SEC Form DEFM14A filed by P & F Industries Inc.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

Filed by the Registrant ☐

Filed by a Party other than the Registrant ☐

Check the appropriate box:

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

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P&F INDUSTRIES, INC.

(Name of Registrant as Specified In Its Charter)

   

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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No fee required.

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Fee paid previously with preliminary materials.

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11.

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P&F Industries, Inc.
445 Broadhollow Road, Suite 100
Melville, New York 11747

November 17, 2023

Dear Stockholder:

You are cordially invited to attend a special meeting of stockholders (the “Special Meeting”) of P&F Industries, Inc. (“P&F” or the “Company”). The Special Meeting will be held on December 19, 2023, at 10:00 a.m. Eastern Standard Time (EST) at the Conference Center located at 445 Broadhollow Road, Melville, New York 11747.

At the Special Meeting, you will be asked to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of October 13, 2023, by and among P&F, Tools AcquisitionCo, LLC, a Delaware limited liability company and an affiliate of ShoreView Industries, LLC (“Parent”), and Tools MergerSub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent (“Acquisition Sub”) (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, Acquisition Sub will merge with and into P&F (the “Merger”), with P&F surviving the Merger, and P&F becoming a wholly owned subsidiary of Parent. You will also be asked to consider and vote on a non-binding, advisory proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger.

If the Merger contemplated by the Merger Agreement is consummated, you will be entitled to receive $13.00, without interest, subject to deduction for any required withholding tax or other amounts required to be withheld therefrom for each share of P&F’s common stock that you own immediately prior to the effective time of the Merger, par value $1.00 per share (“P&F common stock”) (unless you have properly exercised your appraisal rights in accordance with Section 262 of the Delaware General Corporation Law with respect to such shares).

The Board of Directors of P&F (the “Board”), after considering factors more fully described in the enclosed proxy statement (the “Proxy Statement”), approved the adoption of the Merger Agreement, and resolved that the Merger Agreement and the transactions contemplated thereby, including the consummation of the Merger, in accordance with the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the relevant provisions of the General Corporation Law of the State of Delaware, are advisable to, fair to and in the best interests of P&F and its stockholders.

After careful consideration, the Board has unanimously recommended that you vote “FOR” the proposal to adopt the Merger Agreement, “FOR” the non-binding, advisory proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger and “FOR” the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement.

The enclosed Proxy Statement provides detailed information about the Special Meeting, the Merger Agreement and the Merger. A copy of the Merger Agreement is attached as Annex A to the Proxy Statement. The Proxy Statement also describes the actions and determinations of our Board in connection with its evaluation of the Merger Agreement and the Merger. You are encouraged to read the Proxy Statement and its annexes, including the Merger Agreement, carefully and in their entirety. You may also obtain more information about P&F from documents we file with the U.S. Securities and Exchange Commission (the “SEC”) from time to time.

We appreciate you taking the time to vote promptly. After reading the Proxy Statement, please vote, at your earliest convenience. Your shares cannot be voted unless you (i) vote by Internet, (ii) vote by phone, (iii) sign, date and return the enclosed proxy card by mail or (iv) attend the Special Meeting and vote at the Special Meeting in person. In addition, your proxy is revocable at any time before it is voted by written notice to the Secretary of P&F or by delivery of a later-dated proxy. If you attend the Special Meeting and vote in person, your vote will revoke any proxy that you have previously submitted. If you hold your shares in “street name,” you should instruct your broker how to vote in accordance with the voting instruction card you will receive from your broker, bank or other nominee.

 

 

Your vote is very important, regardless of the number of shares of the Company that you own. We cannot consummate the Merger unless the proposal to adopt the Merger Agreement is approved by the affirmative vote of a majority of the shares of P&F common stock outstanding and entitled to vote thereon and the affirmative vote of a majority of the votes cast at the Special Meeting by stockholders other than Richard A. Horowitz, as applicable, provided a quorum is present. In addition, the Merger Agreement makes the approval by the stockholders of P&F (“P&F stockholders”) of the proposal to adopt the Merger Agreement a condition to the parties’ obligations to consummate the Merger. The failure of any stockholder to vote in person at the Special Meeting, to submit a signed proxy card or to grant a proxy electronically over the Internet or by telephone will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement and will not have any effect on the proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger or the proposal to adjourn the Special Meeting. Broker non-votes, if any, will have the effect of a vote “AGAINST” the proposal to adopt the Merger Agreement and will not have any effect on the proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger or the proposal to adjourn the Special Meeting.

If you have any questions about the accompanying Proxy Statement, the Special Meeting, the Merger Agreement or the Merger or need assistance with voting procedures, please contact MacKenzie Partners, Inc., our proxy solicitor, by calling (212) 929-5500 / Toll-Free: (800) 322-2885.

On behalf of our Board, I thank you for your support and appreciate your consideration of this matter.

Sincerely,

JOSEPH A. MOLINO, JR.

Secretary

Neither the SEC nor any state securities regulatory agency has approved or disapproved of the transactions described in this document, including the Merger, or determined if the information contained in this document is accurate or adequate. Any representation to the contrary is a criminal offense.

The accompanying Proxy Statement is dated November 17, 2023 and, together with the enclosed form of proxy card, is first being mailed to P&F stockholders on or about November 17, 2023.

 

 

P&F Industries, Inc.
445 Broadhollow Road, Suite
100 Melville, New York 11747

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

YOUR VOTE IS VERY IMPORTANT.

PLEASE VOTE YOUR SHARES PROMPTLY.

A special meeting of the stockholders (the “Special Meeting”) of P&F Industries, Inc., a Delaware corporation (“P&F” or the “Company”), will be conducted on December 19, 2023, at 10:00 a.m. Eastern Standard Time (EST), at the Conference Center located at 445 Broadhollow Road, Melville, New York 11747, with respect to the following matters:

1.

to consider and vote on the proposal to adopt the Agreement and Plan of Merger, dated as of October 13, 2023, by and among P&F, Tools AcquisitionCo, LLC, an affiliate of ShoreView Industries, LLC (“Parent”), and Tools MergerSub, Inc., a wholly owned subsidiary of Parent (“Acquisition Sub”) (as may be amended from time to time, the “Merger Agreement”), a copy of which is attached as Annex A to the proxy statement (the “Proxy Statement”) accompanying this notice;

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2.

to consider and vote on a non-binding, advisory proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the merger of Acquisition Sub with and into P&F (the “Merger”); and

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3.

to consider and vote on any proposal to adjourn the Special Meeting to a later date or dates if necessary or appropriate to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting.

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The affirmative vote of (i) the majority of the shares of common stock of P&F, par value $1.00 per share (“P&F common stock”), outstanding and entitled to vote thereon and (ii) the affirmative vote of a majority of the votes cast at the Special Meeting by stockholders other than Richard A. Horowitz, as applicable, is required to adopt the Merger Agreement. The affirmative vote of a majority of the shares of P&F common stock entitled to vote which are present at the Special Meeting, provided a quorum is present, is required to approve, by means of a non-binding, advisory vote, compensation that will or may become payable by P&F to its named executive officers in connection with the Merger. The affirmative vote of a majority of the shares of P&F common stock entitled to vote which are present at the Special Meeting, whether or not a quorum is present, is required to approve the proposal to adjourn the Special Meeting. The failure of any stockholder of record to submit a signed proxy card, grant a proxy electronically over the Internet or by telephone or to vote in person at the Special Meeting will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement, but will not have any effect on the proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger or the proposal to adjourn the Special Meeting. Abstentions will be counted as votes “AGAINST” the proposal to adopt the Merger Agreement with respect to the vote required by clause (i) above and will have no effect on the vote required by clause (ii) above. Abstentions will be counted as votes “AGAINST” the proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger and the proposal to adjourn the Special Meeting. A broker, bank or other nominee holding shares in “street name” for a beneficial owner has discretion (but is not required) to vote the client’s shares with respect to “routine” matters if the client does not provide voting instructions. All of the proposals in the Proxy Statement are non-routine matters.

When a matter is not routine and the brokerage firm has not received voting instructions from the stockholder, the brokerage firm cannot vote the shares on that matter. This is called a broker “non-vote.” Broker non-votes, if any, will have the effect of a vote “AGAINST” the proposal to adopt the Merger Agreement and will not have any effect on the proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger or the proposal to adjourn the Special Meeting.

 

 

Only P&F stockholders of record as of the close of business on November 13, 2023 are entitled to notice of the Special Meeting and to vote at the Special Meeting or at any adjournment or postponement thereof. A list of stockholders entitled to vote at the Special Meeting will be available in our principal executive offices located at 445 Broadhollow Road, Suite 100, Melville, New York 11747, during regular business hours for a period of no less than ten (10) days before the Special Meeting and at the place of the Special Meeting during such meeting.

P&F’s board of directors (the “Board”) has unanimously recommended that you vote “FOR” the adoption of the Merger Agreement, “FOR” the non-binding, advisory proposal regarding compensation that will or may become payable by P&F to its named executive officers in connection with the Merger and “FOR” the adjournment of the Special Meeting (if necessary or appropriate). In considering the recommendation of the Board, P&F stockholders should be aware that its executive officers and members of the Board may have agreements and arrangements in place that provide them with interests in the Merger that may be different from, or in addition to, those of P&F. See the section entitled “The Merger-Interests of the Directors and Executive Officers of P&F in the Merger” beginning on page 53 of this Proxy Statement.

Our Notice of Special Meeting and Proxy Statement are available at www.astproxyportal.com/ast/04902.

By order of the Board of Directors,

JOSEPH A. MOLINO, JR.

Secretary

 

 

YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON, P&F ENCOURAGES YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE (1) THROUGH THE INTERNET, (2) BY TELEPHONE, OR (3) BY SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. You may revoke your proxy or change your vote at any time before your proxy is exercised at the Special Meeting. If your shares are held in the name of a broker, bank or other nominee, please follow the instructions on the voting instruction card furnished to you by such broker, bank or other nominee, which is considered the stockholder of record, in order to vote. As a beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote the shares in your account. Your broker, bank or other nominee cannot vote on any of the proposals, including the proposal to adopt the Merger Agreement, without your instructions.

If you fail to either (i) return your proxy card, (ii) grant your proxy electronically over the Internet or by telephone, or (iii) vote in person at the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting. If you are a stockholder of record, voting in person at the Special Meeting will revoke any proxy that you previously submitted. If you hold your shares through a broker, bank or other nominee, you must obtain from the record holder a valid “legal” proxy issued in your name in order to vote in person at the Special Meeting.

P&F encourages you to read the accompanying Proxy Statement, including all documents incorporated by reference into the accompanying Proxy Statement, and its annexes carefully and in their entirety. If you have any questions concerning the Merger, the Special Meeting or the accompanying Proxy Statement, would like additional copies of the accompanying Proxy Statement or need help voting your shares of common stock, please contact our proxy solicitor:

MacKenzie Partners, Inc.
1407 Broadway
New York, New York 10018
Call (212) 929-5500 / Toll-Free: (800) 322-2885
Email: [email protected]

 

 

TABLE OF CONTENTS

 

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QUESTIONS AND ANSWERS

The following questions and answers are intended to address some commonly asked questions regarding the Merger, the Merger Agreement and the Special Meeting. These questions and answers may not address all questions that may be important to you as a P&F stockholder. You are encouraged to read carefully the more detailed information contained elsewhere in this Proxy Statement, the annexes to this Proxy Statement and the documents we refer to in this Proxy Statement. You may obtain the information incorporated by reference in this Proxy Statement without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 91 of this Proxy Statement.

Q:

Why am I receiving these materials?

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A:

On October 13, 2023, P&F entered into the Merger Agreement providing for the Merger of Acquisition Sub with and into P&F, with P&F surviving the Merger as a wholly owned subsidiary of Parent. The Board is furnishing this Proxy Statement and form of proxy card to the holders of P&F common stock in connection with the solicitation of proxies in favor of the proposal to adopt the Merger Agreement and to approve the other proposals to be voted on at the Special Meeting or any adjournment or postponement thereof. This Proxy Statement includes information that we are required to provide to you under the rules of the SEC and is designed to assist you in voting on the matters presented at the Special Meeting. P&F stockholders of record as of the close of business on November 13, 2023 may attend the Special Meeting and are entitled and requested to vote on the proposals described in this Proxy Statement.

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Q:

What is included in the proxy materials?

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A:

The proxy materials include this Proxy Statement, the annexes to this Proxy Statement, including the Merger Agreement, and a proxy card.

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Q:

When and where is the Special Meeting?

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A:

The Special Meeting will be held on December 19, 2023, at 10:00 a.m. Eastern Standard Time (EST), at the Conference Center located at 445 Broadhollow Road, Melville, New York 11747.

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Q:

What is the proposed Merger and what effects will it have on P&F?

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A:

The proposed Merger is the acquisition of P&F by Parent through the Merger of Acquisition Sub with and into P&F pursuant to the Merger Agreement. If the proposal to adopt the Merger Agreement is approved by the requisite number of shares of P&F common stock, and the other closing conditions under the Merger Agreement have been satisfied or waived, Acquisition Sub will merge with and into P&F, with P&F continuing as the Surviving Corporation. As a result of the Merger, P&F will become a wholly owned subsidiary of Parent and you will no longer own shares of P&F common stock. P&F expects to delist its common stock from The Nasdaq Stock Market as promptly as practicable after the Effective Time and de-register its common stock under the Exchange Act as promptly as practicable after such delisting. Thereafter, P&F would no longer be a publicly traded company, and P&F will no longer file periodic reports with the SEC on account of P&F common stock.

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Q:

What will I receive if the Merger is consummated?

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A:

Upon the consummation of the Merger, you will be entitled to receive the Merger Consideration of $13.00 in cash, without interest and less applicable tax withholdings, for each share of P&F common stock that you own, unless you have properly exercised and perfected and not withdrawn your demand for appraisal rights under DGCL with respect to such shares. For example, if you own one hundred (100) shares of P&F common stock, you will receive $1,300 in cash, without interest and less any applicable withholding taxes, in exchange for your one hundred (100) shares of P&F common stock. In either case, your shares will be cancelled and you will not own shares in the Surviving Corporation.

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Q:

Who is entitled to vote at the Special Meeting?

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A:

Only stockholders of record as of the close of business on November 13, 2023 are entitled to notice of the Special Meeting and to vote at the Special Meeting or at any adjournment or postponement thereof.

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If you hold shares of P&F common stock indirectly through a broker, bank or similar institution, you are not a stockholder of record, but instead hold your shares in “street name” and the record owner of your shares is you broker, bank or similar institution. Instructions on how to vote shares held in “street name” are described under the question “How may I vote?” below.

Q:

How may I vote?

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A:

For P&F stockholders of record: If you are eligible to vote at the Special Meeting and are a stockholder of record, you may submit your proxy or cast your vote in any of four (4) ways:

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(i) by Internet — If you have Internet access, you may submit your proxy by following the instructions provided with your proxy materials and on your proxy card. Proxies submitted via Internet must be received by 11:59 p.m., Eastern Time, on December 18, 2023;

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(ii) by telephone — You can also submit your proxy by telephone by following the instructions provided with your proxy materials and on your proxy card. Proxies submitted via telephone must be received by 11:59 p.m., Eastern Time, on December 18, 2023;

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(iii) by mail — You may submit your proxy by completing the proxy card enclosed with those materials, signing and dating it and returning it in the postage-paid envelope P&F has provided; or

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(iv) at the Special Meeting — You may vote in person at the Special Meeting. You are encouraged to sign, date and return the proxy card in the postage-paid envelope provided, or vote via the Internet or by telephone, regardless of whether you plan to attend the Special Meeting.

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For holders in “street name”: If you hold your shares in “street name” and, therefore, are not a stockholder of record, you will need to follow the specific voting instruction card provided to you by your broker, bank or other similar instruction. If you wish to vote your shares at the Special Meeting, you must obtain a legal proxy from such broker, trust, bank or other nominee (which indicates that you were the beneficial owner of the shares on the Record Date, and that such broker, trust, bank or other nominee is giving you its proxy to vote the shares).

If you submit your proxy by Internet, telephone or mail, and you do not subsequently revoke your proxy, your shares of P&F common stock will be voted in accordance with your instructions.

Even if you plan to attend the Special Meeting, you are strongly encouraged to vote your shares of P&F common stock by proxy. If you are a stockholder of record or if you obtain a valid “legal” proxy to vote shares which you beneficially own and wish to change your vote, you may still vote your shares of P&F common stock at the Special Meeting even if you have previously voted by proxy. If you are present at the Special Meeting and vote in person, your previous vote by proxy will not be counted.

Q:

How many votes do I have?

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A:

Each holder of P&F common stock is entitled to cast one vote on each matter properly brought before the Special Meeting for each share of P&F common stock that such holder owned as of the Record Date.

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Q:

May I attend the Special Meeting and vote?

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A:

Yes. All P&F Stockholders of record as of the Record Date may attend the Special Meeting and vote in person.

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Q:

What am I being asked to vote on at the Special Meeting?

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A:

You are being asked to consider and vote on the following proposals:

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to adopt the Merger Agreement, pursuant to which Acquisition Sub will merge with and into P&F, and P&F will become a wholly owned subsidiary of Parent;

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to approve, by non-binding, advisory vote, compensation that will or may become payable by P&F to its named executive officers in connection with the Merger; and

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to approve the adjournment of the Special Meeting to a later date if necessary or appropriate to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting.

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Q:

How does the Merger Consideration compare to the market price of P&F common stock prior to the announcement of the Merger?

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A:

The Merger Consideration represents a premium of approximately 97 percent over the closing price of P&F common stock on October 12, 2023, the last full trading day prior to the Board’s approval of the Merger Agreement. The Merger Consideration also represents approximately a 95 percent premium over the 30-day volume weighted average price of P&F common stock, a 89 percent premium over the 90-day volume weighted average price of P&F common stock, and a 104 percent premium over the 180-day volume weighted average price of P&F common stock, in each case, for the period through and including October 12, 2023.

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Q:

Will P&F pay a quarterly dividend before the closing of the Merger?

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A:

Under the terms of the Merger Agreement, from October 13, 2023 until the consummation of the Merger, P&F is permitted to pay its regular quarterly dividend in the fourth quarter of fiscal 2023 but is not permitted to pay any dividends thereafter, as further described in the section entitled “Terms of the Merger Agreement — Conduct of the Business Pending the Merger” beginning on page 67 of this Proxy Statement, is prohibited from declaring or preparing any dividends without the written consent of Parent following the third quarter 2023 $0.05 per share dividend which was declared in November 2023.

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Q:

Does Parent have the financial resources to consummate the Merger?

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A:

Parent has obtained an Equity Commitment Letter and Debt Commitment Letters which will provide it with sufficient resources to consummate the Merger, as further described in the section entitled “The Merger — Financing of the Merger” beginning on page 57 of this Proxy Statement.

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Q:

What do I need to do now?

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A:

You are encouraged to read this Proxy Statement, the annexes to this Proxy Statement (including the Merger Agreement) and the documents we refer to in the Proxy Statement carefully and consider how the Merger affects you. Then, complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying reply envelope or grant your proxy electronically over the Internet or by telephone, so that your shares can be voted at the Special Meeting. If you hold your shares in “street name,” please refer to the voting instruction card provided by your broker, bank or other nominee to vote your shares. Please do not send your stock certificates with your proxy card.

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Q:

Should I send in my stock certificates now?

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A:

No. If you are a record holder, after the Merger is consummated, under the terms of the Merger Agreement, you will receive a letter of transmittal instructing you to send your stock certificates to the paying agent in order to receive the cash payment of the Merger Consideration for each share of P&F common stock represented by such stock certificates. You should use the letter of transmittal to exchange your stock certificates for the Merger Consideration to which you are entitled upon the consummation of the Merger. Please do not send in your stock certificates now.

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Q:

If I do not know where my stock certificates are, how will I get the Merger Consideration for my shares of P&F common stock?

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A:

If the Merger is consummated, the transmittal materials you will receive after the closing of the Merger will include the procedures that you must follow if you cannot locate your stock certificates. This will include an affidavit that you will need to sign attesting to the loss of your stock certificates. You may also be required to post a bond as indemnity against any potential loss.

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Q:

How does the Board recommend that I vote?

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A:

The Board — after considering the various factors as set forth in the section entitled “The

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Merger — Recommendation of the Board and Reasons for the Merger,” beginning on page 39 of this Proxy Statement, the comprehensive sale process conducted by the Board and the alternatives to the Merger (including remaining as a standalone company) — has determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are advisable to, fair to and in the best interests of P&F and its stockholders, and has approved the adoption of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger.

The Board unanimously recommends that you vote “FOR” the adoption of the Merger Agreement, by means of a non-binding, advisory vote, “FOR” the proposal to approve compensation that will or may become payable by P&F to its named executed officers in connection with the Merger and “FOR” the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting.

Q:

What happens if the Merger is not consummated?

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A:

If the Merger Agreement is not adopted by P&F stockholders or if the Merger is not consummated for any other reason, P&F stockholders will not receive any payment for their shares of P&F common stock. Instead, P&F will remain an independent public company, P&F common stock will continue to be listed and traded on The Nasdaq Stock Market and registered under the Exchange Act and we will continue to file periodic reports with the SEC on account of P&F common stock.

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Under certain specified circumstances, P&F may be required to reimburse Parent’s expenses or pay Parent a termination fee, or under certain other specific circumstances, P&F may be entitled to receive a reverse termination fee from Parent, upon the termination of the Merger Agreement, as described in the sections entitled “Terms of the Merger Agreement. — Termination Fees” and “Terms of the Merger Agreement — Expense Reimbursement” beginning on pages 78 and 79, respectively, of this Proxy Statement.

Q:

Do any of P&F’s directors or officers have interests in the Merger that may differ from those of P&F stockholders generally?

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A:

Yes. In considering the recommendation of the Board with respect to the proposal to adopt the Merger Agreement, you should be aware that P&F’s directors and executive officers may have interests in the Merger that are different from, or in addition to, the interests of P&F stockholders generally. The Board was aware of and considered these interests, to the extent such interests existed at the time, among other matters, in evaluating and negotiating the Merger Agreement and the Merger, in approving the Merger Agreement and the Merger, and in recommending that the Merger Agreement be adopted by P&F stockholders. For a description of the interests of P&F’s directors and executive officers in the Merger, see the section entitled “The Merger — Interests of the Directors and Executive Officers of P&F in the Merger” beginning on page 53 of this Proxy Statement.

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Q:

What vote is required to approve the proposal submitted to a vote at the Special Meeting?

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A:

The affirmative vote of the majority of the shares of P&F common stock, outstanding and entitled to vote thereon and the affirmative vote of a majority of the votes cast at the Special Meeting by stockholders other than Richard A. Horowitz, as applicable, is required to adopt the Merger Agreement. The affirmative vote of a majority of the shares of P&F common stock entitled to vote which are present, by attendance at the Special Meeting or represented by proxy, at the Special Meeting, provided a quorum is present, is required to approve, by means of a non-binding, advisory vote, the proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger. The affirmative vote of a majority of the shares of P&F common stock entitled to vote which are present, by attendance at the Special Meeting or represented by proxy, at the Special Meeting, whether or not a quorum is present, is required to approve the proposal to adjourn the Special Meeting. This means that the proposal to adopt the Merger Agreement will be approved if (i) the number of shares voted “FOR” such proposal is greater than fifty percent (50%) of the total number of shares of P&F common stock entitled to vote at the Special Meeting and (ii) the number of shares held by stockholders other than Richard A. Horowitz, P&F’s Chief Executive Officer and Director, voted “FOR” such proposal is greater than fifty present (50%) of the total number of such shares of P&F common stock cast at the Special Meeting. Abstentions will be counted as votes

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“AGAINST” the proposal to adopt the Merger Agreement with respect to the vote required by clause (i) above and will have no effect on the vote required by clause (ii) above. Abstentions will be counted as votes “AGAINST” the proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger and the proposal to adjourn the Special Meeting. Broker non-votes, if any, will have the effect of a vote “AGAINST” the proposal to adopt the Merger Agreement and will not have any effect on the proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger or the proposal to adjourn the Special Meeting.

As of November 13, 2023, the record date for determining who is entitled to vote at the Special Meeting, there were 3,194,699 shares of P&F common stock issues and outstanding. Each holder of P&F common stock is entitled to one vote per share of stock owned by such holder as of the Record Date.

Q:

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

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A:

If your shares are registered directly in your name with our transfer agent, Equiniti Trust Company, LLC, you are considered, with respect to those shares, to be the “stockholder of record.” In this case, this Proxy Statement and your proxy card have been sent directly to you by P&F.

​

If your shares are held through a broker, bank or other nominee, you are considered the “beneficial owner” of the shares of P&F common stock held in “street name.” in that case, this Proxy Statement has been forwarded to your by your broker, bank or other nominee who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote your shares by following their instructions for voting. You are also invited to attend the Special Meeting. However, because you are not the stockholder of record, you may not vote your shares in person at the Special Meeting unless you request and obtain a valid “legal” proxy from your broker, bank or other nominee.

Q:

What is a proxy?

​

​

A:

A proxy is your legal designation of another person, referred to as a “proxy,” to vote your shares of P&F common stock. The written document describing the matters to be considered and voted on at the Special Meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of P&F common stock is called a “proxy card.” The Board has designated Richard A. Horowitz and Joseph A. Molino, Jr., and each of them, with full power of substitution, as proxies for the Special Meeting.

​

Q:

Can I change or revoke my proxy?

​

​

A:

For P&F Stockholders of record: Yes. A proxy may be changed or revoked at any time prior to the vote at the Special Meeting by submitting a later-dated proxy (including a proxy submitted via the Internet or by telephone) or by giving written notice to P&F’s Secretary. You may not change your vote over the Internet or by telephone after 11:59 p.m., Eastern Time, on December 18, 2023. You may also attend the Special Meeting and vote your shares in person.

​

For holders in “street name”: Yes. You must follow the specific voting instruction card provided to you by your broker, bank or other similar institution to change or revoke any instructions you have already provided to them.

Q:

If a P&F stockholder gives a proxy, how will the shares be voted?

​

A:

Regardless of the method you choose to vote, the individuals named on the enclosed proxy card, or your proxies, will vote your shares in the way that you indicate. When completing the Internet or telephone process or the proxy card, you may specify whether your shares should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the Special Meeting.

​

If you properly sign your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted “FOR” the

 

19

 

adoption of the Merger Agreement, “FOR” the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by P&F to its named executive officers in connection with the Merger and “FOR” the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting.

Q:

I understand that a quorum is required in order to conduct business at the Special Meeting. What constitutes a quorum?

​

​

A:

A majority in voting power of P&F common stock issued and outstanding and entitled to vote at the Special Meeting, which are present by attendance at the Special Meeting or represented by proxy, constitutes a quorum at the Special Meeting. As of the close of business on the Record Date, there were 3,194,699 shares of P&F common stock issued and outstanding and entitled to vote. If you submit a properly executed proxy by Internet, telephone or mail, you will be considered a part of the quorum. In addition, abstentions will be counted for purposes of establishing a quorum. Broker non-votes will not be counted for purposes of establishing a quorum. As a result, 1,597,350 shares must be present at the Special Meeting or represented by proxy to have a quorum. If a quorum is not present, the Special Meeting will be adjourned until a quorum is obtained, subject to the terms of the Merger Agreement. The affirmative vote of a majority of the voting power of the shares of P&F common stock, present, by attendance or represented by proxy, and entitled to vote at the Special Meeting, or the chairman of the Special Meeting, may adjourn the Special Meeting.

​

Q:

How can I obtain a proxy card?

​

A:

If you lose, misplace or otherwise need to obtain a proxy card, please follow the applicable procedure below.

​

For P&F Stockholders of record: Please contact MacKenzie Partners, Inc., our proxy solictor, by calling (212) 929-5500 / Toll-Free: (800) 322-2885.

For holders in “street name”: Please contact your account representative at your broker, bank or other similar institution.

Q:

What happens if I sell or otherwise transfer my shares of P&F common stock after the close of business on the Record Date but before the Special Meeting?

​

A:

The Record Date is earlier than both the date of the Special Meeting and the date the Merger is expected to be consummated. If you sell or transfer your shares of P&F common stock after the close of business on the Record Date but before the Special Meeting, unless special arrangements (such as the provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your shares and each of you notifies P&F in writing of such special arrangements, you will transfer the right to receive the Merger Consideration, if the Merger is consummated, to the person to whom you sell or transfer your shared of P&F common stock, but you will retain your right to vote these shares at the Special Meeting. Even if you sell or otherwise transfer your shares of P&F common stock after the close of business on the Record Date, you are encouraged to complete, date, sign and return the enclosed proxy card or vote via the Internet or telephone.

​

Q:

What should I do if I receive more than one set of voting materials?

​

A:

You may receive more than one set of voting materials, including multiple copies of this Proxy Statement and multiple proxy cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, date, sign and return (or vote via the Internet or telephone with respect to) each proxy card and voting instruction card that you receive.

​

 

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Q:

Who will count the votes?

​

​

A:

The votes will be counted by Equiniti Trust Company, LLC, the independent inspector of election appointed by the Board for the Special Meeting.

​

Q:

Who pays for the expenses of this proxy solicitation?

​

A:

P&F will bear the entire cost of this proxy solicitation, including the preparation, printing, mailing and distribution of these proxy materials. P&F has retained MacKenzie Partners, Inc., a proxy solicitation firm, to solicit proxies in connection with the Special Meeting at a cost of approximately $7,500 plus expenses. P&F has also agreed to reimburse MacKenzie Partners, Inc., for reasonable out-of-pocket expenses incurred in connection with the proxy solicitation and indemnify MacKenzie Partners, Inc. against losses arising out of its provision of such services on P&F’s behalf. P&F may also reimburse brokerage firms and other persons representing stockholders who hold their shares in “street name” for reasonable expenses incurred by them in forwarding proxy materials to such stockholders. In addition, certain directors, officers and other employees, without additional remuneration, may solicit proxies in person, or by telephone, facsimile, email and other methods or electronic communication.

​

Q:

Where can I find the voting results of Special Meeting?

​

A:

P&F intends to announce preliminary voting results at the Special Meeting and publish final results in a Current Report on Form 8-K that will be filed with the SEC within four (4) business days after the Special Meeting.

​

Q:

Will I be subject to U.S. federal income tax upon the exchange of P&F common stock for cash pursuant to the Merger?

​

​

A:

The exchange of P&F common stock for cash pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. Accordingly, a U.S. Holder (as defined in the section entitled “The Merger — U.S. Federal Income Tax Consequences of the Merger” beginning on page 59 of this Proxy Statement) who exchanges shares of P&F common stock for cash in the Merger generally will recognize gain or loss in an amount equal to the difference, if any, between the amount of cash received with respect to such shares and the U.S. Holder’s adjusted tax basis in such shares. Gain or loss will be determined separately for each block of shares of P&F common stock (that is, shares acquired for the same cost in a single transaction). If you are a Non-U.S. Holder (as defined in the section entitled “The Merger — U.S. Federal Income Tax Consequences of the Merger” beginning on page 59 of this Proxy Statement), the Merger generally will not result in U.S. federal income tax to you unless you have certain connections with the United States.

​

For a more complete description of the U.S. federal income tax consequences of the Merger, see the section entitled “The Merger — U.S. Federal Income Tax Consequences of the Merger” beginning on page 59 of this Proxy Statement.

Q:

What will the holders of outstanding P&F equity awards receive in the Merger?

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​

A:

For information regarding the treatment of P&F’s outstanding equity awards, see the section entitled “Terms of the Merger Agreement — Merger Consideration — Company Options and Company Restricted Shares” beginning on page 63 of this Proxy Statement.

​

Q:

When do you expect the Merger to be consummated?

​

A:

We are working toward consummating the Merger as quickly as possible and currently expect to consummate the Merger shortly following the Special Meeting. However, the exact timing of consummation of the Merger cannot be predicted because the Merger is subject to specified conditions, including, among other things, the P&F Stockholder Approval.

​

Q:

Are there any other risks to me from the Merger that I should consider?

​

​

A:

Yes. There are risks associated with all business combinations, including the Merger. See the section entitled “Cautionary Statement on Forward-Looking Statements” beginning on page 23 of this Proxy Statement.

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Q:

Am I entitled to appraisal rights under the DGCL?

​

​

A:

If the Merger is adopted by P&F stockholders, stockholders who do not vote (whether by attendance at the Special Meeting or by proxy) in favor of the adoption of the Merger Agreement and who properly demand appraisal of their shares will be entitled to appraisal rights in connection with the Merger under Section 262 of the DGCL. This means that P&F stockholders common stock are entitled to have their shares appraised by the Court of Chancery and to receive payment in cash of the “fair value” of the shares of P&F common stock, exclusive of any elements of value arising from the accomplishment or expectation of the Merger, together with interest based to be paid upon the amount determined to be fair value, if any, as determined by the Court of Chancery. Stockholders who wish to seek appraisal of their shares are in any case encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process. The DGCL requirements for exercising appraisal rights are described in the section entitled “Appraisal Rights” beginning on page 84 of this Proxy Statement, and the relevant section of the DGCL regarding appraisal rights is reproduced and attached as Annex C to this Proxy Statement.

​

Q:

How can I obtain more information about P&F?

​

​

A:

You can find more information about P&F from various sources described in the section entitled “Where You Can Obtain Additional Information” beginning on page 91 of this Proxy Statement.

​

Q:

Who can help answer my questions?

​

A:

If you have any questions concerning the Merger, the Special Meeting or this Proxy Statement, would like additional copies of this Proxy Statement or need help voting your shares of common stock, please contact P&F’s proxy solicitor:

​

MacKenzie Partners, Inc.
1407 Broadway
New York, New York 10018
Call (212) 929-5500 / Toll-Free: (800) 322-2885
Email: [email protected]

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Proxy Statement, and the documents to which P&F refers you in this Proxy Statement, as well as information included in oral statements or other written statements made or to be made by P&F or on P&F’s behalf, contain “forward-looking statements” within the meaning of federal securities laws about P&F’s financial condition and results of operations that are based on management’s current expectations, estimates and projections about the markets in which P&F operates, as well as management’s beliefs and assumptions. Words such as “expects,” “anticipates,” “believes,” “estimates” or other similar expressions and future or conditional verbs such as “will,” “should,” “would” and “could” are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements.

This Proxy Statement includes forward-looking statements relating to the proposed Merger between P&F, Parent and Acquisition Sub, including financial estimates and statements as to the expected timing, completion and effects of the proposed Merger. These estimates and statements are subject to risks and uncertainties, and actual results might differ materially. Such estimates and statements include, but are not limited to, statements about the benefits of the proposed Merger, including future financial and operating results, the combined company’s plans, expectations and intentions, and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of P&F’s management and are subject to significant risks and uncertainties outside of P&F’s control. Actual results could differ materially based on factors including, but not limited to: (i) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; (ii) the risk that P&F stockholders may not approve the proposed Merger; (iii) inability to complete the proposed Merger because, among other reasons, conditions to the closing of the proposed Merger may not be satisfied or waived; (iv) uncertainty as to the timing of completion of the proposed Merger; (v) potential adverse effects or changes to the relationships with customers, employees, suppliers or other parties resulting from the announcement or completion of the proposed Merger; (vi) potential litigation relating to the proposed Merger that could be instituted against P&F or its directors and officers, including the effects of any outcomes related thereto; or (vii) possible disruptions from the proposed Merger that could harm P&F’s business, including current plans and operations.

All of the forward-looking statements P&F makes in this Proxy Statement are qualified by the information contained or incorporated by reference herein, including, but not limited to, (i) the information contained under this heading and (ii) the information in P&F’s consolidated financial statements and notes thereto included in our most recent filing on Form 10-K for the fiscal year ended December 31, 2022 and subsequent periodic and interim report filings (see the section entitled “Where You Can Find More Information” beginning on page 91 of this Proxy Statement).

Discussions of additional risks and uncertainties are contained in P&F’s filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect P&F’s judgment only as of the date hereof. P&F undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise.

THE SPECIAL MEETING

The enclosed proxy is solicited on behalf of the Board for use at the Special Meeting or any adjournment or postponement thereof.

Date, Time and Place

The Special Meeting will be held on December 19, 2023, at 10:00 a.m. Eastern Standard Time (EST) at the Conference Center located at 445 Broadhollow Road, Melville, New York 11747.

Purpose of the Special Meeting

At the Special Meeting, P&F stockholders will be asked to vote on proposals to adopt the Merger Agreement, to approve, by non-binding, advisory vote, compensation that will or may become payable by

 

23

 

P&F to its named executive officers in connection with the Merger and to adjourn the Special Meeting to a later date to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting.

Record Date; Shares Entitled to Vote; Quorum

Only P&F Stockholders of record as of the close of business on November 13, 2023 are entitled to notice of the Special Meeting and to vote at the Special Meeting or at any adjournment or postponement thereof. A list of stockholders entitled to vote at the Special Meeting will be available for inspection in P&F’s headquarters located at 445 Broadhollow Road, Suite 100, Melville, New York 11747, during regular business hours for a period of at least ten (10) days before the Special Meeting and at the location of the Special Meeting during the Special Meeting.

A majority in voting power of P&F common stock issued and outstanding and entitled to vote at the Special Meeting, which are present in person or represented by proxy, constitutes a quorum at the Special Meeting. As of the close of business on the Record Date for the Special Meeting, there were 3,194,699 shares of P&F common stock issued and outstanding and entitled to vote. If you submit a properly executed proxy by Internet, telephone or mail, you will be considered a part of the quorum. In addition, abstentions will be counted for purposes of establishing a quorum. Broker non-votes, if any, will not be counted for purposes of establishing a quorum. As a result, 1,597,350 shares must be present by attendance at the Special Meeting or represented by proxy to have a quorum. If a quorum is not present, the Special Meeting will be adjourned until a quorum is obtained, subject to the terms of the Merger Agreement. The affirmative vote of a majority of voting power of the shares of P&F common stock entitled to vote which are present, by attendance at the Special Meeting or represented by proxy, at the Special Meeting, or the chairman of the Special Meeting, may adjourn the Special Meeting.

Vote Required; Abstentions and Broker Non-Votes

The affirmative vote of the majority of the shares of P&F common stock, outstanding and entitled to vote thereon and the affirmative vote of a majority of the votes cast at the Special Meeting by stockholders other than Richard A. Horowitz, as applicable, is required to adopt the Merger Agreement. The affirmative vote of a majority of the shares of P&F common stock entitled to vote which are present, by attendance at the Special Meeting or represented by proxy, at the Special Meeting, provided a quorum is present, is required to approve, by means of a non-binding, advisory vote, the proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger. The affirmative vote of a majority of the shares of P&F common stock entitled to vote which are present, by attendance at the Special Meeting or represented by proxy, at the Special Meeting, whether or not a quorum is present, is required to approve the proposal to adjourn the Special Meeting. This means that the proposal to adopt the Merger Agreement will be approved if (i) the number of shares voted “FOR” such proposal is greater than fifty percent (50%) of the total number of shares of P&F common stock entitled to vote at the Special Meeting and (ii) the number of shares held by stockholders other than Richard A. Horowitz, P&F’s Chief Executive Officer and Director, voted “FOR” such proposal is greater than fifty present (50%) of the total number of such shares of P&F common stock cast at the Special Meeting. Abstentions will be counted as votes “AGAINST” the proposal to adopt the Merger Agreement with respect to the vote required by clause (i) above and will have no effect on the vote required by clause (ii) above. Abstentions will be counted as votes “AGAINST” the proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger and the proposal to adjourn the Special Meeting. Broker non-votes, if any, will have the effect of a vote “AGAINST” the proposal to adopt the Merger Agreement and will not have any effect on the proposal to approve compensation that will or may become payable by P&F to its named executive officers in connection with the Merger or the proposal to adjourn the Special Meeting.

Shares Held by P&F’s Directors and Executive Officers

At the close of business on November 13, 2023, P&F’s directors and executive officers beneficially owned, and were entitled to vote, 1,604,004 shares of P&F common stock, which represented approximately 50% of the shares of P&F’s outstanding common stock on that date. Except as otherwise provided in the

 

24

 

Support Agreement, the directors and executive officers have informed P&F that they currently intend to vote all of their shares of P&F common stock “FOR” the adoption of the Merger Agreement, “FOR” the non-binding, advisory proposal regarding compensation that will or may become payable by P&F to its named executive officers in connection with the Merger and “FOR” the adjournment of the Special Meeting (if necessary or appropriate).

Voting of Proxies

If your shares are registered in your name with P&F’s transfer agent, Equiniti Trust Company, LLC, you may cause your shares to be voted by returning a signed proxy card, or you may vote in person at the Special Meeting. Additionally, you may submit electronically over the Internet or by phone a proxy authorizing the voting of your shares by following the instructions on your proxy card. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to submit a proxy electronically over the Internet or by telephone. Based on your proxy cards or Internet and telephone proxies, the proxy holders will vote your shares according to your directions.

You are encouraged to sign, date and return the proxy card in the postage-paid envelope provided, or vote via the Internet or by telephone, regardless of whether you plan to attend the Special Meeting. If you attend the Special Meeting and vote in person, your vote by ballot will revoke any proxy previously submitted.

Voting instructions are included on your enclosed proxy card. All shares represented by properly executed proxies received in time for the Special Meeting will be voted at the Special Meeting in accordance with the instructions of the stockholders. Properly executed proxies that do not contain voting instructions will be voted “FOR” adoption of the Merger Agreement, “FOR” the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by P&F to its named executive officers in connection with the Merger and “FOR” the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting. No proxy that is specifically marked against adoption of the Merger Agreement will be voted in favor of the proposed compensation arrangements for P&F’s named executive officers in connection with the Merger, unless it is specifically marked “FOR” the approval of such proposal.

If your shares are held in “street name” through a broker, bank or other nominee, you may vote through your broker, bank or other nominee by completing and returning the voting instruction form provided by your broker, bank or other nominee, or by the Internet or telephone through your broker, bank or other nominee if such a service is provided. To vote via the Internet or telephone through your broker, bank or other nominee, you should follow the instructions on the voting instruction card provided by your broker, bank or other nominee. If you do not return your bank’s broker’s or other nominee’s voting instruction form, do not vote via the Internet or telephone through your broker, bank or other nominee, if possible, or do not attend the Special Meeting and vote by attendance at the Special Meeting with a “legal” proxy from your broker, bank or other nominee, it will be counted as a vote “AGAINST” the proposal to adopt the Merger Agreement with respect to the vote requiring a majority of P&F’s outstanding shares and will not have any effect on the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by P&F to its named executive officers in connection with the Merger or the proposal to adjourn the Special Meeting.

Revocability of Proxies

If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the Special Meeting by:

•

submitting a new proxy electronically over the Internet or by telephone after the date of the earlier submitted proxy;

​

•

delivering a written notice of revocation to P&F’s Secretary;

​

•

completing and properly executing another proxy card with a later date and returning it in the postage paid envelope provided; or

​

•

attending the Special Meeting and voting in person.

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25

 

Please note that to be effective, your new proxy card, Internet or telephonic voting instructions or written notice of revocation must be received by P&F’s Secretary prior to the Special Meeting and, in the case of Internet or telephonic voting instructions, must be received before 11:59 p.m. Eastern Time on December 18, 2023. If you have submitted a proxy, your appearance at the Special Meeting, in the absence of voting by attendance at the Special Meeting or submitting an additional proxy or revocation, will not have the effect of revoking your prior proxy.

If you hold your shares of P&F common stock in “street name,” you should contact your broker, bank or other nominee for instructions regarding how to change your vote. If you wish to vote your shares in person at the Special Meeting, you must obtain a legal proxy from such broker, trust, bank or other nominee (which indicates that you were the beneficial owner of the shares on the Record Date, and that such broker, trust, bank or other nominee is giving you its proxy to vote the shares).

Please note, if you do not provide a copy of the legal proxy, you may still attend the Special Meeting by showing proof of ownership but you will be unable to vote your shares in person at the Special Meeting.

Any adjournment, recess or postponement of the Special Meeting for the purpose of soliciting additional proxies will allow P&F stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting which was adjourned, recessed or postponed.

Board Recommendation

The Board — after considering various factors described in the section entitled “The Merger — Recommendation of the Board of Directors and Reasons for the Merger” beginning on page 39 of this Proxy Statement, and after consultation with legal and financial advisors — has determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are advisable to, fair to and in the best interests of P&F and its stockholders, and has adopted and approved the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger. The Board unanimously recommends that you vote “FOR” the proposal to adopt the Merger Agreement, “FOR” the proposal to approve, by non-binding, advisory vote, compensation that will or may become payable by P&F to its named executive officers in connection with the Merger and “FOR” the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting.

Tabulation of Votes

All votes will be tabulated by a representative of Equiniti Trust Company, LLC, who will act as the inspector of election appointed for the Special Meeting, and will separately tabulate affirmative and negative votes, abstentions and Broker non-votes.

Solicitation of Proxies

This Proxy Statement is sent on behalf of, and the proxies are being solicited by, the Board. The expense of soliciting proxies in the enclosed form will be borne by P&F. P&F has retained MacKenzie Partners, Inc., a proxy solicitation firm, to solicit proxies in connection with the Special Meeting at a cost of approximately $7,500 plus expenses. P&F has also agreed to reimburse MacKenzie Partners, Inc., for reasonable out-of-pocket expenses incurred in connection with the proxy solicitation and indemnify MacKenzie Partners, Inc. against losses arising out of its provision of such services on P&F’s behalf. In addition, P&F may reimburse brokers, banks and other custodians, nominees and fiduciaries representing beneficial owners of shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by some of P&F’s directors, officers and employees, in person, or by telephone, facsimile, email and other methods of electronic communication. No additional compensation will be paid for such services.

Anticipated Date of Consummation of the Merger

Assuming timely satisfaction of necessary closing conditions, including, among other things, the P&F Stockholder Approval and receipt of required regulatory approvals, we currently anticipate that the Merger will be consummated shortly following the Special Meeting.

 

26

 

Attending the Special Meeting

P&F stockholders of record as of the close of business on the Record Date may attend and vote in person at the Special Meeting.

If you hold your shares in “street name” and, therefore, are not a stockholder of record, you will need to follow the specific voting instruction card provided to you by your broker, bank or other similar instruction. If you wish to vote your shares in person at the Special Meeting, you must obtain a legal proxy from such broker, trust, bank or other nominee (which indicates that you were the beneficial owner of the shares on the Record Date, and that such broker, trust, bank or other nominee is giving you its proxy to vote the shares).

Please note, if you do not provide a copy of the legal proxy, you may still attend the Special Meeting by showing proof of ownership but you will be unable to vote your shares in person at the Special Meeting.

Even if you plan to attend the Special Meeting, you are encouraged to complete, sign, date and return the enclosed proxy card or vote electronically over the Internet or via telephone to ensure that your shares will be represented at the Special Meeting. If you attend the Special Meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. If you hold your shares in “street name,” because you are not the stockholder of record, you may not vote your shares in person at the Special Meeting unless you follow the procedures set forth above.

Assistance

If you need assistance in completing your proxy card or have questions regarding the Special Meeting, please contact MacKenzie Partners, Inc., our proxy solicitor, by calling (212) 929-5500 / Toll-Free: (800) 322-2885.

Rights of Stockholders Who Seek Appraisal

If the proposal to adopt the Merger Agreement is approved by P&F stockholders, stockholders who do not vote (whether by attendance at the Special Meeting or by proxy) in favor of the adoption of the Merger Agreement and who properly exercise and perfect their demand for appraisal of their shares will be entitled to appraisal rights in connection with the Merger under Section 262 of the DGCL. This means that holders of P&F common stock are entitled to have their shares appraised by the Court of Chancery and to receive payment in cash of the “fair value” of the shares of P&F common stock, exclusive of any elements of value arising from the accomplishment or expectation of the Merger, together with interest to be paid upon the amount determined to be fair value, if any, as determined by the court. Stockholders who wish to seek appraisal of their shares are in any case encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process.

Stockholders considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the $13.00 per share Merger Consideration payable pursuant to the Merger Agreement if they did not seek appraisal of their shares.

To exercise your appraisal rights, you must, among other things, submit a written demand for appraisal to P&F before the vote is taken on the proposal to adopt the Merger Agreement, you must not submit a blank proxy or otherwise vote in favor of the proposal to adopt the Merger Agreement, and you must continue to hold the shares of P&F common stock of record through the Effective Time. Your failure to follow the procedures specified under the DGCL will result in the loss of your appraisal rights. The DGCL requirements for exercising appraisal rights are described in further detail in this Proxy Statement, and the relevant section of the DGCL regarding appraisal rights is reproduced and attached as Annex C to this Proxy Statement. If you hold your shares of P&F common stock through a broker, bank or other nominee and you wish to exercise appraisal rights, you should consult with your broker, bank or other nominee to determine the appropriate procedures for the making of a demand for appraisal by such broker, bank or other nominee. Stockholders should refer to the discussion in the section entitled “Appraisal Rights” beginning on page 84 of this Proxy Statement and the DGCL requirements for exercising appraisal rights reproduced and attached as Annex C to this Proxy Statement.

Other Matters

At this time, we know of no other matters to be submitted at the Special Meeting.

 

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PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

THE MERGER

The discussion of the Merger in this section and elsewhere in this Proxy Statement is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A to this Proxy Statement and is incorporated into this Proxy Statement by reference. This summary does not purport to be complete and may not contain all of the information about the Merger that is important to you. You are encouraged to read the entire Merger Agreement carefully and in its entirety as it is the legal document that governs the Merger.

Additional information about the Company may be found elsewhere in this Proxy Statement and in the Company’s other public filings. See attached entitled “Where You Can Find Additional Information” beginning on page 91 of this Proxy Statement.

Parties Involved in the Merger

P&F Industries, Inc.

445 Broadhollow Road, Suite 100,
Melville, New York 11747
(631) 694-9800

P&F imports, manufactures and markets pneumatic hand tools of its own design, primarily to the retail, industrial, automotive and aerospace markets. Its products include sanders, grinders, drills, saws and impact wrenches. These tools are primarily powered by compressed air, rather than by electricity or a battery. P&F conducts its business through a wholly-owned subsidiary, Continental Tool Group, Inc. (“Continental”), which in turn operates through its wholly-owned subsidiaries, Florida Pneumatic Manufacturing Corporation (“Florida Pneumatic” or “FP”) and Hy-Tech Machine, Inc. (“Hy-Tech” or “HT”). Exhaust Technologies Inc. (“ETI”), Universal Air Tool Company Limited (“UAT”) and Jiffy Air Tool, Inc. (“Jiffy”), are wholly-owned subsidiaries of Florida Pneumatic. The business of Air Tool Service Company (“ATSCO”) operates through a wholly-owned subsidiary of Hy-Tech. Blaz-Man Gear, Inc. and Gear Products & Manufacturing, Inc. are each wholly-owned subsidiaries of Hy-Tech.

Tools AcquisitionCo, LLC

222 South Ninth Street, Suite 3300
Minneapolis, Minnesota 55402
(612) 436-4280

Parent is a Delaware limited liability company and an affiliate of ShoreView Industries, LLC. ShoreView Industries, LLC is an investment firm which partners with family and entrepreneur-owned companies across many sectors, including building products, industrial technology, plastics and packaging, aerospace and defense, business and professional services, life sciences, industrial distribution, niche consumer products, specialty materials, and residential services. Parent was formed solely for the purpose of entering into the Merger Agreement and completing the transactions contemplated by the Merger Agreement, including the Merger, and the related financing transactions. Parent has not conducted any business operations except in furtherance of this purpose and activities incident to its formation. Upon the consummation of the Merger, P&F will be a wholly owned subsidiary of Parent.

Tools MergerSub, Inc.

Acquisition Sub is a Delaware corporation and a direct wholly owned subsidiary of Parent formed solely for the purpose of entering into the Merger Agreement and completing the transactions contemplated by the Merger Agreement, including the Merger, and the related financing transactions. Acquisition Sub has not conducted any business operations except in furtherance of this purpose and activities incident to its formation. Upon the consummation of the Merger, Acquisition Sub will cease to exist.

 

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Effect of the Merger

If the Merger Agreement is adopted by P&F stockholders and certain conditions to the consummation of the Merger are either satisfied or waived, Acquisition Sub will merge with and into P&F, with P&F surviving and continuing under the name “P&F Industries, Inc.” as the Surviving Corporation. As a result of the Merger, P&F will become a wholly-owned subsidiary of Parent and P&F common stock will no longer be publicly traded. In addition, P&F common stock will be delisted from Nasdaq and deregistered under the Exchange Act, in each case, in accordance with applicable law, rules and regulations, and P&F will no longer file periodic reports with the SEC on account of P&F common stock. If the Merger is consummated, you will not own any shares of common stock of the Surviving Corporation.

The Effective Time will occur upon the filing of the certificate of merger with the Secretary of State of the State of Delaware (or at such other time as may be agreed to by Parent, Acquisition Sub and the Company).

Effect on P&F if the Merger is Not Consummated

If the Merger Agreement is not adopted by P&F stockholders or if the Merger is not consummated for any other reason, P&F stockholders will not receive any payment for their shares of P&F common stock. Instead, P&F will remain an independent public company, P&F common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act and P&F will continue to file periodic reports with the SEC on account of P&F common stock. In addition, if the Merger is not consummated, P&F expects that P&F’s management will operate the business in a manner similar to that in which it is operated today.

Furthermore, if the Merger is not consummated, depending on the circumstances that would have caused the Merger not to be consummated, it is likely that the price of P&F common stock will decline significantly. If that were to occur, it is uncertain when, if ever, the price of P&F common stock would return to the price at which it trades as of the date of this Proxy Statement.

Accordingly, if the Merger is not consummated, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares of P&F common stock. If the Merger is not consummated, the Board will continue to evaluate and review P&F’s business operations, properties, dividend policy and capitalization, among other things, make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance stockholder value. If the Merger Agreement is not adopted by P&F stockholders or if the Merger is not consummated for any other reason, there can be no assurance that any other transaction acceptable to P&F will be offered or that P&F’s business, prospects or results of operation will not be adversely impacted.

In addition, under specific circumstances, P&F may be required to reimburse Parent’s expenses or pay Parent a termination fee, or may be entitled to receive a reverse termination fee from Parent, upon termination of the Merger Agreement, as described in the sections entitled “Terms of the Merger Agreement — Termination Fees” and “Terms of the Merger Agreement — Expense Reimbursement” beginning on pages 78 and 79, respectively, of this Proxy Statement.

Merger Consideration

Upon the consummation of the Merger, each share of P&F common stock issued and outstanding prior to the Effective Time (other than (i) shares held by P&F or any of its subsidiaries or held, directly or indirectly, by Parent or Acquisition Sub, which will be canceled for no consideration, and (ii) Dissenting Shares) will be canceled and automatically converted into the right to receive the Merger Consideration.

Background of the Merger

As part of its ongoing evaluation of P&F’s business, the Board, together with senior management, regularly reviews and assesses P&F’s strategic direction, financial performance and business plans with a view towards strengthening P&F’s business and identifying opportunities to increase stockholder value. As part of this review, the Board has periodically considered whether the continued execution of P&F’s business strategy as a standalone company or through a business combination with a third party would provide the best avenue to enhance stockholder value.

 

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In the Summer and Fall of 2018, Richard A. Horowitz, the Chairman of the Board and P&F’s President and Chief Executive Officer and Joseph A. Molino, Jr., P&F’s Chief Operating Officer and Chief Financial Officer had various discussions about ways to maximize stockholder value. During such time period, they began discussions with Peter Rothschild of Daroth Capital Advisors LLC (“Daroth”) regarding the Company, its markets, and the value of the Company relative to comparable businesses.

On November 26, 2018, at a regular meeting of the Board, following a presentation by Daroth containing, among other things, a market and industry overview and valuation considerations, the Board authorized Daroth to undertake a market check on behalf of the Company. In December 2018, Daroth merged with an affiliate of East Wind Securities, LLC (“East Wind”).

In January 2019, the Company engaged East Wind to evaluate strategic alternatives for maximizing stockholder value including a possible sale of the Company (the “Previous Process”). In connection with the Previous Process, East Wind approached 83 parties, including 8 strategic companies about their possible interest in the Company. During that process, the potential strategic acquirers who had been approached by East Wind had either declined to pursue an acquisition of the Company or were only interested in acquiring a segment of the business and not the Company as a whole.

Discussions between East Wind continued with potential financial buyers until May 2020 when P&F’s management, following consultation with the Board, paused the Previous Process based on, among other things, the updated financial outlook for the business and its customers who were being negatively impacted by the COVID-19 pandemic and, in the case of one significant aerospace Company customer, by the grounding in March 2019 of one of its most popular aircraft.

Between June 2020 and July 2022, management engaged in periodic conversations with East Wind about the Company’s business and its markets.

On August 1, 2022, Messrs. Molino and Horowitz engaged in a conversation with East Wind about the Company. Mr. Molino updated East Wind about the current operations as well as the opportunities and threats facing the Company over the next several years. East Wind requested an updated financial model from Mr. Molino, which Mr. Molino provided to East Wind.

Throughout August 2022, Messrs. Horowitz and Molino discussed with each other the health of the business including the risks and opportunities associated with, among other things: (i) the growing demand for battery operated tools in the markets in which the Company serves that could potentially impact the Company’s business lines, especially the automotive market; (ii) the recovery by a major aerospace customer that was affecting prospects for the Company’s aerospace sales: (iii) the Company’s UK operation in dealing with a post-Brexit business climate; (iv) the negative cash flow and delays in integrating the Company’s most recent acquisition of a business into the Company’s Power Transmission Group (“PTG”) and the operational challenges PTG was experiencing; (v) concerns relating to senior management succession planning; (vi) the significant sourcing from Asia, especially Taiwan, and the potential impact on the business in the event of an outbreak of hostilities between China and Taiwan; (vii) the improved margins the Company began achieving as the result of the across-the-board price increases; (viii) the initial interest expressed by potential European aerospace and automotive customers in the Company’s products; (ix) the excitement around a new president at the Company’s Hy-Tech Machine, Inc. subsidiary with fresh ideas; (x) the significant growth opportunities with several large Hy-Tech customers; (xi) the significant profit growth opportunities at Hy-Tech as it begins to absorb overhead with additional sales; (xii) the opportunities for growth of the PTG business through a possible roll-up acquisition program; and (xiii) the opportunities for substantial margin improvement at Hy-Tech and PTG as a result of more efficient operations through improved equipment automation.

In August 2022, Messrs. Molino and Horowitz continued to have general discussions with East Wind regarding the M&A markets and its receptivity to the acquisition of a power tools/industrial company. East Wind expressed that, although there were general concerns about a potential recession, with the favorable outlook for the Company’s aerospace business and its aftermarket automotive business, East Wind believed there would be enough potential interest in the Company to merit moving forward with exploring a potential sale process. East Wind further explained that its optimism for the successful sale of the business was also based on the lack of available for sale companies of lower middle market, interest in industrial manufacturing types of businesses and the significant amount of private equity capital seeking acquisitions.

 

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On September 19, 2022, Messrs. Molino and Horowitz discussed with East Wind the various attributes that differentiate PTG from not only the rest of P&F, but even Hy-Tech. These attributes include the customer base, the selling process, the branding strategy, and the industries served. It was concluded that these factors would make it more difficult to sell PTG with the rest of the Company as it was likely that potential buyers of the tools segment of the Company are likely not to be interested in PTG. As a result, the possibility of spinning off PTG was discussed and potentially marketing the remaining tools business in a separate transaction. This was ultimately rejected as PTG was determined to be too small to be attractive as a standalone public company.

On September 27, 2022, Messrs. Horowitz and Molino discussed the potential valuation of the Company and various strategic planning issues and whether to include the PTG business in the marketing and sale of the Company. In addition, they also discussed their belief that the traditional market for Hy-Tech’s legacy large impact tools may have peaked, which would require a pivot in strategy for this part of the Hy-Tech business.

During October 2022 there were various discussions among Messrs. Molino and Horowitz and East Wind about the Company’s overall projections and the expected results for the Company’s PTG group in 2022 and 2023 and how the losses it was projecting for 2022 would impact the overall valuation of the Company. Mr. Molino and Mr. Horowitz shared with East Wind the slow progress of the integration of the Jackson Gear acquisition and how they anticipated that it would take at least until the end of 2022 for this to be substantially complete. East Wind recommended marketing PTG both as part of a potential sale of the entire Company as well as potentially as the subject of a standalone sale in order to maximize the overall Company’s value.

On November 21, 2022, East Wind circulated to management of the Company a draft engagement letter between East Wind and the Company.

On December 6, 2022, the Board held a regular meeting, at which Messrs. Horowitz and Molino shared with the Board their views on the strategic position of the Company and the various opportunities and risks associated with continuing to operate the business. The Board discussed engaging a strategic advisor to explore options to maximize stockholder value. At this meeting, Messrs. Horowitz and Molino recommended to the Board that it consider engaging East Wind as its advisor to explore strategic alternatives for the Company. They shared information regarding East Wind’s knowledge of the Company based on prior engagements and well as the capabilities that it could bring to bear as an advisor. In addition, the Board had a conversation regarding the terms of a potential engagement with East Wind.

On December 12, 2022, January 5, 2023 and January 6, 2023, members of the Company’s management and East Wind discussed the terms of a draft engagement letter with East Wind.

On January 10, 2023, the Board held a special meeting, at which the Board approved executing an engagement letter with East Wind with the stated goal of exploring ways to maximize the stockholder value of the Company. Also on such day, Company management directed East Wind to begin preparing a Confidential Information Memorandum (“CIM”).

During the remainder of January 2023, Messrs. Molino and Horowitz and other members of Company management worked with East Wind to prepare and finalize the CIM. Starting at the end of January, 2023 and the beginning of February, 2023, East Wind started to contact potential acquirers about their potential interest in a middle market power tools company under the code name “Project Tools”. As part of that process East Wind contacted ShoreView Industries, LLC (“ShoreView”) who requested an NDA which was executed by both parties on March 5, 2023, at which point East Wind provided ShoreView with the CIM. East Wind and ShoreView had a follow-up call on March 17, 2023 to address questions about the business. East Wind had several similar conversations with many of the other parties that received the CIM. In total East Wind contacted 87 parties about the potential opportunity to purchase the Company of which 8 were potential strategic acquirers. The Company enterd into confidentiality agreements with 48 of those parties, each of which contained, among other things, customary non-disclosure and non-use provisions, and none of which contained “don’t-ask, don’t waive” or standstill provisions.

On March 7, 2023, the Board held a regular meeting. At such meeting, among other things, Messrs. Molino and Horowitz updated the Board on the activities of East Wind on behalf of the Company. In early

 

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March, East Wind sent out process letters to approximately 29 parties who were still reviewing the opportunity to purchase the Company. East Wind requested the indications of interest to be submitted based on enterprise value of P&F because East Wind believed it would likely result in a higher per share value than if they were based on the per share value of P&F. As a result, East Wind received indications of interest from four parties, of which two were in a range that the Board viewed could potentially be acceptable to stockholders. The indications of interest that were received were as follows:

(1)

All bids were either received on the basis of, or converted into, an enterprise value for the operating business

​

(2)

$ in millions

​

(3)

ShoreView’s revised bid did not include the proceeds associated with the Company’s sale-leasebacks, but included PTG.

​

On March 24, 2023, ShoreView and East Wind had a conference call to confirm ShoreView’s preliminary Indication of Interest, which was previously submitted. During this meeting, East Wind discussed with ShoreView the timing and location of potential management presentations.

On March 27, 2023, the Board held a special meeting, at which East Wind, gave a presentation to the Board on, among other things, the status of the process that East Wind had undertaken on behalf of the Company to maximize stockholder value, which included exploring potential transactions. The update included the status of contacts with third parties, execution of non-disclosure agreements, sharing of the CIM, and receiving preliminary indications of interest from four parties. East Wind then discussed matters relating to the valuation of the Company and types of potential transactions. Also at such Board meeting, the Company’s corporate counsel discussed with the Board duties of the Board under Delaware law and the benefits of the establishment of an independent special committee in connection with this process.

East Wind scheduled for mid-April management presentations for the two firms that provided indications of interest that were viewed as potentially being acceptable to stockholders.

Management met with ShoreView and the other potential purchaser who submitted a potentially acceptable indication of interest on April 19, 2023 and April 20, 2023. Management provided a detailed presentation on the Company and the markets in which it operates. The presentation included detailed information about the Company’s subsidiaries: Florida Pneumatic Manufacturing Corporation, Jiffy Air Tool, Inc., Hy-Tech Machine, Inc. and the PTG business. It also included information on the Company’s New York corporate office and the functions it serves as well as the costs associated with running that office.

On April 27, 2023, the Board held a special meeting, at which Messrs. Horowitz and Molino updated the Board on the process undertaken by East Wind on behalf of the Company. Additionally at such meeting, attorneys from the Company’s outside legal counsel, Ruskin Moscou Faltischek, PC (“RMF”), discussed with the Board the fiduciary duties and standards of judicial review applicable to the Board under Delaware law generally, and specifically as it related to a potential transaction of the type that the Company is considering pursuing. The Board then continued a discussion from a prior Board meeting relating to the establishment of an independent special committee of the Board and determined that, although under the facts and circumstances an independent committee was not necessarily required, the establishment of such a committee would enable the Board to act more efficiently and in the best interests of the Company and its stockholders with the intent of maximizing stockholder value. The Board then approved establishing such special committee of the Board (the “Special Committee”), appointed its members (Mitchell A. Solomon and Kenneth M. Scheriff) and established its duties and powers, including the power to engage its own counsel and other advisors.

 

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On May 2, 2023, the Special Committee held a meeting. At such meeting, attorneys from Skadden, Arps, Slate, Meagher & Flom LLP, the Special Committee’s outside legal counsel (“Skadden”), outlined that the purpose of the meeting was to provide to the Special Committee an update on the process undertaken by East Wind, which includes recently conducted management presentations and the planned opening of a virtual data room (the “VDR”) for prospective buyers to conduct due diligence of Company documents.

At such meeting, East Wind then gave a presentation to the Special Committee on the process undertaken by East Wind, including providing a summary of the process undertaken by East Wind on behalf of the Company in 2019-2020 with both strategic and financial parties. East Wind then presented a summary of the management presentations with the two interested parties, and additional preliminary follow-up discussions with other parties. Further, East Wind also outlined the next steps in the process, including noting that East Wind was assisting the Company in establishing the VDR for the potential buyers’ high level business due diligence as a first step, which would be followed by more detailed legal due diligence, if and when the process continues. East Wind noted that the Company is considering arranging select facility tours and follow-up management meetings, followed by requests for updated indications of interest with markups of the transaction agreement. Skadden then outlined the process for drafting and finalizing the definitive transaction documentation, as well as the anticipated SEC review and closing timeline.

In executive session, among other things, Skadden outlined certain key terms of the anticipated merger agreement draft, including with respect to closing certainty, indemnification obligations and contractual terms required in transacting with financial buyers. Skadden also summarized certain considerations related to the capitalization of the Company, including with respect to the expected Company stockholder approvals.

On May 3, 2023, East Wind had a follow-up call with Bidder A who received a management presentation to answer some of their questions. Also, management met with East Wind to discuss creating the VDR and preparing a form of merger agreement to provide to the interested parties. East Wind opened up the VDR on May 11, 2023 for the two interested parties.

On May 19, 2023, East Wind had a follow-up call with Bidder A who asked several questions, which East Wind and the Company addressed on May 26, 2023.

On June 1, 2023, Bidder A indicated it would not continue in the process for several reasons, including that it focuses on acquiring domestic manufacturing businesses and it was not comfortable with the sourcing side of the Company’s business. It also stated that it was also not comfortable with the private label business and the customer concentration that the Company has with its private label customers.

From the middle of May, 2023 through the end of June, 2023, ShoreView continued to complete its preliminary due diligence and East Wind and management responded to ShoreView’s questions about the business. On June 12, 2023, ShoreView informed East Wind that based on its due diligence and the required capital investment in the business, it was not prepared to move forward based on its original indication of interest. ShoreView indicated it liked the Company’s businesses, but was not comfortable from a valuation point of view. East Wind asked that ShoreView respond with a revised purchase price at which it would be willing to move forward with the transaction. ShoreView requested additional information, which was provided prior to June 26, 2023. ShoreView ultimately responded that it would move forward with the process at an enterprise valuation of $53 million assuming the Company cancelled the contemplated sale leaseback transactions, and the purchase included the PTG business. After East Wind advised ShoreView that its indicated valuation would keep ShoreView in the process, ShoreView requested a copy of the Merger Agreement to be sent to its counsel.

On June 12, 2023, the Special Committee held a meeting, at which East Wind gave a presentation to the Special Committee on the transaction process, including providing a summary of the recent discussions East Wind had conducted with prospective buyers, noting that one of the potential buyers had indicated it is no longer interested in proceeding with a business combination transaction at this time, and that East Wind was advancing discussions with the other potential buyer while continuing selective preliminary conversations with other third parties that had expressed an interest in the Company. East Wind then outlined the next steps in the process, including noting that East Wind is assisting the Company in launching the VDR, in which the auction draft of the merger agreement, as well as certain diligence materials, would be

 

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populated and provided to prospective buyers. Skadden then provided a summary of certain key terms of the auction draft of the merger agreement, a summary of which had previously been provided to the Special Committee, and outlined the transaction structure and consideration mechanics, certain representations, warranties and covenants provided by each party, anticipated regulatory approvals and financing requirements, the Company’s non-solicitation obligations and related exceptions and termination rights and obligations in connection with receiving an unsolicited superior proposal, as well as the parties’ closing conditions and termination rights.

On July 11, 2023, the Special Committee held a meeting, with all members of the Board in attendance, at which representatives from East Wind provided a summary of the process undertaken by East Wind, including a summary of the recent discussions East Wind had conducted with prospective buyers, noting that the current focus is primarily on ShoreView. East Wind summarized the evolution of such potential buyer’s valuation range. East Wind indicated that it expects it would be able to deliver a fairness opinion, provided ShoreView submits a bid consistent with the present valuation range.

At such meeting, East Wind then presented to the Special Committee the proceeds analysis prepared by East Wind, discussing the inputs required in the analysis and methodology for calculating them, including the adjustments to convert the $53 million enterprise value to a per share price. East Wind further discussed the justification for asking ShoreView to indicate its interest at this stage in the form of an enterprise value, rather than a price per share. Skadden and East Wind then discussed the process for sharing the proceeds analysis with ShoreView and the Special Committee, with the concurrence of the Board, unanimously determined to authorize East Wind to share the appropriate portion of its proceeds analysis with the potential buyer. Skadden then outlined the next steps in the process and noted that ShoreView may request exclusivity with its bid.

On July 11, 2023, East Wind provided ShoreView with a per share reconciliation of the $53 million enterprise value to a price of $13.39 per share, based on various assumptions.

On July 12, 2023, East Wind had a conference call with ShoreView to review the per share reconciliation, which East Wind had provided to ShoreView the day before.

On July 17, 2023, ShoreView sent a letter to East Wind, as representative of the Company, proposing an offer of $12.50 per share that included a Support Agreement from Richard Horowitz that would include: (i) customary transfer restrictions of P&F common stock and agreements to vote in favor of the transaction and (ii) a payment from Mr. Horowitz in any circumstance where the termination fee would be payable by the Company equal to the greater of: (x) $1.0 million or (y) 50% of the incremental consideration received by Mr. Horowitz from any Competing Proposal giving rise to payment of a termination fee. ShoreView also provided a responsive markup of the Merger Agreement draft, including, among other things, revisions to certain representations and warranties made by P&F, the Surviving Corporation’s obligation to maintain Directors and Officers insurance, to obligations of Parent in connection with Continuing Employees, the conditions to the obligations of Parent and Acquisition Sub to effect the Merger, the reasons for which each of P&F, Parent and Acquisition Sub could terminate the Merger Agreement and the amount of any termination fee and reverse termination fee.

On July 19, 2023, East Wind contacted ShoreView to let them know that Mr. Horowitz would not agree to a termination fee in excess of 50% of any incremental benefit from a Competing Proposal and that the Special Committee was seeking a share price in excess of $13.00 and would not agree to expense reimbursement in excess of $250,000-$300,000. Furthermore, East Wind communicated to ShoreView that the Special Committee would not grant exclusivity without firm financing and only for a limited period of time not to exceed 30 calendar days.

On July 21, 2023, ShoreView responded with a revised proposal breaking their remaining due diligence process into two phases. During Phase I there would be no exclusivity but if the Company closed on a Competing Proposal then ShoreView would be entitled to expense reimbursement up to $300,000. ShoreView also increased their proposed per share price from $12.50 to $13.00. Also, the proposal required a Support Agreement from Mr. Horowitz whereby in the event the Company closed on a Competing Proposal, Mr. Horowitz would share 50% of any premium he received above $13.00 per share from such a Competing

 

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Proposal with ShoreView. During Phase II of the due diligence process the Company would agree to provide ShoreView 30 days of exclusivity to complete their legal due diligence and any other remaining business due diligence.

On July 23, 2023, the Special Committee held a meeting, with all members of the Board in attendance. At such meeting, East Wind provided a summary of the events leading up to ShoreView’s current position, including discussion of ShoreView’s initial offer made on July 17, 2023 for $12.50 per share, requesting (i) the Support Agreement from Mr. Horowitz that provided a termination fee equal to the greater of $1.0 million or 50% of the incremental consideration received by Mr. Horowitz from any competing proposal and (ii) an expense reimbursement arrangement (the “Reimbursement Letter”) under which ShoreView would be reimbursed for its expenses during a 30-day period for up to $500,000.

East Wind also reviewed the discussions that occurred the prior week between it and ShoreView relating to the Reimbursement Letter and ShoreView’s proposed purchase price. East Wind reported that, following such discussions, ShoreView indicated that it is prepared to pay $13.00 per share, and the expense reimbursement would be capped at $300,000 and would only be payable in the event the Company and ShoreView terminated discussions and the Company consummated a transaction with another party within one year. East Wind then reviewed ShoreView’s requested Support Agreement with the Special Committee, which would require Mr. Horowitz to provide 50% of the incremental consideration received by Mr. Horowitz as an additional termination fee. East Wind noted that ShoreView had originally requested a $1 million minimum additional termination fee from Mr. Horowitz but ultimately agreed to eliminate the $1 million minimum.

The Special Committee discussed the terms and appropriateness of the proposed Support Agreement and Reimbursement Letter. Skadden commented on certain legal matters related to the Reimbursement Letter. The Special Committee expressed comfort with entering into the Reimbursement Letter, provided that Mr. Horowitz, through further discussion, would be comfortable that the Support Agreement would otherwise be on customary and reasonable terms. Mr. Horowitz indicated that he would be discussing the Support Agreement with his personal legal counsel, and indicated that he was prepared to enter into a reasonable Support Agreement for a transaction at a valuation of $13.00 per share on terms to be subsequently negotiated with ShoreView. The Special Committee, with the concurrence of the Board, unanimously resolved to proceed with the Reimbursement Letter.

On July 26, 2023, ShoreView provided to the Company and Mr. Horowitz an initial draft of the Support Agreement, proposing, among other things, that Mr. Horowitz appoint Parent as his proxy to vote his shares of P&F common stock for the adoption of the Merger Agreement and approval of the Merger and that Mr. Horowitz’s shares of P&F common stock would be subject to a lock-up and standstill in accordance with the terms of the Support Agreement.

On July 28, 2023, the Company and ShoreView executed the Reimbursement Letter, and ShoreView began Phase I (financial and operational diligence) of a two-phase diligence process, to be followed by Phase II (legal, insurance, environmental and other diligence).

Between August 1, 2023 and August 8, 2023, representatives of ShoreView’s operational due diligence consulting firm visited the Company’s U.S. manufacturing and distribution facilities and visited with certain members of the Company’s senior operational management team.

On August 10, 2023, the Company provided to ShoreView revised drafts of the Merger Agreement and Support Agreement, including, among other things, revisions to certain representations and warranties made by P&F, the restrictions on the operation of P&F pending the Merger, the circumstances under which P&F could enter into a competing proposal, the benefits to be provided to continuing employees of P&F and the amount of any termination fee or reverse termination fee. The parties made certain additional clarifying revisions to the Support Agreement until it was finalized on October 12, 2023.

Between August 15, 2023 and August 22, 2023, members of ShoreView visited the Company’s manufacturing and distribution facilities and visited with certain members of the Company’s senior operational management team. In addition, a representative of ShoreView’s operational due diligence consulting firm joined ShoreView on its visit to the Florida Pneumatic location.

 

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On August 27, 2023, ShoreView provided to the Company a revised draft of the Merger Agreement, including, among other things, revisions to certain representations and warranties made by P&F, certain restrictions regarding the operation of P&F during the period between the date of the Merger Agreement and the Effective Time, the requirement that Parent provide or cause the Company to provide the existing directors and officers of P&F with D&O insurance coverage.

On August 28, 2023, ShoreView confirmed to East Wind that it had completed the first diligence phase and that it was prepared to begin the second phase of the diligence process, and it was prepared to proceed with a per-share price of $13.00 per share, subject to being granted exclusivity during Phase II.

On August 29, 2023, the Company held a meeting of the Special Committee, at which all of the Board members were in attendance. At such meeting, East Wind provided an overview of the diligence process to date as well as the status of the transaction. Skadden discussed the status of the negotiation of the terms of the Merger Agreement as well as ShoreView’s proposed exclusivity agreement, as revised by the Skadden and RMF. The Board and the Special Committee authorized management to proceed with entering into the exclusivity agreement for a period of 30 days, subject to the parties working together on the resolution of the most material open points in the draft Merger Agreement.

On August 30, 2023, legal counsel to the Company, the Special Committee and ShoreView held a videoconference meeting to discuss certain open items raised by ShoreView’s markup of the Merger Agreement.

On August 31, 2023, the Company and ShoreView executed the exclusivity agreement, granting exclusivity to ShoreView through September 30, 2023.

In September 2023, the Company and ShoreView continued to engage in the Phase II due diligence process, and the parties continued to negotiate the terms of the Merger Agreement.

Between September 7, 2023 and September 13, 2023, ShoreView’s environmental consulting firm visited the Company’s U.S. operational locations.

On September 11, 2023, the Company provided to ShoreView a revised draft of the Merger Agreement, including, among other things, revisions to certain representations and warranties made by P&F, certain restrictions on the continuing operation of P&F during the period between the execution of the Merger Agreement and the Effective Time, P&F’s repayment to Parent of expenses upon the termination of the Merger Agreement under certain circumstances and the amount of any termination fee or reverse termination fee payable upon the termination of the Merger Agreement.

On September 14, 2023, a member of the East Wind’s team and the President of Hy-Tech met with Shoreview at ShoreView’s offices to discuss the business’ operations, general corporate matters and future business opportunities.

On September 19, 2023, legal counsel to the Company, the Special Committee and ShoreView held a videoconference meeting to discuss certain open items raised by the Company’s markup of the Merger Agreement.

On September 22, 2023, ShoreView provided to the Company initial drafts of the ShoreView equity commitment letter and limited guarantee in connection with the financing of the transaction. Legal counsel to the Company, the Special Committee and ShoreView subsequently made certain revisions to such documents until they were finalized on October 12, 2023.

On September 26, 2023, ShoreView provided to the Company a revised draft of the Merger Agreement, including, among other things, revisions to certain representations and warranties of P&F, certain conditions to the obligations of Parent and Acquisition Sub to effect the Merger, the continued operation of P&F during the period from the execution of the Merger Agreement until the Effective Time and P&F’s ability to adjourn the Special Meeting. Legal counsel to the Company, the Special Committee and ShoreView subsequently held several videoconference and telephonic meetings and made additional revisions to the Merger Agreement draft until it was finalized on October 12, 2023.

 

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On October 2, 2023, the Special Committee held a meeting, at which Skadden and East Wind provided an update of the process undertaken by the Company in connection with the potential strategic transaction with ShoreView, including noting that the consent of one of the Company’s customers was required in connection with the transaction, and that the Company was working diligently on obtaining such consent. Skadden noted that the exclusivity agreement had expired and ShoreView had asked for a 10-day extension. The Special Committee agreed to extend the exclusivity granted to ShoreView through October 10, 2023. On such date, an amendment to the exclusivity agreement was entered into by the Company and ShoreView, extending the term of the exclusivity agreement until October 10, 2023.

On October 4, 2023, ShoreView provided to the Company initial drafts of the debt commitment documents in connection with the debt financing of the transaction. Legal counsel to the Company, the Special Committee and ShoreView subsequently suggested certain revisions to such documents until they were finalized on October 12, 2023.

The Special Committee held a meeting on October 7, 2023. At such meeting, Skadden updated the Special Committee with respect to the status of the required third-party consent in connection with the transaction, noting that the Company has been working diligently on obtaining the consent and that the review process through such third-party’s finance and legal organizations was underway and the Company had received no negative feedback from this third party to date. Skadden noted that, in light of the third party’s procedural review requirements to grant the consent, the parties were considering proceeding with the execution of definitive documentation pending the consent, subject to the addition of obtaining this consent as a closing condition. Skadden and RMF then discussed the related disclosure considerations and litigation and closing risks. The Special Committee authorized management to continue pursuing the transaction, including, if necessary, adding the consent as a closing condition in the event the consent is not obtained shortly. Additionally, the Special Committee discussed ShoreView’s position that it would prohibit the Company from declaring any dividends subsequent to executing a merger agreement and the Special Committee’s view that the Company should be permitted to pay dividends pending completion of the merger. The parties subsequently agreed that (i) the Company would be permitted to pay its quarterly dividend in November but not thereafter and (ii) the required third-party consent in connection with the transaction would be added as a closing condition.

On October 10, 2023, ShoreView provided to the Company and Mr. Horowitz an initial draft of the amendment to Mr. Horowitz’s existing letter agreement with the Company. The parties subsequently made certain revisions to such amendment until it was finalized on October 11, 2023.

The Special Committee held a meeting on October 12, 2023. At such meeting, East Wind provided an overview of East Wind’s valuation and fairness presentation. East Wind noted that it had assisted the Company in running an extensive sale process with approximately 87 potential buyers, including approximately 48 potential buyers under an NDA. East Wind then presented on the several valuation techniques utilized by East Wind in its analysis of the transaction, including discounted cash flows, comparable companies and comparable transactions methods. East Wind then outlined its analysis process, noting that it had undergone East Wind’s fairness opinion committee review, and that East Wind would be prepared, if requested, to render an opinion that the proposed consideration of $13.00 per share is fair, from a financial point of view.

Skadden then presented to the Special Committee a summary of the transaction documentation, including transaction structure, consideration, representations and warranties, material covenants, closing conditions, termination rights and fees, including the fiduciary out, contained in the proposed merger agreement and ancillary agreements. The Company’s General Counsel then outlined proposed amendments to the employment agreements of Messrs. Horowitz and Molino.

Skadden then reviewed the reasons for recommending the transaction to the Board. The Committee then proceeded with an executive session attended by members of the Committee and Skadden.

On October 12, 2023, immediately following the meeting of the Special Committee, the Board and the Compensation Committee of the Board (the “Compensation Committee”) held a joint meeting. At such meeting, Skadden and the Board discussed the transaction process to date and expected next steps. Additionally, Proskauer Rose LLP, counsel to the Compensation Committee (“Proskauer”), updated the

 

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Compensation Committee regarding the negotiation process related to proposed employment agreement amendments for Messrs. Molino and Horowitz. Proskauer discussed the remaining employee-related open items, including with respect to the fixing of bonuses, post-employment health insurance payments, lump sum retention payments, and the payment of additional target bonuses.

Further, East Wind then provided an overview for the Board of East Wind’s valuation and fairness presentation, beginning with a presentation on the five-year performance of the Company’s stock. East Wind then provided an overview with respect to the proposed transaction consideration of $13.00 per share in cash, as well as the sources and uses of the transaction proceeds, followed by a summary of the Company’s historical financial performance and management’s estimates for the fiscal year 2023, the Company’s balance sheet and debt paydown history. East Wind then reviewed the Company’s sale process, noting that East Wind had contacted approximately 87 potential buyers, including approximately 48 potential buyers under an NDA. East Wind then outlined the evolution of the negotiation process with ShoreView, including with respect to the scope of the transaction and the transaction consideration, valuation and applicable multiples. East Wind presented on the several valuation techniques utilized by East Wind in its analysis of the transaction, including discounted cash flows, comparable companies and comparable transactions methods. East Wind then noted that it had undergone East Wind’s fairness opinion committee review, and that East Wind had reached a conclusion that the proposed consideration of $13.00 per share in cash is fair, from a financial point of view, to the Company’s stockholders, and would, if requested, be in a position to deliver its fairness opinion.

Skadden then presented to the Board a summary of the Merger Agreement, including with respect to transaction structure, consideration, representations and warranties, material covenants, closing conditions, termination rights and fees, including the fiduciary out. Skadden also outlined certain terms contained in the ancillary transaction agreements, including the financing documentation and Mr. Horowitz’s voting and support agreement and letter agreement amendment, including Mr. Horowitz’s agreement, upon the terms and conditions therein, to pay 50% of his profit above $13.00 per share to ShoreView if there is a competing transaction.

Skadden provided an overview of the reasons for approving the transaction, as described below in the section entitled “Recommendation and Reasons for the Merger”.

RMF then advised on the fiduciary duties of directors, including in the context of a transaction such as the contemplated transaction with ShoreView.

Mr. Horowitz then provided the Board with his views regarding the process undertaken by the Company and the reasons for the proposed transaction with ShoreView and his support for the transaction.

On October 13, 2023, the Company convened a combined meeting of the Board, the Compensation Committee of the Board, and the Special Committee. At such meeting, Proskauer Rose updated the Compensation Committee regarding the proposed final terms of the amendments of the employment agreements of Messrs. Horowitz and Molino, including certain modifications that were requested by ShoreView, and the Compensation Committee unanimously approved entry into the amendments of the employment agreements of Messrs. Horowitz and Molino.

Skadden then provided an update for the Special Committee on the remaining transaction documentation and process in connection with the proposed ShoreView transaction, and following related discussion between Skadden and the Special Committee, the Special Committee unanimously approved recommending that the Board approve the transaction.

Immediately following the recommendation by the Special Committee, Skadden and RMF provided an update for the Board on the transaction documentation and process in connection with the proposed ShoreView transaction, including the path to execution and announcement. East Wind confirmed that there were no material updates to East Wind’s fairness analysis previously provided to the Board and that East Wind was delivering to the Board East Wind’s opinion that the contemplated transaction with ShoreView is fair, from a financial point of view, to the Company’s stockholders.

Following a discussion with Skadden, the Board unanimously approved the transaction.

 

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On October 13, 2023, the Company and ShoreView each executed and delivered the Merger Agreement and the other transaction documents and ShoreView and the Company issued a press release announcing the transaction.

Recommendation of the Board and Reasons for the Merger

On October 13, 2023, the Board, acting following the recommendation of the Special Committee, after considering various factors, including those described herein, and after consultation with the Company’s independent financial advisor and legal counsel for the Company and Special Committee, (i) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into the Merger Agreement and consummate the Merger and the other transactions contemplated by the Merger Agreement, (ii) declared it advisable and approved and adopted the Merger Agreement, approved the execution and delivery of the Merger Agreement by the Company, the performance by the Company of its covenants and other obligations thereunder, and the consummation of the Merger and the other transactions contemplated by the Merger Agreement upon the terms and conditions set forth therein and (iii) resolved to recommend that the Company stockholders vote in favor of the adoption of the Merger Agreement and the approval of the Merger and the other transactions contemplated by the Merger Agreement.

In evaluating the Merger Agreement and the transactions contemplated thereby, the Board, among other things, considered and relied upon the analyses and the recommendation of the Special Committee (which analyses and recommendation were adopted by the Board) in arriving at this determination and recommendation. In making its determination, the Board reviewed and discussed information with respect to the Company’s financial condition, results of operations, businesses, competitive position and business strategy, on a historical and prospective basis, as well as current industry, economic and market conditions and trends, and discussed the Special Committee’s recommendation with the members of the Special Committee and the independent financial advisor and legal counsel for the Company and Special Committee. The following are the material factors that supported the Board’s determination and recommendation:

•

Special Committee Process.   The following procedural safeguards implemented in an effort to ensure that the interests of all the Company’s stockholders were considered in connection with the transactions contemplated by the Merger Agreement:

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•

the Special Committee consists solely of directors of the Company who are independent directors not affiliated with Parent or Acquisition Sub and who are not officers or employees of the Company, and who are independent and disinterested with respect to the Merger and the other transactions contemplated by the Merger Agreement, and the Special Committee was advised by independent legal counsel in its review, evaluation and negotiation of the Merger and the other transactions contemplated by the Merger Agreement;

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•

the Special Committee held numerous meetings with the Company’s independent financial advisor and its independent legal counsel to discuss and evaluate the transaction, other alternatives to the transaction and other matters related thereto, and that each member of the Special Committee was actively engaged in the process on a regular basis; and

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•

the Special Committee, after considering various factors, including those described herein, and after consultation with the Company’s independent financial advisor and its independent legal counsel, recommended to the Board the approval of the Merger Agreement and the transactions contemplated by the Merger Agreement.

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•

Premium to Market Price.   The fact that the Merger Consideration of $13.00 per share of P&F common stock represents a premium of approximately (i) 97% relative to the unaffected closing price of the P&F common stock on October 12, 2023 of $6.60 (the last trading day prior to the Board’s approval of the Merger Agreement), (ii) 91% relative to the closing price of the P&F common stock on October 4, 2023 of $6.80 (the trading day one week prior to the Board’s approval of the Merger Agreement), (iii) 94% relative to the closing price of the P&F common stock on September 11, 2023 of $6.69 (the trading day one month prior to the Board’s approval of the Merger Agreement). Certain historical market prices of the P&F common stock are set forth in the table in the section entitled “Market Prices and Dividend Data” beginning on page 82 of this Proxy Statement.

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•

EBITDA Multiple.   The fact that Merger Consideration of $13.00 per share (based on the P&F common stock closing price of $6.60 on October 12, 2023, the last full trading day prior to the Board’s approval of the Merger Agreement) represents a valuation of the Company at an EV / EBITDA multiple for of 14.0x.

​

•

Opinion of East Wind.   The opinion of East Wind, dated as of October 13, 2023 , to the Board to the effect that, as of that date and based upon and subject to the assumptions, limitations, qualifications and conditions described in East Wind’s opinion, the Merger Consideration of $13.00 per share in cash to be received by the holders of shares of P&F common stock in the Merger was fair, from a financial point of view, to such holders, as more fully described below in the section entitled “The Merger — Opinion of P&F’s Financial Advisor.”

​

•

Financial Analyses.   The financial analyses reviewed and discussed with the Special Committee and the Board by representatives of East Wind.

​

•

Other Strategic Alternatives.   The Board’s assessment that the Merger Consideration of $13.00 per share of P&F common stock is more favorable to the stockholders of the Company than the potential value that would reasonably be expected to result from other strategic and financial alternatives reasonably available, including a sale to another potential counterparty, the continuation of the Company’s business plan as an independent public company or potential expansion opportunities through acquisitions and combinations of the Company with other businesses, taking into account the potential risks, rewards and uncertainties associated with each alternative.

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•

Form of Consideration.   The fact that the Merger Consideration is all cash, and therefore would provide P&F stockholders significant, immediate and certain value and liquidity for their shares of P&F common stock, while avoiding long-term business and execution risk, including the risks and uncertainties relating to the Company’s prospects and the risks of an economic downturn that could adversely affect the Company, as well as risks related to the financial markets generally.

​

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•

Solicitation Process Prior to Merger Agreement.   The Company’s rigorous process, together with the Company’s independent financial advisor, for soliciting and responding to offers from potential counterparties that were believed to be the most willing and able to pay the highest price for the P&F common stock, including the fact that approximately 87 parties were contacted or solicited during the Company’s process for exploring a potential strategic transaction between early February and August 2023, in an effort to obtain the best value reasonably available to stockholders, 48 of which entered into confidentiality agreements with the Company and were provided with an opportunity to conduct due diligence, including conducting management diligence sessions with members of the Company’s management (as described under the section entitled “The Merger — Background of the Merger” beginning on page 29 of this Proxy Statement).

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•

Quality of Bidders.   The fact that 4 parties submitted initial indications of interest.

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•

Liquidity of Common Stock.   The fact that the P&F common stock has relatively low trading volume and resulting limited liquidity, in part due to the Company’s relatively small market capitalization, which could impair (i) the ability of the stockholders or prospective stockholders from trading a significant amount of the P&F common stock without affecting the price of the shares and (ii) the Company’s ability to raise cash through future sales of P&F common stock.

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•

Negotiations Process.   The Company’s negotiations and the fact that the Company, through management and the Company’s independent financial advisor and the Company’s and Special Committee’s legal counsel, negotiated vigorously with Parent with respect to price and other terms of the Merger Agreement, including obtaining a revised price from Parent’s initial offer price of $47 million – $57 million in enterprise value to an enterprise value of $53 million (or the equivalent of $13.00 per share of P&F common stock after the agreed upon adjustments between the Company and ShoreView), which, after consultation with East Wind, the Special Committee and the Board believed represented (i) the highest price that Parent was willing to pay and (ii) a price higher than any of the other interested parties was willing to pay. The Board also considered the fact that the consideration and negotiation of the Merger Agreement was conducted through extensive arm’s-length negotiations.

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•

Loss of Opportunity.   The possibility that, if the Board does not approve the Merger Agreement, it may not have another opportunity to do so or to pursue an opportunity offering the same or better value and certainty to the Company’s stockholders in the future, and that the short-term market price for the shares of P&F common stock could remain below the value of the per share consideration under the Merger Agreement, and possibly substantially below the value of the per share consideration under the Merger Agreement.

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•

Company Prospects.   The fact that there was no guarantee that Company profit margins would be sustained in the future given the potential volatility of supply and demand and potential adverse economic conditions, which is not in the Company’s control and difficult to predict.

​

•

Current Conditions.   The current state of the U.S. and global economies, including increased volatility in the credit, financial and stock markets, global inflation trends and the increasing interest rate environment to combat inflation, the potential for a recession and the current and potential impact in both the near term and long term on the Company’s industry and the trading price of the P&F common stock.

​

•

Likelihood of Closing.   The likelihood that the Merger would be completed, based on, among other things:

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•

the fact that Parent and Acquisition Sub have committed equity financing for the transactions and the limited nature of the conditions to the equity financing;

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•

the fact that Parent and Acquisition Sub obtained committed debt financing for the transactions, the obligation of Parent and Acquisition Sub to use reasonable best efforts to obtain such necessary debt financing and the limited number and nature of the conditions to the debt financing;

​

•

the absence of a financing condition in the Merger Agreement;

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•

the Company’s ability, under certain circumstances pursuant to the Merger Agreement and the equity commitment letter to seek specific performance of Parent’s obligation to cause the equity commitment to Parent to be funded pursuant to the equity commitment letter;

​

•

the Company’s ability, under certain circumstances pursuant to the Merger Agreement, to seek specific performance to prevent breaches of the Merger Agreement and enforce specifically the terms of the Merger Agreement;

​

•

the absence of a need to obtain regulatory approvals in connection with the Merger; and

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•

Parent’s ability to complete the transaction.

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•

Support Agreement.   The fact that the Mr. Richard A. Horowitz, who holds approximately 45.2% of the voting power of the Company, entered into the Support Agreement, pursuant to which, among other things, he agreed to (i) vote the shares of P&F common stock owned by him constituting 42.5% of the outstanding shares of P&F common stock in favor of the approval and adoption of the Merger Agreement and the Merger and the remaining shares of P&F common stock owned by him (constituting approximately 2.7% of the outstanding shares of P&F common stock) proportionately with other stockholders, and (ii) in the event the Company termination fee is payable in connection with a competing proposal, pay to Parent a fee in an amount equal to 50% of Mr. Horowitz’s profit above $13.00 per share from the sale or transfer of any securities pursuant to the transactions contemplated by such competing proposal, in each case subject to the terms and conditions of the Support Agreement and the existing letter agreement between Mr. Horowitz and the Company.

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•

Merger Agreement Terms.   The terms of the Merger Agreement and the related agreements, which were reviewed by the Special Committee with its independent legal counsel and by the Company’s financial advisor and legal counsel, and the fact that such terms were the product of arm’s-length negotiations between the parties, including:

​

•

the Company’s obligation to consummate the Merger is conditioned on the approval of (i) a majority of the votes entitled to be cast by the holders of outstanding shares of P&F common stock entitled to vote thereon and (ii) a majority of the votes cast by stockholders other than

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Mr. Horowitz, in each case who will have the opportunity to approve or reject the Merger (subject, in the case of Mr. Horowitz, to the Support Agreement);

•

the Company’s ability to consider and respond to unsolicited acquisition proposals, including to furnish information to third parties under certain circumstances specified in the Merger Agreement;

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•

the structure of the Merger and time required to obtain the Company’s stockholder approval would allow sufficient time for a third party to make a Superior Proposal if such third party desires to do so;

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•

the Board’s ability to effect an Adverse Recommendation Change with respect to the adoption of the Merger Agreement prior to the adoption of the Merger Agreement by the vote of its stockholders, if, subject to certain limitations, it determines in good faith, after consulting with, and receiving advice from, its outside legal counsel and financial advisor, that the failure to change its recommendation would be reasonably likely to be inconsistent with its fiduciary duties under applicable law;

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•

the Board’s ability to terminate the Merger Agreement to enter into a Superior Proposal, subject to its compliance with the Merger Agreement, if it determines in good faith, after consultation with its outside legal counsel and financial advisor, that a Competing Proposal constitutes a Superior Proposal and, after consulting with, and receiving advice from, its legal advisors, that the failure to change its recommendation would be reasonably likely to be inconsistent with its fiduciary duties under applicable law;

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•

the continuing obligation on Parent to provide indemnification to, and maintain insurance for, officers and directors of the Company, which is common in transactions of this type; and

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•

the fact that ShoreView Capital Partners IV, L.P. provided a limited guarantee in favor of the Company, which guarantees certain obligations of Parent and Acquisition Sub under the Merger Agreement, including the reverse termination fee.

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•

Appraisal Rights.   The fact that appraisal rights under the DGCL are available to holders of P&F common stock who comply with all of the required procedures under the DGCL, which allows such holders to seek appraisal of the fair value of their shares of P&F common stock as determined by the Court of Chancery, as more fully described in the section entitled “Appraisal Rights” beginning on page 84 of this Proxy Statement.

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Reverse Termination Fee.   The ability of the Company to, under certain circumstances described in the Merger Agreement, receive a reverse termination fee of $3,687,670.00 as more fully described in the section entitled “Terms of the Merger Agreement — Termination Fees” beginning on page 78 of this Proxy Statement, or seek specific performance or other equitable relief to prevent breaches or to enforce the terms of the Merger Agreement, including with respect to obtaining the debt financing and equity financing.

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Leadership Transition Risk.   The fact that Mr. Horowitz, the Company’s founder and CEO, and Mr. Joseph Molino, the Company’s COO, are nearing retirement age and that, if not for the Merger, there would be potential uncertainty associated with succession planning and the success of the Company under different leadership who have not been identified at this time.

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In the course of its deliberations, the Board weighed these advantages and opportunities against a number of other risks and potential negative factors concerning the Merger Agreement and the Merger, including, but not limited to, the following (not necessarily in order of relative importance):

•

Closing Certainty.   The fact that the consummation of the Merger is subject to certain customary closing conditions, which may delay or prevent the consummation of the Merger, and the adverse impact such event may have on the Company and its business.

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•

No Stockholder Participation in Future Growth.   The fact that, following the Merger, the Company stockholders would no longer participate in the Company’s future earnings or growth, or benefit from any future appreciation in value of the P&F common stock, including the fact that that profitability

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could continue or grow over a sustainable period, which would provide further opportunity to return additional value, which stockholders would not receive if the Merger is consummated.

•

Impact of Failed Transaction.   The fact that the Company’s business, sales operations and financial results could suffer in the event that the Merger is not consummated and that the Company’s stock price may be adversely affected.

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•

Impact of Merger Announcement on the Company.   The risk that disruptions from the Merger (including the ability of certain customers to terminate or cease business with the Company) may harm (i) the Company’s business, including current plans and operations, including during the pendency of the Merger, and (ii) the ability of the Company to retain and hire key personnel. The potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger and potential business uncertainty, including changes to existing business relationships, during the pendency of the Merger that could affect the Company’s financial performance.

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•

Severance Payments.   The fact that Messrs. Horowitz and Molino are expected to receive certain severance payments and benefits upon a termination of their employment following the consummation of the Merger, and that their employment agreements were amended with respect to, among other thing, certain post-employment medical benefits, as more fully described in the section entitled “The Merger — Interests of the Directors and Executive Officers in the Merger” beginning on page 53 of this Proxy Statement.

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•

Tax Treatment.   The fact that the receipt of the Merger Consideration, which is all cash, in exchange for shares of P&F common stock pursuant to the Merger Agreement would be taxable to the Company’s stockholders that are U.S. holders for U.S. federal income tax purposes.

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•

Restrictions on Solicitation.   The prohibition imposed by the Merger Agreement of solicitations by the Company of alternative acquisition proposals from third parties, and that prospective bidders may perceive Parent’s right under the Merger Agreement to negotiate with the Company during a period prior to the Company being able to terminate the Merger Agreement and accept a Superior Proposal to be a deterrent to making alternative acquisition proposals.

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•

Termination Fee.   The requirement that the Company must pay a termination fee of $2,107,240.00, plus certain transaction expenses, if the Merger Agreement is terminated under the circumstances described under “Terms of the Merger Agreement — Termination Fees” beginning on page 78 of this Proxy Statement, which may discourage third parties that might otherwise have an interest in a business combination with, or acquisition of, the Company from making unsolicited acquisition proposals;

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Reverse Termination Fee.   The fact that the reverse termination fee is not available in all instances where the Merger Agreement is terminated and may be the Company’s only recourse where it is available.

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•

Cap on Parent Liability.   That the Merger Agreement provides that in certain circumstances the maximum aggregate liability of Parent for breaches under the Merger Agreement or the transactions contemplated thereby, in the aggregate for all such breaches, will equal the reverse termination fee.

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•

Pre-Closing Covenants.   The restrictions placed on the conduct of the Company’s business prior to the completion of the Merger pursuant to the terms of the Merger Agreement, which could delay or prevent the Company from undertaking business opportunities or transactions (such as sale-leaseback transactions) that may arise or any other action it would otherwise take with respect to the operations of the Company absent the pending completion of the Merger.

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Closing Timing.   The amount of time it could take to consummate the Merger, and the uncertainty of timing to consummate the Merger, including the fact that the consummation of the Merger depends on factors outside of the Company’s, Parent’s or Acquisition Sub’s control, and the risk that the pendency of the Merger for an extended period of time following the announcement of the execution of the Merger Agreement could adversely affect the Company’s relationships with its customers, suppliers and any other persons with whom the Company has a business relationship.

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•

Remedy Enforcement.   The potential challenges in enforcing the Company’s rights and remedies, including, among other things, rights to specific performance or payment of the reverse termination fee.

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•

Loss of Productivity.   The potential for diversion of management and employee attention during the period prior to the consummation of the Merger and the potential negative effects on the Company as a result of such diversion, including with respect to relationships with the Company’s customers, employees, suppliers or other parties.

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•

Loss of Personnel.   The risk that, despite the retention efforts of the Company in connection with the Merger, the Company, in the event the Merger is not consummated, may lose key personnel.

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•

Changing Circumstances.   The risk that changes in the regulatory landscape, economic landscape (including the possibility of a recession) or new industry developments may adversely affect the Company, in the event the Merger is not consummated.

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•

Industry Risks.   The risks associated with the industry in which the Company operates, including the trend to switch from pneumatic tools to battery tools, which could have an adverse impact on the Company’s sales and, accordingly, business performance results.

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•

Litigation.   The risk of potential litigation relating to the Merger that could be instituted against the Company or its directors and officers, and the potential effects of any outcomes related thereto.

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Forward-Looking.   The risks of the type and nature described in the section entitled “Cautionary Statement on Forward-Looking Statements” beginning on page 23 of this Proxy Statement.

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Consent of Customer.   Risk of receiving a consent from a large aerospace manufacturer that is a customer of one of the Company’s subsidiaries and as a result Parent can terminate the Merger Agreement if the consent is not received.

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The Board concluded that the uncertainties, risks and potentially negative factors relevant to the Merger were outweighed by the potential benefits.

In addition, the Board was aware of the fact that some of the Company’s directors and executive officers have interests in the Merger that are different from, or in addition to, the Company stockholders generally, including those interests that are a result of employment and compensation arrangements with the Company. The members of the Board considered these interests, among others, in reaching their determinations to adopt the Merger Agreement and approve the Merger and the other transactions contemplated by the Merger Agreement, and to make their recommendation to the Company’s stockholders. For more information, see the section entitled “The Merger — Interests of the Directors and Executive Officers in the Merger” beginning on page 53 of this Proxy Statement.

The foregoing discussion of factors considered by the Board in reaching its conclusions and recommendation includes the principal factors considered by the Board, but is not intended to be exhaustive and may not include all of the factors considered by the Board. In light of the variety of factors considered in connection with its evaluation of the Merger Agreement and the Merger, the Board did not find it practicable to, and did not, quantify or otherwise assign relative or specific weights to the specific factors considered in reaching its determinations and recommendations. Rather, the Board based its decisions on the totality of the factors and information it considered. Moreover, each member of the Board applied his own personal business judgment to the process and may have given different weight to different factors.

Opinion of P&F’s Financial Advisor

East Wind rendered its opinion to the Board that, as of October 13, 2023, and based upon and subject to the factors and assumptions set forth therein, the Merger Consideration to be paid to the holders (other than Parent and its affiliates) of P&F common stock pursuant to the Merger Agreement was fair from a financial point of view to such holders.

The full text of the written opinion of East Wind, dated as of October 13, 2023, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion and which you should read carefully and in its entirety, is attached as Annex B

 

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to this Proxy Statement. East Wind provided advisory services and its opinion for the information and assistance of the Board in connection with its consideration of the Merger. The East Wind opinion is not a recommendation as to how any holder of P&F common stock should vote with respect to the Merger or any other matter.

The following summarizes the material financial analyses reviewed by East Wind with the Board at its meeting on October 12, 2023 and confirmed to the Board at its meeting on October 13, 2023, which material was considered by East Wind in rendering its opinion, to provide a view toward the fairness, from a financial point of view, of ShoreView’s proposal to enter into the Merger Agreement. No company or transaction used in the analyses described below is identical or directly comparable to P&F or the contemplated merger.

The preparation of a fairness opinion is a complex process and requires significant analysis and judgment. Selecting portions of the analyses or of the summary set forth herein, without considering the analyses as a whole, could create an incomplete view of the processes underlying East Wind’s opinion. In developing East Wind’s opinion regarding the fairness from a financial point of view of the Merger Consideration to be received by the holders of P&F common stock in the Merger, East Wind utilized several valuation techniques including (i) Discounted Cash Flow Analyses (ii) Selected Public company trading comparables (iii) Selected M&A transaction comparables; and (iv) M&A premiums paid analysis.

Discounted Cash Flow Analysis.   East Wind analyzed the discounted present value of P&F’s projected free cash flows beginning January 1, 2024, continuing through the end of fiscal year 2027 on a standalone basis. East Wind calculated unlevered free cash flows, defined as earnings before interest, after taxes, plus depreciation, plus amortization, less capital expenditures, less investment in working capital.

The discounted cash flow analysis was based on projections prepared by management (the “Projections”), as set forth in the section below entitled “Projections Prepared by P&F Management”. Consistent with the periods included in the Projections, East Wind used fiscal year 2027 as the final year for the analysis and utilized two methodologies for comparison purposes to calculate a terminal value: (i) applied multiples ranging from 6.5x to 7.5x, selected by East Wind upon the application of its professional judgment and expertise after reviewing M&A transaction multiples for comparable companies, to normalized fiscal year 2027 EBITDA in order to derive a range of terminal values for P&F in 2027 and (ii) applied perpetual growth rates ranging from 2.5% to 3.5%, selected by East Wind upon the application of its professional judgment and expertise, to normalized fiscal year 2027 unlevered free cash flow in order to derive a range of terminal values for P&F in 2023. The perpetual growth rates were chosen based on historical inflation rates, as well as being below historical GDP growth rates.

The projected unlevered free cash flows and terminal values were discounted using rates ranging from 17.0% to 19.0%, which range was selected, upon the application of East Wind’s professional judgment and expertise, to reflect the weighted average after-tax cost of debt and equity capital associated with executing P&F’s business plan. This range was selected based on the beta from a simple average of 15 publicly traded companies, certain macroeconomic conditions, as well as East Wind’s experience and judgment. The resulting range of present enterprise values was adjusted by P&F’s net debt (the face amount of total debt and preferred stock and book value of non-controlling interests less the amount of excess cash and cash equivalents, as reflected on P&F’s most recent projection for the year-end balance sheet), as well as other wind down expenses and transaction fees associated with executing a transaction. This value was divided by the number of diluted shares outstanding in order to arrive at a range of present values per share of P&F common stock. East Wind reviewed the range of per share prices derived in the discounted cash flow analysis and compared them to the price per share for P&F common stock implied by the Merger Consideration. The results of the discounted cash flow analyses are summarized below:

 

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Exit Multiple Methodology:

Perpetual Growth Rate Methodology:

Furthermore, East Wind applied the high and low range of each discounted cash flow analyses and determined the implied equity price per share of P&F common stock and then compared those implied equity values per share to the Merger Consideration of $13.00 per share. The results of this are summarized below:

Selected Publicly Trading Companies Analysis.   East Wind analyzed the relative valuation multiples of six publicly traded, lower middle market, industrial tools and engineered products companies that it deemed relevant to valuing P&F common stock. East Wind calculated various financial multiples for each company including enterprise value (market equity value plus debt, plus preferred stock, plus minority interests, less excess cash and equivalents) compared to revenue, EBITDA, and EBIT for the latest twelve months period for which financial results were available.

East Wind then reviewed the harmonic mean, 25th percentile and 75th percentile relative valuation multiples of the selected public companies and compared them to corresponding valuation multiples for P&F implied by the Merger Consideration. The results of the selected publicly traded companies analysis are summarized below:

 

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Furthermore, East Wind applied the 25th percentile and the 75th percentile of the relative valuation multiple range for each of the metrics to P&F’s projected fiscal year end 2023 financial results, and determined the implied equity price per share of P&F common stock and then compared those implied equity values per share to the Merger Consideration of $13.00 per share. The results of this are summarized below:

Selected Transaction Analysis.   East Wind analyzed the relative valuation multiples for eight industrial tools and engineered products transactions that it deemed relevant. East Wind examined the enterprise value compared to the target companies’ Revenue and EBITDA, in each case for twelve months ended prior to closing of the transaction, where such information was publicly available. The results of the selected transactions analysis are summarized below:

NA — Not Available

East Wind reviewed the harmonic mean, 25th percentile and 75th percentile relative valuation multiples of the selected transactions and compared them to corresponding valuation multiples for P&F implied by the Merger Consideration.

Furthermore, East Wind applied the 25th percentile and the 75th percentile of the relative valuation multiple range for each of the metrics to P&F’s projected fiscal year end 2023 financial results and determined the implied equity price per share of P&F common stock and then compared those implied equity values per share to the Merger Consideration of $13.00 per share. The results of this are summarized below:

 

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Premiums Paid Analysis.   East Wind analyzed the premiums paid for select acquisitions of public companies with market capitalization below $65 billion (“All Companies”) utilizing publicly available information, industrial sector companies (“Industrial Companies”), and below $250 million dollars (“Small Cap Companies”) that closed since January 1, 2020. East Wind prepared a summary of the relative valuation multiples paid in these transactions, with respect to the stock price one day prior to announcement, one week prior to announcement, and one month prior to announcement. The results for these analyses are summarized below:

Additional Considerations.   The preparation of a fairness opinion is a complex process and is not susceptible to a partial analysis or summary description. East Wind believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering the analyses taken as a whole, would create an incomplete view of the process underlying its opinion. In addition, East Wind considered the results of all such analyses and did not assign relative weights to any of the analyses, but rather made qualitative judgments as to the significance and relevance of each analysis and factor, so the ranges of valuations resulting from any particular analysis described above should not be taken to be the view of East Wind as to the actual value of P&F.

In performing its analyses, East Wind made numerous assumptions with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond the control of P&F. The analyses performed by East Wind are not necessarily indicative of actual values, trading values or actual future results which might be achieved, all of which may be significantly more or less favorable than suggested by such analyses. Such analyses were provided to the Board (solely in its capacity as such) and were prepared solely as part of the analysis of East Wind of the fairness, from a financial point of view, to P&F stockholders of the Merger Consideration to be received by such stockholders in

 

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connection with the proposed merger pursuant to the merger agreement. The analyses do not purport to be appraisals or to reflect the prices at which companies may actually be sold, and such estimates are inherently subject to uncertainty. The opinion of East Wind was one of many factors taken into account by the Board in making its determination to approve the Merger Consideration.

Neither East Wind’s opinion nor the analyses described above should be viewed as determinative of the Board or Company management’s views with respect to P&F, ShoreView and its affiliates, or the Merger Consideration. East Wind provided advice to P&F with respect to the proposed transaction. East Wind did not, however, recommend any specific amount of consideration to the Board or that any specific merger consideration constituted the only appropriate consideration for the Merger Consideration. Furthermore, East Wind expressed no opinion as to the fairness of any consideration to be paid in connection with the transactions to the holders of any other class of securities, creditors or other constituencies of P&F or as to the underlying decision by P&F to engage in the transactions. P&F placed no limits on the scope of the analysis performed, or opinion expressed, by East Wind.

The East Wind opinion was necessarily based upon market, economic, financial and other circumstances and conditions existing and disclosed to it on October 13, 2023, and any material change in such circumstances and conditions may affect the opinion of East Wind, but East Wind does not have any obligation to update, revise or reaffirm that opinion. East Wind relied upon and assumed, without independent verification, that there had been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of P&F since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to East Wind that would be material to its analyses or its opinion, and that there was no information or any facts that would make any of the information reviewed by East Wind incomplete or misleading in any material respect.

East Wind has also provided certain financial advisory services to P&F from time to time for which it has received compensation, including having advised the Board in 2019 with respect to the repurchase of P&F common stock from a shareholder.

P&F retained East Wind as its financial advisor in connection with the proposed merger based on East Wind’s experience and reputation. East Wind is actively involved in the investment banking business and regularly undertakes the valuation of investment securities in connection with public offerings, private placements, business combinations and similar transactions. East Wind may provide investment banking, financial advisory and other financial services for P&F and / or ShoreView and / or its affiliated companies or other participants in the merger in the future, for which East Wind may receive compensation. Pursuant to an engagement letter between P&F and East Wind, P&F has agreed to pay East Wind a transaction fee that is estimated, based on the information available as of the date of announcement of the Merger, at approximately $1.050 million, of which $850 thousand is contingent upon consummation of the Merger. In March 2023, P&F paid East Wind $50,000 in connection with financial advisory services provided to the Board related to a potential sale of P&F. In October 2023, P&F paid East Wind $150,000 in connection with its Fairness Opinion. The transaction fee of approximately $1.050 million due to East Wind upon the consummation of the Merger would be reduced by the amount paid to East Wind in 2023.

Projections Prepared by P&F’s Management

P&F does not, as a matter of course, publicly disclose projections as to its future financial performance due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, as part of its regular financial planning process, P&F’s management prepares estimates and forecasts for future periods. In connection with such financial planning process, on December 10, 2022, P&F’s management provided the Board with its estimates for the fiscal year ended December 31, 2022 and the forecast for fiscal year 2023, assuming P&F continues to operate as a standalone company.

On February 2, 2023 in the CIM, P&F presented to potential acquirors, including ShoreView, with historical data for the fiscal years ending December 31, 2020, and December 31, 2021, an estimate for the fiscal year ending December 31, 2022 and a forecast for the fiscal year ending December 31, 2023. The projections included in the CIM (the “Initial Projections”) included a financial breakdown of each of the subsidiaries, Hy-Tech and Florida Pneumatic. The Initial Projections included revenue and gross profit

 

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for HT and FP, as well as a consolidated pro-forma estimate for P&F for the fiscal year ending December 31, 2022 and a forecast for the fiscal year ending December 31, 2023.

The Initial Projections included the following EBITDA adjustments (the “Adjustments”).

•

A corporate addback, which included costs of P&F’s corporate office which was expected to be eliminated by a buyer in connection with a sale transaction, and P&F being privately owned;

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•

A rent adjustment projected by P&F that assumed that P&F executes sales of certain real property which was in the process of being sold;

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•

The elimination of the impact of losses in 2022 and earnings in 2023 from P&F’s PTG.

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•

An addback for the benefit of efficiencies from the investment in automation equipment that was recently purchased by P&F to improve profitability that will not be generating savings until H2 2023;

​

•

An addback for the change of the HT President, which included the non-recurring costs associated with recruiting a new president of Hy-Tech, and;

​

•

A price increase addback, which was projected by P&F to show the increase of EBITDA based on the price increases that were implemented in 2022 to show the full year impact.

​

The table below summarizes the Initial Projections that were presented to potential buyers, including ShoreView:

(1)

The elimination of the impact of losses in 2022 and earnings in 2023 from PTG.

​

On April 19, 2023 and April 20, 2023, P&F provided select potential buyers that had submitted reasonable indications of interests (“IOI”), including ShoreView, in connection with their initial meeting with P&F management (the “Management Presentations”), with non-public financial forecasts prepared by P&F’s management. Although, as described above, P&F does not publicly disclose financial projections, management does prepare projections from time to time as part of its long-range planning. These projections are regularly shared with the Board, and the information prepared for the meetings on April 19, 2023 and April 20, 2023 included projections for fiscal year 2023 through fiscal year 2027 (the “Business Forecasts”). The Business Forecasts included revenue, EBITDA and EBIT margins for 2020 – 2027 for FP, HT and PTG.

 

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The table below shows the Business Forecasts that were presented to potential buyers, including ShoreView, in connection with the Management Presentations.