Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 74

                                        -158-                                         
          rights.  Petitioner claims that he and Mr. Ackerman had every               
          hope and expectation that the banks would remain their partners             
          for an extended period.  We find, however, that they did have a             
          prearranged understanding.                                                  
               First, as Mr. Geary testified, the banks were relying on the           
          side letter agreement with Rockport Capital and fully intended to           
          exercise their put rights to accomplish their overall goal of               
          disposing of their interests in SMHC.  Mr. Lerner was intimately            
          engaged in the negotiation and drafting process at all levels,              
          including in his one-on-one negotiations with Mr. Jouannet.  It             
          defies reason that Mr. Lerner would have been unaware of the                
          banks’ plans.  Every aspect of the Credit Lyonnais group’s                  
          history and of the negotiation and drafting process pointed                 
          towards the banks’ exercising their put rights.  In fact, the               
          totality of facts in the record persuades us that the banks’                
          exercise of their put rights was integral to the Ackerman group’s           
          plans, was fully contemplated by them, and was part of the deal.            
               Also, in one of the drafts of the SMP LLC agreement that               
          emerged in the course of the negotiations, Mr. Geary commented              
          that CDR would require Mr. Lerner to provide consents at closing            
          permitting the transfer of Generale Bank’s and CLIS’s preferred             
          interests to a CDR affiliate and the subsequent transfer of those           
          interests to Rockport Capital, pursuant to the side letter                  







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