Document:

ex10_04.htm

    
      

    

    EXHIBIT
      10.04

    Great
      Barrington

    20
      Maple
      Avenue

    LEASE

    

    This
      lease, dated as of September 10, 2007, (“Lease”) is by and between S&A
      Supply, Inc., a  Massachusetts corporation (“Landlord”)
      and  S&A Purchasing Corp., a New York corporation
      (“Tenant”).

    

    TERMS

    

    For
      good
      and valuable consideration received by each party from the other, the parties
      covenant and agree as follows:

    

    1.
      PREMISES

    

    (a)  Landlord’s
      Authority.  Landlord represents and warrants that it is the sole owner
      of the land, buildings and equipment described on Schedule A attached hereto,
      together with all buildings, improvements, facilities and fixtures located
      on
      the land, and any easements, rights of access and other property rights
      necessary to allow Tenant unobstructed use and occupancy of the foregoing (the
      “Premises”).  Landlord represents and warrants that it has full right
      and authority to lease the Premises to Tenant and to otherwise enter into this
      Lease on the terms and conditions set forth herein, and that the provisions
      of
      this Lease do not conflict with or violate the provisions of existing agreements
      between the Landlord and third parties.

    

    (b)  Lease
      of Premises.  Landlord hereby leases the Premises to Tenant, and
      Tenant hereby leases the Premises from Landlord.  The Premises are
      leased to Tenant together with all singular appurtenances, rights and privileges
      in or otherwise pertaining thereto.

    

    (c)  Landlord’s
      Access.  Landlord and its authorized agents or representatives shall
      have reasonable access to the Premises during Tenant’s normal business hours on
      not less than four hours notice to Tenant.  In the event of any
      emergency giving rise to the threat of damage or injury to life or property,
      Landlord may enter the Premises without notice.

    

    2.  TERM

    

    (a)  Lease
      Commencement.   The term of this Lease shall commence on
      September 10, 2007 (the “Commencement Date”), or the date possession of the
      Premises is delivered to Tenant in accordance with this Lease or any riders
      attached hereto.

    
      
        
        

      

      
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    (b)  Initial
      Term.  The initial term of this Lease (the “Initial Term”) shall be 5
      years, commencing on the Commencement Date.   Hereinafter, “Term”
shall mean the Initial Term and any extension thereof.

    

    (c)  Extension
      Term.  Tenant shall have the option to extend the term of this Lease
      for 3 periods of 5 years each (each such period defined as a “Renewal Period”),
      on the same terms and conditions (except for Annual Fixed
      Rental,  which shall be subject to adjustment as provided on Schedule
“B” annexed hereto) as herein contained. Tenant may exercise each of the 5 year
      option periods by giving written notice to Landlord not less than 180 days
      prior
      to the expiration date of the Initial Term or the Renewal Term, as the case
      may
      be.

    

    3.  RENT

    

    (a)  Rent.
      Tenant shall pay Landlord the Annual Fixed Rental as set forth on Schedule
      B
      annexed hereto, in equal monthly installments, on the first day of each and
      every calendar month, beginning October 1, 2007, until the expiration of the
      term of this Lease and any Renewal Term. The Annual Fixed Rental plus any
      additional rent due under this lease is hereinafter sometimes referred to as
      “Rent”.  Rent for partial months at the beginning and end of the Term
      shall be apportioned based on the number of days in such partial
      months.

    

    (b)  The
      initial payment of rent shall be made by Tenant on the date of possession of
      the
      Premises anticipated to be on or about September 10, 2007.  Said
      payment shall be for a prorated share of the monthly amount described
      herein.

    

    (c)  Late
      Rent.  The Annual Fixed Rental payments are due on the first day of
      the month and shall be considered late if received after the tenth day of the
      month.  In the event that Tenant fails to make the Annual Fixed Rental
      payment on or before the fifteenth day of the month, Tenant shall pay a late
      charge in the amount of 5% of the amount due.

    

    4.  TAXES
      AND ASSESSMENTS

    

    (a)  Payment
      of Taxes by Tenant.  As additional rent, Tenant shall pay all real
      estate taxes, personal property taxes, transaction, privilege, excise or sales
      taxes, special improvement and other assessments (ordinary and extraordinary),
      and all other taxes, duties, charges, fees and payments imposed by any
      governmental or public authority which shall be imposed, assessed or levied
      upon, or arising in connection with the ownership, use, occupancy or possession
      of the Premises or any part thereof during the Term (all of which are herein
      called “Taxes”).  Tenant shall deliver to Landlord evidence of timely
      payment of Taxes.  Taxes for the tax year in which the term shall
      commence or expire shall be apportioned according to the number of days during
      which each party shall be in possession during such tax year.

    
      
        
        

      

      
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    (b)  Tax
      Protest.  Tenant may contest any Taxes by appropriate proceedings
      conducted at Tenant’s expense in Tenant’s name or, if required by law, in
      Landlord’s name.  Landlord shall cooperate with Tenant and execute any
      documents or pleadings reasonably required for such purpose, but Landlord shall
      not be obligated to incur any expense or liability in connection with such
      contest.  Tenant may defer payment of the contested Taxes pending the
      outcome of such contest, if such deferment does not subject Landlord’s interest
      in the Premises to forfeiture.  Tenant shall deposit with Landlord, if
      Landlord so requests, an amount of money at least equal to the payment so
      deferred plus estimated penalties and interest.  Upon notice to
      Tenant, Landlord may pay such contested Taxes from such deposit if necessary
      to
      protect Landlord’s interest in the Premises from immediate sale or
      loss.  When all contested Taxes have been paid or canceled, all moneys
      so deposited to secure the same and not applied to the payment thereof shall
      be
      repaid to Tenant without interest.  In lieu of any such deposit, at
      its election Tenant may furnish a bond in a form, in an amount, and with a
      surety reasonably satisfactory to Landlord.  All refunds of Taxes
      shall be the property of Tenant to the extent they are refunds of or on account
      of payments made by Tenant.

    

    5.  SERVICES
      AND UTILITIES

    

    (a)  Contractual
      Arrangements.  Tenant shall make arrangements for delivery to the
      Premises of any gas, electrical power, water, sewer, telephone and other utility
      services and any cleaning, trash and snow removal and maintenance services
      as
      Tenant deems necessary or desirable for its operations during the
      Term.  Landlord represents that the foregoing services and utilities
      are installed or readily available at the Premises without any material
      installation costs to Tenant.

    

    (b)  Payment
      of Charges.  Tenant shall promptly pay all charges for utility and
      other services contracted by Tenant to be delivered to or used upon the Premises
      during the Term and shall be responsible for providing such security deposits,
      bonds or assurances as may be necessary to procure such services.

    

    (c)  Transition.  Landlord
      and Tenant shall each reasonably assist the other in transition of payments
      for,
      and control of, services and utilities at the commencement and termination
      of
      this Lease.

    
      
        
        

      

      
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    6.  MAINTENANCE
      AND REPAIR

    

    (a)  Present
      Condition.   Prior to the commencement of the Term, Landlord
      shall put the building systems, including, without limitation, plumbing and
      electrical lines and equipment, heating, ventilation and air conditioning
      systems, boilers, and elevators, if any, in good repair and
      condition.  Landlord represents, warrants and covenants that at the
      Commencement Date such systems will be in good mechanical and operating
      condition.  Subject to the preceding sentences of this paragraph,
      Tenant accepts the Premises in their present condition.  Landlord
      represents and warrants that it has no knowledge of any conditions which have
      existed or presently exist which could materially adversely affect Tenant’s
      business or contemplated use of the Premises.

    

    (b)  Maintenance
      Obligations.  After the commencement of the Term, Tenant shall
      promptly make or cause to be made all non-structural and mechanical repairs
      needed to maintain the Premises in its present condition, subject to reasonable
      wear and tear.  Landlord shall promptly make or cause to be made all
      structural and mechanical repairs and replacements necessary to so maintain
      the
      Premises, which shall include keeping the roof and Premises free of leaks,
      repairs to the plumbing and drainage systems, electrical systems, and the
      exterior and interior structural elements of the building (including, without
      limitation, the roof, exterior and bearing walls of the building, support beams,
      foundations, columns and lateral supports).

    

    7.  USE;
      COMPLIANCE WITH LAWS

    

    (a)  Permitted
      Uses.  Tenant may use and occupy the Premises for all lawful uses or
      purposes.

    

    (b)  Compliance
      with Laws.  Landlord represents and warrants that Tenant’s intended
      use of the Premises for heating and plumbing supply business and an electrical
      wholesale business, and for offices and other related uses in connection with
      Tenant’s distribution business is a lawful use of the Premises, and that no
      further governmental consents, approvals or permits are necessary for such
      use.  Landlord further represents and warrants that the Premises are
      in compliance with all applicable laws, including the Americans With
      Disabilities Act.  If the foregoing representations are untrue, then,
      in addition to all of Tenant’s other rights hereunder or at law or in equity,
      Landlord shall reimburse Tenant for, and shall indemnify and hold Tenant and
      any
      Tenant Indemnitees harmless from and against, any and all damages, injuries,
      fines, losses or claims, and all costs and expenses, including reasonable
      attorneys fees, incurred by or asserted against Tenant as a result of or arising
      out of such representation being untrue, including any costs or expenses
      associated with obtaining any necessary consents, approvals or
      permits.

    
      
        
        

      

      
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    8.  ALTERATIONS

    

    Tenant
      may, without obtaining Landlord’s prior consent or approval, make temporary
      alterations, improvements and additions (“Alterations”) to the Premises that do
      not permanently affect the Premises.  Tenant may make other
      non-temporary Alterations to the Premises (by way of example but not limitation,
      the installation of drywall partitioning, doorways, and lifts) with Landlord’s
      prior consent or approval, which consent or approval shall not be unreasonably
      withheld, conditioned or denied; notwithstanding the foregoing, if the cost
      of
      such non-temporary Alterations is less than $20,000, Landlord’s prior consent
      shall not be required.  All Alterations made by Tenant shall be made
      at Tenant’s sole cost and expense, including all costs and expenses incurred in
      obtaining any required governmental consents, permits or
      approvals.  Tenant may perform all Alterations with contractors and
      subcontractors of Tenant’s own choosing.  Landlord will cooperate with
      Tenant’s efforts to obtain any governmental permits or approvals or consents
      required therefor. Landlord shall not be entitled to impose upon Tenant any
      charges or fees of any kind in connection with any Alterations.

    

    9.  SIGNAGE

    

    Tenant,
      at its expense and subject to its obtaining any required governmental permits
      and approvals, may place, maintain, repair and replace signage on the Premises,
      which may include any such trade name(s) or corporate affiliations as Tenant
      chooses.  Landlord shall cooperate with Tenant’s efforts to obtain any
      permit, approval or consent necessary or desirable in connection with the
      installation of any sign.

    

    10.  TENANT’S
      PROPERTY

    

    For
      purposes of this Lease, the Term “Tenant’s Property” shall mean all office
      furniture and equipment, movable partitions, communications equipment,
      inventory, and other articles of movable personal property owned or leased
      by
      Tenant and located in the Premises.  All Tenant’s Property shall be
      and remain the property of Tenant throughout the Term of this Lease and may
      be
      removed by Tenant at any time during the Term.  Upon the expiration of
      this Lease, or within 30 days after the sooner termination hereof, Tenant shall
      remove all Tenant’s Property from the Premises without leaving any noticeable
      damage to the Premises.  If Tenant leaves noticeable damage as a
      result of Tenant’s removal of Tenant’s Property, Landlord shall give Tenant 15
      days written notice to remove or repair such damage, after which time, Landlord
      may repair such damage and Tenant shall reimburse Landlord for all costs and
      expenses reasonably incurred by Landlord in repairing such
      damage.

    
      
        
        

      

      
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    11.  QUIET
      ENJOYMENT

    

    Landlord
      covenants that Tenant shall and may, at all times during the Term, peaceably
      and
      quietly have, hold, occupy, and enjoy the Premises.

    

    12.  LIENS
      AND MORTGAGES

    

    (a)
      Tenant’s Liens.  Tenant shall not (i) by any failure to act or by any
      act, other than the mere hiring of a material or service provider, allow any
      materialman’s or mechanic’s liens, or (ii) by any act or failure to act allow
      any other liens, deeds of trust, mortgages, or other encumbrances, to be placed
      on the whole or any portion of the Premises during the term of this
      Lease.

    

    (b)  Non-Disturbance.
      Landlord may place or leave in place a mortgage on the Premises, but only if
      Landlord shall have obtained from its mortgagee a written agreement with Tenant,
      in form and substance satisfactory to Tenant’s legal counsel,  which
      agreement (including any extensions, modifications, renewals, consolidations,
      and replacements thereof) shall be binding on their respective successors and
      assigns and which provides that so long as Tenant shall not be in default in
      payment of Rent: (a) Tenant shall not be joined as a defendant in any proceeding
      which may be instituted to foreclose or enforce the mortgage; (b) Tenant’s
      possession and use of the premises in accordance with the provisions of this
      Lease shall not be affected or disturbed by reason of the subordination of
      this
      Lease to, or any modification of or default, under the mortgage; and (c) the
      mortgagee will subordinate and subject its respective rights, if any, to any
      portion of the insurance proceeds otherwise payable to Landlord when and to
      the
      extent necessary for Landlord to comply with its obligations of repair and
      restoration hereunder.

    

    13.  INSURANCE

    

    (a)  Building
      Insurance.  Throughout the Term, Landlord shall keep the buildings and
      improvements included in the Premises insured for the “full replacement value”
thereof against loss or damage by perils customarily included under standard
      “all-risk” policies.

    
      
        
        

      

      
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    (b)  Tenant’s
      Liability Insurance. Throughout the Term, Tenant shall maintain commercial
      general liability insurance, including a contractual liability endorsement,
      and
      personal injury liability coverage in respect of the Premises and the conduct
      or
      operation of business therein, with Landlord as an additional insured, with
      limits of not less than $3,000,000 combined single limit for bodily injury
      and
      property damage liability in any one occurrence.  Each such policy of
      insurance shall provide that the same will not be canceled without at least
      30
      days prior written notice to Landlord. On written request by Landlord, Tenant
      shall deliver to Landlord certificates of insurance, showing that the insurance
      required to be maintained pursuant to the foregoing provisions of this Section
      13(b) is in force and will not be modified or canceled without 30 days prior
      written notice being furnished to Landlord. Thereafter, not less than 30 days
      prior to the expiration or termination of each such policy, Tenant shall furnish
      to Landlord certificates showing renewal of, or substitution for, policies
      which
      expire or are terminated.  The insurance to be maintained by Tenant
      pursuant to this Section 13(b) may be effected either by blanket or umbrella
      policies.

    

    (c)  Waiver
      of Subrogation.  A party shall have no claim against the other or the
      employees, officers, directors, managers, agents, shareholders, partners or
      other owners of the other for any loss, damage or injury which is covered by
      insurance carried by such party and for which recovery from such insurer is
      made, notwithstanding the negligence of either party in causing the
      loss.  The foregoing waiver and release shall not apply, however, to
      any damage caused by intentionally wrongful actions or omissions. Each party
      represents that its current insurance policies allow such
      waiver.  Neither Landlord nor Tenant shall obtain or accept any
      insurance policy which would be invalidated by or which would conflict with
      this
      paragraph.

    

    14.  INDEMNIFICATION

    

    Except
      as
      may otherwise be provided in this Lease, Tenant shall indemnify and hold
      harmless Landlord, its employees, officers, directors, managers, agents,
      shareholders, partners or other owners from and against any and all third-party
      claims arising from or in connection with: (i) the conduct or management of
      the
      Premises or of any business thereon, or any condition created in or about the
      Premises during the term of this Lease, unless created by Landlord or any person
      or entity acting at the instance of Landlord; (ii) any act, omission or
      negligence of Tenant or any of its subtenants or licensees or its or their
      employees, officers, directors, managers, agents, shareholders, partners or
      other owners, invitees or contractors; (iii) any accident or injury or damage
      whatever, not caused by Landlord or any person or entity acting at the instance
      of the Landlord occurring in, at or upon the Premises.  Tenant shall
      have the right to assume the defense of any such third-party claim with counsel
      chosen by Tenant or by Tenant’s insurance company.  Tenant shall not
      be responsible for the fees of any separate counsel employed by the
      Landlord.

    
      
        
        

      

      
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    15.  OPTIONS
      TO PURCHASE

    

    Right
      of
      First Refusal.  Should Landlord during the Term enter into an
      agreement to sell the Premises, or any portion thereof, (“Sales Agreement”)
      Landlord shall provide to Tenant a written notice of intent to sell (“Notice”)
      with a copy of the Sales Agreement.  Tenant shall have and may
      exercise an option to acquire the Premises, or the portion thereof subject
      to
      the Sales Agreement, on the same terms and conditions, other than as to the
      identity of the purchaser and date for closing, as are set forth in the Sales
      Agreement.  If Tenant does not within 30 days after receiving the
      Notice and copy of the Sales Agreement give Landlord written notice of Tenant’s
      intention to exercise such option, then subject to and as provided by the Sales
      Agreement Landlord may sell the Premises or portion thereof covered by the
      Sales
      Agreement by no later than the 150th day after receipt by Tenant of the Notice
      and copy of the Sales Agreement.  If Landlord does not timely so sell
      the Premises or varies the terms of the Sales Agreement, Landlord shall again
      comply with the terms of this Section 15 as if no Notice had ever been
      given.  If Tenant timely notifies Landlord of its intent to exercise
      such option, then at such time as Tenant may specify, but no later than 90
      days
      following receipt by Landlord of such notice from Tenant, and at such place
      within the city or town where the Premises is located as Tenant may specify,
      or
      such other place and time and Landlord and Tenant may agree, Tenant shall
      exercise its option by purchasing, and Landlord shall sell to Tenant, the
      Premises or portion thereof subject to the Sales Agreement.

    

    16.
      ENVIRONMENTAL MATTERS

    

    (a)  Definitions.

    

    “Environment”
      means soil, surface waters, groundwater, land, stream sediments, surface or
      subsurface strata and ambient air.

    

    “Environmental
      Condition” means any condition with respect to the Environment on or off the
      Premises, whether or not yet discovered, which could or does result in any
      Environmental Damages, including, without limitation, any condition resulting
      from the operation of any business that is or was conducted on the Premises
      by
      Landlord or Landlord’s predecessors, lessees, sublessees or occupants of the
      Premises other than Tenant, or on the property of any other property owner
      or
      operator in the vicinity of the Premises, or which could or does result from
      any
      activity or operation conducted by any person or entity on or off the
      Premises.

    
      
        
        

      

      
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    “Environmental
      Damages” means all claims, judgments, damages ( including punitive and
      consequential damages), losses, penalties, fines, liabilities (including strict
      liability), encumbrances, liens, costs and expenses of investigation and defense
      of any claim, whether or not such claim is ultimately defeated, and of any
      settlement or judgment, of whatever kind or nature, contingent or otherwise,
      matured or unmatured, and the costs and expenses of remediation, any of which
      are incurred at any time as a result of (i) the existence of an Environmental
      Condition on, about or beneath the Premises or migrating to or from the
      Premises, (ii) the Release or Threat of Release of Hazardous Substances into
      the
      Environment from the Premises or (iii) the violation or threatened violation
      of
      any Environmental Law with respect to the Premises, regardless of whether the
      existence of such Hazardous Substances or the violation or threatened violation
      of such Environmental Law arose prior to, on or after the Commencement Date,
      and
      including without limitation:

    

    (i)  damages
      for personal injury, disease or death or injury to property or the Environment
      occurring on or off the Premises, including lost profits, consequential damages,
      and the cost of demolition and rebuilding of any improvements;

    

    (ii)  diminution
      in the value of the Premises, and damages for the loss or of restriction on
      the
      use of the Premises;

    

    (iii)  fees
      incurred for the services of attorneys, consultants, contractors, experts,
      laboratories and all other costs incurred in connection with investigation,
      cleanup and remediation, including the preparation of any feasibility studies
      or
      reports and the performance of any cleanup, remedial, removal, abatement,
      containment, closure, restoration or monitoring work; and

    

    (iv)  liability
      to any person or entity to indemnify such person or entity for costs expended
      in
      connection with the items referred to in this paragraph.

    
      
        
        

      

      
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    “Environmental
      Laws” means all laws (including rules, regulations, codes, plans, injunctions,
      judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
      local, and foreign governments (and all agencies thereof) concerning pollution
      or protection of the environment, public health and safety, or employee health
      and safety, including laws relating to emissions, discharges, releases, or
      threatened releases of pollutants, contaminants, or chemical, industrial,
      hazardous, or toxic materials, substances or wastes into ambient air, surface
      water, ground water, or lands or otherwise relating to the manufacture,
      processing, distribution, use, treatment, storage, disposal, transport, or
      handling of pollutants, contaminants, or chemical, industrial, hazardous, or
      toxic materials, substances or wastes, including, but not limited to, the
      Comprehensive Environmental Response, Compensation and Liability Act, as
      amended, 42 U.S.C. §9601 et. seq. (“CERCLA”); the Hazardous Materials
      Transportation Act, as amended, 49 U.S.C. §1801 et. seq.; the Resource
      Conservation and Recovery Act, as amended, 42 U.S.C. §6901 et. seq.; the Federal
      Water Pollution Control Act, as amended, 33 U.S.C. §1251 et. seq.; The Clean Air
      Act, 42 U.S.C. §7404 et. seq., the Occupational Safety and Health Act of 1970,
      each as amended, and any comparable law of the state in which the Premises
      is
      located;

    

    “Hazardous
      Substance” means any (i) substance, gas, material or chemical which poses or may
      pose a hazard to human health or safety, (ii) toxic substance or hazardous
      waste, substance or related material, or any pollutant or contaminant, (iii)
      asbestos, urea formaldehyde foam insulation, petroleum and petroleum
      by-products, polychlorinated dibenzo-p-dioxins, polychlorinated dibenzofurans
      or
      polychlorinated biphenyls which, in each case, is now or hereafter subject
      to
      Environmental Law or (iv) 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.

    

    “Release”
      means any spilling, leaking, pumping, pouring, emitting, discharging, injecting,
      escaping, leaching, dumping, disposing, or other entering into the Environment
      of any Hazardous Substance, whether known or unknown, intentional or
      unintentional.

    
      
        
        

      

      
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    “Threat
      of Release” means a substantial likelihood of a Release which requires action to
      prevent or mitigate damage to the Environment which may result from such Release
      and which is required under the Environmental laws.

    

    (b)  Representations
      and Warranties.  Landlord represents and warrants to Tenant that,
      unless otherwise disclosed on Schedule C:

    

    (i)   Landlord
      has no material documents in its possession concerning any Environmental
      Condition, and Landlord is not aware of any material information relating to
      any
      Environmental Condition of the Premises.

    

    (iii)  During
      Landlord’s ownership of the Premises:

    

    (A)
      Landlord has not installed any above ground or underground tanks for storage
      of
      Hazardous Substances (“Storage Tanks”) at the Premises, nor were any Storage
      Tanks located at the Premises prior to the time Landlord acquired ownership
      of
      the Premises.  The Premises 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"), on the Property,
      except as disclosed on Schedule C hereto.  To the extend there are any
      Tanks disclosed on Schedule C, such Tanks shall have been properly removed
      or
      shall have been legally and property de-commissioned and abandoned and Landlord
      shall provide written verification of such proper removal or de-commissioning
      and abandonment within 10 days prior to the Commencement Date.

    

    (B)  It
      has not received any notice of any private, administrative or judicial action,
      or notice of any intended private, administrative or judicial action, relating
      to the presence or alleged presence of Hazardous Substances in, under or upon
      the Premises, or that may have migrated from the Premises and there is no basis
      for any such notice or action.  There are no pending, or to Landlord’s
      knowledge, threatened, actions or proceedings (or notices of potential actions
      or proceedings) from any governmental agency or any other entity regarding
      any
      matter relating to any Environmental Laws.

    

    (C)  Landlord
      has not notified or been made aware of any notice to any environmental agency
      of
      a Release at the Premises.

    

    (D)  Landlord
      has not disposed of any Hazardous Substances at the Premises or sent,
      transported, caused the transportation of or disposed of any waste materials
      that are not Hazardous Substances, at the Premises.

    
      
        
        

      

      
        -
          11
          -

        
          

        

      

      
        
        

      

    

    (E)  Landlord,
      during its ownership and operation of the Premises, has disposed of all wastes
      it generated from operations conducted at the Premises in compliance with
      applicable laws and only at off-Premises facilities reasonably believed by
      Landlord to have necessary permits and approvals.

    

    (F)  Landlord
      has during its ownership and operation of the Premises maintained or kept all
      records required by law to be maintained or kept relating to the generation,
      storage, treatment, release and/or disposal of Hazardous
      Substances.

    

    (G)   Landlord
      has no knowledge of any Release at the Premises.

    

    (c)  Environmental
      Indemnities.  Landlord shall indemnify and hold harmless Tenant and
      any Tenant Indemnitees against any and all Environmental Damages. Tenant shall
      indemnify Landlord against any loss, cost, damage, claim or expense to Landlord
      arising out of or related to the presence, use, handling, discharge, release
      or
      disposal of Hazardous Substances on, in, under, to or from the Premises
      introduced by Tenant onto the Premises, provided that Landlord shall have the
      burden of proving that any such loss, cost, damage, claim or expense arose
      on
      account of Hazardous Substances introduced by Tenant onto the
      Premises.

    

    17.  DAMAGE
      AND DESTRUCTION

    

    In
      case
      of damage to or destruction of the Premises or any part thereof by any cause
      whatever, if Tenant cannot continue the operation of its business in the same
      manner as prior to such damage or destruction, Tenant by a written notice to
      Landlord may terminate this Lease unless Landlord, within 20 days following
      such
      damage or destruction, has agreed to reconstruct the
      Premises.  Following such damage or destruction and unless and until
      the termination of this Lease, this Lease shall remain in full force and effect
      and Tenant shall continue the operation of its business at the Premises if
      and
      to the extent the Tenant determines, in Tenant’s good faith judgment, that it is
      reasonably practical to do so.  If Landlord agrees to reconstruct the
      Premises and Tenant does not terminate the Lease on account of such damage
      or
      destruction as aforesaid (a) Landlord shall abate and forgive Rent payments
      which become due from the time of such damage or destruction through the course
      of the reconstruction to reflect the extent to which Tenant does not conduct
      its
      business operation at the Premises, (b) the lease term shall continue and the
      parties shall continue to be bound by this Agreement, and (c) Landlord shall
      commence such reconstruction as soon as possible and diligently prosecute such
      reconstruction through completion.  Notwithstanding the foregoing, if
      Tenant does not elect to terminate, Tenant shall have the right to require
      Landlord to reconstruct the Premises, in which event the provisions of “(a), (b)
      and (c) of the preceding sentence shall apply and the building insurance
      proceeds shall be held for such purpose.

    
      
        
        

      

      
        -
          12
          -

        
          

        

      

      
        
        

      

    

    18.
      CONDEMNATION

    

    (a)  Notice.  Landlord
      and Tenant shall each notify the other if it becomes aware that there will
      or
      might occur a taking of any portion of the Premises by condemnation proceedings
      or by exercise of any right of eminent domain (each, a “Taking”).

    

    (b)  Termination
      of Lease.  In the event of the Taking of the entire Premises, this
      Lease shall terminate as of the date of such Taking.  If there occurs
      a Taking of a portion of the Premises such that the remainder of the Premises
      shall not, in Tenant’s reasonable opinion, be adequate and suitable for the
      conduct of Tenant’s business as conducted prior to such Taking, then Tenant may,
      at its option, terminate this Lease.

    

    (c)  Continuation
      of Lease.  If there is a Taking of a portion of the Premises and this
      Lease is not terminated pursuant to Section 18(b) hereof, then this Lease shall
      remain in full force and effect, except that appropriate adjustments shall
      be
      made to, and in respect of, the Premises and Rent, and Landlord shall proceed
      with due diligence to perform any work necessary to restore the remaining
      portions of the Premises to the condition that they were in immediately prior
      to
      the Taking, or as near thereto as possible.

    

    (d)  Condemnation
      Award.  Any award resulting from any Taking of the Premises for the
      value of Tenant’s leasehold prior to the Taking, or Tenant’s personal property,
      fixtures, relocation costs or loss of goodwill shall be the property of
      Tenant.  All of any award resulting from any such Taking not
      specifically reserved to Tenant shall be the property of Landlord.

    

    19.  DEFAULT
      BY LANDLORD

    

    Notwithstanding
      any other provision of this Lease, if the Landlord by any act or omission in
      breach or default of this Lease renders the Premises or any portion thereof
      untenantable or unfit for Tenant’s business operations, then (a) if such
      untenantability or unfitness continues for a period of five consecutive days
      after Tenant notifies Landlord in writing thereof, all Rent shall abate for
      the
      period that the Premises remain untenantable or unfit to the extent that the
      Premises have been rendered untenantable or unfit; and (b) if such
      untenantability or unfitness continues for a period of 30 consecutive days
      after
      Tenant notifies Landlord in writing thereof, Tenant may (i) terminate this
      Lease
      at any time thereafter by delivering written notice to Landlord thereof, or
      (ii)
      cure same and deduct the cost from Rent.

    
      
        
        

      

      
        -
          13
          -

        
          

        

      

      
        
        

      

    

    20.  DEFAULT
      BY TENANT

    

    It
      shall
      constitute an Event of Default if Tenant shall fail to perform or comply with
      any term of this Lease, including the payment of Rent, and such failure shall in
      the case of a default in the payment of rent continue for a period of 10 days
      (30 days for all other defaults) after Tenant’s receipt of written notice
      thereof from Landlord specifying such failure and requiring it to be remedied;
      provided, however, that if any such failure, other than the failure to pay
      Rent,
      cannot with due diligence be remedied by Tenant within a period of 30 days,
      if
      Tenant 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 Tenant prosecutes such remedy
      with
      reasonable diligence. Following the occurrence of any Event of Default, Landlord
      may terminate this Lease and have immediate possession of the Premises, in
      addition to any other remedies allowed by law.

    

    21.  SURRENDER;
      HOLDOVER

    

    At
      the
      end of the Term or upon termination of this Lease, whichever first occurs,
      Tenant shall quit and surrender possession of the Premises to Landlord vacant
      and broom clean.  If Tenant remains in possession of the Premises
      after the end of the Term, then Tenant shall be deemed to be a tenant from
      month
      to month only, under all of the same terms and conditions of this Lease then
      in
      effect, except as to the duration of the Term.

    

    22.  BROKERAGE

    

    Landlord
      and Tenant each represents and warrants to the other that it had no
      conversations or negotiations with any broker or finder concerning the
      consummation of this Lease. Landlord and Tenant shall each indemnify and hold
      harmless the other from and against any claims for brokerage commissions or
      finder’s fees (together all related expenses, including, without limitation,
      reasonable attorneys’ fees) resulting from or arising out of any conversations
      or negotiations had by it with, or any agreement between it and, any broker
      or
      finder in connection with this Lease, other than a broker identified
      above.  In the event there is a broker, Landlord shall pay all
      brokerage commissions.

    
      
        
        

      

      
        -
          14
          -

        
          

        

      

      
        
        

      

    

    23.  ASSIGNMENT
      AND SUBLETTING

    

    Except
      as
      set forth herein, Tenant shall not assign this Lease without the Landlord’s
      prior written consent, which consent, however, shall not be unreasonably
      withheld nor delayed.  Notwithstanding the foregoing, Tenant may,
      without the Landlord’s consent: (a) sublet not more than 50% of the Premises;
      (b) assign or sublet this Lease to any entity or affiliate more than 50% owned
      or controlled by Tenant, to any entity which owns or controls more than a 50%
      interest in Tenant or to any entity under common control with
      Tenant.  A merger or consolidation to which Tenant or any successor to
      Tenant is party shall not constitute an assignment requiring consent of
      Landlord.

    

    24.  MISCELLANEOUS

    

    (a)  Governing
      Law.  This Lease shall be governed by and construed in accordance with
      the laws of the State in which the Premises is located.

    

    (b)
      Certain Definitions.

    

    “Including”
      means including without limitation.

    

     “Tenant
      Indemnitee” means any corporation, individual or other entity (a) of which
      Tenant is a direct or indirect subsidiary of any tier, or that directly or
      indirectly controls Tenant, (b) that is a direct or indirect subsidiary of
      any
      tier of Tenant, or (c) that is under direct or indirect common control with
      Tenant.

    

    (c)
      Indemnification Matters Involving Third Parties.  With respect to the
      obligation of either party to indemnify pursuant to this Lease:

     

    
      	
               

            	
              (1)

            	
              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,

            

      
        
          
          

        

        
          -
            15
            -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

            	
              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

            

    

     

    
      	
               

            	
              (c)

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

            

    

     

    
      	
               

            	
              (2)

            	
              In
                any action or proceeding, the Indemnified Party shall have the right
                to
                retain its own counsel, but, in the event the Landlord is the Indemnified
                Party, Landlord shall have the right to retain only one counsel on
                behalf
                of all the Landlord; 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.

            

    

     

    
      	
               

            	
              (3)

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

            

    

     

    
      	
               

            	
              (4)

            	
              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.

            

      
        
          
          

        

        
          -
            16
            -

          
            

          

        

        
          
          

        

      

    

     

    (d)  Consents
      and Approvals.  If, pursuant to any provision of this Lease, the
      consent or approval of either party is required to be obtained by the other
      party, then, unless otherwise provided herein, the party whose consent or
      approval is required shall not unreasonably withhold, condition or delay such
      consent or approval.

     

    (e)  Rights
      and Remedies.  All rights and remedies of either party expressly set
      forth herein are intended to be cumulative and not in limitation of any other
      right or remedy set forth herein or otherwise available to such party at law
      or
      in equity.  Notwithstanding the foregoing, in no event shall either
      party be liable to the other for consequential or punitive damages, except
      as
      otherwise provided in this Lease.

    

    (f)  No
      Waiver.  The failure of either party to seek redress for a breach of,
      or to insist upon the strict performance of any covenant or condition of this
      Lease, shall not prevent a subsequent act which would have originally
      constituted a breach from having all the force and effect of an original
      breach.  The receipt by Landlord of Rent with knowledge of the breach
      of any covenant of this Lease by Tenant shall not be deemed a waiver of such
      breach and no provision of this Lease shall be deemed to have been waived by
      Landlord unless such waiver is in writing and signed by Landlord.  The
      payment by Tenant of Rent with knowledge of the breach of any covenant of this
      Lease by Landlord shall not be deemed a waiver of such breach and no provision
      of this Lease shall be deemed to have been waived by Tenant unless such waiver
      is in writing and signed by Tenant.

    

    (g)  Successors
      and Assigns.  Each and all of the terms and agreements herein
      contained shall be binding upon and inure to the benefit of the parties hereto,
      and their heirs, legal representatives, successors and assigns.  Any
      sale or transfer of the Premises by Landlord during the term of this Lease
      shall
      be made by an instrument that expressly refers to this Lease as a burden upon
      the Premises.

    

    (h)  Recording.  Tenant
      may record this Lease, a short form thereof, or a memorandum
      thereof.  Landlord will cooperate with Tenant in the execution and
      delivery of such documents (including a memorandum or short form of this lease
      or comparable documents) as may be required to effectuate the foregoing in
      accordance with the requirements, customs and practices governing such
      recordation.

    
      
        
        

      

      
        -
          17
          -

        
          

        

      

      
        
        

      

    

    (i)
      Notices.  All notices required hereunder shall be in writing and shall
      be effective when delivered to the address set forth below (or to such other
      addresses as either party may subsequently designate).

    

    TENANT:

    

    S&A
      Purchasing Corp.

    c/o
      Universal Supply Group, Inc.

    275
      Wagaraw Road

    Hawthorne,
      NJ  07506

    Attn:
      Mr.
      William Pagano

    

    LANDLORD:

    

    S&A
      Supply, Inc.

    c/o
      Brian
      Mead

    8
      Hillside Avenue

    Gr.
      Barrington, MA 01230

    

    (j)  Entire
      Agreement; Modifications.  This Lease contains the entire agreement
      between the parties concerning the matters set forth herein and may not be
      modified orally or in any manner other than by an agreement in writing signed
      by
      all the parties hereto or their respective successors in
      interest.  Notwithstanding the foregoing, Tenant’s remedies hereunder
      and under the Stock Acquisition Agreement shall be cumulative and not
      exclusive.

    

    (k) Joint
      and Several Obligations.  If Landlord includes more than one person or
      entity, the obligations shall be joint and several of all such persons and
      entities.

    

    IN
      WITNESS WHEREOF, the parties hereto have duly executed this Lease as of the
      day
      and year first above written.

    

    
      	
              LANDLORD:

            	
              TENANT:

            
	 	 
	
              S&A
                SUPPLY, INC.

            	
              S&A
                PURCHASING CORP.

            
	 	 
	
              By:
                /s/ Brian Mead

            	
              By:
                /s/ William Pagano

            
	
                
                Brian Mead, President

            	
                
                William Pagano, President

            

    

    
      
        
        

      

      
        -
          18
          -

        
          

        

      

      
        
        

      

    

    Great
      Barrington

    20
      Maple
      Avenue

    Schedule
      A

    

    DESCRIPTION
      OF PREMISES

    

    

    The
      following described land in Berkshire County, State of Massachusetts, commonly
      referred to as 20 Maple Avenue, together with all buildings thereon and
      appurtenances thereto:

    

    Consisting
      of approximately 33,580 square feet located at 20 Maple Avenue, Great
      Barrington, Massachusetts, as further described in Schedule A-1 annexed
      hereto.

    
      
        
        

      

      
        -
          19
          -

        
          

        

      

      
        
        

      

    

    Great
      Barrington

    20
      Maple
      Avenue

    Schedule
      B

    

    ADDITIONAL
      PROVISIONS TO LEASE

    

     

    Annual
      Fixed Rent in Initial Term and Renewal Terms

     

     

    
      	
               

            	
              1.

            	
              The
                “Annual Fixed Rent” for the first year of the Initial Term shall be the
                sum of eighty one thousand dollars ($81,000) per year, or six thousand
                seven hundred fifty dollars ($6,750) per
                month.

            

    

     

    
      	
               

            	
              2.

            	
              Every
                year, starting with the second year, the Annual Fixed Rent shall
                be
                adjusted upward, but never decreased, pursuant to the provisions
                hereof.

            

    

     

    
      	
               

            	
              3.

            	
              For
                the purposes of this Schedule, the following terms have the following
                meanings:

            

    

     

    
      	
              “Index”

            	 	
              The
                Consumer Price Index—All Urban Consumers for New York-Northern New
                Jersey-Long Island, NY-NJ-CT-PA—All Items, published by the United States
                Bureau of Labor, and any successor thereto (1982 – 1984 =
                100)

            
	
              “Base
                Month”

            	 	
              September
                2007

            
	
              “Comparison
                Month”

            	 	
              September
                2008 and every September thereafter

            

    

     

    
      	
               

            	
              4.

            	
              The
                Annual Fixed Rent for the second year of the Initial Term shall be
                eighty
                one thousand dollars ($81,000) per year, increased by the percentage
                of
                increase of the Index of the Comparison Month (September 2008 and
                every
                September thereafter) over the Base Month (September
                2007).

            

    

     

    Example

     

    Assume
      that the Index for September 2008 shows a three percent (3%) increase over
      the
      Index for September 2007.  The Annual Fixed Rent for the second year
      is eighty three thousand four hundred thirty dollars ($83,430).

     

    
      	
               

            	
              5.

            	
              The
                same procedure shall be followed every year throughout the Initial
                Term
                and the Renewal Terms, with the applicable percentage of increase
                to be
                multiplied times the Annual Fixed Rent for the year just
                concluded.

            

      
        
          
          

        

        
          -
            20
            -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              6.

            	
              Because
                the Index is not published until after the close of a month, the
                adjustment in Annual Fixed Rent shall be made when the Comparison
                Month’s
                Index is published and Landlord presents to Tenant the comparison
                figure
                and computation of adjustment of Annual Fixed Rent; and any increase
                for
                months already lapsed since the end of the prior year shall be added
                to
                the next installment of Annual Fixed
                Rent.

            

    

     

    
      	
               

            	
              7.

            	
              In
                the event that the Index is discontinued, the parties shall agree
                upon an
                equivalent and substituted Index to be applied in the same
                manner.

            

    

     

    
 

    
      	
              LANDLORD:

            	
              TENANT:

            
	 	 
	
              S&A
                SUPPLY, INC.

            	
              S&A
                PURCHASING CORP.

            
	 	 
	
              By:
                /s/ Brian Mead

            	
              By:
                /s/ William Pagano

            
	
                    
                Brian Mead, President

            	
                    
                William Pagano, President

            

    

    
      
        
        

      

      
        -
          21
          -

        
          

        

      

      
        
        

      

    

    Great
      Barrington

    20
      Maple
      Avenue

    Schedule
      C

    

    Underground
      Tanks or Pipes Ancillary to Underground or Above-Ground Tanks

    
      
        
        

      

      
        -
          22
          -

        
          

        

      

      
        
        

      

    

    This
      Agreement, dated September 10, 2007 (the “Agreement”), is entered into by and
      among S&A Supply, Inc. (“Landlord” or “S&A Supply”), S&A Purchasing
      Corp. (“Tenant” or “S&A”), a New York corporation and Colonial Commercial
      Corp. (“Colonial”), a New York corporation and the sole shareholder of
      S&A.

    

    Landlord
      and Tenant entered into that certain lease agreement dated September 10, 2007
      for the premises located at 20 Maple Avenue, Great Barrington, Massachusetts
      (the “Lease Agreement”) in connection with the purchase by S&A of the assets
      set forth in that certain Asset Purchase Agreement dated by and among S&A,
      S&A Supply and the other signatories thereto.

    

    For
      good
      and valuable consideration received by each party from the other, the parties
      covenant and agree as follows:

    

    In
      the
      event Tenant fails to perform any of its obligations in accordance with the
      terms of the Lease Agreement, Landlord shall provide Tenant written notice
      (“Failure Notice”) specifying such failure and requiring such failure be
      remedied in accordance with the terms of the Lease
      Agreement.  Colonial hereby agrees to perform such failed obligation
      on behalf of the Tenant in the event Tenant shall have failed to remedy such
      failure in accordance with the prior sentence and Landlord provides Colonial
      with a written notice specifying the obligation that Tenant failed to cure
      along
      with a copy of the Failure Notice.

    

    In
      the
      event Tenant contests any of the matters set forth in a Failure Notice, Tenant
      and Landlord shall resolve such dispute exclusively by arbitration by the
      American Arbitration Association in Great Barrington, Massachusetts.
      Notwithstanding anything set forth in this Agreement, in the event a Failure
      Notice is arbitrated in accordance with this subsection, Colonial’s obligations
      under this Agreement shall be subject to the finding of Tenant’s failure to
      perform by such arbitration.

     

     

    (REST
      OF
      PAGE INTENTIONALLY LEFT BLANK)

     

    
      
        
          
          

        

        
          -
            23
            -

          
            

          

        

        
          
          

        

      

    

     

    
      	
              LANDLORD:

            	
              TENANT:

            	
              COLONIAL:

            
	 	 	 
	 	 	 
	
              S&A
                SUPPLY, INC.

            	
              S&A
                PURCHASING CORP.

            	
              COLONIAL
                COMMERCIAL CORP.

            
	 	 	 
	 	 	 
	
              By:     /s/
                Brian Mead

            	
              By:     /s/
                William Pagano

            	
              By:     /s/
                William Pagano

            
	
              Name:
                Brian Mead

            	
              Name:
                William Pagano

            	
              Name:
                William Pagano

            
	
              Title:  President

            	
              Title:  President

            	
              Title:
                Chief Executive Officer

            

    

    
      
        
        

      

      
        -
          24
          -

        
          

        

      

      
        
        

      

    

    Great
      Barrington

    20
      Maple
      Avenue

    

    Lease
      Addendum

    Number
      1

    

    Landlord
      and Tenant agree that any environmental hazard, including but not limited to
      contamination or hazardous waste, caused by or related to the disclosures in
      the
      environmental reports dated August 20, 2007 and September 7, 2007, attached
      hereto, shall be the sole liability of the Landlord.

    

    

    
      	
              LANDLORD:

            	
              TENANT:

            	
              COLONIAL:

            
	 	 	 
	 	 	 
	
              S&A
                SUPPLY, INC.

            	
              S&A
                PURCHASING CORP.

            	
              COLONIAL
                COMMERCIAL CORP.

            
	 	 	 
	 	 	 
	
              By:     /s/
                Brian Mead

            	
              By:     /s/
                William Pagano

            	
              By:     /s/
                William Pagano

            
	
              Name:
                Brian Mead

            	
              Name:
                William Pagano

            	
              Name:
                William Pagano

            
	
              Title:  President

            	
              Title:  President

            	
              Title:
                Chief Executive Officer

            

    

    
      
        
        

      

      
        -
          25
          -

        
          

        

      

      
        
        

      

    

    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

    
      
        
        

      

      
        -
          26
          -

        
          

        

      

      
        
        

      

    

    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

    September
      7, 2007

    

    Mr.
      William Pagano, President

    Universal
      Supply Group Inc.

    275
      Wagaraw Road

    Hawthorne,
      New Jersey 07506

    E-mail:
      wpagano@usginc.com

    

    
      	
              RE:

            	
              Phase
                I Environmental Site Assessment: “S&A Supply Inc.”
                

              20
                & 40 Maple Avenue, Great Barrington,
                Massachusetts

            

    

    

    Dear
      Mr.
      Pagano:

    

    William
      L. Going & Associates, Inc. is pleased to submit this Phase I Environmental
      Site Assessment of commercial properties situated at 20 and 40 Maple Avenue,
      Great Barrington, Berkshire County, Massachusetts. This assessment has been
      conducted pursuant to ASTM E1527-05. The objective of this assessment was to
      identify "recognized environmental conditions" associated with a range
      of contaminants within the scope of Comprehensive Environmental Response,
      Compensation and Liability Act (CERCLA) and petroleum products. The term
"recognized environmental conditions" means the presence or likely
      presence of any hazardous substances or petroleum products on a property under
      conditions that indicate an existing release, a past release, or a material
      threat of a release into the structures on the property or into the ground,
      groundwater, or surfacewater of the property.  This assessment is not
      intended to address de minimus conditions that generally do not
      represent a material risk of harm to public health or the environment and
      generally would not be the subject of enforcement action if brought to the
      attention of appropriate regulatory agencies.

    

    Included
      in this letter report under the heading "Attachment A" are
      topographic area map, neighborhood aerial photograph, municipal tax map,
      photographs of the property, portion of assessor’s file, historical USGS
      topographic area maps (1897, 1946, 1995), Sanborn® Fire Insurance
      Maps
      (1923, 1947), historical aerial photographs (1942, 1952, 1970, 1987, 2006),
      a
      Massachusetts Department of Public Safety, Division of Fire Prevention tank
      removal permit (1992), a city directory compiled by Environmental FirstSearchTM
(August 2007), an Environmental Questionnaire completed by Mr. Brian Mead
      (August 2007), and an environmental database compiled by Environmental
      FirstSearchTM (August 2007).

    
      
        
        

      

      
        -
          27
          -

        
          

        

      

      
        
        

      

    

    Phase
      I Site Inspection

    

    Subject
      properties are located at 20 and 40 Maple Avenue, Town of Great Barrington,
      Berkshire County, Massachusetts [topographic map, tax map, and photos]. 20
      Maple
      Avenue [22.0-0-2], herein called Lot 2, is 1.63 acres in size, irregular in
      shape, and generally level. Lot 2 is classified as commercial; more
      specifically, retailplumbing supplies, in the Town of Great
      Barrington Assessment Role. 40 Maple Avenue [22.0-0-6], herein called Lot 6,
      is
      0.36 acre in size, irregular in shape, and slopes gently northwest to southeast.
      Lot 6 is classified as commercial; more specifically,
retailstore, plumbing fixtures, in the Town of Great
      Barrington Assessment Role. No portion of subject is federal, state, or tribal
      land.

    

    Nearby
      land use and improvements are residential and commercial along a mixed-use
      corridor. Adjacent property includes: Roy Birches Funeral Home to the north,
      residential and commercial (Agway) to the south, residential and commercial
      (former Condor Chevrolet, Dunkin Donuts, Strip Mall) to the east, and the
      Housatonic Railroad tracks and residential property to the west. There does
      not
      appear to be any property directly upgradient of subject that would threaten
      or
      compromise the environment of subject. No "recognized environmental
      conditions" were obvious on adjacent land; however, we observed deposits of
      discarded bagged trash, used tires, scrap metal and wood, and two scrap auto
      gasoline tanks on the Condor Chevrolet property.

    

    Lot
      2
      is improved with four commercial buildings, which provide retail and storage
      space for S&A Supply Inc. (plumbing/electrical wholesaler). We observed a
      paved outdoor storage yard that contained piping, new 275 gal. fuel oil tanks
      (for retail sale), and electrical wire. A paved driveway provides access from
      Massachusetts Avenue to the storage yard and buildings. Lot 6 is improved
      with one commercial building, which houses a plumbing fixture showroom for
      S&A Supply Inc. A paved driveway provides access from Massachusetts Avenue
      to a paved parking area.

    

    Lot
      2 contains the main commercial building and three supporting warehouses.
      The
      main building, herein called Building 1, is a 2-story wood frame
      structure over slab and crawl space. This building is serviced by municipal
      water and sewer systems and electric utilities, and is heated with fuel oil.
      The
      structure houses offices, racks of plumbing and electrical supplies, and sales
      counter space for S&A Supply.

    

    The
      first
      warehouse, herein called Building 2, is a 1-story “pole barn” style
      building over concrete slab. This building is serviced by electric utilities
      but
      is not heated. This structure houses racks of plumbing supplies.

    

    The
      second warehouse, herein called Building 3, is a 1-story “pole barn”
style building over asphalt. This building [situated in the northeast
      corner of
      the site] is serviced by electric utilities but is not heated. This structure
      houses racks of plumbing and electrical supplies.

    

    The
      third
      warehouse, herein called Building 4, is a 1-story structure situated in
      the southeast corner of the site. It can be described as a shed attached to
      a
      warehouse. The shed is a wood frame building over a concrete slab; the warehouse
      is a pre-engineered metal building over a concrete slab. This structure is
      serviced by electric utilities and is heated with fuel oil.

    
      
        
        

      

      
        -
          28
          -

        
          

        

      

      
        
        

      

    

    Solid
      waste generated at the site is best characterized as commercial garbage,
      including paper, cardboard, and wood packing material, all of which is removed
      by Allied Waste Services. Based on the age of Building 1, it is possible that
      painted surfaces contain lead-based paint and that the roofing materials contain
      asbestos. Painted surfaces were in good condition and the roofing materials
      were
      non-friable.

    

    Lot
      6 contains a plumbing fixture showroom. The plumbing fixture showroom is
      a
      converted assemblage of 1 1⁄2 -story residence, a 1-story garage and a connecting
      addition. These structures are wood frame construction. The showroom is serviced
      by municipal water and sewer systems and electric utilities, and is heated
      with
      fuel oil and/or natural gas.

    

    We
      observed three (3) aboveground fuel oil storage tanks (ASTs) onsite;
      specifically, Building 1 is serviced by a 275 gal. AST, Building 4 is serviced
      by a 330 gal. AST, and the showroom is serviced by a 275 gal. AST. There was
      no
      secondary containment associated with any of the ASTs. There were no noticeable
      leaks or drips or stains in the vicinity of the ASTs.

    

    We
      observed small containers of adhesives, cleaners, sealers, and water treatments
      packaged for retail sale, and there were no noticeable leaks from any of these
      containers.

    

    We
      observed floor drains in the north section of Building 1. The owner reports
      that
      the north section is the original section of the building, which was
      historically utilized for the storage and transportation of raw milk, and he
      asserts that the drains are connected to the municipal sewer.

    

    The
      owner
      (Mr. Mead) reports that there are no underground chemical storage tanks or
      drywells or sumps or pits on the property, and we did not observe evidence
      of
      such. There is no current or historic evidence of generation, storage or
      disposal of hazardous chemical waste onsite. There was no obvious sign of
      significant chemical release to the site or to the local
      environment.

    

     

    Site
      History and Other Relevant Information

     

    We
      examined the Town of Great Barrington Assessor’s records, Great Barrington
      Building Department records, Great Barrington Health Department
      records, historical USGS topographical area maps, historical Sanborn® Fire Insurance
      Maps, historical aerial photographs and historical city directories. We
      interviewed the Building Inspector (Edwin A. May), the Fire Chief (Harry
      Jennings), the Health Department Agent (Mark Pruhenski), and the owner of
      S&A Supply and subject property (Brian Mead). This work serves to establish
      that Lot 2 was improved in 1930 with the construction of the north
      section of Building 1. Prior to 1930, Lot 2 was apparently an unimproved lot.
      Lot 6 was improved in 1850 with the construction of the majority of the
      converted residence we see today. Prior to 1850, Lot 6 was apparently an
      unimproved lot.

    

    Municipal
      records establish ownership of Lot 2 as follows: Mr. Collins prior to
      1924, Dairymen’s League Co-Operative Inc. in 1924, Dairylea Co-Operative Inc.
      and Richard J. Aloisi in 1972, and current owner S&A Supply Inc. in 1976.
      Municipal records also indicate that Lot 2 was improved with the construction
      of
      the north section of Building 1 in 1920, the central section of Building 1
      in
      the mid 1970s, the warehouse portion of Building 4 in 1978, Building 3 in 1981,
      Building 2 and the south section of Building 1 in 1989.

    
      
        
        

      

      
        -
          29
          -

        
          

        

      

      
        
        

      

    

    Municipal
      records establish ownership of Lot 6 as follows: Henry J. Van Lennep
      prior to 1984, Elaine N. Allen in 1984, and current owner S&A Supply Inc. in
      1995. Municipal records also indicate that the residence was remodeled in 1981.
      The owner indicated that the showroom was renovated in May 2007.

    

    The
      1897
      issue of the USGS area map depicts Lot 2 and north adjacent property as
      unimproved land; Lot 6, south, and east adjacent property as residential, and
      west adjacent property as a New York, New Hampshire & Hartford Railroad
      (Berkshire Division). The 1946 issue of the USGS area map depicts the north
      section of Building 1 on Lot 2, and Lot 6 and adjacent property as largely
      unchanged.

    

    Sanborn®
      Fire Insurance Maps
      (1923 and 1947) were reviewed. The 1923 map presents Lot 2 and north adjacent
      as
      undeveloped, Lot 6 as residential with three auxiliary structures (i.e. garages
      and or sheds), south adjacent property as “Colonial Inn”, west adjacent property
      as “N.Y. N.H. & H. RR” (New York, New Hampshire & Hartford
      Railroad), and east adjacent as residential. The 1947 map presents Lot 2 as
      improved with three structures: a non-descript auxiliary building, a building
      labeled “Grains” with occupant listed as “Eastern States Farmers Exchange”, and
      the north section of Building 1 labeled “Dairy” with occupant listed as
“Dairymen’s League”. The 1947 map also presents Lot 6 as residential and
      adjacent property as largely unchanged.

    

    Historic
      aerial photos (1942, 1952, 1970, 1986, and 2006) were also carefully reviewed.
      Lot 2 featured one structure in 1942 and three structures in 1952. These aerials
      also establish that Lot 6, south, and east adjacent properties were improved
      (apparently residential), west adjacent property was a railroad right-of-way,
      and north adjacent property was wooded and undeveloped. The 1970 aerial photo
      was not clear or useful. The 1987 aerial establishes that Lot 2 was improved
      with three structures (north and central sections of Building 1, Building 3,
      and
      warehouse section of Building 4) and that Lot 6 was unchanged. This photo
      establishes that north adjacent property was improved with two structures,
      south
      adjacent property was improved with one structure that appears similar to the
      present Agway building, east adjacent property was improved with one structure
      that appears similar to the present auto dealership, and west adjacent property
      as railroad right-of-way. The 2006 aerial depicts the addition of Building
      2,
      the shed portion of Building 4, and the south portion of Building 1 on Lot
      2.
      This aerial depicts Lot 6 and adjacent property as largely unchanged, except
      for
      another addition to the structure that appears similar to the present Agway
      building.

    

    Historic
      site-specific city directories (1907, 1913-14, 1920-21, 1926-28, 1932-34, 1940
      42, 1947-49, 1955-56, 1963-64, 1992, 1997, 2002, and 2007) compiled by
      Environmental FirstSearchTM were also reviewed. These city directories provide a
      property occupant/use list for subject and four addresses “up” and “down”
Massachusetts Avenue. The city directories indicate that Lot 2 (20 Maple Ave.)
      was not listed from 1907 through 1992, but was occupied by S&A Supply Inc.
      from 1992-2007. Lot 6 (40 Maple Ave) was listed as vacant in 1907 and
      residential from 1913-1992. Businesses along Maple Avenue included Central
      Dairy
      Co and Eastern States Farmers Exchange in the 1932; Dairyman’s League
      Cooperative Association Inc. from 1940-1954; and Dairyman’s League Cooperative
      Association Inc. Milk in 1963. South adjacent properties were occupied by Mrs.
      Ella M. Stiles Boarding & Lodging in 1907, Colonial Inn in 1913, Collins Inn
      in 1920, Colonial Inn and John B. Hyatt in 1926, Hotel Bartime and William
      E.
      Darling in 1932, Coach Lamp Inn and multiple residences and Eastern States
      Farmers Exchange in 1940, Colonial Inn, Albert E. Martin and Eastern States
      Farmers Exchange in 1947; The Berkshire Chalet Inn and Eastern States Farmers
      Exchange in 1963; and Agway Inc. from 1992-2007. East adjacent property was
      not
      listed from 1907-1963, but was occupied by Condor Rental Co. in 1992, Condor
      Chevrolet in 1997, and Condor Chevrolet Pontiac Buick Oldsmobile in 2007. West
      adjacent property was occupied by N.Y., N.H & H. RR Crossing from 1907-1920,
      and N.Y., N.H & H. RR Crosses at Grade in 1926. North adjacent property was
      not listed in city directories.

    
      
        
        

      

      
        -
          30
          -

        
          

        

      

      
        
        

      

    

    The
      Building Inspector, the Fire Inspector, and the Health Department Agent
      indicated that neither they nor their departments have knowledge of any
"recognized environmental conditions" associated with subject property.
      Building Department files contain reports of building code inspections, various
      building permits, and “certificates of occupancy”. Site-specific building and
      health department files did not contain any reference to hazardous chemicals
      or
      petroleum products. Site-specific fire department files did not contain any
      reference to hazardous chemicals, but did contain a detailed permit to
      close-in-place one 6,000 fuel oil UST and one 2,000 gal. fuel oil
      UST.

    

    The
      owner
      (Mr. Mead) informed us that there are two (2) closed-in-place, former
      underground fuel oil storage tanks (6,000 and 2,000 gal.) partially situated
      under the central section of Building 1. Mr. Mead provided us with a copy of
      a
      Massachusetts Department of Public Safety, Division of Fire Prevention permit
      application for tank removal. This application, Fire Department Identification
      Number 03113, dated July 8, 1992, listed the applicant as Joe Wilkinson
      Excavating, Inc., and was approved by Great Barrington Fire District Chief
      Cavanaugh.  The application indicates that the substance lasted stored
      in the tanks was fuel oil, and provides a site sketch showing the approximate
      location of the two USTs in relation to Building 1. The sketch contained the
      following note: ‘Two fuel oil tanks located under main building were filled in
      place with a concrete slurry mix’. There are no records or soil chemistry data
      available; soil condition in the vicinity of these USTs is
      undocumented.

     

    Mr.
      Brian
      Mead informs us that he is not aware of any environmental liens, engineering
      controls, or institutional controls associated with the property.
      Mr. Mead further informs us that S&A Supply has utilized Lot 2 since 1976
      and Lot 6 since 1995. Mr. Mead asserts that he has no specific knowledge of
      generation, storage or disposal of hazardous chemicals, or chemical spills,
      or
      obvious indicators of contamination, or environmental cleanups at subject
      property.

    

    MADEP
      and
      USEPA databases have been examined for reports of hazardous chemical spills
      or
      releases within one mile of subject property and for potential sites that may
      have impacted subject property. There is one Comprehensive Environmental
      Response Compensation and Liability Information System (CERCLIS) no Further
      Remedial Action Planed (NFRAP) site, one Resource Conservation and Recovery
      Act
      Corrective Action Generator (RCRAGN), twenty-one sites with known chemical
      or
      petroleum contamination (STATE), twenty-nine reported spills (SPILLS), eleven
      reported leaking tanks (LUST),  two registered facilities with
      underground storage tanks (REG UST), ten facilities listed in the Area of
      Critical Environmental Concern (STATE ACEC), four facilities listed in the
      Facility Index System (FINDS), one facility listed in the Hazardous Material
      Incident Response System (HMIRS), and two facilities reporting releases of
      less
      than reportable volumes (OTHER), within one mile of subject
      property.

    

    There
      are
      no federal or state environmental records suggesting that subject property
      has
      been impaired in any way. Furthermore, there has not been any report of chemical
      release at subject property or at any adjacent property. The environmental
      profile indicates that there are neither environmental liens against the
      property nor any Activity and Use Limitations (AULs) associated with subject
      property. Subject was not in listed in the MADEP Voluntary Cleanup Program
      or
      the Brownfields Program. Relevant portions of the environmental profile are
      included in Attachment A.

    
      
        
        

      

      
        -
          31
          -

        
          

        

      

      
        
        

      

    

    Conclusions
      and Recommendations

     

    We
      conclude, based on the results of this ASTM Phase I assessment process and
      our
      professional judgment (taking into account applicable professional practices
      currently utilized in surveying and assessing this type of property), that
      the
      presence of several fuel oil ASTs, the undocumented abandonment of former fuel
      oil USTs, and numerous environmental incidences (including chemical storage,
      leaks and spills) represent "recognized environmental conditions" that
      require additional investigation

    

    The
      Phase
      I environmental assessment process is intended to identify "recognized
      environmental conditions" that require additional investigation. This
      does not mean that subject property is contaminated, only that, based on the
      consulting industry’s collective experience, there is the possibility of a past
      release, an existing release, or a material threat of a release into the
      structures on subject property or into the ground, groundwater, or surfacewater
      of subject property. Additional investigation [Phase II] is intended to resolve
      any question of impairment or liability. The soil or groundwater chemistry
      data
      that are normally the result of Phase II sampling would become the basis for
      definitive environmental conclusions, and the end point for “environmental due
      diligence”.

     

    We
      recommend installation of test pits [10’-14’ deep] in the vicinity of the
      closed-in-place fuel oil USTs, as well as along the upgradient and downgradient
      perimeters of the property. Representative samples of soil and/or groundwater
      should be analyzed for volatile and semi-volatile organic compounds, selected
      metals, pesticides and PCBs. Chemistry results should be compared to MADEP
      soil
      cleanup guidelines. This would serve to establish a current environmental
      baseline for subject property.

    

    We
      suggest that the fuel oil ASTs onsite be retrofitted with secondary containment
      and that they be routinely inspected and maintained so as to prevent product
      release. This suggestion represents best management practice.

    

    The
      environmental assessment that we have completed conforms to industry-wide
      standards.  Investigations and direct observations notwithstanding, we
      do not warrant that there are absolutely no toxic or hazardous chemical
      contamination at the subject property, nor do we accept any liability if such
      are found at some future time, or could have been found if additional sampling
      had been conducted.  In view of the rapidly changing status of
      environmental laws, regulations, and guidelines, we cannot be responsible for
      changes in laws, regulations, or guidelines that occur after the study has
      been
      completed and which may affect the subject property.

    

    William
      Going & Associates, Inc. has prepared this report for Universal Supply Group
      Inc. (Client), although it is based in part on information obtained from third
      parties not within the control of either client or William Going &
Associates. While it is believed that the third-party information contained
      herein is reliable, we do not guarantee the accuracy thereof.

    

    Our
      website [williamgoingassociates.com] presents the author’s resume. If there are
      questions pertaining to this report, please contact the
      undersigned.

    

    Sincerely,

    

    /s/
      William L. Going

    

    William
      L. Going, Principal

    
      
        
        

      

      
        -
          32
          -

        
          

        

      

      
        
        

      

    

    ATTACHMENT
      A

    

    USGS
      Topographic Locator Map

    Neighborhood
      Aerial Photograph

     Municipal
      Tax Map

    Photographs
      of Subject Property

    Portion
      of Assessor’s File

    Historical
      USGS Topographic Area Maps (1897, 1946, 1995)

    Sanborn®
Fire
      Insurance Maps
      (1923, 1947)

    Historical
      Aerial Photographs (1942, 1952, 1970, 1987, 2006)

    Environmental
      FirstSearchTM Site-Specific City Directories:

    1907,
      1913-14, 1920-21, 1926-28, 1932-34, 1940-42, 1947-49, 1955-56,
      1963-64,

    1992,
      1997, 2002, 2007 (August 2007)

    Massachusetts
      Department of Public Safety, Division of Fire Prevention,

     Tank
      Removal Permit (1992)

    Environmental
      Questionnaire Completed By Mr. Brian Mead (August 2007)

    Environmental
      FirstSearchTM ASTM Environmental/Statistical Profile (August 2007)

     

     

    -
      33
      -ex10_05.htm

    
      

    

    EXHIBIT
      10.05

    

    EMPLOYMENT
      AGREEMENT

    

    AGREEMENT,
      dated as of September 10, 2007, by and between S&A Purchasing Corp., a New
      York corporation, with its principal office located at 275 Wagaraw Road,
      Hawthorne, New Jersey 07506 (the "Company") and Adam Mead, residing at 31
      Lynnann Drive, Lee, Mass. 01238 (the "Employee").

    

    
      	
              1.

            	
              Employment:

            

    

    

    
      	
            	
              a)

            	
              Upon
                the terms and conditions hereinafter set forth, the Company hereby
                employs
                the Employee, and the Employee hereby accepts employment, as Manager
                of
                the Company.

            

    

    

    
      	
            	
              b)

            	
              Employee
                represents and warrants to the Company that he is free to enter into
                this
                Agreement in accordance with the terms hereof and is under no restriction,
                contractual or otherwise, which would interfere with his execution
                hereof
                or performance hereunder.

            

    

    

    
      	
              2.

            	
              Term.
                The Employee's employment hereunder shall be for a term (the "Term")
                commencing as of this date (the "Commencement Date") and terminating
                at
                the close of business on December 31,
                2010.

            

    

    

    
      	
              3.

            	
              Duties.
                During the Term, the Employee shall report to the President of the
                Company
                or his designee and shall perform such duties, consistent with his
                position hereunder, as may be assigned to him from time to time by
                the
                President of the Company. The Employee shall devote his best efforts
                and
                his entire time, attention and energies, during regular working hours,
                to
                the performance of his duties hereunder and to the furtherance of
                the
                business and interests of the Company, its subsidiaries and affiliate
                companies. Employee shall engage in no other business activities
                other
                than the passive supervision of his
                investments.

            

    

    

    
      	
              4.

            	
              Compensation:

            

    

    

    
      	
            	
              a)

            	
              Compensation.
                For all services rendered by the Employee hereunder and all covenants
                and
                conditions undertaken by him pursuant to this Agreement, the Company
                shall
                pay, and the Employee shall accept a salary at the rate of $65,000
                per
                annum for the first full year of employment and said compensation
                shall be
                increased by CPI Index percentage increases annually. Compensation
                shall
                be payable not less frequently than in bi-weekly
                installments.

            

    

    

    
      	
            	
              b)

            	
              Additional
                Incentive Compensation.  For each year (twelve months) of
                the Term of this Agreement, Employee shall receive an additional
                compensation incentive in accordance with the terms set forth in
                Schedule
                A, attached hereto.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
            	
              c)

            	
              Deductions.  The
                Company shall deduct from the compensation described in this Section
                any
                Federal, state or local withholding taxes, social security contributions
                and any other amounts which may be required to be deducted or withheld
                by
                the Company pursuant to any Federal, state or city laws, rules or
                regulations.

            

    

    

    
      	
              5.

            	
              Benefits;
                Expenses:

            

    

    

    
      	
            	
              a)

            	
              Fringe
                Benefits.  During the Term, the Employee shall be entitled
                to participate in such group life, health, accident, disability or
                hospitalization insurance plans as the Company may make available
                to its
                other employees.

            

    

    

    
      	
            	
              b)

            	
              Automobile.  The
                Company shall provide Employee with an automobile for the Employee
                to
                utilize related to his employment activities.  The automobile
                shall be a Chevy Trail Blazer or a comparable vehicle agreed upon
                by the
                Company and the Employee.

            

    

    

    
      	
            	
              c)

            	
              Expenses.
                Upon presentation of an itemized account thereof, with such substantiation
                as the Company shall require, the Company shall pay or reimburse
                the
                Employee for the reasonable and necessary expenses directly and properly
                incurred by the Employee in connection with the performance of his
                duties
                hereunder, subject to guidelines established by the Board of
                Directors.  The Company also agrees to reimburse Employee for
                reasonable club dues and expenses, as required by Employee to conduct
                Company's business including, but not limited to, Company sales meetings,
                employee meetings and other required matters relating to Company
                business.  Employee estimates these expenses to be approximately
                $4,500 per annum.

            

    

    

    
      	
            	
              d)

            	
              Vacations.
                During the Term, the Employee shall be entitled to paid holidays
                and paid
                vacations in accordance with the policy of the Company as determined
                by
                the President of the Company provided, however, that the Employee
                shall be
                entitled to not less than three weeks paid vacation during each year
                of
                the Term, to be taken at times convenient to the Employee and to
                the
                Company.

            

    

    

    
      	
              6.

            	
              Location.
                Notwithstanding anything which may be contained herein to the contrary,
                the Employee's offices shall be located in the County of Berkshire,
                State
                of Massachusetts area and the performance of his duties hereunder
                shall
                not require his continued presence outside of such counties if the
                Employee shall object thereto.

            

    

    

    
      	
              7.

            	
              Termination:

            

    

    

    
      	
            	
              a)

            	
              The
                employment of the Employee, and the obligations of the Employee and
                the
                Company hereunder, shall cease and terminate (except as otherwise
                specifically provided in this Agreement) upon the first to occur
                on the
                following dates (the "Termination Date") described in this
                Section:

            

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              i)

            	
              The
                date of expiration by its terms of the
                Term;

            

    

    

    
      	
               

            	
              ii)

            	
              The
                date of death of the Employee;

            

    

    

    
      	
               

            	
              iii)

            	
              The
                occurrence of a Disability Event; For purposes of this Agreement,
                the
                term, "Disability", shall mean Employee’s inability to perform his
                material duties under this Agreement because of any illness or physical
                or
                mental disability, or their incapacity, as evidenced by a written
                statement of a physician licensed to practice medicine in the State
                of
                Massachusetts selected by the Company, which disability, or other
                incapacity, continues for a period in excess of six (6) consecutive
                months
                in any consecutive twelve-month
                period.

            

    

    

    
      	
               

            	
              iv)

            	
              The
                Employee is terminated “For Cause” (as defined in Section
                9).

            

    

    

    
      	
            	
              b)

            	
              Rights
                after Termination;

            

    

    

    
      	
               

            	
              i)

            	
              In
                the event the Employee is terminated For Cause, the Employee shall
                be
                entitled to receive salary and benefits accrued to the date of
                termination, and Employee shall not be entitled to any other payment,
                including but not limited to, any portion of Additional Incentive
                Compensation otherwise payable to
                Employee.

            

    

    

    
      	
               

            	
              ii)

            	
              In
                the event the employment is terminated by reason of death or disability,
                Employee shall be entitled to receive (i) salary and benefits accrued
                to
                the date of death or disability, and (ii) a pro rata share of any
                additional Incentive Compensation in an amount obtained by multiplying
                the
                additional Incentive Compensation for the full year or period, as
                the case
                may be, in which death or disability occurred, by a fraction, the
                numerator of which is the number of days in the year or period in
                which
                Employee was employed and the denominator of which is the number
                of days
                of the year (365).

            

    

    

    
      	
              8.

            	
              Restrictive
                Covenants:

            

    

    

    
      	
            	
              a)

            	
              Non-Disclosure.  The
                Employee shall not at any time during or after the term of this Agreement
                disclose or furnish to any other person, firm or corporation (the
                "Entity") except in the course of the performance of his duties hereunder,
                the following:

            

    

    

    
      	
               

            	
              i)

            	
              any
                information relating to any process, technique or procedure used
                by the
                Company, including, without limitation, computer programs and methods
                of
                evaluation and pricing and marketing techniques;
                or

            

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              ii)

            	
              any
                information relating to the operations or financial status of the
                Company,
                including, without limitation, all financial data and sources of
                financing, which is not specifically a matter of public record;
                or

            

    

    

    
      	
               

            	
              iii)

            	
              any
                information of a confidential nature obtained as a result of his
                prior,
                present or future relationship with the Company, which is not specifically
                a matter of public record; or

            

    

    

    
      	
               

            	
              iv)

            	
              any
                trade secrets of the Company; or

            

    

    

    
      	
               

            	
              v)

            	
              the
                name, address or other information relating to any customer or debtor
                of
                the Company; or

            

    

    

    
      	
               

            	
              vi)

            	
              any
                Confidential Information, or divulge, communicate, use to the detriment
                of
                the Company or for the benefit of any other person or persons, any
                Confidential Information, or misuse in any way, Confidential Information
                pertaining to the Business.  Any confidential information or
                data now known or hereafter acquired by the Employee with respect
                to the
                Business shall be deemed a valuable, special and unique asset of
                the
                Company that is received by the Employee, in confidence and as a
                fiduciary, and the Employee shall remain a fiduciary to the Company
                with
                respect to all of such information.

            

    

    

    
      	
            	
              b)

            	
              Non-Competition.  The
                Employee shall not, during the period (the “Restricted Period”) from the
                date hereof until the later of one year after the termination of
                his
                employment with the Company or the third anniversary of the Closing
                date
                (as defined in the Asset Purchase Agreement dated September 10, 2007
                by
                and among the Company, Employee and other parties set forth on the
                signatory page thereto (the
“APA”)):

            

    

    

    
      	
               

            	
              i)

            	
              Without
                the prior written consent of the Company (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 Company or any of its subsidiaries or
                Affiliates anywhere with the Territory. Territory means any state
                (including the District of Columbia), territory or possession of
                the
                United States within which the Company presently or hereafter does
                business or within a 50-mile radius of any of the Owned Premises,
                Owned
                Real Estate, Real Property and/or Leased Premises (as defined in
                the APA),
                (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 in which the Company now or hereafter engages or
                which
                competes or plans to compete in any way with the Company or any of
                its
                subsidiaries or Affiliates within the Territory, or (C) utilize his
                special knowledge of the business of each Seller or the Company and
                his
                relationship with customers, suppliers and others to compete with
                Company
                and/or its Affiliates in any business which engages or plans to engage
                in
                any facet of the Business in which the Company now or hereafter engages
                or
                which competes or plans to compete in any way with the Company or
                any of
                its subsidiaries or Affiliates within the Territory; provided, however,
                that nothing herein shall be deemed to prevent either Employee 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 Employee 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.  Employee 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
                trade secrets of the Company.  Employee further acknowledges and
                agrees that such covenants are reasonable and necessary in terms
                of time,
                area and line of business to protect the Company’s legitimate business
                interests, which include its interests in protecting the Company’s (i)
                valuable confidential business information, (ii) substantial relationships
                with customers, and (iii) customer goodwill associated with the ongoing
                Business.  Employee hereby expressly authorizes the enforcement
                of the covenants provided for in this Section by (A) the Company
                and its
                subsidiaries, (B) the Company’s permitted assigns, and (C) any successors
                to the Company’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.

            

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              ii)

            	
              The
                Employee shall not, directly or indirectly, for 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  Employee make
                known the names and addresses of such customers or any information
                relating in any manner to the Company’s or 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 Company or assist any entity in doing so
                or
                attempting to do so or (D) employ any employees of
                Company.

            

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              iii)

            	
              Injunction.  Employee
                recognizes and hereby acknowledges that a breach or violation by
                Employee
                of any or all of the covenants and agreements contained in this Section
                may cause irreparable harm and damage to the Company in a monetary
                amount
                which may be virtually impossible to ascertain.  As a result,
                Employee recognizes and hereby acknowledges that the Company 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 Employee, his, 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
                Company  may possess hereunder, at law or in
                equity.  Nothing contained in this Section shall be construed to
                prevent the Company from seeking and recovering from the Employee,
                jointly
                and severally, damages sustained by it as a result of any breach
                or
                violation by they Employee of any of the covenants or agreements
                contained
                herein.

            

    

    

    
      	
              9.

            	
              Termination
                by the Company “For Cause.”  At any time during the term of
                this Agreement, the Company may discharge the Employee for cause
                and
                terminate this Agreement without any further liability hereunder
                to the
                Employee or his estate, except to pay any accrued, but unpaid, salary
                but
                not Incentive Compensation to him.  In the event of such
                termination, Employee agrees he shall also be deemed to have resigned
                from
                the Company and its Parent, as a Manager and Employee, effective
                as of the
                date of such termination.  For purposes of this Agreement, a
                "discharge for cause" shall mean termination of the Employee upon
                written
                notification to the Employee limited, however, to one or more of
                the
                following reasons:

            

    

    

    
      	
            	
              a)

            	
              Fraud,
                misappropriation or embezzlement by the Employee in connection with
                the
                Company; or

            

    

    

    
      	
            	
              b)

            	
              Neglect
                of duties or insubordination, after notice to the Employee of the
                particular details thereof and a period of fifteen (15) days to correct
                such actions or omissions, if any;
                or

            

    

    

    
      	
            	
              c)

            	
              Conviction
                by a court of competent jurisdiction in the United States of a felony
                or a
                crime involving moral turpitude; or

            

    

    

    
      	
            	
              d)

            	
              Willful
                and unauthorized disclosure of confidential, or proprietary trade
                secret
                information of the Company; or

            

    

    

    
      	
            	
              e)

            	
              The
                Employee's breach of any material term or provision of this Agreement,
                after notice to the Employee of the particular details thereof and
                a
                period of not less than thirty (30) days thereafter within which
                to cure
                such breach, if any.

            

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
      	
              10.

            	
              Miscellaneous:

            

    

    

    
      	
            	
              c)

            	
              Assignment.  This
                Agreement shall not be assigned by either party, except that the
                Company
                shall have the right to assign its rights hereunder to any parent,
                subsidiary and affiliate of, or successor to, the
                Company.

            

    

    

    
      	
            	
              d)

            	
              Binding
                Effect.  This agreement shall extend to and be binding upon
                the Employee, his legal representatives, heirs and distributees,
                and upon
                the Company, its successors and
                assigns.

            

    

    

    
      	
            	
              e)

            	
              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 THE
      COMPANY:

    William
      Pagano

    c/o
      Universal Supply Group, Inc.

    275
      Wagaraw Road

    Hawthorne,
      New Jersey 07506

    

    IF
      TO THE
      EMPLOYEE:

    Adam
      Mead

    31
      Lynnann Drive

    Lee,
      Mass. 01238

    

    
      	
               

            	
              f)

            	
              Waiver.  A
                waiver by a party hereto of a breach of any term, covenant or condition
                of
                this Agreement by the other party hereto shall not operate or be
                construed
                as waiver of any other or subsequent breach by such party of the
                same or
                any other term, covenant or condition
                hereof.

            

    

    

    
      	
            	
              g)

            	
              Prior
                Agreements.  Other than for that certain APA, any and all
                prior agreements between the Company and the Employee, whether written
                or
                oral, between the parties, relating to any and all matters covered
                by, and
                contained or otherwise dealt within this Agreement are hereby canceled
                and
                terminated.

            

    

    

    
      	
            	
              h)

            	
              Entire
                Agreement.  No waiver, modification, change or amendment of
                any of the provisions of this Agreement shall be valid unless in
                writing
                and signed by the party against whom such claimed waiver, modification,
                change or amendment is sought to be
                enforced.

            

    

    

    
      	
               

            	
              i)

            	
              Definitions.
                All capitalized terms not defined herein shall have the meaning set
                forth
                in the APA.

            

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              j)

            	
              Authority.
                The parties severally represent and warrant that they have the power,
                authority and right to enter into this agreement and to carry out
                and
                perform the terms; covenants and conditions
                hereof.

            

    

    

    
      	
            	
              k)

            	
              Applicable
                Law. THE
                PARTIES AGREE
                THAT 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
                EMPLOYEE FURTHER AGREES THAT THE SERVICE OF PROCESS OR OF ANY OTHER
                PAPERS
                UPON THEM IN THE MANNER PROVIDED FOR NOTICES HEREUNDER SHALL BE DEEMED
                GOOD, PROPER AND EFFECTIVE SERVICE UPON
                THEM.

            

    

    

    
      	
               

            	
              l)

            	
              Severability.  In
                the event that any of the provisions of this Agreement, or any portion
                thereof, shall be held to be invalid or unenforceable, the validity
                and
                enforceability of the remaining provisions shall not be affected
                or
                impaired, but shall remain in full force and
                effect.

            

    

    

    
      	
            	
              m)

            	
              Titles.
                The titles of the Articles and Sections of this Agreement are inserted
                merely for convenience and ease of reference and shall not affect
                or
                modify the meaning of any of the terms, covenants or conditions of
                this
                Agreement.

            

    

    

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and date first above written.

    

    
      	 	S&A
              Purchasing Corp.
	 	 	 
	 	BY:	
              /s/
                William Pagano

            
	 	 	
               William
                Pagano

            
	 	 	 
	 	BY:	
              /s/
                Adam Mead

            
	 	 	
               
                Adam Mead, Employee

            

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    SCHEDULE
      A

    

    Additional
      Compensation Incentive

    

    As
      additional compensation, Employee shall receive annual incentive as described
      below.  All incentives and performance criteria relate to the Great
      Barrington location.

    

    
      	
               

            	
              1.

            	
              Up
                to 16% of base salary for increase in profitability over prior
                year.

            

    

    

    The
      Employee shall receive 2% of base salary for every $15,000 increase of pre-tax
      profit, up to a maximum of 16% of base salary.

    

    
      	
               

            	
              2.

            	
              Up
                to 9% of base salary for annual sales growth over 5% of prior
                year.

            

    

    

    The
      Employee shall receive 1% of base salary for every 1% of sales growth in excess
      of 5%.  The maximum Employee can receive in accordance with this
      paragraph shall be 9% of base salary.

    

    
      	
               

            	
              3.

            	
              Up
                to 5% of base salary of new HVAC equipment
                sales.

            

    

    

    Employee
      shall receive 1% of base salary for every $60,000 in new HVAC equipment
      sales.  The maximum incentive Employee may receive pursuant to this
      paragraph shall be 5% of base salary.

    

    
      	
               

            	
              4.

            	
              Up
                to 5% of base salary for increase in electrical business at RAL Supply
                and
                new institutional business from the Great Barrington
                location.

            

    

    

    Employee
      shall receive 1% of base salary for every $60,000 in new business obtained
      in
      sales of either electrical items to RAL Supply or new institutional business
      from the Great Barrington location.  The maximum incentive Employee
      may receive pursuant to this paragraph shall be 5% of base salary.

    

    THIS
      INCENTIVE PROGRAM SHALL BE REVIEWED AND MODIFIED ANNUALLY

     

     

    9

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