Charles B. and Teresa A. Thompson, et al. - Page 5

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          distributor of beauty supplies, purchased from manufacturers                
          (hereinafter called suppliers) for sale to subdistributors                  
          (hereinafter called customers) who then sold to beauty salons and           
          licensed cosmetologists.  In 1987, State Supply was one of four             
          such master distributors in the country.  At the time of the                
          acquisition, described infra, there were three principal                    
          suppliers from which State Supply purchased products:  Redken (26           
          percent of State Supply's sales), Matrix (26 percent of State               
          Supply's sales), and Lamaur Products (19 percent of State                   
          Supply's sales).  State Supply had distribution agreements with             
          approximately 77 customers, servicing approximately 20,000 beauty           
          salons.  Pursuant to distribution agreements between State Supply           
          and its customers, either party to a distribution agreement could           
          terminate the agreement, without cause, by giving 90 days' prior            
          written notice of such termination to the other party.  The                 
          distribution agreements did not prohibit the customers from                 
          buying from other sources.                                                  
          State Supply's Shareholders                                                 
               At the time of the acquisition, State Supply had 75,659.61             
          shares of common stock issued and outstanding.  At the time of              
          the acquisition, Robert F. Beaurline, president of State Supply,            
          owned 12,586 shares directly and 3,060.5 shares through his                 
          participation in the Employee Stock Option Plan (ESOP), for a               
          total of 15,646.5 shares (approximately 20 percent of all                   
          shares).  Betty Holliday (hereinafter referred to as Holliday),             

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