Document:

exv10w8

Exhibit 10.8

KB HOME

PERFORMANCE-BASED INCENTIVE PLAN FOR SENIOR MANAGEMENT

(as amended and restated on October 2, 2008)

     SECTION 1. Purpose. The purposes of the KB Home Performance-Based Incentive Plan for Senior
Management (the “Plan”) are to promote the interests of KB Home and its stockholders by (i)
attracting and retaining exceptional executive personnel and other key employees of the Company and
its Affiliates, as defined below; (ii) motivating such employees by means of performance-related
incentives to achieve long-range performance goals; (iii) enabling such employees to participate in
the long-term growth and financial success of the Company; and (iv) qualifying compensation paid
under the Plan for deductibility under Section 162(m) of the Internal Revenue Code of 1986, as
amended. The Plan is an amendment and restatement of the Kaufman and Broad Home Corporation
Performance-Based Incentive Plan for Senior Management which shall be effective as of October 2,
2008 (the “Amendment Date”).

     SECTION 2. Definitions. As used in the Plan, the following terms shall have the meanings set
forth below:

     “Affiliate” shall mean (i) any entity that, directly or indirectly, is controlled by the
Company and (ii) any entity in which the Company has a significant equity interest, in either case
as determined by the Committee.

     “Amendment Date” shall have the meaning set forth in Section 1 hereof.

     “Award” shall mean any Performance-Based Bonus opportunity granted under the Plan, as well as
any Option, Stock Appreciation Right, award of Restricted Stock, or Other Stock-Based Award granted
under the Plan or granted in payment or settlement of a Performance-Based Bonus.

     “Award Agreement” shall mean any written agreement, contract, or other instrument or document
(which may include, if so designated by the Committee, an Employment Agreement, as defined herein)
evidencing any Award, which may, but need not, be executed or acknowledged by a Participant.

     “Board” shall mean the Board of Directors of the Company.

     “Change of Ownership” shall be deemed to have occurred if either (1) individuals who, as of
the Effective Date of this Plan, constitute the Board of the Company (as of the Effective Date, the
“Incumbent Board”) cease for any reason to constitute at least a majority of the directors
constituting the Board, provided that any person becoming a director subsequent to the

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Effective Date of this Plan whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least three-quarters (3/4) of the then directors who are
members of the Incumbent Board (other than an election or nomination of an individual whose initial
assumption of office is (A) in connection with the acquisition by a third person, including a
“group” as such term is used in Section 13(d)(3) of the Exchange Act, of beneficial ownership,
directly or indirectly, of 20% or more of the combined voting securities ordinarily having the
right to vote for the election of directors of the Company (unless such acquisition of beneficial
ownership was approved by a majority of the Board who are members of the Incumbent Board), or (B)
in connection with an actual or threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) shall be, for purposes of this Plan, considered as though such person were a
member of the Incumbent Board, or (2) the Board (a majority of which shall consist of directors who
are members of the Incumbent Board) has determined that a Change of Ownership, for purposes of this
Plan, shall have occurred. If any of the events enumerated in clauses (1) or (2) occur, the Board
shall determine the effective date of the Change of Ownership resulting therefrom, for purposes of
the Plan.

     “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. All
references to the Code or any section thereof shall include the Treasury Regulations and other
Department of Treasury guidance issued thereunder.

     “Committee” shall mean a committee of the Board designated by the Board to administer the Plan
and composed of not less than the minimum number of persons from time to time required by Rule
16b-3, each of whom (i) to the extent necessary to comply with Rule 16b-3 only, is a “disinterested
Person” within the meaning of Rule 16b-3 and (ii) to the extent necessary to comply with Section
162(m) only, is an “outside director” within the meaning of Section 162(m). Until otherwise
determined by the Board, the Compensation Committee designated by the Board shall be the Committee
under the Plan.

     “Company” shall mean KB Home, together with any successor thereto.

     “Effective Date” shall have the meaning set forth in Section 14(a) hereof.

     “Employment Agreement” shall mean (i) with respect to Awards relating to performance in fiscal
year 1995, an agreement between the Company and a Participant, the effectiveness or continuing
effectiveness of which is contingent upon approval, or approval of the Plan, by the Company’s
stockholders, which approval shall satisfy all applicable requirements of Section 162(m) and (ii)
with respect to Awards relating to performance in any fiscal year of the Company after fiscal year
1995, an agreement between the Company and a Participant entered into prior to the end of the first
fiscal quarter of such fiscal year.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

     “Fair Market Value” shall mean the fair market value of the property or other item being
valued, as determined by the Committee in its sole discretion.

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     “Incentive Stock Option” shall mean a right to purchase Shares from the Company that is
granted under Section 7 of the Plan and that is intended to meet the requirements of Section 422 of
the Code or any successor provision thereto.

     “Non-Qualified Stock Option” shall mean a right to purchase Shares from the Company that is
granted under Section 7 of the Plan and that is not intended to be an Incentive Stock Option.

     “Officer” shall mean, at any time, an individual who is an officer of the Company or any of
its subsidiaries.

     “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

     “Other Stock-Based Award” shall mean any right granted under Section 11 of the Plan.

     “Participant” shall mean any Officer selected by the Committee to receive an Award under the
Plan.

     “Performance-Based Bonus” shall mean a bonus opportunity awarded in accordance with Section 6
of the Plan.

     “Person” shall mean any individual, corporation, partnership, association, joint-stock
company, trust, unincorporated organization, government or political subdivision thereof or other
entity.

     “Plan” shall mean this KB Home Performance-Based Incentive Plan for Senior Management.

     “Restricted Stock” shall mean any Share granted under Section 9 of the Plan.

     “Rule 16b-3” shall mean Rule 16b-3 as promulgated and interpreted by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect from time to time.

     “Section 162(m)” shall mean Section 162(m) of the Code and, for the avoidance of doubt only,
the Treasury Regulations and other Department of Treasury guidance issued thereunder.

     “Section 409A” shall mean Section 409A of the Code and, for the avoidance of doubt only, the
Treasury Regulations and other Department of Treasury guidance issued thereunder.

     “SEC” shall mean the Securities and Exchange Commission or any successor thereto and shall
include the Staff thereof.

     “Shares” shall mean shares of the Common Stock, $1 par value, of the Company, or such other
securities of the Company as may be designated by the Committee from time to time.

     “Stock Appreciation Right” shall mean any right granted under Section 8 of the Plan.

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     “Substitute Awards” shall mean Awards granted in assumption of, or in substitution for,
outstanding awards previously granted by a company acquired by the Company or with which the
Company combines.

     SECTION 3. Administration.

     (a) Authority of Committee. The Plan shall be administered by the Committee. Subject to the
terms of the Plan and applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be granted to an eligible
Officer; (iii) determine the number of Shares to be covered by, or with respect to which payments,
rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms
and conditions of any Award; (v) determine whether, to what extent, and under what circumstances
Awards may be settled or exercised in cash, Shares, other securities, or other property, or
canceled, forfeited, or suspended and the method or methods by which Awards may be settled,
exercised, canceled, forfeited, or suspended, provided that Options may be settled only in cash and
Shares; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other
securities, other Awards, other property, and other amounts payable with respect to an Award shall
be deferred either automatically or at the election of the holder thereof or of the Committee,
provided that such determinations shall not cause a violation of the requirements of Section 409A;
(vii) interpret and administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan; (viii) recommend to the Board any amendment, alteration, suspension,
discontinuance or termination of the Plan, and subject to the shareholder approval requirement set
forth in Section 12(a), to take any such action not required by applicable law to be taken by the
Board, (ix) establish, amend, suspend, or waive such rules and regulations and appoint such agents
as it shall deem appropriate for the proper administration of the Plan; and (x) make any other
determination and take any other action that the Committee deems necessary or desirable for the
administration of the Plan.

     (b) Committee Discretion Binding. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and
shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any
Participant, any holder or beneficiary of any Award, any stockholder and any Officer.

     SECTION 4. Award Limits.

     (a) Plan Shares. Subject to adjustment as provided in Section 4(c), the number of Shares
with respect to which Awards may be granted under the Plan shall be 1,000,000. If, after the
Effective Date of the Plan, any Shares covered by an Award denominated in Shares granted under the
Plan, or to which such an Award relates, are forfeited, or if such an Award is settled for cash or
otherwise terminates or is canceled without the delivery of Shares, then the Shares covered by such
Award, or to which such Award relates, or the number of Shares otherwise counted against the
aggregate number of Shares with respect to which Awards may be granted,

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to the extent of any such settlement, forfeiture, termination or cancellation, shall again become
Shares with respect to which Awards may be granted. In the event that any Option or other Award
granted hereunder is exercised through the delivery of Shares or in the event that withholding tax
liabilities arising from such Award are satisfied by the withholding of Shares by the Company, the
number of Shares available for Awards under the Plan shall be increased by the number of Shares so
surrendered or withheld.

     (b) Individual Stock-Based Awards. Subject to adjustment as provided in Section 4(c), no
Participant may receive stock-based Awards under the Plan in any calendar year that relate to more
than 100,000 Shares; provided, however, that such number may be increased with respect to any
Participant by any Shares available for grant to such Participant in accordance with this Paragraph
4(b) in any prior years that were not granted in such prior years. No provision of this Paragraph
4(b) shall be construed as limiting the amount of any cash-based Award which may be granted to any
Participant.

     (c) Adjustments. In the event of any dividend or other distribution (whether in the form of
cash, Shares, other securities, or other property, and other than normal cash dividends),
recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affecting the Shares or the price of the
Shares, the Committee shall make appropriate proportionate adjustments to reflect such change with
respect to any or all of (i) the number of Shares or other securities of the Company (or number and
kind of other securities or property) with respect to which Awards may be granted, (ii) the number
of Shares or other securities of the Company (or number and kind of other securities or property)
subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Award, or,
if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award;
provided, in each case, that (A) with respect to Awards of Incentive Stock Options no such
adjustment shall be authorized to the extent that such authority would cause the Plan to fail to
qualify under Section 422(b)(1) of the Code, as from time to time amended, (B) with respect to any
Award no such adjustment shall be authorized to the extent that such authority would be
inconsistent with the Plan’s meeting the requirements of Section 162(m) of the Code, as from time
to time amended, and (C) with respect to any Award under the Plan no such adjustment shall be
authorized to the extent that such authorization or adjustment would cause a violation of the
requirements of Section 409A.

     (d) Substitute Awards. Any Shares underlying Substitute Awards shall not, except in the case
of Shares with respect to which Substitute Awards are granted to individuals who are officers or
directors of the Company for purposes of Section 16 of the Exchange Act or any successor section
thereto, be counted against the Shares available for Awards under the Plan; provided that any
assumption or substitution under this Section 4(d) must comply with the requirements of Section
409A.

     (e) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award
may consist, in whole or in part, of authorized and unissued Shares or of Shares acquired by the
Company on the open market or otherwise.

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     (f) Cash Award Limits. (i) Any Participant who is the Chief Executive Officer at the time of
payment of an Award (other than a stock-based Award) shall be eligible to be paid in any calendar
year an amount not in excess of $5,000,000 in respect of any such cash Award under the Plan, and
(ii) no Participant other than a Participant described in clause (i) of this Paragraph 4(f) shall
be eligible to be paid in any calendar year more than $2,000,000 in respect of any such cash Award.
No provision of this Paragraph 4(f) shall be construed as limiting the number of stock-based
Awards that a Participant may receive.

     SECTION 5. Eligibility. Any Officer, including any Officer who is a director of the Company
or any Affiliate, who is not a member of the Committee, shall be eligible to be designated a
Participant.

     SECTION 6. Performance-Based Bonuses.

     (a) At such times and in such manner as may be prescribed by Section 162(m), the Committee
may select Participants and award to such Participants the opportunity to earn a Performance-Based
Bonus, which will be contingent upon the Company’s attainment of performance goals selected by the
Committee.

     (b) Performance goals which may be employed by the Committee for purposes of a
Performance-Based Bonus awarded under Paragraph (a) will include pre-tax income, after-tax income,
cash flow, return on equity, return on capital, earnings per share, unit volume, net sales or
service quality, as determined in accordance with GAAP, if applicable, which goals may relate to
the Company as a whole or, if applicable, to the performance of one or more specific divisions or
Affiliates.

     (c) Notwithstanding Paragraphs (a) and (b), the formula for determining a Performance-Based
Bonus to any Participant may, if so determined by the Committee, be governed by the terms of an
Employment Agreement applicable to such Participant.

     (d) Performance-Based Bonuses awarded under Paragraph (a) may be paid in cash, other Awards
or any combination thereof, and the form of payment may be governed, as to any Participant, by an
Employment Agreement applicable to such Participant.

     SECTION 7. Stock Options.

     (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Officers to whom Options shall be granted, the number of Shares to be
covered by each Option, the exercise price therefor and the conditions and limitations applicable
to the exercise of the Option, provided, however, that the Committee shall not amend an Option to
reduce the per Share exercise price (except as permitted by Section 4(c)) or otherwise modify an
Option or add any feature for the deferral of compensation in any manner that would cause a
violation of the requirements of Section 409A. The Committee shall have the authority to grant
Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant both types of
options. In the case of Incentive Stock Options, the terms and conditions of such

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grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the
Code, as from time to time amended, and any regulations implementing such statute.

     (b) Exercise Price. The Committee in its sole discretion shall establish the exercise price
at the time each Option is granted, which exercise price shall be not less than the Fair Market
Value of the Shares subject to the Option on the date of grant of the Option.

     (c) Exercise. Each Option shall be exercisable at such times and subject to such terms and
conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement
or thereafter, provided, however, that the Committee shall not extend the exercise period of an
Option beyond the earlier of the latest date upon which the Option could have expired by its
original terms under any circumstances or the tenth anniversary of the date of grant of such
Option. The Committee may impose such conditions with respect to the exercise of Options,
including without limitation, any relating to the application of federal or state securities laws,
as it may deem necessary or advisable.

     (d) Payment. No Shares shall be delivered pursuant to any exercise of an Option until
payment in full of the exercise price therefor is received by the Company. Such payment may be
made in cash, or its equivalent, or, if and to the extent permitted by the Committee, by exchanging
Shares owned by the Participant (which are not the subject of any pledge or other security
interest), or by a combination of the foregoing, provided that the combined value of all cash and
cash equivalents and the Fair Market Value of any such Shares so tendered to the Company as of the
date of such tender is at least equal to such exercise price plus the related amount of any taxes
required to be withheld by the Company in connection with such exercise, to the extent such
withholding taxes are then ascertainable. If the amount of such taxes is not ascertainable at the
time of the notice of exercise, such amount shall be tendered by you to the Company as soon as the
same shall become ascertainable and shall be communicated to you by the Company.

     SECTION 8. Stock Appreciation Rights.

     (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Officers to whom Stock Appreciation Rights shall be granted, the number
of Shares to be covered by each Stock Appreciation Right Award, the grant price thereof and the
conditions and limitations applicable to the exercise thereof. Stock Appreciation Rights may be
granted in tandem with another Award, in addition to another Award, or freestanding and unrelated
to another Award. Stock Appreciation Rights granted in tandem with or in addition to an Award may
be granted either at the same time as the Award or at a later time.

     (b) Exercise and Payment. A Stock Appreciation Right shall entitle the Participant to
receive an amount equal to the excess of the Fair Market Value of a Share on the date of exercise
of the Stock Appreciation Right over the grant price thereof, provided that the Committee may for
administrative convenience determine that, with respect to any Stock Appreciation Right which is
not related to an Incentive Stock Option and which can only be exercised for cash during limited
periods of time in order to satisfy the conditions of Rule 16b-3, the exercise of

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such Stock Appreciation Right for cash during such limited period shall be deemed to occur for all
purposes hereunder on the day during such limited period on which the Fair Market Value of the
Shares is the highest. Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights granted prior to such
determination as well as Stock Appreciation Rights thereafter granted. The Committee shall
determine whether a Stock Appreciation Right shall be settled in cash, Shares or a combination of
cash and Shares.

     (c) Other Terms and Conditions. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine, at or after the grant of a Stock Appreciation Right, the
term, methods of exercise, methods and form of settlement, and any other terms and conditions of
any Stock Appreciation Right. Any such determination by the Committee may be changed by the
Committee from time to time and may govern the exercise of Stock Appreciation Rights granted or
exercised prior to such determination as well as Stock Appreciation Rights granted or exercised
thereafter. The Committee may impose such conditions or restrictions on the exercise of any Stock
Appreciation Right as it shall deem appropriate.

     SECTION 9. Restricted Stock.

     (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Officers to whom Shares of Restricted Stock shall be granted, the number
of Shares of Restricted Stock to be granted to each Participant, the duration of the period during
which, and the conditions under which, the Restricted Stock may be forfeited to the Company, and
the other terms and conditions of such Awards. Notwithstanding any other provision of this Plan to
the contrary, the period during which such Awards may be forfeited to the Company shall not
terminate prior to the third anniversary of the date of grant of such Award; provided, however,
that the Committee may determine to have such period terminate after the first anniversary of the
date of grant of any such Award if the Committee has established conditions for the earning of such
Award that relate to performance of the Company or one or more divisions or units thereof. Subject
to the preceding sentence, once established, such performance vesting criteria may be changed,
adjusted or amended during the term of an Award.

     (b) Transfer Restrictions. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as provided in the Plan or the applicable
Award Agreements. Certificates issued in respect of Shares of Restricted Stock shall be registered
in the name of the Participant and deposited by such Participant, together with a stock power
endorsed in blank, with the Company. Upon the lapse of the restrictions applicable to such Shares
of Restricted Stock, the Company shall deliver such certificates to the Participant or the
Participant’s legal representative.

     (c) Dividends and Distributions. Dividends and other distributions paid on or in respect of
any Shares of Restricted Stock may be paid directly to the Participant, or may be reinvested in
additional Shares of Restricted Stock, as determined by the Committee in its sole discretion.

     SECTION 10. Change of Ownership. Notwithstanding anything to the contrary in this

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Plan, unless otherwise specifically determined by the Committee at the time of grant, all Options
theretofore granted and not fully exercisable shall become exercisable in full and the restrictions
on any other outstanding Awards shall lapse upon the occurrence of a Change of Ownership.

     SECTION 11. Other Stock-Based Awards. The Committee shall have authority to grant to any
Officer an “Other Stock-Based Award”, which shall consist of any right which is (i) not an Award
described in Sections 6 through 9 above and (ii) an Award of Shares or an Award denominated or
payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares), as deemed by the Committee to
be consistent with the purposes of the Plan; provided that any such rights must comply, to the
extent deemed desirable by the Committee, with Rule 16b-3 and applicable law. Subject to the terms
of the Plan and any applicable Award Agreement, the Committee shall determine the terms and
conditions of any such Other Stock-Based Award.

     SECTION 12. Amendment and Termination.

     (a) Amendments to the Plan. Subject to the authority of the Committee as set forth in
Section 3, and subject to the requirements of Section 409A and of Section 13(p) hereof, if
applicable, the Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion
thereof at any time; provided that no such amendment, alteration, suspension, discontinuation or
termination shall be made without shareholder approval if such approval is necessary to comply with
any tax or regulatory requirement, including for these purposes any approval requirement which is a
prerequisite for exemptive relief from Section 16(b) of the Exchange Act, for which or with which
the Board deems it necessary or desirable to qualify or comply. Notwithstanding anything to the
contrary herein, the Committee may amend the Plan in such manner as may be necessary so as to have
the Plan conform with local rules and regulations in any jurisdiction outside the United States,
subject to the requirements of Section 409A and of Section 13(p) hereof, if applicable.

     (b) Amendments to Awards. Subject to the requirements of Section 409A and of Section 13(p)
hereof, if applicable, the Committee may waive any conditions or rights under, amend any terms of,
or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted, prospectively
or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance,
cancellation or termination that would adversely affect the rights of any Participant or any holder
or beneficiary of any Award theretofore granted shall not to that extent be effective without the
consent of the affected Participant, holder or beneficiary; and provided further that no
outstanding Option may be amended to decrease the per Share exercise price or extend the exercise
period thereof, or otherwise modified in any manner, except in accordance with Sections 4(c), 7(a),
and 7(c) hereof.

     (c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The
Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 4(c) hereof) affecting the Company, any Affiliate, or
the financial statements of the Company or any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee determines that such

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adjustments are appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan; provided that no such adjustment
shall be authorized to the extent that such authority would be inconsistent with the Plan’s meeting
the requirements of Section 162(m) of the Code, as from time to time amended, or to the extent that
such authority or adjustment would cause a violation of the requirements of Section 409A.

     (d) Cancellation. Any provision of this Plan or any Award Agreement to the contrary
notwithstanding, the Committee may cause any Award granted hereunder to be canceled in
consideration of a cash payment or alternative Award made to the holder of such canceled Award
equal in value to the Fair Market Value of such canceled Award; provided, however, that except as
permitted by Sections 4(c) and 12(c) hereof, no Option may be granted in exchange for, or in
connection with, the cancellation or surrender of an Option having a higher per Share exercise
price, and no alternative Award may be made if such action would cause a violation of Section 409A.

     SECTION 13. General Provisions.

     (a) Dividend Equivalents. In the sole and complete discretion of the Committee, an Award,
whether made as an Other Stock-Based Award under Section 10 or as an Award granted pursuant to
Sections 6 through 9 hereof, may provide the Participant with dividends or dividend equivalents,
payable in cash, Shares, other securities or other property on a current or deferred basis.

     (b) Nontransferability. No Award shall be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant, except by will or the laws of descent and
distribution; provided, however, that an Award may be transferable, to the extent set forth in the
applicable Award Agreement, (i) if such Award Agreement provisions do not disqualify such Award for
exemption under Rule 16b-3, or (ii) if such Award is not intended to qualify for exemption under
such rule.

     (c) No Rights to Awards. Except as may be provided in an Employment Agreement, no Officer,
Participant or other Person shall have any claim to be granted any Award, and there is no
obligation for uniformity of treatment of Employees, Participants, or holders or beneficiaries of
Awards. The terms and conditions of Awards need not be the same with respect to each recipient.

     (d) Share Certificates. All certificates for Shares or other securities of the Company or
any Affiliate delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Committee may deem advisable
under the Plan or the rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities are then listed, and any
applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

     (e) Withholding. A Participant may be required to pay to the Company or any Affiliate,

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and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any
Award, from any payment due or transfer made under any Award or under the Plan or from any
compensation or other amount owing to a Participant the amount (in cash, Shares, other securities,
other Awards or other property) of any applicable withholding taxes in respect of an Award, its
exercise, or any payment or transfer under an Award or under the Plan and to take such other action
as may be necessary in the opinion of the Company to satisfy all obligations for the payment of
such taxes. Notwithstanding any other provision of the Plan, the number of Shares which may be
withheld pursuant to this Section 13(e) shall be limited to the number of Shares which have a Fair
Market Value on the date of withholding or repurchase equal to the aggregate amount of the
liability for such withholding taxes based on the minimum applicable statutory withholding rates.

     (f) Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement which
shall be delivered to the Participant and shall specify the terms and conditions of the Award and
any rules applicable thereto, including but not limited to the effect on such Award of the death,
retirement or other termination of employment of a Participant.

     (g) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent
the Company or any Affiliate from adopting or continuing in effect other compensation arrangements,
which may, but need not, provide for the grant of bonuses, options, restricted stock, Shares and
other types of Awards provided for hereunder (subject to shareholder approval if such approval is
required), and such arrangements may be either generally applicable or applicable only in specific
cases.

     (h) No Right to Employment. The grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Company or any Affiliate. Further, the
Company or an Affiliate may at any time dismiss a Participant from employment, free from any
liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement.

     (i) No Rights as Stockholder. Subject to the provisions of the applicable Award, no
Participant or holder or beneficiary of any Award shall have any rights as a stockholder with
respect to any Shares to be distributed under the Plan until he or she has become the holder of
such Shares. Notwithstanding the foregoing, in connection with each grant of Restricted Stock
hereunder, the applicable Award shall specify if and to what extent the Participant shall not be
entitled to the rights of a stockholder in respect of such Restricted Stock.

     (j) Governing Law. The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan and any Award Agreement shall be determined in accordance with the
laws of the State of California, except to the extent that the General Corporation Law of the State
of Delaware shall be applicable to the Company.

     (k) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would
disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform the applicable laws, or if it cannot

11

 

be construed or deemed amended without, in the determination of the Committee, materially altering
the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction,
Person or Award and the remainder of the Plan and any such Award shall remain in full force and
effect.

     (l) Other Laws. The Committee may refuse to issue or transfer any Shares or other
consideration under an Award if, acting in its sole discretion, it determines that the issuance or
transfer of such Shares or such other consideration might violate any applicable law or regulation
or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment
tendered to the Company by a Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant Participant, holder or
beneficiary. Without limiting the generality of the foregoing, no Award granted hereunder shall be
construed as an offer to sell securities of the Company, and no such offer shall be outstanding,
unless and until the Committee in its sole discretion has determined that any such offer, if made,
would be in compliance with all applicable requirements of the U.S. federal securities laws and any
other laws to which such offer, if made, would be subject.

     (m) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to
create a trust or separate fund of any kind or a fiduciary relationship between the Company or any
Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to
receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any Affiliate.

     (n) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the
Plan or any Award, and cash shall be paid in lieu of any fractional Shares, and such fractional
Shares shall be eliminated by rounding down.

     (o) Headings. Headings are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof.

     (p) Section 409A.

          (1) To the extent that the Committee determines that any Award granted under the Plan is
subject to Section 409A, the Award Agreement evidencing such Award shall comply with the
requirements of Section 409A. To the extent applicable, the Plan and Award Agreements 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 or
the Amendment Date. Notwithstanding any provision of the Plan to the contrary, in the event that
following the Effective Date the Committee determines that any Award may be subject to Section
409A, including such Department of Treasury guidance as may be issued after the Effective Date or
the Amendment Date, the Committee may adopt such amendments to the Plan and the applicable Award
Agreement or adopt other policies and procedures (including amendments, policies and procedures
with retroactive effect), or take any other actions, that the Committee determines are necessary or
appropriate to (A) exempt the

12

 

Award from Section 409A and/or preserve the intended tax treatment of the benefits provided with
respect to the Award, or (B) comply with the requirements of Section 409A.

          (2) 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 an Award (including any taxes, interest, and penalties under Section 409A), and
neither the Company nor its affiliates shall have any obligation to indemnify or otherwise hold
such Participant harmless from any or all of such taxes, interest, or penalties.

     SECTION 14. Term of the Plan.

     (a) Effective Date. The Plan became effective as of December 1, 1994 (the “Effective Date”)
and was subsequently approved by the shareholders of the Company within one year thereafter. This
amendment and restatement shall be effective as of the Amendment Date as defined herein.

     (b) Expiration Date. The plan expired on November 30, 2004. No Award shall be granted under
the Plan after November 30, 2004. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority of the Board or the
Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive
any conditions or rights under any such Award shall, continue after the authority for grant of new
Awards hereunder has been exhausted.

13exv10w11

EXHIBIT 10.11

KB HOME

1998 STOCK INCENTIVE PLAN

(as amended and restated on October 2, 2008)

     SECTION 1. PURPOSE. The purpose of the 1998 Stock Incentive Plan (the “Plan”) is to promote
the success of KB Home (the “Company”) by providing a method whereby employees of the Company and
its subsidiaries and other eligible participants may be encouraged to invest in the Common Stock,
$1.00 par value, of the Company (“Common Stock”), increase their proprietary interest in its
business, remain in the employ of the Company or its subsidiaries, and increase their personal
interests in the continued success and progress of the Company. The Plan provides for the grant of
Options that satisfy the requirements for treatment as Incentive Stock Options (“ISOs”) as defined
under Section 422 of the Code or that are not intended to satisfy such requirements (“Non-qualified
Options”), as well as for certain other “Awards,” as defined below.

     SECTION 2. DEFINITIONS. As used in this Plan, the following terms shall have the indicated
meanings:

     (a) Award: An award under this Plan of a Performance Stock Award, Restricted Stock Award, or
Stock Unit Award.

     (b) Board: The board of directors of KB Home.

     (c) Code: The Internal Revenue Code of 1986, as amended.

     (d) Committee: The Committee specified in Section 3(a) of this Plan.

     (e) Company or Corporation: KB Home and its Subsidiaries.

     (f) Exchange Act: The Securities Exchange Act of 1934, as amended.

     (g) Limited Stock Appreciation Right: A right granted pursuant to Section 6(b) to receive
cash in certain circumstances with respect to a related Option.

     (h) Option: An Option is a right granted under Section 6(a) to purchase a number of shares of
Common Stock at such exercise price, at such times, and on such other terms and conditions as are
specified in or determined pursuant to the document(s) evidencing the Award.

     (i) Participant: An individual eligible under Section 5(a) to participate in this Plan.

     (j) Performance Objectives: With reference to a particular Option or Award, the objectives
established by the Committee under various criteria, the satisfaction of which may result in the
grant, issuance, retention and/or vesting of an Option, a Performance Stock Award or Stock Unit
Award, or which may accelerate the release of shares of Common Stock from the restrictions of a
Restricted Stock Award. The Performance Objectives may differ from Participant to Participant and
from Award to Award, as determined by the Committee and

 

 

specified in the applicable Award. For purposes of an Award that is intended to qualify as
“performance-based compensation” under Code Section 162(m), the term “Performance Objective” shall
mean any one or more of the following performance criteria, either individually, alternatively or
in any combination, applied to either the Company as a whole or to a business unit or subsidiary,
either individually, alternatively or in any combination, and measured either annually or
cumulatively over a period of years, on an absolute basis or relative to a pre-established target,
to previous years’ results or to a designated comparison group, in each case as specified by the
Committee in the Award: (i) pre-tax income, (ii) after-tax income, (iii) cash flow, (iv) return on
equity, (v) return on capital, (vi) earnings per share (including earnings before interest, taxes,
depreciation and amortization), (vii) unit volume, (viii) net sales, (ix) service quality or (v)
total shareholder return, in each case as determined in accordance with Generally Accepted
Accounting Principles, if applicable.

     (k) Performance Stock Award: Performance Stock is an award of shares of Common Stock made
under Section 7(a), the grant, issuance, retention and/or vesting of which is subject to such
performance and other conditions as are expressed in the document(s) evidencing the Award.

     (l) Plan: The KB Home 1998 Stock Incentive Plan, as it may be amended from time to time.

     (m) Restricted Stock Award: Restricted Stock is a right granted under Section 7(b) to shares
of Common Stock issued or issuable under the Plan but subject during specified periods of time to
such conditions on vesting, restrictions on transferability and/or repurchase rights as are
expressed in the document(s) evidencing the Award.

     (n) Stock Unit Award: An award granted under Section 8 of this Plan.

     (o) Subsidiary: Any corporation of which the Corporation owns, directly or indirectly, fifty
percent (50%) or more of the voting or capital stock, or any partnership or other entity of which
the Company owns, directly or indirectly, a fifty percent (50%) or more participating interest or
the general partner of which is a Subsidiary.

     (p) Tax Date: The date on which taxes of any kind are required by law to be withheld with
respect to shares of Common Stock subject to an Option or Award.

     SECTION 3. ADMINISTRATION.

     (a) The Plan shall be administered by the Board and/or by a committee of the Board, as
appointed from time to time by the Board (the “Committee”). The Board shall fill vacancies on, and
from time to time may remove or add members to, the Committee. The Committee shall act pursuant to
a majority vote or unanimous written consent. Notwithstanding the foregoing, with respect to any
Award that is not intended to satisfy the conditions of Rule 16b-3 under the Exchange Act or
Section 162(m)(4)(C) of the Code, the Committee may appoint one or more separate committees (any
such committee, a “Subcommittee”) composed of one or more directors of the Corporation (who may but
need not be members of the Committee) and may delegate to any such Subcommittee(s) the authority to
grant Options, Limited Stock Appreciation Rights and/or Awards under the Plan, to determine all
terms of such Options, Limited Stock

2

 

Appreciation Rights and /or Awards, and to administer the Plan or any aspect of it. Any
action by any such Subcommittee shall be deemed for all purposes to have been taken by the
Committee. The Committee may designate the Secretary of the Corporation or other Company employees
to assist the Committee in the administration of the Plan, and may grant authority to such persons
to issue and/or execute agreements or other documents under this Plan on behalf of the Committee or
the Company.

     (b) The Committee shall have full power and authority, subject to such orders or resolutions
not inconsistent with the provisions of the Plan as may from time to time be issued or adopted by
the Board, to grant to eligible persons Options, Limited Stock Appreciation Rights and Awards
pursuant to the provisions of the Plan, to fix the exercise price and other terms of Options, to
fix the terms of any Performance Stock Award and/or Restricted Stock Award in a manner consistent
with the terms of Section 7, to fix the terms of any Stock Unit Award in a manner consistent with
the terms of Section 8, to prescribe, amend and rescind rules and regulations, if any, relating to
the Plan, to interpret the provisions of the Plan, Options, Limited Stock Appreciation Rights and
Awards issued under the Plan, to amend such Options, Limited Stock Appreciation Rights and Awards
from time to time subject to the provisions of the Plan, and to supervise the administration of the
Plan. All decisions made by the Committee pursuant to the provisions of the Plan and related
orders or resolutions of the Board shall be final, conclusive and binding on all persons, including
the Company, stockholders, employees and optionees.

     (c) Each person who is or shall have been a member of the Committee or of the Board shall be
indemnified and held harmless by the Company from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him or her in connection with any claim, action, suit or
proceeding to which he or she may be a party by reason of any action taken or any failure to act
under the Plan. The foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled under the Company’s Articles of
Incorporation or Bylaws, or as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.

     SECTION 4. SHARES SUBJECT TO THE PLAN.

     (a) The shares to be delivered upon exercise of Options or Limited Stock Appreciation Rights
granted under the Plan or pursuant to Awards, may be made available from the authorized but
unissued shares of the Company or from shares reacquired by the Company, including shares purchased
in the open market or in private transactions.

     (b) Subject to adjustments made pursuant to the provisions of Section 4(d) and this Section
4(b), the aggregate number of shares reserved for issuance upon the exercise of Options and
pursuant to Awards which may be granted under the Plan shall not exceed 1,900,000 shares of Common
Stock. The aggregate number of shares of Common Stock issued under this Plan shall equal only the
number of shares actually issued upon exercise or settlement of an Option or vesting or settlement
of any Award and not returned to the Company upon cancellation, expiration or forfeiture of Options
and Awards or delivered (either actually or by attestation) in payment or satisfaction of the
exercise price, purchase price or tax obligation of Options and Awards.

3

 

     (c) The aggregate number of shares of Common Stock issued and issuable pursuant to ISOs may
not exceed 1,900,000 shares. The maximum number of shares of Common Stock subject to Options
granted during any calendar year to any one Participant shall not exceed 1,000,000. The maximum
number of shares of Common Stock subject to Awards (other than Stock Units issued or issuable upon
exercise of Options) that may be granted during any calendar year to any one Participant shall not
exceed 250,000 in the aggregate.

     (d) In the event of any stock dividend, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares,
warrants or rights offering to purchase Common Stock at a price substantially below fair market
value, or other similar corporate event affecting the Common Stock such that an adjustment is
required in order to preserve the benefits or potential benefits intended to be made available to
Participants under this Plan, the Committee shall make appropriate proportional adjustments to any
or all of (1) the number and kind of shares which thereafter may be awarded or optioned and sold or
made the subject of Limited Stock Appreciation Rights under the Plan, (2) the number and kind of
shares subject to outstanding Options and Awards, and Limited Stock Appreciation Rights, and (3)
the option price with respect to any of the foregoing and/or, if deemed appropriate, make provision
for a cash payment to a Participant, including to reflect such an event occurring prior to an
Option or Award, the grant of which was intentionally deferred in anticipation of such event;
provided, however, that the number of shares subject to any Option or Award shall always be a whole
number. Any adjustment under this Section 4(d) shall be made only to the extent that such
adjustment will not cause a violation of the requirements of Section 409A.

     SECTION 5. ELIGIBILITY AND EXTENT OF PARTICIPATION.

     (a) The persons eligible to receive Awards, Options and associated Limited Stock Appreciation
Rights under the Plan shall consist of employees or prospective employees of the Company and
consultants or advisors of the Company who, in the Committee’s judgment, can make substantial
contributions to the Company’s long-term profitability and value. For purposes of the
administration of previously granted Options and Awards, the term “Participant” shall also include
a former Participant and any permitted transferee (including any trust, partnership or estate) of a
Participant or former Participant.

     (b) Subject to the limitations of the Plan, the Committee shall, after such consultation with
and consideration of the recommendations of management as the Committee considers desirable, select
from eligible persons those Participants to be granted Options and Awards and determine the time
when each Option and Award shall be granted, the number of shares subject to each Option and Award
and whether Limited Stock Appreciation Rights should be granted in connection with such Option, the
number of shares for each Award and the restrictions associated with such Award. Subject to the
provisions of Section 4, both Options and Awards may be granted to the same Participant.

     SECTION 6. GRANTS OF OPTIONS AND LIMITED STOCK APPRECIATION RIGHTS.

     (a) Grant of Options. Options on shares of Common Stock may be granted to

4

 

Participants by the Committee from time to time at its sole discretion. Options intended to
qualify as ISOs pursuant to Code Section 422 and Non-Qualified Options which are not intended to
qualify as ISOs may be granted as the Committee in its sole discretion shall determine. Each
Option grant shall contain such terms and conditions as may be approved by the Committee. Subject
to the terms of the Plan, the Committee may establish provisions regarding (1) the number of shares
of Common Stock which may be issued upon exercise of the Option, (2) the purchase price of the
shares of Common Stock and the means of payment for the shares of Common Stock, (3) the term of the
Option, (4) such terms and conditions of exercisability as may be determined from time to time by
the Committee, (5) restrictions on the transfer of the Option and forfeiture provisions, and (6)
such further terms and conditions, in each case not inconsistent with the Plan as may be determined
from time to time by the Committee. The grant of an Option shall not constitute or be evidence of
any agreement or other understanding, express or implied, on the part of the Company or any
Subsidiary to employ an individual for any specific period.

     (b) Grant of Limited Stock Appreciation Rights in the Event of Change of Ownership. If deemed
by the Committee to be in the best interests of the Company, any Option granted on or after the
effective date of the Plan may include a Limited Stock Appreciation Right at the time of grant of
the Option; also, the Committee may grant a Limited Stock Appreciation Right with respect to any
unexercised Option at any time after granting such Option prior to the end of its term, provided
such Option was granted after the effective date of the Plan. Unless otherwise specified, any
reference in this Plan to an Option or Options shall include any associated Limited Stock
Appreciation Right. Such Limited Stock Appreciation Rights shall be subject to such terms and
conditions not inconsistent with the Plan as the Committee shall impose, provided that:

	 	(1)	 	A Limited Stock Appreciation Right shall be exercisable only during the
ninety-one (91) day period specified in the last sentence of Section 9(a), provided,
however, that except in connection with a Change of Ownership, no Limited Stock
Appreciation Right granted to a Participant who is subject to Section 16 of the
Exchange Act shall be exercisable within six (6) months of the date of its grant; and
	 
	 	(2)	 	A Limited Stock Appreciation Right shall, upon its exercise, entitle the
optionee to whom such Limited Stock Appreciation Right was granted to receive an amount
of cash equal to the amount by which the “Offer Price per Share” (as such term is
hereinafter defined) shall exceed the exercise price of the associated Option,
multiplied by the number of shares of Common Stock with respect to which such Limited
Stock Appreciation Right shall have been exercised. Upon the exercise of a Limited
Stock Appreciation Right, any associated Option shall cease to be exercisable to the
extent of the shares of Common Stock with respect to which such Limited Stock
Appreciation Right was exercised. Upon the exercise or termination of an associated
Option, any related Limited Stock Appreciation Right shall terminate to the extent of
the shares of Common Stock with respect to which such associated Option was exercised
or terminated.
	 
	 	 	 	The term “Offer Price per Share” as used in this Section 6(b) shall mean with

5

 

	 	 	 	respect to a Limited Stock Appreciation Right the higher of (i) the fair market
value per share of Common Stock on the date of exercise of such Limited Stock
Appreciation Right or (ii) the highest price per share for Common Stock paid or to
be paid in the transaction, if any, giving rise to the event specified in clauses
(1) or (2) (as the case may be) of Section 9(a) which triggered the exercisability
of such Limited Stock Appreciation Right. For purposes of clause (ii) above, any
securities or property which are part of the consideration paid or to be paid in
such transactions shall be valued in determining the Offer Price per Share at the
highest of (A) the valuation placed on such securities or property by the company,
person or other entity engaging in such transaction, or (B) the valuation placed on
such securities or property by the Committee.
	 
	 	(c)	 	Option Price.
	 
	 	(1)	 	The price at which each share of Common Stock may be purchased upon exercise of
a particular Option shall be as specified by the Committee, in its sole discretion, but
in no event shall the exercise price be less than 100% of the fair market value of a
share of Common Stock at the time such Option is granted, except that (i) in the event
that an optionee is required to make a payment or to forego the receipt of other
compensation pursuant to paragraph (c)(3) below prior to receiving such Option, the
exercise price per share of Common Stock of such Option shall not be less than 100% of
the fair market value of a share of Common Stock at the time such Option is granted
less the purchase price per share of Common Stock of such Option, and (ii) the
Committee may specifically provide that the exercise price of an Option may be higher
or lower in the case of an Option granted to employees of a company acquired by the
Company in assumption and substitution of options held by such employees at the time
such company is acquired.
	 
	 	(2)	 	Unless approved by shareholders and subject to adjustment pursuant to Section
4(d), the exercise price of any Option previously awarded under the Plan may not be
adjusted downward, whether through amendment, cancellation or replacement grants, or by
any other means.
	 
	 	(3)	 	If the Committee, in its discretion, shall deem it desirable, the grant of an
Option may be made conditional upon the receipt of a payment therefor by the optionee
or upon the optionee agreeing to forego receipt of an amount of other compensation.
Such condition and the terms and conditions as to its satisfaction may also provide for
the reimbursement to the optionee of any part or all of such payment under such
circumstances as the Committee may specify.
	 
	 	(d)	 	Exercise.
	 
	 	(1)	 	Each Option shall be exercisable at such times and subject to such terms and
conditions as the Committee may, in its sole discretion, specify, provided, however,
that except in connection with a Change of Ownership, (i) Options granted to
Participants who are subject to Section 16 of the Exchange Act shall

6

 

	 	 	 	not become exercisable within six (6) months from the date of grant and (ii) in no
event may any Option granted hereunder be exercisable after the expiration of 15
years from the date of such grant. Subject to the foregoing, each Option grant
shall specify the effect thereon of the death, retirement or other termination of
employment of the optionee. In addition, the Committee may impose such other
conditions with respect to the exercise of Options, including without limitation,
any relating to the application of Federal or state securities laws, as it may deem
necessary or advisable.
	 
	 	(2)	 	No shares shall be delivered pursuant to any exercise of an Option until the
Participant has made payment in full of the option price therefor or provision for such
payment satisfactory to the Committee. The exercise price of an Option may be paid in
cash or certified or cashiers’ check or by delivery (either actually or by attestation)
of shares of Common Stock that have been acquired or held by the Participant in such
manner as to not result in an accounting charge. To the extent authorized by the
Committee, either at the time of grant or at the time of exercise of an Option, the
exercise price of an Option also may be paid through one of more of the following: 

(i)
shares of capital stock of the Corporation, (ii) other property deemed acceptable by
the Committee, (iii) a reduction in the number of shares or other property otherwise
issuable pursuant to such Option, (iv) a promissory note of or other commitment to pay
by the Participant or of a third party, the terms and conditions of which shall be
determined by the Committee, or (vi) any combination of the foregoing. No optionee or
the legal representative, legatee or distributee of an optionee shall be deemed to be a
holder of any shares subject to any Option prior to the issuance of such shares upon
exercise of such Option.

     (e) Transferability of Options. Unless the documents evidencing the grant of an Option (or an
amendment thereto authorized by the Committee) expressly states that the Option is transferable as
provided hereunder, no Option granted under the Plan may be sold, assigned, conveyed, gifted,
pledged, hypothecated or otherwise transferred in any manner, other than by will or the laws of
descent and distribution. The Committee may in its sole discretion grant an Option or amend an
outstanding Option to provide that the Option is transferable or assignable to a member or members
of the Participant’s “immediate family,” as such term is defined under Exchange Act Rule 16a-1(e),
or to a trust for the benefit solely of a member or members of the Participant’s immediate family,
or to a partnership or other entity whose only owners are members of the Participant’s family,
provided that (1) no consideration is given in connection with the transfer of such Option, and (2)
following any such transfer or assignment the Option will remain subject to substantially the same
terms applicable to the Option while held by the Participant, as modified as the Committee in its
sole discretion shall determine appropriate, and the transferee shall agree to be bound by such
terms.

     SECTION 7. PERFORMANCE STOCK AWARDS AND RESTRICTED STOCK AWARDS.

     (a) Performance Stock Awards. Subject to the terms of this Plan, Performance Stock Awards may
be granted to Participants by the Committee from time to time at its sole discretion.

7

 

Performance Stock Awards shall consist of an award of shares of Common Stock, the grant,
issuance, retention and/or vesting of which shall be subject to such Performance Objectives, and to
such further terms and conditions as the Committee deems appropriate. Each Performance Stock Award
shall contain provisions regarding (1) the number of shares of Common Stock subject to such Award
or a formula for determining such, (2) the performance criteria and level of achievement versus
these criteria which shall determine the number of shares of Common Stock granted, issued,
retainable and/or vested, (3) the period as to which performance shall be measured for determining
achievement of such performance criteria (a “Performance Period”), (4) forfeiture provisions, and
(5) such further terms and conditions, in each case not inconsistent with the Plan as may be
determined from time to time by the Committee. The grant, issuance, retention and/or vesting of
each Performance Stock Award shall be subject to such performance criteria and level of achievement
versus these criteria as the Committee shall determine, which criteria may be based on financial
performance and/or personal performance evaluations. Notwithstanding anything to the contrary
herein, the performance criteria for any Performance Stock that is intended by the Committee to
satisfy the requirements for “performance-based compensation” under Code Section 162(m) shall be a
measure based on one or more Performance Objectives selected by the Committee and specified at the
time the Performance Stock Award is granted. Notwithstanding anything in this Plan to the
contrary, Performance Stock Awards may provide that upon satisfaction of Performance Objectives the
shares subject to the Award are subject to such further holding periods and/or restrictions on
transferability as the Committee may provide.

     (b) Restricted Stock Awards. Subject to the terms of this Plan, Restricted Stock Awards may
be granted to Participants by the Committee from time to time at its sole discretion. Restricted
Stock consists of shares of Common Stock which are registered or are issuable by the Company in the
name of a Participant in exchange for such cash or other consideration, if any, as determined by
the Committee. Restricted Stock shall be subject during specified periods of time to such
conditions to vesting, to restrictions on their sale or other transfer by the Participant and/or to
repurchase rights as may be determined by the Committee, consistent with the terms of the Plan.
The transfer and sale of shares of Common Stock pursuant to Restricted Stock Awards shall be
subject to the following terms and conditions:

	 	(1)	 	The number of shares of Common Stock to be transferred or sold by the Company
to a Participant pursuant to a Restricted Stock award shall be determined by the
Committee.
	 
	 	(2)	 	Subject to the requirements of applicable law, the Committee shall determine
the price, if any, at which shares of Restricted Stock shall be sold or awarded to a
Participant, which may vary from time to time and among Participants and which may be
below the fair market value of such Shares at the date of grant or issuance.
	 
	 	(3)	 	All shares of Common Stock transferred or sold as Restricted Stock hereunder
shall be subject to such restrictions or conditions as the Committee may determine,
including, without limitation any or all of the following: (i) a prohibition against
the sale, transfer, pledge or other encumbrance of the Shares, such prohibition to
lapse at such time or times as the Committee shall determine (whether in annual or more
frequent installments, at the time of the death,

8

 

	 	 	 	disability or retirement of the holder of such Shares, or otherwise); (ii) a
requirement that the holder of shares of Common Stock forfeit or resell back to the
Company at a price specified by the Committee (which price may be more than the
price, if any, paid by the Participant for such Shares) all or part of such shares
of Common Stock in the event of termination of employment during any period in which
such shares of Common Stock are subject to conditions; (iii) such other conditions
or restrictions as the Committee may deem advisable; and (iv) any applicable
Performance Objectives which, if achieved, shall cause acceleration of the lapsing
of restrictions imposed upon all or part of the shares covered by the Restricted
Stock Award.

Notwithstanding anything else in this Plan to the contrary, the restrictions set forth in Section
7(b)(3) shall not lapse with respect to a Restricted Stock Award before the second anniversary of
the date of grant of such Restricted Stock Award, provided, however, that the Committee, in its
sole discretion, may designate that such restrictions shall lapse upon the achievement of
Performance Objectives. Subject to the preceding sentence, once established, Performance
Objectives and the terms under which the lapsing of restrictions may be accelerated may be changed,
adjusted or amended by the Committee in its sole discretion. Notwithstanding anything in this Plan
to the contrary, Restricted Stock Awards may provide that upon the lapsing of restrictions set
forth above, the shares subject to the Award may be subject to such further holding periods and/or
restrictions on transferability as the Committee may provide.

     (c) Rights with Respect to Shares. Unless the terms of the Award provide otherwise, unless
and until forfeited pursuant to the terms of this Plan or the Award, a Participant shall have the
right to vote and to receive dividends and other distributions on shares subject to a Performance
Stock Award or Restricted Stock Award, subject, however, to the terms, conditions and restrictions
described in this Plan and the Award.

     (d) Escrow. Shares of Common Stock issued pursuant to a Performance Stock Award or Restricted
Stock Award may be held in escrow by the Company until such time as the Committee shall have
determined that the restrictions set forth in Section 7 have lapsed or until the shares subject to
such Performance Stock Award or Restricted Stock Award are forfeited pursuant to their terms.

     (e) Restrictive Legends. Certificates for shares of Common Stock delivered pursuant to
Performance Stock Awards or Restricted Stock Awards may bear an appropriate legend referring to the
terms, conditions and restrictions described in this Plan and in the applicable Award. Any attempt
to dispose of any such shares of Common Stock in contravention of the terms, conditions and
restrictions described in this Plan or in the applicable Award shall be ineffective. Any shares of
Common Stock of the Company or other property, including cash, received by a Participant as a
dividend or as a result of any stock split, combination, exchange of shares, reorganization,
merger, consolidation or similar event with respect to shares of Common Stock received pursuant to
a Performance Stock Award or Restrictive Stock Award shall have the same status and bear the same
legend and be held in escrow pursuant to Section 7(d) as the shares received pursuant to the
Performance Stock Award or Restricted Stock Award unless otherwise determined by the Committee at
the time of such event.

9

 

     (f) Designation of Beneficiaries. A Participant may designate a beneficiary or beneficiaries
to receive such Participant’s Common Stock hereunder in the event of such Participant’s death, and
may, at any time and from time to time, change any such beneficiary designation. All beneficiary
designations and changes therein shall be in writing and shall be effective if and when delivered
to the Committee during the lifetime of the Participant.

     (g) Discretionary Adjustments. Notwithstanding satisfaction of any Performance Objectives,
the number of shares of Common Stock granted, issued, retainable and/or vested under a Performance
Stock Award on account of either financial performance or personal performance evaluations may be
reduced by the Committee on the basis of such further considerations as the Committee in its sole
discretion shall determine. The Committee may make adjustments or modifications, and its
determination thereof shall be conclusive, in any applicable Performance Objectives to give effect
to the intent of this Plan in connection with any event affecting the performance criteria
established as the Performance Objectives, including without limitation, any reorganization,
recapitalization, merger, consolidation, offering of additional shares of Common Stock or other
change in the Company’s shareholders’ equity by means other than earnings, or any similar event.
The grant of an Award shall not constitute or be evidence of any agreement or other understanding,
express or implied, on the part of the Company or any Subsidiary to employ an individual for any
specific period.

     SECTION 8. STOCK UNIT AWARDS.

     (a) Grant of Stock Unit Awards. The Committee shall have authority to grant to Participants
Stock Unit Awards, the value of which is based, in whole or in part, on the value of Common Stock.
Each “Stock Unit” shall consist of a bookkeeping entry representing an amount equivalent to the
fair market value of one share of Common Stock. Such Stock Units represent an unfunded and
unsecured obligation of the Company, except as otherwise provided for by the Committee. Stock
Units may be granted as additional compensation or in lieu of any other compensation, as specified
by the Committee, or may be issued upon exercise of Options, or in lieu of a Performance Stock
Award or Restricted Stock Award, provided that for any Common Stock to be purchased in connection
with a Stock Unit Award other than upon exercise of an Option or in settlement of a Performance
Stock Award or Restricted Stock Award, the purchase price or the amount of consideration paid or of
other compensation foregone shall be equal to at least 100% of the fair market value of such Common
Stock on the date such Award is granted. Subject to the provisions of the Plan, Stock Unit Awards
shall be subject to such terms, restrictions, conditions, vesting requirements and payment rules as
the Committee may determine in its sole discretion.

     (b) Transferability of Stock Units. Unless the Stock Unit Award (or an amendment thereto
authorized by the Committee) expressly states otherwise, any shares of Common Stock which are part
of a Stock Unit Award shall not be assigned, sold transferred, pledged or otherwise encumbered
before the date on which the shares are issued.

     (c) Settlement of Stock Units. Unless provided otherwise by the Committee, settlement of
Stock Units shall be made by issuance of Common Stock and shall occur within 60 days after a
Participant’s termination of employment for any reason. The Committee may provide for Stock Units
to be settled in cash (at the election of the Company or the Participant, as

10

 

specified by the Committee) and to be made at such other times as it determines appropriate or
as it permits a Participant to choose. The amount of shares of Common Stock, or other settlement
medium, to be so distributed may be increased by an interest factor or by dividend equivalents,
which may be valued as if reinvested in Common Stock. Until a Stock Unit is settled, the number of
shares of Common Stock represented by a Stock Unit shall be subject to adjustment pursuant to
Section 4(d).

     SECTION 9. SPECIAL RULES.

     (a) Notwithstanding anything to the contrary in this Plan, unless otherwise specifically
determined by the Committee at the time of grant, all Options theretofore granted and not fully
exercisable shall become exercisable in full and the restrictions on all outstanding Awards shall
lapse upon the occurrence of a Change of Ownership. A “Change of Ownership” shall be deemed to
have occurred if either (1) individuals who, as of the effective date of this Plan, constitute the
Board of Directors of the Company (the “Board of Directors” generally and as of the date hereof the
“Incumbent Board”) cease for any reason to constitute at least a majority of the directors
constituting the Board of Directors, provided that any person becoming a director subsequent to the
effective date of this Plan whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least three-quarters (3/4) of the then directors who are
members of the Incumbent Board (other than an election or nomination of an individual whose initial
assumption of office is (i) in connection with the acquisition by a third person, including a
“group” as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the “Act”), of beneficial ownership, directly or indirectly, of 20% or more of the combined voting
securities ordinarily having the right to vote for the election of directors of the Company (unless
such acquisition of beneficial ownership was approved by a majority of the Board of Directors who
are members of the Incumbent Board), or (ii) in connection with an actual or threatened election
contest relating to the election of the directors of the Company, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Act) shall be, for purposes of this Plan, considered
as though such person were a member of the Incumbent Board, or (2) the Board of Directors (a
majority of which shall consist of directors who are members of the Incumbent Board) has determined
that a Change of Ownership triggering the exercisability of Options and the lapse of restrictions
on Awards as described in this Section 10 shall have occurred. Options which become fully
exercisable by reason of events specified in clauses (1) or (2) shall remain exercisable for 90
days following the date on which they become so exercisable, after which they will revert to being
exercisable in accordance with their original terms, provided, however, that no Option which has
previously been exercised or has expired or otherwise terminated shall become exercisable by virtue
of this Section nor shall this Section permit exercise of any option during the portion, if any, of
such 90 day period which follows the termination or expiration of any such Option.

     (b) For purposes of this Plan and any Option or Award hereunder, termination of employment
shall not be deemed to occur upon the transfer of any optionee from the employ of the Company to
the employ of any Subsidiary or affiliate. For purposes of this Plan, “affiliate” means (1) any
entity 50% or more of the voting interest in which is owned, directly or indirectly, by an entity
which owns, directly or indirectly, 50% or more of the voting interest in the Company and (2) any
entity which owns, directly or indirectly, 50% or more of the voting interest in the Company.

11

 

     SECTION 10. DELIVERY OF SHARES. No shares of Common Stock shall be delivered pursuant to an
Award or any exercise of an Option until the requirements of such laws and regulations as may be
deemed by the Committee to be applicable thereto are satisfied.

     SECTION 11. FINANCING AND WITHHOLDING.

     (a) Withholding of Taxes. As a condition to the making of an Award, to the lapse of the
restrictions pertaining to an Award, or to the delivery of shares in connection with the exercise
of an Option, the Company may require the Participant to pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any taxes of any kind required by law to be
withheld with respect to such shares of Common Stock.

     (b) Financing. If requested by a Participant who exercises an Option or who has received
shares of Common Stock pursuant to an Award, the Committee may in its discretion provide financing
to the Participant in a principal amount sufficient for the purchase of shares of Common Stock
pursuant to such Option exercise or under such Award, and/or to pay the amount of taxes required by
law to be withheld with respect to such Option exercise or such receipt of shares of Common Stock.
Any such loan shall be subject to all legal requirements, and restrictions pertinent thereto,
including if applicable, Regulation G promulgated by the Federal Reserve Board. The grant of an
Option or Award shall in no way obligate the Company or the Committee to provide any financing
whatsoever upon the lapse of restrictions on shares or the exercise of such Option.

     (c) Withholding of Shares.

	 	(1)	 	If requested by a Participant who acquires shares of Common Stock upon the
exercise of an Option or who has received Common Stock pursuant to an Award with
respect to which the restrictions shall have lapsed, the Committee may in its
discretion permit the Participant to satisfy any tax withholding obligations, in whole
or in part, by having the Company withhold a portion of such shares with a value equal
to the amount of taxes required by law to be withheld.
	 
	 	(2)	 	Requests by a Participant to have shares of Common Stock withheld shall be (i)
made prior to the Tax Date and (ii) irrevocable. In addition, in the event the
Participant is an officer or director of the Company within the meaning of Section 16
of the Act, such requests must be made either six months prior to the Tax Date or in a
ten day period beginning on the third day following the release of the Company’s
quarterly or annual earnings statement.

     SECTION 12. AMENDMENTS, SUSPENSION OR DISCONTINUANCE. The Board of Directors may amend,
suspend or discontinue the Plan or any Option or Award granted under the Plan. Notwithstanding the
foregoing, except as permitted by Section 4(c), the Board may not, without prior approval of the
shareholders of the Company, make any amendment which operates (a) to reduce the exercise price of
outstanding Options or amend the provisions of Section 6(c)(2) relating to repricing Options, (b)
to materially increase the total number of shares of Common Stock which may be delivered in respect
of Awards or on exercise of Options granted under the Plan, (c) to extend the maximum option period
or the period which Options or

12

 

Awards may be granted under the Plan or (d) to reduce the minimum permissible Option exercise
price.

     SECTION 13. TERM OF PLAN. The Plan shall become effective on the date it is approved and
adopted by the Board, subject to its subsequent approval by shareholders of the Company. No Option
or Award shall be granted under the Plan after the date that is ten (10) years after the date on
which the Plan is approved by the Company’s shareholders or after such earlier date as the
Committee may decide, in its sole discretion.

     SECTION 14. OPTION GRANTS BY SUBSIDIARIES. In the case of a grant of an option to any
Participant by a Subsidiary, such grant may, if the Committee so directs, be implemented by the
Corporation issuing any subject shares to the Subsidiary, for such lawful consideration as the
Committee may determine, upon the condition or understanding that the Subsidiary will transfer the
shares to the optionholder in accordance with the terms of the option specified by the Committee
pursuant to the provisions of the Plan. Notwithstanding any other provision hereof, such option
may be issued by and in the name of the Subsidiary and shall be deemed granted on such date as the
Committee shall determine.

     SECTION 15. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the Board nor
the submission of the Plan to the shareholders of the Company for approval shall be construed as
creating any limitations on the power of the Board or the Committee to adopt such other incentive
arrangements as it or they may deem desirable, including without limitation, the granting of
restricted stock or stock options otherwise than under the Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.

13

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