Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 294

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               B.  History of the EBD Film Library                                    
               1.  Epic Productions                                                   
               In the late 1980s, through some intermediate steps of                  
          ownership, Credit Lyonnais created Epic Pictures Enterprises                
          (Epic Pictures) and Epic Productions, Inc. (Epic Productions).              
          Epic Pictures was created in 1987 or 1988 to take possession of             
          and manage certain motion picture assets.  Epic Productions took            
          possession of the stock of Epic Pictures and managed that company           
          after it was created.  In 1992, Credit Lyonnais lost confidence             
          in the existing management of Epic Productions and hired John               
          Peters to replace that management and serve as its CEO.36  Mr.              
          Peters worked as Epic Productions’ CEO from 1992 until July 1998.           
               In late 1993 or early 1994, Credit Lyonnais began acquiring            
          other entertainment assets, particularly film libraries, from               
          companies to which Credit Lyonnais had lent money.  (When loans             
          from Credit Lyonnais became distressed, Credit Lyonnais would               
          acquire the film assets in workouts, bankruptcies, or other                 
          proceedings.)  To take possession of, or title to, these film               
          assets, Credit Lyonnais created approximately six companies,                
          including Alpha Library Co., Inc. (Alpha) and Epsilon Library               
          Co., Inc. (Epsilon).  After Credit Lyonnais acquired these film             

               36 As chief executive officer (CEO) at Epic Productions,               
          John Peters had frequent contact with individuals associated with           
          Credit Lyonnais, including Hank de Kaiser in Rotterdam, Mr.                 
          Jouannet and Michelle la Brund in Paris, and Bruno Hurstel, who             
          was a director on Epic Productions’ board.                                  

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