Lorvic Holdings, Inc. - Page 8

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            Scherer contemplated divesting itself of Old Lorvic because of                              
            new strategic objectives and considerations with respect to its                             
            business.                                                                                   
                  In an undated Descriptive Memorandum prepared by Shearson                             
            Lehman, it was noted that "Management feels the loyalty of its                              
            customer base is Lorvic's most significant competitive advantage                            
            in a market dominated by large corporate organizations."                                    
            Moreover, the Descriptive Memorandum also recognized that "While                            
            [Old Lorvic] utilizes a dealer network for the majority of sales,                           
            senior management has built strong direct relationships with                                
            [Old] Lorvic's old customers."  The Descriptive Memorandum                                  
            reported that the management of Old Lorvic projected that                                   
            revenues would increase in the short term.  In particular,                                  
            revenue was projected to be $4.1 million for the taxable year                               
            ended March 31, 1990.  This figure was a 12.8-percent increase                              
            from the previous year.  For the fiscal year 1992, revenues were                            
            projected to reach $5 million with $2.1 million in operating                                
            income.                                                                                     
                  Scherer offered to sell Old Lorvic to Richard Nemanick for                            
            approximately $7.5 million.  At the same time, Chemical Ventures                            
            Capital Associates (Chemical Ventures), a venture capital                                   
            company, in conjunction with John I. Kirtley (Kirtley), and P.                              
            Jeffrey Leck (Leck) received the Descriptive Memorandum regarding                           







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