Exhibit 10.14


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

  	
   

  	
  3

  
	
  1.20

  	
   

  	
  PARTICIPANT ELECTION FORM

  	
   

  	
  3

  
	
  1.21

  	
   

  	
  PLAN

  	
   

  	
  3

  
	
  1.22

  	
   

  	
  PLAN YEAR

  	
   

  	
  3

  
	
  1.23

  	
   

  	
  SEPARATION FROM SERVICE

  	
   

  	
  3

  
	
  1.24

  	
   

  	
  SPECIFIED EMPLOYEE

  	
   

  	
  3

  
	
  1.25

  	
   

  	
  TRUST

  	
   

  	
  3

  
	
  1.26

  	
   

  	
  TRUSTEE

  	
   

  	
  3

  
	
  1.27

  	
   

  	
  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

  	
   

  	
  9

  
	
  5.2

  	
   

  	
  UNFORESEEABLE EMERGENCY DISTRIBUTIONS

  	
   

  	
  10

  
	
  5.3

  	
   

  	
  DEATH

  	
   

  	
  11

  
	
  5.4

  	
   

  	
  TRUST

  	
   

  	
  11

  
	
  5.5

  	
   

  	
  RE-EMPLOYMENT OF RECIPIENT, ETC.

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  6

  
	
  DISTRIBUTION
  OF BENEFITS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  AMOUNT

  	
   

  	
  12

  
	
  6.2

  	
   

  	
  METHOD OF PAYMENT

  	
   

  	
  12

  
	
  6.3

  	
   

  	
  DEATH BENEFITS

  	
   

  	
  12

  
	
  6.4

  	
   

  	
  WITHHOLDING

  	
   

  	
  13

  
	
  6.5

  	
   

  	
  EMPLOYER DISCRETION

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 



 ii
 








 


	
  ARTICLE 8

  
	
  ADMINISTRATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  ADMINISTRATIVE AUTHORITY

  	
   

  	
  14

  
	
  8.2

  	
   

  	
  LITIGATION

  	
   

  	
  15

  
	
  8.3

  	
   

  	
  CLAIMS PROCEDURE

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  9

  
	
  AMENDMENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  RIGHT TO AMEND

  	
   

  	
  19

  
	
  9.2

  	
   

  	
  AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  10

  
	
  TERMINATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  RIGHT TO TERMINATE OR SUSPEND PLAN

  	
   

  	
  19

  
	
  10.2

  	
   

  	
  SUSPENSION OF DEFERRALS

  	
   

  	
  19

  
	
  10.3

  	
   

  	
  ALLOCATION AND DISTRIBUTION

  	
   

  	
  19

  
	
  10.4

  	
   

  	
  SUCCESSOR TO EMPLOYER

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  11

  
	
  THE
  TRUST

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  ESTABLISHMENT OF TRUST

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  12

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  LIMITATIONS ON LIABILITY OF EMPLOYER

  	
   

  	
  20

  
	
  12.2

  	
   

  	
  CONSTRUCTION

  	
   

  	
  20

  
	
  12.3

  	
   

  	
  SPENDTHRIFT PROVISION

  	
   

  	
  21

  
	
  12.4

  	
   

  	
  LEAVE OF ABSENCE

  	
   

  	
  21

  
	
  12.5

  	
   

  	
  LEGAL FEES

  	
   

  	
  21

  
	
  12.6

  	
   

  	
  NONASSIGNABILITY

  	
   

  	
  22

  
	
  12.7

  	
   

  	
  UNSECURED GENERAL CREDITOR

  	
   

  	
  22

  
	
  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

  	
   

  	
  23

  



 



 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 separation from service within the meaning of Code
Section 409A.


1.24                           SPECIFIED
EMPLOYEE means, with respect to a corporation any stock of which is
publicly traded on an established securities market or otherwise, a key
employee, as currently defined in Code Section 416(i) (without regard to
paragraph (5) thereof) to mean, as of the Effective Date, an employee of the
Employer who, at any time during the Plan Year, is (i) an officer of the
Employer having an annual compensation greater than $135,000 for 2005 (indexed
for inflation in future years); (ii) a five percent owner of the Employer; or
(iii) a one percent owner of the Employer having an annual compensation from
the Employer of more than $150,000.


1.25                           TRUST
means the Trust established pursuant to Article 11.


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


1.27                           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 



 3
 








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 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 (i) terminate any deferral election the Participant has made for the
remainder of the Plan Year in which the Participant’s membership status changes
and/or (ii) prevent the Participant from making future deferral
elections.  Notwithstanding the
foregoing, the Committee shall interpret this Section 2.4 in a manner that is
consistent with Code Section 409A and the regulations thereunder, including
without limitation guidance issued in connection with that Section.


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 


 



 4
 








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 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



 5
 








(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.


3.2                                 PARTICIPANT
COMPENSATION DEFERRALS.  In
connection with a Participant’s commencement of participation in the Plan, the
Participant shall make an irrevocable deferral election of Compensation for the
Plan Year in which the Participant commences participation in the Plan for
services yet to be performed, along with such other elections as the Company
deems necessary or desirable under the Plan. 
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 so, the Committee may
allow participants to make a deferral election with respect to such
Compensation by timely delivering an Election Form to the Committee, in
accordance with its rules and procedures, no later than six months before the
end of the performance service period for such Compensation.  “Performance-based compensation” shall be
compensation based on services performed over a period of at least 12 months in
accordance with Code Section 409A and related guidance.


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
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.



 6
 








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 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.  Any
election so made and accepted by the Company shall apply as soon as is
reasonably practicable following the Company’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 



 7
 








“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.


(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 



 8
 








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
time of initial deferral (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 of Control of the 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 



 9
 








payment date or Change of
Control, such delay is at least five (5) full calendar years in length.   A distribution date may not be accelerated.


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


Notwithstanding
the foregoing, if and when the Employer becomes a corporation whose stock is
publicly traded on an established securities market or otherwise, any
Participant who is a Specified Employee and elects to receive distribution upon
Separation from Service shall not be entitled to receive a distribution of the
Account (or, in the case of installments, distributions from the Account may
not commence) under this Section prior to the date which is at least six (6)
months after the date or his or her Separation from Service (or, if earlier,
his or her death).


For purposes of
this Section, a “Separation from Service” means separation from service within
the meaning of Code section 409A, including the termination of Board membership
with respect to a Participant who is a Board member.


For purposes of
this Section, a “Change of Control” means a change of control of the Company
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 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 



 10
 








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 or
Beneficiary resulting from an illness or accident of the Participant or Beneficiary,
the Participant’s or Beneficiary’s spouse or a dependent (as defined in Code
section 152(a)) of the Participant or Beneficiary, (b) loss of the Participant’s
or Beneficiary’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 or Beneficiary, 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.


5.5                                 RE-EMPLOYMENT
OF RECIPIENT, ETC.  If a Participant
receiving installment distributions pursuant to Section 6.2 is re-employed by
the Employer (or becomes a member of the Company’s Board of Directors), the
remaining distribution(s) due to the Participant shall be suspended until such
time as the Participant (or his or her Beneficiary) once again becomes eligible
for benefits under Section 5.1 or Section 5.2, at which time such
distribution(s) shall commence, subject to the limitations and conditions
contained in this Plan.  Notwithstanding
the foregoing, the Committee shall interpret this Section 5.4 in a manner that
is consistent with Code Section 409A and the regulations thereunder, including
without limitation guidance issued in connection with that Section.


 



 11















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).


(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 time of
initial deferral.  “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 of Control, the payment
date (or commencement of payments) is delayed for at least five (5) full
calendar years..


Notwithstanding
the preceding, to the extent permitted under Code section 409A and by the
Employer, the Participant may elect the form of distributions during 2005, 2006
or 2007 (except that (i) a Participant cannot in 2006 change payment elections
with respect to payments that the Participant would otherwise receive in 2006,
or in 2006 make an election that causes post-2006 scheduled payments to be made
in 2006 or (ii) a Participant cannot in 2007 change payment elections with
respect to payments that the Participant would otherwise receive in 2007, or in
2007 make an election that causes post-2007 scheduled payments to be made in
2007), 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 



 12
 









a lump sum to the
person or persons designated in accordance with Section 7.1.  Notwithstanding the foregoing, the Committee
shall interpret this Section 6.3 in a manner that is consistent with Code
Section 409A and the regulations thereunder, including without limitation
guidance issued in connection with that Section.


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.


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, 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).


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 



 13
 









to the Participant’s
estate without liability for any tax or other consequences which might flow
therefrom, or may take such other action as the Employer deems to be
appropriate.


7.2                                 INFORMATION
TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES; INABILITY TO LOCATE
PARTICIPANTS OR BENEFICIARIES.  Any
communication, statement or notice addressed to a Participant or to a Beneficiary
at his or her last post office address as shown on the Employer’s records shall
be binding on the Participant or Beneficiary for all purposes of the Plan.  The Employer shall not be obliged to search
for any Participant or Beneficiary beyond the sending of a registered letter to
such last known address.  If the Employer
notifies any Participant or Beneficiary that he or she is entitled to an amount
under the Plan and the Participant or Beneficiary fails to claim such amount or
make his or her location known to the Employer within three years thereafter,
then, except as otherwise required by law, if the location of one or more of
the next of kin of the Participant is known to the Employer, the Employer may
direct distribution of such amount to any one or more or all of such next of
kin, and in such proportions as the Employer determines.  If the location of none of the foregoing
persons can be determined within five years after the initial benefit payment
would otherwise be due, the Employer shall have the right to direct that the
amount payable shall be deemed to be a forfeiture, except that the dollar
amount of the forfeiture, unadjusted for deemed gains or losses in the interim,
shall be paid by the Employer if a claim for the benefit subsequently is made
by the Participant or the Beneficiary to whom it was payable. If a benefit
payable to an unlocated Participant or Beneficiary is subject to escheat
pursuant to applicable state law, the Employer shall not be liable to any
person for any payment made in accordance with such law.


ARTICLE 8


ADMINISTRATION


8.1                                 ADMINISTRATIVE
AUTHORITY.  Except as otherwise
specifically provided herein, the 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.



 14
 









(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 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.  In 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 



 15
 









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 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).



 16
 









(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 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 



 17
 









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;


(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.



 18
 









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


ARTICLE 10


TERMINATION


10.1                           RIGHT
TO TERMINATE OR SUSPEND PLAN.  The
Company reserves the right to terminate the Plan and/or the Employer’s
obligation to make further credits to Plan Accounts.  The Company also reserves the right to
suspend the operation of the Plan for a fixed or indeterminate period of time.


10.2                           SUSPENSION
OF DEFERRALS.  In the event of a
suspension of the Plan, the Employer shall continue all aspects of the Plan,
other than Compensation Deferrals and Employer Contribution Credits, during the
period of the suspension, in which event payments hereunder will continue to be
made during the period of the suspension in accordance with Articles 5 and 6.


10.3                           ALLOCATION AND DISTRIBUTION. 
This Section 10.3 shall become operative on a complete termination of
the Plan.  The provisions of this Section
10.3 also shall become operative in the event of a partial termination of the
Plan, as determined by the Employer, but only with respect to that portion of
the Plan attributable to the Participants to whom the partial termination is
applicable.  Upon the effective date of
any such event, notwithstanding any other provisions of the Plan, no persons
who were not theretofore Participants shall be eligible to become Participants,
the value of the interest of all Participants and Beneficiaries shall be
determined and, after deduction of estimated expenses in liquidating and, if
applicable, paying Plan benefits, paid to them in accordance with Articles 5
and 6.  Notwithstanding the foregoing,
the Committee shall interpret this Section 10.3 in a manner that is consistent
with Code Section 409A and the regulations thereunder, including without
limitation guidance issued in connection with that Section.



 19
 









Notwithstanding
anything in the Plan to the contrary, the Company, in its discretion, reserves
the right, by action of the Board, to terminate the Plan and distribute to
Participants their vested Account balances as permitted in accordance with the
Code (e.g., Prop. Reg. 1.409A-3(h)(2)(viii)).


10.4                           SUCCESSOR
TO EMPLOYER.  Any corporation or
other business organization which is a successor to the Employer by reason of a
consolidation, merger or purchase of substantially all of the assets of the
Employer shall have the right to become a party to the Plan by adopting the
same by resolution of the entity’s board of directors or other appropriate
governing body.


ARTICLE 11


THE TRUST


11.1                           ESTABLISHMENT
OF TRUST.  The Employer shall establish
the Trust with the Trustee pursuant to such terms and conditions as are set
forth in the Trust agreement to be entered into between the Employer and the
Trustee.  The Trust is intended to be
treated as a “grantor” trust under the Code and the establishment of the Trust
is not intended to cause the Participant to realize current income on amounts
contributed thereto, and the Trust shall be so interpreted.


ARTICLE 12


MISCELLANEOUS


12.1                           LIMITATIONS
ON LIABILITY OF EMPLOYER.  Neither
the establishment of the Plan nor any modification thereof, nor the creation of
any account under the Plan, nor the payment of any benefits under the Plan
shall be construed as giving to any Participant or other person any legal or
equitable right against the Employer, or any officer or employer thereof except
as provided by law or by any Plan provision. 
The Employer does not in any way guarantee any Participant’s Account
from loss or depreciation, whether caused by poor investment performance of a
deemed investment or the inability to realize upon an investment due to an
insolvency affecting an investment vehicle or any other reason.  In no event shall the Employer, or any
successor, employee, officer, director or stockholder of the Employer, be
liable to any person on account of any claim arising by reason of the
provisions of the Plan or of any instrument or instruments implementing its
provisions, or for the failure of any Participant, Beneficiary or other person
to be entitled to any particular tax consequences with respect to the Plan, or
any credit or distribution hereunder.


12.2                           CONSTRUCTION.  If any provision of the Plan is held to be
illegal or void, such illegality or invalidity shall not affect the remaining
provisions of the Plan, but shall be fully severable, and the Plan shall be
construed and enforced as if said illegal or invalid provision had never been
inserted herein.  For all purposes of the
Plan, where the context admits, the singular shall include the plural, and the
plural shall include the singular.  Headings
of Articles and Sections herein are inserted only for convenience of reference
and are not to be considered in the construction of the Plan.  The laws of the State of Maryland shall
govern, control and determine 



 20
 









all questions of
law arising with respect to the Plan and the interpretation and validity of its
respective provisions, except where those laws are preempted by the laws of the
United States.  Participation under the
Plan will not give any Participant the right to be retained in the service of
the Employer nor any right or claim to any benefit under the Plan unless such
right or claim has specifically accrued hereunder.


12.3                           SPENDTHRIFT
PROVISION.  No amount payable to a
Participant or a Beneficiary under the Plan will, except as otherwise specifically
provided by law, be subject in any manner to anticipation, alienation,
attachment, garnishment, sale, transfer, assignment (either at law or in
equity), levy, execution, pledge, encumbrance, charge or any other legal or
equitable process, and any attempt to do so will be void; nor will any benefit
be in any manner liable for or subject to the debts, contracts, liabilities,
engagements or torts of the person entitled thereto. Further, (i) the
withholding of taxes from Plan benefit payments, (ii) the recovery under the
Plan of overpayments of benefits previously made to a Participant or
Beneficiary, (iii) if applicable, the transfer of benefit rights from the Plan
to another plan, or (iv) the direct deposit of benefit payments to an account
in a banking institution (if not actually part of an arrangement constituting
an assignment or alienation) shall not be construed as an assignment or
alienation.


In the
event that any Participant’s or Beneficiary’s benefits hereunder are garnished
or attached by order of any court, the Employer or Trustee may bring an action
or a declaratory judgment in a court of competent jurisdiction to determine the
proper recipient of the benefits to be paid under the Plan.  During the pendency of said action, any
benefits that become payable shall be held as credits to the Participant’s or
Beneficiary’s Account or, if the Employer or Trustee prefers, paid into the
court as they become payable, to be distributed by the court to the recipient
as the court deems proper at the close of said action. Notwithstanding the
foregoing, the Committee shall interpret this Section 12.3 in a manner that is
consistent with Code Section 409A and the regulations thereunder, including
without limitation guidance issued in connection with that Section.


12.4                           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 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, 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 



 21
 









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.


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.


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.


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.  Notwithstanding the foregoing, the Committee
shall interpret this Section 12.8 in a manner that is consistent with Code
Section 409A and the regulations thereunder, including without limitation
guidance issued in connection with that Section.


12.9                           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. 
Should any provision of this Plan not comply with the provisions of Code
Section 409A listed above, that provision shall have no affect on the remaining
parts of this Plan and this Plan shall be construed and enforced as if such
provision had never been inserted herein.


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 



 22
 









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. 
To the extent required under Code section 409A, 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 sections 414(b) or (c)), 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 Section 409A shall require.


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.

  
	
   

  	
   

  
	
  /s/ Valerie S.
  Zook

  	
   

  	
  By:

  	
  /s/ Robert J. Cunnion, III

  
	
  Name:

  	
  Valerie S. Zook

  	
   

  	
  Name:

  	
  Robert J. Cunnion, III

  
	
  Title:

  	
  Vice President,
  Compensation and Benefits

  	
   

  	
  Title:

  	
  Senior Vice President, Human Resources

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
  December 6, 2006

  



 



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