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): April 17, 2020

P & F INDUSTRIES, INC.

(Exact Name of Registrant as Specified in Charter)

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:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 1.01. Entry into a Material Definitive Agreement

On April 17, 2020, P&F Industries, Inc. (the “Company”) executed a promissory note (the “Note”) in favor of BNB Bank (the “Lender”) evidencing an unsecured loan in the aggregate principal amount of $2,929,200 (the “PPP Loan”) which was guaranteed by the U.S. Small Business Administration (“SBA”). The Loan was made pursuant to the Paycheck Protection Program (the “PPP”) established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which was enacted on March 27, 2020 and provides for loans to qualifying businesses for amounts up to 2.5 times the average monthly payroll expenses of qualifying business. All the funds under the PPP Loan were disbursed to the Company on April 20, 2020.

The Note provides for a fixed interest rate of one percent per year with a term of two years from the date of the first disbursement of the PPP Loan. No payments are due on the PPP Loan for six-month period (the “Deferment Period”) beginning from the date of first disbursement of the PPP Loan, however, interest will continue to accrue during the Deferment Period. At the end of the Deferment Period, the Company shall pay all accrued and unpaid interest outstanding that is not subject to forgiveness (discussed below). The unpaid, unforgiven principal balance of the Note outstanding at the end of the Deferment Period shall be payable in eighteen (18) equal consecutive installments of principal and interest payable (based upon an 18 month amortization schedule) commencing on the seven-month anniversary of the date of the Note and ending on the date of maturity of the PPP Loan. The PPP Loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties, subject to certain notice requirements.

Under the PPP and pursuant to the Note, the Company can apply for and be granted forgiveness of a portion of the PPP Loan in an amount equal to the sum of costs incurred during the eight-week period (the “Measurement Period”) beginning on the date of the first disbursement of the PPP Loan including: payroll costs; any payment of interest on a covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation); any payment on a covered rent obligation; and any covered utility payment, in each case calculated in accordance with the terms of the CARES Act. The amount of loan forgiveness shall be calculated (and may be reduced) in accordance with the requirements of the PPP, including the provisions of Section 1106 of the CARES Act, which among other things includes provisions that reduce forgiveness based on the termination of employees or reduction of salaries during the Measurement Period. Additionally, not more than 25% of the amount forgiven can be attributable to non-payroll costs. The terms of any forgiveness may also be subject to further regulations and guidelines the SBA may adopt. The Company will carefully monitor all qualifying expenses and other requirements necessary to properly maximize loan forgiveness; however, no assurance can be provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.

The Note also provides for customary representations and warranties and default provisions.

Effective April 17, 2020, the Company, its subsidiaries Florida Pneumatic Manufacturing Corporation (“Florida Pneumatic”) and Hy-Tech (together with the Company and Florida Pneumatic, collectively, “Borrowers”) and the Registrant’s subsidiaries Jiffy Air Tool, Inc. (“Jiffy”), ATSCO Holdings Corp. (“ATSCO”), Bonanza Properties Corp. (“Properties”), Continental Tool Group, Inc. (“Continental Tool”), Countrywide Hardware, Inc. (“Countrywide”), Embassy Industries, Inc. (“Embassy”), Exhaust Technologies, Inc. (“Exhaust”) and Hy-Tech Illinois, Inc. (formerly known as DaVinci Purchase Corp., and together with Jiffy, ATSCO, Properties, Continental Tool, Countrywide, Embassy and Exhaust, collectively, “Guarantors”) entered into a Payroll Protection Program Consent (the “Consent”) with Capital One, National Association, as agent (the “Agent”) for the lenders (the “Lenders”) from time to time party to the Loan Agreement (as defined below). The Consent relates to the Second Amended and Restated Loan and Security Agreement, dated as of April 5, 2017, as amended from time to time (the “Loan Agreement”), among the Borrowers, the Guarantors, the Agent and the Lenders.

The Consent allowed the Company to accept the PPP Loan and agrees that such PPP Loan shall not be deemed 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).The Consent also provides that the Company may establish and maintain an account with BNB to be used exclusively for receiving and disbursing the proceeds of the PPP Loan. The Consent also contains certain related covenants, representations and warranties of the Borrowers and Guarantors.

The foregoing descriptions of the Note and the Consent do not purport to be complete and are qualified in their entirety by reference to the full text of the Note and the Consent, attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.

The information contained in Item 1.01 above is hereby incorporated by reference into this Item 2.03.

On April 23, 2020, the Company issued a press release (the “Press Release”) announcing the PPP Loan. A copy of the Press Release is furnished as Exhibit 99.1 hereto

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.

Exhibit 10.1

NOTE

In return for the Loan, Borrower promises to pay to the order of Lender the amount of Two Million Nine Hundred Twenty-Nine Thousand Two Hundred and 00/100 Dollars, plus interest on the unpaid principal balance, and all other amounts required by this Note.

“Loan” means the loan evidenced by this Note.

“Loan Documents” means the documents related to this loan signed by Borrower, including the Application for the Loan.

“SBA” means the Small Business Administration, an Agency of the United State of America.

Borrower must make all payments at the place Lender designates. The payment terms for this Note are:

Initial Deferment Period: No payments are due on this loan for 6 months from the date of first disbursement of this loan. Interest will continue to accrue during the deferment period.

Loan Forgiveness: Borrower may apply to Lender for forgiveness of the amount due on this loan in an amount equal to the sum of the following costs incurred by Borrower during the 8-week period beginning on the date of first disbursement of this loan:

The amount of loan forgiveness shall be calculated (and may be reduced) in accordance with the requirements of the Paycheck Protection Program, including the provisions of Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (P.L. 116-136). Not more than 25% of the amount forgiven can be attributable to non-payroll costs. If the Borrower has received an EIDL advance in any amount, that amount shall be subtracted from the loan forgiveness amount.

Maturity: This Note will mature two years from date of first disbursement of this loan.

Repayment Terms: The interest rate on this Note is one percent per year. The interest rate is fixed and will not be changed during the life of the loan.

Other Repayment Terms: At the end of the 6-month deferment period the Borrower shall pay all accrued and unpaid interest outstanding that is not subject to forgiveness by the SBA. The unpaid principal balance of this Note outstanding at the end of the deferment period shall be payable in eighteen (18) equal consecutive installments of principal and interest payable (based upon an 18 month amortization schedule) commencing on the 7 month anniversary of the Note date to and including the Maturity date.

Lender will apply each installment payment first to pay interest accrued to the day Lender received the payment, then to bring principal current, and will apply any remaining balance to reduce principal.

Loan Prepayment: Notwithstanding any provision in this Note to the contrary:

Borrower may prepay this Note at any time without penalty. Borrower may prepay 20 percent or less of the unpaid principal balance at any time without notice. If Borrower prepays more than 20 percent and the Loan has been sold on the secondary market, Borrower must: a. Give Lender written notice; b. Pay all accrued interest; and c. If the prepayment is received less than 21 days from the date Lender received the notice, pay an amount equal to 21 days interest from the date lender received the notice, less any interest accrued during the 21 days and paid under b. of this paragraph. If Borrower does not prepay within 30 days from the date Lender received the notice, Borrower must give Lender a new notice.

Non-Recourse. Lender and SBA shall have no recourse against any individual shareholder, member or partner of Borrower for non-payment of the loan, except to the extent that such shareholder, member or partner uses the loan proceeds for an unauthorized purpose.

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Borrower is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower:

A. Fails to do anything required by this Note and other Loan Documents;

B. Defaults on any other loan with Lender;

C. Does not disclose, or anyone acting on their behalf does not disclose, any material fact to Lender or SBA;

D. Makes, or anyone acting on their behalf makes, a materially false or misleading representation to Lender or SBA;

E. Defaults on any loan or agreement with another creditor, if Lender believes the default may materially affect Borrower’s ability to pay this Note;

F. Fails to pay any taxes when due;

G. Becomes the subject of a proceeding under any bankruptcy or insolvency law;

H. Has a receiver or liquidator appointed for any part of their business or property;

I. Makes an assignment for the benefit of creditors;

J. Has any adverse change in financial condition or business operation that Lender believes may materially affect Borrower’s ability to pay this Note;

K. Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without Lender’s prior written consent; or

L. Becomes the subject of a civil or criminal action that Lender believes may materially affect Borrower’s ability to pay this Note.

Without notice or demand and without giving up any of its rights, Lender may:

A. Require immediate payment of all amounts owing under this Note;

B. Collect all amounts owing from any Borrower;

C. File suit and obtain judgment; or

D. Exercise any rights of set off.

Without notice and without Borrower’s consent, Lender may:

A. Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other Loan Document. Among other things, the expenses may include payments and reasonable attorney’s fees and costs. If Lender incurs such expenses, it may demand immediate repayment from Borrower or add the expenses to the principal balance;

B. Release anyone obligated to pay this Note; and

C. Take any action necessary to collect amounts owing on this Note.

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When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.

Under this Note, Borrower include the successors of each, and Lender includes its successors and assigns.

A. All individuals and entities signing this Note are jointly and severally liable.

B. Borrower waives all suretyship defenses.

C. Borrower must sign all documents necessary at any time to comply with the Loan Documents.

D. Lender may exercise any of its rights separately or together, as many times and in any order it chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them.

E. Borrower may not use an oral statement of Lender or SBA to contradict or alter the written terms of this Note.

F. If any part of this Note is unenforceable, all other parts remain in effect.

G. To the extent allowed by law, Borrower waives all demands and notices in connection with this Note, including presentment, demand, protest, and notice of dishonor.

This Note may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. One or more parties may transmit his/her signature on this Note via telecopy, facsimile or other form of electronic transmission, and that such signature shall be binding and have the same effect as a manual signature upon the original. It is agreed that in any legal proceeding, a copy of this Note kept in Lender’s course of business may be admitted into evidence as an original.

The Borrower warrants and represents that:

1. This Loan is hereby made pursuant to the SBA Paycheck Protection Program;

2. Borrower was in operation on February 15, 2020;

3.  Borrower had employees for whom it paid salaries and payroll taxes or paid independent contractors, as reported on a Form 1099-MISC;

4. the current economic uncertainty makes this loan request necessary to support the ongoing operations of the Borrower;

5. the funds will be used to retain workers and maintain payroll (as defined in the CARES Act and

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SBA’s IFR), costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums, make mortgage interest payments (but not mortgage prepayments or principal payments), rent payments, utility payments, interest payments on any other debt obligations that were incurred before February 15, 2020 and/or refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020;

6. Borrower understandings that if the funds are knowingly used for unauthorized purposes, the federal government may hold the Borrower legally liable such as for charges of fraud;

7. documentation verifying the number of full-time equivalent employees on payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight-week period following this loan will be provided to the Lender by the Borrower;

8. during the period beginning on February 15, 2020 and ending on December 31, 2020, the Borrower has not and will not receive another loan under the Payroll Protection Program;

9. the information provided in the application and the information provided in all supporting documents and forms as provided to the Lender was and remains true and accurate in all material respects;

10. Borrower understands that knowingly making a false statement to obtain a guaranteed loan from the US Small Business Administration (“SBA”) is punishable under the law, including under 18 USC 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine of not more than

$5,000; and, if submitted to a federally insured institution, under 18 USC 1014 by imprisonment of not more than thirty years and/or a fine of not more than $1,000,000, and Borrower understands that if the Borrower’s shareholders, members, or partners use the Loan proceeds for unauthorized purposes, SBA will have recourse against the shareholder(s), member(s), or partner(s) for the unauthorized use;

11. Borrower acknowledges that the Lender will confirm the eligible loan amount using tax documents the Borrower has submitted;

12. the tax documents are identical to those submitted to the Internal Revenue Service; and

13. Borrower understands, acknowledges, and agrees that the Lender can share the tax information with SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.

<Signatures on the next page>

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By signing below, each individual or entity becomes obligated under this Note as Borrower.

When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.

The execution and delivery of this Note has been authorized by all necessary action of the governing body of the Borrower.

By accepting and electronically signing this document, the undersigned agrees that the electronic signature or copy of a signed signature has the same legal validity and effect as an original handwritten signature. This Agreement and any and all other documents relative to the same shall be treated as transferable record under the ESIGN Act, Uniform Electronic Transactions Act and Article 3 of the Uniform Commercial Code.

P&F Industries, Inc

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

Printed Name: Joseph Molino

Title: Vice President                                             

Date Signed: 4/17/2020 | 4:57 PM EDT             

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2200 Montauk Highway P.O. Box 3005 Bridgehampton, NY 11932 631.537.1000   www.bnbbank.com

SBA Paycheck Protection Program Note Addendum

By accepting and using the Paycheck Protection Program Loan proceeds the Borrower agrees to and acknowledges receipt of the following terms and conditions:

USA Patriot Act Notice: To help the U.S. government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each Applicant (“you”, “your”) that opens a loan account. This means that when an Applicant (defined below) opens a loan account, BNB BANK (“Bank”, “we”, “us”) will ask for the business name, business address, taxpayer identifying number and other information that will allow us to identify the Applicant, such as organizational documents. For some business entities we may need to ask for identifying information and documentation relating to certain individuals associated with the business or organization, including such individual’s name, address, date of birth and other information that will help us identify such person. For example, we may also ask to see such person’s driver’s license or other official documents to identify such person.

ECOA Notice: The federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract), because all or part of the applicant’s income derives from any public assistance program, or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The federal agency that administers compliance with this law concerning this creditor is: Federal Reserve Consumer Help Center, P.O. Box 1200 Minneapolis, MN 55480.

New York Human Rights Law Notice: The New York Human Rights Law also prohibits creditors from discriminating in the granting, withholding, extending or renewing, or in the fixing of the rates, terms or conditions of, any form of credit, on the basis of race, creed, color, national origin, sexual orientation, military status, age, sex, marital status, disability, or familial status.

Ownership of Applicant. If one or more Applicants is a corporation, limited liability company or any other type of business entity (each, an “Entity”), Applicant agrees to provide Bank with a certification of beneficial owners in form and substance acceptable to Bank for each such Entity that is executed by the principals of each Entity in connection with this loan application and any time an updated version may be requested by Bank from time to time (“Certification of Beneficial Owners”). The Applicant represents and warrants, as of the date of this loan application and as of the date on which each updated Certification of Beneficial Owners is provided to Bank, that the information in the Certification of Beneficial Owners is true, complete and correct. You agree to provide updated versions of the Certification of Beneficial Owners promptly following each change in the beneficial ownership or the controlling party of Applicant. Further, from time to time Bank may be required to verify the continued accuracy of the information provided in the Certification of Beneficial Owners. The Applicant agrees to provide written confirmation of the accuracy of the information in a then current Certification of Beneficial Owners or deliver a new Certification of Beneficial Owners in form and substance acceptable to Bank when requested by Bank.

The Applicant further agrees to provide such other information and documentation as may reasonably be requested by Bank from time to time for purposes of compliance by the Bank with applicable laws and regulations (including, without limitation, the USA Patriot Act and anti-money laundering rules and regulations) and any policy or procedure implemented by Bank to comply therewith. Bank is authorized to make all inquiries it deems necessary to verify accuracy of the information submitted in your loan application and to determine the Applicant’s creditworthiness, and to share any information provided to Bank by or about any Applicant(s) with any third party that performs services for Bank in connection with this application or the loan or to whom this application or any loan to the Applicant may be transferred.

Deposit Account; Sensitive Enterprises. Applicant understands and agrees that, if the loan application is approved, it will be required to establish and maintain a deposit account at the Bank during the term of the loan. The Bank's policy requires that Applicants whose business includes participating in certain sensitive enterprises, such as check cashing, money transfer, gambling and marijuana/cannabis production and sales must be evaluated carefully before a deposit or loan account is established.

Notice for Denial: If you have applied for credit and your request is denied you have the right to a written statement of the specific reasons for denial. To obtain the statement, you must write to us within 60 days from the date you are notified of our decision at: 898 Veterans Memorial Highway, Suite 560 Hauppauge, NY 11788] or call us at: (631) 537-1000. We will send you a written statement of the reason(s) for denial within 30 days of receiving your request for the statement.

Indemnity. You agree that the Bank shall be entitled to rely on the accuracy and completeness of all representations and all the information provided by you and you, on behalf of the Applicant, hereby indemnify the Bank, its affiliates and their respective directors, officers, employees and agents (each an "Indemnified Party") from, and hold each Indemnified Party harmless from and against, all actions, causes of action, claims, damages, liabilities and expenses (including reasonable attorneys' fees) of any nature or kind (including those by third parties) arising out of, or related to, any violations or inaccuracies of the undertakings made pursuant to these Terms and Conditions.

Bank Property. You agree that the loan application, including all materials submitted by Applicant in connection with it, is the property of the Bank, whether or not the application is approved or a loan is originated.

Agreement for Electronic Delivery and Signature (“Esign Agreement”). Borrower hereby agrees to receive information from and provide information to Bank electronically pursuant to the terms and conditions of this E-Sign Agreement. This E-Sign Agreement contains important information and disclosures about your rights and obligations in connection with your application for a loan from Bank. If you choose not to agree to the terms and conditions of this E-Sign Agreement, you should not utilize the proceeds of your loan and advise us accordingly. Please read and retain a copy of this E-Sign Agreement for your records.

By providing telephone number(s) to the Bank, our affiliates or agents, whether in the application or separately at a later time, you authorize the Bank, and/or our affiliates and agents to contact you regarding your loan account(s) with us at the telephone numbers provided using any means, including but not limited to placing calls using an automated dialing system to cell phone or VoIP numbers or leaving pre-recorded messages or sending text messages. You agree that you may incur charges for any such calls or text messages. You further agree that any phone call with us may be monitored or recorded

by us for quality control and other purposes. Also, by providing an e-mail address, Borrower consents and agrees to receive electronic mail from the Bank, our affiliates and agents.

Electronic Agreement - By accepting and using the Paycheck Protection Program Loan proceeds the Borrower:

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.

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]

Exhibit 99.1

P&F INDUSTRIES, INC. CLOSES ON PAYCHECK PROTECTION

PROGRAM LOAN UNDER THE CARES ACT

MELVILLE, N.Y., April 23, 2020 P&F Industries, Inc. (NASDAQ:PFIN), today announced that on April 20, 2020 it closed on a $2,929,200 Payroll Protection Program (PPP) loan, as provided pursuant to the Coronavirus Aid, Relief, and Economic Security Act ( CARES Act), signed into law on March 27, 2020. PPP loans, which are unsecured and guaranteed by the U.S. Small Business Administration (SBA), were designed to create economic stimulus by providing additional operating capital to small businesses, such as P&F, in the United States for permitted uses for an eight-week period following receipt of funds.

The loan, which was obtained from BNB Bank under a promissory note dated April 17, 2020, provides for a fixed rate of one percent per year with a maturity date of two years from the April 20, 2020 receipt of the funds. No payments of principal or interest are due during the initial six-month period. Beginning in the seventh month, the Company is required to make monthly payments of principal and interest until maturity, for any portion of the loan that is not forgiven. Up to 100% of the loan can be forgiven based on the amount of the funds used during the first eight-week period after receiving the funds towards payroll, rent, and certain other permitted operating expenses calculated pursuant to the CARES Act, although no assurance can be provided that P&F will obtain forgiveness of the loan in whole or in part.

Richard Horowitz, P&F's Chairman, President and Chief Executive Officer, stated “We are grateful for this stimulus in response to the COVID-19 pandemic. Access to this form of funding will help us continue to execute our plans and maintain our workforce while we manage through this crisis, and continue to manufacture and distribute our products to our customers, many of which are critical to the ongoing operation of many essential and life sustaining industries.”

About P&F Industries, Inc.

P&F Industries, Inc., through its wholly owned subsidiaries, is a leading manufacturer and importer of power tools and accessories sold principally to the aerospace, industrial, automotive and retail markets. P&F’s products are sold under its own trade names, as well as under the private labels of major manufacturers and retailers.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 (the Reform Act) provides a safe harbor for forward-looking statements made by or on behalf of P&F Industries, Inc. and subsidiaries (P&F, or the Company). P&F and its representatives may, from time to time, make written or verbal forward-looking statements, including statements contained in the Company’s filings with the Securities and Exchange Commission and in its reports to shareholders. Generally, the inclusion of the words believe, expect, intend, estimate, anticipate, will, may, would, could, should and their opposites and similar expressions identify statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections. Any forward-looking statements contained herein, including those related to the Company’s future performance, are based upon the Company’s historical performance and on current plans, estimates and expectations. All forward-looking statements involve risks and uncertainties. These risks and uncertainties could cause the Company’s actual results for all or part the 2020 fiscal year and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company for a number of reasons including, but not limited to:

and those other risks and uncertainties described in the Company’s most recent Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, and its other reports and statements filed by the Company with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made. 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. The Company cautions you against relying on any of these forward-looking statements.

P&F Industries, Inc.

Joseph A. Molino, Jr.

Chief Operating Officer

631-694-9800

www.pfina.com