 Bombardier CRJ-700s. Deliveries of
all aircraft extend through 2006. Future payments for all aircraft, including
the estimated amounts for price escalation, will approximate $2.7 billion in
2001, $1.6 billion in 2002, $900 million in 2003 and an aggregate of
approximately $1.3 billion in 2004 through 2006. In addition to these
commitments for aircraft, the Company's Board of Directors has authorized
expenditures of approximately $2.8 billion over the next five years for
modifications to aircraft, renovations of - and additions to - airport and
off-airport facilities, and the acquisition of various other equipment and
assets. AMR expects to spend approximately $855 million of this authorized
amount in 2001.

       The Miami International Airport Authority is currently remediating
various environmental conditions at the Miami International Airport (the
Airport) and funding the remediation costs through landing fee revenues and
other cost recovery methods. Future costs of the remediation effort may be borne
by carriers operating at the Airport, including American, through increased
landing fees and/or other charges since certain of the potentially responsible
parties are no longer in business. The future increase in landing fees and/or
other charges may be material but cannot be reasonably estimated due to various
factors, including the unknown extent of the remedial actions that may be
required, the proportion of the cost that will ultimately be recovered from the
responsible parties, and uncertainties regarding the environmental agencies that
will ultimately supervise the remedial activities and the nature of that
supervision. In addition, the Company is subject to environmental issues at
various other airport and non-airport locations. Management believes, after
considering a number of factors, that the ultimate disposition of these
environmental issues is not expected to materially affect the Company's
consolidated financial position, results of operations or cash flows. Amounts
recorded for environmental issues are based on the Company's current assessments
of the ultimate outcome and, accordingly, could increase or decrease as these
assessments change.

       The Company has agreed to sell its McDonnell Douglas MD-11 aircraft to
FedEx Corporation (FedEx). No significant gain or loss is expected to be
recognized as a result of this transaction. As of December 31, 2000, the
carrying value of the remaining aircraft American has committed to sell was
approximately $462 million.

       AMR and American have included event risk covenants in approximately $2.2
billion of indebtedness. These covenants permit the holders of such indebtedness
to receive a higher rate of return (between 75 and 650 basis points above the
stated rate) if a designated event, as defined, should occur and the credit
rating of such indebtedness is downgraded below certain levels within a certain
period of time following the event.


                                       40
<PAGE>   42

3.     COMMITMENTS AND CONTINGENCIES (CONTINUED)

       Special facility revenue bonds have been issued by certain
municipalities, primarily to purchase equipment and improve airport facilities
that are leased by American. In certain cases, the bond issue proceeds were
loaned to American and are included in long-term debt. Certain bonds have rates
that are periodically reset and are remarketed by various agents. In certain
circumstances, American may be required to purchase up to $544 million of the
special facility revenue bonds prior to scheduled maturity, in which case
American has the right to resell the bonds or to use the bonds to offset its
lease or debt obligations. American may borrow the purchase price of these bonds
under standby letter of credit agreements. At American's option, certain letters
of credit are secured by funds held by bond trustees and by approximately $540
million of short-term investments.

4.     LEASES

       AMR's subsidiaries lease various types of equipment and property,
including aircraft, and airport and off-airport facilities. The future minimum
lease payments required under capital leases, together with the present value of
such payments, and future minimum lease payments required under operating leases
that have initial or remaining non-cancelable lease terms in excess of one year
as of December 31, 2000, were (in millions):

<TABLE>
<CAPTION>
                                                           Capital      Operating
      Year Ending December 31,                              Leases       Leases
                                                           -------      ---------
<S>                                                        <C>          <C>
      2001                                                  $  320       $   984
      2002                                                     276           921
      2003                                                     195           931
      2004                                                     246           913
      2005                                                     178           900
      2006 and subsequent                                      867        11,306
                                                            ------       ------
                                                              2,082(1)   $15,955(2)
                                                                         =======
      Less amount representing interest                        532
                                                            ------
      Present value of net minimum lease payments           $1,550
                                                            ======
</TABLE>

(1)    Includes $191 million guaranteed by AMR relating to special facility
       revenue bonds issued by municipalities.

(2)    Includes $6.4 billion guaranteed by AMR relating to special facility
       revenue bonds issued by municipalities.

       At December 31, 2000, the Company had 201 jet aircraft and 39 turboprop
aircraft under operating leases, and 65 jet aircraft and 57 turboprop aircraft
under capital leases. The aircraft leases can generally be renewed at rates
based on fair market value at the end of the lease term for one to five years.
Most aircraft leases have purchase options at or near the end of the lease term
at fair market value, but generally not to exceed a stated percentage of the
defined lessor's cost of the aircraft or at a predetermined fixed amount.

       During 1996, American made prepayments on the cancelable operating leases
it had on 12 of its Boeing 767-300 aircraft. Upon the expiration of the amended
leases, American can purchase the aircraft for a nominal amount. As a result,
the aircraft were recorded as flight equipment under capital leases. During 2000
and 1999, the Company exercised its option to purchase six and two of the Boeing
767-300 aircraft for a nominal fee, respectively. As such, these aircraft were
reclassified from flight equipment under capital leases to owned flight
equipment.

       Rent expense, excluding landing fees, was $1.3 billion for 2000 and 1999,
and $1.1 billion for 1998.




                                       41
<PAGE>   43



5.     INDEBTEDNESS

       Long-term debt (excluding amounts maturing within one year) consisted of
(in millions):

<TABLE>
<CAPTION>
                                                                    December 31,
                                                                  -----------------
                                                                   2000       1999
                                                                  ------     ------
<S>                                                               <C>        <C>
Secured variable and fixed rate indebtedness due through 2016
   (effective rates from 6.71% - 9.597% at December 31, 2000)     $3,209     $2,556
7.875% - 10.62% notes due through 2039                               345        812
9.0% - 10.20% debentures due through 2021                            332        437
6.0% - 7.10% bonds due through 2031                                  176        176
Unsecured variable rate indebtedness due through 2024
   (3.55% at December 31, 2000)                                       86         86
Other                                                                  3         11
                                                                  ------     ------
Long-term debt, less current maturities                           $4,151     $4,078
                                                                  ======     ======
</TABLE>

       Maturities of long-term debt (including sinking fund requirements) for
the next five years are: 2001 - $569 million; 2002 - $201 million; 2003 - $169
million; 2004 - $228 million; 2005 - $482 million.

       During the third quarter of 2000, the Company repurchased prior to
scheduled maturity approximately $167 million in face value of long-term debt.
Cash from operations provided the funding for the repurchases. These
transactions resulted in an extraordinary loss of $14 million ($9 million
after-tax).

       American has $1.0 billion in credit facility agreements that expire
December 15, 2005, subject to certain conditions. At American's option, interest
on these agreements can be calculated on one of several different bases. For
most borrowings, American would anticipate choosing a floating rate based upon
the London Interbank Offered Rate (LIBOR). At December 31, 2000, no borrowings
were outstanding under these agreements.

       Certain debt is secured by aircraft, engines, equipment and other assets
having a net book value of approximately $3.4 billion. In addition, certain of
American's debt and credit facility agreements contain restrictive covenants,
including a minimum net worth requirement, which could limit American's ability
to pay dividends. At December 31, 2000, under the most restrictive provisions of
those debt and credit facility agreements, approximately $1.5 billion of the
retained earnings of American was available for payment of dividends to AMR.

       Cash payments for interest, net of capitalized interest, were $301
million, $237 million and $277 million for 2000, 1999 and 1998, respectively.

6.     FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

       As part of the Company's risk management program, AMR uses a variety of
financial instruments, including interest rate swaps, fuel swap and option
contracts, and currency exchange agreements. The Company does not hold or issue
derivative financial instruments for trading purposes.

       NOTIONAL AMOUNTS AND CREDIT EXPOSURES OF DERIVATIVES

       The notional amounts of derivative financial instruments summarized in
the tables which follow do not represent amounts exchanged between the parties
and, therefore, are not a measure of the Company's exposure resulting from its
use of derivatives. The amounts exchanged are calculated based on the notional
amounts and other terms of the instruments, which relate to interest rates,
exchange rates or other indices.


                                       42
<PAGE>   44


6.     FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

       The Company is exposed to credit losses in the event of non-performance
by counterparties to these financial instruments, but it does not expect any of
the counterparties to fail to meet its obligations. The credit exposure related
to these financial instruments is represented by the fair value of contracts
with a positive fair value at the reporting date, reduced by the effects of
master netting agreements. To manage credit risks, the Company selects
counterparties based on credit ratings, limits its exposure to a single
counterparty under defined guidelines, and monitors the market position of the
program and its relative market position with each counterparty. The Company
also maintains industry-standard security agreements with the majority of its
counterparties which may require the Company or the counterparty to post
collateral if the value of these instruments falls below certain mark-to-market
thresholds. As of December 31, 2000, no collateral was required under these
agreements, and the Company does not expect to post collateral in the near
future.

       INTEREST RATE RISK MANAGEMENT

       American utilizes interest rate swap contracts to effectively convert a
portion of its fixed-rate obligations to floating-rate obligations. These
agreements involve the exchange of amounts based on a floating interest rate for
amounts based on fixed interest rates over the life of the agreement without an
exchange of the notional amount upon which the payments are based. The
differential to be paid or received as interest rates change is accrued and
recognized as an adjustment of interest expense related to the obligation. The
related amount payable to or receivable from counterparties is included in
current liabilities or assets. The fair values of the swap agreements are not
recognized in the financial statements. Gains and losses on terminations of
interest rate swap agreements are deferred as an adjustment to the carrying
amount of the outstanding obligation and amortized as an adjustment to interest
expense related to the obligation over the remaining term of the original
contract life of the terminated swap agreement. In the event of the early
extinguishment of a designated obligation, any realized or unrealized gain or
loss from the swap would be recognized in income coincident with the
extinguishment.

       During 2000, the Company terminated interest rate swap agreements on
notional amounts of approximately $425 million which had effectively converted a
portion of its fixed-rate obligations to floating-rate obligations. The cost of
terminating these interest rate swap agreements was not material.

       The following table indicates the notional amounts and fair values of the
Company's interest rate swap agreements (in millions):

<TABLE>
<CAPTION>
                                                  December 31,
                                  ---------------------------------------------
                                          2000                   1999
                                  ---------------------   ---------------------
                                  Notional                Notional
                                   Amount    Fair Value    Amount    Fair Value
                                  --------   ----------   --------   ----------
<S>                               <C>        <C>          <C>        <C>
Interest rate swap agreements      $ 158        $  4       $ 696       $ (9)
</TABLE>

       The fair values represent the amount the Company would receive or pay if
the agreements were terminated at December 31, 2000 and 1999, respectively.

       At December 31, 2000, the weighted-average remaining life of the interest
rate swap agreements in effect was 9.7 years. The weighted-average floating
rates and fixed rates on the contracts outstanding were:

<TABLE>
<CAPTION>
                                  December 31,
                                 ----------------
                                  2000      1999
                                 ------    ------
<S>                              <C>       <C>
Average floating rate            6.798%    5.855%
Average fixed rate               6.631%    6.593%
</TABLE>

       Floating rates are based primarily on LIBOR and may change significantly,
affecting future cash flows.


                                       43
<PAGE>   45


6.     FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

       FUEL PRICE RISK MANAGEMENT

       American enters into fuel swap and option contracts to protect against
increases in jet fuel prices. Under the fuel swap agreements, American receives
or makes payments based on the difference between a fixed price and a variable
price for certain fuel commodities. Under the fuel option agreements, American
pays a premium to cap prices at a fixed level. The changes in market value of
such agreements have a high correlation to the price changes of the fuel being
hedged. Effective gains or losses on fuel hedging agreements are recognized as a
component of fuel expense when the underlying fuel being hedged is used. Any
premiums paid to enter into option contracts are recorded as assets. Gains and
losses on fuel hedging agreements would be recognized immediately should the
changes in the market value of the agreements cease to have a high correlation
to the price changes of the fuel being hedged. At December 31, 2000, American
had fuel hedging agreements with broker-dealers on approximately 2.3 billion
gallons of fuel products, which represented approximately 40 percent of its
expected 2001 fuel needs, approximately 15 percent of its expected 2002 fuel
needs, and approximately seven percent of its expected 2003 fuel needs. The fair
value of the Company's fuel hedging agreements at December 31, 2000,
representing the amount the Company would receive to terminate the agreements,
totaled $223 million. At December 31, 1999, American had fuel hedging agreements
with broker-dealers on approximately 2.0 billion gallons of fuel products, which
represents approximately 48 percent of its expected 2000 fuel needs and
approximately 10 percent of its expected 2001 fuel needs. The fair value of the
Company's fuel hedging agreements at December 31, 1999, representing the amount
the Company would receive to terminate the agreements, totaled $232 million.

       FOREIGN EXCHANGE RISK MANAGEMENT

       To hedge against the risk of future exchange rate fluctuations on a
portion of American's foreign cash flows, the Company enters into various
currency put option agreements on a number of foreign currencies. The option
contracts are denominated in the same foreign currency in which the projected
foreign cash flows are expected to occur. These contracts are designated and
effective as hedges of probable quarterly foreign cash flows for various periods
through December 31, 2001, which otherwise would expose the Company to foreign
currency risk. Realized gains on the currency put option agreements are
recognized as a component of passenger revenues. At December 31, 2000 and 1999,
the notional amount related to these options totaled approximately $456 million
and $445 million, respectively, and the fair value, representing the amount AMR
would receive to terminate the agreements, totaled approximately $20 million and
$14 million, respectively.

       The Company has entered into Japanese yen currency exchange agreements to
effectively convert certain yen-based lease obligations into dollar-based
obligations. Changes in the value of the agreements due to exchange rate
fluctuations are offset by changes in the value of the yen-denominated lease
obligations translated at the current exchange rate. Discounts or premiums are
accreted or amortized as an adjustment to interest expense over the lives of the
underlying lease obligations. The related amounts due to or from counterparties
are included in other liabilities or other assets. The net fair values of the
Company's yen currency exchange agreements, representing the amount the Company
would pay or receive to terminate the agreements, were (in millions):

<TABLE>
<CAPTION>
                                                  December 31,
                               -------------------------------------------------
                                          2000                   1999
                               -----------------------   -----------------------
                                 Notional                  Notional
                                  Amount    Fair Value      Amount    Fair Value
                               ------------ ----------   ------------ ----------
<S>                            <C>          <C>          <C>          <C>
Japanese yen                   31.0 billion    $ (5)     33.6 billion    $ 41
</TABLE>

       The exchange rates on the Japanese yen agreements range from 66.5 to
113.5 yen per U.S. dollar.


                                       44
<PAGE>   46


6.     FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

       FAIR VALUES OF FINANCIAL INSTRUMENTS

       The fair values of the Company's long-term debt were estimated using
quoted market prices where available. For long-term debt not actively traded,
fair values were estimated using discounted cash flow analyses, based on the
Company's current incremental borrowing rates for similar types of borrowing
arrangements. The carrying amounts and estimated fair values of the Company's
long-term debt, including current maturities, were (in millions):

<TABLE>
<CAPTION>
                                                        December 31,
                                        ----------------------------------------
                                              2000                   1999
                                        ------------------    ------------------
                                        Carrying    Fair      Carrying     Fair
                                          Value     Value      Value       Value
                                        --------    ------    --------    ------
<S>                                      <C>        <C>        <C>        <C>
Secured variable and fixed rate
   indebtedness                          $3,366     $3,455     $2,651     $2,613
7.875% - 10.62% notes                       749        759      1,014      1,024
9.0% - 10.20% debentures                    332        358        437        469
6.0% - 7.10% bonds                          176        179        176        174
Unsecured variable rate indebtedness
                                             86         86         86         86
Other                                        11         11         16         16
                                         ------     ------     ------     ------
                                         $4,720     $4,848     $4,380     $4,382
                                         ======     ======     ======     ======
</TABLE>

       All other financial instruments, except for the investment in Equant, are
either carried at fair value or their carrying value approximates fair value.

       Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended (SFAS 133), was adopted by the Company on January 1,
2001. SFAS 133 requires the Company to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to fair
value through income. If the derivative is a hedge, depending on the nature of
the hedge, changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The adoption of SFAS 133 did not have a material impact on the Company's net
earnings. However, the Company recorded a transition adjustment of approximately
$100 million in accumulated other comprehensive income in the first quarter of
2001.

7.     INCOME TAXES

       The significant components of the income tax provision were (in
millions):

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                                 -----------------------
                                                 2000     1999     1998
                                                 ----     ----     ----
<S>                                              <C>      <C>      <C>
                   Current                       $ 47     $167     $451
                   Deferred                       461      183      268
                                                 ----     ----     ----
                                                 $508     $350     $719
                                                 ====     ====     ====
</TABLE>

       The income tax provision includes a federal income tax provision of $454
million, $290 million and $628 million and a state income tax provision of $47
million, $49 million and $78 million for the years ended December 31, 2000, 1999
and 1998, respectively.


                                       45
<PAGE>   47


7.     INCOME TAXES (CONTINUED)

       The income tax provision differed from amounts computed at the statutory
federal income tax rate as follows (in millions):

<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                                       --------------------------
                                                        2000      1999       1998
                                                       -----     -----      -----
<S>                                                    <C>       <C>        <C>
Statutory income tax provision                         $ 450     $ 352      $ 641
State income tax provision, net of federal benefit        30        32         51
Meal expense                                              19        19         18
Change in valuation allowance                             --       (67)        (4)
Other, net                                                 9        14         13
                                                       -----     -----      -----
Income tax provision                                   $ 508     $ 350      $ 719
                                                       =====     =====      =====
</TABLE>

       The change in valuation allowance in 1999 relates to the realization of a
tax loss on the sale of the Company's investment in Canadian (see Note 2). The
change in valuation allowance in 1998 relates to the utilization of foreign tax
credits.

       The components of AMR's deferred tax assets and liabilities were (in
millions):

<TABLE>
<CAPTION>
                                                        December 31,
                                                    --------------------
                                                      2000         1999
                                                    -------      -------
<S>                                                 <C>          <C>
Deferred tax assets:
   Postretirement benefits other than pensions      $   632      $   614
   Rent expense                                         522          449
   Frequent flyer obligation                            362          307
   Gains from lease transactions                        225          238
   Alternative minimum tax credit carryforwards         184          289
   Other                                                541          520
                                                    -------      -------
     Total deferred tax assets                        2,466        2,417
                                                    -------      -------
Deferred tax liabilities:
   Accelerated depreciation and amortization         (3,822)      (3,381)
   Pensions                                             (89)         (50)
   Other                                               (245)        (220)
                                                    -------      -------
     Total deferred tax liabilities                  (4,156)      (3,651)
                                                    -------      -------
Net deferred tax liability                          $(1,690)     $(1,234)
                                                    =======      =======
</TABLE>

       At December 31, 2000, AMR had available for federal income tax purposes
approximately $184 million of alternative minimum tax credit carryforwards which
are available for an indefinite period.

       Cash payments for income taxes were $49 million, $71 million and $408
million for 2000, 1999 and 1998, respectively.

8.     COMMON AND PREFERRED STOCK

       On June 9, 1998, a two-for-one stock split in the form of a stock
dividend was effective for shareholders of record on May 26, 1998. All prior
period share and earnings per share amounts reflect the stock split. The Company
has 20 million shares of preferred stock (without par value) authorized at
December 31, 2000 and 1999.


                                       46
<PAGE>   48



9.     STOCK AWARDS AND OPTIONS

       Under the 1998 Long Term Incentive Plan, as amended, officers and key
employees of AMR and its subsidiaries may be granted stock options, stock
appreciation rights, restricted stock, deferred stock, stock purchase rights,
other stock-based awards and/or performance-related awards, including cash
bonuses. The total number of common shares authorized for distribution under the
1998 Long Term Incentive Plan is 23,700,000 shares. The 1998 Long Term Incentive
Plan, the successor to the 1988 Long Term Incentive Plan, which expired May 18,
1998, will terminate no later than May 21, 2008. Options granted under the 1988
and 1998 Long Term Incentive Plans (collectively, the Plans) are awarded with an
exercise price equal to the fair market value of the stock on date of grant,
become exercisable in equal annual installments over five years following the
date of grant and expire 10 years from the date of grant. Stock appreciation
rights may be granted in tandem with options awarded.

       As a result of the Sabre spin-off in March 2000, AMR's stock price was
adjusted from $60 9/16 to $25 9/16 by the New York Stock Exchange. Accordingly,
all outstanding stock options and other stock-based awards, including the
related exercise prices, were adjusted to preserve the intrinsic value of the
stock options and awards. See Note 12 for information regarding the Sabre
spin-off.

       In 2000, 1999 and 1998, the total charge for stock compensation expense
included in wages, salaries and benefits expense was $52 million, $53 million
and $52 million, respectively. No compensation expense was recognized for stock
option grants under the Plans since the exercise price was the fair market value
of the underlying stock on the date of grant.

       Stock option activity was:

<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                     -------------------------------------------------------------------------------
                                               2000                        1999                       1998
                                     -----------------------     -----------------------     -----------------------
                                                    Weighted                   Weighted                     Weighted
                                                     Average                    Average                     Average
                                                    Exercise                   Exercise                     Exercise
                                      Options         Price       Options       Price         Options        Price
                                     ----------     --------     ----------    --------      ----------     --------
<S>                                  <C>            <C>          <C>           <C>           <C>            <C>
  Outstanding at January 1            5,219,634      $52.06       4,147,124      $46.60       3,506,774      $38.77
  Sabre adjustment                    7,150,899          --              --          --              --          --
  Granted                             6,003,111       30.21       1,539,585       63.19       1,216,720       63.01
  Exercised                          (1,557,034)      32.85        (258,875)      68.17        (470,810)      31.82
  Canceled                             (247,703)      23.38        (208,200)      49.96        (105,560)      42.34
                                     ----------                  ----------                  ----------
Outstanding at December 31           16,568,907      $25.42       5,219,634      $52.06       4,147,124      $46.60
                                     ==========                  ==========                  ==========
Exercisable options outstanding
  at December 31                      5,334,444      $19.79       2,012,889      $40.63       1,586,974      $36.49
                                     ==========                  ==========                  ==========
</TABLE>

       The following table summarizes information about the stock options
outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                                       Weighted       Weighted                  Weighted
                           Range of     Number of       Average       Average    Number of       Average
                           Exercise      Options       Remaining     Exercise     Options       Exercise
                           Prices      Outstanding    Life (years)     Price     Exercisable     Price
                           --------    -----------    -----------    --------    -----------    --------
                          <S>          <C>            <C>            <C>         <C>            <C>
                           Under $20    3,073,130         4.21         $14.93     2,769,990      $14.75
                             $20-$30    8,113,906         8.26          24.71     1,992,625       23.62
                            Over $30    5,381,871         9.14          32.48       571,829       30.83
                                       ----------         ----         ------     ---------      ------
                                       16,568,907         7.79         $25.42     5,334,444      $19.79
                                       ==========                                 =========
</TABLE>



                                       47
<PAGE>   49


9.       STOCK AWARDS AND OPTIONS (CONTINUED)

         In May 1997, in conjunction with the labor agreement reached between
American and members of the Allied Pilots Association (APA), the Company
established the Pilots Stock Option Plan (The Pilot Plan). The Pilot Plan
granted members of the APA the option to purchase 11.5 million shares of AMR
stock at $41.69 per share, $5 less than the average fair market value of the
stock on the date of grant, May 5, 1997. These shares were exercisable
immediately. In conjunction with the Sabre spin-off, the exercise price was
adjusted to $17.59 per share. Pilot Plan option activity was:

<TABLE>
<CAPTION>
                                          Year Ended December 31,
                               ---------------------------------------------
                                   2000            1999              1998
                               -----------      -----------      -----------
<S>                            <C>              <C>              <C>
Outstanding at January 1         5,420,028        5,791,381        7,438,220
Sabre adjustment                 7,421,048               --               --
Exercised                       (1,850,886)        (371,353)      (1,646,839)
                               -----------      -----------      -----------
Outstanding at December 31      10,990,190        5,420,028        5,791,381
                               ===========      ===========      ===========
</TABLE>

       The weighted-average grant date fair value of all stock option awards
granted during 2000, 1999 and 1998 was $16.54, $23.17 and $21.15, respectively.

       Shares of deferred stock are awarded at no cost to officers and key
employees under the Plans' Career Equity Program and will be issued upon the
individual's retirement from AMR or, in certain circumstances, will vest on a
pro rata basis. Deferred stock activity was:

<TABLE>
<CAPTION>
                                         Year Ended December 31,
                               ------------------------------------------
                                 2000             1999            1998
                               ----------      ----------      ----------
<S>                            <C>             <C>             <C>
Outstanding at January 1        2,310,680       2,401,532       2,457,190
Sabre adjustment                3,165,632              --              --
Granted                                --         146,200         185,812
Issued                           (479,177)       (122,042)       (190,911)
Canceled                          (40,638)       (115,010)        (50,559)
                               ----------      ----------      ----------
Outstanding at December 31      4,956,497       2,310,680       2,401,532
                               ==========      ==========      ==========
</TABLE>

       The weighted-average grant date fair value of career equity awards
granted during 1999 and 1998 was $63.54 and $57.77, respectively.


                                       48
<PAGE>   50


9.     STOCK AWARDS AND OPTIONS (CONTINUED)

       A performance share plan was implemented in 1993 under the terms of which
shares of deferred stock are awarded at no cost to officers and key employees
under the Plans. The fair value of the performance shares granted is equal to
the market price of the Company's stock at the date of grant. The shares vest
over a three-year performance period based upon certain specified financial
measures of AMR. Performance share activity was:

<TABLE>
<CAPTION>
                                       Year Ended December 31,
                               ------------------------------------------
                                  2000            1999           1998
                               ----------      ----------      ----------
<S>                            <C>             <C>             <C>
Outstanding at January 1        1,215,644       1,565,616       1,737,274
Sabre adjustment                1,665,432              --              --
Granted                         1,277,539         509,822         644,680
Issued                           (399,517)       (208,265)       (205,458)
Awards settled in cash         (1,200,177)       (513,370)       (522,234)
Canceled                          (51,166)       (138,159)        (88,646)
                               ----------      ----------      ----------
Outstanding at December 31      2,507,755       1,215,644       1,565,616
                               ==========      ==========      ==========
</TABLE>

       The weighted-average grant date fair value of performance share awards
granted during 2000, 1999 and 1998 was $32.93, $62.95 and $62.06, respectively.

       The Company has adopted the pro forma disclosure features of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). As required by SFAS 123, pro forma information
regarding income from continuing operations before extraordinary loss and
earnings per share from continuing operations before extraordinary loss has been
determined as if the Company had accounted for its employee stock options and
awards granted subsequent to December 31, 1994 using the fair value method
prescribed by SFAS 123. The fair value for the stock options was estimated at
the date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 2000, 1999 and 1998: risk-free interest rates
ranging from 5.01% to 6.15%; dividend yields of 0%; expected stock volatility
ranging from 29.9% to 43.5%; and expected life of the options of 4.5 years for
the Plans and 1.5 years for The Pilot Plan.

       The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options. In addition,
because SFAS 123 is applicable only to options and stock-based awards granted
subsequent to December 31, 1994, its pro forma effect is not fully reflected in
years prior to 1999.


                                       49
<PAGE>   51


9.     STOCK AWARDS AND OPTIONS (CONTINUED)

       The following table shows the Company's pro forma income from continuing
operations before extraordinary loss and earnings per share from continuing
operations before extraordinary loss assuming the Company had accounted for its
employee stock options using the fair value method (in millions, except per
share amounts):

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                               -------------------------------
                                                 2000       1999         1998
                                               -------     -------     -------
<S>                                            <C>         <C>         <C>
Income from continuing operations before
extraordinary loss:
   As reported                                 $   779     $   656     $ 1,114
   Pro forma                                       772         651       1,114

Basic earnings per share from continuing
operations before extraordinary loss:
   As reported                                 $  5.20     $  4.30     $  6.60
   Pro forma                                      5.15        4.27        6.60

Diluted earnings per share from continuing
operations before extraordinary loss:
   As reported                                 $  4.81     $  4.17     $  6.38
   Pro forma                                      4.77        4.14        6.38
</TABLE>

10.    RETIREMENT BENEFITS

       All regular employees of the Company are eligible to participate in
pension plans. The defined benefit plans provide benefits for participating
employees based on years of service and average compensation for a specified
period of time before retirement. Airline pilots and flight engineers also
participate in defined contribution plans for which Company contributions are
determined as a percentage of participant compensation.

       In addition to pension benefits, other postretirement benefits, including
certain health care and life insurance benefits, are also provided to retired
employees. The amount of health care benefits is limited to lifetime maximums as
outlined in the plan. Substantially all employees of American and employees of
certain other subsidiaries may become eligible for these benefits if they
satisfy eligibility requirements during their working lives.

       Certain employee groups make contributions toward funding a portion of
their retiree health care benefits during their working lives. AMR funds
benefits as incurred and makes contributions to match employee prefunding.


                                       50
<PAGE>   52

10.    RETIREMENT BENEFITS (CONTINUED)

       The following table provides a reconciliation of the changes in the
plans' benefit obligations and fair value of assets for the years ended December
31, 2000 and 1999, and a statement of funded status as of December 31, 2000 and
1999 (in millions):

<TABLE>
<CAPTION>
                                                    Pension Benefits         Other Benefits
                                                 --------------------      --------------------
                                                  2000          1999        2000        1999
                                                 -------      -------      -------      -------
<S>                                              <C>          <C>          <C>          <C>
Reconciliation of benefit obligation
Obligation at January 1                          $ 5,628      $ 6,117      $ 1,306      $ 1,526
   Service cost                                      213          236           43           56
   Interest cost                                     467          433          108          108
   Actuarial loss (gain)                             499         (849)         328         (311)
   Plan amendments                                    --           75           --           --
   Benefit payments                                 (373)        (388)         (77)         (70)
   Curtailments/Special termination benefits          --            4           --           (3)
                                                 -------      -------      -------      -------
Obligation at December 31                        $ 6,434      $ 5,628      $ 1,708      $ 1,306
                                                 =======      =======      =======      =======
Reconciliation of fair value of plan assets
Fair value of plan assets at January 1           $ 5,282      $ 5,564      $    72      $    62
   Actual return on plan assets                      735            7            5            1
   Employer contributions                             85          100           88           79
   Benefit payments                                 (373)        (388)         (77)         (70)
   Transfers                                           2           (1)          --           --
                                                 -------      -------      -------      -------
Fair value of plan assets at December 31         $ 5,731      $ 5,282      $    88      $    72
                                                 =======      =======      =======      =======

Funded status
Accumulated benefit obligation (ABO)             $ 5,306      $ 4,700      $ 1,708      $ 1,306
Projected benefit obligation (PBO)                 6,434        5,628           --           --
Fair value of assets                               5,731        5,282           88           72

Funded status at December 31                        (703)        (346)      (1,620)      (1,234)
   Unrecognized loss (gain)                          523          288          (51)        (395)
   Unrecognized prior service cost                   129          139          (35)         (40)
   Unrecognized transition asset                      (6)          (7)          --           --
                                                 -------      -------      -------      -------
Prepaid (accrued) benefit cost                   $   (57)     $    74      $(1,706)     $(1,669)
                                                 =======      =======      =======      =======
</TABLE>

       At December 31, 2000 and 1999, plan assets of approximately $88 million
and $71 million, respectively, were invested in shares of mutual funds managed
by a subsidiary of AMR.


                                       51
<PAGE>   53


10.    RETIREMENT BENEFITS (CONTINUED)

       The following tables provide the components of net periodic benefit cost
for the years ended December 31, 2000, 1999 and 1998 (in millions):

<TABLE>
<CAPTION>
                                                                Pension Benefits
                                                           ---------------------------
                                                            2000       1999       1998
                                                           -----      -----      -----
<S>                                                        <C>        <C>        <C>
      Components of net periodic benefit cost
      Defined benefit plans:
         Service cost                                      $ 213      $ 236      $ 213
         Interest cost                                       467        433        418
         Expected return on assets                          (490)      (514)      (478)
         Amortization of:
            Transition asset                                  (1)        (4)       (11)
            Prior service cost                                10          5          4
            Unrecognized net loss                             17         21         22
         Settlement loss                                      --         --          6
                                                           -----      -----      -----
         Net periodic benefit cost for defined benefit
            plans                                            216        177        174
      Defined contribution plans                             174        155        158
                                                           -----      -----      -----
      Total                                                $ 390      $ 332      $ 332
                                                           =====      =====      =====
</TABLE>

<TABLE>
<CAPTION>
                                                                 Other Benefits
                                                           ---------------------------
                                                            2000       1999       1998
                                                           -----      -----      -----
<S>                                                        <C>        <C>        <C>
      Components of net periodic benefit cost
         Service cost                                      $  43      $  56      $  52
         Interest cost                                       108        108         99
         Expected return on assets                            (7)        (6)        (5)
         Amortization of:
            Prior service cost                                (5)        (5)        (5)
            Unrecognized net gain                            (14)        --         (2)
                                                           -----      -----      -----
         Net periodic benefit cost                         $ 125      $ 153      $ 139
                                                           =====      =====      =====
</TABLE>

       The following table provides the amounts recognized in the consolidated
balance sheets as of December 31, 2000 and 1999 (in millions):

<TABLE>
<CAPTION>
                                            Pension Benefits          Other Benefits
                                           --------------------      --------------------
                                            2000         1999         2000         1999
                                           -------      -------      -------      -------
<S>                                        <C>          <C>          <C>          <C>
Prepaid benefit cost                       $   107      $   244      $    --      $    --
Accrued benefit liability                     (225)        (170)      (1,706)      (1,669)
Additional minimum liability                   (21)         (15)          --           --
Intangible asset                                72           13           --           --
Accumulated other comprehensive income          10            2           --           --
                                           -------      -------      -------      -------
Net amount recognized                      $   (57)     $    74      $(1,706)     $(1,669)
                                           =======      =======      =======      =======
</TABLE>


                                       52
<PAGE>   54


10.    RETIREMENT BENEFITS (CONTINUED)

       The following assumptions were used by the Company in the measurement of
the benefit obligation as of December 31:

<TABLE>
<CAPTION>
                                      Pension Benefits          Other Benefits
                                    --------------------      --------------------
                                      2000         1999         2000         1999
                                    -------      -------      -------      -------
<S>                                 <C>          <C>          <C>          <C>
Weighted-average assumptions
Discount rate                         7.75%        8.25%        7.75%        8.25%
Salary scale                          4.26         4.26           --           --
Expected return on plan assets        9.50         9.50         9.50         9.50
</TABLE>

       The assumed health care cost trend rate was changed to seven percent,
effective December 31, 2000, decreasing gradually to an ultimate rate of four
percent by 2004. The previously assumed health care cost trend rate was five
percent in 1999, decreasing gradually to an ultimate rate of four percent by
2001.

       A one percentage point change in the assumed health care cost trend rates
would have the following effects (in millions):

<TABLE>
<CAPTION>
                                                One percent   One percent
                                                  increase      decrease
                                                -----------   -----------
<S>                                             <C>          <C>
Impact on 2000 service and interest cost          $ 20           $ (19)
Impact on postretirement benefit obligation
  as of December 31, 2000                         $137           $(131)
</TABLE>

       Effective January 1, 2001, American established a defined contribution
plan for non-contract employees in which the Company will contribute a match up
to 5.5 percent on employee contributions of pensionable earnings to the
Company's existing 401(k) plan. During 2000, American provided a one-time
election for current non-contract employees to remain in the defined benefit
plan or discontinue accruing future credited service in the defined benefit plan
as of January 1, 2001 and begin participation in the defined contribution plan.


                                       53
<PAGE>   55


11.    EARNINGS PER SHARE

       The following table sets forth the computation of basic and diluted
earnings per share (in millions, except per share amounts):

<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                                               ---------------------------------
                                                 2000         1999         1998
                                               -------      -------      -------
<S>                                            <C>          <C>          <C>
NUMERATOR:
   Numerator for earnings per share -
     income from continuing operations
     before extraordinary loss                 $   779      $   656      $ 1,114
                                               =======      =======      =======

DENOMINATOR:
   Denominator for basic earnings per
     share - weighted-average shares               150          152          169

   Effect of dilutive securities:
     Employee options and shares                    27           12           13
     Assumed treasury shares purchased             (15)          (7)          (7)
                                               -------      -------      -------
   Dilutive potential common shares                 12            5            6

   Denominator for diluted  earnings per
     share - adjusted weighted-average
     shares                                        162          157          175
                                               =======      =======      =======
Basic earnings per share from
   continuing operations before
   extraordinary loss                          $  5.20      $  4.30      $  6.60
                                               =======      =======      =======

Diluted earnings per share from continuing
   operations before extraordinary loss        $  4.81      $  4.17      $  6.38
                                               =======      =======      =======
</TABLE>

12.      DISCONTINUED OPERATIONS

       During the first quarter of 1999, the Company sold AMR Services, AMR
Combs and TeleService Resources. As a result of these sales, the Company
recorded a gain of approximately $64 million, net of income taxes of
approximately $19 million.

       On February 7, 2000, the Company declared its intent to distribute AMR's
entire ownership interest in Sabre as a dividend on all outstanding shares of
its common stock. To effect the dividend, AMR exchanged all of its 107,374,000
shares of Sabre's Class B common stock for an equal number of shares of Sabre's
Class A common stock. Effective after the close of business on March 15, 2000,
AMR distributed 0.722652 shares of Sabre Class A common stock for each share of
AMR stock owned by AMR's shareholders. The record date for the dividend of Sabre
stock was the close of business on March 1, 2000. In addition, on February 18,
2000, Sabre paid a special one-time cash dividend of $675 million to
shareholders of record of Sabre common stock at the close of business on
February 15, 2000. Based upon its approximate 83 percent interest in Sabre, AMR
received approximately $559 million of this dividend. The dividend of AMR's
entire ownership interest in Sabre's common stock resulted in a reduction to
AMR's retained earnings in March of 2000 equal to the carrying value of the
Company's investment in Sabre on March 15, 2000, which approximated $581
million. The fair market value of AMR's investment in Sabre on March 15, 2000,
based upon the quoted market closing price of Sabre Class A common stock on the
New York Stock Exchange, was approximately $5.2 billion. In addition, effective
March 15, 2000, the Company reduced the exercise price and increased the number
of employee stock options and awards by approximately 19 million to offset the
dilution to the holders, which occurred as a result of the spin-off. These
changes were made to


                                       54
<PAGE>   56


12.     DISCONTINUED OPERATIONS (CONTINUED)

keep the holders in the same economic position as before the spin-off. This
dilution adjustment was determined in accordance with Emerging Issues Task Force
Consensus No. 90-9, "Changes to Fixed Employee Stock Option Plans as a Result of
Equity Restructuring", and had no impact on earnings.

       The results of operations for Sabre, AMR Services, AMR Combs and
TeleService Resources have been reflected in the consolidated statements of
operations as discontinued operations. Summarized financial information of the
discontinued operations is as follows (in millions):

<TABLE>
<CAPTION>
                                  Year Ended December 31,
                                ----------------------------
                                 2000       1999       1998
                                ------     ------     ------
<S>                             <C>        <C>        <C>
SABRE
Revenues                        $  542     $2,435     $2,306
Minority interest                   10         57         40
Income taxes                        36        196        140
Net income                          43        265        192

AMR SERVICES, AMR COMBS AND
   TELESERVICE RESOURCES
Revenues                        $   --     $   97     $  513
Income taxes                        --         --          7
Net income                          --         --          8
</TABLE>

       The historical assets and liabilities of Sabre, AMR Services, AMR Combs
and TeleService Resources at December 31, 1999, which have been reflected on a
net basis in other assets on the consolidated balance sheets, are summarized as
follows (in millions):

<TABLE>
<S>                                                                 <C>
                Current assets                                      $  976
                Total assets                                         1,951
                Current liabilities                                    525
                Total liabilities, including minority interest         912
                Net assets of discontinued operations                1,039
</TABLE>

13.    SEGMENT REPORTING

       Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information", as amended (SFAS 131),
requires that a public company report annual and interim financial and
descriptive information about its reportable operating segments. Operating
segments, as defined, are components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance.

       The Company has two primary operating segments, consisting primarily of
American and AMR Eagle, which represent one reportable segment. American is one
of the largest scheduled passenger airlines in the world. At the end of 2000,
American provided scheduled jet service to more than 169 destinations throughout
North America, the Caribbean, Latin America, Europe and the Pacific. American is
also one of the largest scheduled air freight carriers in the world, providing a
full range of freight and mail services to shippers throughout its system. AMR
Eagle owns two regional airlines which do business as "American Eagle" --
American Eagle Airlines, Inc. and Executive Airlines, Inc. The American Eagle
carriers provide connecting service from eight of American's high-traffic cities
to smaller markets throughout the United States, Canada, the Bahamas and the
Caribbean.


                                       55
<PAGE>   57


13.      SEGMENT REPORTING (CONTINUED)

       Revenues from other segments are below the quantitative threshold for
determining reportable segments and consist primarily of revenues from AMR
Investment Services, Inc., Americas Ground Services and Airline Management
Services. The difference between the financial information of the Company's one
reportable segment and the financial information included in the consolidated
statements of operations and balance sheets as a result of these entities is not
material.

       The Company's operating revenues by geographic region are summarized
below (in millions):

<TABLE>
<CAPTION>
                                    Year Ended December 31,
                                -------------------------------
                                  2000        1999        1998
                                -------     -------     -------
<S>                             <C>         <C>         <C>
Domestic                        $13,881     $12,563     $12,262
Latin America                     2,907       2,697       2,830
Europe                            2,338       1,984       2,039
Pacific                             577         486         385
                                -------     -------     -------
Total consolidated revenues     $19,703     $17,730     $17,516
                                =======     =======     =======
</TABLE>

       The Company attributes operating revenues by geographic region based upon
the origin and destination of each flight segment. The Company's tangible assets
consist primarily of flight equipment which is mobile across geographic markets
and, therefore, has not been allocated.


                                       56
<PAGE>   58


14.    QUARTERLY FINANCIAL DATA (UNAUDITED)

       Unaudited summarized financial data by quarter for 2000 and 1999 (in
millions, except per share amounts):

<TABLE>
<CAPTION>
                                         First        Second         Third        Fourth
                                        Quarter       Quarter       Quarter       Quarter
                                       ---------     ---------     ---------     ---------
<S>                                    <C>           <C>           <C>           <C>
   2000
Operating revenues                     $   4,577     $   5,011     $   5,256     $   4,859
Operating income                             212           517           572            80
Income from continuing operations
   before extraordinary loss                  89           321           322            47
Net earnings                                 132           321           313            47
Earnings per share:
     Basic
       From continuing operations
         before extraordinary loss          0.60          2.15          2.14          0.31
       Net earnings                         0.89          2.15          2.08          0.31
     Diluted
       From continuing operations
         before extraordinary loss          0.57          1.96          1.96          0.29
       Net earnings                         0.86          1.96          1.91          0.29

   1999
Operating revenues                     $   4,007     $   4,541     $   4,695     $   4,487
Operating income                              46           414           426           270
Income from continuing operations             17           216           213           210
Net earnings                                 158           268           279           280
Earnings per share:
     Basic
       From continuing operations           0.11          1.41          1.42          1.42
       Net earnings                         0.99          1.76          1.86          1.89
     Diluted
       From continuing operations           0.11          1.36          1.38          1.37
       Net earnings                         0.96          1.70          1.76          1.84
</TABLE>

       During the second quarter of 2000, the Company recorded an after-tax gain
of approximately $36 million from the sale of the Company's warrants to purchase
5.5 million shares of priceline common stock (see Note 2). During the third
quarter of 2000, the Company recorded a $9 million after-tax extraordinary loss
on the repurchase prior to scheduled maturity of long-term debt (see Note 5).
Results for the fourth quarter of 2000 include an after-tax gain of
approximately $26 million for the recovery of start-up expenses related to the
Canadian services agreement (see Note 2) and an after-tax charge of
approximately $35 million for the Company's employee home computer program.

       During the first quarter of 1999, the Company recorded an after-tax gain
of approximately $64 million from the sale of AMR Services, AMR Combs and
TeleService Resources, and a $37 million after-tax gain from the sale of a
portion of the Company's holdings in Equant, of which approximately $18 million
is recorded in income from discontinued operations (see Note 2). Results for the
fourth quarter of 1999 include the following: (i) a $25 million after-tax gain
related to the Company's sale of its investment in the preferred stock of
Canadian and a $67 million tax benefit resulting from the tax loss on the
Company's investment in Canadian (see Note 2), (ii) an after-tax gain of
approximately $81 million related to the sale of a portion of the Company's
holdings in Equant, of which approximately $53 million is recorded in income
from discontinued operations (see Note 2), (iii) a $28 million after-tax
increase in passenger revenue resulting from a change in estimate related to
certain passenger revenues earned during the first nine months of 1999, and (iv)
a $25 million after-tax provision for certain litigation settlements.


                                       57
<PAGE>   59

15.    SUBSEQUENT EVENTS

       On January 10, 2001, the Company announced three transactions that are
expected to substantially increase the scope of its existing network. First, the
Company announced that it had agreed to purchase substantially all of the assets
of Trans World Airlines, Inc. (TWA) for approximately $500 million in cash and
to assume approximately $3.5 billion of TWA's obligations. The Company's
agreement with TWA contemplated that TWA would file for bankruptcy protection
under Chapter 11 of the U.S. Bankruptcy Code and conduct an auction of its
assets under the auspices of the Bankruptcy Court. During the auction, other
credible offers would compete with the Company's offer. TWA filed for bankruptcy
protection on January 10, 2001. In conjunction therewith, the Company also
agreed to provide TWA with up to $200 million in debtor-in-possession financing
to facilitate TWA's ability to maintain its operations until the completion of
this transaction. The amount available under this facility was later increased
to $330 million. As of March 19, 2001, approximately $289 million had been
provided via the debtor-in-possession financing.

       The auction of TWA's assets was commenced on March 5, 2001, and recessed
to March 7, 2001. During the recess, the Company increased its cash bid to $625
million and agreed to leave in the TWA estate certain aircraft security
deposits, advance rental payments and rental rebates that were estimated to
bring approximately $117 million of value to TWA. On March 7, 2001, TWA's board
selected the Company's bid as the "highest and best" offer, and on March 12,
2001, the U.S. Bankruptcy Court, District of Delaware, entered an order
approving the sale of TWA's assets to the Company. Consummation of the
transaction is subject to several contingencies, including the waiver by TWA's
unions of certain provisions of their collective bargaining agreements. The
approval of the U.S. Department of Justice was obtained on March 16, 2001.
Certain parties have filed appeals of the Bankruptcy Court's sale order, and
have sought a stay of the transaction, pending the appeals. A provision of the
Bankruptcy Code will permit the Company to close the transaction, despite
pending appeals, unless a stay is granted. If a stay is granted, the Company
would anticipate that the appeal process would be expedited. Upon the closing of
the transaction, TWA will be integrated into American's operations with a
continued hub operation in St. Louis.

       Secondly, the Company announced that it has agreed to acquire from United
Airlines, Inc. (United) certain key strategic assets (slots, gates and aircraft)
of US Airways, Inc. (US Airways) upon the consummation of the previously
announced merger between United and US Airways. In addition to the acquisition
of these assets, American will lease a number of slots and gates from United so
that American may operate half of the northeast Shuttle (New York/Washington
DC/Boston). United will operate the other half of the Shuttle. For these assets,
American will pay approximately $1.2 billion in cash to United and assume
approximately $300 million in aircraft operating leases. The consummation of
these transactions is contingent upon the closing of the proposed United/US
Airways merger. Also, the acquisition of aircraft is generally dependent upon a
certain number of US Airways' Boeing 757 cockpit crew members transferring to
American's payroll.

       Finally, American has agreed to acquire a 49 percent stake in, and to
enter into an exclusive marketing agreement with, DC Air LLC (DC Air). American
has agreed to pay $82 million in cash for its ownership stake. American will
have a right of first refusal on the acquisition of the remaining 51 percent
stake in DC Air. American will also lease to DC Air a certain number of Fokker
100 aircraft with necessary crews (known in the industry as a "wet lease").
These wet leased aircraft will be used by DC Air in its operations. DC Air is
the first significant new entrant at Ronald Reagan Washington National Airport
(DCA) in over a decade. DC Air will acquire the assets needed to begin its DCA
operations from United/US Airways upon the consummation of the merger between
the two carriers. American's investment in DC Air and the other arrangements
described above are contingent upon the consummation of the merger between
United and US Airways.

       As a result of the above transactions, and for several other reasons,
American and American Eagle have initiated an impairment review of certain fleet
types in accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." This review could result in an impairment charge to be taken by
the Company in 2001. The size of any resulting 2001 charge is not presently
known, but may be significant.


                                       58
<PAGE>   60


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

                                    PART III
- --------------------------------------------------------------------------------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Incorporated herein by reference from the Company's definitive proxy statement
for the annual meeting of stockholders on May 16, 2001. Information concerning
the executive officers is included in Part I of this report on page 15.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated herein by reference from the Company's definitive proxy statement
for the annual meeting of stockholders on May 16, 2001.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Incorporated herein by reference from the Company's definitive proxy statement
for the annual meeting of stockholders on May 16, 2001.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated herein by reference from the Company's definitive proxy statement
for the annual meeting of stockholders on May 16, 2001.

                                     PART IV
- --------------------------------------------------------------------------------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) (1)  The following financial statements and Independent Auditors' Report are
         filed as part of this report:

<TABLE>
<CAPTION>
                                                                                  Page
                                                                                  -----
<S>                                                                               <C>
         Report of Independent Auditors                                              30

         Consolidated Statements of Operations for the Years Ended
         December 31, 2000, 1999 and 1998                                         31-32

         Consolidated Balance Sheets at December 31, 2000 and 1999                33-34

         Consolidated Statements of Cash Flows for the Years Ended
         December 31, 2000, 1999 and 1998                                            35

         Consolidated Statements of Stockholders' Equity for the Years Ended
         December 31, 2000, 1999 and 1998                                            36

         Notes to Consolidated Financial Statements                               37-58
</TABLE>


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<PAGE>   61


    (2)  The following financial statement schedule and Independent Auditors'
         Report are filed as part of this report:


<TABLE>
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<S>                                                                               <C>
         Report of Independent Auditors                                             69

         Schedule II   Valuation and Qualifying Accounts and Reserves               70
</TABLE>

         Schedules not included have been omitted because they are not
         applicable or because the required information is included in the
         consolidated financial statements or notes thereto.

    (3)  Exhibits required to be filed by Item 601 of Regulation S-K. (Where the
         amount of securities authorized to be issued under any of AMR's
         long-term debt agreements does not exceed 10 percent of AMR's assets,
         pursuant to paragraph (b)(4) of Item 601 of Regulation S-K, in lieu of
         filing such as an exhibit, AMR hereby agrees to furnish to the
         Commission upon request a copy of any agreement with respect to such
         long-term debt.)

<TABLE>
<CAPTION>
         EXHIBIT
         -------
<S>               <C>
         3.1      Restated Certificate of Incorporation of AMR, incorporated by
                  reference to AMR's Registration Statement on Form S-4, file
                  number 33-55191.

         3.2      Bylaws of AMR, amended as of November 18, 1998, incorporated
                  by reference to Exhibit 3.2 to AMR's report on Form 10-K for
                  the year ended December 31, 1998.

         3.3      Bylaws of AMR, amended as of January 19, 2000, incorporated by
                  reference to Exhibit 3.3 to AMR's report on Form 10-K for the
                  year ended December 31, 1999.

         10.1     Employment Agreement among AMR, American Airlines and Robert
                  L. Crandall, dated January 1, 1988, incorporated by reference
                  to Exhibit 10(t) to AMR's report on Form 10-Q for the period
                  ended March 31, 1988; amendments thereto incorporated by
                  reference to Exhibit 10(ff) to AMR's report on Form 10-K for
                  the year ended December 31, 1989, Exhibit 10(tt) to AMR's
                  report on Form 10-K for the year ended December 31, 1990,
                  Exhibit 10(uu) to AMR's report on Form 10-Q for the period
                  ended June 30, 1992, and Exhibit 10(ooo) to AMR's report on
                  Form 10-Q for the period ended March 31, 1995.

         10.2     Amended and Restated Employment Agreement among AMR, American
                  Airlines and Robert L. Crandall, dated January 21, 1998,
                  incorporated by reference to Exhibit 10.2 to AMR's report on
                  Form 10-K for the year ended December 31, 1997.

         10.3     Compensation and Benefit Agreement relative to the retirement
                  of Robert L. Crandall, between AMR and Robert L. Crandall,
                  dated September 18, 1998, incorporated by reference to Exhibit
                  10.3 to AMR's report on Form 10-K for the year ended December
                  31, 1998.

         10.4     Irrevocable Executive Trust Agreement, dated as of May 1,
                  1992, between AMR and Wachovia Bank of North Carolina N.A.,
                  incorporated by reference to Exhibit 10(vv) to AMR's report on
                  Form 10-K for the year ended December 31, 1992.

         10.5     Deferred Compensation Agreement, dated April 14, 1973, as
                  amended March 1, 1975, between American and Robert L.
                  Crandall, incorporated by reference to Exhibit 10(c)(7) to
                  American's Registration Statement No. 2-76709.

         10.6     Form of Executive's Termination Benefits Agreement
                  incorporated by reference to Exhibit 10(p) to AMR's report on
                  Form 10-K for the year ended December 31, 1985.
</TABLE>

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<PAGE>   62



<TABLE>
<S>               <C>
         10.7     Management Severance Allowance, dated as of February 23, 1990,
                  for levels 1-4 employees of American Airlines, Inc.,
                  incorporated by reference to Exhibit 10(oo) to AMR's report on
                  Form 10-K for the year ended December 31, 1989.

         10.8     Management Severance Allowance, dated as of February 23, 1990,
                  for level 5 and above employees of American Airlines, Inc.,
                  incorporated by reference to Exhibit 10(pp) to AMR's report on
                  Form 10-K for the year ended December 31, 1989.

         10.9     Description of informal arrangement relating to deferral of
                  payment of directors' fees, incorporated by reference to
                  Exhibit 10(c)(11) to American's Registration Statement No.
                  2-76709.

         10.10    Directors Stock Equivalent Purchase Plan, incorporated by
                  reference to Exhibit 10(gg) to AMR's report on Form 10-K for
                  the year ended December 31, 1989.

         10.11    Directors Stock Incentive Plan dated May 18, 1994, as amended,
                  incorporated by reference to Exhibit 10.9 to AMR's report on
                  Form 10-K for the year ended December 31, 1996.

         10.12    Deferred Compensation Agreement, dated as of June 1, 1998,
                  between AMR and Edward A. Brennan, incorporated by reference
                  to Exhibit 10.15 to AMR's report on Form 10-K for the year
                  ended December 31, 1998.

         10.13    Deferred Compensation Agreement, dated as of January 11, 2000,
                  between AMR and Edward A. Brennan, incorporated by reference
                  to Exhibit 10.15(a) to AMR's report on Form 10-K for the year
                  ended December 31, 1999.

         10.14    Changes to the Deferred Compensation Agreement, dated as of
                  June 2, 1998, between AMR and Edward A. Brennan.

         10.15    Deferred Compensation Agreement, dated as of February 7, 1996,
                  between AMR and Armando M. Codina, incorporated by reference
                  to Exhibit 10(ttt) to AMR's report on Form 10-K for the year
                  ended December 31, 1995.

         10.16    Deferred Compensation Agreement, dated as of February 10,
                  1997, between AMR and Armando M. Codina, incorporated by
                  reference to Exhibit 10.13 to AMR's report on Form 10-K for
                  the year ended December 31, 1996.

         10.17    Deferred Compensation Agreement, dated as of February 19,
                  1998, between AMR and Armando M. Codina, incorporated by
                  reference to Exhibit 10.15 to AMR's report on Form 10-K for
                  the year ended December 31, 1997.

         10.18    Deferred Compensation Agreement, dated as of January 13, 1999,
                  between AMR and Armando M. Codina, incorporated by reference
                  to Exhibit 10.19 to AMR's report on Form 10-K for the year
                  ended December 31, 1998.

         10.19    Deferred Compensation Agreement, dated as of January 12, 2000,
                  between AMR and Armando M. Codina, incorporated by reference
                  to Exhibit 10.20 to AMR's report on Form 10-K for the year
                  ended December 31, 1999.

         10.20    Deferred Compensation Agreement, dated as of January 22, 2001,
                  between AMR and Armando M. Codina.

         10.21    Deferred Compensation Agreement, dated as of July 16, 1997,
                  between AMR and Judith Rodin, incorporated by reference to
                  Exhibit 10.22 to AMR's report on Form 10-K for the year ended
                  December 31, 1997.
</TABLE>

                                       61
<PAGE>   63


<TABLE>
<S>               <C>
         10.22    Deferred Compensation Agreement, dated as of February 19,
                  1998, between AMR and Judith Rodin, incorporated by reference
                  to Exhibit 10.23 to AMR's report on Form 10-K for the year
                  ended December 31, 1997.

         10.23    Deferred Compensation Agreement, dated as of January 7, 1999,
                  between AMR and Judith Rodin, incorporated by reference to
                  Exhibit 10.30 to AMR's report on Form 10-K for the year ended
                  December 31, 1998.

         10.24    Deferred Compensation Agreement, dated as of January 12, 2000,
                  between AMR and Judith Rodin, incorporated by reference to
                  Exhibit 10.29 to AMR's report on Form 10-K for the year ended
                  December 31, 1999.

         10.25    Deferred Compensation Agreement, dated as of January 22, 2001,
                  between AMR and Judith Rodin.

         10.26    Deferred Compensation Agreement, dated as of January 19, 2001,
                  between AMR and Philip J. Purcell.

         10.27    Description of American's Split Dollar Insurance Program,
                  dated December 28, 1977, incorporated by reference to Exhibit
                  10(c)(1) to American's Registration Statement No. 2-76709.

         10.28    AMR Corporation 1988 Long-Term Incentive Plan, incorporated by
                  reference to Exhibit 10(t) to AMR's report on Form 10-K for
                  the year ended December 31, 1988.

         10.29    Amendment to AMR's 1988 Long-term Incentive Plan dated May 18,
                  1994, incorporated by reference to Exhibit A to AMR's
                  definitive proxy statement with respect to the annual meeting
                  of stockholders held on May 18, 1994.

         10.30    AMR Corporation 1998 Long-Term Incentive Plan, as amended,
                  incorporated by reference to Exhibit 10.34 to AMR's report on
                  Form 10-K for the year ended December 31, 1998.

         10.31    Form of Stock Option Agreement for Corporate Officers under
                  the AMR 1988 Long-Term Incentive Plan, incorporated by
                  reference to Exhibit 10(rr) to AMR's report on Form 10-K for
                  the year ended December 31, 1990.

         10.32    Current form of Stock Option Agreement under the AMR 1988
                  Long-Term Incentive Plan, incorporated by reference to Exhibit
                  10.28 to AMR's report on Form 10-K for the year ended December
                  31, 1997.

         10.33    Current form of Stock Option Agreement under the AMR 1998
                  Long-Term Incentive Plan, incorporated by reference to Exhibit
                  10.37 to AMR's report on Form 10-K for the year ended December
                  31, 1998.

         10.34    Current form of Stock Option Agreement under the AMR 1998
                  Long-Term Incentive Plan, incorporated by reference to Exhibit
                  10.37 to AMR's report on Form 10-K for the year ended December
                  31, 1999.

         10.35    Current form of Stock Option Agreement under the AMR 1998
                  Long-Term Incentive Plan.

         10.36    Form of Career Equity Program Agreement, incorporated by
                  reference to Exhibit 10(nnn) to AMR's report on Form 10-K for
                  the year ended December 31, 1994.

         10.37    Current Form of Career Equity Program Deferred Stock Award
                  Agreement for Corporate Officers under the AMR 1988 Long-Term
                  Incentive Plan, incorporated by reference to Exhibit 10.30 to
                  AMR's report on Form 10-K for the year ended December 31,
                  1997.
</TABLE>


                                       62
<PAGE>   64


<TABLE>
<S>               <C>
         10.38    Current form of Career Equity Program Deferred Stock Award
                  Agreement for non-officers under the AMR 1988 Long-Term
                  Incentive Plan, incorporated by reference to Exhibit 10.31 to
                  AMR's report on Form 10-K for the year ended December 31,
                  1997.

         10.39    Current Form of Career Equity Program Deferred Stock Award
                  Agreement for Corporate Officers under the AMR 1998 Long-Term
                  Incentive Plan, incorporated by reference to Exhibit 10.41 to
                  AMR's report on Form 10-K for the year ended December 31,
                  1998.

         10.40    Current form of Career Equity Program Deferred Stock Award
                  Agreement for non-officers under the AMR 1998 Long-Term
                  Incentive Plan, incorporated by reference to Exhibit 10.42 to
                  AMR's report on Form 10-K for the year ended December 31,
                  1998.

         10.41    Current form of Career Equity Program Deferred Stock Award
                  Agreement for Senior Officers under the AMR 1998 Long-Term
                  Incentive Plan, incorporated by reference to Exhibit 10.42(a)
                  to AMR's report on Form 10-K for the year ended December 31,
                  1998.

         10.42    Current form of Career Equity Program Deferred Stock Award
                  Agreement for Employees under the AMR 1998 Long-Term Incentive
                  Plan, incorporated by reference to Exhibit 10.44 to AMR's
                  report on Form 10-K for the year ended December 31, 1999.

         10.43    Form of Guaranty to Career Equity Program under the AMR 1988
                  Long-Term Incentive Plan, incorporated by reference to Exhibit
                  10(ccc) to AMR's report on Form 10-K for the year ended
                  December 31, 1993.

         10.44    Performance Share Program for the years 1994 to 1996 under the
                  1988 Long-Term Incentive Program, incorporated by reference to
                  Exhibit 10(lll) to AMR's report on Form 10-K for the year
                  ended December 31, 1994.

         10.45    Performance Share Program for the years 1995 to 1997 under the
                  1988 Long-Term Incentive Program, incorporated by reference to
                  Exhibit 10(ooo) to AMR's report on Form 10-K for the year
                  ended December 31, 1995.

         10.46    Performance Share Program for the years 1996 to 1998 under the
                  1988 Long-Term Incentive Program, incorporated by reference to
                  Exhibit 10.26 to AMR's report on Form 10-K for the year ended
                  December 31, 1996.

         10.47    Performance Share Program for the years 1997 to 1999 under the
                  1988 Long-Term Incentive Program, incorporated by reference to
                  Exhibit 10.27 to AMR's report on Form 10-K for the year ended
                  December 31, 1996.

         10.48    Form of Performance Share Program for the years 1997 to 1999
                  under the 1988 Long-Term Incentive Program, incorporated by
                  reference to Exhibit 10.37 to AMR's report on Form 10-K for
                  the year ended December 31, 1997.

         10.49    Performance Share Program for the years 1998 to 2000 under the
                  1988 Long-Term Incentive Program, incorporated by reference to
                  Exhibit 10.38 to AMR's report on Form 10-K for the year ended
                  December 31, 1997.

         10.50    Performance Share Program for the years 1999 to 2001 under the
                  1998 Long-Term Incentive Program, incorporated by reference to
                  Exhibit 10.50 to AMR's report on Form 10-K for the year ended
                  December 31, 1998.

         10.51    Performance Share Program for the years 2000 to 2002 under the
                  1998 Long-Term Incentive Program, incorporated by reference to
                  Exhibit 10.53 to AMR's report on Form 10-K for the year ended
                  December 31, 1999.
</TABLE>


                                       63
<PAGE>   65

<TABLE>
<S>               <C>
         10.52    Performance Share Program for the years 2001 to 2003 under the
                  1998 Long-Term Incentive Program.

         10.53    Form of Performance Share Program for the years 2001 to 2003
                  under the 1998 Long-Term Incentive Program.

         10.54    American Airlines, Inc. Supplemental Executive Retirement
                  Program, as amended January 1997, incorporated by reference to
                  Exhibit 10.28 to AMR's report on Form 10-K for the year ended
                  December 31, 1996.

         10.55    AMR Corporation 1987 Executive Deferral Plan, as amended
                  through 1999, incorporated by reference to Exhibit 10.52 to
                  AMR's report on Form 10-K for the year ended December 31,
                  1998.

         10.56    American Airlines, Inc. 1996 Employee Profit Sharing Plan,
                  incorporated by reference to Exhibit 10.29 to AMR's report on
                  Form 10-K for the year ended December 31, 1996.

         10.57    American Airlines, Inc. 1997 Employee Profit Sharing Plan,
                  incorporated by reference to Exhibit 10.30 to AMR's report on
                  Form 10-K for the year ended December 31, 1996.

         10.58    American Airlines, Inc. 1998 Employee Profit Sharing Plan,
                  incorporated by reference to Exhibit 10.43 to AMR's report on
                  Form 10-K for the year ended December 31, 1997.

         10.59    American Airlines, Inc. 1999 Employee Profit Sharing Plan,
                  incorporated by reference to Exhibit 10.56 to AMR's report on
                  Form 10-K for the year ended December 31, 1998.

         10.59(a) American Airlines, Inc. 2000 Employee Profit Sharing Plan,
                  incorporated by reference to Exhibit 10.60 to AMR's report on
                  Form 10-K for the year ended December 31, 1999.

         10.60    American Airlines, Inc. 2001 Employee Profit Sharing Plan.

         10.61    American Airlines, Inc. 1996 Incentive Compensation Plan for
                  Officers and Key Employees, incorporated by reference to
                  Exhibit 10(qqq) to AMR's report on Form 10-K for the year
                  ended December 31, 1995.

         10.62    American Airlines, Inc. 1997 Incentive Compensation Plan for
                  Officers and Key Employees, incorporated by reference to
                  Exhibit 10.32 to AMR's report on Form 10-K for the year ended
                  December 31, 1996.

         10.63    American Airlines, Inc. 1998 Incentive Compensation Plan for
                  Officers and Key Employees, incorporated by reference to
                  Exhibit 10.46 to AMR's report on Form 10-K for the year ended
                  December 31, 1997.

         10.64    American Airlines, Inc. 1999 Incentive Compensation Plan for
                  Officers and Key Employees, incorporated by reference to
                  Exhibit 10.60 to AMR's report on Form 10-K for the year ended
                  December 31, 1998.

         10.65    American Airlines, Inc. 2000 Incentive Compensation Plan for
                  Officers and Key Employees, incorporated by reference to
                  Exhibit 10.65 to AMR's report on Form 10-K for the year ended
                  December 31, 1999.

         10.66    American Airlines, Inc. 2001 Incentive Compensation Plan for
                  Officers and Key Employees.

         10.67    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Gerard J. Arpey, dated May
                  21, 1998, incorporated by reference to Exhibit 10.61 to AMR's
                  report on Form 10-K for the year ended December 31, 1998.
</TABLE>


                                       64
<PAGE>   66

<TABLE>
<S>               <C>
         10.68    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Robert W. Baker, dated May
                  21, 1998, incorporated by reference to Exhibit 10.62 to AMR's
                  report on Form 10-K for the year ended December 31, 1998.

         10.69    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Peter M. Bowler, dated May
                  21, 1998, incorporated by reference to Exhibit 10.63 to AMR's
                  report on Form 10-K for the year ended December 31, 1998.

         10.70    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Donald J. Carty, dated May
                  21, 1998, incorporated by reference to Exhibit 10.64 to AMR's
                  report on Form 10-K for the year ended December 31, 1998.

         10.71    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Peter J. Dolara, dated May
                  21, 1998, incorporated by reference to Exhibit 10.65 to AMR's
                  report on Form 10-K for the year ended December 31, 1998.

         10.72    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Daniel P. Garton, dated May
                  21, 1998, incorporated by reference to Exhibit 10.66 to AMR's
                  report on Form 10-K for the year ended December 31, 1998.

         10.73    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Michael W. Gunn, dated May
                  21, 1998, incorporated by reference to Exhibit 10.67 to AMR's
                  report on Form 10-K for the year ended December 31, 1998.

         10.74    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Monte E. Ford, dated
                  November 15, 2000.

         10.75    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Thomas W. Horton, dated
                  January 19, 2000, incorporated by reference to Exhibit 10.73
                  to AMR's report on Form 10-K for the year ended December 31,
                  1999.

         10.76    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Henry C. Joyner, dated
                  January 19, 2000, incorporated by reference to Exhibit 10.74
                  to AMR's report on Form 10-K for the year ended December 31,
                  1999.

         10.77    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Thomas J. Kiernan, dated
                  May 21, 1998, incorporated by reference to Exhibit 10.68 to
                  AMR's report on Form 10-K for the year ended December 31,
                  1998.

         10.78    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and David L. Kruse, dated May
                  21, 1998, incorporated by reference to Exhibit 10.69 to AMR's
                  report on Form 10-K for the year ended December 31, 1998.

         10.79    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Charles D. MarLett, dated
                  May 21, 1998, incorporated by reference to Exhibit 10.70 to
                  AMR's report on Form 10-K for the year ended December 31,
                  1998.

         10.80    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Anne H. McNamara, dated May
                  21, 1998, incorporated by reference to Exhibit 10.71 to AMR's
                  report on Form 10-K for the year ended December 31, 1998.

         10.81    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Susan M. Oliver, dated
                  September 22, 2000.
</TABLE>


                                       65
<PAGE>   67

<TABLE>
<S>               <C>
         10.82    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and William K. Ris, Jr., dated
                  October 20, 1999, incorporated by reference to Exhibit 10.79
                  to AMR's report on Form 10-K for the year ended December 31,
                  1999.

         10.83    Aircraft Sales Agreement by and between American Airlines,
                  Inc. and Federal Express Corporation, dated April 7, 1995,
                  incorporated by reference to Exhibit 10(rrr) to AMR's report
                  on Form 10-K for the year ended December 31, 1995.
                  Confidential treatment was granted as to a portion of this
                  document.

         10.84    Aircraft Purchase Agreement by and between American Airlines,
                  Inc. and The Boeing Company, dated October 31, 1997,
                  incorporated by reference to Exhibit 10.48 to AMR's report on
                  Form 10-K for the year ended December 31, 1997. Confidential
                  treatment was granted as to a portion of this document.

         10.85    Aircraft Purchase Agreement by and between AMR Eagle Holding
                  Corporation and Bombardier Inc., dated January 31, 1998,
                  incorporated by reference to Exhibit 10.49 to AMR's report on
                  Form 10-K for the year ended December 31, 1997. Confidential
                  treatment was granted as to a portion of this document.

         10.86    Aircraft Purchase Agreement by and between AMR Eagle, Inc. and
                  Embraer-Empresa Brasileira de Aeronautica S.A., dated December
                  22, 1997, incorporated by reference to Exhibit 10.50 to AMR's
                  report on Form 10-K for the year ended December 31, 1997.
                  Confidential treatment was granted as to a portion of this
                  document.

         10.87    Aircraft Purchase Agreement by and between AMR Eagle Holding
                  Corporation and Embraer-Empresa Brasileira de Aeronautica
                  S.A., dated September 30, 1998, incorporated by reference to
                  Exhibit 10.76 to AMR's report on Form 10-K for the year ended
                  December 31, 1998. Confidential treatment was granted as to a
                  portion of this document.

         10.88    Amended and Restated Asset Purchase Agreement, dated as of
                  February 28, 2001, by and between American Airlines, Inc.
                  and Trans World Airlines, Inc.

         10.89    Amendment No. 1 to Amended and Restated Asset Purchase
                  Agreement, dated as of March 9, 2001, by and between American
                  Airlines, Inc. and Trans World Airlines, Inc.

         10.90    Secured Debtor In Possession Credit and Security Agreement
                  dated as of January 10, 2001 among Trans World Airlines, Inc.
                  and AMR Finance, Inc.

         10.91    Letter Agreement/Amendment to Secured Debtor In Possession
                  Credit and Security Agreement dated as of January 11, 2001
                  between Trans World Airlines, Inc. and AMR Finance, Inc.

         10.92    Letter Agreement/Amendment to Secured Debtor In Possession
                  Credit and Security Agreement dated as of January 26, 2001
                  between Trans World Airlines, Inc. and AMR Finance, Inc.

         10.93    Letter Agreement/Amendment to Secured Debtor In Possession
                  Credit and Security Agreement dated as of March 7, 2001
                  between Trans World Airlines, Inc. and AMR Finance, Inc.

         10.94    First Amendment to Secured Debtor In Possession Credit and
                  Security Agreement dated as of March 12, 2001 between Trans
                  World Airlines, Inc. and AMR Finance, Inc.
</TABLE>


                                       66
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<TABLE>
<S>               <C>
         12       Computation of ratio of earnings to fixed charges for the
                  years ended December 31, 1996, 1997, 1998, 1999 and 2000.

         21       Significant subsidiaries of the registrant as of December 31,
                  2000.

         23       Consent of Independent Auditors.
</TABLE>


(b)    Reports on Form 8-K:

       Form 8-Ks filed under Item 5 - Other Events

       On October 19, 2000, AMR filed a report on Form 8-K relative to a press
release issued to report the Company's third quarter 2000 earnings, information
relating to American's hosting of its biennial Analyst & Investor Conference,
the future dates of AMR's earnings report, and information on how to access
AMR's web site.

       On November 1, 2000, AMR filed a report on Form 8-K relative to certain
data regarding its fleet plan, unit costs, capacity, traffic and fuel.

       Form 8-Ks furnished under Item 9 - Regulation FD Disclosure

       On November 10, 2000, AMR filed a report on Form 8-K relative to an
upcoming presentation by AMR's Chairman and CEO Don Carty as part of the 15th
Annual Salomon Smith Barney Transportation Conference in New York City.

       On November 27, 2000, AMR filed a report on Form 8-K relative to certain
data regarding its fleet plan, unit costs, capacity, traffic and fuel.

       On December 14, 2000, AMR filed a report on Form 8-K relative to certain
data regarding its fleet plan, unit costs, capacity, operational considerations,
traffic and fuel.


                                       67
<PAGE>   69

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

AMR CORPORATION

/s/  Donald J. Carty
- -------------------------------------------------
Donald J. Carty
Chairman, President and Chief Executive Officer
(Principal Executive Officer)


/s/  Thomas W. Horton
- -------------------------------------------------
Thomas W. Horton
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

Date:  March 22, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates noted:

Directors:

/s/  David L. Boren                /s/  Michael A. Miles
- -----------------------------      ----------------------------
David L. Boren                     Michael A. Miles


/s/  Edward A. Brennan             /s/  Charles H. Pistor, Jr.
- -----------------------------      ----------------------------
Edward A. Brennan                  Charles H. Pistor, Jr.


/s/  Armando M. Codina             /s/  Philip J. Purcell
- -----------------------------      ----------------------------
Armando M. Codina                  Philip J. Purcell


/s/  Earl G. Graves                /s/  Joe M. Rodgers
- -----------------------------      ----------------------------
Earl G. Graves                     Joe M. Rodgers


/s/  Ann McLaughlin Korologos      /s/  Judith Rodin
- -----------------------------      ----------------------------
Ann McLaughlin Korologos           Judith Rodin



Date:  March 22, 2001


                                       68
<PAGE>   70


REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
AMR Corporation

We have audited the consolidated financial statements of AMR Corporation as of
December 31, 2000 and 1999, and for each of the three years in the period ended
December 31, 2000, and have issued our report thereon dated January 16, 2001,
except for Note 15, for which the date is March 19, 2001. Our audits also
included Schedule II - Valuation and Qualifying Accounts and Reserves. This
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this schedule based on our audits.

       In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

                                                        ERNST & YOUNG LLP

2121 San Jacinto
Dallas, Texas  75201
January 16, 2001, except for Note 15,
  for which the date is March 19, 2001.



                                       69
<PAGE>   71


                                 AMR CORPORATION
          SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                                  (IN MILLIONS)

<TABLE>
<CAPTION>
                                                        INCREASES                                    SALES,
                                           BALANCE      CHARGED TO                                   RETIRE-        BALANCE
                                             AT           INCOME                    WRITE-OFFS       MENTS             AT
                                          BEGINNING     STATEMENT                    (NET OF          AND           END OF
                                           OF YEAR       ACCOUNTS     PAYMENTS      RECOVERIES)     TRANSFERS         YEAR
                                          ---------      --------     --------      -----------     ---------       -------
<S>                                       <C>            <C>          <C>           <C>             <C>             <C>
YEAR ENDED DECEMBER 31, 2000

Allowance for
obsolescence of inventories                  $279          $ 62          $ --           $ --           $ (9)          $332

Allowance for
uncollectible accounts                         57            18            --            (48)            --             27

Reserves for maintenance activities            38            52           (55)            --             --             35

Reserves for environmental
remediation costs                              65            24           (19)            --             --             70

Reserves for litigation                        31            --            (2)            --             --             29

YEAR ENDED DECEMBER 31, 1999

Allowance for
obsolescence of inventories                   214            59            --             --              6            279

Allowance for
uncollectible accounts                         19            34            --              4             --             57

Reserves for maintenance activities            31            50           (43)            --             --             38

Reserves for environmental
remediation costs                              23            48            (6)            --             --             65

Reserves for litigation                        --            39            (8)            --             --             31

YEAR ENDED DECEMBER 31, 1998

Allowance for
obsolescence of inventories                   203            40            --             --            (29)           214

Allowance for
uncollectible accounts                          9            12            --             (2)            --             19

Reserves for maintenance activities            35             3            (4)            --             (3)            31

Reserves for environmental
remediation costs                              14            12            (3)            --             --             23
</TABLE>



                                       70
<PAGE>   72

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                    DESCRIPTION
       -------                   -----------
<S>               <C>
         10.14    Changes to the Deferred Compensation Agreement, dated as of
                  June 2, 1998, between AMR and Edward A. Brennan.

         10.20    Deferred Compensation Agreement, dated as of January 22, 2001,
                  between AMR and Armando M. Codina.

         10.25    Deferred Compensation Agreement, dated as of January 22, 2001,
                  between AMR and Judith Rodin.

         10.26    Deferred Compensation Agreement, dated as of January 19, 2001,
                  between AMR and Philip J. Purcell.

         10.35    Current form of Stock Option Agreement under the AMR 1998
                  Long-Term Incentive Plan.

         10.52    Performance Share Program for the years 2001 to 2003 under the
                  1998 Long-Term Incentive Program.

         10.53    Form of Performance Share Program for the years 2001 to 2003
                  under the 1998 Long-Term Incentive Program.

         10.60    American Airlines, Inc. 2001 Employee Profit Sharing Plan.

         10.66    American Airlines, Inc. 2001 Incentive Compensation Plan for
                  Officers and Key Employees.

         10.74    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Monte E. Ford, dated
                  November 15, 2000.

         10.81    Amended and Restated Executive Termination Benefits Agreement
                  between AMR, American Airlines and Susan M. Oliver, dated
                  September 22, 2000.

         10.88    Asset Purchase Agreement, dated as of February 28, 2001, by
                  and between American Airlines, Inc. and Trans World Airlines,
                  Inc.

         10.89    Amendment No. 1 to Amended and Restated Asset Purchase
                  Agreement, dated as of March 9, 2001, by and between American
                  Airlines, Inc. and Trans World Airlines, Inc.

         10.90    Secured Debtor In Possession Credit and Security Agreement
                  dated as of January 10, 2001 among Trans World Airlines, Inc.
                  and AMR Finance, Inc.

         10.91    Letter Agreement/Amendment to Secured Debtor In Possession
                  Credit and Security Agreement dated as of January 11, 2001
                  between Trans World Airlines, Inc. and AMR Finance, Inc.

         10.92    Letter Agreement/Amendment to Secured Debtor In Possession
                  Credit and Security Agreement dated as of January 26, 2001
                  between Trans World Airlines, Inc. and AMR Finance, Inc.

         10.93    Letter Agreement/Amendment to Secured Debtor In Possession
                  Credit and Security Agreement dated as of March 7, 2001
                  between Trans World Airlines, Inc. and AMR Finance, Inc.

         10.94    First Amendment to Secured Debtor In Possession Credit and
                  Security Agreement dated as of March 12, 2001 between Trans
                  World Airlines, Inc. and AMR Finance, Inc.

         12       Computation of ratio of earnings to fixed charges for the
                  years ended December 31, 1996, 1997, 1998, 1999 and 2000.

         21       Significant subsidiaries of the registrant as of December 31,
                  2000.

         23       Consent of Independent Auditors.
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>2
<FILENAME>d84957ex10-14.txt
<DESCRIPTION>CHANGES TO DEFERRED COMPENSATION AGREEMENT 6/2/98
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.14



                                                  June 2, 1998


Mr. Edward A. Brennan
400 North Michigan Avenue
Suite 400
Chicago, IL 60611

Dear Ed:

     This letter will confirm the changes we discussed to your deferral
arrangement.

     1.   You will continue to defer, pursuant to the Directors' Stock
          Equivalent Purchase Plan (the "Plan"), all cash compensation paid to
          you as a consequence of your service on the Board of Directors of AMR
          Corporation and/or American Airlines, Inc. You may discontinue this
          deferral at any time upon written notice to AMR.

     2.   The Deferral Termination Date (see Article 1.04 of the Plan) will be
          the first to occur of: (i) your retirement from the Board or (ii) your
          departure from the Board for reasons other than retirement.

     3.   Please indicate below whether you want the payment to be (i) a
          lump-sum payment or (ii) made in installments. If you choose a
          lump-sum payment, the first and final distribution will be made in
          accordance with Article 4.01(B).

          If you choose an installment payment, the distribution will be made in
          accordance with Articles 4.01(B) and (C).

          I ELECT DISTRIBUTION TO BE MADE AS FOLLOWS [INDICATE A LUMP-SUM
          PAYMENT OR INSTALLMENT OVER "X" YEARS]: _____________________________.

     4.   In the event of your death prior to a full distribution of the Stock
          Equivalent Units, the distribution will be made in accordance with
          Article 4.01(E) in favor of Lois L. Brennan.

<PAGE>   2


     Please indicate your agreement to the foregoing by signing below. This
letter will replace in its entirety that dated January 31, 1990. Capitalized
terms will have the meanings set forth in the Plan, a copy of which is attached
hereto.

                                       Very truly yours,



                                       Charles D. MarLett
                                       Corporate Secretary


Agreed:


- -----------------------------------
Edward A. Brennan
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.20
<SEQUENCE>3
<FILENAME>d84957ex10-20.txt
<DESCRIPTION>DEFERRED COMPENSATION AGREEMENT - 1/22/2001
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.20


                                      January 22, 2001


Mr. Armando M. Codina
Chairman
Codina Group, Inc.
Two Alhambra Plaza, PH2
Coral Gables, FL 33134

Dear Armando:

     This will confirm the following agreement relating to the deferral of, and
payment of, your directors' fees in 2001:

     1. All directors' fees and retainers (AFees@) payable to you in connection
with your service on the boards of directors (including committees of such
boards) of AMR Corporation and American Airlines, Inc. for the period January 1,
2001, through December 31, 2001, will be deferred and paid to you in accordance
with this letter agreement.

     2. Fees will be converted to Stock Equivalent Units in accordance with the
Directors' Stock Equivalent Purchase Plan, a copy of which is attached hereto as
Exhibit A (the "Plan").

     3. On or before January 31, 2010, all the Stock Equivalent Units will be
converted to cash and paid to you by multiplying the number of Stock Equivalent
Units as of December 31, 2009, by the arithmetic mean of the high and low of AMR
stock ("fair market value") during December 2009.

     4. AMR's obligation to make payments pursuant to paragraph 3 hereof will
not be released or modified by reason of your death. In such event, the number
of Stock Equivalent Units as of your date of death will be multiplied by the
fair market value of AMR stock during the calendar month immediately preceding
your death, and the amount paid to Margarita Codina.


<PAGE>   2


     If the foregoing is satisfactory to you, please indicate by signing one of
the originals (two are enclosed) and returning it to me.

                                       Very truly yours,




                                       Charles D. MarLett
                                       Corporate Secretary




Accepted and agreed:



Armando M. Codina


Date
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.25
<SEQUENCE>4
<FILENAME>d84957ex10-25.txt
<DESCRIPTION>DEFERRED COMPENSATION AGREEMENT - 01/22/2001
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.25



                                               January 22, 2001


Judith Rodin, PhD.
President
University of Pennsylvania
100 College Hall
Philadelphia, PA 19104

Dear Judith:

     This will confirm the following agreement relating to the deferral of your
directors' fees and retainers in 2001:

     1. All directors' fees and retainers (AFees@) payable to you in connection
with your service on the boards of directors (including committees of such
boards) of AMR Corporation and American Airlines, Inc. for the period January 1,
2001 through December 31, 2001, will be deferred and paid to you in accordance
with this letter agreement:

     2. Fees will be converted to Stock Equivalent Units in accordance with the
Directors' Stock Equivalent Purchase Plan, a copy of which is attached hereto as
Exhibit A (the "Plan").

     3. Upon your retirement from the Board of Directors of AMR the Stock
Equivalent Units accrued pursuant to the Plan will be converted to cash and paid
to you by multiplying the number of Stock Equivalent Units as of the date of
your retirement by the arithmetic mean of the high and low of AMR stock ("fair
market value") during the calendar month immediately preceding such retirement
date. Such payment will occur within 30 days of your retirement date.

     4. AMR's obligation to make payments pursuant to paragraph 3 hereof will
not be released or modified by reason of your death. In such event, the number
of Stock Equivalent Units as of your date of death will be multiplied by the
fair market value of AMR stock during the calendar month immediately preceding
your death, and the amount paid to the Trustees under your Revocable Agreement
of Trust, dated September 15, 1997, as amended November 3, 1997, Judith Rodin
Settlor and Trustee.


<PAGE>   2


     If the foregoing is satisfactory to you, please indicate by signing one of
the originals (two are enclosed) and returning it to me.

                                       Very truly yours,



                                       Charles D. MarLett
                                       Corporate Secretary


Accepted and agreed:



Judith Rodin



Date
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.26
<SEQUENCE>5
<FILENAME>d84957ex10-26.txt
<DESCRIPTION>DEFERRED COMPENSATION AGREEMENT - 1/19/2001
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.26


                                            January 19, 2001

Mr. Philip J. Purcell
Morgan Stanley Dean Witter & Co.
2500 Lake Cook Road
Riverwoods, IL 60015

Dear Mr. Purcell:

     This will confirm the following agreement relating to the deferral of your
director's fees in 2001.

     1. All director's fees and retainers ("Fees") payable to you in connection
with your service on the boards of directors (including committees of such
boards) of AMR Corporation and American Airlines, Inc. for the period January 1,
2001 through December 31, 2001, will be deferred and paid to you in accordance
with this letter agreement.

     2. Fees will be converted to Stock Equivalent Units in accordance with the
Directors' Stock Equivalent Purchase Plan, a copy of which is attached hereto as
Exhibit A (the "Plan").

     3. Within 30 days of the date when you cease to be a Director of AMR
Corporation, the Stock Equivalent Units accrued pursuant to the Plan will be
converted to cash and paid to you by multiplying the number of such Stock
Equivalent Units by the arithmetic mean of the high and the low of AMR stock
("fair market value") during the month when you ceased to be a Director of AMR
Corporation.

     4. AMR's obligation to make the payment pursuant to paragraph 3 hereof will
not be released or modified by reason of your death. In such event, the number
of Stock Equivalent Units as of your date of death will be multiplied by the
fair market value of AMR stock during the calendar month immediately preceding
your death, and the amount paid to Anne Purcell.


<PAGE>   2


     If the foregoing is satisfactory to you, please indicate by signing one of
the originals (two are enclosed) and returning it to me.

                                       Very truly yours,




                                       Charles D. MarLett
                                       Corporate Secretary


Accepted and agreed:



Philip J. Purcell


Date






                                       2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.35
<SEQUENCE>6
<FILENAME>d84957ex10-35.txt
<DESCRIPTION>CURRENT FORM OF STOCK OPTION AGREEMENT
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.35

                                  STOCK OPTION

         STOCK OPTION granted DATE, by AMR Corporation, a Delaware corporation
(the "Corporation"), and FIRST LAST, employee number 999999, an employee of the
Corporation or one of its Subsidiaries or Affiliates (the "Optionee").

                                  WITNESSETH:

         WHEREAS, the stockholders of the Corporation approved the 1998 Long
Term Incentive Plan at the Corporation's annual meeting held on May 20, 1998
(such plan, as may be amended from time to time, to be referenced the "1998
Plan");

         WHEREAS, the 1998 Plan provides for the grant of an option to purchase
shares of the Corporation's Common Stock to those individuals selected by the
Committee or, in lieu thereof, the Board of Directors of AMR Corporation (the
"Board"); and

         WHEREAS, the Board has determined that the Optionee is eligible under
the Plan and that it is to the advantage and interest of the Corporation to
grant the option provided for herein to the Optionee as an incentive for
Optionee to remain in the employ of the Corporation or one of its Subsidiaries
or Affiliates, and to encourage ownership by the Optionee of the Corporation's
Common Stock, $1 par value (the "Common Stock").

         NOW, THEREFORE:

         1. Option Grant. The Corporation hereby grants to the Optionee a
non-qualified stock option, subject to the terms and conditions hereinafter set
forth, to purchase all or any part of an aggregate of SHARES shares of Common
Stock at a price of $32.8438 per share (being the fair market value of the
Common Stock on the date hereof), exercisable in approximately equal
installments on and after the following dates and with respect to the following
number of shares of Common Stock:

<TABLE>
<CAPTION>
             Exercisable On and After       Number of Shares
             ------------------------       ----------------
<S>                                         <C>
                      SHARES1                  11/07/2001
                      -------                  ----------
                      SHARES2                  11/07/2002
                      -------                  ----------
                      SHARES3                  11/07/2003
                      -------                  ----------
                      SHARES4                  11/07/2004
                      -------                  ----------
                      SHARES5                  11/07/2005
                      -------                  ----------
</TABLE>

<PAGE>   2


provided, that in no event shall this option be exercisable in whole or in part
ten years from the date hereof and that the Corporation shall in no event be
obligated to issue fractional shares. The right to exercise this option and to
purchase the number of shares comprising each such installment shall be
cumulative, and once such right has become exercisable it may be exercised in
whole at any time and in part from time to time until the date of termination of
the Optionee's rights hereunder.

         2. Restriction on Exercise. Notwithstanding any other provision hereof,
this option shall not be exercised if at such time such exercise or the delivery
of certificates representing shares of Common Stock purchased pursuant hereto
shall constitute a violation of any provision of any applicable Federal or State
statute, rule or regulation, or any rule or regulation of any securities
exchange on which the Common Stock may be listed.

         3. Manner of Exercise. This option may be exercised with respect to all
or any part of the shares of Common Stock then subject to such exercise by
written notice from the Optionee to the Corporation addressed to P.O. Box
619616, Dallas/Fort Worth Airport, Texas 75261-9616, Attention: Executive
Compensation. Such notice shall be accompanied (i) by the payment of the option
price in cash or by check or (ii) by whatever other form of payment may be
authorized by the Corporation, and, in the event that at the time of such
exercise the shares of Common Stock as to which this option is exercisable have
not been registered under the Securities Act of 1933, shall include a
representation by the Optionee that at the time of such exercise he is acquiring
the shares of Common Stock for investment only and not with a view to
distribution. Subject to compliance by the Optionee with all the terms and
conditions hereof, the Corporation shall promptly thereafter deliver to the
Optionee a certificate or certificates for such shares with all requisite
transfer stamps attached.

         4. Termination of Option. This option shall terminate and may no longer
be exercised if (i) the Optionee ceases to be an employee of the Corporation or
one of its Subsidiaries or Affiliates; or (ii) the Optionee becomes an employee
of a Subsidiary that is not wholly owned, directly or indirectly, by the
Corporation; or (iii) the Optionee takes a leave of absence without
reinstatement rights, unless otherwise agreed in writing between the Corporation
and the Optionee; except that

         (a) If the Optionee's employment by the Corporation (and any Subsidiary
or Affiliate) terminates by reason of death, the vesting of the option will be
accelerated and the option will remain exercisable until its expiration;


                                                                               2
<PAGE>   3


         (b) If the Optionee's employment by the Corporation (and any Subsidiary
or Affiliate) terminates by reason of Disability, the option will continue to
vest in accordance with its terms and may be exercised until its expiration;
provided, however, that if the Optionee dies after such Disability the vesting
of the option will be accelerated and the option will remain exercisable until
its expiration;

         (c) If the Optionee's employment by the Corporation (and any Subsidiary
or Affiliate) terminates by reason of Normal or Early Retirement, the option
will continue to vest in accordance with its terms and may be exercised until
its expiration; provided, however, that if the Optionee dies after Retirement
the vesting of the option will be accelerated and the option will remain
exercisable until its expiration;

         (d) If the Optionee's employment by the Corporation (and any Subsidiary
or Affiliate) is involuntarily terminated by the Corporation or a Subsidiary or
Affiliate (as the case may be) without Cause, the option may thereafter be
exercised, to the extent it was exercisable at the time of termination, for a
period of three months from the date of such termination of employment or until
the stated term of such option, whichever period is shorter; and

         (e) In the event of a Change in Control or a Potential Change in
Control of the Corporation, this option shall become exercisable in accordance
with the 1998 Plan, or its successor.

         5. Adjustments in Common Stock. In the event of any stock dividend,
stock split, merger, consolidation, reorganization, recapitalization or other
change in the corporate structure, appropriate adjustments may be made by the
Board in the number of shares, class or classes of securities and the price per
share.

         6. Non-Transferability of Option. Unless the Committee shall permit (on
such terms and conditions as it shall establish), an option may not be
transferred except by will or the laws of descent and distribution to the extent
provided herein. During the lifetime of the Optionee this option may be
exercised only by him or her (unless otherwise determined by the Committee).

         7. Miscellaneous.

         (a) This option (i) shall be binding upon and inure to the benefit of
any successor of the Corporation, (ii) shall be governed by the laws of the
State of Texas, and any applicable laws of the United States, and (iii) may not
be amended except in writing. No contract or right of employment shall be
implied by this option.


                                                                               3
<PAGE>   4



         (b) If this option is assumed or a new option is substituted therefore
in any corporate reorganization (including, but not limited to, any transaction
of the type referred to in Section 425(a) of the Internal Revenue Code of 1986,
as amended), employment by such assuming or substituting corporation or by a
parent corporation or a subsidiary thereof shall be considered for all purposes
of this option to be employment by the Corporation.

         (c) In the event the Optionee's employment is terminated by reason of
Early or Normal Retirement and the Optionee subsequently is employed by a
competitor of the Corporation, the Corporation reserves the right, upon notice
to the Optionee, to declare the option forfeited and of no further validity.

         8. Securities Law Requirements. The Corporation shall not be required
to issue shares upon the exercise of this option unless and until (a) such
shares have been duly listed upon each stock exchange on which the Corporation's
Stock is then registered; and (b) a registration statement under the Securities
Act of 1933 with respect to such shares is then effective.

         The Board may require the Optionee to furnish to the Corporation, prior
to the issuance of any shares of Stock in connection with the exercise of this
option, an agreement, in such form as the Board may from time to time deem
appropriate, in which the Optionee represents that the shares acquired by him
upon such exercise are being acquired for investment and not with a view to the
sale or distribution thereof.

         9. Option Subject to 1998 Plan. This option shall be subject to all the
terms and provisions of the 1998 Plan and the Optionee shall abide by and be
bound by all rules, regulations and determinations of the Board now or hereafter
made in connection with the administration of the 1998 Plan. Capitalized terms
not otherwise defined herein shall have the meanings set forth for such terms in
the 1998 Plan.

         IN WITNESS WHEREOF, the Corporation has executed this Stock Option as
of the day and year first above written.

                                               AMR Corporation



- ------------------------------                 ----------------------------
Optionee                                       Charles D. MarLett
                                               Corporate Secretary


                                                                               4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.52
<SEQUENCE>7
<FILENAME>d84957ex10-52.txt
<DESCRIPTION>PERFORMANCE SHARE PROGRAM
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.52

                       2001 - 2003 PERFORMANCE SHARE PLAN
                         FOR OFFICERS AND KEY EMPLOYEES

Purpose

The purpose of the 2001 - 2003 AMR Corporation Performance Share Plan ("Plan")
for Officers and Key Employees is to provide greater incentive to officers and
key employees of the subsidiaries and affiliates of AMR Corporation ("AMR" or
"the Corporation") to achieve the highest level of individual performance and to
meet or exceed specified goals which will contribute to the success of the
Corporation. This Plan is adopted pursuant to the 1998 Long Term Incentive Plan,
as amended ("LTIP").

Definitions

Capitalized terms not otherwise defined in the Plan or the award agreement for
performance shares between the Corporation and the employee, will have the
meanings set forth in the LTIP.

For purposes of the Plan, the following definitions will control:

"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.

"Committee" is defined as the Compensation / Nominating Committee of the AMR
Board of Directors.

"Comparator Group" is defined as the seven major U.S. based carriers including
AMR Corporation, Continental Airlines, Inc., Delta Air Lines, Inc., Northwest
Airlines Corp., Southwest Airlines Co., UAL Corporation, and US Airways Group,
Inc.

"Measurement Period" is defined as the three year period beginning January 1,
2001 and ending December 31, 2003.

"Total Shareholder Return (TSR)" is defined as the annualized rate of return
reflecting stock price appreciation plus reinvestment of dividends over the
Measurement Period. The average Daily Closing Stock Price (adjusted for splits
and dividends) for the three months prior to the beginning and ending points of
the Measurement Period will be used to smooth out market fluctuations. The
Committee reserves the right to adjust the calculation at its discretion.

"Daily Closing Stock Price" is defined as the stock price at the close of
trading (4:00 PM EST) of the National Exchange on which the stock is traded.


<PAGE>   2

"National Exchange" is defined as either the New York Stock Exchange (NYSE), the
National Association of Stock Dealers and Quotes (NASDAQ), or the American Stock
Exchange (AMEX).

Accumulation of Shares

The number of shares under the Plan to be distributed to individual participants
is determined by (i) the Corporation's TSR rank within the Comparator Group and
(ii) the terms and conditions of the award agreement between the Corporation and
the employee. The distribution percentage of target shares, based on rank, is
specified below:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
      Granted Shares - Percent of Target Based on Rank
- ------------------------------------------------------------------------------
<S>            <C>       <C>       <C>       <C>      <C>       <C>       <C>
  Rank          7         6         5         4        3         2         1
- ------------------------------------------------------------------------------
Payout %        0%       25%       50%       75%      100%      135%      175%
- ------------------------------------------------------------------------------
</TABLE>


In the event that a carrier (or carriers) in the Comparator Group ceases to
trade on a National Exchange at any point in the Measurement Period, the
following distribution percentage of target shares, based on rank and the number
of remaining comparators, will be used accordingly.

                                  6 Comparators

<TABLE>
<CAPTION>
- -------------------------------------------------------------------
    Granted Shares - Percent of Target Based on Rank
- -------------------------------------------------------------------
<S>            <C>      <C>      <C>       <C>       <C>       <C>
  Rank         6         5         4         3         2         1
- -------------------------------------------------------------------
Payout %       0%       50%       75%      100%      135%      175%
- -------------------------------------------------------------------
</TABLE>

                                  5 Comparators

<TABLE>
<CAPTION>
- ---------------------------------------------------------
    Granted Shares - Percent of Target Based on Rank
- ---------------------------------------------------------
<S>            <C>      <C>      <C>       <C>       <C>
  Rank         5         4         3         2         1
- ---------------------------------------------------------
Payout %      50%       75%      100%      135%      175%
- ---------------------------------------------------------
</TABLE>

                                  4 Comparators

<TABLE>
<CAPTION>
- ------------------------------------------------
Granted Shares - Percent of Target Based on Rank
- ------------------------------------------------
<S>            <C>      <C>      <C>       <C>
  Rank         4         3        2         1
- ------------------------------------------------
Payout %      75%      100%      135%      175%
- ------------------------------------------------
</TABLE>

                                       2

<PAGE>   3


                                  3 Comparators

<TABLE>
<CAPTION>
- ------------------------------------------------
Granted Shares - Percent of Target Based on Rank
- ------------------------------------------------
<S>           <C>      <C>      <C>
  Rank         3        2         1
- ------------------------------------------------
Payout %      100%     135%      175%
- ------------------------------------------------
</TABLE>

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. The
distribution percentage of shares, if any, will be determined based on an audit
of AMR's TSR Rank by the General Auditor of American Airlines, Inc. A summary of
awards under the Plan shall be provided to the Board of Directors at the first
regular meeting following determination of the awards. The Committee may
determine to pay a cash equivalent in lieu of the stock award.

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
Airlines, Inc. 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 an award as may have been expressly
awarded by the Committee subject to the terms and conditions of the award
agreement between the Corporation and the employee.

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 the
Corporation, whether similar or dissimilar, (each a "Force Majeure Event"),
which Force Majeure Event affects the Corporation 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 awards due currently or in the future under the
Plan, including, but not limited to, any awards 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 Airlines, Inc. 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 Airlines, Inc. or its Affiliates or


                                       3
<PAGE>   4

after such employment is terminated, and (iii) not to solicit any current
employees of American Airlines, Inc. or any subsidiaries of AMR to join the
employee at his or her new place of employment after his or her employment with
American Airlines, Inc. is terminated.

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


                                       4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.53
<SEQUENCE>8
<FILENAME>d84957ex10-53.txt
<DESCRIPTION>FORM OF PERFORMANCE SHARE PROGRAM
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.53

                      2000 - 2002 PERFORMANCE SHARE PROGRAM
                         DEFERRED STOCK AWARD AGREEMENT

         This AGREEMENT made as of DATE, by and between AMR Corporation, a
Delaware corporation (the "Corporation"), and FIRST LAST (the "Employee"),
employee number 999999.

         WHEREAS, the stockholders of the Corporation approved the 1998 Long
Term Incentive Plan at the Corporation's annual meeting held on May 20, 1998
(such plan, as may be amended from time to time, to be referenced the "1998
Plan"); and

         WHEREAS, pursuant to the Performance Share Program (the "Program")
adopted by the Board of Directors of the Corporation (the "Board"), the Board
has determined to make a Program grant to the Employee of Deferred Stock
(subject to the terms of the 1998 Plan and this Agreement), as an inducement for
the Employee to remain an employee of the Corporation (or a Subsidiary or
Affiliate thereof), and to retain and motivate such Employee during such
employment.

         NOW, THEREFORE, the Corporation and the Employee hereby agree as
follows:

         1. Grant of Award. The Employee is hereby granted as of DATE, (the
"Grant Date") a Deferred Stock Award (the "Award"), subject to the terms and
conditions hereinafter set forth, with respect to SHARES shares of Common Stock,
$1.00 par value, of the Corporation ("Stock"). The shares of Stock covered by
the Award shall vest, if at all, in accordance with Section 2.

         2. Vesting.

         (a) The Award will vest, if at all, in accordance with Schedule A,
attached hereto and made a part of this Agreement.

         (b) In the event of the termination of Employee's employment with the
Corporation (or a Subsidiary or Affiliate thereof) prior to the end of three
year measurement period set forth in Schedule A (the "Measurement Period") due
to the Employee's death, Disability, Retirement or termination not for Cause
(each an "Early Termination") the Award will vest, if at all, on a prorata basis
and will be paid to the Employee (or, in the event of the Employee's death, the
Employee's designated beneficiary for purposes of the Award, or in the absence
of an effective beneficiary designation, the Employee's estate) as soon as
practicable after the end of the Measurement Period. The prorata share will be a
percentage where the denominator is


                                                                               1
<PAGE>   2

36 and the numerator is the number of months from January 1, 2000 through the
month of the Early Termination, inclusive.

         (c) In the event of the termination of Employee's employment with the
Corporation (or any Subsidiary or Affiliate thereof) for Cause, or if the
Employee terminates his/her employment with the Corporation (or any Subsidiary
or Affiliate thereof) prior to the distribution of any Award hereunder, the
Award shall be forfeited in its entirety.

         (d) In the event of a Change in Control or Potential Change in Control
of the Corporation, the Award shall vest in accordance with the 1998 Plan, or
its successor.

         (e) If prior to the distribution of any Award hereunder, the Employee
becomes an employee of a Subsidiary that is not wholly owned, directly or
indirectly, by the Corporation, then the Award shall be forfeited in its
entirety.

         (f) If prior to the distribution of any Award hereunder, the Employee
takes a leave of absence without reinstatement rights, and unless otherwise
agreed in writing between the Corporation and the Employee, then the Award shall
be forfeited in its entirety.

         3. Payment in Cash. Upon a determination by the Board, an Award may be
paid in cash or other consideration in accordance with a formula as adopted by
the Board.

         4. Elective Deferrals. At any time at least 12 months prior to the end
of the Measurement Period, the Employee may elect in writing, subject to
approval by the Corporation, to voluntarily defer the receipt of the Stock for a
specified additional period beyond the end of the Measurement Period (the
"Elective Deferral Period"). Any Stock deferred pursuant to this Section 4 shall
be issued to the Employee within 60 days after the end of the Elective Deferral
Period. In the event of the death of the Employee during the Elective Deferral
Period, the Stock so deferred shall be issued to the Employee's designated
Beneficiary (or to the Employee's estate, in the absence of an effective
beneficiary designation) within 60 days after the Corporation receives written
notification of death.

         5. Transfer Restrictions. This Award is non-transferable otherwise than
by will or by the laws of descent and distribution, and may not otherwise be
assigned, pledged or hypothecated and shall not be subject to execution,
attachment or similar process. Upon any attempt by the Employee (or the
Employee's successor in interest after the Employee's death) to effect any such
disposition, or upon the levy of any such process, the Award may immediately
become null and void, at the discretion of the Board.


                                                                               2
<PAGE>   3


         6. Miscellaneous. This Agreement (a) shall be binding upon and inure to
the benefit of any successor of the Corporation, (b) shall be governed by the
laws of the State of Texas and any applicable laws of the United States, and (c)
may not be amended without the written consent of both the Corporation and the
Employee. No contract or right of employment shall be implied by this Agreement.
In the event Employee does not forward to the Corporation, within the applicable
period, required taxes with respect to any Award distributed pursuant to this
Agreement, the Corporation may withhold from any payments to be made to the
Employee by the Corporation (or any Subsidiary or Affiliate thereof), an
amount(s) equal to such taxes.

         7. Securities Law Requirements. The Corporation shall not be required
to issue Stock pursuant to this Award unless and until (a) such shares have been
duly listed upon each stock exchange on which the Corporation's Stock is then
registered and (b) a registration statement under the Securities Act of 1933
with respect to such shares is then effective.

         The Board may require the Employee to furnish to the Corporation, prior
to the issuance of the Stock in connection with this Award, an agreement, in
such form as the Board may from time to time deem appropriate, in which the
Employee represents that the shares acquired under the Award are being acquired
for investment and not with a view to the sale or distribution thereof.

         8. Incorporation of 1998 Plan Provisions. This Agreement is made
pursuant to the 1998 Plan and is subject to all of the terms and provisions of
the 1998 Plan as if the same were fully set forth herein. Capitalized terms not
otherwise defined herein (inclusive of Schedule A) shall have the meanings set
forth for such terms in the 1998 Plan.

         IN WITNESS HEREOF, the Employee and the Corporation have executed this
Performance Share Grant as of the day and year first above written.

EMPLOYEE                                         AMR CORPORATION


- -----------------------------                    ---------------------
                                                 Charles D. MarLett
                                                 Corporate Secretary

                                                                               3
<PAGE>   4


                                   Schedule A

                                 AMR CORPORATION

                       2000 - 2002 PERFORMANCE SHARE PLAN
                         FOR OFFICERS AND KEY EMPLOYEES

Purpose

The purpose of the 2000 - 2002 AMR Corporation Performance Share Plan ("Plan")
for Officers and Key Employees is to provide greater incentive to officers and
key employees of the subsidiaries and affiliates of AMR Corporation ("AMR" or
"the Corporation") to achieve the highest level of individual performance and to
meet or exceed specified goals which will contribute to the success of the
Corporation. This Plan is adopted pursuant to the 1998 Long Term Incentive Plan,
as amended ("LTIP").

Definitions

Capitalized terms not otherwise defined in the Plan or the award agreement for
performance shares between the Corporation and the employee, will have the
meanings set forth in the LTIP.

For purposes of the Plan, the following definitions will control:

 "Adjusted Investment" is defined as the sum of AMR's consolidated 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 extraordinary or unusual items which may be added or deducted at
the discretion of the Committee.

"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.

"Average Adjusted Investment" is defined as the sum of Adjusted Investment as of
December 31 of a given year during the measurement period, plus Adjusted
Investment as of the December 31 of the prior fiscal year, divided by two.

"Calculated Amortization of Operating Leases" is defined as the amortization
expense associated with the Capitalized Value of Operating Leases as if such
leases were


                                                                               4
<PAGE>   5


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 Compensation / Nominating Committee of the AMR
Board of Directors.

"Measurement Period" is defined as the three year period beginning January 1,
2000 and ending December 31, 2002.

"Adjusted Earnings" is defined as the sum of AMR's pre-tax income, interest
expense, aircraft rental expense, 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.

"Average Plan Earnings" is defined as the sum of Adjusted Earnings for each of
the years during the measurement period, divided by three.

"Plan Average Adjusted Investment" is defined as the sum of Average Adjusted
Investment for each of the years during the measurement period, divided by
three.

"Present Value of Operating Leases" is defined as the present value of the lease
payments required under aircraft operating leases over the remaining lease term,
calculated using the discount rate used in the determination of the Capitalized
Value of Operating Leases.

"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.

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

"Sabre" is defined as Sabre Holdings Corporation and its subsidiaries.

For purposes of determining ROI, the assets, liabilities, shareholder equity and
earnings of Sabre are to be excluded.

Unless otherwise indicated, the sources for all of the financial data specified
above are the applicable Annual Reports on Form 10-K filed by the Corporation.


                                                                               5
<PAGE>   6



Accumulation of Shares

         The number of shares under the Plan to be distributed to individual
participants is determined by (i) the Corporation's ROI (ii), the Corporation's
pre-tax income, and (iii) the terms and conditions of the award agreement
between the Corporation and the employee. The distribution percentage of shares
is specified below:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
                                 GRANTED SHARES - PERCENT OF TARGET

                                              AMR'S ROI
- -----------------------------------------------------------------------------------------------------------------
            > OR = TO 5.5%    > OR = TO 7.5%    > OR = TO 9.5%    > OR = TO 11.5%    > OR = TO 13.5%    > OR = TO
 < 5.5%       AND < 7.5%        AND < 9.5%        AND < 11.5%       AND < 13.5%        AND < 15.5%        15.5%
- --------    --------------    --------------    --------------    ---------------    ---------------    ---------
<S>         <C>               <C>               <C>               <C>                <C>                <C>
   0%               50%               75%               100%              125%             150%            175%
</TABLE>


SUBJECT TO ANY ADJUSTMENTS MADE BY THE COMMITTEE TO ADJUSTED INVESTMENT OR
ADJUSTED EARNINGS, NO SHARES WILL BE DISTRIBUTED IF THE CORPORATION'S CUMULATIVE
PRE-TAX INCOME DURING THE MEASUREMENT PERIOD IS LESS THAN, OR EQUAL TO, $0.

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 operation of the Plan. The distribution
percentage of shares, if any, should be determined based on certification of
AMR's ROI by AMR's independent auditors. A summary of awards under the Plan
shall be provided to the Board of Directors at the first regular meeting
following determination of the awards. The Committee may determine to pay a cash
equivalent in lieu of the stock award.

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 an award 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 the
Corporation, whether similar or dissimilar, (each a "Force Majeure Event"),
which Force Majeure Event affects the Corporation or its


                                       6
<PAGE>   7

subsidiaries or its Affiliates, the Committee, at its sole discretion, may (i)
terminate or (ii) suspend, delay, defer (for such period of time as the Board
may deem necessary), or substitute any awards due currently or in the future
under the Plan, including, but not limited to, any awards 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, 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 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 is terminated.

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


                                                                               7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.60
<SEQUENCE>9
<FILENAME>d84957ex10-60.txt
<DESCRIPTION>2001 EMPLOYEE PROFIT SHARING PLAN
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.60

                        2001 EMPLOYEE PROFIT SHARING PLAN


Purpose

The purpose of the 2001 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. In the event of the AMR acquisition of TWA, Adjusted Investment will be
reduced by the net of AMR goodwill generated by the transaction, plus assets
attributable to TWA, plus net losses attributable to TWA, less assumed
liabilities attributable to TWA.

"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. Subsidiaries of American Airlines, Inc. and AMR
created for the TWA acquisition and transition will be excluded from the
definition of American.

"Average Adjusted Investment" is defined as the sum of Adjusted Investment as of
12/31/00, 3/31/01, 6/30/01, and 9/30/01, 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.


<PAGE>   2

"Committee" is defined as the AMR Incentive Compensation Committee.

"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 3/31/01, 6/30/01, and 9/30/01 are computed by determining the
difference between the Present Value of Operating Leases as of 12/31/01 and
12/31/00 and allocating that difference evenly over the four quarters of 2001.

"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 pay through December 31 of 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 such as IdeAAs in Action
payments, 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:

o    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
<PAGE>   3


o    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.

o    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 2001 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
<PAGE>   4



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 Chairman 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 independent auditors. 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 2001 are available. Individuals, except
retirees, may elect to defer their awards into the 401(k) plan, where
applicable, established by American.

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
<PAGE>   5

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 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.


                                       5
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.66
<SEQUENCE>10
<FILENAME>d84957ex10-66.txt
<DESCRIPTION>2001 INCENTIVE COMPENSATION PLAN
<TEXT>

<PAGE>   1

                                                                   EXHIBIT 10.66

                        2001 INCENTIVE COMPENSATION PLAN
                         FOR OFFICERS AND KEY EMPLOYEES

Purpose

The purpose of the 2001 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. Subsidiaries of American Airlines, Inc. and AMR
created for the TWA acquisition and transition will be excluded from the
definition of American.

"Committee" is defined as the Compensation/Nominating Committee of the AMR Board
of Directors.

"Competitors" is defined as Continental Airlines, Delta Airlines, Northwest
Airlines, United Airlines and US Airways.

"DOT Rank" is defined as American's relative rank with respect to its
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, 2000 through November 30, 2001,
inclusive. To the extent that at any point during the year a carrier ceases to
participate, they will be excluded from the entire year.


<PAGE>   2

"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.

"Leadership Score" is defined as American's average score on the overall
leadership dimension of the 360(degrees) multi-rater survey reported for level
5's and above annually.

"Measure" is defined as Net Income, DOT Rank, Survey America Rank, Engagement
Score, or the Leadership 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 weighted representative sample of the largest
U.S. industrial (Fortune 500) and service sector corporations.

"Net Income" is AMR net income including any accounting adjustments or
extraordinary or unusual items which may be added or deducted by the Committee.
Net Income of subsidiaries of American Airlines, Inc. and AMR created for the
TWA acquisition and transition will be excluded from the calculation of Net
Income.

"Qualified Earnings" is defined as base pay as of December 31 of the Plan year,
holiday pay, sick pay, and vacation pay, and 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 such as IdeAAs in Action payments, 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 its Competitors for the
period October 1, 2000 through September 30, 2001, inclusive. To the extent that
at any point during the year a carrier ceases to participate, they 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.


                                       2
<PAGE>   3



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 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 Measures: financial, employee and customer. The
employee and customer measures have various components (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:

<TABLE>
<CAPTION>
         Component         Threshold         Target    Maximum
         ---------         ---------         ------    -------
<S>                        <C>              <C>      <C>
         Financial            16.50%           66%      132%
         Employee              8.50%           17%       34%
         Customer             12.75%           17%       34%

                  Total       37.75%          100%      200%
</TABLE>


                                       3
<PAGE>   4

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 $155
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:

<TABLE>
<CAPTION>
          Net Income                    % of Target Awards Earned
          ----------                    -------------------------
<S>                                    <C>
            $155                                 16.50%
            $270                                 33.00%
            $385                                 49.50%
            $500                                 66.00%
            $650                                 99.00%
            $800                                132.00%(Max)
</TABLE>


Employee Measures:

The employee measures will depend on Engagement Scores and Leadership Score.

<TABLE>
<CAPTION>
                                                   Threshold   Target   Maximum
                                                   ---------   ------   -------
<S>                                                <C>        <C>      <C>
                  Engagement Score                    3.5%       7%       14%
                  Engagement versus National Norm     2.5%       5%       10%
                  Leadership Score                    2.5%       5%       10%
                                                     ----       --       ---
                                    Total             8.5%      17%       34%
</TABLE>

At a threshold Engagement Score of 69%, the Fund will accumulate 3.5% of
Aggregate Target Awards. Higher scores will result in higher percentages of
Aggregate Target Awards, as follows:

<TABLE>
<CAPTION>
                  Engagement Score          % of Target Awards Earned
                  ----------------          -------------------------
<S>                                         <C>
                        69%                         3.50%
                        70%                         4.38%
                        71%                         5.25%
                        72%                         7.00%
                        73%                        10.50%
                        74%                        14.00%(Max)
</TABLE>

At a threshold Engagement Score of 9% below National Norm, the Fund will
accumulate 2.5% of Aggregate Target Awards. Higher scores will result in higher
percentages of Aggregate Target Awards, as follows:


                                       4
<PAGE>   5

<TABLE>
<CAPTION>
                  Percent below National Norm        % of Target Awards Earned
                  ---------------------------        -------------------------
<S>                                                 <C>
                            9%                                 2.50%
                            8%                                 3.75%
                            7%                                 5.00%
                            6%                                 7.50%
                            5%                                10.00%(Max)
</TABLE>

At a threshold Leadership Score of 4.25, the Fund will accumulate 2.5% of
Aggregate Target Awards. Higher scores will result in higher percentages of
Aggregate Target Awards, as follows:

<TABLE>
<CAPTION>
                  Leadership Score                   % of Target Awards Earned
                  ----------------                   -------------------------
<S>                                                 <C>
                        4.25                                  2.50%
                        4.28                                  3.75%
                        4.31                                  5.00%
                        4.34                                  7.50%
                        4.37                                 10.00%(Max)
</TABLE>

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:

<TABLE>
<CAPTION>
               Rank                               % of Target Awards Earned
              -------                             -------------------------
<S>                                               <C>
               Fourth                                      2.55%
               Third                                       3.40%
               Second                                      5.10%
               First                                       6.80%(Max)
</TABLE>



                                       5
<PAGE>   6



The following scorecard illustrates this.

                          2001 INCENTIVE PLAN SCORECARD
<TABLE>
<CAPTION>
                                                   THRESHOLD                        TARGET              MAXIMUM    EXAMPLE
MEASURES                                   WEIGHT     25%        50%        75%      100%      150%       200%     SCORE(1)
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>      <C>        <C>        <C>       <C>       <C>       <C>       <C>
SHAREHOLDER
- - AMR net income                            66%      $155M      $270M      $385M     $500M     $650M     $800M     66.00%


                                                              Threshold             Target              Maximum    Example
                                           Weight     25%        50%        75%      100%      150%       200%      Score
- ----------------------------------------------------------------------------------------------------------------------------
EMPLOYEE
- - engagement score on opinion survey         7%       n/a        69%        71%       72%       73%       74%       3.50%
- - AA engagement vs. national norm            5%       n/a      9% below  8% below  7% below  6% below   5% below    3.75%
- - leadership  score on 360(degrees)
  multi-rater survey                         5%       n/a        4.25      4.28      4.31      4.34       4.37      2.50%
                                            --                                                                      ----
                                            17%                                                                     9.75%

                                                                         Threshold  Target              Maximum    Example
                                           Weight     25%        50%        75%      100%      150%       200%      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                                                                                              92.75%
</TABLE>

(1) Based on performance results in shaded areas


Allocation of Individual Awards

The Chairman and CEO of American, in consultation with the Vice-Chairman,
executive and senior vice presidents of American, will determine awards for
non-officer eligible employees based upon the eligible employee's performance.
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 (excluding Net Income), such
partial payment will be paid from the general



                                       6
<PAGE>   7

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 Target Net Income) 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. 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 2001 American
Airlines Employee Profit Sharing Plan and the 2001 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.

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 2001 are available. Individuals, except retirees, may
elect to defer their awards into a 401(k) plan, where applicable, established by
American or AMR or into a deferred compensation program, if any, administered by
American or AMR.

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.

                                       7
<PAGE>   8

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.


                                       8
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.74
<SEQUENCE>11
<FILENAME>d84957ex10-74.txt
<DESCRIPTION>AMEND/RESTATED TERMINATION AGREEMENT
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.74

                              AMENDED AND RESTATED
                    EXECUTIVE TERMINATION BENEFITS AGREEMENT


         THIS AMENDED AND RESTATED EXECUTIVE TERMINATION BENEFITS AGREEMENT
(this "Agreement"), dated as of the 15th day of November, 2000 is among AMR
CORPORATION, a Delaware corporation, AMERICAN AIRLINES, INC., a Delaware
corporation (collectively the "Company"), and MONTE E. FORD (the "Executive").

                                  WITNESSETH:

         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;


<PAGE>   2


         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

                                       2
<PAGE>   3


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

                                       3
<PAGE>   4

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;


                                       4
<PAGE>   5


                           (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


                                       5
<PAGE>   6

                  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

                                       6
<PAGE>   7

                  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

                                       7
<PAGE>   8

                  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


                                       8
<PAGE>   9

                  "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

                                       9
<PAGE>   10

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.




                                       10
<PAGE>   11


                  (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


                                       11
<PAGE>   12

"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.

                  (e) Executive Outplacement Counseling


                                       12
<PAGE>   13

                  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

                                       13
<PAGE>   14

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.


                                       14
<PAGE>   15

                  (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


                                       15
<PAGE>   16

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


                                       16
<PAGE>   17

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


                                       17
<PAGE>   18

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

                                       18
<PAGE>   19

                  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


                                       19
<PAGE>   20

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

                                       20
<PAGE>   21

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.


                                       21
<PAGE>   22


         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

                                       22
<PAGE>   23

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.


                                       23
<PAGE>   24


         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


                                       24
<PAGE>   25

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.


                                       25
<PAGE>   26


         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

                                       26
<PAGE>   27

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

                                       27
<PAGE>   28

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.


                                       28
<PAGE>   29


         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
                                                --------------------------


                                            EXECUTIVE



                                            /s/ Monte E. Ford
                                            ------------------------------


                                       29
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.81
<SEQUENCE>12
<FILENAME>d84957ex10-81.txt
<DESCRIPTION>AMEND/RESTATED EXECUTIVE TERMINATION AGREEMENT
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.81

                              AMENDED AND RESTATED
                    EXECUTIVE TERMINATION BENEFITS AGREEMENT


         THIS AMENDED AND RESTATED EXECUTIVE TERMINATION BENEFITS AGREEMENT
(this "Agreement"), dated as of the 22nd day of September, 2000 is among AMR
CORPORATION, a Delaware corporation, AMERICAN AIRLINES, INC., a Delaware
corporation (collectively the "Company"), and SUSAN M. OLIVER (the "Executive").

                                  WITNESSETH:

         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;


<PAGE>   2


         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


                                       2
<PAGE>   3

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

                                       3
<PAGE>   4

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;




                                       4
<PAGE>   5

                           (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


                                       5
<PAGE>   6

                  the scope or value thereof, any of which is not remedied by
                  the Company within 10 calendar days after receipt by the
                  Company of written notice from the Executive of such change,
                  reduction or termination, as the case may be;

                           (iii) A determination by the Executive (which
                  determination will be conclusive and binding upon the parties
                  hereto provided it has been made in good faith and in all
                  events will be presumed to have been made in good faith unless
                  otherwise shown by the Company by clear and convincing
                  evidence) that a change in circumstances has occurred
                  following a Change in Control, including, without limitation,
                  a change in the scope of the business or other activities for
                  which the Executive was responsible immediately prior to the
                  Change in Control, which has rendered the Executive
                  substantially unable to carry out, has substantially hindered
                  Executive's performance of, or has caused the Executive to
                  suffer a substantial reduction in, any of the authorities,
                  powers, functions, responsibilities or duties attached to the
                  position held by the Executive immediately prior to the Change
                  in Control, which situation is not remedied within 10 calendar
                  days after written notice to the Company from the Executive of
                  such determination;

                           (iv) The liquidation, dissolution, merger,
                  consolidation or reorganization of the Company or transfer of
                  all or substantially all of its business and/or assets, unless
                  the successor or successors (by liquidation, merger,
                  consolidation, reorganization, transfer or otherwise) to which
                  all or substantially all of its business and/or assets have
                  been transferred (directly or by operation of


                                       6
<PAGE>   7

                  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

                                       7
<PAGE>   8

                  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


                                       8
<PAGE>   9

                  "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


                                       9
<PAGE>   10

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.


                                       10
<PAGE>   11

                  (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


                                       11
<PAGE>   12

"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.

                  (e) Executive Outplacement Counseling


                                       12
<PAGE>   13


                  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


                                       13
<PAGE>   14

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.


                                       14
<PAGE>   15

                  (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


                                       15
<PAGE>   16

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


                                       16
<PAGE>   17

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

                                       17
<PAGE>   18

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


                                       18
<PAGE>   19

                  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


                                       19
<PAGE>   20


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


                                       20
<PAGE>   21


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.


                                       21
<PAGE>   22

         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

                                       22
<PAGE>   23


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.


                                       23
<PAGE>   24

         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


                                       24
<PAGE>   25

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.


                                       25
<PAGE>   26

         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

                                       26
<PAGE>   27

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


                                       27
<PAGE>   28

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.


                                       28
<PAGE>   29


         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/ Thomas J. Kiernan
                                            ------------------------


                                        SUSAN M. OLIVER



                                        /s/ Susan M. Oliver
                                        ----------------------------


                                       29
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.88
<SEQUENCE>13
<FILENAME>d84957ex10-88.txt
<DESCRIPTION>ASSET PURCHASE AGREEMENT DATED FEBRUARY 28, 2001
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.88


                  AMENDED AND RESTATED ASSET PURCHASE AGREEMENT


                                     between

                            AMERICAN AIRLINES, INC.,
                                  as Purchaser,



                                       and

                           TRANS WORLD AIRLINES, INC.,
                                    as Seller

                                February 28, 2001


<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      Page
                                                                                                      ----
<S>               <C>                                                                                 <C>
ARTICLE I                DEFINITIONS....................................................................1

         1.1      Definitions...........................................................................1

         1.2      Disclosure Schedules..................................................................1

ARTICLE II               PURCHASE OF ASSETS.............................................................2

         2.1      Purchase and Sale of Transferred Assets...............................................2

         2.2      Excluded Assets.......................................................................2

ARTICLE III              ASSUMPTION OF LIABILITIES......................................................2

         3.1      Assumed Liabilities...................................................................2

         3.2      Retained Liabilities..................................................................3

ARTICLE IV               PURCHASE PRICE.................................................................5

         4.1      Purchase Price........................................................................5

         4.2      Allocation of Purchase Price..........................................................5

         4.3      Working Capital Adjustment............................................................5

         4.4      Other Adjustments to Purchase Price...................................................8

         4.5      Prorations............................................................................9

         4.6      Transfer Taxes........................................................................9

         4.7      Offsets to Purchase Price............................................................10

         4.8      Holdbacks to Purchase Price..........................................................10

ARTICLE V                CLOSING.......................................................................10

         5.1      Closing..............................................................................10

         5.2      Deliveries at Closing................................................................10

         5.3      Delivery of Transferred Assets.......................................................11

         5.4      Conditions Precedent to Obligations of Purchaser.....................................12

         5.5      Conditions Precedent to Obligations of TWA...........................................15

ARTICLE VI               REPRESENTATIONS AND WARRANTIES OF SELLERS.....................................16

         6.1      Organization and Good Standing.......................................................16

         6.2      Authorization and Effect of Agreement................................................16

         6.3      No Conflicts.........................................................................17

         6.4      No Third Party Options...............................................................17
</TABLE>


                                       i
<PAGE>   3


                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      Page
                                                                                                      ----
<S>               <C>                                                                                 <C>
         6.5      Data.................................................................................18

         6.6      Consents and Approvals...............................................................18

         6.7      Permits; Compliance with Law.........................................................18

         6.8      Litigation...........................................................................18

         6.9      Title to and Condition of Assets.....................................................18

         6.10     U.S. Citizen; Air Carrier............................................................19

         6.11     Assumed Contracts....................................................................19

         6.12     Aircraft; Engines and Spare Parts....................................................19

         6.13     Slots................................................................................21

         6.14     No Casualty..........................................................................22

         6.15     Insurance............................................................................22

         6.16     Gates; Gate Property and Ground Equipment............................................22

         6.17     Environmental Matters................................................................23

         6.18     Taxes................................................................................25

         6.19     Labor Matters........................................................................26

         6.20     Employee Matters.....................................................................27

         6.21     Routes...............................................................................28

         6.22     Intellectual Property................................................................28

         6.23     Worldspan............................................................................29

         6.24     Real Property........................................................................29

         6.25     Disclosure...........................................................................31

ARTICLE VII              REPRESENTATIONS AND WARRANTIES OF PURCHASER...................................31

         7.1      Corporate Organization...............................................................31

         7.2      Authorization and Effect of Agreement................................................31

         7.3      No Conflicts.........................................................................31

         7.4      Litigation...........................................................................32

ARTICLE VIII             PRE-CLOSING COVENANTS.........................................................32

         8.1      Access...............................................................................32

         8.2      Conduct of Business..................................................................33

         8.3      Notification.........................................................................34
</TABLE>


                                       ii
<PAGE>   4

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      Page
                                                                                                      ----
<S>               <C>                                                                                 <C>
         8.4      No Inconsistent Action...............................................................35

         8.5      Satisfaction of Conditions...........................................................35

         8.6      Filings..............................................................................35

         8.7      All Reasonable Efforts...............................................................35

         8.8      Further Assurances...................................................................36

         8.9      Publicity............................................................................36

         8.10     [Intentionally Omitted]..............................................................36

         8.11     Bankruptcy Court Approval............................................................36

         8.12     Specific Enforcement of Covenants....................................................39

         8.13     Other Agreements.....................................................................40

         8.14     [Intentionally Omitted]..............................................................40

         8.15     Aircraft Inspection Rights...........................................................40

         8.16     Designations.........................................................................40

         8.17     Marketing Agreements.................................................................41

ARTICLE IX               POST-CLOSING COVENANTS........................................................41

         9.1      Maintenance of Books and Records.....................................................41

         9.2      Right of Subrogation.................................................................41

         9.3      Confidentiality......................................................................41

         9.4      Post-Closing Assignments.............................................................42

         9.5      Transition Agreements................................................................43

         9.6      Property Tax Payments................................................................43

         9.7      Frequent Flyer Programs..............................................................43

         9.8      Access to Information................................................................44

ARTICLE X                EMPLOYEE MATTERS..............................................................44

         10.1     Hiring Obligations...................................................................44

         10.2     Union Matters........................................................................45

         10.3     Treatment of Pension Plans...........................................................45

         10.4     Treatment of Welfare Plans...........................................................45

         10.5     Tax Reporting........................................................................46

ARTICLE XI               RISK OF LOSS..................................................................46
</TABLE>


                                      iii
<PAGE>   5

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      Page
                                                                                                      ----
<S>               <C>                                                                                 <C>
         11.1     Risk of Loss on Sellers..............................................................46

ARTICLE XII              FURTHER AGREEMENTS AND TERMINATION............................................46

         12.1     Termination Payment..................................................................46

         12.2     Bankruptcy Termination Payment.......................................................47

         12.3     Termination..........................................................................47

         12.4     Procedure and Effect of Termination..................................................49

ARTICLE XIII             MISCELLANEOUS PROVISIONS......................................................49

         13.1     Notices..............................................................................49

         13.2     Actions by Sellers...................................................................51

         13.3     Expenses.............................................................................51

         13.4     Successors and Assigns...............................................................51

         13.5     Waiver...............................................................................51

         13.6     Entire Agreement; Disclosure Schedules...............................................51

         13.7     Amendments, Supplements, Etc.........................................................52

         13.8     Rights of the Parties................................................................52

         13.9     Applicable Law.......................................................................52

         13.10    Execution in Counterparts............................................................52

         13.11    Titles and Headings..................................................................52

         13.12    Invalid Provisions...................................................................52

         13.13    Transfers............................................................................52

         13.14    Brokers..............................................................................52

         13.15    Exculpation..........................................................................53

         13.16    Principles of Interpretation.........................................................53
</TABLE>

Exhibits

Exhibit A - Definitions
Exhibit B - Sale Procedures Order
Exhibit C - Approval Order
Exhibit D - Retention Agreements



                                       iv
<PAGE>   6
                                                                   EXHIBIT 10.88



                              AMENDED AND RESTATED
                            ASSET PURCHASE AGREEMENT

         This Amended and Restated Asset Purchase Agreement (this "Agreement")
is made and entered into as of February 28, 2001, by and between American
Airlines, Inc., a Delaware corporation ("Purchaser"), and Trans World Airlines,
Inc., a Delaware corporation and debtor-in-possession under Chapter 11 Case No.
01-56 (SLR), jointly administrated, in the United States Bankruptcy Court for
the District of Delaware ("TWA").

                                    RECITALS

         WHEREAS, TWA and its direct and indirect subsidiaries (other than Royal
Ambassador Insurance Company, a Vermont insurance company, and Trans World PARS,
Inc., a Delaware corporation) are referred to herein collectively as "Sellers,"
and each is referred to herein individually as a "Seller";


         WHEREAS, Purchaser and TWA are parties to that certain Asset Purchase
Agreement, dated as of January 9, 2001 (the "Original Agreement");

         WHEREAS, Section 13.7 of the Original Agreement provides that the
Original Agreement may be amended or supplemented at any time as may mutually be
determined by Purchaser and TWA to be necessary, desirable or expedient to
further the purposes of the Original Agreement or to clarify the intention of
the parties thereto; and

         WHEREAS, each of Purchaser and TWA has determined that it is desirable
to amend the Original Agreement as set forth in this Agreement.

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Purchaser and TWA hereby agree that the Original Agreement be
amended and restated in its entirety as follows:

                                   ARTICLE I

                                   DEFINITIONS

         1.1 Definitions. As used in this Agreement, unless the context
otherwise requires, capitalized terms used in this Agreement shall have the
meanings set forth in Exhibit A hereto.

         1.2 Disclosure Schedules. References to "Schedules" shall mean the
Schedule of Exceptions (and any schedules, exhibits or attachments thereto)
delivered by Purchaser or TWA that are specifically made part of this Agreement.

<PAGE>   7


                                   ARTICLE II

                               PURCHASE OF ASSETS

         2.1 Purchase and Sale of Transferred Assets. On the terms and subject
to the conditions set forth herein, at the Closing as described in Article V,
TWA shall, and shall cause each other Seller to, sell, transfer, convey, assign
and deliver, and Purchaser shall purchase and accept, all of each such Seller's
right, title and interest in and to all such Seller's rights, properties and
assets, wherever located, including, without limitation, (i) all personal and
real property, (ii) all general intangibles and intangible property, including
without limitation all Intellectual Property and goodwill, (iii) all equipment,
furniture and fixtures, (iv) all accounts, accounts receivable and rights to
payment, (v) claims and interests in litigation listed on Schedule 2.1(v) (which
shall exclude all Avoidance Actions), (vi) all existing and future instruments,
chattel paper, documents of title, contracts, agreements, licenses, grants and
rights, (vii) all securities, whether certificated or uncertificated, including,
without limitation, either the capital stock of TWA Stock Holding, Inc. or the
interests in Worldspan L.P., a Delaware limited partnership ("Worldspan") (at
Purchaser's option; provided that Purchaser is the successful bidder of both the
Transferred Assets and the Worldspan interest), but excluding the capital stock
of any Seller other than TWA Stock Holding, Inc., (viii) all security
entitlements, securities accounts, commodity contracts and commodity accounts,
(ix) any and all existing and assignable manufacturer or vendor warranties,
service life policies, customer support agreements and similar items (or to the
extent such items are not assignable, subrogation rights to such items), (x) all
proceeds and products of the foregoing, and (xi) all books and records relating
to the foregoing, in each case of clauses (i) through (xi) above, together with
all substitutions therefor and all accessions, replacements and renewals thereof
(collectively, the "Transferred Assets"), free and clear of all Liens except
Permitted Liens.

         2.2 Excluded Assets. Notwithstanding anything contained in this
Agreement to the contrary, the rights, properties and assets identified on
Schedule 2.2 hereto (collectively, the "Excluded Assets") shall not be included
in the Transferred Assets.

                                  ARTICLE III

                            ASSUMPTION OF LIABILITIES

         3.1 Assumed Liabilities. As of the Closing, Purchaser shall assume and
thereafter in due course pay and fully satisfy the following liabilities and
obligations of Seller (the "Assumed Liabilities") and no other liabilities or
obligations:

                  (a) all liabilities and obligations of any Seller arising from
and after the Closing pursuant to the terms of the indebtedness of Sellers
listed on Schedule 3.1(a) (the "Assumed Debt Obligations");


                                       2
<PAGE>   8

                  (b) all liabilities and obligations of any Seller arising from
and after the Closing under any Assumed Contract (other than Retention
Agreements, which are addressed in Section 3.1(d) below);

                  (c) all liabilities and obligations of any Seller arising at
any time under the indebtedness and other liabilities of Sellers listed on
Schedule 3.1(c);

                  (d) all liabilities and obligations of any Seller under the
Retention Agreements; provided, however, that, notwithstanding the foregoing or
any other provision in this Agreement to the contrary, Purchaser shall not
assume any obligation under the Retention Agreements in excess of $14,000,000 in
the aggregate unless Purchaser has requested in writing to TWA that it wishes to
expand such Retention Agreements in scope and amount;

                  (e) in order to retain directors of TWA, the liabilities and
obligations of TWA to provide the air travel benefits described on Schedule
3.1(e) from and after the Closing;

                  (f) liabilities and obligations of TWA incurred as a result of
a violation by Purchaser of Section 8.16;

                  (g) liabilities and obligations of TWA to honor vouchers
issued by TWA solely to passengers who were denied boarding or who voluntarily
relinquished seats on scheduled flights due to overbooking; and

                  (h) liabilities and obligations of any Seller arising directly
out of those proceedings set forth on Schedule 2.1(v).

Except as set forth above, Purchaser shall not assume or be liable for any other
obligations or liabilities of Sellers (including, without limitation, any cure
amounts payable to other parties to the Assumed Contracts).

         3.2 Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Purchaser does not assume or agree to pay, satisfy,
discharge or perform, and shall not be deemed by virtue of the execution and
delivery of this Agreement or any document delivered at the Closing pursuant to
this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed to pay,
satisfy, discharge or perform, any liability, obligation or indebtedness of any
Seller, whether primary or secondary, direct or indirect, other than the Assumed
Liabilities. Sellers shall retain and pay, satisfy, discharge and perform in
accordance with the terms thereof, all liabilities and obligations other than
the Assumed Liabilities to the extent specifically provided in Section 3.1,
including without limitation those set forth below (all such liabilities and
obligations retained by Seller being referred to herein as the "Retained
Liabilities"):

                  (a) all obligations or liabilities of Sellers or any
predecessor(s) or Affiliate(s) of Sellers that relate to any of the Excluded
Assets;

                                       3
<PAGE>   9


                  (b) all obligations or liabilities of Sellers or any
predecessor(s) or Affiliate(s) of Sellers relating to Taxes with respect to the
Transferred Assets or otherwise, for all periods, or portions thereof, on or
prior to the Closing Date;

                  (c) all obligations or liabilities for any legal, accounting,
investment banking, brokerage or similar fees or expenses incurred by any Seller
in connection with, resulting from or attributable to the transactions
contemplated by this Agreement and the DIP Facility;

                  (d) liabilities and obligations for which Purchaser assumes no
obligation or liability as described in Section 3.1(d);

                  (e) all obligations or liabilities for any borrowed money
incurred by any Seller or any predecessor(s) or Affiliate(s) of Sellers;

                  (f) all obligations of Sellers related to the right to or
issuance of any capital stock or other equity interest of any Seller, including,
without limitation, any stock options or warrants;

                  (g) all obligations or liabilities of Sellers to the FAA for
any fines and penalties;

                  (h) all obligations or liabilities of Sellers to provide air
travel or related services pursuant to any flight travel privileges, awards or
certificates or any similar agreements, arrangements or understandings (whether
written or oral), other than as expressly set forth in Section 3.1(g); and

                  (i) all liabilities and obligations of Sellers or any
predecessor(s) or Affiliate(s) of Sellers resulting from, caused by or arising
out of, directly or indirectly, the conduct of their respective businesses or
ownership or lease of any of their properties or assets or any properties or
assets previously used by any Seller at any time prior to or on the Closing
Date, including without limitation such of the foregoing (i) as constitute, may
constitute or are alleged to constitute a tort, breach of contract or violation
of requirement of any Law, (ii) that relate to, result in or arise out of the
existence or imposition of any liability or obligation to remediate or
contribute or otherwise pay any amount under or in respect of any environmental,
superfund or other environmental cleanup or remedial Laws, occupational safety
and health Laws or other Laws or (iii) that relate to any and all claims,
disputes, demands, actions, liabilities, damages, suits in equity,
administrative proceedings, accounts, costs, expenses, setoffs, contributions,
attorneys' fees and/or causes of action of whatever kind or character against
any Seller or any predecessor(s) or Affiliate(s) of Sellers, whether past,
present, future, known or unknown, liquidated or unliquidated, accrued or
unaccrued.


                                       4
<PAGE>   10

                                   ARTICLE IV

                                 PURCHASE PRICE

         4.1 Purchase Price. In consideration of the conveyance to Purchaser of
each Seller's right, title and interest in and to the Transferred Assets and the
other rights granted to Purchaser pursuant hereto, and subject to the conditions
and in accordance with terms hereof, at Closing, Purchaser shall (i) assume the
Assumed Liabilities and (ii) pay TWA an aggregate of $500,000,000 in cash,
subject to adjustments as provided in Section 4.3 and Section 4.4 (clauses (i)
and (ii), together in the aggregate, are referred to as the "Purchase Price"),
any offsets to the Purchase Price pursuant to Section 4.7 and any holdbacks of
the Purchase Price pursuant to Section 4.8.

         4.2 Allocation of Purchase Price. Purchaser shall, within 120 days
after the Closing Date, prepare and deliver to TWA for its consent (which
consent shall not be unreasonably withheld) a schedule allocating the Purchase
Price among the Transferred Assets in accordance with Treasury Regulation
1.1060-1T (or any comparable provisions of state or local tax law) or any
successor provision. If TWA raises objections, Purchaser and TWA will negotiate
in good faith to resolve such objections. Purchaser, TWA and each other Seller
shall report and file all Tax Returns (including amended Tax Returns and claims
for refund) consistent with the allocation, and shall take no position contrary
thereto or inconsistent therewith (including, without limitation, in any audits
or examinations by any taxing authority or any other proceedings). Purchaser,
TWA and each other Seller shall cooperate in the filing of any forms (including
Form 8594) with respect to such allocation, including any amendments to such
forms required with respect to any adjustment to the Purchase Price, pursuant to
this Agreement. If and to the extent the parties are unable to agree on such
allocation, each shall be free to make its own allocation for tax purposes.
Notwithstanding any other provisions of this Agreement, the foregoing agreement
shall survive the Closing Date without limitation.

         4.3 Working Capital Adjustment.

                  (a) Prior to Closing, Purchaser shall prepare and deliver to
TWA in accordance with Section 13.1 an estimated statement of certain working
capital accounts of TWA as of the Closing Date in the format of Schedule 4.3(a)
hereto (the "Pre-Closing Statement"). The Pre-Closing Statement shall be
prepared by Purchaser in good faith on a basis consistent in all material
respects with the methods, principles, practices and policies employed in the
preparation and presentation of the consolidated balance sheet of TWA and its
subsidiaries as of September 30, 2000 as included in TWA's quarterly report on
Form 10-Q for the quarter ended September 30, 2000, as filed with the Securities
and Exchange Commission (the "September Balance Sheet"), and in accordance with
generally accepted accounting principles consistently applied (without regard to
consummation of the transactions contemplated by this Agreement or the Chapter
11 Cases).

                  (b) Based on the Pre-Closing Statement, the Purchase Price
shall be adjusted immediately prior to Closing as follows:


                                       5
<PAGE>   11

                           (i) the Purchase Price shall be (A) increased by 100%
         of the amount, if any, by which the Accounts Receivable Amount is
         greater than $245,732,000 or (B) decreased by 100% of the amount, if
         any, by which the Accounts Receivable Amount is less than $245,732,000;

                           (ii) the Purchase Price shall be (A) increased by 50%
         of the amount, if any, by which the Spare Parts Amount is greater than
         $106,333,000 or (B) decreased by 50% of the amount, if any, by which
         the Spare Parts Amount is less than $106,333,000;

                           (iii) the Purchase Price shall be (A) increased by
         100% of the amount, if any, by which the Advance Ticket Sales Amount is
         less than $304,647,000 or (B) decreased by 100% of the amount, if any,
         by which the Advance Ticket Sales Amount is greater than $304,647,000;
         and

                           (iv) the Purchase Price shall be (A) increased by
         100% of the amount, if any, by which the Accrued Employee Expenses
         Amount is less than $145,206,000 or (B) decreased by 100% of the
         amount, if any, by which the Accrued Employee Expenses Amount is
         greater than $145,206,000.

                  (c) Within 45 Business Days after Closing, Purchaser shall
prepare and deliver to TWA in accordance with Section 13.1 a statement of
certain working capital accounts of TWA as of the Closing Date in the format of
Schedule 4.3(a) hereto (the "Closing Statement"). The Closing Statement shall be
prepared by Purchaser in good faith on a basis consistent in all material
respects with the methods, principles, practices and policies employed in the
preparation and presentation of the September Balance Sheet, and in accordance
with generally accepted accounting principles consistently applied (without
regard to consummation of the transactions contemplated by this Agreement).

                  (d) After receipt of the Closing Statement, TWA shall have 10
Business Days to review it together with the work papers used in the preparation
thereof. Unless TWA delivers written notice to Purchaser on or prior to the 10th
Business Day after TWA's receipt of the Closing Statement stating that it has
objections thereto, TWA shall be deemed to have accepted and agreed to the
Closing Statement. TWA shall not object to any method, principle, practice or
policy employed in the preparation of the Closing Statement if such method,
principle, practice or policy is consistent in all material respects with that
employed in the preparation and presentation of the September Balance Sheet. If,
however, TWA notifies Purchaser of objections to the Closing Statement on or
prior to the 10th Business Day after TWA's receipt of the Closing Statement, the
parties shall in good faith attempt to resolve, within 10 Business Days (or such
longer period as the parties may agree in writing) following such notice (the
"Resolution Period"), their differences with respect to such objections and any
resolution by them as to any disputed amounts shall be final, binding and
conclusive.


                                       6
<PAGE>   12

                  (e) Amounts relating to any working capital account set forth
in the Closing Statement remaining in dispute at the conclusion of the
Resolution Period shall be promptly submitted to the Bankruptcy Court for
determination.

                  (f) Once the Closing Statement has been finalized in
accordance with this Section 4.3 (as so finalized, the "Final Closing
Statement"), the Purchase Price (without giving effect to the adjustment
provided by Section 4.3(b)) shall be adjusted as follows:

                           (i) the Purchase Price shall be (A) increased by 100%
         of the amount, if any, by which the Accounts Receivable Amount is
         greater than $245,732,000 or (B) decreased by 100% of the amount, if
         any, by which the Accounts Receivable Amount is less than $245,732,000;

                           (ii) the Purchase Price shall be (A) increased by 50%
         of the amount, if any, by which the Spare Parts Amount is greater than
         $106,333,000 or (B) decreased by 50% of the amount, if any, by which
         the Spare Parts Amount is less than $106,333,000;

                           (iii) the Purchase Price shall be (A) increased by
         100% of the amount, if any, by which the Advance Ticket Sales Amount is
         less than $304,647,000 or (B) decreased by 100% of the amount, if any,
         by which the Advance Ticket Sales Amount is greater than $304,647,000;
         and

                           (iv) the Purchase Price shall be (A) increased by
         100% of the amount, if any, by which the Accrued Employee Expenses
         Amount is less than $145,206,000 or (B) decreased by 100% of the
         amount, if any, by which the Accrued Employee Expenses Amount is
         greater than $145,206,000.

                  (g) If the Purchase Price as adjusted pursuant to Section
4.3(f) is less than the Purchase Price as adjusted pursuant to Section 4.3(b),
TWA shall promptly pay Purchaser an amount of cash equal to the difference
obtained by subtracting the Purchase Price as adjusted pursuant to Section
4.3(f) from the Purchase Price as adjusted pursuant to Section 4.3(b). If the
Purchase Price as adjusted pursuant to Section 4.3(f) is greater than the
Purchase Price as adjusted pursuant to Section 4.3(b), Purchaser shall promptly
pay TWA an amount of cash equal to the difference obtained by subtracting the
Purchase Price as adjusted pursuant to Section 4.3(b) from the Purchase Price as
adjusted pursuant to Section 4.3(f).

                  (h) During the preparation of the Pre-Closing Statement and
Closing Statement and the period of any review or dispute within the
contemplation of this Section 4.3, TWA shall, and shall cause the other Sellers
and all representatives of the Sellers (including, without limitation, TWA's
auditors) to, (i) provide Purchaser and its authorized representatives with full
access at all reasonable times, and in a manner so as not to interfere
unreasonably with the normal business operations of TWA and the other Sellers,
to all relevant books, records, work papers, information and employees of such
Persons, and (ii) cooperate fully with the Purchaser and its authorized
representatives, in


                                       7
<PAGE>   13

each case (i) and (ii), as necessary or useful for the preparation, calculation
and review of the Pre-Closing Statement and Closing Statement or for the
contemplated resolution of any dispute between the parties relating thereto.

                  (i) Notwithstanding anything in this Section 4.3 to the
contrary, no adjustment to the Purchase Price shall be made unless and until the
aggregate adjustment to the Purchase Price that would otherwise be required by
this Section 4.3 shall equal or exceed $5,000,000, in which case the full amount
of such adjustment shall be made to the Purchase Price pursuant to this Section
4.3 without regard to this paragraph (i).

         4.4 Other Adjustments to Purchase Price.

                  (a) In the event that, as a result of the operation of Section
11.1 or upon mutual agreement of the parties, any Transferred Asset that would
be otherwise purchased at the Closing is not purchased at the Closing (or in the
event that any tangible Transferred Asset has been damaged as described in
Section 11.1, but such damage has not been fully repaired), then the Purchase
Price shall be reduced by the portion of the Purchase Price allocable to such
Transferred Asset in a manner consistent with Schedule 4.4 (or, in the case of
such damaged asset, by the amount necessary to fully repair such damaged asset)
except as otherwise set forth in paragraphs (b), (c), (d) and (e) below.

                  (b) With respect to each Owned Aircraft, the portion of the
Purchase Price allocated to each such item (and accordingly, the Purchase Price
as a whole) shall be adjusted as follows:

                           (i) reduced by the amount such Owned Aircraft has
         depreciated, determined as set forth on Schedule 4.4, from the date of
         the Original Agreement until the date of delivery of such Owned
         Aircraft;

                           (ii) if any Owned Aircraft is not in Delivery
         Condition as of the Closing Date, reduced by an amount equal to the
         product obtained by multiplying the number of Owned Aircraft that are
         not in Delivery Condition as of the Closing Date by $50,000; and

                           (iii) for each Owned Aircraft that is not to be
         transferred to Purchaser at the Closing for any reason, reduced by an
         amount consistent with the allocations as set forth on Schedule 4.4.

                  (c) With respect to each Leased Aircraft, the portion of the
Purchase Price allocated to each such item (and accordingly, the Purchase Price
as a whole) shall be adjusted as follows:

                           (i) if any Leased Aircraft is not in Delivery
         Condition as of the Closing Date, reduced by an amount equal to the
         product obtained by multiplying the number of Leased Aircraft that are
         not in Delivery Condition as of the Closing Date by $50,000; and


                                       8
<PAGE>   14

                           (ii) for each Leased Aircraft that is not to be
         transferred to Purchaser at the Closing for any reason, reduced by an
         amount consistent with the allocations as set forth on Schedule 4.4.

                  (d) With respect to any Slot, Gate, Gate Lease, Ground
Equipment, Ground Equipment Lease, Gate Property, Gate Property Lease, Engine,
Spare Part or any other Transferred Asset that is not to be transferred to
Purchaser at the Closing for any reason, the portion of the Purchase Price
allocated to each such item (and accordingly, the Purchase Price as a whole)
shall be reduced by an amount consistent with the allocations as set forth on
Schedule 4.4 or as mutually agreed by the parties hereto if not specifically
included thereon.

                  (e) With respect to Aircraft Leases and Gate Leases listed on
Schedule 2.2, all fees, costs, penalties and expenses incurred by Seller as a
result of a breach by Purchaser of Section 8.16 shall be reimbursed by Purchaser
to Seller and the Purchase Price shall be increased by such amount.

                  (f) In accordance with the Sale Procedures Order, if Purchaser
is the prevailing bidder for Transferred Assets but not for the Worldspan
interest, the Purchase Price shall be reduced by $200,000,000.00.

         4.5 Prorations. TWA shall bear all personal property and ad valorem tax
liability with respect to the Transferred Assets if the lien or assessment date
arises prior to the Closing Date irrespective of the reporting and payment dates
of such taxes. All other property taxes, ad valorem taxes and similar recurring
taxes and fees on the Transferred Assets, and all lease payments or similar
recurring payments under lease agreements that are Assumed Contracts, shall be
pro rated between Purchaser and the applicable Seller as of 12:01 a.m. local
time on the Closing Date. All payments to be made by Purchaser or any Seller in
accordance with this Section 4.5 shall be made, to the extent then determinable,
at the Closing with such payments deposited into escrow until due, or, to the
extent not determinable as of the Closing, promptly following the determination
thereof, with such payments deposited into escrow until due. Purchaser shall
have the right of reasonable review and approval of TWA's property tax returns
and assessments and the right to contest any assessment for which Purchaser
bears any economic responsibility. TWA shall reasonably cooperate with Purchaser
to advance any contest.

         4.6 Transfer Taxes. Any sales, use, transfer, recording or similar
taxes due as a result of the transactions provided for herein shall be paid (i)
with respect to real property, pro rata by Sellers and Purchaser based on the
relative value of real property transferred to Purchaser pursuant to this
Agreement and (ii) with respect to personal property, by Sellers.
Notwithstanding the foregoing, the Approval Order shall contain a provision that
the Sellers' sale, transfer, assignment and conveyance of the Transferred Assets
to Purchaser hereunder shall be entitled to the protections afforded under
Section 1146(c) of the Bankruptcy Code. The parties will reasonably cooperate to
minimize any such taxes, including with respect to delivery location.


                                       9
<PAGE>   15

         4.7 Offsets to Purchase Price. The Purchase Price payable by Purchaser
to Sellers at the Closing shall be offset by crediting Purchaser with the
following amounts (collectively, the "Purchase Price Offset Amount"):

                  (a) total aggregate principal, interest, fees and other
amounts outstanding and payable to Purchaser under the DIP Facility as of the
Closing Date;

                  (b) TWA's payment obligation to Purchaser under Section 8.6;
and

                  (c) all other amounts owed by Sellers to Purchaser under this
Agreement that are unpaid and outstanding as of the Closing Date.

         4.8 Holdbacks to Purchase Price. The amount of any personal property,
excise, ad valorem, sales, use, transfer, recording or similar tax liability, or
any other taxes required to be withheld by any taxing jurisdiction, relating to
a Transferred Asset that are (i) not dischargeable in the Chapter 11 Cases and
(ii) attributable to Sellers pursuant to Section 4.5 and Section 4.6 and unpaid
or not yet due and payable shall be estimated in good faith by Purchaser as of
the Closing Date and deducted from the Purchase Price payable by Purchaser to
Sellers at Closing and such amount shall be held by the Purchaser and used for
the sole purpose of discharging and releasing any liens on or claims to such
Transferred Assets with respect to such items pursuant to Section 9.6.

                                    ARTICLE V

                                     CLOSING

         5.1 Closing. The consummation of the purchase of each Seller's right,
title and interest in and to the Transferred Assets contemplated hereby (the
"Closing") shall take place at the offices of Weil, Gotshal & Manges LLP, 100
Crescent Court, Suite 1300, Dallas, Texas subject to the satisfaction or waiver
of the conditions set forth in Section 5.4 and Section 5.5, as soon as
practicable after the date hereof and in any event not later than the Scheduled
Closing Date, or at such other time and place and on such other date as
Purchaser and TWA shall agree (the "Closing Date").

         5.2 Deliveries at Closing. At the Closing:

                  (a) TWA shall deliver, or cause each Seller to deliver, as
applicable, to Purchaser the items described in clauses (i) through (vi) below,
to the extent applicable with respect to the Closing:

                           (i) a general bill of sale and assignment, in form
         and substance reasonably satisfactory to Purchaser (the "Bill of
         Sale"), with respect to the Transferred Assets to be conveyed by such
         Seller at the Closing and any other documents reasonably requested by
         Purchaser so as to convey to Purchaser good title, free and clear of
         all Liens (other than Permitted Liens), to all of each Seller's right,
         title and interest in and to the Transferred Assets to be conveyed at
         the


                                       10
<PAGE>   16

         Closing (other than Owned Aircraft and Engines), each executed by each
         applicable Seller;

                           (ii) instruments of conveyance or consents to
         assignment for the assignment of the Slots and Routes, in form and
         substance reasonably satisfactory to Purchaser, executed by each
         applicable Seller;

                           (iii) for each Owned Aircraft and Engine being
         conveyed at the Closing, a full warranty (as to title) and a FAA bill
         of sale, each in form and substance reasonably satisfactory to
         Purchaser, executed by each applicable Seller;

                           (iv) the warranty deeds, title insurance policies,
         surveys and tax withholding affidavits satisfying Section 1445(b)(2) of
         the Code, each in form and substance reasonably satisfactory to
         Purchaser, with respect to any Owned Real Estate transferred by any
         Seller;

                           (v) the officers' certificates referenced in Section
         5.4(c); and

                           (vi) all other documents, certificates, instruments
         or writings reasonably requested by Purchaser in connection herewith.

                  (b) Purchaser shall deliver to TWA, to the extent applicable
with respect to the Closing, the items described in clauses (i) through (iv)
below:

                           (i) the Purchase Price set forth on the Pre-Closing
         Statement (less the Purchase Price Offset Amount) by wire transfer of
         immediately available funds to the account or accounts designated by
         TWA no later than two Business Days prior to the Closing;

                           (ii) an assumption agreement pursuant to which
         Purchaser assumes at the Closing the Assumed Liabilities being assigned
         at the Closing, in form and substance reasonably satisfactory to TWA
         (the "Assumption Agreement"), executed by Purchaser;

                           (iii) the officer's certificate referenced in Section
         5.5(c); and

                           (iv) all other documents, certificates, instruments
         or writings reasonably requested by TWA in connection herewith.

         5.3 Delivery of Transferred Assets. At Closing, TWA shall, and shall
cause each other Seller to, place Purchaser in full possession and control of
the Transferred Assets being acquired at the Closing. Each Owned Aircraft and
Leased Aircraft shall be delivered to Purchaser in accordance with the
procedures specified in this Section 5.3 and with the risk of loss remaining
with the applicable Seller until delivery has been made; provided, that
Purchaser and Seller agree to use their reasonable best efforts to coordinate
such delivery in a mutually agreeable manner such to permit the avoidance, to
the


                                       11
<PAGE>   17

maximum extent possible, of any Taxes. On the Closing Date, the transfer of
aircraft from Sellers to Purchaser will require the following actions: (i) with
respect to each Leased Aircraft, the lease for which will be assumed by
Purchaser at the Closing, each such Leased Aircraft which is in scheduled
service will remain in scheduled service on the Closing Date and will not be
subject to any interruption in its planned schedule on the Closing Date, except
any Leased Aircraft which is assigned to scheduled service but which is
temporarily removed from service pending required maintenance will continue to
undergo required maintenance. Any Leased Aircraft which has been removed from
scheduled service due to scheduled maintenance will continue to undergo such
scheduled maintenance on the Closing Date; (ii) with respect to any Leased
Aircraft, the lease for which will not be assumed by Purchaser at the Closing,
and all Owned Aircraft listed on Schedule 2.2, (A) each of such aircraft which
is in scheduled service will be removed from scheduled service at Closing and
will be situated at a location deemed appropriate by TWA, or as applicable, the
lessor of such Leased Aircraft, (B) each of such aircraft assigned to scheduled
service but temporarily out of service due to corrective maintenance will be
immediately situated (or, if necessary, repaired to an airworthy condition and
parked thereafter) at a location deemed appropriate by TWA, or as applicable,
the lessor of such Leased Aircraft and (C) each of such aircraft removed from
scheduled service pending scheduled maintenance will be situated "as is" at a
location deemed most appropriate by TWA, or as applicable, the lessor of such
Leased Aircraft; and (iii) prior to the Closing, (A) Sellers will submit a
motion to establish the procedures for assuming and assigning Aircraft Leases
and (B) the Bankruptcy Court will enter an order establishing (1) which Aircraft
Leases will be rejected by the applicable Seller and (2) which Aircraft Leases
will be assumed by the applicable Seller and assigned to Purchaser.

         5.4 Conditions Precedent to Obligations of Purchaser. The obligations
of Purchaser under this Agreement to consummate the transactions contemplated
hereby to be consummated at the Closing shall be subject to the satisfaction, at
or prior to the Closing, of all of the following conditions, any one or more of
which may be waived in writing at the option of Purchaser:

                  (a) All representations and warranties of Sellers in this
Agreement or in any exhibit, schedule or document delivered pursuant hereto
shall be true and complete in all respects (with respect to representations and
warranties qualified or limited by materiality or Material Adverse Effect) or in
all material respects (with respect to representations and warranties not so
qualified or limited), in each case when made and on and as of the Closing Date
as if made on and as of that date (other than any such representations or
warranties that expressly speak only as of an earlier date); provided, that this
condition shall be deemed satisfied if any inaccuracies in any of such
representations and warranties at and as of the applicable date (without giving
effect to any materiality or Material Adverse Effect qualifications or
exceptions contained therein) would not, individually or in the aggregate, have
or reasonably be expected to have a Material Adverse Effect.


                                       12
<PAGE>   18

                  (b) All of the terms, covenants and conditions to be complied
with and performed by Sellers on or prior to the Closing Date shall have been
complied with or performed in all material respects.

                  (c) Purchaser shall have received a certificate or
certificates, dated as of the Closing Date, executed on behalf of Sellers, each
by an authorized executive officer thereof, certifying in such detail as
Purchaser may reasonably request that the conditions specified in Section 5.4(a)
and Section 5.4(b) hereof have been fulfilled.

                  (d) The waiting period under the HSR Act or any other
applicable competition, merger, control, antitrust Law or similar Law shall have
expired or terminated, and the FAA, DOT and any other Governmental Authorities
whose consent is required for consummation of the transactions contemplated
hereby (including without limitation the applicable regulatory body of the
European Union) shall have issued all approvals required for the transactions
contemplated hereby, and no condition or requirement unacceptable to Purchaser
in its sole discretion shall be imposed on or required of Purchaser or any of
its Affiliates as a result of or as a condition to any of the foregoing.

                  (e) All Consents described on Schedule 6.11 shall have been
obtained (without any limitation, restriction or condition not otherwise
applicable to the applicable Seller being imposed on Purchaser or its ownership
or use of any Transferred Assets), except for where the failure to obtain such
Consents will not have had, or would not be reasonably likely to have, a
Material Adverse Effect.

                  (f) No action, suit or proceeding (including, without
limitation, any proceeding over which the Bankruptcy Court has jurisdiction
under 28 U.S.C. Section 157(b) and (c)) shall be pending or overtly threatened
by or before any Governmental Authority or pending or overtly threatened by any
other party to enjoin, restrain, prohibit or obtain substantial damages or
significant equitable relief in respect of or related to any of the transactions
contemplated by this Agreement, or that would be reasonably likely to prevent or
make illegal the consummation of any transactions contemplated by this Agreement
or that, if adversely determined, could be materially adverse to the operation
or use of the Transferred Assets, and any such actions, suits or proceedings
that have theretofore been brought and determined shall have become Final
Orders.

                  (g) There shall not be in effect any Law of any Governmental
Authority of competent jurisdiction restraining, enjoining or otherwise
preventing consummation of the transactions contemplated by this Agreement.

                  (h) No loss of or damage to any Transferred Asset(s) shall
have occurred since the date of the Original Agreement, except for (i) damage
that has already been fully repaired, (ii) losses that have been replaced with
assets of comparable or higher quality with the reasonable approval of Purchaser
and (iii) other damage or losses that, in the aggregate, have not had, or would
not be reasonably likely to have, a Material Adverse Effect.


                                       13
<PAGE>   19

                  (i) No loss or modification of or limitation on any Assumed
Contract shall have occurred since the date of the Original Agreement without
the written consent of Purchaser in its sole discretion, including without
limitation any forfeiture, expiration without renewal, termination or other loss
thereof, except for losses, modifications or limitations that, in the aggregate,
have not had, or would not be reasonably likely to have, a Material Adverse
Effect.

                  (j) No loss of or limitation on any Route shall have occurred
since the date of the Original Agreement without the written consent of
Purchaser in its sole discretion, including without limitation any forfeiture,
expiration without renewal, termination or other loss thereof.

                  (k) No Slot shall have been withdrawn by the FAA or designated
for withdrawal by the FAA for any reason whatsoever (except those that have been
reinstated as of the Closing and those relinquished with the written consent of
Purchaser in its sole discretion) and Sellers' right or license to use any Slot
shall have not expired without renewal or have been terminated or revoked by the
FAA for any reason whatsoever (except those that have been reinstated as of the
Closing, those relinquished with the written consent of Purchaser in its sole
discretion and those under leases that have expired by their terms) and no Law
shall have been enacted, adopted, modified, amended or repealed, the effect of
which is to prevent the transfer of any Slot or materially limit or prohibit the
use by Purchaser of any Slot.

                  (l) The Approval Order and the Sale Procedures Order shall
have been entered, shall be in form and substance reasonably satisfactory to
Purchaser, and shall have each become a Final Order, and the Approval Order, the
Sale Procedures Order and any other orders of the Bankruptcy Court with respect
to this Agreement and the DIP Facility shall be in form and substance reasonably
satisfactory to Purchaser.

                  (m) The CBA Amendments, in form and substance reasonably
acceptable to Purchaser in its sole discretion, shall have been obtained.

                  (n) The Rights Plan Amendment, if required by Purchaser, in
form and substance reasonably acceptable to Purchaser, shall have been obtained
and shall be in full force and effect.

                  (o) No event, events or circumstance shall have occurred since
the date of the Original Agreement and Purchaser shall not learn of any event,
events or circumstances which, independently or together with any other event,
events or circumstance that have occurred or are reasonably likely to occur,
have or are reasonably likely to have a Material Adverse Effect.

                  (p) A Final Order shall have been entered rejecting all
discounted, bulk-sale or similar ticketing agreements or arrangements between
TWA and any other party.


                                       14
<PAGE>   20

                  (q) No claims, disputes, demands, actions, liabilities,
damages, suits in equity, administrative proceedings, accounts, costs, expenses,
setoffs, contributions, attorneys' fees and/or causes of action of whatever kind
or character (i) costing or expected by Purchaser to cost more than $55,000,000
in the aggregate or (ii) requiring Purchaser to take, or restraining Purchaser
from taking, any action that is determined by Purchaser to be materially adverse
to, or unduly burdensome in, conducting Purchaser's business and operations from
and after the Closing, in each case, shall be owed by or binding on, be
reasonably expected to be owed by or binding on, or, for any then pending
matters, if determined adversely, be owed by or binding on Purchaser.

         5.5 Conditions Precedent to Obligations of TWA. The obligations of TWA
and each other Seller under this Agreement to consummate the transactions
contemplated hereby to be consummated at the Closing shall be subject to the
satisfaction, at or prior to the Closing, of all the following conditions, any
one or more of which may be waived in writing at the option of TWA:

                  (a) All representations and warranties of Purchaser made in
this Agreement or in any exhibit, schedule or document delivered pursuant hereto
shall be true and complete in all respects (with respect to representations and
warranties qualified or limited by materiality) or in all material respects
(with respect to representations and warranties not so qualified or limited), in
each case when made and as of the Closing Date as if made on and as of that date
(other than such representations or warranties that expressly speak only as of
an earlier date); provided, that this condition shall be deemed satisfied if any
inaccuracies in any of such representations and warranties at and as of the
applicable date (without giving effect to any materiality qualifications or
exceptions contained therein) would not, individually or in the aggregate, have
or reasonably be expected to have a Purchaser Material Adverse Effect.

                  (b) All of the terms, covenants and conditions to be complied
with and performed by Purchaser on or prior to the Closing Date shall have been
complied with or performed in all material respects.

                  (c) TWA shall have received a certificate, dated as of the
Closing Date, executed on behalf of Purchaser by an authorized executive officer
thereof, certifying in such detail as Seller may reasonably request that the
conditions specified in Section 5.5(a) and Section 5.5(b) have been fulfilled.

                  (d) The waiting period under the HSR Act or any other
applicable competition, merger, control, antitrust Law or similar Law shall have
expired or terminated, and the FAA, DOT and any other Governmental Authorities
whose consent is required for consummation of the transactions contemplated
hereby (including without limitation the applicable regulatory body of the
European Union) shall have issued all approvals required for the transactions
contemplated hereby.

                  (e) There shall not be in effect any Law of any Governmental
Authority of competent jurisdiction restraining, enjoining or otherwise
preventing consummation of the transactions contemplated by this Agreement.


                                       15
<PAGE>   21

                  (f) The Approval Order shall have been entered.

                                   ARTICLE VI

                    REPRESENTATIONS AND WARRANTIES OF SELLERS

         Subject to any exceptions set forth in the Schedule of Exceptions
(whether or not an express reference is made in this Article VI to such Schedule
of Exceptions), TWA makes the following representations and warranties to
Purchaser with respect to itself and each other Seller, as applicable, each of
which shall be true and correct as of the date of the Original Agreement and as
of the Closing Date (except to the extent expressly relating to a specific date,
in which event it shall be true and correct as of such date) and shall be
unaffected by any investigation heretofore or hereafter made by or on behalf of
Purchaser.

         6.1 Organization and Good Standing. Each Seller is a corporation or
other entity duly organized and validly existing and in good standing under the
laws of its respective jurisdiction of organization and has the requisite
corporate or other organizational power and authority to own, lease or otherwise
hold its properties and assets and carry on its business as presently conducted.
Each Seller is qualified or licensed to do business as a foreign corporation and
is in good standing in every jurisdiction where the nature of the business
conducted by it or the properties owned or leased by it requires qualification,
except where the failure to be so qualified, licensed or in good standing would
not reasonably be expected to have a Material Adverse Effect.

         6.2 Authorization and Effect of Agreement. TWA has the requisite
corporate power and authority (a) to execute and to deliver this Agreement and
the Collateral Agreements to which it will be a party and (b) in the event the
Sale Procedures Order and the Approval Order are entered by the Bankruptcy
Court, to perform its obligations hereunder and under any such Collateral
Agreements. The execution and delivery by each Seller of the Collateral
Agreements to which it will be a party have been (or will be at the time of
execution thereof) duly authorized by all necessary corporate or other
organizational action on the part of such Seller. The execution and delivery of
this Agreement and the Collateral Agreements by TWA, and subject to clause (b)
above, the performance by TWA of its obligations hereunder and thereunder and
the consummation by TWA of the transactions contemplated hereby and thereby,
have been duly authorized by its Board of Directors and no other corporate
action on the part of TWA is necessary to authorize the execution and delivery
of this Agreement, the Collateral Agreements or the consummation of the
transactions contemplated hereby or thereby. The execution and delivery by each
Seller of the Collateral Agreements to which it will be a party have been (or
will be at the time of execution thereof) duly authorized by all necessary
corporate or other organizational action on the part of such Seller. This
Agreement has been duly and validly executed and delivered by TWA and
constitutes a valid and binding obligation of TWA, enforceable against TWA in
accordance with its terms, subject (a) to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, including,

                                       16
<PAGE>   22

without limitation, for purposes of the representation and warranty being made
as of the Closing Date, the discretion of the Bankruptcy Court for so long as
the Bankruptcy Court retains jurisdiction over the Chapter 11 Cases, and (b) as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity), and (c) for purposes
of the representation and warranty being made as of the date of the Original
Agreement (but not for purposes of the representation and warranty being made as
of the Closing Date), to the commencement of the Chapter 11 Cases, competing
offers as described in Section 8.11(a), and entry of the Approval Order. Each of
the Collateral Agreements, when executed and delivered by TWA or any Seller, as
applicable, at the Closing, shall constitute a valid and binding agreement of
TWA or such Seller, enforceable against TWA or such Seller in accordance with
its terms, subject (a) to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, including, without limitation, the discretion of
the Bankruptcy Court for so long as the Bankruptcy Court retains jurisdiction
over the Chapter 11 Cases, (b) as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).

         6.3 No Conflicts. The execution and delivery by TWA of this Agreement
and any Collateral Agreements to which it will be a party and the execution and
delivery by each other Seller of each Collateral Agreement to which it will be a
party do not and will not, as applicable, and, in the event TWA commences a
Chapter 11 Case and the Approval Order is entered by the Bankruptcy Court, the
performance by each Seller of the transactions contemplated by this Agreement or
such Collateral Agreements, as applicable, will not, (a) conflict with, or
result in any violation of, or constitute a default under (except as a result of
the Chapter 11 Cases), or, as applicable, give rise to the creation of a Lien
upon any of the Transferred Assets or to a right of termination, cancellation or
acceleration of any obligation or to a loss of a benefit under, (i) any
provision of the certificate of incorporation or bylaws or other applicable
constituent documents of any Seller, (ii) and except for consents required to
assign certain Assumed Contracts as described on Schedule 6.11 hereto, any of
the terms, conditions or provisions of any Contract by which any Seller is
bound, (iii) any Law applicable to or binding on any Seller or any of its
respective assets, (b) affect the ability of Purchaser to own, use or operate
the Transferred Assets following the Closing in substantially the same manner as
the Transferred Assets are presently owned, used or operated by any Seller, (c)
create any Lien on or any right of any third party to purchase, use or operate
any of the Transferred Assets or (d) accelerate or trigger any right or
obligation of any party under any Assumed Contract.

         6.4 No Third Party Options. Except as set forth in Schedule 6.4, there
are no existing agreements, options or commitments granting to any Person the
right to acquire any Seller's right, title or interest in or to any of the
Transferred Assets or any interest therein.


                                       17
<PAGE>   23

         6.5 Data. All Data are true and correct in all material respects (other
than FAA maintenance records, which are true and correct in all respects) and
are accurately extracted from the books and records of Sellers.

         6.6 Consents and Approvals. Other than in connection with the
commencement of the Chapter 11 Cases, entry of the Sale Procedures Order, entry
of the Approval Order and as set forth on Schedule 6.6, the execution and
delivery by Sellers of this Agreement and any Collateral Agreements to which it
will be a party does not and will not, and the consummation by Sellers of the
transactions contemplated hereby and thereby will not, require any Consent,
except (i) as disclosed on Schedule 6.11, (ii) for compliance with the HSR Act,
(iii) as required by the FAA, (iv) as required by the DOT and (v) as required by
the European Union.

         6.7 Permits; Compliance with Law. Schedule 6.7 sets forth a true,
correct and complete list of all Permits. Sellers possess all Permits necessary
for the operation and ownership of the Transferred Assets. All Permits issued to
any Seller are in full force and effect. No outstanding violations are or have
been recorded in respect of any of the Permits. The use and operation by any
Seller of the Transferred Assets and the conduct of its business comply with all
Laws and the requirements and conditions of all Permits, including without
limitation all applicable operating certificates and authorities, common carrier
obligations, airworthiness directives, and all other rules, regulations,
directives and policies of the FAA, DOT and all other Governmental Authorities
having jurisdiction over the Transferred Assets and the business conducted by
Sellers. No proceeding is pending or, to TWA's knowledge, threatened to revoke,
withdraw or limit any such Permit, and there is no fact, error or admission
relevant to any Permit that would permit the violation of or revocation,
withdrawal or limitation or result in the threatened violation of or revocation,
withdrawal or limitation of any such Permit. Except as set forth on Schedule
6.7, on or immediately after the Closing, each Permit will continue in full
force and effect and accrue to the benefit of Purchaser without any consent,
approval or modification required by or from any Governmental Authority.

         6.8 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to TWA's knowledge, threatened that
question the validity of this Agreement or any action taken or to be taken by
any Seller in connection with this Agreement. Other than the Chapter 11 Cases,
there are no lawsuits, claims, administrative or other proceedings or
investigations relating to the ownership or use of the Transferred Assets or
conduct of business by Sellers or otherwise affecting the Transferred Assets
pending, or, to TWA's knowledge, threatened against any Seller. Other than
pursuant to the Chapter 11 Cases, there are no judgments, orders or decrees of
any Governmental Authority binding on any Seller that relate to the Transferred
Assets or otherwise affect the Transferred Assets.

         6.9 Title to and Condition of Assets. The applicable Seller has, and at
the Closing, such Seller shall convey to Purchaser, good, valid and indefeasible
title to the Transferred Assets (other than the Leased Assets), free and clear
of all Liens other than Permitted Liens. With respect to any Leased Assets, the
applicable Seller has a valid

                                       18
<PAGE>   24

leasehold interest therein for the term specified in Schedule 6.12(b) and
Schedule 6.16(a). The Transferred Assets constituting tangible property, taken
as a whole, are in good operating condition and repair, subject to normal wear,
are usable in the regular and ordinary course of business and conform in all
material respects to applicable Laws.

         6.10 U.S. Citizen; Air Carrier. TWA and each other Seller is a "citizen
of the United States" as defined in the Federal Aviation Act and is an "air
carrier" within the meaning of such Act operating under certificates issued
pursuant to such Act (49 U.S.C. Sections 41101-41112).

         6.11 Assumed Contracts. The Assumed Contracts are valid and enforceable
in accordance with their terms, subject to applicable bankruptcy,
reorganization, moratorium, and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity. No Seller is, and to TWA's knowledge, no other party thereto is, in
material default in the performance, observance or fulfillment of any obligation
under any Assumed Contract (other than payments or amounts due thereunder, which
shall be paid or discharged by TWA at or prior to the Closing), and, to TWA's
knowledge, no event has occurred, which with or without the giving of notice or
lapse of time, or both, would constitute a material default thereunder. Other
than in connection with the commencement of the Chapter 11 Cases, entry of the
Sale Procedures Order, entry of the Approval Order and as set forth on Schedule
6.11 hereto, none of the Assumed Contracts requires the consent of any party to
its assignment in connection with the transactions contemplated hereby. True and
complete copies of all Assumed Contracts have been delivered to Purchaser.

         6.12 Aircraft; Engines and Spare Parts.

                  (a) Schedule 6.12(a) sets forth a true, correct and complete
list of all aircraft owned by any Seller (other than aircraft listed on Schedule
2.2) (collectively, "Owned Aircraft"), including identification of which Seller
owns such aircraft, a description of the type and aircraft number of each such
aircraft and the date the applicable Seller placed such aircraft in service or
proposes to place such aircraft in service.

                  (b) Schedule 6.12(b) sets forth a true, correct and complete
list of all lease, sublease or other agreements (including without limitation by
means of one or more capital leases) pursuant to which any Seller operates
aircraft (other than leases relating to aircraft listed on Schedule 2.2)
(collectively, "Aircraft Leases"), including identification of which Seller
leases such aircraft, a description of the type and aircraft number of each such
aircraft and the date the applicable Seller placed such aircraft in service or
proposes to place such aircraft in service.

                  (c) Each Owned Aircraft and aircraft subject to Aircraft
Leases ("Leased Aircraft") has as of February 26, 2001 the number of flight
hours and calendar time indicated on Schedule 6.12(c) remaining prior to its
next "C" or "D" check and a notation as to whether the aircraft (i) complies
with Stage 3 noise level requirements of the Airport Noise and Capacity Act of
1990; and (ii) requires refitting or repair to bring it

                                       19
<PAGE>   25

into compliance with any outstanding FAA aircraft requirements mandated by
certain airworthiness directives promulgated by the FAA.

                  (d) Except as set forth in Schedule 6.12(d), each Owned
Aircraft and Leased Aircraft is in Delivery Condition and has a validly issued,
current individual aircraft FAA Certificate of Airworthiness with respect to
such aircraft which satisfies all requirements for the effectiveness of such FAA
Certificate of Airworthiness.

                  (e) Each Owned Aircraft and Leased Aircraft complies with the
aircraft records requirements of the Federal Aviation Act.

                  (f) Each Owned Aircraft's and Leased Aircraft's structure,
systems and components are functioning in accordance with its intended use as
set forth in FAA-approved documentation, including any applicable manuals,
technical standard orders or parts manufacturing approval certificates.

                  (g) Other than in the ordinary course of business consistent
with past practice and except as set forth on Schedule 6.12(g), no deferred or
carryover maintenance items exist with respect to any Owned Aircraft and Leased
Aircraft and all temporary repairs to each such aircraft have been made
permanent.

                  (h) Each Owned Aircraft and Leased Aircraft is properly
registered on the FAA aircraft registry.

                  (i) Except as set forth on Schedule 6.12(i), no Seller is a
party to any interchange or pooling agreements with respect to its Owned
Aircraft and Leased Aircraft, Engines or Spare Parts.

                  (j) Each Seller has maintained Owned Aircraft and Leased
Aircraft in compliance in all material respects with all applicable statutes and
regulations as in effect from time to time and in accordance with such Seller's
standard maintenance procedures approved by applicable Government Authorities.

                  (k) Except as set forth in Schedule 6.12(d), each Seller has
maintained, inspected, serviced, repaired, overhauled and tested (or caused to
be maintained, inspected, serviced, repaired, overhauled and tested) the Owned
Aircraft, Leased Aircraft and Engines (including spare Engines) so as to keep
such items (i) in Delivery Condition and in as good operating condition as when
delivered to such Seller, ordinary wear and tear excepted, and within the
acceptable limits of performance provided in the applicable manufacturer's
maintenance manuals and service bulletins, all in accordance with standards that
are approved by the FAA, (ii) in conformity with the applicable operating
manual, instructions and mandatory service bulletins and all airworthiness
directives issued by the FAA and any other Governmental Authority having
jurisdiction over such aircraft, (iii) in such condition that such aircraft,
including each engine installed thereon, complies with the FAA type certificate
(as in effect form time to time) issued to the manufacturer of such aircraft or
such engine, and (iv) in such a condition as is necessary to enable the
applicable airworthiness certification for each such aircraft and engine to be


                                       20
<PAGE>   26

maintained in good standing, valid and current, at all times (other than
temporary periods of storage in accordance with applicable regulations) under
the Federal Aviation Act and all regulations issued pursuant thereto.

                  (l) Each Seller has maintained or caused to be maintained all
records, logs and other materials required to be maintained in respect of the
Owned Aircraft and Leased Aircraft, Engines and Spare Parts by the FAA and any
other applicable Governmental Authority, including all historical maintenance
records and other data with respect to such aircraft and Engines in a manner
such that there are no missing pieces of material information from the earliest
date required by applicable Law (including without limitation the Federal
Aviation Act and FAA directives) with respect to each such aircraft or Engine.

                  (m) No Seller has maintained, used or operated any Owned
Aircraft and Leased Aircraft in violation, in any material respect, of any law
or any rule, regulation or order of any Governmental Authority having
jurisdiction over such aircraft or in violation of any airworthiness
certificate, license or registration relating to any such aircraft.

                  (n) Each Seller has complied with all issued and effective
mandatory manufacturer's service bulletins and airworthiness directives with
respect to the Owned Aircraft and Leased Aircraft.

                  (o) No Owned Aircraft and Leased Aircraft is subleased to or
otherwise in the possession of another air carrier or other Person other than
the applicable Seller, to operate such aircraft in air transportation or
otherwise.

         6.13 Slots. Schedule 6.13 sets forth a true, correct and complete list
of all takeoff and landing slots and other similar takeoff and landing rights
("Slots") used by any Seller on the date of the Original Agreement at any
domestic or international airport, including a true, correct and complete list
of all Slot lease agreements. Sellers will have complied in all material
respects with the requirements of the regulations issued under the Federal
Aviation Act and any other Laws with respect to the Slots. The Slots have not
been identified as being subject to withdrawal under the provisions of SCAR No.
48, and Sellers have not received any notice, and they have no knowledge, of any
proposed withdrawal of the Slots by the FAA, the DOT or any other Governmental
Authority. The Slots have not been designated for the provision of essential air
services in accordance with the regulations issued under the Federal Aviation
Act, were not acquired pursuant to 14 C.F.R. Section 93.219 and have not been
designated for international operations, as more fully detailed in 14 C.F.R.
Section 93.217. Sellers have used each Slot either at least 80% of the maximum
amount that each Slot could have been used during each full and partial
reporting period (as described in 14 C.F.R. Section 93.227(i)) or such greater
or lesser amount of minimum usage as may have been required to protect such
Slot's authorization from termination or withdrawal under regulations
established by any Governmental Authority or airport authority. All reports
required by the FAA or any Governmental Authority relating to the Slots have
been filed in a timely manner. Except as set forth on Schedule

                                       21
<PAGE>   27

6.13, no Seller has agreed to any Slot slide, Slot trade, Slot purchase, Slot
sale or other transfer of any of the Slots.

         6.14 No Casualty. Except as set forth on Schedule 6.14, the Transferred
Assets have not been affected by any fire, explosion, accident, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance).

         6.15 Insurance. TWA or each other Seller has in place insurance
policies with respect to the Transferred Assets, in amounts and types that are
customary in the industry for similar assets, and all such policies are in full
force and effect.

         6.16 Gates; Gate Property and Ground Equipment.

                  (a) Schedule 6.16(a) sets forth a true, correct and complete
list of all the airport gates leased, occupied or otherwise used by any Seller
(the "Gates"), including the gate number and the airport and terminal or
concourse location of each such Gate.

                  (b) Schedule 6.16(b) sets forth a true, correct and complete
list of all the lease, sublease, use agreements, licenses, permits, certificates
or other documents or agreements under which any Seller leases, occupies or
otherwise has the right to use any Gate, and all amendments thereto (the "Gate
Leases"), in each case, including identification of the applicable Seller and
the lease expiration date, and corresponding Gate Property Leases and Ground
Equipment Leases.

                  (c) Schedule 6.16(c) sets forth a true, correct and complete
list of all the lease, sublease, use agreements, licenses, permits, certificates
or other documents or agreements under which any Seller leases, occupies or
otherwise has the right to use any Gate Property, and all amendments thereto
(the "Gate Property Leases"), in each case, including identification of the
applicable Seller and the lease expiration date.

                  (d) Schedule 6.16(d) sets forth a true, correct and complete
list of all the lease, sublease, use agreements, licenses, permits, certificates
or other documents or agreements under which any Seller leases, occupies or
otherwise has the right to use any Ground Equipment, and all amendments thereto
(the "Ground Equipment Leases"), in each case, including identification of the
applicable Seller and the lease expiration date.

                  (e) Schedule 6.16(e) sets forth a true, correct and complete
list of all the Gates, Gate Property and Ground Equipment owned by any Seller
(the "Owned Gate Items"), including identification of the applicable Seller.

                  (f) The Owned Gate Items and the Gate Property and Ground
Equipment subject to the Gate Property Leases and Ground Equipment Leases,
respectively, are all in good operating condition and repair, subject to normal
wear, are usable in the regular and ordinary course of business and conform in
all material respects to applicable Laws.


                                       22
<PAGE>   28

                  (g) The Gate Property Documents are in full force and effect,
TWA has no knowledge of any material default under the Gate Property Documents
and TWA knows of no material condition or event which has occurred which with
notice or the passage of time or both would constitute a material default by any
Seller under the Gate Property Documents.

                  (h) Sellers have not received any notice that any portion of
the Gates, Gate Property or Owned Gate Items is or will be subject to, or
affected by, any condemnation, eminent domain or similar proceeding and there
are no material violations of record or otherwise against any portion of the
Gates, Gate Property or Owned Gate Items.

                  (i) To TWA's knowledge, the Gates, Gate Property and Owned
Gate Items, as applicable, have been constructed in good and workmanlike manner,
are structurally sound and free from material defects and all building systems,
including without limitation, the heat, ventilation and air conditioning,
plumbing, electrical, elevator, sewage and other systems and systems related to
the specific uses thereof (as, for example, passenger terminal facilities,
office space, cargo facilities, and ground support equipment maintenance spaces,
and aircraft maintenance space) are free from material defects. The Gates, Gate
Property and Owned Gate Items, as applicable, are in good working order, subject
to reasonable wear and tear. Except as set forth in Schedule 6.16(i), no Seller
has deferred any of its maintenance or repair obligations under the Gate
Property Documents.

                  (j) With respect to the Owned Gate Items, the applicable
Seller has, and at the Closing, such Seller shall convey to Purchaser, good,
valid and indefeasible title thereto free and clear of all Liens other than
Permitted Liens.

         6.17 Environmental Matters.

                  (a) Except as set forth on Schedule 6.17(a) hereto, to TWA's
knowledge after reasonable inquiry, the use and operation of the Transferred
Assets is and has been in full compliance with all applicable Environmental
Laws, and consistent with the consummation of the transactions contemplated
hereby or Purchaser's ability to own, use or operate the Transferred Assets in
substantially the same manner as the Transferred Assets are presently owned,
used or operated by Seller. Except as set forth on Schedule 6.17(a), Sellers
have not received any written communication from any Person that alleges that
such Seller is not in such full compliance, the subject matter of which written
communication has not been fully resolved and satisfied, and, to TWA's knowledge
after reasonable inquiry, there are no circumstances (other than changes in
existing, or future requirements of, Environmental Laws) that would reasonably
be expected to prevent or interfere with such full compliance in the future.
Schedule 6.17(a) sets forth a true, correct and complete list of all orders,
decrees or other agreements relating to any Seller or any of its properties
issued pursuant to or entered into under any Environmental Law.




                                       23
<PAGE>   29

                  (b) Except as set forth on Schedule 6.17(b), there is no
Environmental Claim relating to ownership or use of the Transferred Assets
pending or threatened against any Seller or, to TWA's knowledge after reasonable
inquiry, against any Person whose liability for such Environmental Claim Sellers
have retained or assumed either contractually or by operation of law.

                  (c) Except as set forth on Schedule 6.17(c), Sellers have not
received any written allegation or other information , the subject matter of
which allegation or information has not been fully resolved and satisfied, that
past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge or
disposal of any Material of Environmental Concern relating to the ownership or
use of the Transferred Assets could form the basis of any Environmental Claim
relating to the Transferred Assets against any Seller or against any Person
whose liability for such Environmental Claim any Seller retained or assumed
either contractually or by operation of law.

                  (d) Without in any way limiting the generality of the
foregoing, to TWA's knowledge after reasonable inquiry, (i) all onsite and
off-site locations where any Seller or any other occupant has stored, disposed
or arranged for the disposal of Materials of Environmental Concern from 1980 to
the date of the Original Agreement relating to the transferred maintenance bases
are identified on Schedule 6.17(d), (ii) all underground storage tanks, and the
capacity and contents of such tanks, located on the Transferred Assets are
identified on Schedule 6.17(d), (iii) except as set forth on Schedule 6.17(d),
there is no damaged and friable asbestos or lead based paint coatings in poor
condition contained in or forming part of any building, building component,
structure or office space with respect to the Gates and (iv) except as set forth
on Schedule 6.17(d), no polychlorinated biphenyls (PCB's) are used at any Gate
in violation of Environmental Laws.

                  (e) For purposes of this Agreement but only as it relates to
the Transferred Assets, the following terms shall have the following meanings:

                           (i) "Environmental Claim" means any written notice by
         any Governmental Authority or Person alleging potential liability
         (including, without limitation, potential liability for investigatory
         costs, cleanup costs, governmental response costs, natural resources
         damages, property damages, personal injuries or penalties) (A) which
         would have a material and adverse effect on any of the Transferred
         Assets, the consummation of the transactions contemplated hereby or
         Purchaser's ability to own, use or operate the Transferred Assets in
         substantially the same manner as the Transferred Assets are presently
         owned, used or operated by Seller and (B) arising out of, based on or
         resulting from (x) the presence, or release into the environment, of
         any Material of Environmental Concern at any location, whether or not
         owned by any Seller or Purchaser or (y) any material violation, or
         alleged violation, of any Environmental Law.

                           (ii) "Environmental Laws" means all Laws applicable
         to the respective Transferred Assets and relating to pollution or
         protection of human


                                       24
<PAGE>   30

         health or the environment (including, without limitation, ambient air,
         surface water, ground water, land surface or subsurface strata),
         including, without limitation, laws and regulations relating to
         emissions, discharges, releases or threatened releases of Materials of
         Environmental Concern arising from or relating to the Transferred
         Assets, or otherwise relating to the manufacture, processing,
         distribution, use, treatment, storage, disposal, transport or handling
         of Materials of Environmental Concern arising from or relating to the
         Transferred Assets or the operation thereof.

                           (iii) "Materials of Environmental Concern" means
         dangerous goods, hazardous, toxic or regulated substances, materials,
         or wastes as defined in the Environmental Laws.

         6.18 Taxes. Except as set forth on Schedule 6.18:

                  (a) All Tax Returns that are required to be filed on or before
the Closing Date by any Seller have been or will be duly filed on a timely basis
and all such Tax Returns were or will be true, correct and complete in all
material respects. All Taxes due with respect to any taxable period or partial
taxable period of each such Seller ending on or before the Closing Date have
been or will be timely paid or withheld. No Seller has executed or filed with
the Internal Revenue Service or any other taxing authority any agreement
extending the period for filing any Tax Return.

                  (b) No claim for assessment or collection of Taxes has been
asserted against any Seller. No Seller is a party to any pending action,
proceeding or investigation by any Governmental Authority for the assessment or
collection of Taxes, nor does any Seller have knowledge of any such threatened
action, proceeding or investigation.

                  (c) No waivers of statutes of limitation in respect of any Tax
Returns have been given or requested by any Seller nor has any Seller agreed to
any extension of time with respect to a Tax assessment or deficiency. No claim
has been made at any time during the ten-year period ending on the date of the
Original Agreement by a Governmental Authority in a jurisdiction where any
Seller does not currently file Tax Returns that it is or may be subject to
taxation by that jurisdiction, nor is any Seller aware that any such assertion
of jurisdiction is threatened. No security interests have been imposed upon or
asserted against any of any Seller's assets or any of the Transferred Assets as
a result of or in connection with any failure, or alleged failure, to pay any
Tax.

                  (d) Each Seller has withheld and paid all Taxes required to be
withheld in connection with any amounts paid or owing to any employee, creditor,
independent contractor or other third party.

                  (e) No Seller is a foreign person within the meaning of
Section 1445 of the Code.

                  (f) None of the Transferred Assets is (i) "tax-exempt use
property" within the meaning of Section 168(h) of the Code, (ii) "tax-exempt
bond-financed


                                       25
<PAGE>   31

property" within the meaning of Section 168(g) of the Code, (iii) "limited use
property" within the meaning of Revenue Procedure 76-30, (iv) subject to Section
168(g)(i)(A) of the Code or (v) property that is or will be required to be
treated as being owned by any Person (other than any Seller) pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended, and in effect immediately before the enactment of the Tax Reform Act of
1986.

         6.19 Labor Matters.

                  (a) Schedule 6.19(a) identifies all collective bargaining
agreements (including any side letter, supplemental agreement or memorandum of
understanding) covering employees of each Seller (collectively, the "Collective
Bargaining Agreements"). TWA has made available to Purchaser copies of all such
Collective Bargaining Agreements. TWA has informed Purchaser of all material
communications and current proposals of TWA, any other Seller or any union in
all ongoing negotiations with representatives of any unions representing pilots,
flight attendants, mechanics, dispatchers and all other organized employee
groups and all matters on which any tentative agreements have been reached in
the course of such negotiations.

                  (b) TWA has made available to Purchaser a true, correct and
complete list of all the current employees of each Seller that are members of an
organized labor unit covered by any of the Collective Bargaining Agreements,
their current respective positions or job classifications and their current
respective wage scales or salaries, as the case may be, as of the date of the
Original Agreement.

                  (c) Except as set forth in Schedule 6.19(c):

                           (i) There are no controversies pending or, to the
         knowledge of TWA, threatened, or which TWA, based on its knowledge of
         its employees and labor units, believes will be more likely than not to
         occur, between any Seller and any of its employees or organized labor
         units, which controversies have or could have a Material Adverse
         Effect;

                           (ii) No Seller has breached or otherwise failed to
         comply or has been alleged to have breached or otherwise failed to
         comply in any material respect with any provision of any Collective
         Bargaining Agreement or other labor union contract applicable to
         persons employed by any Seller (because of the transactions
         contemplated by this Agreement or otherwise), and there are no material
         grievances outstanding against any Seller under any such agreement or
         contract;

                           (iii) To the knowledge of TWA, there is no petition
         pending before the National Mediation Board seeking certification or
         any change in certification of a labor representative with respect to
         any craft or class of employees of any Seller;


                                       26
<PAGE>   32

                           (iv) There is no strike, slowdown, work stoppage,
         labor action or lockout, or, to the knowledge of TWA, threat thereof,
         by or with respect to any employees of any Seller; and

                           (v) There is no unfair labor practice or analogous
         complaint or claim against any Seller pending before the National
         Mediation Board or any similar board or agency or before any court of
         competent jurisdiction or any other forum.

                           (vi) There is no complaint for violation of the
         Railway Labor Act, 45 U.S.C. 8, as amended, against any Seller pending
         before any Governmental Authority.

                  (d) That certain Settlement Agreement (the "Pension Plans
Agreement") dated January 5, 1993, by and between The Official Unsecured
Creditors' Committee of Trans World Airlines, Inc., The International
Association of Machinists and Aerospace Workers, the Independent Federation of
Flight Attendants, The Air Line Pilots Association, International, the Transport
Workers of America, Carl Icahn, an Icahn Entity, Pichin Corp. and the Pension
Benefit Guaranty Corporation, is in full force and effect and is enforceable in
accordance with its terms. TWA has at all times performed in compliance with the
Pension Plans Agreement and there are no defaults thereunder. TWA has no
remaining duties or liabilities under the Pension Plans Agreement other than in
connection with the administration of the employee benefit plans subject to the
Pension Plans Agreement. Pursuant to the Pension Plans Agreement and applicable
law, TWA has no incurred or potential liability to the Pension Benefit Guaranty
Corporation or any other Person under Title IV of ERISA, under the Pension Plans
Agreement, or otherwise, and TWA has no liability to any participant in or any
fiduciary of any employee benefit plan that is subject to the Pension Plans
Agreement for pension benefits or otherwise. By entering into this Agreement and
performing their respective duties hereunder neither TWA, the other Sellers nor
Purchaser or any Affiliates of Purchaser shall be liable, or incur any
obligation, to the Pension Benefit Guaranty Corporation or any participant or
fiduciary of any employee benefit plan pursuant to the Pension Plans Agreement,
ERISA or otherwise, and no lien shall result that shall affect any property that
is subject to this Agreement. The releases entered into in connection with the
Pension Plans Agreement (i) are binding and in full force and effect, (ii) are
enforceable against the parties thereto in accordance with their respective
terms, and (iii) will not be invalidated or adversely affected by the execution
and delivery of this Agreement, performance of any Person hereunder or by any
transaction occurring pursuant to this Agreement.

         6.20 Employee Matters.

                  (a) TWA has made available to Purchaser a true, correct and
complete list of all the current employees of each Seller (other than employees
on the list described in Section 6.19(b)), their current respective positions or
job classifications and their current respective wage scales or salaries, as the
case may be, as of the date of the Original Agreement. Each Seller is in
compliance in all material respects with all

                                       27
<PAGE>   33

applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and are not engaged in any unfair
labor practice.

                  (b) Schedule 6.20(b) sets forth a true, correct and complete
list and brief description of each "employee pension benefit plan" (as defined
in Section 3(2) of ERISA), "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA), stock option, stock purchase, deferred compensation plan
or arrangement, and other material employee fringe benefit plan or arrangement
maintained, contributed to or required to be maintained or contributed to by TWA
or any other Seller for the benefit of any present or former employees of
Sellers or their beneficiaries (all the foregoing herein called "Benefit
Plans"). TWA has delivered to Purchaser true, complete, and correct copies of
(1) each Benefit Plan (or, in the case of any unwritten Benefit Plans,
descriptions thereof) and (2) the most recent summary plan description for each
Benefit Plan (if any such description was required).

                  (c) TWA complies in all material respects with the applicable
requirements of Section 4980B(f) of the Code with respect to each Benefit Plan
that is a group health plan, as such term is defined in Section 5000(b)(1) of
the Code.

                  (d) As of the Closing Date, Sellers have paid all
contributions which are due and required by the Benefit Plans sponsored by
Sellers in accordance with the terms of such Benefit Plans and all applicable
Laws.

         6.21 Routes. Schedule 6.21 sets forth a true, correct and complete list
of all flight routes flown by any Seller as of the date of the Original
Agreement to the extent authorized, regulated or limited by any Governmental
Authority or other route authority (each, a "Route"). Except as set forth on
Schedule 6.21, no Route has been or, to TWA's knowledge, is threatened to be
subject to any forfeiture, expiration without renewal, termination or other loss
thereof.

         6.22 Intellectual Property. Schedule 6.22 contains an accurate and
complete list of all Intellectual Property owned or used by any Seller. Except
as set forth on Schedule 6.22, Sellers own the entire right, title and interest
in and to the Intellectual Property (including, without limitation, the right to
use and license the same). Except as set forth in Schedule 6.22, there are no
pending, or to the knowledge of TWA, threatened actions, claims or proceedings
of any nature affecting or relating to the Intellectual Property. Schedule 6.22
lists all notices or claims currently pending or received by any Seller that
claim infringement of any domestic or foreign letters patent, patent
applications, patent licenses, software licenses and know-how licenses, trade
names, trademark registrations and applications, service marks, copyrights,
copyright registrations or applications, trade secrets, technical knowledge,
know-how or other confidential proprietary information. Except as set forth on
Schedule 6.22, there is, to the knowledge of TWA, no reasonable basis upon which
any claim may be asserted against any Seller for infringement or
misappropriation of any domestic or foreign letters patent, patents, patent
applications, patent licenses, software licenses, and know-how licenses, trade
names, trademark registrations and applications, trademarks, service marks,
copyrights, copyright registrations or applications, trade secrets, technical
knowledge,

                                       28
<PAGE>   34

know-how or other confidential proprietary information. All letters patent,
registrations and certificates issued by any Governmental Authority relating to
any of the Intellectual Property and all licenses and other agreements pursuant
to which any Seller uses any of the Intellectual Property are valid and
subsisting, have been properly maintained and neither any Seller, nor to the
knowledge of TWA, any other Person, is in default or violation thereunder.

         6.23 Worldspan. Trans World PARS, Inc., a Delaware corporation, is an
indirect wholly owned subsidiary of TWA, and a general partner of Worldspan and
directly owns a 26.315% interest in Worldspan. Except for compliance with the
right of first refusal set forth in the Sixth Amended and Restated Limited
Partnership Agreement, dated as of April 30, 1993, of Worldspan, no action,
approval, notice or consent is required in connection with the transfer by Trans
World PARS, Inc. to Purchaser of all of such right, title and interest in and to
Worldspan, including without limitation the Worldspan partnership interest and
rights as a general partner thereof.

         6.24 Real Property.

                  (a) Except as set forth on Schedule 6.24(a), each applicable
Seller owns fee simple absolute title to all owned real properties used in the
conduct of Sellers' business (the "Owned Real Estate") and has good title to, or
valid leasehold interests in, all other real properties used in the conduct of
Sellers' business (the "Leased Real Estate" and together with the Owned Real
Estate, the "Real Estate Assets"). Schedule 6.24(a) contains a true, correct and
complete list of all the Real Estate Assets, including the name of the owner of
record thereof, an accurate street address, a brief description of the use of
such Real Estate Asset and the lease, sublease or other agreement for all Leased
Real Estate. No Seller owns or holds, or is obligated under or a party to, any
option, right of first refusal or other contractual right to purchase, acquire,
sell, assign or dispose of any of the Real Estate Assets.

                  (b) All components of all improvements included within any
Real Estate Asset (collectively, the "Improvements"), including, without
limitation, the roofs and structural elements thereof and the heating,
ventilation, air conditioning, plumbing, electrical, mechanical, sewer, waste
water, storm water, paving and parking equipment, systems and facilities
included therein, (i) in the case of any Owned Real Property, are or (ii) in the
case of any Leased Real Property, (x) to the extent required to be maintained,
repaired or replaced under the related Lease, are or (y) to the extent not so
required to be maintained, repaired or replaced, to TWA's knowledge, are, in
each case, in good working order and repair (ordinary wear and tear excepted).
All water, gas, electrical, steam, compressed air, telecommunication, sanitary
and storm sewage lines and systems and other similar systems currently serving
the Real Estate Assets are installed and operating and are sufficient to enable
the Real Estate Assets to continue to be used and operated in the manner
currently being used and operated, and no Seller has any knowledge of any factor
or condition that could result in the termination or material impairment of the
furnishing thereof. No Improvement or portion thereof is dependent for its
access, operation or utility on any land, building or other Improvement that is
not

                                       29
<PAGE>   35

both included in the Real Estate Assets that is not available for use pursuant
to a reciprocal easement agreement or other contractual right of the applicable
Seller.

                  (c) All Permits required to have been issued to any Seller to
enable any Real Estate Asset to be lawfully occupied and used for all of the
purposes for which they are currently occupied and used have been lawfully
issued and are in full force and effect. No Seller has received any notice, or
has any knowledge, of any pending, threatened or contemplated condemnation
proceeding affecting any Real Estate Asset or any part thereof or any proposed
termination or impairment of any parking at any such owned or leased real
property or of any sale or other disposition of any such Real Estate Asset or
any part thereof in lieu of condemnation.

                  (d) No portion of any Real Estate Asset has suffered any
damage by fire or other casualty loss which has not heretofore been completely
repaired and restored to its original condition.

                  (e) Except as set forth on Schedule 6.24(e):

                           (i) no structure on any Real Estate Asset fails to
         conform in any material respect with applicable ordinances,
         regulations, zoning laws and restrictive covenants nor encroaches upon
         real property of others, nor is any such Real Estate Asset encroached
         upon by structures of others in any case in any manner that would have
         or would be reasonably likely to have a Material Adverse Effect;

                           (ii) no charges or violations have been filed,
         served, made or threatened against any Seller, to the knowledge of TWA,
         any other Person, against or relating to any such property or structure
         on or any of the operations conducted at any Real Estate Asset, as a
         result of any violation or alleged violation of any applicable
         ordinances, requirements, regulations, zoning laws or restrictive
         covenants or as a result of any encroachment on the property of others
         where the effect of same would have or would be reasonably likely to
         have a Material Adverse Effect;

                           (iii) other than pursuant to applicable laws, rules,
         regulations or ordinances, covenants that run with the land or
         provisions in any agreement listed on Schedule 6.24(a), there exists no
         restriction on the use, transfer or mortgaging of any Real Estate
         Asset;

                           (iv) each Seller, as applicable, has adequate
         permanent rights of ingress to and egress from any such property used
         by it for the operations conducted thereon; and

                           (v) there are no developments affecting any of the
         Real Estate Assets or interests of any Seller therein pending or, to
         the knowledge of TWA, threatened which might reasonably be expected to
         curtail or interfere in any


                                       30
<PAGE>   36

         material respect with the use of any such Real Estate Asset for the
         purposes for which it is now used.

         6.25 Disclosure. No representation or warranty of Sellers contained
herein, and no statement contained in any document or other instrument to be
furnished by any Seller to Purchaser in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
representation, warranty or statement so made not misleading.

                                  ARTICLE VII

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

         Purchaser hereby makes the following representations and warranties to
Sellers each of which shall be true and correct as of the date of the Original
Agreement and as of the Closing Date (except to the extent expressly relating to
a specific date, in which event it shall be true and correct as of such date)
and shall be unaffected by any investigation heretofore or hereafter made.

         7.1 Corporate Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to own, lease or otherwise
hold its properties and assets and to carry on its business as presently
conducted.

         7.2 Authorization and Effect of Agreement. Purchaser has the requisite
corporate power and authority to execute and deliver this Agreement and the
Collateral Agreements to which it will be a party and to perform its obligations
hereunder and thereunder. The execution and delivery by Purchaser of this
Agreement and the performance by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of Purchaser. This Agreement has been duly executed and delivered by Purchaser
and constitutes a valid and binding agreement of Purchaser, enforceable against
Purchaser in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity. Each of the Collateral Agreements to which Purchaser will be a party,
when executed and delivered by Purchaser, will constitute a valid and binding
agreement of Purchaser, enforceable against Purchaser in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium, and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity.

         7.3 No Conflicts. The execution and delivery of this Agreement and the
Collateral Agreements to which Purchaser will be a party by Purchaser does not
or will not (as applicable), and the performance by Purchaser of the
transactions contemplated by this Agreement and such Collateral Agreements will
not, conflict with, or result in any violation of, or constitute a default under
(a) any provision of the certificate of incorporation or bylaws of Purchaser,
(b) any of the terms, conditions, or provisions of


                                       31
<PAGE>   37

any material agreement or other material document by which Purchaser is bound,
or (c) any Law or order applicable to or binding on Purchaser. Except for the
Approval Order and the expiration of the waiting period under the HSR Act, no
Consent is required to be obtained, made or given (whether pursuant to
applicable Law, contract or otherwise) in connection with the execution and
delivery of this Agreement by Purchaser or the performance by Purchaser of the
transactions contemplated hereby.

         7.4 Litigation. As of the date of the Original Agreement, there are no
judicial or administrative actions, proceedings or investigations pending or, to
Purchaser's knowledge, threatened that question the validity of this Agreement
or any action taken or to be taken by Purchaser in connection with this
Agreement.

                                  ARTICLE VIII

                              PRE-CLOSING COVENANTS

         8.1 Access. Prior to the Closing, upon reasonable notice from
Purchaser, TWA shall, and shall cause each other Seller to, afford to the
officers, attorneys, accountants or other authorized representatives of
Purchaser reasonable access during normal business hours to the employees,
Transferred Assets, facilities and books and records of such Seller relating to
the Transferred Assets then owned or previously owned and/or operated by such
Seller so as to afford Purchaser full opportunity to make such review,
examination and investigation of such Transferred Assets as Purchaser determines
are reasonably necessary in connection with the consummation of the transactions
contemplated hereby; provided, however, that the foregoing right of access shall
not be exercisable in such a manner as to interfere unreasonably with the normal
operations and business of such Seller. Purchaser shall be permitted to make
extracts from or to make copies of such books and records as may be reasonably
necessary in connection therewith. Prior to the Closing, TWA shall, and shall
cause each Seller to, promptly furnish Purchaser with access to such maintenance
records, operating data and other information relating to the Transferred Assets
then owned and/or operated by such Seller as Purchaser may reasonably request.
TWA shall promptly deliver to Purchaser such copies of all pleadings, motions,
notices, statements, schedules, applications, reports and other papers filed by
TWA in the Chapter 11 Cases. Seller shall promptly provide to Purchaser all
documents and materials relating to the proposed sale of the Transferred Assets,
Assumed Contracts or any portion thereof, including, without limitation, with
respect to competing bids, and otherwise cooperate with Purchaser, to the extent
reasonably necessary in connection with Purchaser's preparation for or
participation in any part of the Chapter 11 Cases in which Purchaser's
participation is necessary, required or reasonably appropriate. Seller shall
promptly deliver to Purchaser all pleadings, motions, notices, statements,
schedules, applications, reports and other papers filed in any other judicial or
administrative proceeding as Purchaser may reasonably request. In addition, TWA
shall, and shall cause the other Sellers to, consult with Purchaser with respect
to any written or oral communication concerning, in whole or in part, the
transactions contemplated by this Agreement. Without limiting the generality of
this Section 8.1, if requested by Purchaser, Sellers shall provide access to the
Transferred


                                       32
<PAGE>   38

Assets to Purchaser and its representatives and agents for purposes of
conducting nonintrusive environmental assessments, including Phase I analyses.

         8.2 Conduct of Business. Except as expressly contemplated by this
Agreement (including, without limitation, the commencement and prosecution of
the Chapter 11 Cases) or as otherwise consented to by Purchaser in writing,
during the period from the date of the Original Agreement and continuing until
the Closing, TWA shall, and shall cause each Seller to, in respect of the
Transferred Assets then owned and/or operated by such Seller:

                  (a) to (i) conduct its business with respect to such
Transferred Assets in the usual, regular and ordinary course as presently
conducted and consistent with past practice, (ii) keep such Transferred Assets
intact, and (iii) maintain such Transferred Assets in at least as good a
condition as their current condition (reasonable wear and tear excepted);

                  (b) not take or omit to take any action as a result of which
any representation or warranty of TWA made in Article VI would be rendered
untrue or incorrect if such representation or warranty were made immediately
following the taking or failure to take such action;

                  (c) not mortgage, pledge, sell or dispose of any such
Transferred Assets, and not waive, release, grant, transfer or permit to lapse
any rights of material value, including without limitation any Routes or Slots
to which any Seller has any right on the date of the Original Agreement;

                  (d) not assign, modify, cancel, otherwise impair or permit to
lapse any Assumed Contract;

                  (e) comply in all material respects with all provisions of any
Assumed Contract to which such Seller is a party;

                  (f) comply in all material respects with all applicable Laws
that relate to or affect any Transferred Assets or such Seller's ownership
and/or use thereof, including but not limited to the timely, complete and
correct filing of all reports and maintenance of all records required by any
Governmental Authority to be filed or maintained;

                  (g) other than adoption of the Retention Agreements and salary
increases in the ordinary course consistent with past practice, not adopt or
amend any bonus, profit-sharing, compensation, severance, termination, stock
option, pension, retirement, deferred compensation, employment or employee
benefit plan, agreement, trust, plan, fund or other arrangement for the benefit
and welfare of any director, officer or employee, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any existing plan or arrangement (including, without
limitation, the removal of existing restrictions in any benefit plans or
agreements);

                                       33
<PAGE>   39

                  (h) except as specifically required by Article X, not enter
into any new or amended contract, agreement, side letter or memorandum of
understanding with any unions representing employees of any Seller;

                  (i) continue, in respect of all Owned Aircraft, Leased
Aircraft, Engines and Spare Parts intended for use in its operations, their
maintenance programs consistent with past practice (except as required or
permitted by applicable law), including using reasonable best efforts to keep
all such aircraft in such condition as may be necessary to enable the
airworthiness certification of such aircraft under the Federal Aviation Act to
be maintained in good standing at all times;

                  (j) continue to use and operate the Slots, Routes and all
other Transferred Assets used and operated by Sellers as of the date of the
Original Agreement in a manner consistent with prior practice and in accordance
with all applicable laws, and shall not enter into any contract nor otherwise
act, nor suffer or permit any other person to act, to restrict, interfere with
or prevent the use of such Slots, Routes and Transferred Assets;

                  (k) notify Purchaser in writing of any incidents or accidents
occurring on or after the date of the Original Agreement involving any property
owned or operated by any Seller that resulted or could reasonably be expected to
result in damages or losses in excess of $1,000,000;

                  (l) notify Purchaser in writing of the commencement of any
material litigation against any Seller or of the existence of any adverse
business conditions arising on or after the date of the Original Agreement
threatening the continued, normal business operations of Sellers or of any
agreement, consent or order of the FAA or DOT involving any Seller;

                  (m) not take any action, or fail to take action, which action
or failure could result in the loss of any Slot or Route;

                  (n) not enter into any agreement or understanding with any
other party involving expenditures in excess of $5.0 million in the aggregate or
involving terms of duration or commitments in excess of twelve months;

                  (o) not enter into any agreement or understanding in excess of
twelve months with any other party containing any exclusivity, non-competition
or similarly restrictive provisions; and

                  (p) not enter into any marketing arrangement or alliance
(involving code sharing or frequent-flyer program reciprocity) with any other
carrier.

         8.3 Notification.


                  (a) TWA shall notify Purchaser, and Purchaser shall notify
TWA, of any litigation, arbitration or administrative proceeding pending or, to
their knowledge,


                                       34
<PAGE>   40

threatened against any Seller or Purchaser, as the case may be, which challenges
or would materially affect the transactions contemplated hereby.

                  (b) TWA shall provide prompt written notice to Purchaser of
any change in any of the information contained in the representations and
warranties made by TWA in Article VI hereof or any exhibits or schedules
referred to herein or attached hereto and shall promptly furnish any information
which Purchaser may reasonably request in relation to such change; provided,
however, that such notice shall not operate to cure any breach of the
representations and warranties made by TWA in Article VI hereof or any exhibits
or schedules referred to herein or attached hereto.

         8.4 No Inconsistent Action. Neither Purchaser nor TWA shall take any
action which is materially inconsistent with its obligations under this
Agreement, and TWA shall cause the other Sellers to refrain from taking any such
action.

         8.5 Satisfaction of Conditions. Prior to the Closing, each of the
parties shall use reasonable best efforts with due diligence and in good faith
to satisfy promptly all conditions required hereby to be satisfied by such party
in order to expedite the consummation of the transactions contemplated hereby.

         8.6 Filings. Each party shall use its reasonable best efforts to
obtain, and to cooperate with the other party in obtaining, all authorizations,
consents, orders and approvals of any Governmental Authority that may be or
become necessary in connection with the consummation of the transactions
contemplated by this Agreement, and to take all reasonable actions to avoid the
entry of any order or decree by any Governmental Authority prohibiting the
consummation of the transactions contemplated hereby, including without
limitation, the notifications required to be filed by it under the HSR Act, and
shall furnish to the other all such information in its possession as may be
necessary for the completion of the notifications to be filed by the other;
provided that, in complying with this Section 8.6, neither Purchaser nor any of
its Affiliates shall be required to (i) divest any assets or discontinue or
modify any of its operations or (ii) accept or become subject to any condition
or requirement unacceptable to Purchaser in its sole discretion. No party shall
withdraw any such filing or submission prior to the termination of this
Agreement without the written consent of the other parties. Purchaser and TWA
agree that the filing fee required to be paid in connection with the filing
under any regulatory filings (including without limitation under the HSR Act)
shall be paid by Purchaser and divided equally between Purchaser and TWA by
subtracting TWA's half of such filing fees from the Purchase Price in accordance
with Section 4.7.

         8.7 All Reasonable Efforts. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all action, and to do, or cause to be done as
promptly as practicable, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including, without
limitation, the prompt preparation by Sellers of all pleadings, motions,
notices, statements, schedules, applications, reports and other papers
reasonably necessary in connection with the Chapter 11 Cases.


                                       35
<PAGE>   41

         8.8 Further Assurances. From time to time following the Closing, TWA
shall, and shall cause the other Sellers to, execute, acknowledge and deliver
such additional documents, instruments of conveyance, transfer and assignment or
assurances and take such other action as Purchaser may reasonably request to
more effectively assign, convey and transfer to Purchaser, and fully vest title
in Purchaser, with respect to the Transferred Assets.

         8.9 Publicity. The parties hereto shall consult with each other and
shall mutually agree (the agreement of each party not to be unreasonably
withheld or delayed) upon the content and timing of any press release or other
public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation and agreement, except as may be required by
applicable law or by obligations pursuant to any listing agreement with any
securities exchange or any stock exchange regulations as advised by counsel;
provided, however, that each party shall give prior notice to the other parties
of the content and timing of any such press release or other public statement
required by applicable law or by obligations pursuant to any listing agreement
with any securities exchange or any stock exchange regulations.

         8.10 [Intentionally Omitted].

         8.11 Bankruptcy Court Approval.

                  (a) The ORDER (A) AUTHORIZING AND SCHEDULING A PUBLIC AUCTION
AT WHICH THE DEBTORS WILL SOLICIT BIDS FOR ONE OR MORE SALES OF OR OTHER
TRANSACTIONS CONCERNING SUBSTANTIALLY ALL OF THEIR ASSETS FREE AND CLEAR OF
LIENS, CLAIMS AND ENCUMBRANCES; (B) APPROVING PROCEDURES FOR THE SUBMISSION OF
COMPETING OFFERS; (C) APPROVING CERTAIN TERMINATION RIGHTS, EXPENSE
REIMBURSEMENT AND OTHER BIDDING RIGHTS PROVISIONS; (D) SCHEDULING A HEARING TO
CONSIDER APPROVAL OF SUCH TRANSACTION; AND (E) APPROVING THE FORM AND MANNER OF
NOTICE OF THE TRANSACTIONS AND COMPETING OFFER PROCEDURES PURSUANT TO FED. R.
BANKR. PROC. 2002 entered by the Bankruptcy Court on February 7, 2001 and
attached hereto as Exhibit C (with such changes thereto as Purchaser shall
approve in its sole discretion, the "Sale Procedures Order"), (A) approved the
Termination Amount and the Bankruptcy Termination Amount and provided that, in
the event the obligation of Seller to pay Purchaser either the Termination
Amount or the Bankruptcy Termination Amount arises, such obligation shall
constitute a superpriority administrative expense under sections 503(b) and
507(a)(1) of the Bankruptcy Code and shall be payable in accordance with the
provisions of Section 12.1 or Section 12.2 without further order of the
Bankruptcy Court, (B) established procedures and deadlines for the submission of
competing offers, including, without limitation, that (1) a competing offer,
whether a proposed Recapitalization Transaction or a proposed purchase or other
disposition of the Transferred Assets (collectively, a "Competing Offer"), shall
not be considered to be a higher and better offer unless, at a


                                       36
<PAGE>   42

minimum, such offer provides for aggregate consideration of at least $75,000,000
in excess of the Purchase Price (with respect to the initial round of bidding)
and of at least $5,000,000 in excess of the aggregate consideration contained in
such bidder's prior Competing Offer (with respect to each subsequent round of
bidding, if any) and is otherwise a Superior Proposal, (2) a Competing Offer
must be accompanied by a good faith cash deposit of at least $50,000,000 and (3)
Purchaser shall be entitled to credit bid the amount of the Bankruptcy
Termination Amount against any revised offer Purchaser may make following such
Competing Offer, and (C) scheduled a hearing to consider entry of the Approval
Order on March 9, 2001 (the "Approval Order Hearing Date") and provided that
notice of such hearing be given to all of Sellers' creditors and interest
holders of record and published in the Wall Street Journal (National Edition).
Purchaser and Sellers agree to make promptly any filings, to take all actions
and to use their reasonable best efforts to obtain entry of the Sale Procedures
Order and the Approval Order and any and all other approvals and orders
necessary or appropriate for the consummation of the transactions contemplated
hereby.

                  (b) Prior to entry of the Approval Order, TWA and Purchaser
shall, and TWA shall cause the other Chapter 11 Sellers to, accurately inform
the Bankruptcy Court of all material facts of which they are aware relating to
this Agreement and the transactions contemplated hereby.

                  (c) If the Approval Order, Sale Procedures Order or any other
orders of the Bankruptcy Court relating to this Agreement shall be appealed by
any Person (or a petition for certiorari or motion for rehearing or reargument
shall be filed with respect thereto), TWA agrees to, and shall cause the other
Chapter 11 Sellers to, take all steps as may be reasonable and appropriate to
defend against such appeal, petition or motion, and Purchaser agrees to
cooperate in such efforts, and each party hereto agrees to use its reasonable
best efforts to obtain an expedited resolution of such appeal; provided,
however, that nothing herein shall preclude the parties hereto from consummating
the transactions contemplated herein if the Approval Order shall have been
entered and has not been stayed and Purchaser, in its sole discretion, has
waived in writing the requirement that the Approval Order be a Final Order in
which event Purchaser shall be able to assert the benefits of Section 363(m) of
the Bankruptcy Code as a consequence of which such appeal shall become moot.

                  (d) Prior to Closing, the sale of the Transferred Assets to
Purchaser pursuant to this Agreement and the other transactions contemplated by
this Agreement shall have been approved by order of the Bankruptcy Court
pursuant to sections 363 and 365 of the Bankruptcy Code, pursuant to an order in
substantially the form attached hereto as Exhibit D (with such changes thereto
as Purchaser shall approve or request in its sole discretion, the "Approval
Order"), and the Approval Order shall have become a Final Order. Purchaser and
TWA agree to use their reasonable best efforts to cause the Bankruptcy Court to
enter an Approval Order which contains, among other provisions reasonably
requested by Purchaser, the following provisions (it being understood that
certain of such provisions may be contained in either the findings of fact or
conclusions of law to be made by the Bankruptcy Court as part of the Approval
Order): (i) the


                                       37
<PAGE>   43

transfers of the Transferred Assets by Sellers to Purchaser (A) are or will be
legal, valid and effective transfers of the Transferred Assets; (B) vest or will
vest Purchaser with all right, title and interest of Sellers in and to the
Transferred Assets free and clear of all Liens (other than Permitted Liens) and
claims (as defined in section 101(5) of the Bankruptcy Code) pursuant to section
363(f) of the Bankruptcy Code (other than Liens created by Purchaser) whatsoever
known or unknown including, but not limited to, any of Sellers' creditors,
vendors, suppliers, employees or lessors and that Purchaser shall not be liable
in any way (as successor entity or otherwise) for any claims that any of the
foregoing or any other third party may have against any of the Sellers, the
business of Sellers and the Transferred Assets and permanently enjoins and
restrains the assertion and prosecution of any claims against Purchaser,
Purchaser's Affiliates and the ownership, use and operation of the Transferred
Assets, other than claims on the account of Assumed Liabilities; and (C)
constitute transfers for reasonably equivalent value and fair consideration
under the Bankruptcy Code and the laws of the States of New York and Delaware;
(ii) all amounts to be paid to Purchaser pursuant to this Agreement constitute
superpriority administrative expenses under sections 503(b) and 507(a)(1) of the
Bankruptcy Code and are immediately payable if and when the obligations of
Sellers arise under this Agreement, without any further order of the Bankruptcy
Court; provided, however, that Sellers shall have the right to contest the
validity and amount of such asserted claims; (iii) all Persons are enjoined from
taking any action against Purchaser, Purchaser's Affiliates (as they existed
immediately prior to the Closing) or the Sellers to recover any claim which such
Person has solely against Sellers or any of Sellers' Affiliates (as they existed
immediately following the Closing); (iv) the Bankruptcy Court retains exclusive
jurisdiction through the Bankruptcy Resolution Date to interpret, construe and
enforce the provisions of this Agreement, the Sale Procedures Order and the
Approval Order in all respects; provided, however, that in the event the
Bankruptcy Court abstains from exercising or declines to exercise jurisdiction
with respect to any matter provided for in this clause (iv) or is without
jurisdiction, such abstention, refusal or lack of jurisdiction shall have no
effect upon and shall not control, prohibit or limit the exercise of
jurisdiction of any other court having competent jurisdiction with respect to
any such matter; (v) the provisions of the Approval Order are nonseverable and
mutually dependent; (vi) the transactions contemplated by this Agreement are
undertaken by Purchaser and Sellers at arm's length, without collusion and in
good faith within the meaning of section 363(m) of the Bankruptcy Code, and such
parties are entitled to the protections of section 363(m) of the Bankruptcy
Code, (vii) not selling the Transferred Assets free and clear of liens and
claims would impact adversely on Sellers' bankruptcy estates; (viii) a sale of
the Transferred Assets other than one free and clear of liens and claims would
be of substantially less benefit to the estate of the Sellers; (ix) Sellers may
assign and transfer to Purchaser all of Sellers' right, title and interest
(including common law rights) to all of their intangible property; (x) approves
the Sellers' assignment of the Assumed Contracts pursuant to sections 363 and
365 of the Bankruptcy Code and orders Sellers to pay any cure amounts payable to
the other parties to the Assumed Contracts from the Purchase Price proceeds;
(xi) provides for the retention of jurisdiction by the Bankruptcy Court to
resolve any and all disputes that may arise under this Agreement as between
Sellers and Purchaser, and further to hear and determine any and all disputes
between Sellers and/or Purchaser, as the case may be, and any non-Sellers party
to,


                                       38
<PAGE>   44

among other things, any Assumed Contracts, concerning inter alia, Sellers'
assignment thereof to Purchaser under this Agreement and any non-Seller's claims
arising under any agreements relating to Retained Liabilities; (xii) pursuant to
section 1146(c) of the Bankruptcy Code, provides for the exemption of the
transactions contemplated herein from certain taxes, provides for the waiver of
so-called "bulk-sale" laws in all necessary jurisdictions, and provides that the
transactions contemplated herein are deemed to be under or in contemplation of a
plan to be confirmed under section 1129 of the Bankruptcy Code; and (xiii)
provides that except for the items set forth on Schedule 2.1(v), the Assumed
Liabilities do not include any of Sellers' liabilities or obligations relating
to any claims, disputes, demands, actions, liabilities, damages, suits in
equity, administrative proceedings accounts, costs, expenses, setoffs,
contributions, attorneys' fees and/or causes of action of whatever kind or
character, whether past, present, future, known or unknown, liquidated or
unliquidated, accrued or unaccrued.

                  (e) TWA shall, and shall cause the other Chapter 11 Sellers
to, cooperate reasonably with Purchaser and its representatives in connection
with the Approval Order, the Sale Procedures Order and the bankruptcy
proceedings in connection therewith. Such cooperation shall include, but not be
limited to, consulting with Purchaser at Purchaser's reasonable request
concerning the status of such proceedings and providing Purchaser with copies of
requested pleadings, notices, proposed orders and other documents relating to
such proceedings as soon as reasonably practicable prior to any submission
thereof to the Bankruptcy Court. Sellers further covenant and agree that the
terms of any plan submitted by Sellers to the Bankruptcy Court for confirmation
shall not conflict with, supersede, abrogate, nullify, modify or restrict the
terms of this Agreement and the rights of Purchaser hereunder, or in any way
prevent or interfere with the consummation or performance of the transactions
contemplated by this Agreement including, without limitation, any transaction
that is contemplated by or approved pursuant to the Approval Order and the Sale
Procedures Order.

         8.12 Specific Enforcement of Covenants. Sellers acknowledge that
irreparable damage would occur in the event that any of the covenants and
agreements of Sellers set forth in this Article VIII or in any other part of
this Agreement were not timely performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that Purchaser shall be
entitled to an injunction or injunctions to prevent or cure any breach of such
covenants and agreements of Sellers and to enforce specifically the terms and
provisions thereof, this being in addition to any other remedy to which it may
be entitled at law or in equity, it being understood that, after commencement of
the Chapter 11 Cases, the Bankruptcy Court shall have exclusive jurisdiction
over such matters; provided, however, that in the event the Bankruptcy Court
abstains from exercising or declines to exercise jurisdiction with respect to
any matter provided for in this sentence or is without jurisdiction, such
abstention, refusal or lack of jurisdiction shall have no effect upon and shall
not control, prohibit or limit the exercise of jurisdiction of any other court
having competent jurisdiction with respect to any such matter.


                                       39
<PAGE>   45

         8.13 Other Agreements. After the date of the Original Agreement should
any Seller enter into any contract, agreement or other arrangement, TWA shall
(i) immediately deliver written notice to Purchaser of the occurrence of such
event and provide Purchaser with all the information about and with access to
such items as Purchaser may reasonably request and (ii) if notified in writing
by Purchaser prior to Closing, transfer, convey or assign to Purchaser such item
in the manner and on the terms and conditions as if it were a Transferred Asset
or Assumed Contract under this Agreement.

         8.14 [Intentionally Omitted].

         8.15 Aircraft Inspection Rights. Purchaser shall have the right to
conduct an inspection of the Owned Aircraft and Leased Aircraft as would be
required in connection with the performance of a "B" maintenance check of the
aircraft under Purchaser's approved maintenance program, including the right to
open those sealed items, including any sealed bays, panels or doors, which would
be required to be opened during such "B" check (but not to open any other sealed
items, except as would be so required during such "B" check), and to inspect (in
such manner consistent with a "B" check level inspection) those parts,
components, and structures behind such sealed items (i) which would be required
to be inspected during such "B" check or (ii) whose maintenance condition would
be otherwise immediately apparent during the course of such required inspection.
Purchaser shall have customary rights for an acceptance flight of the aircraft.
Purchaser shall also have the right to borescope the engines to the same extent
as would be required in connection with the performance of a "B" maintenance
check of the aircraft under Purchaser's approved maintenance program.

         8.16 Designations. With respect to any lease that would be an Aircraft
Lease but for the fact that the aircraft to which it relates is listed on
Schedule 2.2 or Gate Lease listed on Schedule 2.2, Purchaser shall not purchase,
lease or otherwise obtain a direct or indirect interest in the aircraft or gate
underlying such lease during the period commencing on the date of the Original
Agreement and ending on the first anniversary of the Closing Date; provided,
however, that this Section 8.16 shall not apply to (i) any Aircraft underlying
an Aircraft Lease not (A) assigned by the applicable Seller to Purchaser at
Closing or (B) amended at Closing to incorporate terms agreed to by Purchaser
with the parties to such Aircraft Lease due in either case solely to the
inability to obtain any necessary consents of any party with rights with respect
to such Aircraft or Aircraft Lease (including, without limitation, lenders,
guarantors, residual holders, lienholders, pre-delivery financing providers and
parties with purchase options, but excluding the primary lessor under such
Aircraft Leases) and (ii) any Gate at any of the following airports JFK, SFO,
BQN and any other airport designated by Purchaser and consented to by TWA (which
consent shall not be unreasonably withheld); provided, further that any lease or
license of an Aircraft or Gate to, or similar use by, Purchaser pursuant to
Section 9.5 shall not be a violation of this Section 8.16.


                                       40
<PAGE>   46

         8.17 Marketing Agreements. Purchaser and TWA shall promptly negotiate
in good faith agreements between them regarding accrual of AAdvantage frequent
flyer miles on TWA flights and reciprocal airport lounge access.

                                   ARTICLE IX

                             POST-CLOSING COVENANTS

         9.1 Maintenance of Books and Records. Sellers and Purchaser shall
preserve until the seventh anniversary of the Closing Date (or, with respect to
any Sellers, until such time as such Seller is liquidated) all records possessed
by such party relating to the assets, liabilities or operations of the
Transferred Assets prior to the Closing Date. After the Closing Date, where
there is a legitimate purpose, such party shall provide the other party with
access, upon prior reasonable written request specifying the need therefor,
during regular business hours, to (i) the relevant officers and employees of
such party and (ii) the books of account and records of such party, but, in each
case, only to the extent relating to the assets, liabilities and operations of
the Transferred Assets prior to the Closing Date, and the other party and its
representatives shall have the right to make copies of such books and records;
provided, however, that the foregoing right of access shall not be exercisable
in such a manner as to interfere unreasonably with the normal operations and
business of such party; and further provided that, as to so much of such
information as constitutes trade secrets or confidential business information of
such party, the requesting party and its representatives shall use due care to
not disclose such information except (i) as required by Law, (ii) with the prior
written consent of such party, which consent shall not be unreasonably withheld,
or (iii) where such information becomes available to the public generally, or
becomes generally known to competitors of such party, through sources other than
the requesting party and its representatives. Such records may nevertheless be
destroyed by a party if such party sends the other party written notice of its
intent to destroy records, specifying with particularity the contents of the
records to be destroyed. Such records may then be destroyed after the 30th day
following delivery of such notice unless the other party objects to the
destruction, in which case the party seeking to destroy the records shall either
agree to retain such records or to deliver such records to the objecting party.

         9.2 Right of Subrogation. In connection with Purchaser's right of
subrogation pursuant to Section 2.1(ix), upon the written request of Purchaser,
TWA shall, and shall cause each other Seller to, cooperate with Purchaser in
connection with any action or proceeding by Purchaser (whether or not in the
name of any such Seller) to enforce any such subrogation right.

         9.3 Confidentiality. Each party hereto acknowledges that the other
parties have legitimate and continuing proprietary interests in the protection
of their confidential information and that the parties have invested substantial
sums and will continue to invest substantial sums to develop, maintain and
protect such confidential information. Prior to and after the Closing, each
party agrees not to disclose, furnish or make accessible to anyone or use for
its own benefit (other than as contemplated hereby) any trade secrets or


                                       41
<PAGE>   47

other confidential or proprietary information of another party relating to any
Seller, Purchaser and/or their respective businesses or the other parties
including, but not limited to, information obtained by or revealed to such party
during any investigations, negotiations or review relating to this Agreement and
any other document contemplated hereby or thereby or any past or future actions
taken in connection with, pursuant to, in accordance with, or under this
Agreement, including without limitation any business plans, marketing plans,
financial information, strategies, systems, programs, methods and computer
programs; provided, however, that such protected information shall not include
(i) information required to be disclosed by law, legal or judicial process
(including a court order, subpoena or order of a Governmental Authority) or the
rules of any stock exchange, (ii) information that is or becomes available to
the disclosing party on a non-confidential basis from a source other than the
other parties and not obtained in violation of this Agreement and (iii)
information known to the public or otherwise in the public domain without
violation of this Section 9.3; provided, further, that this Section 9.3 shall
not in any way limit the disclosure of information by TWA (a) in connection with
the commencement and prosecution of the Chapter 11 Cases or (b) regarding TWA
(i) to other bidders or potential bidders to the extent specifically permitted
by this Agreement or (ii) following the termination of this Agreement. Each
party hereto further agrees that: (i) unless otherwise approved by antitrust
counsel to Purchaser and TWA, respectively, only information relating to due
diligence matters (and not information relating to integration or otherwise)
shall be delivered by TWA to Purchaser and its representatives for purposes of
Purchaser conducting any due diligence in accordance with this Agreement; (ii)
Purchaser agrees that any information provided by TWA will only be used by
Purchaser to conduct due diligence in accordance with this Agreement; (iii)
information received by Purchaser will be disclosed only to those Purchaser
personnel and representatives (a) who need to know such information for the
purpose of conducting due diligence in accordance with this Agreement and (b)
have agreed to only use such information for purposes of conducting due
diligence in accordance with this Agreement; (iv) TWA acknowledges that it will
be necessary for Purchaser, in the course of its due diligence investigation, to
have discussions regarding TWA with third parties who have contractual
relationships with TWA and Purchaser hereby agrees that it will, upon commencing
any such discussion or as soon as practicable thereafter, notify TWA of the
identity of any such third party; and (v) Purchaser hereby agrees that all
requests by Purchaser and its representatives for additional information or
access will be submitted to one or more of the appropriate information
representatives previously designated by TWA (or any officer, director, employee
or agent of TWA approved by Stan Henderson).

         9.4 Post-Closing Assignments. After the Closing Date and upon the
discovery by any Seller of any items included within the definition of
Transferred Assets or Assumed Contracts but not transferred, conveyed or
assigned to or assumed by Purchaser in the Bill of Sale, the Assumption
Agreement or any other applicable instrument of conveyance, TWA shall (i)
immediately deliver written notice to Purchaser of the existence and
non-transfer or non-assumption of such item and provide Purchaser with all the
information about and with access to such item as Purchaser may reasonably
request and (ii) if notified in writing by Purchaser within 30 days after the
delivery of such notice by TWA, transfer, convey or assign to Purchaser such
item in the manner and on the

                                       42
<PAGE>   48

terms and conditions as if it were a Transferred Asset or Assumed Contract under
this Agreement.

         9.5 Transition Agreements.

                  (a) If requested in writing by Purchaser on or before 10 days
prior to the Closing Date, TWA shall use its best efforts to (i) enter into one
or more of a lease, sublease, license, use agreement, transition services
agreement or any other similar arrangement on terms reasonably acceptable to
Purchaser and TWA and/or (ii) at Purchaser's sole expense, keep in force and
effect any existing agreements or arrangements in order to provide Purchaser
access to and/or the full use and benefit of any Excluded Asset, any item listed
on Schedule 2.2 (including, without limitation, real property leases and third
party administration contracts) or any other item not transferred to Purchaser
under this Agreement and listed by Purchaser in such request for a reasonable
period of time. TWA will defend and dispute any efforts to preclude Purchaser
from having the benefits of this Section 9.5(a).

                  (b) At the Closing, the Purchaser and TWA, on behalf of itself
and the other Sellers, agree to negotiate and enter into a mutually acceptable
transition services agreement (the "Transition Services Agreement") whereby the
Purchaser shall provide, or shall cause its wholly-owned direct and indirect
subsidiaries to provide, to Sellers various services, including without
limitation, financial services (e.g., controller functions, payroll functions,
financial reporting functions, systems management functions, accounts payable
functions), infrastructure support services (e.g., information technology and
application support), operations support services (e.g., storage space, office
space, etc.), and human resources services (e.g., staffing), pursuant to
mutually acceptable and reasonable terms and conditions.

         9.6 Property Tax Payments. From and after the Closing Date, Purchaser
shall use that portion of the Purchase Price held back pursuant to Section 4.8
to pay and discharge all personal property, ad valorem and other tax payments
owed by Sellers pursuant to Section 4.5 and Section 4.6 and any remaining
amounts held back shall be returned to the account of TWA.

         9.7 Frequent Flyer Programs. Purchaser agrees that, following the
Closing, participants in TWA's Aviators frequent-flyer program will be given the
opportunity to exchange accrued miles in the Aviators program for miles in
Purchaser's AAdvantage frequent-flyer program on a mile-for-mile basis;
provided, that it shall be a condition of such exchange that, to the extent that
such participant is not already an AAdvantage member, such participant shall be
required to enroll in the AAdvantage program and all AAdvantage miles delivered
in exchange for Aviators miles shall be subject to the terms and conditions of
(i) such enrollment and (ii) the AAdvantage program as may be in effect from
time to time. In addition, Purchaser (or its permitted assignee hereunder)
agrees to negotiate in good faith with TWA for the purposes of entering into an
agreement with TWA whereby Purchaser (or its permitted assignee) will provide
services to TWA from and after the Closing for the purposes of (i) administering
the Aviators program on behalf of TWA, and (ii) honoring partner and
participation contracts of TWA

                                       43
<PAGE>   49

with respect to the Aviators program; provided, however, that such agreement
between TWA and Purchaser (or its permitted assignee) will expire no less than
180 days following the Closing Date and provided, further, that Purchaser (or
its permitted assignee) shall not, by virtue of any such agreement, be deemed to
have assumed any contract, arrangement or other understanding with respect to
the Aviators program except as may otherwise be expressly set forth in this
Agreement.

         9.8 Access to Information For a period of thirty six (36) months after
the Closing Date (the "Transition Period"), TWA, Purchaser and their
representatives shall have reasonable access to, and each shall the right to
photocopy at their own expense, all of the books and records, including any
computerized databases and files and programs and associated software, (the
"Books and Records") relating to the pre-Closing operations of TWA and/or the
Transferred Assets as they existed as of the Closing Date, including but not
limited to (i) the investigation, evaluation and prosecution of any and all
causes of action retained by any Seller, (ii) the evaluation and defense of any
and all claims brought against the estate of any Seller and (iii) all
transferred employees' records or other personnel and medical records required
by law, legal process or subpoena, in the possession of the other party to the
extent that such access may reasonably be required by such party in connection
with the Assumed Liabilities and Retained Liabilities, or other matters relating
to or affected by the operation of TWA's business or use of the Transferred
Assets. During the Transition Period, Purchaser agrees to provide TWA and any of
its representatives, during ordinary business hours, upon reasonable request and
notice and at TWA's expense, with reasonable access to employees of the
Purchaser for purposes of winding down the estates of Sellers. Access pursuant
to this Section 9.8 shall be afforded by the party in possession of such Books
and Records, upon receipt of reasonable advance notice, during normal business
hours and at the expense of the requesting party; provided, however, that (A)
any such investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the business of any party, (B) no party shall
be required to take any action which would constitute a waiver of the
attorney-client privilege or which would require the disclosure of confidential
information and (C) no party need to supply the other party with any information
which such party is under a legal obligation not to supply. The party exercising
this right of access shall be solely responsible for any costs or expenses
incurred by it pursuant to this Section 9.8. If the party in possession of such
Books and Records shall desire to dispose of any such Books and Records upon or
prior to the expiration of such period, such party shall, prior to such
disposition, give the other party a reasonable opportunity at such other party's
expense, to segregate and remove such Books and Records as such other party may
select.

                                   ARTICLE X

                                EMPLOYEE MATTERS

         10.1 Hiring Obligations. Upon the occurrence of the Closing, Purchaser
shall (i) offer all of Sellers' U.S.-based union employees (other than personnel
who (A) have previously been terminated by Purchaser or an entity controlled by
Purchaser or (B)

                                       44
<PAGE>   50

would not be qualified for employment under Purchaser's general hiring policies
as in effect at Closing) employment by Purchaser or one or more entities
controlled by Purchaser at compensation levels substantially equivalent to those
currently enjoyed by similarly situated employees of Purchaser or such
controlled entity, (ii) offer employment to certain members of TWA's executive
management and non-union employees on a case-by-case basis at Purchaser's sole
discretion and (iii) provide employment benefits and post-retirement benefits to
all employees actually hired by Purchaser pursuant to (i) and (ii) above at
levels substantially no less favorable than those benefits provided to
Purchaser's similarly situated employees. Any Seller employees to be hired by
Purchaser or an entity controlled by Purchaser in accordance with this Section
10.1 will be hired in accordance with terms and conditions established by
Purchaser or such entity (and, where applicable, in accordance with and pursuant
to collective bargaining agreements relating to employees of Purchaser or such
controlled entity).

         10.2 Union Matters. All offers of employment made by Purchaser in
accordance with Section 10.1(i) above and all benefits to be provided pursuant
to Section 10.1(iii) above will be conditioned on acceptance by all such
employees of Purchaser's work rules then in effect and in effect after the
Closing Date from time to time that are generally applicable to similarly
situated employees of Purchaser. Purchaser and Sellers agree to encourage their
respective unions to negotiate in good faith to resolve fair and equitable
seniority integration. Prior to Closing, TWA shall amend all existing Collective
Bargaining Agreements relating to any present or former employee of TWA to
provide that (i) scope, successorship, and benefits provisions of the Collective
Bargaining Agreements are not applicable to or being assumed by Purchaser as
part of or as the result of the transactions contemplated by this Agreement, and
(ii) consummation of the transactions contemplated by this Article X will not
violate or breach in any manner any provision of any Collective Bargaining
Agreement (collectively, the "CBA Amendments").

         10.3 Treatment of Pension Plans. Sellers' employees hired by Purchaser
pursuant to Section 10.1 above shall cease to participate in all pension plans
(within the meaning of section 3(2) of ERISA) maintained or contributed to by
any of Sellers. Purchaser shall not assume or be liable for any such pension
plans. Purchaser intends to permit a transfer or merger of the assets of any
such pension plan which is a defined contribution plan (as defined in section
3(34) of ERISA) that Purchaser determines is qualified under section 401(a) of
the Code, or may permit the receipt of eligible rollover distributions (within
the meaning of section 402(f)(2)(A) of the Code) from such plan, with or to any
plan of Purchaser after the Closing Date.

         10.4 Treatment of Welfare Plans. Sellers' employees hired by Purchaser
pursuant to Section 10.1 above shall cease to participate in all welfare plans
(within the meaning of section 3(1) of ERISA) maintained or contributed to by
any of Sellers. Purchaser shall not assume or be liable for any such welfare
plans. Sellers shall have sole responsibility for "continuation coverage"
benefits provided under Sellers' group health plans to all former employees of
Sellers, and "qualified beneficiaries" of former employees of Sellers, for whom
a "qualifying event" has occurred on or prior to the


                                       45
<PAGE>   51

Closing Date. Terms used in this subsection and not otherwise defined herein
shall have the meanings ascribed to them under section 4980B of the Code and
sections 601-608 of ERISA.

         10.5 Tax Reporting. If requested by Purchaser, Purchaser, TWA and each
other Seller agree that, pursuant to the "Alternative Procedure" provided in
Section 5 of Revenue Procedure 96-60, 1996-2 C.B. 399, (i) Purchaser, TWA and
each other Seller will report on a predecessor-successor basis as set forth
therein, (ii) TWA and each other Seller will be relieved from filing a Form W-2
with respect to any employee of TWA and each other Seller who accepts employment
with Purchaser, and (iii) Purchaser will file (or cause to be filed) a Form W-2
for each such employee for the year that includes the Closing Date (including
the portion of such year that such employee was employed by TWA or any other
Seller). TWA agrees to provide Purchaser with all payroll and employment-related
information reasonably requested by Purchaser with respect to each employee of
TWA and each other Seller who commences employment with Purchaser.

                                   ARTICLE XI

                                  RISK OF LOSS

         11.1 Risk of Loss on Sellers. TWA shall bear the risk of any loss or
damage to any Transferred Assets at all times prior to the delivery of physical
possession thereof to Purchaser in accordance with Section 5.3. TWA shall
promptly notify Purchaser if any such loss or damage occurs. If any such
Transferred Asset has been damaged but not destroyed then TWA promptly shall
fully repair (or cause the applicable Seller to fully repair) such Transferred
Asset; provided, however, that such repair obligation shall not exist if the
cost of repair would be sufficiently large that the only reasonable course of
action would be to treat such Transferred Asset as a total loss. In the event of
any total loss (or loss treated as a total loss in accordance with the
immediately prior sentence) of any Transferred Asset, the Purchase Price shall
be reduced in accordance with Section 4.4. If any loss or damage to any tangible
Transferred Asset occurs following the Closing at which such Transferred Asset
was conveyed to Purchaser but prior to the delivery of physical possession
thereof to Purchaser in accordance with Section 5.3, then TWA promptly shall pay
or cause the applicable Seller to pay to Purchaser the amount by which the
Purchase Price would have been reduced in accordance with Section 4.4 if such
loss or damage had occurred prior to the Closing.

                                  ARTICLE XII

                       FURTHER AGREEMENTS AND TERMINATION

         12.1 Termination Payment.

                  (a) In the event that this Agreement is terminated pursuant to
Section 12.3(c)(iii) (in a case in which any Seller is in material default or
material breach of this Agreement, or where a representation or warranty made as
of the date of the Original Agreement is shown to have been inaccurate as of the
date of the Original


                                       46
<PAGE>   52

Agreement, subject to the other terms and conditions of Section 12.3(c)(iii)
regarding such inaccuracy) or Section 12.3(c)(iv) of this Agreement or by TWA
pursuant to Section 12.3(b)(iii) of this Agreement, then in any such case TWA
shall be obligated to pay Purchaser, in cash, an amount (not to exceed
$10,000,000) on account of the Purchaser Expenses.

                  (b) Any amount payable pursuant to this Section 12.1 shall be
referred to as the "Termination Amount". The Termination Amount shall be paid
immediately prior to the termination of this Agreement.

         12.2 Bankruptcy Termination Payment. In the event this Agreement is
terminated pursuant to Section 12.3(b)(i) of this Agreement, TWA shall be
obligated to pay to Purchaser, in cash, the sum of $55,000,000 plus an amount
(not to exceed $10,000,000) on account of the Purchaser Expenses (such sum being
the "Section 12.3(b)(i) Termination Amount"), which amount shall be payable no
later than the earlier of (i) the consummation of the Recapitalization
Transaction or sale (whether in one transaction or a series of transactions) of
either TWA or all or substantially all of the assets of TWA or all or
substantially all of the Transferred Assets to a Person or Persons other than
Purchaser or an Affiliate of Purchaser, (ii) the effective date of any plan of
reorganization (that is not a plan of liquidation) confirmed in the Chapter 11
Cases, (iii) the dismissal of the Chapter 11 Cases, and (iv) the conversion of
the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code. In the
event this Agreement is terminated pursuant to Section 12.3(c)(i) or Section
12.3(c)(ii) of this Agreement, then (i) TWA shall be obligated to pay Purchaser,
immediately upon such termination of this Agreement, an amount (not to exceed
$10,000,000) on account of the Purchaser Expenses, and (ii) if, (x) within
twelve (12) months following such termination of this Agreement, TWA or the
other Sellers consummate a Recapitalization Transaction or sale of either TWA or
all or substantially all of the assets of TWA or all or substantially all of the
Transferred Assets to a Person (or group of Persons) other than Purchaser or an
Affiliate of Purchaser, or (y) within twenty-four (24) months following such
termination of this Agreement, a chapter 11 plan for TWA or the other Sellers is
confirmed, then TWA shall be obligated to pay to Purchaser, immediately upon the
consummation of any such transaction, an amount equal to $55,000,000 (the sum of
the amounts described in clauses (i) and (ii) above being the "Alternative
Termination Amount," with the Section 12.3(b)(i) Termination Amount and the
Alternative Termination Amount being referred to herein collectively as the
"Bankruptcy Termination Amount"); provided, however, that, in accordance with
the terms and conditions of the Sale Procedures Order, the Bankruptcy
Termination Amount shall not be applicable to and Purchaser shall not be paid
the Bankruptcy Termination Amount if Purchaser is the successful bidder for the
Transferred Assets but not the successful bidder for the Worldspan interest.

         12.3 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:

                  (a) by mutual consent of each of TWA and Purchaser;


                                       47
<PAGE>   53

                  (b) by either of TWA or Purchaser (provided that such party is
not then in material breach of any provision of this Agreement or any agreement
underlying the DIP Facility):

                           (i) if the Bankruptcy Court approves a
         Recapitalization Transaction or a sale of TWA or all or substantially
         all of the assets of TWA or any of the Transferred Assets to a Person
         (or group of Persons) other than Purchaser or an Affiliate of
         Purchaser, provided, that no termination under this Section 12.3(b)(i)
         shall be effective until the Section 12.3(b)(i) Termination Amount
         shall have been paid to Purchaser;

                           (ii) if a Governmental Authority shall have issued an
         order, decree or ruling or taken any other action (which order, decree
         or ruling the parties hereto shall use their reasonable best efforts to
         lift), in each case permanently restraining, enjoining or otherwise
         prohibiting the transactions contemplated by this Agreement and such
         order, decree, ruling or other action shall have become final and
         nonappealable; or

                           (iii) if the Closing shall not have occurred on or
         before the Scheduled Closing Date.

                  (c) by Purchaser (provided that Purchaser is not then in
material breach of any provision of this Agreement or any agreement underlying
the DIP Facility):

                           (i) if the Sale Procedures Order is modified in any
         respect without the consent of Purchaser;

                           (ii) if the Approval Order has not been entered by
         the Bankruptcy Court within 10 days of the Approval Order Hearing Date
         and, as of the time of such termination of this Agreement, the Approval
         Order has not been entered by the Bankruptcy Court; or

                           (iii) if a material default or material breach shall
         be made by any Seller with respect to the due and timely performance of
         any of its covenants or agreements contained herein, or if its
         representations or warranties contained in the Agreement shall have
         become inaccurate (without giving effect to any materiality or Material
         Adverse Effect qualifications or exceptions contained therein) and such
         inaccuracy has had or would be reasonably likely to have a Material
         Adverse Effect, if such default, breach or inaccuracy has not been
         cured or waived within 30 days after written notice to such Seller
         specifying, in reasonable detail, such claimed default, breach or
         inaccuracy and demanding its cure or satisfaction; or

                           (iv) if an event or events or circumstance shall have
         occurred since the date of the Original Agreement which, independently
         or together with any other event, events or circumstance that have
         occurred or are reasonably likely to occur, have or are reasonably
         likely to have a Material Adverse Effect.


                                       48
<PAGE>   54

                  (d) by TWA (provided that TWA is not then in material breach
of any provision of this Agreement or any agreement underlying the DIP Facility)
if a material default or breach shall be made by Purchaser with respect to the
due and timely performance of any of its covenants or agreements contained
herein, or if its representations or warranties contained in the Agreement shall
have become inaccurate and such inaccuracy has had or would be reasonably likely
to have a Purchaser Material Adverse Effect, if such default, breach or
inaccuracy has not been cured or waived within 30 days after written notice to
Purchaser specifying, in reasonable detail, such claimed default, breach or
inaccuracy and demanding its cure or satisfaction;

         12.4 Procedure and Effect of Termination. This Agreement shall in no
event terminate unless and until any and all amounts payable to Purchaser
pursuant to Section 12.1 and Section 12.2 in connection with such proposed
termination shall have been paid in full to Purchaser. In the event of
termination and abandonment of the transactions contemplated hereby pursuant to
Section 12.3, written notice thereof shall forthwith be given to the other
parties to this Agreement and this Agreement shall terminate (subject to the
provisions of this Section 12.4) and the transactions contemplated hereby shall
be abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein:

                  (a) upon request therefor, each party shall redeliver all
documents, work papers and other material of any other party relating to the
transactions contemplated hereby, whether obtained before or after the execution
hereof, to the party furnishing the same;

                  (b) no party hereto shall have any liability or further
obligation to any other party to this Agreement resulting from such termination
except (i) that the provisions of Section 12.1, Section 12.2, this Section 12.4
and Section 9.3 shall remain in full force and effect and (ii) no party waives
any claim or right against a breaching party to the extent that such termination
results from the breach by a party hereto of any of its representations,
warranties, covenants or agreements set forth in this Agreement; provided,
however, that in the event Purchaser is entitled to receive the Termination
Amount or the Bankruptcy Termination Amount, the right of Purchaser to receive
such amount shall constitute Purchaser's sole remedy for (and such amount shall
constitute liquidated damages in respect of) any breach by any Seller of any of
its representations, warranties, covenants or agreements set forth in this
Agreement; and

                  (c) the DIP Facility shall be terminated or shall terminate in
accordance with its terms.

                                  ARTICLE XIII

                            MISCELLANEOUS PROVISIONS

         13.1 Notices. All notices and other communications required or
permitted hereunder shall be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly given when delivered in person or
when dispatched by

                                       49
<PAGE>   55

electronic facsimile transfer (confirmed in writing by mail simultaneously
dispatched) or one business day after having been dispatched by a nationally
recognized overnight courier service to the appropriate party at the address
specified below:

                  (a) If to TWA, to:

                      Trans World Airlines, Inc.
                      One City Centre
                      515 North 6th Street
                      St. Louis, Missouri  63101
                      Attention:  Kate Soled
                      Facsimile:  (314) 589-3461

                      with a copy to:

                      Kirkland & Ellis
                      Aon Center
                      200 East Randolph Drive
                      Chicago, Illinois  60601
                      Attention:  Willard G. Fraumann & James H.M. Sprayregen
                      Facsimile:  (312) 861-2200

                  (b) If to Purchaser, to:

                      American Airlines
                      4333 Amon Carter Boulevard
                      Fort Worth, Texas  76155
                      Attention:  Anne McNamara
                      Facsimile:  (817) 967-2501

                      with copies to:

                      Weil, Gotshal & Manges LLP
                      767 Fifth Avenue
                      New York, New York 10153
                      Attention:  Thomas A. Roberts & Alan B. Miller
                      Facsimile:  (212) 310-8007

                      and

                      Weil, Gotshal & Manges LLP
                      100 Crescent Court, Suite 1300
                      Dallas, Texas  75201
                      Attention:  Mary R. Korby
                      Facsimile:  (214) 746-7777


                                       50
<PAGE>   56

or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.

         13.2 Actions by Sellers. Where any provision of this Agreement
indicates that any Seller shall take any specified action (or refrain from
taking any specified action) or requires any Seller to take any specified action
(or to refrain from taking any specified action), then, regardless of whether
this Agreement specifically provides that TWA shall do so, TWA shall cause such
Seller to take such action (or to refrain from taking such action, as
applicable). TWA shall be responsible for the failure of any such Seller to take
any such action (or to refrain from taking any such action, as applicable).

         13.3 Expenses. Except as otherwise expressly provided herein, each
party hereto shall pay any expenses incurred by it incident to this Agreement
and in preparing to consummate and consummating the transactions provided for
herein.

         13.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
(including, without limitation, any trustee appointed for TWA or any of the
Sellers) and permitted assigns, but shall not be assignable or delegable by any
party without the prior written consent of the other party; provided, however,
that upon notice to TWA or any other Seller delivered in accordance with Section
13.1, Purchaser may assign or delegate any or all of their rights or obligations
under this Agreement to any Affiliate thereof or to any Person that directly or
indirectly acquires, after the Closing, all or substantially all of the assets
or voting stock of Purchaser, but such assignment or delegation shall not
relieve Purchaser of any obligation hereunder.

         13.5 Waiver. Purchaser may, by written notice to TWA, and TWA (for
itself and on behalf of all other Sellers) may, by written notice to Purchaser,
(a) extend the time for performance of any of the obligations of the other party
under this Agreement, (b) waive any inaccuracies in the representations or
warranties of the other party contained in this Agreement, (c) waive compliance
with any of the conditions or covenants of the other party contained in this
Agreement, or (d) waive or modify performance of any of the obligations of the
other party under this Agreement; provided, however, that no such party may,
without the prior written consent of the other party, make or grant such
extension of time, waiver of inaccuracies or compliance or waiver or
modification of performance with respect to its representations, warranties,
conditions or covenants hereunder. Except as provided in the immediately
preceding sentence, no action taken pursuant to this Agreement shall be deemed
to constitute a waiver of compliance with any representations, warranties,
conditions or covenants contained in this Agreement or shall operate or be
construed as a waiver of any subsequent breach, whether of a similar or
dissimilar nature.

         13.6 Entire Agreement; Disclosure Schedules. This Agreement, which
includes the schedules and exhibits hereto, supersedes any other agreement,
whether written or oral, that may have been made or entered into by any party
relating to the matters contemplated hereby, including without limitation that
certain Letter Agreement dated as


                                       51
<PAGE>   57

of February 5, 2001 between TWA and Purchaser, and constitutes the entire
agreement by and among the parties hereto.

         13.7 Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be
determined by Purchaser and TWA to be necessary, desirable or expedient to
further the purposes of this Agreement or to clarify the intention of the
parties.

         13.8 Rights of the Parties. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give any Person
other than the parties hereto any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby.

         13.9 Applicable Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the rules
and substantive Laws of the State of New York, without regard to conflicts of
law provisions thereof.

         13.10 Execution in Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement. Any counterpart may
be executed by facsimile signature and such facsimile signature shall be deemed
an original.

         13.11 Titles and Headings. Titles and headings to Sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.

         13.12 Invalid Provisions. If any provision of this Agreement (other
than Section 5.4 or Article XII of this Agreement or any part or provision
thereof) is held to be illegal, invalid, or unenforceable under any present or
future Law, and if the rights or obligations under this Agreement of TWA on the
one hand and Purchaser on the other hand will not be materially and adversely
affected thereby, (a) such provision shall be fully severable; (b) this
Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part hereof; (c) the remaining
provisions of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid, or unenforceable provision or by its
severance from this Agreement; and (d) in lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically as a part of this
Agreement a legal, valid, and enforceable provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible.

         13.13 Transfers. Purchaser and TWA shall, and TWA shall cause each
other Seller to, cooperate and take such action as may be reasonably requested
by the other in order to effect an orderly transfer of the Transferred Assets
with a minimum of disruption to the operations and employees of the businesses
of Purchaser, TWA or any other Seller.

         13.14 Brokers. TWA hereby agrees to indemnify and hold harmless the
Purchaser against any liability, claim, loss, damage or expense incurred by TWA
or any

                                       52
<PAGE>   58

other Seller relating to any fees or commissions owed to any broker, finder or
financial advisor as a result of actions taken by TWA or any other Seller.
Purchaser hereby agrees to indemnify and hold harmless TWA against any
liability, claim, loss, damage or expense incurred by Purchaser relating to any
fees or commissions owed to any broker, finder or financial advisor as a result
of actions taken by Purchaser.

         13.15 Exculpation. Each Seller agrees that neither Purchaser nor its
respective controlling persons, officers, directors, partners, agents, employees
or other representatives shall be liable for any action heretofore or hereafter
taken or omitted to be taken by any of them in connection with the transactions
contemplated by this Agreement.

         13.16 Principles of Interpretation. Whenever used in this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
any noun or pronoun shall be deemed to include the plural as well as the
singular and to cover all genders. Unless otherwise specified, the terms
"hereof," "herein," "hereby" and similar terms refer to this Agreement as a
whole (including the exhibits and schedules hereto), and references herein to
Articles or Sections refer to Articles or Sections of this Agreement.

            [The remainder of this page is intentionally left blank.]


                                       53
<PAGE>   59


         IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Asset Purchase Agreement as of the day and year first above written.

                                            AMERICAN AIRLINES, INC.


                                            By:    /s/ Charles D. MarLett
                                                   -----------------------
                                            Name:  Charles D. MarLett
                                                   -----------------------
                                            Title: Corporate Secretary
                                                   -----------------------

                                            TRANS WORLD AIRLINES, INC.


                                            By:    /s/ William F. Compton
                                                   -----------------------
                                            Name:  William F. Compton
                                                   -----------------------
                                            Title: President & CEO
                                                   -----------------------

<PAGE>   60


                                    EXHIBIT A

                                   DEFINITIONS

         "Accounts Receivable Amount" shall mean "Receivables, Less Allowance
for Doubtful Accounts" of TWA and its consolidated subsidiaries as of the
Closing Date, as stated in the Pre-Closing Statement or Final Closing Statement,
calculated on a basis consistent in all material respects with the methods,
principles, practices and policies employed in the preparation and presentation
of "Receivables, Less Allowance for Doubtful Accounts" contained in the
September Balance Sheet and in accordance with generally accepted accounting
principles consistently applied (without regard to consummation of the
transactions contemplated by this Agreement).

         "Accrued Employee Expenses Amount" shall mean the sum of "Accrued
Expenses: Employee Compensation and Vacations Earned" and "Accrued Expenses:
Contributions to Retirement and Pension Trusts", in each case of TWA and its
consolidated subsidiaries as of the Closing Date, as stated in the Pre-Closing
Statement or Final Closing Statement, calculated on a basis consistent in all
material respects with the methods, principles, practices and policies employed
in the preparation and presentation of "Accrued Expenses: Employee Compensation
and Vacations Earned" and "Accrued Expenses: Contributions to Retirement and
Pension Trusts" contained in the September Balance Sheet and in accordance with
generally accepted accounting principles consistently applied (without regard to
consummation of the transactions contemplated by this Agreement).

         "Acquisition Proposal" means any proposal or offer, other than a
proposal or offer by Purchaser or any of its Affiliates, for (a) any merger,
consolidation, share exchange, business combination or other similar transaction
with TWA or any of the other Sellers, (b) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of 10% or more of the assets and
liabilities of TWA in a single transaction or series of transactions (whether
related or unrelated), (c) any tender offer or exchange offer for 20% or more of
the outstanding shares of TWA's common stock or any class of TWA's debt
securities or the filing of a registration statement under the Securities Act of
1933, as amended, in connection therewith, (d) the acquisition of beneficial
ownership or a right to acquire beneficial ownership of, or the formation of any
"group" (as defined under Section 13(d)(3) of the Securities Exchange Act of
1934, as amended) which beneficially owns or has the right to acquire beneficial
ownership of 20% or more of the then outstanding shares of any class of TWA's
common stock or any class of TWA's debt securities or (e) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.

         "Advance Ticket Sales Amount" shall mean "Advance Ticket Sales" of TWA
and its consolidated subsidiaries as of the Closing Date, as stated in the
Pre-Closing Statement or Final Closing Statement, calculated on a basis
consistent in all material respects with the methods, principles, practices and
policies employed in the preparation and presentation of "Advance Ticket Sales"
contained in the September Balance Sheet


                                      A-1
<PAGE>   61

and in accordance with generally accepted accounting principles consistently
applied (without regard to consummation of the transactions contemplated by this
Agreement).

         "Affiliate" shall mean with respect to any Person, any other person
who, directly or indirectly, controls, is controlled by, or is under common
control with that Person.

         "Agreement" shall have the meaning ascribed to such term in the
preamble to this Agreement.

         "Aircraft" shall mean each of the Owned Aircraft and Leased Aircraft
contemplated by this Agreement, each consisting of an airframe and each of the
following items installed on or in such airframe: Engines, landing gear,
auxiliary power units, avionics, appliances, parts, furnishings, instruments,
accessories and equipment.

         "Aircraft Leases" shall have the meaning ascribed to such term in
Section 6.12(b) of this Agreement.

         "Alternative Termination Amount" shall have the meaning ascribed to
such term in Section 12.2 of this Agreement.

         "Approval Order" shall have the meaning ascribed to such term in
Section 8.11(d) of this Agreement.

         "Approval Order Hearing Date" shall have the meaning ascribed to such
term in Section 8.11(a) of this Agreement.

         "Assumed Aircraft Leases" shall mean the Aircraft Leases (as may be
modified prior to Closing with the consent of Purchaser and TWA) other than
Designated Aircraft Leases.

         "Assumed Contracts" shall mean the following contracts or agreements in
effect as of the date of the Original Agreement, as may be modified prior to
Closing with the consent of Purchaser and TWA (provided that if any such
contracts or agreements relate not only to Transferred Assets but also other
assets, then only the portions of such contracts and agreements that relate
specifically to the Transferred Assets shall be deemed to be Assumed Contracts),
in each case other than Designated Contracts:

         (a)      the Assumed Aircraft Leases;

         (b)      the Assumed Gate Leases;

         (c)      the Assumed Ground Equipment Leases;

         (d)      the Assumed Gate Property Leases;

         (e)      the Retention Agreements; and


                                      A-2
<PAGE>   62

         (f)      all other contracts, agreements, arrangements and
                  understandings of Sellers, other than Retained Liabilities and
                  Excluded Assets.

         "Assumed Debt Obligations" shall have the meaning ascribed to such term
in Section 3.1(a) of this Agreement.

         "Assumed Gate Leases" shall mean the Gate Leases (as may be modified
prior to Closing with the consent of Purchaser and TWA) other than Designated
Gate Leases.

         "Assumed Gate Property Leases" shall mean the Gate Property Leases (as
may be modified prior to Closing with the consent of Purchaser and TWA) other
than Designated Gate Property Leases.

         "Assumed Ground Equipment Leases" shall mean the Ground Equipment
Leases (as may be modified prior to Closing with the consent of Purchaser and
TWA) other than Designated Ground Equipment Leases.

         "Assumed Liabilities" shall have the meaning ascribed to such term in
Section 3.1 of this Agreement.

         "Assumption Agreement" shall have the meaning ascribed to such term in
Section 5.2(b)(ii) of this Agreement.

         "Avoidance Actions" shall mean all claims and rights of action against
vendors and lessors of the Assumed Contracts and lenders under the Assumed Debt
Obligations, including, but not limited to, all rights and avoidance claims of
Sellers under chapter 5 of the Bankruptcy Code.

         "Bankruptcy Code" shall have the meaning ascribed to such term in the
Recitals of the Original Agreement.

         "Bankruptcy Court" shall have the meaning ascribed to such term in the
Recitals of the Original Agreement.

         "Bankruptcy Resolution Date" means the date on which a Final Order of
the Bankruptcy Court has been entered dismissing, closing or otherwise
terminating the Chapter 11 Cases.

         "Bankruptcy Termination Amount" shall have the meaning ascribed to such
term in Section 12.2 of this Agreement.

         "Benefit Plans" shall have the meaning ascribed to such term in Section
6.20(b) of this Agreement.

         "Bill of Sale" shall have the meaning ascribed to such term in Section
5.2(a)(i) of this Agreement.


                                      A-3
<PAGE>   63

         "Books and Records" shall have the meaning ascribed to such term in
Section 9.8 of this Agreement.

         "Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York City, New York are authorized or
required by Law to close.

         "CBA Amendments" shall have the meaning ascribed to such term in
Section 10.2 of this Agreement.

         "Chapter 11 Cases" shall mean the voluntary cases commenced by Sellers
under chapter 11 of the Bankruptcy Code.

         "Chapter 11 Sellers" shall mean all Sellers other than Constellation
Finance LLC, a Delaware limited liability company.

         "Closing" shall have the meaning ascribed to such term in Section 5.1
of this Agreement.

         "Closing Date" shall have the meaning ascribed to such term in Section
5.1 of this Agreement.

         "Closing Statement" shall have the meaning ascribed to such term in
Section 4.3(c) of this Agreement.

         "Code" shall mean the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder.

         "Collateral Agreements" shall mean the Bill of Sale, Assumption
Agreement and the other assignment or transfer documents delivered at the
Closing.

         "Collective Bargaining Agreements" shall have the meaning ascribed to
such term in Section 6.19(a) of this Agreement.

         "Competing Offer" shall have the meaning ascribed to such term in
Section 8.11(a) of this Agreement.

         "Consent" shall mean any consent, approval or authorization of, notice
to, or designation, registration, declaration or filing with, any Person.

         "Contract" shall mean any agreement, contract, lease, commitment,
license, undertaking or other legally binding contractual right or obligation to
which a Person is a party or by which a Person or its assets or properties are
bound.

         "Data" shall mean all documents, books, drawing, logs, manuals and
records relating primarily or exclusively to the Transferred Assets (including,
without limitation, maintenance and operations records relating to the Owned
Aircraft and Engines, the


                                      A-4
<PAGE>   64

Leased Aircraft and Engines leased pursuant to the Assumed Aircraft Leases, the
Spare Parts and the Ground Equipment).

         "Delivery Condition" shall mean with respect to each Aircraft:

                  (A) the Aircraft shall have a validly issued, current
         individual aircraft FAA Certificate of Airworthiness with respect to
         such Aircraft which satisfies all requirements for the effectiveness of
         such FAA Certificate of Airworthiness;

                  (B) the Aircraft shall be in a serviceable condition, such
         that the Aircraft and each of its structures, systems and components
         are functioning in accordance with its intended use as required or set
         forth in any FAA regulations, rules, standards or requirements or in
         any FAA-approved documentation, including any applicable manuals,
         technical standard orders or parts manufacturing approval certificates;

                  (C) the Aircraft shall be complete, including, without
         limitation, shall have installed therein one (1) set of catering and
         cabin service equipment used in Seller's service; and

                  (D) the Aircraft shall be in compliance with all issued and
         effective mandatory manufacturer's service bulletins and airworthiness
         directives applicable thereto, in each case which require compliance on
         or before the Closing Date.

         "Designated Aircraft Leases" shall mean those Aircraft Leases that
constitute Designated Contracts.

         "Designated Contracts" shall mean (A) any Contract that would be an
Assumed Contract but for the fact that is not (i) assignable by the applicable
Seller to Purchaser at Closing or (ii) amendable at Closing to incorporate terms
agreed to by Purchaser with the other parties to such Assumed Contract due in
either case to the inability to obtain any necessary consents of any party with
rights with respect to such Assumed Contract (including, without limitation,
lenders, guarantors, residual holders, lienholders, pre-delivery financing
providers and parties with purchase options, but excluding any primary lessor
under such Assumed Contract) and (B) any contract, agreement or other
arrangement of any Seller not elected to be transferred, conveyed or assigned to
Purchaser pursuant to Section 8.13 or not disclosed to Purchaser by TWA pursuant
to Section 8.13.

         "Designated Gate Leases" shall mean those Gate Leases that constitute
Designated Contracts.

         "Designated Gate Property Leases" shall mean those Gate Property Leases
that constitute Designated Contracts.


                                      A-5
<PAGE>   65

         "Designated Ground Equipment Leases" shall mean those Ground Equipment
Leases that constitute Designated Contracts.

         "DIP Facility" shall have the meaning ascribed to such term in the
Recitals to the Original Agreement.

         "DOT" shall mean the United States Department of Transportation or any
successor thereto.

         "Engines" shall mean engines, spare engines, parts, tooling and other
equipment necessary to support the operation of the Owned Aircraft and the
Leased Aircraft, as applicable.

         "Environmental Claims" shall have the meaning ascribed to such term in
Section 6.17(e)(i) of this Agreement.

         "Environmental Laws" shall have the meaning ascribed to such term in
Section 6.17(e)(ii) of this Agreement.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.

         "Excluded Assets" shall have the meaning ascribed to such term in
Section 2.2 of this Agreement.

         "FAA" shall mean the Federal Aviation Administration or any successor
thereto.

         "Federal Aviation Act" shall mean the Federal Aviation Act of 1958, as
amended, together with the aviation regulations of the FAA, as the same may be
in effect from time to time.

         "Final Closing Statement" shall have the meaning ascribed such term in
Section 4.3(f) of this Agreement.

         "Final Order" shall mean an order or judgment the operation or effect
of which is not stayed, and as to which order or judgment (or any revision,
modification or amendment thereof), the time to appeal or seek review or
rehearing has expired, and as to which no appeal or petition for review or
motion for rehearing or reargument has been taken or been made and is pending
for argument.

         "Gate Leases" shall have the meaning ascribed to such term in Section
6.16(b) of this Agreement.

         "Gate Property" shall mean all facilities, equipment, fixtures,
appurtenances and personality (including, without limitation, bag rooms, ticket
counters and other exclusive use space) owned or used by any Seller and used
exclusively or primarily in connection with the Gates.


                                      A-6
<PAGE>   66

         "Gate Property Documents" shall mean the Gate Leases, the Gate Property
Leases and the Ground Equipment Leases.

         "Gate Property Leases" shall have the meaning ascribed to such term in
Section 6.16(c) of this Agreement.

         "Gates" shall have the meaning ascribed to such term in Section 6.16(a)
of this Agreement.

         "Governmental Authority" shall mean any federal, state, local or
foreign government or any subdivision, agency, instrumentality, authority,
department, commission, board or bureau thereof or any federal, state, local or
foreign court, tribunal or arbitrator (including, without limitation, the
Bankruptcy Court).

         "Ground Equipment" shall mean each vehicle, tool, piece of equipment,
or other tangible asset used in connection with aircraft operations or
maintenance (other than Owned Aircraft, Leased Aircraft, and Spare Parts).

         "Ground Equipment Leases" shall have the meaning ascribed to such term
in Section 6.16(d) of this Agreement.

         "HSR Act" shall mean Hart-Scott-Rodino Act of 1976, as amended.

         "Improvements" shall have the meaning ascribed to such term in Section
6.24(b) of this Agreement.

         "Intellectual Property" shall mean (i) all inventions (whether
patentable or not patentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, divisions, continuations,
continuations-in-part, revisions, renewals, extensions, and reexaminations
thereof, (ii) all registered and unregistered trademarks, service marks, trade
dress, logos, trade names, and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations and renewals in
connection therewith, (iii) all works of authorship, including, without
limitation, all copyrightable works, all copyrights, and all applications,
registrations and renewals in connection therewith, and all moral rights, (iv)
all databases, data compilations and data collections, (v) all trade secrets and
confidential information (including, without limitation, ideas, research and
development, know-how, processes, methods, techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business, technical and marketing plans and proposals), (vi)
all domain names, web addresses and websites, (vii) all computer software,
source code and object code, whether embodied in software, firmware or otherwise
(including related data and documentation), (viii) all other intellectual
property and proprietary rights, and (ix) all copies and tangible embodiments of
all of the foregoing (i) through (ix) in any form or medium.


                                      A-7
<PAGE>   67

         "Laws" shall mean all federal, state, local or foreign laws, orders,
writs, injunctions, decrees, ordinances, awards, stipulations, statutes,
judicial or administrative doctrines, rules or regulations enacted, promulgated,
issued or entered by a Governmental Authority, including without limitation, the
Bankruptcy Code, the Federal Aviation Act and any Environmental Laws.

         "Leased Aircraft" shall have the meaning ascribed to such term in
Section 6.12(c) of this Agreement, but shall not include for any purpose hereof
aircraft listed on Schedule 2.2.

         "Leased Assets" means the Aircraft Leases, the Gate Leases, Gate
Property Leases and the Ground Equipment Leases.

         "Leased Real Estate" shall have the meaning ascribed to such term in
Section 6.24(a) of this Agreement.

         "Liens" shall mean all title defects or objections, mortgages, liens,
claims, charges, pledges, or other encumbrances of any nature whatsoever,
including without limitation licenses, leases, chattel or other mortgages,
collateral security arrangements, pledges, title imperfections, defect or
objection liens, security interests, conditional and installment sales
agreements, easements, encroachments or restrictions, of any kind and other
title or interest retention arrangements, reservations or limitations of any
nature.

         "Material Adverse Effect" shall mean (a) a material adverse effect on
the business, results of operations, condition (financial or otherwise) or
prospects of the business operated by TWA, other than any change, circumstance
or effect relating solely (i) to the economy or financial markets in general,
(ii) to changes in general political or regulatory conditions in the United
States, (iii) generally to the industries in which TWA operates and not
specifically relating to TWA, (iv) to or resulting from the announcement or
pendency of the transactions contemplated by this Agreement and/or (v) to or
resulting from the filing of the Chapter 11 Cases, or (b) a material adverse
effect on (w) the transactions contemplated by this Agreement, (x) the legality,
validity or enforceability of this Agreement and the agreements and instruments
to be entered into in connection herewith, or the realization of the rights and
remedies thereunder, (y) the ability of Purchaser to operate the business of TWA
from and after the Closing as a result of the failure or inability to obtain the
consents necessary to transfer a significant number of Aircraft underlying
Aircraft Leases to Purchaser or (z) the ability of TWA to perform its
obligations under this Agreement.

         "Materials of Environmental Concern" shall have the meaning ascribed to
such term in Section 6.17(e)(iii) of this Agreement.

         "Original Agreement" shall have the meaning ascribed to such term in
the Recitals of this Agreement.


                                      A-8
<PAGE>   68


         "Owned Aircraft" shall have the meaning ascribed to such term in
Section 6.12(a) of this Agreement, but shall not include for any purpose hereof
aircraft listed on Schedule 2.2.

         "Owned Gate Items" shall have the meaning ascribed to such term in
Section 6.16(e) of this Agreement.

         "Owned Real Estate" shall have the meaning ascribed to such term in
Section 6.24(a) of this Agreement.

         "Pension Plans Agreement" shall have the meaning ascribed to such term
in Section 6.19(d) of this Agreement.

         "Permits" shall mean all permits, licenses, approvals, franchises,
notices and authorizations issued by any Governmental Authority that relate to
or otherwise are used or are necessary in connection with the ownership,
operation or other use of any of the Transferred Assets.

         "Permitted Liens" shall mean Liens for taxes, assessments and other
governmental charges which are not due and payable.

         "Person" shall mean any individual, general partnership, limited
partnership, limited liability company, joint venture, corporation, trust,
unincorporated organization, Governmental Authority or other entity.

         "Pre-Closing Statement" shall have the meaning ascribed to such term in
Section 4.3(a) of this Agreement.

         "Purchase Price" shall have the meaning ascribed to such term in
Section 4.1 of this Agreement.

         "Purchase Price Offset Amount" shall have the meaning ascribed to such
term in Section 4.7 of this Agreement.

         "Purchaser" shall have the meaning ascribed to such term in the
preamble to this Agreement.

         "Purchaser Expenses" shall mean Purchaser's reasonable out of pocket
expenses (including but not limited to reasonable financial advisor's account's
or attorney's fees and expenses and filing fees, including without limitation
those paid in connection with filings under the HSR Act) incurred in connection
with the negotiation and performance of this Agreement and its due diligence
investigation of the Sellers and the Transferred Assets in connection with this
Agreement.

         "Purchaser Material Adverse Effect" shall mean a materially adverse
effect on the business, results of operations or financial condition of
Purchaser and its subsidiaries and Affiliates, taken as a whole, other than any
change, circumstance or effect relating (i) to the economy or financial markets
in general, (ii) to changes in general political or


                                      A-9
<PAGE>   69

regulatory conditions in the United States, (iii) generally to the industries in
which Purchaser operates and not specifically relating to Purchaser or (iv) to
or resulting from the announcement or pendency of the transactions contemplated
by this Agreement.

         "Real Estate Assets" shall have the meaning ascribed to such term in
Section 6.24(a) of this Agreement.

         "Recapitalization Transaction" means a recapitalization transaction
involving TWA and its existing security holders that does not involve the sale
of any Seller or all or substantially all of the assets of any Seller.

         "Resolution Period" shall have the meaning ascribed such term in
Section 4.3(d) of this Agreement.

         "Retained Liabilities" shall have the meaning ascribed to such term in
Section 3.2 of this Agreement.

         "Retention Agreements" shall mean the obligations of Sellers under that
certain Key Employee Retention and Severance Program filed with the Bankruptcy
Court and attached hereto as Exhibit D; excluding, however, any amounts owed or
payable by Sellers under such Key Employee Retention and Severance Program in
excess of $14,000,000 in the aggregate.

         "Rights Plan Amendment" shall have the meaning ascribed to such term in
Section 8.14 of this Agreement.

         "Route" shall have the meaning ascribed to such term in Section 6.21 of
this Agreement.

         "Sale Procedures Order" shall have the meaning ascribed to such term in
Section 8.11(a) of this Agreement.

         "Scheduled Closing Date" shall mean May 31, 2001, provided that
Purchaser may, by written notice to TWA, extend the Scheduled Closing Date to
such later date as Purchaser in its sole discretion may determine but in all
events within 30 days after satisfaction or waiver of all conditions set forth
in Section 5.4 and Section 5.5.

         "Section 12.3(b)(i) Termination Amount" shall have the meaning ascribed
to such term in Section 12.2 of this Agreement.

         "Sellers" shall have the meaning ascribed to such term in the Recitals
to this Agreement.

         "September Balance Sheet" shall have the meaning ascribed such term in
Section 4.3(a) of this Agreement.


                                      A-10
<PAGE>   70


         "Slots" shall have the meaning ascribed to such term in Section 6.13 of
this Agreement.

         "Spare Parts" shall mean spare parts used or useful in connection with
the operation and maintenance of aircraft, including without limitation
expendable and rotable spare parts and tooling.

         "Spare Parts Amount" shall mean "Spare Parts, Materials and Supplies,
Less Allowance for Obsolescence" of TWA and its consolidated subsidiaries as of
the Closing Date, as stated in the Pre-Closing Statement or Final Closing
Statement, calculated on a basis consistent in all material respects with the
methods, principles, practices and policies employed in the preparation and
presentation of "Spare Parts, Materials and Supplies, Less Allowance for
Obsolescence" contained in the September Balance Sheet and in accordance with
generally accepted accounting principles consistently applied (without regard to
consummation of the transactions contemplated by this Agreement).

         "Superior Proposal" means an Acquisition Proposal that the Board of
Directors of TWA has determined in good faith, if accepted, is reasonably likely
to be consummated taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal, and that the Board
of Directors of TWA believes in good faith, after consultation with an outside
financial advisor would, if consummated, result in a transaction more favorable
from a financial point of view than the transaction proposed by this Agreement.

         "Tax" and "Taxes" shall mean all federal, state, local, or foreign
income, payroll, employee withholding, unemployment insurance, social security,
sales, use, service, service use, leasing, leasing use, excise, franchise, gross
receipts, value added, alternative or add-on minimum, estimated, occupation,
real and personal property, stamp, transfer, workers' compensation, severance,
windfall profits, environmental (including taxes under Section 59A of the Code),
or other tax of the same or of a similar nature, including any interest,
penalty, or addition thereto, whether disputed or not.

         "Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes or any amendment
thereto, and including any schedule or attachment thereto.

         "Termination Amount" shall have the meaning ascribed to such term in
Section 12.1(b) of this Agreement.

         "Transferred Assets" shall have the meaning ascribed to such term in
Section 2.1 of this Agreement.

         "Transition Period" shall have the meaning ascribed to such term in
Section 9.8 of this Agreement.

         "Transition Services Agreement" shall have the meaning ascribed to such
term in Section 9.5(b) of this Agreement.

                                      A-11
<PAGE>   71

         "TWA" shall have the meaning ascribed to such term in the preamble to
this Agreement.

         "Warranty" shall mean all claims and rights against third parties, if
and to the extent the same relate to or arise under the Transferred Assets,
including, without limitation, all rights under manufacturers' and vendors'
warranties, if any, and all rights of recovery, set-offs and credits.

         "Worldspan" shall have the meaning ascribed to such term in Section 2.1
of this Agreement.


                                      A-12
<PAGE>   72


                                    EXHIBIT B

                              SALE PROCEDURES ORDER


<PAGE>   73

                                    EXHIBIT C

                                 APPROVAL ORDER


<PAGE>   74
                                    EXHIBIT D

                              RETENTION AGREEMENTS

                  KEY EMPLOYEE RETENTION AND SEVERANCE PROGRAM

         The objective of the Key Employee Retention and Severance Program (the
"Retention Program") is to assist the Debtors in retaining the services of their
key employees, support a smooth and successful operation of the on-going
business during the restructuring, and meet the Debtors' personnel needs during
the sale or reorganization process.

         Participants in one or more components of the Retention Program (as set
forth more fully below) consist of approximately 100 current employees
(collectively, the "Key Employees") deemed critical to the performance of the
Debtors' businesses during the Debtors' chapter 11 proceedings and include
without limitation (i) the President and Chief Executive Officer, (ii) Executive
Vice Presidents, (iii) Senior Vice Presidents, (iv) Other Executive Management
Positions, such as certain corporate vice-presidents and (v) Corporate and
Subsidiary managers and professionals.

         The Retention Program has four components: (i) a "retention" component
which provides an incentive for essential management and professional teams to
remain with the Debtors, (ii) a "severance" component to create a stronger sense
of security through the Chapter 11 process, (iii) a "success" bonus component
for those Key Employees who remain with the Debtors through the completion of
the sale or confirmation of a plan of reorganization and a reasonable amount of
time thereafter, and (iv) a discretionary bonus component to be awarded at the
discretion of the President of TWA to encourage the retention of other valuable
employees.

I.  Definitions

         Definitions: As used in the Retention Program, the following terms
shall have the following meanings when used herein with initial capital letters:

         1.1.1 "Amended Motion" shall mean the Amended Motion for an Order
Authorizing the Debtors to Implement a Key Employee Retention and Severance
Program and Assume Certain Employment Contracts filed with the Bankruptcy Court
on January 19, 2001.

         1.1.2 "Bankruptcy Court" shall mean the United States Bankruptcy Court
of the District of Delaware.

         1.1.3 "Cause" shall mean that a Key Employee has:


                                      D-1
<PAGE>   75

         (a) been convicted of or engaged in conduct which constitutes a felony,
or a misdemeanor involving moral turpitude;

         (b) been found by the Board of Directors to have willfully engaged in
conduct which is demonstrably and materially injurious to the Debtors or
Purchaser;

         (c) been found by the Board of Directors to have failed or refused to
in any material respect to competently perform his or her duties and
responsibilities (after notice and opportunity to cure if such material failure
or refusal can be cured);

         (d) breached his or her duty of loyalty to, or committed any act of
fraud, theft or dishonesty against or involving, the Debtors or Purchaser; or

         (e) breached any provision of this Retention Program or associated
retention agreement.

         1.1.4 "Change of Control Agreement(s)" shall refer to each Key
Employees respective change of control agreement with the Debtors.

         1.1.5 "Chapter 11 Cases" shall mean all actions, activities, conduct,
determinations, events, filings, proceedings and similar transactions of a legal
or non-legal nature undertaken by the Debtors pursuant to the voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code filed by Debtors
with the Bankruptcy Court on January 10, 2001.

         1.1.6 "Closing" shall mean consummation of (a) the sale of
substantially all of the Debtors assets to a Purchaser or (b) any confirmed plan
of reorganization of and for the Debtors.

         1.1.7 "Debtors" shall have the same meaning as set forth in the Amended
Motion.

         1.1.8 "Employment Agreement(s)" shall have the same meaning as set
forth in the Amended Motion.

         1.1.9  "Petition Date" shall mean January 10, 2001.

         1.1.10 "Purchaser" shall mean the successful bidder for the Debtors'
assets after an auction and as approved by the Bankruptcy Court or any entity
that succeeds to the assets of the Debtors after Closing.


                                      D-2


<PAGE>   76

II.  Retention Component

         The retention component provides incentives to Key Employees to remain
with the Debtors throughout all or a substantial portion of the Debtors'
reorganization process. Key Employees shall receive a bonus of 15% to 30% of
their annual salary (the "Retention Bonus") paid according to the following
schedule:

         (1) 1/3 of the amount upon the approval of the Retention Program and
entry of the attached order with the Bankruptcy Court;

         (2) 1/3 of the amount six months after the Petition Date; and

         (3) 1/3 of the amount twelve months after the Petition Date.

         In order to receive the applicable portion of the Retention Bonus on
any such date, the participant must be employed as of that date by the Debtors
or a Purchaser; however, the unpaid amount of any Retention Bonus shall be paid
on the earlier of (i) termination of the participant without Cause after the
Petition Date or (ii) substantial completion of a liquidation provided that, in
the event that a liquidation occurs prior to 180 days after the Closing, if a
Purchaser offers the Key Employee a comparable position with such Purchaser or a
position as a consultant to such Purchaser to facilitate the transition, the Key
Employee shall not receive payment upon substantial completion of a liquidation
of the Debtors. Instead, such Key Employee shall receive payment no earlier than
180 days after the Closing or the date such participant is terminated without
Cause . Key Employees who voluntarily terminate their employment or are
terminated for Cause shall not be entitled to receive any remaining portion of
their Retention Bonuses under the Retention Program. Upon the death or
disability of a Key Employee, any Retention Bonus then outstanding will be paid
immediately.

III.  Severance Component

         The severance component provides security to certain of the Key
Employees listed on Attachment A attached hereto, who were employed on the
Petition Date pursuant to an Employment Agreement, and who have not submitted
their resignation (or whose previously submitted resignation has been rescinded
and such rescission has been accepted by the Debtor) on or before such date
(each, a "Severance Participant"). Each Severance Participant shall receive a
severance payment equal to 2 to 3 times their annual salary (a "Severance
Payment"), as set forth in Attachment A, upon the occurrence of the earliest of
the following events (subject to the conditions set forth below):

         (1) upon Closing, in the event the Severance Participant is terminated
without Cause prior to the Closing;

         (2) upon termination of the Severance Participant without Cause
following the Closing;

         (3) 180 days after Closing; or

         (4) upon substantial completion of a liquidation of the Debtors
following the Closing, provided that, in the event that a liquidation occurs
prior to 180 days after the Closing, if a Purchaser offers the Severance
Participant a comparable position with such Purchaser or a


                                      D-3
<PAGE>   77

position as a consultant to such Purchaser to facilitate the transition, the
Severance Participant shall not receive payment upon substantial completion of a
liquidation of the Debtors. Instead, such Severance Participant shall receive
payment no earlier than 180 days after the Closing or the date such participant
is terminated without Cause.

         If any Severance Participant eligible to receive a Severance Payment is
terminated for Cause or voluntarily terminates his or her employment prior to
the Closing or within 180 days thereafter, such Severance Participant shall not
be eligible to receive any portion of the Severance Payment.

         Upon the death or disability of any Severance Participant, the
severance component shall be immediately payable.

         Each Severance Participant shall be provided with payments for life,
disability, accident and health insurance, for the period and on the terms and
conditions set forth in Section 4(c) of his or her respective Change of Control
Agreement (notwithstanding the language in 4(c) of the Change of Control
Agreements, the Retention Program provides only for payments for the above
benefits and a Purchaser will not be responsible for providing coverage for the
above benefits under any circumstances) from and after any of the events
outlined in Article III of the Retention Program; provided, however, that in no
event shall the Debtors' obligation to provide such insurance pursuant to this
paragraph exceed $396,000 in the aggregate.

IV.  Success Bonus Component

         The success bonus component will provide the financial security
necessary to retain the Key Employees. A success bonus shall be between 25% and
100% of the Key Employees annual salary (a "Success Bonus") paid according to
the following schedule:

         (a) 25% upon Closing; and

         (b) 75% upon the earlier of (i) 180 days after the Closing; (ii) the
date of termination of a Key Employee without Cause following the Closing; (iii)
the date of substantial completion of a liquidation of the Debtors, provided
that, in the event that a liquidation occurs prior to 180 days after the
Closing, if a Key Employee is offered a comparable position with a Purchaser or
a consulting position with a Purchaser to facilitate the transition, the Key
Employee shall not receive payment upon the date of a substantial completion of
a liquidation of the Debtors. Instead such Key Employee shall receive payment no
earlier than 180 days after the Closing, or the date such Key Employee is
terminated without Cause.

         In order to receive the applicable portion of the Success Bonus on any
payment date, the Key Employee must be employed on that date by the Debtors or a
Purchaser. A pro rata portion of each such payment, however, shall be paid on
the Closing if the Key Employee is terminated without Cause after the Petition
Date and prior to the Closing. In accordance with the above listed factors and
schedule, upon the death or disability of a Key Employee any remaining Success
Bonus shall be immediately payable. In the event that a Key Employee voluntarily


                                      D-4
<PAGE>   78

terminates his or her employment or is terminated for Cause, any unearned
Success Bonus will be forfeited.

V.  Discretionary Component

         The discretionary component allows the President of TWA to provide an
incentive to encourage retention of other valuable employees of the Debtors. The
President may, in his discretion, award monetary bonuses to other employees,
including Key Employees, of the Debtors from a $500,000 fund established for
such purpose. The President shall not allocate any amount from the discretionary
fund to himself.

VI.  General Provisions

         Except as set forth herein, no other provisions, including, without
limitation, any change of control provisions set forth in the Change of Control
Agreements, Employment Agreements or any other compensation agreement or
arrangement shall be binding upon the Debtors or a Purchaser. Each Severance
Participant and Key Employee who participates in the Retention Program shall be
deemed to have waived all such rights and claims in connection with his or her
Change of Control Agreement, Employment Agreement, or any other compensation
agreement.

         The total cost of the Retention Program shall not exceed $15 million in
the aggregate.


                                      D-5

<PAGE>   79
                                                                       EXHIBIT B
                     IN THE UNITED STATES BANKRUPTCY COURT
                          FOR THE DISTRICT OF DELAWARE


IN RE:                                  )   CHAPTER 11
                                        )
TRANS WORLD AIRLINES, INC., ET AL.,(1)  )   CASE NO. 01-056(PJW)
                                        )   (JOINTLY ADMINISTERED)
                                        )
                           DEBTORS.     )

          ORDER (A) AUTHORIZING AND SCHEDULING AN AUCTION AT WHICH THE
          DEBTORS WILL SOLICIT BIDS FOR ONE OR MORE SALES OF OR OTHER
         TRANSACTIONS CONCERNING SUBSTANTIALLY ALL OF THEIR ASSETS FREE
           AND CLEAR OF LIENS, CLAIMS AND ENCUMBRANCES; (B) APPROVING
             PROCEDURES FOR THE SUBMISSION OF COMPETING OFFERS; (C)
          APPROVING CERTAIN TERMINATION RIGHTS, EXPENSE REIMBURSEMENT
        AND OTHER BIDDING RIGHTS PROVISIONS; (D) SCHEDULING A HEARING TO
          CONSIDER APPROVAL OF SUCH TRANSACTION; AND (E) APPROVING THE
           FORM AND MANNER OF NOTICE OF THE TRANSACTIONS AND COMPETING
             OFFER PROCEDURES PURSUANT TO FED. R. BANKR. PROC. 2002

     A hearing having been held on January 27, 2001 (the "Procedures Hearing")
to consider the motion, dated January 10, 2001 (the "Procedures Motion"), of the
above captioned debtors and debtors in possession (collectively, the "Debtors")
for entry of an order (a) authorizing and scheduling an auction at which the
Debtors will solicit bids for the sale of all or substantially all of their
assets (the "Transferred Assets"), free and clear of liens, claims, and
encumbrances pursuant to an Asset Purchase Agreement, dated as of January 9,
2001, between American Airlines, Inc. ("American") and the Debtors as modified
during the course of the Procedures Hearing, by this Order and by a separate
amendment incorporating changes agreed to

- ----------

(1) THE DEBTORS ARE THE FOLLOWING ENTITIES: TRANS WORLD AIRLINES, INC.,
AMBASSADOR FUEL CORPORATION, LAX HOLDING COMPANY, INC., MEGA ADVERTISING INC.,
NORTHWEST 112TH STREET CORPORATION, THE TWA AMBASSADOR CLUB, INC., TRANS WORLD
COMPUTER SERVICES, INC., TRANSCONTINENTAL & WESTERN AIR, INC., TWA AVIATION,
INC., TWA GROUP, INC., TWA STANDARDS & CONTROLS, INC., TWA STOCK HOLDING
COMPANY, TWA-D.C. GATE COMPANY, INC., TWA-LAX GATE COMPANY, INC., TWA LOGAN GATE
CO., INC., TWA-NY/NJ GATE COMPANY, INC., TWA-OMNIBUS GATE COMPANY, INC., TWA-SAN
FRANCISCO GATE COMPANY, INC., TWA-HANGAR 12 HOLDING COMPANY, INC., OZARK GROUP,
INC., TWA NIPPON, INC., TWA EMPLOYEE SERVICES, INC., TWA GETAWAY VACATIONS,
INC., TRANS WORLD EXPRESS, INC., INTERNATIONAL AVIATION SECURITY INC., GETAWAY
MANAGEMENT SERVICES, INC., THE GETAWAY GROUP (U.K.) INC.

<PAGE>   80
by American at the Procedure Hearing (the "Agreement"); (b) approving procedures
for the submission of competing offers to acquire the Transferred Assets or
offers of other Alternative Transactions (as defined below)(the "Auction
Procedures"); (c) approving certain termination rights, expense reimbursement
and other bidding rights provisions; (d) scheduling a hearing to consider
approval of such sale or other transaction (the "Transaction Hearing"); and (e)
approving the form and manner of notice of the Auction Procedures and the
Transaction Hearing pursuant to Fed. R. Bankr. Proc. 2002, all as more fully
described in the Procedures Motion and as modified during the course of the
Procedures Hearing and by this Order, and due and proper notice of the
Procedures Motion having been given; and it appearing that no other or further
notice need be given; and the Court having jurisdiction to consider the
Procedures Motion and the relief requested therein in accordance with 28 U.S.C.
Sections 157(b) and 1334; and upon consideration of the Procedures Motion, and
the responses and objections thereto, and the record of the Procedures Hearing,
and after due deliberation and sufficient cause appearing therefor, it is hereby

         FOUND AND DETERMINED (2) THAT:

         A. the Debtors have articulated good and sufficient reasons for
granting the Procedures Motion, as modified, and for approval of the Notice of
Auction (defined herein) and the Auction Procedures; and


- ----------

(2)      Findings of fact shall be construed as conclusions of law and
         conclusions of law shall be construed as findings of fact when
         appropriate. See Fed. R. Bankr. P. 7052. Statements made by the Court
         from the bench at the hearing shall constitute additional conclusions
         of law and findings of fact as appropriate.



                                       2
<PAGE>   81
         B. the Auction Procedures in this Order set forth the process for the
submission and consideration of competing offers for the Transferred Assets or
the Alternative Transactions (as defined below).

         NOW, THEREFORE, IT IS HEREBY:

         ORDERED that the Procedures Motion as modified at the Procedures
Meeting and by this Order is granted; and it is further

         ORDERED that the following procedures relating to the submission and
consideration of competing offers (an "Alternative Transaction") are hereby
approved:

         A. On or before February 6, 2001, American shall, in good faith,
establish a reasonable value (the "Worldspan Allocation") not to exceed
$200,000,000 to be allocated to the cash portion of the Purchase Price, as
defined in the Agreement, for the Debtors' interest in Worldspan L.P., TWA Stock
Holding Company and Trans World FARS, Inc. (collectively, the "Worldspan
Interest"). The Debtors shall promptly file with the Court a statement setting
forth the Worldspan Allocation.

         B. The Debtors shall provide copies of this Procedures Order, the
Procedures Motion and a notice of auction containing, among other things, the
competitive bidding procedures set forth herein and substantially in the form of
Exhibit "A" hereto (the "Notice of Auction"), a copy of the Agreement and a
statement of the Worldspan Allocation (a) to those persons who were contacted by
the Debtors financial advisor, Rothschild Inc. ("Rothschild"), or who contacted
or were contacted by Rothschild or the Debtors during the prepetition marketing
process, in each case with respect to a potential sale of the Transferred Assets
and (b) to all other

                                       3
<PAGE>   82
prospective offerors and parties in interest upon written request to the
Debtors.

         C. An offer for an Alternative Transaction may be an offer to acquire
(a) all of the Transferred Assets, (b) solely the Worldspan Interest, or (c) the
Transferred Assets excluding the Worldspan Interest (the "Non-Worldspan
Assets"), and such offer or offers may be submitted singly or jointly with other
offers, and also can be an offer to propose a plan of reorganization
(liquidation) for all (but not less than all) of the Debtors. Unit bidding will
not be permitted, unless such bids, when taken together, are bids for all of the
Transferred Assets.

         D. Under no circumstances shall American be required to purchase the
Worldspan Interest if it is not the prevailing Auction bidder for the
Non-Worldspan Assets. If American is ultimately the prevailing bidder for the
Non-Worldspan Assets, but not the Worldspan Interest, the cash portion of the
Purchase Price shall be reduced by the Worldspan Allocation. A sale solely of
the Worldspan Interest to any party shall not entitle American to receive the
Termination Amount (as defined in Section 12.1 of the Agreement) or the
Bankruptcy Termination Amount (as defined in Section 12.1 of the Agreement), as
such Bankruptcy Termination Amount is amended in the next sentence, or any
portion thereof. the Bankruptcy Termination Amount is hereby reduced from
$65,000,000 (plus expenses up to $10,000,000) to $55,000,000 (plus expenses up
to $10,000,000).

         E. Upon request to the Debtors by a prospective offeror, the Debtors
shall, upon execution by such prospective offeror of a confidentiality agreement
in form and substance reasonably satisfactory to the Debtors, American, and the
Creditors' Committee (as defined herein), and upon delivery of evidence
establishing to the Debtors' reasonable satisfaction such prospective offeror's
financial capability to timely consummate its, or its portion of a, proposed



                                       4
<PAGE>   83

Alternative Transaction, provide such person (a "Prospective Offeror") with
access to relevant business and financial information that will enable such
person to evaluate the Debtors' assets and liabilities for the purpose of
submitting a competing offer for an Alternative Transaction. Prospective
Offerors shall have access to the same due diligence information from the
Debtors that the Debtors have made available to American, and due diligence
examinations for all Prospective Offerors shall proceed simultaneously. The
Debtors shall promptly provide American and the Statutory Committee of Unsecured
Creditors (the "Creditors' Committee") with the name of each Prospective
Offeror. American shall provide each Prospective Offeror with copies of
environmental studies and reports it has obtained.

         F. Within 15 days after delivery by the Debtors to American of all
disclosure schedules provided for under the Agreement and accepted by American
pursuant to Section 1.2 of the Agreement, as well as all other requested due
diligence materials, American shall deliver notice to the Debtors as to which
contracts and/or liabilities (including, without limitation, aircraft leases,
capital leases, and other obligations) American will assume at closing, and
American's due diligence conditions under the Agreement, including without
limitation, the conditions relating to environmental matters, shall terminate
(such actions by American are hereinafter referred to as "Going Firm");
provided, however, that with respect to disclosure schedules and other due
diligence provided by the Debtors to American on or before February 12, 2001. If
American makes "follow-up" requests regarding such disclosure schedules and due
diligence requests and such follow-up requests are complied with on or before
February 27, 2001, then, prior to the Auction, American shall Go Firm concerning
due diligence conditions, contracts and/or liabilities relating to such
follow-up requests. Once American "Goes Firm," its



                                       5
<PAGE>   84

due diligence periods and right to terminate the Agreement based on any and all
due diligence conditions shall be deemed to have concluded; provided that all
other conditions precedent set forth in Section 12.3(e)(iv) shall remain in
effect. American shall not, under any condition, be entitled to recover any
Termination Payment or the Bankruptcy Termination Amount unless and until it has
"Gone Firm." On the same day the Debtors receive American's Going Firm notice,
the Debtors will deliver copies of such notice to all Prospective Offerors and
to the Creditors' Committee.

         G. To be considered, each comparing offer for an Alternative
Transaction shall remain open and be irrevocable in accordance with its terms
through the Transaction Hearing, and, if it is identified as the Final Accepted
Offer (as defined below), it shall remain open and irrevocable through the date
on which all applicable regulatory approvals of its offer are obtained and
shall:

                  (i) be made by a person or persons satisfying the conditions
         described in this Order to qualify as a competing bidder (a "Competing
         Bidder");

                  (ii) be submitted in a writing signed by the Competing Bidder
         and contain (A) a representation that the Competing Bidder will agree
         to all terms and conditions set forth in the Agreement other than
         matters relating to bidding provisions, (B) a mark-up of the Agreement
         indicating the specific changes to the Agreement that the Competing
         Bidder requires, or (C) with regard to a Chapter 11 plan of
         reorganization proposed by the Competing Bidder, a separate form of
         agreement which better reflects the Alternative Transaction;

                  (iii) (A) for the Debtors' review only, provide the Competing
         Bidder's



                                       6
<PAGE>   85
                  draft submissions relating to the approval of the Competing
                  Bidder's purchase of the Transferred Assets by the Department
                  of Justice in accordance with Hart-Scott-Rodino Antitrust
                  Improvements Act of 1976, as amended, if required to
                  consummate the transaction, (B) represent that the Competing
                  Bidder(s) is/are prepared to immediately initiate all actions
                  necessary to obtain all other applicable regulatory approvals
                  for the Alternative Transaction, and (C) provide its good
                  faith estimate of the time within which such approvals will be
                  obtained;

                       (iv) not be considered to be a higher or better offer
                  unless, at a minimum, such offer or offers (A)
                  provides/provide for aggregate considerations to the Debtors'
                  estates or at least $75,000,000 in excess of the Purchase
                  Price (as defined in Section 4.1 of the Agreement) to be paid
                  by American under the Agreement, or to the extent such offer
                  is only for the Worldspan Interest, such offer provides for
                  consideration to the Debtors' estates at least ten percent
                  (10%) greater than the Worldspan Allocation, and (B) is not
                  subject to a condition based on the outcome of due diligence
                  or similar review or for procurement of financing or
                  funding of such financing,

                       (v) include a good faith deposit of $50,000,000 in cash
                  or in other form of immediately available U.S. funds (the
                  "Initial Deposit") and a commitment to provide, in the event
                  such offer ultimately is determined by the Debtors, in
                  consultation with the Creditors' Committee, to be the Final
                  Accepted Offer (as defined below), a further deposit in cash
                  or in other form of immediately available U.S. funds in the
                  amount sufficient to bring the total deposit up to the

                                       7
<PAGE>   86
amount that is equal to $50,000,000 plus 10% of the aggregate value of such
Final Accepted Offer (as defined below) other than indebtedness assumed pursuant
to such offer (the "Full Deposit"), within one business day after the Debtors
notify the Competing Bidder(s) that its/their offer(s) has/have been determined
to be the Final Accepted Offer (as defined below); and

         (vi) with respect to an offer for the Worldspan Interest, include a
good faith deposit in cash or in other form of immediately available U.S. funds
equal to 10% of the aggregate value of such offer (the "Worldspan Initial
Deposit") and a commitment to provide, in the event such offer ultimately is
determined by the Debtors, in consultation with the Creditors' Committee, is to
be part of the Final Accepted Offer (as defined below), a further deposit in
cash or in other form of immediately available U.S. funds in the amount
sufficient to bring the total deposit up to the amount that is equal to 10% of
the aggregate value of such portion of the Final Accepted Offer (as defined
below) allocated to the Worldspan Interest (the "Worldspan Full Deposit") within
one business day after the Debtors notify the Competing Bidder(s) that its/their
offer(s) has been determined to be part of the Final Accepted Offer (as defined
below); and

         (vii) be submitted on or before 4:00 p.m. prevailing Eastern time on
February 28, 2001, by (A) delivering the complete competing offer(s) for
Alternative Transaction(s) together with the Initial Deposit (or, if applicable,
the Worldspan Initial Deposit) to the Debtors; (B) delivering a complete copy of
the competing offer(s) to the Debtors and their co-counsel, Rothschild, American
and

                                       8
<PAGE>   87
its co-counsel, and the Creditors' Committee's counsel and financial advisor

Loeb Partners, at the following addresses:

               to the Debtors:

               TRANS WORLD AIRLINES, INC.
               One City Centre
               515 North 6th Street
               St. Louis, Missouri 63101
               Attention: Kate Soled, Esquire
               Telephone: (312) 589-3261
               Facsimile: (314) 589-3461

               to co-counsel for the Debtors:

               PACHULSKI STANG, ZIEHL, YOUNG & JONES
               919 North Market Street, 16th Floor
               P.O. Box 8705
               Wilmington, Delaware 19899-8705
               Attention: Laura Davis Jones, Esquire
               Telephone: (302) 652-4100
               Facsimile: (302) 652-4400

                                     -and-

               KIRKLAND & ELLIS
               200 East Randolph Drive
               Chicago, Illinois 60601
               Attention: James H.M. Sprayregen, Esquire
               Telephone: (312) 861-2000
               Facsimile: (312) 861-2200

               to the Debtors' financial advisor:

               ROTHSCHILD INC.
               1251 Avenue of the America's
               New York, New York 10020
               Attention: David Resnick & Noah Roy
               Telephone: (212) 403-5413
               Facsimile: (212) 403-3500

               to American:



                                       9








<PAGE>   88


                             AMERICAN AIRLINES INC.
                             4333 Amon Carter Boulevard
                             Fort Worth, Texas 76155
                             Attention: Anne McNamara, Esquire
                             Facsimile: (817) 967-2501

                             to co-counsel for American:

                             RICHARDS, LAYTON & FINGER
                             One Rodney Square
                             P.O. Box 551
                             Wilmington, Delaware 19899
                             Attention: Mark D. Collins, Esquire
                             Telephone: (302) 651-7531
                             Facsimile: (302) 658-6548

                                    -and-

                             WEIL, GOTSHAL & MANGES LLP
                             767 Fifth Avenue
                             New York, NY 10153
                             Attention: Alan B. Miller, Esquire
                             Telephone: (212) 310-8272
                             Facsimile: (212) 310-8007

                             and to counsel for the Creditors' Committee:

                             BLANK, ROME, COMISKY & McCauley LLP
                             1201 Market Street, Suite 2100
                             Wilmington, Delaware 19801
                             Attention: Bonnie Glantz Farell, Esquire
                             Telephone: 302-425-6423
                             Facsimile: 302-425-6464

                                    -and-

                             BLANK, ROME, COMISKY & McCauley LLP
                             One Logan Square
                             Philadelphia, Pennsylvania 19103
                             Attention: Thomas E. Biron, Esquire
                             Telephone: (215) 569-5562
                             Facsimile: (215) 569-5522



                                       10
<PAGE>   89
                                     -and-

                        BLANK ROME TENZER GREENBLATT LLP
                        The Chrysler Building
                        405 Lexington Avenue
                        New York, New York 10174
                        Attention: Michael Z. Brownstein, Esquire
                        Telephone: (212) 885-5505
                        Facsimile: (212) 885-5002

                        and to the Creditors' Committee financial advisor

                        LOEB PARTNERS CORPORATION
                        61 Broadway, 24th Floor
                        New York, New York 10006
                        Attention: Mr. Harvey Tepner
                        Telephone: (212) 483-7086
                        Facsimile: (212) 574-2071

and (C) filing a copy of the competing offer(s) with the Court.

         H.  Upon receipt of a competing offer that satisfies all of the
required terms and conditions set forth herein (a "Conforming Competing Bid"),
the Debtors and the Creditors' Committee, in their discretion, may communicate
with such Competing Bidder prior to the Auction, and such Competing Bidder shall
provide to the Debtors and the Creditors' Committee within one business day
after the Debtors' or the Creditors' Committee's request therefor any
information reasonably required by the Debtors or the Creditors' Committee in
connection with the Debtors' and the Creditors' Committee's evaluation of such
Conforming Competing Bid.

         I. Prior to the Auction, the Debtors shall consult with the Creditors'
Committee in evaluating American's offer, as embodied in the Agreement, and any
Conforming Competing Bids they have received, and the Debtors shall select the
offer or offers that the Debtors determine to be the highest or best offer or
offers for the Transferred Assets or


                                       11
<PAGE>   90
Alternative Transaction for the Debtors and their estates (the "Initial Accepted
Offer"). Copies of the Initial Accepted Offer shall be delivered to American and
to all Competing Bidders.

         J. On March 5, 2001 at 10:00 a.m. prevailing Eastern Time, the Debtors
shall conduct an Auction at the offices of Kirkland & Ellis, 153 East 53rd
Street, Suite 3900, New York, NY 10022, on invitation to American and each
Competing Bidder that has made a timely Conforming Competing Bid. The only
persons who will be permitted to bid at the Auction are American and those that
have made Conforming Competing Bids, and each party bidding at the Auction shall
be entitled to learn the terms and conditions of the bids of all other bidders
as such bids are made. The Initial Accepted Offer, or any further offer
submitted at such Auction by American or a Competing Bidder, that the Debtors,
in consultation with the Creditors' Committee, determine to be the highest or
best offer for the Transferred Assets or an Alternative Transaction for the
Debtors and their estates (the "Final Accepted Offer"), shall be submitted for
approval by the Court. Within one business day after the Debtors and the
Committee notify the party/parties submitting the Final Accepted Offer (the
"Successful Offeror(s)") that its/their offer(s) has been determined by the
Debtors, in consultation with the Committee, to be the Final Accepted Offer, the
Successful Offeror(s), if other than American, shall deliver any unpaid portion
of the Full Deposit (and/or, if applicable, the Worldspan Full Deposit) to the
Debtors. The Debtors shall promptly distribute the Final Accepted Offer to
American, to the Creditors' Committee, and to all persons who have objections or
other responses in connection with the Sale Motion or the Transaction Hearing.

         K. In reaching their determination of the Initial Accepted Offer and
the Final Accepted Offer, the Debtors, in consultation with the Creditors'
Committee, shall be guided by,

                                       12
<PAGE>   91

but need not strictly adhere to, the concept of a Superior Proposal as set forth
in the Agreement. Further, the Debtors and the Creditors' Committee are
permitted to discuss in private with Competing Bidders their offers for an
Alternative Transaction.

         L. Each Initial Deposit and Remaining Deposit received by the Debtors
shall be maintained in an interest-bearing account in accordance with the
requirements of 11 U.S.C. Section 345(b) and be subject to the jurisdiction of
the Court.

         M. The Full Deposit (and/or the Worldspan Full Deposit) shall be
applied by the Debtors against the purchase price to be paid by the Successful
Offeror or Offerors at the closing of the transaction approved by the Court, and
in the event: (a) a Successful Offeror(s) other than American does not
consummate its transaction by reason of a breach of any of the terms of a Final
Accepted Offer with the Debtors, the Full Deposit (and/or, if applicable, this
Worldspan Full Deposit), together with any interest paid therein, shall be
retained by the Debtors; and (b) American does not consummate its transaction by
reason of its breach of terms of the Agreement, American shall forego repayment
of a portion of the debtor-in-possession financing of the Debtors provided by
American in an amount equal to the greater of $50,000,000 or 10% of the cash
portion of its bid (the "American Deposit"), or if no remaining balance is owed
to American on the financing, American shall pay the American Deposit to the
Debtors.

         N. In the event that American shall make the Final Accepted Offer for
the Transferred Assets or the Non-Worldspan Assets, then $4,000,000 of the
facility fee paid to American in connection with its debtor-in-possession
financing of the Debtors shall be returned and refunded to the Debtors.

         O. Promptly following the conclusion of the Transaction Hearing, the



                                       13
<PAGE>   92
Debtors shall return to each unsuccessful Competing Bidder, its Initial Deposit,
together with any interest paid thereon, submitted by such unsuccessful
Competing Bidder(s).

         P. If there is competitive bidding at the Auction, overbids other than
the Initial Overbid of $75,000,000 shall be in an amount of at least $5,000,000.
No matching bids will be permitted.

         Q. American shall have the right at the Auction to credit bid the
amount of the Bankruptcy Termination Amount with respect to any offer American
may make at the Auction.

         R. The Full Deposit shall be applied by the Debtors against the
purchase price to be paid by the Successful Offeror(s) at the closing of the
transaction approved by the Court. In the event the Successful Offeror(s)
do/does not consummate the transaction by reason of a breach of the terms of
its/their agreement with the Debtors, the Full Deposit (and/or, if applicable,
the Worldspan Interest), together with any interest paid thereon, shall be
retained by the Debtors or, in the event American is the Successful Offeror, and
does not consummate its Transaction as a result of its breach of the Agreement,
the provisions for default contained above shall control; and

         IT IS FURTHER ORDERED that the Notice of Auction, providing notice of,
among other things, this Order, the Sale Motion, the Transaction Hearing, the
Auction, and the Auction Procedures, as modified by this Order, in the form of
Exhibit A attached hereto, shall be provided by the Debtors to all creditors,
indenture trustees, and equity holders (by publication only) (a) by first class
mail deposited as soon as practicable after the date of this Order and (b) as
soon as practicable after the date for this Order by publication (in summary
form) in The Wall


                                       14
<PAGE>   93
Street Journal (National Edition), and such notice shall constitute good and
sufficient notice of this Order, the Auction, the Auction Procedures, the Sale
Motion, the Transaction Hearing and all proceedings to be held thereon; and it
is further

         ORDERED, that the Debtors shall place copies of this Order, the Notice
of Auction and all other documents described in the proceeding paragraph in
their website, and it is further

         ORDERED that Article 12 of the Agreement is hereby approved and in the
event that the obligation of the Debtors to pay to American the Termination
Amount of the Bankruptcy Termination Amount arises, such obligations shall
constitute an administrative expense claim under Sections 503(b) and 507(a)(1)
of the Bankruptcy Code and shall be payable in accordance with the provisions of
Article 12 of the Agreement without further order of the Court; and it is
further

         ORDERED that objections, if any, to the Sale Motion shall be in
writing, shall confirm to the Federal Rules of Bankruptcy Procedure and local
rules and orders of the Court, shall set forth the nature of the objectant's
claims against or interests in the Debtors' estates, the basis for the
objections and the specific grounds therefor, and shall be filed with the United
States Bankruptcy Court for the District of Delaware, Marine Midland Plaza, 824
Market Street, Wilmington, Delaware 19801 and served so as to be received on or
before 4:00 p.m. prevailing Eastern Time on February 28, 2001 by the Office of
the United States Trustee for the District of Delaware, co-counsel to the
Debtors, co-counsel to American, and counsel to the Creditors' Committee, and
any entity objecting to the Sale Motion that has not complied with the
requirements of this paragraph may not be heard at the Transaction Hearings, and
it is further

                                       15
<PAGE>   94
         ORDERED that nothing contained herein shall be deemed to deprive any
party of the right to object timely to the Sale Motion, all of which rights were
expressly reserved at the Procedures Hearing and are expressly reserved by the
Order; and it is further

         ORDERED that replies, if any, to objections and responses to the Sale
Motion shall be filed with the United States Bankruptcy Court for the District
of Delaware, Marine Midland Plaza, 824 Market Street, Wilmington, Delaware 19801
and served so as to be received on or before 4:00 p.m. prevailing Eastern Time
on March 5, 2001 by the Office of the United States Trustee for the District of
Delaware, counsel to the objecting parties, co-counsel to the Debtors,
co-counsel to American and counsel to the Creditors' Committee; and it is
further

         ORDERED that the Transaction Hearing to consider the relief requested
in the Sale Motion and to consider whether the Final Accepted Order is to be
approved by the Court shall be held before the Court on March 9, 2001 at
9:30 a.m. prevailing Eastern Time; and it is further

         ORDERED that the Debtors (with the consent of American and the
Creditors' Committee or by order of this Court) may extend the deadlines set
forth in these Auction Procedures, may adjourn the Auction by announcement at
the Auction, and/or may seek adjournment of the Transaction Hearing by
announcement in open court, all without further notice (in each case, subject
to the terms and conditions of the Agreement); and it is further

         ORDERED, that this Court shall retain jurisdiction to hear and
determine all matters arising from or relating to the implementation of this
Order.

Dated: February 7, 2001
       -----------

                                                  /s/ SUE L. ROBINSON
                                                  -----------------------------
                                                  The Honorable Sue L. Robinson



                                       16
<PAGE>   95
                                                                       EXHIBIT C

                         IN THE UNITED STATES BANKRUPTCY
                       COURT FOR THE DISTRICT OF DELAWARE

IN RE:                                  )   CHAPTER 11
                                        )
TRANS WORLD AIRLINES, INC., ET AL.,(1)  )   CASE NO. 01-0___ (___)
                                        )   (JOINTLY ADMINISTERED)
                                        )
                           DEBTORS.     )

            ORDER PURSUANT TO SECTIONS 105(a), 363, 365, AND 1146(c)
               OF THE BANKRUPTCY CODE (i) AUTHORIZING THE DEBTORS'
                 SALE OF SUBSTANTIALLY ALL OF THEIR ASSETS, FREE
               AND CLEAR OF LIENS, CLAIMS, AND ENCUMBRANCES; (ii)
           APPROVING AN ASSET PURCHASE AGREEMENT; AND (iii) APPROVING
               THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY
           CONTRACTS AND UNEXPIRED LEASES IN CONNECTION WITH SUCH SALE

     A HEARING HAVING BEEN HELD ON JANUARY 9, 2001 (THE "HEARING"), TO CONSIDER
THE MOTION, DATED JANUARY 9, 2001 (THE "MOTION") OF THE ABOVE CAPTIONED DEBTORS
AND DEBTORS IN POSSESSION (COLLECTIVELY, THE


- ----------

(1) THE DEBTORS ARE THE FOLLOWING ENTITIES: TRANS WORLD AIRLINES, INC.,
AMBASSADOR FUEL CORPORATION, LAX HOLDING COMPANY, INC., MEGA ADVERTISING INC.,
NORTHWEST 112TH STREET CORPORATION, THE TWA AMBASSADOR CLUB, INC., TRANS WORLD
COMPUTER SERVICES, INC., TRANSCONTINENTAL & WESTERN AIR, INC., TWA AVIATION,
INC., TWA GROUP, INC., TWA STANDARDS & CONTROLS, INC., TWA STOCK HOLDING
COMPANY, TWA-D.C. GATE COMPANY, INC., TWA-LAX GATE COMPANY, INC., TWA LOGAN GATE
CO., INC., TWA-NY/NJ GATE COMPANY, INC., TWA-OMNIBUS GATE COMPANY, INC., TWA-SAN
FRANCISCO GATE COMPANY, INC., TWA-HANGAR 12 HOLDING COMPANY, INC., OZARK GROUP,
INC., TWA NIPPON, INC., TWA EMPLOYEE SERVICES, INC, TWA GETAWAY VACATIONS, INC.,
TRANS WORLD EXPRESS, INC., INTERNATIONAL AVIATION SECURITY INC., GETAWAY
MANAGEMENT SERVICES, INC., THE GETAWAY GROUP (U.K.) INC.



<PAGE>   96


"DEBTORS") FOR AN ORDER PURSUANT TO SECTIONS 105(a), 363, 365, AND 1146(c) OF
TITLE 11 OF THE UNITED STATES CODE (THE "BANKRUPTCY CODE") (i) AUTHORIZING THE
DEBTORS' SALE OF SUBSTANTIALLY ALL OF THEIR ASSETS (THE "TRANSFERRED ASSETS"),
IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THAT CERTAIN ASSET PURCHASE
AGREEMENT, DATED AS OF JANUARY, 2001, BETWEEN THE DEBTORS, AS SELLERS
("SELLERS"), AND AMERICAN AIRLINES, INC., AS PURCHASER ("PURCHASER"), A COPY OF
WHICH IS ANNEXED TO THE MOTION AS EXHIBIT A (THE "AGREEMENT"), SUBJECT TO HIGHER
AND BETTER OFFERS, FREE AND CLEAR OF ALL LIENS, CLAIMS AND ENCUMBRANCES OTHER
THAN THE LIENS CREATED BY PURCHASER (COLLECTIVELY, "LIENS"), WITH SUCH LIENS TO
TRANSFER, AFFIX, AND ATTACH TO THE PROCEEDS OF SUCH SALE, ALL AS MORE FULLY SET
FORTH IN THE MOTION; (ii) APPROVING THE AGREEMENT; AND (iii) APPROVING THE
ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES
(THE "ASSUMED CONTRACTS") IN CONNECTION WITH SUCH SALE; AND THE COURT HAVING
ENTERED AN ORDER, DATED FEBRUARY 7, 2001 (THE "SALE PROCEDURES ORDER"),
AUTHORIZING THE DEBTORS TO CONDUCT, AND APPROVING THE TERMS AND CONDITIONS OF,
AN AUCTION (THE "AUCTION") TO CONSIDER HIGHER AND BETTER OFFERS FOR THE
TRANSFERRED ASSETS (AN "ALTERNATIVE TRANSACTION"), ESTABLISHING DATES FOR THE
AUCTION AND THE HEARING, AND APPROVING THE PROCEDURES FOR THE SUBMISSION OF
COMPETING OFFERS, THE FORM AND MANNER OF NOTICE OF THE AUCTION, THE MOTION, AND
THE HEARING, AND THE PROPOSED BANKRUPTCY TERMINATION PAYMENT SET FORTH IN
ARTICLE XII OF THE

                                                                               2

<PAGE>   97



AGREEMENT; AND THE COURT HAVING JURISDICTION TO CONSIDER THE MOTION AND THE
RELIEF REQUESTED THEREIN IN ACCORDANCE WITH 28 U.S.C. SECTIONS 157(b)(2) AND
1334; AND CONSIDERATION OF THE MOTION, THE RELIEF REQUESTED THEREIN, AND THE
RESPONSES THERETO, IF ANY, BEING A CORE PROCEEDING IN ACCORDANCE WITH 28 U.S.C.
SECTION 157(b); AND THE APPEARANCES OF ALL INTERESTED PARTIES AND ALL RESPONSES
AND OBJECTIONS TO THE MOTION, IF ANY, HAVING BEEN DULY NOTED IN THE RECORD OF
THE HEARING; AND UPON THE RECORD OF THE HEARING, THE MOTION, SAID RESPONSES AND
OBJECTIONS, IF ANY; AND AFTER DUE DELIBERATION AND SUFFICIENT CAUSE APPEARING
THEREFOR, THE COURT HEREBY FINDS, DETERMINES, AND CONCLUDES THAT:

     1. The findings and conclusions set forth herein constitute the Court's
findings of fact and conclusions of law pursuant to Fed. R. Bankr. Proc. 7052,
made applicable to this proceeding pursuant to Fed. R. Bankr. Proc. 9014.

     2. To the extent any of the following findings of fact constitute
conclusions of law, they are adopted as such. To the extent any of the following
conclusions of law constitute findings of act, they are adopted as such.

     3. Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed thereto in the Agreement.

     4. Notice of the Motion, the Auction, and the Hearing has been given in
accordance with Fed. R. Bankr. Proc. 2002 and 6004, the Sale Procedures Order,
and the Agreement. The foregoing notice constitutes good and sufficient notice
of the Motion, the

                                                                               3

<PAGE>   98


Auction, and the Hearing, and no other or further notice of the Motion, the
Auction, the Hearing or the entry of this Order need be given.

     5. A reasonable opportunity has been afforded any interested party to make
a higher and better offer for the Transferred Assets.

     6. Emergent circumstances and sound business reasons exist for Sellers'
sale of the Transferred Assets pursuant to the Agreement. Entry into the
Agreement and consummation of the transactions contemplated thereby constitute
the exercise by the Debtors of sound business judgment and such acts are in the
best interests of the Debtors, their estates, and creditors.

     7. The Agreement represents the highest and best offer received by Sellers
for the Transferred Assets.

     8. The sale consideration to be realized by Sellers pursuant to the
Agreement is fair and reasonable.

     9. The transactions contemplated by the Agreement are undertaken by Sellers
and Purchaser at arm's length, without collusion and in good faith within the
meaning of section 363(m) of the Bankruptcy Code, and such parties are entitled
to the protections of section 363(m) of the Bankruptcy Code.

     10. A sale of the Transferred Assets other than one free and clear of
Liens, claims, and encumbrances would impact adversely on Sellers' bankruptcy
estates and would be of substantially less benefit to the estates of the
Sellers.

     11. The decision to assume and assign the Assumed Contracts is based on the
reasonable exercise of the Debtors' business judgment and is in the best
interests of the Debtors' estates.

                                                                               4
<PAGE>   99


     12. Purchaser has demonstrated adequate assurance of future performance
with respect to the Assumed Contracts.

     For all of the foregoing and after due deliberation, the Court ORDERS,
ADJUDGES, AND DECREES THAT:

     1. The Motion, the Agreement and the transactions contemplated thereby are
hereby approved.

     2. Pursuant to section 363(b) of the Bankruptcy Code, Sellers are
authorized to sell the Transferred Assets to Purchaser upon the terms and
subject to the conditions set forth in the Agreement.

     3. Each of Sellers and Purchaser is hereby authorized to take all actions
and execute all documents and instruments that Sellers and Purchaser deem
necessary or appropriate to implement and effectuate the transactions
contemplated by the Agreement.

     4. The sale of the Transferred Assets to Purchaser shall be free and clear
of Liens (other than Liens created by Purchaser) pursuant to section 363(f) of
the Bankruptcy Code whatsoever known or unknown including, but not limited to,
any of the Sellers' creditors, vendors, suppliers, employees or lessors and that
Purchaser shall not be liable in any way (as successor entity or otherwise) for
any claims that any of the foregoing or any other third party may have against
any of the Sellers, provided further that, with regard to employees' claims, the
free and clear delivery of the Assets shall include, but not be limited to, all
asserted or unasserted, known or unknown, employment related claims, payroll
taxes, employee contracts, employee seniority accrued while employed with any of
the Sellers and successorship liability, with any and all valid and enforceable
Liens thereon, including those asserted by Sellers' secured lenders, to be

                                                                               5

<PAGE>   100


transferred, affixed, and attached to the net proceeds of such sale, with the
same validity, priority, force, and effect as such Liens had upon the
Transferred Assets immediately prior to the Closing.

     5. Subject to the payment by Purchaser to Sellers pursuant to sections 363
and 365(a) of the Bankruptcy Code of the consideration provided for in the
Agreement, the sale of the Transferred Assets by Sellers to Purchaser shall
constitute a legal, valid, and effective transfer of the Transferred Assets and
shall vest Purchaser with all right, title, and interest of Sellers in and to
the Transferred Assets free and clear of all Liens pursuant to section 363(f) of
the Bankruptcy Code, effective as of the Closing.

     6. The sale of the Transferred Assets to Purchaser under the Agreement will
constitute transfers for reasonably equivalent value and fair consideration
under the Bankruptcy Code and the laws of the States of New York and Delaware.

     7. Purchaser is hereby granted the protections provided to a good-faith
purchaser under section 363(m) of the Bankruptcy Code.

     8. All amounts to be paid to Purchaser pursuant to the Agreement shall
constitute administrative expenses under sections 503(b) and 507(a)(1) of the
Bankruptcy Code and shall be immediately payable if and when any such
obligations of Sellers arise under the Agreement, without any further order of
the Court; provided, however, that Sellers shall have the right to contest the
validity and amount of such asserted claims.

     9. Pursuant to sections 105(a) and 363 of the Bankruptcy Code, all Persons
are hereby enjoined from taking any action against Purchaser or Purchaser's
Affiliates (as they existed immediately prior to the Closing) to recover any
claim which such Person has solely against Sellers or Sellers' Affiliates (as
they exist immediately following the Closing).

                                                                               6

<PAGE>   101


     10. Sellers are authorized to assign and transfer to Purchaser all of
Sellers' rights, title and interest (including common law rights) to all of
Sellers' intangible property to be assigned and transferred to Purchaser under
the Agreement.

     11. All objections and responses concerning the Sale Motion are resolved in
accordance with the terms of this Order and as set forth in the record of the
Hearing and to the extent any such objection or response was not otherwise
withdrawn, waived, or settled, they are and all reservations and rights therein,
are overruled and denied.

     12. Purchaser has not assumed or otherwise become obligated for any of
Sellers' liabilities other than as set forth in Section 3.1 of the Agreement,
and Purchaser has not purchased any of the Excluded Assets. Consequently, all
holders of Retained Liabilities against the Sellers are hereby enjoined from
asserting or prosecuting any Claim or cause of action against Purchaser or the
Purchased Assets to recover on account of any liabilities other than Assumed
Liabilities pursuant to Section 2.2 of the Asset Purchase Agreement or other
than pursuant to this Order. All persons having any interest in the Excluded
Assets are hereby enjoined from asserting or prosecuting any claim or cause of
action against Purchaser for any liability associated with the Excluded Assets.

     13. The assumption and assignment of the Assumed Contracts is approved
pursuant to section 365 of the Bankruptcy Code.

     14. The Sellers shall pay any cure amounts payable to the other parties to
the Assumed Contracts in accordance with section 365 of the Bankruptcy Code and
the Agreement. Purchaser shall assume obligations of the Sellers arising from
and after the Closing under the Assumed Contracts and shall not assume any
obligation other than the Assumed Contracts

                                                                               7

<PAGE>   102


accruing thereunder prior to the Closing. Upon assumption and assignment of any
Assumed Contract, the Sellers and the estates shall be relieved of any liability
for breach of such Assumed Contract occurring after such assignment pursuant to
section 365(k) of the Bankruptcy Code. Notwithstanding the foregoing, Sellers
shall remain obligated to reimburse Purchaser for any amounts payable under any
Assumed Contract after the Closing.

     15. Purchaser has provided adequate assurance of its future performance
under the Assumed Contracts and the proposed assumption and assignment of the
Assumed Contracts satisfies the requirements of the Bankruptcy Code including,
inter alia, sections 365(b)(1) and (3) and 365(f) to the extent applicable.

     16. The Assumed Contracts are valid and binding, in full force and effect,
and enforceable in accordance with their terms.

     17. There shall be no rent accelerations, assignment fees, increases, or
any other fees charged to Purchaser as a result of the assignment of the Assumed
Contracts, and the validity of the assumption, assignment and sale to Purchaser
shall not be affected by any dispute between any Seller and another party to an
Assumed Contract regarding the payment of the "cure" amount.

     18. All parties to the Assumed Contracts are forever barred and enjoined
from raising or asserting against Purchaser any assignment fee, default or
breach under, or any claim or pecuniary loss, or condition to assignment,
arising under or related to the Assumed Contracts existing as of the Closing or
arising by reason of the Closing.

     19. The Assumed Contracts, upon assignment to Purchaser, shall be deemed
valid and binding, in full force and effect in accordance with their terms,
subject to the provisions of

                                                                               8

<PAGE>   103


this Order, and, pursuant to section 365(k) of the Bankruptcy Code, Sellers
shall be relieved from any further liability, except for any cure obligations as
herein provided.

     20. Pursuant to sections 363(b), 363(f) 365(a), 365(b) and 365(f) of the
Bankruptcy Code, the assumption, assignment and sale to Purchaser of the Assumed
Contracts by the respective Seller thereto shall be effected by this Order.

     21. The Assumed Contracts identified in Exhibit ___ annexed hereto,
together with any amendments and modification of such Assumed Contracts,
constitute the Assumed Contracts that are being assumed by and assigned to
Purchaser by the Seller party thereto.

     22. Purchaser shall not be liable for any claims of the lessors or contract
parties under the Assumed Contracts in respect of any claim or breach of an
Assumed Contract that accrued prior to Closing.

     23. This Order shall be effective and enforceable immediately upon entry
and its provisions shall be self-executing.

     24. The obligations of Sellers relating to Taxes shall be fulfilled by
Sellers.

     25. This Court shall retain exclusive jurisdiction through the Bankruptcy
Resolution Date to interpret and enforce the provisions of the Agreement, the
Sale Procedures Order, and this Order in all respects and further to hear and
determine any and all disputes between Sellers and/or Purchaser, as the case may
be, and any non-Sellers party to, among other things, any Assumed Contracts
concerning, inter alia, Sellers' assumption and assignment thereof to Purchaser
under the Agreement; provided, however, that in the event the Court abstains
from exercising or declines to exercise such jurisdiction or is without
jurisdiction with respect to the Agreement, Sale Procedures Order, or this
Order, such abstention, refusal, or lack of jurisdiction

                                                                               9

<PAGE>   104


shall have no effect upon, and shall not control, prohibit, or limit the
exercise of jurisdiction of any other court having competent jurisdiction with
respect to any such matter.

     26. The provisions of this Order are nonseverable and mutually dependent.

     27. This Order shall inure to the benefit of Purchaser, Sellers, and their
respective successors and assigns, including but not limited to any chapter 11
or chapter 7 trustee that may be appointed in Sellers' cases and shall be
binding upon any trustee, party, entity or fiduciary that may be appointed in
connection with these cases or any other or further cases involving Sellers,
whether under chapter 7 or chapter 11 of the Bankruptcy Code.

     28. Pursuant to section 1146(c) of the Bankruptcy Code, the transactions
contemplated by the Agreement are determined to be under or in contemplation of
a plan to be confirmed under section 1129 of the Bankruptcy Code in that the net
proceeds of the sale of the Transferred Assets are essential and required to
fund a chapter 11 plan for Sellers, and therefore, are exempt from any transfer,
stamp or similar tax or any so-called "bulk-sale" law in all necessary
jurisdictions arising as a result of or in connection with Sellers' sale and
transfer of the Transferred Assets to Purchaser.

     29. Each and every federal, state, and local governmental agency or
department is hereby directed to accept any and all documents and instruments
necessary and appropriate to consummate the transactions contemplated by the
Agreement and this Order.

     30. This Court shall retain jurisdiction to hear and determine all matters
arising from the implementation of this Order and the Agreement.

DATED: ______________, 2001

                                IT IS SO ORDERED:



                                       -----------------------------------------
                                                       JUDGE

                                                                              10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.89
<SEQUENCE>14
<FILENAME>d84957ex10-89.txt
<DESCRIPTION>AMEND NO. 1 TO AMEND/RESTATED ASSET PURCHASE
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.89


                                 AMENDMENT NO. 1

                                       TO

                  AMENDED AND RESTATED ASSET PURCHASE AGREEMENT


     This Amendment No. 1 (this "Amendment") is made and entered into as of
March 9, 2001, by and between American Airlines, Inc., a Delaware corporation
("AA"), and Trans World Airlines, Inc., a Delaware corporation and
debtor-in-possession under Chapter 11 Case No. 01-56 (PJW), jointly
administrated, in the United States Bankruptcy Court for the District of
Delaware ("TWA").

                                    RECITALS

     WHEREAS, AA and TWA are parties to that certain Amended and Restated Asset
Purchase Agreement, dated as of February 28, 2001 (the "Agreement");

     WHEREAS, Section 13.7 of the Agreement provides that the Agreement may be
amended or supplemented at any time as may mutually be determined by AA and TWA
to be necessary, desirable or expedient to further the purposes of the Agreement
or to clarify the intention of the parties thereto; and

     WHEREAS, each of AA and TWA has determined that it is desirable to amend
the Agreement as set forth in this Amendment.

     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, AA and TWA hereby agree as follows:

     1. DEFINED TERMS. All capitalized terms used, but not defined, in this
Amendment shall have the meanings given to such terms in the Agreement.

     2. SECURITY DEPOSITS. The following words shall be inserted at the end of
item 2 on Schedule 2.2:

          and all security deposits relating to Aircraft Leases in existence on
     the Closing Date

     3. PURCHASE PRICE.

     (a) Section 4.1 of the Agreement shall be replaced in its entirety with the
following:

          In consideration of the conveyance to Purchaser of each Seller's
     right, title and interest in and to the Transferred Assets and the other
     rights granted to Purchaser pursuant hereto, and subject to the conditions
     and in accordance with



<PAGE>   2


     terms hereof, at Closing, Purchaser shall (i) assume the Assumed
     Liabilities and (ii) pay TWA an aggregate of $500,000,000 in cash, subject
     to adjustments as provided in Section 4.3 and Section 4.4 and including any
     post-Closing payments made pursuant to Section 4.9 (clauses (i) and (ii),
     together in the aggregate, are referred to as the "Purchase Price"), any
     offsets to the Purchase Price pursuant to Section 4.7 and any holdbacks of
     the Purchase Price pursuant to Section 4.8.

     (b) The following section shall be added as Section 4.9 of the Agreement:

          4.9 Post-Closing Payments. On the effective date of the confirmation
     of a Chapter 11 plan for Sellers' estate, Purchaser shall pay to TWA (i) up
     to $125,000,000 to the extent necessary to pay any claims against Sellers'
     estate secured by Liens and claims entitled to priority under section 507
     of the Bankruptcy Code, (ii) the amount equal to any rebate or credit
     received by Purchaser from lessors of Leased Aircraft relating to the
     period of March 12, 2001 to the Closing Date and in respect of the
     differential in amount of lease payments between (A) the amount of such
     lease payments in effect on March 12, 2001 and (B) the amount of such lease
     payments reflected in any amended Aircraft Lease negotiated by Purchaser to
     be effective on the Closing Date, (iii) a pro rata amount for all unused
     pre-paid lease payments for Leased Aircraft calculated on a per diem basis
     from the Closing Date to the end of the applicable pre-payment period and
     (iv) up to $10,000,000 to the extent Sellers are required to pay any cure
     amounts to parties who have agreed with Purchaser to waive such cure
     amounts notwithstanding such agreement.

     4. 717 DEBT. The following shall be added as item 7 to Schedule 3.1(c):

          7. That certain indebtedness in the aggregate principal amount not to
     exceed $103,484,157 relating to the following 717 aircraft owned by
     Sellers: N412TW, N413TW, N415TW and N2414E

     5. SECTION 5.4(q). The following words shall be inserted at the end of
Section 5.4(q):

          ; provided, however, that any liabilities and obligations arising
     directly out of the proceedings set forth on Schedule 2.1(v) shall be
     excluded from the provisions of this Section 5.4(q)

     6. EXHIBIT A. The definition of "Designated Contracts" in Exhibit A shall
be amended by inserting the words "solely" after the words "in either case" in
clause (A)(ii) of such definition.

     7. ENTIRE AGREEMENT. This Amendment and the Agreement, together with the
exhibits and schedules thereto, shall constitute the entire understanding and
agreement between AA and TWA with regard to the subjects hereof and thereof.

     8. NO OTHER MODIFICATION. Except as set forth in this Amendment, the terms
and conditions of the Agreement shall remain in full force and effect.

                                       2

<PAGE>   3


     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first written above.


                                       AMERICAN AIRLINES, INC.

                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------


                                       TRANS WORLD AIRLINES, INC.

                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------

                                       3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.90
<SEQUENCE>15
<FILENAME>d84957ex10-90.txt
<DESCRIPTION>SECURED DEBTOR AGREEMENT DATED JANUARY 12, 2001
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.90


                          SECURED DEBTOR IN POSSESSION
                          CREDIT AND SECURITY AGREEMENT

                          DATED AS OF JANUARY 10, 2001

                                      AMONG

                           TRANS WORLD AIRLINES INC.,
                       A DEBTOR AND DEBTOR IN POSSESSION,

                                  AS BORROWER,

                                       AND

                 THE SUBSIDIARIES OF THE BORROWER PARTY HERETO,
                  EACH AS A DEBTOR AND A DEBTOR IN POSSESSION,

                                 AS GUARANTORS,

                                       AND

                   THE LENDERS FROM TIME TO TIME PARTY HERETO

                                       AND

                               AMR FINANCE, INC.,

                             AS ADMINISTRATIVE AGENT

<PAGE>   2


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      PAGE
                                                                                                      ----

<S>                                                                                                    <C>
Article I             Definitions, Interpretation And Accounting Terms..................................1

         Section 1.1.        Defined Terms..............................................................1

         Section 1.2.        Computation of Time Periods...............................................23

         Section 1.3.        Accounting Terms and Principles...........................................24

         Section 1.4.        Certain Terms.............................................................24

Article II            The Facility.....................................................................25

         Section 2.1.        The Commitments...........................................................25

         Section 2.2.        Borrowing Procedures......................................................25

         Section 2.3.        Reduction and Termination of the Commitments..............................26

         Section 2.4.        Repayment of Loans........................................................26

         Section 2.5.        Evidence of Debt..........................................................26

         Section 2.6.        Optional Prepayments......................................................27

         Section 2.7.        Mandatory Prepayments.....................................................27

         Section 2.8.        Interest..................................................................28

         Section 2.9.        Fees......................................................................28

         Section 2.10.       Payments and Computations.................................................29

         Section 2.11.       Capital Adequacy..........................................................31

         Section 2.12.       Taxes.....................................................................31

Article III           Conditions To Loans..............................................................33

         Section 3.1.        Conditions Precedent to Initial Loans.....................................33

         Section 3.2.        Conditions Precedent to Each Loan.........................................35

Article IV            Representations and Warranties...................................................36

         Section 4.1.        Corporate Existence; Compliance with Law..................................36

         Section 4.2.        Corporate Power; Authorization; Enforceable Obligations...................36

         Section 4.3.        Ownership of Subsidiaries.................................................37

         Section 4.4.        Financial Statements......................................................38

         Section 4.5.        Material Adverse Change...................................................38

         Section 4.6.        Litigation................................................................38
</TABLE>


<PAGE>   3

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      PAGE
                                                                                                      ----

<S>                                                                                                    <C>
         Section 4.7.        Full Disclosure...........................................................38

         Section 4.8.        Margin Regulations........................................................38

         Section 4.9.        No Burdensome Restrictions; No Defaults...................................39

         Section 4.10.       Investment Company Act; Public Utility Holding Company Act................39

         Section 4.11.       Use of Proceeds...........................................................39

         Section 4.12.       Secured, Super Priority Obligations.......................................40

         Section 4.13.       Deposit Accounts; Control Accounts........................................40

         Section 4.14.       Title; No Other Liens.....................................................40

         Section 4.15.       Pledged Collateral........................................................41

         Section 4.16.       Guarantors................................................................41

         Section 4.17.       Passive Holding Company...................................................41

         Section 4.18.       Asset Purchase Agreement Representations and Warranties...................41

         Section 4.19.       Operations................................................................41

         Section 4.20.       Aircraft and Spare Parts..................................................42

Article V             Financial Covenants..............................................................42

         Section 5.1.        Minimum EBITDA............................................................43

         Section 5.2.        Capital Expenditures......................................................43

Article VI            Reporting Covenants..............................................................43

         Section 6.1.        Financial Statements; Etc.................................................43

         Section 6.2.        Default Notices...........................................................45

         Section 6.3.        Litigation................................................................45

         Section 6.4.        Asset Sales...............................................................45

         Section 6.5.        Operations-Related Notices................................................45

         Section 6.6.        SEC Filings; Press Releases...............................................46

         Section 6.7.        Labor Relations...........................................................46

         Section 6.8.        Tax Returns...............................................................46

         Section 6.9.        Insurance.................................................................46

         Section 6.10.       ERISA Matters.............................................................46
</TABLE>

<PAGE>   4

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      PAGE
                                                                                                      ----

<S>                                                                                                    <C>
         Section 6.11.       Environmental Matters.....................................................46

         Section 6.12.       Borrowing Base Determination..............................................47

         Section 6.13.       Bankruptcy Court..........................................................48

         Section 6.14.       Daily Business Plan.......................................................48

         Section 6.15.       Other Information.........................................................48

Article VII           Affirmative Covenants............................................................48

         Section 7.1.        Preservation of Corporate Existence, Etc..................................49

         Section 7.2.        Compliance with Laws, Etc.................................................49

         Section 7.3.        Conduct of Business.......................................................49

         Section 7.4.        Payment of Taxes, Etc.....................................................49

         Section 7.5.        Maintenance of Insurance..................................................49

         Section 7.6.        Access....................................................................50

         Section 7.7.        Keeping of Books..........................................................50

         Section 7.8.        Maintenance of Properties, Etc............................................50

         Section 7.9.        Application of Proceeds...................................................50

         Section 7.10.       Environmental.............................................................50

         Section 7.11.       Receivables Facility......................................................51

         Section 7.12.       Slots and Routes..........................................................51

         Section 7.13.       Section 1110 Elections....................................................51

         Section 7.14.       Schedules.................................................................51

Article VIII          Negative Covenants...............................................................52

         Section 8.1.        Indebtedness and Guaranty Obligations.....................................52

         Section 8.2.        Liens, Etc................................................................52

         Section 8.3.        Investments...............................................................52

         Section 8.4.        Sale of Assets............................................................53

         Section 8.5.        Restricted Payments; Permitted Prepetition Claim Payment..................53

         Section 8.6.        Restriction on Fundamental Changes........................................54

         Section 8.7.        Change in Nature of Business..............................................54

         Section 8.8.        Transactions with Affiliates..............................................54
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                                TABLE OF CONTENTS

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         Section 8.9.        Restrictions on Subsidiary Distributions; No New Negative Pledge..........54

         Section 8.10.       Modification of Constituent Documents.....................................54

         Section 8.11.       Accounting Changes; Fiscal Year...........................................55

         Section 8.12.       Margin Regulations........................................................55

         Section 8.13.       Operating Leases; Sale/Leasebacks.........................................55

         Section 8.14.       No Speculative Transactions...............................................55

         Section 8.15.       Compliance with ERISA.....................................................55

         Section 8.16.       Environmental.............................................................55

         Section 8.17.       Chapter 11 Claims.........................................................55

         Section 8.18.       The Orders................................................................55

         Section 8.19.       Employment Expenses.......................................................55

         Section 8.20.       Passive Holding Company...................................................56

Article IX            Events Of Default................................................................56

         Section 9.1.        Events of Default.........................................................56

         Section 9.2.        Remedies..................................................................59

         Section 9.3.        Rescission................................................................59

Article X             Guaranty.........................................................................59

         Section 10.1.       The Guaranty..............................................................59

         Section 10.2.       Nature of Liability.......................................................60

         Section 10.3.       Independent Obligation....................................................60

         Section 10.4.       Authorization.............................................................60

         Section 10.5.       Reliance..................................................................61

         Section 10.6.       Subordination.............................................................61

         Section 10.7.       Waiver....................................................................61

         Section 10.8.       Limitation on Enforcement.................................................62

Article XI            Security.........................................................................62

         Section 11.1.       Security..................................................................62

         Section 11.2.       Perfection of Security Interests..........................................64

         Section 11.3.       Rights of Lender; Limitations on Lenders' Obligations.....................65
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                                TABLE OF CONTENTS

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         Section 11.4.       Covenants of the Loan Parties with Respect to Collateral..................66

         Section 11.5.       Performance by Administrative Agent of the Loan Parties' Obligations......71

         Section 11.6.       Limitation on Administrative Agent's Duty in Respect of Collateral........71

         Section 11.7.       Remedies, Rights Upon Default.............................................72

         Section 11.8.       The Administrative Agent's Appointment as Attorney-in-Fact................74

         Section 11.9.       Modifications.............................................................75

Article XII           The Administrative Agent.........................................................76

         Section 12.1.       Authorization and Action..................................................76

         Section 12.2.       Administrative Agent's Reliance, Etc......................................77

         Section 12.3.       The Administrative Agent Individually.....................................77

         Section 12.4.       Lender Credit Decision....................................................77

         Section 12.5.       Indemnification...........................................................78

         Section 12.6.       Successor Administrative Agent............................................78

Article XIII          Miscellaneous....................................................................79

         Section 13.1.       Amendments, Waivers, Etc..................................................79

         Section 13.2.       Assignments and Participations............................................80

         Section 13.3.       Costs and Expenses........................................................81

         Section 13.4.       Indemnities...............................................................82

         Section 13.5.       Limitation of Liability...................................................83

         Section 13.6.       Right of Set-off..........................................................84

         Section 13.7.       Sharing of Payments, Etc..................................................84

         Section 13.8.       Notices, Etc..............................................................84

         Section 13.9.       No Waiver; Remedies.......................................................85

         Section 13.10.      Binding Effect............................................................86

         Section 13.11.      Governing Law.............................................................86

         Section 13.12.      Submission to Jurisdiction; Service of Process............................86

         Section 13.13.      Waiver of Jury Trial......................................................87

         Section 13.14.      Marshaling; Payments Set Aside............................................87
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                                TABLE OF CONTENTS

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         Section 13.15.      Section Titles............................................................87

         Section 13.16.      Execution in Counterparts.................................................87

         Section 13.17.      Entire Agreement..........................................................87

         Section 13.18.      Confidentiality...........................................................87
</TABLE>

                                    SCHEDULES

Schedule I       - Revolving Credit Commitments
Schedule II      - Addresses for Notices
Schedule 4.2     - Consents
Schedule 4.3     - Ownership of Subsidiaries
Schedule 4.6     - Litigation
Schedule 4.12    - Priority Collateral; Junior Collateral
Schedule 4.13    - Deposit Accounts and Control Accounts
Schedule 4.15    - Pledged Collateral
Schedule 4.16    - Guarantors
Schedule 4.20(a) - Airframes
Schedule 4.20(b) - Engines
Schedule 4.20(c) - Spare Parts

EXHIBITS

Exhibit A        - Form of Assignment and Acceptance
Exhibit B-1      - Form of Revolving Credit Note
Exhibit B-2      - Form of Term Credit Note
Exhibit C        - Form of Notice of Borrowing
Exhibit D        - Form of Borrowing Base Certificate
Exhibit E-1      - Form of Opinion of Kirkland & Ellis
Exhibit E-2      - Form of Opinion of In-house Counsel
Exhibit F        - Form of Interim Order
Exhibit G-1      - 2001 Business Plan
Exhibit G-2      - Three Month Business Plan



<PAGE>   8


         SECURED DEBTOR IN POSSESSION CREDIT AND SECURITY AGREEMENT dated as of
January 10, 2001, among TRANS WORLD AIRLINES, INC., a Delaware corporation, as
debtor and debtor in possession under chapter 11 of the Bankruptcy Code (as
defined below) (the "Borrower"), certain Subsidiaries (as defined below) of the
Borrower listed on the signature pages hereof as Guarantors, as debtors and
debtors in possession under chapter 11 of the Bankruptcy Code (the
"Guarantors"), the Lenders (as defined below), and AMR FINANCE, INC., a Delaware
corporation ("AMR Finance"), as administrative agent for the Lenders (in such
capacity, the "Administrative Agent").

                                   WITNESSETH:

         WHEREAS, on January 10, 2001, (the "Petition Date"), the Borrower, the
Guarantors and certain other Subsidiaries of the Borrower each filed a voluntary
petition for relief (collectively, the "Cases") under chapter 11 of the
Bankruptcy Code with the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"); and

         WHEREAS, the Borrower, the Guarantors and certain other Subsidiaries of
the Borrower are continuing to operate their respective businesses and manage
their respective properties as debtors in possession under Sections 1107 and
1108 of the Bankruptcy Code; and

         WHEREAS, the Borrower has requested that the Lenders provide a secured
term loan and revolving credit facility in order to fund the continued operation
of the Borrower's and the Guarantors' businesses as debtors and debtors in
possession under the Bankruptcy Code; and

         WHEREAS, the Lenders are willing to make available to the Borrower such
post-petition loans and other extensions of credit upon the terms and subject to
the conditions set forth herein; and

         WHEREAS, each of the Guarantors has agreed to guaranty the obligations
of the Borrower hereunder and each of the Borrower and the Guarantors has agreed
to secure its obligations to the Lenders hereunder with, inter alia, security
interests in, and liens on, all of its property and assets, whether real,
personal or mixed, tangible or intangible, now existing or hereafter acquired or
arising, all as more fully provided herein;

         NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:

                                   ARTICLE I

                DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS

         SECTION 1.1. DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):

         "Account" has the meaning specified in Article 9 of the UCC, including
the Receivables.

         "Account Debtor" has the meaning specified in Article 9 of the UCC.



<PAGE>   9


         "Additional Pledged Collateral" means all shares of, limited and/or
general partnership interests in, and limited liability company interests in,
and all securities convertible into, and warrants, options and other rights to
purchase or otherwise acquire, stock of, either (i) any Person that, after the
date of this Agreement, as a result of any occurrence, becomes a direct
Subsidiary of any Grantor or (ii) any issuer of Pledged Stock that are acquired
by any Grantor after the date hereof; all certificates or other instruments
representing any of the foregoing; all security entitlements of any Grantor in
respect of any of the foregoing; all additional indebtedness from time to time
owed to any Grantor by any obligor on the Pledged Notes and the instruments
evidencing such indebtedness; and all interest, cash, instruments and other
property or Proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the foregoing.
Additional Pledged Collateral may be General Intangibles or Investment Property.

         "Administrative Agent" has the meaning set forth in the preamble
hereof.

         "Advance Percentage" has the meaning set forth in the Receivables
Indenture as those Advance Percentages applicable to each Category of
Receivables after the occurrence and continuance of a Chapter 11 Case (as
defined in the Receivables Indenture), as the same may be adjusted from time to
time on one (1) Business Days' prior written notice to the Borrower by the
Administrative Agent, in its sole and absolute discretion.

         "Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person, each officer, director, general partner or joint-venturer of
such Person, and each Person who is the beneficial owner of five percent (5%) or
more of any class of Voting Stock of such Person. For the purposes of this
definition, "control" means the possession of the power to direct or cause the
direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

         "Agreement" means this Secured Debtor In Possession Credit and Security
Agreement.

         "Aircraft" means collectively each Airframe and each Engine (whether or
not such Engine at the date hereof or at any time hereafter is installed on any
particular Airframe), as well as the logs and manuals maintained or required to
be maintained by or for any Grantor and associated therewith, in respect of
which any Grantor may have any right, title or interest from time to time,
whether as owner thereof or pursuant to an Aircraft Leasehold or otherwise.

         "Aircraft Leasehold" shall mean any lease or other agreement under
which any Grantor holds a leasehold interest in aircraft.

         "Airframe" means any airframe together with any and all Appliances
incorporated or installed in, or attached to, such airframe.

         "American" means American Airlines, Inc., a Delaware corporation.

         "AMR Finance" has the meaning set forth in the preamble hereof.

         "Appliances" means all parts, instruments, appurtenances, accessories,
furnishings or other equipment of whatever nature (other than complete Engines
but including any engine (other than an Engine) of less than 750 rated takeoff
horse power or the equivalent

                                       2

<PAGE>   10


thereof) which may from time to time be incorporated or installed in, or
attached to, any Airframe or Engine.

         "Applicable Margin" means 4.00% per annum.

         "Applicable Unused Commitment Fee Rate" means 0.50% per annum.

         "AR Notes" means those certain 9.8% Airline Receivable Asset Backed
Notes due 2001 issued pursuant to the Receivables Indenture.

         "AR Termination Date" means that date on which all of the AR Notes have
been paid in full.

         "Arrangement Fee" has the meaning specified in Section 2.9(b).

         "Asset Purchase Agreement" means that certain Asset Purchase Agreement
dated of even date herewith by and between Borrower and American.

         "Asset Sale" has the meaning specified in Section 8.4.

         "Assignee" has the meaning set forth in Section 13.2.

         "Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Assignee, and accepted by the Administrative Agent, in
substantially the form of Exhibit A.

         "Availability Reserves" means, as of two Business Days after the date
of written notice of any determination thereof to the Borrower by the
Administrative Agent, such amounts as the Administrative Agent may from time to
time establish against the Revolving Credit Commitments, in the Administrative
Agent's sole discretion, in order either (a) to preserve the value of the
Collateral or the Administrative Agent's Lien thereon or (b) to provide for the
payment of unanticipated liabilities of any of the Loan Parties arising after
the Closing Date.

         "Available Credit" means, at any time, an amount equal to (a) the
lesser of (i) the Revolving Credit Commitments in effect at such time and (ii)
the Borrowing Base at such time, minus (b) the sum of (i) the aggregate
Revolving Loans then outstanding at such time and (ii) any Availability Reserves
in effect at such time.

         "Aviation Act" shall mean Title 49, United States Code, formerly known
as the Federal Aviation Act of 1958, as amended from time to time, or any
similar legislation of the United States enacted in substitution or replacement
thereof.

         "Bankruptcy Code" means Title 11, United States Code, as amended from
time to time.

         "Bankruptcy Court" is defined in the recitals to this Agreement or
shall mean any other court having competent jurisdiction over the Cases.

         "Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall be
equal at all times to the highest of:

                                       3

<PAGE>   11


         (a) the rate of interest announced publicly by Chase in New York, New
     York, from time to time, as Chase's prime rate (which may not be the best
     or the lowest rate of interest offered by Chase); and

         (b) the sum of (i) 0.5% per annum plus (ii) the Federal Funds Rate.

         "Borrower" has the meaning set forth in the preamble hereof.

         "Borrowing" means, as applicable, a Revolving Credit Borrowing or a
Term Credit Borrowing.

         "Borrowing Base" means, on any date of determination, the sum, with
respect to each Category of Receivables, of (i) the product of (A) the excess of
(I) the aggregate Face Amount of the Receivables of each Obligor in such
Category at the end of the Business Day immediately preceding such Business Day
over (II) the sum of (x) the aggregate amount by which the aggregate Face Amount
of all such Receivables of each Obligor exceeded the Obligor Limit with respect
to such Obligor as of such date for the Category of Receivables into which such
Receivables fall, (y) the aggregate Face Amount of all such Receivables of each
Obligor that were Delinquent Receivables as of the related Month-End Date for
the Category of Receivables into which such Receivables fall and (z) the
aggregate Face Amount of all such Receivables of each Obligor that were
Ineligible Receivables as of such date for the Category of Receivables into
which such Receivables fall, and (B) the Advance Percentage with respect to such
Category of Receivables, minus (ii) the current Tax Lien Amount (as defined in
the Servicing Agreement).

         "Borrowing Base Certificate" means a certificate to be executed and
delivered from time to time by the Borrower to the Administrative Agent
substantially in the form of Exhibit D.

         "Business Day" means a day of the year on which banks are not required
or authorized to close in New York City or Dallas, Texas.

         "Business Plan" means (i) the business plan of the Borrower and its
Subsidiaries attached hereto as Exhibit G-1, which contains the forecasted
expenditures, revenues and pre-tax income, prepared by the management of the
Borrower, and covering the period from January 1, 2001 through December 31,
2001, (ii) the three month forecast in substantially the form of Exhibit G-1,
and (iii) the three month daily cash flow forecast in substantially the form of
Exhibit G-2, in each case as updated from time to time pursuant to this
Agreement.

         "Capital Expenditures" means, with respect to any Person for any
period, the aggregate of amounts that would be reflected as additions to
property, plant or equipment on a consolidated balance sheet of such Person and
its Subsidiaries prepared in conformity with GAAP, excluding interest
capitalized during construction.

         "Capital Lease" means, with respect to any Person, any lease of
property by such Person as lessee which would be accounted for as a capital
lease on a balance sheet of such Person prepared in conformity with GAAP.

         "Capital Lease Obligations" means, with respect to any Person, the
capitalized amount of all obligations of such Person or any of its Subsidiaries
under Capital Leases, as determined on a consolidated basis in conformity with
GAAP.

                                       4

<PAGE>   12


         "Carve-Out" means claims of the following parties for the following
amounts: (i) the unpaid fees of the U.S. Trustee or the Clerk of the Bankruptcy
Court pursuant to 28 U.S.C. Section 1930(a) and (ii) the aggregate allowed
unpaid fees and expenses payable under Sections 330 and 331 of the Bankruptcy
Code to professional persons retained pursuant to an order of the Bankruptcy
Court by the Borrower, any Subsidiary of the Borrower or any Committee not to
exceed $10,000,000, plus any fees and expenses accrued and not yet paid on the
date of the relevant Event of Default, in the aggregate; provided, however, that
the Carve-Out shall not include, apply to or be available for any fees or
expenses incurred by any party, including the Borrower, any Subsidiary of the
Borrower or any Committee, in connection with (x) the investigation (including
discovery proceedings), initiation or prosecution of any claims, causes of
action, adversary proceedings or other litigation against the Administrative
Agent or the Lenders, including challenging the amount, validity, perfection,
priority or enforceability of or asserting any defense, counterclaim or offset
to, the Obligations or the security interests and Liens of the Secured Parties
in respect thereof or (y) the initiation or prosecution of any claims, causes of
action, adversary proceedings or other litigation against American or its
Affiliates, including challenging the validity or enforceability of the Asset
Purchase Agreement; and provided further, however, that as long as no Default or
Event of Default shall occur and be continuing, the Borrower and each Guarantor
shall be permitted to pay compensation and reimbursement of expenses allowed and
payable under Sections 330 and 331 of the Bankruptcy Code, as the same may be
due and payable, and the same shall not reduce the Carve-Out.

         "Cases" has the meaning set forth in the recitals hereof.

         "Cash Collateral Account" means any deposit account or Securities
Account established by the Administrative Agent in which cash and Cash
Equivalents may from time to time be on deposit or held therein as provided
herein.

         "Cash Equivalents" means (a) securities issued or fully guaranteed or
insured by the United States government or any agency thereof, (b) certificates
of deposit, eurodollar time deposits, overnight bank deposits and bankers'
acceptances of any commercial bank organized under the laws of the United
States, any state thereof, the District of Columbia, any foreign bank, or its
branches or agencies (fully protected against currency fluctuations) which, at
the time of acquisition, are rated at least "A-1" by Standard & Poor's Rating
Services ("S&P") or "P-1" by Moody's Investors Services, Inc. ("Moody's"), (c)
commercial paper of an issuer rated at least "A-1" by S&P or "P-1" by Moody's,
and (d) shares of any money market fund that (i) has at least ninety-five
percent (95%) of its assets invested continuously in the types of investments
referred to in clauses (a) through (c) above, (ii) has net assets of not less
than $500,000,000 and (iii) is rated at least "A-1" by S&P or "P-1" by Moody's;
provided, however, that the maturities of all obligations of the type specified
in clauses (a) through (c) above shall not exceed 180 days.

         "Category" has the meaning set forth in the Receivables Indenture.

         "Chase" means The Chase Manhattan Bank or such successor bank as
selected by the Administrative Agent in its sole and absolute discretion.

         "Chattel Paper" has the meaning specified in Article 9 of the UCC.

         "Claim" has the meaning ascribed to such term in Section 101(5) of the
Bankruptcy Code.

         "Closing Date" means the first date on which any Loan is made.

                                       5

<PAGE>   13


         "Code" means the Internal Revenue Code of 1986 (or any successor
legislation thereto), as amended from time to time.

         "Collateral" has the meaning specified in Section 11.1.

         "Collateral Documents" means this Agreement, all financing statements,
deeds of trust, mortgages, and any other agreement or document required by the
terms of this Agreement to be entered into guaranteeing or granting a security
interest or other Lien to secure payment of the Obligations.

         "Commitments" means, as applicable, the Revolving Credit Commitments or
the Term Credit Commitments.

         "Committee" means the official statutory committee of unsecured
creditors approved in the Cases pursuant to Section 1102 of the Bankruptcy Code.

         "Compliance Certificate" has the meaning specified in Section 6.1(d).

         "Consolidated Net Income" means, for any Person for any period, the net
income (or loss) of such Person and its Subsidiaries for such period, determined
on a consolidated basis in conformity with GAAP.

         "Constellation" means Constellation Finance LLC, a Delaware limited
liability company and wholly-owned subsidiary of the Borrower.

         "Constituent Documents" means, with respect to any Person, (a) the
articles/certificate of incorporation (or the equivalent organizational
documents) of such Person, (b) the by-laws (or the equivalent governing
documents) of such Person and (c) any document setting forth the manner of
election and duties of the directors or managing members of such Person (if any)
and the designation, amount and/or relative rights, limitations and preferences
of any class or series of such Person's Stock.

         "Contaminant" means any material, substance or waste that is
classified, regulated or otherwise characterized under any Environmental Law as
hazardous, toxic, a contaminant or a pollutant or by other words of similar
meaning or regulatory effect, including any petroleum or petroleum-derived
substance or waste, asbestos and polychlorinated biphenyls.

         "Contracts" means, with respect to any Loan Party, any and all
"contracts", as such term is defined in Article 1 of the UCC, of such Loan
Party, including any Aircraft Leaseholds.

         "Contractual Obligation" of any Person means any obligation, agreement,
undertaking or similar provision of any Security issued by such Person or of any
agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or
other instrument (excluding a Loan Document) to which such Person is a party or
by which it or any of its property is bound or to which any of its properties is
subject.

         "Control Account" means a securities account or commodity account
maintained by any Grantor with an approved securities intermediary, and includes
all financial assets held therein and all certificates and instruments, if any,
representing or evidencing such Control Account.

                                       6

<PAGE>   14


         "Copyright Licenses" means any written agreement naming any Grantor as
licensor or licensee granting any right under any Copyright, including the grant
of rights to copy, publicly perform, create derivative works, manufacture,
distribute, exploit and sell materials derived from any Copyright.

         "Copyrights" means (a) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any foreign counterparts thereof and (b)
the right to obtain all renewals thereof.

         "Customary Permitted Liens" means, with respect to any Person, any of
the following Liens:

         (a) Liens with respect to the payment of taxes, assessments or
     governmental charges in all cases which are not yet due or which are being
     contested in good faith by appropriate proceedings and with respect to
     which adequate reserves or other appropriate provisions are being
     maintained to the extent required by GAAP;

         (b) Liens of landlords arising by statute and liens of suppliers,
     mechanics, carriers, materialmen, warehousemen or workmen and other liens
     imposed by law created in the ordinary course of business for amounts not
     yet due or which are being contested in good faith by appropriate
     proceedings and with respect to which adequate reserves or other
     appropriate provisions are being maintained to the extent required by GAAP;

         (c) deposits made in the ordinary course of business in connection with
     worker's compensation, unemployment insurance or other types of social
     security benefits or to secure the performance of bids, tenders, sales,
     contracts (other than for the repayment of borrowed money) and surety,
     appeal, customs or performance bonds;

         (d) encumbrances arising by reason of zoning restrictions, easements,
     licenses, reservations, covenants, rights-of-way, utility easements,
     building restrictions and other similar encumbrances on the use of Real
     Property which do not materially detract from the value of such Real
     Property or interfere with the ordinary conduct of the business conducted
     and proposed to be conducted at such Real Property;

         (e) encumbrances arising under leases or subleases of Real Property
     which do not in the aggregate materially detract from the value of such
     Real Property or interfere with the ordinary conduct of the business
     conducted and proposed to be conducted at such Real Property; and

         (f) financing statements evidencing a lessor's rights in and to
     personal property leased to such Person pursuant to an operating lease in
     the ordinary course of such Person's business.

         "Debt Issuance" means the incurrence of Indebtedness of the type
specified in clause (a) and (b) of the definition of "Indebtedness" by the
Borrower or any of its Subsidiaries.

         "Default" means any event which with the passing of time or the giving
of notice or both would become an Event of Default.

                                       7

<PAGE>   15


         "Delinquent Receivables" has the meaning set forth in the Receivables
Indenture.

         "Delinquency Percentage" has the meaning set forth in the Receivables
Indenture.

         "Disclosure Documents" means, collectively, all documents filed by any
Loan Party or any of its Subsidiaries with the Securities and Exchange
Commission or the Bankruptcy Court.

         "Dollars" and the sign "$" each mean the lawful money of the United
States of America.

         "DOT" shall mean the United States Department of Transportation or
successor authority established in replacement thereof.

         "EBITDA" means, with respect to any Person for any period, an amount
equal to (a) Consolidated Net Income of such Person for such period plus (b) the
sum of, in each case to the extent included in the calculation of such
Consolidated Net Income but without duplication, (i) any provision for income
taxes, (ii) Interest Expense, (iii) loss from extraordinary items and (iv)
depreciation, depletion and amortization of intangibles or financing or
acquisition costs, (v) any aggregate net loss from the sale, exchange or other
disposition of capital assets by such Person, and (vi) all other non-cash
charges and non-cash losses for such period, including the amount of any
compensation deduction as the result of any grant of Stock or Stock Equivalents
to employees, officers, directors or consultants minus (c) the sum of, in each
case to the extent included in the calculation of such Consolidated Net Income
but without duplication, (i) any credit for income tax, (ii) interest income,
(iii) gains from extraordinary items for such period, (iv) any aggregate net
gain from the sale, exchange or other disposition of capital assets by such
Person, and (v) any other non-cash gains.

         "Effective Date" means the date upon which a plan of reorganization in
any of the Cases becomes effective.

         "Eligibility Reserves" means, effective as of two Business Days after
the date of written notice of any determination thereof to the Borrower by the
Administrative Agent, such amounts as the Administrative Agent, in its sole
discretion, may from time to time establish against the gross amount of
Receivables, to reflect risks or contingencies arising after the Closing Date
which may affect any one or class of such items and which have not already been
taken into account in the calculation of the Borrowing Base.

         "Eligible Receivable" has the meaning set forth in the Receivables
Indenture.

         "Engine" means any aircraft engine which is 750 rated takeoff
horsepower or the equivalent thereof, together with any and all Appliances
incorporated or installed in, or attached to, such aircraft engine.

         "Entry Date" means the date of the entry of the Final Order.

         "Environmental Laws" means all applicable Requirements of Law now or
hereafter in effect, as amended or supplemented from time to time, relating to
pollution or the regulation and protection of human health, safety, the
environment or natural resources, including

                                       8

<PAGE>   16


the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Section 9601 et seq.); the Hazardous Material
Transportation Act, as amended (49 U.S.C. Section 180 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. Section 136 et
seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section
6901 et seq.); the Toxic Substance Control Act, as amended (42 U.S.C. Section
7401 et seq.); the Clean Air Act, as amended (42 U.S.C. Section 740 et seq.);
the Federal Water Pollution Control Act, as amended (33 U.S.C. Section 1251 et
seq.); the Occupational Safety and Health Act, as amended (29 U.S.C. Section 651
et seq.); the Safe Drinking Water Act, as amended (42 U.S.C. Section 300f et
seq.); and their state and local counterparts or equivalents and any transfer of
ownership notification or approval statute, including the Industrial Site
Recovery Act (N.J. Stat. Ann. Section 13:1K-6 et seq.).

         "Environmental Liabilities and Costs" means, with respect to any
Person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by
any other Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute, including any thereof arising under
any Environmental Law, Permit, order or agreement with any Governmental
Authority or other Person, which relate to any environmental, health or safety
condition or a Release or threatened Release, and result from the past, present
or future operations of, or ownership of property by, such Person or any of its
Subsidiaries.

         "Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.

         "Equipment" has the meaning specified in Article 9 of the UCC,
including all Airframes, engines and Spare Parts and all Ground Equipment,
wherever located.

         "ERISA" means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control or treated as a single employer with the
Borrower or any of its Subsidiaries within the meaning of Section 414 (b), (c),
(m) or (o) of the Code.

         "ERISA Event" means (a) a reportable event described in Section 4043(b)
or 4043(c)(1), (2), (3), (5), (6), (8) or (9) of ERISA with respect to a Title
IV Plan or a Multiemployer Plan; (b) the withdrawal of the Borrower, any of its
Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial employer, as defined
in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of the
Borrower, any of its Subsidiaries or any ERISA Affiliate from any Multiemployer
Plan; (d) notice of reorganization or insolvency of a Multiemployer Plan; (e)
the filing of a notice of intent to terminate a Title IV Plan or the treatment
of a plan amendment as a termination under Section 4041 of ERISA; (f) the
institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by
the PBGC; (g) the failure to make any required contribution to a Title IV Plan
or Multiemployer Plan; (h) the imposition of a lien under Section 412 of the
Code or Section 302 of ERISA on the Borrower or any of its Subsidiaries or any
ERISA Affiliate; or (i) any other event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Title IV Plan or
Multiemployer Plan or the imposition of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of ERISA.

                                       9

<PAGE>   17

         "Event of Default" has the meaning specified in Section 9.1.

         "FAA" means the Federal Aviation Administration, or any successor
thereto.

         "Face Amount" has the meaning set forth in the Receivables Indenture.

         "Fair Market Value" means (a) with respect to any asset or group of
assets (other than a marketable Security) at any date, the value of the
consideration obtainable in a sale of such asset at such date assuming a sale by
a willing seller to a willing purchaser dealing at arm's length and arranged in
an orderly manner over a reasonable period of time having regard to the nature
and characteristics of such asset, as reasonably determined by the Board of
Directors of the Borrower or its Subsidiaries, as applicable, or, if such asset
shall have been the subject of a relatively contemporaneous appraisal by an
independent third party appraiser, the basic assumptions underlying which have
not materially changed since its date, the value set forth in such appraisal,
and (b) with respect to any marketable Security at any date, the closing sale
price of such Security on the Business Day next preceding such date, as
appearing in any published list of any national securities exchange or the
Nasdaq Stock Market or, if there is no such closing sale price of such Security,
the final price for the purchase of such Security at face value quoted on such
business day by a financial institution of recognized standing which regularly
deals in securities of such type selected by the Administrative Agent.

         "Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three (3) Federal funds
brokers of recognized standing selected by it.

         "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto.

         "Fees" shall mean the Unused Commitment Fee, the Arrangement Fee and
any and all other fees payable to the Administrative Agent, any Lender or their
respective Affiliates pursuant to this Agreement or any of the other Loan
Documents.

         "Final Order" means an order of the Bankruptcy Court pursuant to
section 364 of the Bankruptcy Code, approving this Agreement and the other Loan
Documents and authorizing the incurrence by the Loan Parties of post-petition
secured Indebtedness in accordance with this Agreement, and as to which no stay
has been entered and which has not been reversed, modified, vacated or
overturned, and which is in form and substance satisfactory to the
Administrative Agent and the Requisite Lenders.

         "Financial Statements" means the financial statements of the Borrower
and its Subsidiaries delivered in accordance with Sections 4.4 and 6.1.

         "First Day Orders" means all orders entered by the Bankruptcy Court on
the Petition Date or within five (5) Business Days of the Petition Date or based
on motions filed on the Petition Date.

                                       10

<PAGE>   18


         "Fiscal Quarter" means each of the three-month periods ending on March
31, June 30, September 30 and December 31.

         "Fiscal Year" means the twelve (12) month period ending on December 31.

         "GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.

         "Gates" shall mean all of the rights, title, interests and privileges,
now owned or hereafter acquired, of each Grantor (or any of its Subsidiaries) in
all airline passenger ground facilities at airports obtained pursuant to airport
use or lease agreements (including any lease, license or other agreement or
arrangement entered into between any Grantor and any Person, including an
Affiliate of Grantor).

         "General Intangible" has the meaning specified in Article 9 of the UCC,
and includes Slot Collateral and Routes.

         "Governmental Authority" means (a) any nation, sovereign or government,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and (b) any airport authority or operator including,
without limitation, any municipal subdivision which may operate or oversee the
administration of any airport and the FAA.

         "Grantors" means the Borrower and each Guarantor.

         "Ground Equipment" means all appliances, instruments, appurtenances,
accessories, furnishings, rolling stock, vehicles and other equipment now owned
or hereafter acquired by any Grantor, to the extent that the same shall
constitute personal property, whether motorized or non-motorized, which are used
by any Grantor (or are of a type commonly used by air carriers) to load and
unload, service and/or maintain aircraft, provide ground transportation to
passengers, transport materials and/or maintain airport facilities, including
without limitation of the generality of the foregoing, passenger service
equipment, food service equipment, cargo trailers and other cargo and
baggage-handling equipment, loading bridges and other passenger-handling
equipment, communications and meteorological equipment, maintenance and
engineering equipment, surface transport vehicles, furnishings and other office
equipment, storage and distribution equipment, medical equipment, flight
training equipment and security equipment now owned or hereafter acquired by any
Grantor.

         "Guarantor" means each Subsidiary of the Borrower party to this
Agreement.

         "Guaranty" means the guaranty of the Obligations of the Borrower made
by the Guarantors pursuant to Article X of this Agreement.

         "Guaranty Obligation" means, as applied to any Person (the
"guaranteeing person"), any obligation of (a) the guaranteeing person or (b)
another Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case



                                       11
<PAGE>   19

guaranteeing or in effect guaranteeing any Indebtedness, Leases, Contracts,
dividends or other obligations (the "primary obligations") of any other third
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided however, that the term Guaranty Obligation shall not include
endorsement of instruments for deposit or collection in the ordinary course of
business. The amount of any Guaranty Obligation of any guaranteeing person shall
be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made.

         "Indebtedness" of any Person means without duplication (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments or which
bear interest, (c) all reimbursement and all obligations with respect to letters
of credit, bankers' acceptances, surety bonds and performance bonds, whether or
not matured, (d) all indebtedness for the deferred purchase price of property or
services, other than trade payables incurred in the ordinary course of business
which are not overdue, (e) all indebtedness of such Person created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (f) all Capital Lease Obligations of
such Person and the present value of future rental payments under all synthetic
leases, (g) all Guaranty Obligations of such Person, (h) all obligations of such
Person to purchase, redeem, retire, defease or otherwise acquire for value any
Stock or Stock Equivalents of such Person, valued, in the case of redeemable
preferred stock, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (i) all payments that such Person
would have to make in the event of an early termination on the date Indebtedness
of such Person is being determined in respect of Hedging Contracts of such
Person and (j) all Indebtedness of the type referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including Accounts
and general intangibles) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness.

         "Indemnitees" has the meaning specified in Section 13.4.

         "Indemnified Matters" has the meaning specified in Section 13.4.

         "Ineligible Receivables" has the meaning set forth in the Receivables
Indenture.

         "Instrument" has the meaning specified in Article 9 of the UCC, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.

         "Intellectual Property" means, collectively, all rights, priorities and
privileges of any Grantor or its Subsidiaries relating to intellectual property,
whether arising under United States, multinational or foreign laws or otherwise,
including Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks,
Trademark Licenses and trade secrets, and all rights to sue








                                       12
<PAGE>   20


at law or in equity for any infringement or other impairment thereof, including
the right to receive all proceeds and damages therefrom.

         "Interest Expense" means, for any Person for any period, (a) total
interest expense of such Person and its Subsidiaries for such period determined
on a consolidated basis in conformity with GAAP plus (ii) any interest income of
such Person and its Subsidiaries for such period determined on a consolidated
basis in conformity with GAAP.

         "Interim Facility" means that portion of the Facility made available to
the Borrower prior to the Entry Date, as approved by the Interim Order.

         "Interim Order" means that certain order issued by the Bankruptcy Court
in substantially the form of Exhibit F and otherwise in form and substance
satisfactory to the Administrative Agent.

         "Inventory" has the meaning specified in Article 9 of the UCC, wherever
located.

         "Investment" means, with respect to any Person, (a) any purchase or
other acquisition by that Person of (i) any Security issued by, (ii) a
beneficial interest in any Security issued by, or (iii) any other equity
ownership interest in, any other Person, (b) any purchase by that Person of all
or a significant part of the assets conducted by another Person, or all or
substantially all of the assets constituting the business of a division, branch
or other unit operation of any Person, (c) any loan, advance (other than
deposits with financial institutions available for withdrawal on demand, prepaid
expenses, accounts receivable and similar items, in each case made or incurred
in the ordinary course of business as presently conducted), or capital
contribution by that Person to any other Person, including all Indebtedness of
any other Person to that Person arising from a sale of property by that Person
other than in the ordinary course of its business and (d) any Guaranty
Obligation incurred by that Person in respect of the obligations of any other
Person.

         "Investment Property" means, with respect to any Person, any and all
"investment property", as such term is defined in Article 9 of the UCC, of such
Loan Party or its Subsidiaries, wherever located.

         "IRS" means the Internal Revenue Service of the United States or any
successor thereto.

         "Junior Collateral" shall mean that Collateral in which Lender has a
Lien that is subject, subordinate and junior to the Lien of another Person,
which Junior Collateral is more fully described on Schedule 4.12.

         "Leases" means, with respect to any Person, all of those leasehold
estates in real property of such Person, as lessee, as such may be amended,
supplemented or otherwise modified from time to time.

         "Lender" means each financial institution or other entity that (a) is
listed on the signature pages hereof as a "Lender" or (b) from time to time
becomes a party hereto by execution of an Assignment and Acceptance.

         "Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge, deposit arrangement, encumbrance, lien (statutory or other),
security interest or





                                       13
<PAGE>   21


preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever intended to assure payment of any Indebtedness or
the performance of any other obligation, including any conditional sale or other
title retention agreement, the interest of a lessor under a Capital Lease, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the UCC or comparable
law of any jurisdiction naming the owner of the asset to which such Lien relates
as debtor.

         "Loan" means a Revolving Credit Loan or a Term Loan made by any Lender
pursuant to this Agreement.

         "Loan Account" means the following account of the Administrative Agent
with Chase, which shall be entitled as follows:

                           The Chase Manhattan Bank
                           New York, New York
                           ABA # 021000021
                           Beneficiary: AMR Finance, Inc./TWA DIP Loan Account
                           Account # 323187250


         "Loan Documents" means, collectively, this Agreement, the Notes, the
Guaranty, the Collateral Documents, the Compliance Certificates, the Borrowing
Base Certificate and each certificate, agreement or document executed by a Loan
Party and delivered to the Administrative Agent or any Lender in connection with
or pursuant to any of the foregoing.

         "Loan Party" means the Borrower, each Guarantor and each other
Subsidiary of the Borrower that executes and delivers a Loan Document.

         "Lockbox Account" has the meaning set forth in the Receivables
Indenture.

         "Loss Estimate Percentage" has the meaning set forth in the Receivables
Indenture.

         "Material Adverse Change" means a material adverse change in any of (a)
the condition (financial or otherwise), business, performance, prospects,
operations or properties of the Borrower or, the Borrower and its Subsidiaries
taken as a whole, (b) the ability of the Borrower to repay the Obligations or of
the Loan Parties to perform their respective obligations under the Loan
Documents, or (c) the rights and remedies of the Administrative Agent or the
Lenders under the Loan Documents.

         "Material Adverse Effect" means an effect that results in or causes, or
could reasonably be expected to result in or cause, a Material Adverse Change.

         "Material Intellectual Property" means Intellectual Property owned by
or licensed to a Grantor or its Subsidiaries which is material to its business.

         "Maximum Credit" means, at any time, (a) the lesser of (i) the
Revolving Credit Commitments in effect at such time and (ii) the Borrowing Base
at such time minus (b) the aggregate amount of any Availability Reserve in
effect at such time.

         "Monthly Receivables Report" has the meaning set forth in Section
6.12(b).




                                       14
<PAGE>   22

         "Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Borrower, any of its Subsidiaries or any ERISA
Affiliate has any obligation or liability, contingent or otherwise.

         "Net Cash Proceeds" means proceeds received by any Loan Party or its
respective Subsidiaries after the Closing Date in cash or Cash Equivalents from
any (a) Asset Sale, other than an Asset Sale permitted under Section 8.4, net of
(i) the reasonable cash costs of sale, assignment or other disposition, (ii)
taxes paid or payable as a result thereof and (iii) any amount required by the
Bankruptcy Court to be paid or prepaid on Indebtedness (other than the
Obligations) secured by a perfected and unavoidable Lien on the assets subject
to such Asset Sale; provided, however, that the evidence of each of (i), (ii)
and (iii) are provided to the Administrative Agent in form and substance
satisfactory to it; (b) Property Loss Event net of (i) the reasonable costs and
expenses associated with settling any claim with respect to such Property Loss
Event, (ii) taxes paid or payable as a result thereof, and (iii) any amount
required by the Bankruptcy Court to be paid or prepaid on Indebtedness (other
than the Obligations) secured by a perfected and unavoidable Lien on the assets
subject to Asset Sale; provided, however, that the evidence of each of (i), (ii)
and (iii) are provided to the Administrative Agent in form and substance
satisfactory to it; or (c) the issuance of Stock or Indebtedness, the cash
proceeds received from such issuance or incurrence, net of attorney's fees,
notarial fees, investment banking fees, accountants' fees, underwriting
discounts and commissions and other customary fees and expenses incurred in
connection therewith.

         "Non-Funding Lender" has the meaning specified in Section 2.2(d).

         "Non-Stayed Order" means an order of the Bankruptcy Court which is in
full force and effect, as to which no stay has been entered and which has not
been reversed, modified, vacated or overturned.

         "Non-U.S. Lender" means each Lender or Administrative Agent that is not
a United States person as defined in Section 7701(a)(30) of the Code.

         "Notes" means the Revolving Credit Notes and the Term Credit Notes.

         "Notice of Borrowing" has the meaning specified in Section 2.2(a).

         "Obligations" means the Loans and all other amounts, obligations,
covenants and duties owing by the Borrower to the Administrative Agent, any
Lender, any Affiliate of any of them or any Indemnitee, of every type and
description (whether by reason of an extension of credit, loan, guaranty,
indemnification, or otherwise), present or future, arising under this Agreement,
any other Loan Document, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired and whether or not evidenced by any note,
guaranty or other instrument or for the payment of money, and includes all fees,
interest, charges, expenses, fees, attorneys' fees and disbursements and other
sums chargeable to the Borrower under this Agreement or any other Loan Document.

         "Obligor" has the meaning set forth in the Receivables Indenture.

         "Obligor Limit" has the meaning set forth in the Receivables Indenture.

         "Orders" means the Interim Order or the Final Order, as applicable.



                                       15
<PAGE>   23

         "Other Taxes" has the meaning specified in Section 2.12(b).

         "PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.

         "PARS" means Trans World PARS, Inc., a Delaware corporation.

         "Patents" means (a) all letters patent of the United States, any other
country or any political subdivision thereof and all reissues and extensions
thereof, (b) all applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-part
thereof, and (c) all rights to obtain any reissues or extensions of the
foregoing.

         "Patent License" means all agreements, whether written or oral,
providing for the grant by or to any Grantor or any of its Subsidiaries of any
right to manufacture, use, import, sell or offer for sale any invention covered
in whole or in part by a Patent.

         "Permanent Facility" means that portion of the Facility made available
to the Borrower from and after the Entry Date.

         "Permit" means any permit, approval, authorization, license, variance
or permission required from a Governmental Authority under an applicable
Requirement of Law.

         "Permitted Prepetition Claim Payment" means a payment (as adequate
protection or otherwise) on account of any Claim arising or deemed to have
arisen prior to the Petition Date, which is made (i) pursuant to authority
granted by a Non-Stayed Order of the Bankruptcy Court and (ii) which are
reflected in the cash flow forecast attached as Exhibit G-2 and such other
amounts as shall be approved by the Administrative Agent, in writing, in its
sole and absolute discretion; provided, that no such payment shall be made after
the occurrence and during the continuance of a Default or an Event of Default.

         "Person" means an individual, partnership, corporation (including a
business trust), joint stock company, estate, trust, limited liability company,
unincorporated association, joint venture or other entity, or a Governmental
Authority.

         "Petition Date" has the meaning specified in the recitals to this
Agreement.

         "Pledged Collateral" means, collectively, the Pledged Notes and the
Pledged Stock, any other Investment Property of any Grantor, all certificates or
other instruments representing any of the foregoing, all dividends, interest
distributions, cash, warrants, rights, instruments and other property or
Proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the foregoing. Pledged Collateral
may be General Intangibles or Investment Property.

         "Pledged Notes" means all right, title and interest of any Grantor, in
the Instruments evidencing all Indebtedness owed to such Grantor, including all
Indebtedness described on Schedule 4.15, issued by the obligors named therein,
and all interest, cash, Instruments and other property or Proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such Indebtedness.



                                       16
<PAGE>   24

         "Pledged Stock" means the Stock owned by each Grantor and pledged
hereunder as set forth on Schedule 4.15.

         "Priority Collateral" shall mean that Collateral in which Lender has a
first-priority security interest and which is more fully described on Schedule
4.12.

         "Proceeds" means any and all "proceeds", as such term is defined in
Section 9-306 of the UCC.

         "Property Loss Event" means any loss of or damage to property of the
Borrower or any of its Subsidiaries that results in the receipt by such Person
of proceeds of insurance in excess of $250,000 or any taking or condemnation of
property (or deed in lieu thereof) of the Borrower or any of its Subsidiaries
that results in the receipt by such Person of a compensation payment in respect
thereof in excess of $250,000.

         "Protective Advances" means all expenses, disbursements and advances
incurred by the Administrative Agent pursuant to the Loan Documents which the
Administrative Agent, in its sole discretion, deems necessary or desirable to
preserve or protect the Collateral or any portion thereof or to enhance the
likelihood or maximize the amount of repayment of the Obligations, including
without limitation, at the discretion of the Requisite Lender(s) and without any
obligation to do so, to repay or prepay any Indebtedness which is secured in
whole or in part by any of the Collateral, including the repayment of the
Indebtedness of PARS or TWA Stockholding, which is secured by the Stock of TWA
Stockholding.

         "Purchasing Lender" has the meaning specified in Section 13.7(a).

         "Ratable Portion" or "ratably" means, with respect to any Lender, the
percentage obtained by dividing (a) with respect to the Revolving Credit
Commitment, (x) the Revolving Credit Commitment of such Lender by (y) the
aggregate Revolving Credit Commitments of all Lenders (or, at any time after the
Revolving Credit Termination Date, the percentage obtained by dividing the
aggregate outstanding principal balance of the Revolving Loans then owing to
such Lender by the aggregate outstanding principal balance of the Revolving
Loans then owing to all Lenders) and (b) with respect to the Term Credit
Commitment, (x) the Term Credit Commitment of such Lender by (y) the aggregate
Term Credit Commitments of all Lenders (or at any time after the Term Credit
Termination Date, the percentage obtained by dividing the aggregate outstanding
principal balance of the Term Loans then owing to such Lender by the aggregate
outstanding principal balance of the Term Loans then owing to all Lenders).

         "Real Property" means all of those plots, pieces or parcels of land now
owned, leased or hereafter acquired or leased by the Borrower or any of its
Subsidiaries (the "Land") including any Gate, any hanger or maintenance
facilities wherever located, together with the right, title and interest of the
Borrower or any of its Subsidiaries, if any, in and to the streets, the land
lying in the bed of any streets, roads or avenues, opened or proposed, in front
of, the air space and development rights pertaining to the Land and the right to
use such air space and development rights, all rights of way, privileges,
liberties, tenements, hereditaments and appurtenances belonging or in any way
appertaining thereto, all fixtures, all easements now or hereafter benefiting
the Land and all royalties and rights appertaining to the use and enjoyment of
the Land, including all alley, vault, drainage, mineral, water, oil and gas
rights, together with all of the buildings and other improvements now or
hereafter erected on the Land, and any fixtures appurtenant thereto.





                                       17
<PAGE>   25

         "Receivables" has the meaning set forth in the Receivables Indenture.

         "Receivables Indenture" means that certain Indenture, dated as of
December 30, 1997 by and between Constellation, as Issuer, and The Chase
Manhattan Bank, as trustee, as supplemented to date (including the Series 1997-1
Supplement dated as of December 30, 1997), pursuant to which Constellation
issued $100,000,000 of AR Notes as such Receivables Indenture is in effect on
the date hereof.

         "Register" has the meaning specified in Section 13.2(c).

         "Release" means, with respect to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration, in each case, of any Contaminant into the indoor or
outdoor environment or into or out of any property owned by such Person,
including the movement of Contaminants through or in the air, soil, surface
water, ground water or property.

         "Remedial Action" means all actions required to (a) clean up, remove,
treat or in any other way address any Contaminant in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release so that a Contaminant does not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment or (c)
perform pre-remedial studies and investigations and post-remedial monitoring and
care.

         "Requirement of Law" means, with respect to any Person, the common law
and all federal, state, local and foreign laws, rules and regulations, orders,
judgments, decrees and other legal requirements or determinations of any
Governmental Authority or arbitrator, applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

         "Requisite Lenders" means, (a) prior to the Revolving Credit
Termination Date or Term Credit Termination Date, Lenders having more than
fifty-one percent (51%) of the aggregate outstanding amount of the Commitments,
(b) after the Term Credit Termination Date but prior to the Revolving Credit
Termination Date, Lenders having more than fifty-one percent (51%) of the
aggregate amount outstanding of the Revolving Credit Commitments and Term Loans,
(c) after the Revolving Credit Termination Date but prior to the Term Credit
Termination Date, Lenders having fifty one percent (51%) of the aggregate amount
outstanding of the Revolving Loans and Term Credit Commitments, and (d) after
the Term Credit Termination Date and the Revolving Credit Termination Date,
Lenders having fifty-one percent (51%) of the aggregate amount outstanding of
all Loans. A Non-Funding Lender shall not be included in the calculation of
"Requisite Lenders."

         "Requisite Revolving Credit Lenders" means, collectively, Lenders
having more than fifty-one percent (51%) of the aggregate outstanding amount of
the Revolving Credit Commitments or, after the Revolving Credit Termination
Date, fifty-one percent (51%) of the aggregate Revolving Loans then outstanding.
A Non-Funding Lender shall not be included in the calculation of "Requisite
Revolving Credit Lenders."

         "Requisite Term Loan Lenders" means, collectively, Lenders having more
than fifty-one percent (51%) of the aggregate outstanding amount of the Term
Credit Commitments or, after the Term Credit Termination Date, fifty-one percent
(51%) of the aggregate Term Loans





                                       18
<PAGE>   26

then outstanding. A Non-Funding Lender shall not be included in the calculation
of "Requisite Term Credit Lenders."

         "Responsible Officer" means, with respect to any Person, any of the
principal executive officers, but in any event, with respect to financial
matters, the chief financial officer, treasurer or controller of such Person.

         "Restricted Payment" means (a) any dividend or other distribution, or
any payment on account of direct or indirect, any Stock or Stock Equivalents of
the Borrower or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in Stock or Stock Equivalents or a dividend or
distribution payable solely to the Borrower and/or one or more Guarantors, (b)
any redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any Stock or Stock Equivalents of
the Borrower or any of its Subsidiaries now or hereafter outstanding other than
one payable solely to the Borrower and/or one or more Guarantors, and (c) any
payment or prepayment of principal, premium (if any), interest, fees (including
fees to obtain any waiver or consent in connection with any Indebtedness) or
other charges on, or redemption, purchase, retirement, defeasance, sinking fund
or similar payment with respect to, any Indebtedness of the Borrower or any of
its Subsidiaries or any other Loan Party, other than any required or mandatory
redemptions, retirements, purchases or other payments, in each case to the
extent permitted to be made by the terms of such Indebtedness after giving
effect to any applicable subordination provisions.

         "Revolving Credit Borrowing" means Revolving Loans made on the same day
by the Lenders ratably according to their respective Revolving Credit
Commitments.

         "Revolving Credit Commitment" means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans in the aggregate principal
amount outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule I under the caption "Revolving Credit Commitment," as amended
to reflect each Assignment and Acceptance executed by such Lender and as such
amount may be reduced pursuant to this Agreement.

         "Revolving Credit Note" means a promissory note of the Borrower payable
to the order of any Lender in a principal amount equal to the amount of such
Lender's Revolving Credit Commitment evidencing the aggregate Indebtedness of
the Borrower to such Lender resulting from the Revolving Loans owing to such
Lender.

         "Revolving Credit Termination Date" shall mean the earliest of (a) the
Scheduled Termination Date, (b) the date of termination of the Revolving Credit
Commitments pursuant to Section 2.3 and (c) the date on which the Obligations
become due and payable pursuant to Section 9.2.

         "Revolving Facility" means the Revolving Credit Commitments and the
provisions herein related to the Revolving Loans.

         "Revolving Loan" has the meaning specified in Section 2.1(a).

         "Routes" shall mean all right, title, privilege, interests and
authority now or hereafter acquired or held by any Grantor or its Subsidiaries
(including, without limitation, rights and authorities pursuant to all
certificates and exemptions issued to each Grantor or its Subsidiaries under the
provisions of Section 401 and 416 of the Aviation Act) to provide





                                       19
<PAGE>   27


interstate, overseas or foreign air transportation of persons, property and
mail, including, without limitation: (i) all designations held by any Grantor or
its Subsidiaries to serve any foreign country or point named on any route; (ii)
any and all frequency allocations held by any Grantor or its Subsidiaries
authorizing service to any foreign country or point named on any route; (iii)
any and all rights of any Grantor or its Subsidiaries to provide scheduled or
charter air transportation service to any foreign country or point named on any
route that is not included in an air transport agreement or that is in addition
to the rights available to United States-designated airlines under applicable
air transport agreements; (iv) any and all rights to fly over any foreign
country or point named on any route; (v) all right and authority of any Grantor
or its Subsidiaries to operate between and beyond all foreign countries and
points named on any route, including, without limitation, the right to operate
between and beyond such countries and points on a fifth-freedom and blind sector
basis; and (vi) any and all operating or landing authorizations (other than
Slots) held by any Grantor or its Subsidiaries.

         "Scheduled Termination Date" means the earlier to occur of (a) May 30,
2001, (b) the closing of the transactions contemplated by the Asset Purchase
Agreement, or (c) the date on which the Obligations become due and payable
pursuant to Section 9.2.

         "Secured Obligations" means, in the case of the Borrower, the
Obligations, and, in the case of any other Loan Party, the obligations of such
Loan Party under the Guaranty and the other Loan Documents to which it is a
party.

         "Secured Parties" means the Lenders, the Administrative Agent, each of
their respective successors and assigns, and any other holder of any of the
Obligations or of any other obligations under the Loan Documents, including the
beneficiaries of each indemnification obligation undertaken by the Loan Parties
and the Administrative Agent.

         "Securities Account" has the meaning specified in Article 8 of the UCC.

         "Security" means any Stock, Stock Equivalent, voting trust certificate,
bond, debenture, note or other evidence of Indebtedness, whether secured,
unsecured, convertible or subordinated, or any certificate of interest, share or
participation in, or any temporary or interim certificate for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing, but shall not include any evidence of the Obligations.

         "Selling Lender" has the meaning specified in Section 13.7(a).

         "Servicing Agreement" means that certain Sale and Servicing Agreement,
dated as of December 30, 1997, between Borrower, as originator, seller and
servicer, and Constellation, as purchaser, as amended from time to time.

         "Slots" shall mean all of the rights, title, privilege, interests and
authority now or hereafter acquired or held by any Person in and to (i) the
operating authority granted by the FAA pursuant to Title 14, to conduct one
Instrument Flight Rule (as defined under the federal aviation regulations)
operation in a specified time period at a High Density Airport, (ii) any
equivalent authority granted by a foreign Governmental Authority or (iii) the
authority to takeoff and land at any airport to which any of them provide
service. For the purposes of this definition, a "High Density Airport" shall
mean any airport so designated pursuant to 14 C.F.R. Section 93.123 or other
airport that has restrictions on flight frequencies in and out of such airport.
The term "Slot" as used herein shall include all Slots created after the date
hereof pursuant to Title 14 or any equivalent domestic or foreign law,
regulation or order.




                                       20
<PAGE>   28

         "Slot Collateral" means any beneficial interest or other interest,
right, title, privilege and authority of a Grantor in respect of (i) any Slots,
(ii) any Slot Trust Assets and (iii) any Slot Trust Interest.

         "Slot Trust" means any trust created from time to time which acquires
or holds any Slots (including the trusts created by (i) that Declaration of
Trust dated as of March 31, 1997 between the Borrower and the Slot Trustee and
(ii) that Acquired Slot Trust Agreement Declaration of Trust dated as of
December 9, 1997 between the Borrower and the Slot Trustee).

         "Slot Trust Assets" means any Slots which from time to time are
acquired or held by a Slot Trust (including all slot trust assets as referred to
in (i) Section 4.1 of that Acquired Slot Trust Agreement dated as of March 31,
1997 between the Borrower and the Slot Trustee and (ii) Section 4.01 of that
Acquired Slot Trust Agreement dated as of December, 9 1997 between the Borrower
and the Slot Trustee ) and any interest, right, title, privilege and authority
of any Grantor in respect thereof, whether arising under a license or otherwise
(including pursuant to (i) that Master Sub-License Agreement dated as of March
31, 1997 between the Borrower and the Slot Trustee and (ii) that Master
Sub-License Agreement dated as of December 9, 1997 between the Borrower and the
Slot Trustee).

         "Slot Trust Interest" means any beneficial interest or other interest,
right, title, privilege and authority of a Grantor under or in respect of any
Slot Trust including any such interest arising under or evidenced by any
instrument or certificate of beneficial interest (including (i) that Beneficial
Interest Certificate issued by the Slot Trustee to the Borrower pursuant to that
Acquired Slot Trust Agreement dated as of March 31, 1997 between the Borrower
and the Slot Trustee and (ii) that Beneficial Interest Certificate issued by the
Slot Trustee to the Borrower pursuant to that Acquired Slot Trust Agreement
dated as of December 9, 1997 between the Borrower and the Slot Trustee).

         "Slot Trustee" means First Security Bank, National Association in its
capacity as slot trustee of any Slot Trust.

         "Spare Parts" means all appliances, spare parts, instruments,
appurtenances, accessories, furnishings; all expendable parts, appliances,
modules, apparatus and assemblies; all rotable and repairable nonconsumable
parts, appliances, apparatus, assemblies and materials which are interchangeable
for use or useable, and other equipment of whatever nature (other than engines)
maintained for installation or use or useable in aircraft, airframes, engines or
any appliance or propeller useable thereon, and any and all substitutions of any
of the foregoing and replacements thereto. The terms "spare parts" and
"appliances" (as used in this definition) shall include, but not be limited to,
the definitions assigned to those terms by Section 40102 of Title 49 of the
United States Code as amended from time to time or any recodification thereof in
any regulation.

         "Stock" means shares of capital stock (whether denominated as common
stock or preferred stock), beneficial, partnership or membership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity,
whether voting or non-voting.

         "Stock Equivalents" means all securities convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any Stock, whether or not presently convertible, exchangeable or
exercisable.



                                       21
<PAGE>   29

         "Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company or other business entity of which an
aggregate of fifty percent (50%) or more of the outstanding Voting Stock is, at
the time, directly or indirectly, owned or controlled by such Person and/or one
or more Subsidiaries of such Person.

         "Tax Affiliate" means, with respect to any Person, (a) any Subsidiary
of such Person, and (b) any Affiliate of such Person with which such Person
files or is eligible to file consolidated, combined or unitary tax returns.

         "Tax Return" has the meaning specified in Section 6.8.

         "Taxes" has the meaning specified in Section 2.12(a).

         "Term Credit Borrowing" means Term Loans made on the same day by the
Lenders ratably according to their respective Term Credit Commitments.

         "Term Credit Commitments" means, with respect to each Lender, the
commitment of such Lender to make Term Loans in the aggregate principal amount
outstanding not to exceed the amount set forth opposite such Lender's name or
Schedule I under the caption "Term Loan Commitment," as amended to reflect each
Assignment and Acceptance executed by such Lender and as such amount may be
reduced pursuant to this Agreement.

         "Term Credit Note" means a promissory note of the Borrower payable to
the order of any Lender in a principal amount equal to the amount of such
Lender's Term Credit Commitment evidencing the aggregate Indebtedness of the
Borrower to such Lender resulting from the Term Loans owing to such Lender.

         "Term Credit Termination Date" shall mean the earliest of (a) May 30,
2001, (b) the date of termination of the Term Credit Commitments pursuant to
Section 2.3, (c) the date on which the Obligations become due and payable
pursuant to Section 9.2 or (d) the date when the aggregate outstanding amount of
Term Loans is equal to the Term Credit Commitment.

         "Term Loan" has the meaning specified in Section 2.1(b). "Title IV
Plan" means a pension plan, other than a Multiemployer Plan, which is covered by
Title IV of ERISA to which the Borrower any of its Subsidiaries or any ERISA
Affiliate has any obligation or liability (contingent or otherwise).

         "Title 14" shall mean Title 14 of the United States Code of Federal
Regulations, Part 93, Subparts K and S, as amended from time to time or any
successor or recodified regulation.

         "Trademark License" means any agreement, whether written or oral,
providing for the grant by or to any Grantor or its Subsidiaries of any right to
use any Trademark.

         "Trademarks" means (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision




                                       22
<PAGE>   30


thereof, or otherwise, and all common-law rights related thereto, and (b) the
right to obtain all renewals thereof.

         "Travel Agency Cash Refund Commission" has the meaning set forth in the
Receivables Indenture.

         "Travel Agency Cash Refund Percentage" has the meaning set forth in the
Receivables Indenture.

         "TWA Stockholding" means TWA Stock Holding Company, a Delaware
corporation.

         "UCC" means, at any time, the Uniform Commercial Code in effect in the
State of New York at such time or, to the extent it may be required to apply to
any item or items of Collateral, the Uniform Commercial Code as in effect in any
other applicable jurisdiction.

         "Unfunded Pension Liability" means, with respect to the Borrower or any
of its Subsidiaries at any time, the sum of (a) the amount, if any, by which the
present value of all accrued benefits under each Title IV Plan (other than any
Title IV Plan subject to Section 4063 of ERISA) exceeds the fair market value of
all assets of such Title IV Plan allocable to such benefits in accordance with
Title IV of ERISA, as determined as of the most recent valuation date for such
Title IV Plan using the actuarial assumptions in effect under such Title IV
Plan, and (b) the aggregate amount of withdrawal liability that could be
assessed under Section 4063 with respect to each Title IV Plan subject to such
Section, separately calculated for each such Title IV Plan as of its most recent
valuation date and (c) for a period of five (5) years following a transaction
reasonably likely to be covered by Section 4069 of ERISA, the liabilities
(whether or not accrued) that could be avoided by the Borrower, any of its
Subsidiaries or any ERISA Affiliate as a result of such transaction.

         "Unused Commitment Fee" has the meaning specified in Section 2.9(a).

         "U.S. Trustee" means the United States Trustee for the District of
Delaware.

         "Vehicles" means all vehicles covered by a certificate of title law of
any state.

         "Voting Stock" means Stock of any Person having ordinary power to vote
in the election of members of the board of directors, managers, trustees or
other controlling Persons, of such Person (irrespective of whether, at the time,
Stock of any other class or classes of such entity shall have or might have
voting power by reason of the happening of any contingency).

         "Withdrawal Liability" means, with respect to the Borrower or any of
its Subsidiaries at any time, the aggregate liability incurred (whether or not
assessed) with respect to all Multiemployer Plans pursuant to Section 4201 of
ERISA or for increases in contributions required to be made pursuant to Section
4243 of ERISA.

         "Worldspan" means Worldspan, L.P., a Delaware limited partnership.

         SECTION 1.2. COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding" and the word "through" means "to and including."



                                       23
<PAGE>   31

         SECTION 1.3. ACCOUNTING TERMS AND PRINCIPLES.

         (a) Except as set forth below, all accounting terms not specifically
defined herein shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in conformity with GAAP.

         (b) If any change in the accounting principles used in the preparation
of the most recent Financial Statements referred to in Section 6.1 is hereafter
required or permitted by the rules, regulations, pronouncements and opinions of
the Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or any successors thereto) and such change is adopted by the
Borrower with the agreement of its independent public accountants and results in
a change in any of the calculations required by Article V or Article VIII had
such accounting change not occurred, the parties hereto agree to enter into
negotiations in order to amend such provisions so as to equitably reflect such
change with the desired result that the criteria for evaluating compliance with
such covenants by the Borrower shall be the same after such change as if such
change had not been made; provided, however, that no change in GAAP that would
affect a calculation that measures compliance with any covenant contained in
Article V or Article VIII shall be given effect until such provisions are
amended to reflect such changes in GAAP.

         SECTION 1.4. CERTAIN TERMS.

         (a) The words "herein," "hereof" and "hereunder" and similar words
refer to this Agreement as a whole, and not to any particular Article, Section,
subsection or clause in this Agreement.

         (b) References in this Agreement to an Exhibit, Schedule, Article,
Section, subsection or clause refer to the appropriate Exhibit or Schedule to,
or Article, Section, subsection or clause of this Agreement.

         (c) Each agreement defined in this Article I shall include all
appendices, exhibits and schedules thereto and all amendments, restatements,
supplements or modifications thereto; provided that if the prior written consent
of the Lenders is required hereunder for any amendment, restatement, supplement
or other modification to any such agreement such consent shall have been
obtained.

         (d) References in this Agreement to any Requirement of Law shall be to
such Requirement of Law as amended or modified and in effect at the time any
such reference is operative.

         (e) The term "including" when used in any Loan Document means
"including without limitation", except when used in the computation of time
periods.

         (f) The terms "Lender" and "Administrative Agent" include their
respective successors.

         (g) Upon the appointment of any successor Administrative Agent pursuant
to Section 12.6, references to AMR Finance in Section 12.3 shall be deemed to
refer to the Person then acting as the Administrative Agent or one of its
Affiliates if it so designates.



                                       24
<PAGE>   32

         (h) Terms not otherwise defined herein and defined in the UCC are used
herein with the meanings specified in the UCC.

                                   ARTICLE II

                                  THE FACILITY

         SECTION 2.1. THE COMMITMENTS.

         (a) On the terms and subject to the conditions contained in this
Agreement, each Lender severally agrees to make revolving loans (each a
"Revolving Loan") to the Borrower from time to time on any Business Day during
the period from the date hereof until the Revolving Credit Termination Date in
an aggregate amount not to exceed at any time outstanding for all such Revolving
Loans by such Lender such Lender's Revolving Credit Commitment; provided,
however, that at no time shall any Lender be obligated to make a Revolving Loan
(i) in excess of such Lender's Ratable Portion of the Available Credit and (ii)
to the extent that the aggregate Revolving Loans then outstanding, after giving
effect to such Revolving Loan, would exceed the Maximum Credit in effect at such
time. Within the limits of each Lender's Revolving Credit Commitment, amounts of
Revolving Loans repaid may be reborrowed under this Section 2.1(a).

         (b) On the terms and subject to the conditions contained in this
Agreement, each Lender severally agrees to make term loans (each a "Term Loan")
to the Borrower from time to time on any Business Day during the period from the
date hereof until the Term Credit Termination Date in an aggregate amount not to
exceed at any time outstanding for all such Term Loans by such Lender such
Lender's Term Credit Commitment; provided, however, that at no time shall any
Lender be obligated to make a Term Loan (i) in excess of such Lender's Ratable
Portion of the aggregate Term Credit Commitments and (ii) to the extent that the
aggregate Term Loans then outstanding, after giving effect to such Term Loan,
would exceed the aggregate Term Credit Commitments in effect at such time. No
amounts of Term Loans repaid may be reborrowed under this Section 2.1(b).

         SECTION 2.2. BORROWING PROCEDURES.

         (a) Each Borrowing shall be made on written notice given by the
Borrower to the Administrative Agent not later than 11:00 A.M. (Dallas time) one
Business Day prior to the date of the proposed Borrowing. Each such notice shall
be in substantially the form of Exhibit C (a "Notice of Borrowing"), specifying
(i) whether the proposed Borrowing consists of a Revolving Loan, a Term Loan or
both, (ii) the date of such proposed Borrowing, (iii) the aggregate amount of
such proposed Borrowing, and (iv) with respect to the Revolving Credit
Borrowings, the Available Credit (after giving effect to the proposed
Borrowing). Each Borrowing shall be in an aggregate amount of not less than
$1,000,000 or an integral multiple of $1,000,000 in excess thereof. The Borrower
may not request more than two Borrowings per week.

         (b) The Administrative Agent shall give to each Lender prompt notice of
the Administrative Agent's receipt of a Notice of Borrowing. Each Lender shall,
before 10:00 A.M. (Dallas time) on the date of the proposed Borrowing, make
available to the Administrative Agent by wire transfer in immediately available
funds to the Loan Account, such Lender's Ratable Portion of such proposed
Borrowing. After the Administrative Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Sections 3.1 and 3.2, the
Administrative Agent will make such funds available to the Borrower.



                                       25
<PAGE>   33

         (c) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any proposed Borrowing that such Lender will not
make available to the Administrative Agent such Lender's Ratable Portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
Ratable Portion available to the Administrative Agent on the date of such
Borrowing in accordance with this Section 2.2 and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such Ratable Portion available to the Administrative Agent, such Lender and
the Borrower severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, at (i) in the case of the
Borrower, the interest rate applicable at the time to the Loans comprising such
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate for the
first Business Day and thereafter at the interest rate applicable at the time to
the Loans comprising such Borrowing. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement. If the Borrower shall repay to the Administrative Agent such
corresponding amount, such payment shall not relieve such Lender of any
obligation it may have hereunder to the Borrower.

         (d) The failure of any Lender to make the Loan or any payment required
by it on the date specified (a "Non-Funding Lender"), shall not relieve any
other Lender of its obligations to make such Loan or payment on such date but no
such other Lender shall be responsible for the failure of any Non-Funding Lender
to make a Loan or payment required under this Agreement.

         SECTION 2.3. REDUCTION AND TERMINATION OF THE COMMITMENTS.

         (a) The Borrower may, upon at least three (3) Business Days' prior
notice to the Administrative Agent, terminate in whole or reduce in part ratably
the unused portions of the respective Commitments of the Lenders; provided,
however, that each partial reduction shall be in the aggregate amount of not
less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof.

         (b) The then current Revolving Credit Commitments shall be reduced on
each date on which a prepayment of Revolving Loans is made pursuant to Section
2.7 or would be required to be made had the outstanding Revolving Loans equaled
the Revolving Credit Commitments then in effect, in each case in the amount of
such prepayment (or deemed prepayment) (and the Revolving Credit Commitment of
each Lender shall be reduced by its Ratable Portion of such amount).

         SECTION 2.4. REPAYMENT OF LOANS. The Borrower promises to repay the
entire unpaid principal amount of the Loans and all accrued but unpaid interest
thereon on the Scheduled Termination Date or such earlier date on which the
Loans shall be due and payable pursuant to the Agreement.

         SECTION 2.5. EVIDENCE OF DEBT.

         (a) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the Indebtedness of the Borrower to such Lender
resulting from





                                       26
<PAGE>   34


each Loan of such Lender from time to time, including the amounts of principal
and interest payable and paid to such Lender from time to time under this
Agreement.

         (b) The Administrative Agent shall maintain accounts in accordance with
its usual practice in which it will record (i) the amount of each Revolving Loan
and Term Loan made, (ii) the amount of any principal or interest due and payable
by the Borrower to each Lender hereunder with respect to each Loan and (iii) the
amount of any sum received by the Administrative Agent hereunder from the
Borrower, whether such sum constitutes principal or interest (and the type of
the Loan to which it applies), fees, expenses or other amounts due under the
Loan Documents and each Lender's share thereof, if applicable. (c) The entries
made in the accounts maintained pursuant to clauses (a) and (b) of this Section
2.5 shall, to the extent permitted by applicable law, be prima facie evidence of
the existence and amounts of the obligations recorded therein; provided,
however, that the failure of any Lender or the Administrative Agent to maintain
such accounts or any error therein shall not in any manner affect the
obligations of the Borrower to repay the Loans in accordance with their terms.

         (d) Notwithstanding any other provision of the Agreement, in the event
that any Lender requests that the Borrower execute and deliver a promissory note
or notes payable to such Lender in order to evidence the Indebtedness owing to
such Lender by the Borrower hereunder, the Borrower will promptly execute and
deliver a Revolving Credit Note or Revolving Credit Notes to such Lender
evidencing any Revolving Loans of such Lender, substantially in the form of
Exhibit B-1, or a Term Credit Note or Term Credit Notes to such Lender
evidencing any Term Loans of such Lender substantially in the form of Exhibit
B-2.

         SECTION 2.6. OPTIONAL PREPAYMENTS.

         (a) The Borrower may, upon at least one Business Days' prior notice to
the Administrative Agent, prepay the outstanding principal amount of the Loans
in whole or in part; provided, however, that each partial prepayment of Loans
shall be in an aggregate principal amount not less than $100,000. Upon the
giving of such notice of prepayment, the principal amount of Loans specified to
be prepaid shall become due and payable on the date specified for such
prepayment.

         (b) The Borrower shall have no right to prepay the principal amount of
any Loan other than as provided in this Section 2.6.

         SECTION 2.7. MANDATORY PREPAYMENTS.

         (a) Upon receipt by the Borrower or any of its Subsidiaries of any Net
Cash Proceeds, the Borrower shall immediately prepay the Loans in an amount
equal to one hundred percent (100%) of such Net Cash Proceeds, provided,
however, that in the case of any Net Cash Proceeds arising from a Property Loss
Event, the Borrower need not prepay the Loans to the extent that such Net Cash
Proceeds are actually used to repair or replace the damaged or taken property
within 180 days of the receipt of such Net Cash Proceeds and, pending
application of such proceeds, the Borrower has paid the same to the
Administrative Agent to be held in a Cash Collateral Account designated by the
Administrative Agent. Any such mandatory prepayment shall be applied in
accordance with Section 2.7(c) below.



                                       27
<PAGE>   35

         (b) Borrower shall, on the fourth day following the third consecutive
day on which cash and Cash Equivalents of the Loan Parties and their respective
Subsidiaries exceed the limitations set forth in Section 8.3(b), prepay the
Revolving Loan (without any concommitant reduction in the Revolving Credit
Commitment) in an amount equal to such excess.

         (c) Any prepayments made by the Borrower required to be applied in
accordance with this Section 2.7(c) shall be applied as follows: Mandatory
prepayments shall be applied (i) to Term Loans ratably based upon the then
outstanding principal amounts of the Term Loans and (ii) to the extent of any
excess, to the automatic and permanent reduction of the Revolving Loan Credit
Commitment in an amount equal to such excess and if, after giving effect to such
reduction, the outstanding amount of the Revolving Loans exceeds such reduced
Revolving Credit Commitment, the Borrower shall immediately repay the Revolving
Loans in an amount such that, after giving effect to such repayment, the
Revolving Credit Commitment is greater than or equal to the outstanding
principal amount of the Revolving Loans.

         (d) If, at any time, the aggregate principal amount of the aggregate
Revolving Loans exceed the Maximum Credit at such time, the Borrower shall
forthwith prepay the Revolving Loans then outstanding in an amount equal to such
excess. If, at any time, the aggregate principal amount of the aggregate Term
Loans exceed the aggregate Term Credit Commitments, the Borrower shall forthwith
prepay the Term Loans then outstanding in an amount equal to such excess.

         SECTION 2.8. INTEREST.

         (a) Rate of Interest. All Loans and the outstanding amount of all other
Obligations shall bear interest, in the case of Loans, on the unpaid principal
amount thereof from the date such Loans are made and, in the case of such other
Obligations, from the date such other Obligations are due and payable until, in
all cases, paid in full, except as otherwise provided in Section 2.8(c), at a
rate per annum equal to the sum of (i) the Base Rate as in effect from time to
time, plus (ii) the Applicable Margin.

         (b) Interest Payments. (i) Interest accrued on each Loan shall be
payable in arrears (A) on the last day of each calendar month, commencing on the
first such day following the making of such Loan, and (B) if not previously paid
in full, at maturity (whether by acceleration or otherwise) of such Loan; and
(ii) interest accrued on the amount of all other Obligations shall be payable on
demand from and after the time such Obligation becomes due and payable (whether
by acceleration or otherwise).

         (c) Default Interest. Notwithstanding the rates of interest specified
in Section 2.8(a) or elsewhere herein, effective immediately upon the occurrence
of an Event of Default, and for as long thereafter as such Event of Default
shall be continuing, the principal balance of all Loans and the amount of all
other Obligations shall bear interest at a rate which is three percent (3%) per
annum in excess of the rate of interest applicable to such Loans or such other
Obligations from time to time.

         SECTION 2.9. FEES.

         (a) Unused Commitment Fee. The Borrower agrees to pay to each Lender an
unused commitment fee on the average amount by which (i) in the case of a Lender
holding a Revolving Credit Commitment, the Revolving Credit Commitment of such
Lender exceeds such Lender's Ratable Portion of the Revolving Loans then
outstanding and (ii) in the case of a Lender





                                       28
<PAGE>   36


holding a Term Credit Commitment, the Term Credit Commitment of such Lender
exceeds such Lender's Ratable Portion of the Term Loans then outstanding (the
"Unused Commitment Fee"), in each case, from the date hereof until the Revolving
Credit Termination Date or the Term Credit Termination Date, as the case may be,
at the Applicable Unused Commitment Fee Rate, payable in arrears on the last day
of each calendar month, commencing on the first such day following the Closing
Date and on the Revolving Credit Termination Date or the Term Credit Termination
Date, as the case may be.

         (b) Arrangement Fees. The Borrower agrees to pay to the Administrative
Agent on the Closing Date an arrangement fee equal to 4.00% of the Commitment
(the "Arrangement Fee").

         SECTION 2.10. PAYMENTS AND COMPUTATIONS.

         (a) The Borrower shall make each payment hereunder (including fees and
expenses) not later than 11:00 A.M. (New York City time) on the day when due, in
Dollars, to the Administrative Agent by wire transfer of immediately available
funds to the Loan Account without set-off or counterclaim. The Administrative
Agent will promptly thereafter cause to be distributed immediately available
funds relating to the payment of principal or interest or fees to the Lenders,
in accordance with the application of payments set forth in clauses (f) and (g)
of this Section 2.10, as applicable; provided, however, that amounts payable
pursuant to Section 2.11 or 2.12 shall be paid only to the affected Lender or
Lenders. Payments received by the Administrative Agent after 11:00 A.M. (New
York City time) shall be deemed to be received on the next succeeding Business
Day.

         (b) All computations of interest and of fees shall be made by the
Administrative Agent on the basis of a year of 365 days, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest and fees are payable. Each
determination by the Administrative Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.

         (c) If and to the extent any payment owed to the Administrative Agent
or any Lender is not made when due, each Loan Party hereby authorizes the
Administrative Agent and such Lender, subject to any notice period provided in
the Orders, to setoff and charge any amount so due against any deposit account
maintained by such Loan Party with the Administrative Agent or such Lender or
against other amounts due from the Administrative Agent or such Lender, in each
case whether or not the deposit therein or such other amount is then due.

         (d) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of payment of interest or fees, as the case may be.

         (e) Unless the Administrative Agent shall have received notice from the
Borrower to the Lenders prior to the date on which any payment is due hereunder
that the Borrower will not make such payment in full, the Administrative Agent
may assume that the Borrower has made such payment in full to the Administrative
Agent on such date and the Administrative Agent may, in reliance upon such
assumption, cause to be distributed to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent the Borrower
shall not have made such payment in full to the Administrative Agent, each





                                       29
<PAGE>   37

Lender shall repay to the Administrative Agent forthwith on demand such amount
distributed to such Lender together with interest thereon at the rate applicable
to Loans, for each day from the date such amount is distributed to such Lender
until the date such Lender repays such amount to the Administrative Agent.

         (f) Subject to the provisions of clause (g) of this Section 2.10 (and
except as otherwise provided in Section 2.7), all payments and any other amounts
received by the Administrative Agent from or for the benefit of the Borrower or
any other Loan Party shall be applied first, ratably to such Loans as the
Borrower shall designate (or in the absence of such designation, to Revolving
Loans) to pay principal of and interest on any portion of the Loans which the
Administrative Agent may have advanced pursuant to the express provisions of
this Agreement on behalf of any Lender, for which the Administrative Agent has
not then been reimbursed by such Lender or the Borrower; second, to pay all
other Obligations then due and payable; and third, as the Borrower so
designates. Payments in respect of Revolving Loans and Term Loans received by
the Administrative Agent shall be distributed to each Lender in accordance with
such Lender's Ratable Portion, as applicable; and all payments of fees and all
other payments in respect of any other Obligation shall be allocated among such
of the Lenders as are entitled thereto, and, if to the Lenders, in proportion to
their respective Ratable Portions.

         (g) After the occurrence and during the continuance of an Event of
Default, the Borrower hereby irrevocably waives the right to direct the
application of any and all payments in respect of the Obligations and any
proceeds of Collateral, and agrees that the Administrative Agent may, and shall
upon either (A) the written direction of the Requisite Lenders or (B) the
acceleration of the Obligations pursuant to Section 9.2, apply all payments in
respect of any Obligations and all funds on deposit in any Cash Collateral
Account (including all proceeds arising from a Property Loss Event that are held
in the Cash Collateral Account pending application of such proceeds as specified
in a reinvestment notice) and all other proceeds of Collateral in the following
order:

          (i) first, to pay interest on and then principal of any portion of the
     Loans which the Administrative Agent may have advanced on behalf of any
     Lender for which the Administrative Agent has not then been reimbursed by
     such Lender or the Borrower;

          (ii) second, to pay Obligations in respect of any expense
     reimbursements or indemnities then due the Administrative Agent;

          (iii) third, to pay Obligations in respect of any expense
     reimbursements or indemnities then due to the Lenders;

          (iv) fourth, to pay Obligations in respect of any fees then due to the
     Administrative Agent or the Lenders;

          (v) fifth, to pay interest then due and payable in respect of the
     Loans ratably to such Loans;

          (vi) sixth, to pay or prepay principal payments on the Loans ratably
     to the aggregate principal amount of such Loans; and

          (vii) seventh, to the ratable payment of all other Obligations;




                                       30
<PAGE>   38

provided, however, that if sufficient funds are not available to fund all
payments to be made in respect of any of the Obligations described in any of the
foregoing clauses first through seventh, the available funds being applied with
respect to any such Obligation (unless otherwise specified in such clause) shall
be allocated to the payment of such Obligations ratably, based on the proportion
of the Administrative Agent's and each Lender's interest in the aggregate
outstanding Obligations described in such clauses. The order of priority set
forth in clauses first through seventh of this Section 2.10(g) may at any time
and from time to time be changed by the agreement of the Requisite Lenders
without necessity of notice to or consent of or approval by the Borrower, any
Secured Party that is not a Lender, or any other Person. The order of priority
set forth in clauses first through fifth of this Section 2.10(g) may be changed
only with the prior written consent of the Administrative Agent in addition to
the Requisite Lenders.

         (h) At the option of the Administrative Agent, interest, fees, expenses
and other sums due and payable in respect of the Loans and Protective Advances
may be paid from the proceeds of Term Loans or Revolving Loans. The Borrower
hereby authorizes the Lenders to make Revolving Loans or Term Loans pursuant to
Section 2.2(a), from time to time in such Lender's discretion, which are in the
amounts of any and all interest, fees, expenses and other sums payable in
respect of the Loans, and further authorizes the Administrative Agent to give
the Lenders notice of any Borrowing with respect to Loans and to distribute the
proceeds of such Loans to pay such amounts. The Borrower agrees that all such
Loans so made shall be deemed to have been requested by it (irrespective of the
satisfaction of the conditions in Section 3.2, which conditions the Lenders
irrevocably waive) and directs that all proceeds thereof shall be used to pay
such amounts. The Borrower further agrees that any such Loans will constitute
Obligations hereunder, even if the effect of making such Loans causes the
principal outstanding amount of the Loans to exceed the Commitment.

         SECTION 2.11. CAPITAL ADEQUACY. If at any time any Lender determines
that (a) the adoption of or any change in or in the interpretation of any law,
treaty or governmental rule, regulation or order after the date of this
Agreement regarding capital adequacy, (b) compliance with any such law, treaty,
rule, regulation, or order, or (c) compliance with any guideline or request or
directive from any central bank or other Governmental Authority (whether or not
having the force of law) shall have the effect of reducing the rate of return on
such Lender's (or any corporation controlling such Lender's) capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change,
compliance or interpretation, then, upon demand from time to time by such Lender
(with a copy of such demand to the Administrative Agent), the Borrower shall pay
to the Administrative Agent for the account of such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to such amounts submitted to the
Borrower and the Administrative Agent by such Lender shall be conclusive and
binding for all purposes, absent manifest error.

         SECTION 2.12. TAXES.

         (a) Any and all payments by any Loan Party under each Loan Document
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding (i) in the case of each Lender and
the Administrative Agent (A) taxes measured by its net income, and franchise
taxes imposed on it, by the jurisdiction (or any political subdivision thereof)
under the laws of which such Lender or the Administrative Agent (as the case may
be) is organized and (B) any United States withholding taxes payable with
respect to payments under the Loan Documents under laws (including any statute,
treaty or regulation) in effect on the






                                       31
<PAGE>   39


Closing Date (or, in the case of an Assignee, the date of the Assignment and
Acceptance) applicable to such Lender or the Administrative Agent, as the case
may be, but not excluding any United States withholding payable as a result of
any change in such laws occurring after the Closing Date (or the date of such
Assignment and Acceptance) and (ii) in the case of each Lender, taxes measured
by its net income, and franchise taxes imposed on it, as a result of a present
or former connection between such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any taxing authority thereof or
therein (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If any
Taxes shall be required by law to be deducted from or in respect of any sum
payable under any Loan Document to any Lender or the Administrative Agent (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.12) such Lender or the Administrative Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the relevant Loan Party shall make such deductions,
(iii) the relevant Loan Party shall pay the full amount deducted to the relevant
taxing authority or other authority in accordance with applicable law and (iv)
the relevant Loan Party shall deliver to the Administrative Agent evidence of
such payment.

         (b) In addition, each Loan Party agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction, and all liabilities with respect thereto, which
arise from any payment made under any Loan Document or from the execution,
delivery or registration of, or otherwise with respect to, any Loan Document
(collectively, "Other Taxes").

         (c) Each Loan Party will indemnify each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section 2.12)
paid by such Lender or the Administrative Agent (as the case may be) and any
liability (including for penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within thirty (30) days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor.

         (d) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes, the Borrower will furnish to the Administrative Agent, at its
address referred to in Section 13.8, the original or a certified copy of a
receipt evidencing payment thereof.

         (e) Without prejudice to the survival of any other agreement of the
Loan Parties hereunder, the agreements and obligations of the Loan Parties
contained in this Section 2.12 shall survive the payment in full of the
Obligations.

         (f) Prior to the Closing Date in the case of each Non-U.S. Lender that
is a signatory hereto, and on the date of the Assignment and Acceptance pursuant
to which it becomes a Lender in the case of each other Non-U.S. Lender and from
time to time thereafter if requested by the Borrower or the Administrative
Agent, each Non-U.S. Lender that is entitled at such time to an exemption from
United States withholding tax, or that is subject to such tax at a reduced rate
under an applicable tax treaty, shall provide the Administrative Agent and the
Borrower with two completed copies of: (i) Form W-8ECI (claiming exemption from
withholding because the income is effectively connected with a U.S. trade or
business) (or any successor form); (ii) Form W-8BEN (claiming exemption from, or
a reduction of, withholding tax under an income tax




                                       32
<PAGE>   40


treaty) (or any successor form); (iii) in the case of a Non-U.S. Lender claiming
exemption under Sections 871(h) or 881(c) of the Code, a Form W-8BEN (claiming
exemption from withholding under the portfolio interest exemption) (or successor
form); or (iv) or other applicable form, certificate or document prescribed by
the IRS certifying as to such Non-U.S. Lender's entitlement to such exemption
from United States withholding tax or reduced rate with respect to all payments
to be made to such Non-U.S. Lender under the Loan Documents. Unless the Borrower
and the Administrative Agent have received forms or other documents satisfactory
to them indicating that payments under any Loan Document to or for a Non-U.S.
Lender are not subject to United States withholding tax or are subject to such
tax at a rate reduced by an applicable tax treaty, the Borrower or the
Administrative Agent shall withhold taxes from such payments at the applicable
statutory rate.

         (g) Any Lender claiming any additional amounts payable pursuant to this
Section 2.12 shall use its reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
applicable lending office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts which would be payable
or may thereafter accrue and would not, in the sole determination of such
Lender, be otherwise disadvantageous to such Lender.

                                  ARTICLE III

                               CONDITIONS TO LOANS

         SECTION 3.1. CONDITIONS PRECEDENT TO INITIAL LOANS. The obligation of
each Lender to make the initial Loans requested to be made by it on the Closing
Date is subject to the satisfaction of all of the following conditions
precedent:

         (a) Bankruptcy Court Order. The Bankruptcy Court shall have entered the
Interim Order, certified by the Clerk of the Bankruptcy Court as having been
duly entered, and the Interim Order shall be in full force and effect and shall
not have been vacated, reversed, modified, amended or stayed without the prior
written consent of the Administrative Agent and the Requisite Lenders.

         (b) Certain Documents. The Administrative Agent shall have received on
the Closing Date each of the following, each dated the Closing Date unless
otherwise indicated or agreed to by the Administrative Agent, in form and
substance satisfactory to the Administrative Agent and each Lender and each of
their respective counsel, and in sufficient copies for each Lender:

          (i) this Agreement, duly executed and delivered by each of the Loan
     Parties and, for the account of each Lender requesting the same, a
     Revolving Credit Note or Revolving Credit Notes and Term Credit Note or
     Term Credit Notes of the Borrower conforming to the requirements set forth
     herein;

          (ii) copies of UCC search reports as of a recent date listing all
     effective financing statements that name any Loan Party as debtor, together
     with copies of such financing statements, none of which shall cover the
     Collateral (except for those Liens permitted pursuant to Section 8.2);

                                       33
<PAGE>   41

          (iii) (A) share certificates representing all certificated Stock being
     pledged pursuant to this Agreement and stock powers for such share
     certificates executed in blank, as the Administrative Agent may require;

                (B) instruments representing such of the Instruments pledged
     pursuant to this Agreement as shall be requested by the Administrative
     Agent, in each case duly endorsed in favor of the Administrative Agent or
     in blank;

          (iv) a favorable opinion of (A) Kirkland & Ellis, counsel to the Loan
     Parties, in substantially the form of Exhibit E-1, and (B) in-house counsel
     to the Loan Parties, in substantially the form of Exhibit E-2, in each case
     addressed to the Administrative Agent and the Lenders and addressing such
     other matters as any Lender through the Administrative Agent may reasonably
     request;

          (v) a copy of the articles or certificate of incorporation (or
     equivalent Constituent Document) of each Loan Party, certified as of a
     recent date by the Secretary of State of the state of incorporation or
     formation of such Loan Party, together with certificates of such official
     attesting to the good standing of each such Loan Party;

          (vi) a certificate of the Secretary or an Assistant Secretary of each
     Loan Party certifying (A) the names and true signatures of each officer of
     such Loan Party who has been authorized to execute and deliver any Loan
     Document or other document required hereunder to be executed and delivered
     by or on behalf of such Loan Party, (B) the by-laws (or equivalent
     Constituent Document) of such Loan Party as in effect on the date of such
     certification, (C) the resolutions of such Loan Party's Board of Directors
     (or equivalent governing body) approving and authorizing the execution,
     delivery and performance of this Agreement and the other Loan Documents to
     which it is a party and (D) that there have been no changes in the
     certificate of incorporation (or equivalent Constituent Document) of such
     Loan Party from the certificate of incorporation (or equivalent Constituent
     Document) delivered pursuant to the immediately preceding clause;

          (vii) a certificate of a Responsible Officer of the Borrower to the
     effect that the condition set forth in Section 3.2(b) has been satisfied;

          (viii) evidence satisfactory to the Administrative Agent that the
     insurance policies required by Section 7.5 are in full force and effect,
     together with endorsements naming the Administrative Agent, on behalf of
     the Secured Parties, as an additional insured and/or loss payee under all
     insurance policies to be maintained with respect to the properties of the
     Borrower and its Subsidiaries;

          (ix) evidence satisfactory to the Administrative Agent of the receipt
     of the consents, authorizations and approvals, and the making of the
     filings, listed on Schedule 4.2;

          (x) a copy of the Business Plan and the Financial Statements, all in
     form and substance satisfactory to the Administrative Agent and the
     Lenders;

          (xi) a letter from Worldspan addressed to the Administrative Agent, in
     form and substance satisfactory to the Administrative Agent in its sole and
     absolute discretion, (A) releasing that certain Lien created by PARS in
     favor of Worldspan in the





                                       34
<PAGE>   42


     Stock of Worldspan owned by PARS, including the Lien perfected by UCC-1
     financing statement (x) number 086951 filed with the New York Secretary of
     State and (y) number 3031678 filed with the Missouri Secretary of State,
     and (ii) acknowledging there are no Liens outstanding against the
     partnership interest of Worldspan; and

          (xii) such other certificates, documents, agreements and information
     respecting the Borrower and its Subsidiaries as any Lender through the
     Administrative Agent may reasonably request.

         (c) Fee and Expenses Paid. There shall have been paid to the
Administrative Agent, for the account of the Administrative Agent and the
Lenders, as applicable, all fees and expenses (including reasonable fees and
expenses of counsel) due and payable on or before the Closing Date.

         SECTION 3.2. CONDITIONS PRECEDENT TO EACH LOAN. The obligation of each
Lender on any date (including the Closing Date) to make any Loan (including any
Loan made on the Closing Date) is subject to the satisfaction of all of the
following conditions precedent:

         (a) Request for Borrowing. With respect to any Loan, the Administrative
Agent shall have received a duly executed Notice of Borrowing dated on or before
such date and the Borrower must be current in the delivery of all Compliance
Certificates and Borrowing Base Certificates required to be delivered hereunder.

         (b) Representations and Warranties; No Defaults. The following
statements shall be true on the date of such Loan, both before and after giving
effect thereto and applying the proceeds therefrom:

             (i) The representations and warranties set forth in Article IV and
     in the other Loan Documents shall be true and correct on and as of the
     Closing Date and shall be true and correct in all material respects on and
     as of any such date after the Closing Date with the same effect as though
     made on and as of such date, except to the extent such representations and
     warranties expressly relate to an earlier date in which case, the
     representation and warranties were true and correct in all material
     respects as of such earlier date; and

             (ii) no Default or Event of Default has occurred and is continuing;

         (c) Availability. After giving effect to the Loans requested to be made
on any such date and the use of proceeds thereof, (i) the aggregate Revolving
Loans then outstanding shall not exceed the Maximum Credit at such time and (ii)
the aggregate Term Loans then outstanding shall not exceed the aggregate Term
Credit Commitments at such time.

         (d) No Legal Impediments. The making of the Loans on such date does not
violate any Requirement of Law on the date of or immediately following such Loan
and is not enjoined, temporarily, preliminarily or permanently.

         (e) Final Order. From and after the 21st day after the Closing Date,
the Bankruptcy Court shall have entered the Final Order, certified by the Clerk
of the Bankruptcy Court as having been duly entered, and the Final Order shall
be in full force and effect and shall not have been vacated, reversed, modified,
amended or stayed without the prior written consent of the Administrative Agent
and the Requisite Lenders.




                                       35
<PAGE>   43

         (f) Asset Purchase Agreement. The Asset Purchase Agreement (i) shall
not have been determined to be invalid or unenforceable and (ii) shall not have
been terminated by Borrower or any of its Subsidiaries (irrespective of the
reason therefor) or by American as a result of the operation of Section
12.3(b)(i) of the Asset Purchase Agreement and none of the Loan Parties or any
other Subsidiaries shall have challenged the validity or enforceability thereof.

         (g) Additional Matters. The Administrative Agent shall have received
such additional documents, information and materials as any Lender, through the
Administrative Agent, may request.

Each submission by the Borrower to the Administrative Agent of a Notice of
Borrowing and the acceptance by the Borrower of the proceeds of each Loan
requested therein, shall be deemed to constitute a representation and warranty
by the Borrower as to the matters specified in this Section 3.2 on the date of
the making of such Loan.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         To induce the Lenders and the Administrative Agent to enter into this
Agreement, the Borrower represents and warrants as to itself and as to its
Subsidiaries, and each other Loan Party represents and warrants as to such Loan
Party, to the Lenders and the Administrative Agent that, on and as of the
Closing Date, after giving effect to the making of the Loans and other financial
accommodations on the Closing Date and on and as of each date as required by
Section 3.2(b)(i):

         SECTION 4.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the
Borrower and its Subsidiaries (a) is duly organized or formed, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
formation, as applicable; (b) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where such qualification is
necessary, except where the failure to be so qualified or in good standing would
not have a Material Adverse Effect; (c) has all requisite power and authority
and the legal right to own, pledge, mortgage and operate its properties, to
lease the property it operates under lease and to conduct its business as now or
currently proposed to be conducted; (d) is in compliance with its Constituent
Documents; (e) is in compliance with all applicable Requirements of Law, except
where the failure to be in compliance would not in the aggregate have a Material
Adverse Effect; and (f) has all necessary licenses, permits, consents or
approvals from or by, has made all necessary filings with, and has given all
necessary notices to, each Governmental Authority having jurisdiction, to the
extent required for such ownership, operation and conduct, except for licenses,
permits, consents, approvals or filings which can be obtained or made by the
taking of ministerial action to secure the grant or transfer thereof or the
failure to obtain or make could not in the aggregate have a Material Adverse
Effect.

         SECTION 4.2. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.

         (a) The execution, delivery and performance by each Loan Party of the
Loan Documents to which it is a party and the consummation of the transactions
contemplated thereby, including the obtaining of the Loans and the creation and
perfection of the Liens on the Collateral as security therefor:



                                       36
<PAGE>   44

          (i) are, subject to the entry of the Orders, within such Loan Party's
     corporate, limited liability company, partnership or other powers;

          (ii) have been or, at the time of delivery thereof pursuant to Article
     III will have been, duly authorized by all necessary corporate action,
     including the consent of shareholders where required;

          (iii) subject to the entry of the Orders, do not and will not (A)
     contravene such Loan Party's or any of its Subsidiaries' respective
     Constituent Documents, (B) violate any other Requirement of Law applicable
     to such Loan Party (including Regulations T, U and X of the Federal Reserve
     Board), or any order or decree of any Governmental Authority or arbitrator
     applicable to such Loan Party, (C) conflict with or result in the breach
     of, or constitute a default under, or result in or permit the termination
     or acceleration of, any material Contractual Obligation of such Loan Party
     or any of its Subsidiaries, or (D) result in the creation or imposition of
     any Lien upon any of the property of such Loan Party or any of its
     Subsidiaries, other than those in favor of the Secured Parties pursuant to
     this Agreement, the other Loan Documents and the Orders; and

          (iv) do not require the consent of, authorization by, approval of,
     notice to, or filing or registration with, any Governmental Authority or
     any other Person, other than those listed on Schedule 4.2 and which have
     been or will be, prior to the Closing Date, obtained or made, copies of
     which have been or will be delivered to the Administrative Agent pursuant
     to Section 3.1, and each of which on the Closing Date will be in full force
     and effect.

         (b) This Agreement has been, and each of the other Loan Documents will
have been upon delivery thereof pursuant to the terms of this Agreement, duly
executed and delivered by each Loan Party thereto. Subject to the entry of the
Orders, this Agreement is, and the other Loan Documents will be, when delivered
hereunder, the legal, valid and binding obligation of each Loan Party thereto,
enforceable against such Loan Party in accordance with its terms.

         SECTION 4.3. OWNERSHIP OF SUBSIDIARIES. Set forth on Schedule 4.3
hereto is a complete and accurate list showing, as of the Closing Date, all
Subsidiaries of the Borrower and, as to each such Subsidiary, (i) the
jurisdiction of its incorporation, (ii) the number of shares of each class of
Stock authorized (if applicable), (iii) the number outstanding on the Closing
Date and (iv) the number and percentage of the outstanding shares of each such
class owned (directly or indirectly) by the Borrower or any other Subsidiary. No
Stock of any Subsidiary of the Borrower is subject to any outstanding option,
warrant, right of conversion or purchase or any similar right. All of the
outstanding Stock of each Subsidiary of the Borrower owned (directly or
indirectly) by the Borrower or any other Subsidiary has been validly issued, is
fully paid and non-assessable and is owned by the Borrower or a Subsidiary of
the Borrower, free and clear of all Liens (other than Liens set forth on
Schedule 4.3, the Lien in favor of the Secured Parties created pursuant to this
Agreement and the Orders). Neither the Borrower nor any such Subsidiary is a
party to, or has knowledge of, any agreement restricting the transfer or
hypothecation of any Stock of any such Subsidiary, other than as set forth on
Schedule 4.3 and the Loan Documents. Neither the Borrower nor any of its
Subsidiaries owns or holds, directly or indirectly, any Stock of any Person
other than such Subsidiaries and Investments permitted by Section 8.3.




                                       37
<PAGE>   45

         SECTION 4.4. FINANCIAL STATEMENTS.

         (a) The consolidated balance sheet of the Borrower and its Subsidiaries
as of December 31, 1999, and the related consolidated statements of income,
retained earnings and cash flows of the Borrower and its Subsidiaries for the
fiscal year then ended, certified by KPMG LLP, and the consolidated balance
sheets of the Borrower and its Subsidiaries as at September 30, 2000, and the
related consolidated statements of income, retained earnings and cash flows of
the Borrower and its Subsidiaries for the nine (9) months then ended, copies of
which have been furnished to each Lender, fairly present, in all material
respects, subject, in the case of said balance sheets as at September 30, 1999,
and said statements of income , retained earnings and cash flows for the nine
(9) months then ended, to the absence of footnote disclosure and normal
recurring year-end audit adjustments, the consolidated financial condition of
the Borrower and its Subsidiaries as at such dates and the consolidated results
of the operations of the Borrower and its Subsidiaries for the period ended on
such dates, all in conformity with GAAP.

         (b) Neither the Borrower nor any of its Subsidiaries has any material
obligation, contingent liability or liability for taxes, long-term Leases or
Contracts or unusual forward or long-term commitment which is not reflected in
the Financial Statements referred to in clause (a) above or in the notes thereto
or permitted by this Agreement.

         SECTION 4.5. MATERIAL ADVERSE CHANGE. Other than the filing of the
Cases and the events and circumstances precipitating such filing, since
September 30, 1999, there has been no Material Adverse Change and there have
been no events or developments that in the aggregate have had a Material Adverse
Effect.

         SECTION 4.6. LITIGATION. Other than the Cases, there are no pending or,
to the knowledge of the Borrower, threatened actions, investigations or
proceedings affecting the Borrower or any of its Subsidiaries before any court,
Governmental Authority or arbitrator other than those that in the aggregate have
no reasonable risk of being determined adversely to the Borrower or the Borrower
and its Subsidiaries taken as a whole, respectively and, if so determined, would
not have a Material Adverse Effect. The performance of any action by any Loan
Party required or contemplated by any of the Loan Documents is not restrained or
enjoined (either temporarily, preliminarily or permanently). Schedule 4.6 lists
all litigation pending against any Loan Party at the date hereof which, if
adversely determined, would have a Material Adverse Effect.

         SECTION 4.7. FULL DISCLOSURE.

         (a) The written information prepared or furnished by or at the
direction of any Loan Party in connection with this Agreement or the
consummation of the financing taken as a whole, including the information
contained in the Disclosure Document, does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein or herein not misleading. All facts known to the Borrower
which are material to an understanding of the financial condition, business,
properties or prospects of the Borrower and its Subsidiaries taken as one
enterprise have been disclosed to the Lenders.

         (b) The Disclosure Documents comply as to form in all material respects
with all applicable requirements of all applicable state and Federal securities
laws.

         SECTION 4.8. MARGIN REGULATIONS. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the


                                       38
<PAGE>   46


meaning of Regulation U of the Federal Reserve Board), and no proceeds of any
Borrowing will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock in
contravention of Regulation T, U or X of the Federal Reserve Board.

         SECTION 4.9. NO BURDENSOME RESTRICTIONS; NO DEFAULTS.

         (a) Neither the Borrower nor any of its Subsidiaries (i) is a party to
any Contractual Obligation the compliance with which would have a Material
Adverse Effect or the performance of which by any thereof, either
unconditionally or upon the happening of an event, would result in the creation
of a Lien enforceable against such Person (other than a Lien permitted under
Section 8.2) on the property or assets of any thereof or (ii) is subject to any
charter or corporate restriction which would have a Material Adverse Effect.

         (b) Neither the Borrower nor any of its Subsidiaries is in default
under or with respect to any Contractual Obligation owed by it and, to the
knowledge of the Borrower, no other party is in default under or with respect to
any Contractual Obligation owed to any Loan Party or to any Subsidiary of a Loan
Party, other than, in either case, those defaults which occurred solely as a
result of the filing of the Cases or which, in the aggregate would not have a
Material Adverse Effect.

         (c) No Default or Event of Default has occurred and is continuing.

         (d) To the best knowledge of the Borrower, there is no Requirement of
Law applicable to any Loan Party or their respective Subsidiaries the
noncompliance with which by such Loan Party or Subsidiary would have a Material
Adverse Effect.

         SECTION 4.10. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. Neither the Borrower nor any of its Subsidiaries is (a) an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended or (b) a "holding company," or an "affiliate" or
a "holding company" or a "subsidiary company" of a "holding company," as each
such term is defined and used in the Public Utility Holding Act of 1935, as
amended.

         SECTION 4.11. USE OF PROCEEDS. The proceeds of the Loans are being used
by the Borrower solely as follows: (a) to fund post-petition operating expenses
of the Loan Parties incurred in the ordinary course of business, (b) to pay
certain other costs and expenses of administration of the Cases to be specified
in writing to the Administrative Agent (including by notice of application for
Orders), (c) for working capital, capital expenditures and other general
corporate purposes of the Loan Parties not in contravention of any Requirement
of Law or the Loan Documents and (d) as long as no Default or Event of Default
has occurred and is continuing and the Borrower has complied or has caused its
Subsidiaries to comply with Section 8.5(b), if applicable, to pay certain
Permitted Prepetition Claim Payments. The Borrower shall use the entire amount
of the proceeds of each Loan in accordance with this Section 4.11, provided,
however, that nothing herein shall in any way prejudice or prevent the
Administrative Agent or the Lenders from objecting, for any reason, to any
requests, motions or applications made in the Bankruptcy Court, including any
applications for interim or final allowances of compensation for services
rendered or reimbursement of expenses incurred under Sections 105(a), 330 or 331
of the Bankruptcy Code, by any party in interest, and provided, further, that
the Borrower shall not use the proceeds from any Loans (x) for any purpose that
is prohibited under the Bankruptcy Code, or




                                       39
<PAGE>   47


(y) in connection with (i) the investigation (including discovery proceedings),
initiation or prosecution of any claims, causes of action, adversary proceedings
or other litigation against the Administrative Agent or the Lenders, including
challenging the amount, validity, perfection, priority or enforceability of or
asserting any defense, counterclaim or offset to, the Obligations or the
security interests and Liens of the Secured Parties in respect thereof or (ii)
the initiation or prosecution of any claims, causes of action, adversary
proceedings or other litigation against American or its Affiliates, including
challenging the validity or enforceability of the Asset Purchase Agreement.

         SECTION 4.12. SECURED, SUPER PRIORITY OBLIGATIONS.

         (a) On and after the Closing Date, the provisions of the Loan Documents
and the Orders are effective to create in favor of the Administrative Agent, for
the benefit of the Secured Parties, legal, valid and perfected Liens on and
security interests (having the priority provided for herein and in the Orders)
in all right, title and interest in the Collateral, enforceable against each
Loan Party that owns an interest in such Collateral.

         (b) Pursuant to subsections 364(c)(2) and (3) of the Bankruptcy Code
and the Orders, all amounts owing by the Borrower under this Agreement and the
other Loan Documents and by the Guarantors in respect thereof will be secured by
a first priority perfected Lien on the Priority Collateral and a perfected Lien
on the Junior Collateral, subject only to (i) valid, perfected, nonavoidable and
enforceable Liens existing as of the Petition Date in the case of the Junior
Collateral and (ii) the Carve-Out in the case of the Junior Collateral and the
Priority Collateral.

         (c) Pursuant to Section 364(c) of the Bankruptcy Code and the Orders,
all obligations of the Borrower and the obligations of the Guarantors under the
Guaranty in respect thereof at all times will constitute allowed super-priority
administrative expense claims in the Cases having priority over all
administrative expenses of the kind specified in Sections 503(b) or 507(b) of
the Bankruptcy Code, subject only to the Carve-Out.

         (d) The Orders and the transactions contemplated hereby and thereby,
are in full force and effect and have not been vacated, reversed, modified,
amended or stayed without the prior written consent of the Administrative Agent.

         SECTION 4.13. DEPOSIT ACCOUNTS; CONTROL ACCOUNTS. The only deposit
accounts, Securities Accounts or commodity accounts maintained by any Grantor on
the date hereof are those listed on Schedule 4.13, which sets forth such
information separately for each Grantor.

         SECTION 4.14. TITLE; NO OTHER LIENS. Except for the Lien granted to the
Administrative Agent pursuant to this Agreement, (a) each Grantor is the record
and beneficial owner of the Pledged Collateral pledged by it hereunder
constituting Instruments or certificated securities and owns each other item of
Collateral in which a Lien is granted by it hereunder and (b) all such
Collateral is owned free and clear of any and all Liens other than Liens
permitted under Section 8.2.



                                       40
<PAGE>   48

         SECTION 4.15. PLEDGED COLLATERAL.

         (a) The Pledged Stock pledged hereunder by each Grantor constitutes
that percentage of the issued and outstanding equity of all classes of each
issuer thereof as set forth on Schedule 4.15.

         (b) All of the Pledged Stock has been duly and validly issued and is
fully paid and nonassessable.

         (c) Each of the Pledged Notes constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, and general equitable principles (whether
considered in a proceeding in equity or at law).

         (d) All Pledged Stock of such Grantor as of the date hereof are listed
on Schedule 4.15.

         (e) Other than with respect to the Stock set forth on Schedule 4.15,
the Pledged Collateral consisting of certificated securities or Instruments has
been delivered to the Administrative Agent to the extent requested by the
Administrative Agent.

         (f) Other than with respect to the Stock set forth on Schedule 4.15,
there is no Pledged Collateral other than that represented by certificated
securities or Instruments in the possession of the Administrative Agent.

         (g) Other than with respect to the Stock set forth on Schedule 4.15, no
Person has control over any Investment Property of such Grantor.

         SECTION 4.16. GUARANTORS. No Loan Party has any Subsidiary which owns
or holds (by lease, beneficially or otherwise) any material assets other than
those Subsidiaries which are Guarantors hereunder and those identified on
Schedule 4.16.

         SECTION 4.17. PASSIVE HOLDING COMPANY. Each of TWA Stock Holding and
PARS, engages in no activities or business and has incurred no Indebtedness or
Guaranty Obligations other than (a) with respect to TWA Stock Holding, the
ownership of the Stock of PARS, and (b) with respect to PARS, the ownership of
the Stock of Worldspan.

         SECTION 4.18. ASSET PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES.
Each of the representations and warranties set forth in Article VI of the Asset
Purchase Agreement is true and correct and is incorporated herein by reference
with the same effect as if each such representation and warranty had been
restated herein (without regard to any amendment, modification or waiver of the
Asset Purchase Agreement and notwithstanding the termination thereof).

         SECTION 4.19. OPERATIONS. The Borrower is a "citizen of the United
States" as defined in Section 101(16) of the Aviation Act. The Borrower is a
duly certificated "air carrier" pursuant to Section 44750 of Title 49 of the
United States Code. The Borrower is a duly certificated "air carrier" within the
meaning of the Aviation Act authorized to transport passengers, property and
mail in interstate, overseas and foreign air transportation and is certificated
under Sections 401 and 604(b) of the Aviation Act. All such certificates or





                                       41
<PAGE>   49

exemptions from the requirement to possess certificates or their foreign
equivalents are in force and duly issued to Borrower, as the case may be, by the
DOT, the FAA or its predecessor agency or the applicable equivalent foreign
Governmental Authority, and all material licenses, permits, authorizations,
certificates of compliance, certificates of public convenience and necessity and
other certificates (including, without limitation, air carrier operating
certificates and operations specifications issued by the FAA or any applicable
equivalent foreign Governmental Authority pursuant to Part 121 of the
Regulations of the FAA or equivalent foreign regulation), which are required by
the DOT and the FAA or any equivalent foreign Governmental Authority and which
are adequate for the conduct of the business of Borrower as now conducted and as
proposed to be conducted . There are no license fees due and payable on
Borrower's DOT or FAA licenses or their applicable foreign equivalents. Borrower
is in compliance with all material requirements of the licenses, permits,
authorizations and certificates issued to it by the DOT and the FAA or any
applicable equivalent foreign Governmental Authority and none of the FAA, DOT or
any applicable equivalent foreign agency is taking any action or, to the
knowledge of Borrower, considering the taking of any action to revoke, suspend,
modify or amend such licenses, permits, authorizations or certificates which is
reasonably likely to have a Material Adverse Effect.

         SECTION 4.20. AIRCRAFT AND SPARE PARTS.

         (a) Schedule 4.20(a) sets forth a true and complete list of all
Airframes which are owned or leased by the Borrower and its Subsidiaries as of
the Closing Date (including descriptions of manufacturer, model, manufacturer's
serial number and U.S. registration number and whether owned or leased by the
relevant Grantor and whether subject to an existing mortgage or similar Lien).

         (b) Schedule 4.20(b) sets forth a true and complete list of all Engines
which are owned or leased by the Borrower and its Subsidiaries as of the Closing
Date (including descriptions of manufacturer, model, manufacturer's serial
number and whether owned or leased by the relevant Grantor and whether subject
to an existing mortgage or similar Lien). Each such Engine is capable of
producing not less than 750 rated takeoff horsepower.

         (c) Schedule 4.20(c) sets forth a true and complete list of all
designated locations at which Spare Parts and Ground Equipment are located which
are owned and maintained by the Borrower and its Subsidiaries as of the Closing
Date (including general descriptions of the Spare Parts and Ground Equipment
owned by the Borrower and its Subsidiaries at each such location and whether
such Spare Parts and Ground Equipment are subject to an existing mortgage or
similar Lien).

                                   ARTICLE V

                               FINANCIAL COVENANTS

         As long as any of the Obligations or Commitments remain outstanding,
unless the Requisite Lenders otherwise consent in writing, the Borrower agrees
with the Lenders and the Administrative Agent that:



                                       42
<PAGE>   50

         SECTION 5.1. Minimum EBITDA. The Borrower will have, as of the last day
of each fiscal month in each Fiscal Year set forth below, EBITDA for such fiscal
month ending on such day of not less than the following:

<TABLE>
<CAPTION>
        FISCAL MONTH ENDING                  MINIMUM EBITDA
        -------------------                  --------------

<S>                                           <C>
            January 2001                      $(64,000,000)

            February 2001                     $(39,600,000)

             March 2001                       $  9,900,000

             April 2001                       $ 12,400,000

              May 2001                        $  7,600,000

</TABLE>


         SECTION 5.2. Capital Expenditures. The Borrower will not permit Capital
Expenditures to be made or incurred during any fiscal month of any Fiscal Year
in excess of the maximum amount set forth below for such fiscal month:

<TABLE>
<CAPTION>
                                             MAXIMUM CAPITAL
          FISCAL MONTH ENDING                 EXPENDITURES
          -------------------                ---------------

<S>                                         <C>
             January 2001                      $ 2,700,000

            February 2001                      $ 2,700,000

              March 2001                       $ 2,800,000

              April 2001                       $ 8,800,000

               May 2001                        $13,500,000
</TABLE>

In addition to the foregoing, Borrower may incur Capital Expenditures in an
amount agreed by the Administrative Agent, in writing, in its sole and absolute
discretion.

                                   ARTICLE VI

                               REPORTING COVENANTS

         As long as any of the Obligations or Commitments remain outstanding,
unless the Requisite Lenders otherwise consent in writing, the Borrower agrees
with the Lenders and the Administrative Agent that:

         SECTION 6.1. FINANCIAL STATEMENTS; ETC. The Borrower shall furnish to
the Administrative Agent (with sufficient copies for each of the Lenders) the
following:

         (a) Monthly Reports. Within twenty (20) days after the end of each
fiscal month in each Fiscal Year, financial information regarding the Borrower
and its Subsidiaries consisting of consolidated unaudited balance sheets as of
the close of such month and the related statements of income and cash flow for
such month and that portion of the current Fiscal Year ending as of the close of
such month, setting forth in comparative form the figures for the corresponding
period in the prior year and the figures contained in the Business Plan for the
current Fiscal Year, in each case certified by a Responsible Officer of the
Borrower as fairly presenting, in all material respects, the consolidated
financial position of the Borrower and its Subsidiaries as at the dates
indicated and the results of their operations and cash flow for the






                                       43
<PAGE>   51


periods indicated in accordance with GAAP (subject to the absence of footnote
disclosure and normal year-end audit adjustments).

         (b) Quarterly Reports. Within forty-five (45) days after the end of
each Fiscal Quarter of each Fiscal Year, financial information regarding the
Borrower and its Subsidiaries consisting of consolidated unaudited balance
sheets as of the close of such quarter and the related statements of income and
cash flow for such quarter and that portion of the Fiscal Year ending as of the
close of such quarter, setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the Business
Plan for the current Fiscal Year, in each case certified by a Responsible
Officer of the Borrower as fairly presenting, in all material respects, the
consolidated financial position of the Borrower and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for the
periods indicated in accordance with GAAP (subject to the absence of footnote
disclosure and normal year-end audit adjustments).

         (c) Annual Reports. Within ninety (90) days after the end of each
Fiscal Year, financial information regarding the Borrower and its Subsidiaries
consisting of consolidated and consolidating balance sheets of the Borrower and
its Subsidiaries as of the end of such year and related statements of income and
cash flows of the Borrower and its Subsidiaries for such Fiscal Year, all
prepared in conformity with GAAP and certified, in the case of such consolidated
financial statements, without qualification as to the scope of the audit by
independent public accountants acceptable to the Administrative Agent, together
with the report of such accounting firm stating that (i) such financial
statements fairly present, in all material respects, the consolidated financial
position of the Borrower and its Subsidiaries as at the dates indicated and the
results of their operations and cash flow for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years (except for
changes with which such independent certified public accountants shall concur
and which shall have been disclosed in the notes to the financial statements)
and (ii) the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with generally
accepted auditing standards, and accompanied by a certificate stating that in
the course of the regular audit of the business of the Borrower and its
Subsidiaries such accounting firm has obtained no knowledge that a Default or
Event of Default has occurred and is continuing, or, if in the opinion of such
accounting firm, a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.

         (d) Compliance Certificate. Together with each delivery of any
financial statement pursuant to clauses (a), (b) and (c) of this Section 6.1, a
certificate of a Responsible Officer of the Borrower (each, a "Compliance
Certificate") (i) showing in reasonable detail the calculations used in
demonstrating compliance with each of the financial covenants contained in
Article V which is tested on a monthly basis and (ii) stating that no Default or
Event of Default has occurred and is continuing or, if a Default or an Event of
Default has occurred and is continuing, stating the nature thereof and the
action which the Borrower proposes to take with respect thereto.

         (e) Management Letters, Etc. Within five (5) Business Days after
receipt thereof by the Borrower or its Subsidiaries, copies of each management
letter, exception report or similar letter or report received by such Person
from its independent certified public accountants;

         (f) Intercompany Loan Balances. Together with each delivery of any
financial statement pursuant to clause (a) of this Section 6.1, a summary of the
outstanding




                                       44
<PAGE>   52


balance of all intercompany Indebtedness as of the last day of the fiscal month
covered by such financial statement, certified by a Responsible Officer.

         SECTION 6.2. DEFAULT NOTICES. As soon as practicable, and in any event
three (3) Business Days after a Responsible Officer of any Loan Party has actual
knowledge of the existence of any Default, Event of Default or any other event
which has had a Material Adverse Effect or which has any reasonable likelihood
of causing or resulting in a Material Adverse Change, the Borrower shall give
the Administrative Agent notice specifying the nature of such Default or Event
of Default or other event, including the anticipated effect thereof, which
notice, if given by telephone, shall be promptly confirmed in writing on the
next Business Day.

         SECTION 6.3. LITIGATION. Promptly after The commencement thereof, the
Borrower shall give the Administrative Agent written notice of the commencement
of all actions, suits and proceedings before any domestic or foreign
Governmental Authority or arbitrator, affecting the Borrower or any of its
Subsidiaries, which (i) seeks injunctive or similar relief, (ii) in the
reasonable judgment of the Borrower, exposes the Borrower or such Subsidiary to
liability not covered by insurance or (iii) is in an amount aggregating
$1,000,000 or more or which, if adversely determined, would have a Material
Adverse Effect.

         SECTION 6.4. ASSET SALES. Prior to any Asset Sale anticipated to
generate in excess of $50,000 (or its Dollar equivalent) in Net Cash Proceeds,
the Borrower shall send the Administrative Agent a notice (a) describing such
Asset Sale or the nature and material terms and conditions (including any
payments to any Person other than the Lenders) of such transaction and (b)
stating the estimated Net Cash Proceeds anticipated to be received by the
Borrower or any of its Subsidiaries.

         SECTION 6.5. OPERATIONS-RELATED NOTICES.

         (a) Within three (3) Business Days after Borrower or any of its
Subsidiaries shall (i) have determined not to use or otherwise protect any Route
(other than a Dormant Route) or Slot held by it in accordance with Title 14 or
any applicable foreign or domestic law or regulation, Borrower will notify the
Administrative Agent of such determination, which notice shall identify such
Slot or Route, the holder and operator thereof and the extent of use of such
Slot or Route during the two calendar months preceding such notice, or (ii)
propose to make a change in the frequency of its flights.

         (b) In the event of the proposal by a Governmental Authority or the
imposition of any law, rule, proceeding or regulation with respect to Routes or
Slots, which law, rule or regulation is intended to or will directly (i) alter
or modify in any respect the ability of the Lenders to acquire, hold, sell or
otherwise transfer the right to hold or use any of the Slots or to cause the
sale or transfer of the Routes or (ii) in any other respect, materially
adversely affect the interest of the Lenders, Borrower will, in each case,
within three (3) days of the notice of any proceeding requiring an answer within
ten (10) days or less or within seven (7) days of any other event, give notice
to the Administrative Agent of such proposal or imposition.

         (c) Each Grantor shall notify the Administrative Agent upon the earlier
to occur of (i) fifteen (15) days prior to the date such Grantor or its
Subsidiaries acquire any Spare Parts with a Fair Market Value equal to or
greater than $1,000,000, Airframes or Engines or (ii) execution of a term sheet
or letter of intent with respect thereto.



                                       45
<PAGE>   53

         SECTION 6.6. SEC FILINGS; PRESS RELEASES. Promptly after the sending or
filing thereof, the Borrower shall send the Administrative Agent copies of (a)
all reports which the Borrower sends to its security holders generally, (b) all
reports and registration statements which the Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission or any national
securities exchange, (c) all press releases and (d) all other statements
concerning material changes or developments in the business of the Borrower and
its Subsidiaries made available by any such Person to the public.

         SECTION 6.7. LABOR RELATIONS. Promptly after becoming aware of the
same, the Borrower shall give the Administrative Agent written notice of (a) any
material labor dispute to which the Borrower of any of its Subsidiaries is or
may become a party, including any strikes, lockouts or other disputes relating
to any of such Person's plants and other facilities, and (b) any Worker
Adjustment and Retraining Notification Act or related liability incurred with
respect to the closing of any plant or other facility of any of such Person.

         SECTION 6.8. TAX RETURNS. Upon the request of any Lender, through the
Administrative Agent, the Borrower will provide copies of all federal, state,
local and foreign tax returns and reports filed by the Borrower or any of its
Subsidiaries in respect of taxes measured by income (excluding sales, use and
like taxes).

         SECTION 6.9. INSURANCE. Upon the request of the Administrative Agent,
the Borrower will furnish the Administrative Agent (in sufficient copies for
each of the Lenders) with (a) a report in form and substance satisfactory to the
Administrative Agent and the Lenders outlining all material insurance coverage
maintained as of the date of such report by the Borrower and its Subsidiaries
and the duration of such coverage and (b) an insurance broker's statement that
all premiums then due and payable with respect to such coverage have been paid.

         SECTION 6.10. ERISA MATTERS. The Borrower shall furnish to the
Administrative Agent (with sufficient copies for each of the Lenders):

         (a) promptly and in any event within thirty (30) days after the
Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has reason to
know that any ERISA Event has occurred, notice of such occurrence;

         (b) promptly and in any event within ten (10) days after the Borrower,
any of its Subsidiaries or any ERISA Affiliate knows or has reason to know that
a request for a minimum funding waiver under Section 412 of the Code has been
filed with respect to any Title IV Plan or Multiemployer Plan, a written
statement of a Responsible Officer of the Borrower describing such ERISA Event
or waiver request and the action, if any, which the Borrower, its Subsidiaries
and ERISA Affiliates propose to take with respect thereto and a copy of any
notice filed with the PBGC or the IRS pertaining thereto; and

         (c) simultaneously with the date that the Borrower, any of its
Subsidiaries or any ERISA Affiliate files a notice of intent to terminate any
Title IV Plan, if such termination would require material additional
contributions in order to be considered a standard termination within the
meaning of Section 4041(b) of ERISA, a copy of each notice.

         SECTION 6.11. ENVIRONMENTAL MATTERS. The Borrower shall provide the
Administrative Agent promptly and in any event within ten (10) days of the
Borrower or any Subsidiary learning of any of the following, written notice of
any of the following:



                                       46
<PAGE>   54

         (a) the Borrower or any of its Subsidiaries is or may be liable to any
Person as a result of a Release or threatened Release which could reasonably be
expected to subject such Person to Environmental Liabilities and Costs of
$100,000 or more;

         (b) the receipt by the Borrower or any of its Subsidiaries of
notification that any real or personal property of such Person is or is
reasonably likely to be subject to any Environmental Lien;

         (c) the receipt by the Borrower or any of its Subsidiaries of any
notice of violation of or potential liability under, or knowledge by such Person
that there exists a condition which could reasonably be expected to result in a
violation of or liability under any Environmental Law, except for violations and
liabilities the consequence of which in the aggregate would have no reasonable
likelihood of subjecting the Loan Parties collectively to Environmental
Liabilities and Costs of $100,000 or more;

         (d) the commencement of any judicial or administrative proceeding or
investigation alleging a violation of or liability under any Environmental Law,
which in the aggregate, if adversely determined, would have a reasonable
likelihood of subjecting the Loan Parties collectively to Environmental
Liabilities and Costs of $100,000 or more;

         (e) any proposed action by the Borrower or any of its Subsidiaries or
any proposed change in Environmental Laws which in the aggregate have a
reasonable likelihood of requiring the Loan Parties to obtain additional
environmental, health or safety Permits or make additional capital improvements
to obtain compliance with Environmental Laws that in the aggregate would cost
$100,000 or more or subject the Loan Parties to additional Environmental
Liabilities and Costs of $100,000 or more; and

         (f) upon written request by any Lender through the Administrative
Agent, a report providing an update of the status of any environmental, health
or safety compliance, hazard or liability issue identified in any notice or
report delivered pursuant to this Agreement.

         SECTION 6.12. BORROWING BASE DETERMINATION.

         (a) On each Business Day, the Borrower shall deliver to the
Administrative Agent a properly completed and executed Borrowing Base
Certificate to be in form and substance satisfactory to the Administrative Agent
in its sole discretion with such supporting documentation as the Administrative
Agent shall request.

         (b) On the fourteenth (14th) day of each calendar month (or if such day
is not a Business Day, the next succeeding Business Day) a Monthly Receivables
Report setting forth, among other things (i) for each day in the prior month for
which a Borrowing Base Certificate was produced by the Borrower, the aggregate
information from such Borrowing Base Certificates, (ii) the Delinquency
Percentage as of the last day of the prior month, (iii) the Loss Estimate
Percentage as of the last day of the prior month, (iv) the Travel Agency Cash
Refund Commission Percentage as of the last day of the prior month, (v) the
Travel Agency Cash Refund Percentage as of the last day of the prior month and
(vi) such other information as may be required. Such certificate shall also
include a certification that (i) the information contained therein is true and
correct in all material respects, (ii) the representations and warranties set
forth in Article IV and in the other Loan Documents shall be true and correct on
and as of the date thereof with the same effect as though made on and as of such
date, except to the extent such representations and warranties expressly relate
to an earlier date, in which case the representation




                                       47
<PAGE>   55


and warranties were true and correct in all material respects as of such earlier
date and (iii) no Default or Event of Default has occurred and is continuing.

         (c) The Borrower shall conduct, or shall cause to be conducted, at its
sole cost and expense, and upon request of the Administrative Agent, and present
to the Administrative Agent for approval, such appraisals, investigations and
reviews as the Administrative Agent shall request for the purpose of determining
the Borrowing Base, all upon notice and at such times and as often as may be
requested. The Borrower shall furnish to the Administrative Agent any
information which the Administrative Agent may request regarding the
determination and calculation of the Borrowing Base including correct and
complete copies of any invoices, underlying agreements, instruments or other
documents and the identity of all Account Debtors in respect of Accounts
referred to therein.

         (d) The Borrower shall promptly notify the Administrative Agent in
writing in the event that at any time the Borrower receives or otherwise gains
knowledge that (i) the Borrowing Base is less than ninety-five percent (95%) of
the Borrowing Base reflected in the most recent Borrowing Base Certificate
delivered pursuant to Section 6.12(a) or that (ii) the aggregate outstanding
Revolving Loans exceed the Borrowing Base as a result of a decrease therein, and
the amount of such excess.

         (e) The Administrative Agent may, at the Borrower's sole cost and
expense, make test verifications of the Accounts in any manner and through any
medium that the Administrative Agent considers advisable, and the Borrower shall
furnish all such assistance and information as the Administrative Agent may
require in connection therewith.

         SECTION 6.13. BANKRUPTCY COURT. The Loan Parties will use their best
efforts to obtain the approval of the Bankruptcy Court of this Agreement and the
other Loan Documents and deliver to the Administrative Agent and the
Administrative Agent's counsel all pleadings, motions and other documents filed
on behalf of all of the Loan Parties with the Bankruptcy Court.

         SECTION 6.14. DAILY BUSINESS PLAN. The Borrower shall deliver to the
Administrative Agent (i) daily, an update to the daily cash flow forecast
attached as Exhibit G-2 to reflect the prior days' actual cash flows and (ii) on
or before the last day of each fiscal month, an update of the three-month
forecast attached as Exhibit G-1. The Borrower shall notify the Administrative
Agent in writing of any material deviation in the results of operations from
those contained in the Business Plan from the preceding month.

         SECTION 6.15. OTHER INFORMATION. The Borrower will provide the
Administrative Agent or any Lender with such other information respecting the
business, properties, condition, financial or otherwise, or operations of the
Borrower or any of its Subsidiaries as any Lender through the Administrative
Agent may from time to time request.

                                  ARTICLE VII

                              AFFIRMATIVE COVENANTS

         As long as any of the Obligations or Commitments remain outstanding,
unless the Requisite Lenders otherwise consent in writing, each Loan Party
agrees with the Lenders and the Administrative Agent that:


                                       48
<PAGE>   56

         SECTION 7.1. PRESERVATION OF CORPORATE EXISTENCE, ETC. (a) Such Loan
Party shall, and shall cause each of its Subsidiaries to, preserve and maintain
its existence, rights (charter and statutory) and franchises, (b) the Borrower
shall continue to be an air carrier certified under Section 604(b) of the FAA,
and (c) the Borrower shall continue to be a "citizen of the United States" as
defined in Section 101(16) of the FAA.

         SECTION 7.2. COMPLIANCE WITH LAWS, ETC. Such Loan Party shall, and
shall cause each of its Subsidiaries to, comply with all applicable Requirements
of Law, Contractual Obligations and Permits, except where the failure so to
comply would not in the aggregate have a Material Adverse Effect.

         SECTION 7.3. CONDUCT OF BUSINESS. Such Loan Party shall, and shall
cause each of its Subsidiaries to, (a) conduct its business in the ordinary
course and (b) use its reasonable efforts, in the ordinary course and consistent
with past practice, to preserve its business and the goodwill and business of
the customers, advertisers, suppliers and others having business relations with
such Loan Party or any of its Subsidiaries.

         SECTION 7.4. PAYMENT OF TAXES, ETC. Such Loan Party shall, and shall
cause each of its Subsidiaries to, pay and discharge before the same shall
become delinquent, all lawful governmental claims, taxes, assessments, charges
and levies arising after the Petition Date, except where contested in good
faith, by proper proceedings and adequate reserves therefor have been
established on the books of such Loan Party or the appropriate Subsidiary in
conformity with GAAP.

         SECTION 7.5. MAINTENANCE OF INSURANCE. Such Loan Party shall (i)
maintain, and cause to be maintained for each of its Subsidiaries, insurance
with responsible and reputable insurance companies or associations in such
amounts and covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general areas in
which such Loan Party or such Subsidiary operates, and such other insurance as
may be reasonably requested by the Requisite Lenders, and, in any event, all
insurance required by any Loan Document and (ii) cause all such insurance to
name the Administrative Agent on behalf of the Secured Parties as additional
insured or loss payee, as appropriate, and to provide that no cancellation,
material addition in amount or material change in coverage shall be effective
until after thirty (30) days' written notice thereof to the Administrative
Agent. Notwithstanding the foregoing, the Loan Parties shall, and shall cause
each of their Subsidiaries to, carry the following types of insurance:

         (a) Aircraft Liability Insurance. The Loan Parties will carry, or cause
to be carried, at no expense to the Administrative Agent, aircraft liability
insurance (including, but not limited to, bodily injury, personal injury and
property damage liability, exclusive of manufacturer's product liability
insurance) and contractual liability insurance with respect to the Aircraft in
amounts and of the type usually carried by, and covering risks of the kind
customarily insured against by, corporations engaged in the same or similar
business, similarly situated with the Loan Parties and owning or operating
similar aircraft and engines and that is maintained in effect with insurers of
recognized responsibility. Any policies of insurance carried in accordance with
this Section 7.5 and any policies taken out in substitution or replacement for
any of such policies shall name the Administrative Agent (in its individual
capacity and as Administrative Agent) as additional insureds.

         (b) Insurance Against Loss or Damage to Aircraft. The Loan Parties
shall maintain, or cause to be maintained, in effect with insurers of recognized
responsibility, at no






                                       49
<PAGE>   57


expense to the Administrative Agent or any Secured Party, all-risk aircraft hull
insurance covering each Aircraft and all-risk coverage with respect to any
Engines or Spare Parts while removed from an Aircraft (including, without
limitation, war risk insurance if and to the extent the same is maintained by
American with respect to aircraft owned or operated by it on the same routes)
that is of the type and in substantially the amount usually carried by
corporations engaged in the same or similar business and similarly situated with
Loan Parties. Any policies carried in accordance with this Section 7.5 and any
policies taken out in substitution or replacement for any such policies shall
provide that any insurance proceeds shall be paid to the Administrative Agent as
long as the Agreement shall not have terminated.

         SECTION 7.6. ACCESS. Such Loan Party shall from time to time (and
provided no Event of Default then exists, upon one Business Day's advance notice
during normal business hours) permit the Administrative Agent and the Lenders,
or any agents or representatives thereof, at such Lender's request to (a)
examine and make copies of and abstracts from the records and books of account
of such Loan Party and each of its Subsidiaries, (b) visit the properties of
such Loan Party and each of its Subsidiaries, (c) discuss the affairs, finances
and accounts of such Loan Party and each of its Subsidiaries with any of their
respective officers or directors and (d) communicate directly and discuss the
affairs, finances and accounts of such Loan Party and each of its Subsidiaries
with any other party in interest to the Cases, as lessor under any Contract or
Lease to which any Loan Party or its Subsidiaries is a party, any creditor of
any Loan Party or its Subsidiaries, the Committee or otherwise. Such Loan Party
hereby authorizes its independent certified public accountants to disclose to
the Administrative Agent or any Lender any and all financial statements and
other information of any kind, as the Administrative Agent or any Lender
requests from the Borrower or such Loan Party and which such accountants may
have with respect to the business, financial condition, results of operations or
other affairs of such Loan Party or any of its Subsidiaries.

         SECTION 7.7. KEEPING OF BOOKS. Such Loan Party shall, and shall cause
each of its Subsidiaries to, keep proper books of record and account, in which
full and correct entries shall be made in conformity with GAAP of all financial
transactions and the assets and business of such Loan Party and each such
Subsidiary.

         SECTION 7.8. MAINTENANCE OF PROPERTIES, ETC. Except as otherwise
required by the Bankruptcy Code, such Loan Party shall, and shall cause each of
its Subsidiaries to, maintain and preserve (a) all of its properties which are
necessary in the conduct of its business in good working order and condition,
(b) all rights, permits, licenses, approvals and privileges (including all
Permits) which are used or necessary in the conduct of its business and (c) all
Intellectual Property with respect to its business, which is used or necessary
in the conduct of its business.

         SECTION 7.9. APPLICATION OF PROCEEDS. The Borrower shall use the entire
amount of the proceeds of the Loans as provided in Section 4.11.

         SECTION 7.10. ENVIRONMENTAL. Except as otherwise required by the
Bankruptcy Code or by a Final Order of the Bankruptcy Court, such Loan Party
shall, and shall cause each of its Subsidiaries to, comply in all material
respects with Environmental Laws and, without limiting the foregoing, such Loan
Party shall, at its sole cost and expense, upon receipt of any notification or
otherwise obtaining knowledge of any Release or other event that has any
reasonable likelihood of such Loan Party and its Subsidiaries incurring
Environmental Liabilities and Costs in excess of $100,000, (a) conduct, or pay
for consultants to conduct, tests or assessments of environmental conditions at
such operations or properties, including the






                                       50
<PAGE>   58


investigation and testing of subsurface conditions and (b) take such Remedial
Action, investigational or other action as required by Environmental Laws or as
any Governmental Authority requires or as is appropriate and consistent with
good business practice to address the Release or event.

         SECTION 7.11. RECEIVABLES FACILITY. Upon the occurrence of the AR
Termination Date, the Borrower shall (a) cause Constellation, to (i) collect any
and all proceeds of the Receivables it may receive, (ii) hold, and not
distribute to any Person other than the Borrower any such proceeds, (iii)
immediately (and in any event within two (2) Business Days) dividend all such
proceeds to the Borrower and (iv) immediately (and in any event within five (5)
Business Days dividend the Receivables to Borrower, (b) as soon as possible (but
in any event not later than thirty (30) days) following the occurrence of the AR
Termination Date, cause the Limited Liability Company Agreement of
Constellation, dated as of December 22, 1997, to be amended to delete Sections
10.1 through and including 10.6 (concerning transfers of Membership interests)
thereof and (c) as soon as possible (but in any event not later than three (3)
days following the occurrence of the AR Termination Date), cause the proceeds of
all Receivables to be paid into a lockbox account in the name of the Borrower.

         SECTION 7.12. SLOTS AND ROUTES. Unless otherwise agreed in writing by
the Administrative Agent:

         (a) The Borrower will, and will cause each of its Subsidiaries to, take
all actions necessary or, in the judgment of the Administrative Agent, advisable
in order to maintain the right, if any, to operate their respective Slots,
Routes and Gates, with the corresponding frequencies as in effect on the date
hereof;

         (b) The Borrower will comply or cause the compliance in all respects
with all of the terms, conditions and regulations set forth in Title 14,
including, without limitation, the usage and reporting requirements set forth in
Section 93.227 thereof, and any equivalent foreign regulation, with respect to
the Slots; and

         (c) The Borrower will not permit any Slot to be designated for or
limited to the provision of any type of airline passenger service, unless such
Slot was so designated or restricted as of the date hereof.

         SECTION 7.13. SECTION 1110 ELECTIONS. Unless otherwise agreed by the
Administrative Agent, in writing, in its sole and absolute discretion, the
Borrower will, and will cause each of its Subsidiaries to, take all actions
necessary or, in the judgment of the Administrative Agent, advisable under
Section 1110 of the Bankruptcy Code in order to maintain possession of their
"equipment" as such term is defined under Section 1110(a)(2) of the Bankruptcy
Code.

         SECTION 7.14. SCHEDULES. Borrower shall, within twenty-one days (21)
following the Closing Date, deliver to the Administrative Agent, such
supplements and updates to the schedules attached to this Agreement as shall be
acceptable to the Administrative Agent in its discretion, setting forth the
information required therein not reasonably available on the Petition Date.




                                       51
<PAGE>   59

                                  ARTICLE VIII

                               NEGATIVE COVENANTS

         As long as any of the Obligations or Commitments remain outstanding,
unless the Requisite Lenders otherwise consent in writing, each Loan Party
agrees with the Lenders and the Administrative Agent that:

         SECTION 8.1. INDEBTEDNESS AND GUARANTY OBLIGATIONS. Such Loan Party
will not, and will not permit any of its Subsidiaries to, directly or indirectly
create, incur, assume or otherwise become or remain directly or indirectly
liable with respect to any Indebtedness or Guaranty Obligations, except:

         (a) the Obligations;

         (b) Indebtedness existing prior to the Petition Date;

         (c) Guaranty Obligations incurred by the Borrower or any Guarantor in
respect of Indebtedness of the Borrower or any Guarantor otherwise permitted by
this Section 8.1;

         (d) Indebtedness arising from intercompany loans from (i) the Borrower
to any Guarantor or from any Guarantor to the Borrower or any other Guarantor
and (ii) a Subsidiary that is not a Guarantor to the Borrower or a Guarantor
provided that such Subsidiary subordinates such intercompany loan to the prior
payment in full of the Obligations on terms acceptable to the Administrative
Agent in its sole and absolute discretion;

         (e) Indebtedness arising under any performance or surety bond entered
into in the ordinary course of business; and

         (f) Capital Lease Obligations in compliance with Section 5.2.

         SECTION 8.2. LIENS, ETC. Such Loan Party will not, and will not permit
any of its Subsidiaries to, create or suffer to exist, any Lien upon or with
respect to any of its properties or assets, whether now owned or hereafter
acquired, or assign, or permit any of its Subsidiaries to assign, any right to
receive income, except for:

         (a) Liens created pursuant to the Loan Documents;

         (b) Liens existing prior to the Petition Date;

         (c) Customary Permitted Liens of the Borrower and its Subsidiaries;

         (d) Liens in favor of lessors securing operating leases permitted
hereunder; and

         (e) Liens in respect of Capital Lease Obligations permitted under
Section 8.1.

         SECTION 8.3. INVESTMENTS. Such Loan Party will not, and will not permit
any of its Subsidiaries to, directly or indirectly make or maintain
any Investment except:



                                       52
<PAGE>   60

         (a) Investments existing prior to the Petition Date;

         (b) Cash and Cash Equivalents not to exceed an aggregate amount for the
Borrower and its Subsidiaries in excess of $60,000,000 for the first ten (10)
days following the Petition Date and, thereafter, $60,000,000 for more than five
(5) consecutive days, at which time the Borrower shall make a prepayment of the
Loan as provided in Section 2.7(b);

         (c) Accounts, Contract Rights and Chattel Paper, notes receivable and
similar items arising in the ordinary course of business consistent with the
past practice of such Loan Party and its Subsidiaries;

         (d) Investments received in settlement of amounts due to such Loan
Party or any Subsidiary of such Loan Party effected in the ordinary course of
business; and

         (e) Investments by (i) the Borrower in any Guarantor (except a
Guarantor which is the owner of any Junior Collateral), or by any Guarantor in
the Borrower or any other Guarantor (except a Guarantor which is the owner of
any Junior Collateral), or (ii) a Subsidiary that is not a Guarantor in the
Borrower or a Guarantor.

         SECTION 8.4. SALE OF ASSETS. Such Loan Party will not, and will not
permit any of its Subsidiaries to, sell, convey, transfer, assign, lease or
otherwise dispose of, any of its assets or any interest therein (including the
sale or factoring at maturity or collection of any accounts or the sale of any
Accounts to Constellation but excluding sales of inventory and services in the
ordinary course of business) to any Person, or permit or suffer any other Person
to acquire any interest in any of its assets or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's Stock or Stock Equivalent (any
such disposition being an "Asset Sale"), except:

         (a) the sale or disposition of equipment which have become obsolete or
are replaced in the ordinary course of business, provided, however, that unless
otherwise agreed in writing by the Administrative Agent in its sole and absolute
discretion, the aggregate Fair Market Value of all such equipment disposed of in
any fiscal month of any Fiscal Year shall not exceed $50,000; and

         (b) transfers resulting from a Property Loss Event so long as the
Proceeds are applied in the manner specified in Section 2.7(a);

provided further, that the foregoing limitations are not intended to prevent
such Loan Party from rejecting unexpired leases or executory contracts pursuant
to Section 365 of the Bankruptcy Code in connection with the Cases.

         SECTION 8.5. RESTRICTED PAYMENTS; PERMITTED PREPETITION CLAIM PAYMENT.

         (a) Such Loan Party will not, and will not permit any of its
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Payment except Restricted Payments in respect of
Permitted Prepetition Claim Payments in respect of which such Loan Party has
complied with Section 8.5(b); and

         (b) Such Loan Party will not, and will not permit any of its
Subsidiaries to, directly or indirectly, make any payments to vendors or
suppliers on account of any pre-petition Claim without the prior written consent
of the Required Lenders.



                                       53
<PAGE>   61

         SECTION 8.6. RESTRICTION ON FUNDAMENTAL CHANGES. Such Loan Party will
not, and will not permit any of its Subsidiaries to, (a) merge with any Person,
(b) consolidate with any Person, (c) acquire all or substantially all of the
Stock or Stock Equivalents of any Person, (d) acquire all or substantially all
of the assets of any Person or all or substantially all of the assets
constituting the business of a division, branch or other unit operation of any
Person, (e) enter into any joint venture or partnership with any Person or (f)
acquire or create any Subsidiary.

         SECTION 8.7. CHANGE IN NATURE OF BUSINESS. Such Loan Party will not,
and will not permit any of its Subsidiaries to, (a) make any adverse change in
the nature or conduct of its business as carried on at the date hereof, (b) take
any action or fail to take any lawful action that could reasonably be expected
to result in the loss of any Routes, Slots or Gates held by such Loan Party or
its Subsidiaries or (c) make any change in the frequencies of its flights as in
effect on the date hereof.

         SECTION 8.8. TRANSACTIONS WITH AFFILIATES. Such Loan Party will not,
and will not permit any of its Subsidiaries to, except as otherwise expressly
permitted herein, do any of the following: (a) make any Investment in an
Affiliate of the Borrower which is not a Guarantor; (b) sell, convey, assign,
transfer, lease or otherwise dispose of any asset to any Affiliate of the
Borrower which is not a Guarantor; (c) merge into or consolidate with or
purchase or acquire assets from any Affiliate of the Borrower which is not a
Guarantor; (d) repay any Indebtedness to any Affiliate of the Borrower which is
not a Guarantor; or (e) enter into any other transaction directly or indirectly
with or for the benefit of any Affiliate of the Borrower which is not a
Guarantor (including guaranties and assumptions of obligations of any such
Affiliate), except for (i) transactions in the ordinary course of business on a
basis no less favorable to the Borrower or such Guarantor as would be obtained
in a comparable arm's length transaction with a Person not an Affiliate, (ii)
salaries and other employee compensation to officers or directors of the
Borrower or any of its Subsidiaries in compliance with Section 8.19, (iii)
transactions with Worldspan in the ordinary course of business consistent with
past practice and (iv) transactions with Arinc in the ordinary course of
business consistent with past practice.

         SECTION 8.9. RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS; NO NEW NEGATIVE
PLEDGE. Other than as a result of the commencement of the Cases pursuant to the
Loan Documents and any agreements governing any purchase money Indebtedness or
Capital Lease Obligations permitted by Section 8.1(b) (in which latter case, any
prohibition or limitation shall only be effective against the assets financed
thereby), such Loan Party will not, and will not permit any of its Subsidiaries
to, (a) agree to enter into or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of such
Subsidiary to pay dividends or make any other distribution or transfer of funds
or assets or make loans or advances to or other Investments in, or pay any
Indebtedness owed to, the Borrower or any other Subsidiary of the Borrower or
(b) enter into or suffer to exist or become effective any agreement which
prohibits or limits the ability of the Borrower or any Subsidiary of the
Borrower to create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, including
any agreement which requires other Indebtedness or material Contractual
Obligation to be equally and ratably secured with the Obligations.

         SECTION 8.10. MODIFICATION OF CONSTITUENT DOCUMENTS. Such Loan Party
will not, and will not permit any of its Subsidiaries to, change its capital
structure (including in the terms of its outstanding Stock) or otherwise amend
its Constituent Documents, except for changes and amendments or except as
specifically required pursuant to Section 7.11(b).



                                       54
<PAGE>   62

         SECTION 8.11. ACCOUNTING CHANGES; FISCAL YEAR. Such Loan Party will
not, and will not permit any of its Subsidiaries to, change its (a) accounting
treatment and reporting practices or tax reporting treatment, except as required
by GAAP or any Requirement of Law and as disclosed to the Lenders and the
Administrative Agent or (b) Fiscal Year.

         SECTION 8.12. MARGIN REGULATIONS. The Borrower will not use all or any
portion of the proceeds of any credit extended hereunder to purchase or carry
margin stock within the meaning of Regulations T, U and X of the Federal Reserve
System.

         SECTION 8.13. OPERATING LEASES; SALE/LEASEBACKS.

         (a) Such Loan Party will not, and will not permit any of its
Subsidiaries to, become or remain liable as lessee or guarantor or other surety
with respect to any operating lease, other than (i) operating leases in effect
on the Petition Date, (ii) operating leases entered into after the Petition Date
so long as the aggregate amount of all rents paid or accrued under all such
operating leases shall not exceed $50,000 in any fiscal month of any Fiscal Year
and (iii) operating leases in an amount agreed in writing by the Administrative
Agent, in its sole and absolute discretion.

         (b) Such Loan Party will not, and will not permit any of its
Subsidiaries to, enter into any sale and leaseback transaction.

         SECTION 8.14. NO SPECULATIVE TRANSACTIONS. Such Loan Party will not,
and will not permit any of its Subsidiaries to, engage in any speculative
transaction or in any transaction involving hedging contracts.

         SECTION 8.15. COMPLIANCE WITH ERISA. Such Loan Party will not, and will
not permit any of its Subsidiaries to, or cause or permit any ERISA Affiliate
to, cause or permit to occur (a) an event which could result in the imposition
of a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or (b) an
ERISA Event (other than the Cases) that would have a Material Adverse Effect.

         SECTION 8.16. ENVIRONMENTAL. Such Loan Party will not, and will not
permit any of its Subsidiaries to, allow a Release of any Contaminant in
violation of any Environmental Law in a manner that could reasonably be expected
to have a Material Adverse Effect.

         SECTION 8.17. CHAPTER 11 CLAIMS. Such Loan Party will not, and will not
permit any of its Subsidiaries to, incur, create, assume, suffer to exist or
permit any administrative expense, unsecured claim, or other super-priority
claim or lien in each case which is pari passu with or senior to the claims of
the Secured Parties against the Loan Parties hereunder, or apply to the
Bankruptcy Court for authority to do so, except for the Carve-Out.

         SECTION 8.18. THE ORDERS. Such Loan Party will not, and will not permit
any of its Subsidiaries to, make or permit to be made any change, amendment or
modification, or any application or motion for any change, amendment or
modification, to either Order without the prior written consent of the Requisite
Lenders.

         SECTION 8.19. EMPLOYMENT EXPENSES. The Borrower shall not, and shall
not permit any of its Subsidiaries to, pay to any officer, director or employee
any employment wages, salary, bonus or other compensation of any type or
character that is not





                                       55
<PAGE>   63


consistent with past practices other than "stay-pay" which has been approved as
part of the Business Plan by the Bankruptcy Court and otherwise approved in
writing by the Requisite Lenders.

         SECTION 8.20. PASSIVE HOLDING COMPANY. The Borrower will not permit
either of TWA Stockholding or PARS to engage in any activity of business or
incur any Indebtedness or Guaranty Obligations other than (a) with respect to
TWA Stockholding, the ownership of the Stock of PARS or (b) with respect to
PARS, the ownership of Stock of Worldspan.

                                   ARTICLE IX

                                EVENTS OF DEFAULT

         SECTION 9.1. EVENTS OF DEFAULT. Each of the following events shall be
an Event of Default:

         (a) The Borrower shall fail to pay any principal of any Loan when the
same becomes due and payable; or

         (b) The Borrower shall fail to pay any interest on any Loan, any fee
under any of the Loan Documents or any other Obligation (other than one referred
to in Section 9.1 (a) above) and such non-payment continues for a period of
three (3) Business Days after the due date therefor; or

         (c) any representation or warranty made or deemed made by any Loan
Party in any Loan Document or by any Loan Party (or any of its officers) in
connection with any Loan Document shall prove to have been incorrect in any
material respect when made or deemed made; or

         (d) any Loan Party shall fail to perform or observe (i) any term,
covenant or agreement contained in Article V, Section 6.1, 6.2, 6.12(a), 7.1,
7.6, 7.9, 7.11, 7.12 or 7.13 or Article VIII, or (ii) any other term, covenant
or agreement contained in this Agreement or in any other Loan Document if such
failure under this clause (ii) shall remain unremedied for ten (10) days after
the earlier of the date on which (A) a Responsible Officer of the Borrower
becomes aware of such failure or (B) written notice thereof shall have been
given to the Borrower by the Administrative Agent or any Lender; or

         (e) (i) the Borrower or any of its Subsidiaries shall fail to make any
payment on any Indebtedness arising after the Petition Date other than
Indebtedness of the type provided in Section 7.13 (other than the Obligations)
of the Borrower or any such Subsidiary (or any Guaranty Obligation) having a
principal amount of $50,000 or more, when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise); or (ii) any other event shall occur or condition shall exist under
any agreement or instrument relating to any such Indebtedness, if the effect of
such event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Indebtedness; or (iii) any such Indebtedness shall become or be
declared to be due and payable, or required to be prepaid or repurchased (other
than by a regularly scheduled required prepayment), prior to the stated maturity
thereof; or




                                       56
<PAGE>   64

         (f) The Loan Documents and the Orders shall, for any reason, cease to
create a valid Lien on any of the Collateral purported to be covered thereby or
such Lien shall cease to be a perfected Lien having the priority provided herein
pursuant to Section 364 of the Bankruptcy Code against each Loan Party, or any
Loan Party shall so allege in any pleading filed in any court, or any material
provision of any Loan Document shall, for any reason, cease to be valid and
binding on each Loan Party thereto or any Loan Party shall so state; or

         (g) one or more final, non-appealable judgments or orders (or other
similar process) to the extent not covered by insurance, shall be rendered
against one or more of any Loan Party or its Subsidiaries, in each case the
enforcement of which has not been stayed by the Bankruptcy Court; or

         (h) an ERISA Event (other than the Cases) shall occur and the amount of
all liabilities and deficiencies resulting therefrom, whether or not assessed,
exceeds $250,000 in the aggregate; or

         (i) Any of the Cases shall be dismissed (or the Bankruptcy Court shall
make a ruling requiring the dismissal of the Cases), suspended or converted to a
case under chapter 7 of the Bankruptcy Code, or any Loan Party shall file any
pleading requesting any such relief, or an application shall be filed by any
Loan Party for the approval of, or there shall arise, (i) any other Claim having
priority senior to or pari passu with the claims of the Administrative Agent and
the Lenders under the Loan Documents or any other claim having priority over any
or all administrative expenses of the kind specified in Sections 503(b) or
507(b) of the Bankruptcy Code (other than the Carve-Out) or (ii) any Lien on the
Collateral having a priority senior to or pari passu with the Liens and security
interests granted herein, except as expressly provided herein; or

         (j) Any Loan Party shall file a motion seeking, or the Bankruptcy Court
shall enter, an order (i) approving payment of any prepetition Claim other than
a Permitted Prepetition Claim Payment which has been approved pursuant to
Section 8.5(b), if applicable, (ii) approving a First Day Order not approved by
the Administrative Agent, (iii) granting relief from the automatic stay
applicable under Section 362 of the Bankruptcy Code to any holder of any
security interest to permit foreclosure on any assets (other than certain assets
identified by the Borrower and agreed to in writing by the Administrative Agent)
having a book value in excess of $100,000 in the aggregate, or (iv) except to
the extent the same would not constitute a Default under any of the previous
clauses, approving any settlement or other stipulation with any creditor of any
Loan Party, other than the Administrative Agent and the Lenders, or otherwise
providing for payments as adequate protection or otherwise to such creditor
individually or in the aggregate in excess of $100,000 for any and all such
creditors; or

         (k) (i) The Interim Order shall cease to be in full force and effect
and the Final Order shall not have been entered prior to such cessation, or (ii)
the Final Order shall not have been entered by the Bankruptcy Court on or before
the 21st day following the Closing Date, or (iii) from and after the date of
entry thereof, the Final Order shall cease to be in full force and effect, or
(iv) any Loan Party shall fail to comply with the terms of the Interim Order or
the Final Order in any material respect, or (v) the Interim Order or the Final
Order shall be amended, supplemented, stayed, reversed, vacated or otherwise
modified (or any of the Loan Parties shall apply for authority to do so) without
the written consent of the Requisite Lenders; or



                                       57
<PAGE>   65


         (l) The Bankruptcy Court shall enter an order appointing a responsible
officer or an examiner with powers beyond the duty to investigate and report, as
set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code, in any of the
Cases; or

         (m) there shall occur a Material Adverse Change or any event or
circumstances which could have a Material Adverse Effect; or

         (n) one or more of the Borrower and its Subsidiaries shall have entered
into one or more consent or settlement decrees or agreements or similar
arrangements with a Governmental Authority or one or more judgments, orders,
decrees or similar actions shall have been entered against one or more of the
Borrower and its Subsidiaries based on or arising from the violation of or
pursuant to any Environmental Law, or the generation, storage, transportation,
treatment, disposal or Release of any Contaminant and, in connection with all
the foregoing, the Borrower and its Subsidiaries are likely to incur
Environmental Liabilities and Costs in excess of those that were reflected in
the Financial Statements delivered pursuant to Section 4.4; or

         (o) The earlier to occur of (i) the thirtieth (30th) day following the
termination of the Asset Purchase Agreement by American or any of its
Affiliates, (ii) the termination of the Asset Purchase Agreement by the Borrower
or any of its Subsidiaries, (iii) the tenth (10th) day following the acceptance
or endorsement by the Board of Directors of the Borrower of the sale of the
Borrower (or all or substantially all of the assets of the Borrower and its
Subsidiaries or of a division, branch or other unit of the Borrower or its
Subsidiaries) to a Person other than American or its Affiliates, (iv) the entry
by the Bankruptcy Court of an order approving the sale of the Borrower (or all
or substantially all of the assets of the Borrower or its Subsidiaries or of a
division, branch or other unit of the Borrower and its Subsidiaries ) to any
Person other than American or its Affiliates or (v) the Asset Purchase Agreement
shall, for any reason, other than as set forth in clauses (i) through (iv),
cease to be the valid, binding and enforceable obligation of the Borrower or its
Subsidiaries party thereto or the Borrower or any of its Subsidiaries shall so
state or allege the same; or

         (p) The loss of any Routes, Gates, Slots or other facilities, licenses,
permits, authorizations, certificates of compliance, certificates of public
convenience and necessity and other certificates, including without limitation,
air carrier operating certificates and operations specifications issued by the
FAA pursuant to Part 121 of the Regulations of the FAA, which are required by
the DOT, FAA or any corresponding foreign Governmental Authority or other assets
or the rights to use same; or

         (q) Except as otherwise agreed in writing by the Administrative Agent,
in its sole and absolute discretion, the Borrower or any Subsidiary shall fail
to (i) timely enter into and obtain approval of the Bankruptcy Court of an
agreement to perform all obligations of the Borrower or any such Subsidiary that
come due under any security agreement, conditional sale contract or lease with
respect to any equipment defined in Section 1110(a)(2) of the Bankruptcy Code
and (ii) cure any default under any such security agreement, conditional sale
contract or lease in accordance with Section 1110 of the Bankruptcy Code; or

         (r) Two or more of William Compton, Michael Palumbo, Kathleen Soled,
Stan Henderson or Chris Deister shall no longer be employed by the Borrower in
their current capacity and arrangements satisfactory to the Administrative Agent
for the continued operation of the Borrower in the absence of such executive
officers shall not have been implemented within ten (10) days.



                                       58
<PAGE>   66

         SECTION 9.2. REMEDIES. During the continuance of any Event of Default,
without further order of, application to, or action by, the Bankruptcy Court,
the Administrative Agent (a) may, and shall at the request of the Requisite
Lenders, by notice to the Borrower declare that all or any portion of the
Commitments be terminated, whereupon any and all the obligations of each Lender
to make any Loan shall immediately terminate, and/or (b) may, and shall at the
request of the Requisite Lenders, by notice to the Borrower, declare the Loans,
all interest thereon and all other amounts and Obligations payable under this
Agreement to be forthwith due and payable, whereupon the Loans, all such
interest and all such amounts and Obligations shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower. In addition, subject
solely to any requirement of the giving of notice by the terms of the Interim
Order or the Final Order, the automatic stay provided in Section 362 of the
Bankruptcy Code shall be deemed automatically vacated without further action or
order of the Bankruptcy Court and the Administrative Agent and the Lenders shall
be entitled to exercise all of their respective rights and remedies under the
Loan Documents, including, without limitation, all rights and remedies with
respect to the Collateral and the Guarantors.

         SECTION 9.3. RESCISSION. If at any time after termination of the
Commitments and/or acceleration of the maturity of the Loans, the Borrower shall
pay all arrears of interest and all payments on account of principal of the
Loans which shall have become due otherwise than by acceleration (with interest
on principal and, to the extent permitted by law, on overdue interest, at the
rates specified herein) and all Events of Default and Defaults (other than
non-payment of principal of and accrued interest on the Loans due and payable
solely by virtue of acceleration) shall be remedied or waived pursuant to
Section 13.1, then upon the written consent of the Requisite Revolving Credit
Lenders (in the case of the Revolving Credit Commitments and the Revolving
Loans) and written notice to the Borrower, the termination of the Requisite Term
Loan Lenders (in the case of the Term Credit Commitments and the Term Loans) and
the Commitments and/or the acceleration and their consequences may be rescinded
and annulled; provided, however, that such action shall not affect any
subsequent Event of Default or Default or impair any right or remedy consequent
thereon. The provisions of the preceding sentence are intended merely to bind
the Lenders to a decision which may be made at the election of the Requisite
Lenders and they are not intended to benefit the Borrower and do not give the
Borrower the right to require the Lenders to rescind or annul any acceleration
hereunder, even if the conditions set forth herein are met.

                                   ARTICLE X

                                    GUARANTY

         SECTION 10.1. THE GUARANTY. In order to induce the Lenders to enter
into this Agreement and to extend credit hereunder and in recognition of the
direct benefits to be received by each Guarantor from the proceeds of the Loans,
each Guarantor hereby agrees with the Administrative Agent and the Lenders that
such Guarantor hereby unconditionally and irrevocably, jointly and severally,
guarantees as primary obligor and not merely as surety the full and prompt
payment and performance when due, whether upon maturity, by acceleration or
otherwise, of any and all of the Obligations of the Borrower to the Lenders. If
any or all of the Obligations of the Borrower to the Lenders become due and
payable hereunder, each Guarantor, jointly and severally, unconditionally
promises to pay and perform such Obligations to the Lenders, or order, on
demand, together with any and all reasonable expenses which may be incurred by
the Administrative Agent or the Lenders in collecting any of the Obligations.



                                       59
<PAGE>   67

         SECTION 10.2. NATURE OF LIABILITY. The liability of each Guarantor
hereunder is exclusive and independent of any security for or other guaranty of
the Obligations of the Borrower, whether executed by such Guarantor, any other
Guarantor, any other guarantor or by any other party, and the liability of each
Guarantor hereunder shall not be affected or impaired by (a) any direction as to
application of payment by the Borrower or by any other party, or (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the Obligations of the Borrower, or (c) any payment on
or in reduction of any such other guaranty or undertaking, or (d) any
dissolution, termination or increase, decrease or change in personnel by the
Borrower, or (e) any payment made to the Administrative Agent or the Lenders on
the indebtedness which the Administrative Agent or such Lenders repay to the
Borrower pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding.

         SECTION 10.3. INDEPENDENT OBLIGATION. The obligations of each Guarantor
hereunder are independent of the obligations of any other Guarantor, any other
guarantor or the Borrower, and a separate action or actions may be brought and
prosecuted against each Guarantor whether or not action is brought against any
other Guarantor, any other guarantor or the Borrower and whether or not any
other Guarantor, any other guarantor or the Borrower be joined in any such
action or actions. Each Guarantor waives, to the fullest extent permitted by
law, the benefit of any statute of limitations affecting its liability hereunder
or the enforcement thereof. Any payment by the Borrower or other circumstance
which operates to toll any statute of limitations as to the Borrower shall
operate to toll the statute of limitations as to the Guarantor.

         SECTION 10.4. AUTHORIZATION. Each Guarantor authorizes the
Administrative Agent and the Lenders without notice or demand (except as shall
be required by applicable statute and cannot be waived), and without affecting
or impairing its liability hereunder, from time to time to:

         (a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of the
Obligations (including any increase or decrease in the rate of interest
thereon), any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the Guaranty herein made shall apply to the
Obligations as so changed, extended, renewed or altered;

         (b) take and hold security for the payment of the Obligations and sell,
exchange, release, surrender, realize upon or otherwise deal with in any manner
and in any order any property by whomsoever at any time pledged or mortgaged to
secure, or howsoever securing, the Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset there against;

         (c) exercise or refrain from exercising any rights against the Borrower
or others or otherwise act or refrain from acting;

         (d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors;

         (e) settle or compromise any of the Obligations, any security therefor
or any liability (including any of those hereunder) incurred directly or
indirectly in respect thereof or


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<PAGE>   68

hereof, or subordinate the payment of all or any part thereof to the payment of
any liability (whether due or not) of the Borrower to its creditors;

         (f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Lenders regardless of what
liability or liabilities of such Guarantor or the Borrower remain unpaid; and/or

         (g) consent to or waive any breach of, or any act, omission or default
under, this Agreement or any of the instruments or agreements referred to
herein, or otherwise amend, modify or supplement this Agreement or any of such
other instruments or agreements.

         SECTION 10.5. RELIANCE. It is not necessary for the Administrative
Agent or the Lenders to inquire into the capacity or power of the Borrower or
its Subsidiaries or the officers, directors, partners or agents acting or
purporting to act on its behalf, and any Obligations made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.

         SECTION 10.6. SUBORDINATION. Any of the Indebtedness of the Borrower
now or hereafter owing to any Guarantor is hereby subordinated to the
Obligations of the Borrower; provided, however, that payment may be made by the
Borrower on any such Indebtedness owing to such Guarantor so long as the same is
not prohibited by this Agreement; and provided further, that if the
Administrative Agent so requests at a time when a Default or an Event of Default
exists, all such Debt of the Borrower to such Guarantor shall be collected,
enforced and received by such Guarantor as trustee for the Lenders and be paid
over to the Administrative Agent on behalf of the Lenders on account of the
Obligations of the Borrower to Lenders, but without affecting or impairing in
any manner the liability of such Guarantor under the other provisions of this
Guaranty. Prior to the transfer by any Guarantor of any note or negotiable
instrument evidencing any of the Indebtedness of the Borrower to such Guarantor,
such Guarantor shall mark such note or negotiable instrument with a legend that
the same is subject to this subordination.

         SECTION 10.7. WAIVER.

         (a) Each Guarantor waives any right (except as shall be required by
applicable statute and cannot be waived) to require the Administrative Agent or
the Lenders to (i) proceed against the Borrower, any other Guarantor, any other
guarantor or any other party, (ii) proceed against or exhaust any security held
from the Borrower, any other Guarantor, any other guarantor or any other party
or (iii) pursue any other remedy in the Administrative Agent's or the Lenders'
power whatsoever. Each Guarantor waives (except as shall be required by
applicable statute and cannot be waived) any defense based on or arising out of
any defense of the Borrower, any other Guarantor, any other guarantor or any
other party other than payment in full of the Obligations, including, without
limitation, any defense based on or arising out of the disability of the
Borrower, any other Guarantor, any other guarantor or any other party, or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of the Borrower other than payment in
full of the Obligations. Subject to the giving of three (3) Business Days prior
written notice in accordance with the Orders and except for the application of
proceeds of Collateral received by the Administrative Agent, during such three
(3) Business Days the Administrative Agent and the Lenders may, at their
election, foreclose on any security held by the Administrative Agent or the
Lenders by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale is
permitted by applicable law), or exercise any other right or remedy the
Administrative




                                       61
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Agent and the Lenders may have against the Borrower, any other Guarantor, any
other guarantor or any other party, or any security, without affecting or
impairing in any way the liability of any Guarantor hereunder except to the
extent the Obligations have been paid. Each Guarantor waives any defense arising
out of any such election by the Administrative Agent and the Lenders, even
though such election operates to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of such Guarantor against the Borrower
or any other party or any security.

         (b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
Obligations. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Obligations and
the nature, scope and extent of the risks which such Guarantor assumes and
incurs hereunder, and agrees that the Administrative Agent and the Lenders shall
have no duty to advise such Guarantor of information known to them regarding
such circumstances or risks.

         SECTION 10.8. LIMITATION ON ENFORCEMENT. The Lenders agree that this
Guaranty may be enforced only by the action of the Administrative Agent, in each
case acting upon the instructions of the Requisite Lenders, and that no Lender
shall have any right individually to seek to enforce or to enforce this Guaranty
it being understood and agreed that such rights and remedies may be exercised by
the Administrative Agent for the benefit of the Lenders upon the terms of this
Agreement.

                                   ARTICLE XI

                                    SECURITY

         SECTION 11.1. SECURITY.

         (a) To induce the Lenders to make Loans, each Grantor hereby grants to
the Administrative Agent, for itself and for the ratable benefit of the Secured
Parties, as security for the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of the obligations of such Grantor, a
continuing first priority Lien and security interest (subject only to (i) valid,
perfected, enforceable and nonavoidable Liens of record existing immediately
prior to the Petition Date, (ii) the Carve-Out and (iii) Liens permitted under
Section 8.2(c)), in accordance with Sections 364(c)(2) and (3) of the Bankruptcy
Code, in and to all Collateral of such Grantor wherever located and whether
real, personal or mixed, and whether now owned or hereafter acquired. For
purposes of this Agreement, all of the following property now owned or at any
time hereafter acquired by a Grantor or in which a Grantor now has or at any
time in the future may acquire any right, title or interests is collectively
referred to as the "Collateral":

             (i) all Accounts;

             (ii) all Inventory;

             (iii) all Equipment;

             (iv) all General Intangibles, including all Intellectual Property
     and that portion of the Pledged Collateral constituting General
     Intangibles;


                                       62
<PAGE>   70

             (v) all Investment Property, including all control accounts and
     that portion of the Pledged Collateral constituting Investment Property;

             (vi) all Documents, Instruments and Chattel Paper;

             (vii) all deposit accounts;

             (viii) all Vehicles;

             (ix) all Real Property;

             (x) without limiting any other provision of this Section 11.1,
     all Aircraft, including by way of mortgage (A) each Airframe described in
     Schedule 4.20(a) and (B) each Engine described in Schedule 4.20(b);

             (xi) without limiting any other provision of this Section 11.1,
     all Spare Parts and Ground Equipment, including by way of mortgage, all
     Spare Parts and Ground Equipment located at each designated location
     described in Schedule 4.20(c);

             (xii) all books and records pertaining to the property described
     in this Section 11.1;

             (xiii) all other goods and personal property of such Grantor,
     whether tangible or intangible, wherever located, including money, letters
     of credit and all rights of payment or performance under letters of credit;

             (xiv) all property of any Grantor held by the Administrative
     Agent or any Secured Party, including all property of every description, in
     the possession or custody of or in transit to the Administrative Agent or
     such Secured Party for any purpose, including safekeeping, collection or
     pledge, for the account of such Grantor, or as to which such Grantor may
     have any right or power;

             (xv) to the extent not otherwise included, all monies and other
     property of any kind which is, after the Petition Date, received by such
     Grantor in connection with refunds with respect to taxes, assessments and
     governmental charges imposed on such Grantor or any of its property or
     income;

             (xvi) to the extent not otherwise included, all causes of action
     (other than claims of the Grantors under Sections 544, 545, 547 and 548 of
     the Bankruptcy Code) and all monies and other property of any kind received
     therefrom, and all monies and other property of any kind recovered by any
     Grantor; and

             (xvii) to the extent not otherwise included, all Proceeds of each
     of the foregoing and all accessions to, substitutions and replacements for,
     and rents, profits and products of, each of the foregoing, any and all
     proceeds of insurance, indemnity, warranty or guaranty payable to any
     Grantor from time to time with respect to any of the foregoing.



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         SECTION 11.2. PERFECTION OF SECURITY INTERESTS.

         (a) Each Grantor shall, at its expense, perform any and all steps
requested by the Administrative Agent at any time to perfect, maintain, protect,
and enforce the Lenders' Liens against the Collateral of such Grantor,
including, without limitation, (i) executing and filing mortgages, deeds of
trust, or other security documents or instruments, financing or continuation
statements and all relevant filings and recordations with the FAA and any other
Governmental Authority, and amendments thereof, each in form and substance
satisfactory to the Administrative Agent, (ii) maintaining complete and accurate
stock records, (iii) using its best efforts in delivering to the Administrative
Agent negotiable warehouse receipts, if any, and, upon the Administrative
Agent's request therefor, non-negotiable warehouse receipts covering any portion
of the Collateral located in warehouses and for which warehouse receipts are
issued, (iv) placing notations on such Grantor's books of account to disclose
the Administrative Agent's security interest therein, (v) delivering to the
Administrative Agent all documents, certificates and Instruments necessary or
desirable to perfect the Administrative Agent's Lien in letters of credit on
which such Grantor is named as beneficiary and all acceptances issued in
connection therewith, (vi) after the occurrence and during the continuation of
an Event of Default, transferring Inventory maintained in warehouses to other
warehouses designated by the Administrative Agent and (vii) taking such other
steps as are deemed necessary or desirable to maintain the Administrative
Agent's security interest in the Collateral, including title insurance policies,
current as built surveys, zoning letters and certificates of occupancy, as shall
be requested by the Administrative Agent, in each case satisfactory to the
Administrative Agent, in its sole discretion.

         (b) Each Grantor hereby authorizes the Administrative Agent to execute
and file financing or continuation statements or other relevant filings and
recordings on such Grantor's behalf covering the Collateral. The Administrative
Agent may file one or more financing or continuation statements or other
relevant filings and recordings disclosing the Administrative Agent's security
interest under this Agreement or the other Loan Documents without the signature
of such Grantor appearing thereon. Each Grantor shall pay the costs of, or
incidental to, any recording or filing of any financing or continuation
statements or other relevant filings and recordings concerning the Collateral.
Each Grantor agrees that a carbon, photographic, photostatic or other
reproduction of this Agreement or the other Loan Documents or of a financing or
continuation statement is sufficient as such statement, filing or recording. If
any Collateral is at any time in the possession or control of any warehouseman,
bailee or such Grantor's agents or processors, such Grantor shall notify such
warehouseman, bailee, agents or processors of the Administrative Agent's
security interest, which notification shall specify that such Person shall, upon
the occurrence and during the continuance of an Event of Default, hold all such
Collateral for the Administrative Agent's account subject to the Administrative
Agent's instructions. From time to time, each Grantor shall, upon the
Administrative Agent's request, execute and deliver written instruments pledging
to the Administrative Agent the Collateral described in any such instruments or
otherwise, but the failure of such Grantor to execute and deliver such
confirmatory instruments shall not affect or limit the Administrative Agent's
security interest or other rights in and to the Collateral. Until all
Obligations have been fully satisfied and the Commitments shall have been
terminated, the Administrative Agent's security interest in the Collateral, and
all Proceeds and products thereof, shall continue in full force and effect.

         (c) Notwithstanding subsections (a) and (b) of this Section 11.2, or
any failure on the part of any Grantor or the Administrative Agent to take any
of the actions set forth in such subsections, the Liens and security interests
granted herein shall be deemed valid, enforceable and perfected by entry of the
Interim Order and the Final Order, as applicable. No




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<PAGE>   72

financing statement, notice of lien, mortgage, deed of trust or similar
instrument in any jurisdiction or filing office need be filed or any other
action taken in order to validate and perfect the Liens granted by or pursuant
to this Agreement, the Interim Order or the Final Order.

         SECTION 11.3. RIGHTS OF LENDER; LIMITATIONS ON LENDERS' OBLIGATIONS.

         (a) Subject to each Grantor's rights and duties under the Bankruptcy
Code (including section 365 of the Bankruptcy Code), it is expressly agreed by
each Grantor that, anything herein to the contrary notwithstanding, such Grantor
shall remain liable under its Contracts to observe and perform all the
conditions and obligations to be observed and performed by it thereunder.
Neither the Administrative Agent nor any Secured Party shall have any obligation
or liability under any Contract by reason of or arising out of this Agreement,
the Loan Documents, or the granting to the Administrative Agent of a security
interest therein or the receipt by the Administrative Agent or any Lender of any
payment relating to any Contract pursuant hereto, nor shall the Administrative
Agent be required or obligated in any manner to perform or fulfill any of the
obligations of any Grantor under or pursuant to any Contract, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any Contract, or to present or file any claim, or to take any action to collect
or enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

         (b) Subject to Section 11.5 hereof, the Administrative Agent authorizes
each Grantor to collect its Accounts, provided that such collection is performed
in accordance with such Grantor's customary procedures, and the Administrative
Agent may, upon the occurrence and during the continuation of any Event of
Default and without notice, other than any requirement of notice provided in the
Orders, limit or terminate said authority at any time.

         (c) Subject to any requirement of notice provided in the Orders, the
Administrative Agent may at any time, upon the occurrence and during the
continuation of any Event of Default, after first notifying the Borrower of its
intention to do so, notify Account Debtors, notify the other parties to the
Contracts of the Borrower or any other Grantor, notify obligors of Instruments
and Investment Property of the Borrower or any other Grantor and notify obligors
in respect of Chattel Paper of the Borrower or any other Grantor that the right,
title and interest of the Borrower or such Grantor in and under such Accounts,
such Contracts, such Instruments, such Investment Property and such Chattel
Paper have been assigned to the Administrative Agent and that payments shall be
made directly to the Administrative Agent. Subject to any requirement of notice
provided in the Orders, upon the request of the Administrative Agent, the
Borrower or such other Grantor will so notify such Account Debtors, such parties
to Contracts, obligors of such Instruments and Investment Property and obligors
in respect of such Chattel Paper. Subject to any requirement of notice provided
in the Orders, upon the occurrence and during the continuation of an Event of
Default, the Administrative Agent may in its own name, or in the name of others,
communicate with such parties to such Accounts, Contracts, Instruments,
Investment Property and Chattel Paper to verify with such Persons to the
Administrative Agent's reasonable satisfaction the existence, amount and terms
of any such Accounts, Contracts, Instruments, Investment Property or Chattel
Paper.

         (d) The Administrative Agent shall have the right to make test
verification of the Accounts in any manner and through any medium that it
considers advisable, and each Grantor agrees to furnish all such assistance and
information as the Administrative Agent may



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require in connection therewith. Each Grantor, at its expense, will cause
certified independent public accountants satisfactory to the Requisite Lenders
to prepare and deliver to the Administrative Agent at any time and from time to
time, promptly upon the Administrative Agent's request, the following reports:
(i) a reconciliation of all Accounts of such Grantor, (ii) an aging of all
Accounts of such Grantor, (iii) trial balances and (iv) a test verification of
such Accounts as the Administrative Agent may request. The Administrative Agent
shall have the right at any time to conduct periodic audits of the Accounts of
any Grantor at the expense of the Borrower.

         SECTION 11.4. COVENANTS OF THE LOAN PARTIES WITH RESPECT TO COLLATERAL.
Each Grantor hereby covenants and agrees with the Administrative Agent that from
and after the date of this Agreement and until the Obligations are fully
satisfied:

         (a) Maintenance of Records. Such Grantor will keep and maintain, at its
own cost and expense, satisfactory and complete records of the Collateral, in
all material respects, including, without limitation, a record of all payments
received and all credits granted with respect to the Collateral and all other
dealings concerning the Collateral. For the Administrative Agent's further
security, each Grantor agrees that the Administrative Agent shall have a
property interest in all of such Grantor's books and records pertaining to the
Collateral and, upon the occurrence and during the continuation of an Event of
Default, such Grantor shall deliver and turn over any such books and records to
the Administrative Agent or to its representatives at any time on demand of the
Administrative Agent.

         (b) Indemnification With Respect to Collateral. In any suit, proceeding
or action brought by the Administrative Agent relating to any Account, Chattel
Paper, Contract, General Intangible, Investment Property, Instrument,
Intellectual Property, Aircraft, Spare Parts or other Collateral for any sum
owing thereunder or to enforce any provision of any Account, Chattel Paper,
Contract, General Intangible, Investment Property, Instrument, Intellectual
Property, Aircraft, Spare Parts or other Collateral, such Grantor will save,
indemnify and keep the Secured Parties harmless from and against all expense,
loss or damage suffered by the Secured Parties by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by such Grantor of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to, or in favor of, such obligor or its successors from such Grantor, and
all such obligations of such Grantor shall be and remain enforceable against and
only against such Grantor and shall not be enforceable against the
Administrative Agent.

         (c) Limitation on Liens on Collateral. Such Grantor will not create,
permit or suffer to exist, and will defend the Collateral against and take such
other action as is necessary to remove, any Lien on the Collateral except Liens
permitted under Section 8.2 and will defend the right, title and interest of the
Administrative Agent in and to all of such Grantor's rights under the Chattel
Paper, Leases, Real Estate, Contracts, Documents, General Intangibles,
Instruments, Investment Property and to the Intellectual Property, Equipment,
Inventory, Aircraft, Spare Parts and in and to the Proceeds thereof against the
claims and demands of all Persons whomsoever other than claims or demands
arising out of Liens permitted under Section 8.2.

         (d) Limitations on Modifications of Accounts. Such Grantor will not,
without the Administrative Agent's prior written consent, grant any extension of
the time of payment of any of the Accounts, Chattel Paper or Instruments,
compromise, compound or settle the same for less than the full amount thereof,
release, wholly or partly, any Person liable for the payment thereof, or allow
any credit or discount whatsoever thereon other than any of the




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foregoing which are done in the ordinary course of business, consistent with
past practices and trade discounts granted in the ordinary course of business of
such Grantor.

         (e) Notices. Such Grantor will advise the Lenders promptly, in
reasonable detail, (i) of any Lien asserted against any of the Collateral other
than Liens permitted under Section 8.2, and (ii) of the occurrence of any other
event which would result in a material adverse change with respect to the
aggregate value of the Collateral or on the Liens created hereunder.

         (f) Maintenance of Equipment. Such Grantor will keep and maintain the
Equipment in good operating condition sufficient for the continuation of the
business conducted by such Grantor on a basis consistent with past practices,
ordinary wear and tear excepted.

         (g) Pledged Collateral.

             (i) Upon request of the Administrative Agent, such Grantor will (x)
     deliver to the Administrative Agent, all certificates or Instruments
     representing or evidencing any Pledged Collateral, whether now arising or
     hereafter acquired, in suitable form for transfer by delivery or, as
     applicable, accompanied by such Grantor's endorsement, where necessary, or
     duly executed instruments of transfer or assignment in blank, all in form
     and substance satisfactory to the Administrative Agent, together with a
     Pledge Amendment, duly executed by the Grantor, in substantially the form
     of Annex 3 (a "Pledge Amendment"), in respect of such Additional Pledged
     Collateral and authorizes the Administrative Agent to attach each Pledge
     Amendment to this Agreement and (y) maintain all other Pledged Collateral
     constituting Investment Property in a Control Account. The Administrative
     Agent shall have the right, at any time in its discretion and without
     notice to the Grantor, to transfer to or to register in its name or in the
     name of its nominees any or all of the Pledged Collateral. The
     Administrative Agent shall have the right at any time to exchange
     certificates or instruments representing or evidencing any of the Pledged
     Collateral for certificates or instruments of smaller or larger
     denominations.

             (ii) Except as provided in Section 11.7, Section 7.11 and Section
     2.7(b), such Grantor shall be entitled to receive all cash dividends paid
     in respect of the Pledged Collateral (other than liquidating or
     distributing dividends) with respect to the Pledged Collateral. Any sums
     paid upon or in respect of any of the Pledged Collateral upon the
     liquidation or dissolution of any issuer of any of the Pledged Collateral,
     any distribution of capital made on or in respect of any of the Pledged
     Collateral or any property distributed upon or with respect to any of the
     Pledged Collateral pursuant to the recapitalization or reclassification of
     the capital of any issuer of Pledged Collateral or pursuant to the
     reorganization thereof shall, unless otherwise subject to a perfected
     security interest in favor of the Administrative Agent, be delivered to the
     Administrative Agent to be held by it hereunder as additional collateral
     security for the Secured Obligations. If any sums of money or property so
     paid or distributed in respect of any of the Pledged Collateral shall be
     received by such Grantor, such Grantor shall, until such money or property
     is paid or delivered to the Administrative Agent, hold such money or
     property in trust for the Administrative Agent, segregated from other funds
     of such Grantor, as additional security for the Secured Obligations.

             (iii) Except as provided in Section 11.7, such Grantor will be
     entitled to exercise all voting, consent and corporate rights with respect
     to the Pledged Collateral; provided, however, that no vote shall be cast,
     consent given or right exercised or other action taken by such Grantor
     which would impair the Collateral or which would be




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     inconsistent with or result in any violation of any provision of this
     Agreement or any other Loan Document or, without prior notice to the
     Administrative Agent, to enable or take any other action to permit any
     issuer of Pledged Collateral to issue any stock or other equity securities
     of any nature or to issue any other securities convertible into or granting
     the right to purchase or exchange for any stock or other equity securities
     of any nature of any issuer of Pledged Collateral.

             (iv) Such Grantor shall not grant control over any Investment
     Property to any Person other than the Administrative Agent.

             (v) In the case of each Grantor which is an issuer of Pledged
     Collateral, such Grantor agrees to be bound by the terms of this Agreement
     relating to the Pledged Collateral issued by it and will comply with such
     terms insofar as such terms are applicable to it. In the case of each
     Grantor which is a partner in a partnership, such Grantor hereby consents
     to the extent required by the applicable partnership agreement to the
     pledge by each other Grantor, pursuant to the terms hereof, of the pledged
     partnership interests in such Partnership and to the transfer of such
     pledged partnership interests to the Administrative Agent or its nominee
     and to the substitution of the Administrative Agent or its nominee as a
     substituted partner in such partnership with all the rights, powers and
     duties of a general partner or a limited partner, as the case may be. In
     the case of each Grantor which is a member of a limited liability company,
     such Grantor hereby consents to the extent required by the applicable
     limited liability company agreement to the pledge by each other Grantor,
     pursuant to the terms hereof, of the pledged limited liability company
     interests in such limited liability company and to the transfer of such
     pledged limited liability company interests to the Administrative Agent or
     its nominee and to the substitution of the Administrative Agent or its
     nominee as a substituted member of the limited liability company with all
     the rights, powers and duties of a member of the limited liability company
     in question.

             (vi) Such Grantor will not agree to any amendment of a limited
     liability company agreement or partnership agreement that in any way
     adversely affects the perfection of the security interest of the
     Administrative Agent in the pledged partnership interests or pledged
     limited liability company interests pledged by such Grantor hereunder,
     including electing to treat the membership interest or partnership interest
     of such Grantor as a security under Section 8-103 of the UCC.

         (h) Intellectual Property.

             (i) Such Grantor (either itself or through licensees) will (i)
     continue to use each Trademark that is Material Intellectual Property in
     order to maintain such Trademark in full force and effect with respect to
     each class of goods for which such Trademark is currently used, free from
     any claim of abandonment for non-use, (ii) maintain as in the past the
     quality of products and services offered under such Trademark, (iii) use
     such Trademark with the appropriate notice of registration and all other
     notices and legends required by applicable Requirements of Law, (iv) not
     adopt or use any mark which is confusingly similar or a colorable imitation
     of such Trademark unless the Administrative Agent shall obtain a perfected
     security interest in such mark pursuant to this Agreement and (v) not (and
     not permit any licensee or sublicensee thereof to) do any act or knowingly
     omit to do any act whereby such Trademark may become invalidated or
     impaired in any way.



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             (ii) Such Grantor (either itself or through licensees) will not do
     any act, or omit to do any act, whereby any Patent which is Material
     Intellectual Property may become forfeited, abandoned or dedicated to the
     public.

             (iii) Such Grantor (either itself or through licensees) (i) will
     not (and will not permit any licensee or sublicensee thereof to) do any act
     or omit to do any act whereby any portion of the Copyrights which is
     Material Intellectual Property may become invalidated or otherwise impaired
     and (ii) will not (either itself or through licensees) do any act whereby
     any portion of the Copyrights which is Material Intellectual Property may
     fall into the public domain.

             (iv) Such Grantor (either itself or through licensees) will not do
     any act, or omit to do any act, whereby any trade secret which is Material
     Intellectual Property may become publicly available or otherwise
     unprotectable.

             (v) Such Grantor (either itself or through licensees) will not do
     any act that knowingly uses any Material Intellectual Property to infringe
     the intellectual property rights of any other Person.

             (vi) Such Grantor will notify the Administrative Agent immediately
     if it knows, or has reason to know, that any application or registration
     relating to any Material Intellectual Property may become forfeited,
     abandoned or dedicated to the public, or of any adverse determination or
     development (including the institution of, or any such determination or
     development in, any proceeding in the United States Patent and Trademark
     Office, the United States Copyright Office or any court or tribunal in any
     country) regarding such Grantor's ownership of, right to use, interest in,
     or the validity of, any Material Intellectual Property or such Grantor's
     right to register the same or to own and maintain the same.

             (vii) Whenever such Grantor, either by itself or through any agent,
     licensee or designee, shall file an application for the registration of any
     Intellectual Property with the United States Patent and Trademark Office,
     the United States Copyright Office or any similar office or agency within
     or outside the United States, such Grantor shall report such filing to the
     Administrative Agent within five (5) Business Days after the last day of
     the fiscal quarter in which such filing occurs. Upon request of the
     Administrative Agent, such Grantor shall execute and deliver, and have
     recorded, any and all agreements, instruments, documents, and papers as the
     Administrative Agent may request to evidence the Administrative Agent's
     security interest in any Copyright, Patent or Trademark and the goodwill
     and general intangibles of such Grantor relating thereto or represented
     thereby.

             (viii) Such Grantor will take all reasonable actions necessary or
     requested by the Administrative Agent, including in any proceeding before
     the United States Patent and Trademark Office, the United States Copyright
     Office or any similar office or agency, to maintain and pursue each
     application (and to obtain the relevant registration) and to maintain each
     registration of any Copyright, Trademark or Patent that is Material
     Intellectual Property, including filing of applications for renewal,
     affidavits of use, affidavits of incontestability and opposition and
     interference and cancellation proceedings.



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             (ix) In the event that any Material Intellectual Property is
     infringed upon or misappropriated or diluted by a third party, such Grantor
     shall notify the Administrative Agent promptly after such Grantor learns
     thereof. Such Grantor shall take appropriate action in response to such
     infringement, misappropriation of dilution, including promptly bringing
     suit for infringement, misappropriation or dilution and to recover any and
     all damages for such infringement, misappropriation of dilution, and shall
     take such other actions as may be appropriate in its reasonable judgment
     under the circumstances to protect such Material Intellectual Property.

         (i) Aircraft and Spare Parts.

             (i) As long as any Aircraft is in service, the Grantors will (at
     their expense) (x) make such modifications in and additions to each
     relevant Airframe and Engine as may be required from time to time to
     comply, in all material respects, with the applicable requirements at such
     time of the FAA and any other Governmental Authority; (y) operate, inspect,
     maintain, service, repair, overhaul and test each relevant Airframe and
     Engine so as to keep the same in good operating condition, ordinary wear
     and tear excepted, and in compliance, in all material respects, with all
     applicable requirements of the FAA and any other Governmental Authority,
     including all airworthiness directives issued by the FAA and in the case of
     each Airframe, in such condition as may be necessary to enable the
     airworthiness certificate in respect thereof to be maintained in good
     standing and effective under the Aviation Act; and (z) maintain all
     records, logs, and other materials required by the FAA to be maintained in
     respect of each Airframe and each Engine.

             (ii) The Grantors shall, promptly following the request of the
     Administrative Agent (and subject to the requirements of any prior Lien
     which is permitted by this Agreement), ensure that there is affixed and
     maintained in the cockpit of each Aircraft a plate bearing the inscription
     "AMR FINANCE, INC., AS ADMINISTRATIVE AGENT ON BEHALF OF CERTAIN SECURED
     PARTIES AND AS MORTGAGEE" and, if not prevented by applicable law and if it
     will not adversely affect the proper use thereof, ensure that there is
     marked on each Engine an appropriate plate, disk or marking bearing the
     same inscription.

             (iii) The Grantors shall ensure that at all times all Spare Parts
     (other than Spare Parts that have been contributed to an interchange or
     pooling arrangement which is customary in the airline industry or that
     otherwise are in the possession of (or in transit to) third parties) are
     kept at a designated location referred to in Schedule 4.20(c).

         (j) Possession, Operation and Use, Maintenance and Registration.

             (i) Grantors shall not, without the prior written consent of the
     Administrative Agent, lease or otherwise in any manner deliver, transfer or
     relinquish possession of any Airframe or any Engine or install any Engine,
     or permit any Engine to be installed, on any airframe other than an
     Airframe; provided that, Grantors may, so long as no Default shall have
     occurred and be continuing and so long as the action to be taken shall not
     deprive the Administrative Agent of the perfected Lien of this Agreement on
     any Airframe or (subject to the proviso of subsection (A)(c) of this
     Section 11.4) any Engine, and in any event, so long as Grantors shall
     comply with the provisions of Section 7.5, without the consent of the
     Administrative Agent:



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                  (A) subject any Airframe to normal interchange agreements or
         subject any Engine to normal interchange or pooling agreements or
         arrangements, in each case customary in the airline industry and
         entered into by Grantors in the ordinary course of its business with
         any U.S. Air Carrier or with any "foreign air carrier" (as such term is
         defined in the Transportation Code) as to which there is in force a
         permit issued pursuant to the Transportation Code (49 U.S.C. Sections
         41301-41306) or any successor provision that gives like authority;
         provided that (a) no transfer of the registration of any Airframe shall
         be effected in connection therewith, (b) no such agreement or
         arrangement contemplates or requires the transfer of title to any
         Airframe and (c) if Grantors' title to any Engine shall be divested
         under any such agreement or arrangement, such divestiture shall be
         deemed to be an event of loss with respect to such Engine, and Grantors
         shall comply with Section 7.5 in respect thereof;

                  (B) deliver possession of any Airframe or any Engine to any
         organization for testing, service, repair, maintenance, overhaul work
         or other similar purposes or for alterations, modifications or
         additions to such Airframe or such Engine to the extent required or
         permitted by the terms of this Agreement;

             (ii) Grantors agree that the Aircraft will not be maintained, used
     or operated in violation, in any material respect, of any law, rule,
     regulation or order of any government of any country having jurisdiction
     over the Aircraft or in violation of any airworthiness certificate, license
     or registration relating to the Aircraft issued by any such government.
     Grantors will not operate the Aircraft, or permit the Aircraft to be
     operated or located, (A) in any area excluded from coverage by any
     insurance required by the terms of Section 7.5 or (B) in any war zone or
     recognized or, in Grantors' reasonable judgment, threatened area of
     hostilities unless covered by war risk insurance in accordance with Section
     7.5.

             (iii) Grantors shall cause the Aircraft to remain duly registered,
     under the laws of the United States, in the name of Grantors except as
     otherwise required by the Transportation Code.

         SECTION 11.5. PERFORMANCE BY ADMINISTRATIVE AGENT OF THE LOAN PARTIES'
OBLIGATIONS. If any Grantor fails to perform or comply with any of its
agreements contained herein and the Administrative Agent, as provided for by the
terms of this Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the
Administrative Agent incurred in connection with such performance or compliance,
together with interest thereon at the rate then in effect in respect of the
Revolving Loan, shall be payable by such Grantor to the Administrative Agent on
demand and shall constitute Obligations secured by the Collateral. Performance
of such Grantor's obligations as permitted under this Section 11.5 shall in no
way constitute a violation of the automatic stay provided by Section 362 of the
Bankruptcy Code and each Grantor hereby waives applicability thereof. Moreover,
the Administrative Agent shall in no way be responsible for the payment of any
costs incurred in connection with preserving or disposing of Collateral pursuant
to Section 506(c) of the Bankruptcy Code and the Collateral may not be charged
for the incurrence of any such cost.

         SECTION 11.6. LIMITATION ON ADMINISTRATIVE AGENT'S DUTY IN RESPECT OF
COLLATERAL. Neither the Administrative Agent nor any Lender shall have any duty
as to any Collateral in its possession or control or in the possession or
control of any agent or




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nominee of it or any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto, except that the
Administrative Agent shall, with respect to the Collateral in its possession or
under its control, deal with such Collateral in the same manner as the
Administrative Agent deals with similar property for its own account. Upon
request of the Borrower, the Administrative Agent shall account for any moneys
received by it in respect of any foreclosure on or disposition of the Collateral
of any Grantor.

         SECTION 11.7. REMEDIES, RIGHTS UPON DEFAULT.

         (a) If any Event of Default shall occur and be continuing, the
Administrative Agent may exercise in addition to all other rights and remedies
granted to it in this Agreement and in any other Loan Document, all rights and
remedies of a secured party under the UCC. Without limiting the generality of
the foregoing, each Grantor expressly agrees that in any such event the
Administrative Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice required by the Interim
Order or Final Order or the notice specified below of time and place of public
or private sale) to or upon such Grantor or any other Person (all and each of
which demands, advertisements and/or notices are hereby expressly waived to the
maximum extent permitted by the UCC and other applicable law), may forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or at any of the
Administrative Agent's offices or elsewhere at such prices at it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Administrative Agent shall have the right upon any such public sale or
sales to purchase the whole or any part of said Collateral so sold, free of any
right or equity of redemption, which equity of redemption each Grantor hereby
releases. Each Grantor further agrees, at the Administrative Agent's request, to
assemble the Collateral make it available to the Administrative Agent at places
which the Administrative Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Administrative Agent shall apply the
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale (net of all expenses incurred by the Administrative Agent in connection
therewith, including, without limitation, attorney's fees and expenses), to the
Obligations in any order deemed appropriate by the Administrative Agent, such
Grantor remaining liable for any deficiency remaining unpaid after such
application, and only after so paying over such net proceeds and after the
payment by the Administrative Agent of any other amount required by any
provision of law, including Section 9-504(l)(c) of the UCC, need the
Administrative Agent account for the surplus, if any, to such Grantor. To the
maximum extent permitted by applicable law, each Grantor waives all claims,
damages, and demands against the Administrative Agent and the Lenders arising
out of the repossession, retention or sale of the Collateral except such as
arise out of the gross negligence or willful misconduct of the Administrative
Agent. Each Grantor agrees that the Administrative Agent need not give more than
seven (7) days' notice to the Grantors (which notification shall be deemed given
when mailed or delivered on an overnight basis, postage prepaid, addressed to
the Borrower at its address referred to in Section 13.8) of the time and place
of any public sale or of the time after which a private sale may take place and
that such notice is reasonable notification of such matters. The Grantors shall
remain liable for any deficiency if the proceeds of any sale or disposition of
the Collateral are insufficient to pay all amounts to which the Administrative
Agent is entitled, the Grantors also being liable for the fees and expenses of
any attorneys employed by the Administrative Agent to collect such deficiency.



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         (b) Each Grantor hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral.

         (c) Pledged Collateral.

             (i) During the continuance of an Event of Default, if the
     Administrative Agent shall give notice of its intent to exercise such
     rights to the relevant Grantor or Grantors, (i) the Administrative Agent
     shall have the right to receive any and all cash dividends, payments or
     other Proceeds paid in respect of the Pledged Collateral and make
     application thereof to the Obligations in the order set forth herein and
     (ii) the Administrative Agent or its nominee may exercise (A) all voting,
     consent, corporate and other rights pertaining to the Pledged Collateral at
     any meeting of shareholders, partners or members, as the case may be, of
     the relevant issuers of Pledged Collateral or otherwise and (B) any and all
     rights of conversion, exchange and subscription and any other rights,
     privileges or options pertaining to the Pledged Collateral as if it were
     the absolute owner thereof (including the right to exchange at its
     discretion any and all of the Pledged Collateral upon the merger,
     consolidation, reorganization, recapitalization or other fundamental change
     in the corporate structure of any issuer of Pledged Securities, the right
     to deposit and deliver any and all of the Pledged Collateral with any
     committee, depositary, transfer agent, registrar or other designated agency
     upon such terms and conditions as the Administrative Agent may determine),
     all without liability except to account for property actually received by
     it, but the Administrative Agent shall have no duty to any Grantor to
     exercise any such right, privilege or option and shall not be responsible
     for any failure to do so or delay in so doing.

             (ii) In order to permit the Administrative Agent to exercise the
     voting and other consensual rights which it may be entitled to exercise
     pursuant hereto and to receive all dividends and other distributions which
     it may be entitled to receive hereunder, (i) each Grantor shall promptly
     execute and deliver (or cause to be executed and delivered) to the
     Administrative Agent all such proxies, dividend payment orders and other
     instruments as the Administrative Agent may from time to time reasonably
     request and (ii) without limiting the effect of clause (i) above, such
     Grantor hereby grants to the Administrative Agent an irrevocable proxy to
     vote all or any part of the Pledged Collateral and to exercise all other
     rights, powers, privileges and remedies to which a holder of the Pledged
     Collateral would be entitled (including giving or withholding written
     consents of shareholders, partners or members, as the case may be, calling
     special meetings of shareholders, partners or members, as the case may be,
     and voting at such meetings), which proxy shall be effective, automatically
     and without the necessity of any action (including any transfer of any
     Pledged Collateral on the record books of the issuer thereof) by any other
     person (including the issuer of such Pledged Collateral or any officer or
     agent thereof) during the continuance of an Event of Default and which
     proxy shall only terminate upon the payment in full of the Secured
     Obligations.

             (iii) Each Grantor hereby expressly authorizes and instructs each
     issuer of any Pledged Collateral pledged hereunder by such Grantor to (i)
     comply with any instruction received by it from the Administrative Agent in
     writing that (A) states that an Event of Default has occurred and is
     continuing and (B) is otherwise in accordance with the terms of this
     Agreement, without any other or further instructions from such Grantor, and
     each Grantor agrees that such issuer shall be fully protected in so
     complying and (ii) unless otherwise expressly permitted hereby, pay any
     dividends or




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     other payments with respect to the Pledged Collateral directly to the
     Administrative Agent.

         SECTION 11.8. THE ADMINISTRATIVE AGENT'S APPOINTMENT AS
ATTORNEY-IN-FACT.

         (a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its and its Subsidiaries true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of such Grantor and
in the name of such Grantor, or in its own name, from time to time in the
Administrative Agent's discretion, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute and
deliver any and all documents and instruments which may be necessary and
desirable to accomplish the purposes of this Agreement and the transactions
contemplated hereby, and, without limiting the generality of the foregoing,
hereby give the Administrative Agent the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor to do the following:

             (i) to ask, demand, collect, receive and give acquittances and
     receipts for any and all moneys due and to become due under any Collateral
     and, in the name of such Grantor, its own name or otherwise, to take
     possession of and endorse and collect any checks, drafts, notes,
     acceptances or other Instruments for the payment of moneys due under any
     Collateral and to file any claim or to take any other action or proceeding
     in any court of law or equity or otherwise deemed appropriate by the
     Administrative Agent for the purpose of collecting any and all such moneys
     due under any Collateral whenever payable and to file any claim or to take
     any other action or proceeding in any court of law or equity or otherwise
     deemed appropriate by the Administrative Agent for the purpose of
     collecting any and all such moneys due under any Collateral whenever
     payable;

             (ii) to pay or discharge taxes, Liens, security interests or other
     encumbrances levied or placed on or threatened against the Collateral, to
     effect any repairs or any insurance called for by the terms of this
     Agreement and to pay all or any part of the premiums therefor and the costs
     thereof; and

             (iii) (A) to direct any party liable for any payment under any of
     the Collateral to make payment of any and all moneys due, and to become due
     thereunder, directly to the Administrative Agent or as the Administrative
     Agent shall direct; (B) to receive payment of and receipt for any and all
     moneys, claims and other amounts due, and to become due at any time, in
     respect of or arising out of any Collateral; (C) to sign and indorse any
     invoices, freight or express bills, bills of lading, storage or warehouse
     receipts, drafts against debtors, assignments, verifications and notices in
     connection with accounts and other documents constituting or relating to
     the Collateral; (D) to commence and prosecute any suits, actions or
     proceedings at law or equity in any court of competent jurisdiction to
     collect the Collateral or any part thereof and to enforce any other right
     in respect of any Collateral; (E) to defend any suit, action or proceeding
     brought against any Grantor with respect to any Collateral of such Grantor;
     (F) to settle, compromise or adjust any suit, action or proceeding
     described above and, in connection therewith, to give such discharges or
     releases as the Administrative Agent may deem appropriate; (G) to license
     or, to the extent permitted by an applicable license, sublicense, whether
     general, special or otherwise, and whether on an exclusive or non-exclusive
     basis, any trademarks, throughout the world for such term or terms, on such
     conditions, and in such manner, as



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     the Administrative Agent shall in its sole discretion determine; and (H)
     generally to sell, transfer, pledge, make any agreement with . respect to
     or otherwise deal with any of the Collateral as fully and completely as
     though the Administrative Agent were the absolute owner thereof for all
     purposes, and to do, at the Administrative Agent's option and such
     Grantor's expense, at any time, or from time to time, all acts and things
     which the Administrative Agent reasonably deems necessary to protect,
     preserve or realize upon the Collateral and the Administrative Agent's Lien
     therein, in order to effect the intent of this Agreement, all as fully and
     effectively as such Grantor might do.

         (b) The Administrative Agent agrees that it will forbear from
exercising the power of attorney or any rights granted to the Administrative
Agent pursuant to this Section 11.8, except upon the occurrence or during the
continuation of an Event of Default. The Grantors hereby ratify, to the extent
permitted by law, all that said attorneys shall lawfully do or cause to be done
by virtue hereof. Exercise by the Administrative Agent of the powers granted
hereunder is not a violation of the automatic stay provided by Section 362 of
the Bankruptcy Code and each Grantor waives applicability thereof. The power of
attorney granted pursuant to this Section 11.8 is a power coupled with an
interest and shall be irrevocable until the Obligations are indefeasibly paid in
full.

         (c) The powers conferred on the Administrative Agent hereunder are
solely to protect the Administrative Agent's and the Lenders' interests in the
Collateral and shall not impose any duty upon it to exercise any such powers.
The Administrative Agent shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees or agents shall be responsible to any Grantor
for any act or failure to act, except for its own gross negligence or willful
misconduct.

         (d) Each Grantor also authorizes the Administrative Agent, at any time
and from time to time upon the occurrence and during the continuation of any
Event of Default or as otherwise expressly permitted by this Agreement, (i) to
communicate in its own name or the name of its Subsidiaries with any party to
any Contract with regard to the assignment of the right, title and interest of
such Grantor in and under the Contracts hereunder and other matters relating
thereto and (ii) to execute any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral.

         (e) All Obligations shall constitute, in accordance with Section
364(c)(1) of the Bankruptcy Code, claims against the Borrower and each other
Grantor in its Case which are administrative expense claims having priority over
any all administrative expenses of the kind specified in Sections 503(b) or
507(b) of the Bankruptcy Code.

         SECTION 11.9. MODIFICATIONS.

         (a) The Liens, lien priority, administrative priorities and other
rights and remedies granted to the Administrative Agent for the benefit of the
Lenders pursuant to this Agreement, the Interim Order and/or the Final Order
(specifically, including, but not limited to, the existence, perfection and
priority of the Liens provided herein and therein and the administrative
priority provided herein and therein) shall not be modified, altered or impaired
in any manner by any other financing or extension of credit or incurrence of
Indebtedness by any of the Grantors (pursuant to Section 364 of the Bankruptcy
Code or otherwise), or by any dismissal or conversion of any of the Cases, or by
any other act or omission whatsoever. Without limitation, notwithstanding any
such order, financing, extension, incurrence, dismissal, conversion, act or
omission:



                                       75
<PAGE>   83

             (i) except for the Carve-Out having priority over the Obligations,
     no costs or expenses of administration which have been or may be incurred
     in any of the Cases or any conversion of the same or in any other
     proceedings related thereto, and no priority claims, are or will be prior
     to or on a parity with any claim of the Administrative Agent or the Lenders
     against the Grantors in respect of any Obligation;

             (ii) the Liens granted herein shall constitute valid and perfected
     first priority liens and security interests (subject only to (A) the
     Carve-Out, (B) valid, perfected, enforceable and nonavoidable Liens of
     record existing immediately prior to the Petition Date and (C) Liens
     permitted under Section 8.2(d)) in accordance with Sections 364(c)(2) and
     (3) of the Bankruptcy Code, and shall be prior to all other Liens , now
     existing or hereafter arising, in favor of any other creditor or any other
     Person whatsoever; and

             (iii) the Liens granted hereunder shall continue valid and
     perfected without the necessity that financing statements be filed or that
     any other action be taken under applicable nonbankruptcy law.

         (b) Notwithstanding any failure on the part of any Grantor or the
Administrative Agent or the Lenders to perfect, maintain, protect or enforce the
Liens in the Collateral granted hereunder, the Interim Order and the Final Order
(when entered) shall automatically, and without further action by any Person,
perfect such Liens against the Collateral.

                                  ARTICLE XII

                            THE ADMINISTRATIVE AGENT

         SECTION 12.1. AUTHORIZATION AND ACTION.

         (a) Each Lender hereby appoints AMR Finance as the Administrative Agent
hereunder and each Lender authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the other Loan Documents as are delegated to the Administrative Agent under
such agreements and to exercise such powers as are reasonably incidental
thereto. Without limiting the foregoing, each Lender authorizes the
Administrative Agent to execute and deliver, and to perform its obligations
under, each of the Loan Documents to which the Administrative Agent is a party
and to exercise all rights, powers and remedies that the Administrative Agent
may have under such Loan Documents and that under such Loan Documents the
Administrative Agent is acting as agent for the Lenders and the other Secured
Parties.

         (b) As to any matters not expressly provided for by this Agreement and
the other Loan Documents (including enforcement or collection), the
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Requisite Lenders, and such instructions shall be binding upon all Lenders;
provided, however, that the Administrative Agent shall not be required to take
any action which (i) the Administrative Agent in good faith believes exposes it
to personal liability unless the Administrative Agent receives an
indemnification satisfactory to it from the Lenders with respect to such action
or (ii) is contrary to this Agreement or applicable law. The Administrative
Agent agrees to give to each Lender prompt notice of each notice given to it by
any Loan Party pursuant to the terms of this Agreement or the other Loan
Documents.



                                       76
<PAGE>   84

         (c) In performing its functions and duties hereunder and under the
other Loan Documents, the Administrative Agent is acting solely on behalf of the
Lenders and its duties are entirely administrative in nature. The Administrative
Agent does not assume and shall not be deemed to have assumed any obligation
other than as expressly set forth herein and in the other Loan Documents or any
other relationship as the Administrative Agent, fiduciary or trustee of or for
any Lender or holder of any other Obligation. The Administrative Agent may
perform any of its duties under any of the Loan Documents by or through its
agents or employees.

         SECTION 12.2. ADMINISTRATIVE AGENT'S RELIANCE, ETC. Neither the
Administrative Agent nor any of its Affiliates or any of the respective
directors, officers, agents or employees of the Administrative Agent or any such
Affiliate shall be liable for any action taken or omitted to be taken by it,
him, her or them under or in connection with this Agreement or the other Loan
Documents, except for its, his, her or their own gross negligence or willful
misconduct. Without limiting the foregoing, the Administrative Agent (a) may
treat the payee of any Revolving Credit Note or Term Credit Note as its holder
until such Revolving Credit Note or Term Credit Note, as applicable has been
assigned in accordance with Section 13.2; (b) may rely on the Register to the
extent set forth in Section 13.2(c); (c) may consult with legal counsel
(including counsel to the Borrower or any other Loan Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (d) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made by or on behalf of the Borrower
or any of its Subsidiaries in or in connection with this Agreement or any of the
other Loan Documents; (e) shall not have any duty to ascertain or to inquire
either as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or any of the other Loan Documents or the financial
condition of any Loan Party, or the existence or possible existence of any
Default or Event of Default; (f) shall not be responsible to any Lender for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; and (g) shall incur
no liability under or in respect of this Agreement or any of the other Loan
Documents by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telecopy) or any telephone message believed by it to be
genuine and signed or sent by the proper party or parties.

         SECTION 12.3. THE ADMINISTRATIVE AGENT INDIVIDUALLY. With respect to
its Ratable Portion, the Administrative Agent shall have and may exercise the
same rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms "Lenders" or "Requisite Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include the Administrative Agent in its
individual capacity as a Lender or as one of the Requisite Lenders. AMR Finance
and its Affiliates may engage in any kind of business with any Loan Party as if
it were not acting as the Administrative Agent or a Lender.

         SECTION 12.4. LENDER CREDIT DECISION. Each Lender acknowledges that it
shall, independently and without reliance upon the Administrative Agent or any
other Lender conduct its own independent investigation of the financial
condition and affairs of the Borrower and each other Loan Party in connection
with the making and continuance of the Loans and with the issuance of the
Letters of Credit. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its






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own credit decisions in taking or not taking action under this Agreement and
other Loan Documents.

         SECTION 12.5. INDEMNIFICATION. Each Lender agrees to indemnify the
Administrative Agent and each of its Affiliates, and each of their respective
directors, officers, employees, agents and advisors (to the extent not
reimbursed by the Borrower), from and against such Lender's aggregate Ratable
Portion of any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements (including fees and
disbursements of legal counsel) of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against, the Administrative Agent or any of
its Affiliates, directors, officers, employees, agents and advisors in any way
relating to or arising out of this Agreement or the other Loan Documents or any
action taken or omitted by the Administrative Agent under this Agreement or the
other Loan Documents; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's or such Affiliate's gross negligence or willful
misconduct. Without limiting the foregoing, each Lender agrees to reimburse the
Administrative Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including fees and disbursements of legal counsel)
incurred by the Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of its rights or responsibilities under, this Agreement or the
other Loan Documents, to the extent that the Administrative Agent is not
reimbursed for such expenses by the Borrower or another Loan Party.

         SECTION 12.6. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent
may resign at any time by giving written notice thereof to the Lenders and the
Borrower; provided that so long as no Event of Default then exists, Borrowers
shall have consented thereto. Upon any such resignation, the Requisite Lenders
shall have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Requisite
Lenders, and shall have accepted such appointment, within thirty (30) days after
the retiring Administrative Agent's giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, selected from among the Lenders. Upon the acceptance of
any appointment as Administrative Agent by a successor Administrative Agent,
such successor Administrative Agent shall succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Administrative Agent,
and the retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. Prior to any
retiring Administrative Agent's resignation hereunder as Administrative Agent,
the retiring Administrative Agent shall take such action as may be reasonably
necessary to assign to the successor Administrative Agent its rights as
Administrative Agent under the Loan Documents. After such resignation, the
retiring Administrative Agent shall continue to have the benefit of this Article
XII as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.



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                                  ARTICLE XIII

                                  MISCELLANEOUS

         SECTION 13.1. AMENDMENTS, WAIVERS, ETC.

         (a) No amendment or waiver of any provision of this Agreement or any
other Loan Document nor consent to any departure by any Loan Party therefrom
shall in any event be effective unless the same shall be in writing and signed
by the Requisite Lenders, and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no amendment, waiver or consent shall, unless in writing
and signed by each Lender affected thereby, in addition to the Requisite
Lenders, do any of the following:

             (i) waive any of the conditions specified in Sections 3.1 or 3.2
     except with respect to a condition based upon another provision hereof, the
     waiver of which requires only the concurrence of the Requisite Lenders;

             (ii) increase the Commitments of the Lenders or subject the Lenders
     to any additional obligations; provided, however, that any such increase
     with respect to the Term Loan Commitments or the Revolving Loan Commitments
     shall require the consent of the Requisite Term Loan Lenders or the
     Requisite Revolving Credit Lenders, as the case may be;

             (iii) extend the scheduled final maturity of any Loan, or waive,
     reduce or postpone any scheduled date fixed for the payment or reduction of
     principal (it being understood that Section 2.7 does not provide for
     scheduled dates fixed for payment) or of the Commitments;

             (iv) reduce the principal amount of any Loan (other than by the
     payment or prepayment thereof);

             (v) reduce the rate of interest on any Loan or any fee payable
     hereunder;

             (vi) postpone any scheduled date fixed for payment of such interest
     or fees;

             (vii) change the aggregate Ratable Portions of the Lenders which
     shall be required for the Lenders or any of them to take any action
     hereunder;

             (viii) release all or substantially all of the Collateral except as
     provided in Section 10.7(b) or release any Guarantor from its obligations
     under the Guaranty except in connection with sale or other disposition
     permitted by this Agreement (or permitted pursuant to a waiver or consent
     of a transaction otherwise prohibited by this Agreement); or

             (ix) amend Section 10.7(b) or this Section 13.1 or the definition
     of the terms "Requisite Lenders" or "Requisite Revolving Credit Lenders" or
     "Requisite Term Loan Lenders" or "Ratable Portion";



                                       79
<PAGE>   87

and provided, further, (A) that any modification of the application of payments
to the Term Loans pursuant to Section 2.7 shall require the consent of the
Requisite Term Loan Lenders and any such modification of the application of
payments to the Revolving Loans pursuant to Section 2.7 or the reduction of the
Revolving Credit Commitments pursuant to Section 2.3(b) shall require the
consent of the Requisite Revolving Credit Lenders and (B) that no amendment,
waiver or consent shall, unless in writing and signed by the Administrative
Agent in addition to the Lenders required above to take such action, affect the
rights or duties of the Administrative Agent under this Agreement or the other
Loan Documents.

         (b) The Administrative Agent may, but shall have no obligation to, with
the written concurrence of any Lender, execute amendments, modifications,
waivers or consents on behalf of that Lender. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on any Loan Parties in any case shall
entitle such Loan Party to any other or further notice or demand in similar or
other circumstances.

         SECTION 13.2. ASSIGNMENTS AND PARTICIPATIONS.

         (a) Each Lender, with the consent of the Administrative Agent, may
sell, transfer, negotiate or assign to one or more Persons (an "Assignee") all
or a portion of its rights and obligations hereunder; provided, however, that
(A) if any such assignment shall be of the assigning Lender's Revolving Loans
then outstanding and Revolving Credit Commitment, such assignment shall cover
the same percentage of such Lender's Revolving Loans then outstanding and
Revolving Credit Commitment, and (B) if any such assignment shall be of the
assigning Lender's Term Loans and Term Credit Commitment, such assignment shall
cover the same percentage of such Lender's Term Loans and Term Credit
Commitment.

         (b) The parties to each assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording, an Assignment and
Acceptance, together with any Note subject to such assignment. Upon such
execution, delivery, acceptance and recording and the receipt by the
Administrative Agent from the assignee of an assignment fee in the amount of
$3,500 from and after the effective date specified in such Assignment and
Acceptance, (i) the assignee thereunder shall become a party hereto and, to the
extent that rights and obligations under the Loan Documents have been assigned
to such assignee pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender, and (ii) the assignor thereunder shall, to the extent
that rights and obligations under this Agreement have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights (except those
which survive the payment in full of the Obligations) and be released from its
obligations under the Loan Documents, other than those relating to events or
circumstances occurring prior to such assignment (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under the Loan Documents, such Lender shall
cease to be a party hereto).

         (c) The Administrative Agent shall maintain at its address referred to
in Section 13.8 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recording of the names and addresses of
the Lenders and the Commitments of and principal amount of the Loans owing to
each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Loan Parties, the Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender for all purposes of this
Agreement. The Register shall be




                                       80
<PAGE>   88


available for inspection by the Borrower, the Administrative Agent or any Lender
at any reasonable time and from time to time upon reasonable prior notice.

         (d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, the Administrative Agent shall, if such
Assignment and Acceptance has been completed, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five (5) Business Days
after its receipt of such notice, the Borrower, at its own expense, shall, if
requested by such assignee, execute and deliver to the Administrative Agent, new
Notes to the order of such assignee in an amount equal to the Commitments
assumed by it pursuant to such Assignment and Acceptance and, if the assigning
Lender has surrendered any Note for exchange in connection with the assignment
and has retained Commitments hereunder, new Notes to the order of the assigning
Lender in an amount equal to the Commitments retained by it hereunder. Such new
Notes shall be dated the same date as the surrendered Notes and be in
substantially the form of Exhibit B-1 or Exhibit B-2 hereto, as applicable.

         (e) In addition to the other assignment rights provided in this Section
13.2, each Lender may assign, as collateral or otherwise, any of its rights
under this Agreement (including rights to payments of principal or interest on
the Loans).

         (f) Each Lender may sell participations to one or more Persons in or to
all or a portion of its rights and obligations under the Loan Documents
(including all its rights and obligations with respect to the Term Loans and
Revolving Loans). The terms of such participation shall not, in any event,
require the participant's consent to any amendments, waivers or other
modifications of any provision of any Loan Documents, the consent to any
departure by any Loan Party therefrom, or to the exercising or refraining from
exercising any powers or rights which such Lender may have under or in respect
of the Loan Documents (including the right to enforce the obligations of the
Loan Parties), except if any such amendment, waiver or other modification or
consent would (i) reduce the amount, or postpone any date fixed for, any amount
(whether of principal, interest or fees) payable to such participant under the
Loan Documents, to which such participant would otherwise be entitled under such
participation or (ii) result in the release of all or substantially all of the
Collateral other than in accordance with Section 10.7(b). In the event of the
sale of any participation by any Lender, (A) such Lender's obligations under the
Loan Documents shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties for the performance of such obligations, (C)
such Lender shall remain the holder of such Obligations for all purposes of this
Agreement and (D) the Borrower, the Administrative Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement. Each participant
shall be entitled to the benefits of Sections 2.11 and 2.12 as if it were a
Lender; provided, however, that anything herein to the contrary notwithstanding,
the Borrower shall not, at any time, be obligated to pay to any participant of
any interest of any Lender, under Section 2.11 or 2.12, any sum in excess of the
sum which the Borrower would have been obligated to pay to such Lender in
respect of such interest had such participation not been sold.

         SECTION 13.3. COSTS AND EXPENSES.

         (a) The Loan Parties agree upon demand to pay, or reimburse the
Administrative Agent for, all of the Administrative Agent's reasonable internal
and external audit, legal, appraisal, valuation, filing, document duplication
and reproduction and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of the





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<PAGE>   89

Administrative Agent's counsel, Weil, Gotshal & Manges LLP, local legal counsel,
auditors, accountants, appraisers, printers, insurance and environmental
advisers, and other consultants and agents) incurred by the Administrative Agent
in connection with (i) the Administrative Agent's audit and investigation of the
Borrower and its Subsidiaries in connection with the preparation, negotiation
and execution of the Loan Documents and the Administrative Agent's periodic
audits of the Borrower and its Subsidiaries, as the case may be; (ii) the
preparation, negotiation, execution and interpretation of this Agreement
(including, without limitation, the satisfaction or attempted satisfaction of
any of the conditions set forth in Article III), the Loan Documents and any
proposal letter or commitment letter issued in connection therewith and the
making of the Loans hereunder; (iii) the creation, perfection or protection of
the Liens under the Loan Documents (including, without limitation, any
reasonable fees and expenses for local counsel in various jurisdictions); (iv)
the ongoing administration of this Agreement and the Loans, including
consultation with attorneys in connection therewith and with respect to the
Administrative Agent's rights and responsibilities hereunder and under the other
Loan Documents; (v) the protection, collection or enforcement of any of the
Obligations or the enforcement of any of the Loan Documents; (vi) the
commencement, defense or intervention in any court proceeding relating in any
way to the Obligations, any Loan Party, any of the Borrower's Subsidiaries, the
Asset Purchase Agreement, this Agreement or any of the other Loan Documents;
(vii) the response to, and preparation for, any subpoena or request for document
production with which the Administrative Agent is served or deposition or other
proceeding in which the Administrative Agent is called to testify, in each case,
relating in any way to the Obligations, any Loan Party, any of the Borrowers'
Subsidiaries, the Asset Purchase Agreement, this Agreement or any of the other
Loan Documents; and (viii) any amendments, consents, waivers, assignments,
restatements, or supplements to any of the Loan Documents and the preparation,
negotiation, and execution of the same, in each case without further order of
the Bankruptcy Court.

         (b) The Loan Parties further agree to pay or reimburse the
Administrative Agent and each of the Lenders upon demand for all out-of-pocket
costs and expenses, including, without limitation, reasonable attorneys' fees
(including allocated costs of internal counsel and costs of settlement),
incurred by the Administrative Agent and such Lenders (i) in enforcing any Loan
Document or Obligation or any security therefor or exercising or enforcing any
other right or remedy available by reason of an Event of Default; (ii) in
connection with any refinancing or restructuring of the credit arrangements
provided hereunder in the nature of a "work-out"; (iii) in commencing, defending
or intervening in any litigation or in filing a petition, complaint, answer,
motion or other pleadings in any legal proceeding relating to the Obligations,
any Loan Party, any of the Borrowers' Subsidiaries and related to or arising out
of the transactions contemplated hereby or by any of the other Loan Documents or
the Asset Purchase Agreement; and (iv) in taking any other action in or with
respect to any suit or proceeding described in clauses (i) through (iii) above.

         SECTION 13.4. INDEMNITIES.

         (a) The Loan Parties agree to indemnify and hold harmless the
Administrative Agent, each Lender and each of their respective Affiliates, and
each of the directors, officers, employees, agents, representative, attorneys,
consultants and advisors of or to any of the foregoing (including those retained
in connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in Article III) (each such Person being an "Indemnitee")
from and against any and all claims, damages, liabilities, obligations, losses,
penalties, actions, judgments, suits, costs, disbursements and expenses of any
kind or nature (including fees and disbursements of counsel to any such
Indemnitee) which may be imposed on, incurred by or asserted against any such
Indemnitee in connection with or arising out of any





                                       82
<PAGE>   90

investigation, litigation or proceeding, whether or not any such Indemnitee is a
party thereto, whether direct, indirect, or consequential and whether based on
any federal, state or local law or other statutory regulation, securities or
commercial law or regulation, or under common law or in equity, or on contract,
tort or otherwise, in any manner relating to or arising out of this Agreement,
any other Loan Document, any Obligation, any Disclosure Document, or any act,
event or transaction related or attendant to any thereof, or the use or intended
use of the proceeds of the Loans or in connection with any investigation of any
potential matter covered hereby (collectively, the "Indemnified Matters");
provided, however, that the Loan Parties shall not have any obligation under
this Section 13.4 to an Indemnitee with respect to any Indemnified Matter caused
by or resulting from the gross negligence or willful misconduct of that
Indemnitee, as determined by a court of competent jurisdiction in a final
non-appealable judgment or order. Without limiting the foregoing, Indemnified
Matters include (i) all Environmental Liabilities and Costs arising from or
connected with the past, present or future operations of the Borrower or any of
its Subsidiaries involving any property subject to a Collateral Document, or
damage to real or personal property or natural resources or harm or injury
alleged to have resulted from any Release of Contaminants on, upon or into such
property or any contiguous real estate; (ii) any costs or liabilities incurred
in connection with any Remedial Action concerning the Borrower or any of its
Subsidiaries; (iii) any costs or liabilities incurred in connection with any
Environmental Lien; (iv) any costs or liabilities incurred in connection with
any other matter under any Environmental Law, including CERCLA and applicable
state property transfer laws, whether, with respect to any of such matters, such
Indemnitee is a mortgagee pursuant to any leasehold mortgage, a mortgagee in
possession, the successor in interest to the Borrower or any of its
Subsidiaries, or the owner, lessee or operator of any property of the Borrower
or any of its Subsidiaries by virtue of foreclosure, except, with respect to
those matters referred to in clauses (i), (ii), (iii) and (iv) above, to the
extent incurred following (A) foreclosure by the Administrative Agent or any
Lender, or the Administrative Agent or any Lender having become the successor in
interest to the Borrower or any of its Subsidiaries, and (B) attributable solely
to acts of the Administrative Agent or such Lender or any agent on behalf of the
Administrative Agent or such Lender.

         (b) The Borrower shall indemnify the Administrative Agent and the
Lenders for, and hold the Administrative Agent and the Lenders harmless from and
against, any and all claims for brokerage commissions, fees and other
compensation made against the Administrative Agent and the Lenders for any
broker, finder or consultant with respect to any agreement, arrangement or
understanding made by or on behalf of any Loan Party or any of its Subsidiaries
in connection with the transactions contemplated by this Agreement.

         (c) The Loan Parties agree that any indemnification or other protection
provided to any Indemnitee pursuant to this Agreement (including pursuant to
this Section 13.4) or any other Loan Document shall (i) survive payment in full
of the Obligations and (ii) inure to the benefit of any Person who was at any
time an Indemnitee under this Agreement or any other Loan Document.

         SECTION 13.5. LIMITATION OF LIABILITY. THE LOAN PARTIES AGREE THAT NO
INDEMNITEE SHALL HAVE ANY LIABILITY (WHETHER DIRECT OR INDIRECT, IN CONTRACT,
TORT OR OTHERWISE) TO ANY LOAN PARTY OR ANY OF THEIR RESPECTIVE SUBSIDIARIES OR
ANY OF THEIR EQUITY HOLDERS OR CREDITORS FOR OR IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY AND IN THE OTHER LOAN DOCUMENTS AND ASSET
PURCHASE AGREEMENT, EXCEPT TO THE EXTENT SUCH LIABILITY IS FOUND IN A FINAL
JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH
INDEMNITEE'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN




                                       83
<PAGE>   91


NO EVENT, HOWEVER, SHALL ANY INDEMNIFIED PARTY BE LIABLE ON ANY THEORY OF
LIABILITY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES AND EACH
OF THE LOAN PARTIES HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH
CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.

         SECTION 13.6. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default each Lender and each Affiliate of a Lender
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender or its Affiliates to or for the credit or the
account of any Loan Parties against any and all of the Obligations now or
hereafter existing whether or not such Lender shall have made any demand under
this Agreement or any other Loan Document and although such Obligations may be
unmatured. The rights of each Lender under this Section 13.6 are in addition to
the other rights and remedies (including other rights of set-off) which such
Lender may have.

         SECTION 13.7. SHARING OF PAYMENTS, ETC.

         (a) If any Lender shall receive any payment (whether voluntary,
involuntary, through the exercise of any right of set-off or otherwise) of the
Loans owing to it, any interest thereon, fees in respect thereof or amounts due
pursuant to Section 13.3 or 13.4 (other than payments pursuant to Section 2.11
or 2.12) in excess of its Ratable Portion of all payments of such Obligations
obtained by all the Lenders, such Lender (a "Purchasing Lender") shall forthwith
purchase from the other Lenders (each, a "Selling Lender") such participations
in their Loans or other Obligations as shall be necessary to cause such
Purchasing Lender to share the excess payment ratably with each of them.

         (b) If all or any portion of any payment received by a Purchasing
Lender is thereafter recovered from such Purchasing Lender, such purchase from
each Selling Lender shall be rescinded and such Selling Lender shall repay to
the Purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Selling Lender's ratable share (according to the
proportion of (i) the amount of such Selling Lender's required repayment to (ii)
the total amount so recovered from the Purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. (c) The Borrower agrees that any Purchasing Lender so
purchasing a participation from a Selling Lender pursuant to this Section 13.7
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.

         SECTION 13.8. NOTICES, ETC. All notices, demands, requests and other
communications provided for in this Agreement shall be given in writing, or by
any telecommunication device capable of creating a written record and addressed
to the party to be notified, as follows:




                                       84
<PAGE>   92

         (a)      if to the Loan Parties:

                  Trans World Airlines, Inc.
                  One City Centre
                  515 North 6th Street
                  St. Louis, Missouri  63101
                  Attention:  Kate Soled
                  Facsimile:  (314) 589-3461

                  with a copy to:

                  Kirkland & Ellis
                  Aon Center
                  200 East Randolph Drive
                  Chicago, Illinois  60601
                  Attention:  Andrew M. Kaufman
                  Facsimile:  (312) 861-2200

         (b) if to any Lender, at the address specified opposite its name on
Schedule II or on the signature page of any applicable Assignment and
Acceptance;

         (c)      if to the Administrative Agent:

                  AMR Finance, Inc.
                  4333 Amon Carter Boulevard
                  Mail Drop 5618
                  Fort Worth, Texas  76155
                  Attention:  General Counsel
                  Facsimile:  (817) 967-2501

                  with a copy to:

                  Weil, Gotshal & Manges LLP
                  767 Fifth Avenue
                  New York, New York  10153
                  Attention:  Thomas A. Roberts
                  Facsimile:  (212) 310-8007

or at such other address as shall be notified in writing (i) in the case of the
Borrower and the Administrative Agent, to the other parties and (ii) in the case
of all other parties, to the Borrower and the Administrative Agent. All such
notices and communications shall be effective upon personal delivery (if
delivered by hand, including any overnight courier service), when deposited in
the mails (if sent by mail), or when properly transmitted (if sent by a
telecommunications device); provided, however, that notices and communications
to the Administrative Agent pursuant to Article II or X shall not be effective
until received by the Administrative Agent.

         SECTION 13.9. NO WAIVER; REMEDIES. No failure on the part of any Lender
or the Administrative Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.




                                       85
<PAGE>   93

         SECTION 13.10. BINDING EFFECT. Upon entry of the Interim Order, this
Agreement shall become effective when it shall have been executed by the Loan
Parties and the Administrative Agent and when the Administrative Agent shall
have been notified by each Lender that such Lender has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Administrative Agent and each Lender and their respective successors and
assigns, except that none of the Loan Parties shall have the right to assign
their respective rights or obligations hereunder or any interest herein without
the prior written consent of the Lenders.

         SECTION 13.11. GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.

         SECTION 13.12. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.

         (a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE BANKRUPTCY COURT OR IN THE COURTS
OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF
THE LOAN PARTIES HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

         (b) EACH OF THE LOAN PARTIES HEREBY IRREVOCABLY CONSENTS TO THE SERVICE
OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN ANY SUIT, ACTION
OR PROCEEDING BROUGHT IN THE UNITED STATES OF AMERICA ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS BY THE MAILING
(BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID) OR DELIVERING OF A COPY OF
SUCH PROCESS TO EACH LOAN PARTY AT ITS ADDRESS SPECIFIED IN SECTION 13.8. THE
LOAN PARTIES AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW.

         (c) Nothing contained in this Section 13.12 shall affect the right of
the Administrative Agent or any Lender to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed against the
Borrower or any other Loan Party in any other jurisdiction.

         (d) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in Dollars into another currency, the
parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent could purchase Dollars with such
other currency at the spot rate of exchange quoted by the Administrative Agent
at 11:00



                                       86
<PAGE>   94


a.m. (Dallas time) on the Business Day preceding that on which final judgment is
given, for the purchase of Dollars, for delivery two (2) Business Days
thereafter.

         SECTION 13.13. WAIVER OF JURY TRIAL. EACH OF THE ADMINISTRATIVE AGENT,
THE LENDERS AND THE LOAN PARTIES IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.

         SECTION 13.14. MARSHALING; PAYMENTS SET ASIDE. None of the
Administrative Agent or any Lender shall be under any obligation to marshal any
assets in favor of the Loan Parties or any other party or against or in payment
of any or all of the Obligations. To the extent that any of the Loan Parties
make a payment or payments to the Administrative Agent or the Lenders or any of
such Persons receives payment from the proceeds of the Collateral or exercise
their rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
right and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.

         SECTION 13.15. SECTION TITLES. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.

         SECTION 13.16. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are attached to the same
document.

         SECTION 13.17. ENTIRE AGREEMENT. This Agreement, together with all of
the other Loan Documents and all certificates and documents delivered hereunder
or thereunder, embodies the entire agreement of the parties and supersedes all
prior agreements and understandings relating to the subject matter hereof.
Delivery of an executed signature page of this Agreement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all parties
shall be lodged with the Borrower and the Administrative Agent.

         SECTION 13.18. CONFIDENTIALITY. Each Lender and the Administrative
Agent agree to keep all material non-public information obtained by it pursuant
hereto and the other Loan Documents confidential in accordance with such
Lender's or the Administrative Agent's, as the case may be, customary practices
and agrees that it will only use such information in connection with the
transactions contemplated by this Agreement and not disclose any of such
information other than (a) to such Lender's or the Administrative Agent's, as
the case may be, employees, representatives and agents who are or are expected
to be involved in the evaluation of such information in connection with the
transactions contemplated by this Agreement and who are advised of the
confidential nature of such information, (b) to the extent such information
presently is or hereafter becomes available to such Lender or the Administrative
Agent, as the case may be, on a non-confidential basis from a source other than
the Borrower and its Subsidiaries, (c) to the extent disclosure is required by
law, regulation or judicial order, (d) to





                                       87
<PAGE>   95

assignees or participants or potential assignees or participants who agree to be
bound by the provisions of this Section 13.18, or (e) to the extent permitted
pursuant to Section 7.6.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]




                                       88
<PAGE>   96


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                               TRANS WORLD AIRLINES, INC.,
                               as Borrower

                               By:
                                  --------------------------------------------
                                  Name:    William F. Compton
                                  Title:   President and Chief Executive
                                           Officer


                               AMBASSADOR FUEL CORPORATION,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Michael Palumbo
                                  Title:   President


                               MEGA ADVERTISING INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Secretary


                               NORTHWEST 112TH STREET CORPORATION,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Secretary


                               THE TWA AMBASSADOR CLUB, INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Secretary




[SIGNATURE PAGE TO SECURED DEBTOR IN POSSESSION
CREDIT AND SECURITY AGREEMENT]
<PAGE>   97

                               TRANS WORLD COMPUTER SERVICES, INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Secretary


                               TRANSCONTINENTAL & WESTERN AIR, INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    William F. Compton
                                  Title:   President


                               TWA AVIATION, INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Secretary


                               TWA GROUP, INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Secretary


                               TWA STANDARDS & CONTROLS, INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Assistant Secretary


                               OZARK GROUP, INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Michael Palumbo
                                  Title:   President


[SIGNATURE PAGE TO SECURED DEBTOR IN POSSESSION
CREDIT AND SECURITY AGREEMENT]

<PAGE>   98


                               TWA NIPPON, INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Secretary


                               TWA EMPLOYEE SERVICES, INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Secretary


                               TWA GETAWAY VACATIONS, INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Assistant Secretary


                               TRANS WORLD EXPRESS, INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Secretary


                               INTERNATIONAL AVIATION SECURITY, INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Secretary


[SIGNATURE PAGE TO SECURED DEBTOR IN POSSESSION
CREDIT AND SECURITY AGREEMENT]

<PAGE>   99

                               GETAWAY MANAGEMENT SERVICES, INC., as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Secretary


                               THE GETAWAY GROUP (UK), INC.,
                               as a Guarantor

                               By:
                                  --------------------------------------------
                                  Name:    Paul J.M. Rutterer
                                  Title:   Secretary


                               AMR FINANCE, INC.,
                               as Administrative Agent and Lender

                               By:
                                   --------------------------------------------
                                   Name:
                                   Title:


[SIGNATURE PAGE TO SECURED DEBTOR IN POSSESSION
CREDIT AND SECURITY AGREEMENT]
<PAGE>   100
                                    EXHIBIT A

                       ASSIGNMENT AND ACCEPTANCE AGREEMENT

                  This Assignment and Acceptance Agreement (this "Agreement") is
made as of _______________, ____ by and between
__________________________________ (the "Assignor Lender") and
________________________ (the "Assignee Lender") and acknowledged and consented
to by AMR Finance, Inc., as administrative agent for the Lenders party to the
Credit Agreement referred to below (the "Administrative Agent"). All capitalized
terms used in this Agreement and not otherwise defined herein will have the
respective meanings set forth in the Credit Agreement as hereinafter defined.

                                    RECITALS:

                  WHEREAS, Trans World Airlines, Inc., a Delaware corporation
(the "Borrower"), the Subsidiaries of the Borrower party thereto, as Guarantors,
the Lenders from time to time party thereto and the Administrative Agent, have
entered into that certain Secured Debtor In Possession Credit and Security
Agreement dated as of January __, 2001 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"); and

                  WHEREAS, the Assignor Lender desires to assign to the Assignee
Lender [all/a portion] of its interest in the Loan (as described below) and the
Collateral and to delegate to the Assignee Lender [all/a portion] of its
Commitments and other duties with respect to the Loan and the Collateral; and

                  WHEREAS, the Assignee Lender desires to become a Lender under
the Credit Agreement and to accept such assignment and delegation from the
Assignor Lender; and

                  WHEREAS, the Assignee Lender desires to appoint the
Administrative Agent as agent for the Assignee Lender under the Credit
Agreement;

                  NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the Assignor Lender and
the Assignee Lender agree as follows:

1.       ASSIGNMENT, DELEGATION, AND ACCEPTANCE

                  1.1 Assignment. The Assignor Lender hereby transfers and
assigns to the Assignee Lender, without recourse and without any representation
or warranty of any kind (except as set forth in Section 3.2 hereof), [all/such
percentage] of the Assignor Lender's right, title and interest in the Loan, the
Loan Documents and the Collateral as will result in the Assignee Lender having
as of the Effective Date (as hereinafter defined) a Pro Rata Share thereof, as
set forth below:

<PAGE>   101

<TABLE>
<CAPTION>
                Principal Amount                 Pro Rata Share
<S>                                              <C>
         $                                                  %
           -------------------------                 ------
</TABLE>

                  1.2 Delegation. The Assignor Lender hereby irrevocably assigns
and delegates to the Assignee Lender [all/a portion] of its Commitments and its
other duties and obligations as a Lender under the Loan Documents equivalent to
[100%/___%] of the Assignor Lender's [Revolving/Term] Credit Commitment (such
percentage representing a commitment of $ ________).

                  1.3 Acceptance by the Assignee Lender. By its execution of
this Agreement, the Assignee Lender irrevocably purchases, assumes and accepts
such assignment and delegation and agrees to be a Lender with respect to the
delegated interest under the Loan Documents and to be bound by the terms and
conditions thereof. By its execution of this Agreement, the Assignor Lender
agrees, to the extent provided herein, to relinquish its rights and be released
from its obligations and duties under the Credit Agreement.

                  1.4 Effective Date. Such assignment and delegation by the
Assignor Lender and acceptance by the Assignee Lender will be effective and the
Assignee Lender will become a Lender under the Loan Documents as of [no earlier
than the date of this Agreement] (the "Effective Date") and upon payment of the
Assigned Amount and the Assignment Fee (as each term is defined below).
[Interest and Fees accrued prior to the Effective Date are for the account of
the Assignor Lender, and interest and Fees accrued from and after the Effective
Date are for the account of the Assignee Lender.]

2.       INITIAL PAYMENT AND DELIVERY OF NOTES

                  2.1 Payment of the Assigned Amount. The Assignee Lender will
pay to the Assignor Lender, in immediately available funds, not later than 12:00
noon (New York time) on the Effective Date, an amount equal to its Pro Rata
Share of the then outstanding principal amount of the Loans as set forth above
in Section 1.1 [together with accrued interest, Fees and other amounts as set
forth on Schedule 2.1] (the "Assigned Amount").

                  2.2 Payment of Assignment Fee. The Assignor Lender will pay to
the Administrative Agent, for its own account in immediately available funds,
not later than 12:00 noon (New York time) on the Effective Date, the assignment
fee in the amount of $3,500 (the "Assignment Fee") as required pursuant to
Section 13.2(b) of the Credit Agreement.

                  2.3 Execution and Delivery of Notes. Following payment of the
Assigned Amount and the Assignment Fee, the Assignor Lender will deliver to the
Administrative Agent the [Revolving/Term] Credit Note previously delivered to
the Assignor Lender for redelivery to the Loan Parties and the Administrative
Agent will obtain from the Borrower for delivery to [the Assignor Lender and]
the Assignee Lender, new executed [Revolving/Term] Credit Note[s] evidencing the
Assignee Lender's [and

                                       2

<PAGE>   102

the Assignor Lender's respective] Pro Rata Share[s] in the Loans after giving
effect to the assignment described in Section 1. Each new [Revolving/Term]
Credit Note will be issued in the aggregate maximum principal amount of the
[applicable] Commitment [of the Lender to whom such [Revolving/Term] Credit Note
is issued] OR [the Assignee Lender].

3.       REPRESENTATIONS, WARRANTIES AND COVENANTS

                  3.1 Assignee Lender's Representations, Warranties and
Covenants. The Assignee Lender hereby represents, warrants and covenants the
following to the Assignor Lender and the Administrative Agent:

                           (a) This Agreement is a legal, valid and binding
                  agreement of the Assignee Lender, enforceable according to its
                  terms;

                           (b) The execution and performance by the Assignee
                  Lender of its duties and obligations under this Agreement and
                  the Loan Documents will not require any registration with,
                  notice to, or consent or approval by any Governmental
                  Authority;

                           (c) The Assignee Lender is familiar with transactions
                  of the kind and scope reflected in the Loan Documents and in
                  this Agreement;

                           (d) The Assignee Lender has made its own independent
                  investigation and appraisal of the financial condition and
                  affairs of each Loan Party, has conducted its own evaluation
                  of the Loan, the Loan Documents and each Loan Party's
                  creditworthiness, has made its decision to become a Lender to
                  the Loan Parties under the Credit Agreement independently and
                  without reliance upon the Assignor Lender or the
                  Administrative Agent, and will continue to do so;

                           (e) The Assignee Lender is entering into this
                  Agreement in the ordinary course of its business, and is
                  acquiring its interest in the Loan for its own account and not
                  with a view to or for sale in connection with any subsequent
                  distribution; provided, however, that at all times the
                  distribution of the Assignee Lender's property shall, subject
                  to the terms of the Credit Agreement, be and remain within its
                  control;

                           (f) No future assignment or participation granted by
                  the Assignee Lender pursuant to Section 13.2 of the Credit
                  Agreement will require the Assignor Lender, the Administrative
                  Agent or any Loan Party to file any registration statement
                  with the Securities and Exchange Commission or to apply to
                  qualify under the blue sky laws of any state;

                           (g) The Assignee Lender has no loans to, written or
                  oral agreements with, or equity or other ownership interest in
                  any Loan Party;

                                       3

<PAGE>   103

                           (h) The Assignee Lender will not enter into any
                  written or oral agreement with, or acquire any equity or other
                  ownership interest in, any Loan Party without the prior
                  written consent of the Administrative Agent; and

                           (i) As of the Effective Date, the Assignee Lender (i)
                  is entitled to receive payments of principal and interest in
                  respect of the Obligations without deduction for or on account
                  of any taxes imposed by the United States of America or any
                  political subdivision thereof [, (ii) is not subject to
                  capital adequacy or similar requirements under Section 2.11 of
                  the Credit Agreement, and (iii) does not require the payment
                  of any increased costs under Section 2.12 of the Credit
                  Agreement,] and the Assignee Lender will indemnify the
                  Administrative Agent from and against all liabilities,
                  obligations, losses, damages, penalties, actions, judgments,
                  suits, costs or expenses that result from the Assignee
                  Lender's failure to fulfill its obligations under the terms of
                  Section 12.5 of the Credit Agreement [or from any other
                  inaccuracy in the foregoing].

                           3.2. Assignor Lender's Representations, Warranties
and Covenants. The Assignor Lender hereby represents, warrants and covenants the
following to the Assignee Lender:

                           (a) The Assignor Lender is the legal and beneficial
                  owner of the Assigned Amount;

                           (b) This Agreement is a legal, valid and binding
                  agreement of the Assignor Lender, enforceable according to its
                  terms;

                           (c) The execution and performance by the Assignor
                  Lender of its duties and obligations under this Agreement and
                  the Loan Documents will not require any registration with,
                  notice to or consent or approval by any Governmental
                  Authority;

                           (d) The Assignor Lender has full power and authority,
                  and has taken all action necessary to execute and deliver this
                  Agreement and to fulfill the obligations hereunder and to
                  consummate the transactions contemplated hereby;

                           (e) The Assignor Lender is the legal and beneficial
                  owner of the interests being assigned hereby, free and clear
                  of any adverse claim, Lien, restriction on transfer, purchase
                  option, call or similar right of a third party; and

                           (f) This Assignment by the Assignor Lender to the
                  Assignee Lender complies, in all material respects, with the
                  terms of the Loan Documents.


                                      4
<PAGE>   104

4.       LIMITATIONS OF LIABILITY

                  Neither the Assignor Lender (except as provided in Section 3.2
hereof) nor the Administrative Agent makes any representations or warranties of
any kind, nor assumes any responsibility or liability whatsoever, with regard to
(a) the Loan Documents or any other document or instrument furnished pursuant
thereto or the Loan or other Obligations, (b) the creation, validity,
genuineness, enforceability, sufficiency, value or collectibility of any of
them, (c) the amount, value or existence of the Collateral, (d) the perfection
or priority of any Lien upon the Collateral, or (e) the financial condition of
any Loan Party or other obligor or the performance or observance by any Loan
Party of its Obligations under any of the Loan Documents. Neither the Assignor
Lender nor the Administrative Agent has or will have any duty, either initially
or on a continuing basis, to make any investigation, evaluation, appraisal of,
or any responsibility or liability with respect to the accuracy or completeness
of, any information provided to the Assignee Lender which has been provided to
the Assignor Lender or the Administrative Agent by any Loan Party. Nothing in
this Agreement or in the Loan Documents shall impose upon the Assignor Lender or
the Administrative Agent any fiduciary relationship in respect of the Assignee
Lender.

5.       FAILURE TO ENFORCE

                  No failure or delay on the part of the Administrative Agent or
the Assignor Lender in the exercise of any power, right or privilege hereunder
or under any Loan Document will impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein. No single or
partial exercise of any such power, right, or privilege will preclude further
exercise thereof or of any other right, power, or privilege. All rights and
remedies existing under this Agreement are cumulative with, and not exclusive
of, any rights or remedies otherwise available.

6.       NOTICES

                  Unless otherwise specifically provided herein, any notice or
other communication required or permitted to be given will be in writing and
addressed to the respective party as set forth below its signature hereunder, or
to such other address as the party may designate in writing to the other.

7.       AMENDMENTS AND WAIVERS

                  No amendment, modification, termination or waiver of any
provision of this Agreement will be effective without the written concurrence of
the Assignor Lender, the Administrative Agent and the Assignee Lender.

8.       SEVERABILITY

                  Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law. In
the event any provision of this Agreement is or is held to be invalid, illegal,
or unenforceable under applicable law, such provision will be ineffective only
to the extent of such invalidity,



                                       5
<PAGE>   105

illegality or unenforceability, without invalidating the remainder of such
provision or the remaining provisions of the Agreement. In addition, in the
event any provision of or obligation under this Agreement is or is held to be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations in any other
jurisdictions will not in any way be affected or impaired thereby.

9.       SECTION TITLES

                  Section and Subsection titles in this Agreement are included
for convenience of reference only, do not constitute a part of this Agreement
for any other purpose, and have no substantive effect.

10.      SUCCESSORS AND ASSIGNS

                  This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.

11.      APPLICABLE LAW

                  THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE.

12.      COUNTERPARTS

                  This Agreement and any amendments, waivers, consents or
supplements may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which, when so executed and
delivered, will be deemed an original and all of which shall together constitute
one and the same instrument.

                  IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above,

ASSIGNEE LENDER:                            ASSIGNOR LENDER:


By:                                         By:
    ------------------------------------      ----------------------------------
Name:                                       Name:
     -----------------------------------         -------------------------------
Title:                                      Title:
       ---------------------------------          ------------------------------


Notice Address:                             Notice Address:



                                       6
<PAGE>   106



ACKNOWLEDGED AND CONSENTED TO:

AMR FINANCE, INC.,
as the Administrative Agent



By:
    ------------------------------
Name:
     -----------------------------
Title:
       ---------------------------





                                       7
<PAGE>   107



                                  SCHEDULE 2.1




Assignor Lender's Loans

<TABLE>
<CAPTION>
Principal Amount
- ----------------
<S>                                                           <C>
Loan                                                          $
                                                                -------

Accrued Interest                                              $
                                                                -------

Other + or -                                                  $
                                                                -------

Total                                                         $
                                                                =======
</TABLE>


All determined as of the Effective Date.





                                       8
<PAGE>   108
                                  EXHIBIT B - 1

                              REVOLVING CREDIT NOTE

Lender: [_______________]                                    New York, New York
Principal Amount: [$___________]                             January __, 2001

                  FOR VALUE RECEIVED, the undersigned, Trans World Airlines,
Inc., a Delaware corporation (the "Borrower"), hereby promises to pay to the
order of the Lender set forth above (the "Lender") the Principal Amount set
forth above, or, if less, the aggregate unpaid principal amount of all Revolving
Loans (as defined in the Credit Agreement referred to below) of the Lender to
the Borrower, payable at such times, and in such amounts, as are specified in
the Credit Agreement.

                  The Borrower promises to pay interest on the unpaid principal
amount of the Revolving Loans from the date made until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.

                  Both principal and interest are payable in Dollars to the Loan
Account in immediately available funds.

                  This Note is one of the Revolving Credit Notes referred to in,
and is entitled to the benefits of, that certain Secured Debtor In Possession
Credit and Security Agreement, dated as of January __, 2001 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the Subsidiaries of the Borrower party
thereto, as Guarantors, the Lenders from time to time party thereto and AMR
Finance, Inc., as Administrative Agent. Capitalized terms used herein and not
defined herein are used herein as defined in the Credit Agreement.

                  The Credit Agreement, among other things, (i) provides for the
making of Revolving Loans by the Lender to the Borrower in an aggregate amount
not to exceed at any time outstanding the Principal Amount set forth above, the
indebtedness of the Borrower resulting from such Revolving Loans being evidenced
by this Note and (ii) contains provisions for acceleration of the maturity of
the unpaid principal amount of this Note upon the happening of certain stated
events and also for prepayments on account of the principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.

                  This Note is entitled to the benefits of the Guaranty and is
secured as provided in the Credit Agreement.

                  Demand, diligence, presentment, protest and notice of
non-payment and protest are hereby waived by the Borrower.

                  This Note shall be governed by, and construed and interpreted
in accordance with, the law of the State of New York.


              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                     B-1-1

<PAGE>   109

                  IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed and delivered by its duly authorized officer as of the day and year and
at the place set forth above.

                                                 TRANS WORLD AIRLINES, INC.



                                                 By:
                                                    ----------------------------
                                                 Name:
                                                      --------------------------
                                                 Title:
                                                       -------------------------



<PAGE>   110

                                  EXHIBIT B - 2

                                 TERM LOAN NOTE

Lender: [_______________]                                    New York, New York
Principal Amount: [$_______________]                         January __, 2001

                  FOR VALUE RECEIVED, the undersigned, Trans World Airlines,
Inc., a Delaware corporation (the "Borrower"), hereby promises to pay to the
order of the Lender set forth above (the "Lender") the Principal Amount set
forth above, or, if less, the aggregate unpaid principal amount of the Term
Loans (as defined in the Credit Agreement referred to below) of the Lender to
the Borrower, payable at such times, and in such amounts, as are specified in
the Credit Agreement.

                  The Borrower promises to pay interest on the unpaid principal
amount of such Term Loan from the date made until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Credit Agreement.

                  Both principal and interest are payable in Dollars to the Loan
Account in immediately available funds.

                  This Note is one of the Term Loan Notes referred to in, and is
entitled to the benefits of, that certain Secured Debtor In Possession Credit
and Security Agreement, dated as of January __, 2001 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the Subsidiaries of the Borrower party
thereto, as Guarantors, the Lenders from time to time party thereto and AMR
Finance, Inc., as Administrative Agent. Capitalized terms used herein and not
defined herein are used herein as defined in the Credit Agreement.

                  The Credit Agreement, among other things, (i) provides for the
making of Term Loans by the Lender to the Borrower in an aggregate amount not to
exceed at any time outstanding the Principal Amount set forth above, the
indebtedness of the Borrower resulting from such Term Loans being evidenced by
this Note and (ii) contains provisions for acceleration of the maturity of the
unpaid principal amount of this Note upon the happening of certain stated events
and also for prepayments on account of the principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.

                  This Note is entitled to the benefits of the Guaranty and is
secured as provided in the Credit Agreement.

                  Demand, diligence, presentment, protest and notice of
non-payment and protest are hereby waived by the Borrower.

                  This Note shall be governed by, and construed and interpreted
in accordance with, the law of the State of New York.



              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                      B-2-1

<PAGE>   111



                  IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed and delivered by its duly authorized officer as of the day and year and
at the place set forth above.

                                           TRANS WORLD AIRLINES, INC.



                                           By:
                                              ----------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                --------------------------------


<PAGE>   112
                                    EXHIBIT C

                               NOTICE OF BORROWING

AMR Finance, Inc.,
    as Administrative Agent under the
    Credit Agreement referred to below
4333 Amon Carter Boulevard                                      January __, 2001
Fort Worth, Texas  76155

Attention:

             Re:    Trans World Airlines, Inc. (the "Borrower")

                  Reference is made to the Secured Debtor in Possession Credit
and Security Agreement, dated as of January __, 2001 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the Subsidiaries of the Borrower party
thereto, as Guarantors, the Lenders from time to time party thereto and AMR
Finance, Inc., as Administrative Agent. Capitalized terms used herein and not
otherwise defined herein are used herein as defined in the Credit Agreement.

                  The Borrower hereby gives you notice, pursuant to Section 2.2
of the Credit Agreement that the undersigned hereby requests a Borrowing of
[Revolving Loans/Term Loans] under the Credit Agreement and, in that connection,
sets forth below the information relating to such Borrowing (the "Proposed
Borrowing") as required by Section 2.2 of the Credit Agreement:

                    (i) The date of the Proposed Borrowing is __________, ____
               (the "Funding Date").

                    (ii) The aggregate amount of the Revolving Credit Borrowing
               is $_________. After giving effect to the proposed Revolving
               Credit Borrowing, Borrower's Available Credit is $_________.

                    (iii) The aggregate amount of the Term Loan Borrowing is
               $_________.

                  The undersigned hereby certifies that the following statements
are true on the date hereof and shall be true on the Funding Date both before
and after giving effect thereto and to the application of the proceeds
therefrom:


                                       C-1

<PAGE>   113





                    (i) the representations and warranties set forth in Article
               IV of the Credit Agreement and in the other Loan Documents are
               true and correct in all material respects on and as of the
               Funding Date with the same effect as though made on and as of
               such date, except to the extent such representations and
               warranties expressly relate to an earlier date in which case,
               such representations and warranties were true and correct in all
               material respects as of such earlier date; and

                    (ii) no Default or Event of Default has occurred and is
               continuing on the Funding Date.

                                             TRANS WORLD AIRLINES, INC.



                                             By:
                                                --------------------------------
                                             Name:
                                                  ------------------------------
                                             Title:
                                                   -----------------------------

<PAGE>   114
                                    EXHIBIT D

                       FORM OF BORROWING BASE CERTIFICATE

Pursuant to the Secured Debtor In Possession Credit and Security Agreement dated
as of January __, 2001, among Trans World Airlines, Inc., a Delaware
corporation, as debtor and debtor in possession under chapter 11 of the
Bankruptcy Code (the "Borrower"), the Subsidiaries of the Borrower listed on the
signature pages thereof as guarantors, as debtors and debtors in possession
under chapter 11 of the Bankruptcy Code (the "Guarantors"), the Lenders from
time to time party thereto and AMR Finance, Inc., a Delaware corporation, as
administrative agent for the Lenders (the "Administrative Agent") (including all
annexes, exhibits or schedules thereto, and as from time to time amended,
restated, supplemented or otherwise modified, (the "Credit Agreement"), the
undersigned certifies that as of the close of business on the date set forth
below, the Borrowing Base is computed as set forth below.

The undersigned represents and warrants that this Borrowing Base Certificate is
a true and correct statement of, and that the information attached hereto is
true and correct in all material respects regarding, the status of Receivables,
Eligible Receivables and the Borrowing Base and that the amounts reflected
herein are in compliance with the provisions of the Credit Agreement. The
undersigned further represents and warrants that there is no Default or Event of
Default and the representations and warranties set forth in Article IV of the
Credit Agreement and in the other Loan Documents are true and correct in all
material respects on and as of the date hereof with the same effect as though
made on and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date in which case, such
representations and warranties were true and correct in all material respects as
of such earlier date. The undersigned understands that the Lenders will extend
loans in reliance upon the information contained herein. In the event of a
conflict between the following summary of eligibility criteria and the Credit
Agreement, the Credit Agreement shall govern. Capitalized terms used herein and
not otherwise defined herein shall have the meanings specified in the Credit
Agreement

                                                    TRANS WORLD AIRLINES, INC.



                                                    By:
                                                       -------------------------
                                                       Duly Authorized Signatory



<PAGE>   115
                                                                     EXHIBIT E-1


                                January 10, 2001

The Lenders party to the Credit Agreement
referred to below, and AMR Finance, Inc.,
as Administrative Agent for the Lenders

                          Re: Trans World Airlines Inc.
                              -------------------------

Ladies and Gentlemen:

                  We have acted as counsel to Trans World Airlines Inc., a
Delaware corporation ("Borrower"), and a debtor and debtor-in-possession under
the Bankruptcy Code, the subsidiaries of the Borrower listed on Schedule A to
this letter (collectively, the "Subsidiaries", and together with Borrower, each
a "Loan Party" and collectively the "Loan Parties"), subsidiaries of the
Borrower acting as guarantors and as debtors and debtors-in-possession, in
connection with the preparation, authorization, execution and delivery of, and
the consummation of the transactions contemplated by that certain Secured Debtor
in Possession Credit and Security Agreement, dated as of January 10, 2001, among
Borrower, Subsidiaries, the lenders from time to time party thereto, as Lenders,
and AMR Finance, Inc., as Administrative Agent (the "Credit Agreement"). This
opinion is being delivered to you pursuant to Section 3.1 of the Credit
Agreement. Capitalized terms defined in the Credit Agreement used herein, and
not otherwise defined herein, shall have the meanings given them in the Credit
Agreement.

                  For purposes of this opinion letter, we have examined
originals or copies (certified or otherwise identified to our satisfaction) of
the following documents:

                  (a) the Credit Agreement and the Exhibits and Schedules
annexed thereto; and

                  (b) the Interim Order.

                  Subject to the assumptions, qualifications, exclusions and
other limitations identified in this letter, we are of the opinion that:

1.   Upon entry of the Interim Order by the Bankruptcy Court and subject
     thereto, the Credit Agreement will be duly executed and delivered on behalf
     of each Loan Party that is a party thereto and (assuming the due
     authorization, execution and delivery thereof by the parties thereto other
     than the Loan Parties) will constitute a valid and binding obligation of
     such Loan Party, enforceable against such Loan Party in accordance with its
     terms. No opinion is expressed in this opinion as to the creation,
     perfection or priority of any Liens, and we note that the enforcement of
     any Liens may require filings with and the approval of the Bankruptcy
     Court.

2.   Upon entry of the Interim Order by the Bankruptcy Court and subject
     thereto, the execution and delivery of the Credit Agreement, the
     consummation of the transactions contemplated thereby, and the compliance
     by each Loan Party, as applicable, with any of the provisions thereof
     pertaining to such Loan Party will not



<PAGE>   116


     conflict with, constitute a default under or violate any applicable
     provision of existing New York, Delaware general corporate or federal
     statutory law or rule or regulation covered by this letter.

3.   Other than the entry of the Interim Order of the Bankruptcy Court, no
     approval, authorization, consent, permit, order or other action of any New
     York, Delaware or federal Governmental Authority is required in connection
     with (i) the execution, delivery or performance by any Loan Party of the
     Credit Agreement, or (ii) the legality, validity, binding effect or
     enforceability of the Credit Agreement, except for the filings required by
     the terms of the Credit Agreement in connection with the Liens created in
     favor of the Administrative Agent by the Credit Agreement and except that
     (a) we express no opinion regarding actions or filings required in
     connection with the ordinary course conduct by each Loan Party of its
     business and ownership or operation by each Loan Party of its assets, to
     the extent that the same may be required by the Credit Agreement, and (b)
     enforcement of any liens with respect to the Loan Parties may require
     filing with and approval of the Bankruptcy Court.

4.   The making of the extensions of credit to the Borrower under the Credit
     Agreement does not violate Regulations T, U or X of the Board of Governors
     of the Federal Reserve System under the Securities Exchange Act of 1934, as
     amended.

5.   The Borrower is not an "investment company" within the meaning of the
     Investment Company Act of 1940, as amended.

6.   The Interim Order has been entered, is in full force and effect in
     accordance with its terms, and, to our knowledge based on the review of the
     docket of the Reorganization Cases, no order amending, staying, vacating or
     rescinding the Interim Order has been entered by the Bankruptcy Court.

                  For purposes of this letter, we have assumed the genuineness
of all signatures, the legal capacity of all natural persons, the accuracy and
completeness of all documents we have reviewed, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents. We have further
assumed that each of the Loan Parties is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
with full right, power and authority to execute and deliver the Credit Agreement
and to carry out the terms thereof, that each Loan Party has all requisite power
and authority to execute and deliver the Credit Agreement and to perform its
respective obligations thereunder, and that the execution, delivery and
performance by each Loan Party of the Credit Agreement, and the consummation of
the transactions under the Credit Agreement, have been duly authorized by all
necessary corporate action on the part of each such Loan Party. We understand
that you have received and are satisfied with the opinion of Kathleen A. Soled,
Senior Vice President and General Counsel of the Borrower, as to the matters
assumed in the preceding sentence.

                  We have further assumed that the Credit Agreement and every
other agreement we have examined for purposes of this letter constitutes a valid
and binding obligation of each party to that document and that each such party
has satisfied all legal requirements that are applicable to such party to the
extent necessary to entitle such party to enforce such agreement (except that we
make no such assumptions with respect to the Loan Parties).



<PAGE>   117


                  For purposes of our opinions in paragraph 1, we have also
assumed that the Credit Agreement constitutes or will constitute the valid and
binding obligations of each party thereto other than the Loan Parties,
enforceable against each such party in accordance with its respective terms.

                  For purposes of (a) our opinions in paragraphs 2 and 3, we
have also assumed that the Loan Parties will in the future obtain all permits
and governmental approvals required, and will in the future take all actions
required, relevant to the consummation of transactions or the performance under
the Credit Agreement and (b) our opinions in paragraph 2, will not in the future
take any discretionary action (including a decision not to act) permitted under
the Credit Agreement that would result in a violation of law or governmental
regulation to which the Loan Parties may be subject.

                  For purposes of our opinion in paragraph 4, we have assumed
that none of the proceeds of the Loans will be used for the purpose of buying,
carrying or trading in securities or buying or carrying any part of an
investment contract security which shall be deemed credit for the purpose of
buying or carrying the entire security (in each case within the meaning of the
definition of "purpose credit" in Regulation T of the Board of Governors of the
Federal Reserve System) or for the purpose, whether immediate, incidental, or
ultimate, of buying or carrying margin stock (within the meaning of the
definition of "purpose credit" in Regulation U of the Board of Governors of the
Federal Reserve System) and that all required statements that the credits
extended or to be extended under the Credit Agreement are not "purpose credit"
will be obtained on a timely basis.

                  In preparing this letter we have relied without independent
verification upon: (i) factual information represented to be true in the Credit
Agreement and other documents specifically identified at the beginning of this
letter as having been read by us; (ii) factual information provided to us by the
Loan Parties or their representatives; and (iii) factual information we have
obtained from such other sources as we have deemed reasonable. We have assumed
that there has been no relevant change or development between the dates as of
which the information cited in the preceding sentence was given and the date of
this letter and that the information upon which we have relied is accurate and
does not omit disclosures necessary to prevent such information from being
misleading. In rendering our opinions in paragraphs 1, 2 and 3 above, we have
relied upon the terms of the Interim Order and we express no opinion with
respect to any amendment, modification, vacation or stay with respect to the
Interim Order after the date hereof.

                  We confirm that we do not have knowledge that has caused us to
conclude that our reliance and assumptions cited in the six immediately
preceding paragraphs are unwarranted. Whenever this letter provides advice about
(or based upon) our knowledge or awareness of any particular information or
about any information which has or has not come to our attention such advice is
based entirely on the conscious awareness at the time this letter is delivered
on the date it bears by the lawyers with Kirkland & Ellis at that time who spent
substantial time representing the Loan Parties in negotiating the transactions
contemplated by the Credit Agreement or in representing the Loan Parties in the
Reorganization Cases.

                  Each opinion (an "enforceability opinion") in this letter that
any particular contract is a valid and binding obligation or is enforceable in
accordance with its terms is subject to: (i) applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and judicially developed doctrines in
this area such as substantive consolidation and equitable subordination; (ii)
the effect of general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity); and (iii) other commonly recognized
statutory and judicial constraints on



<PAGE>   118


enforceability including statutes of limitations. "General principles of equity"
include but are not limited to: principles limiting the availability of specific
performance and injunctive relief; principles which limit the availability of a
remedy under certain circumstances where another remedy has been elected;
principles requiring reasonableness, good faith and fair dealing in the
performance and enforcement of an agreement by the party seeking enforcement;
and principles affording equitable defenses such as waiver, laches and estoppel.
It is possible that certain terms in a particular contract covered by our
enforceability opinion may not prove enforceable for reasons other than those
explicitly cited in this letter should an actual enforcement action be brought,
but (subject to all the exceptions, qualifications, exclusions and other
limitations contained in this letter) such unenforceability would not in our
opinion prevent the party entitled to enforce that contract from realizing the
principal benefits purported to be provided to that party by the terms in that
contract which are covered by our enforceability opinion.

                  Our advice on every legal issue addressed in this letter is
based exclusively on the Delaware General Corporation Law, the internal laws of
the State of New York and the federal law of the United States (including
Federal bankruptcy laws), and represents our opinion as to how that issue would
be resolved were it to be considered by the highest court in the jurisdiction
which enacted such law. We express no opinion as to what law might be applied by
any other courts to resolve any issue addressed by our opinion and we express no
opinion as to whether any relevant difference exists between the laws upon which
our opinions are based and any other laws which may actually be applied to
resolve issues which may arise under the Credit Agreement. The manner in which
any particular issue would be treated in any actual court case would depend in
part on facts and circumstances particular to the case. This letter is not
intended to guarantee the outcome of any legal dispute which may arise in the
future.

                  This letter does not cover any law which in our experience
would generally not be considered by lawyers in New York for purposes of the
opinions contained in this letter. We express no opinion with respect to any
federal or state securities (or "blue sky") laws or regulations or laws and
regulations administered by the United States Securities and Exchange
Commission, federal or state antitrust or unfair competition laws or any laws,
statutes, governmental rules or regulations which in our experience are not
applicable generally to credit transactions of the kind covered by the Credit
Agreement when undertaken by general business corporations which are not engaged
in any material respect in regulated activities or businesses. We express no
opinion regarding the enforceability of any provision providing for
indemnification for liabilities arising under securities laws.

                  This letter speaks as of the time of its delivery on the date
it bears. We do not assume any obligation to provide you with any subsequent
opinion or advice by reason of any fact about which we did not have knowledge at
that time, by reason of any change subsequent to that time in any law other
governmental requirement or interpretation thereof covered by any of our
opinions or advice, or for any other reason.



<PAGE>   119


                  You may rely upon this letter only for the purpose served by
the provision in the Credit Agreement cited in the initial paragraph of this
opinion letter in response to which it has been delivered. Without our written
consent: (i) no person other than you or the Loan Parties may rely on this
opinion letter for any purpose; (ii) this opinion letter may not be cited or
quoted in any financial statement, prospectus, private placement memorandum or
other similar document; (iii) this opinion letter may not be cited or quoted in
any other document or communication which might encourage reliance upon this
opinion letter by any person or for any purpose excluded by the restrictions in
this paragraph; and (iv) copies of this opinion letter may not be furnished to
anyone for purposes of encouraging such reliance; provided, however, that
financial institutions which become assignees in accordance with the provisions
of section 13.2 of the Credit Agreement may rely on this opinion as of the time
of its delivery on the date hereof as if such assignees were addressees hereof.


                                                      Sincerely,


                                                      Kirkland & Ellis




<PAGE>   120


              [Form of Opinion of TWA In-house Counsel]            EXHIBIT E-2




                                January 10, 2001

The Lenders party to the Credit Agreement
referred to below, and AMR Finance, Inc.,
as Administrative Agent for the Lenders


                          Re: Trans World Airlines Inc.

Ladies and Gentlemen:

                  I am [Senior Vice President and General Counsel] of Trans
World Airlines Inc., a Delaware corporation ("Borrower"), and a debtor and
debtor-in-possession under the Bankruptcy Code, the subsidiaries of the Borrower
listed on Schedule A to this letter (collectively, the "Subsidiaries", and
together with Borrower, each a "Loan Party" and collectively the "Loan
Parties"), subsidiaries of the Borrower acting as guarantors and as debtors and
debtors-in-possession, and in that capacity I have participated in the
preparation, authorization, execution and delivery of, and the consummation of
the transactions contemplated by that certain Secured Debtor in Possession
Credit and Security Agreement, dated as of January 10, 2001, among Borrower,
Subsidiaries, the lenders from time to time party thereto, as Lenders, and AMR
Finance, Inc., as Administrative Agent (the "Credit Agreement"). This opinion is
being delivered to you pursuant to Section 3.1 of the Credit Agreement.
Capitalized terms defined in the Credit Agreement used herein, and not otherwise
defined herein, shall have the meanings given them in the Credit Agreement.

                  For purposes of this opinion letter, I have examined originals
or copies (certified or otherwise identified to our satisfaction) of the
following documents:

                  (a)      the Credit Agreement and the Exhibits and Schedules
                           annexed thereto;

                  (b)      the Interim Order;

                  (c)      the certificates or articles of incorporation and
                           bylaws of each of the Loan Parties, as amended to
                           date; and

                  (d)      all records of proceedings and actions of the Boards
                           of Directors of the Loan Parties relating to the
                           Credit Agreement and the transactions contemplated
                           thereby.

                  Subject to the assumptions, qualifications, exclusions and
other limitations identified in this letter, I am of the opinion that:

1.   Each Loan Party is a corporation validly existing and in good standing
     under the laws of its state of incorporation, with full right, power and
     authority to carry on its business, to own or hold under lease its
     properties, and to execute and deliver the Credit Agreement and to carry
     out the terms thereof.



<PAGE>   121




2.   Each Loan Party has all requisite power and authority to execute and
     deliver the Credit Agreement and to perform its respective obligations
     thereunder. The execution, delivery and performance by each Loan Party of
     the Credit Agreement, and the consummation of the transactions under the
     Credit Agreement, have been duly authorized by all necessary corporate
     action on the part of each such Loan Party, and the Credit Agreement has
     been duly executed and delivered on behalf of each Loan Party that is a
     party thereto.

3.   Upon entry of the Interim Order by the Bankruptcy Court and subject
     thereto, the execution and delivery of the Credit Agreement, the
     consummation of the transactions contemplated thereby, and the compliance
     by each Loan Party, as applicable, with any of the provisions thereof
     pertaining to such Loan Party will not conflict with, constitute a default
     under or violate (i) any applicable provision of existing Missouri
     statutory law or rule or regulation covered by this letter, (ii) any of the
     terms, conditions or provisions of its Constituent Documents, or (iii) any
     judgment, writ, injunction, decree, order, or ruling of any court or
     Governmental Authority binding on any Loan Party of which I am aware.

                  For purposes of this letter, I have assumed the genuineness of
all signatures (other than those on behalf of any Loan Party), the legal
capacity of all natural persons, the accuracy and completeness of all documents
I have reviewed, the authenticity of all documents submitted to me as originals,
the conformity to original documents of all documents submitted to me as
certified, conformed or photostatic copies and the authenticity of the originals
of such latter documents.

                  For purposes of my opinions in paragraph 3, I have also
assumed that the Loan Parties will in the future obtain all permits and
governmental approvals required, and will in the future take all actions
required, relevant to the consummation of transactions or the performance under
the Credit Agreement and will not in the future take any discretionary action
(including a decision not to act) permitted under the Credit Agreement that
would result in a violation of law or governmental regulation to which the Loan
Parties may be subject.

                  I confirm that I do not have knowledge that has caused me to
conclude that my reliance and assumptions cited in the preceding paragraphs are
unwarranted.

                  My advice on every legal issue addressed in this letter is
based exclusively on the Delaware General Corporation Law and the internal laws
of the State of Missouri, and represents my opinion as to how that issue would
be resolved were it to be considered by the highest court in the jurisdiction
which enacted such law. I express no opinion as to what law might be applied by
any other courts to resolve any issue addressed by my opinion and I express no
opinion as to whether any relevant difference exists between the laws upon which
my opinions are based and any other laws which may actually be applied to
resolve issues which may arise under the Credit Agreement. The manner in which
any particular issue would be treated in any actual court case would depend in
part on facts and circumstances particular to the case. This letter is not
intended to guarantee the outcome of any legal dispute which may arise in the
future.

                  This letter speaks as of the time of its delivery on the date
it bears. I do not assume any obligation to provide you with any subsequent
opinion or advice by reason of any fact about which I did not have knowledge at
that time, by reason of any change subsequent to that time in any law other
governmental requirement or interpretation thereof covered by any of my opinions
or advice, or for any other reason.



<PAGE>   122



                  You may rely upon this letter only for the purpose served by
the provision in the Credit Agreement cited in the initial paragraph of this
opinion letter in response to which it has been delivered. Without my written
consent: (i) no person other than you or the Loan Parties may rely on this
opinion letter for any purpose; (ii) this opinion letter may not be cited or
quoted in any financial statement, prospectus, private placement memorandum or
other similar document; (iii) this opinion letter may not be cited or quoted in
any other document or communication which might encourage reliance upon this
opinion letter by any person or for any purpose excluded by the restrictions in
this paragraph; and (iv) copies of this opinion letter may not be furnished to
anyone for purposes of encouraging such reliance; provided, however, that
financial institutions which become assignees in accordance with the provisions
of section 13.2 of the Credit Agreement may rely on this opinion as of the time
of its delivery on the date hereof as if such assignees were addressees hereof.

                                        Sincerely,


<PAGE>   123


                                                                     EXHIBIT F

                      IN THE UNITED STATES BANKRUPTCY COURT
                          FOR THE DISTRICT OF DELAWARE


- ---------------------------------------X
IN RE:                                 :
                                       :     CHAPTER 11
TRANS WORLD AIRLINES, INC. ET AL.,(1)  :

                                       :     CASE NOS. 01-[___] (___)
                                       :     THROUGH 01-[___] (___)
                                       :
                    DEBTORS.           :     (JOINTLY ADMINISTERED)
- ---------------------------------------X


                 INTERIM ORDER (i) AUTHORIZING DEBTORS TO ENTER
                    INTO POSTPETITION FINANCING AGREEMENT AND
                    OBTAIN POSTPETITION FINANCING PURSUANT TO
                     SECTION 364(c) OF THE BANKRUPTCY CODE,
                  (ii) GRANTING LIENS AND SUPER-PRIORITY CLAIMS
                AND (iii) SCHEDULING THE HEARING ON THE DEBTORS'
               MOTION TO INCUR SUCH FINANCING ON A PERMANENT BASIS
               AND APPROVING THE FORM AND METHOD OF NOTICE THEREOF

                  Upon the motion, dated January 10, 2001 (the "Motion"), of
Trans World Airlines, Inc. ("TWA") and the other above-captioned debtors
(collectively, the "Guarantors"), each as debtor and debtor in possession (TWA
and the Guarantors each, individually, a "Debtor" and, collectively, the
"Debtors"), (a) for authorization and approval, pursuant to section 364(c) of
title 11 of the United States Code (the "Bankruptcy Code") and rule 4001(c)(2)
of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), to (i)
enter into and perform their obligations under that certain $200,000,000 Secured
Debtor In Possession Credit Agreement, dated as of January 10, 2001 (as the same
may be amended, supplemented or otherwise modified from time to



- ----------

(1)  The Debtors are the following entities: Trans World Airlines, Inc.,
     Ambassador Fuel Corporation, LAX Holding Company, Inc., Mega Advertising
     Inc., Northwest 112th Street Corporation, The TWA Ambassador Club, Inc.,
     Trans World Computer Services, Inc., Transcontinental & Western Air, Inc.,
     TWA Aviation, Inc., TWA Group, Inc., TWA Standards & Controls, Inc., TWA
     Stock Holding Company, TWA-D.C. Gate Company, Inc., TWA-LAX Gate Company,
     Inc., TWA Logan Gate Co., Inc., TWA-NY/NJ Gate Company, Inc., TWA-Omnibus
     Gate Company, Inc., TWA-San Francisco Gate Company, Inc., TWA-Hangar 12
     Holding Company,


<PAGE>   124

time, the "DIP Credit Agreement"(2), by and among TWA, as Borrower, the
Guarantors, the Lenders, and AMR Finance, Inc. ("AMR"), as Administrative Agent
(the "Agent"), substantially in the form of Exhibit "A" to the Motion, and
obtain postpetition financing pursuant to the terms and provisions thereof (ii)
grant security interests, liens, encumbrances and super-priority administrative
expense claims to the Agent and the Lenders pursuant to section 364(c) of the
Bankruptcy Code, and (iii) pending a final hearing on the Motion (the "Final
Hearing"), obtain emergency postpetition loans under the DIP Credit Agreement to
and including the date on which the Final Order (as hereinafter defined) is
entered (the "Interim Facility"), and (b) in accordance with Bankruptcy Rule
4001(c)(2), requesting that this Court schedule the Final Hearing and approve
notice with respect thereto; and the Court having considered the Motion, the
Exhibits thereto, including, without limitation, the DIP Credit Agreement, the
Affidavit of Michael J. Palumbo in Support of First Day Motions filed
contemporaneously herewith, and all other pleadings and papers filed in these
Cases in support of the First Day Orders; and in accordance with Bankruptcy Rule
4001(c)(1) and (2), due and proper notice of the Motion having been given; and a
hearing to consider approval of the Interim Facility having been held and
concluded on the date hereof (the "Interim Hearing"); and upon all of the
pleadings filed with the Court and all of the proceedings held before the Court;
and after due deliberation and consideration and good and sufficient cause
appearing therefor,

- ----------

     Inc., Ozark Group, Inc. , TWA Nippon, Inc. , TWA Employee Services, Inc,
     TWA Getaway Vacations, Inc., Trans World Express, Inc., International
     Aviation Security Inc., Getaway Management Services, Inc., and The Getaway
     Group (U.K.) Inc.

(2)  Unless otherwise defined herein, all capitalized terms used herein have the
     meanings ascribed to such terms in the DIP Credit Agreement.



                                        2
<PAGE>   125


                  IT IS HEREBY FOUND:

                  A. On January 10, 2001 (the "Petition Date"), the Debtors each
commenced in this Court a case under chapter 11 of the Bankruptcy Code. The
Debtors are continuing to operate their respective businesses and manage their
respective properties as debtors in possession pursuant to sections 1107 and
1108 of the Bankruptcy Code.

                  B. Pursuant to an Order of this Court, these chapter 11 cases
have been consolidated for procedural purposes only and are being jointly
administered.

                  C. This Court has jurisdiction over this proceeding and the
parties in interest and properties and interests in properties affected hereby
under sections 157(b) and 1334 of title 28 of the United States Code (the
"Judiciary Code"). Consideration of the Motion constitutes a core proceeding
under section 157(b)(2) of the Judiciary Code. The statutory predicates for the
relief granted herein are sections 105 and 364 of the Bankruptcy Code and
Bankruptcy Rules 4001(c)(1) and (c)(2). Venue of the Debtors' Cases and this
Motion in this district is proper pursuant to sections 1408 and 1409 of the
Judiciary Code.

                  D. An immediate and critical need exists for the Debtors to
obtain funds in order to continue the operation of their businesses. Without
such funds, the Debtors will not be able to pay their employees and other direct
operating expenses, resulting in an immediate cessation of the Debtors'
businesses and causing irreparable harm to the Debtors' estates. At this time,
the ability of the Debtors to finance their operations and the availability to
them of sufficient working capital and liquidity through the incurrence of new
indebtedness for borrowed money, and other financial





                                       3

<PAGE>   126

accommodations, are essential to the ability of the Debtors to meet their
financial obligations and thereby maintain the confidence of the Debtors'
vendors, suppliers and customers, and to the preservation and maintenance of the
going concern value of the Debtors' estates.

                  E. The Debtors have attempted, but have been unable, to obtain
interim financing from sources other than the Lenders on terms more favorable
than under the Post-Petition Loan Documents (as hereinafter defined). The
Debtors have been unable to obtain unsecured credit or unsecured debt allowable
under section 503(b)(1) of the Bankruptcy Code as an administrative expense
pursuant to section 364(a) or (b) of the Bankruptcy Code. New credit is
unavailable to the Debtors without their (a) granting to the Agent and the
Lenders claims having priority over that of other administrative expenses of the
kind specified in sections 503(b) and 507(b) of the Bankruptcy Code (other than
the Carve-Out (as hereinafter defined)) and (b) securing such loans and other
obligations with liens on and security interests in all the prepetition and
postpetition assets, properties and interests in property of the Debtors as
provided herein and in the Post-Petition Loan Documents.

                  F. The Lenders have indicated a willingness to consent and
agree to provide financing to the Debtors subject to (i) the entry of this
Order, (ii) the terms and conditions of the DIP Credit Agreement and the other
Post-Petition Loan Documents, and (iii) findings by the Court that such
financing is essential to the Debtors' estates, is being incurred and provided
in good faith, and that the Agent's and the Lenders' security interests, liens,
encumbrances, claims, super-priority administrative expense claims and other
protections granted pursuant to this Order, the DIP Credit Agreement and the
other



                                       4

<PAGE>   127

Post-Petition Loan Documents will not be affected by any subsequent reversal,
modification, vacatur or amendment of this Order or any other order, as provided
in section 364(e) of the Bankruptcy Code.

                  G. Telephonic or facsimile notice of the Interim Hearing and
the entry of this Order has been given to the twenty (20) largest creditors
listed in the Debtors' consolidated list of creditors, the Agent, the Lenders
and the Office of the United States Trustee for the District of Delaware. Under
these urgent circumstances, requisite notice of the Motion and the relief
requested thereby has been provided in accordance with Bankruptcy Rule 4001,
which notice is adequate and sufficient for all purposes under the Bankruptcy
Code, including, without limitation, sections 102(1) and 364 of the Bankruptcy
Code, and no other notice need be given for entry of this Order.

                  H. Good cause has been shown for entry of this Order. The
ability of the Debtors to finance the continuation of their respective
operations and the availability to them of sufficient working capital through
the incurrence of new indebtedness for borrowed money and other financial
accommodations is in the best interests of the Debtors and their respective
creditors and estates. Among other things, entry of this Order will minimize any
disruption of the Debtors' businesses and operations and permit them to meet
payroll and other operating expenses, obtain needed supplies, and thereby retain
customer, supplier and employee confidence by demonstrating that they have the
financial ability and wherewithal to maintain normal operations. The interim
financing authorized hereunder is vital to avoid immediate irreparable harm to
the Debtors' estates and to allow the orderly continuation of the Debtors'
businesses.




                                       5
<PAGE>   128


                  I. The DIP Credit Agreement and the other Post-Petition Loan
Documents have been negotiated in good faith and at arm's length between the
Debtors, the Agent and the Lenders and any credit extended, loans made and other
financial accommodations extended to the Debtors by the Lenders shall be deemed
to have been extended or made, as the case may be, in good faith within the
meaning of section 364(e) of the Bankruptcy Code.

                  J. The terms of the Post-Petition Loan Documents are fair and
reasonable, reflect the Debtors' exercise of prudent business judgment
consistent with their fiduciary duties and are supported by reasonably
equivalent value and fair consideration.

                  K. The Debtors have requested immediate entry of this Order
pursuant to Bankruptcy Rule 4001(c)(2). Such relief is necessary to avoid
immediate and irreparable harm to the Debtors. This Court concludes that entry
of this Order is in the best interest of the Debtors, their estates and
creditors as its implementation will, among other things, allow for the
continuous operation and rehabilitation of the Debtors' businesses.

IT IS HEREBY ORDERED, ADJUDGED AND DECREED:

                  1. The Motion is granted.

                  2. The Debtors are hereby authorized to enter into, execute
and deliver the DIP Credit Agreement and any and all documents and instruments
delivered pursuant thereto or in connection therewith (collectively, the
"Post-Petition Loan Documents"), and to perform their respective obligations
thereunder on the terms and



                                       6
<PAGE>   129


subject to the conditions thereof. The DIP Credit Agreement and the other
Post-Petition Loan Documents are hereby approved.

                  3. Upon execution and delivery of the DIP Credit Agreement and
the other Post-Petition Loan Documents, such agreements, documents and
instruments shall constitute valid, binding obligations of the Debtors,
enforceable against each of the Debtors in accordance with their terms;
provided, however, that notwithstanding any other provision hereof or of the
Post-Petition Loan Documents, pending the entry of a final order approving the
DIP Credit Agreement (the "Final Order"), the aggregate amount of the Loans
outstanding shall not exceed $175,000,000.


                  4. Each of the Debtors is authorized and directed to take and
effect all actions, to execute and deliver all agreements, instruments and
documents and to pay all present and future fees, costs, expenses and taxes
(including, without limitation, all fees and expenses of professionals engaged
by the Agent or any Lender, in accordance with the terms of the DIP Credit
Agreement), that may be provided for under or required or necessary for its
performance under the DIP Credit Agreement and the other Post-Petition Loan
Documents, including, without limitation, the execution and delivery of the DIP
Credit Agreement, each Term Credit Note and each Revolving Credit Note, all in
substantially the forms attached to the DIP Credit Agreement, and the
performance of all of its obligations thereunder, in each case without further
order of this Court other than the Final Order for the purpose of accessing
borrowings in the maximum amount provided under the DIP Credit Agreement.

                  5. As security for the payment and performance of all
Obligations, including under the DIP Credit Agreement and the other
Post-Petition Loan Documents,




                                       7
<PAGE>   130


and all obligations and liabilities hereunder (collectively, the "Post-Petition
Obligations"), the Agent and the Lenders shall be, and hereby are, granted,
effective immediately and without any further act or deed, including the
necessity of the execution by the Debtors, or the filing, recording or noticing,
of financing statements, mortgages, deeds of trust, aircraft mortgages, security
agreements, other filings or recordations customarily made with the FAA or other
Governmental Authority, or otherwise, in accordance with sections 364(c) (2) and
(3) of the Bankruptcy Code, a first priority, fully and immediately perfected
security interest in and lien on all of the property and assets of each of the
Debtors and their estates of every kind or type whatsoever, tangible,
intangible, real, personal and mixed, whether now owned or existing or hereafter
acquired or arising, and regardless of where located, and, including, without
limitation,

         (i)      all Accounts;

         (ii)     all Inventory;

         (iii)    all Equipment;

         (iv)     all Contract rights, rights under Contracts and other General
                  Intangibles, including all Intellectual Property and that
                  portion of the Pledged Collateral constituting General
                  Intangibles;

         (v)      all Investment Property, including all Control Accounts and
                  that portion of the Pledged Collateral constituting Investment
                  Property;

         (vi)     all Documents, Instruments and Chattel Paper;

         (vii)    all Cash Collateral Accounts, Blocked Accounts and other
                  deposit accounts;

         (viii)   all Vehicles;

         (ix)     all Real Property, including all Gates, hangars and
                  maintenance facilities;

         (x)      all Aircraft, including each Airframe and each Engine;

         (xi)     all Spare Parts;




                                       8
<PAGE>   131


         (xii)    all books and records pertaining to the Collateral, as
                  hereinafter defined;

         (xiii)   all other goods and personal property of the Debtors, whether
                  tangible or intangible, wherever located, including money,
                  letters of credit and all rights of payment or performance
                  under letters of credit;

         (xiv)    all property of any Debtor held by the Administrative Agent or
                  any Secured Party, including all property of every
                  description, in the possession or custody of or in transit to
                  the Administrative Agent or such Secured Party for any
                  purpose, including safekeeping, collection or pledge, for the
                  account of such Debtor, or as to which such Debtor may have
                  any right or power;

         (xv)     January 10, 2001 to the extent not otherwise included, all
                  monies and other property of any kind which is, after the
                  Petition Date, received by such Debtor in connection with
                  refunds with respect to taxes, assessments and governmental
                  charges imposed on such Debtor or any of its property or
                  income;

         (xvi)    to the extent not otherwise included, all causes of action
                  (other than claims of the Debtors under sections 544, 545, 547
                  and 548 of the Bankruptcy Code) and all monies and other
                  property of any kind received therefrom, and all monies and
                  other property of any kind recovered by any Debtor;

         (xvii)   to the extent not otherwise included, all Proceeds of or from
                  Collateral and all accessions to, substitutions and
                  replacements for, and rents, profits and products of, each of
                  the foregoing, any and all proceeds of insurance, indemnity,
                  warranty or guaranty payable to any Debtor from time to time
                  with respect to any of the foregoing; and

         (xviii)  all property of the estates of each of the Debtors within the
                  meaning of section 541 of the Bankruptcy Code

(collectively, the "Collateral"), subject only to (a) valid, perfected,
enforceable, and nonavoidable liens of record as of the Petition Date, (b) the
Carve-Out, and (c) Customary Permitted Liens of the Debtors. The security
interests and liens granted to the Agent and the Lenders hereunder shall not be
subject to any security interest or lien that




                                       9

<PAGE>   132


is avoided and preserved for the benefit of the estates of any of the Debtors
under section 551 of the Bankruptcy Code. Except as specifically provided
herein, the security interests and liens granted to the Agent and the Lenders
shall not be made on a parity with, or subordinated to, any other security
interest or lien under section 364(d) of the Bankruptcy Code or otherwise.

                  6. The "Carve-Out" shall include only claims of the following
parties for the following amounts: (i) the unpaid fees of the United States
Trustee or the Clerk of the Court payable pursuant to 28 U.S.C. Section 1930(a),
and (ii) the aggregate allowed unpaid fees and expenses payable under sections
330 and 331 of the Bankruptcy Code to professional persons (the "Estate
Professionals") retained pursuant to an order of this Court by the Debtors or a
statutory committee of unsecured creditors appointed in these Cases (the
"Committee") not to exceed $10,000,000, plus any fees and expenses accrued and
not yet paid on the date of the relevant Event of Default, in the aggregate;
provided, however, that the Carve-Out shall not include, apply to or be
available for any fees or expenses incurred by any party, including the Debtors
or the Committee, in connection with the initiation or prosecution of any
claims, causes of action, adversary proceedings or other litigation against (i)
the Agent or the Lenders, including without limitation, challenging the amount,
validity, perfection, priority or enforceability of, or asserting any defense,
counterclaim or offset to, the Post-Petition Obligations or the security
interests and liens of the Agent and the Lenders in respect thereof or (ii) the
initiation or prosecution of any claims, causes of action, adversary proceedings
or other litigation against AMR or its Affiliates, including American Airlines,
Inc. ("American"), including challenging the validity or enforceability of that
certain Asset Purchase Agreement dated



                                       10
<PAGE>   133


as of even date herewith by and between TWA and American (the "Asset Purchase
Agreement") or any provision thereof. So long as no Default or Event of Default
shall have occurred and be continuing, the Debtors shall be permitted to pay
compensation and reimbursement of expenses allowed and payable under sections
330 and 331 of the Bankruptcy Code, as the same may be due and payable, and the
same shall not reduce the Carve-Out. The foregoing shall not be construed as a
consent to the allowance of any fees and expenses referred to above and shall
not affect the right of the Debtors, the Agent or the Lenders to object to the
allowance and payment of such amounts.

                  7. The Post-Petition Obligations shall constitute, in
accordance with section 364(c)(1) of the Bankruptcy Code, claims against each of
the Debtors in its Chapter 11 Case which are administrative expense claims
having priority over any and all administrative expenses of the kinds specified
or ordered pursuant to any provision of the Bankruptcy Code, including, but not
limited to, Bankruptcy Code sections 105, 326, 328, 330, 331, 503(b), 507(a),
507(b) and 546(c), subject only to the Carve-Out. Except for the Carve-Out, no
costs or administrative expenses which have been or may be incurred in the
Debtors' chapter 11 Cases or in subsequent cases under chapter 7 of the
Bankruptcy Code as a result of a conversion pursuant to section 1112 of the
Bankruptcy Code, and no priority claims, are or will be prior to or on a parity
with the claims of the Agent and the Lenders with respect to the Post-Petition
Obligations to the maximum extent permitted by law. Except for the Carve-Out, no
other claim having a priority superior to or pari passu with that granted by
this Order to the Agent and the Lenders shall be granted while any portion of
the Post-Petition Obligations remains outstanding.





                                       11
<PAGE>   134


                  8. The Debtors may use the proceeds of the loans and advances
made pursuant to the DIP Credit Agreement only for the purposes specifically set
forth in the DIP Credit Agreement. Notwithstanding anything contained herein or
in the DIP Credit Agreement to the contrary, no such loans or advances or any
proceeds of the Collateral may be used by the Debtors or any other person or
entity, directly or indirectly, to object to or contest in any manner, or raise
any defenses to, the amount, validity, extent, perfection, priority or
enforceability of the Post-Petition Obligations or any liens or security
interests granted with respect thereto or any other rights or interests of the
Agent or the Lenders, or to assert any claims or causes of action, including,
without limitation, any actions under chapter 5 of the Bankruptcy Code, or the
initiation or prosecution of any claims, causes of action, adversary proceedings
or other litigation against the Agent, Lenders or American or to challenge in
any manner the validity or enforceability of the Asset Purchase Agreement or any
provision thereof.

                  9. The Post-Petition Obligations shall be due and payable,
without notice or demand, on the Scheduled Termination Date.

                  10. The Agent and the Lenders shall not be required to file
financing statements, mortgages, deeds of trust, notices of lien, aircraft
mortgages, security agreements, other filings or recordations customarily made
with the FAA or other Governmental Authority, or otherwise, or similar
instruments in any jurisdiction or with any regulatory authority or effect any
other action to immediately and without any further act or deed to attach or
perfect the security interests and liens granted under this Order, the DIP
Credit Agreement or any other Post-Petition Loan Documents. Notwithstanding the
foregoing, the Agent and the Lenders may, in their sole discretion, file such
financing



                                       12

<PAGE>   135


statements, mortgages, deeds of trust, notices of lien or similar instruments or
otherwise confirm perfection of such liens, security interests and mortgages
without seeking modification of the automatic stay under section 362 of the
Bankruptcy Code and all such documents shall be deemed to have been filed or
recorded at the time and on the date of the commencement of the Chapter 11
Cases.

                  11. Upon the occurrence and during the continuance of any
Event of Default, the DIP Credit Agreement shall be subject to termination in
the sole discretion of the Lenders as provided therein, and upon three business
days' prior written notice by the Agent to TWA, any Committee and the United
States Trustee, the Agent and the Lenders shall have immediate relief from the
automatic stay of section 362(a) of the Bankruptcy Code, without further order
of the Court, to enforce their liens and security interests in any manner
provided in the DIP Credit Agreement, the other Post-Petition Loan Documents or
herein, or otherwise to take any enforcement or remedial action provided by such
agreements or applicable law. Notwithstanding the occurrence of an Event of
Default or the Termination Date or anything herein, all of the rights, remedies,
benefits and protections provided to the Agent and the Lenders under this Order
and the Post-Petition Loan Documents shall survive the Termination Date.

                  12. If it becomes necessary for the Agent or the Lenders, at
any time, to exercise any of their rights and remedies hereunder or under
applicable law in order to effect repayment of the Post-Petition Obligations or
to receive any amounts or remittances due in connection therewith, including,
without limitation, foreclosing upon and selling all or a portion of the



                                       13
<PAGE>   136


Collateral, the Agent and the Lenders may, without further order of this Court,
exercise such rights and remedies as to all or such part of the Collateral as
the Agent and the Lenders may elect in their sole discretion, subject to the
Agent having given three business days' notice to TWA, the Committee and the
United States Trustee. The Agent and Lenders shall not be subject to the
equitable doctrine of "marshaling" or any other similar doctrine with respect to
any Collateral; provided, however, that upon and during the continuation of an
Event of Default, the Lenders shall have no further obligations to make any
additional Loans to the Debtors and may terminate their obligations to do so
without further order of this Court or notice to any other party, including the
Borrowers, as may be provided for under the DIP Credit Agreement.

                  13. The Debtors shall execute and deliver to the Agent and the
Lenders all such agreements, financing statements, instruments and other
documents as the Agent or any of the Lenders may reasonably request to evidence,
confirm, validate or perfect the liens granted pursuant hereto.

                  14. The Debtors shall promptly reimburse the Agent and the
Lenders for their costs and expenses as provided for in section 13.3 of the DIP
Credit Agreement. None of the costs and expenses payable pursuant to such
section are subject to the approval of this Court, and no recipient of any such
payment shall be required to file with respect thereto any interim or final fee
application with this Court.

                  15. Nothing contained herein shall limit or expand the rights
of the Agent or the Lenders with respect to any prepetition claims they have
against the Debtors including, without limitation, the right to (i) seek
adequate protection under sections 362, 363 or 364 of the Bankruptcy Code, (ii)
seek relief from the automatic stay of section 362 of the Bankruptcy Code, (iii)
request a conversion of any or all of the Debtors' Chapter




                                       14
<PAGE>   137


11 Cases to chapter 7 or the appointment of a trustee or an examiner under
section 1104 of the Bankruptcy Code, or (iv) propose, subject to the provisions
of section 1121 of the Bankruptcy Code, a chapter 11 plan or plans in any or all
of these Chapter 11 Cases.

                  16. The provisions of this Order shall be binding upon and
inure to the benefit of the Agent, the Lenders, the Debtors, and their
respective successors and assigns. This Order shall bind any trustee hereafter
appointed for the estate of any of the Debtors, whether in the Chapter 11 Cases
or in the event of the conversion of any Chapter 11 Case to a liquidation under
chapter 7 of the Bankruptcy Code. Such binding effect is an integral part of
this Order.

                  17. The provisions of this Order and any actions taken
pursuant hereto shall survive the entry of any order (a) confirming any plan of
reorganization in any of the Chapter 11 Cases (and, to the extent not satisfied
in full, the Post-Petition Obligations shall not be discharged by the entry of
any such order, or pursuant to Bankruptcy Code section 1141(d)(4), each of the
Debtors having hereby waived such discharge), (b) converting any of the Chapter
11 Cases to a chapter 7 case, or (c) dismissing any of the Chapter 11 Cases, and
the terms and provisions of this Order as well as the super-priority claims and
liens granted pursuant to this Order and the Post-Petition Loan Documents shall
continue in full force and effect notwithstanding the entry of any such order,
and such super-priority claims and liens shall maintain their priority as
provided by this Order and to the maximum extent permitted by law until all of
the Post-Petition Obligations are indefeasibly paid in full and discharged.

                  18. Except as expressly permitted by the DIP Credit Agreement,
the Debtors will not, at any time during these Chapter 11 Cases, grant
mortgages, security


                                       15

<PAGE>   138


interests or liens in the Collateral or any portion thereof to any other parties
pursuant to section 364(d) of the Bankruptcy Code or otherwise or on a parity
with or superior to those granted pursuant to this Order.

                  19. Except as otherwise provided in this Order, pursuant to
Section 552(a) of the Bankruptcy Code, all property acquired by the Debtors
after the Petition Date, including, without limitation, all Collateral pledged
to the Agent and the Lenders pursuant to the DIP Credit Agreement and this
Order, is not and shall not be subject to any lien of any entity resulting from
any security agreement entered into by the Debtors prior to the Petition Date,
except to the extent that such property constitutes proceeds of property of the
Debtors that is subject to a valid, perfected, enforceable, and nonavoidable
liens of record as of the Petition Date.

                  20. Without limiting the rights of access and information
afforded the Agent and the Lenders under the Post-Petition Loan Documents, each
of the Debtors shall permit representatives, agents and/or employees of the
Agent and the Lenders to have reasonable access to such entity's premises and
its records during normal business hours (without unreasonable interference with
the proper operation of the Debtors' businesses) and shall cooperate, consult
with, and provide to such persons all such non-privileged information as they
may reasonably request.

                  21. The obligations of the Debtors hereunder and under the
Post-Petition Loan Documents shall be joint and several.

                  22. Upon entry of this Order, the Agent and the Lenders shall
be and shall be deemed to be, without any further action or notice, named as
additional insureds




                                       16
<PAGE>   139


on each insurance policy maintained by the Debtors which in any way relates to
the Collateral.

                  23. If any or all of the provisions of this Order or the DIP
Credit Agreement or any other Post-Petition Loan Document are hereafter
modified, vacated, amended or stayed by subsequent order of this Court or any
other Court, such modification, vacatur, amendment or stay shall not affect the
validity of any obligation to the Agent or the Lenders that is or was incurred
prior to the effective date of such modification, vacatur, amendment or stay, or
the validity and enforceability of any security interest, lien or priority
authorized or created by this Order, the DIP Credit Agreement or any other
Post-Petition Loan Document and, notwithstanding any such modification, vacatur,
amendment or stay, any obligations of the Debtors pursuant to this Order or the
DIP Credit Agreement or any other Post-Petition Loan Document arising prior to
the effective date of such modification, vacatur, amendment or stay shall be
governed in all respects by the original provisions of this Order and the DIP
Credit Agreement and the other Post-Petition Loan Documents, and the validity of
any such credit extended or security interest or lien granted pursuant to this
Order or the DIP Credit Agreement or the other Post-Petition Loan Documents is
subject to the protection accorded under section 364(e) of the Bankruptcy Code.

                  24. This Order constitutes findings of fact and conclusions of
law and takes effect and becomes enforceable immediately upon execution hereof.

                  25. This matter is set for a Final Hearing at [_:00 _].m.
(Eastern Time) on January [__], 2001 in this Court, at which time any
party-in-interest may appear and state its objections, if any, to future
borrowings by the Debtors. Immediately, and in no



                                       17
<PAGE>   140


event later than January [__], 2001, the Debtors shall mail, first class postage
prepaid, copies of the Motion, this Order, the proposed Final Order and a notice
of hearing (the "Final Hearing Notice") to (i) the Office of the United States
Trustee, (ii) the attorneys for any Committee appointed in the Cases, (iii) the
attorneys for the Agent and the Lenders, (iv) the District Director for Internal
Revenue for the District of Delaware, (v) the Securities and Exchange
Commission, (vi) the Pension Benefit Guaranty Corporation, (vii) the Office of
the United States Attorney for the District of Delaware, (viii) the twenty (20)
largest unsecured creditors of the Debtors on a consolidated basis, (ix) any
indenture trustees with respect to any indebtedness issued by the Debtors, (x)
the FAA, (xi) the Air Line Pilots Association, (xii) the International
Association of Machinists and Aerospace Workers, (xiii) counsel to the Debtors'
secured lenders and (xiv) any parties in interest that have filed notices of
appearance and requests for service of papers pursuant to Bankruptcy Rule 2002.
Objections shall be in writing, shall specify the ground(s) for and facts on
which each such objection is based and shall be filed with the Clerk of the
Bankruptcy Court with a copy served by hand-delivery, telecopy or overnight
delivery service upon and received by Kirkland & Ellis, 200 East Randolph Drive,
Chicago, Illinois 60601, Attention: James H.M. Sprayregen, Esq.; Pachulski,
Stang, Ziehl, Young & Jones P.C., 919 N. Market Street, Wilmington, Delaware,
19899, Attention: Laura Davis Jones, Esq.; Weil, Gotshal & Manges LLP, 767 Fifth
Avenue, New York, New York 10153, Attention: Alan B. Miller, Esq. and Shai Y.
Waisman, Esq.; and Richards, Layton & Finger, One Rodney Square, Wilmington,
Delaware 19899, Attention: Mark D. Collins, Esq., so that such objections are
received on or before 4:00 p.m. on January [__], 2001; any objections by
creditors or other parties-in-interest to any of the



                                       18
<PAGE>   141


provisions of this Order shall be deemed waived unless filed and received in
accordance with the notice on or before the close of business on such date.

Dated:  Wilmington, Delaware
        January 10, 2001
                                           ------------------------------------
                                                         Judge





                                       19
<PAGE>   142


                                  EXHIBIT G-1

                               2001 Business Plan

<PAGE>   143

[TWA LOGO]

Trans World Airlines, Inc.
2001 Financial Plan

<TABLE>
<CAPTION>
                                       JAN           FEB           MAR           APR           MAY           JUN           JUL
                                    ----------    ----------    ----------    ----------    ----------    ----------    ----------
<S>                                 <C>           <C>           <C>           <C>           <C>           <C>           <C>

  Passenger
     Domestic                          222,200       232,600       291,000       286,500       292,300       317,600       319,100
     Trans Atlantic                     17,000        13,400        18,800        18,500        20,400        22,900        22,900
                                    ----------    ----------    ----------    ----------    ----------    ----------    ----------
        Ttl Passenger Revenue          239,200       246,000       309,800       305,000       312,700       340,500       342,000

  Cargo                                  7,951         7,827         8,997         8,052         9,455         8,259         8,807
  Charter & Other Transport              8,251         7,612        11,847        11,108        10,885        11,794        11,827
  Getaway Tours Revenue                    389           562         1,157         1,651         1,488         1,885         2,340
  Contract Work for Others               1,595         1,541         1,519         1,574         1,548         1,557         1,603
  Other Transport Related                4,326         4,129         4,978         4,300         4,582         4,745         5,125
  RJ Segment Revenue                     6,121         6,340         8,375         8,789         9,671        11,283        12,712
                                    ----------    ----------    ----------    ----------    ----------    ----------    ----------
        Ttl other revenue               26,662        28,012        36,873        35,973        37,628        39,303        42,418
     TOTAL OPERATING REVENUE           267,862       273,012       346,673       340,973       350,528       379,803       384,418

OPERATING EXPENSES
  Salaries, Wages & Benefits           116,050       112,270       115,251       112,890       118,571       112,518       114,852
  Fuel & Oil                            46,882        44,233        50,138        48,606        50,475        50,485        52,189
  Passenger Food & Beverages             6,779         8,415         7,827         7,441         7,750         7,867         7,956
  Passenger Sales Commissions           10,676         9,768        11,878        12,037        12,405        13,153        13,674
  Advertising                            3,763         3,791         4,451         4,049         4,522         4,855         4,814
  Direct Materials & Svcs.              11,658        10,079        12,967         9,659        12,771         9,858        11,062
  Outside Services Purchased            22,265        21,674        23,347        22,198        22,921        22,202        21,733
  Depreciation & Amortization           10,606        10,588        10,619        10,557        10,694        10,621        10,571
  Aircraft Rentals                      49,280        49,289        49,586        50,108        50,373        60,835        50,832
  Facilities & Equip. Rentals            9,948         9,978        10,020        10,069         9,959         9,853         9,865
  Landing Fees & Nav Chgs.               7,380         6,608         7,257         7,070         7,603         7,411         7,665
  Getaway Tours Expense                    330           485         1,017         1,459         1,311         1,488         2,072
  RJ Expense                             7,731         8,175         9,728         9,697        10,766        11,582        12,789
  All Other Airlines Expenses           19,722        19,389        22,407        20,184        21,552        20,887        20,519
                                    ----------    ----------    ----------    ----------    ----------    ----------    ----------
  Special Charges
                                    ----------    ----------    ----------    ----------    ----------    ----------    ----------

     TOTAL OPERATING EXPENSES          325,258       312,864       338,465       327,123       341,604       333,281       340,292

OPERATING INCOME(LOSS)                 (57,394)      (38,888)       10,179        13,848         9,024        46,542        44,126
                                    ----------    ----------    ----------    ----------    ----------    ----------    ----------

AIRLINE NONOP. (INC.)/EXP.
  Interest Expense                       6,696         6,674         6,665         6,621         6,603         6,569         6,512
  Interest & Investment Income            (710)         (845)       (1,020)       (1,024)       (1,112)       (1,283)       (1,188)
  Disposition of Assets                     --            --            --            --            --            --            --
  Equity Interest in Worldspan          (2,769)       (3,684)       (4,120)       (2,976)       (2,961)       (2,192)       (1,950)
  Other Charges (Credits)-Net             (781)         (882)         (858)         (843)         (728)         (661)         (588)
                                    ----------    ----------    ----------    ----------    ----------    ----------    ----------

     TOTAL NONOP. CHARGES                2,433         1,483           657         1,778         1,602         2,213         2,506

P/(L) BEFORE INCOME TAXES              (59,827)      (40,369)        9,522        12,068         7,222        44,329        41,620
                                    ==========    ==========    ==========    ==========    ==========    ==========    ==========

<CAPTION>
                                       AUG           SEP           OCT           NOV           DEC          TOTAL
                                    ----------    ----------    ----------    ----------    ----------    ----------
<S>                                 <C>           <C>           <C>           <C>           <C>         <C>

  Passenger
     Domestic                          311,400       275,600       298,900       281,000       274,500     3,400,700
     Trans Atlantic                     22,100        20,700        20,000        15,600        16,200       228,500
                                    ----------    ----------    ----------    ----------    ----------    ----------
        Ttl Passenger Revenue          333,500       296,300       318,900       296,600       290,700     3,629,200

  Cargo                                  8,449         8,241         8,526         8,249         6,585       101,400
  Charter & Other Transport             12,075        11,686        12,017         9,049         9,349       127,500
  Getway Tours Revenue                   2,181         3,016         2,035         1,613         1,134        19,250
  Contract Work for Others               1,633         1,622         1,584         1,588         1,548        18,893
  Other Transport Related                4,636         4,874         4,775         4,445         4,448        55,860
  RJ Segment Revenue                    12,718        11,781        12,888        12,335        13,178       126,366
                                    ----------    ----------    ----------    ----------    ----------    ----------
        Ttl other revenue               41,693        41,222        41,821        37,258        38,238       449,299
     TOTAL OPERATING REVENUE           375,193       337,522       358,721       333,858       328,838     4,078,499

OPERATING EXPENSES
  Salaries, Wages & Benefits           116,189       113,523       113,951       117,493       115,088     1,376,546
  Fuel & Oil                            51,700        46,637        48,706        48,021        45,908       585,981
  Passenger Food & Beverages             7,905         7,209         7,757         7,308         7,204        89,457
  Passenger Sales Commissions           12,420        10,777        11,916        10,413        10,238       139,757
  Advertising                            4,610         4,370         4,536         4,245         4,090        52,500
  Direct Materials & Svcs.              14,513        12,179        11,370        11,409        10,506       138,176
  Outside Services Purchased            21,911        22,362        22,478        20,003        19,961       263,274
  Depreciation & Amortization           10,644        10,589        10,823        10,585        10,740       127,437
  Aircraft Rentals                      50,653        50,716        51,108        51,477        51,742       606,059
  Facilities & Equip. Rentals            9,815         9,811         9,870         9,788         9,762       118,769
  Landing Fees & Nav Chgs.               7,544         7,356         7,531         7,342         7,406        88,205
  Getway Tours Expense                   1,929         2,871         1,801         1,424           997        16,987
  RJ Expense                            12,784        12,322        13,880        13,775        14,671       138,103
  All Other Airlines Expenses           21,372        20,942        21,342        20,190        19,018       247,636
                                    ----------    ----------    ----------    ----------    ----------    ----------
  Special Charges                                                                                                 --
                                    ----------    ----------    ----------    ----------    ----------    ----------

     TOTAL OPERATING EXPENSES          345,520       333,592       336,750       331,575       327,931     3,981,201

OPERATING INCOME(LOSS)                  30,873         3,931        21,971         2,282         1,008        87,299
                                    ----------    ----------    ----------    ----------    ----------    ----------

AIRLINE NONOP. (INC.)/EXP.
  Interest Expense                       6,476         6,446         5,410         5,958         5,921        77,551
  Interest & Investment Income          (1,125)       (1,185)       (1,266)       (1,192)       (1,143)      (13,076)
  Disposition of Assets                     --            --            --            --            --            --
  Equity Interest in Worldspan          (2,400)       (3,067)       (3,878)       (1,135)          140       (30,992)
  Other Charges (Credits)-Net             (756)         (827)         (853)         (693)         (790)       (9,650)
                                    ----------    ----------    ----------    ----------    ----------    ----------

     TOTAL NONOP. CHARGES                2,195         1,377           413         2,938         4,128        23,923

P/(L) BEFORE INCOME TAXES               28,476         2,554        21,558          (856)       (3,122)       63,176
                                    ==========    ==========    ==========    ==========    ==========    ==========
</TABLE>


                                       1
<PAGE>   144


                                  EXHIBIT G-2

                            Three Month Business Plan


<PAGE>   145

                                     JAN 1

<TABLE>
<CAPTION>

                                                   1-JAN THROUGH 17-JAN ESTIMATED CASH FLOW AT CITIBANK
                                       1-Jan       2-Jan       3-Jan       4-Jan       5-Jan       8-Jan       9-Jan
                                      ------      ------     -------      ------     -------      ------      ------
<S>                                   <C>         <C>        <C>          <C>        <C>          <C>         <C>
INVESTED CASH AT CITIBANK               0.0         0.0       (26.4)      (31.0)      (36.8)      (44.1)      (47.1)
IATA/ACH PYMTS                            H
W/H & FICA PYMTS                                   (4.0)                                           (3.2)
EXCISE TAX PYMTS                          O
TRANS STATES W/T                                   (1.8)                   (0.5)       (1.5)       (1.7)
AETNA MED/DENTAL                          L        (0.5)       (0.5)       (0.5)       (0.5)       (0.5)       (0.5)
CREDIT UNION                                                                           (1.5)
FUEL                                      I        (0.2)       (7.8)       (3.0)       (0.2)       (0.7)
A/C LEASES                                         (5.4)       (1.0)       (4.3)       (4.9)       (6.8)      (10.3)
PRINC + INTEREST                          D        (0.8)                               (0.5)       (0.3)       (0.4)
OTHER W/TRANSFERS                                 (11.1)       (0.2)       (2.7)       (1.3)       (0.3)       (1.5)
EST OF REFUND/LOD/ETC. CLEARINGS          A        (0.3)       (0.3)       (0.3)       (0.3)       (0.3)       (0.3)
EST OF PAYROLL CKS CLEARING                        (2.5)       (1.7)       (1.0)       (1.7)       (1.7)       (0.5)
EST OF A/P CKS CLEARING                   Y        (6.3)       (3.0)       (3.0)       (3.0)       (3.5)       (2.5)

TTL CASH OUT                            0.0       (33.0)      (14.5)      (15.3)      (15.4)      (19.0)      (18.0)

TTL RECEIPTS/CASH IN                                7.4        12.0         8.8         7.9        18.0         6.1
     SPECIAL RECEIPTS                              (0.8)       (2.1)        2.9

INCREASE/(DECREASE) CASH                0.0       (26.4)       (4.6)       (5.6)       (7.5)       (3.0)       (9.9)

INVESTED CASH AT CITIBANK               0.0       (26.4)      (31.0)      (36.8)      (44.1)      (47.1)      (57.0)

OTHER OVERNIGHT INVESTMENTS
TWA STOCK
TWA STOCK VOLUME

<CAPTION>





                                      10-Jan      11-Jan      12-Jan      15-Jan      16-Jan      17-Jan
                                      ------      ------     -------      ------     -------      ------
<S>                                   <C>         <C>        <C>          <C>        <C>          <C>
INVESTED CASH AT CITIBANK             (57.0)      (60.9)      (73.6)      (75.4)      (75.4)      (73.4)
IATA/ACH PYMTS                                     (0.5)                      H
W/H & FICA PYMTS                                                                       (4.8)       (0.8)
EXCISE TAX PYMTS                                   (9.7)                      O
TRANS STATES W/T                       (1.6)                   (8.4)                   (1.5)
AETNA MED/DENTAL                       (0.6)       (0.6)       (0.5)          L        (0.5)       (0.5)
CREDIT UNION                                                   (2.9)
FUEL                                   (7.8)       (3.0)                      I        (0.7)       (8.9)
A/C LEASES                             (2.7)       (2.3)       (5.4)                   (2.7)       (2.8)
PRINC + INTEREST                                   (0.9)                      D
OTHER W/TRANSFERS                      (1.5)       (1.4)       (0.2)                   (0.3)       (0.2)
EST OF REFUND/LOD/ETC. CLEARINGS       (0.3)       (0.3)       (0.3)          A        (0.3)       (0.6)
EST OF PAYROLL CKS CLEARING            (2.5)       (0.3)       (2.4)                   (4.3)       (1.7)
EST OF A/P CKS CLEARING                (2.5)       (2.5)       (2.5)          Y        (3.5)       (2.5)

TTL CASH OUT                          (19.4)      (21.7)      (14.6)        0.0       (18.6)      (18.0)

TTL RECEIPTS/CASH IN                   16.5         9.0        12.8                    20.8        18.6
     SPECIAL RECEIPTS

INCREASE/(DECREASE) CASH               (3.9)      (12.7)       (1.8)        0.0         2.0         0.6

INVESTED CASH AT CITIBANK             (60.9)      (73.6)      (75.4)      (75.4)      (73.4)      (72.8)

OTHER OVERNIGHT INVESTMENTS
TWA STOCK
TWA STOCK VOLUME
</TABLE>

                                     Page 1
<PAGE>   146



                                     JAN 18

<TABLE>
<CAPTION>

                                                  18-JAN THROUGH 31-JAN ESTIMATED CASH FLOW AT CITIBANK
                                      18-Jan      19-Jan      22-Jan      23-Jan      24-Jan      25-Jan      28-Jan
                                      ------      ------     -------      ------     -------      ------      ------
<S>                                   <C>         <C>        <C>          <C>        <C>          <C>         <C>
INVESTED CASH AT CITIBANK             (72.8)      (70.9)      (68.2)      (63.7)      (59.9)      (65.5)      (65.5)
IATA/ACH PYMTS
W/H & FICA PYMTS                                               (2.6)                                           (6.4)
EXCISE TAX PYMTS                                                                                   (9.7)
TRANS STATES W/T                                   (0.5)       (3.1)                               (1.8)        0.0
AETNA MED/DENTAL                       (0.5)       (0.6)       (0.5)       (0.5)       (0.5)       (0.5)       (0.5)
CREDIT UNION                                       (1.5)                                                       (2.0)
FUEL                                   (2.6)                   (0.7)                   (6.7)       (3.1)
A/C LEASES                             (0.8)       (1.1)                   (1.4)       (2.5)       (1.0)       (1.8)
PRINC + INTEREST
OTHER W/TRANSFERS                      (1.4)       (0.2)       (1.9)       (0.2)       (0.2)       (1.4)       (0.2)
EST OF REFUND/LOD/ETC. CLEARINGS       (0.6)       (0.6)       (0.8)       (0.6)       (0.8)       (0.3)       (0.3)
EST OF PAYROLL CKS CLEARING            (1.0)       (7.3)       (1.3)       (4.5)       (0.6)       (1.6)       (3.2)
EST OF A/P CKS CLEARING                (2.0)       (2.0)       (2.0)       (2.0)       (3.0)       (2.6)       (2.5)

TTL CASH OUT                           (8.9)       (7.7)      (12.7)       (9.2)      (14.1)      (21.3)      (16.9)

TTL RECEIPTS/CASH IN                   10.8        10.4        17.2        13.0        18.2        11.6        12.7
     SPECIAL RECEIPTS

INCREASE/(DECREASE) CASH                1.9         2.7         4.5         3.8         4.1        (9.7)       (4.2)

INVESTED CASH AT CITIBANK             (70.9)      (68.2)      (63.7)      (59.9)      (65.5)      (65.5)      (69.7)

OTHER OVERNIGHT INVESTMENTS
TWA STOCK
TWA STOCK VOLUME

<CAPTION>




                                                                                       TOTAL       TOTAL
                                           29-Jan        30-Jan        31-Jan          1-Jan       MONTH
                                           ------        ------        ------          -----       -----
<S>                                        <C>           <C>           <C>             <C>         <C>
INVESTED CASH AT CITIBANK                  (69.7)        (79.7)        (74.2)          0.0           0.0
IATA/ACH PYMTS                             (18.0)                                      0.0         (15.5)
W/H & FICA PYMTS                            (4.3)                                      0.0         (28.4)
EXCISE TAX PYMTS                                                                       0.0         (19.4)
TRANS STATES W/T                            (1.6)                                      0.0         (15.3)
AETNA MED/DENTAL                            (0.5)         (0.5)         (0.5)          0.0         (10.5)
CREDIT UNION                                                            (0.3)          0.0          (8.8)
FUEL                                        (0.2)                       (8.0)          0.0         (53.8)
A/C LEASES                                  (0.1)                                      0.0         (87.1)
PRINC + INTEREST                            (2.1)                       (0.4)          0.0          (5.2)
OTHER W/TRANSFERS                           (0.2)         (0.2)         (2.3)          0.0         (28.9)
EST OF REFUND/LOD/ETC. CLEARINGS            (0.3)         (0.3)         (0.3)          0.0          (8.1)
EST OF PAYROLL CKS CLEARING                 (4.5)         (2.2)         (2.0)          0.0         (42.8)
EST OF A/P CKS CLEARING                     (2.8)         (1.5)         (3.1)          0.0         (58.1)

TTL CASH OUT                               (31.4)         (4.7)        (17.5)          0.0        (349.9)

TTL RECEIPTS/CASH IN                        20.1          10.2          23.2           0.0         280.1
     SPECIAL RECEIPTS                        1.3                        14.0           0.0          15.3

INCREASE/(DECREASE) CASH                   (10.0)          5.5          19.7           0.0         (54.5)

INVESTED CASH AT CITIBANK                  (79.7)        (74.2)        (54.5)          0.0         (54.5)

OTHER OVERNIGHT INVESTMENTS
TWA STOCK
TWA STOCK VOLUME
</TABLE>

                                     Page 1
<PAGE>   147

                                     FEB 1

<TABLE>
<CAPTION>

                                                   1-FEB THROUGH 19-FEB ESTIMATED CASH FLOW AT CITIBANK
                                      1-Feb       2-Feb       5-Feb        6-Feb     7-Feb        8-Feb       9-Feb
                                      ------      ------     -------      ------     ------       ------      ------
<S>                                   <C>         <C>        <C>          <C>        <C>          <C>         <C>
INVESTED CASH AT CITIBANK               0.0       (15.8)     (12.1)       (12.5)     (21.4)       (15.0)      (18.0)
IATA/UATP/ACH PYMTS
W/H & FICA PYMTS                                              (2.6)                                (0.6)
EXCISE TAX PYMTS
TRANS STATES W/T                                              (4.4)
AETNA MED/DENTAL                       (0.5)       (0.5)      (0.5)        (0.5)      (0.5)        (0.5)       (0.5)
CREDIT UNION                                       (1.5)                                                       (2.0)
FUEL                                   (2.7)       (0.5)                              (8.0)        (3.7)
A/C LEASES                            (11.1)       (0.9)      (3.8)       (15.3)      (0.3)        (4.3)       (0.6)
PRINC + INTEREST                       (0.9)       (0.5)                                           (0.4)
OTHER W/TRANSFERS                      (7.6)       (0.3)      (1.5)        (1.0)      (0.4)        (1.5)       (1.7)
EST OF REFUND/LOD/ETC CLEARINGS        (0.3)       (0.3)      (0.3)        (0.3)      (0.3)        (0.3)       (0.3)
EST OF PAYROLL CKS CLEARING            (0.6)       (1.5)      (1.9)        (0.5)      (1.9)        (0.4)       (2.5)
EST OF A/P CKS CLEARING                (4.0)       (3.0)      (4.0)        (3.0)      (3.6)        (3.0)       (3.0)

TTL CASH OUT                          (27.7)       (9.1)     (19.1)       (20.6)     (15.0)       (14.7)      (10.8)

TTL RECEIPTS/CASH IN                   11.9        12.8       18.7         11.7       21.4         11.7        12.7
     SPECIAL RECEIPTS

INCREASE/(DECREASE) CASH              (15.8)        3.7       (0.4)        (8.9)       8.4         (3.0)        2.1

INVESTED CASH AT CITIBANK             (15.8)      (12.1)     (12.5)       (21.4)     (15.0)       (18.0)      (15.9)

OTHER OVERNIGHT INVESTMENTS
TWA STOCK
TWA STOCK VOLUME

<CAPTION>





                                           12-Feb        13-Feb        14-Feb          15-Feb      16-Feb     19-Feb
                                           ------        ------        ------          ------      ------     ------
<S>                                        <C>           <C>           <C>             <C>         <C>        <C>

INVESTED CASH AT CITIBANK                  (15.9)        (28.1)        (28.1)          (19.5)      (19.8)     (10.0)
IATA/UATP/ACH PYMTS                                                                                             H
W/H & FICA PYMTS                            (4.3)                                       (0.8)       (0.5)
EXCISE TAX PYMTS                            (9.7)                                                               0
TRANS STATES W/T                            (3.9)                                                   (0.2)
AETNA MED/DENTAL                            (0.5)         (0.5)         (0.5)           (0.5)       (0.5)       L
CREDIT UNION                                                                            (0.8)       (1.5)
FUEL                                        (0.7)                       (8.0)           (1.8)                   I
A/C LEASES                                  (1.9)         (0.9)         (0.9)           (1.5)
PRINC + INTEREST                                          (0.9)                         (3.0)                   D
OTHER W/TRANSFERS                           (2.1)         (0.3)         (0.4)           (1.5)       (0.3)
EST OF REFUND/LOD/ETC CLEARINGS             (0.3)         (0.3)         (0.3)           (0.3)       (0.3)       A
EST OF PAYROLL CKS CLEARING                 (3.2)         (2.8)         (1.8)           (1.4)       (1.5)
EST OF A/P CKS CLEARING                     (5.0)         (4.0)         (3.0)           (2.0)       (2.0)       Y

TTL CASH OUT                               (31.6)         (9.7)        (14.7)          (13.6)       (6.8)       0.0

TTL RECEIPTS/CASH IN                        19.4          11.7          21.3            12.2        16.4
     SPECIAL RECEIPTS                                                                    1.3

INCREASE/(DECREASE) CASH                   (12.2)          2.0           6.6            (0.1)        9.6        0.0

INVESTED CASH AT CITIBANK                  (28.1)        (28.1)        (19.6)          (19.6)      (10.0)     (10.0)

OTHER OVERNIGHT INVESTMENTS
TWA STOCK
TWA STOCK VOLUME
</TABLE>

                                     Page 1
<PAGE>   148



                                     Feb 20

<TABLE>
<CAPTION>

                                                  20-FEB THROUGH 28-FEB ESTIMATED CASH FLOW AT CITIBANK
                                      20-Feb      21-Feb      22-Feb      23-Feb      28-Feb      27-Feb      28-Feb
                                      ------      ------     -------      ------     -------      ------      ------
<S>                                   <C>         <C>        <C>          <C>        <C>          <C>         <C>
INVESTED CASH AT CITIBANK             (10.0)       (9.3)       (3.9)       (3.3)        1.5        (6.1)      (10.2)
IATA/ACH PYMTS                                                                                                (20.0)
W/H & FICA PYMTS                       (2.8)                                          (10.7)
EXCISE TAX PYMTS                                                                                   (9.7)
TRANS STATES W/T                       (3.9)                                           (3.3)
AETNA MED/DENTAL                       (0.5)       (0.5)       (0.5)       (0.5)       (0.5)       (0.5)       (0.5)
CREDIT UNION                                                               (2.0)                               (0.9)
FUEL                                   (0.7)       (8.0)       (3.7)                   (0.4)                   (6.0)
A/C LEASES                             (7.0)       (0.8)       (2.5)       (0.6)       (0.2)       (0.1)
PRINC + INTEREST
OTHER W/TRANSFERS                      (1.7)       (0.4)       (1.6)       (0.3)       (1.0)       (0.9)       (0.5)
EST OF REFUND/LOD/ETC CLEARINGS        (0.3)       (0.3)       (0.3)       (0.3)       (0.3)       (0.3)       (0.3)
EST OF PAYROLL CKS CLEARING            (2.1)       (5.9)       (0.7)       (3.0)       (6.8)       (1.7)       (2.4)
EST OF A/P CKS CLEARING                (5.0)       (3.0)       (2.0)       (2.0)       (5.5)       (3.0)       (3.3)

TTL CASH OUT                          (23.8)      (18.9)      (11.5)       (8.6)      (28.7)      (15.7)      (33.9)

TTL RECEIPTS/CASH IN                    24.5        24.3       12.1        13.4        21.1        11.8        28.8
     SPECIAL RECEIPTS                                                                                          20.0

INCREASE/(DECREASE) CASH                0.7         5.4         0.6         4.8        (7.9)       (4.1)       14.9

INVESTED CASH AT CITIBANK              (9.3)       (3.9)       (3.3)        1.5        (8.1)      (10.2)        4.7

OTHER OVERNIGHT INVESTMENTS
TWA STOCK
TWA STOCK VOLUME

<CAPTION>




                                                                                       TOTAL       TOTAL
                                                                                       1-Feb       MONTH
                                                                                       -----       -----
<S>                                                                                    <C>         <C>
INVESTED CASH AT CITIBANK                                                                0.0         0.0
IATA/ACH PYMTS                                                                           0.0       (20.0)
W/H & FICA PYMTS                                                                         0.0       (22.1)
EXCISE TAX PYMTS                                                                         0.0       (19.4)
TRANS STATES W/T                                                                         0.0       (15.7)
AETNA MED/DENTAL                                                                        (0.5)       (9.5)
CREDIT UNION                                                                             0.0        (8.7)
FUEL                                                                                    (2.7)      (44.3)
A/C LEASES                                                                             (11.1)      (52.6)
PRINC + INTEREST                                                                        (0.9)       (5.7)
OTHER W/TRANSFERS                                                                       (7.6)      (24.8)
EST OF REFUND/LOD/ETC CLEARINGS                                                         (0.3)       (5.7)
EST OF PAYROLL CKS CLEARING                                                             (0.6)      (42.4)
EST OF A/P CKS CLEARING                                                                 (4.0)      (63.4)

TTL CASH OUT                                                                           (27.7)     (334.3)

TTL RECEIPTS/CASH IN                                                                    11.9       317.7
     SPECIAL RECEIPTS                                                                    0.0        21.3

INCREASE/(DECREASE) CASH                     0.0           0.0           0.0           (15.8)        4.7

INVESTED CASH AT CITIBANK                    0.0           0.0           0.0           (15.8)        4.7

OTHER OVERNIGHT INVESTMENTS
TWA STOCK
TWA STOCK VOLUME
</TABLE>

                                     Page 1
<PAGE>   149

                                     Mar 1

<TABLE>
<CAPTION>

                                                  1-MAR THROUGH 19-MAR ESTIMATED CASH FLOW AT CITIBANK
                                      1-Mar       2-Mar       5-Mar        6-Mar     7-Mar        8-Mar       9-Mar
                                      ------      ------     -------      ------     ------       ------      ------
<S>                                   <C>         <C>        <C>          <C>        <C>          <C>         <C>
INVESTED CASH AT CITIBANK               0.0       (22.9)     (21.8)       (25.6)     (24.4)       (16.7)      (19.4)
(IATA)UATP/ACH PYMTS
W/H & FICA PYMTS                                              (2.6)                                (0.6)
EXCISE TAX PYMTS
TRANS STATES W/T                                              (4.4)
AETNA MED/DENTAL                       (0.5)       (0.5)      (0.5)        (0.5)      (0.5)        (0.5)       (0.5)
CREDIT UNION                                       (1.5)                                                       (2.0)
FUEL                                   (4.5)                  (0.7)                   (8.0)        (3.4)
A/C LEASES                             (6.1)       (3.1)      (5.2)        (4.1)      (1.8)        (4.3)       (1.9)
PRINC + INTEREST                       (9.1)                  (0.6)                                (0.4)
OTHER W/TRANSFERS                      (8.3)       (0.4)      (1.5)        (0.9)      (0.3)        (1.4)       (1.8)
EST OF REFUND/LOD/ETC. CLEARINGS       (0.3)       (0.3)      (0.3)        (0.3)      (0.3)        (0.3)       (0.3)
EST OF PAYROLL CKS CLEARING            (0.9)       (1.8)      (1.9)        (0.5)      (1.9)        (0.4)       (2.5)
EST OF A/P CKS CLEARING                (5.8)       (4.8)      (5.8)        (4.6)      (3.6)        (3.6)       (3.6)

TTL CASH OUT                          (35.3)      (12.2)     (23.5)       (10.9)     (10.2)       (14.9)      (11.8)

TTL RECEIPTS/CASH IN                   12.4        13.3       19.7         12.1       23.9         12.2        13.2
     SPECIAL RECEIPTS

INCREASE/(DECREASE) CASH              (22.9)        1.1       (3.8)         1.2        7.7          7.7         1.4

INVESTED CASH AT CITIBANK             (22.9)      (21.8)     (25.5)       (24.4)     (16.7)       (19.4)      (18.0)

OTHER OVERNIGHT INVESTMENTS
TWA STOCK
TWA STOCK VOLUME

<CAPTION>





                                           12-Mar        13-Mar        14-Mar          15-Mar      16-Mar     19-Mar
                                           ------        ------        ------          ------      ------     ------
<S>                                        <C>           <C>           <C>             <C>         <C>        <C>

INVESTED CASH AT CITIBANK                  (18.0)        (29.2)        (27.3)          (18.8)      (23.0)     (18.9)
(IATA)UATP/ACH PYMTS
W/H & FICA PYMTS                            (4.3)                                       (0.8)       (0.5)      (2.8)
EXCISE TAX PYMTS                            (9.7)
TRANS STATES W/T                            (3.9)                                                   (0.2)      (2.2)
AETNA MED/DENTAL                            (0.5)         (0.5)         (0.5)           (0.5)       (0.5)      (0.5)
CREDIT UNION                                                                            (0.8)       (1.5)
FUEL                                        (0.7)                       (8.0)           (3.7)                  (0.7)
A/C LEASES                                  (1.2)         (0.9)         (1.0)           (3.2)       (0.6)      (0.6)
PRINC + INTEREST                                          (0.9)                         (2.1)       (0.2)
OTHER W/TRANSFERS                           (2.0)         (0.3)         (0.3)           (1.4)       (0.3)      (1.6)
EST OF REFUND/LOD/ETC. CLEARINGS            (0.3)         (0.3)         (0.3)           (0.3)       (0.3)      (0.3)
EST OF PAYROLL CKS CLEARING                 (3.2)         (2.8)         (1.8)           (1.4)       (1.5)      (2.1)
EST OF A/P CKS CLEARING                     (5.6)         (4.6)         (3.6)           (3.6)       (3.6)      (5.6)

TTL CASH OUT                               (31.4)        (10.3)        (15.3)          (17.8)       (9.2)     (16.2)

TTL RECEIPTS/CASH IN                        20.2          12.2          23.8            12.3        13.3       10.7
     SPECIAL RECEIPTS                                                                    1.3

INCREASE/(DECREASE) CASH                   (11.2)          1.9           8.5            (4.2)        4.1        0.5

INVESTED CASH AT CITIBANK                  (29.2)        (27.3)        (18.8)          (23.0)      (18.9)     (14.4)

OTHER OVERNIGHT INVESTMENTS
TWA STOCK
TWA STOCK VOLUME
</TABLE>

                                     Page 1
<PAGE>   150



                                     Mar 20

<TABLE>
<CAPTION>

                                                   20-MAR THROUGH 30-MAR ESTIMATED CASH FLOW AT CITIBANK
                                      20-Mar      21-Mar      22-Mar      23-Mar      26-Mar      27-Mar      28-Mar
                                      ------      ------     -------      ------     -------      ------      ------
<S>                                   <C>         <C>        <C>          <C>        <C>          <C>         <C>
INVESTED CASH AT CITIBANK             (14.4)      (13.5)       (9.3)       (9.3)       (1.2)       (6.4)      (10.6)
IATA/ACH PYMTS                                                                                                (23.0)
W/H & FICA PYMTS                                                                      (10.7)
EXCISE TAX PYMTS                                                                                   (9.7)
TRANS STATES W/T                       (1.7)                                           (3.3)
AETNA MED/DENTAL                       (0.5)       (0.5)       (0.5)       (0.5)       (0.5)       (0.5)       (0.5)
CREDIT UNION                                                               (2.0)
FUEL                                               (8.0)       (2.8)                   (0.7)       (8.0)       (4.4)
A/C LEASES                             (5.4)       (2.5)       (1.5)       (0.4)       (0.9)       (1.1)       (0.6)
PRINC & INTEREST                                               (2.1)                   (0.1)
OTHER W/TRANSFERS                      (0.3)       (0.6)       (1.5)       (0.3)       (0.4)       (0.3)       (0.3)
EST OF REFUND/LOD/ETC. CLEARINGS       (0.3)       (0.3)       (0.3)       (0.3)       (0.3)       (0.3)       (0.3)
EST OF PAYROLL CKS CLEARING            (0.5)       (5.7)       (0.4)       (3.0)       (4.8)       (1.4)       (5.8)
EST OF A/P CKS CLEARING                (2.0)       (2.1)       (1.5)       (1.8)       (4.0)       (3.3)       (3.0)

TTL CASH OUT                          (11.3)      (19.7)      (10.5)       (8.1)      (25.7)      (16.6)      (41.3)

TTL RECEIPTS/CASH IN                   12.2        23.9        12.2        13.2        20.5        12.4        24.1
     SPECIAL RECEIPTS                                           1.3

INCREASE/(DECREASE) CASH                0.9         4.2         3.0         5.1        (5.2)       (4.2)      (17.2)

INVESTED CASH AT CITIBANK             (13.5)       (9.3)       (8.3)       (1.2)       (8.4)      (10.6)      (27.8)

OTHER OVERNIGHT INVESTMENTS
TWA STOCK
TWA STOCK VOLUME

<CAPTION>




                                                                                       TOTAL       TOTAL
                                           29-Mar        30-Mar                        1-Mar       MONTH
                                           ------        ------                        -----       -----
<S>                                        <C>           <C>                           <C>         <C>
INVESTED CASH AT CITIBANK                  (27.8)        (24.9)                        0.0           0.0
IATA/ACH PYMTS                                                                         0.0         (23.0)
W/H & FICA PYMTS                                                                       0.0         (22.1)
EXCISE TAX PYMTS                                                                       0.0         (19.4)
TRANS STATES W/T                                                                       0.0         (15.7)
AETNA MED/DENTAL                            (0.5)         (0.5)                       (0.5)        (11.0)
CREDIT UNION                                              (2.4)                        0.0         (10.2)
FUEL                                        (4.4)                                     (4.5)        (63.4)
A/C LEASES                                  (0.6)                                     (6.3)        (46.2)
PRINC & INTEREST                                                                      (9.1)        (15.7)
OTHER W/TRANSFERS                           (1.4)         (0.7)                       (8.3)        (26.1)
EST OF REFUND/LOD/ETC. CLEARINGS            (0.3)         (0.3)                       (0.3)         (6.5)
EST OF PAYROLL CKS CLEARING                 (1.6)         (1.5)                       (0.9)        (47.0)
EST OF A/P CKS CLEARING                     (2.5)         (2.5)                       (5.8)        (61.0)

TTL CASH OUT                               (14.3)         (7.9)                      (35.3)       (377.4)

TTL RECEIPTS/CASH IN                        14.2          18.3                        12.4         366.3
     SPECIAL RECEIPTS                                     12.0                         0.0          14.5

INCREASE/(DECREASE) CASH                     2.9          22.4                       (22.9)         (2.5)

INVESTED CASH AT CITIBANK                  (24.9)         (2.5)                      (22.9)         (2.5)

OTHER OVERNIGHT INVESTMENTS
TWA STOCK
TWA STOCK VOLUME
</TABLE>

                                     Page 1
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.91
<SEQUENCE>16
<FILENAME>d84957ex10-91.txt
<DESCRIPTION>LETTER AGREEMENT DATED JANUARY 11, 2001
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.91


                                AMR FINANCE, INC.
                           4333 Amon Carter Boulevard
                                 Mail Drop 5618
                             Fort Worth, Texas 76155


                                January 11, 2001


Trans World Airlines, Inc.
One City Centre
515 North 6th Street
St. Louis, Missouri  63101
Attn: William P. Compton

            Re:      Secured Debtor in Possession Credit and Security Agreement
                     dated as of January 10, 2001 (the "Credit Agreement") among
                     Trans World Airlines, Inc., as borrower, certain of its
                     subsidiaries, as guarantors, the Lenders from time to time
                     party thereto and AMR Finance, Inc., as Administrative
                     Agent


Dear Bill:

                  This letter is to evidence our agreement that Section 2.9(b)
         of the Credit Agreement is hereby amended, in accordance with the
         Interim Order, to read as follows:

                  "(b) Arrangement Fees. The Borrower agrees to pay to the
         Administrative Agent an arrangement fee equal to 4.0% of the
         Commitments (the "Arrangement Fee"), payable incrementally on the date
         of the funding of each Borrowing; provided, however, the Arrangement
         Fee shall only be payable on that portion of such Borrowing equal to
         the amount (if any ) by which (i) the total outstanding amount of the
         Loans (after giving effect to the Borrowing) on the date of such
         Borrowing, exceeds (ii) the maximum amount of the Loans outstanding on
         any date prior to the date of such Borrowing."

                  If the terms hereof accurately reflect your understanding of
our agreement and the Interim Order, please acknowledge this letter by signing
below, and return the same to me.

                                           AMR Finance, Inc.


                                           By:
                                              --------------------------------
                                           Name:
                                                ------------------------------
                                           Title:
                                                 -----------------------------



<PAGE>   2


Trans World Airlines, Inc.
January 11, 2001
Page 2


Acknowledged and Accepted
this 11th day of January, 2001:


TRANS WORLD AIRLINES, INC.,                 AMBASSADOR FUEL CORPORATION,
as Borrower                                 as a Guarantor


By:                                         By:
   ------------------------------------        ----------------------------
   Name:  William P. Compton                   Name:  Michael Palumbo
   Title: President and Chief Executive        Title: President
          Officer


MEGA ADVERTISING, INC.,                     NORTHWEST 112TH STREET
as a Guarantor                              CORPORATION, as a Guarantor


By:                                         By:
   ------------------------------------        ----------------------------
   Name:  Paul J.M. Rutterer                   Name:  Paul J.M. Rutterer
   Title: Secretary                            Title: Secretary


THE TWA AMBASSADOR CLUB, INC.,              TRANS WORLD COMPUTER
SERVICES, as a Guarantor                    INC., as a Guarantor



By:                                         By:
   ------------------------------------        ----------------------------
   Name:  Paul J.M. Rutterer                   Name:  Paul J.M. Rutterer
   Title: Secretary                            Title: Secretary


TRANSCONTINENTAL & WESTERN AIR,             TWA AVIATION, INC.,
INC., as a Guarantor                        as a Guarantor



By:                                         By:
   ------------------------------------        ----------------------------
   Name:  William P. Compton                   Name:  Paul J.M. Rutterer
   Title: President                            Title: Secretary


<PAGE>   3


Trans World Airlines, Inc.
January 11, 2001
Page 3


TWA GROUP, INC.,                            TWA STANDARDS & CONTROLS, INC.,
as a Guarantor                              as a Guarantor



By:                                         By:
   ------------------------------------        ----------------------------
   Name:  Paul J.M. Rutterer                   Name:  Paul J.M. Rutterer
   Title: Secretary                            Title: Assistant Secretary


OZARK GROUP, INC.,                          TWA NIPPON, INC.,
as a Guarantor                              as a Guarantor



By:                                         By:
   ------------------------------------        ----------------------------
   Name:  Michael Palumbo                      Name:  Paul J.M. Rutterer
   Title: President                            Title: Secretary


TWA EMPLOYEE SERVICES, INC.,                TWA GETAWAY VACATIONS, INC.,
as a Guarantor                              as a Guarantor



By:                                         By:
   ------------------------------------        ----------------------------
   Name:  Paul J.M. Rutterer                   Name:  Paul J.M. Rutterer
   Title: Secretary                            Title: Assistant Secretary


TRANS WORLD EXPRESS, INC.,                  INTERNATIONAL AVIATION
SECURITY, as a Guarantor                    INC., as a Guarantor



By:                                         By:
   ------------------------------------        ----------------------------
   Name:  Paul J.M. Rutterer                   Name:  Paul J.M. Rutterer
   Title: Secretary                            Title: Secretary




<PAGE>   4


Trans World Airlines, Inc.
January 11, 2001
Page 4



GETAWAY MANAGEMENT SERVICES,                THE GETAWAY GROUP (UK), INC.,
INC., as a Guarantor                        as a Guarantor



By:                                         By:
   ------------------------------------        ----------------------------
   Name:  Paul J.M. Rutterer                   Name:  Paul J.M. Rutterer
   Title: Secretary                            Title: Secretary



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.92
<SEQUENCE>17
<FILENAME>d84957ex10-92.txt
<DESCRIPTION>LETTER AGREEMENT DATED JANUARY 26, 2001
<TEXT>

<PAGE>   1


                                                                   EXHIBIT 10.92

                                AMR FINANCE, INC.
                           4333 Amon Carter Boulevard
                                 Mail Drop 5618
                             Fort Worth, Texas 76155



                                January 26, 2001


Trans World Airlines, Inc.
One City Centre
515 North 6th Street
St. Louis, Missouri  63101
Attn: William P. Compton

             Re:    Secured Debtor in Possession Credit and Security Agreement
                    dated as of January 10, 2001 (as amended from time to time,
                    the "Credit Agreement") among Trans World Airlines, Inc., as
                    borrower, certain of its subsidiaries, as guarantors, the
                    Lenders from time to time party thereto and AMR Finance,
                    Inc., as Administrative Agent. Terms used herein but not
                    defined herein shall have the meanings set forth in the
                    Credit Agreement.

Dear Bill:

                  This letter is to evidence our agreement as to the following:

                  1. The last sentence of Section 2.2(a) of the Credit Agreement
is hereby deleted in its entirety and the following inserted in lieu thereof:

                  "The Borrower may not request more than one Borrowing per
Business Day."

                  2. The Borrower transferred and sold Receivables to
Constellation on January 10, 11, 12, 15 and 16, 2001, and in exchange therefore,
received cash in an amount equal to approximately $30,000,000 (the
"Transaction"). The Lenders hereby waive any Default or Event of Default arising
solely from the consummation of the Transaction; provided, however, such
transferred Receivables shall not be included as "Receivables" or "Eligible
Receivables" for purposes of calculating the Borrowing Base.

                  3. The following sentence is hereby added as the last sentence
to Section 6.1(a) of the Credit Agreement:

                  "Notwithstanding the foregoing and with respect to the monthly
financial information of the Borrower and it Subsidiaries for the fiscal month
ended December 31, 2000 only, the Borrower shall be permitted to deliver such
information to the Administrative Agent no later than February 15, 2001."



<PAGE>   2
Trans World Airlines, Inc.
January 26, 2001
Page 2

                  4. Section 7.11(b) of the Credit Agreement is hereby deleted
in its entirety and following inserted in lieu thereof:

                  "(b) as soon as possible (but in any event not later than
         thirty (30) days) following the occurrence of the AR Termination Date,
         (x) cause the Limited Liability Company Agreement of Constellation,
         dated as of December 22, 1997, to be amended to delete Sections 10.1
         through and including 10.6 (concerning transfers of Membership
         interests) thereof and to amend or delete, at the direction of the
         Administrative Agent, any other provision of Constellation's
         Constituent Documents to permit Constellation to become a Guarantor and
         Grantor hereunder and to pledge its assets to the Administrative Agent,
         (y) take all actions as the Administrative Agent may request to
         evidence the Borrower's pledge of its interest in Constellation to the
         Administrative Agent, and (z) cause Constellation to become a Guarantor
         and a Grantor hereunder and in connection therewith, grant to the
         Administrative Agent, for the benefit of the Lenders, a security
         interest in all of Constellation's assets, and"

                  If the terms hereof accurately reflect your understanding of
our agreement, please acknowledge this letter by signing below, and return the
same to me. This Letter Agreement is executed as of the date written above and
will be effective for all purposes as of January 10, 2001.

                                              AMR Finance, Inc.





                                              By:
                                                 -------------------------------
                                              Name:
                                                   -----------------------------
                                              Title:
                                                   -----------------------------



<PAGE>   3

Trans World Airlines, Inc.
January 26, 2001
Page 3


Acknowledged and Accepted
this 26th day of January, 2001:


TRANS WORLD AIRLINES, INC.,                   AMBASSADOR FUEL CORPORATION,
as Borrower                                   as a Guarantor


By:                                           By:
   ------------------------------------          -------------------------------
   Name: William P. Compton                      Name: Michael Palumbo
   Title: President and Chief Executive          Title: President
          Officer


MEGA ADVERTISING, INC.,                       NORTHWEST 112TH STREET
as a Guarantor                                CORPORATION,  as a Guarantor


By:                                           By:
   ------------------------------------          -------------------------------
   Name: Paul J.M. Rutterer                      Name: Paul J.M. Rutterer
   Title: Secretary                              Title: Secretary


THE TWA AMBASSADOR CLUB, INC.,                TRANS WORLD COMPUTER SERVICES,
INC., as a Guarantor                          as a Guarantor



By:                                           By:
   ------------------------------------          -------------------------------
   Name: Paul J.M. Rutterer                      Name: Paul J.M. Rutterer
   Title: Secretary                              Title: Secretary


TRANSCONTINENTAL & WESTERN AIR,               TWA AVIATION, INC.,
INC., as a Guarantor                          as a Guarantor



By:                                           By:
   ------------------------------------          -------------------------------
   Name: William P. Compton                      Name: Paul J.M. Rutterer
   Title: President                              Title: Secretary


<PAGE>   4

Trans World Airlines, Inc.
January 26, 2001
Page 4


TWA GROUP, INC.,                              TWA STANDARDS & CONTROLS, INC.,
as a Guarantor                                as a Guarantor



By:                                           By:
   ------------------------------------          -------------------------------
   Name: Paul J.M. Rutterer                      Name: Paul J.M. Rutterer
   Title: Secretary                              Title: Assistant Secretary


OZARK GROUP, INC.,                            TWA NIPPON, INC.,
as a Guarantor                                as a Guarantor



By:                                           By:
   ------------------------------------          -------------------------------
   Name: Michael Palumbo                         Name: Paul J.M. Rutterer
   Title: President                              Title: Secretary


TWA EMPLOYEE SERVICES, INC.,                  TWA GETAWAY VACATIONS, INC.,
as a Guarantor                                as a Guarantor



By:                                           By:
   ------------------------------------          -------------------------------
   Name: Paul J.M. Rutterer                      Name: Paul J.M. Rutterer
   Title: Secretary                              Title: Assistant Secretary


TRANS WORLD EXPRESS, INC.,                    INTERNATIONAL AVIATION
SECURITY, as a Guarantor                      INC., as a Guarantor



By:                                           By:
   ------------------------------------          -------------------------------
   Name: Paul J.M. Rutterer                      Name: Paul J.M. Rutterer
   Title: Secretary                              Title: Secretary




<PAGE>   5

Trans World Airlines, Inc.
January 26, 2001
Page 5

GETAWAY MANAGEMENT SERVICES,                  THE GETAWAY GROUP (UK), INC.,
INC., as a Guarantor                          as a Guarantor



By:                                           By:
   ------------------------------------          -------------------------------
   Name: Paul J.M. Rutterer                      Name: Paul J.M. Rutterer
   Title: Secretary                              Title: Secretary



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.93
<SEQUENCE>18
<FILENAME>d84957ex10-93.txt
<DESCRIPTION>LETTER AGREEMENT DATED MARCH 7, 2001
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.93

                                AMR FINANCE, INC.
                           4333 Amon Carter Boulevard
                                 Mail Drop 5618
                             Fort Worth, Texas 76155


                                  March 7, 2001

VIA FACSIMILE (314) 589-3461

Trans World Airlines, Inc.
One City Centre
515 North 6th Street
St. Louis, Missouri  63101
Attn:    Kate Soled

         Re:      Secured Debtor in Possession Credit and Security Agreement
                  dated as of January 10, 2001, by and among Trans World
                  Airlines, Inc., as Borrower, certain of Subsidiaries of
                  Borrower, as Guarantors, the Lenders from time to time party
                  thereto and AMR Finance, Inc., as Administrative Agent (as may
                  be amended, extended, renewed, or restated from time to time,
                  the "Credit Agreement"; terms defined in the Credit Agreement
                  and not otherwise defined herein shall be used herein as
                  defined in the Credit Agreement)

Dear Kate:

         This letter is to evidence our agreement that the phrase "thirty (30)
days" set forth in Section 7.11(b) of the Credit Agreement is hereby deleted and
replaced with the phrase "sixty (60) days".

         As a material inducement to the Lenders to execute this letter,
Borrower hereby represents and warrants to the Lenders that, after giving effect
to this letter and the waiver contained herein: (a) all of the representations
and warranties contained in the Credit Agreement and the other Loan Documents
are true and correct as of the date hereof as though made as of such date
(unless they speak to a specific date or are based upon facts which have changed
by transactions expressly contemplated or permitted by the Credit Agreement);
and (b) no Default or Event of Default exists.

         By execution of this letter in the space provided below, Borrower
consents to the foregoing and ratifies and confirms that the Credit Agreement
and all other Loan Documents, and all renewals, extensions, and restatements of,
and amendments and supplements to, any of the foregoing, are and remain in full
force and effect in accordance with their respective terms.

         The waiver hereby granted by the Lenders does not (a) constitute a
waiver or modification of any other terms or provisions set forth in the Credit
Agreement or any other Loan Document and shall not impair any right that any
Lender may now or hereafter have under or in connection with the Credit
Agreement or any other Loan Document, and (b) impair any



<PAGE>   2
Trans World Airlines, Inc.
March 7, 2001
Page 2

Lender's rights to insist upon strict compliance with the Credit Agreement, as
amended or otherwise modified hereby, or the other Loan Documents. The Loan
Documents continue to bind and inure to Borrower and the Lender and their
respective successors and permitted assigns.

                  This letter, when countersigned by the Required Lenders, shall
be a "Loan Document" as defined and referred to in the Credit Agreement and the
other Loan Documents, and may be signed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         This letter, the Credit Agreement, and the other Loan Documents embody
the final, entire agreement among the parties hereto and supersede any and all
prior commitments, agreements, representations, and understandings, whether
written or oral, relating to the subject matter hereof and may not be
contradicted or varied by evidence of prior, contemporaneous, or subsequent oral
agreements or discussions of the parties hereto, there are no oral agreements
among the parties hereto.

                                          AMR Finance, Inc., as Administrative
                                          Agent and Lender


                                          By:
                                             -----------------------------------
                                          Name:
                                               ---------------------------------
                                          Title:
                                                --------------------------------

cc:      Andrew M. Kaufman
         Kirkland & Ellis
         (312) 861-2200 fax



<PAGE>   3

Trans World Airlines, Inc.
March 7, 2001
Page 3


Acknowledged and Accepted this _____ day of March, 2001:

TRANS WORLD AIRLINES, INC.,
as Borrower


By:
   -----------------------------------
   Name: William P. Compton
   Title: President and Chief
          Executive Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.94
<SEQUENCE>19
<FILENAME>d84957ex10-94.txt
<DESCRIPTION>1ST AMEND TO SECURED DEBTOR IN POSSESSION CREDIT
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.94

                       FIRST AMENDMENT TO CREDIT AGREEMENT

         THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered
into as of the 12th day of March, 2001, by and among Trans World Airlines, Inc.
(the "Borrower"), as a debtor and debtor in possession under chapter 11 of the
Bankruptcy Code, certain Subsidiaries of the Borrower listed on the signature
pages hereto, as Guarantors, as debtors and debtors in possession under chapter
11 of the Bankruptcy Code, the Lenders and AMR Finance, Inc. (the
"Administrative Agent"), as administrative agent for the Lenders.

                                   BACKGROUND

                  A. The Borrower, the Guarantors, the Lenders, and the
Administrative Agent are parties to that certain Secured Debtor In Possession
Credit and Security Agreement dated as of January 10, 2001 (as amended by those
certain letter agreements dated January 11, 2001, January 26, 2001 and March 7,
2001 and as may be further amended, extended, renewed, or restated from time to
time, the "Credit Agreement"; terms defined in the Credit Agreement and not
otherwise defined herein shall be used herein as defined in the Credit
Agreement).

                  B. The Borrower, the Guarantors, the Lenders and the
Administrative Agent desire to amend the Credit Agreement to (i) increase the
Revolving Credit Commitment from $100,000,000 (such Original Revolving Credit
Commitment together with the Term Credit Commitment the "Original Commitment")
to $230,000,000 (such increase, the "Incremental Commitment") and (ii) permit
Overadvances (defined below).

                  NOW, THEREFORE, in consideration of the covenants, conditions
and agreements contained herein, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, the parties
hereto covenant and agree as follows:

                  1.       AMENDMENTS TO THE CREDIT AGREEMENT. The Credit
Agreement is hereby amended as follows:

                           (a)      Section 1.1 is amended to add the following
         definitions:

                                    "'Overadvances' has the meaning specified in
                           Section 2.1(c)."

                                    "'Post-Petition Obligation Credit' has the
                           meaning set forth in Section 2.10(a)."

                           (b)      Section 2.1 is hereby amended by adding the
         following new paragraph as Section 2.1(c):

                                    "(c) Any provision of this Agreement to the
                           contrary notwithstanding, at the request of the
                           Borrower, the Administrative Agent may, in its sole
                           and absolute discretion (but shall have absolutely no
                           obligation to), make a Revolving Loan to Borrower on
                           behalf of the



<PAGE>   2

                           Lenders in amounts that cause the outstanding
                           balance of the aggregate Revolving Loans then
                           outstanding, after giving effect to such Revolving
                           Loan, to exceed the amount equal to the Borrowing
                           Base less Availability Reserves, in each case then
                           in effect at such time (any such excess Revolving
                           Loan is herein referred to collectively as an
                           "Overadvance" and collectively, the "Overadvances");
                           provided, however (i) no such event or occurrence
                           shall cause or constitute a waiver of the
                           Administrative Agent's or any Lender's right to
                           refuse to make any further Overadvance, or to make
                           any Revolving Loans or Term Loans in accordance with
                           this Agreement and the other Loan Documents, and
                           (ii) no Overadvance shall result in a Default or
                           Event of Default due to Borrower's failure to comply
                           with Section 2.7(d), but solely with respect to the
                           amount of such Overadvance. Overadvances may be made
                           notwithstanding the condition set forth in Section
                           3.2(c)(i). All Overadvances shall bear interest at
                           the rates and be payable on the dates set forth in
                           Section 2.8. Any Overadvance made pursuant to this
                           Section 2.1(c) shall be repaid on the Revolving
                           Credit Termination Date. The authority of the
                           Administrative Agent to make Overadvances is limited
                           to an aggregate principal amount not to exceed
                           $130,000,000 at any time outstanding and shall not
                           cause the aggregate principal amount of the
                           Revolving Loan outstanding at any time to exceed the
                           Revolving Credit Commitment."

                           (c)      Section 2.2(a)(i) is hereby deleted and
         replaced with the following:

                                    "(i) whether the proposed Borrowing consists
                           of a Revolving Loan, a Term Loan or both and if the
                           Borrowing of Revolving Loans constitutes a request
                           for an Overadvance, the intended use of the proceeds
                           thereof,"

                           (d)      The first sentence of Section 2.6(a) is
         hereby deleted and replaced with the following:

                           "The Borrower may, upon at least one Business Day's
                           prior notice to the Administrative Agent, prepay the
                           outstanding principal amount of the Loans in whole or
                           in part; provided, however, that each partial
                           prepayment of Loans shall be in an aggregate
                           principal amount not less than $100,000; provided
                           further that all prepayments of the Revolving Loans
                           shall first be applied to Overadvances then
                           outstanding."

                                       2
<PAGE>   3

                           (e)      Section 2.7(d) is hereby deleted and
         replaced with the following:

                                    "(d) If, at any time, the aggregate
                           principal amount of the aggregate Revolving Loans
                           then outstanding (excluding Overadvances) exceeds by
                           more than $10,000,000 the amount equal to the
                           Borrowing Base less Availability Reserves, in each
                           case then in effect at such time, the Borrower shall
                           forthwith prepay the Revolving Loans then outstanding
                           in an amount equal to such excess. Overadvances made
                           pursuant to Section 2.1(c) shall be repaid on the
                           Revolving Credit Termination Date. If, at any time,
                           the aggregate principal amount of the aggregate
                           Revolving Loans (including Overadvances) exceeds the
                           aggregate Revolving Credit Commitments, the Borrower
                           shall forthwith prepay the Revolving Loans then
                           outstanding in an amount equal to such excess. If, at
                           any time, the aggregate principal amount of the
                           aggregate Term Loans exceeds the aggregate Term
                           Credit Commitments, the Borrower shall forthwith
                           prepay the Term Loans then outstanding in an amount
                           equal to such excess."

                           (f)      Section 2.7 is hereby amended by adding the
         following new paragraph as Section 2.7(e):

                                    "(e) Notwithstanding anything to the
                           contrary set forth in Section 2.7, except with
                           respect to the first sentence of Section 2.7(d), any
                           payments of the Revolving Loans pursuant to this
                           Section 2.7 shall first be applied to Overadvances
                           then outstanding."

                           (g)      Section 2.9(b) is hereby deleted and
         replaced with the following:

                                    "(b) The Borrower agrees to pay to the
                           Administrative Agent an arrangement fee equal to four
                           percent (4%) of the Original Commitment and two
                           percent (2%) of the Incremental Commitment
                           (collectively, the "Arrangement Fee"), payable on the
                           date of the funding of each Borrowing; provided,
                           however, that the Arrangement Fee shall only be
                           payable on that portion of such Borrowing equal to
                           the amount (if any) by which (i) the total
                           outstanding amount of the Loans (after giving effect
                           to the Borrowing) on the date of such Borrowing,
                           exceeds (ii) the maximum amount of the Loans
                           outstanding on any date prior to the date of such
                           Borrowing; provided further that all Borrowings
                           outstanding at any time up to $200 million shall be
                           deemed to be Borrowings of the Original Commitment
                           and; provided further, that in the event that

                                       3
<PAGE>   4

                           American shall make the Final Accepted Offer (as
                           defined in the Asset Purchase Agreement) for the
                           Transferred Assets (as defined in the Asset Purchase
                           Agreement) or the Non-Worldspan Assets (as defined in
                           the Asset Purchase Agreement) then one-half of the
                           Arrangement Fee paid to Administrative Agent shall be
                           returned and refunded to the Borrower on the closing
                           date for such asset purchase."

                           (h)      Section 2.10 is hereby amended to add the
         following language at the end of Section 2.10(a):

                           "Notwithstanding any provision in this Agreement to
                           the contrary, in the event AMR Finance or any of its
                           Affiliates purchases any asset or assets of the
                           Borrower or its Subsidiaries, whether pursuant to the
                           Asset Purchase Agreement or otherwise, or incurs any
                           other obligation to any of the Borrower or any of its
                           Subsidiaries or any trustee or examiner for the
                           Borrower or any of its Subsidiaries appointed under
                           chapter 7 or chapter 11 of the Bankruptcy Code, AMR
                           Finance and its Affiliates shall be entitled to pay
                           the purchase price or satisfy any such obligation by
                           a credit of the amount of such purchase price or
                           other obligation against the Obligations owing to AMR
                           Finance, without further order of the Bankruptcy
                           Court or notice to any other party, whether or not
                           such Obligations are then due and payable (the
                           "Post-Petition Obligation Credit") and the
                           Obligations owing to AMR Finance shall be reduced by
                           the amount of the Post-Petition Obligation Credit
                           owing to AMR Finance."

                           (i)      Section 3.2 is hereby amended to re-letter
         clause (g) thereof as clause (h) and insert the following new
         clause (g):

                                    "(g) Arrangement Fee. The Administrative
                           Agent shall have received (or shall receive
                           simultaneously with the funding of any Borrowing) the
                           Arrangement Fee (if any) due and owing in respect of
                           such Borrowing pursuant to Section 2.9(b)."

                           (j)      Section 4.11 is hereby amended to add the
         following language at the end of Section 4.11:

                           "Notwithstanding the foregoing, the proceeds of the
                           Overadvances shall be used only for the purpose
                           detailed in the Notice of Borrowing requesting such
                           Overadvance and which is approved by the
                           Administrative Agent in writing prior to the date of
                           such Overadvance."

                                        4
<PAGE>   5

                           (k)      Schedule I is hereby deleted and replaced
         with Schedule I attached hereto.

                           (l)      Exhibit C is hereby deleted and replaced
         with Exhibit C attached hereto.

                  2. ACKNOWLEDGMENT OF THE BORROWER. The Borrower acknowledges
and agrees that the Lenders executing this Amendment have done so in their sole
discretion and without any obligation.

                  3. SUBSIDIARIES ACKNOWLEDGMENT. By signing below, each of the
Subsidiaries which has executed the Credit Agreement (a) consents and agrees to
the execution and delivery of this Amendment, (b) ratifies and confirms its
obligations under the Credit Agreement and the other Loan Documents, (c)
acknowledges and agrees that its obligations under the Credit Agreement and the
other Loan Documents are not released, diminished, impaired, reduced, or
otherwise adversely affected by this Amendment, and (d) acknowledges and agrees
that it has no claims or offsets against, or defenses or counterclaims to, its
obligations under the Credit Agreement or any of the other Loan Documents.

                  4. REPRESENTATIONS AND WARRANTIES TRUE, NO EVENT OF DEFAULT.
By its execution and delivery hereof, the Borrower represents and warrants, as
to itself and as to its Subsidiaries, to the Administrative Agent and the
Lenders that, as of the date hereof:

                           (a) the representations and warranties contained in
         the Credit Agreement and the other Loan Documents are true and correct
         in all material respects on and as of the date hereof as made on and as
         of such date, except for any representations and warranties made as of
         a specific date, which shall be true and correct in all material
         respects as of such specific date; and

                           (b) after giving effect to this Amendment, no event
         has occurred and is continuing which constitutes a Default or an Event
         of Default.

                  5. CONDITIONS OF EFFECTIVENESS. This Amendment shall not be
effective until each of the following conditions precedent shall have been
satisfied:

                           (a) This Amendment has been executed by Borrower, the
         Guarantors, the Administrative Agent and the Lenders; and

                           (b) The Administrative Agent shall have received such
         documents, certificates and instruments as the Administrative Agent
         shall reasonably require, including an order of the Bankruptcy Court
         approving this Amendment; and

                           (c) Borrower shall have paid to the Administrative
         Agent the reasonable fees and expenses of the Administrative Agent's
         counsel.

                  6. REFERENCE TO CREDIT AGREEMENT. Upon the effectiveness of
this Amendment, each reference in the Credit Agreement to "this Agreement,"
"hereunder," or


                                       5
<PAGE>   6

words of like or similar import shall mean and be a reference to the Credit
Agreement, as affected and amended by this Amendment.

                  7. COUNTERPARTS; EXECUTION VIA FACSIMILE. This Amendment may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. This Amendment may be validly executed and delivered by facsimile or
other electronic transmission.

                  8. GOVERNING LAW: BINDING EFFECT. This Amendment shall be
governed by and construed in accordance with the laws of the State of New York
and shall be binding upon the Borrower, the Guarantors, the Administrative
Agent, each Lender and their respective successors and assigns.

                  9. HEADINGS. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.

                  10. LOAN DOCUMENT. This Amendment is a Loan Document and is
subject to all provisions of the Credit Agreement applicable to Loan Documents,
all of which are incorporated in this Amendment by reference as if set forth in
this Amendment verbatim.

                  11. NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




                                        6
<PAGE>   7



         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.


                                   TRANS WORLD AIRLINES, INC.,
                                   as Borrower


                                   By:
                                      ------------------------------------------
                                   Name: William P. Compton
                                   Title: President and Chief Executive Officer


                                   AMBASSADOR FUEL CORPORATION,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Michael Palumbo
                                   Title: President


                                   MEGA ADVERTISING INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J.M. Rutterer
                                   Title: Secretary


                                   NORTHWEST 112TH STREET CORPORATION,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J.M. Rutterer
                                   Title: Secretary


                                   THE TWA AMBASSADOR CLUB, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J.M. Rutterer
                                   Title: Secretary



                                       7
<PAGE>   8

                                   TRANS WORLD COMPUTER SERVICES, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J.M. Rutterer
                                   Title: Secretary


                                   TRANSCONTINENTAL & WESTERN AIR, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: William P. Compton
                                   Title: President


                                   TWA AVIATION, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J.M. Rutterer
                                   Title: Secretary


                                   TWA GROUP, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J.M. Rutterer
                                   Title: Secretary


                                   TWA STANDARDS & CONTROLS, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J. M. Rutterer
                                   Title: Assistant Secretary

                                       8

<PAGE>   9

                                   OZARK GROUP, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Michael Palumbo
                                   Title: President


                                   TWA NIPPON, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J. M. Rutterer
                                   Title: Secretary


                                   TWA EMPLOYEE SERVICES, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J. M. Rutterer
                                   Title: Secretary


                                   TWA GETAWAY VACATIONS, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J. M. Rutterer
                                   Title: Assistant Secretary


                                   TRANS WORLD EXPRESS, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J. M. Rutterer
                                   Title: Secretary


                                       9

<PAGE>   10

                                   INTERNATIONAL AVIATION SECURITY, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J. M. Rutterer
                                   Title: Secretary


                                   GETAWAY MANAGEMENT SERVICES, INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J. M. Rutterer
                                   Title: Secretary


                                   THE GETAWAY GROUP (UK), INC.,
                                   as a Guarantor


                                   By:
                                      ------------------------------------------
                                   Name: Paul J. M. Rutterer
                                   Title: Secretary


                                   AMR FINANCE, INC.,
                                   as Agent and Lender


                                   By:
                                      ------------------------------------------
                                   Name: Thomas Horton
                                   Title: Senior Vice President &
                                          Chief Financial Officer


                                       10




<PAGE>   11



                                   Schedule I


<TABLE>
<CAPTION>
        LENDER        REVOLVING CREDIT COMMITMENT       TERM CREDIT COMMITMENT
        ------        ---------------------------       ----------------------
<S>                   <C>                              <C>
AMR Finance, Inc.            $230,000,000                     $100,000,000
</TABLE>



                                       11






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>20
<FILENAME>d84957ex12.txt
<DESCRIPTION>COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TEXT>

<PAGE>   1
                                                                      EXHIBIT 12

                                 AMR CORPORATION
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                                  (IN MILLIONS)

<TABLE>
<CAPTION>
                                            1996       1997       1998       1999       2000
                                           ------     ------     ------     ------     ------
<S>                                        <C>        <C>        <C>        <C>        <C>
Earnings:
   Earnings from continuing operations
   before income taxes and
   extraordinary loss                      $1,295     $1,336     $1,833     $1,006     $1,287

   Add:  Total fixed charges
        (per below)                         1,281      1,166      1,117      1,227      1,313

   Less:  Interest capitalized                 10         20        104        118        151
                                           ------     ------     ------     ------     ------
      Total earnings                       $2,566     $2,482     $2,846     $2,115     $2,449
                                           ======     ======     ======     ======     ======

Fixed charges:
   Interest                                $  514     $  420     $  369     $  383     $  450

   Portion on rental expense
   representative of the interest
   factor                                     763        744        743        832        844

   Amortization of debt expense                 4          2          5         12         19
                                           ------     ------     ------     ------     ------
      Total fixed charges                  $1,281     $1,166     $1,117     $1,227     $1,313
                                           ======     ======     ======     ======     ======

Ratio of earnings to fixed charges           2.00       2.13       2.55       1.72       1.87
                                           ======     ======     ======     ======     ======
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>21
<FILENAME>d84957ex21.txt
<DESCRIPTION>SUBSIDIARIES OF THE REGISTRANT
<TEXT>

<PAGE>   1
                                                                      EXHIBIT 21

                                 AMR CORPORATION
                         SUBSIDIARIES OF THE REGISTRANT
                             AS OF DECEMBER 31, 2000

Subsidiary companies of the Registrant are listed below. With respect to the
companies named, all voting securities are owned directly or indirectly by the
Registrant, except where otherwise indicated.

<TABLE>
<CAPTION>
                                                                                     STATE OR
                                                                                 SOVEREIGN POWER
NAME OF SUBSIDIARY                                                               OF INCORPORATION
- ------------------                                                               ----------------
<S>                                                                              <C>
Subsidiaries included in the Registrant's consolidated financial statements

Airline Management Services, Inc.                                                      Delaware
American Airlines, Inc.                                                                Delaware
         Admirals Club, Inc. (Massachusetts only)                                      Massachusetts
         AEROSAN S.A. (50%)                                                            Chile
         AEROSAN Airport Services S.A. (50%)                                           Chile
         American Airlines Australian Tours, Inc.                                      Delaware
         American Airlines de Mexico, S.A.                                             Mexico
         American Airlines de Venezuela, S.A.                                          Venezuela
         American Airlines Deutschland Holding GmbH                                    Germany
         American Airlines Holding Company, Inc.                                       Delaware
         American Holidays Limited (50/50 AA/AMR)                                      United Kingdom
         American Airlines Overseas Finance, N.V.                                      Neth. Antilles
         AMR Aircraft Sales & Leasing Company                                          Delaware
         AMR Training Group, Inc.                                                      Delaware
         AMR Ventures III, Inc.                                                        Delaware
         ONEworld Management Company Ltd. (34.6%)                                      British Columbia
         Texas Aero Engine Services, L.L.C, dba TAESL (50/50 AA/Rolls-Royce)           Delaware
Americas Ground Services, Inc.                                                         Delaware
         Aerodespachos Colombia, S.A.                                                  Colombia
         Caribbean Dispatch Services, Ltd.                                             St. Lucia
         Dispatch Services 93, S.A.                                                    Venezuela
         DSA                                                                           Dominican Republic
         International Ground Services, S.A. de C.V.                                   Mexico
         Panama Dispatch                                                               Panama
         Peru Dispatch Company                                                         Peru
AMR/American Airlines Foundation                                                       Texas
American Airlines Center Foundation, Inc.                                              Texas
American Airlines/American Eagle Family Fund, Inc.                                    Texas
</TABLE>

<PAGE>   2
<TABLE>
<CAPTION>
                                                                                     STATE OR
                                                                                 SOVEREIGN POWER
NAME OF SUBSIDIARY                                                               OF INCORPORATION
- ------------------                                                               ----------------
<S>                                                                              <C>
AMR Eagle Holding Corporation                                                          Delaware
         American Eagle Airlines, Inc.                                                 Delaware
                 AMR Leasing Corporation                                               Delaware
                 Wings West Aviation Services, Inc.                                    Delaware
         AMR Eagle Maintenance Services Group, Inc.                                    Delaware
         AMR Eagle Regional Aircraft Maintenance Center, Inc.                          Delaware
         Aero Perlas (20%)                                                             Panama
         Eagle Aviation Leasing, Inc.                                                  Delaware
         Eagle Aviation Services, Inc.                                                 Delaware
         Executive Airlines, Inc.                                                      Delaware
AMR Financial Services, Inc.                                                           Delaware
AMR Foreign Sales Corporation, Ltd.                                                    Bermuda
AMR Holding Company, Inc.                                                              Delaware
AMR Investment Services, Inc.                                                          Delaware
         American Private Equity Management, L.L.C.                                    Delaware
Avion Assurance Ltd.                                                                   Bermuda
Cargo Services, Inc.                                                                   Delaware
SC Investment, Inc.                                                                    Delaware
The C.R. Smith Aviation Museum Foundation                                              Delaware
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>22
<FILENAME>d84957ex23.txt
<DESCRIPTION>CONSENT OF INDEPENDENT AUDITORS
<TEXT>

<PAGE>   1
                                                                      EXHIBIT 23

                        CONSENT OF INDEPENDENT AUDITORS

       We consent to the incorporation by reference in Registration Statements
(Form S-8 No. 2-68366, Form S-8 No. 33-60725, Form S-8 No. 33-60727, Form S-8
No. 333-13751, Form S-8 No. 333-19325, Form S-8 No. 333-70239, Form S-8 No.
33-27866, Form S-8 No. 333-56947, Form S-4 No. 33-55191, Form S-3 No. 33-02633,
Form S-3 No. 33-42027, Form S-3 No. 33-46325, Form S-3 No. 33-52121, and Form
S-3 No. 333-68211) of AMR Corporation, and in the related Prospectuses, of our
reports dated January 16, 2001, except for Note 15, for which the date is March
19, 2001, with respect to the consolidated financial statements and schedule of
AMR Corporation included in this Annual Report (Form 10-K) for the year ended
December 31, 2000.

                                                        ERNST & YOUNG LLP

Dallas, Texas
March 22, 2001
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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