The Ryland Group, Inc.

Senior Executive Supplemental Retirement Plan

Master Plan Document

 

 

TABLE OF CONTENTS

 

		Page
ARTICLE 1	Definitions	1
ARTICLE 2	Vesting	3
2.1	Vesting in Benefits	3
ARTICLE 3	Benefits	4
3.1	Eligibility for Benefits	4
3.2	Death Benefit	4
3.3	Lump Sum Payment and Change of Commencement Date	4
3.4	Committee Discretion	5
3.5	Withholding and Payroll Taxes	5
3.6	Transition Period	5
ARTICLE 4	Termination, Amendment or Modification of the Plan	5
4.1	Termination or Amendment	6
4.2	Termination of Agreement	6
ARTICLE 5	Other Benefits and Agreements	6
5.1	Coordination with Other Benefits	6
ARTICLE 6	Administration of this Plan	6
6.1	Committee Duties	6
6.2	Administration Upon Change in Control	7
6.3	Agents	7
6.4	Binding Effect of Decisions	7
6.5	Indemnity of Committee	7
6.6	Company Information	8
ARTICLE 7	Claims Procedures	8
7.1	Presentation of Claim	8
7.2	Notification of Decision	8
7.3	Review of a Denied Claim	9
7.4	Decision on Review	9
7.5	Legal Action	9
7.6	Named Fiduciary

 

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The Ryland Group, Inc.

Senior Executive Supplemental Retirement Plan

Master Plan Document

 

 

ARTICLE 8	Beneficiary Designation	10
8.1	Beneficiary	10
8.2	Beneficiary Designation; Change; Spousal Consent	10
8.3	Acknowledgement	10
8.4	No Beneficiary Designation	10
8.5	Doubt as to Beneficiary	10
8.6	Discharge of Obligations	10
ARTICLE 9	Trust	11
9.1	Establishment of the Trust	11
9.2	Interrelationship of the Plan and the Trust	11
9.3	Deposits	11
ARTICLE 10	Miscellaneous	11
10.1	Status of Plan	11
10.2	Unsecured General Creditor	11
10.3	Company’s Liability	12
10.4	Nonassignability	12
10.5	Furnishing Information	12
10.6	Terms	12
10.7	Captions	12
10.8	Governing Law	12
10.9	Validity	12
10.10	Notice	12
10.11	Successors	13
10.12	Spouse’s Interest	13
10.13	Incompetent	13
10.14	Court Order	13
10.15	Distribution in the Event of Taxation	13
10.16	Legal Fees To Enforce Rights After Change in Control	13
10.17	Aggregation of Employers	13
10.18	Aggregation of Plans	13
10.19	USERRA	19

 

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The Ryland Group, Inc.

Senior Executive Supplemental Retirement Plan

Master Plan Document

 

 

THE RYLAND GROUP, INC.

SENIOR EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN

Amendment and Restatement Effective January 1, 2005

 

The purpose of this Plan is to provide specified benefits to a select group of management and highly compensated employees who contribute materially to the continued growth, development and future business success of the Company.  This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA. The Plan is intended to comply with the requirements of section 409A of the Code, as added by the American Jobs Creation Act of 2004, and the Treasury regulations or any other authoritative guidance issued thereunder.

 

ARTICLE 1
Definitions

 

For purposes hereof, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:

 

1.1                                  “Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated, in accordance with Article 8, that are entitled to receive the Participant’s benefits under this Plan upon the Participant’s death.

 

1.2                                  “Beneficiary Designation Form” shall mean the form established from time to time by the Committee that the Participant completes, signs and returns to the Committee to designate a Beneficiary.

 

1.3                                  “Change in Control” shall mean the first to occur of any of the following events:

 

(a)                              The acquisition by any person, other than the Company or any employee benefit plan of the Company, of beneficial ownership of 20% or more of the combined voting power of the Company’s then outstanding voting securities;

 

(b)                             The first purchase under a tender offer or exchange offer, other than an offer by the Company or any employee benefit plans of the Company, pursuant to which shares of common stock have been purchased;

 

(c)                              During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof, unless the election or nomination for the election by stockholders of the Company of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period; or

 

(d)                             Approval by stockholders of the Company of a merger, consolidation, liquidation or dissolution of the Company, or the sale of all or substantially all of the assets of the Company.

 

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The Ryland Group, Inc.

Senior Executive Supplemental Retirement Plan

Master Plan Document

 

 

1.4                                 “Claimant” shall have the meaning set forth in Section 7.1.

 

1.5                                 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

1.6                                 “Committee” shall mean the committee described in Article 6.

 

1.7                                 “Company” shall mean The Ryland Group, Inc., a Maryland corporation.

 

1.8                                 “Compensation Committee” shall mean the Compensation Committee of the Board of Directors of the Company.

 

1.9                                 “Death Benefit” shall mean a benefit described in Section 3.2(c).

 

1.10                           “Effective Date” shall mean the effective date of the amendment and restatement of the Plan, which is January 1, 2005.  The original effective date of the Plan was July 1, 2003.

 

1.11                           “Election Form” shall mean the form upon which the Participant elects the manner of distribution of his or her Vested SERP Benefit and/or Death Benefit, and shall be made in such form as the Committee may require.

 

1.12                           “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

1.13                           “Initial Participants” are Mark L. Beisswanger, Robert J. Cunnion, III, Eric E. Elder, David L. Fristoe, John M. Garrity, Timothy J. Geckle, Cathey S. Lowe, Gordon A. Milne, Daniel G. Schreiner and Kipling W. Scott.

 

1.14                           “Involuntary Termination of Employment Without Cause” shall mean an involuntary termination of the Participant’s employment with the Company other than by reason of the Participant’s (i) willful and continued failure to perform the material duties of his or her position after receiving notice of such failure and being given reasonable opportunity to cure such failure; (ii) willful misconduct which is demonstrably and materially injurious to the Company; or (iii) conviction of a felony.  No act or failure to act on the part of the Participant shall be considered “willful” unless it is done or omitted to be done in bad faith or without reasonable belief that the action or omission was in the best interest of the Company.

 

1.15                           “Lump Sum” shall mean the present value equivalent of a Participant’s remaining unpaid Vested SERP Benefit or Death Benefit, as the case may be, using an 8% discount rate.

 

1.16                           “Participant” shall mean any Employee (i) who is selected to participate in the Plan, (ii) who signs an Election Form and a Beneficiary Designation Form, and (iii) whose participation in the Plan has not terminated.  As of the original effective date of the Plan, the Participants are the Initial Participants.  A spouse or former spouse of a Participant, as such, shall not be treated as a Participant in the Plan or have a SERP Benefit under the Plan, even if he or she has an interest in the Participant’s benefits under the Plan as a beneficiary, or as a result of applicable law or property settlements resulting from legal separation or divorce.

 

1.17                           “Plan” shall mean the Company’s Senior Executive Supplemental Retirement Plan, which shall be evidenced by this instrument, as it may be amended from time to time.

 

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The Ryland Group, Inc.

Senior Executive Supplemental Retirement Plan

Master Plan Document

 

 

1.18                           “SERP Benefit” shall mean a benefit described in Section 3.1(c).

 

1.19                           “Separation from Service” shall mean the Participant’s “separation from service” within the meaning of Code section 409A, treating as a Separation from Service an anticipated permanent reduction in the level of bona fide services to be performed by the Participant to 20% or less of the average level of bona fide services performed by the Participant over the immediately preceding 36 month period (or the full period during which the Participant performed services for the Company, if that is less than 36 months).  Separation from Service includes a termination of employment, which shall mean the severing of employment with the Company, voluntarily or involuntarily, for any reason.

 

1.20                           “Trust” shall mean the trust established pursuant to that certain Master Trust Agreement, dated as of November 1, 2002, between the Company and the trustee named therein, as amended from time to time.

 

1.21                           “Vested SERP Benefit” shall mean a benefit described in Section 3.1(c).

 

ARTICLE 2
Vesting

 

2.1                                 Vesting in Benefits .

 

(a)                                  General .   The Participant shall vest in his or her SERP Benefit according to the following vesting schedule, provided that he or she is continuously employed with the Company from his or her commencement of participation in the Plan (which for Initial Participants is July 1, 2003) through the specified date of vesting:

 

Anniversary of Plan Participation	Vesting Percentage
1 st  Year	20%
2 nd  Year	40%
3 rd  Year	60%
4 th  Year	80%
5 th  Year	100%

 

(b)                                  Special .  For the Initial Participants in the Plan, the “Anniversary of Plan Participation” shall be determined using a Plan Participation date of July 1, 2003 such that the Anniversary of Plan Participation for “1 st  Year” is July 1, 2004, for “2 nd  Year” is July 1, 2005, for “3 rd  Year” is July 1, 2006, for “4 th  Year”  is July 1, 2007 and for “5 th  Year” is July 1, 2008.  Notwithstanding anything to the contrary in this Section 2.1, the Participant shall immediately become 100% vested (if he or she is not already vested in accordance with the above vesting schedule) in his or her SERP Benefit upon the occurrence of a Change in

 

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The Ryland Group, Inc.

Senior Executive Supplemental Retirement Plan

Master Plan Document

 

 

Control or if he or she experiences an Involuntary Termination of Employment Without Cause.

 

ARTICLE 3
Benefits

 

3.1                                 Eligibility for Benefits .

 

(a)                                  SERP Benefit .  The Participant shall be eligible to receive his or her Vested SERP Benefit starting on the date specified below.

 

(b)                                 Commencement of SERP Benefit .  The payment of the Participant’s Vested SERP Benefit shall commence on the later of the Participant’s Separation from Service or the January 1 following the Participant’s 60 th  birthday.   All distributions upon Separation from Service shall be made or shall commence on the date that is six months following the date of Separation from Service (or within 30 days thereafter). All distributions upon a January 1 payment date shall commence within 60 days after the January 1 date.

 

(c)                                  SERP Benefit Amount .  Unless the Participant elects otherwise pursuant to Section 3.3, a Participant’s “SERP Benefit” is a benefit in the form of 15 annual payments in the amount of $150,000 each.  A Participant’s “Vested SERP Benefit” is the benefit specified in the preceding sentence multiplied for each payment by the applicable vesting percentage set forth in Article 2 of this Plan.

 

3.2                                 Death Benefit .

 

(a)                                  Death Benefit .   In the event that the Participant dies before his or her Vested SERP Benefit has been paid in full, the Participant’s Beneficiary shall receive a Death Benefit.

 

(b)                                 Commencement of Death Benefit .  Unless the Participant elects otherwise pursuant to Section 3.3, the Death Benefit shall be paid to the Participant’s Beneficiary in a single lump sum payment.  The Death Benefit payment shall be made or commence no later than sixty (60) days after the date on which the Participant would have otherwise received his or her SERP payment (or  the next SERP Benefit payment, if payments to the Participant have commenced) had he or she lived.

 

(c)                                  Death Benefit Amount .  The “Death Benefit” paid to a Participant’s beneficiary as a result of the Participant’s death shall be a benefit in the amount of the Participant’s remaining unpaid Vested SERP Benefit.

 

3.3                                 Change of Commencement Date or Form of Payment .  At the time the Participant initially is eligible to participate in the Plan (or as otherwise permitted by Code section 409A), the Participant may elect on an Election Form to have his or her Vested SERP Benefit and Death Benefit paid in a Lump Sum or in annual payments (i.e., 15 annual payments or the remaining number of annual payments the Participant would have otherwise received had he or she lived),

 

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The Ryland Group, Inc.

Senior Executive Supplemental Retirement Plan

Master Plan Document

 

 

and also may elect to have his or her Vested SERP Benefit paid on a later January 1 payment date, which date may be no later than the January 1 following the Participant’s 65th birthday.

 

Subsequent to any initial election, the Participant may change the payment commencement day or the form of benefit payment (i.e., lump sum or 15 annual payments) by submitting a new Election Form to the Committee, provided that any such Election Form is submitted to and accepted by the Committee in its sole discretion at least one (1) year prior to the date on which the payment of the applicable benefit would have commenced without the new election and the payment commencement date is delayed for at least five (5) full calendar years. Any election to change the time or form of payment under this paragraph shall not take effect until twelve (12) months after the date on which the election is made.  The Election Form most recently accepted by the Committee in accordance with the rules described above shall govern the payout of the Participant’s Vested SERP Benefit and Death Benefit.  If a Participant’s election to change the commencement date of benefit payments or the form of benefit payments is not timely submitted, then such change election shall be deemed void.  Notwithstanding anything in the Plan to the contrary, no change submitted on a Participant Election Form shall be accepted by the Committee, and the Committee shall deny any change made on a Participant Election Form, if the Committee determines that the change violates the requirements under Code section 409A.

 

3.4                                 Committee Discretion .   The Committee, in its discretion (without any direct or indirect election on the part of any Participant), may accelerate distributions under the Plan to the extent permitted under Code section 409A (e.g., Treas. Reg. 1.409A-3(j)(4)), including, but not limited to, payments necessary to comply with a domestic relations order, payments necessary to comply with certain conflict of interest rules, and certain de minimis payments related to the Participant’s termination of his or her interest in the plan. A distribution date may not be accelerated except as permitted by Code section 409A.

 

3.5                                 Withholding and Payroll Taxes .  The Company shall withhold from any and all benefits made under this Article 3, all federal, state and local income, employment and other taxes required to be withheld by the Company in connection with the benefits hereunder, in amounts to be determined in the sole discretion of the Company.

 

3.6                                 Transition Period .  Notwithstanding anything in the Plan to the contrary, to the extent permitted under Code section 409A and by the Company, the Participant may elect the form and timing of payment of his or her Vested SERP Benefit or Death Benefit during 2008 (except that a Participant cannot change payment elections with respect to payments that the Participant would otherwise receive in 2008, or make an election that causes payments scheduled for subsequent years to be made in 2008), and such election shall not be treated as a change in the form and timing of payment or an acceleration of payment.

 

ARTICLE 4
Termination, Amendment or Modification of the Plan

 

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The Ryland Group, Inc.

Senior Executive Supplemental Retirement Plan

Master Plan Document

 

 

4.1                                 Termination or Amendment .  This Plan may be amended or terminated only by a written agreement executed by both the Company and all of the current Participants.  Notwithstanding the preceding, the Plan may be amended by the Company at any time, retroactively if required in the opinion of the Company, in order to ensure that the Plan is characterized as a “top-hat” plan as described under ERISA Sections 201(2), 301(a)(3), and 401(a)(1) to conform with the Plan to the requirements of Code Section 409A, 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.    Upon a termination of the Plan pursuant to this Section 4.1, Vested SERP Benefits shall be paid to Participants in accordance with Artic