|
|
Item 5.02
|
Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
|
On January 30, 2018,
P & F Industries, Inc. (the “Company”) and Joseph A. Molino, Jr. (“Mr. Molino”), the Company’s
Vice President, Chief Operating Officer and Chief Financial Officer, entered into an Executive Employment Agreement (the “Employment
Agreement”), effective as of January 1, 2018. The prior executive employment agreement between the Company and Mr. Molino
expired by its terms on December 31, 2017.
The Employment Agreement
provides for Mr. Molino to serve as the Company’s Vice President, Chief Operating Officer and Chief Financial Officer; provided,
that prior to a Change in Control (as defined in the Employment Agreement), the Company may in its sole discretion remove any or
all of the Executive’s titles (and the related responsibilities) other than Chief Operating Officer. The term of the Employment
Agreement expires on December 31, 2020, unless sooner terminated pursuant to the provisions of the Employment Agreement. Pursuant
to the Employment Agreement, Mr. Molino will receive a minimum annual base salary of $400,000. Mr. Molino’s base salary will
be reviewed annually by the Board of Directors of the Company (the “Board”) (or a committee thereof) and may be increased,
but not decreased, from time to time. Mr. Molino will be eligible for an annual incentive payment in accordance with the terms
and conditions of the Company’s Bonus Plan (as defined in the Employment Agreement) with performance goals to be set by the
Compensation Committee of the Board (the “Compensation Committee”) in its sole discretion, with a target of 35% of
his then-current base salary, and a maximum bonus based on exceeding performance targets as established by the Compensation Committee
of 58% of his then-current base salary. Mr. Molino will also receive (i) senior executive level employee benefits and (ii) a Company-provided
automobile and the payment of certain related expenses.
In the event Mr. Molino’s
employment is terminated by the Company without Cause (as defined in the Employment Agreement), or Mr. Molino resigns for Good
Reason (as defined in the Employment Agreement), he will receive all accrued amounts of base salary, unpaid bonuses for the prior
year, unreimbursed expenses and amounts due under benefits plans in accordance with their terms and, subject to his execution of
a general release, (i) he will continue to receive his base salary for 12 months, (ii) he will receive a pro rata bonus for the
year of termination, and (iii) the Company will pay him monthly an amount equal to the difference in his COBRA premium and the
active employee contribution for medical coverage until the earlier of (a) 18 months from the date of termination, (b) his becoming
eligible for medical benefits from a subsequent employer, or (c) his becoming ineligible for COBRA (the “COBRA Payments”).
In the event Mr. Molino’s
employment is terminated by the Company without Cause or he resigns for Good Reason within two years following a Change in Control
(as defined in the Employment Agreement), then subject to his execution of a general release, he will receive the amounts set forth
in the previous paragraph in addition to a lump sum amount equal to his target annual bonus for the fiscal year in which his termination
occurs; provided, that the COBRA Payments set forth in clause (iii)(a) of the previous paragraph shall extend for up to 12 months
from the date of termination rather than up to 18 months from the date of termination; and provided further, that in the event
of a 409A Change in Control (as defined in the Employment Agreement) he will receive the base salary severance payment set forth
in clause (i) of the previous paragraph in a lump sum rather than in installments. Notwithstanding the foregoing, in the event
an Excise Tax (as defined in the Employment Agreement) would otherwise be incurred by Mr. Molino, amounts paid to Mr. Molino upon
a Change in Control will be reduced to 2.99 times his “base amount” (as determined in accordance with Sections 280G
of the Internal Revenue Code of 1986, as amended).
Pursuant to the Employment
Agreement, during term of his employment and for a period of twelve months after termination of his employment, Mr. Molino is prohibited
from (i) competing with the Company, (ii) soliciting or hiring the Company’s employees, representatives or agents, or (iii)
soliciting any of the Company’s customers. The Employment Agreement also prohibits Mr. Molino from using or disclosing the
Company’s non-public, proprietary or confidential information.
The foregoing description
of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the
Employment Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K which is incorporated by reference herein.