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Exhibit 10.20
CHANGE OF
CONTROL EMPLOYMENT AGREEMENT
AGREEMENT
by and between Beazer Homes USA, Inc., a Delaware corporation
(the "Company") and MICHAEL R. DOUGLAS (the "Executive"),
dated as of the 1 st
day of May, 2007.
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:
1.
Certain
Definitions .
(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; provided, however, that
commencing on the date one year after the date hereof, and on
each annual anniversary of such date (such date and each
annual anniversary thereof shall be hereinafter referred to as
the "Renewal Date"), unless previously terminated, the Change
of Control Period shall be automatically extended so as to
terminate two years from such Renewal Date, unless at least 60
days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not
be so extended.
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
1
(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
(d)
Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
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 such
date (the "Employment Period").
4.
Terms of
Employment .
(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 at any time
during the 120 day period immediately preceding the Effective
Date and (B) the Executive's services shall be performed at
the location where the Executive was employed immediately
preceding the Effective Date 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 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.
2
(b)
Compensation
.
(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 any deferred bonus under the Executive’s
bonus program 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 peer 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 during the
120-day period immediately preceding 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.
3
(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 peer 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
during the 120 day period immediately preceding 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 during the 120 day period immediately preceding 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 during the 120 day period immediately
preceding 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.
(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 during
the 120 day period immediately preceding 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 during the 120 day period immediately
preceding 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 12(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.
4
(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 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
