Exhibit 10.14

**THE RYLAND GROUP, INC.EXECUTIVE AND DIRECTORDEFERRED COMPENSATION PLAN II**

## **Effectiveas of January 1, 2005**

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**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 |
|                               |   |   |   |   |

 

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| **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 |
|                                 |   |   |   |   |

 

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| **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 |

 

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**THE RYLAND GROUP, INC.EXECUTIVE AND DIRECTOR DEFERRED COMPENSATION PLAN II**

## Effective as of January 1, 2005

**RECITALS**

TheRyland 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 ofcertain of the Employer’s executive employees and Directors.

Thepurpose of the Plan is to offer participants an opportunity to elect to deferthe receipt of compensation in order to provide deferred compensation benefitstaxable pursuant to Code section 451, and to provide a deferred compensationvehicle to which the Employer may credit certain amounts on behalf ofparticipants.  The Plan is intended to bea “top-hat” plan under sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.  The Plan is also intended to comply with therequirements of section 409A of the Code, as added by the American JobsCreation Act of 2004, and the Treasury regulations or any other authoritativeguidance issued thereunder.

Accordingly,the following Plan is adopted.

**ARTICLE 1**

**DEFINITIONS**

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

1.2                                 BENEFICIARYmeans any person or persons so designated in accordance with the provisions ofArticle 7.

1.3                                 CLAIMANTis defined in Section 8.3.

1.4                                 CODEmeans the Internal Revenue Code of 1986 and the regulations thereunder, asamended from time to time.

1.5                                 COMMITTEEshall mean the Committee chosen by the Company to oversee the administration ofthe Plan.

1.6                                 COMPANYmeans The Ryland Group, Inc. and its successors and assigns.

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1.7                                 COMPENSATION means the annual cash compensationrelating to services performed during any calendar year, whether or not paid insuch calendar year or included on the Federal Income Tax Form W-2 forsuch calendar year, excluding TRG Incentive Plan, Personal Health and ServicesAllowance, Executive Health and Fitness, any discretionary bonus, fringebenefits, stock options, relocation expenses, non-monetary awards andautomobile and other allowances paid to a Participant for employment servicesrendered (whether or not such allowances are included in the Participant’sgross income). Compensation shall be calculated before reduction for compensationvoluntarily deferred or contributed by the Participant pursuant to allqualified or non-qualified plans of any Employer and shall be calculatedto include amounts not otherwise included in the Participant’s gross incomeunder Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plansestablished by any Employer; provided, however, that all such amounts will beincluded 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 whoparticipate in the Plan retainer fees or stock awards payable in the Employer’scommon stock in addition to cash payments.

1.8                                 COMPENSATIONDEFERRAL ACCOUNT is defined in Section 3.2.

1.9                                 COMPENSATIONDEFERRAL is defined in Section 3.2.

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

1.11                           DISPUTEis defined in Section 12.5.

1.12                           EFFECTIVEDATE means the general effective date of the Plan, which shall be January1, 2005.

1.13                           EMPLOYEEmeans a person who is an employee of the Employer.

1.14                           EMPLOYERmeans The Ryland Group, Inc. and its successors and assigns unless otherwiseherein provided, or any other corporation or business organization which, withthe consent of The Ryland Group, Inc., or its successors or assigns, assumesthe Employer’s obligations hereunder, or any other corporation or businessorganization which agrees, with the consent of The Ryland Group, Inc., tobecome a party to the Plan.

1.15                           EMPLOYERCONTRIBUTION CREDIT ACCOUNT is defined in Section 3.1.

1.16                           EMPLOYERCONTRIBUTION CREDITS is defined in Section 3.1.

1.17                           ERISAmeans the Employee Retirement Income Security Act of 1974.

1.18                           MEASUREMENTFUNDS is defined in Section 4.1(c).

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1.19                           PARTICIPANTmeans any person so designated in accordance with the provisions of Article 2,including, where appropriate according to the context of the Plan, any formeremployee or former member of the Employer’s Board of Directors who is or maybecome (or whose Beneficiaries may become) eligible to receive a benefit underthe Plan.

1.20                           PARTICIPANTELECTION FORM means the form or forms on which a Participant elects todefer Compensation hereunder and/or on which the Participant makes certainother designations as required thereon.

1.21                           PLANis defined in the Recitals.

1.22                           PLANYEAR means the 12-month period ending on December 31 of each year duringwhich the Plan is in effect.

1.23                           SEPARATIONFROM SERVICE means separation from service within the meaning of CodeSection 409A.

1.24                           SPECIFIEDEMPLOYEE means, with respect to a corporation any stock of which ispublicly traded on an established securities market or otherwise, a keyemployee, as currently defined in Code Section 416(i) (without regard toparagraph (5) thereof) to mean, as of the Effective Date, an employee of theEmployer who, at any time during the Plan Year, is (i) an officer of theEmployer having an annual compensation greater than $135,000 for 2005 (indexedfor 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 fromthe Employer of more than $150,000.

1.25                           TRUSTmeans the Trust established pursuant to Article 11.

1.26                           TRUSTEEmeans the trustee of the Trust established pursuant to Article 11.

1.27                           VALUATIONDATE means the last day of each Plan Year and any other date that theEmployer, in its sole discretion, designates as a Valuation Date.

**ARTICLE 2**

**ELIGIBILITY AND PARTICIPATION**

2.1                                 ELIGIBILITY.  Participation in the Plan shall be limited toa 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, inits sole discretion, Employees and/or Directors to participate in thePlan.  In order to participate in thematching contribution feature of this Plan, an otherwise eligible Employee mustmake the maximum amount of salary deferrals to the Employer’s 401(k) Plan.

2.2                                 ENROLLMENTREQUIREMENTS.  As a condition toparticipation, each selected 

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Employee orDirector shall complete, execute and return to the Company a ParticipantElection Form within 30 days after he or she is selected to participate in thePlan.  In addition, the Company shallestablish from time to time such other enrollment requirements as it determinesin its sole discretion are necessary. Provided an Employee or Director selected to participate in the Plan hasmet all enrollment requirements set forth in this Plan and required by the Company,including returning all required documents to the Company within the specifiedtime period, that Employee or Director shall commence participation in the Planon a specified date as determined by the Company in its sole discretion.  Upon commencement of such participation, theEmployee or Director shall become a Participant in the Plan.  If an Employee or Director fails to meet allsuch requirements within the period required, that Employee or Director shallnot be eligible to participate in the Plan until the first day of the Plan Yearfollowing the delivery to and acceptance by the Company of the requireddocuments.

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

2.4                                 CHANGEOF STATUS.  If the Company determinesin good faith that a Participant no longer qualifies as a member of a selectgroup of management or highly compensated Employees, as membership in suchgroup is determined in accordance with Sections 201(2), 301(a)(3) and401(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 theremainder of the Plan Year in which the Participant’s membership status changesand/or (ii) prevent the Participant from making future deferralelections.  Notwithstanding theforegoing, the Committee shall interpret this Section 2.4 in a manner that isconsistent with Code Section 409A and the regulations thereunder, includingwithout limitation guidance issued in connection with that Section.

**ARTICLE 3**

**CONTRIBUTIONS AND CREDITS**

3.1                                 EMPLOYERCONTRIBUTION CREDITS.  There shall beestablished and maintained a separate Employer Contribution Credit Account inthe name of each Participant who is an Employee.  Such account shall be credited or debited, asapplicable, with (a) amounts equal to the Employer’s Contribution Creditscredited to that account, if any, and (b) any deemed earnings and losses (tothe extent realized, based upon deemed fair market value of the account’sdeemed assets) allocated to that account.

TheEmployer’s Contribution Credits attributable to a Participant who is anEmployee shall consist of the following:

(i)                                     matchingcontribution amounts with respect to each pay period (but contributed with afrequency determined by the Employer) equal to the Participant’s CompensationDeferral amounts for that pay period, provided however that the 

 

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total Employer matchingcontribution amounts under the Employer’s 401(k) plan and this Plan for any payperiod shall not exceed six percent of the Participant’s Compensation from theEmployer for that pay period; and

(ii)                                  fora particular Plan Year, any discretionary Employer contribution amounts thatthe Employer wishes to contribute, but is prohibited under applicable law fromcontributing, as discretionary Employer contribution amounts, under theEmployer’s 401(k) plan.

Notwithstandingthe foregoing, any matching contributions credited to a Participant’s EmployerContribution Credit Account with respect to any pay period in excess of thelimit provided in paragraph (i) above, as determined by the Employer in goodfaith, shall be returned to the Employer.

Participantsshall become vested in amounts credited to their Employer Contribution CreditAccounts pursuant to the following vesting schedule:

| Years of Service |   | Vested Percentage |
|------------------|--------|-------------------|
| Less than 1      |   | 0%                |
| 1                |   | 33%               |
| 2                |   | 66%               |
| 3                |   | 100%              |

 

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

Notwithstanding theforegoing, a Participant will become immediately vested in amounts credited tohis or her Employer Contribution Credit Account upon his or her death, his orher 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 “Changein Control” of the Company.  For thispurpose, a Change in Control shall occur upon any of the following:

(i)                                     theacquisition by any person, other than the Employer or any employee benefitplan(s) of the Employer, of beneficial ownership of 20% or more of the combinedvoting power of Company’s then outstanding voting securities;

(ii)                                  thefirst purchase under a tender offer or exchange offer, other than an offer bythe Employer or any employee benefit plan(s) of the Company, pursuant to whichshares of common stock of the Company have been purchased;

(iii)                               duringany period of two consecutive years, individuals who, at the beginning of suchperiod constitute the Board of Directors of the Company cease for any reason toconstitute at least a majority thereof, unless the election or the nominationfor the election by stockholders of the Company of each new Director wasapproved by a vote of at least two-thirds of the Directors then still in officewho were Directors at the beginning of the period; or

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(iv)                              approvalby stockholders of the Company of a merger, consolidation, liquidation ordissolution of the Company, or the sale of all or substantially all of theassets of the Company.

When a Participantbecomes vested in his or her Employer Contribution Credits, plus earningsthereon, the Employer shall withhold from the Participant’s salary and/or bonusthat is not deferred, in a manner determined by the Employer, the Participant’sshare of FICA and other employment taxes. If necessary, the Employer may reduce the vested portion of theParticipant’s Employer Contribution Credit Account to comply with thisrequirement.

3.2                                 PARTICIPANTCOMPENSATION DEFERRALS.  Inconnection with a Participant’s commencement of participation in the Plan, theParticipant shall make an irrevocable deferral election of Compensation for thePlan Year in which the Participant commences participation in the Plan forservices yet to be performed, along with such other elections as the Companydeems necessary or desirable under the Plan. For these elections to be valid, the Participant Election Form must becompleted and signed by the Participant and timely delivered to the Company asdescribed in Section 2.2.

For eachsucceeding Plan Year, an irrevocable deferral of Compensation election for thatPlan Year, and such other elections as the Company deems necessary or desirableunder the Plan, shall be made by timely delivering to the Company, inaccordance with its rules and procedures, before the end of the Plan Yearpreceding the Plan Year in which the services giving rise to the Compensationto be deferred are to be performed (or such earlier time as the Company mayestablish, in its sole discretion), a new Participant Election Form.  If no such Participant Election Form istimely delivered for a Plan Year, the Participant’s Compensation Deferral forthat Plan Year shall be zero.

Notwithstandingthe foregoing, the Committee may, in its sole discretion, determine thatcertain Compensation qualifies as “performance-based compensation” under CodeSection 409A.  If so, the Committee mayallow participants to make a deferral election with respect to suchCompensation by timely delivering an Election Form to the Committee, inaccordance with its rules and procedures, no later than six months before theend of the performance service period for such Compensation.  “Performance-based compensation” shall becompensation based on services performed over a period of at least 12 months inaccordance with Code Section 409A and related guidance.

For each PlanYear, the deferral of compensation shall be withheld from each regularlyscheduled salary payroll in the percentage elected by the Participant.  The bonus portion of the CompensationDeferral shall be withheld at the time the bonus would otherwise be paid to theParticipant.  For each Plan Year in whichCompensation is deferred, the Employer shall withhold from that portion of theParticipant’s salary and bonus that is not being deferred, in a mannerdetermined by the Employer, the Participant’s share of FICA and otheremployment taxes on such deferral amount, together with such other withholdingsfor 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 thisrequirement.

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Thereshall be established and maintained by the Employer a separate CompensationDeferral Account in the name of each Participant to which shall be credited ordebited: (a) amounts equal to the Participant’s Compensation deferrals, and (b)amounts equal to any deemed earnings or losses (to the extent realized, basedupon deemed fair market value of the account’s deemed assets) attributable orallocable thereto.  The amounts deferredshall be referred to as the Compensation Deferrals.

A Participant shall atall times be 100% vested in amounts credited to his or her CompensationDeferral Account.

3.3                                 CONTRIBUTIONSTO THE TRUST.  Amounts shall becontributed by the Employer to the Trust maintained under Section 11.1 equal tothe amounts required to be credited to the Participant’s Account under Sections3.1 and 3.2.  The Employer shall make agood faith effort to contribute these amounts to the Trust as soon as ispracticable after such amounts are determined. Employer contributions to the Trust shall be made in cash or in commonstock of the Employer, as determined by the Company.

**ARTICLE 4**

**ALLOCATION OF FUNDS**

4.1                                 ALLOCATIONOF DEEMED EARNINGS OR LOSSES ON ACCOUNTS. In accordance with, and subject to, the rules and procedures that areestablished from time to time by the Company, in its sole discretion, amountsshall be credited or debited to a Participant’s Account in accordance with thefollowing rules:

(a)                                  A Participant, in connection with his orher initial deferral election shall elect one or more Measurement Fund(s) (asdescribed below) to be used to determine the additional amounts to be creditedor debited to his or her Account.  AParticipant may (but is not required to) elect to add or delete one or moreavailable Measurement Fund(s) to be used to determine the additional amounts tobe credited or debited to his or her Account, or to change the portion of hisor her Account allocated to each previously or newly elected MeasurementFund.  A Participant may elect to makesuch a change by submitting a Participant Election Form, whether written orelectronic (as determined by the Company from time to time and in its solediscretion), to the Company.  Anyelection so made and accepted by the Company shall apply as soon as isreasonably 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 inSection 4.1(a), the Participant shall specify on the applicable form which maybe completed on-line, in increments of one percentage point, the percentage ofhis or her Account to be allocated to a Measurement Fund (as if the Participantwere making an investment in that Measurement Fund with that portion of his orher Account).

(c)                                  A Participant may elect one or moreMeasurement Funds (the 

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“Measurement Funds”) from among those selected by the Company for thepurpose of crediting or debiting additional amounts to his or her Account.  As necessary, the Company may, in its solediscretion, discontinue, substitute or add Measurement Funds.  Each such action will take effect as of thefirst day of the calendar month that follows by 30 days or more the day onwhich the Company gives Participants advance written notice of suchchange.  In selecting the MeasurementFunds that are available from time to time, neither the Company nor anyEmployer shall be liable to any Participant for such selection or adding,deleting or continuing any available Measurement Fund.

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

(e)                                  Notwithstandingany other provision of this Plan that may be interpreted to the contrary, theMeasurement Funds are to be used for measurement purposes only, and aParticipant’s election of any such Measurement Fund, the allocation to his orher Account thereof, the calculation of additional amounts and the crediting ordebiting of such amounts to a Participant’s Account shallnot beconsidered or construed in any manner as an actual investment of his or herAccount in any such Measurement Fund.  Inthe event that the Company or the Trustee, in its sole discretion, decides toinvest funds in any or all of the Measurement Funds, no Participant shall haveany rights in or to such investments themselves.  Without limiting the foregoing, a Participant’sAccount shall at all times be a bookkeeping entry only and shall not representany investment made on his or her behalf by the Company or the Trustee; and theParticipant shall at all times remain an unsecured creditor of the Company.

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

(g)                                 The Participant shall bear fullresponsibility for all results associated with his or her selection ofMeasurement Funds under this Section 4.1, and the Employer shall have noresponsibility or liability with respect to the Participant’s selection of suchMeasurement Funds.  Each Participanthereunder, as a condition to his or her participation hereunder, agrees toindemnify and hold harmless the Employer and its agents and representativesfrom any losses or damages of any kind relating to the deemed investment of theParticipant’s Account hereunder.

(h)                                 Notwithstanding any contrary provision ofthe Plan, Participants shall not have the right to direct the deferral of Directorretainer fees or awards that otherwise would have been payable in Employercommon stock.  Rather, such deferralsshall initially be deemed to be invested in the common stock of the Employer.  Once deferred, the Participant may thereafterelect to have some or all of such deferral amounts, plus earnings thereon,reallocated to one or more of the non-Employer common stock Measurement Fundsavailable under the Plan; provided, however, that the Employer may impose suchrestrictions on such transfers as the Employer 

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deems necessary or advisable in order to comply with federal or statesecurities laws (including, but not limited to, Rule 16b-3 of the SecuritiesExchange Act of 1934, as amended).  AnyParticipant subject to such restrictions shall be notified by theEmployer.  Once a Participant hastransferred an amount out of the Employer common stock Measurement Fund, he orshe may not subsequently reallocate into that Measurement Fund.

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

4.2                                 ACCOUNTINGFOR DISTRIBUTIONS.  As of the date ofany distribution hereunder, the distribution made hereunder to the Participantor his or her Beneficiary or Beneficiaries shall be charged to such Participant’sAccount.

4.3                                 EXPENSES.  Expenses, including Trustee fees, allocableto the administration or operation of an Account maintained under the Planshall be paid by the Employer unless, in the discretion of the Employer, theEmployer elects to charge such expenses, or any portion thereof, against theappropriate Participant’s Account or Participants’ Accounts.

**ARTICLE 5**

**ENTITLEMENT TO BENEFITS**

5.1                                 FIXED PAYMENT DATES; SEPARATION FROMSERVICE; DISABILITY; CHANGE IN CONTROL.  TheParticipant’s vested Account will be valued and paid according to theprovisions of Article 6 on the payment date elected by a Participant at thetime of initial deferral (or as otherwise required by Code section 409A).

The Participantmay elect to receive payment of his or her vested Account at Separation fromService with the Employer, upon a fixed payment date, or at the earlier of (orlater of) a fixed payment date, Separation from Service, Disability, and/orChange of Control of the Employer.  Inany case, the extension and non-acceleration rules discussed in this Plan shallapply to such timing of payment elections.

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

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

The Participantmay elect to delay a payment, on a continual basis, so long as any election todelay the payment is made by the Participant at least twelve (12) months priorto the date on which the distribution is to be made and, in the case of paymentupon Separation from Service, a fixed 

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

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

Notwithstandingthe foregoing, if and when the Employer becomes a corporation whose stock ispublicly traded on an established securities market or otherwise, anyParticipant who is a Specified Employee and elects to receive distribution uponSeparation from Service shall not be entitled to receive a distribution of theAccount (or, in the case of installments, distributions from the Account maynot 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 ofthis Section, a “Separation from Service” means separation from service withinthe meaning of Code section 409A, including the termination of Board membershipwith respect to a Participant who is a Board member.

For purposes ofthis Section, a “Change of Control” means a change of control of the Companywithin the meaning of Code section 409A.

For purposes ofthis Section, a “Disability” means a period during which a Participant (i) isunable to engage in any substantial gainful activity by reason of any medicallydeterminable physical or mental impairment which can be expected to result indeath or can be expected to last for a continuous period of not less thantwelve (12) months, (ii) is, by reason of any medically determinable physicalor mental impairment which can be expected to result in death or can be expectedto last for a continuous period of not less than twelve (12) months, receivingincome replacement benefits for a period of not less than three (3) monthsunder 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, asdefined below, the Participant may apply to the Employer for the distributionof all or any part of his or her vested Account. The Employer shall considerthe circumstances of each such case, and the best interests of the Participantand his or her family, and shall have the right, in its sole discretion, ifapplicable, to allow such distribution, or, if applicable, to direct adistribution of part of the amount requested, or to refuse to allow anydistribution; provided, however, that such distribution shall be permittedsolely 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 fromamounts held by the Employer in respect of the Participant’s vested Account. Inno event shall the aggregate amount of the distribution exceed either the fullvalue of the Participant’s vested Account or the amount determined by theEmployer to be necessary 

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to satisfy theunforeseeable emergency plus amounts necessary to pay taxes reasonablyanticipated as a result of the distribution, after taking into account theextent to which the unforeseeable emergency is or may be relieved throughreimbursement or compensation by insurance or otherwise or by liquidation ofthe Participant’s assets (to the extent the liquidation of assets would notitself cause severe financial hardship), or by cessation of CompensationDeferrals under this Plan.

“Unforeseeableemergency” means (a) a severe financial hardship to the Participant orBeneficiary resulting from an illness or accident of the Participant or Beneficiary,the Participant’s or Beneficiary’s spouse or a dependent (as defined in Codesection 152(a)) of the Participant or Beneficiary, (b) loss of the Participant’sor Beneficiary’s property due to casualty, or (c) other similar extraordinaryand unforeseeable circumstances arising as a result of events beyond thecontrol of the Participant or Beneficiary, each as determined to exist by theEmployer.  A distribution may be madeunder this Section only with the consent of the Employer.

5.3                                 DEATH.  Upon the Participant’sdeath, the Participant’s vested Account shall be valued and paid to theParticipant’s Beneficiary(ies) as provided in Article 6.

5.4                                 TRUST.  The Employer’s obligations under the Plan maybe satisfied with Trust assets distributed pursuant to the terms of the Trust,and any such distribution shall reduce the Employer’s obligations under thisPlan.  The Trustee of the Trust shall beauthorized, upon written instructions received from the Company or investmentmanager appointed by the Company, to invest and reinvest the assets of theTrust in accordance with the applicable Trust Agreement.  A Participant shall have no preferred claimon, or any beneficial interest in, any assets of the Trust.  Any assets held by the Trust shall be subjectto 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 dueor is subject to a pending proceeding as a debtor under the United StatesBankruptcy Code).  If the Trust pays allor some of the Employer’s obligations to a Participant under the terms of thisPlan, such payment shall be treated as a payment by the Employer for purposesof this Plan.

5.5                                 RE-EMPLOYMENTOF RECIPIENT, ETC.  If a Participantreceiving installment distributions pursuant to Section 6.2 is re-employed bythe Employer (or becomes a member of the Company’s Board of Directors), theremaining distribution(s) due to the Participant shall be suspended until suchtime as the Participant (or his or her Beneficiary) once again becomes eligiblefor benefits under Section 5.1 or Section 5.2, at which time suchdistribution(s) shall commence, subject to the limitations and conditionscontained in this Plan.  Notwithstandingthe foregoing, the Committee shall interpret this Section 5.4 in a manner thatis consistent with Code Section 409A and the regulations thereunder, includingwithout limitation guidance issued in connection with that Section.

 

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**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 withArticle 5, a distribution in an aggregate amount equal to the Participant’svested Account.

6.2                                 METHODOF PAYMENT.

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

(b)                                 Timingand Manner of Payment.  In the caseof distributions to a Participant or his or her Beneficiary by virtue of anentitlement pursuant to Section 5.1, an aggregate amount equal to theParticipant’s vested Account will be paid, as provided in Section 6.1, in alump sum or in annual installments, not less than two nor greater than 15 usingthe Fractional Payment Method, as selected by the Participant at the time ofinitial deferral.  “Fractional PaymentMethod” means annual installment payments over the number of years selected bythe Participant in accordance with this Plan, calculated as follows: the vestedAccount of the Participant shall be calculated each year as of the applicableValuation Date.  The annual installmentshall be calculated by multiplying this balance by a fraction, the numerator ofwhich is one, and the denominator of which is the remaining number of annualpayments due the Participant.  By way ofexample, if the Participant elects 10 years, the first payment shall be 1/10 ofthe vested Account.  For the followingyear, the payment shall be 1/9 of the vested Account.

If aParticipant fails to designate properly the manner of payment of theParticipant’s benefit under the Plan, such payment will be in a lump sum.  If the whole or any part of a paymenthereunder is to be in installments, the total to be so paid shall continue tobe deemed to be invested pursuant to Section 4.1 under such procedures as theEmployer may establish.

Aparticipant may elect to change the method of payment elected (or deemedelected) so long as any election to change the form of payment is made by theParticipant at least twelve (12) months prior to the date on which thedistribution is to be made (or commence) and, in the case of payment uponSeparation from Service, a fixed payment date or Change of Control, the paymentdate (or commencement of payments) is delayed for at least five (5) fullcalendar years..

Notwithstandingthe preceding, to the extent permitted under Code section 409A and by theEmployer, the Participant may elect the form of distributions during 2005, 2006or 2007 (except that (i) a Participant cannot in 2006 change payment electionswith 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 madein 2006 or (ii) a Participant cannot in 2007 change payment elections withrespect to payments that the Participant would otherwise receive in 2007, or in2007 make an election that causes post-2007 scheduled payments to be made in2007), and such election shall not be treated as a change in the form andtiming of payment or an acceleration of payment.

6.3                                 DEATHBENEFITS.  If a Participant diesbefore receiving the entire value of his or her vested Account, the remainingunpaid portion of his or her vested Account shall be paid in 

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a lump sum to theperson or persons designated in accordance with Section 7.1.  Notwithstanding the foregoing, the Committeeshall interpret this Section 6.3 in a manner that is consistent with CodeSection 409A and the regulations thereunder, including without limitationguidance 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 allfederal, state and local income, employment and other taxes required to bewithheld by the Employer, or the Trustee of the Trust, in connection with suchpayments, in amounts and in a manner to be determined in good faith in the solediscretion of the Employer and the Trustee of the Trust.  All distributions under the Plan are subjectto any applicable tax withholding, as determined by the Employer in itsdiscretion.

6.5                                 EMPLOYERDISCRETION.  Notwithstanding anythingin the Plan to the contrary, no change submitted on a Participant Election Formshall be accepted by the Employer, and the Employer shall deny any change madeon a Participant Election Form, if the Employer determines that the changeviolates the requirements under Code section 409A.

TheEmployer, in its discretion, may accelerate distributions under the Plan to theextent permitted under Code section 409A (e.g., payments necessary to complywith a domestic relations order, payments necessary to comply with certainconflict of interest rules, and certain de minimis payments related to theparticipant’s termination of his or her interest in the plan).

**ARTICLE 7**

**BENEFICIARIES; PARTICIPANT DATA**

7.1                                 DESIGNATIONOF BENEFICIARIES.  Each Participantmay designate any person or persons (who may be named contingently orsuccessively) to receive such benefits as may be payable under the Plan upon orafter the Participant’s death, and such designation may be changed from time totime by the Participant by filing a new designation.  Each designation will revoke all priordesignations by the same Participant, shall be in a form prescribed by theEmployer, and will be effective only when filed in writing with the Employerduring the Participant’s lifetime.

Inthe absence of a valid Beneficiary designation, or if, at the time any benefitpayment is due to a Beneficiary, there is no living Beneficiary validly namedby the Participant, the Employer shall pay any such benefit payment to theParticipant’s spouse, if then living, but otherwise to the Participant’s thenliving descendants, if any, per stirpes, but, if none, to theParticipant’s estate.  In determining theexistence or identity of anyone entitled to a benefit payment, the Employer mayrely conclusively upon information supplied by the Participant’s personalrepresentative, executor or administrator.

If aquestion arises as to the existence or identity of anyone entitled to receive abenefit payment as aforesaid, or if a dispute arises with respect to any suchpayment, then, notwithstanding the foregoing, the Employer, in its solediscretion, may distribute such payment 

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to the Participant’sestate without liability for any tax or other consequences which might flowtherefrom, or may take such other action as the Employer deems to beappropriate.

7.2                                 INFORMATIONTO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES; INABILITY TO LOCATEPARTICIPANTS OR BENEFICIARIES.  Anycommunication, statement or notice addressed to a Participant or to a Beneficiaryat his or her last post office address as shown on the Employer’s records shallbe binding on the Participant or Beneficiary for all purposes of the Plan.  The Employer shall not be obliged to searchfor any Participant or Beneficiary beyond the sending of a registered letter tosuch last known address.  If the Employernotifies any Participant or Beneficiary that he or she is entitled to an amountunder the Plan and the Participant or Beneficiary fails to claim such amount ormake 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 ofthe next of kin of the Participant is known to the Employer, the Employer maydirect distribution of such amount to any one or more or all of such next ofkin, and in such proportions as the Employer determines.  If the location of none of the foregoingpersons can be determined within five years after the initial benefit paymentwould otherwise be due, the Employer shall have the right to direct that theamount payable shall be deemed to be a forfeiture, except that the dollaramount 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 madeby the Participant or the Beneficiary to whom it was payable. If a benefitpayable to an unlocated Participant or Beneficiary is subject to escheatpursuant to applicable state law, the Employer shall not be liable to anyperson for any payment made in accordance with such law.

**ARTICLE 8**

**ADMINISTRATION**

8.1                                 ADMINISTRATIVEAUTHORITY.  Except as otherwisespecifically provided herein, the Company, acting through the Committee, or thedesignee or designees thereof, shall have the sole responsibility for and thesole control of the operation and administration of the Plan, and shall havethe power and authority to take all action and to make all decisions andinterpretations which may be necessary or appropriate in order to administerand operate the Plan, including, without limiting the generality of theforegoing, the power, duty and responsibility to:

(a)                                  Resolveand determine all disputes or questions arising under the Plan, and to remedyany ambiguities, inconsistencies or omissions in the Plan.

(b)                                 Adoptsuch rules of procedure and regulations as in its opinion may be necessary forthe proper and efficient administration of the Plan and as are consistent withthe Plan.

(c)                                  Implementthe Plan in accordance with its terms and the rules and regulations adopted asabove.

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(d)                                 Makedeterminations with respect to the eligibility of any Employee or Director as aParticipant and make determinations concerning the crediting of Plan Accounts.

(e)                                  Appointany persons or firms, or otherwise act to secure specialized advice orassistance, as it deems necessary or desirable in connection with theadministration and operation of the Plan, and the Company shall be entitled torely conclusively upon, and shall be fully protected in any action or omissiontaken by it in good faith reliance upon, the advice or opinion of such personsor firms.  The Company shall have thepower and authority to delegate from time to time by written instrument all orany part of its duties, powers or responsibilities under the Plan, bothministerial and discretionary, as it deems appropriate, to any person orcommittee, and in the same manner to revoke any such delegation of duties,powers or responsibilities.  Any actionof such person or committee in the exercise of such delegated duties, powers orresponsibilities shall have the same force and effect for all purposeshereunder as if such action had been taken by the Company.  Further, the Company may authorize one ormore persons to execute any certificate or document on behalf of the Company, inwhich event any person notified by the Company of such authorization shall beentitled to accept and conclusively rely upon any such certificate or documentexecuted by such person as representing action by the Company until suchnotified person shall have been notified of the revocation of such authority.

(f)                                    Interpretthis 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 Beneficiaryshall be entitled to any notice or service of process, and any final judgmententered in such action shall be binding on all persons interested in, orclaiming under, the Plan.

8.3                                 CLAIMSPROCEDURE.  This Section 8.3 is basedon final regulations issued by the Department of Labor and published in theFederal Register on November 21, 2000 and codified at 29 C.F.R. section2560.503-1.  If any provision of thisSection conflicts with the requirements of those regulations, the requirementsof those regulations will prevail.

(a)                                  InitialClaim.  A Participant or Beneficiarywho believes he or she is entitled to any Benefit (a “Claimant”) under thisPlan may file a claim with the administrator under this Article 9 (the “PlanAdministrator”).  The Plan Administratorwill review the claim itself or appoint another individual or entity to reviewthe claim.

(i)                                     BenefitClaims that do not Require a Determination of Disability.  In the claim is for a benefit other than adisability benefit, the Claimant will be notified within ninety days after theclaim is filed whether the claim is allowed or denied, unless the Claimantreceives written notice from the Plan Administrator or appointee of the PlanAdministrator before the end of the ninety day period stating that specialcircumstances require an extension of the time for decision, such extension notto extend beyond the day which is one hundred eighty days after the day theclaim is filed.

(ii)                                  DisabilityBenefit Claims.  In the case of abenefits claim that requires a determination by the Plan Administrator of aParticipant’s disability status, the Plan 

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Administrator willnotify the Claimant of the Plan’s adverse benefit determination within areasonable period of time, but not later than forty-five days after receipt ofthe claim.  If, due to matters beyond thecontrol of the Plan, the Plan Administrator needs additional time to process aclaim, the Claimant will be notified, within forty-five days after the PlanAdministrator receives the claim, of those circumstances and of when the PlanAdministrator expects to make its decision but not beyond seventy-fivedays.  If, prior to the end of theextension period, due to matters beyond the control of the Plan, a decisioncannot be rendered within that extension period, the period for making thedetermination may be extended for up to one hundred five days, provided thatthe Plan Administrator notifies the Claimant of the circumstances requiring theextension and the date as of which the Plan expects to render a decision.  The extension notice will specificallyexplain the standards on which entitlement to a disability benefit is based,the unresolved issues that prevent a decision on the claim and the additionalinformation needed from the Claimant to resolve those issues, and the Claimantwill be afforded at least forty-five days within which to provide the specifiedinformation.

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

(A)                              Thespecific reasons for the denial;

(B)                                Areference to the Plan provision or insurance contract provision upon which thedenial is based;

(C)                                Adescription of any additional information or material that the Claimant mustprovide in order to perfect the claim;

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

(E)                                 Noticethat the Claimant has a right to request a review of the claim denial andinformation on the steps to be taken if the Claimant wishes to request a reviewof the claim denial; and

(F)                                 Astatement of the participant’s right to bring a civil action under ERISAsection 502(a) following a denial on review of the initial denial.

Inaddition, in the case of a denial of disability benefits on the basis of thePlan Administrator’s independent determination of the Participant’s disabilitystatus, 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 andwithout charge).

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(b)                                 ReviewProcedures.

(i)                                     BenefitClaims that do not Require a Determination of Disability.  Except for claims requiring an independentdetermination of a Participant’s disability status, a request for review of adenied claim must be made in writing to the Plan Administrator within sixtydays after receiving notice of denial. The decision upon review will be made within sixty days after the PlanAdministrator’s receipt of a request for review, unless special circumstancesrequire an extension of time for processing, in which case a decision will berendered not later than one hundred twenty days after receipt of a request forreview.  A notice of such an extensionmust be provided to the Claimant within the initial sixty day period and mustexplain the special circumstances and provide an expected date of decision.

Thereviewer will afford the Claimant an opportunity to review and receive, withoutcharge, all relevant documents, information and records and to submit issuesand comments in writing to the Plan Administrator.  The reviewer will take into account allcomments, documents, records and other information submitted by the Claimantrelating to the claim regardless of whether the information was submitted orconsidered in the initial benefit determination.

(ii)                                  DisabilityBenefit Claims.  In addition tohaving the right to review documents and submit comments as described in (i)above, a Claimant whose claim for disability benefits requires an independentdetermination by the Plan Administrator of the Participant’s disability statushas at least one hundred eighty days following receipt of a notification of anadverse benefit determination within which to request a review of the initialdetermination.  In such cases, the reviewwill meet the following requirements:

(A)                              ThePlan will provide a review that does not afford deference to the initialadverse benefit determination and that is conducted by an appropriate namedfiduciary of the Plan who did not make the initial determination that is thesubject of the appeal, nor is a subordinate of the individual who made thedetermination.

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

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

(D)                               Thedecision on review will be made within forty-five days after the PlanAdministrator’s receipt of a request for review, unless special circumstancesrequire an extension of time for processing, in which case a decision will berendered not later than ninety days after receipt of a request for review.  A notice of such an extension must beprovided to the 

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Claimant withinthe initial forty-five day period and must explain the special circumstancesand provide an expected date of decision.

(iii)                               Mannerand Content of Notice of Decision on Review.  Upon completion of its review of an adverseinitial claim determination, the Plan Administrator will give the Claimant, inwriting or by electronic notification, a notice containing:

(A)                              itsdecision;

(B)                                thespecific reasons for the decision;

(C)                                therelevant Plan provisions or insurance contract provisions on which its decisionis based;

(D)                               astatement that the Claimant is entitled to receive, upon request and withoutcharge, reasonable access to, and copies of, all documents, records and otherinformation in the Plan’s files which is relevant to the Claimant’s claim forbenefits;

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

(F)                                 ifan internal rule, guideline, protocol or other similar criterion was reliedupon in making the adverse determination on review, a statement that a copy ofthe rule, guideline, protocol or other similar criterion will be providedwithout charge to the Claimant upon request.

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

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

(e)                                  Failureof Claimant to Follow Procedures.  AClaimant’s compliance with the foregoing provisions of this Section 8.3 is amandatory prerequisite to the Claimant’s right to commence any legal actionwith respect to any claim for benefits under the Plan.

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**ARTICLE 9**

**AMENDMENT**

9.1                                 RIGHTTO AMEND.  The Company, by writteninstrument executed by a duly authorized representative of the Company, shallhave the right to amend the Plan, at any time and with respect to anyprovisions hereof, and all parties hereto or claiming any interest hereundershall be bound by such amendment; provided, however, that no such amendmentshall deprive a Participant or a Beneficiary of a right accrued hereunder priorto the date of the amendment.

9.2                                 AMENDMENTSTO ENSURE PROPER CHARACTERIZATION OF PLAN. Notwithstanding the provisions of Section 9.1, the Plan may be amendedby the Company at any time, retroactively if required in the opinion of theCompany, in order to ensure that the Plan is characterized as a “top-hat” planas described under ERISA Sections 201(2), 301(a)(3), and 401(a)(1) to conformwith the Plan to the requirements of Code Section 409A, and to conform the Planto the provisions and requirements of any applicable law (including ERISA andthe Code).  No such amendment shall beconsidered prejudicial to any interest of a Participant or a Beneficiaryhereunder.

**ARTICLE 10**

**TERMINATION**

10.1                           RIGHTTO TERMINATE OR SUSPEND PLAN.  TheCompany reserves the right to terminate the Plan and/or the Employer’sobligation to make further credits to Plan Accounts.  The Company also reserves the right tosuspend the operation of the Plan for a fixed or indeterminate period of time.

10.2                           SUSPENSIONOF DEFERRALS.  In the event of asuspension of the Plan, the Employer shall continue all aspects of the Plan,other than Compensation Deferrals and Employer Contribution Credits, during theperiod of the suspension, in which event payments hereunder will continue to bemade 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 ofthe Plan.  The provisions of this Section10.3 also shall become operative in the event of a partial termination of thePlan, as determined by the Employer, but only with respect to that portion ofthe Plan attributable to the Participants to whom the partial termination isapplicable.  Upon the effective date ofany such event, notwithstanding any other provisions of the Plan, no personswho were not theretofore Participants shall be eligible to become Participants,the value of the interest of all Participants and Beneficiaries shall bedetermined and, after deduction of estimated expenses in liquidating and, ifapplicable, paying Plan benefits, paid to them in accordance with Articles 5and 6.  Notwithstanding the foregoing,the Committee shall interpret this Section 10.3 in a manner that is consistentwith Code Section 409A and the regulations thereunder, including withoutlimitation guidance issued in connection with that Section.

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

10.4                           SUCCESSORTO EMPLOYER.  Any corporation orother business organization which is a successor to the Employer by reason of aconsolidation, merger or purchase of substantially all of the assets of theEmployer shall have the right to become a party to the Plan by adopting thesame by resolution of the entity’s board of directors or other appropriategoverning body.

**ARTICLE 11**

**THE TRUST**

11.1                           ESTABLISHMENTOF TRUST.  The Employer shall establishthe Trust with the Trustee pursuant to such terms and conditions as are setforth in the Trust agreement to be entered into between the Employer and theTrustee.  The Trust is intended to betreated as a “grantor” trust under the Code and the establishment of the Trustis not intended to cause the Participant to realize current income on amountscontributed thereto, and the Trust shall be so interpreted.

**ARTICLE 12**

**MISCELLANEOUS**

12.1                           LIMITATIONSON LIABILITY OF EMPLOYER.  Neitherthe establishment of the Plan nor any modification thereof, nor the creation ofany account under the Plan, nor the payment of any benefits under the Planshall be construed as giving to any Participant or other person any legal orequitable right against the Employer, or any officer or employer thereof exceptas provided by law or by any Plan provision. The Employer does not in any way guarantee any Participant’s Accountfrom loss or depreciation, whether caused by poor investment performance of adeemed investment or the inability to realize upon an investment due to aninsolvency affecting an investment vehicle or any other reason.  In no event shall the Employer, or anysuccessor, employee, officer, director or stockholder of the Employer, beliable to any person on account of any claim arising by reason of theprovisions of the Plan or of any instrument or instruments implementing itsprovisions, or for the failure of any Participant, Beneficiary or other personto be entitled to any particular tax consequences with respect to the Plan, orany credit or distribution hereunder.

12.2                           CONSTRUCTION.  If any provision of the Plan is held to beillegal or void, such illegality or invalidity shall not affect the remainingprovisions of the Plan, but shall be fully severable, and the Plan shall beconstrued and enforced as if said illegal or invalid provision had never beeninserted herein.  For all purposes of thePlan, where the context admits, the singular shall include the plural, and theplural shall include the singular.  Headingsof Articles and Sections herein are inserted only for convenience of referenceand are not to be considered in the construction of the Plan.  The laws of the State of Maryland shallgovern, control and determine 

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

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

In theevent that any Participant’s or Beneficiary’s benefits hereunder are garnishedor attached by order of any court, the Employer or Trustee may bring an actionor a declaratory judgment in a court of competent jurisdiction to determine theproper recipient of the benefits to be paid under the Plan.  During the pendency of said action, anybenefits that become payable shall be held as credits to the Participant’s orBeneficiary’s Account or, if the Employer or Trustee prefers, paid into thecourt as they become payable, to be distributed by the court to the recipientas the court deems proper at the close of said action. Notwithstanding theforegoing, the Committee shall interpret this Section 12.3 in a manner that isconsistent with Code Section 409A and the regulations thereunder, includingwithout limitation guidance issued in connection with that Section.

12.4                           LEAVEOF ABSENCE.  If a Participant isauthorized by the Employer for any reason to take a paid leave of absence fromthe employment of the Employer, the Participant shall continue to be consideredemployed by the Employer and his or her elected annual deferral amount shallcontinue to be withheld during such paid leave of absence.  If a Participant is authorized by theEmployer for any reason to take an unpaid leave of absence from the employmentof the Employer, the Participant shall continue to be considered employed bythe Employer and the Participant shall be excused from making deferrals untilthe Participant returns to a paid employment status.  Upon such return, deferrals shall resume forthe remaining portion of the Plan Year in which the return occurs, based on thedeferral 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 Section12.4 in a manner that is consistent with Code Section 409A and the regulationsthereunder, including without limitation, guidance issued in connection withthat Section.

12.5                           LEGALFEES.  If, following a Change inControl of the Company, it should appear to any Participant that the Company,the Participant’s Employer or any successor corporation has failed to complywith any of its obligations under the Plan or any agreement 

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thereunder or, ifthe Company, such Employer or any other person takes any action to declare thePlan void or unenforceable or institutes any litigation or other legal actiondesigned to deny, diminish or to recover from any Participant the benefitsintended to be provided (collectively, the “Dispute”), then the Company and theParticipant’s Employer shall pay, if the Participant prevails in the Dispute,the Participant’s reasonable legal fees and court costs actually incurred bythe Participant in the initiation or defense of the Dispute, whether by oragainst the Company or the Participant’s Employer or any director, officer,shareholder or other person affiliated with the Company, the Participant’sEmployer or any successor thereto.

12.6                           NONASSIGNABILITY.  Neither a Participant nor any other personshall have any right to commute, sell, assign, transfer, pledge, anticipate,mortgage or otherwise encumber, transfer, hypothecate, alienate or convey inadvance of actual receipt, the amounts, if any, payable hereunder, or any partthereof, which are, and all rights to which are expressly declared to be,unassignable and non-transfer­able.  Nopart of the amounts payable shall, prior to actual payment, be subject toseizure, attachment, garnishment or sequestration for the payment of any debts,judgments, alimony or separate maintenance owed by a Participant or any otherperson, be transferable by operation of law in the event of a Participant’s orany other person’s bankruptcy or insolvency or be transferable to a spouse as aresult of a property settlement or otherwise.

12.7                           UNSECUREDGENERAL CREDITOR. Participants and their Bene­ficiaries, heirs, successorsand assigns shall have no legal or equitable rights, interests or claims in anyproperty or assets of an Employer.  Forpurposes of the payment of benefits under this Plan, any and all of an Employer’sassets shall be, and remain, the general, unpledged unrestricted assets of theEmployer.  An Employer’s obligation underthe Plan shall be merely that of an unfunded and unsecured promise to pay moneyin the future.

12.8                           COURT ORDER. The Employer is authorized to make anypayments directed by court order in any action in which the Plan or theEmployer has been named as a party.  Inaddition, if a court determines that a spouse or former spouse of a Participanthas an interest in the Participant’s benefits under the Plan in connection witha property settlement or otherwise, the Employer, in its sole discretion, shallhave the right, notwithstanding any election made by a Participant, toimmediately distribute the spouse’s or former spouse’s interest in theParticipant’s benefits under the Plan to that spouse or former spouse.  Notwithstanding the foregoing, the Committeeshall interpret this Section 12.8 in a manner that is consistent with CodeSection 409A and the regulations thereunder, including without limitationguidance 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 mannerconsistent with those foregoing sections. Should any provision of this Plan not comply with the provisions of CodeSection 409A listed above, that provision shall have no affect on the remainingparts of this Plan and this Plan shall be construed and enforced as if suchprovision had never been inserted herein.

12.10                     UNVESTED ACCOUNT BALANCES UNDER PRIOR PLAN.  If a Participant participated in the Executive and Director DeferredCompensation Plan, as amended and restated as 

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of January 1, 2003, and all or a part of the Participant’s accountbalance under that plan was unvested as of January 1, 2005, that unvestedbalance will be transferred to this Plan in accordance with Code Section 409Aand the regulations thereunder, and such balance shall be administered inaccordance with the provisions of this Plan, provided, however, that thevesting of that balance shall be based on the applicable vesting schedule(s)under the Executive and Director Deferred Compensation Plan, which areincorporated herein by reference.

12.11                     AGGREGATION OF EMPLOYERS. To the extent required under Code section 409A, if the Employer is amember of a controlled group of corporations or a group of trades or businessunder common control (as described in Code sections 414(b) or (c)), all membersof the group shall be treated as a single Employer for purposes of whetherthere has occurred a Separation from Service and for any other purposes underthe Plan as Section 409A shall require.

**IN WITNESS WHEREOF**, the Employer has causedthis 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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