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PROMISSORY NOTE
AND AGREEMENT
$300,000,000 March 17, 1999
For value received, American Airlines, Inc., a Delaware
corporation ("American"), hereby promises to pay to The SABRE
Group Holdings, Inc., a Delaware corporation ("Holdings"), the
sum of Three Hundred Million Dollars ($300,000,000), or such
lesser amount as may be outstanding pursuant hereto, with
interest on the unpaid balance of such principal sum at the
Interest Rate (as hereinafter defined).
Section 1. Definitions. The following terms, as used
herein, shall have the following meanings:
(1) "Advances" means the two advances to be made by Holdings
hereunder as described in Section 3 hereof. "Advance" has a
corresponding meaning.
(2) "American" has the meaning set forth in the introductory
paragraph.
(3) "American Risk Component" has the meaning set forth in
Section 7(a) hereof.
(4) "AMR" has the meaning set forth in Section 2 hereof.
(5) "Bloomberg" has the meaning set forth in Section 7(a)
hereof.
(6) "Business Day" means any day other than a Saturday, Sunday
or a day on which banks located in New York, New York are
required or permitted to be closed.
(7) "Credit Agreement" has the meaning set forth in Section 2
hereof.
(8) "Equipment Trust Certificate" means equipment pass through
certificates or equipment trust certificates issued by American
as to which an opinion of counsel shall have been delivered to
the effect that the benefits of Section 1110 of the United States
Bankruptcy Code, as amended, or any successor statute are or
should be available.
(9) "Holdings" has the meaning set forth in the introductory
paragraph.
(10) "Interest Period" means each calendar month during the term
hereof during which principal of this Note is outstanding and any
portion of a calendar month during such period.
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(11) "Interest Rate" has the meaning set forth in Section 7
hereof.
(12) "Market Rates" has the meaning set forth in Section 7(a)
hereof.
(13) "Moody's" means Xxxxx'x Investors Services, Inc.
(14) "Note" means this Promissory Note.
(15) "Rating Agencies" means Moody's and S&P, and any successors
thereto that are nationally recognized rating agencies, and if no
such service nor any successor thereto shall remain in the
business of rating debt obligations, a nationally recognized
rating agency in the United States of American mutually
satisfactory to American and Holdings.
(16) "S&P" means Standard and Poor's Ratings Services, a division
of The XxXxxx-Xxxx Companies, Inc.
(17) "TSG" has the meaning set forth in Section 2 hereof.
(18) "TSG Excess Cash" means the aggregate amount of cash held by
TSG for itself and its wholly-owned subsidiaries, or expected to
be deposited in its cash account on such Business Day, that is
not needed to meet the daily cash requirements (including any
amounts TSG's lenders require it to maintain on deposit) of TSG
and its wholly-owned subsidiaries.
Section 2. Termination of TSG Obligations Under the
Credit Agreement. American, AMR Corporation, a Delaware
corporation ("AMR"), The SABRE Group, Inc., a Delaware
corporation ("TSG"), and Holdings are parties to that certain
Credit Agreement, dated as of July 1, 1996 (the "Credit
Agreement"). American, AMR, TSG and Holdings hereby agree that
all obligations of TSG pursuant to Section 2.02 of the Credit
Agreement, including, without limitation, TSG's obligation to
make any TSG Advance (as defined in the Credit Agreement), are
hereby terminated. Except as expressly amended by the foregoing
sentence, American, AMR, TSG and Holdings hereby affirm the terms
of the Credit Agreement as their legal and binding obligations.
Section 3. Advance. On or before 11:00 a.m. (New York,
New York time) on (a) March 17, 1999, or such other day as
American and Holdings shall agree, Holdings shall advance to
American the sum of Two Hundred Million Dollars ($200,000,000),
and (b) March 29, 1999, or such other day as American and
Holdings shall agree, Holdings shall advance to American the sum
of One Hundred Million Dollars ($100,000,000). American may
request a lesser amount under each Advance by a written notice to
Holdings given in the manner set forth herein. Holdings shall
make such Advances in U.S. dollars by wire transfer of
immediately available funds to American's account at The Chase
Manhattan Bank, N.A. (New York, New York) (ABA No. 000000000),
American Airlines, Inc. Account No. 000-0-000000, or such other
account as American may designate in writing to Holdings.
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Section 4. Liquidation Cost Reimbursement. American
agrees to reimburse Holdings for any losses equal to or in
excess of $10,000 that Holdings incurs in liquidating investments
in order to fund the Advances if it is reasonably necessary for
Holdings to liquidate such investments in order to fund the
Advances.
Section 5. Payment and Prepayment. The principal
balance of this Note shall be due and payable on June 30, 1999.
Interest on this Note accrued during each Interest Period but
unpaid shall be due and payable on the sixth Business Day after
the last day of such Interest Period (whether or not the
principal on which such interest accrued was paid or prepaid
during such Interest Period). American may prepay the principal
of this Note at any time and from time to time, in whole or in
part, without premium or penalty, upon one Business Day prior
notice to Holdings. American shall be required to pay accrued
interest on this Note through the date of any such prepayment in
arrears on the sixth Business Day after the last day of the
Interest Period in which such prepayment occurs as provided
above. All payments and prepayments by American hereunder shall
be made in U.S. dollars by wire transfer of immediately available
funds to Holdings' account at The Chase Manhattan Bank, N.A. (New
York, New York)(ABA No. 000000000), The SABRE Group Holdings,
Inc. Account No. 000-0-000000, or such other account as Holdings
may designate in writing to American. Any payment made on a day
other than a Business Day, or made after 1:00 p.m. (New York, New
York time) on a Business Day, shall be deemed to have been made
on the next succeeding Business Day.
Section 6. Holdings' Call Right. Holdings may require
American to prepay the principal amount of this Note at any time
upon ten Business Days' prior written notice given as provided in
Section 16. Such notice shall state the day upon which American
shall be required to prepay the principal amount of this Note,
which day shall be at least ten Business Days after receipt of
such notice by American. Interest on this Note through the date
of any such prepayment will be paid on the sixth Business Day
after the last day of the Interest Period in which such
prepayment occurs as set forth in Section 5 above.
Section 7. Interest. Interest shall accrue on the
principal sum from time to time outstanding hereunder at the
Interest Rate. The interest rate per annum for any Interest
Period shall equal the sum of the rates determined in subsections
7(a) and 7(b) below (the "Interest Rate"):
(a) An interest component to cover the incremental credit
risk assumed by Holdings in loaning money to American (the
"American Risk Component") equal to the difference between the
fair market sector curve rates (the "Market Rates") for
industrial securities with three month maturities as set forth in
Bloomberg's Financial Services ("Bloomberg") (if Bloomberg does
not publish a list of fair market sector curve rates, the fair
market sector curve rates set by the successor to Bloomberg shall
apply; and if no such successor sets fair market sector curve
rates, such rates set by a nationally recognized entity (mutually
satisfactory to American and Holdings) that sets fair market
sector curve rates in the United States of America shall apply)
at the end of the Interest Period
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(i) for securities with an S&P credit rating of "A" and (ii)
for securities with the credit rating assigned to American's
senior unsecured long term debt at the end of the Interest Period
by both Rating Agencies (if no such long term debt of American is
rated by the Rating Agencies, the Rating Agency credit ratings
shall be deemed to be one level below the credit ratings assigned
to the most recent issue of American's Equipment Trust
Certificates at the end of the Interest Period by both Rating
Agencies). The calculations required to be made under this
subsection shall be subject to the provisions of subsection (c)
of this Section 7.
(b) An interest component representing TSG's cost of funds
calculated to equal the average investment return on funds TSG
has invested in the investment accounts in which it invests TSG
Excess Cash and any funds needed to meet TSG's daily cash
requirements (including amounts that TSG's lenders require it to
maintain on deposit) during the Interest Period.
(c) If in any case the Rating Agency credit ratings are not
the same, then the higher of the two credit ratings will apply
unless there is more than one level of difference between the
credit ratings (one level of difference is equal to the
difference between BBB and BBB- for S&P or Baa1 and Baa2 for
Moody's, for example), in which case the credit rating will be
deemed to be the average of the credit ratings (rounded down in
the event the average falls between two levels). If only one
Rating Agency rates such securities, then the rating applied by
that Rating Agency shall be used.
(d) No later than five Business Days after the last day of
each Interest Period, American shall provide Holdings, and
Holdings shall confirm, the Interest Rate for such Interest
Period and the calculation of interest accrued during such
Interest Period but unpaid. Interest shall be calculated on the
basis of a 365-day year for the actual number of days elapsed.
Section 8. Usury Savings Clause. All agreements between
the parties, whether now existing or hereafter arising and
whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand for payment or
acceleration of the maturity hereof or otherwise, shall the
interest contracted for, charged or received exceed the maximum
amount permissible under applicable law. If, from any
circumstance whatsoever, interest would otherwise be payable in
excess of the maximum lawful amount, the interest payable shall
be reduced to the maximum amount permitted under applicable law;
and if from any circumstance Holdings shall ever receive anything
of value deemed interest by applicable law in excess of the
maximum lawful amount, an amount equal to any excessive interest
shall be applied to the reduction of the principal hereof and not
to the payment of interest, or if such excessive interest exceeds
the unpaid balance of principal hereof such excess shall be
refunded to American. All interest paid or agreed to be paid
shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period until
payment in full of the principal (including the period of any
renewal or extension hereof) so that the interest hereon for such
full period shall not exceed the maximum amount permitted by
applicable law. To the extent that TEX. REV. CIV. STAT. XXX.
art. 5069-1.04, as amended, is applicable to this Note, the
indicated rate ceiling specified in such article is the
applicable ceiling; provided that;
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if any applicable law permits greater interest, the law
permitting the greatest interest shall apply.
Section 9. Limitation of Liability. Neither party shall
have any liability under this Note (including any liability for
its own negligence) for damages, losses or expenses (including
expenses or higher interest rates incurred in order to obtain
alternative financing sources) suffered by the other party or its
subsidiaries as a result of the performance or non-performance of
such party's obligations hereunder, unless such damages, losses
or expenses are caused by or arise out of the willful misconduct
or gross negligence of such party or a breach by such party. In
no event shall either party have any liability to the other party
for indirect, incidental or consequential damages that such other
party or its subsidiaries or any third party may incur or
experience on account of the performance or non-performance of
such party's obligations hereunder. The provisions of this
Section 9 shall survive any termination of this Note.
Section 10. Term. The term of this Note shall commence
on the date hereof and shall continue until all sums due and
owing hereunder have been paid in full.
Section 11. Dispute Resolution. All disputes under this
Note shall be resolved in the manner provided in Article 16 of
that certain Management Services Agreement, effective on July 1,
1996, between American and TSG, as it may be amended from time to
time, as if each of American and Holdings were party to such
agreement. If a dispute arises after June 30, 1999, such dispute
resolution procedures shall continue to apply regardless of the
status of the Management Services Agreement.
Section 12. Assignment. Neither party hereto may assign
this Note, or its rights or obligations hereunder, without the
prior written consent of the other party.
Section 13. Amendment. This Note may not be amended
except by a written instrument executed by both parties hereto.
Section 14. Waivers. Either party hereto may (a) extend
the time for performance of any of the obligations or other acts
of the other party or (b) waive compliance with any of the
agreements of the other party contained herein. No waiver of any
term of this Note shall be construed as a waiver of the same
term in any other situation or a waiver of any other term of this
Note. The failure of any party to assert any of its rights
hereunder will not constitute a waiver of any such rights.
Section 15. Severability. If any provision of this Note
is invalid, illegal or incapable of being enforced by any rule of
law or public policy, such provision shall be deemed severable
and all other provisions of this Note shall nevertheless remain
in full force and effect.
Section 16. Notices. All notices and other
communications required or permitted hereunder to be given to or
made upon any party shall be in writing, shall be addressed as
provided below and shall be considered properly given and
received: (a) when delivered, if delivered in person;
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(b) one Business Day after dispatch, if dispatched by a
recognized express delivery service which provides signed
acknowledgments of receipt; (c) three Business Days after deposit
in the U.S. mail, if sent be certified or registered first class
mail, postage prepaid, return receipt requested; or (d) upon
completion of transmission and confirmation by the sender (by a
telephone call to a representative of the recipient or by machine
confirmation) that the transmission was received, if transmitted
by facsimile. For the purposes of notice, the addresses of the
parties shall be as set forth below; provided, however, that
either party shall have the right to change its address for
notice to any other location by giving at least three Business
Days' prior written notice to the other party in the manner set
forth above.
If to American: American Airlines, Inc.
0000 Xxxx Xxxxxx Xxxxxxxxx
Mail Drop 5501
Xxxx Xxxxx, Xxxxx 00000
Attention: Managing Director of Financial
Planning
Telecopier: (000) 000-0000
If to Holdings: The SABRE Group Holdings, Inc.
0000 Xxxx Xxxxxx Xxxxxxxxx
Mail Drop 4224
Xxxx Xxxxx, Xxxxx 00000
Attention: Corporate Finance Manager
Telecopier: (000) 000-0000
Section 17. Headings. Section headings in this Note are
included herein for convenience of reference only and shall not
constitute a part of this Note for any other purpose.
Section 18. Governing Law. This Note shall be governed
by and construed in accordance with the law of the State of
Texas, without giving effect to the principles of conflict of
laws of such State.
Section 19. Counterparts. This Note may be executed in
counterparts, each of which shall be an original, but all of
which together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, American and Holdings, and, solely with
regard to Section 2 hereof, AMR and TSG, have caused this Note to
be executed as of the date first above written.
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AMERICAN AIRLINES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Its: Vice President-Corporate
Development and Treasurer
THE SABRE GROUP HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Its: Chief Financial Officer and Treasurer
With respect to Section 2 only:
AMR CORPORATION
By: /s/ Xxxxxx X. Xxxxx
Its: Senior Vice President-Finance
and Planning and Chief
Financial Officer
THE SABRE GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Its: Senior Vice President and Chief
Financial Officer
