Exhibit 10.15

 

Prepared by and after
recording return to:

 

Thomas G. Wilson, III, Esq.
Smith Hulsey & Busey

Post Office Box 53315
Jacksonville, Florida 32201-3315

 

SECOND LOAN DOCUMENTS MODIFICATION AGREEMENT

 

THIS SECOND LOAN DOCUMENTS MODIFICATION AGREEMENT (this “Agreement”) is made as
of April 22, 2010 (the “Effective Date”), by and between COUNTRYWIDE HARDWARE,
INC., a Delaware corporation (“Borrower”), whose address for notices is 445
Broadhollow Road, Suite 100, Melville, New York 11747, and WELLS FARGO BANK,
NATIONAL ASSOCIATION, a national banking association (“Bank”),
successor-by-merger to Wachovia Bank, National Association, whose address for
notices is 225 Water Street, Third Floor, FL0061, Jacksonville, Florida 32202.

 

Recitals:

 

1.               In connection with a loan from Bank to Borrower in the amount
of $2,024,000.00 (the “Loan”), Borrower executed and delivered to Bank that
certain Promissory Note in the original principal amount of $2,024,000.00 dated
as of May 24, 2002 (as modified by the Prior Modification (as defined below),
and as the same may have been otherwise amended from time to time, the “Note”).
The Note is secured by, among other things, that certain Mortgage, Security
Agreement and Absolute Assignment of Leases from Borrower to Bank dated as of
May 24, 2002 and recorded in Official Records Book 11663, Page 770 (as modified
by the Prior Modification, and as the same may have been otherwise amended from
time to time, the “Mortgage”).

 

2.               The proceeds of the Loan have been advanced in accordance with
that certain Loan Agreement dated as of May 24, 2002 by and between Borrower and
Bank, as modified and amended by that certain Amendment Letter dated as of
December 31, 2006, and that certain Amendment to Note and Loan Agreement dated
as of May 24, 2009 (as further amended by the Prior Modification, and as the
same may have been otherwise amended from time to time, the “Loan Agreement”).

 

3.               The Note, the Mortgage and the Loan Agreement were each amended
and modified by, among other things, that certain Loan Documents Modification
Agreement dated as of February 24, 2010 and recorded in Official Records Book
19769, Page 429 of the public records of Hillsborough County, Florida (the
“Prior Modification”).

 

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4.               The Note, the Mortgage, the Loan Agreement and all other
documents to which Bank is a party or beneficiary now or in the future together
with all amendments, modifications, renewals or extensions thereof, including,
but not limited to the First Modification, that evidence, secure or otherwise
relate to the Loan are hereinafter collectively referred to as the “Loan
Documents.”

 

5.               Borrower has requested that Bank modify and amend certain of
the Loan Documents and waive Borrower’s default related to certain covenants,
and Bank is willing to modify and amend certain of the Loan Documents and
provide such waivers, provided that Borrower comply with and consent to the
terms set forth in this Agreement and not otherwise.

 

NOW, THEREFORE, in consideration of Bank modifying and amending certain of the
Loan Documents, Borrower and Bank hereby agree as follows:

 

1.               Recitals. Borrower warrants and represents to Bank that the
foregoing Recitals are true and correct. The Recitals are incorporated into this
Agreement by this reference.

 

2.               Estoppel. Borrower represents and warrants to Bank that, as of
Effective Date, the outstanding principal balance of the Note is $1,079,467.04
(which amount does not include the principal payment described in Section 8 of
this Agreement), that accrued interest has been paid to March 24, 2010, and that
accrued interest in the amount of $-0- remains due and unpaid, that the funds
have been disbursed in accordance with the terms and conditions of the Loan
Agreement, that no letters of credit are outstanding from Bank on behalf of
Borrower, that the outstanding principal balance of the Note and accrued
interest are secured by the Mortgage and are due, owing and unpaid, without
defense, setoff or counterclaim, and that any defenses, setoffs or
counterclaims, if any, held by Borrower presently or which may be held by Bank
in the future, whether known or unknown, are hereby forever waived, released and
discharged by Borrower.

 

3.               Ratification. Borrower ratifies, approves and consents to all
the disbursements of the Loan made by Bank under the Loan Documents and
acknowledges that Bank has fully complied with the terms and conditions of the
Loan Documents. Borrower acknowledges that the Loan Documents are in full force
and effect. Borrower hereby restates and confirms the covenants,
representations, agreements, grants and warranties in the Loan Documents.
Borrower ratifies, approves and consents to all action or inaction of Bank with
respect to the Loan, including, but not limited to, the administering,
disbursing, handling, servicing, securing, demanding, enforcing and collecting
of the Loan.

 

4.               Modification of the Note. The Note is hereby amended and
modified as follows:

 

(a)           The Section entitled “Repayment Terms” is deleted and replaced in
its entirety to read as follows:

 

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(i)            This Note shall be due and payable in consecutive monthly
payments of principal of $11,244.44, plus accrued interest, commencing on
May 22, 2010, and continuing on the same day of each month thereafter until
fully paid. In any event, all principal and accrued interest shall be due and
payable on January 1, 2011.

 

5.               Modification  of the Mortgage. The Mortgage is hereby amended
and modified such that the definition of the “Note” is hereby modified and
amended to include the Note, as amended, modified and extended by this
Agreement.

 

6.               Modification  of the Loan Agreement. The Loan Agreement is
hereby amended and modified as follows:

 

(a)           The definition of the “Note” is hereby modified and amended to
include the Note as amended, modified and extended in this Agreement.

 

(b)           The following provisions are hereby added to the section entitled
“Affirmative Covenants” to read as follows:

 

(i)            Additional Financial Information. (a) Annual Balance Sheet. As
soon as available, but in any event within ninety (90) days after the end of
each fiscal year of Borrower, a copy of the audited consolidated and unaudited
consolidating balance sheet of Borrower and its Subsidiaries as of the end of
such year and the related audited consolidated and unaudited consolidating
statements of income, shareholders equity and cash flow for such year, setting
forth in each case in comparative form the respective figures for the previous
fiscal year end, and accompanied by a report thereon of J.H. Cohn LLP in the
case of such audited statement or other independent certified public accountants
of recognized standing selected by Borrower and reasonably satisfactory to the
Bank, which report shall be unqualified, prepared in accordance with GAAP on a
consistent basis; (b) Monthly Balance Sheet. As soon as available, but in any
event not later than twenty (20) days after the end of each calendar month of
each fiscal year of Borrower, commencing with the month ending April 30, 2010, a
copy of the unaudited interim consolidated and consolidating balance sheet of
Borrower as of the end of each such month, and the related unaudited interim
consolidated and consolidating statements of income, shareholder equity and cash
flow (i) as of the end of each such month, and (ii) for the portion of the
fiscal year through such date, each delivered in the format attached hereto as
Exhibit “A” and prepared by the Chief Financial Officer of Borrower in
accordance with GAAP, applied on a consistent basis and accompanied by a
certificate to that effect executed by the Chief Financial Officer of Borrower,
provided the December monthly statements shall be subject to customary year end
adjustments; (c) Certificate. On or prior to the twentieth (20th) day of each
calendar month, a certificate prepared and signed by the Chief Financial
Officer, Chief Executive Officer or Vice President of Finance of Borrower as to
whether or not, as of the close of such preceding calendar month, and at all
times during such preceding calendar month, Borrower was in compliance with all
the provisions in this Agreement showing computation of financial covenants and
attesting to compliance with negative covenants and the actual versus forecasted
results of operations with respect to the covenants set forth in section 7.13 of
the Credit Agreement related to the subordinate financing from CitiBank, N.A.
and

 

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HSBC Bank, USA, National Association to Borrower; (d) Cash Flow Forecast. Prior
to the close of business on the business day immediately following the last
business day of each week, a rolling 13-week cash flow forecast of Borrower in
the format attached hereto as Exhibit “B.”

 

7.               Limited Financial Covenant Waiver. Bank hereby waives the
application of the covenant in the Loan Agreement entitled “Fixed Charge
Coverage Ratio” and cross defaults to the extent that such defaults have been
waived by CitiBank, N.A. and HSBC Bank, USA, National Association (collectively,
the “Subordinate Lenders”) related to their subordinate financing with Borrower,
but not otherwise, until the maturity date of the Note as extended by this
Agreement, upon which date such waiver shall expire automatically. From and
after the date hereof, and provided that Borrower is not in default under any
Loan Document, Borrower’s failure to comply with such covenant shall not
constitute a default under the Loan Agreement or any other Loan Document.
Borrower acknowledges and agrees that the waiver described in this Section 7
does not constitute a waiver of any of Bank’s rights under any other document
delivered in connection with the Loan or otherwise. Notwithstanding anything to
the contrary in this Agreement, future unwaived defaults by the Subordinate
Lenders, their successors or assigns, will constitute defaults under the Loan
Documents resulting from the existing cross default language in the Loan
Documents.

 

8.               Principal Payment. Prior to the effectiveness of this
Agreement, Borrower shall make a principal payment to Bank to be applied to the
Note in the amount of $150,000.00.

 

9.               Reconfirmation. Borrower hereby restates and reconfirms all
representations, warranties, covenants, agreements and stipulations contained in
the Loan Documents, as if set out herein in full and further acknowledges and
agree that the Loan Documents are valid, binding and legally enforceable against
Borrower in accordance with their terms, as modified.

 

10.             Warranties and Representations. Borrower warrants and represents
as follows:

 

(a)           This Agreement and the Loan Documents constitute legally binding
obligations and are enforceable against Borrower in accordance with their
respective terms;

 

(b)           Neither this Agreement nor any other document delivered in
connection herewith or action taken in connection herewith shall be deemed or
construed to be a satisfaction, novation, or release of any obligations of
Borrower under the Loan Documents, and the execution of this Agreement shall not
constitute a waiver of any of the Bank’s rights thereunder except as set forth
in Section 7 above, and as otherwise provided herein;

 

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(c)           Bank has no further obligation to Borrower under the terms of the
Loan Documents or with respect to any transaction contemplated thereby or
related thereto except as expressly set forth herein; and

 

(d)           Borrower is not a party to, or subject of, any lawsuit, complaint,
counterclaim, cross-claim, adversary proceeding, arbitration proceeding,
bankruptcy or insolvency proceeding, administrative claim or other legal action
or proceeding.

 

11.             General Release of Bank. Borrower, in consideration of the
premises herein contained and other good and valuable consideration, the
adequacy and sufficiency of which is hereby acknowledged hereby releases and
discharges Bank, its agents, officers, directors, employees, affiliates,
attorneys, successors and assigns, jointly and severally, from any and all
manner of action and actions, cause or causes of action, suits, debts, sums of
money, accounts, covenants, contracts, controversies, obligations, liabilities,
agreements, promises, expenses, damages, claims or demand of every nature and
kind whatsoever, if any, at law or in equity, whether now accrued or hereafter
maturing and whether known or unknown which Borrower now has or hereafter can,
shall, or may have by reason of any matter, cause or thing from the beginning of
the world to and including the date hereof which may arise or could arise by
reason of the making, administration, disbursement, documentation, demand for
payment, foreclosure or modification of the Loan.

 

12.             Impairment. Nothing herein invalidates or shall invalidate any
security now held by Bank for the aforesaid indebtedness as herein modified nor
impair or release any covenant, modification, condition, agreement or
stipulation in the Loan Documents and the same shall continue in full force and
effect, and Borrower covenants and agrees to keep, perform, comply with, and
abide by, each and every of the covenants, conditions, agreements and
stipulations of this Agreement and the Loan Documents.

 

13.             Costs, Expenses and Attorneys’ Fees. Borrower agrees to pay all
costs and expenses incurred by Bank in connection with the negotiation,
preparation and administration of this Agreement.

 

14.             Taxes. It is the intent of Borrower and Bank that this Agreement
only modify the terms of the Loan Documents in a manner so that no additional
title insurance premiums, documentary stamp tax or intangible personal property
tax shall be due and payable. In the event additional title insurance premiums,
documentary stamp tax, intangible personal property tax or other taxes or costs
are assessed, imposed or, in Bank’s sole opinion, are due and payable, Borrower
shall immediately pay the same, including any interest and penalties imposed in
connection therewith, and Borrower hereby agrees to indemnify, defend and hold
Bank harmless from any liability, loss, costs, damages, interest and penalties,
including attorneys’ fees, that Bank may incur thereby. Any sums paid by Bank
shall be immediately due and payable by Borrower. This provision shall survive
the repayment of the Note.

 

15.             Default. If any of Borrower’s representations contained herein
or in the Note or in the Mortgage shall prove to be incorrect or untrue in any
material manner or if

 

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Borrower fails to perform any of its covenants and agreements contained herein,
the occurrence of any such event shall constitute a default under the Note and
the Mortgage entitling Bank to the exercise of all of its rights and remedies
under the Note and the Mortgage.

 

16.             Survival. Notwithstanding the execution of this Agreement,
Borrower acknowledges that all remedies of Bank under the terms of the Loan
Documents shall survive the execution hereof and that each and every remedy
shall be cumulative and concurrent and shall be in addition to each and every
other right, power and remedy given hereunder. Except as expressly set forth
herein, nothing contained in this Agreement shall constitute a waiver of any
rights or remedies of the Bank under the terms of the Loan Documents.

 

17.             No Novation. Borrower and Lender hereby acknowledge and agree
that this Agreement shall not constitute a novation of the indebtedness
evidenced by the Loan Documents, and further that the terms and provisions of
the Loan Documents shall remain valid and in full force and effect except as may
be hereinabove modified and amended.

 

18.             Invalidity. In case any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, the same shall not affect any other provision of
this Agreement and this Agreement shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein.

 

19.             Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida without regard to choice of
law rules thereunder.

 

20.             Modifications. The terms of this Agreement may not be changed,
modified, waived, discharged or terminated orally, but may only be done so by
instruments in writing signed by the party against whom enforcement of the
change, modification, waiver, discharge or termination is asserted.

 

21.             Paragraph Headings. Paragraph headings are inserted for
convenience of reference only and shall not be involved or considered in the
interpretation of this Agreement.

 

22.             Entire Agreement. Except as specifically set forth herein, there
are no other modifications of any of the Loan Documents nor any other agreements
between the parties relating to the modification, amendment or extension of the
Note.

 

23.             Counterparts. This Agreement may be executed in any number of
counterparts and each counterpart taken together shall constitute a single
instrument.

 

24.             Binding Agreement. The covenants and agreements contained herein
shall be binding upon and inure to the benefit of Borrower and Bank, and their
respective heirs, successors, assigns, personal representatives and legal
representatives.

 

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25.           Waiver of Jury Trial. BANK AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION INVOLVING THE LOAN DOCUMENTS, THIS AGREEMENT, THE
INDEBTEDNESS EVIDENCED BY THE NOTE AND SECURED BY THE MORTGAGE OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTION OF
ANY PARTY RELATED TO OR INVOLVING THE LOAN DOCUMENTS, THIS AGREEMENT OR THE
INDEBTEDNESS EVIDENCED BY THE NOTE AND SECURED BY THE MORTGAGE. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR BANK ENTERING INTO THIS AGREEMENT.

 

[signatures on following pages]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the Effective Date.

 

 

 

 

                “BORROWER”

 

 

 

 

 

 

 

COUNTRYWIDE HARDWARE, INC., a
Delaware corporation

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Joseph A. Molino, Jr.

 

 

 

 

Joseph A. Molino, Jr.

 

 

 

 

Vice President

 

 

 

 

 

 

 

 

 

 

STATE OF New York

 

 

 

COUNTY OF Suffolk

 

 

 

 

 

The foregoing instrument was acknowledged before me this 21st day of April 2010,
by Joseph A. Molino, Jr., as Vice President of Countrywide Hardware, Inc., a
Delaware corporation, on behalf of the corporation, who is personally known to
me or who has produced                    as identification.

 

 

 

/s/ Robert C. Weiden

 

 

Print Name:

Robert C. Weiden

 

 

Notary Public, State and County Aforesaid

 

 

My Commission Expires:

12-22-10

 

 

Commission Number:

4875900

 

 

 

ROBERT C. WEIDEN

 

 

Notary Public, State of New York

 

 

No. 4875900

 

 

Qualified in Suffolk County

 

 

Commission Expires

12-22-10

 

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“BANK”

 

 

 

 

 

 

 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking
association, successor by merger to
Wachovia Bank, National Association

 

 

 

 

 

 

 

 

 

By:

/s/ Michael L Williamson

 

 

 

Name:

Michael L Williamson

 

 

 

Title:

SR Vice President

 

 

 

 

 

 

 

 

STATE OF Florida

 

 

COUNTY OF VOLUSIA

 

 

 

The foregoing instrument was acknowledged before me this 22 day of April 2010,
by Michael L Williamson               , as Senior V. P. of Wells Fargo
Bank, National Association, a national banking association, successor-by-merger
toWachovia Bank, National Association, on behalf of the association, who is
personally known to me or who has produced                    as identification.

 

 

 

 

/s/ Sandy C. Barber

 

 

Print Name:

Sandy C. Barber

[SEAL]

 

Notary Public, State and County Aforesaid

 

 

Commission Number:

DD797576

 

 

My Commission Expires:

July 21, 2012

 

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INSTR # 2002177275

PREPARED BY: Michael D. Morelly, Esq.

OR BK 11663 PG 0770

Michael D. Morelly, Esq.

RECORDED 05/24/2002 03: 24 PM

1200 S. Pine Island Rd., Ste 220

RICHARD AKE CLERK OF COURT

Plantation, Florida 33324

HILLSBOROUGH COUNTY

 

DOC TAX PD (F.S.201.08) 7,084.00

 

INT. TAX PD (F.S.199) 4,048.00

RETURN TO:

DEPUTY CLERK P Beckham

 

Gibbons Cohn

2/8

 

FLORIDA DOCUMENTARY STAMP TAXES IN THE AMOUNT OF $7,048.00 AND FLORIDA
NON-RECURRING INTANGIBLE TAXES IN THE AMOUNT OF $4,048.00 ARE BEING PAID UPON
RECORDATION OF THIS INSTRUMENT.

 

MORTGAGE, SECURITY AGREEMENT AND ABSOLUTE ASSIGNMENT OF
LEASES

 

This MORTGAGE (hereafter referred to as “Mortgage”) made May 24, 2002, by and
between, Countrywide Hardware, Inc., whose address is 300 Smith Street,
Farmingdale, New York 11735 (“Mortgagor”) and Wachovia Bank, National
Association, a national banking association, whose address is 214 North Hogan
Street - FL0070, Jacksonville, Florida 32202 (“Bank”).

 

W I T N E S S E T H:

 

To secure payment and performance of obligations under a Promissory Note (the
“Note”) dated May 24, 2002, in the amount of $2,024,000.00, made by Mortgagor
payable to Bank, this Mortgage, other loan documents as defined in the Note (the
“Loan Documents”), and swap agreements (as defined in 11 U.S.C. § 101) between
Bank and Mortgagor, and any renewals, extensions, novations, or modifications of
the foregoing (collectively the “Obligations”), and in consideration of these
premises and for other consideration, Mortgagor does mortgage, grant and convey
unto Bank, its successors and assigns, all of Mortgagor’s right, title and
interest now owned or hereafter acquired in and to each of the following
(collectively, the “Property”): (i) all those certain tracts of land in the
County of Hillsborough, State of Florida described in EXHIBIT A attached hereto
and made part hereof (the “Land”); (ii) all buildings and improvements now or
hereafter erected on the Land; (iii) all fixtures, machinery, equipment and
other articles of real, personal or mixed property attached to, situated or
installed in or upon, or used in the operation or maintenance of, the Land or
any buildings or improvements situated thereon, whether or not such real,
personal or mixed property is or shall be affixed to the Land; (iv) all building
materials, building machinery and building equipment delivered on site to the
Land during the course of, or in connection with, any construction, repair or
renovation of the buildings and improvements situated or to be situated thereon;
(v) all leases, licenses or occupancy agreements of all or any part of the Land
and all extensions, renewals, and modifications thereof, and any options, rights
of first refusal or guarantees relating thereto; all rents, income, revenues,
security deposits, issues, profits, awards and payments of any kind payable
under the leases or otherwise arising from the Land; (vi) all contract rights,
accounts receivable and general intangibles relating to the Land or the use,
occupancy, maintenance, construction, repair or operation thereof; all
management agreements, franchise agreements, utility agreements and deposits;
all maps, plans, surveys and specifications; all warranties and guaranties; all
permits, licenses and approvals; and all insurance policies; (vii) all estates,
rights, tenements, hereditaments, privileges, easements, and appurtenances of
any kind benefiting the Land; all means of access to and from the Land, whether
public or private; and all water and mineral rights; and (viii) all “Proceeds”
of any of the above-described property, which term shall have the meaning given
to it in the Uniform Commercial Code of the jurisdiction where this Mortgage is
recorded (the “UCC”), whether cash or non-cash, and including

 

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insurance proceeds and condemnation awards; and all replacements, substitutions
and accessions thereof.

 

TO HAVE AND TO HOLD the Property and all the estate, right, title and interest,
in law and in equity, of Mortgagor in and to the Property unto Bank, its
successors and assigns, forever.

 

Mortgagor WARRANTS AND REPRESENTS that Mortgagor is lawfully seized of the
Property, in fee simple, absolute, that Mortgagor has the legal right to convey
and encumber the same, and that the Property is free and clear of all liens and
encumbrances. Mortgagor further warrants and will forever defend all and
singular the Property and title thereto to Bank and Bank’s successors and
assigns, against the lawful claims of all persons whomsoever.

 

PROVIDED ALWAYS that if all Obligations are timely paid and performed each and
every representation, warranty, agreement, and condition of this Mortgage, the
other Loan Documents and any swap agreements, are complied with and abided by,
this Mortgage and the estate hereby created shall cease and be null, void, and
canceled of record.

 

To protect the security of this Mortgage, Mortgagor further represents and
agrees with Bank as follows:

 

Payment of Obligations. That the Obligations shall be timely paid and performed.

 

Future Advances. This Mortgage is given to secure not only existing Obligations,
but also future advances made within 20 years of the date of this Mortgage to
the same extent as if such future advances are made on the date of the execution
of this Mortgage. The principal amount (including any swap agreements and future
advances) that may be so secured may decrease or increase from time to time, but
the total amount so secured at any one time shall not exceed the maximum
principal amount of $4,048,000.00, plus all interest, costs, reimbursements,
fees and expenses due under this Mortgage and secured hereby. Mortgagor shall
not execute any document that impairs or otherwise impacts the priority of any
future advances secured by this Mortgage.

 

Grant of Security Interest in Personal Property. This Mortgage constitutes a
security agreement under the UCC and shall be deemed to constitute a fixture
financing statement. Mortgagor hereby grants a security interest in any personal
property included in the Property. On request of Bank, Mortgagor will execute
one or more Financing Statements in form satisfactory to Bank and will pay all
costs and expenses of filing the same in all public filing offices, where filing
is deemed desirable by Bank. Bank is authorized to file Financing Statements
relating to the Property without Mortgagor’s signature where permitted by law.
Mortgagor appoints Bank as its attorney-in-fact to execute such documents
necessary to perfect Bank’s security interest on Mortgagor’s behalf. The
appointment is coupled with an interest and shall be irrevocable as long as any
Obligations remain outstanding.

 

Leases, Subleases and Easements. Mortgagor shall maintain, enforce and cause to
be performed all of the terms and conditions under any lease, sublease or
easement which may constitute a portion of the Property. Mortgagor shall not,
without the consent of Bank, enter into any new lease of all or any portion of
the Property, agree to the cancellation or surrender under any lease of all or
any portion of the Property, agree to prepayment of rents, issues or profits
(other than rent paid at the signing of a lease or sublease), modify any such
lease so as to shorten the term, decrease the rent, accelerate the payment of
rent, or change the terms of any renewal option; and any such purported new
lease, cancellation, surrender, prepayment or modification made without the
consent of Bank shall be void as against Bank.

 

Required Insurance. Mortgagor shall maintain with respect to the Property:
(i) during construction of any improvements on the Property, “all-risk” builders
risk insurance (non-reporting Completed Value with Special Cause of Loss form),
in an amount not less than the total value of the improvements under
construction, naming Bank as mortgagee and loss payee; (ii) upon completion of
construction and at all other times, insurance against loss or damage by fire
and other casualties and

 

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hazards by insurance written on an “all risks” basis, including specifically
windstorm and/or hail damage, in an amount not less than the replacement cost
thereof, naming Bank as loss payee and mortgagee; (iii) if the Property is
required to be insured pursuant to the National Flood Reform Act of 1994, and
the regulations promulgated thereunder, flood insurance is required in the
amount equal to the lesser of the loan amount or maximum available under the
National Flood Insurance Program, but in no event should the amount of coverage
be less than the value of the improved structure, naming Bank as mortgagee and
loss payee; and (iv) liability insurance providing coverage in such amount as
Bank may require but in no event less than $1,000,000.00 combined single limit,
naming Bank as an additional insured; and (v) such other insurance as Bank may
require from time to time.

 

All casualty insurance policies shall contain an endorsement or agreement by the
insurer in form satisfactory to Bank that any loss shall be payable in
accordance with the terms of such policy notwithstanding any act or negligence
of Mortgagor and the further agreement of the insurer waiving rights of
subrogation against Bank, and rights of set-off, counterclaim or deductions
against Mortgagor.

 

All insurance policies shall be in form, provide coverages, be issued by
companies and be in amounts satisfactory to Bank. At least 30 days prior to the
expiration of each such policy, Mortgagor shall furnish Bank with evidence
satisfactory to Bank that such policy has been renewed or replaced or is no
longer required hereunder. All such policies shall provide that the policy will
not be canceled or materially amended without at least 30 days prior written
notice to Bank. In the event Mortgagor fails to provide, maintain, keep in
force, and furnish to Bank the policies of insurance required by this paragraph,
Bank may procure such insurance or single-interest insurance in such amounts, at
such premium, for such risks and by such means as Bank chooses, at Mortgagor’s
expense; provided however, Bank shall have no responsibility to obtain any
insurance, but if Bank does obtain insurance, Bank shall have no responsibility
to assure that the insurance obtained shall be adequate or provide any
protection to Mortgagor.

 

Insurance Proceeds. After occurrence of any loss to any of the Property,
Mortgagor shall give prompt written notice thereof to Bank.

 

In the event of such loss all insurance proceeds shall be payable to Bank, and
Mortgagor hereby authorizes and directs any affected insurance company to make
payment of such proceeds directly to Bank. Bank is hereby authorized by
Mortgagor to settle, adjust or compromise any claims for loss or damage under
any policy or policies of insurance and Mortgagor appoints Bank as its
attorney-in-fact to receive and endorse any insurance proceeds to Bank, which
appointment is coupled with an interest and shall be irrevocable as long as any
Obligations remain unsatisfied.

 

In the event of any damage to or destruction of the Property, Bank shall have
the option of applying or paying all or part of the insurance proceeds to
(i) the Obligations in such order as Bank may determine, (ii) restoration of the
Property, or (iii) Mortgagor. Nothing herein shall be deemed to excuse Mortgagor
from restoring, repairing and maintaining the Property as required herein.

 

Impositions; Escrow Deposit. Mortgagor will pay all taxes, levies, assessments
and other fees and charges imposed upon or which may become a lien upon the
Property under any law or ordinance (all of the foregoing collectively
“Impositions”) before they become delinquent and in any event in the same
calendar year in which they first become due. Upon request of Bank (but only if
Mortgagor has failed to timely pay same when and as due), Mortgagor shall add to
each periodic payment required under the Note the amount estimated by Bank to be
sufficient to enable Bank to pay, as they come due, all Impositions and
insurance premiums which Mortgagor is required to pay hereunder. Payments
requested under this provision shall be supplemented or adjusted as required by
Bank from time to time. Such funds may be commingled with the general funds of
Bank and shall not earn interest. Upon the occurrence of a Default, Bank may
apply such funds to pay any of the Obligations.

 

Use of Property. Mortgagor shall use and operate, and require its lessees or
licensees to use and operate, the Property in compliance with all applicable
laws and ordinances, covenants, and restrictions, and with all applicable
requirements of any lease or sublease now or hereafter affecting the

 

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Property. Mortgagor shall not permit any unlawful use of the Property or any use
that may give rise to a claim of forfeiture of any of the Property. Mortgagor
shall not allow changes in the stated use of Property from that disclosed to
Bank at the time of execution hereof. Mortgagor shall not initiate or acquiesce
to a zoning change of the Property without prior notice to, and written consent
of, Bank.

 

Maintenance, Repairs and Alterations. Mortgagor shall keep and maintain the
Property in good condition and repair and fully protected from the elements to
the satisfaction of Bank. Mortgagor will not materially remove, demolish or
structurally alter more than twenty-five (25%) percent of any of the buildings
or other improvements on the Property (except such alterations as may be
required by laws, ordinances or regulations) without the prior written consent
of Bank. Mortgagor shall promptly notify Bank in writing of any material loss,
damage or adverse condition affecting the Property.

 

Eminent Domain. Should the Property or any interest therein be taken or damaged
by reason of any public use or improvement or condemnation proceeding
(“Condemnation”), or should Mortgagor receive any notice or other information
regarding such Condemnation, Mortgagor shall give prompt written notice thereof
to Bank. Bank shall be entitled to all compensation, awards and other payments
or relief granted in connection with such Condemnation and, at its option, may
commence, appear in and prosecute in its own name any action or proceedings
relating thereto. Bank shall be entitled to make any compromise or settlement in
connection with such taking or damage. All compensation, awards, and damages
awarded to Mortgagor related to any Condemnation (the “Proceeds”) are hereby
assigned to Bank and Mortgagor agrees to execute such further assignments of the
Proceeds as Bank may require. Bank shall have the option of applying or paying
the Proceeds in the same manner as insurance proceeds as provided herein.
Mortgagor appoints Bank as its attorney-in-fact to receive and endorse the
Proceeds to Bank, which appointment is coupled with an interest and shall be
irrevocable as long as any Obligations remain unsatisfied.

 

Environmental Condition of Property and Indemnity. Mortgagor warrants and
represents to Bank, except as reported by Mortgagor to Bank in writing, that:
(i) Mortgagor has inspected and is familiar with the environmental condition of
the Property; (ii) the Property and Mortgagor, and any occupants of the
Property, are in compliance with and shall continue to be in compliance with all
applicable federal, state and local laws and regulations intended to protect the
environment and public health and safety as the same may be amended from time to
time (“Environmental Laws”); (iii) to the best of Mortgagor’s knowledge and
belief, the Property is not and has never been used to generate, handle, treat,
store or dispose of, in any quantity, oil, petroleum products, hazardous or
toxic substances, hazardous waste, regulated substances or hazardous air
pollutants (“Hazardous Materials”) in violation of any Environmental Laws; and
(iv) no Hazardous Materials (including asbestos or lead paint in any form) are
located on or under the Property or emanate from the Property, except those that
are properly handled and disposed of in accordance with all federal and state
laws. Further, Mortgagor represents to Bank that no portion of the Property is a
protected wetland. Mortgagor agrees to notify Bank immediately upon receipt of
any citations, warnings, orders, notices, consent agreements, process or claims
alleging or relating to violations of any Environmental Laws or to the
environmental condition of the Property.

 

Mortgagor shall indemnify, hold harmless, and defend Bank from and against any
and all damages, penalties, fines, claims, suits, liabilities, costs, judgments
and expenses, including attorneys’, consultants’ or experts’ fees of every kind
and nature incurred, suffered by or asserted against Bank as a direct or
indirect result of: (i) representations made by Mortgagor in this Section being
or becoming untrue in any material respect; (ii) Mortgagor’s violation of or
failure to meet the requirements of any Environmental Laws; or (iii) Hazardous
Materials which, while the Property is subject to this Mortgage, exist on the
Property. Bank shall have the right to arrange for or conduct environmental
inspections of the Property from time to time (including the taking of soil,
water, air or material samples). The cost of such inspections made after Default
or which are required by laws or regulations applicable to Bank shall be borne
by Mortgagor. Mortgagor’s obligations under this Section shall continue, survive
and remain in full force and effect notwithstanding foreclosure, satisfaction of
this Mortgage or full satisfaction of the Obligations. However, Mortgagor’s
indemnity shall not apply to any negligent or intentional act of Bank which
takes place after foreclosure or satisfaction of this Mortgage.

 

4

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Appraisals. Mortgagor agrees that Bank may obtain an appraisal of the Property
when required by the regulations of the Federal Reserve Board or the Office of
the Comptroller of the Currency or at such other times as Bank may reasonably
require. Such appraisals shall be performed by an independent third party
appraiser selected by Bank. The cost of such appraisals shall be borne by
Mortgagor. If requested by Bank, Mortgagor shall execute an engagement letter
addressed to the appraiser selected by Bank. Mortgagor failure or refusal to
sign such an engagement letter, however, shall not impair Bank’s right to obtain
such an appraisal. Mortgagor agrees to pay the cost of such appraisal within 10
days after receiving an invoice for such appraisal.

 

Inspections. Bank, or its representatives or agents, are authorized to enter at
any reasonable time upon any part of the Property for the purpose of inspecting
the Property and for the purpose of performing any of the acts it is authorized
to perform under the terms of this Mortgage at their own risk.

 

Liens and Subrogation. Mortgagor shall pay and promptly discharge all liens,
claims and encumbrances upon the Property. Mortgagor shall have the right to
contest in good faith the validity of any such lien, claim or encumbrance,
provided: (i) such contest suspends the collection thereof or there is no danger
of the Property being sold or forfeited while such contest is pending;
(ii) Mortgagor first deposits with Bank a bond or other security satisfactory to
Bank in such amounts as Bank shall reasonably require; and (iii) Mortgagor
thereafter diligently proceeds to cause such lien, claim or encumbrance to be
removed and discharged.

 

Bank shall be subrogated to any liens, claims and encumbrances against Mortgagor
or the Property that are paid or discharged through payment by Bank or with loan
proceeds, notwithstanding the record cancellation or satisfaction thereof.

 

Waiver of Mortgagor’s Rights. To the fullest extent permitted by law, Mortgagor
waives any: (i) rights of homestead or other exemption with regard to any of the
Property; (ii) rights or claims of equitable or statutory redemption;
(iii) rights of appraisal; and (iv) rights to require marshaling of assets
except as same is permitted by law.

 

Payments by Bank; Indemnification. In the event of default in the timely payment
or performance of any of the Obligations, Bank, at its option and without any
duty on its part to determine the validity or necessity thereof, but with notice
to Borrower, may pay the sums for which Mortgagor is obligated. Further, Bank
may pay such sums as Bank deems appropriate for the protection and maintenance
of the Property including, without limitation, sums to pay Impositions and other
levies, assessments or liens, maintain insurance, make repairs, secure the
Property, maintain utility service, intervene in any condemnation and pay
attorneys’ fees and other fees and costs to enforce this Mortgage or protect the
lien hereof (including foreclosure) or collect the Obligations, without
limitation, including those incurred in any proceeding including Bankruptcy or
arbitration. Any amounts so paid shall bear interest at the default rate stated
in the Note and shall be secured by this Mortgage.

 

In the event Bank shall become party to any suit or legal proceeding by reason
of its status as holder of this Mortgage, Mortgagor shall indemnify and hold
harmless Bank and reimburse Bank for any amounts paid or incurred by Bank,
including all reasonable costs, charges and attorneys’ fees in any such suit or
proceeding.

 

Assignment of Rents. Mortgagor hereby absolutely assigns and transfers to Bank
all the leases, rents, issues and profits of the Property (collectively
“Rents”). Although this assignment is effective immediately, so long as no
Default exists, Bank gives to and confers upon Mortgagor the privilege under a
revocable license to collect as they become due, but not prior to accrual, the
Rents and to demand, receive and enforce payment, give receipts, releases and
satisfactions, and sue in the name of Mortgagor for all such Rents. Mortgagor
represents there has been no prior assignment of leases or Rents, and agrees not
to further assign such leases or Rents. Upon any occurrence of Default, the
license granted to Mortgagor herein shall be automatically revoked without
further notice to or demand upon Mortgagor, and Bank shall have the right, in
its discretion, without notice, by agent or by a receiver appointed by a court,
and without regard to the adequacy of any security for the Obligations, (i) to
enter

 

5

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upon and take possession of the Property, (ii) notify tenants, subtenants and
any property manager to pay Rents to Bank or its designee, and upon receipt of
such notice such persons are authorized and directed to make payment as
specified in the notice and disregard any contrary direction or instruction by
Mortgagor, and (iii) in its own name, sue for or otherwise collect Rents,
including those past due, and apply Rents, less costs and expenses of operation
and collection, including attorneys’ fees, to the Obligations in such order and
manner as Bank may determine or as otherwise provided for herein. Bank’s
exercise of any one or more of the foregoing rights shall not cure or waive any
Default or notice of Default hereunder.

 

Due on Sale or Further Encumbrance. The direct or indirect sale, assignment, or
conveyance of the Property, or any interest therein, or the further encumbrance
of the Property, without Bank’s written consent shall, at Bank’s option,
constitute a Default under this Mortgage. Transfer of control of or a
controlling interest in the Mortgagor shall be deemed a transfer of the Property
except that a transfer or merger with Guarantor shall not constitute a default
hereunder.

 

Remedies of Bank on Default. Failure of Mortgagor or any other person liable to
timely pay or perform any of the Obligations is a default (“Default”) under this
Mortgage. Upon the occurrence of Default the following remedies are available,
without limitation, to Bank: (i) Bank may exercise any or all of Bank’s remedies
under this Mortgage or other Loan Documents including, without limitation,
acceleration of maturity of all payments and Obligations, other than Obligations
under any swap agreements (as defined in 11 U.S.C. § 101) with Bank, which shall
be governed by the default and termination provisions of said swap agreements;
(ii) Bank may take immediate possession of the Property or any part thereof
(which Mortgagor agrees to surrender to Bank) and manage, control or lease the
same to such persons and at such rental as it may deem proper and collect and
apply Rents to the payment of: (a) the Obligations, together with all costs and
attorneys’ fees; (b) all Impositions and any other levies, assessments or liens
which may be prior in lien or payment to the Obligations, and premiums for
insurance, with interest on all such items; and (c) the cost of all alterations,
repairs, replacements and expenses incident to taking and retaining possession
of the Property and the management and operation thereof; all in such order or
priority as Bank in its sole discretion may determine. The taking of possession
shall not prevent concurrent or later proceedings for the foreclosure sale of
the Property; (iii) Bank may apply to any court of competent jurisdiction for
the appointment of a receiver for all purposes including, without limitation, to
manage and operate the Property or any part thereof, and to apply the Rents
therefrom as hereinabove provided. In the event of such application, Mortgagor
consents to the appointment of a receiver, and agrees that a receiver may be
appointed without notice to Mortgagor, without regard to whether Mortgagor has
committed waste or permitted deterioration of the Property, without regard to
the adequacy of any security for the Obligations, and without regard to the
solvency of Mortgagor or any other person, firm or corporation who or which may
be liable for the payment of the Obligations.

 

Miscellaneous Provisions. Mortgagor agrees to the following: (i) All remedies
available to Bank with respect to this Mortgage or available at law or in equity
shall be cumulative and may be pursued concurrently or successively. No delay by
Bank in exercising any remedy shall operate as a waiver of that remedy or of any
Default. Any payment by Bank or acceptance by Bank of any partial payment shall
not constitute a waiver by Bank of any Default; (ii) The provisions hereof shall
be binding upon and inure to the benefit of Mortgagor, its heirs, personal
representatives, successors and assigns including, without limitation,
subsequent owners of the Property or any part thereof, and shall be binding upon
and inure to the benefit of Bank, its successors and assigns and any future
holder of the Note or other Obligations; (iii) Any notices, demands or requests
shall be sufficiently given Mortgagor if in writing and mailed or delivered to
the address of Mortgagor shown above or to another address as provided herein
and to Bank if in writing and mailed or delivered to Bank’s office address shown
above, or such other address as Bank may specify from time to time and in the
event that either party hereto changes its address at any time prior to the date
the Obligations are paid in full, that party shall promptly give written notice
of such change of address by registered or certified mail, return receipt
requested, all charges prepaid; (iv) This Mortgage may not be changed,
terminated or modified orally or in any manner other than by an instrument in
writing signed by the parties hereto; (v) The captions or headings at the
beginning of each paragraph hereof are for the convenience of the parties and
are not a part of this

 

6

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Mortgage; (vi) If the lien of this Mortgage is invalid or unenforceable as to
any part of the Obligations, the unsecured portion of the Obligations shall be
completely paid (and all payments made shall be deemed to have first been
applied to payment of the unsecured portion of the Obligations) prior to payment
of the secured portion of the Obligations and if any clause, provision or
obligation hereunder is determined invalid or unenforceable the remainder of
this Mortgage shall be construed and enforced as if such clause, provision or
obligation had not been contained herein; (vii) This Mortgage shall be governed
by and construed under the laws of the jurisdiction where this Mortgage is
recorded; (viii) Mortgagor by execution and Bank by acceptance of this Mortgage
agree to be bound by the terms and provisions hereof.

 

Mortgagor has signed and sealed this instrument as of the day and year first
above written.

 

 

Mortgagor

 

Countrywide Hardware, Inc.

 

 

CORPORATE

By:

/s/ Joseph A. Molino, Jr

SEAL

 

Joseph A. Molino, Jr., Vice Preside

 

STATE OF NEW YORK

COUNTY OF NASSAU

 

Corporate Acknowledgment

 

The foregoing instrument was acknowledged this day by Joseph A. Molino, Jr.,
Vice President of Countrywide Hardware, Inc., a Delaware corporation on behalf
of the corporation, who is personally known to me.

 

Witness my hand and official seal, this 6th day of May 2002.

 

Notary Seal

/s/ GEORGE DeMOTT

, Notary Public

 

 

GEORGE DeMOTT

 

Notary Public, State of New York

 

No. 01DE6036862

 

Qualified in Suffolk County

 

Commission Expires February 07, 2006

 

 

7

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EXHIBIT A

 

Lot 5, FISHER’S FARMS, according to the plat thereof, recorded in Plat Book 26,
Page 1, of the Public Records of Hillsborough County, Florida, LESS the North
100 feet of the South 475.60 feet of the West 125 feet and LESS the South 70
feet of said Lot 5, AND

 

The North 100 feet of the South 475.60 feet of the West 125 feet of Lot 5,
FISHER’S FARMS, according to the plat thereof, recorded in Plat Book 26, Page 1,
of the Public Records of Hillsborough County, Florida.

 

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PROMISSORY NOTE

 

$2,024,000.00

May 24, 2002

 

FLORIDA DOCUMENTARY STAMP TAX IN THE AMOUNT OF $7,084.00 HAS BEEN AFFIXED TO THE
RECORDED INSTRUMENT PURSUANT TO SECTION 201.08, FLORIDA STATUTE.

 

Countrywide Hardware, Inc.

300 Smith Street

Farmingdale, New York 11735

Hereinafter referred to as “Borrower”)

 

Wachovia Bank, National Association
214 North Hogan Street - FL0070
Jacksonville, Florida 32202
Hereinafter referred to as “Bank”)

 

Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, at its office indicated above or wherever else Bank may
specify, in writing, the sum of Two Million, Twenty-Four Thousand and No/100
Dollars ($2,024,000.00) or such sum as may be advanced and outstanding from time
to time, with interest on the unpaid principal balance at the rate and on the
terms provided in this Promissory Note (including all renewals, extensions or
modifications hereof, this “Note”).

 

LOAN AGREEMENT. This Note is subject to the provisions of that certain Loan
Agreement between Bank and Borrower of even date herewith, as modified from time
to time.

 

USE OF PROCEEDS. Borrower shall use the proceeds of the loan(s) evidenced by
this Note for the commercial purposes of Borrower, as follows: to finance the
acquisition of certain real property located at 10333 Windhorst Road, Tampa,
Florida,

 

SECURITY. Borrower has granted Bank a security interest in the collateral
described in the Loan Documents, including, but not limited to, real property
collateral described in that certain Mortgage of even date herewith.

 

INTEREST RATE. Interest shall accrue on the unpaid principal balance of this
Note from the date hereof at 1-month LIBOR plus 1.55% (“Interest Rate”), as
determined by Bank prior to the commencement of each consecutive interest period
of 1 month (each, an “Interest Period”) during the term of the Note; provided,
the first Interest Period shall commence on the date of this Note and end on the
first date thereafter that interest is due. Each Interest Rate shall remain in
effect for the entire Interest Period until redetermined for the next successive
Interest Period. “LIBOR” is the rate for U. S. dollar deposits with a maturity
equal to the number of months specified above, as reported on Telerate page 3750
as of 11:00 a.m., London time, on the second London business day before the
relevant Interest Period begins (or if not so reported, then as determined by
the Bank from another recognized source or interbank quotation).

 

INDEMNIFICATION. Borrower shall indemnify Bank against Bank’s loss or expense as
a consequence of (a) Borrower’s failure to make any payment when due under this
Note, after any applicable grace period hereunder, (b) intentionally omitted, or
(c) any failure to make a borrowing or conversion after giving notice thereof
(“Indemnified Loss or Expense”). The amount of such Indemnified Loss or Expense
shall be determined by Bank based upon the assumption that Bank funded 100% of
that portion of the loan in the London interbank market.

 

DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (as defined herein) occurs and as long as a Default continues, all
outstanding Obligations shall bear interest at the Interest

 

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Rate plus 3% (“Default Rate”). The Default Rate shall also apply from
acceleration until the Obligations or any judgment thereon is paid in full.

 

INTEREST AND FEE(S) COMPUTATION (ACTUALI/360). Interest and fees, if any, shall
be computed on the basis of a 360-day year for the actual number of days in the
applicable period (“Actual/360 Computation”). The Actual/360 Computation
determines the annual effective yield by taking the stated (nominal) rate for a
year’s period and then dividing said rate by 360 to determine the daily periodic
rate to be applied for each day in the applicable period. Application of the
Actual/360 Computation produces an annualized effective interest rate exceeding
the nominal rate.

 

REPAYMENT TERMS. This Note shall be due and payable in consecutive monthly
payments of principal of $11,244.44, plus accrued interest, commencing on June
24, 2002, and continuing on the same day of each month thereafter until fully
paid. In any event, all principal and accrued interest shall be due and payable
on May 24, 2009.

 

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. If a Default occurs, monies may be applied to the Obligations in
any manner or order deemed appropriate by Bank.

 

If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.

 

DEFINITIONS. Loan Documents. The term “Loan Documents” used in this Note and the
other Loan Documents refers to all documents executed in connection with or
related to the loan evidenced by this Note and any prior notes which evidence
all or any portion of the loan evidenced by this Note, and any letters of credit
issued pursuant to any loan agreement to which this Note is subject, any
applications for such letters of credit and any other documents executed in
connection therewith or related thereto, and may include, without limitation, a
commitment letter that survives closing, a loan agreement, this Note, guaranty
agreements, security agreements, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. § 101). Obligations. The term “Obligations” used in this Note refers to
any and all indebtedness and other obligations under this Note, all other
obligations under any other Loan Document(s), and all obligations under any swap
agreements (as defined in 11 U.S.C. § 101) between Borrower and Bank whenever
executed. Certain Other Terms. All terms that are used but not otherwise defined
in any of the Loan Documents shall have the definitions provided in the Uniform
Commercial Code.

 

LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 5% of each payment past due for 10 or more days.

 

Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank’s right to collect such late charge or to collect
a late charge for any subsequent late payment received.

 

ATTORNEYS’ FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank’s
reasonable expenses incurred to enforce or collect any of the Obligations
including, without limitation, reasonable arbitration, paralegals’, attorneys’
and experts’ fees and expenses, whether incurred without the commencement of a
suit, in any trial, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.

 

USURY. If at any time the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.

 

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CURE PERIOD. Except as provided below, a Default based upon Nonpayment, as
defined herein, may be cured within 5 days of the date such payment is due and
any other Default may be cured within 10 days after written notice thereof is
mailed to the Borrower by Bank. The Borrower’s right to cure shall be applicable
only to curable defaults and shall not apply, without limitation, to Defaults
based upon False Warranty or Cessation; Bankruptcy. Borrower shall have the
right to cure a Default requiring mailing of notice only once during any 12
month period. Bank shall not exercise its remedies to collect the Obligations
except as Bank reasonably deems necessary to protect its interest in collateral
securing the Obligations during a cure period.

 

DEFAULT. If any of the following occurs and is not cured within the applicable
Cure Period, a default (“Default”) under this Note shall exist: Nonpayment;
Nonperformance. The failure of timely payment or performance of the Obligations
or Default under this Note or any other Loan Documents. False Warranty. A
warranty or representation made or deemed made in the Loan Documents or
furnished Bank in connection with the loan evidenced by this Note proves
materially false, or if of a continuing nature, becomes materially false. Cross
Default. At Bank’s option, any default in payment or performance of any
obligation under any other loans, contracts or agreements of Borrower, any
Subsidiary or Affiliate of Borrower, any general partner of or the holder (s) of
the majority ownership interests of Borrower with Bank or its affiliates
(“Affiliate” shall have the meaning as defined in 11 U.S.C. § 101, except that
the term “Borrower” shall be substituted for the term “Debtor” therein;
“Subsidiary” shall mean any business in which Borrower holds, directly or
indirectly, a controlling interest). Cessation; Bankruptcy. The death of,
appointment of a guardian for, dissolution of, termination of existence of, loss
of good standing status by, appointment of a receiver for, assignment for the
benefit of creditors of, or commencement of any bankruptcy or insolvency
proceeding by or against Borrower, its Subsidiaries or Affiliates, if any, or
any general partner of or the holder(s) of the majority ownership interests of
Borrower, or any party to the Loan Documents. Material Business Alteration.
Without prior written consent of Bank, a material alteration in the kind or type
of Borrowers business. Material Capital Structure or Business Alteration.
Without prior written consent of Bank, (i) a material alteration in the kind or
type of Borrower’s business or that of Borrower’s Subsidiaries or Affiliates, if
any; (ii) the sale of substantially all of the business or assets of Borrower,
any of Borrower’s Subsidiaries or Affiliates or any guarantor, or a material
portion (10% or more) of such business or assets if such a sale is outside the
ordinary course of business of Borrower, or any of Borrower’s Subsidiaries or
Affiliates or any guarantor, or more than 50% of the outstanding stock or voting
power of or in any such entity in a single transaction or a series of
transactions; (iii) the acquisition of substantially all of the business or
assets or more than 50% of the outstanding stock or voting power of any other
entity; or (iv) should any Borrower or any of Borrower’s Subsidiaries or
Affiliates or any guarantor enter into any merger or consolidation.
Notwithstanding the foregoing, Borrower may be merged into Guarantor without
default upon prior written notice of same to Bank.

 

REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, take the following actions: Bank
Lien. Foreclose its security interest or lien against Borrower’s accounts
without notice. Acceleration Upon Default. Accelerate the maturity of this Note
and, at Bank’s option, any or all other Obligations, other than Obligations
under any swap agreements (as defined in 11 U.S.C. § 101) between Borrower and
Bank, which shall be governed by the default and termination provisions of said
swap agreements; whereupon this Note and the accelerated Obligations shall be
immediately due and payable; provided, however, if the Default is based upon a
bankruptcy or insolvency proceeding commenced by or against Borrower or any
guarantor or endorser of this Note, all Obligations (other than Obligations
under any swap agreement as referenced above) shall automatically and
immediately be due and payable. Cumulative. Exercise any rights and remedies as
provided under the Note and other Loan Documents, or as provided by law or
equity.

 

FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower’s financial
condition. Such information shall be true, complete, and accurate.

 

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parties hereto (a “Dispute”) shall be resolved by binding arbitration conducted
under and governed by the Commercial Financial Disputes Arbitration Rules (the
“Arbitration Rules”) of the American Arbitration Association (the “AAA”) and the
Federal Arbitration Act. Disputes may include, without limitation, tort claims,
counterclaims, a dispute as to whether a matter is subject to arbitration,
claims brought as class actions, or claims arising from documents executed in
the future. A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under or related to swap agreements. Special Rules. All
arbitration hearings shall be conducted in the city named in the address of Bank
first stated above. A hearing shall begin within 90 days of demand for
arbitration and all hearings shall conclude within 120 days of demand for
arbitration. These time limitations may not be extended unless a party shows
cause for extension and then for no more than a total of 60 days. The expedited
procedures set forth in Rule 51 et seq, of the Arbitration Rules shall be
applicable to claims of less than $1,000,000.00. Arbitrators shall be licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The parties do not waive applicable Federal or state substantive law
except as provided herein. Preservation and Limitation of Remedies.
Notwithstanding the preceding binding arbitration provisions, the parties agree
to preserve, without diminution, certain remedies that any party may exercise
before or after an arbitration proceeding is brought. The parties shall have the
right to proceed in any court of proper jurisdiction or by self-help to exercise
or prosecute the following remedies, as applicable: (i) all rights to foreclose
against any real or personal property or other security by exercising a power of
sale or under applicable law by judicial foreclosure including a proceeding to
confirm the sale; (ii) all rights of self-help including peaceful occupation of
real property and collection of rents, set-off, and peaceful possession of
personal property; (iii) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment of
receiver and filing an involuntary bankruptcy proceeding; and (iv) when
applicable, a judgment by confession of judgment. Any claim or controversy with
regard to any party’s entitlement to such remedies is a Dispute. Waiver of
Exemplary Damages. The parties agree that they shall not have a remedy of
punitive or exemplary damages against other parties in any Dispute and hereby
waive any right or claim to punitive or exemplary damages they have now or which
may arise in the future in connection with any Dispute whether the Dispute is
resolved by arbitration or judicially. Waiver of Jury Trial. THE PARTIES
ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED
ANY RIGHT THEY MAY HAVE TO JURY TRIAL WITH REGARD TO A DISPUTE.

 

IN WITNESS WHEREOF, Borrower, on the day and year first above written, has
caused this Note to be executed under seal.

 

 

Countrywide Hardware, Inc.

 

Taxpayer Identification Number.

82-0542665

 

 

 

By:

/s/ Joseph A. Molino, Jr.

(SEAL)

 

Joseph A. Molino, Jr., Vice President

 

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

 

LOAN AGREEMENT

 

Wachovia Bank, National Association
214 North Hogan Street - FL01070
Jacksonville, Florida 32202

Hereinafter referred to as the “Bank”)

 

Countrywide Hardware, Inc.

300 Smith Street

Farmingdale, New York 11735

Hereinafter referred to as the “Borrower”)

 

This Loan Agreement (“Agreement”) is entered into May 24, 2002, by and between
Bank and Borrower.

 

This Agreement applies to the loan or loans (individually and collectively, the
“Loan”) evidenced by one or more promissory notes dated May 24, 2002 or other
notes subject hereto, as modified from time to time (whether one or more, the
“Note”) and all Loan Documents. The terms “Loan Documents” and “Obligations,” as
used in this Agreement, are defined in the Note.

 

Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:

 

REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: Accurate Information. All
information now and hereafter furnished to Bank is and will be true, correct and
complete. Any such information relating to Borrower’s financial condition will
accurately reflect Borrower’s financial condition as of the date(s) thereof,
(including all contingent liabilities of every type), and Borrower further
represents that its financial condition has not changed materially or adversely
since the date(s) of such documents. Authorization; Non-Contravention. The
execution, delivery and performance by Borrower and any guarantor, as
applicable, of this Agreement and other Loan Documents to which it is a party
are within its power, have been duly authorized as may be required and, if
necessary, by making appropriate filings with any governmental agency or unit
and are the legal, binding, valid and enforceable obligations of Borrower and
any guarantors; and do not (i) contravene, or constitute (with or without the
giving of notice or lapse of time or both) a violation of any provision of
applicable law, a violation of the organizational documents of Borrower or any
guarantor, or a default under any agreement, judgment, injunction, order, decree
or other instrument binding upon or affecting Borrower or any guarantor,
(ii) result in the creation or imposition of any lien (other than the
lien(s) created by the Loan Documents) on any of Borrower’s or any guarantor’s
assets, or (iii) give cause for the acceleration of any obligations of Borrower
or any guarantor to any other creditor. Asset Ownership. Borrower has good and
marketable title to all of the properties and assets reflected on the balance
sheets and financial statements supplied Bank by Borrower, and all such
properties and assets are free and clear of mortgages, security deeds, pledges,
liens, charges, and all other encumbrances, except as otherwise disclosed to
Bank by Borrower in writing and approved by Bank (“Permitted Liens”). To
Borrower’s knowledge, no default has occurred under any Permitted Liens and no
claims or interests adverse to Borrower’s present rights in its properties and
assets have arisen. Discharge of Liens and Taxes. Borrower has duly filed, paid
and/or discharged all taxes or other claims which may become a lien on any of
its property or assets, except to the extent that such items are being
appropriately contested in good faith and an adequate reserve for the payment
thereof is being maintained. Sufficiency of Capital. Borrower is not, and after
consummation of this Agreement and after giving effect to all indebtedness
incurred and liens created by Borrower in connection with the Note and any other
Loan Documents, will not be, insolvent within the meaning of 11 U.S.C. §
101(32). Compliance with Laws. Borrower is in compliance in all respects with
all federal, state and local laws, rules and regulations applicable to its
properties, operations, business, and finances, including, without limitation,
any federal or state laws relating to liquor (including 18 U.S.C. § 3617, et
seq.) or narcotics (including 21

 

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

 

U. S. C. § 801, et seq.) and/or any commercial crimes; all applicable federal,
state and local laws and regulations intended to protect the environment; and
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), if
applicable. Organization and Authority. Each corporate or limited liability
company Borrower and/or guarantor, as applicable, is duly created, validly
existing and in good standing under the laws of the state of its organization,
and has all powers, governmental licenses, authorizations, consents and
approvals required to operate its business as now conducted. Each corporate or
limited liability company Borrower and/or guarantor, as applicable, is duly
qualified, licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers, and in which the
failure to so qualify or be licensed, as the case may be, in the aggregate,
could have a material adverse effect on the business, financial position,
results of operations, properties or prospects of Borrower or any such
guarantor. No Litigation. There are no pending or threatened suits, claims or
demands against Borrower or any guarantor that have not been disclosed to Bank
by Borrower in writing, and approved by Bank.

 

AFFIRMATIVE COVENANTS. Borrower agrees that from the date hereof and until final
payment in full of the Obligations, unless Bank shall otherwise consent in
writing, Borrower will: Access to Books and Records. Allow Bank, or its agents,
during normal business hours, access to the books, records and such other
documents of Borrower as Bank shall reasonably require, and allow Bank, at
Borrower’s expense, to inspect, audit and examine the same and to make extracts
therefrom and to make copies thereof. Business Continuity. Conduct its business
in substantially the same manner and locations as such business is now and has
previously been conducted. Compliance with Other Agreements. Comply with all
terms and conditions contained in this Agreement, and any other Loan Documents,
and swap agreements, if applicable, as defined in the 11 U. S. C. § 101.
Estoppel Certificate. Furnish, within 15 days after request by Bank, a written
statement duly acknowledged of the amount due under the Loan and whether offsets
or defenses exist against the Obligations. Insurance. Maintain adequate
insurance coverage with respect to its properties and business against loss or
damage of the kinds and in the amounts customarily insured against by companies
of established reputation engaged in the same or similar businesses including,
without limitation, commercial general liability insurance, workers compensation
insurance, and business interruption insurance; all acquired in such amounts and
from such companies as Bank may reasonably require. Maintain Properties.
Maintain, preserve and keep its property in good repair, working order and
condition, making all needed replacements, additions and improvements thereto,
to the extent allowed by this Agreement. Non-Default Certificate From Borrower.
Deliver to Bank, with the Financial Statements required to be delivered to Bank
by the Guarantor, a certificate signed by Borrower, in the form attached hereto
as Exhibit A, if Borrower is an individual, or by a principal financial officer
of Borrower warranting that no “Default” as specified in the Loan Documents nor
any event which, upon the giving of notice or lapse of time or both, would
constitute such a Default, has occurred and demonstrating Borrower’s compliance
with the financial covenants contained herein. Notice of Default and Other
Notices. (a) Notice of Default. Furnish to Bank immediately upon becoming aware
of the existence of any condition or event which constitutes a Default (as
defined in the Loan Documents) or any event which, upon the giving of notice or
lapse of time or both, may become a Default, written notice specifying the
nature and period of existence thereof and the action which Borrower is taking
or proposes to take with respect thereto. (b) Other Notices. Promptly notify
Bank in writing of (and as to items (i), (ii), (iii), if such matter is a claim
in excess of $50,000.00) (i) any material adverse change in its financial
condition or its business; (ii) any default under any material agreement,
contract or other instrument to which it is a party or by which any of its
properties are bound, or any acceleration of the maturity of any indebtedness
owing by Borrower; (iii) any material adverse claim against or affecting
Borrower or any part of its properties; (iv) the commencement of, and any
material determination in, any litigation with any third party or any proceeding
before any governmental agency or unit affecting Borrower; and (v) at least 30
days prior thereto, any change in Borrower’s name or address as shown above,
and/or any change in Borrower’s structure. Other Financial Information. Deliver
promptly such other information regarding the operation, business affairs, and
financial condition of Borrower which Bank may reasonably request. Payment of
Debts. Pay and discharge when due, and before subject to penalty or further
charge, and otherwise satisfy before maturity or delinquency, all obligations,
debts, taxes, and liabilities of whatever nature or amount, except those which
Borrower in good faith disputes. Reports and Proxies. Deliver to Bank, promptly,
a copy of all financial statements,

 

2

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

 

reports, notices, and proxy statements, sent by Borrower to stockholders, and
all regular or periodic reports required to be filed by Borrower with any
governmental agency or authority.

 

NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: Change in Fiscal Year. Change its fiscal
year. Change of Control. Make or suffer a change of ownership that effectively
changes control of Borrower from current ownership. Notwithstanding the
foregoing, Borrower may be merged into Guarantor without default upon prior
written notice of same to Bank. Default on Other Contracts or Obligations.
Default on any material contract with or obligation when due to a third party or
default in the performance of any obligation to a third party incurred for money
borrowed. Government Intervention. Permit the assertion or making of any
seizure, vesting or intervention by or under authority of any government by
which the management of Borrower or any guarantor is displaced of its authority
in the conduct of its respective business or its such business is curtailed or
materially impaired. Judgment Entered. Permit the entry of any monetary judgment
or the assessment against, the filing of any tax lien against, or the issuance
of any writ of garnishment or attachment against any property of or debts due.
Retire or Repurchase Capital Stock. Retire or otherwise acquire any of its
capital stock except as part of a merger with Guarantor.

 

TAX RETURNS. Borrower shall deliver to Bank, within 30 days of filing, complete
copies of federal and state tax returns, as applicable, together with all
schedules thereto, each of which shall be signed and certified by Borrower to be
true and complete copies of such returns. In the event an extension is filed,
Borrower shall deliver a copy of the extension within 30 days of filing. This
provision may also be met by the delivery to the Bank of copies of any
consolidated and consolidating returns filed by Borrower’s parent corporation.

 

CONDITIONS PRECEDENT. The obligations of Bank to make the loan and any advances
pursuant to this Agreement are subject to the following conditions precedent:
Additional Documents. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request.

 

IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.

 

 

 

Countrywide Hardware, Inc.

 

 

 

By:

/s/ Joseph A. Molino, Jr.

(SEAL)

 

 

Joseph A. Molino, Jr. Vice President

 

 

 

 

Wachovia Bank, National Association

 

 

 

By:

/s/ Dena Bombard, Vice President

(SEAL)

 

 

Dena Bombard, Vice President

 

 

3

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

 

AMENDMENT LETTER

 

December 31, 2006

 

COUNTRYWIDE HARDWARE, INC.

300 Smith Street

Farmingdale, New York 11735

 

FLORIDA PNEUMATIC MANUFACTURING CORPORATION

851 Jupiter Park Lane

Jupiter, Florida 33458

 

and

 

EMBASSY INDUSTRIES, INC.

300 Smith Street

Farmingdale, New York 11735

 

Attn: Joseph A. Molino, Jr.

 

Re:                              Wachovia Bank, National Association (the
“Bank”) $1,800,000.00 loan to FLORIDA PNEUMATIC MANUFACTURING CORPORATION, a
Florida corporation (“Florida Pneumatic”), as guaranteed by P&F INDUSTRIES,
INC., a Delaware corporation (“P&F Industries”);

$2,024,000.00 loan to COUNTRYWIDE HARDWARE, INC., a Delaware corporation
(“Countrywide Hardware”), as guaranteed by P&F Industries; and

$1,697,300.74 amended and restated loan to EMBASSY INDUSTRIES, INC., a New York
corporation (“Embassy Industries”) as guaranteed by P&F Industries

 

Dear Mr. Molino:

 

Reference is made to that certain loan from the Bank to Florida Pneumatic (the
“Florida Pneumatic Loan”), as evidenced by certain loan documents (the “Florida
Pneumatic Loan Documents”), which Florida Pneumatic Loan Documents include, but
are not limited to, that certain Loan Agreement dated as of January 23, 1999, by
and between the Bank and Florida Pneumatic, as amended by that certain Amendment
Letter dated as of January 24, 2003, as further amended by that certain
Amendment Letter dated as of April 7, 2005 (as the same may be amended or
restated, the “Florida Pneumatic Loan Agreement”), and that certain
$1,800,000.00 Promissory Note dated as of February 26, 1999, made by Florida
Pneumatic to the order of the Bank in the original principal amount of
$1,800,000.00, as modified by that certain Amendment Letter dated as of April 7,
2005, by and between the Bank and Florida Pneumatic (as the same may be amended
or restated, the “Florida Pneumatic Note”).

 

Reference is also made to that certain loan from the Bank to Countrywide
Hardware (the “Countrywide Hardware Loan”), as evidenced by certain loan
documents (the “Countrywide Hardware Loan Documents”), which Countrywide
Hardware Loan Documents include, but are not limited to, that certain Loan
Agreement dated as of May 24, 2002, by and between the Bank and Countrywide
Hardware, as amended by that certain Amendment Letter dated as of April 7, 2005
(as the same may be amended or restated the “Countywide Hardware Loan
Agreement”), and that certain $2,024,000.00 Promissory Note dated as of May 31,
2002 made by Countrywide Hardware in favor of the Bank in the original principal
amount of $2,024,000.00, as

 

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

 

modified by that certain Amendment Letter dated as of April 7, 2005 by and
between the Bank and Countrywide Hardware (as the same may be amended or
restated, the “Countrywide Hardware Note”).

 

Reference is also made to that certain loan from the Bank to Embassy Industries
(the “Embassy Industries Loan”), as evidenced by certain loan documents (the
“Embassy Industries Loan Documents”), which Embassy Industries Loan Documents
include, but are not limited to, that certain Consolidated Loan Agreement dated
as of January 24, 2003, by and between the Bank and Embassy Industries, as
amended by that certain Letter Agreement dated as of April 7, 2005 (as the same
may be amended or restated, the “Embassy Industries Loan Agreement”), and that
certain Amended, Restated and Consolidated Promissory Note dated as of
January 24, 2003, made by Embassy Industries to the order of the Bank in the
original principal amount of $1,697,300.74, as modified by that certain
Amendment Letter dated as of April 7, 2005 by and between the Bank and Embassy
Industries (as the same may be amended or restated, the “Embassy Industries
Note”).

 

P&F Industries guaranteed all obligations to the Bank under the Florida
Pneumatic Loan pursuant to that certain Unconditional Guaranty dated as of
February 26, 1999, as amended by that certain Amendment Letter dated as of
January 24, 2003 by and between Florida Pneumatic, P&F Industries and the Bank
(the “Florida Pneumatic Guaranty”). P&F Industries also guaranteed all
obligations under the Countrywide Hardware Loan pursuant to that certain
Unconditional Guaranty (Replacement and Restated) dated as of April 23, 2003, as
amended by that certain Amendment Letter dated as of April 7, 2005 (the
“Countrywide Hardware Guaranty”). P&F Industries also guaranteed all obligations
under the Embassy Industries Loan pursuant to that certain Unconditional
Guaranty dated as of January 24, 2003, as amended by that certain Amendment
Letter dated as of April 7, 2005 (the “Embassy Industries Guaranty”).

 

The Florida Pneumatic Note, the Countrywide Hardware Note and the Embassy
Industries Note are hereinafter collectively referred to as the “Note”. The
Florida Pneumatic Guaranty, the Countrywide Hardware Guaranty and the Embassy
Industries Guaranty are hereinafter collectively referred to as the “Guaranty”.
The Florida Pneumatic Loan Agreement, the Countrywide Hardware Loan Agreement
and the Embassy Industries Loan Agreement are hereinafter collectively referred
to as the “Loan Agreement”. The Note, the Loan Agreement, the Guaranty, the
Florida Pneumatic Loan Documents, the Countrywide Hardware Loan Documents and
the Embassy Industries Loan Documents are hereinafter collectively referred to
as the “Loan Documents.”

 

Florida Pneumatic, Countrywide Hardware and Embassy Industries have requested
and the Bank has agreed to delete the Debt Service Coverage Ratio, the Senior
Liabilities to Effective Tangible Net Worth Ratio, and the Minimum Capital Base
requirement in the Florida Pneumatic Loan Agreement, the Countrywide Hardware
Loan Agreement, the Embassy Industries Loan Agreement, the Florida Pneumatic
Guaranty, the Countrywide Hardware Guaranty and the Embassy Industries Guaranty.

 

Florida Pneumatic, Countrywide Hardware and Embassy Industries have also
requested and the Bank has agreed to delete the Tax Returns reporting
requirement in the Florida Pneumatic Loan Agreement, the Countrywide Hardware
Loan Agreement, the Embassy Industries Loan Agreement, the Florida Pneumatic
Guaranty, the Countrywide Hardware Guaranty and the Embassy Industries Guaranty.
This covenant shall be deleted in its entirety in each agreement, as applicable.

 

Florida Pneumatic, Countrywide Hardware and Embassy Industries have also
requested and the Bank has agreed to amend the Annual Financial Statements
covenant in the Florida Pneumatic Loan Agreement, the Countrywide Hardware Loan
Agreement, the Embassy Industries Loan Agreement, the Florida Pneumatic
Guaranty, the Countrywide Hardware Guaranty and the Embassy Industries Guaranty.
This covenant shall be deleted in its entirety in each agreement, as applicable,
and replaced with the following covenant by operation of this Letter Agreement:

 

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

 

ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 120 days
after the close of each fiscal year, audited financial statements of P & F
Industries, Inc., a Delaware corporation (“P&F Industries”) reflecting the
operations of P&F Industries during such fiscal year, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules and in reasonable detail, prepared in
conformity with generally accepted accounting principles, applied on a basis
consistent with that of the preceding year. All such statements shall be
examined by an independent certified public accountant acceptable to Bank. The
opinion of such independent certified public accountant shall not be acceptable
to Bank if qualified due to any limitations in scope imposed by Borrower, P&F
Industries, or any other person or entity. Any other qualification of the
opinion by the accountant shall render the acceptability of the financial
statements subject to Bank’s approval. Borrower shall also deliver any loan
covenant compliance certificate executed by P&F Industries for the preceding
fiscal year.

 

Florida Pneumatic, Countrywide Hardware and Embassy Industries have also
requested and the Bank has agreed to amend the Financial Covenant section in the
Florida Pneumatic Guaranty, the Countrywide Hardware Guaranty and the Embassy
Industries Guaranty. This section shall be deleted in its entirety in each
agreement, as applicable, and replaced with the following covenant by operation
of this Letter Agreement:

 

Cross Default. Any default in the payment or performance of any obligation under
any other loans, contracts or agreements of Guarantor, any Subsidiary or
Affiliate of Guarantor (“Affiliate” shall have the meaning as defined in 11
U.S.C. § 101, as in effect from time to time, except that the term “Guarantor”
shall be substituted for the term “Debtor” therein; “Subsidiary” shall mean any
corporation of which more than 50% of the issued and outstanding voting stock is
owned directly or indirectly by Guarantor), with Citibank or its affiliates (or
a substitute lender), which is not cured or waived within ninety (90) days of
the date of the subject default shall constitute a default hereunder, without
the necessity of further notice. Guarantor shall provide Bank with copies of all
default notifications from such lenders within five (5) days of its receipt of
the same.

 

Florida Pneumatic acknowledges, represents, warrants and confirms to the Bank
that the Florida Pneumatic Note, the Florida Pneumatic Loan Agreement, and the
other Florida Pneumatic Loan Documents, as amended or modified to date, (i) are
valid and binding upon Florida Pneumatic and enforceable in accordance with the
respective terms thereof; (ii) all of the terms, covenants, conditions,
representations, warranties and agreements contained in the Loan Documents are
hereby ratified and confirmed in all respects; (iii) there are no defenses,
setoffs, counterclaims, cross-actions or equities in favor of Florida Pneumatic
to or against the enforcement of the Florida Pneumatic Note, the Florida
Pneumatic Loan Agreement, or the other Florida Pneumatic Loan Documents; (iv) no
oral representations, statements, or inducements have been made by the Bank with
respect to the Florida Pneumatic Loan, this Letter Agreement or any Florida
Pneumatic Loan Document; and (v) the Bank is under no obligation to further
amend or modify the Florida Pneumatic Loan Agreement or any other Florida
Pneumatic Loan Document.

 

Florida Pneumatic, Countrywide Hardware and Embassy Industries have also
requested and the Bank has agreed to approve any acquisition(s) made by P&F
Industries of entities within P&F Industries’ current industry, provided that
any such acquisition does not create a default or event of default under any of
the Citibank Loan Documents.

 

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

 

Countrywide Hardware acknowledges, represents, warrants and confirms to the Bank
that the Countrywide Hardware Note, the Countrywide Hardware Loan Agreement, and
the other Countrywide Hardware Loan Documents, as amended or modified to date,
(i) are valid and binding upon Countrywide Hardware and enforceable in
accordance with the respective terms thereof; (ii) all of the terms, covenants,
conditions, representations, warranties and agreements contained in the Loan
Documents are hereby ratified and confirmed in all respects; (iii) there are no
defenses, setoffs, counterclaims, cross-actions or equities in favor of
Countrywide Hardware to or against the enforcement of the Countrywide Hardware
Note, the Countrywide Hardware Loan Agreement, or the other Countrywide Hardware
Loan Documents; (iv) no oral representations, statements, or inducements have
been made by the Bank with respect to the Countrywide Hardware Loan, this Letter
Agreement or any Countrywide Hardware Loan Document; and (v) the Bank is under
no obligation to further amend or modify the Countrywide Hardware Loan Agreement
or any other Countrywide Hardware Loan Document.

 

Embassy Industries acknowledges, represents, warrants and confirms to the Bank
that the Embassy Industries Note, the Embassy Industries Loan Agreement, and the
other Embassy Industries Loan Documents, as amended or modified to date, (i) are
valid and binding upon Embassy Industries and enforceable in accordance with the
respective terms thereof; (ii) all of the terms, covenants, conditions,
representations, warranties and agreements contained in the Loan Documents are
hereby ratified and confirmed in all respects; (iii) there are no defenses,
setoffs, counterclaims, cross-actions or equities in favor of Embassy Industries
to or against the enforcement of the Embassy Industries Note, the Embassy
Industries Loan Agreement, or the other Embassy Industries Loan Documents;
(iv) no oral representations, statements, or inducements have been made by the
Bank with respect to the Embassy Industries Loan, this Letter Agreement or any
Embassy Industries Loan Document; and (v) the Bank is under no obligation to
further amend or modify the Embassy Industries Loan Agreement or any other
Embassy Industries Loan Document.

 

P&F Industries acknowledges, represents, warrants and confirms to Bank that
(i) the Florida Pneumatic Guaranty, the Countrywide Guaranty and the Embassy
Industries Guaranty are valid and binding upon P&F Industries and enforceable in
accordance with the respective terms thereof; (ii) all of the terms, covenants,
conditions, representations, warranties and agreements contained in the Florida
Pneumatic Guaranty, the Countrywide Guaranty and the Embassy Industries Guaranty
are hereby ratified and confirmed in all respects; and (iii) the Bank is under
no obligation to amend or modify the Florida Pneumatic Guaranty, the Countrywide
Guaranty or the Embassy Industries Guaranty.

 

Except as specifically modified herein, all other terms, conditions and
provisions of the Loan Documents remain unchanged and in full force and effect.
The Bank shall be under no obligation to further modify or amend any of the Loan
Documents.

 

[CONTINUES ON FOLLOWING PAGE]

 

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

 

Very Truly Yours,

 

Wachovia Bank, National Association

 

 

By:

/s/ Frank Salomone

 

Name:

Frank Salomone

 

Title:

Vice President

 

 

[SIGNATURE APPEARS ON NEXT PAGE]

 

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

 

AGREED TO AND ACKNOWLEDGED BY:

 

FLORIDA PNEUMATIC MANUFACTURING

CORPORATION, a Florida corporation

 

 

By:

/s/ Joseph A. Molino, Jr.

 

Name:

Joseph A. Molino, Jr.

 

Title:

Vice President

 

 

[SIGNATURE APPEARS ON NEXT PAGE]

 

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

 

COUNTRYWIDE HARDWARE, INC., a

Delaware corporation

 

 

By:

/s/ Joseph A. Molino, Jr.

 

Name:

Joseph A. Molino, Jr.

 

Title:

Vice President

 

 

[SIGNATURE APPEARS ON NEXT PAGE]

 

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

 

EMBASSY INDUSTRIES, INC.,

a New York corporation

 

 

By:

/s/ Joseph A. Molino, Jr.

 

Name:

Joseph A. Molino, Jr.

 

Title:

Vice President

 

 

[SIGNATURE APPEARS ON NEXT PAGE]

 

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

 

P&F INDUSTRIES, INC., a Delaware corporation

 

 

By:

/s/ Joseph A. Molino, Jr.

 

Name:

Joseph A. Molino, Jr.

 

Title:

Vice President

 

 

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

 

INSTRUMENT#: 2010089501, BK: 19769 PG: 429 PGS: 429 — 435 03/17/2010 at 10:13:55
AM,  DEPUTY CLERK:BLOGGANS Pat Frank, Clerk of the Circuit Court Hillsborough
County

 

Prepared by and after

recording return to:

 

Thomas G. Wilson, III, Esq.

Smith Hulsey & Busey

Post Office Box 53315

Jacksonville, Florida 32201-3315

 

LOAN DOCUMENTS MODIFICATION AGREEMENT

 

THIS LOAN DOCUMENTS MODIFICATION AGREEMENT (this “Agreement”) is made as of
February 24, 2010 (the “Effective Date”), by and between COUNTRYWIDE HARDWARE,
INC., a Delaware corporation (“Borrower”), whose address for notices is 445
Broadhollow Road, Suite 100, Melville 11747, and WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association (“Bank”), whose address for notices
is 225 Water Street, Third Floor, FLO061, Jacksonville, Florida 32202.

 

Recitals:

 

1.             In connection with a loan from Bank to Borrower in the amount of
$2,024,000.00 (the “Loan”), Borrower executed and delivered to Bank that certain
Promissory Note in the original principal amount of $2,024,000.00 dated as of
May 24, 2002 (the “Note”). The Note is secured by, among other things, that
certain Mortgage, Security Agreement and Absolute Assignment of Leases from
Borrower to Bank dated as of May 24, 2002 and recorded in Official Records Book
11663, Page 770, of the public records of Hillsborough County, Florida (the
“Mortgage”).

 

2.             The proceeds of the Loan have been advanced in accordance with
that certain Loan Agreement dated as of May 24, 2002 by and between Borrower and
Bank, as modified and amended by that certain Amendment Letter dated as of
December 31, 2006 (as the same may be further amended from time to time,
collectively, the “Loan Agreement”).

 

3.             The Note, the Mortgage, the Loan Agreement and all other
documents to which Bank is a party or beneficiary now or in the future together
with all amendments, modifications, renewals or extensions thereof, that
evidence, secure or otherwise relate to the Loan are hereinafter collectively
referred to as the “Loan Documents.”

 

4.             Borrower has requested that Bank modify and amend certain of the
Loan Documents, and Bank is willing to modify and amend certain of the Loan
Documents, provided that Borrower comply with and consent to the terms set forth
in this Agreement and not otherwise.

 

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NOW, THEREFORE, in consideration of Bank modifying and amending certain of the
Loan Documents, Borrower and Bank hereby agree as follows:

 

1.             Recitals. Borrower warrants and represents to Bank that the
foregoing Recitals are true and correct. The Recitals are incorporated into this
Agreement by this reference.

 

2.             Estoppel. Borrower represents and warrants to Bank that, as of
Effective Date, the outstanding principal balance of the Note is $1,090,711.48,
that accrued interest has been paid to January 21, 2010, and that accrued
interest in the amount of $-0- remains due and unpaid, that the funds have been
disbursed in accordance with the terms and conditions of the Loan Agreement,
that no letters of credit are outstanding from Bank to Borrower, that the
outstanding principal balance of the Note and accrued interest are secured by
the Mortgage and are due, owing and unpaid, without defense, setoff or
counterclaim, and that any defenses, setoffs or counterclaims, if any, held by
Borrower presently or which may be held by Bank in the future, whether known or
unknown, are hereby forever waived, released and discharged by Borrower.

 

3.             Ratification. Borrower ratifies, approves and consents to all the
disbursements of the Loan made by Bank under the Loan Documents and acknowledges
that Bank has fully complied with the terms and conditions of the Loan
Documents. Borrower acknowledges that the Loan Documents are in full force and
effect. Borrower hereby restates and confirms the covenants, representations,
agreements, grants and warranties in the Loan Documents. Borrower ratifies,
approves and consents to all action or inaction of Bank with respect to the
Loan, including, but not limited to, the administering, disbursing, handling,
servicing, securing, demanding, enforcing and collecting of the Loan.

 

4.             Modification of the Note. The Note is hereby amended and modified
as follows:

 

(a)           The Section entitled “Repayment Terms” is deleted and replaced in
its entirety to read as follows:

 

(i)            This Note shall be due and payable in consecutive monthly
payments of principal of $11,244.44, plus accrued interest, commencing on
March 24, 2010, and continuing on the same day of each month thereafter until
fully paid. In any event, all principal and accrued interest shall be due and
payable on June 1, 2010.

 

5.             Modification of the Mortgage. The Mortgage is hereby amended and
modified such that the definition of the “Note” is hereby modified and amended
to include the Note, as amended, modified and extended by this Agreement.

 

6.             Modification of the Loan Agreement. The Loan Agreement is hereby
modified and amended such that the definition of the “Note” is hereby modified
and amended to include the Note as amended, modified and extended in this
Agreement.

 

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7.             Reconfirmation. Borrower hereby restates and reconfirms all
representations, warranties, convenants, agreements and stipulations contained
in the Loan Documents, as if set our herein in full and further acknowledges and
agree that the Loan Documents, are valid, binding and legally enforceable
against Borrower in accordance with their terms, as modified.

 

8.             Warranties and Representations. Borrower warrants and represents
as follows:

 

(a)          This Agreement and the Loan Documents constitute legally binding
obligations and are enforceable against Borrower in accordance with their
respective terms;

 

(b)         Neither this Agreement nor any other document delivered in
connection herewith or action taken in connection herewith shall be deemed or
construed to be a satisfaction, novation, or release of any obligations of
Borrower under the Loan Documents, and the execution of this Agreement shall not
constitute a waiver of any of the Bank’s rights thereunder except as provided
herein;

 

(c)          Bank has no further obligation to Borrower under the terms of the
Loan Documents or with respect to any transaction contemplated thereby or
related thereto except as expressly set forth herein; and

 

(d)         Borrower is not a party to, or subject of, any lawsuit, complaint,
counterclaim, cross-claim, adversary proceeding, arbitration proceeding,
bankruptcy or insolvency proceeding, administrative claim or other legal action
or proceeding.

 

9.             General Release of Bank. Borrower, in consideration of the
premises herein contained and other good and valuable consideration, the
adequacy and sufficiency of which is hereby acknowledged hereby releases and
discharges Bank, its agents, officers, directors, employees, affiliates,
attorneys, successors and assigns, jointly and severally, from any and all
manner of action and actions, cause or causes of action, suits, debts, sums of
money, accounts, covenants, contracts, controversies, obligations, liabilities,
agreements, promises, expenses, damages, claims or demand of every nature and
kind whatsoever, if any, at law or in equity, whether now accrued or hereafter
maturing and whether known or unknown which Borrower now has or hereafter can,
shall, or may have by reason of any matter, cause or thing from the beginning of
the world to and including the date hereof which may arise or could arise by
reason of the making, administration, disbursement, documentation, demand for
payment, foreclosure or modification of the Loan.

 

10.           Impairment. Nothing herein invalidates or shall invalidate any
security now held by Bank for the aforesaid indebtedness as herein modified nor
impair or release any covenant, modification, condition, agreement or
stipulation in the Loan Documents and the same shall continue in full force and
effect, and Borrower covenants and agrees to keep, perform, comply with, and
abide by, each and every of the covenants, conditions, agreements and
stipulations of this Agreement and the Loan Documents.

 

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11.           Costs, Expenses and Attorneys’ Fees. Borrower agrees to pay all
costs and expenses incurred by Bank in connection with the negotiation,
preparation and administration of this Agreement, including, but not limited to,
a $5,000.00 modification fee to Bank.

 

12.           Taxes. It is the intent of Borrower and Bank that this Agreement
only modify the terms of the Loan Documents in a manner so that no additional
title insurance premiums, documentary stamp tax or intangible personal property
tax shall be due and payable. In the event additional title insurance premiums,
documentary stamp tax, intangible personal property tax or other taxes or costs
are assessed, imposed or, in Bank’s sole opinion, are due and payable, Borrower
shall immediately pay the same, including any interest and penalties imposed in
connection therewith, and Borrower hereby agrees to indemnify, defend and hold
Bank harmless from any liability, loss, costs, damages, interest and penalties,
including attorneys’ fees, that Bank may incur thereby. Any sums paid by Bank
shall be immediately due and payable by Borrower. This provision shall survive
the repayment of the Note.

 

13.           Default. If any of Borrower’s representations contained herein or
in the Note or in the Mortgage shall prove to be incorrect or untrue in any
material manner or if Borrower fails to perform any of its covenants and
agreements contained herein, the occurrence of any such event shall constitute a
default under the Note and the Mortgage entitling Bank to the exercise of all of
its rights and remedies under the Note and the Mortgage.

 

14.           Survival. Notwithstanding the execution of this Agreement,
Borrower acknowledges that all remedies of Bank under the terms of the Loan
Documents shall survive the execution hereof and that each and every remedy
shall be cumulative and concurrent and shall be in addition to each and every
other right, power and remedy given hereunder. Except as expressly set forth
herein, nothing contained in this Agreement shall constitute a waiver of any
rights or remedies of the Bank under the terms of the Loan Documents.

 

15.           No Novation. Borrower and Lender hereby acknowledge and agree that
this Agreement shall not constitute a novation of the indebtedness evidenced by
the Loan Documents, and further that the terms and provisions of the Loan
Documents shall remain valid and in full force and effect except as may be
hereinabove modified and amended.

 

16.           Invalidity. In case any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, the same shall not affect any other provision of
this Agreement and this Agreement shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein.

 

17.           Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida without regard to choice of
law rules thereunder.

 

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18.           Modifications. The terms of this Agreement may not be changed,
modified, waived, discharged or terminated orally, but may only be done so by
instruments in writing signed by the party against whom enforcement of the
change, modification, waiver, discharge or termination is asserted.

 

19.           Paragraph Headings. Paragraph headings are inserted for
convenience of reference only and shall not be involved or considered in the
interpretation of this Agreement.

 

20.           Entire Agreement. Except as specifically set forth herein, there
are no other modifications of any of the Loan Documents nor any other agreements
between the parties relating to the modification, amendment or extension of the
Note.

 

21.           Counterparts. This Agreement may be executed in any number of
counterparts and each counterpart taken together shall constitute a single
instrument.

 

22.           Binding Agreement. The covenants and agreements contained herein
shall be binding upon and inure to the benefit of Borrower and Bank, and their
respective heirs, successors, assigns, personal representatives and legal
representatives.

 

23.           Waiver of Jury Trial. BANK AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION INVOLVING THE LOAN DOCUMENTS, THIS AGREEMENT, THE
INDEBTEDNESS EVIDENCED BY THE NOTE AND SECURED BY THE MORTGAGE OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTION OF
ANY PARTY RELATED TO OR INVOLVING THE LOAN DOCUMENTS, THIS AGREEMENT OR THE
INDEBTEDNESS EVIDENCED BY THE NOTE AND SECURED BY THE MORTGAGE. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR BANK ENTERING INTO THIS AGREEMENT.

 

[signatures on following pages]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the Effective Date.

 

 

 

“BORROWER”

 

 

 

 

 

COUNTRYWIDE HARDWARE, INC., a
Delaware corporation

 

 

 

 

 

By:

/s/ Joseph A. Molino, Jr.

 

 

Joseph A. Molino, Jr.

 

 

Vice President

 

 

STATE OF NEW YORK

 

COUNTY OF SUFFOLK

 

 

The foregoing instrument was acknowledged before me this 23rd day of
February 2010, by Joseph A. Molino, Jr., as Vice President of Countrywide
Hardware, Inc., a Delaware corporation, on behalf of the corporation, who is
personally known to me or who has produced                          as
identification.

 

 

/s/ Robert C. Weiden

 

Print Name:

Robert C. Weiden

 

Notary Public, State and County Aforesaid

 

My Commission Expires:

12-22-10

 

Commission Number:

4875900

 

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“BANK”

 

 

 

 

 

WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association

 

 

 

 

 

By:

/s/ Ralph L Kelly

 

Name:

Ralph L Kelly

 

Title:

SVP

 

 

STATE OF FLORIDA

 

COUNTY OF DUVAL

 

The foregoing instrument was acknowledged before me this 24th day of
February 2010 by Ralph L Kelly, as Senior Vice President of Wachovia Bank,
National Association, a national banking association, on behalf of the
association, who is personally known to me or has
produced                                        as identification.

 

 

 

/s/ Thomas G. Wilson III

 

Print Name:

 

[SEAL]

Notary Public, State and County Aforesaid

 

Commission Number:

 

 

My Commission Expires:

 

 

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