Document:

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

 

1

 

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;”

 

2

 

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:

 

3

 

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.

 

4

 

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]

 

5

 

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

  
					

 

6United States Securities & Exchange Commission EDGAR Filing

EXHIBIT 10.1

SECOND AMENDMENT TO FORBEARANCE AGREEMENT

THIS SECOND AMENDMENT TO FORBEARANCE AGREEMENT (the "Second Amendment") is made and entered into as of August 28, 2009, by and among PREMIX-MARBLETITE MANUFACTURING CO. ("Premix"), DFH, INC., formerly known as Acrocrete, Inc. and Acro Holdings, Inc. ("DFH"), and JUST-RITE SUPPLY, INC. ("Just-Rite"), each a Florida corporation (each a "Borrower" and collectively, "Borrowers"); IMPERIAL INDUSTRIES, INC., a Delaware corporation ("Guarantor"); MICHAEL PHELAN, as assignee for the benefit of the creditors of Just-Rite, and not individually ("Assignee"); and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association and successor to Congress Financial Corporation (Florida) under the Loan Agreement (defined below) ("Lender").

Recitals:

Lender and Borrowers entered into a certain Consolidating, Amended and Restated Financing Agreement and Security Agreement dated January 28, 2000 (as amended, restated, modified and supplemented from time to time, the "Loan Agreement"), pursuant to which Lender has made loans and other extensions of credit to Borrowers, which loans and extensions of credit are secured by security interest in and liens upon all of the assets of Borrowers and guaranteed unconditionally by Guarantor.

Just-Rite has made an assignment for the benefit of its creditors under Florida law, styled In re Just-Rite Supply, Inc., Assignor, to Michael Phelan, Assignee, Case No. CACE 2009 09032744XXXX (04), In the Circuit Court of the 17th Judicial Circuit, In and For Broward County, Florida (the "ABC").  Assignee is the assignee in the ABC.

Lender, Borrowers and Guarantor entered into a Forbearance and Amendment Agreement dated June 9, 2009 (as at any time amended, the "Forbearance Agreement"). By separate written agreement, Assignee has agreed to be bound by the Loan Agreement and the Forbearance Agreement.   On or about August 7, 2009, Lender, Borrowers, Guarantor and Assignee entered into a First Amendment to Forbearance Agreement dated as of August 7, 2009 (the "First Amendment").

Borrowers, Guarantor and Assignee have requested that the Forbearance Agreement be amended, and Lender is willing to amend the Forbearance Agreement as hereinafter set forth.

NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and in consideration of the premises and the mutual covenants herein contained, the parties hereto, intending to be legally bound hereby, agree as follows:

1.

Definitions.  All capitalized terms used in this Second Amendment, unless otherwise defined, shall have the meanings ascribed to such terms in the Forbearance 

Agreement; provided that as used herein, the term "Obligor" shall mean and include Borrowers, Guarantor and the Assignee (solely in his capacity as assignee in the ABC, and not individually).

2.

Acknowledgments and Stipulations of Obligors.   

(a)

Each Obligor acknowledges, stipulates and agrees that (1) as of the opening of business on August 27, 2009, the aggregate net principal balance of Revolving Loans outstanding under the Loan Agreement, exclusive of accrued interest, costs, bank fees and attorneys' fees chargeable to Obligors under the Financing Agreements, totaled approximately $352,099; (2) all of the Obligations are absolutely due and owing to Lender without any defense, deduction, offset or counterclaim (and, to the extent any Obligor had any defense, deduction, offset or counterclaim on the date hereof, the same is hereby waived); (3) Events of Default have occurred and exist under the Financing Agreements, (4) the Financing Agreements executed by each Borrower are legal, valid and binding obligations of such Borrower enforceable against such Borrower in accordance with their terms; (5) the security interests granted by each Borrower to Lender in the Accounts, Inventory, general intangibles and other Collateral are duly perfected security interests in such Collateral; (6) the payment expected by the Assignee to be received from the Mississippi Department of Transportation as reimbursement of relocation expenses related to Just-Rite's Gulfport, Mississippi, location constitutes a general intangible or proceeds of a general intangible as to which Lender has a security interest; (7) each of the Guaranty and Waiver Agreements executed by Guarantor (collectively, the "Guaranties") is a legal, valid and binding obligation of Guarantor and is enforceable against Guarantor in accordance with its terms; (8) each of the recitals contained at the beginning of this Second Amendment is true and correct; and (9) prior to executing this Second Amendment, each Obligor consulted with and had the benefit of advice of legal counsel of its own selection and each has relied upon the advice of such counsel, and in no part upon any representation of Lender concerning the legal effects of this Second Amendment or any provision hereof.

(b)

In addition, each Obligor acknowledges, stipulates and agrees that certain Forbearance Conditions have not been satisfied.

(c)

Further, each Obligor acknowledges, stipulates and agrees that, considering the inability of Obligors to determine and report to Lender the quantity, quality or value of the remaining assets owned by Just-Rite, the widespread disputes that exist between Just-Rite (or the Assignee on behalf of Just-Rite) and the customers of Just-Rite with respect to Accounts owed by such customers, the collection risks that exist with respect to undisputed Accounts owed to Just-Rite, and the inaccuracies in Just-Rite's previous assessments of the quantity and value of its Inventory, none of the assets of Just-Rite qualifies or should be treated as Eligible Accounts or Eligible Inventory.

3.

Amendments to Forbearance Agreement.  The Forbearance Agreement is hereby amended as follows:

(a)

In Section 1, by deleting the date "August 31, 2009" in the definition of "Forbearance Period" and by substituting in lieu thereof the date "September 30, 2009"; and

(b)

By deleting Section 8 in its entirety and by substituting in lieu thereof the following:

8.

Discretionary Loans to Premix and Assignee.  

(a)

Notwithstanding that Events of Default have occurred and exist under the Financing Agreements and certain Forbearance Conditions have not been satisfied, Lender may continue, in its sole and absolute discretion, to honor requests by Premix or the Assignee (with the consent of Premix) for Revolving Loans pursuant to the Loan Agreement and this Agreement.  If Lender, in its sole and absolute discretion, elects to honor any such request, the making of such Revolving Loan will not operate as a waiver of any Default or any Event of Default or any right or remedy under the Loan Agreement or any other Financing Agreement, will not be deemed to establish a course of conduct so as to justify an expectation by Premix or the Assignee that Lender will make any future advances, and will not preclude Lender from exercising any and all remedies available to Lender under the Loan Agreement, the other Financing Agreements or Applicable Law at any time or times. Lender's discretion to honor requests for a Revolving Loan from Premix or the Assignee (with the consent of Premix) in accordance with the Loan Agreement and this Agreement, and the amount of such Revolving Loan, may be exercised without regard to Borrowers' compliance with the terms of the Financing Agreements or this Agreement or the existence of any Event of Default.  If the unpaid balance of Revolving Loans outstanding at any time should exceed the borrowing base set forth in Section 2.1 of the Loan Agreement at such time, all such Revolving Loans shall nevertheless constitute Obligations that are secured by the Collateral and entitled to all of the benefits thereof.  

(b)

For purposes of notice to Premix and the Assignee, but without in any way limiting the sole and absolute discretion of Lender to make or to decline to make any Revolving Loan, in considering requests for Revolving Loans, among other factors, Lender intends to (i) on each of September 4, 2009, September 11, 2009, September 18, 2009 and September 25, 2009, reduce the Maximum Credit by $50,000 to $450,000, $400,000, $350,000 and $300,000, respectively, and (ii) implement a Reserve in the amount of 50% of any funds received by the Assignee from the Mississippi Department of Transportation and remitted to Lender as and to the extent that any such funds are received hereafter. Each Obligor hereby agrees that all Availability Reserves implemented by Lender and the foregoing changes to the borrowing formulas in the Loan Agreement are reasonable and justified by the financial condition of Borrowers and the current state of the Collateral.

4.

Ratification and Reaffirmation.  Each Obligor hereby ratifies and reaffirms the Loan Agreement, the Forbearance Agreement, the First Amendment and the other Financing Agreements and all of its obligations and liabilities thereunder.  

5.

No Novation.  Except for the amendments expressly provided in Section 3 of this Second Amendment, nothing herein shall be deemed to amend or modify any provision of the Forbearance Agreement, the First Amendment, the Loan Agreement or the other Financing 

Documents, which shall continue in full force and effect.  This Second Amendment is not intended to be, nor shall it be construed to create, a novation or an accord and satisfaction.

6.

Non-Waiver of Default; Reservation of Rights and Remedies; Strict Compliance. Neither this Second Amendment nor any Revolving Loans made by Lender shall be deemed to constitute a waiver of or consent to any Stipulated Default, any other Event of Default or any failure to satisfy any Forbearance Condition or a commitment or agreement make any Revolving Loans. Lender reserves all of the rights and remedies available to it under the Financing Agreements and Applicable Law.  Each Obligor hereby agrees that, notwithstanding any temporary variation from the terms of the Forbearance Agreement or Loan Agreement that may have occurred in the past, such Obligor, from and after the date hereof, shall strictly comply with all of the terms and conditions in the Forbearance Agreement, the Loan Agreement and the other Financing Agreements.

7.

Specific Waivers by Assignee.  Assignee hereby waives and releases (i) any claim or cause of action that may exist against Lender under F.S.A. § 727.109(8) or otherwise, and (ii) any right that he may have to seek to surcharge any Collateral for any costs or expenses of, or that may arise or exist in connection with, the ABC.

8.

Payment of Expenses.  Each Obligor hereby agrees to pay, on demand, all expenses, including, without limitation, legal fees, incurred by Lender in connection with the negotiation, drafting, execution and implementation of this Second Amendment.  

9.

Counterparts; Electronic Signatures.  This Second Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall constitute an original, but all of which taken together shall be one and the same instrument.  In proving this Second Amendment, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought.  Any signed counterpart of this Second Amendment that is transmitted by facsimile or electronic transmission shall be deemed to constitute an original counterpart for all purposes.

10.

Governing Law; Waiver of Notice of Acceptance.  This Second Amendment shall be deemed to be a contract governed by and construed in accordance with the internal laws of the State of Florida.  Each Obligor hereby waives notice of the acceptance of this Second Amendment.

11.

Release of Claims.  To induce Lender to enter into this Second Amendment, each Obligor hereby releases, acquits and forever discharges Lender, and all of its officers, directors, agents, employees, attorneys, affiliates, successors and assigns, from all liabilities, claims, demands, actions or causes of action of any kind (if any there be), whether absolute or contingent, due or to become due, disputed or undisputed, liquidated or unliquidated, at law or in equity, or known or unknown, that any one or more of them now have or ever have had against Lender, whether arising under or in connection with any of the Financing Agreements, the Forbearance Agreement, this Second Amendment or otherwise.

12.

Waiver of Jury Trial.  To the fullest extent permitted by Applicable Law, each of the parties hereto waives the right to trial by jury in any action, suit or proceeding arising out of or related to this Second Amendment, the Forbearance Agreement, the First Amendment, the Loan Agreement or the Guaranties.

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed and delivered on the date first written above.

			
	         

	PREMIX-MARBLETITE MANUFACTURING CO.

("Borrower")

	 
	 
	  

	 
	 
	 

	 
	By:  

	/s/ Howard L. Ehler, Jr.

	 
	Title:

	Vice President

			
	         

	DFH, INC. 

("Borrower")

	 
	 
	  

	 
	 
	 

	 
	By:  

	/s/ Howard L. Ehler, Jr.

	 
	Title:

	Vice President

			
	         

	 JUST-RITE SUPPLY, INC.

 ("Borrower")

	 
	 
	  

	 
	 
	 

	 
	By:  

	/s/ Howard L. Ehler, Jr.

	 
	Title:

	Vice President

			
	         

	 IMPERIAL INDUSTRIES, INC.

("Guarantor")

	 
	 
	  

	 
	 
	 

	 
	By:  

	/s/ Howard L. Ehler, Jr.

	 
	Title:

	Chief Operating Officer

			
	 
	 
	  

	 
	 
	 

	 
	 
	/s/ Michael Phelan

	 
	 
	MICHAEL PHELAN, solely as 

Assignee and not individually

			
	 
	Accepted:

	         

	 WACHOVIA BANK,

NATIONAL ASSOCIATION

("Lender")

	 
	 
	  

	 
	 
	 

	 
	By:  

	/s/ Wanda Alverio

	 
	Title:

	Vice President

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