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Exhibit
10.1
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this
“Agreement”), made and entered into as of November 2,
2007, which shall be effective upon November 30, 2007 (“the
Effective Date”), by and between Griffon Corporation, a
Delaware corporation, with its principal office located at 100
Jericho Quadrangle, Jericho, New York 11753 (hereinafter, together
with its subsidiaries, collectively referred to as “the
Corporation”) and Frank Smith who resides at 6555 Adams
Avenue, Cincinnati, OH 45243 (hereinafter referred to as “the
Executive”).
WITNESSETH:
WHEREAS ,
the Executive has had extensive experience in the business and
affairs of the Corporation and is a valuable member of the
management team; and
WHEREAS ,
the Board of Directors of Griffon Corporation (the
“Board”) has determined that it is appropriate to
reinforce the continued attention of certain key management
employees, including the Executive, to their assigned duties
without distraction if the possibility should arise of a change in
control of the Corporation;
NOW, THEREFORE ,
in consideration of the mutual covenants and agreements hereinafter
set forth, the parties hereto agree as follows:
1.
EMPLOYMENT .
During the term of this Agreement, the Executive agrees to remain
in the employ of the Corporation and to continue to perform the
Executive’s regular duties as an executive of the
Corporation.
2.
CHANGE IN CONTROL .
No benefits shall be payable hereunder unless there shall have been
a Change in Control of the Corporation, as set forth below, and the
Executive’s employment by Griffon Corporation shall
thereafter have been terminated in accordance with Section 3
hereof. For purposes of this Agreement, a “Change in
Control” shall mean the occurrence of any of the following
events after the date of this Agreement:
2.1
the
acquisition, directly or indirectly, by a “person”
(within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended from time to time, including
rules thereunder and successor provisions and rules thereto
(the “Exchange Act”) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 30% of the
combined voting power of the voting securities of Griffon
Corporation entitled to vote generally in the election of
directors (the “Voting Securities”); provided,
however, that the following acquisitions shall not constitute
a Change in Control: (a) any acquisition by or from Griffon
Corporation or any corporation or other entity in which the
Griffon Corporation owns or controls directly or indirectly at
least 50 percent of the total combined voting power
represented by all classes of stock issued by such
corporation, or in the case of a noncorporate entity, at least
50% of the profits or capital interest in such entity (a
“Subsidiary,”) or by any employee benefit plan (or
related trust) sponsored or maintained by Griffon Corporation
or any Subsidiary, (b) any acquisition by an individual who as
of the effective date of the Plan is a member of the Board,
(c) any acquisition by any underwriter in any firm commitment
underwriting of securities to be issued by Griffon
Corporation, or (d) any acquisition by any corporation (or
other entity) if, immediately following such acquisition, 65%
or more of the then outstanding shares of common stock (or
other equity unit) of such corporation (or other entity) and
the combined voting power of the then outstanding voting
securities of such corporation (or other entity), are
beneficially owned, directly or indirectly, by all or
substantially all of the individuals or entities who,
immediately prior to such acquisition, were the beneficial
owners of the then outstanding Voting Securities in
substantially the same proportions, respectively, as their
ownership immediately prior to the acquisition of the stock
and Voting Securities; or
2.2
the
following individuals cease for any reason to constitute a
majority of the Board: individuals who, as of the date of the
this Agreement, constitute the Board and any new director
(other than a director whose initial assumption of office is
in connection with an actual or threatened election contest,
including, but not limited to, a consent solicitation relating
to the election of directors of Griffon Corporation) whose
appointment or election by the Board or nomination for
election by the stockholders of Griffon Corporation was
approved and recommended by a vote of at least two-thirds of
the directors then still in office who either were directors
on the effective date of the Plan or whose appointment,
election or nomination for election was previously so approved
or recommended; or
2.3
the
consummation of the sale or other disposition of all or
substantially all of the assets of Griffon Corporation, other
than to an entity, at least 65% of the Voting Securities of
which are owned by Persons in substantially the same
proportions as their ownership of Griffon Corporation
immediately prior to such sale; or
2.4
the
consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving
the Corporation or any of its Subsidiaries that requires the
approval of the Corporation's stockholders, whether for such
transaction or the issuance of securities in the transaction
(a "Business Combination"), unless immediately following such
Business Combination: (i) more than 65% of the total voting
power of (x) the corporation resulting from such Business
Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting
securities eligible to elect directors of the Surviving
Corporation (the "Parent Corporation"), is represented by
Voting Securities that were outstanding immediately prior to
such Business Combination (or, if applicable, is represented
by shares into which such Corporation Voting Securities were
converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the
same proportion as the voting power of such Voting Securities
among the holders thereof immediately prior to the Business
Combination; or
2.5
the
consummation of a plan of complete liquidation or substantial
dissolution of Griffon Corporation, other than a liquidation
or substantial dissolution, which would result in the Voting
Securities of the entity after such liquidation or
dissolution, if any, continuing to represent (whether by
remaining outstanding or by being converted to voting
securities of the surviving entity) 65% or more of the Voting
Securities or the voting power of the voting securities of
such surviving entity outstanding immediately after such
liquidation or dissolution, and such voting power among the
holders thereof is in substantially the same proportion as the
voting power of such Voting Securities among the holders
thereof immediately prior to the such liquidation or
dissolution; or
2.6
the
sale, transfer, assignment, distribution or other disposition
by Griffon Corporation and/or one of its Subsidiaries, in one
transaction, or in a series of related transactions within any
period of 18 consecutive calendar months (including, without
limitation, by means of the sale, transfer, assignment,
distribution or other disposition of the capital stock of any
Subsidiary or Subsidiaries), of assets which account for an
aggregate of 50% or more of the consolidated revenues of
Griffon Corporation and the Subsidiaries of Griffon
Corporation, as applicable, as determined in accordance with
U.S. generally accepted accounting principles, for the fiscal
year most recently ended prior to the date of such transaction
(or, in the case of a series of transactions as described
above, the first such transaction); provided, however, that no
such transaction shall be taken into account if substantially
all the proceeds thereof (whether in cash or in kind) are used
after such transaction in the ongoing conduct by Griffon
Corporation and/or its Subsidiaries) of the business conducted
by Griffon Corporation and/or its Subsidiaries prior to such
transaction.
3.
TERMINATION FOLLOWING A CHANGE IN CONTROL
.
If any of the events described in Section 2 hereof constituting a
Change in Control of Griffon Corporation shall have occurred, the
Executive, if terminated during the twenty four (24) months
following
such
Change in Control, shall be entitled to the benefits provided in
Section 4 hereof, unless such termination is due to the
Executive’s death or Disability, or is by Griffon Corporation
for Cause, or is by the Executive for other than Good Reason. In
the event that, upon the occurrence of a Change in Control, the
Executive is eligible for retirement in accordance with the terms
and conditions of any applicable corporate retirement plan or
program in effect immediately preceding such Change in Control, the
Executive’s eligibility for immediate retirement benefits,
and any request therefor, shall not preclude the Executive’s
receipt of severance benefits under Section 4 hereof as a result of
any termination without Cause or for Good Reason. For purposes of
this Agreement, the following definitions shall apply:
3.1
“Cause”
shall mean (i) the willful and continued failure by the
Executive to substantially perform the Executive’s
duties (other than any such failure resulting from incapacity
due to physical or mental illness); or (ii) conviction of a
felony or acts of dishonesty resulting in gain or personal
enrichment at the expense of the Corporation; or (iii) the
Executive’s willful misconduct or insubordination which
is materially injurious to the Corporation. With respect to
(i) and (iii) “Cause” shall only be determined to
exist until Griffon Corporation presents written notice to the
Executive specifically identifying the alleged circumstances
or actions giving rise to Cause (a “Cause
Notice”), and the Executive fails to correct such action
or circumstances within 20 days of receiving the Cause Notice.
For purposes of this paragraph, no act or failure to act on
the Executive’s part shall be considered as willful
unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the action or
omission was in the best interests of the
Corporation.
3.2
“Disability”
shall mean the illness or other mental or physical disability
of the Executive, as determined by a physician
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