AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of May 28, 1997,
among P&F INDUSTRIES, INC., a Delaware corporation (the "Company") having its
principal place of business at 000 Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxx Xxxx 00000,
and XXXXXXX X. XXXXXXXX, residing at 0 Xxx Xxxxx, Xxxxx Xxxxx, Xxx Xxxx 00000
(the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive wish to amend and restate the
Employment Agreement among the parties hereto, dated as of February 28, 1997
(the "Prior Agreement"), with this Agreement;
NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:
1. Employment, Duties and Acceptance
1.1. Subject to the provisions of Article 4, the Executive hereby
agrees to continue his employment with the Company, and the Company hereby
agrees to continue its employment of the Executive, for the term of this
Agreement, as defined in Article 2 hereof. The Executive shall render services
as Chairman, President and Chief Executive Officer of the Company and shall
perform such executive duties which are consistent with his position as he may
be reasonably directed to perform by the Board of Directors of the Company.
2. Term of Employment
The term of the Executive's employment pursuant to this Agreement (the
"Term") will commence on the date hereof (the "Effective Date") and will
continue until the seventh anniversary of the Effective Date, unless sooner
terminated pursuant to the provisions of Article 4. Such employment will, unless
sooner terminated pursuant to the provisions of Article 4, continue from year to
year thereafter (each such year, an "Additional Term") until one party gives the
other notice of its intention to terminate the Executive's employment at the end
of the Term or an Additional Term, as the case may be, which notice may not be
given more than ninety or less than thirty days prior to the last day of such
Additional Term.
3. Compensation
3.1. The base compensation of the Executive will be $458,000 per annum.
All compensation will be paid in installments as determined by the Company, but
not less frequently than monthly.
3.2. The Company will pay or reimburse the Executive for all reasonable
expenses actually incurred or paid by him during the Term
and each Additional Term in connection with the performance of his services
under this Agreement, upon presentation of expense statements or vouchers or
such other supporting information as it may reasonably require, it being
understood that the character of and amount available for such expenses will be
in accordance with applicable policies of the Company and may be fixed in
advance by the Board of Directors of the Company. In addition, the Company shall
provide the Executive, at the Company's expense, with a current model automobile
similar to the automobile furnished to the Executive at the date hereof.
3.3. The Executive will also be eligible to receive such increases in
base compensation as the Board of Directors of the Company may from time to time
grant to him (which shall not thereafter be reduced) and to receive such bonuses
as the Board of Directors of the Company, in its discretion, may allocate to
him. In addition, so long as the Company continues to provide money purchase
pension, group insurance, medical insurance and vacation benefits, for its
senior management generally, the Executive will be entitled to participate
therein as well as in any other employee benefit plan hereafter established for
senior management.
3.4. Throughout the Term, the Company shall maintain in effect at
current levels the split-dollar life insurance policy currently maintained for
the Executive, and shall continue to pay premiums on the supplemental disability
insurance policies currently maintained by the Executive (or reimburse the
Executive for premiums paid by him).
3.5. In the event of the Executive's death, this Agreement will
terminate. In that event, the Executive's estate will be entitled to his (i)
full salary through the date of death together with any bonus under the then
current executive bonus plan accrued through the date of death; and (ii) an
additional payment equal to his then current salary for an additional twelve
months.
3.6. If during the Term or an Additional Term, the Executive becomes
physically or mentally disabled, whether totally or partially, so that he is
prevented from performing his usual duties for a period of 270 consecutive
business days or for 360 business days during any period of 450 business days,
the Company may terminate his employment under this Agreement by 60 days'
advance written notice to the Executive. In that event, the Executive will be
entitled to his (i) full salary through the date of termination, less any amount
received by the Executive under any policy of disability insurance carried by
the Company in which Executive participates; (ii) an additional payment equal to
his then current salary for an additional twelve months, without regard to any
amount received by the Executive under any policy of disability insurance; and
(iii) during such additional twelve month period, continued use of his Company
car and other perquisites being
provided to the Executive prior to such termination, including continuation of
the split-dollar life insurance policy referenced in Section 3.4 hereof. In
addition, during the period of disability and until (x) the death of the
Executive or (y) the re-employment of the Executive, the Company shall provide
the Executive with medical benefits similar to those provided for other
executive officers of the Company, taking into account medical benefits provided
to the Executive by other sources.
4. Protection of Information: Noncompetition
4.1. In view of the fact that the Executive's work with the Company
will bring him into close contact with many confidential affairs of the Company
including matters of a business nature such as information about costs, profits,
markets, sales, plans for future development and other information not readily
available to the public, the Executive will:
4.1.1. Keep secret all confidential information relating to the Company
and not disclose the same to anyone outside of the Company either during or
after his employment with the Company, except with the Company's written
consent;
4.1.2. Deliver promptly to the Company on termination of his services
hereunder, or at any time the Company may so request, all memoranda, notes,
records, lists, reports and other documents (and all copies thereof) relating to
the business of the Company which he may then possess or have under his control;
and
4.1.3. During his employment and, provided that a "change in control"
(as hereinafter defined) has not occurred, for a period of three years following
the termination of his employment, not, directly or indirectly, (i) enter the
employ of, or render any services to, any person, firm or corporation engaged in
any business competitive with the business of the Company, (ii) engage in such a
business for his own account, or (iii) become interested in such a business as
an individual, partner, shareholder, director, officer, principal, agent,
employee, trustee, consultant or in any other relationship or capacity. The
provisions of this Section 4.1.3 shall not apply to the Executive following any
termination of employment which occurs in connection with or following a "change
in control" (as hereinafter defined).
4.2. "Business competitive with the business of the Company" means, as
of any date, any business then being conducted by the Company in which Executive
has been actively engaged.
5. Change in Control
5.1. The term "change in control" of the Company shall mean:
5.1.1. An occurrence of a nature that would be required to be reported
in response to (i) Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1934 (the "Exchange Act") as in effect on the
date of this Agreement, or (H) Item I(a) of Form 8-K under the Exchange Act, or
(iii) if Item 6(e) of Schedule 14A or Item I(a) of Form 8-K is no longer in
effect, any regulations issued by the Securities and Exchange Commission
pursuant to the Exchange Act which serve similar purposes; or
5.1.2. An event in which (i) any "person," as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act (a "Person"), other
than the Executive is or becomes a beneficial owner, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities then entitled to vote for the
election of directors or (ii) individuals who, as of the date hereof, constitute
the Board of Directors of the Company (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of Directors; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board of Directors; or
5.1.3. An event in which there shall be consummated (i) any
consolidation, merger or recapitalization of the Company or any similar
transaction involving the Company, whether or not the Company is the continuing
or surviving corporation, pursuant to which shares of the Company's common
stock, par value $1.00 per share ("Common Stock"), would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company or (iii) the adoption of a plan of complete
liquidation of the Company (whether or not in connection with the sale of all or
substantially all of the Company's assets) or a series of partial liquidations
of the Company that is dejure or defacto part of a plan of complete liquidation
of the Company; provided, that the divestiture of less than substantially all
of the assets of the Company in one transaction or a series of related
transactions, whether effected by sale, lease, exchange, spin-off, sale of the
stock or merger of a subsidiary or otherwise, or a transaction solely for the
purpose of reincorporating the Company in another jurisdiction, shall not
constitute a change in control.
5.2. The "change date" shall be the date on which a change in control
of the Company (as described in paragraph 5.1) occurs.
5.3. The term "discharge" shall mean (i) any termination by the Company
of the employment of the Executive which occurs in connection with or following
a change in control of the Company, or (ii) resignation by the Executive which
occurs in connection with or following a change in control, which is based on a
determination by the Executive that, (A), as a result of a change in
circumstances affecting his position, he is unable to exercise the authorities,
powers, functions or duties attached to his position as contemplated by Article
1 of the Agreement, (B) the compensation, benefits or perquisites being provided
to the Executive have been reduced or adversely affected, or (C) the Company (or
its successor) has breached this Agreement in any material respect.
5.4. In the event of a discharge, the Company shall pay to the
Executive and provide him with the following:
5.4.1. During the remainder of the Term, the Company shall continue to
pay the Executive his salary as frequently as the Company then pays other
executives and at the same rate as payable immediately prior to the date of
discharge plus the estimated amount of any bonuses to which he would have been
entitled had he remained in the employ of the Company;
5.4.2. During the remainder of the Term, the Executive shall continue
to be entitled to all benefits and service credit for benefits under medical,
insurance, life insurance and other employee benefit plans, programs and
arrangements of the Company as if he were still employed during such period
under this Agreement;
5.4.3. If, despite the provisions of paragraph 5.4.2 above, benefits or
service credits under any employee benefit plan shall not be payable or provided
under any such plan to the Executive, or his dependents, beneficiaries or the
Company, the Company itself shall, to the extent necessary, pay or provide for
payment of such benefits and service credit so as to place the Executive, his
dependents, beneficiaries and estate in such financial position as if the
Executive were employed by the Company during the Term; and
5.4.4. Any outstanding Incentive Stock Options held by the
Executive shall be converted to nonqualified stock options on the day after the
last day of the three month period following the date of discharge.
5.5. Severance Allowance. In the event of discharge of the Executive
during the Term, the Executive may elect, within 60 days after such discharge,
to be paid a lump sum severance allowance, in lieu of payments to be made
pursuant to 5.4.1 hereof, in an amount equal to 2.99 times the Executive's
"annualized includible compensation for the base period," as those terms are
defined in section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"). Any payment due hereunder will be made within five days after the
election by the Executive to receive the lump sum payment.
In the event of discharge by reason of an event described in paragraph
5.3, if the Executive makes an election pursuant to the first sentence of this
paragraph 5.6 to receive a lump sum severance allowance, then, in addition to
such amount, he shall receive (i) in addition to the benefits provided under any
pension plan maintained by the Company, the pension benefits he would have
accrued under such pension plan if he had remained in the employ of the Company
for 36 calendar months after his discharge, which benefits will be paid
concurrently with, and in addition to, the benefits provided under such pension
plan, (ii) incentive compensation (including, but not limited to, the right to
receive and exercise stock options and stock appreciation rights and to receive
restricted stock and grants thereof and similar incentive compensation benefits)
to which he would have been entitled under all incentive compensation plans
maintained by the Company if he had remained in the employ of the Company for 36
calendar months after his discharge, and (iii) the employee benefits (including,
but not limited to, coverage under any medical, disability and life insurance
arrangements or programs) to which he would have been entitled under all
employee benefit plans, programs or arrangements maintained by the Company if he
had remained in the employ of the Company for 36 calendar months after his
discharge, or the value of the amounts described in clauses (i), (ii) and (iii)
of this sentence. The amount of the payments described in the preceding sentence
shall be determined and such payments shall be distributed as soon as it is
reasonably possible.
5.6. Parachute Payment. If any payment to be made by the Company to the
Executive pursuant to Article 6 of this Agreement, after taking into account any
other payments to be made by the Company to the Executive, is not deductible by
the Company pursuant to section 280G(a) of the Code, then any payment to be made
pursuant to Article 6 of this Agreement shall be reduced by the smallest amount
necessary so that no such payment shall fail to be deductible pursuant to
section 280G(a) of the Code. If the Company determines that any payment to the
Executive is subject to limitation pursuant to this paragraph 6.7, it shall
provide the Executive with a written determination within 30 days of the
Executive's discharge during the terms of this Agreement. If the Executive
disagrees with the Company's determination, he shall provide the Company with
written-notice of his objection within 15 days of receipt of the Company's
determination. The matter shall then be promptly submitted by either the
Executive or the Company to a "Big 6" accounting firm, not otherwise associated
with the Company or the Executive, for a determination within 30 days on both
the Executive and the Company. The expenses incurred in connection with any
determination will be shared equally by the parties. Any payment due hereunder
shall be paid within five days of the determination by the Company or the "Big
6" accounting firm.
6. Miscellaneous.
6.1. If any of the provisions contained in this Agreement is hereafter
construed to be invalid or unenforceable, such event will not affect the
remainder of this Agreement, which will be given full effect, without regard to
the invalid portions.
6.2. If any of the covenants contained in Article 5, or any part
thereof, is held to be unenforceable because of the duration or scope of such
provision or the area covered thereby, the parties agree that the court making
such determination will have the power to reduce the duration, scope and/or area
of such provision and in its reduced form, such provision will then be
enforceable.
6.3. This Agreement has been negotiated and executed in the State of
New York, and will be construed and enforced in accordance with the laws of the
State of New York applicable to agreements made and to be performed entirely in
New York.
6.4. All notices, requests, consents and other communications, required
or permitted to be given hereunder, will be in writing and shall be deemed to
have been duly given if delivered personally or sent by prepaid telegram, or
mailed first class, postage prepaid, by registered or certified mail (if
possible), addressed to either party at the address set forth in the preamble to
this Agreement (or to such other address as either party shall designate by
notice in writing to the other in accordance herewith).
6.5. The article headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
6.6. This Agreement sets forth the entire agreement and understanding
of the parties relating to the subject matter hereof, and supersedes and will
supersede all prior agreements, arrangements and
understandings, written or oral, relating to the subject matter including,
without limitation, the Prior Agreement.
6.7. This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by all of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of any party at any time or
times to require performance o f any provision hereof will in no manner affect
the right at a later time to enforce the same. No waiver by either party of the
breach of any term or covenant contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, will be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the breach
of any other term or covenant contained in this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
P & F INDUSTRIES, INC.
By /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Executive Vice President
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
