Document:

Exhibit 10.1

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is
made effective as of the 14th day of March, 2005 (the “Effective Date”) by and
between BEAZER HOMES USA, INC., a Delaware corporation (the “Company”), and Kenneth
J. Gary, an individual resident of the State of Georgia (“Executive”).

 

WITNESSETH:

 

WHEREAS,
the Company wishes to employ the Executive, and the Executive wishes to accept
employment with the Company, on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises
and of the mutual covenants and agreements herein contained, the Company and
Executive hereby agree as follows:

 

1.             Employment and Duties.

 

(a)           The Company hereby agrees to employ Executive
for the Term (as hereinafter defined) as its Executive Vice President, General
Counsel and Corporate Secretary. If
requested by the Board of Directors of the Company (the “Board”), Executive
shall also serve on the Board without additional compensation.  Executive shall also serve, if requested by
the Board, as an executive officer and/or director of any subsidiaries and/or
affiliated companies and shall comply with the policy of the Compensation
Committee of the Board (the “Compensation Committee”) with regard to retention
or forfeiture of any director’s fees. As used in this Agreement, the term “affiliated companies” shall
include any company controlled by, controlling or under common control with the
Company.

 

(b)           The Executive shall
have such management and oversight responsibilities and authority as are
necessary to efficiently administer the affairs of the Company and as are
customary of an Executive Vice
President, General Counsel and Corporate Secretary.  All
powers herein granted to the Executive are subject to supervisory approval of
the Board and of the President and Chief Executive Officer of the Company (the “CEO”),
and the Executive may be given such further reasonably related supervisory
duties, powers and prerogatives as may be delegated to him from time to time by
said Board and/or the CEO.  The Executive
shall report exclusively to the CEO and the Board and further shall render such
advice to the CEO and Board as said CEO and/or Board may from time to time
request.

 

(c)           During the Term, and excluding any periods of vacation and
sick leave to which the Executive is entitled, Executive shall devote
substantially all of his business time and efforts to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, use the
Executive’s reasonable best efforts to perform faithfully such
responsibilities. In performing such duties hereunder, Executive shall comply
with the policies and procedures as adopted from time to time by the Board,
shall give the Company the benefit of his special knowledge, skills, contacts
and business experience, shall perform his duties and carry out his
responsibilities hereunder in a diligent manner.

 

(d)           During the Employment Term, it shall not be a
violation of this Agreement for the Executive to (i) with the prior approval of
the Board in each case, serve on corporate, civic or charitable boards or
committees, (ii) with the prior approval of the Board in each case, deliver
lectures, fulfill speaking engagements or teach at educational institutions,
and (iii) manage personal investments, so long as such activities do not
significantly interfere or constitute a conflict of interest with the
performance of the Executive’s responsibilities as an employee of the Company
in accordance with this Agreement.

 

(e)           The principal location for performance of
Executive’s services hereunder shall be at the offices of Beazer Homes USA,
Inc. in Atlanta, Georgia, subject to reasonable travel 

 

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requirements
during the course of such performance. Executive shall not be required,
without his consent, to regularly report to any office of the Company which is
located more than thirty-five (35) miles from the Company’s current office
location, provided Executive will be expected to travel to the extent
reasonably necessary to fulfill his responsibilities.

 

2.             Employment Term.   The
term of Executive’s employment hereunder (the “Term”) shall commence effective
as of the date hereof and shall end on March 13, 2007, unless sooner terminated
as provided herein; provided, however; that the Term shall
automatically be extended for successive one year periods unless: (i) this
Agreement is terminated as otherwise provided herein; or (ii) Executive or the
Company provides written notice to the other of such party’s desire not to
extend the Term at least sixty (60) days prior to the scheduled
expiration of the Term as then in effect.

 

3.
            Compensation and Benefits

 

(a)
          Base Salary. 
During the Term, the Executive shall receive an annual base salary (“Annual
Base Salary”) in the amount of $375,000, payable in accordance with the Company’s
normal payroll practices (but not less frequently than monthly). During the
Term, the Annual Base Salary shall be reviewed by the Compensation Committee
(for purposes of increase only) 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. Notwithstanding anything contained
herein to the contrary, in the event that the Company shall implement a
Company-wide reduction in executive base compensation, then, solely for such
purpose and only during the continuation of such Company-wide reduction, the
Company shall have the right to reduce the Annual Base Salary then payable
hereunder in a manner that is consistent with said Company-wide reduction.

 

(b)
          Bonuses; Stock Incentive
Plans. Executive will be
eligible to and shall participate in the Company’s bonus and stock incentive
plans at the discretion of the Compensation Committee of the Board. The amount
and terms of, and the targets, conditions and restrictions applicable to each
bonus or other incentive award shall be subject to the provisions of any such
plan and of the applicable award letter duly executed and delivered by the
Company.

 

(c)           Incentive, Savings and
Retirement Plans. During
the Term, 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.

 

(d)           Welfare Benefit Plans. During the Term, 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.

 

(e)
          Expenses. The Company will pay or reimburse Executive
for all reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement. Executive shall keep detailed
and accurate records of expenses incurred in connection with the performance of
his duties hereunder and reimbursement therefore shall be in accordance with
policies and procedures to be established from time to time by the Board.

 

(f)
           Office and Support Staff. 
During the Term, the Executive shall be entitled to an office or offices
of a size and with furnishings and other appointments, and to secretarial and
other assistance, consistent with the Executive’s position and title.

 

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(g)           Vacation. 
During the Term, Executive shall be entitled to twenty (20) working days
of compensated vacation in each fiscal year, to be taken at times which do not
unreasonably interfere with the performance of Executive’s duties hereunder.
Any unused vacation time from any fiscal year shall be subject to accumulation
or forfeiture in accordance with Company policy as in effect from time to time.

 

4.
            Termination of Employment.

 

(a)
          Death or Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Term. If the Disability of
the Executive occurs during the Term (pursuant to the definition of Disability
set forth below), the Company may give to the Executive written notice in
accordance with Section 10(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 120 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)            any act or failure to act by Executive done
with the intent to harm in any material respect the financial interests or
reputation of the Company or any affiliated companies;

 

(ii)           Executive
being convicted of (or entering a plea of guilty or nolo contendere to) a felony (other than a felony involving
a motor vehicle);

 

(iii)          Executive’s dishonesty, misappropriation or fraud
with regard to the Company or any affiliated companies (other than good faith
expense account disputes);

 

(iv)          a grossly negligent act or failure to act by
Executive which has a material adverse affect on the Company or any affiliated
companies;

 

(v)           the material breach by Executive of his
agreements or obligations under this Agreement which has a material
adverse effect on the Company, which breach, if curable, is not cured by
Executive within fifteen (15) days after written
notice from the Company which specifically identifies the material breach which
the Company believes that Executive has committed; or

 

(vi)          the continued refusal to follow the
directives of the CEO or the Board or
their designees which are consistent with Executive’s duties and
responsibilities identified in Section 1 hereof; provided that the
foregoing refusal shall not be “cause” if Executive in good faith believes that
such direction is illegal, unethical or immoral and promptly so notifies the
CEO or Board, as the case may be, in
writing.

 

(c)
          Notice of Termination.  Any
termination by the Company for Cause shall be communicated by Notice of
Termination to the Executive given in accordance with Section 10(c) 

 

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of
this Agreement. For purposes of this Agreement, a “Notice of Termination” means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of the Executive’s employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of
such notice, specifies the termination date (which date shall be not more than
thirty days after the giving of such notice). The failure by the Company to set
forth in the Notice of Termination any fact or circumstance which contributes
to a showing of Cause shall not waive any right of the Company hereunder or
preclude the Company from asserting such fact or circumstance in enforcing the
Company’s rights hereunder.

 

(d)
          Date of Termination. “Date of Termination” means (i) if the
Executive’s employment is terminated by the Company for Cause, the date of
receipt of the Notice of Termination or, subject to applicable cure periods,
any later date specified therein, as the case may be, (ii) if the Executive’s
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive’s employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the
case may be.

 

6.
            Obligations of the Company
upon Termination.

 

(a)
          Other Than for Cause. If, during the Term, the Company shall
terminate the Executive’s employment other than for Cause:

 

(i)
           the Company shall pay to the Executive in a lump sum in cash within 30
days after the Date of Termination the aggregate of the following amounts: (1)
the Executive’s Annual Base Salary through the Date of Termination to the
extent not theretofore paid, (2)  any
accrued but unpaid annual bonus (“Annual Bonus”) respecting any completed
fiscal year ending prior to the Date of Termination, (3) the product of (x) the
Average Annual Bonus (hereinafter defined) and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (4) any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1), (2), (3) and
(4) shall be hereinafter referred to as the “Accrued Obligations”). The
timing of payment by the Company of any deferred compensation shall remain
subject to any payment election previously made by the Executive.  The term “Average Annual Bonus” shall mean
the arithmetic average of the Executive’s bonuses (whether paid or deferred)
under the Company’s annual incentive plans during the last three full fiscal
years prior to the Date of Termination or for such lesser period as the
Executive has been employed by the Company (annualized in the event that the
Executive was not employed by the Company for the whole of any such fiscal
year).  Without limiting the generality
of the foregoing definition, the “Average Annual Bonus” shall include the
following components, if any, pursuant to the Company’s EVCIP Rules (or any successor incentive
plan, for so long as any of same shall exist):

 

(a)   Cash payouts from VC and IVC awards and the “Bank”
payout, subject to the Payout Cap, all at full face value;

 

(b)   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)   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

 

(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);

 

(i)            so long as the Executive is and remains in
compliance in all material respects with his obligations under Section 7 below,
the Company shall pay to the Executive an amount equal to the sum of (1)
Executive’s Annual Base Salary (at the rate in effect on the Date of
Termination), and (2) the Average Annual Bonus for a period of two years from
the Date of Termination, (the “Severance Period”), at the same time that
payments of Annual Base Salary would otherwise have become due and payable
during said period in the absence of such termination;

 

(iii)          so long as the Executive is and remains in
compliance in all material respects with his obligations under Section 7 below,
during the Severance Period, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy, the Company shall
continue benefits to the Executive and/or the Executive’s family at least equal
to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 3(d) of this Agreement if
the Executive’s employment had not been terminated, provided, however, that if
the Executive becomes reemployed with another employer and receives medical or
other welfare benefits under another employer provided plan, the medical and
other welfare benefits described herein shall cease; and

 

(iv)          to the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the “Other Benefits”).

 

(b)
          Death. If the Executive’s employment is terminated
by reason of the Executive’s death, this Agreement shall terminate without
further obligations to the Executive’s legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination.

 

(c)
          Disability. If the Executive’s employment is terminated
by reason of the Executive’s Disability, this Agreement shall terminate without
further obligations to the Executive, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive or the Executive’s legal
representative in a lump sum in cash within 30 days of the Date of Termination.

 

(d)
          Cause. If the Executive’s employment shall be
terminated for Cause, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive
(x) his Annual Base Salary through the Date of Termination, (y) the amount of
any compensation previously deferred by the Executive, and (z) Other Benefits,
in each case to the extent theretofore unpaid. If the Executive voluntarily
terminates employment during the 

 

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Term,
this Agreement shall terminate without further obligations to the Executive,
other than for Accrued Obligations and the timely payment or provision of Other
Benefits. In such case, all Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination.

 

(e)           Election Not to Extend.  In
the event that the Company elects, pursuant to Section 2 above, not to extend
the Term, then, such election shall be treated for all purposes hereof the same
as the termination by the Company of Executive’s employment for other than
Cause, and, in such case, commencing upon the date of the expiration of the
Term, Executive shall be entitled to receive from the Company the same payments
and benefits as Executive would be entitled to receive pursuant to Section 6(a)
above; provided, however, and notwithstanding anything contained in Section
6(a) above to the contrary, in connection with an election by the Company not
to renew the Term, the applicable “Severance Period” shall not extend beyond
the date that the Executive reaches the age of sixty-five (65).

 

7.
            Employment Covenants.

 

(a)           Covenant Not to Compete. Executive recognizes and acknowledges that
the Company is placing its confidence and trust in Executive. Executive,
therefore, covenants and agrees that during the Applicable Non-Compete Period
(as defined below) Executive shall not, either directly or indirectly, without
the prior written consent of the Board (which may be withheld in the sole and
absolute discretion of the Board):

 

(i)            Engage in or carry on any business or in any
way become associated with any business in the Restricted Area (as hereinafter
defined) which is similar to or is in competition with the Business of the
Company (as hereinafter defined). As used in this Section 7(a), the term (1) “Business
of the Company” shall mean and include all business activities in which the
Company and/or any affiliated companies have engaged (or have prepared written
plans to engage) at any time during the Term, including but not limited to, the
purchase of land (or options therefor) for development and the construction of
residential homes for resale to consumers, and (2) “Restricted Area” shall mean
and include anywhere in the United States of America or in any foreign country
in which the Company or any affiliated companies then engage (or have within
the preceding three years engaged) in business;

 

(ii)           in connection with any business which is
similar to or is in competition with the Business of the Company in the
Restricted Area, solicit the business of any person or entity, on behalf of
himself or any other person or entity, which is or has been at any time during
the Term a customer or supplier of the Company including, but not limited to,
former or present customers or suppliers with whom Executive has had personal
contact during, or by reason of, his relationship with the Company;

 

(iii)          Be or become an employee, agent, consultant,
representative, director or officer of, or be otherwise in any manner
associated with, any person, firm, corporation, association or other entity
which is engaged in or is carrying on any business which is similar to or in
competition with the Business of the Company in the Restricted Area;

 

(iv)          Solicit for employment or employ any person
employed by the Company at any time during the twelve (12) month period
immediately preceding such solicitation or employment; or

 

(v)           Be or become a shareholder, joint venturer,
owner (in whole or in part), or partner, or be or become associated with or
have any proprietary or financial 

 

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interest
in or of any firm, corporation, association or other entity which is engaged in
or is carrying on any business which is similar to or in competition with the
Business of the Company in the Restricted Area. Notwithstanding the preceding
sentence, passive equity investments by Executive of $25,000 or less in any
entity or affiliated group of any entity which is engaged in or is carrying on
any business which is similar to or in competition with the Business of the
Company shall not be deemed to violate this Section 7(a).

 

For purposes of identifying the Restricted Area,
Executive hereby recognizes and acknowledges that the existing Business of the
Company currently extends throughout the States of Georgia, Tennessee, South
Carolina, North Carolina, California, Arizona, Nevada, Florida, New Jersey,
Delaware, Maryland, Virginia, West Virginia, Texas, New York, Colorado,
Mississippi, Indiana, Kentucky, Ohio, Pennsylvania, Washington, D.C., West
Virginia and New Mexico.  Executive
further warrants and represents that, because of his varied skill and
abilities, he does not need to compete with the Business of the Company and
that this Agreement will not prevent him from earning a livelihood and
acknowledges that the restrictions contained in this Section 7 constitute
reasonable protections for the Company.

 

As
used in this Section 7, “Applicable Non-Compete Period” shall mean the
following:

 

(A)          at all times that the Executive is employed
by the Company; and

 

(B)           for a period of time after the Executive’s
employment under this Agreement is terminated for any reason equal to the
greater of

 

(i)            180 days; or

 

   (ii)           such
longer period of time that the Executive is entitled to receive payments under
Sections 6(a)(ii) or (iii) above.

 

(b)           Confidential Information. Executive
agrees that all Confidential Information shall be the sole property of the
Company, and Executive agrees that he shall not during the Term nor thereafter,
use for his benefit or the benefit of others or disclose at any time
Confidential Information or take with him upon termination of this Agreement
any records, papers, reports, lists, computer tapes or disks or any other
materials of any nature that contain any Confidential Information.  “Confidential Information” shall mean all
information other than General Knowledge (defined below) relating to the
Company’s: (i) business or existing projects including all those in various
stages of research and development including all unpublished plans for new
products or services; (ii) financial information, internal business procedures
and other information which relate to the way the Company conducts its business
and which are not publicly available; (iii) data written by the Company’s
employees or others, including source codes, object codes, marketing and
development plans, budgets, forecasts, forecast assumptions and future plans
and potential strategies of the Company which have been or are being discussed;
(iv) unpublished pricing data; (v) identity, buying habits and practices of the
Company, its suppliers and customers to the extent not publicly available; (vi)
information regarding the skills or compensation of employees of the Company;
(vii) the Intellectual Property of the Company and any information pertaining
thereto; (viii) materials and information supplied by customers or clients to
the Company that contain data regarding any research, products, procedures or
the like; and (ix) any other information deemed confidential by the Company by
marking such information with the word “Confidential” or similar word; by
orally advising the Executive that the information is confidential or by
treating the information in such a manner that the Executive should reasonably
believe it to be deemed confidential by the Company.  “General Knowledge” shall mean (i) general
skills or experience gained during Executive’s employment with, consultation
for or work for the Company; and (ii) information and data publicly available.

 

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(c)           Records. All files, records, memoranda and other
documents regarding former, existing or prospective customers of the Company or
relating in any manner whatsoever to Confidential Information or the Business
of the Company (collectively, “Records”), whether prepared by Executive or
otherwise coming into his possession, shall be the exclusive property of the
Company. All Records shall be immediately placed in the physical possession of
the Company upon the termination of Executive’s employment with the Company, or
at any other time specified by the Board. The retention and use by Executive of
duplicates in any form of Records is prohibited after the termination of
Executive’s employment with the Company.

 

(d)           Breach. Executive hereby recognizes and
acknowledges that irreparable injury or damage shall result to the Company in
the event of a breach or threatened breach by Executive of any of the terms or
provisions of this Section 7, and Executive therefore agrees that the Company
shall be entitled to an injunction restraining Executive from engaging in any
activity constituting such breach or threatened breach. Nothing contained
herein shall be construed as prohibiting the Company from pursuing any other
remedies available to the Company at law or in equity for such breach or
threatened breach, including but not limited to, the recovery of damages from
Executive and, if Executive is an employee of the Company, the termination of
his employment with the Company in accordance with the terms and provisions of
this Agreement.

 

(e)           Survival. 
Notwithstanding the termination of the employment of Executive or the
termination of this Agreement, the provisions of this Section 7 shall survive
and be binding upon Executive unless a written agreement which specifically
refers to the termination of the obligations and covenants of this Section 7 is
executed by the Company.  Notwithstanding
the foregoing, this Section 7 shall not survive the termination of this
Agreement as the result of the Change Of Control Agreement (hereinafter
defined) becoming effective.

 

(f)            Blue-Penciling. Should any court or other legally constituted authority determine that
for any such agreement or covenant to be effective it must be modified to limit
its duration or scope, the parties hereto shall consider such agreement or
covenant to be amended or modified with respect to duration and/or scope so as
to comply with the orders of any such court or other legally constituted
authority, and as to all other portions of such agreement or covenants they
shall remain in full force and effect as originally written.

 

8.             No Mitigation. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced whether or
not the Executive obtains other employment. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest by (i) the
Company, provided that the Executive prevails in at least one material issue,
(ii) the Executive or (iii) others, of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of
performance thereof (including, without limitation, as a result of any contest
by the Executive about the amount of any payment pursuant to this Agreement),
plus in each case interest on any delayed payment at the applicable Federal
rate provided for in Section 7872(f) (2) (A) of the Internal Revenue Code of
1986, as amended (the “Code”).

 

9.
            Successors.

 

(a)
          This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive’s legal
representatives.

 

(b)
          This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

 

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10.
          Miscellaneous.

 

(a)
          This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to principles of conflict
of laws. Any legal action, suit or proceeding arising out of or relating
to this Agreement shall be instituted in the state or federal courts in the
State of Delaware and the parties agree not to assert, in any action, suit or
proceeding by way of motion, as a defense or otherwise, any claim that either
party is not personally subject to the jurisdiction of such court, or that such
action, suit or proceeding is brought in an inconvenient forum, or that the
venue is improper or that the subject matter hereof cannot be enforced in such
court.  The parties hereby irrevocably
submit to the jurisdiction of any such court in any such action, suit or
proceeding and agree that service of all process in any such action, suit or
proceeding in any such court may be made by registered or certified mail,
return receipt requested, to its address set forth in this Agreement, such service
being hereby acknowledged by such party to be sufficient for personal
jurisdiction in any action against such party in any such court and to be
otherwise effective and binding service in every respect.

 

(b)           The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

 

(c)
          All notices
and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party, by UPS or other commercial overnight courier
or by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

 

If to the Executive:

 

1000 Abernathy Road

Suite 1200

Atlanta, Georgia 30328

 

If to the Company:

 

1000 Abernathy Road

Suite 1200

Atlanta, Georgia 30328

Attention:
President and Chief Executive Officer

 

or
to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

 

(d)
          The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.

 

(e)
          The Company may withhold from any amounts payable under this Agreement
such Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

 

(f)
           The Company’s
failure to insist upon strict compliance with any provision of this Agreement
or the failure to assert any right the Company may have hereunder shall not be
deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.

 

(g)           This Agreement supersedes any and all other
prior or contemporaneous agreements, either oral or in writing, between the
parties hereto with respect to the subject matter hereof, and this Agreement
contains all of the covenants and agreements between the parties with respect
to employment of Executive by the Company.

 

9

 

Reference
is hereby made to that certain Employment Agreement dated as of March 14, 2005
(the “Change of Control Agreement”) by and between the Company and the
Executive.  Notwithstanding anything
contained herein to the contrary, (i) this Agreement shall not supersede the
Change of Control Agreement, and (ii) upon the “Effective Date” occurring under
the Change of Control Agreement, this Agreement shall be superseded by the
Change of Control Agreement.

 

(h)           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.

 

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

 

 

	
   

  	
  BEAZER HOMES USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Ian J. McCarthy

  	
   

  
	
   

  	
  Name:
  Ian J. McCarthy

  
	
   

  	
  Title:
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Kenneth J. Gary

  	
   

  
	
   

  	
  Kenneth
  J. Gary

  

 

10EMPLOYMENT AGREEMENT

 

AGREEMENT by and between Beazer Homes USA, Inc., a
Delaware corporation (the “Company”) and Kenneth J. Gary (the “Executive”),
dated as of the 14th day of March, 2005.

 

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

 

 

1

 

(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

 

(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.

 

 

2

 

(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.

 

(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
the following components, if any, pursuant to the Company’s EVCIP Rules (or any
successor incentive plan, for so long as any of same shall exist):

 

(a)          Cash payouts from VC and IVC awards and the “Bank”
payout, subject to the Payout Cap, all at full face value;

 

 

3

 

(b)         Any excess in the Bank discounted at 75% of face value
(which shall, for purposes hereof, be deemed to be fully vested);

 

(c)          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

 

(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 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.

 

(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 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,

 

 

4

 

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.

 

(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

 

 

5

 

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 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 first anniversary of the Effective Date shall be
deemed to be a termination for Good Reason for all purposes of this Agreement.

 

(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 12(c) of this Agreement. For purposes of this
Agreement, a “Notice of Termination” means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment under
the provision so indicated and (iii) if the Date of Termination (as defined

 

 

6

 

below) is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive any right of the Executive
or the Company, respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or circumstance in enforcing
the Executive’s or the Company’s rights hereunder.

 

(e)           Date
of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good
Reason, the date of receipt of the Notice of Termination or, subject to
applicable cure periods, any later date specified therein, as the case may be, (ii)
if the Executive’s employment is terminated by the Company other than for Cause
or Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination and (iii) if the Executive’s
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.

 

6.             Obligations
of the Company upon Termination.

 

(a)           Good
Reason; Other Than for Cause. If, during the Employment Period, the Company
shall terminate the Executive’s employment other than for Cause or the
Executive shall terminate employment for Good Reason:

 

(i)            the
Company shall pay to the Executive in a lump sum in cash within 30 days after
the Date of Termination the aggregate of the following amounts:

 

A. the sum of (1) the
Executive’s Annual Base Salary through the Date of Termination to the extent
not theretofore paid, (2)  any accrued
but unpaid Annual Bonus respecting any completed fiscal year ending prior to
the Date of Termination, (3) the product of (x) the Average Annual Bonus and
(y) a fraction, the numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the denominator of which is
365 and (4) any compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon) and any accrued vacation pay, in
each case to the extent not theretofore paid (the sum of the amounts described
in clauses (1), (2), (3) and (4) shall be hereinafter referred to as the
“Accrued Obligations”).  The timing of payment by the Company of any deferred
compensation shall remain subject to any payment election previously made by
the Executive; and

 

B.            the amount equal to the product of
(1) two (2), and (2) the sum of (x) the Executive’s Annual Base Salary and (y)
the Average Annual Bonus; and

 

(ii)           for two (2) years after the
Executive’s Date of Termination, or such longer period as may be provided by
the terms of the appropriate plan, program, practice or policy, the Company
shall continue benefits to the Executive and/or the Executive’s family at least
equal to those which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section 4(b)(iv) of this
Agreement if the Executive’s employment had not been terminated 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 and
their families, provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or other welfare
benefits under another employer provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided under such other
plan during such applicable period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits) of the

 

 

7

 

Executive for retiree
benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until two (2) years
after the Date of Termination and to have retired on the last day of such
period;

 

(iii)          the
Company shall, at its sole expense as incurred, provide the Executive with
outplacement services in accordance with the Company’s policies with regard to
outplacement then in effect; and

 

(iv)          to
the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company and its affiliated
companies (such other amounts and benefits shall be hereinafter referred to as
the “Other Benefits”).

 

(b)           Death.
If the Executive’s employment is terminated by reason of the Executive’s death
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive’s legal representatives under this Agreement,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive’s estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of the most senior executives of the Company and such affiliated
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other most senior executives and
their beneficiaries at any time during the 120 day period immediately preceding
the Effective Date or, if more favorable to the Executive’s estate and/or the
Executive’s beneficiaries, as in effect on the date of the Executive’s death
with respect to other [most senior] executives of the Company and its
affiliated companies and their beneficiaries.

 

                (c)
          Disability. If the
Executive’s employment is terminated by reason of the Executive’s Disability
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations and
the timely payment or provision of Other Benefits. Accrued Obligations shall be
paid to the Executive or the Executive’s legal representative in a lump sum in
cash within 30 days of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in this Section 6(c)
shall include, and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at least equal to the
most favorable of those generally provided by the Company and its affiliated
companies to disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their families at
any time during the 120 day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive’s family, as in effect
at any time thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.

 

(d)           Cause;
Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the
obligation to pay to the Executive (x) his Annual Base Salary through the Date
of Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than for
Accrued Obligations and the timely payment or provision of Other

 

 

8

 

Benefits. In such case, all Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.

 

7.             Non-exclusivity
of Rights. Nothing in this Agreement shall prevent or limit the Executive’s
continuing or future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies and for which the
Executive may qualify, nor, subject to Section 12(f), shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.

 

8.             Full Settlement. The Company’s obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. Each and every payment made hereunder by the
Company shall be final, and the Company shall not seek to recover all or any
part of such payment from the Executive or from whomsoever may be entitled
thereto, for any reasons whatsoever. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Agreement and such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay as incurred, to
the full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest by (i) the Company,
provided that the Executive prevails in at least one material issue, (ii) the
Executive or (iii) others, of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance thereof
(including, without limitation, as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate provided for in
Section 7872(f) (2) (A) of the Internal Revenue Code of 1986, as amended (the
“Code”).

9.             Certain
Additional Payments by the Company.

 

(a)           Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the event it shall
be determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 9) (a “Payment”) would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise
Tax”), then the Executive shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 9(a), if it shall be determined that the Executive
is entitled to a Gross-Up Payment, but that the Payments do not exceed 110% of
the greatest amount (the “Reduced Amount”) that could be paid to the Executive
such that the receipt of Payments would not give rise to any Excise Tax, then
no Gross-Up Payment shall be made to the Executive and the Payments, in the
aggregate, shall be reduced to the Reduced Amount.

 

(b)           Subject
to the provisions of Section 9(c), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required and
the

 

 

9

 

amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by such certified public
accounting firm as may be designated by the Company (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Company and
the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested
by the Company. In the event that the Accounting Firm is serving as accountant
or auditor for the individual, entity or group effecting the Change of Control,
the Company shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm’s
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

 

(c)           The
Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company
of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive shall:

 

(i)            give
the Company any information reasonably requested by the Company relating to
such claim,

 

(ii)           take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,

 

(iii)          cooperate
with the Company in good faith in order effectively to contest such claim, and

 

(iv)          permit
the Company to participate in any proceedings relating to such claim;

 

provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 9(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or

 

 

10

 

more appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay such claim and sue
for a refund, the Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment
of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.

 

(d)           If,
after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 9(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Section 9(c)) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(c), a determination is
made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.

 

10.           Confidential
Information. The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or
data relating to the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the Executive during
the Executive’s employment by the Company or any of its affiliated companies
and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive’s employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

 

11.           Successors.

 

(a)           This
Agreement is personal to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by the Executive’s legal representatives.

 

(b)           This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

 

(c)           The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law, or otherwise.

 

 

11

 

12.           Miscellaneous.

 

(a)           This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without reference to principles of conflict of laws. Any legal
action, suit or proceeding arising out of or relating to this Agreement shall
be instituted in the state or federal courts in the State of Delaware and the
parties agree not to assert, in any action, suit or proceeding by way of
motion, as a defense or otherwise, any claim that either party is not
personally subject to the jurisdiction of such court, or that such action, suit
or proceeding is brought in an inconvenient forum, or that the venue is
improper or that the subject matter hereof cannot be enforced in such
court.  The parties hereby irrevocably
submit to the jurisdiction of any such court in any such action, suit or
proceeding.

 

(b)           The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

 

(c)           All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party, by FedEx or other commercial
overnight courier or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

 

If to the Executive:

 

1000 Abernathy Road

Suite 1200

Atlanta, Georgia 30328

 

If to the Company:

 

1000 Abernathy Road

Suite 1200

Atlanta, Georgia 30328

                                Attention:  President and Chief Executive Officer

 

or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.

 

(d)           The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.

 

(e)           The
Company may withhold from any amounts payable under this Agreement such
Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

 

(f)            The
Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)
through (v) of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.

 

(g)           Except
as may otherwise be provided under any other written agreement between the
Executive and the Company, the Executive and the Company acknowledge that the
employment of the Executive by the Company is “at will” and, subject to Section
1 hereof, prior to the Effective Date, the Executive’s employment and/or this
Agreement may be terminated by either the Executive or the Company at any time
prior to the Effective Date, in which case the Executive shall have no further
rights under this Agreement. From and after the Effective Date,

 

 

12

 

this Agreement shall supersede any other agreement between the parties
with respect to the subject matter hereof and, upon the Effective Date, any
such other agreement shall be null, void and of no further force or effect.

 

IN WITNESS WHEREOF, the Executive has hereunto set the
Executive’s hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.

 

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  /s/ Kenneth J. Gary

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Kenneth J. Gary

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  BEAZER HOMES USA, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By

  	
  /s/ Ian J. McCarthy

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Ian J. McCarthy

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  President and Chief Executive Officer

  	
   

  

 

 

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