-165-
price equal to the lesser of $7 million or the value of the
Carolco subordinated notes; and (ii) the 5-percent common
interests at a price equal to the lesser of $3 million or the
value of the Carolco preferred stock. Both options were
exercisable for a period of 12 months after the earlier of 5
years from the date of issue or the liquidation of the Carolco
subordinated notes and the Carolco preferred stock,
respectively.116 Eventually, the parties eliminated the alternate
classes of preferred stock and the issuance of 5 percent of the
common interests to Generale Bank and CLIS; they agreed instead
to certain preferred distributions and an additional contingent
put price tied to the liquidation value of the Carolco
subordinated notes and Carolco preferred stock.117 Through these
116 Mr. Geary became concerned with the proposed options on
the alternate Class B preferred and 5 percent common stock
interests. Mr. Geary was uncertain what economic motivation
anyone might have for exercising the call option and indicated to
Mr. Lerner and his representatives that “any explanation of such
motivations may leave unanswered questions in Paris”. Given this
problem, Mr. Geary added a paragraph 16 to a new draft of the
side letter agreement giving CLIS the right to require Rockport
Capital to purchase its Common II and Class B preferred
membership interests in SMP at prices tied to the liquidation
value of the Carolco securities. At the conclusion of the
drafting process, however, the parties did not execute the
interest option agreement and paragraph 16 was removed from the
side letter agreement.
117 The pertinent events and times for measuring the
contingent amount were set forth in detailed paragraphs in the
side letter agreement defining “the SN Liquidation Date,” “the SN
Measurement Date,” “the PS Measurement Date,” and “the PS
Liquidation Value.”
Page: Previous 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 NextLast modified: May 25, 2011