Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 288

                                       - 55 -                                         
          would not, and would not cause any of its affiliates to, at any             
          time, reveal to any other person or use in any way detrimental to           
          SMP any nonpublic, confidential, or proprietary information                 
          relating to the business and affairs of SMP that was acquired or            
          otherwise received by such person in connection with the                    
          transactions contemplated in the LLC agreement.                             
               a.  Amendment No. 1                                                    
               Mr. Lerner and Rockport Capital executed an amendment                  
          (“Amendment No. 1”) to the SMP LLC agreement dated as of December           
          11, 1996, which admitted CLIS and Generale Bank as new members of           
          SMP.  Amendment No. 1 recited that CLIS would contribute its SMHC           
          stock and the $79 million receivable to SMP, and Generale Bank              
          would contribute $974,296,600.85 of principal indebtedness owing            
          by SMHC, in exchange for preferred interests in SMP.31  CLIS and            
          Generale Bank executed ratification certificates agreeing to all            
          the terms of the SMP LLC agreement as amended by Amendment No. 1.           
                    b.  Amendment No. 2                                               
               Mr. Lerner, as manager of SMP and as a director of Rockport            
          Capital, executed a second amendment (“Amendment No. 2”) to the             
          SMP LLC agreement dated as of December 11, 1996, admitting                  
          Somerville S Trust as a member of SMP.  Amendment No. 2 required            

               31 From this point forward, the documents in the record                
          (including the relevant tax returns) refer to $974,296,600.85 in            
          indebtedness owing by SMHC.  Previous documents alluded to a                
          principal debt of $975,494,909.84.  For our purposes, we refer to           
          the $974 million in receivables from Generale Bank.                         





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