Document:

Exhibit 10.03 - Stock Option Award of Mark J. Costa

Form
    10-Q
    EXHIBIT
      10.03

    

    

    AWARD
      NOTICE 

    

    NOTICE
      OF NONQUALIFIED STOCK OPTION

    GRANTED
      PURSUANT TO THE

    EASTMAN
      CHEMICAL COMPANY

    2002
      OMNIBUS LONG-TERM COMPENSATION PLAN

    

    

    Grantee:
      Mark J. Costa

    

    Number
      of
      Shares: 65,000

    

    Option
      Price: $56.52

    

    Date
      of
      Grant: June 1, 2006

    

    
      	1.  
                	
              Grant
                of Option.
                This Award Notice serves to notify you that the Compensation and
                Management Development Committee (the “Committee”) of the Board of
                Directors of Eastman Chemical Company ("Company") has granted to
                you,
                under the Company’s 2002 Omnibus Long-Term Compensation Plan (the "Plan"),
                a nonqualified stock option ("Option") to purchase, on the terms
                and
                conditions set forth in this Award Notice and the Plan, up to the
                number
                of shares of its $.01 par value Common Stock ("Common Stock") set
                forth
                above, at a price equal to $56.52 per share. The Plan is incorporated
                herein by reference and made a part of this Award Notice. Capitalized
                terms not defined herein have the respective meanings set forth in
                the
                Plan. The principal terms of the Plan, and of the offer by the Company
                of
                the shares of Common Stock covered by the Option, are described in
                the
                Prospectus for the Plan, which Prospectus will be delivered to you
                by the
                Company.

            

    

    

    
      	2. 
                	
              Period
                of Option and Limitations on Right to Exercise.
                Subject to earlier cancellation of all or a portion of the Option
                as
                described in Sections 6 and 7 of this Award Notice, the Option will
                expire
                at 4:00 p.m., Eastern Standard Time, on May 31, 2016 ("Expiration
                Date").

            

    

    

    
      	3. 
               	
              Exercise
                of Option.
                

            

    

    

    
      	(a)	
              Subject
                to the terms set forth in this Award Notice, the Option will become
                exercisable as to one-third of the shares covered hereby on June
                1, 2007,
                and one-third of the shares covered hereby on June 1, 2008, and as
                to the
                remaining shares on June 1, 2009.

            

    

    

    
      	(b)	
              Upon
                your death, your personal representative may exercise the Option,
                subject
                to the terms set forth in Section 6 of this Award
                Notice.

            

    

    

    
      	(c)	
              The
                Option may be exercised in whole or in part. The exercise generally
                must
                be accompanied by, or make provision for, full payment in cash; by
                check;
                or by surrendering unrestricted shares of Common Stock having a value
                on
                the date of exercise equal to the exercise price, together with proof
                that
                such shares, if acquired through a previous option exercise, have
                been
                owned by the optionee for at least six months prior to the date of
                exercise of the Option; or in any combination of the foregoing; however,
                if you wish to pay with shares of Common Stock already held by you,
                you
                may submit an Affidavit of Ownership form attesting to the ownership
                of
                the shares instead of sending in actual share
                certificates.

            

    

     

    
      
        56

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      EXHIBIT
        10.03

    

     

     

    
      	4.  
              	
              Nontransferability.
                The Option is not transferable except by will or by the laws of descent
                and distribution, and may not be sold, assigned, pledged or encumbered
                in
                any way, whether by operation of law or otherwise. The Option may
                be
                granted only to, and exercised only by you during your lifetime,
                except in
                the case of a permanent disability involving mental
                incapacity.

            

    

    

    
      	5.  	
              Limitation
                of Rights.
                You will not have any rights as a stockholder with respect to the
                shares
                covered by the Option until you become the holder of record of such
                shares
                by exercising the Option. Neither the Plan, the granting of the Option
                nor
                this Award Notice gives you any right to remain employed by the Company
                and its Subsidiaries.

            

    

    

    
      	6.  
              	
              Termination.
                Upon termination of your employment with the Company and its Subsidiaries
                ("termination") by reason of death, disability, termination without
                Cause
                or for Good Reason as defined in your Employment Agreement dated
                May 4,
                2006, or retirement, the Option will remain exercisable for the lesser
                of:
                1) five (5) years following your date of termination, or, 2) the
                Expiration Date. Upon termination due to voluntary resignation, the
                Option
                will remain exercisable for the lesser of: 1) ninety (90) days following
                your date of termination, or, 2) the Expiration Date. Upon termination
                for
                Cause, any portion of the Option not previously exercised by you
                will be
                canceled and forfeited by you, without payment of any consideration
                by the
                Company. Upon termination for a reason other than those described
                in this
                Section, the Committee will determine if all or any portion of the
                Option
                will remain exercisable and if so, the period of time the Option
                may be
                exercised, up to, but not to exceed the Expiration Date.
                

            

    

    

    
      	7.  
              	
              Noncompetition;
                Confidentiality.
                You will forfeit all rights under the Option if you violate the
                noncompetition and confidentiality provisions contained in Section
                20 of
                the Plan.

            

    

    

    
      	8.  
              	
              Restrictions
                on Issuance of Shares.
                If at any time the Company determines that listing, registration
                or
                qualification of the shares covered by the Option upon any securities
                exchange or under any state or federal law, or the approval of any
                governmental agency, is necessary or advisable as a condition to
                the
                exercise of the Option, the Option may not be exercised in whole
                or in
                part unless and until such listing, registration, qualification or
                approval shall have been effected or obtained free of any conditions
                not
                acceptable to the Company.

            

    

    

    
      	9.  
              	
              Change
                in Ownership; Change in Control.
                Sections 25 and 26 of the Plan contain certain special provisions
                that
                will apply to the Option in the event of a Change in Ownership or
                Change
                in Control, respectively.

            

    

    

    
      	10.	
              Adjustment
                of Shares.
                If the number of outstanding shares of Common Stock changes through
                the
                declaration of stock dividends or stock splits, the number of shares
                subject to the Option and the exercise price of the Option automatically
                will be adjusted. If there is a change in the number of outstanding
                shares
                of Common Stock or any change in the outstanding stock in the Company,
                the
                Committee will make any adjustments and modifications to the Option
                that
                it deems appropriate. In the event of any other change in the capital
                structure or in the Common Stock of the Company, the Committee is
                authorized to make appropriate adjustments to the
                Option.

            

    

    

    
      	11.	
              Plan
                Controls.
                In the event of any conflict between the provisions of the Plan and
                the
                provisions of this Award Notice, the provisions of the Plan will
                be
                controlling and determinative.

            

    

     

    57EXHIBIT 10.3

                        [GRIFFON CORPORATION LETTERHEAD]

[Date]

Name of Recipient
[address]

Dear              :
     -------------

Pursuant to the Griffon Corporation 2006 Equity Incentive Plan (the "Plan"), the
Plan's administrative committee (the "Committee") hereby grants to you
restricted shares of Common Stock, par value $.25 ("Award").

This Award is subject to the applicable terms and conditions of the Plan, which
are incorporated herein by reference, and in the event of any contradiction,
distinction or difference between this letter and the terms of the Plan, the
terms of the Plan will control. All capitalized terms used herein have the
meanings set forth herein or in the Plan, as applicable.

Subject to your continued service with the Company or its Subsidiaries, the
restrictions on your Award shall lapse as follows:

        Restrictions shall lapse with respect to              shares on
                                                 ------------
        ---------------;
        Restrictions shall lapse with respect to              shares on
                                                 ------------
        ---------------;*
        Restrictions shall lapse with respect to              shares on
                                                 ------------
        ---------------;*
        Restrictions shall lapse with respect to              shares on
                                                 ------------
        ---------------;* and
        Restrictions shall lapse with respect to              shares on
                                                 ------------
        ---------------.*

Notwithstanding any section of the Plan to the contrary, upon a Change in
Control, your Award will not automatically become free from restriction (unless
otherwise provided by the Committee prior to the Change in Control), but subject
to your continued service with the acquiring or surviving company, the
restrictions on your Award shall continue to lapse on the dates and in the
amounts set forth above. At or prior to such Change in Control, the Committee
will determine the method by which you may, subject to your continued service
with the acquiring or surviving company, be able to attain the value of your
Award.

If your service with the Company and its Subsidiaries is terminated by the
Company without Cause, the restrictions hereunder on your entire Award will
lapse and your entire Award shall become free from restriction upon the date
that your service with the Company so terminates. Unless otherwise determined by
the Committee or as set forth above, upon your termination of service with the
Company and its Subsidiaries for any reason (other than a termination by the
Company without Cause), the portion of your Award that is subject to
restrictions hereunder on the date of such termination shall be forfeited
immediately with no further compensation due to you.

------------------------------
*If necessary

<PAGE>

You will receive certificate(s) for the restricted shares designating you as the
registered owner. Upon such receipt, you agree to deliver the certificate(s)
together with a signed and undated stock power to the Company or the Company's
designee authorizing the Committee to transfer title to the certificate(s) to
the Company in the event that your Award or any portion thereof is forfeited
prior to the lapse of the restrictions.

At the time that the restrictions lapse, you must make appropriate arrangements
with the Company concerning withholding of any taxes that may be due with
respect to such Common Stock. You may tender cash payment to the Company in an
amount equal to the required withholding or request the Company retain the
number of shares of Common Stock whose fair market value equals the amount to be
withheld. As promptly thereafter as possible, the Company will issue
certificates for the shares released from restrictions.

The Company may impose any additional conditions or restrictions on the Award as
it deems necessary or advisable to ensure that all rights granted under the Plan
satisfy the requirements of applicable securities laws. The Company shall not be
obligated to issue or deliver any shares if such action violates any provision
of any law or regulation of any governmental authority or national securities
exchange.

The Committee may amend the terms of this Award to the extent it deems
appropriate to carry out the terms of the Plan. The construction and
interpretation of any provision of this Award or the Plan shall be final and
conclusive when made by the Committee.

Nothing in this letter shall confer on you the right to continue in the service
of the Company or its Subsidiaries or interfere in any way with the right of the
Company or its Subsidiaries to terminate your service at any time.

Please sign and return a copy of this agreement to the Chairman of the Board of
the Company designating your acceptance of this Award. This acknowledgement must
be returned within thirty (30) days; otherwise, the Award will lapse and become
null and void. Your signature will also acknowledge that you have received and
reviewed the Plan and that you agree to be bound by the applicable terms of such
document.

Very truly yours,

GRIFFON CORPORATION

By:
   ---------------------------------

ACKNOWLEDGED AND ACCEPTED

------------------------------------
Dated:
      ------------------------------

Enclosure (Copy of Plan)

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