Charles B. and Teresa A. Thompson, et al. - Page 8

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          purchase all of the issued and outstanding stock of State Supply            
          for $6 million.                                                             
               The offer proposed that the stock purchase be accomplished             
          by a cash merger (the acquisition) with a new corporation to be             
          organized by Von Allmen and Olson.  There were no provisions for            
          covenants not to compete (sometimes referred to as noncompete               
          agreements) in the offer.  The offer provided that State Supply             
          would permit Group One or its advisers full access to all of its            
          properties, books, and records as may be reasonably requested.              
          The acquisition took place on October 29, 1987.                             
          Holliday and Beaurline as Potential Competitors                             
               During their investigation of State Supply, Von Allmen and             
          Olson discovered that Holliday had been with State Supply for 26            
          years, since its inception and had developed extensive                      
          relationships with customers over those 26 years as the "right              
          arm" of the founder of State Supply, Jim Lewis.  Holliday had               
          sufficient money to go into competition with State Supply after             
          the sale of her stock to Group One.                                         
               During the investigation, Von Allmen discovered that                   
          Beaurline had been in the beauty supply business for 36 years,              
          had been with State Supply for 8 years, knew the suppliers and              
          customers very well, was well known in the beauty supply                    
          industry, and had served as master of ceremonies for                        
          manufacturers' sales meetings and beauty shows.                             
               Prior to joining State Supply, Beaurline held positions with           
          distributors and manufacturers in the beauty supply industry and            

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