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As a condition to entering the transaction, SPELI required
CATCO and CAC to enter into a remarketing agreement, an
assignment agreement, and a lease with American. The remarketing
agreement provided that in the event that CATCO was unsuccessful
in selling the aircraft prior to delivery from American, SPELI
could require CATCO to transfer one or more aircraft to CAC for
the disassembly and sale of the aircraft and parts. SPELI also
required CAC to assume the debt attributable to such aircraft
when it acquired an aircraft to disassemble. Using its best
efforts, CAC agreed to sell the disassembled parts at not less
than 25 percent below CAC's estimated price for such a part. If
SPELI did not accept CAC's estimated prices, its only contractual
remedy was to terminate the remarketing agreement, leaving CAC
with no further liability. The remarketing agreement also
provided for the allocation of the proceeds between the parties
from the sale of any aircraft or parts. The remarketing
agreement first allocated the proceeds to the amounts due under
the promissory note, with any excess allocated 55 percent to
CATCO and 45 percent to SPELI. The assignment agreement required
CATCO to assign all of its rights under the aircraft purchase
agreement as security to SPELI.
The lease agreement provided for CATCO to lease the 36
aircraft to American for the remaining period of use in
accordance with American's "phase-out" schedule for each
aircraft. The lease contained a lease rate of $1 per month per
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Last modified: May 25, 2011