Exhibit 10.1

 

PURCHASE AGREEMENT

 

This PURCHASE AGREEMENT (this "Agreement") is made and entered into as of
October 14, 2014 by and between P&F Industries Inc., a Delaware corporation (the
"Company"), and Timothy J. Stabosz, an individual (the "Seller").

 

WHEREAS, Seller directly owns shares of the issued and outstanding common stock,
par value $1.00 per share, of the Company ("Company Shares"); and

 

WHEREAS, Seller desires to sell, and the Company desires to purchase, free and
clear of any and all Liens (as defined herein) 208,325 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; ClOSINGS

 

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, 208,325 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").

 

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 the Purchased Shares, the Company shall
pay to Seller a price per Purchased Share of $7.60 for an aggregate price of
$1,583,270 (the "Purchase Price").

 

Section 1.3     Expenses. Except as expressly set forth in this Agreement, 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.

 

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) no condition existing on the Closing
Date which would prevent the Company from drawing funds under the Loan and
Security Agreement, dated as of October 25, 2010, among the Company, certain of
the Company’s subsidiaries, Capital One Leverage Finance Corporation, as agent,
and the financial institutions party thereto, 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 thereby 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; and

 

(b)     Prior to the Closing, Seller shall deliver or cause to be delivered to
the Company all of the 208,325 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.

 

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.

 

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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
any of the Seller or his Affiliates, successors or assigns (collectively, the
"Seller Parties") or (ii) accusing or implying that any Seller Party 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 any 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)     The 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), the 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)     Upon execution of this Agreement, the Company shall issue a press
release (in substantially the form attached hereto as Exhibit A). Without
limitation of the Company’s rights under the last sentence of Section 2.2(a)
hereof, no party hereto nor any of its respective Affiliates shall issue any
press release or make any public statement relating to the transactions
contemplated hereby (including, without limitation, any statement to any
governmental or regulatory agency or accrediting body) that is inconsistent
with, or are otherwise contrary to, the statements in the press release.

 

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(b)     Promptly following the date hereof, Seller will cause to be filed with
the Securities and Exchange Commission an amendment to its Schedule 13D relating
to the Company Shares and prior to filing will provide the Company and its
counsel a reasonably opportunity to review and comment upon such amendment.

 

Section 2.4     Confidentiality. Seller shall not disclose and shall maintain
the confidentiality of (and shall cause his Affiliates and employees 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 they respectively employ to avoid unauthorized
disclosure, publication or dissemination of their own information of a similar
nature, but in no case less than reasonable care. In the event that Seller (or
any Affiliate or employee) 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 reasonable efforts to
obtain reliable assurance that confidential treatment is accorded the
Confidential Information so disclosed.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF Seller

 

Seller hereby makes the following representations and warranties to the Company:

 

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 thereunder 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 the Seller enforceable against him 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.

 

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Section 3.3     Ownership. Seller is the sole record and beneficial owner of the
Purchased Shares, free and clear of any and all Liens. Seller has full power and
authority to transfer full legal ownership of its respective Purchased Shares 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.
The entire direct or indirect beneficial ownership of Seller or any of his
Affiliates in the Company is 208,325 Company Shares.

 

Section 3.4     Good Title Conveyed. Any stock certificates and stock powers
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
Purchased Shares, 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 such
party that could impair the ability of Seller to perform its obligations
hereunder or to consummate the transactions contemplated hereby.

 

Section 3.6     Other Acknowledgments.

 

(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
or otherwise materially adverse to Seller's interests. Seller acknowledges and
agrees that the Company shall have no obligation to disclose to it or him any
such information and hereby waives and releases, to the fullest extent permitted
by law, any and all claims and causes of action it has or may have against the
Company and their respective 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 hereunder.

 

(b)     Seller further represents that it or 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 has,
independently and without reliance upon the Company, made his own analysis and
decision to sell the Purchased Shares. 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, 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. Seller acknowledges that the Company or any of
their respective directors, officers, subsidiaries or Affiliates has not made or
makes any representations or warranties, whether express or implied, of any kind
except as expressly set forth in this Agreement.

 

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(c)     Seller is an "accredited investor" as defined in Rule 501 promulgated
under the Securities Act. The sale of the Purchased Shares 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.

 

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 it 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 any party
by investigation, each party shall have the right to fully rely on the
representations, warranties, covenants and agreements of the other parties
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, no party has made any representation warranty, covenant or
agreement.

 

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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 #: (631) 775-4223

 

If to Seller:

 

[Seller Home Address]

 

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.

 

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Section 5.5     No Waiver. Any waiver by any party hereto of a breach of any
provision of this Agreement shall not 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 any party hereunder) may not be assigned by any party without the
prior written consent of the other parties 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, among 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.

 

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.

 

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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 among 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.

 

[SIGNATURE PAGES FOLLOW]

 

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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., Vice President       DWAC Instructions:       American Stock
Transfer & Trust Company,
LLC       Account   Number:       /s/ Timothy J. Stabosz   TIMOTHY J. STABOSZ