EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made and entered into as of
October 1, 1998, by and between Griffon Corporation, a Delaware corporation,
with its principal office located at 000 Xxxxxxx Xxxxxxxxxx, Xxxxxxx, Xxx Xxxx
00000-0000 (together with its successors and assigns permitted under this
Agreement, "Griffon") and Xxxxxx X. Xxxx ("Xxxx"), amends and restates in its
entirety the original agreement made and entered into as of March 1, 1983
between Griffon and Blau, as subsequently amended through May 8, 1991 (the
"Prior Agreement").
WITNESSETH:
WHEREAS, Griffon has determined that it is in the best interests of
Griffon and its stockholders to continue to employ Blau and to set forth in this
Agreement the obligations and duties of both Griffon and Blau; and
WHEREAS, Griffon wishes to assure itself of the services of Blau for the
period hereinafter provided, and Blau 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 of
which is mutually acknowledged, Griffon and Blau (individually a "Party" and
together the "Parties" ) agree as follows:
1. DEFINITIONS.
(a) "Beneficiary" shall mean the person or persons named by Blau pursuant
to Section 17 below or, in the event that no such person is named who survives
Blau, his estate.
(b) "Board" shall mean the Board of Directors of Griffon.
(c) "Cause" shall mean:
(i) Blau's conviction of a felony involving an act or acts of dishonesty on
his part and resulting or intended to result directly or indirectly in gain or
personal enrichment at the expense of Griffon;
(ii) willful and continued failure of Blau to perform his obligations under
this Agreement, resulting in demonstrable material economic harm to Griffon, or
(iii) a material breach by Blau of the provisions of Sections 14 or 15
below to the demonstrable and material detriment of Griffon.
Notwithstanding the foregoing, in no event shall Blau's failure to perform
the duties associated with his position caused by his mental or physical
disability constitute Cause for his termination.
For purposes of this Section 1(c), no act or failure to act on the part of
Blau shall be considered "willful" unless it is done, 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. Any act or failure to act based upon authority
given pursuant to a resolution adopted by the Board or based upon the advice of
counsel for Griffon shall be conclusively presumed to be done, or omitted to be
done, by Blau in good faith and in the best interests of Griffon.
(d) "Change in Control" shall mean the occurrence of any of the following
events:
(i) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 as
amended (the "Exchange Act") (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of voting securities
of Griffon when such acquisition causes such Person to own 20 percent or more of
the combined voting power of the then outstanding voting securities of Griffon
entitled to vote generally in the election of directors (the "Outstanding
Griffon Voting Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not be deemed to result in a
Change of Control: (A) any acquisition directly from Griffon, (B) any
acquisition by Griffon, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Griffon or any corporation controlled
by Griffon or (D) any acquisition pursuant to a transaction that complies with
clauses (A), (B) and (C) of subsection (iii) below; and provided, further, that
if any Person's beneficial ownership of the Outstanding Griffon Voting
Securities reaches or exceeds 20 percent as a result of a transaction described
in clause (A) or (B) above, and such Person subsequently acquires beneficial
ownership of additional voting securities of Griffon, such subsequent
acquisition shall be treated as an acquisition that causes such Person to own 20
percent or more of the Outstanding Griffon Voting Securities; or
(ii) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by Griffon's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding for this purpose
any such individual 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 a Person other than the Board; or
(iii) consummation of a reorganization, merger or consolidation or sale or
other disposition of all or subsequently all of the assets of Griffon or the
acquisition of assets of another entity ("Business Combination"); excluding,
however, such a Business Combination pursuant to which (A) all or substantially
all of the individuals and entities who were the beneficial owners of the
Outstanding Griffon Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60 percent of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation that as a result of such transaction owns Griffon or all or
substantially all of Griffon's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Griffon Voting
Securities, (B) no Person (excluding any employee benefit plan (or related
trust) of Griffon or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20 percent or more of, respectively,
the then outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (C) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(iv) approval by the stockholders of Griffon of a complete liquidation or
dissolution of the Company.
(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) "Consulting Period" shall mean the period specified in Section 13 below
during which Blau serves as a consultant to Griffon.
(h) "Disability" shall mean the illness or other mental or physical
disability of Blau, as determined by a physician acceptable to Griffon and Blau,
resulting in his failure during the Employment Term or the Consulting Period, as
the case may be, (i) to perform substantially his applicable material duties
under this Agreement for a period of nine consecutive months and (ii) to return
to the performance of his duties within 30 days after receiving written notice
of termination.
(i) "Employment Term" shall mean the period specified in Section 2(b)
below.
(j) "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.
(k) "Good Reason" shall mean, at any time during the Employment Term,
without Blau's prior written consent or his acquiescence:
(i) reduction in his then current Salary;
(ii) diminution, reduction or other adverse change in the bonus or
incentive compensation opportunities available to Blau (with respect to the
level of bonus or incentive compensation opportunities, the applicable
performance criteria and otherwise the manner in which bonuses and incentive
compensation are determined) in the aggregate from those available as of the
date hereof in accordance with Section 4(a) below;
(iii) Griffon's failure to pay Blau any amounts otherwise vested and due
him hereunder or under any plan or policy of Griffon;
(iv) diminution of Blau's titles, position, authorities or
responsibilities, including not serving on the Board;
(v) assignment to Blau of duties incompatible with his position of Chief
Executive Officer;
(vi) termination by Blau of his employment within one year following a
Change in Control other than (a) by mutual agreement, (b) for Cause or (c) by
reason of Retirement, death or Disability;
(vii) imposition of a requirement that Blau report other than directly to
the full Board;
(viii) a material breach of the Agreement by Griffon that is not cured
within 10 business days after written notification by Blau of such breach; or
(ix) relocation of Griffon's corporate headquarters to a location more than
35 miles from the location first above described.
(l) "Retirement" shall mean termination of Blau's employment subsequent to
the date hereof, other than (i) due to death or Disability, (ii) for Cause or
Good Reason or (iii) without Cause, with Blau's entitlement to receive a fully
vested benefit under Griffon's Supplemental Executive Retirement Plan as in
effect on the date hereof.
(m) "Salary" shall mean the annual salary provided for in Section 3 below,
as adjusted from time to time.
(n) "Spouse" shall mean, during the Term of Employment and the Consulting
Period, the woman who as of any relevant date is legally married to Blau.
(o) "Subsidiary" shall mean any corporation of which Griffon owns, directly
or indirectly, more than 50 percent of its voting stock.
2. EMPLOYMENT TERM, POSITIONS AND DUTIES.
(a) Employment of Blau. Griffon hereby continues to employ Blau, and Blau
hereby accepts continued 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. Blau 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. The Employment Term shall commence on the date hereof
and shall terminate on December 1, 2003.
(c) Titles and Duties.
(i) Until the date of termination of his employment hereunder, Blau shall
be employed as Chief Executive Officer, reporting to the full Board. In his
capacity as Chief Executive Officer, Blau shall have the customary powers,
responsibilities and authorities of chief executive officers of corporations of
the size, type and nature of Griffon including, without limitation, authority,
in conjunction with the Board as appropriate, to hire and terminate other
employees of Griffon.
(ii) During the Employment Term, Griffon shall uses its best efforts to
secure the election of Blau to the Board and to the chairmanship thereof. During
the Employment Term, if the Board forms an executive or similar committee, Blau
shall serve thereon.
(d) Time and Effort.
(i) Blau agrees to devote his best efforts and abilities, and such of his
business time and attention as is reasonably necessary, to the affairs of
Griffon in order to carry out his duties and responsibilities under this
Agreement. The Parties hereby acknowledge that Blau is chairman of the board of
Aeroflex Incorporated and senior partner of the law firm, Blau, Kramer, Wactlar
& Xxxxxxxxx, P.C. and that during the Employment Term he will be devoting time
and attention to those activities.
(ii) Notwithstanding the foregoing, nothing shall preclude Blau from (A)
serving on the boards of a reasonable number of trade associations, charitable
organizations and/or businesses not in competition with Griffon, (B) engaging in
charitable activities and community affairs and (C) managing his personal
investments and affairs; provided, however, that, such activities do not
materially interfere with the proper performance of his duties and
responsibilities specified in Section 2 (c) above.
3. SALARY.
(a) Initial Salary. Blau shall receive from Griffon a Salary, payable in
accordance with the regular payroll practices of Griffon, in a minimum amount of
$775,000.
(b) Cost-of-Living Increase. During the Employment Term Blau's Salary shall
be increased semiannually by an amount equal to the increase in the cost of
living for the immediately preceding calendar half-year, as reported in the
"Consumer Price Index, New York and Northeastern New Jersey, All Items,"
published by the United States Department of Labor, Bureau of Labor Statistics
(or, if such index is no longer published, a successor or comparable index that
is published). Such amount shall be calculated and paid to Blau in a single sum
on or before the first day of the second month following the applicable calendar
half year, and thereafter his Salary shall be deemed to include the amount of
any such increase. The first calculation and payment shall be made on or before
February 1, 1999 with respect to the period October 1, 1998 through December 31,
1998. If Blau's employment shall terminate during any such six-month period, the
cost-of-living increase provided in this Section 3(b) shall be prorated
accordingly.
(c) Salary Increase. Any amount to which Blau's Salary is increased, as
provided in Section 3(b) above or otherwise, shall not thereafter be reduced
without his consent, and the term "Salary" as used in this Agreement shall refer
to his Salary as thus increased.
4. BONUSES.
(a) Annual Bonus. Blau shall be eligible to receive an annual bonus for
each Fiscal Year or portion thereof during the Employment Term in accordance
with Griffon's Senior Management Incentive Compensation Plan or another plan or
plans providing him annual award opportunities (with respect to their level,
applicable performance criteria and the manner in which bonuses are determined)
that in the aggregate are not less than those in effect as of the date hereof.
Blau shall be entitled to elect to defer, under the terms of the Senior
Management Incentive Compensation Plan or any successor plan, any portion of his
annual bonus that is not already subject to deferral thereunder.
(b) Special Bonus. Blau shall be eligible to receive additional bonuses
during the Employment Term. The Committee shall determine, in its discretion,
the occasion for payment, and the amount, of any such bonus.
5. LONG-TERM INCENTIVE.
During the Employment Term, Blau shall be eligible for an award under any
long-term incentive compensation plan established by Griffon for the benefit of
Blau or, in the absence thereof, under any such plan established for the benefit
of members of the senior management of Griffon.
6. EQUITY OPPORTUNITY.
During the Employment Term, Blau shall be eligible to receive grants of
options to purchase shares of Griffon's stock and awards of shares of Griffon's
stock, either or both as determined by the Committee, under and in accordance
with the terms of applicable plans of Griffon and related option and award
agreements. It is the intention of Griffon to grant stock options to Blau during
the Employment Term. Also, to the extent permitted by any such plan, Blau shall
be eligible during any Consulting Period to receive grants of options and awards
of shares of Griffon's stock in the same manner.
7. EXPENSE REIMBURSEMENT; CERTAIN OTHER COSTS.
During the Employment Term and any Consulting Period, Blau shall be
entitled to prompt reimbursement by Griffon for all reasonable out-of-pocket
expenses incurred by him in performing services under this Agreement, upon his
submission of such accounts and records as may be reasonably required by
Griffon. In addition, Blau shall be entitled to payment by Griffon of all
reasonable costs and expenses, including attorneys' and consultants' fees and
disbursements, incurred by him in connection with adoption of this Agreement and
any related compensatory arrangements that Griffon adopts solely for his
benefit.
8. PERQUISITES.
During the Employment Term and, and any Consulting Period, Griffon shall
provide Blau with the following perquisites:
(a) an office of a size and with furnishings and other appointments, and
exclusive personal secretarial and other assistance, at least equal to that
provided to Blau by Griffon as of the date hereof; and
(b) payment of club dues and the use of an automobile and payment of
related expenses on the same terms as in effect on the date hereof or, if more
favorable to Blau, as made available generally to other executive officers of
Griffon and its affiliates at any time thereafter.
9. EMPLOYEE BENEFIT PLANS.
(a) General. During the Employment Term, Blau shall be entitled to
participate in all employee benefit plans and programs made available to
Griffon's senior executives or to its employees generally, as such plans or
programs may be in effect from time to time, including, without limitation,
pension and other retirement plans, profit-sharing plans, savings and similar
plans, group life insurance, accidental death and dismemberment insurance,
travel accident insurance, hospitalization insurance, surgical insurance, major
and excess major medical insurance, dental insurance, short-term and long-term
disability insurance, sick leave (including salary continuation arrangements),
holidays, vacation (not less than four weeks in any calendar year) and any other
employee benefit plans or programs that may be sponsored by Griffon from time to
time, including plans that supplement the above-listed types of plans, whether
funded or unfunded.
(b) Medical Care Reimbursement and Insurance. During the Employment Term
and Consulting Period, Griffon shall reimburse Blau for 100 percent of any
medical expenses incurred by him for himself and his Spouse that are not
reimbursed by insurance or otherwise, offset by any amounts that are
reimbursable by Medicare if Blau and his Spouse, when eligible, elect to be
covered by Medicare. Griffon shall provide Blau and his Spouse during his
lifetime with hospitalization insurance, surgical insurance, major and excess
major medical insurance and dental insurance in accordance with the most
favorable plans, policies, programs and practices of Griffon and its
Subsidiaries made available generally to other senior executive officers of
Griffon and its Subsidiaries as in effect from time to time.
(c) Life Insurance Benefit. In addition to the group life insurance
available to employees generally, Griffon shall provide Blau with an individual
permanent life insurance benefit in an initial amount of not less than
approximately $5 million, the terms and conditions of such benefit to be more
fully described in an insurance ownership agreement between Blau and Griffon.
(d) Disability Benefit. In consideration of the benefit payable to Blau in
the event of termination of his employment due to Disability, as provided in
Section 10(e) below, or, if applicable, in the event of termination of Blau's
consulting services due to Disability during the Consulting Period, as provided
in Section 13(d) below, Griffon shall not be obligated to provide Blau with
long-term disability insurance. If Griffon elects to provide Blau with such
insurance, he shall be the owner of any individual policies obtained and shall
pay the premiums thereon; provided, however, that Griffon shall reimburse Blau
for any premiums that he pays.
(e) Retirement Benefit. Blau shall be entitled to the benefits provided
under Griffon's Supplemental Executive Retirement Plan (the "SERP"); provided,
however, that if Griffon fails to maintain the SERP, Blau's retirement benefit
shall be determined as if the SERP had remained in effect until termination of
his employment with Griffon by retirement. These benefits are in addition to the
benefits provided under this Agreement, and no modification, amendment or
termination of this Agreement shall affect Blau's rights under the SERP as in
effect on the date hereof or, if more favorable to Blau, as in effect at any
time thereafter.
10. TERMINATION OF EMPLOYMENT.
(a) Voluntary Termination and Termination by Mutual Agreement. Blau may
terminate his employment voluntarily at any time. If he does so, his entitlement
shall be the same as if Griffon had terminated his employment for Cause. The
Parties may terminate this Agreement by mutual agreement at any time. If they do
so, Blau's entitlements shall be as the Parties mutually agree.
(b) General. Notwithstanding anything to the contrary herein, in the
event of termination of Blau's employment under this Agreement, he or his
Beneficiary, as the case may be, shall be entitled to receive (in addition to
payments and benefits under, and except as specifically provided in, subsections
(c) through (i) below, as applicable):
(i) his Salary through the date of termination;
(ii) any unused vacation from prior years;
(iii) any annual or special bonus awarded but not yet paid to him;
(iv) any deferred compensation under the Senior Management Incentive
Compensation Plan or any other deferred compensation plan of Griffon;
(v) any other compensation or benefits, including without limitation
long-term incentive compensation described in Section 5 above, benefits under
equity grants and awards described in Section 6 above and employee benefits
under plans described in Section 9 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; and
(vi) reimbursement in accordance with Sections 9(a) and (b) above of any
business and medical expenses incurred by Blau or his Spouse, as applicable,
through the date of termination but not yet paid to him.
(c) Termination due to Retirement. In the event that Blau's employment is
terminated due to his Retirement, he shall be entitled, in addition to the
compensation and benefits specified in Section 10(b), to the benefits provided
under the SERP, as provided in Section 9(e) above.
(d) Termination due to Death. In the event that Blau's employment is
terminated due to his death, his Beneficiary shall be entitled, in addition to
the compensation and benefits specified in Section 10(b), to his Salary payable
for the remainder of the Employment Term at the rate in effect immediately
before such termination.
(e) Termination due to Disability. In the event of Disability, Griffon or
Blau may terminate Blau's employment. If Blau's employment is terminated due to
Disability, he shall be entitled, in addition to the compensation and benefits
specified in Section 10(b), to his Salary payable for the remainder of the
Employment Term at the rate in effect immediately before such termination,
offset by any long-term disability insurance benefit that Griffon may have
elected to provide for him.
(f) Termination by Griffon for Cause. Griffon may terminate Blau's
employment hereunder for Cause only upon written notice to Blau not less than 30
days prior to any intended termination, which notice shall specify the grounds
for such termination in reasonable detail. Cause shall in no event be deemed to
exist except upon a finding reflected in a resolution approved by a majority
(excluding Blau) of the members of the Board (whose findings shall not be
binding upon or entitled to any deference by any court, arbitrator or other
decision-maker ruling on this Agreement) at a meeting of which Blau shall have
been given proper notice and at which Blau (and his counsel) shall have a
reasonable opportunity to present his case. In the event that Blau's employment
is terminated for Cause, he shall be entitled only to the compensation and
benefits specified in Section 10(b).
(g) Termination Without Cause or by Blau for Good Reason.
(i) Termination without Cause shall mean termination of Blau's employment
by Griffon and shall exclude termination (A) due to Retirement, death,
Disability or Cause, (B) by Blau voluntarily or (C) by mutual agreement of Blau
and Griffon. Griffon shall provide Blau 15 days' prior written notice of
termination by it without Cause, and Blau shall provide Griffon 15 days' prior
written notice of his termination for Good Reason.
(ii) In the event of termination by Griffon of Blau's employment without
Cause or of termination by Blau of his employment for Good Reason, he shall be
entitled, in addition to the compensation and benefits specified in Section
10(b), to:
(A) his Salary, payable for the remainder of the Employment Term at the
rate in effect immediately before such termination;
(B) annual bonuses for the remainder of the Employment Term (including a
prorated bonus for any partial Fiscal Year) equal to the average of the three
highest annual bonuses awarded to him during the ten Fiscal Years preceding the
Fiscal Year of termination, such bonuses to be paid at the same time annual
bonuses are regularly paid by Griffon to Blau;
(C) continued medical reimbursement for the remainder of the Employment
Term and thereafter the lifetime medical benefits described in Section 9(b)
above;
(D) 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 (calculated and payable
as provided in the SERP) over (y) the early retirement benefit actually payable
to him; and
(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 precluded from continuing his
participation in any employee benefit plan or program as provided in this clause
(E), he shall be entitled to the after-tax economic equivalent of the benefits
under the plan or program in which he is unable to participate until the end of
the Employment Term, and (y) the economic equivalent of any benefit foregone
shall be deemed to be the lowest cost that Blau would incur in obtaining such
benefit on an individual basis; and
(F) other benefits in accordance with applicable plans and programs of the
Company.
(iii) Prior written consent by Blau to any of the events described in
Section 1(k) above shall be deemed a waiver by him of his right to terminate for
Good Reason under this Section 10(g) solely by reason of the events set forth in
such waiver.
(h) Voluntary Termination by Blau. Blau shall have the right, upon 60 days'
prior written notice, voluntarily to terminate his employment without Good
Reason, in which event his employment shall cease and the Employment Term shall
terminate as of the date stated in such notice, and the Consulting Period shall
begin on the next succeeding business day, and he shall be entitled to receive
compensation and benefits as if Griffon had terminated his employment for Cause,
as provided in Section 10(f).
(i) Change in Control. Notwithstanding anything to the contrary in this
Section 10, termination of Blau's employment within the one-year period
following a Change in Control for any reason other than Cause, Retirement, death
or Disability, shall be governed by Section 10(g). In the event of any such
termination, Blau shall be entitled to compensation and benefits in accordance
with the provisions of Section 10(g)(ii).
11. NO DUTY TO MITIGATE.
Blau shall not be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or otherwise, nor
will any payment hereunder be subject to offset in the event Blau does receive
compensation for services from any other source.
12. PARACHUTES.
(a) Application. If all, or any portion, of the payments provided under
this Agreement, and/or any other payments and benefits that Blau receives or is
entitled to receive from Griffon or a Subsidiary, whether or not under an
existing plan, arrangement or other agreement, constitutes an excess "parachute
payment" within the meaning of Section 280G(b) of the Code (each such parachute
payment, a "Parachute Payment") and will result in the imposition on Blau of an
excise tax under Section 4999 of the Code, then, in addition to any other
benefits to which Blau is entitled under this Agreement, Griffon shall pay him
an amount in cash equal to the sum of the excise taxes payable by him by reason
of receiving Parachute Payments, plus the amount necessary to put him in the
same after-tax position (taking into account any and all applicable federal,
state and local excise, income or other taxes at the highest possible applicable
rates on such Parachute Payments (including without limitation any payments
under this Section 12) as if no excise taxes had been imposed with respect to
Parachute Payments (the "Parachute Gross-up").
(b) Computation. The amount of any payment under this Section 12 shall
be computed by a certified public accounting firm of national reputation
selected by Griffon and acceptable to Blau. If Griffon or Blau disputes the
computation rendered by such accounting firm, Griffon shall select an
alternative certified public accounting firm of national reputation to perform
the applicable computation. If the two accounting firms cannot agree upon the
computations, Blau and Griffon shall jointly appoint a third certified public
accounting firm of national reputation within 10 calendar days after the two
conflicting computations have been rendered. Such third accounting firm shall be
asked to determine within 30 calendar days the computation of the Parachute
Gross-up to be paid to Blau, and payments shall be made accordingly.
(c) Payment. In any event, Griffon shall pay to Blau or pay on his behalf
the Parachute Gross-up as computed by the accounting firm initially selected by
Blau by the time any taxes payable by him as a result of the Parachute Payments
become due, with Blau agreeing to return the excess amount of such payment over
the final computation rendered from the process described in Section 12(b). Blau
and Griffon shall provide the accounting firms with all information that any of
them reasonably deems necessary in order to compute the Parachute Gross-up. The
cost and expenses of all the accounting firms retained to perform the
computations described above shall be borne by Griffon.
In the event that the Internal Revenue Service ("IRS") or the accounting
firm computing the Parachute Gross-up finally determines that the amount of
excise taxes thereon initially paid was insufficient to discharge Blau's excise
tax liability, Griffon shall make additional payments to him as may be necessary
to reimburse him for discharging the full liability.
Blau shall apply to the IRS for a refund of any excise taxes paid and remit
to Griffon the amount of any such refund that he receives. Griffon shall
reimburse Blau for his expenses in seeking a refund of excise taxes and for any
interest and penalties imposed on excise taxes that he is required to pay.
13. CONSULTING PERIOD.
(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, (ii) by mutual agreement or
(iii) by Retirement), 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.
(b) Duties and Extent of Services.
(i) During the Consulting Period, Blau shall consult with Griffon and its
senior executive officers regarding its respective businesses and operations.
Such consulting services shall not require more than 50 days in any calendar
year, nor more than one day in any week, it being understood and agreed that
during the Consulting Period Blau shall have the right, consistent with the
prohibitions of Sections 14 and 15 below, to engage in full-time or part-time
employment with any business enterprise that is not a competitor of Griffon.
(i) Blau's service as a consultant shall only be required at such times and
such places as shall not result in unreasonable inconvenience to him,
recognizing his other business commitments that he may have to accord priority
over the performance of services for Griffon. In order to minimize interference
with Blau's other commitments, his consulting services may be rendered by
personal consultation at his residence or office wherever maintained, or by
correspondence through mail, telephone, fax or other similar mode of
communication at times, including weekends and evenings, most convenient to him.
(iii) During the Consulting Period, Blau shall not be obligated to serve as
a member of the Board or to occupy any office on behalf of Griffon or any of its
Subsidiaries.
(c) Compensation. During the Consulting Period, Blau shall receive from
Griffon each year an amount equivalent to two-thirds of his Salary at the end of
the Employment Term, payable and subject to annual increase as provided in
Section 3 above.
(d) Disability. In the event of Disability during the Consulting Period,
Griffon or Blau may terminate Blau's consulting services. If Blau's consulting
services are terminated due to Disability, he shall be entitled to compensation,
in accordance with Section 13(c), for the remainder of the Consulting Period.
(e) Termination. The Consulting Period shall terminate after five years or,
if earlier, upon Blau's death or upon his failure to perform consulting services
as provided in Section 13(b), pursuant to 30 days' written notice by Griffon to
Blau of the grounds constituting such failure and reasonable opportunity
afforded Blau to cure the alleged failure. Upon any such termination, payment of
consulting fees and benefits (with the exception of lifetime medical benefits
under Section 9(b) above) shall cease.
(f) Other. During the Consulting Period, Blau shall be entitled to expense
reimbursement (including secretarial, telephone and similar support services)
and perquisites and medical benefits, pursuant to the terms of Sections 7, 8 and
9(b), respectively.
14. CONFIDENTIAL INFORMATION.
(a) General.
(i) Blau understands and hereby acknowledges that as a result of his
employment with Griffon he will necessarily become informed of and have access
to certain valuable and confidential information of Griffon and any of its
Subsidiaries, joint ventures and affiliates, including, without limitation,
inventions, trade secrets, technical information, computer software and
programs, know-how and plans ("Confidential Information"), and that any such
Confidential Information, even though it may be developed or otherwise acquired
by Blau, is the exclusive property of Griffon to be held by him in trust solely
for Griffon's benefit.
(ii) Accordingly, Blau hereby agrees that, during the Employment Term and
the Consulting Period and subsequent to both, he shall not, and shall not cause
others to, use, reveal, report, publish, transfer or otherwise disclose to any
person, corporation or other entity any Confidential Information without prior
written consent of the Board, except to (A) responsible officers and employees
of Griffon or (B) responsible persons who are in a contractual or fiduciary
relationship with Griffon or who need such information for purposes in the
interest of Griffon. Notwithstanding, the foregoing, the prohibitions of this
clause (ii) shall not apply to any Confidential Information that becomes of
general public knowledge other than from Blau or is required to be divulged by
court order or administrative process.
(b) Return of Documents. Upon termination of his employment with Griffon
for any reason or, if applicable, upon expiration of the Consulting Period, Blau
shall promptly deliver to Griffon all plans, drawings, manuals, letters, notes,
notebooks, reports, computer programs and copies thereof and all other
materials, including without limitation those of a secret or confidential
nature, relating to Griffon's business that are then in his possession or
control.
(c) Remedies and Sanctions. In the event that Blau is found to be in
violation of Section 14(a) or (b) above, Griffon shall be entitled to relief as
provided in Section 16 below.
15. NONCOMPETITION/NONSOLICITATION.
(a) Prohibitions. During the Employment Term and, if applicable, the
Consulting Period, Blau shall not, without prior written authorization of the
Board, directly or indirectly, through any other individual or entity:
(i) become on officer or employee of, or render any service to, any direct
competitor of Griffon;
(ii) solicit or induce any customer of Griffon to cease purchasing goods or
services from Griffon or to become a customer of any competitor of Griffon; or
(iii) solicit or induce any employee of Griffon to become employed by any
competitor of Griffon.
(b) Remedies and Sanctions. In the event that Blau is found to be in
violation of Section 15(a) above, Griffon shall be entitled to relief as
provided in Section 16 below.
(c) Exceptions. Notwithstanding anything to the contrary in Section 15(a)
above, its provisions shall not:
(i) apply if Griffon terminates Blau's employment without Cause or Blau
terminates his employment for Good Reason, each as provided in Section 10(g)
above;
(ii) be construed as preventing Blau from investing his assets in any
business that is not a direct competitor of Griffon; or
(iii) be construed as preventing Blau from maintaining the same level of
involvement in the affairs of Aeroflex Corporation that he has as of the date
thereof.
16. REMEDIES/SANCTIONS.
Blau acknowledges that the services he is to render under this Agreement
are of a unique and special nature, the loss of which cannot reasonably or
adequately be compensated for in monetary damages, and that irreparable injury
and damage may result to Griffon in the event of any breach of this Agreement or
default by Blau. Because of the unique nature of the Confidential Information
and the importance of the prohibitions against competition and solicitation,
Blau further acknowledges and agrees that Griffon will suffer irreparable harm
if he fails to comply with his obligations under Section 14(a) or (b) above or
Section 15(a) above and that monetary damages would be inadequate to compensate
Griffon for any such breach. Accordingly, Blau agrees that, in addition to any
other remedies available to either Party at law, in equity or otherwise, Griffon
will be entitled to seek injunctive relief or specific performance to enforce
the terms, or prevent or remedy the violation, of any provisions of this
Agreement.
17. BENEFICIARIES/REFERENCES.
Blau shall be entitled to select (and change, to the extent permitted under
any applicable law) a beneficiary or beneficiaries to receive any compensation
or benefit payable under this Agreement following his death by giving Griffon
written notice thereof. In the event of Blau's death, or of a judicial
determination of his incompetence, reference in this Agreement to Blau shall be
deemed to refer, as appropriate, to his beneficiary, estate or other legal
representative.
18. WITHHOLDING TAXES.
All payments to Blau or his Beneficiary under this Agreement shall be
subject to withholding on account of federal, state and local taxes as required
by law.
19. INDEMNIFICATION AND LIABILITY INSURANCE.
Nothing herein is intended to limit Griffon's indemnification of Blau, and
Griffon shall indemnify him to the fullest extent permitted by applicable law
consistent with Griffon's Certificate of Incorporation and By-Laws as in effect
at the beginning of the Employment Term, with respect to any action or failure
to act on his part while he is an officer, director or employee of Griffon or
any Subsidiary. Griffon shall cause Blau to be covered at all times by
directors' and officers' liability insurance on terms no less favorable than the
directors' and officers' liability insurance maintained by Griffon in effect on
the date hereof in terms of coverage and amounts. Griffon shall continue to
indemnify Blau as provided above and maintain such liability insurance coverage
for him after the Employment Term and, if applicable, the Consulting Period for
any claims that may be made against him with respect to his service as a
director or officer of Griffon or a consultant to Griffon.
20. EFFECT OF AGREEMENT ON OTHER BENEFITS.
The existence of this Agreement shall not prohibit or restrict Blau's
entitlement to participate fully in compensation, employee benefit and other
plans of Griffon in which senior executives are eligible to participate.
21. ASSIGNABILITY; BINDING NATURE.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of Blau) and
assigns. No rights or obligations of Griffon under this Agreement may be
assigned or transferred by Griffon except pursuant to (a) a merger or
consolidation in which Griffon is not the continuing entity or (b) sale or
liquidation of all or substantially all of the assets of Griffon, provided that
the surviving entity or assignee or transferee is the successor to all or
substantially all of the assets of Griffon and such surviving entity or assignee
or transferee assumes the liabilities, obligations and duties of Griffon under
this Agreement, either contractually or as a matter of law.
Griffon further agrees that, in the event of a sale of assets or
liquidation as described in the preceding sentence, it shall use its best
efforts to have such assignee or transferee expressly agree to assume the
liabilities, obligations and duties of Griffon hereunder; provided, however,
that notwithstanding such assumption, Griffon shall remain liable and
responsible for fulfillment of the terms and conditions of this Agreement; and
provided, further, that in no event shall such assignment and assumption of this
Agreement adversely affect Blau's right upon a Change in Control, as provided in
Section 10(i) above. No rights or obligations of Blau under this Agreement may
be assigned or transferred by him.
22. REPRESENTATIONS.
The Parties respectively represent and warrant that each is fully
authorized and empowered to enter into this Agreement and that the performance
of its or his obligations, as the case may be, under this Agreement will not
violate any agreement between such Party and any other person, firm or
organization. Griffon represents and warrants that this Agreement has been duly
authorized by all necessary corporate action and is valid, binding and
enforceable in accordance with its terms.
23. ENTIRE AGREEMENT.
Except to the extent otherwise provided herein, this Agreement contains the
entire understanding and agreement between the Parties concerning the subject
matter hereof and supersedes any prior agreements, whether written or oral,
between the Parties concerning the subject matter hereof, including without
limitation the Prior Agreement. Payments and benefits provided under this
Agreement are in lieu of any payments or other benefits under any severance
program or policy of Griffon to which Blau would otherwise be entitled.
24. AMENDMENT OR WAIVER.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by both Blau and an authorized officer of
Griffon. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Party to be charged with the waiver. No delay by either Party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof.
25. SEVERABILITY.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
26. SURVIVAL.
The respective rights and obligations of the Parties under this Agreement
shall survive any termination of Blau's employment with Griffon.
27. GOVERNING LAW/JURISDICTION.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of New York, without reference to principles of
conflict of laws.
28. COSTS OF DISPUTES.
Griffon shall pay, at least monthly, all costs and expenses, including
attorneys' fees and disbursements, of Blau in connection with any proceeding,
whether or not instituted by Griffon or Blau, relating to any provision of this
Agreement, including but not limited to the interpretation, enforcement or
reasonableness thereof; provided, however, that, if Blau instituted the
proceeding and the judge or other decision-maker presiding over the proceeding
affirmatively finds that his claims were frivolous or were made in bad faith, he
shall pay his own costs and expenses and, if applicable, return any amounts
theretofore paid to him or on his behalf under this Section 28. Pending the
outcome of any proceeding, Griffon shall pay Blau all amounts due to him without
regard to the dispute; provided, however, that if Griffon shall be the
prevailing party in such a proceeding, Blau shall promptly repay all amounts
that he received during pendency of the proceeding.
29. NOTICES.
Any notice given to either Party shall be in writing and shall be deemed to
have been given when delivered either personally, by fax, by overnight delivery
service (such as Federal Express) or sent by certified or registered mail
postage prepaid, return receipt requested, duly addressed to the Party concerned
at the address indicated below or to such changed address as the Party may
subsequently give notice of.
If to Griffon or the Board:
Griffon Corporation
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxx
FAX: (000) 000-0000
With a copy to:
Blau, Kramer, Wactlar & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, XX 00000
If to Blau:
000 Xxxxxxxx Xxxx
Xxx Xxxxxxxx, XX 00000
With a copy to:
Xxxxxx X. Xxxx
c/o Griffon Corporation
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, XX 00000
30. HEADINGS.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
31. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
Griffon Corporation
Attest: /s/ Xxxxxx X Xxxxxx By: /s/ Xxxxxx Xxxxxxxx
---------------------- ----------------------------------
Witness: /s/ Xxxxxxx X'Xxxxxxx /S/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
