NON-QUALIFIED STOCK OPTION AGREEMENT
AGREEMENT made as of the 1st day of March, 2005, between GRIFFON CORPORATION, a
Delaware corporation, (hereinafter called the "Company") and XXXX XXXXXXXXX
(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
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at 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.
3. Anti-dilution. The price per share at which shares of Common Stock may
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be 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 dividend, stock split up or reverse split shall be considered as
a recapitalization and as an exchange for a larger or smaller number
of shares, as the case may be.
(B) In the case of any consolidation of the Company with, or merger of
the Company into, any other Company, or in case of any sale or
conveyance of all or substantially all of the assets of the Company in
connection with a plan of complete liquidation of the Company, then,
as a condition of such consolidation, merger or sale or conveyance,
adequate provision shall be made whereby the holder hereof shall
thereafter have the right to purchase and receive, upon the basis and
upon the terms and conditions specified in this Option and in lieu of
shares of Common Stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, such
shares of stock or securities as may be issued in connection with such
consolidation, merger or sale or conveyance with respect to or in
exchange for the number of outstanding shares of Common Stock
immediately therefore purchasable and receivable upon the exercise of
the rights represented hereby had such consolidation, merger or sale
or conveyance not taken place, and in any such case appropriate
provision shall be made with respect to the rights and interests of
the holder of this Option to the end that the provisions hereof shall
be applicable as nearly as may be in relation to any shares of stock
or securities thereafter deliverable upon the exercise hereof.
4. Non-Transferability of Option. The Option granted under this
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Agreement shall not be transferable otherwise than by will or the laws
of descent and distribution or to the extent permitted by the Board of
Directors of the Company or the Compensation Committee of the Board of
Directors.
5. Purchase for Investment. To the extent that, at the time of exercise
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of the within Option, the underlying shares have not been registered
for sale under the Securities Act or 1933, as amended, the Optionee
represents, on behalf of himself and any transferees permitted by the
terms of the Plan, that any shares of Common Stock purchased pursuant
to this Agreement will be acquired in good faith for investment and
not for resale or distribution, and Optionee on behalf of himself and
said person or persons, agrees that each notice of the exercise of the
within Option shall contain or be accompanied by a representation in
writing signed by him or said person or persons, as the case may be,
in form satisfactory to the Company, that the shares of Common Stock
to be purchased pursuant to such notice are being so acquired and will
not be sold except in compliance with applicable securities laws.
6. Covenant of the Company. The Company covenants and agrees that all
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shares may be delivered upon the exercise of this Option and will,
upon delivery, be fully paid and non-assessable, and, without limiting
the generality of the foregoing, the Company covenants and agrees that
it will at all times to reserve or hold available a sufficient number
of shares of Common Stock to cover the number of shares issuable upon
the exercise of this Option.
7. Rights as Shareholder. This Option shall not entitle the holder hereof
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to any voting rights or other rights as a shareholder of the Company,
or to any other rights whatsoever except the rights herein expressed,
and no dividends shall be payable or accrue in respect of this Option
or the interest represented hereby or the shares purchasable hereunder
until or unless, and except to the extent that, this Option shall be
exercised.
8. Information. The Company will transmit to the holder of this Option
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such information, documents and reports as are generally distributed
to shareholders of the Company concurrently with the distribution
thereof to such shareholders.
9. Notices. Notices to be given to the holder of this Option shall be
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deemed to have been sufficiently given if delivered or mailed,
addressed in the name and at the address of such holder appearing in
the records of the Company, and if mailed, sent first class registered
or certified mail, postage prepaid. The address of the Company is 000
Xxxxxxx Xxxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000, and the Company shall
give written notice of any change of address to the holder hereof.
10. Applicable Law. This Agreement and the legal relations among the
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parties hereto shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and
performed therein.
11. Consent to Jurisdiction and Waivers. The parties hereto irrevocably
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consent that any legal action or proceeding against any of them under,
arising out of or in any manner relating to, this Agreement or any
other document delivered in connection herewith, may be brought in any
court of the State of New York located within Nassau County or in the
United States District Court for the Eastern District of New York. By
the execution and delivery of this Agreement, the parties expressly
and irrevocably consent and submit to the personal jurisdiction of any
of such courts in any such action or proceeding. The parties further
irrevocably consent to the service of any complaint, summons, notice
or other process relating to any such action or proceeding by delivery
thereof to it by hand or by any other manner permitted by law. The
parties hereby expressly and irrevocably waive any claim or defense in
any such action or proceeding based on any alleged lack of personal
jurisdiction, improper venue or forum non convenient or any similar
basis.
IN WITNESS WHEREOF, the Company has caused this Option to be executed and
delivered as of the date first above written.
GRIFFON CORPORATION
By: /s/Xxxxxxx Xxxxxx
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XXXXXXX XXXXXX, Vice President
/s/Xxxx Xxxxxxxxx
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XXXX XXXXXXXXX, Optionee
