Opinion ID: 2180498
Heading Depth: 2
Heading Rank: 8

Heading: Execution of the CHCL SPA and Side Letter

Text: The Cirrus Board met to consider the terms of the CHCL SPA on June 6, 2001 and June 7, 2001. On June 7, 2001, the Cirrus Board approved the transaction, and CHCL SPA was executed notwithstanding AeroGlobal's proposed investment. The CHCL SPA encompassed the terms of the restructured CHCL LOI. The CHCL SPA also required the Cirrus Board to perform certain tasks: (1) cause a special meeting of the shareholders to convene on or before June 26, 2001; (2) recommend approval of the Crescent transaction to the shareholders; (3) prepare proxy materials soliciting approval of the Crescent transaction; and (4) provide the required notice of the meeting to the shareholders. The CHCL SPA included a no-shop and no-talk provision. The no-shop and no-talk provision contained in Section 7.3.1 required that neither Cirrus nor any party working on behalf of Cirrus shall: (a) solicit, initiate or encourage the submission of any Acquisition Proposal [which is broadly defined in the CHCL SPA] or (b) initiate or participate in any discussions or negotiations regarding, or furnish to any Person any information with respect to, or take any other action to encourage or facilitate any inquiries or the making of any proposal that constitutes, or could be expected to lead to, any Acquisition Proposal. Section 7.3.1 goes on to provide for a narrowly tailored exception to the no-talk provision found in subsection (b) quoted above. It reads as follows: Notwithstanding anything to the contrary contained in this Section 7.3 or in any other provision of this Agreement, the Cirrus Board, in response to a Superior Proposal (as defined in Section 7.3.2) which did not result from a breach of this Section 7.3.1, at any time prior to the date ten (10) days after the date hereof (the Open Window), may (x) participate in discussions or negotiations with or furnish information to any Person (other than a Cirrus Related Person) (a  Potential Acquiror ) which makes a Superior Proposal that is submitted to Cirrus by such Potential Acquiror after the date hereof and (y) approve or recommend such Superior Proposal to the Cirrus Stockholders if, prior to any such action, the Cirrus Board determines in good faith, after consultation with Cirrus' outside financial and legal advisors, that to do otherwise would violate the fiduciary duties of the Cirrus Board and not be in the best interests of the Cirrus Stockholders. Under section 7.3.2, the term Superior Proposal is defined as any bona fide Acquisition Proposal which is reasonably likely to result in terms and consideration which are, viewed in the aggregate, more favorable to Cirrus and the Cirrus shareholders than [Crescent's proposal], considering all relevant factors.... Under Section 7.3.1, Cirrus also was to notify Crescent if it received any Acquisition Proposal (or any inquiry which could lead to one) and of any Board meeting to consider an Acquisition Proposal. To address Cirrus's need to explore AeroGlobal's proposal, the parties also entered into a Side Letter on June 7, 2001. The Side Letter provided that Cirrus and its Board were entitled to communicate with [AeroGlobal] regarding its proposal dated May 16, 2001 ... through June 14, 2001 without such communication being deemed to be a violation of Section 7.3 of the [CHCL SPA]. The Cirrus parties, however, uniformly believed that there was a ten-day Open Window for them to explore the AeroGlobal proposal. It was their understanding that the Open Window would run through June 17, 2001.