Document:

Exhibit
10.18

 

BEAZER
HOMES USA, INC.

 

AMENDED
AND RESTATED 1999 STOCK INCENTIVE PLAN

 

PERFORMANCE
SHARES AWARD AGREEMENT

 

THIS
AWARD AGREEMENT (this “Agreement”) is made as of February 2,
2006 by and between BEAZER HOMES USA, Inc., a Delaware corporation (the “Company”),
and                     ,
an individual resident of the State of                      (“Participant”).

 

WITNESSETH:

 

WHEREAS, the
Company pursuant to its Amended and Restated 1999 Stock Incentive Plan (the “Plan”)
wishes to make certain performance vesting incentive awards to Participant.

 

NOW,
THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto hereby agree to the terms set
forth below. The terms of this Agreement shall be interpreted in accordance
with the Plan and any capitalized terms used in this Agreement but not defined
herein shall have the meaning set forth in the Plan.

 

1.                                      AWARD
OF PERFORMANCE VESTING RESTRICTED STOCK.

 

(a)           Award, Effective Date. The
Company hereby notifies Participant that, effective as of January 1, 2006
(the “Performance Shares Effective Date”), the Company has awarded to
Participant                
shares of the Company’s common stock, par value $.001 per share (the “Common
Stock”), subject to the terms of the Plan and subject to achievement of the
performance measures and such further adjustments as set forth herein. Such
shares of Common Stock are hereinafter collectively referred to as the “Performance
Shares.”

 

 

(b)           Performance Periods. The
Performance Shares shall have the following Performance Periods (as defined
below):

 

(i)            [1/3 of the Performance
Shares] Performance Shares (the “A Target Performance Shares”)
shall have a Performance Period commencing on January 1, 2006 and ending on
December 31, 2008 (the “A Performance Period”);

 

(ii)           [1/3 of the Performance
Shares] Performance Shares (the “B Target Performance Shares”)
shall have a Performance Period commencing on January 1, 2006 and ending on
December 31, 2009 (the “B Performance Period”); and

 

(iii)          [1/3 of the Performance
Shares] Performance Shares (the “C Target Performance Shares”
and collectively with the A Performance Shares and the B Performance Shares,
the “Target Performance Shares”) shall have a Performance Period commencing on
January 1, 2006 and ending on December 31, 2010 (the “C Performance Period” and
together with the A Performance Period and the B Performance Period, the “Performance
Periods”).

 

(iv)          The number of A Target Performance
Shares, B Target Performance Shares and C Target Performance Shares shall be
adjusted by the Company as deemed appropriate in its sole discretion to reflect
the effect of any stock split, reverse stock split, stock dividend, stock
combination or similar event with respect to the Common Stock such that each
such Target Performance Shares shall represent one-third of the aggregate
Target Performance Shares after giving effect to such event.

 

(c)           Performance Shares and Achievement
of Performance Measures/Vesting.

 

(i)            Vesting of the A Target Performance
Shares, B Target Performance Shares and C Target Performance Shares, which
shall occur at the close of the market on each February 2 immediately following
the applicable Performance Period and shall be determined by reference to the
Company’s ranking of compound annual growth rate (“CAGR”) of total return to shareholders
(as further described below, “TRS”) for the A Performance 

 

2

 

Period, B Performance Period and C Performance Period,
respectively, as compared to the CAGR of TRS for the Peer Group (as defined
below), based on the following chart and as further described below:

 

	
  CAGR Peer Ranking

  	
   

  	
  Vesting Percentage for each of

  A, B and C Target Performance Shares

  
	
  Above 3rd Ranked Peer

  	
   

  	
  150%

  
	
  Equal to 3rd Ranked
  Peer

  	
   

  	
  130%

  
	
  Equal to or Above 4th
  Ranked Peer

  	
   

  	
  115%

  
	
  Equal to or Above 5th
  Ranked Peer

  	
   

  	
  100%

  
	
  Equal to or Above 6th
  Ranked Peer

  	
   

  	
  75%

  
	
  Equal to or Above 7th
  Ranked Peer

  	
   

  	
  50%

  
	
  Below 7th Ranked Peer

  	
   

  	
  0%

  

 

(ii)           For purposes of this Agreement, CAGR
of TRS for a Performance Period for the Company and each member of the Peer
Group shall be determined as follows:

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CAGR of TRS    
  =

  	
  

  	
  Ending Stock
  Price               
  +                Dividends
  Paid

  	
  

  	
  (1/n)

  
	
  Beginning Stock
  Price

  	
  -1

  

 

(1)                                  CAGR
of TRS shall be calculated and rounded to the nearest one hundredth.

 

(2)                                  “Beginning
Stock Price” shall mean the average of the closing prices of the subject
company’s common stock for the twenty (20) trading days ending on the last
trading day prior to the first trading day of the applicable Performance Period
(i.e., the first trading day after January 1, 2006).

 

(3)                                  “Ending
Stock Price” shall mean the average of the closing prices of the subject
company’s common stock for the twenty (20) trading days ending on the last trading
day of the applicable Performance Period.

 

(4)                                  “Dividends
Paid” shall mean the total dollar amount of all dividends paid on one (1) share
of stock during the applicable Performance Period.

 

(5)                                  “n”
equals the number of years in the applicable Performance Period.

 

3

 

For purposes of the above
calculations, the closing price of the subject company’s common stock shall be
determined by reference to the closing price as reported by the principal exchange
on which the subject company’s common stock is traded, or if such stock is not
traded on an exchange as reported by the automated quotation system maintained
by the National Association of Securities Dealers, Inc. (“NASDAQ”) or any
successor quotation system as the last sales price or in absence of such last
sales price, the mean between the closing representative bid and ask prices for
the stock on each relevant date, as reported by NASDAQ or any successor
quotation system. In the event the Company or any other entity in the Peer
Group declares a stock split, reverse stock split, stock dividend, stock
combination or similar event with respect to its common stock during any
Performance Period, appropriate and proportionate adjustments shall be made by
the Company, in its sole discretion under the Plan, to the Beginning Stock
Price for such Performance Period for the Company or such member of the Peer
Group subject to such event in determining TRS and CAGR of TRS for such Performance
Period. Any similar adjustment deemed necessary and appropriate by the Company
shall be made to the dividends paid during such Performance Period as is
necessary to reflect the change in the Company’s or Peer Group members’ stock
during the relevant Performance Period.

 

(iii)          Following the calculation of the
Company’s CAGR of TRS and each member of the Peer Group’s CAGR of TRS for and
after the completion of each applicable Performance Period, the Company’s CAGR
of TRS peer ranking (the “CAGR Peer Ranking”) shall then be determined by
aligning the CAGR of TRS for each member of the Peer Group from high to low and
ranking the Company’s CAGR of TRS against such group. Once the CAGR Peer
Ranking is determined, the amount of A Target Performance Shares, B Target
Performance Shares and C Target Performance Shares, as applicable, awarded to
Participant shall be determined by reference to the applicable corresponding
Vesting Percentage of Target Performance Shares in the above table and all
rights to the number of such Performance Shares determined shall be vested in
the Participant on the February 2 immediately following the applicable
Performance Period (the “Vested Performance Shares”).

 

(iv)          The Peer Group shall initially consist
of the companies listed on Appendix A hereto, subject to the following:

 

4

 

(1)                                  In
the event of a merger, acquisition or business combination transaction of a
member of the Peer Group with or by another member of the Peer Group, the
surviving entity shall remain in the Peer Group, without adjustment to its
financial or market structure, and the Compensation Committee of the Board of
Directors of the Company (the “Compensation Committee”) shall select a new
member of the Peer Group (the “Replacement Member”) for the remaining term of
the applicable Performance Period; provided, that,
the Replacement Member’s CAGR of TRS for the applicable Performance Period
shall be determined by taking (y) the non-surviving Peer Group entity’s TRS from
the beginning of the Performance Period until the date on which the Replacement
Member is selected by the Committee and determining the resulting CAGR of TRS for
the full Performance Period based on such TRS and (z) the Replacement Member’s TRS
from the date on which the Replacement Member is selected by the Committee to
the end of the applicable Performance Period and determining the resulting CAGR
of TRS for the full Performance Period based on such TRS. The sum of such two
CAGR of TRS calculations shall represent the CAGR of TRS for such Replacement
Member.

 

(2)                                  In
the event of a merger of a member of the Peer Group with or by an entity
outside the Peer Group, or the acquisition or business combination transaction
by a member of the Peer Group of or with an entity outside the Peer Group, in
each case, where the member of the Peer Group is the surviving entity, the
surviving entity will remain a member of the Peer Group, without adjustment to
its financial or market structure.

 

(3)                                  In
the event of a merger or acquisition or business combination transaction of a
member of the Peer Group with or by an entity outside the Peer Group, other
form of “going private” transaction relating to any member of the Peer Group or
the liquidation of any member of the Peer Group, where such member of the Peer
Group is not the surviving entity or is otherwise no longer publicly traded,
the Compensation Committee shall select 

 

5

 

a Replacement Member for
the remaining term of the applicable Performance Period; provided,
that, the Replacement Member’s CAGR of TRS for the applicable
Performance Period shall be determined by taking (y) the non-surviving,
privately held or liquidated Peer Group entity’s TRS from the beginning of the
Performance Period until the date on which the Replacement Member is selected
by the Committee and determining the resulting CAGR of TRS for the full Performance
Period based on such TRS and (z) the Replacement Member’s TRS from the date on
which the Replacement Member is selected by the Committee to the end of the
applicable Performance Period and determining the resulting CAGR of TRS for the
full Performance Period based on such TRS. The sum of such two CAGR of TRS
calculations shall represent the CAGR of TRS for such Replacement Member.

 

(4)                                  In
the event of a bankruptcy of a member of the Peer Group, such member shall
remain in the Peer Group, without adjustment to its financial or market
condition.

 

(d)           Dividends. During the
applicable Performance Period, all dividends and other distributions otherwise
payable with respect to the Performance Shares (whether in cash, property or
shares of the Company’s Common Stock) shall be accrued for the account of the
Participant and held by the Company in a book entry account. Such dividends and
other distributions shall be subject to the same restrictions and adjustments
as the Performance Shares with respect to which they were accrued and shall, to
the extent vested, be paid when and to the extent the underlying Performance
Shares are vested, as soon as practicable following the applicable vesting date.
Any such dividends or other distributions related to Performance Shares that do
not vest shall be forfeited by the Participant to the Company.

 

(e)           Change in Control. Upon the
occurrence of a Change in Control (as defined in the Plan) of the Company, all Target
Performance Shares not theretofore vested pursuant to Section 1(c)(iii) above
shall become immediately vested with a 100% Vesting Percentage.

 

6

 

(f)            Additional Terms. Prior to
vesting, Performance Shares shall not be voluntarily or involuntarily sold,
assigned, transferred, pledged, alienated, hypothecated or encumbered by
Participant, other than by will or the laws of descent and distribution. Prior to vesting, Participant shall have
voting rights with respect to 100% of the Target Performance Shares represented
by this Agreement. Prior to vesting, the Company may impose such
restrictions with respect to Performance Shares in addition to those contained
herein as the Company may, in its sole discretion, deem appropriate.

 

2.                                      FORFEITURE
OF PERFORMANCE SHARES.

 

(a)           In the event that Participant’s
employment with the Company or any of its Affiliates (as defined in the Plan) shall
be Terminated for Cause (as defined below) or in the event Participant
voluntarily resigns from his/her employment with the Company or any of its
subsidiaries, then any Performance Shares which are held by Participant on the
date of such termination and which have not previously vested in accordance
with Section 1(c)(iii) hereof shall be forfeited by Participant (regardless of
the level of TRS and CAGR of TRS for the period in which such termination
occurs), and the Company shall have no further obligation to Participant with
respect to such forfeited Performance Shares.

 

For purposes of this
Agreement, a “Termination for Cause” shall mean a termination of employment by
the Company (or an Affiliate of the Company) due to any of the following:

 

(i)            the willful and continued failure of
Participant to perform substantially Participant’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 Participant by the Board or
the Chief Executive Officer of the Company which specifically identifies the
manner in which the Board of Chief Executive Officer believes that Participant
has not substantially performed Participant’s duties, or

 

(ii)           the willful engaging by Participant
in illegal conduct or gross misconduct which is materially and demonstrably
injurious to the Company.

 

7

 

For purposes of this
provision, no act or failure to act, on the part of Participant, shall be
considered “willful” unless it is done, or omitted to be done, by Participant
in bad faith or without reasonable belief that Participant’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 Participant in good faith and in the best
interests of the Company. The cessation of employment of Participant shall not
be deemed to be for Cause unless and until there shall have been delivered to
Participant 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 Participant and Participant is given an opportunity, together with counsel,
to be heard before the Board), finding that, in the good faith opinion of the
Board, Participant is guilty of the conduct described in subparagraph (i) or
(ii) above, and specifying the particulars thereof in detail.

 

(b)           In the event Participant becomes Disabled
(as defined below) or dies or his/her employment is terminated by the Company
or any of its Affiliates other than a Termination for Cause, or in the event
Participant’s employment is terminated by reason of his/her Retirement (as
defined below), then Participant (or, as appropriate, Participant’s executors,
estate or proper legal guardians and representatives) shall be entitled, in
addition to such number of Performance Shares as may have vested prior to such
Disability, death, termination other than for cause or Retirement (such number
being referred to in this clause (b) as the “Vested Amount”), to the immediate
vesting of such number of Target Performance Shares (rounded upward to the
nearest whole share) as equals the positive difference (if any) of (A) the
product of (y) the total number of Target Performance Shares awarded to
Participant as described in Section 1(b) hereof multiplied by (z) a fraction,
the numerator of which shall be equal to the number of whole months (counting
each month as ending on the first day of a calendar month) elapsed from the Performance
Shares Effective Date until the date of such Disability, death, termination not
for cause or Retirement and the denominator of which shall be 60; minus
(B) the Vested Amount.

 

8

 

For purposes of this
Agreement, a Participant shall be deemed “Disabled” if the Participant becomes
ill or is injured or otherwise becomes disabled or incapacitated such that, in
the opinion of the Board of Directors of the Company or the Compensation
Committee acting on its behalf, he/she cannot fully carry out and perform
his/her duties as an employee of the Company (and its subsidiaries), and such disability
or incapacity shall continue for a
period of forty-five (45) consecutive days, and the term “Disability” shall
have a meaning correlative with the foregoing.

 

For purposes of this
Agreement, “Retirement” shall mean a voluntary termination of employment by a
Participant aged 65 or older with at least five (5) years of Company service. A
Participant may request approval for Retirement treatment if between the ages
of 62 and 65 with at least five (5) years of Company service. At the sole
discretion of the Compensation Committee, such requests shall be approved or
denied.

 

(c)           Stock Certificates. The Target
Performance Shares awarded hereunder shall be held in a book entry account by
the Company. Upon vesting of any Performance Shares awarded hereunder, a certificate
or certificates representing Vested Performance Shares shall be delivered to
the Participant, which certificate or certificates may contain such legends as
the Company, in its sole discretion, deems necessary or advisable in connection
with applicable securities laws. To the extent the number of then Vested
Performance Shares exceeds the number of Performance Shares then maintained in
such book entry account, such shares shall be issued by the Company from shares
held in treasury or from authorized but unissued shares of Common Stock of the
Company.

 

3.                                      MISCELLANEOUS

 

(a)           The Plan. The award of Performance
Shares provided for herein is made pursuant to the Plan and is subject to its
terms. The Plan is available for inspection during business hours at the
principal offices of the Company (currently located at 1000 Abernathy Road,
Suite 1200, Atlanta, Georgia 30328) and a copy of the Plan may be obtained by
Participant through a request in writing therefor directed to the Secretary of
the Company.

 

(b)           No Right to Employment. This
Agreement shall not confer on Participant any right with respect to continuance
of employment by the Company or any Affiliates, nor will it interfere in any
way with the right of the Company to terminate such employment at any time.

 

9

 

(c)           Taxes. In order to provide the
Company with the opportunity to claim the benefit of any income tax deduction
which may be available to it upon the award or vesting of Performance Shares,
and in order to comply with all applicable federal, state or local income tax
laws or regulations, the Company may take such action as it deems appropriate
to ensure that, if necessary, all applicable federal, state or local payroll,
withholding, income or other taxes are withheld or collected from Participant. Participant
may elect to satisfy his/her federal, state and local income tax withholding
obligations upon the vesting of Performance Shares by (i) having the Company
withhold a portion of the then Vested Performance Shares having a Fair Market
Value equal to the amount of federal and state income tax required to be
withheld, (ii) delivering to the Company shares of Common Stock other than Vested
Performance Stock with a Fair Market Value equal to such taxes, or (iii)
delivering to the Company cash, check (bank check, certified check or personal
check), money order or wire transfer equal to such taxes upon the vesting of Performance
Shares.

 

(d)           Waivers. No waiver at any time
of any term or provision of this Agreement shall be construed as a waiver of
any other term or provision of this Agreement and a waiver at any time of any
term or provision of this Agreement shall not be construed as a waiver at any
subsequent time of the same term or provision.

 

(e)           Headings. All headings set
forth in this Agreement are intended for convenience only and shall not control
or affect the meaning, construction or effect of this Agreement or of any of
the provisions hereof.

 

(f)            Counterparts. This Agreement
may be executed via facsimile transmission signature and in counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

 

(g)           Board and Committee Determinations.
All matters to be determined by the Board of Directors of the Company or any
committee thereof, including, without limitation, the Compensation Committee,
pursuant to the terms of this Agreement shall be determined by the members of
the Board or such duly authorized committee without the vote of Participant.

 

10

 

(h)           Law Governing Agreement. This
agreement shall be governed by and construed in accordance with the laws of the
state of Georgia.

 

11

 

IN WITNESS
WHEREOF, the parties hereto have executed this AWARD AGREEMENT effective as of the date first written
above.

 

	
   

  	
  BEAZER
  HOMES USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Ian J. McCarthy

  
	
   

  	
  President / Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Name]

  

 

12

 

Appendix
A

 

Peer
Group Members

 

Centex Corp.

DR Horton Inc.

Hovnanian Enterprises
Inc.

KB Home

Lennar Corp.

MDC Holdings Inc.

Pulte Homes Inc.

Ryland Group Inc.

Toll Brothers Inc.

 

A-1Exhibit
10.19

 

BEAZER HOMES USA, INC.

 

AMENDED AND RESTATED 1999 STOCK INCENTIVE PLAN

 

AWARD AGREEMENT

 

THIS AWARD AGREEMENT (this “Agreement”) is made effective as of February 2,
2006 by and between BEAZER HOMES USA, Inc., a Delaware corporation (the “Company”),
and                     ,
an individual resident of the State of                      (“Participant”).

 

WITNESSETH:

 

WHEREAS, the Company pursuant to its Amended and
Restated 1999 Stock Incentive Plan (the “Plan”) wishes to make certain
incentive awards to Participant.

 

NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto hereby agree to the terms
set forth below. The terms of this Agreement shall be interpreted in accordance
with the Plan and any capitalized terms used in this Agreement but not defined
herein shall have the meaning set forth in the Plan.

 

1.             GRANT
OF OPTION TO ACQUIRE COMMON STOCK

 

(a)           Grant; Effective
Date; Option Price. The Company hereby notifies Participant that the Company
has granted to Participant in accordance with the Plan and effective as of February 2,
2006 (the “Option Effective Date”), the right and option (hereinafter referred
to as the “Option”) to purchase, on the terms and conditions set forth herein,
all or any part of an aggregate of «F24» shares
(the “Option Shares”) of common stock of the Company, $0.001 par value per
share (“Common Stock”), at a price per share equal to the closing price per
share of the Common 

 

 

Stock as reported by the New
York Stock Exchange (the “NYSE”) at the close of business on the Option
Effective Date ($68.56) (the “Option Price”), subject to adjustment as provided
in Section 1(g) below. The Option is not intended to be an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”).

 

The Company will at all
times during the Option Term of the Option (as set forth in Section 1(b) below)
reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of this Agreement.

 

(b)           Duration and
Exercisability of Option; Limitations on Exercisability.

 

(i)            The Option shall in
all events terminate at midnight on the seventh anniversary of the Option
Effective Date (the period commencing on the Option Effective Date and ending
on the seventh anniversary thereof being referred to herein as the “Option Term”).
The Option shall not be exercisable, in whole or in part, prior to the third
anniversary of the Option Effective Date, but shall become exercisable by
Participant as to one-third (1/3) of aggregate Option Shares (rounded to the
nearest whole share) on each of the third, fourth and fifth anniversaries of
the Option Effective Date. Notwithstanding the foregoing sentence, the Option shall
become exercisable in full upon the occurrence of a Change in Control (as
defined in the Plan).

 

(ii)           During the lifetime
of Participant, the Option shall be exercisable only by Participant (or,
subject to Section 1(d) (ii) or (iii) below, by Participant’s guardian or legal
representative or Family Member (as defined in Section 7.2 of the Plan) to whom
the Option has been gifted or transferred pursuant to a domestic relations
order) and shall not be assignable or transferable by Participant other than
(a) to an individual by will or the laws of descent and distribution or (b) to
a Family Member by gift or transfer pursuant to a domestic relations order.

 

2

 

(iii)          The exercise of all
or any part of the Option shall only take effect at such time that the sale of
the shares of Common Stock or shares of such other securities or property as
may be the subject of grants herein pursuant to an adjustment made under
Section 9.1 of the Plan and Section 1(g) of this Agreement issuable pursuant to
such exercise will not violate any state or federal securities or other laws or
the rules of the NYSE or any other exchange upon which the Company’s securities
may then be trading. Any other provision of this Agreement notwithstanding, the
Company shall have the right to designate one or more periods of time, each of
which shall not exceed 180 days in length, during which the Option shall not be
exercisable if the Company determines (in its sole discretion) that such limitation
on exercise could in any way facilitate a lessening of any restriction on
transfer pursuant to the Securities Act of 1933, as amended (the “Act”) or any
state securities laws with respect to any issuance of securities by the
Company, facilitate the registration or qualification or any securities by the
Company under the Act or any state securities laws, or facilitate the
perfection of any exemption from the registration or qualification requirements
of the Act or any applicable state securities laws for the issuance or transfer
of any securities. Such limitation on exercise shall not affect the dates on
which the Option becomes exercisable or the Option Term pursuant to clause (i)
of this Section 1(b) in any way other than to limit the periods during which
the Option shall be exercisable.

 

(c)           No Rights as a
Shareholder. Participant shall have none of the rights of a hareholder with
respect to Shares subject to the Option until such Shares shall have been
issued to Participant upon exercise of the Option. No adjustments will be made
for dividends or other distributions or rights if the applicable record date
occurs before a stock certificate is issued pursuant to Participant’s exercise
of the Option.

 

3

 

(d)           Effect of Termination of Employment on Option.

 

(i)            In the event that
Participant has a Termination for Cause (as hereinafter defined) or in the
event Participant voluntarily resigns, the Option shall terminate as of such
date of resignation or termination.

 

For purposes of this
Agreement, a “Termination for Cause” shall mean a termination of employment by
the Company (or an Affiliate) due to any of the following:

 

(A)  the willful and continued
failure of Participant to perform substantially Participant’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 Participant 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 Participant has not substantially performed Participant’s duties, or

 

(B)  the willful engaging by
Participant 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 Participant, shall be considered “willful” unless it is done, or omitted to
be done, by Participant in bad faith or without reasonable belief that
Participant’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
Participant in good faith and in the best interests of the Company. The
cessation of employment of Participant shall not be deemed to be for Cause 

 

4

 

unless and until there shall
have been delivered to Participant 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 Participant and Participant is given an
opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, Participant is guilty of the
conduct described in subparagraph (A) or (B) above, and specifying the
particulars thereof in detail.

 

(ii)           In the event
Participant’s employment is terminated as a result of either his/her becoming Disabled
(as hereinafter defined) or is terminated by the Company or any of its
Affiliates other than a Termination for Cause by the Company prior to the full
vesting of the Option pursuant to Section 1(b)(i), then Participant shall
be entitled to the immediate vesting of exercisability of such portion of the
Option (rounded upward to the nearest whole share) as equals the product of (y)
the total number of Option Shares underlying such Option awarded to Participant
as described in Section 1(a) hereof multiplied by (z) a fraction, the numerator
of which shall be equal to the number of whole months (counting each month as
ending on the first day of a calendar month) elapsed from the Option Effective
Date until the date of such termination and the denominator of which shall be
60, minus that number of Option Shares as has previously vested pursuant
to Section 1(b)(i) hereof (the “Vested Amount”). Further, upon such
termination, the Option, to the extent exercisable at that time pursuant to
Section 1(b)(i) hereof or pursuant to the vesting provisions of the immediately
preceding sentence, may be exercised at any time within three (3) months after
the date of such termination. In this case the vested portion of the Option may
be exercised by Participant, his/her guardians or legal representatives, or by
any Family Member to whom the Option is gifted or transferred pursuant to a
domestic relations order and subject to the condition that no portion of the
Option shall be exercisable after the expiration of the Option Term.

 

5

 

For purposes of this
Agreement, a Participant shall be deemed “Disabled” if the Participant becomes
ill or is injured or otherwise becomes disabled or incapacitated such that, in
the opinion of the Board, he/she cannot fully carry out and perform his/her
duties as an employee of the Company (and all Affiliates), and such disability
or incapacity shall continue for a period of forty-five (45) consecutive days,
and the term “Disability” shall have a meaning correlative with the foregoing.

 

(iii)          In the event
Participant dies or terminates employment by reason of Retirement (as
hereinafter defined) while an active Participant prior to the full vesting of
the Option pursuant to Section 1(b)(i) hereof, then the Participant shall be
entitled to the immediate vesting of exercisability of such portion of the
Option (rounded upward to the nearest whole share) as equals the product of (y)
the total number of Option Shares underlying such Option awarded to Participant
as described in Section 1(a) hereof multiplied by (z) a fraction, the numerator
of which shall be equal to the number of whole months (counting each month as
ending on the first day of the calendar month) elapsed from the Option
Effective Date until the date of Participant’s death or Retirement and the
denominator of which shall be 60, minus the Vested Amount. Further, upon
Participant’s death or Retirement, the Option, to the extent exercisable at
that time pursuant to Section 1(b)(i) hereof or pursuant to the vesting
provisions of the immediately preceding sentence, may be exercised at any time
within twelve (12) months after Participant’s death or Retirement. In this case
the vested portion of the Option may be exercised by Participant, his/her
guardian or legal representatives or by any Family Member to whom the Option is
gifted or transferred pursuant to a domestic relations order, or, in the case
of death, by any person or persons to whom the Option is transferred by will or
the applicable laws of descent and distribution, as applicable, and subject to
the condition that no portion of the Option shall be exercisable after the
expiration of the Option Term.

 

6

 

For purposes of this Agreement, “Retirement” shall mean a voluntary
termination of employment by a Participant aged 65 or older with at least five
(5) years of Company service. A Participant may request approval for retirement
treatment if between the ages of 62 and 65 with at least five (5) years of
Company service. At the sole discretion of the Compensation Committee of the
Board of Directors, such requests can be approved or denied.

 

(e)           Effect of a
Change in Control of the Company on the Option. In the event of a Change in
Control (as defined in the Plan), the Company shall use its best efforts to
notify Participant that a Change in Control will occur promptly after the
Company is informed thereof and the Company shall give to Participant, at the
time of such Change in Control, either, in the Company’s sole discretion (i) a
reasonable time thereafter within which to exercise the Option, prior to the
effectiveness of such Change in Control, at the end of which time the Option
shall terminate, or (ii) the right to exercise the Option (or a substitute
option) as to an equivalent number of shares of stock of the corporation
succeeding the Company or acquiring its business by reason of such Change of
Control in accordance with Section 1(g).

 

(f)            Manner of
Exercise.

 

(i)            The Option can be
exercised only by Participant or other proper party by delivering within the
Option Term written notice to the Company at its principal office. The notice
shall state the number of Shares as to which the Option is being exercised and
be accompanied by payment in full of the Option Price for all shares designated
in the notice.

 

(ii)           Participant may pay
the Option Price in cash, by check (bank check, certified check or personal
check), by money order, or by wire transfer. In addition, with the approval of
the Company, Participant may pay the Option Price by (A) delivering to the
Company for cancellation, Shares with a Fair Market Value as of the date of
exercise equal to the Option Price or the portion thereof being paid by
tendering such Shares, or (B) delivering to the 

 

7

 

Company the full Option
Price in a combination of cash and/or shares of Common Stock in accordance with
clause (A) above; provided, however, that the Option Price may not be
paid by the delivery of Shares more frequently than once every six (6) months;
any shares so delivered must have been held by Participant for at least six
months.

 

(iii)          The Shares issued
pursuant to exercise of the Option may be subject to restrictions on transfer
under applicable federal or state securities laws. Certificates of Option Shares
issued pursuant to exercise of the Option shall bear an appropriate legend
referring to the restrictions applicable to such Shares.

 

(g)           Adjustments. If
there shall be any change in the Common Stock through (a) dividend or other
distribution (whether in the form of cash, shares of Common Stock, other
securities or other property), (b) recapitalization, (c) stock split, (d)
reverse stock split, (e) reorganization, (f) merger, (g) consolidation, (h)
split-up, (i) spin-off, (j) combination, (k) repurchase or exchange of shares of
Common Stock or other securities of the Company, (l) issuance of warrants or
other rights to purchase shares of Common Stock or other securities of the
Company or (m) other similar corporate transaction or event affects the shares
of Common Stock, and all or any portion of the Option shall then be unexercised
and not yet expired, then appropriate adjustments in the outstanding portion of
the Option shall be made by the Company, in its sole discretion under the Plan,
in order to prevent dilution or enlargement of the Option rights contemplated
hereby. Such adjustments shall include, where appropriate, changes in the number
and type of shares subject to the Option and/or the Option Price. In addition,
in the event of a merger, consolidation, liquidation, sale of all or
substantially all of the assets of the Company or other change of like nature
in the corporate structure of the Company, the Company shall, if the Option has
not yet expired, make such adjustments to the terms of the Option, which
adjustments may (but need not) include, without limitation, acceleration of the
date of the initial exercisability of the Option or provision for the deemed
exercise of the unexercised portion of the 

 

8

 

Option resulting in payment
of an amount of cash or other property reasonably equivalent to the amount that
could have been realized by Participant upon actual exercise of the unexercised
portion of the Option had the Option been exercisable and exercised immediately
prior to such event, all as the Company, in its sole discretion under the Plan,
may deem appropriate under the circumstances.

 

2.             AWARD OF RESTRICTED STOCK.

 

(a)           Award; Effective
Date. The Company hereby notifies Participant that, effective as of February
2, 2006 (the “Restricted Stock Effective Date”), the Company has awarded to
Participant «F25» shares of Common Stock,
subject to the terms of the Plan and subject to such further restrictions as
set forth below. Such shares of restricted Common Stock are hereinafter
referred to as “Restricted Stock”.

 

(b)           Vesting; Change in
Control; Restrictions. (i) Subject in each case to the provisions of
Section 2(c), Participant’s rights with respect to one-third (1/3) of the shares
of Restricted Stock (rounded to the nearest whole share) awarded hereunder
shall vest at the close of the market on each of the fifth, sixth and seventh
anniversaries of the Restricted Stock Effective Date.

 

(i)            Subject to the
provisions of Section 2(c), upon the occurrence of a Change in Control of the
Company, all shares of Restricted Stock not theretofore vested pursuant to
Section 2(b)(i) above shall become immediately vested.

 

(ii)           Prior to vesting,
shares of Restricted Stock shall not be voluntarily or involuntarily sold,
assigned, transferred, pledged, alienated, hypothecated or encumbered by
Participant, other than by will or the laws of descent and distribution.

 

9

 

(iii)          Prior to vesting,
Participant shall have voting rights and receive dividends if and when declared
on shares of Restricted Stock held by the Company on behalf of Participant.

 

(iv)          Prior to vesting,
the Company may impose such restrictions with respect to Restricted Stock in
addition to those contained herein as the Company may deem appropriate.

 

(c)           Forfeiture of
Restricted Stock.

 

(i)            In the event that
Participant has a Termination for Cause (as defined in Section 1(d)(i) hereof)
or in the event Participant voluntarily resigns from employment with the Company
or any of its Affiliates, then any unvested shares of Restricted Stock which
are held by Participant on the date of such termination or resignation shall be
forfeited by Participant, and the Company shall have no further obligation to
Participant with respect to such forfeited Restricted Stock.

 

(ii)           In the event
Participant becomes Disabled (as defined in Section 1(d) hereof) or dies or
his/her employment is terminated by the Company or any of its Affiliates for
any reason other than a Termination for Cause, or in the event Participant’s
employment is terminated by reason of his/her Retirement (as defined in Section
1(d) hereof), then Participant (or, as appropriate, Participant’s executors,
estate or proper legal guardians and representatives) shall be entitled to the
immediate vesting of such number of shares of Restricted Stock (rounded upward
to the nearest whole share) as equals the product of (y) the total number of shares
of Restricted Stock awarded to Participant as described in Section 2(a) hereof
multiplied by (z) a fraction, the numerator of which shall be equal to the
number of whole months (counting each month as ending on the first day of a
calendar month) elapsed from the Restricted Stock Effective Date until the date
of such disability, death, termination other than a Termination for Cause or Retirement
and the denominator of which shall be 84, minus the number of shares of
Restricted Stock as shall have vested pursuant to Section 2(b)(i) prior to the
date of such termination.

 

10

 

(d)           Stock
Certificates. The Restricted Stock awarded hereunder shall be held in a
book entry account by the Company. Upon vesting of any shares of Restricted
Stock awarded hereunder, a certificate or certificates representing such shares
shall be delivered to the Participant, which certificate or certificates may
contain such legends as the Company, in its sole discretion, deems necessary or
advisable in connection with applicable securities laws.

 

3.             MISCELLANEOUS

 

(a)           The Plan. The
grant of the Option and award of Restricted Stock provided for herein are made
pursuant to the Plan and are subject to its terms. The Plan is available for
inspection during business hours at the principal offices of the Company
(currently located at 1000 Abernathy Road, Suite 1200, Atlanta, Georgia 30328)
and a copy of the Plan may be obtained by Participant through a request in
writing therefor directed to the Secretary of the Company.

 

(b)           No Right to
Employment. This Agreement shall not confer on Participant any right with
respect to continuance of employment by the Company or any Affiliates, nor will
it interfere in any way with the right of the Company to terminate such
employment at any time.

 

(c)           Taxes. In
order to provide the Company with the opportunity to claim the benefit of any
income tax deduction which may be available to it upon the grant or exercise of
the Option or upon the award or vesting of Restricted Stock, and in order to
comply with all applicable federal, state or local income tax laws or
regulations, the Company may take such action as it deems appropriate to ensure
that, if necessary, all applicable federal, state or local payroll,
withholding, income or other taxes are withheld or collected from Participant. Participant
may elect to satisfy his/her federal, state and local income tax withholding
obligations upon the vesting of Restricted Stock or the exercise of the Option
by (i) having the Company withhold a portion of the Shares otherwise to be
delivered upon the vesting of Restricted Stock or the 

 

11

 

exercise of the Option
having a Fair Market Value equal to the amount of federal, state and local income
tax required to be withheld, (ii) delivering to the Company shares of Common
Stock other than the shares of Common Stock constituting vesting Restricted
Stock or issuable upon the exercise of the Option with a Fair Market Value
equal to such taxes, (iii) delivering to the Company cash, check (bank check,
certified check or personal check), money order or wire transfer equal to such
taxes upon the vesting of Restricted Stock or the exercise of the Option, or
(iv) any combination of 4(c) (i) through (iii).

 

(d)           Waivers. No
waiver at any time of any term or provision of this Agreement shall be
construed as a waiver of any other term or provision of this Agreement and a
waiver at any time of any term or provision of this Agreement shall not be
construed as a waiver at any subsequent time of the same term or provision.

 

(e)           Headings. All
headings set forth in this Agreement are intended for convenience only and
shall not control or affect the meaning, construction or effect of this
Agreement or of any of the provisions hereof.

 

(f)            Counterparts.
This Agreement may be executed via facsimile transmission signature and in
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

 

(g)           Board and
Committee Determinations. All matters to be determined by the Board of
Directors of the Company or any committee thereof, including, without
limitation, the Compensation Committee, pursuant to the terms of this Agreement
shall be determined by the members of the Board or such duly authorized
committee without the vote of Participant.

 

(h)           Law Governing
Agreement. This agreement shall be governed by and construed in accordance
with the laws of the state of Georgia.

 

12

 

IN WITNESS WHEREOF, the parties hereto have executed this AWARD
AGREEMENT effective as of the date first written above.

 

	
   

  	
  BEAZER HOMES USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
   

  
	
   

  	
   

  	
  Ian J. McCarthy

  
	
   

  	
   

  	
  President/Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  

 

13

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