Exhibit
      10.1

    
 

    SEVERANCE
      AGREEMENT

     

    THIS
      SEVERANCE AGREEMENT
      (this
“Agreement”), made and entered into as of November 2, 2007, which shall be
      effective upon November 30, 2007 (“the Effective Date”), by and between Griffon
      Corporation, a Delaware corporation, with its principal office located at 100
      Jericho Quadrangle, Jericho, New York 11753 (hereinafter, together with its
      subsidiaries, collectively referred to as “the Corporation”) and Frank Smith who
      resides at 6555 Adams Avenue, Cincinnati, OH 45243 (hereinafter referred to
      as
“the Executive”). 

     

    WITNESSETH:

     

    WHEREAS,
      the
      Executive has had extensive experience in the business and affairs of the
      Corporation and is a valuable member of the management team; and

     

    WHEREAS,
      the
      Board of Directors of Griffon Corporation (the “Board”) has determined that it
      is appropriate to reinforce the continued attention of certain key management
      employees, including the Executive, to their assigned duties without distraction
      if the possibility should arise of a change in control of the
      Corporation;

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and agreements hereinafter set forth,
      the
      parties hereto agree as follows:

     

    1.     EMPLOYMENT.
      During
      the term of this Agreement, the Executive agrees to remain in the employ of
      the
      Corporation and to continue to perform the Executive’s regular duties as an
      executive of the Corporation.

     

    2.     CHANGE
      IN CONTROL.
      No
      benefits shall be payable hereunder unless there shall have been a Change in
      Control of the Corporation, as set forth below, and the Executive’s employment
      by Griffon Corporation shall thereafter have been terminated in accordance
      with
      Section 3 hereof. For purposes of this Agreement, a “Change in Control” shall
      mean the occurrence of any of the following events after the date of this
      Agreement:

     

    2.1     the
      acquisition, directly or indirectly, by a “person” (within the meaning of
      Section 13(d)(3) of the Securities Exchange Act of 1934, as amended from time
      to
      time, including rules thereunder and successor provisions and rules thereto
      (the
“Exchange Act”) (a “Person”) of beneficial ownership (within the meaning of Rule
      13d-3 promulgated under the Exchange Act) of more than 30% of the combined
      voting power of the voting securities of Griffon Corporation entitled to vote
      generally in the election of directors (the “Voting Securities”); provided,
      however, that the following acquisitions shall not constitute a Change in
      Control: (a) any acquisition by or from Griffon Corporation or any corporation
      or other entity in which the Griffon Corporation owns or controls directly
      or
      indirectly at least 50 percent of the total combined voting power represented
      by
      all classes of stock issued by such corporation, or in the case of a
      noncorporate entity, at least 50% of the profits or capital interest in such
      entity (a “Subsidiary,”) or by any employee benefit plan (or related trust)
      sponsored or maintained by Griffon Corporation or any Subsidiary, (b) any
      acquisition by an individual who as of the effective date of the Plan is a
      member of the Board, (c) any acquisition by any underwriter in any firm
      commitment underwriting of securities to be issued by Griffon Corporation,
      or
      (d) any acquisition by any corporation (or other entity) if, immediately
      following such acquisition, 65% or more of the then outstanding shares of common
      stock (or other equity unit) of such corporation (or other entity) and the
      combined voting power of the then outstanding voting securities of such
      corporation (or other entity), are beneficially owned, directly or indirectly,
      by all or substantially all of the individuals or entities who, immediately
      prior to such acquisition, were the beneficial owners of the then outstanding
      Voting Securities in substantially the same proportions, respectively, as their
      ownership immediately prior to the acquisition of the stock and Voting
      Securities; or

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    2.2     the
      following individuals cease for any reason to constitute a majority of the
      Board: individuals who, as of the date of the this Agreement, constitute the
      Board and any new director (other than a director whose initial assumption
      of
      office is in connection with an actual or threatened election contest,
      including, but not limited to, a consent solicitation relating to the election
      of directors of Griffon Corporation) whose appointment or election by the Board
      or nomination for election by the stockholders of Griffon Corporation was
      approved and recommended by a vote of at least two-thirds of the directors
      then
      still in office who either were directors on the effective date of the Plan
      or
      whose appointment, election or nomination for election was previously so
      approved or recommended; or

     

    2.3     the
      consummation of the sale or other disposition of all or substantially all of
      the
      assets of Griffon Corporation, other than to an entity, at least 65% of the
      Voting Securities of which are owned by Persons in substantially the same
      proportions as their ownership of Griffon Corporation immediately prior to
      such
      sale; or

     

    2.4     the
      consummation of a merger, consolidation, statutory share exchange or similar
      form of corporate transaction involving the Corporation or any of its
      Subsidiaries that requires the approval of the Corporation's stockholders,
      whether for such transaction or the issuance of securities in the transaction
      (a
      "Business Combination"), unless immediately following such Business Combination:
      (i) more than 65% of the total voting power of (x) the corporation resulting
      from such Business Combination (the "Surviving Corporation"), or (y) if
      applicable, the ultimate parent corporation that directly or indirectly has
      beneficial ownership of 100% of the voting securities eligible to elect
      directors of the Surviving Corporation (the "Parent Corporation"), is
      represented by Voting Securities that were outstanding immediately prior to
      such
      Business Combination (or, if applicable, is represented by shares into which
      such Corporation Voting Securities were converted pursuant to such Business
      Combination), and such voting power among the holders thereof is in
      substantially the same proportion as the voting power of such Voting Securities
      among the holders thereof immediately prior to the Business Combination;
      or

     

    
      
         

      

      
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    2.5     the
      consummation of a plan of complete liquidation or substantial dissolution of
      Griffon Corporation, other than a liquidation or substantial dissolution, which
      would result in the Voting Securities of the entity after such liquidation
      or
      dissolution, if any, continuing to represent (whether by remaining outstanding
      or by being converted to voting securities of the surviving entity) 65% or
      more
      of the Voting Securities or the voting power of the voting securities of such
      surviving entity outstanding immediately after such liquidation or dissolution,
      and such voting power among the holders thereof is in substantially the same
      proportion as the voting power of such Voting Securities among the holders
      thereof immediately prior to the such liquidation or dissolution;
      or

     

    2.6     the
      sale,
      transfer, assignment, distribution or other disposition by Griffon Corporation
      and/or one of its Subsidiaries, in one transaction, or in a series of related
      transactions within any period of 18 consecutive calendar months (including,
      without limitation, by means of the sale, transfer, assignment, distribution
      or
      other disposition of the capital stock of any Subsidiary or Subsidiaries),
      of
      assets which account for an aggregate of 50% or more of the consolidated
      revenues of Griffon Corporation and the Subsidiaries of Griffon Corporation,
      as
      applicable, as determined in accordance with U.S. generally accepted accounting
      principles, for the fiscal year most recently ended prior to the date of such
      transaction (or, in the case of a series of transactions as described above,
      the
      first such transaction); provided, however, that no such transaction shall
      be
      taken into account if substantially all the proceeds thereof (whether in cash
      or
      in kind) are used after such transaction in the ongoing conduct by Griffon
      Corporation and/or its Subsidiaries) of the business conducted by Griffon
      Corporation and/or its Subsidiaries prior to such transaction. 

     

    3.     TERMINATION
      FOLLOWING A CHANGE IN CONTROL.
      If any
      of the events described in Section 2 hereof constituting a Change in Control
      of
      Griffon Corporation shall have occurred, the Executive, if terminated during
      the
      twenty four (24) months following such
      Change in Control, shall be entitled to the benefits provided in Section 4
      hereof, unless such termination is due to the Executive’s death or Disability,
      or is by Griffon Corporation for Cause, or is by the Executive for other than
      Good Reason. In the event that, upon the occurrence of a Change in Control,
      the
      Executive is eligible for retirement in accordance with the terms and conditions
      of any applicable corporate retirement plan or program in effect immediately
      preceding such Change in Control, the Executive’s eligibility for immediate
      retirement benefits, and any request therefor, shall not preclude the
      Executive’s receipt of severance benefits under Section 4 hereof as a result of
      any termination without Cause or for Good Reason. For purposes of this
      Agreement, the following definitions shall apply:

     

    3.1     “Cause”
      shall mean (i) the willful and continued failure by the Executive to
      substantially perform the Executive’s duties (other than any such failure
      resulting from incapacity due to physical or mental illness); or (ii) conviction
      of a felony or acts of dishonesty resulting in gain or personal enrichment
      at
      the expense of the Corporation; or (iii) the Executive’s willful misconduct or
      insubordination which is materially injurious to the Corporation. With respect
      to (i) and (iii) “Cause” shall only be determined to exist until Griffon
      Corporation presents written notice to the Executive specifically identifying
      the alleged circumstances or actions giving rise to Cause (a “Cause Notice”),
      and the Executive fails to correct such action or circumstances within 20 days
      of receiving the Cause Notice. For purposes of this paragraph, no act or failure
      to act on the Executive’s part shall be considered as willful unless done, or
      omitted to be done, by the Executive not in good faith and without reasonable
      belief that the action or omission was in the best interests of the
      Corporation.

     

    
      
         

      

      
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    3.2     “Disability”
      shall mean the illness or other mental or physical disability of the Executive,
      as determined by a physician reasonably acceptable to the Corporation and the
      Executive, resulting in the Executive’s failure to perform substantially all of
      his applicable material duties for a period of six consecutive months and to
      return to the performance of such duties within 30 days after receiving written
      notice of termination.

     

    3.3     “Good
      Reason” shall mean (i) reduction in the Executive’s (then) current base salary
      immediately preceding the Change in Control; (ii) diminution, reduction or
      other
      adverse change in the annual bonus opportunity or other incentive compensation
      opportunities available to the Executive immediately preceding the Change in
      Control; (iii) the Corporation’s failure to pay the Executive any amounts
      otherwise earned, vested or due under any compensation plan or human resources
      policy of the Corporation immediately preceding the Change in Control; (iv)
      diminution of the Executive’s title, position, authority or responsibility; (v)
      assignment to the Executive of duties incompatible with the position occupied
      by
      the Executive immediately preceding the Change in Control; (vi) a change in
      the
      organizational position to which the Executive directly reports; or (vii)
      relocation of the Executive’s position to a location more than 35 miles from the
      location to which the Executive was assigned immediately preceding the Change
      in
      Control. 

     

    4.     CERTAIN
      SEVERANCE BENEFITS ON TERMINATION.
      If,
      after any Change in Control (as defined herein) shall have occurred, the
      Executive’s employment shall be terminated during the twenty-four (24) months
      following the date of such Change in Control (i) by the Corporation other than
      for death, Disability or Cause or (ii) by the Executive for Good Reason, the
      Executive shall be entitled to certain severance benefits (hereinafter “the
      Severance Benefits”) as provided below:

     

    4.1     The
      Corporation shall pay the Executive’s full base salary through the date of
      termination at the rate which is the higher of the (then) current annual rate
      or
      the annual rate in effect immediately prior to the date of any Change in
      Control. The Corporation shall also pay the Executive the amount, if any, of
      any
      unpaid earned annual bonus for the preceding fiscal year, as well as a pro
      rata
      portion of the higher of (i) the earned annual bonus for the preceding fiscal
      year or (ii) the target or projected annual bonus for the fiscal year in which
      the termination of employment occurs. In addition, the Corporation shall
      continue in full force and effect through the date of termination the
      Executive’s participation in all stock ownership, stock purchase or stock option
      plans, all health and welfare benefit plans, and all insurance and disability
      plans as may be in effect at the date of the Change in Control.

     

    4.2     Subject
      to Section 4.4 and 4.5 hereof, the Corporation shall pay as Severance Benefits
      to the Executive on or before the fifth (5th) day following the date of
      termination of employment, a lump sum payment (“the lump sum payment”) equal to
      two and fifty one hundredths (2.50) times the sum of (i) the Executive’s base
      salary at the rate which is the higher of the (then) current annual rate or
      the
      annual rate in effect immediately prior to the date of any Change in Control
      and
      (ii) the average of the annual bonuses received by the Executive for each of
      the
      last three fiscal years of the Corporation and its affiliates. Such lump sum
      payment shall be subject to all applicable Federal, state and local income
      and
      FICA taxes including all required withholding amounts.

     

    
      
         

      

      
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    4.3     For
      the
      continued benefit of the Executive and the Executive’s eligible dependents, the
      Corporation shall maintain in full force and effect until the earlier of (i)
      December 31 of the second calendar year following the calendar year of
      termination or (ii) the Executive’s commencement of full-time employment with a
      new employer, at the same cost as is paid by similarly-situated continuing
      employees all medical and health plans and programs for which the Executive
      was
      eligible immediately prior to the date of termination, provided that the
      Executive’s continued participation is possible under the general terms and
      provisions of such plans and programs, and subject further to such periodic
      changes in such plans and programs as are generally applicable to all
      participants in such plans and programs. Any such claims for reimbursement
      of a
      proper medical or health expense shall be paid as soon as administratively
      feasible following the proper submission of such expense; provided however,
      that
      all such claims must be submitted and paid by the end of the year following
      the
      year in which such expense is incurred.
      The
      Executive will be responsible for any income tax liability arising out of any
      continued participation in such health and medical plans and programs, and
      notwithstanding the provision of this Section 4.3, no additional employment
      service credits shall be given for the period of such continued
      participation.

     

    4.4     The
      Severance Benefits to be provided to the Executive hereunder and all other
      payments or benefits which are “parachute payments” (as defined in Section
      280(G)(b)(2)(A) of the Code) payable to the Executive under other arrangements
      or agreements (the “Total Payments”) shall be adjusted as set forth in this
      Section 4.4. If the Total Payments as a result of any Change in Control would
      (in the aggregate) result in an amount not being deductible under Code Section
      280G or an excise tax under Section 4999, the Total Payments shall be reduced
      to
      the extent necessary so that the deductibility of the full amount of such
      reduced Total Payments is not limited by Code Section 280G or such Total Payment
      is not subject to an excise tax under Section 4999.

     

    4.5     Notwithstanding
      anything herein to the contrary, if any payments due under this Agreement would
      subject Executive to any tax imposed under Section 409A of the “Code” if such
      payments were made at the time otherwise provided herein, then the payments
      that
      cause such taxation shall be payable in a single lump sum on the first day
      which
      is at least six months after the date of the Executive’s “separation of service”
as set forth in Code Section 409A and the regulations issued
      thereunder.

     

    4.6     The
      Executive shall not be required to mitigate or offset the amount of any
      Severance Benefits or other benefits provided under this Section 4 by seeking
      employment or otherwise, nor shall the amount of any payment provided under
      this
      Section 4 be reduced by any compensation earned by the Executive as the result
      of employment by another employer after the date of termination from the
      Corporation.

     

    
      
         

      

      
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    5.     RESTRICTIVE
      COVENANTS.

     

    5.1     Executive
      agrees at all times during Executive’s employment with the Corporation and at
      all times thereafter (except as otherwise required by applicable law, regulation
      or legal process) that Executive shall hold in strictest confidence and not
      to
      use for his own benefit or the benefit of any other person, or to disclose
      to
      any person without authorization from the Corporation, any Confidential
      Information. “Confidential Information” means any and all confidential or
      proprietary business information of the Corporation or its affiliates,
      including, without limitation, information relating to the Corporation’s or its
      affiliates’ trade secrets, software and technology architecture, networks,
      business methodologies, facilities, financial and operational information,
      contracts, customer lists, marketing or sales prospect lists, “know how”, and
      all copies, reproductions, notes, analyses, compilations, studies,
      interpretations, summaries and other documents in connection with the foregoing.
      Confidential Information does not include any information which (i) is or
      becomes publicly known or available other than as a result of wrongful
      disclosure by Executive, (ii) becomes available to Executive on a
      non-confidential basis from a source which, to Executive’s knowledge, is not
      prohibited from disclosing such Confidential Information to Executive, or (iii)
      is generally known in the industry in which the Corporation or its affiliates
      operate and pertains to activities or business not specific to the Corporation
      or its affiliates. 

     

    5.2     From
      the
      Effective Date through the date that is twenty-four (24) months following the
      Executive’s termination of employment (the “Restriction Period”), Executive will
      not, without the prior written consent of the Board, engage in “Competition” (as
      defined below) with the Corporation. For purposes of this Agreement, if
      Executive takes any of the following actions Executive will be engaged in
“Competition”: if Executive is engaging in or carrying on, directly or
      indirectly, any enterprise, whether as an advisor, principal, agent, partner,
      officer, director, employee, stockholder, associate or consultant to any person,
      partnership, corporation or any other business entity, that is engaged in a
      business that is competitive with any material business that the Corporation
      is
      engaged in at the time of the Executive’s termination of employment.
      Notwithstanding anything herein to the contrary, “Competition” will not include
      the ownership of less than a one percent equity interest in a publicly held
      company and exercise of rights appurtenant thereto.

     

    5.3     If
      a
      court or arbitrator holds that the duration, scope, area or other restrictions
      stated herein are unreasonable under circumstances then existing, the
      Corporation and the Executive agree that the maximum duration, scope, area
      or
      other restrictions reasonable under such circumstances will be substituted
      for
      the stated duration, scope, area or other restrictions.

     

    5.4     The
      existence of any claim or cause of action of Executive against the Corporation,
      whether or not predicated upon the terms of this Agreement, will not constitute
      a defense to the enforcement of the provisions of this Section 5.

     

    
      
         

      

      
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    5.5     The
      parties acknowledge that any violation of this Section 5 can cause substantial
      and irreparable harm to the Corporation. Therefore, the Corporation will be
      entitled to pursue any and all legal and equitable remedies, including but
      not
      limited to any injunctions.

     

    6.     PROPRIETARY
      INFORMATION.
      Upon
      termination, except to the extent required to render services to or on behalf
      of
      the Corporation, the Executive will deliver to the Corporation any documents,
      files, copies which constitute Proprietary Information (whether in written,
      printed, electronic or other form). “Proprietary Information” means all
      information or data with respect to the conduct or details of the businesses
      of
      the Corporation and its affiliates (whether constituting a trade secret or
      not)
      including, without limitation, methods of operation, customers and customer
      lists, supplier lists, sales data, details of contracts with customers,
      consultants, suppliers or employees, products, proposed products, former
      products, proposed, pending or completed acquisitions of any company, division,
      product line or other business unit, prices and pricing policies, fees, costs,
      plans, designs, technology, inventions, trade secrets, know how, software,
      marketing methods, policies, plans, personnel, suppliers, competitors, markets
      or other specialized information or proprietary matters of the Corporation,
      or
      any of its affiliates.

     

    7.     TERM
      OF AGREEMENT.
      This
      Agreement shall have an original term expiring on July 18, 2008, and shall
      thereafter be automatically renewed for successive one-year terms unless the
      Corporation has notified the Executive of its election not to renew the term
      of
      this Agreement not less than 120 days before the expiration of the (then)
      current term. Notwithstanding anything in this Agreement to the contrary, this
      Agreement shall not terminate in the event that a Change in Control (as defined
      herein) shall have occurred.

     

    8.     SUCCESSORS;
      BINDING AGREEMENT.
      The
      Corporation shall require any successor (whether direct or indirect by purchase,
      merger, consolidation or otherwise) to all or substantially all of the business,
      equity and/or assets of the Corporation to expressly assume and agree to perform
      this Agreement in the same manner and to the same extent that the Corporation
      would be required to perform if no such succession had taken place. Failure
      of
      the Corporation to obtain such agreement prior to the effective date of any
      such
      succession shall be a breach of this Agreement and shall entitle the Executive
      to compensation from the Corporation in the same amount and on the same terms
      as
      that which the Executive would be entitled to hereunder as if the Executive’s
      employment by the Corporation were immediately terminated without Cause or
      for
      Good Reason. As referred to in this Agreement, “Corporation” shall mean the
      Corporation as herein defined and any successor to its business, equity and/or
      assets which becomes bound by the terms and conditions of this Agreement by
      operation of law. This Agreement shall inure to the benefit and be enforceable
      by the Executive’s personal or legal representatives, executors, administrators,
      successors, heirs, distributees, devisees and legatees. If the Executive should
      die while any amount would still be payable hereunder, all such amounts shall
      be
      paid in accordance with the terms of this Agreement to the Executive’s
      estate.

     

    
      
         

      

      
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    9.     NOTICES.
      Any and
      all notices which may be given hereunder by either party to the other shall
      be
      sufficient if in writing and sent by registered mail to the respective party
      at
      its or their last known address.

     

    10.     MODIFICATIONS
      AND WAIVERS; ENTIRE AGREEMENT.
      No
      agreements or representations, express or implied, with respect to the subject
      matter hereof have been made by either party which are not expressly set forth
      in this Agreement. No provisions of this Agreement may be modified, waived
      or
      discharged unless such modification, waiver or discharge is agreed to in writing
      signed by the Executive and the Chief Executive Officer of the Corporation.
      No
      waiver by either party hereto at any time of any breach by the other party
      hereto of any condition or provision of this Agreement to be performed by such
      other party shall be deemed a waiver of similar or dissimilar provisions or
      conditions at the same or any prior or subsequent time. This Agreement shall
      supersede the Severance Agreement entered into by and between the Executive
      and
      the Corporation as of July 18, 2006 (the “Former Severance Agreement”); however,
      this Agreement shall not supersede or in any way limit the rights, duties or
      obligations the Executive may have under any written agreement other than the
      Former Severance Agreement with the Corporation including, without limitation,
      any employment agreement now in effect or subsequently entered into by and
      between the Executive and the Corporation.

     

    11.     GOVERNING
      LAW.
      This
      Agreement shall be governed by and construed and interpreted in accordance
      with
      the laws of the State of New York without reference to principles of conflict
      of
      laws thereof.

     

    12.     COUNTERPARTS.
      This
      Agreement may be executed in one or more counterparts each of which shall be
      deemed to be an original, but all of which together shall constitute one and
      the
      same instrument.

     

    13.     DISPUTES.
      Any
      dispute or controversy arising under, our of or in connection with this
      Agreement may be resolved in any court of competent jurisdiction.

     


    
      
         

      

      
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    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Agreement as the day and year first written
      above.

     

    
      	 	 	 
	 	
              GRIFFON
                CORPORATION:

            
	 
 	 
 	 
 
	 	By:  	/s/ Harvey
              R.
              Blau 
	 	
              
Harvey
              R. Blau
	 	
              Chairman
                and Chief Executive Officer

            


    

     

    
      	 	 	 
	 	EXECUTIVE:
	 
 	 
 	 
 
	 	By:  	/s/ Franklin
              H. Smith
	 	
              
Name: Frank
              Smith 
	 	 


    

     

    
      	 	 	 
	 	
              WITNESS:

            
	 
 	 
 	 
 
	 	 Signature:	 /s/ Gary T. Moomjian
	
                

            	
            
	 	
            
	
              Name: Gary
                T. Moomjian

            	
            


    

    
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