8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  June 10, 2009

P&F INDUSTRIES, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-5332	22-1657413
(State or Other Jurisdiction	(Commission File No.)	(IRS Employer
of Incorporation)		Identification Number)

445 Broadhollow Road, Suite 100, Melville, New York 11747

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code:  (631) 694-9800

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement

Reference is made to Item 2.01 which is hereby incorporated herein.

Item 2.01. Completion of Acquisition or Disposition of Assets

On June 10, 2009, pursuant to an Asset Purchase Agreement dated as of June 8, 2009 (the “Asset Purchase Agreement”), WM Coffman LLC, a Delaware limited liability company (“Purchaser”) and an indirect subsidiary of P & F Industries, Inc. (the “Company”), acquired substantially all of the assets (the “Assets”) of Coffman Stairs, LLC, a Delaware limited liability company (“Seller”).  The purchase price consisted of $4,528,098.36 payable in cash, $3,971,901.64 in principal pursuant to a promissory note, dated June 8, 2009, made payable by Purchaser to the order of Seller (the “Seller Note”) and the assumption of certain payables, liabilities and obligations.  Subject to certain conditions, Purchaser also agreed to pay to Seller certain additional contingent payments based upon the financial performance of the Purchaser’s business and certain other factors described in the Asset Purchase Agreement.  The Assets were used by the Seller in the business of manufacturing and/or selling interior wood and iron stair components throughout the United States.

Interest on the unpaid principal balance of the Seller Note accrues (1) from June 8, 2009 until the Maturity Date (as defined below), at the rate of six and one-half percent (6.5%) per annum, (2) from and after the Maturity Date, or during the continuance of an Event of Default (as defined in the Seller Note), at the rate set forth in (1) plus two percent (2%), or (3) if less than the rates applicable under (1) and (2), the maximum rate permitted by law.  The principal amount and accrued interest due pursuant to the Seller Note is payable on the date (the “Maturity Date”) that is the latter of (1) the last day of the Contingency Period (as defined in the Asset Purchase Agreement) or (2) the earlier of (a) the date that is three (3) years and ninety (90) days after the date of the Seller Note or (b) the date that all obligations under the Loan Agreement (as defined below) are satisfied in full.  Pursuant to the terms of the Seller Note, all obligations under the Seller Note are subject to the terms of a Subordination Agreement, dated as of June 8, 2009, among Purchaser, Seller and PNC Bank, National Association (“PNC”).

Contemporaneously with the execution and delivery of the Asset Purchase Agreement, Purchaser and Seller entered into an Assignment and Assumption of Lease Agreement dated as of June 8, 2009 (the “Assignment and Assumption Agreement”).  Pursuant to the Assignment and Assumption Agreement, Seller transferred, conveyed and assigned to Purchaser all of its right, title and interest, as tenant, in, to and under, and Purchaser assumed all rights, obligations and liabilities of Seller under, that certain Lease Agreement, dated as of March 30, 2007, by and between AGNL Coffman, L.L.C., as landlord (“AGNL”), and Seller and Visador Holding Corporation (“Visador”), jointly and severally, as tenant (the “Lease Agreement”), for the lease of certain real property located in Marion, Virginia (the “Leased Premises”). The Lease Agreement provides for (1) an expiration date of March 30, 2027, unless all monies owed under the Lease Agreement are not paid by March 30, 2027, in which case AGNL may extend the term

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until the date that such monies are paid and (2) a basic rent of $580,000 per annum, payable quarterly in advance on July 1st, October 1st, January 1st and April 1st, in equal installments of $145,000 and at such additional rent as is set forth in the Lease Agreement, including, but not limited to, all costs of landlord and tenant incurred in connection with the ownership, use and maintenance of the Leased Premises.  Further, Purchaser entered into a First Amendment to Lease Agreement, dated as of June 8, 2009 (the “First Amendment”), which First Amendment provides for (1) Purchaser to become the tenant under the Lease Agreement, (2) Purchaser posting with the landlord a security deposit in the amount of $100,000, and (3) modifications to certain definitions and covenants in the Lease Agreement.

Contemporaneously with the execution and delivery of the Asset Purchase Agreement, Purchaser also entered into a Management Agreement with Visador (the “Visador Management Agreement”), pursuant to which Purchaser agreed to pay an advisory fee to Visador in exchange for Visador providing consulting and advisory services to the Purchaser during the Contingency Period, as follows: (a) $0 for the year commencing June 8, 2009 and ending on June 7, 2010 (the “First Year”), provided, however, that if that certain Consulting Agreement (as defined in the Visador Management Agreement), is not terminated by Visador for any reason or by Purchaser for Cause (as defined in the Visador Management Agreement) (a “Smith Termination”) during said year, then the advisory fee for the First Year shall be $200,000, (b) $0 for the year commencing on June 8, 2010 and ending on June 7, 2011 (the “Second Year”), provided, however, that if there is no Smith Termination during the First Year, and there is no Smith Termination during the Second Year, then the advisory fee for the Second Year shall be $300,000, and (c) $250,000 for each year thereafter that the Visador Management Agreement remains in full force and effect.

Further, contemporaneously with the execution and delivery of the Asset Purchase Agreement, Purchaser’s members, Woodmark International, L.P. (“Woodmark”) and Pacific Stair Products, Inc. (“PSP”), contributed to Purchaser certain assets of Woodmark and PSP, respectively, subject to Purchaser’s assumption of certain liabilities and obligations of each of Woodmark and PSP (the “Asset Contribution”).  In addition, Woodmark and PSP entered into certain agreements with Purchaser, effectively transferring the Company’s stair parts business to Purchaser.

On June 10, 2009, Purchaser entered into a Revolving Credit, Term Loan and Security Agreement, dated as of June 8, 2009 (the “Loan Agreement”), among Purchaser, the Lenders (as defined in the Loan Agreement) and PNC Bank, as agent for Lenders, pursuant to which Purchaser may receive loans from PNC Bank in the aggregate principal amount of $12,000,000 (the “Loans”), to be used for, among other things, the purchase of the Assets of Seller.

Pursuant to a Reimbursement Agreement, dated as of June 8, 2009 (the “Reimbursement Agreement”), Purchaser (1) requested that Richard Horowitz, President and Chief Executive Officer, and a principal stockholder, of the Company (“Horowitz”), cause New York Commercial Bank (“NYCB”) to issue to PNC Bank two letters of credit (each a “Letter of

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Credit” and collectively, the “Letters of Credit”), each in the amount of $145,000, terminating on the earliest of (a) 5:00 p.m. eastern time on June 30, 2010 for one Letter of Credit and September 30, 2010 for the other Letter of Credit, or if not a business day, the next following business day, (b) the date on which there has been a drawing, (c) the day upon which a substitute letter of credit becomes effective, or (d) the date a Letter of Credit shall be delivered to NYCB for cancellation as set forth in the Loan Agreement and (2) agreed that any drawing under the Letters of Credit that results in Horowitz being liable to NYCB for the amount of such draw shall be converted into a loan from Horowitz to Purchaser and evidenced by a note issued by Purchaser to the order of Horowitz (the “Letter of Credit Note”), bearing interest at the rate of six and one half percent (6.5%) from the date of the Letter of Credit Note to its maturity.  Kenneth M. Scheriff, a member of the board of directors of the Company, is an Executive Vice President of NYCB.

In connection with the Loan Agreement, Purchaser executed and delivered to PNC Bank a Term Note, dated June 8, 2009, in the original principal amount of $1,134,000 (the “Term Note”) and a Revolving Credit Note, dated June 8, 2009, in the original principal amount of $10,866,000 (the “Revolving Credit Note”) evidencing Purchaser’s obligation to repay the Loans.  The principal on the Term Note is payable in twenty-four (24) equal monthly installments of $47,250, commencing on July 1, 2009.  The interest on the Term Note accrues at either the Alternate Base Rate (as defined in the Loan Agreement) (“ABR”) plus the applicable margin or at 1, 2 or 3 month LIBOR plus the applicable margin (“LIBOR”), and said interest is payable monthly in arrears on the first (1st) business day of each month for ABR borrowings and at the end of the applicable interest period for LIBOR borrowings.  The Revolving Advances (as defined in the Loan Agreement) in connection with the Revolving Credit Note are available for borrowing until the Revolving Credit Note matures on July 1, 2012, subject to a borrowing base as set forth in the Loan Agreement.  The interest on the Revolving Credit Note accrues at either the ABR plus the applicable margin or at 1, 2 or 3 month LIBOR plus the applicable margin, and said interest is payable monthly in arrears on the first (1st) business day of each month for ABR borrowings and at the end of the applicable interest period for LIBOR borrowings.  The amount of Revolving Advances drawn by Purchaser as of June 10, 2009 was $6,176,214.07.

Contemporaneously with the execution and delivery of this Asset Purchase Agreement,  Purchaser also executed and delivered to Citibank, N.A. (“Citibank”) and HSBC Bank USA, National Association (“HSBC”) (collectively, the “Lenders”) Amendment No. 19 and Waiver to Credit Agreement (“Amendment”), which modified the Credit Agreement, dated June 30, 2004, as previously amended  (the “Credit Agreement”), by and among the Company, the Lenders, Citibank, as Administrative Agent, and the following subsidiaries of the Company: Florida Pneumatic Manufacturing Corporation, Embassy Industries, Inc., Green Manufacturing, Inc., Countrywide Hardware, Inc., Nationwide Industries, Inc., Woodmark, PSP, WILP Holdings, Inc., Continental Tool Group, Inc. and Hy-Tech Machine, Inc. (collectively, the “Co-Borrowers”).  The Amendment, among other things, (1) amended the margins on the Revolving Credit Loans and Additional Term Loans priced as LIBOR Loans (as such terms are defined in the Credit Agreement); (2) revised certain financial covenants, the borrowing base and related definitions; and (3) waived compliance with certain negative covenants to permit the Company, Woodmark and PSP to

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consummate the Asset Contribution.  The Amendment also replaced the previously existing revolving loan notes, that provided for an aggregate principal amount of up to $22,000,000, with new revolving loan notes that provide for an aggregate principal amount of up to $20,700,000 (one payable to Citibank in the principal amount of $13,455,000 (the “Fourth Amended and Restated Citibank Note”) and the other payable to HSBC in the principal amount of $7,245,000 (the “Fourth Amended and Restated HSBC Note”)). The Amendment further provided that the maximum Revolving Credit loans will be further reduced on August 31, 2009 to an aggregate principal amount of $19,400,000 ($12,610,000 in respect of Citibank and $6,790,000 in respect of HSBC).

The descriptions of the Asset Purchase Agreement, the Seller Note, the Assignment and Assumption Agreement, the Visador Management Agreement, the Lease Agreement, the First Amendment, the Loan Agreement, the Reimbursement Agreement, the Term Note, the Revolving Credit Note, the Amendment, the Fourth Amended and Restated Citibank Note and the Fourth Amended and Restated HSBC Note are qualified in their entirety by reference to the Asset Purchase Agreement, the Seller Note, the Assignment and Assumption Agreement, the Visador Management Agreement, the Lease Agreement, the First Amendment, the Loan Agreement, the Reimbursement Agreement, the Term Note, the Revolving Credit Note, the Amendment, the Fourth Amended and Restated Citibank Note and the Fourth Amended and Restated HSBC Note filed hereto as Exhibits 2.1, 2.2, 2.3, 2.4, 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7, 10.8 and 10.9, respectively. On June 10, 2009, the Company issued a press release (the “Press Release”) announcing the entering into of the Asset Purchase Agreement described herein. A copy of the Press Release is furnished as Exhibit 99.1 hereto.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Company

Reference is made to Item 2.01 which is hereby incorporated herein.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits:

2.1	Asset Purchase Agreement, dated as of June 8, 2009, by and between Seller and Purchaser.
2.2	Seller Note, dated June 8, 2009, made payable by Purchaser to Seller.
2.3	Assignment and Assumption of Lease Agreement, made and entered into as of June 8, 2009, by and among Seller and Purchaser.
2.4	Management Agreement, dated June 8, 2009, between Purchaser and Visador.
10.1	Lease Agreement, dated as of March 30, 2007, by and between AGNL Coffman, L.L.C. and Coffman Stairs, LLC and Visador.
10.2	First Amendment to Lease Agreement, dated as of June 8, 2007, made by AGNL Coffman, L.L.C. and Purchaser.

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10.3	Revolving Credit, Term Loan and Security Agreement, dated as of June 8, 2009, among Purchaser, the Lenders and PNC Bank.
10.4	Reimbursement Agreement, dated as of June 8, 2009, by and between Purchaser and Horowitz.
10.5	Term Note, dated June 8, 2009, made payable by Purchaser to the order of PNC Bank in the original principal amount of $1,134,000.
10.6	Revolving Credit Note, dated June 8, 2009, made payable by Purchaser to the order of PNC Bank in the original principal amount of $10,866,000.
10.7	Amendment No. 19 and Waiver to Credit Agreement, dated as of June 10, 2009, by and among the Company, the Lenders, Citibank, as Administrative Agent, and the Co-Borrowers.
10.8	Fourth Amended and Restated Revolving Credit Note, dated June 10, 2009, issued by the Co-Borrowers to HSBC.
10.9	Fourth Amended and Restated Revolving Credit Note, dated June 10, 2009, issued by the Co-Borrowers to Citibank.
99.1	Press Release, dated June 10, 2009, issued by the Company.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		P&F INDUSTRIES, INC.
Date:  June 16, 2009
	By:	/s/ Joseph A. Molino, Jr.
		Joseph A. Molino, Jr.
		Vice President,
		Chief Operating Officer and
		Chief Financial Officer

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EX-2.1

Exhibit 2.1

Execution Version

ASSET PURCHASE AGREEMENT, dated as of June 8, 2009 (the “Agreement”), by and between COFFMAN STAIRS, LLC, a Delaware limited liability company (“Seller”) and WM COFFMAN LLC, a Delaware limited liability company (“Purchaser”).

RECITALS

Seller is in the business of manufacturing and/or selling interior wood and iron stair components (the “Business”).  Purchaser desires to purchase from Seller, and Seller desires to sell to Purchaser, all Seller’s rights, title and interest, in and to substantially all of Seller’s assets on the terms and conditions described below.

NOW, THEREFORE, in consideration of the recitals and the respective covenants, representations, warranties and agreements herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

ARTICLE I
DEFINITIONS

1.1          Defined Terms.  As used in this Agreement, the following terms shall have the following meanings:

“Accounts” shall mean all of Seller’s accounts (including accounts receivable), notes and employee loans receivable as of the Closing Date, including the Accounts as of the Seller Balance Sheet Date set forth on Schedule 1.1 attached hereto (unless such Accounts have previously been paid).

“Action” shall mean any action, suit, proceeding, arbitration, claim or governmental investigation.

“Additional Transaction Documents” shall mean those documents set forth on Schedule 1.2 attached hereto and each and every other agreement, certificate, instrument or document (other than this Agreement) executed and/or delivered in connection with this Agreement and the transactions contemplated hereby and thereby.

“Adjustment Amount” shall have the meaning set forth in Section 2.2.4(b) of this Agreement.

“Adjusted EBITDA” shall mean, for any period, Purchaser EBITDA for such period adjusted by adding back the management fees due and payable under the Visador Management Agreement and the Countrywide Management Agreement with respect to such period, whether or not actually paid.

“Affiliate” of any specified Person shall mean any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.  Notwithstanding

anything contained in this Agreement, for purposes of this Agreement, neither Seller, Visador, or either of their parents or subsidiaries is considered an Affiliate of Purchaser.

“AGNL Guaranty” shall mean that certain Guaranty Agreement, of even date herewith, by and among Crown Column & Millwork Company, LLC, Seller, Visador, Purchaser and AGNL Coffman, L.L.C.

“Agreement” shall have the meaning set forth in the Preamble.

“Assets” shall have the meaning set forth in Section 2.1.

“Assigned Contracts” shall have the meaning set forth in Section 2.1.1(f).

“Assignment and Assumption Agreements” shall have the meaning set forth in Section 5.1(c).

“Assignments of Certifications” shall have the meaning set forth in Section 5.1(e).

“Assumed Obligations” shall have the meaning set forth in Section 2.3.2.

“Assumed Payables” shall mean (other than (i) amounts payable to any Affiliate of Seller, and/or (ii) those accounts payable listed on Schedule 6.3 attached hereto) those accounts payable and accrued expenses of Seller incurred by Seller in the ordinary course of business, consistent with past practices, which reflect bona fide, arm’s-length transactions for goods or services  purchased by Seller, as of the Closing Date, including those Assumed Payables as of the Seller Balance Sheet Date set forth on Schedule 1.3 attached hereto (unless such Assumed Payables have previously been satisfied), and, with respect to all of the forgoing, which are not excluded in calculating Undrawn Availability in the Borrowing Base Certificate submitted under the PNC Credit Agreement as of the Closing Date.

“Assumed Warranty Obligations” shall have the meaning set forth in Section 6.1.

“Audited Seller Financial Statements” shall have the meaning set forth in Section 3.6(a)(i).

“Bill of Sale” shall have the meaning set forth in Section 5.1(a).

“Bodies” shall mean all federal, state, local and foreign governmental departments, commissions, boards, bureaus, agencies or instrumentalities and other regulatory bodies.

“Books and Records” shall mean all information, files, books, records, data, plans and recorded knowledge.

“Business” shall have the meaning set forth in the Recitals.

“Business Employee” shall have the meaning set forth in Section 6.4.

“Capital Expenditures” means expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto

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which in accordance with GAAP, would be classified as capital expenditures, except expenditures made in connection with the replacement, substitutions or restoration of assets (i) to the extent reimbursed or financed from insurance proceeds or condemnation awards; or (ii) to the extent resulting from one or more breaches of any representation, warranty, covenant or agreement by Seller.

“Cash” shall mean cash, cash equivalents, marketable securities and other short-term investments.

“Cash Dividend” shall mean Cash dividends from Purchaser to any Affiliate of Purchaser, provided, however, that, “Cash Dividend” shall not include (A) any amounts P&F (or any Subsidiary thereof) is required to pay to Citibank in connection with the Closing or (B) any amounts paid and/or payable (i) under and/or pursuant to the Nationwide Consulting Agreement and/or Countrywide Management Agreement, (ii) under and/or pursuant to the PSP Notes or Woodmark Notes, (iii) for or with respect to goods or services rendered by any Affiliate of Purchaser to the extent permitted by Section 2.2.5.4 (g) of this Agreement.

“Cash Payment” shall have the meaning set forth in Section 2.2.4(a)(i).

“Certifications” shall mean all product certifications and ratings.

“Change in Control Transaction” shall mean, with respect to Purchaser or any Parent Company (the “Entity”), except for one or more Non-Qualifying Transactions (each of which is hereby deemed not to constitute a Change in Control Transaction), whether or not in the context of a Liquidation Event (i) a merger or consolidation, (ii) the issuance or transfer of equity of the Entity, or (iii) the sale of substantially all the assets of such Entity.  “Non-Qualifying Transaction” shall mean:  (i) a Termination Transaction entered into, conducted and/or consummated pursuant to, or in accordance with, Section 2.2.5.3, (ii) a transaction between or among any of Purchaser, any one or more Parent Companies (or any one or more Affiliates thereof) or any one or more employee benefit plans (or related trusts) sponsored or maintained by each such Entity or Affiliate of any of them, or (iii) any transaction in which, after giving effect to such transaction, sixty-six and two-thirds (66 2/3%) percent or more of the fully diluted equity interests of such Entity are owned or controlled by (1) the Person(s) which own or control such interests as of the Closing Date, (2) one or more Affiliates thereof, (3) any one or more employee benefit plans (or related trusts) sponsored or maintained by the Entity, such Person(s) or any one or more Affiliates of any of them, or (4) any Persons acquiring such securities in connection with a Non-Qualifying Transaction.  Notwithstanding anything contained in this Agreement, a Non-Qualifying Transaction is hereby deemed not to be a Change in Control Transaction

“Claim” shall have the meaning set forth in Section 7.2.3(a).

“Claim Notice” shall have the meaning set forth in Section 7.2.3(a).

“Closing Date” shall mean the date hereof.

“Closing Net Assets” shall be calculated in a manner consistent with the categories of assets and liabilities set forth in Schedule 1.4.

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“Closing Statement” shall have the meaning set forth in Section 2.2.2.2.

“Closing Year” shall have the meaning set forth in Section 6.2.

“Contemporaneous Documents” shall have the meaning set forth in Section 5.3.

“Contingency Period” shall mean, the period beginning on the Closing Date and ending upon (i) in the event Contingent Consideration is due and payable to the Seller pursuant to the terms and conditions of this Agreement, the first date of payment, pursuant to the terms and conditions of this Agreement, of any part of Contingent Consideration, (ii) in the event Contingent Consideration is not due and payable to the Seller pursuant to the terms and conditions of this Agreement but Termination Proceeds are due and payable to the Seller, the date on which the first such Termination Proceeds are paid to Seller, (iii) in the event Contingent Consideration is not due and payable pursuant to Section 2.2.5.2(b), the date on which the Four Year Financial Report was delivered to the Seller or (iv) in the event a Change in Control Transaction is consummated, the date thereof.

“Contingent Consideration” shall mean the Seller Trigger Three Year Contingent Consideration, the Purchaser Trigger Three Year Contingent Consideration or the Four Year Contingent Consideration, in each case as payable pursuant to Section 2.2.5.

“Contract” shall mean any written or oral contract, agreement, lease, purchase order, arrangement, commitment, understanding or obligation.

“Contribution Agreement” shall mean collectively (i) that certain Assignment and Assumption Agreement of even date by and between Purchaser and Woodmark, and (ii) that certain Assignment and Assumption Agreement of even date between Purchaser and PSP.

“Countrywide Management Agreement” shall have the meaning set forth in Section 5.2(l).

“Decree” shall mean any order, injunction, judgment, award or decree.

“Deferred Proceeds” shall mean all cash and securities actually received, and as and when received (whether, and to the extent that, payment thereof is deferred, contingent or otherwise delayed or uncertain), by Purchaser or its member(s) directly on account of any Termination Transaction or Change in Control Transaction following the consummation thereof, less any and all Transaction Fees and all liabilities and obligations of Purchaser not assumed by the buyer in such Termination Transaction or Change in Control Transaction.

“Delinquent Receivables” shall have the meaning set forth in Section 6.5.

“Disputed Items” shall have the meaning set forth in Section 2.2.3.

“Division Balance Sheet” shall have the meaning set forth in Section 4.7.

“Division Balance Sheet Date” shall have the meaning set forth in Section 4.7.

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“EBITDA” shall mean earnings before interest, taxes, depreciation and amortization calculated in accordance with GAAP, applied in the same manner in which it is applied by Purchaser as of the Closing Date notwithstanding any changes in applicable law or accounting practices.

“Employee Benefits Plans” shall have the meaning set forth in Section 3.24(a).

“Environmental Laws” shall mean any federal, state or local statute, regulation, ordinance, order, decree, or other requirement of law relating to protection of human health or the environment or to the identification, transportation, handling, discharge, emission, treatment, storage, or disposal of any pollutant, contaminant, hazardous or toxic substance or material.  Without limiting the generality of the foregoing, Environmental Laws shall include the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 261 et seq.; the Safe Drinking Water Act, 42 U.S.C. 43000 (f) et seq.; the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; and the Hazardous Materials Transportation Act, 49 U.S.C. § 1802 et seq., each as amended; together with the regulations promulgated thereunder, Permits issued thereunder, and analogous state and local statutes, regulations and ordinances.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“Excluded Assets” shall have the meaning set forth in Section 2.1.2.

“Financing Lease” shall mean (a) any lease of property (real, personal or mixed), the obligations under which are capitalized on a consolidated balance sheet of Purchaser and its Subsidiaries and (b) any other such lease to the extent that the then present value of the minimum rental commitment thereunder should, in accordance with GAAP, be capitalized on a balance sheet of the lessee.

“First Earn-Out Period” shall mean the period commencing on the second anniversary of the Closing Date and ending on the date immediately preceding the Three Year Anniversary.

“Fixed Assets” shall mean, as of the Closing Date, (i) all machinery, equipment, tools, supplies, office equipment, vehicles, forklifts, racking storage, furniture and fixtures (including all such items as set forth on the Seller Balance Sheet, with additions thereto (net of dispositions in the ordinary course of business)), (ii) all the replacements and improvements for any of the foregoing owned or leased by Seller, (iii) any rights of Seller to the warranties and licenses received from manufacturers and sellers of the aforesaid items, and (iv) any related claims, credits, and rights of recovery and set-off with respect thereto.

“Four Year Acceptance Notice” shall mean written notice from Seller to Purchaser in, or substantially in, the form of Exhibit A attached hereto and made a part hereof.

“Four Year Anniversary Date” shall mean the fourth anniversary of the Closing Date.

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“Four Year Contingent Consideration” shall mean (i) the product obtained by multiplying (A) the Adjusted EBITDA for the Second Earn-Out Period, by (B) five (5.0), (ii) subtracting from such product Total Indebtedness as of the last day of the Second Earn-Out Period, (iii) adding to such product any (A) Cash Dividends made during the period commencing on the Closing Date and terminating on the last day of the Second Earn-Out Period and (B) Purchaser’s Cash as of the last day of the Second Earn-Out Period and (iv) multiplying the amount resulting from the calculations set forth in sub-clauses (i) through (iii), inclusive, of this definition by forty-two one hundredths (.42).

“Four Year Dispute Notice” shall mean written notice from Seller to Purchaser in, or substantially in, the form of Exhibit B attached hereto and made a part hereof.

“Four Year Financial Report” shall mean (i) Purchaser’s financial statements, including only a statement of operations, balance sheet and notes thereto (prepared in accordance with GAAP in the same manner in which it is applied by Purchaser as of the Closing Date notwithstanding any changes in applicable law or accounting practices) for the Second Earn-Out Period, and (ii) a written report of Purchaser’s calculation of the Four Year Contingent Consideration and the details thereof.

“Four Year Mandatory Acceptance Notice” shall mean written notice from Purchaser to Seller in, or substantially in, the form of Exhibit C attached hereto and made a part hereof.

“Four Year Mandatory Rejection Notice” shall mean written notice from Purchaser to Seller in, or substantially in, the form of Exhibit D attached hereto and made a part hereof.

“Four Year Option Date” shall mean 5:00 p.m., local New York time, on a date that is not more than 60 days following Seller’s receipt of the Four Year Financial Report; provided, however, that, in the event of a Four Year Dispute Notice being sent pursuant to Section 2.2.5.2(a)(ii) of this Agreement, for purposes of Section 2.2.5.2(d) of this Agreement, “Four Year Option Date” shall mean a date that is 30 days following Purchaser’s receipt of the Independent Accountant’s written determination pursuant to Section 2.2.3 of this Agreement.

“Four Year Trigger Date” shall have the meaning set forth in Section 2.2.5.2 (a).

“GAAP” shall mean United States generally accepted accounting principles.

“Guaranty Notes” shall mean that certain Promissory Note A and Promissory Note B which may potentially be issued in connection with the Carousel Guaranty (as such term is defined in the PNC Credit Agreement).

“Hazardous Substance” shall mean any hazardous substance, hazardous waste, toxic substance, pollutant, contaminant, petroleum or any fraction thereof, and any other substance regulated under Environmental Laws.

“Indebtedness” shall mean, with respect to any Person (and such Person’s Subsidiaries), at a particular date, the sum (without duplication) at such date of (a) indebtedness for borrowed money or for the deferred purchase price of property or services in respect of which such Person is liable as obligor, (b) indebtedness secured by any Lien on any property or asset owned or held

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by such Person regardless of whether the indebtedness secured thereby shall have been assumed by or is a primary liability of such Person, (c) obligations of such Person under Financing Leases, (d) the face amount of all letters of credit issued for the account of or upon the application of such Person and, without duplication, the unreimbursed amount of all drafts drawn thereunder, (e) obligations (in the nature of principal or interest) of such Person in respect of acceptances or similar obligations issued or created for the account of such Person, and (f) such other interest bearing items as are required or permitted to be classified as liabilities upon a balance sheet of such person prepared in accordance with GAAP.

“Indemnification Threshold” shall have the meaning set forth in Section 7.3.

“Indemnified Purchaser Party” shall have the meaning set forth in Section 7.2.1.

“Indemnified Seller Party” shall have the meaning set forth in Section 7.2.2.

“Independent Accountant” shall have the meaning set forth in Section 2.2.3.

“Intangible Assets” shall mean all intangible personal property rights used or arising in connection with the Business, including, phone numbers, fax numbers, websites, domain names, email accounts and the name “Coffman” or any derivative or variation thereof.

“Intellectual Property” shall mean all patents, trademarks, service marks, copyrights, trade dress, trade names, logos, and other intellectual property rights, registered or unregistered, all applications relating to the registration of any of the foregoing, all licenses and sublicenses granted and obtained with respect thereto, all rights thereunder, all remedies against infringements thereof, and all rights to protection of interests therein.

“Intellectual Property and Intangible Asset Assignment” shall have the meaning set forth in Section 5.1(b).

“Inventory” shall mean, as of the Closing Date, (i) all of the finished goods, raw materials, work in progress and inventoriable supplies owned by Seller (including all such items as set forth on the Seller Balance Sheet, with additions thereto (net of dispositions in the ordinary course of business)) and (ii) any and all rights of Seller to the warranties received from its suppliers with respect to such inventory and related claims, credits, and rights of recovery and set-off with respect thereto, including the Inventory as of the Seller Balance Sheet Date set forth on Schedule 3.13 attached hereto (net of dispositions in the ordinary course of business).

“Inventory Count” shall have the meaning set forth in Section 2.2.2.1.

“Investment Bank” shall have the meaning set forth in Section 2.2.5.3(a).

“Knowledge” shall have the meaning set forth in Section 8.7.

“Lease” shall have the meaning set forth in Section 3.32(a).

“Leased Real Property” shall have the meaning set forth in Section 3.32(a).

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“Letter of Credit Notes” shall mean that certain Promissory Note A and Promissory Note B which may potentially be issued in connection with the NY Commercial Bank Letters of Credit (as such term is defined in the PNC Credit Agreement).

“Lien” shall mean any mortgage, pledge, security interest, encumbrance, lien (statutory or other) or conditional sale agreement.

“Liquidation” shall have the meaning set forth in Section 2.2.5.3(e).

“Liquidation Event” shall mean the voluntarily liquidation, winding-up or dissolution, commencement of any case, proceeding or other action by the Purchaser under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, composition, extension or other such relief with respect to it or its debts, or seeking appointment of a receiver, trustee, custodian or other similar official for all or substantially all of its assets.

“Listed Agreements” shall have the meaning set forth in Section 3.16.

“Listed Intellectual Property Agreements” shall have the meaning set forth in Section 3.11(a).

“Listed Purchaser Intellectual Property Agreements” shall have the meaning set forth in Section 4.10.

“Losses” shall have the meaning set forth in Section 7.2.1.

“Marion Lease” shall mean that certain lease agreement, dated as of March 30, 2007, among AGNL Coffman, L.L.C., Visador and Seller, as amended by that certain First Amendment to Lease Agreement of even date, among AGNL Coffman, L.L.C.  and Purchaser.

“Nationwide Consulting Agreement” means that certain Consulting Agreement of even date by and between Nationwide Industries, Inc.  and Purchaser.

“Net Asset Ceiling” shall mean $10,827,000 less checks outstanding at Closing to unaffiliated third parties for goods or services purchased by Seller in the ordinary course of business, consistent with past practice, in bona fide arms length transactions.

“Net Asset Floor” shall mean $10,327,000 less checks outstanding at Closing to unaffiliated third parties for goods or services purchased by Seller in the ordinary course of business, consistent with past practice, in bona fide arms length transactions.

“Obsolete Inventory” shall mean, as of the Closing Date, (i) Seller’s obsolete finished goods, raw materials, work in progress and inventoriable supplies calculated in accordance with Seller’s past practices, including those as of the Seller Balance Sheet Date listed on Schedule 1.5 attached hereto (net of dispositions in the ordinary course of business), and (ii) any and all rights of Seller to the warranties received from its suppliers with respect to such inventory and related claims, credits, and rights of recovery and set-off with respect thereto.

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“Occurrence” shall have the meaning set forth in Section 3.33(b).

“Other Pension Plans” shall have the meaning set forth in Section 3.24(c).

“Outstanding Amount” shall have the meaning set forth in Section 6.5.

“P&F” shall mean P&F Industries, Inc., a Delaware corporation.

“Parent Company” shall mean an entity, other than P&F, that, directly or indirectly, either (i) owns 50% or more of the fully diluted equity interests of Purchaser, (ii) has the power to vote 50% or more of the equity interests having ordinary voting power for the election of directors (or the individuals performing similar functions) of Purchaser or (iii) has the power to direct or cause the direction of the management and policies of Purchaser by contract or otherwise.

“Pension Plans” shall have the meaning set forth in Section 3.24(b).

“Permits” shall mean all permits, licenses, orders, franchises, certificates, registrations and approvals.

“Permitted Indebtedness” shall have the meaning set forth in Section 2.2.5.4(c).

“Permitted Liens” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced:  (i) Liens for Taxes, assessments, and governmental charges or levies not yet due and payable and which are being contested in good faith; (ii) materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business securing obligations that are not yet due; and (iii) Liens arising under conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business; and, in each case, which do not, and would not reasonably be expected to, individually or in the aggregate, materially adversely affect the value of or the continued use of, the Assets in the same or similar manner as such are currently being used by, or materially impairs the operations of, Seller (and with respect to Purchaser, the Purchaser Assets in the same or similar manner as such are currently being used by, or materially impairs the operations of, Purchaser).

“Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or other entity, including any agency, division, subdivision, audit group or procuring office of a government, whether domestic or foreign, national, state or local.

“PNC” shall mean PNC Bank, National Association.

“PNC Credit Agreement” shall mean that certain Revolving Credit, Term Loan and Security Agreement of even date between Purchaser and PNC, as lender and agent, or any successor or replacement credit facility entered into by Purchaser on prevailing market terms and in an amount not to exceed the aggregate outstanding amounts plus the then-current unused availability under the PNC Credit Agreement as of the time such credit facility is entered into.

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“Product Liability Lawsuits” shall have the meaning set forth in Section 3.33(a)(i).

“Products” shall have the meaning set forth in Section 3.33(a)(i).

“PSP” shall have the meaning set forth in Section 4.2.

“PSP Division” shall have the meaning set forth in Section 4.6(a)(i).

“PSP A Note” means that certain Promissory Note of even date made payable by the Purchaser to the order of PSP in the original principal amount set forth therein.

“PSP B Note” means that certain Promissory Note of even date made payable by the Purchaser to the order of PSP in the original principal amount set forth therein.

‘PSP Notes” means the PSP A Note and the PSP B Note.

“Purchase Price” shall have the meaning set forth in Section 2.2.1.

“Purchaser” shall have the meaning set forth in the Preamble.

“Purchaser Assets” means the assets of the Woodmark Division and PSP Division acquired by Purchaser pursuant to the Contribution Agreement.

“Purchaser Business” means the business conducted by the Woodmark Division and PSP Division immediately prior to the execution and delivery of the Contribution Agreement.

“Purchaser EBITDA” shall mean the EBITDA of Purchaser for any period, adjusted as follows:  (i) Purchaser EBITDA shall be computed without regard to “extraordinary items” of gain or loss as that term is defined in GAAP; (ii) Purchaser EBITDA shall not include extraordinary SG&A expenses unless consented to by Seller, which consent shall not be unreasonably withheld or delayed (and shall not include any profits related thereto or associated therewith) incurred by Purchaser during the First Earn-Out Period or the Second Earn-Out Period which are inconsistent with the conduct of the business established during the first two years of the Contingency Period; (iii) Purchaser EBITDA shall not include any revenue, profit or loss from extraordinary sales of goods or services by Purchaser; (iv) Purchaser EBITDA shall not include all startup operating expenditures and profits related to or associated with Purchaser establishing any new facility during either the First Earn-Out Period or the Second Earn-Out Period, as applicable unless consented to by Seller, which consent shall not be unreasonably withheld or delayed; (v) Purchaser EBITDA shall be computed consistently in the same manner in which it is computed as of the Closing Date regardless of any changes in applicable law or accounting practices; and (vi) Purchaser EBITDA shall not include any gains, losses or profits realized from goods or services sold by Purchaser to its Affiliates or vice versa; provided, however, that notwithstanding any provision of this Agreement, Seller acknowledges and agrees that there shall be no restriction or limitation upon Purchaser’s ability to enter into arm’s-length commercial transactions of any nature or magnitude with its Affiliates, and Purchaser may, but shall not be obligated to, enter into any such transactions in its sole and absolute discretion which shall be final, conclusive and binding.

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“Purchaser Financial Statements” shall have the meaning set forth in Section 4.6(a)

“Purchaser Fixed Assets” shall mean, with respect to the Purchaser Assets, (i) all machinery, equipment, tools, supplies, office equipment, vehicles, forklifts, racking storage, furniture and fixtures (including all such items as set forth on the Division Balance Sheet, with additions thereto (net of dispositions in the ordinary course of business)), (ii) all the replacements for any of the foregoing owned or leased by Purchaser, (iii) any rights of Purchaser to the warranties and licenses received from manufacturers and sellers of the aforesaid items, and (iv) any related claims, credits, and rights of recovery and set-off with respect thereto.

“Purchaser General Maximum Limitation” shall mean:  (i) during the period commencing on the Closing Date and ending on the date immediately preceding the first anniversary of the Closing Date, Two Million ($2,000,000) Dollars, (ii) during the period commencing on the first anniversary of the Closing Date and ending on the date immediately preceding the second anniversary of the Closing Date, One Million Five Hundred Thousand ($1,500,000) Dollars, and (iii) on and after the third anniversary of the Closing Date, One Million ($1,000,000) Dollars;

“Purchaser Intellectual Property” shall have the meaning set forth in Section 4.10.

“Purchaser Inventory” shall mean those items described on Schedule 4.12(a) attached hereto.

“Purchaser Knowledge Group” shall have the meaning set forth in Section 8.7.

“Purchaser Obsolete Inventory” shall mean (i) all of the finished goods, raw materials, work in progress and inventoriable supplies listed on Schedule 4.12(b) attached hereto, and (ii) any and all rights of Purchaser to the warranties received from its suppliers with respect to such inventory and related claims, credits, and rights of recovery and set-off with respect thereto.

“Purchaser Trigger Three Year Contingent Consideration” shall mean (i) the product obtained by multiplying (A) the Adjusted EBITDA for the First Earn-Out Period, by (B) five and five tenths (5.5), (ii) subtracting from such product Total Indebtedness as of the last day of the First Earn-Out Period, and (iii) adding to such product any (A) Cash Dividends made during the period commencing on the Closing Date and terminating on the last day of the First Earn-Out Period and (B) Purchaser’s Cash as of the last day of the First Earn-Out Period and (iv) multiplying the amount resulting from the calculations set forth in sub-clauses (i) through (iii), inclusive, of this definition by forty-two one hundredths (.42).

“Rebates” shall mean rebates, credits and allowances.

“Record Date” shall have the meaning set forth in Section 6.5.

“Retained Liabilities” shall have the meaning set forth in Section 2.3.1.

“Retrofits” shall have the meaning set forth in Section 3.33(a)(iii).

“Sale Period” shall have the meaning set forth in Section 2.2.5.3(a).

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“Second Earn-Out Period” shall mean the period commencing on the Three Year Anniversary Date and ending on the date immediately preceding the Four Year Anniversary Date.

“Seller” shall have the meaning set forth in the Preamble.

“Seller Balance Sheet” shall have the meaning set forth in Section 3.7(a).

“Seller Balance Sheet Date” shall have the meaning set forth in Section 3.7(a).

“Seller Financial Statements” shall have the meaning set forth in Section 3.6(a).

“Seller General Maximum Limitation” shall mean:  as of the day any indemnification payment is due and payable under Article VII (whether by offset, withholding, deduction or otherwise) (1) provided a Change in Control Transaction has not been consummated:  (i) the aggregate amount of:  (A) an amount equal to all amounts payable, whether or not due, under the Seller Note, including the aggregate amount of principal and interest outstanding, as of the date a final, binding and non-appealable order of a court of competent jurisdiction is rendered relative to each Claim with respect to which the Seller General Maximum Limitation is being calculated (in each instance, the “Judgment Date”), (B) an amount equal to all amounts payable, whether or not due, under the Visador Management Agreement, to Visador as of the applicable Judgment Date, (C) an amount equal to Five Million ($5,000,000) Dollars during the period commencing on the Closing Date and ending on the date immediately preceding the first anniversary of the Closing Date, which amount shall be reduced to Three Million Three Hundred Thirty-Three Thousand Three Hundred Thirty-Three ($3,333,333) Dollars during the period commencing on the first anniversary of the Closing Date and ending on the date immediately preceding the second anniversary of the Closing Date, and which amount shall be reduced to One Million Six Hundred Sixty-Six Thousand Six Hundred Sixty-Seven ($1,666,667) Dollars on and after the second anniversary of the Closing Date, and (D) an amount equal to any purchase price adjustment pursuant to Section 2.2.2.3; and (2) in the event that a Change in Control Transaction has been consummated:  in the event of any escrow agreed to by Purchaser for the benefit of a third party in such Change in Control Transaction, Seller’s Portion of any such escrow, provided that Seller’s Portion shall not exceed the lesser of (i) ten (10%) percent of the Change in Control Consideration received by Seller and (ii) Seven Hundred Fifty Thousand ($750,000) Dollars (in each case, the “Seller Holdback”).

“Seller Holdback” shall have the meaning set forth in the definition of “Seller General Maximum Limitation.”

“Seller Knowledge Group” shall have the meaning set forth in Section 8.7.

“Seller Note” shall have the meaning set forth in Section 2.2.4(a)(ii).

“Seller Trigger Three Year Contingent Consideration” shall mean (i) the product obtained by multiplying (A) the Adjusted EBITDA for the First Earn-Out Period, by (B)(1) four (4.0), in the event the Adjusted EBITDA for the First Earn-Out Period is Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) or less, (2) four and twenty-five one hundredths (4.25), in the event the Adjusted EBITDA for the First Earn-Out Period is greater than Two

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Million Two Hundred Fifty Thousand Dollars ($2,250,000) and less than Three Million Fifty-Eight Thousand Dollars ($3,058,000) or (3) four and five tenths (4.5), in the event Adjusted EBITDA for the First Earn-Out Period is equal to or greater than Three Million Fifty-Eight Thousand Dollars ($3,058,000), (ii) subtracting from such product Total Indebtedness as of the last day of the First Earn-Out Period, and (iii) adding to such product any (A) Cash Dividends made during the period commencing on the Closing Date and terminating on the last day of the First Earn-Out Period and (B) Purchaser’s Cash as of the last day of the First Earn-Out Period and (iv) multiplying the amount resulting from the calculations set forth in sub-clauses (i) through (iii), inclusive, of this definition by forty-two one hundredths (.42).

“Seller’s Portion” shall mean forty-two (42%) percent, payable in kind in the same proportion received by Purchaser and/or Purchaser’s direct or indirect equityholders.

“Subordination Agreement” shall have the meaning set forth in Section 5.1(n).

“Subsidiary” shall mean each corporation, partnership, limited liability company and other business entity controlled by a Person.  (As used herein, “controlled by” means (i) the ownership of not less than fifty (50%) percent of the voting securities or other interests of a corporation, partnership, limited liability company or other business entity, or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a corporation, partnership, limited liability company or other business entity, whether through ownership of voting shares, by contract or otherwise).

“Survival Termination Date” shall mean, (A) in the event that a Change in Control Transaction is not consummated, the latter of:  (i) in the event that Seller Trigger Three Year Contingent Consideration is due and payable to Seller pursuant to the provisions of Section 2.2.5.1 of this Agreement, the date the payment Seller Trigger Three Year Contingent Consideration is due and payable to Seller pursuant to the provisions of Section 2.2.5.1 of this Agreement, (ii) in the event that Purchaser Trigger Three Year Contingent Consideration is due and payable to Seller pursuant to the provisions of Section 2.2.5.1 of this Agreement, the date the Purchaser Trigger Three Year Contingent Consideration is due and payable to Seller pursuant to the provisions of Section 2.2.5.1 of this Agreement, (iii) in the event that no Four Year Contingent Consideration is due and payable to Seller pursuant to the provisions of Section 2.2.5.2 (b) of this Agreement, the date the Four Year Contingent Consideration Report is delivered to Seller pursuant to the provisions of Section 2.2.5.2 (b) of this Agreement, (iv) in the event that Four Year Contingent Consideration is due and payable to Seller pursuant to the provisions of Section 2.2.5.2 of this Agreement, the date the Four Year Contingent Consideration is due and payable to Seller pursuant to the provisions of Section 2.2.5.2 of this Agreement, or (v) in the event that any Termination Proceeds are due and payable to Seller pursuant to the provisions of Section 2.2.5.3 of this Agreement, the date the Termination Proceeds are due and payable to Seller pursuant to the provisions of Section 2.2.5.3 of this Agreement, or (B) subject to the provisions of Section 7.4(b) of this Agreement, in the event that a Change in Control Transaction is consummated, (i) if such Change of Control Transaction is consummated prior to the Three Year Anniversary Date, the earlier of (a) twelve months after the closing date of the Change in Control Transaction or (b) the Three Year Anniversary Date and (ii) if such Change of Control Transaction is consummated on or after the Three Year Anniversary Date, the closing date of the Change of Control Transaction.

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“Taxes” shall mean all federal, state, local and foreign taxes, however denominated, including any interest, penalties or additions to tax that may become payable in respect thereof, imposed by any governmental body, which taxes shall include all income taxes, payroll and employee withholding taxes, unemployment insurance, social security, sales and use taxes, utility taxes, excise taxes, franchise taxes, capital stock taxes, gross receipts taxes, occupation taxes, real and personal property taxes, value added taxes, stamp taxes, transfer taxes, gains taxes, worker’s compensation taxes and other obligations of the same or a similar nature, whether arising before, on or after the Closing Date.

“Termination Date” shall have the meaning set forth in Section 6.4.

“Termination Proceeds” shall mean all cash and securities actually received by Purchaser or its member(s) directly on account of any Termination Transaction or Change In Control Transaction upon the consummation thereof, less any and all Transaction Fees and all liabilities and obligations of Purchaser not assumed by the buyer in such Termination Transaction or Change in Control Transaction.  In the event of a Change in Control Transaction that includes entities or assets in addition to, or in lieu of, the assets or equity of Purchaser, the Termination Proceeds shall be deemed to be the imputed value of Purchaser in such Change in Control Transaction.

“Termination Transaction” shall mean, except for a Non-Qualifying Transaction, whether or not in connection with a Liquidation, the sale of substantially all of the assets, sale of all outstanding equity securities, merger or consolidation of Purchaser in accordance with Section 2.2.5.3.

“Texas Sublease” shall mean that certain Sublease Agreement, of even date herewith, between Seller, as sublessor, and Purchaser, as sublessee, with respect to the premises known as “Building 6” within Arlington Industrial Park, Arlington, Texas.

“Three Year Acceptance Notice” shall mean written notice from Seller to Purchaser in, or substantially in, the form of Exhibit E attached hereto and made a part hereof.

“Three Year Anniversary Date” shall mean the third anniversary of the Closing Date.

“Three Year Dispute Notice” shall mean written notice from Seller to Purchaser in, or substantially in, the form of Exhibit F attached hereto and made a part hereof.

“Three Year Financial Report” shall mean (i) Purchaser’s financial statements, including at least a statement of operations, balance sheet and notes thereto (prepared in accordance with GAAP applied in the same manner in which it is applied by Purchaser as of the Closing Date notwithstanding any changes in applicable law or accounting practices) for the First Earn-Out Period (with such other information as Purchaser may determine its sole and absolute discretion which shall be final, conclusive and binding), and (ii) a written report of Purchaser’s calculation of the Seller Trigger Three Year Contingent Consideration, the Purchaser Trigger Three Year Contingent Consideration, and the details thereof.

“Three Year Option Date” shall mean 5:00 p.m., local New York time, on a date that is not more than sixty (60) days following Seller’s receipt of the Three Year Financial Report;

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provided, however, that, in the event of a Three Year Dispute Notice being sent pursuant to Section 2.2.5.1(a)(iii) of this Agreement, for purposes of Section 2.2.5.1(d) or Section 2.2.5.1(g) of this Agreement, “Three Year Option Date” shall mean a date that is thirty (30) days following Purchaser’s receipt of the Independent Accountant’s written determination pursuant to Section 2.2.3 of this Agreement.

“Three Year Rejection Notice” shall mean written notice from Seller to Purchaser in, or substantially in, the form of Exhibit G attached hereto and made a part hereof.

“Total Indebtedness” shall mean the Indebtedness of the Purchaser (including any Subsidiaries).

“Transaction Fees” shall mean (i) all Losses reasonably incurred by Purchaser, its member(s) and its and their Affiliates, directly or indirectly, in any way relating to (A) a Termination Transaction, and/or (B) all efforts, including Actions, commenced by or on behalf of such Persons to enforce any rights against the buyer, other counter-party or third party relative to any Termination Transaction, including, with respect to the collection of Termination Proceeds, Deferred Proceeds and/or any Losses incurred by Purchaser its member(s) or its or their Affiliates; (ii) all break-up fees, topping fees and similar fees paid or payable by Purchaser with respect to a Termination Transaction (iii) all Losses incurred by any Person, other than Purchaser, its member(s) or its or their Affiliates, which Purchaser, its member (s) or its or their Affiliates pays, are required or agree to pay, and (iv) all Losses incurred by Purchaser, its member(s) or its or their Affiliates which as of the date any payment to Seller would otherwise be due is unpaid by such Person; without limiting the generality of the foregoing, Transaction Fees shall include any of the above described amounts relative to every Termination Transaction, whether consummated or not.

“Transferred Employee” shall have the meaning set forth in Section 6.4(a).

“Unaudited Seller Financial Statements” shall have the meaning set forth in Section 3.6(a)(ii).

“Undrawn Availability” shall have the meaning ascribed to such term in the PNC Credit Agreement.

 “Virginia Sublease” shall mean that certain Sublease Agreement, of even date herewith, between Purchaser, as sublessor, and Visador, as sublessee, with respect to the premises known as 320 Johnston Road, Marion, Virginia, 24354.

“Visador” shall mean Visador Holding Corporation.

“Visador Consulting Agreement” shall have the meaning set forth in Section 5.1(f).

“Visador Management Agreement” shall have the meaning set forth in Section 5.1(g).

“W.A.R.N.”  shall mean the Worker Adjustment and Retraining Notification Act, as codified at 29 U.S.C., §§ 2101-2109, and the regulations promulgated thereunder.

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“W.A.R.N.  Liabilities” shall have the meaning set forth in Section 6.4(d).

“Welfare Plans” shall have the meaning set forth in Section 3.24(d).

“Woodmark” shall have the meaning set forth in Section 4.2.

“Woodmark Division” shall have the meaning set forth in Section 4.6(a)(i).

“Woodmark A Note” means that certain Promissory Note of even date made payable by Purchaser to Woodmark in the original principal amount set forth therein.

“Woodmark B Note” means that certain Promissory Note of even date made payable by Purchaser to Woodmark in the original principal amount set forth therein.

“Woodmark Notes” means the Woodmark A Note and the Woodmark B Note.

ARTICLE II
PURCHASE AND SALE

2.1Purchase and Sale of Assets.  Upon and subject to the terms and conditions of this Agreement, Seller hereby grants, sells, conveys, assigns, transfers and delivers to Purchaser, and Purchaser hereby purchases and accepts from Seller, for the Purchase Price and in reliance on the representations, warranties and covenants of Seller contained herein, all of the right, title and interest of Seller in and to all of Seller’s assets, properties and rights (other than the Excluded Assets), wherever located (collectively, the “Assets”), free and clear of all Liens other than Permitted Liens.

2.1.1Included Assets.  The Assets shall include all of the right, title and interest of Seller in and to the following assets, properties and rights as of the Closing Date (but excluding the Excluded Assets):

(a)all Accounts;

(b)all Inventory and Obsolete Inventory;

(c)all prepaid expenses;

(d)all security deposits;

(e)all Fixed Assets, including the Fixed Assets set forth on Schedule 3.17 attached hereto;

(f)all rights of Seller under Contracts (such Contracts collectively, the “Assigned Contracts”), including the Contracts listed and described on Schedule 3.16 attached hereto;

(g)all Intellectual Property, including the Intellectual Property set forth on Schedule 3.11(a) attached hereto;

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(h)all Intangible Assets, including the Intangible Assets set forth on Schedule 3.11(b) attached hereto;

(i)all rights of Seller under all Permits, including the Permits set forth on Schedule 3.20(a) attached hereto;

(j)all Certifications, including the Certifications set forth on Schedule 3.20(b) attached hereto;

(k)all of Seller’s documents, files, records, lists and correspondence, wherever located, and in whatever medium, whether hard copy, electronic or otherwise, including all of Seller’s purchase, marketing and sales records, customer and supplier records and lists, customer data, production records, pricing and cost information, manuals, business and marketing plans and proposals, trade secrets, and any confidential information (whether such confidential information has been reduced to writing or is in electronic format or otherwise);

(l)all of Seller’s rights and choses in action, including all rights under express or implied warranties from suppliers and vendors and all rights to receive insurance proceeds;

(m)all technical information, data, specifications, research and development information, engineering drawings, operating and maintenance manuals and other know-how;

(n)all of Seller’s goodwill associated with the Business;

(o)all of Seller’s Books and Records; and

(p)all other tangible and intangible assets, properties and rights of Seller.

2.1.2Excluded Assets.  Notwithstanding the foregoing, the Assets shall not include any of the following assets, properties or rights (the “Excluded Assets”):

(a)Seller’s cash and cash equivalents;

(b)Seller’s rights under this Agreement and the Additional Transaction Documents;

(c)Seller’s minute books, organizational documents and tax returns;

(d)Seller’s Books and Records relating exclusively to any Excluded Asset or Retained Liability;

(e)Seller’s rights and choses in action relating exclusively to any Excluded Asset or Retained Liability; and

(f)Seller’s right to receive any income Tax refunds.

2.1.3Third Party Consents.  To the extent that Seller’s rights under any Contract, Permit or other Asset to be assigned to Purchaser hereunder may not be assigned without the

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consent of another Person which has not been obtained, this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful, and Seller, at its expense, shall use commercially reasonable efforts to obtain any such required consent(s) as promptly as possible.  If any such consent shall not be obtained or if any attempted assignment would be ineffective or would impair Purchaser’s rights in and to the Asset in question so that Purchaser would not in effect acquire the benefit of all such rights, Seller, to the maximum extent permitted by law and the Asset, shall, at Purchaser’s request, without charge, cooperate with Purchaser in any other reasonable arrangement designed to provide such benefits to Purchaser.  Nothing in this Section shall limit or affect the representations contained in Section 3.4.

2.2Purchase Price.

2.2.1Purchase Price.  The purchase price for the Assets (the “Purchase Price”) shall be (subject to adjustment as provided in Section 2.2.2 of this Agreement):

(a)Eight Million Five Hundred Thousand ($8,500,000) Dollars;

(b)the Contingent Consideration, Termination Proceeds and Deferred Proceeds, as applicable; and

(c)Purchaser’s assumption of the Assumed Payables to the extent provided in Section 2.3 of this Agreement.

2.2.2Inventory; Closing Report; Purchase Price Adjustment.

2.2.2.1Inventory.  A physical count of the Inventory will be taken no later than June 30, 2009, and rolled back to the Closing Date in a manner consistent with Seller’s past practices (the “Inventory Count”).

2.2.2.2Closing Statement.  A statement (the “Closing Statement”) shall be prepared by Purchaser with, if requested by Purchaser, the assistance of Seller, based upon the results of the Inventory Count and the Books and Records of Seller as of the date of this Agreement on a stand-alone basis (i.e., with out giving effect to the consummation of the transactions contemplated by this Agreement).  The Closing Statement shall be prepared in accordance with GAAP, and on a basis consistent with the preparation of the Seller Balance Sheet, including giving effect to reasonable allowances for bad debt, inventory shrinkage and obsolescence, and reasonable reserves for vacation pay, warranty, and customer returns, allowances and rebates.  Purchaser shall deliver to Seller the Closing Statement no later than forty-five (45) days after the date of this Agreement.  Any dispute between Purchaser and Seller with regard to the Closing Statement shall be resolved pursuant to the provisions of Section 2.2.3.  The Closing Statement shall set forth, as of the Closing Date, in reasonable detail, an itemized calculation of the Closing Net Assets of Seller.

2.2.2.3Purchase Price Adjustment.  When the Closing Net Assets of Seller are finally determined (including pursuant to Section 2.2.3, if applicable), the Purchase Price will be adjusted in the following manner:

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(a)If the Closing Net Assets of Seller are greater than the Net Asset Ceiling, the Purchase Price will be increased by an amount equal to such excess and Purchaser shall pay to Seller such excess, if any, in accordance with Section 2.2.4 of this Agreement.

(b)If the Closing Net Assets of Seller are less than the Net Asset Floor, the Purchase Price will be decreased by an amount equal to such difference, and Seller shall pay to Purchaser such amount in accordance with Section 2.2.4.

2.2.3Disputes.  In the event that Seller disputes the Closing Statement in any respect, Seller shall so notify Purchaser within thirty (30) days of its receipt of the Closing Statement (which notice shall specify in reasonable detail the disputed items).  If the parties are unable to resolve such dispute within thirty (30) days thereafter, the items that remain in dispute (the “Disputed Items”) shall be submitted to an independent accounting firm that is mutually acceptable to Purchaser and Seller (the “Independent Accountant”) for determination.  In the event that the parties do not agree upon an Independent Accountant within fifteen (15) days of the date on which an Independent Accountant is initially proposed by one party to the other, the parties shall submit the matter to the American Arbitration Association for a determination of the Independent Accountant.  In connection with its review, the Independent Accountant shall (i) have the right to undertake such procedures as it may deem appropriate and examine all work papers utilized in connection with the preparation of the Closing Statement, and (ii) only make a determination as to the Disputed Items.  The decision of the Independent Accountant as to the Disputed Items shall be final, conclusive and binding upon the parties, without any right of further appeal (absent manifest error).  The parties shall cause the Independent Accountant to deliver a written report of its determination under this Section 2.2.3 contemporaneously to each of the parties.  The expense of (A) the Independent Accountant, and (B) the submission to the American Arbitration Association (as set forth in this paragraph) shall be borne by Purchaser, on the one hand, and Seller, on the other hand, in proportion to the relative differences between (x) the final position of the parties prior to submission of the matter to the Independent Accountant and (y) the determination of the Independent Accountant.

2.2.4Payment of Purchase Price.  (a) The Purchase Price is being paid to Seller as follows:

(i)Four Million Five Hundred Twenty-Eight Thousand Ninety-Eight and Thirty-Six One Hundredths ($4,528,098.36) Dollars (the “Cash Payment”) is being paid by wire transfer to an account designated in writing by Seller contemporaneously with the execution and delivery of this Agreement;

(ii)Three Million Nine Hundred Seventy-One Thousand Nine Hundred One and Sixty-Four One Hundredths ($3,971,901.64) Dollars shall be paid by Purchaser’s execution and delivery of a promissory note of Purchaser payable to Seller of even date herewith (the “Seller Note”) contemporaneously with the execution and delivery of this Agreement.

(iii)the Contingent Consideration shall be paid in accordance with Section 2.2.5; and

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(iv)an amount equal to the Assumed Payables will be paid by Purchaser’s assumption thereof pursuant to Section 2.3.2 of this Agreement.

(b)The amount payable pursuant to Section 2.2.2 (the “Adjustment Amount”) shall be payable following the final determination of the amount thereof as follows:

(i)In the event that the Adjustment Amount is payable to Purchaser, then Purchaser, at its option, shall be paid such amount by withholding from, offsetting against and deduction of all or any portion of the Adjustment Amount from any amounts otherwise payable by Purchaser under (A) this Agreement and (B) Additional Transaction Documents; provided, however, that Purchaser shall not have the right to withhold from, offset against or deduct any such amounts from any amounts otherwise payable by Purchaser pursuant to or otherwise in connection with the Visador Consulting Agreement, the Texas Sublease or the AGNL Guaranty; or

(ii)In the event that the Adjustment Amount is payable to Seller, then Purchaser shall pay the Adjustment Amount to Seller by check made payable to the order of Seller contemporaneously with any payment due and payable pursuant to Section 2.2.5 of this Agreement.

2.2.5Contingent Consideration.

2.2.5.1Three Year Contingent Consideration.

(a)Within ninety (90) days following the Three Year Anniversary Date, Purchaser shall deliver to Seller the Three Year Financial Report.  Following Seller’s receipt of the Three Year Financial Report, Seller shall either:

(i)deliver to Purchaser the Three Year Acceptance Notice;

(ii)deliver to Purchaser the Three Year Rejection Notice; or

(iii)deliver to Purchaser the Three Year Dispute Notice.

(b)In the event that Purchaser receives the Three Year Acceptance Notice on or before the Three Year Option Date, Purchaser shall pay to Seller the Seller Trigger Three Year Contingent Consideration within thirty (30) days following Purchaser’s receipt of the Three Year Acceptance Notice.

(c)In the event that Purchaser (i) receives the Three Year Rejection Notice on or before the Three Year Option Date, and (ii) does not receive (x) the Three Year Acceptance Notice or (y) Three Year Dispute Notice on or before the Three Year Option Date, Purchaser shall not pay to Seller the Seller Trigger Three Year Contingent Consideration and Seller’s rights thereto shall be automatically terminated without further action on the part of any Person.

(d)In the event that Purchaser receives the Three Year Dispute Notice on or before the Three Year Option Date and (ii) does not receive (x) the Three Year Acceptance Notice, or (y) the Three Year Rejection Notice on or before the Three Year Option Date, Seller

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and Purchaser shall, during the thirty (30) day period following Purchaser’s receipt of the Three Year Dispute Notice, cooperate with each other to resolve each disputed item set forth in the Three Year Dispute Notice.  To the extent any matter set forth in the Three Year Dispute Notice remains unresolved following the expiration of such thirty (30) day period, all remaining disagreements with respect to the calculation of such Seller Trigger Three Year Contingent Consideration shall be resolved under the procedures set forth in Section 2.2.3 of this Agreement by substituting “Three Year Financial Report” for “Closing Statement”.  The Parties shall cause such dispute to be resolved within ninety (90) days following the initial submission of such dispute to the Independent Accountant pursuant to Section 2.2.3 of this Agreement.

(e)Within thirty (30) days following receipt of the written determination of the Independent Accountant pursuant to Section 2.2.3 of this Agreement with respect to any dispute submitted pursuant to Section 2.2.5.1(d) of this Agreement, Seller shall:

(i)deliver to Purchaser the Three Year Acceptance Notice, whereupon the provisions of Section 2.2.5.1(b) of this Agreement shall apply; or

(ii)deliver to Purchaser the Three Year Rejection Notice, whereupon the provisions of Section 2.2.5.1(c) shall apply.

(f)Seller shall not deliver to Purchaser more than one notice under Section 2.2.5.1(a) or 2.2.5.1(e) of this Agreement.  In the event Purchaser receives on or before the Three Year Option Date more than one notice under Section 2.2.5.1 (a), or no such notice, Seller is hereby deemed to have delivered only a Three Year Rejection Notice (on or before the Three Year Option Date) pursuant to Section 2.2.5.1(c) of this Agreement.  Except to the extent permitted by Section 2.2.5.1 (e) (and assuming only a Three Year Dispute Notice (and no Three Year Acceptance Notice or Three Year Rejection Notice) was received by Purchaser as contemplated by Section 2.2.5.1 (a) prior to the Three Year Option Date), any notice under this Section 2.2.5.1 received by Purchaser following the Three Year Option Date shall be of no effect.

(g)Notwithstanding anything else contained in this Agreement, in the event that Purchaser (i) receives the Three Year Rejection Notice on or before the Three Year Option Date (or Seller is deemed to have delivered the Three Year Rejection Notice on or before the Three Year Option Date pursuant to Section 2.2.5.1(f) of this Agreement), or (ii) does not receive (x) the Three Year Acceptance Notice or (y) Three Year Dispute Notice, in each case on or before the Three Year Option Date, then, (A) if Adjusted EBITDA for the First Earn Out Period is equal to or greater than Three Million Fifty-Eight Thousand ($3,058,000) Dollars (as shown on the Three Year Contingent Consideration Report or as otherwise determined pursuant to Section 2.2.5.1(d) of this Agreement), Purchaser may, in its sole and absolute discretion, which shall be final, conclusive and binding, pay to Seller the Purchaser Trigger Three Year Contingent Consideration and (B) if Adjusted EBITDA for the First Earn Out Period is less than Three Million Fifty-Eight Thousand ($3,058,000) Dollars (as shown on the Three Year Contingent Consideration Report or as otherwise determined pursuant to Section 2.2.5.1(d) of this Agreement), Purchaser may, in its sole and absolute discretion, which shall be final, conclusive and binding, pay to Seller the Purchaser Trigger Three Year Contingent

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Consideration as if the Adjusted EBITDA was exactly Three Million Fifty-Eight Thousand ($3,058,000) Dollars.

2.2.5.2Four Year Contingent Consideration.

(a)Provided no Seller Trigger Three Year Contingent Consideration has been paid or is due and payable to Seller and Purchaser has not paid to Seller any Purchaser Trigger Three Year Contingent Consideration, in each case pursuant to Section 2.2.5.1 of this Agreement, within ninety (90) days following the Four Year Anniversary Date (the last day of such ninety (90) day period being referred to as the “Four Year Trigger Date”), Purchaser shall deliver to Seller the Four Year Financial Report, and Purchaser may, in its sole and absolute discretion, which shall be final, conclusive and binding, elect to pay to Seller the Four Year Contingent Consideration (such election to be evidenced by Purchaser’s written notice to Seller which shall accompany the Four Year Financial Report); provided, however, that such election shall not be binding upon Purchaser if Seller elects to, or is deemed to have, delivered the Four Year Dispute Notice to Purchaser.  Following Seller’s receipt of the Four Year Financial Report, if Purchaser has elected to pay the Four Year Contingent Consideration, Seller shall either:

(i)deliver to Purchaser the Four Year Acceptance Notice;

(ii)deliver to Purchaser the Four Year Dispute Notice.

(b)Notwithstanding anything else contained in this Agreement, if following the resolution of any dispute pursuant to Section 2.2.5.2(d), or if there is no such dispute, the Four Year Financial Report reflects that the Four Year Contingent Consideration is $0 or a negative number, Seller shall not be entitled to any Four Year Contingent Consideration, Termination Proceeds or Deferred Proceeds or other payments under Section 2.2.5 and Purchaser shall have no further obligations under such section.

(c)In the event that Purchaser receives the Four Year Acceptance Notice on or before the Four Year Option Date, Purchaser shall pay to Seller the Four Year Contingent Consideration within thirty (30) days following Purchaser’s receipt of the Four Year Acceptance Notice.

(d)In the event that Purchaser (i) receives the Four Year Dispute Notice on or before the Four Year Option Date and does not receive the Four Year Acceptance Notice on or before the Four Year Option Date, Seller and Purchaser shall during the thirty (30) day period following Purchaser’s receipt of the Four Year Dispute Notice cooperate with each other to resolve each disputed item set forth in the Four Year Dispute Notice.  To the extent any matter set forth in the Four Year Dispute Notice remains unresolved following the expiration of such thirty (30) day period, all remaining disagreements with respect to the calculation of such Four Year Contingent Consideration shall be resolved under the procedures set forth in Section 2.2.3 of this Agreement by substituting “Four Year Contingent Consideration Report” for “Closing Statement”.  The Parties shall cause such dispute to be resolved within ninety (90) days following the initial submission of such dispute to the Independent Accountant pursuant to Section 2.2.3 of this Agreement.

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(e)Within thirty (30) days following receipt of the written determination of the Independent Accountant pursuant to Section 2.2.3 of this Agreement with respect to any dispute submitted pursuant to Section 2.2.5.2(d) of this Agreement, Purchaser may in its sole and absolute discretion, which shall be final, conclusive and binding:

(i)deliver to Seller the Four Year Mandatory Acceptance Notice, together with payment to Seller of the Four Year Contingent Consideration (calculated using the amount finally determined by the Independent Account pursuant to Section 2.3 of this Agreement with respect to the matters submitted pursuant to Section 2.2.5.2 (d) of this Agreement); or

(ii)deliver to Seller the Four Year Mandatory Rejection Notice and Purchaser shall not pay to Seller the Four Year Contingent Consideration and Seller’s rights thereto shall be automatically terminated without further action on the part of any Person.

(f)Seller shall not deliver to Purchaser more than one notice under Section 2.2.5.2(a) of this Agreement.  In the event Purchaser receives prior to the Four Year Option Date more than one such notice or no such notice, Seller is hereby deemed to have delivered only a Four Year Acceptance Notice pursuant to Section 2.2.5.2(a)(i) of this Agreement.  Any notice under this Section 2.2.5.2 received by Purchaser following the Four Year Option Date shall be of no effect.

2.2.5.3Termination Transaction.

(a)In the event that (i) Purchaser has not received the Three Year Acceptance Notice on or before the Three Year Option Date, (ii) Purchaser is not obligated to pay the Purchaser Trigger Contingent Consideration pursuant to Section 2.2.5.1 of this Agreement, (iii) Purchaser is not obligated to pay the Four Year Contingent Consideration pursuant to 2.2.5.2 of this Agreement, and (iv) a Change of Control Transaction has not been consummated, Purchaser shall (during the one (1) year period commencing on the day immediately following the Four Year Trigger Date (the “Sale Period”)) use its commercially reasonable efforts to consummate a Termination Transaction, or cause a Termination Transaction to be consummated, as soon as reasonably practicable, following the Four Year Option Date.  The parties hereby agree that (A) as soon as reasonably practicable following the Four Year Option Date, Purchaser shall notify Seller of the proposed investment bank (the “Investment Bank”) selected by Purchaser to conduct the sale process (which Investment Bank shall be reasonably acceptable to Seller (it being understood and agreed by Seller that Purchaser need not select an Investment Bank unless and until Purchaser has received from Seller Seller’s written notice indicating such Investment Bank is acceptable to Seller, which notice of acceptance shall not be unreasonably withheld or delayed following Purchaser’s request therefor)); (B) Seller shall have access to, and shall have the ability to ask questions about the sale process of, Purchaser and, if applicable, the Investment Bank, provided that an officer of Purchaser, designated by the Board of Directors of P&F is present during each such opportunity; (C) Purchaser shall provide Seller with copies of all marketing materials created by Purchaser or the Investment Bank and used in the sale process and information on the terms and conditions of all bids submitted for Purchaser; and (D) Seller shall, upon its request, be kept advised by Purchaser regarding the timing, structure, pricing, contingencies and other material terms and conditions of the Termination Transaction; provided,

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however, that the timing, structure, pricing, contingencies and all other terms and conditions of the (and whether or not to consummate any) Termination Transaction shall be determined by Purchaser, in its sole and absolute discretion, which shall be final, conclusive and binding.

(b)Contemporaneously with the consummation of a Termination Transaction, if any, Purchaser shall pay to Seller Seller’s Portion of any Termination Proceeds.

(c)Following the consummation of a Termination Transaction, Purchaser shall pay to Seller Seller’s Portion of any Deferred Proceeds within ten (10) days following Purchaser’s receipt thereof.

(d)Without limiting the generality of anything contained in this Agreement, nothing in this Agreement shall require Purchaser to consummate a Termination Transaction, or cause a Termination Transaction to be consummated (and, accordingly, Purchaser shall have no obligations under any of the provisions of this Section 2.2.5.3(a) through (e), inclusive), in the event such Termination Transaction, in Purchaser’s sole and absolute discretion, which shall be final, conclusive and binding, would result in the aggregate of Termination Proceeds and Deferred Proceeds constituting a negative amount.

(e)If no Termination Transaction has been consummated prior to the end of the Sale Period, Purchaser shall, as soon as practicable and in accordance with law and Purchaser’s Operating Agreement, commence the dissolution and winding up of Purchaser’s business (including distributions to, or making reasonable provision for distributions to, all creditors of Purchaser) (a “Liquidation”).  In such event, upon consummation of any such Termination Transaction, Purchaser shall pay to Seller Seller’s Portion of any Termination Proceeds and within ten (10) days following receipt of any Deferred Proceeds, Purchaser shall pay Seller Seller’s Portion of any Deferred Proceeds.

2.2.5.4Conduct of Business During Contingency Period.

During the Contingency Period, Purchaser shall not, without the prior written consent of Seller, which consent shall not be unreasonably withheld or delayed:

(a)Engage in any business other than the Business and the Purchaser Business, and any business ancillary or related, or necessary or advisable with respect, thereto;

(b)Except in connection with a Change in Control Transaction, a Non-Qualifying Transaction in which Purchaser is not a direct party, a Termination Transaction, a Liquidation or a Liquidation Event:  (i) sell, lease, transfer or otherwise dispose of any of Purchaser’s properties or assets, other than (A) sales or dispositions of inventory in the ordinary course of business and (B) sales or dispositions of non-inventory assets not to exceed $100,000 in any one sale or disposition (or series of related sales or dispositions) or $150,000 in the aggregate for any calendar year; or, (ii) except (A) to the extent of a Non-Qualifying Transaction or (B) for short-term deposit accounts maintained in the ordinary course of business, direct obligations of the United States or any agency thereof, certificates of time deposits in commercial banks of recognized standing, commercial paper issued by a domestic corporation with a rating by Moody’s Investor Service, Inc.  of at least “P-1” or by Standard & Poor’s Corporation of at least “A-1”, purchase or acquire obligations or equity interests of, or any other

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interest in, any Person, or make other any investments (including investments in Xiamen Wei Yu Wood Products Co., Ltd or Quanzhou Yoddex Building Material Co., other than ordinary course transactions with such entities);

(c)Create, incur or assume any Indebtedness to the extent that the principal amount thereof outstanding on any date is in excess of One Hundred Thousand ($100,000) Dollars (other than (i) Indebtedness pursuant to the PNC Credit Agreement or (ii) current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices of Purchaser (collectively “Permitted Indebtedness)); materially modify the terms of any existing Indebtedness of Purchaser (it being acknowledged and agreed that no such modification shall be deemed material to the extent that the principal amount of Indebtedness outstanding on any date other than Permitted Indebtedness is One Hundred Thousand ($100,000) Dollars or less); or take any actions or permit Purchaser to omit to take any actions with respect to any of Purchaser’s Indebtedness (other than Permitted Indebtedness) if such action (or failure to act) would result in a default by Purchaser under the terms of such Indebtedness, except to the extent such Indebtedness is being contested in good faith or valid Purchaser has valid claims against the Person to whom such Indebtedness is owed, or where such payment is prohibited or restricted by law;

(d)Enter into any one or more Financing Leases in any calendar year in an aggregate amount in excess of One Hundred Thousand ($100,000) Dollars;

(e)Contract for, purchase, or make any expenditure or commitments for, Capital Expenditures in any calendar year in an aggregate amount in excess of Five Hundred Thousand ($500,000) Dollars;

(f)Pay or make any Cash Dividend on any membership interest of Purchaser or apply any of its funds, property or assets to the purchase, redemption or other retirement of any membership interest of Purchaser, or of any options to purchase or acquire any such membership interest of Purchaser;

(g)Enter into any transaction with any Affiliate of Purchaser, except transactions described on Schedule 2.2.5.4 or any transaction disclosed to Seller that is entered into in the ordinary course of business, on an arm’s length basis on terms and conditions no less favorable than terms and conditions which would have been obtainable from a Person other than an Affiliate of Purchaser; or

(h)Change Purchaser’s fiscal year or make any material change (i) in accounting treatment and reporting practices except as required or permitted by GAAP or (ii) tax reporting treatment except as required or permitted by law.

2.2.5.5Information as to Purchaser

During the Contingency Period, Purchaser shall

(a)Furnish Seller with a copy of any financial information (including any accompanying management discussion and analysis required to be delivered to PNC) furnished by Purchaser to PNC under Sections 9.7, 9.8, 9.9 and 9.10 of the PNC Credit Agreement,

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contemporaneously as such are furnished to PNC; provided, that in no event shall Seller receive any less financial information than that which Purchaser is obligated to deliver to PNC pursuant to Sections 9.7, 9.8, 9.9 and 9.10 of the PNC Credit Agreement as in effect on the date hereof;

(b)Furnish Seller with copies of any written notice required or permitted to be given by Purchaser to PNC under the PNC Agreement, which notice shall be delivered to Seller contemporaneously with delivery of such of notice to PNC; provided, that in no event shall Seller receive any less notice than that which Purchaser is obligated to deliver to PNC pursuant to the PNC Credit Agreement as in effect on the date hereof;

(c)Furnish Seller with prompt written notice of any Liquidation Event occurring with respect to the Purchaser;

(d)Allow one representative designated by Seller to attend as an observer at (i) all meetings of the Managers of Purchaser and (ii) at no less than two (2) regular monthly financial review meetings (in which the Managers and certain executive and financial officers and employees of Purchaser participate) during each fiscal year, in each case with such representative being entitled to receive notice of such meetings and an opportunity to review any related materials furnished to the Managers to the same extent and in the same manner as the Managers, provided that such representative has previously executed and delivered to Purchaser a Restrictive Covenant Agreement in, or substantially in, the form attached hereto as Exhibit H; and

(e)At all reasonable times and upon reasonable notice from Seller to Purchaser, provide Seller with full access to and the right to inspect and make abstracts and copies (all at Seller’s sole cost and expense) from Purchaser’s books, records, audits, correspondence and all other papers relating to Purchaser and the operation of its business, provided that Purchaser shall have no obligation under this Section 2.2.5.5(g) to the extent compliance would or does constitute a waiver, or impairment, of the attorney-client privilege or which is otherwise restricted by law or an agreement of confidentiality.

2.2.5.6Change in Control.  (a)  Contemporaneously with the consummation of a Change in Control Transaction, if any, Purchaser shall pay to Seller Seller’s Portion of any Termination Proceeds.

(b)Following the consummation of a Change in Control Transaction, Purchaser shall pay to Seller Seller’s Portion of any Deferred Proceeds within ten (10) days following Purchaser’s receipt thereof.

(c)Upon the consummation of a Change in Control Transaction Purchaser shall have no liability or obligation to Seller under Section 2.2.5 of this Agreement except as set forth in Sections 2.2.5.6(a) and 2.2.5.6(b).

2.2.5.7Satisfaction of Obligations.  Upon payment in full by Purchaser to Seller of the Contingent Consideration or Termination Proceeds, as applicable (including payment in full of any Deferred Proceeds), Purchaser shall have no further obligations pursuant to this Section 2.2.5.

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2.2.6Allocation.  The Purchase Price shall be allocated among the Assets acquired hereunder in accordance with Schedule 2.2.6 hereof and subject to the Purchase Price adjustment set forth in Section 2.2.2 hereof.  In the event of any such Purchase Price adjustment, the allocation and apportionments set forth on Schedule 2.2.6 shall be adjusted accordingly.  It is agreed that the allocation and apportionment set forth on Schedule 2.2.6 have been arrived at by arm’s length negotiation and properly reflect the respective fair market values of the Assets.  Each of Purchaser and each Seller hereby covenants and agrees that it will not take a position on any income tax return, before any governmental agency charged with the collection of any income tax, or in any judicial proceeding that is in any way inconsistent with the terms of this Section 2.2.6 or Schedule 2.2.6.  If any party receives notice that a taxing authority is challenging such allocation, the party receiving such notice shall promptly notify the other parties, and the parties shall cooperate in good faith in responding to such challenging in order to preserve the effectiveness of such allocation.

2.2.7Priority of Contingent Seller Payments.  Any Contingent Consideration due Seller shall only be paid after prior payment of amounts due on the following obligations of the Company in the order specified: (i) the PNC Credit Agreement, (ii) the Guaranty Notes and the Letter of Credit Notes, (iii) the Visador Management Agreement and the Countrywide Management Agreement, (iv) the PSP A Note and the Woodmark A Note, and (v) the Seller Note, the PSP B Note and the Woodmark B Note.  Notwithstanding the foregoing, any amounts derived by reason of a Liquidation or a Liquidation Event shall only be paid to Seller after prior payment of the following obligations of the Company in the order specified: (A) the PNC Credit Agreement, (B) the Guaranty Notes and the Letter of Credit Notes, (C) the PSP A Note and the Woodmark A Note; (D) the Seller Note, the PSP B Note and the Woodmark B Note, and (E) the Visador Management Agreement and the Countrywide Management Agreement.   If there is less than the amount available to fully pay the obligations of the Company contained in any category (i) through (v) or (A) through (E) above, the amount available will be pro rated based upon the amount due for each obligation to the total amount available.

2.2.8Interim Collections.  Notwithstanding anything to the contrary contained in this Agreement, the parties hereto hereby acknowledge and agree that all payments received by Seller in respect of its Accounts as of 11:59 p.m. on Friday, June 05, 2009 which are credited to any of Seller’s bank accounts on or before 12:00 noon on the Closing Date shall be for Seller’s account, and each party agrees that PNC may remit such payments to Seller.

2.3Assumption of Liabilities.

2.3.1No Assumption of Liabilities.  It is expressly understood and agreed that, except for the Assumed Obligations, in no event shall Purchaser assume or agree to pay or incur any liability or obligation under this Agreement, including under this Section 2.3 or otherwise, in respect of any liability or obligation of Seller of any kind, nature or description whatsoever, known or unknown, fixed or contingent, inchoate or otherwise (collectively, the “Retained Liabilities”), including the following:

(a)any liability based on tortious or illegal conduct, regardless of when made or asserted, which arises out of or is based upon any express or implied representation, warranty, agreement or guarantee made by Seller, or alleged to have been made by Seller, or which is

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imposed or asserted to be imposed by operation of law, in connection with any service performed or product sold by or on behalf of Seller, or any claim seeking recovery for consequential or special damage or lost revenue or income;

(b)any liability or obligation to creditors, lenders, customers, vendors or suppliers, or others with whom Seller had or has a business relationship, whether pursuant to a Contract or otherwise;

(c)any liability or obligation to any officer, director or stockholder of Seller;

(d)any liability or obligation with respect to, or in connection with, the Excluded Assets;

(e)any liability or obligation with regard to any Tax, including any interest or penalties thereon, (i) payable with respect to the Business, Seller and/or the Assets or (ii) incident to or arising as a consequence of the negotiation or consummation by Seller of this Agreement and the transactions contemplated hereby;

(f)any liability or obligation to or in connection with any employees, agents or independent contractors of Seller, whether or not employed by Seller and/or Purchaser after the Closing Date, or under any benefit arrangement with respect thereto;

(g)any liability or obligation under any Contract pursuant to which Seller has acquired or is to acquire any assets or properties;

(h)any liability or obligation of Seller arising or incurred in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated hereby, including fees and expenses of counsel, accountants, advisors and other experts; and/or

(i)any other liability or obligation of Seller, whether known or unknown, absolute or contingent, inchoate or otherwise.

2.3.2Assumed Obligations.  As of the Closing Date, on the terms and conditions set forth in this Agreement, Purchaser shall assume and agree to discharge, perform and pay only the following obligations (the “Assumed Obligations”) as and when due:

(a)the Assumed Payables, except that if the aggregate amount of Assumed Payables to be assumed by Purchaser as of the Closing Date exceeds $2,250,000, then Purchaser shall not be required to assume those accounts payable and accrued expenses in excess of $2,250,000 (and Purchaser, in its sole discretion, may decide which of such accounts payable and accrued expenses it desires not to assume so long as the aggregate amount of accounts payable and accrued expenses assumed by Purchaser is not less than $2,250,000); for purposes of clarity, the parties acknowledge that any such accounts payable and accrued expenses not assumed pursuant to this Section 2.3.2(a) shall not be included in the calculation of Closing Net Assets;

(b)those obligations arising after the Closing Date under (i) the Listed Agreements and (ii) under all other Contracts of Seller which are not required to be listed on Schedule 3.16, except that (A) Purchaser shall not assume any obligation or liability to the extent

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that it arises out of or relates to, directly or indirectly, any action or inaction of Seller on or prior to the Closing Date (other than the Assumed Warranty Obligations) and (B) with respect to monetary obligations pursuant to clause (b)(ii) of this sentence, if the aggregate amount of such Contracts exceeds $100,000, then Purchaser shall not be required to assume those Contracts in excess of $100,000 (and Purchaser, in its sole discretion, may decide which of such Contracts it desires not to assume so long as Purchaser has assumed Contracts not set forth on Schedule 3.16 totaling at least $100,000 in the aggregate); and

(c)the Assumed Warranty Obligations as provided for in Section 6.1 hereof.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller makes the following representations and warranties to Purchaser, each of which shall be deemed material, and Purchaser, in executing, delivering and consummating this Agreement, has relied upon the correctness and completeness of each of such representations and warranties:

3.1Valid Corporate Existence; Qualification.

3.1.1Seller.  Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.  Seller has the full limited liability company power and authority to carry on the Business as now conducted and to own its Assets.  Except as set forth in Schedule 3.1, Seller is not required to qualify as a foreign limited liability company in any jurisdiction in order to own its Assets or to carry on the Business as now conducted, and there has not been any claim by any jurisdiction to the effect that Seller is required to qualify or otherwise be authorized to do business as a foreign limited liability company therein.  The copies of the Certificate of Formation of Seller, as amended to date (certified by the Secretary of the State of Delaware), and the Operating Agreement of Seller, as amended to date, (certified by an officer) which have been delivered to Purchaser or its counsel, are true and complete copies of those documents as in effect on the Closing Date.  The minute books of Seller, copies of which have been delivered to Purchaser or its counsel, contain accurate records of all meetings of its members and managers, any committees or comparable bodies thereof and accurately reflect all transactions referred to therein.

3.2Capitalization.  All of the issued and outstanding membership interests of Seller are owned beneficially and of record by Visador.  There are no subscriptions, options, warrants, rights or calls or other commitments or agreements to which Seller or Visador is a party, or by which it is bound, calling for the issuance, transfer, sale or other disposition of any securities of Seller, and there are no outstanding securities of Seller convertible into or exchangeable for, actually or contingently, membership interests or any other securities of Seller.

3.3Subsidiaries.  Seller has not made any investment in, and does not own, any of the capital stock of, or any other proprietary interest in, any other limited liability company, corporation, partnership or other Person or Subsidiary.

3.4Consents.  Schedule 3.4 attached hereto sets forth a true and complete list of all consents of governmental and other regulatory agencies, foreign or domestic, and of other Persons

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required to be received by or on the part of Seller to enable it to enter into and carry out this Agreement and the Additional Transaction Documents and the transactions contemplated hereby and thereby, including the transfer to Purchaser of all of the right, title and interest of Seller in and to the Assets.  Seller has obtained those consents noted with an asterisk on Schedule 3.4.

3.5Authority; Binding Nature of Agreement.

Seller has the power and authority to enter into this Agreement and the Additional Transaction Documents and to carry out its respective obligations hereunder and thereunder.  The execution and delivery of this Agreement and the Additional Transaction Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the sole member and manager of Seller, and no other limited liability company proceedings on the part of Seller are necessary to authorize the execution and delivery of this Agreement and the Additional Transaction Documents and the consummation of the transactions contemplated hereby and thereby.  This Agreement constitutes the valid and binding obligation of Seller and is enforceable in accordance with its terms.

3.6Financial Statements.  (a) Seller has provided to Purchaser true and complete copies of the following financial statements of Seller (the “Seller Financial Statements”), copies of which are attached hereto as Schedule 3.6:

(i)audited financial statements of Seller (A) as of December 29, 2007 and the year then ended, and (B) as of December 27, 2008 and for the year then ended (collectively, the “Audited Seller Financial Statements”); and

(ii)unaudited financial statements of Seller as of May 2, 2009, for the period beginning December 28, 2008 and ending on May 2, 2009 (the “Unaudited Seller Financial Statements”);

(b)The Audited Financial Statements (i) are true and complete, (ii) are in accordance with the Books and Records of Seller, (iii) fairly and accurately present the financial position of Seller as of December 29, 2007 and the results of operations and cash flows of Seller for such year, (iv) fairly and accurately present the financial position of Seller as of December 27, 2008 and the results of operations and cash flows of Seller for such year, and (v) were prepared in conformity with GAAP consistently applied throughout the periods covered thereby.  The Audited Financial Statements have been audited by PricewaterhouseCoopers LLP, whose audit report thereon is included therein.

(c)The Unaudited Seller Financial Statements (i) are true and complete, (ii) are in accordance with the Books and Records of each Seller, (iii) fairly and accurately present the financial position of Seller as of such date and the results of operations of Seller for such period, and (iv) were prepared in accordance with GAAP consistently applied throughout the periods covered thereby and on a basis that is consistent with the Audited Seller Financial Statements, provided, however, that the Unaudited Seller Financial Statements are subject to normal period-end recurring audit and similar adjustments, which individually and in the aggregate are not, and will not be, material, and do not have the notes required under GAAP.

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3.7Liabilities; Warranty Claims.  (a)  As of May 2, 2009 (the “Seller Balance Sheet Date”), except as set forth in the Seller’s balance sheet as of the Seller Balance Sheet Date (collectively, the “Seller Balance Sheet”), Seller had no debts, liabilities or obligations, contingent or absolute, known or unknown, inchoate or otherwise required by GAAP to be reflected or reserved against in its Balance Sheet (except for such debts, liabilities or obligations required by GAAP to be described in notes, which amounts shall be consistent with the notes contained in the Audited Seller Financial Statements, subject to immaterial changes) and there was no basis for the assertion against Seller of any debt, liability or obligation not so reflected or reserved against therein.

(b)Schedule 3.7 attached hereto sets forth a true and complete list of all warranty claims made against Seller during the current fiscal year and each of the past two (2) fiscal years and when all outstanding warranties and service contracts will expire.

3.8Actions Since the Balance Sheet Date.  Since the Seller Balance Sheet Date, except as set forth in Schedule 3.8 attached hereto, Seller has not:

(a)incurred any obligation or liability, absolute or contingent, known or unknown, inchoate or otherwise, except for those incurred in the ordinary and usual course of business consistent with past practice;

(b)sold, leased, disposed of, assigned or acquired any assets, properties or rights, except Inventory in the ordinary and usual course of business consistent with past practice;

(c)mortgaged, pledged or subjected to any Lien any of its assets, rights or properties, or permitted any of its assets, rights or properties to be subjected to any Lien;

(d)acquired (by merger, consolidation, acquisition of stock or assets or otherwise) any Person or division thereof pursuant to which it acquired any assets, rights or properties;

(e)made any wage or salary increases, granted any bonuses or modified any compensation arrangement with respect to, or entered into any severance, employment or similar Contract with, any of its employees or independent contractors, officers or directors;

(f)amended the Certificate of Formation or Operating Agreement of Seller;

(g)adopted, amended or increased the payments to or benefits under, any Employee Benefit Plan;

(h)incurred damage to or destruction or loss of any Asset, whether or not covered by insurance;

(i)entered into, terminated or received notice of termination of (i) any license distributorship, dealer, sales representative, joint venture, credit or similar Contract to which Seller is a party, or (ii) any Contract or transaction involving a total remaining commitment by Seller of at least $50,000;

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(j)cancelled or waived any claims or rights with a value to Seller in excess of $50,000;

(k)received or became aware of any indication by any customer or supplier of an intention to discontinue or materially change the terms of its relationship with Seller;

(l)other than this Agreement and the transactions contemplated hereby, entered into or amended any Contract or otherwise took any action, or made any commitment, not in the ordinary and usual course of business and consistent with past practice;

(m)changed any accounting methods used by Seller; or

(n)entered into or amended any Contract with respect to any of the foregoing.

3.9Adverse Developments.  Except as set forth on Schedule 3.9, since the Seller Balance Sheet Date, (i) there have been no material adverse changes in the Assets or the Business, there has been no act or omission on the part of Seller, or, to the Knowledge of Seller, others, which would form the basis for the assertion against Seller of any material liability or obligation, and (ii) to the Knowledge of Seller, no other event has occurred which could be reasonably expected to have a materially adverse effect upon the Assets or the Business, and, to the Knowledge of Seller, there is no development or threatened development of a nature which could be reasonably expected to have a materially adverse effect upon the Assets or the Business.

3.10Taxes.  Except as set forth on Schedule 3.10, all Taxes imposed by any taxing authority, which have or may become due or payable by Seller, and all interest and penalties thereon, whether disputed or not, have been paid in full or adequately provided for by reserves shown in its books of account.  All deposits required by law to be made by Seller or with respect to estimated income, franchise and employees’ withholding Taxes have been duly made.  All Tax returns, including estimated Tax returns, required to be filed have been duly and timely filed.  Seller does not know of any proposed additional Tax assessments against it.  No sales or use Taxes are required to be collected in connection with the operation of the Business.  Seller is not aware that any claim has ever been made by a Body in a jurisdiction where it does not file Tax returns that it is or may be subject to taxation by that jurisdiction, and Seller has not received any notice or request for information from any such Body.  Seller has not received any notice or request for information from the Internal Revenue Service or any other taxing authority in connection with any Tax return or report filed by it, and Seller is not aware of any facts which, either individually or in the aggregate, could result in any liability for Tax obligations relating to it for periods ending prior to the date of the Seller Financial Statements, in excess of the accrued liability for Taxes shown thereon.  No waivers of statutes of limitations have been given or requested with respect to Seller with regard to the payment of any Taxes.

3.11Intellectual Property; Intangible Assets.  (a)  Schedule 3.11(a) sets forth a true and complete list of each (i) patent, trademark, service mark, copyright, trade name and logo (whether registered or unregistered, and including all applications relating to the registration of any of the foregoing) owned or used by Seller in connection with the Business and (ii) agreement, Contract, license, sublicense and assignment to which Seller grants or obtains rights to any Intellectual Property owned or used by Seller in connection with the Business; provided,

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that Schedule 3.11(a) does not list mass market computer software licensed to Seller that is available in consumer retail stores or otherwise commercially available and subject to “shrink-wrap”, “click-through” or off-the-shelf license agreements.  Seller owns or has the right to use pursuant to law, license, sublicense, Contract or permission all of the Intellectual Property, including any patent, trademark, service mark and copyright, necessary for the operation of the Business as presently conducted.  Each item of Intellectual Property set forth on Schedule 3.11 (a) will be owned or available for use by Purchaser on terms and conditions substantially similar to those described on Schedule 3.11(a).  Seller has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property of any Person, and Seller has not received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation, including any claim that Seller must license or refrain from using any intellectual property rights of any Person.  To the Knowledge of Seller, no Person has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any of the Intellectual Property.  Seller has taken all necessary action to maintain and protect each item of Intellectual Property that it owns or uses.  Except as set forth on Schedule 3.11(a), Seller (a) has not licensed or granted to any Person rights of any nature to use any of the Intellectual Property, (b) does not pay, and is not obligated to pay, royalties to any Person for use of any intellectual property rights, and (c) is not otherwise a party to, or bound by, any oral or written Contract with regard to any Intellectual Property (other than mass market computer software licensed to Seller that is available in consumer retail stores or otherwise commercially available and subject to “shrink-wrap”, “click-through” or off-the-shelf license agreements) (the “Listed Intellectual Property Agreements”).  A true and complete copy of each of the written Listed Intellectual Property Agreements has been delivered to Purchaser or its counsel.  Seller has in all material respects performed all obligations required to be performed by it to date under all of the Listed Intellectual Property Agreements, is not in default in any material respect under any of the Listed Intellectual Property Agreements and has received no notice of any dispute, default or alleged default thereunder which has not heretofore been cured or which notice has not heretofore been withdrawn.  To the Knowledge of Seller, there is no material default under any of the Listed Intellectual Property Agreements by any other party thereto or by any other Person bound thereunder.  Except as set forth on Schedule 3.11(a), each of the Listed Intellectual Property Agreements is freely assignable to Purchaser.

(b)Schedule 3.11(b) attached hereto sets forth a list of all material Intangible Assets utilized by Seller in the Business and described thereon.  Each of the Intangible Assets is valid and in good standing, is not currently being challenged, and is not involved in any pending or, to the Knowledge of Seller, threatened administrative or judicial proceeding which could have a material adverse effect on the Business, and does not conflict with any material rights of any other Person.

3.12Litigation; Claims; Compliance with Law.  (a)  Except as described in Schedule 3.12(a) attached hereto, there is no Action relating to Seller or any of the Assets or the Business pending or, to the Knowledge of Seller, threatened, or any Decree outstanding, against Seller or against or relating to any of the Assets or the Business.  To the Knowledge of Seller, there exists no basis for any such Action or Decree which could have a material adverse effect on the Assets or the Business.

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(b)Schedule 3.12(b) attached hereto sets forth for the current fiscal year and each of the past two (2) fiscal years a statement describing each claim (excluding any ordinary course warranty claims under Seller’s product warranties) made by a Person against Seller, whether or not such claim was submitted to such Seller’s insurance carrier, including (i) the name of the claimant; (ii) the amount and a description of the claim; and (iii) the resolution of the claim.

(c)Seller is not in violation of any law, regulation, ordinance, Decree, or other requirement of any governmental or other regulatory body, court or arbitrator, the violation of which would have a material adverse effect on the Assets or the Business.

3.13Inventories.  Attached hereto as Schedule 3.13 is a true and complete list of the Inventory as of the Seller Balance Sheet Date, including the location thereof.  To the Knowledge of Seller, all items included in the Inventory (other than Obsolete Inventory) consist of a quality and quantity usable and, with respect to finished goods, saleable, in the ordinary course of business of Seller.  All of the Inventory (other than Obsolete Inventory not written off or written down) has been valued at the lower of cost or market value on a first in, first out basis.  Inventory now on hand that was purchased after the Balance Sheet Date was purchased in the ordinary course of business of Seller, at a cost not exceeding market prices prevailing at the time of purchase.

3.14Accounts.  All Accounts of Seller are reflected properly on its Books and Records, are valid receivables subject to no setoffs or counterclaims, are current and collectible, and will be collected in accordance with their terms at their recorded amounts, subject only to the reserve for bad debts set forth on the face of the Closing Balance Sheet.

3.15Backlog.  Schedule 3.15 attached hereto sets forth a true and complete description of the backlog of Seller as of the Seller Balance Sheet Date.

3.16Agreements and Obligations; Performance.  Except for the Leases and except as listed in Schedule 3.16 attached hereto (the “Listed Agreements”), Seller is not a party to, or bound by, any of the following, whether oral or written:

(a)Contract that cannot be terminated at will without penalty or premium or any continuing obligation or liability;

(b)Contract of any kind with any officer, member or manager;

(c)Contract which is in violation of applicable law;

(d)Contract for the purchase, sale or lease of any equipment, materials, products, supplies or services which contains, or which commits or will commit it for, a fixed term;

(e)Contract of employment;

(f)deferred compensation, bonus or incentive plan or Contract;

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(g)management or consulting Contract;

(h)license or royalty Contract;

(i)Contract relating to indebtedness for borrowed money;

(j)union or other collective bargaining Contract;

(k)Open purchase orders or other contracts with any customer or supplier that involve delivery or receipt of products or services of an aggregate annual amount in excess of Forty Thousand ($40,000) Dollars;

(l)Contracts relating to warranty or service obligations;

(m)Contracts relating to customer Rebates;

(n)Contract which, by its terms, requires the consent of any party thereto to the consummation of the transactions contemplated hereby;

(o)Contract containing covenants limiting the freedom of Seller to engage or compete in any line or business or with any Person in any geographical area;

(p)Contract that contains a restrictive covenant on the part of Seller or another party thereto;

(q)Contract or option relating to the acquisition or sale of any business;

(r)option for the purchase of any asset, tangible or intangible; or

(s)other Contract which materially affects any of the Assets or the Business, whether directly or indirectly, or which was entered into other than in the ordinary and usual course of business consistent with past practice.

A true and complete copy of each of the written Listed Agreements has been delivered to Purchaser or its counsel.  Seller has in all material respects performed all obligations required to be performed by it to date under all of the Listed Agreements, is not in default in any material respect under any of the Listed Agreements and has received no written notice, or to the Knowledge or Seller, any other notice, of any dispute, default or alleged default thereunder which has not heretofore been cured or which notice has not heretofore been withdrawn.  To the Knowledge of Seller and each Parent Company, there is no material default under any of the Listed Agreements by any other party thereto or by any other Person bound thereunder; and, except as set forth in Schedule 3.16, each of the Listed Agreements is freely assignable to Purchaser.

3.17Ownership and Condition of Assets.  (a)  Seller owns outright, and has good and marketable title to all of the Assets (including all of the Assets reflected in the Seller Balance Sheet and all of the Assets acquired since the date thereof), free and clear of all Liens (other than Permitted Liens).  The Assets (other than cash) constitute all assets necessary to permit Seller to

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conduct the Business as now conducted.  None of the Assets are subject to any restriction with regard to transferability.  All of the tangible Assets are in the possession of Seller and, except as set forth in Schedule 3.17(a), located at the Leased Real Property.  There are no Contracts with any Person to acquire any of the Assets or any rights or interest therein, other than Contracts for the sale of Inventory in the ordinary and usual course of business consistent with prior practice.  No Affiliate of Seller and no shareholder, partner or member of any of the foregoing (or any spouse or relative of any such Person) owns, has any right to, or has possession of, any assets, properties or rights (other than the Excluded Assets) relating to the Business.

(b)Attached hereto as Schedule 3.17(b) is a true and complete list of the Fixed Assets, including the location thereof with respect to any Fixed Assets not located at the Leased Real Property.  To the Knowledge of Seller each of the Fixed Assets is in good operating condition, ordinary wear and tear excepted.  Seller has performed in all material respects all maintenance on each of the Fixed Assets in a manner consistent with past practice.

3.18Suppliers.  Schedule 3.18 attached hereto lists the names and addresses of the ten (10) largest suppliers of Seller for the current fiscal year and each of the past two (2) fiscal years, together with the approximate total dollar amount of purchases by Seller from each such supplier during each such year and period.  Except as set forth on Schedule 3.18, to the Knowledge of Seller, since the Seller Balance Sheet Date, there has been no material adverse change in the business relationship of Seller with any supplier named on Schedule 3.18.  Except as set forth on Schedule 3.18, Seller has no Knowledge (a) of any request or demand by that any such supplier to require the payment of higher prices for its goods or services on or after the Closing Date, (b) that any such supplier will be unable to continue to supply goods or services as presently supplied, or will or intends to cease to continue the relationship, or (c) that any such supplier will otherwise materially modify the relationship, that has existed with Seller prior to the Closing Date.

3.19Customers.  Schedule 3.19 attached hereto lists the names and addresses of the ten (10) largest customers of Seller for the current fiscal year and for each of the past two (2) fiscal years, together with the approximate amount for which each such customer was invoiced during each such year and period, and all amounts written off by Seller with respect to each such customer during each such year and period.  Except as set forth in Schedule 3.19, to the Knowledge of Seller, since the Seller Balance Sheet Date, there has been no material adverse change in the business relationship of Seller with any customer named on Schedule 3.19.  Except as set forth in Schedule 3.19, Seller has no Knowledge (a) of any request or demand by any such customer to require that prices for the goods purchased by, or services provided to, such customer be reduced, (b) that any such customer will or intends to reduce the requirements for the goods purchased by, or services provided to, such customer, or (c) that any such customer will or intends to cease to continue the relationship, or otherwise materially modify the relationship, that has existed with Seller prior to the Closing Date.

3.20Permits; Certifications.  (a)  Schedule 3.20(a) attached hereto sets forth a true and complete list of all Permits from all Bodies held by Seller.  Seller has all Permits from all Bodies required to carry on the Business as presently conducted and to offer and sell its services and goods.  All such Permits are in full force and effect, and, to the Knowledge of Seller, no suspension or cancellation of any of such Permits is threatened.  Seller is in compliance in all

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material respects with all requirements, standards and procedures of the Bodies which have issued such Permits.

(b)Schedule 3.20(b) attached hereto sets forth a true and complete list of all Certifications held by Seller.  All such Certifications are in full force and effect and, to the Knowledge of Seller, no suspension or cancellation of any such Certifications is threatened.

3.21Occupational Health and Safety and Environmental Matters.  Except as set forth on Schedule 3.21:

(a)Seller has all Permits from all Bodies relating to occupational health and safety or environmental matters or required under Environmental Laws to lawfully conduct the Business.

(b)There is no Action pending or, to the Knowledge of Seller, threatened or known to be contemplated by any Body in respect of or relating to the Assets or the Business with respect to occupational health and safety or environmental matters.

(c)All operations of the Business have been conducted in compliance with all, and Seller is not liable in any respect for any violation of any, applicable federal, state or local laws or regulations pertaining to occupational health and safety and/or environmental matters, including the Environmental Laws.

(d)Seller has not received any notice of a possible claim or citation against or in respect of any real property owned or leased by Seller relating to occupational health and safety or environmental matters or liability under any Environmental Law, and Seller has no Knowledge of any basis for any such claim or action.

(e)No substance identified or regulated pursuant to any Environmental Law, including any Hazardous Substance, has come to be located on, at, beneath, or near any real property currently or, to the Knowledge of Seller, formerly owned, operated, leased or used by Seller in violation of any Environmental Law.

(f)No real property currently or, to the Knowledge of Seller, formerly owned, operated, leased or used by Seller contains or formerly contained any underground or aboveground storage tank, surface impoundment, landfill, land disposal area, polychlorinated biphenyls, asbestos or urea formaldehyde insulation except in accordance with Environmental Law.

(g)Seller has not disposed of, transported or arranged for the disposal or transportation of any Hazardous Substance at or to any facility at which there has been a release or threatened release of a Hazardous Substance.

(h)No other Person with whom Seller has contracted for environmental matters is or has been the subject of any Action arising out of the substance of the transaction to which such contract relates and involving the violation or alleged violation of any Environmental Law or the disposal, arrangement for the disposal, release or threatened release of any Hazardous Substance.

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(i)Seller has not, by Contract or otherwise, assumed any liability of or duty to indemnify any other Person for any claim under any Environmental Law or any claim, damage or loss arising out of the use, treatment, storage or disposal of any Hazardous Substance.

(j)No Hazardous Substance has migrated from any real property currently or formerly owned, operated, leased or used by Seller to any other real property, nor has any Hazardous Substance migrated from any other real property onto any real property owned, operated, leased or used by Seller.

(k)No conditions exist on, at, beneath or near any real property owned, leased or used by Seller, or affecting the Business, which could give rise to any claim against, liability of, or loss by, Purchaser pursuant to Environmental Laws.

3.22Interest in Assets.  Except for the Excluded Assets, the licensed Intellectual Property listed on Schedule 3.11, the Leased Real Property and the leased personal property listed on Schedule 3.22, no Person other than Seller owns any property or rights, tangible or intangible, used in or related, directly or indirectly, to the Business.

3.23Compensation Information.  Schedule 3.23 attached hereto contains a true and complete list of the names and current salary rates of, bonus commitments to, and other compensatory arrangements with, the employees and independent contractors of Seller.

3.24Employee Benefit Plans.

(a)Schedules 3.24 (b), (c) and (d) attached hereto include a list of all of the “pension” and “welfare” benefit plans (within the respective meanings of Sections 3(2) and 3(1) of ERISA) maintained by Seller or to which Seller makes employer contributions with respect to its employees (collectively, the “Employee Benefit Plans”), a complete and correct copy of each of which has been delivered to Purchaser.

(b)All of the pension and profit sharing plans maintained by Seller (herein collectively referred to as the “Pension Plans”) are listed in Schedule 3.24(b).

(c)All of the pension plans not maintained by Seller but to which it makes employer contributions with respect to its employees (herein collectively referred to as the “Other Pension Plans”), are listed in Schedule 3.24(c).  Each of the Other Pension Plans is a “multi-employer plan” (within the meaning of section 3(37) of ERISA), but Seller is not a “substantial employer” (within the meaning of section 4001(a)(2) of ERISA) with respect to any of the Other Pension Plans.

(d)All of the welfare plans maintained by Seller or to which Seller makes employer contributions with respect to its employees (herein collectively referred to as the “Welfare Plans”) are listed in Schedule 3.24(d).

(e)There are no Actions pending or, to the Knowledge of Seller, threatened, and Seller has no Knowledge of any facts which could give rise to any Actions against any of the Pension Plans, or, with respect to the participation of Seller therein, against any of the Other Pension or Welfare Plans, or against Seller with respect to any thereof.

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(f)Seller has performed in all material respects all obligations required to be performed under each Employee Benefit Plan, and each Employee Benefit Plan has been established and maintained in all material respects in accordance with its terms and in compliance with all applicable laws.

(g)There are no vested and unfunded benefits under any of the Employee Benefit Plans.

3.25Insurance.  Schedule 3.25 attached hereto sets forth a true and complete list and brief description of all policies of liability and other forms of insurance held by Seller.  Such policies are valid, outstanding and enforceable policies, as to which premiums have been paid currently, are with reputable insurers.  To the Knowledge of Seller, there exists no state of facts, and no event has occurred, which might reasonably (a) form the basis for any claim against Seller not fully covered by insurance for liability on account of any express or implied warranty or tortious omission or commission, or (b) result in any material increase in insurance premiums.

3.26No Breach.  The execution and delivery of this Agreement by Seller, the compliance by Seller with any of the provisions hereof, and/or the consummation of the transactions contemplated hereby, will not:

(a)violate or conflict with any provision of the Articles of Formation or Operating Agreement of Seller;

(b)violate or, alone or with notice or the passage of time or both, result in the breach or termination of, or otherwise give any contracting party the right to terminate, or declare a default under, the terms of any Contracts assumed by Purchaser pursuant to Section 2.3.2(b);

(c)result in the creation of any Lien upon any of the Assets;

(d)violate any Decree against, or binding upon, Seller or the Assets; or

(e)violate any law or regulation of any jurisdiction relating to Seller, the Assets or the Business.

3.27Brokers.  Seller has not engaged, consented to, or authorized any broker, finder, investment banker or other Person to act on its behalf, directly or indirectly, as a broker or finder in connection with the transactions contemplated by this Agreement.

3.28Employment Relations.  Except as set forth on Schedule 3.28:

(a)Seller is in compliance with all federal, state and other applicable laws, rules and regulations respecting employment and employment practices, terms and conditions of employment and wages and hours, and has not engaged in any unfair labor practice which, in any of the foregoing cases, could have a materially adverse effect on the Assets or the Business.

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(b)There is not pending, or, to the Knowledge of Seller, threatened, any unfair labor practice charge or complaint against Seller by or before the National Labor Relations Board or any comparable state agency or authority.

(c)There is no labor strike, dispute, slowdown or stoppage pending or, to the Knowledge of Seller, threatened.

(d)No union represents any employees of Seller, and Seller is not aware of any union organization effort respecting the employees of Seller.

(e)No grievance which might have an adverse effect on Seller or the conduct of the Business, nor any arbitration proceeding arising out of or under any collective bargaining agreement, is pending and no claim therefor has been asserted.

(f)No Action is now pending, and, to the Knowledge of Seller, no Person has made any claim or has threatened an Action against Seller arising out of any law relating to discrimination against employees, sexual harassment or employment practices.

(g)No collective bargaining agreement is currently in effect or being negotiated by Seller.

(h)Seller has not experienced any material labor difficulties during the last four (4) years.

3.29Prior Names and Addresses.  Since March 1, 2003, except as set forth in Schedule 3.29 attached hereto, Seller has used no business name and has had no business address other than its current name and the business address set forth herein.

3.30Transactions with Directors, Officers and Affiliates.  Except as set forth on Schedule 3.30 attached hereto, since January 1, 2008, there have been no transactions between or among Seller and any of its directors, managers, officers, employees, members, stockholders or Affiliates.  To the Knowledge of Seller, except as set forth on Schedule 3.30, none of the managers, officers, employees, members or Affiliates of Seller, or any spouse or relative of any of such Persons, has been a manager, officer, employee, member or Affiliate of, or has had any direct or indirect interest in, any Person with which Seller has had a business relationship, including as a supplier, customer or sales representative of Seller or which has competed with or been engaged in any business of the kind being conducted by the Business.

3.31Indebtedness Owed to Affiliates.  Except as set forth on Schedule 3.31, no indebtedness, liability or obligation of any nature of Seller is owed to any Affiliate of Seller, or to any shareholder, partner or member of any of the foregoing (or any spouse or relative of any such Person).

3.32Leases.

(a)Schedule 3.32 attached hereto sets forth a list of all leases, licenses, permits, subleases and occupancy agreements, together with all amendments and supplements thereto, with respect to all real properties in which Seller has a leasehold interest, whether as

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lessor or lessee (each, a “Lease” and collectively, the “Leases”; the property covered by Leases under which Seller is a lessee is referred to herein as the “Leased Real Property”) and in which Seller had a leasehold interest.  Seller has furnished true, correct and complete copies of all Leases to Purchaser or its representatives.  No option has been exercised under any of such Leases, except options whose exercise has been evidenced by a written document, a true, complete and accurate copy of which has been delivered to Purchaser or its representatives with the corresponding Lease.  Except as set forth on Schedule 3.32, the transactions contemplated by this Agreement do not require the consent or approval of the other party to the Leases, nor will such transactions violate any Lease or cause Seller to be in default under any Lease.

(b)Each Lease is in full force and effect and no Lease has been modified or amended except pursuant to an amendment referred to on Schedule 3.32.  Neither Seller nor any other party to a Lease has given to any other party written notice of, or has made a claim with respect to, any breach or default.  Seller is not in default under any Lease and, to the Knowledge of Seller, no other party to a Lease is in default.  There are no events which with the passage of time or the giving of notice or both would constitute a default by Seller or, to the Knowledge of Seller, by any other party to such Lease.

(c)Except as set forth on Schedule 3.32 (c), none of the Leased Real Property is subject to any sublease, license or other agreement granting to any Person any right to the use, occupancy or enjoyment of such property or any portion thereof.  Seller has not received any notice from any utility company or municipality of any fact or condition which could result in the discontinuation of presently available or otherwise necessary sewer, water, electric, gas, telephone or other utilities or services for any of the Leased Real Property.  The Leased Real Property, all improvements thereon and thereto, and the operations therein conducted, conform in all material respects to all applicable health, fire, insurance, environmental, safety, zoning and building laws, ordinances and administrative regulations, Permits and other regulations (including the Americans with Disabilities Act), except for possible nonconforming uses or violations that do not and will not interfere with the present use, operation or maintenance thereof as now used, operated or maintained or access thereto, and that do not and will not affect the value thereof, and that do not and will not give rise to any penalty, fine or other liability, and Seller has not received any notice to the contrary.  Each Leased Real Property is occupied and used by a Seller in compliance with the Lease applicable thereto and pursuant to and in conformity with a validly issued certificate of occupancy which currently remains in effect.

(d)To the Knowledge of Seller, except as set forth on Schedule 3.32, the plumbing, electrical, heating, air conditioning, elevator, ventilating and all other mechanical or structural systems for which Seller is responsible under the Leases in the buildings or improvements are in good working order and condition, ordinary wear and tear excepted, and are fully useable for their intended purpose, and the roof, basement and foundation walls of such buildings and improvements for which Seller is responsible under the Leases are in good condition, ordinary wear and tear excepted, and free of leaks and other defects.  To the Knowledge of Seller, all such mechanical and structural systems and such roofs, basement and foundation walls for which others are responsible under said Leases are in good working order and condition, ordinary wear and tear excepted, and free of leaks and other defects.  To the Knowledge of Seller, there are no other physical defects or deferred maintenance items at any Leased Real Property that interfere with or impede the use of such property by Seller in the

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ordinary course of its business or that Seller is obligated under any of the Leases to repair or otherwise correct.

(e)There are no guaranties (from Seller or from other Persons) in favor of the lessors of any of the Leased Real Property which will continue in effect following the Closing.

(f)Except as set forth on Schedule 3.32 (f), the Seller has not sold, assigned, transferred, pledged or encumbered all or any part of its leasehold interests in any of the Leased Real Property.

(g)Access from public streets and provision for parking and loading/unloading at each Leased Real Property conform to all applicable legal requirements and are adequate for the conduct of the Business in the normal course.

(h)To the Knowledge of Seller, no Leased Real Property is subject to a fee mortgage, deed of trust, other security interest or similar encumbrance, nor to a ground lease or underlying lease.

(i)There is no pending, or, to the Knowledge of Seller, threatened:  (i) condemnation of any part of the Leased Real Property by any Body or other governmental entity; (ii) special assessment against any part of the Leased Real Property; or (iii) litigation against Seller or any lessor for breach of any restrictive covenant affecting any part of the Leased Real Property.

3.33Products Liability.  (a) (i) There is no notice, demand, claim, action, suit, inquiry, hearing, proceeding, notice of violation or investigation of a civil, criminal or administrative nature before any court, Body or governmental or other regulatory or administrative agency, commission or authority, domestic or foreign, against or involving any products manufactured, produced, distributed or sold by or on behalf Seller (including any parts or components) (collectively, “Products”), or class of claims or lawsuits involving the same or similar Product which is pending or, to the Knowledge of Seller, threatened, resulting from an alleged defect in design, manufacture, materials or workmanship of any Product, or any alleged failure to warn, or from any breach of implied warranties or representations (collectively, “Product Liability Lawsuits”); (ii) to the Knowledge of Seller there has not been any Occurrence (as hereinafter defined); and (iii) there has not been, nor is there under consideration or investigation by Seller, any Product rework or retrofit (collectively, “Retrofits”) conducted by or on behalf of Seller.

(b)For purposes of this Section 3.33, the term “Occurrence” shall mean any accident, happening or event which takes place at any time which is caused or allegedly caused by any alleged hazard or alleged defect in manufacture, design, materials or workmanship including any alleged failure to warn or any breach of express or implied warranties or representations with respect to, or any such accident, happening or event otherwise involving, any Product that is likely to result in a claim or loss.

3.34Solvency.  Except as set forth on Schedule 3.34, on the Closing Date and at all times during the six (6) months immediately preceding the Closing Date, Seller is and has been paying all of its debts, liabilities and obligations accruing with respect to or resulting from the conduct of the Business as the same shall become due and owing, and none of such payment obligations

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are past due or otherwise delinquent in any material respect.  Except as set forth on Schedule 3.34, on and immediately after the Closing Date, Seller (a) is and will be solvent (i.e., the sum of its debts will be less than all of its property, at a fair valuation), and (b) is and will be able to pay its current and anticipated debts as such debts mature.  Seller is executing this Agreement in good faith, for fair value and without intent to hinder, delay or to defraud its present and future creditors.

3.35Untrue or Omitted Facts.  No representation, warranty or statement by Seller in this Agreement contains any untrue statement of a material fact, or omits to state a fact necessary in order to make such representations, warranties or statements not materially misleading.  Except as set forth on Schedule 3.35, without limiting the generality of the foregoing, there is no fact Known to Seller that has had, or which may be reasonably expected to have, a materially adverse effect on any of the Assets or the Business that has not been disclosed in this Agreement.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser makes the following representations and warranties to Seller, each of which shall be deemed material, and Seller, in executing, delivering and consummating this Agreement, has relied upon the correctness and completeness of each of such representations and warranties:

4.1Valid Existence.  Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.  Purchaser has the full limited liability company power and authority to carry on the Purchaser Business and to own the Purchaser Assets.  The Purchaser is not required to qualify as a foreign limited liability company in any jurisdiction in order to own the Purchaser Assets or to carry on the Purchaser Business as now conducted, and there has not been any claim by any jurisdiction to the effect that Purchaser is required to qualify or otherwise be authorized to do business as a foreign limited liability company therein.  The copies of the Certificate of Formation of Purchaser (certified by the Secretary of the State of Delaware), which have been delivered to Seller or its counsel, are true and complete copies of those documents as in effect on the Closing Date.

4.2Capitalization.  All of the issued and outstanding securities of Purchaser are owned beneficially and of record as set forth on Schedule 4.2 attached hereto by Woodmark International, LP (“Woodmark”) Pacific Stair Products, Inc.  (“PSP”).  There are no subscriptions, options, warrants, rights or calls or other commitments or agreements to which Purchaser, Woodmark or PSP is a party, or by which any of them is bound, calling for the issuance, transfer, sale or other disposition of any securities of Purchaser, and there are no outstanding securities of Purchaser convertible into or exchangeable for, actually or contingently, membership interests or any other securities of Purchaser.

4.3Subsidiaries.  Purchaser has not made any investment in, nor owns, any of the capital stock of, or any other proprietary interest in, any other corporation, partnership, limited liability company or other Person or Subsidiary.

4.4Consents.  Schedule 4.4 attached hereto sets forth a true and complete list of all consents of governmental and other regulatory agencies, foreign or domestic, and of other Persons

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required to be received by or on the part of Purchaser to enable it to enter into and carry out this Agreement and the transactions contemplated hereby.  Except as set forth on Schedule 4.4, all such requisite consents have been obtained.

4.5Authority; Binding Nature of Agreement.  Purchaser has the power and authority to enter into this Agreement and to carry out its obligations hereunder.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the managers of Purchaser and no other limited liability company proceedings on the part of Purchaser are necessary to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.  This Agreement constitutes the valid and binding obligation of Purchaser and is enforceable in accordance with its terms.

4.6Financial Statements.  (a)  Purchaser has provided to Seller true and complete copies of the following financial statements relating to the Purchaser Business (the “Purchaser Financial Statements”), copies of which are attached hereto as Schedule 4.6:

(i)combined unaudited financial statements of the stair parts operations of Woodmark (the “Woodmark Division”) and the stair parts operations of PSP (the “PSP Division”) as of December 31, 2008 and for the year then ended;

(ii)combined unaudited financial statements of the Woodmark Division and PSP Division as of April 30, 2009 and for the four months then ended for such period;

(b)The Purchaser Financial Statements (i) are true and complete, (ii) are in accordance with the Books and Records of Purchaser, the Woodmark Division and PSP Divisions, as applicable, (iii) except as set forth in Section 5.3, fairly and accurately present the financial position of the Purchaser Business as of such date and the results of operations of the Purchaser Business for the applicable period ending on such date, and (iv) were prepared in conformity with GAAP consistently applied throughout the periods covered thereby; provided, however, that the Purchaser Financial Statements are subject to normal period-end recurring audit and similar adjustments, which individually and in the aggregate are not, and will not be, material, and do not have the notes required under GAAP.

4.7Liabilities.  As of April 30, 2009 (the “Division Balance Sheet Date”), except as set forth on the Division’s balance sheet as of the Division Balance Sheet Date (collectively, the Division Balance Sheet”), and except as set forth in Section 5.3, the Purchaser Business had no debts, liabilities or obligations, contingent or absolute, known or unknown, inchoate or otherwise, required by GAAP to be reflected or reserved against with respect to the Purchaser Business in the Division Balance Sheet (except for such debts, liabilities or obligations required by GAAP to be described in notes), and there was no basis for the assertion against Purchaser of any debt, liability or obligation not so reflected or reserved against therein.

4.8Actions Since the Balance Sheet Date.  Since the Division Balance Sheet Date, except as set forth in Schedule 4.8 attached and as set forth in Section 5.3, neither Woodmark with respect to the Woodmark Division nor PSP with respect to the PSP Division has:

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(a)incurred any obligation or liability, absolute or contingent, known or unknown, inchoate or otherwise, except for those incurred in the ordinary and usual course of its respective business consistent with past practice;

(b)sold, leased, disposed of, assigned or acquired any assets, properties or rights, except Inventory in the ordinary and usual course of its respective business consistent with past practice;

(c)mortgaged, pledged or subjected to any Lien any of its assets, rights or properties, or permitted any of its assets, rights or properties to be subjected to any Lien;

(d)acquired (by merger, consolidation, acquisition of stock or assets or otherwise) any Person or division thereof pursuant to which it acquired any assets, rights or properties;

(e)made any wage or salary increases, granted any bonuses or modified any compensation arrangement with respect to, or entered into any severance, employment or similar Contract with, any of its employees or independent contractors, officers or directors;

(f)amended the Certificate of Formation or Operating Agreement of Purchaser;

(g)adopted, amended or increased the payments to or benefits under, any employee benefit plan of Purchaser;

(h)incurred damage to or destruction or loss of any Asset, whether or not covered by insurance;

(i)entered into, terminated or received notice of termination of (i) any license distributorship, dealer, sales representative, joint venture, credit or similar Contract to which Purchaser is a party, or (ii) any Contract or transaction involving a total remaining commitment by Purchaser of at least $50,000;

(j)cancelled or waived any claims or rights with a value to Purchaser in excess of $50,000;

(k)received or became aware of any indication by any customer or supplier of an intention to discontinue or materially change the terms of its relationship with Purchaser;

(l)other than this Agreement and the transactions contemplated hereby, entered into or amended any Contract or otherwise took any action, or made any commitment, not in the ordinary and usual course of its respective business and consistent with past practice; or

(m)entered into or amended any Contract with respect to any of the foregoing.

4.9Adverse Developments.  Since the Division Balance Sheet Date except as set forth in Section 5.3, (i) there have been no material adverse changes in the Purchaser Assets or the

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Purchaser Business, there has been no act or omission on the part of Purchaser, Woodmark with respect to the Woodmark Division or PSP with respect to the PSP Division, or, to the Knowledge of Purchaser, others, which would form the basis for the assertion against Purchaser of any material liability or obligation, and (ii) to the Knowledge of Purchaser, no other event has occurred which could be reasonably expected to have a materially adverse effect upon the Purchaser Assets or the Purchaser Business, and to the Knowledge of Purchaser, there is no development or, threatened development of a nature which could be reasonably expected to have a materially adverse effect upon the Purchaser Assets or the Purchaser Business.

4.10Intellectual Property; Intangible Assets.  (a)  Schedule 4.10(a) sets forth a true and complete list and brief description of each (i) patent, trademark, service mark, copyright, trade name and logo (whether registered or unregistered, and including all applications relating to the registration of any of the foregoing) owned or used by Purchaser in connection with the Purchaser Business and (ii) agreement, Contract, license, sublicense and assignment to which Purchaser grants or obtains rights to any Intellectual Property owned or used by the Purchaser in connection with the Business (the “Purchaser Intellectual Property”); provided, that Schedule 4.10(a) does not list mass market computer software licensed to Purchaser that is available in consumer retail stores or otherwise commercially available and subject to “shrink-wrap”, “click-through” or off-the-shelf license agreements.  Purchaser owns or has the right to use pursuant to law, license, sublicense, Contract or permission all of the Purchaser Intellectual Property, including any patent, trademark, service mark and copyright, necessary for the operation of the Purchaser Business as presently conducted.  Woodmark with respect to the Woodmark Division and PSP with respect to the PSP Division.  The Purchaser has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property of any Person, and Purchaser has never received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation, including any claim that Purchaser must license or refrain from using any intellectual property rights of any Person.  To the Knowledge of Purchaser, no Person has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any of the Purchaser Intellectual Property.  Each Division has taken all necessary action to maintain and protect each item of Purchaser Intellectual Property that it owns or uses.  Except as set forth on Schedule 4.10(a), Purchaser (a) has not licensed or granted to any Person rights of any nature to use any of the Purchaser Intellectual Property, (b) does not pay, and is not obligated to pay, royalties to any Person for use of any intellectual property rights, and (c) is not otherwise a party to, or bound by, any oral or written Contract with regard to any Purchaser Intellectual Property (other than mass market computer software licensed to Purchaser that is available in consumer retail stores or otherwise commercially available and subject to “shrink-wrap”, “click-through” or off-the-shelf license agreements) (the “Listed Purchaser Intellectual Property Agreements”).  A true and complete copy of each of the written Listed Purchaser Intellectual Property Agreements has been delivered to Seller or its counsel.  Purchaser has in all material respects performed all obligations required to be performed by it to date under all of the Listed Division Intellectual Property Agreements, is not in default in any material respect under any of the Listed Purchaser Intellectual Property Agreements and has received no notice of any dispute, default or alleged default thereunder which has not heretofore been cured or which notice has not heretofore been withdrawn.  To the Knowledge of Purchaser, there is no material default under any of the Listed Purchaser Intellectual Property Agreements by any other party thereto or by any other Person bound thereunder.

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(b)Schedule 4.10(b) attached hereto sets forth a list of all material Intangible Assets utilized by Purchaser in the Purchaser Business and described thereon.  Each of the Intangible Assets is valid and in good standing, is not currently being challenged, and is not involved in any pending or, to the Knowledge of Purchaser, threatened administrative or judicial proceeding which could have a material adverse effect on the Purchaser Business, and does not conflict with any material rights of any other Person.

4.11Litigation; Claims; Compliance with Law.  (a)  Except as described in Schedule 4.11(a) attached hereto, there is no Action relating to Purchaser, Woodmark, with respect to the Woodmark Division, and PSP, with respect to the PSP Division, or any of the Purchaser Assets or the Purchaser Business pending or, to the Knowledge of Purchaser, threatened, or any Decree outstanding, against Purchaser, Woodmark, with respect to the Woodmark Division, or PSP, with respect to the PSP Division, or against or relating to any of the Purchaser Assets or the Purchaser Business.  To the Knowledge of Purchaser, there exists no basis for any such Action or Decree which could have a material adverse effect on the Purchaser Assets or the Purchaser Business.

(b)Schedule 4.11(b) attached hereto sets forth for the current fiscal year and each of the past two (2) fiscal years a statement describing each claim (excluding any ordinary course warranty claims under Purchaser’s product warranties) made by a Person against Purchaser, Woodmark, with respect to the Woodmark Division, and PSP, with respect to the PSP Division, whether or not such claim was submitted to such Purchaser’s, Woodmark’s or PSP’s insurance carrier, including (i) the name of the claimant; (ii) the amount and a description of the claim; and (iii) the resolution of the claim.

(c)Purchaser, Woodmark, with respect to the Woodmark Division, and PSP, with respect to the PSP Division, is not in violation of any law, regulation, ordinance, Decree, or other requirement of any governmental or other regulatory body, court or arbitrator, the violation of which would have a material adverse effect on the Purchaser Assets or the Purchaser Business.

4.12Inventories.  To the Knowledge of Purchaser except as set forth in Section 5.3, all items included in the Purchaser Inventory (other than Purchaser Obsolete Inventory) consist of a quality and quantity usable and, with respect to finished goods, saleable, in the ordinary course of business.  All of the Purchaser Inventory (other than the Purchaser Obsolete Inventory not written off or written down) has been valued at the lower of cost or market value on a first in, first out basis.  Purchaser Inventory now on hand that was purchased, whether by Purchaser or Woodmark, with respect to the Woodmark Division, after the Division Balance Sheet Date was purchased in the ordinary course of business, at a cost not exceeding market prices prevailing at the time of purchase.

4.13Backlog.  Schedule 4.13 attached hereto sets forth a true and complete description of the backlog of Purchaser as of the Closing Date.

4.14Ownership and Condition of Purchaser Assets.  (a)  Purchaser owns outright, and has good and marketable title to all of the Purchaser Assets free and clear of all Liens (other than Permitted Liens).  The Purchaser Assets (other than cash) constitute all assets necessary to

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permit Purchaser to conduct the Purchaser Business as now conducted.  No Affiliate of Purchaser and no shareholder, partner or member of any of the foregoing (or any spouse or relative of any such Person) owns, has any right to, or has possession of, any assets, properties or rights relating to the Purchaser Business.

(b)Attached hereto as Schedule 4.14 (b) is a true and complete list of the Purchaser Fixed Assets, including the location thereof.  To the Knowledge of Purchaser, each of the Fixed Assets is in good operating condition, ordinary wear and tear excepted.  Purchaser has performed in all material respects all maintenance on each of the Purchaser Fixed Assets in a manner consistent with past practice.

4.15Interest in Assets.  Except as set forth on Schedule 4.15 attached hereto, no Person other than Purchaser owns any property or rights, tangible or intangible, used in or related, directly or indirectly, to the Purchaser.

4.16No Breach.  Neither the execution and delivery of this Agreement by Purchaser, nor compliance by Purchaser with any of the provisions hereof, nor the consummation of the transactions contemplated hereby, will:

(a)violate or conflict with any provision of the Certificate of Formation or Operating Agreement of Purchaser;

(b)violate any Decree against, or binding upon, Purchaser; or

(c)violate any law or regulation of any jurisdiction relating to Purchaser.

4.17Brokers.  Purchaser has not engaged, consented to, or authorized any broker, finder, investment banker or other Person to act on its behalf, directly or indirectly, as a broker or finder in connection with the transactions contemplated by this Agreement.

4.18Transactions with Directors, Officers and Affiliates.  Except as set forth on Schedule 4.18 attached hereto and except as set forth in Section 5.3, since January 1, 2008, there have been no transactions between or among Purchaser and any of its directors, managers, officers, employees, members, stockholders or Affiliates.  To the Knowledge of Purchaser, except as set forth on Schedule 4.18, none of the managers, officers, employees, members or Affiliates of Purchaser, or any spouse or relative of any of such Persons, has been a manager, officer, employee, member or Affiliate of, or has had any direct or indirect interest in, any Person with which Purchaser has had a business relationship, including as a supplier, customer or sales representative of Purchaser or which has competed with or been engaged in any business of the kind being conducted by the Purchaser Business.

4.19Untrue or Omitted Facts.  No representation, warranty or statement by Purchaser in this Agreement contains any untrue statement of a material fact, or omits to state a fact necessary in order to make such representations, warranties or statements not materially misleading.  Except as set forth on Schedule 4.19, without limiting the generality of the foregoing, there is no fact Known to Purchaser that has had, or which may be reasonably expected to have, a materially adverse effect on any of the Division Assets or the Division Business that has not been disclosed in this Agreement.

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ARTICLE V
DELIVERIES; CONTEMPORANEOUS TRANSACTIONS

5.1Items to be Delivered by Seller.  Contemporaneously with the execution and delivery hereof, Seller is delivering, or causing to be delivered, to Purchaser the following:

(a)That certain assignment and bill of sale of even date, from Seller in favor of Purchaser (the “Bill of Sale”), duly executed by Seller, duly endorsed by Seller;

(b)Those certain assignments of Intellectual Property rights and Intangible Assets of even date, among Seller and Purchaser (the “Intellectual Property and Intangible Asset Assignment”), duly executed by Seller;

(c)Those certain assignment and assumption agreements of even date, among Seller and Purchaser (the “Assignment and Assumption Agreements”), duly executed by Seller;

(d)Those certain consents to assignment and assumption of even date, duly executed by the parties thereto;

(e)Those certain assignments of the Certifications of even date, among Seller and Purchaser (collectively, the “Assignments of Certifications”), duly executed by Seller;

(f)That certain Consulting Agreement of even date, between Purchaser and Visador, duly executed by Visador (the “Visador Consulting Agreement”);

(g)That certain Management Services Agreement of even date between Purchaser and Visador (the “Visador Management Agreement”), duly executed by Visador;

(h)The Virginia Sublease, duly executed by Visador;

(i)The Texas Sublease, duly executed by Seller;

(j)That certain Restrictive Covenant Agreement of even date by Seller in favor of Purchaser, duly executed by Seller;

(k)That certain Restrictive Covenant Agreement of even date by Visador in favor of Purchaser, duly executed by Visador;

(l)That certain Restrictive Covenant Agreement of even date by Carousel Capital Partners II, L.P.  in favor of Purchaser, duly executed by Carousel;

(m)That certain Restrictive Covenant Agreement of even date by Smith in favor of Purchaser, duly executed by Smith;

(n)That certain Subordination Agreement of even date by and among Purchaser, Woodmark, PSP, Seller and PNC (the “Subordination Agreement”), duly executed by Seller;

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(o)Evidence reasonably satisfactory to Purchaser and its counsel that Seller has submitted (A) to the Secretary of State of Delaware for filing an amendment to its Certificate of Formation and (B) to the Secretary of the Commonwealth of Virginia with respect to its qualification to do business in Virginia, to change its company name to a name that does not include “Coffman” or any derivative or variation thereof; and

(p)A certificate of even date, executed by a duly authorized officer of Seller, certifying and attaching (i) appropriate action by the sole member and Manager of Seller authorizing the execution of this Agreement and the related agreements and documents executed in connection herewith by Seller, and the consummation of the transactions contemplated hereby and thereby; (ii) true and complete copies of the Certificate of Formation and Operating Agreement (or equivalent documents) of Seller; a certificate of good standing of Seller in Delaware and a certificate of authority to do business in Virginia.

5.2Items to be Delivered by Purchaser.  Contemporaneously with the execution and delivery hereof, Purchaser is delivering, or causing to be delivered, to Seller, the following:

(a)The Cash Payment;

(b)That certain instrument of assumption of liabilities of even date, by Purchaser for the benefit of Seller with respect to the Assumed Payables, duly executed by Purchaser;

(c)The Seller Note;

(d)The Intellectual Property and Intangible Asset Assignment, duly executed by Purchaser;

(e)The Assignment and Assumption Agreements, duly executed by Purchaser;

(f)The Assignments of Certifications, duly executed by Purchaser;

(g)The Visador Consulting Agreement, duly executed by Purchaser;

(h)The Visador Management Agreement, duly executed by Purchaser;

(i)The Virginia Sublease, duly executed by Purchaser;

(j)The Texas Sublease, duly executed by Purchaser;

(k)The Subordination Agreement, duly executed by Purchaser;

(l)That certain Management Services Agreement of even date between Purchaser and Countrywide Hardware, Inc.  (the “Countrywide Management Agreement”); and

(m)A certificate of even date, executed by a duly authorized officer of Purchaser, certifying and attaching (i) appropriate evidence of approval authorizing the execution

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of this Agreement and the related agreements and documents executed in connection herewith by Purchaser, and the consummation of the transactions contemplated hereby and thereby; and (ii) true and complete copies of the Certificate of Formation and Operating Agreement (or equivalent documents) of Purchaser.

5.3Contemporaneous Transactions.  Contemporaneously with the execution and delivery of this Agreement and the Additional Transaction Documents, Purchaser is executing and delivering certain instruments, documents and agreements more fully described on Schedule 5.3 attached hereto (collectively, the “Contemporaneous Documents”).  Notwithstanding anything contained in this Agreement or the Additional Transaction Documents, the Seller hereby acknowledges and consents to the execution, delivery, and consummation of the Contemporaneous Documents and the performance thereof by the parties thereto.  Further, notwithstanding anything contained in this Agreement or the Additional Transaction Documents, Seller agrees that no representation, warranty, covenant or agreement by Purchaser in this Agreement, or Purchaser or Affiliate of Purchaser in any Additional Transaction Document, is, or shall be, breached or violated by virtue of the Contemporaneous Documents, the execution and delivery thereof or the performance thereby by the parties thereto, such representations, warranties, covenants and agreements being hereby modified such that they are not, and shall not be, so breached or violated.  Seller acknowledges that no accounts receivable were contributed to Purchaser from Woodmark and no accounts receivable or inventory were contributed to Purchaser from PSP.

ARTICLE VI
POST-CLOSING MATTERS

6.1Warranty Obligations.  Purchaser shall assume all after-sales service and warranty obligations with respect to products manufactured and/or sold by Seller on or prior to the Closing Date (the “Assumed Warranty Obligations”).  The provisions of this Section 6.1 shall not relieve Seller of its obligation of indemnity relating to or arising out of product liability claims with respect to products manufactured and/or sold by Seller on or prior to the Closing Date pursuant to and in accordance with the provisions of Article VII hereof.

6.2Rebates.  In the event that any customer of Seller is entitled to a Rebate based upon sales volume or otherwise for the calendar year during which the sale of the Assets occurs (the “Closing Year”), Seller shall reimburse Purchaser for a proportionate amount of the Rebate for each customer based upon the ratio of gross sales by Seller to such customer from January 1 of the Closing Year to the Closing Date to aggregate gross sales by Seller and Purchaser but only with respect to Seller products to such customer for the Closing Year.  Seller represents and warrants to Purchaser that no Rebates are due to any customer of Seller for any period prior to the Closing Date.

6.3Accounts Payable.  Seller agrees that any and all accounts payable of Seller as of the Closing Date that are not Assumed Payables (all of which are described on Schedule 6.3) shall be satisfied by Seller following the consummation of the sale and purchase contemplated hereby in a timely manner.  For purposes of this Agreement, “timely manner” shall include satisfaction under any written agreements between Seller and the respective counterparty as attached hereto as Schedule 6.3.

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6.4Employee Benefits; W.A.R.N.

(a)Effective as of 12:01 AM on the Closing Date (the “Termination Date”), Seller shall cause the employment of each employee of the Business identified on Schedule 6.4 (“Business Employee”) to be terminated and Purchaser shall offer to hire each Business Employee on terms and conditions substantially similar to those by which each such Business Employee was employed by Seller as of the Termination Date.  Each such employee who accepts Purchaser’s offer of employment shall be referred to herein as a “Transferred Employee.”  Nothing in this Agreement shall prevent Purchaser from terminating the employment of any Transferred Employee or changing the terms and conditions of employment of any Transferred Employee following such employee’s accepting employment with Purchaser as contemplated by this Section 6.4 (a).

(b)Seller shall be responsible for the payment of all wages, other remuneration and termination or severance amounts due to the employees of Seller, and for the provision of health plan continuation coverage in accordance with the requirements of COBRA.  Seller shall maintain continuing health plan coverage in compliance with COBRA and the regulations thereunder and shall take such actions as are reasonably necessary to prevent Purchaser from becoming a successor thereunder.

(c)No portion of the assets of any plan, fund, program or arrangement, written or unwritten, heretofore sponsored or maintained by Seller, including the Employee Benefit Plans (and no amount attributable to any such plan, fund, program or arrangement), shall be transferred to Purchaser, and Purchaser shall not be required to continue any such plan, fund, program or arrangement.  The amounts payable on account of all benefit arrangements shall be determined with reference to the date of the event by reason of which such amounts become payable, without regard to conditions subsequent, and Purchaser shall not be liable for any claim for insurance, reimbursement or other benefits payable by reason of any event which occurs on or prior to the Closing Date.

(d)Subject to Purchaser’s obligation to make offers to each Business Employee pursuant to Section 6.4(a), Seller shall be responsible for all obligations and liabilities under W.A.R.N.  and each similar state law with respect to employees by reason of their severance or other termination of employment by Seller on, prior to or following the Closing Date (collectively, the “W.A.R.N.  Liabilities”).

6.5Uncollectible Accounts Receivable.  At any time after the one hundred eightieth (180) day following the date of this Agreement (the “Record Date”), Purchaser may, but shall not be obligated to, notify Seller in writing as to which of the Accounts transferred to Purchaser pursuant to the terms of this Agreement are outstanding as of the Record Date (the “Delinquent Receivables”), and the amount outstanding at the Record Date with respect to each of such Delinquent Receivables (the “Outstanding Amount”).  Except as set forth on Schedule 6.5, Purchaser shall have the right to offset and deduct pursuant to Section 7.4 of this Agreement the aggregate amount by which the total amount of Delinquent Receivables exceeds the amount of the accounts receivable reserve reflected on the Closing Balance Sheet, less any payments received by Purchaser after the Record Date on account of the Delinquent Receivables (net of the reasonable costs actually incurred in collecting such Delinquent Receivables).

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6.6Phone and Fax Numbers.  Seller shall use commercially reasonable best efforts to transfer to Purchaser the phone and fax numbers identified on Schedule 3.11(b) attached hereto.  Purchaser hereby assumes and agrees to pay, perform and discharge, as and when due, those liabilities and obligations of Seller relative to the above-mentioned phone and fax numbers accruing after the Closing Date.

6.7Further Assurances.  On and after the Closing Date, (a) upon the request of Purchaser, Seller shall take or cause to be taken all such further actions and execute, acknowledge and deliver all such further instruments and documents as may be necessary or desirable to convey and transfer to, and vest in, Purchaser, and to protect Purchaser’s right, title and interest in and to, and enjoyment of, the Assets intended to be assigned, transferred, conveyed and delivered pursuant to this Agreement and the related agreements and documents executed in connection herewith, and (b) the parties shall take all such further actions and execute and deliver all such further instruments and documents as may be necessary or appropriate to carry out the transactions contemplated by this Agreement and the related agreements and documents executed in connection herewith (including the remittance to Purchaser of any payments received by Seller in connection with the Business or the Assets).

6.8Power of Attorney.  Without limitation of any provision of this Agreement, effective upon the Closing Date, Seller constitutes and appoints Purchaser and its successors and assigns, and each of them, as its true and lawful attorney, with full power of substitution, in their own names or in the name of Seller, but for their own benefit and at their own expense, (i) to institute and prosecute all proceedings which any of them may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the Assets transferred or intended to be transferred to Purchaser hereunder, and to do all such acts and things in relation thereto as any of them shall deem advisable, and (ii) to take all actions which they may deem proper in order to provide for them the benefits under any claims, Contracts, Permits, Certifications, sales orders, or other documents or instruments transferred or intended to be transferred to Purchaser hereunder.  Seller acknowledges that the foregoing powers are coupled with an interest and are not revocable in any manner or for any reason.

ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

7.1Survival.  The indemnity obligations contained in this Agreement shall survive for a period beginning on the Closing Date and ending on the Survival Termination Date.  Any claim relating to any of the foregoing shall continue after the expiration of the applicable survival period until such claim is resolved and satisfied if the party entitled to such indemnification has provided a Claim Notice to the party required to provide such indemnification prior to the expiration of the applicable survival period.

7.2Indemnification.

7.2.1General Indemnification Obligation of Seller.  From and after the Closing Date, Seller shall reimburse, indemnify and hold harmless Purchaser and its officers, employees, members, managers, successors and assigns (each, an “Indemnified Purchaser Party”) against

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and in respect of any and all Actions, damages, losses, deficiencies, liabilities, assessments, fines, costs and expenses, including court costs, costs and expenses of investigation and reasonable attorneys’ fees (collectively, “Losses”), incurred or suffered by any Indemnified Purchaser Party that result from, relate to or arise out of:

(a)any and all Retained Liabilities, including the following:

(i)any and all liabilities and obligations of Seller of any kind, nature and description whatsoever, known or unknown, fixed or contingent, inchoate or otherwise, to the extent they either (A) are existing on the Closing Date (other than the Assumed Obligations) or (B) arise out of, or result from or relate to, any transaction entered into, or any state of facts existing, prior to or at the Closing Date (other than the Assumed Obligations);

(ii)any and all claims that relate to the Assets or the Business in which the principal event giving rise thereto occurred on or prior to the Closing Date or result from or arise out of any action or inaction on or prior to the Closing Date of or by Seller, or any director, officer, employee, shareholder, agent or representative of Seller;

(iii)any and all liabilities and obligations relating to or arising out of product liability or similar claims by Persons with respect to products manufactured and/or sold by Seller on or prior to the Closing Date;

(b)the W.A.R.N.  Liabilities;

(c)the failure of Seller to comply with the requirements of the bulk sales laws of all jurisdictions the laws of which may apply to the transactions set forth in this Agreement; and

(d)any misrepresentation, breach of warranty or nonfulfillment of any agreement or covenant on the part of Seller under this Agreement and/or under any of the Additional Transaction Documents.

7.2.2General Indemnification Obligation of Purchaser.  From and after the Closing Date, Purchaser will reimburse, indemnify and hold harmless Seller and its officers, employees, members, managers, successors and assigns (each, an “Indemnified Seller Party”) against and in respect of any and all Losses incurred or suffered by any Indemnified Seller Party that result from, relate to or arise out of:

(a)the Assumed Obligations;

(b)any and all liabilities and obligations of Purchaser, Woodmark or PSP of any kind, nature and description whatsoever, known or unknown, fixed or contingent, inchoate or otherwise, to the extent they either (A) are existing on the Closing Date or (B) arise out of, or result from or relate to, any transaction entered into, or any state of facts existing, prior to or at the Closing Date;

(c)any and all claims that relate to the Purchaser Assets or the Purchaser Business in which the principal event giving rise thereto occurred on or prior to the Closing Date

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or result from or arise out of any action or inaction on or prior to the Closing Date of or by Purchaser, or any director, officer, employee, shareholder, agent or representative of Purchaser, Woodmark or PSP;

(d)any and all liabilities and obligations relating to or arising out of product liability or similar claims by Persons with respect to products manufactured and/or sold by Purchaser, Woodmark or PSP on or prior to the Closing Date;

(e)any and all claims against any Indemnified Seller Party to the extent they relate to the Assets or the Business or the Purchaser Business in which the principal event giving rise thereto occurred after the Closing Date or which result from or arise out of any action or inaction after the Closing Date of Purchaser or any director, officer, employee, shareholder, agent or representative of Purchaser;

(f)any and all liabilities and obligations relating to or arising out of product liability or similar claims by Persons with respect to products manufactured and sold by Purchaser after the Closing Date;

(g)any and all liabilities and obligations of any Indemnified Seller Party relating to or arising out of the AGNL Guaranty provided, however, that notwithstanding anything else contained in this Agreement, the indemnity obligations of Purchaser set forth in this Section 7.2.2(g) shall be (i) null and void if Purchaser files a bankruptcy petition, a bankruptcy petition is filed against Purchaser, or Purchaser makes a general assignment for the benefit of creditors and (ii) limited in all cases (other than with respect to the immediately preceding clause (i)) to the aggregate amount of eighteen (18) months of Basic Rent (as defined in the Marion Lease); and

(h)any misrepresentation, breach of warranty or nonfulfillment of any agreement or covenant on the part of Purchaser under this Agreement and/or any of the Additional Transaction Documents.

7.2.3Method of Asserting Claims.

(a)In the event that any Action, claim or demand (collectively, “Claim”) for which Seller would be liable to an Indemnified Purchaser Party hereunder is asserted against or sought to be collected from an Indemnified Purchaser Party by a third party, the Indemnified Purchaser Party shall notify Seller of such Claim, specifying the nature of the Claim and the amount or the estimated amount thereof to the extent then feasible (which estimate shall not be conclusive of the final amount of the Claim) (the “Claim Notice”).  Seller shall thereupon, at the sole cost and expense of Seller, assume the control of the defense, settlement or compromise of the Claim against the Indemnified Purchaser Party with counsel of Seller’s choosing that is reasonably satisfactory to the Indemnified Purchaser Party.  The failure to timely give a Claim Notice shall not relieve Seller of its obligations hereunder, except and only to the extent that such failure shall result in any material prejudice to the indemnifying party in defense of the Claim.

(b)Seller shall not, without the prior written consent of the Indemnified Purchaser Party, consent to the entry of any judgment against the Indemnified Purchaser Party or enter into any settlement or compromise which does not include, as an unconditional term

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thereof (i.e., there being no requirement that the Indemnified Purchaser Party pay any amount of money or give any other consideration), the giving by the claimant or plaintiff to the Indemnified Purchaser Party of a release, in form and substance satisfactory to the Indemnified Purchaser Party, from all liability in respect of the Claim.  If any Indemnified Purchaser Party desires to participate in, but not control, any such defense or settlement, it may do so at its sole cost and expense.  If, in the reasonable opinion of the Indemnified Purchaser Party, (i) the use of counsel chosen by Seller would present such counsel with a conflict of interest, or (ii) the actual or potential defendants in, or targets of, any such action include both the Indemnified Purchaser Party and Seller, and the Indemnified Purchaser Party shall have reasonably concluded that there may be legal defenses available to it which are different from or in addition to those available to Seller, or (iii) any Claim, or the litigation or resolution of any Claim, involves an issue or matter which could reasonably have a materially adverse effect on the business, operations, assets, properties or prospects of the Indemnified Purchaser Party or its Affiliates, then, in each case, the Indemnified Purchaser Party shall have the right to control the defense or settlement of any such claim or demand, and its costs and expenses shall be included as part of the indemnification obligation of Seller hereunder; provided, however, that the Indemnified Purchaser Party shall not settle any such Claim without the prior written consent of Seller, which consent shall not be unreasonably withheld or delayed.  If the Indemnified Purchaser Party should elect to exercise such right, Seller shall have the right to participate in, but not control, the defense or settlement of such Claim at its sole cost and expense.

(c)In the event an Indemnified Purchaser Party should have a claim against Seller hereunder that does not involve a Claim being asserted against or sought to be collected from it by a third party, the Indemnified Purchaser Party shall send a Claim Notice with respect to such Claim to Seller.

(d)All claims for indemnification by an Indemnified Seller Party under this Agreement shall be asserted and resolved under the procedures set forth hereinabove by substituting in the appropriate place “Indemnified Seller Party” for “Indemnified Purchaser Party” and variations thereof, “Purchaser” for “Seller” and variations thereof, and “Purchaser” for “indemnifying party”, as applicable.

7.3Limitations.  Notwithstanding anything herein to the contrary, as to matters which are subject to indemnification pursuant to this Article XII:  (a) Seller shall not be liable unless and until the aggregate Losses to the Indemnified Purchaser Parties resulting from such otherwise indemnifiable matters shall exceed a cumulative aggregate of One Hundred Thousand ($100,000) Dollars (the “Indemnification Threshold”) (with Seller being responsible for all Losses that exceed the Indemnification Threshold); (b) the maximum aggregate liability of Seller as a result of any Claims made hereunder shall be limited to the Seller General Maximum Limitation in effect at the time any such Claim is made; (c) Purchaser shall not be liable unless and until the aggregate Losses to the Indemnified Seller Parties resulting from such otherwise indemnifiable matters shall exceed the Indemnification Threshold (with Purchaser being responsible for all Losses that exceed the Indemnification Threshold); and (d) the maximum aggregate liability of Purchaser as a result of any Claims made hereunder shall be limited to the Purchaser General Maximum Limitation in effect at the time any such Claim is made; provided, that (i) neither the Indemnification Threshold nor the Purchaser General Maximum Limitation shall apply to any claim by any Indemnified Seller Party pursuant to Section 7.2.2(g), (ii) neither

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the Indemnification Threshold, the Purchaser General Maximum Limitation nor the Seller General Maximum Limitation shall apply to the payment of the Adjustment Amount pursuant to Section 2.2.2 and (iii) neither the Indemnification Threshold nor the Seller General Maximum Limitation shall apply to any Contracts not assumed by Purchaser pursuant to Section 2.3.2(b)(ii)(B).

7.4Payment; Right of Setoff.  (a)  Subject to the terms and conditions of this Agreement, including Article VII:  (i) except as set forth in Section 7.4(c), upon the determination of liability with respect to a matter for which Purchaser is liable to an Indemnified Seller Party(ies) under this Article VII (pursuant to the final, binding, non-appealable order of a court of competent jurisdiction) the Purchaser shall pay to the applicable Indemnified Seller Party(ies), contemporaneously with the payment of any Contingent Consideration, Termination Proceeds or Deferred Proceeds under this Agreement, the amount of such Claim for indemnification made hereunder by such Indemnified Seller Party(ies); provided, however, that if any Claim remains unresolved at the time such Contingent  Consideration, Termination Proceeds or Deferred Proceeds are due and payable, Purchaser shall be entitled to hold back an amount equal to the amount of such unresolved Claim, and promptly upon final determination of liability under this Article VII, such held back amount shall be paid to the Indemnified Seller Party(ies) or retained by Purchaser, as applicable; and (ii) (A) pending final determination of any Claims in accordance with the provisions of this Article VII, Purchaser shall have the right to withhold from and offset against any amounts due to Seller, pursuant to this Agreement and the Additional Transaction Documents, the amount of such Claims, and (B) upon the determination of liability with respect to a matter for which Seller is liable to an Indemnified Purchaser Party(ies) under this Article VII (pursuant to the final, binding, non-appealable order of a court of competent jurisdiction) Purchaser shall have the right and obligation to withhold from, offset against and deduct any amounts due to Seller, pursuant to this Agreement and the Additional Transaction Documents, the amount of such Claims, whereupon Purchaser’s liability with respect thereto shall be terminated; provided, however, that Purchaser’s right of setoff provided for in this Agreement (including, but not limited to all rights of Purchaser to withhold, offset and deduct as set forth in this Section 7.4) is Purchaser’s sole source of indemnification under this Agreement.

(b)Subject to Section 7.4(c), but notwithstanding anything else contained in this Agreement or any of the Additional Transaction Documents, upon the consummation of a Change in Control Transaction, Purchaser shall have the right to withhold from and offset against any amounts due to Seller under this Agreement and the Additional Transaction Documents the Seller Holdback, provided (i) same is contemporaneously deposited into escrow contemporaneously with the consummation of any such Change in Control Transaction, (ii) there shall be no such right to withhold, offset and/or escrow funds if the Change In Control Transaction occurs after the Third Year Anniversary Date, and (iii) if the Change In Control Transaction occurs prior to the Third Year Anniversary Date, then any such escrow will be distributed on the Third Year Anniversary Date.  In such event (i) if the proceeds of such escrow are paid to a third party, the amount of any such payment up to the amount of the Seller Holdback shall be withheld from, offset against and deducted from any amounts due Purchaser, or (ii) if the proceeds of such escrow are irrevocably paid to Purchaser, Purchaser shall promptly remit to Seller, Seller’s pro rata share of such proceeds in such proportion as the Seller Holdback bears to the total amount deposited in such escrow by Purchaser, including the amount of the Seller Holdback; provided, however, that Seller need not remit any portion of the Seller

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Holdback or such proceeds to the extent that the amount thereof is equal to or less than the amount of any Claim by an Indemnified Purchaser Party against Seller that is unresolved or due and owing (whether by withholding offset, deduction or otherwise) to such Indemnified Purchaser Party as of the date such payment would otherwise be required by this Section 7.4(b), it being acknowledged and agreed by Seller that, if the amount of any such Claim is not determined by such Indemnified Purchaser Party, no such portion of the Seller Holdback or proceeds need be remitted until such time as the amount of such Claim is determined, and then, such Indemnified Purchaser Party shall have the rights set forth in Section 7.4(a) with respect thereto.

(c)Notwithstanding anything to the contrary contained in this Agreement, in no event shall Purchaser be able to withhold from, offset against or deduct (i) any amounts payable pursuant to or otherwise in connection with the Visador Consulting Agreement or the Texas Sublease, or (ii) any amounts recoverable by any Indemnified Seller Party pursuant to Section 7.2.2(g).

7.5Exclusive Remedy.  This Article VII provides the exclusive legal remedy for all matters related to this Agreement and the transactions contemplated hereby, except for (i) the foregoing shall not affect the right of either party to seek specific performance or other equitable remedy not involving the payment of money and (ii) (A) claims made pursuant to the Additional Transaction Documents, and/or (B) fraud or intentional misrepresentation.

ARTICLE VIII
MISCELLANEOUS PROVISIONS

8.1Expenses.  Except as expressly provided otherwise in the Agreement and as set forth on Schedule 8.1 attached hereto, each of the parties shall bear its own expenses in connection herewith.

8.2Publicity; Confidentiality.  None of the parties hereto will issue or make any report, statement or release pertaining to the matters contemplated by, or otherwise disclose any of the terms or existence of, or transactions contemplated by, this Agreement to any Person without the prior written consent of Seller and Purchaser.  Notwithstanding the foregoing, Seller and Purchaser may disclose the terms of this Agreement (i) to such of its officers, members, managers, employees, agents, lenders and investors, including its counsel and accountants (collectively, such party’s “Representatives”), who it determines have a need to know and who it informs of the confidential nature of such information; provided, that a disclosure of the terms of this Agreement by either party’s Representatives that would be a breach of this Agreement had such party disclosed such terms will be deemed a breach by such disclosing party of this Section 8.2, and (ii) as required by law or by the rules of any securities exchange or association on which the securities of such party are listed or included for trading.

8.3Transfer and Documentary Taxes.  Seller, on the one hand, and Purchaser, on the other hand, shall share equally all federal, state and local sales, documentary and other transfer taxes, if any, due as a result of the purchase, sale and transfer of the Assets in accordance herewith, whether imposed by law on Seller or Purchaser and each party shall indemnify, reimburse and hold harmless the other in respect of the liability for payment of or failure to pay any such taxes.

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Seller and Purchaser shall cooperate in making in a timely manner all filings, returns, reports and forms as may be required to comply with the foregoing.

8.4Equitable Relief.  The parties acknowledge and agree that, in the event any party shall violate or threaten to violate any of the restrictions of Sections 2.2.5 and 8.2, the aggrieved party will be without an adequate remedy at law and will, therefore, be entitled to enforce such restrictions by preliminary, temporary or permanent injunctive or mandatory relief in any court of competent jurisdiction without the necessity of proving damages, without the necessity of posting any bond or other security, and without prejudice to any other remedies which it may have at law or in equity.

8.5Entire Agreement.  This Agreement, including the schedules attached hereto, which are a part hereof, and the Additional Transaction Documents constitute the entire agreement of the parties with respect to the subject matter hereof.  The representations, warranties, covenants and agreements set forth in this Agreement and in the financial statements, schedules or exhibits delivered pursuant hereto constitute all the representations, warranties, covenants and agreements of the parties and upon which the parties have relied, and shall not be deemed waived or otherwise affected by any investigation made by any party hereto.  No change, modification, amendment, addition or termination of this Agreement or any part thereof shall be valid unless in writing and signed by or on behalf of the party to be charged therewith.

8.6Waiver.  The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right of such party at a later time to enforce the same.  No waiver by any party of the breach of any term, covenant, representation or warranty contained in this Agreement shall release or affect any liability resulting from such breach, and no waiver of any nature, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or of any breach of any other term, covenant, representation or warranty contained in this Agreement.

8.7Construction.  As used in this Agreement, the word “including” and its variants shall mean “including, without limitation,” the masculine gender shall include the feminine and the neuter, and the singular number shall include the plural, and vice versa.  “Knowledge” of (i) Seller means the actual knowledge of Smith, Tom Waggoner, Ron Cassell, Kay Yonts, Jack McCarty and David Wynne ( the “Seller Knowledge Group”), and in each case such knowledge as the members of the Seller Knowledge Group should have had after reasonable investigation or inquiry.  “Knowledge” of Purchaser is the actual knowledge of Joseph A.  Molino, Jr., Christopher Kliefoth, Frank Partin, and Scott McCullough (the “Purchaser Knowledge Group”) and such knowledge as the Purchaser Knowledge Group should have had after reasonable investigation or inquiry.

8.8Notices.  Any and all notices or other communications or deliveries required or permitted to be given or made pursuant to any of the provisions of this Agreement shall be deemed to have been duly given or made for all purposes when hand delivered or sent by certified or registered mail, return receipt requested and postage prepaid, overnight mail or courier, or facsimile as follows:

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If to Purchaser at:

c/o P & F Industries, Inc.

445 Broadhollow Road, Suite 100

Melville, New York 11747

Attn:  Chief Financial Officer

Facsimile Number:  (631) 773-4220

With a copy to:

Certilman Balin Adler & Hyman, LLP

90 Merrick Avenue, 9th Floor

East Meadow, New York 11554

Attn:  Steven J.  Kuperschmid, Esq.

Facsimile Number:  (516) 296-7111

If to Seller, at:

c/o Visador Holding Corporation

320 Johnston Road

P.O.  Box 150

Marion, Virginia 24354

Attn:  William Smith

Facsimile Number:  (276) 783-2376

With a copy to:

K&L Gates LLP

Hearst Tower, 47th Floor

214 North Tryon Street

Charlotte, North Carolina 28202

Attn:  Kevin P. Stichter, Esq.

Facsimile Number:  (704) 353-3282

or at such other address as any party may specify by notice given to the other parties in accordance with this Section 8.8.

8.9Choice of Law; Jurisdiction.  This Agreement shall be governed by, and interpreted and construed in accordance with, the laws of the State of New York excluding choice of law principles thereof.  Seller hereby irrevocably and unconditionally:  (i) consents and submits for itself and its property in any action relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the federal courts located within the Eastern District of New York and state courts located within the County of Suffolk in the State of New York; (ii) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered

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or certified mail (or any substantially similar form of mail), postage prepaid, to Seller at its address set forth in Section 8.8 of this Agreement or at such other address of which the sender shall have been previously notified in writing and in accordance with Section 8.8; and (iv) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law.

8.10Severability.  In the event any clause, section or part of this Agreement shall be held or declared to be void, illegal or invalid for any reason, all other clauses, sections or parts of this Agreement which can be effected without such void, illegal or invalid clause, section or part shall nevertheless continue in full force and effect.

8.11Successors and Assigns; Assignment.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.  Purchaser’s rights and obligations under this Agreement may be assigned, without the prior written consent of Seller, to any Person that acquires all or substantially all of the assets of Purchaser or to any Affiliate of Purchaser, provided that the assignee agrees in writing to be bound by the provisions hereof as they apply to Purchaser.  Except as stated in the immediately preceding sentence, no party may assign any of its rights or obligations under this Agreement without the prior written consent of the other parties.

8.12Headings.  The headings or captions under sections of this Agreement are for convenience of reference only and do not in any way modify, interpret or construe the intent of the parties or affect any of the provisions of this Agreement.

8.13No Third Party Beneficiaries.  Other than with respect to an assignee of Purchaser pursuant to the terms of Section 8.11 hereof, no Person not a party to this Agreement shall be entitled to rely upon or enforce any of the provisions of this Agreement.

8.14Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one instrument.

8.15Facsimile Signatures.  Signatures hereon which are transmitted via facsimile shall be deemed original signatures.

8.16Representation by Counsel; Interpretation.  The parties acknowledge that they have been represented by counsel in connection with this Agreement and the transactions contemplated hereby.  Accordingly, any rule or law or any legal decision that would require the interpretation of any claimed ambiguities in this Agreement against the party that drafted it has no application and is expressly waived by the parties.  The provisions of this Agreement shall be interpreted in a reasonable manner to give effect to the intent of the parties hereto.

8.17WAIVER OF JURY TRIAL.  SELLER AND PURCHASER EACH HEREBY IRREVOCABLY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THIS AGREEMENT AND THE RELATIONSHIPS THEREBY ESTABLISHED.  The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any

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court and that relate to the subject matter of this Agreement, including contract claims, tort claims, breach of duty claims, and all other statutory and common law claims.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS AGREEMENT.  In the event of litigation, this provision may be filed as a written consent to a trial by the court.

[Remainder of page intentionally left blank]

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WITNESS the execution of this Agreement as of the date first above written.

WM COFFMAN LLC
By:	/s/ Joseph A. Molino, Jr.
	Name: Joseph A. Molino, Jr.
	Title: Vice President
COFFMAN STAIRS, LLC
By:	/s/ William E. Smith
	Name: William E. Smith
	Title: President

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EX-2.2

Exhibit 2.2

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

SUBORDINATED PROMISSORY NOTE

$3,971,901.64 June 8, 2009

FOR VALUE RECEIVED, the undersigned, WM Coffman LLC, a Delaware limited liability company (including its successors, the “Borrower”), hereby promises to pay to the order of Coffman Stairs LLC, a Delaware limited liability company (the “Holder”), in lawful money of the United States of America and in immediately available funds the principal sum of Three Million Nine Hundred Seventy-One Thousand Nine Hundred One and Sixty-Four Hundredths ($3,971,901.64) Dollars , together with interest on the unpaid principal balance at the rate and on the terms and conditions provided in this subordinated promissory note (the “Note”).

1.Acquisition Agreement.  This Note evidences payment of a portion of the purchase price payable under the Asset Purchase Agreement, dated on or about the date hereof, between the Borrower and the Holder (the “APA”). This Note is the Seller Note referred to in the APA. Unless otherwise defined herein, capitalized terms used in this Note have the same meanings set forth in the APA.

2.Interest; Principal.  Interest on the unpaid principal balance of this Note shall accrue (i) from the date hereof at the rate of six and one-half (6.5%) percent per annum, (ii) from and after the Maturity Date, as defined herein, or during the continuance of an Event of Default, as defined herein, at the rate set forth in (i) plus two (2.0%) percent, or (iii) if less than the rates applicable under (i) and (ii), the maximum rate permitted by law.  Interest shall be calculated on the basis of a 360 day year for the actual days elapsed.  The Borrower shall pay to the Holder all accrued interest on:  (i) March 31, June 30, September 30 and December 31 of each year (each, a “Quarterly Payment Date”); or (ii) if any such interest payment is not permitted to be made under the Subordination Agreement (as defined below), the first Business Day that such payment is permitted to be made under the Subordination Agreement, provided such Business Day occurs not later than one year after the scheduled Quarterly Payment Date for such payment.  To the extent all or any portion of any interest payment is not permitted to be made under the Subordination Agreement for a period of one year after the scheduled Quarterly Payment Date for such payment, such amount shall be added to the principal hereunder, shall accrue interest as provided in the first sentence of this Section 2 and shall be paid on the Maturity Date.   The Borrower shall pay to the Holder all outstanding principal and accrued interest on the date (the “Maturity Date”) that is the latter of: (i) the last day of the Contingency Period; or (ii) the earlier of (a) the date that is 3 years and 90 days after the date hereof or (b) the date that all obligations under the Credit Agreement (as defined below) are satisfied in full.

3.Manner and Application of Payment.  If a payment to be made by the Borrower hereunder shall become due on a Saturday, Sunday or bank holiday in New York City, New York, such payment shall be made on the next succeeding business day.  All payments of principal and interest shall be made to the Holder in immediately available funds to an account designated by the Holder in writing. Any payment made hereunder shall be applied first to costs and expenses due hereunder, then to accrued interest and thereafter to principal.  All payments under this Note shall be made in accordance with the applicable provisions of the APA, including APA Section 2.2.7.

4.Prepayment.  The Borrower may at its option, after payment of all obligations of the Borrower to PNC Bank, National Association, as Agent under the Revolving Credit, Term Loan and Security Agreement dated on or about the date hereof (the “Credit Agreement”), prepay the outstanding principal balance of this Note, in whole or in part, at any time or, from time to time, without premium or penalty; provided, that any such prepayment shall also include all accrued but unpaid interest on the Note through the repayment date.

5.Right of Setoff.  The Borrower shall be entitled to set off against the unpaid principal and interest balance of this Note, provided such setoff is conducted in accordance with the applicable provisions of the APA, including APA Section 7.4.

6.Subordination.  ALL OBLIGATIONS UNDER THIS NOTE ARE SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT, DATED ON OR ABOUT THE DATE HEREOF, AMONG THE BORROWER, THE HOLDER AND PNC BANK, NATIONAL ASSOCIATION (THE “SUBORDINATION AGREEMENT”).

7.Default.  Each of the following events shall be an “Event of Default” hereunder:

(a)the Borrower fails to pay any of the principal, interest or any other amounts payable under this Note when and as the same becomes due and payable, except to the extent such payment is not permitted under the Subordination Agreement;

(b)the Borrower files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or seeks the appointment of a custodian, receiver, trustee (or other similar official) of the Borrower or all or any substantial portion of the Borrower’s assets, or makes any assignment for the benefit of creditors or takes any action in furtherance of any of the foregoing, or fails to generally pay its debts as they become due;

(c)an involuntary petition is filed, or any proceeding or case is commenced, against the Borrower (unless such proceeding or case is dismissed or discharged within sixty (60) days of the filing or commencement thereof) under any bankruptcy, reorganization, arrangement, insolvency, adjustment of debt, liquidation or moratorium statute now or hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official) is applied for, appointed for the Borrower or to take possession, custody or control of any property of the Borrower, or an order for relief is entered against the Borrower in any of the foregoing;

(d)the Borrower shall fail to perform any covenant, condition or agreement under this Note; or

(e)any representation or warranty made or deemed made by the Borrower under this Note shall have been false or misleading in any material respect when made or deemed made;

8.Remedies.  Upon the occurrence and during the continuance of an Event of Default hereunder:

(a)all unpaid principal, accrued interest and other amounts owing hereunder shall, at the option of the Holder, and, in the case of an Event of Default pursuant to Section 7(b) or (c) above, automatically, be immediately due, payable and collectible by the Holder pursuant to applicable law;

(b)any and all unpaid principal, interest or other amounts due under this Note shall

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thereafter bear interest at the maximum rate set forth in Section 2 hereof; and

(c)theHolder may exercise any and all rights and remedies it may have under this Note or under applicable law.

All rights and remedies shall be cumulative and not exclusive.  The failure of the holder hereof to exercise all or any of its rights, remedies, powers or privileges hereunder or applicable law in any instance shall not constitute a waiver thereof in that or any other instance.

9.Expenses.  The Borrower agrees to and shall pay to the Holder on demand, any and all expenses, including, without limitation, reasonable attorney’s fees and disbursements, incurred or paid by the Holder in connection herewith, including, without limitation, such fees, costs and expenses incurred for collection or enforcement of amounts outstanding hereunder, for protecting, preserving or enforcing the Holder’s rights or remedies (including fees, costs and expenses relating to any proceedings with respect to the bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation of the Borrower).

10.Waivers.  The Borrower, for itself and its legal representatives, successors and assigns, hereby expressly waives demand, protest, presentment, notice of dishonor, notice of acceptance, and notice of protest, and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and agrees that any extension, renewal or postponement of the time of payment or any other indulgence to, or release of any person now or hereafter obligated for the payment of this Note shall not affect the Borrower’s liability hereunder.

11.Governing Law; Consent to Jurisdiction.  This Note and any disputes hereunder shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of New York.  Each of the Borrower and the Holder (a) submits to the exclusive jurisdiction of any state or federal court sitting in New York, New York in any action or proceeding arising out of or relating to this Note, (b) agrees that all claims in respect of such action or proceeding may be heard and determined only in any such court, (c) waives any claim of inconvenient forum or other challenge to venue in such court, and (d) agrees not to bring any action or proceeding arising out of or relating to this Note in any other court.

12.Successors and Assigns.  This Note and all obligations of the Borrower hereunder shall be binding upon the successors and assigns of the Borrower, and shall, together with the rights and remedies of the Holder hereunder, inure to the benefit of the Holder, any future holder of this Note and their respective successors and assigns, provided, however, the Borrower may not transfer or assign its rights or obligations hereunder without the express written consent of the Holder, and any purported transfer or assignment by the Borrower without the Holder’s written consent shall be null and void. The Holder may assign, transfer, participate or endorse its rights under this Note.  Upon request, the Borrower shall, at its own expense, execute and deliver to the assignee of this Note, a replacement Note of equal and like tenor in an amount assigned to and assumed by such assignee.

13.Waiver of Jury Trial.  THE BORROWER AND THE HOLDER EACH WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS.  The Borrower (i) certifies that neither the Holder nor any representative, agent or attorney of the Holder has represented, expressly or otherwise, that the Holder would not, in the event of litigation, seek to enforce the foregoing waivers and (ii) acknowledges that, in entering into this Note, the

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Holder is relying upon, among other things, the foregoing waivers and certifications.

14.Entire Agreement; Amendments; Invalidity.  This Note, the APA, and the Subordination Agreement constitute the entire agreement and understanding of the parties, and supercede and replace in their entirety any prior discussions, agreements, etc., all of which are merged herein and therein.  None of the terms of this Note may be amended or otherwise modified except by an instrument executed by each of the Borrower and the Holder. If any term of this Note shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof shall in no way be affected thereby, and this Note shall be construed and be enforceable as if such invalid, illegal or unenforceable term had not been included herein.

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

16.Counterparts.  This Note may be executed in any number of counterparts (including by facsimile), all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Note by signing any such counterpart signature page or counterpart.

[Signature page follows on next page.]

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IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed as of the date first above written.

WM COFFMAN LLC
By:	/s/ Joseph A. Molino, Jr.
Name:		Joseph A. Molino, Jr.
Title:		Vice President

The undersigned hereby acknowledges and agrees to the terms of this Note, as of the date first set forth above:

COFFMAN STAIRS LLC
By:	/s/ William E. Smith
Name:		William E. Smith
Title:		President

Subordinated Promissory Note – Coffman Stairs

EX-2.3

Exhibit 2.3

ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT (this “Assignment”) is made and entered into as of June 8, 2009 by and among COFFMAN STAIRS, LLC, a Delaware limited liability company ( “Assignor”) and WM COFFMAN LLC, a Delaware limited liability company (“Assignee”).

RECITALS

WHEREAS, pursuant to the Lease Agreement dated as of March 30, 2007 (as amended and restated from time to time, the “Lease”), by and among AGNL Coffman, L.L.C. (“AGNL Coffman”), as Landlord, and Coffman Stairs, LLC (“Coffman Stairs”) and Visador Holding Company (“Visador”), jointly and severally, as Tenant, AGNL Coffman leased to Coffman Stairs and Visador the premises located at 1000 Industrial Road, 1500 Industrial Road and 320 Johnston Road in Marion, Virginia (the “Premises”);

WHEREAS, pursuant to the Asset Purchase Agreement dated as of June 8, 2009 (the “Asset Purchase Agreement”) by and among Assignor and Assignee, Assignor has agreed to sell to Assignee, and Assignee has agreed to purchase from Assignor, substantially all of Assignor’s assets, including, without limitation, all of Assignor’s right, title and interest as Tenant under the Lease (the “Asset Sale”);

WHEREAS, pursuant to Paragraph 21(j) of the Lease, the Asset Sale requires the consent of Landlord;

WHEREAS, simultaneously with the execution of and delivery of this Assignment, Visador has transferred, conveyed and assigned all of its right, title and interest in and to the Lease to Assignor pursuant to Paragraph 3 of the Consent Agreement to which this Assignment is attached as Exhibit A; and

WHEREAS, Landlord has agreed to grant such consent on the condition that Assignor and Assignee enter into an agreement substantially in the form of this Assignment.

NOW, THEREFORE, in consideration of the recitals and the respective covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereby agree as follows:

1.             Assignment.  Effective as of the date hereof (the “Assignment Date”), Assignor hereby transfers, conveys and assigns unto Assignee, and Assignee hereby accepts from Assignor, for good and valuable consideration, received and paid respectively, all of the right, title and interest of Assignor, as Tenant, in, to and under the Lease and Assignee hereby assumes all rights, obligations and liabilities of Assignor under the Lease.

2.             Assignee’s and Assignor’s Liability.  Assignee hereby attorns to Landlord and assumes and agrees to perform directly to and for the benefit of Landlord all of the obligations of Assignor under the Lease, whenever arising, whether before or after the Assignment Date, and to comply with all of the terms, covenants and provisions of the Lease as if Assignee were the original Tenant under

the Lease.  Assignee further agrees to enter a First Amendment of Lease Agreement substantially in the form of Exhibit A.

3.             Authority.  Each of the parties hereto represents and warrants to the other (and to the Landlord) that such party is duly organized and validly existing and is authorized to do business in the State where the Premises are located, that this Assignment has been authorized by all necessary parties on behalf of such party, is validly executed by authorized officers or partners of such party and is binding upon and enforceable against such party in accordance with its terms.

4.             Choice of Law.  This Assignment and the obligations arising hereunder shall be governed by, and construed in accordance with, the laws of the State of New York.  To the fullest extent permitted by law, the parties unconditionally and irrevocably waive any claim to assert that the law of any other jurisdiction governs this Assignment.  Any legal suit, action or proceeding arising out of or relating to this Assignment shall be instituted in a Federal or state court sitting in the State of New York and the parties waive any objection which either of them may now or hereafter have to the laying of venue of any such suit, action or proceeding in such state, and the parties hereby expressly and irrevocably submit to the jurisdiction of any such court in any suit, action or proceeding.

(Signature page follows.)

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IN WITNESS WHEREOF, the parties hereby have caused this Assignment to be duly executed as of the day and year first written above.

ASSIGNOR:

COFFMAN STAIRS, LLC,

a Delaware limited liability company

By:	/s/ William E. Smith
	Name:	William E. Smith
	Title:	President

ASSIGNEE:

WM COFFMAN LLC,

a Delaware limited liability company

By:	/s/ Joseph A. Molino, Jr.
	Name:	Joseph A. Molino, Jr.
	Title:	Vice President

Consented to:
AGNL COFFMAN, L.L.C.,
a Delaware limited liability company
By:	AGNL Manager, Inc.,
	a Delaware corporation
By:	/s/ Gordon J. Whiting
Name:	Gordon J. Whiting
Title:	Vice President and Managing Director

EX-2.4

Exhibit 2.4

WM Coffman LLC

Management Agreement

June 8, 2009

Visador Holding Corporation

320 Johnston Road

P.O. Box 150

Marion, Virginia 24354

Ladies and Gentlemen:

WM Coffman LLC, a Delaware limited liability company (the “Company”), hereby retains Visador Holding Corporation (the “Advisor”) to provide consulting and advisory services to the Company, commencing on the date hereof and continuing until the end of the Contingency Period.   All capitalized terms used, but not defined, herein shall have the meanings ascribed to them in the Asset Purchase Agreement of even date by and between the Company and Coffman Stairs, LLC (the “APA”).  The advisory services that may be provided hereunder shall be mutually determined by the Company and the Advisor.

Consideration:

(a)           In consideration of providing the foregoing services and of matters covered by the APA, the Advisor (or its designee) shall receive from the Company an annual advisory fee of (a) $0 for the year commencing the date hereof and ending on the date immediately preceding the first anniversary of the date hereof (the “First Year”), provided, however, that if that certain Consulting Agreement of even date between the Company and the Advisor (the “Consulting Agreement”) is not terminated by the Advisor for any reason or by the Company for Cause (as defined in the Consulting Agreement) (a “Smith Termination”) during said year, then the advisory fee for the First Year shall be $200,000 (the “First Year Incentive Payment”), (b) $0 for the year commencing on the first anniversary of the date hereof and ending on the date immediately preceding the second anniversary of the date hereof (the “Second Year”), provided, however, that if there has been no Smith Termination during the First Year, and there is no Smith Termination during the Second Year, then the advisory fee for the Second Year shall be $300,000 (the “Second Year Incentive Payment”), and (c) $250,000 for each year thereafter that this letter agreement remains in full force and effect (each an “Additional Payment”).

(b)           The First Year Incentive Payment, if any, shall be made within 30 days following the first anniversary of the date hereof.  The Second Year Incentive Payment, if any, shall be made within 30 days following the second anniversary of the date hereof.  Each Additional Payment shall be payable in arrears in equal quarterly installments on each of January 1, April 1, July 1 and October 1 of each such year.  For any partial year, the Company will pay a pro rated amount for such year.

Right of Setoff:   The Company shall have the right to set off or apply against any amounts payable to the Advisor under this letter agreement any amounts claimed to be owing at any time by the Advisor or any Affiliate to the Company, in accordance with Section 7.4 of the APA.

Restrictions on Performance of Obligations:

(a)           The Advisor hereby acknowledges and agrees that the ability of the Company to perform and/or pay its obligations to the Advisor hereunder is restricted by the terms of that certain Revolving Credit, Term Loan and Security Agreement of even date between the Company and PNC Bank, National Association.

(b)           So long as there is no Smith Termination, the Company hereby acknowledges and agrees not to make any payment to Countrywide Hardware, Inc. (“Countrywide”) pursuant to the Countrywide Management Agreement unless, at the time of any such payment to Countrywide, the Company makes simultaneous payment of all corresponding amounts due and payable to the Advisor pursuant to this letter agreement.  In the event that there is a Smith Termination, then the Company shall be subject to no such restriction, and shall have the discretion to make any payment to Countrywide pursuant to the Countrywide Management Agreement as it sees fit.

Assignment:   Neither this letter agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party hereto without the prior written consent of the other party hereto; provided that Advisor may assign all of its rights and obligations hereunder to any affiliate of Advisor without the consent of the Company.

Governing Law/Venue:   This letter agreement shall be governed by the laws of the State of New York, without giving effect to any rules, principles, or provisions of choice of law or conflict of laws.  Any dispute concerning this letter agreement shall be brought and maintained only in the state and/or federal courts located within the Eastern District of New York and state courts located within the County of Suffolk in the State of New York, and the parties irrevocably consent to the exercise of personal jurisdiction by those New York courts, and acknowledge the convenience and propriety of such venue.

Notices:  Any and all notices or other communications or deliveries required or permitted to be given or made pursuant to any of the provisions of this letter agreement shall be deemed to have been duly given or made for all purposes when hand delivered or sent by certified or registered mail, return receipt requested and postage prepaid, or overnight mail or courier, as follows:

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If to the Company, at:

c/o P & F Industries, Inc.

445 Broadhollow Road, Suite 100

Melville, New York 11747

Attn:  Chief Financial Officer

With a copy to:

Certilman Balin Adler & Hyman, LLP

90 Merrick Avenue, 9th Floor

East Meadow, New York 11554

Attn: Steven J. Kuperschmid, Esq.

If to the Advisor, at:

320 Johnston Road

P.O. Box 150

Marion, Virginia 24354

Attn: William Smith

With a copy to:

K&L Gates LLP

Hearst Tower, 47th Floor

214 North Tryon Street

Charlotte, North Carolina 28202

Attn: Kevin P. Stichter

or at such other address as either party may specify by notice given to the other party in accordance with this section.

Severability:         If any provision, or part thereof, of this letter agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and not in any way affect or render invalid or unenforceable any other provisions of this letter agreement, and this letter agreement shall be carried out as if such invalid or unenforceable provision, or part thereof, had been reformed, and any court of competent jurisdiction is authorized to so reform such invalid or unenforceable provision, or part thereof, so that it would be valid, legal and enforceable to the fullest extent permitted by applicable law.

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Waiver:  The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right of such party at a later time to enforce the same.  No waiver of any nature, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or of any breach of any other term, covenant, representation or warranty of this letter agreement.

Headings:  The headings or captions under sections of this letter agreement are for convenience of reference only and do not in any way modify, interpret or construe the intent of the parties or affect any of the provisions of this letter agreement.

Representation by Counsel; Interpretation:  The parties acknowledge that they have been represented by counsel in connection with this letter agreement and the transactions contemplated hereby.  Accordingly, any rule or law or any legal decision that would require the interpretation of any claimed ambiguities in this letter agreement against the party that drafted it has no application and is expressly waived by the parties.  The provisions of this letter agreement shall be interpreted in a reasonable manner to give effect to the intent of the parties hereto.

WAIVER OF JURY TRIAL:  THE ADVISOR AND THE COMPANY EACH HEREBY IRREVOCABLY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS LETTER AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES RELATING TO THIS LETTER AGREEMENT AND THE RELATIONSHIPS THEREBY ESTABLISHED.  The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this letter agreement, including contract claims, tort claims, breach of duty claims, and all other statutory and common law claims.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS LETTER AGREEMENT.  In the event of litigation, this provision may be filed as a written consent to a trial by the court.

Binding Effect:   This letter agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns.

Entire Agreement:  This letter agreement constitutes the entire agreement between the parties concerning the subject matter of this letter agreement and shall not be amended, altered, modified, or supplemented, except by a written instrument executed by all parties.  This letter agreement supersedes all prior agreements between the parties with respect to the subject matter of this letter agreement and all prior agreements shall be void and of no further force or effect as of this letter agreement’s effective date.

If you are in agreement with the foregoing, please so indicate by signing a counterpart of this letter, whereupon it will become a binding agreement between us.  Transmission of images of

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signed signature pages by facsimile, e-mail or other electronic means shall have the same effect as the delivery of manually signed documents in person.

[Signature page follows]

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Very truly yours,
WM COFFMAN LLC
By:	/s/ Joseph A. Molino, Jr.
Name:	Joseph A. Molino, Jr.
Title:	Vice President

Agreed and accepted as of
June 8, 2009.
VISADOR HOLDING CORPORATION
By:	/s/ William E. Smith
Name:	William E. Smith
Title:	President

EX-10.1

Exhibit 10.1

LEASE AGREEMENT

BY AND BETWEEN

AGNL COFFMAN, L.L.C.,

A DELAWARE LIMITED LIABILITY COMPANY

AS LANDLORD

AND

COFFMAN STAIRS, LLC,

A DELAWARE LIMITED LIABILITY COMPANY,

AND

VISADOR HOLDING CORPORATION,

A DELAWARE CORPORATION,

JOINTLY AND SEVERALLY,

AS TENANT

Premises: 1000 Industrial Road
1500 Industrial Road
320 Johnston Road Marion, VA 24354

Dated as of:  March 30, 2007

THIS LEASE AGREEMENT CONSTITUTES A “DEED OF LEASE” AS REQUIRED BY THE VIRGINIA CODE ANNOTATED §55-2, AS AMENDED.

TABLE OF CONTENTS

		Page
1.	Demise of Premises	1
2.	Certain Definitions	1
3.	Title and Condition	11
4.	Use of Leased Premises; Quiet Enjoyment	12
5.	Term	13
6.	Basic Rent	14
7.	Additional Rent	14
8.	Net Lease: Non-Terminability	15
9.	Payment of Impositions	16
10.	Compliance with Laws and Easement Agreements; Environmental Matters	17
11.	Liens; Recording	20
12.	Maintenance and Repair	20
13.	Alterations and Improvements	22
14.	Permitted Contests	23
15.	Indemnification	23
16.	Insurance	24
17.	Casualty and Condemnation	27
18.	Termination Events	29
19.	Restoration	30
20.	Intentionally Omitted	31
21.	Assignment and Subletting: Prohibition against Leasehold Financing	31
22.	Events of Default	35
23.	Remedies and Damages Upon Default	38
24.	Notices	41
25.	Estoppel Certificate	41
26.	Surrender	42
27.	No Merger of Title	42
28.	Books and Records	42
29.	Determination of Value	43
30.	Non-Recourse as to Landlord	45
31.	Financing	45
32.	Subordination, Non-Disturbance and Attornment	46
33.	Tax Treatment: Reporting	46
34.	Miscellaneous	47
35.	Security Deposit	51

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EXHIBITS

Exhibit A	- Premises
Exhibit B	- Machinery and Equipment
Exhibit C	- Schedule of Permitted Encumbrances
Exhibit D	- Rent Schedule
Exhibit E	- Patriot Act Compliance
Exhibit F	- Form of Auditor Release Letter
Exhibit G	- Form of Lender Release Letter
Exhibit H	- Form of Escrow Agreement
SCHEDULES
Schedule 10(j)	- Required Remediation
Schedule 12(a)	- Immediate Repairs
Schedule 16	- Existing Insurance Policies

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LEASE AGREEMENT (as amended, supplemented or modified, this “Lease”), made as of this 30th day of March, 2007, between AGNL COFFMAN, L.L.C., a Delaware limited liability company (together with its successors and assigns “Landlord”), with an address at c/o Angelo, Gordon & Co., L.P., 245 Park Avenue, 26th Floor New York, New York 10167-0094, and COFFMAN STAIRS, LLC, a Delaware limited liability company, and VISADOR HOLDING CORPORATION, a Delaware corporation, jointly and severally (together with their respective successors and permitted assigns, “Tenant”) with an address at 1000 Industrial Road, Marion, VA 24354.

The Landlord hereby appoints CT Corporation System, as resident agent with an address of 4701 Cox Road, Suite 301, Glen Allen, Virginia 23060-6802, for purposes of service of any process, notice, order or demand required or permitted by law to be served on the Landlord and as required by and for the purposes set forth in Virginia Code Annotated §55.218.1, as amended.

In consideration of the rents and provisions herein stipulated to be paid and performed, Landlord and Tenant hereby covenant and agree as follows:

1.Demise of Premises.  Landlord hereby demises and lets to Tenant, and Tenant hereby takes and leases from Landlord, for the term and upon the provisions hereinafter specified, the following described property (collectively, the “Leased Premises”):

(a)the real property located at 1000 Industrial Road, Marion, VA 24354; 1500 Industrial Road, Marion, VA 24354; and 320 Johnston Road, Marion, VA 24354, and being more particularly described in Exhibit A-1, Exhibit A-2, and Exhibit A-3 (the “Real Property”):

(b)the three (3) main buildings located on the Real Property (each a “Facility”) containing approximately 523,023 square feet in the aggregate and all other structures and improvements situated on, or affixed or appurtenant to the Real Property (collectively, the “Improvements”);

(c)all tenements, hereditaments, easements, rights-or-way, rights, privileges in and to the Real Property, including (i) easements over other lands granted by any Easement Agreement and (ii) any streets, ways, alleys, vaults, gores or strips of land adjoining the Real Property (collectively, the “Appurtenances”);

(d)all fixtures located on or affixed to the Real Property or the Improvements (collectively, the “Fixtures”); and

(e)all machinery, equipment and other property described in Exhibit B (collectively, the “Equipment”).

2.Certain Definitions.

“Acquisition Cost” means $5,800,000.

“Additional Rent” is defined in Paragraph 7.

“Adjoining Property” means all sidewalks, driveways, curbs, gores and vault spaces adjoining any of the Leased Premises.

“Affiliate” of any Person means any Person which (a) controls, (b) is under the control of, or (c) is under common control with such Person (the term “control” as used herein shall be deemed to mean ownership of more than 50% of the outstanding voting stock of a corporation or other majority equity and control interest if such Person is not a corporation) and the power to direct or cause the direction of the management or policies of such Person.

“Alterations” means all changes, additions, improvements or repairs to, all alterations, reconstructions, restorations, renewals, replacements or removals of and all substitutions or replacements for any of the Improvements or Equipment occurring after the date of this Lease, both interior and exterior, structural and non-structural, and ordinary and extraordinary and shall include any Major Alterations.

“Applicable Initial Date” is defined in Paragraph 29.

“Appurtenances” is defined in Paragraph 1(c).

“Asset Transfer” is defined in Paragraph 21 (j).

“Assignment” means any assignment of rents and leases from Landlord to a Lender which (a) encumbers the Leased Premises and (b) secures Landlord’s obligation to repay a Loan, as the same may be amended, supplemented or modified from time to time.

“Basic Rent” is defined in Paragraph 6.

“Basic Rent Adjustment Date” is defined in Exhibit D.

“Basic Rent Payment Date” is defined in Paragraph 6.

“Beginning CPI” is defined in Exhibit D.

“Business Day” means any day other than a Saturday, Sunday or a day on which commercial banks in New York City are required or authorized to be closed.

“Cash Security Deposit” is defined in Paragraph 35(a).

“Casualty” means any loss of or damage to or destruction of all or any portion of the Leased Premises.

“Code” is defined in Paragraph 33.

“Coffman” means Coffman Stairs, LLC, a Delaware limited liability company.

“Commencement Date” is defined in Paragraph 5.

“Condemnation” means (a) any taking or damaging of all or a portion of the Leased Premises (i) in or by condemnation or other eminent domain proceedings pursuant to any Law,

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(ii) by reason of any agreement with any condemnor in settlement of or under threat of any such condemnation or other eminent domain proceeding, or (iii) by any other means, (b) any de facto condemnation, or (c) any Requisition.  A Condemnation shall be considered to have taken place as of the later of the date actual physical possession is taken by the condemnor, or the date on which the right to compensation and damages accrues under the applicable Law.

“Condemnation Notice” means notice or knowledge of the institution of or intention to institute any proceeding or any threatened institution of any proceeding for Condemnation.

“Control” is defined in Paragraph 21 (k).

“Control Person” is defined in Paragraph 21 (k).

“Costs” of a Person or associated with a specified transaction means all reasonable costs and expenses incurred by such Person or associated with such transaction, including without limitation, attorneys’ fees and expenses, court costs, brokerage fees, escrow fees, title insurance premiums, mortgage commitment fees, mortgage points, recording fees and transfer taxes, as the circumstances require.

“CPI” is defined in Exhibit D.

“Credit Entity” means any Person that immediately following an assignment, subletting, Asset Transfer or Change of Control and having given effect thereto, will have a publicly traded unsecured senior debt rating of “Baa” or better from Moody’s or a rating of “BBB” or better from S&P (or, if such Person does not then have rated debt, a determination that by either of such rating agencies its unsecured senior debt would be so rated by such agency and will not be on “Negative Credit Watch”), and in the event both such rating agencies cease to furnish such ratings, then a comparable rating by any rating agency acceptable to Landlord and Lender.

“Crown” means Crown Column & Millwork Company, LLC, a Delaware limited liability company.

“Default Rate” is defined in Paragraph 7(a)(iv).

“Easement Agreement” means any condition, covenant, restriction, easement, declaration, license or other agreement listed as a Permitted Encumbrance or as may hereafter affect the Leased Premises.

“Environmental Law” means (a) whenever enacted or promulgated, any applicable Federal, state, foreign or local law, statute, ordinance, rule, regulation, license, permit, authorization, approval, consent, court order, judgment, decree, injunction, code, requirement or agreement with any governmental entity, (i) relating to pollution (or the cleanup thereof), or the protection of air, water vapor, surface water, groundwater, drinking water supply, land (including land surface or subsurface), plant, aquatic and animal life from injury caused by a Hazardous Substance or (ii) concerning exposure to, or the use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, handling, labeling, production, disposal or remediation of any Hazardous Substance, Hazardous Condition or Hazardous Activity, as now or hereafter in effect, and (b) any common law or equitable

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doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations or injuries or damages due to or threatened as a result of the presence of, exposure to, or ingestion of, any Hazardous Substance.  The term Environmental Law includes, without limitation, the Federal Comprehensive Environmental Response Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resources Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments to RCRA), the Federal Solid Waste Disposal Act, the Federal Toxic Substance Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, the Federal National Environmental Policy Act and the Federal Hazardous Materials Transportation Act, each as now or hereafter in effect and any similar state or local Law.

“Environmental Violation” means (a) any direct or indirect discharge, disposal, spillage, emission, escape, pumping, pouring, injection, leaching, release, seepage, filtration or transporting of any Hazardous Substance at, upon, under, onto or within the Leased Premises, or from the Leased Premises to the environment, in violation of any Environmental Law or in excess of any reportable quantity established under any Environmental Law or which could result in any liability to any Federal, state or local government or any other Person for the costs of any removal or remedial action or natural resources damage or for bodily injury or property damage, (b) any deposit, storage, dumping, placement or use of any Hazardous Substance at, upon, under or within the Leased Premises or which extends to any Adjoining Property in violation of any Environmental Law or in excess of any reportable quantity established under any Environmental Law or which could result in any liability to any Federal, state or local government or to any other Person for the costs of any removal or remedial action or natural resources damage or for bodily injury or property damage, (c) the abandonment or discarding of any barrels, containers or other receptacles containing any Hazardous Substances in violation of any Environmental Laws, (d) any activity, occurrence or condition which could result in any liability, cost or expense to Landlord or Lender or any other owner or occupier of the Leased Premises, or which could result in a creation of a lien on the Leased Premises under any Environmental Law or (e) any violation of or noncompliance with any Environmental Law.

“Equipment” is defined in Paragraph 1(e).

“Escrow Agent” means Lawyers Title Insurance Company or another independent third-party escrow agent satisfactory to Landlord in its reasonable discretion.

“Escrow Agreement” means an Escrow Agreement among Escrow Agent, Landlord and Tenant in substantially in the form of Exhibit H.

“Escrow Charges” is defined in Paragraph 9(b).

“Escrow Payment” is defined in Paragraph 9(b).

“Event of Default” is defined in Paragraph 22(a).

“Existing Insurance Policies is defined in Paragraph 16(a).

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“Facility” is defined in Paragraph 1(b).

“Expiration Date” is defined in Paragraph 5(a).

“Fair Market Value” means the higher of (a) the fair market value of the Leased Premises as of the Relevant Date as if unaffected and unencumbered by this Lease or (b) the fair market value of the Leased Premises as of the Relevant Date as affected and encumbered by this Lease and assuming that the Term has been extended for all extension periods provided for herein.  For all purposes of this Lease, Fair Market Value shall be determined in accordance with the procedure specified in Paragraph 29.

“Fair Market Value Date” means the date on which the Fair Market Value is determined in accordance with Paragraph 29.

“Federal Funds” means Federal or other immediately available funds which at the time of payment are legal tender for the payment of public and private debts in the United States of America.

“First Full Basic Rent Payment Date” is defined in Exhibit D.

“Fixtures” is defined in Paragraph 1(d).

“Future Tax” is defined in Paragraph 9(a).

“GAAP” is defined in Paragraph 28(a).

“Guarantor” means Crown, a Replacement Guarantor or any successor or permitted assignee thereof.

“Guaranty” means the Guaranty Agreement dated as of the date hereof from Crown to Landlord guaranteeing the payment and performance by Tenant of all or Tenant’s obligation s under this Lease.

“Hazardous Activity” means any activity, process, procedure or undertaking which directly or indirectly (a) procures, generates or creates any Hazardous Substance; (b) causes or results in (or threatens to cause or result in) the release, seepage, spill, leak, flow, discharge or emission of any Hazardous Substance into the environment (including the air, ground water, watercourses or water systems), (c) involves the containment or storage of any Hazardous Substance; or (d) would cause the Leased Premises or any portion thereof to become a hazardous waste treatment, recycling, reclamation, processing, storage or disposal facility within the meaning of any Environmental Law.

“Hazardous Condition” means any condition which would support any claim or liability under any Environmental Law, including the presence of underground storage tanks.

“Hazardous Substance” means (a) any substance, material, product, petroleum, petroleum product, derivative, compound or mixture, mineral (including asbestos), chemical, gas, medical waste, or other pollutant, in each case whether naturally occurring, man-made or the by-product

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of any process, that is toxic, harmful or hazardous or acutely hazardous to the environment or public health or safety or (b) any substance supporting a claim under any Environmental Law, whether or not defined as hazardous as such under any Environmental Law.  Hazardous Substances include, without limitation, any toxic or hazardous waste, pollutant, contaminant, industrial waste, petroleum or petroleum-derived substances or waste, radon, radioactive materials, asbestos, asbestos containing materials, urea formaldehyde foam insulation, lead and polychlorinated biphenyls.

“Immediate Repair Amount” is defined in Paragraph 12(a).

“Immediate Repair Fund” is defined in Paragraph 12(a).

“Impositions” is defined in Paragraph 9(a).

“Improvements” is defined in Paragraph 1(b).

“Indemnitee” is defined in Paragraph 15.

“Information” is defined in Paragraph 34(o).

“Insurance Requirements” means the requirements of all insurance policies maintained in accordance with this Lease.

“Landlord” is defined in the introductory Paragraph.

“Late Charge” is defined in Paragraph 7(a)(ii).

“Law” means any constitution, statute, rule of law, code, ordinance, order, judgment, decree, injunction, rule, regulation, policy, requirement or administrative or judicial determination, even if unforeseen or extraordinary, of every duly constituted governmental authority, court or agency, now or hereafter enacted or in effect.

“Lease” is defined in the introductory Paragraph.

“Lease Year” means, with respect to the first Lease Year, the period commencing on the Commencement Date and ending at midnight on the last day of the twelfth (12l) full consecutive calendar month following the month in which the Commencement Date occurred, and each succeeding twelve (12) month period during the Term.

“Leased Premises” is as defined in Paragraph 1.

“Legal Requirements” means the requirements of all present and future Laws, including all permit and licensing requirements and all covenants, restrictions and conditions, including all Easement Agreements, now or hereafter of record which may be applicable to Tenant or to the Leased Premises, or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or restoration of the Leased Premises.

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“Lender” means any Person which may, on or after the date hereof, make a Loan to Landlord or be the holder of a Note, together with its successors, transferees and assigns.

“Letter of Credit” means an irrevocable, stand-by letter of credit issued by Harris Bank NA or such other bank or financial institution acceptable to Landlord and in form and substance satisfactory to Landlord.

“Loan” means any loan made by one or more Lenders to Landlord, which loan is secured by a Mortgage and an Assignment and evidenced by a Note.

“Material Indebtedness” is defined in Section 22(a)(x).

“Monetary Obligations” means Rent, Impositions, Escrow Charges and all other sums payable by Tenant under this Lease to Landlord, to any third party on behalf of Landlord or to any Indemnitee.

“Moody’s” means Moody’s Investor Services, Inc.

“Mortgage” means any mortgage or deed of trust from Landlord to a Lender which (a) encumbers the Leased Premises and (b) secures Landlord’s obligation to repay a Loan, as the same may be amended, supplemented or modified.

“Net Award” means (a) the entire award payable to Landlord or Lender by reason of a Condemnation, less any sums paid pursuant to a separate claim by Tenant for (i) any furniture, fixtures and equipment owned by Tenant and affected by such Condemnation, or (ii) Tenant’s relocation expenses; or (b) the entire proceeds of any insurance policy by reason of a Casualty, in each case, less any expenses incurred by Landlord and Lender in collecting such award or proceeds.

“Net Sublet Rent” is defined in Paragraph 21(h).

“Non-Preapproved Assignee” is defined in Paragraph 21(b).

“Non-Preapproved Assignment” is defined in Paragraph 21(b).

“Note” means any promissory note evidencing Landlord’s obligation to repay a Loan, as the same may be amended, supplemented or modified.

“Partial Casualty” means any Casualty which does not constitute a Termination Event.

“Partial Condemnation” means any Condemnation which does not constitute a Termination Event.

“Permitted Asset Transfer” is defined in Paragraph 21(j).

“Permitted Change of Control” is defined in Paragraph 21(k).

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“Permitted Encumbrances” means those covenants, restrictions, reservations, liens, conditions and easements and other encumbrances, other than any Mortgage or Assignment, listed on Exhibit C.

“Permitted Violations” is defined in Paragraph 14.

“Person” means an individual, partnership, limited liability company, association, corporation or other entity.

“Preapproved Sublet” is defined in Paragraph 21(c).

“Prepayment Premium” means any payment required to be made by Landlord to a Lender under a Note or other document evidencing or securing a Loan (other than payments of principal and/or interest) solely by reason of any prepayment or defeasance by Landlord of any principal due under such Loan, and which may, without limitation, take the form of (a) a “make whole” or yield maintenance clause requiring a prepayment premium or (b) a defeasance payment (such defeasance payment to be an amount equal to the positive difference between (i) the total amount required to defease a Loan and (ii) the outstanding principal balance of the Loan as of the date of such defeasance plus reasonable Costs of Landlord and Lender).

“Present Value” of any amount means such amount discounted by the rate often percent (10%) per annum.

“Prime Rate” means the interest rate per annum as published, from time to time, in The Wall Street Journal as the “Prime Rate” in its column entitled “Money Rate”.  The Prime Rate may not be the lowest rate of interest charged by any “large U.S.  money center commercial banks” and Landlord makes no representations or warranties to that effect.  In the event The Wall Street Journal ceases publication or ceases to publish the “Prime Rate” as described above, the Prime Rate shall be the average per annum discount rate (the “Discount Rate”) on ninety- one (91) day bills (“Treasury Bills”) issued from time to time by the United States Treasury at its most recent auction, plus three hundred (300) basis points.  If no such 91-day Treasury Bills are then being issued, the Discount Rate shall be the discount rate on Treasury Bills then being issued for the period of time closest to ninety-one (91) days.

“Prior Months” is defined in Exhibit D.

“Real Property” is defined in Paragraph 1(a).

“Record” is defined in Paragraph 11(b).

“Release Conditions” is defined in Paragraph 35(a).

“Relevant Date” means (a) in the event of a Termination Notice pursuant to Paragraph 18 with respect to a Condemnation, the date immediately prior to the date on which the applicable Condemnation Notice is received, (b) in the event of a Termination Notice pursuant to Paragraph 18 with respect to a Casualty, the date immediately prior to the date on which the applicable Casualty occurs, (c) in the event of a redetermination of Fair Market Value pursuant to Paragraph 20(c), the date on which Fair Market Value is determined, and (d) in the event

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Landlord provides Tenant with notice of its intention to require Tenant to make a termination offer under Paragraph 23(a)(iii), the date immediately prior to the Event of Default giving rise to the need to determine Fair Market Value.

“Remaining Obligations” is defined in Paragraph 18(d).

“Remaining Sum” is defined in Paragraph 19(c).

“Remediation Amount” is defined in Paragraph 10(j).

“Remediation Fund” is defined in Paragraph 10(j).

“Renewal Date” is defined in Paragraph 5.

“Renewal Term” is defined in Paragraph 5.

“Rent” means, collectively, Basic Rent and Additional Rent.

“Replacement Guarantor” means the Guarantor under any Replacement Guaranty.

“Replacement Guaranty” is defined in Paragraph 21(k).

“Requesting Party” is defined in Paragraph 25.

“Required Letters of Credit” means, collectively, each Letter of Credit Tenant is required to obtain and maintain pursuant to Paragraph 10(j), Paragraph 12(a), and Paragraph 35(e) of this Lease.

“Required Remediation” is defined in Paragraph 10(j).

“Requisition” means a temporary requisition or confiscation of the use or occupancy of all or a portion of the Leased Premises by any governmental authority, civil or military, whether pursuant to an agreement with such governmental authority in settlement of or under threat of any such requisition or confiscation.

“Review Criteria” is defined in Paragraph 21(b).

“S&P” means Standard and Poor’s Ratings Services, a division of McGraw Hill Companies, Inc.

“Security Deposit” is defined in Paragraph 35(a).

“Senior Lender” means Harris Bank NA.

“Senior Loan Documents” means that certain Credit Agreement, Security Agreement, and related documents, as amended, restated or modified, dated February 28, 2003 executed in connection with the extension of credit by the Senior Lender to the Tenant and Guarantor.

“Set-Off is defined in Paragraph 8(a).

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“Site Assessment” is defined in Paragraph 10(c).

“Site Reviewers” is defined in Paragraph 10(c).

“State” means the State of Texas.

“Specially Designated National or Blocked Person” is defined in Paragraph 34(n).

“Subordinated Lender” means American Capital Financial Services, Inc.

“Subordinated Loan Documents” means that certain Note and Equity Purchase Agreement and other related documents dated February 28, 2003 executed in connection with the extension of credit by the Subordinated Lender to Tenant and Guarantor.

“Subsidiary(ies)” means, as to any Person, any corporation, partnership, limited liability company, association, or other business entity of which such Person directly or indirectly owns more than 50% of the capital stock or other equity interests.

“Surviving Obligations” means any obligations of Tenant under this Lease, actual or contingent, which arise on or prior to the expiration or prior termination of this Lease or which survive such expiration or termination by their own terms.

“Tenant” is defined in the introductory Paragraph.

“Tenant Certificate” means the Tenant Certificate executed and delivered by Tenant to Landlord in connection with this Lease.

“Term” is defined in Paragraph 5(a).

“Termination Amount” means the sum of the Fair Market Value of the Leased Premises and any applicable Prepayment Premium, minus the amount of any Net Award received by Landlord.

“Termination Date” is defined in Paragraph 18(c).

“Termination Event” means a Casualty or Condemnation described in Paragraph 18(a) or Paragraph 18(b).

“Termination Notice” is defined in Paragraph 18(a).

“Third Party Purchaser” is defined in Paragraph 21(i).

“Warranties” is defined in Paragraph 3(d).

“Visador” means Visador Holding Corporation, a Delaware corporation.

“Work” is defined in Paragraph 13(b).

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3.Title and Condition.

(a)The Leased Premises are demised and let subject to (i) any Mortgage and Assignment in effect from time to time, (ii) the rights of any Persons in possession of the Leased Premises as of the date hereof, (iii) the state of title of the Leased Premises as of the date hereof, including any Permitted Encumbrances, (iv) any state of facts which an accurate survey or physical inspection of the Leased Premises might show, (v) all Legal Requirements, including any existing violation of any thereof, and (vi) the condition of the Leased Premises as of the date hereof, without representation or warranty by Landlord.

(b)Tenant acknowledges that the Leased Premises are in good condition and repair at the inception of this Lease.  LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS WHERE IS AND WITH ALL FAULTS.  TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii)THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD’S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii)USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY (xiv) OPERATION, (xv) THE EXISTENCE OR PRESENCE OF ANY HAZARDOUS SUBSTANCE, OR (xvi) COMPLIANCE OF THE LEASED PREMISES WITH ANY LEGAL REQUIREMENT; AND ALL RISKS RELATED TO ANY OF THE FOREGOING ARE TO BE BORNE BY TENANT.  TENANT ACKNOWLEDGES THAT THE LEASED PREMISES ARE OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE LEASED PREMISES HAVE BEEN INSPECTED BY TENANT AND ARE SATISFACTORY TO IT.  IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT).  THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO THE CONDITION OF THE LEASED PREMISES.

(c)Tenant acknowledges that Tenant has examined the title to the Leased Premises prior to the execution and delivery of this Lease and has found the same to be satisfactory for the purposes contemplated hereby.  Tenant represents and warrants to Landlord that (i) Landlord has good and marketable fee simple title to the Real Property, free and clear of all liens and encumbrances other than the Permitted Encumbrances, (ii) Tenant has only the leasehold right of possession and use of the Leased Premises, as provided herein, (iii) the Leased Premises conform to all Legal Requirements and all Insurance Requirements, (iv) all easements necessary or appropriate for the use or operation of the Leased Premises have been obtained and maintained,

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(v) neither Tenant or any agent, officer, employee, principal or affiliate of Tenant has granted or knowingly suffered to exist any unrecorded deeds, mortgages, land contracts, options to purchase, agreements or other instruments adversely affecting title to the Leased Premises or any lien, encumbrance, transfer of interest, constructive trust, or other equity in the Leased Premises, (vi) all real property taxes due and payable with respect to the Real Property and the Leased Premises have been paid in full, (vii) Tenant has received no notice of any Casualty, Condemnation or pending or threatened special assessments affecting the Leased Premises, (viii) Tenant has received no complaint with respect to, or notice of, any litigation filed against Tenant, the Real Property or the Leased Premises that would adversely affect the current use or operation of the Leased Premises or the ability of Tenant to perform its obligations under this Lease, (ix) all contractors and subcontractors who have performed work on or supplied materials to the Leased Premises have been fully paid, and all materials and supplies have been fully paid for, (x) all permits, licenses, approvals and third-party consents necessary for the use and operation of the Leased Premises have been obtained and remain in full force and effect and no violations or defaults exist thereunder, (xi) the Improvements have been fully completed in all material respects in a workmanlike manner of first class quality, (xii) all Equipment necessary for the use or operation of the Leased Premises has been installed and is presently fully operative in all material respects, and (xiii) other than this Lease, there are no other leases in effect with respect to the Leased Premises.  The foregoing representations and warranties shall survive the date on which this Lease is fully executed.

(d)Landlord hereby assigns to Tenant, without recourse or warranty whatsoever, in conjunction with Landlord, the right to enforce all assignable warranties, guaranties, indemnities, causes of action and similar rights (collectively “Warranties”) which Landlord may have against any manufacturer, seller, engineer, contractor or builder in respect of the Leased Premises.  Such assignment shall remain in effect until the expiration or earlier termination of this Lease (unless Tenant or its Affiliate or designee acquires the Leased Premises, in which instance such assignment shall become permanent and irrevocable with respect to the Leased Premises), whereupon such assignment shall cease and all of the Warranties shall automatically revert to Landlord.  In confirmation of such reversion Tenant shall execute and deliver promptly any certificate or other document reasonably required by Landlord.  Landlord shall also retain the right to enforce any Warranties upon the occurrence of an Event of Default.  Tenant shall use commercially reasonable efforts to enforce the Warranties in accordance with their respective terms.

4.Use of Leased Premises; Quiet Enjoyment.

(a)Tenant may occupy and use the Leased Premises for storage, manufacture and/or general office use associated with the manufacture, sale and distribution of stair products and systems, architectural columns and other building components and products, as well as uses ancillary thereto (the “Permitted Use”), and for no other purpose without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed; provided that at the time of a permitted assignment of this Lease in accordance with the terms of Paragraph 21 below, Tenant’s assignee shall propose the use that such assignee intends to use and occupy the Leased Premises for, and if such proposed use is not consistent with the Permitted Use, Landlord, in Landlord’s sole discretion, shall have the right to approve or disapprove such proposed use.  Notwithstanding the foregoing, any assignee’s use and

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occupancy of the Leased Premises must not diminish the market value or impair the usefulness of the Leased Premises, as determined in Landlord’s reasonable discretion, and the proposed use and occupancy of any assignee must comply with this Lease in all other respects.  Tenant shall be responsible for obtaining and maintaining all permits, licenses, certificates of occupancy, or any other items required by Law or any Legal Requirement with respect to Tenant’s permitted use and occupancy of the Leased Premises.  Tenant shall not use or occupy or permit the Leased Premises to be used or occupied, nor do or permit anything to be done in or on the Leased Premises, in a manner which would or might (i) violate any Legal Requirement or Permitted Encumbrance, (ii) make void or voidable or cause any insurer to cancel any insurance required by this Lease, or make it difficult or impossible to obtain any such insurance at commercially reasonable rates, (iii) make void or voidable, cancel or cause to be cancelled or release any of the Warranties, (iv) cause structural injury to any of the Improvements or (v) constitute a public or private nuisance or waste.  If during the Term Tenant’s use or occupancy of the Leased Premises are no longer permitted by Law or any Legal Requirement, Tenant shall not have the right to terminate this Lease.

(b)Subject to the provisions hereof, so long as no Event of Default has occurred and is continuing, Tenant shall quietly hold, occupy and enjoy the Leased Premises throughout the Term, without any hindrance, ejection or molestation by Landlord with respect to matters that arise after the date hereof, provided that Landlord or its agents may enter upon and examine the Leased Premises during normal business hours upon at least two (2) days advance notice to Tenant (except in the case of any emergency, in which event no notice shall be required) for the purpose of inspecting the Leased Premises, verifying compliance or non-compliance by Tenant with its obligations hereunder and the existence or non-existence of an Event of Default or event which with the passage of time and/or notice would constitute an Event of Default, showing the Leased Premises to prospective Lenders and purchasers, making any repairs and taking such other action with respect to the Leased Premises as is permitted by any provision hereof.  Landlord shall use commercially reasonable efforts to avoid interruption to Tenant’s business operations during any such entry, except to the extent such entry occurs during the continuation of an Event of Default, and Landlord shall indemnify Tenant and hold Tenant harmless from and against any and all claims, loses, damages, costs or expenses incurred by Tenant as a result of such entry.  Tenant shall permit inspection of the Leased Premises by any federal, state, county or municipal officer or representative to determine if the Leased Premises or any portion thereof comply with any Law or Legal Requirement.

5.Term.

(a)Subject to the provisions hereof, Tenant shall have and hold the Leased Premises for an initial term (as extended or renewed in accordance with the provisions hereof, the “Term”) commencing on the date hereof (the “Commencement Date”) and ending on the last day of the two hundred fortieth (240th) full calendar month next following the date hereof (the “Expiration Date”).  If all Rent and all other sums due hereunder shall not have been fully paid by the end of the Term, and provided that no bona fide disputes exist between Landlord and Tenant with respect to the amount of Rent or other sums due, Landlord may, at its option, extend the Term until all said sums shall have been fully paid.

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(b)Provided that if, on or prior to the Expiration Date or any other Renewal Date (as hereinafter defined) this Lease shall not have been terminated pursuant to any provision hereof, then on the Expiration Date and on the tenth (10th) anniversary of the Expiration Date (each such date, a “Renewal Date”), the Term shall be deemed to have been automatically extended for an additional period often (10) years (each of the extension periods, a “Renewal Term”), unless Tenant shall notify Landlord in writing in recordable form at least eighteen (18) months prior to the next Renewal Date that Tenant is terminating this Lease as of the next Renewal Date.  Any such extension of the Term shall be subject to all of the provisions of this Lease (except that Tenant shall not have the right to any additional Renewal Terms).

(c)If Tenant exercises its option pursuant to Paragraph 5(b) not to have the Term automatically extended, or if an Event of Default occurs and is continuing, then Landlord shall have the right during the remainder of the Term then in effect and, in any event, Landlord shall have the right during the last year of the Term, to (i) advertise the availability of the Leased Premises for sale or reletting and to erect upon the Leased Premises signs indicating such availability and (ii) show the Leased Premises to prospective purchasers or tenants or their agents at such reasonable times as Landlord may select.

6.Basic Rent.

Tenant shall pay to Landlord for the Leased Premises during the Term, annual rent in the amounts (“Basic Rent”) and on the dates (each, a “Basic Rent Payment Date”) provided for in Exhibit “D”.  Each payment of Basic Rent shall be made to Landlord (or one or more other Persons as Landlord may designate) in Federal Funds on each Basic Rent Payment Date, without offset, abatement or deduction, pursuant to wire transfer instructions delivered to Tenant from time to time.

7.Additional Rent.

(a)Tenant shall pay and discharge, as additional rent (collectively, “Additional Rent”):

(i)except as otherwise specifically provided herein, all Costs of Tenant, Landlord (including Costs of Landlord’s counsel and Landlord’s reasonable internal Costs) and any other Persons specifically referenced herein which are incurred in connection or associated with (A) the ownership, use, non-use, occupancy, monitoring, possession, operation, condition, design, construction, maintenance, alteration, repair or restoration of the Leased Premises, including, without limitation, all Costs associated with the resolution, in a manner reasonably satisfactory to Landlord, of the “apparent deed gap” issue noted on those certain surveys dated March 29, 2007, prepared by Mathews & Henegar, Inc.  impacting the 1000 Industrial Road, Marion, Virginia property and the 1500 Industrial Road, Marion, Virginia property, (B) the performance of any of Tenant’s obligations under this Lease, (C) any sale or other transfer of the Leased Premises to Tenant under this Lease, including costs and expenses incurred in connection with the payment of a Prepayment Premium, (D) any Condemnation proceedings, (E) the adjustment, settlement or compromise of any insurance claims involving or arising from the Leased Premises, (F) the prosecution, defense or settlement of any litigation involving or arising from the Leased Premises, this Lease, or the sale of the Leased Premises to Landlord (except to

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the extent such litigation is the result of the actions or omissions of Landlord), (G) the exercise or enforcement by Landlord of any of its rights under this Lease, (H) any amendment or supplement to or modification or termination of this Lease requested by Tenant or necessitated by any action of Tenant, including without limitation, any default by Tenant in the performance of any of its obligations under this Lease, (I) the preparation, negotiation and execution of this Lease, any act undertaken by Landlord (or its counsel) at the request of Tenant, any act of Landlord performed on behalf of Tenant, or the review and monitoring of compliance by Tenant with the terms of this Lease, including compliance with applicable Law, (J) Tenant’s failure to act promptly in an emergency situation, (K) associated with the wire transfers of Rent payments, and (L) all other items specifically required to be paid by Tenant under this Lease;

(ii)If all or any portion of any installment of Basic Rent is due and not paid by the applicable Basic Rent Payment Date, an amount (the “Late Charge”) equal to five percent (5%) of the amount of such unpaid installment or portion thereof to reimburse Landlord for its cost and inconvenience incurred as a result of Tenant’s delinquency;

(iii)a sum equal to any additional sums (including any late charge in excess of the amount payable under clause (ii) above for that portion of the Basic Rent paid to the Lender as scheduled installments of principal and interest, default penalties, interest in excess of amounts payable under clause (iv) below for that portion of the Basic Rent paid to the Lender as scheduled installments of principal and interest, and fees of Lender’s counsel) which are payable by Landlord to any Lender under any Note by reason of Tenant’s late payment or non-payment of Basic Rent or by reason of an Event of Default; and

(iv)interest at the rate (the “Default Rate”) of five percent (5%) over the Prime Rate per annum on the following sums until paid in full:  (A) all overdue installments of Basic Rent from the respective due dates thereof, (B) all overdue amounts of Additional Rent relating to obligations which Landlord shall have paid on behalf of Tenant, from the date of payment thereof by Landlord, and (C) all other overdue amounts of Additional Rent, from the date when any such amount becomes overdue.

(b)Tenant shall pay and discharge (i) any Additional Rent referred to in Paragraph 7(a)(i) when the same shall become due; provided that amounts which are billed to Landlord or any third party, but not to Tenant, shall be paid within five (5) Business Days after Landlord’s demand for payment thereof, and (ii) any other Additional Rent, within five (5) Business Days after Landlord’s demand for payment thereof.

(c)In no event shall amounts payable under Paragraph 7(a)(ii), (iii) and (iv) or elsewhere in this Lease exceed the maximum amount permitted by applicable Law.

8.Net Lease:  Non-Terminability.

(a)This is a net lease and all Monetary Obligations shall be paid without notice or demand and without set-off, counterclaim, recoupment, abatement, suspension, deferment, diminution, deduction, reduction or defense (collectively, a “Set-Off”).

(b)This Lease and the rights of Landlord and the obligations of Tenant hereunder shall not be affected by any event or for any reason or cause whatsoever foreseen or unforeseen.

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(c)The obligations of Tenant hereunder shall be separate and independent covenants and agreements, all Monetary Obligations shall continue to be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and the obligations of Tenant hereunder shall continue unaffected unless the requirement to pay or perform the same shall have been terminated pursuant to an express provision of this Lease.  The obligation to pay Rent or amounts equal thereto shall not be affected by any collection of rents by any governmental body pursuant to a tax lien or otherwise.  All Rent payable by Tenant hereunder shall constitute “rent” for all purposes (including Section 502(b)(6) of the Federal Bankruptcy Code).

(d)Except as otherwise expressly provided herein, Tenant shall have no right and hereby waives all rights which it may have under any Law to (i) quit, terminate or surrender this Lease or the Leased Premises, or (ii) any Set-Off of any Monetary Obligations.

9.Payment of Impositions.

(a)Tenant shall pay and discharge when due:  all taxes (including real and personal property, franchise, sales, use, gross receipts and rent taxes; all charges for any easement or agreement maintained for the benefit of the Leased Premises; all assessments and levies; all fines, penalties and other costs in connection with noncompliance with any applicable Law (except to the extent that such noncompliance is caused by the actions or inaction of Landlord); all permit, inspection and license fees; all rents and charges for water, sewer, utility and communication services relating to the Leased Premises; all other public charges, imposed upon or assessed against (i) Tenant, (ii) Tenant’s interest in the Leased Premises, (iii) the Leased Premises, (iv) Landlord as a result of or arising in respect of the acquisition, ownership, occupancy, leasing, use, possession or sale of the Leased Premises, any activity conducted on the Leased Premises, or the Rent, or (v) any Lender by reason of any Note, Mortgage, Assignment or other document evidencing or securing a Loan and which (as to this clause (v)) Landlord has agreed to pay (collectively, the “Impositions”); provided that nothing herein shall obligate Tenant to pay (A) income, excess profits or other taxes of Landlord (or Lender) which are determined on the basis of Landlord’s (or Lender’s) net income or net worth (unless such taxes are in lieu of or a substitute for any other tax, assessment or other charge upon or with respect to the Leased Premises which, if it were in effect, would be payable by Tenant under the provisions hereof or by the terms of such tax, assessment or other charge), (B) any estate, inheritance, succession, gift or similar tax imposed on Landlord or (C) any capital gains tax imposed on Landlord in connection with the sale of the Leased Premises to any Person.  In the event that any ad valorem or other future real property tax (“Future Tax”) is decreed or characterized by Law as an income tax and Tenant is thereby prohibited by any applicable Law from paying such Future Tax pursuant to this Paragraph 9(a), Landlord and Tenant agree that Basic Rent shall be adjusted by such amount as shall be necessary to yield to Landlord the same net amount as Landlord would have received but for the implementation of such Future Tax.  Landlord shall have the right to require Tenant to pay, together with scheduled installments of Basic Rent, the amount of the gross receipts or rent tax, if any, payable with respect to the amount of such installment of Basic Rent.  If any Imposition may be paid in installments without interest or penalty, Tenant shall have the option to pay such Imposition in installments.  Tenant shall prepare and file all tax reports required by governmental authorities which relate to the Impositions.  Tenant shall deliver to Landlord (1) copies of all settlements and notices pertaining to the Impositions which may be issued by any governmental authority within ten (10) days after Tenant’s receipt thereof,

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(2) receipts for payment of all taxes required to be paid by Tenant hereunder within thirty (30) days after the due date thereof and (3) receipts for payment of all other Impositions within ten (10) days after Landlord’s request therefor.

(b)During the continuance of an Event of Default, Tenant shall pay to Landlord such amounts (each an “Escrow Payment”) monthly or as required by such Lender (but not more often than monthly) so that there shall be in an escrow account an amount sufficient to pay the Escrow Charges (as hereinafter defined) as they become due.  As used herein, “Escrow Charges” means real estate taxes and assessments on or with respect to the Leased Premises or payments in lieu thereof and premiums on any insurance required by this Lease and any reserves for capital improvements, deferred maintenance, repair and/or tenant improvements required by any Lender.  Landlord shall determine the amount of the Escrow Charges (it being agreed that if required by a Lender, such amount shall equal any corresponding escrow installments required to be paid by Landlord) and the amount of each Escrow Payment.  The Escrow Payments may be commingled with other funds of Landlord or other Persons and no interest thereon shall be due or payable to Tenant.  Landlord shall apply the Escrow Payments to the payment of the Escrow Charges in such order or priority as Landlord shall determine or as required by Law.  If at any time the Escrow Payments theretofore paid to Landlord shall be insufficient for the payment of the Escrow Charges, Tenant, within ten (10) days after Landlord’s demand therefor, shall pay the amount of the deficiency to Landlord.  Within ten (10) days following Tenant’s cure of the first or second Event of Default giving rise Tenant’s obligation to make Escrow Payments pursuant to this Paragraph 9(b), all Escrow Payments that have not been applied to satisfy Escrow Charges shall be refunded to Tenant; provided that (x) if the first and second Event of Default occur within one (1) year of each other, or (y) upon the occurrence and cure of any Event of Default subsequent to the second Event of Default, then Tenant shall no longer be entitled to a refund of any Escrow Payments until the expiration of the Term.

(c)Tenant agrees to notify Landlord immediately of any changes to the amounts, schedules, instructions for payment of any Impositions and premiums on any insurance held under this Lease of which Tenant has obtained knowledge and authorizes Landlord or Lender to obtain the bills for Impositions or Escrow Charges directly from the appropriate authority or entity.

10.Compliance with Laws and Easement Agreements; Environmental Matters.

(a)Tenant shall, at its expense, comply with and conform to, and cause the Leased Premises and any other Person occupying any part of the Leased Premises to comply with and conform to, all Insurance Requirements and all Legal Requirements (including all applicable Environmental Laws).  Tenant shall not at any time (i) cause, permit or suffer to occur any Environmental Violation or any environmental lien whether due to the acts of Tenant or any other party or (ii) permit any sublessee, assignee or other Person occupying the Leased Premises under or through Tenant to cause, permit or suffer to occur any Environmental Violation and, at the request of Landlord or Lender, Tenant shall promptly remediate or undertake any other appropriate response action to correct any existing Environmental Violation, however immaterial, or (iii) without the prior written consent of Landlord and Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Real Property, regardless of the depth thereof or the method of mining or

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extraction thereof.  Any and all reports prepared for or by Landlord with respect to the Leased Premises shall be for the sole benefit of Landlord and Lender and no other Person shall have the right to rely on any such reports.

(b)Tenant, at its sole cost and expense, will at all times promptly and faithfully abide by, discharge and perform all of the covenants, conditions and agreements contained in any Easement Agreement existing as of the date hereof on the part of Landlord or the occupier to be kept and performed thereunder.  Tenant will not alter, modify, amend or terminate any Easement Agreement, give any consent or approval thereunder, or enter into any new Easement Agreement without, in each case, prior written consent of Landlord.

(c)Upon at least three (3) Business Days advance written notice from Landlord, Tenant shall permit such persons as Landlord may designate (“Site Reviewers”) to visit the Leased Premises during normal business hours and in a manner which does not unreasonably interfere with Tenant’s operations and perform, as agents of Tenant, environmental site investigations and assessments (“Site Assessments”) on the Leased Premises in any of the following circumstances:  (i) in connection with any sale, financing or refinancing of the Leased Premises, (ii) within the six month period prior to the expiration of the Term, (iii) if required by Lender or the terms of any credit facility to which Landlord is bound, (iv) if an Event of Default has occurred and has continued for a period of thirty (30) days or more, (v) if required under any applicable Law, or (vi) at any other time that Landlord or Lender receives notice that an Environmental Violation or any condition that could reasonably be expected to result in any Environmental Violation exists.  Such Site Assessments may include both above and below the ground testing for Environmental Violations and such other tests as may be necessary, in the opinion of the Site Reviewers, to conduct the Site Assessments.  Tenant shall supply to the Site Reviewers such historical and operational information regarding the Leased Premises as may be reasonably requested by the Site Reviewers to facilitate the Site Assessments, and shall make available for meetings with the Site Reviewers appropriate personnel having knowledge of such matters.  Tenant shall pay the cost of performing all Site Assessments performed pursuant to the foregoing clauses (iv), (v) and (vi) and all Site Assessments that reveal that an Environmental Violation exists (other than as a result of the acts or omissions of Landlord).  Landlord shall pay the cost of performing all other Site Assessments.

(d)If an Environmental Violation occurs or is found to exist and as a result of the act of any Persons not affiliated with Landlord or Landlord’s Lender, and, in Landlord’s reasonable judgment, the cost of remediation of, or other response action with respect to, the same is likely to exceed $50,000, Tenant shall provide to Landlord, within ten (10) days after Landlord’s request therefor, adequate financial assurances that Tenant will effect such remediation in accordance with applicable Environmental Laws.  Such financial assurances shall be a bond or letter of credit satisfactory to Landlord in form and substance and in an amount equal to or greater than Landlord’s reasonable estimate, based upon a Site Assessment performed pursuant to Paragraph 10(c), of the anticipated cost of such remedial action.  Tenant shall comply with all reasonable requests of Landlord with respect to an Environmental Violation, including without limitation (i) a request to effectuate a remediation of any Environmental Violation, (ii) a request for Tenant to comply with any Environmental Laws or to comply with any directive from a governmental authority, or (iii) a reasonable request to take any action necessary to protect human health and the environment.

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(e)Notwithstanding any other provision of this Lease, if an Environmental Violation occurs or is found to exist and the Term would otherwise terminate or expire, then, at the option of Landlord, the Term shall be automatically extended beyond the date of termination or expiration and this Lease shall remain in full force and effect beyond such date until the earlier to occur of (i) the completion of all remedial action in accordance with applicable Environmental Laws or (ii) the date specified in a written notice from Landlord to Tenant terminating this Lease.

(f)If Tenant fails to comply with any requirement of any Environmental Law in connection with any Environmental Violation which occurs or is found to exist, Landlord shall have the right (but no obligation) to take any and all actions as Landlord shall deem necessary or advisable in order to cure such Environmental Violation.

(g)Tenant shall notify Landlord immediately after becoming aware of any Environmental Violation (or alleged Environmental Violation) or noncompliance with any of the covenants contained in this Paragraph 10 and shall forward to Landlord immediately upon receipt thereof copies of all orders, reports, notices, permits, applications or other communications relating to any such violation or noncompliance.

(h)All future leases, subleases or concession agreements relating to the Leased Premises entered into by Tenant shall contain covenants of the other party thereto which are identical to the covenants contained in Paragraph 10(a).

(i)Tenant shall, from time to time, upon Landlord’s reasonable request, provide Landlord with an officer’s certificate from Tenant satisfactory to Landlord certifying that the Property complies with all Legal Requirements or is exempt from compliance with such Legal Requirements.

(j)On the Commencement Date, Tenant shall deliver to Escrow Agent cash in the amount of $62,500 (the “Remediation Amount”).  Subject to the terms of the Escrow Agreement, Escrow Agent shall hold the Remediation Amount in a fund (the “Remediation Fund”) and disburse amounts from the Remediation Fund to fund the cost of the environmental remediation to the Leased Premises set forth on Schedule 10(j) hereto (the “Required Remediation”) in accordance with the disbursement procedure for the Restoration Fund set forth in Paragraph 19(a).  Tenant shall promptly commence the Required Remediation in compliance with the requirements of the Virginia Department of Environmental Quality and all other applicable Legal Requirements and shall proceed diligently to complete such remediation as soon as reasonably practicable.  If any sum remains in the Remediation Fund after completion of the repairs listed on Schedule 10(j), Escrow Agent shall disburse such sum to Tenant.  Notwithstanding the foregoing, no later than April 9, 2007, Tenant agrees and covenants to deliver to Escrow Agent a Letter of Credit to replace any amounts held by the Escrow Agent in the Remediation Fund.  Such Letter of Credit (i) shall be in the Remediation Amount or if any amounts have been disbursed from the Remediation Fund in accordance with the Escrow Agreement, then in such lesser amount, (ii) shall be held by Escrow Agent pursuant to the Escrow Agreement until Tenant has complied with all conditions related to release of the Remediation Amount from the Remediation Fund, (iii) shall be drawn on by Escrow Agreement to fund disbursements in accordance with the disbursement procedure for the Restoration Fund

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set forth in Paragraph 19(a) and the Escrow Agreement and (iv) shall contain instructions to the financial institution issuing the Letter of Credit to disburse the funds held pursuant to the Letter of Credit in accordance with the terms and conditions in this Paragraph 10(j).

(k)Tenant shall obtain and provide a copy to Landlord of a valid, final certificate of occupancy by May 1, 2007 for the outbuilding on the 1000 Industrial Road property that contains the predryer constructed in 2001 and used in connection with Tenant’s business at the Leased Premises.

11.Liens; Recording.

(a)Tenant shall not, directly or indirectly, create or permit to be created or to remain and shall promptly discharge or remove any lien, levy or encumbrance on the Leased Premises or on any Rent or any other sums payable by Tenant under this Lease, other than any Mortgage or Assignment, the Permitted Encumbrances and any mortgage, lien, encumbrance or other charge created by or resulting solely from any act or omission of Landlord.  NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO MECHANICS’ OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO THE LEASED PREMISES.  LANDLORD MAY AT ANY TIME POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON- LIABILITY OF LANDLORD.

(b)Tenant and Landlord shall execute, deliver and record, file or register (collectively, “record”) all such instruments as may be required or permitted by any present or future Law in order to evidence the respective interests of Landlord and Tenant in the Leased Premises, and shall cause a memorandum of this Lease (or, if such a memorandum cannot be recorded, this Lease), and any supplement hereto or thereto, to be recorded in such manner and in such places as may be required or permitted by any present or future Law in order to protect the validity and priority of this Lease.

12.Maintenance and Repair.

(a)On the Commencement Date, Tenant shall deliver to Escrow Agent cash in the amount of $260,875 (the “Immediate Repair Amount”).  Subject to the terms of the Escrow Agreement, Escrow Agent shall hold the Immediate Repair Amount in a fund (the “Immediate Repair Fund”) and disburse amounts from the Immediate Repair Fund to fund the cost of the repairs to the Leased Premises set forth on Schedule 12(a) hereto in accordance with the disbursement procedure for the Restoration Fund set forth in Paragraph 19(a).  Tenant shall complete the repairs listed on Schedule 12(a) no later than December 31, 2007.  If any sum remains in the Immediate Repair Fund after completion of the repairs listed on Schedule 12(a), Escrow Agent shall disburse such sum to Tenant.  Notwithstanding the foregoing, no later than April 9, 2007, Tenant agrees and covenants to deliver to Escrow Agent a Letter of Credit to replace any amounts held by the Escrow Agent in the Immediate Repair Fund.  Such Letter of Credit (i) shall be in the Immediate Repair Amount or if any amounts have been disbursed from

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the Immediate Repair Fund in accordance with the Escrow Agreement, then in such lesser amount, (ii) shall be held by Escrow Agent pursuant to the Escrow Agreement until Tenant has complied with all conditions related to release of the Immediate Repair Amount from the Immediate Repair Fund, (iii) shall be drawn on by Escrow Agent to fund disbursements in accordance with the disbursement procedure for the Restoration Fund set forth in Paragraph 19(a) and (iv) shall contain instructions to the financial institution issuing the Letter of Credit to disburse the funds held pursuant to the Letter of Credit in accordance with the terms and conditions in this Paragraph 12(a).

(b)Tenant shall at all times maintain the Leased Premises in as good repair and appearance as they are on the date hereof and fit to be used for their intended use in accordance with the better of the practices generally recognized as then acceptable by other companies in its industry or observed by Tenant with respect to the other real properties owned or operated by it, and, in the case of the Equipment, in as good mechanical condition as it was on the later of the date hereof or the date of its installation, except for ordinary wear and tear.  Tenant shall take every other action necessary or appropriate for the preservation and safety of the Leased Premises.  Tenant shall promptly make all Alterations of every kind and nature, whether foreseen or unforeseen, which may be required to comply with the foregoing requirements of this Paragraph 12(a) or to comply with any Legal Requirement.  Except as otherwise provided herein, Landlord shall not be required to make any Alteration, whether foreseen or unforeseen, or to maintain the Leased Premises in any way, and Tenant hereby expressly waives any right which may be provided for in any Law now or hereafter in effect to make Alterations at the expense of Landlord or to require Landlord to make Alterations.  Any Alteration made by Tenant pursuant to this Paragraph 12 shall be made in conformity with the provisions of Paragraph 13.  Tenant hereby agrees and covenants not to commit or permit the Leased Premises to suffer waste, and shall take all precautions necessary to prevent waste from occurring at the Leased Premises.  Notwithstanding the foregoing, (i) if Landlord determines in its sole discretion that the roof, HVAC and/or boiler needs to be replaced in the last two (2) years of the end of the Term and Landlord elects to require Tenant to make such replacement; or (ii) if Landlord determines that the parking lot needs to be repaved and re-striped in the last two (2) years of the end of the Term, either due to normal wear and tear as determined by a third-party independent engineer or consultant, or due to Tenant’s failure to maintain the parking lot as required by this Lease, and Landlord elects to require Tenant to repave the parking lot, the cost of such repaying and re- striping will be borne by Tenant; provided that if Tenant elects to terminate this Lease at end of the initial Term, the cost of such replacement or repaying and re-striping, as the case may be, will be apportioned between Landlord and Tenant with Tenant’s share equal to the cost of such replacement or repairing and re-striping, as the case may be, multiplied by a fraction, the numerator of which shall be the remainder of the Term from the time Landlord determines the roof, HVAC and/or boiler needs replacement or the parking lot needs repaying and re-striping, and the denominator of which shall be the anticipated useful life of such roof, HVAC, boiler or parking lot as replaced or repaved and re-striped, as the case may be.

(c)If any Improvement, now or hereafter constructed, shall (i) encroach upon any setback or any property, street or right-of-way adjoining the Leased Premises, (ii) violate any zoning restrictions, including without limitation height or set-back restrictions, or the provisions of any restrictive covenant affecting the Leased Premises, (iii) hinder or obstruct any easement or right-of-way to which the Leased Premises is subject or (iv) impair the rights of others in, to or

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under any of the foregoing, Tenant shall, promptly after receiving notice or otherwise acquiring knowledge thereof, either (A) obtain from all necessary parties waivers or settlements of all claims, liabilities and damages resulting from each such encroachment, violation, hindrance, obstruction or impairment, whether the same shall affect Landlord, Tenant or both, or (B) take such action as shall be necessary to remove all such encroachments, hindrances or obstructions and to end all such violations or impairments, including, if necessary, making Alterations.

13.Alterations and Improvements.

(a)Tenant shall not make (i) any non-structural Alterations to the Leased Premises that cost more than $580,000 in the aggregate over the Term or (ii) any structural Alterations to the Leased Premises, without having first obtained the prior written consent of Landlord and Lender, such consent not to be unreasonably withheld, conditioned or delayed.  For any Alteration that requires Landlord’s and Lender’s consent, Landlord and Lender shall have fifteen (15) days following receipt from Tenant of the information related to the Alteration to either approve or disapprove the Alteration or request additional information on which to base their decision.  If, during the initial fifteen (15) day review period, Landlord or Lender requests additional information concerning the Alteration, Tenant shall provide such additional information as soon as reasonably practicable, and Landlord and Lender shall approve or disapprove the Alteration no later than the fifteenth (15’) day following receipt of the requested additional information.  Landlord and Lender shall be deemed to have acted reasonably in withholding consent if Tenant fails to deliver any such additional information.  If a response is not received by Tenant from Landlord by the expiration of such initial fifteen (15) day period or such subsequent fifteen (15) day period, as applicable, such Alteration shall be deemed approved.  Tenant shall not construct upon the Real Property any additional buildings without having first obtained the prior written consent of Landlord and Lender.  Landlord shall have the right to require Tenant to remove any Alterations except for those Alterations required by Law or for which Landlord has agreed in writing that removal will not be required.

(b)If Tenant makes any Alterations pursuant to this Paragraph 13 or as required by Paragraph 12 or 17 (such Alterations and actions being hereinafter collectively referred to as “Work”), then (i) the market value of the Leased Premises shall not be lessened by any such Work or its usefulness impaired, (ii) all such Work shall be performed by Tenant in a good and workmanlike manner, (iii) all such Work shall be expeditiously completed in compliance with all Legal Requirements, (iv) all such Work shall comply with the requirements of all insurance policies required to be maintained by Tenant hereunder, (v) if any such Work involves the replacement of Equipment or parts thereto, all replacement Equipment or parts shall have a value and useful life equal to the greater of (A) the value and useful life on the date hereof of the Equipment being replaced or (B) the value and useful life of the Equipment being replaced immediately prior to the occurrence of the event which required its replacement (assuming such replaced Equipment was then in the condition required by this Lease), (vi) Tenant shall promptly discharge or remove all liens filed against the Leased Premises arising out of such Work, (vii) Tenant shall procure and pay for all permits and licenses required in connection with any such Work, (viii) all such Work (excluding Tenant’s trade fixtures and equipment) shall be the property of Landlord and shall be subject to this Lease, and Tenant shall execute and deliver to Landlord any document requested by Landlord evidencing the assignment to Landlord of all estate, right, title and interest (other than the leasehold estate created hereby) of Tenant or any

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other Person thereto or therein, and (ix) Tenant shall comply, to the extent requested by Landlord or required by this Lease, with the provisions of Paragraphs 12(a) and 19(a), whether or not such Work involves restoration of the Leased Premises.

14.Permitted Contests.

Notwithstanding any other provision of this Lease, Tenant shall not be required to (a) pay any Imposition, (b) discharge or remove any lien referred to in Paragraph 11 or 13 or (d) take any action with respect to any encroachment, violation, hindrance, obstruction or impairment referred to in Paragraph 12(b) (such non-compliance with the terms hereof being hereinafter referred to collectively as “Permitted Violations”‘) and may dispute or contest the same, so long as at the time of such non-compliance no Event of Default exists and so long as Tenant shall contest, in good faith, the existence, amount or validity thereof, the amount of the damages caused thereby, or the extent of its or Landlord’s liability therefor by appropriate proceedings which shall operate during the pendency thereof to prevent or stay (i) the collection of, or other realization upon, the Permitted Violation so contested, (ii) the sale, forfeiture or loss of the Leased Premises or any Rent to satisfy or to pay any damages caused by any Permitted Violation, (iii) any interference with the use or occupancy of the Leased Premises, (iv) any interference with the payment of any Rent, or (v) the cancellation or increase in the rate of any insurance policy or a statement by the carrier that coverage will be denied.  Tenant shall provide Landlord security which is satisfactory, in Landlord’s reasonable judgment, to assure that such Permitted Violation is corrected, including all Costs, interest and penalties that may be incurred or become due in connection therewith.  While any proceedings which comply with the requirements of this Paragraph 14 are pending and the required security is held by Landlord, Landlord shall not have the right to correct any Permitted Violation thereby being contested unless Landlord is required by Law to correct such Permitted Violation and Tenant’s contest does not prevent or stay such requirement as to Landlord.  Each such contest shall be promptly and diligently prosecuted by Tenant to a final conclusion, except that Tenant, so long as the conditions of this Paragraph 14 are at all times complied with, has the right to attempt to settle or compromise such contest through negotiations.  Tenant shall pay any and all losses, judgments, decrees and Costs in connection with any such contest and shall, promptly after the final determination of such contest, fully pay and discharge the amounts which shall be levied, assessed, charged or imposed or be determined to be payable therein or in connection therewith, together with all penalties, fines, interest and Costs thereof or in connection therewith, and perform all acts the performance of which shall be ordered or decreed as a result thereof.  No such contest shall subject Landlord to the risk of any civil or criminal liability.

15.Indemnification.

(a)Tenant shall pay, protect, indemnify, defend, save and hold harmless Landlord, Lender and all other Persons described in Paragraph 30 (each an “Indemnitee”) from and against any and all liabilities, losses, damages (including punitive damages), penalties, Costs (including attorneys’ fees and costs), causes of action, suits, claims, demands or judgments of any nature whatsoever, howsoever caused, without regard to the form of action and whether based on strict liability, gross negligence, negligence or any other theory of recovery at law or in equity, arising from (i) any matter pertaining to the acquisition (or the negotiations leading thereto), ownership, leasing, use, non-use, occupancy, operation, management, condition, design, construction,

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maintenance, repair or restoration of the Leased Premises, (ii) any Casualty in any manner arising from the Leased Premises, whether or not Indemnitee has or should have knowledge or notice of any defect or condition causing or contributing to said Casualty, (iii) any violation by Tenant of (A) any provision of this Lease (including any representation or warranty), (B) any contract or agreement to which Tenant is a party, (C) any Legal Requirement or (D) any Permitted Encumbrance or any encumbrance Tenant consented to or the Mortgage or Assignment or (iv) any alleged, threatened or actual Environmental Violation, including (A) liability for response costs and for costs of removal and remedial action incurred by the United States Government, any state or local governmental unit or any other Person, or damages from injury to or destruction or loss of natural resources, including the reasonable costs of assessing such injury, destruction or loss, incurred pursuant to Section 107 of CERCLA, or any successor section or act or provision of any similar state or local Law, (B) liability for costs and expenses of abatement, correction or clean-up, fines, damages, response costs or penalties which arise from the provisions of any of the other Environmental Laws and (C) liability for personal injury or property damage arising under any statutory or common-law tort theory, including damages assessed for the maintenance of a public or private nuisance or for carrying on of a dangerous activity.  Provided, however, in no event shall Tenant be liable in any respect for any liabilities, losses, damages, penalties, costs, causes of action, suits, claims, demands or judgments resulting from the acts or omissions of Landlord or its agents, contractors, employees or affiliates.

(b)In case any action or proceeding is brought against any Indemnitee by reason of any such claim, (i) Tenant may, except in the event of a conflict of interest or a dispute between Tenant and any such Indemnitee or during the continuance of an Event of Default, retain its own counsel and defend such action (it being understood that Landlord may employ counsel of its choice to monitor the defense of any such action, the cost of which shall be paid by Tenant) and (ii) such Indemnitee shall notify Tenant to resist or defend such action or proceeding by retaining counsel reasonably satisfactory to such Indemnitee, and such Indemnitee will cooperate and assist in the defense of such action or proceeding if reasonably requested to do so by Tenant.  In the event of a conflict of interest or dispute or during the continuance of an Event of Default, Landlord shall have the right to select counsel, and the cost of such counsel shall be paid by Tenant.

(c)The obligations of Tenant under this Paragraph 15 shall survive any termination, expiration or rejection in bankruptcy of this Lease.

16.Insurance.

(a)Each policy of insurance listed on Schedule 16 attached hereto (the “Existing Insurance Policies”) is in full force and effect and all premiums due with respect thereto have been paid.  There are no claims outstanding or pending under any Existing Insurance Policies.

(b)Tenant shall obtain, pay for and maintain the following insurance on or in connection with the Leased Premises:

(i)Insurance against all risk of physical loss or damage to the Improvements and Equipment as provided under “Special Causes of Loss” form coverage in an amount not less

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than the actual replacement cost of the Improvements and Equipment without deduction for depreciation, including the perils of hail, windstorm, flood coverage, earthquake and acts of terrorism, in amounts which may be at various sublimits as determined to be adequate in the sole discretion of Landlord, however which may not be less than that in force at the time of the execution of this Lease; provided that, if Tenant’s insurance company is unable or unwilling to include any or all of such excluded perils, Tenant shall have the option of purchasing coverage against such perils from another insurer on a “Difference in Conditions” form or through a stand- alone policy.  Such policies shall contain Replacement Cost and Agreed Amount Endorsements and “Law and Ordinance” coverage (at full replacement cost).  Such policies and endorsements shall contain deductibles in such amounts as Landlord or Lender shall require, provided that such deductible shall not be less than $10,000.  Such policies shall name Landlord as a named insured, and Lender as mortgagee/loss payee, with respect to the Leased Premises.

(ii)Commercial General Liability Insurance and Umbrella/Excess Liability Insurance, including Business Automobile Liability Insurance (including Non-Owned and Hired Automobile Liability) against claims for personal injury, bodily injury, death, accident or property damage occurring on, in or as a result of the use of the Leased Premises, in an amount not less than $ 11,000,000 on a per location basis and on an occurrence basis.  Coverage shall also include elevators/escalators (if any), independent contractors, contractual liability and Products/Completed Operations Liability coverage.  Such policies shall name Landlord and Lender as additional insureds with respect to the Leased Premises.

(iii)Workers’ compensation insurance in the amount required by applicable Law.

(iv)Employers’ liability insurance covering all persons employed by Tenant in connection with any work done on or about the Leased Premises in the amount of $1,000,000 per accident, $1,000,000 per illness, per employee, and $1,000,000 per illness, in the aggregate.

(v)Comprehensive Boiler and Machinery/Equipment Breakdown Insurance on any of the Equipment or any other equipment on or in the Leased Premises, in an amount not less than $10,000,000 per accident for damage to property (and which may be carried as part of the coverage required under clause (i) above or pursuant to a separate policy or endorsement).  If such coverage is provided pursuant to a separate Boiler and Machinery policy or endorsement, Tenant will obtain a Joint Loss Agreement.  Either such Boiler and Machinery policy endorsements or the Special Causes of Loss policy required in clause (i) above shall include at least the amount per incidence for Off-Premises Service Interruption, Expediting Expenses, Ammonia Contamination, and Hazardous Materials Clean-Up Expense as Tenant maintains on the date hereof, and may contain a deductible not to exceed $25,000.  Such policies shall name Landlord and Lender as loss payees with respect to the Leased Premises.

(vi)Business Income/Extra Expense Insurance at limits sufficient to cover 100% of the period of indemnity not less than eighteen (18) months from time of loss and an extended period of indemnity of three hundred sixty-five (365) days.  Such policies shall name Landlord and Lender as loss payees with respect to the Leased Premises.

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(vii)During any period in which substantial Alterations at the Leased Premises are being undertaken, builder’s risk insurance covering the total completed value, including all hard and soft costs (which shall include business interruption coverage) with respect to the Improvements being constructed, altered or repaired (on a completed value, non-reporting basis), replacement cost of work performed and equipment, supplies and materials furnished in connection with such construction, alteration or repair of Improvements or Equipment, together with such other endorsements as Landlord may reasonably require, and general liability, worker’s compensation and automobile liability insurance with respect to the Improvements being constructed, altered or repaired, in such form and in such amounts as Landlord may reasonably require.  Such policies shall name Landlord and Lender as named insured, mortgagee, additional insured and/or loss payees with respect to the Leased Premises, as applicable.

(viii)Such other insurance (or other terms with respect to any insurance required pursuant to this Paragraph 16, including without limitation amounts of coverage, deductibles, form of mortgagee clause) on or in connection with the Leased Premises as Landlord or Lender may reasonably require (including, without limitation, mold insurance); provided that, (i) such insurance is consistent, as to types of coverage and amounts, with the requirements generally of institutional lenders or prudent owners or operators of similar properties, and (ii) no Boiler and Machinery policy endorsement or Special Causes of Loss policy required in Paragraph 16(b)(i) shall require more than $3,000,000 per incidence for Off- Premises Service Interruption, Expediting Expenses, Ammonia Contamination, and Hazardous Materials Clean-Up Expense.

(c)The insurance required by Paragraph 16(b) shall be written by companies having a Best’s rating of A:X or above and a claims paying ability rating of AA or better by S&P or equivalent rating agency approved by Landlord and Lender in their sole discretion and are authorized to write insurance policies by, the State Insurance Department (or its equivalent) for the states in which the Leased Premises are located.  The insurance policies (i) shall be for such terms as Landlord may reasonably approve and (ii) shall be in amounts sufficient at all times to satisfy any coinsurance requirements thereof.  If said insurance or any part thereof shall expire, be withdrawn, become void, voidable, unreliable or unsafe for any reason, including a breach of any condition thereof by Tenant or the failure or impairment of the capital of any insurer, or if for any other reason whatsoever said insurance shall become reasonably unsatisfactory to Landlord, Tenant shall immediately obtain new or additional insurance reasonably satisfactory to Landlord.

(d)Each insurance policy referred to in clauses (i), (iv), (v) and (vi) of Paragraph 16(b) shall contain standard non-contributory mortgagee clauses in favor of and acceptable to Lender.  Each policy required by any provision of Paragraph 16(b), except clause (iii) thereof, shall provide that it may not be cancelled, substantially modified or allowed to lapse on any renewal date except after thirty (30) days’ prior written notice to Landlord and Lender.

(e)Tenant shall pay as they become due all premiums for the insurance required by Paragraph 16(b), shall renew or replace each policy and deliver to Landlord evidence of the payment of the full premium therefor or installment then due at least ten (10) days prior to the expiration date of such policy, and shall promptly deliver to Landlord all original certificates of

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insurance evidencing such coverages or, if required by Lender, original or certified policies.  All certificates of insurance (including liability coverage) provided to Landlord and Lender shall be on ACORD Form 27 (or its equivalent).

(f)Anything in this Paragraph 16 to the contrary notwithstanding, any insurance which Tenant is required to obtain pursuant to Paragraph 16(b) may be carried under a “blanket” policy or policies covering other properties of Tenant or under an “umbrella” policy or policies covering other liabilities of Tenant, as applicable; provided that, such blanket or umbrella policy or policies otherwise comply with the provisions of this Paragraph 16, and upon request, Tenant shall provide to Landlord a Statement of Values which may be reviewed annually and shall be amended to the extent determined necessary by Landlord based on revised Replacement Cost Valuations.  The original or a certified copy of each such blanket or umbrella policy shall promptly be delivered to Landlord.

(g)Tenant shall not carry separate insurance concurrent in form or contributing in the event of a Casualty with that required in this Paragraph 16 unless (i) Landlord and Lender are included therein as named insureds, with loss payable as provided herein, and (ii) such separate insurance complies with the other provisions of this Paragraph 16.  Tenant shall immediately notify Landlord of such separate insurance and shall deliver to Landlord the original policies or certified copies thereof.

(h)Each policy (other than workers’ compensation coverage) shall contain an effective waiver by the carrier against all claims for payment of insurance premiums against Landlord and shall contain a full waiver of subrogation against the Landlord.

(i)The proceeds of any insurance required under Paragraph 16(b) shall be payable as follows:

(i)proceeds payable under clauses (ii), (iii) and (iv) of Paragraph 16(b) and proceeds attributable to the general liability coverage of Builder’s Risk insurance under clause (vi) of Paragraph 16(b) shall be payable to the Person entitled to receive such proceeds; and

(ii)proceeds of insurance required under clause (i) of Paragraph 16(b) and proceeds attributable to Builder’s Risk insurance (other than its general liability coverage provisions) under clause (vi) of Paragraph 16(b) shall be payable to Landlord or Lender and applied as set forth in Paragraph 17 or, if applicable, Paragraph 18.  Tenant shall apply the Net Award to restoration of the Leased Premises in accordance with the applicable provisions of this Lease unless a Termination Event shall have occurred and Tenant has given a Termination Notice.

17.Casualty and Condemnation.

(a)Tenant shall give Landlord and Lender immediate notice of the occurrence of any Casualty.  Landlord and Lender, in their discretion and upon notice to Tenant (except that no notice to Tenant shall be required if an Event of Default has occurred and is continuing), may adjust, collect and compromise all claims under any of the insurance policies required by Paragraph 16(b) (except public liability insurance claims payable to a Person other than Tenant,

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Landlord or Lender) and to execute and deliver on behalf of Tenant all necessary proofs of loss, receipts, vouchers and releases required by the insurers.  Provided that no Event of Default has occurred and is continuing, Tenant shall be entitled to participate with Landlord and Lender in any adjustment, collection and compromise of the Net Award payable in connection with a Casualty.  Tenant agrees to sign, upon the request of Landlord or Lender, all such proofs of loss, receipts, vouchers and releases, subject to Tenant’s reasonable approval thereof.  If Landlord or Lender so requests, Tenant shall adjust, collect and compromise any and all such claims, and Landlord and Lender shall have the right to join with Tenant therein.  Any adjustment, settlement or compromise of any such claim shall be subject to the prior written approval of Landlord and Lender, and Landlord and Lender shall have the right to prosecute or contest, or to require Tenant to prosecute or contest, any such claim, adjustment, settlement or compromise.  Each insurer is hereby authorized and directed to make payment under said policies, including return of unearned premiums, directly to Landlord or, if required by the Mortgage, to Lender instead of to Landlord and Tenant jointly, and Tenant hereby appoints each of Landlord and Lender as Tenant’s attorneys-in-fact to endorse any joint draft therefor.  The rights of Landlord under this Paragraph 17(a) shall be extended to Lender if and to the extent that any Mortgage so provides.

(b)Tenant shall provide Landlord and Lender immediate written notice of Tenant’s receipt of a Condemnation Notice.  Landlord and Lender are authorized to collect, settle and compromise, in their discretion (and, if no Event of Default exists, upon notice to Tenant), the amount of any Net Award.  Provided that no Event of Default has occurred and is continuing, Tenant shall be entitled to participate with Landlord and Lender in any Condemnation proceeding or negotiations under threat thereof and to contest the Condemnation or the amount of the Net Award therefor.  No agreement with any condemnor in settlement or under threat of any Condemnation shall be made by Tenant without the written consent of Landlord and Lender.  Subject to the provisions of this Paragraph 17(b), Tenant hereby irrevocably assigns to Landlord any award or payment to which Tenant is or may be entitled by reason of any Condemnation, whether the same shall be paid or payable for Tenant’s leasehold interest hereunder or otherwise; but nothing in this Lease shall impair Tenant’s right to any award or payment on account of Tenant’s trade fixtures, equipment or other tangible property which is not part of the Equipment, moving expenses or loss of business, if available, to the extent that and so long as (i) Tenant shall have the right to make, and does make, a separate claim therefor against the condemnor and (ii) such claim does not in any way reduce either the amount of the award otherwise payable to Landlord for the Condemnation of Landlord’s fee interest in the Leased Premises or the amount of the award (if any) otherwise payable for the Condemnation of Tenant’s leasehold interest hereunder.  The rights of Landlord under this Paragraph 17(b) shall also be extended to Lender if and to the extent that any Mortgage so provides.

(c)If any Partial Casualty (whether or not insured against) or Partial Condemnation shall occur (other than a Requisition) to the Leased Premises, this Lease shall continue, notwithstanding such event, and there shall be no abatement or reduction of any Monetary Obligations.  Promptly after such Partial Casualty or Partial Condemnation, Tenant, as required in Paragraphs 12(a) and 13(b), shall commence and diligently continue to restore the Leased Premises as nearly as possible to its value, condition and character immediately prior to such event (assuming the Leased Premises to have been in the condition required by this Lease).  Upon the receipt by Landlord of the entire Net Award of such Partial Casualty or Partial Condemnation, Landlord shall make such Net Award available to Tenant for restoration in

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accordance with and subject to the provisions of Paragraph 19(a).  If a Requisition shall occur, Tenant shall comply with the terms and conditions of Paragraph 17(d).  If any Casualty or Condemnation which is not a Partial Casualty, Partial Condemnation or Requisition shall occur, Tenant shall comply with the terms and conditions of Paragraph 18.  Upon the expiration of the Term, any portion of such Net Award which shall not have been previously paid as set forth above shall be retained by Landlord.

(d)In the event of a Requisition of the Leased Premises, any Net Award payable by reason of such Partial Condemnation shall be (i) retained by Landlord, or (ii) paid to Lender.

(e)The Tenant hereby waives any and all rights it may have and agrees that the terms and provisions of this Lease shall control over any rights granted to Tenant pursuant to Virginia Code Annotated § 55-226, as amended.

18.Termination Events.

(a)If all of the Leased Premises shall be taken by a Condemnation, Tenant shall, within thirty (30) days after Tenant receives a Condemnation Notice, give to Landlord written notice of Tenant’s election to terminate this Lease (a “Termination Notice”).

(b)If fifty percent (50%) or more (but less than all) of the Leased Premises is taken by a Condemnation or fifty percent (50%) or more of the Leased Premises is totally damaged or destroyed by a Casualty, Tenant shall have the option of reconstructing the Leased Premises using the Net Award payable in connection with such Condemnation or Casualty or, within thirty (30) days after Tenant receives a Condemnation Notice or thirty (30) days after the Casualty, as the case may be, to give to Landlord a Termination Notice.  If Tenant elects not to give Landlord a Termination Notice, then Tenant shall restore, rebuild or repair the Leased Premises in accordance with Paragraphs 17 and 19.

(c)A Termination Notice shall contain (i) notice of Tenant’s intention to terminate this Lease on the later to occur of (A) the first Basic Rent Payment Date which occurs at least ninety (90) days after the Fair Market Value Date, or (B) the date on which Landlord receives the Net Award (the “Termination Date”), and (ii) a binding and irrevocable commitment of Tenant to pay the Termination Amount on the Termination Date.  Promptly upon Landlord’s receipt of a Termination Notice, Landlord and Tenant shall commence to determine the Fair Market Value of the Leased Premises pursuant to Paragraph 29.

(d)If Tenant delivers a Termination Notice to Landlord, this Lease shall terminate on the Terminate Date; provided that if an Event of Default has occurred and is continuing as of the Termination Date specified in Tenant’s Termination Notice, this Lease shall remain in full force and effect and the Termination Date shall be extended until such Event of Default has been cured by Tenant or waived by Landlord.  On the Termination Date, (i) Tenant shall pay to Landlord all the Termination Amount and all Monetary Obligations due on or prior to the Termination Date (collectively, “Remaining Obligations”), (ii) all other obligations of Tenant under this Lease shall terminate except for any Surviving Obligations, (iii) Tenant shall immediately vacate and shall have no further right, title or interest in or to the Leased Premises, and (iv) the Net Award shall be retained by Landlord.  Notwithstanding anything to the contrary hereinabove contained,

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if on the Termination Date, Tenant has not satisfied all Remaining Obligations, then Landlord may, at its option, extend the Termination Date to a date which is no later than the first Basic Rent Payment Date after the date on which Tenant has satisfied all such Remaining Obligations.

19.Restoration.

(a)If any Net Award is less than $200,000, Tenant shall be entitled to payment of the Net Award, and Tenant shall complete restoration of any affected portions of the Leased Premises.  If any Net Award is equal to or greater than $200,000, Landlord (or Lender if required by any Mortgage) shall hold the Net Award in a fund (the “Restoration Fund”) and disburse amounts from the Restoration Fund only in accordance with the following conditions:

(i)Tenant shall commence the restoration as soon as reasonably practical and diligently pursue completion of such restoration to completion;

(ii)prior to commencement of restoration, (A) the architects, contracts, contractors, plans and specifications and a detailed budget for the restoration shall have been approved by Landlord, such detailed budget shall reflect that the Restoration Fund is sufficient to cover the costs of restoration, including any additional insurance required as a result of restoration, and payments of Rent due under this Lease (if Landlord reasonably determines that the Restoration Fund is insufficient to cover such costs, Tenant must deposit such required excess amount as directed by Landlord as provided in Paragraph 19(b) below) (B) Landlord and Lender shall be provided by Tenant with mechanics’ lien insurance, “owner contractor’s protective liability insurance” (if available), builder’s risk completed value insurance and acceptable performance and payment bonds which insure satisfactory completion of and payment for the restoration, are in an amount and form and have a surety acceptable to Landlord, and name Landlord and Lender as additional dual obligees, and (C) appropriate waivers of mechanics’ and materialmen’s liens shall have been filed;

(iii)at the time of any disbursement, (A) no Event of Default shall exist (B) all materials installed and work and labor performed (except to the extent being paid out of the requested disbursement) in connection with the restoration shall have been paid in full, and (C) no mechanics’ or materialmen’s liens or stop orders or notices of pendency shall have been filed or threatened against the Leased Premises and remain undischarged or fully bonded to the satisfaction of Landlord;

(iv)disbursements shall be made no more frequently than once every month in an amount not exceeding the cost of the Work completed since the last disbursement, upon receipt of (A) satisfactory evidence, including architects’ certificates, of the stage of completion, the estimated total cost of completion and performance of the Work to date in a good and workmanlike manner in accordance with the contracts, plans and specifications, (B) waivers of liens, (C) contractors’ and subcontractors’ sworn statements as to completed Work and the cost thereof for which payment is requested, (D) a satisfactory bringdown of title insurance and (E) other evidence of cost and payment so that Landlord and Lender can verify that the amounts disbursed from time to time are represented by Work that is completed, in place and free and clear of mechanics’ and materialmen’s lien claims;

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(v)each request for disbursement shall be accompanied by a certificate of Tenant, signed by the president or a vice president of Tenant, describing the Work for which payment is requested, stating the cost incurred in connection therewith, stating that Tenant has not previously received payment for such Work and, upon completion of the Work, also stating that the Work has been fully completed and complies with the applicable requirements of this Lease and with all Legal Requirements;

(vi)Landlord may retain ten percent (10%) of the Restoration Fund until the Work is fully completed;

(vii)If the Restoration Fund is held by Landlord, the Restoration Fund shall not be commingled with Landlord’s other funds and shall bear interest at a rate agreed to by Landlord and Tenant; and

(viii)such other reasonable conditions as Landlord or Lender may impose; including without limitation, if Lender requires Tenant, on Lender’s and Landlord’s behalf, to hire a casualty consultant if the costs of restoration exceed $1,000,000.

(b)Prior to commencement of restoration and at any time during restoration, if the estimated cost of completing the restoration Work free and clear of all liens, as determined by Landlord, exceeds the amount of the Net Award available for such restoration, the amount of such excess shall, upon demand by Landlord, be paid by Tenant to Landlord to be added to the Restoration Fund.  Any sum so added by Tenant which remains in the Restoration Fund upon completion of restoration shall be refunded to Tenant.  For purposes of determining the source of funds with respect to the disposition of funds remaining after the completion of restoration, the Net Award shall be deemed to be disbursed prior to any amount added by Tenant.

(c)If any sum remains in the Restoration Fund after completion of the restoration and any refund to Tenant pursuant to Paragraph 19(b), such sum (the “Remaining Sum”) shall be retained by Landlord or, if required by a Note or Mortgage, paid by Landlord to a Lender.

20.Intentionally Omitted.

21.Assignment and Subletting:  Prohibition against Leasehold Financing.

(a)Tenant may assign all, but not less than all, of Tenant’s interest in this Lease (either voluntarily or involuntarily, whether by operation of law or otherwise, including through merger or consolidation) without Landlord’s consent to any Person in connection with a Permitted Asset Transfer or a Permitted Change of Control.  Otherwise, Tenant may not assign this Lease without the prior written consent of Landlord and Lender, which consent shall not be unreasonably withheld, conditioned or delayed.  Any purported assignment in violation of this Paragraph 21 (a) shall be null and void.

(b)If Tenant desires to assign this Lease to a Person (a “Non-Preapproved Assignee”) that is not a wholly-owned Subsidiary of Tenant or a Credit Entity or if the proposed assignment is not being made in connection with a Permitted Asset Transfer or a Permitted Change of Control (a “Non-Preapproved Assignment”) then Tenant shall, not less than forty-five (45) days prior to the date on which it desires to make such Non-Preapproved Assignment, submit to

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Landlord and Lender information regarding the following with respect to the Non-Preapproved Assignee (collectively, the “Review Criteria”):  (A) credit, (B) capital structure, (C) management, (D) operating history and (E) proposed use of the Leased Premises by the Non-Preapproved Assignee (if not consistent with the uses allowed hereunder).  Landlord and Lender shall have thirty (30) days following receipt of such information to either approve or disapprove the Non- Preapproved Assignment or request additional information on which to base their decision.  Landlord and Lender shall be deemed to have acted reasonably in granting or withholding approval if such grant or disapproval is based on their review of the Review Criteria applying prudent business judgment.  If, during the initial thirty (30) day review period, Landlord or Lender requests additional information concerning the Non-Preapproved Assignment, Tenant shall provide such additional information as soon as reasonably practicable, and Landlord and Lender shall approve or disapprove the Non-Preapproved Assignment no later than the fifteenth (15th) day following receipt of the requested additional information.  Landlord and Lender shall be deemed to have acted reasonably in granting or withholding consent if such grant or disapproval is based on their review of the Review Criteria applying prudent business judgment or if Tenant fails to deliver any such additional information.  If a response is not received by Tenant from Landlord by the expiration of such initial thirty (30) day period or such subsequent fifteen (15) day period, as applicable, such Non-Preapproved Assignment shall be deemed disapproved.  In the event that Landlord disapproves or is deemed to have disapproved a Non- Preapproved Assignment, Tenant shall have five (5) days to submit to Landlord a written request to reconsider the Non-Preapproved Assignment.  Upon Landlord’s receipt of any such request for reconsideration, the review process set forth in this Paragraph 21(b) shall begin again; provided that no Non-Preapproved Assignment shall be reconsidered more than one (1) time.

(c)Tenant shall have the right, upon thirty (30) days prior written notice to Landlord and Lender, to enter into (x) one or more subleases with any wholly-owned Subsidiary of Tenant or any Credit Entity or (y) one or more subleases with any third parties that demise, in the aggregate, up to, but not to exceed ten percent (10%) of the gross leaseable area (on a square footage basis) of any of the Improvements, with no consent or approval of Landlord being required or necessary (each, a “Preapproved Sublet”).  Other than pursuant to Preapproved Sublets, at no time during the Term shall subleases exist for more than ten percent (10%) of the gross leaseable area (on a square footage basis) of any of the Improvements without the prior written consent of Landlord, which consent shall be granted or withheld based on a review of the Review Criteria as they relate to the proposed subtenant and the terms of the proposed sublease.  Landlord and Lender shall be deemed to have acted reasonably in granting or withholding consent if such grant or disapproval is based on their review of the Review Criteria applying prudent business judgment.  Any purported sublease in violation of this Paragraph 21(c) shall be null and void.

(d)If Tenant assigns all of its rights and interest under this Lease, the assignee under such assignment shall expressly assume all the obligations of Tenant hereunder, actual or contingent, arising after the date of such assignment, by a written instrument delivered to Landlord at the time of such assignment and shall also provide a certification reasonably required by Landlord related to compliance with the USA Patriot Act substantially in the form of Exhibit “E”, Each sublease of the Leased Premises shall (A) be expressly subject and subordinate to this Lease and any Mortgage encumbering the Leased Premises; (B) not extend beyond the then current Term minus one day; (C) terminate upon any termination of this Lease,

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unless Landlord elects in writing, to cause the subtenant to attorn to and recognize Landlord as the lessor under such sublease, whereupon such sublease shall continue as a direct lease between the subtenant and Landlord upon all the terms and conditions of such sublease; and (D) bind the subtenant to all covenants contained in Paragraphs 4(a), 10 and 12 with respect to subleased premises to the same extent as if the subtenant were the Tenant.  Except as provided in Paragraph 21 (j) and Paragraph 21(k), no assignment or sublease shall affect or reduce any of the obligations of Tenant hereunder or the obligations of Guarantor under the Guaranty, and all such obligations of Tenant and Guarantor shall continue in full force and effect as obligations of a principal and not as obligations of a guarantor, as if no assignment or sublease had been made.  No assignment or sublease shall impose any additional obligations on Landlord under this Lease.

(e)Tenant shall, within ten (10) days after the execution and delivery of any assignment or sublease, deliver a duplicate original copy thereof to Landlord which, in the event of an assignment, shall be in recordable form.  With respect to any assignment to a wholly- owned Subsidiary of Tenant or Credit Entity or any Preapproved Sublet, at least thirty (30) days prior to the effective date of such assignment or sublease, Tenant shall provide to Landlord information reasonably required by Landlord to establish that the Person involved in any such proposed assignment or sublet is a wholly-owned Subsidiary of Tenant, a Credit Entity, or satisfies the criteria set forth in this Lease for a Preapproved Sublet, as the case may be.

(f)As security for performance of its obligations under this Lease, Tenant hereby grants, conveys and assigns to Landlord all right, title and interest of Tenant in and to all subleases now in existence or hereafter entered into with respect to all or any portion of the Leased Premises, any and all extensions, modifications and renewals thereof and all rents, issues and profits therefrom.  Landlord hereby grants to Tenant a license to collect and enjoy all rents and other sums of money payable under any sublease of the Leased Premises; provided, however, that during the continuance of an Event of Default, Landlord shall have the absolute right at any time upon notice to Tenant and any subtenants to revoke said license and to collect such rents and sums of money and to retain the same.  Any amounts collected shall be applied to Rent payments next due and owing.  Tenant shall not consent to, cause or allow any modification or alteration of any of the terms, conditions or covenants of any of the subleases or the termination thereof, without the prior written consent of Landlord nor shall Tenant accept any rents more than thirty (30) days in advance of the accrual thereof nor do nor permit anything to be done, the doing of which, nor omit or refrain from doing anything, the omission of which, will or could be a breach of or default in the terms of any of the subleases.

(g)Tenant shall not have the power to mortgage, pledge or otherwise encumber its interest under this Lease or any sublease of the Leased Premises, and any such mortgage, pledge or encumbrance made in violation of this Paragraph 21 shall be void and of no force and effect; provided, however.  Tenant shall be entitled to enter into financing arrangements secured by the fixtures, equipment and/or inventory within the Leased Premises.

(h)Tenant shall pay to Landlord not later than five (5) business Days after Tenant’s receipt thereof, as Additional Rent, one half of all Net Sublet Rent paid by any subtenant under any sublease for all or any portion of the Leased Premises, except in the event that such sublease is to a wholly-owned subsidiary of Tenant.  The term “Net Sublet Rent” as used in this Paragraph 21(h) means the aggregate amount of all rent payable by all subtenants for any portion

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of the Leased Premises less (i) any operating expenses certified by Tenant relating to that portion of the Leased Premises sublet (ii) the cost of any improvements constructed and paid for by Tenant specifically for such subtenant, (iii) the costs of any leasing commissions, legal fees and any tenant inducements incurred to consummate such transaction and (iv) the product of (A) Basic Rent then in effect multiplied by (B) the percentage of the leaseable square feet of the Leased Premises sublet.

(i)Landlord may sell or transfer the Leased Premises at any time without Tenant’s consent to one or more third parties (each a “Third Party Purchaser”).  In the event of any such transfer, provided the Third Party Purchaser assumes Landlord’s obligations hereunder in writing, Tenant shall attorn to any Third Party Purchaser as Landlord so long as such Third Party Purchaser and Landlord notify Tenant in writing of such transfer.  At the request of Landlord, Tenant will execute such documents confirming the agreement referred to above and such other agreements as Landlord may reasonably request (including, without limitation, a separate leases for the Leased Premises); provided that such agreements do not increase the liabilities and obligations of Tenant hereunder.

(j)Coffman, Visador, or any successor Tenant shall not, in a single transaction or series of transactions (including any interim merger or consolidation), sell, convey, transfer, abandon or lease to any Person all or substantially all of its assets (an “Asset Transfer”), and any such Asset Transfer shall be deemed an assignment in violation of this Lease; except that Coffman, Visador, or any successor Tenant shall have the right to conduct an Asset Transfer (a “Permitted Asset Transfer”) if the following conditions are met:  (i) (A) the Asset Transfer is to a Person that immediately following such transaction or transactions, taken in the aggregate, (x) is (or would be on pro forma basis) a wholly-owned Subsidiary of Coffman, Visador, or such successor Tenant, (y) is (or would be on pro forma basis) a Credit Entity, or (z) has a credit rating or quality, after giving effect to the assignment of Asset Transfer as determined in Landlord’s reasonable discretion, equal to or greater than Tenant at the time this Lease was executed by Tenant, or (B) either the transferor or the transferee, or an Affiliate of transferor or transferee, delivers to Landlord an irrevocable standby letter of credit equal to 18 months of Basic Rent (whether issued for the account of the transferor, the transferee or some other Person), or (C) the Asset Transfer is to a Person that is approved in writing by Landlord and Lender under the Review Criteria as a Non-Preapproved Assignee in accordance with the provisions of Paragraph 21(b); and, in any such case, (ii) this Lease is assigned to such Person as a part of such Asset Transfer.  In the event of an Asset Transfer to a wholly-owned Subsidiary of Coffman, Visador, or any successor Tenant, any subsequent sale of such assets by such Subsidiary shall be governed by the requirements of this subparagraph (j) irrespective of whether or not such sale would be considered a sale of all or substantially all of the assets of such Subsidiary.  Upon the consummation of a Permitted Asset Transfer to a Person other than a Subsidiary of the transferor, such transferor shall be relieved of its obligations under this Lease, and any applicable Guaranty shall terminate, upon a legal, valid and enforceable assignment to the transferee of all of the transferor’s right, title and interest under this Lease and a legal, valid and enforceable assumption by the transferee of all of the obligations of the transferor under this Lease; provided that the transferor delivers Landlord a legal opinion from a law firm reasonably satisfactory to Landlord confirming that such assignment and assumption are valid, legal and enforceable in accordance with their terms.

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(k)At no time during the Term shall any Person or “group” (within the meaning of Section 13(d) or Section 14(d) of the Securities Exchange Act of 1934, as amended) pursuant to a single transaction or series of related transactions (i) acquire, directly or indirectly, more than 50% of the voting stock, partnership interests, membership interests or other equitable and/or beneficial interests of Coffman, Visador, or any successor Tenant, or (ii) obtain, directly or indirectly, the power (whether or not exercised) to elect a majority of the directors of Coffman, Visador, or any successor Tenant or voting control of any partnership or limited liability company or other entity acting as its general partner or managing member (including through a merger or consolidation of Coffman, Visador, or any successor Tenant with or into any other Person), (in either case, “Control”), unless (A) the purchaser of such Control (the “Control Person”) shall, after taking into account the transaction that resulted in the acquisition of such Control, be a Credit Entity, or (B) such Control Person, or an Affiliate thereof, delivers to Landlord an irrevocable standby letter of credit equal to 18 months of Basic Rent (whether issued for the account of such Control Person or some other Person), or (C) after such Control Person’s acquisition of Control, taking into account the transaction that resulted in the acquisition of such Control, Tenant has a credit rating or quality, as determined in Landlord’s reasonable discretion, equal to or greater than Tenant at the time this Lease was executed, or (D) the proposed change in Control is approved in writing by Landlord under the Review Criteria as a Non-Preapproved Assignee in accordance with the provisions of Paragraph 21(b) above (a “Permitted Change of Control”).  Except as permitted in this Paragraph 21(k), any such change of Control (by operation of law, merger, consolidation or otherwise) shall be deemed an assignment in violation of this Lease; provided, however, that a deemed assignment pursuant to the transfer of the outstanding capital stock of Coffman, Visador, or any successor Tenant shall not be deemed to include the sale of such stock by persons or parties through the “over-the- counter market” or through any recognized stock exchange, other than by those deemed to be a “control-person” within the meaning of the Securities Exchange Act of 1934.  In the event of a Permitted Change of Control and execution of a replacement guaranty in form and substance reasonably acceptable to Landlord (a “Replacement Guaranty”) by such Control Person, the existing Guarantor will be released from the existing Guaranty and such Control Person will become Guarantor hereunder.

(l)Notwithstanding anything to the contrary contained in this Paragraph 21, Tenant shall not have the right to assign this Lease (voluntarily or involuntarily, whether by operation of law or otherwise, including through merger or consolidation) or sublet the Leased Premises to any Person at any time that an Event of Default shall exist or would exist after giving effect to such assignment or sublet.

22.Events of Default.

(a)The occurrence of any one or more of the following (after expiration of any applicable cure period as provided in Paragraph 22(b)) shall, at the sole option of Landlord, constitute an “Event of Default” under this Lease:

(i)a failure by Tenant to pay any Monetary Obligation, regardless of the reason for such failure, and such default continues beyond the date that is ten (10) days after the date on which such Monetary Obligation was due; provided that such ten (10) day grace period shall be permanently reduced to a five (5) day grace period if Tenant defaults under this

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Paragraph 22(a)(i):  (A) more than one (1) time in any twelve (12) month period; or (B) more than two (2) times during the Term;

(ii)a failure by Tenant duly to perform and observe, or a violation or breach of, any other provision of this Lease not otherwise specifically mentioned in this Paragraph 22(a), which default continues beyond the date that is thirty (30) days from the date on which Tenant receives written notice of such default or, if such default cannot be cured within such thirty (30) day period and delay in the exercise of a remedy would not (in Landlord’s reasonable judgment) cause a material adverse harm to Landlord of the Leased Premises, the cure period shall be extended for the period required to cure the default (but such cure period, including any extension, shall not in the aggregate exceed ninety (90) days); provided that Tenant shall commence to cure the default within said thirty (30) day period and shall actively and diligently and in good faith proceed with and continue the curing of the default until it shall be fully cured;

(iii)any representation or warranty made by Tenant herein or in any certificate, demand or request made pursuant hereto proves to be incorrect, now or hereafter, in any material respect and (A) Landlord, in its sole discretion, determines that such default has had a material adverse effect on Landlord, or (B) such default continues beyond the date that is thirty (30) days from the date on which Tenant receives written notice of such default;

(iv)Tenant shall fail to comply with the requirements of Paragraph 16;

(v)Tenant shall enter into an transaction or series of transactions in violation of Paragraph 21;

(vi)          Tenant shall fail to occupy and use at least eighty percent (80%) of the Leased Premises for a use permitted in accordance with Paragraph 4 without Landlord’s prior written consent; provided that (A) if Tenant has commenced and continues restoration of the Leased Premises following a Casualty as provided in Paragraph 19 of this Lease, then during any such period, Tenant shall be permitted to occupy and use less than eighty percent (80%) of the Leased Premises without violating this Paragraph 22(a)(vi) and (B) if Tenant is completing Alterations in accordance with Paragraphs 12 and 13 of this Lease, then during any such period, Tenant shall be permitted to occupy and use less than eighty percent (80%) of the Leased Premises, but not less than fifty percent (50%), of any Facility without Landlord’s prior written consent, without violating this Paragraph 22(a)(vi);

(vii)Tenant shall fail to maintain in effect any license or permit necessary for the use, occupancy or operation of the Leased Premises, which default continues for thirty (30) days after Tenant receives notice of such default from any applicable governmental entity;

(viii)Tenant shall fail to deliver the estoppel described in Paragraph 25 within the time period specified therein;

(ix)Tenant shall fail to perform or observe, or shall violate or breach, or shall make a misrepresentation under, any provision of any Assignment or any other document between Tenant and Lender or from Tenant to Lender, if such failure, violation, breach or

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misrepresentation gives rise to a default beyond any applicable cure period with respect to any Loan;

(x)Coffman, Visador, Crown or any successor Tenant or Guarantor shall (A) fail to pay at maturity (or make a final payment of) any principal or interest owing on any obligations for borrowed money having an outstanding principal balance of $2,000,000 or more in the aggregate (“Material Indebtedness”), or (B) fail to perform any other provision (including any provision with respect to the payment of principal, interest or any other monetary obligation) contained in any instrument under which all or any portion of any such Material Indebtedness is created or secured (including the breach of any covenant thereunder) if the effect of such failure is to cause such Material Indebtedness to become due prior to its stated maturity;

(xi)Coffman, Visador, Crown or any successor Tenant or Guarantor shall fail to pay, beyond any applicable cure period, any amount owed under, or fail to perform any other material provision of, any contract or contracts (including leases) that have, in the aggregate, payment obligations over the terms thereof of $ 1,000,000 or more if the contract parties under such contracts commence to exercise their right to cause such payment obligations to be immediately due and payable in full;

(xii)a final, non-appealable judgment or judgments for the payment of money in excess of $250,000 in the aggregate shall be rendered against Coffman, Visador, Crown or any successor Tenant or Guarantor and the same shall remain undischarged for a period of ninety (90) consecutive days; provided that a judgment shall not be deemed undischarged if (A) such judgment is part of a structured settlement where payments are made in installments and all installment payments are made when due and payable, or (B) such judgment has been bonded or other security has been posted with respect to such judgment, if and to the extent permitted by the terms of any such judgment, pending an action against an insurance carrier by the party against which such judgment was rendered;

(xiii)Coffman, Visador, Crown or any successor Tenant or Guarantor shall (A) voluntarily be adjudicated a bankrupt or insolvent, (B) seek or consent to the appointment of a receiver or trustee for itself or for the Leased Premises, (C) file a petition seeking relief under the bankruptcy or other similar laws of the United States, any state or any jurisdiction, (D) make a general assignment for the benefit of creditors, or (E) become “insolvent”, as such term is defined (y) in the Federal Bankruptcy Code, as codified in Title 11 of the United States Code, or under the insolvency laws of the Commonwealth of Virginia, including without limitation becoming “insolvent” as defined under Section 8.1A-201 of the Virginia Code, as amended;

(xiv)a court shall enter an order, judgment or decree appointing, without the consent of Coffman, Visador, Crown or any successor Tenant or Guarantor, a receiver or trustee for it or for the Leased Premises or approving a petition filed against Coffman, Visador, Crown or any successor Tenant or Guarantor which seeks relief under the bankruptcy or other similar laws of the United States, any state or any jurisdiction, and such order, judgment or decree shall remain undischarged or unstayed sixty (60) days after it is entered;

(xv)Coffman, Visador, Crown or any successor Tenant or Guarantor shall be liquidated or dissolved or shall begin proceedings towards its liquidation or dissolution;

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(xvi)the estate or interest of Tenant in the Leased Premises shall be levied upon or attached in any proceeding and such estate or interest is about to be sold or transferred or such process shall not be vacated or discharged within sixty (60) days after it is made;

(xvii)an event of default beyond any applicable cure period shall occur under the Guaranty; or

(xviii)Tenant shall fail to provide, maintain and replenish, if necessary, the Security Deposit in accordance with the requirements of Paragraph 35.

(xix)Tenant shall not obtain and maintain the Required Letters of Credit in the time and manner required pursuant to this Lease.

(xx)Tenant fails to comply with the terms and conditions set forth in Paragraph 34(p) of this Lease.

(b)Notwithstanding any provision to the contrary contained in this Paragraph 22, at such time as Coffman, Visador, Crown or any successor Tenant or Guarantor is released from its obligations under this Lease and/or the Guaranty, in accordance with the terms of this Lease and/or the Guaranty, as applicable, no Event of Default shall occur under this Lease as a result of any act of, event occurring with respect to, such released party.

23.Remedies and Damages Upon Default.

(a)If an Event of Default shall have occurred and is continuing, Landlord shall have the right, at its sole option, then or at any time thereafter, to exercise its remedies and to collect damages from Tenant in accordance with this Paragraph 23, subject in all events to applicable Law, without demand upon or notice to Tenant except as otherwise provided in this Paragraph 23 or under any applicable Law.

(i)Landlord may give Tenant notice of Landlord’s intention to terminate this Lease on a date specified in such notice.  Upon such date, this Lease, the estate hereby granted and all rights of Tenant hereunder shall expire and terminate.  Upon such termination, Tenant shall immediately surrender and deliver possession of the Leased Premises to Landlord in accordance with Paragraph 26.  If Tenant does not so surrender and deliver possession of all of the Leased Premises, Landlord may re-enter and repossess the Leased Premises not surrendered, by any available legal process.  Upon or at any time after taking possession of the Leased Premises, Landlord may, by legal process, remove any Persons or property therefrom.  Landlord shall be under no liability for or by reason of any such entry, repossession or removal.  Notwithstanding such termination of the Lease, Landlord may collect the damages set forth in Paragraph 23(b)(i) or 23(b)(ii).

(ii)Landlord may terminate Tenant’s right of possession (but not this Lease) and may repossess and reenter the Leased Premises by any available legal process without thereby releasing Tenant from any liability hereunder and, except as required by applicable Law, without demand or notice of any kind to Tenant and without terminating this Lease.  After repossession of the Leased Premises pursuant hereto, Landlord shall have the right to relet the Leased Premises to such tenant or tenants, for such term or terms, for such rent, on such

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conditions and for such uses as Landlord in its sole discretion may determine, and collect and receive any rents payable by reason of such reletting.  Landlord may make such Alterations in connection with such reletting as it may deem advisable in its sole discretion.  Notwithstanding any such termination of Tenant’s right of possession of the Leased Premises, Landlord may (A) exercise the remedy set forth in and collect the damages permitted by Paragraph 23(a)(iii) or (B) collect the damages set forth in Paragraph 23(b)(ii) or, at any time thereafter, elect to terminate this Lease and in such event Landlord shall have the right and remedies specified in the last sentence of Paragraph 23(a)(i).

(b)The following constitute damages to which Landlord shall be entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or 23(a)(ii);

(i)If Landlord exercises its remedy under Paragraph 23(a)(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise such remedy and is unsuccessful in reletting the Leased Premises) then, upon written demand from Landlord, Tenant shall pay to Landlord, as liquidated and agreed final damages for Tenant’s default and in lieu of all current damages beyond the date of such demand (it being agreed that it would be impracticable or extremely difficult to fix the actual damages), an amount equal to the Present Value of the excess, if any, of (A) all Basic Rent from the date of such demand to the date on which the Term is scheduled to expire hereunder in the absence of any earlier termination, re-entry or repossession over (B) the then fair market rental value of the Leased Premises for the same period.  Tenant shall also pay to Landlord all accrued Rent then due and unpaid, all other Monetary Obligations which are then due and unpaid, all Monetary Obligations which arise or become due by reason of Tenant’s default hereunder, including any Costs of Landlord in connection with the repossession of the Leased Premises and any attempted reletting thereof, including all brokerage commissions, legal expenses, reasonable attorneys’ fees, employees’ expenses, costs of Alterations and expenses and preparation for reletting.

(ii)If Landlord exercises its remedy under Paragraph 23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant shall, until the end of what would have been the Term in the absence of the termination of the Lease, and whether or not the Leased Premises shall have been relet, be liable to Landlord for, and shall pay to Landlord, as liquidated and agreed current damages all Monetary Obligations which would be payable under this Lease by Tenant in the absence of such termination less the net proceeds, if any, of any reletting pursuant to Paragraph 23(a)(ii), after deducting from such proceeds all accrued Rent then due and unpaid, all other Monetary Obligations which are then due and unpaid, all Monetary Obligations which arise or become due by reason of such Event of Default, including any Costs of Landlord incurred in connection with such repossessing and reletting, including all brokerage commissions, actual legal expenses, reasonable attorneys’ fees, costs of Alterations and expenses and preparation for reletting; provided that if Landlord has not relet the Leased Premises, such Costs of Landlord shall be considered to be Monetary Obligations payable by Tenant.

(iii)Tenant shall be and remain liable for all sums aforesaid, and Landlord may recover such damages from Tenant and institute and maintain successive actions or legal proceedings against Tenant for the recovery of such damages.  Nothing herein contained shall be deemed to require Landlord to wait to begin such action or other legal proceedings until the date when the Term would have expired by its own terms had there been no such Event of Default.

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(c)Notwithstanding anything to the contrary herein contained, in lieu of or in addition to any of the foregoing remedies and damages, Landlord may exercise any remedies and collect any damages available to it at law or in equity.  If Landlord is unable to obtain full satisfaction pursuant to the exercise of any remedy, it may pursue any other remedy which it has hereunder or at law or in equity.

(d)Landlord shall not be required to mitigate any of its damages hereunder unless required to by applicable Law.  If any Law shall validly limit the amount of any damages provided for herein to an amount which is less than the amount agreed to herein, Landlord shall be entitled to the maximum amount available under such Law.

(e)No termination of this Lease, repossession or reletting of the Leased Premises, exercise of any remedy or collection of any damages pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations.

(f)WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD OR TENANT HEREUNDER, TENANT HEREBY WAIVES THE SERVICE OF NOTICE WHICH MAY BE REQUIRED BY ANY APPLICABLE LAW.  TENANT AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS LEASE OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH.  THIS WAIVER IS GIVEN KNOWINGLY, WILLINGLY AND VOLUNTARILY BY TENANT, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.  TENANT REPRESENTS AND WARRANTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON OR ENTITY TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.  TENANT FURTHER REPRESENTS AND WARRANTS THAT TENANT HAS BEEN REPRESENTED IN THE TRANSACTION EVIDENCED BY THIS LEASE BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF TENANT’S OWN FREE WILL, AND THAT TENANT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH SUCH COUNSEL.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES HERETO ENTERING INTO THIS LEASE.  LANDLORD IS AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY TENANT.  THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE EXPIRATION OR ANY EARLIER TERMINATION OF THIS LEASE.

(g)Upon the occurrence of any Event of Default, Landlord shall have the right (but no obligation) to perform any act required of Tenant hereunder and, if performance of such act requires that Landlord enter the Leased Premises, Landlord may enter the Leased Premises for such purpose

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(h)No failure of Landlord (i) to insist at any time upon the strict performance of any provision of this Lease or (ii) to exercise any option, right, power or remedy contained in this Lease shall be construed as a waiver, modification or relinquishment thereof.  A receipt by Landlord of any sum in satisfaction of any Monetary Obligation with knowledge of the breach of any provision hereof shall not be deemed a waiver of such breach, and no waiver by Landlord of any provision hereof shall be deemed to have been made unless expressed in a writing signed by Landlord.

(i)Tenant hereby waives and surrenders, for itself and all those claiming under it, including creditors of all kinds, (i) any right and privilege which it or any of them may have under any present or future Law to redeem the Leased Premises or to have a continuance of this Lease after termination of this Lease or of Tenant’s right of occupancy or possession pursuant to any court order or any provision hereof, and (ii) the benefits of any present or future Law which exempts property from liability for debt or for distress for rent.

(j)Except as otherwise provided herein, all remedies are cumulative and concurrent and no remedy is exclusive of any other remedy.  Each remedy may be exercised at any time an Event of Default has occurred and is continuing and may be exercised from time to time.  No remedy shall be exhausted by any exercise thereof.

24.Notices.

All notices, demands, requests, consents, approvals, offers, statements and other instruments or communications required or permitted to be given pursuant to the provisions of this Lease shall be in writing and shall be deemed to have been given and received for all purposes when delivered in person or by Federal Express or other reliable 24-hour delivery service or five (5) Business Days after being deposited in the United States mail, by registered or certified mail, return receipt requested, postage prepaid, addressed to the other party at the address set forth below or when delivery is refused.  Notices sent to Landlord shall be to the attention of Joseph Wekselblatt, Chief Financial Officer, Angelo, Gordon & Co., L.P., 245 Park Avenue, 26th Floor, New York, NY 10167-0094, and notices sent to Tenant shall be to the attention of the Chief Financial Officer, 1000 Industrial Road, Marion Virginia 24354.  A copy of any notice given by Tenant to Landlord shall be addressed to the attention of Michele E. Williams, Esquire, Arent Fox LLP, 1050 Connecticut Avenue, N.W., Washington, D.C.  20036-5339.  A copy of any notice given by Landlord to Tenant shall be addressed to the attention of Kevin P. Stichter, Esquire, Kennedy Covington, Hearst Tower, 47th Floor, 214 North Tryon St., Charlotte, NC 28202.  For the purposes of this Paragraph, any party may substitute another address stated above (or substituted by a previous notice) for its address by giving fifteen (15) days’ notice of the new address to the other party, in the manner provided above.

25.Estoppel Certificate.

At any time upon not less than ten (10) days’ prior written request by either Landlord or Tenant (the “Requesting Party”) to the other party (the “Responding Party”), the Responding Party shall deliver to the Requesting Party a statement in writing, executed by an authorized officer of the Responding Party, certifying (a) that, except as otherwise specified, this Lease is unmodified and in full force and effect, (b) the dates to which Basic Rent, Additional Rent and

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all other Monetary Obligations have been paid, (c) that, to the knowledge of the signer of such certificate and except as otherwise specified, no default by either Landlord or Tenant exists hereunder, (d) such other matters as the Requesting Party may reasonably request, and (e) if Tenant is the Responding Party that, except as otherwise specified, there are no proceedings pending or, to the knowledge of the signer, threatened, against Tenant before or by a court or administrative agency which, if adversely decided, would materially and adversely affect the financial condition and operations of Tenant.  Any such statements by the Responding Party may be relied upon by the Requesting Party, any Person whom the Requesting Party notifies the Responding Party in its request for the certificate is an intended recipient or beneficiary of the certificate, any Lender or their assignees and by any prospective purchaser or mortgagee of the Leased Premises.  Any certificate required under this Paragraph 25 and delivered by Tenant shall state that, in the opinion of each person signing the same, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to the subject matter of such certificate.

26.Surrender.

Upon the expiration or earlier termination of this Lease, Tenant shall peaceably leave and surrender the Leased Premises to Landlord in the same condition in which the Leased Premises were at the commencement of this Lease, except as repaired, rebuilt, restored, altered, replaced or added to as permitted or required by any provision of this Lease, ordinary wear and tear excepted.  Upon such surrender, Tenant shall (a) remove from the Leased Premises all property which is owned by Tenant or third parties other than Landlord and Alterations required to be removed pursuant to Paragraph 13 hereof and (b) repair any damage caused by such removal.  Property not so removed shall become the property of Landlord, and Landlord may thereafter cause such property to be removed from the Leased Premises.  The cost of removing and disposing of such property and repairing any damage to the Leased Premises caused by such removal shall be paid by Tenant to Landlord upon demand.  Landlord shall not in any manner or to any extent be obligated to reimburse Tenant for any such property which becomes the property of Landlord pursuant to this Paragraph 26.

27.No Merger of Title.

There shall be no merger of the leasehold estate created by this Lease with the fee estate in the Leased Premises by reason of the fact that the same Person may acquire or hold or own, directly or indirectly, (a) the leasehold estate created hereby or any part thereof or interest therein and (b) the fee estate in the Leased Premises or any part thereof or interest therein, unless and until all Persons having any interest in the interests described in (a) and (b) above which are sought to be merged shall join in a written instrument effecting such merger and shall duly record the same.

28.Books and Records.

(a)Tenant shall keep adequate records and books of account with respect to the finances and business of Tenant generally and with respect to the Leased Premises, in accordance with generally accepted accounting principles (“GAAP”) consistently applied, and shall permit Landlord and Lender by their respective agents, accountants and attorneys, upon

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reasonable notice to Tenant, to visit and inspect the Leased Premises and examine (and make copies of) the records and books of account and to discuss the finances and business with the officers of Tenant, at such reasonable times as may be requested by Landlord.  Upon the request of Lender or Landlord (either telephonically or in writing), Tenant shall provide the requesting party with copies of any information to which such party would be entitled in the course of a personal visit.

(b)Tenant shall deliver to Landlord and to Lender within ninety (90) days of the close of each fiscal year, annual audited financial statements of Tenant prepared by a nationally recognized independent certified public accountants, without the prior written consent of Landlord, which consent shall not be unreasonably withheld.  Tenant shall also furnish to Landlord within forty-five (45) days after the end of each of the three remaining quarters unaudited financial statements and all other quarterly reports of Tenant, certified by Tenant’s chief financial officer, and all filings, if any, of Form 10-K, Form 10-Q and other required filings with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934, as amended, or any other Law.  All financial statements of Tenant shall be prepared in accordance with GAAP consistently applied.  All annual financial statements shall be accompanied (i) by an opinion of said accounting firm stating that (A) there are no qualifications as to the scope of the audit and (B) the audit was performed in accordance with GAAP and (ii) by the affidavit of the president or a vice president of Tenant, dated within five (5) days of the delivery of such statement, stating that (C) the affiant knows of no Event of Default, or event which, upon notice or the passage of time or both, would become an Event of Default which has occurred and is continuing hereunder or, if any such event has occurred and is continuing, specifying the nature and period of existence thereof and what action Tenant has taken or proposes to take with respect thereto and (D) except as otherwise specified in such affidavit, that Tenant has fulfilled all of its obligations under this Lease which are required to be fulfilled on or prior to the date of such affidavit.

(c)Notwithstanding the foregoing, Landlord approves the use by Coffman and Visador of independent certified public accountants that are not nationally recognized; provided such independent certified public accountants are a regionally recognized independent certified public accountant approved by the Senior Lender and the Subordinated Lender, and (ii) Landlord has been provided with sufficient information to confirm that such independent certified public accountants satisfy the criteria set forth in (i) above.  This Paragraph 28(c) shall not inure to the benefit of or apply to any successors or assigns of Coffman or Visador.

29.Determination of Value.

(a)Whenever a determination of Fair Market Value is required pursuant to Paragraph 18, such Fair Market Value shall be determined in accordance with the following procedure:

(i)Landlord and Tenant shall endeavor to agree upon such Fair Market Value within thirty (30) days after the date (the “Applicable Initial Date”) on which Tenant delivers a Termination Notice to Landlord pursuant to Paragraph 18.  Upon reaching such agreement, the parties shall execute an agreement setting forth the amount of such Fair Market Value.

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(ii)If the parties shall not have signed such agreement within twenty (20) days after the Applicable Initial Date, Tenant shall within fifty (50) days after the Applicable Initial Date select an appraiser and notify Landlord in writing of the name, address and qualifications of such appraiser.  Within fifteen (15) days following Landlord’s receipt of Tenant’s notice of the appraiser selected by Tenant, Landlord shall select an appraiser and notify Tenant of the name, address and qualifications of such appraiser.  Such two appraisers shall endeavor to agree upon Fair Market Value based on a written appraisal made by each of them as of the Relevant Date (and given to Landlord by Tenant).  If such two appraisers shall agree upon a Fair Market Value, the amount of such Fair Market Value as so agreed shall be binding and conclusive upon Landlord and Tenant.

(iii)If such two appraisers shall be unable to agree upon a Fair Market Value within fifteen (15) days after the selection of an appraiser by Landlord, then such appraisers shall advise Landlord and Tenant of their respective determination of Fair Market Value and shall select a third appraiser to make the determination of Fair Market Value.  The selection of the third appraiser shall be binding and conclusive upon Landlord and Tenant.

(iv)If such two appraisers shall be unable to agree upon the designation of a third appraiser within ten (10) days after the expiration of the fifteen (15) day period referred to in clause (iii) above, or if such third appraiser does not make a determination of Fair Market Value within twenty (20) days after his selection, then such third appraiser or a substituted third appraiser, as applicable, shall, at the request of either party hereto (with respect to the other party), be appointed by the President or Chairman of the American Arbitration Association in New York, New York.  The determination of Fair Market Value made by the third appraiser appointed pursuant hereto shall be made within fifteen (15) days after such appointment.

(v)If a third appraiser is selected, Fair Market Value shall be the average of the determination of Fair Market Value made by the third appraiser and the determination of Fair Market Value made by the appraiser (selected pursuant to Paragraph 29(a)(ii) hereof) whose determination of Fair Market Value is nearest to that of the third appraiser.  Such average shall be binding and conclusive upon Landlord and Tenant.

(vi)All appraisers selected or appointed pursuant to this Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have no right, power or authority to alter or modify the provisions of this Lease, (C) utilize the definition of Fair Market Value hereinabove set forth above, and (D) be registered in the State where the Leased Premises is located if such State provides for or requires such registration.

(vii)The Cost of the procedure described in this Paragraph 29(a) above shall be borne by Tenant.

(b)If, by virtue of any delay, Fair Market Value is not determined by the expiration or termination of the then current Term, then the date on which the Term would otherwise expire or terminate shall be extended with respect to the Leased Premises, to the date specified for termination in the particular provision of this Lease pursuant to which the determination of Fair Market Value is being made.

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(c)In determining Fair Market Value as defined in clause (b) of the definition of Fair Market Value, the appraisers shall add (a) the Present Value of the Rent for the remaining Term, assuming the Term has been extended for all extension periods provided herein (with assumed increases in the CPI to be determined by the appraisers) using a discount rate (which may be determined by an investment banker retained by each appraiser) based on the creditworthiness of Tenant and (b) the Present Value of the Leased Premises as of the end of such Term (having assumed the Term has been extended for all extension periods provided herein).  The appraisers shall further assume that no default then exists under the Lease, that Tenant has complied (and will comply) with all provisions of the Lease.

30.Non-Recourse as to Landlord.

(a)Anything contained herein to the contrary notwithstanding, any claim based on or in respect of any liability of Landlord under this Lease shall be limited to actual damages and shall be enforced only against the Leased Premises and not against any other assets, properties or funds of (a) Landlord, (b) any director, member, officer, general partner, limited partner, employee or agent of Landlord (or any legal representative, heir, estate, successor or assign of any thereof), (c) any predecessor or successor partnership, corporation, limited liability company (or other entity) of Landlord, or any of its general partners, members or shareholders, or (d) any other Person affiliated with Landlord.

31.Financing.

(a)Tenant agrees to pay, within ten (10) days following written request from Landlord, all Costs incurred by Landlord in connection with the financing of the initial Loan, including any “points” or commitment fees, brokers’ fees, survey and title costs and the fees and expenses of Landlord’s and Lender’s counsel (with respect to Lender’s counsel up to a maximum of Eighteen Thousand Dollars ($18,000.00); provided that Tenant shall not be responsible for Costs incurred with respect to the financing of the initial Loan to the extent that such Costs, together with the Costs set forth in Paragraph 31(b) exceed Two Hundred Fifteen Thousand Dollars ($215,000.00) (the “Initial Cost Cap”).

(b)Tenant agrees to pay all Costs incurred by Landlord in connection with the purchase and leasing of the Leased Premises including, without limitation, the cost of appraisals, environmental reports, title insurance, engineering and property condition reports, surveys, legal fees and expenses and brokers’ fees up to a maximum amount equal to the Initial Cost Cap.

(c)If Landlord desires to obtain or refinance any Loan, Tenant shall negotiate in good faith with Landlord concerning any request made by any Lender or proposed Lender for changes or modifications in this Lease.  In particular, Tenant shall agree, upon request of Landlord, to supply any such Lender with such notices and information as Tenant is required to give to Landlord hereunder and to extend the rights of Landlord hereunder to any such Lender and to consent to such financing if such consent is requested by such Lender.  Tenant shall provide any other consent or statement and shall execute any and all other documents that such Lender reasonably requires in connection with such financing, including any environmental indemnity agreement and subordination, non-disturbance and attornment agreement, so long as the same do not materially adversely affect any right, benefit or privilege of Tenant under this

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Lease or increase Tenant’s obligations under this Lease or any ancillary documentation with the initial Loan.  Such subordination, non-disturbance and attornment agreement may require Tenant to confirm that (i) Lender and its assigns will not be liable for any misrepresentation, act or omission of Landlord and (ii) Lender and its assigns will not be subject to any counterclaim, demand or offsets which Tenant may have against Landlord.  In the event of any such refinancing by Landlord, notwithstanding anything to the contrary set forth herein, the rights and obligations of Tenant hereunder shall not be materially adversely affected and Tenant shall not be responsible for any cost or expense that Tenant would not otherwise have been liable for under the initial Loan.  Under no circumstances shall Tenant be responsible for any Costs incurred by Landlord in connection with any refinancing of the initial Loan or any subsequent Loan, including any “points” or commitment fees, brokers’ fees, survey and title costs or the fees and expenses of Landlord’s or Lender’s counsel.

32.Subordination, Non-Disturbance and Attornment.

This Lease and Tenant’s interest hereunder shall be subordinate to any Mortgage or other security instrument hereafter placed upon the Leased Premises by Landlord, and to any and all advances made or to be made thereunder, to the interest thereon, and all renewals, replacements and extensions thereof; provided that any such Mortgage or other security instrument (or a separate instrument in recordable form duly executed by the holder of any such Mortgage or other security instrument and delivered to Tenant) shall provide for the recognition of this Lease and all Tenant’s rights hereunder unless and until an Event of Default exists or Landlord shall have the right to terminate this Lease pursuant to any applicable provision hereof.

33.Tax Treatment:  Reporting.

Landlord and Tenant each acknowledge that each shall treat this transaction as a true lease for state law purposes and shall report this transaction as a lease for Federal income tax purposes.  For Federal income tax purposes each shall report this Lease as a true lease with Landlord as the owner of the Leased Premises and Equipment and Tenant as the lessee of such Leased Premises and Equipment including:  (i) treating Landlord as the owner of the property eligible to claim depreciation deductions under Section 167 or 168 of the Internal Revenue Code of 1986 (the “Code”) with respect to the Leased Premises and Equipment, (ii) Tenant reporting its Rent payments as rent expense under Section 162 of the Code, and (iii) Landlord reporting the Rent payments as rental income.  Notwithstanding the foregoing, nothing contained herein shall (a) require Landlord or Tenant to take any action that would be inconsistent with the requirements of GAAP or violate any state or federal law, or (b) be deemed to constitute a guaranty, warranty or representation by either Landlord or Tenant as to the actual treatment of this transaction for state or federal tax purposes of for purposes of accounting or financial reporting, including but not limited to the determination as to whether this lease shall qualify for sale-leaseback accounting treatment or whether this lease shall be properly classified as an operating lease or finance lease in accordance with GAAP.

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34.Miscellaneous.

(a)The Paragraph headings in this Lease are used only for convenience in finding the subject matters and are not part of this Lease or to be used in determining the intent of the parties or otherwise interpreting this Lease.

(b)As used in this Lease, the singular shall include the plural and any gender shall include all genders as the context requires and the following words and phrases shall have the following meanings:  (i) “including” means “including without limitation”; (ii) “provisions” means “provisions, terms, agreements, covenants and/or conditions”; (iii) “lien” means “lien, charge, encumbrance, title retention agreement, pledge, security interest, mortgage and/or deed of trust”; (iv) “obligation” means “obligation, duty, agreement, liability, covenant and/or condition”; (v) “the Leased Premises” means “the Leased Premises or any part thereof or interest therein”; (vi) “any of the Real Property” means “the Real Property or any part thereof or interest therein”; (vii) “any of the Improvements” means “the Improvements or any part thereof or interest therein”; (viii) “any of the Equipment” means “the Equipment or any part thereof or interest therein”; and (ix) “any of the Adjoining Property” means “the Adjoining Property or any part thereof or interest therein”.

(c)Any act which Landlord is permitted to perform under this Lease may be performed at any time and from time to time by Landlord or any person or entity designated by Landlord.  Each appointment of Landlord as attorney-in-fact for Tenant hereunder is irrevocable and coupled with an interest.

(d)Except as otherwise expressly provided in this Lease, Landlord shall not unreasonably withhold or delay its consent whenever such consent is required under this Lease.  Tenant hereby waives any claim for damages against or liability of Landlord which is based upon a claim that Landlord has unreasonably withheld or unreasonably delayed any consent or approval requested by Tenant, and Tenant agrees that its sole remedy shall be an action for declaratory judgment; provided if Landlord has acted in bad faith in withholding or delaying its consent or approval, Tenant may seek a claim for damages against Landlord.  If with respect to any required consent or approval Landlord is required by the express provisions of this Lease not to unreasonably withhold or delay its consent or approval, and if it is determined in any such proceeding referred to in the preceding sentence that Landlord acted unreasonably, the requested consent or approval shall be deemed to have been granted; however, Landlord shall have no liability whatsoever to Tenant for its refusal or failure to give such consent or approval; provided if Landlord has acted in bad faith in withholding or delaying its consent or approval, Tenant may seek a claim for damages against Landlord.  Tenant’s sole remedy for Landlord’s unreasonably withholding or delaying, consent or approval shall be as provided in this Paragraph.

(e)Time is of the essence with respect to the performance by Tenant and Landlord of their respective obligations under this Lease.

(f)Landlord shall in no event be construed for any purpose to be a partner, joint venturer or associate of Tenant or of any subtenant, operator, concessionaire or licensee of Tenant with respect to the Leased Premises or otherwise in the conduct of their respective businesses.

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(g)This Lease and any documents which may be executed by Tenant on or about the effective date hereof at Landlord’s request, including without limitation, the Tenant’s Certificate, constitute the entire agreement between the parties and supersede all prior understandings and agreements, whether written or oral, between the parties hereto relating to the Leased Premises and the transactions provided for herein.  Landlord and Tenant are business entities having substantial experience with the subject matter of this Lease and have each fully participated in the negotiation and drafting of this Lease.  Accordingly, this Lease shall be construed without regard to the rule that ambiguities in a document are to be construed against the drafter.

(h)This Lease may be modified, amended, discharged or waived only by an agreement in writing signed by the party against whom enforcement of any such modification, amendment, discharge or waiver is sought.

(i)The covenants of this Lease shall run with the land and bind Tenant, its successors and assigns and all present and subsequent encumbrancers and subtenants of the Leased Premises, and shall inure to the benefit of Landlord, its successors and assigns.  If there is more than one Tenant, the obligations of each shall be joint and several.

(j)Notwithstanding any provision in this Lease to the contrary, all Surviving Obligations of Tenant shall survive the expiration or termination of this Lease.

(k)If any one or more of the provisions contained in this Lease shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Lease, but this Lease shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

(l)All exhibits attached hereto are incorporated herein as if fully set forth.

(m)Each of Landlord and Tenant hereby agree that the State of New York has a substantial relationship to the parties and to the underlying transaction embodied hereby, and in all respects (including, without limiting the generality of the foregoing, matters of construction, validity and performance) this Lease and the obligations arising hereunder shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and performed therein and all applicable law of the United States of America; except that, at all times, the provisions for the creation of the leasehold estate, enforcement of Landlord’s rights and remedies with respect to right of re-entry and repossession, surrender, delivery, ejectment, dispossession, eviction or other in-rem proceeding or action regarding the Leased Premises pursuant to Paragraph 23 hereof shall be governed by and construed according to the Laws of the State in which the Leased Premises is located, it being understood that, to the fullest extent permitted by law of such State, the law of the State of New York shall govern the validity and the enforceability of the Lease, and the obligations arising hereunder.  To the fullest extent permitted by law, Tenant hereby unconditionally and irrevocably waives any claim to assert that the law of any other jurisdiction governs this Lease.  Any legal suit, action or proceeding against Tenant arising out of or relating to this Lease may be instituted in any Federal or state court sitting in the State of New York, and Tenant waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding in such County and State, and Tenant hereby expressly and irrevocably submits to the jurisdiction of any such court in any suit,

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action or proceeding.  Notwithstanding the foregoing, nothing herein shall prevent or prohibit Landlord from instituting any suit, action or proceeding in any other proper venue or jurisdiction in which Tenant is located or where service of process can be effectuated.

(n)To Tenant’s knowledge, neither Tenant nor any of the members, shareholders, partners or any other Person comprising Tenant is a Specially Designated National or Blocked Person.  As used herein, the term “Specially Designated National or Blocked Person” shall mean a person or entity (i) designated by the Department of Treasury’s Office of Foreign Assets Control, or other governmental entity, from time to time as a “specially designated national or blocked person” or similar status, (ii) described in Section 1 of U.S.  Executive Order 13224 issued on September 23, 2001, or (iii) otherwise identified by government or legal authority as a person or entity with whom Landlord or its affiliates are prohibited from transacting business.

(o)Tenant shall maintain as confidential (i) any and all information, data and documents obtained about Landlord (“Landlord Information”) prior to and following the execution of this Lease (including without limitation, any financial or operating information of, or related to, the Landlord), and (ii) the terms and conditions of this Lease (as originally circulated or as negotiated) and all other documents related to the execution of this Lease, but only to the extent that the Landlord Information and other items referenced in this Paragraph are not otherwise available to the general public.  Tenant shall not disclose any such Landlord Information to any third party except as required by any applicable law, court order, subpoena or legal or regulatory requirement.  Notwithstanding the foregoing, Tenant shall be permitted to disclose information related to this Lease described in item (ii) above:  (x) in accordance with Tenant’s general public disclosure policy; provided Tenant has obtained Landlord’s prior consent to the contents of any such disclosure, (y) to Tenant’s attorneys, accountants, advisors, consultants, affiliates and lenders, and the attorneys and accountants of such lenders and accountants (“Tenant Interested Persons”) in accordance with usual and customary business practices; provided such individuals or entities agree, at the time of such disclosure by Tenant, the Tenant Interested Persons are either bound by the terms and conditions of this Paragraph 34(o) or by a standard confidentiality agreement (whether contained in a separate confidentiality agreement or set forth as a provision of an agreement) with respect to the Landlord Information being provided such Tenant Interested Person, and (z) to Tenant’s investors in accordance with usual and customary financial disclosure practices.  Tenant shall not make copies of any Landlord Information except for use exclusively by Tenant or Tenant Interested Persons as needed in accordance with usual and customary business practices.  All copies of such Landlord Information will be returned to Landlord or destroyed after the use of such Landlord Information is no longer needed, except to the extent such destruction is prohibited by law, rule or regulation.  Landlord consents to the disclosure by Tenant for general marketing purposes of the existence of this Lease, the purchase price of the Leased Premises, Landlord’s ownership of the Leased Premises and the nature and location of the Property.  Tenant shall not record this Lease or any memorandum thereof in the land records of any county or jurisdiction or with any governmental authority, without the prior written consent and approval of the Landlord; provided, at Tenant’s request, Landlord shall execute and deliver a memorandum of this Lease describing the Leased Premises and setting forth the Term of this Lease and Tenant shall be entitled to record such memorandum in the land records where the Property is located, all at Tenant’s sole cost and expense.

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Landlord shall maintain as confidential (i) any and all information, data and documents obtained about Tenant (“Tenant Information”) prior to and following the execution of this Lease (including without limitation, any financial or operating information of, or related to, Tenant), and (ii) the terms and conditions of this Lease (as originally circulated or as negotiated) and all other documents related to the execution of this Lease.  Landlord shall not disclose any such Tenant Information to any third party except as required by any applicable law, court order, subpoena or legal or regulatory requirement.  Notwithstanding the foregoing, Landlord shall be permitted to disclose Tenant Information and information related to this Lease described in items (i) and (ii) above:  (x) in accordance with Landlord’s general public disclosure policy; provided Landlord has obtained Tenant’s prior consent to the contents of any such disclosure, and (y) to Landlord’s attorneys, accountants, advisors, consultants, affiliates, lenders and investors and the attorneys and accountants of such lenders and accountants (“Landlord Interested Persons”) in accordance with usual and customary business practices; provided that such individuals or entities agree in writing at the time of such disclosure to be bound by the terms and conditions of this paragraph; and provided further in the case of either clause (x) or (y), Landlord shall not disclose any of Tenant’s financial information or proprietary business information to any third party without Tenant’s prior written consent, which consent may be conditioned on entry into a separate confidentiality agreement with the party to whom such information is to be disclosed. Landlord shall not make copies of any Tenant Information except for use exclusively by Landlord or Landlord Interested Persons as needed in accordance with usual and customary business practices.  All copies of such Tenant Information will be returned to Tenant or destroyed after the use of such Tenant Information is no longer needed, except to the extent such destruction is prohibited by law, rule or regulation.  Tenant consents to the disclosure by Landlord for general marketing purposes of the existence of this Lease, the purchase price of the Leased Premises (provided that Landlord also simultaneously disclose that Tenant used the proceeds of such purchase price to the reduction of indebtedness), Tenant’s use of the proceeds related to the transaction with Landlord, Tenant’s use of the Leased Premises and the nature and location of the Property, and to the use by Landlord of Tenant’s name, tradename or logo.  This provision shall survive beyond the termination of this Lease.

(p)From and after the time that the Remediation Fund, Immediate Repair Fund and the Security Deposit are held in the form of the Required Letters of Credit, such Required Letters of Credit shall each be renewed at least thirty (30) days prior to any expiration thereof.  If Tenant provides notice of its intent not to renew any Required Letter of Credit or fails to renew any Required Letter of Credit within thirty (30) days of its termination date, time being of the essence, Landlord shall have the right at any time after the thirtieth (30th) day before such expiration date to draw on the Required Letters of Credit and have the proceeds delivered to the Escrow Agent to be held in separate accounts designated by Landlord.  Such notice of intent not to renew or failure by Tenant to renew the Required Letters of Credit shall be an immediate Event of Default under this Lease.

(q)Tenant hereby agrees to deliver, execute, record, or deliver for execution and recordation such further assurances and documents (including, without limitation any deed that might need to be provided from Tenant to Landlord) that are required to resolve the “apparent deed gap” issue noted on those certain surveys dated March 29, 2007, prepared by Mathews & Henegar, Inc. impacting the 1000 Industrial Road, Marion, Virginia property and the 1500 Industrial Road, Marion, Virginia property.

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35.Security Deposit.

(a)Concurrently with the execution of this Lease, Tenant shall deliver to the Escrow Agent a security deposit (the “Security Deposit”) in the amount of Five Hundred Eighty Thousand Dollars ($580,000).  The Security Deposit shall initially be in the form of cash (a “Cash Security Deposit”).  Subject to the terms of the Escrow Agreement, the Security Deposit shall be held by Escrow Agent until such time as Escrow Agent has received (i) Visador’s audited consolidated financial statements for the year ended December 31, 2006 which shall include a letter substantially in the form of Exhibit F, and (ii) a certificate from each of Senior Lender and Subordinated Lender substantially in the form of Exhibit G.  Satisfaction of the foregoing conditions (i) and (ii) (the “Release Conditions”) shall be the only conditions to Escrow Agent’s release of the Security Deposit to Tenant.  As soon as reasonably practicable after the Release Conditions have been satisfied, Escrow Agent shall release the Security Deposit to Tenant, notwithstanding the existence of an Event of Default, any change in Visador’s business or prospects, any dispute between Landlord and Tenant or any other fact or circumstance.  Until the Release Conditions are satisfied, Escrow Agent shall hold the Security Deposit as security for the payment by Tenant of the Rent and all other charges or payments to be paid hereunder and the performance of the covenants and obligations contained herein.  The Security Deposit shall be held in a separate escrow account maintained by Escrow Agent and not be commingled with other funds of Landlord or other Persons.  Any interest earned on the Security Deposit shall be paid to Tenant in connection with the release of the Security Deposit following satisfaction of the Release Conditions.

(b)Notwithstanding the foregoing, no later than April 9, 2007, Tenant agrees and covenants to provide to Escrow Agent a Letter of Credit to replace the Cash Security Deposit.  Such Letter of Credit (i) shall be in the amount of the Security Deposit or if any amounts have been disbursed from the Security Deposit in accordance with the Escrow Agreement, then in such lesser amount, (ii) shall be held by Escrow Agent pursuant to the Escrow Agreement until Tenant has complied with the Release Conditions related to disbursement of the Security Deposit, (iii) shall be drawn on by Escrow Agreement at the instruction of Landlord to fund amounts due to Landlord pursuant to paragraph 35(c) in accordance with the Escrow Agreement and (iv) shall contain instructions to the financial institution issuing the Letter of Credit to disburse the funds held pursuant to the Letter of Credit in accordance with the terms and conditions in this Paragraph 35.

(c)If at any time an Event of Default shall have occurred and be continuing, Landlord shall be entitled, at its sole discretion, to instruct Escrow Agent to draw on the Letter of Credit or to withdraw the Cash Security Deposit from the above-described account in accordance with the Escrow Agreement, and Landlord shall have the right to apply the proceeds in payment of (i) any Rent or other charges for the payment of which Tenant shall be in default, (ii) Basic Rent (including any Basic Rent that has been accelerated in accordance with the terms of this Lease) on the date such Basic Rent is due and payable, (iii) any expense incurred by Landlord in curing any default of Tenant, and/or (iv) any other sums due to Landlord in connection with any default or the curing thereof, including, without limitation, any damages incurred by Landlord by reason of such default, including any rights of Landlord under Paragraph 23 or to do any combination of the foregoing, all in such order or priority as Landlord shall so determine in its sole discretion and Tenant acknowledges and agrees that such proceeds shall not constitute assets

51

or funds of Tenant or its estate, or be deemed to be held in trust for Tenant, but shall be, for all purposes, the property of Landlord (or Lender, to the extent assigned).  Tenant further acknowledges and agrees that (1) Landlord’s application of the proceeds of the Letter of Credit or Cash Security Deposit towards the payment of Basic Rent, Additional Rent or the reduction of any damages due Landlord in accordance with Paragraph 23 of this Lease, constitutes a fair and reasonable use of such proceeds, and (2) the application of such proceeds by Landlord towards the payment of Basic Rent, Additional Rent or any other sums due under this Lease shall not constitute a cure by Tenant of the applicable default; provided that an Event of Default shall not exist if Tenant restores the Security Deposit to its full amount within five (5) Business Days and in accordance with the requirements of this Paragraph 35, so that the original amount of the Security Deposit shall be again on deposit with Landlord.

(d)Upon satisfaction of the Release Conditions, Escrow Agent shall return the Letter of Credit or any funds remaining available under the Cash Security Deposit, as the case may be, to Tenant in accordance with the terms of the Escrow Agreement.

(e)Landlord shall have the right to assign the Security Deposit to Lender or any other holder of a Mortgage during the term of the applicable Loan, and such Lender or other holder of a Mortgage shall have all of the rights of Landlord under this Paragraph 35, including, without limitation, the right to replace Landlord as the beneficiary under the Letter of Credit.  Tenant covenants and agrees to execute such agreements, consents and acknowledgments as may be requested by Landlord from time to time to assign the Security Deposit as hereinabove provided.

(signatures follow)

52

IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly executed under seal as of the day and year first above written.

LANDLORD:
AGNL COFFMAN, L.LC,
a Delaware limited liability company
By:	AGNL Manager, Inc.,
	its manager
	By:	/s/ Peter Kaplan
	Name:	Peter Kaplan
	Title:	Managing Director

STATE OF New York

COUNTY OF New York

On March 27, 2007 before me, Wynne Fong, a Notary Public in and for said state, personally appeared Peter Kaplan, the Managing Director of AGNL Manager, Inc., the manager of AGNL Coffman, L.L.C., a Delaware limited liability company, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument.

Witness my hand and official seal.

/s/ Wynne Fong

Notary Public in and for said State

WYNNE FONG

Notary Public, State of New York

NO. 01FO6019224

Qualified In New York County

Commission Expires Feb. 1, 20    

(signatures continue)

53

ATTEST:		TENANT:
		COFFMAN STAIRS, LLC,
		a Delaware limited liability company
By:	/s/ Kay M. Yonts	By:	/s/ Thomas C. Waggoner
Title:	Director of Finance and IT	Title:	Interim CFO
[Corporate Seal]
ATTEST:		TENANT:
		VISADOR HOLDING CORPORATION, a Delaware corporation
By:	/s/ Kay M. Yonts	By:	/s/ Thomas C. Waggoner
Title:	Director of Finance and IT	Title:	Interim CFO
[Corporate Seal]

(signatures continue)

54

STATE OF Virginia

COUNTY OF Smyth

On March 28, 2007 before me, Angela Blevins, a Notary Public in and for said state, personally appeared Thomas C. Waggoner, CFO of Coffman Stairs, LLC, a Delaware limited liability company, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument.

Witness my hand and official seal.

/s/ Angela D. Blevins

Notary Public in and for said State

(signatures continue)

55

STATE OF Virginia

COUNTY OF Smyth

On March 28, 2007 before me, Angela Blevins, a Notary Public in and for said state, personally appeared Thomas C. Waggoner, CFO of Coffman Stairs, LLC, a Delaware limited liability company, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument.

Witness my hand and official seal.

/s/ Angela D. Blevins

Notary Public in and for said State

56

EXHIBIT D

BASIC RENT PAYMENTS

1.Basic Rent.

(a)Initial Term.  Subject to the adjustments provided for in Paragraphs 2, 3 and 4 below, Basic Rent payable in respect of the Term shall be $580,000 per annum, payable quarterly in advance on July 1st, October 1st, January 1st and April 1st, commencing on July 1, 2007 (each a “Basic Rent Payment Date”), in equal installments of $145,000 each.  Pro rata Basic Rent for the period from the date hereof through the 1st day of July, 2007 shall be paid on the date hereof, and pro rata Basic Rent for the period from the final Basic Rent Payment Date of the initial Term through the last day of initial Term shall be paid with the final installment of Basic Rent for the initial Term.

(b)Renewal Term.  Annual Basic Rent for the first year of each Renewal Term shall be an amount determined in accordance with Paragraphs 2, 3, and 4 below payable in equal quarterly installments.

2.Adjustments to Basic Rent.  The Basic Rent shall be subject to adjustment, in the manner hereinafter set forth, for increases in the index known as United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index, All Urban Consumers, United States City Average, All Items, (1982-84=100) (“CPI”) or the successor index that most closely approximates the CPI.  If the CPI shall be discontinued with no successor or comparable successor index, Landlord and Tenant shall attempt to agree upon a substitute index or formula, but if they are unable to so agree, then the matter shall be determined by arbitration in accordance with the rules of the American Arbitration Association then prevailing in New York City.  Any decision or award resulting from such arbitration shall be final and binding upon Landlord and Tenant and judgment thereon may be entered in any court of competent jurisdiction.  In no event will the annual Basic Rent as adjusted by the CPI adjustment be less than the Basic Rent in effect for the one (1) year period immediately preceding such adjustment.

3.Effective Dates of CPI Adjustments.  Basic Rent shall be adjusted annually to reflect changes in the CPI commencing on the first (1st) anniversary of the Basic Rent Payment Date on which the first full quarterly installment of Basic Rent shall be due and payable (the “First Full Basic Rent Payment Date”).  As of the first (1st) anniversary of the First Full Basic Rent Payment Date and thereafter on each subsequent anniversary of the First Full Basic Rent Payment Date, Basic Rent shall be adjusted to reflect increases in the CPI during the most recent one (1) year period immediately preceding each of the foregoing dates (each such date being hereinafter referred to as the “Basic Rent Adjustment Date”).

4.Method of Adjustment for CPI Adjustment.

(a)As of each Basic Rent Adjustment Date when the average CPI determined in clause (i) below exceeds the Beginning CPI (as defined in this Paragraph 4(a)), the Basic Rent in effect immediately prior to the applicable Basic Rent Adjustment Date shall be multiplied by a fraction, the numerator of which shall be the difference between (i) the average CPI for the three (3) most recent calendar months (the “Prior Months”) ending prior to such Basic Rent

1

Adjustment Date for which the CPI has been published on or before the forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the Beginning CPI, and the denominator of which shall be the Beginning CPI.  An amount equal to the product of such multiplication shall be added to the Basic Rent in effect immediately prior to such Basic Rent Adjustment Date.  As used herein, “Beginning CPI” means the average CPI for the three (3) calendar months corresponding to the Prior Months, but occurring one (1) year earlier.  If the average CPI determined in clause (i) is the same or less than the Beginning CPI, the Basic Rent will remain the same for the ensuing one (1) year period.

(b)Effective as of a given Basic Rent Adjustment Date, Basic Rent payable under this Lease until the next succeeding Basic Rent Adjustment Date shall be the Basic Rent in effect after the adjustment provided for as of such Basic Rent Adjustment Date.

(c)Notice of the new annual Basic Rent shall be delivered to Tenant on or before the tenth (10th) day preceding each Basic Rent Adjustment Date, but any failure to do so by Landlord shall not be or be deemed to be a waiver by Landlord of Landlord’s rights to collect such sums.  Tenant shall pay to Landlord, within ten (10) days after a notice of the new annual Basic Rent is delivered to Tenant, all amounts due from Tenant, but unpaid, because the stated amount as set forth above was not delivered to Tenant at least ten (10) days preceding the Basic Rent Adjustment Date in question.

2

EX-10.2

Exhibit 10.2

FIRST AMENDMENT TO LEASE AGREEMENT

THIS FIRST AMENDMENT TO LEASE AGREEMENT (“First Amendment”) dated as of June 8, 2009, is made by AGNL COFFMAN, L.L.C., a Delaware limited liability company (“Landlord”) and WM COFFMAN LLC, a Delaware limited liability company (together with its successors and permitted assigns (“WM Coffman”).

RECITALS

WHEREAS, pursuant to the Lease Agreement dated as of March 30, 2007 (as amended by this First Amendment and as further amended from time to time, the “Lease”) by and among Landlord and Coffman Stairs, LLC, a Delaware limited liability company (“Coffman Stairs”), and Visador Holding Company, a Delaware corporation (“Visador”), Landlord leased to Coffman Stairs and Visador, jointly and severally, as tenant, certain real property located at 1000 Industrial Road, Marion, VA 24354; 1500 Industrial Road, Marion, VA 24354; and 211 Johnston Road, Marion, VA 24354 (collectively, the “Leased Premises”) in accordance with the terms thereof;

WHEREAS, Coffman Stairs wishes to sell to WM Coffman all of its assets, including all of its right, title and interest as Tenant under the Lease (the “Asset Sale”);

WHEREAS, in connection with the Asset Sale, Visador wishes to relinquish all of its rights under and pursuant to the Lease and to be released from its obligations as Tenant under the Lease (the “Release”);

WHEREAS, pursuant to Paragraph 21(j) of the Lease, the Asset Sale and the Release require the consent of Landlord; and

WHEREAS, the execution and delivery of this First Amendment is a condition to the granting of such consent by Landlord;

NOW, THEREFORE, in consideration of the premises and for the purpose of inducing Landlord to grant its consent to the Asset Sale and the Release, Landlord and WM Coffman hereby agree as follows:

AGREEMENTS

1.Incorporation of Recitals.  The recitals are incorporated herein by reference.

2.Capitalized Terms.  Capitalized terms not defined herein shall have the meaning ascribed to them in the Lease.

3.Amendments to Lease.  The parties agree that, effective as of the date hereof, the Lease shall be amended as follows:

(a)Definitions.  For all purposes under the Lease:

(i)“First Amendment” means the First Amendment of Lease dated as of June 8, 2009 between Landlord and Tenant.

(ii)“Fitch” means Fitch Ratings Ltd.

(iii)The definition of “Guarantor” is deleted in its entirety.

(iv)“Guarantors” means Coffman Stairs, Visador, Crown, and all future Subsidiaries of Tenant and any Replacement Guarantor or any successor or permitted assignee thereof.

(v)The definition of “Guaranty” is revised to read as follows:

“Guaranty” means the Guaranty Agreement dated as June 8, 2009 from Coffman Stairs, Visador, Crown, and all future Subsidiaries of Tenant and any Replacement Guaranty.

(vi)The definition of “Letter of Credit” is revised to read as follows:

“letter of credit” or “Letter of Credit” means an irrevocable, transferable, standby letter of credit that provides for automatic renewal, unless notice of refusal to renew is given by the issuing bank at least sixty (60) days prior to the expiration thereof, in form and substance reasonably satisfactory to Landlord, issued by a bank or financial institution reasonably acceptable to Landlord (a) that is chartered under the laws of the United States, any state thereof or the District of Columbia, and which is insured by the Federal Deposit Insurance Corporation, (b) whose long-term unsecured and unsubordinated debt obligations are rated in not lower than the second highest category by at least two of Fitch, Moody’s and S&P or their respective successors (the “Rating Agencies”) (which shall mean AA from Fitch, Aa from Moody’s or AA from S&P) and (c) that  has a short-term deposit rating in the highest category from at least two Rating Agencies (which shall mean F1 from Fitch, P-1 from Moody’s and A-2 from S&P).

(vii)“Sponsor” is defined in Paragraph 6(b).

(ix)“Tenant” means WM Coffman, together with its successors and permitted assigns.

(b)Paragraph 6 shall become Paragraph 6(a) and new Paragraph 6(b) shall be added as follows:

(b)If, at any time, Tenant is owned directly or indirectly by Countrywide Hardware, Inc., Visador Holding Corporation, or one or more private equity funds or other sponsors which receive a management fee or other comparable distribution (“Sponsor”), Tenant shall cause each such Sponsor to enter into an agreement subordinating Sponsor’s right to collect its management fee to Landlord’s right to collect Basic Rent under this Lease.

(c)Paragraph 10(j) shall be deleted in its entirety.

2

(d)Paragraph 10(k) shall be deleted in its entirety.

(e)Paragraph 12(a) shall be deleted in its entirety and replaced with the following:

(a)On or before July 24, 2009, Tenant agrees to complete those repairs to the Leased Premises set forth on Schedule 12(a) hereto (the “Immediate Repairs”) in a good and workmanlike manner and shall provide Landlord with all documentation which Landlord may request evidencing the completion of same (including, without limitation, paid invoices for the work described on Schedule 12(a)).

(f)Schedule 12(a) shall be replaced with revised Schedule 12(a) attached hereto.

(g)In Paragraph 21(j), the words “Coffman, Visador,” shall be replaced with the word “Tenant”.

(h)In Paragraph 21(k), the words “Coffman, Visador,” shall be replaced with the word “Tenant”.

(i)New Paragraph 21(m) shall be added as follows:

Any future Letter of Credit delivered to Landlord pursuant to this Paragraph 21 shall be held by Landlord as an increased Security Deposit in accordance with Paragraph 35.  If, during any period in which a Letter of Credit is held by Landlord pursuant to this Paragraph 21, the Basic Rent increases hereunder, Tenant shall, within thirty (30) days of such increase, increase the amount of such Letter of Credit in proportion to such increase in Basic Rent.

(j)The provisions of Paragraph 21(h) shall not apply to the Sublease from Tenant to Visador.

(k)In Paragraphs 22(a)(x), (xi), (xii), (xiii), (xiv) and (xv), the words after “Coffman, Visador, Crown” shall be deleted.

(l)Paragraph 35(a) shall be revised to read as follows:

(a)Concurrently with the execution of the First Amendment, Tenant shall deliver to Landlord a security deposit (the “Security Deposit”) in the amount of One Hundred Thousand Dollars ($100,000).  The Security Deposit shall be in the form of a Letter of Credit and shall be held by Landlord as security for the payment by Tenant of the Rent and all other charges or payments to be paid hereunder and the performance of the covenants and obligations contained herein.  If the Bank which issues the Letter of Credit sends notice that it will not be renewed, or Tenant fails to renew or replace the Letter of Credit prior to the date that is thirty (30) days prior to the expiration thereof, Landlord shall have the right at any time after the thirtieth (30th) day before such expiration date to draw on the Letter of Credit and to deposit the proceeds of the Letter of Credit as a cash Security Deposit (“Cash Security Deposit”) for the benefit of Landlord or to declare an Event of Default.  Such Cash Security Deposit may not be

3

commingled with other funds of Landlord or other Persons and no interest thereon shall be due and payable to Tenant but any interest earned on the Security Deposit shall be added to such deposit and held as additional security hereunder.  Landlord acknowledges that a Letter of Credit in the amount of One Hundred Thousand Dollars ($100,000) from Tenant delivered to Landlord on the date of this First Amendment shall satisfy the foregoing requirement for so long as such Letter of Credit is maintained by Tenant.  In the event that any Guarantor delivers a Letter of Credit pursuant to Section 20 of the Guaranty, such Letter of Credit shall be added to the Security Deposit and shall be subject to the provisions of this Paragraph 35, except that failure to renew or replace such Letter of Credit shall not be an Event of Default.

(m)Paragraph 35(b) shall be deleted in its entirety.

(n)Paragraph 35(c) shall become Paragraph 35(b) and shall be revised to read as follows:

(b)If at any time an Event of Default shall have occurred and be continuing, Landlord shall be entitled, at its sole discretion, to draw on the Letter of Credit or to withdraw the Cash Security Deposit, as the case may be, from the above-described account and to apply the proceeds in payment of (i) any Rent or other charges for the payment of which Tenant shall be in default, (ii) prepaid Basic Rent, (iii) any expense incurred by Landlord in curing any default of Tenant, and/or (iv) any other sums due to Landlord in connection with any default or the curing thereof, including, without limitation, any damages incurred by Landlord by reason of such default, including any rights of Landlord under Paragraph 23 or to do any combination of the foregoing, all in such order or priority as Landlord shall so determine in its sole discretion and Tenant acknowledges and agrees that such proceeds shall not constitute assets or funds of Tenant or its estate, or be deemed to be held in trust for Tenant, but shall be, for all purposes, the property of Landlord (or Lender, to the extent assigned).  Tenant further acknowledges and agrees that (1) Landlord’s application of the proceeds of the Letter of Credit or Cash Security Deposit towards the payment of Rent or the reduction of any damages due Landlord in accordance with Paragraph 23 of this Lease, constitutes a fair and reasonable use of such proceeds, and (2) the application of such proceeds by Landlord towards the payment of Rent or any other sums due under this Lease shall not constitute a cure by Tenant of the applicable default; provided that an Event of Default shall not exist if Tenant restores the Security Deposit to its full amount within five (5) days and in accordance with the requirements of this Paragraph 35, so that the original amount of the Security Deposit shall be again on deposit with Landlord.

(o)Paragraph 35(d) shall become Paragraph 35(c) and shall be revised to read as follows.

(c)At the expiration of the Term and so long as no Event of Default exists the Letter of Credit or the Cash Security Deposit, as the case may be, shall be returned to the party having posted same.

(p)Paragraph 35(e) shall become Paragraph 35(d).

(q)Article 24 of the Lease is hereby amended as follows:

4

Any notice or demand which, under the terms of the Lease or under any statute must or may be given or made by the parties herein, shall be in writing, and shall be given or made by mailing the same, by certified mail, return receipt requested, or having same delivered by a national messenger service such as FedEx provided a receipt for such delivery is obtained addressed as follows:

If to Landlord:

AGNL Coffman, L.L.C.

c/o Angelo, Gordon & Co., L.P.

245 Park Avenue, 26th Floor

New York, NY  10167-0094

Phone No.:  (212) 883-4157

Fax No.:  (212) 883-4141

Attn:  Gordon J. Whiting

with a copy to:

AG Net Lease Acquisition Corp.

c/o Angelo, Gordon & Co., L.P.

245 Park Avenue, 26th Floor

New York, NY  10167-0094

Phone No.:  (212) 692-2296

Fax No.:  (212) 867-6448

Attn:  Joseph R. Wekselblatt,

Chief Financial Officer

with a copy to:

DLA Piper LLP (US)

500 Eighth Street, NW

Washington, D.C.  20004

Phone No.:  (202) 799-4108

Fax No.:  (202) 799-5108

Attn:  Michele E. Williams, Esquire

If  to Tenant:

P&F Industries, Inc.

445 Broadhollow Road, Suite 100

Melville, NY  11747

5

with a copy to:

William E. Smith

Visador Holding Corp.

1000 Industrial Road

Marion, VA  24354

with a copy to:

Steven J. Kuperschmid, Esq.

Certilman Balin Adler & Hyman, LLP

90 Merrick Ave.

East Meadow, NY  11554

Either party, however, may designate in writing such new or other address to which such notice or demand shall thereafter be so given, made or mailed.  Any notice given hereunder shall be deemed delivered when received by the party to whom same is addressed or when the party sending the same receives notification from the post office or carrier that same cannot be delivered or is unclaimed or refused.

Any notice to be given hereunder by either of the parties hereto may be given by the attorney for said party with the same force and effect as if such notice had been given by the party.

It is understood and agreed that wherever in this Lease a time period is stated for the performance of some act by Tenant or the sending of some notice by Tenant, that said time periods are of the essence and Tenant shall not be excused for any delay in connection therewith.

18.No Other Amendments.  Except as expressly set forth herein, the Lease shall remain unmodified and in full force and effect.

(Signature pages follow)

6

IN WITNESS WHEREOF, Landlord and Tenant have caused this First Amendment to be duly executed under seal the day and year first written above.

LANDLORD
AGNL COFFMAN, L.L.C.,
a Delaware limited liability company
By:	AGNL Manager, Inc.,
	a Delaware corporation, its manager
	By:	/s/ Gordon J. Whiting
	Name:	Gordon J. Whiting
	Title:	Vice President and Managing Director

STATE / COMMONWEALTH OF New York

COUNTY / CITY OF New York

On                     , 2009 before me, Michelle Vosko, a Notary Public in and for said state, personally appeared Gordon J. Whiting, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument.

Witness my hand and official seal.

/s/ Michelle Vosko

Notary Public in and for said State

TENANT
WM COFFMAN LLC,
a Delaware limited liability company
By:	/s/ Joseph A. Molino, Jr.
	Name:	Joseph A. Molino, Jr.
	Title:	Vice President

STATE / COMMONWEALTH OF New York

COUNTY / CITY OF Suffolk

On June 8, 2009 before me, Rosemary A. Guerra, a Notary Public in and for said state, personally appeared Joseph A. Molino, Jr., personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument.

Witness my hand and official seal.

/s/ Rosemary A. Guerra

Notary Public in and for said State

EX-10.3

Exhibit 10.3

REVOLVING CREDIT, TERM LOAN

AND

SECURITY AGREEMENT

PNC BANK, NATIONAL ASSOCIATION

(AS LENDER AND AS AGENT)

WITH

WM COFFMAN LLC

(BORROWER)

JUNE 8, 2009

TABLE OF CONTENT

ARTICLE I DEFINITIONS		1
1.1.	Accounting Terms	1
1.2.	General Terms	1
1.3.	Uniform Commercial Code Terms	26
1.4.	Certain Matters of Construction	27
ARTICLE II ADVANCES, PAYMENTS		28
2.1.	Revolving Advances	28
2.2.	Procedure for Revolving Advances Borrowing	29
2.3.	Disbursement of Advance Proceeds	31
2.4.	Term Loan	31
2.5.	Repayment of Advances	32
2.6.	Repayment of Excess Advances	32
2.7.	Statement of Account	33
2.8.	Letters of Credit	33
2.9.	Issuance of Letters of Credit	33
2.10.	Requirements For Issuance of Letters of Credit	34
2.11.	Disbursements, Reimbursement	34
2.12.	Repayment of Participation Advances	36
2.13.	Documentation	36
2.14.	Determination to Honor Drawing Request	36
2.15.	Nature of Participation and Reimbursement Obligations	36
2.16.	Indemnity	38
2.17.	Liability for Acts and Omissions	38
2.18.	Additional Payments	40
2.19.	Manner of Borrowing and Payment	40
2.20.	Mandatory Prepayments	42
2.21.	Use of Proceeds	42
2.22.	Defaulting Lender	42
ARTICLE III INTEREST AND FEES		43
3.1.	Interest	43
3.2.	Letter of Credit Fees	44
3.3.	Closing Fee and Facility Fee	45
3.4.	Collateral Fees	45
3.5.	Computation of Interest and Fees	45
3.6.	Maximum Charges	46
3.7.	Increased Costs	46
3.8.	Basis For Determining Interest Rate Inadequate or Unfair	47
3.9.	Capital Adequacy	48
3.10.	Gross Up for Taxes	48
3.11.	Withholding Tax Exemption	49
3.12.	Treatment of Certain Refunds	49

i

ARTICLE IV COLLATERAL: GENERAL TERMS		50
4.1.	Security Interest in the Collateral	50
4.2.	Perfection of Security Interest	50
4.3.	Disposition of Collateral	51
4.4.	Preservation of Collateral	51
4.5.	Ownership of Collateral	52
4.6.	Defense of Agent’s and Lenders’ Interests	52
4.7.	Books and Records	53
4.8.	Financial Disclosure	53
4.9.	Compliance with Laws	53
4.10.	Inspection of Premises; Appraisals	54
4.11.	Insurance	54
4.12.	Failure to Pay Insurance	55
4.13.	Payment of Taxes	55
4.14.	Payment of Leasehold Obligations	55
4.15.	Receivables	56
4.16.	Inventory	58
4.17.	Maintenance of Equipment	58
4.18.	Exculpation of Liability	59
4.19.	Environmental Matters	59
4.20.	Financing Statements	61
ARTICLE V REPRESENTATIONS AND WARRANTIES		61
5.1.	Authority	61
5.2.	Formation and Qualification	62
5.3.	Survival of Representations and Warranties	62
5.4.	Tax Returns	63
5.5.	Financial Statements	63
5.6.	Entity Name and Locations	64
5.7.	O.S.H.A. and Environmental Compliance	64
5.8.	Solvency; No Litigation, Violation, Indebtedness or Default	65
5.9.	Patents, Trademarks, Copyrights and Licenses	66
5.10.	Licenses and Permits	66
5.11.	Default of Indebtedness	67
5.12.	No Default	67
5.13.	No Burdensome Restrictions	67
5.14.	No Labor Disputes	67
5.15.	Margin Regulations	67
5.16.	Investment Company Act	67
5.17.	Disclosure	68
5.18.	Delivery of Acquisition Agreement and Subordinated Loan Documentation	68
5.19.	Swaps	68
5.20.	Conflicting Agreements	68
5.21.	Application of Certain Laws and Regulations	68
5.22.	Business and Property of Borrower	69
5.24.	Anti-Terrorism Laws	69
5.25.	Trading with the Enemy	70

ii

5.26.	Federal Securities Laws	70
5.27.	Commercial Tort Claims	70
5.28.	Partnership and Limited Liability Company Interests	70
5.29.	Material Contracts	70
ARTICLE VI AFFIRMATIVE COVENANTS		70
6.1.	Payment of Fees	70
6.2.	Conduct of Business and Maintenance of Existence and Assets	71
6.3.	Violations	71
6.4.	Government Receivables	71
6.5.	Financial Covenants	71
6.6.	Execution of Supplemental Instruments	72
6.7.	Payment of Indebtedness	72
6.8.	Standards of Financial Statements	72
6.9.	Federal Securities Laws	72
6.10.	Exercise of Rights	72
6.11.	Real Property	73
6.12.	Opening Balance Sheet	73
ARTICLE VII NEGATIVE COVENANTS		73
7.1	Merger, Consolidation, Acquisition and Sale of Assets	73
7.2.	Creation of Liens	73
7.3.	Guarantees	74
7.4	Investments	74
7.5.	Loans	74
7.6.	Capital Expenditures	74
7.8.	Indebtedness	75
7.10.	Transactions with Affiliates	76
7.11.	Leases	77
7.12.	Subsidiaries	77
7.13.	Fiscal Year and Accounting Changes	77
7.14.	Pledge of Credit	77
7.15.	Amendment of Organizational Documents	77
7.16.	Compliance with ERISA	77
7.17.	Prepayment of Indebtedness	78
7.18.	Anti-Terrorism Laws	78
7.19.	Trading with the Enemy Act	79
7.20.	Subordinated Notes	79
7.21.	Other Agreements	79
7.22	Additional Negative Pledges	79
7.23.	Additional Bank Accounts	79
7.24.	Remuneration	79
ARTICLE VIII CONDITIONS PRECEDENT		80
8.1.	Conditions to Initial Advances	80
8.2.	Conditions to Each Advance	85

iii

ARTICLE IX INFORMATION AS TO BORROWER		86
9.1.	Disclosure of Material Matters	86
9.2	Schedules	86
9.3.	Environmental Reports	87
9.4.	Litigation	87
9.5.	Material Occurrences	87
9.6.	Government Receivables	87
9.7.	Annual Financial Statements	88
9.8	Quarterly Financial Statements	88
9.9.	Monthly Financial Statements	88
9.10.	Other Reports	88
9.11.	Additional Information	89
9.12.	Projected Operating Budget	89
9.13.	Variances From Operating Budget	89
9.14.	Notice of Suits, Adverse Events	89
9.15.	ERISA Notices and Requests	89
9.16.	Additional Documents	90
ARTICLE X EVENTS OF DEFAULT		90
10.1.	Nonpayment	90
10.2.	Breach of Representation	91
10.3.	Financial Information	91
10.4.	Judicial Actions	91
10.5.	Noncompliance	91
10.6.	Judgments	91
10.7.	Bankruptcy	92
10.8.	Inability to Pay	92
10.9.	Affiliate Bankruptcy	92
10.10.	Material Adverse Effect	92
10.11.	Lien Priority	92
10.12.	Subordinated Loan Default	92
10.13.	Cross Default	93
10.14.	Change of Ownership	93
10.15.	Invalidity	93
10.16.	Licenses	93
10.17.	Seizures	93
10.18.	Operations	94
10.19.	Pension Plans	94
ARTICLE XI LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT		94
11.1.	Rights and Remedies	94
11.2.	Agent’s Discretion	96
11.3.	Setoff	96
11.4.	Rights and Remedies not Exclusive	96
11.5.	Allocation of Payments After Event of Default	96

iv

ARTICLE XII WAIVERS AND JUDICIAL PROCEEDINGS		97
12.1.	Waiver of Notice	97
12.2.	Delay	98
12.3.	Jury Waiver	98
ARTICLE XIII EFFECTIVE DATE AND TERMINATION		98
13.1.	Term	98
13.2.	Termination	99
ARTICLE XIV REGARDING AGENT		99
14.1.	Appointment	99
14.2.	Nature of Duties	100
14.3.	Lack of Reliance on Agent and Resignation	100
14.4.	Certain Rights of Agent	101
14.5.	Reliance	101
14.6.	Notice of Default	101
14.7.	Indemnification	102
14.8.	Agent in its Individual Capacity	102
14.9.	Delivery of Documents	102
14.10.	Borrower’s Undertaking to Agent	102
14.11.	No Reliance on Agent’s Customer Identification Program	103
14.12.	Other Agreements	103
ARTICLE XV MISCELLANEOUS		103
15.1.	Governing Law	103
15.2.	Entire Understanding	104
15.3.	Successors and Assigns; Participations; New Lenders	106
15.4.	Application of Payments	108
15.5.	Indemnity	109
15.6	Notice	109
15.7.	Survival	111
15.8.	Severability	111
15.9.	Expenses	111
15.10.	Injunctive Relief	112
15.11.	Damages	112
15.12.	Captions	112
15.13.	Counterparts; Facsimile Signatures	112
15.14.	Construction	112
15.15.	Confidentiality; Sharing Information	113
15.16.	Publicity	113
15.17.	Certifications From Banks and Participants; USA PATRIOT Act	113
15.18.	Draws Under the NY Commercial Bank Letters of Credit	114

v

List of Exhibits and Schedules

Exhibits
Exhibit 1.2	Borrowing Base Certificate
Exhibit 1.2(a)	Compliance Certificate
Exhibit 2.1(a)	Revolving Credit Note
Exhibit 2.4	Term Note
Exhibit 5.5(b)	Financial Projections
Exhibit 7.8(h)(i)	Form of Third Party Subordinated Note
Exhibit 7.8(h)(ii)	Form of Third Party Subordination Agreement
Exhibit 8.1(i)	Financial Condition Certificate
Exhibit 15.3	Commitment Transfer Supplement
Schedules
Schedule 1.2(a)	Original Owners
Schedule 1.2 (b)	Permitted Encumbrances
Schedule 1.2(c)	Accounts Payable Payments
Schedule 4.5	Equipment and Inventory Locations; Place of Business; Chief Executive Office; Locations of Real Property
Schedule 4.15(h)	Deposit and Investment Accounts
Schedule 5.1	Consents
Schedule 5.2(a)	States of Formation, Qualification and Good Standing
Schedule 5.2(b)	Subsidiaries; Ownership
Schedule 5.4	Federal Tax Identification Number
Schedule 5.6	Other Names; Mergers, Acquisitions, Etc.
Schedule 5.7	Environmental
Schedule 5.8(b)	Litigation
Schedule 5.8(d)	Plans
Schedule 5.9	Intellectual Property; Source Code Escrow Agreements; Challenges to Use
Schedule 5.10	Failure to Comply with Laws or Obtain Licenses and Permits
Schedule 5.14	Labor Disputes
Schedule 5.29	Material Contracts
Schedule 7.4	Investments
Schedule 7.8	Indebtedness

vi

REVOLVING CREDIT, TERM LOAN

AND

SECURITY AGREEMENT

Revolving Credit, the Term Loan and Security Agreement dated as of June 8, 2009 among WM COFFMAN LLC, a limited liability company formed under the laws of the State of Delaware (“Borrower”), the financial institutions which are now or which hereafter become a party hereto (collectively, the “Lenders” and individually a “Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity, the “Agent”).

IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrower, Lenders and Agent hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1.         Accounting Terms.

All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with GAAP, applied on a consistent basis, as in effect from time to time, except as otherwise specifically prescribed herein.  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement or any Other Document, and Borrower or the Required Lenders shall so request, Agent, Lenders and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to Agent and the Lenders financial statements and other documents required under this Agreement or any Other Document or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

1.2.         General Terms.

For purposes of this Agreement the following terms shall have the following meanings:

“Accountants” shall have the meaning set forth in Section 9.7 hereof.

“Acquisition Agreement” shall mean the Asset Purchase Agreement including all exhibits and schedules thereto dated as of June 8, 2009 between Seller and Borrower as buyer.

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“Advance Rates” shall mean, collectively, the Receivables Advance Rate and the Inventory Advance Rate.

“Advances” shall mean and include the Revolving Advances, Letters of Credit, as well as the Term Loans.

“Affiliate” of any Person shall mean (a) any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, or (b) any Person who is a director, managing member, general partner or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above.  For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 5% or more of the Equity Interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for any such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by ownership of Equity Interests, contract or otherwise.  Seller and its Affiliates shall not be deemed Affiliates hereunder.

“Agent” shall have the meaning set forth in the preamble to this Agreement and shall include its successors and assigns.

“Agreement” shall mean this Revolving Credit, the Term Loan and Security Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the highest of (i) the Base Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on such day plus 1/2 of 1%, (iii) the Daily LIBOR plus 1%, and (iv) three hundred fifty basis points (3.50%).

“Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Applicable Laws may from time to time be amended, renewed, extended, or replaced).

“Applicable Law” shall mean all laws, rules and regulations applicable to the Person, conduct, transaction, covenant, Other Document or contract in question, including all applicable common law and equitable principles; all provisions of all applicable state, federal and foreign constitutions, statutes, rules, regulations and orders of any Governmental Body, and all orders, judgments and decrees of all courts and arbitrators.

“Applicable Margin” shall mean for (i) Revolving Advances that are Eurodollar Rate Loans, 3.50%, (ii) Revolving Advances that are Domestic Rate Loans, 2.50%, (iii) Term Loans that are Eurodollar Rate Loans, 4.50%, and (iv) Term Loans that are Domestic Rate Loans, 3.50%.

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“Appraisal” shall mean an appraisal performed by an appraiser selected by or acceptable to Agent, in form and substance reasonably satisfactory to Agent.

“Authority” shall have the meaning set forth in Section 4.19(d).

“Base Rate” shall mean the base commercial lending rate of PNC as publicly announced to be in effect from time to time, such rate to be adjusted automatically, without notice, on the effective date of any change in such rate.  This rate of interest is determined from time to time by PNC as a means of pricing some loans to its customers and is neither tied to any external rate of interest or index nor does it necessarily reflect the lowest rate of interest actually charged by PNC to any particular class or category of customers of PNC.

“Blocked Accounts” shall have the meaning set forth in Section 4.15(h).

“Blocked Account Bank” shall have the meaning set forth in Section 4.15(h).

“Blocked Person” shall have the meaning set forth in Section 5.24(b) hereof.

“Borrower” shall have the meaning set forth in the preamble to this Agreement and shall extend to all permitted successors and assigns of such Person.

“Borrower’s Account” shall have the meaning set forth in Section 2.7.

“Borrowing Base Certificate” shall mean a certificate in substantially the form of Exhibit 1.2 duly executed by the President, Chief Executive Officer, Chief Financial Officer or Controller of the Borrower and delivered to Agent, appropriately completed, by which such officer shall certify to Agent the Formula Amount and calculation thereof as of the date of such certificate.

“Business Day” shall mean any day other than Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in East Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans, such day must also be a day on which dealings are carried on in the London interbank market.

“Capital Expenditures” shall mean expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one year, including the total principal portion of Capitalized Lease Obligations, which, in accordance with GAAP, would be classified as capital expenditures.

“Capital Stock” shall mean (i) in the case of a corporation, capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (iii) in the case of a partnership, partnership interests (whether general or limited), (iv) in the case of a limited liability company, membership interests and (v) any other equity interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

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“Capitalized Lease Obligation” shall mean any Indebtedness of Borrower represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

“Carousel Guaranty” shall mean the Carousel Guaranty dated as of the Closing Date in the maximum amount of $250,000.

“Cash Management Products” shall mean any one or more of the following types of services or facilities extended to Borrower by Agent, any Lender or any Affiliate of Agent or a Lender in reliance on Agent’s or such Lender’s agreement to indemnify such Affiliate:  (i) Automated Clearing House (ACH) transactions and other similar money transfer services; (ii) cash management, including controlled disbursement and lockbox services; (iii) establishing and maintaining deposit accounts; and (iv) credit cards or stored value cards.

“Cash Taxes” shall mean, for any period, the federal, state and local taxes of a Person based on income and business activity payable in actual cash during such period.

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.

“Change of Control” shall mean (a) the occurrence of any event (whether in one or more transactions) which results in a transfer of control of Borrower to a Person who is not an Original Owner or (b) any merger or consolidation of or with Borrower or sale of all or substantially all of the property or assets of Borrower.  For purposes of this definition, “control of Borrower” shall mean the power, direct or indirect (x) to vote 50% or more of the Equity Interests having ordinary voting power for the election of directors (or the individuals performing similar functions) of Borrower or (y) to direct or cause the direction of the management and policies of Borrower by contract or otherwise.

“Change of Ownership” shall mean (a) 50% or more of the Equity Interests of Borrower  is no longer owned or controlled by (including for the purposes of the calculation of percentage ownership, any Equity Interests into which any Equity Interests of Borrower held by any of the Original Owners are convertible or for which any such Equity Interests of Borrower or of any other Person may be exchanged and any Equity Interests issuable to such Original Owners upon exercise of any warrants, options or similar rights which may at the time of calculation be held by such Original Owners) a Person who is an Original Owner or (b) any merger, consolidation or sale of substantially all of the property or assets of Borrower.

“Charges” shall mean all taxes, charges, fees, imposts, levies or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other

4

authority, domestic or foreign (including the Pension Benefit Guaranty Corporation or any environmental agency or superfund), upon the Collateral, Borrower or any of its Affiliates.

“Closing Date” shall mean June 8, 2009 or such other date as may be agreed to by the parties hereto.

“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

“Collateral” shall mean and include:

(a)           all Receivables;

(b)           all Equipment;

(c)           all General Intangibles;

(d)           all Inventory;

(e)           all Investment Property;

(f)            all of Borrower’s right, title and interest in and to, whether now owned or hereafter acquired and wherever located, (i) its respective goods and other property including, but not limited to, all merchandise returned or rejected by Customers, relating to or securing any of the Receivables; (ii) all of Borrower’s rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all additional amounts due to Borrower from any Customer relating to the Receivables; (iv) other property, including warranty claims, relating to any goods securing the Obligations; (v) all of Borrower’s contract rights, rights of payment which have been earned under a contract right, instruments (including promissory notes), documents, chattel paper (including electronic chattel paper), warehouse receipts, deposit accounts, letters of credit and money; (vi) each commercial tort claim in existence as of the date hereof and in which a security interest is hereafter granted to Agent by Borrower pursuant to the provision of Section 4.1 or otherwise; (viii) all letter of credit rights (whether or not the respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and (x) any other goods, personal property or real property now owned or hereafter acquired in which Borrower has expressly granted a security interest or may in the future grant a security interest to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between Agent and Borrower;

(g)           all of Borrower’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by Borrower or in which it has an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e) or (f) of this Paragraph; and

5

(h)           all of Borrower’s cash and cash equivalents; and

(i)            all proceeds and p*roducts of (a), (b), (c), (d), (e), (f), (g) and (h), in whatever form, including, but not limited to:  cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds.

Any security interest granted in the Collateral and the Term “Collateral” shall not include any rights under any leases, contract or agreement (including, without limitation, any license in intellectual property) to the extent that the granting of a security interest therein is specifically prohibited in writing or would constitute an event of default or could grant a party a termination right under any agreement governing such right unless such prohibition is not enforceable or is otherwise illegal; provided, however, Agent shall be provided copies of any such leases, contracts or agreements.

“Commitment Percentage” shall mean for any Lender party to this Agreement on the Closing Date, the percentage set forth below such Lender’s name on the signature page hereof as same may be adjusted upon any assignment by a Lender pursuant to Section 15.3 (c) or (d) hereof, and for any Lender that becomes a party to this Agreement pursuant to a Commitment Transfer Supplement or Modified Commitment Transfer Supplement, the percentage set forth on Schedule 1 to such Commitment Transfer Supplement or Modified Commitment Transfer Supplement, as applicable.

“Commitment Transfer Supplement” shall mean a document in the form of Exhibit 15.3 hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Advances under this Agreement.

“Compliance Certificate” shall mean a compliance certificate substantially in the form attached hereto as Exhibit 1.2 (a) to be signed by the President, Chief Executive Officer, Chief Financial Officer or Controller of Borrower, which shall state that, based on an examination sufficient to permit such officer to make an informed statement, (i) no Default or Event of Default exists, or if such is not the case, specifying such Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps being taken by Borrower with respect to such default and, such certificate shall have appended thereto calculations which set forth Borrower’s compliance with the requirements or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.11; and (ii) that to the best of such officer’s knowledge, Borrower is in compliance in all material respects with all federal, state and local Environmental Laws, or if such is not the case, specifying all areas of non-compliance and the proposed action Borrower will implement in order to achieve full compliance.

“Consents” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies and other third parties,

6

domestic or foreign, necessary to carry on Borrower’s business or necessary (including to avoid a conflict or breach under any agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement, the Other Documents, the Subordinated Loan Documentation, or the Acquisition Agreement, including any Consents required under all applicable federal, state or other Applicable Law.

“Consigned Inventory” shall mean Inventory of Borrower that is in the possession of another Person on a consignment, sale or return, or other basis that does not constitute a final sale and acceptance of such Inventory.

“Consulting Agreements” shall mean the Consulting Agreements dated as of the Closing Date between (i) Borrower and Visador Holding Corporation and (ii) Borrower and Nationwide Industries, Inc.

“Contract Rate” has the meaning set forth in Section 3.1.

“Controlled Group” shall mean, at any time, the Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with Borrower, are treated as a single employer under Section 414 of the Code.

“Customer” shall mean and include the account debtor with respect to any Receivable and/or the purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into any contract or other arrangement with Borrower, pursuant to which Borrower is to deliver any personal property or perform any services.

“Customs” shall have the meaning set forth in Section 2.11(b) hereof.

“Daily LIBOR” shall mean, for any day, the rate per annum determined by Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the percentage prescribed by the Federal Reserve for determining the maximum reserve requirements with respect to any Eurocurrency funding by banks on such day.

“Default” shall mean an event, circumstance or condition which, with the giving of notice or passage of time or both, would constitute an Event of Default.

“Default Rate” shall have the meaning set forth in Section 3.1 hereof.

“Defaulting Lender” shall have the meaning set forth in Section 2.22(a) hereof.

“Depository Accounts” shall have the meaning set forth in Section 4.15(h) hereof.

“Designated Lender” shall have the meaning set forth in Section 15.2(b) hereof.

“Dollar” and the sign “$” shall mean lawful money of the United States of America.

7

“Domestic Rate Loan” shall mean any Advance that bears interest based upon the Alternate Base Rate.

“Domestic Subsidiaries” shall mean, with respect to any Person, any Subsidiary of such Person which is incorporated or organized under the laws of any state of the United States or the District of Columbia.

“Drawing Date” shall have the meaning set forth in Section 2.11(b) hereof.

“Early Termination Date” shall have the meaning set forth in Section 13.1 hereof.

“EBITDA” shall mean for any period, for Borrower, the sum of (i) Net Income for such period, plus (ii) all Interest Expense for such period, plus (iii) all charges against income of Borrower for such period for federal, state, local and foreign taxes (and any franchise, single business or unitary taxes imposed in lieu of income taxes) expensed, plus (iv) depreciation expenses for such period, plus (v) amortization expenses for such period, plus (vi) any extraordinary, unusual or non-recurring non-cash expenses, losses or charges (including non-cash losses on sales of assets outside of the Ordinary Course of Business) during such period, plus (vii) accrued but unpaid Management Fees during the applicable period, minus (viii) any extraordinary, unusual or non-recurring non-cash income, gains or charges (including gains on the sale of assets outside of the Ordinary Course of Business) during such period, in each case, only to the extent included in the statement of net income for such period.

“Eligible Inventory” shall mean and include Inventory excluding work in process valued at the lower of cost or market value, determined on a first-in-first-out basis, which is not, in Agent’s opinion, obsolete, slow moving or unmerchantable and which Agent, in its sole discretion, shall not deem ineligible Inventory, based on such considerations as Agent may from time to time deem appropriate including whether the Inventory is subject to a perfected, first priority security interest in favor of Agent and no other Lien (other than a Permitted Encumbrance).  In addition, Inventory shall not be Eligible Inventory if it (i) does not conform to all standards imposed by any Governmental Body which has regulatory authority over such goods or the use or sale thereof; (ii) is in transit; (iii) is located outside the continental United States or at a location that is not otherwise in compliance with this Agreement; (iv) constitutes Consigned Inventory; (v) is the subject of an Intellectual Property Claim; (vi) is subject to a License Agreement or other agreement that limits, conditions or restricts Borrower’s or Agent’s right to sell or otherwise dispose of such Inventory, unless Agent is a party to a Licensor/Agent Agreement with the Licensor under such License Agreement; or (vii) is situated at a location not owned by Borrower unless the owner or occupier of such location has executed in favor of Agent a Lien Waiver Agreement, in any case above, Agent may deem such Inventory as Eligible Inventory.

“Eligible Receivables” shall mean and include with respect to Borrower, each Receivable of Borrower arising in the Ordinary Course of Business and which Agent, in its sole credit judgment, shall deem to be an Eligible Receivable, based on such considerations as Agent may from time to time deem appropriate.  A Receivable shall not be deemed eligible unless such Receivable is subject to Agent’s first priority perfected security interest and no other Lien (other

8

than Permitted Encumbrances), and is evidenced by an invoice or other documentary evidence satisfactory to Agent.  In addition, no Receivable shall be an Eligible Receivable if:

(a)           it arises out of a sale made by Borrower to an Affiliate of Borrower or to a Person controlled by an Affiliate of Borrower;

(b)           it is due or unpaid more than sixty (60) days after the original due date not to exceed one hundred twenty (120) days after the original invoice date;

(c)           fifty percent (50%) or more of the Receivables from such Customer are not deemed Eligible Receivables hereunder;

(d)           any covenant, representation or warranty contained in this Agreement with respect to such Receivable has been breached;

(e)           the Customer shall (i) apply for, suffer, or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;

(f)            the sale is to a Customer outside the continental United States of America or Canada, unless the sale is on letter of credit, guaranty, acceptance terms or covered by credit insurance, in each case acceptable to Agent in its sole credit judgment exercised in good faith;

(g)           the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper (excluding the Stock Building Supply accounts receivable except as noted in (k) below);

(h)           Agent believes, in its Permitted Discretion, that collection of such Receivable is insecure or that such Receivable may not be paid by reason of the Customer’s financial inability to pay;

(i)            the Customer is the United States of America, any state or any department, agency or instrumentality of any of them, unless Borrower assigns its right to payment of such Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes or ordinances;

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(j)            the goods giving rise to such Receivable have not been invoiced in the Ordinary Course of Business and title to the goods has not passed to the Customer;

(k)           the Receivables of the Customer exceed a credit limit determined by Agent, in its Permitted Discretion, to the extent such Receivable exceeds such limit (for purposes hereof, Stock Building Supply accounts receivable cannot exceed 20% of all Eligible Receivables (excluding the stock ETA accounts receivable) and BMC West Corporation accounts receivable cannot exceed 20% of all Eligible Receivables);

(l)            the Receivable is subject to any offset, deduction, defense, dispute, or counterclaim (but only as to that portion of the Receivable subject to such offset, deduction, defense, dispute or counterclaim), the Customer is also a creditor or supplier of Borrower (but only as to that portion of the Receivable that does not exceed the amount owed by Borrower to such creditor or supplier) or the Receivable is contingent in any respect or for any reason;

(m)          Borrower has made any agreement with any Customer for any deduction therefrom, except for discounts or allowances made in the Ordinary Course of Business for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto;

(n)           any return, rejection or repossession of the merchandise has occurred or the rendition of services has been disputed;

(o)           such Receivable is not payable to Borrower;

(p)           such Receivable is not payable in Dollars; or

(q)           such Receivable is not otherwise satisfactory to Agent as determined by Agent in its Permitted Discretion.

“Environmental Complaint” shall have the meaning set forth in Section 4.19(d) hereof.

“Environmental Laws” shall mean all federal, state and local laws, statutes, ordinances and codes relating to the protection of the environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.

“Equipment” shall mean and include all of Borrower’s goods (other than Inventory) whether now owned or hereafter acquired and wherever located including all equipment, machinery, apparatus, fittings, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefor or accessions thereto.

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“Equity Interests” of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and the rules and regulations promulgated thereunder.

“Eurodollar Rate” shall mean for any Eurodollar Rate Loan for the then current Interest Period relating thereto the greater of (A) 250 basis points (2.50%) or (B) the interest rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by Agent by dividing (i) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by Agent which has been approved by the British Bankers’ Association as an authorized information vendor for the purpose of displaying rates at which US dollar deposits are offered by leading banks in the London interbank deposit market (an “Alternative Source”), at approximately 11:00 a.m., London time two (2) Business Days prior to the first day of such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable replacement rate determined by the Agent at such time (which determination shall be conclusive absent manifest error)) for an amount comparable to such Eurodollar Rate Loan and having a borrowing date and a maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus the Reserve Percentage.

The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that is outstanding on the effective date of any change in the Reserve Percentage as of such effective date.  The Agent shall give prompt notice to the Borrower of the Eurodollar Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.

“Eurodollar Rate Loan” shall mean an Advance at any time that bears interest based on the Eurodollar Rate.

“Event of Default” shall have the meaning set forth in Article X hereof.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Executive Order No. 13224” shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

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“Extended Terms Agreement Advance Rate” shall mean up to 50%, subject to the provisions of Section 2.1(b) hereof, of Receivables generated from a Stock Building Supply Agreement or “ETA” that would be deemed Eligible Receivables except for their payment terms.

“ETA” shall mean the Stock Building Extended Terms Agreement.

“Federal Funds Effective Rate” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced.

“Federal Fund Open Rate” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by the Agent (an “Alternate Source”) (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate determined by Agent at such time (which determination shall be conclusive absent manifest error); provided however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the immediately preceding Business Day.  If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies will change automatically without notice to the Borrower, effective on the date of any such change.

“Fixed Charge Coverage Ratio” shall mean and include, with respect to the applicable fiscal period, the ratio of (a) EBITDA minus Capital Expenditures of Borrower made during such fiscal period which are not funded by borrowed money or equity investments for such Capital Expenditures (other than proceeds of Revolving Advances) minus Cash Taxes paid by Borrower during such fiscal period minus any cash dividends or distributions made by Borrower during such fiscal period to (b) the sum of all Funded Debt Payments made during such period.

“Foreign Subsidiary” of any Person, shall mean any Subsidiary of such Person that is not organized or incorporated in the United States or any State or territory thereof.

“Formula Amount” shall have the meaning set forth in Section 2.1(a).

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“Funded Debt Payments” shall mean and include for any period all cash actually expended by Borrower to make (a) interest payments on any Advances hereunder, plus (b) scheduled principal payments on the Term Loans, plus, (c) to the extent added back in the calculation of EBITDA, payments for all fees, commissions and charges set forth herein and with respect to any Advances, plus (d) payments on Capitalized Lease Obligations, plus (e) payments with respect to the Subordinated Loans and any other Indebtedness for borrowed money.

“GAAP” shall mean generally accepted accounting principles in the United States of America in effect from time to time.

“General Intangibles” shall mean and include all of Borrower’s general intangibles, whether now owned or hereafter acquired, including all payment intangibles, all choses in action, causes of action, corporate or other business records, inventions, designs, patents, patent applications, equipment formulations, manufacturing procedures, quality control procedures, trademarks, trademark applications, service marks, trade secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes, records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to Borrower to secure payment of any of the Receivables by a Customer (other than to the extent covered by Receivables) all rights of indemnification and all other intangible property of every kind and nature (other than Receivables).

“Governmental Acts” shall have the meaning set forth in Section 2.16.

“Governmental Body” shall mean any nation or government, any state or other political subdivision thereof or any entity, authority, agency, division or department exercising the legislative, judicial, regulatory or administrative functions of or pertaining to a government.

“Guarantor” shall mean any Person who may hereafter guarantee payment or performance of the whole or any part of the Obligations and “Guarantors” means collectively all such Persons.

“Guarantor Security Agreement” shall mean any Security Agreement executed by any Guarantor in favor of Agent securing the Guaranty of such Guarantor, in form and substance satisfactory to Agent.

“Guaranty” shall mean any guaranty of the obligations of Borrower executed by a Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders, in form and substance satisfactory to Agent.

“Hazardous Discharge” shall have the meaning set forth in Section 4.19(d) hereof.

“Hazardous Substance” shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials

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Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA or any other applicable Environmental Law and in the regulations adopted pursuant thereto.

“Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA, RCRA or applicable state law, and any other applicable Federal and state laws now in force or hereafter enacted relating to hazardous waste disposal.

“Hedge Liabilities” shall have the meaning provided in the definition of “Lender-Provided Interest Rate Hedge”.

“Increased Tax Burden” shall mean the additional federal, state or local taxes assumed to be payable by a member of Borrower as a result of Borrower’s status as a limited liability company as evidenced and substantiated by the tax returns filed by Borrower as a limited liability company, if so required, with such taxes being calculated for all members at the highest marginal rate applicable to any member.

“Indebtedness” of a Person at a particular date shall mean all obligations of such Person which in accordance with GAAP would be classified upon a balance sheet as liabilities (except capital stock and surplus earned or otherwise and except for trade accounts payable in the Ordinary Course of Business which are not more than sixty (60) days past the due date) and in any event, without limitation by reason of enumeration, shall include all indebtedness, debt and other similar monetary obligations of such Person whether direct or guaranteed, and all premiums, if any, due at the required prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by such Person, whether or not such indebtedness actually shall have been created, assumed or incurred by such Person.  Any indebtedness of such Person resulting from the acquisition by such Person of any assets subject to any Lien shall be deemed, for the purposes hereof, to be the equivalent of the creation, assumption and incurring of the indebtedness secured thereby, whether or not actually so created, assumed or incurred.

“Intellectual Property” shall mean property constituting under any Applicable Law a patent, patent application, copyright, trademark, service mark, trade name, mask work, trade secret or license or other right to use any of the foregoing.

“Intellectual Property Claim” shall mean the assertion by any Person of a claim (whether asserted in writing, by action, suit or proceeding or otherwise) that Borrower’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other property or asset is violative of any ownership of or right to use any Intellectual Property of such Person.

“Interest Expense” shall mean for any period interest expense, net of cash interest income, of Borrower for such period, as determined in accordance with GAAP.

“Interest Period” shall mean the period provided for any Eurodollar Rate Loan pursuant to Section 2.2(b).

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“Interest Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus the Applicable Margin with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus the Applicable Margin with respect to Eurodollar Rate Loans.

“Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by the Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, the Borrower, any Guarantor and/or their respective Subsidiaries of increasing floating rates of interest applicable to Indebtedness.

“Inventory” shall mean and include all of Borrower’s now owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, cut stock, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in Borrower’s business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them.

“Inventory Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(ii) hereof.

“Investment Property” shall mean and include all of Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts.

“Issuer” shall mean PNC in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

Lender” and “Lenders” shall have the meaning ascribed to such term in the preamble to this Agreement and shall include each Person which becomes a transferee, successor or assign of any Lender.

“Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is provided by any Person (or affiliate of such Person) that was a  Lender at the time it entered into such Interest Rate Hedge, whether or not such Person has ceased to be a Lender under this Agreement and with respect to which Agent confirms meets the following requirements: such Interest Rate Hedge (i) is documented in a standard International Swap Dealer Association Agreement, (ii) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner, and (iii) is entered into for hedging (rather than speculative) purposes.  The liabilities of Borrower to the provider of any Lender-Provided Interest Rate Hedge (the “Hedge Liabilities”) shall be “Obligations” hereunder and otherwise treated as Obligations for purposes of each of the Other Documents.  The Liens securing the Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the Other Documents.

“Letter of Credit Borrowing” shall have the meaning set forth in Section 2.11(d).

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“Letter of Credit Documents” shall mean, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (i) the rights and obligations of the parties concerned or at risk or (ii) any collateral security for such obligations.

“Letter of Credit Fees” shall have the meaning set forth in Section 3.2.

“Letter of Credit Sublimit” shall mean $200,000.

“Letters of Credit” shall mean any letter of credit used hereunder.  A Letter of Credit may be a standby and/or a trade letter of credit.

“License Agreement” shall mean any agreement between Borrower and a Licensor pursuant to which Borrower is authorized to use any Intellectual Property in connection with the manufacturing, marketing, sale or other distribution of any Inventory of Borrower or otherwise in connection with Borrower’s business operations.

“Licensor” shall mean any Person from whom Borrower obtains the right to use (whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with Borrower’s manufacture, marketing, sale or other distribution of any Inventory or otherwise in connection with Borrower’s business operations.

“Licensor/Agent Agreement” shall mean an agreement between Agent and a Licensor, in form and content reasonably satisfactory to Agent, by which Agent is given the unqualified right, vis-à-vis such Licensor, to enforce Agent’s Liens with respect to and to dispose of Borrower’s Inventory with the benefit of any Intellectual Property applicable thereto, irrespective of Borrower’s default under any License Agreement with such Licensor.

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction.

“Lien Waiver Agreement” shall mean an agreement which is reasonably satisfactory to Agent and executed in favor of Agent by a Person who owns or occupies premises at which any Collateral may be located from time to time and by which such Person shall waive any Lien that such Person may ever have with respect to any of the Collateral and shall authorize Agent from time to time to enter upon the premises to inspect or remove the Collateral from such premises or to use such premises to store or dispose of such Collateral.

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“Management Fees” shall mean all fees (including agency fees), charges and other amounts (including, without limitation, salaries, bonuses, pensions and profit sharing) due or to become due to Countrywide Hardware, Inc. and Visador Holding Corporation, but excluding for all purposes amounts paid under the Consulting Agreements.

“Material Adverse Effect” shall mean a material adverse effect on (a) the condition (financial or otherwise), results of operations, assets, business or properties of Borrower, (b) Borrower’s ability to duly and punctually pay or perform the Obligations in accordance with the terms thereof, (c) the value of the Collateral, or Agent’s Liens on the Collateral or the priority of any such Lien or (d) the practical realization of the benefits of Agent’s and each Lender’s rights and remedies under this Agreement and the Other Documents.

“Material Contract” shall mean any contract, agreement, permit or license, written or oral, of a Borrower the failure to comply with which could reasonably be expected to have a Material Adverse Effect.

“Maximum Face Amount” shall mean, with respect to any outstanding Letter of Credit, the face amount of such Letter of Credit including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.

“Maximum Loan Amount” shall mean $12,000,000 less repayments of the Term Loan.

“Maximum Revolving Advance Amount” shall mean $10,866,000.

“Maximum Undrawn Amount” shall mean with respect to any outstanding Letter of Credit, the amount of such Letter of Credit that is or may become available to be drawn, including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.

“Modified Commitment Transfer Supplement” shall have the meaning set forth in Section 15.3(d).

“Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of ERISA.

“Multiple Employer Plan” shall mean a Plan which has two or more contributing sponsors (including the Borrower or any member of the Controlled Group) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

“NY Commercial Bank A Letter of Credit” shall mean the letter of credit issued by New York Commercial Bank or another bank issuer of a substitute letter of credit reasonably satisfactory to Agent and its counsel for the benefit of Agent in the amount of $145,000 with an expiry date of June 30, 2010 and otherwise acceptable to Agent.

“NY Commercial Bank B Letter of Credit” shall mean the letter of credit issued by New York Commercial Bank or another bank issuer of a substitute letter of credit reasonably

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satisfactory to Agent and its counsel for the benefit of Agent in the amount of $145,000 with an expiry date of September 30, 2010 and otherwise acceptable to Agent.

“NY Commercial Bank Letters of Credit” shall mean the New York Commercial Bank A Letter of Credit and the New York Commercial Bank B Letter of Credit.

“Net Income” shall mean for any period, the net income (or loss) of Borrower, determined in accordance with GAAP; provided, that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of Borrower or is merged into or consolidated with the Borrower, (b) the net income (or deficit) of any Person (other than a Subsidiary of Borrower) in which the Borrower has an ownership interest, except to the extent that any such income is actually received by Borrower in the form of dividends or similar distributions and (c) the undistributed earnings of Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is at the time prohibited by the terms of any agreement to which such Person is a party or by which it or any of its property is bound, any of such Person’s organizational documents or other final determination of legal proceedings binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Net Worth” shall mean, at a particular date, (a) the aggregate amount of all assets of Borrower as may be properly classified as such in accordance with GAAP consistently applied, less (b) the aggregate amount of all liabilities of Borrower as may be properly classified as such in accordance with GAAP consistently applied.

“Note” shall mean the Term Note and the Revolving Credit Note.

“Obligations” shall mean and include the Advances, any other loans and advances or extensions of credit made or to be made by any Lender to Borrower, or to others for Borrower’s account, in each case pursuant to the terms and provisions of this Agreement, together with interest thereon (including interest which accrues after the commencement of any bankruptcy or similar case, whether or not such post-petition interest is allowed in such case) and, including, without limitation, any reimbursement obligation or indemnity of Borrower on account of Letters of Credit and all other obligations in respect of Letters of Credit and all indebtedness, fees, liabilities and obligations that may at any time be owing by Borrower to any Lender (or an Affiliate of a Lender) or Agent, in each case pursuant to this Agreement or any Other Document, whether now in existence or incurred by Borrower from time to time hereafter, whether unsecured or secured by pledge of, Lien upon or security interest in any of Borrower’s assets or property or the assets or property of any other Person, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of Agent or any Lender’s non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether such indebtedness is absolute or contingent, joint or several, matured or unmatured, direct or indirect and whether Borrower is liable to such Lender (or an Affiliate of a Lender) for such indebtedness as principal, surety, endorser, guarantor or otherwise.  Obligations shall also include any other indebtedness owing to any Lender (or an Affiliate of a Lender) by Borrower under this Agreement and the Other Documents, all liabilities and obligations arising

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under Lender-Provided Interest Rate Hedges owing from Borrower to any Lender, or any Affiliate of a Lender (or any Person that was a Lender or an affiliate of a Lender at the time such Lender-Provided Interest Rate Hedge was entered into), permitted hereunder, and all liabilities and obligations now or hereafter arising from or in connection with any Cash Management Products.

“Ordinary Course of Business” shall mean the ordinary course of Borrower’s business as such segments of same were previously conducted by former owners of same.

“Original Owners” shall mean owners on the Closing Date of Equity Interests in Borrower as set forth on Schedule 1.2(a).

“Other Documents” shall mean the Note, any Guaranty, any Guarantor Security Agreement, any Lender-Provided Interest Rate Hedge, any Letter of Credit Document and any and all other agreements, instruments and documents, including guaranties, pledges, powers of attorney, consents, interest or currency swap agreements or other similar agreements and all other writings heretofore, now or hereafter executed by Borrower or any Guarantor and/or delivered to Agent or any Lender in respect of the transactions contemplated by this Agreement.

“Out-of-Formula Loans” shall have the meaning set forth in Section 15.2(b).

“P&F” shall mean P&F Industries, Inc., a Delaware corporation.

“Parent” of any Person shall mean a corporation or other entity owning, directly or indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting power to elect a majority of the directors of the Person, or other Persons performing similar functions for any such Person.

“Participant” shall mean each Person who shall be granted the right by any Lender to participate in any of the Advances and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.

“Participation Advance” shall have the meaning set forth in Section 2.11(d).

“Participation Commitment” shall mean each Lender’s obligation to buy a participation of the Letters of Credit issued hereunder.

“Payment Office” shall mean initially Two Tower Center Boulevard, East Brunswick, New Jersey 08816; thereafter, such other office of Agent, if any, which it may designate by notice to Borrower and to each Lender to be the Payment Office.

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.

“Pension Benefit Plan” shall mean at any time any employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title

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IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained by any member of the Controlled Group for employees of any member of the Controlled Group; or (ii) has at any time within the preceding five years been maintained by any entity which was at such time a member of the Controlled Group for employees of any entity which was at such time a member of the Controlled Group.

“Permitted Discretion” shall mean a determination made in good faith and in the exercise of reasonable (from the perspective of a secured asset based lender) business judgment.

“Permitted Encumbrances” shall mean:

(a)           Liens in favor of Agent for the benefit of Agent and Lenders;

(b)           Liens for Charges not delinquent or being Properly Contested, but only if the Lien shall have no effect on the priority of the Liens in favor of Agent or the value of the assets in which Agent has such a Lien and a stay of enforcement of any such Lien shall be in effect;

(c)           Liens disclosed in the financial statements referred to in Section 5.5;

(d)           deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance;

(e)           deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary Course of Business;

(f)            Liens arising by virtue of the rendition, entry or issuance against Borrower, or any property of Borrower, of any judgment, writ, order, or decree for so long as each such Lien (i) is in existence for less than twenty (20) consecutive days after it first arises or is being Properly Contested and (ii) is at all times junior in priority to any Liens in favor of Agent;

(g)           mechanics’, workers’, materialmen’s, carriers’, repairmen’s or other like Liens arising in the Ordinary Course of Business with respect to obligations which are not due or which are being Properly Contested;

(h)           Liens securing Permitted Purchase Money Indebtedness, provided that (i) such Liens shall be created substantially simultaneously with the acquisition of the asset acquired with such Indebtedness, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not increased and (iv) the principal amount of Indebtedness secured by any such Lien shall at no time exceed 100% of the original purchase price of such property;

(i)            easements, rights-of-way, restrictions and other similar encumbrances or Liens incurred in the Ordinary Course of Business which, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the property subject

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thereto or materially interfere with the ordinary conduct of the business on the property subject to such encumbrances; and

(j)            Liens disclosed on Schedule 1.2(b); and

(k)           Liens securing permitted Capitalized Lease Obligations provided that (i) such Liens shall be created substantially simultaneously with the acquisition of the asset acquired with such Indebtedness, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not increased and (iv) the principal amount of Indebtedness secured by any such Lien shall at no time exceed 100% of the original purchase price of such property.

“Permitted Purchase Money Indebtedness” shall mean Purchase Money Indebtedness of Borrower which is incurred after the date of this Agreement and which is secured by no Lien or only by a Purchase Money Lien; provided that (a) the aggregate principal amount of such Purchase Money Indebtedness outstanding at any time shall not exceed $750,000 (including any such Indebtedness on Schedule 7.8), (b) such Indebtedness when incurred shall not exceed the purchase price of the asset(s) financed, and (c) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing.

“Person” shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, limited liability partnership, institution, public benefit corporation, joint venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).

“Plan” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Benefit Plan), maintained for employees of Borrower or any member of the Controlled Group or any such Plan to which Borrower or any member of the Controlled Group is required to contribute on behalf of any of its employees.

“PNC” shall have the meaning set forth in the preamble to this Agreement and shall extend to all of its successors and assigns.

“Pro Forma Balance Sheet” shall have the meaning set forth in Section 5.5(a) hereof.

“Pro Forma Financial Statements” shall have the meaning set forth in Section 5.5(b) hereof.

“Projections” shall have the meaning set forth in Section 5.5(b) hereof.

“Properly Contested” shall mean, in the case of any Indebtedness, Lien or Charge, as applicable, of any Person (including any charges) that is not paid as and when due or payable by reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such Indebtedness, Lien or Charge, as applicable, is being properly contested

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in good faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Person has established appropriate reserves as shall be required in conformity with GAAP; (iii) the non-payment of such Indebtedness will not have a Material Adverse Effect and will not result in the forfeiture of any assets of such Person; (iv) no Lien is imposed upon any of such Person’s assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of the Agent (except only with respect to property taxes that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; (v) if such Indebtedness, Lien or Charge, as applicable, results from, or is determined by the entry, rendition or issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in connection therewith.

“Published Rate” shall mean the rate of interest published each Business Day in The Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the Eurodollar rate for a one month period as published (which may include electronic methods of “publication”) in another publication or source determined by Agent.

“Purchase Money Indebtedness” shall mean and include (i) Indebtedness (other than the Obligations) of Borrower for the payment of all or any part of the purchase price of any Equipment, (ii) any Indebtedness (other than the Obligations) of Borrower incurred at the time of or within thirty (30) days prior to or one hundred twenty (120) days after the acquisition of any Equipment for the purpose of financing all or any part of the purchase price thereof (whether by means of a loan agreement, capitalized lease or otherwise), and (iii) any renewals, extensions or refinancings (but not any increases in the principal amounts) thereof outstanding at the time.

“Purchase Money Lien” shall mean a Lien upon Equipment which secures Purchase Money Indebtedness, but only if such Lien shall at all times be confined solely to the fixed assets acquired through the incurrence of the Purchase Money Indebtedness secured by such Lien and shall not encumber any other property of Borrower, and such Lien constitutes a purchase money security interest under the Uniform Commercial Code.

“Purchasing CLO” shall have the meaning set forth in Section 15.3(d) hereof.

“Purchasing Lender” shall have the meaning set forth in Section 15.3(c) hereof.

“RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time.

“Real Property” shall mean all real property owned and leased by Borrower and identified on Schedule 4.55 hereto.

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“Receivables” shall mean and include, as to Borrower, all of Borrower’s accounts, contract rights, instruments (including those evidencing indebtedness owed to Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, credit card receivables and all other forms of obligations owing to Borrower arising out of or in connection with the sale or lease of Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Agent hereunder.

“Receivables Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(i) hereof.

“Reimbursement Obligation” shall have the meaning set forth in Section 2.11(b) hereof.

“Release” shall have the meaning set forth in Section 5.7(c)(i) hereof.

“Register” shall have the meaning set forth in Section 15.3(e).

“Reportable Event” shall mean a reportable event described in Section 4043(b) of ERISA or the regulations promulgated thereunder.

“Required Lenders” shall mean Lenders holding more than fifty percent (50%) of the Advances and if no Advances are outstanding shall mean Lenders holding more than fifty percent (50%) of the Commitment Percentage.

“Reserve Percentage” shall mean as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).

“Revolving Advances” shall mean Advances made other than Letters of Credit and the Term Loans.

“Revolving Credit Note” shall mean the promissory notes referred to in Section 2.1(a) hereof.

“SEC” shall mean the Securities and Exchange Commission or any successor thereto.

“Section 20 Subsidiary” shall mean the Subsidiary of the bank holding company controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Seller” shall mean Coffman Stairs, LLC, a Delaware limited liability company.

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“Settlement Date” shall mean the Closing Date and thereafter Wednesday or Thursday of each week or more frequently if Agent deems appropriate unless such day is not a Business Day in which case it shall be the next succeeding Business Day.

“Subordinated Debt Payments” shall mean and include all cash actually expended to make payments of principal and interest on the Subordinated Notes.

“Subordinated Lenders” shall mean P&F Industries, Inc., a Delaware corporation, and Seller.

“Subordinated Loans” shall mean the loan evidenced by the Subordinated Notes.

“Subordinated Loan Documentation” shall mean the Subordinated Notes and any other documents between Borrower and each Subordinated Lender.

“Subordinated Notes” shall mean (i) the subordinated promissory notes issued by Borrower in favor of Pacific Stair Products, Inc. dated as of the Closing Date in the aggregate principal sum of $733,964.88, (ii) the subordinated promissory notes issued by Borrower in favor of Woodmark International, L.P. dated as of the Closing Date in the aggregate principal sum of $6,605,683.90 and (iii) the subordinated promissory note issued by Borrower in favor of Seller dated as of the Closing Date in the principal sum of $3,971,901.64.

“Subordination Agreements” shall mean the Subordination Agreements dated June 8, 2009 among Agent, Borrower and each of the Subordinated Lenders.

“Subsidiary” of any Person shall mean a corporation or other entity of whose Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person.

“Subsidiary Stock” shall mean:

(a)           one hundred percent 100% of the issued and outstanding Equity Interests of any Domestic Subsidiary of Borrower and 65% of each class of the issued and outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (“Voting Equity”) and 100% of each class of the issued and outstanding Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (“Non-Voting Equity”) of each Foreign Subsidiary (but only to the extent that the pledge of such Non-Voting Equity would not cause the Obligations to be treated as “United States property” of such Foreign Subsidiary within the meaning of Treas. Reg. Section 1.956-2), in each case together with the certificates (or other agreements or instruments), if any, representing such Equity Interests, and all options and other rights, contractual or otherwise, with respect thereto (collectively, the “Pledged Capital Stock”), including, but not limited to, the following:

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(y)           subject to the percentage restrictions described above, all shares, securities, membership interests or other equity interests representing a dividend on any of the Pledged Capital Stock, or representing a distribution or return of capital upon or in respect of the Pledged Capital Stock, or resulting from a stock split, revision, reclassification or other exchange therefor, and any subscriptions, warrants, rights or options issued to the holder of, or otherwise in respect of, the Pledged Capital Stock; and

(z)            without affecting the obligations of Borrower under any provision prohibiting such action hereunder, in the event of any consolidation or merger involving the issuer of any Pledged Capital Stock and in which such issuer is not the surviving entity, all shares of each class of the Equity Interests of the successor entity formed by or resulting from such consolidation or merger;

(b)           Subject to the percentage restrictions described above, any and all other Capital Stock owned by Borrower in any Domestic Subsidiary or any Foreign Subsidiary; and

(c)           All proceeds and products of the foregoing, however and whenever acquired and in whatever form.

“Term” shall have the meaning set forth in Section 13.1 hereof.

“Term Loan” shall mean the Advances made pursuant to Section 2.4 hereof.

“Term Note” shall mean the promissory note described in Section 2.4 hereof.

“Termination Event” shall mean (i) a Reportable Event with respect to any Plan or Multiemployer Plan; (ii) the withdrawal of Borrower or any member of the Controlled Group from a Plan or Multiemployer Plan during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of Borrower or any member of the Controlled Group from a Multiemployer Plan.

“Toxic Substance” shall mean and include any material present on the Real Property which has been shown to have significant adverse effect on human health or which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law, or any other applicable Federal or state laws now in force or hereafter

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enacted relating to toxic substances.  “Toxic Substance” includes but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.

“Trading with the Enemy Act” shall mean the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto.

“Transactions” shall have the meaning set forth in Section 5.5 hereof.

“Transferee” shall have the meaning set forth in Section 15.3(d) hereof.

“Undrawn Availability” at a particular date shall mean an amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount, minus (b) the sum of (i) the outstanding amount of Advances (other than the Term Loans) plus (ii) all amounts due and owing to Borrower’s trade creditors which are outstanding more than sixty (60) days after their due date, except those set forth on Schedule 1.2(c), plus (iii) fees and expenses for which Borrower is liable but which have not been paid or charged to Borrower’s Account.

“Uniform Commercial Code” shall have the meaning set forth in Section 1.3 hereof.

“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

“Voting Stock” shall mean, with respect to any Person, Capital Stock issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency.

“Week” shall mean the time period commencing with the opening of business on a Wednesday and ending on the end of business the following Tuesday.

1.3.         Uniform Commercial Code Terms.

All terms used herein and defined in the Uniform Commercial Code as adopted in the State of North Carolina from time to time (the “Uniform Commercial Code”) shall have the meaning given therein unless otherwise defined herein.  Without limiting the foregoing, the terms “accounts”, “chattel paper”, “instruments”, “general intangibles”, “payment intangibles”, “supporting obligations”, “securities”, “investment property”, “documents”, “deposit accounts”, “software”, “letter of credit rights”, “inventory”, “equipment” and “fixtures”, as and when used in the description of Collateral shall have the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code.  To the extent the definition of any category or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision.

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1.4.         Certain Matters of Construction.

The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision.  All references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.  Any pronoun used shall be deemed to cover all genders.  Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa.  All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations.  Unless otherwise provided, all references to any instruments or agreements to which Agent is a party, including references to any of the Other Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof.  All references herein to the time of day shall mean the time in New York, New York.  Unless otherwise provided, all financial calculations shall be performed with Inventory valued on a first-in, first-out basis.  Whenever the words “including” or “include” shall be used, such words shall be understood to mean “including, without limitation” or “include, without limitation”.  A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by the Required Lenders.  Any Lien referred to in this Agreement or any of the Other Documents as having been created in favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of Agent and Lenders.  Wherever the phrase “to the best of Borrower’s knowledge” or words of similar import relating to the knowledge or the awareness of Borrower are used in this Agreement or Other Documents, such phrase shall mean and refer to (i) the actual knowledge of a senior officer of Borrower or (ii) the knowledge that a senior officer would have obtained if he had engaged in good faith and diligent performance of his/her duties, including the making of such reasonably specific inquiries as may be necessary of the employees or agents of Borrower and a good faith attempt to ascertain the existence or accuracy of the matter to which such phrase relates.  All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or otherwise within the limitations of, another covenant shall not avoid the occurrence of a default if such action is taken or condition exists.  In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of a breach of a representation or warranty hereunder.

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ARTICLE II

ADVANCES, PAYMENTS

2.1.         Revolving Advances.

(a)           Amount of Revolving Advances

Subject to the terms and conditions set forth in this Agreement including Section 2.1(b), each Lender, severally and not jointly, will make Revolving Advances to Borrower in aggregate amounts such that such Lender’s Commitment Percentage of all outstanding Revolving Advances plus such Lender’s Commitment Percentage of all outstanding Letters of Credit shall not exceed its Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit or (y) an amount equal to the sum of:

(i)            up to (A) 85%, subject to the provisions of Section 2.1(b) hereof, of Eligible Receivables, plus (B) up to the lesser of (i) the Extended Terms Agreement Advance Rate or (ii) $250,000 (collectively, the “Receivables Advance Rate”), plus

(ii)           up to the lesser of (A) 65%, subject to the provisions of Section 2.1(b) hereof, of the value of the Eligible Inventory, (B) 85% of the appraised net orderly liquidation value of Eligible Inventory (as evidenced by an Inventory appraisal satisfactory to Agent in its sole discretion exercised in good faith) or (C) $7,000,000 in the aggregate at any one time (“Inventory Advance Rate”), minus

(iii)          the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus

(iv)          a reserve of $500,000 established the day following the Closing Date to be released no earlier than fifteen (15) months from the Closing Date upon such time as Borrower requests that the reserve be released and Agent consents to such releases, minus

(v)           such reserves as Agent may reasonably deem proper and necessary in its Permitted Discretion from time to time.

The amount derived from the sum of (w) Sections 2.1(a)(y)(i) and (ii) minus (z) Sections 2.1 (a)(y)(iii), (iv) and (v) at any time and from time to time shall be referred to as the “Formula Amount”.  The Revolving Advances shall be evidenced by one or more secured promissory notes (collectively, the “Revolving Credit Note”) substantially in the form attached hereto as Exhibit 2.1(a).

(b)           Discretionary Rights.

The Advance Rates may be increased or decreased by Agent at any time and from time to time in its Permitted Discretion.  Borrower consents to any such increases or decreases and

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acknowledges that decreasing the Advance Rates or increasing or imposing reserves may limit or restrict Advances requested by Borrower.  In the absence of a Default or an Event of Default, Agent shall give Borrower five (5) days prior written notice of its intention to decrease the Advance Rates.  The rights of Agent under this subsection are subject to the provisions of Section 15.2(b).

2.2.         Procedure for Revolving Advances Borrowing.

(a)           Borrower may notify Agent prior to 11:00 a.m. (New York time) on a Business Day of Borrower’s request to incur, on that day, a Revolving Advance hereunder.  Should any amount required to be paid as interest hereunder, or as fees or other charges under this Agreement or any Other Documents with Agent or Lenders, or with respect to any other Obligation, become due, same shall be deemed a request for a Revolving Advance maintained as a Domestic Rate Loan as of the date such payment is due, in the amount required to pay in full such interest, fee, charge or Obligation under this Agreement or any other agreement with Agent or Lenders, and such request shall be irrevocable.

(b)           Notwithstanding the provisions of subsection (a) above, in the event Borrower desires to obtain a Eurodollar Rate Loan, Borrower shall give Agent written notice by no later than 11:00 a.m. on the day which is three (3) Business Days prior to the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount on the date of such Advance to be borrowed, which amount shall be in an aggregate principal amount that is not less than $500,000 and in integral multiples of $250,000, in excess thereof, and (iii) the duration of the first Interest Period therefor.  Interest Periods for Eurodollar Rate Loans shall be for one, two, three or six months; provided, if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day.  No Eurodollar Rate Loan shall be made available to Borrower during the continuance of a Default or an Event of Default.  After giving effect to each requested Eurodollar Rate Loan, including those which are converted from a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more than five (5) Eurodollar Rate Loans, in the aggregate.

(c)           Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar Rate Loan is made and shall end on such date as Borrower may elect as set forth in subsection (b)(iii) above provided that the exact length of each Interest Period shall be determined in accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the term.

Borrower shall elect the initial Interest Period applicable to a Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section 2.2(d), as the case may be.  Borrower shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than 11:00 a.m. (New York time) on the day which is three (3) Business Days prior to the last day of the then current Interest Period applicable to such Eurodollar Rate Loan.  If Agent does not receive timely notice of the Interest Period elected by Borrower, Borrower shall be

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deemed to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) herein below.

(d)           On the last Business Day of the then current Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate Loans, convert any such loan into a loan of another type in the same aggregate principal amount provided that any conversion of a Eurodollar Rate Loan shall be made only on the last Business Day of the then current Interest Period applicable to such Eurodollar Rate Loan and any conversion to a Eurodollar Rate Loan may be done if no Event of Default has occurred and is continuing.  If Borrower desires to convert a loan, Borrower shall give Agent written notice by no later than 11:00 a.m. (New York time) (i) on the day which is three (3) Business Days’ prior to the date on which such conversion is to occur with respect to a conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the day which is one (1) Business Day prior to the date on which such conversion is to occur with respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in each case, the date of such conversion, the loans to be converted and if the conversion is from a Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefor.

(e)           At its option and upon written notice given prior to 11:00 a.m. (New York time) at least three (3) Business Days’ prior to the date of such prepayment, Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part from time to time with accrued interest on the principal being prepaid to the date of such repayment.  Borrower shall specify the date of prepayment of Advances which are Eurodollar Rate Loans and the amount of such prepayment.  In the event that any prepayment of a Eurodollar Rate Loan is required or permitted on a date other than the last Business Day of the then current Interest Period with respect thereto, Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof.

(f)            Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and against any and all losses or expenses that Agent and Lenders may sustain or incur as a consequence of any prepayment, conversion of or any default by Borrower in the payment of the principal of or interest on any Eurodollar Rate Loan or failure by Borrower to complete a borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder.  A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Agent or any Lender to Borrower shall be conclusive absent manifest error.

(g)           Notwithstanding any other provision hereof, if any Applicable Law, treaty, regulation or directive, or any change therein or in the interpretation or application thereof, shall make it unlawful for any Lender (for purposes of this subsection (g), the Term “Lender” shall include any Lender and the office or branch where any Lender or any corporation or bank controlling such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrower shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon request from Agent, either pay all such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans into loans of another type.  If any such

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payment or conversion of any Eurodollar Rate Loan is made on a day that is not the last day of the Interest Period applicable to such Eurodollar Rate Loan, Borrower shall pay Agent, upon Agent’s request, such amount or amounts as may be necessary to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect of such Eurodollar Rate Loan as a result of such payment or conversion, including (but not limited to) any interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in order to make or maintain such Eurodollar Rate Loan.  A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Lenders to Borrower shall be conclusive absent manifest error.

(h)           If any Lender requests compensation under Section 2.2(g) hereof, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Advances hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.2(g) in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with such designation or assignment.

(i)            The Borrower’s obligations and indemnifications under this Section 2.2 shall survive the termination of this Agreement.

2.3.         Disbursement of Advance Proceeds.

All Advances shall be disbursed from whichever office or other place Agent may designate from time to time and, together with any and all other Obligations of Borrower to Agent or Lenders, shall be charged to Borrower’s Account on Agent’s books.  During the term, Borrower may use the Revolving Advances by borrowing, prepaying and reborrowing, all in accordance with the terms and conditions hereof.  The proceeds of each Revolving Advance requested by Borrower or deemed to have been requested by Borrower under Section 2.2(a) hereof shall, with respect to requested Revolving Advances to the extent Lenders make such Revolving Advances, be made available to Borrower on the day so requested by way of credit to Borrower’s operating account at PNC, or such other bank as Borrower may designate following notification to Agent, in immediately available federal funds or other immediately available funds or, with respect to Revolving Advances deemed to have been requested by Borrower, be disbursed to Agent to be applied to the outstanding Obligations giving rise to such deemed request in accordance with  Section 2.2(a).

2.4.         Term Loan.

Subject to the terms and conditions of this Agreement, each Lender, severally and not jointly, will make the Term Loan to Borrower in the sum equal to such Lender’s Commitment Percentage of $1,134,000.  The Term Loan shall be advanced on the Closing Date and shall be, with respect to principal, payable as follows, subject to acceleration upon the occurrence of an Event of Default under this Agreement or termination of this Agreement: principal shall be repaid in equal monthly installments of $47,250 commencing on July 1, 2009 with the outstanding principal balance due in full on July 1, 2011.  The Term Loan shall be evidenced by

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one or more secured promissory notes (collectively, the “Term Note”) in substantially the form attached hereto as Exhibit 2.4.  The Term Loan may consist of Domestic Rate Loans or Eurodollar Rate Loans, or a combination thereof, as Borrower may request.  In the event that Borrower desires to obtain or extend a Eurodollar Rate Loan or to convert a Domestic Rate Loan to a Eurodollar Rate Loan, Borrower shall comply with the notification requirements set forth in Sections 2.2(b) and (d) and the provisions of Sections 2.2(b) through (h) shall apply, mutatis mutandis.

2.5.         Repayment of Advances.

(a)           The Revolving Advances shall be due and payable in full on the last day of the Term subject to earlier prepayment as herein provided.  The Term Loan shall be due and payable as provided in Section 2.4 hereof and in the Term Note, subject to mandatory prepayments as herein provided.

(b)           Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the date received.  In consideration of Agent’s agreement to conditionally credit Borrower’s Account as of the next Business Day following the Agent’s receipt of those items of payment, Borrower agrees that, in computing the charges under this Agreement, all items of payment shall be deemed applied by Agent on account of the Obligations one (1) Business Day after (i) the Business Day Agent receives such payments via wire transfer or electronic depository check or (ii) in the case of payments received by Agent in any other form, the Business Day such payment constitutes good funds in Agent’s account.  Agent is not, however, required to credit Borrower’s Account for the amount of any item of payment which is unsatisfactory to Agent and Agent may charge Borrower’s Account for the amount of any item of payment which is returned to Agent unpaid.

(c)           All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Agent at the Payment Office not later than 1:00 p.m. (New York time) on the due date therefor in lawful money of the United States of America in federal funds or other funds immediately available to Agent.  Agent shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging Borrower’s Account or by making Advances as provided in Section 2.2 hereof.

(d)           Borrower shall pay principal, interest, and all other amounts payable hereunder, or under any related agreement, without any deduction whatsoever, including, but not limited to, any deduction for any setoff or counterclaim.

2.6.         Repayment of Excess Advances.

The aggregate balance of Advances outstanding at any time in excess of the maximum amount of Advances permitted hereunder shall be immediately due and payable without the necessity of any demand, at the Payment Office, whether or not a Default or Event of Default has occurred.

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2.7.         Statement of Account.

Agent shall maintain, in accordance with its customary procedures, a loan account (“Borrower’s Account”) in the name of Borrower in which shall be recorded the date and amount of each Advance made by Agent and the date and amount of each payment in respect thereof; provided, however, the failure by Agent to record the date and amount of any Advance shall not adversely affect Agent or any Lender.  Each month (or at any time upon the request of Borrower at Borrower’s expense), Agent shall send to Borrower a statement showing the accounting for the Advances made, payments made or credited in respect thereof, and other transactions between Agent and Borrower, during such month.  The monthly statements shall be deemed correct and binding upon Borrower in the absence of manifest error and shall constitute an account stated between Lenders and Borrower unless Agent receives a written statement of Borrower’s specific exceptions thereto within thirty (30) days after such statement is received by Borrower.  The records of Agent with respect to the loan account shall be conclusive evidence absent manifest error of the amounts of Advances and other charges thereto and of payments applicable thereto.

2.8.         Letters of Credit.

Subject to the terms and conditions hereof, Agent shall issue or cause the issuance of Letters of Credit for the account of Borrower; provided, however, that Agent will not be required to issue or cause to be issued any Letters of Credit to the extent that the issuance thereof would then cause the sum of (i) the outstanding Revolving Advances plus (ii) the Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula Amount.  The Maximum Undrawn Amount of all outstanding Letters of Credit shall not exceed in the aggregate at any time the Letter of Credit Sublimit.  All disbursements or payments related to Letters of Credit shall be deemed to be Domestic Rate Loans consisting of Revolving Advances and shall bear interest at the Interest Rate for Domestic Rate Loans.  Letters of Credit that have not been drawn upon shall not bear interest.

2.9.         Issuance of Letters of Credit.

(a)           Borrower may request Agent to issue or cause the issuance of a Letter of Credit by delivering to Agent, at the Payment Office, prior to 11:00 a.m. (New York time), at least five (5) Business Days’ prior to the proposed date of issuance, Agent’s form of Letter of Credit Application (the “Letter of Credit Application”) completed to the satisfaction of Agent; and, such other certificates, documents and other papers and information as Agent may reasonably request.  Borrower also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of Credit.

(b)           Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts, other written demands for payment, or acceptances or drafts when presented for

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honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twelve (12) months after such Letter of Credit’s date of issuance and in no event later than the last day of the term.  Each standby Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce at the time a Letter of Credit is issued (“UCP”) or the International Standby Practices (ISP98-International Chamber of Commerce Publication Number 600) (“ISP98 Rules”), as determined by Agent, and each trade Letter of Credit shall be subject to UCP.

(c)           Agent shall use its reasonable efforts to notify Lenders of the request by Borrower for a Letter of Credit hereunder.

2.10.       Requirements For Issuance of Letters of Credit.

(a)           Borrower shall authorize and direct any Issuer to name Borrower as the “Applicant” or “Account Party” of each Letter of Credit.  If Agent is not the Issuer of any Letter of Credit, Borrower shall authorize and direct the Issuer to deliver to Agent all instruments, documents, and other writings and property received by the Issuer pursuant to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the application therefor.

(b)           In connection with all Letters of Credit issued or caused to be issued by Agent under this Agreement, Borrower hereby appoints Agent, or its designee, as its attorney, with full power and authority if an Event of Default shall have occurred, (i) to sign and/or endorse Borrower’s name upon any warehouse or other receipts, letter of credit applications and acceptance, (ii) to sign Borrower’s name on bills of lading; (iii) to clear Inventory through the United States of America Customs Department (“Customs”) in the name of Borrower or Agent or Agent’s designee, and to sign and deliver to Customs officials powers of attorney in the name of Borrower for such purpose; and (iv) to complete in Borrower’s name or Agent’s, or in the name of Agent’s designee, any order, sale or transaction, obtain the necessary documents in connection therewith, and collect the proceeds thereof.  Neither Agent nor its attorneys will be liable for any acts or omissions nor for any error of judgment or mistakes of fact or law, except for Agent’s or its attorney’s willful misconduct, gross negligence or bad faith.  This power, being coupled with an interest, is irrevocable as long as any Letters of Credit remain outstanding.

2.11.       Disbursements, Reimbursement.

(a)           Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from Agent a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Commitment Percentage of the Maximum Face Amount of such Letter of Credit and the amount of such drawing, respectively.

(b)           In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, Agent will promptly notify Borrower.  Provided that it shall have received such notice, Borrower shall reimburse (such obligation to reimburse Agent shall

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sometimes be referred to as a “Reimbursement Obligation”) Agent prior to 12:00 Noon, New York time on each date that an amount is paid by Agent under any Letter of Credit (each such date, a “Drawing Date”) in an amount equal to the amount so paid by Agent.  In the event Borrower fails to reimburse Agent for the full amount of any drawing under any Letter of Credit by 12:00 Noon, New York time, on the Drawing Date, Agent will promptly notify each Lender thereof, and Borrower shall be deemed to have requested that a Revolving Advance maintained as a Domestic Rate Loan be made by the Lenders to be disbursed on the Drawing Date under such Letter of Credit, subject to Section 8.2 hereof.  Any notice given by Agent pursuant to this Section 2.11(b) may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(c)           Each Lender shall upon any notice pursuant to Section 2.11(b) make available to Agent an amount in immediately available funds equal to its Commitment Percentage of the amount of the drawing, whereupon the participating Lenders shall (subject to Section 2.11(d)) each be deemed to have made a Revolving Advance maintained as a Domestic Rate Loan to Borrower in that amount.  If any Lender so notified fails to make available to Agent the amount of such Lender’s Commitment Percentage of such amount by no later than 2:00 p.m., New York time on the Drawing Date, then interest shall accrue on such Lender’s obligation to make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Revolving Advances maintained as a Domestic Rate Loans on and after the fourth day following the Drawing Date.  Agent will promptly give notice of the occurrence of the Drawing Date, but failure of Agent to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.11(c), provided that such Lender shall not be obligated to pay interest as provided in Section 2.11(c)(i) and (ii) until and commencing from the date of receipt of notice from Agent of a drawing.

(d)           With respect to any unreimbursed drawing that is not converted into a Revolving Advances maintained as a Domestic Rate Loan to Borrower in whole or in part as contemplated by Section 2.11(b), because of Borrower’s failure to satisfy the conditions set forth in Section 8.2 (other than any notice requirements) or for any other reason, Borrower shall be deemed to have incurred from Agent a borrowing (each a “Letter of Credit Borrowing”) in the amount of such drawing.  Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to a Revolving Advance maintained as a Domestic Rate Loan.  Each Lender’s payment to Agent pursuant to Section 2.11(c) shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing and shall constitute a “Participation Advance” from such Lender in satisfaction of its Participation Commitment under this Section 2.11.

Each Lender’s Participation Commitment shall continue until the last to occur of any of the following events:  (x) Agent ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and uncancelled and (z) all Persons (other than the Borrower) have been fully reimbursed for all payments made under or relating to Letters of Credit.

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2.12.       Repayment of Participation Advances.

(a)           Upon (and only upon) receipt by Agent for its account of immediately available funds from Borrower (i) in reimbursement of any payment made by the Agent under the Letter of Credit with respect to which any Lender has made a Participation Advance to Agent, or (ii) in payment of interest on such a payment made by Agent under such a Letter of Credit, Agent will pay to each Lender, in the same funds as those received by Agent, the amount of such Lender’s Commitment Percentage of such funds, except Agent shall retain the amount of the Commitment Percentage of such funds of any Lender that did not make a Participation Advance in respect of such payment by Agent.

(b)           If Agent is required at any time to return to Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments made by Borrower to Agent pursuant to Section 2.12(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Lender shall, on demand of Agent, forthwith return to Agent the amount of its Commitment Percentage of any amounts so returned by Agent plus interest at the Federal Funds Effective Rate.

2.13.       Documentation.

Borrower agrees to be bound by the terms of the Letter of Credit Application and by Agent’s interpretations of any Letter of Credit issued for Borrower’s account and by Agent’s written regulations and customary practices relating to letters of credit, though Agent’s interpretations may be different from Borrower’s own.  In the event of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern.  It is understood and agreed that, except in the case of gross negligence, willful misconduct or bad faith (as determined by a court of competent jurisdiction in a final non-appealable judgment), Agent shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.

2.14.       Determination to Honor Drawing Request.

In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, Agent shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth.

2.15.       Nature of Participation and Reimbursement Obligations.

Each Lender’s obligation in accordance with this Agreement to make the Revolving Advances or Participation Advances as a result of a drawing under a Letter of Credit, and the obligations of Borrower to reimburse Agent upon a draw under a Letter of Credit, shall be

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absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.15 under all circumstances, including the following circumstances:

(i)            any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Agent, Borrower or any other Person for any reason whatsoever;

(ii)           the failure of Borrower or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in this Agreement for the making of a Revolving Advance, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of the Lenders to make Participation Advances under Section 2.11;

(iii)          any lack of validity or enforceability of any Letter of Credit;

(iv)          any claim of breach of warranty that might be made by Borrower or any Lender against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which Borrower or any Lender may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), Agent or any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between Borrower or any Subsidiaries of Borrower and the beneficiary for which any Letter of Credit was procured);

(v)           the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has been notified thereof;

(vi)          payment by Agent under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;

(vii)         the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;

(viii)        any failure by the Agent or any of Agent’s Affiliates to issue any Letter of Credit in the form requested by Borrower, unless the Agent has received written notice from Borrower of such failure within three (3) Business Days after the Agent shall have

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furnished Borrower a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;

(ix)           any Material Adverse Effect on Borrower or any Guarantor;

(x)            any breach of this Agreement or any Other Document by any party thereto;

(xi)           the occurrence or continuance of an insolvency proceeding with respect to Borrower or any Guarantor;

(xii)          the fact that a Default or Event of Default shall have occurred and be continuing;

(xiii)         the fact that the Term shall have expired or this Agreement or the Obligations hereunder shall have been terminated; and

(xiv)        any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

2.16.       Indemnity.

In addition to amounts payable as provided in Section 15.5, the Borrower hereby agrees to protect, indemnify, pay and save harmless Agent and any of Agent’s Affiliates that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which the Agent or any of Agent’s Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (A) the gross negligence, willful misconduct or bad faith of the Agent as determined by a final and non-appealable judgment of a court of competent jurisdiction or (b) the wrongful dishonor by the Agent or any of Agent’s Affiliates of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Body (all such acts or omissions herein called “Governmental Acts”).  The foregoing obligations and the indemnifications hereunder shall survive the termination of this Agreement.

2.17.       Liability for Acts and Omissions.

As between Borrower and Agent and Lenders, Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit.  In furtherance and not in limitation of the respective foregoing, Agent shall not be responsible for:  (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if Agent shall have been notified thereof); (ii) the validity

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or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among Borrower and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, facsimile, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Agent, including any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of Agent’s rights or powers hereunder.  Nothing in the preceding sentence shall relieve Agent from liability for Agent’s gross negligence, willful misconduct or bad faith (as determined by a court of competent jurisdiction in a final non-appealable judgment) in connection with actions or omissions described in such clauses (i) through (viii) of such sentence.  In no event shall Agent or Agent’s Affiliates be liable to the Borrower for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.

Without limiting the generality of the foregoing, Agent and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by Agent or  such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by Agent or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on Agent or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.

In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by Agent under or in connection with the Letters of Credit

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issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and without gross negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment), shall not put Agent under any resulting liability to Borrower or any Lender.

2.18.       Additional Payments.

Any sums expended by Agent or any Lender due to Borrower’s failure to perform or comply with its obligations under this Agreement or any Other Document including Borrower’s obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrower’s Account as a Revolving Advance and added to the Obligations.  Agent shall provide notice to Borrower of any sums charged to Borrower’s Account hereunder.

2.19.       Manner of Borrowing and Payment.

(a)           Each borrowing of Revolving Advances shall be advanced according to the applicable Commitment Percentages of Lenders.  The Term Loan shall be advanced according to the Commitment Percentages of Lenders.

(b)           Each payment (including each prepayment) by Borrower on account of the principal of and interest on the Revolving Advances, shall be applied to the Revolving Advances pro rata according to the applicable Commitment Percentages of Lenders.  Each payment (including each prepayment) by Borrower on account of the principal of and interest on the Term Note, shall be made from or to, or applied to that portion of the Term Loan evidenced by the Term Note pro rata according to the Commitment Percentages of Lenders.  Except as expressly provided herein, all payments (including prepayments) to be made by Borrower on account of principal, interest and fees shall be made without set off or counterclaim and shall be made to Agent on behalf of the Lenders to the Payment Office, in each case on or prior to 1:00 p.m., New York time, in Dollars and in immediately available funds.

(c)           (i)            Notwithstanding anything to the contrary contained in Sections 2.19(a) and (b) hereof, commencing with the first Business Day following the Closing Date, each borrowing of Revolving Advances shall be advanced by Agent and each payment by Borrower on account of Revolving Advances shall be applied first to those Revolving Advances advanced by Agent.  On or before 1:00 p.m., New York time, on each Settlement Date commencing with the first Settlement Date following the Closing Date, Agent and Lenders shall make certain payments as follows:  (I) if the aggregate amount of new Revolving Advances made by Agent during the preceding Week (if any) exceeds the aggregate amount of repayments applied to outstanding Revolving Advances during such preceding Week, then each Lender shall provide Agent with funds in an amount equal to its applicable Commitment Percentage of the difference between (w) such Revolving Advances and (x) such repayments and (II) if the aggregate amount of repayments applied to outstanding Revolving Advances during such Week exceeds the aggregate amount of new Revolving Advances made during such Week, then Agent shall provide each Lender with funds in an amount equal to its applicable Commitment Percentage of the difference between (y) such repayments and (z) such Revolving Advances.

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(ii)           Each Lender shall be entitled to earn interest at the applicable Contract Rate on outstanding Advances which it has funded.

(iii)          Promptly following each Settlement Date, Agent shall submit to each Lender a certificate with respect to payments received and Advances made during the Week immediately preceding such Settlement Date.  Such certificate of Agent shall be conclusive in the absence of manifest error.

(d)           If any Lender or Participant (a “benefited Lender”) shall at any time receive any payment of all or part of its Advances, or interest thereon, or receive any Collateral in respect thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such payment to and Collateral received by any other Lender, if any, in respect of such other Lender’s Advances, or interest thereon, and such greater proportionate payment or receipt of Collateral is not expressly permitted hereunder, such benefited Lender shall purchase for cash from the other Lenders a participation in such portion of each such other Lender’s Advances, or shall provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.  Each Lender so purchasing a portion of another Lender’s Advances may exercise all rights of payment (including rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion.

(e)           Unless Agent shall have been notified by telephone, confirmed in writing, by any Lender that such Lender will not make the amount which would constitute its applicable Commitment Percentage of the Advances available to Agent, Agent may (but shall not be obligated to) assume that such Lender shall make such amount available to Agent on the next Settlement Date and, in reliance upon such assumption, make available to Borrower a corresponding amount.  Agent will promptly notify Borrower of its receipt of any such notice from a Lender.  If such amount is made available to Agent on a date after such next Settlement Date, such Lender shall pay to Agent on demand an amount equal to the product of (i) the daily average Federal Funds Rate (computed on the basis of a year of 360 days) during such period as quoted by Agent, times (ii) such amount, times (iii) the number of days from and including such Settlement Date to the date on which such amount becomes immediately available to Agent.  A certificate of Agent submitted to any Lender with respect to any amounts owing under this paragraph (e) shall be conclusive, in the absence of manifest error.  If such amount is not in fact made available to Agent by such Lender within three (3) Business Days after such Settlement Date, Agent shall be entitled to recover such an amount, with interest thereon at the rate per annum then applicable to such Revolving Advances hereunder, on demand from Borrower; provided, however, that Agent’s right to such recovery shall not prejudice or otherwise adversely affect Borrower’s rights (if any) against such Lender.

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2.20.       Mandatory Prepayments.

Subject to Section 4.3 hereof, when Borrower sells or otherwise disposes of any Collateral other than Inventory in the Ordinary Course of Business, Borrower shall repay the Advances in an amount equal to the net proceeds of such sale (i.e., gross proceeds less the reasonable costs of such sales or other dispositions), such repayments to be made promptly but in no event more than one (1) Business Day following receipt of such net proceeds, and until the date of payment, such proceeds shall be held in trust for Agent.  The foregoing shall not be deemed to be implied consent to any such sale otherwise prohibited by the terms and conditions hereof.  Such repayments shall be applied (x) first, to the outstanding principal installments of the Term Loan in the inverse order of the maturities thereof and (y) second, to the remaining Advances in such order as Agent may determine, subject to Borrower’s ability to reborrow Revolving Advances in accordance with the terms hereof.

2.21.       Use of Proceeds.

(a)           Borrower shall apply the proceeds of Advances to (i) purchase the assets of Seller pursuant to the terms of the Acquisition Agreement, (ii) purchase the assets of Woodmark International, L.P. (including its Stair House operations) and Pacific Stair Products, Inc., (iii) repay existing indebtedness of P&F secured by assets being contributed by P&F to Borrower, (iv) pay fees and expenses relating to this transaction, (v) provide for its working capital needs, capital expenditure needs and reimburse drawings under Letters of Credit, and (vi) for other general corporate purposes of Borrower.

(b)           Without limiting the generality of Section 2.21(a) above, neither the Borrower nor any other Person which may in the future become party to this Agreement or the Other Documents as Borrower, intends to use nor shall they use any portion of the proceeds of the Advances, directly or indirectly, for any purpose in violation of the Trading with the Enemy Act.

2.22.       Defaulting Lender.

(a)           Notwithstanding anything to the contrary contained herein, in the event any Lender (x) has refused (which refusal constitutes a breach by such Lender of its obligations under this Agreement) to make available its portion of any Advance or (y) notifies either Agent or Borrower that it does not intend to make available its portion of any Advance (if the actual refusal would constitute a breach by such Lender of its obligations under this Agreement) (each, a “Lender Default”), all rights and obligations hereunder of such Lender (a “Defaulting Lender”) as to which a Lender Default is in effect and of the other parties hereto shall be modified to the extent of the express provisions of this Section 2.22 while such Lender Default remains in effect.

(b)           Advances shall be incurred pro rata from Lenders (the “Non-Defaulting Lenders”) which are not Defaulting Lenders based on their respective Commitment Percentages, and no Commitment Percentage of any Lender or any pro rata share of any Advances required to be advanced by any Lender shall be increased as a result of such Lender Default.  Amounts received in respect of principal of any type of Advances shall be applied to reduce the applicable Advances of each Lender (other than any Defaulting Lender) pro rata based on the aggregate of

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the outstanding Advances of that type of all Lenders at the time of such application; provided, that, Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees).  Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent.  Agent may hold and, in its discretion, re-lend to Borrower the amount of such payments received or retained by it for the account of such Defaulting Lender.

(c)           A Defaulting Lender shall not be entitled to give instructions to Agent or to approve, disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents.  All amendments, waivers and other modifications of this Agreement and the Other Documents may be made without regard to a Defaulting Lender and, for purposes of the definition of “Required Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have either Advances outstanding or a Commitment Percentage.

(d)           Other than as expressly set forth in this Section 2.22, the rights and obligations of a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall remain unchanged.  Nothing in this Section 2.22 shall be deemed to release any Defaulting Lender from its obligations under this Agreement and the Other Documents, shall alter such obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice any rights which Borrower, Agent or any Lender may have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder.

(e)           In the event a Defaulting Lender retroactively cures to the satisfaction of Agent the breach which caused a Lender to become a Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall be treated as a Lender under this Agreement.

ARTICLE III

INTEREST AND FEES

3.1.         Interest.

Interest on Advances shall be payable in arrears on the first day of each month with respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at the end of each Interest Period or, for Eurodollar Rate Loans with an Interest Period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollar Rate Loan or (b) the end of the Interest Period.  Interest charges shall be computed on the actual principal amount of Advances outstanding during the month at a rate per annum equal to (i) with respect to Revolving Advances, and the Term Loans, the applicable Interest Rate (as applicable, the “Contract Rate”).  Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is increased or decreased, the applicable Contract Rate for Domestic Rate Loans shall be similarly changed without notice or demand of any kind by an amount equal to the amount of such change in the Alternate Base Rate during the time such change or changes remain in effect.  The Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans without notice or

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demand of any kind on the effective date of any change in the Reserve Percentage as of such effective date.  Upon and after the occurrence of an Event of Default, and during the continuation thereof, (i) at the option of Agent or at the direction of Required Lenders, the Obligations shall bear interest at the applicable Contract Rate plus two (2%) percent per annum (the “Default Rate”).  Agent will promptly provide notice to Borrower if the Default Rate is instituted.

3.2.         Letter of Credit Fees.

(a)           Borrower shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter of Credit for the period from and excluding the date of issuance of same to and including the date of expiration or termination, equal to the average daily face amount of each outstanding Letter of Credit multiplied by three and one-half of one percent (3.50%) per annum, such fees to be calculated on the basis of a 360-day year for the actual number of days elapsed and to be payable quarterly in arrears on the first day of each fiscal quarter and on the last day of the term, and (y) to the Issuer, a fronting fee of one quarter of one percent (0.25%) per annum, together with any and all administrative, issuance, amendment, payment and negotiation charges with respect to Letters of Credit and all fees and expenses as agreed upon by the Issuer and the Borrower in connection with any Letter of Credit, including in connection with the opening, amendment or renewal of any such Letter of Credit and any acceptances created thereunder and shall reimburse Agent for any and all fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing fees, the “Letter of Credit Fees”).  All such charges shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason.  Any such charge in effect at the time of a particular transaction shall be the charge for that transaction, notwithstanding any subsequent change in the Issuer’s prevailing charges for that type of transaction.  All Letter of Credit Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason.  Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, the Letter of Credit Fees described in clause (x) of this Section 3.2(a) shall be increased by an additional two percent (2%) per annum.  Any Letters of Credit which the Agent agrees to allow to remain outstanding after the termination of this Agreement will be cash collateralized in an amount equal to one hundred and five percent (105%) of the amount thereof in the manner described above.

Upon the occurrence and continuance of an Event of Default, on demand, Borrower will cause cash to be deposited and maintained in an account with Agent, as cash collateral, in an amount equal to one hundred and five percent (105%) of the Maximum Undrawn Amount of all outstanding Letters of Credit, and Borrower hereby irrevocably authorizes Agent, in its discretion, on Borrower’s behalf and in Borrower’s name, to open such an account and to make and maintain deposits therein, or in an account opened by Borrower, in the amounts required to be made by Borrower, out of the proceeds of Receivables or other Collateral or out of any other funds of Borrower coming into any Lender’s possession at any time.  Agent will invest such cash collateral (less applicable reserves) in such short-term money-market items as to which Agent and Borrower mutually agree and the net return on such investments shall be credited to such account and constitute additional cash collateral.  Borrower may not withdraw amounts credited

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to any such account except upon the occurrence of all of the following: (x) payment and performance in full of all Obligations, (y) expiration of all Letters of Credit and (z) termination of this Agreement.

3.3.         Closing Fee and Facility Fee.

(a)           Closing Fee.

Upon the execution of this Agreement, Borrower shall pay to Agent for the ratable benefit of Lenders a closing fee of $90,000 less that portion of the deposit fee of $80,000 heretofore paid by Borrower to Agent after application of such fee to out of pocket expenses.

(b)           Facility Fee.

Borrower shall pay to Agent a fee for the ratable benefit of Lenders in an amount equal to one-half of one percent (0.50%) per annum multiplied by the amount by which the Maximum Revolving Advance Amount exceeds the average daily unpaid balance of the Revolving Advances plus the aggregate amount of any outstanding Letters of Credit that are available to be drawn during each calendar quarter.  Such fee shall be payable to Agent in arrears on the first day of each calendar quarter with respect to the previous calendar quarter.

3.4.         Collateral Fees.

(a)           Collateral Management Fee.

Borrower shall pay Agent a collateral management fee equal to $1,250 per month commencing on the first day of the month following the Closing Date and on the first day of each month thereafter during the term.  The collateral management fee shall be deemed earned in full on the date when same is due and payable hereunder and shall not be subject to rebate or proration upon termination of this Agreement for any reason.

(b)           Collateral Monitoring Fee.

Borrower shall pay to Agent on the first day of each month following any month in which Agent performs any collateral monitoring - namely any field examination, collateral analysis or other business analysis, the need for which is to be reasonably determined by Agent and which monitoring is undertaken by Agent or for Agent’s benefit - a collateral monitoring fee in an amount equal to $850 per day for each person employed to perform such monitoring plus all costs and disbursements incurred by Agent in the performance of such examination or analysis (absent an Event of Default, Borrower shall not be required to pay Agent for more than four (4) such collateral monitoring fees per calendar year).

3.5.         Computation of Interest and Fees.

Interest and fees hereunder shall be computed on the basis of a year of 360 days and for the actual number of days elapsed.  If any payment to be made hereunder becomes due and

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payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable Contract Rate during such extension.

3.6.         Maximum Charges.

In no event whatsoever shall interest and other charges charged hereunder exceed the highest rate permissible under law.  In the event interest and other charges as computed hereunder would otherwise exceed the highest rate permitted under law, such excess amount shall be first applied to any unpaid principal balance owed by Borrower, and if the then remaining excess amount is greater than the previously unpaid principal balance, Lenders shall promptly refund such excess amount to Borrower and the provisions hereof shall be deemed amended to provide for such permissible rate.

3.7.         Increased Costs.

(a)           In the event that any introduction of or change in Applicable Law or in the interpretation or application thereof, or compliance by any Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or directive (whether or not having the force of law) from any central bank or other financial, monetary or other authority, shall:

(i)            subject Agent or any Lender to any tax of any kind whatsoever with respect to this Agreement or any Other Document or change the basis of taxation of payments to Agent or any Lender of principal, fees, interest or any other amount payable hereunder or under any Other Documents (except for changes in the rate of tax on the overall net income of Agent or any Lender by the jurisdiction in which it maintains its principal office);

(ii)           impose, modify or hold applicable any reserve, special deposit, assessment or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or other credit extended by, any office of Agent or any Lender, including pursuant to Regulation D of the Board of Governors of the Federal Reserve System; or

(iii)          impose on Agent or any Lender or the London interbank Eurodollar market any other condition with respect to this Agreement or any Other Document;

and the result of any of the foregoing is to increase the cost to Agent or any Lender of making, renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by an amount that Agent or such Lender deems to be material, then, in any case Borrower shall promptly pay Agent or such Lender, upon its demand, such additional amount as will compensate Agent or such Lender for such additional

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cost or such reduction, as the case may be, provided that the foregoing shall not apply to increased costs which are reflected in the Eurodollar Rate, as the case may be.  Agent or such Lender shall certify the amount of such additional cost or reduced amount to Borrower, and such certification shall be conclusive absent manifest error.

(b)           A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender and delivered to the Borrower shall be conclusive absent manifest error.

(c)           Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section 3.7 shall not constitute a waiver of such Lender’s right to demand such compensation.

3.8.         Basis For Determining Interest Rate Inadequate or Unfair.

In the event that Agent or any Lender shall have determined that:

(a)           reasonable means do not exist for ascertaining the Eurodollar Rate applicable pursuant to Section 2.2 hereof for any Interest Period; or

(b)           Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank Eurodollar market, with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,

then Agent shall give Borrower prompt written, or telephonic notice of such determination.  If such notice is given, (i) any such requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrower shall notify Agent no later than 11:00 a.m. (New York City time) two (2) Business Days prior to the date of such proposed borrowing, that its request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an affected type of Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no later than 11:00 a.m. (New York City time) two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no later than 11:00 a.m. (New York City time) two (2) Business Days prior to the last Business Day of the then current Interest Period applicable to such affected Eurodollar Rate Loan, shall be converted into an unaffected type of Eurodollar Rate Loan, on the last Business Day of the then current Interest Period for such affected Eurodollar Rate Loans.  Until such notice has been withdrawn, Lenders shall have no obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate Loans and Borrower shall not have the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.

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3.9.         Capital Adequacy.

(a)           In the event that Agent or any Lender shall have determined that any Applicable Law, rule, regulation or guideline regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Body, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Agent or any Lender (for purposes of this Section 3.9, the Term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on Agent or any Lender’s capital as a consequence of its obligations hereunder to a level below that which Agent or such Lender could have achieved but for such adoption, change or compliance (taking into consideration Agent’s and each Lender’s policies with respect to capital adequacy) by an amount deemed by Agent or any Lender to be material, then, from time to time, Borrower shall pay upon demand to Agent or such Lender such additional amount or amounts as will compensate Agent or such Lender for such reduction.  In determining such amount or amounts, Agent or such Lender may use any reasonable averaging or attribution methods.  The protection of this Section 3.9 shall be available to Agent and each Lender regardless of any possible contention of invalidity or inapplicability with respect to the Applicable Law, regulation or condition.

(b)           A certificate of Agent or such Lender setting forth such amount or amounts as shall be necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered to Borrower shall be conclusive absent manifest error.

(c)           Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section 3.9 shall not constitute a waiver of such Lender’s right to demand such compensation.

3.10.       Gross Up for Taxes.

If Borrower shall be required by Applicable Law to withhold or deduct any taxes from or in respect of any sum payable under this Agreement or any of the Other Documents to Agent, or any Lender, assignee of any Lender, or Participant (each, individually, a “Payee” and collectively, the “Payees”), (a) the sum payable to such Payee or Payees, as the case may be, shall be increased as may be necessary so that, after making all required withholding or deductions, the applicable Payee or Payees receives an amount equal to the sum it would have received had no such withholding or deductions been made (the “Gross-Up Payment”), (b) Borrower shall make such withholding or deductions, and (c) Borrower shall pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with Applicable Law.  Notwithstanding the foregoing, Borrower shall not be obligated to make any portion of the Gross-Up Payment that is attributable to any withholding or deductions that would not have been paid or claimed had the applicable Payee or Payees properly claimed a complete exemption with respect thereto pursuant to Section 3.11 hereof.

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3.11.       Withholding Tax Exemption.

(a)           Each Payee that is not incorporated under the Laws of the United States of America or a state thereof (and, upon the written request of Agent, each other Payee) agrees that it will deliver to Borrower and Agent two (2) duly completed appropriate valid Withholding Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations (“Regulations”)) certifying its status (i.e., U.S. or foreign person) and, if appropriate, making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Code.  The Term “Withholding Certificate” means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as required under §1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in §1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Code or Regulations that certify or establish the status of a payee or beneficial owner as a U.S. or foreign person.

(b)           Each Payee required to deliver to Borrower and Agent a valid Withholding Certificate pursuant to Section 3.11(a) hereof shall deliver such valid Withholding Certificate as follows:  (A) each Payee which is a party hereto on the Closing Date shall deliver such valid Withholding Certificate at least five (5) Business Days prior to the first date on which any interest or fees are payable by Borrower hereunder for the account of such Payee; (B) each Payee shall deliver such valid Withholding Certificate at least five (5) Business Days before the effective date of such assignment or participation (unless Agent in its sole discretion shall permit such Payee to deliver such Withholding Certificate less than five (5) Business Days before such date in which case it shall be due on the date specified by Agent).  Each Payee which so delivers a valid Withholding Certificate further undertakes to deliver to Borrower and Agent two (2) additional copies of such Withholding Certificate (or a successor form) on or before the date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent Withholding Certificate so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by Borrower or Agent.

(c)           Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or exemption from U.S. withholding tax required under Section 3.11(b) hereof, Agent shall be entitled to withhold United States federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under §1.1441-7(b) of the Regulations.  Further, Agent is indemnified under §1.1461-1(e) of the Regulations against any claims and demands of any Payee for the amount of any tax it deducts and withholds in accordance with regulations under §1441 of the Code.

3.12.Treatment of Certain Refunds.

If Agent, any Lender or the Issuer receives a refund of any taxes as to which it has been indemnified by Borrower or with respect to which Borrower has paid additional amounts pursuant to this Agreement, it shall pay to Borrower an amount equal to such refund (but only to the extent of indemnity payments made or additional amounts paid, by Borrower under this Agreement with respect to the taxes giving rise to such refund), net of all out-of-pocket expenses

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of Agent, such Lender or the Issuer, as the case may be, and without interest (other than any interest paid by the relevant Governmental Body with respect to such refund), provided that Borrower, upon the request of Agent, such Lender or the Issuer, agrees to repay the amount paid over to Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Body) to Agent, such Lender or the Issuer in the event Agent, such Lender or the  Issuer is required to repay such refund to such Governmental Body.  This subsection shall not be construed to require the Agent, any Lender or the Issuer to make available its tax returns (or any other information relating to its taxes that it deems confidential) to Borrower or any other Person.

3.13.        Survival of Obligations.

The Borrower’s obligations and the indemnifications under this Article III shall survive the termination of this Agreement.

ARTICLE IV

COLLATERAL: GENERAL TERMS

4.1.         Security Interest in the Collateral.

To secure the prompt payment and performance to Agent and each Lender of the Obligations, Borrower hereby assigns, pledges and/or grants, as applicable, to Agent for its benefit and for the ratable benefit of each Lender a continuing security interest in and to and Lien on all of its Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located.  Borrower shall mark its books and records as may be necessary or appropriate to evidence, protect and perfect Agent’s security interest and shall cause its financial statements to reflect such security interest.  Borrower shall promptly provide Agent with written notice of all commercial tort claims, such notice to contain the case title together with the applicable court and a brief description of the claim(s).  Upon delivery of each such notice, Borrower shall be deemed to hereby grant to Agent a security interest and lien in and to such commercial tort claims and all proceeds thereof.

4.2.         Perfection of Security Interest.

Borrower shall take all action that may be reasonably necessary or desirable, or that Agent may request, so as at all times to maintain the validity, perfection, enforceability and priority of Agent’s security interest in and Lien on the Collateral or to enable Agent to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to, (i) immediately discharging all Liens other than Permitted Encumbrances, (ii) obtaining Lien Waiver Agreements, (iii) delivering to Agent, endorsed or accompanied by such instruments of assignment as Agent may specify, and stamping or marking, in such manner as Agent may specify, any and all chattel paper, instruments, letters of credits and advices thereof and documents evidencing or forming a part of the Collateral, (iv) entering into warehousing, lockbox and other custodial arrangements reasonably satisfactory to Agent, and (v) executing and delivering financing statements, control agreements, instruments of pledge, mortgages,

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notices and assignments, in each case in form and substance reasonably satisfactory to Agent, relating to the creation, validity, perfection, maintenance or continuation of Agent’s security interest and Lien under the Uniform Commercial Code or other Applicable Law.  Agent is hereby authorized to file financing statements in accordance with the Uniform Commercial Code as adopted in the State of North Carolina from time to time.  By its signature hereto, Borrower hereby authorizes Agent to file against Borrower, one or more financing continuation or amendment statements pursuant to the Uniform Commercial Code in form and substance reasonably satisfactory to Agent (which statements may have a description of collateral which is broader than that set forth herein and which may describe the Collateral as “all assets” or “all personal property”).  All charges, expenses and fees Agent may incur in doing any of the foregoing, and any local taxes relating thereto, shall be charged to Borrower’s Account as a Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at Agent’s option, shall be paid to Agent for its benefit and for the ratable benefit of Lenders immediately upon demand.

4.3.         Disposition of Collateral.

Borrower will utilize all commercially reasonable means in the Ordinary Course of Business to safeguard and protect all Collateral for Agent’s general account and make no disposition thereof whether by sale, lease or otherwise except (a) the sale or lease of Inventory in the Ordinary Course of Business, and (b) the disposition or transfer of obsolete and worn-out Equipment in the Ordinary Course of Business during any fiscal year having an aggregate fair market value of not more than $250,000 and only to the extent that (i) the proceeds of any such disposition are used to acquire replacement Equipment which is subject to Agent’s first priority security interest or (ii) the proceeds of which are remitted to Agent to be applied pursuant to Section 2.20 and (c) the disposition or transfer of obsolete and worn-out personal property no longer necessary to the efficient conduct of business; and (d) the sale or discount of Receivables in the Ordinary Course of Business absent a Default or an Event of Default.

4.4.         Preservation of Collateral.

Following the occurrence of an Event of Default, in addition to the rights and remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as Agent deems necessary to protect Agent’s interest in and to preserve the Collateral, including the hiring of such security guards or the placing of other security protection measures as Agent may deem appropriate; (b) may employ and maintain at any of Borrower’s premises a custodian who shall have full authority to do all acts necessary to protect Agent’s interests in the Collateral; (c) may lease warehouse facilities to which Agent may move all or part of the Collateral; (d) may use Borrower’s owned or leased lifts, hoists, trucks and other facilities or equipment for handling or removing the Collateral; and (e) shall have, and is hereby granted, a right of ingress and egress to the places where the Collateral is located, and may proceed over and through any of Borrower’s owned or leased property.  Borrower shall cooperate fully with all of Agent’s efforts to preserve the Collateral and will take such actions to preserve the Collateral as Agent may direct.  All of Agent’s expenses of preserving the Collateral, including any expenses relating to the bonding of a custodian, shall be charged to Borrower’s Account as a Revolving Advance maintained as a

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Domestic Rate Loan and added to the Obligations.  Agent shall provide notice to Borrower of any amounts charged to Borrower’s Account.

4.5.         Ownership of Collateral.

(a)           With respect to the Collateral, at the time the Collateral becomes subject to Agent’s security interest:  (i) Borrower shall be the sole owner of and fully authorized and able to sell, transfer, pledge and/or grant a first priority security interest in each and every item of the its respective Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall be free and clear of all Liens and encumbrances whatsoever; (ii) each document and agreement executed by Borrower or delivered to Agent or any Lender in connection with this Agreement shall be true and correct in all material respects; (iii) all signatures and endorsements of Borrower that appear on such documents and agreements shall be genuine and Borrower shall have full capacity to execute same; and (iv) Borrower’s Equipment and Inventory shall be located as set forth on Schedule 4.5 and shall not be removed from such location(s) without the prior written consent of Agent except with respect to the sale of Inventory in the Ordinary Course of Business and Equipment to the extent permitted in Section 4.3 hereof.

(b)           (i)            There is no location at which Borrower has any Inventory (except for Inventory in transit) or other Collateral other than those locations listed on Schedule 4.5; (ii) Schedule 4.5 hereto contains a correct and complete list, as of the Closing Date, of the legal names and addresses of each warehouse at which Inventory of Borrower is stored and each warehouseman, bailee or other third party in possession of any of Borrower’s Inventory or Equipment; (iii) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of (A) each place of business of Borrower and (B) the chief executive office of Borrower; and (iv) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of the location, by state and street address, of all Real Property owned or leased by Borrower, identifying which properties are owned and which are leased, together with the names and addresses of any landlords.

4.6.         Defense of Agent’s and Lenders’ Interests.

Until (a) payment and performance in full of all of the Obligations and (b) termination of this Agreement, Agent’s interests in the Collateral shall continue in full force and effect.  During such period Borrower shall not, without Agent’s prior written consent, pledge, sell (except Inventory in the Ordinary Course of Business and Equipment to the extent permitted in Section 4.3 hereof), assign, transfer, create or suffer to exist a Lien upon or encumber or allow or suffer to be encumbered in any way except for Permitted Encumbrances, any part of the Collateral.  Borrower shall defend Agent’s interests in the Collateral against any and all Persons whatsoever.  At any time following demand by Agent for payment of all Obligations, after the occurrence of an Event of Default and provided Agent elects to exercise its remedies hereunder, Agent shall have the right to take possession of the indicia of the Collateral and the Collateral in whatever physical form contained, including:  labels, stationery, documents, instruments and advertising materials.  If Agent exercises this right to take possession of the Collateral, Borrower shall, upon demand, assemble it in the best manner possible and make it available to Agent at a place reasonably convenient to Agent.  In addition, with respect to all Collateral, Agent and

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Lenders shall be entitled to all of the rights and remedies set forth herein and further provided by the Uniform Commercial Code or other Applicable Law.  Borrower shall, and Agent may, at its option, instruct all suppliers, carriers, forwarders, warehousers or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest to deliver same to Agent and/or subject to Agent’s order and if they shall come into Borrower’s possession, they, and each of them, shall be held by Borrower in trust as Agent’s trustee, and Borrower will immediately deliver them to Agent in their original form together with any necessary endorsement.

4.7.         Books and Records.

Borrower shall (a) keep proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of or in relation to its business and affairs which books and records shall be kept at Borrower’s principal place of business; (b) set up on its books accruals with respect to all taxes, assessments, charges, levies and claims; and (c) on a reasonably current basis set up on its books, from its earnings, allowances against doubtful Receivables, advances and investments and all other proper accruals (including by reason of enumeration, accruals for premiums, if any, due on required payments and accruals for depreciation, obsolescence, or amortization of properties), which should be set aside from such earnings in connection with its business.  All determinations pursuant to this subsection shall be made in accordance with, or as required by, GAAP consistently applied in the opinion of such independent public accountant as shall then be regularly engaged by Borrower.

4.8.         Financial Disclosure.

Borrower hereby irrevocably authorizes and directs all accountants and auditors employed by Borrower at any time during the Term to Exhibit and deliver to Agent and each Lender copies of any of Borrower’s financial statements, trial balances or other accounting records of any sort in the accountant’s or auditor’s possession, and to disclose to Agent and each Lender any information such accountants may have concerning Borrower’s financial status and business operations.  Borrower hereby authorizes all Governmental Bodies to furnish to Agent and each Lender copies of reports or examinations relating to Borrower, whether made by Borrower or otherwise; however, Agent and each Lender will attempt to obtain such information or materials directly from Borrower prior to obtaining such information or materials from such accountants or Governmental Bodies.

4.9.         Compliance with Laws.

Borrower shall comply in all material respects with all Applicable Laws with respect to the Collateral or any part thereof or to the operation of Borrower’s business the non-compliance with which could reasonably be expected to have a Material Adverse Effect.  The Collateral assets of Borrower at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the Collateral assets of Borrower so that such insurance shall remain in full force and effect.

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4.10.       Inspection of Premises; Appraisals.

At all reasonable times and upon reasonable notice to Borrower in the absence of an Event of Default, Agent and each Lender shall have full access to and the right to audit, check, inspect and make abstracts and copies from Borrower’s books, records, audits, correspondence and all other papers relating to the Collateral and the operation of Borrower’s business.  Agent, any Lender and their agents may enter upon any of Borrower’s premises at any time during business hours and at any other reasonable time and upon reasonable notice to Borrower in the absence of an Event of Default, and from time to time, for the purpose of inspecting the Collateral and any and all records pertaining thereto and the operation of Borrower’s business and discussing the affairs, finances and business of Borrower with any officers and directors of Borrower or with the Accountants.  At the sole cost of Borrower, Agent will conduct no more than four field examinations per year in the absence of a Default and no more than one Appraisal of Inventory and one Appraisal of Machinery and Equipment but reserves the right, in its Permitted Discretion, to conduct additional Appraisals at Borrower’s expense upon reasonable notice to Borrower.

4.11.       Insurance.

The assets and properties of Borrower at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the assets and properties of Borrower so that such insurance shall remain in full force and effect.  Borrower shall bear the full risk of any loss of any nature whatsoever with respect to the Collateral.  At Borrower’s own cost and expense in amounts and with carriers acceptable to Agent, Borrower shall (a) keep all its insurable properties and properties in which Borrower has an interest insured against the hazards of fire, flood, sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to Borrower’s including business interruption insurance; (b) if required by Agent and only if customary for companies engaged in businesses similar to Borrower, maintain a bond in such amounts as is customary in the case of companies engaged in businesses similar to Borrower insuring against larceny, embezzlement or other criminal misappropriation of insured’s officers and employees who may either singly or jointly with others at any time have access to the assets or funds of Borrower either directly or through authority to draw upon such funds or to direct generally the disposition of such assets; (c) maintain public and product liability insurance against claims for personal injury, death or property damage suffered by others; (d) maintain all such worker’s compensation or similar insurance as may be required under the laws of any state or jurisdiction in which Borrower is engaged in business; (e) furnish Agent with (i) copies of all policies and evidence of the maintenance of such policies by the renewal thereof at least thirty (30) days before any expiration date, and (ii) appropriate loss payable endorsements in form and substance satisfactory to Agent, naming Agent as a loss payee as its interests may appear with respect to all insurance coverage referred to in clauses (a) and (c) above, and providing (A) that all proceeds thereunder shall be payable to Agent, (B) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy, and (C) that such policy and loss payable clauses may not be cancelled, amended or terminated unless at least thirty (30) days’ prior written notice is given to Agent.  In the event of any loss thereunder, the carriers

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named therein hereby are directed by Agent and Borrower to make payment for such loss to Agent and not to Borrower and Agent jointly.  If any insurance losses are paid by check, draft or other instrument payable to Borrower and Agent jointly, Agent may endorse Borrower’s name thereon and do such other things as Agent may deem advisable to reduce the same to cash.  If any payment for such loss is made to Borrower and not Agent, Borrower shall turn over such payment to Agent.  Agent is hereby authorized to adjust and compromise claims under insurance coverage referred to in clauses (a) and (b) above.  All loss recoveries received by Agent upon any such insurance may be applied to the Obligations, in such order as Agent in its sole discretion shall determine.  Any surplus shall be paid by Agent to Borrower or applied as may be otherwise required by law.  Any deficiency thereon shall be paid by Borrower to Agent, on demand.

4.12.       Failure to Pay Insurance.

If Borrower fails to obtain insurance as hereinabove provided, or to keep the same in force, Agent, if Agent so elects, may obtain such insurance and pay the premium therefor on behalf of Borrower, and charge Borrower’s Account therefor as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be part of the Obligations.

4.13.       Payment of Taxes.

Subject to those Charges Properly Contested, Borrower will pay, when due, all taxes, assessments and other Charges lawfully levied or assessed upon Borrower or any of the Collateral including real and personal property taxes, assessments and charges and all franchise, income, employment, social security benefits, withholding, and sales taxes.  If any tax by any Governmental Body is or may be imposed on or as a result of any transaction between Borrower and Agent or any Lender which Agent or any Lender may be required to withhold or pay or if any taxes, assessments, or other Charges remain unpaid after the date fixed for their payment, or if any claim shall be made which, in Agent’s or any Lender’s opinion, may possibly create a valid Lien on the Collateral, Agent may without notice to Borrower pay the taxes, assessments or other Charges and Borrower hereby indemnifies and holds Agent and each Lender harmless in respect thereof.  Agent will endeavor to give Borrower prompt notice of the payment of such items.  The amount of any payment by Agent under this Section 4.13 shall be charged to Borrower’s Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations and, until Borrower shall furnish Agent with an indemnity therefor (or supply Agent with evidence satisfactory to Agent that due provision for the payment thereof has been made or same is being Properly Contested), Agent may hold without interest any balance standing to Borrower’s credit and Agent shall retain its security interest in and Lien on any and all Collateral held by Agent.

4.14.       Payment of Leasehold Obligations.

Borrower shall at all times pay, when and as due, its rental obligations under all leases under which it is a tenant, and shall otherwise comply, in all material respects, with all other terms of such leases and keep them in full force and effect unless the failure to comply would not

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be expected to have a Material Adverse Effect and, at Agent’s request will provide evidence of having done so.

4.15.       Receivables.

(a)           Nature of Receivables.

Each of the Receivables shall be a bona fide and valid account representing a bona fide indebtedness incurred by the Customer therein named, for a fixed sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice errors and other imperfection shall not be deemed to be a breach hereof) with respect to an absolute sale or lease and delivery of goods upon stated terms of Borrower, or work, labor or services theretofore rendered by Borrower as of the date each Receivable is created.  Same shall be due and owing in accordance with Borrower’s standard terms of sale without dispute, setoff or counterclaim except as may be stated on the accounts receivable schedules delivered by Borrower to Agent.

(b)           Solvency of Customers.

Each Customer, to the best of Borrower’s actual knowledge, with respect to the P&F contributed assets and based solely on the representations of Seller contained in the Acquisition Agreement with respect to Seller assets, as of the date each Receivable is created, is and will be solvent and able to pay all Receivables on which the Customer is obligated in full when due or with respect to such Customers of Borrower who are not solvent Borrower has set up on its books and in its financial records bad debt reserves adequate to cover such Receivables.

(c)           Location of Borrower.

Borrower’s chief executive office is located at the address set forth on Schedule 4.5.  Until written notice is given to Agent by Borrower of any other office at which Borrower keeps its records pertaining to Receivables, all such records shall be kept at such executive office.

(d)           Collection of Receivables.

Until Borrower’s authority to do so is terminated by Agent (which notice Agent may give at any time following the occurrence of an Event of Default), Borrower will, at Borrower’s sole cost and expense, but on Agent’s behalf and for Agent’s account, collect as Agent’s property and in trust for Agent all amounts received on Receivables, and shall not commingle such collections with Borrower’s funds or use the same except to pay Obligations.  Borrower shall deposit in the Blocked Account or, upon request by Agent, deliver to Agent, in original form and on the date of receipt thereof, all checks, drafts, notes, money orders, acceptances, cash and other evidences of Indebtedness.

(e)           Notification of Assignment of Receivables.

At any time following the occurrence of an Event of Default and provided Agent elects to exercise its remedies hereunder, Agent shall have the right to send notice of the assignment of,

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and Agent’s security interest in and Lien on, the Receivables to any and all Customers or any third party holding or otherwise concerned with any of the Collateral.  Thereafter, Agent shall have the sole right to collect the Receivables, take possession of the Collateral, or both.  Agent’s actual collection expenses, including, but not limited to, stationery and postage, telephone and telegraph, secretarial and clerical expenses and the salaries of any collection personnel used for collection, may be charged to Borrower’s Account and added to the Obligations.

(f)            Power of Agent to Act on Borrower’s Behalf.

Upon the occurrence of an Event of Default and provided Agent elects to exercise its remedies hereunder, Agent shall have the right to receive, endorse, assign and/or deliver in the name of Agent or Borrower any and all checks, drafts and other instruments for the payment of money relating to the Receivables, and Borrower hereby waives notice of presentment, protest and non-payment of any instrument so endorsed.  Upon the occurrence of an Event of Default and provided Agent elects to exercise its remedies hereunder, Borrower hereby constitutes Agent or Agent’s designee as Borrower’s attorney with power (i) to endorse Borrower’s name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment or Collateral; (ii) to sign Borrower’s name on any invoice or bill of lading relating to any of the Receivables, drafts against Customers, assignments and verifications of Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to sign Borrower’s name on all documents or instruments deemed necessary or appropriate by Agent to preserve, protect, or perfect Agent’s interest in the Collateral and to file same; (v) to demand payment of the Receivables; (vi) to enforce payment of the Receivables by legal proceedings or otherwise; (vii) to exercise all of Borrower’s rights and remedies with respect to the collection of the Receivables and any other Collateral; (viii) to settle, adjust, compromise, extend or renew the Receivables; (ix) to settle, adjust or compromise any legal proceedings brought to collect Receivables; (x) to prepare, file and sign Borrower’s name on a proof of claim in bankruptcy or similar document against any Customer; (xi) to prepare, file and sign Borrower’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables; and (xii) to do all other acts and things necessary to carry out this Agreement.  All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake of fact or of law, unless done maliciously or with gross (not mere) negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment); this power being coupled with an interest is irrevocable while any of the Obligations remain unpaid.  Agent shall have the right at any time following the occurrence of an Event of Default or Default, to change the address for delivery of mail addressed to Borrower to such address as Agent may designate and to receive, open and dispose of all mail addressed to Borrower.

(g)           No Liability.

Neither Agent nor any Lender shall, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Receivables or any instrument received in payment thereof, or for any damage resulting therefrom except those specified in Section 4.15(f) hereof.  Following the occurrence of an Event of Default Agent may, without notice or consent from

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Borrower, sue upon or otherwise collect, extend the time of payment of, compromise or settle for cash, credit or upon any terms any of the Receivables or any other securities, instruments or insurance applicable thereto and/or release any obligor thereof.  Agent is authorized and empowered to accept following the occurrence of an Event of Default the return of the goods represented by any of the Receivables, without notice to or consent by Borrower, all without discharging or in any way affecting Borrower’s liability hereunder.

(h)           Establishment of a Cash Management System.

All proceeds of Collateral shall be deposited by Borrower into either (i) a lockbox account, dominion account or such other “blocked account” (“Blocked Accounts”) established at a bank or banks (each such bank, a “Blocked Account Bank”) pursuant to an arrangement with such Blocked Account Bank as may be selected by Borrower and be reasonably acceptable to Agent or (ii) depository accounts (“Depository Accounts”) established at the Agent for the deposit of such proceeds.  Borrower, Agent and each Blocked Account Bank shall enter into a deposit account control agreement in form and substance reasonably satisfactory to Agent directing such Blocked Account Bank to transfer such funds so deposited to Agent, either to any account maintained by Agent at said Blocked Account Bank or by wire transfer to appropriate account(s) of Agent.  All funds deposited in such Blocked Accounts shall immediately become the property of Agent and Borrower shall obtain the agreement by such Blocked Account Bank to waive any offset rights against the funds so deposited.  Neither Agent nor any Lender assumes any responsibility for such blocked account arrangement, including any claim of accord and satisfaction or release with respect to deposits accepted by any Blocked Account Bank thereunder.  All deposit accounts and investment accounts of Borrower and its Subsidiaries are set forth on Schedule 4.15(h).

(i)            Adjustments.

Borrower will not, without Agent’s consent, compromise or adjust any material amount of the Receivables (or extend the time for payment thereof) or accept any material returns of merchandise or grant any additional discounts, allowances or credits thereon except for those compromises, adjustments, returns, discounts, credits and allowances in the Ordinary Course of Business.

4.16.       Inventory.

To the extent Inventory held for sale or lease has been produced by Borrower, it has been and will be produced by Borrower in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder.

4.17.       Maintenance of Equipment.

The Equipment shall be maintained in good operating condition and repair (reasonable wear and tear excepted) and all necessary replacements of and repairs thereto shall be made so that the value and operating efficiency of the Equipment shall be maintained and preserved.  Borrower shall not use or operate the Equipment in violation of any law, statute, ordinance, code,

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rule or regulation.  Borrower shall have the right to sell Equipment to the extent set forth in Section 4.3 hereof.

4.18.       Exculpation of Liability.

Nothing herein contained shall be construed to constitute Agent or any Lender as Borrower’s agent for any purpose whatsoever, nor shall Agent or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof.  Neither Agent nor any Lender, whether by anything herein or in any assignment or otherwise, assume any of Borrower’s obligations under any contract or agreement assigned to Agent or such Lender, and neither Agent nor any Lender shall be responsible in any way for the performance by Borrower of any of the terms and conditions thereof.

4.19.       Environmental Matters.

(a)           Borrower shall ensure that the Real Property owned or leased by Borrower remains in compliance in all material respects with all Environmental Laws and they shall not place or permit to be placed any Hazardous Substances on any Real Property except as permitted by Applicable Law or appropriate governmental authorities or except where such non-compliance would not result in a Material Adverse Effect.

(b)           Borrower shall establish and maintain a system reasonably satisfactory to Agent to assure and monitor continued compliance with all applicable Environmental Laws which system shall include periodic reviews of such compliance.

(c)           Borrower shall (i) employ in connection with the use of the Real Property appropriate technology necessary to maintain compliance in all material respects with any applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste generated at the Real Property in accordance with Environmental Laws in all material respects.  Borrower shall use its reasonable efforts to obtain certificates of disposal, such as hazardous waste manifest receipts, from all treatment, transport, storage or disposal facilities or operators employed by Borrower in connection with the transport or disposal of any Hazardous Waste generated at the Real Property.

(d)           In the event Borrower obtains, gives or receives notice of any Release or threat of Release of a reportable quantity of any Hazardous Substances at the Real Property (any such event being hereinafter referred to as a “Hazardous Discharge”) or receives any notice of violation, request for information or notification that it is potentially responsible for investigation or cleanup of environmental conditions at the Real Property, demand letter or complaint, order or citation with regard to any Hazardous Discharge or violation of Environmental Laws affecting the Real Property or Borrower’s interest therein (any of the foregoing is referred to herein as an “Environmental Complaint”) from any Person, including any state agency responsible in whole or in part for environmental matters in the state in which the Real Property is located or the United States Environmental Protection Agency (any such person or entity hereinafter the “Authority”), then Borrower shall promptly give written notice of same to Agent detailing facts

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and circumstances of which Borrower is aware giving rise to the Hazardous Discharge or Environmental Complaint.  Such information is to be provided to allow Agent to protect its security interest in and Lien on the Real Property and the Collateral and is not intended to create nor shall it create any obligation upon Agent or any Lender with respect thereto.

(e)           Borrower shall promptly forward to Agent copies of any request for information, notification of potential liability, demand letter relating to potential responsibility with respect to the investigation or cleanup of Hazardous Substances at any other site owned, operated or used by Borrower to dispose of Hazardous Substances and shall continue to forward copies of correspondence between Borrower and the Authority regarding such claims to Agent until the claim is settled.  Borrower shall promptly forward to Agent copies of all documents and reports concerning a Hazardous Discharge at the Real Property that Borrower is required to file under any Environmental Laws.  Such information is to be provided solely to allow Agent to protect Agent’s security interest in and Lien on the Real Property and the Collateral.

(f)            Subject to those which are diligently contested in good faith, Borrower shall diligently take all action necessary to comply with Environmental Laws with regard to any Hazardous Discharge or Environmental Complaint.  If Borrower shall fail to comply with any Environmental Laws, Agent, after notice from Agent and a reasonable opportunity to cure, on behalf of Lenders may, but without the obligation to do so, for the sole purpose of protecting Agent’s interest in the Collateral:  (A) give such notices or (B) enter onto the Real Property (or authorize third parties to enter onto the Real Property) and take such actions as Agent (or such third parties as directed by Agent) deem reasonably necessary or advisable, to clean up, remove, mitigate or otherwise deal with any such Hazardous Discharge or Environmental Complaint.  All reasonable costs and expenses incurred by Agent and Lenders (or such third parties) in the exercise of any such rights, including any sums paid in connection with any judicial or administrative investigation or proceedings, fines and penalties, together with interest thereon from the date expended at the Default Rate for Domestic Rate Loans constituting Revolving Advances shall be paid upon demand by Borrower, and until paid shall be added to and become a part of the Obligations secured by the Liens created by the terms of this Agreement or any other agreement between Agent, any Lender and Borrower.

(g)           Upon the occurrence and continuance of an Event of Default, promptly upon the written request of Agent from time to time, Borrower shall provide Agent, at Borrower’s expense, with an environmental site assessment or environmental audit report prepared by an environmental engineering firm acceptable in the reasonable opinion of Agent, to assess with a reasonable degree of certainty the existence of a Hazardous Discharge and the potential costs in connection with abatement, cleanup and removal of any Hazardous Substances found on, under, at or within the Real Property.  Any report or investigation of such Hazardous Discharge proposed and acceptable to an appropriate Authority that is charged to oversee the clean-up of such Hazardous Discharge shall be acceptable to Agent.  If such estimates, individually or in the aggregate, exceed $100,000, Agent shall have the right to require Borrower to post a bond, letter of credit or other security reasonably satisfactory to Agent to secure payment of these costs and expenses.

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(h)           Borrower shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their respective employees, agents, directors and officers harmless from and against all loss, liability, damage and expense, claims, costs, fines and penalties, including reasonable attorney’s fees, suffered or incurred by Agent or Lenders under or on account of any Environmental Laws, including the assertion of any Lien thereunder, with respect to any Hazardous Discharge, the presence of any Hazardous Substances affecting the Real Property, whether or not the same originates or emerges from the Real Property or any contiguous real estate, realized as a result of the foregoing except to the extent such loss, liability, damage and expense is attributable to any Hazardous Discharge resulting from actions on the part of Agent or any Lender.  Borrower’s obligations under this Section 4.19 shall arise upon the discovery of the presence of any Hazardous Substances at the Real Property, whether or not any federal, state, or local environmental agency has taken or threatened any action in connection with the presence of any Hazardous Substances.  Borrower’s obligation and the indemnifications hereunder shall survive the termination of this Agreement.

(i)            For purposes of Section 4.19 and 5.7, all references to Real Property shall be deemed to include all of Borrower’s right, title and interest in and to its owned and leased premises.

4.20.       Financing Statements.

Except as respects the financing statements filed by Agent and the financing statements described on Schedule 1.2, no financing statement covering any of the Collateral or any proceeds thereof is on file in any public office except for financing statements related to Permitted Encumbrances.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

5.1.         Authority.

Borrower has full power, authority and legal right to enter into this Agreement and the Other Documents and to perform all its respective Obligations hereunder and thereunder.  This Agreement, the Subordination Agreements and the Other Documents have been duly executed and delivered by Borrower, and this Agreement, the Subordination Agreements and the Other Documents constitute the legal, valid and binding obligation of Borrower enforceable in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium, or similar laws affecting creditors’ rights generally and general principles of equity.  The execution, delivery and performance of this Agreement and of the Other Documents (a) are within Borrower’s limited liability company powers, have been duly authorized by all necessary company action, are not in contravention of law or the terms of Borrower’s operating agreement, certificate of formation or other applicable documents relating

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to Borrower’s formation or to the conduct of Borrower’s business or of any material agreement or undertaking to which Borrower is a party or by which Borrower is bound, including the Acquisition Agreement or the Subordinated Loan Documentation, (b) to the best of Borrower’s knowledge after due diligence, will not conflict with or violate any law or regulation, or any judgment, order or decree of any Governmental Body, (c) will not require the Consent of any Governmental Body or any other Person, except those Consents set forth on Schedule 5.1 hereto, all of which will have been duly obtained, made or compiled prior to the Closing Date and which are in full force and effect and (d) to the best of Borrower’s knowledge after due diligence, will not conflict with, nor result in any breach in any of the provisions of or constitute a default under or result in the creation of any Lien except Permitted Encumbrances upon any asset of Borrower under (i) the provisions of any charter document, operating agreement to which Borrower is a party or by which it or its property is a party or by which it may be bound, including under the provisions of the Subordinated Loan Documentation or the Acquisition Agreement or (ii) the provisions of any agreement, instrument or other instruments to which Borrower is a party or by which it or its property is a party or by which it may be bound provided such conflict or breach would have a Material Adverse Effect.

5.2.         Formation and Qualification.

(a)           Borrower is duly formed and in good standing under the laws of the state indicated on Schedule 5.2(a) and is qualified to do business and is in good standing in the states indicated on Schedule 5.2(a) which constitute all states in which qualification and good standing are necessary for Borrower to conduct its business and own its property and where the failure to so qualify could reasonably be expected to have a Material Adverse Effect.  Borrower has delivered to Agent true and complete copies of its certificate of formation and operating agreement and will promptly notify Agent of any amendment or changes thereto.

(b)           As of the Closing Date, the only Subsidiaries of Borrower are listed on Schedule 5.2(b).  As of the Closing Date, the Persons identified on Schedule 5.2(b) are the record and beneficial owners of all of the shares of Capital Stock of each of the Persons listed on Schedule 5.2(b) as being owned by thereby, there are no proxies, irrevocable or otherwise, with respect to such shares, and no equity securities of any of such Persons are or may become required to be issued by reason of any options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of any Capital Stock of any such Person (except as set forth under the Subordinated Loan Documentation), and there are no contracts, commitments, understandings or arrangements by which any such Person is or may become bound to issue additional shares of its Capital Stock or securities convertible into or exchangeable for such shares.  All of the shares owned by Borrower are owned free and clear of any Liens other than Permitted Encumbrances.

5.3.         Survival of Representations and Warranties.

All representations and warranties of Borrower contained in this Agreement and the Other Documents shall be true at the time of Borrower’s execution of this Agreement and the Other Documents, and shall survive in all material respects the execution, delivery and

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acceptance thereof by the parties thereto and the closing of the transactions described therein or related thereto (except to the extent such representations and warranties relate to an earlier date).

5.4.         Tax Returns.

Borrower’s federal tax identification number is set forth on Schedule 5.4.  Borrower has filed all federal, state and local tax returns and other material reports it is required by law to file and has paid all taxes, fees and other governmental charges that are due and payable.  The provision for taxes on the books of Borrower is reasonably adequate for all years not closed by applicable statutes, and for its current fiscal year, and Borrower has no knowledge of any material deficiency or additional material assessment in connection therewith not provided for on its books.

5.5.         Financial Statements.

(a)           The pro forma balance sheet of Borrower (the “Pro Forma Balance Sheet”) furnished to Agent on the Closing Date reflects the consummation of the transactions contemplated by the Acquisition Agreement, the Subordinated Loan Documentation and under this Agreement (collectively, the “Transactions”) and is accurate, complete and correct and fairly reflects, in all material respects, the financial condition of Borrower as of the Closing Date after giving effect to the Transactions, and has been prepared in accordance with GAAP, consistently applied.  The Pro Forma Balance Sheet has been certified as accurate, complete and correct in all material respects by the President, Chief Financial Officer or Chief Executive Officer of Borrower.  All financial statements referred to in this subsection 5.5(a), including the related schedules and notes thereto, have been prepared, in accordance with GAAP, except as may be disclosed in such financial statements.

(b)           The four quarters cash flow projections of Borrower and its projected balance sheets as of the Closing Date (and income statements), and the twelve month cash flow projections of Borrower and its projected balance sheet after the Closing Date and delivered after the Closing Date (and income statements), copies of the four quarter cash flow projections are annexed hereto as Exhibit 5.5(b) (the “Projections”) were prepared by the President, Chief Financial Officer or Chief Executive Officer of Borrower, are based on underlying assumptions which provide a reasonable basis for the projections contained therein and reflect Borrower’s judgment based on present circumstances of the most likely set of conditions and course of action for the projected period.  The cash flow Projections together with the Pro Forma Balance Sheet, are referred to as the “Pro Forma Financial Statements”.

(c)           The combined and consolidating balance sheets of Borrower and such other Persons prepared by Price Waterhouse Coopers in the Quality of Earnings Report dated December 31, 2008, and the related statements of income, changes in stockholder’s equity, and changes in cash flow for the period ended on such date, all accompanied by reports thereon containing opinions without qualification by independent certified public accountants, copies of which have been delivered to Agent, have been prepared in accordance with GAAP, consistently applied (except for changes in application in which such accountants concur) and present fairly the financial position of Borrower at such date and the results of their operations for such period. 

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Since December 31, 2008 there has been no material change in the condition, financial or otherwise, of Borrower as shown on the consolidated balance sheet as of such date and no material change in the aggregate value of machinery, equipment and Real Property owned by Borrower, except changes in the Ordinary Course of Business

5.6.         Entity Name and Locations.

Borrower has not been known by any other corporate name in the past five years and does not sell Inventory under any other name except as set forth on Schedule 5.6, nor has Borrower been the surviving company of a merger or consolidation or acquired all or substantially all of the assets of any Person during the preceding five (5) years.

5.7.         O.S.H.A. and Environmental Compliance.

(a)           Except as set forth on Schedule 5.7, (i) Borrower has duly complied within all material respects, and its facilities, business, assets, property, leaseholds, Real Property and Equipment are in compliance in all material respects with, the provisions of the Federal Occupational Safety and Health Act, RCRA and all other Environmental Laws; and (ii) there have been no outstanding citations, notices or orders of non-compliance issued to Borrower or relating to its business, assets, property, leaseholds or Equipment under any such laws, rules or regulations, except where such non-compliance is not reasonably likely to have a Material Adverse Effect.

(b)           Borrower has been issued all required federal, state and local licenses, certificates or permits relating to all applicable Environmental Laws, except where such failure to issue would not have a Material Adverse Effect.

(c)           Except as set forth on Schedule 5.7 and except for matters not reasonably expected to have a Material Adverse Effect, (i) there are no visible signs of releases, spills, discharges, leaks or disposal (collectively referred to as “Releases”) of Hazardous Substances at, upon, under or within any Real Property or any premises leased by Borrower; (ii) there are no underground storage tanks or polychlorinated biphenyls on the Real Property or any premises leased by Borrower; (iii) neither the Real Property nor any premises leased by Borrower has  ever been used as a treatment, storage or disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are present on the Real Property or any premises leased by Borrower, excepting such quantities as are handled in accordance with all applicable manufacturer’s instructions and governmental regulations and in proper storage containers and as are necessary for the operation of the commercial business of Borrower or of its tenants.

Sections 4.19 and 5.7 contain the sole representations or warranties of Borrower pertaining to Hazardous Substances, Hazardous Discharges, Hazardous Wastes, Releases, Environmental Laws, Environmental Complaints, Toxic Substances, or any other environmental, health, or safety matter associated with Borrower.

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5.8.         Solvency; No Litigation, Violation, Indebtedness or Default.

(a)           After giving effect to the Transactions, Borrower will be solvent, able to pay its debts as they mature, will have capital sufficient to carry on its business and all businesses in which it is about to engage, and (i) as of the Closing Date, the fair present saleable value of its assets, calculated on a going concern basis, is in excess of the amount of its liabilities and (ii) subsequent to the Closing Date, the fair saleable value of its assets (calculated on a going concern basis) will be in excess of the amount of its liabilities.

(b)           Except as disclosed in Schedule 5.8(b), Borrower has no (i) pending or, to the best of its knowledge, threatened litigation, arbitration, actions or proceedings which involve the possibility of having a Material Adverse Effect, and (ii) liabilities or indebtedness for borrowed money other than the Obligations (or as otherwise permitted under this Agreement).

(c)           Borrower is not in violation of any applicable statute, law, rule, regulation or ordinance in any respect which could reasonably be expected to have a Material Adverse Effect, nor is Borrower in violation of any order of any court, Governmental Body or arbitration board or tribunal.

(d)           Neither Borrower nor any member of the Controlled Group maintains or contributes to any Plan other than those listed on Schedule 5.8(d) hereto.  (i) No Plan has incurred any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived, and Borrower and each member of the Controlled Group has met all applicable minimum funding requirements under Section 302 of ERISA in respect of each Plan; (ii) each Plan which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and the trust related thereto is exempt from federal income tax under Section 501(a) of the Code; (iii) neither Borrower nor any member of the Controlled Group has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due which are unpaid; (iv) no Plan has been terminated by the plan administrator thereof nor by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Plan; (v) at this time, the current value of the assets of each Plan exceeds the present value of the accrued benefits and other liabilities of such Plan and neither Borrower nor any member of the Controlled Group knows of any facts or circumstances which would materially change the value of such assets and accrued benefits and other liabilities; (vi) neither Borrower nor any member of the Controlled Group has breached any of the responsibilities, obligations or duties imposed on it by ERISA with respect to any Plan; (vii) neither Borrower nor any member of a Controlled Group has incurred any liability for any excise tax arising under Section 4972 or 4980B of the Code, and no fact exists which could give rise to any such liability; (viii) neither Borrower nor any member of the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has engaged in a “prohibited transaction” described in Section 406 of the ERISA or Section 4975 of the Code nor taken any action which would constitute or result in a Termination Event with respect to any such Plan which is subject to ERISA; (ix) Borrower and each member of the Controlled Group has made all contributions due and payable with respect to each Plan; (x) there exists no event described in Section 4043(b) of

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ERISA, for which the thirty (30) day notice period has not been waived; (xi) neither Borrower nor any member of the Controlled Group has any fiduciary responsibility for investments with respect to any plan existing for the benefit of persons other than employees or former employees of Borrower and any member of the Controlled Group; (xii) neither Borrower nor any member of the Controlled Group maintains or contributes to any Plan which provides health, accident or life insurance benefits to former employees, their spouses or dependents, other than in accordance with Section 4980B of the Code; (xiii) neither Borrower nor any member of the Controlled Group has withdrawn, completely or partially, from any Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact which would reasonably be expected to result in any such liability; and (xiv) no Plan fiduciary (as defined in Section 3(21) of ERISA) has any liability for breach of fiduciary duty or for any failure in connection with the administration or investment of the assets of a Plan.

5.9.         Patents, Trademarks, Copyrights and Licenses.

All patents, patent applications, registered trademarks, trademark applications, registered service marks, service mark applications, registered copyrights, registered copyright applications, design patents and applications thereto, tradenames and assumed names, filed with any Governmental Body and licenses owned or utilized by Borrower and reasonably necessary for the operation of Borrower are set forth on Schedule 5.9, to the knowledge of Borrower, after due inquiry, are valid and have been duly registered or filed with all appropriate Governmental Bodies and constitute all of the intellectual property rights which are necessary for the operation of its business; there is no known objection to or pending challenge to the validity of any such patent, registered trademark, registered copyright, design rights, registered tradename or license and Borrower is not aware of any grounds for any challenge, except as set forth in Schedule 5.9 hereto.  Each patent, patent application, patent license, trademark, trademark application, trademark license, service mark, service mark application, service mark license, design rights, copyright, copyright application and copyright license owned or held by Borrower and all trade secrets used by Borrower consist of original material or property developed by Borrower or was lawfully acquired by Borrower from the proper and lawful owner thereof.  Each of such items has been maintained so as to preserve the value thereof from the date of creation or acquisition thereof.  Other than software that is commercially available and not customized for Borrower, Borrower is either in possession of all source and object codes related to each piece of software or is the beneficiary of a source code escrow agreement, with respect to all software used by Borrower that is material in the operation of its business.  Each such source code escrow agreement being listed on Schedule 5.9 hereto.

5.10.       Licenses and Permits.

Except as set forth in Schedule 5.10, Borrower (a) is in compliance with and (b) has procured and is now in possession of, all material licenses or permits required by any applicable federal, state or local law, rule or regulation for the operation of its business in each jurisdiction wherein it is now conducting or proposes to conduct business and where the non-compliance or failure to procure such licenses or permits could have a Material Adverse Effect.

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5.11.       Default of Indebtedness.

Borrower is not in default in the payment of the principal of or interest on any material Indebtedness or under any instrument or agreement under or subject to which any material Indebtedness has been issued and no event has occurred under the provisions of any such instrument or agreement which with or without the lapse of time or the giving of notice, or both, constitutes or would constitute an event of default thereunder that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Borrower.

5.12.       No Default.

Borrower is not in default in the payment or performance of any of its material contractual obligations and no Default has occurred that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Borrower.

5.13.       No Burdensome Restrictions.

Borrower is not party to any contract or agreement the performance of which could have a Material Adverse Effect on Borrower (other than Material Contracts).  Borrower has heretofore delivered to Agent true and complete copies of all Material Contracts.  Borrower has not agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien which is not a Permitted Encumbrance.

5.14.       No Labor Disputes.

Borrower is not involved in any labor dispute; there are no strikes or walkouts or union organization of Borrower’s employees, to the best of Borrower’s knowledge after due diligence, threatened or in existence and no labor contract is scheduled to expire during the Term other than as set forth on Schedule 5.14 hereto.

5.15.       Margin Regulations.

Borrower is not engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect.  No part of the proceeds of any Advance will be used for “purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of Governors.

5.16.       Investment Company Act.

Borrower is not an “investment company” registered or required to be registered under the Investment Company Act of 1940, as amended, nor is it controlled by such a company.

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5.17.       Disclosure.

No representation or warranty made by Borrower in this Agreement, the Subordinated Loan Documentation or in the Acquisition Agreement, or in any financial statement, report, certificate or any other document furnished in connection herewith or therewith contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading.  There is no fact known to Borrower or which reasonably should be known to Borrower which Borrower has not disclosed to Agent in writing with respect to the transactions contemplated by the Acquisition Agreement, the Subordinated Loan Documentation or this Agreement which could reasonably be expected to have a Material Adverse Effect.

5.18.       Delivery of Acquisition Agreement and Subordinated Loan Documentation.

Agent has received complete copies of the Acquisition Agreement and the Subordinated Loan Documentation (including all exhibits, schedules and disclosure letters referred to therein or delivered pursuant thereto, if any) and all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof.  None of such documents and agreements has been amended or supplemented, nor have any of the provisions thereof been waived, except pursuant to a written agreement or instrument which has heretofore been delivered to Agent.

5.19.       Swaps.

Borrower is not a party to, nor will it be a party to, any swap agreement whereby Borrower has agreed or will agree to swap interest rates or currencies unless same provides that damages upon termination following an event of default thereunder are payable on an unlimited “two-way basis” without regard to fault on the part of either party.

5.20.       Conflicting Agreements.

No provision of any material mortgage, indenture, contract, agreement, judgment, decree or order binding on Borrower or affecting the Collateral conflicts with, or requires any Consent which has not already been obtained to, or would in any way prevent the execution, delivery or performance of, the terms of this Agreement or the Other Documents, except to the extent such failure would not result in a Material Adverse Effect.

5.21.       Application of Certain Laws and Regulations.

Neither Borrower nor any of its Subsidiaries is a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company” within the meaning of the Public Utility Holding Company Act of 1935, as amended.

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5.22.       Business and Property of Borrower.

Borrower did not engage in any business prior to the Closing Date, except organizational matters in connection with the Acquisition Agreement.

5.23.       [Reserved.]

5.24.       Anti-Terrorism Laws.

(a)           General.  Neither Borrower nor any Affiliate of Borrower is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

(b)           Executive Order No. 13224.  Neither Borrower nor any Affiliate of Borrower or their respective agents acting or benefiting in any capacity in connection with the Advances or other transactions hereunder, is any of the following (each a “Blocked Person”):

(i)            a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

(ii)           a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

(iii)          a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

(iv)         a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order No. 13224;

(v)          a Person or entity that is named as a “specially designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or

(vi)         a Person or entity who is affiliated or associated with a Person or entity listed above.

Neither Borrower or to the knowledge of Borrower, any of its agents acting in any capacity in connection with the Advances or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.

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5.25.       Trading with the Enemy.

Borrower has not engaged, nor does it intend to engage, in any business or activity prohibited by the Trading with the Enemy Act.

5.26.       Federal Securities Laws.

Neither Borrower nor any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) has any securities registered under the Exchange Act or (iii) has filed a registration statement that has not yet become effective under the Securities Act.

5.27.       Commercial Tort Claims.

Borrower does not have any known material commercial tort claims as of the Closing Date.

5.28.       Partnership and Limited Liability Company Interests.

Except as previously disclosed in writing to Agent, none of the Subsidiary Stock consisting of partnership or limited liability company interests (i) is dealt in or traded on a securities exchange or in a securities market, (ii) by its terms expressly provides that it is a security governed by Article 8 of the Uniform Commercial Code, (iii) is an investment company security, (iv) is held in a securities account or (v) constitutes a “security” or a “financial asset” as such terms are defined in Article 8 of the Uniform Commercial Code.

5.29.       Material Contracts.

Set forth on Schedule 5.29, as updated from time to time, is a complete and accurate list of all Material Contracts of Borrower and its Subsidiaries.  All of the Material Contracts are in full force and effect, and no material defaults currently exist thereunder.

ARTICLE VI

AFFIRMATIVE COVENANTS

Borrower shall, until payment in full of the Obligations and termination of this Agreement:

6.1.         Payment of Fees.

Pay to Agent on demand all usual and customary fees and expenses which Agent incurs in connection with (a) the forwarding of Advance proceeds and (b) the establishment and maintenance of any Blocked Accounts or Depository Accounts as provided for in Section 4.15(h).  Agent may, without making demand, charge Borrower’s Account for all such fees and expenses.

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6.2.         Conduct of Business and Maintenance of Existence and Assets.

(a)           Conduct continuously and operate actively its business according to good business practices and maintain all of its properties useful or necessary in its business in good working order and condition (reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of this Agreement), including all licenses, patents, copyrights, design rights, tradenames, trade secrets and trademarks and necessary for the operation of Borrower and take all actions reasonably necessary to enforce and protect the validity of any intellectual property right or other right included in the Collateral; (b) keep in full force and effect its existence and comply in all material respects with the laws and regulations governing the conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect; and (c) make all such reports and pay all such franchise and other taxes and license fees and do all such other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers and franchises under the laws of the United States or any political subdivision thereof where the failure to do so could reasonably be expected to have a Material Adverse Effect.

6.3.         Violations.

Promptly notify Agent in writing of any violation of any law, statute, regulation or ordinance of any Governmental Body, or of any agency thereof, applicable to Borrower which could reasonably be expected to have a Material Adverse Effect.

6.4.         Government Receivables.

Take all steps necessary to protect Agent’s interest in the Collateral to the extent included in any Borrowing Base Certificate under the Federal Assignment of Claims Act, the Uniform Commercial Code and all other applicable state or local statutes or ordinances and deliver to Agent appropriately endorsed, any instrument or chattel paper connected with any Receivable arising out of contracts between Borrower and the United States, any state or any department, agency or instrumentality of any of them.

6.5.         Financial Covenants.

(a)           Fixed Charge Coverage Ratio.

Cause to be maintained a Fixed Charge Coverage Ratio of not less than 1.15 to 1.0 for (i) the one quarter period ending as of September 30, 2009; (ii) the two quarter period ending as of December 31, 2009; (iii) the three quarter period ending as of March 31, 2010; and (iv) the four quarter period ending as of June 30, 2010 and for each fiscal quarter thereafter.

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(b)           Minimum EBITDA.

Cause to be maintained an EBITDA of at least (i) $50,000 as of July 31, 2009; (ii) $92,000 as of August 31, 2009; (iii) $175,000 as of September 30, 2009; (iv) $237,000 as of October 31, 2009; and (v) $171,000 as of November 30, 2009.

6.6.         Execution of Supplemental Instruments.

Execute and deliver to Agent from time to time, upon demand, such supplemental agreements, statements, assignments and transfers, or instructions or documents relating to the Agent’s Lien on the Collateral, and such other instruments as Agent may reasonably request, in order that the full intent of this Agreement may be carried into effect.

6.7.         Payment of Indebtedness.

Pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to specified grace periods and, in the case of the trade payables, to normal payment practices) all its obligations and liabilities of whatever nature, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect or when the amount or validity thereof is currently being Properly Contested.

6.8.         Standards of Financial Statements.

Cause all financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12 and 9.13, as to which GAAP is applicable to be complete and correct in all material respects (subject, in the case of interim financial statements, to normal year-end audit adjustments) and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except as concurred in by such reporting accountants or officer, as the case may be, and disclosed therein).

6.9.         Federal Securities Laws.

Promptly notify Agent in writing if Borrower or any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) registers any securities under the Exchange Act or (iii) files a registration statement under the Securities Act.

6.10.       Exercise of Rights.

Enforce all of its rights under the Acquisition Agreement and the Indemnification Agreement executed in connection therewith including, but not limited to, all indemnification rights and pursue all remedies available to it with diligence and in good faith in connection with the enforcement of any such rights.

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6.11.       Real Property.

If Borrower shall acquire at any time or times hereafter any fee simple interest in real property with a value in excess of $250,000, then within ninety (90) days of the acquisition thereof Borrower shall execute and deliver to Agent, as additional security and Collateral for the Obligations, deeds of trust, security deeds, mortgages or other collateral assignments reasonably satisfactory in form and substance to Agent and its counsel (herein collectively referred to as “New Mortgages”) covering such real property.  The New Mortgages shall be duly recorded (at Borrower’s expense) in each office where such recording is required to constitute a valid lien on the real property covered thereby.  In respect of any New Mortgage, Borrower shall deliver to Agent, at Borrower’s expense, mortgagee title insurance policies issued by a title insurance company reasonably satisfactory to Agent, which policies shall be in form and substance reasonably satisfactory to Agent and shall insure a valid lien in favor of Agent on the property covered thereby, subject only to Permitted Encumbrances and those other exceptions reasonably acceptable to Agent and its counsel.  Borrower shall also deliver to Agent such other usual and customary documents, including, without limitation, ALTA surveys of the real property described in the New Mortgages, as Agent and its counsel may reasonably request relating to the real property subject to the New Mortgages.

6.12.       Opening Balance Sheet.

Within ninety (90) days of the Closing Date Borrower shall deliver to Agent an opening balance sheet for Borrower from J.H. Cohn LLP.

ARTICLE VII

NEGATIVE COVENANTS

Borrower shall not, until satisfaction in full of the Obligations and termination of this Agreement:

7.1          Merger, Consolidation, Acquisition and Sale of Assets.

(a)           Enter into any merger, consolidation or other reorganization with or into any other Person or acquire all or a substantial portion of the assets or Equity Interests of any Person or permit any other Person to consolidate with or merge with it.

(b)           Sell, lease, transfer or otherwise dispose of any of its properties or assets, except (i) dispositions of Inventory, Equipment and/or other assets to the extent expressly permitted by Section 4.3 and (ii) any other sales or dispositions expressly permitted by this Agreement.

7.2.         Creation of Liens.

Create or suffer to exist any Lien or transfer upon or against any of its property or assets now owned or hereafter acquired, except Permitted Encumbrances.

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7.3.         Guarantees.

Become liable upon the obligations or liabilities of any Person by assumption, endorsement or guaranty thereof or otherwise (other than to Lenders) except (a) guarantees made in the Ordinary Course of Business up to an aggregate amount of $100,000, and (b) the endorsement of checks in the Ordinary Course of Business.

7.4          Investments.

Purchase or acquire obligations or Equity Interests of, or any other interest in, any Person, or make other investments except (a) obligations issued or guaranteed by the United States of America or any agency thereof, (b) commercial paper with maturities of not more than one hundred eighty (180) days and a published rating of not less than A-1 or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers’ acceptances having maturities of not more than one hundred eighty (180) days and repurchase agreements backed by United States government securities of a commercial bank if (i) such bank has a combined capital and surplus of at least $500,000,000, or (ii) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment rating agency, (d) U.S. money market funds that invest solely in obligations issued or guaranteed by the United States of America or an agency thereof, (e) investments in respect of Interest Rate Hedges, (f) extensions of trade credit in the Ordinary Course of Business, (g) loan and advances to officers, directors and employees made in compliance with Section 7.5, (h) investments existing on the Closing Date and set forth on Schedule 7.4; (i) investments in the form of promissory notes in connection with sales permitted under Section 7.1; and (j) investments in connection with the bankruptcy or reorganization of settlement of delinquent accounts and disputes with customers and suppliers.

7.5.         Loans.

Make advances, loans or extensions of credit to any Person, including any Parent, Subsidiary or Affiliate except with respect to (a) the extension of commercial trade credit in connection with the sale of Inventory in the Ordinary Course of Business and (b) loans to its employees and officers not to exceed the aggregate amount of $250,000 at any time outstanding.

7.6.         Capital Expenditures.

Contract for, purchase or make any expenditure or commitments for Capital Expenditures in any fiscal year in an aggregate amount in excess of $400,000, excluding Capital Expenditures financed by equity investments in Borrower.

7.7.         Distributions.

(i) Pay or make any distribution on any membership interests of Borrower other than the purchase of capital stock or options from present or former employees, officers, directors or consultants of any Borrower or their respective estates, spouses or family members upon the

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death, disability or termination of employment of such employee, officer, director or consultant (provided that no such purchase shall be made after the occurrence and during the continuation of an Event of Default and the amount of such purchase shall not exceed $250,000 in the aggregate) or (ii) apply any of its funds, property or assets to the purchase, redemption or other retirement of any membership interests, or of any options to purchase or acquire any such membership interests of Borrower (other than the purchase of capital stock or options from present or former employees, officers, directors or consultants of Borrower or their respective estates, spouses or family members upon the death, disability or termination of employment of such employee, officer, director or consultant (provided that no such purchase shall be make after the occurrence and during the continuation of an Event of Default and the aggregate amount of such purchase shall not exceed $250,000 in the aggregate)) except that so long as (a) a notice of termination with regard to this Agreement shall not be outstanding, and (b) no Event of Default or Default shall have occurred, and (c) the purpose for such purchase, redemption or distribution shall be as set forth in writing to Agent at least ten (10) Business Days prior to such purchase, redemption or distribution and such purchase, redemption or distribution shall in fact be used for such purpose.  Borrower shall be permitted to make distributions to its members in an aggregate amount equal to the Increased Tax Burden of its members.  Payments to members shall be made so as to be available when the tax is due, including in respect of estimated tax payments.  In the event (x) the actual distribution to members made pursuant to this Section 7.7 exceeds the actual income tax liability of any member due to Borrower’s status as a limited liability company, or (y) if Borrower was a subchapter C corporation, Borrower would be entitled to a refund of income taxes previously paid as a result of a tax loss during a year in which Borrower is a limited liability company, then the members shall repay Borrower the amount of such excess or refund, as the case may be, no later than the date the annual tax return must be filed by Borrower (without giving effect to any filing extensions).  In the event such amounts are not repaid in a timely manner by any member, then such Borrower shall not pay or make any distribution with respect to, or purchase, redeem or retire, any membership interest of Borrower held or controlled by, directly or indirectly, such member until such payment has been made.

7.8.         Indebtedness.

Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except in respect of:

(a)           Indebtedness to Lenders under this Agreement and the Other Documents;

(b)           Indebtedness incurred for Capital Expenditures permitted under Section 7.6 hereof;

(c)           Permitted Purchase Money Indebtedness;

(d)           Indebtedness due under the Subordinated Loan Documentation and Indebtedness assumed or incurred under or pursuant to the Acquisition Agreement and any refinancings of such Indebtedness, provided that in connection with such refinancing:  (i) the aggregate principal amount of such Indebtedness is not increased, (ii) the scheduled maturity date of such

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Indebtedness is not shortened, (iii) the covenants or defaults are not materially more restrictive or more onerous than analogous provisions in the Subordinated Loan Documentation as in effect on the date hereof, and (iv) an intercreditor agreement in form and substance reasonably satisfactory to Agent and the Required Lenders shall have been executed and delivered to Agent prior to the consummation of such refinancing (it being agreed that an intercreditor agreement containing terms substantially similar to the terms set forth in the Subordination Agreements will be satisfactory);

(e)           Indebtedness described on Schedule 7.8 and any refinancings of such Indebtedness, provided that the aggregate principal amount of such Indebtedness is not increased, the scheduled maturity dates of such Indebtedness are not shortened and such refinancing is on terms and conditions no more restrictive than the terms and conditions of the Indebtedness being refinanced;

(f)            Indebtedness under any Interest Rate Hedge;

(g)           Indebtedness unsecured in an amount not to exceed $200,000 in the aggregate;

(h)           Indebtedness under promissory notes issued by Borrower to (i) Richard Horowitz in the amount of any draw under the NY Commercial Bank A Letter of Credit or the NY Commercial Bank B Letter of Credit or (ii) Carousel Capital Partners II, L.P. in the amount of any Shortfall Payment required by the Carousel Guaranty; provided, however, that any such promissory note (A) must be in the form attached hereto as Exhibit 7.8(h)(i) and be fully subordinate to the Obligations pursuant to a subordination agreement in the form attached hereto as Exhibit 7.8(h)(ii), (B) may provide for quarterly payments of interest provided no Default or Event of Default then exists at a rate not to exceed six and one-half of one percent (6.50%) per annum and (C) may provide for principal payments after repayment in full of the Term Note provided no Default or Event of Default then exists and provided that after making any such principal payment Undrawn Availability is at least $400,000 for the day such payment is made and for the next four Business Days; and

(i)            Indebtedness consisting of taxes either not yet due or being property contested pursuant to the Agreement.

7.9.         Nature of Business.

Substantially change the nature of the business in which it is presently engaged, nor except as specifically permitted hereby purchase or invest, directly or indirectly, in any assets or property other than in the Ordinary Course of Business for assets or property which are useful in, necessary for and are to be used in its business.

7.10.       Transactions with Affiliates.

Except for transactions under the Subordinated Loan Documentation, the Section 7.8(h) notes, products purchased from Borrower or its Affiliates listed on the schedule provided to Agent and the Transition Services Agreements and Supply Agreements furnished to Agent,

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directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, make any payment to, or enter into any transaction or arrangement with, or otherwise deal with, any Affiliate, except transactions disclosed to the Agent, which are in the Ordinary Course of Business, on an arm’s-length basis on terms and conditions no less favorable than terms and conditions which would have been obtainable from a Person other than an Affiliate.

7.11.       Leases.

Enter as lessee into any lease arrangement for real or personal property (unless capitalized and permitted under Section 7.6 hereof) if after giving effect thereto, aggregate annual rental payments for all leased real and personal property would exceed $2,000,000 in any one fiscal year in the aggregate for Borrower.

7.12.       Subsidiaries.

(a)           Form any Subsidiary.

(b)           Enter into any partnership, joint venture or similar arrangement.

7.13.       Fiscal Year and Accounting Changes.

Change its fiscal year from its current practices in accordance with its financial statements or make any material change (i) in accounting treatment and reporting practices except as required by GAAP or (ii) in tax reporting treatment except as required by law.

7.14.       Pledge of Credit.

Now or hereafter pledge Agent’s or any Lender’s credit on any purchases or for any purpose whatsoever or use any portion of any Advance in or for any business other than Borrower’s business as conducted on the date of this Agreement.

7.15.       Amendment of Organizational Documents.

Amend, modify or waive any material term or material provision of its Certificate of Formation or Operating Agreement or other organizational documents or adopt any resolution which would have the effect of diminishing the rights of Agent or the Lenders under this Agreement or any Other Documents.

7.16.       Compliance with ERISA.

(i) (x) Maintain, or permit any member of the Controlled Group to maintain, or (y) become obligated to contribute, or permit any member of the Controlled Group to become obligated to contribute, to any Plan, other than those Plans disclosed on Schedule 5.8(d), (ii) engage, or permit any member of the Controlled Group to engage, in any non-exempt “prohibited transaction”, as that term is defined in Section 406 of ERISA and Section 4975 of the

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Code, (iii) incur, or permit any member of the Controlled Group to incur, any “accumulated funding deficiency”, as that term is defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any member of the Controlled Group to terminate, any Plan where such event could result in any liability of Borrower or any member of the Controlled Group or the imposition of a lien on the property of Borrower or any member of the Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any member of the Controlled Group to assume, any obligation to contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any member of the Controlled Group to incur, any withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any Termination Event, (viii) fail to comply, or permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the Code or other Applicable Laws in respect of any Plan, (ix) fail to meet, or permit any member of the Controlled Group to fail to meet, all minimum funding requirements under ERISA or the Code or postpone or delay or allow any member of the Controlled Group to postpone or delay any funding requirement with respect of any Plan.

7.17.       Prepayment of Indebtedness.

At any time, prepay, repurchase, redeem, retire or otherwise acquire, or make any payment on account of any principal of, interest on or premium payable in connection with the prepayment or redemption of any Indebtedness for borrowed money (other than Indebtedness owed to the Lender under this Agreement or the Other Documents), except (i) any such prepayment, repurchase, redemption, retirement or acquisition expressly permitted in the Subordination Agreements, (ii) in connection with any refinancing of Indebtedness in compliance with Section 7.8(d) or Section 7.8(e) or (iii) in accordance with Indebtedness permitted under Section 7.8(b), (c), (e), (f), (g), (h), (i) and (j).

7.18.       Anti-Terrorism Laws.

Borrower shall not, until satisfaction in full of the Obligations and termination of this Agreement, nor shall it permit any Affiliate or agent acting or benefitting in any capacity in connection with the Advances or other transactions hereunder:

(a)           Conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person.

(b)           Deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.

(c)           Engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order No. 13224, the USA PATRIOT Act or any other Anti-Terrorism Law.  Borrower shall deliver to Lenders any certification or other evidence requested from time to time by any Lender in its sole discretion, confirming Borrower’s compliance with this Section.

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7.19.       Trading with the Enemy Act.

Engage in any business or activity in violation of the Trading with the Enemy Act.

7.20.       Subordinated Notes.

At any time, directly or indirectly, pay, prepay, repurchase, redeem, retire or otherwise acquire, or make any payment on account of any principal of, interest on or premium payable in connection with the repayment or redemption of the Subordinated Notes or the Section 7.8(h) notes, except as expressly permitted in the Subordination Agreements or the Section 7.8(h) notes.

7.21.       Other Agreements.

Enter into any material amendment, waiver or modification of (a) the Acquisition Agreement, (b) the Subordinated Loan Documentation, other than as permitted by the Subordination Agreements, or (c) any Material Contract that is materially adverse to Agent and Lender.

7.22        Additional Negative Pledges.

Create or otherwise cause or suffer to exist or become effective, directly or indirectly, (i) any prohibition or restriction (including any agreement to provide equal and ratable security to any other Person in the event a Lien is granted to or for the benefit of the Agent and the Lenders) on the creation or existence of any Lien upon the assets of Borrower, other than in the documentation evidencing Permitted Encumbrances or (ii) any contractual obligation which may restrict or inhibit the Agent’s rights or ability to sell or otherwise dispose of the Collateral or any part thereof after the occurrence of an Event of Default.

7.23.       Additional Bank Accounts.

Open, maintain or otherwise have any checking, savings or other accounts at any bank or other financial institution, or any other account where money is or may be deposited or maintained with any Person, other than (a) the accounts set forth on Schedule 4.15(h), each of which shall be subject to a blocked account arrangement with the depository institution, except to the extent otherwise determined by Agent (b) deposit accounts established after the Closing Date that are subject to a blocked account arrangement with the depository institution in form and substance satisfactory to Agent, (c) other deposit accounts established after the Closing Date solely as payroll and other zero balance accounts and (d) other deposit accounts established after the Closing Date, so long as at any time the balance in any such account does not exceed $10,000 and the aggregate balance in all such accounts does not exceed $100,000.

7.24.      Remuneration.

Other than amounts paid under the Consulting Agreements, Borrower will not permit the aggregate amount of salary and other direct and indirect remuneration (including, but not limited

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to, employee benefits and professional, consulting and management fees and expenses and bonuses) paid or accrued by Borrower during any fiscal year to or for the benefit of (a) Countrywide Hardware, Inc. and Visador Holding Corporation for Management Fees to exceed $250,000 each in any fiscal year with respect to Countrywide Hardware, Inc. and $200,000 in fiscal year 2009 and $300,000 in fiscal year 2010 with respect to Visador Holding Corporation (beginning with the 2009 fiscal year; provided, however, any accrued and unpaid Management Fees from any prior year where such Management Fee was not paid may be paid at any time) or (b) any other officer, director or member of management of any Borrower to exceed amounts which are reasonable and customary for employees with similar responsibility and experience of other companies in the same industry as the Borrower; provided, however, that nothing in this Section 7.26 shall prohibit Borrower from (A) paying P&F Industries’ out-of-pocket expenses, fees and closing costs on the Closing Date in connection with the transactions contemplated hereby and (B) paying indemnification claims made by an officer or director or shareholder of Borrower to the extent of any contractual obligation to do so currently in effect; provided, however, Borrower agrees to promptly notify Agent of the payment of any such indemnification claims.  Notwithstanding the foregoing, no Management Fees shall be paid by Borrower for a period of twelve (12) months following the Closing Date and in no event shall be paid if after making any such payment (i) Undrawn Availability is less than $500,000 if the reserve set forth in Section 2.1(a)(iv) is not in effect or $350,000 if the reserve is in effect on the day such payment is made and for the next ten (10) Business Days or (ii) any of the other financial covenants set forth herein would be violated.

ARTICLE VIII

CONDITIONS PRECEDENT

8.1.         Conditions to Initial Advances.

The agreement of Lenders to make the initial Advances requested to be made on the Closing Date is subject to the satisfaction, or waiver by Agent, immediately prior to or concurrently with the making of such Advances, of the following conditions precedent:

(a)           Loan Documents.

Agent shall have received the Agreement, the Notes and each Other Documents duly executed and delivered by an authorized officer of Borrower;

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(b)           Filings, Registrations and Recordings.

Each document (including any Uniform Commercial Code financing statement) required by this Agreement, any related agreement or under law or reasonably requested by the Agent to be filed, registered or recorded in order to create, in favor of Agent, a perfected security interest in or lien upon the Collateral shall have been properly filed, registered or recorded in each jurisdiction in which the filing, registration or recordation thereof is so required or requested, and Agent shall have received an acknowledgment copy, if required, or other evidence satisfactory to it, of each such filing, registration or recordation and satisfactory evidence of the payment of any necessary fee, tax or expense relating thereto;

(c)           Company Proceedings of Borrower.

Agent shall have received a copy of the resolutions in form and substance reasonably satisfactory to Agent, of the Board of Directors, Board of Managers or other similar managing body of Borrower authorizing (i) the execution, delivery and performance of this Agreement and each of the Other Documents and (ii) the granting by Borrower of the security interests in and liens upon the Collateral in each case certified by the Secretary or an Assistant Secretary of Borrower as of the Closing Date; and, such certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date of such certificate;

(d)           Incumbency Certificates of Borrower.

Agent shall have received a certificate of the Secretary or an Assistant Secretary of Borrower, dated the Closing Date, as to the incumbency and signature of the officers of Borrower executing this Agreement, the Other Documents, any certificate or other documents to be delivered by it pursuant hereto, together with evidence of the incumbency of such Secretary or Assistant Secretary;

(e)           Certificates.

Agent shall have received a copy of the Articles or Certificate of Formation of Borrower, and all amendments thereto, certified by the Secretary of State or other appropriate official of its jurisdiction of Formation together with copies of the Operating Agreement of Borrower and all agreements of Borrower’s members certified as accurate and complete by the Secretary of Borrower;

(f)            Good Standing Certificates.

Agent shall have received good standing certificates for Borrower dated not more than thirty (30) days prior to the Closing Date, issued by the Secretary of State or other appropriate official of Borrower’s jurisdiction of organization and each jurisdiction where the conduct of Borrower’s business activities or the ownership of its properties necessitates qualification;

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(g)           Legal Opinion.

Agent shall have received the executed legal opinion of counsel to Borrower in form and substance reasonably satisfactory to Agent which shall cover such matters incident to the transactions contemplated by this Agreement, the Note, the Other Documents, the Subordination Agreements and related agreements as Agent may reasonably require and Borrower hereby authorizes and directs such counsel to deliver such opinions to Agent and Lenders;

(h)           No Litigation.

(i) No litigation, investigation or proceeding before or by any arbitrator or Governmental Body shall be continuing or threatened against Borrower or against the officers or directors of Borrower (A) in connection with this Agreement, the Other Documents, the Subordinated Loan Documents or any of the transactions contemplated thereby and which, in the reasonable opinion of Agent, is deemed material or (B) which could, in the reasonable opinion of Agent, have a Material Adverse Effect; and (ii) no injunction, writ, restraining order or other order of any nature materially adverse to Borrower or the conduct of its business or inconsistent with the due consummation of the Transactions shall have been issued by any Governmental Body;

(i)            Financial Condition Certificates.

Agent shall have received an executed Financial Condition Certificate in the form of Exhibit 8.1(i);

(j)            Collateral Examination.

Agent shall have completed Collateral examinations and received appraisals, the results of which shall be reasonably satisfactory in form and substance to Lenders, of the Receivables, Inventory, General Intangibles, and Equipment of Borrower and all books and records in connection therewith, including, without limitation, satisfactory review of the detail supporting the non-recurring adjustments for reasonableness;

(k)           Fee.

Agent shall have received all fees payable to Agent and Lenders on or prior to the Closing Date hereunder, including pursuant to Article III hereof;

(l)            Pro Forma Financial Statements.

Agent shall have received a copy of the Pro Forma Financial Statements which shall be satisfactory in all respects to Lenders;

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(m)          Acquisition and Subordinated Loan Documents.

Agent shall have received final executed copies of the Acquisition Agreement and the Subordinated Loan Documentation, and all related agreements, documents and instruments, together with all exhibits, schedules and amendments thereto, as in effect on the Closing Date;

(n)           Subordination Agreements.

Agent shall have entered into a Subordination Agreement with Borrower and each Subordinated Lender which shall set forth the basis upon which the “Subordinated Noteholder” may receive, and Borrower may make, payments under the applicable Subordinated Note, which basis shall be reasonably satisfactory in form and reasonably satisfactory in substance to Agent;

(o)           Insurance.

Agent shall have received in form and substance reasonably satisfactory to Agent, certificates of insurance of Borrower’s casualty insurance policies, together with loss payable endorsements on Agent’s standard form of lender loss payee endorsement naming Agent as loss payee, and certificates of insurance of Borrower’s liability insurance policies, together with endorsements naming Agent as a co-insured;

(p)           Disbursement Agreement; Payment Instructions.

Agent shall have received written instructions from Borrower directing the application of proceeds of the initial Advances made pursuant to this Agreement;

(q)           Blocked Accounts.

Agent shall have received duly executed agreements establishing the Blocked Accounts or Depository Accounts with financial institutions reasonably acceptable to Agent for the collection or servicing of the Receivables and proceeds of the Collateral;

(r)           Consents.

Agent shall have received any and all Consents necessary to permit the effectuation of the transactions contemplated by this Agreement and the Other Documents; and, Agent shall have received such Consents and waivers of such third parties as might assert claims with respect to the Collateral, as Agent and its counsel shall deem reasonably necessary;

(s)           No Adverse Material Change.

(i) since December 31, 2009 (the date of the Quality of Earnings Report prepared by Price Waterhouse Coopers on Borrower’s behalf) there shall not have occurred any event, condition or state of facts which could reasonably be expected to have a Material Adverse Effect and (ii) no representations made or information supplied to Agent or Lenders shall have been proven to be inaccurate or misleading in any material respect;

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(t)            Leasehold Agreements.

Agent shall have received landlord, mortgagee or warehouseman, agreements reasonably satisfactory to Agent with respect to all premises leased by Borrower at which Inventory and books and records are located;

(u)           Contract Review.

Agent shall have reviewed copies of all Material Contracts of Borrower requested by Agent including leases, union contracts, labor contracts, vendor supply contracts, license agreements, purchase and sale agreements and distributorship agreements and such contracts and agreements shall be reasonably satisfactory in all respects to Agent;

(v)            Closing Certificate.

Agent shall have received a closing certificate signed by the President, Chief Financial Officer or Chief Executive Officer of Borrower dated as of the date hereof, stating, among other matters, that (i) all representations and warranties set forth in this Agreement and the Other Documents are true and correct on and as of such date, (ii) Borrower is on such date in compliance with all the terms and provisions set forth in this Agreement and the Other Documents and (iii) on such date no Default or Event of Default has occurred or is continuing;

(w)           Borrowing Base.

Agent shall have received evidence from Borrower that the aggregate amount of Eligible Receivables and Eligible Inventory is sufficient in value and amount to support Advances in the amount requested by Borrower on the Closing Date;

(x)           Undrawn Availability.

After giving effect to the initial Advances hereunder, Borrower shall have Undrawn Availability of at least $1,200,000;

(y)           Compliance with Laws.

Agent shall be reasonably satisfied that Borrower is in compliance with all pertinent federal, state, local or territorial regulations, including those with respect to the Federal Occupational Safety and Health Act, the Environmental Protection Act, ERISA and the Trading with the Enemy Act;

(z)           Stock Building Agreement.

Agent shall have received and approved the form Stock Building Supply “Extended Terms Agreement” and the associated accounts receivable;

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(aa)         Quality of Earnings Report.

Agent shall have received a Quality of Earning report satisfactory to Agent prepared by a firm acceptable to Agent;

(bb)         Financial Statements.

Agent shall have received year-to-date financial statements for Seller and Woodmark International, L.P. (without inclusion of the kitchen and bath business) satisfactory to Agent;

(cc)         Management Meeting.

Agent shall have met with the management team of Borrower and certain officers of P&F;

(dd)         NY Commercial Bank Letters of Credit and Carousel Guaranty.

The NY Commercial Bank Letters of Credit and the Carousel Guaranty; and

(ee)         Other.

All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the Transactions shall be reasonably satisfactory in form and substance to Agent and its counsel.

8.2.         Conditions to Each Advance.

The agreement of Lenders to make any Advance requested to be made on any date (including the initial Advance), is subject to the satisfaction of the following conditions precedent as of the date such Advance is made:

(a)           Representations and Warranties.

Each of the representations and warranties made by Borrower in or pursuant to this Agreement, the Other Documents and any related agreements to which it is a party, and each of the representations and warranties contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement, the Other Documents or any related agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date (except to the extent the same relate to an earlier date);

(b)           No Default.

No Event of Default or Default shall have occurred and be continuing on such date, or would exist after giving effect to the Advances requested to be made, on such date and, in the case of the initial Advance, after giving effect to the consummation of the transactions

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contemplated by the Acquisition Agreement; provided, however that Agent, in its sole discretion, may continue to make Advances notwithstanding the existence of an Event of Default or Default and that any Advances so made shall not be deemed a waiver of any such Event of Default or Default; and

(c)           Maximum Advances.

In the case of any type of Advance requested to be made, after giving effect thereto, the aggregate amount of such type of Advance shall not exceed the maximum amount of such type of Advance permitted under this Agreement.

Each request for an Advance by Borrower hereunder shall constitute a representation and warranty by Borrower as of the date of such Advance that the conditions contained in this subsection shall have been satisfied.

ARTICLE IX

INFORMATION AS TO BORROWER

Borrower shall, until satisfaction in full of the Obligations and the termination of this Agreement:

9.1.         Disclosure of Material Matters.

Promptly upon learning thereof, report to Agent all matters materially affecting the value, enforceability or collectability of any portion of the Collateral, including Borrower’s reclamation or repossession of, or the return to Borrower of, a material amount of goods or claims or disputes asserted by any Customer or other obligor.

9.2          Schedules.

Deliver to Agent on or before the fifteenth (15th) day of each month as and for the prior month (a) accounts receivable ageings inclusive of reconciliations to the general ledger, (b) accounts payable schedules inclusive of reconciliations to the general ledger, (c) Inventory reports and (d) a Borrowing Base Certificate in form and substance reasonably satisfactory to Agent (which shall be calculated as of the last day of the prior month and which shall not be binding upon Agent or restrictive of Agent’s rights under this Agreement).  In addition, Borrower will deliver to Agent (i) a weekly Borrowing Base Certificate in form and substance satisfactory to Agent and (ii) at such intervals as Agent may require:  (a) confirmatory assignment schedules, (b) copies of Customer’s invoices, (c) evidence of shipment or delivery, and (d) such further schedules, documents and/or information regarding the Collateral as Agent may reasonably require including trial balances and test verifications.  Agent shall have the right to confirm and verify all Receivables by any manner and through any medium it considers advisable and do whatever it may deem reasonably necessary to protect its interests hereunder.  The items to be provided under this Section are to be in form reasonably satisfactory to Agent

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and executed by Borrower and delivered to Agent from time to time solely for Agent’s convenience in maintaining records of the Collateral, and Borrower’s failure to deliver any of such items to Agent shall not affect, terminate, modify or otherwise limit Agent’s Lien with respect to the Collateral.

9.3.         Environmental Reports.

Furnish Agent, concurrently with the delivery of the financial statements referred to in Sections 9.7 and 9.8, a Compliance Certificate signed by the President, Chief Financial Officer, Chief Executive Officer or Controller of Borrower stating, to the best of his knowledge, that Borrower is in compliance in all material respects with all federal, state and local Environmental Laws.  To the extent Borrower is not in compliance with the foregoing laws, the Compliance Certificate shall set forth with specificity all areas of non-compliance and the proposed action Borrower will implement in order to achieve full compliance.

9.4.         Litigation.

Promptly notify Agent in writing of any claim, litigation, suit or administrative proceeding affecting Borrower, whether or not the claim is covered by insurance, and of any litigations, suit or administrative proceeding, which in any such case affects a material portion of the Collateral or which could reasonably be expected to have a Material Adverse Effect.

9.5.         Material Occurrences.

Promptly notify Agent in writing upon the occurrence of (a) any Event of Default or Default; (b) any event of default under the Subordinated Loan Documentation; (c) any event which with the giving of notice or lapse of time, or both, would constitute an event of default under the Subordinated Loan Documentation; (d) any event, development or circumstance whereby any financial statements or other reports furnished to Agent fail in any material respect to present fairly, in accordance with GAAP consistently applied, the financial condition or operating results of Borrower as of the date of such statements; (e) any accumulated retirement plan funding deficiency which, if such deficiency continued for two plan years and was not corrected as provided in Section 4971 of the Code, could subject Borrower to a tax imposed by Section 4971 of the Code; (f) each and every default by Borrower which results in the acceleration of the maturity of any material Indebtedness, including the names and addresses of the holders of such Indebtedness with respect to which there is a default existing or with respect to which the maturity has been or could be accelerated, and the amount of such Indebtedness; and (g) any other development in the business or affairs of Borrower which could reasonably be expected to have a Material Adverse Effect; in each case describing the nature thereof and the action Borrower proposes to take with respect thereto.

9.6.         Government Receivables.

Notify Agent promptly if any of its Receivables arise out of contracts between Borrower and the United States, any state, or any department, agency or instrumentality of any of them.

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9.7.         Annual Financial Statements.

Furnish Agent within ninety (90) days after the end of each fiscal year of Borrower, financial statements of Borrower including, but not limited to, statements of income and stockholders’ equity and cash flow from the beginning of the current fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year, all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in reasonable detail and accompanied by a report and opinion (which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like assumption, qualification or exception as to scope of the audit) of J.H. Cohn LLP or another an independent certified public accounting firm selected by Borrower and reasonably satisfactory to Agent (the “Accountants”).  Beginning with fiscal year 2009 and each fiscal year thereafter, the report of the Accountants shall be accompanied by a statement of the Accountants certifying that no information came to their attention which to their knowledge constituted an Event of Default or a Default under this Agreement.  In addition, the reports shall be accompanied by a Compliance Certificate.

9.8          Quarterly Financial Statements.

Furnish Agent within forty-five (45) days after the end of each fiscal quarter, an unaudited balance sheet of Borrower and unaudited statements of income and stockholders’ equity and cash flow of Borrower reflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such quarter, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year end adjustments that individually and in the aggregate are not material to Borrower’s business.  The reports shall be accompanied by a Compliance Certificate.

9.9.         Monthly Financial Statements.

Furnish Agent within thirty (30) days after the end of each month, an unaudited balance sheet of Borrower and unaudited statements of income and stockholders’ equity and cash flow of Borrower reflecting results of operations from the beginning of the fiscal year to the end of such month and for such month, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year end adjustments in accordance with GAAP, and accompanied by management and analysis discussion.  The reports for the last month of each quarter shall be accompanied by a Compliance Certificate regarding the quarter then ended.

9.10.       Other Reports.

Furnish Agent as soon as available, but in any event within ten (10) days after the issuance thereof, (i) with copies of such financial statements, reports and returns as Borrower shall send to its members and (ii) copies of all notices, reports, financial statements and other materials sent pursuant to the Subordinated Loan Documentation.

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9.11.       Additional Information.

Furnish Agent with such additional information as Agent shall reasonably request in order to enable Agent to determine whether the terms, covenants, provisions and conditions of this Agreement and the Note have been complied with by Borrower including, without the necessity of any request by Agent, (a) copies of all environmental audits and reviews, (b) at least thirty (30) days prior thereto, notice of Borrower’s opening of any new office or place of business or Borrower’s closing of any existing office or place of business, and (c) promptly upon Borrower’s learning thereof, notice of any labor dispute to which Borrower may become a party, any strikes or walkouts relating to any of its plants or other facilities, and the expiration of any labor contract to which Borrower is a party or by which Borrower is bound.

9.12.       Projected Operating Budget.

Furnish Agent, no later the first day of Borrower’s fiscal years commencing with fiscal year 2010, a month by month projected operating budget and cash flow of Borrower for such fiscal year (including an income statement for each month and a balance sheet as at the end of the last month in each fiscal quarter), such projections include a summary of the assumptions upon which such projections are based.

9.13.       Variances From Operating Budget.

Furnish Agent, concurrently with the delivery of the financial statements referred to in Section 9.7 and each quarterly report, a written report summarizing all material variances from budgets submitted by Borrower pursuant to Section 9.12 and a discussion and analysis by management with respect to such variances.

9.14.       Notice of Suits, Adverse Events.

Furnish Agent with prompt written notice of (i) any lapse or other termination of any Consent issued to Borrower by any Governmental Body or any other Person that is material to the operation of Borrower’s business, (ii) any refusal by any Governmental Body or any other Person to renew or extend any such Consent; and (iii) copies of any periodic or special reports filed by Borrower with any Governmental Body or Person, if such reports indicate any material change in the business, operations, affairs or condition of Borrower, or if copies thereof are requested by Lender, and (iv) copies of any material notices and other communications from any Governmental Body or Person which specifically relate to Borrower.

9.15.       ERISA Notices and Requests.

Furnish Agent with immediate written notice in the event that (i) Borrower or any member of the Controlled Group knows or has reason to know that a Termination Event has occurred, together with a written statement describing such Termination Event and the action, if any, which Borrower or any member of the Controlled Group has taken, is taking, or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, Department of Labor or PBGC with respect thereto, (ii) Borrower or any

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member of the Controlled Group knows or has reason to know that a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred together with a written statement describing such transaction and the action which Borrower or any member of the Controlled Group has taken, is taking or proposes to take with respect thereto, (iii) a funding waiver request has been filed with respect to any Plan together with all communications received by Borrower or any member of the Controlled Group with respect to such request, (iv) any increase in the benefits of any existing Plan or the establishment of any new Plan or the commencement of contributions to any Plan to which Borrower or any member of the Controlled Group was not previously contributing shall occur, (v) Borrower or any member of the Controlled Group shall receive from the PBGC a notice of intention to terminate a Plan or to have a trustee appointed to administer a Plan, together with copies of each such notice, (vi) Borrower or any member of the Controlled Group shall receive any favorable or unfavorable determination letter from the Internal Revenue Service regarding the qualification of a Plan under Section 401(a) of the Code, together with copies of each such letter; (vii) Borrower or any member of the Controlled Group shall receive a notice regarding the imposition of withdrawal liability, together with copies of each such notice; (viii) Borrower or any member of the Controlled Group shall fail to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment; (ix) Borrower or any member of the Controlled Group knows that (a) a Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.

9.16.       Additional Documents.

Execute and deliver to Agent, upon request, such documents and agreements as Agent may, from time to time, reasonably request to carry out the purposes, terms or conditions of this Agreement.

ARTICLE X

EVENTS OF DEFAULT

The occurrence of any one or more of the following events shall constitute an “Event of Default”:

10.1.       Nonpayment.

Failure by Borrower to pay any principal or interest on the Obligations when due, whether at maturity or by reason of acceleration pursuant to the terms of this Agreement or by notice of intention to prepay, or by required prepayment or failure to pay when due any other liabilities or make any other payment, fee or charge provided for herein when due or in any Other Document;

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10.2.       Breach of Representation.

Any representation or warranty made or deemed made by Borrower or any Guarantor in this Agreement, any Other Document or any related agreement or in any certificate, document or financial or other statement furnished at any time in connection herewith or therewith shall prove to have been misleading in any material respect on the date when made or deemed to have been made;

10.3.       Financial Information.

Failure by Borrower to (i) furnish financial information when due or when requested, or (ii) permit the inspection of its books or records;

10.4.       Judicial Actions.

Issuance of a notice of Lien, levy, assessment, injunction or attachment against any material portion of Borrower’s Inventory or Receivables or against a material portion of Borrower’s other property which is not stayed or lifted or bonded within forty-five (45) days;

10.5.       Noncompliance.

Except as otherwise provided for in Section 10.1 or Section 10.3:

(a)           failure or neglect of Borrower to perform, keep or observe any term, provision, condition, or covenant, contained in Sections 4.10, 6.2(b) or 6.5 or in Article 7 or 9 (other than Section 9.15 which is subject to the terms of (b) below) hereof, or

(b)           failure or neglect of Borrower to perform, keep or observe any term, provision, condition or covenant contained herein or any Other Document that, if such term, provision, condition or covenant is capable of cure, is not cured within thirty (30) days from the earlier to occur of (A) receipt by Borrower of written notice thereof from Agent or any Lender and (B) the date upon which Borrower obtains knowledge thereof, or within such reasonably longer period as may be required to cure same (so long as cure is commenced within the thirty-day period and thereafter is prosecuted to completion with reasonable diligence);

10.6.       Judgments.

Any judgment or judgments are rendered against Borrower or any Guarantor for an aggregate amount in excess of $250,000 and (i) enforcement proceedings shall have been commenced by a creditor upon such judgment, (ii) there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, shall not be in effect, or (iii) any such judgment results in the creation of a Lien upon any of the Collateral (other than a Permitted Encumbrance or a Lien which is bonded);

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10.7.       Bankruptcy.

Borrower shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vi) acquiesce to, or fail to have dismissed, within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy laws,  or (vii) take any action for the purpose of effecting any of the foregoing;

10.8.       Inability to Pay.

Borrower or any Subsidiary of Borrower shall admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business;

10.9.       Affiliate Bankruptcy.

Any Subsidiary of Borrower, shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;

10.10.     Material Adverse Effect.

Any change in Borrower’s results of operations or condition (financial or otherwise) which in Agent’s opinion has a Material Adverse Effect;

10.11.     Lien Priority.

Any Lien created hereunder or under any Other Document or provided for hereby including, without limitation, the Permitted Encumbrances, or thereby or under any related agreement for any reason ceases to be or is not a valid and perfected Lien having a first priority interest or Borrower or any other Person acting on its behalf shall so claim except as the result of Agent’s or any Lender’s gross negligence;

10.12.     Subordinated Loan Default.

An event of default has occurred under the Subordinated Loan Documentation or either of the Subordination Agreements, which default shall not have been cured or waived within any

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applicable grace period and for which the applicable Subordinated Lender is permitted to take action under the applicable Subordination Agreement;

10.13.     Cross Default.

A default of the obligations of Borrower under any other material agreement evidencing Indebtedness in excess of $250,000 to which it is a party shall occur which adversely affects its condition or affairs (financial or otherwise) which default is not cured within any applicable grace period;

10.14.     Change of Ownership.

Any Change of Ownership or Change of Control shall occur;

10.15.     Invalidity.

Any material provision of this Agreement or any Other Document shall, for any reason, cease to be valid and binding on Borrower, or Borrower or any Person acting on their behalf shall so claim;

10.16.     Licenses.

(i) Any Governmental Body shall (A) revoke, terminate, suspend or adversely modify any license, permit, patent trademark or tradename of Borrower, the continuation of which is material to the continuation of Borrower’s  business, or (B) commence proceedings to suspend, revoke, terminate or adversely modify any such license, permit, trademark, tradename or patent and such proceedings shall not be dismissed or discharged within sixty (60) days, or (c) Schedule or conduct a hearing on the renewal of any license, permit, trademark, tradename or patent necessary for the continuation of Borrower’s business and the staff of such Governmental Body issues a report recommending the termination, revocation, suspension or material, adverse modification of such license, permit, trademark, tradename or patent; (ii) any agreement which is necessary or material to the operation of Borrower’s business shall be revoked or terminated and not replaced by a substitute acceptable to Agent within thirty (30) days after the date of such revocation or termination, and such revocation or termination and non-replacement would reasonably be expected to have a Material Adverse Effect;

10.17.     Seizures.

Any portion of the Collateral shall be seized or taken by a Governmental Body, or Borrower material or the title and rights of Borrower, or any Original Owner which is the owner of any material portion of the Collateral shall have become the subject matter of claim, litigation, suit or other proceeding which might, in the opinion of Agent, upon final determination, result in impairment or loss of the security provided by this Agreement or the Other Documents;

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10.18.     Operations.

The operations of any of Borrower’s manufacturing facility are interrupted at any time for more than ten (10) consecutive days, unless Borrower shall (i) be entitled to receive for such period of interruption, proceeds of business interruption insurance sufficient to assure that its per diem cash needs during such period is at least equal to its average per diem cash needs for the consecutive three month period immediately preceding the initial date of interruption and (ii) receive such proceeds in the amount described in clause (i) preceding not later than thirty (30) days following the initial date of any such interruption; provided, however, that notwithstanding the provisions of clauses (i) and (ii) of this section, an Event of Default shall be deemed to have occurred if Borrower shall be receiving the proceeds of business interruption insurance for a period of ninety (90) consecutive days; or

10.19.     Pension Plans.

An event or condition specified in Sections 7.16 or 9.15 hereof shall occur or exist with respect to any Plan and, as a result of such event or condition, together with all other such events or conditions, Borrower or any member of the Controlled Group shall incur, or in the opinion of Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both) which, in the reasonable judgment of Agent, would have a Material Adverse Effect.

ARTICLE XI

LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT

11.1.       Rights and Remedies.

(a)           Upon the occurrence of (i) an Event of Default pursuant to Section 10.7 all Obligations shall be immediately due and payable and this Agreement and the obligation of Lenders to make Advances shall be deemed terminated; and, (ii) any of the other Events of Default and at any time thereafter (such default not having previously been cured), at the option of Required Lenders all Obligations shall be immediately due and payable and Lenders shall have the right to terminate this Agreement and to terminate the obligation of Lenders to make Advances and (iii) a filing of a petition against Borrower in any involuntary case under any state or federal bankruptcy laws, which remains undismissed for a period of sixty (60) days all Obligations shall be immediately due and payable and the obligation of Lenders to make Advances hereunder shall be terminated other than as may be required by an appropriate order of the bankruptcy court having jurisdiction over Borrower.  Upon the occurrence of any Event of Default, Agent shall have the right to exercise any and all rights and remedies provided for herein, under the Other Documents, under the Uniform Commercial Code and at law or equity generally, including the right to foreclose the security interests granted herein and to realize upon any Collateral by any available judicial procedure and/or to take possession of and sell any or all of the Collateral with or without judicial process.  Agent may enter any of Borrower’s premises or other premises without legal process and without incurring liability to Borrower therefor, and Agent may thereupon, or at any time thereafter, in its discretion without notice or demand, take

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the Collateral and remove the same to such place as Agent may deem advisable and Agent may require Borrower to make the Collateral available to Agent at a convenient place.  With or without having the Collateral at the time or place of sale, Agent may sell the Collateral, or any part thereof, at public or private sale, at any time or place, in one or more sales, at such price or prices, and upon such terms, either for cash, credit or future delivery, as Agent may elect.  Except as to that part of the Collateral which is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Agent shall give Borrower reasonable notification of such sale or sales, it being agreed that in all events written notice mailed to Borrower at least ten (10) days prior to such sale or sales is reasonable notification.  At any public sale Agent or any Lender may bid for and become the purchaser, and Agent, any Lender or any other purchaser at any such sale thereafter shall hold the Collateral sold absolutely free from any claim or right of whatsoever kind, including any equity of redemption and all such claims, rights and equities are hereby expressly waived and released by Borrower.  In connection with the exercise of the foregoing remedies, including the sale of Inventory, Agent is granted a perpetual nonrevocable, royalty free, nonexclusive license and Agent is granted permission to use all of Borrower’s (a) trademarks, trade styles, trade names, patents, patent applications, copyrights, service marks, licenses, franchises and other proprietary rights which are used or useful in connection with Inventory for the purpose of marketing, advertising for sale and selling or otherwise disposing of such Inventory and (b) Equipment for the purpose of completing the manufacture of unfinished goods.  The cash proceeds realized from the sale of any Collateral shall be applied to the Obligations in the order set forth in Section 11.5 hereof.  Noncash proceeds will only be applied to the Obligations as they are converted into cash.  If any deficiency shall arise, Borrower shall remain liable to Agent and Lenders therefor.

(b)           To the extent that Applicable Law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, Borrower acknowledges and agrees that it is not commercially unreasonable for the Agent (i) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Customers and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as the Borrower, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or

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disposition of Collateral, or (xii) to the extent deemed appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Agent in the collection or disposition of any of the Collateral.  Borrower acknowledges that the purpose of this Section 11.1(b) is to provide non-exhaustive indications of what actions or omissions by the Agent would not be commercially unreasonable in the Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 11.1(b).  Without limitation upon the foregoing, nothing contained in this Section 11.1(b) shall be construed to grant any rights to Borrower or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by Applicable Law in the absence of this Section 11.1(b).

11.2.       Agent’s Discretion.

Subject to the rights of the Lenders under this Agreement and the Other Documents, Agent shall have the right in its sole discretion to determine which rights, Liens, security interests or remedies Agent may at any time pursue, relinquish, subordinate, or modify or to take any other action with respect thereto and such determination will not in any way modify or affect any of Agent’s or Lenders’ rights hereunder.

11.3.       Setoff.

Subject to Section 14.12, in addition to any other rights which Agent or any Lender may have under Applicable Law, upon the occurrence of an Event of Default hereunder, Agent and such Lender shall have a right, immediately and without notice of any kind, to apply Borrower’s property held by Agent and such Lender to reduce the Obligations.

11.4.       Rights and Remedies not Exclusive.

The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise of any rights or remedy shall not preclude the exercise of any other right or remedies provided for herein or otherwise provided by law, all of which shall be cumulative and not alternative.

11.5.       Allocation of Payments After Event of Default.

Notwithstanding any other provisions of this Agreement to the contrary, after the occurrence and during the continuance of an Event of Default, all amounts collected or received by the Agent on account of the Obligations or any other amounts outstanding under any of the Other Documents or in respect of the Collateral may, at Agent’s discretion, be paid over or delivered as follows:

FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of the Agent in connection with enforcing its rights and the rights of the Lenders under this Agreement and the Other Documents and any protective advances made by the Agent with respect to the Collateral under or pursuant to the terms of this Agreement;

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SECOND, to payment of any fees owed to the Agent;

THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of each of the Lenders in connection with enforcing its rights under this Agreement and the Other Documents or otherwise with respect to the Obligations owing to such Lender;

FOURTH, to the payment of all of the Obligations consisting of accrued fees and interest;

FIFTH, to the payment of the outstanding principal amount of the Obligations (including the payment or cash collateralization of any outstanding Letters of Credit), to breakage, termination or other payments, and any interest accrued thereon, due under any Lender-Provided Interest Rate Hedge, to the extent such Lender-Provided Interest Rate Hedge is permitted by Section 7.8, and to amounts due under any Cash Management Products;

SIXTH, to all other Obligations and other obligations which shall have become due and payable under the Other Documents or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH” above; and

SEVENTH, to the payment of the surplus, if any, to Borrower.

In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; (ii) each of the Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro rata share (based on the proportion that the then outstanding Advances held by such Lender bears to the aggregate then outstanding Advances) of amounts available to be applied pursuant to clauses “FOURTH”, “FIFTH” and “SIXTH” above; and (iii) to the extent that any amounts available for distribution pursuant to clause “FIFTH” above are attributable to the issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by the Agent in a cash collateral account and applied (A) first, to reimburse the Issuer from time to time for any drawings under such Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all other obligations of the types described in clauses “FIFTH” and “SIXTH” above in the manner provided in this Section 11.5.

ARTICLE XII

WAIVERS AND JUDICIAL PROCEEDINGS

12.1.       Waiver of Notice.

Borrower hereby waives notice of non-payment of any of the Receivables, demand, presentment, protest and notice thereof with respect to any and all instruments, notice of acceptance hereof, notice of loans or advances made, credit extended, Collateral received or

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delivered, or any other action taken in reliance hereon, and all other demands and notices of any description, except such as are expressly provided for herein.

12.2.       Delay.

No delay or omission on Agent’s or any Lender’s part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default.  No Out-of-Formula Loan or protective advance made during the existence of a Default or an Event of Default shall operate as a waiver of any such Default or Event of Default.

12.3.       Jury Waiver.

EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

ARTICLE XIII

EFFECTIVE DATE AND TERMINATION.

13.1.       Term.

This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of Borrower, Agent and each Lender, shall become effective on the date hereof and shall continue in full force and effect until June 8, 2012 (the “Term”) unless sooner terminated as herein provided.  Borrower may terminate this Agreement at any time upon fifteen (15) days’ prior written notice upon payment in full of the Obligations.  In the event the Obligations are prepaid in full prior to the last day of the Term (the date of such prepayment hereinafter referred to as the “Early Termination Date”), Borrowers shall pay to Agent for the benefit of Lenders an early termination fee in an amount equal to (x) two percent (2.0%) of the Maximum Loan Amount if the Early Termination Date occurs on or after the Closing Date to and including the date immediately preceding the first anniversary of the Closing

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Date, (y) one percent (1.0%) of the Maximum Loan Amount if the Early Termination Date occurs on or after the first anniversary of the Closing Date to and including the date immediately preceding the second anniversary of the Closing Date, and (z) one-half of one percent (0.50%) of the Maximum Loan Amount if the Early Termination Date occurs on or after the second anniversary of the Closing Date to and including the date immediately preceding the third anniversary of the Closing Date.

13.2.       Termination.

The termination of the Agreement shall not affect Borrower’s, Agent’s or any Lender’s rights, or any of the Obligations having their inception prior to the effective date of such termination, and the provisions hereof shall continue to be fully operative until all transactions entered into, rights or interests created or Obligations (other than contingent indemnity claims not yet asserted or threatened) have been fully and indefeasibly paid, disposed of, concluded or liquidated.  The security interests, Liens and rights granted to Agent and Lenders hereunder and the financing statements filed hereunder shall continue in full force and effect, notwithstanding the termination of this Agreement or the fact that Borrower’s Account may from time to time be temporarily in a zero or credit position, until all of the Obligations (other than contingent indemnity claims not yet asserted or threatened) have been indefeasibly paid and performed in full after the termination of this Agreement or Borrower has furnished Agent and Lenders with an indemnification satisfactory to Agent and Lenders with respect thereto.  Accordingly, Borrower waives any rights which it may have under the Uniform Commercial Code to demand the filing of termination statements with respect to the Collateral, and Agent shall not be required to send such termination statements to Borrower, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations (other than contingent indemnity claims not yet asserted or threatened) have been indefeasibly paid in full in immediately available funds.  All representations, warranties, covenants, waivers and agreements contained herein shall survive termination hereof until all Obligations (other than contingent indemnity claims not yet asserted or threatened) are indefeasibly paid and performed in full.

ARTICLE XIV

REGARDING AGENT

14.1.       Appointment.

Each Lender hereby designates PNC to act as Agent for such Lender under this Agreement and the Other Documents.  Each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and the Other Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto and Agent shall hold all Collateral, payments of principal and interest, fees (except the fees set forth in Sections 3.3(a) and 3.4), charges and collections (without giving effect to any collection days) received pursuant to this Agreement, for the ratable

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benefit of Lenders.  Agent may perform any of its duties hereunder by or through its agents or employees.  As to any matters not expressly provided for by this Agreement (including collection of the Note) Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding; provided, however, that Agent shall not be required to take any action which exposes Agent to liability or which is contrary to this Agreement or the Other Documents or Applicable Law unless Agent is furnished with an indemnification reasonably satisfactory to Agent with respect thereto.  In furtherance and not in limitation of the foregoing, each of the Lenders hereby acknowledges that it has received and reviewed copies of the Subordination Agreements and hereby authorizes Agent to enter into the Subordination Agreements on its behalf.

14.2.       Nature of Duties.

Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the Other Documents.  Neither Agent nor any of its officers, directors, employees or agents shall be (i) liable for any action taken or omitted by them as such hereunder or in connection herewith, unless caused by their gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), or (ii) responsible in any manner for any recitals, statements, representations or warranties made by Borrower or any officer thereof contained in this Agreement, or in any of the Other Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any of the Other Documents or for the value, validity, effectiveness, genuineness, due execution, enforceability or sufficiency of this Agreement, or any of the Other Documents or for any failure of Borrower to perform its obligations hereunder.  Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any of the Other Documents, or to inspect the properties, books or records of Borrower.  The duties of Agent as respects the Advances to Borrower shall be mechanical and administrative in nature; Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth herein.

14.3.       Lack of Reliance on Agent and Resignation.

Independently and without reliance upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of Borrower in connection with the making and the continuance of the Advances hereunder and the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the creditworthiness of Borrower.  Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before making of the Advances or at any time or times thereafter except as shall be provided by Borrower pursuant to the terms hereof.  Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any agreement, document, certificate or a statement delivered in

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connection with or for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Agreement or any Other Document, or of the financial condition of Borrower or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, the Note, the Other Documents or the financial condition of Borrower, or the existence of any Event of Default or any Default.

Agent may resign on sixty (60) days’ written notice to each of Lenders and Borrower and upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably satisfactory to Borrower.

Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the Term “Agent” shall mean such successor agent effective upon its appointment, and the former Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent.  After any Agent’s resignation as Agent, the provisions of this Article XIV shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.

14.4.       Certain Rights of Agent.

If Agent shall request instructions from Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any Other Document, Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from the Required Lenders; and Agent shall not incur liability to any Person by reason of so refraining.  Without limiting the foregoing, Lenders shall not have any right of action whatsoever against Agent as a result of its acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders.

14.5.       Reliance.

Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, order or other document or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to this Agreement and the Other Documents and its duties hereunder, upon advice of counsel selected by it.  Agent may employ agents and attorneys-in-fact and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent with reasonable care.

14.6.       Notice of Default.

Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder or under the Other Documents, unless Agent has received notice from a Lender or Borrower referring to this Agreement or the Other Documents, describing such Default or Event of Default and stating that such notice is a “notice of default”.  In the event that Agent receives such a notice, Agent shall give notice thereof to Lenders.  Agent shall take such

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action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of Lenders.

14.7.       Indemnification.

To the extent Agent is not reimbursed and indemnified by Borrower, each Lender will reimburse and indemnify Agent in proportion to its respective portion of the Advances (or, if no Advances are outstanding, according to its Commitment Percentage), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in performing its duties hereunder, or in any way relating to or arising out of this Agreement or any Other Document; provided that, Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent’s gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment).

14.8.       Agent in its Individual Capacity.

With respect to the obligation of Agent to lend under this Agreement, the Advances made by it shall have the same rights and powers hereunder as any other Lender and as if it were not performing the duties as Agent specified herein; and the Term “Lender” or any similar term shall, unless the context clearly otherwise indicates, include Agent in its individual capacity as a Lender.  Agent may engage in business with Borrower as if it were not performing the duties specified herein, and may accept fees and other consideration from Borrower for services in connection with this Agreement or otherwise without having to account for the same to Lenders.

14.9.       Delivery of Documents.

To the extent Agent receives financial statements required under Sections 9.7, 9.8, 9.9, and 9.12 or Borrowing Base Certificates from Borrower pursuant to the terms of this Agreement which Borrower is not obligated to deliver to each Lender, Agent will promptly furnish such documents and information to Lenders.

14.10.     Borrower’s Undertaking to Agent.

Without prejudice to its obligations to Lenders under the other provisions of this Agreement, Borrower hereby undertakes with Agent to pay to Agent from time to time on demand all amounts from time to time due and payable by it for the account of Agent or Lenders or any of them pursuant to this Agreement to the extent not already paid.  Any payment made pursuant to any such demand shall pro tanto satisfy the relevant Borrower’s obligations to make payments for the account of Lenders or the relevant one or more of them pursuant to this Agreement.

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14.11.     No Reliance on Agent’s Customer Identification Program.

Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with Borrower, its Affiliates or its agent, acting or benefitting in any capacity in connection with Advances of other transactions hereunder, this Agreement, the Other Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other laws.

14.12.     Other Agreements.

Each of the Lenders agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the request of Agent, set off against the Obligations, any amounts owing by such Lender to Borrower or any deposit accounts of Borrower now or hereafter maintained with such Lender.  Anything in this Agreement to the contrary notwithstanding, each of the Lenders further agrees that it shall not, unless specifically requested to do so by Agent, take any action to protect or enforce its rights arising out of this Agreement or the Other Documents, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Other Documents shall be taken in concert and at the direction or with the consent of Agent or Required Lenders.

ARTICLE XV

MISCELLANEOUS

15.1.       Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina applied to contracts to be performed wholly within the State of North Carolina.  Any judicial proceeding brought by or against Borrower with respect to any of the Obligations, this Agreement, the Other Documents or any related agreement may be brought in any court of competent jurisdiction in the State of North Carolina, United States of America, and, by execution and delivery of this Agreement, Borrower accepts for itself and in connection with its properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement.  Borrower hereby waives personal service of any and all process upon it and consents that all such service of process may be made by registered mail (return receipt requested) directed to Borrower at its address set forth in Section 15.6 and service so made shall

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be deemed completed five (5) days after the same shall have been so deposited in the mails of the United States of America.  Nothing herein shall affect the right to serve process in any manner permitted by law or shall limit the right of Agent or any Lender to bring proceedings against Borrower in the courts of any other jurisdiction.  Borrower waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens.  Borrower waives the right to remove any judicial proceeding brought against Borrower in any state court to any federal court.  Any judicial proceeding by Borrower against Agent or any Lender involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Agreement or any related agreement, shall be brought only in a federal or state court located in the County of Mecklenburg, State of North Carolina.

15.2.       Entire Understanding.

(a)           This Agreement and the documents executed concurrently herewith contain the entire understanding between Borrower, Agent and each Lender and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof.  Any promises, representations, warranties or guarantees not herein contained and hereinafter made shall have no force and effect unless in writing, signed by Borrower’s, Agent’s and each Lender’s respective officers.  Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in any manner other than by an agreement in writing, signed by the party to be charged.  Borrower acknowledges that it has been advised by counsel in connection with the execution of this Agreement and Other Documents and is not relying upon oral representations or statements inconsistent with the terms and provisions of this Agreement.

(b)           The Required Lenders, Agent and Borrower may, subject to the provisions of this Section 15.2 (b), from time to time enter into written supplemental agreements to this Agreement or the Other Documents executed by Borrower, for the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any manner the rights of Lenders, Agent or Borrower thereunder or the conditions, provisions or terms thereof of waiving any Event of Default thereunder, but only to the extent specified in such written agreements; provided, however, that no such supplemental agreement shall, without the consent of all Lenders:

(i)            increase the Commitment Percentage or the maximum dollar commitment of any Lender.

(ii)           extend the maturity of any Note or the due date for any amount payable hereunder (excluding any mandatory prepayment), or decrease the rate of interest or reduce any fee payable by Borrower to Lenders pursuant to this Agreement.

(iii)          alter the definition of the Term Required Lenders or alter, amend or modify this Section 15.2(b).

(iv)          release any Collateral during any calendar year (other than in accordance with the provisions of this Agreement.

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(v)           change the rights and duties of Agent.

(vi)          permit any Revolving Advance to be made if after giving effect thereto the total of Revolving Advances outstanding hereunder would exceed the Formula Amount for more than thirty (30) consecutive Business Days or exceed one hundred and five percent (105%) of the Formula Amount.

(vii)         increase the Advance Rates above the Advance Rates in effect on the Closing Date.

(viii)        release any Guarantor.

Any such supplemental agreement shall apply equally to each Lender and shall be binding upon Borrower, Lenders and Agent and all future holders of the Obligations.  In the case of any waiver, Borrower, Agent and Lenders shall be restored to their former positions and rights, and any Event of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of Default is the same as the Event of Default which was waived), or impair any right consequent thereon.

In the event that Agent requests the consent of a Lender pursuant to this Section 15.2 and such Lender shall not respond or reply to Agent in writing within five (5) days of delivery of such request, such Lender shall be deemed to have consented to the matter that was the subject of the request.  In the event that Agent requests the consent of a Lender pursuant to this Section 15.2 and such consent is denied, then PNC may, at its option, require such Lender to assign its interest in the Advances to PNC or to another Lender or to any other Person designated by the Agent (the “Designated Lender”), for a price equal to the then outstanding principal amount thereof plus accrued and unpaid interest and fees due such Lender, which interest and fees shall be paid when collected from Borrower.  In the event PNC elects to require any Lender to assign its interest to PNC or to the Designated Lender, PNC will so notify such Lender in writing within forty five (45) days following such Lender’s denial, and such Lender will assign its interest to PNC or the Designated Lender no later than five (5) days following receipt of such notice pursuant to a Commitment Transfer Supplement executed by such Lender, PNC or the Designated Lender, as appropriate, and Agent.

Notwithstanding (a) the existence of a Default or an Event of Default, (b) that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or (c) any other provision of this Agreement, Agent may at its discretion and without the consent of the Required Lenders, voluntarily permit the outstanding Revolving Advances at any time to exceed  the Formula Amount by up to ten percent (10%) of the Formula Amount for up to thirty (30) consecutive Business Days (the “Out-of-Formula Loans”); provided, that, such outstanding Advances do not exceed the Maximum Revolving Advance Amount.  If Agent is willing in its sole and absolute discretion to make such Out-of-Formula Loans, such Out-of-Formula Loans shall be payable on demand and shall bear interest at the Default Rate for Revolving Advances consisting of Domestic Rate Loans; provided that, if Lenders do make Out-of-Formula Loans,

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neither Agent nor Lenders shall be deemed thereby to have changed the limits of Section 2.1(a).  For purposes of this paragraph, the discretion granted to Agent hereunder shall not preclude involuntary overadvances that may result from time to time due to the fact that the Formula Amount was unintentionally exceeded for any reason, including, but not limited to, Collateral previously deemed to be either “Eligible Receivables” or “Eligible Inventory”, as applicable, becomes ineligible, collections of Receivables applied to reduce outstanding Revolving Advances are thereafter returned for insufficient funds or overadvances are made to protect or preserve the Collateral.  In the event Agent involuntarily permits the outstanding Revolving Advances to exceed the Formula Amount by more than ten percent (10%), Agent shall use its efforts to have Borrower decrease such excess in as expeditious a manner as is practicable under the circumstances and not inconsistent with the reason for such excess.  Revolving Advances made after Agent has determined the existence of involuntary overadvances shall be deemed to be involuntary overadvances and shall be decreased in accordance with the preceding sentence.

In addition to (and not in substitution of) the discretionary Revolving Advances permitted above in this Section 15.2, the Agent is hereby authorized by Borrower and the Lenders, from time to time in the Agent’s sole discretion, (A) after the occurrence and during the continuation of a Default or an Event of Default, or (B) at any time that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied, to make Revolving Advances to Borrower on behalf of the Lenders which the Agent, in its reasonable business judgment, deems necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment of the Advances and other Obligations, or (c) to pay any other amount chargeable to Borrower pursuant to the terms of this Agreement; provided, that at any time after giving effect to any such Revolving Advances the outstanding Revolving Advances do not exceed one hundred and ten percent (110%) of the Formula Amount.

15.3.       Successors and Assigns; Participations; New Lenders.

(a)           This Agreement shall be binding upon and inure to the benefit of Borrower, Agent, each Lender, all future holders of the Obligations and their respective successors and assigns, except that Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Agent and each Lender.

(b)           Borrower acknowledges that in the regular course of commercial banking business one or more Lenders may at any time and from time to time sell participating interests in the Advances (without the consent of Agent, Borrower or any other Lender) to other financial institutions (each such transferee or purchaser of a participating interest, a “Participant”; provided, that any such sale of participating interests must be for a constant and non-varying interest in all Advances.  Each Participant may exercise all rights of payment (including rights of set-off) with respect to the portion of such Advances held by it or other Obligations payable hereunder as fully as if such Participant were the direct holder thereof provided that Borrower shall not be required to pay to any Participant more than the amount which it would have been required to pay to Lender which granted an interest in its Advances or other Obligations payable hereunder to such Participant had such Lender retained such interest in the Advances hereunder or other Obligations payable hereunder and in no event shall Borrower be required to pay any

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such amount arising from the same circumstances and with respect to the same Advances or other Obligations payable hereunder to both such Lender and such Participant.  Borrower hereby grants to any Participant a continuing security interest in any deposits, moneys or other property actually or constructively held by such Participant as security for the Participant’s interest in the Advances.  No Lenders shall transfer, grant, assign or sell any participation under which the participant shall have rights to approve any amendment or waiver of this Agreement except to the extent such amendment or waiver would (A) extend the final maturity date or the date for the payments of any installment of fees or principal or interest of any Advances or Letter of Credit reimbursement obligations in which such participant is participating, (B) reduce the amount of any installment of principal of the Advances or Letter of Credit reimbursement obligations in which such participant is participating, (C) except as otherwise expressly provided in this Agreement, reduce the interest rate applicable to the Advances or Letter of Credit reimbursement obligations in which such participant is participating, or (D) except as otherwise expressly provided in this Agreement, reduce any fees payable hereunder.

(c)           Any Lender with the consent of Agent (and, so long as no Event of Default has occurred and is continuing, the Borrower, such consent not to be unreasonably withheld) which shall not be unreasonably withheld or delayed must sell, assign or transfer all or any part of its rights and obligations under or relating to Revolving Advances and/or Term Loans under this Agreement and the Other Documents to one or more additional banks or financial institutions and one or more additional banks or financial institutions may commit to make Advances hereunder (each a “Purchasing Lender”), in minimum amounts of not less than $5,000,000 for Revolving Advances and $500,000 for a Term Loan, pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for recording; provided, that any such assignment of a portion must be for a constant and non-varying portion of such Lender’s rights under this Agreement, the Other Documents, the Advances and Commitment Percentage.  Upon such execution, delivery, acceptance and recording, from and after the transfer effective date determined pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder with a Commitment Percentage as set forth therein, and (ii) the transferor Lender thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Agreement, the Commitment Transfer Supplement creating a novation for that purpose.  Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents.  Borrower hereby consents to the addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents.  Borrower shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.

(d)           Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, may directly or indirectly sell, assign or transfer all or any portion of its rights and

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obligations under or relating to Revolving Advances, and/or Term Loans under this Agreement and the Other Documents to an entity, whether a corporation, partnership, trust, limited liability company or other entity that (i) is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and (ii) is administered, serviced or managed by the assigning Lender or an Affiliate of such Lender (a “Purchasing CLO” and together with each Participant and Purchasing Lender, each a “Transferee” and collectively the “Transferees”), pursuant to a Commitment Transfer Supplement modified as appropriate to reflect the interest being assigned (“Modified Commitment Transfer Supplement”), executed by any intermediate purchaser, the Purchasing CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for recording.  Upon such execution and delivery, from and after the transfer effective date determined pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the extent provided in such Modified Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder and (ii) the transferor Lender thereunder shall, to the extent provided in such Modified Commitment Transfer Supplement, be released from its obligations under this Agreement, the Modified Commitment Transfer Supplement creating a novation for that purpose.  Such Modified Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing CLO.  Borrower hereby consents to the addition of such Purchasing CLO.  Borrower shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.

(e)           Agent shall maintain at its address a copy of each Commitment Transfer Supplement and Modified Commitment Transfer Supplement delivered to it and a register (the “Register”) for the recordation of the names and addresses of each Lender and the outstanding principal, accrued and unpaid interest and other fees due hereunder.  The entries in the Register shall be conclusive, in the absence of manifest error, and Borrower, Agent and Lenders may treat each Person whose name is recorded in the Register as the owner of the Advance recorded therein for the purposes of this Agreement.  The Register shall be available for inspection by Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.  Agent shall receive a fee in the amount of $3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon the effective date of each transfer or assignment (other than to an immediate purchaser) to such Purchasing Lender and/or Purchasing CLO.

(f)            Borrower authorizes each Lender to disclose to any Transferee and any prospective Transferee any and all financial information in such Lender’s possession concerning Borrower which has been delivered to such Lender by or on behalf of Borrower pursuant to this Agreement or in connection with such Lender’s credit evaluation of Borrower.

15.4.       Application of Payments.

Agent shall have the continuing and exclusive right to apply or reverse and re-apply any payment and any and all proceeds of Collateral to any portion of the Obligations.  To the extent that Borrower makes a payment or Agent or any Lender receives any payment or proceeds of the Collateral for Borrower’s benefit, which are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver,

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custodian or any other party under any bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by Agent or such Lender.

15.5.       Indemnity.

Borrower shall indemnify Agent, each Lender and each of their respective officers, directors, Affiliates, attorneys, employees and agents from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including reasonable fees and disbursements of counsel) which may be imposed on, incurred by, or asserted against Agent or any Lender in any claim, litigation, proceeding or investigation instituted or conducted by any Governmental Body or instrumentality or any other Person with respect to any aspect of, or any transaction contemplated by, or referred to in, or any matter related to, this Agreement or the Other Documents, whether or not Agent or any Lender is a party thereto, except to the extent that any of the foregoing arises out of the gross negligence, bad faith or willful misconduct of the party being indemnified (as determined by a court of competent jurisdiction in a final and non-appealable judgment).  Without limiting the generality of the foregoing, this indemnity shall extend to any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including reasonable fees and disbursements of counsel) asserted against or incurred by any of the indemnitees described above in this Section 15.5 by any Person under any Environmental Laws or similar laws by reason of Borrower’s or any other Person’s failure to comply with laws applicable to solid or hazardous waste materials, including Hazardous Substances and Hazardous Waste, or other Toxic Substances.  Additionally, if any taxes (excluding taxes imposed upon or measured solely by the net income of Agent and Lenders, but including any intangibles taxes, stamp tax, recording tax or franchise tax) shall be payable by Agent, Lenders or Borrower on account of the execution or delivery of this Agreement, or the execution, delivery, issuance or recording of any of the Other Documents, or the creation or repayment of any of the Obligations hereunder, by reason of any Applicable Law now or hereafter in effect, Borrower will pay (or will promptly reimburse Agent and Lenders for payment of) all such taxes, including interest and penalties thereon, and will indemnify and hold the indemnitees described above in this Section 15.5 harmless from and against all liability in connection therewith.

15.6        Notice.

Any notice or request hereunder may be given to Borrower or to Agent or any Lender at their respective addresses set forth below or at such other address as may hereafter be specified in a notice designated as a notice of change of address under this Section.  Any notice, request, demand, direction or other communication (for purposes of this Section 15.6 only, a “Notice”) to be given to or made upon any party hereto under any provision of this Loan Agreement shall be given or made by telephone or in writing (which includes by means of electronic transmission (i.e., “e-mail”) or facsimile transmission in accordance with this Section 15.6.  Any such Notice must be delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names on Section 15.6 hereof or in accordance with any subsequent unrevoked

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Notice from any such party that is given in accordance with this Section 15.6.  Any Notice shall be effective:

(a)           In the case of hand-delivery, when delivered;

(b)           If given by mail, four days after such Notice is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested;

(c)           In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a facsimile or electronic transmission, a Website Posting or an overnight courier delivery of a confirmatory Notice (received at or before noon on such next Business Day);

(d)           In the case of a facsimile transmission, when sent to the applicable party’s facsimile machine’s telephone number, if the party sending such Notice receives confirmation of the delivery thereof from its own facsimile machine;

(e)           In the case of electronic transmission, when actually received;

(f)            If given by any other means (including by overnight courier), when actually received.

Any Lender giving a Notice to Borrower shall concurrently send a copy thereof to the Agent, and the Agent shall promptly notify the other Lenders of its receipt of such Notice.

(A)	If to Agent or	PNC Bank, National Association
	PNC at:	One Piedmont Town Center
		4720 Piedmont Row Drive
		Suite 300
		Charlotte, North Carolina 28210
		Attention:	Bryan Shia
		Telephone:	(704) 551-8512
		Facsimile:	(704 693-7918
with a copy to:		PNC Bank, National Association
		PNC Agency Services
		PNC Firstside Center
		500 First Avenue, 4th Floor
		Pittsburgh, Pennsylvania 15219
		Attention:	Lisa Pierce
		Telephone:	(412) 762-6442
		Facsimile:	(412) 762-8672

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with an additional
copy to:		Moore & Van Allen
		100 N. Tryon Street, Floor 47
		Charlotte, North Carolina 28202-4003
		Attention:	Lea Stromire Johnson
		Telephone:	(704) 331-1068
		Facsimile:	(704) 378-2068
(B)	If to a Lender other than Agent, as specified on the signature pages hereof
(C)	If to Borrower:	WM Coffman LLC
		c/o P&F Industries, Inc.
		445 Broadhollow Road, Suite 100
		Melville, New York 11747
		Attention:	Joseph A. Molino, Jr.
			Vice President and CFO
		Telephone:	(631) 773-4210
		Telecopier:	(631) 773-4230
with a copy to:		Certilman Balin Adler & Hyman LLP
		90 Merrick Avenue
		East Meadow, New York 11554
		Attention:	Steven J. Kuperschmid, Esq.
		Telephone:	(516) 296-7000
		Telecopier:	(516) 296-7111

15.7.       Survival.

The obligations of Borrower under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(h), and 15.5 and the obligations of Lenders under Section 14.7, shall survive termination of this Agreement and the Other Documents and payment in full of the Obligations.

15.8.       Severability.

If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Laws or regulations, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.

15.9.       Expenses.

All costs and expenses including reasonable attorneys’ fees (including the allocated costs of in house counsel) and disbursements incurred by Agent on its behalf or on behalf of Lenders (a) in all efforts made to enforce payment of any Obligation or effect collection of any Collateral, or (b) in connection with the entering into, modification, amendment, administration and enforcement of this Agreement, the Subordination Agreements, the Other Documents or any

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consents or waivers hereunder or thereunder and all related agreements, documents and instruments, or (c) in instituting, maintaining, preserving, enforcing and foreclosing on Agent’s security interest in or Lien on any of the Collateral, or maintaining, preserving or enforcing any of Agent’s or any Lender’s rights hereunder, under the Subordination Agreements, the Other Documents and under all related agreements, whether through judicial proceedings or otherwise, or (d) in defending or prosecuting any actions or proceedings arising out of or relating to Agent’s or any Lender’s transactions with Borrower, or any Subordinated Lenders or (e) in connection with any advice given to Agent with respect to its rights and obligations under this Agreement, the Subordination Agreements, the Other Documents and all related agreements, may be charged to Borrower’s Account and shall be part of the Obligations.

15.10.     Injunctive Relief.

Borrower recognizes that, in the event Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, or threatens to fail to perform, observe or discharge such obligations or liabilities, any remedy at law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving that actual damages are not an adequate remedy.

15.11.     Damages.

Neither Agent nor any Lender, nor any agent or attorney for any of them, shall be liable to Borrower (or any Affiliate of any such Person) for punitive, exemplary or consequential damages arising from any breach of contract, tort or other wrong relating to the establishment, administration or collection of the Obligations or as a result of any transaction contemplated under this Agreement or any other Document.

15.12.     Captions.

The captions at various places in this Agreement are intended for convenience only and do not constitute and shall not be interpreted as part of this Agreement.

15.13.     Counterparts; Facsimile Signatures.

This Agreement may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement.  Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto.

15.14.     Construction.

The parties acknowledge that each party and its counsel have reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits thereto.

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15.15.     Confidentiality; Sharing Information.

(a)           Agent, each Lender and each Transferee shall hold all non-public information obtained by Agent, such Lender or such Transferee pursuant to the requirements of this Agreement in accordance with Agent’s, such Lender’s and such Transferee’s customary procedures for handling confidential information of this nature; provided, however, Agent, each Lender and each Transferee may disclose such confidential information (a) to its examiners, Affiliates, outside auditors, counsel and other professional advisors, (b) to Agent, any Lender or to any prospective Transferees (such prospective Transferees to execute a similar confidentiality agreement), and (c) as required or requested by any Governmental Body or representative thereof or pursuant to legal process; provided, further that (i) unless specifically prohibited by Applicable Law or court order, Agent, each Lender and each Transferee shall use its reasonable best efforts prior to disclosure thereof, to notify Borrower of the applicable request for disclosure of such non-public information (A) by a Governmental Body or representative thereof (other than any such request in connection with an examination of the financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal process and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return any materials furnished by Borrower other than those documents and instruments in possession of Agent or any Lender in order to perfect its Lien on the Collateral once the Obligations have been paid in full and this Agreement has been terminated.

(b)           Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and Borrower hereby authorizes each Lender to share any information delivered to such Lender by Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the provisions of this Section 15.15 as if it were a Lender hereunder.  Such authorization shall survive the repayment of the other Obligations and the termination of this Agreement.

15.16.     Publicity.

Borrower and each Lender hereby authorizes Agent to make appropriate announcements of the financial arrangement entered into among Borrower, Agent and Lenders, including announcements which are commonly known as tombstones, in such publications and to such selected parties as Agent provided Agent shall obtain Borrower’s consent for announcements inconsistent with the prior approval of Borrower.

15.17.     Certifications From Banks and Participants; USA PATRIOT Act.

Each Lender or assignee or participant of a Lender that is not incorporated under the Laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA PATRIOT Act and the applicable

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regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign country, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to the Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by Section 313 of the USA PATRIOT Act and the applicable regulations:  (1) within 10 days after the Closing Date, and (2) as such other times as are required under the USA PATRIOT Act.

15.18.     Draws Under the NY Commercial Bank Letters of Credit.

Agent shall be permitted to draw in full on first the NY Commercial Bank A Letter of Credit and next the NY Commercial Bank B Letter of Credit upon Agent’s demand pursuant to the terms of the applicable NY Commercial Bank Letter of Credit following a Triggering Event (as defined below), provided Agent may only draw on one NY Commercial Bank Letter of Credit with respect to any single Triggering Event, which draw shall be the only amount payable under the NY Commercial Bank Letters of Credit in respect of such Triggering Event.  A “Triggering Event” shall occur at such time as Excess Availability for Borrower is less than $150,000 for two (2) consecutive Business Days or more than five (5) Business Days in total with no more than two Triggering Events occurring prior to September 30, 2010.  For the four quarter period ending as of June 30, 2010, if the Fixed Charge Coverage Ratio of Borrower is greater than or equal to 1.25 to 1.0 and there has been no Triggering Event, both the NY Commercial Bank Letters of Credit shall be cancelled, terminated or permitted to expire without renewal, as applicable, on June 30, 2010 and Agent shall promptly deliver the original NY Commercial Bank Letters of Credit to Borrower.  If there has been a Triggering Event during the four quarter period ending as of June 30, 2010 and the Fixed Charge Coverage Ratio of Borrower is less than 1.25 to 1.0, the outstanding NY Commercial Bank B Letter of Credit shall not be terminated until September 30, 2010.  As used herein, “Excess Availability” at a particular date shall mean an amount equal to (A) the lesser of (I) the Formula Amount or (II) the Maximum Revolving Advance Amount, minus (B) the outstanding amount of Advances.  Agent acknowledges that simultaneously with making a draw under a NY Commercial Bank Letter of Credit that Agent will demand payment of a Shortfall Payment under the Carousel Guaranty.  Notwithstanding the foregoing, Agent agrees that prior to a draw under either NY Commercial Bank Letter of Credit Agent will notify P&F that Agent intends to make a draw and if Agent receives a wire from P&F no later than one (1) Business Day following Agent’s notification in the amount of the proposed draw Agent will not make a draw under the applicable NY Commercial Bank Letter of Credit.

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Each of the parties has signed this Agreement as of the day and year first above written.

WM COFFMAN LLC
By:	/s/ Joseph A. Molino, Jr.
Name:	Joseph A. Molino, Jr.
Title:	Vice President
PNC BANK, NATIONAL ASSOCIATION,
as Lender and as Agent
By:	/s/ Bryan Shia
Name:	Bryan Shia
Title:	Vice President

Credit Agreement

STATE OF New York	)
	) ss.
COUNTY OF Suffolk	)

On this 5th day of June, 2009, before me personally came Joseph A. Molino, Jr., to me known, who, being by me duly sworn, did depose and say that s/he is the Vice President of WM COFFMAN LLC, the limited liability company described in and which executed the foregoing instrument; and that s/he signed her/his name thereto by order of the management committee of said limited liability company.

/s/ Robert C. Weiden

Notary Public

STATE OF North Carolina	)
	) ss.
COUNTY OF Mecklenburg	)

On this 12th day of June, 2009, before me personally came Bryan Shia, to me known, who, being by me duly sworn, did depose and say that s/he is the Vice President of PNC BANK, NATIONAL ASSOCIATION, and that s/he was authorized to sign her/his name thereto.

/s/ Stephanie O’ Madigan

Notary Public

EX-10.4

Exhibit 10.4

REIMBURSEMENT AGREEMENT

DATED AS OF June 8, 2009

By and Between

WM COFFMAN LLC

and

RICHARD HOROWITZ

REIMBURSEMENT AGREEMENT

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

W I T N E S S E T H:

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

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

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

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

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

ARTICLE I

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

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

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

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

ARTICLE II

LETTERS OF CREDIT AND LOANS

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

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

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

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

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

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

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

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.01.Representations and Warranties.

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

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

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

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

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

ARTICLE IV

SUBORDINATION PROVISIONS

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

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

ARTICLE V

CONDITIONS PRECEDENT

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

ARTICLE VI

MISCELLANEOUS

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

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

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

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

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

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

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

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

(a)if to the Borrower:

WM Coffman LLC

445 Broadhollow Road

Melville, New York 11747

(b)if to the Principal:

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

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

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

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

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

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

WM COFFMAN LLC
By:	/s/ Joseph A. Molino, Jr.
Name:	Joseph A. Molino
Title:	Vice President
/s/ Richard Horowitz
Richard Horowitz

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EX-10.5

Exhibit 10.5

TERM NOTE

$1,134,000 June 8, 2009

This Term Note is executed and delivered under and pursuant to the terms of that certain Revolving Credit, Term Loan and Security Agreement dated as of June 8, 2009 (as amended, restated, supplemented or modified from time to time, the “Loan Agreement”) by and among the undersigned, as Borrower, the various financial institutions named therein or which hereafter become a party thereto (each individually a “Lender” and collectively, “Lenders”) and PNC BANK, NATIONAL ASSOCIATION, as agent for Lenders (in such capacity, “Agent”).  Capitalized terms not otherwise defined herein shall have the meanings provided in the Loan Agreement.

FOR VALUE RECEIVED, Borrower hereby promises to pay to the order of PNC BANK, NATIONAL ASSOCIATION (“Payee”), at the office of Agent located at Two Tower Center Boulevard, East Brunswick, New Jersey 08816 or at such other place as Agent may from time to time designate to Borrower in writing:

(i)            the principal sum of ONE MILLION ONE HUNDRED THIRTY-FOUR THOUSAND AND 00/100 DOLLARS ($1,134,000) or, if different, from such amount, the unpaid principal balance of Payee’s Commitment Percentage of the Term Loan as may be due and owing under the Loan Agreement, payable in accordance with the provisions of the Loan Agreement, subject to acceleration upon the occurrence of an Event of Default under the Loan Agreement or earlier termination of the Loan Agreement pursuant to the terms thereof; and

(ii)           interest on the principal amount of this Term Note from time to time outstanding until such principal amount is paid in full at the applicable Interest Rate in accordance with the provisions of the Loan Agreement.  Upon and after the occurrence of an Event of Default, and during the continuation thereof, interest shall be payable at the Default Rate.  In no event, however, shall interest exceed the maximum interest rate permitted by law.

This Term Note is one of the Term Notes as referred to in the Loan Agreement and is secured by the liens granted pursuant to the Loan Agreement and the Other Documents, is entitled to the benefits of the Loan Agreement and the Other Documents and is subject to all of the agreements, terms and conditions therein contained.

This Term Note is subject to mandatory prepayment and may be voluntarily prepaid, in whole or in part, on the terms and conditions set forth in the Loan Agreement.

If an Event of Default under Section 10.7 of the Loan Agreement shall occur, then this Term Note shall immediately become due and payable, without notice, together with reasonable attorneys’ fees if the collection hereof is collected by or through an attorney at law.  If any other Event of Default shall occur under the Loan Agreement or any of the Other Documents, which is

not cured within any applicable grace period, then this Term Note may, as provided in the Loan Agreement, be declared to be immediately due and payable, without notice, together with reasonable attorneys’ fees, if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof.

Each Borrower expressly waives any presentment, demand, protest, notice of protest, or notice of any kind except as expressly provided in the Loan Agreement.

[Signatures on Following Page]

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This Term Note shall be construed and enforced in accordance with the laws of the State of North Carolina.

WM COFFMAN LLC,
a Delaware limited liability company
By:	/s/ Joseph A. Molino, Jr.
Name:	Joseph A. Molino, Jr.
Title:	Vice President

Term Note A

STATE OF New York	)
	) ss.
COUNTY OF Suffolk	)

On this 4th day of June, 2009, before me personally came Joseph A. Molino, Jr., to me known, who, being by me duly sworn, did depose and say that he is the Vice President of WM COFFMAN LLC, the limited liability company described in and which executed the foregoing instrument; that he knows the seal of said limited liability company; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the members of said limited liability company, and that he signed his name thereto by like order.

/s/ Robert C. Weiden

NOTARY PUBLIC

My Commission Expires:

12/22/10

[NOTARIAL SEAL]

Term Note A

EX-10.6

Exhibit 10.6

REVOLVING CREDIT NOTE

$10,866,000 June 8, 2009

This Revolving Credit Note is executed and delivered under and pursuant to the terms of that certain Revolving Credit, Term Loan and Security Agreement dated as of June 8, 2009 (as amended, restated, supplemented or modified from time to time, the “Loan Agreement”) by and among the undersigned, as Borrower, the various financial institutions named therein or which hereafter become a party thereto (each individually a “Lender” and collectively, “Lenders”) and PNC BANK, NATIONAL ASSOCIATION, as agent for Lenders (in such capacity, “Agent”).  Capitalized terms not otherwise defined herein shall have the meanings provided in the Loan Agreement.

FOR VALUE RECEIVED, the Borrower hereby promises to pay to the order of PNC BANK, NATIONAL ASSOCIATION (“Payee”), at the office of Agent located at Two Tower Center Boulevard, East Brunswick, New Jersey  08816, or at such other place as Agent may from time to time designate to Borrower in writing:

(i)            the principal sum of TEN MILLION EIGHT HUNDRED SIXTY-SIX THOUSAND DOLLARS ($10,866,000) or, if different from such amount, the aggregate unpaid principal balance of Payee’s Commitment Percentage of the Revolving Advances as may be due and owing under the Loan Agreement, payable in accordance with the provisions of the Loan Agreement, subject to acceleration upon the occurrence of an Event of Default under the Loan Agreement or earlier termination of the Loan Agreement pursuant to the terms thereof; and

(ii)           interest on the principal amount of the Revolving Advances under this Revolving Credit Note from time to time outstanding until such principal amount is paid in full at the applicable Interest Rate in accordance with the provisions of the Loan Agreement.  In no event, however, shall interest exceed the amount collectible at the maximum interest rate permitted by law.  Upon and after the occurrence of an Event of Default, and during the continuation thereof, interest may be payable at the Default Rate in accordance with the provisions of the Loan Agreement.

This Revolving Credit Note is one of the Revolving Credit Notes referred to in the Loan Agreement and is secured by the liens granted pursuant to the Loan Agreement and the Other Documents, is entitled to the benefits of the Loan Agreement and the Other Documents and is subject to all of the agreements, terms and conditions therein contained.

This Revolving Credit Note is subject to mandatory prepayment and may be voluntarily prepaid, in whole or in part, on the terms and conditions set forth in the Loan Agreement.

If an Event of Default under Section 10.7 of the Loan Agreement shall occur, then this Revolving Credit Note shall immediately become due and payable, without notice, together with reasonable attorneys’ fees if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof.  If any other Event of Default shall occur under the Loan Agreement

or any of the Other Documents, and the same is not cured within any applicable grace or cure period, then this Revolving Credit Note may, as provided in the Loan Agreement, be declared to be immediately due and payable, without notice, together with reasonable attorneys’ fees, if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof.

Borrower expressly waives any presentment, demand, protest, notice of protest, or notice of any kind except as expressly provided in the Loan Agreement.

[Signatures on Following Page]

This Revolving Credit Note shall be construed and enforced in accordance with the laws of the State of North Carolina.

BORROWER:
WM COFFMAN LLC,
a Delaware limited liability company
By:	/s/ Joseph A. Molino, Jr.
Name:	Joseph A. Molino, Jr.
Title:	Vice President

Revolving Credit Note

STATE OF New York	)
	) ss.
COUNTY OF Suffolk	)

On this 4th day of June, 2009, before me personally came Joseph A. Molino, Jr., to me known, who, being by me duly sworn, did depose and say that he is the Vice President of WM COFFMAN LLC, the limited liability company described in and which executed the foregoing instrument; that he knows the seal of said limited liability company; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the members of said limited liability company, and that he signed his name thereto by like order.

/s/ Robert C. Weiden

NOTARY PUBLIC

My Commission Expires:

12/22/10

[NOTARIAL SEAL]

Revolving Credit Note

EX-10.7

Exhibit 10.7

AMENDMENT NO. 19 AND WAIVER TO

CREDIT AGREEMENT

THIS AMENDMENT NO. 19 AND WAIVER, dated as of June 10, 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

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.

Accordingly, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto 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) 2.00%, with respect to Revolving Credit Loans that are Prime Rate Loans and (b) 3.75%, with respect to Revolving Credit Loans that are LIBOR Loans, each such margin in (a) and (b) hereinafter the “Prime Rate Margin”.

“Applicable Additional Term Loan Margin” shall mean (a) 2.00%, with respect to Additional Term Loans that are Prime Rate Loans and (b) 4.00%, with respect to Additional Term Loans that are LIBOR Loans, each such margin in (a) and (b) hereinafter the “LIBOR Margin.”

“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)(x) $13,700,000, for the period from the Amendment No. 19 Effective Date through August 30, 2009 or (y) $13,500,000, for the period from August 31, 2009 and thereafter, plus (c) if

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applicable on such date of determination, the Stair Business Borrowing Base minus (d) for periods through August 31, 2009 only, the Contributed Collateral Shortfall, 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 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.”

“Consolidated” shall mean, as applied to any financial or accounting term, such term determined on a consolidated basis in accordance with GAAP for the Financial Parties.

“Consolidated Capital Base” shall mean on a Consolidated basis, the shareholders’ equity of the Financial Parties plus (a) Subordinated Debt less (b) all intangible assets, including without limitation, organization expenses, intellectual property, goodwill, loans or mortgages due from shareholders and/or employees and/or Affiliates, treasury stock (unless otherwise deducted in the computation of shareholders’ equity) or deferred charges less (c) the Net Investment in Coffman.

“Consolidated Current Maturities on Long Term Debt” shall mean, on any date of determination, the aggregate principal payments made during the prior twelve (12) month period with respect to all Indebtedness which is classified as long term debt on the Consolidated financial statements of the Financial Parties, as calculated in accordance with GAAP.

“Consolidated EBITDA” shall mean for the Financial Parties for any period, the Consolidated Net Income (or Consolidated net loss) of the Financial Parties for such period, plus (I) the sum, without duplication, of (a) gross interest expense (without giving effect to any netting for any interest income), (b) depreciation and amortization expenses or charges, (c) all income taxes to any government or governmental instrumentality, expensed on any Financial Party’s books (whether paid or accrued), (d) non-cash losses resulting from a write-down or write-off of goodwill or intangible assets in the context of an acquisition (net of the associated tax benefit), and (e) non-cash charges incurred in connection with accounting for (i) stock options and stock-based compensation under Financial Accounting Standards No. 123R and (ii) non-cash expenses under Financial Account Standards No. 141 minus (II) the sum of (a) all extraordinary gains, (b) all non-cash income or gain and (c) interest income, in each case determined on a Consolidated basis for the Financial Parties in accordance with GAAP.  All of the foregoing categories shall be calculated (without duplication) for the four fiscal quarters ending on or most recently ended prior to the date of calculation thereof.

“Consolidated Interest Expense” shall mean the Consolidated gross interest expense of the Financial Parties (without giving effect to any netting for any interest income), determined in accordance with GAAP and calculated (without

2

duplication) for the four fiscal quarters ending on or most recently ended prior to the date of calculation thereof.

“Consolidated Net Income” shall mean, for any period, the net income of the Financial Parties on a Consolidated basis for such period determined in accordance with GAAP.

“Consolidated Net Loss” shall mean, for any period, a net loss of the Financial Parties on a Consolidated basis for such period determined in accordance with GAAP.

“Consolidated Net Worth” shall mean (a) total Consolidated assets of the Financial Parties less (b) the total Consolidated liabilities of the Financial Parties, in each case determined in accordance with GAAP.

“Consolidated Senior Debt” shall mean all Indebtedness of the Financial Parties for borrowed money other than (i) Indebtedness described in clause “(j)” of the definition of the term “Indebtedness,” (ii) Subordinated Debt and (iii) Indebtedness consisting of foreign currency exchange agreements as described in clause “(h)” of the definition of Indebtedness.

“Prime Rate”  shall mean the highest of (i) the Prime Rate; (ii) the Federal Funds Effective Rate from time to time plus 0.5%; and (iii) two hundred (200) basis points in excess of the floating rate of interest determined, on a daily basis, by the Administrative Agent in accordance with its customary procedures and utilizing such electronic or other quotation sources as it considers appropriate to be the prevailing rate per annum in effect each banking day at which deposits in United States dollars for a one month period, determined by the Administrative Agent in its sole discretion, are offered to the Administrative Agent by first class banks in the London Interbank Market shortly after 11:00 a.m. (London time) two banking days prior to the date such rate of interest shall be effective and applied to existing and future advances under Prime Rate Loans.

“Revolving Credit Commitment” shall mean, with respect to each Lender, the obligation of such Lender to make Revolving Credit Loans to the Co-Borrowers and to acquire participations in Letters of Credit and Banker’s Acceptances in an aggregate amount in an aggregate amount not to exceed the amount set forth opposite such Lender’s name on the signature page to Amendment No. 19 under the caption “Revolving Credit Commitment” and for the periods described therein, as such amounts may be adjusted in accordance with the terms of this Agreement.

“Security Documents” shall mean the Security Agreement, the Pledge Agreements, the Mortgages and the Assignments of Note.

“Subordination Agreements” shall mean the Hytech Subordination Agreement.

“Total Commitment” shall mean, at any time, the aggregate of the Commitments in effect at such time.

“Total Revolving Credit Commitment” shall mean, at any time, the aggregate of the Revolving Credit Commitments in effect at such time, which shall be

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$20,700,000, as of the Amendment No. 19 Effective Date, and $19,400,000, as of August 31, 2009, as same may be otherwise adjusted from time to time.

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

“Amendment No. 19” shall mean Amendment No. 19 and Waiver to Credit Agreement, dated as of the Amendment No. 19 Effective Date, among the Co-Borrowers, the Lenders and the Administrative Agent.

“Amendment No. 19 Effective Date” shall mean June 10, 2009.

“Assignments of Notes” shall mean, collectively, the Assignments of Notes, each substantially in the form attached hereto as Exhibit O to be executed and delivered on the Amendment No. 19 Effective Date by Woodmark and Pacific with respect to the Coffman Notes, as each of the same may hereafter be amended, restated, supplemented or otherwise modified from time to time.

“Coffman” shall mean WM Coffman LLC, a Delaware limited liability company.

“Coffman Contribution Agreements” shall mean, collectively, (a) the Assignment and Assumption Agreement, dated as of June 8, 2009, between Woodmark and Coffman, pursuant to which Woodmark contributed the Woodmark Contributed Assets to Coffman and (b) the Assignment and Assumption Agreement, dated as of June 8, 2009, between Pacific and Coffman, pursuant to which Pacific contributed the Pacific Contributed Assets to Coffman.

“Coffman Documents” shall mean the Coffman Contribution Agreements, the Coffman Purchase Agreement and the other documents executed and delivered in connection with the Coffman Transaction.

“Coffman Notes” shall mean the Subordinated Promissory Notes delivered to each of Woodmark and Pacific pursuant to the Coffman Purchase Agreement, as further described in the Assignments of Note.

“Coffman Purchase Agreement” shall mean the Asset Purchase Agreement, dated on or about June 8, 2009, between Coffman Stairs LLC, a Delaware limited liability company, as Seller, and Coffman, as Purchaser.

“Coffman Transaction” shall mean the transactions contemplated under the Coffman Contribution Agreements and the Coffman Purchase Agreement.

“Contributed Collateral Shortfall Amount” shall mean the amount described as the “Contributed Collateral Shortfall Amount” in the closing statement delivered to the Lenders in accordance with Amendment No. 19 and dated as of the Amendment No. 19 Effective Date.

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal fund brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the

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quotations for the day of such transactions received by the Administrative Agent from three Federal fund brokers of recognized standing selected by the Administrative Agent.

“Financial Parties” shall mean the Co-Borrowers and all of their respective Subsidiaries, other than Coffman.

“Fixed Charge Coverage Ratio” shall mean the ratio of (i) Consolidated EBITDA minus cash taxes paid to (ii) Consolidated Interest Expense plus Consolidated Current Maturities on Long Term Debt.

“HyTech PA” shall mean Hy-Tech Holdings, Inc., a Delaware corporation.

“HyTech Documents” shall mean the Junior Note, the Junior Security Agreement and the Junior Mortgage, as such terms are defined in the HyTech Subordination Agreement.

“HyTech Subordination Agreement” shall mean the Subordination Agreement to be hereinafter entered into among Hy-Tech, the Administrative Agent and HyTech PA, as amended, restated, supplemented or modified, from time to time.

“Net Investment in Coffman” shall mean the remainder of (a) the aggregate amount of the Coffman Notes minus (b) the amount that is shown as the “due to Coffman” on the Financial Parties’ financial statements, all as determined on the Amendment No. 19 Effective Date.

“Pacific Contributed Assets” shall mean those assets described on Schedule A hereto.

“PNC Loan Agreement” shall mean the Revolving Credit, Term Loan and Security Agreement, dated on or about June 8, 2009, between Coffman and PNC Bank, National Association.

“Stair Business Borrowing Base” shall mean, for periods through August 31, 2009 only, (a) 80% of the value of the Stair Business Eligible Accounts Receivable, plus (b) 50% of the aggregate value of the Stair Business Eligible Inventory.

“Stair Business Eligible Accounts Receivables” shall mean Eligible Accounts Receivables owing to Woodmark and/or Pacific in connection with the “Stair Business”, which was not contributed to Coffman, as further described in the Borrowing Base Certificate with respect to the Stair Business Borrowing Base.

“Stair Business Eligible Inventory” shall mean Eligible Inventory owned by Pacific in connection with the “Stair Business” which was not contributed to Coffman in connection with the Coffman Contribution Agreements, as further described in the Borrowing Base Certificate with respect to the Stair Business Borrowing Base.

“Woodmark Contributed Assets” shall mean those assets described on Schedule B hereto.

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Section 1.03.The definition of the term “Affiliate” in Section 1.01 of the Credit Agreement is hereby amended to add the following sentence at the end thereof:

“Notwithstanding anything to the contrary herein, any references to the term “Affiliate” when used to reference Affiliates of the Co-Borrowers shall be deemed to include Coffman as an Affiliate of the Co-Borrowers, including without limitation under Section 7.15 hereof.”

Section 1.04.The definition of the term “Subsidiaries” in Section 1.01 of the Credit Agreement is hereby amended to add the following sentence at the end thereof:

“Notwithstanding anything to the contrary herein, all references in this Agreement to the term “Subsidiaries” when used to describe Subsidiaries of the Co-Borrowers (including with respect to the calculation of financial covenants set forth in Section 7.13 hereof) shall not be deemed to include Coffman, except with respect to the delivery of financial statements pursuant to Section 6.03(a) and 6.03(b) hereof.

Section 1.05.Article VI of the Credit Agreement is hereby amended to add a new Section 6.15 at the end thereof as follows:

SECTION 6.15.HyTech Documents.  The Co-Borrowers shall deliver to the Administrative Agent,  by no later than June 26, 2009, a counterpart of the HyTech Subordination Agreement, duly executed by Hy-Tech and HyTech PA, along with copies of the executed HyTech Documents. The Co-Borrower shall further deliver to the Administrative Agent, promptly following payment in full of the obligations described in the HyTech Documents, evidence, satisfactory to the Administrative Agent and its counsel, that the subordinate liens on the personal property and real property of Hy-Tech in favor of HyTech PA have been released.

Section 1.06.Section 7.01 of the Credit Agreement is hereby amended by deleting the period at the end of clause “(l)” thereof and adding the word “and” and by adding new clause “(m)” at the end thereof as follows:

“(m)   Liens on personal property and real property of Hy-Tech to be granted to HyTech PA pursuant to the HyTech Documents, provided that such Liens are only granted to secure obligations under the HyTech Documents and that all such Liens shall be terminated following payment in full of the Indebtedness described in the HyTech Documents.”

Section 1.07.Section 7.02 of the Credit Agreement is hereby amended by deleting the period at the end of clause “(i)” thereof and adding the word “and” and by adding new clause “(j)” at the end thereof as follows:

“(j)Indebtedness of Hy-Tech owing to HyTech PA under the HyTech Documents.

Section 1.08.Section 7.13(a) of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

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“Fixed Charge Coverage Ratio.  Permit the Fixed Charge Coverage Ratio as of the last day of each fiscal quarter set forth below, to be less than the ratio set forth below opposite the applicable fiscal quarter:

Period	Ratio
December 31, 2009	1.05:1.00
March 31, 2010	1.20:1.00
June 30, 2010	1.15:1.00
September 30, 2010	1.10:1.00
December 31, 2010	1.10:1.00
March 31, 2011	1.15:1.00
June 30, 2011	1.15:1.00
September 30, 2011 and at the end of each fiscal quarter thereafter”	1.20:1.00

Section 1.09.The table in Section 7.13(b) of the Credit Agreement, Minimum Consolidated Capital Base, is hereby amended and restated in its entirety to provide as follows:

Period	Amount
June 30, 2009 through December 30, 2009	$	23,000,000
December 31, 2009 through March 30, 2010	$	22,700,000
March 31, 2010 through June 29, 2010	$	22,300,000
June 30, 2010 through September 29, 2010	$	23,200,000
September 30, 2010 through December 30, 2010	$	23,600,000
December 31, 2010 through March 30, 2011	$	23,800,000
March 31, 2011 through June 29, 2011	$	24,100,000
June 30, 2011 through September 29, 2011	$	25,000,000
September 30, 2011 through December 30, 2011	$	25,600,000
December 31, 2011 and thereafter	$	25,800,000

Section 1.10.Section 7.13(c) of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“Consolidated Senior Debt to Consolidated EBITDA.  Permit the ratio of Consolidated Senior Debt to Consolidated EBITDA Ratio as of the last day of each fiscal quarter set forth below, to be less than the ratio set forth below opposite the applicable fiscal quarter:

Period	Ratio
June 30, 2009	8.00:1.00
September 30, 2009	7.50:1.00
December 31, 2009	5.50:1.00
March 31, 2010	4.50:1.00
June 30, 2010	4.50:1.00
September 30, 2010	4.50:1.00
December 31, 2010	4.25:1.00
March 31, 2011	4.25:1.00
June 30, 2011	4.25:1.00
September 30, 2011	3.75:1.00
December 31, 2011 and at the end of each fiscal quarter thereafter”	3.50:1.00

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

“Consolidated Capital Expenditures.  Permit Consolidated Capital Expenditures to exceed (a) $2,000,000, for the fiscal year ending December 31, 2009 or (b) $1,250,000, for any fiscal year thereafter.”

Section 1.12Section 7.13(e) of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“No Consolidated Net Loss.  Incur for any four consecutive fiscal quarters of the Co-Borrowers a Consolidated Net Loss in excess of (a) ($700,000), for the fiscal quarter ending June 30, 2009, (b) ($450,000), for the fiscal quarter ending September 30, 2009, or (c) $0, at any time thereafter.  For purposes of this Section 7.13(e) Consolidated Net Loss shall be calculated exclusive of extraordinary gains, provided that for purposes of determining compliance with this covenant for the fiscal quarters ending June 30, 2009 and September 30, 2009, Consolidated Net Loss shall be calculated without giving effect to the one-time charge against earnings resulting from the write-down of goodwill and other intangible assets (net of the associated deferred tax benefit), which was incurred by the Co-Borrowers in the fiscal quarter ended December 31, 2008.”

Section 1.13.Article VII of the Credit Agreement is hereby amended to add a new Section 7.17, Section 7.18 and Section 7.19 at the end thereof as follows:

SECTION 7.17.Coffman Documents. No Co-Borrower shall amend, supplement or otherwise modify any of the terms of the Coffman Documents in a manner that would be materially adverse to the Administrative Agent of the Lenders, including with respect to the incurrence by Woodmark or Pacific of any additional liabilities or obligations thereunder or contribution of additional assets or grant of a security interest in their respective assets, without the prior written consent of the Required Lenders.

SECTION 7.18.PNC Loan Agreement.  No Co-Borrower shall cause or permit Coffman to amend, supplement or otherwise modify any of the terms of the PNC Loan Agreement or any documents or agreements now or hereinafter executed in connection therewith, in any manner which may result in any Co-Borrower guarantying the obligations of Coffman to PNC under such facility, granting a security interest to PNC in its assets or otherwise being liable or responsible for, whether contingent or otherwise, any obligations of Coffman, whether with regard to the payment of money or otherwise, under such facility.

SECTION 7.19.Dealings with Coffman.  Notwithstanding anything to the contrary herein, no Co-Borrower shall make any loans to or investments in Coffman, nor shall any Co-Borrower guaranty, or become liable or responsible for, in any way, the obligations of Coffman, whether with regard to the payment or money owing to PNC or any other party.

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Section 1.14.Schedule III [Existing Indebtedness] to the Credit Agreement is hereby amended to add the following at the end thereof:

8.Obligations of Woodmark and Pacific arising under the Transitional Services Agreement, dated on or about June 8, 2009, among Woodmark, Pacific and Coffman.

9.Obligations of Woodmark owing to Property Reserve, Inc., or its agents pursuant to the Lease with respect to Woodmark’s Plano, Texas location, which lease was assigned to Coffman but without novation by such landlord.

10.Obligations of Woodmark owing to Distribution Funding II, LLC or its agent pursuant to the Lease with respect to Woodmark’s Austell, Georgia location, which lease was assigned to Coffman but without novation by such landlord.

Section 1.15.Schedule IV [Existing Guarantees] to the Credit Agreement is hereby amended to add the following at the end thereof:

Woodmark International, L.P.

Guaranty obligations of Woodmark described in item 9 of Schedule III

Pacific Stair Products, Inc.

None

Section 1.16.Exhibit A and Exhibit H to the Credit Agreement are each hereby amended in their entirety and replaced with Exhibit A and Exhibit H, respectively, attached to this Amendment.  Schedule A and Schedule B attached hereto are hereby added as Schedule A and Schedule B to the Credit Agreement.  Exhibit O attached to this Amendment is hereby added as Exhibit O to the Credit Agreement.

ARTICLE II.

Waiver and Consent.

The Administrative Agent and the Lenders hereby (i) waive compliance with Sections 6.10, 7.04, Section 7.05, Section 7.06 and Section 7.12 of the Credit Agreement solely in order to permit P&F, Woodmark and Pacific to enter into and consummate the Coffman Transaction, including the formation of Coffman as a wholly-owned subsidiary of P&F and the contribution and transfer to Coffman by Woodmark, of the Woodmark Contributed Assets, and Pacific, of the Pacific Contributed Assets and (ii) consent to the consummation by Woodmark and Pacific of the Coffman Trnasaction, all subject to the terms and conditions of the Coffman Documents.

ARTICLE III.

Conditions of Effectiveness, Additional Covenants.

Section 3.1.This Amendment and Waiver shall become effective as of the date hereof,

(a)upon the receipt and satisfactory review by the Lenders of (i) the closing statement in the form attached hereto as Exhibit 1, duly executed by an Executive Officer, and such financial information supporting the statements made thereon that the Lenders may reasonably require and (ii) an amendment and waiver fee of $30,000 for the pro-rata distribution to the Lenders; and

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(b)upon receipt by the Administrative Agent of: (a)  this Amendment, duly executed by each Co-Borrower; (b) an amended and restated Revolving Credit Note, substantially in the form of Exhibit A attached hereto, duly executed by each Co-Borrower in favor of each Lender; (c) Assignments of Notes, duly executed by each of Woodmark and Pacific, each substantially in the form attached hereto as Exhibit O, along with the original Coffman Notes applicable to such Assignment of Notes, (d) an Officer’s Certificate, 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 amended and restated Revolving Credit Notes and the other documents to be delivered in connection herewith and therewith and (e) copies of the executed PNC Loan Agreement, the Coffman Contribution Agreements, the Coffman Purchase Agreement and such other documents and agreements that the Administrative Agent may reasonably request.

3.2.The Co-Borrower further agree to deliver to the Administrative Agent, as soon as possible, and in any event within seven (7) days of the Amendment No. 19 Effective Date, a schedule prepared by the Chief Financial Officer describing the net assets contributed by Woodmark and Pacific to Coffman pursuant to the Contribution Agreements and the cash and notes received by Woodmark and Pacific in connection therewith.

ARTICLE IV.

Representations and Warranties; Effect on Credit Agreement.

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

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.

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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.

ARTICLE V.

Miscellaneous.

Section 5.1.This Amendment and Waiver shall be governed by and construed in accordance with the laws of the State of New York.

Section 5.2.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 5.3.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.

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

	P&F INDUSTRIES, INC.
	FLORIDA PNEUMATIC MANUFACTURING CORPORATION
	EMBASSY INDUSTRIES, INC. GREEN MANUFACTURING, INC.
	COUNTRYWIDE HARDWARE, INC. NATIONWIDE INDUSTRIES, INC.
	WOODMARK INTERNATIONAL, L.P.
	By:				Countrywide Hardware, Inc., its General
					Partner
	PACIFIC STAIR PRODUCTS, INC.
	WILP HOLDINGS, INC.
	CONTINENTAL TOOL GROUP, INC.
	HY-TECH MACHINE, INC.
	By:			/s/ Joseph A. Molino, Jr.
				Joseph A. Molino, Jr., the Vice President of each of the corporations named above
Revolving Credit Commitment:	CITIBANK, N.A., as a Lender and as Administrative
	Agent
(a)For the period from the Amendment
No. 19 Effective Date through 8/30/09:
$13,455,000
(b)8/31/09 and thereafter: $12,610,000	By:		/s/ Stephen Kelly
			Stephen Kelly, Vice President
Revolving Credit Commitment:	HSBC BANK USA, NATIONAL ASSOCIATION, as
	a Lender
(a) For the period from the Amendment
No. 19 Effective Date through 8/30/09:
$7,245,000
(b)8/31/09 and thereafter: $6,790,000	By:	/s/ Gary Sarro
		Gary Sarro, First Vice President

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EX-10.8

Exhibit 10.8

FOURTH AMENDED AND RESTATED REVOLVING CREDIT NOTE

$13,455,000 June 10, 2009

FOR VALUE RECEIVED, 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”), jointly and severally promise to pay to the order of CITIBANK, N.A. (the “Lender”), on or before the Revolving Credit Termination Date, the principal amount of THIRTEEN MILLION FOUR HUNDRED FIFTY FIVE THOUSAND ($13,455,000) DOLLARS or, if less, the unpaid principal amount of all Revolving Credit Loans made by the Lender to the Co-Borrowers under the Credit Agreement referred to below.

The Co-Borrowers jointly and severally promise to pay interest on the unpaid principal amount hereof from the date hereof until paid in full at the rates and at the times which shall be determined, and to make principal repayments on this Note at the times which shall be determined, in accordance with the provisions of the Credit Agreement referred to below.

This Note is one of the “Revolving Credit Notes” referred to in the Credit Agreement, dated as of June 30, 2004, by and among the Co-Borrowers, Citibank, N.A., as Administrative Agent, and the Lenders (including the Lender) as are or may from time to time become parties thereto (as same has been and may be further amended, restated, supplemented or modified, the “Credit Agreement”) and is issued pursuant to and entitled to the benefits of the Credit Agreement to which reference is hereby made for a more complete statement of the terms and conditions under which the Revolving Credit Loans evidenced hereby were made and are to be repaid.  Capitalized terms used herein without definition shall have the meanings set forth in the Credit Agreement.

Each of the Lender and any subsequent holder of this Note shall record the date, Type and amount of each Revolving Credit Loan and the date and amount of each payment or prepayment of principal of each Revolving Credit Loan on the grid schedule annexed to this Note; provided, however, that the failure of the Lender or any holder to set forth such Revolving Credit Loans, payments and other information on the attached grid schedule shall not in any manner affect the obligation of the Co-Borrowers to repay the Revolving Credit Loans made by the Lender in accordance with the terms of this Note.

This Note is subject to prepayment as provided in Section 3.03 of the Credit Agreement.

Upon the occurrence of an Event of Default the unpaid balance of the principal amount of this Note together with all accrued but unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement.

All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in immediately available funds at the office of Citibank, N.A., as

1

Administrative Agent for the Lenders under the Credit Agreement, located at 730 Veterans Memorial Highway, Hauppauge, New York 11788 or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligation of the Co-Borrowers, which is absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed.

Each Co-Borrower and each endorser of this Note waive diligence, presentment, protest, demand, and notice of any kind in connection with this Note.

This Note is an amendment and restatement of, and is being issued in replacement of and substitution for, the Third Amended and Restated Revolving Credit Note dated March 30, 2009 in the original principal amount of $14,300,000 issued by the Co-Borrowers (the “Original Note”).  The execution and delivery of this Note shall not be construed to have constituted a repayment of any principal of, or interest on, the Original Note.

THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAW.

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IN WITNESS WHEREOF, each Co-Borrower has caused this Note to be executed and delivered by its duly authorized officer, as of the day and year and at a place first above written.

P&F INDUSTRIES, INC.
FLORIDA PNEUMATIC MANUFACTURINGCORPORATION
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

3

SCHEDULE OF LOANS

					Amount of
Date	Type		Principal		Principal
of	of	Interest	Amount of	Maturity	Paid or
Loan	Loan	Rate	Loan	of Loan	Unpaid

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EX-10.9

Exhibit 10.9

FOURTH AMENDED AND RESTATED REVOLVING CREDIT NOTE

$7,245,000 June 10, 2009

FOR VALUE RECEIVED, 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”), jointly and severally promise to pay to the order of HSBC BANK USA, NATIONAL ASSOCIATION (the “Lender”), on or before the Revolving Credit Termination Date, the principal amount of SEVEN MILLION TWO HUNDRED FORTY FIVE THOUSAND ($7,245,000) DOLLARS or, if less, the unpaid principal amount of all Revolving Credit Loans made by the Lender to the Co-Borrowers under the Credit Agreement referred to below.

The Co-Borrowers jointly and severally promise to pay interest on the unpaid principal amount hereof from the date hereof until paid in full at the rates and at the times which shall be determined, and to make principal repayments on this Note at the times which shall be determined, in accordance with the provisions of the Credit Agreement referred to below.

This Note is one of the “Revolving Credit Notes” referred to in the Credit Agreement, dated as of June 30, 2004, by and among the Co-Borrowers, Citibank, N.A., as Administrative Agent, and the Lenders (including the Lender) as are or may from time to time become parties thereto (as same has been and may be further amended, restated, supplemented or modified, the “Credit Agreement”) and is issued pursuant to and entitled to the benefits of the Credit Agreement to which reference is hereby made for a more complete statement of the terms and conditions under which the Revolving Credit Loans evidenced hereby were made and are to be repaid.  Capitalized terms used herein without definition shall have the meanings set forth in the Credit Agreement.

Each of the Lender and any subsequent holder of this Note shall record the date, Type and amount of each Revolving Credit Loan and the date and amount of each payment or prepayment of principal of each Revolving Credit Loan on the grid schedule annexed to this Note; provided, however, that the failure of the Lender or any holder to set forth such Revolving Credit Loans, payments and other information on the attached grid schedule shall not in any manner affect the obligation of the Co-Borrowers to repay the Revolving Credit Loans made by the Lender in accordance with the terms of this Note.

This Note is subject to prepayment as provided in Section 3.03 of the Credit Agreement.

Upon the occurrence of an Event of Default the unpaid balance of the principal amount of this Note together with all accrued but unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement.

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All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in immediately available funds at the office of Citibank, N.A., as Administrative Agent for the Lenders under the Credit Agreement, located at 730 Veterans Memorial Highway, Hauppauge, New York 11788 or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligation of the Co-Borrowers, which is absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed.

Each Co-Borrower and each endorser of this Note waive diligence, presentment, protest, demand, and notice of any kind in connection with this Note.

This Note is an amendment and restatement of, and is being issued in replacement of and substitution for, the Third Amended and Restated Revolving Credit Note dated March 30, 2009 in the original principal amount of $7,700,000 issued by the Co-Borrowers (the “Original Note”).  The execution and delivery of this Note shall not be construed to have constituted a repayment of any principal of, or interest on, the Original Note.

THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAW.

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IN WITNESS WHEREOF, each Co-Borrower has caused this Note to be executed and delivered by its duly authorized officer, as of the day and year and at a place 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

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SCHEDULE OF LOANS

					Amount of
Date	Type		Principal		Principal
of	of	Interest	Amount of	Maturity	Paid or
Loan	Loan	Rate	Loan	of Loan	Unpaid

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EX-99.1

Exhibit 99.1

P&F SUBSIDIARY ACQUIRES COFFMAN STAIRS

MELVILLE, N.Y., June 10, 2009 - P&F Industries, Inc. (Nasdaq: PFIN) today announced that WM Coffman LLC, a newly-formed subsidiary of P&F’s Countrywide Hardware unit, has acquired substantially all of the assets comprising the business of Coffman Stairs, LLC, a Delaware limited liability company, engaged in the manufacturing and supply of wood and iron stair parts in the U.S.  This business has been combined with the stair operations of the Woodmark International, Pacific Stair Products and Stair House business units of P&F.  The purchase price for the transaction is $4.5 million in cash, a note of $4.0 million and the assumption of certain payables, liabilities and obligations.  In addition, there is an obligation to make certain contingent payments based upon the operation and certain other circumstances.  The acquisition is expected to be accretive to earnings before the end of 2009.  The transaction was financed through a new and separate credit facility with PNC Bank that is dedicated to our stair operations.  Our existing credit facility continues in place with respect to the remainder of P&F.

The newly-acquired business, headquartered in Marion, VA, includes a 500,000 sq. foot manufacturing facility.  In addition, WM Coffman intends to continue warehouse operations in Marion, VA, Plano, TX and Austell, GA.  Coffman Stairs had revenue of $27.5 million in 2008 and had approximately 115 employees at the time of the acquisition.

Richard Horowitz, Chairman, President and Chief Executive Officer of P&F, explained, “We are excited to bring together P&F’s stair businesses and Coffman to form the largest manufacturer and supplier of wood and iron stair parts in the U.S.  Management believes that the complementary combination of product lines, distribution networks, employees, sales representatives, and domestic and international suppliers is unique in the industry and makes WM Coffman well-positioned to respond to the service requirements of one- and two-step distributors as well as stair specialists.”

OTHER INFORMATION

P&F Industries, Inc., through its two wholly owned operating subsidiaries, Continental Tool Group, Inc. and Countrywide Hardware, Inc., manufactures and/or imports air-powered tools sold principally to the industrial, retail and automotive markets, and various residential hardware such as staircase components, kitchen and bath hardware, fencing hardware and door and window hardware. P&F’s products are sold under their own trademarks, as well as under the private labels of major manufacturers and retailers.

This is a Safe-Harbor Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including those related to the Company’s future performance, and those contained in the comments of management, are based upon the Company’s historical performance and on current plans, estimates and expectations, which are subject to various risks and uncertainties, including, but not limited to, the strength of the retail, industrial, housing and other markets in which the Company operates, the impact of competition, product demand, supply chain pricing, and the Company’s debt and debt service requirements, and those other risks and uncertainties described in the reports and statements filed by the Company with the Securities and Exchange Commission, including, among others, those described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008. These risks could cause the Company’s actual results for the 2009 fiscal year and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

P&F Industries, Inc.

Joseph A. Molino, Jr.

Chief Financial Officer

631-694-9800

www.pfina.com