Donald N. and Rosemarie F. Merino - Page 6

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          Corp. based on the quality and amount of recycled scrap.  Neither           
          PI nor the end-users carried out the terms of the sublicense                
          faithfully.  In practice, those terms regularly were ignored.               
               Both Clearwater and Northeast leased Sentinel EPE recyclers            
          from F & G Corp. and licensed those recyclers to FMEC Corp.                 
          Apart from leasing and licensing seven recyclers instead of six,            
          the underlying transactions involving Northeast do not differ in            
          any substantive respect from the Clearwater transactions                    
          considered in the Provizer case.                                            
               For convenience, we refer to the series of transactions                
          among PI, ECI Corp., F & G Corp., Northeast, FMEC Corp., and PI             
          as the Northeast transactions.  In addition to the Northeast                
          transactions, a number of other limited partnerships entered into           
          transactions similar to the Northeast transactions, also                    
          involving Sentinel EPE recyclers and Sentinel expanded                      
          polystyrene (EPS) recyclers.  We refer to these collectively as             
          the Plastics Recycling transactions.                                        
          B.  Northeast Resource Recovery Associates                                  
               Northeast is a New York limited partnership that closed on             
          October 7, 1981.  Richard Roberts (Roberts) is the general                  
          partner of Northeast.                                                       
               A private placement memorandum for Northeast was distributed           
          to potential limited partners.  Reports by F & G Corp.'s                    
          evaluators, Dr. Stanley M. Ulanoff (Ulanoff), a marketing                   
          consultant, and Dr. Samuel Z. Burstein (Burstein), a mathematics            




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