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): February 11, 2016

P & F INDUSTRIES, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-5332	22-1657413
(State or Other Jurisdiction of Incorporation)	(Commission File No.)	(IRS Employer 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 February 11, 2016 (the “Closing Date”), Countrywide Hardware, Inc., a Delaware corporation (“Seller”) and a wholly-owned subsidiary of P&F Industries, Inc. (the “Company”), Nationwide Industries, Inc., a Florida corporation and a wholly-owned subsidiary of Seller (“Nationwide”), the Company and Argosy NWI Holdings, LLC, a Delaware limited liability company (“Purchaser”), entered into a Stock Purchase and Redemption Agreement (the “Stock Purchase and Redemption Agreement”), pursuant to which, among other things, giving effect to certain contributions and redemptions of common shares (“Nationwide Shares”) of Nationwide, Purchaser acquired (the “Acquisition”) all of the outstanding Nationwide Shares from Seller, as more particularly described below and in the Stock Purchase and Redemption Agreement. The Acquisition was effective as of 11:59 p.m. on the Closing Date. Contemporaneously, the parties executed the Stock Purchase and Redemption Agreement and consummated the transactions contemplated thereby.

Pursuant to the Stock Purchase and Redemption Agreement, the purchase price for the Nationwide Shares acquired in the Acquisition was approximately $22.2 million (the “Consideration”), before giving effect to an estimated working capital adjustment of approximately $877,000, which is subject to further adjustment post-closing. The Consideration was paid to Seller or at Seller’s direction, less $1,955,000 escrowed pursuant to the terms of the Stock Purchase Agreement; in addition, the Stock Purchase and Redemption Agreement provides that, under certain circumstances, up to an additional $400,000 may be contributed into escrow by Seller. The Stock Purchase and Redemption Agreement contains various representations, warranties and covenants.

The foregoing description of the Stock Purchase and Redemption Agreement is qualified in its entirety by reference to the full text of the Stock Purchase and Redemption Agreement attached as an Exhibit 2.1 hereto and incorporated herein by reference.

Effective as of the Closing Date, the Company and the president of Nationwide, Christopher J. Kliefoth (the “Selling Securityholder”), entered into a purchase agreement (the “Purchase Agreement”), pursuant to which, among other things the Company acquired (i) 30,000 shares of the Company’s Class A Common Stock (“Common Stock”) at the aggregate purchase price of $254,490 (the “Repurchase”) and (ii) options, held by Selling Securityholder, to acquire 6,667 shares of Common Stock at an aggregate price of $16,597, as described herein and in the Purchase Agreement. The Purchase Agreement contains certain covenants, including standstill restrictions imposed on the Selling Securityholder with respect to shares of Common Stock for a three-year period. The Purchase Agreement also contains customary representations and warranties.

The foregoing description of the Purchase Agreement is qualified in its entirety by reference to the full text of the Purchase Agreement attached as an Exhibit 10.1 hereto and incorporated herein by reference.

Contemporaneously with the Acquisition and the Repurchase, the Company, its subsidiaries Florida Pneumatic Manufacturing Corporation (“Florida Pneumatic”), Hy-Tech Machine, Inc. (Hy-Tech”), ATSCO Holdings Corp. (“ATSCO”) and Nationwide (together with the Company, Florida Pneumatic, Hy-Tech and ATSCO, collectively, “Borrowers”) and the Company’s subsidiaries Continental Tool Group, Inc. (“Continental Tool”), Countrywide Hardware, Inc. (“Countrywide”), Embassy Industries, Inc. (“Embassy”), Green Manufacturing, Inc. (“Green”), Pacific Stair Products, Inc. (“Pacific Stair”), WILP Holdings, Inc. (“WILP”), Exhaust Technologies, Inc. (“Exhaust”) and Woodmark International, L.P. (“Woodmark,” and together with Continental Tool, Countrywide, Embassy, Green, Pacific Stair, WILP and Exhaust, collectively, “Guarantors”) entered into the Consent and Second Amendment to the Amended and Restated Loan and Security Agreement, effective as of February 11, 2016 (the “Amendment”), with Capital One Business Credit Corp. (the “Resigning Agent”), as resigning agent for Lenders (the “Lenders”), and Capital One, National Association, a successor agent for the Lenders from time to time party to the Loan Agreement (as defined below). The Amendment amended the Amended and Restated Loan and Security Agreement, dated as of August 13, 2014 (the “Loan Agreement”), as amended, among the Borrowers, the Guarantors, the Agent and the Lenders.

The Amendment, among other things: (1) provided the Lenders’ consent to the transactions contemplated by the Stock Purchase Agreement and the Repurchase and (2) amended the Loan Agreement by: (a) reducing the aggregate Commitment (as defined in the Loan Agreement) from approximately $33,657,000 to $11,600,000; (b) eliminating the Tranche B Term Loan (as defined in the Loan Agreement) which had an original principal amount of $3,000,000; (c) reducing the Tranche A Term Loan (as defined in the Loan Agreement) which had an original principal amount of approximately $6,533,000 to $100,000; (d) reducing the Revolver Commitment (as defined in the Loan Agreement) from $22,000,000 to $10,000,000 (less the outstanding Tranche A Term Loan); (e) reducing the Capex Loan Commitment (as defined in the Loan Agreement) from approximately $2,123,000 to $1,600,000; (f) modifying certain financial covenants, interest rate margins and fee obligations; and (g) extending the expiration of the credit facility under the Loan Agreement from December 19, 2017 to February 11, 2019.

The foregoing description of the Amendment is qualified in its entirety by reference to the full text of the Amendment attached as an Exhibit 10.2 hereto and incorporated herein by reference.

In connection with the Acquisition, effective as of the Closing Date, the Seller, as landlord, and Nationwide, as tenant, entered into a “triple net” lease (the “Lease”) relating to the Tampa, Florida-based real property in which Nationwide and a month-to-month co-tenant operate (the “Premises”). The Lease provides for, among other things, a seven-year term commencing on the Closing Date and an annual base rent of approximately $252,000 with annual escalations. The Lease also provides that the tenant will pay certain taxes and operating expenses associated with the Premises. The Lease replaces the previous lease between the parties and includes the entire Premises. The foregoing description of the Lease is qualified in its entirety by reference to the full text of the Lease attached as an Exhibit 10.3 hereto and incorporated herein by reference.

Additionally, effective as on the Closing Date, the Seller and Nationwide entered into an Option and Right of First Refusal Agreement (the “Option Agreement”) relating to the Premises, pursuant to which the Seller granted a purchase option to Nationwide relating to the Premises if such option is initiated within 60 days following the Closing Date, in addition to the right of first refusal relating to certain offers made by third parties during the five-year period following the Closing Date. The foregoing description of the Option Agreement is qualified in its entirety by reference to the full text of the Option Agreement attached as an Exhibit 10.4 hereto and incorporated herein by reference.

The foregoing provisions of the Stock Purchase and Redemption Agreement, the Purchase Agreement, the Amendment, the Lease and the Option Agreement do not purport to be complete, and are qualified in their entirety by the full text of the Stock Purchase and Redemption Agreement, the Purchase Agreement, the Amendment, the Lease and the Option Agreement attached as Exhibits hereto.

The Stock Purchase and Redemption Agreement, the Purchase Agreement, the Amendment, the Lease and the Option Agreement and the above descriptions of such agreements, have been included to provide investors and security holders with information regarding the terms and such agreements, and are not intended to provide any other factual information about the Company, its subsidiaries or affiliates, or any other parties to such agreements. The representations and warranties contained in such agreements were made only for purposes of those agreements, and as of specific dates, were solely for the benefit of the parties to those agreements, may be subject to a contractual standard of materiality different from what might be viewed as material to shareholders, and may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made by the parties to each other. Investors should not rely on the representations and warranties contained in the Stock Purchase and Redemption Agreement, the Purchase Agreement, the Amendment, the Lease and the Option Agreement as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries, affiliates or businesses.

Item 8.01. Other Items

On February 12, 2016, the Company issued a press release (the “Press Release”) announcing the Acquisition. A copy of the Press Release is furnished as Exhibit 99.1 hereto.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits:

2.1 Stock Purchase and Redemption Agreement, dated as of February 11, 2016, by and among Seller, Purchaser, the Company and Nationwide.

10.1 Purchase Agreement, dated as of February 11, 2016, by and between the Company and Christopher J. Kliefoth.

10.2 Consent and Second Amendment to Amended and Restated Loan and Security Agreement, dated as of February 11, 2016, by and among the Borrowers, Guarantors, Lender and Agent.

10.3 Lease, dated as of February 11, 2016, between the Company and Nationwide.

10.4 Option and Right of First Refusal Agreement, dated as of February 11, 2016, between the Company and Nationwide.

99.1 Press Release, dated February 12, 2016, issued by the Company.

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:    February 17, 2016	By:	/s/ Joseph A. Molino, Jr.
		Joseph A. Molino, Jr.
		Vice President, Chief Operating Officer and Chief Financial Officer

EX-2.1

Exhibit 2.1

Execution Version

CONFIDENTIAL

STOCK PURCHASE and REDEMPTION AGREEMENT

among

COUNTRYWIDE HARDWARE, INC.,

NATIONWIDE INDUSTRIES, INC.,

P&F INDUSTRIES, INC.

and

ARGOSY NWI HOLDINGS, LLC

dated as of

February 11, 2016

Article I          Definitions		1
Article II        Purchase and Sale		13
Section 2.01	Basic Transaction	13
Section 2.02	Closing Payments	13
Section 2.03	Purchase Price Adjustment	13
Section 2.04	Adjustments to Purchase Price	15
Section 2.05	Payment of Purchase Price Adjustment	16
Section 2.06	Withholding Rights	17
Section 2.07	Closing	17
Section 2.08	Closing Deliveries	17
Article III         Representations and Warranties of Seller		19
Section 3.01	Organization and Authority of Seller	19
Section 3.02	Organization, Authority and Qualification of the Company	19
Section 3.03	Capitalization	20
Section 3.04	No Subsidiaries	20
Section 3.05	No Conflicts; Consents	20
Section 3.06	Financial Statements	21
Section 3.07	Undisclosed Liabilities	21
Section 3.08	Absence of Certain Changes, Events and Conditions	21
Section 3.09	Material Contracts	24
Section 3.10	Title to Assets	25
Section 3.11	Real Property	26
Section 3.12	Condition And Sufficiency of Assets	27
Section 3.13	Intellectual Property	27
Section 3.14	Inventory	29
Section 3.15	Accounts and Notes Receivable	29
Section 3.16	Customers and Vendors	29
Section 3.17	Insurance	30
Section 3.18	Legal Proceedings; Governmental Orders	30
Section 3.19	Compliance With Laws; Permits	31
Section 3.20	Environmental Matters	31
Section 3.21	Employee Benefit Matters	32
Section 3.22	Employment Matters	35

Section 3.23	Taxes	36
Section 3.24	Indebtedness	38
Section 3.25	Certain Business Relationships with the Company	38
Section 3.26	Product and Service Warranty	39
Section 3.27	Product Liability	39
Section 3.28	Foreign Corrupt Practices	40
Section 3.29	Brokers	40
Section 3.30	No Other Representations and Warranties	40
Article IV         Representations and Warranties of Buyer		40
Section 4.01	Organization and Authority of Buyer	41
Section 4.02	No Conflicts; Consents	41
Section 4.03	Investment Purpose	41
Section 4.04	Brokers	42
Section 4.05	Legal Proceedings	42
Section 4.06	Independent Investigation	42
Section 4.07	No Other Representations and Warranties	42
Article V         Covenants		42
Section 5.01	Confidentiality	42
Section 5.02	Non-competition; Non-solicitation	43
Section 5.03	Employees; Benefit Plans	44
Section 5.04	Director and Officer Indemnification	45
Section 5.05	Books and Records	45
Section 5.06	Public Announcements	46
Section 5.07	Further Assurances	46
Section 5.08	Insurance Policies	46
Section 5.09	Company Accounts	47
Section 5.10	Notices of Termination, Resignation, Disability, or Death	47
Section 5.11	Intercompany Arrangements	48
Section 5.12	Sale of Real Property	48
Section 5.13	Maintenance of and No Changes to Trident Insurance Policies	48
Section 5.14	Profit Sharing Plan Payments	49
Article VI         Tax Matters		49
Section 6.01	Transfer Taxes	49
Section 6.02	Tax Returns	50

Section 6.03	Liability for Taxes	51
Section 6.04	Contest Provisions	52
Section 6.05	Termination of Existing Tax Sharing Agreements	52
Section 6.06	Elections Under Section 338 of the Code	52
Section 6.07	Tax Refunds	53
Section 6.08	Consolidated Tax Filings and Elections	53
Section 6.09	Tax Treatment of Sale	54
Article VII         Indemnification		54
Section 7.01	Survival	54
Section 7.02	Indemnification By Seller	55
Section 7.03	Indemnification By Buyer and the Company	55
Section 7.04	Certain Limitations	56
Section 7.05	Indemnification Procedures	58
Section 7.06	Payments	59
Section 7.07	Tax Treatment of Indemnification Payments	59
Section 7.08	Effect of Investigation	59
Section 7.09	Trident Product Liability	60
Section 7.10	Exclusive Remedies	60
Article VIII         Miscellaneous		60
Section 8.01	Expenses	60
Section 8.02	Notices	60
Section 8.03	Interpretation	61
Section 8.04	Headings	62
Section 8.05	Severability	62
Section 8.06	Entire Agreement	62
Section 8.07	Successors and Assigns	62
Section 8.08	No Third-party Beneficiaries	62
Section 8.09	Amendment and Modification; Waiver	62
Section 8.10	Governing Law; Submission to Jurisdiction; Waiver of Jury Trial	63
Section 8.11	Specific Performance	63
Section 8.12	Counterparts	64
Section 8.13	Non-Recourse	64

Exhibits

Exhibit A	Trident Insurance Policies
Exhibit B	Extinguished Debt
Exhibit C	Seller’s Wire Instructions
Exhibit D	Company Deposit and Merchant Services Accounts

Execution Version

STOCK PURCHASE AND REDEMPTION AGREEMENT

STOCK PURCHASE AND REDMPTION AGREEMENT dated as of February 11, 2016 (this “Agreement”), is entered into among COUNTRYWIDE HARDWARE, INC., a Delaware corporation (“Seller”), NATIONWIDE INDUSTRIES, INC., a Florida corporation (“Company”), P&F INDUSTRIES, INC., a Delaware corporation (“Parent”) (for purposes of Sections 5.02, 5.05, 5.09, 5.13, 5.14 and 6.08 only), and ARGOSY NWI HOLDINGS, LLC, a Delaware limited liability company (“Buyer”).

RECITALS

WHEREAS, Seller owns seventy (70) shares of the issued and outstanding shares of common stock, par value One Dollar ($1.00) per share (the “Redeemed Shares”) of NATIONWIDE INDUSTRIES, INC., a Florida corporation (the “Company”), which immediately prior to the Transactions constituted all of the issued and outstanding shares of the Company,;

WHEREAS, the Company wishes to issue to Buyer, and Buyer wishes to purchase from the Company, thirty (30) shares of the common stock of the Company, par value One Dollar ($1.00) per share (the “Purchased Shares”), subject to the terms and conditions set forth herein;

WHEREAS, simultaneously with the purchase of the Purchased Shares by the Buyer, the Company will redeem from Seller, and Seller will sell to the Company, the Redeemed Shares in exchange for the consideration set forth in Article II, and

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Article I
Definitions

The following terms have the meanings specified or referred to in this Article I:

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Affiliated Group” means any affiliated group within the meaning of the Code Section 1504(a) or any similar group defined under a similar provision of federal, state, local or foreign Law.

“Agreement” has the meaning set forth in the preamble.

“Balance Sheet” has the meaning set forth in Section 3.06.

“Basket” has the meaning set forth in Section 7.04(a).

“Benefit Plan” has the meaning set forth in Section 3.21(a).

“Broker” has the meaning set forth in Section 5.13(b).

“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in the State of New York are authorized or required by Law to be closed for business.

“Buyer” has the meaning set forth in the preamble.

“Buyer Indemnitees” has the meaning set forth in Section 7.02.

“Capital One Lien” means the Encumbrances ( which are being satisfied and released as to the Company at Closing) created by and pursuant to that certain Amended and Restated Loan and Security Agreement, dated as of August 13, 2014 by and among Seller, the Company, P&F Industries, Inc., ATSCO Holdings Corp., Florida Pneumatic Manufacturing Corporation, Hy-Tech Machine, Inc., Continental Tool Group, Inc., Embassy Industries, Inc., Exhaust Technologies, Inc., Green Manufacturing, Inc., Pacific Stair Products, Inc., WILP Holdings, Inc., Woodmark International, L.P., and Capital One Business Credit Corporation, as lender and agent.

“Cash” means, as of a specified date, (a) all cash and cash equivalents (including marketable securities and short-term investments) of the Company as of such date, less (b) the amount of outstanding checks written, and electronic transfers initiated, on the accounts of the Company that have not yet cleared as of such date.

“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601 et seq.

“Closing” has the meaning set forth in Section 2.07.

“Closing Cash” means the amount of Cash as of the Effective Time (determined on a pro forma basis as though the Transactions and the Credit Transactions were not consummated) not to exceed $500,000.

“Closing Date” has the meaning set forth in Section 2.07.

“Closing Transaction Expenses” has the meaning set forth in Section 2.02(b).

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“Closing Working Capital” means: (a) the Current Assets of the Company, less (b) the Current Liabilities of the Company, determined as of the Effective Time (determined on a pro forma basis as though the Transactions and the Credit Transactions were not consummated; provided, however, that assets, liabilities, gains, losses, revenues, and expenses in interim periods or as of dates other than year-end (which normally are determined through the application of so-called interim accounting conventions or procedures) shall be determined, for purposes of preparing the Draft Closing Statement, through full application of the procedures used in preparing the Historical Financial Statements.

“COBRA” has the meaning set forth in Section 3.21(e).

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the preamble.

“Company Accounts” has the meaning set forth in Section 2.08(c)(x).

“Company Continuing Employee” means each Employee who remains employed by the Company immediately after the Closing.

“Company Licensed Intellectual Property” means exclusive or non-exclusive rights or interests in Intellectual Property owned by a third party and licensed to Company.

“Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.

“Credit Facilities” means, collectively, (i) the credit facility evidenced by that certain Credit Agreement among the Company, Buyer and TCF Capital Funding Division of TCF National Bank and (ii) the credit facility evidenced by that certain Note Purchase Agreement among the Company, Buyer, Argosy Investment Partners V, L.P. and the other noteholders party thereto, each dated as of the date hereof.

“Credit Transactions” means the transactions described in or contemplated by the documents memorializing the Credit Facilities.

“Current Assets” means (a) accounts receivable (net of (i) the appropriate allowances for doubtful accounts and, without duplication, (ii) any accounts receivable that have not been received with 120 days of the applicable invoice date), (b) Inventory (net of the appropriate reserves for obsolete, damaged, defective or slow-moving Inventory), (c) prepaid expenses and (d) other current assets that are customarily included in the Company’s “Other Current Assets” line items on its Historical Financial Statements, but excluding (x) receivables from any of the Company’s Affiliates, directors, employees, officers or stockholders and any of their respective Affiliates and (y) Tax assets, in each case, as determined in accordance with GAAP, and to the extent not inconsistent therewith, using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Historical Financial Statements; provided; however, that Current Assets shall not include any Intercompany Payables & Receivables.

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“Current Liabilities” means (a) accounts payable, (b) deferred revenue, customer deposits, customer overpayments or rebates owed to customers, if any, (c) accrued, but unpaid payroll, (d) any accrued but unpaid bonuses for 2016 and any prior years (provided that Buyer and Seller agree that $27,000 shall be treated as the accrual for the 2016 bonuses), and (e) other Liabilities that are customarily included in the Company’s “Other Accrued Liabilities” line item on its Historical Financial Statements, including property Taxes, freight expenses and trade show expenses (excluding in all cases any profit sharing plan accruals, , any Indebtedness, including the current portion thereof, any Transaction Expenses and any deferred Tax Liability), in each case, as determined in accordance with GAAP, and to the extent not inconsistent therewith, using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Historical Financial Statements; provided; however, that Current Liabilities shall not include any Intercompany Payables & Receivables.

“Daroth” means Daroth Capital Advisors LLC.

“Data Room” means the electronic documentation site established by Daroth using the Citrix ShareFile platform on behalf of Seller.

“Disclosure Schedules” means the Disclosure Schedules delivered by Seller and Buyer concurrently with the execution and delivery of this Agreement.

“Dollars or $” means the lawful currency of the United States.

“Draft Closing Statement” has the meaning set forth in Section 2.03(c).

“Effective Time” means 11:59 pm Eastern Time on the Closing Date.

“Employees” means those Persons employed by the Company immediately prior to the Closing.

“Encumbrance” means any lien, pledge, mortgage, deed of trust, security interest, charge, claim, easement, encroachment or other similar encumbrance or restriction of any kind, including any restrictions on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“Environmental Claim” means any Action, Governmental Order, Encumbrance, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

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“Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata), and protection of human health or safety in connection with Hazardous Materials; or (b) concerning exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes the following (including their implementing regulations and any state analogs): CERCLA; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq. in respect of matters relating to Hazardous Materials.

“Environmental Notice” means any written directive, written notice of violation or infraction, or written notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

“Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure, exemption, or decision required under or issued, granted, given, or authorized by any Governmental Authority pursuant to Environmental Law.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“ERISA Affiliate” means any entity that is a member of (a) a controlled group of corporations (as defined in Section 414(b) of the Code), (b) a group of trades or businesses under common control (as defined in Section 414(c) of the Code), (c) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code) or (d) a “controlled group” within the meaning of Section 4001 of ERISA, any of which includes any of Seller, the Company or any of their subsidiaries.

“Escrow Agent” has the meaning set forth in Section 2.02(b).

“Escrow Agreement” means the Escrow Agreement of even date herewith, by and among the Escrow Agent, the Buyer and Seller.

“Escrow Amount” has the meaning set forth in Section 2.02(b).

“Escrow Fund” means the amount held by the Escrow Agent pursuant to the terms of the Escrow Agreement, which amount is originally equal to the Escrow Amount.

“Estimated Closing Statement” has the meaning set forth in Section 2.03(a).

“Estimated Closing Working Capital” has the meaning set forth in Section 2.03(a).

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“Estimated Closing Working Capital Adjustment” means, as the case may be (a) the amount by which the Estimated Working Capital is greater than the Targeted Closing Working Capital, in which case such number shall be expressed as a positive number for purposes of calculating the Purchase Price, or (b) the amount by which the Estimated Working Capital is less than the Targeted Closing Working Capital, in which case such number shall be expressed as a negative number for purposes of calculating the Purchase Price.

“Existing Debt” means all Indebtedness of the Company as of the Effective Time (determined on a pro forma basis as though the Transactions and the Credit Transactions were not consummated, which for the avoidance of doubt means that “Indebtedness” shall not include Liabilities under the Credit Facilities); provided; however, that Existing Debt shall not include any Intercompany Payables & Receivables.

“Extinguished Debt” has the meaning set forth in Section 2.02(b).

“Final Closing Statement” has the meaning set forth in Section 2.04.

“Financial Statements” has the meaning set forth in Section 3.06.

“Fundamental Representations” has the meaning set forth in Section 7.01.

“GAAP” means United States generally accepted accounting principles in effect from time to time.

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or man-made, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum byproducts, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation and polychlorinated biphenyls.

“Historical Financial Statements” has the meaning set forth in Section 3.06.

“Income Tax” means any federal, state, local or foreign Tax measured by or imposed on income, including any interest, penalty or addition thereto, whether disputed or not.

“Income Tax Return” means any Tax Return relating to Income Taxes, including any schedule or attachment thereto.

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“Indebtedness” means any of the following indebtedness of the Company, whether or not contingent: (a) the principal of and accrued interest, including all fees and obligations thereunder (including any prepayment or termination penalties, premiums or fees arising or which will arise out of the prepayment thereof prior to its maturity and termination) of any (i) indebtedness for borrowed money, (ii) Liabilities evidenced by bonds, debentures, notes or other similar instruments or debt securities, (iii) Liabilities under or in connection with drawn letters of credit or bankers’ acceptances or similar items, (iv) Liabilities under or in connection with interest rate swaps, collars, caps and similar hedging arrangements, (v) Liabilities secured by an Encumbrance (other than Permitted Encumbrances) on any of the Company’s assets, whether or not the Company has become liable for the payment of any such Liabilities and (vi) Liabilities under or in connection with off-balance-sheet financing arrangements or synthetic leases, (b) Liabilities to pay the deferred or installment purchase price of property or services other than trade payables and other ordinary course accruals whether or not represented by a note, earn-out or contingent purchase payment or otherwise, (c) any deferred purchase price liabilities related to past acquisitions or divestitures whether or not represented by a note, earn-out or contingent purchase payment or otherwise, (d) obligations under any lease of any property (whether real, personal or mixed) that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on the balance sheet of the Company, (e) any amounts payable by the Company under deferred compensation arrangements, (f) any amounts payable to any of the Company’s Affiliates, directors, employees, officers or stockholders and any of their respective Affiliates, and (g) any amounts guaranteed in any manner by the Company (including guarantees in the form of an agreement to repurchase or reimburse) or other amounts for which the Company is indirectly liable as guarantor, surety or otherwise (excluding any endorsements of instruments for deposit or collection in the ordinary course of business).

“Indemnified Party” has the meaning set forth in Section 7.04.

“Indemnifying Party” has the meaning set forth in Section 7.04.

“Independent Accountant” has the meaning set forth in Section 2.03(e).

“Insurance Policies” has the meaning set forth in Section 3.17.

“Intellectual Property” means all intellectual property and all rights, interests and protections that are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, pursuant to the Laws of any jurisdiction throughout the world, whether registered or unregistered, including any and all: (a) trademarks, service marks, trade names, brand names, logos, trade dress, design rights and other similar designations of source, sponsorship, association or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications and renewals for, any of the foregoing; (b) internet domain names, whether or not trademarks, registered in any top-level domain by any authorized private registrar or Governmental Authority, web addresses, web pages, websites and related content, accounts with Twitter, Facebook and other social media companies and the content found thereon and related thereto, and URLs; (c) works of authorship, expressions, designs and design registrations, whether or not copyrightable, including copyrights, author, performer, moral and neighboring rights, and all registrations, applications for registration and renewals of such copyrights; (d) inventions, discoveries, trade secrets, business and technical information and know-how, databases, data collections and other confidential and proprietary information and all rights therein; (e) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other Governmental Authority-issued indicia of invention ownership (including inventor’s certificates, petty patents and patent utility models); and (f) software and firmware, including data files, source code, object code, application programming interfaces, architecture, files, records, schematics, computerized databases and other related specifications and documentation.

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“Intercompany Payables & Receivables” means any Liability or receivable between the Company, on the one hand, and the Seller or its Affiliates (other than the Company), on the other hand.

“Interim Balance Sheet” has the meaning set forth in Section 3.06.

“Interim Balance Sheet Date” has the meaning set forth in Section 3.06.

“Interim Financial Statements” has the meaning set forth in Section 3.06.

“Inventory” means all of the finished goods, raw materials, parts, work in process and inventoriable supplies owned by Company.

“Inventory Count” has the meaning set forth in Section 2.03(b).

“Knowledge of Seller or Seller’s Knowledge” means (a) the actual knowledge of Richard A. Horowitz, Joseph A. Molino, Jr., Christopher Kliefoth, Stuart Itzkowitz, William Julien, Gregory Michalik, Erik Timothy and, solely for purpose of Section 3.28, Huiying “Clare” Pu Wakefield, (b) the knowledge that would be expected to be obtained by the persons set forth in clause (a) above after a reasonable investigation concerning the matter at issue.

“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

“Leases” has the meaning set forth in Section 3.11(b).

“Leased Real Property” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings or other interest in real property that are used in the Company’s business.

“Liabilities” means all liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

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“Losses” means losses, damages, Liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees; provided, however, that “Losses” shall not include punitive, incidental, consequential, special or indirect damages, including loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, except in the case of fraud or to the extent any such damages are actually awarded to a Governmental Authority or other third party. Notwithstanding the foregoing, nothing contained in this Agreement shall prevent a party from seeking Losses based on diminution in value or a multiple of earnings or from disputing the appropriateness thereof.

“Material Adverse Effect” means any event, occurrence, fact, condition or change that is materially adverse to (a) the business, results of operations, financial condition or assets of the Company, or (b) the ability of Seller to consummate the transactions contemplated hereby; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Company operates; (iii) any changes in financial, banking or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement or any action taken (or omitted to be taken) with the written consent of or at the written request of Buyer; (vi) any matter of which Buyer is aware at the Closing; (vii) any changes in applicable Laws or accounting rules (including GAAP) or the enforcement, implementation or interpretation thereof; (viii) the announcement, pendency or completion of the transactions contemplated by this Agreement, including losses or threatened losses of employees, customers, suppliers, distributors or others having relationships with the Company; (ix) any natural or man-made disaster or acts of God; or (x) any failure by the Company to meet any internal or published projections, forecasts or revenue or earnings predictions (provided that the underlying causes of such failures (subject to the other provisions of this definition) shall not be excluded).

“Material Contracts” has the meaning set forth in Section 3.09(a).

“Material Customers” has the meaning set forth in Section 3.16(a).

“Material Suppliers” has the meaning set forth in Section 3.16(a).

“Net Payment Amount” means an amount equal to (a) the Purchase Price, less (b) the Escrow Amount, less (c) the Closing Transaction Expenses.

“Objection Notice” has the meaning set forth in Section 2.03(d).

“Parent” has the meaning set forth in the preamble.

“Permits” means all permits, licenses, franchises, approvals, authorizations, consents, registrations and similar rights obtained, or required to be obtained, from Governmental Authorities.

“Permitted Encumbrances” has the meaning set forth in Section 3.10.

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“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

“Policy Default” has the meaning set forth in Section 5.13.

“Policy Event” has the meaning set forth in Section 5.13(a).

“Policy Period” has the meaning set forth in Section 5.13(a).

“Post-Closing Company Receipts” has the meaning set forth in Section 5.09.

“Pre-Closing Straddle Period” means the portion of a Straddle Period that extends on or before the Closing Date, through the Closing Date.

“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date.

“Pre-Closing Taxes” means Taxes of the Company for any Pre-Closing Tax Period.

“Purchase Price” means an amount equal to (a) $22,244,380, plus (b) the Estimated Closing Working Capital Adjustment (which may be negative), plus (c) Closing Cash as set forth on the Estimated Closing Statement, less (d) Existing Debt (including without duplication all amounts owed pursuant to the payoff letters referenced in Section 2.2(b)) as set forth on the Estimated Closing Statement. The Purchase Price shall be subject to adjustment after the Closing as expressly set forth in this Agreement.

“Purchased Shares” has the meaning set forth in the recitals.

“Purchased Shares Purchase Price” has the meaning set forth in Section 2.02(a).

“Qualified Benefit Plan” has the meaning set forth in Section 3.21(c).

“Redeemed Shares” has the meaning set forth in the recitals.

“Registered Intellectual Property” means Intellectual Property owned by or registered in the name of the Company that is the subject of any registration that is currently in effect, or any pending applications, including registered or issued patents, copyrights and trademarks.

“Release” means any actual or threatened releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, or disposing into or through the environment (including ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building).

“Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

“Restoration Action” has the meaning set forth in Section 5.13(c).

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“Restricted Business” means the design, manufacture, distribution and sale of fencing and railing hardware, storm and screen door hardware products, and window and door components.

“Restricted Customer” means: (a) each customer of the Company at any point during the twelve (12)-month period prior to the Closing Date; and (b) each prospective customer that the Company actively solicited during the twelve (12)-month period prior to the Closing Date.

“Restricted Period” has the meaning set forth in Section 5.02(a).

“Roll-Back” has the meaning set forth in Section 2.03(b).

“Roll-Back Inventory” has the meaning set forth in Section 2.03(b).

“Section 409A” has the meaning set forth in Section 3.21(i).

“Securities Requirements” has the meaning set forth in Section 5.01.

“Seller” has the meaning set forth in the preamble.

“Seller Indemnitees” has the meaning set forth in Section 7.03.

“Seller Taxes” has the meaning set forth in Section 6.03.

“Straddle Period” means a taxable period that begins before the Closing Date and ends after the Closing Date.

“Subsidiary” means, with respect to any Person, any corporation, partnership, trust, limited liability company or other noncorporate business enterprise in which such Person (or another Subsidiary of such Person) holds stock or other ownership interests representing (i) more than 50% of the voting power of all outstanding stock or ownership interests of such entity or (ii) the right to receive more than 50% of the net assets of such entity available for distribution to the holders of outstanding stock or ownership interests upon a liquidation or dissolution of such entity.

“Tampa Property” has the meaning set forth in Section 5.12.

“Targeted Closing Working Capital” means an amount equal to $6,000,000.

“Tax Authority” means any Governmental Authority responsible for the imposition, assessment, administration or collection of any Tax.

“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to, filed with or submitted to any Governmental Authority in connection with the determination, assessment, collection or payment of Taxes, including any schedule or attachment thereto, and including any amendment thereof.

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“Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, and including any Liability for unclaimed property under applicable escheat or unclaimed property Laws, in each instance together with any interest, additions or penalties with respect thereto, whether disputed or not, and any interest in respect of such additions or penalties.

“Territory” means (a) each state of the United States of America in which the Company was engaged in its business at any time during the twelve (12) months before the Closing Date; and/or (b) the continental United States.

“Third-Party Claim” has the meaning set forth in Section 7.05(a).

“Transactions” means the transactions described in or contemplated by the Transaction Documents. For the avoidance of doubt, the Parties agree that the Credit Transactions shall not be considered to be “Transactions”.

“Transaction Documents” means this Agreement, the Escrow Agreement and each other document or agreement contemplated hereby or to be entered into in connection herewith.

“Transaction Expenses” means (a) the fees, expenses and other similar amounts that have been incurred on or prior to the Closing Date on behalf of the Company, Parent or Seller in connection with this Agreement and the Transactions, including any investment banking, accounting, advisory, broker’s, finder’s, escrow agent or legal fees (other than legal fees for counsel and accountants and tax consultants engaged solely by Seller and/or Parent), and fees to be paid to any Governmental Authority or other Person, (b) any stay bonus, transaction completion bonus, severance payment or other similar payment made or required to be made to directors, officers or employees of the Company as a result of this Agreement or the Transactions (other than as a result of Contracts made by the Company following the Closing or by Buyer), (c) $284,159 on account of the premiums relating to the Trident Insurance Policies, and (d) any Taxes required to be paid by the Company in connection with any of the foregoing.

“Transfer Tax” means any sales, use, transfer, real property transfer, recording, stock transfer and other similar Tax and fees, including any interest, penalty or addition thereto, whether disputed or not; provided, however, that the term “Transfer Tax” shall not include any Income Tax.

“Trident Insurance Policies” means the insurance policies to be issued pursuant to the documents attached hereto as Exhibit A.

“Trident Latches” means the “Trident”, “Downee DBL 1000”, and “Trio” brand gate latches and any other gate latches utilizing the product designs of any of the foregoing, in each case that were manufactured between October 1, 2012 and October 31, 2013 by or on behalf of the Company utilizing only glue and not screws to enclose the magnet within the latch.

“Trident Product Liability” means all Losses arising out of or related to any recall, product warranty claim, product liability claim or similar matter with respect to any Trident Latches.

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“Unified Loss Election” has the meaning set forth in Section 6.08(d).

“Windhorst Road Lease” means that certain Lease between Seller and the Company of even date herewith for the premises located at 10333 Windhorst Road, Tampa, Florida.

Article II
Purchase and Sale

Section 2.01         Basic Transaction. Subject to the terms and conditions set forth herein, at the Closing and in the following sequence:

(a)          The Company shall issue and sell to Buyer, and Buyer shall purchase from the Company, the Purchased Shares for the Purchased Share Purchase Price;

(b)          Immediately thereafter, the Company shall consummate the borrowings under the Credit Facilities; and

(c)          Immediately thereafter, Seller shall sell to the Company, and the Company shall redeem from Seller, the Redeemed Shares for the Purchase Price.

Section 2.02         Closing Payments. At the Closing:

(a)          Buyer agrees to pay to the Company an amount of immediately available funds equal to Eight Million Five Hundred Thousand Dollars ($8,500,000) (the “Purchased Shares Purchase Price”); and

(b)          The Company agrees to (i) deposit into escrow with U.S. Bank National Association, as escrow agent (the “Escrow Agent”), One Million Nine Hundred Fifty Five Thousand Dollars ($1,955,000) (the “Escrow Amount”), (ii) pay to Seller an amount of immediately available funds equal to the Net Payment Amount, (iii) on behalf of the Company, pay off the Existing Debt set forth on Exhibit B (the “Extinguished Debt”) in accordance with payoff letters relating thereto, (iv) on behalf of the Company and Seller, as the case may be, pay all the Transaction Expenses that remain unpaid as of the Closing (the “Closing Transaction Expenses”) to the appropriate payees in accordance with invoices submitted therefor, if any, and (v) issue to Buyer the Purchased Shares.

Section 2.03         Purchase Price Adjustment.

(a)          At least three (3) Business Days before the Closing, Seller caused to be prepared and delivered to Buyer, for Buyer’s review and consent, a statement (the “Estimated Closing Statement”) (which may be revised one (1) Business Day before the Closing) setting forth its good faith estimate of (i) Closing Working Capital (the “Estimated Closing Working Capital”), (ii) Closing Cash, (iii) Existing Debt and (iv) Closing Transaction Expenses, which amounts are being used to determine the calculation of the Purchase Price, Net Payment Amount and payments to be made pursuant to Section 2.02 at the Closing.

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(b)          Not later than forty-five (45) days after the Closing Date, a physical count of the Company’s Inventory (the “Inventory Count”) will be taken by Christopher Kliefoth and such other person(s) as may be designated by Buyer and agreed to by Seller, in writing, in accordance with GAAP and, to the extent not inconsistent therewith, the past practices of the Company as of the date of such Inventory Count. Buyer shall give Seller reasonable advance notice of the Inventory Count and allow a Representative of Seller to be physically present during such count. Not later than forty-five (45) days after the Closing Date, a roll-back (the “Roll-Back”), based on the books and records of the Company taking into account Inventory purchases and sales and other book entries affecting Inventory occurring between the date of the Closing Date and the Inventory Count (the Inventory Count as adjusted pursuant to the Roll-Back, the “Roll-Back Inventory”), will be performed by the Buyer or the Company. The Roll-Back will be performed in accordance with GAAP and, to the extent not inconsistent therewith, in accordance with the past practices of the Company and a manner consistent with the method utilized in preparing the Historical Financial Statements. A statement setting forth the Roll-Back Inventory based upon such Roll-Back, will be delivered by Buyer to Seller not later than forty-five (45) days after the Closing Date.

(c)          Not later than sixty (60) days after the Closing Date, Buyer will cause to be prepared and delivered to Seller a draft statement (the “Draft Closing Statement”), setting forth Buyer’s determination of (i) Closing Working Capital, (ii) Closing Cash, (iii) Existing Debt and (iv) Closing Transaction Expenses. Buyer shall, and shall cause the Company to, provide to Seller whatever information or documentation in its or the Company’s possession, custody or control and such access to their personnel, in each case that is reasonably necessary for Seller to review the Draft Closing Statement or to participate in the dispute resolution process set forth in this Section 2.03.

(d)          If Seller disagrees with the computation of Closing Working Capital, Closing Cash, Existing Debt and/or Closing Transaction Expenses reflected on the Draft Closing Statement, then Seller may, within thirty (30) days after receipt of the Draft Closing Statement, deliver a written notice (an “Objection Notice”) to Buyer setting forth Seller’s calculation of such items. The Objection Notice shall specifically state Seller’s disagreement with the information set forth on the Draft Closing Statement and the basis therefor. If an Objection Notice is not delivered within such time period, then the amount of Closing Working Capital, Closing Cash, Existing Debt and Closing Transaction Expenses set forth on the Draft Closing Statement shall be conclusive and binding upon the parties hereto. If an Objection Notice is delivered and it does not object to one or more of the amount of Closing Working Capital, Closing Cash, Existing Debt or Closing Transaction Expenses, as set forth on the Draft Closing Statement, then the item(s) for which no objection was made shall be conclusive and binding upon the parties hereto. Seller shall provide to Buyer whatever information or documentation in its possession, custody or control and such access to its personnel, in each case that is reasonably necessary for Buyer to review the Objection Notice or to participate in the dispute resolution process set forth in this Section 2.03.

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(e)          If an Objection Notice is delivered within such time period, Buyer and Seller shall, during the twenty (20) Business Days following the receipt by Buyer of such notice, use their reasonable good faith efforts to reach agreement on the disputed items or amounts, but if they do not obtain a final resolution within such twenty (20)-Business Day period, then Buyer and Seller shall jointly retain the dispute resolution group of Crowe Horwath LLP, with which each party hereto acknowledges that it has no current engagement (unless another accounting firm is mutually agreed to in writing between Buyer and Seller prior to such time) (the “Independent Accountant”), to resolve any remaining disagreements. In connection with the retention by Buyer and Seller of the Independent Accountant, Buyer and Seller shall each execute an engagement letter with the Independent Accountant in a form reasonably satisfactory to each of Buyer and Seller; provided, however, that if Buyer and Seller cannot agree upon a form of engagement letter within five (5) days of their receipt of the engagement letter first provided to them by the Independent Accountant, Buyer and Seller shall each sign the Independent Accountant’s standard engagement letter (with only those modifications agreed upon by Buyer and Seller); provided, further, that if (x) Buyer fails to sign such standard engagement letter within five (5) days of the expiration of the prior five (5)-day period, then the amounts set forth in the Objection Notice with respect to any items remaining in dispute shall be conclusive and binding upon the parties hereto or (y) Seller fails to sign such standard engagement letter within five (5) days of the expiration of the prior five (5)-day period, then the amounts set forth in the Draft Closing Statement with respect to any items remaining in dispute shall be conclusive and binding upon the parties hereto. Buyer and Seller shall direct the Independent Accountant to render a determination within thirty (30) Business Days of its retention, and the parties hereto and their respective employees shall cooperate with the Independent Accountant during its engagement. Buyer and Seller shall direct the Independent Accountant to consider only those items in dispute. The Independent Accountant’s determination shall (i) be based on the definitions of Closing Working Capital, Closing Cash, Existing Debt and Closing Transaction Expenses, as the case may be, and related terms and (ii) be conclusive and binding upon the parties hereto. The Independent Accountant’s determination of the matters raised in the applicable Objection Notice cannot be more favorable to Buyer than the related amount reflected on the Draft Closing Statement nor more favorable to Sellers than the related amount reflected in the applicable Objection Notice. The fees and expenses of the Independent Accountant will be allocated between Buyer (or, at Buyer’s election, the Company), on the one hand, and Seller, on the other hand, based upon the percentage which the portion of the matters raised in the applicable Objection Notice not awarded to such party hereto bears to the amount actually contested by such party hereto. For example, if Seller claims that the appropriate adjustments are, in the aggregate, $1,000 greater than the amount determined by Buyer and if the Independent Accountant ultimately resolves such matters by awarding to Seller, in the aggregate, $300 of the $1,000 contested, then the fees, costs and expenses of the Independent Accountant will be allocated 30% (i.e., $300 ÷ $1,000) to Buyer and 70% (i.e., $700 ÷ $1,000) to Seller.

Section 2.04         Adjustments to Purchase Price. Upon the final determination of each of Closing Working Capital, Closing Cash, Existing Debt and Closing Transaction Expenses pursuant to Section 2.03 (the “Final Closing Statement”), the Purchase Price shall be subject to adjustment as set forth below:

(a)          If the Closing Working Capital reflected in the Final Closing Statement exceeds the Closing Working Capital set forth on the Estimated Closing Statement, then the Purchase Price shall be increased by such excess, or if the Closing Working Capital reflected in the Final Closing Statement is less than the Closing Working Capital set forth on the Estimated Closing Statement, then the Purchase Price shall be decreased by the absolute value of such shortfall;

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(b)          If Closing Cash reflected in the Final Closing Statement exceeds Closing Cash set forth on the Estimated Closing Statement, then the Purchase Price shall be increased by such excess, or if Closing Cash reflected in the Final Closing Statement is less than Closing Cash set forth on the Estimated Closing Statement, then the Purchase Price shall be decreased by the absolute value of such shortfall;

(c)          If Existing Debt reflected in the Final Closing Statement exceeds Existing Debt set forth on the Estimated Closing Statement, then the Purchase Price shall be decreased by such excess, or if Existing Debt reflected in the Final Closing Statement is less than Existing Debt set forth on the Estimated Closing Statement, then the Purchase Price shall be increased by the absolute value of such shortfall; and

(d)          If the Closing Transaction Expenses reflected in the Final Closing Statement exceed the Closing Transaction Expenses set forth on the Estimated Closing Statement, then the Purchase Price shall be decreased by such excess, or if the Closing Transaction Expenses reflected in the Final Closing Statement are less than the Closing Transaction Expenses set forth on the Estimated Closing Statement, then the Purchase Price shall be increased by the absolute value of such shortfall.

Section 2.05         Payment of Purchase Price Adjustment.

(a)          If the aggregate net adjustments to the Purchase Price described in Section 2.04 result in a net increase in the Purchase Price or no adjustment to the Purchase Price, then within five (5) days after the determination of the Final Closing Statement, (i) the Company shall deliver to Seller an amount equal to such net increase in Purchase Price and (ii) the Buyer and Seller shall execute and deliver a joint letter of direction to the Escrow Agent instructing it to release to Seller within five (5) days thereafter from the Escrow Fund $250,000.

(b)          If the aggregate net adjustments to the Purchase Price described in Section 2.04 result in a net decrease in the Purchase Price, then within five (5) days after the determination of the Final Closing Statement, (i) the Buyer and Seller shall execute and deliver a joint letter of direction to the Escrow Agent instructing it to release to the Company (or its designee, which may be the Company) within five (5) days thereafter from the Escrow Fund an amount equal to such net decrease in Purchase Price up to an amount not exceeding $250,000, and (ii)(x) if such net decrease in the Purchase Price is in excess of $250,000, then Seller shall pay to the Company the amount of such excess within such five (5)-day period or (y) if such net decrease in the Purchase Price is less than $250,000, such joint letter of direction shall also instruct the Escrow Agent to release to Seller within five (5) days thereafter from the Escrow Fund an amount equal to (A) $250,000, minus (B) the amount of such net decrease in Purchase Price.

(c)          Any amounts payable pursuant to this Section 2.05 shall be by wire transfer of immediately available funds to the account designated by Buyer or Seller, as applicable, in writing.

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Section 2.06         Withholding Rights. The Company shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under any applicable U.S. federal, state, local or foreign Tax Law. To the extent that amounts are so withheld by the Company, such withheld amounts (a) shall be remitted promptly by the Company to the applicable Governmental Authority and (b) shall be treated for all purposes of this Agreement as having been paid to Seller in respect of which such deduction and withholding was made by the Company. Notwithstanding the foregoing, Buyer shall not withhold any Tax if the Seller provides to the Buyer a properly executed IRS Form W-9.

Section 2.07         Closing. Subject to the terms and conditions of this Agreement, the consummation of the Transactions (the “Closing”) shall take place electronically, via the exchange of signature pages in portable document format at such time and date as Seller and Buyer mutually agree upon (the day on which the Closing takes place being the “Closing Date”).

Section 2.08         Closing Deliveries.

(a)           At the Closing, the Company shall:

(i)          pay to Seller the Net Payment Amount as set forth in Section 2.02, by wire transfer of immediately available funds to an account designated by Seller set forth in Exhibit C;

(ii)         pay off the Extinguished Debt and pay the Closing Transaction Expenses as set forth in Section 2.02;

(iii)        deposit with the Escrow Agent the Escrow Amount as set forth in Section 2.02;

(iv)        deliver to Seller the Windhorst Road Lease duly executed by the Company;

(v)         deliver a release duly executed by the Company; and

(vi)        issue to Buyer the Purchased Shares.

(b)           At the Closing, Buyer shall:

(i)          pay the Purchased Shares Purchase Price to the Company;

(ii)         deliver to Seller the Escrow Agreement duly executed by the Buyer; and

(iii)        deliver to Seller a certificate executed by an officer of the Buyer: (i) having attached thereto resolutions of the Buyer’s board of managers authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents to which the Buyer is a party and the consummation of the Transactions; and (ii) certifying the incumbency, signature and authority of the officers of the Buyer authorized to execute, deliver and perform this Agreement and each other the Transaction Document to which the Buyer is a party on behalf of the Buyer;

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(c)           At the Closing, Seller shall deliver to Buyer:

(i)          stock certificate evidencing the Redeemed Shares, free and clear of all Encumbrances, accompanied by stock powers or other instruments of transfer duly executed in blank, with all required stock transfer tax stamps affixed thereto;

(ii)         payoff letters and lien releases with respect to the Extinguished Debt;

(iii)        a release duly executed by Seller;

(iv)        a non-foreign person affidavit that complies with the requirements of Section 1445 of the Code and Treasury Regulations Section 1.1445-2(b), executed by Seller, dated as of the Closing Date;

(v)         the Escrow Agreement duly executed by the Seller;

(vi)        a certificate executed by the secretary of Seller: (i) having attached thereto resolutions of Seller’s board of directors and resolutions of the shareholder of Seller, in each case authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents to which Seller is a party and the consummation of the Transactions; and (ii) having attached thereto the certificate of incorporation and bylaws of Seller as in effect at the time of the Closing with a certification that such documents have not been superseded or amended as of the Closing; (iii) having attached thereto a certificate of good standing for Seller from the Secretary of State of Delaware dated no more than seven (7) days prior to the Closing Date; and (iv) certifying the incumbency, signature and authority of the officers of Seller authorized to execute, deliver and perform this Agreement and each other the Transaction Document to which Seller is a party on behalf of Seller;

(vii)       evidence of payment in full of any transaction bonuses to any employees of the Company;

(viii)      resignations of the officers and directors of the Company, except for Christopher Kliefoth who is not resigning, effective as of the Closing;

(ix)         all consents and approvals set forth on Section 3.05(a) of the Disclosure Schedule; and

(x)          documentation authorizing the Company to draft, after Closing, any amounts in the deposit and merchant services accounts set forth on Exhibit C (the “Company Accounts”).

(xi)         a certificate of good standing for the Company from the Secretary of State of Florida and a certificate of existence, certificate of good standing or similar certificate from the applicable Government Authority in each jurisdiction in which the Company is qualified to do business.

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(d)           At the Closing, Seller shall deliver to the Company:

(i)          a stock certificate evidencing the Purchased Shares, free and clear of all Encumbrances, accompanied by stock powers or other instruments of transfer duly executed in blank, with all required stock transfer tax stamps affixed thereto; and

(ii)         the Windhorst Road Lease, duly executed by Seller.

Article III
Representations and Warranties of Seller

Seller represents and warrants to Buyer and the Company that the statements contained in this Article III are true and correct as of the Closing. Any matter disclosed in any section or subsection of the Disclosure Schedule shall be deemed to have been disclosed for purposes of any other section or subsection of the Disclosure Schedule to the extent it is readily apparent from a reading of the disclosure that such disclosure is applicable to such other sections and subsections of the Disclosure Schedule. Notwithstanding the foregoing, any disclosure made in Section 3.27 of this Agreement, including Section 3.27 of the Disclosure Schedules, any disclosure made in any other section of this Article III or any section of the Disclosure Schedules relating to Trident Product Liability is deemed disclosed for all other sections of this Article III and all other sections of the Disclosure Schedules.

Section 3.01         Organization and Authority of Seller. Seller is a corporation duly organized, validly existing and in good standing under the Laws of the state of Delaware. Seller has all necessary corporate power and authority to enter into this Agreement and the other Transaction Documents to which Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the Transactions. The execution and delivery by Seller of this Agreement and any other Transaction Document to which Seller is a party, the performance by Seller of its obligations hereunder and thereunder and the consummation by Seller of the Transactions have been duly authorized by all requisite corporate action on the part of Seller. This Agreement and each other Transaction Document to which Seller is a party has been duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by each counterparty hereto and thereto) constitutes a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

Section 3.02         Organization, Authority and Qualification of the Company. The Company is a corporation duly organized, validly existing and in good standing under the Laws of the state of Florida and has all necessary corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it is currently conducted. The Company is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not have a Material Adverse Effect.

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Section 3.03         Capitalization.

(a)          The authorized capital stock of the Company consists of one hundred (100) shares of common stock, par value One Dollar ($1.00) per share, of which seventy (70) shares are issued and outstanding and constitute the Redeemed Shares and of which thirty (30) shares, effective as of the Closing, will be issued and outstanding and which constitute the Purchased Shares. All of the Redeemed Shares have been duly authorized, are validly issued, fully paid and non-assessable, and are owned of record and beneficially by Seller, free and clear of all Encumbrances, except the Capital One Lien, which is being satisfied and released as to the Company at Closing. Effective as of the Closing, the Purchased Shares will be duly authorized, validly issued, fully paid and non-assessable, and will be owned of record and beneficially by Buyer, free and clear of all Encumbrances.

(b)          All of the Redeemed Shares were, and at the Closing all of the Purchased Shares will have been, issued in compliance with applicable Laws. None of the Redeemed Shares were, and at the Closing none of the Purchased Shares will have been, issued in violation of any agreement, arrangement or commitment to which Seller or the Company is a party or is subject to or in violation of any preemptive or similar rights of any Person.

(c)          There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the capital stock of, or any other interest in, the Company or obligating Seller or the Company to issue or sell any shares of capital stock of, or any other interest in, the Company. The Company does not have outstanding or authorized any stock appreciation, phantom stock, profit participation or similar rights. Other than this Agreement itself, there are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Redeemed Shares or the Purchased Shares.

Section 3.04         No Subsidiaries. The Company does not own, or have any interest in any shares or have an ownership interest in any Person.

Section 3.05         No Conflicts; Consents. Neither, the execution, delivery and performance by Seller of this Agreement or any of the other Transaction Documents to which it is a party, nor the consummation of the Transactions, will: (a) result in a violation or breach of any provision of the certificate of incorporation or by-laws or other organizational documents of Seller or the Company; (b) result in a material violation or material breach of any provision of any Law or Governmental Order applicable to Seller or the Company; or (c) except as set forth in Section 3.05(a) of the Disclosure Schedules, require the consent, notice or other action by any Person under, conflict with, result in a material violation or material breach of, constitute a material default or an event that, with or without notice or lapse of time or both, would constitute a material default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which Seller or the Company is a party or by which Seller or the Company is bound or to which any of their respective properties or assets are subject (including any Material Contract) or any Permit relating to the properties, assets or business of the Company; or (d) result in the creation or imposition of any Encumbrance (other than Permitted Encumbrances) on any properties or assets of the Company or the Redeemed Shares. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Seller or the Company in connection with the execution and delivery of this Agreement or the other Transaction Documents or the consummation of the Transactions, except as set forth in Section 3.05(b) of the Disclosure Schedules.

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Section 3.06         Financial Statements.     Set forth in Section 3.06 of the Disclosure Schedules are the Company’s unaudited financial statements consisting of the balance sheet of the Company as at December 31 in each of the years 2012, 2013 and 2014 and the related statements of income for the years then ended (the “Historical Financial Statements”), and unaudited financial statements consisting of the balance sheet of the Company as at December 31, 2015 and the related statements of income for the 12-month period then ended (the “Interim Financial Statements” and together with the Historical Financial Statements, the “Financial Statements”). The Financial Statements (i) have been prepared in accordance with GAAP, except that there are no notes to the Financial Statements, applied on a consistent basis throughout the period involved and (ii) are correct and complete and are consistent in all material respects with the books and records of the Company, subject, in the case of the Interim Financial Statements, to normal year-end adjustments (the effect of which will not be materially adverse) and the absence of notes. The Financial Statements fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations and cash flows of the Company for the periods indicated. The balance sheet of the Company as of December 31, 2015 is referred to herein as the “Balance Sheet” and the balance sheet of the Company contained in the Interim Financial Statements is referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date”.

Section 3.07         Undisclosed Liabilities.    The Company has no Liabilities of a type required to be reflected on a balance sheet prepared in accordance with GAAP, except (a) those that are adequately reflected or reserved against in the Interim Balance Sheet as of the Interim Balance Sheet Date and (b) those that have been incurred in the ordinary course of business consistent with past practice since the Interim Balance Sheet Date, all of which are reflected in Closing Working Capital as finally determined in accordance with Section 2.03.

Section 3.08         Absence of Certain Changes, Events and Conditions.    Except as expressly contemplated by the Agreement or as listed (separately for each clause below) on Section 3.08 of the Disclosure Schedules, since August 31, 2015, the Company has operated in the ordinary course of business in all material respects and there has not been, with respect to the Company, any:

(a)          event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate with any other events, occurrences or developments, a Material Adverse Effect;

(b)          amendment of the charter, by-laws or other organizational documents of the Company;

(c)          split, combination or reclassification of any shares of its capital stock;

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(d)          issuance, sale or other disposition of any of its capital stock, or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of its capital stock;

(e)          declaration or payment of any dividends or distributions on or in respect of any of its capital stock or redemption, purchase or acquisition of its capital stock;

(f)          change in any method of accounting or accounting practice of the Company, except as required by GAAP or applicable Law;

(g)          material change in the Company’s cash management practices and its policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;

(h)          incurrence, assumption or guarantee of any Indebtedness in an aggregate amount exceeding Twenty-Five Thousand Dollars ($25,000);

(i)           sale or other disposition of any of the assets shown or reflected on the Balance Sheet, except sales of Inventory in the ordinary course of business consistent with past practice and except for any assets having an aggregate value of less than Twenty-Five Thousand Dollars ($25,000);

(j)           lapse, abandonment, transfer, assignment or grant of any license or sublicense of any material rights under or with respect to any Company Licensed Intellectual Property or Registered Intellectual Property;

(k)          damage, destruction or loss (whether or not covered by insurance) to its property with a cost of repair or replacement exceeding Ten Thousand Dollars ($10,000);

(l)           capital investment in, or any loan to, any other Person;

(m)         acceleration, termination, material modification to or cancellation of any Material Contract (including any Contract that, but for such termination or cancellation, would have been a Material Contract at the Closing);

(n)          capital expenditures that, individually or in the aggregate, exceed Ten Thousand Dollars ($10,000);

(o)          imposition of any Encumbrance upon any of the Company properties, capital stock or assets, tangible or intangible;

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(p)          except as required by applicable Law or pre-existing contractual obligations, (i) increase in wages, salaries, compensation, bonus opportunities (whether annual or long-term, or in the form of cash or property) pension, nonqualified deferred compensation or other fringe benefits or perquisites payable to any current, former or retired executive officer, employee, consultant, independent contractor, other service provider or director from the amount thereof in effect as of August 31, 2015, (ii) grant of severance, retirement or termination pay, entrance into any Contract to make or grant any severance, retirement or termination pay (in each case, except as required under the terms of the Benefit Plans, as in effect as of the Closing), or payment of any bonus other than the customary year-end bonuses in amounts consistent with past practice, (iii) grant, amendment, acceleration, modification or termination of any stock appreciation rights or options to purchase any equity in the Company, any restricted, performance or fully vested equity in the Company, any phantom or restricted equity in the Company, or any right to acquire any equity in the Company with respect to any current, former or retired executive officer, director, consultant, independent contractor or other service provider or employee, (iv) adoption, amendment, modification or termination of any Benefit Plan, (v) hiring, termination, promotion or demotion of any employee, consultant, independent contractor, executive officer, director or other service provider (other than in the ordinary course of business consistent with past practice) or (vi) strike, work stoppage, slow-down or other labor disturbance affecting the Company or any of its Employees.

(q)          acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets (other than in the ordinary course of business) or stock of, or by any other manner, any business or any Person or any division thereof;

(r)          any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its stockholders or current or former directors, officers or employees;

(s)          adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law; or

(t)          purchase, lease or other acquisition of the right to own, use or lease any property or assets for an amount in excess of Ten Thousand Dollars ($10,000), (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of Inventory in the ordinary course of business consistent with past practice;

(u)          action by or with respect to the Company to make, change or rescind any Tax election, amend any Tax Return or take any position on any Tax Return, adopt or change any method of accounting in respect of Tax, enter into any Tax allocation or Tax sharing agreement, enter into a closing agreement or settle or compromise of any material claim or assessment in respect of Tax, consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Tax, or take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of Buyer or the Company in respect of any taxable period or portion thereof beginning after the Effective Time; or

(v)         any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.

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Section 3.09         Material Contracts.

(a)          Section 3.09(a) of the Disclosure Schedules lists (separately for each clause below) each of the following Contracts, which are in effect as of the Closing, to which the Company is a party or by which the Company or any of its assets are bound (together with all Leases required to be listed in Section 3.11(b) of the Disclosure Schedules and all Contracts pertaining to licenses of Intellectual Property granted by the Company or to Company Licensed Intellectual Property required to be listed in Section 3.13(c) or 3.13(d) of the Disclosure Schedules, collectively, the “Material Contracts”):

(i)          each Contract (A) involving (or reasonably likely to involve) aggregate consideration in excess of Twenty-Five Thousand Dollars ($25,000) or (B) requiring performance by any party more than one year from the Closing Date;

(ii)         each Contract that relates to the sale of any of (or the grant of a right of first refusal, or similar right, to purchase) the Company’s assets, other than sales of Inventory in the ordinary course of business, for consideration in excess of Twenty-Five Thousand Dollars ($25,000);

(iii)        each Contract that requires the Company to purchase its total requirements of any product or service from a third-party, that contains a “most favored nations” or similar provision or that contains “take or pay” provisions;

(iv)        each Contract that provides for the indemnification by the Company of any Person, or the assumption of, any Tax, environmental, or Intellectual Property infringement Liability of any Person;

(v)         each Contract that relates to the acquisition of any business, a material amount of stock (or other securities) or assets of any other Person or any real property (whether by merger, sale of stock, sale of assets or otherwise), in each case involving amounts in excess of Twenty-Five Thousand Dollars ($25,000);

(vi)        each employment Contract and each Contract with any independent contractors or consultants (or similar arrangements);

(vii)       except for Contracts relating to trade receivables, each Contract pursuant to which any third-party is indebted or owes money to the Company and the remaining unpaid balance of which is in excess of Twenty-Five Thousand Dollars ($25,000);

(viii)      each Contract relating to Indebtedness of the Company, in each case having an outstanding principal amount in excess of Twenty-Five Thousand Dollars ($25,000);

(ix)         each Contract with any Governmental Authority;

(x)          each Contract that limits or purports to limit the ability of the Company to compete in any line of business or with any Person or in any geographic area or during any period of time or that prohibits the Company from soliciting an employee, supplier or customer of any third party;

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(xi)         each Contract that provides for any joint venture, partnership or similar arrangement by the Company;

(xii)        each Contract between or among the Company, on the one hand, and Seller or any Affiliate of Seller (other than the Company), or any current or former officer, employee, director or equity holder of the Company, on the other hand;

(xiii)       each collective bargaining agreement and each Contract with any labor organization, union or association to which the Company is a party; and

(xiv)      each Contract granting to any Person the right to use any material property or any material property right of the Company.

(b)          Each Material Contract is valid and binding on the Company in accordance with its terms and is in full force and effect enforceable against the Company in accordance with its terms, and Seller has no Knowledge that any such Material Contract is not a valid and binding obligation, enforceable in accordance with its terms, against the applicable counterparty thereto (in each case, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting or relating to creditors’ rights generally, and (ii) the availability of injunctive relief and other equitable remedies). Except as set forth in Section 3.09(b) of the Disclosure Schedule, none of the Company or, to Seller’s Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under) in any material respect, or has provided or received any notice of any intention to terminate, any Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. The Company has not received any notice (written or oral) pursuant to which any party to a Material Contract has declared a material breach thereunder that remains uncured as of the Closing. Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Buyer in the Data Room.

Section 3.10         Title to Assets. The Company has good and valid title to, or a valid leasehold interest in, all personal property and other assets used or held for use in the conduct of its business. All such properties and assets (including leasehold interests) are free and clear of Encumbrances except for the following Encumbrances (the following Encumbrances and the Capital One Lien (which is being satisfied and released as to the Company at Closing) are collectively referred to as “Permitted Encumbrances”):

(a)          those items set forth in Section 3.10(a) of the Disclosure Schedules;

(b)          Encumbrances for Taxes not yet due or payable, or those Taxes described in Section 3.10(b) of the Disclosure Schedule, which are being contested in good faith by appropriate procedures;

(c)          mechanics, materialmens’, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of business consistent with past practice or amounts that are not delinquent and that are not, individually or in the aggregate, material to the business of the Company or that are being contested in good faith by Seller or the Company and for which adequate reserves have been made in accordance with GAAP;

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(d)          easements, rights of way, zoning ordinances and other similar encumbrances affecting the Leased Real Property, and covenants, conditions, restrictions, Encumbrances and other matters of record affecting title to the Leased Real Property and other matters of record on title insurance policies or title commitments or other matters of record affecting the Leased Real Property; and

(e)          liens arising under original purchase price conditional sales Contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice.

(f)          zoning, building codes, and other land use Laws regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Authority having jurisdiction over such real property but excluding any violations of any such Laws which materially interfere with the present uses or occupancy of such real property by the lessee or sublessee thereof; and

(g)          any right, interest, lien or title of a licensor, sublicensor, licensee, sublicensee, lessor or sublessor under any license, or lease agreement or in the property being leased or licensed.

Section 3.11         Real Property.

(a)          The Company does not own, and has not within the past five (5) years owned, directly or indirectly, any real property or interests in real property.

(b)          Section 3.11(b) of the Disclosure Schedule sets forth the address of each Leased Real Property and the name, parties, dates and all amendments to each Lease (as defined below) related thereto. All written leases, subleases, or other use or occupancy agreements pursuant to which the Company is a party as a lessee, sublessee, tenant, subtenant or in a similar capacity with respect to any Leased Real Property, including all amendments, renewals, extensions, modifications, supplements, guaranties or related documents to any of the foregoing or substitutions for any of the foregoing (collectively, the “Leases”), are the valid and binding obligation of the Company and are in full force and effect. No security deposit or portion thereof deposited with respect to any Lease has been applied in respect of any default under such Lease that has not been redeposited in full. The leasehold interest granted to the Company under each such Lease is free of all Encumbrances (other than Permitted Encumbrances and excluding Encumbrances on the Leased Real Property affecting the fee title to such property). The Leased Real Property comprises all the real property currently used in the Company’s business. The Company is not a lessor, sublessor or grantor under any lease, sublease, license or other instrument granting to another person any right to the possession, use or occupancy of any real property. Seller has no Knowledge of any threatened or contemplated, condemnation or eminent domain Action or other Action affecting the Leased Real Property. Except as set forth on Section 3.11(b) of the Disclosure Schedule, neither Seller nor the Company has received any written notice from any Governmental Authority having jurisdiction over the applicable Leased Real Property to the effect that any of the Leased Real Property is not in material compliance with any Law, except notices that have been resolved to the satisfaction of the issuer of the notice.

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Section 3.12         Condition And Sufficiency of Assets. Except as set forth in Section 3.12 of the Disclosure Schedules, the buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property of the Company are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of tangible personal property currently owned or leased by the Company, together with all other properties and assets of the Company, are sufficient for the continued conduct of the Company’s business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the business of the Company as currently conducted.

Section 3.13         Intellectual Property.

(a)          The Company owns and possesses or has the right to use pursuant to a valid and enforceable written license, sublicense, covenant not to sue or other Contract or permission all Intellectual Property necessary for the operation of the business of the Company as presently conducted. Each item of Intellectual Property owned or used by the Company immediately prior to the Closing will be owned or available for use by the Company on identical terms and conditions immediately after the Closing. The Company has taken all necessary action to maintain and protect each item of Intellectual Property that it owns or uses.

(b)          Neither the Company nor any of its businesses as presently conducted has interfered with, infringed upon, misappropriated or otherwise come into conflict with, any Intellectual Property rights of any third party. Except as set forth in Section 3.13(b) of the Disclosure Schedule, to Seller’s Knowledge, there are no facts indicating a likelihood of the foregoing, and Seller has not received any charge, complaint, claim, demand or notice alleging any such interference, infringement, misappropriation or conflict (including any claim that the Company must license or refrain from using any Intellectual Property rights of any third party). Except as set forth in Section 3.13(b) of the Disclosure Schedule, to the Knowledge Seller, no third party has interfered with, infringed upon, misappropriated or otherwise come into conflict with, any Intellectual Property rights of the Company.

(c)          Section 3.13(c) of the Disclosure Schedule contains an accurate and complete list of (i) all Registered Intellectual Property and identifies each pending patent application or application for registration that the Company has made with respect to any of its Intellectual Property, (ii) each license, sublicense, covenant not to sue or other Contract or permission that the Company has granted to any third party with respect to any of its Intellectual Property (together with any exceptions) and (iii) each material unregistered trademark, service mark, trade name, corporate name or Internet domain name, computer software item and each material unregistered copyright owned by the Company. With respect to each item of Intellectual Property required to be identified in Section 3.13(c) of the Disclosure Schedule:

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(i)          Seller has made available to Buyer in the Data Room correct and complete copies of all Registered Intellectual Property and all such licenses, sublicenses, covenants not to sue and other Contracts and permissions (as amended to date);

(ii)         the Company owns and possesses all right, title and interest in and to the Registered Intellectual Property, free and clear of any Encumbrance, except for the Capital One Lien, which is being satisfied and released as to the Company at Closing, license or other restriction or limitation regarding use or disclosure;

(iii)        the item is not subject to any outstanding injunction, judgment, order, decree, ruling or charge;

(iv)        except as set forth in Section 3.13(b) of the Disclosure Schedule, no Action is pending or, to Seller’s Knowledge, is threatened that challenges the legality, validity, enforceability, use or ownership of the item, and to Seller’s Knowledge, there are no grounds for the same;

(v)         the Company has not agreed to indemnify any Person for or against any interference, infringement, misappropriation or other conflict with respect to the item;

(vi)        no loss or expiration of the item is threatened, pending or reasonably foreseeable, except for patents expiring at the end of their statutory terms (and not as a result of any act or omission by Seller or the Company, including a failure by Seller or the Company to pay any required maintenance fees); and

(vii)       all Intellectual Property owned by the Company that is material to or necessary for the conduct of the business was (A) developed by Company employees working within the scope of their employment at the time of such development, or (B) developed by agents, consultants, or contractors who have executed appropriate instruments of assignment in favor of the Company as assignee that have conveyed to the Company ownership of all of such Person’s rights in such Intellectual Property.

(d)          Section 3.13(d) of the Disclosure Schedule contains an accurate and complete list of all Company Licensed Intellectual Property (other than commercially available off-the-shelf software purchased or licensed for less than a total cost of Five Thousand Dollars ($5,000)) and each, license, sublicense, covenant not to sue and other Contract and permission (each as amended to date) related thereto, correct and complete copies of each of which have been made available to the Buyer in the Data Room. With respect to each item of Company Licensed Intellectual Property required to be identified in Section 3.13(d) of the Disclosure Schedule:

(i)          no party to the license, sublicense, covenant not to sue or other Contract or permission has repudiated any provision thereof; and

(ii)         the Company has not granted any sublicense or similar right with respect to the license, sublicense, covenant not to sue or other Contract or permission.

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Section 3.14         Inventory. All Inventory of the Company, whether or not reflected in the Financial Statements, (a) consists of a quality and quantity usable and salable in the ordinary course of business consistent with past practice and (b) is not excessive, but is reasonable for the present circumstances of the Company, in each case except for obsolete, damaged, defective or slow-moving items that have been written off or written down to fair market value or for which adequate reserves have been established. All such Inventory is owned by the Company free and clear of all Encumbrances (other than Permitted Encumbrances), and, except as set forth in Section 3.14 of the Disclosure Schedule, no Inventory is held on a consignment basis.

Section 3.15         Accounts and Notes Receivable. All the accounts receivable and notes receivable owing to the Company as of the Effective Time constitute valid and enforceable claims arising from bona fide transactions in the ordinary course of business, and, to Seller’s Knowledge, there are no claims, refusals to pay, discount rights (except discount rights in the ordinary course of business consistent with past practices of the Company) or other rights of set-off against any of them. Except as set forth in Section 3.15 of the Disclosure Schedule, there (a) was, as of January 31, 2016, no account debtor or note debtor delinquent in its payment by more than the 90 days, (b) is no account debtor or note debtor that has refused (or, to the Knowledge of Seller, threatened to refuse) to pay its obligations for any reason, (c) is no account debtor or note debtor, to the Knowledge of Seller, that is insolvent or bankrupt and (d) is except for Permitted Encumbrances, no account receivable or note receivable which is pledged to any third-party by the Company.

Section 3.16         Customers and Vendors.

(a)          Section 3.16(a) of the Disclosure Schedule sets forth (i) a true, complete and correct customer list showing the twenty (20) largest customers by gross purchases from the Company, taken as a whole, during the twelve (12) months ended December 31, 2015 (collectively, a “Material Customers”), and (ii) a true, complete and correct supplier list showing (A) the twenty (20) largest suppliers by gross sales to the Company, taken as a whole, during the twelve (12) months ended December 31, 2015 and (B) all suppliers of the Company who are the sole source of such supply (other than public utilities) (collectively, the “Material Suppliers”).

(b)          To the Knowledge of Seller, except as set forth in Section 3.16(b) of the Disclosure Schedules, during the twelve (12)-month period ending on the Closing Date, no Material Customer or Material Supplier has (whether as a result of the Transactions contemplated hereby or otherwise) (i) stopped, or indicated an intention to stop, trading with or supplying the Company, (ii) materially reduced, or indicated an intention to materially reduce, its trading with or provision of goods or services to the Company, or (iii) changed, or indicated an intention to change, materially, the terms and conditions on which it is prepared to trade with or supply the Company. During the twelve (12)-month period ending on the Closing Date, no Material Customer has notified the Company or Seller of its intention to return products sold by the Company with an aggregate value in excess of Ten Thousand Dollars ($10,000). To the Knowledge of Seller, no facts, conditions or events (except customary contractual restrictions prohibiting assignment) exist which are reasonably likely to give rise to a claim by the Company against any of its customers or suppliers or any claim by a customer or supplier against the Company (notwithstanding the existence of this Section 3.16(b), no representation or warranty is made with respect to the existence or non-existence of any Trident Product Liability). During the twelve (12)-month period ending on the Closing Date, the Company has not entered into any Contract with customers or suppliers, except in the ordinary course of business.

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Section 3.17         Insurance. Section 3.17(a) of the Disclosure Schedules sets forth a true and complete list, as of the date hereof, of all insurance policies (and the name of the primary policy holder) currently maintained (or, with respect to commercial general liability, including product liability, policies maintained at any point since October 1, 2012) by the Company or with respect to which (a) the Company is a named insured or (b) the Company or any of its officers, directors, employees or assets is covered or (c) the Company is otherwise the beneficiary of coverage (collectively, the “Insurance Policies”), and true and complete copies of such Insurance Policies have been made available to Buyer in the Data Room. Those Insurance Policies that are occurrence based policies are in full force and effect with respect to the Company, its officers, directors, employees and assets, following the consummation of the Transactions for pre-Closing periods. Neither Seller nor any of its Affiliates (including the Company) has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each Insurance Policy. To the extent the Insurance Policies provide for retrospective premium adjustments or other experience-based Liability, Seller is responsible for paying, and shall bear all Liability for, such retrospective premium adjustments and any other experience-based Liability and the Company shall have no responsibility or Liability with respect thereto. All such Insurance Policies (x) are valid and binding in accordance with their terms; (y) are provided by carriers who to Seller’s Knowledge are financially solvent; and (z) have not been subject to any lapse in coverage. There are no claims related to the business of the Company pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. None of Seller or any of its Affiliates (including the Company) is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy. The Insurance Policies are sufficient, with respect to pre-Closing periods, for compliance with all applicable Laws and Contracts to which the Company is a party or by which it is bound.

Section 3.18         Legal Proceedings; Governmental Orders.

(a)          Except as set forth in Section 3.18(a) of the Disclosure Schedules, there are no Actions pending or, to Seller’s Knowledge, threatened against or by the Company affecting any of its properties or assets (or by or against Seller or any Affiliate thereof and relating to the Company), and at all times during the past five (5) years, none of the Company, Seller or any Affiliate thereof has been a party to any such Action.

(b)          Except as set forth in Section 3.18(b) of the Disclosure Schedules, the Company is not, and at all times during the past five (5) years has not been, subject to any outstanding Governmental Orders or unsatisfied judgments, penalties or awards against or affecting the Company or any of its properties or assets.

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Section 3.19         Compliance With Laws; Permits.

(a)          Except as set forth in Section 3.19(a) of the Disclosure Schedules, the Company has at all times during the past five (5) years materially complied, and is now materially complying, with all Laws applicable to it or its business, properties or assets.

(b)          All material Permits required for the Company to conduct its business have been obtained by it and are valid and in full force and effect. All fees and charges with respect to such material Permits as of the Closing have been paid in full. Section 3.19(b) of the Disclosure Schedules lists all material Permits currently issued to the Company, including the names of the material Permits and their respective dates of issuance and expiration. To Seller’s Knowledge, no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any material Permit required to be set forth in Section 3.19(b) of the Disclosure Schedules.

Section 3.20         Environmental Matters.

(a)          Neither the Company nor the Seller has received from any Person any (i) Environmental Notice or Environmental Claim with respect to the business or assets of the Company or any real property currently or formerly owned, operated or leased by the Company, or (ii) written request for information pursuant to Environmental Law with respect to the business or assets of the Company or any real property currently or formerly owned, operated or leased by the Company, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Closing.

(b)          The Company has obtained and is in material compliance with all material Environmental Permits necessary for the ownership, lease, operation or use of the business or assets of the Company as currently conducted, and all such Environmental Permits are in full force and effect. With respect to any such Environmental Permits, Seller has undertaken all measures necessary to facilitate transferability of the same, and neither the Company nor Seller is aware of any condition, event or circumstance that might prevent or impede the transferability of the same.

(c)          Neither the Company nor Seller has received any Environmental Notice that any real property currently, or formerly, owned, operated or leased by the Company is listed on, or has been proposed for listing on, the National Priorities List under CERCLA, or any similar state list, and neither the Company nor Seller has received any notice that it is a potentially responsible party under CERCLA or any analogous Laws.

(d)          Except as set forth in Section 3.20(d) of the Disclosure Schedules, Seller has received no Environmental Notice of any Release of Hazardous Materials in contravention of Environmental Laws with respect to the business or assets of the Company or any real property currently or formerly owned, operated or leased by the Company that would reasonably be expected to result in a material Liability to Seller or the Company under Environmental Law, and neither the Company nor Seller has received an Environmental Notice that any real property currently or formerly owned, operated or leased in connection with the business of the Company (including soils, groundwater, surface water, buildings and other structure located on any such real property) has been contaminated with any Hazardous Material which would reasonably be expected to result in a material liability of Seller or the Company under Environmental Law.

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(e)          Neither Seller nor the Company has retained or assumed, by Contract or operation of Law, any Liabilities of third parties under Environmental Law.

(f)          To Seller’s Knowledge, there are no aboveground or underground storage tanks, landfills, land deposits or sumps located at any real property currently owned, operated or leased by the Company.

(g)         Seller has made available to Buyer in the Data Room all material reports, studies, audits, records, sampling data and site assessments with respect to compliance of the business or assets of the Company with Environmental Laws during the last five (5) years or environmental contamination at any real property currently or formerly owned, operated or leased by the Company that, in each case, are in the possession or reasonable control of Seller or Company.

(h)         The representations and warranties set forth in this Section 3.20 are Seller’s sole and exclusive representations and warranties regarding environmental matters.

Section 3.21         Employee Benefit Matters.

(a)          Section 3.21(a) of the Disclosure Schedules contains a list of each “employee benefit plan” (as defined in Section 3(3) of ERISA) whether or not subject to ERISA, retirement, employment, director, consulting, compensation, or deferred compensation, incentive, bonus, stock option, restricted stock, stock appreciation right, phantom equity, or equity-based, change in control, severance, vacation, paid time off, health, welfare, accident, sickness, death benefit, hospitalization, insurance, personnel policy, disability benefit and fringe-benefit agreement, plan, policy and program or arrangement, whether or not reduced to writing, in effect and covering one or more Employees, former employees of the Company, current or former directors of the Company, current or former consultants, independent contractors or other service providers of the Company or any Company Continuing Employee or the beneficiaries or dependents of any such Persons, and is maintained, sponsored, contributed to, or required to be contributed to by Parent, Seller, the Company, or any of their subsidiaries or ERISA Affiliates, or under which the Company has or is reasonably likely to have any Liability (each, a “Benefit Plan”).

(b)          With respect to each Benefit Plan, the Company has made available to Buyer true, complete and correct copies of the following (as applicable): (i) the written document evidencing such Benefit Plan or, with respect to any such Benefit Plan that is not in writing, a written description thereof; (ii) the summary plan description; (iii) any related trust agreements, insurance contracts or documents of any other funding arrangements; (iv) all amendments, modifications or supplements to any such document; (v) the two most recent actuarial reports; (vi) the most recent determination letter from the IRS; (vii) the three most recent Forms 5500 required to have been filed with the Internal Revenue Service, including all schedules thereto; (viii) any notices to or from the Internal Revenue Service or any office or representative of the Department of Labor or any other Governmental Authority relating to any compliance issues in respect of any such Benefit Plan. Section 3.21(b) of the Disclosure Schedule sets forth as of the date that is five (5) days before the date of this Agreement the accrued Liability for any such plans, programs and arrangements.

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(c)          Except as set forth in Section 3.21(c) of the Disclosure Schedules, each Benefit Plan and related trust complies with all applicable Laws and has been operated in accordance with its governing documents and all obligations, whether arising by operation of Law or by Contract, have been timely performed and there are no defaults, omissions or violations with respect to any Benefit Plan. Each Benefit Plan that is intended to be qualified under Section 401(a) of the Code (a “Qualified Benefit Plan”) has received a favorable determination letter from the Internal Revenue Service, or with respect to a prototype plan, can rely on an opinion letter from the Internal Revenue Service to the prototype plan sponsor, to the effect that such Qualified Benefit Plan is so qualified and that the plan and the trust related thereto are exempt from federal income Taxes under Sections 401(a) and 501(a), respectively, of the Code, and, nothing has occurred that could reasonably be expected to cause the revocation of such determination letter from the Internal Revenue Service or the unavailability of reliance on such opinion letter from the Internal Revenue Service. All benefits, contributions and premiums required by and due under the terms of each Benefit Plan or applicable Law have been timely paid in accordance with the terms of such Benefit Plan, the terms of all applicable Laws and GAAP. With respect to any Benefit Plan, no event has occurred or is reasonably expected to occur that has resulted in or would subject the Company to a Tax under Section 4971 of the Code or the assets of the Company to a lien under Section 430(k) of the Code. All “fiduciaries,” as defined in Section 3(21) of ERISA, with respect to the Benefit Plans have complied in all respects with the requirements of Section 404 of ERISA. Parent, Seller, the Company, their subsidiaries and ERISA Affiliates have in effect fiduciary liability insurance covering each fiduciary of the Benefit Plans.

(d)          Except as set forth in Schedule 3.21(d) of the Disclosure Schedules, neither Parent, Seller, the Company, nor any subsidiary or ERISA Affiliate thereof sponsors, maintains, contributes to or has any obligation to make contribution to, and has not ever sponsored, maintained, contributed to or had any obligation to make contributions to any “employee benefit plan” (as defined in Section 3(3) of ERISA) or any other employee benefit plan, program, Contract or arrangement that: (i) is or was subject to the minimum funding standards of Section 302 of ERISA or Section 412 of the Code; (ii) is or was a “multi-employer plan” (as defined in Section 3(37) of ERISA), or (iii) is or was employee benefit plan or arrangement Contract that is governed by the laws of any government outside of the United States. The Company has no Liability with respect to any “employee benefit plan” (as defined in Section 3(3) of ERISA) or any other employee benefit plan, program, Contract or arrangement described in clause (i), (ii) or (iii) above.

(e)          Except as set forth in Section 3.21(e) of the Disclosure Schedules and other than as required under Section 4980B of the Code (as well as its predecessor provision, Section 162(k) of the Code) and Sections 601 through 608, inclusive, of ERISA (“COBRA”) or other applicable Law, no employee benefit plan, program, agreement or arrangement sponsored, maintained or contributed to by Parent, Seller, the Company, or their subsidiaries or ERISA Affiliates or to which Parent, Seller, the Company, or their subsidiaries or ERISA Affiliates had an obligation to contribute to provides benefits or coverage in the nature of health, life or disability insurance following retirement or other termination of employment (other than death benefits when termination occurs upon death). Parent, Seller, the Company and their subsidiaries and ERISA Affiliates, have, at all times, complied, and currently comply, in all material respects with the applicable continuation requirements for its welfare benefit plans, including (1) COBRA and (2) any applicable state statutes mandating health insurance continuation coverage for employees.

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(f)          Except as set forth in Section 3.21(f) of the Disclosure Schedules: (i) there is no pending or, to Seller’s Knowledge, threatened action relating to a Benefit Plan other than claims for benefits in the ordinary course of business; and (ii) no Benefit Plan is currently or has within the one (1) year prior to the Closing Date been the subject of an examination or audit by a Governmental Authority.

(g)         Except as set forth in Section 3.21(g) of the Disclosure Schedules, no Benefit Plan exists that could: (i) result in the payment to any Employee or Company Continuing Employee, director or consultant of any money or other property; (ii) accelerate the vesting of or provide any additional rights or benefits (including funding of compensation or benefits through a trust or otherwise) to any Employee or Company Continuing Employee, director or consultant, except as a result of any partial plan termination resulting from this Agreement; or (iii) limit or restrict the ability of Buyer or its Affiliates to merge, amend or terminate any Benefit Plan, in each case, as a result of the execution of this Agreement. Neither the execution of this Agreement nor the consummation of the Transactions will result in “excess parachute payments” within the meaning of Section 280G(b) of the Code.

(h)         All persons who are employees for tax withholding and/or Benefit Plan purposes have been treated as employees.

(i)          Each Benefit Plan that is a “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code), including each award thereunder, has been operated since January 1, 2005 in good faith compliance with the applicable provisions of Section 409A of the Code and the Treasury Regulations and other official guidance issued thereunder (collectively, “Section 409A”) and has been since January 1, 2009, in documentary compliance with the applicable provisions of Section 409A; (ii) neither Parent, Seller, the Company nor any of their subsidiaries (1) have been required to report to any government entity or authority any corrections made or Taxes due as a result of a failure to comply with Section 409A and (2) have any indemnity or gross-up obligation for any Taxes or interest imposed or accelerated under Section 409A; (iii) nothing has occurred, whether by action or failure to act, or is reasonably expected or intended to occur, that would subject an individual having rights under any such Benefit Plan to accelerated Tax as a result of Section 409A or a Tax imposed under Section 409A; and (iv) for any Benefit Plan that is not intended to be subject to Section 409A because it is not a nonqualified deferred compensation plan under Treasury Regulations 1.409A-1(a)(2) through 1.409A-1(a)(5), or due to the application of Treasury Regulations Section 1.409A-1(b), all the conditions required to retain such treatment remain in effect and are not reasonably expected to change so as to subject such Benefit Plan to Section 409A.

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(j)          Except for Benefit Plans that are not subject to ERISA (all of which are set forth on Section 3.21(j) of the Disclosure Schedule), no Benefit Plan is a self-funded or self-insured arrangement, and, with respect to each Benefit Plan that is funded in whole or in part through an insurance policy, neither Parent, Seller, the Company, their subsidiaries and ERISA Affiliates have any liability in the nature of retroactive rate adjustment, loss-sharing arrangement or other actual or contingent liability arising wholly or partially out of events occurring on or before the date of this Agreement or is reasonably expected to have such liability with respect to periods through the Closing.

(k)         All reports and disclosures relating to each Benefit Plan required to be filed with or furnished to Governmental Authority (including the Internal Revenue Service and the Department of Labor), Benefit Plan participants or beneficiaries have been filed or furnished in all material respects in a timely manner in accordance with applicable law.

(l)          No Benefit Plan provides for any gross-up payment associated with any Taxes.

Section 3.22         Employment Matters.

(a)          The Company is not, and has not been at any time in the past three (3) years, a party to, or bound by, any collective bargaining or other agreement with a labor organization representing any of its employees. Within the three (3) year period prior to the Closing Date, there has not been, nor, to Seller’s Knowledge, has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor activity or dispute affecting the Company.

(b)          The Company is, and has been at all times in the past three (3) years, in compliance in all material respects with all applicable Laws and Contracts pertaining to employment and employment practices (which includes, for the avoidance of doubt, employee health and safety Laws) to the extent they relate to employees or former employees of the Company. Except as set forth in Section 3.22(b) of the Disclosure Schedules, there are no actions, suits, claims, investigations or other legal proceedings against the Company pending, or to the Seller’s Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former employee of the Company, including any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay or any other employment related matter arising under applicable Laws or Contracts.

(c)          All workers of the Company are and have been properly classified and treated by the Company in accordance with applicable Laws with respect to compensation (including minimum wages and overtime pay) and with respect to being either an employee or an independent contractor.

(d)          The Company is not a party to any Contract: (i) that provides for a term of employment or that otherwise alters the at-will employment relationship for any of its employees; or (ii) that limits the Company’s right to change employee compensation and benefits in the Company’s discretion

(e)          To Seller’s Knowledge, (i) no executive, manager or group of employees of the Company intends to terminate his, her or their employment with the Company, and (ii) no Company employee is a party to any non-competition, non-interference, non-solicitation or other such agreement with any third party that purports to prevent or limit the activities of such employee in the course of working for the Company.

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(f)          The Company is and has not been: (i) a federal government contractor or subcontractor, (ii) subject to any affirmative action obligations under any Law including Executive Order 11246, the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 or Section 503 of the Rehabilitation Act of 1973, and (iii) subject to the McNamara-O’Hara Service Contract Act, the Davis Bacon and Related Acts, or any similar wage law relating to federal government contractors and subcontractors.

(g)          The Company has at all times complied with the requirements of the Immigration Reform Control Act of 1986 and the Company’s obligations to properly complete and maintain employment verification paperwork to the extent required by applicable laws.

(h)          Section 3.22(h) of the Disclosure Schedules contains a complete and accurate list of the following information for each employee of the Company as of the Closing: name; job title; primary work location; Fair Labor Standards Act classification (exempt or non-exempt); base salary or hourly wage rate; current bonus or incentive compensation terms; other compensation and fringe benefits payable; total compensation paid in 2015; employment status (i.e., full-time, part-time, temporary, leased, etc.); active, leave or layoff status (including type of leave, if any, and expected return date); and any paid time off that is accrued but unused.

(i)          Section 3.22(i) of the Disclosure Schedules contains a complete and accurate list of the following information for each individual, non-employee worker of the Company as of the Closing: name; primary work location; work being performed; compensation rate; and date the current engagement with the Company began.

Section 3.23         Taxes.

(a)            Except as set forth in Section 3.23(a) of the Disclosure Schedules:

(i)          The Company has timely filed (after giving effect to extensions), all Income Tax Returns and other material Tax Returns (including all sales, use and franchise Tax Returns) required to be filed by it under applicable Laws. All such Tax Returns are true, complete and accurate in all material respects. All Taxes due or payable by or with respect to the Company have been timely paid, whether or not such Taxes are shown on any Tax Return. There are no Encumbrances with respect to Taxes upon any asset of the Company other than Encumbrances for Taxes not yet due or payable, or those Taxes described in Section 3.10(b) of the Disclosure Schedule which are being contested in good faith by appropriate procedures;

(ii)         The Company has withheld and timely paid to the appropriate Tax Authority all Taxes (including all sales, use and value-added Taxes) required to have been withheld and paid in connection with amounts received from or paid or owing to any employee, creditor, shareholder, individual independent contractor, equity holder, vendor, customer or other third party, and all Forms W-2 and 1099 required with respect thereto have been properly completed and timely filed.

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(iii)        Since January 1, 2010, no written claim has ever been made by a Tax Authority in a jurisdiction where the Company does not file a Tax Return that the Company is or is reasonably likely to be subject to or responsible for the payment of any Tax to that jurisdiction. There is no audit, claim, dispute or other proceeding concerning any Tax liability of the Company pending, or to the Knowledge of Seller, threatened. There are no outstanding agreements or waivers extending the statutory period of limitation applicable to any Tax Returns required to be filed by or with respect to the Company, and none of the Seller or the Company has been requested to grant or approve any such agreement or waiver.

(iv)        Since April 30, 2002 and to Seller’s Knowledge prior to such date, the Company has never been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than such an Affiliated Group with respect to which Parent was the common parent).

(v)         The Company has no Liability for the Taxes of any other Person (x) under Section 1.1502-6 of the Treasury Regulations (or any similar provision of Law) except with respect to Parent and its Subsidiaries, or (y) as a transferee or successor, by contract or otherwise. The Company is not party to or bound by any obligations under any Tax sharing, Tax allocation, Tax indemnity or similar agreement or arrangement, other than agreements entered into in the ordinary course of business the principal purpose of which is unrelated to Taxes.

(vi)        Within the last three (3) years, the Company has not distributed stock of another corporation, or has had its stock distributed by another corporation, in a transaction that was governed, or purported or intended to be governed, in whole or in part, by Section 355 or Section 361 of the Code or any similar provision of state, local or foreign Tax law.

(vii)       The Company will not be required to include any amount in taxable income or exclude any item of deduction or loss from taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of (a) any change in method of accounting for a taxable period ending on or prior to the Closing Date, (b) use of an improper method of accounting for a taxable period ending on or prior to the Closing Date, (c) any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income tax law) executed on or prior to the Closing Date, (d) any intercompany transactions or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision or administrative rule of federal, state, local or non-U.S. income tax law), (e) any installment sale or open transaction disposition made on or prior to the Closing Date, (f) any prepaid amount received on or prior to the Closing Date, or (g) any election under Section 108(i) of the Code.

(viii)      The Company has not (a) participated in any “listed transaction” as defined in Treasury Regulations Section 1.6011-4(b) (as in effect at the relevant time) or any comparable regulations of jurisdictions other than the United States, or (b) engaged in any trade or business outside the United States or otherwise been subject to Tax by any foreign jurisdiction.

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(ix)         The Company has disclosed on its federal Income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal Income Tax within the meaning of Code Section 6662.

(x)          The aggregate unpaid Taxes of the Company (i) did not, as of the Interim Balance Sheet Date, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Interim Balance Sheet and (ii) will not exceed that reserve as adjusted for operations and transactions through the Closing Date in accordance with GAAP solely to reflect (A) payments of amounts included therein, or (B) Taxes incurred or Taxes paid in the ordinary course of Business subsequent to the date of the Interim Balance Sheet Date or pursuant to the transactions contemplated by this Agreement through the Closing Date.

(xi)         None of the assets of the Company constitute tax-exempt bond financed property within the meaning of Code Section 168, and none of such assets is subject to a lease, safe harbor lease or other arrangement as a result of which the Company is not treated as the owner for federal Income Tax purposes.

(xii)        In connection with or upon consummation of the Transactions, the Tax attributes of the Company (including any net operating losses, capital losses, deferred deductions and asset basis) will not be reduced by reason of Treasury Regulations Section 1.1502-36(d) or any comparable or similar provision of Law.

(xiii)       The assets of the Company are free and clear of all Encumbrances related to Taxes, other than those for Taxes not yet due or payable or those for Taxes described in Section 3.10(b) of the Disclosure Schedule, which are being contested in good faith by appropriate procedures.

(b)          Section 3.23(b) of the Disclosure Schedule lists all Income Tax Returns filed by or with respect to the Company for taxable periods beginning on or after January 1, 2010, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. Seller has made available to Buyer in the Data Room complete copies of the Tax Returns, set forth on Section 3.23(b)(i) of the Disclosure Schedule, filed by or with respect to the Company for any taxable year beginning on or after January 1, 2010. There are no examination reports and statements of deficiencies assessed against or agreed to by or with respect to the Company since January 1, 2010.

Section 3.24         Indebtedness. Section 3.24 of the Disclosure Schedule sets forth all Indebtedness of the Company as of the Closing.

Section 3.25         Certain Business Relationships with the Company.

(a)          Except as set forth in Section 3.25(a) of the Disclosure Schedules, neither Seller nor any of its Affiliates is (i) party to any Contract with the Company or, within the past twenty-four (24) months, has been involved in any business arrangement or relationship with (A) the Company (other than in their employment capacity) or (B) any customer, distributor or supplier of the Company, (ii) owns any asset, tangible or intangible, that is used or held for use in the business of the Company or (iii) owns, directly or indirectly, any interest in (excepting less than two percent (2%) stock holdings for investment purposes in securities of publicly held and traded companies), or is an officer, director, employee or consultant of, any Person that is a competitor, lessor, lessee, supplier, distributor, sales agent or customer of, or lender to or borrower from, (x) the Company or (y) any customer, distributor or supplier of the Company.

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(b)          Except as set forth in Section 3.25(b) of the Disclosure Schedules, to Seller’s Knowledge, no officer, director or employee of the Company, nor any parent, sibling, offspring or spouse of any officer, director or employee of the Company, is (i) party to any Contract with the Company or, within the past twenty-four (24) months, has been involved in any business arrangement or relationship with (A) the Company (other than in their employment capacity) or (B) any customer, distributor or supplier of the Company, (ii) owns any asset, tangible or intangible, that is used or held for use in the business of the Company or (iii) owns, directly or indirectly, any interest in (excepting less than two percent (2%) stock holdings for investment purposes in securities of publicly held and traded companies), or is an officer, director, employee or consultant of, any Person that is a competitor, lessor, lessee, supplier, distributor, sales agent or customer of, or lender to or borrower from, (x) the Company or (y) any customer, distributor or supplier of the Company.

Section 3.26         Product and Service Warranty. Except as set forth in Section 3.26(a) of the Disclosure Schedule, each product manufactured, sold, marketed, designed, distributed, serviced, leased or delivered by the Company has been in conformity with all applicable material contractual commitments and all express and implied warranties, and the Company does not have any Liability (and, to Seller’s Knowledge, there is no reasonable basis for any present or future Action against any of them giving rise to any Liability) for replacement or repair thereof or other damages in connection therewith, subject only to the reserve for product and service warranty claims set forth on the Interim Financial Statements. Section 3.26(b) of the Disclosure Schedule identifies (and Seller has made available to Buyer in the Data Room copies of) the standard terms and conditions of sale or service used by the Company (including any applicable guaranty, warranty and indemnity provisions) and the Company has not sold any goods or services to any customer or distributor pursuant to any Contract that deviates in any material manner from the standard terms and conditions set forth in Section 3.26(b) of the Disclosure Schedule. No product designed, manufactured, marketed, sold, distributed, serviced or delivered by the Company is subject to any guaranty, warranty or other indemnity beyond the applicable standard terms and conditions of sale set forth in Section 3.26(b) of the Disclosure Schedule.

Section 3.27         Product Liability.

(a)          Except as set forth in Section 3.27(a) of the Disclosure Schedule, the Company does not have, and is not reasonably likely to have, any material Liability in connection with any Action that is currently pending, or that, to Seller’s Knowledge, is threatened, against the Company arising out of any injury to individuals or property resulting from the possession or use of any product manufactured, sold, leased or delivered by the Company.

(b)          Except as set forth in Section 3.27(b) of the Disclosure Schedule, the Company has not instituted or been involved in any recall, whether voluntarily or as a result of any action by any Governmental Authority, of any product manufactured, sold, leased or delivered by the Company for any reason, including on account of any manufacturing or design defect, or issued any press release or public statements containing any statement advising its trade customers or end-users to treat such products as a potential health or safety risk.

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(c)          To the Knowledge of Seller, the application for the Trident Insurance Policies does not contain any untrue statement of a material fact, or omit to state a material fact; provided, however, that Seller makes no representations or warranties with respect to the facts contained in Section 3.27(c) of the Disclosure Schedule.

Section 3.28         Foreign Corrupt Practices. To the Knowledge of Seller, neither the Company, nor any of its Representatives or any other Person acting on its behalf has offered, paid, promised to pay, or authorized the payment of anything of value, including cash, checks, wire transfers, tangible and intangible gifts, favors, services, and those entertainment and travel expenses that go beyond what is reasonable and customary and of modest value, to (a) an executive, official, employee or agent of a Governmental Authority, (b) a director, officer, employee, or agent of a wholly or partially government-owned or -controlled company or business, (c) a political party or official thereof, or candidate for political office, or (d) an executive, official, employee or agent of a public international organization (e.g., the United Nations, World Bank or International Monetary Fund), in order to obtain, retain, or direct business to anyone. To the Knowledge of Seller, the Company is in material compliance with the Foreign Corrupt Practices Act of 1977 and similar antibribery and anticorruption Laws to which it is subject.

Section 3.29         Brokers. Except for Daroth, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Seller.

Section 3.30         No Other Representations and Warranties. Except for the representations and warranties contained in this Article III (including the related portions of the Disclosure Schedules), none of the Seller, the Company or any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of Seller or the Company, including any representation or warranty as to the accuracy or completeness of any information regarding the Company furnished or made available to Buyer and its Representatives (including the Confidential Information Memorandum prepared by Daroth dated April 30, 2015 and all supplements thereto, including management presentations, and any information, documents or material made available to Buyer in the Data Room, management presentations or in any other form in expectation of the transactions contemplated hereby) or as to the future revenue, profitability or success of the Company, or any representation or warranty arising from statute or otherwise in law; provided; however, that nothing herein or elsewhere in this Agreement will limit any remedy Buyer or any of its Affiliates may have for fraud committed by Seller or the Company, whether or not such fraud relates to a representation made in a written agreement.

Article IV
Representations and Warranties of Buyer

Buyer represents and warrants to Seller that the statements contained in this Article IV are true and correct as of the Closing.

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Section 4.01         Organization and Authority of Buyer. Buyer is a limited liability company duly organized, validly existing and in good standing under the Laws of the state of Delaware. Buyer has all necessary limited liability company power and authority to enter into this Agreement and each other Transaction Document to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the Transactions. The execution and delivery by Buyer of this Agreement, the performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer of the Transactions have been duly authorized by all requisite action on the part of Buyer. This Agreement and each other Transaction Document to which it is a party has been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by each counterparty hereto and thereto) this Agreement constitutes a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

Section 4.02         No Conflicts; Consents. Neither the execution, delivery and performance by Buyer of this Agreement and any of the other Transaction Documents to which it is a party, nor the consummation of the Transactions, will: (a) result in a violation or breach of any provision of the certificate of formation and limited liability company agreement of Buyer; (b) result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer; or (c) require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time, or both, would constitute default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any material Contract to which Buyer is a party or by which Buyer is bound or to which any of Buyer’s properties and assets are subject, except in the cases of clauses (b) and (c), where the violation, breach, conflict, default, acceleration or failure to give notice would not have a material adverse effect on Buyer’s ability to consummate the Transactions. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer in connection with the execution and delivery of this Agreement and the consummation of the Transactions, except such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which would not have a material adverse effect on Buyer’s ability to consummate the Transactions.

Section 4.03         Investment Purpose. Buyer is acquiring the Purchased Shares solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Buyer acknowledges that the Purchased Shares are not registered under the Securities Act of 1933, as amended, or any state securities laws, and that the Purchased Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act of 1933, as amended or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable. Buyer is able to bear the economic risk of holding the Purchased Shares for an indefinite period (including total loss of its investment), and has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment.

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Section 4.04         Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Buyer.

Section 4.05         Legal Proceedings. There are no Actions pending or, to Buyer’s Knowledge, threatened against or by Buyer or any Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay the Transactions.

Section 4.06         Independent Investigation. Buyer has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of Seller and the Company for such purpose. Buyer acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the Transactions, Buyer has relied solely upon its own investigation and the express representations and warranties of Seller set forth in Article III of this Agreement (including the related portions of the Disclosure Schedules); and (b) none of Seller, the Company or any other Person has made any representation or warranty as to Seller, the Company or this Agreement, except as expressly set forth in Article III of this Agreement (including the related portions of the Disclosure Schedules).

Section 4.07         No Other Representations and Warranties. Except for the representations and warranties contained in this Article IV (including the related portions of the Disclosure Schedules), neither the Buyer, nor any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of Buyer; provided; however, that nothing herein or elsewhere in this Agreement will limit any remedy Seller or any of its Affiliates may have for fraud committed by Buyer, whether or not such fraud relates to a representation made in a written agreement.

Article V
Covenants

Section 5.01         Confidentiality. From and after the Closing, Seller shall, and shall cause its Affiliates to, hold, and shall use its reasonable best efforts to cause its or their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning the Company, except to the extent that Seller can show that such information (a) is generally available to and known by the public through no fault of Seller, any of its Affiliates or their respective Representatives; or (b) is lawfully acquired by Seller, any of its Affiliates or their respective Representatives from and after the Closing from sources that are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If Seller or any of its Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law (including the rules and regulations of the Securities and Exchange Commission or any securities exchange upon which any securities of Seller, or any of its Affiliates are, or may later be, traded (the “Securities Requirement”), Seller shall promptly notify Buyer in writing and shall disclose only that portion of such information which Seller is advised by its counsel in writing is legally required to be disclosed, provided that (other than with respect to information disclosed in connection with the Securities Requirements) Seller shall use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

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Section 5.02         Non-competition; Non-solicitation

(a)          For a period of five (5) years commencing on the Closing Date (the “Restricted Period”), neither Seller nor Parent shall, and shall not permit any of their respective Subsidiaries to, directly or indirectly, (i) engage in or assist others in engaging in the Restricted Business in the Territory; (ii) have an interest in any Person that engages directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant; or (iii) intentionally interfere in any material respect with the business relationships between the Company and customers or suppliers of the Company. Notwithstanding the foregoing, Seller, Parent or any of their respective Subsidiaries may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if Seller, Parent or any such Subsidiary is not a controlling Person of, or a member of a group that controls, such Person and does not, directly or indirectly, own five percent (5%) or more of any class of securities of such Person. For the avoidance of doubt, the provisions of this Section 5.02(a) shall not apply to any Person or an Affiliate of any Person (other than Seller, Parent or any of their respective Subsidiaries) that acquires Seller, Parent or any of their respective Subsidiaries, whether such acquisition is by purchase of all or substantially all of the assets of Seller, Parent or any of their respective Subsidiaries, or by merger or transfer of stock or other transaction resulting in the transfer of a majority of the capital stock of Seller, Parent or any of their respective Subsidiaries on a fully diluted basis; provided, however, that the provisions of this Section 5.02(a) shall apply to any Person surviving a direct merger to which Seller, Parent or any of their respective Subsidiaries are a party, but not to any Affiliate thereof (other than Seller, Parent or any of their respective Subsidiaries).

(b)          During the Restricted Period, Seller and Parent shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly: (i) hire or solicit any employee of the Company; (ii) encourage any such employee to leave such employment; or (iii) hire any such employee who has left such employment; provided, however, that nothing in this Section 5.02(b) shall prevent Seller, Parent or any of their respective Affiliates from hiring (x) any employee whose employment has been terminated by the Company or Buyer without cause or (y) after 180 days from the date of termination of employment, any employee whose employment has been terminated by the employee; provided, further, that neither (1) a general solicitation of employment in any newspaper, magazine, trade publication or other media not specifically targeted at any of the Company’s employees nor (2) a referral by a recruiter or employment agency that has not specifically targeted any of the Company’s employees (and has been instructed not to do so) shall not, alone, be considered a solicitation for purposes of this Section 5.02(b).

(c)          During the Restricted Period, Seller and Parent shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, solicit or entice, or attempt to solicit or entice, any Restricted Customer for purposes of diverting their business or services from the Company or in order to provide services or products competitive with the services or products offered by the Company.

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(d)          Seller and Parent each acknowledges that a breach or threatened breach of this Section 5.02 would give rise to irreparable harm to Buyer, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by Seller or Parent of any such obligations, Buyer shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

(e)          Seller and Parent each acknowledges that the restrictions contained in this Section 5.02 are reasonable and necessary to protect the legitimate interests of Buyer and constitute a material inducement to Buyer to enter into this Agreement and consummate the Transactions. In the event that any covenant contained in this Section 5.02 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law. The covenants contained in this Section 5.02 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

Section 5.03         Employees; Benefit Plans.

(a)          During the period commencing at the Closing and ending on December 31, 2016 (or if earlier, the date of the employee’s termination of employment with the Company), Buyer shall and shall cause the Company to provide each of Christopher Kliefoth, Stuart Itzkowitz, William Julien, Gregory Michalik, Erik Timothy and Clair Pu with: (i) base salary or hourly wages which are no less than the base salary or hourly wages provided by the Company immediately prior to the Closing; (ii) target bonus opportunities; and (iii) retirement and welfare benefits that are generally no less favorable in the aggregate than those provided by the Company immediately prior to the Closing.

(b)          With respect to any employee benefit plan maintained by Buyer or its Subsidiaries in which any Company Continuing Employees will participate effective as of the Closing, Buyer shall, or shall cause the Company to, recognize all service of the Company Continuing Employees with the Company or any of its Affiliates, as the case may be as if such service were with Buyer, for vesting and eligibility (but not for benefit accrual purposes) purposes in any Parent Benefit Plan in which such Company Continuing Employees may be eligible to participate after the Closing Date; provided, however, such service shall not be recognized to the extent that (x) such recognition would result in a duplication of benefits or (y) such service was not recognized under the corresponding Benefit Plan.

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(c)          This Section 5.03 shall be binding upon and inure solely to the benefit of each of the parties to this Agreement, and nothing in this Section 5.03, express or implied, shall confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Section 5.03. Nothing contained herein, express or implied, shall be construed to establish, amend or modify any benefit plan, program, agreement or arrangement. The parties hereto acknowledge and agree that the terms set forth in this Section 5.03 shall not create any right in any Employee or any other Person to any continued employment with the Company, Buyer or any of their respective Affiliates or compensation or benefits of any nature or kind whatsoever.

Section 5.04         Director and Officer Indemnification.

(a)          Buyer agrees that all rights to indemnification, advancement of expenses and exculpation by the Company now existing in favor of each Person who is now, or has been at any time prior to the Closing Date or who becomes prior to the Closing Date, an officer or director of the Company, as provided in the articles of incorporation or by-laws of the Company, in each case as in effect on the Closing Date, or pursuant to any other agreements in effect on the Closing Date and disclosed in Section 5.04(a) of the Disclosure Schedules, shall survive the Closing Date and shall continue in full force and effect in accordance with their respective terms.

(b)          The obligations of Buyer and the Company under this Section 5.04 shall not be terminated or modified in such a manner as to adversely affect any director or officer to whom this Section 5.04 applies without the consent of such affected director or officer (it being expressly agreed that the directors and officers to whom this Section 5.04 applies shall be third-party beneficiaries of this Section 5.04, each of whom may enforce the provisions of this Section 5.04).

Section 5.05         Books and Records.

(a)          In order to facilitate the resolution of any claims made against or incurred by Seller prior to the Closing, and for any other reasonable purpose, including facilitation of Seller’s and Seller’s Affiliate’s 2015 audits, Pre-Closing Tax matters, Securities and Exchange Commission inquiries or investigations, or any other inquiry, investigation or regulatory submission undertaken or required by any Governmental Authority for a period of seven (7) years after the Closing, Buyer shall, to the extent necessary for such purpose:

(i)          retain the books and records (including personnel files and information that Seller or any of Seller’s Affiliates shall reasonably require in order for Seller or Seller’s Affiliates to timely complete its or their 2015 audits in accordance with its or their past practices.) of the Company relating to periods prior to the Closing in a manner reasonably consistent with the prior practices of the Company; and

(ii)         upon reasonable notice, afford the Representatives of Seller reasonable access (including the right to make, at Seller’s expense, photocopies), during normal business hours, to such books and records; and

(iii)        upon reasonable notice, afford the Representatives of Seller reasonable access and assure timely and prompt cooperation of the Company’s financial and other executive personnel for the purpose of verbal or written inquiry with regard to facilitating, completing, and filing, on a timely basis, the items set forth in Sections 5.05(a)(i) and 5.05(a)(ii) above.

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(b)          In order to facilitate the resolution of any claims made by or against or incurred by Buyer or the Company after the Closing, or for any other reasonable purpose (including facilitating any claims made by the Company under any Insurance Policies under which the Company is covered for occurrences, act or omissions occurring before the Closing or under the Trident Insurance Policies), for a period of seven (7) years following the Closing, Seller and Parent shall:

(i)          retain the books and records (including personnel files and the Insurance Policies and related documents) of Seller and/or Parent which relate to the Company and its operations for periods prior to the Closing; and

(ii)         upon reasonable notice, afford the Representatives of Buyer or the Company reasonable access (including the right to make, at Buyer’s expense, photocopies), during normal business hours, to such books and records.

(c)          None of Buyer, Seller or Parent shall be obligated to provide the other party with access to any books or records (including personnel files) pursuant to this Section 5.05 where such access would violate any Law.

Section 5.06         Public Announcements. Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no party to this Agreement shall make any public announcements in respect of this Agreement or the Transactions or otherwise communicate with any news media without the prior written consent of the other party (which consent shall not be unreasonably withheld, conditioned or delayed), and the parties shall cooperate as to the timing and contents of any such announcement. For the avoidance of doubt, Buyer and Company hereby consent to Parent’s filing of a current report on Form 8-K and all amendments thereto, and any other public filings, with respect to the United States Securities and Exchange Commission and the issuance of any and all related press releases to the extent required by or advisable under applicable Law or United States Securities and Exchange Commission rules, regulations or forms, or rules, regulations or forms of any exchange on which the securities of Parent now, or may in the future, be listed.

Section 5.07         Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the Transactions.

Section 5.08         Insurance Policies.

(a)          Neither Buyer nor Seller shall, and shall cause their respective Affiliates not to, take any action that would, or would be reasonably likely to, have the effect of terminating, interrupting, limiting or in any way interfering with the availability of coverage to the applicable insureds under the Trident Insurance Policies, including the failure to comply with conditions precedent to coverage under the Trident Insurance Policies. Each of Buyer and Seller shall, and shall cause their respective Affiliates to, take all commercially reasonable steps to ensure that the Trident Insurance Policies remain in full force and effect throughout the applicable periods of coverage.

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(b)          Buyer and Seller shall not and shall cause their respective Affiliates not to, take any action or fail to take any action that would, or would be reasonably likely to, have the effect of terminating, interrupting, limiting or in any way interfering with the availability of coverage to the Company under any Insurance Policies for which coverage extends to the Company for occurrences, acts or omissions occurring prior to the Closing, including the failure to comply with conditions precedent to coverage under such Insurance Policies. Each of Buyer and Seller shall, and shall cause their respective Affiliates to, take all commercially reasonable steps to ensure that such Insurance Policies remain in full force and effect throughout the applicable periods of coverage.

(c)          With respect to any “claims made” Insurance Policies as set forth in Section 5.08(c) of the Disclosure Schedules, for a period of six (6) years following the Closing Date, Seller shall ensure that such Insurance Policies (and any renewals or replacements thereof) continue to extend coverage (in scope, quality and coverage amount substantially similar to those Insurance Policies in effect on the date hereof) to the Company (as a past subsidiary of Seller or Parent) for occurrences, acts or omissions occurring prior to the Closing, but for which claims are made after Closing.

(d)          Seller shall retain any benefit or credit received for any retrospective premium adjustments with respect to the Insurance Policies and the Company shall have no claim or right to any such benefits or credits.

Section 5.09         Company Accounts. Following the Closing, Seller and Parent shall, and shall cause their Affiliates to, within two Business Days forward to Buyer any Cash received by Seller, Parent or any of their Affiliates (including any and all wire transfer payments), and any checks, drafts or other instruments payable to Parent or Seller will, when so delivered, bear all endorsements required to effectuate the transfer of the same to Buyer, to the extent that such Cash and other payments received relate to the Company (collectively, the “Post-Closing Company Receipts”). In furtherance of the forgoing, each of Seller and Parent shall, and shall cause each of their Affiliates to, take all steps reasonably necessary (including delivering any such documentation as reasonably requested by any financial institution) to allow the Company to draft all Post-Closing Company Receipts from the Company Accounts.

Section 5.10         Notices of Termination, Resignation, Disability, or Death. If Buyer terminates Christopher Kliefoth, Stuart Itzkowitz, William Julien, Gregory Michalik, and/or Erik Timothy, or if any of the foregoing individuals resigns, becomes disabled, or dies, within the twelve (12) month period beginning on the Closing Date, Buyer will immediately provide written notice of such termination, resignation, disability, or death to the Seller and such written notice shall contain the following information: (i) the date of termination, resignation, disability or death; (ii) the reason for termination or resignation; and (iii) the amount of any severance or other payments paid or payable to such employee(s) as a result of his termination, resignation, disability or death.

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Section 5.11         Intercompany Arrangements. Effective as of the Closing, (i) all Intercompany Payables & Receivables shall be settled (either by contribution to capital, distribution or repayment in full), and (ii) except for the Contracts listed on Section 5.11 of the Disclosure Schedules, all Contracts between the Seller or any of its direct or indirect Subsidiaries (other than the Company), on the one hand, and the Company, on the other hand, shall be terminated without any liability to any party thereto.

Section 5.12         Sale of Real Property. Each of Seller and Parent hereby agree that if Seller sells the entire fee interest in the property located at 10333 Windhorst Road, Tampa, FL 33619 (the “Tampa Property”) on or prior to August 11, 2017, Seller will, not later than ten (10) Business Days following the closing of any such sale, deliver to the Escrow Agent, the lesser of (a) $400,000 and (b) the amount of cash received in connection with such sale (net of Taxes, fees and expenses incurred in connection with such sale), with the instruction that such amount is to be added to the Escrow Fund held by the Escrow Agent and distributed in accordance with the terms of the Escrow Agreement.

Section 5.13         Maintenance of and No Changes to Trident Insurance Policies.

(a)          Each of the Company and Buyer hereby agree that at any time during which any claim can be made under any of the Trident Insurance Policies, as in effect on the date hereof, or any longer period any claim can be made under such policies (the “Policy Period”), neither the Company nor Buyer will (i) terminate any Trident Insurance Policy, or (ii) amend the terms of any Trident Insurance Policy (x) to reduce Seller’s and/or Parent’s coverage thereunder, (y) to cause Seller and/or Parent to be removed as a named insured thereunder, or (z) to make any change to any broker of record on any of the Trident Insurance Policies (each of the foregoing, a “Policy Event”) without Parent’s prior written consent. Each of Parent, Seller, the Company, and Buyer hereby agree that, at any time during which any of the Trident Insurance Policies is in effect, none of them, individually or collectively, will take any action that would, is intended to, or would be reasonably likely to result in a Policy Event.

(b)          The Buyer and the Company hereby represent and warrant and agree that (i) the Company has delivered instructions to Wells Fargo Insurance Services USA, Inc., or its applicable Affiliate (in its capacity as broker for the Trident Insurance Policies, the “Broker”), such that only the Chairman of the Board of the Company can provide notice with respect to any of the Trident Insurance Policies or give any instructions to initiate a Policy Event, (ii) the Company has not revoked such instructions, and (iii) the Company covenants that it will not revoke such instructions. If (A) the Chairman of the Board of the Company instructs the Broker to initiate a Policy Event, or (B) the Company instructs the Broker to initiate a Policy Event and a Policy Event occurs, then in addition to all other rights and remedies available to Parent or Seller at law, or in equity, a “Policy Default” shall be deemed to occur.

(c)          I If (i) a Person other than the Company instructs the Broker to initiate a Policy Event, and (ii) the Chairman of the Board of the Company receives notice or becomes aware of such Policy Event, and (iii) the Company does not as soon as possible cause the affected Trident Insurance Policies to be restored and/or reinstated, as applicable, to the same condition they were in prior to such Policy Event (“Restoration Action”), then in addition to all other rights and remedies available to Parent or Seller at law, or in equity, a “Policy Default” shall be deemed to occur.

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(d)          If (i) a Policy Event occurs of which the Chairman of the Board of the Company does not have actual or constructive knowledge, (ii) Parent notifies the Chairman of the Board of the Company of such Policy Event, and (iii) Company does not as soon as possible effect a Restoration Action, then in addition to all other rights and remedies available to Parent or Seller at law, or in equity, a “Policy Default” shall be deemed to occur.

(e)          Upon the occurrence of a “Policy Default”: (i) the Company shall indemnify Parent and Seller for any Losses incurred by Parent and/or Seller, as applicable, in connection with any Trident Product Liability; provided, however, that such indemnification obligation shall cease at the termination of the Policy Period, except with respect to any claim made by Parent or Seller prior to the termination of such Policy Period, for which the indemnification set forth above shall survive until final resolution of each such matter, (ii) with respect to Seller’s obligations to indemnify, but not Seller’s rights to indemnification, all of Article VII (except Section 7.10) shall become void and of no effect, and (iii) Section 5.02(a) shall become void and of no effect, in each case effective as of the date of such Policy Event.

(f)          If requested by Seller or Parent from time to time (but not more frequently than annually), within thirty (30) days following such request, the Company shall (i) provide written confirmation and evidence to Seller and Parent reasonably satisfactory to Seller and Parent that no Policy Event has occurred, and (ii)furnish to Seller and Parent a certificate or certificates from the Broker that Seller and Parent are each listed as a named insured on each of the Trident Insurance Policies.

Section 5.14         Profit Sharing Plan Payments. Parent and Seller shall make when due all payments due to the current and former employees of the Company under any profit sharing plans maintained or sponsored by Parent, Seller or the Company prior to the date hereof.

Article VI
Tax Matters

Section 6.01         Transfer Taxes. Each of Seller and Buyer shall pay any Transfer Taxes imposed on it by Law as a result of the Transactions, but, notwithstanding any requirement of Law, Seller shall bear fifty percent (50%) and Buyer shall bear fifty percent (50%) of all such Transfer Taxes. Accordingly, if Buyer or Seller is required by Law to pay any Transfer Taxes in excess of its allocable fifty percent (50%) share, the other party shall promptly reimburse the paying party for such excess Transfer Taxes. Seller and Buyer shall timely file their own Transfer Tax Returns as required by applicable Law and shall notify the other parties hereto when such filing have been made. Seller and Buyer shall cooperate and consult with each other prior to filing such Transfer Tax Returns to ensure that all such returns are filed in a consistent manner. This Section 6.01 (and not Section 6.03) shall govern which of Buyer or Seller is responsible for the payment of Transfer Taxes that arise as a result of the Transactions.

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Section 6.02         Tax Returns. Except as otherwise required by applicable Law, any Tax Return to be prepared pursuant to the provisions of this Section 6.02 with respect to a Pre-Closing Tax Period shall be prepared in a manner consistent with practices followed by the Company in prior years with respect to similar Tax Returns and without a change of any election or any accounting method, except for changes required by applicable Tax Laws or changes in fact. Except as otherwise required by applicable Law or permitted by this Agreement, neither Buyer nor Seller shall file an amended Tax Return, or permit the Company or any of their Affiliates to file an amended Tax Return, with respect to the Company for any Pre-Closing Tax Period without obtaining the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed. The following provisions shall govern the allocation of responsibility as between the Parties for certain Tax matters following the Closing Date:

(a)          Seller shall prepare, or cause to be prepared, at Seller’s expense, all Tax Returns required to be filed by the Company after the Closing Date with respect to a Pre-Closing Tax Period. Seller shall deliver to Buyer a copy of each such Tax Return (together with schedules, statements and, to the extent reasonably requested by Buyer, supporting documentation) at least forty (40) days prior to the due date (including extensions) of such Tax Return. If Buyer objects to any item on any such Tax Return, it shall, within twenty (20) days after delivery of such Tax Return, notify Seller in writing that it so objects, specifying with particularity any such item and stating the specific factual or legal basis for any such objection. If a notice of objection shall be duly delivered, Buyer and Seller shall negotiate in good faith and use their reasonable best efforts to resolve such items. If Buyer and Seller are unable to reach such agreement within ten (10) days after receipt by Seller of such notice, the disputed items shall be resolved by the Independent Accountant in a manner consistent with Section 6.02(c).

(b)          Buyer shall prepare, or cause to be prepared, at Buyer’s expense, all Tax Returns required to be filed by the Company after the Closing Date with respect to a Straddle Period. Buyer shall deliver to Seller a copy of each such Tax Return (together with schedules, statements and, to the extent reasonably requested by Seller, supporting documentation) at least forty (40) days prior to the due date (including extensions) of such Tax Return; provided, however, if such Tax Return is required to be filed within ninety (90) days after Closing, Buyer shall provide a copy of such Tax Return to Seller as soon as reasonably practicable. If Seller objects to any item on any such Tax Return, it shall, within twenty (20) days after delivery of such Tax Return, notify Buyer in writing that it so objects, specifying with particularity any such item and stating the specific factual or legal basis for any such objection. If a notice of objection shall be duly delivered, Buyer and Seller shall negotiate in good faith and use their reasonable best efforts to resolve such items. If Buyer and Seller are unable to reach such agreement within ten (10) days after receipt by Buyer of such notice, the disputed items shall be resolved by the Independent Accountant in a manner consistent with Section 6.02(c).

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(c)          In the event Buyer and Seller are unable to agree on any issue timely-raised by the other party pursuant to Section 6.02(a) or Section 6.02(b), Buyer and Seller shall engage the Independent Accountant to resolve the matter, and the Independent Accountant’s determination shall be final and binding on the Parties. Buyer and Seller shall direct the Independent Accountant to resolve the dispute in a manner consistent with (and in conformity to) the terms of this Agreement within twenty (20) days after the item has been referred to it. Notwithstanding anything to the contrary in this Section 6.02(c), the party responsible pursuant to Section 6.02(a) or Section 6.02(b) for preparing the disputed Tax Return shall be entitled to file on behalf of the Company, or cause to be filed, the applicable Tax Return without having incorporated the disagreed upon changes to avoid a late filing of such Tax Return. If the Independent Accountant’s resolution of the dispute necessitates that a Tax Return filed in accordance with the previous sentence be amended, then the party responsible pursuant to Section 6.02(a) or Section 6.02(b) for preparing the disputed Tax Return shall cause an amended Tax Return to be filed that reflects such resolution. The fees and expenses of the Independent Accountant shall be borne by each party in the percentage inversely proportionate to the percentage of the total items submitted for dispute that are resolved in such party’s favor, and the provisions in Section 2.03(c) regarding the execution of the Independent Accountant’s engagement letter shall apply, mutatis mutandis, to any engagement of the Independent Accountant pursuant to this Section 6.02(c). The preparation and filing of any Tax Return of the Company that does not relate to a Pre-Closing Tax Period or a Straddle Period shall be exclusively within the control of Buyer.

(d)          To the extent permitted or required by Law or administrative practice, the taxable year of the Company shall be treated as closing on (and including) the Closing Date. In the case of any Straddle Period, (i) the amount of any sales or use Tax, value-added Tax, employment Tax, withholding Tax, and any Tax based on or measured by income, profits or receipts, in each instance imposed upon or payable by or with respect to the Company for the Pre-Closing Straddle Period shall be determined based on an interim closing of the books of Company as of the end of the Closing Date, and (ii) the amount of any Taxes other than a sales or use Tax, value-added Tax, employment Tax, withholding Tax, or Tax based on or measured by income, profits or receipts Taxes of the Company for the Pre-Closing Straddle Period shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on and including the Closing Date and the denominator of which is the total number of days in such Straddle Period; provided, however, that exemptions, allowances or deductions that are calculated on an annual basis, such as the deduction for depreciation, shall be apportioned on a pro rata per diem basis.

Section 6.03         Liability for Taxes. Seller shall be liable for and pay, and pursuant to Article VII (and subject to the limitations thereof), shall indemnify and hold harmless Buyer and each of the Company and other Buyer Indemnitees from and against any and all of the following Taxes (collectively, the “Seller Taxes”): (A) Taxes imposed on or payable by Seller, or for which Seller may otherwise be liable, regardless of the Tax period to which such Taxes relate, including Taxes incurred or payable by Seller or any of its Affiliates upon the consummation of the Transaction; (B) Taxes imposed on or payable by the Company, or for which the Company may be liable whether as a transferee or successor (including upon merger, liquidation or otherwise), by contract, Law or otherwise (including all sales Taxes, use Taxes, and withholding Taxes) in each instance with respect to any Pre-Closing Tax Period, or any Pre-Closing Straddle Period as determined in accordance with Section 6.02(d) and; (C) Taxes imposed on or payable by or with respect to the Company by reason of it having been a member of an Affiliated Group on or prior to the Closing Date, including Taxes payable on income and gain recognized by the Company under Treasury Regulation Section 1.1502-13 or any analogous or similar provision of foreign, state or local Law; and (D) Taxes of any member of any Affiliated Group of which the Company (or any predecessor of the Company, whether by merger, liquidation or otherwise) was a member on or prior to the Closing Date by reason of Treasury Regulations Section 1.1502-6(a) or any analogous or similar provision of foreign, state or local Law; provided, however, the term “Seller Taxes” shall not include the amount of any Taxes to the extent such Taxes are reflected as a liability and included in the calculation of Closing Working Capital as finally determined in accordance with Section 2.03. The amount of Seller Taxes shall include all reasonable out-of-pocket fees and expenses (including reasonable attorneys’ and accountants’ fees) incurred by Buyer, the Company and each other Buyer Indemnitees from or in connection therewith. Seller shall reimburse Buyer for any Seller Taxes paid by Buyer, the Company or any Buyer Indemnitee within five (5) days prior to the earlier of (i) the date on which such Taxes are paid by Buyer, the Company or a Buyer Indemnitee, or (ii) the date on which Buyer provides written notice to Seller.

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Section 6.04         Contest Provisions. Each of Buyer and Seller shall promptly notify the other in writing upon receipt (including receipt by Affiliates of Buyer or Seller) of any written notice of any pending or threatened federal, state, local or foreign Tax audits, examinations or assessments or administrative or court proceeding which might reasonably be expected to affect the Tax liabilities of the Company with respect to any Pre-Closing Tax Period or any Straddle Period. With respect to such proceeding that pertains to a Pre-Closing Tax Period, Seller shall have the right to control any such Tax audit, examination, assessment or proceeding, and to employ counsel of its choice at its expense; provided, however, that Buyer and its representatives shall be permitted, at Buyer’s expense, to be present at, and participate in, any such audit, examination, assessment or proceeding. With respect to such proceeding that pertain to a Straddle Period, Buyer shall have the sole right to control any such Tax audit, examination, assessment or proceeding, and to employ counsel of its choice at its expense; provided, however, that Seller and its representatives shall be permitted, at Seller’s expense, to be present at, and participate in, any such audit, examination, assessment or proceeding. None of Seller or any of its Affiliates (with respect to a proceeding involving a Pre-Closing Tax Period), and neither Buyer nor any of its Affiliates (with respect to a proceeding involving a Straddle Period) shall be entitled to settle, either administratively or after the commencement of litigation, any claim for Taxes which could reasonably be expected to adversely affect the liability for Taxes for which the other party may be liable under this Agreement without the prior written consent of the other party (which shall not be unreasonably delayed, conditioned or withheld).

Section 6.05         Termination of Existing Tax Sharing Agreements. Any and all existing Tax sharing agreements (whether written or not) binding upon the Company shall be terminated as of the Closing Date. After such date, none of the Company, Seller nor any of Seller’s Affiliates and their respective Representatives shall have any further rights or liabilities thereunder.

Section 6.06         Elections Under Section 338 of the Code. Buyer shall not make any election under Section 338 of the Code or any other Law that would result in the treatment of the acquisition contemplated by this Agreement as an asset acquisition for Tax purposes.

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Section 6.07         Tax Refunds. Except to the extent included in the calculation of Closing Working Capital, as finally determined in accordance with Section 2.03, any refund of Taxes paid or payable by or with respect to the Company with respect to a Pre-Closing Tax Period or Pre-Closing Straddle Period shall, when actually realized by the Company (whether by refund, credit, overpayment or offset against other Taxes due and payable), be paid to Seller (net of any fees, expenses and additional Taxes incurred or payable by the Company or any of its Affiliates in connection with its receipt of such Tax refund), within ten (10) days after receipt thereof, if attributable to any Tax period or portion thereof ending on or before the Closing Date. For purposes of this Section 6.07, Tax refunds attributable to a Straddle Period shall be allocated in a manner consistent with Section 6.02(d). Buyer shall take such actions as reasonably requested by Seller in writing to obtain any refund to which Seller is entitled under this Section 6.07; provided, however, Seller shall pay all costs incurred by Buyer and its Affiliates (including the Company) in seeking to obtain such Tax Refund; and provided, further, that none of Buyer or its Affiliates (including the Company) shall be required to litigate before any court, or to institute or defend any administrative proceeding, in order to obtain such Tax refund. Notwithstanding the forgoing, none of Buyer or its Affiliates (including the Company) shall be required to take any Action under this Section 6.07 if Buyer reasonably believes that such action would have an adverse effect on Buyer or any of its Affiliates (including the Company).

Section 6.08         Consolidated Tax Filings and Elections.

(a)          For purposes of Treasury Regulations Section 1.1502-76(b)(1)(ii)(A) and (B) (and for purposes of similar provisions under state, local and foreign Law), Seller and Buyer agree that the Company’s status as members of Seller’s Affiliated Group shall cease as of the end of the Closing Date. Except as otherwise provided herein, all transactions which occur by or with respect to the Company on the Closing Date shall for all Tax purposes be treated as occurring on the Closing Date, and all Taxes resulting from or incurred as a consequence of any such transactions shall be borne by Seller and not Buyer or the Company.

(b)          If Buyer believes the Tax attributes of the Company may be reduced by reason of Treasury Regulations Section 1.1502-36(d), then, upon Buyer’s written request, Seller shall (i) promptly notify Buyer in writing of the due date (including extensions) for the timely filing of the federal Income Tax Return that will be filed by Seller and its Affiliates for the taxable year that includes the issuance and purchase of the Purchased Shares and the redemption of the Redeemed Shares pursuant to this Agreement and (ii) provide to Buyer such computations and supporting documents as Buyer shall reasonably request in order for Buyer to prepare and timely deliver to Seller the Unified Loss Election (as defined below); provided, however, that Buyer shall reimburse Seller for one-half of all reasonable third-party costs and expenses incurred by Seller and its Affiliates in the compilation and provision of such computations and supporting documents to Buyer pursuant to this Section 6.08; provided, further, that if any such information is identified in writing by Seller, or marked, as confidential or proprietary, then Buyer shall not disclose such information to any other Person (other than its accountants, attorneys and other advisors who have been advised of the confidential nature of such information).

(c)          Within ten (10) days of Seller’s receipt of the Unified Loss Election provided by Buyer, Seller shall provide Buyer with any objections to the Unified Loss Election and the reduction set forth therein. If Seller timely objects to the Unified Loss Election prepared by Buyer or the reduction set forth therein, then Buyer and Seller shall jointly retain the appropriate group of the Independent Accountant to resolve the dispute in accordance with the dispute resolution procedures set forth in Section 2.03(e), mutatis mutandis, including the provisions regarding the responsibility for the fees and expenses of the Independent Accountant.

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(d)          Upon (i) the agreement of Buyer and Seller, (ii) Seller’s failure to timely object to the Unified Loss Election provided to it by Buyer or (iii) the final determination of the Independent Accountant pursuant to this Section 6.08(b), in each case that the Tax attributes of the Company may be reduced by reason of Treasury Regulations Section 1.1502-36(d), then Parent (as the common parent of the Affiliated Group that includes Seller) shall timely make an election under Treasury Regulations Section 1.1502-36(d)(6)(i)(A) to reduce Seller’s Tax bases in the Redeemed Shares to the maximum extent necessary to ensure that the Tax attributes of the Company are not reduced by reason of Treasury Regulations Section 1.1502-36(d) (the “Unified Loss Election”).

Section 6.09         Tax Treatment of Sale. To the extent permitted by Law, (i) the redemption by the Company from the Seller of the Redeemed Shares, to the extent of the proceeds of the Credit Facilities, shall be treated for U.S. federal income tax purposes as a distribution in part or full payment in exchange for the stock under Code Section 302(a) and that the Seller, Buyer, and (ii) the Company will prepare and file all Tax Returns in a manner consistent with such treatment.

Article VII
Indemnification

Section 7.01         Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is eighteen (18) months from the Closing Date; provided, however, that the representations and warranties contained in Section 3.27(c) shall survive the Closing and shall remain in full force and effect until the date that is sixty (60) months from the Closing Date; provided, further, that the representations and warranties in (a) Section 3.01, Section 3.03, Section 3.04, Section 3.10, Section 3.20, Section 3.21, Section 3.23, Section 3.24, Section 4.01 and Section 4.04 the (“Fundamental Representations”) shall survive the Closing and remain in full force and effect for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus ninety (90) days; provided, further, that if there is no applicable statute of limitations, then the Fundamental Representations shall survive the Closing and remain in full force and effect until the sixth (6th) anniversary of the Closing Date. In no event shall any survival period set forth in this Section 7.01 be extended for any reason. All covenants and agreements of the parties contained herein shall survive the Closing for the period contemplated by its express terms or, in the absence of such terms, until the expiration of the applicable statute of limitations with respect to such covenant or agreement (giving effect to any waiver, mitigation or extension thereof) plus ninety (90) days. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of such survival period and such claims shall survive until finally resolved. Notwithstanding the foregoing, with respect to Section 3.27(c) only, the expiration of the sixty (60)-month survival period therefor shall not be a bar to any claims asserted in good faith with reasonable specificity and in writing by notice from the non-breaching party to the breaching party hereunder after the expiration of such sixty (60)-month survival period to the extent such claims are based on actions or events occurring or claims arising prior to the end of such sixty (60)-month survival period; provided, however, that, subject to Section 7.09, (x) with respect to a claim based on actions or events occurring or claims arising during the first forty-eight (48) months of such sixty (60)-month survival period, no claim with respect to a breach of the representations and warranties set forth in Section 3.27(c) may be brought after the date that is seventy-two (72) months after the Closing Date and (y) with respect to a claim based on actions or events occurring or claims arising during the last twelve (12) months of such sixty (60)-month survival period, no claim with respect to a breach of the representations and warranties set forth in Section 3.27(c) may be brought after the date that is seventy-five (75) months after the Closing Date.

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Section 7.02         Indemnification By Seller. Subject to the other terms and conditions of this Article VII, Seller shall indemnify and defend each of Buyer and its Affiliates (including the Company) and their respective Representatives (collectively, the “Buyer Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, any of the Buyer Indemnitees based upon, arising out of, with respect to or by reason of:

(a)          any inaccuracy in or breach of any of the representations or warranties of Seller (except Section 3.27(c)) contained in this Agreement;

(b)          any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement;

(c)          any Closing Transaction Expenses that were not included on the Final Closing Statement;

(d)          any Existing Debt that was not included on the Final Closing Statement;

(e)          any Seller Taxes;

(f)          any Liability of the Company related to retrospective premium adjustments or other experience-based Liability related to the Insurance Policies;

(g)          subject to Section 7.09, any breach of any of the representations or warranties of Seller contained in Section 3.27(c) if the untrue statement of material fact or omission of material fact underlying such breach was one of the bases upon which the carrier of the Trident Insurance Policies denied coverage thereunder as determined in accordance with Section 7.09; and

(h)          any severance payments owed to any of the Company’s employees pursuant to any Benefit Plan or other written agreement in effect as of the Closing between such employee, on the one hand, and Seller, the Company and/or any of their Affiliates, on the other hand.

Section 7.03         Indemnification By Buyer and the Company. Subject to the other terms and conditions of this Article VII, Buyer and the Company, jointly and severally, shall indemnify and defend each of Seller and its Affiliates and their respective Representatives (collectively, the “Seller Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, any of Seller Indemnitees based upon, arising out of, with respect to or by reason of:

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(a)          any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement;

(b)          any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement; or

(c)          any Policy Default described in Section 5.13.

Section 7.04         Certain Limitations. The party making a claim under this Article VII is referred to as the “Indemnified Party”, and the party against whom such claims are asserted under this Article VII is referred to as the “Indemnifying Party”. The indemnification provided for in Section 7.02 and Section 7.03 shall be subject to the following limitations:

(a)          The Indemnifying Party shall not be liable to the Indemnified Party for indemnification under Section 7.02(a) or Section 7.03(a), as the case may be, until the aggregate amount of all Losses in respect of indemnification under Section 7.02(a) or Section 7.03(a), as the case may be, exceeds One Hundred Fifty Thousand Dollars ($150,000) (the “Basket”), in which event the Indemnifying Party shall be required to pay or be liable for all such Losses from the first dollar without regard to the Basket. With respect to any claim as to which the Indemnified Party may be entitled to indemnification under Section 7.02(a) or Section 7.03(a), as the case may be, the Indemnifying Party shall not be liable for any individual or series of related Losses which do not exceed Five Thousand Dollars ($5,000) (which Losses shall not be counted toward the Basket).

(b)          The aggregate amount of all Losses for which an Indemnifying Party shall be liable pursuant to Section 7.02(a) or Section 7.03(a), as the case may be, shall not exceed Two Million Three Hundred Thousand Dollars ($2,300,000), provided, however, with respect to breaches of Section 3.27(c), the aggregate amount of all Losses for which the Seller will be liable shall not exceed the Purchase Price and Seller shall not be liable for any such individual or series of related Losses which do not exceed Five Thousand Dollars ($5,000)

(c)          Notwithstanding anything in this Agreement to the contrary, the limitations set forth in this Section 7.04 shall not apply to (i) Losses incurred in connection with or arising from any breach of or inaccuracy in any Fundamental Representation; (ii) Losses incurred in connection with or arising from any Policy Default; or (iii) in the case of fraud or intentional misrepresentation.

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(d)          Payments by an Indemnifying Party pursuant to Section 7.02 or Section 7.03 in respect of any Loss shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds actually received by the Indemnified Party (or the Company) in respect of any such claim. The Indemnified Party shall use its commercially reasonable efforts (which shall not include bringing a lawsuit or arbitration proceeding against any insurer) to recover under applicable insurance policies for any Losses prior to being entitled to indemnification under this Agreement; provided, however, that the Indemnified Party shall still be entitled to assert a claim for indemnification prior to attempting to so recover under applicable insurance policies, and such claim shall not, therefore, be barred by any subsequent expiration of the applicable survival period. In the event the Indemnified Party recovers proceeds or benefits under any insurance policy relating to a Loss after it receives payment or other credit from the Indemnifying Party under this Agreement with respect to such Loss, then the Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or credit provided by such Indemnifying Party in connection with such Loss up to (i) the amount of such payment or credit or (ii) the amount of such insurance proceeds or benefits, whichever is less, in either case, net of any expenses or costs incurred by the Indemnified Party by reason of making such claim or collecting such amount.

(e)          Each Indemnified Party shall take, and cause its Affiliates to take, all commercially reasonable steps to mitigate any Loss upon becoming aware of any event or circumstance that such Indemnified Party reasonably expects to, or does, give rise thereto.

(f)          For purposes of determining the amount of Losses for which a Person is entitled to indemnification under this Article VII, and for determining whether a representation, warranty or covenant has been breached, the parties hereto agree to disregard all qualifications and exceptions contained in any representations, warranties or covenants relating to materiality, Material Adverse Effect or words of similar import.

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Section 7.05         Indemnification Procedures.

(a)          Third-Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third-Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof. The failure to give such reasonably prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Third-Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party within fifteen (15) days of being notified of such Third-Party Claim, to assume the defense of any Third-Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel that is reasonably satisfactory to the Indemnified Party, and the Indemnified Party shall cooperate in good faith in such defense; provided, however, that the Indemnifying Party shall only be able to conduct the defense of the Third-Party Claim if (i) it has provided the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party has adequate financial resources to defend against the Third-Party Claim and fulfill its obligations under this Article VII, and (ii) the Third-Party Claim does not (A) relate to any criminal Action (B) involve damages that, when added to all other damages and other Losses for which such Indemnified Party and the other Buyer Indemnitees or Seller Indemnitees (as applicable) have previously sought indemnification pursuant to this Article VII are either less than the Basket or materially in excess of the amounts for which such Indemnifying Party (or Indemnifying Parties, as applicable) would be liable hereunder (based on reasonable estimates thereof), or (C) would create a conflict of interest on the part of the Indemnifying Party. So long as the Indemnifying Party is conducting the defense of a Third-Party Claim pursuant to the provisions of this Section 7.05(a), the Indemnifying Party shall keep the Indemnified Party timely advised of all material events with respect to any Third-Party Claim. The election by the Indemnifying Party of the defense of any Third-Party Claim shall conclusively establish for purposes of this Agreement that the Indemnified Party is entitled to relief under this Agreement for any Loss arising, directly or indirectly, from or in connection with such Third-Party Claim, subject to the limitations set forth in Section 7.04. The Indemnified Party shall have the right to participate in the defense of any Third-Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party; provided, however, that if in the reasonable opinion of counsel to the Indemnified Party, (x) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party; or (y) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to compromise or defend such Third-Party Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third-Party Claim, the Indemnified Party may, subject to Section 7.05(b), pay, compromise, defend such Third-Party Claim and the Indemnifying Party should be responsible for any and all Losses based upon, arising from or relating to such Third-Party Claim. Seller and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third-Party Claim, including making available (subject to the provisions of Section 5.05) records relating to such Third-Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third-Party Claim.

(b)          Settlement of Third-Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into a settlement of any Third-Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed), except as provided in this Section 7.05(b). If a firm offer is made to settle a Third-Party Claim without leading to Liability or the creation of a financial or other obligation on the part of the Indemnified Party, the settlement does not involve the admission of fault or violation of Law by or on behalf of the Indemnified Party, the settlement provides, in customary form, for the unconditional release of each Indemnified Party from all Liabilities and obligations in connection with such Third-Party Claim, the settlement is not reasonably likely to be detrimental to the reputation or business prospects of the Company or the Indemnified Party, the settlement does not impose an injunction or other equitable relief upon the Company or the Indemnified Party and the Indemnifying Party desires to accept and agree to such offer, then the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within fifteen (15) days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third-Party Claim and in such event, the maximum Liability of the Indemnifying Party as to such Third-Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third-Party Claim, the Indemnifying Party may settle the Third-Party Claim upon the terms set forth in such firm offer to settle such Third-Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 7.05(a), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).

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(c)          Policy Default Claim Procedures. In the event of any Action involving a Seller Indemnified Party with respect to any actual or potential Liability arising out of or in connection with Section 5.13, Section 7.05 shall not apply and, therefore, for the avoidance of doubt, the Seller shall have the sole right to control the defense of such Action and the Seller shall have the right to settle any such Action in its sole discretion; provided, however, that Seller shall not enter into a settlement of any such Action without the prior written consent of Buyer (which consent shall not be unreasonably withheld, conditioned or delayed).

Section 7.06         Payments. Any amounts owed by Seller for indemnification to any Buyer Indemnitee under Section 7.02, may be satisfied, at Buyer’s election, either: (a) as a claim against Seller or (b) as a payment by the Escrow Agent from the amount held by the Escrow Agent pursuant to the terms of the Escrow Agreement.

Section 7.07         Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

Section 7.08         Effect of Investigation. The representations, warranties and covenants of the Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including by any of its Representatives) or by reason of the fact that the Indemnified Party or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate.

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Section 7.09         Trident Product Liability. Notwithstanding anything contained in this Article VII or in any other Article of this Agreement to the contrary, the Buyer Indemnified Parties’ exclusive rights, claims and remedies at law and/or equity vis-a-vis Seller and exclusive source of recovery for any Trident Product Liability (other than with respect to a breach of the representations and warranties set forth in Section 3.27(c), fraud or willful misconduct (as determined by a final, binding, non-appealable judgment by a court of competent jurisdiction)) shall be the Trident Insurance Policies and in no event shall Seller indemnify, or be required to indemnify, any Buyer Indemnified Party for any Trident Product Liability. In the event of any Action involving a Buyer Indemnified Party with respect to any actual or potential Trident Product Liability, Section 7.05 shall not apply and, therefore, for the avoidance of doubt, the Company shall have the sole right to control the defense of such Action and the Company shall have the right to settle any such Action in its sole discretion. Buyer agrees that, in connection with any Action involving a Buyer Indemnified Party with respect to any actual or potential Trident Product Liability, it will use its good faith best efforts to seek a recovery under the Trident Insurance Policies (or any replacement policies thereof) relating thereto and further agrees that Seller shall have the right (but not the obligation) to monitor in the prosecution of such insurance coverage for Trident Product Liability. Without limiting the generality of the foregoing, upon the written request of Seller, Buyer shall provide copies of any and all correspondence sent or received by Buyer and/or the Company and/or any Affiliate thereof, any and all pleadings in connection with such Action, and advise Seller in writing of any and all electronic, written and/or verbal communications not otherwise referred to above which are material to any such Action. Notwithstanding anything contained in this Agreement, to the extent that Seller may otherwise have Liability, Seller shall have no Liability to any Buyer Indemnified Party for any Trident Product Liability and/or breach of Section 3.27(c) if Buyer fails to use its good faith best efforts to seek any insurance benefit relating thereto. If a Buyer Indemnified Party or a Seller Indemnified Party becomes aware of any Action involving any actual or potential Trident Product Liability, then Buyer or Seller, as applicable, shall promptly notify the other of such Action. Buyer hereby further agrees that it shall not (i) bring any Action against Seller with respect to any Trident Product Liability and/or a breach of Section 3.27(c), or (ii) assist any third party in bringing any Action against Seller with respect to any Trident Product Liability or breach of Section 3.27(c), unless and until in each case a court of competent jurisdiction has determined by final, binding, non-appealable judgment to affirm, uphold or otherwise not reverse the carrier’s denial of coverage under the Trident Insurance Policies.

Section 7.10         Exclusive Remedies. Subject to Section 8.11, the parties hereto acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud or willful misconduct) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in Article VI and this Article VII. In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in Article VI and this Article VII. Nothing in this Section 7.10 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled pursuant to Section 8.11 or to seek any remedy on account of any party’s fraudulent or intentional misconduct.

Article VIII
Miscellaneous

Section 8.01         Expenses. Except as otherwise expressly provided herein (including Section 5.08 hereof), all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.

Section 8.02         Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) one (1) Business Day after being sent to the recipient if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third (3^rd) Business Day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.02):

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If to Seller:	c/o P&F Industries, Inc.
	445 Broadhollow Road
	Melville, NY 11747 – Suite 100
	Attention:       Richard B. Goodman, Esq.
	General Counsel
	Facsimile:       (631) 773-4223
	E-mail:             RGoodman@pfina.com
with a copy to:	SilvermanAcampora LLP
	100 Jericho Quadrangle – Suite 300
	Jericho, New York  11753
	Attn:        Steven J. Kuperschmid, Esq.
	Facsimile:        (516) 479-6301
If to Buyer:	Argosy NWI Holdings, LLC
	c/o Argosy Private Equity
	950 W Valley Rd, Suite 2900
	Wayne, PA 19087
	E-mail: kirk@argosyprivateequity.com
	Attention:        Kirk Griswold
with a copy to:	McGuireWoods LLP
	201 North Tryon Street
	Suite 3000
	Charlotte, NC 28202
	Facsimile:         (704) 444-8786
	E-mail: rwhite@mcguirewoods.com
	Attention:        H. Ramsey White, III

Section 8.03         Interpretation. For purposes of this Agreement: (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. The term “made available to Buyer” or similar phrases means, with respect to the subject document, that such document was posted in the Data Room at least three (3) Business Days before the Closing Date and such document has remained accessible to Buyer and its Representatives from such date through the Closing Date.

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Section 8.04         Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

Section 8.05         Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the greatest extent possible.

Section 8.06         Entire Agreement. This Agreement constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

Section 8.07         Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.

Section 8.08         No Third-party Beneficiaries. Except as provided in Section 5.04 and Article VII, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 8.09         Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

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Section 8.10         Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

(a)          This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction).

(b)          ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF DELAWARE IN EACH CASE LOCATED IN THE COUNTY OF NEW CASTLE AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c)          EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.10(C).

Section 8.11         Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

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Section 8.12         Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

Section 8.13         Non-Recourse. This Agreement may only be enforced against, and any Action based upon, arising out of, or related to this Agreement, or the negotiation, execution or performance of this Agreement, may only be brought against the entities that are expressly named as parties hereto (and their respective successors and permitted assigns) and then only with respect to the specific obligations set forth herein with respect to such party. No past, present or future incorporator, manager, member, partner, stockholder, Affiliate or Representative of any party hereto or any of their successors or permitted assigns, shall have any Liability under this Agreement or for any Action based on, in respect of or by reason of the Transactions, other than to the extent based on, in respect of or by reason of such Person’s fraud or willful misconduct.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized

countrywide hardware, inc.
By	/s/ Joseph A. Molino, Jr.
Name:	Joseph A. Molino, Jr.
Title:	Vice President
NATIONWIDE INDUSTRIES, INC.
By	/s/ Christopher J. Kliefoth
Name:	Christopher J. Kliefoth
Title:	President
ARGOSY NWI HOLDINGS, LLC
By	/s/ Kirk B. Griswold
Name:	Kirk B. Griswold
Title:	Chief Executive Officer
For purposes of Sections 5.02, 5.05, 5.09, 5.13, 5.14 and 6.08 only.
P&F INDUSTRIES, INC.
By	/s/ Joseph A. Molino, Jr.
Name:	Joseph A. Molino, Jr.
Title:	Vice President

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EX-10.1

Exhibit 10.1

PURCHASE AGREEMENT

This PURCHASE AGREEMENT (this "Agreement") is made and entered into as of February 11, 2016 by and between P&F Industries Inc., a Delaware corporation (the "Company"), and Christopher J. Kliefoth, an individual ("Seller").

WHEREAS, Seller directly owns shares of the issued and outstanding Class A common stock, par value $1.00 per share, of the Company ("Company Shares") (CUSIP: 629830508) and Non-Qualified Options to purchase Company Shares (“Options”); and

WHEREAS, Seller desires to sell, and the Company desires to purchase, free and clear of any and all Liens (as defined herein) 30,000 Company Shares and Options to purchase 6,667 Company Shares.

NOW, THEREFORE, in consideration of the foregoing premises and the covenants, agreements and representations and warranties contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

PURCHASE AND SALE; CLOSING

Section 1.1           Purchase and Sale. Upon the terms and subject to the conditions of this Agreement, Seller agrees to sell, convey, assign, transfer and deliver to the Company, and the Company agrees to purchase from Seller, (i) 30,000 Company Shares (the "Purchased Shares"), free and clear of any and all mortgages, pledges, encumbrances, liens, security interests, options, charges, claims, deeds of trust, deeds to secure debt, title retention agreements, rights of first refusal or offer, limitations on voting rights, proxies, voting agreements, limitations on transfer or other agreements or claims of any kind or nature whatsoever (collectively, "Liens") and (ii) Options (as set forth on Schedule 1 hereto) to purchase 6,667 Company Shares.

Section 1.2           Purchase Price. Upon the terms and subject to the conditions of this Agreement, in consideration of the aforesaid sale, conveyance, assignment, transfer and delivery to the Company of (i) the Purchased Shares, the Company shall pay to Seller a price per Purchased Share of $8.498 for an aggregate price of $254,940 (the "Company Share Purchase Price") and (ii) the Options, the Company shall pay to Seller the aggregate amount of $16,597 (as calculated on Schedule 1 hereto) (the “Option Purchase Price” and, together with the Company Share Purchase Price, the “Purchase Price”).

Section 1.3           Expenses. All fees and expenses incurred by a party hereto in connection with the matters contemplated by this Agreement shall be borne by the party incurring such fee or expense, including without limitation the fees and expenses of any investment banks, attorneys, accountants or other experts or advisors retained by such party.

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Section 1.4           Closing; Conditions.

(a)          The consummation of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of the Company as promptly as practical after satisfaction of the conditions hereto, or at such other place, date or time as the parties may agree in writing (the "Closing Date").

(b)          The Company's obligations to consummate the transactions contemplated by this Agreement shall be conditioned on (i) consummation of the transactions contemplated by the Stock Purchase and Redemption Agreement between Countrywide Hardware, Inc., Nationwide Industries, Inc., Argosy NWI Holdings, LLC, and P&F Industries, Inc. dated as of February 11, 2016, as amended or otherwise modified through the date hereof, (ii) no injunction or other order, judgment, law, regulation, decree or ruling or other legal restraint or prohibition having been issued, enacted or promulgated by a court or other governmental authority of competent jurisdiction that would have the effect of prohibiting or preventing the consummation of the transactions contemplated hereunder, and (iii) approval of this Agreement and the transactions contemplated hereby by Board of Directors of the Company.

Section 1.5           Deliveries.

(a)          At the Closing, in accordance with Section 1.2, the Company shall deliver or cause to be delivered to Seller the Purchase Price by wire transfer of immediately available funds to such account as Seller has specified in writing prior to the Closing Date;

(b)          Prior to the Closing, Seller shall deliver or cause to be delivered to the Company all of the 30,000 Purchased Shares by transfer via the Depository Trust Company Deposit Withdrawal Agent Commission System ("DWAC") in accordance with the instructions included on the signature page hereto, such delivery to be confirmed as “settled” and not subject to reversal or cancellation at or prior to the Closing.

(c)          Prior to the Closing, Seller shall deliver or caused to be delivered to the Company the Non-Qualified Stock Option Agreements representing the Options under the Company’s 2002 and 2012 Stock Incentive Plans.

ARTICLE II

COVENANTS

Section 2.1           Standstill.

(a)          During the period beginning on the date hereof and ending on the date that is the third anniversary hereof (the "Standstill Period"), except as specifically permitted by the terms of this Agreement, Seller shall not, and shall cause his Affiliates (as defined in Section 5.3) not to, acquire, offer or propose to acquire, or agree to acquire, directly or indirectly, by purchase or otherwise, any (i) Voting Securities (as defined in Section 5.3), or (ii) direct or indirect rights or options to acquire (through purchase, exchange, conversion or otherwise) any Voting Securities such that, after such purchase in the case of (i) and (ii), Seller would own in excess of 50,000 Voting Securities (subject to adjustment to reflect any stock dividend, stock split, combination of shares, reclassification, recapitalization or other similar event affecting the number of outstanding Voting Securities).

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(b)          During the Standstill Period, except upon the express prior written invitation of the Company, Seller shall not, and shall cause his Affiliates not to, directly or indirectly, singly or as part of a partnership, limited partnership, syndicate or other group (as those terms are used within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which meanings shall apply for all purposes of this Agreement): (i) make, or in any way participate in, any "solicitation" of "proxies" (as such terms are defined or used in Regulation 14A under the Exchange Act) or exempt solicitation under Rule 14a-2(b)(1) or otherwise with respect to any Voting Securities (including by the execution of actions by written consent), become a "participant" or a "participant in a solicitation" (as such terms are defined or used in Regulation 14A under the Exchange Act) with respect to the Company or otherwise communicate with any stockholder of the Company pursuant to Rule 14a-1(l)(2)(iv) under the Exchange Act; (ii) initiate, propose or otherwise solicit, or participate in the solicitation of, stockholders for the approval of one or more stockholder proposals with respect to the Company, including any proposal made pursuant to Rule 14a-8 under the Exchange Act, or encourage or induce any other individual or entity to initiate any stockholder proposal relating to the Company, or make any demand or request for any list of the holders of Voting Securities; (iii) form, encourage the formation, join or in any way participate in a "group" which owns or seeks or offers to acquire beneficial ownership of Voting Securities or rights to acquire such securities or which seeks or offers to acquire control of the Company or influence its policies; (iv) solicit, seek or offer to effect, negotiate with or provide any information to any party with respect to, make any statement or proposal, whether written or oral, either alone or in concert with others, to the Board of Directors of the Company, to any director or officer of the Company or to any other stockholder of the Company with respect to, or otherwise formulate any plan or proposal or make any public announcement, proposal, offer or filing under the Exchange Act, any similar or successor statute or otherwise, or take action to cause the Company to make any such filing, with respect to: (A) any form of business combination, restructuring, recapitalization, dissolution or similar transaction involving the Company or any Affiliate thereof, including, without limitation, a merger, tender or exchange offer, share repurchase or liquidation of the Company's assets, (B) any acquisition or disposition of assets material to the Company, (C) any request to amend, waive or terminate the provisions of this Agreement or (D) any proposal or other statement inconsistent with the terms of this Agreement; (v) otherwise act, alone or in concert with others (including by providing financing for another party), to seek or offer to acquire control of the Company or influence, in any manner, its management, Board of Directors or policies; or (vi) assist or encourage any third party, whether or not a "group" with such third party, to take any of the actions enumerated in this Section 2.1(b).

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Section 2.2           Non-disparagement.

(a)          The Company (on its own behalf and on behalf of its directors, officers, subsidiaries and Affiliates and each of their respective successors and assigns (collectively, the "Company Parties")) agrees that, during the Standstill Period, it shall not (whether directly or indirectly, individually or in concert with others, publicly or privately, orally or in writing) engage in any conduct or make, or cause to be made, any statement, observation or opinion, or communicate any information that is calculated to or is reasonably likely to have the effect of (i) undermining, impugning, disparaging, injuring the reputation of or otherwise in any way reflecting adversely or detrimentally upon Seller or (ii) accusing or implying that Seller engaged in any wrongful, unlawful or improper conduct. The foregoing shall not apply to any compelled testimony, either by legal process, subpoena or otherwise or to any response to any request for information from any governmental authority having jurisdiction over the Company; provided, however, that in the event that any Company Party is requested pursuant to, or required by, applicable law, regulation or legal process to testify or otherwise respond to a request for information from any governmental authority, the Company shall notify Seller promptly so that the Seller may seek a protective order or other appropriate remedy. In the event that no such protective order or other remedy is obtained, or Seller waives compliance with the terms of this Section 2.2(a), such Company Party shall furnish only such information which it has been advised by counsel is legally required and will exercise reasonable efforts to obtain reliable assurance that such information will be accorded confidential treatment. The preceding sentences of this Section 2.2(a) shall not preclude the Company from responding publicly or otherwise to any comments made by Seller to any news media or to any statements of assertions by any news media based on prior statements, assertions or filings made by Seller.

(b)          Seller agrees that, during the Standstill Period, he shall not (whether directly or indirectly, individually or in concert with others, publicly or privately, orally or in writing) engage in any conduct or make, or cause to be made, any statement, observation or opinion, or communicate any information, including, without limitation, to any member of the press, analyst, governmental or regulatory agency, that is calculated to or is reasonably likely to have the effect of (i) undermining, impugning, disparaging, injuring the reputation of or otherwise in any way reflecting adversely or detrimentally upon any Company Party or (ii) accusing or implying that any Company Party engaged in any wrongful, unlawful or improper conduct; provided, however, that in the event that Seller is requested pursuant to, or required by, applicable law, regulation or legal process to testify or otherwise respond to a request from any governmental authority, Seller shall notify the Company promptly so that the Company may seek a protective order or other appropriate remedy. In the event that no such protective order or other remedy is obtained, or any Company Party waives compliance with the terms of this Section 2.2(b), Seller shall furnish only such information which it is advised by counsel is legally required and will exercise reasonable efforts to obtain reliable assurance that such information will be accorded confidential treatment.

Section 2.3           Public Announcement; Public Filings.

(a)          Without limitation of the Company’s rights under the last sentence of Section 2.2(a) hereof and except as may be required by law or any governmental authority, regulatory agency or accrediting body, neither party hereto nor any of its respective Affiliates shall issue any press release or make any public statement relating to the transactions contemplated hereby.

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Section 2.4           Confidentiality. Seller shall not disclose and shall maintain the confidentiality of (and shall cause his Affiliates to not disclose and to maintain the confidentiality of) any non-public information which relates to the business, legal or financial affairs of the Company (the "Confidential Information"). Seller shall use at least the same degree of care to safeguard and to prevent the disclosure, publication or dissemination of the Confidential Information as he employs to avoid unauthorized disclosure, publication or dissemination of his own information of a similar nature, but in no case less than reasonable care. In the event that Seller (or any Affiliate) is requested or required (by oral question, interrogatory, request for information or documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, Seller shall (a) notify the Company promptly so that the Company may seek a protective order or other appropriate remedy and (b) cooperate with the Company in any effort the Company undertakes to obtain a protective order or other remedy. In the event that no such protective order or other remedy is obtained, the applicable party shall disclose to the person compelling disclosure only that portion of the Confidential Information which such party is advised by counsel is legally required and shall exercise commercially reasonable efforts to obtain reliable assurance that confidential treatment is accorded the Confidential Information so disclosed.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Section 3.1           Existence; Authority. Seller has all requisite competence, power and authority to execute and deliver this Agreement, to perform his obligations hereunder and to consummate the transactions contemplated hereby.

Section 3.2           Enforceability. This Agreement has been duly and validly executed and delivered by Seller and, assuming due and valid authorization, execution and delivery by the Company, this Agreement constitutes a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except as such enforceability may be affected by bankruptcy, insolvency, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles.

Section 3.3           Ownership. Seller is the sole record and beneficial owner of the Purchased Shares and the Options, free and clear of any and all Liens. Seller has full power and authority to transfer full legal ownership of the Purchased Shares and the Options to the Company, and Seller is not required to obtain the approval of any person or governmental agency or organization to effect the sale of the Purchased Shares or the Options. The entire direct or indirect beneficial ownership of Seller or any of his Affiliates in the Company is 30,500 Company Shares and Options to purchase 6,667 Company Shares.

Section 3.4           Good Title Conveyed. Any stock certificates and stock powers (together with the Stock Option Agreements representing the Options) executed and delivered by Seller at the Closing will be valid and binding obligations of Seller, enforceable in accordance with their respective terms, and, together with the delivery of Purchased Shares through DWAC, will effectively vest in the Company good, valid and marketable title to all of the Purchased Shares and Options, free and clear of any and all Liens.

Section 3.5           Absence of Litigation. There is no suit, action, investigation or proceeding pending or, to the knowledge of Seller, threatened against Seller that could impair the ability of Seller to perform its obligations hereunder or to consummate the transactions contemplated hereby.

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Section 3.6           Other Acknowledgements.

(a)          Seller hereby represents and acknowledges that he is a sophisticated investor and he knows the Company may have material Confidential Information concerning the Company and its condition (financial and otherwise), results of operations, businesses, properties, plans and prospects and that such information could be material to Seller's' decision to sell the Purchased Shares and the Options or otherwise materially adverse to Seller's interests. Seller acknowledges and agrees that the Company shall have no obligation to disclose to him any such information and hereby waives and releases, to the fullest extent permitted by law, any and all claims and causes of action he has or may have against the Company and the Company’s Affiliates, officers, directors, employees, agents and representatives based upon, relating to or arising out of nondisclosure of such information or the sale of the Purchased Shares and the Options hereunder.

(b)          Seller further represents that he has adequate information concerning the business and financial condition of the Company to make an informed decision regarding the sale of the Purchased Shares and the Options and has, independently and without reliance upon the Company, made his own analysis and decision to sell the Purchased Shares and the Options. With respect to legal, tax, accounting, financial and other considerations involved in the transactions contemplated by this Agreement, including the sale of the Purchased Shares and the Options, Seller is not relying on the Company (or any agent or representative thereof). Seller carefully considered and, to the extent he believes such discussion necessary, discussed with professional legal, tax, accounting, financial and other advisors the suitability of the transactions contemplated by this Agreement, including the sale of the Purchased Shares and the Options. Seller acknowledges that neither the Company nor any of the Company’s directors, officers, subsidiaries or Affiliates has made or makes any representations or warranties, whether express or implied, of any kind except as expressly set forth in this Agreement.

(c)          Seller is an "accredited investor" as defined in Rule 501 promulgated under the Securities Act of 1933, as amended. The sale of the Purchased Shares and the Options by Seller (i) was privately negotiated in an independent transaction and (ii) does not violate any rules or regulations applicable to Seller.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company makes the following representations and warranties to Seller:

Section 4.1           Existence; Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby and has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement.

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Section 4.2           Enforceability. This Agreement has been duly and validly executed and delivered by the Company and, assuming due and valid authorization, execution and delivery by Seller, this Agreement constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be affected by bankruptcy, insolvency, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles.

Section 4.3           Absence of Litigation. There is no suit, action, investigation or proceeding pending or, to the knowledge of the Company, threatened against such party that could impair the ability of the Company to perform its obligations hereunder or to consummate the transactions contemplated hereby.

ARTICLE V

MISCELLANEOUS

Section 5.1           Survival. Each of the representations, warranties, covenants and agreements in this Agreement or pursuant hereto shall survive the Closing. Notwithstanding any knowledge of facts determined or determinable by either party by investigation, each party shall have the right to fully rely on the representations, warranties, covenants and agreements of the other party contained in this Agreement or in any other documents or papers delivered in connection herewith. Each representation, warranty, covenant and agreement of the parties contained in this Agreement is independent of each other representation, warranty, covenant and agreement. Except as expressly set forth in this Agreement, neither party has made any representation warranty, covenant or agreement.

Section 5.2           Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given if so given) by hand delivery, cable, telecopy or mail (registered or certified, postage prepaid, return receipt requested) to the respective parties hereto addressed as follows:

If to the Company:

445 Broadhollow Road

Suite 100

Melville, NY 11747

Attention: Richard B. Goodman

Telecopy Number: (631) 773-4223

If to Seller:

902 South Rome Avenue, Unit C

Tampa, FL 33606

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Section 5.3           Certain Definitions. As used in this Agreement, (a) the term "Affiliate" shall have the meaning set forth in Rule 12b-2 under the Exchange Act and shall include persons who become Affiliates of any person subsequent to the date hereof; (b) the term "Voting Securities" shall mean the Company Shares and any other securities of the Company entitled to vote in the election of directors, or securities convertible into, or exercisable or exchangeable for, securities of the Company entitled to vote in the election of directors, whether or not subject to the passage of time or other contingencies; and (c) the Company and Seller will be referred to herein individually as a "party" and collectively as "parties."

Section 5.4           Specific Performance. The Company, on the one hand, and Seller, on the other hand, acknowledge and agree that the other would be irreparably injured by a breach of this Agreement and that money damages are an inadequate remedy for an actual or threatened breach of this Agreement. Accordingly, the parties agree to the granting of specific performance of this Agreement and injunctive or other equitable relief as a remedy for any such breach or threatened breach, without proof of actual damages, and further agree to waive any requirement for the securing or posting of any bond in connection with any such remedy. Such remedy shall not be deemed to be the exclusive remedy for a breach of this Agreement, but shall be in addition to all other remedies available at law or equity.

Section 5.5           No Waiver. No waiver by either party hereto of a breach of any provision of this Agreement shall operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party hereto to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

Section 5.6           Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated by such holding. The parties agree that the court making any such determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of, delete specific words or phrases in, or replace any such invalid or unenforceable provision with one that is valid and enforceable and that comes closest to expressing the intention of such invalid or unenforceable provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed.

Section 5.7           Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that this Agreement (and any of the rights, interests or obligations of either party hereunder) may not be assigned by either party without the prior written consent of the other party hereto, such consent not to be unreasonably withheld. Any purported assignment of a party's rights under this Agreement in violation of the preceding sentence shall be null and void.

Section 5.8           Entire Agreement; Amendments. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof and, except as expressly set forth herein, is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. This Agreement may be amended only by a written instrument duly executed by the parties hereto or their respective permitted successors or assigns.

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Section 5.9           Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 5.10         Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to choice of law principles thereof that would cause the application of the laws of any other jurisdiction.

Section 5.11         Submission to Jurisdiction. Each of the parties irrevocably submits to the exclusive jurisdiction and service and venue in any federal or state court sitting in the State of Delaware for the purposes of any action, suit or proceeding arising out of or with respect to this Agreement. Each of the parties irrevocably and unconditionally waives any objections to the laying of venue of any action, suit or proceeding relating to this Agreement in any federal or state court sitting in the State of Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY.

Section 5.12         Counterparts; Facsimile. This Agreement may be executed in counterparts, including by facsimile or PDF electronic transmission, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.

Section 5.13         Further Assurances. Upon the terms and subject to the conditions of this Agreement, each of the parties hereto agrees to execute such additional documents, to use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate or make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement.

Section 5.14         Interpretation. The parties acknowledge and agree that this Agreement has been negotiated at arm's length and between parties equally sophisticated and knowledgeable in the matters covered hereby. Accordingly, any rule of law or legal decision that would require interpretation of any ambiguities in this Agreement against the party that has drafted it is not applicable and is hereby waived.

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

P&F INDUSTRIES INC.
By:	/s/ Joseph A. Molino, Jr.
Name:	Joseph A. Molino, Jr.
Title:	Vice President
/s/ Christopher J. Kliefoth
Christopher J. Kliefoth

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EX-10.2

Exhibit 10.2

CONSENT AND SECOND AMENDMENT

TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This CONSENT AND SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of February 11, 2016, is by and among P&F INDUSTRIES, INC., a Delaware corporation (“P&F”), FLORIDA PNEUMATIC MANAFUACTURING CORPORATION, a Florida corporation (“Florida Pneumatic”), HY-TECH MACHINE, INC., a Delaware corporation (“Hy-Tech”), ATSCO HOLDINGS CORPORATION, a Delaware corporation (“ATSCO”), and NATIONWIDE INDUSTRIES, INC., a Florida corporation (“Nationwide”, and together with P&F, Florida Pneumatic Hy-Tech and ATSCO, collectively, “Borrowers” and each, a “Borrower”), CONTINENTAL TOOL GROUP, INC., a Delaware corporation (“Continental”), COUNTRYWIDE HARDWARE, INC., a Delaware corporation (“Countrywide”), EMBASSY INDUSTRIES, INC., a New York corporation (“Embassy”), GREEN MANUFACTURING, INC., a Delaware corporation (“Green”), PACIFIC STAIR PRODUCTS, INC., a Delaware corporation (“Pacific”), WILP HOLDINGS, INC., a Delaware corporation (“WILP”), EXHAUST TECHNOLOGIES, INC., a Delaware corporation (“Exhaust”), and WOODMARK INTERNATIONAL, L.P., a Delaware limited partnership (“Woodmark”, and together with Continental, Countrywide, Embassy, Green, Pacific, WILP and Exhaust, collectively, “Guarantors” and each, a “Guarantor”), the Lenders (defined below) party to this Agreement, CAPITAL ONE BUSINESS CREDIT CORP. (“COBC”), a New York corporation, as resigning agent for the Lenders (“Resigning Agent”) and CAPITAL ONE, NATIONAL ASSOCIATION (“CONA”), a national banking association, as successor agent for the Lenders (“New Agent”, and collectively with the Resigning Agent, the “Agents”).

RECITALS:

A.           Borrowers, Guarantors, the lenders from time to time party thereto (collectively, the “Lenders”) and Resigning Agent have entered into an Amended and Restated Loan and Security Agreement dated as of August 13, 2014 (as heretofore amended, the “Loan Agreement”) with COBC as the sole Lender thereunder. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement.

B.           Countrywide wishes to enter into a Stock Purchase and Redemption Agreement (“SPA”), dated as of February 11, 2016 and agreements, instruments and documents related thereto (collectively, the “SPA Related Documents”), with Argosy NWI Holdings, LLC, a Delaware limited liability company (“Purchaser”).

C.           Prior to the Closing Date (as defined in the SPA), Nationwide will cause all of its outstanding 100 shares of stock to be represented by two certificates of 30 shares and 70 shares respectively and thereafter but prior to such Closing Date, Countrywide will make a capital contribution of the 30 shares to Nationwide (collectively, the “Share Re-issue and Contribution”). On the Closing Date (as defined in the SPA), (i) Nationwide will issue to Purchaser, and Purchaser will purchase from Nationwide, 30 shares of the common stock of Nationwide, par value One Dollar ($1.00) per share (the “Purchased Shares”) and (ii) simultaneously with the purchase of the Purchased Shares by Purchaser, Nationwide will redeem from Countrywide, and Countrywide will sell to Nationwide, all of the outstanding Equity Interests of Nationwide then owned by Countrywide (the “Redeemed Shares”), in each case of clauses (i) and (ii) above, on and subject to the terms and conditions set forth in the SPA and other SPA Related Documents (collectively, the “Nationwide Sale and Redemption”).

D.          The Borrowers have requested that the Lenders consent to the Share Re-issue and Contribution, the execution and delivery of the SPA, the sale of the Purchased Shares and the redemption of all of the Redeemed Shares, consummation of the transactions under the SPA Related Documents, the release of Nationwide from all its Obligations under the Loan Agreement and release of all Liens on the assets of the Nationwide granted to Agent under and pursuant to the Loan Agreement.

E.           Simultaneously with the entry into this Amendment, COBC shall transfer all of its interests in the Loans and Commitments to CONA and the Resigning Agent will be succeeded by the New Agent.

F.           Subject to the terms and conditions set forth below, the Agents and the Lenders are willing to consent to the Nationwide Sale and Redemption and, with effect immediately after the consummation of the Nationwide Sale and Redemption, to amend the Loan Agreement as set forth herein.

In furtherance of the foregoing, the parties agree as follows:

Section 1.          Consents. Subject to the covenants, terms and conditions set forth herein and in reliance upon the representations and warranties set forth herein, each of the undersigned Lenders hereby consents to:

(a)          the Share Re-issue and Contribution, Countrywide’s execution and delivery of the SPA and the SPA Related Documents, the incurrence and performance by the Countrywide of its obligations thereunder and the consummation of the Nationwide Sale and Redemption (collectively, the “Nationwide Transaction”).

(b)          Simultaneously with the receipt of the proceeds of the sale of the Purchased Shares, Nationwide’s incurrence of debt in an amount of $8,000,000.00 under a new credit facility provided by TCF Capital Funding Division of TCF National Bank secured by Liens on all assets of Nationwide; provided that (i) the debt is solely the obligation of Nationwide and no other Obligor is obligated (directly or indirectly, primarily or secondarily) thereon or with respect thereto , (ii) no assets of any other Obligor are pledged in, or subject to Liens with, respect to such debt and no other Obligor grants or is required to grant any Liens with respect to such debt and (iii) the proceeds of such debt is immediately used to redeem the Redeemed Shares in full and remitted directly to New Agent.

(c)          An amendment to the certificate of incorporation of ATSCO to change such corporation’s legal name; provided that the New Agent shall have received within ten (10) days of the effective date of such name change, a duly authorized amendment to ATSCO’s certificate of incorporation certified by the Secretary of State of the State of Delaware.

(d)          Upon consummation of a sale of Real Estate located in Tampa, Florida in a Permitted Asset Disposition (and notwithstanding anything in the Loan Agreement to the contrary), the holding in escrow or otherwise of a portion of the proceeds thereof, up to $400,000, in accordance with the terms of the SPA (and the release thereof in accordance with the SPA).

The foregoing consents shall be effective upon satisfaction of the conditions in clause (a) of Section 3 hereof.

Section 2.          AMENDMENTS. Subject to the consummation of the Nationwide Sale and Redemption, the Loan Agreement is amended as follows:

(a)          Effective upon the consummation of the Nationwide Sale and Redemption, Nationwide shall cease to be a Borrower and/or Guarantor under or party to the Loan Agreement or other Loan Documents and Nationwide shall be deemed to be released from all Obligations under the Loan Agreement and other Loan Documents.

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(b)          Effective upon the consummation of the Nationwide Sale and Redemption, the Lien on and security interest in the assets and property of Nationwide granted to Agent under the Loan Agreement shall be deemed terminated and released.

(c)          Effective upon the consummation of the Nationwide Sale and Redemption, all references to Nationwide in the Loan Agreement or Loan Documents shall thereafter be deemed deleted.

(d)          Effective immediately after consummation of the Nationwide Sale and Redemption and receipt of the proceeds thereof as required under Section 3(c)(iv) hereof, and subject to the covenants, terms and conditions set forth herein and in reliance upon the representations and warranties set forth herein, the Loan Agreement is hereby amended such that, after giving effect to all such amendments, it shall read in its entirety as attached hereto as Exhibit A, with all revisions to the Loan Agreement reflected in Exhibit A in redlined format.

The amendments to the Loan Agreement are limited to the extent specifically set forth above and no other terms, covenants or provisions of the Loan Agreement are intended to be affected hereby.

Section 3.          CONDITIONS PRECEDENT. The parties hereto agree that:

(a)   the consent set forth in Section 1 above shall not be effective until the Agents shall have received a counterpart of this Amendment, duly executed and delivered by Borrowers, Guarantors and all of the Lenders then party to the Loan Agreement and shall be subject to receipt by New Agent, on the Closing Date (as defined in the SPA), of all proceeds of the Nationwide Sale and Redemption to be received by Countrywide on such Closing Date;

(b)   the amendments set forth in Section 2(a), (b) and (c) shall be effective upon the consummation of the Nationwide Sale and Redemption, provided that prior thereto the Agents shall have received a counterpart of this Amendment, duly executed and delivered by Borrowers, Guarantors and all of the Lenders then party to the Loan Agreement; and

(c)   the amendments set forth in Section 2(d) above shall not be effective until immediately after the consummation of the Nationwide Sale and Redemption and the satisfaction of each of the following conditions precedent (the date of such satisfaction, the “Second Amendment Effective Date”):

i. New Agent shall have received a counterpart of this Amendment, duly executed and delivered by Borrowers, Guarantors and all of the Lenders then party to the Loan Agreement.

ii. New Agent shall have received such other documents and certificates as New Agent or its counsel may reasonably request relating to the organization, existence and good standing of Obligors, the authorization of this Amendment and any other legal matters relating to any Obligor or the transactions contemplated hereby.

iii. On the Closing Date (as defined in the SPA), no Default or Event of Default shall have occurred and be continuing.

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iv. The Closing Date (as defined in the SPA) shall have occurred on or before the date that is one day after the date of this Amendment (or such later date agreed to by the New Agent) and, unless otherwise agreed by the New Agent, all proceeds of the Nationwide Sale and Redemption to be received by Countrywide on such Closing Date shall be remitted directly to the New Agent for application to the Obligations, with so much of such proceeds being applied to prepay the principal balance of the Term Loans then outstanding (other than $100,000 of Tranche A Term Loans), with any remainder applied to the Revolving Loans then outstanding until such Revolving Loans are paid in full.

v. The Nationwide Sale and Redemption is consummated on the terms and conditions of the unexecuted SPA delivered to the New Agent in final form without giving effect to any waivers, amendments, supplements or other modifications thereto unless such waivers, amendments, supplements or other modifications are approved by the Agent in writing.

vi. The Nationwide Sale and Redemption is consummated in accordance with all Applicable Laws, rules or regulations and all requisite approvals and consents (regulatory, governmental or otherwise) have been obtained.

vii. The receipt by New Agent of a certified true copy of the fully executed SPA (within 3 Business Days after the execution thereof or such later date as agreed by the New Agent), SPA Related Documents and other final, execution copies of the other documents, instruments and agreements executed in connection therewith or executed or to be executed in connection with the Nationwide Transaction, in each case, in form and substance reasonably satisfactory to New Agent and such other documents, instruments, agreements and opinions as the New Agent shall reasonably request.

viii. Prior to the Closing Date (as defined in the SPA), the Borrowers shall furnish to the Agents such other material documentation and information relating to the Nationwide Transaction, as reasonably requested by either Agent.

ix. All fees and expenses of counsel to Agent estimated to date shall have been paid in full (without prejudice to final settling of accounts for such fees and expenses).

Section 4.          ADDITIONAL AGREEMENT. Borrowers shall direct (and shall cause any related agreement to provide) that all proceeds to be received by or returned to any Obligor under or pursuant to any escrow agreement or escrow arrangement under or pursuant to the SPA to be remitted directly to the Dominion Account or such other Deposit Account acceptable to the Agent.

Section 5.          REPRESENTATIONS AND WARRANTIES.

(a)          In order to induce the Agents and the Lenders to enter into this Amendment, each Borrower represents and warrants to the Agents and the Lenders as follows:

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(i)          The representations and warranties made by such Borrower in Section 9 of the Loan Agreement are true and correct on and as of the date hereof, except to the extent that such representations and warranties expressly relate to an earlier date in which case such representations and warranties are true and correct on and as of such earlier date.

(ii)         No Default or Event of Default has occurred and is continuing or will exist after giving effect to this Amendment.

(b)          In order to induce the Agents and the Lenders to enter into this Amendment, each Borrower and each Guarantor represents and warrants to the Agents and the Lenders that (i) this Amendment has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation and (ii) the execution, delivery and performance by each Borrower of this Amendment (w) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or third party, except for (A) such as have been obtained or made and are in full force and effect or (B) the failure of which to obtain would not reasonably be expected to result in a Material Adverse Effect, (x) do not and will not violate any Applicable Law or the Organic Documents of such Borrower, except to the extent that such violation would not reasonably be expected to result in a Material Adverse Effect, (y) do not and will not violate or result in a default under any indenture or any other agreement, instrument or other evidence of Material Indebtedness, except to the extent that such default would not reasonably be expected to result in a Material Adverse Effect, and (z) do not and will not result in the creation or imposition of any Lien on any asset of any Obligor, except Liens created under the Loan Documents.

Section 6.          MISCELLANEOUS.

(a)         Ratification and Confirmation of Loan Documents. Each Borrower and each Guarantor hereby consents, acknowledges and agrees to the amendments set forth herein and hereby confirms and ratifies in all respects the Loan Documents to which such Person is a party (including without limitation, with respect to each Guarantor, the continuation of its payment and performance obligations under the guaranties set forth in Section 15 of the Loan Agreement upon and after the effectiveness of the amendments contemplated hereby and, with respect to each Borrower and each Guarantor, the continuation and extension of the liens granted under the Loan Agreement and Security Documents to secure the Obligations). Except as expressly set forth herein, neither this Amendment nor any release of Nationwide or any Liens on Nationwide assets (in each case, whether hereunder or by separate agreement, document or instrument) or under any separate agreement or document) (i) shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lenders, any Agent or the Obligors under the Loan Agreement or any other Loan Document, and (ii) shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Loan Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Without limiting the generality of the foregoing, the Security Documents and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Obligors under the Loan Documents, in each case, as amended by this Amendment. This Amendment shall for all purposes constitute a Loan Document.

(b)         Fees and Expenses. Borrowers shall pay on demand all reasonable costs and expenses of the Agents in connection with the preparation, reproduction, execution, and delivery of this Amendment and any other documents prepared in connection herewith, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agents.

5

(c)         Headings. Section and subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect.

(d)         Governing Law; Waiver of Jury Trial. This Amendment shall be governed by and construed in accordance with the laws of the State of New York, and shall be further subject to the provisions of Sections 14.13, 14.14 and 14.15 of the Loan Agreement.

(e)         Counterparts. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by facsimile, PDF format or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Amendment.

(f)         Notices. All communications and notices hereunder shall be given as provided in the Loan Agreement as amended hereby.

(g)         Entire Agreement. This Amendment, together with all the Loan Documents (collectively, the “Relevant Documents”), sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relating to such subject matter. No promise, condition, representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any party hereto, and no such party has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as otherwise expressly stated in the Relevant Documents, no representations, warranties or commitments, express or implied, have been made by any party to the other. None of the terms or conditions of this Amendment may be changed, modified, waived or canceled orally or otherwise except in a writing signed by Agent for such purpose.

(h)         Enforceability; Severability. Should any one or more of the provisions of this Amendment be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto. Any provision of this Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

(i)         Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of each Borrower, each Guarantor, each Agent, each Lender and their respective successors and assigns (subject to Section 13 of the Loan Agreement).

(j)         Guarantor Acknowledgement. Each Guarantor hereby: (i) consents to this Amendment and to the changes to the Loan Agreement to be effected by this Amendment; (ii) acknowledges that this Amendment does not in any way modify, limit, or release any of its obligations under the Loan Agreement; and (iii)  acknowledges that its consent to any other modification to any Loan Document will not be required as a result of the consent set forth in this Section 5 having been obtained, except to the extent, if any, required by the specific terms of that Loan Document.

[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

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The following parties have caused this Consent and Second Amendment to Amended and Restated Loan and Security Agreement to be executed as of the date first written above.

BORROWERS:
P&F INDUSTRIES, INC.
FLORIDA PNEUMATIC MANUFACTURING
CORPORATION
HY-TECH MACHINE, INC.
ATSCO HOLDINGS CORPORATION
NATIONWIDE INDUSTRIES, INC.
By:	/s/ Joseph A. Molino, Jr.
Name:	Joseph A. Molino, Jr.
Title:	Vice President
GUARANTORS:
CONTINENTAL TOOL GROUP, INC.
COUNTRYWIDE HARDWARE, INC.
EMBASSY INDUSTRIES, INC.
GREEN MANUFACTURING, INC.
PACIFIC STAIR PRODUCTS, INC.
EXHAUST TECHNOLOGIES, INC.
WILP HOLDINGS, INC.
By:	/s/ Joseph A. Molino, Jr.
Name:	Joseph A. Molino, Jr.
Title:	Vice President
WOODMARK INTERNATIONAL, L.P.
By:	Countrywide Hardware, Inc.
By:	/s/ Joseph A. Molino, Jr.
Name:	Joseph A. Molino, Jr.
Title:	Vice President

CONSENT AND SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Signature Page

AGENT AND LENDERS:
CAPITAL ONE BUSINESS CREDIT CORPORATION, as Resigning Agent and assigning Lender
By:	/s/ Julianne Low
Name:	Julianne Low
Title:	Senior Director
CAPITAL ONE, NATIONAL ASSOCIATION, as successor Agent and assuming Lender
By:	/s/ Julianne Low
Name:	Julianne Low
Title:	Senior Director

CONSENT AND SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Signature Page

Execution Copy

EXHIBIT A TO CONSENT AND SECOND AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

P&F INDUSTRIES, INC.,

FLORIDA PNEUMATIC MANAFUACTURING CORPORATION,

HY-TECH MACHINE, INC.,

and

ATSCO HOLDINGS CORPORATION,

and

NATIONWIDE INDUSTRIES, INC., as Borrowers,

CONTINENTAL TOOL GROUP, INC.,

COUNTRYWIDE HARDWARE, INC.,

EMBASSY INDUSTRIES, INC.,
GREEN MANUFACTURING, INC.,

PACIFIC STAIR PRODUCTS, INC.,

WILP HOLDINGS, INC.,

EXHAUST TECHNOLOGIES, INC.,

and

WOODMARK INTERNATIONAL, L.P.,

as Guarantors,

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Dated as of August 13, 2014

$33,656,758.4011,600,000.00

CERTAIN FINANCIAL INSTITUTIONS,

as Lenders

and

CAPITAL ONE BUSINESS CREDIT CORPORATION, NATIONAL ASSOCIATION,

as Agent

TABLE OF CONTENTS

		Page
SECTION 1.	DEFINITIONS; RULES OF CONSTRUCTION	2
1.1	Definitions	2
1.2	Accounting Terms	30
1.3	Uniform Commercial Code	30
1.4	Certain Matters of Construction	30
SECTION 2.	CREDIT FACILITIES	31
2.1	Revolver Commitment	31
2.2	Term Loan Commitment	32
2.3	Letter of Credit Facility	34
SECTION 3.	INTEREST, FEES AND CHARGES	37
3.1	Interest	37
3.2	Fees	38
3.3	Computation of Interest, Fees, Yield Protection	38
3.4	Reimbursement Obligations	39
3.5	Illegality	39
3.6	Inability to Determine Rates	39
3.7	Increased Costs; Capital Adequacy	40
3.8	Mitigation	41
3.9	Funding Losses	41
3.10	Maximum Interest	41
SECTION 4.	LOAN ADMINISTRATION	41
4.1	Manner of Borrowing and Funding Revolver Loans	41
4.2	Defaulting Lender	43
4.3	Number and Amount of LIBOR Loans; Determination of Rate	43
4.4	Borrower Agent	43
4.5	One Obligation	44
4.6	Effect of Termination	44
SECTION 5.	PAYMENTS	44
5.1	General Payment Provisions	44
5.2	Repayment of Revolver Loans	44
5.3	Repayment of Term Loans	45
5.4	Payment of Other Obligations	46

-i-

TABLE OF CONTENTS

(continued)

		Page
5.5	Marshaling; Payments Set Aside	46
5.6	Post-Default Allocation of Payments	46
5.7	Application of Payments	47
5.8	Loan Account; Account Stated	47
5.9	Taxes	48
5.10	Lender Tax Information	48
5.11	Nature and Extent of Each Borrower’s Liability	49
SECTION 6.	CONDITIONS PRECEDENT	51
6.1	Conditions Precedent to Initial Loans	51
6.2	Conditions Precedent to All Credit Extensions	52
SECTION 7.	COLLATERAL	53
7.1	Grant of Security Interest	53
7.2	Lien on Deposit Accounts; Cash Collateral	54
7.3	Real Estate Collateral	54
7.4	Investment Property and other Equity Interests	55
7.5	Other Collateral; New Subsidiaries	55
7.6	No Assumption of Liability	56
7.7	Further Assurances	56
7.8	Foreign Subsidiary Stock	57
SECTION 8.	COLLATERAL ADMINISTRATION	57
8.1	Borrowing Base Certificates	57
8.2	Administration of Accounts	57
8.3	Administration of Inventory	58
8.4	Administration of Equipment	58
8.5	Administration of Deposit Accounts	59
8.6	General Provisions	59
8.7	Power of Attorney	61
SECTION 9.	REPRESENTATIONS AND WARRANTIES	61
9.1	General Representations and Warranties	61
9.2	Complete Disclosure	66
SECTION 10.	COVENANTS AND CONTINUING AGREEMENTS	66
10.1	Affirmative Covenants	66

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TABLE OF CONTENTS

(continued)

		Page
10.2	Negative Covenants	69
10.3	Financial Covenants	73
SECTION 11.	EVENTS OF DEFAULT; REMEDIES ON DEFAULT	74
11.1	Events of Default	74
11.2	Remedies upon Default	75
11.3	License	76
11.4	Setoff	76
11.5	Remedies Cumulative; No Waiver	77
SECTION 12.	AGENT	77
12.1	Appointment, Authority and Duties of Agent	77
12.2	Agreements Regarding Collateral and Field Examination Reports	78
12.3	Reliance By Agent	79
12.4	Action Upon Default	79
12.5	Ratable Sharing	79
12.6	Indemnification of Agent Indemnitees	80
12.7	Limitation on Responsibilities of Agent	80
12.8	Successor Agent and Co-Agents	80
12.9	Due Diligence and Non-Reliance	81
12.10	Replacement of Certain Lenders	81
12.11	Remittance of Payments and Collections	81
12.12	Agent in its Individual Capacity	82
12.13	Agent Titles	82
12.14	Bank Product Providers	82
12.15	No Third Party Beneficiaries	82
SECTION 13.	BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS	83
13.1	Successors and Assigns	83
13.2	Participations	83
13.3	Assignments	83
SECTION 14.	MISCELLANEOUS	84
14.1	Consents, Amendments and Waivers	84
14.2	Indemnity	85
14.3	Notices and Communications	85

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TABLE OF CONTENTS

(continued)

		Page
14.4	Performance of Borrowers’ Obligations	86
14.5	Credit Inquiries	86
14.6	Severability	86
14.7	Cumulative Effect; Conflict of Terms	86
14.8	Counterparts	86
14.9	Entire Agreement	86
14.10	Relationship with Lenders	86
14.11	No Control; No Advisory or Fiduciary Responsibility	87
14.12	Confidentiality	87
14.13	GOVERNING LAW	87
14.14	Consent to Forum	88
14.15	Waivers by Obligors	88
14.16	Patriot Act Notice	88
SECTION 15.	GUARANTY OF OBLIGATIONS	88
15.1	Guaranty; Limitation of Liability	88
15.2	Guaranty Absolute	89
15.3	Waivers and Acknowledgments	91
15.4	Subrogation	92

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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated as of August 13, 2014 (this “Agreement”), among P&F INDUSTRIES, INC., a Delaware corporation (“P&F”), FLORIDA PNEUMATIC MANAFUACTURING CORPORATION, a Florida corporation (“Florida Pneumatic”), HY-TECH MACHINE, INC., a Delaware corporation (“Hy-Tech”), and ATSCO HOLDINGS CORPORATION, a Delaware corporation (“ATSCO”), and NATIONWIDE INDUSTRIES, INC., a Florida corporation (“Nationwide”, and together with P&F, Florida Pneumatic and Hy-Tech and ATSCO, collectively, “Borrowers” and each, a “Borrower”), CONTINENTAL TOOL GROUP, INC., a Delaware corporation (“Continental”), COUNTRYWIDE HARDWARE, INC., a Delaware corporation (“Countrywide”), EMBASSY INDUSTRIES, INC., a New York corporation (“Embassy”), GREEN MANUFACTURING, INC., a Delaware corporation (“Green”), PACIFIC STAIR PRODUCTS, INC., a Delaware corporation (“Pacific”), WILP HOLDINGS, INC., a Delaware corporation (“WILP”), EXHAUST TECHNOLOGIES, INC., a Delaware corporation, and WOODMARK INTERNATIONAL, L.P., a Delaware limited partnership (“Woodmark”, and together with Continental, Countrywide, Embassy, Green, Pacific and WILP, collectively, “Guarantors” and each, a “Guarantor”) the financial institutions party to this Agreement from time to time as lenders (collectively, “Lenders”), and CAPITAL ONE BUSINESS CREDIT CORPORATION, a New York corporation, NATIONAL ASSOCIATION, a national banking association, as agent for the Lenders (“Agent”).

RECITALS:

A.           Reference is hereby made to that certain Loan and Security Agreement, dated as of October 25, 2010 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “Existing Agreement”), by and among the Borrowers and Guarantors party thereto, the Lenders (as defined therein) and the Agent;

B.           The Borrowers, the Lenders and the Administrative Agent have agreed to enter into this Agreement in order to (i) amend and restate the Existing Agreement in its entirety; (ii) re-evidence the “Obligations” under, and as defined in, the Existing Agreement, which shall be repayable in accordance with the terms of this Agreement; and (iii) set forth the terms and conditions under which the existing Loans shall be re-evidenced as Loans (as defined below) owing to the Lenders under this Agreement on a Pro Rata basis;

C.           It is the intent of the parties hereto that this Agreement not constitute a novation of the obligations and liabilities of the parties under the Existing Agreement or be deemed to evidence or constitute full repayment of such obligations and liabilities, but that this Agreement amend and restate in its entirety the Existing Agreement and re-evidence the obligations and liabilities of the Obligors outstanding thereunder, which shall be payable in accordance with the terms hereof; and

D.           It is also the intent of the Borrowers and Guarantors to confirm that all obligations under the Existing Agreement and the “Loan Documents” (as referred to and defined in the Existing Agreement) shall continue in full force and effect but only as modified and/or restated hereby and that, from and after the Restatement Effective Date, all references to the “Agreement” contained in any such existing “Loan Documents” shall be deemed to refer to this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree that the Existing Agreement is hereby amended and restated as follows

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NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties agree as follows:

SECTION 1.          DEFINITIONS; RULES OF CONSTRUCTION

1.1           Definitions. As used herein, the following terms have the meanings set forth below:

Account: as defined in the UCC, including all rights to payment for goods sold or leased, or for services rendered.

Account Debtor: a Person who is obligated under an Account, Chattel Paper or General Intangible.

Accounts Formula Amount: 85% of the Value of Eligible Accounts.

Acquisition: any transaction or series of related transactions resulting in the (a) acquisition of all or substantially all of the Property or business of any Person, or of any business unit, line of business or division of any Person or Property constituting a business unit, line of business or division of any other Person, (b) acquisition of in excess of 50% of the Equity Interests of any Person or otherwise causing a person to become a Subsidiary of the acquiring Person, or (c) merger, consolidation, amalgamation or other combination, whereby a Person becomes a Subsidiary of the acquiring Person.

Adjusted EBITDA: for any period, with respect to the Obligors on a consolidated basis, net income (as that term is determined in accordance with GAAP) for such period, plus:

(a)          without duplication and to the extent already deducted (and not added back) in arriving at such consolidated net income, the sum of the following amounts for such period:

(i)          the amount of depreciation and amortization of fixed and intangible assets deducted in determining such net income for such period;

(ii)         all interest expense and all fees for the use of money or the availability of money, including commitment, facility and like fees and charges upon indebtedness (including Debt to Agent and Lenders) paid or payable during such period;

(iii)        all tax liabilities paid or accrued during such period;

(iv)        non-cash compensation charges and expenses including, but limited to, charges and expenses related to the management incentive plans and employee bonus plans (to the extent deducted in determining net income for such period);

(v)         any non-cash charges related to impairment of intangible assets;

(vi)        other non-cash charges;

minus (b)          without duplication and to the extent included in arriving at such consolidated net income, the following amounts for such period:

(i)          the amount of all gains realized during such period upon the sale or other disposition of property or assets that are sold or otherwise disposed of outside the Ordinary Course of Business and any income for such period attributable to the early extinguishment of Debt;

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(ii)         all other non-cash gains or extraordinary non-recurring income added in determining consolidated net income.

Notwithstanding the above, no more than 10% of Adjusted EBITDA shall be attributable to Universal.

Affiliate: with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have correlative meanings.

Agent Indemnitees: Agent and its officers, directors, employees, Affiliates, agents and attorneys.

Agent Professionals: attorneys, accountants, appraisers, auditors, business valuation experts, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Agent.

Allocable Amount: as defined in Section 5.11.3.

Anti-Terrorism Laws: any laws relating to terrorism or money laundering, including OFAC requirements and the Patriot Act.

Applicable Law: all laws, rules, regulations and governmental guidelines applicable to the Person, conduct, transaction, agreement or matter in question, including all applicable statutory law, common law and equitable principles, and all provisions of constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental Authorities.

Applicable Margin: (a) with respect to Tranche A Term Loans, (i) 2.000.50% with respect to Base Rate Term Loans and (ii) 3.001.50% with respect to LIBOR Term Loans; (b) with respect to Tranche B TermCapex Loans, (i) 2.250.50% with respect to Base Rate TermCapex Loans and (ii) 3.251.50% with respect to LIBOR TermCapex Loans; and (c) with respect to Capex Loans, (i) 2.00% with respect to Base Rate Capex Loans and (ii) 3.00% with respect to LIBOR Capex Loans; and (d) with respect to Revolver Loans, the marginmargins set forth below, as determined by the Leverage Ratio for the Measurement Period ending as of the most recently ended month:

Level	[Leverage Ratio]	Base Rate Revolver Loans	LIBOR Revolver Loans
I	> 2.50 to 1.00	1.501.00%	2.502.00%
II	> 2.00 to 1.00 and < 2.50 to 1.00	1.250.75%	2.251.75%
III	>1.40 to 1.00 and < 2.00 to 1.00	1.000.50%	2.001.50%
IV	>1.10 to 1.00 and < 1.40 to 1.00	0.75%	1.75%
V	< 1.10 to 1.00	0.50%	1.50%

The margins shall be subject to increase or decrease upon receipt by Agent pursuant to Section 10.1.2 of the financial statements and corresponding Compliance Certificate for the last month, which change shall be effective on the first day of the calendar month following receipt; provided, however, that Level IVIII shall apply at any time prior to Agent’s receipt pursuant to Section 10.1.2 of the financial statements and corresponding Compliance Certificate for the month ending June 30, 2014.March 31, 2016. If, by the first day of a month, any financial statements and Compliance Certificate due in the preceding month have not been received, then, at the option of Agent or Required Lenders, the margins shall be determined as if Level I were applicable, from such day until the first day of the calendar month following actual receipt.

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Approved Fund: any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in its ordinary course of activities, and is administered or managed by a Lender, an entity that administers or manages a Lender, or an Affiliate of either.

Asset Disposition: a sale, lease, license, consignment, transfer or other disposition of Property of an Obligor, including a disposition of Property in connection with a sale-leaseback transaction or synthetic lease.

Assignment and Acceptance: an assignment agreement between a Lender and Eligible Assignee, in the form of Exhibit C.

ATSCO Acquisition: the Acquisition by ATSCO of all or substantially all of the assets of Air Tool Services Company, an Ohio corporation, pursuant to the ATSCO Purchase Agreement.

ATSCO Purchase Agreement: the Asset Purchase Agreement dated as of August 13, 2014 by and among Air Tool Services Company as seller, ATSCO as buyer and Hy-Tech with respect to the ATSCO Acquisition.

Availability: the Borrowing Base minus the principal balance of all Revolver Loans and Tranche A Term Loans.

Availability Reserve: the sum (without duplication of any other Reserve or items that are otherwise addressed or excluded through eligibility criteria) of (a) the Rent and Charges Reserve; (b) the LC Reserve; (c) the Bank Product Reserve; and (d) the aggregate amount of liabilities at any time (i) secured by Liens upon Collateral that are senior to Agent’s Liens or (ii) for which Agent and Lenders may be obligated to third parties in connection with this Agreement for which claims may be reasonably expected to be asserted against the Collateral, Agent or Lenders (but imposition of any such reserve shall not waive an Event of Default arising therefrom).

Bank Product: any of the following products, services or facilities extended to any Obligor or Subsidiary by a Lender or any of its Affiliates: (a) Cash Management Services; (b) products under Hedging Agreements; (c) commercial credit card and merchant card services; and (d) other banking products or services as may be requested by any Borrower or other Obligor, other than Letters of Credit.

Bank Product Debt: Debt and other obligations of an Obligor relating to Bank Products.

Bank Product Reserve: the aggregate amount of reserves established by Agent from time to time in its reasonable discretion in respect of Secured Bank Product Obligations.

Bankruptcy Code: Title 11 of the United States Code.

Base Rate: for any day, a per annum rate equal to the greatest of (a) the Prime Rate for such day; (b) the annualized rate for 90-day dealer commercial paper which normally appears in the “Money Rates” section of The Wall Street Journal; and (c) LIBOR for a 30 day interest period as determined on such day, plus 1.00 %.

Base Rate Capex Loan: a Capex Loan that bears interest based on the Base Rate.

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Base Rate Loan: any Loan that bears interest based on the Base Rate.

Base Rate Revolver Loan: a Revolver Loan that bears interest based on the Base Rate.

Base Rate Term Loan: a Term Loan that bears interest based on the Base Rate.

Beneficial Owner: without duplication, any Person who, directly or indirectly, through any contract, arrangement, understanding relationship or otherwise has or shares (a) voting power, which includes the power to vote, or to direct the voting of, such security; and/or (b) investment power, which includes the power to dispose, or to direct the disposition, of such security.

Board of Governors: the Board of Governors of the Federal Reserve System.

Borrowed Money: with respect to any Obligor, without duplication, its (a) Debt that (i) arises from the lending of money by any Person to such Obligor, (ii) is evidenced by notes, drafts, bonds, debentures, credit documents or similar instruments, (iii) accrues interest or is a type upon which interest charges are customarily paid (excluding trade payables owing in the Ordinary Course of Business), or (iv) was issued or assumed as full or partial payment for Property; (b) Capital Leases; (c) reimbursement obligations with respect to letters of credit; and (d) guaranties of any Debt of the foregoing types owing by another Person.

Borrower Agent: as defined in Section 4.4.

Borrowing: a group of Loans of one Type that are made on the same day or are converted into Loans of one Type on the same day.

Borrowing Base: on any date of determination, an amount equal to the lesser of (a) the aggregate amount of Revolver Commitments, minus the Availability Reserve, and (b) the sum of the Accounts Formula Amount, plus the Inventory Formula Amount, plus the Equipment Formula Amount, minus the Borrowing Base Reserve.

Borrowing Base Certificate: a certificate, in form and substance satisfactory to Agent, by which Borrowers certify calculation of the Borrowing Base.

Borrowing Base Reserve: the sum (without duplication of any other Reserve or items that are otherwise addressed or excluded through eligibility criteria) of (a) the Inventory Reserve; (b) the Rent and Charges Reserve; (c) the LC Reserve; (d) the Bank Product Reserve; (e) the Dilution Reserve; (f) the aggregate amount of liabilities secured by Liens upon Revolving Credit Collateral that are senior in priority to Agent’s Liens (but imposition of any such reserve shall not waive an Event of Default arising therefrom); and (g) such additional reserves, in such amounts and with respect to such matters, as Agent in its reasonable credit judgment exercised in good faith may elect to impose from time to time.

Business Day: any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, New York, and if such day relates to a LIBOR Loan, any such day on which dealings in Dollar deposits are conducted between banks in the London interbank Eurodollar market.

Capex Loan: a term loan made pursuant to Section 2.2B.

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Capex Loan Commitment: for any Lender, its obligation to make Capex Loans up to the maximum principal amount shown on Schedule 1.1, or as hereafter determined pursuant to each Assignment and Acceptance to which it is a party.

Capex Loan Commitments: means the aggregate amount of such commitments of all Lenders in an aggregate amount up to $2,123,425.1,600,000.

Capex Loan Note: a promissory note to be executed by Borrowers in favor of a Lender in the form of Exhibit B-2, which shall be in the amount of such Lender’s Capex Loan Commitment and shall evidence the Capex Loans made by such Lender.

Capex Loan Termination Date: the earliest to occur of (a) December 19, 2017[January __, 2019]; (b) the date on which Borrowers terminate the Revolver Commitments pursuant to Section 2.1.4; and (c) the date on which the Capex Loan Commitments are terminated pursuant to Section 11.2.

Capital Expenditures: without duplication, all liabilities incurred, expenditures made or payments due (whether or not made) by a Borrower or Subsidiary for the acquisition of any fixed assets, or any improvements, replacements, substitutions or additions thereto with a useful life of more than one year, including the principal portion of Capital Leases.

Capital Lease: any lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

Capital One: Capital One, N.A.National Association, a national banking association, and its successors and assigns.

Capital One Indemnitees: Capital One and its officers, directors, employees, Affiliates, agents and attorneys.

Cash Collateral: cash and Cash Equivalents, and any interest or other income earned thereon, that is delivered to Agent to Cash Collateralize any Obligations.

Cash Collateral Account: a demand deposit, money market or other account with Agent or an Affiliate of Agent, which account shall be subject to Agent’s Liens for the benefit of Secured Parties.

Cash Collateralize: the delivery of cash to Agent, as security for the payment of Obligations, in an amount equal to (a) with respect to LC Obligations, 105% of the aggregate LC Obligations, and (b) with respect to any inchoate, contingent or other Obligations (including Secured Bank Product Obligations), Agent’s good faith estimate of the amount due or to become due, including all fees contracted for and other amounts relating to such Obligations. “Cash Collateralization” has a correlative meaning.

Cash Equivalents: (a) marketable obligations issued or unconditionally guaranteed by, and backed by the full faith and credit of, the United States government, maturing within 12 months of the date of acquisition; (b) certificates of deposit, time deposits and bankers’ acceptances maturing within 12 months of the date of acquisition, and overnight bank deposits, in each case which are issued by Capital One or a commercial bank organized under the laws of the United States or any state or district thereof, rated A-1 (or better) by S&P or P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a Lender) not subject to offset rights; (c) repurchase obligations with a term of not more than 30 days for underlying investments of the types described in clauses (a) and (b) entered into with any bank meeting the qualifications specified in clause (b); (d) commercial paper issued by Capital One or rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of the date of acquisition; and (e) shares of any money market fund that has substantially all of its assets invested continuously in the types of investments referred to above, has net assets of at least $500,000,000 and has the highest rating obtainable from either Moody’s or S&P.

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Cash Management Services: any services provided from time to time by Capital One, N.A. or any of its Affiliates to any Obligor or Subsidiary in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, including automated clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, lockbox and stop payment services.

CERCLA: the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. § 9601 et seq.).

Change in Law: the occurrence, after the date hereof, of (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority; or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

Change of Control: (a) P&F ceases to own and control, beneficially and of record, directly or indirectly, all Equity Interests in all other Obligors (other than Immaterial Subsidiaries); (b) the Horowitz Percentage is less than twenty-five percent (25%); (c) the current Board of Directors of P&F, or any of them, together with any director approved or nominated by the then majority of the Board of Directors of P&F, or any of them, does not constitute a majority of the Board of Directors of P&F; (d) all or substantially all of any Borrower’s assets are sold or transferred, other than sale or transfer to another Borrower; or (e) Richard A. Horowitz at any time ceases to be the chief executive officer of P&F, whether because of death, disability or otherwise, unless the replacement chief executive officer of P&F appointed by the Board of Directors of P&F within 120 days is reasonably acceptable to Agent and Required Lenders.

Claims: all liabilities, obligations, losses, damages, penalties, judgments, proceedings, interest, costs and expenses of any kind (including remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses) at any time (including after Full Payment of the Obligations, resignation or replacement of Agent, or replacement of any Lender) incurred by or asserted against any Indemnitee in any way relating to (a) any Loans, Letters of Credit, Loan Documents, or the use thereof or transactions relating thereto, (b) any action taken or omitted to be taken by any Indemnitee in connection with any Loan Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) failure by any Obligor to perform or observe any terms of any Loan Document, in each case including all costs and expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate proceedings), whether or not the applicable Indemnitee is a party thereto.

Closing Date: as defined in Section 6.1.

Code: the Internal Revenue Code of 1986.

Collateral: all Property described in Section 7.1, all Property described in any Security Documents as security for any Obligations, and all other Property that now or hereafter secures (or is intended to secure) any Obligations.

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Commitment: for any Lender, the aggregate amount of such Lender’s Revolver Commitment, Term Loan Commitment and Capex Loan Commitment. “Commitments” means the aggregate amount of all Revolver Commitments, Term Loan Commitments and Capex Loan Commitments.

Commitment Termination Date: the earliest to occur of (a) the Revolver Termination Date; (b) the date on which Borrowers terminate the Revolver Commitments pursuant to Section 2.1.4; or (c) the date on which the Revolver Commitments are terminated pursuant to Section 11.2.

Commodity Exchange Act: means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

Compliance Certificate: a certificate, in form and substance satisfactory to Agent, by which Borrowers (i) certify compliance with as to whether a Default or Event of Default has occurred and, if a Default or Event of Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) set forth reasonably detailed calculations of the Leverage Ratio and Fixed Charge Coverage Ratio (whether or not a Covenant Trigger Period then exists) and, to the extent then applicable, certify compliance with the provisions of Sections 10.2.3 and 10.3,10.3 and (iiiii) calculate the applicable Level for the Applicable Margin and (iii) with the financial statements required under Section 10.1.2(a) and (b) with respect to a Fiscal Quarter or Fiscal Year end, calculate Excess Cash Flow for purposes of Section 5.3.2(a).

Contingent Obligation: any obligation of a Person arising from a guaranty, indemnity or other assurance of payment or performance of any Debt, lease, dividend or other obligation (“primary obligations”) of another obligor (“primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person under any (a) guaranty, endorsement, co-making or sale with recourse of an obligation of a primary obligor; (b) obligation to make take-or-pay or similar payments regardless of nonperformance by any other party to an agreement; and (c) arrangement (i) to purchase any primary obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary obligation, (iii) to maintain or assure working capital, equity capital, net worth or solvency of the primary obligor, (iv) to purchase Property or services for the purpose of assuring the ability of the primary obligor to perform a primary obligation, or (v) otherwise to assure or hold harmless the holder of any primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be the stated or determinable amount of the primary obligation (or, if less, the maximum amount for which such Person may be liable under the instrument evidencing the Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto.

Countrywide Lease: that certain lease agreement dated as of April 29, 2010 by and between Countrywide, as landlord, and Purification Technologies, Inc., as tenant, as heretofore modified, supplemented or amended.

Covenant Trigger Period: the period (a) commencing on the day Availability is less than $2,000,000 at any time; and (b) continuing until, during the preceding 30 consecutive days, no Event of Default has existed and Availability has been greater than $2,000,000 at all times.

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

Debt: as applied to any Person, without duplication, (a) all items that would be included as liabilities on a balance sheet in accordance with GAAP, including Capital Leases, but excluding accrued expenses and trade payables incurred and being paid in the Ordinary Course of Business; (b) all Contingent Obligations; (c) all reimbursement obligations in connection with letters of credit issued for the account of such Person; and (d) in the case of an Obligor, the Obligations. The Debt of a Person shall include any recourse Debt of any partnership in which such Person is a general partner or joint venturer (other than the discontinued operations of WMC).

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Default: an event or condition that, with the lapse of time or giving of notice, would constitute an Event of Default.

Default Rate: for any Obligation (including, to the extent permitted by law, interest not paid when due), 2% plus the interest rate otherwise applicable thereto.

Defaulting Lender: any Lender that (a) fails to make any payment or provide funds to Agent or any Borrower as required hereunder or fails otherwise to perform its obligations under any Loan Document, and such failure is not cured within one Business Day, (b) has notified a Borrower, Agent or any Lender that it does not intend to comply with its funding obligations or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by Agent, to confirm in a manner satisfactory to Agent that it will comply with its funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of an Insolvency Proceeding, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority.

Deposit Account Control Agreements: the Deposit Account control agreements to be executed by each institution maintaining a Deposit Account (including the Dominion Account) for an Obligor, in favor of Agent, for the benefit of Secured Parties, as security for the Obligations.

Derivative Security: the right to become the Beneficial Owner of any Equity Interest, including any right to acquire such Equity Interest (a) through the exercise of any option, warrant or right or similar arrangement; (b) through the conversion of a security or similar arrangement; (c) pursuant to the power to revoke a trust, discretionary account or similar arrangement; or (d) pursuant to the automatic termination of a trust, discretionary account or similar arrangement.

Designated Jurisdiction: any country or territory that is the subject of any Sanction.

Dilution Percent: the percent, determined for Borrowers’ most recent Fiscal Quarter, equal to (a) bad debt write-downs or write-offs, discounts, returns, promotions, credits, credit memos and other dilutive items with respect to Accounts, divided by (b) gross sales.

Dilution Reserve: at any date of determination, the percentage amount by which the Dilution Percent exceeds 5% (rounded up to the nearest whole number) times the amount of Eligible Accounts of the Borrowers.

Distribution: any declaration or payment of a distribution, interest or dividend on any Equity Interest of an Obligor (other than payment-in-kind); any distribution, loan, management fee, advance or repayment of Debt to a holder of Equity Interests of an Obligor or of an Affiliate of an Obligor; or any purchase, redemption, or other acquisition or retirement for value of any Equity Interest of an Obligor or an Affiliate of an Obligor.

Dividend: as defined in Section 7.4.3.

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Dollars: lawful money of the United States.

Dominion Account: a special account established by Borrowers at Capital One, over which Agent has exclusive control for withdrawal purposes.

Eligible Account: an Account owing to a Borrower that arises in the Ordinary Course of Business from the sale of goods, is payable in Dollars and is deemed by Agent, in its reasonable discretion, to be an Eligible Account. Without limiting the foregoing, no Account shall be an Eligible Account if (a)(i) with respect to Accounts from Sears Holdings Corp., it is unpaid for more than 30 days after the original due date, or more than 120 days after the original invoice date, and (ii) with respect to all other Accounts, it is unpaid for more than 60 days after the original due date; (b) Accounts representing 50% or more of all amounts owing by the Account Debtor thereon are not Eligible Accounts under the foregoing clause; (c) when aggregated with other Accounts owing by the Account Debtor, (i) with respect to Accounts from Sears Holdings Corp., it exceeds (A) so long as Sears Holdings Corp. is rated CCC+ (or better) by S&P (secured bank facility rating category), 4030% of the aggregate Eligible Accounts during the period of September 1 through November 30 of each year or (B) 3525% of the aggregate Eligible Accounts during all other times, (ii) with respect to Accounts from The Home Depot, Inc., it exceeds (A) so long as The Home Depot, Inc. is rated BBB- (or better) by S&P, 40% of the aggregate Eligible Accounts, (B) so long as The Home Depot, Inc. is rated BB+ by S&P, 25% of the aggregate Eligible Accounts, and (C) so long as The Home Depot, Inc. is rated BB- (or lower) by S&P, 20% of the aggregate Eligible Accounts, and (iii) with respect to all other Accounts, 20% of the aggregate Eligible Accounts (or such higher percentage as Agent may establish for the Account Debtor from time to time); (d) it does not conform with a covenant or representation herein; (e) it is owing by a creditor or supplier, or is otherwise subject to an offset, counterclaim, dispute, deduction, discount, recoupment, reserve, defense, chargeback, credit or allowance (but ineligibility shall be limited to the amount thereof); (f) an Insolvency Proceeding has been commenced by or against the Account Debtor; or the Account Debtor has failed, has suspended or ceased doing business, is liquidating, dissolving or winding up its affairs, is not Solvent, or is subject to Sanctions or any specially designated nationals list maintained by OFAC; or the Borrower is not able to bring suit or enforce remedies against the Account Debtor through judicial process; (g) the Account Debtor is organized or has its principal offices or assets outside the United States or Canada; (h) it is owing by a Government Authority, unless the Account Debtor is the United States or any department, agency or instrumentality thereof and the Account has been assigned to Agent in compliance with the Assignment of Claims Act; (i) it is not subject to a duly perfected, first priority Lien in favor of Agent, or is subject to any other Lien except Permitted Liens permitted by Section 10.2.2(c); (j) the goods giving rise to it have not been delivered to and accepted by the Account Debtor, the services giving rise to it have not been accepted by the Account Debtor, or it otherwise does not represent a final sale; (k) it is evidenced by Chattel Paper or an Instrument of any kind, or has been reduced to judgment; (l) its payment has been extended, the Account Debtor has made a partial payment, or it arises from a sale on a cash-on-delivery basis; (m) it arises from a sale to an Affiliate, from a sale on a bill-and-hold, guaranteed sale, sale or return, sale on approval, consignment, or other repurchase or return basis, or from a (direct) sale to a Person for personal, family or household purposes; (n) it represents a progress billing or retainage, or relates to services for which a performance, surety or completion bond or similar assurance has been issued; or (o) it includes a billing for interest, fees or late charges, but ineligibility shall be limited to the extent thereof. In calculating delinquent portions of Accounts under clauses (a) and (b), credit balances more than 90 days old will be excluded.

Eligible Assignee: a Person that is (a) a Lender, U.S.-based Affiliate of a Lender or Approved Fund; (b) any other financial institution approved by Agent and Borrower Agent (which approval by Borrower Agent shall not be unreasonably withheld or delayed, and shall be deemed given if no objection is made within five Business Days after notice of the proposed assignment), that is organized under the laws of the United States or any state or district thereof, has total assets in excess of $5 billion, extends asset-based lending facilities in its ordinary course of business and whose becoming an assignee would not constitute a prohibited transaction under Section 4975 of the Code or any other Applicable Law; and (c) during any Event of Default, any Person acceptable to Agent in its discretion. None of the Obligors or any Affiliates of any Obligor shall be Eligible Assignees.

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Eligible Equipment: Equipment that is owned by a Borrower and that Agent, in its reasonable discretion, deems to be Eligible Equipment. Without limiting the foregoing, no Equipment shall be Eligible Equipment unless it (a) is in good condition and is not damaged, defective, shopworn or otherwise unfit for use and has not been subject to loss or condemnation; (b) is not obsolete or unmerchantable; (c) meets all standards imposed by any Governmental Authority, and does not constitute hazardous materials under any Environmental Law; (d) conforms with the covenants and representations herein; (e) is subject to Agent’s duly perfected, first priority Lien, and no other Lien; (f) is within the continental United States, is not in transit except between locations of Borrowers, and is not consigned to any Person; (g) is not subject to any warehouse receipt or negotiable Document; (h) is not subject to any License or other arrangement that restricts such Borrower’s or Agent’s right to dispose of such Equipment, unless Agent has received an appropriate Lien Waiver; and (i) is not located on leased premises or in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person, unless the lessor or such Person has delivered a Lien Waiver or an appropriate Rent and Charges Reserve has been established.

If at any time any Equipment included in the Borrowing Base ceases to be owned by a Borrower by reason of a sale or disposition thereof or otherwise or is affected by a material casualty, such Equipment shall be excluded from the Borrowing Base and the Equipment Formula Amount shall be reduced by the NOLV of such Equipment. Such reduction shall be permanent unless such Equipment is replaced by new Eligible Equipment, or any such Equipment affected by a casualty is fully restored to the condition it was in prior to such casualty, within twelve months after such removal from the Borrowing Base. If Equipment removed from the Borrowing Base by the operation of this paragraph is replaced by new Eligible Equipment, the Equipment Formula Amount (after giving effect to the reduction thereof by the NOLV of the replaced Equipment) shall be increased by the lesser of (i) the NOLV of the Equipment replaced by such new Eligible Equipment and (ii) the NOLV of such new Eligible Equipment.

Eligible In-Transit Inventory: Inventory owned by a Borrower that would be Eligible Inventory if it were not subject to a Document and in transit from a foreign location to a location of the Borrower within the United States, with respect to which the Borrower maintains accurate and complete accounting and other records in form satisfactory to Agent and that Agent, in its reasonable discretion, deems to be Eligible In-Transit Inventory. Without limiting the foregoing, no Inventory shall be Eligible In-Transit Inventory unless it (a) is subject to a Document showing Agent (or, with the consent of Agent, another Person acceptable to Agent) as consignee, which Document is in the possession of Agent or such other Person as Agent shall approve; (b) is fully insured in a manner satisfactory to Agent; (c) has been identified to the applicable sales contract and title has passed to the Borrower; (d) is not sold by a vendor that has a right to reclaim, divert shipment of, repossess, stop delivery, claim any reservation of title or otherwise assert Lien rights against the Inventory, or with respect to whom any Borrower is in default of any obligations; (e) is subject to purchase orders and other sale documentation satisfactory to Agent; (f) is shipped by a common carrier that is not affiliated with the vendor and is not subject to Sanctions or any specially designated nationals list maintained by OFAC; and (g) is being handled by a customs broker, freight-forwarder or other handler that has delivered a Lien Waiver.

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Eligible Inventory: Inventory that is owned by a Borrower and that Agent, in its reasonable discretion, deems to be Eligible Inventory. Without limiting the foregoing, no Inventory shall be Eligible Inventory unless it (a) is finished goods or raw materials, and not work-in-process, packaging or shipping materials, labels, samples, display items, bags, replacement parts or manufacturing supplies; (b) is not held on consignment, nor subject to any deposit or downpayment; (c) is in new and saleable condition and is not damaged, defective, shopworn or otherwise unfit for sale; (d) is not slow-moving, obsolete or unmerchantable, and does not constitute returned or repossessed goods; (e) meets all standards imposed by any Governmental Authority, has not been acquired from an entity subject to Sanctions or any specially designated nationals list maintained by OFAC, and does not constitute hazardous materials under any Environmental Law; (f) conforms with the covenants and representations herein; (g) is subject to Agent’s duly perfected, first priority Lien, and no other Lien; (h) is within the continental United States, is not in transit except between locations of Borrowers, and is not consigned to any Person; (i) is not subject to any warehouse receipt or negotiable Document; (j) is not subject to any License or other arrangement that restricts such Borrower’s or Agent’s right to dispose of such Inventory, unless Agent has received an appropriate Lien Waiver; (k) is not located on leased premises or in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person, unless the lessor or such Person has delivered a Lien Waiver or an appropriate Rent and Charges Reserve has been established; and (l) is reflected in the details of a current perpetual inventory report.

Enforcement Action: any action to enforce any Obligations or Loan Documents or to exercise any rights or remedies relating to any Collateral (whether by judicial action, self-help, notification of Account Debtors, exercise of setoff or recoupment, exercise of any right to vote or act in an Obligor’s Insolvency Proceeding, or otherwise).

Environmental Agreement: each agreement of Obligors with respect to any Real Estate subject to a Mortgage, pursuant to which Obligors agree to indemnify and hold harmless Agent and Lenders from liability under any Environmental Laws.

Environmental Laws: all Applicable Laws (including all programs, permits and guidance promulgated by regulatory agencies), relating to public health (but excluding occupational safety and health, to the extent regulated by OSHA) or the protection or pollution of the environment, including CERCLA, RCRA and CWA.

Environmental Notice: a notice (whether written or oral) from any Governmental Authority or other Person of any possible noncompliance with, investigation of a possible violation of, litigation relating to, or potential fine or liability under any Environmental Law, or with respect to any Environmental Release, environmental pollution or hazardous materials, including any complaint, summons, citation, order, claim, demand or request for correction, remediation or otherwise.

Environmental Release: a release as defined in CERCLA or under any other Environmental Law.

Equipment Formula Amount: the lesser of (a) $1,339,000 and (b) 85% of the NOLV of Eligible Equipment, which amount shall be reduced in each case on September 1, 2014 and on the first day of each month thereafter by $22,316.67, such reductions to be permanent and cumulative.

Equity Interest: the interest of any (a) shareholder in a corporation; (b) partner in a partnership (whether general, limited, limited liability or joint venture); (c) member in a limited liability company; or (d) other Person having any other form of equity security or ownership interest, including any Derivative Securities.

ERISA: the Employee Retirement Income Security Act of 1974.

ERISA Affiliate: any trade or business (whether or not incorporated) under common control with an Obligor within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

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ERISA Event: (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of any Obligor or ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Obligor or ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any Obligor or ERISA Affiliate fails to meet any funding obligations with respect to any Pension Plan or Multiemployer Plan, or requests a minimum funding waiver; (g) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (h) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (i) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Obligor or ERISA Affiliate.

Event of Default: as defined in Section 11.

Excess Cash Flow: (without duplication), with respect to P&F and its Subsidiaries on a consolidated basis for any Fiscal Year ending after the Closing Date, Adjusted EBITDA for such period, minus (a) all payments with respect to Capital Expenditures (except those financed with Borrowed Money other than Revolver Loans) made during such period, minus (b) all Interest Expense and all fees for the use of money or the availability of money, including commitment, facility and like fees and charges upon Debt paid or payable on a non-duplicative basis during such period, minus (c) all tax liabilities paid or accrued during such period on a non-duplicative basis, minus (d) all principal amounts of Debt (other than prepayments of Revolver Loans pursuant to Section 5.2 to the extent the Revolver Commitments are not permanently reduced by a corresponding amount pursuant to Section 2.1.4) paid or payable during such period.

Excluded Hedge Obligation: with respect to an Obligor, each Hedge Obligation as to which, and only to the extent that, such Obligor's guaranty of or grant of a Lien as security for such Hedge Obligation is or becomes illegal under the Commodity Exchange Act because the Obligor does not constitute an "eligible contract participant" as defined in the act (determined after giving effect to any keepwell, support or other agreement for the benefit of such Obligor and all guarantees of Hedge Obligations by other Obligors) when such guaranty or grant of Lien becomes effective with respect to the Hedge Obligation. If a Hedging Agreement governs more than one Hedge Obligation, only the Hedge Obligation(s) or portions thereof described in the foregoing sentence shall be Excluded Hedge Obligation(s) for the applicable Obligor.

Excluded Tax: with respect to Agent, any Lender, Issuing Bank or any other recipient of a payment to be made by or on account of any Obligation, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located; (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which Borrower Agent is located; (c) any backup withholding tax required by the Code to be withheld from amounts payable to a Lender that has failed to comply with Section 5.10; (d) in the case of a Foreign Lender, any United States withholding tax that is (i) required pursuant to laws in force at the time such Lender becomes a Lender (or designates a new Lending Office) hereunder, or (ii) attributable to such Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 5.10, except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from Obligors with respect to such withholding tax; and (e) taxes imposed on it by reason of Section 1471 or 1472 of the Code.

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Exhaust Acquisition: the Acquisition, by merger, of all of the Equity Interests of Exhaust Technologies, Inc., a Washington corporation, for an adjusted purchase price of approximately $10.4 million and, in connection therewith (i) the formation of Flying Tiger Acquisition Corp, a Washington corporation (“Merger Sub”), (ii) the entry by Merger Sub and Florida Pneumatic Manufacturing Corporation into the Agreement and Plan of Merger dated as of July 1, 2014 (the “Merger Agreement”) with Exhaust Technologies, Inc. and its stockholders named therein, (iii) pursuant to the Merger Agreement, the merger of the Merger Sub with and into Exhaust Technologies, Inc. with Exhaust Technologies, Inc. being the surviving entity and (iv) subsequent to such merger, the conversion of Exhaust Technologies, Inc. into a Delaware corporation.

Existing Agreement: as defined in Recital A.

Existing Capex Loans: as defined in Section 2.2B.

Existing Term Loans: as defined in Section 2.2.1.

Extraordinary Expenses: all costs, expenses or advances that Agent may incur during a Default or Event of Default, or during the pendency of an Insolvency Proceeding of an Obligor, including those relating to (a) any audit, inspection, repossession, storage, repair, appraisal, insurance, manufacture, preparation or advertising for sale, sale, collection, or other preservation of or realization upon any Collateral; (b) any action, arbitration or other proceeding (whether instituted by or against Agent, any Lender, any Obligor, any representative of creditors of an Obligor or any other Person) in any way relating to any Collateral (including the validity, perfection, priority or avoidability of Agent’s Liens with respect to any Collateral), Loan Documents, Letters of Credit or Obligations, including any lender liability or other Claims; (c) the exercise, protection or enforcement of any rights or remedies of Agent in, or the monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any taxes, charges or Liens with respect to any Collateral; (e) any Enforcement Action; (f) negotiation and documentation of any modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or Obligations; and (g) Protective Advances. Such costs, expenses and advances include transfer fees, Other Taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions, accountants’ fees, environmental study fees, wages and salaries paid to employees of any Obligor or independent contractors in liquidating any Collateral, and travel expenses.

Facility Guaranty: as defined in Section 15.1.

Family Trust: in respect of any individual, any trust for the exclusive benefit of such individual, his/her spouse and lineal descendentsdescendants, so long as such individual has the exclusive right to control such trust.

FASB ASC: the Accounting Standards Codification of the Financial Accounting Standards Board.

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Federal Funds Rate: (a) the weighted average of interest rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on the applicable Business Day (or on the preceding Business Day, if the applicable day is not a Business Day), as published by the Federal Reserve Bank of New York on the next Business Day; or (b) if no such rate is published on the next Business Day, the average rate (rounded up, if necessary, to the nearest 1/8 of 1%) charged to Capital One on the applicable day on such transactions, as determined by Agent.

Fiscal Quarter: each period of three months, commencing on the first day of a Fiscal Year.

Fiscal Year: the fiscal year of P&F and its Subsidiaries for accounting and tax purposes, ending on December 31 of each year.

Fitch: Fitch Ratings Ltd., a division of Fitch, Inc., and its successors.

Fixed Charge Coverage Ratio: the ratio, determined on a consolidated basis for P&F and its Subsidiaries for the most recent Measurement Period, of (a) Adjusted EBITDA minus Capital Expenditures (except those financed with Borrowed Money other than Revolver Loans) and cash taxes paid, to (b) Fixed Charges.

Fixed Charges: the sum of interest expense (other than payment-in-kind), principal payments made on Borrowed Money (other than prepayments of Revolver Loans pursuant to Section 5.2 to the extent the Revolver Commitments are not permanently reduced by a corresponding amount pursuant to Section 2.1.4 ), and Distributions made.

FLSA: the Fair Labor Standards Act of 1938.

Foreign Lender: any Lender that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.

Foreign Plan: any employee benefit plan or arrangement (a) maintained or contributed to by any Obligor or Subsidiary that is not subject to the laws of the United States; or (b) mandated by a government other than the United States for employees of any Obligor or Subsidiary.

Foreign Subsidiary: a Subsidiary that is a “controlled foreign corporation” under Section 957 of the Code, such that a guaranty by such Subsidiary of the Obligations or a Lien on the assets of such Subsidiary to secure the Obligations would result in material tax liability to Borrowers.

Full Payment: with respect to any Obligations or Guaranteed Obligations, (a) the full and indefeasible cash payment thereof, including any interest, fees and other charges accruing during an Insolvency Proceeding (whether or not allowed in the proceeding); (b) if such Obligations or Guaranteed Obligations are LC Obligations or inchoate or contingent in nature, Cash Collateralization thereof (or delivery of a standby letter of credit acceptable to Agent in its discretion, in the amount of required Cash Collateral); and (c) a release of any Claims of Obligors against Agent, Lenders and Issuing Bank arising on or before the payment date. No Loans shall be deemed to have been paid in full until all Commitments related to such Loans have expired or been terminated.

GAAP: generally accepted accounting principles in effect in the United States from time to time.

Governmental Approvals: all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and required reports to, all Governmental Authorities.

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Governmental Authority: any federal, state, municipal, foreign or other governmental department, agency, commission, board, bureau, court, tribunal, instrumentality, political subdivision, or other entity or officer exercising executive, legislative, judicial, regulatory or administrative functions for or pertaining to any government or court, in each case whether associated with the United States, a state, district or territory thereof, or a foreign entity or government.

Guaranteed Obligations: as defined in Section 15.1.

Guarantor Payment: as defined in Section 5.11.3.

Guarantors: as defined in the first paragraph of this Agreement together with each other Person who guarantees payment or performance of any Obligations.

Guaranty: each guaranty agreement, including the guaranties set forth in Section 15, now or hereafter executed by a Guarantor in favor of Agent.

Hedging Agreement: an agreement relating to any swap, cap, floor, collar, option, forward, cross right or obligation, or combination thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk.

Hedge Obligations: means with respect to any Guarantor any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

Horowitz Family: any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, cousin, niece or nephew, including adoptive relationships.

Horowitz Group: Richard A. Horowitz, the Horowitz Family and any Family Trust, and all Affiliates Controlled by any of the foregoing (the terms “Affiliate” and “Control” for purposes of this definition only having the meaning ascribed to such terms in Rule 405 promulgated by the U.S. Securities and Exchange Commission).

Horowitz Percentage: (a) the sum of all Equity Interests of P&F (including all Derivative Securities) Beneficially Owned by one or more members of the Horowitz Group divided by (b) the sum of all issued and outstanding Equity Interests of P&F (including all Derivative Securities).

Immaterial Subsidiary: each Subsidiary of P&F that has been designated by the Borrower Agent in writing to Agent as a “Designated Immaterial Subsidiary” for purposes of this Agreement and the other Loan Documents; provided that at no time shall (a) the total assets of all Immaterial Subsidiaries as of the end of the most recent Fiscal Quarter for which financial statements have been delivered pursuant to Section 10.1.2 equal or exceed $250,000; (b) any Immaterial Subsidiary own assets included in the Borrowing Base; or (c) the gross revenues of all Immaterial Subsidiaries (including any Immaterial Subsidiaries dissolved, liquidated or otherwise disposed of during any Measurement Period) for any Measurement Period equal or exceed $250,000, in each case, as determined in accordance with GAAP; provided further, however, that (i) an intercompany receivable owing to Embassy from P&F of approximately $5,000,000 shall not be considered an “asset” for purposes hereof so long as such intercompany receivable is not transferred or encumbered (except among Obligors) and if so requested by Agent, such intercompany payable shall be represented by a note and pledged to Agent pursuant to documentation reasonably satisfactory to Agent; (ii) notes payable to Woodmark and Pacific from WMC in the approximate amount of $7,339,648.78 shall not be considered “assets” for purposes hereof so long as the realizable value thereof as reasonably determined by Borrower Agent is less than $250,000 (and if at any time greater, notice thereof will be given promptly to Agent) and if so requested by Agent, such notes shall be pledged to Agent pursuant to documentation reasonably satisfactory to Agent; and (iii) the Equity Interest of WMC held by Woodmark and Pacific shall not be considered “assets” for purposes hereof so long as the value reasonably attributed thereto by Borrower Agent is less than $250,000 (and if at any time greater, notice thereof will be given promptly to Agent) and if so requested by Agent, such Equity Interests shall be pledged to Agent pursuant to documentation reasonably satisfactory to Agent. As of the Closing Date, the Subsidiaries specified on Schedule 1.2 are the only Subsidiaries designated by the Borrower Agent as Immaterial Subsidiaries for purposes of this Agreement and the other Loan Documents.

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Indemnified Taxes: Taxes other than Excluded Taxes.

Indemnitees: Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and Capital One Indemnitees.

Insolvency Proceeding: any case or proceeding commenced by or against a Person under any state, federal or foreign law for, or any agreement of such Person to, (a) the entry of an order for relief under the Bankruptcy Code, or any other insolvency, debtor relief or debt adjustment law; (b) the appointment of a receiver, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its Property; or (c) an assignment or trust mortgage for the benefit of creditors.

Intellectual Property: all intellectual and similar Property of a Person, including inventions, designs, patents, copyrights, trademarks, service marks, trade names, trade secrets, confidential or proprietary information, customer lists, know-how, software and databases; all embodiments or fixations thereof and all related documentation, applications, registrations and franchises; all licenses or other rights to use any of the foregoing; and all books and records relating to the foregoing.

Intellectual Property Claim: any claim or assertion (whether in writing, by suit or otherwise) that an Obligor’s or Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other Property violates another Person’s Intellectual Property.

Interest Period: as defined in Section 3.1.3.

Inventory: as defined in the UCC, including all goods intended for sale, lease, display or demonstration; all work in process; and all raw materials, and other materials and supplies of any kind that are or could be used in connection with the manufacture, printing, packing, shipping, advertising, sale, lease or furnishing of such goods, or otherwise used or consumed in a Borrower’s business (but excluding Equipment).

Inventory Formula Amount: the least of (i) $15,000,0005,000,000; (ii) 60% of the Value of Eligible Inventory (including Eligible In-Transit Inventory); and (iii) 85% of the NOLV Percentage of the Value of Eligible Inventory; provided, however, that the Inventory Formula Amount attributable to (x) Eligible Inventory that is Sears Branded Inventory shall not exceed $1,000,000 and (y) Eligible In-Transit Inventory shall not exceed $2,500,000.

Inventory Reserve: reserves established by Agent to reflect factors that may negatively impact the Value of Inventory, including change in salability, obsolescence, seasonality, theft, shrinkage, imbalance, change in composition or mix, markdowns and vendor chargebacks.

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Investment: any acquisition of all or substantially all assets of a Person; any acquisition of record or beneficial ownership of any Equity Interests of a Person; or any loan, advance or capital contribution to or other investment in a Person.

IRS: the United States Internal Revenue Service.

Issuing Bank: Capital One or any Affiliate of Capital One, or any replacement appointed pursuant to Section 2.3.4.

Issuing Bank Indemnitees: Issuing Bank and its officers, directors, employees, Affiliates, agents and attorneys.

LC Application: an application by Borrower Agent to Issuing Bank for issuance of a Letter of Credit, in form and substance satisfactory to Issuing Bank.

LC Conditions: the following conditions necessary for issuance of a Letter of Credit: (a) each of the conditions set forth in Section 6; (b) after giving effect to such issuance, total LC Obligations do not exceed the Letter of Credit Subline, no Overadvance exists and, if no Revolver Loans are outstanding, the LC Obligations do not exceed the Borrowing Base (without giving effect to the LC Reserve for purposes of this calculation); (c) the expiration date of such Letter of Credit is (i) no more than 365 days from issuance (subject to any automatic renewal provisions in the case of “evergreen” letters of credit), in the case of standby Letters of Credit, (ii) no more than 120 days from issuance, in the case of documentary Letters of Credit, and (iii) at least 20 Business Days prior to the Revolver Termination Date; (d) the Letter of Credit and payments thereunder are denominated in Dollars; and (e) the purpose and form of the proposed Letter of Credit is satisfactory to Lender in its reasonable discretion.

LC Documents: all documents, instruments and agreements (including LC Requests and LC Applications) delivered by Borrowers or any other Person to Issuing Bank or Agent in connection with issuance, amendment or renewal of, or payment under, any Letter of Credit.

LC Obligations: the sum (without duplication) of (a) all amounts owing by Borrowers for any drawings under Letters of Credit; (b) the undrawn amount of all outstanding Letters of Credit; and (c) all fees and other amounts owing with respect to Letters of Credit.

LC Request: a request for issuance of a Letter of Credit, to be provided by Borrower Agent to Issuing Bank, in form satisfactory to Agent and Issuing Bank.

LC Reserve: the aggregate of all LC Obligations, other than (a) those that have been Cash Collateralized; and (b) if no Default or Event of Default exists, those constituting charges owing to the Issuing Bank.

Lender Indemnitees: Lenders and their officers, directors, employees, Affiliates, agents and attorneys.

Lenders: as defined in the preamble to this Agreement, including Agent in its capacity as a provider of Swingline Loans and any other Person who hereafter becomes a “Lender” pursuant to an Assignment and Acceptance.

Lending Office: the office designated as such by the applicable Lender at the time it becomes party to this Agreement or thereafter by notice to Agent and Borrower Agent.

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Letter of Credit: any standby or documentary letter of credit issued by Issuing Bank for the account of a Borrower, or any indemnity, guarantee, exposure transmittal memorandum or similar form of credit support issued by Agent or Issuing Bank for the benefit of an Obligor.

Letter of Credit Subline: $5,000,000.

Leverage Ratio: the ratio, determined as of the end of any month, of (a) Borrowed Money (other than Contingent Obligations) of P&F and its Subsidiaries as of the last day of such month, to (b) Adjusted EBITDA for the Measurement Period then ending.

LIBOR: for any Interest Period with respect to a LIBOR Loan, the rate per annum equal to the London Interbank Offered Rate (“LIBOR”) or successor rate (or if not available, a reasonably comparable rate approved by the Agent), as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; provided that to the extent a comparable or successor rate is approved by the Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Agent.

LIBOR Capex Loan: a Capex Loan that bears interest based on LIBOR.

LIBOR Loan: each set of LIBOR Revolver Loans, LIBOR Term Loans or LIBOR Capex Loans having a common length and commencement of Interest Period.

LIBOR Revolver Loan: a Revolver Loan that bears interest based on LIBOR.

LIBOR Term Loan: a Term Loan that bears interest based on LIBOR.

License: any license or agreement under which an Obligor is authorized to use Intellectual Property in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of Property or any other conduct of its business.

Licensor: any Person from whom an Obligor obtains the right to use any Intellectual Property.

Lien: any Person’s interest in Property securing an obligation owed to, or a claim by, such Person, whether such interest is based on common law, statute or contract, including liens, security interests, pledges, hypothecations, statutory trusts, reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Property.

Lien Waiver: an agreement, in form and substance satisfactory to Agent, by which (a) for any material Collateral located on leased premises, the lessor waives or subordinates any Lien it may have on the Collateral, and agrees to permit Agent to enter upon the premises and remove the Collateral or to use the premises to store or dispose of the Collateral; (b) for any Collateral held by a warehouseman, processor, shipper, customs broker or freight forwarder, such Person waives or subordinates any Lien it may have on the Collateral, agrees to hold any Documents in its possession relating to the Collateral as agent for Agent, and agrees to deliver the Collateral to Agent upon request; (c) for any Collateral held by a repairman, mechanic or bailee, such Person acknowledges Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and agrees to deliver the Collateral to Agent upon request; and (d) for any Collateral subject to a Licensor’s Intellectual Property rights, the Licensor grants to Agent the right, vis-à-vis such Licensor, to enforce Agent’s Liens with respect to the Collateral, including the right to dispose of it with the benefit of the Intellectual Property, whether or not a default exists under any applicable License.

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Loan: a Revolver Loan, Term Loan or Capex Loan.

Loan Account: the loan account established by each Lender on its books pursuant to Section 5.8.

Loan Documents: this Agreement, Other Agreements and Security Documents.

Loan Year: each 12 month period commencing on December 19, 2013 and on each annual anniversary thereof.

London Banking Day: any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London, England.

Margin Stock: as defined in Regulation U of the Board of Governors.

Material Adverse Effect: the effect of any event or circumstance that, taken alone or in conjunction with other events or circumstances, (a) has or could be reasonably expected to have a material adverse effect on the business, operations, Properties, prospects or condition (financial or otherwise) of any Borrower or of the Obligors, taken as a whole, on the value of any material Collateral, on the enforceability of any Loan Documents, or on the validity or priority of Agent’s Liens on any Collateral; (b) impairs the ability of any Borrower or of the Obligors, taken as a whole, to perform any obligations under the Loan Documents, including repayment of any Obligations; or (c) otherwise impairs the ability of Agent or any Lender to enforce or collect any Obligations or to realize upon any Collateral in any material respect.

Material Contract: any agreement or arrangement to which a Borrower or Subsidiary is party (other than the Loan Documents) (a) that is deemed to be a material contract under any securities law applicable to such Obligor, including the Securities Act of 1933; (b) for which breach, termination, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect; or (c) that relates to Subordinated Debt, or Debt in an aggregate amount of $100,000 or more.

Measurement Period: at any date of determination, the most recently completed twelve consecutive months of P&F and its Subsidiaries.

Moody’s: Moody’s Investors Service, Inc., and its successors.

Mortgage: each mortgage, deed of trust or deed to secure debt (in each case, as amended, modified, supplemented or restated) pursuant to which an Obligor grants to Agent, for the benefit of Secured Parties, Liens upon the Real Estate owned by such Obligor, as security for the Obligations.

Multiemployer Plan: any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Obligor or ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

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Multiple Employer Plan: a Plan which has two or more contributing sponsors (including an Obligor or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

Net Proceeds: with respect to an Asset Disposition, proceeds (including, when received, any deferred or escrowed payments) received by a Borrower or Subsidiary in cash from such disposition, net of (a) reasonable and customary costs and expenses actually incurred in connection therewith, including legal fees and sales commissions; (b) amounts applied to repayment of Debt secured by a Permitted Lien senior to Agent’s Liens on Collateral sold; (c) transfer or similar taxes; and (d) reserves for indemnities, until such reserves are no longer needed.

NOLV: the net orderly liquidation value expected to be realized at an orderly, negotiated sale held within a reasonable period of time, net of all liquidation expenses, as determined from the most recent appraisal performed by an appraiser and on terms satisfactory to Agent

NOLV Percentage: the net orderly liquidation value of Inventory, expressed as a percentage, expected to be realized at an orderly, negotiated sale held within a reasonable period of time, net of all liquidation expenses, as determined from the most recent appraisal of Borrowers’ Inventory performed by an appraiser and on terms satisfactory to Agent.

Notes: each Revolver Note, Term Note, Capex Loan Note or other promissory note executed by an Obligor to evidence any Obligations.

Notice of Borrowing: a Notice of Borrowing to be provided by Borrower Agent to request a Borrowing of Revolver Loans, in form satisfactory to Agent.

Notice of Conversion/Continuation: a Notice of Conversion/Continuation to be provided by Borrower Agent to request a conversion or continuation of any Loans as LIBOR Loans, in form satisfactory to Agent.

Noticed Hedge: Secured Bank Product Obligations arising under a Hedging Agreement.

Obligations: all (a) principal of and premium, if any, on the Loans, (b) LC Obligations and other obligations of Obligors with respect to Letters of Credit, (c) interest, expenses, fees and other sums payable by Obligors under Loan Documents, (d) obligations of Obligors under any indemnity for Claims, (e) Extraordinary Expenses, (f) Secured Bank Product Obligations, and (g) other Debts, obligations and liabilities of any kind owing by Obligors pursuant to the Loan Documents, whether now existing or hereafter arising, whether evidenced by a note or other writing, including interest, fees and expenses accruing or incurred after the commencement of an Insolvency Proceeding whether allowed or allowable in any Insolvency Proceeding, whether arising from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several, provided that the Obligations shall exclude any Excluded Hedge Obligations.

Obligor: each Borrower, Guarantor, or other Person that is liable for payment of any Obligations or that has granted a Lien in favor of Agent on its assets to secure any Obligations.

Operating Account: the operating/disbursement account established by Obligors at Capital One, N.A.

OFAC: Office of Foreign Assets Control of the U.S. Treasury Department.

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Ordinary Course of Business: the ordinary course of business of any Borrower or Subsidiary, consistent with past practices and undertaken in good faith and with respect to compensation, which will include, without limitation, actions contemplated by any existing plan or agreement or any plan or agreement approved by the Borrower Agent’s Board of Directors (or committee thereof) and such Board’s independent compensation consultant reasonably satisfactory to Agent.

Organic Documents: with respect to any Person, its charter, certificate or articles of incorporation, bylaws, articles of organization, limited liability agreement, operating agreement, members agreement, shareholders agreement, partnership agreement, certificate of partnership, certificate of formation, voting trust agreement, or similar agreement or instrument governing the formation or operation of such Person.

OSHA: the Occupational Safety and Hazard Act of 1970.

Other Agreements: each Note; Guaranty; LC Document; Commitment Letter; Lien Waiver; Real Estate Related Document; Borrowing Base Certificate, Compliance Certificate, financial statement or report delivered hereunder; or other document, instrument or agreement (other than this Agreement or a Security Document) now or hereafter delivered by an Obligor or other Person to Agent or a Lender in connection with any transactions relating hereto; provided that, for the avoidance of doubt, “Other Agreements” shall not include any Hedging Agreements or other agreements executed in connection with Bank Product Obligations.

Other Taxes: all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

Overadvance: as defined in Section 2.1.5.

Overadvance Loan: a Base Rate Revolver Loan made when an Overadvance exists or is caused by the funding thereof.

Overdraft Facility: the overdraft facility between Universal, as borrower, and National Westminster Bank Plc, as lender (or another lender from time to time acceptable to Agent) to be entered into on or about the date hereof, as may be amended from time to time.

Participant: as defined in Section 13.2.

Patriot Act: the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).

Payment Account: the Agent’s account at Capital One to which all payments on account of the Obligations are to made or transferred from the Dominion Account, as designated by the Agent

Payment Item: each check, draft or other item of payment payable to a Obligor, including those constituting proceeds of any Collateral.

PBGC: the Pension Benefit Guaranty Corporation.

Pension Act: the Pension Protection Act of 2006.

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Pension Funding Rules: the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

Pension Plan: any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by any Obligor and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

Permitted Acquisition: each Acquisition with respect to which: (a) the Obligors and any such newly created or acquired Subsidiary shall comply with the requirements of Section 10.1.9; (b) the lines of business of the Person to be (or the property and assets of which are to be) so purchased or otherwise acquired shall be a business permitted by Section 10.2.16; (c) such Acquisition shall be approved by the board of directors of the Person (or, if such Person is not a corporation, a similar or appropriate governing body) which is the subject of such Acquisition and such Person does not otherwise oppose such Acquisition; (d) the aggregate consideration paid or payable for all such Acquisitions (including any purchase price adjustment, earn-out provision, payments in respect of non-competition or consulting agreements or deferred compensation agreements but excluding any Debt that is in existence when such Person becomes a Subsidiary or that is secured by an asset when acquired by a Borrower as long as such Debt was not incurred in contemplation of such Acquisition) shall not exceed $1,000,000 per Fiscal Year; (e) immediately before (including, on a pro forma basis giving effect to the Acquisition) and immediately after giving effect to any such Acquisition, no Default or Event of Default shall have occurred and be continuing (including, without limitation, pro forma compliance with the financial covenants set forth in Sections 10.3.1 and 10.3.2); and (f) the Borrower Agent shall have (i) provided at least 15 Business Days prior written notice to Agent of such Acquisition along with copies of the acquisition agreements and documentation relating thereto or drafts thereof (with copies of the final agreements and documents to be provided thereafter when completed), which shall be reasonably satisfactory to Agent, along with historical financial statements for the most recent fiscal year end (or, if less, for the period of such Person’s existence) of the Person or business to be acquired (audited if available) to the extent available and unaudited financial statements thereof for the interim periods, which are available, and (ii) delivered to Agent at least 10 Business Days prior to the date on which any such Acquisition is to be consummated or such shorter time as Agent may allow, a certificate of a Senior Officer of the Borrower Agent, in form and substance reasonably satisfactory to the Agent, certifying that all of the requirements set forth above will be satisfied on or prior to the consummation of such Acquisition, together with a reasonably detailed calculation of pro forma compliance with Sections 10.3.1 and 10.3.2 and all supporting documentation and other financial information that Agent may reasonably request. None of the Equipment purchased or otherwise acquired pursuant to an Acquisition shall be included in the Equipment Formula Amount and none of the Accounts or Inventory purchased or otherwise acquired pursuant to an Acquisition shall be included in the calculation of the Borrowing Base until Agent has conducted field examinations and appraisals (which field examinations and appraisals shall be at the expense of the Borrowers and shall not count towards the limits set forth in Section 10.1.1) reasonably required by it with results reasonably satisfactory to Agent, and the Person owning such Equipment, Accounts and Inventory shall be a (directly or indirectly) wholly-owned Domestic Subsidiary of the Borrowers and have become a Borrower.

Permitted Asset Disposition: an Asset Disposition that is (a) a sale of Inventory in the Ordinary Course of Business; (b) as long as no Default or Event of Default exists and, other than with respect to an Asset Disposition by a Foreign Subsidiary, all Net Proceeds are remitted to Agent, a disposition of Equipment that, in the aggregate during any 12 month period, has a fair market or book value (whichever is more) of $100,000 or less, provided that any disposition of Equipment related to a Capex Loan shall be in the form of an arms-length sale of such Equipment for cash; (c) as long as no Default or Event of Default exists and, other than with respect to an Asset Disposition by a Foreign Subsidiary, all Net Proceeds are remitted to Agent, a disposition of (i) the Real Estate located in Tampa, Florida and set forth on Schedule 7.3.1 at fair market value as determined by Borrower Agent in its reasonable discretion, and (ii) Inventory that is obsolete, unmerchantable or otherwise unsalable in the Ordinary Course of Business; (d) termination of a lease of real or personal Property that is not necessary for the Ordinary Course of Business, could not reasonably be expected to have a Material Adverse Effect and does not result from an Obligor’s default; (e) a disposition, liquidation or dissolution of any Immaterial Subsidiary; (f) approved in writing by Agent and Required Lenders or (g) the sale and/or issuance of Equity Interests to the extent not constituting a Change of Control.

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Permitted Contingent Obligations: Contingent Obligations (a) arising from endorsements of Payment Items for collection or deposit in the Ordinary Course of Business; (b) arising from Hedging Agreements permitted hereunder; (c) existing on the Closing Date, and any extension or renewal thereof that does not increase the amount of such Contingent Obligation when extended or renewed; (d) incurred in the Ordinary Course of Business with respect to surety, appeal or performance bonds, or other similar obligations; (e) arising from customary indemnification obligations in favor of purchasers in connection with dispositions of Equipment permitted hereunder; (f) arising under the Loan Documents; (g) guaranties of Permitted Debt; or (h) in an aggregate amount of $250,000 or less at any time.

Permitted Investment: (a) Investments in Subsidiaries to the extent existing on the Closing Date and set forth on Schedule 10.2.5; (b) Cash Equivalents that are subject to Agent’s Lien and control, pursuant to documentation in form and substance satisfactory to Agent; (c) loans and advances permitted under Section 10.2.7; (d) to the extent constituting Distributions, Distributions permitted under Section 10.2.4; (e) Investments made when no Default or Event of Default has occurred and is continuing in an aggregate amount not to exceed $1,000,000 in the aggregate at any time outstanding for all Obligors; and (f) Permitted Acquisitions, the Exhaust Acquisition, the Universal Acquisition and the ATSCO Acquisition.

Permitted Lien: as defined in Section 10.2.2.

Permitted Purchase Money Debt: Purchase Money Debt of Borrowers and Subsidiaries that is unsecured or secured only by a Purchase Money Lien, as long as the aggregate amount does not exceed $500,000 per Fiscal Year and its incurrence does not violate Section 10.2.3.

Person: any individual, corporation, limited liability company, partnership, joint venture, joint stock company, land trust, business trust, unincorporated organization, Governmental Authority or other entity.

Plan: any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan) maintained for employees of an Obligor or any ERISA Affiliate or any such Plan to which an Obligor or any ERISA Affiliate is required to contribute on behalf of any of its employees.

Pledged Interests: as defined in Section 7.4.1.

Post-Petition Interest: as defined in Section 15.4.3.

Prime Rate: the highest of the rate of interest announced by Capital One, N.A., Citicorp, N. A. or Bank of America, N.A. from time to time as its prime rate, which rate may be set by such banks on the basis of various factors, including its costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such rate. Any change in such rate shall take effect at the opening of business on the day specified in the public announcement or publication, as applicable, of such change.

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Pro Rata: with respect to any Lender, a percentage (carried out to the ninth decimal place) determined (a) while Revolver Commitments and Capex Loan Commitments are outstanding, by dividing the amount of such Lender’s Revolver Commitment, Capex Loan Commitment and Term Loan by the aggregate amount of all Revolver Commitments, Capex Loan Commitments and Term Loans; and (b) at any other time, by dividing the amount of such Lender’s Loans and LC Obligations by the aggregate amount of all outstanding Loans and LC Obligations.

Properly Contested: with respect to any obligation of an Obligor, (a) the obligation is subject to a bona fide dispute regarding amount or the Obligor’s liability to pay; (b) the obligation is being properly contested in good faith by appropriate proceedings promptly instituted and diligently pursued; (c) appropriate reserves have been established in accordance with GAAP; (d) non-payment could not have a Material Adverse Effect, nor result in forfeiture or sale of any assets of the Obligor; (e) no Lien is imposed on assets of the Obligor, unless bonded and stayed to the satisfaction of Agent; and (f) if the obligation results from entry of a judgment or other order, such judgment or order is stayed pending appeal or other judicial review.

Property: any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

Protective Advances: as defined in Section 2.1.6.

Purchase Money Debt: (a) Debt (other than the Obligations) for payment of any of the purchase price of fixed assets; (b) Debt (other than the Obligations) incurred within 10 days before or after acquisition of any fixed assets, for the purpose of financing any of the purchase price thereof; and (c) any renewals, extensions or refinancings (but not increases) thereof.

Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only the fixed assets acquired with such Debt and constituting a Capital Lease or a purchase money security interest under the UCC.

Qualified ECP: an Obligor with total assets exceeding $10,000,000, or that constitutes an "eligible contract participant" under the Commodity Exchange Act and can cause another Person to qualify as an "eligible contract participant" under Section 1a(18)(A)(v)(II) of such act.

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

Real Estate: all right, title and interest (whether as owner, lessor or lessee) in any real Property or any buildings, structures, parking areas or other improvements thereon.

Refinancing Conditions: the following conditions for Refinancing Debt: (a) it is in an aggregate principal amount that does not exceed the principal amount of the Debt being extended, renewed or refinanced; (b) it has a final maturity no sooner than, a weighted average life no less than, and an interest rate no greater than, the Debt being extended, renewed or refinanced; (c) it is subordinated to the Obligations at least to the same extent as the Debt being extended, renewed or refinanced; (d) the representations, covenants and defaults applicable to it are no less favorable to Borrowers than those applicable to the Debt being extended, renewed or refinanced; (e) no additional Lien is granted to secure it; (f) no additional Person is obligated on such Debt; and (g) upon giving effect to it, no Default or Event of Default exists.

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Refinancing Debt: Borrowed Money that is the result of an extension, renewal or refinancing of Debt permitted under Section 10.2.1(b), (d) or (f).

Reimbursement Date: as defined in Section 2.3.2.

Related Real Estate Documents: with respect to any Real Estate subject to a Mortgage, the following, in form and substance satisfactory to Agent and received by Agent for review at least 10 days prior to the effective date of the Mortgage: (a) a mortgagee title policy (or binder therefor) covering Agent’s interest under the Mortgage, in a form and amount and by an insurer acceptable to Agent, which must be fully paid on such effective date; (b) such assignments of leases, estoppel letters, attornment agreements, consents, waivers and releases as Agent may require with respect to other Persons having an interest in the Real Estate; (c) a current, as-built survey of the Real Estate, containing a metes-and-bounds property description and flood plain certification, and certified by a licensed surveyor acceptable to Agent; (d) flood insurance in an amount, with endorsements and by an insurer acceptable to Agent, if the Real Estate is within a flood plain; (e) a current appraisal of the Real Estate, prepared by an appraiser acceptable to Agent, and in form and substance satisfactory to Required Lenders; (f) an environmental assessment, prepared by environmental engineers acceptable to Agent, and accompanied by such reports, certificates, studies or data as Agent may reasonably require, which shall all be in form and substance satisfactory to Required Lenders; and (g) an Environmental Agreement and such other documents, instruments or agreements as Agent may reasonably require with respect to any environmental risks regarding the Real Estate.

Rent and Charges Reserve: the aggregate of (a) all past due rent and other amounts owing by an Obligor to any landlord, warehouseman, processor, repairman, mechanic, shipper, freight forwarder, broker or other Person who possesses any Collateral or could assert a Lien on any Collateral; and (b) a reserve equal to not more than three months' rent and other charges that could be payable to any such Person, unless it has executed a Lien Waiver.

Report: as defined in Section 12.2.3.

Reportable Event: any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

Reporting Trigger Period: the period (a) commencing on the day that a Default or Event of Default occurs, or Availability is less than $2,000,000 at any time; and (b) continuing until, during the preceding 30 consecutive days, no Event of Default has existed and Availability has been greater than $2,000,000 at all times.

Representation Letter: that certain letter dated as of the date hereof from Borrowers to Agent relating to the relationship between the Obligors and WMC and the obligations of WMC.

Required Lenders: Lenders (subject to Section 4.2) having (a) Revolver Commitments, Capex Loan Commitments and Term Loans in excess of 50% of the aggregate Revolver Commitments, Capex Loan Commitments and Term Loans; and (b) if the Revolver Commitments and Capex Loan Commitments have terminated, Loans in excess of 50% of all outstanding Loans.

Restrictive Agreement: an agreement (other than a Loan Document) that conditions or restricts the right of any Borrower, Subsidiary or other Obligor to incur or repay Borrowed Money, to grant Liens on any assets, to declare or make Distributions, to modify, extend or renew any agreement evidencing Borrowed Money, or to repay any intercompany Debt or to perform any of its obligations hereunder.

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Revolver Commitment: for any Lender, its obligation to make Revolver Loans and to participate in LC Obligations up to the maximum principal amount shown on Schedule 1.1, or as hereafter determined pursuant to each Assignment and Acceptance to which it is a party. “Revolver Commitments” means the aggregate amount of such commitments of all Lenders in an aggregate amount up to $22,000,000.10,000,000.

Revolver Loan: a loan made pursuant to Section 2.1, and any Swingline Loan, Overadvance Loan or Protective Advance.

Revolver Note: an amended and restated promissory note to be executed by Borrowers in favor of a Lender in the form of Exhibit A, which shall be in the amount of such Lender’s Revolver Commitment and shall evidence the Revolver Loans made by such Lender.

Revolver Termination Date: December 19, 2017.February [__], 2019.

Royalties: all royalties, fees, expense reimbursement and other amounts payable by a Borrower under a License.

S&P: Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.

Sanction: any international economic sanction administered or enforced by the United States Government (including OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.

Second Amendment: the Second Amendment to this Agreement, dated as of February [__], 2016.

Second Amendment Effective Date: February [__], 2016.

Sears Branded Inventory: all Inventory of the Obligors that is marked or labeled with a trade name, trademark, logo, service mark or other mark or name owned or licensed by Sears Roebuck and Co. or its Affiliates.

Sears Supply Agreement: that certain Supply Agreement For Compressors and Pneumatic Tools dated as of January 1, 2006, between Sears Roebuck and Co. and Florida Pneumatic, as amended and in effect on the date hereof.

Secured Bank Product Obligations: Bank Product Debt owing to a Secured Bank Product Provider, provided that , in the case of any Secured Bank Product Provider other than Capital One and its Affiliates, the maximum amount of such Secured Bank Product Obligations shall not exceed the amount specified by such provider in writing to Agent, which amount may be established or increased (by further written notice to Agent from time to time) as long as no Default or Event of Default exists and establishment of a Bank Product Reserve for such amount and all other Secured Bank Product Obligations would not result in an Overadvance, provided, further, the Secured Bank Product Obligations of an Obligor shall not include its Excluded Hedge Obligations.

Secured Bank Product Provider: (a) Agent, Capital One or any of their respective Affiliates; and (b) any Lender or Affiliate of a Lender that is provides a Bank Product, provided, however, in the case of this clause (b), such Lender delivers written notice to Agent, in form and substance satisfactory to Agent, by the later of the Closing Date or 10 days following the entering into or creation of a Bank Product, (i) describing the Bank Product and setting forth the maximum amount of the related Secured Bank Product Obligations (subject to subsequent increase or decrease as set forth in the definition thereof) which is to be secured by the Collateral and the methodology to be used in calculating such amount, and (ii) agreeing to be bound by Section 12.14.

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Secured Parties: Agent, Issuing Bank, Lenders and Secured Bank Product Providers.

Security Documents: the Mortgages, the Environmental Agreement, Trademark Security Agreements, Deposit Account Control Agreements, any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of this Agreement and all other documents, instruments and agreements now or hereafter securing (or given with the intent to secure) any Obligations.

Senior Officer: the chairman of the board, president, chief executive officer or chief financial officer of a Borrower or, if the context requires, an Obligor.

Settlement Report: a report delivered by Agent to Lenders summarizing the Revolver Loans and participations in LC Obligations outstanding as of a given settlement date, allocated to Lenders on a Pro Rata basis in accordance with their Revolver Commitments.

Solvent: as to any Person, such Person (a) owns Property whose fair salable value is greater than the amount required to pay all of its debts (including contingent, subordinated, unmatured and unliquidated liabilities); (b) owns Property whose present fair salable value (as defined below) is greater than the probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Person as they become absolute and matured; (c) is able to pay all of its debts as they mature; (d) has capital that is not unreasonably small for its business and is sufficient to carry on its business and transactions and all business and transactions in which it is about to engage; (e) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise) any obligations or liabilities (contingent or otherwise) under any Loan Documents, or made any conveyance in connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of such Person or any of its Affiliates. “Fair salable value” means the amount that could be obtained for assets within a reasonable time, either through collection or through sale under ordinary selling conditions by a capable and diligent seller to an interested buyer who is willing (but under no compulsion) to purchase.

Specified Obligor: an Obligor that is not then an "eligible contract participant" under the Commodity Exchange Act (determined prior to giving effect to Section 5.11).

Subordinated Debt: unsecured Debt incurred by an Obligor that is expressly subordinate and junior in right of payment to Full Payment of all Obligations, and is on terms (including maturity, interest, fees, repayment, covenants and subordination) satisfactory to Agent.

Subsidiary: any entity (other than WMC) at least 50% of whose voting securities or Equity Interests is owned by a Borrower or any combination of Borrowers (including indirect ownership by a Borrower through other entities in which the Borrower directly or indirectly owns 50% of the voting securities or Equity Interests).

Swingline Loan: any Borrowing of Base Rate Revolver Loans funded with Agent’s funds, until such Borrowing is settled among Lenders or repaid by Borrowers.

Tangible Net Worth: as of any date of determination, for P&F and its Subsidiaries on a consolidated basis, consolidated shareholders’ equity of P&F and its Subsidiaries on that date as determined in accordance with GAAP minus intangible assets of P&F and its Subsidiaries on that date minus deferred tax assets of P&F and its Subsidiaries on that date plus Subordinated Debt on that date.

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Taxes: all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

Term Loan: a loan made pursuant to Section 2.2, including any Tranche A Term Loan and any Tranche B Term Loan.

Term Loan Maturity Date: December 19, 2017.February [___], 2019.

Term Note: promissory notes to be executed by Borrowers in favor of a Lender in the form of Exhibit B-1, which shall be in the amount of such Lender’s Tranche A Commitment and Tranche B Commitment and shall evidence the Term Loans made by such Lender.

Trademark Security Agreement: each trademark security agreement pursuant to which an Obligor grants to Agent, for the benefit of Secured Parties, a Lien on such Obligor’s interests in trademarks, as security for the Obligations.

Tranche A Commitment: for any Lender, the obligation of such Lender to make or maintain a Tranche A Term Loan hereunder, up to the principal amount shown on Schedule 1.1. “Tranche A Commitments” means the aggregate amount of such commitments of all Lenders in an aggregate amount up to $6,533,333.40100,000.

Tranche A Term Loan: as defined in Section 2.2.

Tranche B Commitment: for any Lender, the obligation of such Lender to make a Tranche B Term Loan hereunder, up to the principal amount shown on Schedule 1.1. “Tranche B Commitments” means the aggregate amount of such commitments of all Lenders in an aggregate amount up to $3,000,000.

Tranche B Term Loan: as defined in Section 2.2.

Transferee: any actual or potential Eligible Assignee, Participant or other Person acquiring an interest in any Obligations.

Trigger Period: the period (a) commencing on the day that a Default or Event of Default occurs, or Availability is less than $1,500,000 at any time; and (b) continuing until, during the preceding 30 consecutive days, no Event of Default has existed and Availability has been greater than $1,500,000 at all times.

Type: any type of a Loan (i.e., Base Rate Loan or LIBOR Loan) that has the same interest option and, in the case of LIBOR Loans, the same Interest Period.

UCC: the Uniform Commercial Code as in effect in the State of New York or, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of such jurisdiction.

Universal: Universal Air Tools Company Limited, a company organized under the laws of England and Wales.

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Universal Acquisition: the Acquisition of all of the Equity Interests of Universal by Florida Pneumatic for a purchase price equivalent to approximately $2,000,000, to be adjusted by a potential earn-out (with a maximum amount of approximately $430,000 based on exchange rates as of the date of this Amendment) and a working capital adjustment

Unused Line Fee Percentage: a per annum rate equal to 0.375%(i) 0.15% prior to January 31, 2017 and (ii) 0.25% thereafter.

Upstream Payment: a Distribution by a Subsidiary of a Borrower to such Borrower.

Value: (a) for Inventory (other than Eligible In-Transit Inventory), its value determined on the basis of the lower of cost or market, calculated on a first-in, first out basis, and excluding any portion of cost attributable to intercompany profit among Borrowers and their Affiliates; (b) for Eligible In-Transit Inventory, its value determined on the basis of FOB (as defined in Incoterms 2000 by the International Chamber of Commerce) at the point of shipment; and (c) for an Account, its face amount, net of any returns, rebates, discounts (calculated on the shortest terms), credits, allowances or Taxes (including sales, excise or other taxes) that have been or could be claimed by the Account Debtor or any other Person.

WMC: WM Coffman LLC, a Delaware limited liability company, now known as Old Stairs Co LLC.

1.2           Accounting Terms. Under the Loan Documents (except as otherwise specified herein), all accounting terms shall be interpreted, all accounting determinations shall be made, and all financial statements shall be prepared, in accordance with GAAP applied on a basis consistent with the most recent audited financial statements of Borrowers delivered to Agent before the Closing Date and using the same inventory valuation method as used in such financial statements, except for any change required or permitted by GAAP if Borrowers’ certified public accountants concur in such change, the change is disclosed to Agent, and Section 10.3 is amended in a manner satisfactory to Required Lenders to take into account the effects of the change.

1.3           Uniform Commercial Code. As used herein, the following terms are defined in accordance with the UCC in effect in the State of New York from time to time: “Chattel Paper,” “Commercial Tort Claim,” “Deposit Account,” “Document,” “Equipment,” “General Intangibles,” “Goods,” “Instrument,” “Investment Property,” “Letter-of-Credit Right” and “Supporting Obligation.”

1.4           Certain Matters of Construction. The terms “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In the computation of periods of time from a specified date to a later specified date, “from” means “from and including,” and “to” and “until” each mean “to but excluding.” The terms “including” and “include” shall mean “including, without limitation” and, for purposes of each Loan Document, the parties agree that the rule of ejusdem generis shall not be applicable to limit any provision. Section titles appear as a matter of convenience only and shall not affect the interpretation of any Loan Document. All references to (a) laws or statutes include all related rules, regulations, interpretations, amendments and successor provisions; (b) any document, instrument or agreement include any amendments, waivers and other modifications, extensions or renewals (to the extent permitted by the Loan Documents); (c) any section mean, unless the context otherwise requires, a section of this Agreement; (d) any exhibits or schedules mean, unless the context otherwise requires, exhibits and schedules attached hereto, which are hereby incorporated by reference; (e) any Person include successors and assigns; (f) time of day mean time of day at Agent’s notice address under Section 14.3.1; or (g) discretion of Agent, Issuing Bank or any Lender mean the sole and absolute discretion of such Person. All calculations of Value, fundings of Loans, issuances of Letters of Credit and payments of Obligations shall be in Dollars and, unless the context otherwise requires, all determinations (including calculations of Borrowing Base and financial covenants) made from time to time under the Loan Documents shall be made in light of the circumstances existing at such time. Borrowing Base calculations shall be consistent with historical methods of valuation and calculation, and otherwise satisfactory to Agent (and not necessarily calculated in accordance with GAAP). Obligors shall have the burden of establishing any alleged negligence, misconduct or lack of good faith by Agent, Issuing Bank or any Lender under any Loan Documents. No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision. Whenever the phrase “to the best of Borrowers’ knowledge” or words of similar import are used in any Loan Documents, it means actual knowledge of a Senior Officer, or knowledge that a Senior Officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain the matter to which such phrase relates.

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SECTION 2.          CREDIT FACILITIES

2.1           Revolver Commitment.

2.1.1           Revolver Loans. Each Lender agrees, severally on a Pro Rata basis up to its Revolver Commitment, on the terms set forth herein, to make Revolver Loans to Borrowers from time to time through the Commitment Termination Date. The Revolver Loans may be repaid and reborrowed as provided herein. In no event shall Lenders have any obligation to honor a request for a Revolver Loan if the unpaid balance of Revolver Loans outstanding at such time (including the requested Loan) would exceed the Borrowing Base.

2.1.2           Revolver Notes. The Revolver Loans made by each Lender and interest accruing thereon shall be evidenced by the records of Agent and such Lender. At the request of any Lender, Borrowers shall deliver a Revolver Note to such Lender.

2.1.3           Use of Proceeds. The proceeds of Revolver Loans shall be used by Borrowers solely (a) to pay fees and transaction expenses associated with the closing of this credit facility; (b) to pay Obligations in accordance with this Agreement; (c) to finance the ATSCO Acquisition and Permitted Acquisitions; and (d) for working capital and other lawful corporate purposes of Borrowers.

2.1.4           Voluntary Reduction or Termination of Revolver Commitments.

(a)          The Revolver Commitments shall terminate on the Revolver Termination Date, unless sooner terminated in accordance with this Agreement. Upon at least 20 Business Days prior written notice to Agent at any time after the first Loan Year, Borrowers may, at their option, terminate the Revolver Commitments and this credit facility. Any notice of termination given by Borrowers shall be irrevocable. On the termination date, Borrowers shall make Full Payment of all Obligations.

(b)          Borrowers may permanently reduce the Revolver Commitments, on a Pro Rata basis for each Lender, upon at least 20 Business Days prior written notice to Agent, which notice shall specify the amount of the reduction and shall be irrevocable once given. Each reduction shall be in a minimum amount of $1,000,000, or an increment of $1,000,000 in excess thereof.

(c)          Concurrently with any reduction in or termination of the Revolver Commitments, for whatever reason (including an Event of Default), Borrowers shall pay to Agent, for the Pro Rata benefit of Lenders and as liquidated damages for loss of bargain (and not as a penalty), an amount equal to (i) if the reduction or termination occurs during the first Loan Year, 1.00% of the Revolver Commitments being reduced or terminated; and (ii) if it occurs during the second Loan Year, 0.50% of the Revolver Commitments being reduced or terminated. No termination charge shall be payable if termination occurs on the Revolver Termination Date.

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2.1.5           Overadvances. If the aggregate Revolver Loans exceed the Borrowing Base (“Overadvance”) at any time, the excess amount shall be payable by Borrowers on demand by Agent, but all such Revolver Loans shall nevertheless constitute Obligations secured by the Collateral and entitled to all benefits of the Loan Documents. Unless its authority has been revoked in writing by Required Lenders, Agent may require Lenders to honor requests for Overadvance Loans and to forbear from requiring Borrowers to cure an Overadvance, (a) when no other Event of Default is known to Agent, as long as (i) the Overadvance does not continue for more than 30 consecutive days (and no Overadvance may exist for at least five consecutive days thereafter before further Overadvance Loans are required), and (ii) the Overadvance is not known by Agent to exceed 10% of the Borrowing Base; and (b) regardless of whether an Event of Default exists, if Agent discovers an Overadvance not previously known by it to exist, as long as from the date of such discovery the Overadvance (i) is not increased by more than $1,000,000, and (ii) does not continue for more than 30 consecutive days. In no event shall Overadvance Loans be required that would cause the outstanding Revolver Loans and LC Obligations to exceed the aggregate Revolver Commitments. Any funding of an Overadvance Loan or sufferance of an Overadvance shall not constitute a waiver by Agent or Lenders of the Event of Default caused thereby. In no event shall any Borrower or other Obligor be deemed a beneficiary of this Section nor authorized to enforce any of its terms.

2.1.6           Protective Advances. Agent shall be authorized, in its discretion, at any time that any conditions in Section 6 are not satisfied to make Base Rate Revolver Loans (“Protective Advances”) (a) up to an aggregate amount (when combined with any outstanding Overadvance) of $1,000,000 outstanding at any time, if Agent deems such Loans necessary or desirable to preserve or protect Collateral, or to enhance the collectability or repayment of Obligations; or (b) to pay any other amounts chargeable to Obligors under any Loan Documents, including costs, fees and expenses. Each Lender shall participate in each Protective Advance on a Pro Rata basis. Required Lenders may at any time revoke Agent’s authority to make further Protective Advances by written notice to Agent. Absent such revocation, Agent’s determination that funding of a Protective Advance is appropriate shall be conclusive.

2.2           Term Loan Commitment.

2.2.1           Term Loans. (a) Prior to the Closing Date, certain term loans were made to the Borrowers under the Existing Agreement which remain outstanding as of the Closing Date (each such outstanding loans being hereinafter referred to as the “Existing Term Loans”). Subject to the terms and conditions of this Agreement, the Obligors and each Lender agree that on the Closing Date, the Existing Term Loans shall bewere re-evidenced as loans under this Loan Agreement, as Tranche A Term Loans hereunder, and the terms applicable thereto shall bewere restated in their entirety and shall be evidenced by this Agreement. Amounts repaid or prepaid in respect of Tranche A Term Loans may not be reborrowed. The Tranche A Commitment of each Lender shall immediately and automatically terminateterminated on the Closing Date after giving effect to the reallocation of the Loans as described in this Section 2.2.1(a) and Schedule 1.1.

(b)          Each Lender agrees, severally on a Pro Rata basis up to its Tranche B Commitment, on the terms set forth herein, to make Tranche B Term Loan to Borrowers. Tranche B Term Loans shall be funded by Lenders on the Closing Date. The Tranche B Commitment of the Lenders shall expire upon the funding by Lenders of the Tranche B Term Loans. Once repaid, whether such repayment is voluntary or required, Term B Term Loans may not be reborrowed. and Schedule 1.1 as in effect on the Closing Date. On the Second Amendment Effective Date and after giving effect to the repayment of the Tranche A Term Loans as required under the Second Amendment, the Tranche A Commitment of each Lender shall be as set forth on Schedule 1.1 and shall immediately and automatically terminate on such date.

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2.2.2           Term Notes. The Term Loans made by each Lender and interest accruing thereon shall be evidenced by the records of Agent and such Lender. At the request of any Lender, Borrowers shall deliver a Term Note to such Lender.

2.2B       Capex Loan Commitment.

2.2B.1       Capex Loans. Prior to the Closing Date, “Capex Loans” (as defined in the Existing Agreement) were made to the Borrowers under the Existing Agreement which remain outstanding as of the Closing Date (each such outstanding loans being hereinafter referred to as the “Existing Capex Loans”). Subject to the terms and conditions of this Agreement, the Obligors and each Lender agree that on the Closing Date, the Existing Capex Loans shall be re-evidenced as Capex Loans loans under this Loan Agreement and the terms applicable thereto shall be restated in their entirety and shall be evidenced by this Agreement. Each Lender agrees, severally on a Pro Rata basis up to its Capex Loan Commitment, on the terms set forth herein, to make one or more Capex Loans to Borrowers from time to time through the earlier of MayJune 30, 20172018 or the Capex Loan Termination Date as requested by Borrowers in the manner set forth in Section 2.2B.2. No repayment in respect of any Capex Loan may be reborrowed. Each Lender will make Capex Loans only if each of the following conditions is satisfied:

(a)          Borrowers shall have provided evidence to Agent, in form and substance reasonably satisfactory to Agent, that Borrowers will use the proceeds of each requested Capex Loan to purchase, or reimburse Borrowers in connection with the purchase of, new production, used or refurbished Equipment (i) used in such Borrowers’ business operations, (ii) to be located at locations in compliance with this Agreement, and (iii) subject to no Liens other than those in favor of Agent and, when such Capex Loan is made, other Permitted Liens permitted hereunder pursuant to Section 10.2.2(c), (d), (f), and (i); provided that (A) any used or refurbished Equipment is subject to an appraisal in form and substance (and by an appraiser) reasonably satisfactory to Agent; and (B) any Capex Loans made to reimburse Borrowers shall be made within 30 days of Borrowers’ purchase.

(b)          Agent shall have received true copies of the invoice(s) from the seller of the Equipment evidencing the cost of the Equipment Borrowers propose to purchase or for which Borrowers are requesting reimbursement with the proceeds of each Capex Loan, and such invoice(s) disclose(s) that the original principal amount of such requested Capex Loan does not exceed (i) in the case of new Equipment, 75% of the cost of such Equipment, or (ii) in the case of used or refurbished Equipment, 75% of the NOLV of the appraised value of such Equipment, in each case, exclusive of transportation, installation, taxes, software, perishable tooling and other “soft” costs (as determined by Agent in its reasonable discretion) pertaining thereto;

(c)          Agent shall have received, in form and substance reasonably satisfactory to Agent, evidence of insurance covering such Equipment as to which Agent is loss payee pursuant to a Lenders Loss Payable Endorsement acceptable to Agent;

(d)          the requested Capex Loan is in a minimum original principal amount of $250,000;

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(e)          the principal amount of the requested Capex Loan, together with the original principal amounts of all other outstanding Capex Loans does not exceed the Capex Commitments;

(f)          unless waived by Lenders, the requested Capex Loan would be the only Capex Loan funded by Lenders during Borrowers’ then existing fiscal quarter;

(g)          Borrowers shall have delivered or caused to be delivered to Agent and each Lender any and all documents, agreements and instruments deemed reasonably necessary by Agent or any Lender in connection with the making of such Capex Loan. The proceeds of the Capex Loans shall be used solely for the purposes specified in this Section 2.2B.

2.2B.2   Manner of Borrowing and Funding Capex Loans. A request for a Capex Loan shall be made in the following manner: Borrower Agent shall give Agent notice (in form reasonably satisfactory to Agent) of its intention to borrow a Capex Loan, in which Borrower Agent shall specify the amount of the proposed borrowing (consistent with Section 2.2B.1) and the proposed borrowing date, which shall be a Business Day, no later than 12:00 p.m. (New York time) on the date (a) two (2) Business Days prior to the requested funding date, in the case of Base Rate Loans, and (b) four (4) Business Days prior to the requested funding date, in the case of LIBOR Loans. In addition, Borrowers shall also comply with the requirements of Section 2.2B.1 with respect to such Capex Loan. Each Lender shall timely honor its Capex Loan Commitment on the terms set forth in Section 4.1.2.

2.2B.3   Repayment of Capex Loans. The principal amount of each Capex Loan shall be repaid in consecutive equal monthly installments of 1/60th of the original principal amount thereof, commencing on the first day of the month following the month in which such Capex Loan is made and the first day of each month thereafter until the Capex Loan Termination Date. On the Capex Loan Termination Date, all principal, interest and other amounts owing with respect to each Capex Loan shall be due and payable in full. Each installment shall be paid to Agent for the Pro Rata benefit of Lenders. Payments made with respect to a Capex Loan may not be reborrowed. Borrowers may, at their option from time to time, prepay any Capex Loan selected by Borrowers, in whole or in part, which prepayment must be at least $50,000, plus any increment of $50,000 in excess thereof. Borrowers shall give written notice to Agent of an intended prepayment of a Capex Loan, which notice shall specify the amount of the prepayment, shall be irrevocable once given, shall be given at least 10 Business Days prior to the end of a month and shall be effective as of the first day of the next month. All prepayments shall be applied to such Capex Loan in inverse order of maturity.

2.3           Letter of Credit Facility.

2.3.1           Issuance of Letters of Credit. Issuing Bank shall issue Letters of Credit from time to time until 30 days prior to the Revolver Termination Date (or until the Commitment Termination Date, if earlier), on the terms set forth herein, including the following:

(a)          Each Borrower acknowledges that Issuing Bank’s issuance of any Letter of Credit is conditioned upon Issuing Bank’s receipt of a LC Application with respect to the requested Letter of Credit, as well as such other instruments and agreements as Issuing Bank may customarily require for issuance of a letter of credit of similar type and amount. Issuing Bank shall have no obligation to issue any Letter of Credit unless (i) Issuing Bank receives a LC Request and LC Application at least three Business Days prior to the requested date of issuance; (ii) each LC Condition is satisfied; and (iii) if a Defaulting Lender exists, such Lender or Borrowers have entered into arrangements satisfactory to Agent and Issuing Bank to eliminate any funding risk associated with the Defaulting Lender. If, in sufficient time to act, Issuing Bank receives written notice from Required Lenders that any LC Condition has not been satisfied, Issuing Bank shall not issue the requested Letter of Credit. Prior to receipt of any such notice, Issuing Bank shall not be deemed to have knowledge of any failure of LC Conditions.

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(b)          Letters of Credit may be requested by a Borrower only (i) to support obligations of such Borrower incurred in the Ordinary Course of Business; or (ii) for other purposes as Agent may approve from time to time in writing.

(c)          Obligors assume all risks of the acts, omissions or misuses of any Letter of Credit by the beneficiary. In connection with issuance of any Letter of Credit, none of Agent, Issuing Bank or any Lender shall be responsible for the existence, character, quality, quantity, condition, packing, value or delivery of any goods purported to be represented by any Documents; any differences or variation in the character, quality, quantity, condition, packing, value or delivery of any goods from that expressed in any Documents; the form, validity, sufficiency, accuracy, genuineness or legal effect of any Documents or of any endorsements thereon; the time, place, manner or order in which shipment of goods is made; partial or incomplete shipment of, or failure to ship, any goods referred to in a Letter of Credit or Documents; any deviation from instructions, delay, default or fraud by any shipper or other Person in connection with any goods, shipment or delivery; any breach of contract between a shipper or vendor and a Borrower; errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in interpretation of technical terms; the misapplication by a beneficiary of any Letter of Credit or the proceeds thereof; or any consequences arising from causes beyond the control of Issuing Bank, Agent or any Lender, including any act or omission of a Governmental Authority. The rights and remedies of Issuing Bank under the Loan Documents shall be cumulative. Issuing Bank shall be fully subrogated to the rights and remedies of each beneficiary whose claims against Borrowers are discharged with proceeds of any Letter of Credit.

(d)          In connection with its administration of and enforcement of rights or remedies under any Letters of Credit or LC Documents, Issuing Bank shall be entitled to act, and shall be fully protected in acting, upon any certification, documentation or communication in whatever form believed by Issuing Bank, in good faith, to be genuine and correct and to have been signed, sent or made by a proper Person. Issuing Bank may consult with and employ legal counsel, accountants and other experts to advise it concerning its obligations, rights and remedies, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by such experts. Issuing Bank may employ agents and attorneys-in-fact in connection with any matter relating to Letters of Credit or LC Documents, and shall not be liable for the negligence or misconduct of agents and attorneys-in-fact selected with reasonable care.

2.3.2           Reimbursement; Participations.

(a)          If Issuing Bank honors any request for payment under a Letter of Credit, Borrowers shall pay to Issuing Bank, on the same day (“Reimbursement Date”), the amount paid by Issuing Bank under such Letter of Credit, together with interest at the interest rate for Base Rate Revolver Loans from the Reimbursement Date until payment by Borrowers. The obligation of Borrowers to reimburse Issuing Bank for any payment made under a Letter of Credit shall be absolute, unconditional, irrevocable, and joint and several, and shall be paid without regard to any lack of validity or enforceability of any Letter of Credit or the existence of any claim, setoff, defense or other right that Borrowers may have at any time against the beneficiary. Whether or not Borrower Agent submits a Notice of Borrowing, Borrowers shall be deemed to have requested a Borrowing of Base Rate Revolver Loans in an amount necessary to pay all amounts due Issuing Bank on any Reimbursement Date and each Lender agrees to fund its Pro Rata share of such Borrowing whether or not the Commitments have terminated, an Overadvance exists or is created thereby, or the conditions in Section 6 are satisfied.

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(b)          Upon issuance of a Letter of Credit, each Lender shall be deemed to have irrevocably and unconditionally purchased from Issuing Bank, without recourse or warranty, an undivided Pro Rata interest and participation in all LC Obligations relating to the Letter of Credit. If Issuing Bank makes any payment under a Letter of Credit and Borrowers do not reimburse such payment on the Reimbursement Date, Agent shall promptly notify Lenders and each Lender shall promptly (within one Business Day) and unconditionally pay to Agent, for the benefit of Issuing Bank, the Lender’s Pro Rata share of such payment. Upon request by a Lender, Issuing Bank shall furnish copies of any Letters of Credit and LC Documents in its possession at such time.

(c)          The obligation of each Lender to make payments to Agent for the account of Issuing Bank in connection with Issuing Bank’s payment under a Letter of Credit shall be absolute, unconditional and irrevocable, not subject to any counterclaim, setoff, qualification or exception whatsoever, and shall be made in accordance with this Agreement under all circumstances, irrespective of any lack of validity or unenforceability of any Loan Documents; any draft, certificate or other document presented under a Letter of Credit having been determined to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or the existence of any setoff or defense that any Obligor may have with respect to any Obligations. Issuing Bank does not assume any responsibility for any failure or delay in performance or any breach by any Borrower or other Person of any obligations under any LC Documents. Issuing Bank does not make to Lenders any express or implied warranty, representation or guaranty with respect to the Collateral, LC Documents or any Obligor. Issuing Bank shall not be responsible to any Lender for any recitals, statements, information, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of any LC Documents; the validity, genuineness, enforceability, collectability, value or sufficiency of any Collateral or the perfection of any Lien therein; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Obligor.

(d)          No Issuing Bank Indemnitee shall be liable to any Lender or other Person for any action taken or omitted to be taken in connection with any LC Documents except as a result of its actual gross negligence or willful misconduct. Issuing Bank shall not have any liability to any Lender if Issuing Bank refrains from any action under any Letter of Credit or LC Documents until it receives written instructions from Required Lenders.

2.3.3           Cash Collateral. If any LC Obligations, whether or not then due or payable, shall for any reason be outstanding at any time (a) that an Event of Default exists, (b) that Availability is less than zero, or (c) after the Commitment Termination Date, then Borrowers shall, at Issuing Bank’s or Agent’s request, Cash Collateralize the stated amount of all outstanding Letters of Credit and pay to Issuing Bank the amount of all other LC Obligations. Borrowers shall, on demand by Issuing Bank or Agent from time to time, Cash Collateralize the LC Obligations of any Defaulting Lender. If Borrowers fail to provide any Cash Collateral as required hereunder, Lenders may (and shall upon direction of Agent) advance, as Revolver Loans, the amount of the Cash Collateral required (whether or not the Commitments have terminated, an Overadvance exists or the conditions in Section 6 are satisfied).

2.3.4           Resignation of Issuing Bank. Issuing Bank may resign at any time upon 10 days written notice to Agent and Borrowers. On the effective date of such resignation, Issuing Bank shall have no further obligation to issue, amend, renew, extend or otherwise modify any Letter of Credit, but shall continue to have the benefits of Sections 2.3, 12.6 and 14.2 with respect to any Letters of Credit issued or other actions taken while Issuing Bank. Agent shall promptly appoint a replacement Issuing Bank and, as long as no Default or Event of Default exists, such replacement shall be reasonably acceptable to Borrowers.

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2.3.5           Conflict. The provisions of this Section 2.3 control in the event of any conflict between the specific terms hereof and any LC Application or other LC Document.

SECTION 3.          INTEREST, FEES AND CHARGES

3.1           Interest.

3.1.1           Rates and Payment of Interest.

(a)          The Obligations shall bear interest (i) if a Base Rate Loan, at the Base Rate in effect from time to time, plus the Applicable Margin; (ii) if a LIBOR Loan, at LIBOR for the applicable Interest Period, plus the Applicable Margin; and (iii) if any other Obligation (including, to the extent permitted by law, interest not paid when due), at the Base Rate in effect from time to time, plus the Applicable Margin for Base Rate Revolver Loans. Interest shall accrue from the date the Loan is advanced or the Obligation is incurred or payable, until paid by Borrowers. If a Loan is repaid on the same day made, one day’s interest shall accrue.

(b)          During an Insolvency Proceeding with respect to any Borrower, or during any other Event of Default if Agent or Required Lenders in their discretion so elect, Obligations shall bear interest at the Default Rate (whether before or after any judgment). Each Borrower acknowledges that the cost and expense to Agent and Lenders due to an Event of Default are difficult to ascertain and that the Default Rate is a fair and reasonable estimate to compensate Agent and Lenders for this.

(c)          Interest accrued on the Loans shall be due and payable in arrears, (i) on the first day of each month; (ii) on any date of prepayment, with respect to the principal amount of Loans being prepaid; and (iii) on the Commitment Termination Date. Interest accrued on any other Obligations shall be due and payable as provided in the Loan Documents and, if no payment date is specified, shall be due and payable on demand. Notwithstanding the foregoing, interest accrued at the Default Rate shall be due and payable on demand.

3.1.2           Application of LIBOR to Outstanding Loans.

(a)          Borrowers may on any Business Day, subject to delivery of a Notice of Conversion/Continuation, elect to convert any portion of the Base Rate Loans to, or to continue any LIBOR Loan at the end of its Interest Period as, a LIBOR Loan. During any Default or Event of Default, Agent may (and shall at the direction of Required Lenders) declare that no Loan may be made, converted or continued as a LIBOR Loan.

(b)          Whenever Borrowers desire to convert or continue Loans as LIBOR Loans, Borrower Agent shall give Agent a Notice of Conversion/Continuation, no later than 2:00 p.m. at least three Business Days before the requested conversion or continuation date. Promptly after receiving any such notice, Agent shall notify each Lender thereof. Each Notice of Conversion/Continuation shall be irrevocable, and shall specify the amount of Loans to be converted or continued, the conversion or continuation date (which shall be a Business Day), and the duration of the Interest Period (which shall be deemed to be 30 days if not specified). If, upon the expiration of any Interest Period in respect of any LIBOR Loans, Borrowers shall have failed to deliver a Notice of Conversion/Continuation, they shall be deemed to have elected to convert such Loans into Base Rate Loans.

3.1.3           Interest Periods. In connection with the making, conversion or continuation of any LIBOR Loans, Borrowers shall select an interest period (“Interest Period”) to apply, which interest period shall be one, two or three months; provided, however, that:

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(a)          the Interest Period shall commence on the date the Loan is made or continued as, or converted into, a LIBOR Loan, and shall expire one, two or three months thereafter, as applicable;

(b)          if any Interest Period begins on a day for which there is no corresponding day in the calendar month at its end or if such corresponding day falls after the last Business Day of such month, then the Interest Period shall expire on the last Business Day of such month; and if any Interest Period would otherwise expire on a day that is not a Business Day, then, for purposes of the timing of payment of interest only (and not for purposes of determining any subsequent Interest Period), the period shall expire on the next Business Day; provided that such extension of time shall in such case not be included in the computation of payment of interest with the exception of the final payment of interest at maturity or in connection with a voluntary or involuntary prepayment of principal prior to maturity; and

(c)          no Interest Period shall extend beyond the Revolver Termination Date; and no Interest Period for a LIBOR Term Loan may be established that would require repayment before the end of an Interest Period in order to make any scheduled principal payment on Term Loans.

3.2           Fees.

3.2.1           Unused Line Fee. Borrowers shall pay to Agent, for the Pro Rata benefit of Lenders, a fee equal to the Unused Line Fee Percentage times the amount by which the Revolver Commitments exceed the average daily balance of Revolver Loans and stated amount of Letters of Credit during any month. Such fee shall be payable in arrears, on the first day of each month and on the Commitment Termination Date.

3.2.2           LC Facility Fees. Borrowers shall pay (a) to Agent, for the Pro Rata benefit of Lenders, a fee equal to the Applicable Margin in effect for LIBOR Revolver Loans times the average daily undrawn amount of Letters of Credit, which fee shall be payable monthly in arrears, on the first day of each month; (b) to Issuing Bank, for its own account, a fronting fee equal to 0.250% per annum on the undrawn amount of each Letter of Credit, which fee shall be payable monthly in arrears, on the first day of each month; and (c) to Issuing Bank, for its own account, all customary charges associated with the issuance, amending, negotiating, payment, processing, transfer and administration of Letters of Credit, which may be charged to the Loan Account upon incurrence or which charges shall be paid upon 5 Business Days notice thereof. During an Event of Default, the fee payable under clause (a) shall be increased by 2% per annum..

3.2.3           Collateral Management Fee. Borrowers shall pay to Agent, for its own account, a collateral management fee of $18,000 per annum, payable in equal monthly installments on the first day of each month.

3.3           Computation of Interest, Fees, Yield Protection. All interest, as well as fees and other charges calculated on a per annum basis, shall be computed for the actual days elapsed, based on a year of 360 days. Each determination by Agent of any interest, fees or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error. All fees shall be fully earned when due and shall not be subject to rebate, refund or proration. All fees payable under Section 3.2 are compensation for services and are not, and shall not be deemed to be, interest or any other charge for the use, forbearance or detention of money. A certificate as to amounts payable by Borrowers under Section 3.4, 3.6, 3.7, 3.9 or 5.9, submitted to Borrower Agent by Agent or the affected Lender, as applicable, shall be final, conclusive and binding for all purposes, absent manifest error, and Borrowers shall pay such amounts to the appropriate party within 10 days following receipt of the certificate.

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3.4           Reimbursement Obligations. Borrowers shall reimburse Agent for all Extraordinary Expenses. Borrowers shall also reimburse Agent for all legal, accounting, appraisal, consulting, and other fees, costs and expenses incurred by it in connection with (a) negotiation and preparation of any Loan Documents, including any amendment or other modification thereof; (b) administration of and actions relating to any Collateral, Loan Documents and transactions contemplated thereby, including any actions taken to perfect or maintain priority of Agent’s Liens on any Collateral, to maintain any insurance required hereunder or to verify Collateral; and (c) subject to the limits of Section 10.1.1(b), each inspection, audit or appraisal with respect to any Obligor or Collateral, whether prepared by Agent’s personnel or a third party. All legal, accounting and consulting fees shall be charged to Borrowers by Agent’s professionals at their regular hourly rates, regardless of any reduced or alternative fee billing arrangements that Agent, any Lender or any of their Affiliates may have with such professionals with respect to this or any other transaction. If, for any reason (including inaccurate reporting on financial statements or a Compliance Certificate), it is determined that a higher Applicable Margin should have applied to a period than was actually applied, then the proper margin shall be applied retroactively and Borrowers shall immediately pay to Agent, for the Pro Rata benefit of Lenders, an amount equal to the difference between the amount of interest and fees that would have accrued using the proper margin and the amount actually paid. All amounts payable by Borrowers under this Section may be charged to the Loan Account upon incurrence during the continuance of Default or Event of Default or otherwise, upon 3 days' notice thereof.

3.5           Illegality. If any Lender determines that any Applicable Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund LIBOR Loans, or to determine or charge interest rates based upon LIBOR, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to Agent, (a) any obligation of such Lender to make or continue LIBOR Loans or to convert Base Rate Loans to LIBOR Loans shall be suspended and (b) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the LIBOR component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by Agent without reference to the LIBOR component of Base Rate, in each case until such Lender notifies Agent that the circumstances giving rise to such determination no longer exist. Upon delivery of such notice, (x) Borrowers shall prepay or, if applicable, convert all LIBOR Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by Agent without reference to the LIBOR component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBOR Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon LIBOR, Agent shall, during the period of such suspension, compute the Base Rate applicable to such Lender without reference to the LIBOR component thereof until Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon LIBOR. Upon any such prepayment or conversion, Borrowers shall also pay accrued interest on the amount so prepaid or converted.

3.6           Inability to Determine Rates. If Required Lenders notify Agent for any reason in connection with a request for a Borrowing of, or conversion to or continuation of, a LIBOR Loan that (1) Dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable amount and Interest Period of such Loan, (2) adequate and reasonable means do not exist for determining LIBOR for the requested Interest Period, or (3) LIBOR for the requested Interest Period does not, in Lender’s good faith judgment, adequately and fairly reflect the cost to such Lenders of funding such Loan, then Agent will promptly so notify Borrower Agent and each Lender. Thereafter, (x) the obligation of Lenders to make or maintain LIBOR Loans shall be suspended and (y) in the event of a determination described in the preceding sentence with respect to the LIBOR component of the Base Rate, the utilization of the LIBOR component in determining the Base Rate shall be suspended, in each case until Agent (upon instruction by Required Lenders) revokes such notice. Upon receipt of such notice, Borrower Agent may revoke any pending request for a Borrowing of, conversion to or continuation of a LIBOR Loan or, failing that, will be deemed to have submitted a request for a Base Rate Loan.

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3.7           Increased Costs; Capital Adequacy.

3.7.1           Change in Law. If any Change in Law shall:

(a)          impose modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in LIBOR) or Issuing Bank;

(b)          subject any Lender or Issuing Bank to any Tax with respect to any Loan, Loan Document, Letter of Credit or participation in LC Obligations, or change the basis of taxation of payments to such Lender or Issuing Bank in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 5.9 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or Issuing Bank); or

(c)          impose on any Lender or Issuing Bank or the London interbank market any other condition, cost or expense affecting any Loan, Loan Document, Letter of Credit or participation in LC Obligations;

and the result thereof shall be to increase the cost to such Lender of making or maintaining any LIBOR Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or Issuing Bank hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or Issuing Bank, Borrowers will pay to such Lender or Issuing Bank, as applicable, such additional amount or amounts as will compensate such Lender or Issuing Bank, as applicable, for such additional costs incurred or reduction suffered.

3.7.2           Capital Adequacy. If any Lender or Issuing Bank determines that any Change in Law affecting such Lender or Issuing Bank or any Lending Office of such Lender or such Lender’s or Issuing Bank’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s, Issuing Bank’s or holding company’s capital as a consequence of this Agreement, or such Lender’s or Issuing Bank’s Commitments, Loans, Letters of Credit or participations in LC Obligations, to a level below that which such Lender, Issuing Bank or holding company could have achieved but for such Change in Law (taking into consideration such Lender’s, Issuing Bank’s and holding company’s policies with respect to capital adequacy), then from time to time Borrowers will pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate it or its holding company for any such reduction suffered.

3.7.3           Compensation. Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of its right to demand such compensation, but Borrowers shall not be required to compensate a Lender or Issuing Bank for any increased costs incurred or reductions suffered more than six months prior to the date that the Lender or Issuing Bank notifies Borrower Agent of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

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3.8           Mitigation. If any Lender gives a notice under Section 3.5 or requests compensation under Section 3.7, or if Borrowers are required to pay additional amounts with respect to a Lender under Section 5.9, then such Lender shall use reasonable efforts to designate a different Lending Office 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 (a) would eliminate the need for such notice or reduce amounts payable or to be withheld in the future, as applicable; and (b) would not subject the Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to it. Borrowers shall pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

3.9           Funding Losses. If for any reason (other than default by a Lender) (a) any Borrowing of, or conversion to or continuation of, a LIBOR Loan does not occur on the date specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation (whether or not withdrawn), (b) any repayment or conversion of a LIBOR Loan occurs on a day other than the end of its Interest Period, or (c) Borrowers fail to repay a LIBOR Loan when required hereunder, then Borrowers shall pay to each Lender all losses and expenses that it sustains as a consequence thereof, including loss of anticipated profits and any loss or expense arising from liquidation or redeployment of funds or from fees payable to terminate deposits of matching funds. Lenders shall not be required to purchase Dollar deposits in the interbank market or any other offshore Dollar market to fund any LIBOR Loan, but the provisions hereof shall be deemed to apply as if each Lender had purchased such deposits to fund its LIBOR Loans.

3.10         Maximum Interest. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by Applicable Law (“maximum rate”). If Agent or any Lender shall receive interest in an amount that exceeds the maximum rate, the excess interest shall be applied to the principal of the Obligations or, if it exceeds such unpaid principal, refunded to Borrowers. In determining whether the interest contracted for, charged or received by Agent or a Lender exceeds the maximum rate, such Person may, to the extent permitted by Applicable Law, (a) characterize any payment that is not principal as an expense, fee or premium rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

SECTION 4.          LOAN ADMINISTRATION

4.1           Manner of Borrowing and Funding Revolver Loans.

4.1.1           Notice of Borrowing.

(a)          Whenever Borrowers desire funding of a Borrowing of Revolver Loans, Borrower Agent shall give Agent a Notice of Borrowing. Such notice must be received by Agent no later than 12:00 p.m. (New York time) (i) on the Business Day of the requested funding date, in the case of Base Rate Loans, and (ii) at least three Business Days prior to the requested funding date, in the case of LIBOR Loans. Notices received after 12:00 p.m. (New York time) shall be deemed received on the next Business Day. Each Notice of Borrowing shall be irrevocable and shall specify (A) the amount of the Borrowing, (B) the requested funding date (which must be a Business Day), (C) whether the Borrowing is to be made as Base Rate Loans or LIBOR Loans, and (D) in the case of LIBOR Loans, the duration of the applicable Interest Period (which shall be deemed to be 30 days if not specified).

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(b)          Unless payment is otherwise timely made by Borrowers, the becoming due of any Obligations (whether principal, interest, fees or other charges, including Extraordinary Expenses, LC Obligations, Cash Collateral and Secured Bank Product Obligations) shall be deemed to be a request for Base Rate Revolver Loans on the due date, in the amount of such Obligations. The proceeds of such Revolver Loans shall be disbursed as direct payment of the relevant Obligation. In addition, Agent may, at its option, charge such Obligations against any operating, investment or other account of a Borrower maintained with Agent or any of its Affiliates.

(c)          If Borrowers establish a controlled disbursement account with Agent or any Affiliate of Agent, then the presentation for payment of any check or other item of payment drawn on such account at a time when there are insufficient funds to cover it shall be deemed to be a request for Base Rate Revolver Loans on the date of such presentation, in the amount of the check and items presented for payment. The proceeds of such Revolver Loans may be disbursed directly to the controlled disbursement account or other appropriate account.

4.1.2           Fundings by Lenders. Each Lender shall timely honor its Revolver Commitment by funding its Pro Rata share of each Borrowing of Revolver Loans that is properly requested hereunder. Except for Borrowings to be made as Swingline Loans, Agent shall endeavor to notify Lenders of each Notice of Borrowing (or deemed request for a Borrowing) by 12:00 on the proposed funding date for Base Rate Loans or by 3:00 p.m. at least two Business Days before any proposed funding of LIBOR Loans. Each Lender shall fund to Agent such Lender’s Pro Rata share of the Borrowing to the account specified by Agent in immediately available funds not later than 2:00 p.m. on the requested funding date, unless Agent’s notice is received after the times provided above, in which event Lender shall fund its Pro Rata share by 11:00 a.m. on the next Business Day. Subject to its receipt of such amounts from Lenders, Agent shall disburse the proceeds of the Revolver Loans to the Operating Account or otherwise, to an account or pursuant to direction of Borrower Agent, in each case, reasonably satisfactory to Agent. Unless Agent shall have received (in sufficient time to act) written notice from a Lender that it does not intend to fund its Pro Rata share of a Borrowing, Agent may assume that such Lender has deposited or promptly will deposit its share with Agent, and Agent may disburse a corresponding amount to Borrowers. If a Lender’s share of any Borrowing or of any settlement pursuant to Section 4.1.3(b) is not received by Agent, then Borrowers agree to repay to Agent on demand the amount of such share, together with interest thereon from the date disbursed until repaid, at the rate applicable to the Borrowing.

4.1.3           Swingline Loans; Settlement.

(a)          Agent may, but shall not be obligated to, advance Swingline Loans to Borrowers, up to an aggregate outstanding amount of $1,000,000, unless the funding is specifically required to be made by all Lenders hereunder. Each Swingline Loan shall constitute a Revolver Loan for all purposes, except that payments thereon shall be made to Agent for its own account. The obligation of Borrowers to repay Swingline Loans shall be evidenced by the records of Agent and need not be evidenced by any promissory note.

(b)          To facilitate administration of the Revolver Loans, Lenders and Agent agree (which agreement is solely among them, and not for the benefit of or enforceable by any Borrower) that settlement among them with respect to Swingline Loans and other Revolver Loans may take place on a date determined from time to time by Agent, which shall occur at least once each week. On each settlement date, settlement shall be made with each Lender in accordance with the Settlement Report delivered by Agent to Lenders. Between settlement dates, Agent may in its discretion apply payments on Revolver Loans to Swingline Loans, regardless of any designation by Borrower or any provision herein to the contrary. Each Lender’s obligation to make settlements with Agent is absolute and unconditional, without offset, counterclaim or other defense, and whether or not the Commitments have terminated, an Overadvance exists or the conditions in Section 6 are satisfied. If, due to an Insolvency Proceeding with respect to a Borrower or otherwise, any Swingline Loan may not be settled among Lenders hereunder, then each Lender shall be deemed to have purchased from Agent a Pro Rata participation in each unpaid Swingline Loan and shall transfer the amount of such participation to Agent, in immediately available funds, within one Business Day after Agent’s request therefor.

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4.1.4           Notices. Each Borrower authorizes Agent and Lenders to extend, convert or continue Loans, effect selections of interest rates, and transfer funds to or on behalf of Borrowers based on telephonic or e-mailed instructions. Borrowers shall confirm each such request by prompt delivery to Agent of a Notice of Borrowing or Notice of Conversion/Continuation, if applicable, but if it differs in any material respect from the action taken by Agent or Lenders, the records of Agent and Lenders shall govern. Neither Agent nor any Lender shall have any liability for any loss suffered by a Borrower as a result of Agent or any Lender acting upon its understanding of telephonic or e-mailed instructions from a person believed in good faith by Agent or any Lender to be a person authorized to give such instructions on a Borrower’s behalf.

4.2           Defaulting Lender. Agent may (but shall not be required to), in its discretion, retain any payments or other funds received by Agent that are to be provided to a Defaulting Lender hereunder, and may apply such funds to such Lender’s defaulted obligations or readvance the funds to Borrowers in accordance with this Agreement. The failure of any Lender to fund a Loan, to make any payment in respect of LC Obligations or to otherwise perform its obligations hereunder shall not relieve any other Lender of its obligations, and no Lender shall be responsible for default by another Lender. Lenders and Agent agree (which agreement is solely among them, and not for the benefit of or enforceable by any Borrower) that, solely for purposes of determining a Defaulting Lender’s right to vote on matters relating to the Loan Documents and to share in payments, fees and Collateral proceeds thereunder, a Defaulting Lender shall not be deemed to be a “Lender” until all its defaulted obligations have been cured.

4.3           Number and Amount of LIBOR Loans; Determination of Rate. Each Borrowing of LIBOR Loans when made shall be in a minimum amount of $250,000, plus any increment of $100,000 in excess thereof. No more than 7 Borrowings of LIBOR Loans may be outstanding at any time, and all LIBOR Loans having the same length and beginning date of their Interest Periods shall be aggregated together and considered one Borrowing for this purpose. The aggregate dollar amount of LIBOR Loans may not comprise more than 80% of the outstanding dollar amount of all Revolver Loans plus 100% of the outstanding dollar amount of all Term Loans plus 100% of the outstanding dollar amount of all Capex Loans minus any scheduled principal payments of the Term Loans to be made pursuant to Section 5.3.1 minus any scheduled principal payments of the Capex Loans to be made pursuant to Section 2.2B.3 during Interest Periods for all LIBOR Loans. Upon determining LIBOR for any Interest Period requested by Borrowers, Agent shall promptly notify Borrowers thereof by telephone or electronically and, if requested by Borrowers, shall confirm any telephonic notice in writing.

4.4           Borrower Agent. Each Obligor hereby designates P&F (“Borrower Agent”) as its representative and agent for all purposes under the Loan Documents, including requests for Loans and Letters of Credit, designation of interest rates, delivery or receipt of communications, preparation and delivery of Borrowing Base and , receipt and payment of Obligations, requests for waivers, amendments or other accommodations, actions under the Loan Documents (including in respect of compliance with covenants), and all other dealings with Agent, Issuing Bank or any Lender. Borrower Agent hereby accepts such appointment. Agent and Lenders shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or communication (including any notice of borrowing) delivered by Borrower Agent on behalf of any Obligor. Agent and Lenders may give any notice or communication with an Obligor hereunder to Borrower Agent on behalf of such Obligor. Each of Agent, Issuing Bank and Lenders shall have the right, in its discretion, to deal exclusively with Borrower Agent for any or all purposes under the Loan Documents. Each Obligor agrees that any notice, election, communication, representation, agreement or undertaking made on its behalf by Borrower Agent shall be binding upon and enforceable against it.

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4.5           One Obligation. The Loans, LC Obligations and other Obligations shall constitute one general obligation of Borrowers and (unless otherwise expressly provided in any Loan Document) shall be secured by Agent’s Lien upon all Collateral; provided, however, that Agent and each Lender shall be deemed to be a creditor of, and the holder of a separate claim against, each Borrower to the extent of any Obligations jointly or severally owed by such Borrower.

4.6           Effect of Termination. On the effective date of the termination of all the Commitments, all Obligations shall be immediately due and payable, and any Lender may terminate its and its Affiliates’ Bank Products (including, only with the consent of Agent, any Cash Management Services). All undertakings of Obligors contained in the Loan Documents shall survive any termination, and Agent shall retain its Liens in the Collateral and all of its rights and remedies under the Loan Documents until Full Payment of the Obligations. Notwithstanding Full Payment of the Obligations, Agent shall not be required to terminate its Liens in any Collateral unless, with respect to any damages Agent may incur as a result of the dishonor or return of Payment Items applied to Obligations, Agent receives (a) a written agreement, executed by Obligors and any Person whose advances are used in whole or in part to satisfy the Obligations, indemnifying Agent and Lenders from any such damages; or (b) such Cash Collateral as Agent, in its discretion, deems necessary to protect against any such damages. Sections 2.3, 3.4, 3.6, 3.7, 3.9, 5.5, 5.9, 5.10, 12, 14.2 and this Section, and the obligation of each Obligor and Lender with respect to each indemnity given by it in any Loan Document, shall survive Full Payment of the Obligations and any release relating to this credit facility.

SECTION 5.          PAYMENTS

5.1           General Payment Provisions. All payments of Obligations shall be made in Dollars, without offset, counterclaim or defense of any kind, free of (and without deduction for) any Taxes, and in immediately available funds, not later than 2:00 p.m. on the due date. Any payment after such time shall be deemed made on the next Business Day. Any payment of a LIBOR Loan prior to the end of its Interest Period shall be accompanied by all amounts due under Section 3.9. Any prepayment of Loans shall be applied first to Base Rate Loans and then to LIBOR Loans.

5.2           Repayment of Revolver Loans. Revolver Loans shall be due and payable in full on the Revolver Termination Date, unless payment is sooner required hereunder. Revolver Loans may be prepaid from time to time, without penalty or premium. If any Asset Disposition includes the disposition of Accounts, Inventory or Equipment, then Net Proceeds equal to the greater of (a) the net book value of such Accounts, Inventory or Equipment, or (b) the reduction in the Borrowing Base upon giving effect to such disposition, shall be applied to the Revolver Loans. Notwithstanding anything herein to the contrary, if an Overadvance exists, Borrowers shall, on the sooner of Agent’s demand or the first Business Day after any Borrower has knowledge thereof, repay the outstanding Revolver Loans in an amount sufficient to reduce the principal balance of Revolver Loans to the Borrowing Base.

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5.3           Repayment of Term Loans.

5.3.1           Payment of Principal. (a) The principal amount of the Tranche A Term Loans shall be repaid on the first Business Day of each month in consecutive monthly installments of $23,333.33, commencing on September 1, 2014, until the Term Loan Maturity Date, on which date all principal, interest and other amounts owing with respect to the Term Loans shall be due and payable in full. Each installment shall be paid to Agent for the Pro Rata benefit of Lenders. Once repaid, whether such repayment is voluntary or required, Tranche A Term Loans may not be reborrowed.

(b)         The principal amount of the Tranche B Term Loans shall be repaid on the first Business Day of each month in 36 consecutive monthly installments of $83,333.33, commencing on September 1, 2014 or, if sooner, until the Term Loan Maturity Date, on which date all principal, interest and other amounts owing with respect to the Term Loans shall be due and payable in full. Each installment shall be paid to Agent for the Pro Rata benefit of Lenders. Once repaid, whether such repayment is voluntary or required, Tranche B Term Loans may not be reborrowed.

5.3.2           Mandatory Prepayments.

(a)          Within ten days after delivery to Agent of the financial statement and Compliance Certificate required pursuant to Section 10.1.2 (a), Borrowers shall (i) deliver to Agent a written calculation of Excess Cash Flow for such Fiscal Year, certified by a Senior Officer of Borrower Agent, and (ii) prepay Tranche B Term Loans in an amount equal to 50% of such Excess Cash Flow; [Reserved];

(b)          Concurrently with any Asset Disposition of Real Estate, Borrowers shall prepay, in an amount equal to the Net Proceeds of such disposition, (i) the Tranche A Term Loans until paid in full, then (ii) the Tranche B Term Loans until paid in full and then (iii) Capex Loans until paid in full;

(c)          Concurrently with the receipt of any proceeds of insurance or condemnation awards paid in respect of any Real Estate, Borrowers shall prepay, in an amount equal to such proceeds (i) the Tranche A Term Loans until paid in full, then (ii) the Tranche B Term Loans until paid in full and then (iii) Capex Loans until paid in full, subject in each case to Section 8.6.2;

(d)          Concurrently with any issuance of Equity Interests by a Borrower (other than in connection with compensation or benefits paid or provided to employees, officers or directors), Borrowers shall prepay, in an amount equal to the net proceeds of such issuance, to Agent for the Pro Rata benefit of each Lender holding (i) the Tranche B Term Loans until paid in full, then (ii) the Tranche A Term Loans until paid in full and then (iii) Capex Loans until paid in full;

(e)          Concurrently with any Asset Disposition of Equipment, Borrowers shall prepay, in an amount equal to the Net Proceeds of such disposition, (i) if the Equipment is Eligible Equipment, the Capex Loans until paid in full and any balance to the Revolving Loans until paid in full and any balance to the Tranche B Term Loans until paid in full l and (ii) if the Equipment relates to a Capex Loan, the Capex Loans until paid in full an d any balance to, the Tranche B Term Loans until paid in full; and]; and

(f)          On the Commitment Termination Date, Borrowers shall prepay all Term Loans and Capex Loans (unless sooner repaid hereunder).

5.3.3           Optional Prepayments. Borrowers may, at their option from time to time, prepay the Term Loans, which prepayment must be at least $500,000,50,000, plus any increment of $500,00010,000 in excess thereof. Borrowers shall give written notice to Agent of an intended prepayment of Term Loans, which notice shall specify the amount of the prepayment, shall be irrevocable once given, shall be given at least 10 Business Days prior to the end of a month and shall be effective as of the first day of the next month.

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5.3.4           Interest; Application of Prepayments. Each prepayment of Term Loans shall be accompanied by all interest accrued thereon and any amounts payable under Section 3.9, and shall be applied to principal in inverse order of maturity.

5.4           Payment of Other Obligations. Obligations other than Loans, including LC Obligations and Extraordinary Expenses, shall be paid by Borrowers as provided in the Loan Documents or, if no payment date is specified, on demand.

5.5           Marshaling; Payments Set Aside. None of Agent or Lenders shall be under any obligation to marshal any assets in favor of any Obligor or against any Obligations. If any payment by or on behalf of Obligors is made to Agent, Issuing Bank or any Lender, or Agent, Issuing Bank or any Lender exercises a right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Agent, Issuing Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other Person, then to the extent of such recovery, the Obligation originally intended to be satisfied, and all Liens, rights and remedies relating thereto, shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.

5.6           Post-Default Allocation of Payments.

5.6.1           Allocation. Notwithstanding anything herein to the contrary, during an Event of Default, monies to be applied to the Obligations, whether arising from payments by Obligors, realization on Collateral, setoff or otherwise, shall, at the option of Agent or the direction of Required Lenders, be allocated as follows:

(a)          first, to all costs and expenses, including Extraordinary Expenses, owing to Agent;

(b)          second, to all amounts owing to Agent on Swingline Loans;

(c)          third, to all amounts owing to Issuing Bank on LC Obligations;

(d)          fourth, to all Obligations constituting fees (other than Bank Product Obligations);

(e)          fifth, to all Obligations constituting interest (other than Bank Product Obligations);

(f)          sixth, to all Secured Bank Product Obligations relating to Cash Management Services;

(g)          seventh, to all Loans, Letters of Credit, including Cash Collateralization of outstanding and LC Obligations; and

(h)          last, to all other Obligations.

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Amounts shall be applied to each category of Obligations set forth above until Full Payment thereof and then to the next category. If amounts are insufficient to satisfy a category, they shall be applied on a pro rata basis among the Obligations in the category. Excluded Hedge Obligations with respect to any Obligor shall not be paid with amounts received from such Obligor or its assets, but appropriate adjustments shall be made with respect to amounts obtained from other Obligors to preserve the allocations in any applicable category. Amounts distributed with respect to any Secured Bank Product Obligations owing to a Lender or an Affiliate of a Lender shall be the lesser of the maximum Secured Bank Product Obligations last reported to Agent and the actual Secured Bank Product Obligations as calculated by the methodology reported to Agent for determining the amount due. Agent shall have no obligation to calculate the amount to be distributed with respect to any Secured Bank Product Obligations, and may request a reasonably detailed calculation of such amount from the applicable Secured Party. If a Secured Party fails to deliver such calculation within ten days following request by Agent, Agent may assume the amount to be distributed is zero. The allocations set forth in this Section are solely to determine the rights and priorities of Agent and Secured Parties as among themselves, and may be changed by agreement among them without the consent of any Obligor. This Section is not for the benefit of or enforceable by any Obligor.

5.6.2           Erroneous Application. Agent shall not be liable for any application of amounts made by it in good faith and, if any such application is subsequently determined to have been made in error, the sole recourse of any Lender or other Person to which such amount should have been made shall be to recover the amount from the Person that actually received it (and, if such amount was received by any Lender, such Lender hereby agrees to return it).

5.7           Application of Payments. Payments of good funds received in the Payment Account maintained at Agent shall be applied to the Obligations on the Business Day of receipt. Amounts otherwise received by Agent shall be applied to the Obligations on the Business Day of receipt of good funds if received by 12:00 noon (New York time) on such day, otherwise such funds may be applied to the Obligations on the next Business Day. If, as a result of such application, a credit balance exists, the balance shall not accrue interest in favor of Borrowers and shall be made available to Borrowers as long as no Default or Event of Default exists. Each Obligor irrevocably waives the right to direct the application of any payments or Collateral proceeds, and agrees that Agent shall have the continuing, exclusive right to apply and reapply same against the Obligations, in such manner as Agent deems advisable. In the absence of a Default or Event of Default, any prepayment of Loans shall be applied first to Base Rate Loans and then to LIBOR Loans. Notwithstanding the foregoing, if the amount of any prepayment of Loans required under this Section 5.7 shall be in excess of the amount of the Base Rate Loans at the time outstanding (an “Excess Amount”), so long as no Default or Event of Default shall have occurred and be continuing, only the portion of the amount of such prepayment as is equal to the amount of such outstanding Base Rate Loans shall be immediately prepaid and, at the election of the Borrowers, the Excess Amount shall be made available to the Borrowers to the extent an Overadvance would not be caused thereby.

5.8           Loan Account; Account Stated.

5.8.1           Loan Account. Agent shall maintain in accordance with its usual and customary practices an account or accounts (“Loan Account”) evidencing the Debt of Borrowers resulting from each Loan or issuance of a Letter of Credit from time to time. Any failure of Agent to record anything in the Loan Account, or any error in doing so, shall not limit or otherwise affect the obligation of Borrowers to pay any amount owing hereunder. Agent may maintain a single Loan Account in the name of Borrower Agent, and each Obligor confirms that such arrangement shall have no effect on the joint and several character of its liability for the Obligations.

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5.8.2           Entries Binding. Entries made in the Loan Account shall constitute presumptive evidence of the information contained therein. If any information contained in the Loan Account is provided to or inspected by any Person, then such information shall be conclusive and binding on such Person for all purposes absent manifest error, except to the extent such Person notifies Agent in writing within 30 days after receipt or inspection that specific information is subject to dispute.

5.9           Taxes.

5.9.1           Payments Free of Taxes. All payments by Obligors of Obligations shall be free and clear of and without reduction for any Taxes. If Applicable Law requires any Obligor or Agent to withhold or deduct any Tax (including backup withholding or withholding Tax), the withholding or deduction shall be based on information provided pursuant to Section 5.10 and Agent shall pay the amount withheld or deducted to the relevant Governmental Authority. If the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by Borrowers shall be increased so that Agent, Lender or Issuing Bank, as applicable, receives an amount equal to the sum it would have received if no such withholding or deduction (including deductions applicable to additional sums payable under this Section) had been made. Without limiting the foregoing, Borrowers shall timely pay all Other Taxes to the relevant Governmental Authorities.

5.9.2           Payment. Borrowers shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) Agent, Lenders and Issuing Bank for any Indemnified Taxes or Other Taxes (including those attributable to amounts payable under this Section) withheld or deducted by any Obligor or Agent, or paid by Agent, any Lender or Issuing Bank, with respect to any Obligations, Letters of Credit or Loan Documents, whether or not such Taxes were properly asserted by the relevant Governmental Authority, and including all penalties, interest and reasonable expenses relating thereto, as well as any amount that a Lender or Issuing Bank fails to pay indefeasibly to Agent under Section 5.10. A certificate as to the amount of any such payment or liability delivered to Borrower Agent by Agent, or by a Lender or Issuing Bank (with a copy to Agent), shall be conclusive, absent manifest error. As soon as practicable after any payment of Taxes by a Borrower, Borrower Agent shall deliver to Agent a receipt from the Governmental Authority or other evidence of payment satisfactory to Agent.

5.10         Lender Tax Information.

5.10.1         Status of Lenders. Each Lender shall deliver documentation and information to Agent and Borrower Agent, at the times and in form required by Applicable Law or reasonably requested by Agent or Borrower Agent, sufficient to permit Agent or Borrowers to determine (a) whether or not payments made with respect to Obligations are subject to Taxes, (b) if applicable, the required rate of withholding or deduction, and (c) such Lender’s entitlement to any available exemption from, or reduction of, applicable Taxes for such payments or otherwise to establish such Lender’s status for withholding tax purposes in the applicable jurisdiction.

5.10.2         Documentation. If a Borrower is resident for tax purposes in the United States, any Lender that is a “United States person” within the meaning of section 7701(a)(30) of the Code shall deliver to Agent and Borrower Agent IRS Form W-9 or such other documentation or information prescribed by Applicable Law or reasonably requested by Agent or Borrower Agent to determine whether such Lender is subject to backup withholding or information reporting requirements. If any Foreign Lender is entitled to any exemption from or reduction of withholding tax for payments with respect to the Obligations, it shall deliver to Agent and Borrower Agent, on or prior to the date on which it becomes a Lender hereunder (and from time to time thereafter upon request by Agent or Borrower Agent, but only if such Foreign Lender is legally entitled to do so), (a) IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party; (b) IRS Form W-8ECI; (c) IRS Form W-8IMY and all required supporting documentation; (d) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, IRS Form W-8BEN and a certificate showing such Foreign Lender is not (i) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (ii) a “10 percent shareholder” of any Obligor within the meaning of section 881(c)(3)(B) of the Code, or (iii) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code; or (e) any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in withholding tax, together with such supplementary documentation necessary to allow Agent and Borrowers to determine the withholding or deduction required to be made.

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5.10.3         Lender Obligations. Each Lender and Issuing Bank shall promptly notify Borrowers and Agent of any change in circumstances that would change any claimed Tax exemption or reduction. Each Lender and Issuing Bank shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) Borrowers and Agent for any Taxes, losses, claims, liabilities, penalties, interest and expenses (including reasonable attorneys’ fees) incurred by or asserted against a Borrower or Agent by any Governmental Authority due to such Lender’s or Issuing Bank’s failure to deliver, or inaccuracy or deficiency in, any documentation required to be delivered by it pursuant to this Section. Each Lender and Issuing Bank authorizes Agent to set off any amounts due to Agent under this Section against any amounts payable to such Lender or Issuing Bank under any Loan Document.

5.11         Nature and Extent of Each Borrower’s Liability.

5.11.1         Joint and Several Liability. Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Agent and Lenders the prompt payment and performance of, all Obligations and all agreements under the Loan Documents, except its Excluded Hedge Obligations. Each Borrower agrees that its guaranty obligations hereunder constitute a continuing guaranty of payment and not of collection, that such obligations shall not be discharged until Full Payment of the Obligations, and that such obligations are absolute and unconditional, irrespective of (a) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Obligor is or may become a party or be bound; (b) the absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or any waiver, consent or indulgence of any kind by Agent or any Lender with respect thereto; (c) the existence, value or condition of, or failure to perfect a Lien or to preserve rights against, any security or guaranty for the Obligations or any action, or the absence of any action, by Agent or any Lender in respect thereof (including the release of any security or guaranty); (d) the insolvency of any Obligor; (e) any election by Agent or any Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of any claims of Agent or any Lender against any Obligor for the repayment of any Obligations under Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except Full Payment of all Obligations.

5.11.2         Waivers.

(a)          Each Borrower expressly waives all rights that it may have now or in the future under any statute, at common law, in equity or otherwise, to compel Agent or Lenders to marshal assets or to proceed against any Obligor, other Person or security for the payment or performance of any Obligations before, or as a condition to, proceeding against such Borrower. Each Borrower waives all defenses available to a surety, guarantor or accommodation co-obligor other than Full Payment of all Obligations. It is agreed among each Borrower, Agent and Lenders that the provisions of this Section 5.11 are of the essence of the transaction contemplated by the Loan Documents and that, but for such provisions, Agent and Lenders would decline to make Loans and issue Letters of Credit. Each Borrower acknowledges that its guaranty pursuant to this Section is necessary to the conduct and promotion of its business, and can be expected to benefit such business.

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(b)          Agent and Lenders may, in their discretion, pursue such rights and remedies as they deem appropriate, including realization upon Collateral or any Real Estate by judicial foreclosure or non-judicial sale or enforcement, without affecting any rights and remedies under this Section 5.11. If, in taking any action in connection with the exercise of any rights or remedies, Agent or any Lender shall forfeit any other rights or remedies, including the right to enter a deficiency judgment against any Borrower or other Person, whether because of any Applicable Laws pertaining to “election of remedies” or otherwise, each Borrower consents to such action and waives any claim based upon it, even if the action may result in loss of any rights of subrogation that any Borrower might otherwise have had. Any election of remedies that results in denial or impairment of the right of Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the Obligations. Each Borrower waives all rights and defenses arising out of an election of remedies, such as non-judicial foreclosure with respect to any security for the Obligations, even though that election of remedies destroys such Borrower’s rights of subrogation against any other Person. Agent may bid all or a portion of the Obligations at any foreclosure or trustee’s sale or at any private sale, and the amount of such bid need not be paid by Agent but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether Agent or any other Person is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral, and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 5.11, notwithstanding that any present or future law or court decision may have the effect of reducing the amount of any deficiency claim to which Agent or any Lender might otherwise be entitled but for such bidding at any such sale.

5.11.3         Extent of Liability; Contribution.

(a)          Notwithstanding anything herein to the contrary, each Borrower’s liability under this Section 5.11 shall be limited to the greater of (i) all amounts for which such Borrower is primarily liable, as described below, and (ii) such Borrower’s Allocable Amount.

(b)          If any Borrower makes a payment under this Section 5.11 of any Obligations (other than amounts for which such Borrower is primarily liable) (a “Guarantor Payment”) that, taking into account all other Guarantor Payments previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payments in the same proportion that such Borrower’s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to receive contribution and indemnification payments from, and to be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment. The “Allocable Amount” for any Borrower shall be the maximum amount that could then be recovered from such Borrower under this Section 5.11 without rendering such payment voidable under Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or similar statute or common law.

(c)          Nothing contained in this Section 5.11 shall limit the liability of any Borrower to pay Loans made directly or indirectly to that Borrower (including Loans advanced to any other Borrower and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), LC Obligations relating to Letters of Credit issued to support such Borrower’s business, and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder. Agent and Lenders shall have the right, at any time in their discretion, to condition Loans and Letters of Credit upon a separate calculation of borrowing availability for each Borrower and to restrict the disbursement and use of such Loans and Letters of Credit to such Borrower.

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(d)          Each Obligor that is a Qualified ECP when its guaranty of or grant of Lien as security for a Hedge Obligation becomes effective hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide funds or other support to each Specified Obligor with respect to such Swap Obligation as may be needed by such Specified Obligor from time to time to honor all of its obligations under the Loan Documents in respect of such Hedge Obligation (but, in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering such Qualified ECP's obligations and undertakings under this Section 5.11 voidable under any applicable fraudulent transfer or conveyance act). The obligations and undertakings of each Qualified ECP under this Section shall remain in full force and effect until Full Payment of all Obligations. Each Obligor intends this Section to constitute, and this Section shall be deemed to constitute, a guarantee of the obligations of, and a "keepwell, support or other agreement" for the benefit of, each Obligor for all purposes of the Commodity Exchange Act.

5.11.4         Joint Enterprise. Each Borrower has requested that Agent and Lenders make this credit facility available to Borrowers on a combined basis, in order to finance Borrowers’ business most efficiently and economically. Borrowers’ business is a mutual and collective enterprise, and the successful operation of each Borrower is dependent upon the successful performance of the integrated group. Borrowers believe that consolidation of their credit facility will enhance the borrowing power of each Borrower and ease administration of the facility, all to their mutual advantage. Borrowers acknowledge that Agent’s and Lenders’ willingness to extend credit and to administer the Collateral on a combined basis hereunder is done solely as an accommodation to Borrowers and at Borrowers’ request.

5.11.5         Subordination. Each Borrower hereby subordinates any claims, including any rights at law or in equity to payment, subrogation, reimbursement, exoneration, contribution, indemnification or set off, that it may have at any time against any other Obligor, howsoever arising, to the Full Payment of all Obligations.

SECTION 6.          CONDITIONS PRECEDENT

6.1           Conditions Precedent to Initial Loans. In addition to the conditions set forth in Section 6.2, Lenders shall not be required to fund any requested Loan, issue any Letter of Credit, or otherwise extend credit to Borrowers hereunder, until the date (“Closing Date”) that each of the following conditions has been satisfied:

(a)          Notes shall have been executed by Borrowers and delivered to each Lender that requests issuance of a Note. Each other Loan Document shall have been duly executed and delivered to Agent by each of the signatories thereto, and each Obligor shall be in compliance with all terms thereof.

(b)          Agent shall have received, in proper form for filing or recording, all filings or recordations necessary to perfect its Liens in the Collateral, as well as UCC and Lien searches and other evidence satisfactory to Agent that such Liens are the only Liens upon the Collateral, except Permitted Liens, to the extent requested by Agent.

(c)          Agent shall have received all certificates or instruments representing or evidencing all Pledged Interests required by Section 7.4.1 accompanied by all necessary instruments of transfer or assignment, duly executed in blank.

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(d)          Agent shall have received certificates, in form and substance satisfactory to it, from a knowledgeable Senior Officer of Borrower Agent certifying that, after giving effect to the initial Loans and transactions hereunder, (i) each Borrower, on an individual basis, is Solvent and the Obligors, taken as a whole, are Solvent; (ii) no Default or Event of Default exists; (iii) the representations and warranties set forth in Section 9 that are qualified by materiality are true and correct and the representations and warranties set forth in Section 9 that are not qualified by materiality are true and correct in all material respects; and (iv) each Obligor has complied with all agreements and conditions to be satisfied by it under the Loan Documents.

(e)          Agent shall have received a certificate of a duly authorized officer of each Obligor, certifying (i) that attached copies of such Obligor’s Organic Documents (as to each Guarantor, which have modified since, or were not delivered to Agent in connection with, the Existing Agreement) are true and complete, and in full force and effect, without amendment except as shown; (ii) that an attached copy of resolutions authorizing execution and delivery of the Loan Documents is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified or revoked, and constitute all resolutions adopted with respect to this credit facility; and (iii) to the title, name and signature of each Person authorized to sign the Loan Documents. Agent may conclusively rely on this certificate until it is otherwise notified by the applicable Obligor in writing.

(f)          Agent shall have received (i) a written opinion of SilvermanAcampora in form and substance satisfactory to Agent and (ii) a written opinion of any local counsel to Obligors as Agent may reasonably request, in form and substance satisfactory to Agent.

(g)          Agent shall have received copies of the charter documents of each Obligor, certified by the Secretary of State or other appropriate official of such Obligor’s jurisdiction of organization. Agent shall have received good standing certificates for each Obligor, issued by the Secretary of State or other appropriate official of such Obligor’s jurisdiction of organization and each jurisdiction where such Obligor’s conduct of business or ownership of Property necessitates qualification.

(h)          Borrowers shall have paid all fees and expenses to be paid to Agent and Lenders on the Closing Date.

(i)          The ATSCO Acquisition shall be consummated in accordance with the ATSCO Purchase Agreement without any amendments, modifications, waivers or consents thereto that are not reasonably acceptable to the Agent.

(j)          Agent shall have received a Compliance Certificate prepared as of June 30, 2014 demonstrating that upon giving effect to the ATSCO Acquisition and all Loans and Letters of Credit made or issued in connection therewith or on the Closing Date, and the payment by Borrowers of all fees and expenses incurred in connection therewith on the Closing Date, the Borrowers are in pro forma compliance with the covenants set forth in Section 10.3.

6.2           Conditions Precedent to All Credit Extensions. Agent, Issuing Bank and Lenders shall not be required to fund any Loans, arrange for issuance of any Letters of Credit or grant any other accommodation to or for the benefit of Borrowers, unless the following conditions are satisfied:

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(a)          No Default or Event of Default shall exist at the time of, or result from, such funding, issuance or grant;

(b)          The representations and warranties of each Obligor in the Loan Documents that are qualified by materiality shall be true and correct on the date of, and upon giving effect to, such funding, issuance or grant, and the representations and warranties of each Obligor in the Loan Documents that are not qualified by materiality shall be true and correct in all material respects on the date of, and upon giving effect to, such funding, issuance or grant, except for representations and warranties that expressly relate to an earlier date, in which case they shall be true and correct (or true and correct in all material respects, as the case may be) as of such earlier date;

(c)          All conditions precedent in any other Loan Document shall be satisfied;

(d)          No event shall have occurred or circumstance exist that has or could reasonably be expected to have a Material Adverse Effect; and

(e)          With respect to issuance of a Letter of Credit, the LC Conditions shall be satisfied.

Each request (or deemed request) by Borrowers for funding of a Loan, issuance of a Letter of Credit or grant of an accommodation shall constitute a representation by Borrowers that the foregoing conditions are satisfied on the date of such request and on the date of such funding, issuance or grant. As an additional condition to any funding, issuance or grant, Agent shall have received such other information, documents, instruments and agreements as it deems appropriate in connection therewith.

SECTION 7.          COLLATERAL

7.1           Grant of Security Interest. To secure the prompt payment and performance of all Obligations, each Obligor hereby grants to Agent, for the benefit of Secured Parties, a continuing security interest in and Lien upon all Property of such Obligor, whether now owned or hereafter acquired, and wherever located, including all of the following Property:

(a)          all Accounts;

(b)          all Chattel Paper, including electronic chattel paper;

(c)          all Commercial Tort Claims, including those shown on Schedule 9.1.16;

(d)          all Deposit Accounts;

(e)          all Documents;

(f)          all General Intangibles, including Intellectual Property;

(g)          all Goods, including Inventory, Equipment and fixtures;

(h)          all Instruments;

(i)          all Investment Property;

(j)          all Letter-of-Credit Rights;

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(k)          all Supporting Obligations;

(l)          all cash, Cash Collateral, Cash Equivalents or monies, whether or not in the possession or under the control of Lender, or a bailee or Affiliate of Lender;

(m)          all accessions to, substitutions for, and all replacements, products, and cash and non-cash proceeds of the foregoing, including proceeds of and unearned premiums with respect to insurance policies, and claims against any Person for loss, damage or destruction of any Collateral; and

(n)          all books and records (including customer lists, files, correspondence, tapes, computer programs, print-outs and computer records) pertaining to the foregoing.

Notwithstanding anything herein to the contrary, no security interest shall be granted to Agent or Secured Parties under this Section 7.1 in any Equity Interests of P&F as may hereafter be repurchased by P&F with the consent of the Lenders.

7.2           Lien on Deposit Accounts; Cash Collateral.

7.2.1           Deposit Accounts. To further secure the prompt payment and performance of all Obligations, each Obligor hereby grants to Agent, for the benefit of Secured Parties, a continuing security interest in and Lien upon all amounts credited to any Deposit Account of such Obligor, including any sums in any blocked or lockbox accounts or in any accounts into which such sums are swept. Each Obligor hereby authorizes and directs each bank or other depository to deliver to Agent, upon request, all balances in any Deposit Account maintained by such Obligor, without inquiry into the authority or right of Agent to make such request.

7.2.2           Cash Collateral. Any Cash Collateral may be invested, at Agent’s discretion, in Cash Equivalents, but Agent shall have no duty to do so, regardless of any agreement or course of dealing with any Obligor, and shall have no responsibility for any investment or loss. Each Obligor hereby grants to Agent, for the benefit of Secured Parties, a security interest in all Cash Collateral held from time to time and all proceeds thereof, as security for the Obligations, whether such Cash Collateral is held in a Cash Collateral Account or elsewhere. Agent may apply Cash Collateral to the payment of any Obligations, in such order as Agent may elect, as they become due and payable. Each Cash Collateral Account and all Cash Collateral shall be under the sole dominion and control of Agent. No Obligor or other Person claiming through or on behalf of any Obligor shall have any right to any Cash Collateral, until Full Payment of all Obligations.

7.3           Real Estate Collateral.

7.3.1           Lien on Real Estate. The Obligations shall also be secured by Mortgages upon all Real Estate owned by Obligors, including the Real Estate owned as of the Closing Date which is set forth on Schedule 7.3.1.7.3.1 (but excluding, as of the First Amendment Effective Date, the Real Estate located in Tampa, Florida owned on the Closing Date and set forth on Schedule 7.3.1). The Mortgages shall be duly recorded, at Obligors’ expense, in each office where such recording is required to constitute a fully perfected Lien on the Real Estate covered thereby. If any Obligor acquires Real Estate hereafter, Obligors shall, within 30 days, execute, deliver and record a Mortgage sufficient to create a first priority Lien in favor of Agent on such Real Estate, and shall deliver all Related Real Estate Documents.

7.3.2           Collateral Assignment of Leases. To further secure the prompt payment and performance of all Obligations, each Obligor hereby transfers and assigns to Agent, for the benefit of Secured Parties, all of such Obligor’s right, title and interest in, to and under all now or hereafter existing leases of real Property to which such Obligor is a party, whether as lessor or lessee, and all extensions, renewals, modifications and proceeds thereof.

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7.4           Investment Property and other Equity Interests.

7.4.1           Delivery of Certificates. All certificates or instruments representing or evidencing any Investment Property or other Equity Interests constituting Collateral hereunder (“Pledged Interests”), including the Pledged Interests as of the Closing Date which are set forth on Schedule 7.4.1 hereto, shall be delivered to and held by or on behalf of Agent, for the benefit of Secured Parties, pursuant hereto, shall be in suitable form for further transfer by delivery, and shall be accompanied by all necessary instruments of transfer or assignment, duly executed in blank. The Pledged Interests consisting of Equity Interests pledged hereunder have been duly authorized and validly issued and are fully paid and, with respect to Equity Interests in corporations, non-assessable.

7.4.2           Issuer Agreements. Each Obligor that is the issuer of any Pledged Interests hereby (i) acknowledges the security interest and Lien of Agent in such Collateral granted by the Obligor owning such Pledged Interests and (ii) agrees that, with respect to any such Pledged Interests, it will comply with the instructions originated by Agent in accordance with this Agreement or the Security Documents without further consent of any other Obligor.

7.4.3           Distributions on Investment Property and other Equity Interests. In the event that any cash dividend or cash distribution (a “Dividend”) is permitted to be paid on any Pledged Interests of any Obligor at a time when no Event of Default has occurred and is continuing, such Dividend may be paid directly to the applicable Obligor or to another Obligor designated by the Borrower Agent. If an Event of Default has occurred and is continuing, then any such Dividend or payment (other than Upstream Payments) shall be paid directly to Agent to be applied as set forth in Section 5.7.

7.4.4           Voting Rights with respect to Equity Interests. So long as no Event of Default has occurred and is continuing, Obligors shall be entitled to exercise any and all voting and other consensual rights pertaining to any of the Pledged Interests or any part thereof. If an Event of Default shall have occurred and be continuing, all rights of Obligors to exercise the voting and other consensual rights that it would otherwise be entitled to exercise shall, at Agent’s option upon notice to such Obligors, be suspended, and all such rights shall, at Agent’s option upon notice to such Obligors, thereupon become vested in Agent for the benefit of the Secured Parties during the continuation of such Event of Default, and Agent shall, at its option upon notice to such Obligors, thereupon have the sole right to exercise such voting and other consensual rights and during the continuation of such Event of Default, Agent shall have the right to act with respect thereto as though it were the outright owner thereof.

7.4.5           Securities Accounts. Each Obligor irrevocably authorizes and directs each securities intermediary or other Person with which any securities account or similar investment property is maintained, if any, upon written instruction of Agent, to dispose of such Collateral at the direction of Agent and comply with the instructions originated by Agent without further consent of any Obligor. Agent agrees with the Obligors that such instruction shall not be given by Agent unless a Default or Event of Default has occurred and is continuing.

7.5           Other Collateral; New Subsidiaries.

7.5.1           Commercial Tort Claims. Borrower Agent shall promptly notify Agent in writing if any Obligor has a Commercial Tort Claim (other than, as long as no Default or Event of Default exists, a Commercial Tort Claim for less than $100,000), shall promptly amend Schedule 9.1.16 to include such claim, and shall take such actions as Agent deems appropriate to subject such claim to a duly perfected, first priority Lien in favor of Agent (for the benefit of Secured Parties).

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7.5.2           Certificate of Title Collateral. Borrower Agent shall deliver to Agent, as soon as practicable following a request therefore by Agent, any and all evidence of ownership of any of the Equipment (including, without limitation, certificates of title and applications for title).

7.5.3           Certain After-Acquired Collateral. Borrower Agent shall promptly notify Agent in writing if, after the Closing Date, any Obligor obtains any interest in any Collateral consisting of Deposit Accounts, Chattel Paper, Documents, Instruments, Intellectual Property, Investment Property or Letter-of-Credit Rights with a value in excess of $10,000 and, upon Agent’s request, shall promptly take such actions as Agent deems appropriate to effect Agent’s duly perfected, first priority Lien upon such Collateral, including obtaining any appropriate possession, control agreement or Lien Waiver. If any Collateral is in the possession of a third party, at Agent’s request, Obligors shall obtain an acknowledgment that such third party holds the Collateral for the benefit of Agent.

7.5.4           New Subsidiaries. Upon the formation or acquisition of any new direct or indirect Domestic Subsidiary (other than an Immaterial Subsidiary) by any Obligor, then the Borrower Agent shall, at the Obligors’ expense, within 30 days after such formation or acquisition (or such later date as the Agent may specify in its sole discretion), (a) cause it to become a Borrower under this agreement if it is a wholly-owned Domestic Subsidiary of Parent, or, if none of the assets of such subsidiary are to be included in the Borrowing Base or the Agent otherwise consents (or requests) in writing, cause it to become a Guarantor and guaranty the Obligations in a manner reasonably satisfactory to Agent, and (b) cause such Domestic Subsidiary to duly execute and deliver to Agent such joinder agreements, amendments or supplements to the Loan Documents as are reasonably requested by the Agent, (if required under Section 8.5) control agreements and a legal opinion in form and substance reasonably satisfactory to Agent, to cause or authorize the filing of appropriate UCC financing statements, and to take any other action as may be necessary to vest in Agent valid and subsisting Liens on the properties purported to be subject thereto.

7.5.5           New Deposit Accounts and Securities Accounts. Concurrently with or prior to the opening of a Deposit Account, securities account or commodity account by any Obligor, other than any excluded account described in Section 8.5, such Obligor shall deliver to Agent a Deposit Account Control Agreement covering such Deposit Account, or other control agreement covering such securities account or commodity account, in each case, in form and substance reasonably satisfactory to Agent, duly executed by such Obligor, Agent and the applicable bank, securities intermediary or commodity intermediary, as the case may be.

7.6           No Assumption of Liability. The Lien on Collateral granted hereunder is given as security only and shall not subject Agent or any Lender to, or in any way modify, any obligation or liability of Obligors relating to any Collateral. In no event shall the grant of any Lien under any Loan Document secure an Excluded Hedge Obligation of the granting Obligor.

7.7           Further Assurances. Promptly upon request, Obligors shall deliver such instruments, assignments, title certificates, or other documents or agreements, and shall take such actions, as Agent deems appropriate under Applicable Law to evidence or perfect its Lien on any Collateral, or otherwise to give effect to the intent of this Agreement. Each Obligor irrevocably authorizes Lender at any time and from time to time to authenticate and file in any relevant jurisdiction any financing statements (including fixture filings) and amendments thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including, without limitation (i) whether such Obligor is an organization, the type of organization and any organizational identification number issued to such Obligor, (ii) indicating the Collateral as “all assets” or “all personal property” of such Obligor, or words to similar effect, and (iii) filing any financing or continuation statements, amendments or other documents without the signature of such Obligor where permitted by law. Each Obligor hereby ratifies any action taken by Lender before the Closing Date to effect or perfect its Lien on any Collateral. All of Agent’s Liens on Collateral (and all evidences of such Liens), whether effected hereunder or under any other Loan Document, are granted to Agent as agent for the benefit of all Secured Parties

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7.8           Foreign Subsidiary Stock. Notwithstanding Section 7.1, the Collateral shall include only 65% of the voting stock of any Foreign Subsidiary.

SECTION 8.          COLLATERAL ADMINISTRATION

8.1           Borrowing Base Certificates. By the 20th day of each month, Borrowers shall deliver to Lender a Borrowing Base Certificate prepared as of the close of business of the previous month; provided, however, that during a Reporting Trigger Period, Borrowers shall deliver to Agent a Borrowing Base Certificate on a weekly basis, by the third Business Day of the week, as of the end of the prior week, and at such other times as Agent may request. All calculations of Availability in any Borrowing Base Certificate shall originally be made by Borrowers and certified by a Senior Officer, provided that Agent may from time to time review and adjust any such calculation (a) to reflect its reasonable estimate of declines in value of any Collateral, due to collections received in the Dominion Account or otherwise; (b) to adjust advance rates to reflect changes in dilution, quality, mix and other factors affecting Collateral; and (c) to the extent the calculation is not made in accordance with this Agreement or does not accurately reflect the Availability Reserve or the Borrowing Base Reserve.

8.2           Administration of Accounts.

8.2.1           Records and Schedules of Accounts. Each Borrower shall keep accurate and complete records of its Accounts, including all payments and collections thereon, and shall submit to Agent sales, collection, reconciliation and other reports in form satisfactory to Agent, on such periodic basis as Agent may request. Each Borrower shall also provide to Agent, on or before the 15th day of each month, a detailed aged trial balance of all Accounts as of the end of the preceding month, specifying each Account’s Account Debtor name and address, amount, invoice date and due date, showing any discount, allowance, credit, authorized return or dispute, and including such proof of delivery, copies of invoices and invoice registers, copies of related documents, repayment histories, status reports and other information as Agent may reasonably request. If Accounts of any single Account Debtor in an aggregate face amount of $100,000 or more cease to be Eligible Accounts, Borrowers shall notify Agent of such occurrence promptly (and in any event within three Business Days) after any Borrower has knowledge thereof.

8.2.2           Taxes. If an Account of any Borrower includes a charge for any Taxes, Agent is authorized, in its discretion, to pay the amount thereof to the proper taxing authority for the account of such Borrower and to charge Borrowers therefor; provided, however, that neither Agent nor Lenders shall be liable for any Taxes that may be due from Borrowers or with respect to any Collateral.

8.2.3           Account Verification. Whether or not a Default or Event of Default exists, Agent shall have the right at any time, in the name of Agent, any designee of Agent or any Borrower, to verify the validity, amount or any other matter relating to any Accounts of Borrowers by mail, telephone or otherwise. Borrowers shall cooperate fully with Agent in an effort to facilitate and promptly conclude any such verification process.

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8.2.4           Maintenance of Dominion Account. Borrowers shall maintain Dominion Accounts pursuant to lockbox or other arrangements acceptable to Agent. Borrowers shall obtain an agreement (in form and substance satisfactory to Agent) from each lockbox servicer and Dominion Account bank, establishing Agent’s control over and Lien in the lockbox or Dominion Account, requiring prompt (and in any event within two Business Days after receipt) deposit of all remittances received in the lockbox to a Dominion Account, and waiving offset rights of such servicer or bank, except for customary administrative charges. Agent and Lenders assume no responsibility to Borrowers for any lockbox arrangement or Dominion Account, including any claim of accord and satisfaction or release with respect to any Payment Items accepted by any bank.

8.2.5           Proceeds of Collateral. Borrowers shall request in writing and otherwise take all necessary steps to ensure that all payments on Accounts or otherwise relating to Collateral are made directly to a Dominion Account (or a lockbox relating to a Dominion Account). If any Borrower or Subsidiary receives cash or Payment Items with respect to any Collateral, it shall hold same in trust for Agent and promptly (not later than the next Business Day) deposit same into a Dominion Account.

8.3           Administration of Inventory.

8.3.1           Records and Reports of Inventory. Each Borrower shall keep accurate and complete records of its Inventory, including costs and daily withdrawals and additions, and shall submit to Agent inventory and reconciliation reports in form satisfactory to Agent, on such periodic basis as Agent may request. Each Borrower shall (a) conduct a physical inventory at least once per calendar year (and on a more frequent basis if requested by Agent when an Event of Default exists) or (b) periodic cycle counts consistent with historical practices, and shall provide to Agent a report based on each such inventory and count promptly upon completion thereof, together with such supporting information as Agent may request. Agent may participate in and observe each physical count.

8.3.2           Returns of Inventory. No Borrower shall return any Inventory to a supplier, vendor or other Person, whether for cash, credit or otherwise, unless (a) such return is in the Ordinary Course of Business; (b) no Default, Event of Default or Overadvance exists or would result therefrom; (c) Agent is promptly notified if the aggregate Value of all Inventory returned in any month exceeds $25,000; and (d) any payment received by a Borrower for a return is promptly remitted to Agent for application to the Obligations.

8.3.3           Acquisition, Sale and Maintenance. No Borrower shall acquire or accept any Inventory on consignment or approval, and shall take all steps to assure that all Inventory is produced in accordance with Applicable Law, including the FLSA. Other than the customers and locations listed in Schedule 8.3.3, no Borrower shall sell any Inventory on consignment or approval or any other basis under which the customer may return or require a Borrower to repurchase such Inventory. Schedule 8.3.3 may be amended or supplemented from time to time by Borrowers with the consent of Agent. Borrowers shall use, store and maintain all Inventory with reasonable care and caution, in accordance with applicable standards of any insurance and in conformity with all Applicable Law, and shall make current rent payments (within applicable grace periods provided for in leases) at all locations where any Collateral is located.

8.4           Administration of Equipment.

8.4.1           Records and Schedules of Equipment. Each Borrower shall keep accurate and complete records of its Equipment, including kind, quality, quantity, cost, acquisitions and dispositions thereof, and shall submit to Agent, on such periodic basis as Agent may request, a current schedule thereof, in form satisfactory to Agent. Promptly upon request, Borrowers shall deliver to Agent evidence of their ownership or interests in any Equipment.

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8.4.2           Dispositions of Equipment. No Borrower shall sell, lease or otherwise dispose of any Equipment, without the prior written consent of Agent, other than (a) a Permitted Asset Disposition; or (b) replacement of Equipment that is worn, damaged or obsolete with Equipment of like function and value, if the replacement Equipment is acquired substantially contemporaneously with such disposition and is free of Liens other than Permitted Liens (other than a Purchase Money Lien with respect to Equipment related to a Capex Loan).

8.4.3           Condition of Equipment. The Equipment is in good operating condition and repair, and all necessary replacements and repairs have been made so that the value and operating efficiency of the Equipment is preserved at all times, reasonable wear and tear excepted. Each Borrower shall ensure that the Equipment is mechanically and structurally sound, and capable of performing the functions for which it was designed, in accordance with manufacturer specifications. No Borrower shall permit any Equipment to become affixed to real Property unless any landlord or mortgagee delivers a Lien Waiver.

8.5           Administration of Deposit Accounts. Schedule 8.5 sets forth all Deposit Accounts maintained by Borrowers, including all Dominion Accounts. Each Borrower shall take all actions necessary to establish Agent’s control of each such Deposit Account (other than (a) an account exclusively used for payroll, payroll taxes or employee benefits, (b) an account containing not more than $10,000 at any time or (c) accounts maintained at Wachovia Bank, National Association and First Niagara Bank, in each case, containing not more than $25,000 at any time), including, without limitation, the execution and delivery of a Deposit Account Control Agreement for each such Deposit Account. Each Borrower shall be the sole account holder of each Deposit Account and shall not allow any other Person (other than Agent) to have control over a Deposit Account or any Property deposited therein. Each Borrower shall promptly notify Agent of any opening or closing of a Deposit Account and, with the consent of Agent, will amend Schedule 8.5 to reflect same.

8.6           General Provisions.

8.6.1           Location of Collateral. All tangible items of Collateral, other than Inventory in transit, shall at all times be kept by Borrowers at the business locations set forth in Schedule 8.6.1, except that Borrowers may (a) make sales or other dispositions of Collateral in accordance with Section 10.2.6; and (b) move Collateral to another location in the United States, upon 30 Business Days prior written notice to Agent.

8.6.2           Insurance of Collateral; Condemnation Proceeds.

(a)          Each Borrower shall maintain insurance with respect to the Collateral, covering casualty, hazard, theft, malicious mischief, flood and other risks, in amounts, with endorsements and with insurers (with a Best’s Financial Strength Rating of at least A- VII, unless otherwise approved by Agent) reasonably satisfactory to Agent. All proceeds under each policy shall be payable to Agent. From time to time upon request, Borrowers shall deliver to Agent the originals or certified copies of its insurance policies and updated flood plain searches. Unless Agent shall agree otherwise, each policy shall include reasonably satisfactory endorsements (i) showing Agent as loss payee; (ii) requiring 30 days prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever; and (iii) specifying that the interest of Agent shall not be impaired or invalidated by any act or neglect of any Borrower or the owner of the Property, nor by the occupation of the premises for purposes more hazardous than are permitted by the policy. If any Borrower fails to provide and pay for any insurance, Agent may, at its option, but shall not be required to, procure the insurance and charge Borrowers therefor. Each Borrower agrees to deliver to Agent, promptly as rendered, copies of all reports made to insurance companies. While no Event of Default exists, Borrowers may settle, adjust or compromise any insurance claim, as long as the proceeds are delivered to Agent (and with respect to Real Estate and Equipment related to a Capex Loan, the terms and amount are reasonably satisfactory to Agent). If an Event of Default exists, only Agent shall be authorized to settle, adjust and compromise such claims.

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(b)          Any proceeds of insurance (other than proceeds from workers’ compensation, D&O, employee practice insurance or life insurance as to which an Obligor is not the beneficiary) and any awards arising from condemnation of any Collateral shall be paid to Agent. Subject to Section 8.6.2(c), any such proceeds or awards that relate to (i) Inventory or Equipment other than Equipment related to a Capex Loan shall be applied to payment of the Revolver Loans, and then to any other Obligations outstanding, other than Term Loans and Capex Loans, (ii) Real Estate shall be applied first to Term Loans, then to Capex Loans or Revolver Loans (in Agent’s reasonable discretion) and then to other Obligations, (iii) Equipment related to a Capex Loan shall be applied to payment of such Capex Loan then to other Capex Loans or Revolver Loans (in Agent’s reasonable discretion) and then to other Obligations, other than Term Loans and (iv) life insurance shall be applied to payment of the Revolver Loans, and then to any other Obligations outstanding, other than Term Loans and Capex Loans.

(c)          Any insurance proceeds or condemnation awards relating to any loss or destruction of Real Estate or Equipment may be used by the Borrowers (1) with the consent of the Agent or (2) if requested by Borrowers in writing within 90 days after Agent’s receipt of such proceeds, to repair or replace such Real Estate or Equipment (and until so used, the proceeds shall be held by Agent as Cash Collateral); provided that, in the case of this clause (2), as long as (i) no Default or Event of Default exists; (ii) such repair or replacement is promptly undertaken and concluded, in accordance with plans or proposed applications reasonably satisfactory to Agent; (iii) replacement buildings are constructed on the sites of the original casualties or other locations in compliance with this Agreement and are of comparable size, quality and utility to the destroyed buildings or replacement Equipment is of comparable type, quality and utility to and of equal or greater value than the damaged Equipment; (iv) the repaired or replaced Property is free of Liens, other than Permitted Liens that are not Purchase Money Liens; (v) Borrowers comply with disbursement procedures for such repair or replacement as Agent may reasonably require; and (vi) the aggregate amount of such proceeds or awards from any single casualty or condemnation does not exceed $500,000 in the case of Equipment and $2,000,000 in the case of Real Estate; provided that, any proceeds of Equipment related to a Capex Loan may not be so used unless at the time of proposed use of such proceeds, all of the applicable conditions for making a Capex Loan would be met (other than the limitation set forth in Section 2.2B.1(d), (e) or (f) or elsewhere in this Agreement, but solely with respect to this clause (c)).

8.6.3           Protection of Collateral. All expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping any Collateral, all Taxes payable with respect to any Collateral (including any sale thereof), and all other payments required to be made by Agent to any Person to realize upon any Collateral, shall be borne and paid by Borrowers. Agent shall not be liable or responsible in any way for the safekeeping of any Collateral, for any loss or damage thereto (except for reasonable care in its custody while Collateral is in Agent’s actual possession), for any diminution in the value thereof, or for any act or default of any warehouseman, carrier, forwarding agency or other Person whatsoever, but the same shall be at Borrowers’ sole risk.

8.6.4           Defense of Title to Collateral. Each Borrower shall at all times defend its title to Collateral and Agent’s Liens therein against all Persons, claims and demands whatsoever, except Permitted Liens.

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8.7           Power of Attorney. Each Obligor hereby irrevocably constitutes and appoints Agent (and all Persons designated by Agent) as such Obligor’s true and lawful attorney (and agent-in-fact) for the purposes provided in this Section. Agent, or Agent’s designee, may, without notice and in either its or a Obligor’s name, but at the cost and expense of Obligors:

(a)          Endorse a Obligor’s name on any Payment Item (including Chattel Paper and Instruments) or other proceeds of Collateral (including proceeds of insurance) that come into Agent’s possession or control; and

(b)          During an Event of Default, (i) notify any Account Debtors of the assignment of their Accounts, demand and enforce payment of Accounts by legal proceedings or otherwise, and generally exercise any rights and remedies with respect to Accounts; (ii) settle, adjust, modify, compromise, discharge or release any Accounts or other Collateral, or any legal proceedings brought to collect Accounts or Collateral; (iii) sell or assign any Accounts and other Collateral upon such terms, for such amounts and at such times as Agent deems advisable; (iv) collect, liquidate and receive balances in Deposit Accounts or investment accounts, and take control, in any manner, of proceeds of Collateral; (v) prepare, file and sign a Obligor’s name to a proof of claim or other document in a bankruptcy of an Account Debtor, or to any notice, assignment or satisfaction of Lien or similar document; (vi) receive, open and dispose of mail addressed to a Obligor, and notify postal authorities to deliver any such mail to an address designated by Agent; (vii) endorse any Chattel Paper, Document, Instrument, bill of lading, or other document or agreement relating to any Accounts, Inventory or other Collateral; (viii) use a Obligor’s stationery and sign its name to verifications of Accounts and notices to Account Debtors; (ix) use information contained in any data processing, electronic or information systems relating to Collateral; (x) make and adjust claims under insurance policies; (xi) take any action as may be necessary or appropriate to obtain payment under any letter of credit, banker’s acceptance or other instrument for which a Obligor is a beneficiary; and (xii) take all other actions as Agent deems appropriate to fulfill any Obligor’s obligations under the Loan Documents.

SECTION 9.          REPRESENTATIONS AND WARRANTIES

9.1           General Representations and Warranties. To induce Agent and Lenders to enter into this Agreement and to make available the Commitments, Loans and Letters of Credit, each Obligor represents and warrants that:

9.1.1           Organization and Qualification. Each Obligor and Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each Obligor and Subsidiary is duly qualified, authorized to do business and in good standing as a foreign corporation in each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse Effect.

9.1.2           Power and Authority. Each Obligor is duly authorized to execute, deliver and perform the Loan Documents delivered by it or to which it is a party. The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary action, and do not (a) require any consent or approval of any holders of Equity Interests of any Obligor, other than those already obtained; (b) contravene the Organic Documents of any Obligor; (c) violate or cause a default under any Applicable Law or Material Contract; or (d) result in or require the imposition of any Lien (other than Permitted Liens) on any Property of any Obligor.

9.1.3           Enforceability. Each Loan Document is a legal, valid and binding obligation of each Obligor party thereto, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

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9.1.4           Capital Structure. Schedule 9.1.4 shows, for each Obligor and Subsidiary, its name, its jurisdiction of organization, its authorized and issued Equity Interests, the holders of its Equity Interests, and all agreements binding on such holders with respect to their Equity Interests. Except as disclosed on Schedule 9.1.4, in the five years preceding the Closing Date, no Obligor or Subsidiary has acquired any substantial assets from any other Person nor been the surviving entity in a merger or combination. Each Obligor has good title to its Equity Interests in its Subsidiaries, subject only to Agent’s Lien, and all such Equity Interests are duly issued, fully paid and non-assessable. There are no outstanding purchase options, warrants, subscription rights, agreements to issue or sell, convertible interests, phantom rights or powers of attorney relating to Equity Interests of any Obligor or Subsidiary.

9.1.5           Title to Properties; Priority of Liens. Each Obligor and Subsidiary has good and marketable title to (or valid leasehold interests in) all of its Real Estate, and good title to all of its personal Property, including all Property reflected in any financial statements delivered to Agent or Lenders, in each case free of Liens except Permitted Liens. Each Obligor and Subsidiary has paid and discharged all lawful claims that, if unpaid, could become a Lien on its Properties, other than Permitted Liens. All Liens of Agent in the Collateral are duly perfected, first priority Liens, subject only to Permitted Liens that are expressly allowed to have priority over Agent’s Liens.

9.1.6           Accounts. Agent may rely, in determining which Accounts are Eligible Accounts, on all statements and representations made by Borrowers with respect thereto. Borrowers warrant, with respect to each Account at the time it is shown as an Eligible Account in a Borrowing Base Certificate, that:

(a)          it is genuine and in all respects what it purports to be, and is not evidenced by a judgment;

(b)          it arises out of a completed, bona fide sale and delivery of goods in the Ordinary Course of Business, and substantially in accordance with any purchase order, contract or other document relating thereto;

(c)          it is for a sum certain, maturing as stated in the invoice covering such sale, a copy of which has been furnished or is available to Agent on request;

(d)          it is not subject to any offset, Lien (other than Agent’s Lien), deduction, defense, dispute, counterclaim or other adverse condition except as arising in the Ordinary Course of Business and disclosed to Agent; and it is absolutely owing by the Account Debtor, without contingency in any respect;

(e)          no purchase order, agreement, document or Applicable Law restricts assignment of the Account to Agent (regardless of whether, under the UCC, the restriction is ineffective), and the applicable Borrower is the sole payee or remittance party shown on the invoice;

(f)          no extension, compromise, settlement, modification, credit, deduction or return has been authorized with respect to the Account, except discounts or allowances granted in the Ordinary Course of Business for prompt payment that are reflected on the face of the invoice related thereto and in the written reports submitted to Agent hereunder; and

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(g)          to the best of Borrowers’ knowledge, except as reflected on the written reports submitted to Agent hereunder, (i) there are no facts or circumstances that are reasonably likely to impair the enforceability or collectability of such Account; (ii) the Account Debtor had the capacity to contract when the Account arose, continues to meet the applicable Borrower’s customary credit standards, is Solvent, is not contemplating or subject to an Insolvency Proceeding, and has not failed, or suspended or ceased doing business; and (iii) there are no proceedings or actions threatened or pending against any Account Debtor that could reasonably be expected to have a material adverse effect on the Account Debtor’s financial condition.

9.1.7           Financial Statements. The consolidated and consolidating balance sheets, and related statements of income, cash flow and shareholder’s equity, of Borrowers and Subsidiaries that have been and are hereafter delivered to Agent and Lenders, are prepared in accordance with GAAP, and fairly present the financial positions and results of operations of Borrowers and Subsidiaries at the dates and for the periods indicated. All projections delivered from time to time to Agent and Lenders have been prepared in good faith, based on reasonable assumptions in light of the circumstances at such time. Since December 31, 2013,2014, there has been no change in the condition, financial or otherwise, of any Borrower or Subsidiary that could reasonably be expected to have a Material Adverse Effect. No financial statement delivered to Agent or Lenders at any time contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make such statement not materially misleading. Each Borrower and Subsidiary is Solvent.

9.1.8           Surety Obligations. No Borrower or Subsidiary is obligated as surety or indemnitor under any bond or other contract that assures payment or performance of any obligation of any Person, except as permitted hereunder.

9.1.9           Taxes. Each Borrower and Subsidiary has filed all federal, state and local tax returns and other reports that it is required by law to file, and has paid, or made provision for the payment of, all Taxes upon it, its income and its Properties that are due and payable, except to the extent being Properly Contested. The provision for Taxes on the books of each Borrower and Subsidiary is adequate for all years not closed by applicable statutes, and for its current Fiscal Year.

9.1.10         Brokers. There are no brokerage commissions, finder’s fees or investment banking fees payable in connection with any transactions contemplated by the Loan Documents.

9.1.11         Intellectual Property. Except as set forth on Schedule 9.1.11, each Borrower and Subsidiary owns or has the lawful right to use all Intellectual Property necessary for the conduct of its business, without conflict with any rights of others. There is no pending or, to any Borrower’s knowledge, threatened Intellectual Property Claim with respect to any Borrower, any Subsidiary or any of their Property (including any Intellectual Property). Except as disclosed on Schedule 9.1.11, no Borrower or Subsidiary pays or owes any Royalty or other compensation to any Person with respect to any Intellectual Property. All Intellectual Property owned, used or licensed by, or otherwise subject to any interests of, any Borrower or Subsidiary is shown on Schedule 9.1.11.

9.1.12         Governmental Approvals. Each Borrower and Subsidiary has, is in compliance in all material respects with, and is in good standing with respect to, all Governmental Approvals necessary to conduct its business and to own, lease and operate its Properties. All necessary import, export or other licenses, permits or certificates for the import or handling of any goods or other Collateral have been procured and are in effect, and Borrowers and Subsidiaries have complied with all foreign and domestic laws with respect to the shipment and importation of any goods or Collateral, except where noncompliance could not reasonably be expected to have a Material Adverse Effect.

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9.1.13         Compliance with Laws. Each Borrower and Subsidiary has duly complied, and its Properties and business operations are in compliance, in all material respects with all Applicable Law, except where noncompliance could not reasonably be expected to have a Material Adverse Effect. There have been no citations, notices or orders of material noncompliance issued to any Borrower or Subsidiary under any Applicable Law. No Inventory has been produced in violation of the FLSA.

9.1.14         Compliance with Environmental Laws. Except as disclosed on Schedule 9.1.14, no Borrower’s or Subsidiary’s past or present operations, Real Estate or other Properties are subject to any federal, state or local investigation to determine whether any remedial action is needed to address any environmental pollution, hazardous material or environmental clean-up that could reasonably be expected to have a Material Adverse Effect or to exceed $50,000. No Borrower or Subsidiary has received any Environmental Notice. No Borrower or Subsidiary has any contingent liability with respect to any Environmental Release, environmental pollution or hazardous material on any Real Estate now or previously owned, leased or operated by it that could reasonably be expected to have a Material Adverse Effect or to exceed $50,000. The representations and warranties contained in the Environmental Agreement are true and correct on the Closing Date.

9.1.15         Burdensome Contracts. No Borrower or Subsidiary is a party or subject to any contract, agreement or charter restriction that could reasonably be expected to have a Material Adverse Effect. No Obligor or Subsidiary is party or subject to any Restrictive Agreement, except as shown on Schedule 9.1.15. No such Restrictive Agreement conditions, restricts or prohibits the execution, delivery or performance of any Loan Document, the incurrence or repayment of any Obligations or the granting of any Liens on any assets, by an Obligor.

9.1.16         Litigation. Except as shown on Schedule 9.1.16, there are no proceedings or investigations pending or, to any Borrower’s knowledge, threatened against any Borrower or Subsidiary, or any of their businesses, operations, Properties, prospects or conditions, that (a) relate to any Loan Documents or transactions contemplated thereby; or (b) could reasonably be expected to have a Material Adverse Effect if determined adversely to any Borrower or Subsidiary. Except as shown on such Schedule, no Obligor has a Commercial Tort Claim (other than, as long as no Default or Event of Default exists, a Commercial Tort Claim for less than $100,000). No Borrower or Subsidiary is in default with respect to any order, injunction or judgment of any Governmental Authority.

9.1.17         No Defaults. No event or circumstance has occurred or exists that constitutes a Default or Event of Default. No Borrower or Subsidiary is in default, and no event or circumstance has occurred or exists that with the passage of time or giving of notice would constitute a default, under any Material Contract to the best of its knowledge or in the payment of any Borrowed Money. There is no basis upon which any party (other than a Borrower or Subsidiary) could terminate a Material Contract prior to its scheduled termination date.

9.1.18         ERISA. Except as disclosed on Schedule 9.1.18:

(i)          Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code, and other federal and state laws. Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the IRS to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the IRS to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the IRS. To the knowledge of Borrowers, nothing has occurred that would prevent or cause the loss of such tax-qualified status.

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(ii)         There are no pending or, to the knowledge of Obligors, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted in or could reasonably be expected to have a Material Adverse Effect.

(iii)        (i) No ERISA Event has occurred, and no Obligor or any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) each Obligor and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and no Obligor or any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) no Obligor or any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) no Obligor or any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.

(iv)        With respect to any Foreign Plan, (i) all employer and employee contributions required by law or by the terms of the Foreign Plan have been made, or, if applicable, accrued, in accordance with normal accounting practices; (ii) the fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance, or the book reserve established for any Foreign Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations with respect to all current and former participants in such Foreign Plan according to the actuarial assumptions and valuations most recently used to account for such obligations in accordance with applicable generally accepted accounting principles; and (iii) it has been registered as required and has been maintained in good standing with applicable regulatory authorities.

(v)         No Obligor or any ERISA Affiliate maintains or contributes to, or has any unsatisfied obligation to contribute to, or liability under, any active or terminated Pension Plan other than those listed on Schedule 9.1.18 hereto.

9.1.19    Trade Relations. There exists no actual or threatened termination, limitation or modification of any business relationship between any Borrower or Subsidiary and any customer or supplier, or any group of customers or suppliers, that individually or in the aggregate would cause a Material Adverse Effect. There exists no condition or circumstance that could reasonably be expected to impair the ability of any Borrower or Subsidiary to conduct its business at any time hereafter in substantially the same manner as conducted on the Closing Date.

9.1.20    Labor Relations. Except as described on Schedule 9.1.20, no Borrower or Subsidiary is party to or bound by any collective bargaining agreement, management agreement or consulting agreement. There are no material grievances, disputes or controversies with any union or other organization of any Borrower’s or Subsidiary’s employees, or, to any Borrower’s knowledge, any asserted or threatened strikes, work stoppages or demands for collective bargaining that could reasonably be expected to have a Material Adverse Effect.

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9.1.21    Payable Practices. Except in the Ordinary Course of Business, no Borrower or Subsidiary has made any material change in its historical accounts payable practices from those in effect on the Closing Date.

9.1.22    Not a Regulated Entity. No Obligor is (a) an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any public utilities code or any other Applicable Law regarding its authority to incur Debt.

9.1.23    Margin Stock. No Borrower or Subsidiary is engaged, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No Loan proceeds or Letters of Credit will be used by Borrowers to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock or for any related purpose governed by Regulations T, U or X of the Board of Governors.

9.1.24    OFAC. No Borrower, Subsidiary or, to the knowledge of any Borrower or Subsidiary, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity currently the subject of any Sanctions. No Borrower or Subsidiary is located, organized or resident in a Designated Jurisdiction.

9.2           Complete Disclosure. No Loan Document contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make the statements contained therein not materially misleading. There is no fact or circumstance that any Obligor has failed to disclose to Agent in writing that could reasonably be expected to have a Material Adverse Effect.

SECTION 10.       COVENANTS AND CONTINUING AGREEMENTS

10.1         Affirmative Covenants. As long as any Commitments or Obligations are outstanding, each Obligor shall, and shall cause each Subsidiary to:

10.1.1   Inspections; Appraisals.

(a)          Permit Agent, or its representatives or designees, from time to time, subject (except when a Default or Event of Default exists) to reasonable notice and normal business hours, to visit and inspect the Properties of any Obligor or Subsidiary, inspect, audit and make extracts from any Obligor’s or Subsidiary’s books and records, and discuss with its officers, employees, agents, advisors and independent accountants such Obligor’s or Subsidiary’s business, financial condition, assets, prospects and results of operations. Lenders may participate in any such visit or inspection, at their own expense. Neither Agent nor any Lender shall have any duty to any Obligor to make any inspection, nor to share any results of any inspection, appraisal or report with any Obligor. Obligors acknowledge that all inspections, appraisals and reports are prepared by Agent and Lenders for their purposes, and Obligors shall not be entitled to rely upon them.

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(b)          Reimburse Agent for all charges, costs and expenses of Agent in connection with (i) examinations of any Obligor’s books and records or any other financial or Collateral matters as Agent deems appropriate, up to three times per Loan Year; and (ii) appraisals of Inventory and Equipment up to one time per Loan Year; provided, however, that if an examination or appraisal is initiated during a Default or Event of Default, all charges, costs and expenses therefor shall be reimbursed by Borrowers without regard to such limits. Subject to and without limiting the foregoing, Obligors specifically agree to pay Agent’s then standard charges for each day that an employee of Agent or its Affiliates is engaged in any examination activities, and shall pay the standard charges of Agent’s internal appraisal group. (The current standard per diem charge for an employee of Agent or the third party currently utilized by Agent is $850 per day or part thereof.) This Section shall not be construed to limit Agent’s right to conduct examinations or to obtain appraisals at any time in its discretion, nor to use third parties for such purposes.

10.1.2    Financial and Other Information. Keep adequate records and books of account with respect to its business activities, in which proper entries are made in accordance with GAAP reflecting all financial transactions; and furnish to Agent and Lenders:

(a)           as soon as available, and in any event within 120 days after the close of each Fiscal Year, balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year, on consolidated and consolidating bases for (i) Borrowers and Subsidiaries, which consolidated statements shall be audited and certified (without qualification) by CohnReznick LLP or another firm of independent certified public accountants of recognized standing selected by Borrowers and acceptable to Agent, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information acceptable to Agent, and a copy of the annual report on Form 10-K if any Obligor is a reporting entity and (ii) of Universal which consolidated statements shall be audited and certified (without qualification) by Smith & Williamson LLP or another firm of chartered accountants of recognized standing selected by Borrowers and acceptable to Agent, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information acceptable to Agent;

(b)          as soon as available, and in any event within 30 days after the end of each month (but within 60 days after the last month in a Fiscal Quarter and within 90 days after the last month in a Fiscal Year), unaudited balance sheets as of the end of such month and the related statements of income and cash flow for such month and for the portion of the Fiscal Year then elapsed, (i) on consolidated and consolidating bases for Borrowers and Subsidiaries (which consolidating statements shall be prepared by Borrowers), setting forth in comparative form corresponding figures for the preceding Fiscal Year and certified by the chief financial officer of Borrower Agent as prepared in accordance with GAAP and fairly presenting the financial position and results of operations for such month and period, subject to normal year-end adjustments and the absence of footnotes, and a copy of the quarterly report on Form 10-Q if any Obligor is a reporting entity; and (ii) on consolidated and consolidating bases for Universal, setting forth in comparative form corresponding figures for the preceding Fiscal Year and certified by the chief financial officer of Borrower Agent as prepared in accordance with GAAP and fairly presenting the financial position and results of operations for such month and period, subject to normal year-end adjustments and the absence of footnotes;

(c)          concurrently with delivery of financial statements under clauses (a) and (b) above [(in the case of clause (b) when no Reporting Trigger Period is in effect, only for the last month in each Fiscal Quarter], or more frequently if requested by Agent while a Default or Event of Default exists, a Compliance Certificate executed by the chief financial officer of Borrower Agent;

(d)          concurrently with delivery of financial statements under clause (a) above, copies of all management letters and other material reports submitted to Borrowers by their accountants in connection with such financial statements;

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(e)          not later than 60 days prior to the end of each Fiscal Year, projections of Borrowers’ consolidated balance sheets, results of operations, cash flow and Availability for the next three Fiscal Years of Borrowers, in which the first Fiscal Year shall be on a monthly basis and the next two Fiscal Years shall be on an annual basis;

(f)          within 20 days after the end of each month, each Obligor shall provide Agent with (i) a detailed trade payable aging, as of the end of the prior month and at Agent’s request, a listing of each such Obligor’s trade payables, specifying the trade creditor and balance due, all in form reasonably satisfactory to Agent, and (ii) a detailed listing of Inventory by location, including details of any inventory in-transit to such Obligor, as of the end of the prior month, all in form reasonably satisfactory to Agent;

(g)          promptly after the sending or filing thereof, copies of any proxy statements, financial statements or reports that any Obligor has made generally available to its shareholders; copies of any regular, periodic and special reports or registration statements or prospectuses that any Obligor files with the Securities and Exchange Commission or any other Governmental Authority, or any securities exchange; and copies of any press releases or other statements made available by an Obligor to the public concerning material changes to or developments in the business of such Obligor;

(h)          promptly after the sending or filing thereof, copies of any annual report to be filed in connection with each Plan or Foreign Plan;

(i)          such other reports and information (financial or otherwise) as Agent may request from time to time in connection with any Collateral or any Borrower’s, Subsidiary’s or other Obligor’s financial condition or business; and

10.1.3   Notices. Notify Agent and Lenders in writing, promptly after a Borrower’s obtaining knowledge thereof, of any of the following that affects an Obligor: (a) the threat or commencement of any proceeding or investigation, whether or not covered by insurance, if an adverse determination could have a Material Adverse Effect; (b) any pending or threatened labor dispute, strike or walkout, or the expiration of any material labor contract; (c) any default under or termination of the Sears Supply Agreement or other Material Contract; (d) the existence of any Default or Event of Default; (e) any judgment in an amount exceeding $250,000 not covered by insurance; (f) the assertion of any Intellectual Property Claim, if an adverse resolution could have a Material Adverse Effect; (g) any violation or asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any Environmental Laws), if an adverse resolution could have a Material Adverse Effect; (h) any Environmental Release by an Obligor or on any Property owned, leased or occupied by an Obligor; or receipt of any Environmental Notice; (i) the occurrence of any ERISA Event; (j) the discharge of or any withdrawal or resignation by Borrowers’ independent accountants; (k) any opening of a new office or place of business, at least 30 days prior to such opening; or (l) notices of any claims or actions against any Obligor in excess of $25,000 relating to WMC; and after the occurrence of any of the foregoing, provide status updates and copies of documents as reasonably requested by Agent.

10.1.4    Landlord and Storage Agreements. Upon request, provide Agent with copies of all existing agreements, and promptly after execution thereof provide Agent with copies of all future agreements, between an Obligor and any landlord, warehouseman, processor, shipper, bailee or other Person that owns any premises at which any Collateral may be kept or that otherwise may possess or handle any Collateral.

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10.1.5    Compliance with Laws. Comply with all Applicable Laws, including ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding collection and payment of Taxes, and maintain all Governmental Approvals necessary to the ownership of its Properties or conduct of its business, unless failure to comply (other than failure to comply with Anti-Terrorism Laws) or maintain could not reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing, if any Environmental Release occurs at or on any Properties of any Borrower or Subsidiary, it shall act promptly and diligently to investigate and report to Agent and all appropriate Governmental Authorities the extent of, and to make appropriate remedial action to eliminate, such Environmental Release, whether or not directed to do so by any Governmental Authority.

10.1.6    Taxes. Pay and discharge all Taxes prior to the date on which they become delinquent or penalties attach, unless such Taxes are being Properly Contested.

10.1.7    Insurance. In addition to the insurance required hereunder with respect to Collateral, maintain insurance with insurers (with a Best Rating of at least A7, unless otherwise approved by Agent) satisfactory to Agent, (a) with respect to the Properties and business of Borrowers and Subsidiaries of such type (including product liability, workers’ compensation, larceny, embezzlement, or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as are customary for companies similarly situated; and (b) business interruption insurance in an amount not less than $2,000,000, with deductibles and subject to an Insurance Assignment satisfactory to Agent.

10.1.8    Licenses. Keep each License affecting any Collateral (including the manufacture, distribution or disposition of Inventory) or any other material Property of Borrowers and Subsidiaries in full force and effect; promptly notify Agent of any proposed modification to any such License, or entry into any new License, in each case at least 30 days prior to its effective date; pay all Royalties when due; and notify Agent of any default or breach asserted by any Person to have occurred under any License.

10.1.9    Future Subsidiaries. Promptly notify Agent upon any Person becoming a Subsidiary and, if such Person is not a Foreign Subsidiary promptly (but within 30 days or such later date as is agreed by the Agent) cause it to be joined to this Agreement, at the option of the Agent, as a Borrower or a Guarantor of the Obligations in a manner satisfactory to Agent, and to execute and deliver such documents, instruments and agreements and to take such other actions as Agent shall require to evidence and perfect a Lien in favor of Agent (for the benefit of Secured Parties) on all assets of such Person, including delivery of such legal opinions, in form and substance satisfactory to Agent, as Agent shall deem appropriate. If such a Person is a Foreign Subsidiary, upon request of the Agent, promptly (but within 30 days or such later date as is agreed by the Agent) deliver 65% of the Equity Interests of such Foreign Subsidiary to the Agent, along with such documents (including a pledge agreement and stock powers executed in blank) reasonably requested by Agent to obtain and perfect a Lien on such Equity Interests for the benefit of Agent and the Secured Parties.

10.1.10  Depository Bank. Other than Foreign Subsidiaries, maintain Capital One as its principal depository bank, including for the maintenance of operating, collection, disbursement and other deposit accounts and Cash Management Services.

10.2         Negative Covenants. As long as any Commitments or Obligations are outstanding, each Obligor shall not, and shall cause each Subsidiary not to:

10.2.1    Permitted Debt. Create, incur, guarantee or suffer to exist any Debt, except:

(a)          the Obligations;

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(b)          Subordinated Debt;

(c)          Permitted Purchase Money Debt;

(d)          Borrowed Money (other than the Obligations, Subordinated Debt and Permitted Purchase Money Debt), but only to the extent outstanding on the Closing Date and not satisfied with proceeds of the initial Loans;

(e)          Bank Product Debt;

(f)           Debt that is in existence when a Person becomes a Subsidiary or that is secured by an asset when acquired by a Borrower or Subsidiary, as long as such Debt was not incurred in contemplation of such Person becoming a Subsidiary or such acquisition, and does not exceed $500,000 in the aggregate at any time;

(g)          Permitted Contingent Obligations;

(h)          Refinancing Debt as long as each Refinancing Condition is satisfied;

(i)            Debt that is not included in any of the preceding clauses of this Section, is not secured by a Lien and does not exceed $250,000 in the aggregate at any time; and

(j)            Debt of Universal with respect to the Overdraft Facility not to exceed $300,000 at any time outstanding.

10.2.2   Permitted Liens. Create or suffer to exist any Lien upon any of its Property, except the following (collectively, “Permitted Liens”):

(a)          Liens in favor of Agent;

(b)          Purchase Money Liens securing Permitted Purchase Money Debt;

(c)          Liens for Taxes not yet due or being Properly Contested;

(d)          non-consenual, possessory or statutory Liens (other than Liens for Taxes or imposed under ERISA) arising in the Ordinary Course of Business, but only if (i) payment of the obligations secured thereby is not yet due or is being Properly Contested, and (ii) such Liens do not materially impair the value or use of the Property or materially impair operation of the business of any Borrower or Subsidiary;

(e)          Liens incurred or deposits made in the Ordinary Course of Business to secure the performance of tenders, bids, leases, contracts (except those relating to Borrowed Money), statutory obligations and other similar obligations, or arising as a result of progress payments under government contracts, as long as such Liens are at all times junior to Agent’s Liens;

(f)          Liens arising in the Ordinary Course of Business that are subject to Lien Waivers;

(g)          Liens arising by virtue of a judgment or judicial order against any Borrower or Subsidiary, or any Property of a Borrower or Subsidiary, as long as such Liens are (i) in existence for less than 20 consecutive days or being Properly Contested, and (ii) at all times junior to Agent’s Liens;

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(h)          easements, rights-of-way, restrictions, covenants or other agreements of record, and other similar charges or encumbrances on Real Estate, that do not secure any monetary obligation and do not interfere with the Ordinary Course of Business;

(i)            Liens on assets of Universal to secure Debt under the Overdraft Facility;

(j)            normal and customary rights of setoff upon deposits in favor of depository institutions, and Liens of a collecting bank on Payment Items in the course of collection; and

(k)           other Liens existing on the date hereof and shown on Schedule 10.2.2.

10.2.3    Capital Expenditures. Make Capital Expenditures in excess of $2,500,000, in the aggregate during any Fiscal Year; provided, however, that if the amount of Capital Expenditures permitted to be made in any Fiscal Year exceeds the amount actually made, up to 100% of such excess may be carried forward to the next Fiscal Year.

10.2.4    Distributions; Upstream Payments; Executive Compensation. Declare or make any Distributions or pay executive compensation, except (a) Upstream Payments, (b) Distributions of Equity Interests that do not result in a Change of Control and (c) executive compensation, including incentive compensation, and management and directors’ fees and expenses consistent with past practice and, in the case of incentive compensation, with any incentive plans approved by the Board of Directors of P&F as set forth on Schedule 10.2.4 or as subsequently approved by such Board (or a committee thereof) and such Board’s independent compensation consultant reasonably satisfactory to Agent; or create or suffer to exist any encumbrance or restriction on the ability of a Subsidiary to make any Upstream Payment, except for restrictions under the Loan Documents, under Applicable Law or in effect on the Closing Date as shown on Schedule 9.1.15.

10.2.5    Restricted Investments. Make any Investment other than a Permitted Investment; provided that none of the Equipment purchased or otherwise acquired pursuant to an Acquisition shall be included in the Equipment Formula Amount and none of the Accounts or Inventory purchased or otherwise acquired pursuant to an Acquisition shall be included in the calculation of the Borrowing Base until Agent has conducted field examinations and appraisals (which field examinations and appraisals shall be at the expense of the Borrowers and shall not count towards the limits set forth in Section 10.1.1) reasonably required by it with results reasonably satisfactory to Agent, and the Person owning such Equipment, Accounts and Inventory shall be a (directly or indirectly) wholly-owned Subsidiary of the Borrowers and have become a Borrower.

10.2.6    Disposition of Assets. Make any Asset Disposition, except a Permitted Asset Disposition, a disposition of Equipment under Section 8.4.2, or a transfer of Property by a Subsidiary or Obligor to a Borrower.

10.2.7    Loans. Make any loans or other advances of money to any Person, except (a) advances to an officer or employee for salary, travel expenses, commissions and similar items in the Ordinary Course of Business; (b) prepaid expenses and extensions of trade credit made in the Ordinary Course of Business; (c) deposits with financial institutions permitted hereunder; (d) intercompany loans by a Borrower or Guarantor to another Borrower or from a Guarantor to another Guarantor or from a Subsidiary that is not an Obligor to an Obligor (provided, that the terms thereof are reasonably satisfactory to Agent); (e) from a Borrower to a Guarantor in the Ordinary Course of Business and not to exceed $500,000 at any time outstanding with respect to all loans from all Borrowers to all Guarantors and (f) Permitted Investments.

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10.2.8    Restrictions on Payment of Certain Debt. Make any payments (whether voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) with respect to any (a) Subordinated Debt, except regularly scheduled payments of principal, interest and fees, but only to the extent permitted under any subordination agreement relating to such Debt (and a Senior Officer of Borrower Agent shall certify to Agent, not less than five Business Days prior to the date of payment, that all conditions under such agreement have been satisfied); or (b) Borrowed Money (other than the Obligations) prior to its due date under the agreements evidencing such Debt as in effect on the Closing Date or, if later, when entered into (or, in each case, as amended thereafter with the consent of Agent) except payments made in connection with a Permitted Asset Disposition in satisfaction of Permitted Liens on the Equipment or Real Estate that is the subject of such Asset Disposition.

10.2.9    Fundamental Changes. (a) Merge, combine or consolidate with any Person, or liquidate, wind up its affairs or dissolve itself, in each case whether in a single transaction or in a series of related transactions, except for (i) Permitted Acquisitions, (ii) mergers or consolidations of a wholly-owned Subsidiary with another wholly-owned Subsidiary (provided that if either Subsidiary is an Obligor, the surviving Subsidiary shall be an Obligor) or into a Borrower, and (iii) liquidations or dissolutions of Immaterial Subsidiaries; (b) change its name or conduct business under any fictitious name; (c) change its tax, charter or other organizational identification number; or (d) change its form or state of organization.

10.2.10  Subsidiaries. Form or acquire any Subsidiary after the Closing Date, except in accordance with Sections 10.1.9 and 10.2.5; or permit any existing Subsidiary to issue any additional Equity Interests except director’s qualifying shares.

10.2.11  Organic Documents. Amend, modify or otherwise change any of its Organic Documents as in effect on the Closing Date, except for new agreements, amendments, modifications or other changes that do not adversely affect the rights and privileges of any Borrower or Obligor, or its Subsidiaries, and do not adversely affect the ability of a Borrower, Obligor or a Domestic Subsidiary to borrower hereunder or to amend, modify, renew or supplement the terms of this Agreement or any of the other Loan Documents, or otherwise adversely affect the interest of Agent or the Lenders and so long as at the time of such amendment, modification or change, no Default or Event of Default shall exist or have occurred and be continuing.

10.2.12  Tax Consolidation. File or consent to the filing of any consolidated income tax return with any Person other than Borrowers and Subsidiaries and WMC.

10.2.13  Accounting Changes. Make any material change in accounting treatment or reporting practices, except as required by GAAP and in accordance with Section 1.2; or change its Fiscal Year.

10.2.14  Restrictive Agreements. Become a party to any Restrictive Agreement, except a Restrictive Agreement (a) in effect on the Closing Date and set forth on Schedule 9.1.15; (b) relating to secured Debt permitted hereunder, as long as the restrictions apply only to collateral for such Debt or a Foreign Subsidiary that is an obligor with respect to such Debt; or (c) constituting customary restrictions on assignment in leases and other contracts.

10.2.15  Hedging Agreements. Enter into any Hedging Agreement, except to hedge risks arising in the Ordinary Course of Business and not for speculative purposes.

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10.2.16  Conduct of Business. Engage in any business, other than its business as conducted on the Closing Date and any business reasonably related, ancillary or complimentary to such business.

10.2.17  Affiliate Transactions. Enter into or be party to any transaction with an Affiliate, except (a) transactions contemplated by the Loan Documents; (b) payment of reasonable compensation to officers and employees for services actually rendered, (including executive compensation and incentive compensation in accordance with Section 10.2.4) and loans and advances permitted by Section 10.2.7; (c) payment of customary directors’ fees and indemnities; (d) transactions solely among Borrowers or solely among Guarantors; (e) transactions among Borrowers and Guarantors provided that they do not involve in the aggregate the transfer of assets or value to one or more Guarantors having a value in excess of $250,000 at any one time outstanding; (f) transactions that were consummated prior to the Closing Date, as shown on Schedule 10.2.17; and (g) transactions with Affiliates (other than WMC, except as provided in Section 10.2.20) in the Ordinary Course of Business, upon fair and reasonable terms fully disclosed to Agent and no less favorable than would be obtained in a comparable arm’s-length transaction with a non-Affiliate.

10.2.18  Plans. Become party to any Multiemployer Plan or Foreign Plan, other than any in existence on the Closing Date.

10.2.19  Amendments to Subordinated Debt. Amend, supplement or otherwise modify any document, instrument or agreement relating to any Subordinated Debt, if such modification (a) increases the principal balance of such Debt, or increases any required payment of principal or interest; (b) accelerates the date on which any installment of principal or any interest is due, or adds any additional redemption, put or prepayment provisions; (c) shortens the final maturity date or otherwise accelerates amortization; (d) increases the interest rate; (e) increases or adds any fees or charges; (f) modifies any covenant in a manner or adds any representation, covenant or default that is more onerous or restrictive in any material respect for any Borrower or Subsidiary, or that is otherwise materially adverse to any Borrower, any Subsidiary or Lenders; (g) results in the Obligations not being fully benefited by the subordination provisions applicable thereto or (h) results in the Obligations not constituting “Senior Debt” under any applicable subordination agreement.

10.2.20  WMC. No Obligor shall (i) transfer any assets or make any loans to, or Investments in WMC, (ii) assume, become obligated for or satisfy any obligations of WMC, (ii) resume any of the operations or business of WMC or (iv) use the names or other assets of WMC in its business or operations except for payment of reasonable expense, including without limitation legal and accounting fees, in connection with the winding up or dissolution of WMC.

10.2.21  Post-Closing Deliveries. Fail to satisfy any of the requirements set forth on Schedule 10.2.21 within the time period(s) specified therein or such later time period(s) as may be approved by Agent.

10.3         Financial Covenants. As long as any Commitments or Obligations are outstanding, Borrowers shall:

10.3.1    Leverage Ratio. MaintainWhile a Trigger Period is in effect, maintain a Leverage Ratio at all times not greater than the applicable ratio set forth below, measured for the most recently ended month for which financial statements have been delivered hereunder prior to the Trigger Period and each month ending thereafter until the Trigger Period is no longer in effect:

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Measurement Date	Maximum Leverage Ratio
Closing Date through September 30, 2015	4.00 to 1.00
October 1, 2015 through November 30, 2015	3.50 to 1.00
December 1,31, 2015  and thereafter	3.25 to 1.00

10.3.2    Fixed Charge Coverage Ratio. MaintainWhile a Trigger Period is in effect, maintain a Fixed Charge Coverage Ratio as of the end of each Measurement Period of not less than 1.50 to 1.00.1.00 while a Trigger Period is in effect, measured for the most recently ended Measurement Period for which financial statements have been delivered hereunder prior to the Trigger Period and each Measurement Period ending thereafter until the Trigger Period is no longer in effect.

10.3.3    Tangible Net Worth. Maintain a Tangible Net Worth, as of the Measurement Period ending June 30, 2014 and each Fiscal Quarter end thereafter, of not less than $15,500,000 plus 50% of the consolidated net income (if positive) of P&F and its Subsidiaries for each Fiscal Quarter ending after June 30, 2014.

SECTION 11.       EVENTS OF DEFAULT; REMEDIES ON DEFAULT

11.1         Events of Default. Each of the following shall be an “Event of Default” hereunder, if the same shall occur for any reason whatsoever, whether voluntary or involuntary, by operation of law or otherwise:

(a)          A Borrower fails to pay any Obligations when due (whether at stated maturity, on demand, upon acceleration or otherwise);

(b)          Any representation, warranty or other written statement of an Obligor made in connection with any Loan Documents or transactions contemplated thereby is incorrect or misleading in any material respect when given;

(c)          A Borrower breaches or fail to perform any covenant contained in Section 7.2, 7.3, 7.4, 7 .5, 7.7, 8.1, 8.2.4, 8.2.5, 8.5, 8.6.2, 10.1.1, 10.1.2, 10.1.3 (d), 10.2 or 10.3;

(d)          An Obligor breaches or fails to perform any other covenant contained in any Loan Documents, and such breach or failure is not cured within 30 days after a Senior Officer of such Obligor has knowledge thereof or receives notice thereof from Agent, whichever is sooner; provided, however, that such notice and opportunity to cure shall not apply if the breach or failure to perform is not capable of being cured within such period or is a willful breach by an Obligor;

(e)          A Guarantor repudiates, revokes or attempts to revoke its Guaranty; an Obligor or third party denies or contests the validity or enforceability of any Loan Documents or Obligations, or the perfection or priority of any Lien granted to Agent; or any Loan Document ceases to be in full force or effect for any reason (other than a waiver or release by Agent and Lenders);

(f)          Any breach or default of an Obligor occurs under any document, instrument or agreement to which it is a party or by which it or any of its Properties is bound, relating to any Debt (other than the Obligations) in excess of $500,000, if the maturity of or any payment with respect to such Debt may be accelerated or demanded due to such breach;

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(g)          Any unsatisfied judgment or order for the payment of money is entered against an Obligor in an amount that exceeds, individually or cumulatively with all unsatisfied judgments or orders against all Obligors, $500,000 (net of any insurance coverage therefor acknowledged in writing by the insurer), unless a stay of enforcement of such judgment or order is in effect, by reason of a pending appeal or otherwise;

(h)          A loss, theft, damage or destruction occurs with respect to any Collateral if the amount not covered by insurance exceeds $600,000 ($800,000 in the case of hurricane damage to any Collateral);

(i)          An Obligor is enjoined, restrained or in any way prevented by any Governmental Authority from conducting any part of its business that could reasonably be expected to have a Material Adverse Effect; an Obligor suffers the loss, revocation or termination of any material license, permit, lease or agreement necessary to its business; there is a cessation of any material part of an Obligor’s business for a material period of time; any material Collateral or Property of an Obligor is taken or impaired through condemnation; an Obligor agrees to or commences any liquidation, dissolution or winding up of its affairs; or an Obligor is not Solvent;

(j)          An Insolvency Proceeding is commenced by an Obligor; an Obligor makes an offer of settlement, extension or composition to its unsecured creditors generally; a trustee is appointed to take possession of any substantial Property of or to operate any of the business of an Obligor; or an Insolvency Proceeding is commenced against an Obligor and: the Obligor consents to institution of the proceeding, the petition commencing the proceeding is not timely contested by the Obligor, the petition is not dismissed within 30 days after filing, or an order for relief is entered in the proceeding;

(k)          An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan that has resulted or could reasonably be expected to result in liability of an Obligor to a Pension Plan, Multiemployer Plan or PBGC in excess of $250,000, or that constitutes grounds for appointment of a trustee for or termination by the PBGC of any Pension Plan or Multiemployer Plan; an Obligor or ERISA Affiliate fails to pay when due any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan; or any event similar to the foregoing occurs or exists with respect to a Foreign Plan;

(l)          An Obligor or any of its Senior Officers is criminally indicted or convicted for (i) a felony committed in the conduct of the Obligor’s business, or (ii) violating any state or federal law (including the Controlled Substances Act, Money Laundering Control Act of 1986 and Illegal Exportation of War Materials Act) that could lead to forfeiture of any material Property or any Collateral;

(m)          A Change of Control occurs; or any event occurs or condition exists that has a Material Adverse Effect; or

(n)          Any material provision of any subordination provision applicable to any Subordinated Debt in excess of an aggregate of $500,000, ceases to be in full force and effect; or any Obligor contests in any manner the validity or enforceability of any such provision; or any Obligor breaches any such provision.

11.2        Remedies upon Default. If an Event of Default described in Section 11.1(j) occurs with respect to any Borrower, then to the extent permitted by Applicable Law, all Obligations (other than Secured Bank Product Obligations) shall become automatically due and payable and all Commitments shall terminate, without any action by Agent or notice of any kind. In addition, or if any other Event of Default exists, Agent may in its discretion (and shall upon written direction of Required Lenders) do any one or more of the following from time to time:

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(a)          declare any Obligations immediately due and payable, whereupon they shall be due and payable without diligence, presentment, demand, protest or notice of any kind, all of which are hereby waived by Obligors to the fullest extent permitted by law;

(b)          terminate, reduce or condition any Commitment, or make any adjustment to the Borrowing Base;

(c)          require Obligors to Cash Collateralize LC Obligations, Secured Bank Product Obligations and other Obligations that are contingent or not yet due and payable, and, if Obligors fail promptly to deposit such Cash Collateral, Agent may (and shall upon the direction of Required Lenders) advance the required Cash Collateral as Revolver Loans (whether or not an Overadvance exists or is created thereby, or the conditions in Section 6 are satisfied); and

(d)          exercise any other rights or remedies afforded under any agreement, by law, at equity or otherwise, including the rights and remedies of a secured party under the UCC. Such rights and remedies include the rights to (i) take possession of any Collateral; (ii) require Obligors to assemble Collateral, at Borrowers’ expense, and make it available to Agent at a place designated by Agent; (iii) enter any premises where Collateral is located and store Collateral on such premises until sold (and if the premises are owned or leased by an Obligor, Obligors agree not to charge for such storage); and (iv) sell or otherwise dispose of any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale, with such notice as may be required by Applicable Law, in lots or in bulk, at such locations, all as Agent, in its discretion, deems advisable. Each Obligor agrees that 10 days' notice of any proposed sale or other disposition of Collateral by Agent shall be reasonable. Agent shall have the right to conduct such sales on any Obligor’s premises, without charge, and such sales may be adjourned from time to time in accordance with Applicable Law. Agent shall have the right to sell, lease or otherwise dispose of any Collateral for cash, credit or any combination thereof, and Agent may purchase any Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of the purchase price, may credit bid and set off the amount of such price against the Obligations.

11.3        License. Agent is hereby granted an irrevocable, non-exclusive license or other right to use, license or sub-license (without payment of royalty or other compensation to any Person) any or all Intellectual Property of Obligors, computer hardware and software, trade secrets, brochures, customer lists, promotional and advertising materials, labels, packaging materials and other Property, in advertising for sale, marketing, selling, collecting, completing manufacture of, or otherwise exercising any rights or remedies with respect to, any Collateral. Each Obligor’s rights and interests under Intellectual Property shall inure to Agent’s benefit.

11.4        Setoff. At any time during an Event of Default, Agent, Issuing Bank, Lenders, and any of their Affiliates are authorized, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by Agent, Issuing Bank, such Lender or such Affiliate to or for the credit or the account of an Obligor against any Obligations, irrespective of whether or not Agent, Issuing Bank, such Lender or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or are owed to a branch or office of Agent, Issuing Bank, such Lender or such Affiliate different from the branch or office holding such deposit or obligated on such indebtedness; provided that in the event any Defaulting Lender shall exercise any such right of setoff, (a) all amounts so set off shall be paid over immediately to Agent for further application in accordance with the provisions of Section 4.2 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed to be held in trust for the benefit of Agent and the Lenders and (b) the Defaulting Lender shall provide promptly to Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of Agent, Issuing Bank, each Lender and each such Affiliate under this Section are in addition to other rights and remedies (including other rights of setoff) that such Person may have.

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11.5        Remedies Cumulative; No Waiver.

11.5.1   Cumulative Rights. All agreements, warranties, guaranties, indemnities and other undertakings of Borrowers or Obligors under the Loan Documents are cumulative and not in derogation of each other. The rights and remedies of Agent and Lenders are cumulative, may be exercised at any time and from time to time, concurrently or in any order, and are not exclusive of any other rights or remedies available by agreement, by law, at equity or otherwise. All such rights and remedies shall continue in full force and effect until Full Payment of all Obligations.

11.5.2   Waivers. No waiver or course of dealing shall be established by (a) the failure or delay of Agent or any Lender to require strict performance by Obligors with any terms of the Loan Documents, or to exercise any rights or remedies with respect to Collateral or otherwise; (b) the making of any Loan or issuance of any Letter of Credit during a Default, Event of Default or other failure to satisfy any conditions precedent; or (c) acceptance by Agent or any Lender of any payment or performance by an Obligor under any Loan Documents in a manner other than that specified therein. It is expressly acknowledged by Obligors that any failure to satisfy a financial covenant on a measurement date shall not be cured or remedied by satisfaction of such covenant on a subsequent date.

SECTION 12.         AGENT

12.1         Appointment, Authority and Duties of Agent.

12.1.1   Appointment and Authority. Each Secured Party appoints and designates Capital One Business Credit Corporation as Agent under all Loan Documents. Agent may, and each Secured Party authorizes Agent to, enter into all Loan Documents to which Agent is intended to be a party and accept all Security Documents, for the benefit of Secured Parties. Each Secured Party agrees that any action taken by Agent or Required Lenders in accordance with the provisions of the Loan Documents, and the exercise by Agent or Required Lenders of any rights or remedies set forth therein, together with all other powers reasonably incidental thereto, shall be authorized by and binding upon all Secured Parties. Without limiting the generality of the foregoing, Agent shall have the sole and exclusive authority to (a) act as the disbursing and collecting agent for Lenders with respect to all payments and collections arising in connection with the Loan Documents; (b) execute and deliver as Agent each Loan Document, including any intercreditor or subordination agreement, and accept delivery of each Loan Document from any Obligor or other Person; (c) act as collateral agent for Secured Parties for purposes of perfecting and administering Liens under the Loan Documents, and for all other purposes stated therein; (d) manage, supervise or otherwise deal with Collateral; and (e) take any Enforcement Action or otherwise exercise any rights or remedies with respect to any Collateral under the Loan Documents, Applicable Law or otherwise. The duties of Agent shall be ministerial and administrative in nature, and Agent shall not have a fiduciary relationship with any Secured Party, Participant or other Person, by reason of any Loan Document or any transaction relating thereto. Agent alone shall be authorized to determine whether any Accounts or Inventory constitute Eligible Accounts, Eligible In-Transit Inventory or Eligible Inventory, or whether to impose or release any reserve, or whether any conditions to funding or to issuance of a Letter of Credit have been satisfied, which determinations and judgments, if exercised in good faith, shall exonerate Agent from liability to any Lender or other Person for any error in judgment.

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12.1.2   Duties. Agent shall not have any duties except those expressly set forth in the Loan Documents. The conferral upon Agent of any right shall not imply a duty on Agent’s part to exercise such right, unless instructed to do so by Required Lenders in accordance with this Agreement.

12.1.3   Agent Professionals. Agent may perform its duties through agents and employees. Agent may consult with and employ Agent Professionals, and shall be entitled to act upon, and shall be fully protected in any action taken in good faith reliance upon, any advice given by an Agent Professional. Agent shall not be responsible for the negligence or misconduct of any agents, employees or Agent Professionals selected by it with reasonable care.

12.1.4    Instructions of Required Lenders. The rights and remedies conferred upon Agent under the Loan Documents may be exercised without the necessity of joinder of any other party, unless required by Applicable Law. Agent may request instructions from Required Lenders or other Secured Parties with respect to any act (including the failure to act) in connection with any Loan Documents, and may seek assurances to its satisfaction from any or all Secured Parties of their indemnification obligations against all Claims that could be incurred by Agent in connection with any act. Agent shall be entitled to refrain from any act until it has received such instructions or assurances, and Agent shall not incur liability to any Person by reason of so refraining. Instructions of Required Lenders shall be binding upon all Secured Parties, and no Secured Party shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting in accordance with the instructions of Required Lenders. Notwithstanding the foregoing, instructions by and consent of Secured Parties shall be required in the circumstances described in Section 14.1.1. In no event shall Agent be required to take any action that, in its opinion, is contrary to Applicable Law or any Loan Documents or could subject any Agent Indemnitee to personal liability.

12.2         Agreements Regarding Collateral and Field Examination Reports.

12.2.1   Lien Releases; Care of Collateral. Secured Parties authorize Agent to release any Lien with respect to any Collateral (a) upon Full Payment of the Obligations; (b) that is the subject of an Asset Disposition which Borrowers certify in writing to Agent is a Permitted Asset Disposition or a Lien which Borrowers certify is a Permitted Lien entitled to priority over Agent’s Liens (and Agent may rely conclusively on any such certificate without further inquiry); (c) that does not constitute a material part of the Collateral; or (d) with the written consent of all Lenders. Secured Parties authorize Agent to subordinate its Liens to any Purchase Money Lien permitted hereunder. Agent shall have no obligation to assure that any Collateral exists or is owned by a Borrower, or is cared for, protected or insured, nor to assure that Agent’s Liens have been properly created, perfected or enforced, or are entitled to any particular priority, nor to exercise any duty of care with respect to any Collateral.

12.2.2   Possession of Collateral. Agent and Secured Parties appoint each Lender as agent (for the benefit of Secured Parties) for the purpose of perfecting Liens in any Collateral held or controlled by such Lender, to the extent such Liens are perfected by possession or control. If any Lender obtains possession or control of any Collateral, it shall notify Agent thereof and, promptly upon Agent’s request, deliver such Collateral to Agent or otherwise deal with it in accordance with Agent’s instructions.

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12.2.3   Reports. Agent shall promptly forward to each Lender, when complete, copies of any field audit, examination or appraisal report prepared by or for Agent with respect to any Obligor or Collateral (“Report”). Each Lender agrees (a) that neither Capital One Business Credit Corporation nor Agent makes any representation or warranty as to the accuracy or completeness of any Report, and shall not be liable for any information contained in or omitted from any Report; (b) that the Reports are not intended to be comprehensive audits or examinations, and that Agent or any other Person performing any audit or examination will inspect only specific information regarding Obligations or the Collateral and will rely significantly upon Borrowers’ books and records as well as upon representations of Borrowers’ officers and employees; and (c) to keep all Reports confidential and strictly for such Lender’s internal use, and not to distribute any Report (or the contents thereof) to any Person (except to such Lender’s Participants, attorneys and accountants) or use any Report in any manner other than administration of the Loans and other Obligations. Each Lender shall indemnify and hold harmless Agent and any other Person preparing a Report from any action such Lender may take as a result of or any conclusion it may draw from any Report, as well as from any Claims arising as a direct or indirect result of Agent furnishing a Report to such Lender.

12.3         Reliance By Agent. Agent shall be entitled to rely, and shall be fully protected in relying, upon any certification, notice or other communication (including those by telephone, telex, telegram, telecopy or e-mail) believed by it to be genuine and correct and to have been signed, sent or made by the proper Person, and upon the advice and statements of Agent Professionals.

12.4         Action Upon Default. Agent shall not be deemed to have knowledge of any Default or Event of Default, or of any failure to satisfy any conditions in Section 6, unless it has received written notice from a Borrower or a Lender specifying the occurrence and nature thereof. If any Lender acquires knowledge of a Default, Event of Default or failure of such conditions, it shall promptly notify Agent and the other Lenders thereof in writing. Each Secured Party agrees that, except as otherwise provided in any Loan Documents or with the written consent of Agent and Required Lenders, it will not take any Enforcement Action, accelerate Obligations (other than Secured Bank Product Obligations), or exercise any right that it might otherwise have under Applicable Law to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral or to assert any rights relating to any Collateral. Notwithstanding the foregoing, however, a Secured Party may take action to preserve or enforce its rights against an Obligor where a deadline or limitation period is applicable that would, absent such action, bar enforcement of Obligations held by such Secured Party, including the filing of proofs of claim in an Insolvency Proceeding.

12.5         Ratable Sharing. If any Lender shall obtain any payment or reduction of any Obligation, whether through set-off or otherwise, in excess of its share of such Obligation, determined on a Pro Rata basis or in accordance with Section 5.6.1, as applicable, such Lender shall forthwith purchase from Agent, Issuing Bank and the other Lenders such participations in the affected Obligation as are necessary to cause the purchasing Lender to share the excess payment or reduction on a Pro Rata basis or in accordance with Section 5.6.1, as applicable. If any of such payment or reduction is thereafter recovered from the purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. No Lender shall set off against any Dominion Account without the prior consent of Agent. The Pro Rata sharing provisions of this Section shall not be construed to apply to (a) any payment made by or on behalf of Borrowers pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (b) the application of Cash Collateral provided for in Section 2.3.3, (c) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Revolver Loans or subparticipations in LC Obligations or Swingline Loans to any assignee or participant (to the extent permitted hereunder) or (d) any payment made in respect of, and to any Lender participating in, any additional loan facility arising under any amendment of this Agreement.

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12.6         Indemnification of Agent Indemnitees. EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES AND ISSUING BANK INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGORS (BUT WITHOUT LIMITING THE INDEMNIFICATION OBLIGATIONS OF CREDIT PARTIES UNDER ANY LOAN DOCUMENTS), ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY AGENT INDEMNITEE OR ISSUING BANK INDEMNITEE, PROVIDED THAT ANY CLAIM AGAINST AN AGENT INDEMNITEE RELATES TO OR ARISES FROM ITS ACTING AS OR FOR AGENT (IN THE CAPACITY OF AGENT). In Agent’s discretion, it may reserve for any Claims made against an Agent Indemnitee or Issuing Bank Indemnitee, and may satisfy any judgment, order or settlement relating thereto, from proceeds of Collateral prior to making any distribution of Collateral proceeds to Secured Parties. If Agent is sued by any receiver, bankruptcy trustee, debtor-in-possession or other Person for any alleged preference or fraudulent transfer, then any monies paid by Agent in settlement or satisfaction of such proceeding, together with all interest, costs and expenses (including attorneys’ fees) incurred in the defense of same, shall be promptly reimbursed to Agent by each Lender to the extent of its Pro Rata share.

12.7         Limitation on Responsibilities of Agent. Agent shall not be liable to any Secured Party for any action taken or omitted to be taken under the Loan Documents, except for losses directly and solely caused by Agent’s gross negligence or willful misconduct. Agent does not assume any responsibility for any failure or delay in performance or any breach by any Obligor, Lender or other Secured Party of any obligations under the Loan Documents. Agent does not make to Secured Parties any express or implied warranty, representation or guarantee with respect to any Obligations, Collateral, Loan Documents or Obligor. No Agent Indemnitee shall be responsible to Secured Parties for any recitals, statements, information, representations or warranties contained in any Loan Documents; the execution, validity, genuineness, effectiveness or enforceability of any Loan Documents; the genuineness, enforceability, collectability, value, sufficiency, location or existence of any Collateral, or the validity, extent, perfection or priority of any Lien therein; the validity, enforceability or collectability of any Obligations; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Obligor or Account Debtor. No Agent Indemnitee shall have any obligation to any Secured Party to ascertain or inquire into the existence of any Default or Event of Default, the observance or performance by any Obligor of any terms of the Loan Documents, or the satisfaction of any conditions precedent contained in any Loan Documents.

12.8         Successor Agent and Co-Agents.

12.8.1    Resignation; Successor Agent. Subject to the appointment and acceptance of a successor Agent as provided below, Agent may resign at any time by giving at least 30 days written notice thereof to Lenders and Borrower Agent. Upon receipt of such notice, Required Lenders shall have the right to appoint a successor Agent which shall be (a) a Lender or an Affiliate of a Lender; or (b) a commercial bank that is organized under the laws of the United States or any state or district thereof, has a combined capital surplus of at least $200,000,000 and (provided no Default or Event of Default exists) is reasonably acceptable to Borrower Agent. If no successor agent is appointed prior to the effective date of the resignation of Agent, then Agent may appoint a successor agent from among Lenders or, if no Lender accepts such role, Agent may appoint Required Lenders as successor agent. Upon acceptance by a successor Agent of an appointment to serve as Agent hereunder, or upon appointment of Required Lenders as successor Agent, such successor Agent shall thereupon succeed to and become vested with all the powers and duties of the retiring Agent without further act, and the retiring Agent shall be discharged from its duties and obligations hereunder but shall continue to have the benefits of the indemnification set forth in Sections 12.6 and 14.2. Notwithstanding any Agent’s resignation, the provisions of this Section 12 shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while Agent. Any successor to Capital One Business Credit Corporation by merger or acquisition of stock or this loan shall continue to be Agent hereunder without further act on the part of the parties hereto, unless such successor resigns as provided above.

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12.8.2    Separate Collateral Agent. It is the intent of the parties that there shall be no violation of any Applicable Law denying or restricting the right of financial institutions to transact business in any jurisdiction. If Agent believes that it may be limited in the exercise of any rights or remedies under the Loan Documents due to any Applicable Law, Agent may appoint an additional Person who is not so limited, as a separate collateral agent or co-collateral agent. If Agent so appoints a collateral agent or co-collateral agent, each right and remedy intended to be available to Agent under the Loan Documents shall also be vested in such separate agent. Every covenant and obligation necessary to the exercise thereof by such agent shall run to and be enforceable by it as well as Agent. Secured Parties shall execute and deliver such documents as Agent deems appropriate to vest any rights or remedies in such agent. If any collateral agent or co-collateral agent shall die or dissolve, become incapable of acting, resign or be removed, then all the rights and remedies of such agent, to the extent permitted by Applicable Law, shall vest in and be exercised by Agent until appointment of a new agent.

12.9         Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that it has, independently and without reliance upon Agent or any other Lenders, and based upon such documents, information and analyses as it has deemed appropriate, made its own credit analysis of each Obligor and its own decision to enter into this Agreement and to fund Loans and participate in LC Obligations hereunder. Each Secured Party has made such inquiries as it feels necessary concerning the Loan Documents, Collateral and Obligors. Each Secured Party acknowledges and agrees that the other Secured Parties have made no representations or warranties concerning any Obligor, any Collateral or the legality, validity, sufficiency or enforceability of any Loan Documents or Obligations. Each Secured Party will, independently and without reliance upon any other Secured Party, and based upon such financial statements, documents and information as it deems appropriate at the time, continue to make and rely upon its own credit decisions in making Loans and participating in LC Obligations, and in taking or refraining from any action under any Loan Documents. Except for notices, reports and other information expressly requested by a Lender, Agent shall have no duty or responsibility to provide any Secured Party with any notices, reports or certificates furnished to Agent by any Obligor or any credit or other information concerning the affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates) which may come into possession of Agent or its Affiliates.

12.10         Replacement of Certain Lenders. If a Lender (a) is a Defaulting Lender, or (b) fails to give its consent to any amendment, waiver or action for which consent of all Lenders was required and Required Lenders consented, then, in addition to any other rights and remedies that any Person may have, Agent may, by notice to such Lender within 120 days after such event, require such Lender to assign all of its rights and obligations under the Loan Documents to Eligible Assignee(s) specified by Agent, pursuant to appropriate Assignment and Acceptance(s) and within 20 days after Agent’s notice. Agent is irrevocably appointed as attorney-in-fact to execute any such Assignment and Acceptance if the Lender fails to execute same. Such Lender shall be entitled to receive, in cash, concurrently with such assignment, all amounts owed to it under the Loan Documents, including all principal, interest and fees through the date of assignment (but excluding any prepayment charge).

12.11         Remittance of Payments and Collections.

12.11.1  Remittances Generally. All payments by any Lender to Agent shall be made by the time and on the day set forth in this Agreement, in immediately available funds. If no time for payment is specified or if payment is due on demand by Agent and request for payment is made by Agent by 11:00 a.m. on a Business Day, payment shall be made by Lender not later than 2:00 p.m. on such day, and if request is made after 11:00 a.m., then payment shall be made by 11:00 a.m. on the next Business Day. Payment by Agent to any Secured Party shall be made by wire transfer, in the type of funds received by Agent. Any such payment shall be subject to Agent’s right of offset for any amounts due from such payee under the Loan Documents.

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12.11.2  Failure to Pay. If any Secured Party fails to pay any amount when due by it to Agent pursuant to the terms hereof, such amount shall bear interest from the due date until paid at the rate determined by Agent as customary in the banking industry for interbank compensation. In no event shall Borrowers be entitled to receive credit for any interest paid by a Secured Party to Agent, nor shall any Defaulting Lender be entitled to interest on any amounts held by Agent pursuant to Section 4.2.

12.11.3  Recovery of Payments. If Agent pays any amount to a Secured Party in the expectation that a related payment will be received by Agent from an Obligor and such related payment is not received, then Agent may recover such amount from each Secured Party that received it. If Agent determines at any time that an amount received under any Loan Document must be returned to an Obligor or paid to any other Person pursuant to Applicable Law or otherwise, then, notwithstanding any other term of any Loan Document, Agent shall not be required to distribute such amount to any Lender. If any amounts received and applied by Agent to any Obligations are later required to be returned by Agent pursuant to Applicable Law, each Lender shall pay to Agent, on demand, such Lender’s Pro Rata share of the amounts required to be returned.

12.12         Agent in its Individual Capacity. As a Lender, Capital One Business Credit Corporation shall have the same rights and remedies under the other Loan Documents as any other Lender, and the terms “Lenders,” “Required Lenders” or any similar term shall include Capital One Business Credit Corporation in its capacity as a Lender. Each of Capital One Business Credit Corporation and its Affiliates may accept deposits from, maintain deposits or credit balances for, invest in, lend money to, provide Bank Products to, act as trustee under indentures of, serve as financial or other advisor to, and generally engage in any kind of business with, Obligors and their Affiliates, as if Capital One Business Credit Corporation were any other lender, without any duty to account therefor (including any fees or other consideration received in connection therewith) to the other Lenders. In their individual capacity, Capital One Business Credit Corporation and its Affiliates may receive information regarding Obligors, their Affiliates and their Account Debtors (including information subject to confidentiality obligations), and each Secured Party agrees that Capital One Business Credit Corporation and its Affiliates shall be under no obligation to provide such information to any Secured Party, if acquired in such individual capacity and not as Agent hereunder.

12.13         Agent Titles. Each Lender, other than Capital One Business Credit Corporation, that is designated (on the cover page of this Agreement or otherwise) by Capital One Business Credit Corporation as an “Agent” or “Arranger” of any type shall not have any right, power, responsibility or duty under any Loan Documents other than those applicable to all Lenders, and shall in no event be deemed to have any fiduciary relationship with any other Lender.

12.14         Bank Product Providers. Each Secured Bank Product Provider, by delivery of a notice to Agent of a Bank Product, agrees to be bound by Section 5.6 and this Section 12. Each Secured Bank Product Provider shall indemnify and hold harmless Agent Indemnitees, to the extent not reimbursed by Obligors, against all Claims that may be incurred by or asserted against any Agent Indemnitee in connection with such provider’s Secured Bank Product Obligations.

12.15         No Third Party Beneficiaries. This Section 12 is an agreement solely among Secured Parties and Agent, and shall survive Full Payment of the Obligations. This Section 12 does not confer any rights or benefits upon Obligors or any other Person. As between Obligors and Agent, any action that Agent may take under any Loan Documents or with respect to any Obligations shall be conclusively presumed to have been authorized and directed by Secured Parties.

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SECTION 13.         BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

13.1         Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of Obligors, Agent, Lenders, Secured Parties, and their respective successors and assigns, except that (a) no Borrower shall have the right to assign its rights or delegate its obligations under any Loan Documents; and (b) any assignment by a Lender must be made in compliance with Section 13.3. Agent may treat the Person which made any Loan as the owner thereof for all purposes until such Person makes an assignment in accordance with Section 13.3. Any authorization or consent of a Lender shall be conclusive and binding on any subsequent transferee or assignee of such Lender.

13.2         Participations.

13.2.1    Permitted Participants; Effect. Any Lender may, in the ordinary course of its business and in accordance with Applicable Law, at any time sell to a financial institution (other than a Defaulting Lender, an Obligor or an Affiliate of an Obligor) (“Participant”) a participating interest in the rights and obligations of such Lender under any Loan Documents. Despite any sale by a Lender of participating interests to a Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for performance of such obligations, such Lender shall remain the holder of its Loans and Commitments for all purposes, all amounts payable by Borrowers shall be determined as if such Lender had not sold such participating interests, and Borrowers and Agent shall continue to deal solely and directly with such Lender in connection with the Loan Documents. Each Lender shall be solely responsible for notifying its Participants of any matters under the Loan Documents, and Agent and the other Lenders shall not have any obligation or liability to any such Participant. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 5.9 unless Borrowers agree otherwise in writing.

13.2.2    Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, waiver or other modification of any Loan Documents other than that which forgives principal, interest or fees, reduces the stated interest rate or fees payable with respect to any Loan or Commitment in which such Participant has an interest, postpones the Commitment Termination Date or any date fixed for any regularly scheduled payment of principal, interest or fees on such Loan or Commitment, or releases any Borrower, Guarantor or substantial portion of the Collateral.

13.2.3    Benefit of Set-Off. Borrowers agree that each Participant shall have a right of set-off in respect of its participating interest to the same extent as if such interest were owing directly to a Lender, and each Lender shall also retain the right of set-off with respect to any participating interests sold by it. By exercising any right of set-off, a Participant agrees to share with Lenders all amounts received through its set-off, in accordance with Section 12.5 as if such Participant were a Lender.

13.3         Assignments.

13.3.1    Permitted Assignments. A Lender may assign to an Eligible Assignee any of its rights and obligations under the Loan Documents, as long as (a) each assignment is of a constant, and not a varying, percentage of the transferor Lender’s rights and obligations under the Loan Documents and, in the case of a partial assignment, is in a minimum principal amount of $5,000,000 (unless otherwise agreed by Agent in its discretion) and integral multiples of $1,000,000 in excess of that amount; (b) except in the case of an assignment in whole of a Lender’s rights and obligations, the aggregate amount of the Commitments retained by the transferor Lender is at least $5,000,000 (unless otherwise agreed by Agent in its discretion); and (c) the parties to each such assignment shall execute and deliver to Agent, for its acceptance and recording, an Assignment and Acceptance. Nothing herein shall limit the right of a Lender to pledge or assign any rights under the Loan Documents to (i) any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors and any Operating Circular issued by such Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any Loans; provided, however, that any payment by Borrowers to the assigning Lender in respect of any Obligations assigned as described in this sentence shall satisfy Borrowers’ obligations hereunder to the extent of such payment, and no such assignment shall release the assigning Lender from its obligations hereunder.

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13.3.2    Effect; Effective Date. Upon delivery to Agent of an assignment notice in the form of Exhibit D and a processing fee of $3,500 (unless otherwise agreed by Agent in its discretion), the assignment shall become effective as specified in the notice, if it complies with this Section 13.3. From such effective date, the Eligible Assignee shall for all purposes be a Lender under the Loan Documents, and shall have all rights and obligations of a Lender thereunder. Upon consummation of an assignment, the transferor Lender, Agent and Borrowers shall make appropriate arrangements for issuance of replacement and/or new Notes, as applicable. The transferee Lender shall comply with Section 5.10 and deliver, upon request, an administrative questionnaire satisfactory to Agent.

SECTION 14.         MISCELLANEOUS

14.1         Consents, Amendments and Waivers.

14.1.1    Amendment. No modification of any Loan Document, including any extension or amendment of a Loan Document or any waiver of a Default or Event of Default, shall be effective without the prior written agreement of Agent (with the consent of Required Lenders) and each Obligor party to such Loan Document, provided, however, that only the consent of the parties to a Bank Product agreement shall be required for any modification of such agreement and that

(a)          without the prior written consent of Agent, no modification shall be effective with respect to any provision in a Loan Document that relates to any rights, duties or discretion of Agent;

(b)          without the prior written consent of Issuing Bank, no modification shall be effective with respect to any LC Obligations, Section 2.3 or any other provision in a Loan Document that relates to any rights, duties or discretion of Issuing Bank;

(c)          without the prior written consent of each affected Lender, no modification shall be effective that would (i) increase the Commitment of such Lender; (ii) reduce the amount of, or waive or delay payment of, any principal, interest or fees payable to such Lender; or (iii) extend the Revolver Termination Date, Term Loan Maturity Date or Capex Loan Termination Date;

(d)          without the prior written consent of all Lenders (except a Defaulting Lender as provided in Section 4.2), no modification shall be effective that would (i) alter Section 5.6, 7.1 (except to add Collateral) or 14.1.1; (ii) amend the definition of Borrowing Base (or any defined term used in such definition), Pro Rata or Required Lenders; (iii) release Collateral with a book value greater than $1,000,000 during any calendar year, except as currently contemplated by the Loan Documents; or (iv) release any Obligor from liability for any Obligations, if such Obligor is Solvent at the time of the release; and

(e)          without the prior written consent of a Secured Bank Product Provider, no modification shall be effective that affects its relative payment priority under Section 5.6.

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14.1.2    Limitations. The agreement of any Obligor shall not be necessary to the effectiveness of any modification of a Loan Document that deals solely with the rights and duties of Lenders, Agent and/or Issuing Bank as among themselves. Only the consent of the parties to the Commitment Letter or any agreement relating to a Bank Product shall be required for any modification of such agreement, and any non-Lender that is party to a Bank Product agreement shall have no right to participate in any manner in modification of any other Loan Document. Any waiver or consent granted by Agent or Lenders hereunder shall be effective only if in writing and only for the matter specified.

14.1.3    Payment for Consents. No Obligor will, directly or indirectly, pay any remuneration or other thing of value, whether by way of additional interest, fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as consideration for agreement by such Lender with any modification of any Loan Documents, unless such remuneration or value is concurrently paid, on the same terms, on a Pro Rata basis to all Lenders providing their consent.

14.2         Indemnity. EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE OR ASSERTED BY ANY OBLIGOR OR OTHER PERSON. In no event shall any party to a Loan Document have any obligation thereunder to indemnify or hold harmless an Indemnitee with respect to a Claim that is determined in a final, non-appealable judgment by a court of competent jurisdiction to result from the gross negligence or willful misconduct of such Indemnitee.

14.3         Notices and Communications.

14.3.1    Notice Address. Subject to Section 4.1.4, all notices and other communications by or to a party hereto shall be in writing and shall be given to any Obligor, at Borrower Agent’s address shown on the signature pages hereof, and to any other Person at its address shown on the signature pages hereof (or, in the case of a Person who becomes a Lender after the Closing Date, at the address shown on its Assignment and Acceptance), or at such other address as a party may hereafter specify by notice in accordance with this Section 14.3. Each such notice or other communication shall be effective only (a) if given by facsimile transmission, when transmitted to the applicable facsimile number, if confirmation of receipt is received; (b) if given by mail, three Business Days after deposit in the U.S. mail, with first-class postage pre-paid, addressed to the applicable address; or (c) if given by personal delivery, when duly delivered to the notice address with receipt acknowledged. Notwithstanding the foregoing, no notice to Agent pursuant to Section 2.1.4, 2.3, 3.1.2, 4.1.1 or 5.3.3 shall be effective until actually received by the individual to whose attention at Agent such notice is required to be sent. Any written notice or other communication that is not sent in conformity with the foregoing provisions shall nevertheless be effective on the date actually received by the noticed party. Any notice received by Borrower Agent shall be deemed received by all Obligors.

14.3.2    Electronic Communications; Voice Mail. Electronic mail and internet websites may be used only for routine communications, such as financial statements, Borrowing Base Certificates and other information required by Section 10.1.2, administrative matters, distribution of Loan Documents for execution, and matters permitted under Section 4.1.4. Agent and Lenders make no assurances as to the privacy and security of electronic communications. Electronic and voice mail may not be used as effective notice under the Loan Documents.

14.3.3    Non-Conforming Communications. Agent and Lenders may rely upon any notices purportedly given by or on behalf of any Obligor even if such notices were not made in a manner specified herein, were incomplete or were not confirmed, or if the terms thereof, as understood by the recipient, varied from a later confirmation. Each Obligor shall indemnify and hold harmless each Indemnitee from any liabilities, losses, costs and expenses arising from any telephonic communication purportedly given by or on behalf of a Obligor.

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14.4         Performance of Borrowers’ Obligations. Agent may, in its discretion at any time and from time to time, at Borrowers’ expense, pay any amount or do any act required of a Borrower under any Loan Documents or otherwise lawfully requested by Agent to (a) enforce any Loan Documents or collect any Obligations; (b) protect, insure, maintain or realize upon any Collateral; or (c) defend or maintain the validity or priority of Agent’s Liens in any Collateral, including any payment of a judgment, insurance premium, warehouse charge, finishing or processing charge, or landlord claim, or any discharge of a Lien. All payments, costs and expenses (including Extraordinary Expenses) of Agent under this Section shall be reimbursed to Agent by Borrowers, on demand, with interest from the date incurred to the date of payment thereof at the Default Rate applicable to Base Rate Revolver Loans. Any payment made or action taken by Agent under this Section shall be without prejudice to any right to assert an Event of Default or to exercise any other rights or remedies under the Loan Documents.

14.5         Credit Inquiries. Each Obligor hereby authorizes Agent and Lenders (but they shall have no obligation) to respond to usual and customary credit inquiries from third parties concerning any Borrower or Domestic Subsidiary.

14.6         Severability. Wherever possible, each provision of the Loan Documents shall be interpreted in such manner as to be valid under Applicable Law. If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of the Loan Documents shall remain in full force and effect.

14.7         Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents are cumulative. The parties acknowledge that the Loan Documents may use several limitations, tests or measurements to regulate similar matters, and they agree that these are cumulative and that each must be performed as provided. Except as otherwise provided in another Loan Document (by specific reference to the applicable provision of this Agreement), if any provision contained herein is in direct conflict with any provision in another Loan Document, the provision herein shall govern and control.

14.8         Counterparts. Any Loan Document may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall become effective when Agent has received counterparts bearing the signatures of all parties hereto. Delivery of a signature page of any Loan Document by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of such agreement.

14.9         Entire Agreement. Time is of the essence of the Loan Documents. The Loan Documents constitute the entire contract among the parties relating to the subject matter hereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

14.10         Relationship with Lenders. The obligations of each Lender hereunder are several, and no Lender shall be responsible for the obligations or Commitments of any other Lender. Amounts payable hereunder to each Lender shall be a separate and independent debt. It shall not be necessary for Agent or any other Lender to be joined as an additional party in any proceeding for such purposes. Nothing in this Agreement and no action of Agent, Lenders or any other Secured Party pursuant to the Loan Documents or otherwise shall be deemed to constitute Agent and any Secured Party to be a partnership, association, joint venture or any other kind of entity, nor to constitute control of any Obligor.

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14.11         No Control; No Advisory or Fiduciary Responsibility. Nothing in any Loan Document and no action of Agent or any Lender pursuant to any Loan Document shall be deemed to constitute control of any Obligor by Agent or Lenders. In connection with all aspects of each transaction contemplated by any Loan Document, Obligors acknowledge and agree that (a)(i) this credit facility and any related arranging or other services by Agent, any Lender, any of their Affiliates or any arranger are arm’s-length commercial transactions between Obligors and such Person; (ii) Obligors have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate; and (iii) Obligors are capable of evaluating and understanding, and do understand and accept, the terms, risks and conditions of the transactions contemplated by the Loan Documents; (b) each of Agent, Lenders, their Affiliates and any arranger is and has been acting solely as a principal in connection with this credit facility, is not the financial advisor, agent or fiduciary for Obligors, any of their Affiliates or any other Person, and has no obligation with respect to the transactions contemplated by the Loan Documents except as expressly set forth therein; and (c) Agent, Lenders, their Affiliates and any arranger may be engaged in a broad range of transactions that involve interests that differ from those of Obligors and their Affiliates, and have no obligation to disclose any of such interests to Obligors or their Affiliates. To the fullest extent permitted by Applicable Law, each Obligor hereby waives and releases any claims that it may have against Agent, Lenders, their Affiliates and any arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated by a Loan Document.

14.12         Confidentiality. Each of Agent, Lenders and Issuing Bank shall maintain the confidentiality of all Information (as defined below), except that Information may be disclosed (a) to its Affiliates, and to its and their partners, directors, officers, employees, agents, advisors and representatives (provided such Persons are informed of the confidential nature of the Information and instructed to keep it confidential); (b) to the extent requested by any governmental, regulatory or self-regulatory authority purporting to have jurisdiction over it or its Affiliates; (c) to the extent required by Applicable Law or by any subpoena or other legal process; (d) to any other party hereto; (e) in connection with any action or proceeding, or other exercise of rights or remedies, relating to any Loan Documents or Obligations; (f) subject to an agreement containing provisions substantially the same as this Section, to any Transferee or any actual or prospective party (or its advisors) to any Bank Product; (g) with the consent of Borrower Agent; or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) is available to Agent, any Lender, Issuing Bank or any of their Affiliates on a non-confidential basis from a source other than Borrowers. Notwithstanding the foregoing, Agent and Lenders may publish or disseminate general information describing this credit facility, including the names and addresses of Obligors and a general description of Obligors’ businesses, and may use Obligors’ logos, trademarks or product photographs in advertising materials. As used herein, “Information” means all information received from an Obligor or Subsidiary relating to it or its business that is identified as confidential when delivered. Any Person required to maintain the confidentiality of Information pursuant to this Section shall be deemed to have complied if it exercises the same degree of care that it accords its own confidential information. Each of Agent, Lenders and Issuing Bank acknowledges that (i) Information may include material non-public information concerning an Obligor or Subsidiary; (ii) it has developed compliance procedures regarding the use of material non-public information; and (iii) it will handle such material non-public information in accordance with Applicable Law, including federal and state securities laws.

14.13         GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).

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14.14         Consent to Forum.

14.14.1  Forum. EACH OBLIGOR HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER NEW YORK, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH OBLIGOR IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 14.3.1. Nothing herein shall limit the right of Agent or any Lender to bring proceedings against any Obligor in any other court, nor limit the right of any party to serve process in any other manner permitted by Applicable Law. Nothing in this Agreement shall be deemed to preclude enforcement by Agent of any judgment or order obtained in any forum or jurisdiction.

14.15         Waivers by Obligors. To the fullest extent permitted by Applicable Law, each Obligor waives (a) the right to trial by jury (which Agent and each Lender hereby also waives) in any proceeding or dispute of any kind relating in any way to any Loan Documents, Obligations or Collateral; (b) presentment, demand, protest, notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of any commercial paper, accounts, documents, instruments, chattel paper and guaranties at any time held by Agent on which a Obligor may in any way be liable, and hereby ratifies anything Agent may do in this regard; (c) notice prior to taking possession or control of any Collateral; (d) any bond or security that might be required by a court prior to allowing Agent to exercise any rights or remedies; (e) the benefit of all valuation, appraisement and exemption laws; (f) any claim against Agent or any Lender, on any theory of liability, for special, indirect, consequential, exemplary or punitive damages (as opposed to direct or actual damages) in any way relating to any Enforcement Action, Obligations, Loan Documents or transactions relating thereto; and (g) notice of acceptance hereof. Each Obligor acknowledges that the foregoing waivers are a material inducement to Agent and Lenders entering into this Agreement and that Agent and Lenders are relying upon the foregoing in their dealings with Obligors. Each Obligor has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its jury trial and other rights following consultation with legal counsel. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

14.16         Patriot Act Notice. Agent and Lenders hereby notify Obligor s that pursuant to the requirements of the Patriot Act, Agent and Lenders are required to obtain, verify and record information that identifies each Obligor, including its legal name, address, tax ID number and other information that will allow Agent and Lenders to identify it in accordance with the Patriot Act. Agent and Lenders will also require information regarding each personal guarantor, if any, and may require information regarding Obligor s’ management and owners, such as legal name, address, social security number and date of birth.

SECTION 15.         GUARANTY OF OBLIGATIONS

15.1         Guaranty; Limitation of Liability. In order to induce Agent and Lenders to enter into this Agreement and to induce the Lenders to extend credit hereunder and to induce the Lenders or their affiliates provide Bank Products, and in recognition of the direct benefit received by the Guarantors from the extension of such credit and provision of such Bank Products, each Guarantor hereby absolutely, unconditionally and irrevocably guarantees (the undertaking by each Guarantor under this Section 15 being, as amended from time to time, the “Facility Guaranty”) the punctual payment when due, whether at scheduled maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all Obligations of each other Obligor now or hereafter existing under or in respect of the Loan Documents (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing Obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action, costs, expenses or otherwise (such Obligations being the “Guaranteed Obligations”), and agrees to pay any and all expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by Agent or any other Secured Party in enforcing any rights under this Facility Guaranty or any other Loan Document. Without limiting the generality of the foregoing, each Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Obligor to any Secured Party under or in respect of the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of any Insolvency Proceeding involving such other Obligor.

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15.1.1    No Fraudulent Transfer. Each Guarantor, Agent and each other Secured Party, hereby confirms that it is the intention of such Persons that this Facility Guaranty and the obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Facility Guaranty and the Obligations of each Guarantor hereunder. To effectuate the foregoing intention, each Guarantor, Agent and each of the other Secured Parties hereby irrevocably agree that such Guaranteed Obligations and other liabilities shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of each Guarantor that are relevant under the laws referred to in the first sentence hereof, and after giving effect to any collections from, any rights to receive contributions from, or payments made by or on behalf of, any of the other Obligors in respect of the Obligations under any Loan Document, result in the Guaranteed Obligations and all other liabilities of each Guarantor under this Facility Guaranty not constituting a fraudulent transfer or conveyance.

15.1.2    Contribution. Each Guarantor hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to any Secured Party under this Facility Guaranty, any other Loan Document or any other guaranty, each Guarantor will contribute, to the maximum extent permitted by law, such amounts to each other Guarantor and each other guarantor so as to maximize the aggregate amount paid to the Secured Parties under or in respect of the Loan Documents.

15.2         Guaranty Absolute.

15.2.1    Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any Applicable Law, now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Secured Party with respect thereto. The obligations of each Guarantor under or in respect of this Facility Guaranty are independent of the Guaranteed Obligations or any other Obligations of any other Obligor under or in respect of the Loan Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this Facility Guaranty, irrespective of whether any action is brought against any Borrower or any other Obligor or whether any Borrower or any other Obligor is joined in any such action or actions. The liability of each Guarantor under this Facility Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:

(a)          any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto;

(b)          any change in the time, manner or place of payment of, or in any other term of, including any increase in the amount of, all or any of the Guaranteed Obligations or any other Obligations of any other Obligor under or in respect of the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Obligor or otherwise;

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(c)          any taking, exchange, release or non-perfection of any Collateral or any other collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations;

(d)          any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations or any other Obligations of any Obligor under the Loan Documents or any other assets of any Obligor; the failure of Agent, any other Secured Party or any other person to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of such Collateral, property or security;

(e)          the fact that any Collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Guaranteed Obligations shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by each Guarantor that such Guarantor is not entering into this Facility Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any such Collateral;

(f)          any change, restructuring or termination of the corporate structure or existence of any Obligor or any of its Subsidiaries;

(g)          any failure of any Secured Party to disclose to any Obligor any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Obligor now or hereafter known to such Secured Party (each Guarantor waiving any duty on the part of the Secured Parties to disclose such information);

(h)          the failure of any other Person to execute or deliver any Loan Document or any supplement thereto or any other guaranty or agreement or the release or reduction of liability of any Guarantor or other guarantor or surety with respect to the Guaranteed Obligations; or

(i)          any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by any Secured Party that might otherwise constitute a defense available to, or a discharge of, any Obligor or any other guarantor or surety, other than Full Payment of the Guaranteed Obligations.

15.2.2    Reinstatement. This Facility Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by Agent or any Secured Party or any other Person upon the insolvency, bankruptcy or reorganization of any Borrower or any other Obligor or otherwise, all as though such payment had not been made.

15.2.3    Guarantied Obligations Due. Each Guarantor hereby further agrees that, as between each Guarantor on the one hand, and Agent and the other Secured Parties, on the other hand, (i) the Guaranteed Obligations of each Guarantor may be declared to be forthwith due and payable as provided in Section 11.2 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 11.2) for purposes of Section 15.1, notwithstanding any stay, injunction or other prohibition preventing such declaration in respect of the Obligations of any of the Obligors guaranteed hereunder (or preventing such Guaranteed Obligations from becoming automatically due and payable) as against any other Person and (ii) in the event of any declaration of acceleration of such Guaranteed Obligations (or such Guaranteed Obligations being deemed to have become automatically due and payable) as provided in Section 11.2, such Guaranteed Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by each Guarantor for all purposes of this Facility Guaranty.

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15.3         Waivers and Acknowledgments. Each Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Facility Guaranty and any requirement that Agent or any Secured Party protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Obligor or any other Person or any Collateral.

15.3.1    Waiver of Right of Revocation. Each Guarantor hereby unconditionally and irrevocably waives any right to revoke this Facility Guaranty and acknowledges that this Facility Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

15.3.2    Waiver of Defenses. Each Guarantor hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by Agent or any Secured Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of each Guarantor or other rights of each Guarantor to proceed against any of the other Obligors, any other guarantor or any other Person or any Collateral and (ii) any defense based on any right of set-off or counterclaim against or in respect of the Obligations of each Guarantor hereunder.

15.3.3    Foreclosure. Each Guarantor acknowledges that Agent may, without notice to or demand upon each Guarantor and without affecting the liability of each Guarantor under this Facility Guaranty, foreclose under any mortgage by nonjudicial sale, and each Guarantor hereby waives any defense to the recovery by Agent and the other Secured Parties against each Guarantor of any deficiency after such nonjudicial sale and any defense or benefits that may be afforded by applicable law.

15.3.4    Waiver of Duty to Disclose. Each Guarantor hereby unconditionally and irrevocably waives any duty on the part of Agent or any Secured Party to disclose to each Guarantor any matter, fact or thing relating to the business, financial condition, operations, or performance of any other Obligor or any of its Subsidiaries now or hereafter known by Agent or such Secured Party.

15.3.5    Knowing Waivers. Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in Section 15.2 and this Section 15.3 are knowingly made in contemplation of such benefits.

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15.4         Subrogation. Each Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against any Borrower, any other Obligor or any other insider guarantor that arise from the existence, payment, performance or enforcement of each Guarantor’s Obligations under or in respect of this Facility Guaranty or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of Agent or any Secured Party against any Borrower, any other Obligor or any other insider guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Borrower, any other Obligor or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until Full Payment of all of the Guaranteed Obligations and all other amounts payable under this Facility Guaranty. If any amount shall be paid to each Guarantor in violation of the immediately preceding sentence at any time prior to the Full Payment of the Guaranteed Obligations and all other amounts payable under this Facility Guaranty, such amount shall be received and held in trust for the benefit of the Secured Parties, shall be segregated from other property and funds of each Guarantor and shall forthwith be paid or delivered to Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Facility Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Facility Guaranty thereafter arising. If any Guarantor shall make payment to any Secured Party of all or any part of the Guaranteed Obligations, and Full Payment of the Guaranteed Obligations shall occur, then the Secured Parties will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment made by such Guarantor pursuant to this Facility Guaranty.

15.4.1    Subordination. Each Guarantor hereby subordinates any and all debts, liabilities and other obligations in the nature of borrowed money owed to each Guarantor by each other Obligor (as used in this Section 15, the “Intercompany Obligations”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 15.4:

15.4.2    Prohibited Payments, Etc. Except (a) during the continuance of any Event of Default under Sections 11.1(a) or (j) or (b) after notice from Agent or any Lender of any other Event of Default under this Agreement, each Guarantor may receive regularly scheduled payments from any other Obligor on account of the Intercompany Obligations. During the continuance of any Event of Default under Sections 11.1(a) or (j) or after notice from Agent or any Lender of any other Event of Default under this Agreement, however, each Guarantor shall not demand, accept or take any action to collect any payment on account of the Intercompany Obligations unless the Required Lenders otherwise agree.

15.4.3    Prior Payment of Guaranteed Obligations. In any Insolvency Proceeding relating to any other Obligor, each Guarantor agrees that the Secured Parties shall be entitled to receive Full Payment in cash of all Guaranteed Obligations (including all interest, expenses and fees (including legal fees) accruing after the commencement of any Insolvency Proceeding, whether or not constituting an allowed claim in such proceeding (as used in this Section 15, “Post-Petition Interest”)) before each Guarantor receives payment of any Intercompany Obligations.

15.4.4    Turn-Over. After the occurrence and during the continuance of any Event of Default (including the commencement and continuation of any Insolvency Proceeding relating to any other Obligor), each Guarantor shall, if Agent so requests, collect, enforce and receive payments on account of the Intercompany Obligations as trustee for the Secured Parties and deliver such payments to Agent on account of the Guaranteed Obligations (including all Post Petition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of each Guarantor under the other provisions of this Facility Guaranty.

15.4.5    Agent Authorization. After the occurrence and during the continuance of any Event of Default (including the commencement and continuation of any Insolvency Proceeding relating to any other Obligor), Agent is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of each Guarantor, to collect and enforce, and to submit claims in respect of, Intercompany Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Post Petition Interest), and (ii) to require each Guarantor (A) to collect and enforce, and to submit claims in respect of, Intercompany Obligations and (B) to pay any amounts received on such obligations to Agent for application to the Guaranteed Obligations (including any and all Post Petition Interest).

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15.4.6    Continuing Guaranty; Assignments. This Facility Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the Full Payment of the Guaranty Obligations, (b) be binding upon each Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Secured Parties and their successors, transferees and assigns. Without limiting the generality of clause (c) of the immediately preceding sentence, any Secured Party may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitments, the Loans owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Party herein or otherwise, in each case as and to the extent provided in Section 13.3. No Guarantor shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Secured Parties

[Remainder of page intentionally left blank; signatures begin on following page]

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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date set forth above.

BORROWERS:
P&F INDUSTRIES, INC.
FLORIDA PNEUMATIC MANUFACTURING
CORPORATION
HY-TECH MACHINE, INC.
ATSCO HOLDINGS CORPORATION
NATIONWIDE INDUSTRIES, INC.
By:
Name:
Title:
	Attention:
	Telecopy:
GUARANTORS:
CONTINENTAL TOOL GROUP, INC.
COUNTRYWIDE HARDWARE, INC.
EMBASSY INDUSTRIES, INC.
GREEN MANUFACTURING, INC.
PACIFIC STAIR PRODUCTS, INC.
EXHAUST TECHNOLOGIES, INC.
WILP HOLDINGS, INC.
By:
Name:
Title:
	Attention:
	Telecopy:
WOODMARK INTERNATIONAL, L.P.
By:	Countrywide Hardware, Inc.
	By:
	Name:
	Title:
	Attention:
	Telecopy:

LOAN AND SECURITY AGREEMENT

Signature page

AGENT AND LENDERS:
CAPITAL ONE BUSINESS CREDIT CORPORATION, NATIONAL ASSOCIATION as Agent and Lender
By:
Name:
Title:
275 Broadhollow Road
Melville, New York 11747
Attention:	Julianne Low
Telecopy:

LOAN AND SECURITY AGREEMENT

Signature page

EX-10.3

Exhibit 10.3

LEASE

BETWEEN

COUNTRYWIDE HARDWARE, INC.

“LESSOR”

AND

NATIONWIDE INDUSTRIES, INC.

“LESSEE”

Demised Premises:

10333 Windhorst Road, Tampa, Florida

LEASE

THIS LEASE (“Lease”) is made and entered into as of the 11th day of February, 2016, by and between COUNTRYWIDE HARDWARE, INC., a Delaware corporation, having an address at 445 Broadhollow Road, Suite 100, Melville 11747, New York (hereinafter “Lessor”), and NATIONWIDE INDUSTRIES, INC., a Delaware corporation having its principal office at 10333 Windhorst Road, Tampa, Florida 33619 (hereinafter “Lessee”).

WITNESSETH:

WHEREAS, Lessor owns the following real property (collectively, the “Demised Premises”): (a) the land described in Exhibit “A” annexed hereto (the “Land”); (b) the existing building as described in Exhibit “A” annexed hereto (the “Building”), (c) any and all other structures and other improvements and appurtenances now or hereafter located on the Land (the “Other Improvements;” said Building and Other Improvements being hereinafter collectively referred to as the “Improvements”); (d) all right, title, and interest of Lessor, if any, in and to the land lying in the bed of any street or highway in front of or adjoining the Land to the center line of such street or highway; (e) the appurtenances and all the estate and rights of Lessor in and to the Land; and (f) any strips or gores adjoining the Land; and (g) all fixtures attached or appurtenant to any of the foregoing;

WHEREAS, Lessor desires to lease the Demised Premises to Lessee, and Lessee desires to lease the Demised Premises from Lessor;

WHEREAS, the parties desire to enter into this Lease to set forth their rights and obligations to each other relating to the Demised Premises; and

NOW, THEREFORE, for good and valuable consideration, Lessor leases and demises the Demised Premises to Lessee, and Lessee takes and hires the Demised Premises from Lessor, subject only to Permitted Exceptions, for the Term, upon the terms and conditions of this Lease.

ARTICLE I

LEASED PROPERTY AND LEASE TERM

Section 1.01 Leased Property and Lease Term. Lessor hereby leases to Lessee, and Lessee hereby hires on the terms and conditions hereinafter set forth, the Demised Premises, subject to the “Permitted Exceptions” described on Exhibit “B” annexed hereto.

TO HAVE AND TO HOLD, the Demised Premises unto Lessee, for a term of seven (7) years commencing on February 11, 2016 (the “Commencement Date”) and expiring at 12:00 noon on January 31, 2023 (the “Termination Date”), unless this Lease shall be sooner terminated as hereinafter provided. The use of the word “Term” in this Lease shall mean the period commencing on the Commencement Date and ending on the Termination Date, unless sooner terminated as provided herein.

Section 1.02 Delivery. If Lessor shall be unable to give possession of the Demised Premises on the Commencement Date for any reason, Lessor shall not be subject to any liability for the failure to give possession on said date, nor shall such failure in any way affect the validity of this Lease or the obligations of Lessee hereunder except that the Net Rent and any Additional Rent (as hereinafter defined) due hereunder shall be abated until after Lessor shall have given Lessee written notice that the Demised Premises are ready for Lessee's occupancy.

ARTICLE II

RENT

Section 2.01 Net Rent. (a) Lessee shall pay to Lessor a net annual minimum rent for the Demised Premises during the Term of this Lease without any deduction, defense, credit, abatement, setoff or offset for any circumstances whatsoever except as otherwise expressly permitted in this Lease, and without prior notice or demand, in lawful money of the United States as follows (the “Net Rent”):

COMMENCING	ENDING	ANNUAL NET RENT		MONTHLY NET RENT
2/11/2016	1/31/2017	$	251,761.50	$	20,980.13
2/1/2017	1/31/2018	$	259,314.35	$	21,609.53
2/1/2018	1/31/2019	$	267,093.78	$	22,257.82
2/1/2019	1/31/2020	$	275,106.59	$	22,925.55
2/1/2020	1/31/2021	$	283,359.80	$	23,613.32
2/1/2021	1/31/2022	$	291,860.59	$	24,321.72
2/1/2022	1/31/2023	$	300,616.41	$	25,051.37

(b) Lessee shall pay Net Rent in equal monthly installments in advance on the first day of each month. Lessee shall pay all Net Rent and other sums payable by Lessee to Lessor by good and sufficient check payable to Lessor or by wire transfer, at such address as Lessor shall designate from time to time.

(c) Upon the execution and delivery of this Lease by Lessor and Lessee, the Lessee shall pay $13,745.60 which shall be applied to the monthly Net Rent due under this Lease for the period from the date hereof through February 29, 2016 (the “Initial Payment”).

Section 2.02 Additional Rent. In addition to the Net Rent required under Section 2.01, Lessee shall, in accordance with the provisions of this Lease, pay all Impositions (as defined below), insurance premiums, construction costs of any non-structural improvements, additions, alterations and repairs (except as otherwise provided in Section 10.02 hereof) and any other charges, costs and expenses arising out of, or in any way connected with the Demised Premises and the Improvements occurring during the Term of this Lease so that the Net Rent shall in all respects be absolutely net to Lessor. All Impositions, insurance premiums and other charges, costs, expenses or amounts due under this Lease other than Net Rent are sometimes hereinafter collectively referred to as “Additional Rent.” Additional Rent and Net Rent are sometimes hereinafter collectively referred to as “Rent.” In the event of the non payment of all or any portion of Additional Rent, Lessor shall have the same rights and remedies as provided in this Lease or at law, in equity or otherwise for failure of Lessee to pay Net Rent.

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Section 2.03 Address for Payment. Payment of the Net Rent required hereunder together with any other amounts payable by Lessee to Lessor shall be paid at the following address:

COUNTRYWIDE HARDWARE, INC

445 Broadhollow Road, Suite 100

Melville 11747

Attention: Joseph Molino, Jr.

or to such other address as Lessor shall, from time to time, designate in writing.

Section 2.04 During any period when any Net Rent shall be or become uncollectible, reduced, or required to be refunded because of any rent control law or regulation (a “Rent Regulation Period”), Lessee shall enter into such agreement(s) and take such other steps as Lessor may reasonably request and as may be legally permissible to permit Lessor to collect the maximum Net Rent that, from time to time during such Rent Regulation Period, may be legally permissible (and not in excess of the amounts then reserved therefor under this Lease to the extent then due and payable under this Lease). After any Rent Regulation Period: (a) Net Rent shall become and thereafter be payable in accordance with this Lease; and (b) Lessee shall promptly pay in full to Lessor, unless prohibited by law, an amount equal to the excess, if any, of the following during the Rent Regulation Period: (1) the Net Rent that this Lease required Lessee to pay; less (2) the Net Rent Lessee actually paid.

ARTICLE III

TAXES

Section 3.01 Lessee’s Obligation to Pay Taxes.

(a)          Unless a the holder (a “Fee Mortgagee”) of any mortgage encumbering the fee interest of Lessor of which Lessee has been provided a copy (a “Fee Mortgage”) requires otherwise, Lessor shall, if possible, cause the applicable taxing authority to send all applicable tax bills directly to Lessee, then Lessee shall pay or cause to be paid (except as hereinafter provided in this Article), before any fine, penalty, interest or cost may be added thereto for the nonpayment thereof, all real estate taxes, assessments (including, without limitation, special taxes or assessments for improvements to the Improvements) and assessments by business improvement districts, water and sewer rates and charges, any rent tax, occupancy tax or similar tax (including, without limitation, the Tax on Rental or License Fee for Use of Real Property imposed by Section 212.031 of the Florida Statutes), whether or not imposed on or measured by the rents payable by Lessee, and other governmental or quasi-governmental levies and charges, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind and nature whatsoever, which are now or at any time hereafter levied, imposed or become a lien upon the Demised Premises or the Improvements, or both, or any part of either thereof (all of which are hereinafter referred to collectively as “Impositions” and individually as “Imposition”).

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(b)          If, by law, any Imposition is payable, or may at the option of the taxpayer be paid, in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Lessee may pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments as the same respectively become due and before any fine, penalty, interest or cost may be added thereto for the nonpayment of any such installment and interest. However, Lessee shall not be required to pay any installment which shall fall due after the expiration of the Term of this Lease. Any Imposition relating to a fiscal period of the taxing authority, in which the Term of this Lease shall begin or end (whether or not such Imposition shall be levied, imposed or become a lien upon the Demised Premises or the Improvements or any part of either thereof, or become payable in respect thereto during the Term of this Lease), shall be apportioned so that Lessee shall pay only that proportion of such Imposition which corresponds with the portion of said fiscal period as is within the Term of this Lease.

(c)          Lessee shall not be obligated to pay any capital levy, franchise, estate, inheritance, succession, transfer tax, corporate tax, unincorporated business tax, excise tax, capital levies or mortgage recording fees of Lessor, or any income or excess profits tax or any other tax, assessment, charge or levy upon the income of Lessor, nor shall any of the foregoing be deemed to be included within the term “Impositions” as defined in Section 3.01 above. However, if a tax other than a tax of the nature specified in the foregoing sentence is levied upon the Net Rent, whether or not such tax is imposed upon Lessor in the first instance, Lessee shall pay it, or promptly reimburse Lessor for such tax, provided, however, that Lessee shall not be obligated to pay any greater amount than would have been payable by Lessor if the Net Rent had been the sole taxable income and the Demised Premises the sole asset of Lessor.

(d)          Lessee, upon request of Lessor, shall furnish to Lessor for its inspection, within ten (10) business days after the date when any Imposition is payable pursuant to any provision of this Article, official receipts of the appropriate taxing authority, or if an official receipt is not available, other proof satisfactory to Lessor, evidencing the payment thereof.

Section 3.02 Tax Escrow. Notwithstanding anything to the contrary contained in this Article 3, if a Fee Mortgagee requires monthly escrow payments for Impositions, Lessee shall, upon Lessor’s request, deposit with the Lessor (or any Fee Mortgagee designated by Lessor in writing) 1/12th of the annual Impositions as estimated by Lessor(or any such Fee Mortgagee). On the 1st day of each and every calendar month thereafter during the Term of this Lease, Lessee shall deposit with the Lessor (or any Fee Mortgagee designated by Lessor in writing), to be held by the Lessor (or such Fee Mortgagee), a sum equal to 1/12th of the annual Impositions for each then current or ensuing year. In the event that the amount of the Impositions shall not have been fixed at the time when any such monthly deposit is required to be made, Lessee shall make such deposit based upon the amount of the Imposition for the immediately preceding year, subject to adjustment as and when the amount of such Impositions is ascertained. Lessee shall provide Lessor with copies of tax bills within five (5) days after receipt thereof by Lessee. All sums deposited with the Lessor (or Fee Mortgagee) pursuant to this Section shall be applied to the payment of Impositions. No interest shall accrue on the sums so deposited. In the event the sums deposited hereunder are not sufficient to pay the Impositions when due, then Lessee shall, within ten (10) days of notice of the insufficiency, deposit with the Lessor (or Fee Mortgagee, as applicable) any such deficiency and shall also deposit such additional sums as shall be necessary to ensure that the amounts deposited hereunder plus such deposits as are required to be made in the future hereunder are sufficient to pay all Impositions then due or which will become due. In the event of a conveyance by Lessor of its interest in and to the Demised Premises, Lessor shall have no further liability with respect to the deposits for Impositions upon delivery thereof by Lessor to the transferee, provided that the transferee of the Lessor assumes the Lessor’s liability hereunder.

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Section 3.03 Lessee May Contest Taxes.

(a)          Lessee may contest any Impositions in any manner permitted by law, in Lessee’s name, and whenever necessary in Lessor’s name. Lessor will cooperate with Lessee and execute any documents or pleadings required for such purpose provided that such action is without expense to Lessor and that Lessor will not incur any liability by reason thereof. If such contest is instituted in the name of Lessor, Lessee shall so advise Lessor on at least thirty (30) days’ prior notice, giving full details as to the tribunal in which the contest will be brought, the Imposition contested and the amount thereof and such additional information relating thereto as Lessor may request to enable it to understand and evaluate the facts. Such contest may include appeals from any judgments, decrees or orders until a final determination is made by a court or governmental department or authority having final jurisdiction in the matter.

(b)          At Lessee’s election, Lessee may defer payment of the Imposition if prior to the due date thereof Lessee shall have deposited with the Lessor the amount of the contested Imposition and an estimated amount of interest, penalties and charges which might be assessed against or become a charge on the Demised Premises and/or the Improvements by reason of such contest, and provided that the Demised Premises and/or the Improvements or any part thereof would not be in imminent danger of being forfeited or lost by reason of such deferment. Upon the termination of the contest Lessee shall pay the Imposition, as finally determined, together, with the interest, penalties and other charges in connection therewith, and upon such payment the sums deposited with the Lessor shall be returned to Lessee or, if Lessee so elects, the funds deposited with the Lessor may be used for such payment; any surplus to be returned to Lessee and any deficiency to be made good by Lessee.

(c)          If at any time during the pendency of the contest, Lessor reasonably shall deem the amount deposited with the Lessor insufficient to cover the contested Imposition, interest, penalties and charges, Lessee, upon demand of Lessor, shall deposit with the Lessor such additional sums as Lessor may reasonably request. Upon failure of Lessee to make such additional deposit Lessor may pay the contested Imposition and interest, penalties and charges out of the funds held by the Lessor; any surplus to be returned to Lessee and any deficiency to be made good by Lessee.

(d)          Any tax refund with respect to Impositions paid by Lessee or paid by Lessor and for which Lessor has been reimbursed shall be the property of Lessee after deduction and payment of the reasonable costs of procuring such refund incurred by Lessor.

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Section 3.04 Miscellaneous. The certificate, advice, receipt or bill of the appropriate official designated by law to make or issue the same or to receive payment of any Imposition, or of non-payment of such Imposition shall be prima facie evidence that such Imposition is due and unpaid or has been paid at the time of the making or issuance of such certificate, advice, receipt or bill.

ARTICLE IV

USE

Section 4.01 Permitted Use. The Demised Premises and the Improvements may be used for any legal use, including, but not limited to light manufacturing and assembly such as injection molding and associated processes such as a tooling shop, a warehouse, distribution center and ancillary offices, provided, however, in no event may the Demised Premises be used for any other purpose, including, without limitation, any of the “Prohibited Uses” described on Exhibit “C” annexed hereto. Lessee shall have access to the Demised Premises twenty-four (24) hours per day, seven (7) days per week, subject to Legal Requirements.

Section 4.02 Licenses and Permits. If any license or permit of a governmental authority shall be required for the proper and lawful conduct of Lessee's business or other activity carried on in the Demised Premises, and if the failure to secure such license or permit might or would, in any way, affect Lessor, then Lessee, at Lessee's expense, shall duly procure and thereafter maintain such license or permit and submit the same for inspection by Lessor. Lessee, at Lessee's expense, shall, at all times, comply with the requirements of each such license or permit. Lessee will not at any time use or occupy the Demised Premises in violation of the certificate of occupancy (temporary or permanent) issued for the Improvements.

Section 4.03 Impairment of Title. Lessee shall not suffer or permit the Demised Premises, the Improvements or any portion thereof to be used by the public or any person, without restriction or in such manner as would violate or cause a default under any of the provisions of any Fee Mortgage or any other agreement or instrument affecting title to the Demised Premises or which might reasonably tend to impair Lessor’s title to the Demised Premises, the Improvements or any portion thereof, or in such manner as might reasonably make possible a claim or claims of adverse usage, adverse possession or prescription by the public or any person, or of implied dedication, of the Demised Premises, the Improvements or any portion thereof. Lessee hereby acknowledges that Lessor does not hereby consent, expressly or by implication, to the unrestricted use or possession of the whole or any portion of the Demised Premises or the Improvements by the public or any person, and Lessee does not have the power or authority and nothing contained in this Lease is intended or shall be deemed or interpreted to grant Lessee the power or authority to create, grant or approve any such use, possession or condition.

Section 4.04 Intentionally Omitted.

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Section 4.05 Any violation of this Article 4 beyond any applicable notice and cure period shall be deemed a material breach of this Lease and Lessor shall be entitled to injunctive relief in addition to any other remedies available to Lessor under this Lease.

ARTICLE V

UTILITIES & SERVICES

Section 5.01 Utilities. Lessee shall be solely responsible for and shall promptly pay, prior to delinquency, the cost of all gas, heat, water, steam, electricity, light, power, telephone, internet connections, sewage, and any other utilities supplied to the Demised Premises and the Improvements including all connection fees for any utilities or services. Lessor shall not be liable in any way to Lessee for any failure or defect in the supply or character of electric energy furnished to the Demised Premises by reason of any requirement, act or omission of the public utility servicing the Demised Premises with electricity or for any other reason not attributable to Lessor. Lessee's use of electric energy in the Demised Premises shall not at any time exceed the capacity of any of the electrical conductors and equipment in or otherwise servicing the Demised Premises. If such capacity is exceeded, Lessee shall, as an Alteration subject to the terms of Article XI hereof, install additional risers, electric lines or other equipment required therefor at Lessee’s sole cost and expense.

Section 5.02 Facilities or Services. Lessor shall not be required to furnish to Lessee any facilities or services of any kind whatsoever during the Term of this Lease, such as, but not limited to, gas, heat, water, steam, electricity, light, power, telephone, internet access and sewage. Lessor shall in no event be required to make any alterations, re-buildings, replacements, changes, additions, improvements or repairs to such facilities or services at any time during the Term of this Lease.

ARTICLE VI

ENTRY BY LESSOR

Section 6.01 Right of Entry. Lessee shall permit Lessor and its authorized representatives to enter the Demised Premises and the Improvements at all reasonable times for the purpose of (a) inspecting the same, (b) making any necessary repairs thereto and performing any work therein that may be necessary by reason of Lessee’s failure to make any such repairs or perform any such work or to commence the same if Lessee is responsible for such work pursuant to this Lease for thirty (30) days after written notice from Lessor (or without notice in case of emergency), and (c) exhibiting the Demised Premises and the Improvements for sale or financing and during the last six (6) months of the Term for Lease. Nothing herein shall imply any duty upon the part of Lessor to do any such work and performance thereof by Lessor shall not constitute a waiver of Lessee’s default in failing to perform the same.

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Section 6.02 Right to Store Materials. During the progress of any work in the Demised Premises and the Improvements performed by Lessor pursuant to the provisions of Section 6.01 hereof, Lessor may keep and store therein all necessary materials, tools, supplies and equipment. Lessor shall not be liable for any inconvenience, annoyance, disturbance, loss of business or other damage of Lessee or any sublessee by reason of making such repairs or the performance of any such work, or on account of bringing materials, tools, supplies and equipment into the Demised Premises and the Improvements during the course thereof and the obligations of Lessee under this Lease shall not be affected thereby. During the course of any such work, Lessor shall exercise reasonable efforts not to cause a breach of Lessee’s obligations pursuant to an approved sublease and to not cause a disruption to Lessee’s business in the Demised Premises.

Section 6.03 Lessor shall also have the right, at any time, to name the Building, including, but not limited to, appropriate signs and/or lettering on any or all entrances to the Building, and to change the name, number or designation by which the Building is commonly known.

Section 6.04 The exercise by Lessor or its agents of any right reserved to Lessor in this Article shall not constitute an actual or constructive eviction, in whole or in part, or entitle Lessee to any abatement or diminution of rent, or relieve Lessee from any of its obligations under this Lease, or impose any liability upon Lessor, or its agents, or upon any lessor under any ground or underlying Lease, by reason of inconvenience or annoyance to Lessee, or injury to or interruption of Lessee's business, or otherwise.

ARTICLE VII

COMPLIANCE WITH LAW

Section 7.01 Compliance With Legal Requirements and Insurance Requirements. Lessee shall comply, or will cause Lessee’s agents, employees, contractors, subtenants, licensees and invitees promptly to comply, with all laws, statutes and ordinances (including, without limitation, all applicable building codes and zoning regulations and ordinances) and the orders, rules, regulations, directives and requirements of all federal, state, county, city and borough departments, bureaus, governmental boards, agencies, offices, commissions and other subdivisions thereof, or of any official thereof, or of any other governmental, public or quasi public authority or any other body hereafter constituted exercising similar functions, whether now or hereafter in force, which may be applicable to the Demised Premises, the Improvements or any landscaped areas or the sidewalks, roadways, streets, curbs and vaults at or adjoining the Demised Premises or to the use or manner of use of the Demised Premises or the Improvements (collectively, “Legal Requirements”). Lessee shall likewise observe and comply or commence and diligently pursue compliance with all requirements of all policies of liability, fire and all other policies of insurance at any time in force with respect to the Demised Premises, the Improvements and the landscaped areas, sidewalks, curbs and vaults at or adjoining the Demised Premises or to the use or manner of use of the Demised Premises or the Improvements (collectively, the “Insurance Requirements”). Notwithstanding anything in this Section 7.01 to the contrary, in no event shall Lessee be responsible for making any structural repair or replacement or other work if structural in nature of the Demised Premises nor any repair, replacement or other work that is capital in nature (e.g., the repair or replacement of underground pipes), unless necessitated by Lessee’s specific use of the Premises or any Alterations made by Lessee.

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Section 7.02 Right to Contest Laws, Ordinances, Rules, Etc.

(a)          Right to Contest Laws, Ordinances, Rules, Etc. Lessee shall have the right to contest by appropriate legal proceedings, in the name of Lessee or Lessor, or both, but without cost or expense to Lessor, the validity of any law, ordinances, certificate, order, rule, regulation or requirement of the nature in Section 7.01 referred to, and, if permitted by law, may defer compliance therewith pending such contest (which contest shall be diligently prosecuted by Lessee) provided and so long as: (i) such noncompliance shall not subject Lessor to criminal or civil liability or penalty; (ii) such non-compliance is permitted under all Fee Mortgages, and (iii) Lessor’s estate in the Demised Premises shall not be subject to sale or be in imminent jeopardy by reason of such non-compliance. Such contest may include appeals from any judgments, decrees or orders until a final determination is made by a court or governmental department or authority having final jurisdiction in the matter.

(b)          Lessor shall cooperate with Lessee and execute any documents or pleadings required for such contest, provided that such action is without expense to Lessor and that Lessor will not incur any liability by reason thereof.

(c)          If Lessee shall initiate or carry on any such legal proceeding in the name of Lessor, or of Lessor and Lessee, Lessee shall so advise Lessor in writing not less than thirty (30) days before initiating such proceeding and give full details as to the tribunal in which said proceedings are to be filed, the law, ordinance, certificate, order, ruling, regulation or requirement contested, and such additional data as Lessor may reasonably require to enable it to understand the facts and evaluate them.

Section 7.03 Environmental Matters. (a) Lessee shall not undertake, permit or suffer any Environmental Activity at the Demised Premises except to the extent such Environmental Activity is limited to (i) ordinary cleaning, maintenance or operation of the Improvements or (ii) work required in connection with any construction, Alterations or restorations or similar work required or permitted to be made in and to the Demised Premises; provided however, that all of the following requirements are strictly complied with in connection with such work and activity. All such work or activity must: (A) comply with all applicable Insurance Requirements and Legal Requirements; (B) be performed by qualified and, if required, licensed contractors, subcontractors, engineers or other professionals or qualified personnel in a manner customarily performed, undertaken or permitted or caused to be performed or undertaken by prudent property owners of comparable properties exercising due care and which will not result in a Hazardous Discharge or any other Environmental Activity in violation of applicable Insurance Requirements or Legal Requirements; (C) be performed, undertaken or permitted or caused to be performed or undertaken in such a manner as (1) shall keep the Demised Premises free from any lien imposed in respect or as a consequence of such Environmental Activity, and (2) shall safeguard against potential risks to human health or the environment or to the Demised Premises. The provisions of this Subparagraph (a) shall not apply to any “Lessor Hazardous Condition,” as hereinafter defined.

(b)          Lessee shall notify Lessor within forty-eight (48) hours after first becoming aware of a Hazardous Discharge from or at the Demised Premises.

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(c)          Upon reasonable prior notice to Lessee, Lessor shall have the right, exercisable no more than once every two (2) years (and at any time in connection with investigating a suspected Environmental Activity at the Demised Premises that is not permitted hereunder, and then in connection with such Environmental Activity), to cause an environmental audit and inspection of the Demised Premises to be conducted by one or more reputable environmental engineering firms, and Lessee shall cooperate in the conduct of such environmental audit. The reasonable cost of such audit shall be payable by Lessee upon Lessor’s demand therefor if such audit reveals any Environmental Activity at the Demised Premises that is not permitted hereunder or the presence of any Hazardous Discharge that is the responsibility of Lessee to remediate pursuant to this Lease. If any such audit contemplates the performance of any intrusive investigations or testing (which shall not include a mere walk-through of the Demised Premises), then prior to such entry onto the Demised Premises, Lessor shall procure from the contractor engaged to carry out the work a copy of its liability insurance policy naming Lessee as an additional insured in an amount and under a policy that is commercially reasonable in form, scope and substance. Lessor shall furnish Lessee with a copy of such audit, including the results of any such testing.

(d)          If Lessee shall breach the covenants provided in this Section, in addition to any other rights and remedies which may be available to Lessor under this Lease or otherwise at law or in equity, Lessor may require Lessee to take all actions, or to reimburse Lessor for the costs of any and all actions taken by Lessor, as are necessary or reasonably appropriate to cure such breach. Lessee’s obligations under this Section shall survive the expiration or earlier termination of this Lease.

(e)          Lessee hereby acknowledges that Lessor may suffer irreparable harm by reason of a breach or threatened breach of the provisions of this Section, and, accordingly, in addition to any other remedy that Lessor may have under this Lease or as may be permitted by applicable law, Lessor shall be entitled to enjoin the action, activity or inaction that gives rise to such breach or threatened breach by Lessee.

(f)          As used herein:

(i)          The term “Environmental Activity” shall mean any use, storage, installation, existence, release, threatened release, discharge, generation, abatement, removal, disposal, handling or transportation from, under, into or on the Demised Premises (or any portion thereof) of any Hazardous Materials.

(ii)         The term “Hazardous Discharge” shall mean any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping of Hazardous Materials from or onto the Demised Premises.

(iii)        The term “Hazardous Materials” shall mean (A) any “hazardous substance” as defined in Section 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. ‘ 9601(14), as amended; (B) petroleum or petroleum products, crude oil or any by-products thereof, natural gas or synthetic gas used for fuel; (C) any asbestos, asbestos containing material or polychlorinated biphenyl; and (D) any additional substances or materials which at such time are classified or considered to be hazardous or toxic or a pollutant or contaminant under the laws of the State of Florida, the United States of America, or under any other Legal Requirements.

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(g)          Lessee acknowledges that Lessee has been a tenant and occupant of substantially all of the Demised Premises under a prior lease and is fully familiar with the use and condition thereof, including any Environmental Activity thereon. Consequently, as an inducement to Lessor to enter into this Lease, Lessee further covenants and agrees (except as otherwise expressly provided in subparagraph (h) below) to indemnify, defend, protect and save Lessor harmless against and from any and all claims, judgments, damages, penalties, fines, costs, liabilities, expense or losses (including, without limitation, sums paid in settlement of claims, investigation of site conditions, or any cleanup, removal or restoration work required by any federal, state or local governmental agency, attorney’s fees, consultant fees and expert fees) which may at any time be imposed upon, incurred by or asserted or awarded against Lessor and arising from or out of any Hazardous Discharge, any Environmental Activity or violation of any Legal Requirements with respect thereto from, on, in, under or affecting the Demised Premises, from whatever cause, whether occurring prior to, on or after the date of this Lease including, without limitation (i) the costs of removal of any Hazardous Materials, (ii) additional costs reasonably required to take necessary precautions to protect against the release of Hazardous Materials from, on, in, under or affecting the Demised Premises, into the air, or any body of water, any other public domain or any other areas surrounding the Demised Premises, (iii) any costs incurred to comply, in connection with all or any portion of the Demised Premises, with all applicable laws, orders, judgments and regulations with respect to Environmental Activity and (iv) if the provisions of Section 7.03 have been violated, the costs reasonably incurred by Lessor in determining that such provisions have been violated. The indemnification contained in this subparagraph (g) shall not apply to any “Lessor Environmental Condition”, as hereinafter defined.

(h)           Lessee acknowledges that prior to the date hereof, Purification Technologies was a direct tenant of Lessor with respect to a portion of the Demised Premises pursuant to a prior, expired lease. Consequently, notwithstanding anything contained in subparagraph (g) above, Lessor covenants and agrees to indemnify, defend, protect and save Lessee harmless against and from any and all claims, judgments, damages, penalties, fines, costs, liabilities, expense or losses (including, without limitation, sums paid in settlement of claims, investigation of site conditions, or any cleanup, removal or restoration work required by any federal, state or local governmental agency, attorney’s fees, consultant fees and expert fees) which may at any time be imposed upon, incurred by or asserted or awarded against Lessee and arising from or out of any Hazardous Discharge, any Environmental Activity or violation of any Legal Requirements with respect thereto from, on, in, under or affecting the Demised Premises, caused by (i) Lessor prior to, on or after the date of this Lease, or (ii) the migration of any Hazardous Materials from adjoining real property onto or under the Demised Premises through no fault of Lessee or Lessee’s agents, employees, contractors, subtenants, licensees or invitees prior to, on or after the date of this Lease, or (iii) Purification Technologies prior to the date of this Lease (each being referred to collectively as a “Lessor Environmental Condition”) including, without limitation (i) the costs of removal of any Hazardous Materials resulting from a Lessor Environmental Condition, (ii) additional costs reasonably required to take necessary precautions to protect against the release of Hazardous Materials from, on, in, under or affecting the Demised Premises, into the air, or any body of water, any other public domain or any other areas surrounding the Demised Premises resulting from a Lessor Environmental Condition, (iii) any costs incurred to comply, in connection with all or any portion of the Demised Premises, with all applicable laws, orders, judgments and regulations with respect to a Lessor Environmental Condition and (iv) if the provisions of this subparagraph (h) have been violated, the costs reasonably incurred by Lessee in determining that such provisions have been violated.

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ARTICLE VIII

LIENS

Section 8.01 Creation of Lien. Lessee shall not create or permit to be created or to remain, and shall discharge, any mechanic’s, laborer’s or materialmen’s lien or any conditional sale, title retention agreement or chattel mortgage, which might be or become a lien, encumbrance or charge upon the Demised Premises, the Improvements or any part thereof having any priority or preference over or ranking on a parity with the estate, rights and interest of Lessor in the Demised Premises, the Improvements or any part thereof.

Section 8.02 Discharge of Lien. If any mechanic’s, laborer’s or materialman’s lien shall at any time be filed against the Demised Premises, the Improvements or any part thereof, Lessee, within thirty (30) days after notice of the filing thereof, shall cause the same to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or otherwise. If Lessee shall fail to cause such lien to be discharged within the period aforesaid, then, in addition to any other right or remedy, Lessor may, after twenty (20) days’ notice to Lessee, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings, and in any such event Lessor shall be entitled if Lessor so elects, to compel the prosecution of an action for the foreclosure of such lien by the lienor and to pay the amount of the judgment in favor of the lienor with interest, costs and allowances. Any amount so paid by Lessor and all costs and expenses incurred by Lessor in connection therewith shall constitute additional rent payable by Lessee under this Lease and shall be paid by Lessee to Lessor on demand.

Section 8.03 No Consent or Request by Lessor. NOTICE IS HEREBY GIVEN THAT LESSOR SHALL NOT BE LIABLE FOR ANY LABOR OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE UPON CREDIT, AND THAT NO MECHANIC’S OR OTHER LIEN FOR ANY SUCH LABOR OR MATERIALS SHALL ATTACH TO OR AFFECT THE FEE ESTATE. NOTHING IN THIS LEASE SHALL BE DEEMED OR CONSTRUED IN ANY WAY TO CONSTITUTE LESSOR’S CONSENT OR REQUEST, EXPRESS OR IMPLIED, BY INFERENCE OR OTHERWISE, TO ANY CONTRACTOR, SUBCONTRACTOR, LABORER, EQUIPMENT OR MATERIAL SUPPLIER FOR THE PERFORMANCE OF ANY LABOR OR THE FURNISHING OF ANY MATERIALS OR EQUIPMENT FOR ANY CONSTRUCTION, NOR AS GIVING LESSEE ANY RIGHT, POWER OR AUTHORITY TO CONTRACT FOR, OR PERMIT THE RENDERING OF, ANY SERVICES, OR THE FURNISHING OF ANY MATERIALS THAT WOULD GIVE RISE TO THE FILING OF ANY LIENS AGAINST THE FEE ESTATE. LESSEE SHALL INDEMNIFY LESSOR AGAINST ANY CONSTRUCTION UNDERTAKEN BY LESSEE OR ANYONE CLAIMING THROUGH LESSEE, AND AGAINST ALL PROHIBITED LIENS.

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ARTICLE IX

INSURANCE

Section 9.01 Required Insurance. Lessee shall throughout the Term of this Lease, at its sole cost and expense, provide and cause to be maintained:

(a)          commercial general liability insurance, including Blanket Broad Form contractual liability insurance, protecting and indemnifying Lessee and Lessor, from and against any and all claims for damages or injury to person or property or for loss of life or of property occurring upon, in, or about the Demised Premises, such insurance to afford immediate protection, to the limit of not less than Five Million Dollars ($5,000,000) per occurrence and Five Million Dollars ($5,000,000) in the aggregate for all occurrences within each policy year. Such policy shall include a provision, if available, that said aggregate limit shall apply separately at the Demised Premises and that said insurer will provide notice to the Lessor if said aggregate is reduced by either payments of a claim or establishment of a reserve for claims if said payments or reserves exceed Five Million Dollars ($5,000,000). Lessee agrees that if the aggregate limit applying to the Demised Premises is reduced by the payment of a claim or establishment of a reserve to take all practical immediate steps to have the aggregate limit restored by endorsement to the existing policy or the purchase of an additional insurance policy;

(b)          workers’ compensation insurance covering all persons employed by Lessee at the Demised Premises and with respect to whom death or bodily injury claims could be asserted against Lessor, Lessee or the Demised Premises, with statutorily required limits. Lessee shall include a covenant in its Subleases for Sublessees to keep and maintain such insurance covering all persons employed by Sublessees at the Demised Premises;

(c)           business automobile liability insurance covering liability arising out of any vehicle including owned, non-owned, leased, rented and/or hired vehicles insuring against liability for bodily injury and death and for property damage in an amount as may from time to time be reasonably determined by Lessor but not less than Five Million Dollars ($5,000,000) each accident;

(d)          during the performance of any Alteration, builder’s risk completed value form covering the perils insured under the ISO Special Causes of Loss form (CP 10 30) or any other form providing substantially equivalent coverage, including collapse, water damage, flood (if the Demised Premises is located in a flood zone), sink hole, earthquake and transit coverage, with deductible reasonably approved by Lessor, in nonreporting form, covering the total value of work performed and equipment supplies and materials furnished (with an appropriate limit for soft costs in the case of construction) and covering the full insurable value of all materials, tools and equipment at any off-site storage location used with respect to the Demised Premises; and

(e)          during the performance of any Alteration, commercial general liability insurance, which shall include coverage for independent contractors and completed operations.

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(f)          Intentionally Omitted.

Section 9.02 Lessor’s Insurance. Lessor shall throughout the Term of this Lease, at the sole cost and expense of Lessee, provide and cause to be maintained:

(a)          commercial property insurance on the Demised Premises and Improvements written on an “Agreed Amount” basis, in amounts at all times sufficient to prevent Lessor or Lessee from becoming a co-insurer under the terms of the applicable policies, but in any event, in an amount not less than the then Full Insurable Value of the Improvements. The term “Full Insurable Value” shall mean actual replacement cost of the Improvements (exclusive of the cost of noninsurable portions thereof, such as excavation, foundations and footings) without deduction being made for depreciation;

(b)          Insurance upon the Improvements against loss or damage due to war, flood, or earthquake, as and when such insurance shall be customary for premises similarly situated in Tampa, Florida, in an amount not less than the Full Insurable Value thereof or the maximum amount of such insurance obtainable;

(c)          Business interruption, rent, or use and occupancy or rental value insurance in an amount at least sufficient to meet the payments for two (2) years of the Rent provided for in Article II hereof and the Impositions provided for in Article III hereof as reasonably estimated by Lessor, and which insurance shall be payable to Lessor;

(d)          Insurance against loss or damage from leakage of sprinkler systems now or hereafter installed in the Improvements, in such amount as Lessor may reasonably require;

(e)          Boiler and pressure vessel and miscellaneous equipment insurance, including steam pipes, air conditioning systems, electric motors, air tanks, compressors and pumps, in such amounts as Lessor may reasonably require;

(f)          Comprehensive general liability insurance for bodily and personal injury (including contractor's liability) and property damage occurring in, on or about the Demised Premises in an amount not less than Two Million Dollars ($2,000,000) per occurrence and Two Million Dollars ($2,000,000) in the aggregate; and

(g)           Such other insurance and in such amounts as may from time to time be reasonably required by Lessor against other insurable hazards which at the time are customarily insured against in the case of premises and buildings similarly situated in Tampa, Florida, due regard being, or to be given to the height and type of building, its construction, use and occupancy.

Section 9.03 Payment by Lessee. Lessee shall pay to Lessor an amount equal to one hundred (100%) percent of all insurance premiums or installments thereof for the policies of insurance described in Section 9.02 hereof, as Additional Rent, thirty (30) days prior to the date on which such insurance premiums or any installments thereof are payable, upon the receipt of a statement from Lessor specifying the amount of any such insurance premium or installment.

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Section 9.04 Policies of Insurance. All policies of insurance shall be from a company rated on the A.M. Best Key Rating Guide with ratings of at least A- and of at least VI and such company shall be licensed to do business in the State of Florida. Lessee shall provide to Lessor and to the holder of any Fee Mortgage on the Demised Premises, originals or true copies of certificates of the policies, bearing notations evidencing the payment of premiums or accompanied by other evidence reasonably satisfactory to said parties of such payments. Each such policy shall contain a provision that no act or omission of Lessee shall affect or limit the obligation of the insurance company to pay the amount of any loss sustained, and, to the extent commercially available, an agreement by the insurer that such policy shall not be cancelled without at least thirty (30) days’ prior written notice to Lessor and to the holder of any Fee Mortgage on the Demised Premises.

Section 9.05 Compliance by Lessee. Lessee shall conform to the customary provisions of any such policies in all material respects and shall comply with the customary requirements of the companies writing such policies pertinent to the conduct of Lessee’s business on the Demised Premises and the Improvements. Lessee may contest any provisions thereof, and Lessor shall cooperate in Lessee’s reasonable efforts in connection therewith, but not in any manner which would result in the cancellation of such policy without available substitution.

Section 9.06 Named Insureds. All policies of insurance required under Section 9.01 and 9.02 shall name Lessor and the holder of any Fee Mortgage on the Demised Premises, as their interests may appear.

Section 9.07 Blanket Policies. Any insurance provided for in this Article may be effected by a blanket policy or policies of insurance, or under so-called “all risk” or “multi-peril” insurance policies, provided that the amount of the total insurance available in respect of the Demised Premises and the Improvements shall be at least the protection equivalent to separate policies in the amounts herein required, and provided further that in other respects, any such policy or policies shall comply with the provisions of this Article. An increased coverage or “umbrella policy” may be provided and utilized by Lessee to increase the coverage provided by individual or blanket policies in lower amounts and the aggregate liabilities provided by all such policies covering the Demised Premises and the Improvements and Lessee’s liability hereunder shall be satisfactory provided they otherwise comply with the provisions of this Article. In any such case, it shall not be necessary to deliver the original of any such blanket policy to the Lessor, but Lessor shall be furnished with a certificate or duplicate of such policy upon request.

Section 9.08 Subrogation Rights. Neither Lessee nor Lessor shall be liable for loss or damage caused by fire or other perils covered or normally covered by insurance policies maintained or required to be maintained by this Lease by the other party with respect to the Demised Premises, or any personal property contained in the same, and each party on behalf of itself and any insurer, waives all rights of subrogation against the other with respect to those perils. This waiver of liability and subrogation shall apply regardless of the negligence of either party and shall not be limited by the amount of insurance coverage carried by the parties hereto, or either of them. Both parties shall obtain and maintain a waiver of subrogation from their respective carriers. The provisions of this Section 9.08 shall survive the expiration or earlier termination of this Lease.

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ARTICLE X

REPAIRS AND MAINTENANCE

Section 10.01 Repairs and Maintenance by Lessee. To the extent not caused by the negligence or willful misconduct of Lessor, Lessee, at its sole cost and expense, shall take good care of the Demised Premises and shall keep and maintain all non-structural portions of the Demised Premises (whether interior or exterior) and perform all non-structural repairs and maintenance to all Improvements, including any parking areas (except as provided in Section 10.02), landscaping, adjacent private roadways, private streets and private sidewalks that are all part of the Demised Premises, in a clean and orderly condition, free of accumulation of dirt, rubbish, snow and ice. Lessee, at its sole cost and expense, shall make all non-structural repairs to the Demised Premises and all Improvements, including, but not limited to, the HVAC, plumbing (but not underslab or underground plumbing or pipes) and electrical systems (collectively, the "Systems") that service the Demised Premises, parking areas, landscaped areas, sidewalks, private roadways and streets, curbs and vaults. When used in this Article, the word “repairs” shall include replacements, renewals or substitutions when necessary, and all such repairs shall be of such class and character as are appropriate at the time for the Improvements giving due consideration to the age, character and class of the Improvements.

Section 10.02 Repairs by Lessor. Lessor shall, except as otherwise provided herein, at its sole cost and expense (i) repair and maintain the Roof of the Building (ii) repair and maintain (including resurfacing, to the extent necessary in the reasonable opinion of Lessor) the parking lot as necessary (except for day to day upkeep such as trash and debris removal which will be Lessee’s responsibility), and (iii) make all structural repairs to the Building. Notwithstanding the forgoing, if any of the repairs described in this Section 10.02 are necessitated by the negligence, improper care or use by Lessee, its agents, employees, contractors, subtenants, licensees or invitees, such repairs shall be made by Lessor at Lessee's sole cost and expense. Lessor shall invoice Lessee upon completion of any work performed on Lessee’s behalf. There shall be no allowance to Lessee for a diminution of rental value and no liability on the part of Lessor by reason of inconvenience, annoyance or injury to business arising from Lessor, Lessee or others making any repairs, alterations, additions or improvements in or to any portion of the Demised Premises, or in or to the fixtures, appurtenances or equipment thereof, and, except as hereinafter provided in this Section 10.02, no liability upon Lessor for failure of Lessor or others to make any repairs, alterations, additions or improvements in or to any portion of the Demised Premises, or in or to the fixtures, appurtenances or equipment thereof. No default by Lessor under this Section 10.02 shall be deemed to have occurred unless Lessor fails to comply with the provision of this this Section 10.02 and such failure is not cured within thirty (30) days after Lessor's receipt of written notice of such default from Lessee, provided that, if such default not reasonably capable of being cured within the thirty (30) days, no default shall be deemed to have occurred if Lessor commences to cure within the thirty (30) days and thereafter diligently pursues such cure to completion. Upon the occurrence of any default by Lessor under this Section 10.02, Lessee may perform Lessor's obligations under this Section 10.02, and offset the reasonable out of pocket costs and expenses incurred by Lessee in doing so against the next ensuing installments of Net Rent coming due under this Lease.

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Section 10.03 Excavation on Adjoining Premises. If an excavation or other building operation shall be about to be made or shall be made upon any adjoining premises or streets, Lessee shall permit the owner or tenant of such adjoining premises, and their respective representatives, to enter the Demised Premises and the Improvements to shore the foundations and walls of the Improvements and to do any other act or thing necessary for the safety and preservation thereof, and upon the failure or refusal of such owner or tenant or their respective representatives, so to do, Lessor shall undertake such shoring or such other act or things necessary for such safety and preservation.

ARTICLE XI

ALTERATIONS

Section 11.01 Alterations By Lessee. Lessee shall make no alterations, installations, additions or improvements in or to the Demised Premises (collectively, "Alterations") without Lessor's prior written consent (which consent shall not be unreasonably withheld or delayed with respect to nonstructural Alterations). Notwithstanding the forgoing, non-structural, interior Alterations which cost less than $50,000 in the aggregate shall not require the consent of Lessor. Structural Alterations and all exterior Alterations shall be performed only by contractors or mechanics approved by Lessor, which approval or denial shall not be unreasonably withheld or delayed. All Alterations done by Lessee shall at all times comply with all Legal Requirements and plans and specifications prepared by and at the sole cost and expense of Lessee (which shall be submitted to Lessor for its prior written approval if Lessor’s consent is required for such Alterations, which approval shall not be unreasonably withheld or delayed). No Alterations that require Lessor’s consent shall be undertaken by Lessee, its agents, employees, contractors, subtenants, licensees or invitees, until Lessor has approved such plans and specifications in writing (which approval shall not be unreasonably withheld or delayed), and no amendments or additions to such plans and specifications shall be made without the prior written consent of Lessor (which consent shall not be unreasonably withheld or delayed).

Section 11.02 No Alteration, structural or otherwise, shall be undertaken until Lessee shall have procured and paid for all municipal and other governmental permits and authorizations of the various municipal departments and governmental subdivisions having jurisdiction relating to the particular phase of said Alteration to be undertaken. Lessor shall join in the application for such permits or authorizations whenever such action is necessary, provided that such action is without expense to Lessor. If by reason of any Alteration a new certificate of occupancy for the Improvements is required, Lessee shall obtain it promptly upon completion and shall furnish a copy thereof to Lessor promptly after its issuance.

Section 11.03 All work done in connection with any Alteration shall be done promptly and in a good and workmanlike manner of first-class materials and in compliance with all Legal Requirements including the building and zoning laws and all other laws, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments and the appropriate departments, commissions, boards and officers thereof.

Section 11.04 Intentionally Omitted.

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Section 11.05 Lessee shall indemnify and defend the Lessor and hold it harmless from and against all claims, liens, costs (including attorneys' fees) and other liabilities which the Lessor may incur, arising out of or due to any such Alterations performed by Lessee. The provisions of the preceding sentence shall survive the expiration or earlier termination of this Lease. At all times when any Alteration, structural or otherwise, is in progress Lessee shall, at Lessee’s sole cost and expense, maintain or cause to be maintained the insurance required to be maintained by Lessee pursuant to Section 9.01. All such insurance for bodily injury and property damage shall name the Lessor as an insured thereunder; and the policies therefor shall be submitted to the Lessor for its approval of the coverage and insurer before any work is commenced.

Section 11.06 Lessee, at its sole cost and expense, shall obtain forthwith the cancellation or discharge of all notices of violation issued against the Demises Premises or the Building for violation of any building, fire, safety, health, sanitary or other code, statute, ordinance or rule or regulation promulgated under them, arising from or otherwise connected with any work performed by Lessee or by Lessee’s agents, employees, contractors, subtenants, licensees or invitees with respect to the Demised Premises.

Section 11.07 The Lessee agrees that in the exercise of any rights pursuant to the provisions of this Article, any other provision of this Lease and/or pursuant to any consent to any Alteration in or to the Demised Premises, it shall perform its work in a diligent and expeditious manner.

Section 11.08 Lessee shall make arrangements for and pay the reasonable fees (not to exceed $1,500) of any architect or engineer retained by Lessor to review Lessee’s plans and specifications in connection with any proposed Alterations for which Lessor’s consent is required pursuant to this Lease.

Section 11.09 If the Lessee or any of its construction companies, contractors, vendors and suppliers materially interferes with or materially delays prosecution or completion of any alteration work being performed by or on behalf of Lessor, the Lessee shall cease such work and discharge such construction company, contractor, laborer, supplier or vendor; but the Lessor shall have no liability or responsibility for any damage or any injury sustained by the Lessee due to such cessation of work and/or discharge.

ARTICLE XII

FIRE AND OTHER CASUALTY

Section 12.01 If the Demised Premises shall be damaged by fire or other casualty (a "Casualty"), Lessor, at Lessor's expense, shall repair such damage. However, Lessor shall have no obligation to repair any damage to, or to replace, Lessee's personal property or any other property or effects of Lessee. If the entire Building shall be rendered untenantable by reason of any such damage, the Rent shall abate for the period from the date of such damage to the date when such damage shall have been repaired, and if only a part of the Demised Premises shall be so rendered untenantable, the Rent shall abate for such period in the proportion which the rentable area of the part of the Building so rendered untenantable bears to the total rentable area of the Building. However, if prior to the date when all of such damage shall have been repaired any part of the Building so damaged shall be rendered tenantable and shall be used or occupied by Lessee or any person or persons claiming through or under Lessee, then the amount by which the Rent shall abate shall be equitably apportioned for the period from the date of any such use or occupancy to the date when all such damage shall have been repaired.

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Section 12.02 Notwithstanding the foregoing provisions of this Article 12, if during the Term a “Material Portion” (as hereinafter defined) of the Building shall be damaged or rendered untenantable by a Casualty, and if Lessor shall decide not to restore the Building, then, Lessor, at Lessor's option, may give to Lessee within ninety (90) days after such Casualty, a thirty (30) days' notice of termination of this Lease and, in the event such notice is given, this Lease and the Term shall come to an end and expire (whether or not the Term shall have commenced) upon the expiration of said thirty (30) days with the same effect as if the date of expiration of said thirty (30) days were the Expiration Date. The Rent shall be apportioned as of the date of the Casualty and any prepaid portion of Rent for any period after such date shall be refunded by Lessor to Lessee.

Section 12.03 Notwithstanding anything set forth to the contrary in this Article, in the event that any Casualty rendering a “Material Portion” (as hereinafter defined) of the Building wholly untenantable occurs during the final twelve (12) months of the Term, either Lessor or Lessee may terminate this Lease by notice to the other party within thirty (30) days after the occurrence of such Casualty, this Lease shall expire on the 30th day after the date of such notice, the Rent shall be apportioned as of the date of the Casualty and any prepaid portion of Rent for any period after such date shall be refunded by Lessor to Lessee. For purposes of this Article 12, a “Material Portion” of the Building shall be deemed untenantable if due to such Casualty, (a) Lessee shall be precluded from using more than 50% of the area of the Building for the conduct of its business and (b) Lessee’s inability to so use the Building is reasonably expected to continue until at least the earlier of the (i) Expiration Date, or (ii) the 90th day after the date when such Casualty occurred.

Section 12.04 Intentionally Omitted.

Section 12.05 If (i) a Material Portion of the Building is destroyed or damaged by any Casualty to an extent that, in Lessee’s reasonable opinion, Lessee is unable to occupy the Building for the conduct of its business, and (ii) within thirty (30) days after such Casualty Lessee vacates the Demised Premises and delivers to Lessor a written report prepared by a licensed engineer stating that, in the opinion of such engineer, the necessary repairs and restoration is not reasonably capable of being completed with 270 days after the date of Casualty, then Lessee may terminate this Lease on thirty (30) days’ notice to Lessor, provided such notice is given within thirty (30) days after such Casualty.

Section 12.06 This Article 12 constitutes an express agreement governing any case of damage or destruction of the Demised Premises or the Building by fire or other Casualty, and any law which provides for such contingency in the absence of an express agreement now or hereafter in force, shall have no application in any such case.

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Section 12.07 Notwithstanding any of the foregoing provisions of this Article 12, if Lessor or any Fee Mortgagee shall be unable to collect all of the insurance proceeds (including rent insurance proceeds) applicable to damage or destruction of the Demised Premises or the Building by reason of any willful action or inaction on the part of Lessee then, without prejudice to any other remedies which may be available against Lessee, (i) there shall be no abatement of Rent, and (ii) Lessor shall have no obligation to restore the Demised Premises or the Building.

ARTICLE XIII

CONDEMNATION

Section 13.01 In the event that the whole of the Demised Premises or the Building shall be lawfully condemned or taken in any manner for any public or quasi-public use, this Lease and the Term and estate hereby granted shall forthwith cease and terminate as of the date of vesting of title. In the event that only a part of the Building shall be so condemned or taken, then effective as of the date of vesting of title, the Rent hereunder shall be abated in an amount thereof apportioned according to the rentable area of the Building so condemned or taken. In the event that only a part of the Demised Premises shall be so condemned or taken, then (a) if such condemnation or taking shall be of a “Material Portion” of the Building or a substantial part of the means of access thereto, Lessor and Lessee each shall have the right, by delivery of notice in writing to the other within a sixty (60) days following the date on which Lessee shall have received notice of vesting of title, to terminate this Lease and the Term and estate hereby granted as of the date of vesting of title or (b) if neither Lessor nor Lessee elects to terminate this Lease, as aforesaid, this Lease shall be and remain unaffected by such condemnation or taking, except that the Rent shall be abated to the extent, if any, hereinabove provided in this Article. In the event that only a part of the Building shall be so condemned or taken and this Lease and the Term and estate hereby granted are not terminated as hereinabove provided, Lessor will, at its expense, restore the remaining portion of the Building as nearly as practicable to the same condition as it was in prior to such condemnation or taking. In the event of a termination in any of the cases hereinabove provided, this Lease and the Term and estate granted shall expire as of the date of such termination with the same effect as if that were the Expiration Date of this Lease, and the Rent hereunder shall be apportioned as of such date. For purposes of this Article 13, a “Material Portion” of the Building shall be deemed taken if due to such condemnation or taking, (a) Lessee shall be precluded from using more than 50% of the area of the Building for the conduct of its business and (b) Lessee’s inability to so use the Building is reasonably expected to continue until at least the earlier of the (i) Expiration Date, or (ii) the 90th day after the date of the vesting of title.

Section 13.02 In the event of any condemnation or taking hereinabove mentioned of all or part of the Demised Premises, Lessor shall be entitled to receive the entire award in the condemnation proceeding, including any award made for the value of the estate vested by this Lease in Lessee, and Lessee hereby expressly assigns to Lessor any and all right, title and interest of Lessee now or hereafter arising in or to any such award or any part thereof, and Lessee shall be entitled to receive no part of such award, except that the Lessee may file a claim for any taking of nonmovable fixtures owned by Lessee and for moving expenses incurred by Lessee. It is expressly understood and agreed that the provisions of this Article 13 shall not be applicable to any condemnation or taking for governmental occupancy for a limited period except that if a material portion of the Demised Premises is taken then rent shall abate proportionately during the limited period of such taking.

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Section 13.03 In the event any action is filed to condemn the Demised Premises or any part thereof by any public or quasi public authority under the power of eminent domain, or in the event that any action is filed to acquire the temporary use of the Demised Premises or any part thereof, or in the event that any such action is threatened or any public or quasi public authority communicates to Lessor or Lessee its desire to acquire the Demised Premises or any part thereof, or the temporary use thereof, by a voluntary conveyance or transfer in lieu of condemnation, either Lessor or Lessee shall give prompt notice thereof to the other.

ARTICLE XIV

INDEMNITY; WAIVER

Section 14.01 Indemnification. Except for claims arising due to the negligence, misconduct, error or omission of Lessor or Lessor’s agents, contractors, servants, employees or invitees, Lessee will indemnify Lessor, defend and save Lessor harmless from against any and all claims, actions, lawsuits, damages, liability and expense (including, but not limited to reasonable attorneys’ fee) arising from loss, damage or injury to persons or property occurring in, on or about the Demised Premises, arising out of the Demised Premises, or occasioned wholly or in part by any negligence, act or omission of Lessee, Lessee’s agents, contractors, servants, employees, space tenants, subtenants, invitees, licensees, or employees. In case any action or proceeding be brought against Lessor by reason of any such claim, Lessee upon notice from Lessor shall resist and defend such action or proceeding and employ counsel therefor reasonably satisfactory to Lessor, which approval shall not unreasonably be withheld or delayed.

Section 14.02 Inspection by Lessee. Lessee has inspected and is fully familiar with the physical condition of the Demised Premises and the Improvements and building service equipment presently situated thereon. Lessor has made no representations of whatever nature in connection with the condition of the Demised Premises or of the Improvements or building service equipment presently situated thereon and Lessor shall not be liable for any latent or patent defect therein. By entering into occupancy of the Demised Premises, Lessee shall be conclusively deemed to have agreed that Lessor, up to the time of such occupancy had performed all of its obligations hereunder and that the Demised Premises were in satisfactory condition as of the date of such occupancy. Nothing in this Section 14.02 shall relieve Lessor of Lessor’s obligations under Section 10.02 hereof.

Section 14.03 Prevailing Party. In any legal action brought by Lessor or Lessee against the other party in connection with this Lease, the prevailing party shall be entitled to reimbursement from the other party for any reasonable attorneys’ fees and expenses of the legal action incurred by the prevailing party. In the event Lessee is the prevailing party, Lessee shall have the right to offset such fees and expenses against Net Rent thereafter coming due under this Lease.

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ARTICLE XV

ASSIGNMENT AND SUBLETTING

Section 15.01 Except as otherwise expressly provided herein, Lessee shall not mortgage, pledge, encumber or otherwise hypothecate this Lease or the Demised Premises or any part thereof in any manner whatsoever, and any attempt to do so shall be void and a material breach of this Lease. Except as otherwise expressly provided herein, Lessee shall not, whether voluntarily, involuntarily, by operation of law or otherwise: (a) assign or otherwise transfer this Lease or offer or advertise to do so or (b) sublet any part of the Demised Premises, or offer or advertise to do so without obtaining the prior written consent of the Lessor, which consent shall not be unreasonably withheld or delayed. Any attempt by Lessee to assign or transfer this Lease (or its Term and estate) or offer or advertise to do so or sublet any part of the Demised Premises, or offer or advertise to do so, without strictly complying with the requirements of this Article shall be void and a material breach of this Lease. Use or occupancy of the Demised Premises by a licensee, concessionaire, or any person other than Lessee is a sublease subject to this Article. Notwithstanding the foregoing, Lessee shall (i) have the right to assign this Lease or sublet all or any portion of the premises without Lessor’s consent (but after written notice) to any entity directly or indirectly controlling, controlled by, or under common control with Lessee as of the date on which such assignment or subletting is being made (any such entity being a “Related Party” and any such assignment or subletting being a “Related Party Assignment,” which shall include without limitation an assignment of Lessee’s interest under this Lease by operations of law or as a consequence of a merger of Lessee into or with a Related Party, a change of control of or change of ownership of Lessee provided a Related Party thereafter controls Lessee, or a sale of substantially all of Lessee’s assets to a Related Party) and (ii) sublet 10,000 square feet or less, in the aggregate, of any part of the Demised Premises to any entity or person, provided that such subtenant shall not engage in any Environmental Activity in or about the subleased premises (except that said subtenant may use cleaners and lubricant products provided they are used in accordance with Legal Requirements). Lessee shall give Lessor written notice of such sublease along with a copy of the executed sublease agreement at least ten (10) days prior to the effective date of the sublease. For purposes of the definition of “Related Party,” the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of an entity, whether through the ownership of voting securities, or by contract or otherwise.

Section 15.02 Lessor acknowledges its consent to that certain sublease of even date herewith by Lessee, as sub-landlord, and Purification Technologies, as sub-tenant, with respect to a portion of the Demised Premises more particularly described therein.

Section 15.03 No assignment of this Lease shall be valid or binding on Lessor unless and until the assignee executes and delivers to Lessor an agreement whereby the assignee assumes and agrees to be bound by all of the provisions of this Lease and to perform all of the obligations of Lessee hereunder.

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Section 15.04 Notwithstanding any assignment or sublease to any other person, Lessee shall remain fully liable for the payment of Rents and for the performance of all the other obligations of Lessee contained in this Lease. Any act or omission of an assignee or subtenant or any person claiming under or through any of them that violates this Lease shall be deemed a violation of this Lease by Lessee.

Section 15.05 The consent by Lessor to any assignment to any entity or person other than a Related Party shall not relieve Lessee or any person claiming through or under Lessee of the obligation to obtain the consent of Lessor, pursuant to the provisions of this Article to any future assignment or sublease.

Section 15.06 Intentionally Omitted.

Section 15.07 Lessee shall reimburse Lessor on demand for any reasonable costs (not to exceed $2,500.00) that Lessor may incur in connection with any proposed assignment or sublease other than to a Related Party, including, without limitation, the costs of making investigations as to the acceptability of the proposed assignee or subtenant, and legal costs incurred in connection with any request for consent.

Section 15.08 Intentionally Omitted.

Section 15.09 Intentionally Omitted.

Section 15.10 Intentionally Omitted.

Section 15.11 If this Lease is assigned, whether or not in violation of the provisions of this Lease, Lessor may collect rent from the assignee. If the Demised Premises or any part thereof are sublet, whether or not in violation of this Lease, Lessor may, after monetary default by Lessee and expiration of Lessee's time to cure such default, collect rent from the sublessee until such violation is cured. In either event, Lessor may apply the net amount collected to payment of Rent, but no such assignment, subletting, or collection shall be deemed a waiver of any of the provisions of this Lease, an acceptance of the assignee or sublessee as a lessee or a release of Lessee from the performance by Lessee under this Lease.

ARTICLE XVI

SUBORDINATION

Section 16.01 This Lease is subject and subordinate in all respects to (i) the Fee Mortgage encumbering the Demised Premises on the date hereof (the “Existing Fee Mortgage”) and (ii) any “Institutional Fee Mortgage” (as hereinafter defined) which may now or hereafter be placed on or affect the real property of which the Demised Premises form a part, or parts of such real property, and/or Lessor's interest or estate therein, and to each advance made and/or hereafter to be made under any such Existing Fee Mortgage and/or Institutional Fee Mortgage, and to all renewals, modifications, consolidations, replacements and extensions thereof and all substitutions therefore. This Section 16.01 shall be self operative and no further instrument of subordination shall be required. In confirmation of such subordination, Lessee shall execute and deliver promptly any certificate that Lessor and/or the holder of any such Existing Fee Mortgage (the “Existing Fee Mortgagee”) and/or the holder of any Institutional Fee Mortgage (an “Institutional Fee Mortgagee”) and/or their respective successors in interest may request as to the subordination of this Lease. As used herein, an “Institutional Fee Mortgage” means a mortgage held by any savings bank, commercial bank, insurance company or other recognized institutional lender.

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Section 16.02 (i)          Within thirty (30) days after the date of this Lease, Lessor shall deliver to Lessee an “SNDA” (as hereinafter defined) to be executed by Lessee, Lessor and the Existing Fee Mortgagee, on the Existing Fee Mortgagee’s standard form. Lessee agrees to execute and deliver such SNDA to Lessor within ten (10) days after delivery by Lessor.

(ii)         Prior to executing and delivering to any Institutional Fee Mortgagee an Institutional Fee Mortgage after the date of this Lease, Lessor shall use commercially reasonable efforts to obtain an SNDA to be executed by Lessee, Lessor and such Institutional Fee Mortgagee on the standard form then used by such Institutional Fee Mortgagee. Lessee agrees to execute and deliver such SNDA to Lessor within ten (10) days after delivery by Lessor.

(iii)         With respect to any Fee Mortgage other than the Existing Fee Mortgage and any Institutional Fee Mortgage (a “Private Mortgage”), Lessee agrees to subordinate its interest under this Lease to any such Private Mortgage hereafter placed on the Premises, provided that, as a condition to such subordination, Lessee, Lessor and the holder of such Private Mortgage shall execute and deliver to each other a commercially reasonable SNDA.

(iv)         As used herein, an “SNDA” means agreement to be executed by Lessee, Lessor and the Fee Mortgagee confirming the subordination of this Lease to the Fee Mortgage and containing an agreement by the Fee Mortgagee to the effect that so long as no default exists under this Lease, Lessee shall not be joined as a party defendant in any action or proceeding which may be instituted or taken by such Fee Mortgagee for the purpose of foreclosing any such Fee Mortgage and, so long as no default shall exist, (x) Lessee shall not be evicted from the Demised Premises, (y) Lessee’s leasehold estate hereunder shall not be terminated or disturbed and (z) the Fee Mortgagee shall recognize this Lease.

Section 16.03 Without limitation of any of the provisions of this Lease, in the event that any Fee Mortgagee and/or its assigns shall succeed to the interest of Lessor or of any successor lessor and/or shall have become lessee under a new ground or underlying lease, then, at the option of such mortgagee, this Lease shall nevertheless continue in full force and effect and Lessee shall and does hereby agree to attorn to such mortgagee or its assigns and to recognize such mortgagee or its respective assigns as its lessor.

Section 16.04 Lessee and Lessor shall, at any time and from time to time upon not less than ten (10) business days' prior notice to the other, execute, acknowledge and deliver to the requesting party a statement in writing certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modification) and the dates to which the rent, additional rent and other charges have been paid in advance, if any, and stating whether or not to the best knowledge of the signer of such certificate Lessor or Lessee is in default in performance of any covenant, agreement, term, provision or condition contained in this Lease, and if so, specifying each such default of which the signer may have knowledge, it being intended that any such statement delivered pursuant hereto may be relied upon by any prospective purchaser or lessee of said real property or any interest or estate therein, any Fee Mortgagee or prospective Fee Mortgagee thereof or any prospective assignee of this Lease or of any Fee Mortgage.

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Section 16.05 Intentionally Omitted.

ARTICLE XVII

QUIET ENJOYMENT

Section 17.01 Quiet Enjoyment. Lessor covenants and agrees with Lessee that upon Lessee paying the Net Rent and other monetary sums due under the Lease and performing its covenants and conditions hereunder, Lessee shall and may peaceably and quietly have, hold and enjoy the Demised Premises and the Improvements for the entire Term of this Lease without hindrance or molestation of anyone claiming by, through or under Lessor, subject however to the provisions of this Lease.

ARTICLE XVIII

SIGNS

Section 18.01 Lessee shall also have the right to erect signs on the facade of the Building provided (i) the size, design, location and content of such sign complies with all applicable Legal Requirements, (ii) Lessee obtains all required permits therefor, and (iii) Lessee pays all costs and expenses attributable to Lessee’s installation and use of such sign, including, without limitation, labor and material costs and permit fees. Lessor does not represent or warrant that permits are obtainable for any particular sign.

ARTICLE XIX

CONDITIONAL LIMITATIONS; DEFAULTS

Section 19.01 Events of Default. If any one or more of the following events herein (sometimes called “Events of Default” or individually “Event of Default”) shall happen:

(a)          Lessee shall abandon the Demised Premises and/or the Improvements and such abandonment shall continue for a period of fifteen (15) days after notice by Lessor; or

(b)          Lessee shall default in making payment to Lessor of any Net Rent or any other amounts due on a monthly basis hereunder, as and when the same shall become due and payable, and such default in payment shall continue for a period of ten (10) days after notice by Lessor; provided, however, that if Lessee shall default in the timely payment of Rent more than two times in any period of 12 months, then, notwithstanding that such defaults shall have each been cured within the applicable period provided above, upon any further default in the timely payment of Rent, Lessor may serve a five (5) day notice of termination upon Lessee without affording Lessee an opportunity to cure such further default; or

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(c)          Lessee shall default in complying with any other agreements, terms, covenants or conditions of this Lease and such default shall continue for a period of thirty (30) days after notice by Lessor specifying the claimed default; provided, however, that with respect to non-monetary defaults only, if the nature of such non-monetary default is such that the same cannot reasonably be cured within such thirty (30) day period, Lessee shall not be deemed to be in default if Lessee shall within such thirty (30) day period commence such cure and thereafter diligently prosecutes the same to completion; or

(d)          If at any time during the Term of this Lease (i) any proceedings in bankruptcy, insolvency or reorganization shall be instituted against Lessee pursuant to any federal or state law now or hereafter enacted, or any receiver or trustee shall be appointed of all or any portion of Lessee’s business or property, or any execution or attachment shall issue against Lessee or any of Lessee’s business or property or against the leasehold estate created hereby, and any of such proceedings, process or appointment be not discharged and dismissed within sixty (60) days from the date of such filing, appointment or issuance; or (ii) Lessee shall be adjudged a bankrupt or insolvent, or Lessee shall make an assignment for the benefit of creditors, or Lessee shall file a voluntary petition in bankruptcy or petition for (or enter into) an arrangement or for reorganization, composition or any other arrangement with Lessee’s creditors under any federal or state law now or hereafter enacted, or this Lease or the estate of Lessee herein shall pass to or devolve upon, by operation of law or otherwise, anyone other than Lessee (except as herein provided);

then, and in any such events, Lessor at any time thereafter during the continuance of such Event of Default may serve a written five (5) day notice of cancellation and termination of this Lease (the “Termination Notice”) upon Lessee, and upon the expiration of said five (5) days, this Lease and the Term hereunder shall end and expire as fully and completely as if the date of expiration of such five (5) day period were the day herein definitely fixed for the end and expiration of this Lease and the Term thereof, and Lessee shall then quit and surrender to Lessor the Demised Premises, the Improvements and each and every part thereof, and Lessor may enter into or repossess the Demised Premises, the Improvements and each and every part thereof, either by force, summary proceedings or otherwise.

Section 19.02 Lessee’s Liability. No such expiration or termination of this Lease shall relieve Lessee of its liability and obligation to pay Net Rent, Impositions, insurance premiums and any other amounts due Lessor hereunder, and such liability and obligations shall survive any such expiration or termination.

Section 19.03 Right to Re-Enter and Re-Let. If this Lease shall terminate pursuant to any of the provisions of this Article or if this Lease shall terminate by expiration, forfeiture, cancellation, surrender, operation of law, issuance of final court order or otherwise then in any of said events:

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(a)          Lessor may re-enter the Demised Premises, and enter the Improvements to remove therefrom Lessee, its agents, employees, licensees and any sublessees, persons, firms or corporations and all of their respective property, using such reasonable force for that purpose as may be necessary without being liable for prosecution or damages therefor, and thereupon Lessor shall be entitled to retain possession of the Demised Premises and the Improvements with all additions, alterations and improvements thereon, fixtures and appurtenances thereto, free from any estate or interest of Lessee therein. Lessee does hereby expressly waive service of any notice of intention to re-enter or enter except as herein otherwise expressly provided.

(b)          Lessor, at Lessor’s option, may relet the whole or any part of parts of the Demised Premises and the Improvements, from time to time, either in the name of Lessor or otherwise, to such lessee or lessees, for such term or terms ending before, on or after the date fixed in this Lease for the expiration of the Term; at such rental or rentals and upon such other conditions, which may include concessions and free rent periods, as Lessor, in its sole discretion, may determine. Lessor shall have no obligation to relet the Demised Premises, the Improvements or any part thereof and shall in no event be liable for refusal or failure to relet the Demised Premises, the Improvements or any part thereof, or, in the event of any such reletting, for refusal or failure to collect any rent due upon such reletting, and no such refusal or failure shall operate to relieve Lessee of any liability under this Lease or otherwise to affect any such liability. Lessor, at Lessor’s option, may make such repairs, replacements, alterations, additions, improvements, decorations and other physical changes in and to the Demised Premises and the Improvements as Lessor, in its sole discretion, considers advisable or necessary in connection with any such reletting or proposed reletting, without relieving Lessee of any liability under this Lease or otherwise affecting any such liability.

Section 19.04 Late Charge. Lessee hereby acknowledges that late payment by Lessee to Lessor of Net Rent and other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges. Accordingly, if any installment of Net Rent or any other sum due from Lessee hereunder shall not be received by Lessor or Lessor’s designee within ten (10) days after such amount shall be due, Lessee shall pay to Lessor a late charge equal to the lesser of (i) $1,000 or (ii) five percent (5%) of such overdue amount. The parties hereby agree that such a late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s default with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder.

Section 19.05 Waiver of Rights. Lessee, for itself and for any and all persons claiming through or under Lessee, including its creditors, upon the termination of this Lease in accordance with the terms hereof, or in the event of entry of judgment for the recovery of the possession of the Demised Premises and the Improvements in any action or proceeding, or if Lessor shall enter the Demised Premises and the Improvements by process of law or otherwise, hereby waives any right of redemption provided or permitted by any statute, law or decision now or hereafter in force, and does hereby waive, surrender and give up all rights or privileges which it or they may or might have, under and by reason of any present or future law or decision, to redeem the Demised Premises and the Improvements or for a continuation of this Lease for the Term hereby demised after having been dispossessed or ejected therefrom by process of law.

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Section 19.06 Receipt of Rent. No receipt of moneys by Lessor from Lessee after the termination hereof in any lawful manner shall reinstate, continue or extend the Term, or affect any notice theretofore given to Lessee, or operate as a waiver of the right of Lessor to enforce the payment of any Net Rent then due or thereafter falling due, or operate as a waiver of the right of Lessor to recover possession of the Demised Premises and the Improvements by proper suit, action, proceedings or other remedy; it being agreed that after the service of the Termination Notice as herein provided and the expiration of the time therein specified, after the commencement of any suit, action, proceedings or other remedy, or after a final order or judgment for possession of the Demised Premises and the Improvements, Lessor may demand, receive and collect any moneys due, or thereafter falling due, without in any manner affecting such notice, suit, action, proceedings, order or judgment; and any and all such moneys so collected shall be deemed to be payments on account of the use and occupation of the Demised Premises and the Improvements, or, at the election of Lessor, on account of Lessee’s liability hereunder.

Section 19.07 Lessor’s Remedies. If this Lease and the demised Term shall expire and come to an end as provided in this Article XIX or by or under any summary proceeding or any other action or proceeding, or if Lessor shall re-enter the Demised Premises as provided above, or by or under any summary proceeding or any other action or proceeding, then, in any of said events:

(a)          Lessee shall pay to Lessor all Rent and other charges payable under this Lease by Lessee to Lessor to the date upon which this Lease and the demised Term shall have expired and come to an end or to the date of re-entry upon the Demised Premises by Lessor, as the case may be; and

(b)          Lessee shall also be liable for and shall pay to Lessor, as damages, any deficiency (referred to as “Deficiency”) between the Net Rent and other amounts payable by Lessee under this Lease for the period which otherwise would have constituted the unexpired portion of the demised Term and the net amount, if any, of rents collected under any reletting effected pursuant to the provisions of Section 19.03 above, for any part of such period (first deducting from the rents collected under any such reletting all of Lessor’s expenses in connection with the termination of this Lease or Lessor’s re-entry upon the Demised Premises and the Improvements and with such reletting as follows: costs in repossessing the Demised Premises (including legal and court expenses and reasonable attorneys’ fees, brokerage commissions, and expenses incurred making repairs to the Demised Premises which are Lessee’s responsibility under this Lease. Any such Deficiency shall be paid in monthly installments by Lessee on the days specified in this Lease for payment of installments of Net Rent. Lessor shall be entitled to recover from Lessee each monthly Deficiency as the same shall arise, and no suit to collect the amount of Deficiency for any month shall prejudice Lessor’s right to collect the Deficiency for any subsequent month by a similar proceeding; and

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(c)          At any time after the demised Term shall have expired and come to an end or Lessor shall have re-entered upon the Demised Premises and the Improvements, as the case may be, whether or not Lessor shall have collected any monthly Deficiency as aforesaid, Lessor shall be entitled to recover from Lessee, and Lessee shall pay to Lessor, on demand, as and for liquidated and agreed final damages, a sum equal to the amount by which the Net Rent and other amounts payable by Lessee under this Lease for the period which otherwise would have constituted the unexpired portion of the demised Term exceeds the then fair and reasonable rental value of the Demised Premises and the Improvements for the same period, both discounted to present worth at the rate of four (4%) percent per annum, less the aggregate amount of Deficiency theretofore collected by Lessor pursuant to the provisions of subsection (b) of this Section 19.07 for the same period. If, before presentation of proof of such liquidated damages to any court, commission or tribunal, the Demised Premises, the Improvements or any part thereof, shall have been relet by Lessor for the period which otherwise would have constituted the unexpired portion of the demised Term, or any part thereof, the amount of rent reserved upon such reletting shall be deemed, prime facie, to be the fair and reasonable rental value for the part or whole of the Demised Premises and the Improvements so relet during the term of reletting.

Section 19.08 Interest. Any Rent or damages payable under this Lease and not paid, and such payment remains unpaid for ten (10) days after notice thereof shall bear interest at the rate of twelve (12%) percent per annum (the “Interest Rate”), but in no event higher than the highest legal rate, from the due date until paid, and the interest shall be deemed Additional Rent.

Section 19.09 Remedies Not Exclusive. Lessor’s remedies provided in this Lease shall be in addition to, and not in lieu of, all other rights and remedies available to Lessor at law or in equity or otherwise.

Section 19.10 Limitation of Remedies. Notwithstanding anything in this Article XIX to the contrary, (i) in no event may Lessor accelerate any of Lessee’s obligations under this Lease except in the event of a monetary default by Lessee beyond any applicable notice and cure period and (ii) in no event may Lessor lock Lessee out of the Demised Premises without first obtaining a court order.

ARTICLE XX

LESSOR’S RIGHT TO CURE DEFAULTS.

Section 20.01         Lessor’s Right to Cure. Whenever Lessee shall fail to comply with and perform any term, covenant, or condition of this Lease, then, following (a) ten (10) days prior written notice as to any monetary default; or (b) following thirty (30) days’ prior written notice as to other defaults; or (c) following shorter notice if reasonably necessary to meet an emergency situation or governmental time limitation, Lessor may perform, or cause to be performed, such term, covenant or condition, and take such other steps, including entry onto the Demised Premises and the Improvements, as it may deem advisable, to achieve such performance or compliance, in which event Lessee shall reimburse Lessor upon demand for all costs and expenses suffered or incurred by it in connection therewith, together with interest at the Interest Rate. Acting in accordance with the immediately preceding sentence shall not be deemed to obligate Lessor to commence or complete the curing of any term, covenant, or condition which is in default within said time limits or otherwise. Lessee hereby waives any claim and releases Lessor and Lessor’s agents, contractors and employees from all liability for damage occasioned by any action taken by Lessor pursuant to this Section. Such action by Lessor shall not constitute or be deemed a waiver or release of Lessee from any obligation of Lessee contained in this Lease or from any default by Lessee and without waiving Lessor’s right to take such action as may be permissible under this Lease as a result of such default. Any sum of money (other than Net Rent) accruing from Lessee to Lessor pursuant to this Section, may, at Lessor's option, be deemed Additional Rent, and Lessor shall have the same remedies as are available for Lessee's failure to pay any installment of Net Rent when due. Lessee's obligations under this Article shall survive the expiration of sooner termination of the Term.

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ARTICLE XXI

SECURITY DEPOSIT

Section 21.01 Lessee shall deposit the sum of $20,980.13 (the “Security Deposit”) with Lessor upon the execution of this Lease in cash as security for the faithful performance and observance by Lessee of the terms, covenants and conditions of this Lease, including the surrender of possession of the Demised Premises to Lessor as herein provided. It is understood and agreed that the amount of the Security Deposit shall at all times equal one (1) month of Net Rent, and upon any increase in the Net Rent payable under the terms of this Lease, Lessee shall immediately deposit such additional sums as are necessary to increase the amount of the Security Deposit so that it shall equal one (1) month of Net Rent. If Lessee defaults in the payment or performance of any of the terms, covenants or conditions of this Lease, including the payment of Rent and such default continues beyond the applicable notice and cure period, then Lessor may use, apply or retain the whole or any part of the Security Deposit and use, apply, or retain the whole or any part of such proceeds, as the case may be, to the extent required for the payment of any Rent or any other sum as to which Lessee is in default, including (i) any sum which Lessor may expend or may be required to expend by reason of Lessee’s default, and (ii) any damages or Deficiency to which Lessor is entitled pursuant to this Lease or applicable law, whether such damages or Deficiency accrue before or after summary proceedings or other reentry by Lessor. If Lessor uses, applies or retains any part of the Security Deposit, Lessee, upon demand, shall deposit with Lessor the amount so applied or retained so that Lessor shall have the full Security Deposit on hand at all times during the Term. If Lessee shall fully and faithfully comply with all of the terms, covenants and conditions of this Lease, the Security Deposit (or so much thereof as remains) shall be returned to Lessee after the Expiration Date and after delivery of possession of the Demised Premises to Lessor in the manner required by this Lease. Lessee expressly agrees that Lessee shall have no right to apply any portion of the Security Deposit against any of Lessee’s obligations to pay Rent hereunder.

Section 21.02 Upon a sale or other transfer of the Demised Premises or any of Lessor’s interest therein, Lessor shall transfer the Security Deposit to the transferee. Lessee shall look solely to the new landlord for the return of such Security Deposit and the provisions of this Section shall apply to every transfer or assignment made of the Security Deposit to a new landlord. Lessee will not assign or encumber, or attempt to assign or encumber, the Security Deposit, and neither Lessor nor its successors or assigns shall be bound by any such actual or attempted assignment or encumbrance.

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ARTICLE XXII

SURRENDER

Section 22.01 Except as is herein otherwise provided, Lessee shall on the last day of the Term or upon any earlier termination of this Lease, well and truly surrender and deliver up the Demised Premises and the Improvements to the possession and use of Lessor without fraud or delay and in good order, condition and repair, except for reasonable wear and tear and damage by casualty or condemnation expenses, free and clear of all lettings and occupancies other than subleases then terminable at the option of the Lessor thereof or subleases to which Lessor shall have specifically consented, and free and clear of all liens and encumbrances other than those, if any, presently existing or created or suffered by Lessor.

Section 22.02 Unless otherwise agreed by the parties hereto in a writing executed by both parties prior to the Expiration Date of this Lease, there shall be no holding over by Lessee after the expiration or earlier termination of this Lease and the failure by Lessee to deliver possession of the Demised Premises to Lessor shall be an unlawful holdover. During any period in which Lessee so holds over, at Lessor's option, the rental value of the Demised Premises, payable from the date immediately following the date on which Lessee was to deliver the Demised Premises through and including the last day of the calendar month in which Lessee so delivers the Demised Premises, shall be deemed to be equal to (i) one hundred fifty (150%) percent of the Net Rent payable immediately preceding the expiration or earlier termination of this Lease, and (ii) all other items of Additional Rent that would have been otherwise payable hereunder had this Lease not expired or been terminated. Acceptance by Lessor of any such rent during the period in which Lessee so holds over shall not cure or waive Lessee's default, nor prevent Lessor from exercising, before or after such acceptance, any of the remedies provided by this Lease or at law or in equity. Payment of any such rent and other sums during any period in which Lessee holds over shall not excuse Lessee's obligation to vacate and surrender the Demised Premises on the date, and in the manner and condition, required under this Lease. Lessee waives any rights it may have under applicable law in connection with any holdover proceedings that Lessor may institute against Lessee. If the Demised Premises are not surrendered upon the expiration or earlier termination of this Lease with respect to all or any portion of the Demised Premises, Lessee hereby indemnifies Lessor against loss, cost, injury, damage, claim, expense, or liability (including reasonable attorneys' fees and disbursements) resulting from delay by Lessee in so surrendering the same, including any claims made by any succeeding tenant or prospective tenant or prospective tenant founded upon such delay. Lessee's obligations under this Article shall survive the expiration or earlier termination of the Term.

Section 22.03 All appurtenances, fixtures, improvements, additions and other property attached to or built into the Demised Premises, whether by Lessor or Lessee or others, and whether at Lessor's expense, or Lessee's expense, or the joint expense of Lessor and Lessee, shall be and remain the property of Lessor, except that any such fixtures, improvements, additions and other property installed at the sole expense of Lessee with respect to which Lessee has not been granted any credit or allowance by Lessor, and which are removable without material damage to the Demised Premises may be removed by Lessee on condition that Lessee shall repair at its expense any damage to the Demised Premises or the Building resulting from such removal.

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Section 22.04 Any personal property of Lessee or any sublessee which shall remain in the Improvements after the termination of this Lease and the removal of Lessee or such sublessee from the Improvements, may, at the option of Lessor, be deemed to have been abandoned by Lessee or such sublessee and either may be retained by Lessor as its property or be disposed of, without accountability, in such manner as Lessor may see fit, or if Lessor shall give written notice to Lessee to such effect, such property shall be removed by Lessee at Lessee’s sole cost and expense.

Section 22.05 The provisions of this Article shall survive any termination of this Lease.

ARTICLE XXIII

INTENTIONALLY OMITTED

ARTICLE XXIV

MISCELLANEOUS

Section 24.01 Force Majeure. Except as otherwise expressly set forth herein, neither Lessor nor Lessee shall be responsible for delays caused by acts of God, fire, earthquake, hurricane or tornado (or comparable adverse weather conditions of unusual severity, such as, by way of example, severe flooding), war, material shortages, strikes, embargoes, acts of the public enemy, riot, insurrection or civil disorder, or other reasons of a like nature which are beyond the reasonable control of Lessor or Lessee (collectively referred to herein as “Force Majeure”). Notwithstanding the foregoing provisions, the financial inability of Lessor or Lessee to perform their respective obligations under this Lease shall not constitute an event of Force Majeure, nor shall any Force Majeure excuse Lessee’s obligation to pay Rent when due pursuant to this Lease.

Section 24.02 Intentionally Omitted.

Section 24.03 Waiver of Trial by Jury. To the extent permitted by law, Lessor and Lessee hereby waive trial by jury in any litigation brought by either of the parties hereto against the other on any matter in any way connected with this Lease.

Section 24.04 Payments of Money. In the event of nonpayment by Lessee of any sum of money whatsoever which is payable by Lessee under any provision of this Lease, Lessor shall have the same rights and remedies by reason of such nonpayment as if Lessee had failed to pay an installment of Net Rent.

Section 24.05 No Waiver of Rights. No failure by either party to insist upon the strict performance of any covenant, agreement, term or condition of this Lease or to exercise any right or remedy consequent upon a breach thereof, and no acceptance of full or partial rent during the continuance of any such breach, shall constitute a waiver of any such breach or of such covenant, agreement, term or condition. No covenant, agreement, term or condition of this Lease to be performed or complied with by either party, and no breach thereof, shall be waived, altered or modified except by a written instrument executed by the non-defaulting party. No waiver of any breach shall affect or alter this Lease, but each and every covenant, agreement, term and condition of this Lease shall continue in full force and effect with respect to any other then existing or subsequent breach thereof.

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Section 24.06 Rights and Remedies Cumulative. In addition to the remedies set forth in this Lease, Lessor and Lessee shall have the right to pursue any and all other remedies available at law or in equity, provided that in no event shall either party be liable for consequential, punitive or exemplary damages in connection with this Lease. All rights and remedies of Lessor and Lessee under this Lease or existing at law or in equity are cumulative, and the exercise of one or more rights or remedies shall not be taken to exclude or waive the right to the exercise of any other.

Section 24.07 Transfer of Lessor’s Interest. In the event of a sale or conveyance by Lessor of Lessor’s interest in the Demised Premises, other than a transfer for security purposes only, Lessor shall be relieved, from and after the date specified in such notice of transfer, of all obligations and liabilities accruing thereafter on the part of the Lessor. This Lease shall not be affected by any such sale and Lessee agrees to attorn to the purchaser or assignee provided all Lessor’s obligations hereunder are assumed in writing by the transferee.

Section 24.08 Liability of Lessor. (a) Anything elsewhere to contrary notwithstanding, Lessee shall look solely to Lessor’s interest in the Demised Premises including any rent, insurance proceeds, sale proceeds and condemnation awards received therefrom for the satisfaction of Lessee’s remedies for the collection of a judgment (or other judicial process) requiring the payment of money by Lessor in the event of any default or breach by Lessor with respect to any of the terms, conditions and covenants of this Lease to be observed and/or performed by Lessor, and no other property or assets of Lessor shall be subject to levy, execution or other enforcement procedure for the satisfaction of Lessee’s remedies. If Lessor or a successor in interest is an individual (which term as used herein includes aggregates of individuals, such as joint ventures, general or limited partnerships or associations) such individual shall be under no personal liability with respect to any of the provisions of this Lease, and if such individual hereto is in breach or default with respect to its obligations under this Lease, in no event shall Lessee attempt to secure any personal judgment against any partner, employee or agent of Lessor by reason of such default by Lessor.

(b)          Lessee agrees that its sole remedies in cases where Lessor’s reasonableness in exercising its judgment or withholding it consent or approval is applicable pursuant to any provision of this Lease, shall be those in the nature of injunction, declaratory judgment, or specific performance, the rights to money damages or other remedies being hereby specifically waived.

(c)          Lessee shall not be entitled to claim a constructive eviction from the Demised Premises unless Lessee shall have first notified Lessor of the condition or conditions giving rise thereto, and if the complaints be justified, unless Lessor shall have failed to remedy such conditions within a reasonable time after receipt of such notice.

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(d)          Lessor or its agents shall not be liable for any damage to property of Lessee or of others entrusted to employees of the Building, nor for the loss of or damage to any property of Lessee by theft or otherwise. Lessor or its agents shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, electrical disturbance, water, rain or snow or leaks from any part of the Building or from the pipes, appliances or plumbing works or from the Roof, street or subsurface or from any other place or by dampness or by any other cause of whatsoever nature, unless caused by or due to the negligence of Lessor, its agents, servants or employees; nor shall Lessor or its agents be liable for any such damage caused by operations in construction of any private, public or quasi-public work; nor shall Lessor be liable for any latent defect in the Demised Premises or in the Building. If at any time any windows of the Demised Premises are temporarily closed or darkened incident to or for the purpose of repairs, replacements, maintenance and/or cleaning in, on, to or about the Building or any part or parts thereof, Lessor shall not be liable for any damage Lessee may sustain thereby and Lessee shall not be entitled to any compensation therefor nor abatement of rent nor shall the same release Lessee from its obligations hereunder nor constitute an eviction. Lessee shall reimburse and compensate Lessor as Additional Rent for all expenditures made by, or damages or fines sustained or incurred by Lessor and not reimbursed by insurance due to nonperformance or non-compliance with or breach or failure to observe any term, covenants or conditions of this Lease upon Lessee's part to be kept, observed, performed or complied with. Lessee shall give immediate notice to Lessor in case of fire or accidents in the Demised Premises or in the Building or of defects therein or in any fixtures or equipment.

24.09          No Waste. Lessee shall not do or suffer any waste, damage, or injury to the Demised Premises, the Improvements or any part thereof, but this provision shall not be deemed to prevent Lessee’s from making repairs or Alterations to the Improvements in accordance with other provisions of this Lease.

24.10         Captions; Attachments; Defined Terms.

(a)          The captions of the sections of the Lease are for convenience only and shall not be deemed to be relevant in resolving any question of interpretation or construction of any Section of this Lease.

(b)          Exhibits attached hereto, and addendums and schedules initiated by the parties, are deemed by attachment to constitute part of this Lease and are incorporated herein.

(c)          The words “Lessor” and “Lessee”, as used herein, shall include the plural as well as the singular. The obligations contained in this Lease to be performed by Lessor shall be binding on Lessor’s successors and assigns only during their respective periods of ownership.

24.11          Entire Agreement. This Lease along with any exhibits and attachments hereto constitutes the entire agreement between Lessor and Lessee relative to the Demised Premises and the Improvements and this Lease and the exhibits and attachments may be altered, amended or revoked only by an instrument in writing signed by both Lessor and Lessee.

24.12         Severability. If any term or provision of this Lease shall, to any extent, be determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Lease shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforceable to the fullest extent permitted by law.

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24.13         Time of the Essence. Time is of the essence of this Lease and each and every provision hereof.

24.14         Binding Effect. The parties hereto agree that all the provisions hereof are to be construed as both covenants and conditions as though the words importing such covenants and conditions were used in each separate paragraph hereof; all of the provisions hereof shall bind and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.

24.15         Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered, sent pre-paid by FEDEX or other nationally-recognized overnight delivery service that provides evidence of delivery (a “Courier Service”), or if mailed by United States certified or registered mail, postage prepaid, as follows:

If to Lessor:	COUNTRYWIDE HARDWARE, INC.
	445 Broadhollow Road, Suite 100
	Melville, New York 11747
	Attention: Joseph Molino, Jr.
with a copy to:	SILVERMANACAMPORA, LLP
	100 Jericho Quadrangle, Suite 300
	Jericho, New York 11753
	Attention: Peter Marullo, Esq.
If to the Lessee:	NATIONWIDE INDUSTRIES, INC.
	10333 Windhorst Road
	Tampa, Florida 33619
	Attn: Chris Klieforth, President
With a copy to:	Kirk Griswold
	NWI Argosy Holdings, LLC
	950 West Valley Road, Suite 2900
	Wayne, Pennsylvania 19087

or at such other place as any party shall from time to time notify the other in writing as provided herein. The date of service of any communication hereunder shall be the date of personal delivery, the date of delivery by Courier Service or forty-eight (48) hours after the postmark on the certified or registered mail, as the case may be.

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24.16         Waiver. No covenant, term or condition or the breach thereof shall be deemed waived, except by written consent of the party against whom the waiver is claimed, and any waiver or the breach of any covenant, term or condition shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other covenant, term or condition.

24.17          Negation of Partnership. Lessor shall not become or be deemed a partner or a joint venturer with Lessee by reason of the provisions of this Lease.

24.18         Broker. Lessee and Lessor each represents that it has not dealt with any brokers in connection with the negotiation of this Lease. Lessee and Lessor hereby agree to indemnify, defend and hold each other harmless from and against all liability, loss, cost and expenses (including, without limitation, reasonable legal fees) arising out of any inaccuracy or alleged inaccuracy of their respective representations set forth in this Section 24.18. Lessor shall have no liability for brokerage commissions arising out of an assignment or a sublease by Lessee and Lessee shall and does hereby indemnify Lessor and hold it harmless from any and all liability for brokerage commissions arising out of any such assignment or sublease.

24.19         Recording. Upon execution and delivery of this Lease, Lessor and Lessee agree to execute and deliver the Memorandum of Lease annexed hereto as Exhibit D (the “Memo of Lease”) and a Termination of Memorandum of Lease in the form annexed hereto as Exhibit E (the “Termination”). The Memo of Lease may be recorded against the Demised Premises at Lessee’s sole cost and expense. The Termination shall be held by Lessor in escrow and may be recorded only upon the Expiration Date or the earlier termination of this Lease. Except as expressly provided in this Section, neither this Lease nor any short form or memorandum of this Lease shall be recorded. Any attempt to record this Lease or any short form or memorandum thereof in violation of this Section shall constitute a default under this Lease.

24.20         Choice of Law; Jurisdiction. This Lease shall be governed and construed under the laws of the State of Florida. All disputes arising, directly or indirectly, out of or relating to this Lease, and all actions to enforce this Lease, shall be dealt with and adjudicated in the state courts of the State of Florida located in Tampa, Florida or the federal courts for the Middle District of Florida; and for that purpose Lessee expressly and irrevocably submits to the jurisdiction of such courts. Lessee agrees that so far as is permitted under applicable law, this consent to personal jurisdiction shall be self-operative and no further instrument or action, other than service of process in one of the manners specified in this Lease, or as otherwise permitted by law, shall be necessary in order to confer jurisdiction upon it in any such court. Lessee further agrees that judgment against it in any such action or proceeding shall be conclusive and, to the extent permitted by applicable law, may be enforced in any other jurisdiction within or outside the United States of America by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and of the amount of its indebtedness.

24.21         Radon Gas. Lessor hereby notifies Lessee of the following: “RADON GAS : RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY PRESENT HEALTH RISKS TO PERSONS WHO ARE EXPOSED TO IT OVER TIME. LEVELS OF RADON THAT EXCEED FEDERAL AND STATE GUIDELINES HAVE BEEN BOUND IN BUILDINGS IN FLORIDA. ADDITIONAL INFORMATION REGARDING RADON AND RADON TESTING MAY BE OBTAINED FROM YOUR COUNTY PUBLIC HEALTH UNIT.”

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24.22         Consequential Damages. In addition to the remedies set forth in this Lease, Lessor and Lessee shall have the right to pursue any and all other remedies available at law or in equity, provided that in no event shall either party be liable for consequential, punitive or exemplary damages in connection with this Lease. All rights and remedies of Lessor and Lessee under this Lease or existing at law or in equity are cumulative, and the exercise of one or more rights or remedies shall not be taken to exclude or waive the right to the exercise of any other.

24.23         Existing Lease Termination.         The parties acknowledge that Lessee is currently the tenant for the Demised Premises under the Lease Agreement dated May 1, 2002 between W.I. Commercial Properties, Inc. (predecessor-in interest to Lessor) and Lessee (the “Existing Lease”). As of the Commencement Date, the Existing Lease shall terminate and be of no further force and effect and in no event shall Lessee owe rent or any other sums due under this Lease and the Existing Lease at the same time.

SIGNATURE LINES FOLLOW

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IN WITNESS WHEREOF, the parties hereto have executed this Lease on the date and year first written above.

LESSOR:

	COUNTRYWIDE HARDWARE, INC.
Signed, sealed and delivered in the presence of:

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

/s/ George Aronson
Name:	George Aronson

LESSEE:

Signed, sealed and delivered
in the presence of: NATIONWIDE INDUSTRIES, INC

/s/ Stuart D. Itzkowitz		By:	/s/ Christopher J. Kliefoth
Name:	Stuart D. Itzkowitz	Name:	Christopher J. Kliefoth
		Title:	President

/s/ William G. Julien
Name:	William G. Julien

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EXHIBIT A

Demised Premises

Lot 5, FISHER’S FARMS, according to the Plat thereof, recorded in Plat Book 26, Page 1, of the Public Records of Hillsborough County, Florida, LESS the North 100 feet of the South 475.60 feet of the West 125 Feet and LESS the South 70 feet of said Lot 5

AND

The North 100 feet of the South 475.60 of the West 125 Feet of Lot 5, FISHER’S FARMS, according to the Plat thereof, recorded in Plat Book 26, Page 1, of the Public Records of Hillsborough County, Florida

Property Identification No: U-17-29-20-2D2-000000-00005.0; and U-17-29-20-2D2-000000-00005-2

EXHIBIT B

PERMITTED EXCEPTIONS

Subject nevertheless to:

(1) All leases, subleases, tenancies and rights of occupancy affecting the Demised Premises caused or permitted by Lessee or by anyone claiming by, through, or under Lessee;

(2) State of facts an accurate survey, or an inspection, would show;

(3) Any presently existing defects of title, easements, restrictions, and agreements affecting the Land;

(4) Encroachment of the Improvements on any street or on adjacent premises;

(5) Projection of any portion of the Improvements under any abutting street and the right of any governmental authority to require the removal thereof and of any curb cut;

(6) Zoning, environmental, municipal, building, and all other laws, regulations or similar matters imposed by any federal, state, municipal, or local government or any public or quasi-public board, authority, or similar agency having jurisdiction over the Demised Premises or any portion thereof, whether or not or record;

(7) The existing condition and state of repair of the Demised Premises, provided, however, that this Permitted Exception does not relieve Lessor of Lessor’s maintenance obligations in this Lease;

(8) Variations between the tax diagram or the tax map and the record description;

(9) All notes or notices of any violation of law or municipal ordinances, orders, or requirements noted in or issued by any governmental or quasi-governmental authority or departments having or asserting jurisdiction, now or hereafter affecting the Demised Premises;

(10) The lien for all taxes, charges, rents, assessments, and any other governmental charges which are not yet due and payable;

(11) Any Fee Mortgage encumbering the Demised Premises;

(12) Intentionally omitted.

EXHIBIT “C”

PROHIBITED USES

Lessee shall not use or authorize use of any portion of the Demised Premises, for any of the following purposes:

1. A facility for any use which is illegal or would reasonably be determined to cause a threat of imminent harm to persons or property, or would constitute a public or private nuisance outside of the Demised Premises.

2. Any dumping, disposing (other than in the designated trash removal areas), incineration, or reduction of garbage (exclusive of garbage compactors located near the rear of or in the Demised Premises).

3. Establishment providing nude or topless entertainment or wait staff, or any establishment selling or exhibiting pornographic materials (including, without limitation, adult books or videos). Materials shall be considered “adult” or “pornographic” under this paragraph if the same are not available for sale or rental to children under 18 years old because they explicitly deal with or depict sexuality.

4. Any pawn shop, “second-hand” store, schlock store, or “surplus” store; provided, however, that this provision shall not restrict or prohibit Lessee from the ancillary sale of consumer electronics merchandise, regardless of whether new, used or refurbished.

6. Any fire sale, bankruptcy sale (unless pursuant to a court order) or auction house operation (but this provision shall not restrict the absolute freedom of an occupant to determine its own selling prices nor shall it preclude the conduct of any seasonal sales, promotional or clearance sales or legitimate going out of business sales in compliance with applicable Laws).

7. Any bar, pub, tavern or night club.

8. Any gambling facility or operation, including but not limited to: off-track or sports betting parlor; table games such as blackjack or poker; slot machines, video poker/black-jack keno machines or similar devices; or bingo hall.

9. Any Hazardous Materials, except in the ordinary course of it’s usual operations conducted thereon, and any such use shall at all times be in compliance with all Legal Requirements.

10. Any residential use.

EX-10.4

Exhibit 10.4

COUNTRYWIDE HARDWARE, INC.

445 Broadhollow Road, Suite 100

Melville, New York 11747

February 11, 2016

NATIONWIDE INDUSTRIES, INC.

10333 Windhorst Road

Tampa, Florida 33619

Re: Purchase Option and Right of First Refusal to Purchase Premises Known as 10333 Windhorst Road, Tampa, Florida 33619

Gentlemen,

In connection with that certain Lease of even date herewith (the “Lease”) by and between Countrywide Hardware, Inc. (“Countrywide”), as landlord, and Nationwide Industries, Inc. (“Nationwide”), as tenant, with respect to the premises known as 10333 Windhorst Road, Tampa, Florida 33619, being more particularly described in the Lease (the “Premises”), Countrywide and Nationwide hereby agree as follows:

1.          (A) Provided Nationwide is not in monetary default under the Lease beyond any applicable notice and grace periods, and subject to the terms of this letter agreement (the “Agreement”), Nationwide shall have the option (the “Purchase Option”) to purchase the Premises on the terms and conditions set forth herein. Nationwide may only exercise the Purchase Option by giving Countrywide written notice thereof (the “Option Notice”) within sixty (60) days following the date hereof (the “Option Notice Period”), time being of the essence. The Option Notice shall be deemed effective when delivered to Countrywide. The “Purchase Price” shall be the “Fair Market Value” of the Premises as determined pursuant to subparagraph (B) hereof.

(B)         Within ten (10) days after Nationwide shall have given the Option Notice specified in the preceding paragraph, Countrywide shall furnish Nationwide with a notice specifying the Fair Market Value of the Premises as determined by Countrywide. Within ten (10) days after Countrywide shall have given such notice (the “Dispute Period”), Nationwide may dispute the Fair Market Value by giving Countrywide a notice setting forth Nationwide’s determination of the Fair Market Value. If such dispute cannot be resolved by the parties within the Dispute Period, then such dispute shall be resolved by the following appraisal process (the “Appraisal Process”):

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(a)          The Fair Market Value for the Premises shall be determined by averaging the appraised values as determined by Collier International, Franklin Street and Cliggitt Valuation, Inc. (collectively, the ”Appraisers”). In the event one or more of the designated Appraisers are unable or unwilling to participate, a substitute Appraiser shall be selected by the remaining Appraiser(s). Countrywide and Nationwide each represent and warrant to each other that they have not used the services of any of the Appraisers and have not had any business relationship with any of the Appraisers within the last five (5) years.

(b)          The Appraisers shall prepare written appraisal reports containing their determinations of the Fair Market Value (defined for purposes of this Agreement as the price a willing buyer would pay a willing seller on the appraisal date taking into account the condition of building and property including deferred maintenance, if any) and submit them to both Nationwide and Countrywide within fifteen (15) days after the expiration of the Settlement Period.

(c)          The Fair Market Value as determined the Appraisal Process shall be final and binding upon Countrywide and Nationwide and shall constitute the “Purchase Price” for purposes of the Purchase Option.

(d)          Countrywide and Nationwide shall each pay one-half (1/2) of the fees and expenses of the Appraisers and all other necessary and reasonable expenses and costs to complete the Appraisal Process.

(C) If both Nationwide and Countrywide agree to move forward based on the Fair Market Value, then within ten (10) days after the Purchase Price is determined in accordance with subparagraph (B) above, Countrywide shall prepare and deliver to Nationwide a purchase agreement (the ”Purchase Agreement”) which shall provide (i) for an “all cash” sale for the Purchase Price, not subject to any financing contingencies, (ii) that closing of title (the “Closing”) shall occur on or about a date which is thirty (30) days after the date of the Purchase Agreement, subject to, and in accordance with, the terms and conditions contained in the Purchase Agreement, (with Nationwide having a one-time right to adjourn the Closing for a period not to exceed thirty (30) additional days), (iii) that the Premises shall be conveyed to Nationwide in their “as is” condition at the time of Closing, (iv) that Countrywide shall convey insurable title subject to all matters of record other than monetary liens and mortgages not caused by Nationwide, and (v) such other terms as are customarily contained in commercial contracts for similar properties in the Tampa, Florida area. Within ten (10) days thereafter, Nationwide shall execute and deliver the Purchase Agreement to Countrywide, together with a check payable to Countrywide’s attorneys for a contract deposit equal to ten (10%) percent of the Purchase Price to be held in escrow pursuant to the Purchase Agreement. Countrywide shall execute and date the Purchase Agreement and deliver one fully executed counterpart thereof to Nationwide within five (5) days after receipt. The failure of Nationwide to (i) give the Option Notice during the Option Notice Period or (ii) execute and deliver the Purchase Agreement in strict accordance with the provisions of this paragraph, or (iii) close title and pay the Purchase Price in strict accordance with the provisions of the Purchase Agreement, shall each be deemed to constitute an irrevocable waiver of the Purchase Option by Nationwide.

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2.          (a)          Provided Nationwide is not then in monetary default under the Lease beyond any applicable notice and grace periods, then for a period of five (5) years following the date hereof (the “ROFR Period”), Nationwide shall have a right of first refusal to purchase the Premises on the following terms and conditions (the “ROFR”). If during the ROFR Period, Countrywide shall receive a bona fide offer from a third party offeror (the “Offeror”) to purchase the Premises which Countrywide desires to accept, Countrywide shall give Nationwide written notice of such bona fide offer stating the price and other material terms thereof (the “Offer Notice”). Nationwide shall have ten (10) days following the giving of the Offer Notice within which to notify Countrywide in writing as to whether Nationwide desires to purchase the Premises for the same price and on the same terms and conditions contained in the Offer Notice (the “Acceptance Notice”). Any neglect or failure on the part of Nationwide to give Countrywide the Acceptance Notice within said ten (10) day period, time being of the essence, shall conclusively be deemed to be an election not to purchase the Premises. If Nationwide elects not to purchase the Premises in accordance with the terms and conditions of the Offer Notice, then Countrywide shall be at liberty to sell and convey the Premises to the Offeror for the price and on substantially the material terms set forth in the Offer Notice, or on terms and conditions more favorable to Countrywide. Upon conveyance of title to the Offeror, the ROFR shall terminate and be deemed null and void as if the provisions of this paragraph 2 were never included in this Agreement.

(b)          If Countrywide wishes to sell the Premises to such Offeror on material terms more beneficial to the Offeror than contained in the original Offer Notice, Countrywide shall be required to give an amended Offer Notice (an “Amended Offer Notice”) to Nationwide setting forth such changed terms and Nationwide shall have ten (10) days following the giving of such Amended Offer Notice within which to give an Acceptance Notice. Any neglect or failure on the part of Nationwide to give Countrywide the Acceptance Notice within said ten (10) day period, time being of the essence shall, again, conclusively be deemed to be an election not to purchase the Premises. If Nationwide elects not to purchase the Premises in accordance with the terms and conditions of the Amended Offer Notice, then Countrywide shall be at liberty to sell and convey the Premises to the Offeror for the price and on substantially the material terms set forth in the Amended Offer Notice, or on terms and conditions more favorable to Countrywide. Upon conveyance of title to the Offeror, Nationwide’s ROFR shall terminate and be deemed null and void as if the provisions of this paragraph 2 were never included in this Agreement.

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(c)          If Nationwide duly and timely elects to purchase the Premises pursuant to subparagraphs (a) or (b) above, as the case may be, Countrywide and Nationwide shall, within ten (10) days after Countrywide’s receipt of the Acceptance Notice, execute and deliver to each other a Purchase Agreement incorporating the purchase price and other material terms contained in the Offer Notice or Amended Offer Note, as the case may be. Closing of title shall occur subject to, and in accordance with, the terms and conditions contained in the Purchase Agreement.

(d)          Notwithstanding anything contained in this paragraph 2, the provisions of this paragraph 2 shall not apply to, and Countrywide shall have no ROFR (i) with respect to any proposed transfer of the Premises to any affiliate of Countrywide, (ii) with respect to any mortgage foreclosure or deed-in-lieu thereof, (iii) if any mortgagee its designee or a purchaser at a foreclosure or UCC sale (x) takes title to the Premises by foreclosure or deed-in-lieu of foreclosure with respect to any mortgage held by such mortgagee, or (y) becomes the owner and holder of all of the corporate shares in Countrywide by virtue of the foreclosure of any security interest held by such mortgagee therein or the exercise of any remedies such mortgagee may have against Countrywide under the Uniform Commercial Code or a transfer of corporate shares in lieu of foreclosure.

3.          This Agreement and the Purchase Option and ROFR contained herein shall terminate: (i) upon the termination of the Lease for any reason, or (ii) Nationwide assigns the Lease or sublets all or substantially all of the Premises to any person or entity other than a Related Party.

4.          In no event may this Agreement be assigned by Nationwide except to a Related Party; provided, however, in the event Nationwide duly and timely exercises the Purchase Option or ROFR pursuant to paragraphs 1 or 2 above, Nationwide may elect to take title in the name of a wholly-owned subsidiary of Nationwide or a Related Party.

5.          This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof. 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.

6.          Any notice, request, instruction or other document to be given under this Agreement to any parties hereunder shall be in writing and delivered personally, or by overnight courier delivery service, prepaid, to such parties at the addresses set forth above for such parties or to such other addresses as a party hereto may hereafter designate in writing to the other parties and shall be deemed delivered as of the date of delivery.

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7.          This Agreement shall be governed by, and interpreted and construed in accordance with, the laws of the State of Florida, excluding choice of law principles thereof.

8.          This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.

9.          This Agreement may not be assigned by any party without the prior written consent of the other parties except that Nationwide may assign this Agreement to a Related Party.

10.         Signatures hereon which are transmitted via facsimile or electronic mail shall be deemed original signatures.

11.         Capitalized terms not defined in this Agreement shall have the meanings given to them in the Lease.

12.         This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument.

[Signature page follows]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

COUNTRYWIDE HARDWARE, INC.
By:	/s/ Joseph A. Molino, Jr.
Name:	Joseph A. Molino, Jr.
Title:	Vice President
NATIONWIDE INDUSTRIES, INC.
By:	/s/ Christopher J. Kliefoth
Name:	Christopher J. Kliefoth
Title:	President

Signature Page to Purchase Option

EX-99.1

Exhibit 99.1

P&F INDUSTRIES REPORTS THE SALE OF NATIONWIDE INDUSTRIES, INC.

MELVILLE, N.Y., February 12, 2016 - P&F Industries, Inc. (NASDAQ: PFIN) (“P&F”) today announced the sale of Nationwide Industries Inc., (“Nationwide”) to a subsidiary of Argosy Private Equity, a division of Argosy Capital for approximately $22.2 million, subject to working capital adjustment.

Richard Horowitz, P&F’s Chairman of the Board of Directors, Chief Executive Officer and President of P&F stated, “The sale of Nationwide is a significant component of our strategic objective of transforming P&F into a more focused organization. Part of this business strategy is to center our position in the air tools and related accessories sector. While Nationwide has delivered many years of earnings contributing to P&F’s overall success, this transaction is another step toward enabling P&F to move forward on its strategy, as we have divested our other diversified business units over the last several years.” Mr. Horowitz added, “The net proceeds will be used to pay down our bank borrowings. Lastly, I wish to point out that the staff at Nationwide is hardworking, loyal employees, who always put Nationwide, P&F as well as our shareholders first. However, we believe this is the right decision at the right time to enable P&F to grow in a more focused and integrated manner.”

Mr. Horowitz concluded his remarks by noting, “Daroth Capital Advisors acted as financial advisor to P&F throughout this arduous process. Many thanks go to Peter Rothschild, President of Daroth and to his team. Their efforts contributed greatly to the success of this strategic transaction.”

About P&F Industries, Inc.

P&F Industries, Inc., through its wholly owned subsidiaries, is a leading manufacturer and importer of air-powered tools and accessories sold principally to the retail, industrial and automotive markets. P&F’s products are sold under its own trademarks, as well as under the private labels of major manufacturers and retailers.

About Daroth Capital Advisors LLC

Daroth provides a full array of financial advisory services to companies, financial sponsors and institutional investors, including advice regarding M&A transactions, financings, and strategic planning. Daroth is a member of FINRA and SIPC, and is registered with the SEC as a broker-dealer (www.daroth.com). For more information regarding this transaction, please contact Peter Rothschild at (212) 687-2500.

Safe Harbor Statement.

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, automotive, housing and other markets in which the Company operates, the impact of competition, product demand, supply chain pricing, the Company’s debt and debt service requirements and those other risks and uncertainties described in the Company’s most recent Annual Report on Form 10-K, and its other reports and statements filed by the Company with the Securities and Exchange Commission. These risks could cause the Company’s actual results in future periods 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.

Joseph A. Molino, Jr.

Chief Financial and Chief Operating Officer

631-694-9800

www.pfina.com