Exhibit 10.3


 


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.


 


Secured Subordinated Promissory Note


 


	
  $250,000.00

  	
  April 23, 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 Richard
A. Horowitz, his heirs, administrators, successors or assigns  (the “Payee”), the principal amount of Two Hundred
Fifty Thousand Dollars ($250,000.00) 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 accrued interest,
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, interest, penalties, premiums
and/or other charges, if any, under  this
Note (collectively “Obligations”) shall be due and payable on January 2,
2011 unless accelerated pursuant to the terms of this 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
CITIBANK, N.A. AND HSBC BANK USA, NATIONAL ASSOCIATION (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 APRIL 23, 2010 BETWEEN
THE LENDERS, THE PAYEE AND MARC SCHORR (AS AMENDED, RESTATED, SUPPLEMENTED OR
MODIFIED FROM TIME TO TIME, THE “SUBORDINATION AGREEMENT”).  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 MAKER 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:


 


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 


 


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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.


 


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 


 


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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 release, substitution or exchange shall not be deemed an Event of
Default hereunder;


 


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.


 


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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

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  FLORIDA
  PNEUMATIC MANUFACTURING CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  EMBASSY
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  GREEN
  MANUFACTURING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  COUNTRYWIDE
  HARDWARE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  NATIONWIDE
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  



 


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  WOODMARK
  INTERNATIONAL, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  COUNTRYWIDE
  HARDWARE, INC., its

  
	
   

  	
   

  	
  General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  PACIFIC
  STAIR PRODUCTS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  WILP
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL
  TOOL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  HY-TECH
  MACHINE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice President

  
					



 


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