Directors' Legacy Program - KB Home
KAUFMAN AND BROAD HOME CORPORATION
DIRECTORS' LEGACY PROGRAM
1. PURPOSE OF THE PROGRAM
The Kaufman and Broad Home Corporation Director's Charitable Award
Program (the "Program") allows each eligible Director of Kaufman and
Broad Home Corporation (the "Company") to recommend that the Company
make a donation of up to $500,000 to the eligible tax-exempt
organization(s) (the "Donee(s)") selected by the Director, with the
donation to be made in the Director's name in ten equal annual
installments, with the first installment to be made as soon as is
practicable after the Director's death. The purpose of the Program is
to recognize the interest of the Company and its Directors in
supporting worthy educational institutions and other charitable
organizations.
2. ELIGIBILITY
All persons who were serving as Directors of the Company as of January
1, 1995, shall be eligible to participate in the Program. All
Directors who join the Company's Board of Directors after that date
shall be immediately eligible to participate in the Program upon
election to the Board. However, the Nominating Committee of the Board
of Directors may, in its good faith discretion, deny participation to a
Director if it determines that it would not be in the Company's best
interest for the Director to participate, whether due to excessive cost
or other circumstances.
3. RECOMMENDATION OF DONATION
When a Director becomes eligible to participate in the Program, he or
she shall make a written recommendation to the Company, on a form
approved by the Company for this purpose, designating the Donee(s)
which he or she intends to be the recipient(s) of the Company donation
to be made on his or her behalf. A Director may revise or revoke any
such recommendation prior to this or her death by singing a new
recommendation form and submitting it to the Company.
4. AMOUNT AND TIMING OF DONATION
Each eligible Director may choose one organization to receive a Company
donation of $500,000 or up to five organizations to receive donations
aggregating $500,000. Each recommended organization must be
recommended to receive a donation of at least $100,000. The donation
will be made by the Company in ten equal annual installments, with the
first installment to be made as soon as is practicable after the
Director's death. If a Director recommends more than one organization
to receive a donation, each will receive a prorate portion of each
annual installment. Each annual installment payment will be
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divided among the recommended organizations in the same proportions as
the total donation amount has been allocated among the organizations by
the Director.
5. DONEES
In order to be eligible to receive a donation, a recommended
organization must initially, and at the time a donation is to be made,
qualify to receive tax deductible donations under the Internal Revenue
Code, and be reviewed and approved by the Nominating Committee of the
Board of Directors of the Company. A recommendation will be approved
unless it is determined, in the exercise of good faith judgment, that a
donation to the organization would be detrimental to the best interests
of the Company. A Director's private foundation is not eligible to
receive donations under the Program. If an organization recommended by
a Director ceases to qualify as a Donee, and if the Director does not
submit a form to change the recommendation before his or her death, the
amount recommended to be donated to the organization will instead be
donated to the Director's remaining recommended qualified Donee(s) on a
prorated basis. If none of the recommended organizations qualify, the
donation will be made to the organization(s) selected by the Company.
6. VESTING
The amount of the donation made on a Director's behalf will be
determined based on the Directors' months of Board service, in
accordance with the following vesting schedule:
Months of Service Donation Amount
----------------- ---------------
Less than 12 $ 0
12-23 100,000
24-35 200,000
36-47 300,000
48-59 400,000
60 or more 500,000
Notwithstanding this vesting schedule, a Director will be entitled to a
donation amount of $500,000 in the event (a) he or she dies or becomes
disabled while serving as a Director, (b) if not an employee of the
Company, he or she retires at the recommended retirement age for
non-employee directors, or (c) if an employee of the Company, he or she
retires on or after his or her normal retirement date.
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For persons who were serving as Directors as of January 1, 1995, Board
service prior to that date will count as vesting service. If a
Director recommends more than one organization to receive aggregate
donations of $500,000, and if the applicable vested donation amount is
less than $500,000, the actual donation amount will be divided among
those organizations in the same proportions as the total donation
amount has been allocated among the organizations by the Director.
7. FUNDING AND PROGRAM ASSETS
The Company may fund the Program or it may choose not to fund the
Program. If the Company elects to fund the Program in any manner,
neither the Directors nor their recommended Donee(s) shall have any
rights or interests in any assets of the Company identified for such
purpose. Nothing contained in the Program shall create, or be deemed
to create, a trust, actual or constructive, for the benefit of a
Director or any Donee recommended by a Director to receive a donation,
or shall give, or be deemed to give, any Director or recommended Donee
any interest in any assets of the Program or the Company. If the
Company elects to fund the Program through life insurance policies, a
participating Director agrees to cooperate and fulfill the enrollment
requirements necessary to obtain insurance on his or her life.
8. AMENDMENT OR TERMINATION
The Board of Directors of the Company may, at any time, without the
consent of the Directors participating in the Program, amend, suspend,
or terminate the Program.
9. CHANGE OF OWNERSHIP
Notwithstanding any contrary provisions in Section 7 or Section 8, if
there is a Change of Ownership of the Company, all participants serving
as Directors at the time of the Change of Ownership shall immediately
become vested in the Program, and the Program shall thereafter be
irrevocable with respect to all participants in the Program at the time
of the Change of Ownership. In addition, the Company shall immediately
create an irrevocable trust to make the anticipated Program donations,
and shall immediately transfer to the trust sufficient assets (which
may include insurance policies) to make all the Program donations in
respect to the individuals who were participants immediately before the
of Ownership. For the purpose of the Program, the term "Change of
Ownership" shall have the same meaning as is defined for the term in
Section 9 of the Company's 1988 Employee Stock Plan, or any successor
plan thereto.
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10. ADMINISTRATION
The Program shall be administered by the Nominating Committee of the
Board of Directors of the Company. The Committee shall have plenary
authority in its discretion, but subject to the provisions of the
Program, to prescribe, amend, and rescind rules, regulations and
procedures relating to the Program. The determinations of the
Committee on the foregoing matters shall be conclusive and binding on
all interested parties.
11. GOVERNING LAW
The Program shall be construed and enforced according to the laws of
California, and all provisions thereof shall be administered according
to the laws of said state.
12. EFFECTIVE DATE
The Program effective date is January 1, 1995. The recommendation of a
Director will not be effective until he or she completes the Program
enrollment requirements.