Exhibit 10.35
KB HOME
AMENDED AND RESTATED 1999 INCENTIVE PLAN
STOCK APPRECIATION RIGHT BONUS AGREEMENT
     This Stock Appreciation Right Bonus Agreement (this “Agreement”) is made on
July 12, 2007 (the “Grant Date”) between KB Home, a Delaware corporation (the
“Company”), and [NAME] (the “Participant”). Capitalized terms used in this
Agreement and not defined herein have the respective meanings given them in the
KB Home Amended and Restated 1999 Incentive Plan (the “Plan”).
     WHEREAS, the Company desires to grant the Participant a Stock Appreciation
Right Bonus (the “Bonus”);
     WHEREAS, the Bonus is a cash-based Award that is intended to constitute
Qualified Performance-Based Compensation;
     WHEREAS, the Bonus is intended to constitute a Performance-Based Bonus
granted pursuant to Section 6 of the Plan, and, if the Participant is a Covered
Employee, a Performance-Based Award granted pursuant to Section 11 of the Plan;
and
     WHEREAS, the Bonus is intended to constitute a “stock appreciation right”
not providing for the deferral of compensation under, and therefore exempt from,
Section 409A of the Code.
     NOW, THEREFORE, in consideration of the foregoing, the Company and the
Participant enter into this Agreement as follows:
A G R E E M E N T
     1. Grant. Subject to the terms of the Plan and this Agreement, the Company
hereby grants to the Participant a Bonus calculated by reference to an aggregate
of [# RIGHTS] stock appreciation rights (the “Rights”). Subject to the
limitations set forth in Section 5, each Right entitles the Participant to
receive the positive difference, if any, between the grant price of $36.19 (the
“Grant Price”) and the Fair Market Value of a share of common stock, $1.00 par
value per share, of the Company (“Common Stock”) on the date of exercise (the
“Spread”); provided however, that in no event shall the Participant receive more
than 400% of the Grant Price. The Bonus is intended to constitute Qualified
Performance-Based Compensation, a Performance-Based Bonus, a “stock appreciation
right” under Section 409A of the Code, and, if the Participant is a Covered
Employee, a Performance-Based Award. The Rights may be exercised, and the Bonus
may be paid, only as provided under this Agreement.
     2. Rights Vesting and Forfeiture.

  (a)   Normal Rights Vesting. Subject to the limitations set forth in
Section 5, the Rights may be exercised in accordance with the following vesting
schedule if the Participant is employed by the Company or its Subsidiaries on
the respective dates indicated below and if, and only if, the Performance Goal
has been satisfied, as set forth below, as of the date of exercise:

          On or After       Rights Subject to Exercise July 12, 2008      
33-1/3% of Rights July 12, 2009   an additional   33-1/3% of Rights July 12,
2010   an additional   33-1/3% of Rights

 

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      The Performance Goal with respect to the Rights shall be that the
Committee has determined that the Company has achieved positive cash flow from
the Company’s operations for the second half of the fiscal year ending on
November 30, 2007, as reflected on the Company’s consolidated statement of cash
flows for such period and excluding the effects of the Company’s disposition of
its operations in France. If the Committee determines that the Performance Goal
as set forth in the preceding sentence has not been achieved, the Rights shall
not vest or become exercisable, no Bonus shall be paid under this Agreement, and
the Participant will forfeit all rights, title and interests in and to any
portion of the Rights and the Bonus.     (b)   Forfeiture. Except as provided in
Section 3 below with respect to the Participant’s Retirement and subject to
Section 2(a) above and Section 4 below, the Participant will immediately forfeit
all rights, title and interests in and to any portion of the Rights that have
not vested and any portion of the Bonus that has not been paid on the date the
Participant’s employment with the Company or its Subsidiaries is terminated.

     3. Accelerated Rights Vesting. Notwithstanding Section 2 above, subject to
the limitations set forth in Section 5, 100% of the Rights granted hereunder
will vest and become immediately exercisable, and the Bonus will be paid, upon a
Change of Ownership of the Company as provided under the applicable terms of the
Plan, or upon the Participant’s Retirement. “Retirement” means severance from
employment with the Company or its Subsidiaries for any reason other than a
leave of absence, termination for cause, death or disability, at such time as
the sum of the Participant’s age and years of service with the Company or its
Subsidiaries equals at least 65 or more, provided that the Participant is then
at least 55 years of age. The Company will have the sole right to determine
whether the Participant’s severance from employment constitutes a Retirement.
     4. Rights Termination. Vested Rights will cease to be exercisable and will
expire and terminate to the extent not exercised upon the date (the “Expiration
Date”) that is the earlier of (i) the close of business on the tenth anniversary
of the Grant Date and (ii) the dates set forth below in this Section 4.

  (a)   Employment Termination Other Than For Cause or Retirement. If the
Participant’s employment with the Company or its Subsidiaries is terminated for
any reason other than for cause or Retirement (in each case, as determined by
the Company), the date that is 90 calendar days after the date of such
termination.     (b)   Employment Termination for Cause. If the Participant’s
employment with the Company or its Subsidiaries is terminated for cause (as
determined by the Company), the date that is 5 calendar days after the date of
such termination.     (c)   Death. In the event of the Participant’s death (i)
while the Participant is employed by the Company or its Subsidiaries, (ii)
within 90 days of the date the Participant’s employment with the Company or its
Subsidiaries is terminated for any reason other than for cause or Retirement (in
each case, as determined by the Company) or (iii) in the event of the
Participant’s retirement (as determined by the Company) prior to the date set
forth in clause (i) of the first sentence of this Section 4, the first
anniversary of the date of death.

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     5. Rights Exercise and Payment. To exercise any number of the Rights that
have vested, and to be entitled to payment of any portion of the Bonus, the
Company must receive written notice of exercise specifying the number of Rights
to be exercised. The Rights will be deemed exercised upon receipt of the
exercise notice attached as Exhibit A (the “Exercise Notice”). Upon exercise of
any number of the Rights that have vested, the Spread will be determined by the
Fair Market Value per share of the Common Stock on the date the Exercise Notice
is received by the Company and will be paid in cash as soon as reasonably
practicable following such receipt; provided however, that in the event that the
aggregate amount of cash payable to the Participant in respect of any and all
Award(s) under the Plan (including, but not limited to, any phantom stock
bonuses) in any fiscal year of the Company would exceed (i) $5,000,000 if the
Participant is the Chief Executive Officer at the time of such payment or (ii)
$3,000,000 if the Participant is not described in clause (i) of this Section 5,
the Rights shall not be exercisable with respect to such excess amount until
such time that such portion of the Rights could be exercised without exceeding
the applicable limit, subject to the provisions of Section 4. The Company has
the authority to deduct or withhold an amount sufficient to satisfy applicable
federal, state, local and foreign taxes (including the Participant’s FICA
obligation) required by law to be withheld with respect to any taxable event
arising from the exercise of any vested Rights or payment of any portion of the
Bonus.
     6. No Stockholder Rights. The Participant, and any Permitted Transferee (as
defined in Section 10 hereof), will not be deemed to be a holder of or possess
any stockholder rights with respect to any shares of Common Stock based on the
Rights granted hereunder.
     7. Adjustments. In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend or other event described in Section 13(a) of
the Plan, such adjustment will be made to the number of Rights, the Grant Price
and the Spread, and to the terms and conditions hereof, in accordance with the
terms of the Plan.
     8. California Law. This Agreement will be construed, administered and
enforced in accordance with the laws of the State of California. This Agreement,
the Bonus and the Rights will be subject to rescission by the Company if an
executed original of this Agreement by the Participant is not received by the
Company within four weeks of the Grant Date.
     9. Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties with respect to the subject matter of this
Agreement, and supersedes all prior and contemporaneous oral and written
agreements and understandings relating to such subject matter. THE PARTICIPANT
ACKNOWLEDGES AND AGREES TO BE BOUND TO, AND THAT THE BONUS AND THE RIGHTS ARE
GRANTED SUBJECT TO, ALL OF THE TERMS AND CONDITIONS OF THE PLAN, INCLUDING ANY
TERMS, RULES OR DETERMINATIONS MADE BY THE COMMITTEE PURSUANT TO ITS
ADMINISTRATIVE AUTHORITY UNDER THE PLAN, AND THAT IN THE EVENT OF ANY CONFLICT
BETWEEN THIS AGREEMENT AND THE PLAN, THE PLAN WILL PREVAIL.
     10. Non-Transferability. The Rights and the entitlement to the Bonus may
not be transferred (in whole or in part) until and unless vested, and then only
by will or the laws of descent and distribution or by gift or a domestic
relations order to members of the Participant’s family or to trusts or other
entities whose beneficiaries or beneficial owners are the Participant or members
of the Participant’s family (each, a “Permitted Transferee”). During the
Participant’s lifetime, unless the Rights and the entitlement to the Bonus are
transferred to a Permitted Transferee in accordance with this Section 10, only
the Participant may exercise the Rights and receive payment of the Bonus as
provided in this Agreement. Subject to such conditions and procedures as the
Company may require, a Permitted Transferee may exercise the Rights and receive
payment of the Bonus during the Participant’s lifetime.

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     11. No Obligation. Neither the execution and delivery hereof nor the
granting of the Bonus or the Rights will constitute or be evidence of any
agreement or understanding, express or implied, on the part of the Company or
any of its Subsidiaries to employ or continue the employment of the Participant
for any period or in any capacity.
     12. Notice. Any notice given hereunder to the Company will be addressed to
the Company, attention Senior Vice President, Human Resources, or a designee or
successor thereof, and any notice given hereunder to the Participant will be
addressed to the Participant at his or her address as shown on the records of
the Company.
     13. Section 409A. The Bonus and the Rights thereunder are intended to
constitute “stock appreciation rights” that do not constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Code. However,
if at any time the Committee determines that the Bonus or the Rights may be
subject to Section 409A, the Committee may, in its discretion, adopt such
amendments to the Plan or this Agreement or adopt such other policies and
procedures (including amendments, policies and procedures with retroactive
effect), or take any other actions, as the Committee determines are necessary or
appropriate either for the Bonus and the Rights to be exempt from the
application of Section 409A of the Code or to comply with the requirements of
Section 409A of the Code, including by adding conditions with respect to the
vesting of the Rights and/or the payment of the Bonus; provided that no such
amendment may change the Performance Goal with respect to any person who is a
Covered Employee.

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     IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the
Participant have executed this Agreement as of the day and year first above
written.

            KB HOME
 
      By:   Jeffrey T. Mezger         Chief Executive Officer and President     
          PARTICIPANT:
 
      By:           [NAME]           

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EXHIBIT A
EXERCISE NOTICE
STOCK APPRECIATION RIGHTS BONUS
KB Home
Attn: Senior Vice President, Human Resources
     Please be advised that I elect to exercise ____________ vested Rights
granted to me by KB Home under and subject to the terms and provisions of the KB
Home Amended and Restated 1999 Incentive Plan and the Stock Appreciation Rights
Bonus Agreement dated ____________ , 2007.

Name:   

 

Address:   

 

 

Social Security #:   

 

Date:   

 

Signature:   

 

 

Received by KB Home this ___ day of _______________, ______.

                  By:                 Its: