Custom Chrome, Inc. and Subsidiaries - Page 5

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          JC Investors would retain existing management personnel of                  
          acquired companies and would require key employees of the                   
          companies to enter into covenants not to compete.                           
               In 1989, after significant negotiations, JC Investors agreed           
          to purchase from Cruze for $16.75 million all of the outstanding            
          stock in petitioner.  The stock purchase was structured as a                
          leveraged buyout (LBO).                                                     
               In order to carry out the LBO, JC Investors organized Custom           
          Chrome Holdings, Inc. (CC Holdings), as a wholly owned                      
          subsidiary.  On May 24, 1989, a stock purchase agreement between            
          Cruze and CC Holdings was entered into under which Cruze was to             
          be paid $16.75 million in consideration for his stock in                    
          petitioner.                                                                 
               On August 15, 1989, JC Investors organized Custom Chrome               
          Acquisition Corp. (CC Acquisition), as a wholly owned subsidiary            
          of CC Holdings.  CC Acquisition was incorporated 10 days prior to           
          the LBO for the sole purpose of facilitating the LBO.  During its           
          10-day existence, CC Acquisition did not conduct any activities             
          unrelated to the LBO.                                                       
               In August of 1989, CC Acquisition obtained from First                  
          National Bank of Boston (FNBB) a $26 million loan in order to               
          finance the LBO and to provide working capital for petitioner               
          after the LBO.  The $26 million obtained from FNBB by                       







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