This Supply Agreement made this 11th day of January 2002, by and among ROCK OF AGES CORPORATION, a Delaware corporation with its principal office located at 772 Graniteville Road, Graniteville, Vermont 05654 ("ROCK"); and ADAMS GRANITE CO., INC. a Vermont corporation ("Adams").


     WHEREAS, ROCK and Adams have entered into a Purchase and Sale Agreement dated January 11, 2002 ("Purchase and Sale Agreement") pursuant to which ROCK has agreed to sell, and Adams has agreed to purchase, certain real estate and manufacturing assets known as the Lawson Manufacturing Plant.

     WHEREAS, capitalized terms shall have the meanings set forth in the Purchase and Sale Agreement, unless otherwise defined herein;

     WHEREAS, Pursuant to the Purchase and Sale Agreement, Adams has agreed to enter into a supply agreement with ROCK upon the terms and conditions set forth therein and herein; and

     WHEREAS, accordingly, ROCK and Adams believe it is in their mutual interests for Adams to supply granite memorials and monuments to be manufactured at the Lawson Manufacturing Plant (collectively referred to as "Monuments") at prices agreed in advance, all upon the terms and conditions as hereinafter set forth.

     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are herein acknowledged, the parties agree as follows:

     1.    Purchase and Supply of Monuments. Adams agrees to supply ROCK and its subsidiaries, affiliates and designees (hereafter in this Agreement, the term "ROCK" shall be deemed to include Rock of Ages Corporation and its subsidiaries, affiliates and designees) with Monuments for a term of seven (7) years (herein the "Term"). ROCK will order Monuments with or without sandblast as determined in its sole discretion. ROCK presently expects that approximately twenty percent (20%) of its annual orders will be sandblast charges.

     2.    Price for Monuments and Delivery.

     a.    The price to be charged by Adams for Monuments during the Term shall be as set forth in Exhibit 2.1. Rock will purchase Monuments on open account by submitting its then current purchase order. Purchase orders may be submitted electronically or in hard copy. Each purchase order shall specify a delivery date for the Monument. Delivery dates shall be set in accordance with the then current average lead times at the ROCK manufacturing plant for the particular type of Monument to be produced. ROCK will provide Adams with a current schedule of lead times, which schedule may be amended from time to time by ROCK to reflect any changes in lead times. In the event of a conflict between the purchase order and this Agreement, this Agreement will prevail. No other terms shall be applicable to the purchase of such memorials, including, but not limited to Adam's standard sales or invoice terms. Adams will invoice ROCK on the first day of each calendar month during the Term for all Monuments shipped during the previous month, which invoice shall be payable within fifteen (15) days from invoice date on a net basis. ROCK shall use its best efforts to place orders with Adams as such orders are received by ROCK from its customers, taking account of customary seasonal patterns in the supply of Monuments.

     b.    ROCK and Adams each agree that it should be the goal of each party to provide the highest level of quality and service in the supply of Monuments. Accordingly, the parties each agrees to cooperate with each other to facilitate increased efficiencies in the manufacture of Monuments, improved quality of Monuments and, where commercially feasible, reduced lead time for the manufacture of Monuments. In furtherance of this goal, Adams agrees to allow representatives of ROCK reasonable periodic access to Adams plant upon prior notice by ROCK for the purpose of assessing order status and quality control. In addition the parties agree to meet annually to review general performance under this agreement and to discuss items of mutual cooperation.

     3.    Minimum Ordering Obligations. During the Term ROCK shall place orders for at least Three Million Dollars ($3,000,000.00) (the "Minimum Order") of Monuments from Adams in each year of the Term, commencing January 1, 2002. The Minimum Order may vary up or down by up to Ten Percent (10%) in the first year of this Agreement, and Fifteen Percent (15%) per year thereafter, provided, however, that the aggregate Minimum Order in each Two (2) year period shall equal, as nearly as possible, Six Million Dollars ($6,000,000.00).

     EXAMPLE:By way of illustration only, ROCK places orders for $2.7 million in Monuments from Adams for the year ending December 31, 2002, and $3.3 million in Monuments for the year ending December 31, 2003. ROCK has met its Minimum Order requirement for each year over the first two years of the Term.

For the purposes of measuring ROCK's compliance with the Minimum Order requirement, the first two year period shall commence on January 1, 2002 and end on December 31, 2003; the second 2 year period shall commence on January 1, 2004 and end on December 31, 2005; the third 2 year period shall commence January 1, 2006 and end on December 31, 2007; the seventh and final year of the Term shall end on December 31, 2008. If ROCK's Minimum Order for a 2 year period exceeds $6 million, then Adams shall credit ROCK's Minimum Order for the ensuing 2 year period by the excess amount. The Minimum Order for the ensuing period as adjusted by the credit is sometimes referred to herein as the "adjusted Minimum Order." Adams shall credit ROCK's Minimum Order for the seventh and last year of the Term by the amount by which the orders placed by ROCK for the fifth and sixth years of the Term exceed the adjusted Minimum Order for that period.


     EXAMPLE: By way of illustration only, assume that the adjusted Minimum Order for the 2 year period ending December 31, 2007 is $5.9 million. ROCK places orders for $3.2 million of Monuments in the year ending December 31, 2006 and $3.4 million of Monuments in the year ending December 31, 2007, for a total of $6.6 million in orders. ROCK's Minimum Order for the year ending December 31, 2008 would be calculated by subtracting $700,000 (the amount by which the combined orders placed by ROCK exceeded the adjusted Minimum Order of $5.9 million for the 2 year period ending December 31, 2007) from $3 million. The Minimum Order for the seventh and last year of the Term would thus be $2.3 million.

     During the first year of this Supply Agreement, Adams shall credit ROCK's Minimum Order for 2002 by the amount of the orders and work-in-process assumed by Adams pursuant to the Purchase and Sale Agreement. The Minimum Order in each year of this Agreement may be increased or decreased on January 1 of each year during the term based upon any increase or decrease in the prices that Adams charges to ROCK for Monuments. Any such increase or decrease in the Minimum Order shall be proportionate to the increase or decrease in prices.

      4.    Failure to Meet Minimum Order; Remedy. Adams shall provide ROCK with a report of the orders placed by ROCK under this Agreement within Thirty (30) days of the end of each 2 year period, and a report of its orders placed for the seventh year of the Term. ROCK shall verify Adam's report with its own numbers and communicate any discrepancies to Adams. If the orders over such 2 year periods (or, in the case of the seventh year, the 1 year period) are less than the adjusted Minimum Order, then ROCK shall, at its sole option: (i) place orders for Monuments in the amount of the deficiency; or (ii) pay to Adams the gross margin that Adams would have realized had such orders been placed and filled. For the purposes of this Section 3, the gross margin shall be Adams' average gross margin on sales of Monuments to ROCK over the prior 2 year period, calculated in accordance with generally accepted accounting principles, consistently applied. Adams shall keep adequate books and records sufficient to allow ROCK to calculate the average gross margin, and shall allow ROCK access to such books and records in accordance with Section 8 hereof.

     EXAMPLE: By way of illustration only, assume that ROCK's Minimum Order for the 2 year period ending December 31, 2003 is $6 million. ROCK purchases $5.7 million of Monuments for the 2 year period ending December 31, 2003, leaving of deficiency in the Minimum Order obligation of $300,000. Assume that Adams' average gross margin for the 2 year period at 20%. ROCK may, at its option: (i) place orders for up to $300,000 of Monuments, which amount shall be credited to the Minimum Order for the 2 year period ending December 31, 2003; pay $60,000 to Adams ($300,000 x 20%); or, a combination of the above two options.


     The placement of orders and/or the payment of Adams' estimated gross margin, as provided in section 4(i) or (ii) above, shall be Adam's sole and exclusive remedy for ROCK's failure to meet the Minimum Order. In no event shall ROCK be liable to Adams for any claims or demands in equity for specific performance or claims or demands at law for any further amounts or damages of any kind, whether direct or indirect, including, but not limited to, loss of revenue or profits or any special, incidental or consequential damages, even if ROCK has been advised of the possibility of such damages

     5.    Warranty. Adams hereby represents and warrants that each Monument supplied under this Agreement shall be fabricated from the memorial grade granite specified in the applicable purchase order, shall conform in all material respects to ROCK's specifications of quality and workmanship, and shall be merchantable and free from defects in material and workmanship. Adams hereby further represents and warrants to, and agrees with, ROCK that none of the Monuments to be supplied by Adams to ROCK under this Agreement will be treated with any artificial materials or liquids and the finished Monuments are the result of standard accepted polishing methods.

     6.    Defective Memorials. In the event that a Monument sold by Adams to ROCK is flawed, does not conform to the above warranty or is otherwise defective in any respect, Adams shall replace the defective Monument as soon as reasonably possible, it being understood that Adams will use its best efforts to make such replacement as quickly as possible. ROCK shall make any such claim to Adams in writing, identifying the Monument in question and the nature of the flaw, defect or warranty breach. Adams shall respond to each such notice within five (5) days of receipt thereof, and shall provide an estimated time for replacement. If Adams objects to the claim, it shall provide written notice of its objection within the five (5) day period. The parties shall negotiate in good faith to resolve the dispute. If the parties fail to reach agreement within thirty (30) days of notice of claim by ROCK, then the dispute resolution provisions in Section 12.c below shall apply.

     7.  Default; Remedies

     a.  Default. The occurrence of any one or more of the events with respect to Adams shall constitute and event of default hereunder ("Event of Default"):

     (i)      If Adams defaults in its performance of its obligations to ROCK under this Supply Agreement. For the purposes of this Agreement, a default shall include, but not be limited to, repeated and persistent warranty breaches or quality issues in the manufacture and supply of Monuments or repeated and persistent failure to meet the delivery date(s) specified in the applicable purchase orders; or Adams' failure to honor its warranty obligations to Rock.

      (ii)     If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (a "Bankruptcy Law") Adams shall: (a) commence a voluntary case or proceeding; (b) consent to the entry of an order for relief against it in an involuntary case; (c) consent to the appointment of a trustee, receiver, assignee, liquidator or similar official; (d) make an assignment for the benefit of creditors; or (e) admit in writing its inability to pay its debts as they become due.


     (iii)    If a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (a) is for relief against Adams in an involuntary case; (b) appoints a trustee, receiver, assignee, liquidator or similar official for either Adams or substantially all of its properties; or (c) orders the liquidation of Adams, and the order or decree is not dismissed within 90 days.

     b.    Remedies. Upon the occurrence of an Event of Default under this Supply Agreement, ROCK shall give Adams written notice of the nature of such Event of Default. ROCK shall have such remedies as are provided for under applicable law and in this Supply Agreement, including, but not limited to, the right to terminate this Agreement.

     8.    Audit Rights. Each party shall have the right, upon reasonable notice to the other, to review the books and records of the other party to ensure its compliance with the terms of this Supply Agreement.

     9.    Mutual Customer Base. Each party acknowledges that they now service and may in the future service some of the same customers with granite memorial products. In particular, Adams has done a limited amount of business with certain ROCK authorized retailers and ROCK acknowledges that Adams will continue to do so in the future. Adams agrees and acknowledges that it is ROCK's goal to maintain and increase sales of Monuments to its authorized retailer base and that ROCK will encourage its authorized retailers to buy an increasing percentage of Monuments from ROCK. Adams acknowledges that the maintenance and enlargement of ROCK's business with its authorized retailers, and other retailers who are willing to commit to ROCK's authorized retailer program, is critical to ROCK's success and is critical to ROCK's ability to meet the Minimum Order. Accordingly, Adams will not solicit business from Rock of Ages retailers, and the parties each agree that while they may be in competition with one another from time to time, that they will deal with one another on the basis of trust, good faith and fair dealing, taking account of ROCK's stated goals above.

     10.    No Solicitation of Employees. For a period of six (6) months after the effective date of this agreement each party agrees not to, directly or indirectly, solicit or induce any employee of the other party to leave that party's employment for any reason whatsoever or to hire any of such party's employees.

     11.    Non-Disclosure of Confidential Information. Each party acknowledges that they will obtain access to confidential and proprietary information relating to their respective businesses which may or may not be trade secrets, but which is important to the way that the party does business. Each party understands, agrees and covenants that such information is valuable and is intended to be used by such party only in the performance of their respective duties under this Supply Agreement. Therefore, each party covenants and agrees that they will not use, disclose, communicate or divulge such information to any third person or use such information except as may be necessary to perform their respective duties hereunder. Each party's obligations in this section shall survive the expiration or termination of the this Supply Agreement and shall apply as long as any such confidential and proprietary information is not in the public domain.


     12.    Miscellaneous

     a.    This Supply Agreement, together with the Purchase and Sale Agreement, including all exhibits thereto, contains the entire agreement among the parties with respect to the subject matter hereof and thereof. This Supply Agreement may only be amended in writing, signed by all of the parties hereto.

     b.     Any notice required or permitted to be given hereunder shall be given in accordance with Section 9.7 of the Purchase and Sale Agreement.

    c.    This Supply Agreement will be governed by the substantive and procedural laws of the State of Vermont without regard to conflicts of laws principles. Any disputes, controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules and judgment on the award may be entered in any court having jurisdiction thereof. The arbitration shall take place in the City of Barre, Vermont.

     d.     This Supply Agreement shall be binding on each party's successors and assigns. This Supply Agreement shall not be assigned by any party hereto without the express prior written consent of the other party. Adams shall not subcontract any of the work to be performed hereunder without the written consent of ROCK, which consent shall not be unreasonably withheld.

     e.    Subject to section 12.d above, this agreement shall be binding upon and inure solely to the benefit of each party and to the party's permitted successors and assigns; and nothing in this agreement, express or implied, is intended to or shall confer upon any other person an right, benefit or remedy of any nature whatsoever under or by reason of this agreement.

     f.    The headings of Sections in this Supply Agreement are provided for convenience only and will not affect its construction or interpretation. All references to "Section" or "Sections" refer to the corresponding Section or Sections of this Supply Agreement unless otherwise specified.


     g.    Neither party will be deemed in default of this Agreement to the extent that performance of its obligations, or attempts to cure any breach, are delayed or prevented by reason of any act of God, accidents, labor disputes, military conflicts, insurrections, riots, explosions, lightning, earthquake, fires, storms, floods or other cause outside of the party's reasonable control or other force majeure; provided that, such party promptly gives written notice of the condition and undertakes commercially reasonable efforts to circumvent the effects of such force majeure. In any such event, the time for performance will be extended for a period equal to the duration of any delay occasioned by the force majeure, provided, however, that such extension period shall not exceed four (4) weeks.

     h.    Each Exhibit delivered pursuant to the terms of this agreement shall be in writing and shall constitute a part of this agreement. The parties may agree with respect to any Exhibit required to be attached to this agreement, that such Exhibit, if mutually satisfactory, may be attached to this agreement after the date of execution hereof and after mutual approval thereof, such subsequently attached Exhibit shall be treated as if it were attached to this agreement as of the date of execution of this agreement. All Exhibits attached hereto are specifically incorporated herein by reference and made a part hereof. The words "agreement," "herein" and "hereof" as used herein shall in all respects include the entirety of this agreement together with all Exhibits attached hereto and all documents required or permitted to be delivered hereunder.

     IN WITNESS WHEREOF, the parties hereto have executed this agreement all as of the date first above written.

WITNESS                                          ROCK OF AGES CORPORATION

                                                            By: __________________________________
                                                                  Kurt M. Swenson, Chairman/CEO

WITNESS                                          ADAMS GRANITE COMPANY, INC.

                                                            By: __________________________________
                                                                  Kerry F. Zorzi, President




Until December 31, 2002

Prices shall be 43.35% below those listed in the 2001 Adams Granite Co. price book (attached to this Exhibit 2.1) for the monuments shown therein, provided, however, that prices for sandblast shall be 49% below those listed in the Adams Granite Co. price book.

After December 31, 2002

Beginning January 1, 2003 and on each successive January 1 during the term thereafter, Adams may increase its prices from those set in the previous year by an amount equivalent to the increase in Adams's production costs during the prior year, provided, however, that the prices charged hereunder shall remain competitive with the prevailing prices for monuments and sandblast from other manufacturers in the Barre, Vermont area; and provided further that any annual price increase shall not be made more than once annually and shall be capped at Five Percent (5%). Such price increases shall be communicated in writing by Adams to ROCK and shall be effective thirty (30) days from the date that such communication is received by ROCK. Any notice of price increase shall include a breakdown of the increased production costs showing how the new prices were calculated. ROCK shall have full access to Adams's books and records to verify such price increases, and shall have thirty (30) days in which to object to such price increases. If ROCK objects to the price increases, the parties shall negotiate in good faith to reach agreement on the revised pricing. If the parties fail to reach agreement within thirty (30) days of notice of such objection by ROCK, then the dispute resolution provisions in Section 9.c of the Agreement shall apply. During any such dispute, Adams shall continue to supply Monuments to ROCK under the new pricing schedule, provided, however, that the difference between the old and new prices shall be deposited by ROCK into an escrow account pending resolution of the dispute.

For the purposes of this Agreement, production costs shall be limited to:

Direct labor
Indirect labor
Power and fuel
Property taxes on Plant and Improvements
Property and Casualty Insurance


Source: OneCLE Business Contracts.