Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 281

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          bank designated by CDR.26  On November 21, 1996, after exchanging           
          numerous drafts of the letter agreement and the side letter                 
          agreement, the parties reached a basic agreement.  No draft of              
          the letter agreement or side letter agreement mentioned any films           
          or film business.                                                           
               3.  Further Negotiation and Drafting                                   
               Although the parties had reached basic agreement on the                
          terms of the proposed transaction, including the put in favor of            
          Generale Bank and CLIS, the transaction did not close at this               
          point.  The parties proposed supplementary terms to the letter              
          agreement and to the side letter agreement, as well as several              
          revisions to the terms of the side letter agreement.  These                 
          proposals primarily concerned the Carolco securities--CDR wanted            
          to retain the benefit of whatever value might be realized on                
          those securities.  To this end, the parties added a contingent              
          amount to the put price that would be tied to any recovery on the           
          Carolco securities and also provided certain preferred                      
          distribution rights tied to any proceeds realized on a                      
          liquidation of Carolco.  In addition, the parties agreed that               
          Rockport Capital (instead of Rockport Advisors) and Mr. Lerner              
          would be the initial members of a limited liability company (that           
          would later become SMP), which would be structured as a                     


               26 Over the course of the drafting process, the parties                
          agreed to a $5 million put price and a $5 million advisory fee.             





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