THE STANDARD MANAGEMENT CORPORATION

                DEFERRED COMPENSATION PLAN


	ARTICLE I

	Purpose

	The purpose of the Standard Management Corporation Deferred
Compensation Plan (hereinafter referred to as the "Plan") is to
provide funds for retirement or death for certain executive and
management employees (and their beneficiaries) of Standard
Management Corporation.  It is intended that the Plan will aid in
retaining and attracting employees of exceptional ability by
providing such employees with a means to supplement their standard
of living at retirement.  This Plan is intended to qualify for the
exemptions described in sections 201(2), 301(a)(3), and 401(a)(1)
of the Employee Retirement Income Security Act of 1974, as
amended.


	ARTICLE II

	Definitions

	For the purpose of this Plan, the following words and phrases
shall have the meanings indicated, unless the context clearly
indicates otherwise:

2.1	Beneficiary.  "Beneficiary" means the person, persons, or
entity designated by the Participant, or as provided in
Article VIII, to receive any benefits payable under the Plan.
 Any Participant Beneficiary designation shall be made in a
written instrument filed with the Committee and shall become
effective only when received in writing by the Committee.

2.2	Board.  "Board" means the Board of Directors of  Standard
Management Corporation.

2.3	Committee.  "Committee" means the Deferred Compensation
Committee appointed by the Compensation Committee of the
Board.

2.4	Company.  "Company" means Standard Management Corporation and
its subsidiaries.

2.5 Compensation. "Compensation" or "Total Compensation" means
all regular remuneration for services payable by the Company
to a Participant in cash during a Plan Year, but before
reduction for amounts deferred pursuant to this Plan or any
other Plan of the Company.  The Committee shall determine
whether a particular item of income constitutes Compensation
if a question arises.


2.6	Declared Rate.  "Declared Rate" means the annual percentage
rate (APR) of interest to be credited to the executive's
deferral account.  Such rate is to be set annually by the
Committee.

2.7	Deferral Benefit.  "Deferral Benefit" means the benefit
payable to a Participant or Participant's Beneficiary on
Participant's retirement, death, disability, or termination
of employment as calculated in Article VII hereof.

2.8	Deferred Benefit Account.  "Deferred Benefit Account" means
the accounts maintained on the books of account of the
Company for each Participant pursuant to Article VI.  A
separate Deferred Benefit Account shall be maintained for
each Participant.  A Participant's Deferred Benefit Account
shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to the Participant
pursuant to the Plan.  A Participant's Deferred Benefit
Account shall not constitute or be treated as a trust fund of
any kind.

2.9	Determination Date.  "Determination Date" means the date as
of which the amount of a Participant's Deferred Benefit
Account is determined as provided in Article VI hereof.  The
last day of each calendar month shall be a Determination
Date.

2.10	Disability.  "Disability" or "Disabled Participant" means a
physical or mental condition of a Participant resulting in a
determination of disability for purposes of receiving
benefits under the Participant's employment contract then in
effect with the Company.

2.11	Participant.  "Participant" means any individual who is
deemed eligible by the Committee to participate in this Plan
and who elects to participate by filing a Participation
Agreement as provided in Article IV.

2.12	Participation Agreement.  "Participation Agreement" means the
agreement filed by a Participant prior to the beginning of
the first period for which any of the Participant's
Compensation is to be deferred pursuant to the Plan.  A form
of such Participation Agreement is attached hereto.

2.13 Plan Year.  "Plan Year" means a twelve month period
commencing January 1 and ending the following December 31.
The first Plan Year shall commence on January 1, 2002 and
terminate on December 31, 2002.

2.14 Normal Retirement Date.  "Normal Retirement Date" means the
first day of the month coincidental with or next following a
Participant's actual retirement under the Company's 401(k)
Plan.

2.15	Spouse.  "Spouse" means a Participant's wife or husband who
was lawfully married to the Participant at the time of the
Participant's death or a determination of Participant's
incompetency under paragraph 11.8.



	ARTICLE III

	Administration

3.1	Deferred Compensation Committee Duties.  This plan shall be
administered by the Committee.  Members of the Committee may
be Participants under this Plan.  The Committee shall also
have the authority to make, amend, interpret, and enforce all
appropriate rules and regulations  for the administration of
this Plan and decide or resolve any and all questions,
including interpretation of this Plan, as may arise in
connection with the Plan.

3.2	Binding Effect of Decision.  The decision or action of the
Committee with respect to any question arising out of or in
connection with the administration, interpretation, and
application of the Plan and the rules and regulations
promulgated hereunder shall be final, conclusive, and binding
upon all persons having any interest in the Plan, unless a
written appeal is received by the Committee within sixty days
of the disputed action.  The appeal will be reviewed by the
Committee and the decision of the Committee shall be final,
conclusive, and binding on the Participant and all persons
claiming by, through, or under the Participant.

	ARTICLE IV

	Participation

4.1	Participation.  Participation in the Plan shall be limited to
the class of those key employees selected by the Committee
who elect to participate in the Plan by filing a
Participation Agreement with the Committee.  A Participation
Agreement must be filed prior to December 20 immediately
preceding the Plan Year in which the Participant's
participation under the Agreement will commence.  The
election to participate shall be effective on the first day
of the Plan Year following receipt by the Committee of a
properly completed and executed Participation Agreement.

	With respect to an individual hired or promoted during a Plan
Year who thereby becomes eligible to participate herein, an
initial Participation Agreement may be filed within thirty
days of the Committee's notification to Participant of
eligibility to participate.  Such election to participate
shall be effective on the first day of the month following
the Committee's receipt thereof, except that elections not
received by the Committee on or before the 20th day of any
calendar month shall be effective no earlier than the first
day of the second month following the month of receipt.


4.2	Minimum and Maximum Deferral and Length of Participation.  A
Participant may elect in a Participation Agreement to defer a
portion of Participant's Compensation.  The minimum and
maximum amounts that may be deferred under a Participation
Agreement shall be as follows:

			            Minimum Deferral	  Maximum Deferral
Base Salary		     2% of Compensation	100% of Compensation
Incentive Compensation	2% of Compensation  100% of Compensation

	(a)	With respect to Compensation deferrals, the deferral
percentage elected in a Participation Agreement shall
be applied to the Participant's Compensation as
established for the first pay period of the Plan Year
to which the Participation Agreement applies, and the
resulting dollar amount shall be the amount of
Compensation that will be deferred in each pay period
over the Plan Year.  A Participation Agreement shall
apply to the Participant's Compensation payable over a
deferral period of one Plan Year, and thereafter to
each subsequent deferral period of one Plan Year until
the Participant's termination of Participant's
employment or until the election to defer is amended.

		Deferrals shall commence with the Plan Year immediately
following the Plan Year in which the respective
Participation Agreement is filed; provided, however,
that an initial Participation Agreement which is
effective other than on January 1 of a Plan Year shall
apply to the remainder of the Plan Year and to the
following Plan Years as set forth above.

	(b)	A Participant's election to defer Compensation shall be
irrevocable upon the filing of the respective
Participation Agreement; provided, however, that the
deferral of Compensation under any Participation
Agreement may be suspended or amended as provided in
paragraphs 7.4, 7.8, 9.1, or as further described in
this paragraph.

	(c)	A Participant may amend a deferral election with
respect to deferrals in subsequent Plan Years by filing
a new Participation Agreement with the Committee in the
manner provided in paragraph 4.3.  The new agreement
may change the amount of Compensation to be deferred or
discontinue deferrals.

4.3	Additional Participation Agreement.  A Participant may enter
into a new Participation Agreement by filing a Participation
Agreement with the Committee prior to December 20th of any
calendar year, stating the amount that the Participant elects
to have deferred.  The new agreement shall be effective only
as to Compensation paid in Plan Years beginning after the
last day of the Plan Year in which the respective agreement
is filed with the Committee.  A new Participation Agreement
is subject to all of the provisions and requirements set
forth in paragraph 4.2.

ARTICLE V

	Deferred Compensation

5.1	Elective Deferred Compensation.  The amount of Compensation
that a Participant elects to defer in a Participation
Agreement executed by the Participant with respect to each
Plan Year of participation in the Plan shall be credited by
the Company to the Participant's Deferred Benefit Account
throughout each Plan Year as the Participant is paid the non-
deferred portion of Compensation for such Plan Year.  The
amount credited to a Participant's Deferred Benefit Account
shall equal the amount deferred.  To the extent that the
Company is required to withhold any taxes or other amounts
from an employee's deferred wages pursuant to any state,
federal, or local law, such amounts shall be taken out of the
Participant's Compensation which is not deferred under this
Plan.

5.2	Effect on Other Plans.  To the extent to which deferrals by a
Participant under this Plan cause a reduction in matching
contributions made by the Company on behalf of the
Participant under the Company's 401(k) Plan, the Company
shall credit the amount of any such reduction to the
Participant's Deferred Benefit Account under this Plan. Such
amount will be credited as of the December 31 of the year in
which such reduction of contributions occurs, or upon
termination of employment, if earlier.

	The Company may also credit additional amounts from time to
time to a Participant's Deferred Benefit Account based upon
criteria approved by the Committee.

	The Company shall compute life insurance and disability
benefits under any Company plan based on Compensation without
reduction for amounts deferred under this Plan.

5.3	Vesting of Deferred Benefit Account.  A Participant shall be
100% vested in the Participant's Deferred Benefit Account.


	ARTICLE VI

	Deferred Benefit Account

6.1	Determination of Account.  Each Participant's Deferred
Benefit Account as of each Determination Date shall consist
of (1) the balance of the Participant's Deferred Benefit
Account as of the immediately preceding Determination Date,
plus (2) the Participant's elective deferred Compensation
withheld since the immediately preceding Determination Date
pursuant to paragraph 5.1, less (3) the amount of all
distributions, if any, made from such Deferred Benefit
Account since the preceding Determination Date, plus or minus
(4) any interest or earnings adjustment as determined under
paragraph 6.2, plus (5) a credit for any reduced 401(k) plan
matching contributions or other account credits made by the
Company as described under paragraph 5.2


6.2	Crediting of Account.  As of each Determination Date, the
Participant's Deferred Benefit Account shall be adjusted by
the amount of interest or earnings computed since the
preceding Determination Date.  This adjustment shall be based
on the Declared Rate as defined in paragraph 2.6 or as
determined under paragraph 7.5(a)(2) as applicable.  Any such
adjustment shall be credited on the balance of the Deferred
Benefit Account on the Determination Date immediately
preceding the current Determination Date, but after the
Deferred Benefit Account has been adjusted for any
contributions or distributions made during the preceding
month.

6.3	Statement of Accounts.  The Company shall submit to each
Participant, within 90 days after the close of each Plan
Year, a statement in such form as the Company deems
desirable, setting forth the balance to the credit of each
Participant's Deferred Benefit Account as of the last day of
such Plan Year.


	ARTICLE VII

	Benefits

7.1 Benefit for Retirement or Termination of Employment.  Subject
to paragraph 7.6 below, upon a Participant's retirement after
reaching the Retirement Date, or any termination of
employment for reasons other than death or disability, the
Participant shall be entitled to a Deferral Benefit equal to
the amount of Participant's Deferred Benefit Account
determined under paragraphs 6.1 and 6.2 hereof as of the
Determination Date coincidental with or immediately following
such event.


7.2	Death.  Upon the death of a Participant, such Participant's
Beneficiary shall receive a Deferral Benefit equal to the
remaining balance in such Participant's Deferred Benefit
Account.

	The Deferral Benefit shall be payable as provided for in
paragraph 7.5(a).

	The Deferral Benefit provided above shall be in lieu of all
other benefits under this Plan.

7.3	Disability.  In the event of Disability, as defined in
paragraph 2.10, while employed by the Company, payments shall
commence upon attainment of the Participant's Normal
Retirement Date in the form specified in paragraph 7.5(a)(2)
over a period from 2 to 180 months.  Before payments commence
under the preceding sentence, a Disabled Participant may
elect:  (i) to accelerate commencement of the payments to a
date not earlier than 180 days after the onset of Disability,
and/or (ii) to change the form of payment to another form
permitted under paragraph 7.5(a).

7.4	Suspension of Participation/Distribution/Failure to Continue
Participation.  The Committee, in its sole discretion, may
suspend the deferral of a Participant's Compensation during a
Plan Year, and may also authorize a distribution from the
Participant's Deferred Benefit Account, upon the advance
written request of a Participant on account of financial
hardship suffered by that Participant.  A Participant must
file any request for such suspension or distribution on or
before the 15th day preceding the regular pay day on which
the suspension or distribution is to take effect.

	Financial hardship shall mean an unexpected need for cash
resulting from (but not limited to) conditions in the nature
of any of the following:

	(a)	An accident, illness, or disability suffered by a
Participant or a family member or dependent;

	(b)	A casualty or the theft loss suffered by a Participant
or a family member or dependent;

	(c)	The rendering of a judgment against a Participant or a
family member or dependent;

	(d)	A sudden financial reversal or curtailment of income
experienced by a Participant or a family member or
dependent; or,

	(e)	The transfer of a Participant's place of employment.

	The suspension of any deferrals under this paragraph shall
not affect amounts deferred with respect to periods prior to
the effective date of the suspension except as otherwise
permitted by the Committee.

	In the event the Participant ceases to remain a member of the
class of employees who are eligible to participate in the
Plan, the Participant may elect to suspend the amount of any
remaining deferral commitment in the same manner as described
for other suspensions in the paragraph, except that Committee
approval shall not be required.  Continued participation in
the Plan will be allowed only with Committee approval.

7.5	Form of Benefit Payment.

	(a)	Upon retirement, death, or termination of employment,
the Company shall pay to the Participant or
Participant's Beneficiary the balance in the
Participant's Deferred Benefit Account in one of the
following forms, as elected in the Participation
Agreement filed by the Participant:

		(1)	A lump sum payment.


		(2)	A monthly payment which shall amortize the
Deferred Benefit Account balance in equal monthly
payments of principal and interest over a period
from 2 to 180 months.  For purposes of determining
the amount of the monthly payment, the rate of
interest shall be 6%.

	(b)	A Participant may change the form in which benefits
shall be paid by filing a new Participation Agreement
indicating such change any time prior to the date
payments are to commence.  Such new Participation
Agreement may not change the provisions of any previous
Participation Agreement to which it related for
purposes of complying with the provisions of paragraphs
4.2 and 4.3 relating to the minimum and maximum
deferrals and duration of the Participation Agreement.
 No such new Participation Agreement shall change the
amount elected to be deferred in a prior Participation
Agreement.

	(c)	In the absence of a Participant's election under
subparagraph 7.5(a), benefits shall be paid in the form
specified in subparagraph 7.5(a)(1).  In the event of a
Disabled Participant, payment shall be in the form
described in paragraph 7.3.

7.6	Withholding:  Payroll Taxes.  To the extent required by the
law in effect at the time payments are made, the Company
shall withhold from payments made hereunder any taxes
required to be withheld from any employee's wages for the
federal or any state or local government.

7.7	Commencement of Payments.  Commencement of payments under
this Plan shall begin as soon as administratively practical
(but in no event more than 90 days) following receipt of
notice by the Committee of any event which entitles a
Participant (or a Beneficiary) to payments under this Plan,
or at such other date as may be determined by the Company.

7.8 Early Distribution of Deferred Account Balance.  A
participant who remains employed by the Company may elect to
receive a distribution of all or any part of the
Participant's Account Balance prior to the date(s) of
distribution specified in the Participant's Participation
Agreement(s).  Each Participant shall be limited to one such
distribution per calendar year.  Such election, however, will
involve a substantial penalty, as each such distribution from
the Participant's Deferred Benefit Account made under this
provision shall be reduced by a penalty equal to six percent
(6%) of the total amount of the distribution.  The amount of
the penalty shall be forfeited by the Participant.  In
addition, the Participant must continue to defer Compensation
subsequent to such withdrawal in accordance with the
Participant's election and will not be permitted to elect to
defer Compensation attributable to the calendar year
subsequent to the calendar year of the distribution.

7.9 Other Pre-Retirement Distributions  The Committee, in its
sole discretion, may authorize certain other pre-retirement
distributions from a Participant's Deferred Benefit Account.
 A Participant must file a request for such distributions by
December 31st of the Plan Year preceding the Plan Year in
which such distributions are requested to be made.  In no
event will such distributions commence before 90 days after
such request has been authorized by the Committee.
ARTICLE VIII

	Beneficiary Designation

8.1	Beneficiary Designation.  Each Participant shall have the
right, at any time, to designate any person or persons as
Beneficiary or Beneficiaries (both principal as well as
contingent) to whom payment under this Plan shall be made in
the event of Participant's death prior to complete
distribution of the benefits due to the Participant under the
Plan.

8.2	Amendments.  Any Beneficiary designation may be changed by a
Participant by the written filing of such change on a form
prescribed by the Committee.  The filing of a new Beneficiary
Designation form will cancel all Beneficiary designations
previously filed.

8.3	No Beneficiary Designation.  If a Participant fails to
designate a Beneficiary as provided above, or if all
designated Beneficiaries predecease the participant, then the
Participant's designated Beneficiary shall be deemed to be
the surviving Spouse.  Otherwise, the value of the
Participant's account shall be paid as a lump sum to the
Participant's personal representative (executor or
administrator).

8.4	Effect of Payment.  The payment to the deemed Beneficiary
shall completely discharge the Company's obligations under
this Plan.

	ARTICLE IX

	Amendment and Termination of Plan

9.1	Amendment.  The Committee may at any time amend the Plan in
whole or in part; provided, however, that no amendment shall
be effective to decrease or restrict any Deferred Benefit
Account at the time of such amendment or reduce any
additional benefits provided under paragraph 5.2.  In the
event the Plan is amended, the Participation Agreement shall
be subject to the provisions of such amendment as if set
forth in full therein, without further action or amendment to
the Participation Agreement.  The parties shall be bound by,
and have the benefit of, each and every provision of the
Plan, as amended from time to time.

9.2	Company's Right to Terminate.  The Committee may at any time
terminate the Plan with respect to new elections to defer if,
in its judgment, the continuance of the Plan, the tax,
accounting, or other effects thereof, or potential payments
thereunder would not be in the best interests of the Company.
 The Committee may also terminate the Plan in its entirety at
any time, and upon any such termination, all Participants
under the Plan shall be paid the balance in their Deferred
Benefit Accounts in a lump sum, or over such period of time
as determined by the Committee.

9.3	Premature Plan Terminations and Premature Distributions.  The
Committee shall have the right (but shall not be obligated)
to require premature Plan termination and premature Plan
distributions to Participants, as outlined in paragraph 9.2,
upon the occurrence of any of the following conditions or
events:

	(a)	If there shall occur an uncured event of default under
the Amended Credit Agreement with Fleet National Bank,
the Subordinated Debt Agreement with Zurich Capital
markets, Inc., the 10.25% Debentures issued by the
Company, which mature on August 9, 2031, or any other
mortgage or debt agreement to which the Company
subsequently becomes obligated thereunder.

(b) If the shareholders of the Company approve the merger
or consolidation of the Company with or into any other
corporation (other than a corporation wholly-owned by
the Company immediately prior to such event) or the
acquisition of substantially all of the business assets
of the Company by any other person or entity (other
than a corporation wholly-owned by the company
immediately prior to such event);

(c) If a change occurs in the Board of Directors of the
Company whereby Directors comprising a majority of the
Board of Directors immediately prior to such change do
not continue to comprise such a majority immediately
after such change, provided that incremental and/or
related changes (including but not limited to
resignations from the Board of Directors) which occur
within a relatively brief period of time shall be
considered to be but a single change for purposes of
this Subparagraph;

(d) If, as a result of any tender offer or otherwise, any
person or entity or affiliated group becomes the
beneficial or record owner of more than 15% of the
outstanding voting securities of the Company;

(e) If, in the Committee's sole judgment and discretion, a
change in circumstances has occurred (including but not
limited to a change in taxation laws or regulations,
securities laws or regulations, accounting requirements
or the events in Subparagraphs (a), (b), (c), and (d)
of this Paragraph 9.3) which causes the Plan to be
undesirable to a significant portion of the
Participants.


ARTICLE X

	Trust for Payment of Benefits

10.1		Trust for Payment of Benefits.  The Company shall create
a
grantor trust for the purpose of facilitating any benefits
payable hereunder, and any assets transferred to such trust
will remain the general assets of the Company.  Such trust
will be funded upon the occurrence of any of the following
events, as soon as administratively practical (but in no
event more than 90 days):

(a) At the retirement or death of  a Plan Participant;

(b) Upon a decision by the Board of Directors that it
was warranted by a change in circumstances;

(c) If the shareholders of the Company approve the
merger or consolidation of the Company with or into
any other corporation (other than a corporation
wholly-owned by the Company immediately prior to
such event) or the acquisition of substantially all
of the business or assets of the Company by any
other person or entity (other than a corporation
wholly-owned by the Company immediately prior to
such event);

(d) If a change occurs in the Board of Directors of the
Company whereby Directors comprising a majority of
the Board of Directors immediately prior to such
change do not continue to comprise such a majority
immediately after such change, provided that
incremental and/or related changes (including but
not limited to resignations from the Board of
Directors) which occur within a relatively brief
period of time shall be considered to be but a
single change for purposes of this Subparagraph;

(e) If, as a result of any tender offer or otherwise,
any person or entity or affiliated group becomes the
beneficial or record owner of more than 15% of the
outstanding voting securities of the Company.

Such funding will be in an amount sufficient for the trustee
to purchase, and the trustee shall purchase, Single Premium
Annuities from qualified U.S. insurance companies (rated at
least A+ by A.M. Best Company, Inc.) to provide the benefits
payable (other than lump sum payments) under this Plan and
Participation Agreement(s).  After the purchase of the
annuities, neither the Company nor the trustee will have any
further obligation to the Participant or the Participant's
beneficiary(ies) for any benefits under this Plan and
Participation Agreement(s).









ARTICLE XI

	Miscellaneous

11.1	Unsecured General Creditor.  Participants and their
Beneficiaries shall have no legal or equitable rights,
interest, or claims in any property or assets of the Company.
The Company's obligation under the Plan shall be merely that
of an unfunded and unsecured promise of the Company to pay
money in the future.

11.2	Non-assignability.  Neither a Participant nor any other
person shall have any right to commute, sell, assign,
transfer, pledge, anticipate, mortgage, or otherwise
encumber, transfer, hypothecate, 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 or sequestration for the
payment of any debts, judgments, alimony, or separate
maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.

11.3	Not a Contract of Employment.  The terms and conditions of
this Plan shall not be deemed to constitute a contract of
employment between the Company and the Participant, and the
Participant (or Participant's Beneficiary) shall have no
rights against the Company except as may otherwise be
specifically provided herein.  Moreover, nothing in this Plan
shall be deemed to give a Participant the right to be
retained in the service of the Company or to interfere with
the right of the Company to discipline or discharge
Participant at any time.

11.4	Protective Provisions.  A Participant will cooperate with the
Company by furnishing any and all information requested by
the Company in order to facilitate the payment of benefits
hereunder.

11.5	Governing Law.  The provisions of this Plan shall be
construed and interpreted according to the laws of the State
of Indiana.

11.6	Successors.  The provisions of this Plan shall bind and inure
to the benefit of the Company and its successors and assigns.

11.7	Effective Date.  This Plan shall become effective as of
December 31, 2001.


11.8	Incompetent.  In the event that it shall be found upon
evidence satisfactory to the Committee that any Participant
or Beneficiary to whom a benefit is payable under this Plan
is unable to care for such Participant's or such
Beneficiary's affairs because of illness or accident, any
payment due (unless prior claim therefor shall have been made
by a duly authorized guardian or other legal representative)
may be paid, upon appropriate indemnification of the Company,
to the Spouse or other person deemed by the Committee to have
incurred any expense for such Participant or a Beneficiary.
Any such payment shall be a payment for the account of the
Participant or a Beneficiary and shall be a complete
discharge of any liability of the Company therefor.





Participant's Signature


Date



Committee Acknowledgement

Date