Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
-------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------
GRIFFON CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 11-1893410
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 Jericho Quadrangle, Jericho, New York 11753
(Address of principal executive offices) (Zip Code)
1998 STOCK OPTION PLAN
SENIOR MANAGEMENT INCENTIVE COMPENSATION PLAN
1998 EMPLOYEE & DIRECTOR STOCK OPTION PLAN, AS AMENDED
(Full title of the plans)
Robert Balemian, President
Griffon Corporation
100 Jericho Quadrangle
Jericho, New York 11753
(Name and address of agent for service)
(516) 938-5544
(Telephone number, including area code, of agent for service)
-----------------------
copy to:
David H. Lieberman, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
(516) 822-4820
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Title of Each Proposed Maximum Proposed Maximum
Class of Securities Amount to be Offering Aggregate Amount of
to be Registered Registered (1) Price Per Share(2) Offering Price(2) Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,000,000 shs.(3) $10.28 $10,280,000 $3,033
par value $.25
per share together with
the associated Preferred
Share Purchase Rights
Common Stock, 500,000 shs.(4) $10.28 $5,140,000 $1,517
par value $.25
per share together with
the associated Preferred
Share Purchase Rights
Common Stock, 1,350,000 shs(5) $10.28 $13,878,000 $4,094
par value $.25
per share together with
the associated Preferred
Share Purchase Rights
<PAGE>
- --------------------------------------------------------------------------------
<FN>
(1) The Registration Statement also covers an indeterminate number of
additional shares of Common Stock which may become issuable pursuant to
anti-dilution and adjustment provisions of the plans.
(2) Estimated solely for the purpose of calculating the registration fee, based
upon the average of the high and low prices of the Company's Common Stock
reported on the consolidated reporting system on August 20, 1998, pursuant
to Rule 457.
(3) Represents shares of Common Stock issuable under the Griffon Corporation
1998 Stock Option Plan.
(4) Represents shares of Common Stock issuable under the Griffon Corporation
Senior Management Incentive Compensation Plan.
(5) Represents shares of Common Stock issuable under the Griffon Corporation
1998 Employee & Director Stock Option Plan, as amended.
================================================================================
</FN>
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
The following documents have been filed by the Company with the Commission
(File No. 1-6620) pursuant to the Exchange Act, are incorporated by reference in
this Registration Statement and shall be deemed to be a part hereof:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the fiscal quarters ended
December 31, 1997, March 31, 1998 and June 30, 1998;
(3) The Company's Proxy Statement dated December 19, 1997 for its 1998 annual
meeting of stockholders.
(4) The Registration Statement on Form 8-A dated January 19, 1993 with respect
to the Company's Common Stock (File No. 1-6620), including any amendment or
report filed for the purpose of updating the description of the Common
Stock contained therein.
(5) The Registration Statement on Form 8-A dated May 16, 1996 with respect to
the Company's Preferred Share Purchase Rights.
All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Registration Statement and prior to the
termination of this offering of Common Stock shall be deemed to be incorporated
by reference in this Registration Statement and to be part hereof from the date
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference in this Registration Statement shall
be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any subsequently
filed document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
The Company will provide without charge to each person to whom a copy of
this Registration Statement is delivered, upon the written or oral request of
such person, a copy of any or all of the documents incorporated by reference
(except for exhibits thereto unless specifically incorporated by reference
therein). Requests for such copies should be directed to the Secretary, Griffon
Corporation, 100 Jericho Quadrangle, Suite 224, Jericho, New York 11753, (516)
938-5544.
Item 4. Description of Securities.
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
Harvey R. Blau, a member of the law firm of Blau, Kramer, Wactlar &
Lieberman, P.C. ("BKW&L") is Chairman of the Board and Chief Executive Officer
of the Registrant. As of August 18, 1998, Mr. Blau owns 418,657 shares of Common
Stock, and 2,465,000 options to purchase Common Stock granted to Mr. Blau
pursuant to the Registrant's various stock option plans. Edward I. Kramer, also
a member of BKW&L, is Vice President, Administration and Secretary for the
Registrant. As of August 18, 1998, Mr. Kramer owns 40,500 shares of Common
Stock, and 50,000 options to purchase Common Stock granted to Mr. Kramer
pursuant to the Registrant's various stock option plans.
<PAGE>
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
Under provisions of the Certificate of Incorporation and the By-Laws of the
Company, each person who is or was a director or officer of the Company may be
indemnified by the Company to the full extent permitted or authorized by the
General Corporation Law of the State of Delaware.
Under such law, to the extent that such person is successful on the merits
of defense of a suit or proceeding brought against him by reason of the fact
that he is a director or officer of the Company, he shall be indemnified against
expenses (including attorneys' fees) reasonably incurred in connection with such
action.
If unsuccessful in defense of a third-party civil suit or if a criminal
suit is settled, such a person may be indemnified under such law against both
(1) expenses (including attorneys' fees) and (2) judgements, fines and amounts
paid in settlement if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company, and
with respect to any criminal action, had no reasonable cause to believe his
conduct was unlawful.
If unsuccessful in defense of a suit brought by or in the right of the
Company, or if such suit is settled, such a person may be indemnified under such
law only against expenses (including attorneys' fees) incurred in the defense or
settlement of such suit if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company except
that if such a person is adjudged to be liable in such suit for negligence or
misconduct in the performance of his duty to the Company, he cannot be made
whole even for expenses unless the court determines that he is fairly and
reasonably entitled to indemnity for such expenses.
The Company and its officers and directors are covered by officers and
directors liability insurance. The policy coverage is $30,000,000, which
includes reimbursement for costs and fees. There is a maximum deductible under
the policy of $100,000 for each claim. The Company has entered into
Indemnification Agreements with its officers and directors. The Agreements
provide for reimbursement for all direct and indirect costs of any type or
nature whatsoever (including attorneys' fees and related disbursements) actually
and reasonably incurred in connection with either the investigation, defense or
appeal of a Proceeding, as defined, including amounts paid in settlement by or
on behalf of an Indemnitee.
Item 7. Exemption from registration claimed.
-----------------------------------
Not applicable.
Item 8. Exhibits.
--------
4.1 1998 Stock Option Plan.
4.2 Senior Management Incentive Compensation Plan.
4.3 1998 Employee & Director Stock Option Plan, as amended.
5 Opinion and consent of Blau, Kramer, Wactlar & Lieberman, P.C.
23.1 Consent of Blau, Kramer, Wactlar & Lieberman, P.C. - included in their
opinion filed as Exhibit 5.
23.2 Consent of Arthur Andersen LLP.
24 Powers of Attorney - included in signature page hereof.
Item 9. Undertakings.
------------
(a) The undersigned Registrant hereby undertakes:
<PAGE>
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement; provided, however, that paragraphs
(a)(l)(i) and (a)(l)(ii) do not apply if the registration
statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the
Registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Jericho, New York on the 26th day of August, 1998.
GRIFFON CORPORATION
By: /S/ Harvey R. Blau
------------------------------
Harvey R. Blau
Chairman of the Board
(Principal Executive Officer)
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on the 26th day of August, 1998 by
the following persons in the capacities indicated. Each person whose signature
appears below constitutes and appoints Harvey R. Blau and Robert Balemian, and
each of them acting individually, with full power of substitution, our true and
lawful attorneys-in-fact and agents to do any and all acts and things in our
name and on our behalf in our capacities indicated below which they or either of
them may deem necessary or advisable to enable Griffon Corporation to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement including specifically, but not limited to, power and
authority to sign for us or any of us in our names in the capacities stated
below, any and all amendments (including post-effective amendments) thereto,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as we might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or his substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
Signature Title
--------- -----
/S/ Harvey R. Blau
- ---------------------- Chairman of the Board
Harvey R. Blau (Principal Executive Officer)
/S/ Robert Balemian
- ----------------------- President and Director
Robert Balemian (Principal Financial Officer)
/S/ Patrick Alesia
- ---------------------- Vice President and Treasurer
Patrick Alesia (Principal Accounting Officer)
/S/ Henry A. Alpert
- ----------------------- Director
Henry A. Alpert
/S/ Bertrand M. Bell
- ------------------------ Director
Bertrand M. Bell
/S/ Robert Bradley
- ------------------------ Director
Robert Bradley
/S/ Abraham M. Buchman
- -------------------------- Director
Abraham M. Buchman
/S/ Clarence A. Hill, Jr.
- ----------------------------- Director
Clarence A. Hill, Jr.
/S/ Ronald J. Kramer
- ------------------------ Director
Ronald J. Kramer
/S/ James W. Stansberry
- --------------------------- Director
James W. Stansberry
/S/ Martin S. Sussman
- ------------------------- Director
Martin S. Sussman
/S/ William H. Waldorf
- -------------------------- Director
William H. Waldorf
/S/ Lester L. Wolff
- ----------------------- Director
Lester L. Wolff
EXHIBIT 4.1
Griffon Corporation
1998 Stock Option Plan
----------------------
SECTION 1. GENERAL PROVISIONS
------------------
1.1 Name and General Purpose
------------------------
The name of this plan is the Griffon Corporation 1998 Stock Option Plan
(hereinafter called the "Plan"). The purpose of the Plan is to enable Griffon
Corporation (the "Company") and its subsidiaries and affiliates to foster and
promote the interests of the Company by attracting and retaining officers and
employees of the Company who contribute to the Company's success by their
ability, ingenuity and industry, to enable such officers and employees of the
Company to participate in the long-term success and growth of the Company by
giving them a proprietary interest in the Company and to provide incentive
compensation opportunities competitive with those of competing corporations.
1.2 Definitions
-----------
a. "Affiliate" means any person or entity controlled by or under
common control with the Company, by virtue of the ownership of
voting securities, by contract or otherwise.
b. "Board" means the Board of Directors of the Company.
c. "Change in Control" means a change of control of the Company, or
in any person directly or indirectly controlling the Company,
which shall mean:
(a) a change in control as such term is presently defined in
Regulation 240.12b-(2) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); or
(b) if any "person" (as such term is used in Section 13(d) and
14(d) of the Exchange Act) other than the Company or any "person"
who on the date of this Agreement is a director or officer of the
Company, becomes the "beneficial owner" (as defined in Rule
13(d)-3 under the Exchange Act) directly or indirectly, of
securities of the Company representing twenty percent (20%) or
more of the voting power of the Company's then outstanding
securities; or
(c) if during any period of two (2) consecutive years during the
term of this Plan, individuals who at the beginning of such
period constitute the Board of Directors, cease for any reason to
constitute at least a majority thereof.
d. "Code" means the Internal Revenue Code of 1986, as amended.
e. "Committee" means the Committee referred to in Section 1.3 of the
Plan.
<PAGE>
f. "Common Stock" means shares of the Common Stock, par value $.25
per share, of the Company.
g. "Company" means Griffon Corporation, a corporation organized
under the laws of the State of Delaware (or any successor
corporation).
h. "Fair Market Value" means the market price of the Common Stock on
the New York Stock Exchange consolidated reporting system on the
date of the grant or on any other date on which the Common Stock
is to be valued hereunder. If no sale shall have been reported on
the New York Stock Exchange consolidated reporting system on such
date, Fair Market Value shall be determined by the Committee in
accordance with the Treasury Regulations applicable to incentive
stock options under Section 422 of the Code.
i "Incentive Stock Option" means an Incentive Stock Option as
described in Section 2.1 of the Plan.
j. "Non-Employee Director" shall have the meaning set forth in Rule
16b-3 promulgated by the Securities and Exchange Commission
("Commission"); provided, that such person is also an "outside
director" as set forth in Section 162(m) of the Code and the
regulations promulgated thereunder.
k. "Non-Qualified Stock Option" means a Non-Qualified Stock Option
as described in Section 2.1 of the Plan.
l. "Option" means any option to purchase Common Stock under Section
2 of the Plan.
m. "Participant" means any officer or employee of the Company, a
Subsidiary or an Affiliate who is selected by the Committee to
participate in the Plan.
n. "Subsidiary" means any corporation in which the Company possesses
directly or indirectly 50% or more of the combined voting power
of all classes of stock of such corporation.
o. "Total Disability" means accidental bodily injury or sickness
which wholly and continuously disabled an optionee. The
Committee, whose decisions shall be final, shall make a
determination of Total Disability.
1.3 Administration of the Plan
--------------------------
The Plan shall be administered by the Committee appointed by the Board
consisting of two or more members of the Board all of whom shall be Non-Employee
Directors. The Committee shall serve at the pleasure of the Board and shall have
such powers as the Board may, from time to time, confer upon it.
Subject to this Section 1.3, the Committee shall have sole and complete
authority to adopt, alter, amend or revoke such administrative rules, guidelines
and practices governing the operation of the Plan as it shall, from time to
time, deem advisable, and to interpret the terms and provisions of the Plan.
<PAGE>
The Committee shall keep minutes of its meetings and of action taken by it
without a meeting. A majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by all of the members of the Committee
without a meeting, shall constitute the acts of the Committee.
1.4 Eligibility
-----------
Stock options may be granted only to officers or employees of the Company
or a Subsidiary or Affiliate. Subject to Section 2.3, any person who has been
granted any Option may, if he is otherwise eligible, be granted an additional
Option or Options.
1.5 Shares
------
The aggregate number of shares reserved for issuance pursuant to the Plan
shall be 1,000,000 shares of Common Stock, or the number and kind of shares of
stock or other securities which shall be substituted for such shares or to which
such shares shall be adjusted as provided in Section 1.6. No individual may be
granted options to purchase more than an aggregate of 650,000 shares of Common
Stock pursuant to the Plan.
Such number of shares may be set aside out of the authorized but unissued
shares of Common Stock or out of issued shares of Common Stock acquired for and
held in the Treasury of the Company, not reserved for any other purpose. Shares
subject to, but not sold or issued under, any Option terminating or expiring for
any reason prior to its exercise in full will again be available for Options
thereafter granted during the balance of the term of the Plan.
1.6 Adjustments Due to Stock Splits, Mergers, Consolidation, Etc.
-------------------------------------------------------------
If, at any time, the Company shall take any action, whether by stock
dividend, stock split, combination of shares or otherwise, which results in a
proportionate increase or decrease in the number of shares of Common Stock
theretofore issued and outstanding, the number of shares which are reserved for
issuance under the Plan and the number of shares which, at such time, are
subject to Options shall, to the extent deemed appropriate by the Committee, be
increased or decreased in the same proportion, provided, however, that the
Company shall not be obligated to issue fractional shares.
Likewise, in the event of any change in the outstanding shares of Common
Stock by reason of any recapitalization, merger, consolidation, reorganization,
combination or exchange of shares or other corporate change, the Committee shall
make such substitution or adjustments, if any, as it deems to be appropriate, as
to the number or kind of shares of Common Stock or other securities which are
reserved for issuance under the Plan and the number of shares or other
securities which, at such time are subject to Options.
<PAGE>
In the event of a Change in Control, at the option of the Board or
Committee, (a) all options outstanding on the date of such Change in Control
shall, for a period of sixty (60) days following such Change in Control, become
immediately and fully exercisable, and (b) an optionee will be permitted to
surrender for cancellation within sixty (60) days after such Change in Control
any option or portion of an option which was granted more than six (6) months
prior to the date of such surrender, to the extent not yet exercised, and to
receive a cash payment in an amount equal to the excess, if any, of the Fair
Market Value (on the date of surrender) of the shares of Common Stock subject to
the option or portion thereof surrendered, over the aggregate purchase price for
such Shares under the option.
1.7 Non-Alienation of Benefits
--------------------------
Except as herein specifically provided, no right or unpaid benefit under
the Plan shall be subject to alienation, assignment, pledge or charge and any
attempt to alienate, assign, pledge or charge the same shall be void. If any
Participant or other person entitled to benefits hereunder should attempt to
alienate, assign, pledge or charge any benefit hereunder, then such benefit
shall, in the discretion of the Committee, cease.
1.8 Withholding or Deduction for Taxes
----------------------------------
If, at any time, the Company or any Subsidiary or Affiliate is required,
under applicable laws and regulations, to withhold, or to make any deduction for
any taxes, or take any other action in connection with any Option exercise, the
Participant shall be required to pay to the Company or such Subsidiary or
Affiliate, the amount of any taxes required to be withheld, or, in lieu thereof,
at the option of the Company, the Company or such Subsidiary or Affiliate may
accept a sufficient number of shares of Common Stock to cover the amount
required to be withheld.
1.9 Administrative Expenses
-----------------------
The entire expense of administering the Plan shall be borne by the Company.
1.10 General Conditions
------------------
a. The Board or the Committee may, from time to time, amend, suspend or
terminate any or all of the provisions of the Plan, provided that,
without the Participant's approval, no change may be made which would
prevent an Incentive Stock Option granted under the Plan from
qualifying as an Incentive Stock Option under Section 422 of the Code
or result in a "modification" of the Incentive Stock Option under
Section 424(h) of the Code or otherwise alter or impair any right
theretofore granted to any Participant; and further provided that,
without the consent and approval of the holders of a majority of the
outstanding shares of Common Stock of the Company present at a meeting
at which a quorum exists, neither the Board nor the Committee may make
any amendment which (i) changes the class of persons eligible for
options; (ii) increases (except as provided under Section 1.6 above)
the total number of shares or other securities reserved for issuance
under the Plan; (iii) decreases the minimum option prices stated in
Section 2.2 hereof (other than to change the manner of determining
Fair Market Value to conform to any then applicable provision of the
Code or any regulation thereunder); (iv) extends the expiration date
of the Plan, or the limit on the maximum term of Options; or (v)
withdraws the administration of the Plan from a committee consisting
of two or more members, each of whom is a non-employee director.
<PAGE>
b. With the consent of the Participant affected thereby, the Committee may
amend or modify any outstanding Option in any manner not inconsistent
with the terms of the Plan, including, without limitation, and
irrespective of the provisions of Sections 2.3(c) and 2.4(b) below, to
accelerate the date or dates as of which an installment of an Option
becomes exercisable.
c. Nothing contained in the Plan shall prohibit the Company or any
Subsidiary or Affiliate from establishing other additional incentive
compensation arrangements for employees of the Company or such
Subsidiary or Affiliate.
d. Nothing in the Plan shall be deemed to limit, in any way, the right of
the Company or any Subsidiary or Affiliate to terminate a Participant's
employment with the Company (or such Subsidiary or Affiliate) at any
time.
e. Any decision or action taken by the Board or the Committee arising out
of or in connection with the construction, administration,
interpretation and effect of the Plan shall be conclusive and binding
upon all Participants and any person claiming under or through any
Participant.
f. No member of the Board or of the Committee shall be liable for any act
or action, whether of commission or omission, (i) by such member except
in circumstances involving actual bad faith, nor (ii) by any other
member or by any officer, agent or employee.
1.11 Compliance with Applicable Law
------------------------------
Notwithstanding any other provision of the Plan, the Company shall not be
obligated to issue any shares of Common Stock, or grant any Option with respect
thereto, unless it is advised by counsel of its selection that it may do so
without violation of the applicable Federal and State laws pertaining to the
issuance of securities and the Company may require any stock certificate so
issued to bear a legend, may give its transfer agent instructions limiting the
transfer thereof, and may take such other steps, as in its judgment are
reasonably required to prevent any such violation.
1.12 Effective Dates
---------------
The Plan was adopted by the Board on November 5, 1997, and approved by the
stockholders of the Company on February 5, 1998. The Plan shall terminate on
November 4, 2007.
Section 2. OPTION GRANTS
-------------
2.1 Authority of Committee
----------------------
Subject to the provisions of the Plan, the Committee shall have the sole
and complete authority to determine (i) the Participants to whom Options shall
be granted; (ii) the number of shares to be covered by each Option; and (iii)
the conditions and limitations, if any, in addition to those set forth in
Sections 2 and 3 hereof, applicable to the exercise of an Option, including
without limitation, the nature and duration of the restrictions, if any, to be
imposed upon the sale or other disposition of shares acquired upon exercise of
an Option.
<PAGE>
Stock options granted under the Plan may be of two types: an incentive
stock option ("Incentive Stock Option"); and a non-qualified stock option
("Non-Qualified Stock Option").
It is intended that the Incentive Stock Options granted hereunder shall
constitute incentive stock options within the meaning of Section 422 of the Code
and shall be subject to the tax treatment described in Section 422 of the Code.
Anything in the Plan to the contrary notwithstanding, no provision of the
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify either the Plan or, without the consent of the
optionee, any Incentive Stock Option under Section 422 of the Code.
The Committee shall have the authority to grant Incentive Stock Options, or
to grant Non-Qualified Stock Options, or to grant both types of Options. To the
extent that any Option does not qualify as an Incentive Stock Option, in whole
or in part, it shall constitute a separate Non-Qualified Stock Option to the
extent of such disqualification.
2.2 Option Exercise Price
---------------------
The price of stock purchased upon the exercise of Options granted pursuant
to the Plan shall be the Fair Market Value thereof at the time that the Option
is granted.
If an employee owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of the stock of the Company or any parent
corporation of the Company or Subsidiary and an Option granted to such employee
is intended to qualify as an Incentive Stock Option within the meaning of
Section 422 of the Code, the exercise price shall be no less than 110% of the
Fair Market Value of the Common Stock on the date the Option is granted. The
purchase price is to be paid in full in cash, certified or bank cashier's check
or, at the option of the Company, Common Stock valued at its Fair Market Value
on the date of exercise, or a combination thereof, when the Option is exercised
and stock certificates will be delivered only against such payment.
2.3 Incentive Stock Option Grants
-----------------------------
Each Incentive Stock Option will be subject to the following provisions:
a. Term of Option
--------------
An Incentive Stock Option will be for a term of not more than ten years
from the date of grant, except in the case of an employee described in
the second paragraph of Section 2.2 above in which case an Incentive
Stock Option will be for a term of not more than five years from the
date of the grant.
b. Annual Limit
------------
To the extent the aggregate Fair Market Value of the Common Stock
(determined as of the date of grant) with respect to which any options
granted hereunder are intended to be designated as Incentive Stock
Options under the Plan (or any other incentive stock option plan of the
Company or any Subsidiary) which may be exercisable for the first time
by the optionee in any calendar year exceeds $100,000, such options
shall not be considered incentive stock options.
<PAGE>
c. Exercise
--------
Subject to the power of the Committee under Section 1.10(b) above and
except in the manner described below upon the death of the optionee, an
Incentive Stock Option may be exercised only in installments as
follows: up to one-half of the subject shares on and after the first
anniversary of the date of grant, up to all of the subject shares on
and after the second such anniversary of the date of the grant of such
Option but in no event later than the expiration of the term of the
Option.
An Incentive Stock Option shall be exercisable during the optionee's
lifetime only by the optionee and shall not be exercisable by the
optionee unless, at all times since the date of grant and at the time
of exercise, such optionee is an employee of the Company, any parent
corporation of the Company or any Subsidiary, except that, upon
termination of all employment (other than by death, Total Disability,
or by Total Disability followed by death in the circumstances provided
below) with the Company, any parent corporation of the Company and any
Subsidiary or Affiliate, the optionee may exercise an Incentive Stock
Option at any time within three months thereafter but only to the
extent such Option is exercisable on the date of such termination.
Upon termination of all employment by Total Disability, the Optionee
may exercise such options at any time within one year thereafter, but
only to the extent such option is exercisable on the date of such
termination.
In the event of the death of an optionee (i) while an employee of the
Company, any parent corporation of the Company or any Subsidiary or
Affiliate, or (ii) within three months after termination of all
employment with the Company, any parent corporation of the Company and
any Subsidiary or Affiliate (other than for Total Disability) or (iii)
within one year after termination on account of Total Disability of all
employment with the Company, any parent corporation of the Company and
any Subsidiary or Affiliate, such optionee's estate or any person who
acquires the right to exercise such option by bequest or inheritance or
by reason of the death of the optionee may exercise such optionee's
Option at any time within the period of three years from the date of
death. In the case of clauses (i) and (iii) above, such Option shall be
exercisable in full for all the remaining shares covered thereby, but
in the case of clause (ii) such Option shall be exercisable only to the
extent it was exercisable on the date of such termination.
Notwithstanding the foregoing provisions regarding the exercise of an
Option in the event of death, Total Disability or other termination of
employment, in no event shall an Option be exercisable in whole or in
part after the termination date provided in the Option.
<PAGE>
d. Transferability
---------------
An Incentive Stock Option granted under the Plan shall not be
transferable otherwise than by will or by the laws of descent and
distribution.
2.4 Non-Qualified Stock Option Grants
---------------------------------
Each Non-Qualified Stock Option will be subject to the following
provisions:
a. Term of Option
--------------
A Non-Qualified Stock Option will be for a term of not more than ten
years from the date of grant.
b. Exercise
--------
The exercise of a Non-Qualified Stock Option shall be subject to the
same terms and conditions as provided under Section 2.3(c) above except
that (i) upon termination of all employment by Total Disability, the
Optionee may exercise such options at any time within three years
thereafter and (ii) in the event of the death of an Optionee within
three years after termination on account of Total Disability of all
employment with the Company, or any subsidiary or affiliate, such
Optionee's estate or any person who acquires the right to exercise such
option by bequest or inheritance or by reason of the death of the
Optionee may exercise such Optionee's option at any time within a
period of three years from the date of death.
c. Transferability
---------------
A Non-Qualified Stock Option granted under the Plan shall not be
transferable otherwise than by will or by the laws of descent and
distribution, except as may be permitted by the Board or the Committee.
2.5 Agreements
----------
In consideration of any Options granted to a Participant under the Plan,
each such Participant shall enter into an Option Agreement with the Company
providing, consistent with the Plan, such terms as the Committee may deem
advisable.
EXHIBIT 4.2
Griffon Corporation
Senior Management Incentive Compensation Plan
I. EFFECTIVE DATE, PURPOSE
This Griffon Corporation Senior Management Incentive Compensation Plan is
adopted by the Board on November 5, 1997, subject to approval by the Company's
stockholders, and if so approved shall be effective as of October 1, 1997. The
Plan is designed to provide a significant and variable economic opportunity to
the two most senior officers of the Company as a reflection of their
contributions to the success of the Company. Payments pursuant to the Plan are
intended to qualify for exclusion from the term "applicable employee
remuneration" under Section 162(m)(4)(C) of the Internal Revenue Code of 1986,
as amended.
II. DEFINITIONS
"Applicable Delivery Period" shall have the meaning given in Section IV.C.
below.
"Board" shall mean the Board of Directors of the Company.
"Bonus" shall mean a cash or stock award payable to a Participant pursuant
to the terms of the Plan.
"Certification" shall have the meaning given in Section III.B.
"Change of Control" shall mean the occurrence of any of the following
events:
(a) 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 the Company where such acquisition causes such Person
to own 20 percent or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not be deemed to result in a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company or (iv) any acquisition pursuant to a transaction that complies
with clauses (i), (ii) and (iii) of subsection (c) below; and provide,
further, that if any Person's beneficial ownership of the Outstanding
Company Voting Securities reaches or exceeds twenty percent as a result of
a transaction described in clause (i) or (ii) above, and such Person
subsequently acquires beneficial ownership of additional voting securities
of the Company, such subsequent acquisition shall be treated as an
acquisition that causes such Person to own 20 percent or more of the
Outstanding Company Voting Securities; or
<PAGE>
(b) 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
the Company's shareholders, 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
(c) the approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all
or subsequently all of the assets of the Company or the acquisition of
assets of another entity ("Business Combination") or, if consummation of
such Business Combination is subject, at the time of such approval by
shareholders, to the consent of any government or governmental agency, the
obtaining of such consent (either explicitly or implicitly by
consummation); excluding, however, such a Business Combination pursuant to
which (i) all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company 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 the Company or all or substantially all
of the Company'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 Company
Voting Securities, (ii) no Person (excluding any employee benefit plan (or
related trust) of the Company 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 (iii) 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
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
"Change of Control Consideration" shall mean, with respect to each share of
Common Stock credited to a Deferred Stock Account, (i) the amount of any cash,
plus the value of any securities and other noncash consideration, constituting
the most valuable consideration per share of Common Stock, paid to any
shareholder in the transaction or series of transactions that results in a
Change of Control or (ii) if no consideration per share of Common Stock is paid
to any shareholder in the transaction or series of transactions that results in
a Change of Control, the highest reported sales price, regular way, of a share
of Common Stock in any transaction reported on the New York Stock Exchange
Composite Tape or other national exchange on which such shares are listed or on
NASDAQ during the 60-day period prior to and including the date of a Change of
Control. To the extent that such consideration consists all or in part of
securities or other noncash consideration, the value of such securities or other
noncash consideration shall be determined by the Committee in good faith.
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Compensation Committee of the Board or such
other committee of the Board which is composed of not less than two
Disinterested Persons, each of whom shall be appointed by and serve at the
pleasure of the Board.
"Common Stock" means the common stock of the Company, par value $0.25 per
share.
"Company" shall mean Griffon Corporation, a Delaware corporation.
"Consolidated Pretax Earnings" of the Company shall mean, with respect to
any fiscal year, the consolidated income, if any, of the Company for such fiscal
year as set forth in the audited consolidated financial statements of the
Company and its subsidiaries included in its annual report to stockholders for
such fiscal year, before deduction of taxes based on income or of the Bonus to
be paid to the participant under the Plan for such Fiscal Year.
"Delivery Date" shall have the meaning given in Section IV.B below.
"Disinterested Person" shall mean a member of the Board who qualifies as an
"outside director" for purposes of Section 162(m) of the Code.
"Initial Percentage" shall mean, for a particular Participant, the
percentage indicated under the heading "Initial Percentage" opposite such
Participant's name of Schedule I to the Plan.
"Installment Delivery Election" shall have the meaning given in Section
IV.C. below.
"Participant" shall mean an individual named on Schedule I hereto as a
participant in the Plan.
"Plan" shall mean this Griffon Corporation Senior Management Incentive
Compensation Plan.
"Secondary Percentage" shall mean, for a particular Participant, the
percentage indicated under the heading "Secondary Percentage" opposite such
Participant's name on Schedule I to the Plan.
"Stock Portion" of a Bonus shall have the meaning given in Section III.B.
below.
"Tertiary Percentage" shall mean, for a particular Participant, the
percentage indicated under the heading "Tertiary Percentage" opposite such
Participant's name on Schedule I to the Plan.
"Value" of a share of Common Stock as of a particular date shall mean the
average of the closing sale prices of a share of Common Stock on the New York
Stock Exchange composite tape (or, if the Common Stock is not listed on such
exchange, on any other national securities exchange on which the Common Stock is
listed) for each trading day during the period of 20 trading days ending with
such date. If the Common Stock is not traded on any national securities
exchange, the Value of the Common Stock shall be determined by the Committee in
good faith.
<PAGE>
III. DETERMINATION AND PAYMENT OF BONUSES
A. Eligibility; Amount. Each Participant shall be entitled to receive a
Bonus for each fiscal year or portion thereof of the Company during which period
such Participant is employed by the Company based upon the Company's
Consolidated Pretax Earnings for such fiscal year. The Bonus shall in each case
equal the Initial Percentage of the first $3,000,000 in Consolidated Pretax
Earnings, the Secondary Percentage of Consolidated Pretax Earnings between
$3,000,000 and $5,000,000, and the Tertiary Percentage of Consolidated Pretax
Earnings in excess of $5,000,000. Notwithstanding any other provision of the
Plan, a Participant shall not be entitled to a Bonus for any fiscal year in
which he has the right, which he fails to waive, to receive a bonus based upon
Consolidated Pretax Earnings under an employment agreement with the Company.
B. Certification; Payment. Each Bonus for a fiscal year shall be computed
and shall become payable upon the certification by the Committee of the amount
of Consolidated Pretax Earnings for the fiscal year (the "Certification"). The
Certification for each fiscal year shall be made as soon as practicable but in
no event more than 120 days after the end of the fiscal year. The first $500,000
of any Bonus (or, if such Bonus is less than $500,000, the entire amount of such
Bonus) shall not be paid in cash, but shall be credited to the Participant in
the form of deferred stock, as more fully set forth in Section IV below, but
only to the extent there are sufficient shares of Common Stock remaining
available for such crediting (the amount so credited, the "Stock Portion" of
such Bonus). The excess, if any, of the amount of any Bonus over the Stock
Portion thereof shall be paid to the Participant in cash as soon as practicable
after the date of the relevant Certification.
IV. DEFERRED STOCK ACCOUNTS
A. Crediting of Deferred Stock Accounts. The Company shall maintain a
Deferred Stock Account for each Participant, to be credited with shares of
Common Stock as set forth in this Section IV. As of the date of the
Certification for a fiscal year, the Deferred Stock Account of each Participant
shall be credited with a number of shares of Common Stock having a Value, as of
the last day of the fiscal year for which the Bonus is paid, equal to the Stock
Portion of such Participant's Bonus (if any) for the fiscal year. In addition,
as of the payment date for each regular cash dividend that is declared with
respect to the Common Stock, the Deferred Stock Account of each Participant
shall be credited with a number of shares of Common Stock equal to (i) the
number of shares of Common Stock in such Deferred Stock Account as of the record
date for such dividend multiplied by (ii) the per-share amount of such dividend
divided by (iii) the Value of a share of Common Stock on such payment date.
B. Delivery of Deferred Stock. The shares of Common Stock in a
Participant's Deferred Stock Account as of the date the Participant ceases to be
employed by the Company for any reason (the "Delivery Date") shall be delivered
or begin to be delivered in accordance with this Section IV.B. as soon as
practicable after the Delivery Date. Such shares shall be delivered at one time;
provided, that if the number of shares so credited includes a fractional share,
such number shall be rounded to the nearest whole number of shares; and
<PAGE>
provided, further, that if the Participant has in effect a valid Installment
Delivery Election pursuant to Section IV.C. below, then such shares shall be
delivered in equal yearly installments over the Applicable Delivery Period, with
the first such installment being delivered on the first anniversary of the
Delivery Date (and if, in order to equalize such installments, fractional shares
would have to be delivered, such installments shall be adjusted by rounding to
the nearest whole share). If any such shares are to be delivered after the
Participant has died or become legally incompetent, they shall be delivered to
the Participant's estate or legal guardian, as the case may be, in accordance
with the foregoing; provided, that if the Participant dies with a valid
Installment Delivery Election in effect, all remaining undelivered shares shall
be delivered to the Participant's estate immediately. References to a
Participant in this Plan shall be deemed to refer to the Participant's estate or
legal guardian, where appropriate.
C. Installment Delivery. An "Installment Delivery Election" shall mean a
written election by a Participant, on such form as may be prescribed by the
Committee, to receive delivery of shares of Common Stock in installments over a
period of up to five years (the "Applicable Delivery Period"), as more fully
described in paragraph IV.B. above. Once made, an Installment Delivery Election
may be superseded by another Installment Delivery Election or revoked in writing
by the Participant. However, in order for any initial or superseding Installment
Delivery Election or revocation thereof to be valid, it must be received by the
Committee at least one year before the Participant ceases to be any employee of
the Company. In the case of multiple Installment Delivery Elections and/or
revocations by any Participant, the most recent valid Installment Delivery
Election or revocation in effect as of the Delivery Date shall be controlling.
In addition, the effectiveness of any Installment Delivery Election shall be
subject to the approval of the Board or a committee thereof if the Committee, in
its absolute discretion after receiving the advice of counsel, determines such
approval to be necessary or advisable in order to avoid having the delivery of
shares pursuant thereto or any other event occurring in connection therewith
constitute a nonexempt purchase or sale, as applicable, under Rule 16b-3 under
the Securities Exchange Act of 1934.
D. Discretionary Acceleration. Notwithstanding any other provision of the
Plan, the Committee may decide, in its sole discretion, to deliver some or all
of the shares in a Participant's Deferred Stock Account to the Participant
before the time(s) prescribed by Sections IV.B. and C. above.
E. Stock Certificates.
1. The certificates for shares delivered to a Participant as set forth
above shall be issued in the name of the Participant, and from and after such
issuance, the Participant shall be entitled to all rights of a shareholder with
respect to Common Stock for all such shares issued in his name, including the
right to vote the shares, and the Participant shall receive all dividends and
other distributions paid or made with respect thereto.
2. Notwithstanding any other provision of the Plan, the Company shall not
be required to issue or deliver any certificate or certificates for shares of
Common Stock under the Plan prior to fulfillment of all of the following
conditions:
(a) listing or approval for listing upon official notice of issuance of
such shares on the New York Stock Exchange, Inc., or such other securities
exchange as may at the time be a market for the Common Stock;
<PAGE>
(b) any registration or other qualification of such shares under any
state or federal law or regulation, or the maintaining in effect of any
such registration or other qualification which the Committee shall, in its
absolute discretion upon the advice of counsel, deem necessary or
advisable;
(c) obtaining any other consent, approval, or permit from any state or
federal governmental agency which the Committee shall, in its absolute
discretion after receiving the advice of counsel, determine to be necessary
or advisable; and
(d) obtaining any approval of the Board or a committee thereof that the
Committee, in its absolute discretion after receiving the advice of
counsel, determines to be necessary or advisable in order to avoid having
such delivery or any other event occurring in connection therewith
constitute a nonexempt purchase or sale, as applicable, under Rule 16b-3
under the Securities Exchange Act of 1934;
provided, that the Company shall use reasonable best efforts to ensure that all
shares of Common Stock delivered under the Plan are freely transferable by the
recipient thereof following such delivery.
F. Shares Available.
1. Subject to Section IV.F.2, the maximum number of shares of Common Stock
which may be credited to Deferred Stock Accounts pursuant to the Plan is
500,000. Shares of Common Stock issuable under the Plan may be taken from
authorized but unissued or treasury shares of the Company or purchased on the
open market.
2. In the event that there is, at any time after the Board adopts the Plan,
any change in the Common Stock by reason of any stock dividend, stock split,
combination of shares, exchange of shares, warrants or rights offering to
purchase Common Stock at a price below its fair market value, reclassification,
recapitalization, merger, consolidation, spinoff or other change in
capitalization of the Company, appropriate adjustment shall be made in the
number and kind of shares or other property subject to the Plan and the number
and kind of shares or other property held in the Deferred Stock Accounts, and
any other relevant provisions of the Plan by the Committee, whose determination
shall be binding and conclusive on all persons. If the shares of Common Stock
credited to the Deferred Stock Accounts are converted pursuant to this Section
IV.F.2. into another form of property, references in the Plan to the Common
Stock shall be deemed, where appropriate, to refer to such other form of
property, with such other modifications as may be required for the Plan to
operate in accordance with its purposes. Without limiting the generality of the
foregoing, references to delivery of certificates for shares of Common Shares
shall be deemed to refer to delivery of cash and the incidents of ownership of
any other property held in the Deferred Stock Accounts.
V. CHANGE OF CONTROL
Notwithstanding any other provision of this Plan, in the event of a Change
of Control; (i) the Committee shall determine the amount of the Consolidated
Pretax Earnings of the Company for the portion of the then-current fiscal year
(such fiscal year, the "Change-of-Control Year") that ends immediately before
<PAGE>
the Change of Control and each Participant shall be paid a Bonus (the "Change of
Control Bonus"), entirely in cash, on the basis thereof as soon as practicable
after the date of the Change of Control; and (ii) the Company shall immediately
pay to each Participant in a lump sum the Change of Control Consideration
multiplied by the number of shares of Common Stock held in each Participant's
Deferred Stock Account immediately before such Change of Control; provided, that
if the delivery of cash pursuant to the foregoing would make a Change in Control
transaction ineligible for pooling-of-interests accounting under APB No. 16 that
would otherwise be eligible for such accounting treatment, the Committee shall
have the ability to deliver, instead of such cash, Common Stock having a Value
as of the date of such delivery equal to the cash that would otherwise be so
payable. Subject to Section VI, the Plan shall continue after a Change of
Control; provided, that for the portion of the Change-of-Control Year that
follows the Change of Control, each Participant shall be entitled to receive a
Bonus payable entirely in cash (the "Short-Year Bonus") equal to the excess, if
any, of (i) the Bonus for the Change-of-Control Year calculated in accordance
with Section III.A. based upon Consolidated Pretax Earnings for the entire
Change-of-Control Year, over (ii) the amount of the Change-of-Control Bonus paid
to such Participant.
VI. AMENDMENT AND TERMINATION
The Board shall have the right to terminate or modify the Plan from time to
time, but (i) no such modification shall, without prior approval of the
Company's stockholders, alter the manner in which the Bonuses are determined or
add Participants to the Plan, (ii) no such termination or modification shall,
without the consent of the Participant affected, impair or adversely affect the
Bonus payable for any fiscal year that begins before the date the termination or
modification is approved by the Board, and (iii) Section V hereof shall not be
amended, in any manner adverse to a Participant, at the request of a party
seeking to effect, or otherwise in connection with or in anticipation of, a
Change of Control, without the consent of the affected Participant.
VII. MISCELLANEOUS
Payments of the cash portion of Bonuses shall be made from the general
funds of the Company and no special or separate fund shall be required to be
established or other segregation of assets made to assure payment. No
Participant or other person shall have under any circumstances any interest in
any particular property or assets of the Company. The Plan shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to its principle of conflict of laws.
<PAGE>
GRIFFON CORPORATION
SENIOR MANAGEMENT INCENTIVE COMPENSATION PLAN
Schedule I
<TABLE>
<CAPTION>
Initial Secondary Tertiary
Participant Percentage Percentage Percentage
- ----------- ---------- ---------- ----------
<S> <C> <C> <C>
Harvey R. Blau 4% 4% 5%
Robert Balemian 2.5% 3.5% 5%
</TABLE>
EXHIBIT 4.3
Griffon Corporation
1998 Employee and Director Stock Option Plan
--------------------------------------------
(as amended)
----------
SECTION 1. GENERAL PROVISIONS
------------------
1.1. Name and General Purpose
------------------------
The name of this plan is the Griffon Corporation 1998 Employee and
Director Stock Option Plan (hereinafter called the "Plan"). The Plan is intended
to be a broadly-based incentive plan which enables Griffon Corporation (the
"Company") and its subsidiaries and affiliates to foster and promote the
interests of the Company by attracting and retaining directors, officers and
employees of, and consultants to, the Company who contribute to the Company's
success by their ability, ingenuity and industry, to enable such directors,
officers, employees and consultants to participate in the long-term success and
growth of the Company by giving them a proprietary interest in the Company and
to provide incentive compensation opportunities competitive with those of
competing corporations.
1.2 Definitions
-----------
a. "Affiliate" means any person or entity controlled by or under
common control with the Company, by virtue of the ownership of
voting securities, by contract or otherwise.
b. "Board" means the Board of Directors of the Company.
c. "Change in Control" means a change of control of the Company, or
in any person directly or indirectly controlling the Company,
which shall mean:
(a) a change in control as such term is presently defined in
Regulation 240.12b-(2) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); or
(b) if any "person" (as such term is used in Section 13(d) and
14(d) of the Exchange Act) other than the Company or any "person"
who on the date of this Agreement is a director or officer of the
Company, becomes the "beneficial owner" (as defined in Rule
13(d)-3 under the Exchange Act) directly or indirectly, of
securities of the Company representing twenty percent (20%) or
more of the voting power of the Company's then outstanding
securities; or
(c) if during any period of two (2) consecutive years during the
term of this Plan, individuals who at the beginning of such
period constitute the Board of Directors, cease for any reason to
constitute at least a majority thereof.
d. "Committee" means the Committee referred to in Section 1.3 of the
Plan.
<PAGE>
e. "Common Stock" means shares of the Common Stock, par value $.25
per share, of the Company.
f. "Company" means Griffon Corporation, a corporation organized
under the laws of the State of Delaware (or any successor
corporation).
g. "Fair Market Value" means the market price of the Common Stock on
the New York Stock Exchange consolidated reporting system on the
date of the grant or on any other date on which the Common Stock
is to be valued hereunder. If no sale shall have been reported on
the New York Stock Exchange consolidated reporting system on such
date, Fair Market Value shall be determined by the Committee.
h. "Non-Employee Director" shall have the meaning set forth in Rule
16(b) promulgated by the Securities and Exchange Commission
("Commission").
i. "Option" means any option to purchase Common Stock under Section
2 of the Plan.
j. "Option Agreement" means the option agreement described in
Section 2.4 of the Plan.
k. "Participant" means any director, officer, employee or consultant
of the Company, a Subsidiary or an Affiliate who is selected by
the Committee to participate in the Plan.
l. "Subsidiary" means any corporation in which the Company possesses
directly or indirectly 50% or more of the combined voting power
of all classes of stock of such corporation.
m. "Total Disability" means accidental bodily injury or sickness
which wholly and continuously disabled an optionee. The
Committee, whose decisions shall be final, shall make a
determination of Total Disability.
1.3 Administration of the Plan
--------------------------
The Plan shall be administered by the Committee appointed by the Board
consisting of two or more members of the Board all of whom shall be Non-Employee
Directors. The Committee shall serve at the pleasure of the Board and shall have
such powers as the Board may, from time to time, confer upon it.
Subject to this Section 1.3, the Committee shall have sole and
complete authority to adopt, alter, amend or revoke such administrative rules,
guidelines and practices governing the operation of the Plan as it shall, from
time to time, deem advisable, and to interpret the terms and provisions of the
Plan.
<PAGE>
The Committee shall keep minutes of its meetings and of action taken
by it without a meeting. A majority of the Committee shall constitute a quorum,
and the acts of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by all of the members of the
Committee without a meeting, shall constitute the acts of the Committee.
1.4 Eligibility
-----------
Stock Options may be granted only to directors, officers, employees or
consultants of the Company or a Subsidiary or Affiliate. Subject to Section 2.3,
any person who has been granted any Option may, if he is otherwise eligible, be
granted an additional Option or Options.
1.5 Shares
------
The aggregate number of shares reserved for issuance pursuant to the
Plan shall be 1,350,000 shares of Common Stock, or the number and kind of shares
of stock or other securities which shall be substituted for such shares or to
which such shares shall be adjusted as provided in Section 1.6.
Such number of shares may be set aside out of the authorized but
unissued shares of Common Stock or out of issued shares of Common Stock acquired
for and held in the Treasury of the Company, not reserved for any other purpose.
Shares subject to, but not sold or issued under, any Option terminating or
expiring for any reason prior to its exercise in full will again be available
for Options thereafter granted during the balance of the term of the Plan.
<PAGE>
1.6 Adjustments Due to Stock Splits,
Mergers, Consolidation, Etc.
-------------------------------
If, at any time, the Company shall take any action, whether by stock
dividend, stock split, combination of shares or otherwise, which results in a
proportionate increase or decrease in the number of shares of Common Stock
theretofore issued and outstanding, the number of shares which are reserved for
issuance under the Plan and the number of shares which, at such time, are
subject to Options shall, to the extent deemed appropriate by the Committee, be
increased or decreased in the same proportion, provided, however, that the
Company shall not be obligated to issue fractional shares.
Likewise, in the event of any change in the outstanding shares of
Common Stock by reason of any recapitalization, merger, consolidation,
reorganization, combination or exchange of shares or other corporate change, the
Committee shall make such substitution or adjustments, if any, as it deems to be
appropriate, as to the number or kind of shares of Common Stock or other
securities which are reserved for issuance under the Plan and the number of
shares or other securities which, at such time are subject to Options.
In the event of a Change in Control, at the option of the Board or
Committee, (a) all Options outstanding on the date of such Change in Control
shall, for a period of sixty (60) days following such Change in Control, become
immediately and fully exercisable, and (b) an optionee will be permitted to
surrender for cancellation within sixty (60) days after such Change in Control
any Option or portion of an Option which was granted more than six (6) months
prior to the date of such surrender, to the extent not yet exercised, and to
receive a cash payment in an amount equal to the excess, if any, of the Fair
Market Value (on the date of surrender) of the shares of Common Stock subject to
the Option or portion thereof surrendered, over the aggregate purchase price for
such Shares under the Option.
1.7 Non-Alienation of Benefits
--------------------------
Except as herein specifically provided, no right or unpaid benefit
under the Plan shall be subject to alienation, assignment, pledge or charge and
any attempt to alienate, assign, pledge or charge the same shall be void. If any
Participant or other person entitled to benefits hereunder should attempt to
alienate, assign, pledge or charge any benefit hereunder, then such benefit
shall, in the discretion of the Committee, cease.
1.8 Withholding or Deduction for Taxes
----------------------------------
If, at any time, the Company or any Subsidiary or Affiliate is
required, under applicable laws and regulations, to withhold, or to make any
deduction for any taxes, or take any other action in connection with any Option
exercise, the Participant shall be required to pay to the Company or such
Subsidiary or Affiliate, the amount of any taxes required to be withheld, or, in
lieu thereof, at the option of the Company, the Company or such Subsidiary or
Affiliate may accept a sufficient number of shares of Common Stock to cover the
amount required to be withheld.
1.9 Administrative Expenses
-----------------------
The entire expense of administering the Plan shall be borne by the
Company.
<PAGE>
1.10 General Conditions
------------------
a. The Board or the Committee may, from time to time, amend, suspend
or terminate any or all of the provisions of the Plan, provided
that, without the Participant's approval, no change may be made
which would alter or impair any right theretofore granted to any
Participant .
b. With the consent of the Participant affected thereby, the
Committee may amend or modify any outstanding Option in any
manner not inconsistent with the terms of the Plan, including,
without limitation, and irrespective of the provisions of Section
2.3(c) below, to accelerate the date or dates as of which an
installment of an Option becomes exercisable.
c. Nothing contained in the Plan shall prohibit the Company or any
Subsidiary or Affiliate from establishing other additional
incentive compensation arrangements for employees of the Company
or such Subsidiary or Affiliate.
d. Nothing in the Plan shall be deemed to limit, in any way, the
right of the Company or any Subsidiary or Affiliate to terminate
a Participant's employment with the Company (or such Subsidiary
or Affiliate) at any time.
e. Any decision or action taken by the Board or the Committee
arising out of or in connection with the construction,
administration, interpretation and effect of the Plan shall be
conclusive and binding upon all Participants and any person
claiming under or through any Participant.
f. No member of the Board or of the Committee shall be liable for
any act or action, whether of commission or omission, (i) by such
member except in circumstances involving actual bad faith, nor
(ii) by any other member or by any officer, agent or employee.
1.11 Compliance with Applicable Law
------------------------------
Notwithstanding any other provision of the Plan, the Company shall not
be obligated to issue any shares of Common Stock, or grant any Option with
respect thereto, unless it is advised by counsel of its selection that it may do
so without violation of the applicable Federal and State laws pertaining to the
issuance of securities and the Company may require any stock certificate so
issued to bear a legend, may give its transfer agent instructions limiting the
transfer thereof, and may take such other steps, as in its judgment are
reasonably required to prevent any such violation.
1.12 Effective Dates
---------------
The Plan was adopted by the Board on February 5, 1998 and amended by
the Board on July 30, 1998. The Plan shall terminate on February 4, 2008.
<PAGE>
Section 2. OPTION GRANTS
-------------
2.1 Authority of Committee
----------------------
Subject to the provisions of the Plan, the Committee shall have the
sole and complete authority to determine (i) the Participants to whom Options
shall be granted; (ii) the number of shares to be covered by each Option; and
(iii) the conditions and limitations, if any, in addition to those set forth in
Sections 2 and 3 hereof, applicable to the exercise of an Option, including
without limitation, the nature and duration of the restrictions, if any, to be
imposed upon the sale or other disposition of shares acquired upon exercise of
an Option.
Stock Options granted under the Plan shall be non-qualified stock
options.
The Committee shall have the authority to grant Options.
2.2 Option Exercise Price
---------------------
The price of stock purchased upon the exercise of Options granted
pursuant to the Plan shall be the Fair Market Value thereof at the time that the
Option is granted.
The purchase price is to be paid in full in cash, certified or bank
cashier's check or, at the option of the Company, Common Stock valued at its
Fair Market Value on the date of exercise, or a combination thereof, when the
Option is exercised and stock certificates will be delivered only against such
payment.
2.3 Option Grants
-------------
Each Option will be subject to the following provisions:
a. Term of Option
--------------
An Option will be for a term of not more than ten years from the
date of grant.
b. Exercise
--------
(i) By an Employee:
--------------
Subject to the power of the Committee under Section 1.10(b) above
and except in the manner described below upon the death of the
optionee, an Option may be exercised only in installments as
follows: up to one-half of the subject shares on and after the
first anniversary of the date of grant, up to all of the subject
shares on and after the second such anniversary of the date of the
grant of such Option but in no event later than the expiration of
the term of the Option.
An Option shall be exercisable during the optionee's lifetime only
by the optionee and shall not be exercisable by the optionee
unless, at all times since the date of grant and at the time of
<PAGE>
exercise, such optionee is an employee of or providing services to
the Company, any parent corporation of the Company or any
Subsidiary or Affiliate, except that, upon termination of all such
employment or provision of services (other than by death, Total
Disability, or by Total Disability followed by death in the
circumstances provided below), the optionee may exercise an Option
at any time within three months thereafter but only to the extent
such Option is exercisable on the date of such termination.
Upon termination of all such employment by Total Disability, the
optionee may exercise such Options at any time within three years
thereafter, but only to the extent such Option is exercisable on
the date of such termination.
In the event of the death of an optionee (i) while an employee of
or providing services to the Company, any parent corporation of
the Company or any Subsidiary or Affiliate, or (ii) within three
months after termination of all such employment or provision of
services (other than for Total Disability) or (iii) within three
years after termination on account of Total Disability of all such
employment or provision of services, such optionee's estate or any
person who acquires the right to exercise such option by bequest
or inheritance or by reason of the death of the optionee may
exercise such optionee's Option at any time within the period of
three years from the date of death. In the case of clauses (i) and
(iii) above, such Option shall be exercisable in full for all the
remaining shares covered thereby, but in the case of clause (ii)
such Option shall be exercisable only to the extent it was
exercisable on the date of such termination.
(ii) By Persons other than Employees:
-------------------------------
If the optionee is not an employee of the Company or the parent
corporation of the Company or any Subsidiary or Affiliate,
expiration of such optionee's right to exercise his Options shall
be established and determined by the Committee in the Option
Agreement covering the Options granted to such optionee.
Notwithstanding the foregoing provisions regarding the exercise of
an Option in the event of death, Total Disability, other
termination of employment or provision of services or otherwise,
in no event shall an Option be exercisable in whole or in part
after the termination date provided in the Option Agreement.
c. Transferability
---------------
An Option granted under the Plan shall not be transferable
otherwise than by will or by the laws of descent and distribution,
except as may be permitted by the Board or the Committee.
2.4 Agreements
----------
In consideration of any Options granted to a Participant under the
Plan, each such Participant shall enter into an Option Agreement with the
Company providing, consistent with the Plan, such terms as the Committee may
deem advisable.
EXHIBIT 5
August 26, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Griffon Corporation
Registration Statement on Form S-8
----------------------------------
Gentlemen:
Reference is made to the filing by Griffon Corporation (the "Corporation")
of a Registration Statement on Form S-8 with the Securities and Exchange
Commission pursuant to the provisions of the Securities Act of 1933, as amended,
covering the registration of 1,000,000 shares of the Corporation's Common Stock,
$.25 par value per share ("Common Stock") in connection with the Corporation's
1998 Stock Option Plan (the "1998 Plan"), 500,000 shares of Common Stock in
connection with the Corporation's Senior Management Incentive Compensation Plan
(the "Incentive Plan") and 1,350,000 shares of the Corporation's Common Stock in
connection with the Corporation's 1998 Employee & Director Stock Option Plan, as
amended (the "Employee & Director Plan").
As counsel for the Corporation, we have examined its corporate records,
including its Certificate of Incorporation, as amended, By-Laws, its corporate
minutes, the form of its Common Stock certificate, the 1998 Plan, the Incentive
Plan, the Employee & Director Plan and such other documents as we have deemed
necessary or relevant under the circumstances.
Based upon our examination, we are of the opinion that:
1. The Corporation is duly organized and validly existing under the laws of
the State of Delaware.
2. There have been reserved for issuance by the Board of Directors of the
Corporation 1,000,000 shares of its Common Stock under the 1998 Plan. The shares
of the Corporation's Common Stock, when issued pursuant to the 1998 Plan, will
be validly authorized, legally issued, fully paid and non-assessable.
3. There have been reserved for issuance by the Board of Directors of the
Corporation 500,000 shares of its Common Stock under the Incentive Plan. The
<PAGE>
shares of the Corporation's Common Stock, when issued pursuant to the Incentive
Plan, will be validly authorized, legally issued, fully paid and non-assessable.
4. There have been reserved for issuance by the Board of Directors of the
Corporation 1,350,000 shares of its Common Stock under the Employee & Director
Plan. The shares of the Corporation's Common Stock, when issued pursuant to the
Employee & Director Plan, will be validly authorized, legally issued, fully paid
and non-assessable.
We hereby consent to be named in the Registration Statement and in the
Prospectus which constitutes a part thereof as counsel to the Corporation, and
we hereby consent to the filing of this opinion as Exhibit 5 to the Registration
Statement.
Very truly yours,
/s/ Blau, Kramer, Wactlar & Lieberman, P.C.
BLAU, KRAMER, WACTLAR &
LIEBERMAN, P. C.
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Griffon Corporation:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated November 5, 1997
included in Griffon Corporation's Form 10-K for the year ended September 30,
1997 and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
August 25, 1998
Roseland, New Jersey
