Exhibit 10.1
EXECUTION COPY
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (this
“ Agreement ”),
is made and entered into as of August 6, 2009 (the “
Effective Date ”), by and between Griffon Corporation,
a Delaware corporation, with its principal office located at 100
Jericho Quadrangle, Jericho, New York 11753-2794 (together with its
successors and assigns permitted under this Agreement, “
Griffon ”) and
Douglas J. Wetmore (“ Wetmore ”).
W I T N
E S S E
T H :
WHEREAS
, Griffon has determined that it is
in the best interests of Griffon and its stockholders to employ
Wetmore as its Executive Vice-President and Chief Financial
Officer; and
WHEREAS , Griffon wishes to assure itself of the
services of Wetmore for the period hereinafter provided, and
Wetmore is willing to be employed by Griffon for said period, upon
the terms and conditions provided in this Agreement;
NOW,
THEREFORE , in
consideration of the premises and mutual covenants contained herein
and for other good and valuable consideration, the receipt and
sufficiency of which is mutually acknowledged, Griffon and Wetmore
(individually a “ Party ” and together the “
Parties ”) agree as
follows:
1.
DEFINITIONS
.
(a)
“ Affiliate ”
means any person or entity controlling, controlled by or under
common control with Griffon.
(b)
“ Board ” shall mean the Board of
Directors of Griffon.
(c)
“ Cause ” shall mean:
(i)
Wetmore’s willful refusal to
perform his material duties as defined herein (other than as a
result of total or partial incapacity due to physical or mental
illness),
(ii)
theft or embezzlement of Griffon
property or dishonesty in the performance of Wetmore’s
duties,
(iii)
Wetmore’s conviction of, or
plea of guilty or nolo contendere to (x) a felony under the
laws of the United States or any state thereof or (y) a crime
involving moral turpitude,
(iv)
Wetmore’s willful malfeasance
or willful misconduct in connection with Wetmore’s duties
hereunder or any act or omission which is materially injurious to
the financial condition or business reputation of Griffon or any of
its Subsidiaries or Affiliates. For purposes of
Section 1(c)(i) and (iv) , no act or failure to
act on the part of Wetmore shall be considered
“willful” unless it is committed, or omitted
to
be done, by him in bad faith or
without reasonable belief that his action or omission was in the
best interests of Griffon, and/or
(v)
any material breach of the Agreement
by Wetmore.
Notwithstanding the foregoing, no
act or failure to act (to the extent curable) shall constitute
Cause unless Griffon gives Wetmore written notice after becoming
aware of the occurrence of the act or failure to act which Griffon
believes constitutes the basis for Cause, specifying the particular
act or failure to act which Griffon believes constitutes the basis
for Cause. If Wetmore fails to cure such act or failure to
act within thirty (30) days after receipt of such notice,
Wetmore’s employment shall be deemed terminated for
Cause.
(d)
“ Change in Control ” shall mean the
occurrence of any of the following events during the Employment
Term:
(i)
any person, or more than one person
acting as a group within the meaning of Code Section 409A and
the regulations issued thereunder, acquires ownership of stock of
Griffon that, together with stock held by such person or group,
constitutes more than 50 percent of the total fair market value or
total voting power of the stock of Griffon; provided, however, that
for purposes of this subsection (i), the following acquisitions
shall not be deemed to result in a Change in Control: (A) any
acquisition directly from Griffon, (B) any acquisition by
Griffon or any Affiliate, or (C) any acquisition by
(x) any employee benefit plan (or related trust) intended to
be qualified under Section 401(a) of the Code or
(y) any trust established in connection with any broad-based
employee benefit plan sponsored or maintained, in each case, by
Griffon or any corporation controlled by Griffon;
(ii)
any person, or more than one person
acting as a group within the meaning of Code Section 409A and
the regulations issued thereunder, acquires (or has acquired during
the 12-month period ending on the date of the most recent
acquisition) ownership of stock of Griffon possessing 30 percent or
more of the total voting power of Griffon’s stock; provided,
however, that for purposes of this subsection (ii), the following
acquisitions shall not be deemed to result in a Change in Control:
(A) any acquisition directly from Griffon, (B) any
acquisition by Griffon or any Affiliate, or (C) any
acquisition by (x) any employee benefit plan (or related
trust) intended to be qualified under Section 401(a) of
the Code or (y) any trust established in connection with any
broad-based employee benefit plan sponsored or maintained, in each
case, by Griffon or any corporation controlled by
Griffon;
(iii)
a majority of the members of the
Board is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the
members of the Board before the date of the appointment or
election, but excluding any new director whose initial assumption
of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of any individual,
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entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 as amended) (a “ Person ”) other than the Board;
or
(iv)
a person, or more than one person
acting as a group within the meaning of Code Section 409A and
the regulations issued thereunder (other than a subsidiary or an
Affiliate of Griffon), acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition)
all or substantially all of the assets of Griffon.
Notwithstanding the foregoing, a
Change in Control shall not include any event, circumstance or
transaction that results from an action of any Person, entity or
group which includes, is affiliated with or is wholly or partly
controlled by one or more executive officers of Griffon and in
which Wetmore participates directly or actively (other than a
renegotiation of his employment arrangements or in his capacity as
an employee of Griffon or any successor entity thereto or to the
business of Griffon).
(e)
“ Code ” shall mean the Internal
Revenue Code of 1986, as amended from time to time.
(f)
“ Committee ” shall mean the
Compensation Committee of the Board.
(g)
“ Employment Term ” shall mean the
period specified in Section 2(b)
below.
(h)
“ Fiscal Year ” shall mean the
12-month period beginning on October 1 and ending on the next
subsequent September 30, or such other 12-month period as may
constitute Griffon’s fiscal year at any time
hereafter.
(i)
“ Good Reason ” shall mean the
occurrence of any of the following events without Wetmore’s
prior written consent:
(i)
the failure of Griffon to pay
Wetmore’s base salary or annual bonus when due and if earned,
other than an inadvertent administrative error or
failure,
(ii)
a reduction by Griffon in
Wetmore’s Salary or Target Bonus, other than a percentage
reduction applied equally to all senior executives,
(iii)
a material diminution in
Wetmore’s authority or responsibilities from those described
herein, including the appointment of another person to the position
of Chief Financial Officer,
(iv)
failure of Griffon to maintain its
principal headquarters within thirty-five (35) miles of New York
City,
(v)
any material breach of the Agreement
by Griffon, or
(vi)
a failure of Griffon to have any
successor assume in writing the obligations under the
Agreement.
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Notwithstanding the foregoing, none
of these events shall constitute Good Reason unless Wetmore gives
Griffon written notice within ninety (90) days after the occurrence
of the event which Wetmore believes constitutes the basis for Good
Reason, specifying the particular act or failure to act which
Wetmore believes constitutes the basis for Good Reason. If
Griffon fails to cure such act or failure to act within thirty (30)
days after receipt of such notice, Wetmore may terminate his
employment for Good Reason.
(j)
“ Salary ” shall mean the annual
salary provided for in Section 3 below, as adjusted
from time to time.
2.
EMPLOYMENT TERM, POSITIONS AND
DUTIES .
(a)
Employment of Wetmore.
Griffon hereby employs Wetmore, and
Wetmore hereby accepts employment with Griffon, in the positions
and with the duties and responsibilities set forth below and upon
such other terms and conditions as are hereinafter stated.
Wetmore shall render services to Griffon principally at
Griffon’s corporate headquarters, but he shall do such
traveling on behalf of Griffon as shall be reasonably required in
the course of the performance of his duties hereunder.
(b)
Employment Term
. Unless earlier terminated under
Section 9 hereof, the term of employment hereunder
shall commence as of September 1, 2009 (the
“Commencement Date”), and shall continue until the
fourth anniversary of the Commencement Date (the “Initial
Term”) and shall automatically renew for one year periods
commencing on the fourth anniversary of the Commencement Date (each
such one-year period, a “Renewal Term”), unless either
Party provides notice of non-renewal at least ninety (90) days
prior to the end of the Initial Term or any Renewal Term (the
Initial Term and any Renewal Term shall hereinafter be referred to
as the “Employment Term”).
(c)
Titles and Duties
. During the Employment Term,
Wetmore shall (i) have the titles of Executive Vice-President
and Chief Financial Officer, (ii) be responsible for, and,
along with Griffon’s Chief Executive Officer, have authority
over, Griffon’s internal controls, Sarbanes Oxley compliance,
investor relations, finance, accounting and treasury functions,
(iii) have such other duties and responsibilities as are
assigned to Wetmore by Griffon’s Chief Executive Officer or
the Board (not inconsistent in any significant respect with the
duties and responsibilities typically assigned to the chief
financial officer of a publicly-traded corporation), and
(iv) report to Griffon’s Chief Executive Officer and/or
his designees.
(d)
Time and Effort
. Wetmore shall devote his
best efforts and abilities, and all of his business time, to the
performance of his duties under the Agreement; provided that he
shall, to the extent same does not substantially interfere with the
performance of his duties hereunder, be permitted to:
(i) serve on civic boards and committees and, with the prior
written consent of the Board, corporate boards, provided, however,
that Board consent shall not be required to continue
Wetmore’s current membership on the board of Arch
Chemicals, Inc.. (ii) deliver lectures, fulfill speaking
engagements or teach at educational institutions, and
(iii) manage personal and family investments.
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3.
SALARY
.
(a)
Wetmore shall receive from Griffon a
Salary, payable in accordance with the regular payroll practices of
Griffon, in an amount of $500,000 per annum. During the
Employment Term, Wetmore shall be eligible for periodic annual
increases in Salary commencing October 1, 2010, in the sole
discretion of the Committee.
4.
BONUSES
.
(a)
Annual Bonus
. Commencing with the Fiscal Year
ending September 30, 2010 and for each Fiscal Year thereafter
during the Employment Term, Wetmore shall be eligible to receive a
performance based bonus of between 0% and 150% of Salary, with a
target bonus of 75% of Salary (the “Target Bonus”), in
accordance with Griffon’s 2006 Performance Bonus Plan or
another plan or plans providing annual award opportunities.
Any such bonus shall be based on the achievement of performance
objectives to be established and certified by the Committee.
Such performance criteria shall be communicated to Wetmore in
writing within ninety (90) days after the commencement of the
applicable performance period. Such performance-based bonus
shall be paid within seventy-five (75) days of the end of the
Fiscal Year during which it is earned.
(b)
Discretionary Bonus
. Wetmore shall be eligible to
receive a bonus for the Fiscal Year ending September 30, 2009,
and each Fiscal Year thereafter during the Employment Term.
The amount and the occasion for payment of such bonus, if any,
shall be determined by the Committee in its sole
discretion.
5.
EQUITY AWARDS
.
(a)
Restricted Stock
. As soon as practicable
following the Commencement Date, Wetmore shall receive, pursuant to
the Griffon Corporation 2006 Equity Incentive Plan (the
“Plan”) and an award agreement issued thereunder, a
restricted stock grant of 200,000 shares of common stock (the
“Restricted Stock Grant”) of Griffon. The
Restricted Stock Grant shall vest in full on the fourth anniversary
of the date of grant, provided that Wetmore is then still employed
by Griffon (unless prior thereto Wetmore’s employment is
terminated by Griffon without Cause or due to Wetmore’s
disability or by Wetmore for Good Reason, in which case the
Restricted Stock Grant shall vest in accordance with subsection
(i) (in the case of a termination without Cause or for Good
Reason) or (ii) (in the case of disability) of
Section 9(h) ). The award agreement for the
Restricted Stock Grant shall permit Wetmore to satisfy his
withholding obligations by having Griffon withhold a sufficient
number of shares to satisfy such obligations.
(b)
Subsequent Grants
. The Board (or the Committee)
shall consider making additional equity grants to Wetmore, the
amount and frequency of which shall be determined by the Board or
Committee in its sole discretion.
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6.
BUSINESS AND TRAVEL EXPENSE
REIMBURSEMENT; CERTAIN OTHER COSTS .
(a)
Business Expenses
. Wetmore shall be entitled to
prompt reimbursement by Griffon for all reasonable business
expenses incurred by him during the Employment Term in performing
services under this Agreement, upon his proper submission of such
accounts and records as may be reasonably required by
Griffon.
(b)
Other Costs
. Griffon shall reimburse
Wetmore for reasonable attorneys fees incurred in connection with
the negotiation of this Agreement, up to a maximum of
$10,000.00.
All reimbursements under this
Section 6 shall be made as soon as practicable
following submission of a reimbursement request, but no later than
the end of the year following the year during which the underlying
expense was incurred.
7.
PERQUISITES
.
During the Employment Term, Griffon
shall provide Wetmore with the use of an automobile, such as a BMW
X5 or similar model and reimbursement or payment of all related
expenses, including, without limitation, lease payments, insurance,
maintenance and parking, subject to Wetmore’s prompt
submission of such accounts and records as may be reasonably
required by Griffon. All reimbursements or payments under
this Section 7 shall be made as soon as practicable
following submission of a reimbursement request, but no later than
the end of the year following the year during which the underlying
expense was incurred.
8.
BENEFITS
.
(a)
General . During the Employment Term, Wetmore will
be eligible to participate in all welfare benefit plans and
tax-qualified pension plans of Griffon as are generally available
to Griffon’s other similarly situated executives in
accordance with the terms and provisions of such plans, including
without limitation, profit-sharing plans, savings and similar
plans, group life insurance, accidental death and dismemberment
insurance, travel accident insurance, hospitalization insurance,
surgical insurance, major medical insurance, dental insurance,
short-term and long-term disability insurance, sick leave,
holidays, vacation (four weeks per calendar year, to be taken in
accordance with Griffon’s policy) and any other employee
benefit plans or programs that may be sponsored by Griffon from
time to time; provided, however, that Wetmore shall not be eligible
to receive benefits or payments under any severance plan, program
or arrangement of Griffon other than those benefits Wetmore may
become entitled to receive, as the case may be, under this
Agreement.
(b)
Life Insurance Benefit
. In addition to the group
life insurance available to employees generally, Griffon shall
provide Wetmore with company-paid term life insurance coverage with
a face amount equal to three times his Salary.
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9.
TERMINATION OF
EMPLOYMENT .
(a)
Voluntary Termination
. Wetmore may terminate his
employment voluntarily at any time during the Employment Term. If
he does so, except for Good Reason, he shall be entitled to receive
only the compensation and benefits specified in
Section 9(b) .
(b)
General . Notwithstanding anything to the contrary
herein, in the event of any termination of Wetmore’s
employment during the Employment Term (including by reason of his
death), he shall be entitled to receive as soon as administratively
feasible following such termination, but in any event, except as
provided below, within fifteen (15) days thereafter (in addition to
the applicable payments and benefits he may also be entitled to
receive under subsections (c) through (h) below, as
applicable):
(i)
accrued but unpaid Salary through
the date of termination;
(ii)
any accrued but unused
vacation;
(iii)
any annual bonus earned for the
Fiscal Year completed prior to the year of termination but not yet
paid to him; and
(iv)
reimbursement in accordance with
Section 6 above of any expenses incurred by him through
the date of termination but not yet paid to him.
Additionally, Wetmore shall receive any other
compensation or benefits, including, without limitation, benefits
under any outstanding equity grants and awards granted pursuant to
Section 5 above and employee benefits under plans
described in Section 8 above, that have vested through
the date of termination or to which he may then be entitled in
accordance with the applicable terms and conditions of each grant,
award or plan.
(c)
Termination Due to
Disability . If, during
the Employment Term, Wetmore’s employment is terminated by
Griffon due to disability, he shall be entitled, in addition to the
compensation and benefits specified in Section 9(b) ,
to receive:
(i)
a pro-rata bonus for the year of
termination equal to the Target Bonus multiplied by a fraction, the
numerator of which is the number of completed days in the Fiscal
Year of Wetmore’s termination of employment during which
Wetmore was employed by Griffon and the denominator of which is
365, as soon as administratively feasible following such
termination, but in any event within fifteen (15) days
thereafter;
(ii)
severance equal to six months’
Salary payable in six (6) equal monthly installments and
commencing on the first payroll period following such termination;
provided, however, that, if and to the extent necessary to avoid
the imposition of any taxes imposed under Section 409A of the
Code, such six months of continued Salary shall be payable over
eighteen months (ins
