THIS INSTRUMENT IS SUBJECT TO THAT CERTAIN SUBORDINATION AND INTERCREDITOR
AGREEMENT DATED AS OF OCTOBER 25, 2010, BETWEEN MARC SCHORR, AS THE SUBORDINATED
CREDITOR, AND CAPITAL ONE LEVERAGE FINANCE CORPORATION, AS SENIOR AGENT FOR ALL
SENIOR LENDERS.
 
THIS NOTE HAS BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (“THE ACT”). THIS NOTE IS SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM.
 
Amended and Restated
Secured Subordinated Promissory Note
 
$500,000.00
As of October 25, 2010

 
P&F Industries, Inc., a Delaware corporation, Florida Pneumatic Manufacturing
Corporation, a Florida corporation, Embassy Industries, Inc, a New York
corporation, Green Manufacturing, Inc., a Delaware corporation, Countrywide
Hardware, Inc., a Delaware corporation, Nationwide Industries, Inc., a Florida
corporation, Woodmark International, L.P., a Delaware limited partnership,
Pacific Stair Products, Inc., a Delaware corporation, WILP Holdings, Inc., a
Delaware corporation, Continental Tool Group, Inc., a Delaware corporation and
Hy-Tech Machine, Inc., a Delaware corporation (each hereinafter referred to
individually as a “Maker” and collectively as the “Makers”), jointly and
severally, hereby promise to pay to Marc Schorr, his heirs, administrators,
successors or assigns (the “Payee”), the principal amount of Five Hundred
Thousand Dollars ($500,000.00) in such coin or currency of the United States of
America as at the time of payment shall be legal tender therein for the payment
of public and private debts, together with interest, as hereinafter provided,
compounded annually (calculated on the basis of the actual number of days
elapsed over a year of 365 days), from the date hereof on the unpaid balance of
such principal amount, at the rate of eight percent (8%) per annum All
principal, outstanding accrued interest, penalties, premiums and/or other
charges, if any, under this Note (collectively “Obligations”) shall be due and
payable on October 25, 2013 (the “Maturity Date”) unless accelerated or prepaid
pursuant to the terms of this Note.

Makers agree to pay: (a) on the date hereof, $20,273.97 representing all
outstanding accrued interest under the Original Note, as defined below, through
the date hereof; (b) commencing December 31, 2010 and continuing quarterly
thereafter on the last day of March, June, September and December thereafter
interest accrued through the quarter ended on such payment date (each a
“Scheduled Subordinated Debt Payment”) to the extent Makers are permitted to
make such payments under the Subordination Agreement (used as hereinafter
defined); and (c) when permitted under the Subordination Agreement mandatory
prepayments of principal, in an amount equal to the amount of Excess Cash Flow
(as defined in the Subordination Agreement) that Makers are permitted to pay to
the Payee under the conditions and at the times specified in the Subordination
Agreement.
 
 
 

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This Note is being executed and delivered as a restatement of the outstanding
indebtedness evidenced by that certain $500,000.00 note dated April 23, 2010
(hereinafter referred as the “Original Note”) in the current outstanding
aggregate principal amount due thereunder of $500,000.00 and Payee acknowledges
receipt of accrued interest of $20,273.97 representing all outstanding accrued
interest under the Original Note through the date hereof.  This Note shall not
constitute a cancellation or novation with respect to the indebtedness evidenced
by the Original Note.  Such indebtedness (as heretofore evidenced by the
Original Note and as hereafter evidenced by this Note) shall continue to be
secured by, inter alia, the personal property without interruption in the lien
or priority thereof in accordance with the Security Agreement hereinafter
referred to.  Subject to the foregoing provisions this Note amends, restates and
supersedes the Original Note in its entirety and specifically extends the
original maturity date to the Maturity Date and modifies the payments of
principal and interest heretofore provided to conform same to the Subordination
Agreement.  By its acceptance hereof, Payee waives and discharges the Makers
from any claims Payee may have against Makers or their affiliates under the
Original Note.
 
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS NOTE, THE PAYMENT AND PRIORITY
OF ALL CLAIMS OF PAYEE UNDER THIS NOTE ARE SUBORDINATE IN RIGHT, TIME, AND
PRIORITY TO THE CLAIMS OF CAPITAL ONE LEVERAGE FINANCE CORPORATION AS AGENT AND
THE LENDERS PARTY TO THE LOAN AGREEMENT DATED AS OF OCTOBER 25, 2010 AS AMENDED,
RESTATED, SUPPLEMENTED OF MODIFIED FROM TIME TO TIME (THE “LOAN AGREEMENT”) FROM
TIME TO TIME (THE “LENDERS”), AND ALL SUCH AMOUNTS PAYABLE TO PAYEE SHALL NOT BE
PAID OR PAYABLE, EXCEPT AS SET FORTH IN THE SUBORDINATION AND INTERCREDITOR
AGREEMENT DATED AS OF OCTOBER 25, 2010 BETWEEN THE LENDERS, THE PAYEE AND MARC
SCHORR (AS AMENDED, RESTATED, SUPPLEMENTED OR MODIFIED FROM TIME TO TIME, THE
“SUBORDINATION AGREEMENT”). ANY REFERENCE TO THE SUBORDINATION AND INTERCREDITOR
AGREEMENT DATED AS OF APRIL 23, 2010 BY AND AMONG CITIBANK, N.A., AS LENDER AND
ADMINISTRATIVE AGENT AND HSBC BANK USA, NATIONAL ASSOCIATION AND PAYEE DELIVERED
IN CONNECTION WITH THE ORIGINAL NOTE IN THE (A) INDEMNIFICATION AGREEMENT DATED
APRIL 23, 2010 BY AND AMONG PAYEE, RICHARD A. HOROWITZ AND P&F INDUSTRIES INC.
AND (B) THE SECURITY AGREEMENTS DATED APRIL 23, 2010 FROM MAKERS TO PAYEE AND
RICHARD A. HOROWITZ SHALL MEAN THE SUBORDINATION AGREEMENT, AS DEFINED ABOVE.
THE SUBORDINATION AGREEMENT IS INCORPORATED BY REFERENCE AS IF SET FORTH IN
FULL. TO THE EXTENT THE SUBORDINATION AGREEMENT REQUIRES, THE MAKERS SHALL PAY
THE LENDERS ANY SUMS THIS DOCUMENT OTHERWISE REQUIRES THE MAKERS TO PAY PAYEE.
 
This Note is secured by the “Collateral” identified in certain Security
Agreements by each Maker in favor of Payee and the other secured party named
therein of even date herewith (the “Security Agreements”). The principal of and
accrued interest on this Note shall be payable by wire transfer of immediately
available funds to the account of the Payee of this Note at such banking
institution as such Payee designates or, if requested by such Payee, by
certified or official bank check payable to the Payee of this Note at the
address of such Payee as may be designated in writing by the Payee to the
Makers.
 
Any of the following events shall constitute an “Event of Default” under this
Note:

 
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1.             failure by the Makers or any of them to pay all or any amount due
under the Note within ten (10) days of when same is due and payable, except to
the extent such payment is not permitted under the Subordination Agreement;
 
2.             the material breach of any of the representations, warranties or
covenants of the Makers contained in this Note or the Security Agreements unless
such breach was caused in whole or in part by the acts or omissions of Richard
Horowitz in his capacity as officer, director and/or other fiduciary of any
Maker;
 
3.             a default shall occur in the payment of any amount when due
(subject to any applicable grace period), whether by acceleration or otherwise,
of any principal or stated amount of, or interest or fees on, any indebtedness
of any Maker having an outstanding principal amount, individually or in the
aggregate, of one hundred thousand dollars ($100,000.00) or more or an event of
default shall occur under any instrument evidencing or securing any such
indebtedness which gives the holder(s) of such indebtedness or any person acting
on behalf of such holder(s) thereof the right to accelerate the maturity of such
indebtedness; provided, that in any such case the Payee gives the Makers ten
(10) days written notice of such default;
 
4.            filing by any Maker of a petition seeking relief under any
provision of any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction, or
consenting in writing to the filing of any such petition against it;
 
5.            making by any Maker of a general assignment for the benefit of its
creditors, or admitting in writing its inability to pay, or in fact failure to
pay, its debts generally as they become due, or consenting in writing to the
appointment of a receiver, conservator, custodian, liquidator or trustee of the
Maker, or of all or any part of the assets of such Maker; or
 
6.            appointment of a receiver, conservator, custodian, liquidator or
trustee of the Maker or of all or any of its assets by court order, if such
order remains in effect for more than sixty (60) days; or entering of an order
for relief with respect to such Maker under the U.S. Bankruptcy Code; or filing
of a petition against such Maker under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, if not dismissed within sixty (60) days.
 
Upon the occurrence and continuation of an Event of Default hereunder, all of
the unpaid principal amount of this Note and any accrued interest thereon shall
automatically become due and payable, and the Makers hereby waive diligence,
presentment, demand, protest and notice of every kind whatsoever. The failure of
the Payee to exercise any of its rights hereunder in any particular instance
shall not constitute a waiver of the same or of any other right in that or any
subsequent instance with respect to the Payee or any subsequent holder.
 
Upon the occurrence and continuation of an Event of Default hereunder, then at
the option of Payee upon notice to the Makers, all accrued and unpaid interest,
hereunder, shall be added to the outstanding principal balance hereof, and the
entire outstanding principal balance, as so adjusted, shall bear interest
thereafter until paid at an annual rate equal to the lesser of (i) the rate that
is two percentage points (2.0%) in excess of the above-specified interest rate,
or (ii) the maximum rate of interest allowed to be charged under applicable law.

 
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Should the indebtedness evidenced by this Note or any part hereof be collected
at law or in equity or in bankruptcy, receivership or other court proceedings,
or this Note placed in the hands of attorneys for collection, the Makers agree
to pay, in addition to principal and interest due and payable hereon, all costs
of collection, including reasonable attorneys' fees, incurred by the Payee of
this Note in collecting or enforcing this Note. The Makers further agree to pay
the reasonable attorneys fees of the Payee's counsel in connection with the
preparation and negotiation of this Note and the Security Agreements.
 
No extension of the time for payment of the indebtedness evidenced hereby, made
by agreement with any person now or hereafter liable for payment of the
indebtedness evidenced hereby, shall operate to release, discharge, modify,
change or affect the original liability of the Maker hereunder or that of any
other person now or hereafter liable for payment of the indebtedness evidenced
hereby, either in whole or in part, unless the Payee otherwise agrees in
writing. No delay by the Payee in exercising any power or right hereunder shall
operate as a waiver of any power or right, nor shall any single or partial
exercise of any power or right preclude other or further exercise thereof, or
the exercise of any other power or right hereunder or otherwise, and no waiver
or modification of the terms hereof shall be valid unless set forth in writing
by the Payee of this Note and then only to the extent set forth therein.
 
The joint and several Obligations of each of the Makers under this Note shall be
absolute and unconditional and shall remain in full force and effect until the
Obligations shall have been paid and, until such payment has been made, shall
not be discharged, affected, modified or impaired on the happening from time to
time of any event, including, without limitation, any of the following, whether
or not with notice to or the consent of any of the Makers:
 
 
a.
the waiver, compromise, settlement release, termination or amendment (including,
without limitation, any extension or postponement of the time for payment or
performance or renewal or refinancing) of any or all of the obligations or
agreements of any of the Makers under this Note or any other loan document;

 
 
b.
the failure to give notice to any or all of the Makers of the occurrence of a
default under the terms and provisions of this Note or any other loan document;

 
 
c.
the release, substitution or exchange by the holder of this Note of any
Collateral (whether with or without consideration) or the acceptance by the
Payee of this Note of any additional collateral or the availability or claimed
availability of any other collateral or source of repayment or any non-
perfection or other impairment of any collateral; provided, that nothing herein
shall be construed as preventing such release, substitution or exchange with the
consent of the holder of this Note and any such exchange shall not be deemed an
Event of Default hereunder;

 
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d.
the release of any person primarily or secondarily liable for all or any part of
the    obligations, whether by the Payee or any other holder of this Note or in
connection with any voluntary or involuntary liquidation, dissolution,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors or
similar event or proceeding affecting any or all of the Makers or any other
person or entity who, or any of whose property, shall at the time in question be
obligated in respect of the obligations or any part thereof; or

 
 
e.
to the extent permitted by law, any other event, occurrence, action or
circumstance that would, in the absence of this clause, result in the release or
discharge of any or all of the undersigned from the performance or observance of
any obligation, covenant or agreement contained in this Note.

 
The Makers expressly agree that the Payee shall not be required first to
institute any suit or exhaust its remedies against any of the undersigned or any
other person or party to become liable hereunder or against any collateral, in
order to enforce this Note; and expressly agree that, notwithstanding the
occurrence of any of the foregoing, the Makers shall be and remain, directly and
primarily liable for all sums due under this Note and under the loan documents.
On disposition by the Payee of any property encumbered by any collateral, the
undersigned shall be and shall remain jointly and severally liable for any
deficiency.
 
The provisions hereof shall be binding upon and inure to the benefit of the
Payee of this Note and its successors, assigns, heirs/or personal
representatives. This Note may be assigned, in whole or in part, by the Payee or
any subsequent Payee hereof without the consent of the Makers.
 
THE MAKERS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF
OR IN ANY WAY RELATING TO THIS NOTE.
 
The Makers, from time to time after the date hereof, at the Payee's request,
will execute, acknowledge and deliver to the Payee such other instruments and
will take such other actions and execute and deliver such other documents,
certifications and further assurances as the Payee may reasonably request in
order to carry out the intent and purposes of this Note.
 
All notices, demands and other communications provided for or permitted
hereunder shall be made in writing as set forth in the Security Agreements.
 
This Note is made and delivered in, and shall be governed by and construed in
accordance with, the laws of the State of New York without giving effect to the
conflicts of laws rules thereof.

(SIGNATURE PAGES FOLLOW)

 
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IN WITNESS WHEREOF, the Makers has caused this Note to be duly executed and
delivered by its duly authorized officer as of the date first above written.

 

 
P&F INDUSTRIES, INC.
     
By:
/s/ Joseph A. Molino, Jr.
 
Joseph A. Molino, Jr., Vice President
     
FLORIDA PNEUMATIC MANUFACTURING CORPORATION
     
By:
/s/ Joseph A. Molino, Jr.
 
Joseph A. Molino, Jr., Vice President
     
EMBASSY INDUSTRIES, INC
     
By:
/s/ Joseph A. Molino, Jr.
 
Joseph A. Molino, Jr., Vice President
     
GREEN MANUFACTURING, INC
     
By:
/s/ Joseph A. Molino, Jr.
 
Joseph A. Molino, Jr., Vice President
     
NATIONWIDE INDUSTRIES, INC.
     
By:
/s/ Joseph A. Molino, Jr.
 
Joseph A. Molino, Jr., Vice President
     
WOODMARK INTERNATIONAL, L.P.
     
By: COUNTRYWIDE HARDWARE, INC., its
General Partner
     
By:
/s/ Joseph A. Molino, Jr.
 
Joseph A. Molino, Jr., Vice President
     
PACIFIC STAIR PRODUCTS, INC.
     
By:
/s/ Joseph A. Molino, Jr.
 
Joseph A. Molino, Jr., Vice President
     
CONTINENTAL TOOL GROUP, INC.
     
By:
/s/ Joseph A. Molino, Jr.
 
Joseph A. Molino, Jr., Vice President
     
HY-TECH MACHINE, INC.
     
By:
/s/ Joseph A. Molino, Jr.
 
Joseph A. Molino, Jr., Vice President
     
WILP HOLDINGS, INC.
     
By:
/s/ Joseph A. Molino, Jr.
 
Joseph A. Molino, Jr., Vice President

 

 
COUNTRYWIDE HARDWARE, INC.
     
By:
/s/ Joseph A. Molino, Jr.
 
Joseph A. Molino, Jr., Vice President

 
 
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THE AMENDED AND RESTATED SECURED SUBORDINATED PROMISSORY NOTE SET FORTH ABOVE IS
ACCEPTED AND AGREED TO.
     
/s/ Marc Schorr
  
 
Marc Schorr
 

 
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