Exhibit 10.1


 


AMENDMENT NO. 20 AND WAIVER TO


CREDIT AGREEMENT


 


THIS AMENDMENT
NO. 20 AND WAIVER, dated as of August 27, 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


 


A.                                   The
Co-Borrowers, the Lenders and the Administrative Agent are parties to that
certain Credit Agreement pursuant to which the Administrative Agent and the
Lenders provided funding and financial accommodations to the Co-Borrowers, the
terms and conditions of which are more fully and particularly set forth in the
Credit Agreement and the other Loan Documents delivered in connection
therewith.  Capitalized terms used but
not defined herein shall have the meanings given to such terms in the Credit
Agreement.


 


B.                                     The obligations
of the Co-Borrowers to the Administrative Agent and the Lenders under the
Credit Agreement and the other Loan Documents are secured by security interests
and liens on their respective property as more fully and particularly set forth
in the Security Documents.


 


C.                                     The
Co-Borrowers advised the Administrative Agent and the Lenders, which notice was
confirmed by Letter dated August 10, 2009, that the Co-Borrowers were not
in compliance with the financial covenants set forth in Section 7.13(b), (c) and
(e) of the  Credit Agreement for the
fiscal period ended June 30, 2009 (collectively, the “Specified Events
of Default”).


 


D.                                    The
Co-Borrowers have requested, and the Administrative Agent and the Lenders have
agreed, subject to the terms and conditions of this Amendment, to amend and
waive certain provisions of the Credit Agreement as set forth herein.


 


E.                                      The waivers and
amendments contemplated hereby shall remain in effect for a period beginning on
the date hereof and ending on the date (the “Waiver End Date”) whichever is the
earlier date of (i) 5:00 p.m. on October 26, 2009, (ii) the
date on which there shall be any Event of Default under the Loan Documents
(other than the Specified Events of Default), (iii) the date on which the
Co-Borrowers, the Administrative Agent and the Lenders shall have entered into
an amended and restated Credit Agreement which provides for a full dominion and
control “asset-based” loan facility, on terms and conditions satisfactory to
the Administrative Agent and the Lenders, and (iv) the date upon which any
of the Co-Borrowers shall have failed to comply or failed to remain in
compliance with any terms, covenants or conditions under this Agreement.  In connection with clause (iii), the
Co-Borrowers understand and


 


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agree
that the execution and delivery of an amended and restated Credit Agreement
will be subject to satisfaction of all conditions precedent as are customarily
required in connection with asset based credit facilities, including without
limitation delivery of satisfactory inventory and equipment appraisals to the
Administrative Agent and the Lenders.


 


NOW,
THEREFORE, in consideration of the terms herein contained and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
mutually acknowledge, the Co-Borrowers, the Administrative Agent and the
Lenders (collectively, the “Parties”) agree as follows:


 


ARTICLE I.


Amendments to Credit
Agreement.


 


Section 1.01.                           The following
definitions in Section 1.01 of the Credit Agreement are each hereby
amended in their entirety to provide as follows:


 


“Applicable
Revolving Credit Loan Margin” shall mean (a) 2.50%, with respect to
Revolving Credit Loans that are Prime Rate Loans)and (b) 4.25%, with
respect to Revolving Credit Loans that are LIBOR Loans; for purposes of Section 3.01
hereof, such margin in “(a)” is hereinafter a “Prime Rate Margin” and such
margin in “(b)” is hereinafter a “LIBOR Margin”.


 


“Applicable
Additional Term Loan Margin” shall mean (a) 2.50%, with respect to
Additional Term Loans that are Prime Rate Loans and (b) 4.50%, with respect
to Additional Term Loans that are LIBOR Loans; for purposes of Section 3.01
hereof, such margin in “(a)” is hereinafter a “Prime Rate Margin” and such
margin in “(b)” is hereinafter a “LIBOR Margin.


 


“Reserve Adjusted Libor”
shall mean with respect to the Interest Period pertaining to a LIBOR Loan, the
greater of (x) the rate per annum equal to the product (rounded upwards to
the next higher 1/100 of one percent) of (a) the annual rate of interest
at which Dollar deposits of an amount comparable to the amount of the portion
of the LIBOR Loan allocable to the entity which is the Administrative Agent and
for a period equal to the Interest Period applicable thereto which appear on
Telerate Page 3750 at approximately 11:00 a.m. (London time) on the second
Business Day prior to the commencement of such Interest Period, multiplied by (b) the
Eurocurrency Reserve Requirement and (y) one percent (1.0%).


 


Section 1.02.                           Section 6.03(b)(ii) of
the Credit Agreement is hereby amended and restated to provide in its entirety
as follows:


 


“(ii)                            as soon as
available, but in any event not later than 20 days after the end of each
calendar month of each fiscal year of the Co-Borrowers, commencing with the
month ending August 31, 2009, a copy of the unaudited interim consolidated
and consolidating statement of income of P&F and its Subsidiaries as of the
end of each such month, prepared by the Chief Financial Officer of P&F in
accordance with GAAP, applied on a consistent basis and accompanies by a
certificate that effect executed by the Chief Financial Officer of P&F;”


 


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Section 1.03.                           Section 6.03(f) of
the Credit Agreement is hereby amended and restated in its entirety to provide
as follows:


 


“(f) a completed
Borrowing Base Certificate, executed by the Chief Financial Officer of P&F,
(i) on or prior to the fifteenth (15th) Business Day following the end of each calendar
month and current as of the last day of such month; and (ii) on or prior
to the third (3rd) Business Day
following the end of each week, commencing August 28, 2009, and current as
of the end of such calendar week;”


 


Section 1.04.                           Section 6.04(b) of
the Credit Agreement is hereby amended and restated in its entirety to provide
as follows:


 


“(b)                           Permit any
Lender or their respective representative to conduct field audits of the
Co-Borrowers’ accounts receivable and inventory, and all related books and
records, as the Administrative Agent deems necessary or desirable.  The Co-Borrowers shall pay for the costs,
expenses and charges of four such asset audits per year, provided that
following the occurrence and continuance of an Event of Default, there shall be
no restrictions on the amount or cost of such audits.  The Co-Borrowers and the Lenders acknowledge
that the Lenders will endeavor to alternate in their performance of such field
audits so that each Lender performs at least two field audits in each
twelve-month period.”


 


ARTICLE II.


Waivers.


 


(a)                                  Compliance with
Section 7.13(c) of the Credit Agreement, Consolidated Senior Debt
to Consolidated EBITDA, is hereby waived for the fiscal quarter ended June 30,
2009, provided that the ratio of Consolidated Senior Debt to Consolidated
EBITDA was not greater than 10.17:1.00 at the end of such fiscal quarter.


 


(b)                                 Compliance with
Section 7.13(e ) of the Credit Agreement, No Consolidated Net Loss,
is hereby waived for the fiscal quarter ended June 30, 2009, provided
that the Consolidated Net Loss was not greater than $965,000 at the end of such
fiscal quarter.


 


ARTICLE III.


Conditions of Effectiveness.


 


Section 3.1.                                 This Amendment and
Waiver shall become effective as of the date hereof, upon receipt by the
Administrative Agent of (a) this Amendment and Waiver, duly executed by
each Co-Borrower and (b) an amendment and waiver fee of $10,000 for the
pro-rata distribution to the Lenders.


 


Section 3.2.                                 This Amendment
and Waiver shall be subject to the continuing condition that Consolidated EBITDA
of the Co-Borrowers for (a) the two months ending August 31, 2009,
shall not be less than $400,000 and (b) for the month ending September 30,
2009, shall not be less than $460,000.


 


ARTICLE IV.


Representations and
Warranties; Effect on Credit Agreement.


 


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


 


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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.


 


e.                                       There is owing by
Co-Borrowers under Note as of August 27, 2009, $23,323,000.00 in principal
amount, together with accrued but unpaid interest thereon, without limitation
of any other Obligations owing by Co-Borrowers, which amount is allocable to
the Loans, as follows: Revolving Credit Loans: $16,800,000, Additional Term
Loans: $6,523,000.


 


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ARTICLE V.


Term


 


Section 5.1                                      This Amendment and Waiver shall remain in effect until the Waiver End
Date.  Upon the Waiver End Date, this
Amendment and Waiver shall be of no further force or effect.


 


ARTICLE VI.


Miscellaneous.


 


Section 6.1.                                   This Amendment
and Waiver shall be governed by and construed in accordance with the laws of
the State of New York.


 


Section 6.2.                                   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 6.3.                                   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.


 


Section 6.4.                                   Reimbursement of Expenses.  All legal expenses or other costs or
out-of-pocket expenses incurred by the Administrative Agent and the Lenders, in
connection with the preparation and negotiation of this Agreement, all fees
paid by Administrative Agent and the Lenders arising from such services and all
expenses, costs, charges and other fees of such legal counsel of Administrative
Agent and each Lender or relating to any of the events or actions described in
this Agreement shall constitute reimbursable expenses under the Loan Documents,
shall be payable on demand by the Co-Borrowers to the Administrative Agent and
the applicable Lender, and shall constitute Obligations secured by the
Collateral until paid in full.  In
addition, all costs and expenses incurred by the Administrative Agent and the
Lenders in connection with satisfying customary conditions to a full dominion
and control asset based credit facility, including without limitation costs and
expenses related to appraisals of the Co-Borrowers inventory and equipment and
field exams, shall be payable on demand by the Co-Borrowers.  In regard to the foregoing, each Co-Borrower
acknowledges that the Administrative Agent and each Lender, at its option, if
such expenses are not fully paid when payment thereof is demanded, set off
funds of such Co-Borrower on deposit with the Lender, and apply the proceeds
derived therefrom to the payment of such then unpaid reimbursable expenses.


 


[next page is
signature page]


 


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


 


	
   

  	
  P&F INDUSTRIES, INC.

  
	
   

  	
  FLORIDA
  PNEUMATIC  MANUFACTURING CORPORATION

  
	
   

  	
  EMBASSY INDUSTRIES, INC.

  
	
   

  	
  GREEN MANUFACTURING, INC.

  
	
   

  	
  COUNTRYWIDE HARDWARE, INC.

  
	
   

  	
  NATIONWIDE INDUSTRIES, INC.

  
	
   

  	
  WOODMARK INTERNATIONAL, L.P.

  
	
   

  	
  By:

  	
  Countrywide Hardware, Inc., its General
  Partner

  
	
   

  	
  PACIFIC STAIR PRODUCTS, INC.

  
	
   

  	
  WILP HOLDINGS, INC.

  
	
   

  	
  CONTINENTAL TOOL GROUP, INC.

  
	
   

  	
  HY-TECH MACHINE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A. Molino, Jr.

  
	
   

  	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITIBANK, N.A., as a Lender and as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Romano

  
	
   

  	
   

  	
  Richard Romano, Group Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HSBC BANK USA, NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alan M. Harris

  
	
   

  	
   

  	
       Alan M.
  Harris, Vice President

  
					



 


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