exv10w27






Exhibit 10.27




KB HOME

CHANGE IN CONTROL SEVERANCE PLAN

(AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2009)




     KB HOME, a Delaware corporation (the “Company”), has adopted this Change in Control Severance
Plan (the “Plan”) for the benefit of certain key employees of the Company. This Plan is effective
as of October 4, 2001 and has been amended and restated pursuant to Section 10.3 of the Plan
effective January 1, 2009.



     The purposes of the Plan are as follows:



     (1) To reinforce and encourage the continued attention and dedication of members of the
Company’s management to their assigned duties without the distraction arising from the possibility
of a Change in Control (as defined below) of the Company;



     (2) To enable and encourage the Company’s management to focus their attention on obtaining the
best possible deal for the Company’s shareholders and to make an independent evaluation of all
possible transactions, without being diverted by their personal concerns regarding the possible
impact of various transactions on the security of their jobs and benefits;



     (3) To provide severance benefits to any Participant (as defined below) who incurs a
termination of employment under the circumstances described herein within a certain period
following a Change in Control; and



     (4) To comply with all applicable law, including Section 409A of the Code and related Treasury
guidance and regulations, and be operated and interpreted in accordance with this intention.



     1. Defined Terms. For purposes of the Plan, the following terms shall have the
meanings indicated below:



     (A) “Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.



     (B) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Act.



     (C) “Board” shall mean the Board of Directors of the Company.



     (D) “Cause” shall mean (i) acts of fraud or misappropriation committed by the Participant and
intended to result in substantial personal enrichment at the expense of the Company or
(ii) repeated violations by the Participant of the Participant’s obligations to the Company which
are demonstrably willful and deliberate and which result in material injury to the Company;
provided that, in each case, the Participant has received written notice of the



 









 




described activity,
has been afforded a
period of 20 days to cure or correct the activity described in the notice, and has failed to
cure, correct or cease the activity, as appropriate.




     (E) “Change in Control” shall mean the occurrence of a “change in the ownership,” a “change in
the effective control” or a “change in the ownership of a substantial portion of the assets” of a
corporation, as determined in accordance with this Section.


In order for an event described below to constitute a Change in Control with respect to a
Participant, except as otherwise provided in part (ii)(b) of this Section, the applicable event
must relate to the corporation for which the Participant is providing services, the corporation
that is liable for payment of the Participant’s Account Balance (or all corporations liable for
payment if more than one), as identified by the Committee in accordance with Section
1.409A-3(i)(5)(ii)(A)(2) of the Treasury Regulations, or such other corporation identified by the
Committee in accordance with Section 1.409A-3(i)(5)(ii)(A)(3) of the Treasury Regulations.



In determining whether an event shall be considered a “change in the ownership,” a “change in the
effective control” or a “change in the ownership of a substantial portion of the assets” of a
corporation, the following provisions shall apply:





     (i) A “change in the ownership” of the applicable corporation shall occur on the date
on which any one person, or more than one person acting as a group, acquires ownership of
stock of such corporation that, together with stock held by such person or group,
constitutes more than 50% of the total fair market value or total voting power of the stock
of such corporation, as determined in accordance with Section 1.409A-3(i)(5)(v) of the
Treasury Regulations. If a person or group is considered either to own more than 50% of the
total fair market value or total voting power of the stock of such corporation, or to have
effective control of such corporation within the meaning of part (ii) of this Section, and
such person or group acquires additional stock of such corporation, the acquisition of
additional stock by such person or group shall not be considered to cause a “change in the
ownership” of such corporation.




     (ii) A “change in the effective control” of the applicable corporation shall occur on
either of the following dates:




     (a) The date on which any one person, or more than one person acting as a group,
acquires (or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of such corporation
possessing 30% or more of the total voting power of the stock of such corporation, as
determined in accordance with Section 1.409A-3(i)(5)(vi) of the Treasury Regulations.
If a person or group is considered to possess 30% or more of the total voting power
of the stock of a corporation, and such person or group acquires additional stock of
such corporation, the acquisition of additional stock by such person or group shall
not be considered to cause a “change in the effective control” of such corporation;
or




     (b) The date on which a majority of the members of the applicable corporation’s
board of directors is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the members of such
corporation’s board of directors before the date of the



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appointment or election,
as determined in accordance with Section 1.409A-3(i)(5)(vi) of the Treasury
Regulations. In determining whether the event described in the preceding sentence
has occurred, the applicable corporation to which the event must relate shall only
include a corporation identified in accordance with Section 1.409A-3(i)(5)(ii) of the
Treasury Regulations for which no other corporation is a majority shareholder.




     (iii) A “change in the ownership of a substantial portion of the assets” of the
applicable corporation shall occur on the date on which any one person, or more than one
person acting as a group, acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or persons) assets from the corporation
that have a total gross fair market value equal to or more than 40% of the total gross fair
market value of all of the assets of the corporation immediately before such acquisition or
acquisitions, as determined in accordance with Section 1.409A-3(i)(5)(vii) of the Treasury
Regulations. A transfer of assets shall not be treated as a “change in the ownership of a
substantial portion of the assets” when such transfer is made to an entity that is
controlled by the shareholders of the transferor corporation, as determined in accordance
with Section 1.409A-3(i)(5)(vii)(B) of the Treasury Regulations.



     (F) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.



     (G) “Committee” shall mean the committee responsible for administering the Plan, as described
in Section 3 hereof.



     (H) “Company” shall mean KB HOME, a Delaware corporation, and, except in determining under
Section 1(E) hereof whether or not any Change in Control of the Company has occurred, shall include
any successor to its business and/or assets.



     (I) “Disability” shall mean the Participant’s incapacity due to physical or mental illness to
perform his or her full-time duties with the Company for a continuous period of three months or an
aggregate of six months in any eighteen-month period.



     (J) “Good Reason” shall mean, without the consent of the Participant, (i) any changes in the
duties and responsibilities of the Participant which are materially inconsistent with the duties
and responsibilities of the Participant within the Company immediately prior to the Change in
Control, (ii) any reduction of the Participant’s salary, aggregate incentive compensation
opportunities (excluding any reduction in incentive compensation awards due to the economic
performance of the Company) or aggregate benefits, (iii) any required relocation of the
Participant’s office beyond a 50 mile radius from the location of the Participant’s office
immediately prior to the Change in Control, (iv) any failure by the Company to obtain the
assumption of the Plan by a successor of the Company, or (v) the Company’s requiring the
Participant to travel materially in excess of the Participant’s business travel obligations prior
to the Change in Control.



     (K) “Participants” shall mean those persons who are expressly designated in writing by the
Committee from time to time and identified as “Group A Participants” or “Group B





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Participants,” as
the case may be. 

     (L) “Protected Period” shall mean the period beginning on the date of a Change in Control and
ending on the date which is eighteen months after the date of such Change in Control.



     (M) “Separation from Service” shall mean a termination of services provided by a Participant
to the Company, other than by reason of death or Disability, as determined by the Committee in
accordance with Treas. Reg. §1.409A-1(h). In determining whether a Participant has experienced a
Separation from Service, the following provisions shall apply:




(i) For a Participant who provides services to the Company as an Employee, except as
otherwise provided in part (iii) of this Paragraph, a Separation from Service shall
occur when such Participant has experienced a termination of employment with the
Company. A Participant shall be considered to have experienced a termination of
employment when the facts and circumstances indicate that the Participant and the
Company reasonably anticipate that either (a) no further services will be performed
for the Company after a certain date, or (b) that the level of bona fide services the
Participant will perform for the Company 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 Company if the Participant has been providing
services to the Company 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 Company 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 Company 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 Company.
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.




(ii) For a Participant who provides services to the Company as an independent
contractor, except as otherwise provided in part (iii) of this 



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Paragraph, 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 Company, 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 Company.




(iii) For a Participant who provides services to the Company as both an employee and
an independent contractor, a Separation from Service generally shall not occur until
the Participant has ceased providing services for the Company as both as an employee
and as an independent contractor, as determined in accordance with the provisions set
forth in parts (i) and (ii) of this Paragraph, respectively. Similarly, if a
Participant either (a) ceases providing services for the Company as an independent
contractor and begins providing services for the Company as an employee, or (b)
ceases providing services for the Company as an employee and begins providing
services for the Company 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 Company in both capacities, as determined in
accordance with the applicable provisions set forth in parts (i) and (ii) of this
Paragraph.




     Notwithstanding the foregoing provisions in this part (iii), if a Participant
provides services for the Company as both an employee and as a director, to the
extent permitted by Treas. Reg. §1.409A-1(h)(5) 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.




(iv) For purposes of this Paragraph, services performed for the Company shall include
service performed both for the Company and for any other corporation that is a member
of the same “controlled group” of corporations as the Company under Section 414(b) of
the Code or any other trade or business (such as a partnership)_that is under common
control with the Company as determined under Section 414(c) of the Code, in each case
as modified by Treasury Regulation Section 1.409A-1(h)(3) and substituting “at least
50 percent” for “at least 80 percent” each place it appears in Section 1563(a) of the
Code or Treasury Regulation Section 1.414(c)-2..



     (N) “Specified Employee” shall mean any Participant who is determined to be a “key employee”
(as defined under Section 416(i) of the Code without regard to paragraph (5) thereof) for the
applicable period, as determined annually by the Committee in accordance with the methodology
specified by resolution of the Board or the Management Development and Compensation Committee of
the Board and in accordance with Section 1.409A-1(i) of the Treasury Regulations.



     2. Effective Date of Plan. The original effective date of the Plan was October 4,
2001, and the effective date of the amendment and restatement of the Plan is January 1, 2009 (the
“Effective Date”). The Plan shall remain in effect until the earlier of (i) such time as the
Company has discharged all of its obligations hereunder, or (ii) the date of the termination of



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the
Plan pursuant to Section 10.3 hereof.



     3. Administration.



     (A) Prior to the date of a Change in Control, the Plan shall be interpreted, administered and
operated by the Personnel, Compensation and Stock Plan Committee of the Board; on and after the
date of a Change in Control, the Plan shall be interpreted, administered and operated by a
committee appointed by a committee of individuals appointed by the Personnel, Compensation and
Stock Plan
Committee of the Board as such Committee is constituted immediately prior to the Change in Control.
In each case, subject to the terms of the Plan, the Committee shall have complete authority, in
its sole discretion subject to the express provisions of the Plan, to determine who shall be a
Participant, to interpret the Plan, to prescribe, amend and rescind rules and regulations relating
to it, and to make all other determinations necessary or advisable for the administration of the
Plan. Notwithstanding the foregoing, the Committee may delegate any of its duties hereunder to
such person or persons from time to time as it may designate.



     (B) All expenses and liabilities which members of the Committee incur in connection with the
administration of the Plan shall be borne by the Company. The Committee may employ attorneys,
consultants, accountants, appraisers, brokers, or other persons, and the Committee, the Company and
the Company’s officers and directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. No member of the Committee or the Board shall be personally liable
for any action, determination or interpretation made in good faith with respect to the Plan, and
all members of the Committee shall be fully protected by the Company in respect of any such action,
determination or interpretation.



     4. Benefits Provided.



     4.1 Termination After Change in Control. (A) Subject to Section 4.2 and 4.3 hereof, if a
Participant’s employment with the Company is terminated during the Protected Period (a) by the
Company other than for Cause or Disability, or (b) by the Participant for Good Reason, the Company
shall, except as provided in Section 4.1(C), pay to each Participant within ten (10) business days
after the Participant’s Separation from Service a severance payment (the “Severance Payment”) in an
amount determined as follows: (i) in the case of each Group A Participant, a lump sum payment in
an amount equal to two (2) times the sum of the Participant’s average annual base salary and the
Participant’s average actual annual cash bonus under the Company’s incentive compensation plan, in
each case, for the three fiscal years prior to the fiscal year in which the Change in Control
occurs and (ii) in the case of each Group B Participant, a lump sum payment in an amount equal to
one (1) times the sum of the Participant’s average annual base salary and the Participant’s
average actual annual cash bonus under the Company’s Incentive Compensation Plan, in each case, for
the three fiscal years prior to the fiscal year in which the Change in Control occurs. In
addition, notwithstanding any provisions of the Company’s stock option plans, incentive plans, or
other similar plans, all outstanding options, if any, granted to a Participant under any of the
Company’s stock option plans, incentive plans, or other similar plans (or options substituted
therefor covering the stock of a successor corporation) shall become fully vested and exercisable
upon a “Change in Control” or “Change of Ownership,” as such terms are defined in the applicable
plan or agreement thereunder, as to all shares of stock covered
thereby, and the restricted period with




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respect to any restricted stock or any other equity award granted to a Participant thereunder
shall lapse immediately upon such “Change in Control” or Change of Ownership.” In addition,
notwithstanding any provisions of the Company’s Death Benefit Only Life Insurance Plan, each
Participant’s interest in such plan shall become fully vested upon a Change in Control. The
Severance Payment and other benefits described herein shall be
conditioned upon the execution by
the Participant of the Company’s standard form general release, in accordance with paragraph (B) of
this Section 4.1.




     (B) 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 Separation from Service) and any period during which the Participant may
revoke the Release under applicable law or pursuant to the terms of the Release has elapsed.



     (C) If on the date of the Change in Control, a Participant is party to any employment or
similar agreement with the Company that provides severance payments or any of the other benefits
provided in this 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. In addition, except as otherwise expressly provided in a
written agreement between the Company and the Participant that such severance payments or benefits
are to be paid in addition to any payment or benefit described herein, the payment herein shall be
reduced by the aggregate amount of any other cash payments in the nature of severance payments or
the like that any Employer is obligated to pay to the Participant by any contract, plan, or
arrangement other than this Plan.



     4.2 Section 280G. (A) Notwithstanding anything in this Plan to the contrary, in the event
that it shall be determined that any payment or benefit to a Group A Participant, whether pursuant
to the terms of this Plan or otherwise (a “Payment”), would constitute an “excess parachute
payment” within the meaning of Section 280G of the Code, the Group A Participant shall be paid an
additional amount (a “Gross-Up Payment”) such that the net amount retained by the Group A
Participant after deduction of any excise tax imposed under Section 4999 of the Code, and any
federal, state and local income and employment taxes and excise tax, including any interest and
penalties with respect thereto, imposed upon the Gross-Up Payment shall be equal to the Payment.
For purposes of determining the amount of the Gross-Up Payment, the Group A Participant shall be
deemed to pay federal income tax and employment taxes at the highest marginal rate of federal
income and employment taxation in the calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest marginal rate of taxation in the state and locality of
the Group A Participant’s residence on the date the Payment is made, net of the reduction in
federal income taxes that the Group A Participant may obtain from the deduction of such state and
local income taxes. Group B Participants shall not be eligible to receive a Gross-Up Payment under
this Plan.



     (B) All determinations to be made under this Section 4.2 shall be made by the Company’s
independent public accountant immediately prior to the date the Payment is made (the “Accounting
Firm”), which firm shall provide its determinations and any supporting calculations and workpapers
both to the Company and the Group A Participant within ten (10) 


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days of such date. Any such
determination by the Accounting Firm shall be binding upon the Company and the Group A Participant.
Within five days after receipt of the Accounting Firm’s determination, the Company shall pay to
the Group A Participant the Gross-Up Payment determined by the Accounting Firm.



     (C) In the event that upon any audit by the Internal Revenue Service, or by a state or local
taxing authority, of a Payment or Gross-Up Payment, a change is
finally determined to be required
in the amount of taxes paid by the Group A Participant, appropriate adjustments shall be made under
this Section 4.2 such that the net amount which is payable to the Group A Participant after taking
into account the provisions of Section 4999 of the Code and any interest and penalties shall
reflect the intent of the parties as expressed in paragraph (A) of this Section 4.2, in the manner
determined by the Accounting Firm. The Group A Participant shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification shall be given as soon as practicable but no
later than ten (10)
business days after the Group A Participant is informed in writing of such claim and shall apprise
the Company of the nature of such claim and the date on which such claim is requested to be paid.
The Group A Participant shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the Company notifies the
Group A Participant in writing prior to the expiration of such period that it desires to contest
such claim, the Group A Participant shall: (i) give the Company any information reasonably
requested by the Company relating to such claim; (ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company; (iii) cooperate with the Company in good faith in
order effectively to contest such claim; and (iv) permit the Company to participate in any
proceedings relating to such claim; provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Group A Participant harmless, on an after-tax basis,
for any excise tax or income tax (including interest and penalties with respect thereto) imposed as
a result of such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 4.2, the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing authority in respect
of such claim and may contest the claim in any permissible manner, and the Group A Participant
agrees to prosecute such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the Company shall determine. The
Company’s control of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Group A Participant shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.




     (D) All of the fees and expenses of the Accounting Firm in performing the determinations
referred to in paragraphs (B) and (C) of this Section 4.2 shall be borne solely by the Company.
The Company agrees to indemnify and hold harmless the Accounting Firm from any and all claims,
damages and expenses resulting from or relating to its determinations pursuant to paragraphs (B)
and (C) of this Section 4.2, except for claims, damages or expenses


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resulting
from the gross
negligence or willful misconduct of the Accounting Firm.



     (E) Pursuant to the requirements of Section 409A of the Code, any payment due to the Group A
Participant under this Section 4.2 shall be made no later than the end of the calendar year
following the year in which related taxes are remitted to the relevant taxing authority, or, in the
case of an audit or litigation that results in no taxes being remitted, no later than the end of
the calendar year following the year in which such audit or litigation is completed.



     4.3 Compliance with Section 409A of the Code; Delay in Payments to Specified
Employees. Payments under this Plan are intended to comply with Section 409A of the Code (to
the extent applicable) and this Plan shall be interpreted consistent with that intent. In the case
of a Participant who is a Specified Employee, payment of benefits under Section 4.1 (to the extent
subject to Section 409A of the Code) shall not be made sooner than six months following the
Participant’s Separation from Service. Any resulting delayed payments shall be made on the first
day of the seventh month following the date of the Participant’s Separation from Service.



     5. Termination Procedures.



     5.1 Notice of Termination. Any purported termination of a Participant’s employment following
a Change in Control (other than by reason of death) shall be communicated by written Notice of
Termination from one party to the other party in accordance with Section 8 hereof. For purposes of
this Plan, a “Notice of Termination” shall mean a notice which shall indicate the specific
termination provision in this Plan relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Participant’s employment under
the provision so indicated. Further, no termination for Cause shall be effective without (i)
reasonable notice to the Participant setting forth the reasons for the Company’s intention to
terminate, and (ii) an opportunity for the Participant to cure or correct any such breach within
twenty (20) days after receipt of such notice. Notwithstanding anything contained herein, no
termination for Good Reason shall be effective unless (i) the Participant has delivered to the
Company a Notice of Termination in accordance with this Section 5.1 within thirty (30) days after
the occurrence of the event or circumstance which constitutes Good Reason under Section 1(J)
hereof, and (ii) the Company has been afforded an opportunity to cure or correct such event or
circumstance within twenty (20) days after receipt of such notice.



     5.2 Date of Termination. “Date of Termination,” with respect to any purported termination of
a Participant’s employment (other than by reason of the Participant’s death or Disability), shall
mean the date specified in the Notice of Termination (which shall be within thirty (30) days from
the date such Notice of Termination is given).



     5.3 Covenants. The Participant agrees that, in order for the Participant to be eligible to
receive the Severance Payment and other benefits described herein, the Participant must comply with
the covenants set forth in paragraphs (A) and (B) of this Section 5.3. In the event that a
Participant breaches or violates any provision of paragraphs (A) and (B) of this Section 5.3, the
Participant shall forfeit any right and interest of the Participant to receive any Severance
Payment or other benefit described herein and the Participant shall promptly refund to the Company
all payments received under Section 4.1(A).





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     (A) The Participant hereby agrees that, upon termination of the Participant’s
employment with the Company, the Participant shall not discuss or use any
confidential and/or secret information of a proprietary nature which is not otherwise
publicly available.




     (B) The Participant hereby agrees that, for a period commencing on the Date of
Termination and terminating on the first anniversary thereof, the Participant shall not,
either on the Participant’s own account or jointly with or as a manager, agent, officer,
employee, consultant, partner, joint venturer, owner or shareholder or otherwise on behalf
of any other person, firm or corporation, directly or indirectly
solicit or attempt to solicit away from the Company any of its officers or employees; provided, however, that a
general advertisement to which an employee of the Company responds shall in no event be
deemed to result in a breach of this Section 5.3(B).



     6. No Mitigation. The Company agrees that, in order for a Participant to be eligible
to receive the Severance Payment and other benefits described herein, the Participant is not
required to seek other employment or to attempt in any way to reduce any amounts payable to the
Participant by
the Company pursuant to Section 4 hereof. Further, the amount of any payment or benefit provided
for in this Plan hereof shall not be reduced by any compensation or income earned by the
Participant as the result of employment by another employer or self-employment, by retirement
benefits, by offset against any amount claimed to be owed by the Participant to the Company, or
otherwise.



     7. Successors.



     7.1 (A) The Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business and/or assets of
the Company to expressly assume this Plan and all obligations of the Company hereunder in the same
manner and to the same extent that the Company would be so obligated if no such succession had
taken place.



          (B) This Plan shall inure to the benefit of and shall be binding upon the Company, its
successors and assigns, but without the prior written consent of the Participants this Plan may not
be assigned other than in connection with the merger or sale of substantially all of the business
and/or assets of the Company or similar transaction in which the successor or assignee assumes
(whether by operation of law or express assumption) all obligations of the Company hereunder.




     7.2 This Plan shall inure to the benefit of and be enforceable by the Participant’s personal
or legal representatives, executors, administrators, successors, heirs, distributees, devisees,
legatees or other beneficiaries. If a Participant shall die while any amount would still be
payable to such Participant hereunder (other than amounts which, by their terms, terminate upon the
death of the Participant) if such Participant had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this Plan to the
executors, personal representatives or administrators of such Participant’s estate.



     8. Notices. For the purpose of this Plan, notices and all other communications




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provided for in the Plan shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested, postage prepaid,
addressed, if to a Participant, to the address on file with the Company and, if to the Company, to
the address set forth below, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:


To the Company:



KB Home

10990 Wilshire Boulevard

Los Angeles, California 90024




Attention: Senior Vice President, Human Resources




     9. Claims Procedures; Expenses.



     9.1 Claim for Benefits. A Participant may file with the Committee a written claim for
benefits under the Plan if the Participant believes that the Company has not paid the Participant
all amounts due under the Plan. The Committee shall, within a reasonable time not to exceed ninety
(90) days, unless special circumstances require an extension of time of not more than an additional
ninety



     (90) days (in which event a Participant will be notified of the delay during the first ninety (90)
day period), provide adequate notice in writing to any Participant whose claim for benefits shall
have been denied, setting forth the following in a manner calculated to be understood by the
Participant: (i) the specific reason or reasons for the denial; (ii) specific reference to the
provision or provisions of the Plan on which the denial is based; (iii) a description of any
additional material or information required to perfect the claim, and an explanation of why such
material or information is necessary; and (iv) information as to the steps to be taken in order
that the denial of the claim may be reviewed. If written notice of the denial of a claim has not
been furnished to a Participant, and such claim has not been granted within the time prescribed in
this Section 9.1 (including any applicable extension), the claim for benefits shall be deemed
denied.



     9.2 Appeal of Denial. (A) A Participant whose claim for benefits shall have been denied in
whole or in part, may, within sixty (60) days from either the receipt of the denial of the claim or
from the time the claim is deemed denied (unless the notice of denial grants a longer period within
which to respond), appeal such denial to the Committee. In the event of a claim, the Participant
may, upon request, at this time review documents pertinent to his claim and may submit written
issues and comments.



     (B) The Committee shall notify a Participant of its decision within sixty (60) days after an
appeal is received, unless special circumstances require an extension of time of not more than an
additional sixty (60) days (in which event a Participant will be notified of the delay during the
first sixty (60) day period). Such decision shall be given in writing in a manner calculated to be
understood by the Participant and shall include the following: (i) specific reasons for the
decision; and (ii) specific reference to the provision or provisions of the Plan on which the
decision is based.



     9.3 Expenses, Legal Fees. If a Participant commences a legal action to enforce any



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of the
obligations of the Company under this Plan and it is ultimately determined that the Participant is
entitled to any payments or benefits under this Plan, the Company shall pay the Participant the
amount necessary to reimburse the Participant in full for all reasonable expenses (including
reasonable attorneys’ fees and legal expenses) incurred by the Participant with respect to such
action.



     10. Miscellaneous.



     10.1 No Waiver. No waiver by the Company or any Participant, as the case may be, at any time
of any breach by the other party of, or of any lack of compliance with, any condition or provision
of this Plan to be performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. All other plans, policies
and arrangements of the Company in which the Participant participates
during the term of this Plan
shall be interpreted so as to avoid the duplication of benefits paid hereunder.




     10.2 No Right to Employment. Nothing contained in this Plan or any documents relating to the
Plan shall (i) confer upon any Participant any right to continue in the employ of the Company or a
subsidiary, (ii) constitute any contract or agreement of employment, or (iii) interfere in any way
with the right of the Company to terminate the Participant’s employment at any time, with or
without Cause.



     10.3 Termination and Amendment of Plan. Prior to a Change in Control, the Board shall have
the right to amend or terminate the Plan and to add or remove Participants from time to time, in
its sole and absolute discretion. From and after the date of a Change in Control, the Board shall
not
have the right to terminate the Plan or amend it in any manner which adversely affects the rights
of any Participant unless the Company has obtained the prior written consent of each affected
Participant. Notwithstanding the foregoing, the Plan shall automatically terminate on the date
following the termination of the Protected Period, provided that all obligations accrued by
Participants prior to such termination of the Plan must be satisfied in full in accordance with the
terms hereof.



     10.4 Benefits not Assignable. Except as otherwise provided herein or by law, no right or
interest of any Participant under the Plan shall be assignable or transferable, in whole or in
part, either directly or by operation of law or otherwise, including without limitation by
execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or
transfer thereof shall be effective; and no right or interest of any Participant under the Plan
shall be liable for, or subject to, any obligation or liability of such Participant. When a
payment is due under this Plan to a Participant who is unable to care for his or her affairs,
payment may be made directly to his or her legal guardian or personal representative.



     10.5 Tax Withholding. All amounts payable hereunder shall be subject to applicable federal,
state and local tax withholding.



     10.6 Delaware Law. This Plan shall be construed, interpreted and the rights of the parties
determined in accordance with the laws of the State of Delaware (without regard to the conflicts of
laws principles thereof), to the extent not preempted by federal law, which shall otherwise
control.





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     10.7. 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 remain in
full force and effect. If this Plan shall for any reason be or become unenforceable by either
party, this Plan shall thereupon terminate and become unenforceable by the other party as well.




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