- 53 -
$33,111,856.98 aggregate principal amount of the Carolco
subordinated notes.29
3. SMP LLC Agreement
On December 10, 1996, Rockport Capital and Mr. Lerner formed
SMP pursuant to a limited liability company agreement (the SMP
LLC agreement). The SMP LLC agreement indicated that among the
purposes for which SMP was formed was “to produce and distribute
filmed entertainment products and to own interests in entities
engaged in such activities”.
The SMP LLC agreement provided that the members of SMP would
have the following membership interests:
Common Preferred
Common Preferred capital capital
interest interest account account
Rockport 50% 50% $50,000 $50,000
Lerner 50 50 50,000 50,000
The agreement provided for 3 types of interests--Common I, Common
II, and Preferred. Members holding Common I interests had
exclusive voting rights in SMP. Members holding preferred
interests had no voting rights; however, they had the right to
convert all their preferred interests into Common II interests on
29 The exchange and contribution agreement (including its
attached schedules) did not define the term “U.S. Video Film
Rights”.
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