Claymont Investments, Inc., As Successor in Interest to New CCI, Inc. and Subsidiaries - Page 7

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          entered into a film processing contract with Technicolor.                   
          Technicolor lent MCEG $5.5 million to induce MCEG to enter into             
          the contract.  Because of concerns about MCEG’s long-term                   
          viability, Technicolor secured the loan with video distribution             
          royalty rights from four MCEG films.  If the distribution                   
          royalties were insufficient, MCEG was obligated to repay the loan           
          by October 31, 1991 (1988 loan).  Technicolor’s sales plan, dated           
          October 18, 1988, for fiscal year 1989, did not list MCEG as a              
          customer.  On October 31, 1990, MCEG was placed into involuntary            
          bankruptcy, and on March 19, 1992, the U.S. Bankruptcy Court                
          approved MCEG’s chapter 11 reorganization plan.  The successor              
          entity, MCEG Sterling, Inc., did not continue doing business with           
               C.   The 1989 Asset Valuation                                          
               On June 23, 1989, C&L prepared a valuation report (1989                
          Valuation) that determined the FMV of Technicolor’s assets for              
          purposes of allocating the purchase price to those assets.  C&L             
          divided the acquired assets into four classes, discussed supra in           
          section I.A.  Class III included Technicolor’s customer                     
          relationships.  C&L determined the value of the relationships by            
          computing the present value of the net realizable earnings that             
          these assets would generate over their remaining lives.  The                
          remaining lives were determined by adding a 3-year projected                
          extension to each relationship’s termination date.  The remaining           

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