<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
P & F Industries, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
P & F Industries, Inc.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
P&F INDUSTRIES, INC.
300 SMITH STREET
FARMINGDALE, NEW YORK 11735
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 1995
----------------
To the Stockholders of P&F Industries, Inc.:
The Annual Meeting of Stockholders of P&F Industries, Inc. (the "Company")
will be held at the Huntington Hilton Hotel, 598 Broad Hollow Road, Melville,
New York on Wednesday, May 24, 1995 at 10:00 A.M., for the following purposes:
1. To elect two directors to hold office for three years;
2. To ratify the selection of BDO Seidman, independent certified public
accountants, as auditors for the fiscal year ending December 31, 1995;
3. To consider, if properly brought before the meeting, a stockholder
proposal, opposed by the Board of Directors and management, regarding the
Company's stockholder rights plan; and
4. To consider and act upon such other business as may properly come
before the meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on April 24, 1995 are
entitled to notice of and to vote at the meeting, and any adjournment or
postponement thereof.
By order of the Board of Directors,
LEON D. FELDMAN,
Secretary
Dated: May 1, 1995
Farmingdale, New York
IMPORTANT--PLEASE SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE POSTPAID
RETURN ENVELOPE PROVIDED, PARTICULARLY IF YOU DO NOT EXPECT TO
ATTEND THE MEETING IN PERSON.
<PAGE>
P&F INDUSTRIES, INC.
300 SMITH STREET
FARMINGDALE, NEW YORK 11735
----------------
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of P&F Industries, Inc. (the "Company") to be
used at the meeting of stockholders of the Company (the "Annual Meeting") to be
held on Wednesday, May 24, 1995 at 10:00 A.M., at the Huntington Hilton Hotel,
598 Broad Hollow Road, Melville, New York, or at any adjournment or
postponement thereof, for the purposes set forth in the accompanying notice of
Annual Meeting of Stockholders. If the enclosed form of proxy is executed and
returned, it may nevertheless be revoked at any time before it is exercised,
either in person at the Annual Meeting or by written notice or by a duly
executed proxy, bearing a later date, sent to the Secretary of the Company. The
Company anticipates mailing this proxy statement and the accompanying proxy to
stockholders on or about May 1, 1995.
As of April 15, 1995, there were 2,928,867 shares of the Company's Class A
Common Stock, $1.00 par value (the "Class A Common Stock"), outstanding. Each
share of Class A Common Stock is entitled to one vote. Only holders of record
of Class A Common Stock at the close of business on April 24, 1995 will be
entitled to notice of and to vote at the Annual Meeting. The Company will bear
the cost of the Annual Meeting and the cost of soliciting proxies, including
the cost of mailing the proxy material. In addition to solicitation by mail,
directors, officers and regular employees of the Company (who will not be
specifically compensated for such service) may solicit proxies by telephone or
otherwise.
All proxies received pursuant to this solicitation will be voted, except as
to matters where authority to vote is specifically withheld and, where a choice
is specified as to the proposal, such proxies will be voted in accordance with
such specification. If no instructions are given, the persons named in the
proxy solicited by the Board of Directors of the Company intend to vote for the
nominees for election as directors of the Company herein and for the
confirmation of the appointment of BDO Seidman as independent certified public
accountants of the Company for the fiscal year ending December 31, 1995, but
against the stockholder proposal set forth in this proxy statement. If any
other matter should be presented at the Annual Meeting upon which a vote may
properly be taken, the shares represented by the proxy will be voted with
respect thereto at the discretion of the person or persons holding such proxy.
For purposes of determining whether a proposal has received the required number
of votes for approval, abstentions will be included in the vote totals with the
result that an abstention has the same effect as a negative vote. In instances
where nominee recordholders, such as brokers, are prohibited from exercising
discretionary authority for beneficial owners who have not returned a proxy
("broker non-votes"), those shares of Class A Common Stock will not be included
in the vote totals and, therefore, will have no effect on the vote. If a quorum
should not be present, the Annual Meeting may be adjourned from time to time
until a quorum is obtained.
<PAGE>
ELECTION OF DIRECTORS
The Company's By-Laws provide for three classes of directors, as nearly equal
in number as possible, with three-year terms of office expiring in three
successive years. A director elected to fill a vacancy serves for the remaining
term of the class in which the vacancy exists. The Board of Directors presently
consists of seven members, with two members in each of two classes and three
members in the third class.
Management proposes that Messrs. Richard A. Horowitz and Earle K. Moore,
whose terms of office expire in 1995, be re-elected as directors to serve for
terms to expire at the 1998 annual meeting of stockholders. Unless otherwise
indicated, the enclosed proxy will be voted for the election of such nominees.
Should any one or more of these nominees become unable to serve for any reason,
or for good cause, will not serve, which is not anticipated, the Board of
Directors may, unless the Board by resolution provides for a lesser number of
directors, designate substitute nominees, in which event the persons named in
the enclosed proxy will vote for the election of such substitute nominee or
nominees.
Directors will be elected by the plurality vote of the holders of the Class A
Common Stock entitled to vote at the Annual Meeting and present in person or by
proxy.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE FOREGOING
NOMINEES.
INFORMATION AS TO DIRECTORS AND NOMINEES FOR DIRECTORS
Set forth below is the name and age of each director currently in office and
whose term continues and of each nominee for director, his principal
occupation, the year each became a director of the Company and a description of
his principal occupation for the past five years. The information set forth
below is as of April 15, 1995.
<TABLE>
<CAPTION>
YEAR FIRST
NAME PRINCIPAL OCCUPATION AGE ELECTED DIRECTOR
---- -------------------- --- ----------------
<C> <S> <C> <C>
NOMINEES TO SERVE UNTIL THE ANNUAL MEETING
IN 1998:
Richard A. Horowitz........................ President 45 1975
Earle K. Moore............................. Attorney 73 1987
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL
MEETING IN 1996:
Leon D. Feldman............................ Executive Vice-
President,
Secretary and Treasurer 65 1967
Robert L. Dubofsky......................... Insurance Broker 55 1990
Marc A. Utay............................... Investment Banker 35 1992
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL
MEETING IN 1997:
Sidney Horowitz............................ Chairman of the Board of
Directors 74 1962
Arthur Hug, Jr............................. Retired Bank Chairman
and Former Investment
Banker 72 1987
</TABLE>
2
<PAGE>
Sidney Horowitz has been Chairman of the Board of Directors and Chief
Executive Officer since 1968, was President from 1978 until 1986 and from 1962
until 1968, and was Treasurer from 1962 until 1967.
Arthur Hug, Jr., who is retired, was the President of Vanguard Ventures, Inc.
from 1987 until 1989, and was Chairman of North American Bancorp from 1974
until 1987.
Richard A. Horowitz has been President of the Company since June 1986, was
President of the Company's subsidiary, Embassy Industries, Inc., from 1976
until 1993, and was Secretary and Vice President from 1981 until 1986.
Earle K. Moore is a member of the law firm of Bondy & Schloss, which was
general counsel to the Company from September 1990 until December 1992. Mr.
Moore was a member of the former law firm of Moore, Berson, Lifflander,
Eisenberg & Mewhinney, which was general counsel to the Company from 1968 until
September 1990.
Leon D. Feldman has been Treasurer of the Company since 1967, Executive Vice-
President since 1981 and Secretary since June 1986, and was Vice President from
1968 until 1981.
Robert L. Dubofsky has been Managing Director of BWD Group Limited (formerly
Blumencranz, Klepper, Wilkins & Dubofsky, Ltd.), an insurance brokerage group,
since April 1992. From 1985 until March 1992, Mr. Dubofsky was Senior Vice-
President of Alexander & Alexander of New York, Inc., an insurance brokerage
firm.
Marc A. Utay has been a Managing Director of Wasserstein Perella Co., Inc.,
an investment banking firm, since May 1993. From October 1991 to May 1993, Mr.
Utay was a Managing Director of BT Securities Corporation, a subsidiary of
Bankers Trust New York Corporation. From April 1990 to October 1991, Mr. Utay
was a Managing Partner of Kent Capital Partners, Inc., an investment firm. Mr.
Utay was with Drexel Burnham Lambert, Inc. from 1983 to March 1990 in various
positions, the last of which was as a First Vice-President in the Mergers and
Acquisitions division.
OWNERSHIP OF EQUITY SECURITIES
The following table shows the beneficial ownership of Class A Common Stock as
of April 15, 1995, including shares as to which a right to acquire beneficial
ownership within 60 days exists (for example, through the exercise of stock
options) within the meaning of Rule 13d-3(d)(1) under the Securities Exchange
Act of 1934 (the "Exchange Act"), by (i) each director and nominee for
director, (ii) the chief executive officer, (iii) the other executive officers
who are listed in the Summary Compensation Table, (iv) each person known by the
Company to be the beneficial owner of more than 5% of its Class A Common Stock
and (v) all executive officers and directors as a group. Except as indicated in
the applicable footnotes, each beneficial owner listed has sole voting power
and sole investment power over the shares of Class A Common Stock indicated.
3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF CLASS A
COMMON STOCK PERCENT
BENEFICIALLY OWNED OF
NAME APRIL 15, 1995 CLASS
- - ---- ------------------ -------
<S> <C> <C>
Sidney Horowitz(1)(2)................................ 485,875(3) 15.2%
Richard A. Horowitz(1)(2)............................ 917,800(4) 30.3%
Leon D. Feldman(1)................................... 214,000(5) 6.8%
Earle K. Moore....................................... -- --
Robert L. Dubofsky................................... 20,000 (6)
Arthur Hug, Jr....................................... 1,000 (6)
Marc A. Utay......................................... 70,000(7) 2.3%
Steel Partners II(8)................................. 435,000 14.9%
All directors and officers as a group (7 persons).... 1,708,675(9) 47.8%
</TABLE>
- - --------
(1) The address of each of Sidney Horowitz, Richard A. Horowitz and Leon D.
Feldman is in care of the Company, 300 Smith Street, Farmingdale, New York
11735.
(2) Sidney Horowitz is the father of Richard Horowitz.
(3) Includes 99,988 shares owned by Grace Horowitz, wife of Sidney Horowitz,
individually and as trustee for their daughter, and 400 shares owned by the
Sidney and Grace Horowitz Foundation, as to all of which Sidney Horowitz
disclaims beneficial ownership, and 277,000 shares issuable upon the
exercise of stock options.
(4) Includes 22,400 shares owned by Linda Horowitz, wife of Richard A.
Horowitz, individually and as Trustee for their daughter, and 660,000
shares owned by Linda Horowitz, individually, as to all of which Richard A.
Horowitz disclaims beneficial ownership. Linda Horowitz has granted to her
husband, Richard A. Horowitz, a ten year irrevocable proxy to vote the
660,000 shares. Includes 100,000 shares issuable upon the exercise of stock
options.
(5) Includes 200,000 shares issuable upon the exercise of stock options and
14,000 shares held by the Feldman Family Living Trust.
(6) Less than 1%.
(7) Includes warrants to purchase 70,000 shares.
(8) The number of shares held is shown as reported in Steel Partners II's
Schedule 13D, as amended, as filed with the Securities and Exchange
Commission. Steel Partners II's address is 750 Lexington Avenue, 27th
Floor, New York, New York 10022.
(9) Includes 647,000 shares issuable upon the exercise of stock options and
warrants.
In June 1992, Messrs. Richard A. Horowitz, Sidney Horowitz and Leon D.
Feldman entered into an agreement pursuant to which each of Messrs. Sidney
Horowitz and Leon D. Feldman agreed that, in the event that he desires to sell
any shares of Class A Common Stock acquired pursuant to the exercise of his
stock options, he would first offer to sell such shares to Mr. Richard A.
Horowitz. This agreement was cancelled by the parties in June 1994.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES AND DIRECTOR COMPENSATION
During 1994, the Board of Directors held six meetings and each director
attended all meetings. The Board of Directors has an Audit Committee and a
Stock Option Committee, the current members of each of which are Messrs. Arthur
Hug, Jr., Earle K. Moore and Robert L. Dubofsky. The Audit Committee recommends
the selection of independent auditors to the Board of Directors, reviews the
overall scope, as well as the results, of the annual audit and reviews the
overall internal controls of the Company. In 1994, the Audit Committee met
once. The Stock Option Committee administers the Stock Option Plan. The Board
does not have any nominating or compensation committees or committees
performing similar functions.
4
<PAGE>
Each director who was not an employee of the Company or any of its
subsidiaries received fees of $3,500 per year plus $1,250 per meeting attended.
Directors who are also officers of the Company are not compensated for their
duties as directors.
EXECUTIVE COMPENSATION
The following table shows the compensation for the past three fiscal years of
the chief executive officer and each of the other most highly compensated
executive officers whose aggregate compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION (1) AWARDS
----------------------------------- ---------------
OTHER ANNUAL SECURITIES
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION UNDERLYING ALL OTHER
OCCUPATION YEAR ($) ($)(1) ($)(2) OPTIONS/SARS(#) COMPENSATION ($)(3)
------------------ ------ ------ ------ ------------ --------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Sidney Horowitz......... 1994 321,458 110,000 -- -- 10,800
Chairman 1993 315,000 87,000 -- 35,000 17,667
1992 300,000 90,000 -- -- 17,109
Richard A. Horowitz..... 1994 353,100 158,000 -- 250,000 10,800
President 1993 321,000 125,000 -- -- 17,667
1992 300,000 130,000 -- 450,000(4) 17,109
Leon D. Feldman......... 1994 261,450 86,000 -- -- 10,800
Executive Vice-President 1993 249,000 68,000 -- -- 17,667
1992 235,000 70,000 -- -- 17,109
</TABLE>
- - --------
(1) The Company has an incentive compensation bonus plan (the "Bonus Plan").
Under the terms of the Bonus Plan, the total bonuses paid to executive
officers may not exceed 15% of the Company's income before income taxes
prior to the payment under the Bonus Plan. Allocations to the individuals
set forth above are made at the discretion of the Board of Directors.
Amounts are accrued in the year shown above and paid in the following year.
In 1993, the bonus compensation paid under the Bonus Plan to the named
executive officers was calculated based on the pre-tax, pre-bonus income of
the Company's continuing operations after allocating corporate overhead to
the Company's discontinued operations.
(2) No amounts for executive perquisites and other personal benefits are shown
because the aggregate dollar amount per executive is the lesser of either
$50,000 or 10% of annual salary and bonus.
(3) This category includes Company contributions to the retirement plan which
is a defined contribution plan (the "Plan"). The Plan covers all employees
who do not receive pension benefits under a collective bargaining
agreement, have been in the employ of the Company for at least one year and
are at least 21 years of age. For 1994, the contributions paid by the
Company were 5% of the first $40,000 of each employee's salary and 8% of
the balance up to $150,000; for 1993, the contributions paid by the Company
were 5% of the first $40,000 of each employee's salary and 8% of the
balance up to $235,840; and for 1992, the contributions paid by the Company
were 5% of the first $40,000 of each employee's salary and 8% of the
balance up to $228,860. Upon leaving the Company, an employee may receive a
lump sum payment of all amounts vested for him under the Plan, including
earnings thereon.
(4) These options were cancelled by the Company in 1994.
5
<PAGE>
STOCK OPTION GRANTS
The following table shows information concerning options to purchase Class A
Common Stock granted in 1994 to the chief executive officer and the executive
officers who are set forth in the Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(3)
----------------------------------------------- --------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5% 10%
---- ---------- ------------ ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sidney Horowitz......... -- -- -- -- -- --
Richard A. Horowitz..... 250,000 81% $1.994(2) 6/2/99 $ 79,815 $ 231,262
Leon D. Feldman......... -- -- -- -- -- --
</TABLE>
- - --------
(1) Options are granted pursuant to the Company's 1992 Incentive Stock Option
Plan, as amended. The Stock Option Plan is administered by the Stock Option
Committee which authorizes the issuance of options to key employees of the
Company at exercise prices not less than the fair market value at the date
of grant (market price plus 10% in the case of 10% stockholders).
(2) The market price of the Class A Common Stock on the date of the grant on
June 2, 1994 was $1.8125.
(3) Based on the market price on the date of the grant and an annual
appreciation at the rate stated of such market price through the expiration
date of such options. The dollar amounts under these columns are the result
of calculations at 5% and 10% rates set by the Securities and Exchange
Commission and therefore are not intended to forecast possible future
appreciation, if any, of the Company's stock price.
AGGREGATED OPTION EXERCISES AND OPTION VALUES
The following table shows information concerning the exercise of stock
options during 1994 by the chief executive officer and the other executive
officers set forth in the Summary Compensation Table and the fiscal year-end
value of unexercised options.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SAR'S AT OPTIONS/SAR'S
FISCAL YEAR END (#) AT FISCAL YEAR END ($)
SHARES ------------------ ----------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ------------ ---------- ------------------ ----------------------
<S> <C> <C> <C> <C>
Sidney Horowitz......... -- -- 277,000/0 113,356/0
Richard A. Horowitz..... -- -- 50,000/200,000 6,550/26,200
Leon D. Feldman......... -- -- 200,000/0 106,250/0
</TABLE>
6
<PAGE>
COMPENSATION REPORT ON EXECUTIVE COMPENSATION
The Company does not have a compensation committee. The Board of Directors
reviews the annual compensation of the Company's executive officers (including
the chief executive officer). Each executive officer's compensation includes
salary and a performance bonus. During the fiscal year ending December 31,
1994, the three executive officers of the Company, Sidney Horowitz, Richard A.
Horowitz and Leon D. Feldman, were covered by these provisions.
Each of the Company's three executive officers have employment agreements
with the Company. Richard A. Horowitz and Leon D. Feldman entered into
employment agreements with the Company in November 1989 which would have
expired in November 1996. In September 1993, the Company extended their
employment agreements so that they now expire in September 2000 with respect to
Richard Horowitz and September 1998 with respect to Leon D. Feldman. Sidney
Horowitz entered into an employment agreement, dated as of September 30, 1993,
with the Company which provided for him to continue as the Company's Chairman
until November 1994 and thereafter as a consultant to the Company for a three
year period. As of November 1, 1994, the Company entered into a new employment
agreement with Sidney Horowitz which provides for him to continue as the
Company's Chairman through October 31, 1995 and thereafter as a consultant to
the Company for a three year period. The employment agreements provide for
annual salaries, subject to annual increases at the discretion of the Board of
Directors (the executive officers do not vote on the salary increases) and with
respect to Sidney Horowitz, provides for consulting compensation commencing in
November 1995. The employment agreements of each of Richard Horowitz and Leon
Feldman also provide that upon "discharge" after a "change in control" (each as
defined in the respective agreements), each will receive his annual salary for
the remainder of the term of his employment agreement or a lump sum severance
payment in an amount equal to 2.99 times his annual compensation. The Board of
Directors takes into consideration the following factors in determining the
executive officers' compensation levels for the ensuing fiscal year: the
individual officer's job performance and level of responsibility, prior years'
compensation, number of years of employment with the Company and the rate of
inflation. Aggregate increases for 1994 were 5.8%.
In 1986, the Company established the Bonus Plan for the three executive
officers that provides for the payment of a cash bonus not to exceed, in the
aggregate, 15% of the Company's pre-tax profits.
Members of the Board of Directors
Sidney Horowitz (Chairman) Arthur Hug, Jr.
Richard A. Horowitz Marc A. Utay
Leon D. Feldman Robert Dubofsky
Earle K. Moore
PERFORMANCE GRAPH
The following performance graph compares the five-year cumulative return of
the Class A Common Stock to the total returns of the Nasdaq Stock Market
(U.S.A.) Index and a composite group comprised of companies with approximately
the same market capitalization as the Company for the fiscal year ended
December 31, 1992. Such composite group was used because the Company, through
its three subsidiaries, engages in several different lines of business and an
applicable peer group does not exist. In addition to the Company, the following
companies are included in the index: Driver Harris Co. Inc., Energy West, Inc.,
Halsey Drug Corp., Harris & Harris Group, Inc., Leisure Concepts, Inc.,
Presidential Realty Corp., Supradur Manufacturing Corp., TSR, Inc. and Wendi-
Bristol Health Corp. Jewelmasters, Inc., which was included in the index
located in the Company's 1994 proxy statement, has been omitted because the
necessary information is no longer publicly available. Each case assumes a $100
7
<PAGE>
investment on January 1, 1989 and reinvestment of any dividends. Cumulative
returns are at December 31 of each year.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG P&F INDUSTRIES, NASDAQ AND PEER GROUP
<CAPTION>
Measurement period P&F PEER
(Fiscal year Covered) INDUSTRIES NASDAQ GROUP
- - --------------------- ---------- -------- ---------
<S> <C> <C> <C>
Measurement PT -
12/29/89 $ 100 $ 100 $ 100
FYE 12/31/90 $ 56 $ 85 $ 64
FYE 12/31/91 $ 56 $ 136 $ 88
FYE 12/31/92 $ 40 $ 159 $ 98
FYE 12/31/93 $ 56 $ 181 $ 125
FYE 12/31/94 $ 68 $ 177 $ 102
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file with the Securities and Exchange
Commission (the "Commission") initial reports of ownership and reports of
changes in ownership of Class A Common Stock and other equity securities of the
Company. Officers, directors and greater than 10% stockholders are required by
the Commission regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company or written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with
during the fiscal year ended December 31, 1994.
RELATED TRANSACTION
In October 1992, the Company made an unsecured loan to Mr. Richard A.
Horowitz evidenced by a promissory note (the "Note") in the amount of $125,000
for the purchase by Mr. Horowitz of Class A Common Stock from an unaffiliated
third party. The Note is payable on demand and bears interest at the annual
rate charged by the Company's lender, prime plus 1/2%. As of April 15, 1995,
the outstanding principal balance of such Note was $65,000.
8
<PAGE>
SELECTION OF AUDITORS
BDO Seidman has audited the financial statements of the Company since 1963.
The Board of Directors, upon the recommendation of its Audit Committee, has
selected BDO Seidman as independent certified public accountants for the
Company to audit and report upon the consolidated financial statements for the
1995 fiscal year and is submitting this matter to the stockholders for their
ratification. The affirmative vote of a majority of the shares of Class A
Common Stock present or represented and entitled to vote on the proposal at the
Annual Meeting is required for the ratification of the selection of BDO
Seidman. Representatives of BDO Seidman are expected to be present at the
Annual Meeting, to make a statement if they desire to do so and to be available
to respond to appropriate questions that may be asked by stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE APPROVAL OF THE SELECTION OF BDO SEIDMAN AS
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
STOCKHOLDER PROPOSAL
The Company has been informed that Steel Partners II, L.P. intends to present
a proposal at the Annual Meeting. The proposal and supporting statement, for
which the Board of Directors and the Company accept no responsibility, are set
forth below.
THE BOARD OF DIRECTORS OPPOSES THIS PROPOSAL FOR THE REASONS STATED AFTER SUCH
PROPOSAL AND SUPPORTING STATEMENT.
Steel Partners II, L.P., with a principal place of business at 750 Lexington
Avenue, 27th Floor, New York, New York 10022 and which is the beneficial owner
of 435,000 shares of Class A Common Stock, has submitted the following
resolution:
"RESOLVED: The shareholders urge the Board to redeem all "Rights" under the
Company's "Shareholder Rights Plan," unless it is approved by a majority of
the shares at a shareholder meeting held as soon as possible."
The proponent has furnished the following statement setting forth the reasons
advanced by it in support of its proposal:
"In 1994, the Board adopted, without shareholder approval, the current
Shareholder Rights Plan (frequently referred to as a "poison pill"). By
adopting the poison pill, the Board has empowered itself to dilute the
holdings of any shareholder (other than certain members of senior
management and their families and associates with respect to shares now
owned and issued upon exercise of currently outstanding stock options) who
acquires, without the Board's approval, more than 15% of the outstanding
shares. The poison pill is an extremely powerful device intended to prevent
non-Board approved offers for more than 15% of the Company's shares,
however attractive the offer might be to shareholders. In our opinion, the
pill's effects reduce the value of the Company's stock.
We believe that the shareholders--who are the true owners of the Company--
should decide what is a fair price for their shares. The Delaware General
Corporation Law prevents a non-Board approved investor acquiring more than
15% but less than 85% of the shares from engaging in certain self-
interested transactions; this, in our opinion, affords statutory
protections against "unfair" offers intended as a prelude to such self-
interested transactions.
The current poison pill replaces one adopted by the Board in 1989. The
Board redeemed the "Rights" under the earlier pill and adopted the new pill
after we claimed that, under the earlier pill, the exercise by Richard
Horowitz (the Company's President) of options for 660,000 shares
9
<PAGE>
(approximately 22% of outstanding) and his transfer of those shares to his
wife triggered the pill. The new poison pill exempts all shares now owned
by Mr. Horowitz and his father, Sidney Horowitz, and their associates, and
shares acquired on exercise of currently outstanding options by Mr.
Horowitz and his father.
Considering the Company's performance, we believe that the Board has
authorized excessive senior management compensation. In fiscal year 1993
and 1992, compensation to Richard Horowitz, Sidney Horowitz and one other
executive officer totalled approximately $1,200,000 and $1,160,000,
respectively, compared with net income from continuing operations of
$695,000 and $320,000 in those years. In addition, Richard Horowitz and
other senior management have been granted stock options to purchase
additional shares of the Company's common stock which have been exempted by
the Board from the current poison pill.
We believe that poison pills can pose such an obstacle to a takeover that
management becomes entrenched, and that such entrenchment, and the lack of
accountability that results, can adversely affect shareholder value. We are
convinced that the compensation described above and the number of options
granted to senior management demonstrates the effects of the entrenchment
and non-accountability resulting from poison pills. Shareholder values
have, we believe, been adversely affected as a result.
We urge you to vote FOR our proposal."
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "AGAINST" THIS
PROPOSAL.
BOARD OF DIRECTORS STATEMENT ON STOCKHOLDER PROPOSAL
The Board of Directors strongly disagrees with the foregoing proposal and
certain statements set forth in the accompanying supporting statement. As
discussed more fully below, the supporting statement incorrectly describes the
implementation and effects of the Company's new Stockholder Rights Plan. The
supporting statement also presents a distorted analysis of senior management
compensation by comparing pre-tax compensation with the Company's after-tax
earnings and incorrectly concludes that the Company's senior management has
received excessive compensation. The following explains the benefits of the
Stockholder Rights Plan and why over 1,300 companies have adopted such a plan
as well as the compensation of senior management vis-a-vis the Company's pre-
tax earnings for fiscal year 1994.
Because it believed that a new Stockholder Rights Plan was in the best
interests of the stockholders, on August 23, 1994, the Board of Directors
redeemed the prior stockholder rights plan and adopted the current Stockholder
Rights Plan. The Stockholder Rights Plan was adopted after careful
consideration and with the advice of a special committee of independent
directors, which committee was represented by independent legal counsel. The
Stockholder Rights Plan is similar to plans adopted by over 1,300 companies
incorporated in Delaware and across the United States. The Supreme Court of the
State of Delaware, the state in which the Company is incorporated, has upheld
stockholder rights plans as a valid exercise of a board's business judgment and
as an appropriate means to enable the board to better fulfill its fiduciary
responsibilities when confronted with a takeover situation. Accordingly, the
adoption of the new Stockholder Rights Plan was within the scope of the Board
of Directors' authority and did not require stockholder approval. In this
regard, the Board of Directors believes that the supporting statement unfairly
and erroneously implies that stockholder approval was required.
While the Board of Directors is not aware of any current takeover activity
directed at the Company, the Board of Directors has designed the Stockholder
Rights Plan to help it obtain fair and equal treatment for all stockholders in
the event of a proposed takeover. The Board of Directors firmly believes, and
certain studies have supported, that the adoption of a stockholder rights plan
does not
10
<PAGE>
depress the price of a corporation's stock and does not deter takeovers.
Indeed, the Stockholder Rights Plan is intended to preserve the long-term value
of the Company for all stockholders and to protect the Company and its
stockholders from certain coercive takeover tactics. In particular, the
Stockholder Rights Plan was designed to deter anyone from purchasing a
controlling stock interest in the Company without making an offer to purchase
all outstanding shares at a fair price. The Stockholder Rights Plan is not
intended to prevent an acquisition of the Company on terms that the Board
considers favorable and fair to, and in the best interests of all stockholders,
and the Board will not prevent such an acquisition.
Steel Partners II, L.P. ("Steel Partners") claims that plans such as the
Stockholder Rights Plan may deter unsolicited acquisition proposals and that
the Board has authorized excessive senior management compensation. The Board of
Directors has carefully considered these points and strongly disagrees.
Accordingly, the Board has concluded that the Steel Partners' claims do not
justify leaving the stockholders without the protection provided by a rights
plan against unfair treatment by an acquirer. Experience has shown that many
companies with a rights plan in place have received unsolicited offers and a
number of companies have redeemed the rights in connection with transactions
which their directors determined to be in the best interests of the company and
its stockholders. Indeed, during the past year, several companies have used
rights plans to thwart inadequate initial bids and to sell their companies
later at an increased price. This history confirms the Board's belief that the
question of whether to redeem the Rights should be answered only in the context
of a specific acquisition proposal. In such a situation, the Board has an
obligation to meet its fiduciary duties and exercise its business judgment in
the best interests of the stockholders. The Stockholder Rights Plan serves to
increase the negotiating power of the Board of Directors in dealing with a
hostile bidder for the Company's stock, and in certain circumstances may result
in the Board achieving a more favorable price for the Company's stockholders.
With respect to compensation, in fiscal year 1994, senior management received
an increase in pre-tax compensation (including bonus compensation based on the
Company's income) of 10.7% while the Company's pre-tax earnings increased by
77.4%. The Board of Directors believes that the compensation paid to senior
management is appropriate, not excessive, and that the supporting statement
presents inappropriate comparisons of pre-tax compensation and after-tax
earnings in order to cast senior management compensation in a negative light.
Under the corporation law of the State of Delaware, the action recommended in
the proposal can be taken only when the Board of Directors, in its sole
discretion, determines to redeem the Stockholder Rights Plan. Therefore, a vote
in favor of Steel Partners' proposal is only an advisory recommendation to the
Board of Directors that it take steps to initiate such action. The Board of
Directors has no present intention of redeeming the Stockholder Rights Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"AGAINST" THIS PROPOSAL.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR
Stockholder proposals intended for inclusion in the proxy material for the
1996 Annual Meeting of Stockholders, and nominations for director to be elected
at the 1996 Annual Meeting of Stockholders, each must be received by the
Secretary of the Company at the Company's offices at 300 Smith Street,
Farmingdale, New York 11735 not later than January 2, 1996 in order for such
proposals and nominations to be included in the proxy materials for the 1996
Annual Meeting of Stockholders. Any stockholder interested in making a proposal
or nominating a director is referred to the Company's By-laws.
11
<PAGE>
ADDITIONAL INFORMATION AND OTHER MATTERS
A copy of the Company's Form 10-K for the fiscal year ended December 31, 1994
as filed with the Commission may be obtained free of charge by writing to the
Company, 300 Smith Street, Farmingdale, New York 11735; Attention: Secretary of
the Company.
The management is not aware of any matters to be presented for action at the
Annual Meeting other than the matters mentioned above, and does not intend to
bring any other matters before the Annual Meeting. However, if any other
matters should come before the Annual Meeting, it is intended that the holders
of the proxies will vote them in their discretion.
By order of the Board of Directors,
LEON D. FELDMAN
Secretary
Date: May 1, 1995
12
<PAGE>
PROXY
P&F INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders
May 24, 1995
The undersigned hereby appoints SIDNEY HOROWITZ, RICHARD A. HOROWITZ and LEON
D. FELDMAN, or any one or more of them, attorney with full power of substitution
and revocation to each, for and in the name of the undersigned, with all powers
the undersigned would possess if personally present, to vote the Class A Common
Stock of the undersigned in P&F Industries, Inc. at the Annual Meeting of
Stockholders to be held at the Huntington Hilton Hotel, 598 Broad Hollow Road,
Melville, New York on Wednesday, May 24, 1995 at 10:00 a.m. and at any
adjournment thereof, for the following matters.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1 AND 2, AND "AGAINST" PROPOSAL 3.
(Continued, and to be signed on reverse side)
<PAGE>
[X] Please mark your
votes as in this
example.
FOR all nominees WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed at right
1. Election of two [_] [_]
directors, as set
forth at right, for
a term of three years
(expiring in 1998) and until their successors are duly elected and qualified.
INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below.
- - -------------------------------
NOMINEES: Richard A. Horowitz
Earle K. Moore
FOR AGAINST ABSTAIN
2. Ratification of the selection of auditors. [_] [_] [_]
3. Stockholder proposal regarding the [_] [_] [_]
Company's stockholder rights plan.
4. In their discretion, upon any other matters which may properly come before
the meeting.
This proxy will be voted as specified above.
IMPORTANT - please vote, sign and return this proxy as soon as possible so that
it will arrive before the Annual Meeting on May 24, 1995.
SIGNATURE(S)___________________________________DATE ______________________, 1995
NOTE: Please sign as your name(s) appear(s) hereon. When signing at attorney,
executor, administrator, trustee or guardian, please give full title as such. If
more than one name shown, including the case of joint tenants, each party should
sign.
