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Employment Agreement - Kaufman and Broad Home Corp. and Albert Z. Praw

                          [KAUFMAN-BROAD LETTERHEAD]

February 20, 1994

Mr. Albert Z. Praw
3350 Scadlock Lane
Sherman Oaks, CA 91403

Re:      Employment Agreement

Dear Albert:

         This letter agreement (the 'Agreement') will confirm our understanding
concerning the terms and conditions of your employment with Kaufman and Broad
Home Corporation (the 'Company') as follows:

         1.       Employment. The Company hereby employs you and you hereby 
accept employment by the Company in accordance with the terms and provisions of
this Agreement. You shall be an employee exclusively of the Company and shall
serve the Company to the best of your abilities, devoting your full productive
time, energies and abilities, to your obligations hereunder. All improvements,
discoveries, business relationships, corporate opportunities, management
procedures and goodwill, conceived, divested, established, developed or
perfected by you during the period of your employment and related in any way to
the business of the Company or any of its affiliates shall be the exclusive
property of the Company. You may engage in personal and philanthropic
activities if these activities do not interfere or conflict with your duties
and responsibilities to the Company.
         2.       Term. The term of this Agreement shall commence on March 1, 
1994, and, subject to earlier termination as provided herein, shall continue
through January 31, 1999, provided that either party gives prior written notice
of termination of the Agreement at least 60 days prior to January 31, 1999. In
the event that no written notice is given by that date, this Agreement shall
continue in full force and effect until 60 days after written notice of
termination is given by either party, or the date specified in such notice,
whichever is later.
         3.       Duties and Responsibilities. You shall be employed as the 
Senior Vice President, Real Estate, of the Company and as such shall have the
duties and responsibilities as may be reasonably be assigned to you by the
Board of Directors or the Chief Executive Officer of the Company. You shall
perform such duties to the best of your abilities and with the skill and
judgement expected of an executive intrusted with the management of a
comparable business enterprise. You shall act in the best interests of the
Company and its shareholders, subject to such policies and directives as are
promulgated by the Board of Directors or the Chief Executive Officer.

Albert Z. Praw
February 20, 1994
Page two

         4.       Compensation. For all services rendered by you to the Company
hereunder, you shall be compensated as follows:

                  (a) Base salary and Opportunity to Defer. You shall receive a
         fixed base salary which shall be payable in semi-monthly installments
         in accordance with the common payroll practices of the Company. Your
         base salary shall begin at an annual rate of $300,000, and, commencing
         January 1, 1995, and annually thereafter, your salary shall be reviewed
         for an increase. You shall be entitled to defer receipt of all or part
         of your salary and bonus to the maximum extent authorized and allowed
         by federal and state tax laws and Company policy.

                  (b) Incentive Compensation. For fiscal year 1994 (ending
         November 30, 1994), you will be eligible for a Discretionary Incentive
         Award based on profits and the degree of success achieved in meeting
         specific mutually agreed upon goals. At achievement of business plan
         and with expected performance by you, your award will range from
         0-to-60% of your base salary. You are guaranteed to receive a minimum
         Incentive Award of $150,000 for fiscal year 1994. Your individual
         performance shall be judged based on annual performance achievements
         and is the sole discretion of company management. Receipt of any
         Incentive Award is contingent upon your continuous employment through
         the payment date (normally occurring the following January).

                  (c) Employee Benefits. You shall also be entitled to receive
         during the term of this Agreement all other executive benefits and
         similar plans as may be offered by the Company to its key executive
         personnel from time to time. A car allowance of $500 per month plus a
         gasoline credit card for business use will be provided. You shall be
         entitled to receive proper reimbursement by the Company for all
         reasonable out-of-pocket expenses incurred by you (in accordance with
         the policies and procedures established by the Company for its senior
         executives) in performing services under this Agreement. You shall be
         entitled to participate in all employee benefits programs of the
         Company now or hereafter made available to the Company's executives or
         salaried employees generally, as such programs may be in effect,
         modified or eliminated from time to time, including and without
         limitation to stock option plans, stock purchase plans, restricted
         stock plans, pension and other retirement plans, profit sharing plans,
         group life insurance, accidental death and dismemberment insurance,
         hospitalization, surgical, major medical and dental coverage, sick
         leave (including salary continuation arrangement), long-term
         disability, vacations, holidays and any other employee benefit programs
         sponsored by the Company. A summary of executive benefits is attached
         for your information.

Albert Z. Praw
February 20, 1994
Page three

                  (d) Performance Share Plan. Mr. Karatz will recommend to the
         Personnel, Compensation, and Stock Plan Committee of the Board of 
         Directors at its next meeting a grant of 10,000 units of the 1994 
         Performance Share Program.

         5.       Termination.

                  (a) Death. In the event of your death, this Agreement and all
         your unearned rights hereunder shall terminate immediately. In such
         event, the Company shall promptly pay your estate all earned but unpaid
         incentive compensation, and any amounts you have deferred under Section
         4(a). In addition, the Company shall pay your estate the current year
         incentive compensation as if you survived until November 30.

                  (b) Disability. In the event you shall become unable to
         perform the services contemplated by this Agreement due to a physical
         or mental disability for a continuous period of 8 weeks or an aggregate
         of more than 90 days in any 120 day period, the Company may terminate
         this Agreement by giving written notice of the termination to you. In
         the event of any such termination by the Company, the Company shall
         promptly pay to you all earned but unpaid incentive compensation, and
         any amounts you have deferred under Section 4(a). In addition, the
         Company shall pay you the current year incentive compensation as if the
         disability did not occur until November 30.

                  (c) Cause. The Company may terminate your employment for
         'Cause'. 'Cause' shall mean: (i) you are grossly negligent in the
         performance of your duties, or (ii) you commit a willful material
         breach of this Agreement. If your employment is terminated for Cause
         you shall be entitled to (i) any unpaid salary due you pursuant to
         Section 4(a), above, for the period ending on the date of termination,
         (ii) reimbursement by the Company pursuant to Section 4(c), above, in
         respect of certain expenses incurred prior to your termination. Your
         rights, if any, in the current year's incentive compensation shall be
         extinguished. With respect to deferred amounts as provided in Section
         4(a), above, such deferred amounts shall be paid to you within 60 days
         of the termination date.

                  (d) Without Cause. The Company may terminate this Agreement
         and your employment hereunder without Cause by giving 60 days prior
         written notice or pay in lieu of any part of that notice. In that
         event, the Company shall pay you the equivalent of one year's base
         salary plus 50% of the previous year's incentive compensation. The
         foregoing amount will be paid in 12 monthly payments commencing in the
         next month following the date of termination.

                  All medical, dental, life and long term disability benefits
         will remain in force for the 12 months that severance payments are

Albert Z. Praw
February 20, 1994
Page four

         6.       Exclusive Benefit. As long as you are receiving compensation 
under this Agreement you will not, as a director, officer, agent, employee,
partner, owner, 5 or more percent shareholder, or otherwise, enter into or
conduct any business or venture which may be competitive, directly or
indirectly, with that of the Company or any affiliate. A business or activity
shall be deemed to be competitive if it is substantially similar to one engaged
in or conducted by the Company or an affiliate. It is understood that passive
investments in income producing properties are permitted by this paragraph.
Furthermore, you have agreed that after the term of the Agreement or for a
period of one year thereafter you will not seek to employ any person employed
by the Company or any of its affiliates in connection with any business
activity deemed competitive.
         During the performance of your duties on behalf of the Company, you
shall receive and be entrusted with certain confidential and/or secret
information of a proprietary nature. You shall not disclose or use, during the
term of this Agreement or any time thereafter, any such information which is not
otherwise publicly available. The Company is entitled to seek equitable relief
if you improperly disclose trade secrets to a competitor directly or indirectly.

         7.       Effect of Waiver of Breach. The waiver by either party 
hereto of a breach of any provision of this Agreement by the other party shall
not operate or be construed to operate as a waiver of any subsequent breach by
the other party.
         8.       Entire Agreement; Amendments. This Agreement contains the 
entire Agreement between you and the Company concerning your employment. It
supersedes and replaces all prior agreements, whether expressed or implied,
written or oral. This Agreement can not be changed orally, but only by an
agreement in writing, signed by you and a representative of the Board of
Directors. Recently, new compensation legislation has been enacted (OBRA) which
may contain consequences for the structural make-up of this agreement. In that
case, appropriate changes will be made after agreement by both parties.
         9.       Severability. If any provisions of this Agreement shall be 
unlawful, void, or for any reasons unenforceable, they shall be deemed
separated from and in no way affect the validity or enforceability of the
remaining provisions of the Agreement.
         10.      Governing Law. This Agreement is entered into in Los Angeles,
California and shall be construed and enforced under the laws of the State of

         11.       Arbitration. In the event that any controversy or dispute 
between you and the Company arising out of or relating to the employment
relationship, including, but not limited to any disputes in connection with the
validity, construction, application or enforcement of the terms of this
Agreement, occurs, any such controversy or dispute shall be submitted to final
and binding arbitration pursuant to the then-current Commercial Rules of the
American Arbitration Association and the parties hereto expressly waive their
rights, if any, to have such matters heard by a jury or a judge, whether in
state or federal court.

Albert Z. Praw
February 20, 1994
Page five

         The cost of the arbitration including, but not limited to, any
reasonable legal fees or other expenses incident thereto incurred in connection
with such arbitration, shall be determined by the arbitrator(s) and shall be
borne by the prevailing party. During the pendency of the arbitration and up to
the date of the arbitrator's award, you shall participate in all employee
benefits programs of the Company (other than 401(k)) as provided in Section 4(c)

         The Company agrees to pay interest on any amounts payable to you under
this Agreement which are not paid within sixty (60) days after the date when due
and on any money judgement which is awarded to you following a proceeding to
enforce any portion of the date that payments should have been made under this
Agreement. Such interest shall be calculated at 6% from the date that payments
should have been made under this Agreement to the time of actual payment.

         In any arbitration concerning an alleged breach of section 5(c) the
remedy available to the arbitrator shall be limited to the payments and benefits
available under section 5(d).

         12. Assignability; Binding Nature. This Agreement shall bind and
benefit the Company, its successors and assigns and shall inure to the benefit
and be binding on you, your heirs, executors and administrators, provided that
your duties and responsibilities hereunder may not be assigned or delegated by
you. No rights or obligations of the Company under this Agreement may be
assigned or transferred except that such rights or obligations may be assigned
or transferred by operations of law in the event of a merger or consolidation in
which the Company is not the continuing entity, or the sale or liquidation of
all or substantially all of the assets of the Company provided that the assignee
or transferee is the successor to all or substantially all of the assets of the
Company and such assignee or transferee assumes the liabilities, obligations and
duties of the Company, as contained in this Agreement, either contractually or
as a matter of law. The Company further agrees that in the event of a merger,
consolidation, sale of assets, or liquidation as described in the preceding
sentence, it shall use its best efforts to cause such assignee or transferee to
assume the liabilities, obligations, and duties of the Company hereunder. If
not, the provisions of Section 5(d), above, will be deemed applicable.

         13. Notices. Any notice required or permitted to be given under the
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or sent by courier, duly addressed to the party concerned
at the address indicated below or to such changed address as the party may
subsequently give like notice of:

Albert Z. Praw
February 20, 1994
Page six

If to the Company:         Kaufman and Broad Home Corporation
                                    10877 Wilshire Boulevard, 12th Floor
                                    Los Angeles, California  90024
                                    Attn: Vice President of Human Resources

To you:                             Mr. Albert Z. Praw
                                    3350 Scadlock Avenue
                                    Sherman Oaks, California  91403

         Any notice delivered personally under this Section 13 shall be deemed
given on the date delivered and any notice sent by courier shall be deemed given
on the date delivery is recorded by the courier.

         14. Withholding on Payment. All payments made by the Company under this
Agreement shall be subject to normal deductions and withholding.

         Please confirm the terms and conditions of this Agreement by executing
the enclosed copy of this Agreement below and returning it to me.

                                                       Very truly yours,

                                                       /s/ Bruce Karatz
                                                       Bruce Karatz
                                                       Chairman and
                                                       Chief Executive Officer

Agreed this 28th day of February, 1994.

/s/ Albert Z. Praw
- ---------------------------------------
Albert Z. Praw

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