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 (d) Commission of an act of fraud upon, or bad faith, dishonesty or disloyaltytoward, any KB Company;  (e) Material breach of any of the covenants under Article VI;  (f) An act (or failure to act) of egregious misconduct involving seriousmoral turpitude to the extent that, in the reasonable judgment of the PlanAdministrator, the Participant’s credibility and reputation no longer conform toexpected standards; or  (g) An act or omission that the Plan Administrator reasonably determinesmay prejudice significantly any KB Company’s best interests if the Participant’semployment is not terminated.     “**CIC Plan**” means the KB Home Change in Control Severance Plan, as it may be amended from timeto time, or any successor or replacement plan in effect at a relevant Termination Date.     “**Code**” means the Internal Revenue Code of 1986, as amended. All references to the Code or anyprovision of the Code shall include the regulations and other guidance promulgated by the TreasuryDepartment thereunder. Such regulations may be referred to in this Plan as “Treasury Regulations.”     “**Committee**” means the Management Development and Compensation Committee of the Board, or anysuccessor committee of the Board that performs the same or similar executive compensationresponsibilities delegated to the Committee as of the Effective Date.     “**Disability**” means, with respect to any Participant, the Participant’s incapacity due tophysical or mental illness to perform the Participant’s full-time duties or responsibilities withthe Participant’s Employer for a continuous period of three months or an aggregate of six months inany eighteen month period.     “**Effective Date**” means October 4, 2007, the effective date of this Plan.     “**Eligible Officer**” means any officer of KB Home who at the time of any determination has beenelected by the Board to one or more of the following positions: President (other than a Presidentwho also is the Chief Executive Officer), Executive Vice President or Senior Vice President.     “**Employer**” means, with respect to any Participant, the particular KB Company that employs theParticipant.     “**ERISA**” means the Employee Retirement Income Security Act of 1974, as amended.     “**Group A Participant**” means (a) any Participant who, on a relevant Termination Date, is serving inone or more of the following positions with KB Home: President (other than a President who also isthe Chief Executive Officer) or Executive
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Vice President; or (b) any other Participant who is expressly designated by the Committee or theBoard as a Group A Participant.     “**Group B Participant**” means (a) any Participant who, on a relevant Termination Date, isserving as a Senior Vice President of KB Home and is designated by the Board as an “executiveofficer” within the meaning of Rule 3b-7 under the Securities Exchange Act of 1934, as amended; or(b) any other Participant who is expressly designated by the Committee or the Board as a Group BParticipant.     “**Group C Participant**” means (a) any Participant who, on a relevant Termination Date, isserving as a Senior Vice President of KB Home and has not been designated by the Board as an“executive officer” within the meaning of Rule 3b-7 under the Securities Exchange Act of 1934, asamended; or (b) any other Participant who is expressly designated by the Committee or the Board asa Group C Participant.     “**Participant**” means an Eligible Officer or other employee of a KB Company who is expresslydesignated by the Committee or the Board as a Participant and who, in each case, has beencontinuously employed on a full-time basis by one or more KB Companies for at least one year. AParticipant shall cease to be a Participant under the Plan when he or she is no longer an EligibleOfficer or, by action of the Committee or the Board, is no longer a Participant.     “**Plan Administrator**” means KB Home.     “**Section 409A**” means Section 409A of the Code and, for the avoidance of doubt only, shallinclude the regulations and other guidance promulgated by the Treasury Department thereunder.     “**Severance Payment**” means, with respect to any Participant, the amount to be paid to theParticipant under Sections 4.1(a) and (b).     “**Severance Period**” means the period of time commencing on a relevant Termination Date andcontinuing until: (a) for Group A Participants, the second anniversary of the relevant TerminationDate; (b) for Group B Participants, eighteen months following the relevant Termination Date; and(c) for Group C Participants, the first anniversary of the relevant Termination Date.     “**Termination**” means, with respect to any Participant, the Participant’s Employer’s unilateraltermination of the Participant’s employment without Cause and for reasons other than death orDisability, but only if such termination constitutes a “separation from service” with respect tothe Participant’s Employer within the meaning of Section 409A of the Code.          For purposes of this Plan, whether a “separation from service” has occurred shall bedetermined by the Committee in accordance with Treasury Regulation Section 1.409A-1(h). Indetermining whether a Participant has experienced a separation from service, the followingprovisions shall apply:          (a) For a Participant who provides services to the Employer as an employee, except asotherwise provided in part (c) below, a separation from service shall occur when such Participanthas experienced a termination of employment with the Employer.
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A Participant shall be considered to have experienced a termination of employment when the factsand circumstances indicate that the Participant and the Employer reasonably anticipate that either(i) no further services will be performed for the Employer after a certain date, or (ii) that thelevel of bona fide services the Participant will perform for the Employer after such date (whetheras an employee or as an independent contractor) will permanently decrease to no more than 20% ofthe average level of bona fide services performed by such Participant (whether as an employee or anindependent contractor) over the immediately preceding 36-month period (or the full period ofservices to the Employer if the Participant has been providing services to the Employer less than36 months).          If a Participant is on military leave, sick leave, or other bona fide leave of absence, theemployment relationship between the Participant and the Employer shall be treated as continuingintact, provided that the period of such leave does not exceed 6 months, or if longer, so long asthe Participant retains a right to reemployment with the Employer under an applicable statute or bycontract. If the period of a military leave, sick leave, or other bona fide leave of absenceexceeds 6 months and the Participant does not retain a right to reemployment under an applicablestatute or by contract, the employment relationship shall be considered to be terminated forpurposes of this Plan as of the first day immediately following the end of such 6-month period. Inapplying the provisions of this paragraph, a leave of absence shall be considered a bona fide leaveof absence only if there is a reasonable expectation that the Participant will return to performservices for the Employer. For purposes of this paragraph, where a leave of absence is due to anyphysical or mental impairment that can be expected to result in death or can be expected to lastfor a continuous period of not less than six months, where such impairment causes the Participantto be unable to perform the duties of his or her position of employment or any substantiallysimilar position of employment, a 29-month period of absence shall be substituted for such 6-monthperiod.          (b) For a Participant who provides services to the Employer as an independent contractor,except as otherwise provided in part (c) below, a separation from service shall occur upon theexpiration of the contract (or in the case of more than one contract, all contracts) under whichservices are performed for the Employer, provided that the expiration of such contract(s) isdetermined by the Committee to constitute a good-faith and complete termination of the contractualrelationship between the Participant and the Employer.          (c) For a Participant who provides services to the Employer as both an employee and anindependent contractor, a separation from service generally shall not occur until the Participanthas ceased providing services for such Employer as both as an employee and as an independentcontractor, as determined in accordance with the provisions set forth in parts (a) and (b) above,respectively. Similarly, if a Participant either (i) ceases providing services for the Employer asan independent contractor and begins providing services for the Employer as an employee, or (ii)ceases providing services for the Employer as an employee and begins providing services for theEmployer as an independent contractor, the Participant will not be considered to have experienced aseparation from service until the Participant has ceased providing services for the Employer inboth capacities, as determined in accordance with the applicable provisions set forth in parts (a)and (b) above.          Notwithstanding the foregoing provisions in this part (c), if a Participant provides servicesfor the Employer as both an employee and as a director, to the extent
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permitted by Section 1.409A-1(h)(5) of the Treasury Regulations, the services provided by suchParticipant as a director shall not be taken into account in determining whether the Participanthas experienced a separation from service as an employee.          (d) For purposes of determining whether a Participant has experienced a separation fromservice, services performed for the Employer shall include service performed both for the Employerand for any other corporation that is a member of the same “controlled group” of corporations asthe Employer under Section 414(b) of the Code or any other trade or business (such as apartnership) that is under common control with the Employer as determined under Section 414(c) ofthe Code, in each case as modified by Section 1.409A-1(h)(3) of the Treasury Regulations andsubstituting “at least 50 percent” for “at least 80 percent” each place it appears in Section1563(a) of the Code or Section 1.414(c)-2 of the Treasury Regulations.     “**Termination Date**” means, with respect to any Participant, the date on which the Participant’sTermination occurs.ARTICLE IV — SEVERANCE BENEFITS4.1 **Right to Severance Payment.** (a) Subject to Section 4.4(c) and Article V, in the event of aParticipant’s Termination, the Participant shall be entitled to receive fromthe Participant’s Employer a Severance Payment in the amount provided inSection 4.1(b), payable as described in Section 4.1(d); provided that: (i) if the relevant Termination Date occurs during a Protected Period (asdefined in the CIC Plan) and the Participant is thereby entitled toreceive a severance payment under the CIC Plan, then the Participant’srights and obligations will be as specified in the CIC Plan and theParticipant will not be eligible to receive a Severance Payment or anyother benefits or rights pursuant to this Plan nor be subject to anyobligations pursuant to this Plan; and  (ii) if on the relevant Termination Date a Participant is party to anyemployment or similar agreement with an Employer that provides severancepayments or any of the other benefits provided in this Plan (other thanthe CIC Plan), and any terms of that agreement are inconsistent with, orin addition to, the terms of this Plan, the terms of that agreement shallapply to the Participant to the extent of such inconsistent or additionalterms. (b) Subject to the terms and conditions of this Plan, the Severance Payment towhich a Participant shall be entitled to receive under this Plan shall be equal to: (i) the sum of the Participant’s Base Salary and Average Bonus multipliedby (i) 2.0, in the case of a Group A Participant; (ii) 1.5,
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   in the case of a Group B Participant; or (iii) 1.0, in the case of a GroupC Participant, minus the sum of:  (ii) the aggregate amount of any other cash payments in the natureof severance payments, notice pay, or the like that any Employer is obligatedto pay to the Participant by law or by any contract, plan, or arrangementother than this Plan and the CIC Plan; and  (iii) if an Employer is obligated by law to provide advance noticeof Termination to the Participant, the aggregate amount of compensationreceived by the Participant from the date of such notice through theParticipant’s Termination Date;   and shall be further reduced as provided in Section 4.1(d)(ii).  (c) Subject to Section 4.4(c) and Article V, a Participant’s Employer shallprovide the Participant continued participation in the Employer’s medical, dental andvision plans (collectively, the “Health Plans”) for the Severance Period, subject tothe terms and conditions of the Health Plans, including, but not limited to, timelypayment of any employee contributions necessary to maintain participation; provided,however, that for a Group A Participant, continued participation in the Health Plansshall be limited to the period beginning on the Participant’s Termination Date andending on the eighteen-month anniversary of the Participant’s Termination Date, andthe Group A Participant’s Employer shall pay such Group A Participant in a lump sum onthe eighteen-month anniversary of the Participant’s Termination Date, the presentvalue of continued participation in the Health Plans for the last six months of theapplicable Severance Period. If a Participant entitled to benefits under this Section4.1(c) should die before the end of the Participant’s applicable Severance Period, theParticipant’s Employer’s obligations under this Section 4.1(c) shall cease. Anyqualified beneficiaries of any such deceased Participant shall be entitled to continueparticipation in such Employer’s Health Plans only to the extent provided under theConsolidated Omnibus Budget Reconciliation Act of 1986, as amended. (d)     (i) Subject to Sections 4.3 and 9.7, the Severance Payment shallbe paid in installments in the amounts described in Section 4.1(d)(ii) duringthe Severance Period according to a Participant’s Employer’s then-currentpayroll policies; provided, however, that any installments that wouldotherwise have been paid during the 60-calendar day period beginning on theParticipant’s Termination Date shall not be paid during such 60-day period,but shall be accumulated and paid with the first standard pay period thatoccurs on or after the expiration of such 60-day period.
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 (ii) The amount of each installment shall be equal to the total amount ofthe Severance Payment divided by the number of applicable payroll dates inthe Severance Period, and shall be reduced by any amount due and payableby a Participant to the Participant’s Employer as of the date suchinstallment is paid, on account of any advance or loan from the Employeror any other obligation the Participant may be required to repay to theEmployer (including, without limitation, amounts required to be repaidpursuant to Section 4.2); provided, however, that the aggregate amount ofreductions pursuant to this Section 4.1(d)(ii) with respect to SeverancePayment installments paid in any taxable year of the Employer shall notexceed $5,000, with any other amounts owed by the Participant toParticipant’s Employer being repaid by the Participant as and when due.  (iii) If a Participant entitled to a Severance Payment under thisSection 4.1 should die before all amounts payable to him or her have beenpaid, such unpaid amounts shall be paid, in a lump sum, as soon as practicablefollowing the Participant’s death (but in no event later than 30 calendar daysafter the Participant’s death) to the Participant’s executor or personalrepresentative or to the administrators of the Participant’s estate, as thePlan Administrator, in its sole discretion, may determine.4.2 **Business Expenses**. Each Participant shall be responsible for any non-business-related chargesincurred on any Employer’s credit card or other account used by the Participant on or prior tothe Participant’s Termination Date and the Participant shall pay all such charges when due.The Participant’s Employer shall reimburse the Participant for any pending, reasonablebusiness-related expenses for which the Participant has not already been reimbursed as of theParticipant’s Termination Date provided the Participant timely submits a proper travel andexpense report. Such reimbursement shall be paid no later than the last day of theParticipant’s taxable year following the taxable year in which the expense was incurred. 4.3 **Withholding**. A Participant’s Employer shall withhold such amounts from any payments payablepursuant to this Article IV as are required by applicable tax or other law. 4.4 **Other Rights and Obligations**. (a) Nothing in this Plan will affect the benefits or rights that a Participant mayhave accrued as of the Participant’s Termination Date pursuant to: (i) KB Home’sstock plans, incentive plans, 401(k) Savings Plan, Nonqualified DeferredCompensation Plan, Retirement Plan and Death Benefit Only Plan or (ii) any vacationpay policy and any agreement, policy, plan, program or arrangement similar to thoseidentified in clause (i) above of any KB Company under which the Participant mayhave rights at the Participant’s Termination Date. These benefits and rights willbe governed by the terms of such agreements, policies, plans, programs and
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   arrangements, as they may be modified from time to time consistent with theirterms. (b) In connection with a Participant’s Termination, such Participant shall followthe Participant’s Employer’s standard procedures relating to departing employees,including, without limitation, returning (and providing written confirmation that theParticipant has so returned) all Employer-owned property, documents and materials(including copies, reproductions, summaries and/or analyses), and all other materialsthat contain, reflect, summarize, describe, analyze or refer or relate to any items ofInformation (as defined in Section 6.5).  (c) The Participant shall not be required to mitigate damages or the amount ofthe Participant’s Severance Payment or any other benefit under the Plan by seekingother employment or otherwise, nor, except as provided in the following sentence,shall any benefit under the Plan be reduced by any compensation or like benefitsreceived by the Participant as a result of employment after the Participant’sTermination. In the event that a person receiving benefits under the Plan isreemployed or is otherwise engaged in any capacity to provide business services by anyKB Company, the obligation of any Employer to provide benefits to the person under thePlan will cease immediately.ARTICLE V — RELEASE5.1 **Release**. Notwithstanding anything to the contrary contained in this Plan, a Participant shallnot be entitled to receive any Severance Payment or any other benefit under the Plan unlessand until the Participant has signed and returned to the Plan Administrator a release (the“Release”) by the deadline established by the Plan Administrator (which shall be no later than50 calendar days after the Participant’s Termination Date) and any period during which theParticipant may revoke the Release under applicable law or pursuant to the terms of theRelease has elapsed. The Release, which shall be signed by the Participant no earlier than theParticipant’s Termination Date, shall be a written document, in a form prescribed by the PlanAdministrator, intended to create a binding agreement by the Participant to release any claimthat the Participant has or may have against any Employer and related entities andindividuals, including the KB Companies and their respective directors, officers andemployees, arising on or before the date on which Participant signs the Release, including,without limitation, any claims under the federal Age Discrimination in Employment Act. 5.2 **Breach**. Each Employer’s obligations to a Participant under the Plan, and the Participant’sbenefits and rights under Article IV, shall cease immediately in the event the Participantbreaches any of the covenants contained in the Release or in Article VI.
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ARTICLE VI — NON-SOLICITATION, NON-DISPARAGEMENT, CONFIDENTIALITY AND COOPERATION6.1 **Non-Solicitation**. From the relevant Termination Date until the expiration of the SeverancePeriod, a Participant shall not directly or indirectly (a) induce or assist others in inducingany person who is an employee, officer, consultant, or agent of any KB Company to terminateemployment or business affiliation with the KB Company; or (b) employ or associate in businesswith any person employed by or associated in business with any KB Company at any time duringthe Severance Period or in the one-year period prior to the Participant’s Termination Date;provided, however, that the foregoing shall not prohibit the Participant, or any business withwhich the Participant becomes associated, from engaging in general solicitations of employmentor hiring persons that respond to such solicitations. 6.2 **Statements to Third Parties**. A Participant shall not, directly or indirectly, make or causeto be made any statements to any third parties criticizing or disparaging any KB Company orcommenting negatively on its character or business reputation. A Participant further shallnot: (a) comment to others concerning the status, plans or prospects of the business of any KBCompany, or (b) engage in any act or omission that would be detrimental, financially orotherwise, to any KB Company, or that would subject any KB Company to public disrespect,scandal, or ridicule. Solely for purposes of this Section 6.2, the references to a “KBCompany” shall include, in addition to KB Home and its Affiliates, each of their respectivedirectors, officers and predecessors. The foregoing obligations shall not apply to anystatements or opinions that are made under oath in any investigation, civil or administrativeproceeding or arbitration in which the individual has been compelled to testify by subpoena orother judicial process or which are privileged communications. 6.3 **Severability**. In the event that the scope of the obligations in Sections 6.1 or 6.2 are foundcontrary to applicable law by a court of competent jurisdiction, the court shall reform theobligations by limiting them to the maximum reasonable scope. 6.4 **Cooperation**. A Participant shall assist and cooperate with any KB Company and its designatedagents and representatives in the conduct of any administrative or legal proceeding to theextent such proceeding relates to matters involving actions, duties or responsibilities(whether alleged or actual) of the Participant during his or her employment by any Employer. 6.5 **Confidential Information**. As an employee of an Employer, a Participant may havecreated, observed or had access to information and other trade secrets includingconfidential information relating to the business or interests of persons with whom a KBCompany may have commercial relations (“Information”) that is valuable to any of the KBCompanies and may lose its value if disclosed to third parties. Without limiting aParticipant’s obligations under the KB Home Ethics Policy with respect to Information,Participants shall treat all such Information as confidential and belonging to the KBCompanies and take all actions reasonably requested to confirm such ownership. AParticipant shall not, without the prior written consent of the Plan Administrator,disclose or use the
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  Information. Participant’s obligations under this Section 6.5 shall continue as to allInformation until and only to the extent that a specific item of Information becomes publicknowledge through no fault of the Participant. A Participant shall promptly inform the PlanAdministrator of any request, order, or legal process requesting or requiring theParticipant to disclose Information. A Participant shall cooperate with any efforts by theKB Companies to prevent or limit disclosure of Information.ARTICLE VII — AMENDMENT AND TERMINATIONKB Home, through the Committee, reserves the right to amend or terminate the Plan (in whole or inpart), in its sole and absolute discretion, at any time without any prior notice to or approval ofany Participant or any other Employer. No such amendment, modification or change shall adverselyaffect any benefit under the Plan previously paid or actually provided to a Participant (or aParticipant’s successor in interest) or cause a violation of the requirements of Section 409A.ARTICLE VIII — ADMINISTRATION OF PLAN8.1 **Administration**. (a) The Plan shall be administered by the Plan Administrator. The PlanAdministrator shall have the sole and absolute discretion to interpret all provisionsof the Plan (including, without limitation, by supplying omissions from, correctingdeficiencies in, or resolving inconsistencies or ambiguities in, the language of thePlan), to make factual findings with respect to any issue arising under the Plan, todetermine the rights and status under the Plan of Participants or other persons, toresolve questions (including factual questions) or disputes arising under the Plan andto make any determinations with respect to the benefits provided under the Plan andthe persons entitled thereto. Without limiting the generality of the foregoing, thePlan Administrator shall have the authority: (i) to determine whether a particularperson is a Participant, and (ii) to determine if a person is entitled to benefitsunder the Plan and, if so, the amount, scope and duration of such benefits. The PlanAdministrator’s determination of the rights of any person under the Plan shall befinal and binding on all persons, subject only to the provisions of Section 8.3.  (b) The Plan Administrator may delegate (or revoke the delegation of) any of itsadministrative duties, including, without limitation, duties with respect to theprocessing, review, investigation, approval and provision of benefits, to a designatedinternal and/or external administrator or administrators.8.2 **Regulations**. The Plan Administrator shall promulgate any rules, regulations andinterpretations it deems necessary in order to carry out the purposes of the Plan or tointerpret the provisions of the Plan; provided, however, that no rule, regulation orinterpretation shall be contrary to the provisions of the Plan. The rules, regulations andinterpretations made by the Plan Administrator shall, subject only to the provisions ofSection 8.3, be final and binding on all persons.
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8.3 **Claims Procedures**. (a) The Plan Administrator shall determine the rights of any person to anybenefit under the Plan. Any person who believes that he or she has not received abenefit to which he or she is entitled under the Plan must file a claim in writingwith the Plan Administrator specifying the basis for his or her claim and the factsupon which he or she is relying in making such a claim.  (b) The Plan Administrator will notify a claimant of its decision regarding hisor her claim within a reasonable period of time, but not later than 90 calendar daysfollowing the date on which the claim is filed, unless circumstances require a longerperiod for adjudication and the claimant is notified in writing of the reasons for anextension of time prior to the end of the initial 90-day period and the date by whichthe Plan Administrator expects to make the final decision. In no event will the PlanAdministrator extend its processing of a claim beyond 180 calendar days after the dateon which the claim is first filed with the Plan Administrator.If a claim is denied, the Plan Administrator will notify the claimant of itsdecision in writing and the notice will contain the following information: (i) The specific reason(s) for the denial;  (ii) A specific reference to the pertinent Plan provision(s) onwhich the denial is based;  (iii) A description of additional information or materialnecessary for the claimant to reverse the denial of his or her claim, if any,and an explanation of why such information or material is necessary; and  (iv) An explanation of the Plan’s claim review procedures and theapplicable time limits under such procedures and a statement as to theclaimant’s right to bring a civil action under ERISA after all of the Plan’sreview procedures have been satisfied.If additional information or material is needed, an applicable claimant shall beprovided at least 45 calendar days after receiving notice of such need to providethe information or material and any otherwise applicable time period specified inthis Section 8.3 for making a determination or for filing a request for a review ofa denied claim shall be extended by the same period during which the information ormaterial is being obtained.Within 60 calendar days after receipt of a denial of a claim, the claimantmust file with the Plan Administrator, a written request for review of such claim.If a request for review is not filed within such 60-day period, the claimant shallbe deemed to have acquiesced to the original decision of the Plan Administrator onhis or her claim. If a request for review is filed, the Plan Administrator shallreview the claim. The claimant will be provided, upon request and free of charge,reasonable access to and
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copies of all documents, information and material relevant to the claimant’s claimfor benefits. The claimant may submit positions and comments in writing, and thereview will take into account all information submitted by the claimant regardlessof whether it was reviewed as part of the original determination. The decision bythe Plan Administrator with respect to the review will be given no later than 60calendar days after receipt of the request for review, unless circumstances warrantan extension of time not to exceed an additional 60 calendar days. If an extensionis needed, written notice of the extension will be furnished to the claimant beforethe end of the initial 60-day period, indicating the circumstances requiring theextension and the date by which the Plan Administrator expects to make a decision.If the Plan Administrator denies the claim after review, the Plan Administratorwill notify the claimant of its decision in writing and the notice will containthe following information: (A) The specific reason(s) for the denial;  (B) A reference to the specific Plan provision(s) on which thedenial is based;  (C) A statement that the claimant is entitled to receive, uponrequest and free of charge, reasonable access to and copies of all informationrelevant to the claimant’s claim for benefits; and  (D) A statement of the claimant’s right to bring a civil actionunder ERISA.The Plan Administrator’s decision on review shall be, to the extent permitted byapplicable law, final and binding on all interested persons.For the avoidance of doubt, any documents, information and material relevant to aclaim for benefits that a claimant may access or copy in accordance with theprovisions of this Section 8.3 shall be deemed Information.8.4 **Mediation**. After an applicable claimant has exhausted all administrative remedies asprovided in Section 8.3, the claimant may submit any dispute to mediation by written noticeto the Plan Administrator and to any other relevant party or parties. The mediator shall beselected by agreement of the parties. If the parties cannot agree on a mediator, a mediatorshall be designated by the American Arbitration Association at the request of a party. Anymediator so designated must be acceptable to all parties. The mediation shall be conductedas specified by the mediator and agreed upon by the parties. The parties agree to discusstheir differences in good faith and to attempt, with facilitation by the mediator, to reachan amicable resolution of the dispute. The mediation shall be treated as a settlementdiscussion and any matters discussed, information disclosed, determinations made oragreements reached during mediation proceedings shall be confidential and deemed to beInformation. The mediator may not testify for either party in any later proceeding relatingto the dispute. No
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  recording or transcript shall be made of the mediation proceedings. Each party shall bearits own costs in the mediation. The fees and expenses of the mediator shall be sharedequally by the parties.ARTICLE IX — MISCELLANEOUS9.1 **Alienation**. Except as otherwise required by law, no benefit under the Plan shall be subjectin any way to alienation, sale, transfer, assignment, pledge, attachment, garnishment,execution or encumbrance of any kind, and any attempt to accomplish the same shall be void. 9.2 **Incapacity**. Except as provided in Section 4.1(iii), benefits shall be provided under the Planonly to a Participant who is eligible therefor, except that if the Plan Administrator shallfind that such Participant is unable to manage his or her affairs for any reason, each benefitfor which he or she is eligible shall be provided, when due, to his or her duly appointedlegal representative, if there is one, and, if not, to the spouse, parents, children or otherrelatives or dependents of such Participant as the Plan Administrator, in its discretion, maydetermine. 9.3 **Participant’s Successors**. This Plan shall inure to the benefit of and be enforceable by theParticipant’s personal or legal representatives, executors, administrators, successors, heirs,distributees and/or legatees. 9.4 **Exclusive Benefit**. This Plan is intended to be for the exclusive benefit of the KB Companiesand the Participants, and except as provided in Sections 4.1(c), 4.1(d)(iii), 9.2 and 9.3, nothird party shall have any rights under the Plan. 9.5 **Employment Rights**. The Participant’s rights as an employee, and each Employer’s rights todischarge a Participant as an employee of such Employer, shall not be enlarged or affected byreason of the Plan. Nothing contained in the Plan shall be deemed to alter in any manner themanagement rights of the KB Companies with respect to the employment status, title or jobduties or responsibilities of any Participant with any Employer. 9.6 **Legal Status of Plan**. The Plan, as a “severance pay arrangement” within the meaning ofSection 3(2)(B)(i) of ERISA, is intended to be excepted from the definitions of “employeepension benefit plan” and “pension plan” set forth under Section 3(2) of ERISA, and isintended to meet the descriptive requirements of a plan constituting a “severance pay plan”within the meaning of regulations published by the Secretary of Labor at Title 29, Code ofFederal Regulations §2510.3-2(b). 9.7 **Code Section 409A**.(a) The Plan shall be interpreted in accordance with Section 409A, including withoutlimitation any Treasury Regulations or other Department of Treasury guidance that may be issued oramended after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in theevent that following the Effective Date the Committee determines that any payment or benefit underthe Plan may be subject to Section 409A, the Committee may adopt such amendments to the Plan oradopt other policies and procedures (including amendments, policies and procedures with retroactiveeffect), or
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 take any other actions, that the Committee determines are necessary or appropriate to (A) exemptthe payment or benefit from Section 409A and/or preserve the intended tax treatment of the paymentor benefit, or (B) comply with the requirements of Section 409A.(b) Each installment or payment under this Plan shall be considered a separate payment forpurposes of Section 409A. (c) If, on Participant’s Termination Date, (A) such Participant is a “specified employee”(within the meaning of Section 409A as determined annually by the Committee in accordance with themethodology specified by resolution of the Board or the Committee and in accordance with Section1.409A-1(i) of the Treasury Regulations) and (B) the Committee shall make a good-faithdetermination that payment or benefit under the Plan constitutes “deferred compensation” (withinthe meaning of Section 409A) the payment of which is required to be delayed pursuant to thesix-month delay rule set forth in Section 409A in order to preserve the tax treatment intended forsuch payment or to avoid additional tax, interest, or penalties under Section 409A, then theEmployer shall not pay such amount on the otherwise scheduled payment date but shall instead pay iton the first business day after such six-month period. Such amount shall be paid without interest,unless otherwise determined by the Committee, in its sole discretion, or as otherwise provided inany applicable agreement between any KB Company and the relevant Participant. (d) A Participant shall be solely responsible and liable for the satisfaction of all taxes,interest, and penalties that may be imposed on such Participant or for such Participant’s accountin connection with any payment or benefit under the Plan (including any taxes, interest, andpenalties under Section 409A), and no KB Company shall have any obligation to indemnify orotherwise hold such Participant harmless from any or all of such taxes, interest, or penalties.9.8 **Unfunded Plan**. The Plan shall not be required to be funded unless such funding is authorizedby the Committee or the Board. Regardless of whether the Plan is funded, no Participant shallhave any right to, or interest in, any assets of any KB Company to satisfy the provision ofbenefits under this Plan. 9.9 **Notices**. For all purposes of this Plan, all communications, including, without limitation,notices, consents, requests or approvals provided for herein, shall be in writing and shall bedeemed to have been duly given when delivered, addressed to KB Home (to the attention of theChief Legal Officer) at its principal executive offices and to any Participant at his or herprincipal residential address on file with KB Home, or to such other address as any party mayhave furnished to the other in writing and in accordance herewith. Notices of change ofaddress shall be effective only upon receipt. 9.10 **Governing Law**. Any dispute, controversy, or claim of whatever nature arising out of orrelating to this Plan or breach thereof shall be governed by and under the laws of the Stateof California, to be interpreted as a contract between residents of the State of Californiaperformed entirely within the State of California.
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9.11 **Validity**. The invalidity or unenforceability of any provision of this Plan shall notaffect the validity or enforceability of any other provision of this Plan, which shallnevertheless remain in full force and effect. 9.12 **Captions and Section Headings**. Captions and section headings used herein are for convenienceand are not part of this Plan and shall not be used in construing it. References to “Section”or “Article” refer to the corresponding Section or Article of this Plan, unless otherwiseindicated.Effective date of plan: October 4, 2007