Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 307

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               2.  Second Note Purchase Agreement                                     
               As of December 10, 1998, TroMetro and SMP entered into a               
          second note purchase agreement (the second note purchase                    
          agreement) in which TroMetro agreed to purchase “10% of SMP’s               
          right, title and interest in and to the Note, representing a                
          $81,590,418 share of the face amount of the Note” (the $81                  
          million receivable).45  The consideration for the $81 million               
          receivable was:  (i) A $150,000 certified check; and (ii) a $1.25           
          million promissory note from TroMetro.                                      
               As of December 10, 1998, Mr. van Merkensteijn, as manager of           
          TroMetro, executed an “Unsecured Promissory Note” payable to SMP            
          in the amount of $1.25 million (the $1.25 million TroMetro note)            
          in connection with TroMetro’s purchase of the $81 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 10, 1999.                                   
               As of December 10, 1998, Mr. Lerner, as manager of SMP, and            
          Mr. van Merkensteijn, as manager of TroMetro, signed a document             
          entitled “Assignment.”  Pursuant to this document, SMP assigned             



               45 The second note purchase agreement stated that SMP was              
          the holder of an $815,904,188.96 promissory note that SMHC had              
          issued.                                                                     





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