On January 15, 2021 (the “Closing Date”), American Airlines Inc. (“AAI”), Envoy Air Inc. (“Envoy”), Piedmont Airlines Inc. (“Piedmont”) and PSA Airlines Inc. (“PSA” and together with AAI, Envoy and Piedmont, the “Subsidiaries”), each a wholly-owned subsidiary of American Airlines Group Inc. (the “Company”), entered into a Payroll Support Program Extension Agreement (the “PSP2 Agreement”) with the United States Department of Treasury (the “Treasury”), with respect to the Payroll Support Program (“PSP2”) established under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (the “PSP Extension Law”). In connection with its entry into the PSP2 Agreement, on the Closing Date, the Company also entered into a Warrant Agreement (the “Warrant Agreement”) with the Treasury, and the Company issued a promissory note to the Treasury (the “Promissory Note”), with the Subsidiaries as guarantors (the “Note Guarantors”). PSP2 Agreement: Pursuant to the PSP2 Agreement, the Treasury is to provide to the Company financial assistance to be paid in installments (each, an “Installment”) expected to total in the aggregate at least $3,086.8 million. The first Installment, in the amount of approximately $1,543.3 million, was disbursed by the Treasury on January 15, 2021. In connection with PSP2, the Company is required to comply with the relevant provisions of the PSP Extension Law, including the requirement that funds provided pursuant to the PSP2 Agreement be used exclusively for the continuation of payment of employee wages, salaries and benefits, the requirement against involuntary furloughs and reductions in employee pay rates and benefits through March 31, 2021, the requirement to recall employees involuntarily terminated or furloughed after September 30, 2020, the provisions that prohibit the repurchase of the Company’s common stock, $0.01 par value per share (the “Common Stock”), and the payment of common stock dividends through March 31, 2022, as well as those that restrict the payment of certain executive compensation until October 1, 2022. The PSP2 Agreement also imposes substantial reporting obligations on the Company and the Subsidiaries. Promissory Note: As compensation to the United States Government for the provision of financial assistance under the PSP2 Agreement, the Company issued the Promissory Note to the Treasury, which provides for the Company’s unconditional promise to pay to the Treasury the initial principal sum of approximately $433.0 million, subject to an increase equal to 30% of the amount of each additional Installment disbursed under the PSP2 Agreement after the Closing Date, and the guarantee of the Company’s obligations by the Note Guarantors. Assuming the total Installments to be paid pursuant to the PSP2 Agreement aggregate approximately $3,086.8 million, the Promissory Note will have a total principal sum of approximately $896.0 million. The Promissory Note bears interest on the outstanding principal amount at a rate equal to 1.00% per annum until the fifth anniversary of the Closing Date and 2.00% plus an interest rate based on the secured overnight financing rate per annum or other benchmark replacement rate consistent with customary market conventions (but not to be less than 0.00%) thereafter until the tenth anniversary of the Closing Date (the “Maturity Date”), and interest accrued thereon will be payable in arrears on the last business day of March and September of each year, beginning on March 31, 2021. The aggregate principal amount outstanding under the Promissory Note, together with all accrued and unpaid interest thereon and all other amounts payable under the Promissory Note, will be due and payable on the Maturity Date. The Company may, at any time and from time to time, voluntarily prepay amounts outstanding under the Promissory Note, in whole or in part, without penalty or premium. Within 30 days of the occurrence of certain change of control triggering events, the Company is required to prepay the aggregate outstanding principal amount of the Promissory Note at such time, together with any accrued interest or other amounts owing under the Promissory Note at such time. The Promissory Note is the Company’s senior unsecured obligation and each guarantee of the Promissory Note is the senior unsecured obligation of each of the Note Guarantors, respectively. The Promissory Note contains events of default, including cross-default with respect to acceleration or failure to pay at maturity other material indebtedness. Upon the occurrence of an event of default and subject to certain grace periods, the outstanding obligations under the Promissory Note may, and in certain circumstances will automatically, be accelerated and become due and payable immediately.