-162-
which gave Generale Bank and CLIS the right to put their
preferred interests in “Newco” to Rockport Capital. Mr. Geary
testified that by the time of the draft letter agreement,
“clearly there was going to be a second letter, a put letter.
That’s what I understood to be monetized. There was a put
available. We didn’t have to wait, you know, for the time of the
deal.” According to Mr. Geary, it was unimportant to CDR or Mr.
Jouannet what the letter agreement said about the terms of the
preferred interests and the conversion rights, because CDR was
relying on the side letter agreement that required Rockport
Capital to purchase all of Generale Bank’s and CLIS’s preferred
interests for $5 million.
Other than this “put” agreement, four points of negotiation
developed from CDR’s perspective:
First, CDR insisted that the $5 million advisory fee be paid
as a condition to closing on the exchange and contribution
agreement and the $5 million put price be deposited in a blocked
account before closing, thus guaranteeing payment when the put
rights were exercised. The banks decided that the put price
should be placed in escrow in connection with the closing on the
CDR transaction. Mr. Geary drafted a deposit account agreement,
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