Exhibit 10.2

 

April 17, 2020

 

P&F INDUSTRIES, INC., as Borrower Agent

445 Broadhollow Road
Suite 100
Melville, New York 11747

Attn: Joseph A. Molino, Jr.

 

Payroll Protection Program Consent

 

Ladies and Gentlemen:

 

Reference is made to that certain Second Amended and Restated Loan and Security
Agreement, dated as of April 5, 2017 (as amended, restated, supplemented, or
otherwise modified from time to time, the “Loan Agreement”), 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 together with P&F and
Florida Pneumatic, collectively, the “Borrowers” and each, a “Borrower”), JIFFY
AIR TOOL, INC., a Delaware corporation (“Jiffy”), ATSCO HOLDINGS CORP., a
Delaware corporation (“ATSCO”), BONANZA PROPERTIES CORP., a Delaware corporation
(“Properties”), CONTINENTAL TOOL GROUP, INC., a Delaware corporation
(“Continental”), COUNTRYWIDE HARDWARE, INC., a Delaware corporation
(“Countrywide”), EMBASSY INDUSTRIES, INC., a New York corporation (“Embassy”),
EXHAUST TECHNOLOGIES, INC., a Delaware corporation, (“Exhaust”), and HY-TECH
ILLINOIS, INC., a Delaware corporation formerly known as DaVinci Purchase Corp.
(“HTI”; and together with Jiffy, ATSCO, Properties, Continental, Countrywide,
Embassy and Exhaust, collectively, “Guarantors” and each, a “Guarantor”), the
financial institutions party from time to time to the Loan Agreement as
“Lenders” (collectively, “Lenders”), and CAPITAL ONE, NATIONAL ASSOCIATION, a
national banking association, as agent for Lenders (“Agent”). Capitalized terms
used herein but not otherwise defined herein shall have the meanings attributed
thereto in the Loan Agreement.

 

Borrowers have advised Agent and Lenders that P&F intends to or has applied for
a loan pursuant to Section 1102 of the Coronavirus Aid, Relief, and Economic
Security Act (together with all regulations and guidance issued by any
Governmental Authority with respect thereto, and as in effect on the date
hereof, the “Payroll Protection Program”, and such loan the “PPP Loan”).

 

Subject to the terms and conditions set forth in this letter, Agent and Lenders
party hereto consent to P&F incurring the PPP Loan on an unsecured basis and
agrees that such PPP Loan shall be deemed not to constitute Debt under the Loan
Agreement for any purpose except to the extent such PPP Loan is outstanding from
and after the first anniversary of the date such PPP Loan is incurred (or such
later date as Agent shall otherwise agree in writing); provided, that Borrowers
and Guarantors (i) shall provide Agent with true, correct and complete copies of
the PPP Loan application and related loan documentation, (ii) use the proceeds
of the PPP Loan solely for allowable purposes (whether or not forgivable) under
the Payroll Protection Program, and (iii) promptly take all applicable actions,
not later than 45 days after the eight-week period immediately following receipt
of the PPP Loan proceeds, to apply for forgiveness of the PPP Loan in accordance
with the Payroll Protection Program (and provide documentation, and status, of
such forgiveness to Agent). The incurrence of the PPP Loan shall constitute a
representation on behalf of the Borrowers and Guarantors that (i) the PPP Loan
shall remain unsecured and shall not adversely affect any right, remedy or Lien
of Agent with respect to the Obligations under the Loan Agreement, and (ii)
except as has been obtained, no consent of any other person or entity
(including, without limitation, shareholders or creditors of any Borrower or
Guarantor) is required in connection with such incurrence of the PPP Loan.

 

 

 

 

Borrowers have further advised Agent that BNB Bank (“BNB”), the lender servicing
the PPP Loan, requires that P&F establish and maintain a deposit account at BNB
in connection with the PPP Loan (the “PPP Loan Account”). Notwithstanding
anything contained in the Loan Agreement, Agent and Lenders hereby consent to
the establishment and maintenance of the PPP Loan Account, provided that
Borrowers and Guarantors shall (a)  use the PPP Loan Account exclusively for
receiving and disbursing the proceeds of the PPP Loan, (b) not deposit (or have
deposited) into the PPP Loan Account monies from any other source, including,
without limitation, the proceeds of any Collateral, and (c) shall deliver to
Agent, promptly upon Agent’s request, a copy of the most recent account
statement received from BNB (or other documentation acceptable to Agent
evidencing the account balance and account activity) with respect to the PPP
Loan Account.

 

This letter agreement is limited solely to the specific matters listed above and
shall not be deemed to be a waiver of any Default or Event of Default or a
consent to or an amendment of any other provision of the Loan Agreement.
Borrower hereby represents and warrants that no Default or Event of Default has
occurred and is continuing as of the date hereof. All terms of the Loan
Agreement and the other Loan Documents, as modified hereby, remain in full force
and effect. Execution and delivery of an executed counterpart of this letter
agreement by facsimile transmission, electronic mail in pdf form or other
electronic signature shall be as effective as execution and delivery of a
manually executed counterpart hereof; provided, however, that upon request by
Agent the parties agree to promptly provide hand-signed original signatures
hereto.

 

[Signature page to follow]

 

 

 

 

This letter agreement shall not become effective unless and until it has been
accepted and agreed to in writing by Borrowers and Guarantors, which acceptance
and agreement shall be evidenced by Borrowers’ and Guarantors’ signing a copy of
this letter agreement in the space indicated below and returning the same to
Agent.

 

  Very truly yours,      

CAPITAL ONE, NATIONAL ASSOCIATION,

as Agent and Lender

          By:    /s/ Julianne Low      Name: Julianne Low   Title: Senior
Director

 

 

ACKNOWLEDGED AND AGREED:

 

BORROWERS:

 

P&F INDUSTRIES, INC.

FLORIDA PNEUMATIC MANUFACTURING

CORPORATION

HY-TECH MACHINE, INC.

 

 

By:         /s/ Joseph A. Molino, Jr.                        

Name: Joseph A. Molino, Jr.

Title: Vice President

 

GUARANTORS:

 

ATSCO HOLDINGS CORP.

JIFFY AIR TOOL, INC.,

BONANZA PROPERTIES CORP.,

CONTINENTAL TOOL GROUP, INC.

COUNTRYWIDE HARDWARE, INC.

EMBASSY INDUSTRIES, INC.

EXHAUST TECHNOLOGIES, INC.

HY-TECH ILLINOIS, INC.

 

 

By:         /s/ Joseph A. Molino, Jr.                        

Name: Joseph A. Molino, Jr.

Title: Vice President

 

 

[Payroll Protection Program Consent]