exv10w41






Exhibit
10.41

KB HOME




EXECUTIVE SEVERANCE PLAN




ARTICLE I — PURPOSE



The Management Development and Compensation Committee of the Board of Directors of KB Home hereby
adopts the KB Home Executive Severance Plan (the “Plan”). The Plan is designed to provide severance
protection to certain key employees who are expected to make substantial contributions to the
success of KB Home and its Affiliates (together, the “KB Companies,” and each, individually, a “KB
Company”) and thereby provide for stability and continuity of operations.




ARTICLE II — ESTABLISHMENT OF THE PLAN



The benefits provided by the Plan shall be available to Participants, as defined in Article III.




ARTICLE III — DEFINITIONS




     “Affiliate” means, with respect to any person, any entity, directly or indirectly, controlled
by, controlling or under common control with such person.



     “Average Bonus” means, with respect to any Participant, the lesser of: (a) the average of the
annual cash bonuses, if any, actually paid by any Employer to the Participant for three most recent
completed fiscal years preceding the Participant’s Termination Date (or, if the Participant has
been employed by one or more Employers for less than three complete fiscal years, the average of
all annual cash bonuses actually paid to the Participant for completed fiscal years preceding the
Participant’s Termination Date, if any) and (b) (i) for Group A Participants, 3.0 times the
Participant’s Base Salary; (ii) for Group B Participants, 2.5 times the Participant’s Base Salary;
and (iii) for Group C Participants, 2.0 times the Participant’s Base Salary.



     “Base Salary” means, with respect to any Participant, the Participant’s annual base salary as
in effect on the Participant’s Termination Date.



     “Board” means the Board of Directors of KB Home.




     “Cause” means, with respect to any Participant, any of the following committed by the
Participant:




	 	(a)	 	Serious violation or deliberate disregard of the KB Home Ethics Policy or the
policies of any KB Company;
	 
	 	(b)	 	Gross dereliction in the performance of the Participant’s job duties and
responsibilities;
	 
	 	(c)	 	Material misappropriation of a KB Company’s property (whether real, personal,
tangible or intangible);




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	 	(d)	 	Commission of an act of fraud upon, or bad faith, dishonesty or disloyalty
toward, 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 serious
moral turpitude to the extent that, in the reasonable judgment of the Plan
Administrator, the Participant’s credibility and reputation no longer conform to
expected standards; or
	 
	 	(g)	 	An act or omission that the Plan Administrator reasonably determines
may prejudice significantly any KB Company’s best interests if the Participant’s
employment is not terminated.





     “CIC Plan” means the KB Home Change in Control Severance Plan, as it may be amended from time
to 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 any
provision of the Code shall include the regulations and other guidance promulgated by the Treasury
Department 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 any
successor committee of the Board that performs the same or similar executive compensation
responsibilities delegated to the Committee as of the Effective Date.



     “Disability” means, with respect to any Participant, the Participant’s incapacity due to
physical or mental illness to perform the Participant’s full-time duties or responsibilities with
the Participant’s Employer for a continuous period of three months or an aggregate of six months in
any 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 been
elected by the Board to one or more of the following positions: President (other than a President
who 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 the
Participant.



     “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 in
one or more of the following positions with KB Home: President (other than a President who also is
the Chief Executive Officer) or Executive



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Vice President; or (b) any other Participant who is expressly designated by the Committee or the
Board as a Group A Participant.



     “Group B Participant” means (a) any Participant who, on a relevant Termination Date, is
serving as a Senior Vice President of KB Home and is designated by the Board as an “executive
officer” 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 B
Participant.



     “Group C Participant” means (a) any Participant who, on a relevant Termination Date, is
serving 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, as
amended; or (b) any other Participant who is expressly designated by the Committee or the Board as
a Group C Participant.



     “Participant” means an Eligible Officer or other employee of a KB Company who is expressly
designated by the Committee or the Board as a Participant and who, in each case, has been
continuously employed on a full-time basis by one or more KB Companies for at least one year. A
Participant shall cease to be a Participant under the Plan when he or she is no longer an Eligible
Officer 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, shall
include 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 the
Participant under Sections 4.1(a) and (b).



     “Severance Period” means the period of time commencing on a relevant Termination Date and
continuing until: (a) for Group A Participants, the second anniversary of the relevant Termination
Date; (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 unilateral
termination of the Participant’s employment without Cause and for reasons other than death or
Disability, but only if such termination constitutes a “separation from service” with respect to
the 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 be
determined by the Committee in accordance with Treasury Regulation Section 1.409A-1(h). In
determining whether a Participant has experienced a separation from service, the following
provisions shall apply:



          (a) For a Participant who provides services to the Employer as an employee, except as
otherwise provided in part (c) below, a separation from service shall occur when such Participant
has 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 facts
and 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 the
level of bona fide services the Participant will perform for the Employer after such date (whether
as an employee or as an independent contractor) will permanently decrease to no more than 20% of
the average level of bona fide services performed by such Participant (whether as an employee or an
independent contractor) over the immediately preceding 36-month period (or the full period of
services to the Employer if the Participant has been providing services to the Employer less than
36 months).



          If a Participant is on military leave, sick leave, or other bona fide leave of absence, the
employment relationship between the Participant and the Employer shall be treated as continuing
intact, provided that the period of such leave does not exceed 6 months, or if longer, so long as
the Participant retains a right to reemployment with the Employer under an applicable statute or by
contract. If the period of a military leave, sick leave, or other bona fide leave of absence
exceeds 6 months and the Participant does not retain a right to reemployment under an applicable
statute or by contract, the employment relationship shall be considered to be terminated for
purposes of this Plan as of the first day immediately following the end of such 6-month period. In
applying the provisions of this paragraph, a leave of absence shall be considered a bona fide leave
of absence only if there is a reasonable expectation that the Participant will return to perform
services for the Employer. For purposes of this paragraph, where a leave of absence is due to any
physical or mental impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than six months, where such impairment causes the Participant
to be unable to perform the duties of his or her position of employment or any substantially
similar position of employment, a 29-month period of absence shall be substituted for such 6-month
period.



          (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 the
expiration of the contract (or in the case of more than one contract, all contracts) under which
services are performed for the Employer, provided that the expiration of such contract(s) is
determined by the Committee to constitute a good-faith and complete termination of the contractual
relationship between the Participant and the Employer.



          (c) For a Participant who provides services to the Employer as both an employee and an
independent contractor, a separation from service generally shall not occur until the Participant
has ceased providing services for such Employer as both as an employee and as an independent
contractor, 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 as
an 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 the
Employer as an independent contractor, the Participant will not be considered to have experienced a
separation from service until the Participant has ceased providing services for the Employer in
both 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 services
for 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 such
Participant as a director shall not be taken into account in determining whether the Participant
has experienced a separation from service as an employee.



          (d) For purposes of determining whether a Participant has experienced a separation from
service, services performed for the Employer shall include service performed both for the Employer
and for any other corporation that is a member of the same “controlled group” of corporations as
the Employer under Section 414(b) of the Code or any other trade or business (such as a
partnership) that is under common control with the Employer as determined under Section 414(c) of
the Code, in each case as modified by Section 1.409A-1(h)(3) of the Treasury Regulations and
substituting “at least 50 percent” for “at least 80 percent” each place it appears in Section
1563(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’s
Termination occurs.



ARTICLE IV — SEVERANCE BENEFITS





	4.1	 	Right to Severance Payment.






	 	(a)	 	Subject to Section 4.4(c) and Article V, in the event of a
Participant’s Termination, the Participant shall be entitled to receive from
the Participant’s Employer a Severance Payment in the amount provided in
Section 4.1(b), payable as described in Section 4.1(d); provided that:






	 	(i)	 	if the relevant Termination Date occurs during a Protected Period (as
defined in the CIC Plan) and the Participant is thereby entitled to
receive a severance payment under the CIC Plan, then the Participant’s
rights and obligations will be as specified in the CIC Plan and the
Participant will not be eligible to receive a Severance Payment or any
other benefits or rights pursuant to this Plan nor be subject to any
obligations pursuant to this Plan; and
	 
	 	(ii)	 	if on the relevant Termination Date a Participant is party to any
employment or similar agreement with an Employer that provides severance
payments or any of the other benefits provided in this Plan (other than
the CIC Plan), and any terms of that agreement are inconsistent with, or
in addition to, the terms of this Plan, the terms of that agreement shall
apply to the Participant to the extent of such inconsistent or additional
terms.






	 	(b)	 	Subject to the terms and conditions of this Plan, the Severance Payment to
which 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 multiplied
by (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 Group
C Participant,






	 	minus the sum of:
	 
	 	(ii)	 	the aggregate amount of any other cash payments in the nature
of severance payments, notice pay, or the like that any Employer is obligated
to pay to the Participant by law or by any contract, plan, or arrangement
other than this Plan and the CIC Plan; and
	 
	 	(iii)	 	if an Employer is obligated by law to provide advance notice
of Termination to the Participant, the aggregate amount of compensation
received by the Participant from the date of such notice through the
Participant’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 shall
provide the Participant continued participation in the Employer’s medical, dental and
vision plans (collectively, the “Health Plans”) for the Severance Period, subject to
the terms and conditions of the Health Plans, including, but not limited to, timely
payment of any employee contributions necessary to maintain participation; provided,
however, that for a Group A Participant, continued participation in the Health Plans
shall be limited to the period beginning on the Participant’s Termination Date and
ending on the eighteen-month anniversary of the Participant’s Termination Date, and
the Group A Participant’s Employer shall pay such Group A Participant in a lump sum on
the eighteen-month anniversary of the Participant’s Termination Date, the present
value of continued participation in the Health Plans for the last six months of the
applicable Severance Period. If a Participant entitled to benefits under this Section
4.1(c) should die before the end of the Participant’s applicable Severance Period, the
Participant’s Employer’s obligations under this Section 4.1(c) shall cease. Any
qualified beneficiaries of any such deceased Participant shall be entitled to continue
participation in such Employer’s Health Plans only to the extent provided under the
Consolidated Omnibus Budget Reconciliation Act of 1986, as amended.






	 	(d)	 	   






	 	(i)	 	Subject to Sections 4.3 and 9.7, the Severance Payment shall
be paid in installments in the amounts described in Section 4.1(d)(ii) during
the Severance Period according to a Participant’s Employer’s then-current
payroll policies; provided, however, that any installments that would
otherwise have been paid during the 60-calendar day period beginning on the
Participant’s Termination Date shall not be paid during such 60-day period,
but shall be accumulated and paid with the first standard pay period that
occurs 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 of
the Severance Payment divided by the number of applicable payroll dates in
the Severance Period, and shall be reduced by any amount due and payable
by a Participant to the Participant’s Employer as of the date such
installment is paid, on account of any advance or loan from the Employer
or any other obligation the Participant may be required to repay to the
Employer (including, without limitation, amounts required to be repaid
pursuant to Section 4.2); provided, however, that the aggregate amount of
reductions pursuant to this Section 4.1(d)(ii) with respect to Severance
Payment installments paid in any taxable year of the Employer shall not
exceed $5,000, with any other amounts owed by the Participant to
Participant’s Employer being repaid by the Participant as and when due.
	 
	 	(iii)	 	If a Participant entitled to a Severance Payment under this
Section 4.1 should die before all amounts payable to him or her have been
paid, such unpaid amounts shall be paid, in a lump sum, as soon as practicable
following the Participant’s death (but in no event later than 30 calendar days
after the Participant’s death) to the Participant’s executor or personal
representative or to the administrators of the Participant’s estate, as the
Plan Administrator, in its sole discretion, may determine.






	4.2	 	Business Expenses. Each Participant shall be responsible for any non-business-related charges
incurred on any Employer’s credit card or other account used by the Participant on or prior to
the 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, reasonable
business-related expenses for which the Participant has not already been reimbursed as of the
Participant’s Termination Date provided the Participant timely submits a proper travel and
expense report. Such reimbursement shall be paid no later than the last day of the
Participant’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 payable
pursuant 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 may
have accrued as of the Participant’s Termination Date pursuant to: (i) KB Home’s
stock plans, incentive plans, 401(k) Savings Plan, Nonqualified Deferred
Compensation Plan, Retirement Plan and Death Benefit Only Plan or (ii) any vacation
pay policy and any agreement, policy, plan, program or arrangement similar to those
identified in clause (i) above of any KB Company under which the Participant may
have rights at the Participant’s Termination Date. These benefits and rights will
be 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 their
terms.






	 	(b)	 	In connection with a Participant’s Termination, such Participant shall follow
the Participant’s Employer’s standard procedures relating to departing employees,
including, without limitation, returning (and providing written confirmation that the
Participant has so returned) all Employer-owned property, documents and materials
(including copies, reproductions, summaries and/or analyses), and all other materials
that contain, reflect, summarize, describe, analyze or refer or relate to any items of
Information (as defined in Section 6.5).
	 
	 	(c)	 	The Participant shall not be required to mitigate damages or the amount of
the Participant’s Severance Payment or any other benefit under the Plan by seeking
other employment or otherwise, nor, except as provided in the following sentence,
shall any benefit under the Plan be reduced by any compensation or like benefits
received by the Participant as a result of employment after the Participant’s
Termination. In the event that a person receiving benefits under the Plan is
reemployed or is otherwise engaged in any capacity to provide business services by any
KB Company, the obligation of any Employer to provide benefits to the person under the
Plan will cease immediately.





ARTICLE V — RELEASE





	5.1	 	Release. Notwithstanding anything to the contrary contained in this Plan, a Participant shall
not be entitled to receive any Severance Payment or any other benefit under the Plan unless
and 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 than
50 calendar days after the Participant’s Termination Date) and any period during which the
Participant may revoke the Release under applicable law or pursuant to the terms of the
Release has elapsed. The Release, which shall be signed by the Participant no earlier than the
Participant’s Termination Date, shall be a written document, in a form prescribed by the Plan
Administrator, intended to create a binding agreement by the Participant to release any claim
that the Participant has or may have against any Employer and related entities and
individuals, including the KB Companies and their respective directors, officers and
employees, 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’s
benefits and rights under Article IV, shall cease immediately in the event the Participant
breaches any of the covenants contained in the Release or in Article VI.




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ARTICLE VI — NON-SOLICITATION, NON-DISPARAGEMENT, CONFIDENTIALITY AND COOPERATION





	6.1	 	Non-Solicitation. From the relevant Termination Date until the expiration of the Severance
Period, a Participant shall not directly or indirectly (a) induce or assist others in inducing
any person who is an employee, officer, consultant, or agent of any KB Company to terminate
employment or business affiliation with the KB Company; or (b) employ or associate in business
with any person employed by or associated in business with any KB Company at any time during
the 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 with
which the Participant becomes associated, from engaging in general solicitations of employment
or hiring persons that respond to such solicitations.
	 
	6.2	 	Statements to Third Parties. A Participant shall not, directly or indirectly, make or cause
to be made any statements to any third parties criticizing or disparaging any KB Company or
commenting negatively on its character or business reputation. A Participant further shall
not: (a) comment to others concerning the status, plans or prospects of the business of any KB
Company, or (b) engage in any act or omission that would be detrimental, financially or
otherwise, 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 “KB
Company” shall include, in addition to KB Home and its Affiliates, each of their respective
directors, officers and predecessors. The foregoing obligations shall not apply to any
statements or opinions that are made under oath in any investigation, civil or administrative
proceeding or arbitration in which the individual has been compelled to testify by subpoena or
other 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 found
contrary to applicable law by a court of competent jurisdiction, the court shall reform the
obligations by limiting them to the maximum reasonable scope.
	 
	6.4	 	Cooperation. A Participant shall assist and cooperate with any KB Company and its designated
agents and representatives in the conduct of any administrative or legal proceeding to the
extent 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 have
created, observed or had access to information and other trade secrets including
confidential information relating to the business or interests of persons with whom a KB
Company may have commercial relations (“Information”) that is valuable to any of the KB
Companies and may lose its value if disclosed to third parties. Without limiting a
Participant’s obligations under the KB Home Ethics Policy with respect to Information,
Participants shall treat all such Information as confidential and belonging to the KB
Companies and take all actions reasonably requested to confirm such ownership. A
Participant 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 all
Information until and only to the extent that a specific item of Information becomes public
knowledge through no fault of the Participant. A Participant shall promptly inform the Plan
Administrator of any request, order, or legal process requesting or requiring the
Participant to disclose Information. A Participant shall cooperate with any efforts by the
KB Companies to prevent or limit disclosure of Information.





ARTICLE VII — AMENDMENT AND TERMINATION



KB Home, through the Committee, reserves the right to amend or terminate the Plan (in whole or in
part), in its sole and absolute discretion, at any time without any prior notice to or approval of
any Participant or any other Employer. No such amendment, modification or change shall adversely
affect any benefit under the Plan previously paid or actually provided to a Participant (or a
Participant’s successor in interest) or cause a violation of the requirements of Section 409A.




ARTICLE VIII — ADMINISTRATION OF PLAN





	8.1	 	Administration.






	 	(a)	 	The Plan shall be administered by the Plan Administrator. The Plan
Administrator shall have the sole and absolute discretion to interpret all provisions
of the Plan (including, without limitation, by supplying omissions from, correcting
deficiencies in, or resolving inconsistencies or ambiguities in, the language of the
Plan), to make factual findings with respect to any issue arising under the Plan, to
determine the rights and status under the Plan of Participants or other persons, to
resolve questions (including factual questions) or disputes arising under the Plan and
to make any determinations with respect to the benefits provided under the Plan and
the persons entitled thereto. Without limiting the generality of the foregoing, the
Plan Administrator shall have the authority: (i) to determine whether a particular
person is a Participant, and (ii) to determine if a person is entitled to benefits
under the Plan and, if so, the amount, scope and duration of such benefits. The Plan
Administrator’s determination of the rights of any person under the Plan shall be
final 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 its
administrative duties, including, without limitation, duties with respect to the
processing, review, investigation, approval and provision of benefits, to a designated
internal and/or external administrator or administrators.






	8.2	 	Regulations. The Plan Administrator shall promulgate any rules, regulations and
interpretations it deems necessary in order to carry out the purposes of the Plan or to
interpret the provisions of the Plan; provided, however, that no rule, regulation or
interpretation shall be contrary to the provisions of the Plan. The rules, regulations and
interpretations made by the Plan Administrator shall, subject only to the provisions of
Section 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 any
benefit under the Plan. Any person who believes that he or she has not received a
benefit to which he or she is entitled under the Plan must file a claim in writing
with the Plan Administrator specifying the basis for his or her claim and the facts
upon which he or she is relying in making such a claim.
	 
	 	(b)	 	The Plan Administrator will notify a claimant of its decision regarding his
or her claim within a reasonable period of time, but not later than 90 calendar days
following the date on which the claim is filed, unless circumstances require a longer
period for adjudication and the claimant is notified in writing of the reasons for an
extension of time prior to the end of the initial 90-day period and the date by which
the Plan Administrator expects to make the final decision. In no event will the Plan
Administrator extend its processing of a claim beyond 180 calendar days after the date
on which the claim is first filed with the Plan Administrator.






If a claim is denied, the Plan Administrator will notify the claimant of its
decision 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) on
which the denial is based;
	 
	 	(iii)	 	A description of additional information or material
necessary 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 the
applicable time limits under such procedures and a statement as to the
claimant’s right to bring a civil action under ERISA after all of the Plan’s
review procedures have been satisfied.






If additional information or material is needed, an applicable claimant shall be
provided at least 45 calendar days after receiving notice of such need to provide
the information or material and any otherwise applicable time period specified in
this Section 8.3 for making a determination or for filing a request for a review of
a denied claim shall be extended by the same period during which the information or
material is being obtained.




Within 60 calendar days after receipt of a denial of a claim, the claimant
must 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 shall
be deemed to have acquiesced to the original decision of the Plan Administrator on
his or her claim. If a request for review is filed, the Plan Administrator shall
review 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 claim
for benefits. The claimant may submit positions and comments in writing, and the
review will take into account all information submitted by the claimant regardless
of whether it was reviewed as part of the original determination. The decision by
the Plan Administrator with respect to the review will be given no later than 60
calendar days after receipt of the request for review, unless circumstances warrant
an extension of time not to exceed an additional 60 calendar days. If an extension
is needed, written notice of the extension will be furnished to the claimant before
the end of the initial 60-day period, indicating the circumstances requiring the
extension and the date by which the Plan Administrator expects to make a decision.




If the Plan Administrator denies the claim after review, the Plan Administrator
will notify the claimant of its decision in writing and the notice will contain
the following information:




	 	(A)	 	The specific reason(s) for the denial;
	 
	 	(B)	 	A reference to the specific Plan provision(s) on which the
denial is based;
	 
	 	(C)	 	A statement that the claimant is entitled to receive, upon
request and free of charge, reasonable access to and copies of all information
relevant to the claimant’s claim for benefits; and
	 
	 	(D)	 	A statement of the claimant’s right to bring a civil action
under ERISA.






The Plan Administrator’s decision on review shall be, to the extent permitted by
applicable law, final and binding on all interested persons.




For the avoidance of doubt, any documents, information and material relevant to a
claim for benefits that a claimant may access or copy in accordance with the
provisions of this Section 8.3 shall be deemed Information.




	8.4	 	Mediation. After an applicable claimant has exhausted all administrative remedies as
provided in Section 8.3, the claimant may submit any dispute to mediation by written notice
to the Plan Administrator and to any other relevant party or parties. The mediator shall be
selected by agreement of the parties. If the parties cannot agree on a mediator, a mediator
shall be designated by the American Arbitration Association at the request of a party. Any
mediator so designated must be acceptable to all parties. The mediation shall be conducted
as specified by the mediator and agreed upon by the parties. The parties agree to discuss
their differences in good faith and to attempt, with facilitation by the mediator, to reach
an amicable resolution of the dispute. The mediation shall be treated as a settlement
discussion and any matters discussed, information disclosed, determinations made or
agreements reached during mediation proceedings shall be confidential and deemed to be
Information. The mediator may not testify for either party in any later proceeding relating
to the dispute. No




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	 	 	recording or transcript shall be made of the mediation proceedings. Each party shall bear
its own costs in the mediation. The fees and expenses of the mediator shall be shared
equally by the parties.





ARTICLE IX — MISCELLANEOUS





	9.1	 	Alienation. Except as otherwise required by law, no benefit under the Plan shall be subject
in 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 Plan
only to a Participant who is eligible therefor, except that if the Plan Administrator shall
find that such Participant is unable to manage his or her affairs for any reason, each benefit
for which he or she is eligible shall be provided, when due, to his or her duly appointed
legal representative, if there is one, and, if not, to the spouse, parents, children or other
relatives or dependents of such Participant as the Plan Administrator, in its discretion, may
determine.
	 
	9.3	 	Participant’s Successors. This Plan shall inure to the benefit of and be enforceable by the
Participant’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 Companies
and the Participants, and except as provided in Sections 4.1(c), 4.1(d)(iii), 9.2 and 9.3, no
third party shall have any rights under the Plan.
	 
	9.5	 	Employment Rights. The Participant’s rights as an employee, and each Employer’s rights to
discharge a Participant as an employee of such Employer, shall not be enlarged or affected by
reason of the Plan. Nothing contained in the Plan shall be deemed to alter in any manner the
management rights of the KB Companies with respect to the employment status, title or job
duties or responsibilities of any Participant with any Employer.
	 
	9.6	 	Legal Status of Plan. The Plan, as a “severance pay arrangement” within the meaning of
Section 3(2)(B)(i) of ERISA, is intended to be excepted from the definitions of “employee
pension benefit plan” and “pension plan” set forth under Section 3(2) of ERISA, and is
intended 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 of
Federal Regulations §2510.3-2(b).
	 
	9.7	 	Code Section 409A.






	(a)	 	The Plan shall be interpreted in accordance with Section 409A, including without
limitation any Treasury Regulations or other Department of Treasury guidance that may be issued or
amended after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the
event that following the Effective Date the Committee determines that any payment or benefit under
the Plan may be subject to Section 409A, the Committee may adopt such amendments to the Plan or
adopt other policies and procedures (including amendments, policies and procedures with retroactive
effect), or




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	 	take any other actions, that the Committee determines are necessary or appropriate to (A) exempt
the payment or benefit from Section 409A and/or preserve the intended tax treatment of the payment
or benefit, or (B) comply with the requirements of Section 409A.






	(b)	 	Each installment or payment under this Plan shall be considered a separate payment for
purposes 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 the
methodology specified by resolution of the Board or the Committee and in accordance with Section
1.409A-1(i) of the Treasury Regulations) and (B) the Committee shall make a good-faith
determination that payment or benefit under the Plan constitutes “deferred compensation” (within
the meaning of Section 409A) the payment of which is required to be delayed pursuant to the
six-month delay rule set forth in Section 409A in order to preserve the tax treatment intended for
such payment or to avoid additional tax, interest, or penalties under Section 409A, then the
Employer shall not pay such amount on the otherwise scheduled payment date but shall instead pay it
on 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 in
any 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 account
in connection with any payment or benefit under the Plan (including any taxes, interest, and
penalties under Section 409A), and no KB Company shall have any obligation to indemnify or
otherwise 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 authorized
by the Committee or the Board. Regardless of whether the Plan is funded, no Participant shall
have any right to, or interest in, any assets of any KB Company to satisfy the provision of
benefits 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 be
deemed to have been duly given when delivered, addressed to KB Home (to the attention of the
Chief Legal Officer) at its principal executive offices and to any Participant at his or her
principal residential address on file with KB Home, or to such other address as any party may
have furnished to the other in writing and in accordance herewith. Notices of change of
address shall be effective only upon receipt.
	 
	9.10	 	Governing Law. Any dispute, controversy, or claim of whatever nature arising out of or
relating to this Plan or breach thereof shall be governed by and under the laws of the State
of California, to be interpreted as a contract between residents of the State of California
performed entirely within the State of California.




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	9.11	 	Validity. The invalidity or unenforceability of any provision of this Plan shall not
affect the validity or enforceability of any other provision of this Plan, which shall
nevertheless remain in full force and effect.
	 
	9.12	 	Captions and Section Headings. Captions and section headings used herein are for convenience
and 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 otherwise
indicated.





Effective date of plan: October 4, 2007

Date of plan document: July 10, 2008





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