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bank designated by CDR.26 On November 21, 1996, after exchanging
numerous drafts of the letter agreement and the side letter
agreement, the parties reached a basic agreement. No draft of
the letter agreement or side letter agreement mentioned any films
or film business.
3. Further Negotiation and Drafting
Although the parties had reached basic agreement on the
terms of the proposed transaction, including the put in favor of
Generale Bank and CLIS, the transaction did not close at this
point. The parties proposed supplementary terms to the letter
agreement and to the side letter agreement, as well as several
revisions to the terms of the side letter agreement. These
proposals primarily concerned the Carolco securities--CDR wanted
to retain the benefit of whatever value might be realized on
those securities. To this end, the parties added a contingent
amount to the put price that would be tied to any recovery on the
Carolco securities and also provided certain preferred
distribution rights tied to any proceeds realized on a
liquidation of Carolco. In addition, the parties agreed that
Rockport Capital (instead of Rockport Advisors) and Mr. Lerner
would be the initial members of a limited liability company (that
would later become SMP), which would be structured as a
26 Over the course of the drafting process, the parties
agreed to a $5 million put price and a $5 million advisory fee.
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