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 Xxxxxxxx (Xxxxxxxx), amends and restates in its entirety the
original agreement made and entered into as of March 1, 1983 between Griffon and
Balemian, 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 Balemian and to set forth in
this Agreement the obligations and duties of both Griffon and Balemian; and
WHEREAS, Griffon wishes to assure itself of the services of Balemian for
the period hereinafter provided, and Balemian 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 Balemian (individually a Party and
together the Parties ) agree as follows:
1. DEFINITIONS.
(a) Beneficiary shall mean the person or persons named by Balemian pursuant
to Section 17 below or, in the event that no such person is named who survives
Balemian, his estate.
(b) Board shall mean the Board of Directors of Griffon.
(c) Cause shall mean:
(i) Balemians 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 Balemian to perform his obligations
under this Agreement, resulting in demonstrable material economic harm to
Griffon, or
(iii) a material breach by Balemian of the provisions of Sections 14 or 15
below to the demonstrable and material detriment of Griffon.
Notwithstanding the foregoing, in no event shall Balemians 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
Balemian 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 Balemian 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 Persons
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 Griffons
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 Griffons 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 Balemian serves as a consultant to Griffon.
(h) Disability shall mean the illness or other mental or physical
disability of Balemian, as determined by a physician acceptable to Griffon and
Balemian, 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 Griffons fiscal year at any time hereafter.
(k) Good Reason shall mean, at any time during the Employment Term, without
Balemians 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 Balemian (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) Griffons failure to pay Balemian any amounts otherwise vested and due
him hereunder or under any plan or policy of Griffon;
(iv) diminution of Balemians titles, position, authorities or
responsibilities, including not serving on the Board;
(v) assignment to Balemian of duties incompatible with his position of
President;
(vi) termination by Balemian 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 Balemian report other than to the
Chief Executive Officer and the full Board;
(viii) a material breach of the Agreement by Griffon that is not cured
within 10 business days after written notification by Balemian of such breach;
or
(ix) relocation of Griffons corporate headquarters to a location more than
35 miles from the location first above described.
(l) Retirement shall mean termination of Balemians 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 Balemians entitlement to receive a
fully vested benefit under Griffons 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 Balemian.
(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 Balemian. Griffon hereby continues to employ Balemian,
and Balemian 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. Balemian shall render services
to Griffon principally at Griffons 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, Balemian
shall be employed as President, reporting to the Chief Executive Officer and to
the full Board. In his capacity as President, Balemian shall have the customary
powers, responsibilities and authorities of presidents 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 Balemian to the Board. During the Employment Term, if the
Board forms an executive or similar committee, Balemian shall serve thereon.
(d) Time and Effort.
(i) Balemian 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.
(ii) Notwithstanding the foregoing, nothing shall preclude Balemian 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. Balemian shall receive from Griffon a Salary, payable
in accordance with the regular payroll practices of Griffon, in a minimum amount
of $700,000.
(b) Cost-of-Living Increase. During the Employment Term Balemians 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 Balemian 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 Balemians 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 Balemians 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. Balemian shall be eligible to receive an annual bonus for
each Fiscal Year or portion thereof during the Employment Term in accordance
with Griffons 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.
Balemian 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. Balemian 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, Balemian shall be eligible for an award under
any long-term incentive compensation plan established by Griffon for the benefit
of Balemian 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, Balemian shall be eligible to receive grants of
options to purchase shares of Griffons stock and awards of shares of Griffons
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 Balemian
during the Employment Term. Also, to the extent permitted by any such plan,
Balemian shall be eligible during any Consulting Period to receive grants of
options and awards of shares of Griffons stock in the same manner.
7. EXPENSE REIMBURSEMENT; CERTAIN OTHER COSTS.
During the Employment Term and any Consulting Period, Balemian 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, Balemian 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 Balemian 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 Balemian 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 Balemian, 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, Balemian shall be entitled to
participate in all employee benefit plans and programs made available to
Griffons 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 Balemian 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 Balemian and his Spouse, when eligible, elect to be
covered by Medicare. Griffon shall provide Balemian 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 Balemian with an
individual permanent life insurance benefit in an initial amount of not less
than approximately $1.5 million, the terms and conditions of such benefit to be
more fully described in an insurance ownership agreement between Balemian and
Griffon.
(d) Disability Benefit. In consideration of the benefit payable to Balemian
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 Balemians
consulting services due to Disability during the Consulting Period, as provided
in Section 13(d) below, Griffon shall not be obligated to provide Balemian with
long-term disability insurance. If Griffon elects to provide Balemian 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
Balemian for any premiums that he pays.
(e) Retirement Benefit. Balemian shall be entitled to the benefits provided
under Griffons Supplemental Executive Retirement Plan (the SERP); provided,
however, that if Griffon fails to maintain the SERP, Balemians 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 Balemians rights under
the SERP as in effect on the date hereof or, if more favorable to Balemian, as
in effect at any time thereafter.
10. TERMINATION OF EMPLOYMENT.
(a) Voluntary Termination and Termination by Mutual Agreement. Balemian 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, Balemians entitlements shall be as the Parties mutually agree.
(b) General. Notwithstanding anything to the contrary herein, in the
event of termination of Balemians 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 Balemian 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 Balemians 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 Balemians 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
Balemian may terminate Balemians employment. If Balemians 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 Balemians
employment hereunder for Cause only upon written notice to Balemian 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 Balemian) 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 Balemian
shall have been given proper notice and at which Balemian (and his counsel)
shall have a reasonable opportunity to present his case. In the event that
Balemians 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 Balemian for Good Reason.
(i) Termination without Cause shall mean termination of Balemians
employment by Griffon and shall exclude termination (A) due to Retirement,
death, Disability or Cause, (B) by Balemian voluntarily or (C) by mutual
agreement of Balemian and Griffon. Griffon shall provide Balemian 15 days prior
written notice of termination by it without Cause, and Balemian shall provide
Griffon 15 days prior written notice of his termination for Good Reason.
(ii) In the event of termination by Griffon of Balemians employment without
Cause or of termination by Balemian 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 Balemian;
(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 Balemian 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 Balemian was participating on
the date of termination of his employment until the end of the Employment Term;
provided; however, that (x) if Balemian 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 Balemian 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 Balemian 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 Balemian. Balemian 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 Balemians 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, Balemian shall be entitled to compensation and benefits in
accordance with the provisions of Section 10(g)(ii).
11. NO DUTY TO MITIGATE.
Balemian 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
Balemian 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 Balemian 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 Balemian of
an excise tax under Section 4999 of the Code, then, in addition to any other
benefits to which Balemian 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 Balemian. If Griffon or Balemian 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, Balemian 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 Balemian, and payments shall be made
accordingly.
(c) Payment. In any event, Griffon shall pay to Balemian or pay on his
behalf the Parachute Gross-up as computed by the accounting firm initially
selected by Balemian by the time any taxes payable by him as a result of the
Parachute Payments become due, with Balemian agreeing to return the excess
amount of such payment over the final computation rendered from the process
described in Section 12(b). Balemian 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 Balemians excise tax
liability, Griffon shall make additional payments to him as may be necessary to
reimburse him for discharging the full liability.
Balemian 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 Balemian 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 Balemians employment (i) voluntarily, (ii) by mutual agreement or
(iii) by Retirement), Balemian 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, Balemian 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 Balemian 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) Balemians service as a consultant shall only be required at such times
and such places as shall not result in unreasonable inconvenience to him. 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, Balemian 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, Balemian 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 Balemian may terminate Balemians consulting services. If Balemians
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 Balemians death or upon his failure to perform consulting
services as provided in Section 13(b), pursuant to 30 days written notice by
Griffon to Balemian of the grounds constituting such failure and reasonable
opportunity afforded Balemian 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, Balemian 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) Balemian 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 Balemian, is the exclusive property of Griffon to be held by him in trust
solely for Griffons benefit.
(ii) Accordingly, Balemian 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 Balemian 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,
Balemian 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 Griffons business that are then in his possession or
control.
(c) Remedies and Sanctions. In the event that Balemian 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, Balemian 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 Balemian 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 Balemians employment without Cause or
Balemian terminates his employment for Good Reason, each as provided in Section
10(g) above; or
(ii) be construed as preventing Balemian from investing his assets in any
business that is not a direct competitor of Griffon.
16. REMEDIES/SANCTIONS.
Balemian 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 Balemian. Because of the unique nature of the
Confidential Information and the importance of the prohibitions against
competition and solicitation, Balemian 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, Balemian 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.
Balemian 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 Balemians death, or of a
judicial determination of his incompetence, reference in this Agreement to
Balemian shall be deemed to refer, as appropriate, to his beneficiary, estate or
other legal representative.
18. WITHHOLDING TAXES.
All payments to Balemian 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 Griffons indemnification of Balemian,
and Griffon shall indemnify him to the fullest extent permitted by applicable
law consistent with Griffons 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 Balemian 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 Balemian 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 Balemians
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 Balemian) 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 Balemians right upon a Change in Control, as provided
in Section 10(i) above. No rights or obligations of Balemian 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 Balemian 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 Balemian 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 Balemians 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 Balemian in connection with any proceeding,
whether or not instituted by Griffon or Balemian, relating to any provision of
this Agreement, including but not limited to the interpretation, enforcement or
reasonableness thereof; provided, however, that, if Balemian 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 Balemian all amounts due to him
without regard to the dispute; provided, however, that if Griffon shall be the
prevailing party in such a proceeding, Balemian 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
Xxxxx Xxxxxxxxx, Esq.
If to Balemian:
00 Xxx Xxxxxx Xxxx
Xxxxx Xxxxxx, XX 00000
With a copy to:
Xxxxxx Xxxxxxxx
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 X. Xxxx
---------------------------- ---------------------------
Chairman of the Board
Witness: /s/ Xxxxxxx X'Xxxxxxx /s/ Xxxxxx Xxxxxxxx
---------------------------- ---------------------------
Xxxxxx Xxxxxxxx
