-308-
These facts are for the most part undisputed and relate primarily
to the history of MGM and the SMHC receivables and stock. Of the
remaining eight pages in the memorandum, six are dedicated to
“QUALIFICATIONS AND LIMITATIONS” to the opinion. This section of
the opinion states, among other things, that “our understanding
is based upon certain assumptions [42 in toto] that you have
allowed us to make, the accuracy of which we have not
independently investigated.” These assumptions include, among
many others:
33. At the time of the Exchange Agreement, CLIS,
GBN, and Consortium [CDR] intended for CLIS and GBN to
join together with Lerner, Rockport, and Somerville in
the present conduct of an enterprise to form a valid
partnership and to share in the profits and losses
therefrom under the terms of the LLC Agreement.
34. At the time of the Exchange Agreement, none
of CLIS, GBN, and Consortium intended for CLIS and GBN
to acquire its interest in the Company solely to
receive a specific return on its investment independent
of the Company’s performance and success.
35. The payments made to CLIS under the * * *
[advisory fee agreement] were not intended to reimburse
either CLIS, GBN, or Consortium for their expenses
associated with acquiring an interest in the Company.
36. The income and loss allocations provisions
and the distribution provisions in the LLC Agreement,
including its amendments, gave both CLIS and GBN a true
economic interest in the Company’s profits and losses
and were not merely artifices to pay CLIS and GBN a
specified return on its interest in the Company.
37. Each of Rockport, Lerner, Somerville, CLIS,
and GBN formed the Company with the intent to develop
and promote the remaining entertainment assets held by
CL following the MGM Sale, the Carolco Notes, and the
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