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.


 


 





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(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:


 


10.1.9Future
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