EX-10.20 18 a2147884zex-10_20.htm EXHIBIT 10.20 Exhibit 10

Exhibit 10.17


EMPLOYMENT AGREEMENT

        This EMPLOYMENT AGREEMENT ("Agreement") is effective this            day of                        , 2004, between Comstock Homebuilding Companies, Inc. (the "Employer") and Christopher Clemente (the "Executive").

WITNESSETH

        WHEREAS, the Board of Directors of the Employer (the "Board") wishes to employ the Executive on the terms and conditions in this Agreement and in accordance with the policies established by the Employer for senior executive level employees; and

        WHEREAS, the Executive desires to accept such employment;

        NOW THEREFORE, in consideration of the promises and the mutual agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows:

1.     DEFINITIONS

        Those words and terms that have special meanings for purposes of this Agreement are specially defined through the use of parenthetical quotations and upper-lower case lettering. In addition, the following words and terms shall have the meanings set forth below for the purposes of this Agreement:

1.1.

Cause. Termination of the Executive's employment for "Cause" shall mean termination based on any of the following: (a) conviction (or entering a plea of guilty or nolo contendere) of any felony or other crime involving misuse or misappropriation of money or other property, moral turpitude, or that results in Executive being incarcerated for more than sixty (60) consecutive days upon such conviction; or (b) conduct that is intentional in nature that materially injures the business or reputation of the Employer or that prevents the Executive from being able to adequately perform his job duties; or (c) failure of the Executive to perform to the best of his abilities a substantial portion of the Executive's duties and responsibilities assigned or delegated under this Agreement, which failure is not cured, in the reasonable judgment of the Board, within sixty (60) days after written notice given to the Executive by the Board, unless Executive demonstrates during that sixty (60) day period that Executive is taking affirmative steps to cure such failure and in such event Executive shall be entitled to an additional sixty (60) days to cure such failure; (d) any intentional and material breach by the Executive of any of the covenants set forth in the Confidentiality & Non-Competition Agreement of even date herewith; (e) gross negligence, willful gross misconduct or insubordination of the Executive; or (f) an intentional and material breach of any provision of this Agreement that is not cured, in the reasonable judgment of the Board, within sixty (60) days after written notice given to the Executive by the Board, unless Executive demonstrates during that sixty (60) day period that Executive is taking affirmative steps to cure such failure and in such event Executive shall be entitled to an additional sixty (60) days to cure such failure. Cause shall be determined in good faith by the affirmative vote of a majority of the whole Board (excluding the Executive if he is a member of the Board) after the Executive has been provided the opportunity to make a presentation to the Board (which presentation may be with counsel).

1.2.

Change in Control. "Change in Control" shall mean:


(i)

the acquisition by any "person" or "group" (as defined in or pursuant to Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (other than (A) the Employer or any subsidiary thereof or (B) any employee benefit plan of the Employer or any subsidiary thereof, directly or indirectly, as "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of securities of the Employer representing more than fifty percent (50%) of either the then outstanding shares or the combined voting power of the then outstanding securities of the Employer;


(ii)

during any period of twenty-four consecutive months, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period;

(iii)

the stockholders of the Employer approve (A) a merger, consolidation or other business combination of the Employer with any other "person" or "group" (as defined in or pursuant to Sections 13(d) and 14(d) of the Exchange Act) or affiliate thereof, other than a merger or consolidation that would result in the outstanding common stock of the Employer immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into common stock of the surviving entity or a parent or affiliate thereof) more than fifty percent (50%) of the outstanding common stock of the Employer or such surviving entity or a parent or affiliate thereof outstanding immediately after such merger, consolidation or other business combination, or (B) a plan of complete liquidation of the Employer or an agreement for the sale or disposition by the Employer of all or substantially all of it's assets (including if accomplished pursuant to the sale of shares of equity securities (including by any consolidation, merger or reorganization) of one or more subsidiaries of the Employer which collectively constitute all or substantially all of its assets); or

(iv)

any other event or circumstance that is not covered by the foregoing subsections but that the Board determines to affect control of the Employer and with respect to which the Board adopts a resolution that the event or circumstance constitutes a Change in Control for purposes of this Agreement.

1.3.

Disability. Termination by the Employer of the Executive's employment based on "Disability" shall mean termination because the Executive is unable to perform the essential functions of his/her position with or without accommodation due to a disability (as such term is defined in the Americans with Disabilities Act) for nine (9) months in the aggregate during any twelve month period. This definition shall be interpreted and applied consistent with the Americans with Disabilities Act, the Family and Medical Leave Act, and other applicable law.

1.4.

Good Reason. Termination by the Executive of the Executive's employment for "Good Reason" shall mean termination by the Executive based on any one of the following:


1.4.1

Without the Executive's express written consent, a material adverse change made by the Employer in the Executive's functions, duties or responsibilities;

1.4.2.

Without the Executive's express written consent, a reduction by the Employer in the Executive's Base Salary and/or Bonus as the same may be increased from time to time; or, except to the extent permitted by Section 3.4.1 hereof, a substantial and significant reduction in the amount of Employer's directors' and officers' insurance coverage or a material reduction in the package of fringe benefits provided to the Executive, taken as a whole;

1.4.3.

Without the Executive's express written consent, the Employer fails to provide the Executive with an office and administrative support or requires the Executive to work in an office which is more than ten (10) miles from the location of the Employer's current principal executive office, except for required travel on business of the Employer to an extent substantially consistent with the Executive's business travel obligations; or

1.4.4.

The failure by the Employer to obtain the assumption of and agreement to perform this Agreement by a successor as contemplated in Section 8.1 hereof;

2


provided however, that any actions taken by the Employer to accommodate a disability of the Executive or pursuant to the Family and Medical Leave Act shall not be a "good reason" for purposes of this Agreement; and provided further that the continued employment of the Executive shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason.

1.5.

Notice of Termination. Any purported termination of the Executive's employment by the Employer for any reason, or by the Executive for any reason shall be communicated by a written "Notice of Termination" to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a dated notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated, (iii) specifies a Date of Termination; and (iv) is given in the manner specified in Section 8.2. "Date of Termination" as used in this Agreement shall mean the date specified in the Notice of Termination required by this Section.

2.     EMPLOYMENT

2.1.

Position and Term. The Employer hereby employs the Executive as Chief Executive Officer, reporting directly to the Board, and the Executive hereby accepts said employment and agrees to render such services to the Employer, on the terms and conditions set forth in this Agreement. Unless extended as provided in this Section 2.1, or terminated in accordance with Section 5, this Agreement shall terminate five (5) years after the date first above-written; provided, however, that, while this Agreement is in effect, beginning one year following the date first above-written and continuing on each one year anniversary of the Agreement (the "Annual Renewal Date"), this Agreement shall be automatically extended for an additional one (1) year, unless the parties have re-negotiated the Agreement or one of the parties gives written notice of non-renewal in accordance with Section 8.2 hereof to the other party at least thirty (30) days prior to an Annual Renewal Date, in which event this Agreement shall continue in effect for the remaining term of the Agreement. Reference herein to the "Term" of this Agreement shall refer both to the initial term and any successive term, as the context requires. The parties expressly agree that designation of a term and renewal provisions in this Agreement does not in any way limit the right of the parties to terminate this Agreement at any time as hereinafter provided.

2.2.

Duties. During the Term, and to the extent reasonably necessary to perform his duties hereunder, the Executive shall devote his full working time and attention and agrees to use his best efforts to further the interests of the Employer and to perform such services for the Employer as is consistent with his position and as directed, from time to time, by the Board. During the Term, and to the extent reasonably necessary to perform his duties hereunder, the Executive shall devote his full time, attention and energies to the business of the Employer and shall not be employed or involved in any other business activity that prevents the Executive from performing his duties hereunder. Subject to the foregoing, the following activities are permitted activities: (i) volunteer services for or on behalf of such religious, educational or non-profit organization as Executive may wish to serve, (ii) service as a director of as many as three (3) for-profit business entities, and (iii) such other activities as may be specifically approved by the Employer, including, but not limited to, the activity described on Schedule 2.2 hereto. This restriction shall not, however, preclude the Executive (i) from owning less than five percent (5%) of the total outstanding shares of a publicly traded company or (ii) from employment in any capacity with affiliates of the Employer, nor shall any remuneration from such affiliates be considered in calculating the Base Salary (as defined in Section 3.1) due to Executive hereunder or any Bonus that may be due to Executive.

3


3.     COMPENSATION AND BENEFITS

3.1.

Base Salary. For services rendered hereunder by the Executive, the Employer shall compensate and pay Executive for his services during the Term at a minimum base salary of five hundred and fifty thousand dollars ($550,000) per year ("Base Salary"), which may be increased from time to time in such amounts as may be determined by the Board. Said Base Salary shall be payable in accordance with the Employer's regular payroll practices.

3.2.

Bonus. In addition to his Base Salary, the Executive shall be eligible during the Term to receive an annual cash bonus determined by the Board based on the Employer's financial performance goals and taking into account a recommendation by the Employer's Compensation Committee ("Bonus"). Any Bonus shall be paid within ninety (90) days of the end of the Employer's fiscal year, and, provided the Employer's goals have been met, will be not less than two hundred percent (200%) of the Executive's Base Salary. The Executive must be employed at the end of the fiscal year but need not be employed by the Employer at the time of payment in order to receive any Bonus to which the Executive is otherwise entitled pursuant to the terms of this Section 3.2. Payment of any Bonus shall be subject to the provisions of Sections 5.1, 5.2, 5.3, 5.4, 5.5 and 5.6 hereof. The Executive is also an eligible participant in the Employer's equity incentive, employer stock purchase and any similar executive compensation plans the Employer may adopt from time to time. Any awards under such plans shall be determined by the Board, taking into account a recommendation by the Employer's Compensation Committee.

3.3.

Withholding. All payments required to be made by the Employer hereunder to the Executive shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Employer may reasonably determine should be withheld for payment to the applicable taxing authorities pursuant to any applicable law or regulation. Employer shall make such payments to the applicable taxing authority when due.

3.4.

Policies and Benefits.


3.4.1

Participation in Policies and Benefit Plans. Except as otherwise provided herein, during the Term, the Executive's employment shall be subject to the personnel policies that apply generally to the Employer's executive employees as the same may be interpreted, adopted, revised or deleted from time to time by the Employer in its sole discretion. Except as otherwise provided herein, during the Term, the Executive shall be entitled to participate in and receive the benefits of any benefit plans, benefits and privileges given to executive level employees of the Employer, to the extent commensurate with his then duties and responsibilities ("Benefit Plans") when and if such Benefit Plans are established by the Employer. The Employer shall not make any changes in such plans, benefits or privileges that would adversely affect the Executive's rights or benefits thereunder, unless such change occurs pursuant to a program applicable to all executive officers of the Employer and does not result in a proportionately greater adverse change in the rights of or benefits to the Executive as compared with any other executive officer of the Employer. Nothing paid to the Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the Base Salary payable to the Executive pursuant to Section 3.1 hereof.

3.4.2

Director's and Officer's Liability Insurance. During the Term, the Employer shall provide the Executive with directors' and officers' liability insurance coverage in an amount determined by the Board to be appropriate and affordable and deemed reasonably acceptable by the Executive. In addition, after the expiration of this Agreement, the Employer shall provide the Executive with such directors' and officers' liability insurance

4


coverage in an amount and for a period of time determined by the Board to be appropriate and affordable and deemed reasonably acceptable by the Executive.

3.4.3

Life Insurance. During the Term, the Employer shall provide the Executive with Life Insurance in accordance with the terms of any applicable life insurance plan established by the Employer.

3.4.4

Long-term Disability Insurance. During the Term, the Employer shall provide the Executive with Long-Term Disability Insurance in accordance with the terms of any applicable long-term disability plan established by the Employer.

4.     SUPPORT AND EXPENSES

4.1.

Office. The Employer shall provide the Executive with secretarial and support staff and furnished offices and conference facilities in the Reston, Virginia area, and in such other location, if any, in which the Executive hereafter agrees to perform services on behalf of the Employer, all of which shall be consistent with the Executive's duties and sufficient for the efficient performance of those duties as reasonably determined by Executive.

4.2.

Expenses. The Employer shall reimburse the Executive or otherwise provide for or pay for all reasonable expenses incurred by the Executive in furtherance of, or in connection with the business of the Employer, including, but not by way of limitation, traveling expenses, communication expenses (including, but not limited to, reasonable expenses relating to the acquisition, installation and maintenance of telecommunications and computer networking facilities enabling Executive to perform his duties on behalf of the Employer from any of Executive's residences), and all reasonable entertainment expenses (whether incurred at the Executive's residence, while traveling or otherwise), subject to such reasonable documentation and other limitations as may be established by policies of the Employer and/or the Board. Additionally, Employer shall reimburse Executive for legal fees and related costs, up to a maximum of fifty thousand dollars ($50,000), incurred in connection with estate planning matters undertaken on behalf of Executive in contemplation of the Company's planned initial public offering, regardless of whether the fees and costs are incurred prior to or after closing of the initial public offering.

5.     TERMINATION

5.1.

Termination Due to Death. If the Executive's employment is terminated by reason of the Executive's death, the Employer shall (i) continue to pay the Executive's Base Salary then in effect for a period of twelve (12) months after the Date of Termination (after which time the Employer shall have no further obligation to pay Base Salary to the Executive) and (ii) within ninety (90) days of the Employer's last payment of Base Salary under this Section, or the end of the Employer's fiscal year during which the Executive's death occurs, whichever is earlier, pay, on a prorated basis if applicable, any earned but unpaid Bonus, determined as of the Date of Termination (using calendar days of service to the Company during the year of Executive's death as a percentage of 365 calendar days to determine the percentage of Bonus compensation). The entitlement of any beneficiary of the Executive to benefits under any benefit plan shall be determined in accordance with applicable law and the provisions of such plan. In lieu of payments to the Executive's estate following the Executive's death, the Executive may designate a beneficiary or beneficiaries to whom all payments which may be due under this Agreement will be made in the event of the Executive's death. Such designation shall be made on a form delivered to the Employer. The Executive shall have the right to change or revoke any such designation from time to time by filing a new designation or notice of revocation with the Employer, and no notice to any beneficiary nor consent by

5


any beneficiary shall be required to effect any such change or revocation. If the Executive shall fail to designate a beneficiary before the Executive's death, or if no designated beneficiary survives the Executive, any payments which may be due under this Agreement following the Executive's death will be paid to the Executive's estate.

5.2.

Termination Due to Disability. If the Executive is terminated due to Disability, the Employer shall (i) continue to pay the Executive's Base Salary then in effect for a period of twelve (12) months after the Date of Termination (after which time the Employer shall have no further obligation to pay Base Salary to the Executive) and (ii) within ninety (90) days of the Employer's last payment of Base Salary under this Section, or the end of the Employer's fiscal year during which it is determined that the Executive has a Disability, whichever is earlier, pay, on a prorated basis if applicable, any earned but unpaid Bonus, determined as of the Date of Termination (using calendar days of service to the Company during the year of Executive's Disability as a percentage of 365 calendar days to determine the percentage of Bonus compensation). The entitlement of the Executive to benefits under a plan described in Section 3.4.1 upon such termination shall be determined in accordance with applicable law and the provisions of such plan.

5.3.

Termination by Executive Other Than for Good Reason. In the event the Executive terminates this Agreement other than for Good Reason, compensation pursuant to Section 3.1 of this Agreement shall end as of the Date of Termination and any unpaid Bonus shall be forfeited by the Executive. The entitlement of the Executive to benefits under any Benefit Plan shall be determined in accordance with applicable law and the provisions of such plan.

5.4.

Termination by the Employer Without Cause. If this Agreement is terminated by the Employer Without Cause pursuant to this Section 5.4, effective the Date of Termination, the Employer shall (i) continue to pay the Executive's Base Salary then in effect for a period of twenty four (24) months after the Date of Termination and (ii) within ninety (90) days of the Employer's last payment of Base Salary under this Section, or the end of the Employer's fiscal year during which such Termination Without Cause occurs, whichever is earlier, pay two (2) times one hundred percent (100%) of the Bonus the Executive would have been entitled to had he remained an employee of Employer until the end of Employer's fiscal year. Thereafter, the Employer shall have no further obligation to pay compensation to the Executive under this Agreement. Provided however, that upon a termination by the Employer pursuant to this Section 5.4 within the six (6) full calendar month period prior to the effective date of a Change in Control, or within the twelve (12) full calendar months following the effective date of a Change in Control, the cash payment(s) due to Executive as described in this Section 5.4 shall be due and payable in full within thirty (30) days of the effective date of a Change in Control or the effective date of the Executive's Termination Without Cause, whichever is later. The Executive shall continue to be entitled to benefits under Employer's Benefit Plans for twelve (12) months after the Date of Termination provided that a review of applicable law and the provisions of such plans does not result in a determination to the contrary.

5.5.

Termination for Cause. Upon a Termination by the Employer for Cause as defined in Section 1.1 pursuant to this Section 5.5, the Employer shall have no further obligation to pay compensation (Base Salary or Bonus) to the Executive effective the Date of Termination. The entitlement of the Executive to benefits under a plan described in Section 3.4.1 upon such termination shall be determined in accordance with applicable law and the provisions of such plan.

5.6.

Termination by the Executive for Good Reason. If the Executive terminates this Agreement for Good Reason, the Executive shall be entitled to receive the same payments and benefits

6


specified in Section 5.4 of this Agreement. Upon a termination for Good Reason within the six (6) full calendar month period prior to the effective date of a Change in Control or within the twelve (12) full calendar months following the effective date of a Change in Control, the Executive shall be entitled to the same expedited payments provided in Section 5.4. The entitlement of the Executive to benefits under a plan described in Section 3.4.1 upon such termination shall be determined in accordance with applicable law and the provisions of such plan.

5.7.

Termination Due to Discontinuance of Business. Notwithstanding anything in this Agreement to the contrary, in the event the Employer's business is discontinued because rendered impracticable by substantial financial losses, lack of funding, legal decisions, administrative rulings, declaration of war, dissolution, national or local economic depression or crisis or any reasons beyond the control of the Employer, this Agreement shall terminate as of the day the Employer determines to cease operation with the same force and effect as if such day of the month were originally set as the termination date hereof. In the event this Agreement is terminated pursuant to this Section 5.7, the Employer shall have no further obligation to pay compensation to the Executive effective the Date of Termination. The entitlement of the Executive to benefits under a plan described in Section 3.4.1 upon such termination shall be determined in accordance with applicable law and the provisions of such plan. This Section 5.7 shall be void and of no effect in the event of a discontinuance that occurs within twelve (12) months after the effective date of a Change in Control.

5.8.

Termination by Mutual Consent. Notwithstanding any of the foregoing provisions of this Section 5, if at any time during the course of this Agreement the parties by mutual consent decide to terminate it, they shall do so by separate agreement setting forth the terms and conditions of such termination.

5.9.

Cooperation with Employer After Termination of Employment. Following termination of the Executive's employment for any reason, the Executive shall fully cooperate with the Employer in all matters relating to the winding up of his pending work on behalf of the Employer including, but not limited to, any litigation in which the Employer is involved, and the orderly transfer of any such pending work to other employees of the Employer as may be designated by the Employer. The Employer agrees to reimburse the Executive for any out-of-pocket expenses he incurs in performing any work on behalf of the Employer following the termination of his employment.

5.10.

Withholding. All payments required to be made by the Employer to the Executive under Section 5 of this Agreement shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Employer may reasonably determine should be withheld for payment to the applicable taxing authorities pursuant to any applicable law or regulation. Employer shall make such payments to the applicable taxing authority when due.

6.     CONFIDENTIALITY & NON-COMPETITION AGREEMENT

        The parties hereto have entered into a Confidentiality & Non-Competition Agreement dated                        , 2004, which may be amended by the parties from time to time without regard to this Agreement. The Confidentiality & Non-Competition Agreement contains provisions that are intended by the parties to survive and do survive termination or expiration of this Agreement.

7.     EXECUTIVE'S REPRESENTATIONS AND WARRANTIES

7.1.

No Conflict of Interest. The Executive warrants that, subject to Schedule 2.2 attached hereto, he is not, to the best of his knowledge and belief, involved in any situation that might create,

7


or appear to create, a conflict of interest with his loyalty to or duties for the Employer, except as such may have been previously disclosed to Employer.

7.2.

Notification of Materials or Documents from Other Employers. The Executive further warrants that he has not brought and will not bring to the Employer or use in the performance of his responsibilities at the Employer any materials or documents of a former employer that are not generally available to the public, unless he has obtained express written authorization from the former employer for their possession and use.

7.3.

Notification of Other Post-Employment Obligations. The Executive also understands that, as part of his employment with the Employer, he is not to breach any obligation of confidentiality that he has to former employers, and he agrees to honor all such obligations to former employers during his employment with the Employer. The Executive warrants that he is subject to no employment agreement or restrictive covenant preventing full performance of his duties under this Agreement.

7.4.

Indemnification For Breach. In addition to other remedies that the Employer might have for breach of this Agreement, the Executive agrees to indemnify and hold the Employer harmless from any breach of the provisions of this Section 7.

8.     GENERAL PROVISIONS

8.1.

Assignment. The Employer shall assign this Agreement and its rights and obligations hereunder in whole, but not in part, to any corporation or other entity with or into which the Employer may hereafter merge or consolidate or to which the Employer may transfer all or substantially all of its assets, if in any such case said corporation or other entity shall by operation of law or expressly in writing assume all obligations of the Employer hereunder as fully as if it had been originally made a party hereto, but may not otherwise assign this Agreement or its rights and obligations hereunder. The Executive may not assign or transfer this Agreement or any rights or obligations hereunder.

8.2.

Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:



 

 

To the Employer:

 

Comstock Homebuilding Companies, Inc.
Employer Headquarters Address at time of Notice

 

 

 

 

Attention: General Counsel


 


 


To the Executive:


 


Christopher Clemente
Home Address as shown in the records of the Employer at time of Notice

8.3.

Amendment and Waiver. No amendment or modification of this Agreement shall be valid or binding upon (i) the Employer unless made in writing and signed by an officer of the Employer designated by the Board, and (ii) upon the Executive unless made in writing and signed by him.

8.4.

Non-Waiver of Breach. No failure by either party to declare a default due to any breach of any obligation under this Agreement by the other, nor failure by either party to act quickly with regard thereto, shall be considered to be a waiver of any such obligation, or of any future breach.

8.5.

Severability. In the event that any provision or portion of this Agreement, with the exception of Sections 2 and 3, shall be determined to be invalid or unenforceable for any reason, the

8


remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.

8.6.

Governing Law. To the extent not preempted by federal law, the validity and effect of this Agreement and the rights and obligations of the parties hereto shall be construed and determined accordance with the law of the Commonwealth of Virginia.

8.7.

Forum Selection and Consent to Jurisdiction. With respect to any litigation based on, arising out of, or in connection with this Agreement, the parties hereby expressly submit to the personal jurisdiction of the Fairfax County Circuit Court for the Commonwealth of Virginia and of the United States District Court for the Eastern District of Virginia. The parties hereby expressly waive, to the fullest extent permitted by law, any objection that they may now or hereafter have to the laying of venue of any such litigation brought in any such court referred to above, including without limitation any claim that any such litigation has been brought in an inconvenient forum.

8.8.

Entire Agreement. This Agreement contains all of the terms agreed upon by the Employer and the Executive with respect to the subject matter hereof and supersedes all prior agreements, arrangements and communications between the parties dealing with such subject matter, whether oral or written.

8.9.

Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the transferees, successors and assigns of the Employer, including any corporation or entity with which the Employer may merge or consolidate.

8.10.

Headings. Numbers and titles to Sections hereof are for information purposes only and, where inconsistent with the text, are to be disregarded.

8.11.

Counterparts. This agreement may be executed in counterparts, each of which shall be deemed an original, but all of which when taken together, shall be and constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date and year first written above.

The Employer:

 

COMSTOCK HOMEBUILDING COMPANIES, INC.


 


 


By:


 


 

 

 

 

 


Bruce J. Labovitz
Chief Financial Officer


 


 


 


 


 


The Executive:


 


 


 


 

 

 


Christopher Clemente

9



Schedule 2.2

Employer-Permitted Activities

        In connection with the Employment Agreement, effective                        , 2004, between the Employer and the Executive, the following shall be deemed specifically permitted and approved business activities within the purview of Section 2.2(ii) of the Employment Agreement:

Executive, whether in his individual capacity, through Comstock Partners, LC or an affiliated entity ("Comstock Partners") or as a partner, collaborator or co-venturer (without regard to whether the Executive is a majority owner of any such partnership, collaboration or joint venture), may engage in the business of:

(i)    development of and/or ownership of income-producing commercial or for-rent residential (such as apartment buildings) real estate investment properties;

(ii)    ownership of and/or development (including seeking rezoning and/or other entitlements) of speculative land holdings, whether currently owned or acquired in the future, and the related development (land development only) of such speculative land holdings as residential finished building lots intended for construction of for-sale residential units or buildings, provided that in all instances where Executive has a controlling interest or decision making powers, Employer is given a right of first refusal to purchase outright any such residential land at a purchase price not greater than its fair market value as reasonably determined by Employer and authorized by the independent members of Employer's Board of Directors, and provided further that in the event Employer does not purchase any subject property, the Executive shall remain prohibited from engaging in the business of constructing and selling for-sale single-family homes, townhomes or condominiums on such property, if such property is within the Washington, D.C. or Raleigh, North Carolina metropolitan areas or any other geographic area in which Employer is conducting operations or has demonstrable plans to commence operations within six (6) months of the date on which Executive would commence such activity, as provided for in the Confidentiality and Non-Competition Agreement, effective                        , 2004, between the Employer and the Executive; and

(iii)    secured real estate lending to unrelated third parties, where Executive or an entity owned or controlled by Executive, makes loans secured by real estate, provided the making of the Loan does not entitle Executive to control of the subject borrowing entity.

10


 

 

Exhibit 10.20


CONFIDENTIALITY AND NON-COMPETITION AGREEMENT

        This Agreement is between Christopher Clemente (hereafter "You") and Comstock Homebuilding Companies, Inc., its affiliates, successors, assigns, parents and subsidiaries (hereafter "the Company"), effective this    day of                        , 2004. You are entering into this Agreement based on the provision of consideration to You from the Company, including the grant of equity in the Company to You in connection with the Company's initial public offering (the "IPO Grant"), Your employment and continued employment with the Company, and such other benefits that You acknowledge to be sufficient consideration for this Agreement.

1.    NATURE OF AGREEMENT. You and the Company intend this Agreement to be an Agreement concerning confidentiality and non-competition/non-solicitation. This Agreement does not limit in any way the right of either You or the Company to terminate the employment relationship at any time. This Agreement contains obligations that survive termination of the employment relationship between You and the Company. You agree that neither the provisions set forth in this Agreement nor any other written or oral communications between the Company and You about the subject matter of this Agreement as of the date of this Agreement has created or is intended to create a contract of employment or a promise to provide any benefits. If You and the Company enter into or have entered into an Employment Agreement, this Agreement is to be read and applied consistently with that Agreement.

2.    DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings:

2.1

"Business Partner" means each and every person and/or entity who or that, at any time during the one (1) year period prior to termination of Your employment: (i) was either a customer, supplier or subcontractor of or to the Company; (ii) was in contact with You or in contact with any other employee, owner, or agent of the Company, of which contact You either were involved or were or should have been aware, concerning receiving or providing any product or service from the Company; or (iii) was solicited by the Company, or in consideration or planning to be solicited by the Company, in an effort in which You were involved or of which You were or should have been aware. Notwithstanding the foregoing, the following shall be excluded from the definition of Business Partner; (a) any member of Your immediate family (including Your spouse, children, siblings, parents and parents-in-law) unless such person is a full time salaried employee of the Company or (b) any customer, lender, supplier, or subcontractor that has a relationship with you, Comstock Partners, LC ("Comstock Partners") or its affiliated entities or any other entity you are associated with, was solicited by you, Comstock Partners or its affiliated entities or any other entity you are associated with, or you, Comstock Partners or its affiliated entities or any other entity your are associated with is considering soliciting.

2.2

"Conflicting Services" means any service or process of any person or organization other than the Company which directly competes with the Company in the business of (i) assembling, acquiring, developing or making available for-sale raw or developed land for residential purposes or (ii) designing, constructing and selling for-sale single-family homes, townhomes or condominiums within the Washington, D.C. and Raleigh, N.C. metropolitan areas or any other geographic area in which the Company is conducting operations or has demonstrable plans to commence operations within six (6) months of the earlier of (i) the date on which Your employment by the Company terminates and (ii) the date on which You commence providing Conflicting Services during employment by the Company or about which You acquire Confidential Information during Your employment by the Company. The acts of designing, constructing and selling Your personal residence(s) (primary or otherwise) shall not be covered by this Agreement.


Notwithstanding the foregoing, You, whether in your individual capacity, through Comstock Partners or an affiliated entity or as a partner, collaborator or co-venturer (without regard to whether You are a majority owner of any such partnership, collaboration or joint venture), may engage in the Permitted Activities as described in Schedule 2.2 attached to the Employment Agreement, effective            , 2004, between You and the Company.

2.3

"Confidential Information" means material knowledge or information not generally known to the public or in the home construction industry (including information conceived, discovered or developed by You while performing your routine duties for the Company), that You learn of, possess, or to which You have access through Your employment by the Company, related to the Company or its Business Partners, including but not limited to the information listed on Schedule B to this Agreement. Confidential Information shall not include information that is or becomes publicly known through no breach of this Agreement or other act or omission of the Employee. The phrase "publicly known" shall mean readily accessible to the public in a written publication or on the internet (whether in hard copy or in electronic format), and shall not include information that is only available by a substantial searching (not including routine searches on the internet) of the published literature, and information the substance of which must be pieced together from a number of different publications and sources. The burden of proving that information or skills and experience are not Confidential Information shall be on the party asserting such exclusion.

3.    RETURN OF COMPANY PROPERTY. You agree that upon termination of Your employment with the Company for any reason, You will promptly deliver to the Company all property and materials in any form belonging to the Company, or relating to its business, including the property listed on Schedule A to this Agreement. Notwithstanding the foregoing, this provision shall be effective only with respect to Company property and obtained by you after the effective date of this Agreement.

4.    RESTRICTIONS.

4.1.

You agree that while You are employed by the Company, You will not solicit or provide Conflicting Services except on behalf of or at the direction of the Company, except as otherwise stated herein.

4.2

At any time during and for twenty-four (24) months after Your employment with the Company You agree:


4.2.1

You will not disclose Confidential Information to any person or entity without first obtaining the Company's consent, and will take reasonable precautions to prevent inadvertent disclosure of such Confidential Information. You agree to make reasonable efforts to ensure that persons working in any capacity for the Company, including without limitation employees, officers, directors, vendors, sub-contractors, attorneys, and agents, subsidiary or parent entities (and the employees, officers, directors, vendors, contractors, attorneys, and agents, thereof) are permitted access to Confidential Information on a strictly "need to know" basis. This prohibition against Your disclosure of Confidential Information includes, but is not limited to, disclosing the fact that any similarity exists between Confidential Information and information independently developed by another person or entity. You understand that the existence of such a similarity does not excuse You from honoring Your obligations under this Agreement.

4.2.2

Except with respect to Your actions in connection with Permitted Activities, You will not use any Confidential Information for Your personal benefit or for the benefit of any person or entity other than the Company. You will not use, copy or transfer Confidential Information other than as necessary in carrying out Your duties on behalf of the Company or in connection with Permitted Activities, without first obtaining the Company's written

2


consent, and will take reasonable precautions to prevent inadvertent use, copying or transfer of Confidential Information. This prohibition against Your use, copying, or transfer of Confidential Information includes, but is not limited to, selling, licensing or otherwise exploiting, directly or indirectly, any products or services (including software in any form) which embody or are derived from Confidential Information, or exercising judgment in performing analysis based upon knowledge of Confidential Information. Without in any way limiting the generality of this subsection, You agree not to directly or indirectly circumvent or compete with the Company with regard to any Confidential Information.

4.2.3

You will not make any written use of or reference to the Company's name or trademarks (or any name under which the Company does business) for any marketing, public relations, advertising, display or other business purpose unrelated to the express business purposes and interests of the Company or make any use of the Company's facilities for any activity unrelated to the express business purposes and interests of the Company, without the prior written consent of the Company, which consent may be withheld or granted in the Company's sole and absolute discretion.

4.2.4

Notwithstanding the foregoing, it is understood that certain companies and entities that are active in real estate development activities (other than those relating to for-sale residential homebuilding) and that are owned and controlled by You are authorized to use the name Comstock, and it is agreed that the Company benefits from such dual use of the name "Comstock." Further, it is agreed that it is in the best interest of the Company for You to share Confidential Information with Comstock Partners, and its affiliated entities.

4.2.5

In the event that You receive a subpoena or order of a court, or other body having jurisdiction over a matter, in which You are compelled to produce any information relevant to the Company, whether confidential or not, You will immediately provide the Company with written notice of this subpoena or order so that the Company may timely move to quash if appropriate, at no cost to You. If the Company fails to take such action, this Section 4.2.5 shall be null and void and of no effect as it relates to the specific matter covered by the subject subpoena or court order.

4.2.6.

If a court decides that Section 4.2 or any of its restrictions is unenforceable for lack of reasonable temporal limitation and the Agreement or restriction(s) cannot otherwise be enforced, You and the Company agree that twenty-four (24) months shall be the temporal limitation relevant to the contested restriction; provided, however, that this Section 4.2.5 shall not apply to trade secrets protected without temporal limitation under applicable law.

4.3

For the twenty-four (24) months immediately following the termination of Your employment with the Company for any reason You agree, that except as otherwise provided herein:


4.3.1.

You will not solicit or provide Conflicting Services except on behalf of or at the direction of the Company.

4.3.2.

You will not solicit, perform or offer to perform any Conflicting Services for a Business Partner.

4.3.3.

You will not request, induce, or attempt to induce any Business Partner to terminate its relationship with the Company;

4.3.4

You will not attempt to hire, employ or associate in business with any person employed by the Company or who has left the employment of the Company within the preceding six (6) months and You will not make, extend or facilitate offers or promises of any potential

3


employment or business association with such person, even if You did not initiate the discussion or seek out the contact.

5.    REASONABLENESS OF RESTRICTIONS AND SEVERABILITY.

5.1.

You represent and agree that You have read this entire Agreement, and understand it. You agree that this Agreement does not prevent You from earning a living or pursuing Your career. You agree that the restrictions contained in this Agreement are reasonable, proper, and necessitated by the Company's legitimate business interests. You agree that the restrictions placed on You under this Agreement are reasonable given the nature of the compensation (including the IPO Grant) that you have received and may continue to receive from the Company. You represent and agree that You are entering into this Agreement freely and with knowledge of its content and with the intent to be bound by the Agreement and the restrictions contained in it.

5.2.

In the event that a court finds this Agreement, or any of its restrictions, to be ambiguous, unenforceable, or invalid, You and the Company agree that the court shall read the Agreement as a whole and interpret the restriction(s) at issue to be enforceable and valid to the maximum extent allowed by law.

5.3.

If the Court declines to enforce this Agreement in the manner provided in subparagraph 5.2, You and the Company agree that this Agreement will be automatically modified to provide the Company with the maximum protection of its business interests allowed by law and You agree to be bound by this Agreement as modified.

5.4.

You and the Company agree that the geographic market for the Company's products and services is the Washington, D.C. and Raleigh, N.C. metropolitan areas or any other geographic area in which the Company is conducting operations or has demonstrable plans to commence operations within six (6) months of the earlier of (i) the date on which Your employment terminates and (ii) the date on which You commence providing Conflicting Services during employment by the Company, so that this Agreement applies to Your activities throughout those geographic areas. If, however, after applying the provisions of subparagraphs 5.2 and 5.3, a court still decides that this Agreement or any of its restrictions is unenforceable for lack of reasonable geographic limitation and the Agreement or restriction(s) cannot otherwise be enforced You and the Company agree that the fifty (50) mile radius from the Company's current principal executive office or other division office where You are employed during the two years immediately preceding termination of Your employment with the Company shall be the geographic limitation relevant to the contested restriction.

5.5

If any provision of this Agreement is declared to be ambiguous, unenforceable or invalid, the remainder of this Agreement shall remain in full force and effect, and the Agreement shall be read as if the ambiguous, unenforceable or invalid provision was not contained in the Agreement.

6.    INJUNCTIVE RELIEF AND REMEDIES.

6.1.

You acknowledge that it may be impossible to assess the damages caused by Your violation of this Agreement, or any of its terms. You agree that any threatened or actual violation or breach of this Agreement, or any of its terms, will constitute immediate and irreparable injury to the Company.

6.2.

You agree that in addition to any and all other damages and remedies available to the Company if You breach this Agreement, the Company shall be entitled to temporary injunctive relief, without being required to post a bond, and permanent injunctive relief,

4


without the necessity of proving actual damage, to prevent You from violating or breaching this Agreement or any of its terms.

6.3.

In the event that the Company enforces this Agreement through a court order, You agree that the restrictions contained in Section 4.3 of this Agreement shall remain in effect for a period of twenty-four (24) months from the effective date of the Order enforcing the Agreement.

6.4.

You agree that if the Company is successful in whole or part in any legal or equitable action against You under this Agreement, the Company shall be entitled to payment of all costs, including reasonable attorneys' fees, from You.

 

7.    PUBLICATION OF THIS AGREEMENT TO SUBSEQUENT EMPLOYERS OR BUSINESS ASSOCIATES OF EMPLOYEE.

7.1.

If You are offered employment or the opportunity to enter into any business venture (as owner, partner, consultant or other capacity) with a person or entity which provides or is planning to provide Conflicting Services while the restrictions described in paragraph 4.3 of this Agreement are in effect, You agree to inform Your potential employer, partner, co-owner and/or others involved in managing the business which You have an opportunity to join of Your obligations under this Agreement and also agree to provide such person or persons with a copy of this Agreement.

7.2.

You also authorize the Company to provide copies of this Agreement to any of the persons or entities described in subparagraph 7.1 and to make such persons aware of Your obligations under this Agreement.

8.    MISCELLANEOUS.

8.1.

This Agreement and the restrictions and obligations in it survive the employment relationship and are binding regardless of the reason for termination of employment. Notwithstanding the foregoing, this Agreement shall be void and of no effect in the event of a breach by the Company of any of its payment obligations with respect to the compensation (salary or bonus) of You, subject to a thirty (30) day cure period following the Company's receipt of written notice of such breach by Your or Your representative.

8.2.

The Agreement is for the benefit of You and of the Company, its successor, assigns, parent corporations, subsidiaries, and/or purchasers.

8.3.

This Agreement is governed by the laws of the Commonwealth of Virginia without regard to the conflicts of laws or principles thereof. With respect to any litigation based on, arising out of, or in connection with this Agreement, You hereby expressly submit to the personal jurisdiction of the Fairfax County Circuit Court for the Commonwealth of Virginia and of the United States District Court for the Eastern District of Virginia. You hereby expressly waive, to the fullest extent permitted by law, any objection that You may now or hereafter have to the laying of venue of any such litigation brought in any such court referred to above, including without limitation any claim that any such litigation has been brought in an inconvenient forum.

8.4.

No waiver by the Company of any breach of any of the provisions of this Agreement is a waiver of any preceding or succeeding breach of the same or any other provisions of this Agreement. No waiver shall be effective unless in writing and then only to the extent expressly set forth in writing.

5


8.5.

Except as expressly provided otherwise in this Agreement, nothing in this Agreement grants a license or permission to use any intellectual property of Company, whether owned, pending, currently under development, or developed hereafter.

8.6.

This Agreement may be amended by a writing signed by both parties; provided, however, that Schedules A and B to this Agreement may be amended by the Company at any time and the amended schedules attached to this Agreement and made a part of it.

8.7

You agree that on the subjects covered in this Agreement, it is the entire Agreement between You and the Company, superseding any previous oral or written communications, representations, understanding, or agreements with the Company or with any representative of the Company.

By signing this Agreement You represent that You have read and understand this Agreement, You have had an opportunity to consult legal counsel concerning this Agreement and that You sign it voluntarily.


Comstock Homebuilding Companies, Inc.


 


Employee


 


 


 


 


 


By:


 


 


 


 


 


 

 


Bruce Labovitz
Chief Financial Officer


 

 


Christopher Clemente

6



SCHEDULE A

COMPANY PROPERTY

        For purposes of the Confidentiality and Non-Competition Agreement between Comstock Homebuilding Companies, Inc. and Christopher Clemente dated                         , 2004, effective                        , 2004, Company Property shall include but not be limited to items that are important to the ongoing operations of the Company:

1.

Any Confidential Information of the Company that is in your possession.

2.

All notes, files, correspondence (including copies of e-mail or voice mail messages) and memoranda prepared or received in the course of employment.

3.

All manuals, reports, records, notebooks, plans, photographs, specifications, technical data and drawings prepared or received in the course of employment.

4.

All computers, printers, computer hardware and software, computer programs, program listings, diskettes, CD's, DVD's, audio and videotapes; downloads and source/object codes.

        Notwithstanding the foregoing, the Company Property shall not include (i) any items or materials that You obtained prior to the effective date of this Agreement and (ii) any list or information that also relates to the Permitted Activities.

7



SCHEDULE B

CONFIDENTIAL INFORMATION

        For purposes of the Confidentiality and Non-Competition Agreement between Comstock Homebuilding Companies, Inc. and Christopher Clemente dated                         , 2004, effective                        , 2004, Confidential Information shall include but not be limited to the following information where it is not generally known to the public or in the home construction industry (including information conceived, discovered or developed by Employee while in the employ of the Company):

1.

Information relating to the Company's proprietary rights prior to any public disclosure thereof, including but not limited to the nature of the proprietary rights, discoveries, inventions, works of authorship, techniques, improvements and ideas (whether patentable or not), hardware, software, computer programs, source or object codes, documentation, processes, design, concept, development, methods, codes, formulas, production data, technical and engineering data, and information regarding acquiring, protecting, enforcing and licensing proprietary rights (including patents, copyrights and trade secrets).

2.

Work product resulting from or related to work or projects performed or to be performed by or for the Company or by or for clients of the Company, including but not limited to the methods, processes, procedures, analyses, techniques and audits used in connection therewith.

3.

Information relating to the Company's efforts to acquire real property (developed or undeveloped) or interests in real property in connection with the Company's ongoing operations. This information will cease being deemed Confidential Information upon the later to occur of one year after (i) the Company's abandonment of the effort to acquire the real property or interests in real property in question or (ii) the termination of any applicable option or other purchase rights with respect to the real property or interests in real property.

4.

Marketing and development plans, marketing strategies, product descriptions and program descriptions, price and cost data, price and fee amounts, pricing and billing policies, quoting procedures, marketing techniques and methods of obtaining business, forecasts and forecast assumptions and volumes, and future plans and potential strategies of the Company which have been or are being discussed.

5.

Computer software of any type or form in any stage of actual or anticipated research and development, including but not limited to programs and program modules, processes, algorithms, design concepts, design specifications, source code, object code and load modules, programming, program patches, data models and systems plans, design, application and documentation.

6.

Internal Company personnel information, employee lists, compensation data, non-public financial information, financial projections and business plans and strategy, operational plans, financing and capital-raising plans, activities, and agreements, vendor names and other vendor information (including vendor characteristics, services and agreements), purchasing and internal cost information, internal services and operational manuals, and the manner and methods of conducting the Company's business.

7.

Non-public information pertaining to any Business Partner and its needs or desires with respect to the products and services offered by the Company, including, but not limited to, names of Business Partner and their representatives, proposals, bids, contracts and their contents and parties, data provided to the Company by Business Partner, the type, quantity and specifications of products and services purchased, leased, licensed or provided or received by Business Partner and other non-public information.

8.

Any information that a competitor of the Company could use to the competitive disadvantage of the Company.

8


 


QuickLinks

CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
SCHEDULE A COMPANY PROPERTY
SCHEDULE B CONFIDENTIAL INFORMATION