|
Item 5.02
|
Departure of Directors or Certain Officers; Election of Directors; Appointment
of Certain Officers; Compensatory Arrangements of Certain Officers.
|
On December 14, 2021, P &
F Industries, Inc. (the “Company”) and Richard A. Horowitz (“Mr. Horowitz”), the Chairman of the Company’s
Board of Directors (the “Board”), and its President and Chief Executive Officer, entered into an Executive Employment Agreement
(the “Employment Agreement”), effective as of January 1, 2022, which agreement was approved by the Compensation Committee
of the Board (the “Compensation Committee”) on December 13, 2021, following consultation with the independent directors of
the Board. The Compensation Committee utilized the services of Steven Hall & Partners, an independent compensation consulting firm,
as well as the services of special legal counsel to the Compensation Committee. The Company’s currently effective employment agreement
with Mr. Horowitz expires on December 31, 2021.
The Employment Agreement provides
for Mr. Horowitz to serve as the Company’s President and Chief Executive Officer and, if elected by the Board, Chairman of the Board,
for a term expiring on December 31, 2024, unless sooner terminated pursuant to the provisions of the Employment Agreement. Pursuant to
the Employment Agreement, Mr. Horowitz will receive a minimum annual base salary of $825,000 beginning January 1, 2022. Mr. Horowitz’s
base salary will be reviewed annually by the Board (or a committee thereof) and may be increased, but not decreased, from time to time.
Mr. Horowitz 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”) so long as Mr. Horowitz remains employed by the Company on December 31 of the year
to which such incentive payment relates. with performance goals to be set by the Compensation Committee in its sole discretion (after
discussions with Mr. Horowitz), with a target of 55% of his then-current base salary, and a maximum bonus based on exceeding performance
targets as established by the Compensation Committee of 165% of his then-current base salary. The Compensation Committee may reduce the
percentage of the target bonus and the maximum bonus and apply such target amount to a long-term cash award. Mr. Horowitz will also receive
(i) senior executive level employee benefits, (ii) a Company-provided automobile and the payment of certain related expenses and (iii)
payment and/or reimbursement of certain legal and consultants’ fees in connection with the Employment Agreement. Mr. Horowitz received
no equity grants in connection with the Employment Agreement.
Subject to the next paragraph,
in the event Mr. Horowitz’s employment is terminated by the Company without Cause (as defined in the Agreement), or Mr. Horowitz
resigns for Good Reason (as defined in the Agreement), then subject to his execution of a general release, (i) he will continue to receive
his base salary for 24 months, (ii) he will receive payments for accrued but unpaid salary, prior period bonus and eligible unreimbursed
expenses, (iii) he will receive a pro rata bonus for the year of termination (the “Pro Rata Bonus”), and (iv) the Company
will pay him monthly an amount equal to the difference in his COBRA premium and the active employee contribution for medical coverage
for a period of up to 36-months.
In the event Mr. Horowitz’s
employment is terminated by the Company without Cause or he resigns for Good Reason, in either case within two years following a Change
in Control (as defined in the Agreement) (other than a 409A Change in Control (as defined in the Agreement), then subject to his execution
of a general release, he will receive the payments set forth in the previous paragraph; provided, that he will receive his base salary
for 36 months. In the event Mr. Horowitz’s employment is terminated by the Company without Cause or he resigns for Good Reason within
two years following a 409A Change in Control, then subject to his execution of a general release, he will receive the base salary severance
payment set forth in the first sentence of this 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. Horowitz, amounts paid to Mr. Horowitz
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) if such amount would result in a higher after-tax net payment to Mr. Horowitz as compared
to paying the Excise Tax.
In the event Mr. Horowitz’s
employment is terminated due to Disability (as defined in the Agreement) or his death, he (or his estate and or dependents, as applicable)
shall receive (i) any unpaid base salary through the date of termination; (ii) any annual bonus earned but unpaid with respect to the
fiscal year ending on or preceding the date of termination; (iii) his Pro Rata Bonus for the fiscal year in which his termination occurs;
and (iv) certain COBRA-related payments for up to 36 months.
Pursuant to the Employment
Agreement, during term of his employment and for a period of 24 months after termination of his employment, Mr. Horowitz 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. Horowitz from using or disclosing any of 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.