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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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Last modified: May 25, 2011