Exhibit
10.4


 




 





REIMBURSEMENT AGREEMENT


 


DATED AS OF June 8, 2009


 


By and Between


 


WM COFFMAN LLC


and


 


RICHARD HOROWITZ


 




 





 

















 


REIMBURSEMENT AGREEMENT


 


THIS AGREEMENT is made as of
the 8th day of June, 2009 by and between WM COFFMAN
LLC, a limited liability company organized and existing under the laws of the
State of Delaware having its principal office at 445 Broadhollow Road,
Melville, New York 11747 (the Borrower”) and RICHARD HOROWITZ, an individual
residing at 90 Wheatley Road, Old Westbury, New York 11568 (the “Principal”).


 


W I T N E S S E T H:


 


The Borrower has applied to PNC
Bank National Association, a national bank (the “Agent”) for loans in aggregate
principal amount of $12,000,000.00 under a Revolving Credit Term Loan and
Security Agreement dated as of June 8, 2009 among the Borrower, the Agent
and the various lenders party thereto (the “Loan Agreement”); and


 


The Principal is a
substantial shareholder of P&F Industries, Inc., which is the indirect
owner of the Borrower.


 


In order to induce the lenders
and the Agent to enter into the Loan Agreement, Borrower caused Principal to
apply to and enter into letter of credit documentation with New York Commercial
Bank (the “Bank”) to issue two standby letters of credit, each in the amount of
$145,000 naming the Agent as beneficiary (the “Letters of Credit”).


 


In order to cause Principal
to enter into such documentation with Bank and thereby arrange for the issuance
of the Letters of Credit and because of the direct benefit to Borrower related
to the issuance of the Letters of Credit, Borrower has agreed to enter into
this Agreement to provide for the repayment to Principal of any payments made
by Principal to Bank pursuant to the letter of credit documentation arising out
of or by reason of draws under the Letters of Credit.


 


NOW, THEREFORE, intending to
be legally bound, the Borrower and the Principal hereby agree as follows:


 


ARTICLE I


 


1.01        Certain
Definitions.  All
capitalized terms used herein shall have the meanings set forth in the Loan
Agreement.


 


1.02        Accounting
Terms; Other Definitions.  As used herein and in any certificate or
other documents made or delivered pursuant hereto, accounting terms not
specifically defined herein shall have the respective meanings given to them
under GAAP.


 


1.03        Construction.  Unless the context of this Agreement
otherwise clearly requires, references to the plural include the singular, the
singular the plural and “or” has the inclusive meaning represented by the
phrase “and/or”.  The words “hereof”, “herein”,
“hereunder” and 


 


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similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this
Agreement.  The article, section, table
of contents and other headings contained in this Agreement are for reference
purposes only and shall not control or affect the construction of this
Agreement or the interpretation thereof in any respect.  Article, section, subsection, schedule and
exhibit references are to this Agreement unless otherwise specified.


 


ARTICLE II


LETTERS OF CREDIT AND LOANS


 


2.01        Issuance.  The Borrower hereby requests the Principal to
cause the Bank to issue to the Agent on or before the date of the Loan
Agreement, the Letters of Credit No. 2009FS00177 and No. 2009FS00176 in
the form attached hereto as Exhibit “A” for the account of the Borrower
each in the amount of $145,000 to pay a portion of the amounts provided for in Section 15.18
of the Loan Agreement.


 


2.02        Reduction
and Termination.  (a)       The Letters of Credit shall terminate on
the earliest of (i) 5:00 P.M. Eastern Time on June 30, 2010 in
the case of No. 2009FS00177 and September 30, 2010 in the case of No. 2009FS00176
(respectively, the “Expiration Date”), or if not a business day, the next
following business day, (ii) the date on which there has been a drawing, (iii) the
day upon which a substitute letter of credit becomes effective, or (iv) the
date the Letter of Credit shall be delivered to the Bank for cancellation as
set forth in the Loan Agreement.


 


2.03        Loans.  Any drawing under the Letters of Credit that
results in Principal being liable to Bank for the amount of such draw, pursuant
to the Bank documentation, shall automatically be converted into a loan (each,
a “Loan” and, collectively, the “Loans”). 
Each Loan shall be evidenced by a note (as amended and restated from
time to time, the “Note”), in the form attached hereto as Exhibit B, with
appropriate insertions, duly executed and delivered by the Borrower to the
order of the Principal, dated the date of any draw and payable to the Principal.


 


2.04        Interest
Rate.   The Loans
shall bear interest for the period from the date thereof until the stated
maturity thereof on the unpaid principal amount thereof at a rate per annum
equal to six and one-half (6.5%) percent.


 


(b)           If the Borrower shall default in the payment of the
principal of or interest on any Loan, or any other amount becoming due
hereunder, the Borrower shall on demand from time to time pay interest on such
defaulted amount accruing from the date of such default (without reference to
any period of grace) up to and including the date of actual payment (after as
well as before judgment) at eight and one-half (8.5%) percent.


 


(c)           Interest on each Loan shall be payable in arrears on each Quarterly
Payment Date, as of defined in the Note.


 


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(d)           Interest payable on each Loan shall be computed on the
basis of a 360 day year, for the actual number of days elapsed and shall accrue
through the date of receipt of payment. 
In the event the date specified for any payment hereunder is not a business
day, such payment shall be made on the next following business day and interest
shall be paid at the rate provided for herein on any such payment to the business
day on which such payment is made.


 


ARTICLE
III


REPRESENTATIONS
AND WARRANTIES


 


3.01.                     Representations
and Warranties.


 


In order to induce the
Principal to enter into this Agreement and arrange with the Bank for issuance
of the Letters of Credit herein provided for, the Borrower represents and
warrants to the Bank that:


 


(a)           the Borrower has the all requisite
corporate power and authority to execute and deliver this Agreement and the
Notes and to perform all of the obligations hereunder and thereunder.


 


(b)           the execution and delivery by the Borrower of this
Agreement and the Notes and the consummation by the Borrower of the
transactions contemplated hereby and thereby have been validly authorized by
all necessary limited liability action on the part of the Borrower.


 


(c)           this Agreement and the Notes (when executed
and delivered by the Borrower) constitute valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws relating
to or affecting the rights of creditors generally and by equitable principles,
including those limiting the availability of specific performance, injunctive
relief and other equitable remedies and those providing for equitable defenses;
and


 


(d)           the execution, delivery and
performance by the Borrower of this Agreement and the Notes do not and will not
(i) violate any provisions of the Borrower’s formation document, operating
agreement or any contract, agreement, law, regulation, order, decree or writ to
which the Borrower or any of its properties are subject, or (ii) require
the consent or approval of any person, entity or authority, including, without limitation,
any regulatory authority or governmental body of the United States of America
or any state thereof or any political subdivision of any of the foregoing.


 


ARTICLE
IV


SUBORDINATION PROVISIONS


 


4.01        Subordination.    The Principal agrees that the Notes are
subordinate and junior in right of payment to all Obligations, as defined in
the Loan Agreement, except as such payments of 


 


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principal and interest under the Notes are
specifically authorized and provided for in the Loan Agreement.  The full provisions related to the
subordination of the Notes are contained in the Subordination Agreement annexed
hereto and made a part hereof as Exhibit C.


 


ARTICLE
V


CONDITIONS
PRECEDENT


 


5.01        Conditions to Delivery of Notes.  The obligations of the Borrower to execute
and deliver the Notes in the form of Exhibit B hereto in accordance with
the terms hereof is specifically conditioned upon the Principal executing and
delivering the Subordination Agreement in the form of Exhibit C
hereto.  The parties agree to execute and
deliver each of the Note and the Subordination Agreement simultaneously.  Borrower acknowledges and agrees that it will
be responsible for obtaining execution by the Agent of the Subordination Agreement.  Principal agrees to take any actions
reasonably requested by Borrower to assist in obtaining Agent’s execution of
the Subordination Agreement.


 


ARTICLE
VI


MISCELLANEOUS


 


6.01        Consents to Amendments.  This Agreement may be amended and the Borrower
may take any action prohibited, or omit to perform any act required to be
performed by it, if the Borrower shall first obtain the Principal’s written
consent to such amendment, action or omission to act on such terms as the Principal
may require in his sole discretion.


 


6.02        Survival of Representations.  All representations, warranties, covenants
and agreements made by the Borrower in connection herewith shall survive the
execution and delivery of this Agreement.


 


6.03        Successors
and Assigns.  All
covenants and agreements herein shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto, provided the Borrower
may not transfer or assign any of its rights or interests hereunder without the
specific written consent of the Principal.


 


6.04        Expenses.  The Borrower agrees (a) to pay or
reimburse the Principal for all its out-of-pocket costs and expenses incurred
in connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement and any other
documents prepared in connection herewith, and the consummation of the
transactions contemplated hereby and thereby, including, without limitation,
the reasonable fees and disbursements of counsel to the Principal and (b) to
pay or reimburse the Principal for all his costs and expenses incurred in
connection with the enforcement or preservation of any rights under the Notes and
any such other documents, including, without limitation, fees and disbursements
of counsel to the Principal.  The
agreements in this Section shall survive the respective Expiration Dates
of the Letters of Credit.


 


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6.05        Applicable
Law and Jurisdiction; Counterclaims.  This Agreement and the rights and obligations
of the parties hereunder shall be construed and interpreted in accordance with
the law of the State of New York.  The Borrower
hereby submits to the jurisdiction of the Supreme Court of the State of New
York and agrees with the Principal that personal jurisdiction over the Borrower
shall rest with said Court for purposes of any action on or related to this
Agreement.  THE BORROWER HEREBY
EXPRESSLY WAIVES ANY RIGHT TO INTERPOSE A COUNTERCLAIM IN ANY ACTION OR
PROCEEDING ON OR RELATED TO THIS AGREEMENT EXCEPT FOR MANDATORY COUNTERCLAIMS.


 


6.06        Further
Assurances  The Borrower
agrees at any time and from time to time at its expense, upon request of the Principal,
to promptly execute, deliver, or obtain or cause to be executed, delivered or
obtained any and all further instruments and documents and to take or cause to
be taken all such other action as the Principal may reasonably deem desirable
in obtaining the full benefits of this Agreement.


 


6.07        Headings.  The headings herein are for convenience only
and shall not limit or affect the meaning or construction of the provisions
herein.


 


6.08        Notices.  Notices and consents provided herein shall be
in writing and shall be given to the other party by personal delivery or
certified mail, return receipt requested, in a prepaid wrapper directed to the
other party at its address stated below or such other address as from time to
time designated in writing by one party to the other:


 


(a)                                  if to the Borrower:


WM Coffman LLC


445 Broadhollow Road


Melville, New York 11747


 


(b)                                 if to the Principal:


 


Notice by mail shall be effective when
received but if not sooner received shall be deemed effective at 2:45 p.m.
on the second Business Day after mailing. 
This provision shall not prevent any party from using some other method
of giving notice.


 


6.09        Trial By
Jury.  THE BORROWER
AND THE PRINCIPAL MUTUALLY HEREBY KNOWINGLY VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE
OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.


 


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THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT
FOR THE PRINCIPAL TO ACCEPT THIS AGREEMENT AND CAUSE THE ISSUANCE OF THE LETTER
OF CREDIT.


 


6.10        Severability.  In the event that any one or
more  of the provisions of this Agreement
or any document executed in connection herewith shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.


 


6.11        Counterparts.  This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original.  It shall not be necessary in making proof of
this Agreement to produce or account for more than one counterpart.


 


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IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed and delivered by
their proper and duly authorized officers as of the day and year first above
written.


 


	
   

  	
  WM COFFMAN LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A. Molino, Jr.

  
	
   

  	
  Name:

  	
  Joseph A. Molino

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Richard Horowitz

  
	
   

  	
  Richard Horowitz

  



 


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