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Goldwyn-Mayer, Inc.” The letter agreement did not mention any
films or film business.
2. Draft Term Sheet and Letter Agreements
On October 16, 1996, at Mr. Lerner’s request, Shearman &
Sterling sent Mr. Geary a “Draft Term Sheet” proposing a
transaction with Generale Bank concerning MGM Group Holdings.
The draft term sheet contained a section entitled “Initial
Transactions”, providing:
Generale Banque acquires all the stock of MGM Group
Holdings (“Group”) and subsequently contributes
obligations owed to it by Group in the approximate
amount of $1.050 billion (collectively, the “Note”) to
the capital of Group.
The draft term sheet proposed an alternative transaction whereby:
if CLIS’s current basis in Group stock is significant,
in lieu of the transactions described in the term
sheet: (a) CLIS will contribute all of the stock of
Group to Newco in exchange for Preferred Interests, (b)
Generale Banque will contribute the Note to Newco in
exchange for Preferred Interests, and (c) Newco will
contribute the Note to Group.
The draft term sheet also contained a section entitled
“Transaction Structure”, providing:
Step 1: Rockport Capital, Inc., and its associates
(the “Initial Members”) form a Delaware limited
liability company (“Newco”), and contribute assets
(cash and securities) to Newco in an agreed amount to
enhance and monetize the value of the Preferred
Interests to be issued in Step 2.
Step 2: Generale Banque contributes all of the stock
of Group to Newco in exchange for preferred membership
interests in Newco (“Preferred Interests”).
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