\nARTICLE I PURPOSE AND SPECIFICATIONS……………………………..1<\/p>\nARTICLE II DEFINITIONS…………………………………………..1<\/p>\n
ARTICLE III PARTICIPATION…………………………………………3<\/p>\n
ARTICLE IV BENEFICIARIES…………………………………………3<\/p>\n
ARTICLE V PLAN BENEFITS…………………………………………4<\/p>\n
ARTICLE VI ADMINISTRATION OF THE PLAN……………………………..5<\/p>\n
ARTICLE VII AMENDMENT OR TERMINATION OF PLAN………………………..7<\/p>\n
ARTICLE VIII MISCELLANEOUS PROVISIONS……………………………….8<\/p>\n
ARTICLE IX ESTABLISHMENT OF TRUST AND SPECIAL PROVISIONS
\n IN THE EVENT OF A CHANGE IN CONTROL…………………….10
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
-i-<\/p>\n
ARTICLE I PURPOSE AND SPECIFICATIONS<\/p>\n
The purpose of this Death Benefit Only Plan (the “Plan”) is to provide
\nselected employees of KB Home (the “Company”) with an employment benefit similar
\nto term life insurance. The Plan is effective as of November 1, 2001.<\/p>\n
ARTICLE II DEFINITIONS<\/p>\n
2.1 “Affiliated Employer” means any corporation which is a member of a
\ncontrolled group (as defined in Code Sections 414(b) and 1563(a)) that includes
\nthe Company, any trade or business (whether or not incorporated) that is under
\ncommon control (as defined in Code Sections 414(c) and 1563(a)) with the
\nCompany, any organization (whether or not incorporated) that is a member of an
\naffiliated service group (as defined in Code Section 414(m)) that includes the
\nCompany, and any other entity required to be aggregated with the Company
\npursuant to Code Section 414(o) and the Regulations thereunder.<\/p>\n
2.2 “Basic Benefit” is either $1,000,000 (Tier 1) or $500,000 (Tier 2).<\/p>\n
2.3 “Beneficiary” means the person(s) described in Article IV who is
\nentitled to receive benefits under the Plan after the death of a Participant.<\/p>\n
2.4 “Change in Control” shall mean any change in control of the Company of a
\nnature that would be required to be reported in response to Item 1(a) of the
\nCurrent Report on Form 10-K, as in effect on November 1, 2001, pursuant to
\nsection 13 or 15(d) of the Securities Exchange Act of 1934 (the “Act”); provided
\nthat, without limitation, such a “Change in Control” shall be deemed to have
\noccurred if:<\/p>\n
(a) a third person, including a “group” as such term is used in section
\n13(d)(3) of the Act, becomes the beneficial owner, directly or indirectly, of 20
\npercent or more of the combined voting power of the Company’s outstanding voting
\nsecurities ordinarily having the right to vote for the election of directors of
\nthe Company unless such acquisition of beneficial ownership is approved by a
\nmajority of the Incumbent Board (as such term is defined in paragraph (b)
\nbelow); or<\/p>\n
(b) individuals who, as of November 1, 2001, constitute the Board (the
\n“Incumbent Board”) cease for any reason to constitute at least a majority of the
\nBoard, provided that any person becoming a director subsequent to November 1,
\n2001 whose election, or nomination for election by the Company’s shareholders,
\nwas approved by a vote of at least three-quarters of the directors comprising
\nthe Incumbent Board (other than an election or nomination of an individual whose
\ninitial assumption of office is in connection with an actual or threatened
\nelection contest relating to the election of the Directors of the Company, as
\nsuch terms are used in Rule 14a-11 of Regulation 14A promulgated under the Act)
\nshall be, for purposes of this Article, considered as though such person were a
\nmember of the Incumbent Board.<\/p>\n
1<\/p>\n
2.5 “Code” means the Internal Revenue Code of 1986, as amended from time to
\ntime. Reference to any section or subsection of the Code includes reference to
\nany comparable or succeeding provisions of any legislation that amends,
\nsupplements or replaces such section or subsection.<\/p>\n
2.6 The “Committee” means the Committee with the responsibilities set forth
\nherein. The Committee shall be appointed by the Company, acting through its
\nChief Executive Officer or a delegate of such officer.<\/p>\n
2.7 “Employee” means any individual employed by the Company or an Employer.<\/p>\n
2.8 “Employer” means the Company, any Affiliated Employer that adopts the
\nPlan, any predecessor employer named in the Plan, and any successor employer
\nthat may adopt the Plan. By its adoption of the Plan an Affiliated Employer
\nagrees to pay whatever payments are necessary under the Plan to provide the
\nbenefits promised under the Plan to its current and former Employees and their
\nBeneficiaries.<\/p>\n
2.9 “ERISA” means the Employee Retirement Income Security Act of 1974, as
\namended from time to time. Reference to any section or subsection of ERISA
\nincludes reference to any comparable or succeeding provisions of any legislation
\nthat amends, supplements or replaces such section or subsection.<\/p>\n
2.10 “Participant” means any Employee who participates in this Plan in
\naccordance with Article III.<\/p>\n
2.11 “Plan Year” means a calendar year.<\/p>\n
2.12 “Supplemental Benefit” means the amount payable in addition to the Basic
\nBenefit in accordance with Article V.<\/p>\n
2.13 “Totally Disabled” means the inability to engage in any substantial
\ngainful activity by reason of any medically determinable physical or mental
\nimpairment which can be expected to result in death or which has lasted or can
\nbe expected to last for a continuous period of not less than 12 months. The
\npermanence and degree of such impairment shall be supported by medical evidence.<\/p>\n
2.14 “Vested” means that a Participant has completed (a) 10 Years of Service,
\nincluding (b) five consecutive Years of Service while a Participant in the Plan.<\/p>\n
(a) “Years of Service” shall be measured from the date of a
\n Participant’s initial employment by the Company and shall continue so
\n long as the Participant is treated as an employee on Company’s records.
\n In the case of an Employee who is terminated and rehired, periods of
\n service shall be added together to determine the total Years of Service.
\n The Committee, in its complete discretion, may determine to award
\n additional Years of Service to a Participant.<\/p>\n
2<\/p>\n
(b) For the purpose of determining Years of Service, employment
\n with any company that is an Affiliated Employer will be included.<\/p>\n
ARTICLE III PARTICIPATION<\/p>\n
3.1 Commencement of Participation. The Committee shall select the Employees
\nwho shall participate under the Plan. Employees shall only be eligible for
\nselection if they constitute part of a “select group of management or highly
\ncompensated employees” within the meaning of such phrase as it is used in
\nSubtitle B of Title I of ERISA. At the time of selection a Participant shall be
\nselected by the Committee to be eligible for either the Tier 1 or Tier 2 Basic
\nBenefit. Once the Participant has been selected for the initial tier, such
\nselection may not be revoked or modified, except that the Committee may
\nsubsequently determine that a Tier 2 Participant may become eligible for a Tier
\n1 Basic Benefit, which subsequent selection may not be revoked.<\/p>\n
3.2 Cessation of Participation. A Participant shall cease to be a
\nParticipant, so that his or her Beneficiary shall no longer be entitled to
\nbenefits only (a) if the Participant terminates employment before he or she is
\nVested or (b), in the case of a Participant who is not Vested, the Plan is
\nterminated under the circumstances set forth in Article VII.<\/p>\n
3.3 Reinstatement of Former Participant. A former Participant who is
\nreemployed by the Company shall only become a Participant again on the date he
\nor she is reemployed if he or she is affirmatively selected to participate again
\nby the Committee.<\/p>\n
3.4 Required Documentation and Related Conditions to Eligibility. In no
\nevent shall an Employee become a Participant before filling out all
\ndocumentation and taking any other steps required by the Committee as a
\ncondition of participating in the Plan. Such steps shall include the filling out
\nof a Life Insurance Consent Card and may include the taking of a physical
\nexamination or such other steps as are required as a condition to the Company’s
\npurchase of life insurance on the life of the Participant.<\/p>\n
Notwithstanding any other provisions of this Plan, the
\neligibility of an Employee to participate in the Plan is conditioned on a
\ndetermination that life insurance on the life of such Participant can be
\npurchased at standard rates. If an Employee cannot be insured at standard rates,
\nthen, notwithstanding the initial selection of such Employee (or any subsequent
\ndetermination that the Participant shall be increased from a Tier 2 to a Tier 1
\nBasic Benefit), the Committee may determine in its complete discretion that the
\nEmployee shall not participate in the Plan.<\/p>\n
ARTICLE IV BENEFICIARIES<\/p>\n
4.1 Designation. Each Participant shall have the right to designate, on
\nforms provided by the Committee, a Beneficiary to receive the benefits provided
\nunder the Plan in the event of the Participant’s death, and shall have the right
\nat any time to revoke such<\/p>\n
3<\/p>\n
designation or to substitute another such Beneficiary. Any such change shall be
\neffective on the date of written notice from the Participant naming a new or
\nadditional Beneficiary. Such notice shall be delivered to the Committee.<\/p>\n
4.2 Absence of Valid Designation. If, upon the death of a Participant, there
\nis no valid designation of Beneficiary on file with the Committee, the Committee
\nshall designate the Participant’s surviving spouse as Beneficiary, or if there
\nis no surviving spouse, the Participant’s estate.<\/p>\n
ARTICLE V PLAN BENEFITS<\/p>\n
5.1 Basic Benefit. In the event of a Participant’s death, the Company shall
\npay the applicable Basic Benefit directly to the Participant’s Beneficiary
\nwithin 90 days after the date of death.<\/p>\n
5.2 Supplemental Benefit. The Supplemental Benefit is intended to offset the
\nincome tax liability incurred by the Beneficiary as a result of receiving the
\nBasic Benefit and shall be paid by the Company directly to the Participant’s
\nBeneficiary concurrently with the payment of the Basic Benefit. The Supplemental
\nBenefit is an attribute of the Basic Benefit, so that, like the Basic Benefit,
\nthe right to the Supplemental Benefit cannot be altered to the same extent that
\nthe Basic Benefit cannot be altered.<\/p>\n
The Committee shall determine the amount of the Supplemental Benefit
\nbased on the highest combined federal and state net effective income tax rate in
\neffect the year the Basic Benefit is paid. Assuming that the federal rate is X
\nand the state rate is Y, the Supplemental Benefit equals (Basic Benefit divided
\nby Z) minus the Basic Benefit, where Z equals (1-X) times (1-Y). For example, if
\nthe Basic Benefit is $1,000,000, X is .4 (i.e., the highest marginal federal tax
\nrate is 40%), and Y is .1 (i.e., the highest marginal state tax rate is 10%),
\nthe Supplemental Benefit would be $851,851.85. The state income tax rate shall
\nbe based on the state of residence of the beneficiary, as ascertained by the
\nCommittee in its sole discretion.<\/p>\n
In addition, to the extent that the Basic Benefit or Supplemental
\nBenefit is subject to payroll taxes, the Committee may in its complete
\ndiscretion determine to increase the amount of the Supplemental Benefit by an
\nadditional amount up to X. X is an amount equal to such payroll taxes, after
\ntaking into account the reduction of X by any federal or state income taxes
\n(computed as described in the first paragraph of this section) or payroll taxes
\nattributable to X.<\/p>\n
5.3 Permanent Disability. If a Participant becomes Totally Disabled after
\ncompleting three Years of Service and such individual remains Totally Disabled
\nat all times until his or her death, the Company shall pay the Basic Benefit and
\nthe Supplemental Benefit directly to the former Participant’s Beneficiary within
\n90 days after the date of death; provided, however, that the Basic Benefit shall
\nbe determined as of the time the Participant became Totally Disabled.<\/p>\n
4<\/p>\n
5.4 Certain Limitations. The Company has purchased certain life insurance
\npolicies on the lives of Participants. Notwithstanding any other provision of
\nthe Plan, no benefits shall be payable under the Plan if death occurs under
\ncircumstances such that the policy on the life of a Participant does not pay a
\nfull death benefit, as will occur, for example, in the case of suicide within
\ntwo years after the policy date.<\/p>\n
ARTICLE VI ADMINISTRATION OF THE PLAN<\/p>\n
6.1 Selection of the Committee<\/p>\n
There shall be created a “Committee,” consisting of one or more members who
\nshall be selected by Company and who shall serve at its pleasure. A Committee
\nmember may resign by delivering his or her written resignation to Company or be
\nremoved by Company by delivery of written notice of removal, to take effect on
\nthe date specified therein. Vacancies due to resignation, death, removal or
\nother causes shall be filled promptly by Company. The Trustee may rely on the
\nlatest certification as to the membership of the Committee. At the direction of
\nCompany, each member of the Committee shall be bonded in accordance with Section
\n412 of ERISA.<\/p>\n
6.2 Action by the Committee<\/p>\n
A majority of the members of the Committee shall constitute a quorum, and any
\naction by the majority present at a meeting at which a quorum is present, or by
\nall of the members in writing or electronically without a meeting, shall
\nconstitute the action of the Committee. Any action taken in good faith by the
\nCommittee in the exercise of authority conferred upon it by this Article shall
\nbe conclusive and binding upon Participants and their Beneficiaries. All
\ndiscretions conferred upon the Committee shall be absolute. The Committee may
\ndesignate one or more of its members or alternate members to transmit its
\ndecisions and instructions to the Trustee or other interested parties.<\/p>\n
6.3 Allocation and Delegation of Responsibilities<\/p>\n
If the Committee is comprised of more than one member, the responsibilities of
\neach member may be specified by Company and accepted in writing by each member.
\nIn the event that no such delegation is made by Company, the members may
\nallocate the responsibilities among themselves, in which event the members shall
\nnotify Company in writing of such action and shall specify the responsibilities
\nof each member.<\/p>\n
6.4 Powers and Duties of the Committee<\/p>\n
The Committee shall have the duty to manage and administer the Plan in
\naccordance with the terms and provisions of this Article, and shall have the
\npower:<\/p>\n
(a) To construe and interpret the terms and provisions of the Plan;<\/p>\n
5<\/p>\n
(b) To compute the amount and determine the kind of benefits payable
\n to Participants or their Beneficiaries;<\/p>\n
(c) To employ such persons or organizations, including without
\n limitation, actuaries, attorneys, accountants, independent fiduciaries,
\n and administrative consultants, to render advice or perform services
\n with respect to the responsibilities of the Committee under the Plan;<\/p>\n
(d) To make and publish such rules for the administration of the Plan
\n as are not inconsistent with the terms hereof.<\/p>\n
6.5 Indemnification by Company<\/p>\n
Company shall indemnify and hold harmless the members of the Committee and any
\nother persons to whom any fiduciary responsibility with respect to the Plan is
\nallocated or delegated, from and against any and all liabilities, costs and
\nexpenses incurred by such persons as a result of any act or omission to act in
\nconnection with the performance of their duties, responsibilities and
\nobligations under the Plan and under ERISA or the Code, other than such
\nliabilities, costs and expenses as may result from the bad faith or criminal
\nacts of such persons.<\/p>\n
6.6 Records and Reports<\/p>\n
The Committee shall keep a record of all actions taken and shall keep all other
\nbooks of account, records, and other data that may be necessary for proper
\nadministration of the Plan and shall be responsible for supplying all
\ninformation and reports to the Internal Revenue Service, Department of Labor,
\nParticipants, Beneficiaries, and others as required by law.<\/p>\n
6.7 Payment of Expenses<\/p>\n
All expenses of administration may be paid by the Company. Such expenses shall
\ninclude any expenses incident to the functioning of the Committee, including,
\nbut not limited to, fees of accountants, legal counsel, and other specialists
\nand their agents, and other costs of administering the Plan.<\/p>\n
6.8 Claims Procedure and Review<\/p>\n
Claims for benefits under the Plan shall be filed on forms supplied by Company.
\nWritten or electronic notice of the disposition of a claim shall be furnished to
\nthe claimant within 90 days after the application therefor is filed, unless
\nspecial circumstances require an extension of time (not to exceed 90 additional
\ndays) for processing the claim. In the event the claim is denied, the reasons
\nfor the denial shall be specifically set forth, pertinent provisions of the Plan
\nshall be cited and, where appropriate, an explanation as to how the claimant can
\nperfect the claim and whether further material or information is necessary.<\/p>\n
Any Employee, former Employee, or Beneficiary, who has been denied a
\nbenefit or feels aggrieved by any other action of Company shall be entitled upon
\nwritten request to Company to<\/p>\n
6<\/p>\n
receive a written or electronic notice of such action, together with a full and
\nclear statement of the reasons for the action.<\/p>\n
If the claimant wishes further consideration of his or her position, he
\nor she may obtain a form from Company on which to request a hearing. Such form,
\ntogether with a written statement of the claimant’s position, shall be filed
\nwith Company no later than 60 days after receipt of the written notification
\nprovided for in the paragraph above and in the paragraph preceding it. The
\nclaimant or his or her duly authorized representative may review pertinent
\ndocuments and submit issues and comments in writing.<\/p>\n
The Committee shall schedule an opportunity for a full and fair hearing
\nof the issue by the Committee or a person designated by the Committee within the
\nnext 60 days unless special circumstances (including but not limited to, the
\nneed to hold a hearing) require an extension of time for processing, in which
\ncase a decision shall be rendered as soon as possible, but not later than 120
\ndays after receipt of the request for review. If such an extension is necessary,
\nwritten or electronic notice of the extension shall be furnished to the claimant
\nprior to the commencement of the extension.<\/p>\n
The decisions on review shall be furnished to the claimant within the
\ntime limit described in the preceding paragraph. It shall include specific
\nreasons for the decision, expressed in a manner calculated to be understood by
\nthe claimant and shall specifically refer to pertinent Plan provisions on which
\nit is based. The claimant shall be advised that if he or she wishes to pursue
\nhis or her claim further, he or she may file suit in federal or state court and
\nthat the court will decide who should pay court costs and legal fees.<\/p>\n
6.9 Correction of Administrative Errors. If an error is made in the
\nadministration of the Plan, the Committee shall promptly correct the error upon
\nits discovery. For this purpose, “administration” shall encompass the entire
\noperation of the Plan, including but not limited to, eligibility, participation
\nand benefit calculation and distribution. If a Beneficiary has been denied a
\nbenefit distribution due to such administrative oversight, the Committee shall
\ndetermine the correct interest of the Beneficiary and shall disburse an amount
\nto the Beneficiary as is necessary to rectify the error, without payment of
\ninterest or penalty. If an excessive distribution has been made to a
\nBeneficiary, the Committee shall advise the party who received the distribution
\nof the error and shall take such actions on the Plan’s behalf as are necessary
\nto recover the excessive payment.<\/p>\n
ARTICLE VII AMENDMENT OR TERMINATION OF PLAN<\/p>\n
In its discretion and acting in a nonfiduciary capacity, the Committee
\nshall have the right to amend the Plan at any time, and to amend or cancel any
\nsuch action. Plan amendments shall be stated in an instrument executed by the
\nCompany in the same manner as the Plan, and the Plan shall be deemed to have
\nbeen amended in the manner and at the time therein set forth, and all
\nParticipants and Beneficiaries shall be bound thereby. Notwithstanding the
\npreceding sentence, no plan amendment shall modify the right of a Participant to
\na death benefit nor reduce the amount of the Basic Benefit and Supplemental<\/p>\n
7<\/p>\n
Benefit, as such rights are set forth in Articles III and V. Moreover, no
\namendment shall be effective that lessens the benefits hereunder to Participants
\nand Beneficiaries if adopted at any time after the date that is six months prior
\nto a Change in Control. For the purpose of the preceding sentences, both an
\namendment to the definition of “Change in Control” and modifying the
\nconsequences of a Change in Control shall be treated as permissible so long as
\nsuch amendment is adopted prior to the date that is six months before a Change
\nin Control.<\/p>\n
The Committee shall have the right to terminate the Plan at any time. In
\nthe case of a Vested Participant, such termination shall not, however, lessen
\nany of the rights of such Participant to a death benefit nor reduce the amount
\nof the Basic Benefit and Supplemental Benefit, as such rights are set forth in
\nArticles III and V. Such termination shall eliminate any rights hereunder of a
\nParticipant who is not Vested as of the date of termination; provided, however,
\nthat the rights of a non-Vested Participant shall not be eliminated if the
\nCompany and\/or an Employer adopts a plan within six months after the date that a
\nresolution terminating this Plan is adopted if the new plan (a “successor plan”)
\nprovides benefits to any of the Participants in this Plan that are substantially
\nequivalent to the benefits previously provided under this Plan. If such
\nsuccessor plan is adopted, a non-Vested Participant shall remain entitled to
\nbenefits under this Plan as if it had not been terminated.<\/p>\n
ARTICLE VIII MISCELLANEOUS PROVISIONS<\/p>\n
8.1 Information to be Furnished. Participants and Beneficiaries shall
\nprovide the Committee with such information and evidence, and shall sign such
\ndocuments, as may reasonably be requested from time to time for the purpose of
\nadministration of the Plan.<\/p>\n
8.2 Limitation on Participants’ Rights. Participation in the Plan shall not
\ngive any Employee the right to be retained in the Company’s employ, or any right
\nor interest in the benefits provided under the Plan other than as herein
\nprovided. The Company reserves the right to dismiss any Employee without any
\nliability for any claim either against the Plan, except to the extent herein
\nprovided, or against the Company.<\/p>\n
8.3 Governing Law. The Plan shall be construed, administered and enforced
\naccording to the laws of the state of California, except to the extent the law
\nof such state is superseded by ERISA or other federal laws.<\/p>\n
8.4 Receipt and Release. Any payment to any Beneficiary in accordance with
\nthe provisions of the Plan shall be, to the extent thereof, in full satisfaction
\nof all claims against the Committee and the Company; and the Company may require
\nsuch Beneficiary, as a condition precedent to such payment, to execute a receipt
\nand release to such effect.<\/p>\n
8.5 Nonassignability. None of the benefits, payments, proceeds or claims of
\nany Participant or Beneficiary shall be subject to any claim of any creditor of
\nany Participant or Beneficiary and, in particular, the same shall not be subject
\nto attachment or garnishment or<\/p>\n
8<\/p>\n
other legal process by any creditor of such person, nor shall any Participant or
\nBeneficiary have any right to alienate, anticipate, commute, pledge, encumber or
\nassign any of the benefits or payments or proceeds which may be payable under
\nthe Plan.<\/p>\n
8.6 Incompetency. Every person receiving or claiming benefits under the Plan
\nshall be conclusively presumed to be mentally competent and of age until the
\ndate on which the Committee receives a written notice, in a form and manner
\nacceptable to the Committee, that such person is incompetent or a minor, for
\nwhom a guardian or other person legally vested with the care of his person or
\nestate has been appointed; provided, however, that if the Committee shall find
\nthat any person to whom a benefit is payable under the Plan is unable to care
\nfor his affairs because of incompetency, or is a minor, any payment due (unless
\na prior claim therefore shall have been made by a duly appointed legal
\nrepresentative) may be paid to the spouse, a child, a parent or a brother or
\nsister, or to any person or institution deemed by the Committee to have incurred
\nexpense for such person otherwise entitled to payment. To the extent permitted
\nby law, any such payment so made shall be a complete discharge of liability
\ntherefor under the Plan.<\/p>\n
8.7 Benefits Solely from General Assets. The benefits provided by the Plan
\nshall be paid solely from the general assets of the Company. No Participant,
\nBeneficiary or other person shall have any claim against, right to, or security
\nor other interest in, any specific fund, account, insurance policy, or other
\nasset of the Company with respect to benefits under the Plan.<\/p>\n
8.8 Notices. Any notice or other communication required or permitted to be
\ngiven under the Plan shall be given in writing and shall be delivered by hand or
\nby registered or certified mail, postage prepaid, return receipt requested and
\nshall be delivered to the address set forth below or to such other addresses as
\nmay be designed by the parties in a notice given pursuant to this Section. If to
\nthe Company or the Committee:<\/p>\n
KB Home
\n Attn.:
\n Corporate Offices
\n 10990 Wilshire Blvd.
\n 7th Floor
\n Los Angeles, CA 90024<\/p>\n
If to the Participant or Beneficiary:
\n At the last known address of such Participant or
\n Beneficiary as reflected in the records of
\n the Company.<\/p>\n
Any notice or communication given in conformity with this Section shall be
\ndeemed effective when received by the addressee if delivered by hand and five
\ndays after mailing if mailed.<\/p>\n
9<\/p>\n
8.9 Tax Withholding. Any benefits payable to a Beneficiary under the Plan
\nshall be reduced to the extent of any withholding of the Beneficiary’s income
\ntaxes by the Company as required by law.<\/p>\n
ARTICLE IX ESTABLISHMENT OF TRUST AND SPECIAL PROVISIONS IN THE EVENT OF A
\nCHANGE IN CONTROL<\/p>\n
9.1 Establishment of the Trust. The Company shall establish a Trust as a
\npart of the Plan in order to implement and carry out the provisions of the Plan
\nand to finance the benefits under the Plan. The Company shall establish the
\nTrust by entering into a Trust Agreement with a Trustee selected by the
\nCommittee. The Trust shall be an irrevocable grantor trust within the meaning of
\nCode sections 671 through 677, and the Company and\/or each Employer shall be
\ntreated as the owner of the Trust in a manner consistent with the grantor trust
\nrules. It is intended that the Trust shall be in such form as may be necessary
\nfor the Plan to be deemed unfunded for purposes of the ERISA.<\/p>\n
The Trust shall maintain a Trust Fund. The administration and management
\nof the Trust Fund shall be set forth in the Trust Agreement, the terms of which
\nshall be consistent with the provisions of this Plan. Nothing in the Trust
\nAgreement shall impair the rights of the Participant and his Beneficiary nor
\nshall the agreement limit the obligations of the Company under this Plan.<\/p>\n
9.2 Trust Assets and Contributions. The Trust shall hold any insurance
\npolicies that are purchased on the lives of Participants under the Plan. The
\nCompany and\/or each Employer shall make contributions to the Trust in an amount
\nat least equal to that amount necessary to maintain such policies. The terms of
\nthe Trust shall provide that, absent a Change in Control, the death benefits
\nunder the policies shall be payable to the Trust.<\/p>\n
Notwithstanding the foregoing, within 30 days of a Change in Control,
\nthe Company and\/or Employer shall pay the additional contributions to the Trust
\nset forth in this section on behalf of each Participant in the Plan as of the
\ndate of the Change in Control. The additional contribution shall consist of two
\ncomponents, A and B, each of which shall be computed on a
\nParticipant-by-Participant basis.<\/p>\n
The A component for each Participant equals the premium payment on the
\nlife insurance policy maintained on the life of that Participant required in
\norder for the policy to be fully paid up. As used in this paragraph, the term
\n“fully paid up” means that, after the payment described in the preceding
\nsentence is paid as premium to the insurer, the value of the policy is such that
\nthe policy is projected to be able to pay at least the Basic Benefit applicable
\nto the Participant if the Participant dies at any time after the Change in
\nControl and during the period ending when the Participant would attain age 100.
\nFor this purpose the amount to be paid shall be calculated by assuming that the
\nfuture investment return on the policy will equal the guaranteed investment
\ndivision rate quoted by the insurer (or, if the insurer, does not have a
\n“guaranteed investment division rate,” the rate most analogous to such rate) at
\nthe time of the Change in Control.<\/p>\n
The B component is the “Gross-Up Payment.” It equals the amount, such
\nthat the net amount retained by the Employee from the Gross-Up Payment, after
\ndeducting any U.S. federal,<\/p>\n
10<\/p>\n
state, and\/or local income or payroll tax upon the Gross-up Payment, equals the
\ntotal of all federal, state, and\/or local income or payroll taxes imposed
\nbecause of the distribution of the policy described in this section. For the
\npurpose of the preceding sentence, “income taxes” shall also include excise
\ntaxes imposed on the Participant as a result of the distribution, including the
\nexcise tax under Section 4999 of the Code (or any successor thereto), if
\napplicable.<\/p>\n
The Participant may elect that the determination of the A and B
\ncomponent shall be made by a nationally recognized certified public accounting
\nfirm as may be designated by the Participant (the “Accounting Firm”) which shall
\nprovide detailed supporting calculations both to the Company and the Participant
\nwithin 15 business days of the receipt of notice from the Participant that there
\nhas been a Change in Control, or such earlier time as is requested by the
\nCompany. All fees and expenses of the Accounting Firm shall be borne solely by
\nthe Company. The necessary payments to the Trust shall be paid by the Company
\nand\/or Employer within five days of the receipt of the Accounting Firm’s
\ndetermination. Any determination by the Accounting Firm that is supported by its
\nunqualified opinion shall be binding upon the Company and the Participant. As a
\nresult of the uncertainty of the application of Section 4999 of the Code at the
\ntime of the initial determination by the Accounting Firm hereunder, it is
\npossible that payments will not have been made by the Company and\/or Employer
\nthat should have been made as part of the B component (“Underpayment”). In the
\nevent that the Participant is required to make any payment of excise tax under
\nSection 4999 that was not contemplated as part of the initial B component, the
\nAccounting Firm shall determine the amount of the Underpayment that has occurred
\nand any such Underpayment shall be promptly paid by the Company and\/or Employer
\nto or for the benefit of the Participant. Such underpayment shall be calculated
\nin a manner that takes into account any interest or penalties imposed upon the
\nParticipant and any taxes (calculated as described above) imposed upon the
\nUnderpayment, with the result that, after receipt of the Underpayment, the
\nParticipant is in the same position that he or she would have been in if the
\nfully paid up policy had been distributed free of any tax consequences.<\/p>\n
Immediately after receiving the A and B components, the trustee of the
\nTrust shall transmit the A component to the insurer and then cause the policy on
\nthe life of the Participant and an amount equal to the B component to be paid to
\nthe Participant. To the extent the B component is paid directly to the
\nParticipant, the obligation to pay such amount to the Trust shall be treated as
\ndischarged.<\/p>\n
In addition to the payments previously described in this section, the
\nTrust may provide for additional contributions to a reserve to fund any
\nnecessary expenses of the trustee, including expenses relating to the
\nenforcement of the right of the Trust to receive payments hereunder.<\/p>\n
9.3 Payment of Benefits. The benefits under this Plan shall be paid from the
\nTrust Fund except to the extent paid by the Company and\/or Employer and, to the
\nextent of such payment, shall discharge any obligation of the Company and\/or
\nEmployer hereunder. To the extent the payment of required benefits under the
\nPlan is not paid from the Trust, payment of benefits shall be made from the
\ngeneral assets of the Company.<\/p>\n
11<\/p>\n
TO RECORD THE ADOPTION OF THIS PLAN, the Company has caused this document to be
\nexecuted in its name as of the first day of November 1, 2001, by its officer
\nthereunto duly authorized.<\/p>\n
KB Home<\/p>\n
By: \/s\/ CORY F. COHEN
\n ——————————<\/p>\n
12<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7964],"corporate_contracts_industries":[9480],"corporate_contracts_types":[9540,9539],"class_list":["post-38724","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-kb-home","corporate_contracts_industries-construction__contractors","corporate_contracts_types-compensation__benefits","corporate_contracts_types-compensation"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/38724","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=38724"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=38724"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=38724"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=38724"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}