Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 305

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               C.  TroMetro’s Purchases of SMP’s Receivables                          
               In 1997 and again in 1998, TroMetro purchased from SMP                 
          portions of the $974 million in receivables that Generale Bank              
          had contributed to SMP in 1996.                                             
               1.  First Note Purchase Agreement                                      
               As of December 19, 1997, TroMetro and SMP entered into a               
          note purchase agreement (the first note purchase agreement) in              
          which TroMetro agreed to purchase “SMP’s right, title and                   
          interest in and to the $150,000,000 Note” (the $150 million                 
          receivable).  The consideration for the $150 million receivable             
          was:  (i) A certified check of $230,000; and (ii) a promissory              
          note that TroMetro executed in an unspecified amount.  SMP agreed           
          to deliver to TroMetro, at the closing of the transaction, a $150           
          million note endorsed by SMP and payable to the order of                    
          TroMetro.                                                                   
               As of December 19, 1997, Mr. van Merkensteijn, as manager of           
          TroMetro, executed an “Unsecured Promissory Note” payable to SMP            
          in the amount of $2,284,000 (the $2,284,000 Trometro note) in               
          connection with TroMetro’s purchase of the $150 million                     
          receivable.  The terms of this note provided that interest would            
          accrue at 7 percent per annum, that interest and principal would            
          be fully amortized over 5 years, and that interest and principal            
          payments would be due and payable in five equal annual                      
          installments beginning December 19, 1998.                                   






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