Document:

Exhibit 10.1

 

AMENDMENT
NO. 21 AND WAIVER TO

CREDIT
AGREEMENT

 

THIS
AMENDMENT NO. 21 AND WAIVER, dated as of April 23, 2010 (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 Letters dated January 22, 2010
and February 8, 2010 of the existence of one or more Defaults or Events of
Default under the Credit Agreement, including, without limitation, the Events
of Default arising because of the Co-Borrowers’ non-compliance with (a) Section 3.03(b) of
the Credit Agreement, Mandatory Prepayment, requiring the immediate
payment or prepayment of so much of the Loans as shall be necessary in order
for the Aggregate RC Outstandings not to exceed the Borrowing Base, and the
failure of the Co-Borrowers to pledge Cash Collateral in accordance with Section 3.03(b) of
the Credit Agreement, (b) Section 7.13(b) of the Credit
Agreement, Minimum Capital Base, for the fiscal quarter ended June 30,
2009, (c) Section 7.13(c) of the Credit Agreement, Consolidated
Senior Debt to Consolidated 

 

 

EBITDA, for the fiscal quarters ended June 30,
2009 and September 30, 2009, (d) Section 7.13(e) of the
Credit Agreement, No Consolidated Net Loss, for the fiscal quarters
ended June 30, 2009 and September 30, 2009 and at all times
thereafter; and (e) Section 3.2 of Amendment No. 20 and Waiver
to Credit Agreement, dated as of August 27, 2009, requiring Consolidated
EBITDA of not less than $460,000 for the month ending September 30,
2009.  In addition, the Co-Borrowers
failed to repay the Revolving Credit Loan on the Revolving Credit Commitment
Termination Date of March 30, 2010.

 

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.

 

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
acknowledged, 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:

 

“Additional Term Loan
Commitment” shall mean the aggregate of the Additional Term Loan Commitments in
effect on the Amendment No. 21 Effective Date, which shall be $5,337,000.

 

“Available Revolving
Credit Commitment” shall mean at any time the lesser of (a) the Borrowing
Base less the sum of (i) Aggregate RC Outstandings and (ii) $750,000
or (b) the Revolving Credit Commitment less Aggregate Outstandings.

 

“Borrowing Base” shall
mean as of any Borrowing Date an amount equal to the sum of (a) 80% of the
value of the Co-Borrowers’ Eligible Accounts Receivable (other than the Stair
Business Eligible Accounts Receivable), plus (b) the lesser of (i) 50%
of the aggregate value of the Co-Borrowers’ Eligible Inventory (other than the
Stair Business Eligible Inventory), and (ii) $10,000,000, for the period
from the Amendment No. 21 Effective Date and thereafter, all as further
described in the Borrowing Base Certificate; 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 Co-Borrowers’ 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.  The value of all Eligible
Inventory shall be determined at the 

 

2

 

lower of cost or market
value on a first in first out basis in accordance with Generally Accepted
Accounting Principles applied on a consistent basis.  Notwithstanding anything to the contrary, the
amount of Eligible Inventory which is attributable to Foreign Inventory shall
be limited to $1,500,000 for purposes of determining the Borrowing Base.

 

“Eligible Inventory”
shall mean all inventory (including raw materials) of the Obligors’ located in
the United States and Foreign Inventory, without duplication, which meet all of
the following specifications:  (a) the
inventory is lawfully owned by an Obligor, is not subject to any lien, claim,
security interest or prior assignment and is not obsolete, (b) other than
with respect to Foreign Inventory the inventory is stored on property that is
either owned or leased by such Obligor or owned or leased by a warehousemen
that has contracted with such Obligor to store inventory on such warehousemen’s
property, provided that, with respect to inventory stored on property leased by
an Obligor, such Obligor shall have delivered in favor of the Administrative
Agent an appropriate lien waiver (in form and substance reasonably satisfactory
to the Administrative Agent) executed by the Landlord, and with respect to
inventory stored on the property owned or leased by a warehousemen, such
Obligor shall have delivered to the Administrative Agent an appropriate lien
waiver (in form and substance reasonably satisfactory to the Administrative
Agent) executed by the warehousemen, provided further that, in the event that
the Co-Borrowers shall not have delivered to the Administrative Agent a lien
waiver reasonably satisfactory to the Administrative Agent executed by such
Landlord or warehousemen, the Administrative Agent may elect to reserve against
such inventory held at such location in an amount to be determined by the
Administrative Agent in its Permitted Discretion; (c) the Obligor has the
right of assignment thereof and the power to grant liens and security interests
therein; (d) the inventory arose or was acquired in the ordinary course of
such Obligor’s business, and no portion thereof represents defective or damaged
goods or perishable goods or unsalable goods or any reserve for such items; (e) no
accounts receivable or document to title has been created or issued with
respect to such inventory; (f) the inventory is readily marketable for
sale or lease by the applicable Obligor, (g) the inventory does not
consist of any work-in-process, packaging materials and supplies, supplies
(other than supplies held for sale), obsolete goods, slow moving goods, goods
in transit to third parties or consigned inventory or, other than with respect
to Foreign Inventory, inventory in transit, (h) the value of the inventory
is net of any reserve for indirect and warranty costs,”

 

“Revolving Credit
Commitment Termination Date” shall mean January 1, 2011.

 

3

 

“Subordinated Debt” or “Subordinated
Indebtedness” shall mean all debt which is subordinated in right of payment to
the prior indefeasible payment in full of the Obligations of the Obligor party
to such Subordinated Debt or Subordinated Indebtedness, such subordination to be
on terms satisfactory to and approved in writing by the Required Lenders.  The Horowitz Subordinated Note and the Schorr
Subordinated Note each constitutes Subordinated Debt.

 

“Subordination Agreements”
shall mean the Hytech Subordination Agreement, the Horowitz Subordination
Agreement and the Schorr Subordination Agreement.

 

“Total Commitment” shall
mean at any time, the aggregate of the Commitments in effect at such time,
which, as of the Amendment No. 21 Effective Date, shall be $21,837,000.

 

“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. 21
Effective Date, shall be $16,500,000, as the same may be otherwise adjusted
from time to time pursuant to the terms of the Credit Agreement.

 

Section 1.02.          The following definitions are hereby added to Section 1.01
of the Credit Agreement in their appropriate alphabetical order:

“Amendment No. 21”
shall mean this Amendment No. 21 and Waiver to Credit Agreement, dated as
of the Amendment No. 21 Effective Date, among the Co-Borrowers, the
Lenders and the Administrative Agent.

 

“Amendment No. 21
Effective Date” shall mean April 23, 2010.

 

“Horowitz” means Richard
A. Horowitz.

 

“Horowitz Documents”
shall mean the Horowitz Subordinated Note, the Horowitz/Schorr Security
Agreement and the Horowitz/Schorr Indemnification Agreement.

 

“Horowitz/Schorr
Indemnification Agreement” shall mean the Indemnification Agreement in the form
of Exhibit P hereto to be executed and delivered by P&F, Horowitz and
Schorr on or before the Amendment No. 21 Effective Date, as amended,
restated, supplemented or modified from time to time.

 

“Horowitz/Schorr Security
Agreement” shall mean the Security Agreement in the form of Exhibit Q
hereto to be executed and delivered by each of the Co-Borrowers, Horowitz and
Schorr on or before the 

 

4

 

Amendment No. 21
Effective Date, as amended, restated, supplemented or modified from time to
time.

 

“Horowitz Subordinated
Note” shall mean the Secured Subordinated Promissory Note in the original
principal amount of $250,000 in the form of Exhibit R hereto to be
executed and delivered by the Co-Borrowers to Schorr on or before the Amendment
No. 21 Effective Date, as amended, restated, supplemented or modified from
time to time.

 

“Horowitz Subordination
Agreement” shall mean the Subordination and Intercreditor Agreement in the form
of Exhibit S hereto to be entered into among the Co-Borrowers, the Administrative
Agent and Horowitz on or before the Amendment No. 21 Effective Date, as
amended, restated, supplemented or modified from time to time.

 

“Schorr” means Marc
Schorr.

 

“Schorr Documents” shall
mean the Schorr Subordinated Note and the Horowitz/Schorr Security Agreement.

 

“Schorr Subordinated Note”
shall mean the Secured Subordinated Promissory Note in the original principal
amount of $500,000 in the form of Exhibit T hereto to be executed and
delivered by the Co-Borrowers to Schorr on or before the Amendment No. 21
Effective Date, as amended, restated, supplemented or modified from time to
time.

 

“Schorr Subordination
Agreement” shall mean the Subordination and Intercreditor Agreement in the form
of Exhibit S hereto to be entered into among the Co-Borrowers, the
Administrative Agent and Schorr on or before the Amendment No. 21
Effective Date, as amended, restated, supplemented or modified from time to
time.

 

Section 1.03.          Section 2.01 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 Borrowing Base less $750,000.”

 

Section 1.04.          Section 2.01 of the Credit Agreement is hereby
amended to add the following new subsection “(f)” immediately following
subsection “(e)” thereof:

 

“(f) (i) notwithstanding
anything to the contrary set forth in this Agreement, for the period commencing
on the Amendment No. 21 Effective Date and ending June 11, 2010, the
Co-Borrowers shall have no right to request, and the Lenders shall have no
obligation to extend, any additional Revolving Credit Loan.

 

5

 

(ii) From and after June 12,
2010, the Co-Borrowers shall substantiate the need, due to a cash flow deficit,
for any additional Revolving Credit Loan by submission to the Lenders of an
updated rolling 13-week cash flow forecast, delivered in accordance with Section 6.03(k) of
this Agreement.”

 

Section 1.05.          Sections 6.03(a) and (b) of the Credit
Agreement are hereby amended and restated in their entirety to provide as
follows:

 

“(a) as soon
as available, but in any event within 90 days after the end of each fiscal year
of the Co-Borrowers, a copy of the audited consolidated and unaudited
consolidating balance sheet of P&F and its Subsidiaries as of the end of
such year and the related audited consolidated and unaudited consolidating
statements of income, shareholders equity and cash flow for such year, setting
forth in each case in comparative form the respective figures for the previous
fiscal year end, and accompanied by a report thereon of J.H. Cohn LLP in the
case of such audited statements or other independent certified public
accountants of recognized standing selected by the Co-Borrowers and reasonably
satisfactory to the Required Lenders (the “Auditor”), which report shall be
unqualified, prepared in accordance with GAAP on a consistent basis;

 

(b) 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 March 31, 2010, a copy of the unaudited interim consolidated
and consolidating balance sheet of P&F and its Subsidiaries as of the end
of each such month, and the related unaudited interim consolidated and consolidating
statements of income, shareholder equity and cash flow (i) as of the end
of each such month, and (ii) for the portion of the fiscal year through
such date, each delivered in the format attached hereto as Exhibit U and
prepared by the Chief Financial Officer of P&F in accordance with GAAP,
applied on a consistent basis and accompanied by a certificate to that effect
executed by the Chief Financial Officer of P&F, provided the December monthly
statements shall be subject to customary year end adjustments;”

 

Section 1.06.         Section 6.03 of the Credit Agreement is hereby
amended to add the following new subsections “(j)” and “(k)” immediately
following subsection “(i)” thereof:

 

“(j) on or prior to
the twentieth (20th) day of each calendar month, a certificate
prepared and signed by the Chief Financial Officer, Chief Executive Officer or
Vice President of Finance of P&F as to whether or not, as of the close of
such preceding calendar month, and at all times during such preceding calendar
month, the Co-Borrowers were in compliance with all the provisions in this
Agreement showing computation of financial covenants and attesting to
compliance with negative covenants and the actual versus forecasted results of
operations with respect to the covenants set forth in Section 7.13 of this
Agreement.”

 

6

 

“(k) prior
to the close of business on the business day immediately following the last
business day of each week, a rolling 13-week cash flow forecast of the Co-Borrowers
in the format attached hereto as Exhibit V.”

 

Section 1.07.         Article VI of the Credit Agreement is hereby
amended to add the following Sections 6.16, 6.17 and 6.18 at the end thereof as
follows:

 

SECTION 6.16 Horowitz
Documents.  Deliver to the Administrative
Agent, by no later than the Amendment No. 21 Effective Date, a counterpart
of the Horowitz Subordination Agreement, duly executed by Horowitz and P&F,
along with copies of the executed Horowitz Documents and evidence of the
disbursement to the Co-Borrowers of the $250,000 loan evidenced by the Horowitz
Subordinated Note.  Said loan proceeds
shall be used solely for general working capital purposes of the Co-Borrowers
including, but not limited to, the fees and expenses of counsel to Horowitz and
Schorr in connection with the preparation and negotiation of the Horowitz
Documents and the Schorr Documents.

 

SECTION 6.17 Schorr
Documents.  Deliver to the
Administrative Agent, by no later than the Amendment No. 21 Effective
Date, a counterpart of the Schorr Subordination Agreement, duly executed by
Schorr and P&F, along with copies of the executed Schorr Documents and
evidence of the disbursement to the Co-Borrowers of the $500,000 loan evidenced
by the Schorr Subordinated Note.  Said
loan proceeds shall be used solely for general working capital purposes of the
Co-Borrowers.

 

SECTION 6.18 Tax
Refunds.  (a) Promptly notify
each Lender of the receipt of any federal or state income tax refunds paid to
the Co-Borrowers following the Amendment No. 21 Effective Date.  All refund proceeds shall be deposited by
Co-Borrowers in an existing account maintained with the Administrative Agent.

 

(b)  The first
$1,500,000 of tax refunds received by the Co-Borrowers shall, at the discretion
of the Lenders, be applied to (i) Additional Term Loans outstanding and/or
(ii) Revolving Credit Loans outstanding, in which case the Total Revolving
Credit Commitment shall be permanently reduced by the amount of each such
payment.

 

(c) All tax refunds
received by the Co-Borrowers in excess of $1,500,000 shall be paid (i) 75%
to the Co-Borrowers, whose share will be utilized solely to reduce the
Co-Borrowers’ accounts payable, and (ii) 25% to the Lenders, which shall
be applied in accordance with clause (b) above.”

 

Section 1.08.          Section 7.01 of the Credit Agreement is hereby
amended by deleting the period at the end of clause “(m)” thereof and adding
the word “and” and by adding new clause “(n)” at the end thereof as follows:

 

7

 

“(n)” Liens on personal
property of the Co-Borrowers to be granted to Horowitz pursuant to the Horowitz
Documents and to Schorr pursuant to the Schorr Documents, provided that such
Liens are only granted to secure obligations under the Horowitz Documents and
the Schorr Documents and that all such Liens shall be terminated following
payment in full of the obligations described in the Horowitz Documents and the
Schorr Documents.”

 

Section 1.09.          Section 7.02 of the Credit Agreement is hereby
amended by deleting the period at the end of clause “(j)” thereof and adding
the word “and “ and by adding new clause “(k)” at the end thereof as follows:

 

“(k)” Indebtedness of the
Co-Borrowers owing to Horowitz under the Horowitz Documents and to Schorr under
the Schorr Documents.

 

Section 1.10.          Co-Borrowers expressly acknowledge and agree that the
covenant set forth in Section 7.06 of the Credit Agreement, Loans and
Investments and Section 7.15 of the Credit Agreement, Transactions
with Affiliates, shall be deemed to prohibit loans and/or advances to
Richard Horowitz, Schorr and/or any Affiliate of the Co-Borrowers, other than
another Co-Borrower.

 

Section 1.11.          Section 7.13 of the Credit Agreement is hereby
amended and restated in its entirety to provide as follows:

 

(a) Intentionally
Omitted

 

(b) Intentionally
Omitted

 

(c) Intentionally
Omitted

 

(d) Intentionally
Omitted

 

(e) Intentionally
Omitted

 

(f) Minimum
EBITDA.  Achieve less than 85% of
such amounts as are identified on the line item entitled “EBITDA” in the 2010
forecasted consolidating statements of operations attached hereto as Exhibit W,
which shall be tested monthly on a year to date basis.

 

(g) Minimum
Availability.  Achieve less than 85%
of such amounts as are identified on the line item entitled “Total Availability”
in the Forecast 2010 Monthly Consolidated Balance attached hereto as Exhibit X,
which shall be tested monthly on a rolling three month basis.”

 

Section 1.12.          The following sentence shall be added to the end of Section 7.14
of the Credit Agreement:

 

8

 

“Co-Borrowers acknowledge
and agree that without Lenders’ prior written consent, Co-Borrowers are
prohibited from making any payment to Hy-Tech on account of the Junior
Obligations (as such term is defined in the Hy-Tech Subordination Agreement).”

 

Section 1.13.          Section 7.15 of the Credit Agreement is hereby
amended and restated in its entirety to provide as follows:

 

“Section 7.15. Transactions
with Affiliates.  Enter into any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate (other than (i) transactions
with a Co-Borrower or a Guarantor, (ii) indemnification and compensation
arrangements with officers and directors in their capacity as an officer or
director, (iii) payment of dividends otherwise permitted by this Agreement
and (iv) transactions evidenced, contemplated or provided for by the
Horowitz Documents (and the Schorr Documents, to the extent Schorr might be
deemed to be an Affiliate)), except in the ordinary course of and pursuant to
the reasonable requirements of the business of such Co-Borrower or of its
Subsidiary and upon fair and reasonable terms no less favorable to the such
entity than it would obtain in a comparable arms-length transaction with a
Person not an Affiliate.”

 

Section 1.14.          Article VII of the Credit Agreement is hereby
amended to add the following Section 7.20 immediately following Section 7.19
thereof:

 

“Section 7.20  Salary of Horowitz.  From and after April 1, 2010, pay
Horowitz salary compensation at a rate in excess of $750,000 per year, provided
that this Section shall not be deemed to prevent the accrual of any
compensation due Horowitz in connection with his employment agreement dated February 12,
2007, as amended, with P&F.”

 

Section 1.15.          By virtue of his signature below, Richard Horowitz
acknowledges and consents to the limitation imposed by Section 7.20 of the
Credit Agreement.  He further
acknowledges that compliance with such provision shall not constitute a breach
of his employment agreement, dated February 12, 2007, as amended, with
P&F.

 

Section 1.16.          Section 8.01 of the Credit Agreement is hereby
amended by adding a new clause (k) at the end thereof as follows:

“(k) the occurrence
of any default constituting an “event of default” pursuant to that certain (i) Mortgage,
Security Agreement and Absolute Assignment of Leases from Countrywide to
Wachovia Bank, N.A. dated as of May 24, 2002 and recorded in Official
Records Book 11663, Page 770, of the public records of Hillsborough
County, Florida, as amended, or (ii) Mortgage and Security Agreement from
Florida Pneumatic to Wachovia Bank, N.A. dated February 26, 1999 and
recorded in Official 

 

9

 

Records Book 10955, Page 167,
of the public records of Palm Beach County, Florida, as amended.”

 

Section 1.17.          Exhibit H attached to the Credit Agreement is
hereby amended and replaced by Exhibit H attached hereto.  Exhibits P, Q, R, S, T, U, V, W and X
attached to this Amendment and Waiver are hereby added as Exhibits P, Q, R, S,
T, U, V, W and X to the Credit Agreement.

 

ARTICLE II.

Waivers

 

Section 2.01.          The Co-Borrowers have requested that the Lenders waive
the Co-Borrowers’ non-compliance with Section 3.03(b) of the Credit
Agreement, Mandatory Prepayment, for all periods prior to the effective
date of this Amendment and Waiver and any Default or Event of Default arising
solely out of such non-compliance.  The
Lenders hereby waive such non-compliance and any such Default or Event of
Default.

 

Section 2.02.           The Co-Borrowers have requested that the Lenders waive
the Co-Borrowers’ non-compliance with Section 6.01(a) of the Credit
Agreement for the fiscal year ended December 31, 2009, and any Default or
Event of Default arising solely out of such non-compliance.  The Lenders hereby waive such non-compliance
and any such Default or Event of Default, provided that such financial
statements are furnished to the Administrative Agent and the Lenders on or
before April 30, 2010.

 

Section 2.03.           The Co-Borrowers have requested that the Lenders waive
the Co-Borrowers’ non-compliance with Section 7.13(b) of the Credit
Agreement, Minimum Capital Base, for the fiscal quarters ended June 30,
2009, September 30, 2009, December 31, 2009 and March 31, 2010,
and any Default or Event of Default arising solely out of such
non-compliance.  The Lenders hereby waive
such non-compliance and any such Default or Event of Default.

 

Section 2.04.          The Co-Borrowers have requested that the Lenders waive
the Co-Borrowers’ non-compliance with Section 7.13(c) of the Credit
Agreement, Consolidated Senior Debt to Consolidated EBITDA, for the
fiscal quarters ended June 30, 2009, September 30, 2009, December 31,
2009 and March 31, 2010, and any Default or Event of Default arising
solely out of such non-compliance.  The
Lenders hereby waive such non-compliance and any such Default or Event of
Default.

 

Section 2.05.          The Co-Borrowers have requested that the Lenders waive
the Co-Borrowers’ non-compliance with Section 7.13(e) of the Credit
Agreement, No Consolidated Net Loss, for the fiscal quarters ended June 30,
2009, September 30, 2009, December 31, 2009 and March 31, 2010,
and any Default or Event of Default arising solely out of such non-compliance.  The Lenders hereby waive such non-compliance
and any such Default or Event of Default.

 

Section 2.06.          The Co-Borrowers have requested that the Lenders waive
the Co-Borrowers’ non-compliance with Section 7.19 of the Credit
Agreement, Dealings with Coffman, with respect to advancement of
approximately $129,000 utilized to pay certain Coffman expenses that have been
disclosed to the Lenders and any Default or Event of Default arising 

 

10

 

solely out of such non-compliance.  The Lenders hereby waive such non-compliance
and any such Default or Event of Default, provided that any such advances have
been repaid or otherwise reimbursed to the Co-Borrowers in full prior to the
date hereof.

 

Section 2.07.          The Co-Borrowers have requested that the Lenders waive
the Co-Borrowers’ non-compliance with Section 3.2 of Amendment No. 20
and Waiver to Credit Agreement, dated as of August 27, 2009, requiring
Consolidated EBITDA of not less than $460,000 for the month ending September 30,
2009, and any Default or Event of Default arising solely out of such
non-compliance.  The Lenders hereby waive
such non-compliance and any such Default or Event of Default.

 

ARTICLE III.

Conditions of
Effectiveness.

 

Section 3.01.          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, Horowitz and Schorr, (b) the
Horowitz Documents and the Horowitz Subordination Agreement, executed by each
party thereto, (c) the Schorr Documents and the Schorr Subordination
Agreement, executed by each party thereto, (d) evidence of the
disbursement to the Co-Borrowers of the loans in the aggregate principal amount
of $750,000 evidenced by the Horowitz Subordinated Note and the Schorr
Subordinated Note, (e) a certificate of the Secretary or Assistant
Secretary of each Co-Borrower, 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 Waiver, the Horowitz Documents, the Schorr Documents
and the other documents to be delivered in connection herewith and therewith, (f) evidence
satisfactory to the Administrative Agent that the assets of the Co-Borrowers
are free and clear of all liens, except Permitted Liens, and (g) a draft
copy of the audited consolidated balance sheet of P&F and its Subsidiaries
as of December 31, 2009 and the related audited consolidated statements of
income, shareholders equity and cash flow for the fiscal year then ended.

ARTICLE IV.

Representations
and Warranties; Effect on Credit Agreement.

 

Section 4.01.          Each Co-Borrower hereby represents and warrants as follows:

 

a.             The recitals in this Agreement are true and correct in
all respects.

 

b.             This Amendment and Waiver shall constitute a Loan
Document.

 

c.             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.

 

d.             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.

 

11

 

 

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

 

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

 

g.             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, the Horowitz Documents and the Schorr
Documents, has been taken and remains in full force and effect.

 

h.             Each Co-Borrower’s execution, delivery and performance
of this Agreement and the other Loan Documents (if any) do not and will not (i) violate
any law, rule, regulation or court order to which any Co-Borrower is subject; (ii) conflict
with or result in a breach of any Co-Borrower’s articles or certificate of
incorporation, certificate of limited partnership, bylaws or limited
partnership agreement; (iii) conflict with or result in a breach of or any
agreement or instrument to which any Co-Borrower is a party or by which it or
its properties are bound, the violation of which would have a material adverse
effect on the Co-Borrowers taken as a whole; or (iv) result in the
creation or imposition of any Lien, security interest or encumbrance on any
property of any Co-Borrower, whether now owned or hereafter acquired, other
than Liens in favor of the Lenders.

 

Section 4.02.          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 the Credit
Agreement as of April 22, 2010, $19,237,000 in principal amount, together
with accrued but unpaid interest thereon, without limitation of any other
Obligations owing by Co-Borrowers, which amount is allocable 

 

12

 

to the Loans, as follows:
Revolving Credit Loans: $13,900,000, Additional Term Loans: $5,337,000.

 

ARTICLE V.

Miscellaneous.

 

Section 5.01.          This Amendment and Waiver shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to the choice of law principles thereof.

 

Section 5.02.          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 5.03.          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.  Any signature
delivered by a facsimile transmission shall be deemed to be an original
signature hereof.

 

Section 5.04.          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 Amendment and Waiver,
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 Amendment and Waiver 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.

 

Section 5.05.          This Amendment and Waiver shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, their respective successors and assigns.  No other person or entity shall be entitled
to claim any right or benefit hereunder, including, without limitation, the
status of a third-party beneficiary of this Amendment and Waiver.

 

Section 5.06.          This Amendment and Waiver, together
with the other Loan Documents  heretofore
executed, constitutes the entire agreement and understanding among the parties
relating to the subject matter hereof, and supersedes all prior proposals,
negotiations, agreements and understandings relating to such subject
matter.  In entering into this Agreement,
each Co-Borrower acknowledges that it is relying on no statement,
representation, warranty, covenant or 

 

13

 

agreement of any kind made by either Lender or any
employee or agent of either Lender, except for the agreements of Lenders set
forth herein.

 

Section 5.07.          If any provision of this Amendment and
Waiver shall be held invalid or unenforceable in whole or in part in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such invalidity or enforceability without in any manner affecting
the validity or enforceability of such provision in any other jurisdiction or
the remaining provisions of this Amendment and Waiver in any jurisdiction.

 

Section 5.08.           Any notices with respect to this
Amendment and Waiver shall be given in the manner provided for in the Credit
Agreement.

 

Section 5.09.          All representations, warranties, covenants,
agreements, undertakings, waivers and releases of Co-Borrowers contained herein
shall survive the termination of the Credit Agreement and payment in full of
the Obligations.

 

Section 5.10.          No amendment, modification,
rescission, waiver or release of any provision of this Amendment and Waiver
shall be effective unless the same shall be in writing and signed by the
parties hereto.

 

Section 5.11.          By signing below each Co-Borrower on
its own behalf and on behalf of its successors and assigns hereby releases (i) each
Lender and the Administrative Agent and all of the affiliates of each Lender
and the Administrative Agent, and each of their respective successors and
assigns, and (ii) all of the shareholders, directors, officers, employees,
attorneys, agents and representatives of each Lender and the Administrative
Agent and such affiliates, and their respective heirs, executors, successors
and assigns (collectively, the “Released Persons”), from any and all
claims, demands, liabilities, actions and causes of action of any nature
whatsoever, whether liquidated or unliquidated, known or unknown, matured or
unmatured, fixed or contingent which any Co-Borrower had, has or may have had
against any of the Released Persons arising out of or in any way relating to the
Obligations, any Collateral (as defined in the Security Agreement), any Loan
Document or any document, dealing or other matter in connection with any Loan
Document or any Collateral referenced therein, in each case to the extent
arising on or prior to the date hereof or out of, or relating to, actions,
dealings or other matters occurring prior to the date hereof (including any
action or omission of any Released Person prior to the date hereof), the
negotiation and documentation of this Amendment and Waiver, and any of the
transactions made or contemplated to be made hereunder or thereunder
(collectively the “Released Claims”). 
Each Co-Borrower acknowledges and agrees that (i) this release may
be pleaded as a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be
instituted, prosecuted or attempted in breach of the provisions of such
release; and (ii) no fact, event, circumstance, evidence or transaction
which could now be asserted or which may hereafter be discovered shall affect
in any manner the final and unconditional nature of such releases.

 

Section 5.12.          EACH
LENDER AND EACH CO-BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY:

 

14

 

(a)           CONSENT
TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE OF NEW
YORK;

 

(b)           AGREE
THAT VENUE SHALL BE PROPER IN ANY COURT OF COMPETENT JURISDICTION LOCATED IN
THE STATE OF NEW YORK; AND

 

(c)           WAIVE
THEIR RIGHT TO TRIAL BY JURY IN ANY CONTROVERSY ARISING OUT OF OR RELATING TO
ANY LOAN DOCUMENT(S).

 

Section 5.13           Each of the Co-Borrowers acknowledges
that upon the occurrence of an Event of Default, the Administrative Agent may
set off and apply any funds in any account maintained with the Administrative
Agent against any and all Obligations of the Co-Borrowers now or hereafter
existing under the Credit Agreement.

 

(signature
page follows)

 

15

 

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, LP.

  
	
   

  	
  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, NA., as a Lender and as Administrative
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John. S. King

  
	
   

  	
   

  	
  John.
  S. King

  
	
   

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HSBC BANK USA, NATIONAL
  ASSOCIATION, as
  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alan M. Harris

  
	
   

  	
   

  	
  Alan
  M. Harris

  
	
   

  	
   

  	
  Vice
  President

  

 

16

 

ACKNOWLEDGED AND AGREED

WITH RESPECT TO SECTIONS
1.14, 1.15 AND 3.01 HEREOF:

 

 

	
  /s/ Richard A. Horowitz

  	
   

  
	
  Richard A. Horowitz

  	
   

  

 

 

ACKNOWLEDGED AND AGREED

WITH RESPECT TO SECTION 3.01
HEREOF:

 

 

	
  /s/ Marc Schorr

  	
   

  
	
  Marc Schorr

  	
   

  

 

 

 

Exhibit
W

 

 

	
  Consolidating statements of
  operations - budget

  	
   

  	
  Total

  	
   

  	
  January

  	
   

  	
  February

  	
   

  	
  March

  	
   

  	
  April

  	
   

  	
  May

  	
   

  	
  June

  	
   

  	
  July

  	
   

  	
  August

  	
   

  	
  September

  	
   

  	
  October

  	
   

  	
  November

  	
   

  	
  December

  	
   

  
	
  2010

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Revenue

  	
   

  	
  47,175,000

  	
   

  	
  2,980,000

  	
   

  	
  3,500,000

  	
   

  	
  3,828,000

  	
   

  	
  4,205,000

  	
   

  	
  4,618,000

  	
   

  	
  4,296,000

  	
   

  	
  4,289,000

  	
   

  	
  3,564,000

  	
   

  	
  4,962,000

  	
   

  	
  5,189,000

  	
   

  	
  3,218,000

  	
   

  	
  2,526,000

  	
   

  
	
  Cost of Goods Sold -
  Total

  	
   

  	
  31,670,000

  	
   

  	
  2,035,000

  	
   

  	
  2,331,000

  	
   

  	
  2,538,000

  	
   

  	
  2,795,000

  	
   

  	
  3,087,000

  	
   

  	
  2,813,000

  	
   

  	
  2,821,000

  	
   

  	
  2,316,000

  	
   

  	
  3,439,000

  	
   

  	
  3,634,000

  	
   

  	
  2,160,000

  	
   

  	
  1,701,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gross Margin

  	
   

  	
  15,505,000

  	
   

  	
  945,000

  	
   

  	
  1,169,000

  	
   

  	
  1,290,000

  	
   

  	
  1,410,000

  	
   

  	
  1,531,000

  	
   

  	
  1,483,000

  	
   

  	
  1,468,000

  	
   

  	
  1,248,000

  	
   

  	
  1,523,000

  	
   

  	
  1,555,000

  	
   

  	
  1,058,000

  	
   

  	
  825,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Operating Expenses

  	
   

  	
  15,054,000

  	
   

  	
  1,218,000

  	
   

  	
  1,303,000

  	
   

  	
  1,369,000

  	
   

  	
  1,285,000

  	
   

  	
  1,254,000

  	
   

  	
  1,295,000

  	
   

  	
  1,254,000

  	
   

  	
  1,205,000

  	
   

  	
  1,275,000

  	
   

  	
  1,242,000

  	
   

  	
  1,200,000

  	
   

  	
  1,154,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating Income

  	
   

  	
  451,000

  	
   

  	
  (273,000

  	
  )

  	
  (134,000

  	
  )

  	
  (79,000

  	
  )

  	
  125,000

  	
   

  	
  277,000

  	
   

  	
  188,000

  	
   

  	
  214,000

  	
   

  	
  43,000

  	
   

  	
  248,000

  	
   

  	
  313,000

  	
   

  	
  (142,000

  	
  )

  	
  (329,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest Expense - Net

  	
   

  	
  1,035,000

  	
   

  	
  68,000

  	
   

  	
  103,000

  	
   

  	
  105,000

  	
   

  	
  109,000

  	
   

  	
  111,000

  	
   

  	
  111,000

  	
   

  	
  73,000

  	
   

  	
  71,000

  	
   

  	
  70,000

  	
   

  	
  66,000

  	
   

  	
  74,000

  	
   

  	
  74,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Income (Loss) -
  Continuing Operations Before Tax

  	
   

  	
  (584,000

  	
  )

  	
  (341,000

  	
  )

  	
  (237,000

  	
  )

  	
  (184,000

  	
  )

  	
  16,000

  	
   

  	
  166,000

  	
   

  	
  77,000

  	
   

  	
  141,000

  	
   

  	
  (28,000

  	
  )

  	
  178,000

  	
   

  	
  247,000

  	
   

  	
  (216,000

  	
  )

  	
  (403,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Taxes (Recovery) on
  Income

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Income (Loss)

  	
   

  	
  (584,000

  	
  )

  	
  (341,000

  	
  )

  	
  (237,000

  	
  )

  	
  (184,000

  	
  )

  	
  16,000

  	
   

  	
  166,000

  	
   

  	
  77,000

  	
   

  	
  141,000

  	
   

  	
  (28,000

  	
  )

  	
  178,000

  	
   

  	
  247,000

  	
   

  	
  (216,000

  	
  )

  	
  (403,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Income (Loss)

  	
   

  	
  (584,000

  	
  )

  	
  (341,000

  	
  )

  	
  (237,000

  	
  )

  	
  (184,000

  	
  )

  	
  16,000

  	
   

  	
  166,000

  	
   

  	
  77,000

  	
   

  	
  141,000

  	
   

  	
  (28,000

  	
  )

  	
  178,000

  	
   

  	
  247,000

  	
   

  	
  (216,000

  	
  )

  	
  (403,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Adjustments:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest expense - net

  	
   

  	
  1,035,000

  	
   

  	
  68,000

  	
   

  	
  103,000

  	
   

  	
  105,000

  	
   

  	
  109,000

  	
   

  	
  111,000

  	
   

  	
  111,000

  	
   

  	
  73,000

  	
   

  	
  71,000

  	
   

  	
  70,000

  	
   

  	
  66,000

  	
   

  	
  74,000

  	
   

  	
  74,000

  	
   

  
	
  Taxes (recovery) on
  income

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Depreciation and
  amortization - fixed assets

  	
   

  	
  1,710,000

  	
   

  	
  142,000

  	
   

  	
  142,000

  	
   

  	
  143,000

  	
   

  	
  142,000

  	
   

  	
  142,000

  	
   

  	
  144,000

  	
   

  	
  142,000

  	
   

  	
  142,000

  	
   

  	
  143,000

  	
   

  	
  142,000

  	
   

  	
  142,000

  	
   

  	
  144,000

  	
   

  
	
  Amortization -
  identifiable intangible assets

  	
   

  	
  350,000

  	
   

  	
  29,000

  	
   

  	
  29,000

  	
   

  	
  29,000

  	
   

  	
  29,000

  	
   

  	
  29,000

  	
   

  	
  30,000

  	
   

  	
  29,000

  	
   

  	
  29,000

  	
   

  	
  29,000

  	
   

  	
  29,000

  	
   

  	
  29,000

  	
   

  	
  30,000

  	
   

  
	
  Share-based compensation

  	
   

  	
  100,000

  	
   

  	
  11,000

  	
   

  	
  12,000

  	
   

  	
  12,000

  	
   

  	
  11,000

  	
   

  	
  12,000

  	
   

  	
  11,000

  	
   

  	
  5,000

  	
   

  	
  5,000

  	
   

  	
  5,000

  	
   

  	
  5,000

  	
   

  	
  6,000

  	
   

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total adjustments

  	
   

  	
  3,195,000

  	
   

  	
  250,000

  	
   

  	
  286,000

  	
   

  	
  289,000

  	
   

  	
  291,000

  	
   

  	
  294,000

  	
   

  	
  296,000

  	
   

  	
  249,000

  	
   

  	
  247,000

  	
   

  	
  247,000

  	
   

  	
  242,000

  	
   

  	
  251,000

  	
   

  	
  253,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EBITDA

  	
   

  	
  2,611,000

  	
   

  	
  (91,000

  	
  )

  	
  49,000

  	
   

  	
  105,000

  	
   

  	
  307,000

  	
   

  	
  460,000

  	
   

  	
  373,000

  	
   

  	
  390,000

  	
   

  	
  219,000

  	
   

  	
  425,000

  	
   

  	
  489,000

  	
   

  	
  35,000

  	
   

  	
  (150,000

  	
  )

  

 

 

Exhibit
X

 

 

	
  P &
  F Industries, Inc. and subsidiaries

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Without
  WM Coffman

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Balance
  Sheets - budget

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Year
  Ending December 31, 2010

  	
   

  	
  January

  	
   

  	
  February

  	
   

  	
  March

  	
   

  	
  April

  	
   

  	
  May

  	
   

  	
  June

  	
   

  	
  July

  	
   

  	
  August

  	
   

  	
  September

  	
   

  	
  October

  	
   

  	
  November

  	
   

  	
  December

  	
   

  
	
  2010

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Accounts
  Receivable - Net

  	
   

  	
  5,820,000

  	
   

  	
  6,022,000

  	
   

  	
  7,148,000

  	
   

  	
  7,821,000

  	
   

  	
  8,359,000

  	
   

  	
  8,735,000

  	
   

  	
  8,425,000

  	
   

  	
  7,681,000

  	
   

  	
  8,255,000

  	
   

  	
  11,036,000

  	
   

  	
  10,018,000

  	
   

  	
  5,911,000

  	
   

  
	
  Other
  Receivables

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Inventories
  - Net

  	
   

  	
  20,315,000

  	
   

  	
  19,811,000

  	
   

  	
  20,309,000

  	
   

  	
  20,784,000

  	
   

  	
  20,265,000

  	
   

  	
  19,800,000

  	
   

  	
  19,759,000

  	
   

  	
  20,009,000

  	
   

  	
  19,767,000

  	
   

  	
  19,654,000

  	
   

  	
  19,199,000

  	
   

  	
  19,391,000

  	
   

  
	
  Income
  Tax Refunds Receivable

  	
   

  	
  1,200,000

  	
   

  	
  1,200,000

  	
   

  	
  1,200,000

  	
   

  	
  1,200,000

  	
   

  	
  1,200,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Prepaid
  Expenses & Other

  	
   

  	
  529,000

  	
   

  	
  530,000

  	
   

  	
  668,000

  	
   

  	
  667,000

  	
   

  	
  533,000

  	
   

  	
  529,000

  	
   

  	
  528,000

  	
   

  	
  531,000

  	
   

  	
  525,000

  	
   

  	
  527,000

  	
   

  	
  329,000

  	
   

  	
  521,000

  	
   

  
	
  Assets
  of Discontinued Operations - Current

  	
   

  	
  26,000

  	
   

  	
  26,000

  	
   

  	
  26,000

  	
   

  	
  26,000

  	
   

  	
  26,000

  	
   

  	
  26,000

  	
   

  	
  26,000

  	
   

  	
  26,000

  	
   

  	
  26,000

  	
   

  	
  26,000

  	
   

  	
  26,000

  	
   

  	
  26,000

  	
   

  
	
  Deferred
  Tax Assets - Current

  	
   

  	
  1,584,000

  	
   

  	
  1,584,000

  	
   

  	
  1,584,000

  	
   

  	
  1,584,000

  	
   

  	
  1,584,000

  	
   

  	
  1,584,000

  	
   

  	
  1,584,000

  	
   

  	
  1,584,000

  	
   

  	
  1,584,000

  	
   

  	
  1,584,000

  	
   

  	
  1,584,000

  	
   

  	
  1,584,000

  	
   

  
	
  Total
  Current Assets

  	
   

  	
  29,474,000

  	
   

  	
  29,173,000

  	
   

  	
  30,935,000

  	
   

  	
  32,082,000

  	
   

  	
  31,967,000

  	
   

  	
  30,674,000

  	
   

  	
  30,322,000

  	
   

  	
  29,831,000

  	
   

  	
  30,157,000

  	
   

  	
  32,827,000

  	
   

  	
  31,156,000

  	
   

  	
  27,433,000

  	
   

  
	
  Land

  	
   

  	
  1,550,000

  	
   

  	
  1,550,000

  	
   

  	
  1,550,000

  	
   

  	
  1,550,000

  	
   

  	
  1,550,000

  	
   

  	
  1,550,000

  	
   

  	
  1,550,000

  	
   

  	
  1,550,000

  	
   

  	
  1,550,000

  	
   

  	
  1,550,000

  	
   

  	
  1,550,000

  	
   

  	
  1,550,000

  	
   

  
	
  Buildings
  and Improvements

  	
   

  	
  7,476,000

  	
   

  	
  7,476,000

  	
   

  	
  7,476,000

  	
   

  	
  7,476,000

  	
   

  	
  7,476,000

  	
   

  	
  7,476,000

  	
   

  	
  7,476,000

  	
   

  	
  7,476,000

  	
   

  	
  7,476,000

  	
   

  	
  7,476,000

  	
   

  	
  7,476,000

  	
   

  	
  7,476,000

  	
   

  
	
  Machinery
  and Equipment

  	
   

  	
  16,148,000

  	
   

  	
  16,168,000

  	
   

  	
  16,225,000

  	
   

  	
  16,280,000

  	
   

  	
  16,303,000

  	
   

  	
  16,354,000

  	
   

  	
  16,373,000

  	
   

  	
  16,395,000

  	
   

  	
  16,425,000

  	
   

  	
  16,488,000

  	
   

  	
  16,511,000

  	
   

  	
  16,540,000

  	
   

  
	
  Property,
  Plant & Equipment

  	
   

  	
  25,174,000

  	
   

  	
  25,194,000

  	
   

  	
  25,251,000

  	
   

  	
  25,306,000

  	
   

  	
  25,329,000

  	
   

  	
  25,380,000

  	
   

  	
  25,399,000

  	
   

  	
  25,421,000

  	
   

  	
  25,451,000

  	
   

  	
  25,514,000

  	
   

  	
  25,537,000

  	
   

  	
  25,566,000

  	
   

  
	
  Accumulated
  Depreciation

  	
   

  	
  (12,133,000

  	
  )

  	
  (12,275,000

  	
  )

  	
  (12,418,000

  	
  )

  	
  (12,560,000

  	
  )

  	
  (12,702,000

  	
  )

  	
  (12,846,000

  	
  )

  	
  (12,988,000

  	
  )

  	
  (13,130,000

  	
  )

  	
  (13,273,000

  	
  )

  	
  (13,415,000

  	
  )

  	
  (13,557,000

  	
  )

  	
  (13,701,000

  	
  )

  
	
  Property,
  Plant & Equipment - Net

  	
   

  	
  13,041,000

  	
   

  	
  12,919,000

  	
   

  	
  12,833,000

  	
   

  	
  12,746,000

  	
   

  	
  12,627,000

  	
   

  	
  12,534,000

  	
   

  	
  12,411,000

  	
   

  	
  12,291,000

  	
   

  	
  12,178,000

  	
   

  	
  12,099,000

  	
   

  	
  11,980,000

  	
   

  	
  11,865,000

  	
   

  
	
  Investments
  in Subsidiaries

  	
   

  	
  (9,231,000

  	
  )

  	
  (9,365,000

  	
  )

  	
  (9,499,000

  	
  )

  	
  (9,633,000

  	
  )

  	
  (9,767,000

  	
  )

  	
  (9,901,000

  	
  )

  	
  (10,035,000

  	
  )

  	
  (10,169,000

  	
  )

  	
  (10,303,000

  	
  )

  	
  (10,437,000

  	
  )

  	
  (10,571,000

  	
  )

  	
  (10,699,000

  	
  )

  
	
  Deferred
  Tax Assets - Non-current

  	
   

  	
  4,792,000

  	
   

  	
  4,792,000

  	
   

  	
  4,792,000

  	
   

  	
  4,792,000

  	
   

  	
  4,792,000

  	
   

  	
  4,792,000

  	
   

  	
  4,792,000

  	
   

  	
  4,792,000

  	
   

  	
  4,792,000

  	
   

  	
  4,792,000

  	
   

  	
  4,792,000

  	
   

  	
  4,792,000

  	
   

  
	
  Goodwill

  	
   

  	
  5,150,000

  	
   

  	
  5,150,000

  	
   

  	
  5,150,000

  	
   

  	
  5,150,000

  	
   

  	
  5,150,000

  	
   

  	
  5,150,000

  	
   

  	
  5,150,000

  	
   

  	
  5,150,000

  	
   

  	
  5,150,000

  	
   

  	
  5,150,000

  	
   

  	
  5,150,000

  	
   

  	
  5,150,000

  	
   

  
	
  Other
  Intangible Assets

  	
   

  	
  2,622,000

  	
   

  	
  2,593,000

  	
   

  	
  2,564,000

  	
   

  	
  2,535,000

  	
   

  	
  2,506,000

  	
   

  	
  2,476,000

  	
   

  	
  2,447,000

  	
   

  	
  2,418,000

  	
   

  	
  2,389,000

  	
   

  	
  2,360,000

  	
   

  	
  2,331,000

  	
   

  	
  2,301,000

  	
   

  
	
  Intercompany
  Receivables from Parent

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Other
  Assets

  	
   

  	
  186,000

  	
   

  	
  186,000

  	
   

  	
  186,000

  	
   

  	
  186,000

  	
   

  	
  186,000

  	
   

  	
  186,000

  	
   

  	
  186,000

  	
   

  	
  186,000

  	
   

  	
  186,000

  	
   

  	
  186,000

  	
   

  	
  186,000

  	
   

  	
  186,000

  	
   

  
	
  Intercompany
  Receivables from Subsidiaries - withi

  	
   

  	
  1,637,000

  	
   

  	
  1,637,000

  	
   

  	
  1,637,000

  	
   

  	
  1,637,000

  	
   

  	
  1,637,000

  	
   

  	
  1,637,000

  	
   

  	
  1,637,000

  	
   

  	
  1,637,000

  	
   

  	
  1,637,000

  	
   

  	
  1,637,000

  	
   

  	
  1,637,000

  	
   

  	
  1,637,000

  	
   

  
	
  Intercompany
  Notes Receivable

  	
   

  	
  7,647,000

  	
   

  	
  7,687,000

  	
   

  	
  7,726,000

  	
   

  	
  7,766,000

  	
   

  	
  7,806,000

  	
   

  	
  7,846,000

  	
   

  	
  7,885,000

  	
   

  	
  7,925,000

  	
   

  	
  7,965,000

  	
   

  	
  8,005,000

  	
   

  	
  8,045,000

  	
   

  	
  8,090,000

  	
   

  
	
  Total
  Non-current Assets

  	
   

  	
  25,844,000

  	
   

  	
  25,599,000

  	
   

  	
  25,389,000

  	
   

  	
  25,179,000

  	
   

  	
  24,937,000

  	
   

  	
  24,720,000

  	
   

  	
  24,473,000

  	
   

  	
  24,230,000

  	
   

  	
  23,994,000

  	
   

  	
  23,792,000

  	
   

  	
  23,550,000

  	
   

  	
  23,322,000

  	
   

  
	
  Total
  Assets

  	
   

  	
  55,318,000

  	
   

  	
  54,772,000

  	
   

  	
  56,324,000

  	
   

  	
  57,261,000

  	
   

  	
  56,904,000

  	
   

  	
  55,394,000

  	
   

  	
  54,795,000

  	
   

  	
  54,061,000

  	
   

  	
  54,151,000

  	
   

  	
  56,619,000

  	
   

  	
  54,706,000

  	
   

  	
  50,755,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Short-term
  Borrowings

  	
   

  	
  13,905,000

  	
   

  	
  13,829,000

  	
   

  	
  14,571,000

  	
   

  	
  15,036,000

  	
   

  	
  15,244,000

  	
   

  	
  15,027,000

  	
   

  	
  14,734,000

  	
   

  	
  14,702,000

  	
   

  	
  13,855,000

  	
   

  	
  16,105,000

  	
   

  	
  16,166,000

  	
   

  	
  12,802,000

  	
   

  
	
  Accounts
  Payable - Trade

  	
   

  	
  2,177,000

  	
   

  	
  2,222,000

  	
   

  	
  3,466,000

  	
   

  	
  4,179,000

  	
   

  	
  3,691,000

  	
   

  	
  2,578,000

  	
   

  	
  2,392,000

  	
   

  	
  1,992,000

  	
   

  	
  2,972,000

  	
   

  	
  3,167,000

  	
   

  	
  1,680,000

  	
   

  	
  1,778,000

  	
   

  
	
  Accrued
  Liabilities - Compensation

  	
   

  	
  250,000

  	
   

  	
  276,000

  	
   

  	
  326,000

  	
   

  	
  370,000

  	
   

  	
  426,000

  	
   

  	
  471,000

  	
   

  	
  517,000

  	
   

  	
  548,000

  	
   

  	
  602,000

  	
   

  	
  665,000

  	
   

  	
  681,000

  	
   

  	
  679,000

  	
   

  
	
  Accrued
  Liabilities - Other

  	
   

  	
  1,925,000

  	
   

  	
  1,925,000

  	
   

  	
  1,925,000

  	
   

  	
  1,925,000

  	
   

  	
  1,925,000

  	
   

  	
  1,925,000

  	
   

  	
  1,925,000

  	
   

  	
  1,925,000

  	
   

  	
  1,925,000

  	
   

  	
  1,925,000

  	
   

  	
  1,925,000

  	
   

  	
  1,925,000

  	
   

  
	
  Acrrued
  Liabilities - Income Taxes

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Total
  Accrued Liabilities

  	
   

  	
  2,175,000

  	
   

  	
  2,201,000

  	
   

  	
  2,251,000

  	
   

  	
  2,295,000

  	
   

  	
  2,351,000

  	
   

  	
  2,396,000

  	
   

  	
  2,442,000

  	
   

  	
  2,473,000

  	
   

  	
  2,527,000

  	
   

  	
  2,590,000

  	
   

  	
  2,606,000

  	
   

  	
  2,604,000

  	
   

  
	
  Current
  Maturities of Long-term Debt

  	
   

  	
  5,001,000

  	
   

  	
  4,978,000

  	
   

  	
  4,958,000

  	
   

  	
  4,928,000

  	
   

  	
  4,909,000

  	
   

  	
  4,889,000

  	
   

  	
  4,868,000

  	
   

  	
  4,840,000

  	
   

  	
  4,820,000

  	
   

  	
  4,820,000

  	
   

  	
  4,820,000

  	
   

  	
  4,810,000

  	
   

  
	
  Deferred
  Tax Liabilities - Current

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Liabilities
  of Discontinued Ops - Current

  	
   

  	
  30,000

  	
   

  	
  30,000

  	
   

  	
  30,000

  	
   

  	
  30,000

  	
   

  	
  30,000

  	
   

  	
  30,000

  	
   

  	
  30,000

  	
   

  	
  30,000

  	
   

  	
  30,000

  	
   

  	
  30,000

  	
   

  	
  30,000

  	
   

  	
  30,000

  	
   

  
	
  Total
  Current Liabilities

  	
   

  	
  23,288,000

  	
   

  	
  23,260,000

  	
   

  	
  25,276,000

  	
   

  	
  26,468,000

  	
   

  	
  26,225,000

  	
   

  	
  24,920,000

  	
   

  	
  24,466,000

  	
   

  	
  24,037,000

  	
   

  	
  24,204,000

  	
   

  	
  26,712,000

  	
   

  	
  25,302,000

  	
   

  	
  22,024,000

  	
   

  
	
  Long-term
  Debt - Net of Current Maturities

  	
   

  	
  3,991,000

  	
   

  	
  3,832,000

  	
   

  	
  3,674,000

  	
   

  	
  3,526,000

  	
   

  	
  3,368,000

  	
   

  	
  3,209,000

  	
   

  	
  3,052,000

  	
   

  	
  2,904,000

  	
   

  	
  2,778,000

  	
   

  	
  2,620,000

  	
   

  	
  2,461,000

  	
   

  	
  2,314,000

  	
   

  
	
  Deferred
  Tax Liabilities - Non-current

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  Liabilities
  of Discontinued Ops - Non-current

  	
   

  	
  320,000

  	
   

  	
  320,000

  	
   

  	
  320,000

  	
   

  	
  320,000

  	
   

  	
  320,000

  	
   

  	
  320,000

  	
   

  	
  320,000

  	
   

  	
  320,000

  	
   

  	
  320,000

  	
   

  	
  320,000

  	
   

  	
  320,000

  	
   

  	
  320,000

  	
   

  
	
  Total
  Non-current Liabilities

  	
   

  	
  4,311,000

  	
   

  	
  4,152,000

  	
   

  	
  3,994,000

  	
   

  	
  3,846,000

  	
   

  	
  3,688,000

  	
   

  	
  3,529,000

  	
   

  	
  3,372,000

  	
   

  	
  3,224,000

  	
   

  	
  3,098,000

  	
   

  	
  2,940,000

  	
   

  	
  2,781,000

  	
   

  	
  2,634,000

  	
   

  
	
  Total
  Liabilities

  	
   

  	
  27,599,000

  	
   

  	
  27,412,000

  	
   

  	
  29,270,000

  	
   

  	
  30,314,000

  	
   

  	
  29,913,000

  	
   

  	
  28,449,000

  	
   

  	
  27,838,000

  	
   

  	
  27,261,000

  	
   

  	
  27,302,000

  	
   

  	
  29,652,000

  	
   

  	
  28,083,000

  	
   

  	
  24,658,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Common
  Stock

  	
   

  	
  3,956,000

  	
   

  	
  3,956,000

  	
   

  	
  3,956,000

  	
   

  	
  3,956,000

  	
   

  	
  3,956,000

  	
   

  	
  3,956,000

  	
   

  	
  3,956,000

  	
   

  	
  3,956,000

  	
   

  	
  3,956,000

  	
   

  	
  3,956,000

  	
   

  	
  3,956,000

  	
   

  	
  3,956,000

  	
   

  
	
  Adiitional
  Paid-in Capital

  	
   

  	
  10,626,000

  	
   

  	
  10,638,000

  	
   

  	
  10,650,000

  	
   

  	
  10,661,000

  	
   

  	
  10,673,000

  	
   

  	
  10,684,000

  	
   

  	
  10,689,000

  	
   

  	
  10,694,000

  	
   

  	
  10,699,000

  	
   

  	
  10,704,000

  	
   

  	
  10,710,000

  	
   

  	
  10,715,000

  	
   

  
	
  Retained
  Earnings

  	
   

  	
  16,092,000

  	
   

  	
  15,721,000

  	
   

  	
  15,403,000

  	
   

  	
  15,285,000

  	
   

  	
  15,317,000

  	
   

  	
  15,260,000

  	
   

  	
  15,267,000

  	
   

  	
  15,105,000

  	
   

  	
  15,149,000

  	
   

  	
  15,262,000

  	
   

  	
  14,912,000

  	
   

  	
  14,381,000

  	
   

  
	
  Treasury
  Stock

  	
   

  	
  (2,955,000

  	
  )

  	
  (2,955,000

  	
  )

  	
  (2,955,000

  	
  )

  	
  (2,955,000

  	
  )

  	
  (2,955,000

  	
  )

  	
  (2,955,000

  	
  )

  	
  (2,955,000

  	
  )

  	
  (2,955,000

  	
  )

  	
  (2,955,000

  	
  )

  	
  (2,955,000

  	
  )

  	
  (2,955,000

  	
  )

  	
  (2,955,000

  	
  )

  
	
  Total
  Equity

  	
   

  	
  27,719,000

  	
   

  	
  27,360,000

  	
   

  	
  27,054,000

  	
   

  	
  26,947,000

  	
   

  	
  26,991,000

  	
   

  	
  26,945,000

  	
   

  	
  26,957,000

  	
   

  	
  26,800,000

  	
   

  	
  26,849,000

  	
   

  	
  26,967,000

  	
   

  	
  26,623,000

  	
   

  	
  26,097,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Liabilities & Equity

  	
   

  	
  55,318,000

  	
   

  	
  54,772,000

  	
   

  	
  56,324,000

  	
   

  	
  57,261,000

  	
   

  	
  56,904,000

  	
   

  	
  55,394,000

  	
   

  	
  54,795,000

  	
   

  	
  54,061,000

  	
   

  	
  54,151,000

  	
   

  	
  56,619,000

  	
   

  	
  54,706,000

  	
   

  	
  50,755,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrowing Base Summary

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Availability

  	
   

  	
  13,763,500

  	
   

  	
  13,673,100

  	
   

  	
  14,822,900

  	
   

  	
  15,598,800

  	
   

  	
  15,769,700

  	
   

  	
  15,838,000

  	
   

  	
  15,569,500

  	
   

  	
  15,099,300

  	
   

  	
  15,437,500

  	
   

  	
  17,605,800

  	
   

  	
  16,563,900

  	
   

  	
  13,374,300

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Revolver
  Balance

  	
   

  	
  13,905,000

  	
   

  	
  13,829,000

  	
   

  	
  14,571,000

  	
   

  	
  15,036,000

  	
   

  	
  15,244,000

  	
   

  	
  15,027,000

  	
   

  	
  14,734,000

  	
   

  	
  14,702,000

  	
   

  	
  13,855,000

  	
   

  	
  16,105,000

  	
   

  	
  16,166,000

  	
   

  	
  12,802,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Excess
  (deficiency)

  	
   

  	
  (141,500

  	
  )

  	
  (155,900

  	
  )

  	
  251,900

  	
   

  	
  562,800

  	
   

  	
  525,700

  	
   

  	
  811,000

  	
   

  	
  835,500

  	
   

  	
  397,300

  	
   

  	
  1,582,500

  	
   

  	
  1,500,800

  	
   

  	
  397,900

  	
   

  	
  572,300EXHIBIT 10.2

 

THIS NOTE HAS BEEN ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE ACT”).
THIS NOTE IS SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.

 

Secured Subordinated Promissory Note

 

	
  $500,000.00

  	
  April 23, 2010

  

 

P&F Industries, Inc.,  a Delaware corporation, Florida Pneumatic
Manufacturing Corporation, a Florida corporation, Embassy Industries, Inc.,
a New York corporation, Green Manufacturing, Inc., a Delaware corporation,
Countrywide Hardware, Inc., a Delaware corporation, Nationwide Industries, Inc.,
a Florida corporation, Woodmark International, L.P., a Delaware limited
partnership, Pacific Stair Products, Inc., a Delaware corporation, WILP
Holdings, Inc., a Delaware corporation, Continental Tool Group, Inc.,  a Delaware corporation and Hy-Tech Machine, Inc.,  a Delaware corporation (each hereinafter referred to
individually as a “Maker” and collectively as the “Makers”),
jointly and severally, hereby promise to pay to Marc Schorr, his heirs,
administrators, successors or assigns  (the “Payee”),
the principal amount of Five Hundred Thousand Dollars ($500,000.00) in such
coin or currency of the United States of America as at the time of payment
shall be legal tender therein for the payment of public and private debts,
together with accrued interest, compounded annually (calculated on the basis of
the actual number of days elapsed over a year of 365 days), from the date
hereof on the unpaid balance of such principal amount, at the rate of eight
percent (8%) per annum.  All principal,
interest, penalties, premiums and/or other charges, if any, under  this Note (collectively “Obligations”)
shall be due and payable on January 2, 2011 unless accelerated pursuant to
the terms of this Note.

 

NOTWITHSTANDING ANYTHING
TO THE CONTRARY IN THIS NOTE, THE PAYMENT AND PRIORITY OF ALL CLAIMS OF PAYEE
UNDER THIS NOTE ARE SUBORDINATE IN RIGHT, TIME, AND PRIORITY TO THE CLAIMS OF
CITIBANK, N.A. AND HSBC BANK USA, NATIONAL ASSOCIATION (THE “LENDERS”), AND ALL
SUCH AMOUNTS PAYABLE TO PAYEE SHALL NOT BE PAID OR PAYABLE, EXCEPT AS SET FORTH
IN THE SUBORDINATION AND INTERCREDITOR AGREEMENT DATED APRIL 23, 2010 BETWEEN
THE LENDERS, THE PAYEE AND RICHARD HOROWITZ (AS AMENDED, RESTATED, SUPPLEMENTED
OR MODIFIED FROM TIME TO TIME, THE “SUBORDINATION AGREEMENT”).  THE SUBORDINATION AGREEMENT IS INCORPORATED
BY REFERENCE AS IF SET FORTH IN FULL.  TO
THE EXTENT THE SUBORDINATION AGREEMENT REQUIRES, THE MAKER SHALL PAY THE
LENDERS ANY SUMS THIS DOCUMENT OTHERWISE REQUIRES THE MAKERS TO PAY PAYEE.

 

This Note is secured by the “Collateral” identified in
certain Security Agreements by each Maker in favor of Payee and the other
secured party named therein of even date herewith (the “Security Agreements”).  The principal of and accrued interest on this
Note shall be payable by wire 

 

 

transfer of immediately available funds to the account of the
Payee of this Note at such banking institution as such Payee designates or, if
requested by such Payee, by certified or official bank check payable to the
Payee of this Note at the address of such Payee as may be designated in writing
by the Payee to the Makers.

 

Any of the following events shall constitute an “Event of
Default” under this Note:

 

1.                                       failure by the Makers or any of them to
pay all or any amount due under the Note within ten (10) days of when same
is due and payable, except to the extent such payment is not permitted under
the Subordination Agreement;

 

2.                                       the material breach of any of the
representations, warranties or covenants of the Makers contained in this Note
or the Security Agreements unless such breach was caused in whole or in part by
the acts or omissions of Richard Horowitz in his capacity as officer, director
and/or other fiduciary of any Maker;

 

3.                                       a default shall occur in the payment of
any amount when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any principal or stated amount of, or interest or
fees on, any indebtedness of any Maker having an outstanding principal amount,
individually or in the aggregate, of one hundred thousand dollars ($100,000.00)
or more or an event of default shall occur under any instrument evidencing or
securing any such indebtedness which gives the holder(s) of such
indebtedness or any person acting on behalf of such holder(s) thereof the
right to accelerate the maturity of such indebtedness; provided, that in any
such case the Payee gives the Makers ten (10) days written notice of such
default;

 

4.                                       filing by any Maker of a petition seeking
relief under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, or consenting in writing to the filing of any such petition
against it;

 

5.                                       making by any Maker of a general
assignment for the benefit of its creditors, or admitting in writing its
inability to pay, or in fact failure to pay, its debts generally as they become
due, or consenting in writing to the appointment of a receiver, conservator,
custodian, liquidator or trustee of the Maker, or of all or any part of the
assets of such Maker; or

 

6.                                       appointment of a receiver, conservator,
custodian, liquidator or trustee of the Maker or of all or any of its assets by
court order, if such order remains in effect for more than sixty (60) days; or
entering of an order for relief with respect to such Maker under the U.S.
Bankruptcy Code; or filing of a petition against such Maker under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, if not dismissed within
sixty (60) days.

 

Upon the occurrence and continuation of an Event of Default
hereunder, all of the unpaid principal amount of this Note and any accrued
interest thereon shall automatically become due and payable, and the Makers
hereby waive diligence, presentment, demand, protest and notice of every kind
whatsoever.  The failure of the Payee to
exercise any of its rights hereunder in any particular instance shall not
constitute a waiver of the same or of any other right in that or any subsequent
instance with respect to the Payee or any subsequent holder.

 

2

 

Upon the occurrence and continuation of an Event of Default
hereunder, then at the option of Payee upon notice to the Makers, all accrued
and unpaid interest, hereunder, shall be added to the outstanding principal
balance hereof, and the entire outstanding principal balance, as so adjusted,
shall bear interest thereafter until paid at an annual rate equal to the lesser
of (i) the rate that is two percentage points (2.0%) in excess of the
above-specified interest rate, or (ii) the maximum rate of interest
allowed to be charged under applicable law.

 

Should the indebtedness evidenced by this Note or any part
hereof be collected at law or in equity or in bankruptcy, receivership or other
court proceedings, or this Note placed in the hands of attorneys for
collection, the Makers agree to pay, in addition to principal and interest due
and payable hereon, all costs of collection, including reasonable attorneys’
fees, incurred by the Payee of this Note in collecting or enforcing this
Note.  The Makers further agree to pay
the reasonable attorneys fees of the Payee’s counsel in connection with the
preparation and negotiation of this Note and the Security Agreements.

 

No extension of the time for payment of the indebtedness
evidenced hereby, made by agreement with any person now or hereafter liable for
payment of the indebtedness evidenced hereby, shall operate to release,
discharge, modify, change or affect the original liability of the Maker
hereunder or that of any other person now or hereafter liable for payment of
the indebtedness evidenced hereby, either in whole or in part, unless the Payee
otherwise agrees in writing.  No delay by
the Payee in exercising any power or right hereunder shall operate as a waiver
of any power or right, nor shall any single or partial exercise of any power or
right preclude other or further exercise thereof, or the exercise of any other
power or right hereunder or otherwise, and no waiver or modification of the
terms hereof shall be valid unless set forth in writing by the Payee of this
Note and then only to the extent set forth therein.

 

The joint and several Obligations of each of the Makers under
this Note shall be absolute and unconditional and shall remain in full force
and effect until the Obligations shall have been paid and, until such payment
has been made, shall not be discharged, affected, modified or impaired on the
happening from time to time of any event, including, without limitation, any of
the following, whether or not with notice to or the consent of any of the
Makers:

 

a.                                       the waiver,
compromise, settlement release, termination or amendment (including, without
limitation, any extension or postponement of the time for payment or
performance or renewal or refinancing) of any or all of the obligations or
agreements of any of the Makers under this Note or any other loan document;

 

b.                                      the failure
to give notice to any or all of the Makers of the occurrence of a default under
the terms and provisions of this Note or any other loan document;

 

c.                                       the release,
substitution or exchange by the holder of this Note of any Collateral (whether
with or without consideration) or the acceptance by the Payee of this Note of
any additional collateral or the availability or claimed availability of any
other collateral or source of repayment or any non-perfection or other
impairment of any collateral; provided, that nothing herein 

 

3

 

shall be construed as preventing such release, substitution
or exchange with the consent of the holder of this Note and any such release,
substitution or exchange shall not be deemed an Event of Default hereunder;

 

d.                                      the release
of any person primarily or secondarily liable for all or any part of the
obligations, whether by the Payee or any other holder of this Note or in
connection with any voluntary or involuntary liquidation, dissolution,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors
or similar event or proceeding affecting any or all of the Makers or any other
person or entity who, or any of whose property, shall at the time in question
be obligated in respect of the obligations or any part thereof; or

 

e.                                       to the
extent permitted by law, any other event, occurrence, action or circumstance
that would, in the absence of this clause, result in the release or discharge
of any or all of the undersigned from the performance or observance of any
obligation, covenant or agreement contained in this Note.

 

The Makers expressly agree that the Payee shall not be
required first to institute any suit or exhaust its remedies against any of the
undersigned or any other person or party to become liable hereunder or against
any collateral, in order to enforce this Note; and expressly agree that,
notwithstanding the occurrence of any of the foregoing, the Makers shall be and
remain, directly and primarily liable for all sums due under this Note and
under the loan documents.  On disposition
by the Payee of any property encumbered by any collateral, the undersigned
shall be and shall remain jointly and severally liable for any deficiency.

 

The provisions hereof shall be binding upon and inure to the
benefit of the Payee of this Note and its successors, assigns, heirs/or
personal representatives.  This Note may be
assigned, in whole or in part, by the Payee or any subsequent Payee hereof
without the consent of the Makers.

 

THE MAKERS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN
EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS NOTE.

 

The Makers, from time to time after the date hereof,
at the Payee’s request, will execute, acknowledge and deliver to the Payee such
other instruments and will take such other actions and execute and deliver such
other documents, certifications and further assurances as the Payee may
reasonably request in order to carry out the intent and purposes of this Note.

 

All notices, demands and other communications provided for or
permitted hereunder shall be made in writing as set forth in the Security
Agreements.

 

This Note is made and delivered in, and shall be governed by
and construed in accordance with, the laws of the State of New York without
giving effect to the conflicts of laws rules thereof.

 

4

 

IN WITNESS WHEREOF, the Makers has caused this Note to be
duly executed and delivered by its duly authorized officer as of the date first
above written.

 

 

	
   

  	
  P&F
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice President

  
	
   

  	
   

  
	
   

  	
  FLORIDA
  PNEUMATIC MANUFACTURING CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  EMBASSY
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  GREEN
  MANUFACTURING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  COUNTRYWIDE
  HARDWARE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  NATIONWIDE
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  

 

5

 

	
   

  	
  WOODMARK
  INTERNATIONAL, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  COUNTRYWIDE
  HARDWARE, INC., its

  
	
   

  	
   

  	
  General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Joseph A. Molino

  
	
   

  	
   

  	
   

  	
      Name:
   Joseph A. Molino

  
	
   

  	
   

  	
   

  	
      Title:   Vice President

  
	
   

  	
   

  
	
   

  	
  PACIFIC
  STAIR PRODUCTS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  WILP
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL
  TOOL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  HY-TECH
  MACHINE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A.
  Molino

  
	
   

  	
  Name:  Joseph A. Molino

  
	
   

  	
  Title:   Vice President

  
					

 

6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}]]