Custom Chrome, Inc. and Subsidiaries - Page 7

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          subsidiary merger.  Simultaneous with the acquisition by CC                 
          Holdings of Cruze's stock in petitioner, CC Acquisition was                 
          merged into petitioner with petitioner surviving the merger.                
               As a result of the reverse merger, CC Acquisition did not              
          remain in existence, and petitioner became a wholly owned                   
          subsidiary of CC Holdings.                                                  
               According to the plan of acquisition and under the merger              
          agreement, petitioner became liable for debts of CC Acquisition,            
          including the $26 million loan obtained from FNBB.  The $16.75              
          million used to pay Cruze for the stock in petitioner was part of           
          the $26 million received as a loan from FNBB.                               
               After the LBO and under various supplemental agreements                
          relating to acquisition of the stock in petitioner and to the               
          continued employment of the senior employees of petitioner,                 
          Mezzanine Capital and Panzica, Battistella, Navarra, and other              
          employees of petitioner acquired shares of stock in CC Holdings             
          for $500 per share.                                                         
               Further, on August 25, 1989, in connection with the $26                
          million loan made by FNBB, FNBB received from CC Holdings options           
          to purchase, over the course of 10 years, shares of stock in CC             
          Holdings representing up to 12.5 percent of the equity in CC                
          Holdings.  The options will expire on August 31, 1999, and the              
          exercise price was set at $500 per share, the same price per                

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