EXHIBIT 10.1

 

FIFTH AMENDMENT

TO LOAN AND SECURITY AGREEMENT

 

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT dated as of July 1, 2014 (this
“Amendment”), is among P&F INDUSTRIES, INC., a Delaware corporation (“P&F”),
FLORIDA PNEUMATIC MANUFACTURING CORPORATION, a Florida corporation (“Florida
Pneumatic”), HY-TECH MACHINE, INC., a Delaware corporation (“Hy-Tech”), and
NATIONWIDE INDUSTRIES, INC., a Florida corporation (“Nationwide”, and together
with P&F, Florida Pneumatic and Hy-Tech, 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”), 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”), CAPITAL ONE BUSINESS CREDIT CORP. (f/k/a Capital One Leverage
Finance Corp.), as agent for the Lenders (“Agent”), and each of the Lenders
party hereto.

 

RECITALS:

 

A.                 Borrowers, Guarantors, the lenders from time to time party
thereto (collectively, the “Lenders”) and Agent have entered into a Loan and
Security Agreement dated as of October 25, 2010 (as amended by the First
Amendment to Loan and Security Agreement dated as of September 21, 2011, the
Second Amendment to Loan and Security Agreement dated as of November 21, 2011,
the Third Amendment to Loan and Security Agreement dated as of December 19, 2012
and the Fourth Amendment to Loan and Security Agreement dated May 22, 2013, the
“Loan Agreement”). Capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to them in the Loan Agreement.

 

B.                 Borrowers have requested that Agent and the Lenders amend
certain provisions of the Loan Agreement and to permit certain transactions.

 

C.                 Subject to the terms and conditions set forth below, Agent
and the Lenders party hereto are willing to amend the Loan Agreement.

 

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

 

Section 1. AMENDMENTS. 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 amended as follows:

 

(a)                The following new definition is inserted in Section 1.1 in
the appropriate alphabetical position therein:

 

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.

 

Exhaust Transactions: in connection with the Exhaust Acquisition (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, (iv) the potential incurrence of indemnity and other
potential liabilities by Merger Sub and/or Florida Pneumatic Manufacturing
Corporation under and as a party to the Merger Agreement and (iv) subsequent to
such merger, the conversion of Exhaust Technologies, Inc. into a Delaware
corporation.

 

 

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

 

 

 

 

(b)               The existing definition of “Restricted Investment,” in Section
1.1 is deleted in its entirety and the following definition is inserted in lieu
thereof:

 

Restricted Investment: any Investment by an Obligor or Subsidiary, other than
(a) Investments in Subsidiaries to the extent existing on the Closing Date or
made in connection with the Exhaust Acquisition; (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, Permitted Acquisitions and the Exhaust Acquisition; and
(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.

 

 

(c)                The existing Section 10.1.9 of the Loan Agreement is deleted
in its entirety and the following is inserted in lieu thereof:

 

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

 

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 2. CONSENT. The Agent and Lenders hereby consent to (i) the Exhaust
Acquisition and Exhaust Transactions, subject to fulfillment of the conditions
set forth in Section 3 hereof and (ii) the sale by Exhaust Technologies, Inc. of
Accounts owing from The Stanley Works to Citibank, N.A. pursuant to the Supplier
Agreement dated as of March 11, 2005 between Exhaust Technologies, Inc. and
Citibank, N.A. and to the Lien of Citibank, N.A. on such Accounts owing from The
Stanley Works, provided that such Supplier Agreement and Lien of Citibank, N.A.
are terminated within 60 days of the date hereof (or such later date as approved
by the Agent). For the avoidance of doubt, nothing herein is intended to be a
waiver of the requirements of Section 10.1.9, as amended hereby, and Borrowers
shall comply with the provisions thereof within the time period set forth
therein.

 

Section 3. CONDITIONS PRECEDENT. The parties hereto agree that the amendments
set forth in Section 1 and the consent set forth in Section 2 above are subject
to the satisfaction of each of the following conditions precedent:

 

(a)Documentation. Agent shall have received (i) a counterpart of this Amendment,
duly executed and delivered by Borrowers, Guarantors and all of the Lenders then
party to the Loan Agreement, and (ii) such other documents and certificates as
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.

 

 

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

 

 

 

 

(b)Transaction Documents. Agent shall have received copies of the Merger
Agreement and any other agreements and documents relating to the Exhaust
Transaction, as reasonably requested by Agent, which agreements and documents
shall be reasonably acceptable to the Agent (with copies of the final, executed
agreements and documents to be provided thereafter when completed).

(c)Transaction Consummation. The Exhaust Acquisition shall be consummated in
accordance with the Merger Agreement without any amendments, modifications,
waivers or consents thereto that are not reasonably acceptable to the Agent.

(d)Other Conditions. (i) 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; (ii )if requested by Agent, the Borrower Agent shall have provided
to Agent 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, (iii) on a pro forma basis giving effect to the Acquisition, the
Borrowers shall be in compliance with the covenants set forth in Section 10.3,
(iv) Borrower Agent shall have delivered to Agent at least one Business Day
prior to the date on which the Exhaust 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,
including the pro forma calculations of the financial covenants, and all
supporting documentation and other financial information that Agent may
reasonably request and (v) none of the Equipment so purchased or otherwise
acquired shall be included in the Equipment Formula Amount and none of the
Accounts or Inventory so purchased or otherwise acquired 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.

 

Section 4. REPRESENTATIONS AND WARRANTIES.

 

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

 

(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) Since December 31, 2013, no act, event, condition or circumstance has
occurred or arisen which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.

 

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

 

 

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

 

 

(b) In order to induce Agent and the Lenders to enter into this Amendment, each
Borrower and each Guarantor represents and warrants to Agent and the Lenders
that this Amendment has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation.

 

Section 5. 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).

 

(b) Fees and Expenses. Borrowers shall pay on demand all reasonable costs and
expenses of Agent 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 Agent.

 

(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 any number of counterparts,
each of which when executed and delivered shall be deemed to be an original, and
all of which when taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page of this Amendment by
facsimile or electronic transmission (including .pdf file) shall be effective as
delivery of a manually executed counterpart hereof.

 

(f) 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.

 

(g) Enforceability. 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.

 

 

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

 

 

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

 

 

 

The following parties have caused this Fifth Amendment to 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.

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.

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., its General Partner

 

By:  /s/ Joseph A. Molino, Jr.

Name: Joseph A. Molino, Jr.

Title: Vice President

 

 

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

Signature Page

 

 

 

 

 

 

 

 

 

AGENT AND LENDERS:

 

CAPITAL ONE BUSINESS CREDIT CORP. (f/k/a

Capital One Leverage Finance Corp.), as Agent and Lender

 

By:  /s/ Michael Lockery

Name: Michael Lockery

Title: Director

 

 

 

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

Signature Page