- 84 -
On November 19, 1997, at a third meeting of Imperial’s board
of directors, Mr. Lerner formally offered Imperial a 25-percent
equity interest in SMP in exchange for a $5 million cash
investment. At this meeting, Mr. Lerner distributed a handout
that described SMP. He discussed SMP’s assets (including its
film rights), and he explained SMP’s securitization and other
financing plans. Mr. Lerner also discussed “the potential market
for securitization of film libraries and the due diligence
performed to date by * * * [Imperial’s] external accountants.”
After discussing this proposal, Imperial’s board resolved to
invest in SMP.57
D. Proposed Transaction With Corona
1. Formation of Corona Film Finance Fund, LLC
As of November 5, 1997, Mr. Lerner, on behalf of himself,
Peridon Corp. (Peridon), and SMP, executed an “Operating
Agreement” for the creation of Corona Film Finance Fund, LLC
(Corona) as a limited liability company (the Corona LLC
agreement). The initial members of Corona were Mr. Lerner,
Peridon, and SMP. Mr. Lerner contributed $5,000 cash, Peridon
57 Regarding this proposal, Mr. Snavely testified:
There was discussions [sic] about an opportunity
for us to invest in this business, and we did have some
expertise in securitization, and there were discussions
about acquiring film libraries, all of which was
interesting, but we were also interested in making sure
that it fit our tax strategies.
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