SUPPLEMENTAL
EMPLOYMENT AGREEMENT
AGREEMENT
by and between Beazer Homes USA, Inc., a Delaware corporation (the
“Company”) and MICHAEL H. FURLOW (the
“Executive”), dated as of the 6th day of August,
2009.
The
Board of Directors of the Company (the “Board”), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive’s full attention
and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change
of Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
(a) The
“Effective Date” shall mean the first date during the
Change of Control Period (as defined in Section 1(b)) on which
a Change of Control (as defined in Section 2) occurs. Anything
in this Agreement to the contrary notwithstanding, if a Change of
Control occurs and if the Executive’s employment with the
Company is terminated prior to the date on which the Change of
Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated
to effect a Change of Control or (ii) otherwise arose in
connection with or in anticipation of a Change of Control, then for
all purposes of this Agreement the “Effective Date”
shall mean the date immediately prior to the date of such
termination of employment.
(b) The
“Change of Control Period” shall mean the period
commencing on the date hereof and ending on the second anniversary
of the date hereof.
2.
Change of Control . For the purpose of this Agreement, a
“Change of Control” shall mean:
(a) The
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 25% or
more of either (i) the then outstanding shares of common stock
of the Company (the “Outstanding Company Common Stock”)
or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (c) of this
Section 2; or
(b) Individuals
who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a
majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board;
or
(c) Consummation
of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a “Business Combination”), in each case,
unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case
may be, (ii) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from
such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the
extent that such ownership existed prior to the Business
Combination and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination; or
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(d)
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Approval by the shareholders of the
Company of a complete liquidation or dissolution of the
Company.
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(e)
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Notwithstanding the foregoing, a
Change of Control shall not be deemed to have occurred unless it is
also a “change in control event” as described in
Treasury Reg. Section 1.409A-3(i)(5) of the Internal Revenue
Code of 1986, as amended (the “Code”).
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3.
Employment Period . The Company hereby agrees to continue
the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company, subject to the terms and
conditions of this Agreement, for the period commencing on the
Effective Date and ending on the second anniversary of the date
hereof (the “Employment Period”).
(a)
Position and Duties .
(i) During
the Employment Period, (A) the Executive’s position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned from the date hereof to the
Effective Date and (B) the Executive’s services shall be
performed at Charleston, South Carolina or any office or location
less than 35 miles from such location.
(ii) During
the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees
to devote
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reasonable
attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use
the Executive’s reasonable best efforts to perform faithfully
such responsibilities. During the Employment Period it shall not be
a violation of this Agreement for the Executive to (A) serve
on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive’s responsibilities as an
employee of the Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that any such
activities have been conducted by the Executive prior to the
Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive’s
responsibilities to the Company.
(i) Base
Salary . During the Employment Period, the Executive shall
receive an annual base salary (“Annual Base Salary”),
which shall be paid at a monthly rate, at least equal to twelve
times the highest monthly base salary paid or payable, including
any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of
the twelve month period immediately preceding the month in which
the Effective Date occurs. Annual Base Salary shall be payable in
accordance with the Company’s normal payroll practices (but
not less frequently than monthly). During the Employment Period,
the Annual Base Salary shall be reviewed (for purposes of increase
only) no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter
at least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after
any such increase and the term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so increased.
As used in this Agreement, the term “affiliated
companies” shall include any company controlled by,
controlling or under common control with the Company.
(ii)
Annual Bonus . In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the “Annual Bonus”)
in cash at least equal to the arithmetic average of the
Executive’s bonuses (whether paid or deferred) under the
Company’s or its predecessor’s annual incentive plans
during the last three full fiscal years prior to the Effective Date
or for such lesser period as the Executive has been employed by the
Company or its predecessor (annualized in the event that the
Executive was not employed by the Company for the whole of any such
fiscal year), (the “Average Annual Bonus”). Each such
Annual Bonus shall be paid no later than the end of the third month
of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer
the receipt of such Annual Bonus. Without limiting the generality
of the foregoing definition, the “Average Annual Bonus”
shall include the following components, if any, pursuant to the
Company’s Amended and Restated EVCIP Rules ( or any
successor incentive plan, for so long as any of same shall
exist):
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(a)
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Cash payouts from VC and IVC awards
and the “Bank” payout, subject to the Payout Cap, all
at full face value;
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(b)
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Any
excess in the Bank discounted at 75% of face value (which shall,
for purposes hereof, be deemed to be fully vested);
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(c)
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10%
of the Bank contributed to the Deferred Compensation Plan, at full
face value (which shall, for purposes hereof, be deemed to be fully
vested); and
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(d) Any
deferred bonus under the EVCIP which is invested in stock under the
Company’s Corporate Management Stock Purchase Program, at
full face value of said bonus (which shall, for purposes hereof, be
deemed to be fully vested);
(iii)
Incentive, Savings and Retirement Plans . During the
Employment Period, the Executive shall be entitled to participate
in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other most senior executives
of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and
retirement benefit opportunities, in each case, less favorable, in
the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such
plans, practices, policies and programs as in effect at any time
from the date hereof until the Effective Date or if more favorable
to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its
affiliated companies.
(iv)
Welfare Benefit Plans . During the Employment Period, the
Executive and/or the Executive’s family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other most senior executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits which are
less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive
at any time from the date hereof until the Effective Date or, if
more favorable to the Executive, those provided generally at any
time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(v)
Expenses . During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at any time from
the date hereof until the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(vi)
Fringe Benefits . During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without
limitation, tax and financial planning services, payment of club
dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time from the date
hereof until the Effective Date
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or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
(vii)
Office and Support Staff . During the Employment Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive by the Company
and its affiliated companies at any time from the date hereof until
the Effective Date or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other
peer executives of the Company and its affiliated
companies.
(viii)
Vacation . During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time
from the date hereof until the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its
affiliated companies.
5.
Termination of Employment .
(a)
Death or Disability . The Executive’s employment shall
terminate automatically upon the Executive’s death during the
Employment Period. If the Disability of the Executive occurs during
the Employment Period (pursuant to the definition of Disability set
forth below), the Company may give to the Executive written notice
in accordance with Section 13(c) of this Agreement of its intention
to terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the
Executive (the “Disability Effective Date”), provided
that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the
Executive’s duties. For purposes of this Agreement,
“Disability” shall mean the absence of the Executive
from the Executive’s duties with the Company on a full-time
basis for 180 consecutive business days as a result of incapacity
due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s
legal representative.
(b)
Cause . The Company may terminate the Executive’s
employment for Cause. For purposes of this Agreement,
“Cause” shall mean:
(i) the
willful and continued failure of the Executive to perform
substantially the Executive’s duties with the Company or one
of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), for more than
15 days after a written demand for substantial performance is
delivered to the Executive by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in
which the Board or Chief Executive Officer believes that the
Executive has not substantially performed the Executive’s
duties, or
(ii) the
willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the
Company.
For
purposes of this provision, no act or failure to act, on the part
of the Executive, shall be considered “willful” unless
it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the President
and Chief Executive Officer of the
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Company or
based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
The cessation of employment of the Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
(c)
Good Reason . The Executive’s employment may be
terminated by the Executive for Good Reason. For purposes of this
Agreement, “Good Reason” shall mean:
(i) the
assignment to the Executive of any duties inconsistent in any
respect with the Executive’s position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement,
or any other action by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company within
15 days after receipt of notice thereof given by the
Executive;
(ii) any
failure by the Company to comply with any of the provisions of
Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company within 15 days after receipt
of notice thereof given by the Executive;
(iii) the
Company’s requiring the Executive to be based at any office
or location other than as provided in Section 4(a)(i)(B)
hereof or the Company’s requiring the Executive to travel on
Company business to a substantially greater extent than required
immediately prior to the Effective Date, which is not remedied by
the Company within 15 days after receipt of notice thereof
given by the Executive;
(iv) any
purported termination by the Company of the Executive’s
employment otherwise than as expressly permitted by this Agreement;
or
(v) any
failure by the Company to comply with and satisfy Section 11(c) of
this Agreement, which is not remedied by the Company within
15 days after receipt of notice thereof given by the
Executive.
Anything in
this Agreement to the contrary notwithstanding, a termination by
the Executive for any reason during the 30 day period
immediately following the six (6) month anniversary of the
Effective Date shall be deemed to be a termination for Good Reason
for all purposes of this Agreement. A termination pursuant to the
immediately preceding sentence is sometimes hereinafter referred to
as a “Permitted Executive Termination”.
(d)
Notice of Termination . Any termination of the
Executive’s employment by the Company or by the Executive
shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 13(c) of this Agreement.
For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates
the specif
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