GRIFFON CORP
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>gff8kexh102.txt
<TEXT>


                              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 Robert Balemian ("Balemian"), amends and restates in its entirety
the  Employment  Agreement  made and entered  into as of October 1, 1998 between
Griffon and Balemian (the "Prior Agreement").

                                  WITNESSETH:

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

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

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

     1. DEFINITIONS.

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

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

     (c) "Cause" shall mean:

     (i)  Balemian'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 Balemian to perform his  obligations
under this  Agreement,  resulting  in  demonstrable  material  economic  harm to
Griffon, or

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

     Notwithstanding  the  foregoing,  in no event shall  Balemian'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
Balemian shall be considered "willful" unless it is done, or omitted to be done,
by him in bad faith or without reasonable belief that his action or omission was
in the best interests of Griffon. Any act or failure to act based upon authority
given pursuant to a resolution  adopted by the Board or based upon the advice of

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<PAGE>

counsel for Griffon shall be conclusively  presumed to be done, or omitted to be
done, by Balemian in good faith and in the best interests of Griffon.

     (d) "Change in Control"  shall mean the  occurrence of any of the following
events:

     (i) the acquisition by any individual,  entity or group (within the meaning
of Section  13(d)(3)  or  14(d)(2)  of the  Securities  Exchange  Act of 1934 as
amended (the "Exchange  Act") (a "Person") of beneficial  ownership  (within the
meaning of Rule 13d-3  promulgated  under the Exchange Act) of voting securities
of Griffon  when such  acquisition  causes  such Person to  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

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<PAGE>

     (ii)  individuals  who, as of the date  hereof,  constitute  the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided,  however, that any individual becoming a director subsequent to
the date  hereof  whose  election,  or  nomination  for  election  by  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

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<PAGE>

such Business Combination) beneficially owns, directly or indirectly, 20 percent
or more of,  respectively,  the then  outstanding  shares of common stock of the
corporation  resulting  from such Business  Combination  or the combined  voting
power of the then outstanding  voting  securities of such corporation  except to
the extent that such ownership existed prior to the Business Combination and (C)
at least a majority of the members of the board of directors of the  corporation
resulting  from such Business  Combination  (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 Balemian serves as a consultant to Griffon.

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

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<PAGE>

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

     (j) "Fiscal Year" shall mean the 12-month period beginning on October 1 and
ending on the next subsequent September 30, or such other 12-month period as may
constitute 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  Balemian'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 Balemian (with respect to the
level  of  bonus  or  incentive  compensation   opportunities,   the  applicable
performance  criteria and  otherwise  the manner in which  bonuses and incentive
compensation  are  determined) in the aggregate  from those  available as of the
date hereof in accordance with Section 4(a) below;

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

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

     (v)  assignment  to Balemian of duties  incompatible  with his  position of
President;

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<PAGE>

     (vi) termination by Balemian 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 Balemian  report other than to the
Chief Executive Officer and the full Board;

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

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

     (l) "Retirement" shall mean termination of Balemian'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  Balemian'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 Balemian.

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

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<PAGE>

     2. EMPLOYMENT TERM, POSITIONS AND DUTIES.

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


     (b) Employment  Term. The Employment Term shall commence 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,  Balemian
shall be employed as President,  reporting to the Chief Executive Officer and to
the full Board. In his capacity as President,  Balemian shall have the customary
powers,  responsibilities  and  authorities of presidents of corporations of the
size, type and nature of Griffon including,  without limitation,  authority,  in
conjunction with the Board as appropriate, to hire and terminate other employees
of Griffon.

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

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<PAGE>

     (d) Time and Effort.

     (i) Balemian  agrees to devote his best efforts and abilities,  and such of
his business time and attention as is  reasonably  necessary,  to the affairs of
Griffon  in  order to carry  out his  duties  and  responsibilities  under  this
Agreement.

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

     3. SALARY.

     (a) Initial Salary.  Balemian shall receive from Griffon a Salary,  payable
in accordance with the regular payroll practices of Griffon, in a minimum amount
of $700,000.

     (b) Cost-of-Living  Increase.  During the Employment Term Balemian'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 Balemian in a single

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<PAGE>

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

     (c) Salary Increase. Any amount to which Balemian'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. Balemian 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.
Balemian  shall be  entitled  to elect to defer,  under the terms of the  Senior
Management Incentive Compensation Plan or any successor plan, any portion of his
annual bonus that is not already subject to deferral thereunder.

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<PAGE>

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

     5. LONG-TERM INCENTIVE.

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

     6. EQUITY OPPORTUNITY.

     During the Employment Term, Balemian shall be eligible to receive grants of
options to purchase  shares of 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 Balemian
during the  Employment  Term.  Also,  to the extent  permitted by any such plan,
Balemian  shall be eligible  during any  Consulting  Period to receive grants of
options and awards of shares of Griffon's stock in the same manner.

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<PAGE>


     7. EXPENSE REIMBURSEMENT; CERTAIN OTHER COSTS.

     During the  Employment  Term and any Consulting  Period,  Balemian shall be
entitled to prompt  reimbursement  by Griffon for all  reasonable  out-of-pocket
expenses incurred by him in performing  services under this Agreement,  upon his
submission  of such  accounts  and  records  as may be  reasonably  required  by
Griffon.  In addition,  Balemian  shall be entitled to payment by Griffon of all
reasonable costs and expenses,  including  attorneys' and consultants'  fees and
disbursements, incurred by him in connection with adoption of this Agreement and
any  related  compensatory  arrangements  that  Griffon  adopts  solely  for his
benefit.

     8. PERQUISITES.

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

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

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


                                       12
<PAGE>

     9. EMPLOYEE BENEFIT PLANS.

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

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

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<PAGE>

Subsidiaries  made  available  generally to other senior  executive  officers of
Griffon and its Subsidiaries as in effect from time to time.

     (c) Life  Insurance  Benefit.  In  addition  to the  group  life  insurance
available  to  employees  generally,  Griffon  shall  provide  Balemian  with an
individual  permanent  life  insurance  benefit in an initial amount of not less
than approximately $1.5 million,  the terms and conditions of such benefit to be
more fully described in an insurance  ownership  agreement  between Balemian and
Griffon.

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

     (e) Retirement Benefit. Balemian shall be entitled to the benefits provided
under Griffon's Supplemental  Executive Retirement Plan (the "SERP");  provided,
however,  that if Griffon  fails to  maintain  the SERP,  Balemian'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  Balemian's rights under
the SERP as in effect on the date hereof or, if more  favorable to Balemian,  as
in effect at any time thereafter.

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<PAGE>

     10. TERMINATION OF EMPLOYMENT.

     (a) Voluntary Termination and Termination by Mutual Agreement. Balemian 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
employment  for Cause.  The  Parties  may  terminate  this  Agreement  by mutual
agreement at any time. If they do so,  Balemian's  entitlements  shall be as the
Parties mutually agree.

     (b) General.  Notwithstanding anything to the contrary herein, in the event
of  termination  of  Balemian'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

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<PAGE>

termination  or to  which  he may  then  be  entitled  in  accordance  with  the
applicable terms and conditions of each grant, award or plan; and

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

     (c) Termination due to Retirement.  In the event that Balemian's employment
is terminated due to his  Retirement,  he shall be entitled,  in addition to the
compensation and benefits  specified in Section 10(b), to the benefits  provided
under the SERP, as provided in Section 9(e) above.

     (d) Termination  due to Death.  In the event that Balemian'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
Balemian may  terminate  Balemian's  employment.  If  Balemian'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  Balemian's
employment  hereunder  for Cause only upon  written  notice to Balemian not less
than 30 days prior to any intended  termination,  which notice shall specify the

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<PAGE>

grounds for such  termination in reasonable  detail.  Cause shall in no event be
deemed to exist except upon a finding  reflected  in a resolution  approved by a
majority (excluding  Balemian) of the members of the Board (whose findings shall
not be binding  upon or entitled to any  deference by any court,  arbitrator  or
other  decision-maker  ruling on this  Agreement) at a meeting of which Balemian
shall have been given  proper  notice and at which  Balemian  (and his  counsel)
shall  have a  reasonable  opportunity  to present  his case.  In the event that
Balemian'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 Balemian for Good Reason.

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

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

     (A) 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;

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<PAGE>

     (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;

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

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

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

                                       18
<PAGE>

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

     (h) Voluntary Termination by Balemian. At any time after December 31, 2001,
Balemian shall have the right,  upon 60 days' prior written notice,  voluntarily
to terminate his employment  without Good Reason,  in which event his employment
shall cease and the  Employment  Term shall  terminate  as of the date stated in
such  notice,  and the  Consulting  Period  shall  begin on the next  succeeding
business day, and he shall be entitled to receive  compensation  and benefits as
if Griffon  had  terminated  his  employment  for Cause,  as provided in Section
10(f).

     (i) Change in Control.  Notwithstanding  anything  to the  contrary in this
Section 10,  termination  of Balemian'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,  Balemian  shall  be  entitled  to  compensation  and  benefits  in
accordance with the provisions of Section 10(g)(ii).

     11. NO DUTY TO MITIGATE.

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

                                       19
<PAGE>

     12. PARACHUTES.

     (a)  Application.  If all, or any portion,  of the payments  provided under
this Agreement, and/or any other payments and benefits that Balemian receives or
is entitled to receive from Griffon, 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 Balemian of an excise tax under Section 4999 of the Code, then, in
addition  to any  other  benefits  to which  Balemian  is  entitled  under  this
Agreement,  Griffon  shall  pay him an  amount  in cash  equal to the sum of the
excise taxes payable by him by reason of receiving Parachute Payments,  plus the
amount necessary to put him in the same after-tax  position (taking into account
any and all applicable federal, state and local excise, income or other taxes at
the highest  possible  applicable  rates on such Parachute  Payments  (including
without limitation any payments under this Section 12) as if no excise taxes had
been imposed with respect to Parachute Payments (the "Parachute Gross-up").


     (b)  Computation.  The amount of any payment under this Section 12 shall be
computed by a certified public accounting firm of national  reputation  selected
by Griffon and  acceptable  to  Balemian.  If Griffon or Balemian  disputes  the
computation   rendered  by  such  accounting  firm,   Griffon  shall  select  an
alternative  certified public accounting firm of national  reputation to perform
the applicable computation.  If  the  two accounting firms cannot agree upon the

                                       20
<PAGE>

computations,  Balemian  and Griffon  shall  jointly  appoint a third  certified
public accounting firm of national  reputation within 10 calendar days after the
two  conflicting  computations  have been rendered.  Such third  accounting firm
shall be asked to  determine  within 30  calendar  days the  computation  of the
Parachute  Gross-up  to  be  paid  to  Balemian,  and  payments  shall  be  made
accordingly.


     (c)  Payment.  In any event,  Griffon  shall pay to  Balemian or pay on his
behalf the  Parachute  Gross-up  as computed by the  accounting  firm  initially
selected  by  Balemian  by the time any taxes  payable by him as a result of the
Parachute  Payments  become  due,  with  Balemian  agreeing to return the excess
amount of such  payment  over the final  computation  rendered  from the process
described in Section  12(b).  Balemian and Griffon shall provide the  accounting
firms with all information  that any of them reasonably deems necessary in order
to compute the Parachute  Gross-up.  The cost and expenses of all the accounting
firms  retained to perform the  computations  described  above shall be borne by
Griffon.

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

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

                                       21
<PAGE>

     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 Balemian's  employment (i) voluntarily,  (ii) by mutual agreement
or (iii) by  Retirement),  Balemian  shall  become a consultant  to Griffon,  in
recognition  of the continued  value to Griffon of his  extensive  knowledge and
expertise.  Unless  earlier  terminated,  as  provided  in  Section  13(e),  the
Consulting Period shall continue for five years.

     (b) Duties and Extent of Services.

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

     (ii)  Balemian's  service as a  consultant  shall only be  required at such
times and such places as shall not result in unreasonable  inconvenience to him.
His  consulting  services  may  be  rendered  by  personal  consultation  at his
residence or office  wherever  maintained,  or by  correspondence  through mail,
telephone,  fax or other  similar  mode of  communication  at  times,  including
weekends and evenings, most convenient to him.

                                       22
<PAGE>

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

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

     (d) Disability.  In the event of Disability  during the Consulting  Period,
Griffon or Balemian may terminate Balemian's  consulting services. If Balemian'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  Balemian'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 Balemian  of the grounds  constituting  such  failure and  reasonable
opportunity  afforded  Balemian  to cure  the  alleged  failure.  Upon  any such
termination,  payment of  consulting  fees and benefits  (with the  exception of
lifetime medical benefits under Section 9(b) above) shall cease.

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

                                       23
<PAGE>


     14. CONFIDENTIAL INFORMATION.

     (a) General.

     (i) Balemian  understands and hereby  acknowledges  that as a result of his
employment with Griffon he will  necessarily  become informed of and have access
to certain  valuable  and  confidential  information  of Griffon  and any of its
Subsidiaries,  joint ventures and  affiliates,  including,  without  limitation,
inventions,   trade  secrets,  technical  information,   computer  software  and
programs,  know-how and plans  ("Confidential  Information"),  and that any such
Confidential Information,  even though it may be developed or otherwise acquired
by  Balemian,  is the  exclusive  property of Griffon to be held by him in trust
solely for Griffon's benefit.

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

     (b) Return of Documents.  Upon  termination of his employment  with Griffon
for any reason or, if  applicable,  upon  expiration of the  Consulting  Period,
Balemian  shall  promptly  deliver to  Griffon  all  plans,  drawings,  manuals,

                                       24
<PAGE>

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  Balemian is found to be in
violation of Section 14(a) or (b) above,  Griffon shall be entitled to relief as
provided in Section 16 below.

     15. NONCOMPETITION/NONSOLICITATION.

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

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

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

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

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

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

                                       25
<PAGE>

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

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

     16. REMEDIES/SANCTIONS.

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

                                       26
<PAGE>

     17. BENEFICIARIES/REFERENCES.

     Balemian shall be entitled to select (and change,  to the extent  permitted
under  any  applicable  law) a  beneficiary  or  beneficiaries  to  receive  any
compensation  or benefit  payable  under this  Agreement  following his death by
giving Griffon written notice thereof. In the event of Balemian's death, or of a
judicial  determination  of his  incompetence,  reference  in this  Agreement to
Balemian shall be deemed to refer, as appropriate, to his beneficiary, estate or
other legal representative.

     18. WITHHOLDING TAXES.

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

     19. INDEMNIFICATION AND LIABILITY INSURANCE.

     Nothing herein is intended to limit Griffon's  indemnification of Balemian,
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  Balemian to be covered at all
times by directors' and officers' liability insurance on terms no less favorable
than the directors' and officers' liability  insurance  maintained by Griffon in

                                       27
<PAGE>

effect on the date  hereof  in terms of  coverage  and  amounts.  Griffon  shall
continue to indemnify  Balemian as provided  above and maintain  such  liability
insurance  coverage for him after the Employment  Term and, if  applicable,  the
Consulting  Period for any claims that may be made  against him with  respect to
his service as a director or officer of Griffon or a consultant to Griffon.

     20. EFFECT OF AGREEMENT ON OTHER BENEFITS.

     The existence of this Agreement  shall not prohibit or restrict  Balemian'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 Balemian)  and
assigns.  No rights or  obligations  of  Griffon  under  this  Agreement  may be
assigned  or  transferred  by  Griffon  except  pursuant  to  (a)  a  merger  or
consolidation  in which  Griffon  is not the  continuing  entity  or (b) sale or
liquidation of all or substantially all of the assets of Griffon,  provided that
the  surviving  entity or  assignee or  transferee  is the  successor  to all or
substantially all of the assets of Griffon and such surviving entity or assignee
or transferee  assumes the liabilities,  obligations and duties of Griffon under
this Agreement, either contractually or as a matter of law.

                                       28
<PAGE>

     Griffon  further  agrees  that,  in  the  event  of a  sale  of  assets  or
liquidation  as  described  in the  preceding  sentence,  it shall  use its best
efforts  to have such  assignee  or  transferee  expressly  agree to assume  the
liabilities,  obligations and duties of Griffon  hereunder;  provided,  however,
that   notwithstanding   such  assumption,   Griffon  shall  remain  liable  and
responsible for  fulfillment of the terms and conditions of this Agreement;  and
provided, further, that in no event shall such assignment and assumption of this
Agreement  adversely  affect  Balemian's  right  upon a Change  in  Control,  as
provided in Section 10(i) above. No rights or obligations of Balemian under this
Agreement may be assigned or transferred by him.

     22. REPRESENTATIONS.

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

     23. ENTIRE AGREEMENT.

     Except to the extent otherwise provided herein, this Agreement contains the
entire  understanding and agreement  between the Parties  concerning the subject

                                       29
<PAGE>

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

     24. AMENDMENT OR WAIVER.

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

     25. SEVERABILITY.

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

                                       30
<PAGE>

     26. SURVIVAL.

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

     27. GOVERNING LAW/JURISDICTION.

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

     28. COSTS OF DISPUTES.

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

                                       31
<PAGE>

shall be the  prevailing  party in such a proceeding,  Balemian  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
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 Balemian:
 10 Fox Meadow Lane
 Lloyd Harbor, NY  11743

                                       32
<PAGE>

With a copy to:
 Robert Balemian
 10 Fox Meadow Lane
 Lloyd Harbor, NY  11743

     30. HEADINGS.

     The  headings  of  the  sections   contained  in  this  Agreement  are  for
convenience  only and shall not be deemed to control  or affect  the  meaning or
construction of any provision of this Agreement.

     31. COUNTERPARTS.

     This  Agreement  may be  executed  in  counterparts,  each of which when so
executed and delivered shall be an original,  but all such counterparts together
shall constitute one and the same instrument.

     IN WITNESS WHEREOF,  the undersigned have executed this Agreement as of May
2, 2001.


                                                Griffon Corporation

        /s/ Frances L. Stelz                        /s/ Harvey Blau
Attest: ___________________________             By: _________________________


        /s/ Dina Bottari                         /s/ Robert Balemian
Witness: ___________________________             _________________________
                                                      Robert Balemian





                                       33

</TEXT>
</DOCUMENT>
