Exhibit 10.36
KB HOME
AMENDED AND RESTATED 1999 INCENTIVE PLAN
PHANTOM SHARE BONUS AGREEMENT
     This Phantom Share 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 Phantom Shares
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 compensation that does not
provide for the deferral of compensation under, and is 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] phantom share rights (the “Rights”). Subject to the limitations
set forth in Section 4, each Right, when fully vested hereunder, will represent
the economic equivalent of ownership of one share of common stock, $1.00 par
value per share, of the Company (“Common Stock”); provided that the Rights will
not entitle the Participant to, and the Participant will not have any rights in,
or own any, shares of Common Stock. The Bonus is intended to constitute
Qualified Performance-Based Compensation, a Performance-Based Bonus,
compensation that is payable within the “short-term deferral” period after the
Rights are no longer subject to a “substantial risk of forfeiture” under
Section 409A of the Code, and, if the Participant is a Covered Employee, a
Performance-Based Award. Except as provided in this Agreement, the Bonus and the
Rights cannot be transferred in any manner.
     2. Rights Vesting.

  (a)   Normal Rights Vesting. Subject to the limitations set forth in
Section 4, 100% of the Rights granted under this Agreement will vest on July 12,
2010 if Participant is employed by the Company or its Subsidiaries on such date
and if, and only if, the Performance Goal has been satisfied, as set forth
below.         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

 

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      Committee determines that the Performance Goal as set forth in the
preceding sentence has not been achieved, the Rights shall not vest, 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)  
Change of Ownership. Notwithstanding the foregoing and subject to Section 3 and
the limitations set forth in Section 4 below, 100% of the Rights granted
hereunder will vest and all restrictions will lapse, and the Bonus will be paid,
upon a Change of Ownership of the Company as provided under the applicable terms
of the Plan.

     3. Forfeiture. Subject to Section 2(a), the Participant will immediately
forfeit all rights, title and interests in and to any and all Rights that have
not vested on the date the Participant’s employment with the Company or its
Subsidiaries is terminated.
     4. Payment. As soon as reasonably practicable following the date of vesting
of the Rights in accordance with Section 2 above (the “Vesting Date”), but in no
event later than the later of (i) the fifteenth day of the third month following
the Participant’s first taxable year in which the Vesting Date occurs or
(ii) the fifteenth day of the third month following the end of the Company’s
first taxable year in which the Vesting Date occurs, the Company will pay in
cash to the Participant for each vested Right an amount equal to (A) the Fair
Market Value of one share of Common Stock as of the Vesting Date, plus (B) the
cumulative value of all cash dividends paid in respect of a share of Common
Stock from and including the Grant Date through and including the Vesting Date;
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 stock appreciation rights 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 4, the Rights shall
not vest with respect to such excess amount until such time that such portion of
the Rights could be vested without exceeding the applicable limit. 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 vesting of any Rights or payment of any portion of the
Bonus.
     5. No Stockholder Rights. The Participant 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.
     6. 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 and the amount of
the Bonus, and to the terms and conditions hereof, in accordance with the terms
of the Plan.
     7. 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.
     8. 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

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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.
     9. Non-Transferability. Neither this Agreement nor the Rights may not be
assigned by Participant by operation of law or otherwise. Any purported
assignment by Participant shall be null and void. This Agreement shall, however,
be binding upon the successors and assigns of the Company.
     10. 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.
     11. 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.
     12. Section 409A. The Bonus and the Rights thereunder are intended to
constitute compensation that is payable within the “short-term deferral” period
after the Rights are no longer subject to a “substantial risk of forfeiture” and
that does 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.
     IN WITNESS WHEREOF, the Company and the Participant have duly executed and
delivered this Agreement as of the date first above written.

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

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