Lee F. Haney, Sr., and Jean C. Haney, a.k.a. Jeanie Haney - Page 6




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          locations.  Flair Enterprises is one of B&H’s largest customers.            
          In 1999, Flair Enterprises was purchasing PPG paint products for            
          use in its body shops.  PPG canceled its business with B&H, and             
          Flair Enterprises was asked by B&H to switch to Dupont paint                
          products.                                                                   
               Flair Enterprises entered into an agreement (the supply                
          agreement) with B&H for the purchase of Dupont paint products               
          instead of PPG products for 5 years, for which change in supply             
          Flair Enterprises would be compensated $150,000.  Dupont financed           
          the supply agreement as an incentive for Flair Enterprises to               
          continue using B&H as its paint vendor and to switch to Dupont              
          paint products.  Half of the incentive payment was to be paid at            
          the time of the contract formation in 1999, and the remaining               
          half was to be paid in monthly installments of $1,250.                      
               Although the supply agreement does not address the issue,              
          B&H intended that Flair Enterprises would use the incentive                 
          payment to purchase shop equipment, such as paint booths or                 
          spraying machines, and referred to the supply agreement as a                
          “shop investment”.  Flair Enterprises received a payment of                 
          $75,000 in 1999, which year is not before us, when the supply               
          agreement was executed, and received 60 monthly installments of             
          $1,250.  The monthly installments of $1,250 received throughout             
          2000 and until September 2001 were not invested in the business             
          of Flair Enterprises but were cashed by Mrs. Haney.                         







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