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to the Agreement or the subsequent disposition by CLIS
and GB of interests in the Company.
B. Troy & Gould
In June 1997, Mr. Lerner engaged the law firm of Troy &
Gould, P.C., in Los Angeles, California, to perform due diligence
on the EBD film library. Two highly regarded entertainment
lawyers at Troy & Gould, Gary Concoff and Jonathan Handel,
conducted the due diligence. Before engaging Troy & Gould, Mr.
Lerner received no documentation tracing the chain of title for
the EBD film rights.
1. Chain-of-Title and Record Search
Troy & Gould contacted individuals at certain law firms and
at various entities (principally Epic Productions) that were
believed to have held interests in the EBD film library. On
December 9, 1997, Mr. Handel sent Mr. Lerner a memorandum
containing Troy & Gould’s conclusions regarding the nature of the
rights that SMHC acquired in the EBD film library. The
memorandum summarizes its conclusions as follows:
The documentation is too fragmentary to draw
conclusions with any semblance of confidence. As a
matter of general characterization, it would seem that
Santa Monica Holdings is intended to have acquired
domestic video rights for a term of years to the
subject pictures and all rights to the subject
development projects. The domestic rights appear to
include Canada as to some but not all pictures. The
term of the rights varies from picture to picture.
Again, the foregoing characterization is subject to the
caveat that we have no documentation whatsoever on most
of the subject pictures and projects, and the
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