NOTE 2- ACQUISITION OF B.R. JOHNSON, INC. On November 1, 2016, the Company's majority-owned subsidiary, B.R. Johnson, LLC (BRJ LLC) acquired substantially all of the assets (the Acquisition) of B.R. Johnson, Inc. (BRJ Inc.), a seller and distributor of windows, doors and related hardware as well as specialty products for use in commercial and residential buildings (the Business). Following the Acquisition, BRJ LLC carried on the business and operations of BRJ Inc. The Acquisition was consummated pursuant to an Asset Purchase Agreement, dated as of November 1, 2016 (the APA). Total consideration for the Acquisition was approximately $ 15.4 million (subject to customary working capital adjustments), including delivery by BRJ LLC of a promissory note for $ 2,500,000 to BRJ Inc. (the Subordinated term note), which is subordinate to the debt agreements, as described below. The Note accrues interest at a rate of 5.25 % per annum, payable quarterly, with the principal amount of the Note payable in equal quarterly installments of $ 62,500 commencing on November 1, 2018 and maturing on November 30, 2021 . The Company provided $ 10.95 million in debt and equity financing to complete the Acquisition, including $ 7.14 million of the subordinated loan (the " Senior subordinated note") and $ 3.81 million in preferred equity of BRJ LLC with the remainder from bank financing, the Subordinated term note and entities affiliated with Lorraine Capital, LLC. The Company holds 76.17 % of the common membership interests and 95.22 % of the preferred membership interests of BRJ LLC, pursuant to the B.R. Johnson, LLC Limited Liability Company Agreement (the LLC Agreement) entered into by and among Lorraine Capital, LLC (which owns 20 % of the common membership interests), Regional Brands Inc. and BRJ Acquisition Partners, LLC (which owns the remaining 3.83 % of the common membership interests and 4.78 % of the preferred membership interests). Purchase price Amount paid as cash consideration $ 12,900,000 Subordinated term not