EXHIBIT 4.1
NON-QUALIFIED STOCK OPTION AGREEMENT
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AGREEMENT made
as of the 1st day of March, 2005, between GRIFFON
CORPORATION, a Delaware corporation, (hereinafter called the
"Company") and ERIC
EDELSTEIN (hereinafter called "Optionee").
W I T N E S S E T H:
WHEREAS, concurrently herewith the Company and the Optionee intend
to enter
into an employment agreement (the "Employment Agreement") pursuant to which
the
Optionee shall be employed as an Executive Vice President and Chief Financial
Officer of the Company; and
WHEREAS, in
order to induce Optionee to enter into the Employment
Agreement, the Company
has determined that it is advisable to grant to Optionee
an award of certain
options to purchase the Company's common stock, par value
$.25 per share (the "Common Stock"); and
WHEREAS, the
Optionee is only willing to enter into the Employment
Agreement if the Company enters into this option agreement.
NOW,
THEREFORE,
in consideration of
the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Grant of
Option. The Company hereby grants to Optionee an option to
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purchase a total of 250,000 shares of the authorized and unissued Common
Stock of the Company
(the "Option")
at an exercise price of $22.94 per
share, which is the
closing price of the
Common Stock on the date hereof.
The
within Option is
immediately vested and
is exercisable in
accordance
with
Section 2 hereof.
2. Exercisability
and Term of Option.
The within
Option may be
exercised at
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any
time before the Expiration Date in the following amounts:
As to 50% of the shares of Common Stock, on or after March 1,
2006
As to 100% of the shares of Common Stock, on or after March 1,
2007
The
rights represented by
this Option are exercisable at the option of the
holder hereof in whole
at any time, or in
part from time to time, within
the
periods above specified at the price specified in Section 1 hereof.
The
within Option may be
exercised by Optionee at any time prior to
February
28,
2012 (the "Expiration Date"); provided, that in the event of the
prior
termination or
expiration
of the Employment Agreement or Optionee's
employment with the
Company on or before March 1, 2007, whether under the
Employment Agreement
or otherwise,
the Optionee
shall have until May
1,
2007
to exercise the within Option; provided, further, that in the event
of
any
termination
or expiration of the
Employment
Agreement or
Optionee's
employment with the Company prior to the Expiration Date but after
March 1,
2007, whether under
the Employment
Agreement or
otherwise, the
Optionee
shall have a period of sixty (60) days from such termination or expiration
to
exercise the within Option, but in no event shall the Option be
exercisable after the Expiration Date.
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3. Anti-dilution.
The price per share at
which shares of Common
Stock may be
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purchased hereunder,
and the number of such
shares to be purchased
upon
exercise hereof, are subject to change or adjustment as
follows:
(A)
In case the Company shall, while this Option remains
unexercised,
in
whole or in part, and in force, effect a recapitalization of such
character
that
the shares of Common Stock purchasable hereunder shall be changed
into
or
become exchangeable
for a larger or
smaller number of
shares, then,
after the date of record for effecting such recapitalization, the
number of
shares of Common Stock
which the holder hereof shall be entitled to
purchase hereunder shall be increased or decreased, as the case may be, in
direct proportion
to the increase or decrease in the number
of shares of
Common Stock by reason of such recapitalization, and the purchase price
hereunder per share of such recapitalized Common Stock shall, in the
case
of an increase in the
number of such shares,
be proportionately
reduced,
and
in the case of a
decrease in the number of such shares, shall be
proportionately
increased. For the purpose of this subsection (A), a stock
div
