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transfer of those interests to Rockport Capital pursuant to the
side letter agreement.
CDR was also concerned that communications with the
affiliate might cause problems with the stringent confidentiality
provision in the agreement.114 Mr. Geary therefore insisted on an
exception to the confidentiality provision for information that
is disclosed on a confidential basis to a proposed transferee of
some or all of the membership interests of a member.
Fourth, CDR became very focused on the Carolco securities
and wanted to retain whatever value might be realized on those
securities. Indeed, following the basic agreement that the
parties reached on November 21, 1996, CDR proposed several
variations of an agreement tied to the Carolco securities.
Initially, CDR had proposed alternate classes of preferred
interests in Newco (SMP), Class A and B preferred interests,
which would be issued to Generale Bank and CLIS along with 5
percent of the common interests to Generale Bank and CLIS.115 The
parties agreed that Somerville S Trust and Mr. Lerner would have
options to acquire: (i) The Class B preferred interests at a
114 The confidentiality provision provided that SMP’s members
would not reveal to any other person any nonpublic, confidential,
or proprietary information relating to SMP’s business that was
acquired in connection with the transactions contemplated by the
LLC agreement.
115 The Class B preferred interests were given a $7 million
capital account and certain annual distribution rights.
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