Document:

Exhibit 10.30

 

 

 

 

 

 

 

 

 

THE
RYLAND GROUP, INC.

EXECUTIVE
AND DIRECTOR

DEFERRED COMPENSATION
PLAN II

 

 

 

 

 

 

 

 

 

Effective as of January 1, 2005

 

 

THE RYLAND GROUP, INC.

EXECUTIVE AND DIRECTOR DEFERRED COMPENSATION
PLAN II

 

 

Effective
as of January 1, 2005

 

TABLE OF CONTENTS

 

ARTICLE 1

DEFINITIONS

 

	
  1.1

  	
  ACCOUNT

  	
  1

  
	
  1.2

  	
  BENEFICIARY

  	
  1

  
	
  1.3

  	
  CLAIMAINT

  	
  1

  
	
  1.4

  	
  CODE

  	
  1

  
	
  1.5

  	
  COMMITTEE

  	
  1

  
	
  1.6

  	
  COMPANY

  	
  1

  
	
  1.7

  	
  COMPENSATION

  	
  2

  
	
  1.8

  	
  COMPENSATION DEFERRAL ACCOUNT

  	
  2

  
	
  1.9

  	
  COMPENSATION DEFERRAL

  	
  2

  
	
  1.10

  	
  DIRECTOR

  	
  2

  
	
  1.11

  	
  DISPUTE

  	
  2

  
	
  1.12

  	
  EFFECTIVE DATE

  	
  2

  
	
  1.13

  	
  EMPLOYEE

  	
  2

  
	
  1.14

  	
  EMPLOYER

  	
  2

  
	
  1.15

  	
  EMPLOYER CONTRIBUTION CREDIT ACCOUNT

  	
  2

  
	
  1.16

  	
  EMPLOYER CONTRIBUTION CREDITS

  	
  2

  
	
  1.17

  	
  ERISA

  	
  2

  
	
  1.18

  	
  MEASUREMENT FUNDS

  	
  2

  
	
  1.19

  	
  PARTICIPANT

  	
  2

  
	
  1.20

  	
  PARTICIPANT ELECTION FORM

  	
  3

  
	
  1.21

  	
  PLAN

  	
  3

  
	
  1.22

  	
  PLAN YEAR

  	
  3

  
	
  1.23

  	
  SEPARATION FROM SERVICE

  	
  3

  
	
  1.24

  	
  TRUST

  	
  3

  
	
  1.25

  	
  TRUSTEE

  	
  3

  
	
  1.26

  	
  VALUATION DATE

  	
  3

  

 

ARTICLE 2

ELIGIBILITY AND
PARTICIPATION

 

	
  2.1

  	
  ELIGIBILITY

  	
  3

  
	
  2.2

  	
  ENROLLMENT REQUIREMENTS

  	
  3

  
	
  2.3

  	
  RE-EMPLOYMENT, ETC

  	
  4

  
	
  2.4

  	
  CHANGE OF STATUS

  	
  4

  

 

i

 

ARTICLE 3

CONTRIBUTIONS AND
CREDITS

 

	
  3.1

  	
  EMPLOYER CONTRIBUTION CREDITS

  	
  4

  
	
  3.2

  	
  PARTICIPANT COMPENSATION DEFERRALS

  	
  6

  
	
  3.3

  	
  CONTRIBUTIONS TO THE TRUST

  	
  7

  

 

ARTICLE 4

ALLOCATION OF FUNDS

 

	
  4.1

  	
  ALLOCATION OF DEEMED EARNINGS OR LOSSES ON
  ACCOUNTS

  	
  7

  
	
  4.2

  	
  ACCOUNTING FOR DISTRIBUTIONS

  	
  9

  
	
  4.3

  	
  EXPENSES

  	
  9

  

 

ARTICLE 5

ENTITLEMENT TO
BENEFITS

 

	
  5.1

  	
  FIXED PAYMENT DATES; SEPARATION FROM SERVICE; DISABILITY;
  CHANGE IN CONTROL

  	
   

  
	
  5.2

  	
  UNFORESEEABLE EMERGENCY DISTRIBUTIONS

  	
  10

  
	
  5.3

  	
  DEATH

  	
  11

  
	
  5.4

  	
  TRUST

  	
  11

  

 

ARTICLE 6

DISTRIBUTION OF
BENEFITS

 

	
  6.1

  	
  AMOUNT

  	
  11

  
	
  6.2

  	
  METHOD OF PAYMENT

  	
  11

  
	
  6.3

  	
  DEATH BENEFITS

  	
  12

  
	
  6.4

  	
  WITHHOLDING

  	
  12

  
	
  6.5

  	
  EMPLOYER DISCRETION

  	
  13

  
	
  6.6

  	
  PAYMENT OF BENEFITS

  	
  13

  

 

ARTICLE 7

BENEFICIARIES; PARTICIPANT
DATA

 

	
  7.1

  	
  DESIGNATION OF BENEFICIARIES

  	
  13

  
	
  7.2

  	
  INFORMATION TO BE FURNISHED BY PARTICIPANTS
  AND BENEFICIARIES; INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES

  	
  13

  

 

ARTICLE 8

ADMINISTRATION

 

	
  8.1

  	
  ADMINISTRATIVE AUTHORITY

  	
  14

  
	
  8.2

  	
  LITIGATION

  	
  15

  
	
  8.3

  	
  CLAIMS PROCEDURE

  	
  15

  

 

ii

 

ARTICLE 9

AMENDMENT

 

	
  9.1

  	
  RIGHT TO AMEND

  	
  18

  
	
  9.2

  	
  AMENDMENTS TO ENSURE PROPER
  CHARACTERIZATION OF PLAN

  	
  18

  

 

ARTICLE 10

SUSPENSION OR
TERMINATION OF THE PLAN

 

	
  10.1

  	
  RIGHT TO SUSPEND PLAN

  	
  19

  
	
  10.2

  	
  AUTOMATIC TERMINATION OF PLAN

  	
  19

  
	
  10.3

  	
  TERMINATION AND LIQUIDATION OF THE PLAN

  	
  19

  

 

ARTICLE 11

THE TRUST

 

	
  11.1

  	
  ESTABLISHMENT OF TRUST

  	
  19

  

 

ARTICLE 12

MISCELLANEOUS

 

	
  12.1

  	
  LIMITATIONS ON LIABILITY OF EMPLOYER

  	
  20

  
	
  12.2

  	
  CONSTRUCTION

  	
  20

  
	
  12.3

  	
  SPENDTHRIFT PROVISION

  	
  20

  
	
  12.4

  	
  LEAVE OF ABSENCE

  	
  20

  
	
  12.5

  	
  LEGAL FEES

  	
  21

  
	
  12.6

  	
  NONASSIGNABILITY

  	
  21

  
	
  12.7

  	
  UNSECURED GENERAL CREDITOR

  	
  21

  
	
  12.8

  	
  COURT ORDER

  	
  22

  
	
  12.9

  	
  CODE SECTION 409A

  	
  22

  
	
  12.10

  	
  UNVESTED ACCOUNT BALANCES UNDER PRIOR PLAN

  	
  22

  
	
  12.11

  	
  AGGREGATION OF EMPLOYERS

  	
  22

  
	
  12.12

  	
  AGGREGATION OF PLANS

  	
  22

  
	
  12.13

  	
  USERRA

  	
  22

  

 

iii

 

THE RYLAND GROUP, INC.

EXECUTIVE AND DIRECTOR DEFERRED COMPENSATION
PLAN II

 

Effective
as of January 1, 2005

 

RECITALS

 

The Ryland Group, Inc. Executive and Director Deferred
Compensation Plan II (the “Plan”), is adopted by The Ryland Group, Inc.,
effective as of January 1, 2005. 
The Plan is maintained for the benefit of certain of the Employer’s
executive employees and Directors.

 

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 Code section 451, 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 ERISA.  The Plan is
also 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.

 

Accordingly, the following Plan is adopted.

 

ARTICLE 1

 

DEFINITIONS

 

1.1                                 ACCOUNT
means the sum of the amounts credited to a Participant’s or Beneficiary’s Plan
Employer Contribution Credit Account and Compensation Deferral Account,
including contribution credits and deemed income, gains and losses credited
thereto, as such accounts are defined in Article 3.  A Participant’s or Beneficiary’s Account
shall be determined as of the date of reference.

 

1.2                                 BENEFICIARY
means any person or persons so designated in accordance with the provisions of Article 7.

 

1.3                                 CLAIMANT is
defined in Section 8.3.

 

1.4                                 CODE means the
Internal Revenue Code of 1986 and the regulations thereunder, as amended from
time to time.

 

1.5                                 COMMITTEE
shall mean the Committee chosen by the Company to oversee the administration of
the Plan.

 

1.6                                 COMPANY means
The Ryland Group, Inc. and its successors and assigns.

 

1

 

1.7                                 COMPENSATION means the annual cash compensation
relating to services performed during any calendar year, whether or not paid in
such calendar year or included on the Federal Income Tax Form W-2 for such
calendar year, excluding TRG Incentive Plan, Personal Health and Services
Allowance, Executive Health and Fitness, any discretionary bonus, fringe
benefits, stock options, relocation expenses, non-monetary awards and
automobile and other allowances paid to a Participant for employment services
rendered (whether or not such allowances are included in the Participant’s
gross income). Compensation shall be calculated before reduction for
compensation voluntarily deferred or contributed by the Participant pursuant to
all qualified or non-qualified plans of any Employer and shall be calculated to
include amounts not otherwise included in the Participant’s gross income under
Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans
established by any Employer; provided, however, that all such amounts will be
included in compensation only to the extent that had there been no such plan,
the amount would have been payable in cash to the Employee.  Compensation includes for Directors who
participate in the Plan retainer fees or stock awards payable in the Employer’s
common stock in addition to cash payments.

 

1.8                                 COMPENSATION
DEFERRAL ACCOUNT is defined in Section 3.2.

 

1.9                                 COMPENSATION
DEFERRAL is defined in Section 3.2.

 

1.10                           DIRECTOR means a
non-employee member of the Board of Directors of The Ryland Group, Inc.

 

1.11                           DISPUTE is defined in
Section 12.5.

 

1.12                           EFFECTIVE DATE means
the general effective date of the Plan, which shall be January 1, 2005.

 

1.13                           EMPLOYEE means a
person who is an employee of the Employer.

 

1.14                           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.

 

1.15                           EMPLOYER CONTRIBUTION
CREDIT ACCOUNT is defined in Section 3.1.

 

1.16                           EMPLOYER CONTRIBUTION
CREDITS is defined in Section 3.1.

 

1.17                           ERISA means the
Employee Retirement Income Security Act of 1974.

 

1.18                           MEASUREMENT FUNDS is
defined in Section 4.1(c).

 

2

 

1.19                           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 Employer’s Board of Directors who is or may
become (or whose Beneficiaries may become) eligible to receive a benefit under
the Plan.

 

1.20                           PARTICIPANT
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.

 

1.21                           PLAN is defined in
the Recitals.

 

1.22                           PLAN YEAR means the
12-month period ending on December 31 of each year during which the Plan
is in effect.

 

1.23                           SEPARATION
FROM SERVICE means 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 Employer, if
that is less than 36 months).

 

1.24                           TRUST
means the Trust established pursuant to Article 11.

 

1.25                           TRUSTEE means the
trustee of the Trust established pursuant to Article 11.

 

1.26                           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

 

ELIGIBILITY AND PARTICIPATION

 

2.1                                 ELIGIBILITY.  Participation in the Plan shall be limited to
a select group of management and highly compensated Employees and/or Directors,
as determined by the Company in its sole discretion.  From that group, the Company shall select, in
its sole discretion, Employees and/or Directors to participate in the
Plan.  In order to participate in the
matching contribution feature of this Plan, an otherwise eligible Employee must
make the maximum amount of salary deferrals to the Employer’s 401(k) Plan.

 

2.2                                 ENROLLMENT
REQUIREMENTS.  As a condition to
participation, each selected Employee or Director shall complete, execute and
return to the Company a Participant Election Form within 30 days after he
or she is selected to participate in the Plan. 
In addition, the Company shall establish from time to time such other
enrollment requirements as it determines in its sole discretion are
necessary.  Provided an Employee or
Director selected to participate in the Plan has met all enrollment
requirements set forth in this Plan and required by the Company, including
returning all required documents to the Company within the specified time
period, that Employee or Director

 

3

 

shall commence participation in the Plan on a specified date as
determined by the Company in its sole discretion.  Upon commencement of such participation, the
Employee or Director shall become a Participant in the Plan.  If an Employee or Director fails to meet all
such requirements within the period required, that Employee or Director shall
not be eligible to participate in the Plan until the first day of the Plan Year
following the delivery to and acceptance by the Company of the required
documents.

 

2.3                                 RE-EMPLOYMENT,
ETC.  If a Participant whose employment
or Director status with the Employer is terminated and that Participant is
subsequently re-employed by or subsequently becomes a Director of the Employer,
he or she may become a Participant in accordance with the provisions of Section 2.1
and the terms and conditions of the Plan.

 

2.4                                 CHANGE
OF STATUS.  If the Company determines
in good faith that a Participant no longer qualifies as a member of a select
group of management or highly compensated Employees, as membership in such
group is determined in accordance with Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA, the Company shall have the right, in its sole
discretion, to prevent the Participant from making future deferral elections.

 

ARTICLE 3

 

CONTRIBUTIONS AND CREDITS

 

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.  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, and (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.

 

The Employer’s Contribution Credits attributable to a Participant who
is an Employee shall consist of the following:

 

(i)                                     matching
contribution amounts with respect to each pay period (but contributed with a
frequency determined by the Employer) equal to the Participant’s 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 of the Participant’s
Compensation from the Employer for that pay period; and

 

(ii)                                  for
a particular Plan 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 Employer Contribution Credit Account with respect to any pay
period in excess of the limit provided

 

4

 

in paragraph (i) above, as determined by the Employer in good
faith, shall be returned to the Employer.

 

Participants shall become vested in amounts credited to their Employer
Contribution Credit Accounts pursuant to the following vesting schedule:

 

	
  Years of
  Service

  	
   

  	
  Vested
  Percentage

  
	
  Less than 1

  	
   

  	
  0%

  
	
  1

  	
   

  	
  33%

  
	
  2

  	
   

  	
  66%

  
	
  3

  	
   

  	
  100%

  

 

For
purposes of the foregoing, each Participant employed by the Employer will be
credited with one Year of Service for each 12-month period of employment with
the Employer.

 

Notwithstanding
the foregoing, a Participant will become immediately vested in amounts credited
to his or her Employer Contribution Credit Account upon his or her death, his
or her long-term disability (as determined by the Employer, in its discretion),
his or her retirement from service to the Employer on or after age 65, or a “Change
in Control” of the Company.  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 20% or more of the combined voting
power of Company’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 Company, pursuant to
which shares of common stock of the Company have been purchased;

 

(iii)                               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 the 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 the period; or

 

(iv)                              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.

 

When
a Participant becomes vested in his or her Employer Contribution Credits, plus
earnings thereon, the Employer shall withhold from the Participant’s salary
and/or bonus that is not deferred, in a manner determined by the Employer, the
Participant’s share of FICA and other employment taxes.  If necessary, the Employer may reduce the
vested portion of the Participant’s Employer Contribution Credit Account to
comply with this requirement.

 

5

 

3.2                                 PARTICIPANT
COMPENSATION DEFERRALS.  In
connection with a Participant’s commencement of participation in the Plan (or
if a Participant again becomes eligible after having been ineligible for at
least 24 months), the Participant may make an irrevocable election, no later
than 30 days after the date he or she becomes eligible to become a Participant,
to defer Compensation to be earned for services to be performed after the
election, and must make such other elections as the Company deems necessary or
desirable under the Plan.  For this
purpose, an election will be deemed to apply to bonus Compensation for services
performed after the election if the election applies to no more than an amount
equal to the total bonus for the performance period multiplied by the ratio of
the number of days remaining in the performance period after the election over
the total number of days in the performance period.  For these elections to be valid, the
Participant Election Form must be completed and signed by the Participant
and timely delivered to the Company as described in Section 2.2.

 

For each succeeding Plan Year, an irrevocable deferral of Compensation
election for that Plan Year, and such other elections as the Company deems
necessary or desirable under the Plan, shall be made by timely delivering to
the Company, in accordance with its rules and procedures, before the end
of the Plan Year preceding the Plan Year in which the services giving rise to
the Compensation to be deferred are to be performed (or such earlier time as
the Company may establish, in its sole discretion), a new Participant Election
Form.  If no such Participant Election Form is
timely delivered for a Plan Year, the Participant’s Compensation Deferral for
that Plan Year shall be zero.

 

Notwithstanding
the foregoing, the Committee may, in its sole discretion, determine that
certain Compensation qualifies as “performance-based compensation” under Code Section 409A.  If and to the extent permitted by the
Company, a Participant may make an election to defer that portion (if any) of
his or her Compensation which qualifies as Performance-Based Compensation no
later than (and the election shall become irrevocable no later than) six months
prior to the last day of the period over which the services giving rise to the
Performance-Based Compensation are performed (provided that the Participant
performs services continuously from the later of the beginning of the
performance period or the date the performance criteria are established through
the date of the deferral election, and provided further that in no event may an
election to defer be made with respect to any portion of the Performance-Based
Compensation that has become reasonably ascertainable, as defined under Code
section 409A, prior to making the election). 
“Performance-Based Compensation” means that portion (if any) of a
Participant’s Compensation which is contingent on the satisfaction of
pre-established organizational or individual performance criteria related to a
performance period of at least 12 consecutive months, and which meets the requirements
for “performance-based compensation” under Code section 409A, including the
requirement that the performance criteria be established in writing by not
later than  (i) 90 days after the
commencement of the period of service to which the criteria relates and (ii) the
date the outcome ceases to be substantially uncertain.

 

For each Plan Year, the deferral of compensation shall be withheld from
each regularly scheduled salary payroll in the percentage elected by the
Participant.  The bonus portion of the
Compensation Deferral shall be withheld at the time the bonus would otherwise
be paid to the Participant.  For each
Plan Year in which Compensation is deferred, the Employer shall withhold from
that portion of the Participant’s salary and bonus that is not being deferred,
in a manner

 

6

 

determined by the Employer, the Participant’s
share of FICA and other employment taxes on such deferral amount, together with
such other withholdings for employee benefits as would the Employer otherwise
withhold.  Subject to Code Section 409A,
if necessary, the Employer may reduce the deferral amount in order to comply
with this requirement.

 

After the
deadline for making a deferral election (as set forth above) has passed, the
Participant may not change or revoke his or her Compensation Deferral election
until the following Plan Year, except to the extent permitted by the Company
and under Code section 409A upon a disability, unforeseeable emergency
distribution, or a hardship distribution from the Ryland Retirement Savings
Opportunity Plan pursuant to section 1.401(k)-1(d)(3) of the Treasury
Regulations.  For purposes of this
paragraph only, “disability” means any medically determinable physical or
mental impairment resulting in the Participant’s inability to perform the
duties of his or her position or any substantially similar position, where such
impairment can be expected to result in death or can be expected to last for a
continuous period of not less than six months.

 

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, and (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.  The amounts deferred shall be
referred to as the Compensation Deferrals.

 

A
Participant shall at all times be 100% vested in amounts credited to his or her
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 or in common
stock of the Employer, as determined by the Company.

 

ARTICLE 4

 

ALLOCATION OF FUNDS

 

4.1                                 ALLOCATION
OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS. 
In accordance with, and subject to, the rules and procedures that
are established from time to time by the Company, in its sole discretion,
amounts shall be credited or debited to a Participant’s Account in accordance
with the following rules:

 

(a)                                  A Participant,
in connection with his or her initial deferral election shall elect one or more
Measurement Fund(s) (as described below) to be used to determine the
additional amounts to be credited or debited to his or her Account.  A Participant may (but is not required to)
elect to add or delete one or more available Measurement Fund(s) to be
used to determine the additional amounts to be credited or debited to his or
her Account, or to change the portion of his or

 

7

 

her Account allocated to each previously or
newly elected Measurement Fund.  A
Participant may elect to make such a change by submitting a Participant
Election Form, whether written or electronic (as determined by the Company from
time to time and in its sole discretion), to the Company (or its designee).  Any election so made and accepted by the
Company (or its designee) shall apply as soon as is reasonably practicable
following the Company’s (or its designee’s) acceptance of the election.  Any such election shall continue to apply,
unless subsequently changed in accordance with this Section 4.1(a).

 

(b)                                 In making any
election described in Section 4.1(a), the Participant shall specify on the
applicable form which may be completed on-line, in increments of one percentage
point, the percentage of his or her Account to be allocated to a Measurement
Fund (as if the Participant were making an investment in that Measurement Fund
with that portion of his or her Account).

 

(c)                                  A Participant
may elect one or more Measurement Funds (the “Measurement Funds”) from among
those selected by the Company for the purpose of crediting or debiting
additional amounts to his or her Account. 
As necessary, the Company may, in its sole discretion, discontinue,
substitute or add Measurement Funds. 
Each such action will take effect as of the first day of the calendar
month that follows by 30 days or more the day on which the Company gives
Participants advance written notice of such change.  In selecting the Measurement Funds that are
available from time to time, neither the Company nor any Employer shall be
liable to any Participant for such selection or adding, deleting or continuing
any available Measurement Fund.

 

(d)                                 The performance
of each elected Measurement Fund (either positive or negative) will be
reasonably determined by the Company.  A
Participant’s Account shall be credited or debited on a daily basis based on
the performance of each Measurement Fund selected by the Participant.

 

(e)                                  Notwithstanding any
other provision of this Plan that may be interpreted to the contrary, the
Measurement Funds are to be used for measurement purposes only, and a
Participant’s election of any such Measurement Fund, the allocation to his or
her Account thereof, the calculation of additional amounts and the crediting or
debiting of such amounts to a Participant’s Account shall  not be
considered or construed in any manner as an actual investment of his or her
Account in any such Measurement Fund.  In
the event that the Company or the Trustee, in its sole discretion, decides to
invest funds in any or all of the Measurement Funds, no Participant shall have
any rights in or to such investments themselves.  Without limiting the foregoing, a Participant’s
Account shall at all times be a bookkeeping entry only and shall not represent
any investment made on his or her behalf by the Company or the Trustee; and the
Participant shall at all times remain an unsecured creditor of the Company.

 

(f)                                    Notwithstanding the foregoing provisions of this Section 4.1, the
Company shall retain the overriding discretion regarding the Participant’s
designation of Measurement Funds under this Section 4.1.  If a Participant fails to designate any
Measurement Fund under this Section 4.1, the Participant shall be deemed
to have elected the money market fund, or such other fund as determined from
time to time by the Company in its sole discretion.

 

8

 

(g)                                 The Participant
shall bear full responsibility for all results associated with his or her
selection of Measurement Funds under this Section 4.1, and the Employer
shall have no responsibility or liability with respect to the Participant’s
selection of such Measurement Funds. 
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.

 

(h)                                 Notwithstanding any contrary provision of
the Plan, Participants shall not have the right to direct the deferral of
Director retainer fees or awards that otherwise would have been payable in
Employer common stock.  Rather, such
deferrals shall initially be deemed to be invested in the common stock of the
Employer.  Once deferred, the Participant
may thereafter elect to have some or all of such deferral amounts, plus
earnings thereon, reallocated to one or more of the non-Employer common stock
Measurement Funds available under the Plan; provided, however, that the
Employer may impose such restrictions on such transfers as the Employer deems
necessary or advisable in order to comply with federal or state securities laws
(including, but not limited to, Rule 16b-3 of the Securities Exchange Act
of 1934, as amended).  Any Participant subject
to such restrictions shall be notified by the Employer.  Once a Participant has transferred an amount
out of the Employer common stock Measurement Fund, he or she may not
subsequently reallocate into that Measurement Fund.

 

(i)                                     Each reference
in this Article to a Participant shall be deemed to include, where
applicable, a reference to a Beneficiary.

 

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.

 

4.3                                 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.

 

ARTICLE 5

 

ENTITLEMENT TO BENEFITS

 

5.1                                 FIXED PAYMENT DATES; SEPARATION FROM SERVICE; DISABILITY;
CHANGE IN CONTROL.    The Participant’s vested Account will be
valued and paid according to the provisions of Article 6 on the payment
date elected by a Participant at the earlier of the time of initial deferral or
the time the Participant first has a legally binding right to Employer
Contribution Credits (or as otherwise required by Code section 409A).

 

The Participant may elect to receive payment of his or her vested
Account at Separation from Service with the Employer, upon a fixed payment
date, or at the earlier of (or later of) a fixed payment date, Separation from
Service, Disability, and/or Change in Control of the Company or

 

9

 

Employer.  In any case, the extension and
non-acceleration rules discussed in this Plan shall apply to such timing
of payment elections.

 

The “fixed payment date” elected by a Participant must be a date no
earlier than the January 1 of the third calendar year after the calendar
year in which the initial election is made (or if applicable, the January 1
of the third calendar year in which a new election is made after the
Participant has received a distribution of his or her previously vested
Account).

 

If a Participant fails to designate properly the timing of payment of
the Account, the vested Account shall be distributed, or commence to be
distributed, as provided in Article 6, at the Participant’s Separation
from Service with the Employer.

 

The Participant may elect to delay a payment, on a continual basis, so
long as any election to delay the payment is made by the Participant at least
twelve (12) months prior to the date on which the distribution is to be made
and, in the case of payment upon Separation from Service, a fixed payment date
or Change in Control, such delay is at least five (5) full calendar years
in length.  Any election to delay a fixed
payment date under this paragraph shall not take effect until twelve months
after the date on which the election is made. 
A distribution date may not be accelerated.

 

Notwithstanding the preceding, to the extent permitted under Code
section 409A and by the Company, the Participant may elect the timing of
distributions during 2005, 2006, 2007 or 2008 (except that a Participant cannot
in a year change payment elections with respect to payments that the
Participant would otherwise receive in that same year, or make an election that
causes payments scheduled for subsequent years to be made in the year the
election is made), and such election shall not be treated as a change in the
form and timing of payment or an acceleration of payment.

 

For purposes of this Section, a “Change in Control” means a change in
the ownership or effective control of the Company or Employer, or a change in
the ownership of a substantial portion of the assets of the Company or
Employer, within the meaning of Code section 409A.

 

For purposes of this Section, a “Disability” means a period during
which a Participant (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, (ii) is, by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, receiving income replacement benefits for
a period of not less than three (3) months under an accident and health
plan covering employees of the Employer, or (iii) is determined to be
totally disabled by the Social Security Administration.

 

5.2                                 UNFORESEEABLE EMERGENCY DISTRIBUTIONS. 
In the event the Participant incurs an unforeseeable emergency, as
defined below, 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; provided, however, that such distribution shall be permitted
solely to the extent permitted under Code section

 

10

 

409A.  Upon a finding of an unforeseeable emergency,
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 satisfy the unforeseeable emergency plus amounts
necessary to pay taxes reasonably anticipated as a result of the distribution,
after taking into account the extent to which the unforeseeable emergency is or
may be relieved through reimbursement or compensation by insurance or otherwise
or by liquidation of the Participant’s assets (to the extent the liquidation of
assets would not itself cause severe financial hardship), or by cessation of
Compensation Deferrals under this Plan.

 

“Unforeseeable emergency” means (a) a severe financial hardship to
the Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, beneficiary or 
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                                 DEATH.  Upon the
Participant’s death, the Participant’s vested Account shall be valued and paid
to the Participant’s Beneficiary(ies) as provided in Article 6.

 

5.4                                 TRUST.  The Employer’s obligations under the Plan may
be satisfied with Trust assets distributed pursuant to the terms of the Trust,
and any such distribution shall reduce the Employer’s obligations under this
Plan.  The Trustee of the Trust shall be
authorized, upon written instructions received from the Company or investment
manager appointed by the Company, to invest and reinvest the assets of the
Trust in accordance with the applicable Trust Agreement.  A Participant shall have no preferred claim
on, or any beneficial interest in, any assets of the Trust.  Any assets held by the Trust shall be subject
to the claims of general creditors of the Employer in the event of the Employer’s
“insolvency” (i.e., the Employer is unable to pay its debts as they become due
or is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code).  If the Trust pays all
or some of the Employer’s obligations to a Participant under the terms of this
Plan, such payment shall be treated as a payment by the Employer for purposes
of this Plan.

 

ARTICLE 6

 

DISTRIBUTION OF BENEFITS

 

6.1                                 AMOUNT.  A Participant (or his or her Beneficiary)
shall become entitled to receive, on the date determined in accordance with Article 5,
a distribution in an aggregate amount equal to the Participant’s vested
Account.

 

6.2                                 METHOD
OF PAYMENT.

 

(a)                                  Form of
Payment.  Payments under the Plan
shall be made in cash, except that the portion of a Director’s Account that is
hypothetically invested in Employer common stock shall be paid in the form of
Employer common stock (except as otherwise permitted by the Company).

 

11

 

(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 Section 5.1, an aggregate amount equal to the
Participant’s vested Account will be paid, as provided in Section 6.1, in
a lump sum or in annual installments, not less than two nor greater than 15,
using the Fractional Payment Method, as selected by the Participant at the
earlier of the time of initial deferral or the time the Participant first has a
legally binding right to Employer Contribution Credits (or as otherwise
required by Code section 409A).  “Fractional
Payment Method” means annual installment payments over the number of years
selected by the Participant in accordance with this Plan, calculated as
follows: the vested Account of the Participant shall be calculated each year as
of the applicable Valuation Date.  The
annual installment shall be calculated by multiplying this balance by a
fraction, the numerator of which is one, and the denominator of which is the
remaining number of annual payments due the Participant.  By way of example, if the Participant elects
10 years, the first payment shall be 1/10 of the vested Account.  For the following year, the payment shall be
1/9 of the vested Account.

 

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 Section 4.1 under such procedures as
the Employer may establish.

 

A participant
may elect to change the method of payment elected (or deemed elected) so long
as any election to change the form of payment is made by the Participant at
least twelve (12) months prior to the date on which the distribution is to be
made (or commence) and, in the case of payment upon Separation from Service, a
fixed payment date or Change in Control, the payment date (or commencement of
payments) is delayed for at least five (5) full calendar years.   Any election to change the method of payment
under this paragraph shall not take effect until twelve months after the date
on which the election is made.

 

Notwithstanding
the preceding, to the extent permitted under Code section 409A and by the
Company, the Participant may elect the form of distributions during 2005, 2006,
2007 or 2008 (except that a Participant cannot in a year change payment
elections with respect to payments that the Participant would otherwise receive
in that same year, or make an election that causes payments scheduled for
subsequent years to be made in the year the election is made), and such
election shall not be treated as a change in the form and timing of payment or
an acceleration of payment.

 

6.3                                 DEATH
BENEFITS.  If a Participant dies
before receiving the entire value of his or her vested Account, the remaining
unpaid portion of his or her vested Account shall be paid in a lump sum to the
person or persons designated in accordance with Section 7.1.

 

6.4                                 WITHHOLDING.  The Employer, or the Trustee of the Trust,
shall withhold from any payments made to a Participant under this Plan all
federal, state and local income, employment and other taxes required to be
withheld by the Employer, or the Trustee of the Trust, in connection with such
payments, in amounts and in a manner to be determined in good faith in the sole
discretion of the Employer and the Trustee of the Trust.  All distributions under the Plan are subject
to any applicable tax withholding, as determined by the Employer in its
discretion.

 

12

 

6.5                                 EMPLOYER
DISCRETION.  Notwithstanding anything
in the Plan to the contrary, no change submitted on a Participant Election Form shall
be accepted by the Employer, and the Employer shall deny any change made on a
Participant Election Form, if the Employer determines that the change violates
the requirements under Code section 409A.

 

The Employer,
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., 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).

 

6.6                                 PAYMENT
OF BENEFITS.   Except with respect to
distributions upon Separation from Service, any payment made under this Article 6
shall be made or commence within 90 days after the date of the payment event
specified in the Plan; provided, however, such payment shall not be made or
commence later than the later of (i) the last day of the calendar year in
which the payment event occurs, or, if later, the 15th day of the third
calendar month following the date of the payment event, or (ii) the last
day of such other, extended period as the IRS may prescribe, such as in the
case of disputed payments or refusals to pay, provided the conditions of such
extension have been satisfied. 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).

 

ARTICLE 7

 

BENEFICIARIES; PARTICIPANT DATA

 

7.1                                 DESIGNATION
OF BENEFICIARIES.  Each Participant
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.

 

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.

 

13

 

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 ninety (90) days of the latest date upon which the payment could have
been timely made in accordance with the terms of the Plan and Code section 409A
(unless, if not paid, the Participant or Beneficiary takes further enforcement
measures within one hundred eighty (180) days after such latest date) then,
except as otherwise required by law, the amount payable shall be deemed to be a
forfeiture. 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 Company, acting through the Committee, 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:

 

(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 Employee or Director 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 Company 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 persons or firms.  The Company 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

 

14

 

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 Company.  Further, the
Company may authorize one or more persons to execute any certificate or
document on behalf of the Company, in which event any person notified by the
Company 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 Company until such notified person shall have been notified of
the revocation of such authority.

 

(f)                                    Interpret
this Plan in accordance with Code Section 409A.

 

8.2                                 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.

 

8.3                                 CLAIMS
PROCEDURE.  This Section 8.3 is
based on final regulations issued by the Department of Labor and published in
the Federal Register on November 21, 2000 and codified at 29 C.F.R.
section 2560.503-1.  If any provision of
this Section conflicts with the requirements of those regulations, the
requirements of those regulations will prevail.

 

(a)                                  Initial
Claim.  A Participant or Beneficiary
who believes he or she is entitled to any Benefit (a “Claimant”) under this
Plan may file a claim with the administrator under this Article 9 (the “Plan
Administrator”).  The Plan Administrator
will review the claim itself or appoint another individual or entity to review
the claim.

 

(i)                                     Benefit
Claims that do not Require a Determination of Disability.  If the claim is for a benefit other than a
disability benefit, the Claimant will be notified within ninety days after the
claim is filed whether the claim is allowed or denied, unless the Claimant
receives written notice from the Plan Administrator or appointee of the Plan
Administrator before the end of the ninety day period stating that special
circumstances require an extension of the time for decision, such extension not
to extend beyond the day which is one hundred eighty days after the day the
claim is filed.

 

(ii)                                  Disability
Benefit Claims.  In the case of a
benefits claim that requires a determination by the Plan Administrator of a
Participant’s disability status, the Plan Administrator will notify the
Claimant of the Plan’s adverse benefit determination within a reasonable period
of time, but not later than forty-five days after receipt of the claim.  If, due to matters beyond the control of the
Plan, the Plan Administrator needs additional time to process a claim, the
Claimant will be notified, within forty-five days after the Plan Administrator
receives the claim, of those circumstances and of when the Plan Administrator
expects to make its decision but not beyond seventy-five days.  If, prior to the end of the extension period,
due to matters beyond the control of the Plan, a decision cannot be rendered
within that extension period, the period for making the determination may be
extended for up to one hundred five days, provided that the Plan Administrator
notifies the Claimant of the circumstances requiring the extension and the date
as of which the Plan expects to render a decision.  The extension notice will specifically
explain the standards on which

 

15

 

entitlement to a disability benefit is based,
the unresolved issues that prevent a decision on the claim and the additional
information needed from the Claimant to resolve those issues, and the Claimant
will be afforded at least forty-five days within which to provide the specified
information.

 

(iii)                               Manner
and Content of Denial of Initial Claims. 
If the Plan Administrator denies a claim, it must provide to the
Claimant, in writing or by electronic communication:

 

(A)                              The
specific reasons for the denial;

 

(B)                                A
reference to the Plan provision or insurance contract provision upon which the
denial is based;

 

(C)                                A
description of any additional information or material that the Claimant must
provide in order to perfect the claim;

 

(D)                               An
explanation of why such additional material or information is necessary;

 

(E)                                 Notice
that the Claimant has a right to request a review of the claim denial and
information on the steps to be taken if the Claimant wishes to request a review
of the claim denial; and

 

(F)                                 A
statement of the participant’s right to bring a civil action under ERISA
section 502(a) following a denial on review of the initial denial.

 

In addition, in the case of a denial of disability benefits on the
basis of the Plan Administrator’s independent determination of the Participant’s
disability status, the Plan Administrator will provide a copy of any rule,
guideline, protocol, or other similar criterion relied upon in making the
adverse determination (or a statement that the same will be provided upon
request by the Claimant and without charge).

 

(b)                                 Review
Procedures.

 

(i)                                     Benefit
Claims that do not Require a Determination of Disability.  Except for claims requiring an independent
determination of a Participant’s disability status, a request for review of a
denied claim must be made in writing to the Plan Administrator within sixty
days after receiving notice of denial. 
The decision upon review will be made within sixty days after the Plan
Administrator’s receipt of a request for review, unless special circumstances
require an extension of time for processing, in which case a decision will be
rendered not later than one hundred twenty days after receipt of a request for
review.  A notice of such an extension
must be provided to the Claimant within the initial sixty day period and must
explain the special circumstances and provide an expected date of decision.

 

The reviewer will afford the Claimant an opportunity to review and
receive, without charge, all relevant documents, information and records and to
submit issues and comments

 

16

 

in writing to the Plan Administrator.  The reviewer will take into account all
comments, documents, records and other information submitted by the Claimant
relating to the claim regardless of whether the information was submitted or
considered in the initial benefit determination.

 

(ii)                                  Disability
Benefit Claims.  In addition to
having the right to review documents and submit comments as described in (i) above,
a Claimant whose claim for disability benefits requires an independent
determination by the Plan Administrator of the Participant’s disability status
has at least one hundred eighty days following receipt of a notification of an
adverse benefit determination within which to request a review of the initial
determination.  In such cases, the review
will meet the following requirements:

 

(A)                              The
Plan will provide a review that does not afford deference to the initial
adverse benefit determination and that is conducted by an appropriate named
fiduciary of the Plan who did not make the initial determination that is the
subject of the appeal, nor is a subordinate of the individual who made the
determination.

 

(B)                                The
appropriate named fiduciary of the Plan will consult with a health care
professional who has appropriate training and experience in the field of
medicine involved in the medical judgment before making a decision on review of
any adverse initial determination based in whole or in part on a medical
judgment.  The professional engaged for
purposes of a consultation in the preceding sentence will not be an individual
who was consulted in connection with the initial determination that is the
subject of the appeal or the subordinate of any such individual.

 

(C)                                The
Plan will identify to the Claimant the medical or vocational experts whose
advice was obtained on behalf of the Plan in connection with the review,
without regard to whether the advice was relied upon in making the benefit
review determination.

 

(D)                               The
decision on review will be made within forty-five days after the Plan
Administrator’s receipt of a request for review, unless special circumstances
require an extension of time for processing, in which case a decision will be
rendered not later than ninety days after receipt of a request for review.  A notice of such an extension must be
provided to the Claimant within the initial forty-five day period and must
explain the special circumstances and provide an expected date of decision.

 

(iii)                               Manner
and Content of Notice of Decision on Review.  Upon completion of its review of an adverse
initial claim determination, the Plan Administrator will give the Claimant, in
writing or by electronic notification, a notice containing:

 

(A)                              its
decision;

 

(B)                                the
specific reasons for the decision;

 

(C)                                the
relevant Plan provisions or insurance contract provisions on which its decision
is based;

 

17

 

(D)                               a
statement that the Claimant is entitled to receive, upon request and without
charge, reasonable access to, and copies of, all documents, records and other
information in the Plan’s files which is relevant to the Claimant’s claim for
benefits;

 

(E)                                 a
statement describing the Claimant’s right to bring an action for judicial
review under ERISA section 502(a); and

 

(F)                                 if
an internal rule, guideline, protocol or other similar criterion was relied
upon in making the adverse determination on review, a statement that a copy of
the rule, guideline, protocol or other similar criterion will be provided
without charge to the Claimant upon request.

 

(c)                                  Calculation
of Time Periods.  For purposes of the
time periods specified in this Section, the period of time during which a
benefit determination is required to be made begins at the time a claim is
filed in accordance with the Plan procedures without regard to whether all the
information necessary to make a decision accompanies the claim.  If a period of time is extended due to a
Claimant’s failure to submit all information necessary, the period for making
the determination will be tolled from the date the notification is sent to the
Claimant until the date the Claimant responds.

 

(d)                                 Failure
of Plan to Follow Procedures.  If the
Plan fails to follow the claims procedures required by this Section, a Claimant
will be deemed to have exhausted the administrative remedies available under
the Plan and will be entitled to pursue any available remedy under ERISA
section 502(a) on the basis that the Plan has failed to provide a
reasonable claims procedure that would yield a decision on the merits of the
claim.

 

(e)                                  Failure
of Claimant to Follow Procedures.  A
Claimant’s compliance with the foregoing provisions of this Section 8.3 is
a mandatory prerequisite to the Claimant’s right to commence any legal action
with respect to any claim for benefits under the Plan.

 

ARTICLE 9

 

AMENDMENT

 

9.1                                 RIGHT
TO AMEND.  The Company, by written
instrument executed by a duly authorized representative of the Company, 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 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

 

18

 

such amendment shall be considered prejudicial to any interest of a
Participant or a Beneficiary hereunder.

 

ARTICLE 10

 

SUSPENSION OR TERMINATION OF THE PLAN

 

10.1                           RIGHT
TO SUSPEND PLAN.   The Company (or
the Employer, with respect to its Employees or Directors) reserves the right to
suspend the operation of the Plan for a fixed or indeterminate period of
time.  In the event of a suspension of
the Plan, during the period of the suspension, the Employer shall continue all
aspects of the Plan other than Employer Contribution Credits to the Plan and,
effective with the first day of the Plan Year following the date the Plan is
suspended, Compensation Deferrals. Payments of distributions will continue to
be made during the period of the suspension in accordance with Articles 5 and
6.

 

10.2                           AUTOMATIC
TERMINATION OF PLAN.   The Plan, but
not the Trust, automatically shall terminate upon the dissolution of the
Company, or upon a 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.  If the merger or consolidation
qualifies as a change in the ownership or effective control of a corporation,
or a change in the ownership of a substantial portion of the assets of a
corporation as defined in Treas. Reg. 1.409A-3(i)(5), the Plan shall be
liquidated upon such a termination in accordance with Treas. Reg.
1.409A-3(j)(4)(ix)(B).  If the Plan is
not liquidated, payments of distributions will continue to be made following
the termination in accordance with Articles 5 and 6.

 

10.3                           TERMINATION
AND LIQUIDATION OF THE PLAN.   The
Company may terminate and liquidate the Plan in connection with a corporate
dissolution or approval by a bankruptcy court, certain change in control
events, or the termination and liquidation of all plans  that are required to be aggregated, as
described under Treas. Reg. 1.409A-3(j)(4)(ix). 
Upon the date of termination, the value of the vested Accounts of all
affected Participants and Beneficiaries shall be determined.  After deduction of estimated expenses in
liquidating and paying Plan benefits, vested Accounts shall be paid to
Participants and Beneficiaries in a lump sum distribution in accordance with
Treas. Reg. 1.409A-3(j)(4)(ix).

 

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.

 

19

 

ARTICLE 12

 

MISCELLANEOUS

 

12.1                           LIMITATIONS
ON LIABILITY OF COMPANY AND 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 Company or an Employer, or any officer
or employee thereof except as provided by law or by any Plan provision.  The Company and the Employer do 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 Company or Employer, or any successor, employee, officer, director or
stockholder of the Company or 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.

 

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; except to the extent that Code section 409A requires that this
Section be disregarded because it purports to nullify Plan terms that are
not in compliance with Code section 409A. 
For all purposes of the Plan, where the context permits, 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 or any right or claim to any benefit under the Plan unless such
right or claim has specifically accrued hereunder.

 

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.

 

12.4                           LEAVE OF ABSENCE.  If a Participant is authorized by the
Employer for any reason to take a paid leave of absence from the employment of
the Employer, the Participant shall continue

 

20

 

to be considered employed by the Employer and
his or her elected annual deferral amount shall continue to be withheld during
such paid leave of absence.  If a
Participant is authorized by the Employer for any reason to take an unpaid
leave of absence from the employment of the Employer, the Participant shall
continue to be considered employed by the Employer and the Participant shall be
excused from making deferrals until the Participant returns to a paid
employment status.  Upon such return,
deferrals shall resume for the remaining portion of the Plan Year in which the
return occurs, based on the deferral election, if any, made for that Plan
Year.  If no election was made for that
Plan Year, no deferral shall be withheld. 
Notwithstanding the forgoing, the Committee shall interpret this Section 12.4
in a manner that is consistent with Code Section 409A and the regulations
thereunder, including without limitation, guidance issued in connection with
that Section.

 

12.5                           LEGAL FEES.  If, following a Change in Control of the
Company or Employer, it should appear to any Participant that the Company, the
Participant’s Employer or any successor corporation has failed to comply with
any of its obligations under the Plan or any agreement thereunder or, if the
Company, such Employer or any other person takes any action to declare the Plan
void or unenforceable or institutes any litigation or other legal action designed
to deny, diminish or to recover from any Participant the benefits intended to
be provided (collectively, the “Dispute”), then the Company and the Participant’s
Employer shall pay, if the Participant prevails in the Dispute, the Participant’s
reasonable legal fees and court costs actually incurred by the Participant in
the initiation or defense of the Dispute, whether by or against the Company or
the Participant’s Employer or any director, officer, shareholder or other
person affiliated with the Company, the Participant’s Employer or any successor
thereto.  A Participant shall be entitled
to reimbursement of the legal fees described under this Section 12.5
during the period commencing on the date of a Change in Control and ending on
the date that is 10 years after the date of Change in Control.  Any reimbursement of legal fees under this Section 12.5
shall be made on or before the last day of the Plan Year following the Plan
Year in which the expense is incurred. 
The amount of expenses eligible for reimbursement during a Plan Year
shall not affect the expenses eligible for reimbursement in any other Plan
Year.  The right to reimbursement under
this Section is not subject to liquidation or exchange for another
benefit.

 

12.6                           NONASSIGNABILITY.  Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in
advance of actual receipt, the amounts, if any, payable hereunder, or any part
thereof, which are, and all rights to which are expressly declared to be,
unassignable and non-transferable.  No
part of the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, be transferable by operation of law in the event of a Participant’s or
any other person’s bankruptcy or insolvency or be transferable to a spouse as a
result of a property settlement or otherwise, except as provided in Section 12.8.

 

12.7                           UNSECURED GENERAL
CREDITOR. Participants and their Beneficiaries, heirs, successors and
assigns shall have no legal or equitable rights, interests or claims in any
property or assets of an Employer.  For
purposes of the payment of benefits under this Plan, any and all of an Employer’s
assets shall be, and remain, the general, unpledged unrestricted assets of the
Employer.  An Employer’s obligation under
the Plan shall be merely that of an unfunded and unsecured promise to pay money
in the future.

 

21

 

12.8                           COURT ORDER. The Employer is authorized to make any payments
directed by court order in any action in which the Plan or the Employer has
been named as a party.  In addition, if a
court determines that a spouse or former spouse of a Participant has an
interest in the Participant’s benefits under the Plan in connection with a
property settlement or otherwise, the Employer, in its sole discretion, shall
have the right, notwithstanding any election made by a Participant, to
immediately distribute the spouse’s or former spouse’s interest in the
Participant’s benefits under the Plan to that spouse or former spouse as
permitted under Treas. Reg. 1.409A-3(j)(4)).

 

12.9                           CODE SECTION 409A.  
It is intended that the Plan comply with Code Sections 409A(a)(1) to
(4) and (b)(1) to (2). The Plan shall be administered and interpreted
in a manner consistent with those foregoing sections.

 

12.10                     UNVESTED ACCOUNT BALANCES UNDER PRIOR PLAN.  
If a Participant participated in the Executive and Director Deferred
Compensation Plan, as amended and restated as of January 1, 2003, and all
or a part of the Participant’s account balance under that plan was unvested as
of January 1, 2005, that unvested balance will be transferred to this Plan
in accordance with Code Section 409A and the regulations thereunder, and
such balance shall be administered in accordance with the provisions of this
Plan, provided, however, that the vesting of that balance shall be based on the
applicable vesting schedule(s) under the Executive and Director Deferred
Compensation Plan, which are incorporated herein by reference.

 

12.11                     AGGREGATION OF EMPLOYERS.  
If the Employer is a member of a controlled group of corporations or a
group of trades or business under common control (as described in Code section
414(b) or (c), but substituting a 50% ownership level for the 80% level
set forth in those Code Sections), all members of the group shall be treated as
a single Employer for purposes of whether there has occurred a Separation from
Service and for any other purposes under the Plan as Code section 409A shall
require.

 

12.12                     AGGREGATION OF PLANS.   If the
Company or an Employer offers other elective or non-elective account balance
deferred compensation plans in addition to the Plan, those plans together with
the Plan shall be treated as a single plan to the extent required under Code
section 409A for purposes of determining whether a Participant may make a
deferral election pursuant to Section 3.2 within 30 days of becoming
eligible to participate in the Plan, for purposes of cashing out de minimus
amounts pursuant to Section 6.5 and for any other purposes under the Plan
as Code section 409A shall require.

 

12.13                     USERRA.  
Notwithstanding anything herein to the contrary, any distribution
election provided to a Participant as necessary to satisfy the requirements of
the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended,
shall be permissible hereunder.

 

22

 

IN WITNESS WHEREOF,
the Employer has caused this Plan to be executed and effective as of the 1st day of January, 2005.

 

 

	
  ATTEST

  	
   

  	
  THE
  RYLAND GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  
							

 

23Exhibit 10.31

 

THE RYLAND
GROUP, INC.

TRG
INCENTIVE PLAN

(as amended
and restated, effective January 1, 2005)

 

The Ryland Group, Inc. (the “Company”) has
established the TRG Incentive Plan (the “Plan”) to provide incentive
compensation for those key employees whose efforts may significantly affect the
Company’s earnings and performance. The Plan provides for the payment of cash
awards as well as the issuance of Common Stock of the Company and the crediting
of Stock Units as awards under The Ryland Group, Inc. 2002 Equity
Incentive Plan, the terms of which are incorporated herein by reference for all
relevant purposes.  The
Plan is being amended and restated effective January 1, 2005 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.

 

1.      Definitions

 

The terms below shall have
the following meanings:

 

(a)     
“Board” shall mean the Board of
Directors of the Company.

 

(b)      “Cash Account” shall mean an account
established for each Participant to be credited with the cash portion of
Performance Awards. The Cash Account shall consist of separate sub-accounts for
amounts credited, if any, with respect to each Performance Year.

 

(c)     
“Code” shall mean the Internal
Revenue Code of 1986, as amended from time to time and any successor to such
Code.

 

(d)      “Committee” shall mean the Compensation
Committee of the Board or a subcommittee of the Compensation Committee composed
of two or more “outside directors” as defined in Code Section 162(m) and
the regulations thereunder.

 

(e)     
“Common Stock” shall mean shares
of Common Stock of the Company.

 

(f)      “Common Stock Account” shall mean an
account established for each Participant to be credited with the Stock Unit
portion, if any, of Performance Awards. The Common Stock Account shall consist
of separate sub-accounts for Stock Units credited, if any, with respect to each
Performance Year.

 

(g)      “Company” shall mean The Ryland Group, Inc.,
its subsidiaries, partnerships and other related entities and affiliates,
except where the context applies solely to The Ryland Group, Inc. as
determined by the Committee.

 

(h)     
“Disability” shall mean a period during
which a Participant (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, (ii) is, by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, receiving income replacement benefits for
a period of not less than three (3) months under an accident and health
plan covering employees of the Employer, or (iii) is determined to be
totally disabled by the Social Security Administration.

 

(i)     
“Employee” shall mean any person
employed by the Company.

 

(j)      “Fair Market Value” shall mean a price or
value for the Common Stock of the Company, as determined by the Committee to be
the fair market value of the Common Stock, which can be the opening, closing or
other quoted price on the New York Stock Exchange or other exchange on which
the Common 

 

 

Stock
is traded or the first, last or other reported sales price if quoted on the
NASDAQ National Market System or other over-the-counter market.

 

(k)      
“Participant” shall mean an
Employee selected to participate in the Plan pursuant to Section 2.

 

(l)      
“Performance Award” shall mean
the amount of any award to a Participant based on the Company’s achievement of
the Performance Goal(s) for a Performance Period.

 

(m)       “Performance Goal” shall mean the
performance target selected by the Committee to determine the amount of any
Performance Award under the Plan.

 

(n)       “Performance Period” shall mean the period
as established pursuant to Section 4 over which the Performance Goal(s) are
measured for the purpose of determining the extent to which a Performance Award
is earned.

 

(o)       “Performance Year” shall mean the final
fiscal year of the Company of the Performance Period over which Performance
Goals are measured for the purpose of determining the extent to which a
Performance Award is earned.

 

(p)      
“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 Employer, if that is less than 36 months).

 

(q)      
“Stock Unit” shall mean a unit
representing one share of Common Stock.

 

(r)       “Vested Deferred Award” shall mean the
portion of any Deferred Award which is vested pursuant to the Plan, but which
has not been paid to the Participant.

 

2.      
Participants

 

The Committee periodically
determines those Employees who are eligible and selected to participate in the
Plan.

 

3.      
Administration

 

The Plan is administered by the Committee. The
Committee shall establish the Performance Goal(s) for each Performance
Period, review the Company’s actual performance results to assess the extent to
which Performance Goal(s) have been met and Performance Awards have been
earned, approve Performance Awards and make any other determinations,
interpretations or decisions required in connection with the Plan. The
Committee shall have the authority to amend, modify and interpret the Plan and
make all determinations relating to the Plan and the Participants. Decisions of
the Committee on all matters relating to the Plan are conclusive and binding on
all parties, including the Company and the Participants. No member of the
Committee is liable for any act done or determination made in good faith in
administering, construing or interpreting the Plan.

 

4.      
Performance
Awards

 

(a)      Establishment of
Performance Awards. For each Performance Year and/or Performance Period, the
Committee shall determine and set forth in writing not later than 90 days after
the commencement of the Performance Year:

 

          
(i)       the Participants;

 

 

          
(ii)      the target amount of and formula for
determining Performance Awards;

 

          
(iii)     the Performance Goal or Goals for determining
Performance Awards;

 

          
(iv)     whether the Performance Awards will be paid in
cash, Common Stock or Stock Units; and

 

          
(v)      any other terms relating to Performance
Awards under the Plan.

 

          
The Performance Goal or Goals shall be based upon the average return on
stockholders’ equity of the Company as set forth in the audited financial
statements for the Performance Year and the two fiscal years prior to the
Performance Year. The maximum Performance Award that may be earned by any
Participant for any Performance Year is $6,000,000. The Committee may reduce or
eliminate Performance Awards for any reason in its sole discretion, but may not
increase the amount of a Performance Award payable to any Participant for a
given Performance Period after the Performance Goal for that period has been
established.

 

(b)     
Determination, Payment and Crediting of Performance Awards.

 

          
(i)       Within 90 days after the end of each
Performance Year, the Committee shall determine and set forth in writing the
amount of any Performance Award earned by a Participant or group of
Participants.

 

          
(ii)      One-third of each Performance Award (the “Initial
Payment”) shall vest as of December 31 of the related Performance Year and
shall be payable within 90 days thereafter, but not earlier than the Committee’s
determination that such award was earned. As determined by the Committee,
either all or one-half of the Initial Payment shall be paid in cash and either
none or one-half shall be paid in a whole number of shares of Common Stock
determined by dividing one-half of the Initial Payment by the Fair Market Value
of the Common Stock on the first trading day of the Company’s first fiscal year
following the related Performance Year, provided that if a fractional number of
shares results, cash shall be paid in lieu of any fractional share.

 

          
(iii)     The remaining two-thirds of each Performance
Award (the “Deferred Award”) shall be credited to the Participant’s Cash
Account or, if applicable, to the Participant’s Common Stock Account, effective
as of January 1 of the Company’s first fiscal year following the related
Performance Year. As determined by the Committee, either all or one-half of the
Deferred Award shall be credited to the Participant’s Cash Account and either
none or one-half of the Deferred Award shall be credited in the form of Stock
Units to the Participant’s Common Stock Account. For the purposes of the
foregoing, the number of Stock Units, if any, to be credited to the Participant’s
Common Stock Account shall be equal to one-half of the Deferred Award earned
divided by the Fair Market Value of the Common Stock on the first trading day
of the Company’s first fiscal year following the related Performance Year. If a
fractional number of shares results from the calculation of the Stock Units
credited to a Common Stock Account, cash will be credited to the Participant’s
Cash Account in lieu of any fractional shares.

 

          
(iv)     No Performance Award(s) shall be earned or
credited for any Performance Year during which a Participant terminates
employment prior to December 31.

 

(c)      Rights in Respect
of Stock Units. Stock Units shall not represent an actual ownership interest in
Common Stock and the Participant shall have no voting or other rights as a
stockholder in respect of Stock Units including, except as provided in the next
sentence, any right to payment on account of dividends or distributions in
respect of the Common Stock represented thereby. With respect to the total
amount of any cash dividends paid annually in respect of the Company’s Common
Stock, Participants are entitled to receive an annual cash payment in an amount
equal to the annual cumulative total of dividends declared and paid for any
particular calendar year (the “Dividend Determination Year”), to the extent of
any dividends not previously paid to or received by a Participant, which the
Participant would have 

 

 

received
if the Stock Units credited to the Participant’s Common Stock Account actually
had represented shares of Common Stock as of the record date (this payment is
referred to as the “Annual Payment”). The right to this Annual Payment applies
to the cumulative annual amount of cash dividends paid on account of the Common
Stock on any record date on or after the end of a Performance Year related to
the Stock Units credited to the Participant’s Common Stock Account, to the
extent of any dividends not previously paid to or received by a Participant.
The Annual Payment shall be determined and paid within 45 days of the later of October 15th
or the third quarter record date for a quarterly cash dividend payable during
the Company’s fiscal year for any applicable Dividend Determination Year.  A Participant must be employed on the date each
Annual Payment is made to be entitled to payment.

 

(d)      Earnings on Cash
Account. Earnings can be credited to a Participant’s Cash Account on a basis,
in a manner, and at the rate established from time to time by the Committee
that is reasonable under Section 162(m) of the Internal Revenue Code.  Any earnings that are credited to a
Participant’s Cash Account shall be paid at the time and in the manner the
Vested Deferred Award to which such earnings are attributable is paid.

 

5.    
Vesting and
Payment of Deferred Awards

 

(a)     
Vesting of Deferred Awards.

 

          
(i)       The Deferred Award for a Performance
Year will vest in two equal installments on December 31of each of the
Company’s first and second fiscal years following the related Performance Year
(the “Vesting Date”) provided the Participant is employed by the Company on the
Vesting Date.

 

          
(ii)      Notwithstanding Section 5(a)(i), upon
the death, Disability or retirement (as defined by the Company, in its discretion)
of a Participant, all amounts of Deferred Awards shall become fully vested.

 

          
(iii)     Upon a Participant’s voluntary termination of
employment with the Company, all Vested Deferred Awards shall be paid to the
Participant in accordance with the terms of this Plan and any Deferred Awards
which have not vested as of the effective date of the Participant’s voluntary
termination of employment shall be forfeited.

 

          
(iv)     Upon a Participant’s involuntary termination of
employment by the Company without cause, all Vested Deferred Awards shall be
paid to the Participant in accordance with the terms of this Plan and any
Deferred Awards which have not vested as of the effective date of the
Participant’s involuntary termination of employment shall be forfeited.

 

          
(v)      Upon a Participant’s termination of
employment by the Company “for cause,” the Participant forfeits all Performance
Awards, all Initial Payments that have not been paid, and all unvested and
Vested Deferred Awards credited to the Participant’s Cash or Common Stock
Accounts. A termination “for cause” is a termination pursuant to a finding or
determination by the Company of theft, fraud, embezzlement or any act which is
detrimental or damaging to the business, operation or reputation of the
Company.

 

(b)      Payment of Vested
Deferred Awards.

 

Vested Deferred Awards shall be paid on the earliest
of the following events:

 

(i)    On the December 31 of the Company’s first
fiscal year following the related Performance Year (or within 90 days
thereafter), one-half of the Deferred Award (i.e., one-third of the total
Performance Award) for a Performance Year, to the extent vested, shall be paid
to the Participant.

 

(ii)   On the December 31 of the second fiscal
year following the related Performance Year (or within 90 days thereafter), one-half
of the Deferred Award (i.e., one-third of the total Performance Award) for a
Performance Year, to the extent vested, shall be paid to the Participant.

 

 

(iii)   Upon
the Participant’s Disability or death (or within 90 days thereafter), the Participant’s
entire Vested Deferred Award shall be paid in a lump sum to the Participant
(or, in the case of death, to the Participant’s beneficiary).

 

(iv)   Upon the Participant’s Separation from Service,
the Participant’s entire Vested Deferred Award (to the extent the Vested
Deferred Award is not forfeited pursuant to Section 5(a)(iii), (iv), or
(v)) shall be paid in a lump sum to the Participant on the date that is six
months following the date of Separation from Service (or within 30 days
thereafter).

 

(v)   Payments
shall be made in cash to the extent the Vested Deferred Award is credited to a
Participant’s Cash Account and in a number of shares of Common Stock equal to
the Stock Units to the extent the Vested Deferred Award is credited to the
Participant’s Common Stock Account. The Stock Units credited to a Participant’s
Common Stock Account in connection with a Vested Deferred Award can be
converted to and paid in cash, if determined by the Committee, in the amount of
the closing Fair Market Value of the shares of Common Stock related to the
Stock Units converted and paid in cash on the first trading day of the Company’s
fiscal year in which the conversion or cash payment is made.

 

6.     
Dilution and
Other Adjustments

 

The Committee can, in its sole discretion, require
an adjustment in the Common Stock Accounts held by Participants in the event of
any change in the outstanding shares of Common Stock by reason of any stock
dividend or stock split, recapitalization, reclassification, merger, share
exchange, consolidation, combination or exchange of shares or other similar
change.

 

7.     
Change of
Control

 

(a)      For purposes of
this Plan, a Change of Control shall mean the first to occur of any of the
following events:

 

(i)  The acquisition by any person other than the Company, or more
than one person acting as a group, together with stock held by such person or
group, of beneficial ownership of more than 50% of the total fair market value
or total voting power of the Company’s then outstanding voting securities;

 

(ii)  Any one person or more than one person acting as a group
acquires, or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or group, beneficial ownership of 35% or
more of the total voting power of the Company’s then outstanding voting
securities;

 

(iii)  A majority of the members of the Company’s Board is
replaced during any 12-month period by directors whose appointment or election
is not endorsed or approved by a majority of the members of the Board who were
members of the Board prior to the initiation of the replacement; or

 

(iv)  Any one person or more than one person acting as a group
acquires, or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or group, assets of the Company that
have a total gross fair market value of 40% or more of the total gross fair
market value of all of the assets of the Company immediately prior to the
initiation of the acquisition.

 

(b)      Upon the
occurrence of a Change of Control, all Deferred Awards shall immediately vest
and be paid to Participants within 30 days of the date on which the Change of
Control occurs.

 

8.     
Miscellaneous

 

(a)      Tax Withholding.  The Company shall
have the right to deduct from any payments made or benefits accrued under the
Plan, any Federal, state, or local taxes required by law to be withheld. In the
case of awards paid in Common Stock, a Participant may elect to have any
portion of any withholding taxes

 

 

payable
in respect of a distribution of Common Stock satisfied through the retention by
the Company of shares of Common Stock having a Fair Market Value on the date of
withholding equal to the withholding amount, subject to compliance with any
requirements of applicable law and subject to such other restrictions as the
Company may impose.

 

(b)      Employment Rights.  Neither the Plan
nor any action taken hereunder shall be construed as giving an Employee or
Participant any right to be retained in the employ of the Company nor shall any
action taken hereunder be construed as entitling the Company to the services of
any Employee or Participant for any period of time.

 

(c)      Beneficiaries.  Each Participant
shall have the right, at any time, to designate a beneficiary or beneficiaries
(both primary and contingent) to whom payments under this Plan shall be made if
the Participant dies and amounts under this Plan are payable following the
Participant’s death. Any beneficiary designation shall be made in writing and
filed with the Company and shall become effective only when received and
accepted by the Company.

 

          
A Participant may change his beneficiary designation by filing a new
designation with the Company. The filing of a new beneficiary designation will
cancel any and all beneficiary designations previously filed.

 

          
If a Participant fails to designate a beneficiary, or if all designated
beneficiaries predecease the Participant or die prior to complete distribution
of the Participant’s benefits, the payments under this Plan shall be made to
the Participant’s Estate.

 

(d)      Nontransferability.  A person’s
rights and interest under this Plan, including amounts payable, shall be solely
the rights of a general unsecured creditor of the Company and such rights may
not be assigned, pledged or transferred except to a designated beneficiary as
provided above.

 

(e)      Governing Law.  All matters relating
to the Plan or to any Performance Awards granted under the Plan shall be
governed by the laws of the State of Maryland.

 

(f)       Shareholder Approval.  The Plan, as
amended and restated herein, shall be submitted to the Company’s stockholders
for approval in accordance with Code Section 162(m). After the Plan is
approved by the Company’s stockholders, this Plan may not be amended or changed
without stockholder approval if the amendment or change would limit the
deductibility of Performance Awards paid or distributed pursuant to the Plan
under Code Section 162(m).

 

9.                      Amendments

 

Subject to Section 8(f) above, the
Committee may, in its sole and absolute discretion, amend, suspend or terminate
the Plan or any portion of the Plan at any time. The Committee may also, at any
time, in their sole and absolute discretion, amend, revise or modify the terms
of a Participant’s Performance Award(s) or any terms or conditions related
to a Participant’s Performance Award(s), including the terms and conditions
related to the vesting of Performance Award(s), Initial Payment(s) and any
Deferred Awards, notwithstanding anything in this Plan or in any Performance
Award to the contrary.

 

10.      Aggregation of Employers

 

If the Company is a member
of a controlled group of corporations or a group of trades or business under
common control (as described in Code section 414(b) or (c), but
substituting a 50% ownership level for the 80% level set forth in those Code
Sections), all members of the group shall be treated as a single employer for
purposes of whether there has occurred a Separation from Service and for any
other purposes under the Plan as Code section 409A shall require.

 

 

11.      Aggregation of Plans.

 

If the Company offers other
non-elective account balance deferred compensation plans in addition to this
Plan, those plans together with this Plan shall be treated as a single plan to
the extent required under Code section 409A.

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