Opinion ID: 2180498
Heading Depth: 1
Heading Rank: 2

Heading: Cirrus and AeroGlobal's Negotiations

Text: During the Open Window period, Cirrus began to negotiate with AeroGlobal regarding its proposed investment. On June 14, 2001, Aeroglobal submitted a written proposal to Cirrus. The draft proposal was essentially the same as the final transaction ultimately entered into by Aeroglobal and Cirrus. The draft proposal called for a two-stage investment by AeroGlobal. First, AeroGlobal was to provide an immediate bridge loan to Cirrus in the amount of $15 million, for which warrants convertible to stock would be issued to Aeroglobal at a price no lower than $4.25 per share and no higher than $6.00 per share. Second, upon negotiations and approval of a definite stock purchase agreement, AeroGlobal would provide an additional $30 million, and Cirrus would arrange to convert into equity $10 million in outstanding debt. This transaction would not involve a change of control, as AeroGlobal would only acquire a 38% interest in the Cirrus equity. On June 14, 2001 at 11:59 p.m., the time when the Side Letter was scheduled to expire, AeroGlobal and Cirrus had not yet reached an agreement after a heated breakdown in negotiations. Aeroglobal and Cirrus nonetheless resumed negotiations on June 15, 2001 and executed the AeroGlobal Letter of Intent (the AeroGlobal LOI), which was forwarded to the Cirrus Board. Alan Klapmeier wrote to Dyslin to give notice that Cirrus had received an Acquisition Proposal and that the Cirrus Board would meet to consider it on the following day. After sleeping on the AeroGlobal LOI for a night, the Cirrus Board, on June 17, 2001, determined that the AeroGlobal proposal was a Superior Proposal within the meaning of the CHCL SPA. Thereafter, the Cirrus Board passed three resolutions: (1) the AeroGlobal LOI was conditionally approved; (2) the CHCL SPA was terminated; and (3) the Cirrus Board withdrew its recommendation to the shareholders that the transaction with Crescent should be accepted. Before implementing these decisions, the Cirrus Board sent Alan Klapmeier to ask Dyslin for a one-day extension of the Open Window to allow them to engage in further negotiations with Crescent over their deal. After Cirrus received word that the Open Window would not be extended, Alan Klapmeier executed the deal with AeroGlobal. Upon receiving the first $12 million (of the $15 million bridge loan) from AeroGlobal, Cirrus notified Crescent that it was terminating the CHCL SPA pursuant to Section 11.1.7. [4] Cirrus then wired Crescent $4 million of that amount to repay a loan that Crescent had extended. It also purported to tender payment of the $5 million termination fee required under the CHCL SPA. Crescent accepted the $4 million loan repayment but refused to accept the $5 million termination fee.