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EXHIBIT 10.01
EXECUTION COPY
Asset Purchase Agreement
 
This ASSET PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of
the 10th day of September, 2007, by and among  S&A Purchasing Corp., a New York
corporation (the “Buyer”), S&A Supply, Inc., a Massachusetts corporation (the
“Company”), S&A Realty, Inc., a  Massachusetts corporation (“Realty”), S&A
Management, Inc., a Massachusetts corporation (“Management,” and together with
Realty and the Company, the “Sellers,” and each individually sometimes referred
to herein as a “Seller”), Nancy A. Mead (“Nancy”), Nancy A Mead and Thomas H.
Mead, Trustees of The Discretionary Trust (“Trustees”), under The Rodney P. Mead
Revocable Trust (the “Trust”), dated January 12,1999, Sarah Mead (“Sarah”),
Brian Mead (“Brian”) and Adam Mead (“Adam”).  Nancy, the Trustees, Sarah, Brian
and Adam are the sole shareholders of each of the Sellers and are collectively
referred to herein as the “Shareholders.” Nancy and the Trustees are sometimes
referred to herein as the “Majority Shareholders” and Sarah, Brian and Adam are
sometimes referred to herein as the “Minority Shareholders.” Colonial Commercial
Corp., a New York corporation and the sole shareholder of the Buyer
(“Colonial”), is countersigning this Agreement with regard to Section 2(e) only.
 
Recitals
 
 
1.
The Company operates a heating and plumbing supply business and an electrical
wholesale business (the electrical wholesale business together with the heating
and plumbing supply business, the “Business”) in four locations, one of which
also serves as the Company’s corporate office and distribution center.

 
 
2.
Buyer desires to purchase the Business and selected assets of the Company, and
to assume selected liabilities of the Company.

 
 
3.
The Company desires to sell such assets and to cause Buyer to assume such
liabilities.

 
 
4.
Management performs certain administrative services for the Company.

 
 
5.
Buyer desires to purchase selected assets from Management and to assume selected
liabilities of Management related to the operation of the Company.

 
 
6.
Management desires to sell such selected assets and to cause Buyer to assume
such liabilities.

 
 
7.
Buyer desires to lease the three parcels of real property set forth on Schedule
1(f), two of which are owned by Realty and one of which is owned by the Company
(the three parcels of real property are defined herein as the "Owned Real
Estate").

 
 
8.
The Company and Realty desire to lease the Owned Real Estate to the Buyer.

 
Certain definitions related to this Agreement are set forth in Section 27.
 
 

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Agreement
 
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
contained herein, the parties agree as follows:
 
1.
Sale and Purchase of Assets.

 
(a)
On the terms and subject to the conditions of this Agreement, at the Closing
referred to in Section 5, the Sellers shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase, acquire and accept delivery of the
following assets and properties (the “Assets”):

 
 
(A)
Merchandise inventory as of the Valuation Date (which is the close of business
on the second business day prior to the Closing) that is new and unused and in
its original packaging (the “Merchandise Inventory”); the Merchandise Inventory
will be physically counted by the Buyer and the Sellers jointly with each
leaving with a printed priced list of the inventory, some of which will be
hand-written. The term “Merchandise Inventory Value” means the book value of the
Merchandise Inventory as of the Valuation Date.  Book value of inventory shall
be calculated at Sellers’ average cost.  Book value shall include a provision
for reserve for inventory that as of the Closing has not been sold for a period
of eighteen (18) months or inventory in excess of a twelve (12) month supply
(“Inventory Reserve”).  The Merchandise Inventory Value shall not include the
book value of defective or damaged goods.

 
 
(B)
Trade accounts receivable as of the Valuation Date (the “Trade
Receivables”).  “Trade Receivables Value” means the value of the Trade
Receivables as of the Valuation Date less the value of the Past Due Receivables
as of the Valuation Date.  Past Due Receivables means any account from any
customer whose balance in the over 90 days old aging category exceeds 25 percent
of the total account balance of such customer at the Closing (“Excluded
Accounts”), plus, for any account that is not an Excluded Account, amounts from
any customer that at the Closing is more than 90 days past due (“90 Day Past Due
Receivables”). The Trade Receivables will be printed in detail and are subject
to the provisions set forth in Section 4.

 
 
(C)
Trade Receivables service charges shall be excluded from Trade Receivables, but
will be paid to Sellers in accordance with Section 4(c).

 
 
(D)
The prepaid and other assets of the Sellers (“Prepaid and other Assets”) that
are listed in Schedule 1(a)(D). The Buyer will share excess rebate distributions
that are included in Prepaid and other Assets with the Sellers in proportion to
when the purchases took place. The “Prepaid and other Assets Value” means the
book value of the Prepaid and other Assets as set forth in such Schedule,  is
subject to adjustment after the Closing as provided in Section 3 to account for
such events as expenses a party may pay on account of the other party for bills
that crossed their respective periods of operation (e.g., telephone and other
utility bills).

 
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(E)
The fixed assets (the “Fixed Assets”) of the Sellers that are as set forth on
Schedule 8(v);  provided, however, that Buyer’s purchase of the auto and trucks
included in Fixed Assets is subject to the assignment of the Sellers’ auto and
truck financing arrangement to Buyer)) at the depreciated value of the Fixed
Assets (the “Fixed Assets Value”), as set forth on the books and records of the
Sellers, as of the Valuation Date;

 
 
(F)
The Sellers’ rights from and after the Closing under the North Adams, MA real
estate lease that is set forth in Schedule 1(a)(F) (the “Real Estate Lease”);

 
 
(G)
Credit applications and customer guarantees in the form used by the Sellers in
its normal operations of business.

 
 
(H)
[Intentionally Deleted].

 
 
(I)
All proprietary knowledge, Trade Secrets, Confidential Information, computer
software and licenses, formulae, designs and drawings, quality control data,
processes (whether secret or not), methods, inventions and other similar
know-how or rights Used in the conduct of the Sellers’ business, including, but
not limited to, the areas of manufacturing, marketing, advertising and personnel
training and recruitment, together with all other Intangible Rights Used in
connection with the Sellers’ business, including all files, manuals,
documentation and source and object codes related thereto as well as all files,
manuals, documentation relating to Past-Due Receivables and inventory that is
not Merchandise Inventory (as defined above);

 
 
(J)
All utility, security and other deposits and prepaid expenses which are
assignable;

 
 
(K)
the Sellers’ business as a going concern and its franchises, Permits and other
authorizations of Governmental Authorities (to the extent such Permits and other
authorizations of Governmental Authorities are transferable) and third parties,
licenses, telephone numbers for all locations, facsimile numbers, website
addresses, post office boxes, customer lists, vendor lists, referral lists and
contracts, advertising materials and data, restrictive covenants, choses in
action and similar obligations owing to the Sellers from its present and former
shareholders, officers, employees, agents and others, together with all books,
databases, operating data and records (including financial, accounting and
credit records), files, papers, records and other data of the Sellers relative
to the operation of the Sellers’ business, i.e., inventory, customer records,
vendor records, etc.  Notwithstanding the foregoing, the Sellers and Buyer shall
for a period of not less than three years make their records for transactions
through the Closing available to the other on request for review and copying
(whether for the purpose of facilitating the preparation of SEC reports for
Buyer’s affiliates or otherwise), and they shall not destroy their respective
records without first offering to deliver the same to the other party.

 
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(L)
all rights of the Sellers in and to the name S&A Supply, Inc. and any other name
that incorporates the word S&A and all variants thereof, and all other trade
names, trademarks and slogans Used in its business, all variants thereof and all
goodwill associated therewith;

 
 
(M)
to the extent assignable under applicable law, all of Sellers’ rights under any
insurance policy or contract of insurance or indemnity (or similar agreement)
under which Sellers’ are an insured, named as an additional insured or is
otherwise a beneficiary, and all proceeds realized in connection therewith;

 
 
(N)
certificates and copies of all insurance policies, all as set forth on Schedule
8(a)(N);

 
 
(O)
all other property and rights of every kind or nature Used by the Sellers in the
operation of its business;

 
 
(P)
all other purchase orders, Customer orders, and other rights under contracts in
the ordinary course.

 
 
(Q)
the verbal Kohler distribution agreement (“Kohler Distribution Agreement”),
provided, however, that it is expressly understood among the parties that the
Kohler Distribution Agreement shall not be part of the Assets in the event the
Sellers after using their best efforts fail to obtain the necessary consents
required to assign such distribution agreement to the Buyer.

 
(b)
Notwithstanding the foregoing, the following assets and properties (“Excluded
Assets”) are not included in the Assets:

 
 
(A)
Cash

 
 
(B)
Loan Receivable due from each of S&A Management, Inc.,  S&A Realty, Inc. and the
Shareholder, each such Loan Receivable as defined in the Company’s audited
Balance Sheet for the year ended December 31, 2006 (“2006 Audited Balance
Sheet”);

 
 
(C)
The current and non-current portion of the Note Receivable due from Shareholders
set forth in the 2006 Audited Balance Sheet;

 
 
(D)
The life insurance policy, and the cash value of life insurance set forth in the
2006 Audited Balance Sheet;

 
 
(E)
prepaid insurance, it being understood that Buyer will obtain its own policies,
and prepaid taxes, due from employees or due from other affiliates of the
Sellers.

 
 
(F)
any and all contracts or policies of insurance that are used to pay or fund
benefits under any employee benefit plan, as such term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974.

 
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(c)
It is specifically understood and agreed by the parties hereto that the Buyer is
acquiring, and each Seller is selling, all of the tangible and intangible assets
attributable to or Used by the Company in its Business, except the Excluded
Assets. Any cash proceeds (inclusive of checks, money orders and credit card
transactions) of the Excluded Assets received by the Buyer subsequent to the
date of Closing shall be remitted by Buyer to the Company (and Company shall
receive such remittance on behalf of the Sellers) within ten (10) days from
receipt. Conversely, any cash proceeds (inclusive of checks, money orders and
credit card transactions) of the Assets received by the Sellers subsequent to
the date of Closing shall be remitted by the Sellers to Buyer within ten (10)
days from receipt.

 
(d)
The aforesaid assets and properties to be transferred to the Buyer hereunder,
but not including the Excluded Assets, are hereinafter collectively referred to
as the “Assets.”

 
(e)
Method of Conveyance.

 
 
(A)
The sale, transfer, conveyance, assignment and delivery by the Sellers of the
Assets to the Buyer in accordance with Section 1(a) hereof shall be effected on
the Closing Date by the Sellers’ execution and delivery to the Buyer of one or
more Bills of Sale, Assignments and other conveyance instruments with respect to
the Sellers’ transfer of Intangible Rights, real property interests and other
Assets in form and scope reasonably satisfactory to Buyer (collectively the
“Conveyance Documents”).  At the Closing, good, valid and marketable title to
all of the Assets shall be transferred, conveyed, assigned and delivered by the
Company to the Buyer pursuant to the Conveyance Documents, free and clear of any
and all Liens, excepting Assumed Obligations (as defined below).

 
(f)
Real Estate. It is specifically understood and agreed by the parties hereto that
concurrent with the Closing, Buyer shall execute leases for the three parcels of
real property included in the Owned Real Estate .  A copy of said leases (“Owned
Real Estate Leases”) to be delivered by Sellers, fully executed by landlords at
the Closing, are annexed hereto and designated Exhibits (f)(A), 1(f)(B), and
1(f)(C) . In addition thereto, except as otherwise disclosed on Schedule
1(f)(D), Sellers shall at the Closing deliver a certificate of occupancy for
each of the leased premises permitting Buyer to utilize the premises for the
business purposes being purchased pursuant to the terms of this agreement.

 
(g)
Assumed Obligations.  The Buyer hereby assumes, effective as of the Closing, and
the Buyer hereby agrees, effective as of the Closing, to satisfy and discharge
as the same shall become due:

 
 
(A)
all trade accounts payable and accrued expenses that have been incurred in the
ordinary course of the Company’s business consistent with the representations
and warranties set forth in this Agreement (“Trade Accounts Payable”);

 
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(B)
the Sellers’ liabilities and other obligations arising subsequent to the Closing
under the Real Estate Lease set forth on Schedule 1(a)(F) and each of the Auto
and Truck Leases and the Auto and Truck Loans listed on 1(g)(B); and

 
 
(C)
the expense accounts payable, customer deposits payable, payments for
unreconciled stock receipts (merchandise received but for which no invoice has
been received as of the Valuation Date) listed on Schedule 1(g)(C) hereto
(collectively the “Assumed Obligations”).

 
(h)
[Intentionally Deleted].

 
(i)
Excluded Liabilities.  Except as expressly set forth in Section 1(g), the Buyer
shall not assume or be responsible at any time for any liability, obligation,
debt or commitment of the Sellers, whether absolute or contingent, accrued or
unaccrued, asserted or unasserted, or otherwise (the “Excluded
Liabilities”).  Without limiting the generality of the foregoing, Sellers and
Shareholders expressly acknowledge and agree that the Sellers shall retain, and
that Buyer shall not assume or otherwise be obligated to pay, perform, defend or
discharge, any liability or obligation:

 
 
(A)
incident to, arising out of or incurred with respect to, this Agreement and the
transactions contemplated hereby (including any and legal or other fees and
expenses, all sales, income or other taxes arising out of the transactions
contemplated hereby; without limiting the generality of the foregoing, the
Sellers shall promptly file an application for a Waiver of Tax Lien under the
Massachusetts General Law, Chapter 62C §§ 51 and 52, with the Massachusetts
Department of Revenue (“Waiver of Tax Lien”) and shall remit any and all sales
taxes due in respect of the sale of assets contemplated in this transaction to
be paid by Sellers at Closing);

 
 
(B)
for taxes whether measured by income or otherwise;

 
 
(C)
in connection with any Plan or Benefit Program or Agreement (as defined in
Section8(k)), including, without limitation, any liability of the Sellers under
ERISA;

 
 
(D)
under any foreign, federal, state or local law, rule, regulation, ordinance,
program, Permit, or other Legal Requirement relating to health, safety,
Hazardous Materials and environmental matters applicable to the Sellers’
business and/or the facilities Used by the Sellers (whether or not owned by the
Sellers);

 
 
(E)
pertaining to products sold or manufactured or services performed or other
actions taken or omitted by the Sellers prior to the Closing Date;

 
 
(F)
relating to any default taking place before the Closing Date under any of the
Assumed Obligations to the extent such default created or increased the
liability or obligation; or

 
 
(G)
the consulting agreement by and between Management and Richard J. Aloisi, dated
April 6, 2004.

 
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(H)
Sellers and the Majority Shareholders jointly and severally agree to satisfy and
discharge the Excluded Liabilities as the same shall become due.

 
2.
Payment for Assets

 
(a)
As payment in full for the Assets being acquired by the Buyer hereunder and the
non-compete covenants set forth in Section 13(d) hereof, Buyer shall pay to the
Company (and Company shall receive such payment on behalf of the Sellers) in the
manner set forth in this Section 2, (i) the Merchandise Inventory Value, plus
the Trade Receivables Value, plus the Prepaid Asset Value, plus the Fixed Asset
Value, plus $10,000 in respect of the non-compete covenants set forth in Section
13(d), plus $315,000 in respect of goodwill, less (ii)  the face value of all
trade accounts payable and accrued expenses and other liabilities and
obligations that are assumed at the Closing by the Buyer under Section 1(g)(A)
and 1(g)(C) less accrued vacation and sick pay through the Closing of the
business employees of the Sellers, but subject to further adjustment as provided
in Section 3 (such amount, as so adjusted from time to time, is referred to
herein as the “Purchase Price"). It is expressly understood by the parties that
the Purchase Price will not be adjusted downward in the event Sellers, after
using their best efforts, fail to obtain the necessary consents required to
assign the Kohler Distribution Agreement.

 
(b)
In preparation for the Closing, the parties will prepare an estimate (the
“Estimated Purchase Price”) of the actual Purchase Price by conducting the joint
physical inventory and other procedures that are set forth in Section 1(a)(A)
with the appropriate detailed listings and schedule. In order to plan for and
facilitate the Closing, the Sellers will also provide Buyer with an estimated
summary of the foregoing on the Valuation Date. Attached hereto and made a part
hereof as Schedule 2(b) is the June 30, 2007 unaudited internal Balance Sheet of
the Company that shall be delivered by Sellers pursuant to Section 6 and an
example of the purchase price calculation in connection therewith attached
hereto and made a part hereof.

 
(c)
On the Closing Date, the Buyer shall make payment of the Estimated Purchase
Price as follows: Buyer shall deliver to the Company (and Company shall receive
on behalf of the Sellers) by wire transfer of 5% of the Estimated Purchase Price
(the “Escrow Amount”) to Martinelli Discenza P.C., as escrow agent (the “Escrow
Agent"), and by wire transfer of the balance thereof to the Company.  The Escrow
Amount shall be held by the Escrow Agent pursuant to the terms and conditions
hereunder and pursuant to the terms and conditions of the Escrow Agreement
attached hereto as Exhibit 2(c) (the “Escrow Agreement”).

 
(d)
[Intentionally Deleted].

 
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(e)
 

 
 
(A)
In the event Buyer fails to perform any of its obligations hereunder or under
the employment and consulting agreements entered into by Buyer pursuant to this
Agreement, Sellers’ shall provide Buyer written notice (a “Failure Notice”)
specifying such failure and requiring such failure be remedied within 30 days,
provided, however, that if any such failure cannot with due diligence be
remedied by Buyer within a period of 30 days, if Buyer commences to remedy such
failure within such 30 day period and thereafter prosecutes such remedy with
reasonable diligence, the period of time for remedy of such failure shall be
extended so long as Buyer prosecutes such remedy with reasonable
diligence.  Colonial hereby agrees to perform such failed obligation on behalf
of the Buyer in the event Buyer shall have failed to remedy such failure in
accordance with the prior sentence and Sellers provide Colonial with a written
notice specifying the obligation that Buyer failed to cure along with a copy of
the Failure Notice.

 
 
(B)
In the event Buyer fails to perform any of its obligations in accordance with
the terms of any lease agreement entered into by Buyer pursuant to this
Agreement, Sellers’ shall provide Buyer written notice (“Failure Notice”)
specifying such failure and requiring such failure be remedied within 30 days,
provided, however, that if any such failure cannot with due diligence be
remedied by Buyer within a period of 30 days, if Buyer commences to remedy such
failure within such 30 day period and thereafter prosecutes such remedy with
reasonable diligence, the period of time for remedy of such failure shall be
extended so long as Buyer prosecutes such remedy with reasonable
diligence.  Colonial hereby agrees to perform such failed obligation on behalf
of the Buyer in the event Buyer shall have failed to remedy such failure in
accordance with the prior sentence and Sellers provide Colonial with a written
notice specifying the obligation that Buyer failed to cure along with a copy of
the Failure Notice.

 
 
(C)
In the event Buyer contests any of the matters set forth in a Failure Notice,
Buyer and Seller shall resolve such dispute exclusively by arbitration by the
American Arbitration Association in Great Barrington, Massachusetts.
Notwithstanding anything set forth in Section 2(e), in the event a Failure
Notice is arbitrated in accordance with this section, Colonial’s obligations
under Section 2(e) shall be subject to the finding of Buyer’s failure to perform
by such arbitration.

 
3.
Adjustment of Purchase Price.

 
(a)
The Sellers and the Buyer agree to meet on or about 130 days subsequent to the
Closing (“Adjustment Date”) to determine amounts due among the parties in
accordance with Section 4 and to resolve any questions, errors or omissions that
might have occurred in the Purchase Price calculation and to reallocate
responsibility for certain expenses, (i.e., gas and electric, telephone, etc.)
which cover the period prior to and after the date of Closing.  

 
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(b)
If the Purchase Price is adjusted downward, Brian on behalf of the Sellers, and
the Buyer shall forthwith jointly direct the Escrow Agent to release to Buyer
from Escrow the amount by which the Purchase Price is adjusted downward. To the
extent that such reduced amount exceeds the amounts then available for release
from escrow by the Escrow Agent, Sellers and the Majority Shareholders shall
jointly and severally pay the excess to Buyer forthwith.

 
(c)
If the Purchase Price is adjusted upward, Buyer shall forthwith pay to the
Company, and the Company shall receive on behalf of the Sellers, the amount by
which the Purchase Price is adjusted upward.

 
(d)
In the event that there is any dispute on whether any party is required to sign
any direction to the Escrow Agent hereunder, such dispute shall be resolved
exclusively by arbitration by the American Arbitration Association in Great
Barrington, Massachusetts. In the event that the parties agree that a direction
to the Escrow Agent is required to a given extent but dispute whether such
direction is required for any excess amount, then the parties shall execute such
direction for to the given amount as to which there is no dispute, and the
dispute on the excess amount shall be submitted to arbitration as aforesaid.

 
4.
Certain Other Agreements:

 
(a)
Buyer may on the Adjustment Date reassign to the Sellers any Trade Receivable
purchased by the Buyer and not paid by a customer in the ordinary course
(without resort to litigation) by the Adjustment Date; Reassigned Trade
Receivables actually reassigned by Buyer to Sellers is termed “Uncollected
Accounts”. Buyer agrees not to conduct business with any customer who is the
debtor on any Uncollected Accounts within the earlier of (i) one year of such
re-assignment; (ii) the time Sellers shall have been paid in full on such
Uncollected Accounts, and (iii) the time Sellers in their sole discretion shall
consent and allow Buyer to conduct business with such customer.

 
(b)
Sellers and Buyer shall on the Adjustment Date calculate the total dollar amount
of the collected Past Due Receivables (the “Collected Past Due Receivables
Accounts”). If the dollar amount of the Collected Past Due Receivables Accounts
exceeds the dollar amount of the Uncollected Accounts, then the Purchase Price
shall be adjusted upward by such excess amount. If the dollar amount of the
Uncollected Accounts exceeds the dollar amount of the Collected Past Due
Receivables Accounts, then the Purchase Price shall be adjusted downward by such
excess amount.  Buyer agrees not to conduct business with any customer who is
the debtor on any Uncollected Past Due Accounts until the earlier of (i) one
year after the Adjustment Date;  (ii) the Seller has been paid in full, or and
(iii) the time Sellers in their sole discretion shall consent and allow Buyer to
conduct business with such customer.

 
(c)
Service charges accrued at the Closing shall be paid to Sellers within sixty
(60) days of date collected.  Buyer has the option of compromising accrued
service charges in its sole discretion by utilizing its best business judgment.

 
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(d)
Should Buyer fail to receive full credit for any purchased, but defective
inventory within 75 days after the Closing, Buyer will reassign such defective
inventory to the Sellers and the Purchase Price shall be adjusted downward by
the amount Buyer paid to the Sellers for such inventory.

 
(e)
Purchase Price adjustments shall be paid in accordance with Section 3.

 
(f)
The Sellers will at the Closing pay in full, to the employees or other persons
entitled to receive the same, all accruals through the Closing under all of its
profit sharing plans and other employee benefit payments.

 
5.
Closing.

 
(a)
The Closing of this transaction will take place at the office of Oscar Folger,
521 5th Avenue, 24th Floor, New York, N.Y. 10175, or at the request of Buyer, at
the offices of counsel to any lender providing financing in connection with the
transactions contemplated hereby, at 10:00 a.m. on or before September 10, 2007
or, at the request of either party on a later date but not later than October 1,
2007.

 
(b)
The day on which the Closing actually takes place is herein sometimes referred
to as the Closing Date.

 
6.
Audited Financial Statements.  Sellers have delivered to Buyer copies of audited
financial statements of the Company for the years ended December 31, 2006, 2005,
2004 and 2003 (the “Audited Financial Statements”) prepared by the Company’s
certified public accountant.  Sellers have delivered to Buyer copies of interim
unaudited financial statements for the fiscal quarters ended March 31, 2006,
June 30, 2006, and September 30, 2006 (the “Interim 2006 Statements”) and for
the fiscal quarters ended March 31, 2007 and June 30, 2007 (the “Interim 2007
Statements”).  Ninety days (90) subsequent to the Closing, Sellers shall deliver
to Buyer a copy of an interim unaudited financial statement for the fiscal
period ending on the Closing Date.  Additionally, the Sellers have provided
similar interim statements for 2003, 2004 and 2005.  The term “Balance Sheet”
means the unaudited balance sheet dated as of June 30, 2007 that is included in
the Interim 2007 Statements.  The Audited Financial Statements and the Interim
2007 Statements shall be complete and correct, shall have been prepared from the
books and records of the Company in accordance with generally accepted
accounting principles consistently applied and maintained throughout the periods
indicated and shall fairly present the financial condition of the Company as at
their respective dates and the results of its operations for the periods covered
thereby, subject to normal year-end adjustments and accruals.

 
7.
Other Transactions at Closing; Further Assurances.

 
(a)
At the Closing, the Sellers will deliver to Buyer:

 
 
(A)
the Conveyance Documents;

 
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(B)
a certificate executed by each of the Sellers to the effect that the conditions
set forth in Section 12  have been satisfied;

 
 
(C)
possession of all originals and copies of agreements, instruments, documents,
deeds, books, records, files and other data and information included within the
Assets;.

 
 
(D)
Releases of all Liens on any of the Assets other than for Liens relating to each
of the Auto and Truck Leases and Auto and Truck Loans assumed by Buyer;

 
 
(E)
copies of the certificate of incorporation of each of the Sellers certified as
of a date within 10 days of the Closing Date by the Secretary of State of the
State of  Massachusetts;

 
 
(F)
a certificate from the Secretary of State of the State of  Massachusetts as to
the good standing of each of the Sellers as of a date within 10 days of the
Closing Date;

 
 
(G)
[Intentionally Deleted];

 
 
(H)
copies of the bylaws of each of the Sellers, certified by its Secretary as a
true and correct copy thereof as of the Closing Date;

 
 
(I)
all consents from shareholders, lenders and other third parties as are required
to consummate the sale of the Assets, except that it is expressly understood by
the parties that consents for the Kohler Distribution Agreement may not be
obtained, notwithstanding Sellers’ best efforts to obtain such consents;

 
 
(J)
all consents from shareholders, lenders and other third parties as are required
to enter into the leases of the Owned Real Estate;

 
 
(K)
all consents from shareholders, lenders and other third parties as are required
to execute the Owned Real Estate Leases, and,

 
 
(L)
With respect to the Owned Real Estate Leases, the execution and delivery of  a
landlord’s agreement by each landlord  in substantially the same form attached
as Exhibit (7)(a)(L) (the “Landlord’s Agreement”), as well as all consents from
shareholders, lenders, and other third parties as are required for the Buyer to
acquire Seller’s rights under the Real Estate Lease;

 
 
(M)
all consents from shareholders, lenders and other third parties as are required
to consummate the assignment of all contracts, , except that it is expressly
understood by the parties that consents for the Kohler Distribution Agreement
may not be obtained, notwithstanding Sellers’ best efforts to obtain such
consents;

 
 
(N)
a copy of the resolutions of the Board of Directors of each of the
Sellers,  together with any and all required resolutions or consents of the
shareholders thereof, approving the execution and delivery of this Agreement and
the consummation of all of the transactions contemplated hereby, duly certified
by an officer of each of the Sellers; and

 
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(O)
all documents required to be delivered to Buyer under the provisions of this
Agreement or as may reasonably by requested by Buyer and its counsel.

 
(b)
On the Closing Date, Buyer shall deliver or cause to be delivered to the
Company, and the Company shall receive on behalf of the Sellers, the following:

 
 
(A)
payment of the Estimated Purchase Price in accordance with Section 2(c);

 
 
(B)
a copy of the resolutions of the Board of Directors of Buyer,  together with any
and all required resolutions or consents of the shareholders thereof, approving
the execution and delivery of this Agreement and the consummation of all of the
transactions contemplated hereby, duly certified by an officer of Buyer;

 
 
(C)
a copy of the resolutions of the Board of Directors of Colonial approving
Colonial’s obligations set forth in Section 2(e), duly certified by an officer
of Colonial.

 
 
(D)
a certificate executed by an authorized officer of the Buyer, on behalf of the
Buyer, to the effect that the conditions set forth in Section 12(a)(B) have been
satisfied;

 
 
(E)
such other documents as may be required pursuant to this Agreement or as may
reasonably be requested by the Company and their counsel.

 
(c)
At the Closing:

 
 
(A)
Buyer and Brian shall execute and deliver an employment agreement in the form of
Exhibit 7(c)(A);

 
 
(B)
Buyer and Adam shall execute and deliver an employment agreement in the form of
Exhibit 7(c)(B);

 
 
(C)
Sellers shall deliver executed lease agreements and Landlord’s Agreements and
the landlord under the Real Estate Lease shall have consented to the Buyer’s
occupancy of the premises in the same manner as held by Sellers;

 
 
(D)
Buyer and Nancy shall execute and deliver a consulting agreement in the form of
Exhibit 7(c)(D).

 
8.
The Sellers and the Majority Shareholders hereby jointly and severally represent
and warrant to Buyer (i.e. the liability of Sellers and the Majority
Shareholders for the breach of any representation or warranty is joint and
several, in the sense that Buyer may proceed against any one or more Sellers and
Majority Shareholders for all or any part of such liability) and the Minority
Shareholders hereby severally represent and warrant (i.e. the liability of the
Minority Shareholders is several, in the sense that Buyer can proceed against
any Minority Shareholder for only that portion of the total liability for such
breach that is proportional to his pro rata ownership interest in the
Company)  to Buyer that:

 
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(a)
Corporate Existence, etc.  Each Seller is a corporation duly organized, validly
existing and in good standing under the laws of Massachusetts; it has all
requisite corporate power and authority and is entitled to carry on its business
as now being conducted and to own, lease or operate its properties as and in the
places where such business is now conducted and such properties are now owned,
leased or operated; and it is duly qualified, licensed or domesticated and in
good standing as a foreign corporation authorized to do business in the states
listed on Schedule 8‎(a), which are the only states where the nature of the
activities conducted by it or the character of the properties owned, leased or
operated by it require such qualification, licensing or domestication.  Each
Seller has delivered to Buyer true and complete copies of its certificate of
incorporation and all amendments thereto, certified by the Secretary of State of
the State of Massachusetts, and the by laws of each Seller as presently in
effect, certified as true and correct by its Secretary.

 
(b)
Authority, Approval and Enforceability.  This Agreement has been duly executed
and delivered by each Seller and each Shareholder, and the Sellers and the
Shareholders have all requisite power and legal capacity to execute and deliver
this Agreement and all Collateral Agreements executed and delivered or to be
executed and delivered in connection with the transactions provided for hereby,
to consummate the transactions contemplated hereby and by the Collateral
Agreements, and to perform its obligations hereunder and under the Collateral
Agreements.  This Agreement and each Collateral Agreement to which each Seller
and each Shareholder are a party constitutes, or upon execution and delivery
will constitute, the legal, valid and binding obligation of such party,
enforceable in accordance with its terms, except as such enforcement may be
limited by general equitable principles or by applicable bankruptcy, insolvency,
moratorium, or similar laws and judicial decisions from time to time in effect
which affect creditors’ rights generally.

 
(c)
Capitalization and Corporate Records.

 
 
(A)
All issued and outstanding shares of the Sellers’ capital stock are owned
beneficially and of record by the Shareholders.

 
 
(B)
The copies of the Certificate of Incorporation and Bylaws of each Seller
provided to Buyer are true, accurate, and complete and reflect all amendments
made through the date of this Agreement.

 
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(d)
Taxes.  All taxes, including, without limitation, income, property, sales, use,
franchise, added value, employees' income withholding and social security taxes,
imposed by the United States or by any foreign country or by any state,
municipality, subdivision or instrumentality of the United States or of any
foreign country, or by any other taxing authority, which are due or payable by
the Sellers and the Shareholders, and all interest and penalties thereon,
whether disputed or not, have been paid in full, all tax returns required to be
filed in connection therewith have been accurately prepared and duly and timely
filed and all deposits required by law to be made by the Sellers with respect to
employees' withholding taxes have been duly made.  The Sellers and the
Shareholders have not been delinquent in the payment of any foreign or domestic
tax, assessment or governmental charge or deposit and have no tax deficiency or
claim outstanding, proposed or assessed against it, and there is no basis for
any such deficiency or claim.  The Sellers’ federal income tax returns have
never been audited by the Internal Revenue Service for all of its fiscal years
through the year ended 2006, there is not now in force any extension of time
with respect to the date on which any tax return was or is due to be filed by or
with respect to the Sellers, or any waiver or agreement by it for the extension
of time for the assessment of any tax. Sellers can receive upon request from the
Massachusetts Department of Revenue a certificate that certifies the good
standing of, and the payment of taxes by, each of the Sellers as of the date of
the signing of the Agreement.

 
(e)
Bulk Sales Tax.  There are no bulk sales taxes due under this Agreement.

 
(f)
The Sellers’ capital stock issued and outstanding as of the date hereof shall
constitute all of the outstanding shares of capital stock of Sellers as of the
Closing Date.  The Shareholders are the sole shareholders of the Sellers as of
the date hereof and shall be the sole shareholders of the Sellers at the Closing
Date. Other than the Sellers’ capital stock owned by the Shareholders, the
Sellers have not issued any other capital stock or other security instruments
and are not committed or obligated to do so in the future. There are no
outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities or other agreements or arrangements of any
character or nature whatever under which the Sellers, or the Shareholders, are
or may become obligated to issue, assign or transfer, and there are no rights of
first refusal, preemptive rights or similar rights with respect to any such
shares.

 
(g)
Primary Beneficiary.  Nancy is the primary beneficiary of the Trust.

 
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(h)
No Shareholders Defaults or Consents.  The execution and delivery of this
Agreement and the Collateral Agreements by the Shareholders and the performance
by each of the Shareholders of its respective obligations hereunder and
thereunder will not violate or conflict with any provision of law or any
judgment, award or decree or any indenture, agreement or other instrument to
which such Shareholder is a party, or by which the properties or assets of such
Shareholder is bound or affected, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under, any such
indenture, agreement or other instrument, in each case except to the extent that
such violation, default or breach could not reasonably be expected to delay or
otherwise significantly impair the ability of the parties to consummate the
transactions contemplated hereby.

 
(i)
No Company Defaults or Consents

 
 
(A)
Neither the execution and delivery of this Agreement nor the carrying out of any
of the transactions contemplated hereby will:

 
 
(1)
violate or conflict with any of the terms, conditions or provisions of each of
the Sellers’ Certificate of Incorporation or  bylaws ;

 
 
(2)
violate any Legal Requirements applicable to either the Sellers or the
Shareholders;

 
 
(3)
violate, conflict with, result in a breach of, constitute a default under
(whether with or without notice or the lapse of time or both), or accelerate or
permit the acceleration of the performance required by, or give any other party
the right to terminate, any Contract or Permit binding upon or applicable to
either the Sellers or the Shareholders;

 
 
(4)
result in the creation of any lien, charge or other encumbrance on any
Properties of the Sellers; or

 
 
(5)
require the Shareholders or the Sellers to obtain or make any waiver, consent,
action, approval or authorization of, or registration, declaration, notice or
filing with, any private non-governmental third party or any Governmental
Authority.

 
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(j)
No Proceedings.  No suit, action or other proceeding is pending or, to the
Knowledge (as defined below) of the Sellers and Shareholders, threatened before
any Governmental Authority seeking to restrain the either the Sellers or the
Shareholders or prohibit their entry into this Agreement or prohibit the
Closing, or seeking damages against either the Sellers or the Shareholders or
the Properties as a result of the consummation of this Agreement. The term
“Knowledge” shall mean, for purposes of this Agreement, the actual knowledge of
either the Sellers or the Shareholders, or any of the other directors, officers
or managerial personnel of the Sellers with respect to the matter in question,
and such knowledge as Shareholders and Sellers or any of the other directors,
officers or managerial personnel of the Sellers reasonably should have obtained
(i) in the performance of their duties to the Sellers and/or (ii) upon diligent
investigation and inquiry into the matter in question.

 
(k)
Employee Benefit Matters

 
 
(A)
Schedule 8(k)(A) provides a description of each of the following, if any, which
is sponsored, maintained or contributed to by the Sellers for the benefit of the
employees or agents of the Sellers which has been so sponsored, maintained or
contributed to at any time during the Sellers’ existence or with respect to
which each of the Sellers has or may have any actual or contingent liability:

 
 
(1)
each “employee benefit plan,” as such term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 (“ERISA”) (including, but not
limited to, employee benefit plans, such as foreign plans, which are not subject
to the provisions of ERISA) (“Plans”); and,

 
 
(2)
each personnel policy, employee manual or other written statements of rules or
policies concerning employment, stock option plan, collective bargaining
agreement, bonus plan or arrangement, incentive award plan or arrangement,
vacation and sick leave policy, severance pay policy or agreement, deferred
compensation agreement or arrangement, consulting agreement, employment contract
and each other employee benefit plan, agreement, arrangement, program, practice
or understanding which is not described in Section 8(k)(A)(1) (“Benefit Program
or Agreement”).

 
 
(B)
True, correct and complete copies of each of the Plans (if any), and related
trusts, if applicable, including all amendments thereto, have been furnished to
Buyer.  There has also been furnished to Buyer, with respect to each Plan
required to file such report and description, the three most recent reports on
Form 5500 and the summary plan description.  True, correct and complete copies
or descriptions of all Benefit Programs or Agreements have also been furnished
to Buyer.

 
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(C)
Except as otherwise set forth in Schedule 8(k)(C),

 
 
(1)
Each Seller does not contribute to or have an obligation to contribute to, and
each Seller has not at any time contributed to or had an obligation to
contribute to, and each Seller does not have any actual or contingent liability
under, a multiemployer plan within the meaning of Section 3(37) of ERISA
(“Multiemployer Plan”) or a multiple employer plan within the meaning of Section
413(b) and (c) of the Code.

 
 
(2)
Each Seller has substantially performed all obligations, whether arising by
operation of law or by contract, required to be performed by it in connection
with the Plans and the Benefit Programs and Agreements, and to the Knowledge of
each Seller, there have been no defaults or violations by any other party to the
Plans or Benefit Programs or Agreements;

 
 
(3)
All reports and disclosures relating to the Plans required to be filed with or
furnished to governmental agencies, Plan participants or Plan beneficiaries have
been filed or furnished in accordance with applicable law in a timely manner,
and each Plan and each Benefit Program or Agreement has been administered in
substantial compliance with its governing documents;

 
 
(4)
Each of the Plans intended to be qualified under Section 401 of the Code
satisfies the requirements of such Section and has received a favorable
determination letter from the Internal Revenue Service regarding such qualified
status and has not, since receipt of the most recent favorable determination
letter, been amended or operated in a way which could adversely affect such
qualified status;

 
 
(5)
There are no actions, suits or claims pending (other than routine claims for
benefits) or, to the Knowledge of each Seller, threatened against, or with
respect to, any of the Plans or Benefit Programs or Agreements or their assets;

 
 
(6)
All contributions required to be made to the Plans pursuant to their terms and
provisions and applicable law have been made timely;

 
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(7)
As to any Plan subject to Title IV of ERISA, there has been no event or
condition which presents the material risk of Plan termination, no accumulated
funding deficiency, whether or not waived, within the meaning of Section 302 of
ERISA or Section 412 of the Code has been incurred, no reportable event within
the meaning of Section 4043 of ERISA (for which the disclosure requirements of
Regulation Section 2615.3 promulgated by the Pension Benefit Guaranty
Corporation (“PBGC”) have not been waived) has occurred, no notice of intent to
terminate the Plan has been given under Section 4041 of ERISA, no proceeding has
been instituted under Section 4042 of ERISA to terminate the Plan, there has
been no termination or partial termination of the Plan within the meaning of
Section 411(d)(3) of the Code, no liability to the PBGC has been incurred, and
the assets of the Plan equal or exceed the aggregate present value of the
benefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under
the Plan, computed on a “plan termination basis” based upon reasonable actuarial
assumptions and the asset valuation principles established by the PBGC;

 
 
(8)
None of the Plans nor any trust created thereunder or with respect thereto has
engaged in any “prohibited transaction” or “party-in-interest transaction” as
such terms are defined in Section 4975 of the Code and Section 406 of ERISA
which could subject any Plan, each Seller or any officer, director or employee
to a tax or penalty on prohibited transactions or party-in-interest transactions
pursuant to Section 4975 of the Code or Section 502(i) of ERISA;

 
 
(9)
To the Knowledge of each Seller, there is no matter pending (other than routine
qualification determination filings) with respect to any of the Plans or Benefit
Programs or Agreements before the Internal Revenue Service, the Department of
Labor or the PBGC;

 
 
(10)
Each trust funding a Plan, which trust is intended to be exempt from federal
income taxation pursuant to Section 501(c)(9) of the Code, satisfies the
requirements of such section and has received a favorable determination letter
from the Internal Revenue Service regarding such exempt status and has not,
since receipt of the most recent favorable determination letter, been amended or
operated in a way which would adversely affect such exempt status.

 
 
(11)
Each Seller has no obligation to provide health benefits or death benefits to
its former employees, except as specifically required by law;

 
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(12)
Neither the execution and delivery of this Agreement nor the consummation of any
or all of the transactions contemplated hereby will: (A) entitle any current or
former employee of any Seller to severance pay, unemployment compensation or any
similar payment, (B) accelerate the time of payment or vesting or increase the
amount of any compensation due to any such employee or former employee, or (C)
directly or indirectly result in any payment made to or on behalf of any person
to constitute a “parachute payment” within the meaning of Section 280G of the
Code;

 
(13)
Each Seller has not incurred any liability or taken any action, and no action or
event has occurred that could cause the Company to incur any liability (A) under
Section 412 of the Code or Title IV of ERISA with respect to any
“single-employer plan” within the meaning of Section 4001(a)(15) of ERISA that
is not a Plan, or (B) to any Multiemployer Plan, including without limitation an
account of a partial or complete withdrawal within the meaning of Sections 4203
and 4205 of ERISA.

 
(14)
Since January 1, 2000, there have not been any (i) work stoppages, labor
disputes or other significant controversies between the Company and any
employee, (ii) labor union grievances or organizational efforts, or (iii) unfair
labor practice or labor arbitration proceedings pending or threatened.

 
 
(D)
Except as set forth in Schedule 8(k)(A), each Seller is not a party to any
agreement, and each has not established any policy or practice, requiring such
Seller to make a payment or provide any other form or compensation or benefit to
any person performing services for such Seller upon termination of such services
which would not be payable or provided in the absence of the consummation of the
transactions contemplated by this Agreement.

 
 
(E)
Schedule 8(k)(E)(i) sets forth by number and employment classification the
approximate numbers of employees employed by each Seller as of the date of this
Agreement, and, except as set forth on Schedule 8(k)(E) (ii), none of said
employees are subject to union or collective bargaining agreements with such
Seller.

 
 
(F)
Neither the Buyer nor any of its Affiliates shall have any liability or
obligations under or with respect to the Workers Adjustment Retraining
Notification Act in connection with any of the transactions contemplated in
connection herewith.

 
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(l)
Financial Statements; Liabilities; Accounts Receivable; Inventories

 
 
(A)
The Audited Financial Statements and the Interim 2007 Statements that the
Sellers and the Shareholders provided in accordance with Section 6 shall be
complete and correct, shall have been prepared from the books and records of the
Company in accordance with generally accepted accounting principles consistently
applied and maintained throughout the periods indicated and shall fairly present
the financial condition of the Company as at their respective dates and the
results of its operations for the periods covered thereby, subject to normal
year-end adjustments and accruals.

 
 
(B)
Except for (i) the liabilities reflected on the Company’s June 30, 2007 balance
sheet included with the Interim 2007 Statements attached as Schedule 8(l)(B)(a),
(ii) trade payables and accrued expenses incurred since June 30, 2007 in the
ordinary course of business, none of which are material, and (iii) executory
contract obligations under (x) Contracts listed on Schedule 8(s), and/or (y)
Contracts not required to be listed on Schedule 8(s), the Sellers have no
liabilities or obligations (whether accrued, absolute, contingent, known,
unknown or otherwise, and whether or not of a nature required to be reflected or
reserved against in a balance sheet in accordance with GAAP).

 
 
(C)
The accounts receivable reflected on the June 30, 2007 balance sheets and all of
the Trade Receivables arising since June 30, 2007 (the “Balance Sheet Date”)
arose from bona fide transactions in the ordinary course of business, and the
goods and services involved have been sold, delivered and performed to the
account obligors, and no further filings (with Governmental Authorities,
insurers or others) are required to be made, no further goods are required to be
provided and no further services are required to be rendered in order to
complete the sales and fully render the services and to entitle the Company to
collect the accounts receivable in full.  No such accounts receivable has been
assigned or pledged to any other person, firm or corporation, and, except only
to the extent fully reserved against as set forth in the June 30, 2007 balance
sheets, no defense or set-off to any such account has been asserted by the
account obligor or exists.

 
 
(D)
The Merchandise Inventory as of the Closing Date shall consist of items of a
quality, condition and quantity consistent with normal seasonally-adjusted
Inventory levels of the Company and be usable and saleable in the ordinary and
usual course of business for the purposes for which intended.  The Merchandise
Inventory is valued on the Company’s books of account in accordance with GAAP at
the Company’s average cost.

 
(m)
Sellers (i) have and will have as of the Closing Date legal and beneficial
ownership of the Properties and the Owned Real Estate; and (ii) have not, and
are not in default in performance of any covenant, agreement, term, provision or
condition contained in the Real Estate Lease.

 
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(n)
Absence of Certain Changes

 
 
(A)
Except as otherwise set forth in Schedule 8(n)(A) attached hereto, since the
Balance Sheet Date, there has not been:

 
 
(1)
any event, circumstance or change that had or might have a material adverse
effect on the business, operations, prospects, Properties, financial condition
or working capital of the Sellers;

 
 
(2)
any damage, destruction or loss (whether or not covered by insurance) that had
or might have a material adverse effect on the business, operations, prospects,
Properties or financial condition of the Sellers; or

 
 
(3)
any material adverse change in the Sellers’ vendor or supplier relations or
in  Sellers’ sales patterns, pricing policies, accounts receivable or accounts
payable.

 
 
(B)
Except as otherwise set forth in Schedule 8(n)(B) attached hereto, since the
Balance Sheet Date, each Seller has not done any of the following:

 
 
(1)
merged into or with or consolidated with, any other corporation or acquired the
business or assets of any Person;

 
 
(2)
purchased any securities of any Person;

 
 
(3)
created, incurred, assumed, guaranteed or otherwise become liable or obligated
with respect to any indebtedness, or made any loan or advance to, or any
investment in, any person, except in each case in the ordinary course of
business and as set forth on Schedule 8(n)(B)(3);

 
 
(4)
made any change in any existing election, or made any new election, with respect
to any tax law in any jurisdiction which election could have an effect on the
tax treatment of the Seller or the Seller’s business operations;

 
 
(5)
entered into, amended or terminated, or waived any of the Company’s rights
under, any agreement specified in Schedule 8(s);

 
(6)
sold, transferred, leased, mortgaged, encumbered or otherwise disposed of, or
agreed to sell, transfer, lease, mortgage, encumber or otherwise dispose of, any
Properties except (i) in the ordinary course of business and as set forth on
Schedule 8(n)(B)(6), or (ii) pursuant to any agreement specified in Schedule
8(s);

 
 
(7)
settled any claim or litigation, or filed any motions, orders, briefs or
settlement agreements in any proceeding before any Governmental Authority or any
arbitrator;

 
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(8)
incurred, approved or entered into any agreement or commitment to make, any
individual or a group of individually-related expenditures in excess of $25,000
(other than those required pursuant to any agreement specified in Schedule
8(s));

 
 
(9)
maintained its books of account other than in the usual, regular and ordinary
manner in accordance with generally accepted accounting principles and on a
basis consistent with prior periods or made any change in any of its accounting
methods or practices that would be required to be disclosed under GAAP;

 
 
(10)
adopted any Plan or Benefit Program or Agreement, or granted any increase in the
compensation payable or to become payable to directors, officers or employees
(including, without limitation, any such increase pursuant to any bonus,
profit-sharing or other plan or commitment), other than merit increases to
non-officer employees in the ordinary course of business and consistent with
past practice;

 
 
(11)
suffered any extraordinary losses or waived any rights of material value;

 
 
(12)
made any payment to any Affiliate or forgiven any indebtedness due or owing from
any Affiliate to the Company;

 
 
(13)
(A) liquidated Inventory or accepted product returns other than in the ordinary
course, (B) accelerated receivables, (C) delayed payables, or (D) changed in any
material respect the Company’s practices in connection with the payment of
payables or the collection of receivables;

 
 
(14)
engaged in any one or more activities or transactions with an Affiliate or
outside the ordinary course of business;

 
 
(15)
declared, set aside or paid any dividends, or made any distributions or other
payments in respect of its equity securities, or repurchased, redeemed or
otherwise acquired any such securities;

 
 
(16)
amended its Certificate of Incorporation or bylaws; or

 
 
(17)
committed to do any of the foregoing.

 
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(o)
Compliance with Laws

 
 
(A)
Except as otherwise set forth in Schedule 8(o), each Seller is and has been in
compliance in all respects with any and all Legal Requirements applicable to
such Seller, other than failures to so comply that would not have an adverse
effect on the business, operations, prospects, Properties or financial condition
of such Seller.  Except as otherwise set forth in Schedule 8(o), each Seller (i)
has not received or entered into any citations, complaints, consent orders,
compliance schedules, or other similar enforcement orders or received any
written notice from any Governmental Authority or any other written notice that
would indicate that there is not currently compliance with all such Legal
Requirements, except for failures to so comply that would not have an adverse
effect on the business, operations, prospects, Properties or financial condition
of such Seller, and (ii) is not in default under, and no condition exists
(whether covered by insurance or not) that with or without notice or lapse of
time or both would constitute a default under, or breach or violation of, any
Legal Requirement or Permit applicable to such Seller.

 
 
(B)
Without limiting the generality of Section 8(o), each Seller has not received
notice of and there is no basis for, any claim, action, suit, investigation or
proceeding that might result in a finding that such Seller is not or has not
been in compliance with Legal Requirements relating to (a) the development,
testing, manufacture, packaging, distribution and marketing of products, (b)
employment, safety and health, (c) environmental protection, building, zoning
and land use and/or (d) the Foreign Corrupt Practices Act and the rules and
regulations promulgated thereunder.

 
(p)
Litigation

 
 
(A)
Except as otherwise set forth in Schedule 8(p), there are no claims, actions,
suits, investigations or proceedings against each Seller pending or, to the
Knowledge of such Seller or any Shareholder, threatened in any court or before
or by any Governmental Authority, or before any arbitrator, that might have an
adverse effect (whether covered by insurance or not) on the business,
operations, prospects, Properties or financial condition of such Seller or on
their ability to consummate the transactions contemplated hereby, and there is
no basis for any such claim, action, suit, investigation or
proceeding.  Schedule 8(p) also includes a true and correct listing of all
material actions, suits, investigations, claims or proceedings that were
pending, settled or adjudicated since January 1, 2002.

 
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(q)
Special Provisions Regarding Asbestos Claims

 
 
(A)
The Sellers and the Majority Shareholders hereby jointly and severally represent
and warrant to Buyer (i.e. the liability of Sellers and the Majority
Shareholders for the breach of any representation or warranty is joint and
several, in the sense that Buyer may proceed against any one or more Sellers and
Majority Shareholders for all or any part of such liability) and the Minority
Shareholders hereby severally represent and warrant (i.e. the liability of the
Minority Shareholders is several, in the sense that Buyer can proceed against
any Minority Shareholder for only that portion of the total liability for such
breach that is proportional to his pro rata ownership interest in the
Company)  to Buyer that:

 
 
(1)

 
 
(a)
Each Seller has not, since the time any Shareholder purchased equity in, or was
an Affiliate with, any one of the Sellers in April 16, 1993, sold any asbestos
or asbestos containing products and is not a defendant in any lawsuit related to
same.

 
 
(b)
To its Knowledge, each Seller has not prior to April 16, 1993 sold any asbestos
or asbestos containing products and is not a defendant in any lawsuit related to
same.

 
 
(2)
Other than as set forth in Schedule 8(q)(2), each Seller has maintained asbestos
related insurance since the time such Seller was incorporated and that there are
no gaps of coverage for asbestos related insurance.

 
 
(B)
Sellers and Majority Shareholders shall jointly and severally fully indemnify,
protect, reimburse, and hold harmless Buyer from and against any and all
damages, liabilities and claims for personal injury due to, or alleged to be due
to, exposure to asbestos in connection with Sellers’ business, operations or
premises at any time prior to the Closing (an "asbestos claim").

 
 
(C)
In any such action or proceeding, Buyer shall have the right to retain its own
counsel; but the fees and expenses of such counsel shall be at its own expense
unless (i) the Indemnifying Party and Buyer shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any suit, action or
proceeding (including any impleaded parties) include both the Indemnifying Party
and the Buyer and representation of all parties by the same counsel would be
inappropriate due to actual or potential conflict of interests between them.

 
 
(D)
An Indemnifying Party shall not be liable under this Agreement for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought hereunder.

 
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(E)
The Indemnifying Party may settle any claim without the consent of Buyer, but
only if the sole relief awarded is monetary damages that are paid in full by the
Indemnifying Party. Buyer shall, subject to its reasonable business needs, use
reasonable efforts to minimize the indemnification sought from the Indemnifying
Party under this Agreement.

 
 
(F)
If an asbestos claim is made against Buyer, Buyer shall, within ten days after
receiving written notice of such claim, give notice to the Company in the manner
provided elsewhere in this Agreement for notices hereunder.

 
 
(G)
If Sellers assume the defense of an asbestos claim at its own expense, then (x)
it shall within 20 days inform Buyer of such assumption in writing, and (y)
notwithstanding any contrary provision in this Section, Seller shall not incur
any expense for Buyer’s counsel.

 
(r)
Real Property

 
 
(A)
Schedule 8(r)(A) sets forth a list of all real property or any interest therein
(including without limitation any option or other right or obligation to
purchase any real property or any interest therein) currently owned, or ever
owned, by each Seller, in each case setting forth the street address and legal
description of each property covered thereby (the "Owned Premises”)

 
 
(B)
Schedule 8(r)(B) sets forth a list of all leases, licenses or similar agreements
relating to the Sellers’ use or occupancy of real estate owned by a third party
(“Leases”), true and correct copies of which have previously been furnished to
Buyer, in each case setting forth (i) the lessor and lessee thereof and the
commencement date, term and renewal rights under each of the Leases, and (ii)
the street address and legal description of each property covered thereby (the
“Leased Premises”).  The Leases and all guaranties with respect thereto, are in
full force and effect and have not been amended in writing or otherwise, and no
party thereto is in default or breach under any such Lease.  No event has
occurred which, with the passage of time or the giving of notice or both, would
cause a material breach of or default under any of such Leases.  Neither the
Sellers nor its agents or employees have received written notice of any claimed
abatements, offsets, defenses or other bases for relief or adjustment.

 
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(C)
With respect to each Owned Premises and Leased Premises, as applicable:  (i) the
Sellers have good, marketable and insurable fee simple interest in the Owned
Premises and a valid leasehold interest pursuant to a verbal month-to-month
lease, such lease terminable by either party upon 90 days prior termination
notice, in the Leased Premises, free and clear of any Liens, encumbrances,
covenants and easements or title defects that have had or could have an adverse
effect on the Sellers’ use and occupancy of the Owned Premises and the Leased
Premises; (ii) the portions of the buildings located on the Owned Premises and
the Leased Premises that are used in the business of the Sellers are each in
good repair and condition, normal wear and tear excepted, and are in the
aggregate sufficient to satisfy the Sellers’ current and reasonably anticipated
normal business activities as conducted thereon and, to the Knowledge of each
Seller, there is no latent material defect in the improvements on any Owned
Premises, structural elements thereof, the mechanical systems (including,
without limitation, all heating, ventilating, air conditioning, plumbing,
electrical, utility and sprinkler systems) therein, the utility system servicing
each Owned Premises and the roofs which have not been disclosed to Buyer in
writing prior to the date of this Agreement; and(iii) each Seller has not
received notice of (A) any condemnation, eminent domain or similar proceeding
affecting any portion of the Owned Premises or the Leased Premises or any access
thereto, and, to the Knowledge of each Seller, no such proceedings are
contemplated, (B) any special assessment or pending improvement liens to be made
by any governmental authority which may affect any of the Owned Premises or the
Leased Premises, or (C) any violations of building codes and/or zoning
ordinances or other governmental regulations with respect to the Owned Premises
or the Leased Premises.

 
(s)
Commitments

 
 
(A)
Except as otherwise set forth in Schedule 8(s), each Seller is not a party to or
bound by any of the following, whether written or oral:

 
 
(1)
any Contract that cannot by its terms be terminated by such Seller with 30 days’
or less notice without penalty or whose term continues beyond one year after the
date of this Agreement;

 
 
(2)
contract or commitment for capital expenditures by such Seller in excess of
$25,000 per calendar quarter in the aggregate;

 
 
(3)
lease or license with respect to any Properties, real or personal, whether as
landlord, tenant, licensor or licensee;

 
 
(4)
agreement, contract, indenture or other instrument relating to the borrowing of
money or the guarantee of any obligation or the deferred payment of the purchase
price of any Properties;

 
 
(5)
partnership agreement, joint venture agreement or limited liability company
operating agreement;

 
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(6)
contract with any Affiliate of such Seller (including the Shareholders) relating
to the provision of goods or services by or to such Seller;

 
 
(7)
agreement for the sale of any assets that in the aggregate have a net book value
on the such Seller’s books of greater than $5,000;

 
 
(8)
agreement that purports to limit such Seller’s freedom to compete freely in any
line of business or in any geographic area;

 
 
(9)
preferential purchase right, right of first refusal, or similar agreement; or

 
 
(10)
other Contract that is material to the business of such Seller.

 
 
(B)
All of the Contracts listed or required to be listed in Schedule 8(s) are valid,
binding and in full force and effect, and the Sellers have not been notified or
advised by any party thereto of such party’s intention or desire to terminate or
modify any such Contract in any respect, except as disclosed in Schedule
8(s).  Neither the Sellers nor, to the Knowledge of each Seller, any other party
is in breach of any of the terms or covenants of any Contract listed or required
to be listed in Schedule 8(s).  Following the Closing, Buyer will continue to be
entitled to all of the benefits currently held by the each Seller under each
Contract listed or required to be listed in Schedule 8(s).

 
 
(C)
Except as otherwise set forth in Schedule 8(s), each Seller is not a party to or
bound by any Contract or Contracts the terms of which were arrived at by or
otherwise reflect less-than-arm’s-length negotiations or bargaining.

 
(t)
Insurance

 
 
(A)
Schedule 8(t) hereto is a complete and correct list of all insurance policies
(including, without limitation, fire, liability, product liability, workers’
compensation and vehicular) presently in effect that relate to each Seller, or
its Properties, including the amounts of such insurance and annual premiums with
respect thereto, all of which have been in full force and effect from and after
the date(s) set forth on Schedule 8(t).

 
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(u)
Intangible Rights

 
 
(A)
Set forth on Schedule 8(u) is a list and description of all material foreign and
domestic patents, patent rights, trademarks, service marks, trade names, brands
and copyrights (whether or not registered and, if applicable, including pending
applications for registration) owned, Used, licensed or controlled by each
Seller and all goodwill associated therewith.  Each Seller owns or has the right
to use and shall as of the Closing Date own or have the right to use any and all
information, know-how, trade secrets, patents, copyrights, trademarks,
tradenames, software, formulae, methods, processes and other intangible
properties that are necessary or customarily Used by such Seller for the
ownership, management or operation of its Properties (“Intangible Rights”)
including, but not limited to, the Intangible Rights listed on Schedule
8(u).  Except as set forth on Schedule 8(u), (i) each Seller is the sole and
exclusive owner of all right, title and interest in and to all of the Intangible
Rights, and has the exclusive right to use and license the same, free and clear
of any claim or conflict with the Intangible Rights of others; (ii) no
royalties, honorariums or fees are payable by Sellers to any person by reason of
the ownership or use of any of the Intangible Rights; (iii) there have been no
claims made against Sellers asserting the invalidity, abuse, misuse, or
unenforceability of any of the Intangible Rights and no grounds for any such
claims exist; (iv) each Seller has not made any claim of any violation or
infringement by others of any of its Intangible Rights or interests therein and,
to the Knowledge of such Seller, no grounds for any such claims exist; (v) each
Seller has not received any notice that it is in conflict with or infringing
upon the asserted intellectual property rights of others in connection with the
Intangible Rights, and neither the use of the Intangible Rights nor the
operation of such Seller’s business is infringing or has infringed upon any
intellectual property rights of others; (vi) no interest in any of the
Intangible Rights has been assigned, transferred, licensed or sublicensed by
Sellers to any person other than the Buyer pursuant to this Agreement; (viii) to
the extent that any item constituting part of the Intangible Rights has been
registered with, filed in or issued by, any Governmental Authority, such
registrations, filings or issuances are listed on Schedule 8(u) and were duly
made and remain in full force and effect; (ix) to the Knowledge of each Seller,
there has not been any act or failure to act by such Seller or any of their
directors, officers, employees, attorneys or agents during the prosecution or
registration of, or any other proceeding relating to, any of the Intangible
Rights or of any other fact which could render invalid or unenforceable, or
negate the right to issuance of any of the Intangible Rights; (x) to the extent
any of the Intangible Rights constitutes proprietary or confidential
information, each Seller has adequately safeguarded such information from
disclosure; and (xi) all of the Sellers’ current Intangible Rights will remain
in full force and effect following the Closing without alteration or impairment.

 
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(v)
Equipment and Other Tangible Property

 
 
(A)
Schedule 8(v) sets forth a true and compete list of the Fixed Assets, and except
as set forth on such Schedule, the Fixed Assets are suitable for the purposes
for which intended and in good operating condition and repair consistent with
normal industry standards, except for ordinary wear and tear.

 
(w)
Permits; Environmental Matters

 
 
(A)
Schedule 8(w)(A) contains a true and complete list of all Permits Used by each
Seller in the conduct of the Business, setting forth the grantor, grantee, the
function and the expiration and renewal date of each.  Prior to the execution of
this Agreement, each Seller has delivered to the Buyer true and complete copies
of all such Permits.  Except as otherwise set forth in Schedule 8(w)(A), each
Seller has all Permits necessary for such Seller to own, operate, use and
maintain its Properties and to conduct its business and operations as presently
conducted and as expected to be conducted in the future.  Except as otherwise
set forth in Schedule 8(w)(A), all such Permits are in effect, no proceeding is
pending or, to the Knowledge of either the Sellers or the Shareholders,
threatened to modify, suspend or revoke, withdraw, terminate, or otherwise limit
any such Permits, and no administrative or governmental actions have been taken
or, to the Knowledge of either each Seller or each Shareholder, threatened in
connection with the expiration or renewal of such Permits which could adversely
affect the ability of such Seller to own, operate, use or maintain any of its
Properties or to conduct its business and operations as presently conducted and
as expected to be conducted in the future.  Except as otherwise set forth in
Schedule 8(w)(A), (i) no violations have occurred that remain uncured, unwaived,
or otherwise unresolved, or are occurring in respect of any such Permits, other
than inconsequential violations, and (ii) no circumstances exist that would
prevent or delay the obtaining of any requisite consent, approval, waiver or
other authorization of the transactions contemplated hereby with respect to such
Permits that by their terms or under applicable law may be obtained only after
Closing.  Except as otherwise set forth on Schedule 8(w)(A), the execution,
delivery and performance by the Sellers and Buyer of this Agreement and the
consummation of the transactions contemplated hereby shall not (A) result in or
give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, (B) result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments under, or (C) result in the creation or imposition of any
Lien upon each of the Sellers or any of its assets under any Permits.

 
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(B)
Except as set forth on Schedule 8(w)(B), (i) each Seller has at all times been
and is currently in compliance with all applicable Environmental Laws, including
obtaining and maintaining in effect all Permits required by applicable
Environmental Laws, and (ii), there are no claims, liabilities, investigations,
litigation, administrative proceedings, whether pending or, to the Knowledge of
either the Sellers or the Shareholders, threatened, or judgments or orders
relating to any Hazardous Materials (collectively called “Environmental Claims”)
asserted or threatened against any Seller or relating to any real property
currently or formerly owned, leased or otherwise Used by any Seller.  Neither
the Sellers nor, to the Knowledge of either Sellers or the Shareholders, any
prior owner, lessee or operator of said real property, has caused or permitted
any Hazardous Material to be used, generated, reclaimed, transported, released,
treated, stored or disposed of in a manner which could form the basis for an
Environmental Claim against such Sellers or the Buyer.  Except as set forth on
Schedule 8(w)(B), each Seller has not assumed any liability of any Person for
cleanup, compliance or required capital expenditures in connection with any
Environmental Claim.

 
 
(C)
Except as set forth in Schedule 8(w)(C), to the Knowledge of either the Sellers
or the Shareholders, the Owned Premises and the  Leased Premises, or, to the
Knowledge of either the Sellers or the Shareholders, on adjacent parcels of real
property, do not presently contain and never have contained and are presently
free from all chemical substances or pollutants known to be hazardous wastes,
hazardous substances, hazardous constituents, toxic substances or related
materials, whether solid, liquid or gaseous, including but not limited to
asbestos, radioactive materials, oil, gasoline, diesel fuel and other
hydrocarbons, and any other substances defined as "hazardous wastes", "hazardous
substances", "toxic substances", "pollutants", "contaminants", or other similar
designations, or any other material, the removal, storage or presence of which
is regulated or required and/or the maintenance of which is regulated or
penalized by Massachusetts General Laws Chapter 21E; The Massachusetts
Contingency Plan, 310 CMR 40.00 et seq.; the Resources Conservation Recovery
Act, 42 U.S.C. 6901, et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq.; the Toxic Substances
Control Act, 15 U.S.C. 2601, et seq.; the Clean Water Act, 33 U.S.C. 1251, et
seq.; the Safe Drinking Water Act, 42 U.S.C. 300(f)-300(j) – 10; the Clean Air
Act, 42 U.S.C. 7401, et seq.; and rules adopted under such statutes, as well as
any permits or licenses issued under such statutes and rules or any other local,
state or federal agency, authority or governmental unit (collectively,
"Hazardous Substances"). Sellers shall deliver to Buyer within ten days of the
execution of this Agreement by all parties copies of any and all reports or
other data in Sellers’ possession or reasonably accessible to Sellers with
respect to any of the matters referred to herein.

 
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(D)
To the best Knowledge of either the Sellers or the Shareholders, the Owned
Premises and the Leased Premises, and to the knowledge of the Sellers or the
Shareholders without having made inquiry, any adjacent parcels of real property,
do not presently contain and never have contained and are presently free from
any underground tanks or pipes ancillary to underground or above-ground tanks
(collectively “Tanks”) except as disclosed on Schedule 8(w)(D).  To the extend
there are any Tanks disclosed on Schedule 8(w)(D), such Tanks shall have been
properly removed or shall have been legally and property de-commissioned and
abandoned and Seller and Shareholders shall provide written verification of such
proper removal or de-commissioning and abandonment within 10 days of the
execution of this Agreement. Neither Seller, nor to the best Knowledge of either
the Sellers or the Shareholders, any third party has engaged in the generation,
use, manufacture, treatment, storage or disposal of any hazardous substance on
the land in violation of any applicable environmental law.

 
 
(E)
To the best Knowledge of either the Sellers or the Shareholders, the Owned
Premises and the Leased Premises are not and never have been listed on the
National Priorities List, the Comprehensive Environmental Response, Compensation
and Liability Information System or any similar federal, state or local list,
schedule, log, inventory or database.

 
(x)
Suppliers and Customers

 
 
(A)
Schedule 8(x) sets forth (i) the 10 principal suppliers of the Sellers
collectively during each of the year ended December 31, 2006, and for the period
from January 1, 2007 through August 31, 2007 and, in the event that the Closing
is subsequent to September 30, 2007, for the period from January 1, 2007
through  September 30, 2007, together with the dollar amount of goods purchased
by the Company from each such supplier during each such period, and (ii) the 10
principal customers of the Company during each of the fiscal years ended
December 31, 2005 and December 31, 2006, together with the dollar amount of
goods and/or services sold by the Company to each such customer during each such
period and for each of the fiscal quarters ended March 31, 2007, June 30, 2007
and, in the event that the Closing is subsequent to September 30, 2007, fiscal
quarter ended September 30, 2007.  Except as otherwise set forth in Schedule
8(x), each Seller maintains good relations with all suppliers and customers
listed or required to be listed in Schedule 8(x) as well as with governments,
partners, financing sources and other parties with whom such Seller has
significant relations, and no such party has canceled, terminated or made any
threat to the such Seller to cancel or otherwise terminate its relationship with
the such Seller or to materially decrease its services or supplies to such
Seller or its direct or indirect purchase or usage of the products of such
Seller.

 
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(y)
Absence of Certain Business Practices

 
 
(A)
Except as set forth on Schedule 8(y), neither the Shareholders, the Sellers, nor
any other Affiliate or agent of the Sellers or the Shareholders, or any other
person acting on behalf of or associated with the Sellers, acting alone or
together, have (a) received, directly or indirectly, any rebates, payments,
commissions, promotional allowances or any other economic benefits, regardless
of their nature or type, from any customer, supplier, employee or agent of any
customer or supplier; or (b) directly or indirectly given or agreed to give any
money, gift or similar benefit to any customer, supplier, employee or agent of
any customer or supplier, any official or employee of any government (domestic
or foreign), or any political party or candidate for office (domestic or
foreign), or other person who was, is or may be in a position to help or hinder
the business of the Sellers (or assist the Sellers in connection with any actual
or proposed transaction), in each case which (i) may subject the Sellers to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, may have had an adverse effect on the
assets, business, operations or prospects of the Sellers, or (iii) if not
continued in the future, may adversely affect the assets, business, operations
or prospects of the Sellers.

 
(z)
Products, Services and Authorizations

 
 
(A)
To the Knowledge of either the Sellers or the Shareholders, each Product
repaired or distributed by each Seller has been designed, manufactured, repaired
or distributed in accordance with (i) the specifications under which the Product
is normally and has normally been manufactured, and (ii) the provisions of all
applicable laws, policies, guidelines and any other governmental requirements.

 
 
(B)
Schedule 8(z)(B) sets forth (i) a list of all Products which at any time have
been recalled, withdrawn or suspended by each Seller, whether voluntarily or
otherwise, including the date recalled, withdrawn or suspended and a brief
description of all completed or pending proceedings seeking the recall,
withdrawal, suspension or seizure of any Product, (ii) a brief description of
all completed or pending proceedings seeking the recall, withdrawal, suspension
or seizure of any Product, and (iii) a list of all regulatory letters received
by each Seller or any of its agents relating to such Seller or any of the
Products.

 
 
(C)
To Sellers’ Knowledge, there exists no set of facts which could reasonably be
expected to furnish a basis for the recall, withdrawal or suspension of any
product registration, product license, repair or overhaul license, manufacturing
license, wholesale dealers license, export or import license or other license,
approval or consent of any governmental or regulatory authority with respect to
each Seller or any of its Products.

 
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(D)
There are no claims existing or to Sellers’ Knowledge threatened under or
pursuant to any warranty, whether express or implied, on products sold by each
Seller.  There are no claims existing and to Sellers’ Knowledge, there is no
basis for any claim against the Sellers for injury to persons, animals or
property as a result of the sale, distribution or manufacture of any product by
the Sellers, including, but not limited to, claims arising out of the defective
or unsafe nature of its products.  Each Seller has full and adequate insurance
coverage for products liability claims against it.

 
 
(E)
Set forth on Schedule 8(z)(E) is a list of all authorizations, consents,
approvals, franchises, licenses and permits required by any Person (other than a
Governmental Authority) for the operation of the business of the Sellers as
presently operated (the “Other Person Authorizations”).  All of the Other Person
Authorizations have been duly issued or obtained and are in full force and
effect, and each Seller is in compliance with the terms of all the Other Person
Authorizations.  Neither the Sellers nor the Shareholders have any knowledge of
any facts which could be expected to cause them to believe that the Other Person
Authorizations will not be renewed by the appropriate Person in the ordinary
course.  Each of the Other Person Authorizations may be assigned and transferred
to the Buyer in accordance with this Agreement and each will continue in full
force and effect thereafter, in each case without (i) the occurrence of any
breach, default or forfeiture of rights thereunder, or (ii) the consent,
approval, or act of, or the making of any filings with, any Person.

 
(aa)
Transactions With Affiliates

 
 
(A)
Except as set forth on Schedule 8(aa) and except for normal advances to
employees consistent with past practices, payment of compensation for employment
to employees consistent with past practices, and participation in scheduled
Plans or Benefit Programs and Agreements by employees, the Sellers have not
purchased, acquired or leased any property or services from, or sold,
transferred or leased any property or services to, or loaned or advanced any
money to, or borrowed any money from, or entered into or been subject to any
management, consulting or similar agreement with, or engaged in any other
significant transaction with any Shareholders or any other officer, director or
Shareholders of the Sellers or any Affiliates.  Except as set forth on Schedule
8(aa), none of the Shareholders nor any other Affiliate of the Sellers is
indebted to the Sellers for money borrowed or other loans or advances, and the
Sellers are not indebted to any such Affiliate.

 
(bb)
Schedule 8 (bb) is a true and complete list of Sellers credit applications and
guarantees provided by Sellers to the Sellers’ vendors.

 
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(cc)
Other Information

 
 
(A)
The information furnished by the Shareholders and the Sellers to Buyer pursuant
to this Agreement (including, without limitation, information contained in the
exhibits hereto, the Schedules identified herein, the instruments referred to in
such Schedules and the certificates and other documents to be executed or
delivered pursuant hereto by the Shareholders and/or the Sellers at or prior to
the Closing) is not, nor at the Closing will be, false or misleading in any
material respect, or contains, or at the Closing will contain, any misstatement
of material fact, or omits, or at the Closing will omit, to state any material
fact required to be stated in order to make the statements therein not
misleading.

 
(dd)
The representations and warranties contained in this Section shall not be
affected or deemed waived by reason of the fact that Buyer and/or its
representatives knew or should have known that any such representation or
warranty is or might be inaccurate in any respect.

 
(ee)
Each Party agrees and acknowledges that the only representations and warranties
that Sellers and Shareholders are making are those that are expressly set forth
in this Agreement.

 
9.
REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and warrants to
the Company that:

 
(a)
Existence and Qualification

 
 
(A)
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York.

 
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(b)
Authority, Approval and Enforceability

 
 
(A)
This Agreement has been duly executed and delivered by Buyer and Buyer has all
requisite company power and legal capacity to execute and deliver this Agreement
and all Collateral Agreements executed and delivered or to be executed and
delivered by Buyer in connection with the transactions provided for hereby, to
consummate the transactions contemplated hereby and by the Collateral
Agreements, and to perform its obligations hereunder and under the Collateral
Agreements.  Upon the approval of this Agreement by the Board of Directors of
Buyer, the execution and delivery of this Agreement and the Collateral
Agreements and the performance of the transactions contemplated hereby and
thereby have been duly and validly authorized and approved by all company action
necessary on behalf of Buyer.  Subject to such Board approval, this Agreement
and each Collateral Agreement to which Buyer is a party constitutes, or upon
execution and delivery will constitute, the legal, valid and binding obligation
of Buyer, enforceable in accordance with its terms, except as such enforcement
may be limited by general equitable principles or by applicable bankruptcy,
insolvency, moratorium, or similar laws and judicial decisions from time to time
in effect which affect creditors’ rights generally.

 
 
(B)
No Default or Consents

 
 
(1)
Neither the execution and delivery of this Agreement nor the carrying out of the
transactions contemplated hereby will:

 
 
(a)
violate or conflict with any of the terms, conditions or provisions of Buyer’s
Certificate of Incorporation or by-laws;

 
 
(b)
violate any Legal Requirements applicable to Buyer;

 
 
(c)
violate, conflict with, result in a breach of, constitute a default under
(whether with or without notice or the lapse of time or both), or accelerate or
permit the acceleration of the performance required by, or give any other party
the right to terminate, any contract or Permit applicable to Buyer;

 
 
(d)
result in the creation of any lien, charge or other encumbrance on any property
of Buyer; or

 
 
(e)
require Buyer to obtain or make any waiver, consent, action, approval or
authorization of, or registration, declaration, notice or filing with, any
private non-governmental third party or any Governmental Authority.

 
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(c)
No Proceedings

 
 
(A)
No suit, action or other proceeding is pending or, to Buyer’s knowledge,
threatened before any Governmental Authority seeking to restrain Buyer or
prohibit its entry into this Agreement or prohibit the Closing, or seeking
Damages against Buyer or its properties as a result of the consummation of this
Agreement.

 
(d)
Each Party agrees and acknowledges that the only representations and warranties
that the Buyer is making are those that are expressly set forth in this
Agreement.

 
10.
OBLIGATIONS PRIOR TO CLOSING. From the date of this Agreement through the
Closing:

 
(a)
Buyer’s Access to Information and Properties

 
 
(A)
The Sellers shall permit Buyer and its authorized employees, agents,
accountants, legal counsel, financing sources and other representatives to have
access to the books, records, employees, counsel, accountants, engineers and
other representatives of the Company at all times reasonably requested by Buyer
for the purpose of conducting an investigation of the Sellers’ financial
condition, corporate status, operations, prospects, business and
Properties.  Each Seller shall make available to Buyer for examination and
reproduction all documents and data of every kind and character relating to such
Seller in possession or control of, or subject to reasonable access by, such
Seller and/or the Shareholders, including, without limitation, all files,
records, data and information relating to the Properties (whether stored in
paper, magnetic or other storage media) and all agreements, instruments,
contracts, assignments, certificates, orders, and amendments thereto.  Also,
each Seller  shall allow Buyer access to, and the right to inspect, its
Properties, except to the extent that such Properties are operated by a
third-party operator, in which case such Seller shall use its best efforts to
cause the operator of such Properties to allow Buyer access to, and the right to
inspect, such Properties. Buyer shall conduct any such investigation in such a
manner as not to interfere unreasonably with the normal operations of Sellers.

 
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(b)
Company’s Conduct of Business and Operations

 
 
(A)
Sellers and the Shareholders shall keep Buyer advised as to all material
operations and proposed material operations relating to the Sellers.  Each
Seller shall (a) conduct its business in the ordinary course (b) maintain
present employees, (c) maintain and operate its Properties in a good and
workmanlike manner, (d) pay or cause to be paid all costs and expenses
(including but not limited to insurance premiums) incurred in connection
therewith in a timely manner, (e) use reasonable efforts to keep all Contracts
listed or required to be listed on Schedule 8(s) in full force and effect, (f)
comply with all of the covenants contained in all such material Contracts, (g)
maintain in force until the Closing Date insurance policies equivalent to those
in effect on the date hereof, and (h) comply in all material respects with all
applicable Legal Requirements, and (i) use their best efforts to preserve the
present relationships of such Seller with all persons having significant
business relations with such Seller.

 
(c)
General Restrictions

 
 
(A)
Except as otherwise expressly permitted in this Agreement, without the prior
written consent of Buyer, which consent shall not be unreasonably withheld, each
of the Sellers shall not:

 
 
(1)
merge into or with or consolidate with, any other corporation or acquire the
business or assets of any person;

 
 
(2)
amend its articles of incorporation or bylaws;

 
 
(3)
create, incur, assume, guarantee or otherwise become liable or obligated with
respect to any indebtedness, or make any loan or advance to, or any investment
in, any person, except in each case in the ordinary course of business;

 
 
(4)
enter into, amend or terminate any material agreement;

 
 
(5)
sell, transfer, lease, mortgage, encumber or otherwise dispose of, or agree to
sell, transfer, lease, mortgage, encumber or otherwise dispose of, any
Properties except (i) in the ordinary course of business, or (ii) pursuant to
any agreement specified in Schedule 8(s);

 
 
(6)
settle any material claim or litigation, or file any material motions, orders,
briefs or settlement agreements in any proceeding before any Governmental
Authority or any arbitrator;

 
 
(7)
incur or approve, or enter into any agreement or commitment to make, any capital
expenditures in excess of $10,000 (other than those required pursuant to any
agreement specified in Schedule 8(s)));

 
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(8)
maintain its books of account other than in the usual, regular and ordinary
manner in accordance with generally accepted accounting principles and on a
basis consistent with prior periods or make any change in any of its accounting
methods or practices;

 
 
(9)
make any change, whether written or oral, to any agreement or understanding with
any suppliers or customers;

 
 
(10)
accelerate or delay collection of any notes or accounts receivable in advance of
or beyond their regular due dates or the dates when they would have been
collected in the ordinary course of business consistent with past practices;

 
 
(11)
delay or accelerate payment of any accrued expense, trade payable or other
liability beyond or in advance of its due date or the date when such liability
would have been paid in the ordinary course of business consistent with past
practices;

 
 
(12)
allow its levels of inventory to vary in any material respect from the levels
customarily maintained;

 
 
(13)
adopt any Plan or Benefit Program or Agreement or increase the compensation
payable to any employee (including, without limitation, any increase pursuant to
any bonus, profit-sharing or other incentive plan or commitment);

 
 
(14)
become a party to or bound by any of the arrangements described in this
Agreement or any Schedule, whether written or oral;

 
 
(15)
engage in any one or more activities or transactions outside the ordinary course
of business;

 
 
(16)
enter into any transaction or make any commitment which could result in any of
the representations, warranties or covenants of the Company and/or the
Shareholders contained in this Agreement not being true and correct after the
occurrence of such transaction or event; or

 
 
(17)
commit to do any of the foregoing.

 
(d)
Notice Regarding Changes

 
 
(A)
Sellers and the Shareholders shall promptly inform the Buyer in writing of any
change in facts and circumstances that could render any of the representations
and warranties made herein by the Sellers and the Shareholders inaccurate or
misleading.  The Buyer shall promptly inform the Company in writing of any
change in facts and circumstances that could render any of the representations
and warranties made herein by it inaccurate or misleading.

 
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(e)
Ensure Conditions Met

 
 
(A)
Subject to the terms and conditions of this Agreement, each party hereto shall
use all reasonable commercial efforts to take or cause to be taken all actions
and do or cause to be done all things required under applicable Legal
Requirements in order to consummate the transactions contemplated hereby,
including, without limitation, (i) obtaining all Permits, authorizations,
consents and approvals of any Governmental Authority or other person which are
required for or in connection with Buyer’s conduct of the Business (as currently
conducted by the Company) subsequent to (x) Closing or (y) the consummation of
the transactions contemplated hereby and by the Collateral Agreements or (z)
both, (ii) taking any and all reasonable actions necessary to satisfy all of the
conditions to each party’s obligations hereunder as set forth in Section 12, and
(iii) executing and delivering all agreements and documents required by the
terms hereof to be executed and delivered by such party on or prior to the
Closing.

 
(f)
Casualty Loss

 
(A)
If, between the date of this Agreement and the Closing, any of the Properties of
the Sellers shall be destroyed or damaged in whole or in part by fire,
earthquake, flood, other casualty or any other cause, then the Sellers shall, at
Buyer’s election, (i) cause such Properties to be repaired or replaced prior to
the Closing with Properties of substantially the same condition and function,
(ii) assign the Sellers’ rights under applicable insurance policies provided
that the same are sufficient to cause such Properties to be repaired or replaced
prior to the Closing with Properties of substantially the same condition and
function, or (iii) enter into contractual arrangements satisfactory to Buyer so
that the Sellers will have at the Closing the same economic value as if such
casualty had not occurred, provided that if there is substantial loss to any one
of the Sellers’ Properties, Buyer may upon notice to the Company terminate this
Agreement without liability to any party.

 
(g)
Employee Matters

 
 
(A)
The parties acknowledge that the transactions provided for in this Agreement may
result in obligations on the part of the Sellers and one or more of the Plans
that is a welfare benefit plan (within the meaning of Section 3(1) of ERISA) to
comply with the health care continuation requirements of Part 6 of Title 1 of
ERISA and Code Section 4980B, as applicable.  The parties expressly agree that
Buyer and Buyer’s benefit plans shall have no responsibility, and that Sellers
shall have full responsibility, for compliance with such health care
continuation requirements (i) for qualified beneficiaries who previously elected
to receive continued coverage under the Sellers’ ERISA benefit plans or who
between the date of this Agreement and the Closing Date elect to receive
continued coverage, or (ii) with respect to those employees or former employees
of the Sellers who may become eligible to receive such continued coverage as a
result of the transactions provided for in this Agreement.

 
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(B)
Except as specifically set forth in this Agreement: (i) the Buyer shall not be
obligated to assume, continue or maintain any of the Plans or Benefit Programs
or Agreements; (ii) no assets or liabilities of the Plans shall be transferred
to, or assumed by, the Buyer or the Buyer’s benefit plans; and (iii) the Sellers
shall be solely responsible for funding and/or paying any benefits under any of
the Plans or Benefit Programs or Agreements, including any termination benefits
and other employee entitlements accrued under such plans by or attributable to
employees of the Sellers prior to the Closing Date.

 
 
(C)
Nothing in this Agreement, express or implied, shall confer upon any employee of
the Sellers, or any representative of any such employee, any rights or remedies,
including any right to employment or continued employment for any period, of any
nature whatsoever.

 
 
(D)
The Sellers shall, after the execution by the parties of this Agreement, permit
Buyer to contact and make arrangements with the Sellers’ employees for the
purpose of assuring their continued employment by the Buyer after the Closing
and for the purpose of ensuring the continuity of the Sellers’ business, and the
Sellers agree not to discourage any such employees from consulting with Buyer.

 
 
(E)
Each Seller shall use its best efforts to keep available the services of the
Sellers’ present employees.

 
(h)
Name Change

 
 
(A)
Each Seller hereby represents, warrants and covenants to the Buyer that the
corporate name of each and every Seller is as set forth on the signature page
hereof and further agrees and acknowledges that such name is included with the
Assets and that the exclusive right to use such name will be transferred to the
Buyer on the Closing Date.  Each Seller and the Shareholders shall, at the
Closing, cause the filing of an appropriate amendment to such Seller’s
Certificate of Incorporation changing its name to a name which is in no way
similar to the corporate name set forth on the signature page hereof and shall
furnish such written consents and assignments as the Buyer shall hereafter
reasonably request in connection with such name change.

 
11.
The Sellers and the Buyer shall have entered into the Owned Real Estate
Leases  and Landlord’s Agreements and shall have caused the landlord under the
Real Estate Lease to consent to the Buyer’s occupancy of the premises in the
same manner as held by Sellers.

 
12.
CONDITIONS TO SELLERS’ AND BUYER’S OBLIGATIONS

 
(a)
Conditions to Obligations of the Sellers.  The obligations of the Sellers to
carry out the transactions contemplated by this Agreement are subject, at the
option of the Sellers to the commercially reasonable satisfaction, or waiver by
the Sellers, of the following conditions:

 
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(A)
Buyer shall have furnished the Sellers with a certified copy of all necessary
company action on its behalf to approve its execution, delivery and performance
of this Agreement.

 
 
(B)
All representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects at and as of the Closing, and Buyer
shall have performed and satisfied in all material respects all covenants and
agreements required by this Agreement to be performed and satisfied by Buyer at
or prior to the Closing.

 
 
(C)
As of the Closing Date, no suit, action or other proceeding (excluding any such
matter initiated by or on behalf of the Sellers or any Shareholder) shall be
pending or threatened before any Governmental Authority seeking prohibit the
Closing as a result of the consummation of this Agreement.

 
 
(D)
Buyer shall have executed an employment agreement with Adam in the same form as
set forth in Schedule  7(c)(A).

 
 
(E)
Buyer shall have executed an employment agreement with Brian in the same form as
set forth in Schedule 7(c)(B).

 
 
(F)
Buyer shall have executed a consulting agreement with Nancy in the same form as
set forth in Schedule 7(c)(D).

 
(b)
Conditions to Obligations of Buyer.  The obligations of Buyer to carry out the
transactions contemplated by this Agreement are subject, at the option of Buyer,
to the commercially reasonable satisfaction, or waiver by Buyer, of the
following conditions:

 
 
(A)
All representations and warranties of the Sellers and the Shareholders contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing, and the Sellers and the Shareholders shall have performed and
satisfied in all material respects all agreements and covenants required by this
Agreement to be performed and satisfied by them at or prior to the Closing.

 
 
(B)
As of the Closing Date, no suit, action or other proceeding (excluding any such
matter initiated by or on behalf of Buyer) shall be pending or threatened before
any court or governmental agency seeking to prohibit the Closing as a result of
the consummation of this Agreement.

 
 
(C)
Except for matters disclosed in Schedule 8(n)(A) or 8(n)(B), since the Balance
Sheet Date and up to and including the Closing, there shall not have been any
event, circumstance, change or effect that, individually or in the aggregate,
had or might have a material adverse effect on the Sellers’ business,
operations, prospects, Properties or financial condition.

 
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(D)
The Buyer shall have received the opinion of Martinelli Discenza P.C., counsel
to the Sellers (“Company Counsel”), dated as of the Closing Date, addressed to
the Buyer and in form and substance reasonably satisfactory to the Buyer, to the
effect set forth on Exhibit 12(b)(D) hereto.

 
 
(E)
The Sellers shall have furnished Buyer with a certified copy of all necessary
corporate action on its behalf approving the Sellers’ execution, delivery and
performance of this Agreement.

 
 
(F)
Buyer shall have received written evidence, in form and substance satisfactory
to Buyer, of the consent to the transactions contemplated by this Agreement of
all governmental, quasi-governmental and private third parties (including,
without limitation, persons or other entities leasing real or personal property
to the Company) where the absence of any such consent would result in a
violation of law or a breach or default under any agreement to which the Company
is subject.

 
 
(G)
No proceeding in which any of the Shareholders or the Sellers shall be a debtor,
defendant or party seeking an order for its own relief or reorganization shall
have been brought or be pending by or against such person under any United
States, state or foreign bankruptcy or insolvency law.

 
 
(H)
Satisfactory completion of business, legal and accounting due diligence by each
of the Buyer and Buyer’s lender providing financing in connection with the
transactions contemplated hereby, within thirty (30) days of the signing of this
Agreement.

 
 
(I)
[Intentionally Deleted].

 
 
 
(J)
Brian and Adam shall have executed and delivered their respective Employment
Agreements.

 
 
 
(K)
Sellers shall have executed an appropriate notice of sale and request of
continuance of the Kohler distribution agreement to Kohler in substantially the
same form attached as Exhibit 12(b)(K).

 
 
(L)
Sellers shall have filed a request for the Waiver of Tax Lien and shall deliver
such Waiver of Tax Lien promptly to the Buyer upon receipt.

 
 
(M)
Sellers shall have filed on the date of the signing of this Agreement a request
for a certificate from the Massachusetts Department of Revenue as to the good
standing of, and the payment of taxes by, each of the Sellers as of the date of
the signing of the Agreement and shall promptly deliver such certificate to the
Buyer upon receipt.

 
 
(N)
The Sellers shall have simultaneously with the Closing of this Agreement
executed the Owned Real Estate Leases and Landlord’s Agreements.

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13.
POST-CLOSING OBLIGATIONS. Further Assurances

 
 
(a)
Following the Closing, the Sellers, the Shareholders and the Buyer shall execute
and deliver such documents, and take such other action, as shall be reasonably
requested by any other party hereto to carry out the transactions contemplated
by this Agreement.

 
 
(b)
Sellers shall give proper notice to all vendors that Sellers agreed to sell the
Business to the Buyer in accordance with the terms and conditions of this
Agreement. .

 
 
(c)
Post-Closing Indemnity

 
 
(A)
The Sellers and the Majority Shareholders shall jointly and severally indemnify
and hold harmless Buyer from and against any and all damages arising out of,
resulting from or in any way related to (i) a breach of or the failure to
perform or satisfy any of the representations, warranties, covenants and
agreements made by each Seller and each Shareholder in this Agreement or in any
document or certificate delivered by the Sellers at the Closing pursuant hereto,
(ii) the occurrence of any event on or prior to the date of Closing that is (or
would be, but for any deductible thereunder) covered by individual policies of
insurance, blanket insurance policies or self insurance programs maintained by
the Sellers, (iii) the Excluded Assets, (iv) the existence of any liabilities or
obligations of the Sellers (whether accrued, absolute, contingent, known or
unknown, or otherwise, and whether or not of a nature appropriate for inclusion
in a balance sheet in accordance with GAAP) other than the Assumed Obligations
or (v) any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs, and expenses, including, without limitation, legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.  Notwithstanding the above, the Buyer shall be
entitled to indemnification only in the event that the aggregate amount for
which the Buyer is entitled to indemnification (excluding the limitation of this
sentence) exceeds $ 25,000. It is expressly understood that in the event the
aggregate amount of indemnification exceeds $25,000, Buyer shall be entitled to
receive the total amount of indemnification amount from the first dollar.

 
 
(B)
In the event that Buyer is entitled to indemnification hereunder in any amount
and any amounts are then held in escrow by the Escrow Agent under the Escrow
Agreement, Brian (on behalf of the Sellers) shall forthwith join with Buyer in a
written direction to the Escrow Agent to release such amount to Buyer. To the
extent that the amount of the required indemnification exceeds the amounts then
available for release from escrow by the Escrow Agent, Sellers and the Majority
Shareholders shall jointly and severally pay the excess to Buyer forthwith.

 
(C)
On the first anniversary of the Closing, Brian (on behalf of the Sellers) shall
join with Buyer in a written direction to the Escrow Agent to release to the
Company (on behalf of the Sellers) all amounts then held in escrow (together
with any earnings thereon) which Escrow Agent is not then required to release to
Buyer and which are not then subject to any dispute under this Agreement.

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(D)
In the event that there is any dispute on whether any party is required to sign
any direction to the Escrow Agent hereunder, such dispute shall be resolved
exclusively by arbitration by the American Arbitration Association in Great
Barrington, Massachusetts. In the event that the parties agree that a direction
to the Escrow Agent is required to a given extent but dispute whether such
direction is required for any excess amount, then the parties shall execute such
direction for to the given amount as to which there is no dispute, and the
dispute on the excess amount shall be submitted to arbitration as aforesaid.

 
 
(E)
Buyer shall indemnify and hold harmless Sellers from and against any and all
damages arising out of, resulting from or in any way related to Buyer’s failure
to make payments under the Assumed Obligations.

 
 
(F)
If any claim or demand for which an Indemnifying Party would be liable to an
Indemnified Party is asserted against or sought to be collected from the
Indemnified Party by a third party, Indemnified Party shall with reasonable
promptness notify in writing the Indemnifying Party of such claim or demand
stating with reasonable specificity the circumstances of the Indemnified Party’s
claim for indemnification; provided, however, that any failure to give such
notice will not waive any rights of the Indemnified Party except to the extent
the rights of the Indemnifying Party are actually prejudiced.  After receipt by
the Indemnifying Party of such notice, then upon reasonable notice from the
Indemnifying Party to the Indemnified Party, or upon the request of the
Indemnified Party, the Indemnifying Party shall defend, manage and conduct any
proceedings, negotiations or communications involving any claimant whose claim
is the subject of the Indemnified Party’s notice to the Indemnifying Party as
set forth above, and shall take all actions necessary, including, but not
limited to, the posting of such bond or other security as may be required by any
Governmental Authority, so as to enable the claim to be defended against or
resolved without expense or other action by the Indemnified Party.  Upon request
of the Indemnifying Party, the Indemnified Party shall, to the extent it may
legally do so and to the extent that it is compensated in advance by the
Indemnifying Party for any costs and expenses thereby incurred,

 
 
(1)
take such action as the Indemnifying Party may reasonably request in connection
with such action,

 
 
(2)
allow the Indemnifying Party to dispute such action in the name of the
Indemnified Party and to conduct a defense to such action on behalf of the
Indemnified Party, and

 
 
(3)
render to the Indemnifying Party all such assistance as the Indemnifying Party
may reasonably request in connection with such dispute and defense.

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(G)
In any action or proceeding, the Indemnified Party shall have the right to
retain its own counsel, but, in the event the Sellers are the Indemnified Party,
Sellers shall have the right to retain only one counsel on behalf of all the
Sellers; but the fees and expenses of such counsel shall be at its own expense
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any suit,
action or proceeding (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and representation of all parties
by the same counsel would be inappropriate due to actual or potential conflict
of interests between them.

 
 
(H)
An Indemnifying Party shall not be liable under this Agreement for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought hereunder.

 
 
(I)
The Indemnifying Party may settle any claim without the consent of the
Indemnified Party, but only if the sole relief awarded is monetary damages that
are paid in full by the Indemnifying Party. The Indemnified Party shall, subject
to its reasonable business needs, use reasonable efforts to minimize the
indemnification sought from the Indemnifying Party under this Agreement.

 
(d)
Non-Competition, Non-Solicitation and Non-Disclosure

 
 
(A)
General.  In consideration of the payment of the Purchase Price, and in order to
induce the Buyer to enter into this Agreement and to consummate the transactions
contemplated hereby, each Seller and each Shareholder (other than for Brian and
Adam, who shall each be subject to the terms and conditions of the Non-Compete,
Non-Solicitation and Non-Disclosure set forth in their individual employment
agreements) hereby covenants and agrees as follows:

 
 
(1)
Without the prior written consent of the Buyer, neither any  Seller (nor any
Affiliate of Seller) nor any Shareholder (nor any Affiliate of any Shareholder)
shall for a period of three (3) years from and after the Closing Date (A)
directly or indirectly acquire or own in any manner any interest (whether
through a debt or equity instrument) in any person , firm, partnership,
corporation, association or other entity (including the Company) which engages
or plans to engage in any facet of the Business or which competes or plans to
compete in any way with the Buyer or any of its subsidiaries or Affiliates
anywhere within a 50 mile radius of any of the Owned Premises, Owned Real
Estate, Real Property and/or Leased Premises (the “Territory”), (B) be employed
by or serve as an employee, agent, officer, director of, or as a consultant to,
any person, firm, partnership, corporation, association or other entity which
engages or plans to engage in any facet of the Business  or which competes or
plans to compete in any way with the Buyer or any of its subsidiaries or
Affiliates within the Territory, or (C) utilize its or his special knowledge of
the business of each Seller and his or its relationships with customers,
suppliers and others to compete with Buyer and/or its Affiliates in any business
which engages or plans to engage in any facet of the Business; provided,
however, that nothing herein shall be deemed to prevent either Seller or either
Shareholder from (x) acquiring through market purchases and owning, solely as a
passive investment, less than one percent in the aggregate of the equity
securities of any class of any issuer whose shares are registered under §12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and are listed or
admitted for trading on any United States national securities exchange or are
quoted on the National Association of Securities Dealers Automated Quotation
System, or any similar system of automated dissemination of quotations of
securities prices in common use, so long as such Seller or such Shareholder is
not a member of any “control group” (within the meaning of the rules and
regulations of the United States Securities and Exchange Commission) of any such
issuer.  Each Seller and each Shareholder acknowledges and agrees that the
covenants provided for in this Section are reasonable and necessary in terms of
time, area and line of business to protect the Sellers’ Trade Secrets.  Each
Seller and each Shareholder further acknowledges and agrees that such covenants
are reasonable and necessary in terms of time, area and line of business to
protect the Buyer’s legitimate business interests, which include its interests
in protecting the Buyer’s (i) valuable confidential business information, (ii)
substantial relationships with customers, and (iii) customer goodwill associated
with the ongoing Business.  Each Seller and each Shareholder hereby expressly
authorizes the enforcement of the covenants provided for in this Section by (A)
the Buyer and its subsidiaries, (B) the Buyer’s permitted assigns, and (C) any
successors to the Buyer’s business.  To the extent that the covenants provided
for in this Section may later be deemed by a court to be too broad to be
enforced with respect to its duration or with respect to any particular activity
or geographic area, the court making such determination shall have the power to
reduce the duration or scope of the provision, and to add or delete specific
words or phrases to or from the provision.  The provision as modified shall then
be enforced.

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(2)
Without the prior consent of Buyer, neither any Seller (nor any Affiliate of any
Seller) nor any Shareholder (nor any Affiliate of any Shareholder), shall for a
period of three (3) years from the Closing Date, directly or indirectly, for
itself or himself or for any other person, firm, corporation, partnership,
association or other entity (including the Company), (A) solicit any of the
Sellers’ employees employed in the Business, (B) call on or solicit any of the
actual customers or clients of the Business, nor shall any  Seller (or any
Affiliate of Seller) or any Shareholder (or any Affiliate of any Shareholder),
make known the names and addresses of such customers or any information relating
in any manner to the Sellers’ trade or business relationships with such
customers, (C) in any manner, directly or indirectly, attempt to seek to cause
any entity to refrain from dealing or doing business with the Buyer or assist
any entity in doing so or attempting to do so or (D) employ any employees of
Buyer.

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(3)
Neither any  Seller (nor any Affiliate of any Seller) nor any Shareholder (nor
any Affiliate of any Shareholder), shall  at any time divulge, communicate, use
to the detriment of the Buyer or for the benefit of any other person or persons,
or misuse in any way, any Confidential Information pertaining to the
Business.  Any confidential information or data now known or hereafter acquired
by the either any  Seller or any Shareholder, with respect to the Business shall
be deemed a valuable, special and unique asset of the Buyer that is received by
the either any  Seller or any Shareholder, in confidence and as a fiduciary, and
each Seller and each Shareholder, shall remain a fiduciary to the Buyer with
respect to all of such information.

 
 
(4)
Injunction.  It is recognized and hereby acknowledged by the parties hereto that
a breach or violation by either any  Seller or any Shareholder of any or all of
the covenants and agreements contained in this Section may cause irreparable
harm and damage to Buyer in a monetary amount which may be virtually impossible
to ascertain.  As a result, each Seller and each Shareholder recognizes and
hereby acknowledges that Buyer shall be entitled (without the requirement of
posting a bond) to an injunction from any court of competent jurisdiction
enjoining and restraining any breach or violation of any or all of the covenants
and agreements contained in this Section by the each of the Sellers and each of
the Shareholders, and/or its associates, Affiliates, partners or agents, either
directly or indirectly, and that such right to injunction shall be cumulative
and in addition to whatever other rights or remedies the Buyer may possess
hereunder, at law or in equity.  Nothing contained in this Section shall be
construed to prevent Buyer from seeking and recovering from the either any
Seller or any Shareholder, or both, jointly and severally, damages sustained by
it as a result of any breach or violation by either any  Seller or any
Shareholder, or both, of any of the covenants or agreements contained herein.

 
(e)
Delivery of Property Received by the Company After Closing

 
 
(A)
From and after the Closing, Buyer shall have the right and authority to collect,
for the account of Buyer, all receivables and other items which shall be
transferred or are intended to be transferred to Buyer as part of the Assets as
provided in this Agreement, and to endorse with the name of the Sellers any
checks or drafts received on account of any such receivables or other
Assets.  Each Seller agrees that it will transfer or deliver to Buyer, promptly
after the receipt thereof, any cash or other property which such Seller receives
after the Closing Date in respect of any claims, contracts, licenses, leases,
commitments, sales orders, purchase orders, receivables of any character or any
other items transferred or intended to be transferred to Buyer as part of the
Assets under this Agreement.

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(f)
Assignment of Contracts

 
 
(A)
At the option of Buyer, and notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an assignment of any claim,
contract, license, franchise, lease, commitment, sales order, sales contract,
supply contract, service agreement, purchase order or purchase commitment if an
attempted assignment thereof without the consent of a third party thereto would
constitute a breach thereof or in any way adversely affect the rights of Buyer
thereunder.  If such consent is not obtained, or if any attempt at an assignment
thereof would be ineffective or would affect the rights of the Sellers
thereunder so that Buyer would not in fact receive all such rights, the Sellers
shall cooperate at its own expense with Buyer to the extent necessary to provide
for Buyer the benefits under such claim, contract, license, franchise, lease,
commitment, sales order, sales contract, supply contract, service agreement,
purchase order or purchase commitment, including enforcement for the benefit of
Buyer of any and all rights of the Sellers against a third party thereto arising
out of the breach or cancellation by such third party or otherwise.

 
(g)
Corporate Existence.  Each Seller shall maintain its corporate existence
unchanged and in full force and effect for at least six  months following the
Closing Date.

 
MISCELLANEOUS
 
14.
Limitation on Liability.

 
(a)
Representations and Warranties.  Each of the representations and warranties of
each of the parties to this Agreement shall be deemed to have been made, and the
certificates delivered pursuant to Section 7(a)(B) and Section 7(b)(D) by a
party are agreed to and shall be deemed to constitute the making of such
representations and warranties, again at and as of the Closing by and on behalf
of the party on behalf of whom such certificates are delivered.

 
(b)
Survival.

 
 
(A)
The representations and warranties of each party shall survive the execution and
delivery of this Agreement and the Closing hereunder and shall thereafter
continue in full force for 12 full calendar months after the Closing Date.
However, the representations and warranties contained in Section 8(d) (Taxes)
and Section 10(g)(i) (health care continuation requirements under ERISA and
section 4980B of the Code) shall continue until 30 days after all liability
relating thereto is barred by all applicable statutes of limitation; and the
representations and warranties contained in Sections 8(q)(A) (Asbestos) and
Section 8(w)(B) and 8(w) (Environmental) shall survive forever. If any claim for
indemnification hereunder that has been previously asserted by a party to this
Agreement in accordance with this Agreement‎ is still pending at the expiration
of the applicable survival period, such claim shall continue to be subject to
the indemnification provisions of this Agreement until resolved.

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(B)
The covenants, agreements and indemnification and other obligations of the
parties shall survive the execution and delivery of this Agreement and the
Closing hereunder and shall thereafter continue in full force.

 
15.
Confidentiality.

 
(a)
The existing Non-Disclosure Agreement by Buyer or its affiliates in favor of the
Company shall continue in full force and effect until the Closing.

 
(b)
  The Sellers and Shareholders shall, and shall cause their respective
Affiliates, employees, agents, accountants, legal counsel and other
representatives and advisers to, hold in strict confidence all, and not divulge
or disclose any, information of any kind concerning the transactions
contemplated by this Agreement, the Sellers, Buyer or their respective
businesses; provided, however, that the foregoing obligation of confidence shall
not apply to (i) information that is or becomes generally available to the
public other than as a result of a disclosure by the Sellers or Shareholders, or
any of its Affiliates, employees, agents, accountants, legal counsel or other
representatives or advisers, (ii) information that is or becomes available to
the Sellers or Shareholders or any of Sellers and Shareholders Affiliates,
employees, agents, accountants, legal counsel or other representatives or
advisers after the Closing on a nonconfidential basis prior to its disclosure by
the Sellers or Shareholders, or any Affiliates of the Sellers or the
Shareholders, employees, agents, accountants, legal counsel or other
representatives or advisers and (iii) information that is required to be
disclosed by the Sellers or any of its Affiliates, or the Shareholders and their
Affiliates, employees, agents, accountants, legal counsel or other
representatives or advisers as a result of any applicable law, rule or
regulation of any Governmental Authority; and provided further that the Sellers
and Shareholders shall promptly shall notify Buyer of any disclosure pursuant to
clause (ii) of this Section.

 
(c)
Notwithstanding anything herein to the contrary, any party to this agreement
(and each employee, representative, or other agent of such party) may disclose
to any and all persons, without limitation of any kind, the tax treatment and
tax structure of any transaction contemplated by this Agreement and all
materials of any kind (including opinions and other tax analyses) that are
provided to the party relating to such tax treatment and tax structure.

 
(d)
So long as this Agreement is in effect neither the Sellers nor either
Shareholder shall entertain, negotiate or deal with, or provide any Confidential
Information to, any person or entity who or which proposes to purchase all or
any substantial part of the assets of any Seller other than in the ordinary
course of business, or to purchase from any Seller or any Shareholder any equity
interest in any Seller.

-49-

--------------------------------------------------------------------------------

 
16.
Brokers. Regardless of whether the Closing shall occur, (i) the Sellers and the
Majority Shareholders shall jointly and severally indemnify and hold harmless
Buyer from and against any and all liability for any brokers or finders’ fees
arising with respect to brokers or finders retained or engaged by the Sellers or
any of the Shareholders in respect of the transactions contemplated by this
Agreement, and (ii) Buyer shall indemnify and hold harmless the Sellers from and
against any and all liability for any brokers’ or finders’ fees arising with
respect to brokers or finders retained or engaged by Buyer in respect of the
transactions contemplated by this Agreement.

 
17.
Costs and Expenses.  Each of the parties to this Agreement shall bear his or its
own expenses incurred in connection with the negotiation, preparation, execution
and closing of this Agreement and the transactions contemplated hereby, except
that Sellers shall pay all sales and excise and similar taxes, in connection
with this transaction.

 
18.
Notices.

 
Any notice, request, instruction, correspondence or other document to be given
hereunder by any party hereto to another (herein collectively called “Notice”)
shall be in writing and delivered personally or mailed by registered or
certified mail, postage prepaid and return receipt requested,  as follows:
 
IF TO BUYER:
William Pagano

c/o Universal Supply Group, Inc.
275 Wagaraw Road
Hawthorne, New Jersey 07506

 
With a copy to:
 
 
Oscar D. Folger, Esq.
521 Fifth Avenue
24th Floor
New York, NY  10175
Fax No. (212) 697-7833
Tel No. (212) 697-6464
 
-50-

--------------------------------------------------------------------------------

IF TO THE COMPANY AND/OR THE
Brian Mead, President

Shareholder:
8 Hillside Avenue

 
Great Barrington, 01230

 
With a copy to:

 
Gary E. Martinelli

Martinelli Discenza P.C.
138 Longmeadow Street
Longmeadow, MA 01106

Each of the above addresses for notice purposes may be changed by providing
appropriate notice hereunder.  Notice given by personal delivery or registered
mail shall be effective upon actual receipt.  Notice given by telecopier shall
be effective upon actual receipt if received during the recipient’s normal
business hours, or at the beginning of the recipient’s next normal business day
after receipt if not received during the recipient’s normal business hours.  All
Notices by telecopier shall be confirmed by the sender thereof promptly after
transmission in writing by registered mail or personal delivery.  Anything to
the contrary contained herein notwithstanding, notices to any party hereto shall
not be deemed effective with respect to such party until such Notice would, but
for this sentence, be effective both as to such party and as to all other
persons to whom copies are provided above to be given.
 
19.
Governing Law.  The provisions of this agreement and the documents delivered
pursuant hereto shall be governed by and construed in accordance with the laws
of the State of Massachusetts (excluding any conflict of law rule or principle
that would refer to the laws of another jurisdiction).

 
20.
Dispute Resolution.

 
(a)
THE PARTIES AGREE THAT, EXCEPT AS OTHERWISE PROVIDED FOR IN THIS AGREEMENT,  THE
FEDERAL COURTS IN SPRINGFIELD MASSACHUSETTS AND STATE COURTS IN BERKSHIRE
COUNTY, MASSACHUSETTS SHALL HAVE EXCLUSIVE JURISDICTION ON ALL MATTERS ARISING
OUT OF OR CONNECTED IN ANY WAY WITH THIS AGREEMENT, AND SELLERS AND BUYER
FURTHER AGREE THAT THE SERVICE OF PROCESS OR OF ANY OTHER PAPERS UPON THEM OR
ANY OF THEM IN THE MANNER PROVIDED FOR NOTICES HEREUNDER SHALL BE DEEMED GOOD,
PROPER AND EFFECTIVE SERVICE UPON THEM.

-51-

--------------------------------------------------------------------------------

(b)
EACH OF THE SELLERS, SHAREHOLDERS AND BUYER HEREBY WAIVES ITS RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, THE COLLATERAL AGREEMENTS OR ANY OF THE OTHER
TRANSACTION DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

21.
Entire Agreement; Amendments and Waivers.  This Agreement, together with all
exhibits and schedules attached hereto, constitutes the entire agreement between
and among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as set forth specifically herein or contemplated
hereby.  No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby.  No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (regardless of whether similar), nor shall
any such waiver constitute a continuing waiver unless otherwise expressly
provided.

 
22.
Binding Effect and Assignment.  This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective permitted successors
and assigns; but neither this Agreement nor any of the rights, benefits or
obligations hereunder shall be assigned, by operation of law or otherwise, by
any party hereto without the prior written consent of the other party, provided,
however, that nothing herein shall prohibit the assignment of Buyer’s rights and
obligations to any direct or indirect subsidiary or prohibit the assignment of
Buyer’s rights (but not obligations) to any lender.  Nothing in this Agreement,
express or implied, is intended to confer upon any person or entity other than
the parties hereto and their respective permitted successors and assigns, any
rights, benefits or obligations hereunder.

 
23.
Remedies.  The rights and remedies provided by this Agreement are cumulative,
and the use of any one right or remedy by any party hereto shall not preclude or
constitute a waiver of its right to use any or all other remedies.  Such rights
and remedies are given in addition to any other rights and remedies a party may
have by law, statute or otherwise.

 
24.
Multiple Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

-52-

--------------------------------------------------------------------------------

 
25.
References and Construction.

 
(a)
Whenever required by the context, and is used in this Agreement, the singular
number shall include the plural and pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identification the person may require.  The provisions of this Agreement shall
be construed according to their fair meaning and neither for nor against any
party hereto irrespective of which party caused such provisions to be
drafted.  Each of the parties acknowledge that it has been represented by an
attorney in connection with the preparation and execution of this Agreement.
References to monetary amounts, specific named statutes and generally accepted
accounting principles are intended to be and shall be construed as references to
United States dollars, statutes of the United States of the stated name and
United States generally accepted accounting principles, respectively, unless the
context otherwise requires.

 
(b)
The provisions of this Agreement shall be construed according to their fair
meaning and neither for nor against any party hereto irrespective of which party
caused such provisions to be drafted.  Each of the parties acknowledge that it
has been represented by an attorney in connection with the preparation and
execution of this Agreement.

 
26.
Risk of Loss.  Prior to the Closing, the risk of loss of damage to, or
destruction of, any and all of the Sellers’, including without limitation the
Properties, shall remain with the Seller, and the legal doctrine known as the
“Doctrine of Equitable Conversion” shall not be applicable to this Agreement or
to any of the transactions contemplated hereby.

 
27.
Each party hereto shall cooperate, shall take such further action and shall
execute and deliver and further document as may be reasonably requested by the
other party in order to carry out the provisions and purposes of this Agreement.

 
28.
DEFINITIONS Capitalized terms used in this Agreement are used as defined in this
Section or elsewhere in this Agreement.

 
(a)
Affiliate.  The term “Affiliate” shall mean, with respect to any person, any
other person controlling, controlled by or under common control with such
person.  The term “Control” as used in the preceding sentence means, with
respect to a corporation, the right to exercise, directly or indirectly, more
than 50% of the voting rights attributable to the shares of the controlled
corporation and, with respect to any person other than a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person.

 
(b)
Collateral Agreements.  The term “Collateral Agreements” shall mean the any or
all of the exhibits to this Agreement and any and all other agreements,
instruments or documents required or expressly provided under this Agreement to
be executed and delivered in connection with the transactions contemplated by
this Agreement.

-53-

--------------------------------------------------------------------------------

 
(c)
Confidential Information.  Any information not generally known in the relevant
field or industry about the Sellers’ processes, activities, services or
products, including software, patents, Inventions, know-how, trade secrets and
information relating to research, development, purchase, accounting, marketing,
merchandising, pricing, vendors, selling and customer lists.  “Inventions” shall
mean and include discoveries, concepts and ideas, whether patentable or not,
including but not limited to processes, methods, designs, formulas, and
techniques, as well as improvements thereof or know-how related thereto, which
have been reduced to written form in some manner.

 
(d)
Contracts.  The term “Contracts,” when described as being those of or applicable
to any Person, shall mean any and all contracts, agreements, franchises,
understandings, arrangements, leases, licenses, registrations, authorizations,
easements, servitudes, rights of way, mortgages, bonds, notes, guaranties,
liens, indebtedness, approvals or other instruments or undertakings to which
such person is a party or to which or by which such person or the property of
such person is subject or bound, excluding any Permits.

 
(e)
Damages.  The term “Damages” shall mean any and all damages, liabilities,
obligations, penalties, fines, judgments, claims, deficiencies, losses, costs,
expenses and assessments (including without limitation income and other taxes,
interest, penalties and attorneys’ and accountants’ fees and disbursements).

 
(f)
Financial Statements.  The term “Financial Statements” shall mean any or all of
the financial statements, including balance sheets and related statements of
income and cash flows and the accompanying notes thereto, of the Company
prepared in accordance with generally accepted accounting principles
consistently applied, except as may be otherwise provided herein.

 
(g)
GAAP.  “GAAP” means U.S. generally accepted accounting principles, consistently
applied with the Sellers’ past practices.

 
(h)
Governmental Authorities.  The term “Governmental Authorities” shall mean any
nation or country (including but not limited to the United States) and any
commonwealth, territory or possession thereof and any political subdivision of
any of the foregoing, including but not limited to courts, departments,
commissions, boards, bureaus, agencies, ministries or other instrumentalities.

-54-

--------------------------------------------------------------------------------

 
(i)
Hazardous Material.  The term “Hazardous Material” shall mean all or any of the
following: (a) substances that are defined or listed in, or otherwise classified
pursuant to, any applicable laws or regulations as “hazardous substances,”
“hazardous materials,” “Hazardous wastes,” “toxic substances” or any other
formulation intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity or “EP toxicity”; (b) oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; and (d) asbestos in any form or electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million.

 
(j)
Inventory.  The term “Inventory” shall mean all goods, merchandise and other
personal property owned and held for sale, and all raw materials,
works-in-process, materials and supplies of every nature which contribute to the
finished products of the Sellers in the ordinary course of its business,
specifically excluding, however, damaged, defective or otherwise unsaleable
items.

 
(k)
Legal Requirements.  The term “Legal Requirements,” when described as being
applicable to any person, shall mean any and all laws (statutory, judicial or
otherwise), ordinances, regulations, judgments, orders, directives, injunctions,
writs, decrees or awards of, and any Contracts with, any Governmental Authority,
in each case as and to the extent applicable to such person or such person’s
business, operations or properties.

 
(l)
Liens: The term “Liens” shall mean any and all liens, encumbrances, mortgages,
security interests, pledges, claims, equities, charges and other restrictions or
limitations of any kind or nature whatsoever.  

 
(m)
Permits.  The term “Permits” shall mean any and all permits, rights, approvals,
licenses, authorizations, legal status, orders or Contracts under any Legal
Requirement or otherwise granted by any Governmental Authority.

 
(n)
Person.  The term “Person” shall mean any individual, partnership, joint
venture, firm, corporation, association, limited liability company, limited
liability partnership, trust or other enterprise or any governmental or
political subdivision or any agency, department or instrumentality thereof.

 
(o)
Product.  The term “Product” shall mean each product under development,
developed, manufactured, licensed, distributed or sold by the Sellers and any
other products in which the Sellers have any proprietary rights or beneficial
interest.  

 
(p)
Properties.  The term “Properties” shall mean any and all properties and assets
(real, personal or mixed, tangible or intangible) owned or Used by the Sellers,
including all Assets to be conveyed to Buyer pursuant to this Agreement.

-55-

--------------------------------------------------------------------------------

 
(q)
Real Property.  The term “Real Property” shall mean the real property Used by
the Company in the conduct of its business.

 
(r)
Subsidiary.  The term “Subsidiary” shall mean any Person of which a majority of
the outstanding voting securities or other voting equity interests are owned,
directly or indirectly, by any Seller.

 
(s)
Trade Secrets.  The term “Trade Secrets” shall mean information of the Sellers
including, but not limited to, technical or nontechnical data, formulas,
patterns, compilations, programs, financial data, financial plans, product or
service plans or lists of actual or potential customers or suppliers which (i)
derives economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use, and (ii) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.  

 
(t)
Used.  The term “Used” shall mean, with respect to the Properties, Contracts or
Permits of the Sellers, those owned, leased, licensed or otherwise held by the
Sellers which were acquired for use or held for use by the Sellers in connection
with the Sellers’ business and operations, whether or not reflected on the
Sellers’ books of account.

 
[Signature Page Follows]
 
-56-

--------------------------------------------------------------------------------

EXECUTED as of the date first written above.
 
S&A Purchasing Corp.:
 
Colonial Commercial Corp., with regard to Section 2(e) only
                   
By:
/s/ William Pagano
 
By:
/s/ William Pagano
Name:
William Pagano
 
Name:
William Pagano
Title:
President
 
Title:
Chief Executive Officer

 
SELLERS:
 
S&A Supply, Inc.
 
S&A Realty, Inc.
 
S&A Management, Inc.
                               
By:
/s/ Brian Mead
 
By:
/s/ Brian Mead
 
By:
/s/ Brian Mead
Name:
Brian Mead
 
Name:
Brian Mead
 
Name:
Brian Mead
Title:
President
 
Title:
President
 
Title:
President

SHAREHOLDERS:

/s/ Nancy Mead
 
The Discretionary Trust under The Rodney P. Mead Revocable Trust, dated
 
/s/ Adam Mead
Nancy Mead
 
January 12, 1999
 
Adam Mead
             
By:
/s/ Nancy A. Mead
         
Nancy A. Mead, Trustee
                   
By:
/s/ Thomas H. Mead
         
Thomas H. Mead, Trustee
   

        Escrow Agent
/s/ Sarah Mead
 
/s/ Brian Mead
   
Sarah Mead
 
Brian Mead
  Martinelli Discenza P.C.                     
By:
/s/ Gary E. Martinelli
         
Gary E. Martinelli

-1-

--------------------------------------------------------------------------------

SCHEDULES

--------------------------------------------------------------------------------

Schedule 1(a)(D)
Prepaid Expenses, other assets, and excess rebates
 
James E. Kimball, Jr., Inc.
Gt. Barrington Warehouse
$2,587.20
John B. Hull Inc.
Gt. Barr. Counter & Office
$5,565.00
Oil Estimate of possible 990 gallons at 5/8 600 gallons
Pittsfield Warehouse
$1,532.84
 
Total
$9,685.04

Health Insurance
Insurance
Total September Premium
2/3 USG Portion
BlueCross Health
$20,952.35
$13,968.23
Guardian Life, Dental, Disability
$ 3,230.06
$ 2,153.38
Prepaid Insurance
Total annual $17,234.00
$ 2,393.61 (1.66/12)
 
Total
$18,515.22

Data Processing
Company
Total September Premium
2/3 USG Portion
Prophet 21/Activant
$2,178.18
$1,452.09
BSI (printers)
$410.97
$   273.98
 
Total
$1,726.07

 
Other
Service / company
Total Amount
USG Portion
Yellow Pages
$4,290.00  paid through
April 2008
7 2/3 months
$2740.83
Vendor Rebates (detail attached)
$94,138.60
$94, 138.60
Prepaid Vehicle Excise Tax
$5178.25
$3,020.65 Sept 07 – March 08 (7/12)
       
Total
$99,900.08

 
TOTAL PREPAID $129,826.41

End of Schedule

--------------------------------------------------------------------------------

 
Schedule 1(a)(D) attachment
     2007 Vender Rebate Estimates      
                           
Plumbing & Heating
                                       
Vender
 
2006 total Sales
   
2006 Rebate
   
2007 YTD Purchases
   
2007 YTD Anticipated Rebate
 
Robert Manf
  $
12,594.99
    $
305.98
    $
13,745.20
    $
333.92
 
Ridgid
  $
88,549.36
    $
1,758.29
    $
37,959.07
    $
753.74
 
A.O. Smith
  $
188,987.69
    $
5,653.47
    $
157,768.85
    $
4,719.57
 
Unico
  $
158,466.15
    $
7,303.68
    $
59,551.27
    $
2,744.71
 
Charlotte
  $
165,124.42
    $
15,698.11
    $
56,907.90
    $
5,410.14
 
Burnham
  $
851,515.26
    $
9,201.23
    $
365,093.38
    $
3,945.09
 
Symmons
  $
48,653.77
    $
1,226.40
    $
55,152.29
    $
1,390.21
 
Watts
  $
81,649.86
    $
2,116.00
    $
85,756.73
    $
2,572.68
 
Grohe
  $
68,540.91
    $
1,778.00
    $
55,266.19
    $
1,657.98
 
American Saw
  $
35,060.33
    $
1,020.32
    $
26,586.08
    $
797.58
 
Kohler
                          $
17,742.00
                                   
Totals
          $
46,061.48
            $
42,067.63
 

Electrical
                                                                           
Vender
 
2006 total Sales
   
2006 Rebate
   
2007 YTD Purchases
   
2007 YTD Anticipated Rebate
 
Wiremold
  $
21,777.78
    $
1,543.87
    $
24,916.55
    $
1,766.38
 
Genisis Cable
  $
22,942.73
    $
688.28
    $
16,878.93
    $
506.37
 
Leviton
  $
170,559.59
    $
337.16
    $
110,907.37
    $
219.24
 
United Cop
  $
367,687.58
    $
10,500.00
    $
252,433.15
    $
10,500.00
 
Dimplex
  $
31,929.17
    $
207.52
    $
27,420.00
    $
178.21
 
Highland
  $
73,847.96
    $
3,146.79
    $
78,040.49
    $
5,462.00
 
Siemens
  $
212,688.29
    $
2,364.08
    $
152,379.36
    $
1,523.00
 
Equity
  $
0.00
    $
41,312.90
    $
0.00
    $
31,915.77
                                                                     
Totals
                          $
52,070.97
                                                                               
                       
Grand Total
                          $
94,138.60
 

--------------------------------------------------------------------------------

 
Schedule 1(a)(F)

Real Estate Leases
 
S&A Supply, Inc. Occupies premises at 992 Massachusetts Avenue, North Adams, MA
under a verbal month-to-month occupancy agreement with Peter Swift, the owner.
Mr. Swift has agreed (per the attached letter) to continue the relationship with
the Buyer.

--------------------------------------------------------------------------------

 
 
 [logo.jpg]

Schedule 1(a)(F) Attachment

 
September 6, 2007

 
To Whom It May Concern:

Please consider this letter as my acceptance of allowing S & A Purchasing Group
to continue leasing property from me at 992 Massachusetts Avenue in North Adams
under the same terms and conditions as S & A Supply, Inc currently does.

 
/s/ Peter Swift
 
9/6/2007
 
Peter Swift
 
Date

20 Maple Ave, Great Barrington, MA 01230 (413) 528-3470
1311 East Street, Pittsfield, MA 01201 (413) 443-9681
992 Massachusetts Ave, North Adams, MA 01247 (413) 664-4454

--------------------------------------------------------------------------------

Schedule 1(f)(D)

Certificates of Occupancy

 
a)
20 Maple Avenue, Great Barrington, MA

-Town Building Inspector is looking for the C/O in Town archives

b)
40 Maple Avenue, Great Barrington, MA

-S&A Supply, Inc. Must complete Handicapped Entrance to comply with Americans
with Disabilities Act before Town issues C/O on new construction. S&A Realty,
Inc. undertakes to complete this.

c)
1311 East Street, Pittsfield, MA

-C/O attached

d)
992 Massachusetts avenue, North Adams, MA

– Landlord has been requested to supply a copy
 
Attachment(s) on file at the Company’ s corporate office

--------------------------------------------------------------------------------

S&A SUPPLY, INC.
VEHICLE LOANS PAYABLE (Per 7/31/07 TB)
7/31/07

G/L
 
Bank
 
Vehicle
 
CI
   
LT
   
T
   
Proj.
Bal.
9/10/07
                                     
242003
260603
 
Legacy
 
Ford F-650 Box Truck
   
9,934
     
21,841
     
31,775
     
30,823
           
 
                                 
242901
260901
 
Greylock
 
'05 Toyota Tundra
   
3,862
     
5,492
     
9,354
     
8,974
       
 
 
 
                                 
243001
267501
 
GMAC
 
'04 GMC Rack Body
   
6,470
     
4,461
     
10,931
     
10,391
       
 
 
 
                                 
243201
269001
 
GMAC
 
'04 Chevy Colorado
   
4,975
     
3,732
     
8,707
     
7,878
       
 
                                     
243203
267503
 
Greylock
 
'07 Toyota Tundra
   
7,111
     
17,182
     
24,293
     
23,817
       
 
 
 
                                 
243401
261501
 
GMAC
 
'04 Chev. PU/w/plow (Silverado)
   
6,754
     
2,030
     
8,784
     
8,216
           
 
                                 
244501
267801
 
Greylock
 
'05 Chev. 3/4 ton (Silverado)
   
5,583
     
4,713
     
10,296
     
9,293
       
 
 
 
                                 
245005
267905
 
Greylock
 
'06 Ford F350 Rack
   
2,973
     
18,134
     
21,107
     
20,509
       
 
 
 
                                 
248603
 
Berkshire
 
'03 Chev.
   
493
             
493
     
-0-
       
 
 
 
                                 
248703
262003
 
Greylock
 
'05 Chev. 1/2 ton (Silverado)
   
5,401
     
4,543
     
9,944
     
8,954
       
 
 
 
                                 
249003
270003
 
Greylock
 
'06 Ford F250 WH/RE
   
3,538
     
11,552
     
15,090
     
14,421
       
 
 
 
                                 
249203
 
Ford Credit
 
'03 Ford WH Van (E-150)
   
3,799
      (1,891 )    
1,908
     
772
       
 
 
 
                                 
250103
267303
 
Berkshire
 
’06 GMC ExCab (K-25)
   
4,794
     
11,414
     
16,208
     
15,022
       
 
 
 
                                 
251001
268101
 
Ford Credit
 
’03 Ford F-250
   
-
      (753 )     (753 )    
-0-
       
 
 
 
                                 
######
260503
 
Berkshire
 
’07 GMC 3500 Rack
   
-
     
24,442
     
24,442
     
25,119
       
 
 
 
                                 
######
267403
 
Berkshire
 
’07 GMC 2500 P/UP
   
-
     
23,563
     
23,563
     
24,003
       
 
 
 
                                         
Total
                   
247,917
     
239,015
 

--------------------------------------------------------------------------------

 
Schedule 1(g)(B)  page 2 of 2

Auto & Truck Leases

Vehicle, make, model, year
Lessor
Pay Off Date
Monthly Amount
Mnths
Remng
Total amount left on loan
Primary Driver
Branch
Use
     
 
         
Toyota 7FGU25 forklift
Thompson & Johnson
7/31/09
489.00
23
N/A
 
Great Barrington
Yard
                 

End of Schedule

--------------------------------------------------------------------------------

SCHEDULE 1(g)(C)

ASSUMED OBLIGATIONS

·  Expense Accounts Payable
 
None
 
·  Customer Deposits
  $
10,699
 
·  Unreconciled Stock Receipts
       
(Amount to be provided at conclusion of physical inventory)
  $
-
 
·  Unused Vacation and Sick Pay
  $
58,313
 

--------------------------------------------------------------------------------

 
Schedule 2(b)

RESTATED 08/20/2007
S & A  SUPPLY, INC
PAGE  1
AUTOS/SHOWROOM ENTRIES
BALANCE SHEET
   
JUNE 2007
 

      
2007
   
2006
   
CHANGE
   
CHANGE
 
ASSETS   
                       
CURRENT ASSETS  
                       
CASH IN BANK  
   
675
     
675
     
0
      0.0 %
CASH IN BANK OPERATING 
    (441,990 )     (609,038 )    
167,048
      -27.4 %
PAYROLL CHECKING 
   
785
     
716
     
69
      9.6 %
CASH IN BANK OPERATING 
   
0
     
0
     
0
   
#DIV/0!
 
ACCOUNTS RECEIVABLE-TRADE
   
1,831,197
     
1,973,736
      (142,539 )     -7.2 %
ACCOUNTS RECEIVABLE- OTHER
    (6,213 )    
0
      (6,213 )  
#DIV/0!
 
RESERVE FOR BAD DEBTS 
    (119,600 )     (144,600 )    
25,000
      -17.3 %
LOAN REC - S & A MANAGEMENT
   
365,232
     
315,534
     
49,698
      15.8 %
NOTES RECEIVABLE 
   
314
     
314
     
0
      0.0 %
INVENTORIES  
   
4,219,960
     
4,435,643
      (215,683 )     -4.9 %
UNEXPIRED INSURANCE 
   
20,234
     
23,943
      (3,709 )     -15.5 %
LOAN RECEIVABLE J CURE 
   
0
     
72
      (72 )     -100.0 %
PREPAID EXPENSES 
   
31,559
     
22,453
     
9,106
      40.6 %
NOTE RECEIVABLE RPM 
   
315,803
     
326,978
      (11,175 )     -3.4 %
LOAN RECEIVABLE R.J. ALOISIRJA & ERIC DRYS
   
7,804
     
2,543
     
5,261
      206.9 %                                     
TOTAL CURRENT ASSETS 
   
6,225,760
     
6,348,969
      (123,209 )     -1.9 %                                     
PROPERTY. PLANT AND EQUIPMENT
                               
LAND   
   
23,132
     
23,132
     
0
      0.0 %
LAND IMPROVEMENTS 
   
41,076
     
39,418
     
1658
      4.2 %
BUILDING & INPROVEMENTS 
   
480,506
     
480,506
     
0
      0.0 %
IMPROVEMENTS-ELECTRICAL DEPT.
   
78,059
     
78,059
     
0
      0.0 %
FURNITURE AND FIXTURES 
   
200,569
     
200,569
     
0
      0.0 %
MACHINERY AND EQUIPMENT
   
172,894
     
163,120
     
9774
      6.0 %
DATA PROCESSING EQUIPMENT
   
448,854
     
442,885
     
5969
      1.3 %
AUTOMOTIVE EQUIPMENT 
   
585,613
     
610,480
      (24,867 )     -4.1 %
SHOWROOM DISPLAY 
   
119,950
     
79,348
     
40,602
      51.2 %                                     
TOTAL PROP, PLANT & EQUIPMENT
   
2,150,653
     
2,117,517
     
33,136
      1.6 %                                     
LESS ACCUMULATED DEPRECIATION
    (1,564,304 )     (1,597,227 )     (32,923 )     2.1 %                       
             
TOTAL PROP, PLANT & EQUIPMENT
   
586,349
     
520,290
     
66,059
      12.7 %                                     
OTHER ASSETS  
                               
UNAMORTIZED MORTGAGE EXP
   
0
     
0
     
0
   
#DIV/0!
 
DEPOSITS  
   
0
     
0
     
0
   
#DIV/0!
 
EXCHANGE  
    (2,710 )    
1,304
      (4,014 )     -307.8 %
CASH SURR. VALUE OF LIFE INS
   
0
     
0
     
0
   
#DIV/0!
                                      
TOTAL OTHER ASSETS 
    (2,710 )    
1,304
      (4,014 )     -307.8 %                                     
TOTAL ASSETS  
   
6,809,399
     
6,870,563
      (61,164 )     -0.9 %

--------------------------------------------------------------------------------

 

 
S & A  SUPPLY, INC
PAGE  2
 
BALANCE SHEET
   
JUNE 2007
 

                  
 $
     
%
        
2007
   
2006
   
CHANGE
   
CHANGE
 
LIABILITIES AND STOCKHOLDERS EQUITY
                                                    
CURRENT LIABILITIES 
                         
ACCOUNT PAYABLE-TRADE 
   
613,853
     
716,086
      (102,233 )     -14.3 %
LIABILITY TO PENSION FUND 
   
1,954
     
1,450
     
504
      34.8 %
LIFE INSURANCE EMPLOYEES
   
0
     
0
     
0
   
#DIV/0!
 
L/T DISABILITY EMPLOYEES 
   
0
     
0
     
0
   
#DIV/0!
 
FEDERAL & FICA TAXES PAYABLE
   
0
     
0
     
0
   
#DIV/0!
 
SWT PAYABLE  
   
0
     
0
     
0
   
#DIV/0!
 
FED UC PAYABLE  
   
0
     
0
     
0
   
#DIV/0!
 
DEPOSIT CLEARING 
    (6,625 )     (366 )     (6,259 )     1710.1 %
PAYROLL CLEARING 
   
0
     
0
     
0
   
#DIV/0!
 
PAYMENT CLEARING 
    (1,687 )    
16,365
      (18,052 )     -110.3 %
SALES/USE TAX PAYABLE 
   
36,801
     
37,239
      (438 )     -1.2 %
ACCRUED EXPENSES 
   
122,880
     
152,908
      (30,028 )     -19.6 %
CORP TAX PAYABLE 
    (33,996 )    
49
      (34,045 )     -69479.6 %
N/P LEE BK LOC  
   
2,703,454
     
2,671,999
     
31,455
      1.2 %
N/P S & A REALTY  
   
7,200
     
0
     
7,200
   
#DIV/0!
 
N/P LEGACY A&B PLUS AUTOS
   
60,802
     
58,634
     
2,168
      3.7 %
NOTE PAYABLE AUTOS 
   
18,465
     
16,208
     
0
      0.0 %
NOTE PAYABLE NAM 
    (536 )    
181
     
0
      0.0 %
NOTE PAYABLE (1) FORD 650 
   
9,933
     
9,358
     
0
      0.0 %                                     
TOTAL CURRENT LIABILITIES 
   
3,532,498
     
3,680,111
      (147,613 )     -4.0 %                                                    
                     
LONG TERM LIABILITIES 
                               
NOTES PAYABLE - OTHER 
   
537,441
     
520,230
     
17,211
      3.3 %
NOTES PAYABLE - OTHER 
   
37,111
     
58,686
      (21,575 )     -36.8 %
MORTGAGE PAYABLE 
   
101,355
     
104,779
      (3,424 )     -3.3 %                                     
TOTAL LONG TERM LIABILITIES
   
675,907
     
683,695
      (7,788 )     -1.1 %                                                      
                   
STOCKHOLDERS EQUITY 
                               
COMMON STOCK  
   
49,000
     
49,000
     
0
      0.0 %
PAID IN SURPLUS  
   
40,403
     
40,403
     
0
      0.0 %
UNDISTR. S CORP INCOME RVS
   
6,174
     
74,811
      (68,637 )     -91.7 %
RETAINED EARNINGS 
   
2,779,515
     
2,592,075
     
187,440
      7.2 %
CURRENT PERIOD NET INCOME/LOSS
    (274,098 )     (249,532 )     (24,566 )     9.8 %                           
         
TOTAL STOCKHOLDERS EQUITY
   
2,600,994
     
2,506,757
     
94,237
      3.8 %                                     
 
   
6,809,399
     
6,870,563
      (61,164 )     -0.9 %

End of Schedule      

--------------------------------------------------------------------------------

 
Schedule 8(a)

States in which authorized to do Business

(1)
Massachusetts

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(k)(A)

Employee Benefit Plan

 
1.
The Sellers maintain the S&A Group of Companies Profit Sharing Plan and Trust. A
copy of the plan document along with Form 5500s for the most recent three years
has been previously e-mailed to the Buyer.

 
2.
A copy of the Seller’s Employee Handbook (20 pages) is attached as Exhibit
8(k)(A)(2).

Attachment(s) on file at the Company’ s corporate office

--------------------------------------------------------------------------------

Schedule 8(k)(C)

Exceptions to Section 8(k)(C)

Attached is a Schedule listing accrued vacation and sick pay benefits for
Seller’s employees.

Attachment(s) on file at the Company’ s corporate office

--------------------------------------------------------------------------------

Schedule 8(k)(E)(i)

Number of employees by position

Management / Administrative
5
Office Sales / Purchasing
7
Outside Sales
8
Secretarial
6
Counter / Warehouse
14
Delivery
5
Showroom Sales
4
Consulting
1
Cleaning (part time)
1
 
 
Total
51

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(k)(E)(ii)

Union employees

None

End of Schedule

--------------------------------------------------------------------------------

 
    Schedule 8(l)(B)(a)   
        
RESTATED 08/20/2007
            S & A  SUPPLY, INC 
PAGE  1
AUTOS/SHOWROOM ENTRIES
              BALANCE SHEET 
 

      
JUNE 2007
                                                 
2007
   
2006
   
CHANGE
   
CHANGE
 
ASSETS
                       
CURRENT ASSETS  
                       
CASH IN BANK  
   
675
     
675
     
0
      0.0 %
CASH IN BANK OPERATING 
    (441,990 )     (609,038 )    
167,048
      -27.4 %
PAYROLL CHECKING 
   
785
     
716
     
69
      9.6 %
CASH IN BANK OPERATING 
   
0
     
0
     
0
   
#DIV/0!
 
ACCOUNTS RECEIVABLE-TRADE
   
1,831,197
     
1,973,736
      (142,539 )     -7.2 %
ACCOUNTS RECEIVABLE- OTHER
    (6,213 )    
0
      (6,213 )  
#DIV/0!
 
RESERVE FOR BAD DEBTS 
    (119,600 )     (144,600 )    
25,000
      -17.3 %
LOAN REC - S & A MANAGEMENT
   
365,232
     
315,534
     
49,698
      15.8 %
NOTES RECEIVABLE 
   
314
     
314
     
0
      0.0 %
INVENTORIES  
   
4,219,960
     
4,435,643
      (215,683 )     -4.9 %
UNEXPIRED INSURANCE 
   
20,234
     
23,943
      (3,709 )     -15.5 %
LOAN RECEIVABLE J CURE 
   
0
     
72
      (72 )     -100.0 %
PREPAID EXPENSES 
   
31,559
     
22,453
     
9,106
      40.6 %
NOTE RECEIVABLE RPM 
   
315,803
     
326,978
      (11,175 )     -3.4 %
LOAN RECEIVABLE R.J. ALOISIRJA & ERIC DRYS
   
7,804
     
2,543
     
5,261
      206.9 %                                     
TOTAL CURRENT ASSETS 
   
6,225,760
     
6,348,969
      (123,209 )     -1.9 %                                     
PROPERTY. PLANT AND EQUIPMENT
                               
LAND   
   
23,132
     
23,132
     
0
      0.0 %
LAND IMPROVEMENTS 
   
41,076
     
39,418
     
1658
      4.2 %
BUILDING & INPROVEMENTS 
   
480,506
     
480,506
     
0
      0.0 %
IMPROVEMENTS-ELECTRICAL DEPT.
   
78,059
     
78,059
     
0
      0.0 %
FURNITURE AND FIXTURES 
   
200,569
     
200,569
     
0
      0.0 %
MACHINERY AND EQUIPMENT
   
172,894
     
163,120
     
9774
      6.0 %
DATA PROCESSING EQUIPMENT
   
448,854
     
442,885
     
5969
      1.3 %
AUTOMOTIVE EQUIPMENT 
   
585,613
     
610,480
      (24,867 )     -4.1 %
SHOWROOM DISPLAY 
   
119,950
     
79,348
     
40,602
      51.2 %                                     
TOTAL PROP, PLANT & EQUIPMENT
   
2,150,653
     
2,117,517
     
33,136
      1.6 %                                     
LESS ACCUMULATED DEPRECIATION
    (1,564,304 )     (1,597,227 )     (32,923 )     2.1 %                       
             
TOTAL PROP, PLANT & EQUIPMENT
   
586,349
     
520,290
     
66,059
      12.7 %                                     
OTHER ASSETS  
                               
UNAMORTIZED MORTGAGE EXP
   
0
     
0
     
0
   
#DIV/0!
 
DEPOSITS  
   
0
     
0
     
0
   
#DIV/0!
 
EXCHANGE  
    (2,710 )    
1,304
      (4,014 )     -307.8 %
CASH SURR. VALUE OF LIFE INS
   
0
     
0
     
0
   
#DIV/0!
                                      
TOTAL OTHER ASSETS 
    (2,710 )    
1,304
      (4,014 )     -307.8 %                                     
TOTAL ASSETS  
   
6,809,399
     
6,870,563
      (61,164 )     -0.9 %

--------------------------------------------------------------------------------

 
S & A  SUPPLY, INC
PAGE  2
 
BALANCE SHEET
   
JUNE 2007
 

                  
 $
     
%
        
2007
   
2006
   
CHANGE
   
CHANGE
 
LIABILITIES AND STOCKHOLDERS EQUITY
                                                    
CURRENT LIABILITIES 
                         
ACCOUNT PAYABLE-TRADE 
   
613,853
     
716,086
      (102,233 )     -14.3 %
LIABILITY TO PENSION FUND 
   
1,954
     
1,450
     
504
      34.8 %
LIFE INSURANCE EMPLOYEES
   
0
     
0
     
0
   
#DIV/0!
 
L/T DISABILITY EMPLOYEES 
   
0
     
0
     
0
   
#DIV/0!
 
FEDERAL & FICA TAXES PAYABLE
   
0
     
0
     
0
   
#DIV/0!
 
SWT PAYABLE  
   
0
     
0
     
0
   
#DIV/0!
 
FED UC PAYABLE  
   
0
     
0
     
0
   
#DIV/0!
 
DEPOSIT CLEARING 
    (6,625 )     (366 )     (6,259 )     1710.1 %
PAYROLL CLEARING 
   
0
     
0
     
0
   
#DIV/0!
 
PAYMENT CLEARING 
    (1,687 )    
16,365
      (18,052 )     -110.3 %
SALES/USE TAX PAYABLE 
   
36,801
     
37,239
      (438 )     -1.2 %
ACCRUED EXPENSES 
   
122,880
     
152,908
      (30,028 )     -19.6 %
CORP TAX PAYABLE 
    (33,996 )    
49
      (34,045 )     -69479.6 %
N/P LEE BK LOC  
   
2,703,454
     
2,671,999
     
31,455
      1.2 %
N/P S & A REALTY  
   
7,200
     
0
     
7,200
   
#DIV/0!
 
N/P LEGACY A&B PLUS AUTOS
   
60,802
     
58,634
     
2,168
      3.7 %
NOTE PAYABLE AUTOS 
   
18,465
     
16,208
     
0
      0.0 %
NOTE PAYABLE NAM 
    (536 )    
181
     
0
      0.0 %
NOTE PAYABLE (1) FORD 650 
   
9,933
     
9,358
     
0
      0.0 %                                     
TOTAL CURRENT LIABILITIES 
   
3,532,498
     
3,680,111
      (147,613 )     -4.0 %                                                    
                     
LONG TERM LIABILITIES 
                               
NOTES PAYABLE - OTHER 
   
537,441
     
520,230
     
17,211
      3.3 %
NOTES PAYABLE - OTHER 
   
37,111
     
58,686
      (21,575 )     -36.8 %
MORTGAGE PAYABLE 
   
101,355
     
104,779
      (3,424 )     -3.3 %                                     
TOTAL LONG TERM LIABILITIES
   
675,907
     
683,695
      (7,788 )     -1.1 %                                                      
                   
STOCKHOLDERS EQUITY 
                               
COMMON STOCK  
   
49,000
     
49,000
     
0
      0.0 %
PAID IN SURPLUS  
   
40,403
     
40,403
     
0
      0.0 %
UNDISTR. S CORP INCOME RVS
   
6,174
     
74,811
      (68,637 )     -91.7 %
RETAINED EARNINGS 
   
2,779,515
     
2,592,075
     
187,440
      7.2 %
CURRENT PERIOD NET INCOME/LOSS
    (274,098 )     (249,532 )     (24,566 )     9.8 %                           
         
TOTAL STOCKHOLDERS EQUITY
   
2,600,994
     
2,506,757
     
94,237
      3.8 %                                     
TOTAL LIABILITIES & EQUITY 
   
6,809,399
     
6,870,563
      (61,164 )     -0.9 %

End of Schedule  
                               

--------------------------------------------------------------------------------

 
Schedule 8(n)(A)

 
None

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(n)(B)

None, except S&A Supply, Inc. has made monthly payments of rent in the amount of
$7,500 to S&A Realty, Inc. and management fees of $49,200 to S&A Management,
Inc. in the ordinary course of business and consistent with prior practices.

--------------------------------------------------------------------------------

 
Schedule 8(n)(B)(3)

None

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(n)(B)(6)

None

End of Schedule

--------------------------------------------------------------------------------

 
Schedule 8(o)

None

End of Schedule

--------------------------------------------------------------------------------

 
Schedule 8(p)

Dek Tillet Vs Brenden Reed & S & A Supply Inc. S & A  Insurance Company
Settled  Without further cost to S & A

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(q)(2)

Asbestos Insurance

From the time of the Mead family’s first involvement with the Sellers in 1993 to
date, none of the Sellers has carried asbestos-liability insurance. Current
management of the Sellers is not aware of the Sellers ever having carried such
insurance.

--------------------------------------------------------------------------------

Schedule 8(r)(A)

Real Estate Owned

20 Maple Ave Great Barrington, Massachusetts, 01230
Warehouses and corporate offices of S & A Supply Inc, a plumbing, heating, and
electrical wholesale distributor

40 Maple Ave Great Barrington, Massachusetts, 01230
Showroom displaying fixtures sold by S & A Supply Inc, a plumbing, heating, and
electrical wholesale distributor

1311 East Street Pittsfield, Massachusetts, 01201
Warehouse and Showroom of S & A Supply Inc, a plumbing, heating, and electrical
wholesale distributor

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(r)(B)

Real Estate Leased

992 Massachusetts Ave North Adams, Massachusetts 01247
Warehouse of S & A Supply Inc, a plumbing, heating, and electrical wholesale
distributor

Tenet at will
Leased from Peter Swift (DBA Ashley Swift & Sons Plumbing & Heating)

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(s)

Commitments

Company
Service
Verizon Wireless
Cell Phone Service
Pitney Bowes
Postage Meter
Berkshire Graphics
Gt. Barrington Copier
Profit 21
Computer Operating System
BSI
Printer maintenance Service
On Hold Marketing
Telephone Hold Advertising
Unifirst
Uniform Service
Ikon
Gt. Barrington Showroom Copier
Lee Bank
Line of Credit
Legacy Bank
Mortgages

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(t)

Insurance

See Attached Certificate of Insurance dated September 7, 2007 issued by
BIG-Minkler Insurance Agency for information covering insurance coverage.

Copies of policies of insurance carried by the Sellers are attached.

Attachment(s) on file at the Company’ s corporate office

--------------------------------------------------------------------------------

Schedule 8(u)

Intangible Rights

None

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(v)

FIXED ASSETS

Detailed listing attached – 9 pages

Attachment(s) on file at the Company’ s corporate office

--------------------------------------------------------------------------------

Schedule 8(w)(A)

None

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(w)(B)

Permits

None

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(w)(C)

Hazardous Substances

Incorporated by reference herein are the Environmental Site
Investigation-Remediation reports dated August 20, 2007 prepared by William L.
Going Associates, Inc. with respect to:

a)
20-40 Maple Avenue, Great Barrington, MA;

b)
1311 East Street, Pittsfield, MA; and

c)
992 Massachusetts Avenue, North Adams, MA.

--------------------------------------------------------------------------------

William L. Going & Associates, Inc.
ENVIRONMENTAL SITE INVESTIGATION-REMEDIATION
 

--------------------------------------------------------------------------------

38 Chapel Court
Pine Bush, New York 12566
Tel. 845-744-3705
Fax. 845-744-5464
E-mail: budgoing@frontiernet.net
August 20, 2007

Mr. William Pagano, President
Universal Supply Group Inc.
275 Wagaraw Road
Hawthorne, New Jersey 07506

RE:
Summary of Findings for Phase I Environmental Site Assessment

Commercial Property At 1311 East Street, Pittsfield, Massachusetts

Dear Mr. Pagano:

At your request, William L. Going & Associates, Inc. is conducting a Phase I ESA
of commercial property situated at 1311 East Street, Pittsfield, Massachusetts.
We have determined that there are “recognized environmental conditions” onsite
and that there should be some additional investigation in order to determine
whether or not these conditions have caused any significant impact to subject
property.

Specifically, historical sources indicate that subject may have been used as a
trolley yard. In addition, documented historical use of subject property
includes “paper manufacturing, research and development” and we have determined
that two (2) aboveground storage tanks (ASTs) were utilized in the manufacturing
process. The present owner cannot tell us and we have not yet been able to
determine if these ASTs contain chemicals or chemical residual. We also find
that a 10,000 gal. underground fuel oil storage tank (UST) was removed from
subject property in 1989 without any documentation of soil conditions before or
after removal. Furthermore, there are currently three (3) 275 gal. fuel oil ASTs
in service at the subject (without any means of secondary containment). Also,
and finally, subject is surrounded to the north, south, and west by a hazardous
waste site [“General Electric”] identified by both the Massachusetts Department
of Environmental Protection and the U.S. Environmental Protection Agency, and
considerable soil and groundwater contamination has been discovered.

These “recognized environmental conditions” represent significant potential
environmental liability until they have been thoroughly investigated. We
recommend the installation of strategic test pits and soil borings and
subsequent soil and groundwater analysis.

We will issue the complete Phase I ESA (with attachments) in about two weeks.

Meanwhile, if there are any technical questions for us, or if further
elaboration is required, please do not hesitate to contact us at (845) 744-3705.

Thanks for the opportunity to be of service.

Sincerely,

/s/ William L. Going
 
William L. Going, Principal

--------------------------------------------------------------------------------

William L. Going & Associates, Inc.
ENVIRONMENTAL SITE INVESTIGATION-REMEDIATION
 

--------------------------------------------------------------------------------

38 Chapel Court
Pine Bush, New York 12566
Tel. 845-744-3705
Fax. 845-744-5464
E-mail: budgoing@frontiernet.net
August 20, 2007
Mr. William Pagano, President
Universal Supply Group Inc.
275 Wagaraw Road
Hawthorne, New Jersey 07506

RE:
Summary of Findings for Phase I Environmental Site Assessment

Commercial Property 20 and 40, Maple Avenue, Great Barrington, Massachusetts

Dear Mr. Pagano:

At your request, William L. Going & Associates, Inc. is conducting a Phase I ESA
of commercial property situated at 20 and 40, Maple Avenue, Great Barrington,
Massachusetts. We have determined that there are “recognized environmental
conditions” onsite and that there should be some additional investigation in
order to determine whether or not these conditions have caused any significant
impact to subject property.

Specifically, historical sources indicate that a 6,000 gal. underground fuel oil
storage tank (UST) and a 2,000 gal. fuel oil UST were reportly closed in place
in 1992 without any documentation of soil conditions before or after UST
removal. We also find one (1) 275 gal. aboveground fuel oil storage tank (AST)
and one (1) 330 gal. fuel oil AST in service at subject property (without any
means of secondary containment).

These “recognized environmental conditions” represent potential environmental
liability until they have been thoroughly investigated. We recommend the
installation of strategic test pits and/or soil borings and subsequent soil
and/or groundwater analysis.

We will issue the complete Phase I ESA (with attachments) in about two weeks.
Meanwhile, if there are any technical questions for us, or if further
elaboration is required, please do not hesitate to contact us at (845) 744-3705.
Thanks for the opportunity to be of service.

Sincerely,

/s/ William L. Going
 
William L. Going, Principal

--------------------------------------------------------------------------------

William L. Going & Associates, Inc.
ENVIRONMENTAL SITE INVESTIGATION-REMEDIATION 
 

--------------------------------------------------------------------------------

38 Chapel Court
Pine Bush, New York 12566
Tel. 845-744-3705
Fax. 845-744-5464
E-mail: budgoing@frontiernet.net
August 20, 2007

Mr. William Pagano, President
Universal Supply Group Inc.
275 Wagaraw Road
Hawthorne, New Jersey 07506
E-mail: wpagano@usginc.com

RE:
Summary of Findings for Phase I Environmental Site Assessment

Commercial Property At 992 Massachusetts Avenue, North Adams, Massachusetts

Dear Mr. Pagano:

At your request, William L. Going & Associates, Inc. is conducting a Phase I ESA
of commercial property situated at 992 Massachusetts Avenue, North Adams,
Massachusetts. We have not discovered any “recognized environmental conditions”
or significant environmental issues associated with this commercial property.

We will issue the complete Phase I ESA (with attachments) in about two weeks.

Meanwhile, if there are any technical questions for us, or if further
elaboration is required, please do not hesitate to contact us at (845) 744-3705.

Thanks for the opportunity to be of service.

Sincerely,

/s/ William L. Going
 
William L. Going, Principal

--------------------------------------------------------------------------------

Schedule 8(w)(D)

Tanks

-
20 Maple Ave Great Barrington  (1) 2000 gallon Tank & (1) 6000 gallon tank –
Both have been de-commissioned and abandoned

-
1311 East Street Pittsfield (1) 10,000 Gallon Tank removed September 19, 1989

Both above items are referred to in the Going Phase One reports attached to
Schedule 8(w)(C) hereto.

Attached are:

a)
Copy of permit dated September 1, 1989;

b)
Copy of historic site assessment re: 1311 East Street, Pittsfield; and

c)
Copy of Department of Public Safety Application dated July 8, 1992

Attachment(s) on file at the Company’ s corporate office

--------------------------------------------------------------------------------

Schedule 8(x)

Customers/Vendors

Attachment(s) on file at the Company’ s corporate office

--------------------------------------------------------------------------------

Schedule 8(y)

None

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(z)(B)

Recalled Products

No record of, none in recent memory

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(z)(E)

None

End of Schedule

--------------------------------------------------------------------------------

Schedule 8(aa)

Affiliate Transactions

As set forth in Sellers’ annual financial statements

 
1.
S & A Managements, Inc.

 
2.
S & A Realty, Inc.

See also Schedule 8(n)(B) with respect to rent and management fees paid since
June 30, 2007

--------------------------------------------------------------------------------

Schedule 8(bb)

Sellers Credit Applications and Personal Guarantee

The Sellers have not kept records of credit applications and guarantees to
vendors.
 
 

--------------------------------------------------------------------------------