Exhibit 10.1
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT
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AMENDMENT NO. 2 TO THE EMPLOYMENT AGREEMENT (this "Amendment") made as
of the 18th day of July, 2006 by and between GRIFFON CORPORATION, a Delaware
corporation (hereinafter the "Company") and XXXXXX X. XXXX (hereinafter the
"Executive").
WITNESSETH:
WHEREAS, the Company and Executive entered into an Employment
Agreement dated July 1, 2001, as amended subsequently by the Amendment Agreement
dated August 8, 2003 (hereinafter the "Employment Agreement"); and
WHEREAS, the Company and Executive desire to further modify the said
Employment Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. All references to 20 percent with regard to an amount of voting
securities or outstanding stock in Section 1(d) shall henceforth be
read to mean 35 percent, effective as of the date hereof.
2. Section 1(l) shall be amended and restated in its entirety to read as
follows, effective as of the date hereof:
"(l) 'Retirement' shall mean the voluntary termination of
Blau's employment by Blau with eligibility to receive a
fully vested benefit under Griffon's Supplemental Executive
Retirement Plan as in effect on the date hereof, other than
a termination due to Disability or death, or for Good
Reason."
3. A new sentence shall be added at the end of Section 8(b), which shall
read in its entirety as follows, effective as of the date hereof:
"Any payment of such club dues shall be made within 2 and 1/2
months of the later of (a) the end of the calendar year in
which the invoice for such club dues is received or (b) the
end of Griffon's fiscal year in which the invoice for such
club dues is received."
4. A new sentence shall be added at the end of Section 9(b), which shall
read in its entirety as follows, effective as of the date hereof:
"Notwithstanding the foregoing, if, in the mutual good faith
determination and agreement of Blau and Griffon, such lifetime
benefits may not be provided without subjecting Blau to any
tax, interest or penalty imposed under Section 409A(a)(1)(B)
of the Code (or any regulation or any guidance promulgated
thereunder
or with respect to), then on the second anniversary
of the later of (a) a termination of employment or (b) a
termination of the Consulting Period, in lieu of such lifetime
benefits, Blau shall receive a lump sum payment equal to the
value (as mutually determined as of the date of any such
termination in good faith and agreed to by Blau and Griffon)
of such lifetime benefits Blau and his Spouse would otherwise
have been entitled to receive under this Section.
Notwithstanding any other provisions of the Agreement to the
contrary, if Blau has received a lump sum payment of his and
his Spouse's lifetime retiree medical benefits under either
Section 10(g)(ii)(C) or Section 10(i)(iii), Griffon shall no
longer be responsible for the provision of such benefits under
this Section 9(b)."
5. The heading of Section 10 shall be amended and restated in its
entirety to read as follows, effective as of the date hereof:
"TERMINATION OF EMPLOYMENT - CHANGE IN CONTROL"
6. The second sentence of Section 10(a) shall be amended and restated in
its entirety to read as follows, effective as of the date hereof:
"If he does so, except for Good Reason, his entitlement shall
be the same as if Griffon had terminated his employment for
Cause, provided that Blau shall also be entitled to commence
the Consulting Period upon such termination, as provided in
Section 10(h)."
7. Section 10(g)(ii)(B) shall be amended and restated in its entirety to
read as follows, effective as of the date hereof:
"(B) a lump sum payment equal to the annual bonuses for the
remainder of the Employment Term (including, without
limitation, a prorated bonus for any partial Fiscal Year)
equal to the average of the three highest annual bonuses
awarded to Blau during the ten Fiscal Years (or portions
thereof) preceding the termination of Blau's employment as an
employee (including, without limitation, any bonus awarded to
Blau in the year of termination, which is unpaid as of the
date of termination);"
8. Section 10(g)(ii)(C) shall be amended and restated in its entirety to
read as follows, effective as of the date hereof:
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"(C) continued medical reimbursement, as described in Section
9(b) above for the lesser of: (a) two years after any
termination of employment or (b) the remainder of the
Employment Term; provided however, that if, in the mutual good
faith determination and agreement of Blau and Griffon, such
medical reimbursement may be provided without subjecting Blau
to any tax, interest or penalty imposed under Section
409A(a)(1)(B) of the Code (or any regulation or any guidance
promulgated thereunder or with respect to), then the period of
medical reimbursement shall continue for the remainder of the
Employment Term, without regard to the two year period
referred to above. Upon the expiration of the relevant period
referred to above, Blau shall receive the lifetime medical
benefits in accordance with Section 9(b) above;"
9. Section 10(g)(ii)(E) shall be amended and restated in its entirety to
read as follows, effective as of the date hereof:
"(E) continued participation in all employee benefit plans or
programs available to Griffon employees generally in which
Blau was participating on the date of termination of his
employment until the end of the Employment Term; provided;
however, that (x) if Blau is either precluded from continuing
his participation in any employee benefit plan or program as
provided in this clause (E) or if Blau's continued
participation would subject Blau to any tax, interest or
penalty imposed under Section 409A(a)(1)(B) of the Code (or
any regulation or any guidance promulgated thereunder or with
respect to), then Blau shall be entitled to the after-tax
economic equivalent of the benefit foregone under the plan or
program in which he is unable to participate until the end of
the Employment Term (which shall be paid in one lump sum as
soon as administratively feasible after his termination of
participation), and (y) the "economic equivalent of the
benefit foregone" shall be deemed to be the lowest cost that
Blau would incur in obtaining such benefit on an individual
basis; further provided that if such benefit cannot be
obtained at any cost, Blau shall be entitled to a lump sum
payment equal to the aggregate benefit payments he would
reasonably be expected to receive through the end of the
Employment Term, and the valuation of such lump sum benefit
payment amount shall be mutually determined in good faith by
Blau and Griffon; and"
10. Section 10(g)(ii)(F) shall be amended and restated in its entirety to
read as follows, effective as of the date hereof:
"(F) other benefits in accordance with applicable plans and
programs of the Griffon; provided however, that if such other
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benefits would subject Blau to any tax, interest or penalty
imposed under Section 409A(a)(1)(B) of the Code (or any
regulation or any guidance promulgated thereunder or with
respect to), then Blau shall receive a lump sum payment, which
shall be valued in accordance with the principles set forth in
Section 10(g)(ii)(E) above."
11. Section 10(i) shall be amended and restated in its entirety to read as
follows, effective as of the date hereof:
"(i) Change in Control. Notwithstanding anything to the
contrary in this Section 10, upon the occurrence of a Change
in Control, Blau shall be entitled to:
(i) a lump sum payment equal to the net present value of his
Salary for the remainder of the Employment Term at the salary
amount in effect immediately before the Change in Control. The
interest rate used to determine the present value of these
payments shall be the mid-term Applicable Federal Rate
compounded semi-annually for the month in which such Change in
Control occurs;
(ii) a lump sum payment equal to the annual bonuses otherwise
payable under Section 10(g)(ii)(B) for the remainder of the
Employment Term (including, without limitation, a prorated
bonus for any partial Fiscal Year) with each such bonus equal
to the average of the three highest annual bonuses awarded to
Blau during the ten Fiscal Years (or portions thereof)
preceding the Change in Control (including, without
limitation, any bonus awarded to Blau in the year in which the
Change in Control occurs, which is unpaid as of the date of
the Change in Control);
(iii) continued medical reimbursement, as described in Section
9(b) above for the lesser of: (a) two years after the later to
occur of a termination of employment or, if applicable, a
termination of the Consulting Period following a Change in
Control or (b) the remainder of the Employment Term; provided
however, that if, in the mutual good faith determination and
agreement of Blau and Griffon, such medical reimbursement may
be provided without subjecting Blau to any tax, interest or
penalty imposed under Section 409A(a)(1)(B) of the Code (or
any regulation or any guidance promulgated thereunder or with
respect to), then the period of medical reimbursement shall
continue for the remainder of the Employment Term, without
regard to the two year period referred to above. Upon the
expiration of the relevant period referred to above, Blau
shall receive the lifetime medical benefits in accordance with
Section 9(b) above;
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(iv) a lump-sum payment equal to the then present value of the
excess, if any, of (x) the retirement benefit to which Blau
would have been entitled if he had remained employed under
this Agreement until age 72 over (y) the early retirement
benefit actually payable to him, both as calculated and
payable under the SERP, provided such amount is not otherwise
paid to Blau under the terms of the SERP; and
(v) continued participation in all employee benefit plans or
programs available to Griffon employees generally in which
Blau was participating on the date of any termination of his
employment until the end of the Employment Term; provided;
however, that (x) if Blau is either precluded from continuing
his participation in any employee benefit plan or program as
provided in this clause or if Blau's continued participation
would subject Blau to any tax, interest or penalty imposed
under Section 409A(a)(1)(B) of the Code (or any regulation or
any guidance promulgated thereunder or with respect to), then
Blau shall be entitled to the after-tax economic equivalent of
the benefit foregone under the plan or program in which he is
unable to participate until the end of the Employment Term
(which shall be paid in one lump sum as soon as
administratively feasible after his termination of
participation), and (y) the "economic equivalent of the
benefit foregone" shall be deemed to be the lowest cost that
Blau would incur in obtaining such benefit on an individual
basis; further provided that if such benefit cannot be
obtained at any cost, Blau shall be entitled to a lump sum
payment equal to the aggregate benefit payments he would
reasonably be expected to receive through the end of the
Employment Term, and the valuation of such lump sum benefit
payment amount shall be mutually determined in good faith by
Blau and Griffon; and
(vi) other benefits in accordance with applicable plans and
programs of the Griffon; provided however, that if such other
benefits would subject Blau to any tax, interest or penalty
imposed under Section 409A(a)(1)(B) of the Code (or any
regulation or any guidance promulgated thereunder or with
respect to), then Blau shall receive a lump sum payment, which
shall be valued in accordance with the principles set forth in
Section 10(i)(v) above.
Notwithstanding the foregoing, if a Change in Control occurs
prior to January 1, 2007, the lump sum payments provided under
Sections 10(i)(i), 10(i)(ii) and 10(i)(iv) of this Agreement
shall be made on January 2, 2007.
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Payments under this Section 10(i) shall be in full
satisfaction of any payments or benefits Blau would otherwise
be entitled to under Section 10(g)."
12. Section 10(j) shall be added, which shall read in its entirety as
follows, effective as of the date hereof
"10(j) Notwithstanding the foregoing, if (a) Blau or his
estate is to receive payments or benefits under Section 10 for
any reason other than due to Blau's death or due to a Change
in Control, and (b) Blau is a "specified employee" within the
meaning of Code Section 409A for the period in which the
payment or benefits would otherwise commence, and (c) such
payment or benefit would otherwise subject Blau to any tax,
interest or penalty imposed under Section 409A(a)(1)(B) of the
Code (or any regulation or any guidance promulgated thereunder
or with respect to) if the payment or benefit would commence
within six months of a termination of Blau's employment, then
such payment or benefit required under Section 10 shall not
commence until the first day which is at least six months
after the termination of Blau's employment. Such payments or
benefits, which would have otherwise been required to be made
over such six month period, shall be paid to Blau in one lump
sum payment or otherwise provided to Blau, as soon as
administratively feasible after the first day which is at
least six months after the termination of Blau's employment.
Thereafter, payments or benefits shall continue, if
applicable, for the relevant period set forth above."
13. Section 13(a) shall be amended and restated in its entirety to read as
follows, effective as of the date hereof:
"(a) General. Effective upon the end of the Employment Term
(but only if the Employment Term ends by reason of its
expiration or, if earlier, upon termination of Blau's
employment (i) voluntarily by Blau, (ii) by mutual agreement,
(iii) by Retirement or (iv) within the one-year period
following a Change in Control, for any reason other than for
Cause), Blau shall become a consultant to Griffon, in
recognition of the continued value to Griffon of his extensive
knowledge and expertise. Unless earlier terminated, as
provided in Section 13(e), the Consulting Period shall
continue for five years."
14. Except as specifically provided in and modified by this Amendment, the
Employment Agreement is in all other respects hereby ratified and
confirmed and references to the Employment
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Agreement shall be deemed to refer to the Employment Agreement as
modified by this Amendment.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the day and year first above written.
GRIFFON CORPORATION
By:/s/Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Vice President, Treasurer and
Secretary
/s/Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
