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EXHIBIT 10.18
KAUFMAN AND BROAD HOME CORPORATION
DIRECTORS' LEGACY PROGRAM
(amended January 1, 1999)
1. PURPOSE OF THE PROGRAM
The Kaufman and Broad Home Corporation Directors' Legacy 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 $1,000,000 ($500,000 for Directors retiring prior to
January 1, 1999) 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 $1,000,000 (or $500,000, if applicable) or up to five
organizations to
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receive donations aggregating $1,000,000 (or $500,000, if applicable).
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 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
For persons serving as Directors as of January 1, 1999, two separate
vesting schedules shall apply. For the initial $500,000 charitable award
(as adopted under the original Program dated January 1, 1995), a sixty
month vesting schedule applies in accordance with the following
schedule:
Months of Service Donation Amount
----------------- ---------------
Less than 12 0%
12-23 20%
24-35 40%
36-47 60%
48-59 80%
60 or more 100%
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For persons serving as Directors on January 1, 1995, Board service prior
to January 1, 1995 will be counted as vesting service for the original
$500,000 donation only.
As it relates to the increased donation amount of $500,000 (as adopted
under the amended Program dated January 1, 1999) a separate thirty-six
month vesting schedule shall apply which begins January 1, 1999, and
will be fully satisfied on January 1, 2002. The donation amount will be
determined in accordance with the following schedule:
Months of Service Donation Amount
----------------- ---------------
Less than 12 0%
12-23 40%
24-35 70%
36 or more 100%
For persons joining the Board of Directors after January 1, 1999, a
Director will be fully vested in the Program for the entire $1,000,000
charitable award upon the completion of sixty months of service as a
Director. The donation amount will be determined in accordance with the
following schedule:
Months of Service Donation Amount
----------------- ---------------
Less than 12 0%
12-23 20%
24-35 40%
36-47 60%
48-59 80%
60 or more 100%
Notwithstanding the preceding vesting schedules, a Director shall become
fully vested in the Program in the event he or she dies or becomes
disabled while serving as a Director, or in the event that he or she
retires at the recommended retirement age.
If a Director recommends more than one organization to receive aggregate
donations of $1,000,000 (or $500,000 for Directors retiring prior to
January 1,
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1999), and if the applicable vested donation amount is less that
$1,000,000, the actual donation amount will be divided among the
recommended organizations in the same proportions as the total donation
amount has been allocated among the organizations by the Director. For
example, if a Director recommends one organization to receive a donation
of $750,000 and another to receive a donation of $250,000, the
organization recommended to receive the $750,000 will receive 75% of the
vested donation amount and the other organization will receive 25% of
the vested donation amount.
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 1998 Employee Stock Plan, or any successor
plan thereto.
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10. ADMINISTRATION
The Program shall be administered by the Chairman of the Board and the
Nominating and Corporate Governance Committee of the Board of Directors
of the Company. The Chairman of the Board 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 Chairman of the Board 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.