-156-
effective.107 Mr. Geary testified that during the course of the
negotiations with the Ackerman group, Mr. Jouannet and other
individuals at the banks began to worry “whether Lerner and his
people were good for” the $5 million put price. They therefore
decided that the put price should be placed in escrow in
connection with the closing on the transaction with the Ackerman
group. To this end, Mr. Geary drafted a “Deposit Account
Agreement”, which was designed to guarantee payment of the put
price in the event that the put option was exercised.
Mr. Geary testified that, in the transaction with the
Ackerman group, the banks were relying on the side letter
agreement that gave Generale Bank and CLIS the right to put
(“monetize”) their preferred interests in SMP to Rockport
Capital--“the side letter was always a precondition to CDR or
Credit Lyonnais signing anything else.” He explained that
Generale Bank and CLIS did not care about the various provisions
107 On Dec. 12, 1996, Mr. Lerner, on behalf of Rockport
Capital, faxed to Citicorp Trust, a document requesting Citicorp
Trust to wire $5 million from Somerville S Trust’s account to an
account at Chase Manhattan Bank on Dec. 13, 1996. It appears
that this amount represented the $5 million advisory fee that the
Ackerman group was obligated to pay CLIS.
The Ackerman group also agreed to pay the banks an
additional advisory fee equal to 3/4 of 1 percent of the tax
losses, if any, in excess of $1 billion that would be allocated
to all members of SMP other than Generale Bank, CLIS, Rockport,
or their affiliates as of the exchange and contribution agreement
closing date. The record is unclear whether the Ackerman group
ever paid the banks any additional amount of advisory fee.
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