KB HOME
RETIREMENT PLAN
(AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2009)
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1.1 Establishment of the Plan
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1
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1
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ARTICLE III
PARTICIPATION
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3.1 Eligibility for Participation
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5
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3.2 Date of Participation
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6
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3.3 Duration of Participation
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7
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7
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ARTICLE IV
SUPPLEMENTAL RETIREMENT BENEFITS
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8
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4.2 Supplemental Retirement Benefits
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8
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4.3 Commencement and Duration
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4.4 Benefits in the Event of Death
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ARTICLE V
SPECIAL BENEFIT PAYMENT RULES
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9
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5.2 Cost of Living Adjustments
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10
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ARTICLE VI
CHANGE IN CONTROL
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6.1 Full Vesting and Lump Sum Option Upon Change
in Control
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11
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6.2 Amount of Lump Sum Benefit
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11
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7.1 Establishment of the Trust
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- i -
ARTICLE VIII
ADMINISTRATION
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8.2 Decisions and Actions of
Committee
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8.3 Rules and Records of the
Committee
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8.5 Agent for Service of Legal
Process
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9.1 Rights Against the Company
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15
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9.2 Rights Under the Company’s Other
Retirement Plans
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15
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9.3 Payment of Benefits to
Incompetent
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9.5 Amendment or Termination
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9.6 Merger or Consolidation of Plan and
Trust
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9.7 Arbitration/Interest on Unpaid
Amounts/Controlling Law
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9.8 Rights to Trust Fund Assets
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9.10 Illegality of Particular
Provision
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1.1
Establishment of the Plan
KB Home hereby
establishes an unfunded supplemental retirement incentive plan for
the benefit of certain selected executives of KB Home. This plan is
effective as of July 11, 2002, has been amended and restated
effective January 1, 2009, and shall be known as the KB Home
Retirement Plan. This Plan is intended to be an “employee
benefit plan” within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as
amended.
The purpose of
this Plan is to help KB Home attract and retain qualified
executives by providing certain selected executives with an
opportunity to supplement the benefits provided under the
tax-qualified retirement plans maintained by KB Home. This Plan is
intended to comply with all applicable law, including Code
Section 409A and related Treasury guidance and regulations,
and shall be operated and interpreted in accordance with this
intention.
Whenever
capitalized in this document, the following terms shall have the
meanings set forth below unless otherwise expressly
provided.
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(a)
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“Act”
shall mean the
Securities Exchange Act of 1934, as amended.
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(b)
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“Actuarial
Equivalent” shall mean a single sum present
value of a benefit amount otherwise payable, calculated using an
annual interest rate assumption equal to 100% of the Applicable
Federal Rate last announced by the Internal Revenue Service prior
to the determination for the period of time over which the benefits
(or remaining annual benefits, as the case may be) would otherwise
be paid, and based on annual compounding.
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(c)
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“Administrative
Committee” shall mean a committee composed of
one or more officers of the Company appointed by the Company,
acting through its Chief Executive Officer or a delegate of such
officer, from time to time. In the absence of such a committee,
references to the Administrative Committee shall be deemed to be
references to the Committee.
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(d)
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“Annual Benefit
Amount” shall mean the dollar amount,
determined by the Committee and set forth in the
Participant’s Participation Agreement, that is to be used for
purposes of calculating the Participant’s benefit opportunity
under this Plan.
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(e)
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“Beneficiary”
shall mean the person or
persons last designated in writing, on a form or in a manner
approved by the Administrative Committee, by a Participant
to
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receive benefits in the event of the
death of the Participant. In the event that a Participant failed to
designate a beneficiary, or if for any reason such designation
shall be legally ineffective, or if all designated beneficiaries
predecease him or die simultaneously with him, a distribution to
which the Participant would have been entitled under this Plan
shall be made to the Participant’s surviving spouse or, if
none, to the Participant’s estate.
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Upon the Committee or Administrative
Committee being provided with written notice of the dissolution of
marriage of a Participant, any earlier designation of the
Participant’s former spouse as a Beneficiary for a portion or
all of the benefits specified herein shall be treated as though the
Participant’s former spouse had predeceased the Participant.
Notwithstanding the preceding sentence, any designation of the
Participant’s former spouse as a Beneficiary shall not be
treated as though the Participant’s former spouse had
predeceased the Participant if, after the dissolution of the
Participant’s marriage and prior to payment of benefits on
behalf of the Participant (1) the Participant executes and
delivers a new Beneficiary designation that complies with this Plan
that clearly names such former spouse as a Beneficiary, or
(2) there is delivered to the Plan a domestic relations order
providing that the former spouse is to be treated as the
Beneficiary. In any case in which the Participant’s former
spouse is treated under the Participant’s Beneficiary
designation as having predeceased the Participant, no heirs or
other beneficiaries of the former spouse shall receive benefits
from this Plan as a Beneficiary of the Participant except as
provided otherwise in the Participant’s Beneficiary
designation.
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(The following example illustrates
the application of the preceding paragraph. Assume that a
Participant, “Participant A,” is married to
“Spouse A” and that Participant A files a valid and
effective Beneficiary designation under this Plan naming Spouse A
as a 50% Beneficiary and each of Participant A’s two children
with Spouse A (the “Children”) as a 25% Beneficiary.
Assume that Participant A becomes divorced from Spouse A after
making such Beneficiary designation. Upon the Committee or
Administrative Committee being provided with written notice of the
divorce, Spouse A shall be deemed to have predeceased Participant A
for purposes of Participant A’s Beneficiary designation
subject to the second sentence of the preceding paragraph. If
Participant A later dies without having made a valid post-divorce
Beneficiary designation under this Plan and assuming that no Plan
benefits have been paid and that there is no domestic relations
order to the contrary, Participant A’s Beneficiaries shall be
deemed to be his two Children, with each child being a 50%
Beneficiary.)
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Notwithstanding any of the foregoing
to the contrary, a Participant shall be treated as having revoked
all prior beneficiary designations under this Plan in the event the
Participant becomes married (or re-married following a divorce, as
the case may be) and such revocation shall be effective upon the
later of (1) the date of such marriage (or re-marriage) or
(2) the date that the Committee or Administrative Committee is
provided with written notice of such marriage (or re-marriage);
subject to any domestic relations order providing that a former
spouse of the Participant is to be treated as a
Beneficiary.
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(The following example illustrates
the application of the preceding paragraph. Assume the same facts
as in the last example, except that after becoming divorced from
Spouse A and before Participant A’s death, Participant A
becomes re-married to “Spouse B,” that the Committee or
Administrative Committee has written notice of such re-marriage,
and that there is no domestic relations order to the contrary. In
this case, Participant A’s beneficiary shall be deemed to be
Spouse B (his spouse at the time of his death) because Participant
A shall be deemed to have revoked all prior beneficiary
designations under this Plan in connection with his re-marriage. In
the absence of a new valid and effective beneficiary designation,
Participant A’s beneficiary is deemed to be his or her
surviving spouse as provided in the first paragraph of this
definition.)
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(f)
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“Board”
shall mean the Board of
Directors of the Company.
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(g)
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“Cause”
with respect to a
Participant shall mean a termination of employment based upon a
finding by the Committee, acting in good faith and based on its
reasonable belief at the time, that the Participant:
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(1)
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has
been materially negligent in the discharge of his or her duties to
the Company or a Subsidiary, repeatedly refused to perform stated
or assigned duties or is materially incompetent in or (other than
by reason of a disability or analogous condition) materially
incapable of performing those duties; or
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(2)
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has
committed or engaged in a material act of theft, embezzlement or
fraud; or
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(3)
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has
materially breached a fiduciary duty, or willfully and materially
violated any other duty, law, rule, regulation or policy of the
Company or a Subsidiary; or has been convicted of, or plead guilty
or nolo contendere to, a felony or misdemeanor (other than minor
traffic violations or similar offenses); or
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(4)
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has
materially breached any of the provisions of any agreement with the
Company or a Subsidiary; or
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(5)
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has
engaged in unfair competition with, or otherwise acted
intentionally in a manner injurious to the reputation, business or
assets of, the Company or a Subsidiary;
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provided, however, that, if a cure
is reasonably possible in the circumstances, no conduct (or lack
thereof) referred to above shall constitute Cause unless the
Participant shall have been given advance notice of such conduct
(or lack thereof) and a reasonable opportunity to cure such conduct
(or lack thereof) and such conduct (or lack thereof) is not timely
cured. In no event shall a cure period of more than fifteen days be
required.
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(h)
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“Change in
Control” shall mean any change in control of
the Company of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 10-K, as in
effect on the Effective Date, pursuant to Section 13 or 15(d)
of the Act; provided that, without limitation, such a “Change
in Control” shall be deemed to have occurred if:
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(1)
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a
third person, including a “group” as such term is used
in section 13(d)(3) of the Act, becomes the beneficial owner,
directly or indirectly, of 15 percent or more of the combined
voting power of the Company’s outstanding voting securities
ordinarily having the right to vote for the election of directors
of the Company, unless such acquisition of beneficial ownership is
approved by a majority of the Incumbent Board (as such term is
defined in paragraph (2) below); or
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(2)
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individuals who, as of July 11,
2002, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to
July 11, 2002, whose election, or nomination for election by
the Company’s shareholders, was approved by a vote of at
least three-quarters of the directors comprising the Incumbent
Board (other than an election or nomination of an individual whose
initial assumption of office is 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 provision, considered as though such
person were a member of the Incumbent Board..
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(i)
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“Code”
shall mean the Internal
Revenue Code of 1986, as amended.
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(j)
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“Committee”
shall mean the
Personnel, Compensation and Stock Plan Committee of the Board (or a
designee of that Committee).
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(k)
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“Company”
shall mean KB Home, and
any successor thereto.
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(l)
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“Disability”
with respect to a
Participant shall mean that the Participant has become
“totally disabled” (or the equivalent term used if
“totally disabled” is not a defined term) for purposes
of the long-term disability plan of the Company or one of its
Subsidiaries in which the Participant participates.
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(m)
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“Effective
Date” shall mean the effective date of
this Plan as set forth in section 1.1.
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(n)
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“Eligible
Person” shall mean any executive employed by
the Company or one of its Subsidiaries.
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(o)
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“Participant”
shall mean any Eligible
Person who has satisfied the conditions for participation in this
Plan as set forth in sections 3.1 and 3.4.
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(p)
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“Participation
Agreement” shall mean a written agreement in a
form approved by the Committee or Administrative Committee, and
signed by a member of the Committee or by a member of the
Administrative Committee (in each case other than the Eligible
Person covered by the agreement), informing an Eligible Person of
his selection by the Committee as a participant in this Plan,
containing the Eligible Person’s agreement to be bound by the
terms of this Plan, and setting forth such information as may be
required pursuant to section 3.1.
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(q)
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“Participation
Date” shall mean the date, determined by
the Committee and set forth in the Participant’s
Participation Agreement, that is used in determining
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whether a Participant is eligible
for benefits hereunder upon or following the Participant’s
Separation from Service.
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(r)
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“Plan”
shall mean this KB Home
Retirement Plan, as it may be amended from time to time.
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(s)
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“Subsidiary”
shall mean any
corporation or other entity a majority of whose outstanding voting
stock or voting power is owned, directly or indirectly, by the
Company.
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(t)
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“Separation from
Service” shall mean termination of services
provided by a Participant to his or her Company, whether voluntary
or involuntary, as determined by the Administrative Committee in
accordance with Treasury Regulation Section 1.409A-1(h).
In determining whether a Participant has experienced a Separation
from Service, the following provisions shall apply:
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(1)
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For
a Participant who provides services to the Company as an employee,
except as otherwise provided in part (3) of this Subsection, a
Separation from Service shall occur when such Participant has
experienced a termination of employment with the Company. A
Participant shall be considered to have experienced a termination
of employment when the facts and circumstances indicate that the
Participant and the Company reasonably anticipate that either
(i) no further services will be performed for the Company
after a certain date, or (ii) that the level of bona fide
services the Participant will perform for the Company after such
date (whether as an employee or as an independent contractor) will
permanently decrease to no more than 20% of the average level of
bona fide services performed by such Participant (whether as an
employee or an independent contractor) over the immediately
preceding 36-month period (or the full period of services to the
Company if the Participant has been providing services to the
Company less than 36 months).
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If
a Participant is on military leave, sick leave, or other bona fide
leave of absence, the employment relationship between the
Participant and the Company shall be treated as continuing intact,
provided that the period of such leave does not exceed
6 months, or if longer, so long as the Participant retains a
right to reemployment with the Company under an applicable statute
or by contract. If the period of a military leave, sick leave, or
other bona fide leave of absence exceeds 6 months and the
Participant does not retain a right to reemployment under an
applicable statute or by contract, the employment relationship
shall be considered to be terminated for purposes of this Plan as
of the first day immediately following the end of such 6-month
period. In applying the provisions of this paragraph, a leave of
absence shall be considered a bona fide leave of absence only if
there is a reasonable expectation that the Participant will return
to perform services for the Company. For purposes of this
paragraph, where a leave of absence is due to any physical or
mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than six
months, where such
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impairment causes the Participant to
be unable to perform the duties of his or her position of
employment or any substantially similar position of employment, a
29-month period of absence shall be substituted for such 6-month
period.
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(2)
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For
a Participant who provides services to the Company as an
independent contractor, except as otherwise provided in part
(3) of this Subsection, a Separation from Service shall occur
upon the expiration of the contract (or in the case of more than
one contract, all contracts) under which services are performed for
the Company, provided that the expiration of such contract(s) is
determined by the Committee to constitute a good-faith and complete
termination of the contractual relationship between the Participant
and the Company.
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(3)
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For
a Participant who provides services to the Company as both an
employee and an independent contractor , a Separation from
Service generally shall not occur until the Participant has ceased
providing services for such Company as both as an employee and as
an independent contractor, as determined in accordance with the
provisions set forth in parts (1) and (2) of this
Subsection, respectively. Similarly, if a Participant either
(i) ceases providing services for the Company as an
independent contractor and begins providing services for the
Company as an employee, or (ii) ceases providing services for
the Company as an employee and begins providing services for the
Company as an independent contractor, the Participant will not be
considered to have experienced a Separation from Service until the
Participant has ceased providing services for the Company in both
capacities, as determined in accordance with the applicable
provisions set forth in parts 0 and 0 of this
Subsection.
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Notwithstanding the foregoing
provisions in this part (3), if a Participant provides services for
the Company as both an employee and as a director of the Board of
the Company, to the extent permitted by Treas. Reg.
§1.409A-1(h)(5) the services provided by such Participant as a
director of the Board of the Company shall not be taken into
account in determining whether the Participant has experienced a
Separation from Service as an employee.
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(4)
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For
purposes of this Subsection, services performed for the Company
shall include service performed both for the Company and for any
other corporation that is a member of the same “controlled
group” of corporations as the Company under Section 414(b) of
the Code or any other trade or business (such as a
partnership)_that is under common control with the Company as
determined under Section 414(c) of the Code, in each case as
modified by Treasury Regulation Section 1.409A-1(h)(3) and
substituting “at least 50 percent” for “at
least 80 percent” each place it appears in Section 1563(a) of
the Code or Treasury
Regulation Section 1.414(c)-2.
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(u)
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“Specified
Employee” shall mean any Participant who is
determined to be a “key employee” (as defined under
Code Section 416(i) 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 Treas. Reg.
§1.409A-1(i).
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(v)
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“Trust”
shall mean the legal
entity organized pursuant to the Trust Agreement between the
Company and the Trustee to hold and administer the Trust Fund in
which any contributions made by the Company are to be held,
invested, and disbursed to, or for the benefit of, Participants and
their Beneficiaries.
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(w)
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“Trust
Agreement” shall mean the agreement in the
nature of a trust entered into between the Company and Trustee with
respect to this Plan.
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(x)
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“Trust Fund”
shall mean the assets of
every kind and description held in the Trust pursuant to the Trust
Agreement.
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(y)
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“Trustee”
shall mean the entity,
not affiliated with the Company, acting as the trustee under the
Trust Agreement at the time of reference.
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Unless the context
clearly requires otherwise, the masculine pronoun whenever used
shall include the feminine pronoun, and the singular shall include
the plural.
ARTICLE III
Participation
3.1
Eligibility for Participation
Subject to
Section 3.3, an Eligible Person shall participate in this Plan
only if:
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(1)
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he
has been selected by the Committee and designated in writing by the
Committee as a participant in this Plan,
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(2)
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he
executes his Participation Agreement and returns an original copy
of such agreement, along with such administrative and other forms
as the Committee may require, to the Committee no later than thirty
(30) days after the date of his Participation Agreement,
and
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(3)
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he
timely comple
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