Exhibit 10.2

 

AMENDMENT NO. 18 AND WAIVER TO

CREDIT AGREEMENT

 

THIS AMENDMENT NO. 18 AND WAIVER dated as of March 30, 2009 (the “Amendment and
Waiver”) to the Credit Agreement, dated as of June 30, 2004, by and among P&F
INDUSTRIES, INC., a Delaware corporation (“P&F”), FLORIDA PNEUMATIC
MANUFACTURING CORPORATION, a Florida corporation (“Florida Pneumatic”), EMBASSY
INDUSTRIES, INC., a New York corporation (“Embassy”), GREEN MANUFACTURING, INC.,
a Delaware corporation (“Green”), COUNTRYWIDE HARDWARE, INC., a Delaware
corporation (“Countrywide”), NATIONWIDE INDUSTRIES, INC., a Florida corporation
(“Nationwide”), WOODMARK INTERNATIONAL, L.P., a Delaware limited partnership
(“Woodmark”), PACIFIC STAIR PRODUCTS, INC., a Delaware corporation (“Pacific”),
WILP HOLDINGS, INC., a Delaware corporation (“WILP”), CONTINENTAL TOOL GROUP,
INC., a Delaware corporation (“Continental”) and HY-TECH MACHINE, INC., a
Delaware corporation (“Hy-Tech”; and collectively with P&F, Florida Pneumatic,
Embassy, Green, Countrywide, Nationwide, Woodmark, Pacific, WILP and
Continental, the “Co-Borrowers”), CITIBANK, N.A. and HSBC BANK USA, NATIONAL
ASSOCIATION (formerly known as HSBC Bank USA) (collectively, the “Lenders”) and
CITIBANK, N.A., as Administrative Agent for the Lenders (as same has been and
may be further amended, restated, supplemented or otherwise modified, from time
to time, the “Credit Agreement”).

 

RECITALS

 

The Co-Borrowers have requested that the Lenders make additional loans to the
Co-Borrowers, the proceeds of which shall be used to refinance the outstanding
principal amount of the Term Loan and the New Term Loan and the Lenders have
agreed to make such Loans available to the Co-Borrowers.

 

In connection therewith, the Co-Borrowers have requested, and the Administrative
Agent and the Lenders have agreed, subject to the terms and conditions of this
Amendment and Waiver to amend and waive compliance with certain provisions of
the Credit Agreement as set forth herein.

 

Accordingly, in consideration of the premises and of the mutual covenants and
agreements hereinafter set forth, the parties hereto agree as follows:

 

ARTICLE I.

Amendments to Credit Agreement.

 

Section 1.1.            The Co-Borrowers acknowledge and agree that the
outstanding principal amount of the Term Loan and the New Term Loan shall be
amended, replaced and recast as set forth herein.  The Co-Borrowers further
acknowledge and agree that the Term Loan, the Term Loan Commitment, the New Term
Loan and the New Term Loan Commitment shall be null and void and that the Banks
shall have no further obligations or commitments with respect thereto and that
any references to such terms in the Credit Agreement and the other Loan
Documents, other than as amended hereby, shall be deemed to mean the Additional
Term Loan and the Additional Term Loan Commitment (as such terms are herein
defined).

 

Section 1.2.            The Co-Borrowers acknowledge and agree that the
Equipment Loan and the Equipment Loan Commitment shall be null and void and that
the Banks shall have no further obligations or commitments with respect thereto
and that any references to such terms in the Credit Agreement and the other Loan
Documents, other than as amended hereby, shall be deemed deleted.

 

Section 1.3.            The following definitions in Section 1.01 of the Credit
Agreement are each

 

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hereby amended in their entirety to provide as follows:

 

“Aggregate Outstandings” shall mean on the date of determination thereof, the
sum of Aggregate RC Outstandings.

 

“Applicable Revolving Credit Loan Margin” shall mean (a) 2.00%, with respect to
Revolving Credit Loans that are Prime Rate Loans and (b) 3.50%, with respect to
Revolving Credit Loans that are LIBOR Loans, each such margin in (a) and
(b) hereinafter the “Prime Rate Margin”.

 

“Available Revolving Credit Commitment” shall mean at any time the lesser of
(a) the Borrowing Base less Aggregate RC Outstandings or (b) the Revolving
Credit Commitment less Aggregate Outstandings.

 

“Commitment Proportion” shall mean, with respect to each Lender at the time of
determination, the ratio, expressed as a percentage, which such Lender’s
Commitments bear to the Total Commitment or, if the Commitments have expired or
have been terminated, the ratio, expressed as a percentage, which (a) the sum of
aggregate Loans advanced by such Lender, plus the Aggregate Banker’s Acceptance
Outstandings and the Aggregate Letters of Credit Outstandings of such Lender to
(b) the Aggregate Outstandings plus the aggregate amount of Additional Term
Loans outstanding, at such time.

 

“Commitments” shall mean, collectively, the Revolving Credit Commitment and the
Additional Term Loan Commitment.

 

“Loans” shall mean, collectively, the Revolving Credit Loans and the Additional
Term Loans and shall refer to a Prime Rate Loan, a LIBOR Loan or a Fixed Rate
Loan, each of which shall be a “Type” of Loan.

 

“Revolving Credit Commitment” shall mean, with respect to each Lender, the
obligation of such Lender to make Revolving Credit Loans to the Co-Borrowers and
to acquire participations in Letters of Credit and Banker’s Acceptances in an
aggregate amount in an aggregate amount not to exceed the amount set forth
opposite such Lender’s name on the signature page to Amendment No. 18 under the
caption “Revolving Credit Commitment”, as such amounts may be adjusted in
accordance with the terms of this Agreement.

 

“Revolving Credit Commitment Termination Date” shall mean March 30, 2010.

 

“Total Commitment” shall mean, at any time, the aggregate of the Commitments in
effect at such time which, as of the Amendment No. 18 Effective Date, shall be
$29,116,000.

 

“Total Revolving Credit Commitment” shall mean, at any time, the aggregate of
the Revolving Credit Commitments in effect at such time, which, as of the
Amendment No. 18 Effective Date, shall be $22,000,000.

 

Section 1.4.            The following definitions are hereby added to
Section 1.01 of the Credit Agreement in their appropriate alphabetical order:

 

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“Additional Term Loan Commitment” shall mean, with respect to each Lender, the
obligation of such Lender to make the Additional Term Loan to the Co-Borrowers
in an aggregate amount not to exceed the amount set forth opposite such Lender’s
name on the signature page to Amendment No. 18 under the caption “Additional
Term Loan Commitment”.

 

“Additional Term Loan” shall have the meaning specified in Section 2.09.

 

“Additional Term Loan Maturity Date” shall mean March 30, 2012.

 

“Additional Term Loan Note” shall mean the promissory note of the Co-Borrowers
in the form attached as Exhibit M hereto evidencing the Additional Term Loans,
as the same may be amended, supplemented or otherwise modified from time to
time.

 

“Additional Term Loan Commitment” shall mean the aggregate of the Additional
Term Loan Commitments in effect on the Amendment No. 18 Effective Date, which
shall be $7,116,000.

 

“Amendment No. 18” shall mean Amendment No. 18 to Credit Agreement, dated as of
the amendment No. 18 Effective Date, among the Co-Borrowers, the Lenders and the
Administrative Agent.

 

 “Amendment No. 18 Effective Date” shall mean March 30, 2009.

 

Section 1.5.            The definition of the term “Applicable Term
Loan/Equipment Loan Margin” is hereby deleted and replaced with the following
definition:

 

“Applicable Additional Term Loan Margin” shall mean (a) 2.00%, with respect to
Additional Term Loans that are Prime Rate Loans and (b) 3.75%, with respect to
Additional Term Loans that are LIBOR Loans each such margin in (a) and
(b) hereinafter the “LIBOR Margin.”;

 

and all references in the documents to “Applicable Term Loan/Equipment Loan
Margin” are hereby deleted and replaced with the term “Applicable Additional
Term Loan Margin.”

 

Section 1.6.            The first sentence of the definition of the term
“Borrowing Base” in Section 1.01 of the Credit Agreement is hereby amended and
restated in its entirety to provide as follows:

 

“Borrowing Base” shall mean as of any Borrowing Date an amount equal to the sum
of (a) 80% of the value of the Obligor’s Eligible Accounts Receivable, and
(b) the lesser of (i) 50% of the aggregate value of the Obligor’s Eligible
Inventory, and (ii) $15,000,000; provided, however, such percentages and the
foregoing inventory limitation may be revised from time to time solely by the
Required Lenders in their Permitted Discretion (i) after review of each field
audit of the Obligor’s receivables and inventory, upon 30 days’ prior written
notice to the Co-Borrowers so long as no Default or Event of Default has
occurred and is then continuing or (ii) immediately upon written notice if a
Default or Event of Default has occurred and is then continuing.”

 

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Section 1.7.            Clause “(b)(iv)” of the definition of the term “Interest
Period” in Section 1.01 of the Credit Agreement is hereby amended and restated
in its entirety to provide as follows:

 

“(iv)  no Interest Period may be selected with respect to (a) a Revolving Credit
Loan which ends later than the Revolving Credit Commitment Termination Date, or
(b) the Additional Term Loan which ends later than the Additional Term Loan
Maturity Date; and”

 

Section 1.8.            Section 2.01(a) of the Credit Agreement is hereby
amended by amending and restating clause “(ii)” thereof to provide as follows:

 

“(ii) Aggregate RC Outstandings would exceed the then current Borrowing Base”

 

Section 1.9.            Section 2.03, Section 2.04, Section 2.05, Section 2.07
and Section 2.08 of the Credit Agreement are hereby amended and restated in
their entirety to provide as follows:

 

“SECTION 2.03.  Intentionally Omitted.”

 

“SECTION 2.04.  Intentionally Omitted.”

 

“SECTION 2.05.  Intentionally Omitted.”

 

“SECTION 2.07.  Intentionally Omitted.”

 

“SECTION 2.08.  Intentionally Omitted.”

 

Section 1.10.          Section 2.06(a) of the Credit Agreement is hereby amended
by amending and restating clause “(ii)” thereof to provide as follows:

 

“(ii) Aggregate RC Outstandings would exceed the then current Borrowing Base”

 

Section 1.11.          Article II of the Credit Agreement is hereby amended to
add the following new sections 2.09 and 2.10 immediately following Section 2.08
thereof:

 

“SECTION 2.09.  Additional Term Loan.  Subject to the terms and conditions
hereof, each Lender severally agrees to make a term loan (individually, a
“Additional Term Loan” and, collectively, the “Additional Term Loans”) to the
Co-Borrowers on the Amendment No. 18 Effective Date in an amount not to exceed
its Additional Term Loan Commitment.  The Co-Borrowers shall give the
Administrative Agent irrevocable written notice on or before the Amendment
No. 18 Effective Date specifying (i) the amount to be borrowed, which shall not
exceed the Total Additional Term Loan Commitment, (ii) the Type or Types of such
Additional Term Loan and the related amounts for each, and (iii) if all or any
portion of the Additional Term Loan is a LIBOR Loan, the initial Interest Period
selected for the Additional Term Loan.  Upon receipt of such notice from the
Co-Borrowers, the Administrative Agent shall promptly notify each Lender
thereof.  The Additional Term Loans may, at the election of the Co-Borrowers, be
(i) LIBOR Loans, (ii) Prime Rate Loans or (iii) a combination thereof.  The
Additional Term Loan Commitment shall terminate upon funding of the Additional
Term Loans on the Amendment No. 18 Effective Date.

 

4

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SECTION 2.10.   Additional Term Loan Notes.  The Additional Term Loan made by
each Lender shall be evidenced by an Additional Term Loan Note, appropriately
completed, duly executed and delivered on behalf of the Co-Borrowers and payable
to the order of each Lender in a principal amount equal to the Additional Term
Loan Commitment of such Lender.  Each Lender is authorized to record the Type of
its Additional Term Loan and the date and amount of each payment or prepayment
of principal thereof in such Lender’s records or on the grid schedule annexed to
the Additional Term Loan Note; provided, however, that the failure of a Lender
to set forth each payment and other information shall not in any manner affect
the obligation of the Co-Borrowers to repay the Additional Term Loan made by
such Lender in accordance with the terms of its Additional Term Loan Note and
this Agreement.  The Additional Term Loan Note, the grid schedule and the books
and records of each Lender shall constitute presumptive evidence of the
information so recorded absent demonstrable error.  Each Additional Term Loan
Note shall (a) be dated the Amendment No. 18 Effective Date, (b) be stated to
mature on the Additional Term Loan Maturity Date and (c) be payable as to
principal in thirty six (36) consecutive monthly installments commencing on
April 30, 2009 and continuing on the last day of each month thereafter as
follows, each in an aggregate amount equal to $148,250, all for the pro-rata
distribution to the Lenders based upon their Additional Term Loan Commitment,
provided that the final payment on the Additional Term Loan Maturity Date shall
be in an amount equal to the outstanding unpaid principal amount of the
Additional Term Loan.  Each Additional Term Loan Note, the grid schedule and the
books and records of each Lender shall be prima facie evidence of the
information so recorded absent manifest error.  Notwithstanding anything to the
contrary herein, interest on the Additional Term Loan shall be payable in
accordance with Section 3.01 herein and shall commence with the first applicable
Interest Payment Date following the Amendment No. 18 Effective Date.

 

Section 1.12.          Section 3.01(a) of the Credit Agreement is hereby amended
and restated in its entirety to provide as follows:

 

(a) Each Prime Rate Loan shall bear interest for the period from the date
thereof on the unpaid principal amount thereof at a fluctuating rate per annum
equal to the Prime Rate, plus, in the case of Revolving Credit Loans, the
applicable “Prime Rate Margin” as provided in the definition of “Applicable
Revolving Credit Loan Margin,” and in the case of the Additional Term Loans, the
applicable “Prime Rate Margin” as provided in the definition of “Applicable
Additional Term Loan Margin.”

 

Section 1.13.          Section 3.01(b) of the Credit Agreement is hereby amended
and restated to provide as follows:

 

(b)        Each LIBOR Loan shall bear interest for the Interest Period
applicable thereto on the unpaid principal amount thereof at a rate per annum
equal to the Reserve Adjusted Libor determined for each Interest Period thereof
in accordance with the terms hereof, plus, in the case of Revolving Credit
Loans, the applicable “LIBOR Margin” as provided in the definition of
“Applicable Revolving Credit Loan Margin,” and in the case of the Additional
Term Loans, the applicable “LIBOR Margin” as provided in the definition of
“Applicable

 

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Additional Term Loan Margin.”

 

Section 1.14           Section 3.01(h) of the Credit Agreement is hereby amended
and restated to provide as follows:

 

“(h)  No Loan may be funded, converted to or continued as a LIBOR Loan if the
Interest Period would extend beyond the Revolving Credit Commitment Termination
Date, with respect to Revolving Credit Loans or the Additional Term Loan
Maturity Date, with respect to the Additional Term Loan.”

 

Section 1.15.          Section 3.02 of the Credit Agreement is hereby amended by
amending and restating the first sentence thereof to provide as follows:

 

“The proceeds of the Revolving Credit Loans shall be used by the Co-Borrowers
for general corporate purposes, to finance ongoing working capital requirements,
to refinance a portion of the Existing Indebtedness and to refinance a portion
of term loan Indebtedness owing to the Lenders as of the Amendment No. 18
Effective Date.”

 

and to add the following sentence at the end thereof:

 

“The proceeds of the Additional Term Loan shall be used by the Company solely to
refinance a portion of the term loan Indebtedness owing to the Lenders as of the
Amendment No. 18 Effective Date.”

 

Schedule 1.16.       The fourth sentence of Section 3.03(a) of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:

 

“Partial prepayments of any Additional Term Loan pursuant to this Section 3.03
shall be (a) in an aggregate principal amount of (i) $50,000 or whole multiples
of $25,000 in excess thereof with respect to Prime Rate Loans or Fixed Rate
Loans and (ii) $250,000 or whole multiples of $50,000 in excess thereof with
respect to LIBOR Loans and (b) applied to the remaining installments of
principal of the Additional Term Loan in inverse order of maturity.”

 

Section 1.17.          Section 3.03(b) of the Credit Agreement is hereby amended
and restated in its entirety to provide as follows:

 

“In the event that (i) Aggregate Outstandings exceeds the Total Revolving Credit
Commitment or (ii) Aggregate RC Outstandings exceeds the Borrowing Base, the
Co-Borrowers shall immediately pay or prepay so much of the Loans as shall be
necessary in order for the Aggregate Outstandings to be in compliance with the
Total Revolving Credit Commitment and Aggregate RC Outstandings not to exceed
the Borrowing Base.  To the extent that such prepayments are insufficient to
reduce (a) Aggregate Outstandings to an amount equal to or less than the Total
Revolving Credit Commitment or (b) Aggregate RC Outstandings to an amount equal
to or less than the then current Borrowing Base, the Co-Borrowers shall pledge
Cash Collateral, in an amount equal to the amount of such short-fall which Cash
Collateral shall secure the reimbursement obligations with respect to Letters of
Credit and Banker’s Acceptances.”

 

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Section 1.18.          Section 6.03(e) of the Credit Agreement is hereby amended
in its entirety to provide as follows:

 

“on or prior to the twenty-fifth (25th) day of each calendar month (i) a
detailed schedule of accounts receivable of the Co-Borrowers, which schedule
shall include accounts receivable agings on an invoice date basis, and (ii) a
detailed inventory report of the Co-Borrowers, each such report certified by the
Chief Financial Officer of P&F and current as of the last Business Day of the
preceding month, all in form and substance satisfactory to the Required
Lenders;”

 

Section 1.19.          Section 6.14 of the Credit Agreement is deleted in its
entirety.

 

Section 1.20.          The table in Section 7.13(a) of the Credit Agreement,
Fixed Charge Coverage Ratio, is hereby amended and restated in its entirety to
provide as follows:

 

Period

 

Ratio

 

 

 

December 31, 2009 and at the end of each fiscal year of the Co-Borrowers
thereafter

 

1.20:1.00

 

Section 1.21.          The table in Section 7.13(b) of the Credit Agreement,
Minimum Capital Base , is hereby amended and restated in its entirety to provide
as follows:

 

Period

 

Amount

 

 

 

March 31, 2009 through September 29, 2009

 

$

25,500,000

September 30, 2009 through March 30, 2011

 

$

25,000,000

March 31, 2011 through June 29, 2011

 

$

25,500,000

June 30, 2011 through September 29, 2011

 

$

26,500,000

September 30, 2011 and thereafter

 

$

27,000,000

 

Section 1.22.          The table in Section 7.13(c) of the Credit Agreement,
Consolidated Senior Debt to Consolidated EBITDA, is hereby amended and restated
in its entirety to provide as follows:

 

Period

 

Amount

 

 

 

March 31, 2009 through June 29, 2009

 

7.50:1.00

June 30, 2009 through September 29, 2009

 

8.00:1.00

September 30, 2009 through December 30, 2009

 

7.50:1.00

December 31, 2009 through March 30, 2010

 

5.50:1.00

March 31, 2010 through June 29, 2010

 

4.50:1.00

June 30, 2010 through December 30, 2010

 

5.25:1.00

December 31, 2010 through September 29, 2011

 

4.50:1.00

September 30, 2011 through December 30, 2011

 

4.25:1.00

December 31, 2011 and thereafter

 

4.00:1.00

 

Section 1.23.          Section 7.13(e) of the Credit Agreement is hereby amended
and restated in its entirety to provide as follows:

 

“No Consolidated Net Loss.  Incur for any four consecutive fiscal quarters of
the Co-Borrowers a Consolidated Net Loss calculated exclusive of extraordinary

 

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gains, provided that for purposes of determining compliance with this covenant
for the fiscal quarters ending March 31, 2009, June 30, 2009 and September 30,
2009, Consolidated Net Loss shall be calculated without giving effect to the
one-time charge against earnings resulting from the write-down of goodwill and
other intangible assets (net of the associated deferred tax benefit), which was
incurred by the Co-Borrowers in the fiscal quarter ended December 31, 2008.”

 

Section 1.24.          Section 7.13(f) of the Credit Agreement is hereby deleted
in its entirety.

 

Section 1.25.          Clause “(ii)” of the penultimate sentence of
Section 10.05(c) of the Credit Agreement is hereby amended and restated in its
entirety to provide as follows:

 

“and (ii) each transfer to a Purchasing Lender shall be made in the same
pro-rata portion with respect to the Revolving Credit Commitment and the
Addition Term Loan Commitment”.

 

Section 1.26.          Exhibit A to the Credit Agreement is hereby amended in
its entirety and replaced with Exhibit attached to this Amendment.  Exhibit B,
Exhibit C and Exhibit M to the Credit Agreement are hereby deleted in their
entirety.  Exhibit N attached to this Amendment is hereby added as Exhibit N to
the Credit Agreement.

 

ARTICLE II.

Waivers.

 

Section 2.1.            Compliance with Section 7.13(a) of the Credit Agreement,
Fixed Charge Coverage Ratio, is hereby waived for the fiscal year ended
December 31, 2008 provided that the ratio of (i) Consolidated EBITDA  minus cash
taxes paid to (ii) Consolidated Interest Expense plus Consolidated Current
Maturities on Long Term Debt was not less than 0.60 :1.00 as of the end of such
fiscal year.

 

Section 2.2.            Compliance with Section 7.13(c) of the Credit Agreement,
Consolidated Senior Debt to Consolidated EBITDA, is hereby waived for the fiscal
year ended December 31, 2008, provided that the ratio of Consolidated Senior
Debt to Consolidated EBITDA was not greater than 5.50:1.00 at the end of such
fiscal year.

 

Section 2.3.            Compliance with Section 7.13(e) of the Agreement, No
Consolidated  Net Loss, is hereby waived for the fiscal year ended December 31,
2008, provided that Consolidated Net Loss was not greater than $4,500,000 at the
end of such fiscal year .

 

ARTICLE III.

Conditions of Effectiveness.

 

Section 3.1.            This Amendment and Waiver shall become effective as of
the date hereof, upon (i) the receipt and satisfactory review by the Lenders of
P&F’s 10-K report for the fiscal  year ended December 31, 2008, and (ii) upon
receipt by the Administrative Agent of: (a)  this Amendment, duly executed by
each Co-Borrower; (b) an amended and restated Revolving Credit Note,
substantially in the form of Exhibit A attached hereto, duly executed by each
Co-Borrower in favor of each Lender; (c) an Additional Term Loan Note,
substantially in the form of Exhibit N attached hereto, duly executed by each
Co-Borrower in favor of each Lender; and (d) an Officer’s Certificate, in form
and substance satisfactory to the Administrative Agent, confirming that there
have been no changes to each Co-Borrower’s governance documents, authorizing
each Co-Borrower to execute and deliver this Amendment and

 

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Waiver, the Additional Term Loan Notes and the other documents to be delivered
in connection herewith and therewith.

 

ARTICLE IV.

Representations and Warranties; Effect on Credit Agreement.

 

Section 4.1.  Each Co-Borrower hereby represents and warrants as follows:

 

a.             This Amendment and Waiver and the Credit Agreement, as amended
hereby, constitute legal, valid and binding obligations of the Co-Borrowers and
are enforceable against the Co-Borrowers in accordance with their respective
terms.

 

b.             Upon the effectiveness of this Amendment and Waiver, the
Co-Borrowers hereby reaffirm all covenants, representations and warranties made
in the Credit Agreement to the extent that the same are not amended hereby and
each Co-Borrower agrees that all such covenants, representations and warranties
shall be deemed to have been remade as of the date hereof.

 

c.             No Default or Event of Default has occurred and is continuing or
would exist after giving effect to this Amendment and Waiver.

 

d.             No Co-Borrower has any defense, counterclaim or offset with
respect to the Credit Agreement.

 

e.             All corporate and limited partnership action of each Co-Borrower
appropriate and necessary, including, if necessary, resolutions of the Board of
Directors of each of P&F, Florida Pneumatic, Embassy, Green, Countrywide,
Nationwide, Pacific, Continental, Hy-Tech and WILP and resolutions of the
general partner of Woodmark, to authorize the execution, delivery and
performance of this Amendment and Waiver, has been taken.

 

Section 4.2.            Effect on Credit Agreement and Loan Documents.

 

a.             Upon the effectiveness of this Amendment and Waiver, each
reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”,
“herein” or words of like import shall mean and be a reference to the Credit
Agreement as amended hereby.

 

b.             Except as specifically amended herein, the Credit Agreement, and
all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.

 

c.             Except as expressly provided  herein, the execution, delivery and
effectiveness of this Amendment and Waiver shall not operate as a waiver of any
right, power or remedy of the Administrative Agent or the Lenders, nor
constitute a waiver of any provision of the Credit Agreement, or any other
documents, instruments or agreements executed and/or delivered under or in
connection therewith.

 

d.             The other Loan Documents and all agreements, instruments and
documents executed and delivered in connection with the Credit Agreement and any
other Loan Documents shall each be deemed to be amended and supplemented hereby
to the extent necessary, if any, to give effect to the provisions of this
Amendment and Waiver.

 

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ARTICLE V.

Miscellaneous.

 

Section 5.1.            This Amendment and Waiver shall be governed by and
construed in accordance with the laws of the State of New York.

 

Section 5.2.            Section headings in this Amendment and Waiver are
included herein for convenience of reference only and shall not constitute a
part of this Amendment  and Waiver for any other purpose.

 

Section 5.3.            This Amendment and Waiver may be executed in one or more
counterparts, each of which shall constitute an original, and all of which,
taken together, shall be deemed to constitute one and the same agreement.

 

[next page is signature page]

 

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IN WITNESS WHEREOF, the Co-Borrowers, the Lenders and the Administrative Agent
have caused this Amendment and Waiver to be duly executed by their duly
authorized officers as of the day and year first above written.

 

 

 

P&F INDUSTRIES, INC.

 

 

FLORIDA PNEUMATIC MANUFACTURING
CORPORATION

 

 

EMBASSY INDUSTRIES, INC.

 

 

GREEN MANUFACTURING, INC.

 

 

COUNTRYWIDE HARDWARE, INC.

 

 

NATIONWIDE INDUSTRIES, INC.

 

 

WOODMARK INTERNATIONAL, L.P.

 

 

By:

Countrywide Hardware, Inc., its General

 

 

 

Partner

 

 

PACIFIC STAIR PRODUCTS, INC.

 

 

WILP HOLDINGS, INC.

 

 

CONTINENTAL TOOL GROUP, INC.

 

 

HY-TECH MACHINE, INC.

 

 

 

 

 

 

 

 

By:

/s/ Joseph A. Molino, Jr.

 

 

 

Joseph A. Molino, Jr., the Vice President of each of the corporations named
above

 

 

 

Revolving Credit

 

CITIBANK, N.A.

Commitment: $14,300,000

 

as a Lender and as Administrative Agent

 

 

 

Additional Term Loan Commitment:

 

 

$4,625,400

 

By:

/s/ Stephen Kelly

 

 

 

Stephen Kelly, Vice President

 

 

 

Revolving Credit

 

HSBC BANK USA, NATIONAL

Commitment: $7,700,000

 

ASSOCIATION, as a Lender

 

 

 

Additional Term Loan Commitment:

 

 

$2,490,600

 

By:

/s/ Alan Harris

 

 

 

Alan Harris, Vice President

 

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EXHIBIT A

 

FORM OF

THIRD AMENDED AND RESTATED REVOLVING CREDIT NOTE

 

[$14,300,000][$7,700,000]

 

March     , 2009

 

FOR VALUE RECEIVED, P&F INDUSTRIES, INC., a Delaware corporation (“P&F”),
FLORIDA PNEUMATIC MANUFACTURING CORPORATION, a Florida corporation (“Florida
Pneumatic”), EMBASSY INDUSTRIES, INC., a New York corporation (“Embassy”), GREEN
MANUFACTURING, INC., a Delaware corporation (“Green”), COUNTRYWIDE HARDWARE,
INC., a Delaware corporation (“Countrywide”), NATIONWIDE INDUSTRIES, INC., a
Florida corporation (“Nationwide”),WOODMARK INTERNATIONAL, L.P., a Delaware
limited partnership (“Woodmark”), PACIFIC STAIR PRODUCTS, INC., a Delaware
corporation (“Pacific”), WILP HOLDINGS, INC., a Delaware corporation (“WILP”),
CONTINENTAL TOOL GROUP, INC., a Delaware corporation (“Continental”) and HY-TECH
MACHINE, INC., a Delaware corporation (“Hy-Tech”;; and collectively with P&F,
Florida Pneumatic, Embassy, Green, Countrywide, Nationwide, Woodmark, Pacific,
WILP and Continental the “Co-Borrowers”), jointly and severally promise to pay
to the order of [CITIBANK, N.A.] [HSBC BANK USA, NATIONAL ASSOCIATION] (the
“Lender”), on or before the Revolving Credit Termination Date, the principal
amount of [FOURTEEN MILLION THREE] [SEVEN MILLION SEVEN] HUNDRED THOUSAND
([$14,300,000][$7,700,000]) DOLLARS or, if less, the unpaid principal amount of
all Revolving Credit Loans made by the Lender to the Co-Borrowers under the
Credit Agreement referred to below.

 

The Co-Borrowers jointly and severally promise to pay interest on the unpaid
principal amount hereof from the date hereof until paid in full at the rates and
at the times which shall be determined, and to make principal repayments on this
Note at the times which shall be determined, in accordance with the provisions
of the Credit Agreement referred to below.

 

This Note is one of the “Revolving Credit Notes” referred to in the Credit
Agreement, dated as of June 30, 2004, by and among the Co-Borrowers, Citibank,
N.A., as Administrative Agent, and the Lenders (including the Lender) as are or
may from time to time become parties thereto (as same has been and may be
further amended, restated, supplemented or modified, the “Credit Agreement”) and
is issued pursuant to and entitled to the benefits of the Credit Agreement to
which reference is hereby made for a more complete statement of the terms and
conditions under which the Revolving Credit Loans evidenced hereby were made and
are to be repaid.  Capitalized terms used herein without definition shall have
the meanings set forth in the Credit Agreement.

 

Each of the Lender and any subsequent holder of this Note shall record the date,
Type and amount of each Revolving Credit Loan and the date and amount of each
payment or prepayment of principal of each Revolving Credit Loan on the grid
schedule annexed to this Note; provided, however, that the failure of the Lender
or any holder to set forth such Revolving Credit Loans, payments and other
information on the attached grid schedule shall not in any manner affect the
obligation of the Co-Borrowers to repay the Revolving Credit Loans made by the
Lender in accordance with the terms of this Note.

 

This Note is subject to prepayment as provided in Section 3.03 of the Credit
Agreement.

 

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Upon the occurrence of an Event of Default the unpaid balance of the principal
amount of this Note together with all accrued but unpaid interest thereon, may
become, or may be declared to be, due and payable in the manner, upon the
conditions and with the effect provided in the Credit Agreement.

 

All payments of principal and interest in respect of this Note shall be made in
lawful money of the United States of America in immediately available funds at
the office of Citibank, N.A., as Administrative Agent for the Lenders under the
Credit Agreement, located at 730 Veterans Memorial Highway, Hauppauge, New York
11788 or at such other place as shall be designated in writing for such purpose
in accordance with the terms of the Credit Agreement.

 

No reference herein to the Credit Agreement and no provision of this Note or the
Credit Agreement shall alter or impair the obligation of the Co-Borrowers, which
is absolute and unconditional, to pay the principal of and interest on this Note
at the place, at the respective times, and in the currency herein prescribed.

 

Each Co-Borrower and each endorser of this Note waive diligence, presentment,
protest, demand, and notice of any kind in connection with this Note.

 

This Note is an amendment and restatement of, and is being issued in replacement
of and substitution for, the Second Amended and Restated Revolving Credit Note
dated February 12, 2007 in the original principal amount of [$11,700,000]
[$6,300,000] issued by the Co-Borrowers (the “Original Note”).  The execution
and delivery of this Note shall not be construed to have constituted a repayment
of any principal of, or interest on, the Original Note.

 

THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OR CHOICE OF LAW.

 

[next page is signature page]

 

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IN WITNESS WHEREOF, each Co-Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and at a place
first above written.

 

 

P&F INDUSTRIES, INC.

 

FLORIDA PNEUMATIC MANUFACTURING
CORPORATION

 

EMBASSY INDUSTRIES, INC.

 

GREEN MANUFACTURING, INC.

 

COUNTRYWIDE HARDWARE, INC.

 

NATIONWIDE INDUSTRIES, INC.

 

WOODMARK INTERNATIONAL, L.P.

 

By:

Countrywide Hardware, Inc., its General

 

 

Partner

 

PACIFIC STAIR PRODUCTS, INC.

 

WILP HOLDINGS, INC.

 

CONTINENTAL TOOL GROUP, INC.

 

HY-TECH MACHINE, INC.

 

 

 

 

 

By:

 

 

 

Joseph A. Molino, Jr., the Vice President of each of the corporations named
above

 

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SCHEDULE OF LOANS

 

 

 

 

 

 

 

 

 

 

 

Amount of

 

Date

 

Type

 

 

 

Principal

 

 

 

Principal

 

of

 

of

 

Interest

 

Amount of

 

Maturity

 

Paid or

 

Loan

 

Loan

 

Rate

 

Loan

 

of Loan

 

Unpaid_

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT N

 

FORM OF

ADDITIONAL TERM LOAN NOTE

 

[$4,625,400][$2,490,600]

 

March     , 2009

 

FOR VALUE RECEIVED, P&F INDUSTRIES, INC., a Delaware corporation (“P&F”),
FLORIDA PNEUMATIC MANUFACTURING CORPORATION, a Florida corporation (“Florida
Pneumatic”), EMBASSY INDUSTRIES, INC., a New York corporation (“Embassy”), GREEN
MANUFACTURING, INC., a Delaware corporation (“Green”), COUNTRYWIDE HARDWARE,
INC., a Delaware corporation (“Countrywide”), NATIONWIDE INDUSTRIES, INC., a
Florida corporation (“Nationwide”), WOODMARK INTERNATIONAL, L.P., a Delaware
limited partnership (“Woodmark”), PACIFIC STAIR PRODUCTS, INC., a Delaware
corporation (“Pacific”) , WILP HOLDINGS, INC., a Delaware corporation (“WILP”),
CONTINENTAL TOOL GROUP, INC., a Delaware corporation (“Continental”) and HY-TECH
MACHINE, INC., a Delaware corporation (“Hy-Tech”; and collectively with P&F,
Florida Pneumatic, Embassy, Green, Countrywide, Nationwide, Woodmark, Pacific,
WILP and Continental the “Co-Borrowers”), jointly and severally promise to pay
to the order of [CITIBANK, N.A.] [HSBC BANK USA, NATIONAL ASSOCIATION] (the
“Lender”), on or before the Additional Term Loan Maturity Date, the principal
amount of [FOUR MILLION SIX HUNDRED TWENTY FIVE THOUSAND FOUR HUNDRED] [TWO
MILLION FOUR HUNDRED NINETY THOUSAND SIX HUNDRED] ([$4,625,400][$2,490,600])
DOLLARS.  The outstanding principal amount hereof is payable in installments in
the amounts and on the dates set forth in the Credit Agreement referred to
below, provided that the final installment, on the Additional Term Loan Maturity
Date, shall be in an amount equal to the remaining principal amount outstanding
on the Additional Term Loan Maturity Date.

 

The Co-Borrowers jointly and severally promise to pay interest on the unpaid
principal amount hereof from the date hereof until paid in full at the rates and
at the times which shall be determined in accordance with the provisions of the
Credit Agreement referred to below.

 

This Note is one of the “Additional Term Loan Notes” referred to in the Credit
Agreement, dated as of June 30, 2004, by and among the Co-Borrowers, Citibank,
N.A., as Administrative Agent, and the Lenders (including the Lender) as are, or
may from time to time become, parties thereto (as same has been and may be
further amended, restated, supplemented or modified, the “Credit Agreement”) and
is issued pursuant to and entitled to the benefits of the Credit Agreement to
which reference is hereby made for a more complete statement of the terms and
conditions under which the Additional Term Loan evidenced hereby was made and is
to be repaid.  Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.

 

Each of the Lender and any subsequent holder of this Note shall record the date,
Type and amount of each payment or prepayment of principal of the Loans on the
grid schedule annexed to this Note; provided, however, that the failure of the
Lender or any holder to set forth the Additional Term Loan, payments and other
information on the attached grid schedule shall not in any manner affect the
obligation of the Co-Borrowers to repay the Additional Term Loan made by the
Lender in accordance with the terms of this Note.

 

This Note is subject to prepayment as provided in Section 3.03 of the Credit
Agreement.

 

16

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Upon the occurrence of an Event of Default the unpaid balance of the principal
amount of this Note, together with all accrued but unpaid interest thereon, may
become, or may be declared to be, due and payable in the manner, upon the
conditions and with the effect provided in the Credit Agreement.

 

All payments of principal and interest in respect of this Note shall be made in
lawful money of the United States of America in immediately available funds at
the office of Citibank, N.A., as Administrative Agent for the Lenders under the
Credit Agreement, located at 730 Veterans Memorial Highway, Hauppauge, New York
11788 or at such other place as shall be designated in writing for such purpose
in accordance with the terms of the Credit Agreement.

 

No reference herein to the Credit Agreement and no provision of this Note or the
Credit Agreement shall alter or impair the obligation of the Co-Borrowers, which
is absolute and unconditional, to pay the principal of and interest on this Note
at the place, at the respective times, and in the currency herein prescribed.

 

Each Co-Borrower and each endorser of this Note waive diligence, presentment,
protest, demand, and notice of any kind in connection with this Note.

 

THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OR CHOICE OF LAW.

 

[next page is signature page]

 

17

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IN WITNESS WHEREOF, each Co-Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and at the
place first above written.

 

 

P&F INDUSTRIES, INC.

 

FLORIDA PNEUMATIC MANUFACTURING
CORPORATION

 

EMBASSY INDUSTRIES, INC.

 

GREEN MANUFACTURING, INC.

 

COUNTRYWIDE HARDWARE, INC.

 

NATIONWIDE INDUSTRIES, INC.

 

WOODMARK INTERNATIONAL, L.P.

 

By:

Countrywide Hardware, Inc., its General

 

 

Partner

 

PACIFIC STAIR PRODUCTS, INC.

 

WILP HOLDINGS, INC.

 

CONTINENTAL TOOL GROUP, INC.

 

HY-TECH MACHINE, INC.

 

 

 

 

 

By:

 

 

 

Joseph A. Molino, Jr., the Vice President of each of the corporations named
above

 

18

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SCHEDULE OF LOANS

 

 

 

 

 

 

 

 

 

 

Amount of

 

Date

 

Type

 

 

 

Principal

 

 

 

Principal

 

of

 

of

 

Interest

 

Amount of

 

Maturity

 

Paid or

 

Loan

 

Loan

 

Rate

 

Loan

 

of Loan

 

Unpaid_

 

 

 

 

 

 

 

 

 

 

 

 

 

3/    /09

 

 

 

 

 

$

 

 

3/      /12

 

 

 

 

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