Exhibit 10.2


 


AMENDMENT NO. 18 AND WAIVER TO


CREDIT AGREEMENT


 


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


 


RECITALS


 


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


 


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


 


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


 


ARTICLE I.


Amendments to Credit
Agreement.


 


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


 


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


 


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


 

















 


hereby
amended in their entirety to provide as follows:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


2

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


3

















 


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


 


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


 


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


 


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


 


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


 


“SECTION 2.03.  Intentionally Omitted.”


 


“SECTION 2.04.  Intentionally Omitted.”


 


“SECTION 2.05.
 Intentionally Omitted.”


 


“SECTION 2.07.  Intentionally Omitted.”


 


“SECTION 2.08.  Intentionally Omitted.”


 


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


 


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


 


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


 


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


 


4

















 


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


 


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


 


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


 


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


 


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


 


5

















 


Additional
Term Loan Margin.”


 


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


 


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


 


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


 


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


 


and to add the following sentence at the end
thereof:


 


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


 


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


 


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


 


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


 


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


 


6

















 


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


 


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


 


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


 


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


 


	
  Period

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

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

  	
   

  	
  1.20:1.00

  



 


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


 


	
  Period

  	
   

  	
  Amount

  
	
   

  	
   

  	
   

  
	
  March 31, 2009
  through September 29, 2009

  	
   

  	
  $

  	
  25,500,000

  
	
  September 30, 2009
  through March 30, 2011

  	
   

  	
  $

  	
  25,000,000

  
	
  March 31, 2011
  through June 29, 2011

  	
   

  	
  $

  	
  25,500,000

  
	
  June 30, 2011 through
  September 29, 2011

  	
   

  	
  $

  	
  26,500,000

  
	
  September 30, 2011
  and thereafter

  	
   

  	
  $

  	
  27,000,000

  



 


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


 


	
  Period

  	
   

  	
  Amount

  
	
   

  	
   

  	
   

  
	
  March 31, 2009
  through June 29, 2009

  	
   

  	
  7.50:1.00

  
	
  June 30, 2009 through
  September 29, 2009

  	
   

  	
  8.00:1.00

  
	
  September 30, 2009
  through December 30, 2009

  	
   

  	
  7.50:1.00

  
	
  December 31, 2009
  through March 30, 2010

  	
   

  	
  5.50:1.00

  
	
  March 31, 2010
  through June 29, 2010

  	
   

  	
  4.50:1.00

  
	
  June 30, 2010 through
  December 30, 2010

  	
   

  	
  5.25:1.00

  
	
  December 31, 2010
  through September 29, 2011

  	
   

  	
  4.50:1.00

  
	
  September 30, 2011
  through December 30, 2011

  	
   

  	
  4.25:1.00

  
	
  December 31,
  2011 and thereafter

  	
   

  	
  4.00:1.00

  



 


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


 


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


 


7

















 


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


 


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


 


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


 


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


 


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


 


ARTICLE II.


Waivers.


 


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


 


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


 


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


 


ARTICLE III.


Conditions of Effectiveness.


 


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


 


8

















 


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


 


ARTICLE IV.


Representations and
Warranties; Effect on Credit Agreement.


 


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


 


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


 


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


 


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


 


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


 


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


 


Section 4.2.            Effect on Credit Agreement and Loan Documents.


 


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


 


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


 


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


 


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


 


9
















 


ARTICLE V.


Miscellaneous.


 


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


 


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


 


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


 


[next page is signature page]


 


10

















 


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


 


	
   

  	
   

  	
  P&F INDUSTRIES, INC.

  
	
   

  	
   

  	
  FLORIDA
  PNEUMATIC MANUFACTURING

  CORPORATION

  
	
   

  	
   

  	
  EMBASSY INDUSTRIES, INC.

  
	
   

  	
   

  	
  GREEN MANUFACTURING, INC.

  
	
   

  	
   

  	
  COUNTRYWIDE HARDWARE, INC.

  
	
   

  	
   

  	
  NATIONWIDE INDUSTRIES, INC.

  
	
   

  	
   

  	
  WOODMARK INTERNATIONAL, L.P.

  
	
   

  	
   

  	
  By:

  	
  Countrywide Hardware, Inc., its General

  
	
   

  	
   

  	
   

  	
  Partner

  
	
   

  	
   

  	
  PACIFIC STAIR PRODUCTS, INC.

  
	
   

  	
   

  	
  WILP HOLDINGS, INC.

  
	
   

  	
   

  	
  CONTINENTAL TOOL GROUP, INC.

  
	
   

  	
   

  	
  HY-TECH MACHINE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Joseph A. Molino, Jr.

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Revolving Credit

  	
   

  	
  CITIBANK, N.A.

  
	
  Commitment: $14,300,000

  	
   

  	
  as a Lender and as Administrative Agent

  
	
   

  	
   

  	
   

  
	
  Additional Term Loan Commitment:

  	
   

  	
   

  
	
  $4,625,400

  	
   

  	
  By:

  	
  /s/ Stephen Kelly

  
	
   

  	
   

  	
   

  	
  Stephen Kelly, Vice President

  
	
   

  	
   

  	
   

  
	
  Revolving Credit

  	
   

  	
  HSBC BANK USA, NATIONAL

  
	
  Commitment: $7,700,000

  	
   

  	
  ASSOCIATION, as a Lender

  
	
   

  	
   

  	
   

  
	
  Additional Term Loan Commitment:

  	
   

  	
   

  
	
  $2,490,600

  	
   

  	
  By:

  	
  /s/ Alan Harris

  
	
   

  	
   

  	
   

  	
  Alan Harris, Vice President

  
					



 


11

















 


EXHIBIT A


 


FORM OF


THIRD
AMENDED AND RESTATED REVOLVING CREDIT NOTE


 


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

  	
   

  	
  March     ,
  2009

  



 


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


 


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


 


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


 


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


 


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


 


12

















 


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


 


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


 


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


 


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


 


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


 


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


 


[next page is signature page]


 


13

















 


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


 


	
   

  	
  P&F INDUSTRIES, INC.

  
	
   

  	
  FLORIDA
  PNEUMATIC MANUFACTURING

  CORPORATION

  
	
   

  	
  EMBASSY INDUSTRIES, INC.

  
	
   

  	
  GREEN MANUFACTURING, INC.

  
	
   

  	
  COUNTRYWIDE HARDWARE, INC.

  
	
   

  	
  NATIONWIDE INDUSTRIES, INC.

  
	
   

  	
  WOODMARK INTERNATIONAL, L.P.

  
	
   

  	
  By:

  	
  Countrywide Hardware, Inc., its General

  
	
   

  	
   

  	
  Partner

  
	
   

  	
  PACIFIC STAIR PRODUCTS, INC.

  
	
   

  	
  WILP HOLDINGS, INC.

  
	
   

  	
  CONTINENTAL TOOL GROUP, INC.

  
	
   

  	
  HY-TECH MACHINE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

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

  
				



 


14

















 


SCHEDULE OF LOANS


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Amount of

  	
   

  
	
  Date

  	
   

  	
  Type

  	
   

  	
   

  	
   

  	
  Principal

  	
   

  	
   

  	
   

  	
  Principal

  	
   

  
	
  of

  	
   

  	
  of

  	
   

  	
  Interest

  	
   

  	
  Amount of

  	
   

  	
  Maturity

  	
   

  	
  Paid or

  	
   

  
	
  Loan

  	
   

  	
  Loan

  	
   

  	
  Rate

  	
   

  	
  Loan

  	
   

  	
  of Loan

  	
   

  	
  Unpaid_

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


15

















 


EXHIBIT N


 


FORM OF


ADDITIONAL TERM LOAN NOTE


 


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

  	
   

  	
  March     , 2009

  



 


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


 


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


 


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


 


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


 


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


 


16

















 


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


 


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


 


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


 


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


 


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


 


[next page is signature page]


 


17

















 


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


 


	
   

  	
  P&F INDUSTRIES, INC.

  
	
   

  	
  FLORIDA
  PNEUMATIC MANUFACTURING

  CORPORATION

  
	
   

  	
  EMBASSY INDUSTRIES, INC.

  
	
   

  	
  GREEN MANUFACTURING, INC.

  
	
   

  	
  COUNTRYWIDE HARDWARE, INC.

  
	
   

  	
  NATIONWIDE INDUSTRIES, INC.

  
	
   

  	
  WOODMARK INTERNATIONAL, L.P.

  
	
   

  	
  By:

  	
  Countrywide Hardware, Inc., its General

  
	
   

  	
   

  	
  Partner

  
	
   

  	
  PACIFIC STAIR PRODUCTS, INC.

  
	
   

  	
  WILP HOLDINGS, INC.

  
	
   

  	
  CONTINENTAL TOOL GROUP, INC.

  
	
   

  	
  HY-TECH MACHINE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

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

  
				



 


18

















 


SCHEDULE OF LOANS


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Amount of

  	
   

  
	
  Date

  	
   

  	
  Type

  	
   

  	
   

  	
   

  	
  Principal

  	
   

  	
   

  	
   

  	
  Principal

  	
   

  
	
  of

  	
   

  	
  of

  	
   

  	
  Interest

  	
   

  	
  Amount of

  	
   

  	
  Maturity

  	
   

  	
  Paid or

  	
   

  
	
  Loan

  	
   

  	
  Loan

  	
   

  	
  Rate

  	
   

  	
  Loan

  	
   

  	
  of Loan

  	
   

  	
  Unpaid_

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3/    /09

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  3/      /12

  	
   

  	
   

  	
   

  
													



 


19