**Exhibit 10.1**

 

**AMENDMENT NO. 11 AND WAIVER TO**

**CREDIT AGREEMENT**

 

**AMENDMENTNO. 11 AND WAIVER,**dated as of May 12, 2008 (the “Amendment andWaiver”) to the Credit Agreement, dated as of June 30, 2004, by and among **P&F INDUSTRIES, INC.,**a Delawarecorporation****(“P&F”), **FLORIDA PNEUMATIC MANUFACTURING CORPORATION,**a Florida corporation (“Florida Pneumatic”), **EMBASSYINDUSTRIES, INC.,**a New York corporation (“Embassy”), **GREEN MANUFACTURING, INC.,**a Delawarecorporation (“Green”), **COUNTRYWIDE HARDWARE,INC.,**a Delaware corporation (“Countrywide”), **NATIONWIDE INDUSTRIES, INC.,** a Floridacorporation (“Nationwide”), **WOODMARK INTERNATIONAL,L.P.**, a Delaware limited partnership (“Woodmark”), **PACIFIC STAIR PRODUCTS, INC.**, a Delaware corporation (“Pacific”),**WILP HOLDINGS, INC.**, a Delawarecorporation (“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 HSBCBank USA) (collectively, the “Lenders”) and **CITIBANK,N.A**., as Administrative Agent for the Lenders (as same has been andmay be further amended, restated, supplemented or otherwise modified, from timeto time, the “Credit Agreement”).

 

**RECITALS**

 

TheCo-Borrowers, the Lenders and the Administrative Agent have agreed, subject tothe terms and conditions of this Amendment and Waiver, to amend and waivecertain provisions of the Credit Agreement as herein set forth.

 

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

 

1.                                       Amendment.

 

                                                (a)                                  Section 7.13(a) ofthe Credit Agreement is hereby amended and restated in its entirety to provideas follows:

 

**Fixed Charge Coverage Ratio.**  Permit the ratio of (i) ConsolidatedEBITDA minus cash taxes paid to (ii) Consolidated Interest Expense plusConsolidated Current Maturities on Long Term Debt to be less than the ratio setforth below opposite the applicable fiscal year ending:

 

| **Period**                                                                                |   | **Ratio** |
|-------------------------------------------------------------------------------------------|--------|-----------|
|                                                                                      |   |      |
| December 31, 2008                                                                    |   | .80:1.00  |
| December 31,  2009 and at the end of each fiscal year of the Co-Borrowers thereafter |   | 1.20:1.00 |

 

                                                (b)                                 The table in Section 7.13(b) ofthe Credit Agreement, Minimum Capital Base, is hereby amended andrestated in its entirety to provide as follows:

 

| **Period**                                        |   | **Amount** |
|---------------------------------------------------|--------|------------|
|                                              |   |       |
| June 30, 2008 through December 30, 2008 |   | $          | 22,500,000 |

 

 

 

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| December 31,  2008 through March 30, 2009 |   | $ | 23,500,000 |
|-----------------------------------------------------|--------|---|------------|
| March 31,  2009 through December 30, 2009 |   | $ | 21,500,000 |
| December 31,  2009 to December 30, 2010   |   | $ | 26,000,000 |
| December 31,  2010 and thereafter              |   | $ | 33,000,000 |

 

                                                (c)                                  The table in Section 7.13(c) ofthe Credit Agreement, Consolidated Senior Debt to Consolidated EBITDA,****is hereby amended and restated in its entirety toprovide as follows:

 

| **Period**                                          |   | **Amount** |
|-----------------------------------------------------|--------|------------|
|                                                |   |       |
| June 30,  2008 through December 30, 2008  |   | 4.60:1.00  |
| December 31,  2008 through March 30, 2009 |   | 4.30:1.00  |
| March 31,  2009 through December 30, 2009 |   | 2.75:1.00  |
| December 31,  2009 to December 30, 2010   |   | 2.50:1.00  |
| December 31,  2010 and thereafter              |   | 2.00:1.00  |

 

### **2.**                                       Waivers.

 

                                                                (a)                                  Compliance withSection 7.13(c) of the Credit Agreement, Consolidated Senior Debt to Consolidated EBITDA, is herebywaived for the fiscal quarter ended March 31, 2008 and all periods throughJune 29, 2008, provided that the ratio of Consolidated Senior Debt toConsolidated EBITDA was not greater than 4.13:1.00 during all such periods.

 

### **                                               **(b)                                 Compliance with Section 7.13(e) of the Credit Agreement, NoConsolidated Net Loss, is hereby waived for the fiscal quarter ended March 31,2008 and the fiscal quarters ending June 30, 2008 and September 30,2008, provided that the Co-Borrower would have been in compliance if theeffects of the one-time charge against earnings resulting from the write-downof goodwill and other intangible assets (net of the associated deferred taxbenefit), which was incurred by the Co-Borrowers in the fiscal quarter ended December 31,2007, were excluded in calculation of Consolidated Net Loss for such periods.

### ** **

3.                                       Conditions ofEffectiveness

 

                                                This Amendmentand Waiver shall become effective as of the date hereof, upon receipt by theBank of this Amendment and Waiver, duly executed by the Co-Borrowers.

 

4.                                       Miscellaneous.

 

                                                (a)                                  Capitalizedterms used herein and not otherwise defined herein shall have the same meaningsas defined in the Credit Agreement.

 

                                                (b)                                 Except asexpressly amended and waived hereby, the Credit Agreement shall remain in fullforce and effect in accordance with the terms thereof.  The Credit Agreement is ratified andconfirmed in all respects by the Co-Borrowers. The amendments and waivers herein contained are limited specifically tothe matters set forth above and do not constitute directly or by implication anamendment or waiver of any other provision of the Credit Agreement or anyDefault or Event of Default which may occur or may have occurred under theCredit Agreement or any commitment by the Banks to further amend the terms andprovisions of the Credit Agreement, including any extension of the RevolvingCredit Commitment Termination Date.

 

                                                (c)                                  EachCo-Borrower hereby represents and warrants that (i) the representationsand warranties by the Co-Borrowers pursuant to the Credit Agreement and eachother Loan Document are 

 

 

 

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trueand correct on the date hereof, and (ii) no Default or Event of Defaultexists.

 

                                                (d)                                 This Amendmentand Waiver may be executed in one or more counterparts, each of which shallconstitute an original, but all of which, when taken together, shall constitutebut one agreement.

 

(e)                                  This Amendmentand Waiver shall constitute a Loan Document.

 

**IN WITNESSWHEREOF**, the Co-Borrowers, the Lenders and the Administrative Agent havecaused this Amendment and Waiver to be duly executed by their duly authorizedofficers 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/ Stephen Kelly |
|       |                                   | Stephen Kelly, Vice President |
|       |                                   |
| ** ** | **HSBC BANK USA, NATIONAL**            |
| ** ** | **ASSOCIATION**, as a Lender           |
| ** ** | ** **                             |
|       | By:                                    | /s/ Raymond Fincken |
|       |                                   | Raymond Fincken, Vice President |
|            |                                        |  |  |

 

 

 

 

 

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