Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 42

                                        -129-                                         
          financing transactions involving “major” motion picture                     
          companies; however, Mr. Ackerman gave no indication that his                
          experience in financing extended to the particulars of running a            
          film distribution business.  Plus, the record suggests that the             
          banks had misgivings about the Ackerman group’s economic                    
          underpinnings.91                                                            
                    d.  Inattention to Film Rights in Negotiations                    
               Although the Ackerman group and CDR exchanged numerous                 
          documents over the course of their negotiations, we find scant              
          reference to any film distribution business or film rights.                 
          There is no evidence that the parties actively negotiated over              
          the particulars of the purported film business or the specific              
          film rights that would be contributed to SMHC.  The first and               
          only reference to a purported film distribution business appears            
          in the drafts of the SMP LLC agreement that Shearman & Sterling             
          drafted on Rockport Capital’s behalf.  Those drafts, including              
          the final draft, describe the purpose for which SMP was formed as           
          being, inter alia, to produce and distribute filmed entertainment           
          products.  With respect to this provision, Mr. Geary testified              
          that, to his knowledge, the banks had no intent to produce or               
          distribute film products through the transaction with the                   


               91 Mr. Geary testified that, during the negotiations with              
          the Ackerman group, Mr. Jouannet and other individuals in the               
          Credit Lyonnais group began to worry “whether Lerner and his                
          people were good for” the $5 million put price.                             





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