Exhibit 10.23


 


The Ryland Group, Inc.


Dreier Supplemental Executive Retirement Plan
II


 




 





 


Amendment and Restatement


Effective January 1, 2005


 


 













 


The Ryland Group, Inc.


Dreier Supplemental Executive Retirement Plan
II


 




 





TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE 1

  	
   

  	
  Definitions

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  	
  Vesting

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Vesting in Benefits

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  	
  Benefits

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Eligibility for Benefits

  	
   

  	
  6

  
	
  3.2

  	
   

  	
  Death Benefit

  	
   

  	
  6

  
	
  3.3

  	
   

  	
  Forms of Payment; Elections

  	
   

  	
  7

  
	
  3.4

  	
   

  	
  Withholding and Payroll Taxes

  	
   

  	
  7

  
	
  3.5

  	
   

  	
  Delays

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
   

  	
  Termination, Amendment or
  Modification of the Agreement

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Termination or Amendment

  	
   

  	
  8

  
	
  4.2

  	
   

  	
  Termination of Agreement

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
  Other Benefits and Agreements

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Coordination with Other
  Benefits

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  	
  Administration of this
  Agreement

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Committee Duties

  	
   

  	
  8

  
	
  6.2

  	
   

  	
  Administration Upon Change In
  Control

  	
   

  	
  8

  
	
  6.3

  	
   

  	
  Agents

  	
   

  	
  9

  
	
  6.4

  	
   

  	
  Binding Effect of Decisions

  	
   

  	
  9

  
	
  6.5

  	
   

  	
  Indemnity of Committee

  	
   

  	
  9

  
	
  6.6

  	
   

  	
  Company Information

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
   

  	
  Claims Procedures

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Presentation of Claim

  	
   

  	
  10

  
	
  7.2

  	
   

  	
  Notification of Decision

  	
   

  	
  10

  
	
  7.3

  	
   

  	
  Review of a Denied Claim

  	
   

  	
  10

  
	
  7.4

  	
   

  	
  Decision on Review

  	
   

  	
  11

  
	
  7.5

  	
   

  	
  Legal Action

  	
   

  	
  11

  
	
  7.6

  	
   

  	
  Named Fiduciary

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  	
  Beneficiary Designation

  	
   

  	
  11

  



 


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The Ryland Group, Inc.


Dreier Supplemental Executive Retirement Plan
II


 




 





	
  8.1

  	
   

  	
  Beneficiary

  	
   

  	
  11

  
	
  8.2

  	
   

  	
  Beneficiary Designation;
  Change; Spousal Consent

  	
   

  	
  11

  
	
  8.3

  	
   

  	
  Acknowledgement

  	
   

  	
  12

  
	
  8.4

  	
   

  	
  No Beneficiary Designation

  	
   

  	
  12

  
	
  8.5

  	
   

  	
  Doubt as to Beneficiary

  	
   

  	
  12

  
	
  8.6

  	
   

  	
  Discharge of Obligations

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
   

  	
  Trust

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Establishment of the Trust

  	
   

  	
  12

  
	
  9.2

  	
   

  	
  Interrelationship of the
  Agreement and the Trust

  	
   

  	
  12

  
	
  9.3

  	
   

  	
  Deposits to the Trust

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
   

  	
  Miscellaneous

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Status of Agreement

  	
   

  	
  14

  
	
  10.2

  	
   

  	
  Unsecured General Creditor

  	
   

  	
  14

  
	
  10.3

  	
   

  	
  Company’s Liability

  	
   

  	
  14

  
	
  10.4

  	
   

  	
  Nonassignability

  	
   

  	
  14

  
	
  10.5

  	
   

  	
  Furnishing Information

  	
   

  	
  14

  
	
  10.6

  	
   

  	
  Terms

  	
   

  	
  14

  
	
  10.7

  	
   

  	
  Captions

  	
   

  	
  14

  
	
  10.8

  	
   

  	
  Governing Law

  	
   

  	
  15

  
	
  10.9

  	
   

  	
  Validity

  	
   

  	
  15

  
	
  10.10

  	
   

  	
  Notice

  	
   

  	
  15

  
	
  10.11

  	
   

  	
  Successors

  	
   

  	
  15

  
	
  10.12

  	
   

  	
  Spouse’s Interest

  	
   

  	
  15

  
	
  10.13

  	
   

  	
  Incompetent

  	
   

  	
  15

  
	
  10.14

  	
   

  	
  Court Order

  	
   

  	
  16

  
	
  10.15

  	
   

  	
  Distribution in the Event of
  Taxation

  	
   

  	
  16

  
	
  10.16

  	
   

  	
  Legal Fees To Enforce Rights
  After Change in Control

  	
   

  	
  16

  
	
  10.17

  	
   

  	
  Aggregation of Employers

  	
   

  	
  16

  
	
  10.18

  	
   

  	
  Aggregation of Plans

  	
   

  	
  17

  



 


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The Ryland Group, Inc.


Dreier Supplemental Executive Retirement Plan
II


 




 





THE
RYLAND GROUP, INC.


DREIER
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN II


 


THIS DREIER SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN II (this “Agreement”)
is amended and restated  as of January 1,
2005 between the Ryland Group, Inc. (the “Company”) and R. Chad
Dreier (the “Participant”).


 


RECITALS


 


A.                                 The
Participant is the Chief Executive Officer of the Company, and the Company
desires to have the continued services and counsel of the Participant.


 


B.                                   The
purpose of this Agreement is to provide specified benefits to the Participant
as more fully described below.


 


AGREEMENT


 


NOW THEREFORE,
it is mutually agreed as follows:


 


ARTICLE 1


Definitions


 


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


 


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


 


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


 


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


 


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


 


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


 


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The Ryland Group, Inc.


Dreier Supplemental Executive Retirement Plan
II


 




 





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


 


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


 


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


 


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


 


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


 


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


 


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


 


1.9                               “Death
Benefit” shall mean the Participant’s unpaid Vested SERP II Benefit (i) payable
in equal annual installments over the remaining number of years and in the same
amounts as such benefit would have been paid to the Participant had the
Participant survived, or (ii) the present value equivalent of such benefit
stream payable in a lump sum, calculated using an 8% discount rate and an end
of the year payment convention for the purpose of calculating the lump sum
payment.


 


1.10                         “Election Form” shall mean the form upon which the
Participant elects the manner of distribution of his SERP II Benefit and Death
Benefit, and shall be made in such form as the Committee may require, including
thereon a power of attorney from the Participant’s community property spouse,
if any, authorizing the Participant to act on behalf of such spouse in making
the election and agreeing to be irrevocably bound by any such act with respect
to any community property interest under this Agreement.


 


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


 


1.12                         “Retirement” shall mean the Participant’s voluntary
or involuntary separation of service from the Company for any reason other than
death.


 


1.13                         “Separation from Service” shall mean the Participant’s
“separation from service” within the meaning of Code section 409A, treating as
a Separation from Service an anticipated permanent reduction in the level of
bona fide services to be performed by the Participant to 20% or less of the
average level of bona fide services performed by the Participant over the
immediately preceding 36 


 


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The Ryland Group, Inc.


Dreier Supplemental Executive Retirement Plan
II


 




 





month
period (or the full period during which the Participant performed services for
the Company, if that is less than 36 months). 
Separation from Service includes Retirement.


 


1.14                         “SERP I” shall mean the Dreier Supplemental
Executive Retirement Plan entered as of July 1, 2002 between the Company
and the Participant.


 


1.15                         “SERP Benefit” shall have the meaning set forth in Section 1.13
of the SERP I.


 


1.16                         “SERP II Benefit” shall mean a benefit in the amount
that is the sum of subparagraphs (a) and (b) below:


 


(a) (i) an
amount per annum that when added to the SERP Benefit equals $2,400,000 per
annum, payable in annual installments for a period of fifteen (15) years, or (ii) the
present value of the benefit stream in this Section 1.15 (a)(i) payable
in a lump sum, calculated using an 8% discount rate and an end of the year
payment convention for the purpose of calculating the lump sum payment.


 


(b)(i) $1,440,000
per annum, payable in annual installments for a period of fifteen (15) years,
or (ii) the present value of the benefit stream in this Section 1.15(b)(i) payable
in a lump sum, calculated using an 8% discount rate and an end of the year
payment convention for the purpose of calculating the lump sum payment.


 


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


 


1.18                         “Trust”
shall mean the trust established pursuant to that certain Master Trust
Agreement, dated as of June 27, 2002, between the Company and the trustee
named therein, as amended from time to time.


 


1.19                         “Vested
SERP II Benefit” shall mean the Participant’s SERP II Benefit multiplied by the
applicable vesting percentage set forth in Article 2 of this Agreement.


 


ARTICLE 2

Vesting


 


2.1                               Vesting in Benefits.


 


(a)                                General.  The Participant shall vest in his
SERP II Benefit according to the following vesting schedules, provided that the
Participant is continuously employed with the Company through the specified
date of vesting:


 


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The Ryland Group, Inc.


Dreier Supplemental Executive Retirement Plan
II


 




 





(i)                                     With
respect to the SERP II Benefit set forth in Section 1.15 (a):


 


	
  Date of Vesting

  	
   

  	
  Vesting Percentage

  
	
  As of December 30, 2004

  	
   

  	
  40%

  
	
  December 30, 2005

  	
   

  	
  60%

  
	
  December 30, 2006

  	
   

  	
  80%

  
	
  December 30, 2007

  	
   

  	
  100%

  



 


(ii)                                  With
respect to the SERP II Benefit set forth in Section 1.15(b):


 


	
  Date of Vesting

  	
   

  	
  Vesting Percentage

  
	
  December 30, 2005 through

  December 30, 2007

  	
   

  	
  0%

  
	
  December 30, 2008

  	
   

  	
  33 1/3%

  
	
  December 30, 2009

  	
   

  	
  66 2/3%

  
	
  December 30, 2010

  	
   

  	
  100%

  



 


(b)                               Accelerated Vesting.  Notwithstanding anything to the contrary in
this Section 2.1, the Participant shall immediately become 100% vested in
the SERP II Benefit upon the occurrence of a Change in Control or a Termination
of Employment Without Cause.


 


ARTICLE 3

Benefits


 


3.1                               Eligibility for Benefits.


 


(a)                                SERP II Benefit.  Upon the first to occur of a Change in
Control or Separation from Service, the Participant is eligible to receive his
Vested SERP II Benefit.


 


(b)                               Commencement of Payment of the SERP II Benefit.
The payment of the Participant’s Vested SERP II Benefit shall commence on the
earlier of the date of a Change in Control or six (6) months after the
date of the Participant’s Separation from Service.


 


3.2                               Death Benefit.


 


(a)                                Death Benefit.  In the event of the Participant’s death at
any time before the Participant’s Vested SERP II Benefit has been paid in full,
the Participant’s Beneficiary shall receive a Death Benefit.


 


(b)                               Commencement of Death Benefit.  The Death Benefit shall commence or be paid
in full, depending on the Participant’s Election Form, to the Participant’s
Beneficiary on the 


 


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The Ryland Group, Inc.


Dreier Supplemental Executive Retirement Plan
II


 




 





date
the Participant would have otherwise received the next SERP II Benefit payment
had he lived (or within 60 days thereafter)


 


3.3                               Forms of Payment; Elections.  At the time the Participant initially is
eligible to participate in the Plan (or as otherwise permitted by Code section
409A), the Participant shall elect on an Election Form to have his (i) SERP
II Benefit paid in a lump sum or in equal annual installments for fifteen (15)
years, and (ii) Death Benefit paid in a lump sum or in equal annual
installments over the remaining number of years, at the same time and in the
same amounts, as such benefit would have been paid to the Participant had the
Participant survived.  The Participant
may change his initial elections once during calendar year 2005 by submitting a
new Election Form to the Committee by December 31, 2005.  Additionally, to the extent permitted under
Code section 409A and by the Company, the Participant may elect the form and
timing of payment of his SERP II Benefit or Death Benefit during 2008 (except
that a Participant cannot change payment elections with respect to payments
that the Participant would otherwise receive in 2008, or make an election that
causes payments scheduled for subsequent years to be made in 2008), and such
election shall not be treated as a change in the form and timing of payment or
an acceleration of payment.


 


Thereafter,
a new election can be made once if the Participant submits the new election on
an Election Form to the Committee and that election meets the following
requirements: (i) the election cannot take effect until at least twelve
(12) months after the date on which the election is made, (ii) in the case
of the SERP II Benefit only, the payment with respect to which such election is
made must be deferred for a period of five (5) years from the date such
payment would otherwise have been made, and (iii) the election is accepted
by the Committee in its sole discretion. 
The Election Forms most recently accepted by the Committee in accordance
with the rules described above shall govern the payout of the Participant’s
SERP II Benefit and Death Benefit.  If
the Participant does not make an election with respect to the form of payment
of his SERP II Benefit, then such benefit shall be paid in a lump sum.  Similarly, if the Participant does not make
an election with respect to the form of payment of his Death Benefit, then such
benefit shall be paid in a lump sum. Notwithstanding anything in the Agreement
to the contrary, no change submitted on an Election Form shall be accepted
by the Committee, and the Committee shall deny any change made on an Election
Form, if the Committee determines that the change violates the requirements
under Code section 409A.


 


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


 


ARTICLE 4

Termination, Amendment or Modification of the Agreement


 


4.1                               Termination or Amendment.  This
Agreement may be terminated or amended only by a written agreement executed by
the Company and the Participant. Notwithstanding the preceding, the


 


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The Ryland Group, Inc.


Dreier Supplemental Executive Retirement Plan
II


 




 





Agreement
may be amended by the Company at any time, retroactively if required in the
opinion of the Company, in order to ensure that the Agreement is characterized
as a “top-hat” plan as described under ERISA Sections 201(2), 301(a)(3), and
401(a)(1) to conform with the Plan to the requirements of Code Section 409A,
and to conform the Plan to the provisions and requirements of any applicable
law (including ERISA and the Code).  No
such amendment shall be considered prejudicial to any interest of the
Participant or a Beneficiary hereunder.   
Upon a termination of the Plan pursuant to this Section 4.1, Vested
SERP II Benefits shall be paid to the Participant in accordance with Article 3.  Notwithstanding the preceding, the Company,
in its discretion, reserves the right, by action of the Board, to terminate the
Plan and distribute to the Participant his Vested SERP II Benefit as permitted
in accordance with the Code (e.g., Treas. Reg. 1.409A-3(j)(4)(ix)).


 


4.2                               Termination of Agreement.  Unless otherwise modified pursuant to Section
4.1 above, this Agreement shall terminate upon the full payment of the
Participant’s Vested SERP II Benefit or Death Benefit in accordance with
Article 3.


 


ARTICLE 5

Other Benefits and Agreements


 


5.1                               Coordination with Other Benefits.  The benefits provided for the Participant
under this Agreement are in addition to any other benefits available to such
Participant under any other plan or program for employees of the Company.  This Agreement shall supplement and shall not
supersede, modify or amend any other such plan or program except as may
otherwise be expressly provided.


 


ARTICLE 6

Administration of the Agreement


 


6.1                               Committee Duties.  This
Agreement shall be administered by a Committee, which shall consist of the
Compensation Committee, or such committee as the Compensation Committee shall
appoint.  The Committee shall have the
discretion and authority to (i) make, amend, interpret and enforce all
appropriate rules and regulations for the administration of this
Agreement, (ii) make benefit entitlement determinations, and (iii) decide
or resolve any and all questions including interpretations of this Agreement,
as may arise in connection with the Agreement.


 


6.2                               Administration Upon Change In Control.  For purposes of this Agreement, the Committee
shall be the “Administrator” at all times prior to the occurrence of a Change
in Control.  Upon and after the
occurrence of a Change in Control, the “Administrator” shall be an independent
third party selected by the Compensation Committee of the Board of Directors of
the Company, as such committee was constituted prior to the Change in
Control.  The Administrator shall have
the discretionary power to determine all questions arising in connection with
the administration of the Agreement and the interpretation of the Agreement and
Trust including, but not limited to benefit entitlement determinations;
provided, however, upon and after the occurrence of a Change in Control, the
Administrator shall have no power to direct the investment of Trust assets


 


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The Ryland Group, Inc.


Dreier Supplemental Executive Retirement Plan
II


 




 





or select any investment manager or custodial firm for the Trust.  Upon and after the occurrence of a Change in Control,
the Company must: (1) pay all reasonable administrative expenses and fees
of the Administrator; (2) indemnify the Administrator against any costs,
expenses and liabilities including, without limitation, attorney’s fees and
expenses arising in connection with the performance of the Administrator
hereunder, except with respect to matters resulting from the gross negligence
or willful misconduct of the Administrator or its employees or agents; and (3) supply
full and timely information to the Administrator on all matters relating to the
Agreement, the Trust, the Participant and his Beneficiaries, the Participant’s
benefits under this Agreement, the date and circumstances of the Participant’s
termination of employment or death, and such other pertinent information as the
Administrator may reasonably require. 
Upon and after a Change in Control, the Administrator may be terminated
(and a replacement appointed) only with the approval of the Compensation
Committee of the Board of Directors of the Company, as such committee was
constituted prior to a Change in Control. 
Upon and after a Change in Control, the Administrator may not be
terminated by the Company.  If the
Administrator resigns or is removed and no successor is appointed and approved
by the Compensation Committee of the Board of Directors of the Company, as such
committee was constituted prior to a Change in Control, the Participant may
apply to a court of competent jurisdiction for appointment of a successor
third-party administrator.


 


6.3                               Agents.  In the administration of this Agreement, the
Committee may employ agents and delegate to them such administrative duties as
it sees fit, (including acting through a duly appointed representative), and
may from time to time consult with counsel who may be counsel to the Company.


 


6.4                               Binding Effect of Decisions.  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 Agreement and the rules and
regulations promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest in the Agreement.


 


6.5                               Indemnity of Committee.  The Company shall indemnify and
hold harmless the members of the Committee against any and all claims, losses,
damages, expenses or liabilities arising from any action or failure to act with
respect to this Agreement, except in the case of willful misconduct by the
Committee or any of its members.


 


6.6                               Company Information.  To enable the Committee to perform
its functions, the Company shall supply full and timely information to the
Committee on all matters relating to the compensation of the Participant, the
date and circumstances of the Participant’s termination of employment or death,
and such other pertinent information as the Committee may reasonably require.


 


ARTICLE 7


Claims Procedures


 


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The
Ryland Group, Inc.


Dreier Supplemental Executive Retirement Plan
II 




 





 


7.1                                 Presentation of Claim.  The Participant or his Beneficiary (such
Participant or Beneficiary being referred to below as a “Claimant”) may deliver
to the Committee a written claim for a determination with respect to the
amounts distributable to such Claimant pursuant to this Agreement.  If such a claim relates to the contents of a
notice received by the Claimant, the claim must be made within sixty (60) days
after such notice was received by the Claimant. 
All other claims must be made within one hundred eighty (180) days of
the date on which the event that caused the claim to arise occurred.  The claim must state with particularity the
determination desired by the Claimant.


 


7.2                               Notification of Decision.  The Committee shall consider a Claimant’s
claim within a reasonable time, but no later than ninety (90) days after
receiving the claim.  If the Committee
determines that special circumstances require an extension of time for processing
the claim, written notice of the extension shall be furnished to the Claimant
prior to the termination of the initial ninety (90) day period.  In no event shall such extension exceed a
period of ninety (90) days from the end of the initial period.  The extension notice shall indicate the
special circumstances requiring an extension of time and the date by which the
Committee expects to render the benefit determination.  The Committee shall notify the Claimant in
writing:


 


(a)                                that
the Claimant’s requested determination has been made, and that the claim has
been allowed in full; or


 


(b)                               that
the Committee has reached a conclusion contrary, in whole or in part, to the
Claimant’s requested determination, and such notice must set forth in a manner
calculated to be understood by the Claimant:


 


(i)                                   the
specific reason(s) for the denial of the claim, or any part of it;


 


(ii)                                specific
reference(s) to pertinent provisions of the Agreement upon which such
denial was based;


 


(iii)                             a description of any
additional material or information necessary for the Claimant to perfect the
claim, and an explanation of why such material or information is necessary;


 


(iv)                            an
explanation of the claim review procedure set forth in Section 7.3 below;
and


 


(v)                               a
statement of the Claimant’s right to bring a civil action under ERISA Section 502(a)
following an adverse benefit determination on review.


 


7.3                                 Review of a Denied Claim.  On or before sixty (60) days after receiving
a notice from the Committee that a claim has been denied, in whole or in part,
a Claimant (or the Claimant’s duly authorized representative) may file with the
Committee a written request for a review of the denial of the claim.  The Claimant (or the Claimant’s duly
authorized representative):


 


(a)                                may,
upon request and free of charge, have reasonable access to, and copies of, all
documents, records and other information relevant to the claim for benefits;


 


(b)                               may
submit written comments or other documents; and/or


 


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(c)                                may
request a hearing, which the Committee, in its sole discretion, may grant.


 


7.4                               Decision on Review.  The Committee shall render its decision on
review promptly, and no later than sixty (60) days after the Committee
receives the Claimant’s written request for a review of the denial of the
claim.  If the Committee determines that
special circumstances require an extension of time for processing the claim,
written notice of the extension shall be furnished to the Claimant prior to the
termination of the initial sixty (60) day period.  In no event shall such extension exceed a
period of sixty (60) days from the end of the initial period.  The extension notice shall indicate the
special circumstances requiring an extension of time and the date by which the
Committee expects to render the benefit determination.  In rendering its decision, the Committee
shall take into account all comments, documents, records and other information
submitted by the Claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit
determination.  The decision must be
written in a manner calculated to be understood by the Claimant, and it must
contain:


 


(a)                                specific
reasons for the decision;


 


(b)                               specific
reference(s) to the pertinent Agreement provisions upon which the decision
was based;


 


(c)                                a
statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the
Claimant’s claim for benefits; and


 


(d)                               a
statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).


 


7.5                                 Legal Action.  A Claimant’s compliance with the foregoing
provisions of this Article 7 is a mandatory prerequisite to a Claimant’s right
to commence any legal action with respect to any claim for benefits under this
Agreement.


 


7.6                               Named Fiduciary.  The Committee shall be the named fiduciary,
within the meaning of ERISA, with respect to this Agreement solely for purposes
of this Article 7.


 


ARTICLE 8

Beneficiary Designation


 


8.1                                 Beneficiary.  The Participant shall have the right, at any
time, to designate his Beneficiary(ies) (both primary as well as contingent) to
receive any benefits payable under the Agreement to a beneficiary upon the
Participant’s death.  The Beneficiary
designated under this Agreement may be the same as or different from the Beneficiary
designation under any other plan of the Company in which the Participant
participates.  If the Participant does
not make a Beneficiary designation under this Plan, the most recent beneficiary
designation made and accepted by the Committee under SERP I shall apply for
purposes of this Plan.


 


8.2                                 Beneficiary Designation; Change; Spousal Consent.  The Participant shall designate his
Beneficiary by completing and signing the Beneficiary Designation Form, and
returning it to the


 


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Committee
or its designated agent.  The Participant
shall have the right to change a Beneficiary by completing, signing and
otherwise complying with the terms of the Beneficiary Designation Form and
the Committee’s rules and procedures, as in effect from time to time.  If the Participant names someone other than
his or her spouse as a Beneficiary and if the Committee requires that spousal
consent be obtained with respect to the Participant, a spousal consent, in the
form designated by the Committee, must be signed by the Participant’s spouse
and returned to the Committee.  Upon the
acceptance by the Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be cancelled.  The Committee shall be entitled to rely on
the last Beneficiary Designation Form filed by the Participant and
accepted by the Committee prior to his death.


 


8.3                               Acknowledgment.  No
designation or change in designation of a Beneficiary shall be effective until
received, accepted and acknowledged in writing by the Committee or its
designated agent.


 


8.4                               No Beneficiary Designation.  If the
Participant fails to designate a Beneficiary as provided in Sections 8.2 and
8.3 above or, if all designated Beneficiaries predecease the Participant or die
prior to complete distribution of the Participant’s benefits, then the
Participant’s spouse shall be the designated Beneficiary.  If the Participant has no surviving spouse,
the benefits remaining under the Agreement shall be payable to the executor or
personal representative of the Participant’s estate.


 


8.5                               Doubt as to Beneficiary.  If the
Committee has any doubt as to the proper Beneficiary to receive payments
pursuant to this Agreement, the Committee shall have the right, exercisable in
its discretion, to distribute such payment to the Participant’s estate without
liability for any tax or other consequences which might flow therefrom, or may
take such other action as the Company deems to be appropriate.  Any claim for benefits by a Beneficiary must
be made in accordance with Treas. Reg. 1.409A-3(g) or any other applicable
guidance under Code section 409A..


 


8.6                               Discharge of Obligations.  The payment of benefits under this Agreement
to a Beneficiary shall fully and completely discharge the Company and the
Committee from all further obligations under this Agreement with respect to the
Participant, and this Agreement shall terminate upon such full payment of benefits.


 


ARTICLE 9


Trust


 


9.1                               Establishment of the Trust.  In order to provide assets from which to
fulfill the obligations to the Participant and his beneficiaries under the
Agreement, the Company shall update the existing Trust to include this Plan.  The Company may, in its discretion,
contribute cash or other property, including securities issued by the Company,
to provide for the benefit payments under the Agreement.


 


9.2                               Interrelationship of the
Agreement and the Trust.  The
provisions of this Agreement shall govern the rights of the Participant to
receive distributions.  The provisions of
the Trust shall govern the rights of the Company, the Participant and the
creditors of the Company to the assets transferred to the Trust.  The Company shall at all times remain liable
to carry out its obligations


 


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under
the Agreement.  The Company’s obligations
under the Agreement may be satisfied with Trust assets distributed pursuant to
the terms of the Trust, and any such distribution shall reduce the Company’s
obligations under this Agreement.


 


9.3                               Deposits to the Trust.  The Company shall deposit into the Trust an
amount of cash or, in its discretion, other assets, including if desirable
securities issued by the Company, equal to $3,471,991 per annum for the six (6) year
period commencing January 1, 2005. 
Immediately before the date of a Change in Control, the Company shall
deposit into the Trust such amount of cash and other assets, if any, sufficient
in amount to cause the total value of the assets held in such Trust at that
time, excluding the SERP Benefit, to equal the present value of the entire SERP
II Benefit set forth in both Section 1.15(a) and Section 1.15(b) calculated
using an 8% discount rate and the Participant as 100% vested.


 


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ARTICLE
10

Miscellaneous


 


10.1                         Status of Agreement.   This Agreement is intended to be a plan that
is not qualified within the meaning of Code Section 401(a) and that
is “unfunded and is maintained by an employer primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and
401(a)(1).  In addition, the Plan is
intended to comply with Code Sections 409A(a)(1) to (4) and (b)(1) to
(2). The Plan shall be administered and interpreted in a manner consistent with
those foregoing intents.


 


10.2                           Unsecured General Creditor.  The Participant and his Beneficiaries,
successors and assigns shall have no legal or equitable rights, interests or
claims in any property or assets of the Company.  Any and all of the Company’s assets shall be,
and remain, the general, unpledged unrestricted assets of the Company.


 


10.3                         Company’s Liability.  The Company’s liability for the payment of
benefits shall be defined only by this Agreement, as entered into between the
Company and the Participant.


 


10.4                         Nonassignability.  Neither the 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 the Participant or any other person, nor be transferable by
operation of law in the event of the Participant’s or any other person’s
bankruptcy or insolvency.


 


10.5                         Furnishing Information.  The Participant or his Beneficiary will
cooperate with the Committee by furnishing any and all information requested by
the Committee and take such other actions as may be requested in order to
facilitate the administration of this Agreement and the payments of benefits
hereunder, including but not limited to taking such physical examinations as
the Committee may deem necessary.


 


10.6                         Terms.  Whenever any words are used herein in the masculine,
they shall be construed as though they were in the feminine in all cases where
they would so apply; and wherever any words are used herein in the singular or
in the plural, they shall be construed as though they were used in the plural
or the singular, as the case may be, in all cases where they would so apply.


 


10.7                           Captions.  The captions of the articles, sections and
paragraphs of this Agreement are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.


 


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10.8                           Governing Law.  Subject to ERISA, the provisions of this
Agreement shall be construed and interpreted according to the internal laws of
the State of Maryland without regard to its conflict of laws principles.


 


10.9                           Validity.  In case any provision of this Agreement shall
be illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Agreement shall be construed and
enforced as if such illegal and invalid provision had never been inserted
herein; except to the extent that Code section 409A requires that this Section
be disregarded because it purports to nullify terms that are not in compliance
with Code section 409A.


 


10.10                     Notice.  Any notice or filing required or permitted to
be given to the Committee under this Agreement shall be sufficient if in
writing and hand-delivered, or sent by registered or certified mail, to the
address below:


 


SERP
Committee


The
Ryland Group, Inc.


24025
Park Sorrento


Suite 400


Calabasas,
California 91302


 


Such
notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration
or certification.


 


Any
notice or filing required or permitted to be given to the Participant under
this Agreement shall be sufficient if in writing and hand-delivered, or sent by
mail, to the last known address of the Participant.


 


10.11                   Successors.  The
provisions of this Agreement shall bind and inure to the benefit of the Company
and its successors and assigns and the Participant and his Beneficiary.


 


10.12                   Spouse’s Interest.  The
interest in the benefits hereunder of a spouse of the Participant who has
predeceased the Participant shall automatically pass to the Participant and
shall not be transferable by such spouse in any manner, including but not
limited to such spouse’s will, nor shall such interest pass under the laws of
intestate succession.


 


10.13                   Incompetent.  If the
Committee determines in its discretion that a benefit under this Agreement is
to be paid to a minor, a person declared incompetent or to a person incapable
of handling the disposition of that person’s property, the Committee may direct
payment of such benefit to the guardian, legal representative or person having
the care and custody of such minor, incompetent or incapable person.  The Committee may require proof of minority,
incompetency, incapacity or guardianship, as it may deem appropriate prior to
distribution of the benefit.  Any payment
of a benefit shall be a payment for the account of the Participant and the
Participant’s Beneficiary, as the case may be, and shall be a complete
discharge of any liability under the Agreement for such payment amount.


 


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10.14                   Court Order.  The Committee is authorized to make any
payments directed by court order in any action in which the Committee has been
named as a party. Notwithstanding the foregoing, the Committee shall interpret
this provision in a manner that is consistent with Code Section 409A and
other applicable tax law, including but not limited to guidance issued after
the effective date of this Plan (e.g., Treas. Reg. 1.409A-3(j)(4)).


 


10.15                   Distribution in the Event of
Taxation.  If, for any
reason, all or any portion of the Participant’s benefit under this Agreement
becomes taxable to the Participant prior to receipt, the Company shall
distribute to the Participant immediately available funds in an amount equal to
the taxable portion of his or her benefit (which amount shall not exceed the
Participant’s unpaid Vested SERP II Benefit under the Agreement).  Such a distribution shall affect and reduce
the benefits to be paid under this Agreement. 
Notwithstanding the foregoing, the Committee shall interpret this
provision in a manner that is consistent with Code Section 409A and other
applicable tax law, including but not limited to guidance issued after the
effective date of this Plan (e.g., Treas. Reg. 1.409A-3(j)(4)).


 


10.16                   Legal Fees To Enforce
Rights After Change in Control. 
The Company is aware that upon the occurrence of a Change in Control,
the Board or the board of directors of the Company (which might then be
composed of new members) or a shareholder of the Company or of any successor
corporation or affiliate of a successor corporation might then cause or attempt
to cause the Company or such successor to refuse to comply with its obligations
under the Agreement and might cause or attempt to cause the Company to
institute, or may institute, litigation seeking to deny the Participant the
benefits intended under the Agreement. 
In these circumstances, the purpose of the Agreement could be
frustrated.  Accordingly, if, following a
Change in Control, it should appear to the Participant that the Company or any
successor corporation has failed to comply with any of its obligations under
the Agreement or any agreement thereunder or, if the Company or any other
person takes any action to declare the Agreement void or unenforceable or
institutes any litigation or other legal action designed to deny, diminish or
to recover from the Participant the benefits intended to be provided, then the
Company irrevocably authorizes such Participant to retain counsel of his choice
at the expense of the Company to represent such Participant in connection with
the initiation or defense of any litigation or other legal action, whether by
or against the Company or any director, officer, shareholder, other person or
entity affiliated with the Company or any successor corporation or affiliate of
a successor corporation thereto in any jurisdiction.  The Participant shall be entitled to the
benefits described under this Section 10.16 during the period commencing
on the effective date of the Agreement and ending on his death.  The benefits provided during a calendar year
shall not affect the benefits available in any other calendar year.  The benefits provided under this Section are
not subject to liquidation or exchange for another benefit.


 


10.17                     Aggregation of Employers.   If the Company is a member of a controlled
group of corporations or a group of trades or business under common control (as
described in Code section 414(b) or (c), but substituting a 50% ownership level
for the 80% level set forth in those Code Sections), all members of the group
shall be treated as a single employer for purposes of whether there has


 


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occurred a Separation from Service and for any other purposes under the
Plan as Code section 409A shall require.


 


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


 


IN WITNESS WHEREOF, the parties
have executed this Agreement effective as of the date and year indicated below.


 


	
   

  	
  “Company”

  
	
   

  	
  The Ryland Group, Inc., a Maryland corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Robert J.
  Cunnion, III

  	
   

  
	
   

  	
   

  	
   

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Timothy J.
  Geckle

  	
   

  
	
   

  	
   

  	
   

  	
  Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Participant”

  	
   

  
	
   

  	
  R. Chad Dreier

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						



 


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