THE RYLAND GROUP, INC.
EXECUTIVE AND DIRECTOR DEFERRED
COMPENSATION PLAN
Amendment and Restatement Effective as of March 1, 1998
88
THE RYLAND GROUP, INC.
EXECUTIVE AND DIRECTOR DEFERRED COMPENSATION PLAN
Amendment and Restatement Effective as of March 1, 1998
TABLE OF CONTENTS
ARTICLE 1
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DEFINITIONS
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1.1 ACCOUNT.....................................................1
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1.2 BENEFICIARY.................................................1
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1.3 CODE........................................................1
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1.4 COMPENSATION................................................1
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1.5 COMPENSATION DEFERRAL ACCOUNT...............................2
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1.6 COMPENSATION DEFERRALS......................................2
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1.7 DESIGNATION DATE............................................2
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1.8 EFFECTIVE DATE..............................................2
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1.9 ELIGIBLE INDIVIDUAL.........................................2
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1.10 EMPLOYER....................................................2
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1.11 EMPLOYER CONTRIBUTION CREDIT ACCOUNT........................2
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1.12 EMPLOYER CONTRIBUTION CREDITS...............................2
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1.13 ENTRY DATE..................................................2
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1.14 PARTICIPANT.................................................2
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1.15 PARTICIPANT ENROLLMENT AND ELECTION FORM....................3
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1.16 PLAN........................................................3
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1.17 PLAN YEAR...................................................3
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1.18 TRUST.......................................................3
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1.19 TRUSTEE.....................................................3
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1.20 VALUATION DATE..............................................3
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ARTICLE 2
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ELIGIBILITY AND PARTICIPATION
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2.1 REQUIREMENTS................................................3
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2.2 RE-EMPLOYMENT, ETC..........................................3
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2.3 CHANGE OF EMPLOYMENT CATEGORY...............................3
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ARTICLE 3
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CONTRIBUTIONS AND CREDITS
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3.1 EMPLOYER CONTRIBUTION CREDITS...............................4
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3.2 PARTICIPANT COMPENSATION DEFERRALS..........................5
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3.3 CONTRIBUTIONS TO THE TRUST..................................6
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ARTICLE 4
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ALLOCATION OF FUNDS
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4.1 ALLOCATION OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS.........7
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4.2 ACCOUNTING FOR DISTRIBUTIONS................................7
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4.3 SEPARATE ACCOUNTS...........................................7
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4.4 INTERIM VALUATIONS..........................................7
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4.5 DEEMED INVESTMENT DIRECTIONS OF PARTICIPANTS................8
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4.6 EXPENSES....................................................8
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4.7 TAXES.......................................................9
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ARTICLE 5
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ENTITLEMENT TO BENEFITS
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5.1 FIXED PAYMENT DATES; TERMINATION OF EMPLOYMENT..............9
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5.2 HARDSHIP DISTRIBUTIONS......................................9
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5.3 APPLICATION TO TRUSTEE.....................................10
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5.4 RE-EMPLOYMENT OF RECIPIENT, ETC............................10
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ARTICLE 6
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DISTRIBUTION OF BENEFITS
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6.1 AMOUNT.....................................................10
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6.2 METHOD OF PAYMENT..........................................10
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6.3 DEATH BENEFITS.............................................11
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6.4 WITHHOLDING................................................11
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ARTICLE 7
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BENEFICIARIES; PARTICIPANT DATA
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7.1 DESIGNATION OF BENEFICIARIES...............................11
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7.2 INFORMATION TO BE FURNISHED BY PARTICIPANTS
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AND BENEFICIARIES; INABILITY TO LOCATE
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PARTICIPANTS OR BENEFICIARIES..............................12
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ARTICLE 8
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ADMINISTRATION
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8.1 ADMINISTRATIVE AUTHORITY...................................12
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8.2 UNIFORMITY OF DISCRETIONARY ACTS...........................13
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8.3 LITIGATION.................................................13
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8.4 CLAIMS PROCEDURE...........................................13
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ARTICLE 9
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AMENDMENT
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9.1 RIGHT TO AMEND.............................................15
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9.2 AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN.......15
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ARTICLE 10
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TERMINATION
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10.1 EMPLOYER'S RIGHT TO TERMINATE OR SUSPEND PLAN..............15
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10.2 AUTOMATIC TERMINATION OF PLAN..............................15
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10.3 SUSPENSION OF DEFERRALS....................................15
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10.4 ALLOCATION AND DISTRIBUTION................................15
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10.5 SUCCESSOR TO EMPLOYER......................................16
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ARTICLE 11
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THE TRUST
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11.1 ESTABLISHMENT OF TRUST.....................................16
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ARTICLE 12
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MISCELLANEOUS
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12.1 LIMITATIONS ON LIABILITY OF EMPLOYER.......................16
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12.2 CONSTRUCTION...............................................16
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12.3 SPENDTHRIFT PROVISION......................................17
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THE RYLAND GROUP, INC.
EXECUTIVE AND DIRECTOR DEFERRED COMPENSATION PLAN
Amendment and Restatement Effective as of March 1, 1998
RECITALS
--------
This Amendment and Restatement of The Ryland Group, Inc. Executive and
Director Deferred Compensation Plan (the "Plan"), is adopted by The Ryland
Group, Inc. (the "Employer"), effective as of March 1, 1998. The Plan is
maintained for the benefit of certain of the Employer's executive employees and
Directors. When originally adopted on March 1, 1997, the Plan constituted an
amendment and restatement of each of the following plans, all of which were
merged into this Plan: The Ryland Group, Inc. Deferred Compensation Savings
Plan; The Ryland Group, Inc. Salary Deferral Plan; and The Ryland Group, Inc.
Unfunded Deferred Director Fee Plan.
The purpose of the Plan is to offer participants an opportunity to elect
to defer the receipt of compensation in order to provide deferred compensation
benefits taxable pursuant to section 451 of the Internal Revenue Code of 1986,
as amended (the "Code"), and to provide a deferred compensation vehicle to which
the Employer may credit certain amounts on behalf of participants. The Plan is
intended to be a "top-hat" plan under sections 201(2), 301(a)(3) and 401(a)(1)
of the Employee Retirement Income Security Act of 1974 ("ERISA").
The purpose of this Amendment and Restatement of the Plan is to reflect in
the Plan certain amendments to the Plan adopted since the Plan's original
effective date.
Accordingly, the following Amendment and Restatement of the Plan is
adopted.
ARTICLE 1
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DEFINITIONS
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1.1 ACCOUNT means the balance credited to a Participant's or Beneficiary's
Plan account, including contribution credits and deemed income, gains and losses
credited thereto. A Participant's or Beneficiary's Account shall be determined
as of the date of reference.
1.2 BENEFICIARY means any person or person so designated in accordance
with the provisions of Article 7.
1.3 CODE means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended from time to time.
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1.4 COMPENSATION means the total current cash and, in the case of a member
of the Board of Directors, Stock Unit Plan remuneration and retainer fees
payable in common stock of the Employer paid by the Employer to an Eligible
Individual with respect to his or her service for the Employer.
1.5 COMPENSATION DEFERRAL ACCOUNT is defined in Section 3.2.
1.6 COMPENSATION DEFERRALS is defined in Section 3.2.
1.7 DESIGNATION DATE means the date or dates as of which a designation of
deemed investment directions by an individual pursuant to Section 4.5, or any
change in a prior designation of deemed investment directions by an individual
pursuant to Section 4.5, shall become effective. The Designation Dates in any
Plan Year shall be designated by the Employer.
1.8 EFFECTIVE DATE means the general effective date of the Plan, which
shall be March 1, 1997.
1.9 ELIGIBLE INDIVIDUAL means, for any Plan Year (or applicable portion
thereof), a person who is determined by the Employer, or its designee, to be a
member of a select group of management or highly compensated employees of the
Employer or a member of the Employer's Board of Directors and who is designated
by the Employer, or its designee, to be an Eligible Individual under the Plan.
By each December 31, the Employer, or its designee, shall notify those
individuals, if any, who will be Eligible Individuals for the next Plan Year. If
the Employer, or its designee, determines that an individual first becomes an
Eligible Individual during a Plan Year, the Employer, or its designee, shall
notify such individual of its determination and of the date during the Plan Year
on which the individual shall first become an Eligible Individual.
1.10 EMPLOYER means The Ryland Group, Inc. and its
successors and assigns unless otherwise herein provided, or any
other corporation or business organization which, with the
consent of The Ryland Group, Inc., or its successors or assigns,
assumes the Employer's obligations hereunder, or any other
corporation or business organization which agrees, with the
consent of The Ryland Group, Inc., to become a party to the Plan.
1.11 EMPLOYER CONTRIBUTION CREDIT ACCOUNT is defined in Section 3.1.
1.12 EMPLOYER CONTRIBUTION CREDITS is defined in Section 3.1.
1.13 ENTRY DATE with respect to an individual means the first day of the
pay period following the date on which the individual first becomes an Eligible
Individual.
1.14 PARTICIPANT means any person so designated in accordance with the
provisions of Article 2, including, where appropriate according to the context
of the Plan, any former employee or former member of the Board of Directors who
is or may become (or whose Beneficiaries may become) eligible to receive a
benefit under the Plan.
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1.15 PARTICIPANT ENROLLMENT AND ELECTION FORM means the form or forms on
which a Participant elects to defer Compensation hereunder and/or on which the
Participant makes certain other designations as required thereon.
1.16 PLAN means this The Ryland Group, Inc. Executive and
Director Deferred Compensation Plan, an amendment, restatement
and consolidation of The Ryland Group, Inc. Deferred Compensation
Savings Plan, The Ryland Group, Inc. Salary Deferral Plan, and
The Ryland Group, Inc. Unfunded Deferred Director Fee Plan, as
amended from time to time.
1.17 PLAN YEAR means the twelve (12) month period ending on the December
31 of each year during which the Plan is in effect.
1.18 TRUST means the Trust established pursuant to Article 11.
1.19 TRUSTEE means the trustee of the Trust established pursuant
to Article 11.
1.20 VALUATION DATE means the last day of each Plan Year and any other
date that the Employer, in its sole discretion, designates as a Valuation Date.
ARTICLE 2
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ELIGIBILITY AND PARTICIPATION
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2.1 REQUIREMENTS. Every Eligible Individual on the Effective Date shall be
eligible to become or continue as a Participant on the Effective Date. Every
other Eligible Individual shall be eligible to become a Participant on the first
Entry Date occurring on or after the date on which he or she becomes an Eligible
Individual. No individual shall become a Participant, however, if he or she is
not an Eligible Individual on the date his or her participation is to begin.
Participation in the Participant Compensation Deferral feature of the
Plan is voluntary. In order to participate in the Participant Compensation
Deferral feature of the Plan, an otherwise Eligible Individual must make written
application in such manner as may be required by Section 3.2 and by the Employer
and must agree to make Compensation Deferrals as provided in Article 3.
2.2 RE-EMPLOYMENT, ETC. If a Participant whose employment or Director
status with the Employer is terminated is subsequently re-employed by or
subsequently becomes a Director of the Employer, he or she shall become a
Participant in accordance with the provisions of Section 2.1.
2.3 CHANGE OF EMPLOYMENT CATEGORY. During any period in which a Participant
remains in the employ of the Employer, but ceases to be an Eligible Individual,
he or she shall not be eligible to make Compensation Deferrals hereunder.
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ARTICLE 3
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CONTRIBUTIONS AND CREDITS
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3.1 EMPLOYER CONTRIBUTION CREDITS. There shall be established and
maintained a separate Employer Contribution Credit Account in the name of each
Participant who is an employee of the Employer. Such Account shall be credited
or debited, as applicable, with (a) amounts equal to the Employer's Contribution
Credits credited to that Account, if any; (b) any deemed earnings and losses (to
the extent realized, based upon deemed fair market value of the Account's deemed
assets) allocated to that Account; and (c) expenses and/or taxes charged to that
Account.
The Employer's Contribution Credits attributable to a Participant who
is an employee of the Employer shall consist of the following:
(i) matching contribution amounts for each pay period (but contributed
with a frequency determined by the Employer) equal to the
Participant's Participant Compensation Deferral amounts for that pay
period, provided however that the total Employer matching
contribution amounts under the Employer's 401(k) plan and this Plan
for any pay period shall not exceed six percent (6%) of the
Participant's Compensation from the Employer for that pay period; and
(ii) for a particular year, any discretionary Employer contribution
amounts that the Employer wishes to contribute, but is prohibited
under applicable law from contributing, as discretionary Employer
contribution amounts, under the Employer's 401(k) plan.
Notwithstanding the foregoing, any matching contributions credited to
a Participant's Account with respect to any pay period in excess of the limit
provided in paragraph (i) above, as determined by the Employer in good faith,
shall be returned to the Employer
With respect to service credited prior to January 1, 1998, a
Participant shall become vested in amounts credited to his or her Employer
Contribution Account pursuant to the following vesting schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 2 0%
2 25%
3 50%
4 75%
5 100%
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With respect to service credited on or after January 1, 1998, a
Participant shall become vested in amounts credited to his or her Employer
Contribution Credit Account pursuant to the following vesting schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 100%
For purposes of the foregoing, each Participant will be credited with one
Year of Service for each twelve (12) month period of his employment with, or
service as a member of the Board of Directors of, the Employer.
Notwithstanding the foregoing, a Participant will become immediately
vested in amounts credited to his or her Employer Contribution Account upon his
or her death, his or her total and permanent disability (as determined by the
Employer, in its discretion), his or her retirement from service to the Employer
on or after age sixty-five (65), or a "Change in Control" of the Employer. For
this purpose, a Change in Control shall occur upon any of the following:
(i) the acquisition by any person, other than the Employer or any
employee benefit plan(s) of the Employer, of beneficial ownership of
twenty percent (20%) or more of the combined voting power of the
Employer's then outstanding voting securities;
(ii) the first purchase under a tender offer or exchange offer, other than
an offer by the Employer or any employee benefit plan(s) of the
Employer, pursuant to which shares of common stock of the Employer
have been purchased;
(iii)during any period of two (2) consecutive years, individuals who, at
the beginning of such period constitute the Board of Directors of the
Employer cease for any reason to constitute at least a majority
thereof, unless the election or the nomination for the election by
stockholders of the Employer of each new Director was approved by a
vote of at least two-thirds (2/3rds) of the Directors then still in
office who were Directors at the beginning of the period; or
(iv) approval by stockholders of the Employer of a merger, consolidation,
liquidation or dissolution of the Employer, or the sale of all or
substantially all of the assets of the Employer.
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3.2 PARTICIPANT COMPENSATION DEFERRALS. In accordance with rules
established by the Employer, a Participant may elect to defer Compensation which
is not yet payable and which would otherwise be paid to the Participant. Amounts
so deferred will be considered a Participant's "Compensation Deferrals".
Ordinarily, a Participant shall make such an election with respect to a coming
twelve (12) month Plan Year during the period beginning on the December 1 and
ending on the December 31 of the prior Plan Year, or during such other period
established by the Employer.
Compensation Deferrals shall be made through regular payroll or
retainer/meeting fee deductions and/or through an election by the Participant to
defer a bonus payment not yet payable to him or her at the time of the election.
The Participant may reduce his or her regular payroll or retainer/meeting fee
deduction Compensation Deferral amount for a particular year as of, and by
written notice delivered to the Employer at least thirty (30) days prior to, the
beginning of any regular payroll period, with such reduction being first
effective for Compensation to be earned in that payroll period. In the case of
bonus payment deferrals, the Participant may reduce his or her bonus payment
deferral percentage for a particular year by giving notice to the Employer of
the reduced bonus payment Compensation Deferral amount prior to the date the
applicable bonus is first due to be paid.
Once made, a Compensation Deferral regular payroll or
retainer/meeting fee deduction election shall continue in force indefinitely,
until reduced by the Participant as aforesaid or until changed by the
Participant for a coming year on a subsequent Participant Enrollment and
Election Form provided by the Employer. A bonus payment reduction election, or a
reduction thereof pursuant to the foregoing, shall continue in force only for
the Plan Year for which the election is first effective.
Compensation Deferrals shall be deducted by the Employer from the pay
of a deferring Participant. There shall be established and maintained by the
Employer a separate Compensation Deferral Account in the name of each
Participant to which shall be credited or debited: (a) amounts equal to the
Participant's Compensation Deferrals; (b) amounts equal to any deemed earnings
or losses (to the extent realized, based upon deemed fair market value of the
Account's deemed assets) attributable or allocable thereto; and (c) expenses
and/or taxes charged to that Account.
A Participant shall at all times be 100% vested in amounts credited
to his or her Participant Compensation Deferral Account.
3.3 CONTRIBUTIONS TO THE TRUST. Amounts shall be contributed by the
Employer to the Trust maintained under Section 11.1 equal to the amounts
required to be credited to the Participant's Account under Sections 3.1 and 3.2.
The Employer shall make a good faith effort to contribute these amounts to the
Trust as soon as is practicable after such amounts are determined. Employer
contributions to the Trust shall be made in cash, Stock Unit Plan credits, or in
common stock of the Employer.
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ARTICLE 4
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ALLOCATION OF FUNDS
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4.1 ALLOCATION OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS. Subject to
Section 4.5, each Participant shall have the right to direct the Employer as to
how amounts in his or her Plan Account shall be deemed to be invested. Subject
to such limitations as may from time to time be required by law, imposed by the
Employer or the Trustee or contained elsewhere in the Plan, and subject to such
operating rules and procedures as may be imposed from time to time by the
Employer, prior to the date on which a direction will become effective, the
Participant shall have the right to direct the Employer as to how amounts in his
or her Account shall be deemed to be invested.
The Employer shall direct the Trustee to invest the account
maintained in the Trust on behalf of the Participant pursuant to the deemed
investment directions the Employer properly has received from the Participant.
The value of the Participant's Account shall be equal to the value of the
account maintained under the Trust on behalf of the Participant. As of each
valuation date of the Trust, the Participant's Account will be credited or
debited to reflect the Participant's deemed investments of the Trust.
The Participant's Plan Account will be credited or debited with the
increase or decrease in the realizable net asset value or credited interest, as
applicable, of the designated deemed investments, as follows. As of each
Valuation Date, an amount equal to the net increase or decrease in realizable
net asset value or credited interest, as applicable (as determined by the
Employer or the Trustee, as applicable), of each deemed investment option within
the Account since the preceding Valuation Date shall be allocated among all
Participants' Accounts deemed to be invested in that investment option in
accordance with the ratio which the portion of the Account of each Participant
which is deemed to be invested within that investment option, determined as
provided herein, bears to the aggregate of all amounts deemed to be invested
within that investment option.
4.2 ACCOUNTING FOR DISTRIBUTIONS. As of the date of any distribution
hereunder, the distribution made hereunder to the Participant or his or her
Beneficiary or Beneficiaries shall be charged to such Participant's Account.
Such amounts shall be charged on a pro rata basis against the investments of the
Trust in which the Participant's Account is deemed to be invested.
4.3 SEPARATE ACCOUNTS. A separate account under the Plan shall be
established and maintained hereunder to reflect the Account for each Participant
with sub-accounts to show separately the applicable deemed investments of the
Account.
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4.4 INTERIM VALUATIONS. If it is determined by the Employer that the value
of a Participant's Account as of any date on which distributions are to be made
differs materially from the value of the Participant's Account on the prior
Valuation Date upon which the distribution is to be based, the Employer, in its
discretion, shall have the right to designate any date in the interim as a
Valuation Date for the purpose of revaluing the Participant's Account so that
the Account will, prior to the distribution, reflect its share of such material
difference in value.
4.5 DEEMED INVESTMENT DIRECTIONS OF PARTICIPANTS. Subject to such
limitations as may from time to time be required by law, imposed by the Employer
or the Trustee or contained elsewhere in the Plan, and subject to such operating
rules and procedures as may be imposed from time to time by the Employer, prior
to and effective for each Designation Date, each Participant may communicate to
the Employer a direction as to how his or her Plan Accounts should be deemed to
be invested among such categories of deemed investments as may be made available
by the Employer hereunder. Such direction shall designate the percentage (in any
whole percent multiples) of the Participant's Plan Account which is requested to
be deemed to be invested in such categories of deemed investments.
Notwithstanding any contrary provision of the Plan, Participants shall not have
the right to direct the deemed investment of deferrals of director retainer fees
that otherwise would have been payable in common stock of the Employer. Rather,
deferrals of director retainer fees that otherwise would have been payable in
common stock of the Employer shall at all times be deemed to be invested in
common stock of the Employer.
An election concerning deemed investment choices shall continue
indefinitely until changed by the Participant in a manner specified by the
Employer. If the Employer receives an initial or revised deemed investment
direction which it deems to be incomplete, unclear or improper, the
Participant's investment direction then in effect shall remain in effect (or, in
the case of a deficiency in an initial deemed investment direction, the
Participant shall be deemed to have filed no deemed investment direction) until
the next Designation Date, unless the Employer provides for, and permits the
application of, corrective action prior thereto.
If the Employer possesses (or is deemed to possess as provided above)
at any time directions as to the deemed investment of less than all of a
Participant's Account, the Participant shall be deemed to have directed that the
undesignated portion of the Account be deemed to be invested in a money market,
fixed income, stable value or similar fund made available under the Plan as
determined by the Employer in its discretion.
Each Participant hereunder, as a condition to his or her
participation hereunder, agrees to indemnify and hold harmless the Employer and
its agents and representatives from any losses or damages of any kind relating
to the deemed investment of the Participant's Account hereunder.
Each reference in this Section to a Participant shall be deemed to
include, where applicable, a reference to a Beneficiary.
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4.6 EXPENSES. Expenses, including Trustee fees, allocable to the
administration or operation of an Account maintained under the Plan shall be
paid by the Employer unless, in the discretion of the Employer, the Employer
elects to charge such expenses, or any portion thereof, against the appropriate
Participant's Account or Participants' Accounts. If an expense, or any portion
thereof, is charged against a Participant's Account, at the discretion of the
Employer, such expense, or portion thereof, either (i) will reduce the
contribution to the Trust under Section 3.3 next due to be made by the Employer
in respect of the Account, or (ii) will be paid from the Trust to the Employer
out of assets of the Trust corresponding to the Participant's Account hereunder.
4.7 TAXES. Any taxes generated by earnings in an Account, as determined by
the Employer, shall be paid by the Employer unless, in the discretion of the
Employer, the Employer elects to charge such taxes against the appropriate
Participant's Account or Participants' Accounts. If a tax amount is charged
against a Participant's Account, at the discretion of the Employer, such expense
either (i) will reduce the contribution to the Trust under Section 3.3 next due
to be made by the Employer in respect of the Account, or (ii) will be paid from
the Trust to the Employer out of assets of the Trust corresponding to the
Participant's Account.
ARTICLE 5
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ENTITLEMENT TO BENEFITS
-----------------------
5.1 FIXED PAYMENT DATES; TERMINATION OF EMPLOYMENT. On his or her
Participant Enrollment and Election Form, a Participant may select a fixed
payment date for the payment or commencement of payment of his or her vested
Account, which will be valued and payable according to the provisions of Article
6. Such payment dates may be extended to later dates so long as elections to so
extend are made by the Participant prior to the then applicable fixed date. Such
payment dates may not be accelerated.
Alternatively, on his or her Participant Enrollment and Election
Form, a Participant may select payment or commencement of payment of his or her
vested Account at his or her termination of employment or Director status with
the Employer, or at the earlier of a fixed payment date or his or her
termination of employment or Director status with the Employer. In either of
these cases, the extension and non-acceleration rules discussed above shall
apply to such fixed payment date and/or termination of employment date, as
applicable.
Any fixed payment date elected by a Participant as provided above
must be no earlier than the January 1 of the third calendar year after the
calendar year in which the election is made. If a Participant does not select a
payment date or dates as aforesaid, his or her vested account shall be
distributed or commence to be distributed, as provided in Article 6, at the
termination of his or her employment or Director status with the Employer.
5.2 HARDSHIP DISTRIBUTIONS. In the event of financial hardship of the
Participant, as hereinafter defined, the Participant may apply to the Employer
for the distribution of all or any part of his or her vested Account. The
Employer shall consider the circumstances of each such case, and the best
interests of the Participant and his or her family, and shall have the right, in
its sole discretion, if applicable, to allow such distribution, or, if
applicable, to direct a distribution of part of the amount requested, or to
refuse to allow any distribution. Upon a finding of financial hardship, the
Employer shall make the appropriate distribution to the Participant from amounts
held by the Employer in respect of the Participant's vested Account. In no event
shall the aggregate amount of the distribution exceed either the full value of
the Participant's vested Account or the amount determined by the Employer to be
necessary to alleviate the Participant's financial hardship (which financial
hardship may be considered to include any taxes due because of the distribution
occurring because of this Section), and which is not reasonably available from
other resources of the Participant. For purposes of this Section, the value of
the Participant's vested Account shall be determined as of the date of the
distribution.
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"Financial hardship" means (a) a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Code section 152(a)) of the
Participant, (b) loss of the Participant's property due to casualty, or (c)
other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant, each as determined to exist by
the Employer. A distribution may be made under this Section only with the
consent of the Employer.
5.3 APPLICATION TO TRUSTEE. On the date or dates on which a Participant or
Beneficiary is entitled to payment under Section 5.1, the Participant or
Beneficiary need not make application for payment to the Employer, but instead
may make application for payment directly to the Trustee who shall pay the
Participant or Beneficiary the appropriate amount directly from the Trust
without the consent of the Employer. The Trustee shall report the amount of each
such payment, and any withholding thereon, to the Employer.
5.4 RE-EMPLOYMENT OF RECIPIENT, ETC.. If a Participant receiving
installment distributions pursuant to Section 6.2 is re-employed by the Employer
(or becomes a member of the Employer's Board of Directors), the remaining
distributions due to the Participant shall be suspended until such time as the
Participant (or his or her Beneficiary) once again becomes eligible for benefits
under Section 5.1 or 5.2, at which time such distribution shall commence,
subject to the limitations and conditions contained in this Plan.
ARTICLE 6
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DISTRIBUTION OF BENEFITS
------------------------
6.1 AMOUNT. A Participant (or his or her Beneficiary) shall become
entitled to receive, on or about the date or dates selected by the Participant
on his or her Participant Enrollment and Election Form or, if none, on or about
the date of the Participant's termination of employment or Director status with
the Employer (or earlier as provided in Article 5), a distribution in an
aggregate amount equal to the Participant's vested Account. Any payment due
hereunder from the Trust which is not paid by the Trust for any reason will be
paid by the Employer from its general assets.
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6.2 METHOD OF PAYMENT.
(a) Cash Or In-Kind Payments. Payments under the Plan shall be made
in cash or in-kind, as elected by the Participant, as permitted by the Employer
and the Trustee in their sole and absolute discretion and subject to applicable
restrictions on transfer as may be applicable legally or contractually.
Notwithstanding the foregoing, payments in respect of Stock Unit Plan credits
that are deemed to be invested in common stock of the Employer, that are held in
a Participant's Account, will be paid in the form of Employer common stock
(except as otherwise permitted by the Employer).
(b) Timing and Manner of Payment. In the case of distributions to a
Participant or his or her Beneficiary by virtue of an entitlement pursuant to
Sections 5.1, an aggregate amount equal to the Participant's vested Account will
be paid by the Trust or the Employer, as provided in Section 6.1, in a lump sum
or in five (5) or ten (10) substantially equal annual installments (adjusted for
gains and losses), as selected by the Participant as provided in Article 5.
If a Participant fails to designate properly the manner of payment of
the Participant's benefit under the Plan, such payment will be in a lump sum.
If the whole or any part of a payment hereunder is to be in
installments, the total to be so paid shall continue to be deemed to be invested
pursuant to Sections 4.1 and 4.5 under such procedures as the Employer may
establish, in which case any deemed income, gain, loss or expense or tax
allocable thereto (as determined by the Trustee, in its discretion) shall be
reflected in the installment payments, in such equitable manner as the Trustee
shall determine.
6.3 DEATH BENEFITS. If a Participant dies before terminating his or her
employment or Director status with the Employer and before the commencement of
payments to the Participant hereunder, the entire value of the Participant's
Account shall be paid, at the time(s) selected by the Participant under Article
5 and in the manner provided in Section 6.2, to the person or persons designated
in accordance with Section 7.1.
Upon the death of a Participant after payments hereunder have begun
but before he or she has received all payments to which he or she is entitled
under the Plan, the remaining benefit payments shall be paid to the person or
persons designated in accordance with Section 7.1, in the manner in which such
benefits were payable to the Participant.
6.4 WITHHOLDING. All distributions under the Plan are subject to
any applicable tax withholding, as determined by the Employer in its discretion.
ARTICLE 7
---------
BENEFICIARIES; PARTICIPANT DATA
-------------------------------
7.1 DESIGNATION OF BENEFICIARIES. Each Participant from time to time may
designate any person or persons (who may be named contingently or successively)
to receive such benefits as may be payable under the Plan upon or after the
Participant's death, and such designation may be changed from time to time by
the Participant by filing a new designation. Each designation will revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Employer, and will be effective only when filed in writing with the Employer
during the Participant's lifetime.
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In the absence of a valid Beneficiary designation, or if, at the time
any benefit payment is due to a Beneficiary, there is no living Beneficiary
validly named by the Participant, the Employer shall pay any such benefit
payment to the Participant's spouse, if then living, but otherwise to the
Participant's then living descendants, if any, per stirpes, but, if none, to the
Participant's estate. In determining the existence or identity of anyone
entitled to a benefit payment, the Employer may rely conclusively upon
information supplied by the Participant's personal representative, executor or
administrator.
If a question arises as to the existence or identity of anyone
entitled to receive a benefit payment as aforesaid, or if a dispute arises with
respect to any such payment, then, notwithstanding the foregoing, the Employer,
in its sole discretion, may distribute such payment to the Participant's estate
without liability for any tax or other consequences which might flow therefrom,
or may take such other action as the Employer deems to be appropriate.
7.2 INFORMATION TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES;
INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES. Any communication, statement
or notice addressed to a Participant or to a Beneficiary at his or her last post
office address as shown on the Employer's records shall be binding on the
Participant or Beneficiary for all purposes of the Plan. The Employer shall not
be obliged to search for any Participant or Beneficiary beyond the sending of a
registered letter to such last known address. If the Employer notifies any
Participant or Beneficiary that he or she is entitled to an amount under the
Plan and the Participant or Beneficiary fails to claim such amount or make his
or her location known to the Employer within three (3) years thereafter, then,
except as otherwise required by law, if the location of one or more of the next
of kin of the Participant is known to the Employer, the Employer may direct
distribution of such amount to any one or more or all of such next of kin, and
in such proportions as the Employer determines. If the location of none of the
foregoing persons can be determined, the Employer shall have the right to direct
that the amount payable shall be deemed to be a forfeiture, except that the
dollar amount of the forfeiture, unadjusted for deemed gains or losses in the
interim, shall be paid by the Employer if a claim for the benefit subsequently
is made by the Participant or the Beneficiary to whom it was payable. If a
benefit payable to an unlocated Participant or Beneficiary is subject to escheat
pursuant to applicable state law, the Employer shall not be liable to any person
for any payment made in accordance with such law.
ARTICLE 8
---------
ADMINISTRATION
--------------
8.1 ADMINISTRATIVE AUTHORITY. Except as otherwise specifically provided
herein, the Employer, acting through its Board of Directors or the designee or
designees thereof, shall have the sole responsibility for and the sole control
of the operation and administration of the Plan, and shall have the power and
authority to take all action and to make all decisions and interpretations which
may be necessary or appropriate in order to administer and operate the Plan,
including, without limiting the generality of the foregoing, the power, duty and
responsibility to:
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(a) Resolve and determine all disputes or questions arising under
the Plan, and to remedy any ambiguities, inconsistencies or omissions in the
Plan.
(b) Adopt such rules of procedure and regulations as in its opinion
may be necessary for the proper and efficient administration of the Plan and as
are consistent with the Plan.
(c) Implement the Plan in accordance with its terms and the rules
and regulations adopted as above.
(d) Make determinations with respect to the eligibility of any
Eligible Individual as a Participant and make determinations concerning the
crediting of Plan Accounts.
(e) Appoint any persons or firms, or otherwise act to secure
specialized advice or assistance, as it deems necessary or desirable in
connection with the administration and operation of the Plan, and the Employer
shall be entitled to rely conclusively upon, and shall be fully protected in any
action or omission taken by it in good faith reliance upon, the advice or
opinion of such firms or persons. The Employer shall have the power and
authority to delegate from time to time by written instrument all or any part of
its duties, powers or responsibilities under the Plan, both ministerial and
discretionary, as it deems appropriate, to any person or committee, and in the
same manner to revoke any such delegation of duties, powers or responsibilities.
Any action of such person or committee in the exercise of such delegated duties,
powers or responsibilities shall have the same force and effect for all purposes
hereunder as if such action had been taken by the Employer. Further, the
Employer may authorize one or more persons to execute any certificate or
document on behalf of the Employer, in which event any person notified by the
Employer of such authorization shall be entitled to accept and conclusively rely
upon any such certificate or document executed by such person as representing
action by the Employer until such notified person shall have been notified of
the revocation of such authority.
8.2 UNIFORMITY OF DISCRETIONARY ACTS. Whenever in the administration or
operation of the Plan discretionary actions by the Employer are required or
permitted, such actions shall be consistently and uniformly applied to all
persons similarly situated, and no such action shall be taken which shall
discriminate in favor of any particular person or group of persons.
8.3 LITIGATION. Except as may be otherwise required by law, in any action
or judicial proceeding affecting the Plan, no Participant or Beneficiary shall
be entitled to any notice or service of process, and any final judgment entered
in such action shall be binding on all persons interested in, or claiming under,
the Plan.
8.4 CLAIMS PROCEDURE. Any person claiming a benefit under the Plan (a
"Claimant") shall present the claim, in writing, to the Employer or the Trustee,
and the Employer or the Trustee shall respond in writing. If the claim is
denied, the written notice of denial shall state, in a manner calculated to be
understood by the Claimant:
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(a) The specific reason or reasons for the denial, with specific
references to the Plan provisions on which the denial is based;
(b) A description of any additional material or information
necessary for the Claimant to perfect his or her claim and an explanation of why
such material or information is necessary; and
(c) An explanation of the Plan's claims review procedure.
The written notice denying or granting the Claimant's claim shall be
provided to the Claimant within ninety (90) days after the Employer's or
Trustee's receipt of the claim, unless special circumstances require an
extension of time for processing the claim. If such an extension is required,
written notice of the extension shall be furnished by the Employer or Trustee to
the Claimant within the initial ninety (90) day period and in no event shall
such an extension exceed a period of ninety (90) days from the end of the
initial ninety (90) day period. Any extension notice shall indicate the special
circumstances requiring the extension and the date on which the Employer or
Trustee expects to render a decision on the claim. Any claim not granted or
denied within the period noted above shall be deemed to have been denied.
Any Claimant whose claim is denied, or deemed to have been denied
under the preceding sentence (or such Claimant's authorized representative),
may, within sixty (60) days after the Claimant's receipt of notice of the
denial, or after the date of the deemed denial, request a review of the denial
by notice given, in writing, to the Employer or Trustee. Upon such a request for
review, the claim shall be reviewed by the Employer or Trustee (or its
designated representative) which may, but shall not be required to, grant the
Claimant a hearing. In connection with the review, the Claimant may have
representation, may examine pertinent documents, and may submit issues and
comments in writing.
The decision on review normally shall be made within sixty (60) days
of the Employer's receipt of the request for review. If an extension of time is
required due to special circumstances, the Claimant shall be notified, in
writing, by the Employer or Trustee, and the time limit for the decision on
review shall be extended to one hundred twenty (120) days. The decision on
review shall be in writing and shall state, in a manner calculated to be
understood by the Claimant, the specific reasons for the decision and shall
include references to the relevant Plan provisions on which the decision is
based. The written decision on review shall be given to the Claimant within the
sixty (60) day (or, if applicable, the one hundred twenty (120) day) time limit
discussed above. If the decision on review is not communicated to the Claimant
within the sixty (60) day (or, if applicable, the one hundred twenty (120) day)
period discussed above, the claim shall be deemed to have been denied upon
review. All decisions on review shall be final and binding with respect to all
concerned parties.
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ARTICLE 9
---------
AMENDMENT
---------
9.1 RIGHT TO AMEND. The Employer, by written instrument executed by a duly
authorized representative of the Employer, shall have the right to amend the
Plan, at any time and with respect to any provisions hereof, and all parties
hereto or claiming any interest hereunder shall be bound by such amendment;
provided, however, that no such amendment shall deprive a Participant or a
Beneficiary of a right accrued hereunder prior to the date of the amendment.
9.2 AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN. Notwithstanding
the provisions of Section 9.1, the Plan may be amended by the Employer at any
time, retroactively if required in the opinion of the Employer, in order to
ensure that the Plan is characterized as "top-hat" plan as described under ERISA
sections 201(2), 301(a)(3), and 401(a)(1), and to conform the Plan to the
provisions and requirements of any applicable law (including ERISA and the
Code). No such amendment shall be considered prejudicial to any interest of a
Participant or a Beneficiary hereunder.
ARTICLE 10
----------
TERMINATION
-----------
10.1 EMPLOYER'S RIGHT TO TERMINATE OR SUSPEND PLAN. The Employer reserves
the right to terminate the Plan and/or its obligation to make further credits to
Plan Accounts. The Employer also reserves the right to suspend the operation of
the Plan for a fixed or indeterminate period of time.
10.2 AUTOMATIC TERMINATION OF PLAN. The Plan automatically shall terminate
upon the dissolution of the Employer, or upon its merger into or consolidation
with any other corporation or business organization if there is a failure by the
surviving corporation or business organization to adopt specifically and agree
to continue the Plan.
10.3 SUSPENSION OF DEFERRALS. In the event of a suspension of the Plan,
the Employer shall continue all aspects of the Plan, other than Compensation
Deferrals and Employer Contribution Credits, during the period of the
suspension, in which event payments hereunder will continue to be made during
the period of the suspension in accordance with Articles 5 and 6.
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10.4 ALLOCATION AND DISTRIBUTION. This Section shall become operative on a
complete termination of the Plan. The provisions of this Section also shall
become operative in the event of a partial termination of the Plan, as
determined by the Employer, but only with respect to that portion of the Plan
attributable to the Participants to whom the partial termination is applicable.
Upon the effective date of any such event, notwithstanding any other provisions
of the Plan, no persons who were not theretofore Participants shall be eligible
to become Participants, the value of the interest of all Participants and
Beneficiaries shall be determined and, after deduction of estimated expenses in
liquidating and, if applicable, paying Plan benefits, paid to them as soon as is
practicable after such termination.
10.5 SUCCESSOR TO EMPLOYER. Any corporation or other business organization
which is a successor to the Employer by reason of a consolidation, merger or
purchase of substantially all of the assets of the Employer shall have the right
to become a party to the Plan by adopting the same by resolution of the entity's
board of directors or other appropriate governing body. If, within ninety (90)
days from the effective date of such consolidation, merger or sale of assets,
such new entity does not become a party hereto, as above provided, the Plan
automatically shall be terminated, and the provisions of Section 10.4 shall
become operative.
ARTICLE 11
----------
THE TRUST
---------
11.1 ESTABLISHMENT OF TRUST. The Employer shall establish the Trust with
the Trustee pursuant to such terms and conditions as are set forth in the Trust
agreement to be entered into between the Employer and the Trustee. The Trust is
intended to be treated as a "grantor" trust under the Code and the establishment
of the Trust is not intended to cause the Participant to realize current income
on amounts contributed thereto, and the Trust shall be so interpreted.
ARTICLE 12
----------
MISCELLANEOUS
-------------
12.1 LIMITATIONS ON LIABILITY OF EMPLOYER. Neither the establishment of
the Plan nor any modification thereof, nor the creation of any account under the
Plan, nor the payment of any benefits under the Plan shall be construed as
giving to any Participant or other person any legal or equitable right against
the Employer, or any officer or employer thereof except as provided by law or by
any Plan provision. The Employer does not in any way guarantee any Participant's
Account from loss or depreciation, whether caused by poor investment performance
of a deemed investment or the inability to realize upon an investment due to an
insolvency affecting an investment vehicle or any other reason. In no event
shall the Employer, or any successor, employee, officer, director or stockholder
of the Employer, be liable to any person on account of any claim arising by
reason of the provisions of the Plan or of any instrument or instruments
implementing its provisions, or for the failure of any Participant, Beneficiary
or other person to be entitled to any particular tax consequences with respect
to the Plan, or any credit or distribution hereunder.
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12.2 CONSTRUCTION. If any provision of the Plan is held to be illegal or
void, such illegality or invalidity shall not affect the remaining provisions of
the Plan, but shall be fully severable, and the Plan shall be construed and
enforced as if said illegal or invalid provision had never been inserted herein.
For all purposes of the Plan, where the context admits, the singular shall
include the plural, and the plural shall include the singular. Headings of
Articles and Sections herein are inserted only for convenience of reference and
are not to be considered in the construction of the Plan. The laws of the State
of Maryland shall govern, control and determine all questions of law arising
with respect to the Plan and the interpretation and validity of its respective
provisions, except where those laws are preempted by the laws of the United
States. Participation under the Plan will not give any Participant the right to
be retained in the service of the Employer nor any right or claim to any benefit
under the Plan unless such right or claim has specifically accrued hereunder.
The Plan is intended to be and at all times shall be interpreted and
administered so as to qualify as a top-hat plan (as aforesaid), and no provision
of the Plan shall be interpreted so as to give any individual any right in any
assets of the Employer which right is greater than the rights of a general
unsecured creditor of the Employer.
12.3 SPENDTHRIFT PROVISION. No amount payable to a Participant or a
Beneficiary under the Plan will, except as otherwise specifically provided by
law, be subject in any manner to anticipation, alienation, attachment,
garnishment, sale, transfer, assignment (either at law or in equity), levy,
execution, pledge, encumbrance, charge or any other legal or equitable process,
and any attempt to do so will be void; nor will any benefit be in any manner
liable for or subject to the debts, contracts, liabilities, engagements or torts
of the person entitled thereto. Further, (i) the withholding of taxes from Plan
benefit payments, (ii) the recovery under the Plan of overpayments of benefits
previously made to a Participant or Beneficiary, (iii) if applicable, the
transfer of benefit rights from the Plan to another plan, or (iv) the direct
deposit of benefit payments to an account in a banking institution (if not
actually part of an arrangement constituting an assignment or alienation) shall
not be construed as an assignment or alienation.
In the event that any Participant's or Beneficiary's benefits
hereunder are garnished or attached by order of any court, the Employer or
Trustee may bring an action or a declaratory judgment in a court of competent
jurisdiction to determine the proper recipient of the benefits to be paid under
the Plan. During the pendency of said action, any benefits that become payable
shall be held as credits to the Participant's or Beneficiary's Account or, if
the Employer or Trustee prefers, paid into the court as they become payable, to
be distributed by the court to the recipient as the court deems proper at the
close of said action.
IN WITNESS WHEREOF, the Employer has caused this Amendment and Restatement
of the Plan to be executed and its seal to be affixed hereto, effective as of
the 1st day of March, 1998.
ATTEST/WITNESS THE RYLAND GROUP, INC.
/S/ Kelly Elinsky By: /S/ Edward W. Gold (SEAL)
- ---------------------------------- ------------------------------
Print: Kelly Elinsky Print Name: Edward W. Gold
Date: April 13, 1999
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