exv10w3






Exhibit 10.3




AMENDMENT TO KAUFMAN AND BROAD, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN




     The Kaufman and Broad, Inc. Executive Deferred Compensation Plan, effective as of July 11,
1985 (the “Plan”), is hereby amended by KB HOME, a Delaware corporation (the “Company”), effective
January 1, 2009, in the following manner, in accordance with Section 12(a) of the Plan. This
Amendment shall only apply with respect to amounts earned or vested on and after January 1, 2005.


1. Section 1 of the Plan shall be amended by adding the following at the end thereof:




     “This Plan is intended to comply with all applicable law, including Section 409A, related
Treasury guidance and regulations, and the transition relief provided in IRS Notice 2007-86,
2007-46 I.R.B. 990, and shall be operated and interpreted in accordance with this intention.
Notwithstanding the preceding sentence, Section 409A shall not apply with respect to amounts earned
and vested prior to January 1, 2005 (“Grandfathered Amounts”).”


2. Subsection 2(n) of the Plan shall be amended by adding the following at the end thereof:




     “In the case of amounts that are not Grandfathered Amounts, Early Retirement Date means
attainment of age 50 and completion of ten (10) years of continuous employment with Employer.”


3. Subsection 2(r) of the Plan shall be amended by adding the following at the end thereof:




     “In the case of amounts that are not Grandfathered Amounts, Normal Retirement Date means
attainment of age 65, unless the Executive attains age 60 and completes ten (10) years of
continuous employment with Employer.”


4. Section 3 of the Plan shall be amended and restated by replacing Subsections (a) through (e)
with the following and relettering Subsection (f) as (b):




     “(a) No Further Deferrals:



     No further deferrals or contributions shall be permitted effective January 1, 2009.”


5. Subsection 4(a) of the Plan shall be amended by adding the following at the end thereof:




     “Notwithstanding the foregoing, in the case of amounts that are not Grandfathered Amounts, a
Participant who separates from service on his Normal Retirement Date shall be entitled to a
Retirement Income Benefit commencing at his Normal Retirement Date consisting of equal monthly
payments over 20 years or, in the case of Retirement Income Benefits commencing prior to January 1,
2009, the remaining term of such payments as of such date.”


6. Subsection 4(b)(i) of the Plan shall be amended by adding the following at the end thereof:




 









 








     “Notwithstanding the foregoing, in the case of amounts that are not Grandfathered Amounts, a
Participant who separates from service prior to his Normal Retirement Date, but on or after his
Early Retirement Date shall be entitled to a Retirement Income Benefit commencing on his Normal
Retirement Date, consisting of equal monthly payments over 20 years or, in the case of Retirement
Income Benefits commencing prior to January 1, 2009, the remaining term of such payments as of such
date.”


7. Subsection 4(c) of the Plan shall be amended by adding the following at the end thereof:




     “Notwithstanding the foregoing, in the case of amounts that are not Grandfathered Amounts, a
Participant who separates from service after his Normal Retirement Date shall be entitled to a
Retirement Income Benefit commencing on the first day of the month after his separation from
service consisting of equal monthly payments over 20 years or, in the case of Retirement Income
Benefits commencing prior to January 1, 2009, the remaining term of such payments as of such date.
Retirement Income Benefits shall be determined using the balance in his Account as of his
separation from service in lieu of the balance as of his Normal Retirement Date.”


8. Subsections 4(b)(ii), (d), (e) and (f) of the Plan shall each be amended by adding the following
at the end thereof:




     “Notwithstanding the foregoing, this subsection shall not apply with respect to amounts that
are not Grandfathered Amounts.”


9. Subsection 4(g) of the Plan shall be amended by adding the following at the end thereof:




     “Notwithstanding the foregoing, in the case of amounts that are not Grandfathered Amounts,
such amounts shall be paid in a lump sum within 60 days of a Change in Control. For purposes of
the preceding sentence, a “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 Subsection.



     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 subsection, 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:



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     (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 subsection,
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 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



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 determined in accordance with Section 1.409A-3(i)(5)(vii)(B) of the Treasury
Regulations.


10. Subsection 5(a) shall be amended by adding the following at the end thereof:




     “Notwithstanding the foregoing, in the case of amounts that are not Grandfathered Amounts, the
benefit shall be paid in a lump sum within 60 days of the Participant’s death.”


11. Subsection 5(b) shall be amended by adding the following at the end thereof:




     “Notwithstanding the foregoing, this subsection shall not apply with respect to amounts that
are not Grandfathered Amounts.”


12. Subsections 8(b), (c) and (d) of the Plan shall each be amended by adding the following at the
end thereof:




     “Notwithstanding the foregoing, this subsection shall not apply with respect to amounts that
are not Grandfathered Amounts.”


13. Subsections 12(b) and (c) of the Plan shall each be amended by adding the following at the end
thereof:




     “Notwithstanding the foregoing, this subsection shall not apply with respect to amounts that
are not Grandfathered Amounts.”


14. A new Subsection 12(d) shall be added to the Plan, which shall read in its entirety as follows:




     “(d) Notwithstanding anything to the contrary in this Plan, the Plan shall terminate with
respect to the Participant, and the Company shall have no further obligations hereunder, upon
payment by the Company of all payments to which the Participant or his Beneficiary shall be
entitled pursuant to Sections 4 and 6 of the Plan, and any Benefit Agreement entered into by the
Company and the Participant shall have no further force or effect.”


15. A new Section 14 shall be added to the Plan, which shall read in its entirety as follows:




     “14. Section 409A.



     In the case of amounts that are not Grandfathered Amounts, this Plan shall be interpreted,
construed and administered in a manner that satisfies the requirements of Section 409A. Each of
the payments under this Plan shall be considered a separate payment for purposes of Section 409A.
Notwithstanding any provision to the contrary in the Plan, if a Participant is a “specified
employee” at the time of his separation from service within the meaning of Section 409A, and if any
payment or benefit payable pursuant to the Plan would subject such Participant to any tax, interest
or penalty imposed under Section 409A if such payment or benefit were paid within six months of the
Participant’s separation from service, then each such payment or benefit that would otherwise have
been payable within the first six months following the Participant’s



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separation from service shall be accumulated and shall be paid on the first day of the calendar
month that begins at least six months after the Participant’s separation from service, or if
earlier, on the date of the Participant’s death. For purposes of the preceding sentence,
“specified employee” means 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.”




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