exv10w35



 





Exhibit 10.35



KB HOME

AMENDED AND RESTATED 1999 INCENTIVE PLAN

STOCK APPRECIATION RIGHT BONUS AGREEMENT



     This Stock Appreciation Right Bonus Agreement (this “Agreement”) is made on July 12, 2007
(the “Grant Date”) between KB Home, a Delaware corporation (the “Company”), and [NAME] (the
“Participant”). Capitalized terms used in this Agreement and not defined herein have the
respective meanings given them in the KB Home Amended and Restated 1999 Incentive Plan (the
“Plan”).



     WHEREAS, the Company desires to grant the Participant a Stock Appreciation Right Bonus (the
“Bonus”);



     WHEREAS, the Bonus is a cash-based Award that is intended to constitute Qualified
Performance-Based Compensation;



     WHEREAS, the Bonus is intended to constitute a Performance-Based Bonus granted pursuant to
Section 6 of the Plan, and, if the Participant is a Covered Employee, a Performance-Based Award
granted pursuant to Section 11 of the Plan; and



     WHEREAS, the Bonus is intended to constitute a “stock appreciation right” not providing for
the deferral of compensation under, and therefore exempt from, Section 409A of the Code.



     NOW, THEREFORE, in consideration of the foregoing, the Company and the Participant enter into
this Agreement as follows:


A G R E E M E N T



     1. Grant. Subject to the terms of the Plan and this Agreement, the Company hereby
grants to the Participant a Bonus calculated by reference to an aggregate of [# RIGHTS] stock
appreciation rights (the “Rights”). Subject to the limitations set forth in Section 5, each Right
entitles the Participant to receive the positive difference, if any, between the grant price of
$36.19 (the “Grant Price”) and the Fair Market Value of a share of common stock, $1.00 par
value per share, of the Company (“Common Stock”) on the date of exercise (the “Spread”); provided
however, that in no event shall the Participant receive more than 400% of the Grant Price. The
Bonus is intended to constitute Qualified Performance-Based Compensation, a Performance-Based
Bonus, a “stock appreciation right” under Section 409A of the Code, and, if the Participant is a
Covered Employee, a Performance-Based Award. The Rights may be exercised, and the Bonus may be
paid, only as provided under this Agreement.



     2. Rights Vesting and Forfeiture.




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





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






 









 







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





     3. Accelerated Rights Vesting. Notwithstanding Section 2 above, subject to the
limitations set forth in Section 5, 100% of the Rights granted hereunder will vest and become
immediately exercisable, and the Bonus will be paid, upon a Change of Ownership of the Company as
provided under the applicable terms of the Plan, or upon the Participant’s Retirement.
“Retirement” means severance from employment with the Company or its Subsidiaries for any reason
other than a leave of absence, termination for cause, death or disability, at such time as the sum
of the Participant’s age and years of service with the Company or its Subsidiaries equals at least
65 or more, provided that the Participant is then at least 55 years of age. The Company will have
the sole right to determine whether the Participant’s severance from employment constitutes a
Retirement.



     4. Rights Termination. Vested Rights will cease to be exercisable and will expire and
terminate to the extent not exercised upon the date (the “Expiration Date”) that is the earlier of
(i) the close of business on the tenth anniversary of the Grant Date and (ii) the dates set forth
below in this Section 4.




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




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     5. Rights Exercise and Payment. To exercise any number of the Rights that have
vested, and to be entitled to payment of any portion of the Bonus, the Company must receive written
notice of exercise specifying the number of Rights to be exercised. The Rights will be deemed
exercised upon receipt of the exercise notice attached as Exhibit A (the “Exercise Notice”). Upon
exercise of any number of the Rights that have vested, the Spread will be determined by the Fair
Market Value per share of the Common Stock on the date the Exercise Notice is received by the
Company and will be paid in cash as soon as reasonably practicable following such receipt; provided
however, that in the event that the aggregate amount of cash payable to the Participant in respect
of any and all Award(s) under the Plan (including, but not limited to, any phantom stock bonuses)
in any fiscal year of the Company would exceed (i) $5,000,000 if the Participant is the Chief
Executive Officer at the time of such payment or (ii) $3,000,000 if the Participant is not
described in clause (i) of this Section 5, the Rights shall not be exercisable with respect to such
excess amount until such time that such portion of the Rights could be exercised without exceeding
the applicable limit, subject to the provisions of Section 4. The Company has the authority to
deduct or withhold an amount sufficient to satisfy applicable federal, state, local and foreign
taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to
any taxable event arising from the exercise of any vested Rights or payment of any portion of the
Bonus.



     6. No Stockholder Rights. The Participant, and any Permitted Transferee (as defined
in Section 10 hereof), will not be deemed to be a holder of or possess any stockholder rights with
respect to any shares of Common Stock based on the Rights granted hereunder.



     7. Adjustments. In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend or other event described in Section 13(a) of the Plan, such
adjustment will be made to the number of Rights, the Grant Price and the Spread, and to the terms
and conditions hereof, in accordance with the terms of the Plan.



     8. California Law. This Agreement will be construed, administered and enforced in
accordance with the laws of the State of California. This Agreement, the Bonus and the Rights will
be subject to rescission by the Company if an executed original of this Agreement by the
Participant is not received by the Company within four weeks of the Grant Date.



     9. Entire Agreement. This Agreement sets forth the entire agreement and understanding
of the parties with respect to the subject matter of this Agreement, and supersedes all prior and
contemporaneous oral and written agreements and understandings relating to such subject matter.
THE PARTICIPANT ACKNOWLEDGES AND AGREES TO BE BOUND TO, AND THAT THE BONUS AND THE RIGHTS ARE
GRANTED SUBJECT TO, ALL OF THE TERMS AND CONDITIONS OF THE PLAN, INCLUDING ANY TERMS, RULES OR
DETERMINATIONS MADE BY THE COMMITTEE PURSUANT TO ITS ADMINISTRATIVE AUTHORITY UNDER THE PLAN, AND
THAT IN THE EVENT OF ANY CONFLICT BETWEEN THIS AGREEMENT AND THE PLAN, THE PLAN WILL PREVAIL.



     10. Non-Transferability. The Rights and the entitlement to the Bonus may not be
transferred (in whole or in part) until and unless vested, and then only by will or the laws of
descent and distribution or by gift or a domestic relations order to members of the Participant’s
family or to trusts or other entities whose beneficiaries or beneficial owners are the Participant
or members of the Participant’s family (each, a “Permitted Transferee”). During the Participant’s
lifetime, unless the Rights and the entitlement to the Bonus are transferred to a Permitted
Transferee in accordance with this Section 10, only the Participant may exercise the Rights and
receive payment of the Bonus as provided in this Agreement. Subject to such conditions and
procedures as the Company may require, a Permitted Transferee may exercise the Rights and receive
payment of the Bonus during the Participant’s lifetime.



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     11. No Obligation. Neither the execution and delivery hereof nor the granting of the
Bonus or the Rights will constitute or be evidence of any agreement or understanding, express or
implied, on the part of the Company or any of its Subsidiaries to employ or continue the employment
of the Participant for any period or in any capacity.



     12. Notice. Any notice given hereunder to the Company will be addressed to the
Company, attention Senior Vice President, Human Resources, or a designee or successor thereof, and
any notice given hereunder to the Participant will be addressed to the Participant at his or her
address as shown on the records of the Company.



     13. Section 409A. The Bonus and the Rights thereunder are intended to constitute
“stock appreciation rights” that do not constitute “nonqualified deferred compensation” within the
meaning of Section 409A of the Code. However, if at any time the Committee determines that the
Bonus or the Rights may be subject to Section 409A, the Committee may, in its discretion, adopt
such amendments to the Plan or this Agreement or adopt such other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take any other actions,
as the Committee determines are necessary or appropriate either for the Bonus and the Rights to be
exempt from the application of Section 409A of the Code or to comply with the requirements of
Section 409A of the Code, including by adding conditions with respect to the vesting of the Rights
and/or the payment of the Bonus; provided that no such amendment may change the Performance Goal
with respect to any person who is a Covered Employee.



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



	 	 	 	 	 
	 	KB HOME
 

 	 
	 	By:  	Jeffrey T. Mezger
 	 
	 	 	Chief Executive Officer and President 	 
	 	 	 	 
	 
	 	PARTICIPANT:
 

 	 
	 	By:  	
 	 
	 	 	[NAME] 	 
	 	 	 	 



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EXHIBIT A




EXERCISE NOTICE 

STOCK APPRECIATION RIGHTS BONUS




KB Home

Attn: Senior Vice President, Human Resources





     Please be advised that I elect to exercise ____________ vested Rights granted to me by KB Home
under and subject to the terms and provisions of the KB Home Amended and Restated 1999 Incentive
Plan and the Stock Appreciation Rights Bonus Agreement dated ____________ , 2007.






			
	Name: 	 	
 







			
	Address: 	 	
 


	
 







			
	Social Security #: 	 	
 







			
	Date: 	 	
 







			
	Signature: 	 	
 









 









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




	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	 	 
	 	Its: