EMPLOYMENT AGREEMENT

THIS EMPLOYMENT  AGREEMENT (this "Agreement"),  made and entered into as of July
1, 2001, by and between Griffon Corporation,  a Delaware  corporation,  with its
principal office located at 100 Jericho Quadrangle, Jericho, New York 11753-2794
(together  with its  successors  and  assigns  permitted  under this  Agreement,
"Griffon") and Harvey R. Blau ("Blau"),  amends and restates in its entirety the
Employment Agreement made and entered into as of October 1, 1998 between Griffon
and Blau (the "Prior Agreement").

                                  WITNESSETH:

     WHEREAS, Griffon has determined that it is in the best interests of Griffon
and its  stockholders  to  continue  to  employ  Blau  and to set  forth in this
Agreement the obligations and duties of both Griffon and Blau; and

     WHEREAS,  Griffon  wishes to assure  itself of the services of Blau for the
period hereinafter  provided,  and Blau is willing to be employed by Griffon for
said period, upon the terms and conditions provided in this Agreement;

     NOW,  THEREFORE,  in  consideration  of the premises  and mutual  covenants
contained herein and for other good and valuable  consideration,  the receipt of
which is mutually  acknowledged,  Griffon and Blau  (individually  a "Party" and
together the "Parties" ) agree as follows:
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     1. DEFINITIONS.

     (a)  "Beneficiary"  shall mean the person or persons named by Blau pursuant
to Section 17 below or, in the event that no such  person is named who  survives
Blau, his estate.

     (b) "Board" shall mean the Board of Directors of Griffon.

     (c) "Cause" shall mean:

     (i) Blau's conviction of a felony involving an act or acts of dishonesty on
his part and resulting in gain or personal enrichment at the expense of Griffon;

     (ii) willful and continued failure of Blau to perform his obligations under
this Agreement, resulting in demonstrable material economic harm to Griffon, or

     (iii) a willful and material  breach by Blau of the  provisions of Sections
14 or 15 below to the demonstrable and material detriment of Griffon.

     Notwithstanding the foregoing,  in no event shall Blau's failure to perform
the  duties  associated  with his  position  caused by his  mental  or  physical
disability constitute Cause for his termination.

     For purposes of this Section  1(c), no act or failure to act on the part of
Blau shall be considered  "willful" unless it is done, or omitted to be done, by
him in bad faith or without reasonable belief that his action or omission was in
the best  interests of Griffon.  Any act or failure to act based upon  authority
given pursuant to a resolution  adopted by the Board or based upon the advice of
counsel for Griffon shall be conclusively  presumed to be done, or omitted to be
done, by Blau in good faith and in the best interests of Griffon.

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     (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  beneficially  own 20
percent or more of the  combined  voting  power of the then  outstanding  voting
securities  of Griffon  entitled to vote  generally in the election of directors
(the  "Outstanding  Griffon Voting  Securities");  provided,  however,  that for
purposes of this subsection (i), the following  acquisitions shall not be deemed
to result in a Change of Control: (A) any acquisition directly from Griffon, (B)
any acquisition by Griffon, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Griffon or any corporation  controlled
by Griffon or (D) any acquisition  pursuant to a transaction  that complies with
clauses (A), (B) and (C) of subsection (iii) below; and provided,  further, that
if  any  Person's  beneficial   ownership  of  the  Outstanding  Griffon  Voting
Securities reaches or exceeds 20 percent as a result of a transaction  described
in clause (A) or (B) above,  and such Person  subsequently  acquires  beneficial
ownership  of  additional   voting   securities  of  Griffon,   such  subsequent
acquisition  shall be treated  as an  acquisition  that  causes  such  Person to
beneficially  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

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the date  hereof  whose  election,  or  nomination  for  election  by  Griffon's
stockholders,  was  approved by a vote of at least a majority  of the  directors
then  comprising  the  Incumbent  Board  shall  be  considered  as  though  such
individual were a member of the Incumbent  Board, but excluding for this purpose
any such individual whose initial  assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened  solicitation  of proxies or consents by
or on behalf of a Person other than the Board; or

     (iii) consummation of a reorganization,  merger or consolidation or sale or
other  disposition  of all or  subsequently  all of the assets of Griffon or the
acquisition of assets of another  entity  ("Business  Combination");  excluding,
however,  such a Business Combination pursuant to which (A) all or substantially
all of the  individuals  and  entities  who were the  beneficial  owners  of the
Outstanding  Griffon  Voting  Securities  immediately  prior  to  such  Business
Combination  beneficially own, directly or indirectly,  more than 60 percent of,
respectively,  the then  outstanding  shares  of common  stock and the  combined
voting  power  of the  then  outstanding  voting  securities  entitled  to  vote
generally in the election of directors,  as the case may be, of the  corporation
resulting from such Business  Combination 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

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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  (including,  without  limitation,  a
corporation  that  as a  result  of  such  transaction  owns  Griffon  or all or
substantially  all of Griffon's  assets  either  directly or through one or more
subsidiaries)  were members of the Incumbent  Board at the time of the execution
of the  initial  agreement,  or of the action of the Board,  providing  for such
Business Combination; or

     (iv) approval by the  stockholders of Griffon of a complete  liquidation or
dissolution of the Company.

     (e) "Code"  shall mean the Internal  Revenue Code of 1986,  as amended from
time to time.

     (f) "Committee" shall mean the Compensation Committee of the Board.

     (g) "Consulting Period" shall mean the period specified in Section 13 below
during which Blau serves as a consultant to Griffon.

     (h)  "Disability"  shall  mean the  illness  or other  mental  or  physical
disability of Blau, as determined by a physician acceptable to Griffon and Blau,
resulting in his failure during the Employment Term or the Consulting Period, as
the case may be, (i) to perform  substantially  his applicable  material  duties
under this Agreement for a period of nine consecutive  months and (ii) to return
to the performance of his duties within 30 days after  receiving  written notice
of termination.

     (i)  "Employment  Term"  shall mean the period  specified  in Section  2(b)
below.

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        (j) "Fiscal Year" shall mean the 12-month period beginning on October 1
and ending on the next subsequent September 30, or such other 12-month period as
may constitute Griffon's fiscal year at any time hereafter.

        (k) "Good Reason" shall mean, at any time during the Employment Term, in
each case (except for clause (vi) below) without Blau's prior written consent or
his acquiescence:

     (i) reduction in his then current Salary;

     (ii)  diminution,  reduction  or  other  adverse  change  in the  bonus  or
incentive  compensation  opportunities  available  to Blau (with  respect to the
level  of  bonus  or  incentive  compensation   opportunities,   the  applicable
performance  criteria and  otherwise  the manner in which  bonuses and incentive
compensation  are  determined) in the aggregate  from those  available as of the
date hereof in accordance with Section 4(a) below;

     (iii) Griffon's  failure to pay Blau any amounts  otherwise  vested and due
him hereunder or under any plan or policy of Griffon;

     (iv)    diminution   of   Blau's   titles,    position,    authorities   or
responsibilities, including not serving on the Board;

     (v)  assignment to Blau of duties  incompatible  with his position of Chief
Executive Officer;

     (vi)  termination  by Blau of his  employment  within one year  following a
Change  in  Control  other  than  (a) for  Cause  or (b) by  reason  of death or
Disability;

     (vii)  imposition of a requirement  that Blau report other than directly to
the full Board;

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<PAGE>

     (viii) a material  breach of the  Agreement  by  Griffon  that is not cured
within 10 business days after written notification by Blau of such breach; or

     (ix) relocation of Griffon's corporate headquarters to a location more than
35 miles from the location first above described.

     (l) "Retirement" shall mean termination of Blau's employment  subsequent to
the date hereof,  other than (i) due to death or  Disability,  (ii) for Cause or
Good Reason or (iii) without Cause,  with Blau's  entitlement to receive a fully
vested benefit under  Griffon's  Supplemental  Executive  Retirement  Plan as in
effect on the date hereof.

     (m) "Salary" shall mean the annual salary  provided for in Section 3 below,
as adjusted from time to time.


     (n) "Spouse"  shall mean,  during the Term of Employment and the Consulting
Period, the woman who as of any relevant date is legally married to Blau.

     (o) "Subsidiary" shall mean any corporation of which Griffon owns, directly
or indirectly, more than 50 percent of its voting stock.


     2. EMPLOYMENT TERM, POSITIONS AND DUTIES.

     (a) Employment of Blau.  Griffon hereby  continues to employ Blau, and Blau
hereby accepts continued  employment with Griffon, in the positions and with the
duties  and  responsibilities  set forth  below and upon  such  other  terms and
conditions  as are  hereinafter  stated.  Blau shall render  services to Griffon
principally at Griffon's corporate headquarters,  but he shall do such traveling

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<PAGE>

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 as of July 1, 2001
and shall terminate on December 1, 2006.

     (c) Titles and Duties.

     (i) Until the date of termination of his employment  hereunder,  Blau shall
be employed as Chief  Executive  Officer,  reporting  to the full Board.  In his
capacity  as Chief  Executive  Officer,  Blau shall have the  customary  powers,
responsibilities  and authorities of chief executive officers of corporations of
the size, type and nature of Griffon including,  without limitation,  authority,
in  conjunction  with the  Board as  appropriate,  to hire and  terminate  other
employees of Griffon.

     (ii) During the  Employment  Term,  Griffon  shall uses its best efforts to
secure the election of Blau to the Board and to the chairmanship thereof. During
the Employment Term, if the Board forms an executive or similar committee,  Blau
shall serve thereon.

     (d) Time and Effort.

     (i) Blau agrees to devote his best efforts and  abilities,  and such of his
business  time and  attention  as is  reasonably  necessary,  to the  affairs of
Griffon  in  order to carry  out his  duties  and  responsibilities  under  this
Agreement.  The Parties hereby acknowledge that Blau is chairman of the board of
Aeroflex Incorporated and senior partner of the law firm, Blau, Kramer,  Wactlar
& Lieberman,  P.C. and that during the Employment  Term he will be devoting time
and attention to those activities.

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<PAGE>


     (ii)  Notwithstanding  the foregoing,  nothing shall preclude Blau from (A)
serving on the boards of a reasonable number of trade  associations,  charitable
organizations and/or businesses not in competition with Griffon, (B) engaging in
charitable  activities  and  community  affairs and (C)  managing  his  personal
investments  and  affairs;  provided,  however,  that,  such  activities  do not
materially   interfere   with  the   proper   performance   of  his  duties  and
responsibilities specified in Section 2 (c) above.

     3. SALARY.

     (a) Initial  Salary.  Blau shall receive from Griffon a Salary,  payable in
accordance with the regular payroll practices of Griffon, in a minimum amount of
$775,000.

     (b) Cost-of-Living Increase. During the Employment Term Blau's Salary shall
be  increased  semiannually  by an amount  equal to the  increase in the cost of
living for the  immediately  preceding  calendar  half-year,  as reported in the
"Consumer  Price  Index,  New York and  Northeastern  New  Jersey,  All  Items,"
published by the United States  Department of Labor,  Bureau of Labor Statistics
(or, if such index is no longer published,  a successor or comparable index that
is published).  Such amount shall be calculated and paid to Blau in a single sum
on or before the first day of the second month following the applicable calendar
half year,  and  thereafter  his Salary shall be deemed to include the amount of
any such increase.  The first calculation and payment shall be made with respect
to the six month period from and after July 1, 2001. If Blau's  employment shall

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terminate during any such six-month period, the cost-of-living increase provided
in this Section 3(b) shall be prorated  accordingly.

     (c) Salary  Increase.  Any amount to which Blau's Salary is  increased,  as
provided in Section 3(b) above or  otherwise,  shall not  thereafter  be reduced
without his consent, and the term "Salary" as used in this Agreement shall refer
to his Salary as thus increased.

     4. BONUSES.

     (a) Annual  Bonus.  Blau shall be eligible  to receive an annual  bonus for
each Fiscal Year or portion  thereof  during the  Employment  Term in accordance
with Griffon's Senior Management Incentive  Compensation Plan or another plan or
plans  providing  him annual award  opportunities  (with respect to their level,
applicable  performance criteria and the manner in which bonuses are determined)
that in the  aggregate  are not less than those in effect as of the date hereof.
Blau  shall be  entitled  to elect  to  defer,  under  the  terms of the  Senior
Management Incentive Compensation Plan or any successor plan, any portion of his
annual bonus that is not already subject to deferral thereunder.

     (b) Special  Bonus.  Blau shall be eligible to receive  additional  bonuses
during the Employment  Term. The Committee shall  determine,  in its discretion,
the occasion for payment, and the amount, of any such bonus.

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<PAGE>


     5. LONG-TERM INCENTIVE.

     During the Employment  Term,  Blau shall be eligible for an award under any
long-term incentive  compensation plan established by Griffon for the benefit of
Blau or, in the absence thereof, under any such plan established for the benefit
of members of the senior management of Griffon.

     6. EQUITY OPPORTUNITY.

     During the  Employment  Term,  Blau shall be eligible to receive  grants of
options to purchase  shares of Griffon's stock and awards of shares of Griffon's
stock,  either or both as determined by the  Committee,  under and in accordance
with the terms of  applicable  plans of  Griffon  and  related  option and award
agreements. It is the intention of Griffon to grant stock options to Blau during
the Employment  Term. Also, to the extent permitted by any such plan, Blau shall
be eligible during any Consulting Period to receive grants of options and awards
of shares of Griffon's stock in the same manner.

     7. EXPENSE REIMBURSEMENT; CERTAIN OTHER COSTS.

     During  the  Employment  Term  and any  Consulting  Period,  Blau  shall be
entitled to prompt  reimbursement  by Griffon for all  reasonable  out-of-pocket
expenses incurred by him in performing  services under this Agreement,  upon his
submission  of such  accounts  and  records  as may be  reasonably  required  by
Griffon.  In  addition,  Blau  shall be  entitled  to  payment by Griffon of all

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reasonable costs and expenses,  including  attorneys' and consultants'  fees and
disbursements, incurred by him in connection with adoption of this Agreement and
any  related  compensatory  arrangements  that  Griffon  adopts  solely  for his
benefit.

     8. PERQUISITES.

     During the Employment  Term and, and any Consulting  Period,  Griffon shall
provide Blau with the following perquisites:

     (a) an office of a size and with  furnishings and other  appointments,  and
exclusive  personal  secretarial  and other  assistance,  at least equal to that
provided to Blau by Griffon as of the date hereof; and

     (b)  payment  of club  dues and the use of an  automobile  and  payment  of
related  expenses  on the same terms as in effect on the date hereof or, if more
favorable to Blau, as made available  generally to other  executive  officers of
Griffon and its affiliates at any time thereafter.

     9. EMPLOYEE BENEFIT PLANS.

     (a)  General.  During  the  Employment  Term,  Blau  shall be  entitled  to
participate  in all  employee  benefit  plans and  programs  made  available  to
Griffon's  senior  executives  or to its employees  generally,  as such plans or
programs  may be in effect  from time to time,  including,  without  limitation,
pension and other retirement plans,  profit-sharing plans,  savings and  similar

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plans,  group life  insurance,  accidental  death and  dismemberment  insurance,
travel accident insurance,  hospitalization insurance, surgical insurance, major
and excess major medical insurance,  dental insurance,  short-term and long-term
disability insurance,  sick leave (including salary continuation  arrangements),
holidays, vacation (not less than four weeks in any calendar year) and any other
employee benefit plans or programs that may be sponsored by Griffon from time to
time,  including plans that supplement the above-listed types of plans,  whether
funded or unfunded.

     (b) Medical Care  Reimbursement  and Insurance.  During the Employment Term
and  Consulting  Period,  Griffon  shall  reimburse  Blau for 100 percent of any
medical  expenses  incurred  by him for  himself  and his  Spouse  that  are not
reimbursed  by  insurance  or   otherwise,   offset  by  any  amounts  that  are
reimbursable  by  Medicare if Blau and his Spouse,  when  eligible,  elect to be
covered by  Medicare.  Griffon  shall  provide  Blau and his  Spouse  during his
lifetime with hospitalization  insurance,  surgical insurance,  major and excess
major  medical  insurance  and  dental  insurance  in  accordance  with the most
favorable   plans,   policies,   programs  and  practices  of  Griffon  and  its
Subsidiaries  made  available  generally to other senior  executive  officers of
Griffon and its Subsidiaries as in effect from time to time.

     (c) Life  Insurance  Benefit.  In  addition  to the  group  life  insurance
available to employees generally,  Griffon shall provide Blau with an individual
permanent  life  insurance  benefit  in an  initial  amount  of  not  less  than
approximately  $5 million,  the terms and  conditions of such benefit to be more
fully described in an insurance ownership agreement between Blau and Griffon.

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     (d) Disability  Benefit. In consideration of the benefit payable to Blau in
the event of termination  of his  employment  due to Disability,  as provided in
Section 10(e) below,  or, if  applicable,  in the event of termination of Blau's
consulting  services due to Disability during the Consulting Period, as provided
in Section  13(d)  below,  Griffon  shall not be  obligated to provide Blau with
long-term  disability  insurance.  If Griffon  elects to provide  Blau with such
insurance,  he shall be the owner of any individual  policies obtained and shall
pay the premiums thereon;  provided,  however, that Griffon shall reimburse Blau
for any premiums that he pays.

     (e)  Retirement  Benefit.  Blau shall be entitled to the benefits  provided
under Griffon's Supplemental  Executive Retirement Plan (the "SERP");  provided,
however,  that if Griffon fails to maintain the SERP, Blau's retirement  benefit
shall be determined as if the SERP had remained in effect until  termination  of
his employment with Griffon by retirement. These benefits are in addition to the
benefits  provided  under this  Agreement,  and no  modification,  amendment  or
termination  of this  Agreement  shall affect Blau's rights under the SERP as in
effect on the date  hereof or, if more  favorable  to Blau,  as in effect at any
time thereafter.

     10. TERMINATION OF EMPLOYMENT.

     (a) Voluntary  Termination  and Termination by Mutual  Agreement.  Blau may
terminate  his  employment  voluntarily  at any time after  December 31, 2001 in
accordance  with the provisions of Section 10(h). If he does so, except for Good
Reason,  his  entitlement  shall be the same as if Griffon  had  terminated  his

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employment  for Cause.  The  Parties  may  terminate  this  Agreement  by mutual
agreement  at any  time.  If they do so,  Blau's  entitlements  shall  be as the
Parties mutually agree.

     (b) General.  Notwithstanding anything to the contrary herein, in the event
of termination of Blau's employment under this Agreement, he or his Beneficiary,
as the case may be,  shall be entitled to receive (in  addition to payments  and
benefits under, and except as specifically  provided in, subsections (c) through
(i) below, as applicable):

     (i) his Salary through the date of termination;

     (ii) any unused vacation from prior years;

     (iii) any annual or special bonus awarded but not yet paid to him;

     (iv) any  deferred  compensation  under  the  Senior  Management  Incentive
Compensation Plan or any other deferred compensation plan of Griffon;

     (v) any  other  compensation  or  benefits,  including  without  limitation
long-term incentive  compensation  described in Section 5 above,  benefits under
equity  grants and awards  described  in Section 6 above and  employee  benefits
under plans  described in Section 9 above,  that have vested through the date of
termination  or to  which  he may  then  be  entitled  in  accordance  with  the
applicable terms and conditions of each grant, award or plan; and

     (vi)  reimbursement  in accordance  with Sections 9(a) and (b) above of any
business and medical  expenses  incurred by Blau or his Spouse,  as  applicable,
through the date of termination but not yet paid to him.

     (c) Termination due to Retirement.  In the event that Blau's  employment is
terminated  due to his  Retirement,  he shall be  entitled,  in  addition to the

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compensation and benefits  specified in Section 10(b), to the benefits  provided
under the SERP, as provided in Section 9(e) above.

     (d)  Termination  due to Death.  In the event  that  Blau's  employment  is
terminated due to his death, his Beneficiary  shall be entitled,  in addition to
the compensation and benefits  specified in Section 10(b), to his Salary payable
for the  remainder  of the  Employment  Term at the rate in  effect  immediately
before such termination.

     (e) Termination due to Disability.  In the event of Disability,  Griffon or
Blau may terminate Blau's employment.  If Blau's employment is terminated due to
Disability,  he shall be entitled,  in addition to the compensation and benefits
specified  in Section  10(b),  to his Salary  payable for the  remainder  of the
Employment  Term at the rate in  effect  immediately  before  such  termination,
offset by any  long-term  disability  insurance  benefit  that  Griffon may have
elected to provide for him.

     (f)  Termination  by  Griffon  for  Cause.  Griffon  may  terminate  Blau's
employment hereunder for Cause only upon written notice to Blau not less than 30
days prior to any intended  termination,  which notice shall specify the grounds
for such termination in reasonable detail.  Cause shall in no event be deemed to
exist except upon a finding  reflected  in a  resolution  approved by a majority
(excluding  Blau) of the  members  of the  Board  (whose  findings  shall not be
binding  upon or entitled to any  deference  by any court,  arbitrator  or other
decision-maker  ruling on this  Agreement) at a meeting of which Blau shall have
been  given  proper  notice  and at which  Blau (and his  counsel)  shall have a

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reasonable  opportunity to present his case. In the event that Blau's employment
is  terminated  for Cause,  he shall be entitled  only to the  compensation  and
benefits specified in Section 10(b).

     (g) Termination Without Cause or by Blau for Good Reason.

     (i) Termination  without Cause shall mean termination of Blau's  employment
by Griffon and shall exclude termination (A) due to death,  Disability or Cause,
(B) by Blau voluntarily or (C) by mutual written  agreement of Blau and Griffon.
Griffon shall provide Blau 15 days' prior written  notice of  termination  by it
without Cause,  and Blau shall provide  Griffon 15 days' prior written notice of
his termination for Good Reason.

     (ii) In the event of  termination by Griffon of Blau's  employment  without
Cause or of termination  by Blau of his employment for Good Reason,  he shall be
entitled,  in addition to the  compensation  and  benefits  specified in Section
10(b), to:

     (A) a lump-sum payment equal to the Salary payable to him for the remainder
of  the  Employment  Term  at  the  rate  in  effect   immediately  before  such
termination;

     (B) a lump sum payment equal to the 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;

     (C) continued  medical  reimbursement  for the remainder of the  Employment
Term and  thereafter  the lifetime  medical  benefits  described in Section 9(b)
above;

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     (D) a lump-sum  payment equal to the then present  value of the excess,  if
any, of (x) the retirement  benefit to which Blau would have been entitled if he
had remained  employed under this Agreement until age 72 (calculated and payable
as provided in the SERP) over (y) the early retirement  benefit actually payable
to him; and

     (E)  continued  participation  in all  employee  benefit  plans or programs
available to Griffon employees  generally in which Blau was participating on the
date of  termination of his  employment  until the end of the  Employment  Term;
provided;   however,   that  (x)  if  Blau  is  precluded  from  continuing  his
participation in any employee benefit plan or program as provided in this clause
(E), he shall be entitled to the after-tax  economic  equivalent of the benefits
under the plan or program in which he is unable to participate  until the end of
the  Employment  Term, and (y) the economic  equivalent of any benefit  foregone
shall be deemed to be the lowest  cost that Blau would incur in  obtaining  such
benefit on an individual basis; and

     (F) other benefits in accordance with applicable  plans and programs of the
Company.

     (iii)  Prior  written  consent  by Blau to any of the events  described  in
Section 1(k) above shall be deemed a waiver by him of his right to terminate for
Good Reason under this Section 10(g) solely by reason of the events set forth in
such waiver.

     (h) Voluntary  Termination  by Blau.  At any time after  December 31, 2001,
Blau shall have the right,  upon 60 days' prior written  notice,  voluntarily to
terminate  his  employment  without Good Reason,  in which event his  employment
shall cease and the  Employment  Term shall  terminate  as of the date stated in
such  notice, and  the  Consulting Period  shall  begin on  the  next succeeding

                                       18
<PAGE>

business day, and he shall be entitled to receive  compensation  and benefits as
if Griffon  had  terminated  his  employment  for Cause,  as provided in Section
10(f).

     (i) Change in Control.  Notwithstanding  anything  to the  contrary in this
Section  10,  termination  of  Blau's  employment  within  the  one-year  period
following  a Change  in  Control  for any  reason  other  than  Cause,  death or
Disability,  shall  be  governed  by  Section  10(g).  In the  event of any such
termination,  Blau shall be entitled to compensation  and benefits in accordance
with the provisions of Section 10(g)(ii).

     11. NO DUTY TO MITIGATE.

     Blau shall not be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or otherwise,  nor
will any payment  hereunder  be subject to offset in the event Blau does receive
compensation for services from any other source.

     12. PARACHUTES.

     (a)  Application.  If all, or any portion,  of the payments  provided under
this Agreement,  and/or any other payments and benefits that Blau receives or is
entitled to receive from Griffon,  a Subsidiary or any other person,  whether or
not under an existing  plan,  arrangement  or other  agreement,  constitutes  an
excess  "parachute  payment"  within the meaning of Section  280G(b) of the Code
(each such  parachute  payment,  a "Parachute  Payment")  and will result in the
imposition  on Blau of an excise tax under  Section 4999 of the Code,  then,  in

                                       19
<PAGE>

addition to any other benefits to which Blau is entitled  under this  Agreement,
Griffon  shall pay him an amount in cash  equal to the sum of the  excise  taxes
payable  by him by reason  of  receiving  Parachute  Payments,  plus the  amount
necessary to put him in the same after-tax position (taking into account any and
all  applicable  federal,  state and local excise,  income or other taxes at the
highest possible  applicable rates on such Parachute Payments (including without
limitation  any  payments  under this Section 12) as if no excise taxes had been
imposed with respect to Parachute Payments (the "Parachute Gross-up").

     (b)  Computation.  The amount of any payment under this Section 12 shall be
computed by a certified public accounting firm of national  reputation  selected
by Griffon and  acceptable to Blau. If Griffon or Blau disputes the  computation
rendered by such accounting firm, Griffon shall select an alternative  certified
public  accounting  firm  of  national  reputation  to  perform  the  applicable
computation.  If the two  accounting  firms cannot agree upon the  computations,
Blau and Griffon shall jointly appoint a third certified public  accounting firm
of  national  reputation  within 10  calendar  days  after  the two  conflicting
computations  have been rendered.  Such third  accounting firm shall be asked to
determine  within 30 calendar days the computation of the Parachute  Gross-up to
be paid to Blau, and payments shall be made accordingly.


     (c) Payment.  In any event,  Griffon shall pay to Blau or pay on his behalf
the Parachute  Gross-up as computed by the accounting firm initially selected by
Blau by the time any taxes payable by him as a result of the Parachute  Payments
become due,  with Blau agreeing to return the excess amount of such payment over
the final computation rendered from the process described in Section 12(b). Blau

                                       20
<PAGE>

and Griffon shall provide the accounting  firms with all information that any of
them reasonably deems necessary in order to compute the Parachute Gross-up.  The
cost  and  expenses  of  all  the  accounting  firms  retained  to  perform  the
computations described above shall be borne by Griffon.

     In the event that the Internal  Revenue  Service  ("IRS") or the accounting
firm  computing the Parachute  Gross-up  finally  determines  that the amount of
excise taxes thereon  initially paid was insufficient to discharge Blau's excise
tax liability, Griffon shall make additional payments to him as may be necessary
to reimburse him for discharging the full liability.

     Blau shall apply to the IRS for a refund of any excise taxes paid and remit
to  Griffon  the  amount of any such  refund  that he  receives.  Griffon  shall
reimburse  Blau for his expenses in seeking a refund of excise taxes and for any
interest and penalties imposed on excise taxes that he is required to pay.

     13. CONSULTING PERIOD.

     (a) General. Effective upon the end of the Employment Term (but only if the
Employment  Term  ends  by  reason  of  its  expiration  or,  if  earlier,  upon
termination of Blau's  employment (i)  voluntarily,  (ii) by mutual agreement or
(iii) by Retirement),  Blau shall become a consultant to Griffon, in recognition
of the  continued  value to Griffon of his extensive  knowledge  and  expertise.
Unless earlier  terminated,  as provided in Section 13(e), the Consulting Period
shall continue for five years.


                                       21
<PAGE>

     (b) Duties and Extent of Services.

     (i) During the Consulting  Period,  Blau shall consult with Griffon and its
senior executive  officers  regarding its respective  businesses and operations.
Such  consulting  services  shall not require  more than 50 days in any calendar
year,  nor more than one day in any week,  it being  understood  and agreed that
during the  Consulting  Period  Blau shall have the right,  consistent  with the
prohibitions  of Sections 14 and 15 below,  to engage in  full-time or part-time
employment with any business enterprise that is not a competitor of Griffon.

     (ii) Blau's  service as a  consultant  shall only be required at such times
and such  places  as shall  not  result in  unreasonable  inconvenience  to him,
recognizing his other business  commitments  that he may have to accord priority
over the performance of services for Griffon. In order to minimize  interference
with  Blau's  other  commitments,  his  consulting  services  may be rendered by
personal  consultation  at his residence or office  wherever  maintained,  or by
correspondence   through  mail,   telephone,   fax  or  other  similar  mode  of
communication at times, including weekends and evenings, most convenient to him.

     (iii) During the Consulting Period, Blau shall not be obligated to serve as
a member of the Board or to occupy any office on behalf of Griffon or any of its
Subsidiaries.

     (c)  Compensation.  During the Consulting  Period,  Blau shall receive from
Griffon each year an amount equivalent to two-thirds of his Salary at the end of
the  Employment  Term,  payable  and  subject to annual  increase as provided in
Section 3 above.

                                       22
<PAGE>

     (d) Disability.  In the event of Disability  during the Consulting  Period,
Griffon or Blau may terminate Blau's consulting  services.  If Blau's consulting
services are terminated due to Disability, he shall be entitled to compensation,
in accordance with Section 13(c), for the remainder of the Consulting Period.

     (e) Termination. The Consulting Period shall terminate after five years or,
if earlier, upon Blau's death or upon his failure to perform consulting services
as provided in Section 13(b),  pursuant to 30 days' written notice by Griffon to
Blau  of the  grounds  constituting  such  failure  and  reasonable  opportunity
afforded Blau to cure the alleged failure. Upon any such termination, payment of
consulting  fees and benefits (with the exception of lifetime  medical  benefits
under Section 9(b) above) shall cease.

     (f) Other.  During the Consulting Period, Blau shall be entitled to expense
reimbursement  (including  secretarial,  telephone and similar support services)
and perquisites and medical benefits, pursuant to the terms of Sections 7, 8 and
9(b), respectively.

     14. CONFIDENTIAL INFORMATION.

     (a) General.

     (i) Blau  understands  and  hereby  acknowledges  that as a  result  of his
employment with Griffon he will  necessarily  become informed of and have access
to certain  valuable  and  confidential  information  of Griffon  and any of its
Subsidiaries,  joint ventures and  affiliates,  including,  without  limitation,
inventions,   trade  secrets,  technical  information,   computer  software  and

                                       23
<PAGE>

programs,  know-how and plans  ("Confidential  Information"),  and that any such
Confidential Information,  even though it may be developed or otherwise acquired
by Blau, is the exclusive  property of Griffon to be held by him in trust solely
for Griffon's benefit.

     (ii)  Accordingly,  Blau hereby agrees that, during the Employment Term and
the Consulting  Period and subsequent to both, he shall not, and shall not cause
others to, use, reveal, report,  publish,  transfer or otherwise disclose to any
person,  corporation or other entity any Confidential  Information without prior
written consent of the Board,  except to (A) responsible  officers and employees
of Griffon or (B)  responsible  persons who are in a  contractual  or  fiduciary
relationship  with  Griffon or who need such  information  for  purposes  in the
interest of Griffon.  Notwithstanding,  the foregoing,  the prohibitions of this
clause  (ii) shall not apply to any  Confidential  Information  that  becomes of
general public  knowledge  other than from Blau or is required to be divulged by
court order or administrative process.

     (b) Return of Documents.  Upon  termination of his employment  with Griffon
for any reason or, if applicable, upon expiration of the Consulting Period, Blau
shall promptly deliver to Griffon all plans, drawings,  manuals, letters, notes,
notebooks,   reports,  computer  programs  and  copies  thereof  and  all  other
materials,  including  without  limitation  those  of a secret  or  confidential
nature,  relating  to  Griffon's  business  that are then in his  possession  or
control.

     (c)  Remedies  and  Sanctions.  In the  event  that  Blau is found to be in
violation of Section 14(a) or (b) above,  Griffon shall be entitled to relief as
provided in Section 16 below.

                                      24
<PAGE>

     15. NONCOMPETITION/NONSOLICITATION.

     (a)  Prohibitions.  During the  Employment  Term and,  if  applicable,  the
Consulting  Period,  Blau shall not, without prior written  authorization of the
Board, directly or indirectly, through any other individual or entity:

     (i) become on officer or employee  of, or render any service to, any direct
competitor of Griffon;

     (ii) solicit or induce any customer of Griffon to cease purchasing goods or
services from Griffon or to become a customer of any competitor of Griffon; or

     (iii)  solicit or induce any employee of Griffon to become  employed by any
competitor of Griffon.

     (b)  Remedies  and  Sanctions.  In the  event  that  Blau is found to be in
violation  of  Section  15(a)  above,  Griffon  shall be  entitled  to relief as
provided in Section 16 below.

     (c) Exceptions.  Notwithstanding  anything to the contrary in Section 15(a)
above, its provisions shall not:

     (i) apply if Griffon  terminates  Blau's  employment  without Cause or Blau
terminates  his  employment  for Good Reason,  each as provided in Section 10(g)
above;

     (ii) be  construed  as  preventing  Blau from  investing  his assets in any
business that is not a direct competitor of Griffon; or

     (iii) be construed as preventing  Blau from  maintaining  the same level of
involvement  in the affairs of Aeroflex  Corporation  that he has as of the date
thereof.

                                       25
<PAGE>

     16. REMEDIES/SANCTIONS.

     Blau  acknowledges  that the services he is to render under this  Agreement
are of a unique and  special  nature,  the loss of which  cannot  reasonably  or
adequately be compensated for in monetary damages,  and that irreparable  injury
and damage may result to Griffon in the event of any breach of this Agreement or
default by Blau.  Because of the unique nature of the  Confidential  Information
and the importance of the  prohibitions  against  competition and  solicitation,
Blau further  acknowledges and agrees that Griffon will suffer  irreparable harm
if he fails to comply with his  obligations  under Section 14(a) or (b) above or
Section 15(a) above and that monetary  damages would be inadequate to compensate
Griffon for any such breach.  Accordingly,  Blau agrees that, in addition to any
other remedies available to either Party at law, in equity or otherwise, Griffon
will be entitled to seek  injunctive  relief or specific  performance to enforce
the  terms,  or  prevent  or remedy the  violation,  of any  provisions  of this
Agreement.

     17. BENEFICIARIES/REFERENCES.

     Blau shall be entitled to select (and change, to the extent permitted under
any applicable law) a beneficiary or  beneficiaries  to receive any compensation
or benefit  payable under this  Agreement  following his death by giving Griffon
written  notice  thereof.  In  the  event  of  Blau's  death,  or of a  judicial

                                       26
<PAGE>

determination of his incompetence,  reference in this Agreement to Blau shall be
deemed to refer,  as  appropriate,  to his  beneficiary,  estate or other  legal
representative.

     18. WITHHOLDING TAXES.

     All  payments  to Blau or his  Beneficiary  under this  Agreement  shall be
subject to withholding on account of federal,  state and local taxes as required
by law.

     19. INDEMNIFICATION AND LIABILITY INSURANCE.

     Nothing herein is intended to limit Griffon's  indemnification of Blau, and
Griffon shall  indemnify him to the fullest  extent  permitted by applicable law
consistent with Griffon's  Certificate of Incorporation and By-Laws as in effect
at the beginning of the Employment  Term,  with respect to any action or failure
to act on his part while he is an  officer,  director  or employee of Griffon or
any  Subsidiary.  Griffon  shall  cause  Blau  to be  covered  at all  times  by
directors' and officers' liability insurance on terms no less favorable than the
directors' and officers' liability insurance  maintained by Griffon in effect on
the date hereof in terms of coverage  and  amounts.  Griffon  shall  continue to
indemnify Blau as provided above and maintain such liability  insurance coverage
for him after the Employment Term and, if applicable,  the Consulting Period for
any  claims  that may be made  against  him with  respect  to his  service  as a
director or officer of Griffon or a consultant to Griffon.

                                       27
<PAGE>

     20. EFFECT OF AGREEMENT ON OTHER BENEFITS.

     The  existence  of this  Agreement  shall not  prohibit or restrict  Blau's
entitlement to participate  fully in  compensation,  employee  benefit and other
plans of Griffon in which senior executives are eligible to participate.

     21. ASSIGNABILITY; BINDING NATURE.

     This  Agreement  shall be  binding  upon and  inure to the  benefit  of the
Parties  and  their  respective  successors,  heirs  (in the case of  Blau)  and
assigns.  No rights or  obligations  of  Griffon  under  this  Agreement  may be
assigned  or  transferred  by  Griffon  except  pursuant  to  (a)  a  merger  or
consolidation  in which  Griffon  is not the  continuing  entity  or (b) sale or
liquidation of all or substantially all of the assets of Griffon,  provided that
the  surviving  entity or  assignee or  transferee  is the  successor  to all or
substantially all of the assets of Griffon and such surviving entity or assignee
or transferee  assumes the liabilities,  obligations and duties of Griffon under
this Agreement, either contractually or as a matter of law.

     Griffon  further  agrees  that,  in  the  event  of a  sale  of  assets  or
liquidation  as  described  in the  preceding  sentence,  it shall  use its best
efforts  to have such  assignee  or  transferee  expressly  agree to assume  the
liabilities,  obligations and duties of Griffon  hereunder;  provided,  however,
that   notwithstanding   such  assumption,   Griffon  shall  remain  liable  and
responsible for  fulfillment of the terms and conditions of this Agreement;  and
provided, further, that in no event shall such assignment and assumption of this

                                       28
<PAGE>

Agreement adversely affect Blau's right upon a Change in Control, as provided in
Section 10(i) above.  No rights or  obligations of Blau under this Agreement may
be assigned or transferred by him.

     22. REPRESENTATIONS.

     The  Parties  respectively   represent  and  warrant  that  each  is  fully
authorized and empowered to enter into this  Agreement and that the  performance
of its or his  obligations,  as the case may be, under this  Agreement  will not
violate  any  agreement  between  such  Party  and  any  other  person,  firm or
organization.  Griffon represents and warrants that this Agreement has been duly
authorized  by  all  necessary  corporate  action  and  is  valid,  binding  and
enforceable in accordance with its terms.

     23. ENTIRE AGREEMENT.

     Except to the extent otherwise provided herein, this Agreement contains the
entire  understanding and agreement  between the Parties  concerning the subject
matter hereof and  supersedes  any prior  agreements,  whether  written or oral,
between the Parties  concerning  the subject matter  hereof,  including  without
limitation  the Prior  Agreement.  Payments  and  benefits  provided  under this
Agreement  are in lieu of any  payments or other  benefits  under any  severance
program or policy of Griffon to which Blau would otherwise be entitled.

                                       29
<PAGE>

     24. AMENDMENT OR WAIVER.

     No  provision in this  Agreement  may be amended  unless such  amendment is
agreed  to in  writing  and  signed by both Blau and an  authorized  officer  of
Griffon.  No  waiver  by either  Party of any  breach by the other  Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent  time.  Any waiver must be in writing and
signed by the Party to be charged  with the waiver.  No delay by either Party in
exercising  any right,  power or privilege  hereunder  shall operate as a waiver
thereof.

     25. SEVERABILITY.

     In the event  that any  provision  or portion  of this  Agreement  shall be
determined to be invalid or unenforceable  for any reason,  in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.

     26. SURVIVAL.

     The respective  rights and  obligations of the Parties under this Agreement
shall survive any termination of Blau's employment with Griffon.

                                       30
<PAGE>

     27. GOVERNING LAW/JURISDICTION.

     This  Agreement  shall be  governed by and  construed  and  interpreted  in
accordance  with  the laws of New  York,  without  reference  to  principles  of
conflict of laws.

     28. COSTS OF DISPUTES.

     Griffon  shall pay, at least  monthly,  all costs and  expenses,  including
attorneys'  fees and  disbursements,  of Blau in connection with any proceeding,
whether or not instituted by Griffon or Blau,  relating to any provision of this
Agreement,  including  but not  limited to the  interpretation,  enforcement  or
reasonableness  thereof;  provided,   however,  that,  if  Blau  instituted  the
proceeding and the judge or other  decision-maker  presiding over the proceeding
affirmatively finds that his claims were frivolous or were made in bad faith, he
shall pay his own costs and  expenses  and,  if  applicable,  return any amounts
theretofore  paid to him or on his behalf  under this  Section  28.  Pending the
outcome of any proceeding, Griffon shall pay Blau all amounts due to him without
regard  to  the  dispute;  provided,  however,  that  if  Griffon  shall  be the
prevailing  party in such a proceeding,  Blau shall  promptly  repay all amounts
that he received during pendency of the proceeding  (other than amounts received
pursuant to this Section 28).

     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

                                       31
<PAGE>

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
        100 Jericho Quadrangle
        Jericho, NY  11753-2794
        Attention: Patrick Alesia

FAX:  (516) 938-5644

With a copy to:
 Blau, Kramer, Wactlar & Lieberman, P.C.
 100 Jericho Quadrangle
 Jericho, NY  11753


If to Blau:
 125 Wheatley Road
 Old Westbury, NY  11568


With a copy to:
 Harvey R. Blau
 c/o Griffon Corporation
 100 Jericho Quadrangle
 Jericho, NY  11753

     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.

                                       32
<PAGE>

     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 May
2, 2001.

                                                Griffon Corporation


         /s/ Dina Bottari                             /s/ Robert Balemian
Attest:  ___________________________            By: _________________________




        /s/ Frances L. Stelz                          /s/ Harvey R. Blau
Witness: ___________________________                _________________________
                                                          Harvey R. Blau






                                       33