Document:

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                                                                    Exhibit 10.7

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT
                  (AMENDED AND RESTATED ON SEPTEMBER 20, 2000)

AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of the 21st day of April
1999, by and between The Ryland Group, Inc., a Maryland corporation (the
"Company"), and R. Chad Dreier (the "Executive").

In consideration of the mutual covenants and agreements of the parties set forth
in this Agreement, and other good and valuable consideration the receipt and
sufficiency of which are acknowledged, the parties agree as follows:

1.      AMENDMENT AND RESTATEMENT OF EMPLOYMENT AGREEMENT. This Employment
        Agreement amended and restated on September 20, 2000 the Employment
        Agreement dated and effective as of April 21, 1999 between the Company
        and the Executive.

2.      TERM OF EMPLOYMENT. The Company agrees to employ the Executive until
        December 31, 2003. This Agreement shall automatically renew for a one
        (1) year renewal period on December 31, 2003, or for a one (1) year
        renewal period at the end of each renewal period until terminated in
        accordance with the terms of this Agreement. Either party may terminate
        this Agreement on December 31, 2003, or at the end of each one (1) year
        renewal period by giving the other party written notice of termination
        delivered at least one hundred eighty (180) days prior to December 31,
        2003, or any renewal period.

        If at any time during the initial term or any renewal period, a Change
        of Control of the Company occurs (as defined in Section 7.2 below), the
        term of this Agreement shall be the longer of (a) three (3) years beyond
        the effective date of the Change of Control or (b) the term as provided
        in this Section 2.

3.      POSITION AND RESPONSIBILITIES. The Executive shall serve as the Chairman
        of the Board of Directors, President and Chief Executive Officer of the
        Company. In his capacity as Chairman of the Board, President and Chief
        Executive Officer, the Executive shall be the Company's highest ranking
        executive officer and shall have full authority and responsibility for
        formulating and administering the plans and policies of the Company
        subject to the control of the Board of Directors,.

4.      PERFORMANCE OF DUTIES. The Executive shall devote his full time
        attention and energies to the Company's business and will not engage in
        consulting work or any business for his own account or for any person,
        firm or corporation. The Executive may serve as a director of other
        companies so long as this service does not interfere with the
        performance of his duties with the Company.

5.      COMPENSATION. For all services to be rendered by the Executive during
        the term of this Agreement, the Company shall pay and provide to the
        Executive:

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        5.1    BASE SALARY. The Company shall pay the Executive a Base Salary in
               the fixed amount of seven hundred fifty thousand dollars
               ($750,000) per year for the term of this Employment Agreement.
               This Base Salary is paid in installments consistent with the
               normal payroll practices of the Company.

        5.2    ANNUAL BONUS. The Executive is eligible to receive an annual cash
               bonus (the "Bonus") in respect of each fiscal year during the
               term of this Agreement equal to one and one-fifth percent (1.2%)
               of the amount of Ordinary Course Pre-Tax Income that equals or is
               less than the prior fiscal year's Ordinary Course Pre-Tax Income
               and one and one-half percent (1.5%) of the amount of Ordinary
               Course Pre-Tax Income that exceeds the prior fiscal year's
               Ordinary Course Pre-Tax Income. "Ordinary Course Pre-Tax Income"
               is the consolidated pre-tax income of the Company and its
               subsidiaries as reflected in the audited consolidated financial
               statements of the Company, as adjusted in good faith by the
               Compensation Committee to eliminate the effect of non-recurring
               gains and losses and other items not reflective of the ongoing
               ordinary course of business and operating performance of the
               Company. The Bonus shall be payable to the Executive in cash
               within sixty (60) days after the end of each fiscal year during
               the term of this Agreement.

        5.3    INCENTIVE PLANS. The Executive shall participate in the TRG
               Incentive Plan and shall have an individual target performance
               award equal to 120% of the Executive's Base Salary. The Executive
               shall participate in any additional incentive award programs
               available to executive officers of the Company. This
               participation is on a basis which is commensurate with the
               Executive's position with the Company.

        5.4    OTHER BENEFITS. The Executive is entitled to receive other
               employee benefits, such as disability, group life, sickness,
               accident and health insurance programs, split-dollar life
               insurance programs and other perquisites that are available to
               executive officers of the Company. This participation is on a
               basis which is commensurate with the Executive's position with
               the Company.

        5.5    STOCK OPTION

               (a)    Prior Grant of Stock Option (January 1997)

                      Pursuant to the terms and conditions of The Ryland Group,
                      Inc. 1992 Equity Incentive Plan (the "Plan), the Company
                      previously granted to the Executive on January 28, 1997,
                      the ability to exercise during the period ending at the
                      close of business on January 28, 2007, the option to
                      purchase from the Company at a price of $12.75 per share
                      up to 150,000 shares of the Company's Common Stock. THE
                      OPTION GRANTED SHALL NOT BE TREATED AS AN "INCENTIVE STOCK
                      OPTION" WITHIN THE MEANING OF SECTION 422 OF THE INTERNAL
                      REVENUE CODE OF 1986, AS AMENDED. The option is governed
                      and controlled by all terms of the Plan.

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                      The option may be exercised in whole or in part in
                      accordance with the following vesting schedule:

                      The aggregate number of shares of Common Stock optioned by
                      this Agreement are divided into three (3) installments.

<TABLE>
<S>                   <C>                           <C>       <C>                                                       <C>
                      The first installment for     50,000    shares was exercisable in whole or in part beginning      1/29/98
                      The second installment for    50,000    shares was exercisable in whole or in part beginning      1/29/99
                      The third installment for     50,000    shares is exercisable in whole or in part beginning       1/29/00
</TABLE>

               (b)    Current Grant of Stock Option.

                      Pursuant to the terms and conditions of the Plan, the
                      Company grants to the Executive during the period ending
                      at the close of business on April 21, 2009, the option to
                      purchase from the Company at a price of $25.50 per share
                      up to 200,000 shares of the Company's Common Stock. THE
                      OPTION GRANTED SHALL NOT BE TREATED AS AN "INCENTIVE STOCK
                      OPTION" WITHIN THE MEANING OF SECTION 422 OF THE INTERNAL
                      REVENUE CODE OF 1986, AS AMENDED. The option is governed
                      and controlled by all terms of the Plan.

                      The option may be exercised in whole or in part in
                      accordance with the following vesting schedule:

                      The aggregate number of shares of Common Stock optioned
                      pursuant to this Section 5.5(b) of this Agreement are
                      divided into three (3) installments.

<TABLE>
<S>                   <C>                           <C>       <C>                                                       <C>
                      The first installment for     70,000    shares is exercisable in whole or in part beginning       4/21/00
                      The second installment for    70,000    shares is exercisable in whole or in part beginning       4/21/01
                      The third installment for     60,000    shares is exercisable in whole or in part beginning       4/21/02
</TABLE>

               (c)    Exercise of Option.

                      In case an installment is not immediately exercisable, the
                      Board of Directors or the Compensation Committee of the
                      Board may in its discretion accelerate the time at which
                      the installment may be exercised. To the extent not
                      exercised, installments shall accumulate and be
                      exercisable by the Executive during the Option Period.
                      Continued accrual and vesting of installments shall cease
                      immediately upon termination of employment for any reason
                      whatsoever, subject to acceleration by the Board of
                      Directors or the Compensation Committee.

                (d)   Payment of Exercise Price.

                      The Executive shall pay the exercise price in the
                      following ways:

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                      (i)    cash payment (by certified check, bank draft or
                             money order payable to the order of the Company).

                      (ii)   if approved by the Company, cash payment may be
                             made from the proceeds of an immediate sale of
                             Common Stock receivable upon the exercise of the
                             option; or

                      (iii)  if approved by the Company, delivery of Common
                             Stock (including executed stock powers attached
                             thereto);

                      The payment of the exercise price shall be delivered with
                      a notice of exercise, which notice will be in a form
                      provided by the Company.

                      The Company shall, subject to the receipt of withholding
                      tax, issue to the Executive the stock certificate for the
                      number of shares of Common Stock with respect to which the
                      option is exercised.

                      The value of shares of Common Stock used as payment for
                      the exercise of an option shall be the closing price of
                      such shares on the New York Stock Exchange on the date of
                      exercise of an option or as otherwise determined by the
                      Company, the Board of Directors or the Compensation
                      Committee of the Board of Directors.

               (e)    Termination

                      The Options shall terminate upon the happening of the
                      earliest of the following events:

                      (i)    In accordance with Sections 5.5 (a) and (b) above.

                      (ii)   The expiration of 90 days after the date of
                             termination of the Executive's employment, except
                             in the case of death, Disability (defined below) or
                             retirement. During this period, the Executive shall
                             have the right to exercise the Option to the extent
                             it is exercisable on the termination date.

                      (iii)  The expiration of three (3) years after the date of
                             death of the Executive if death occurs during the
                             term of this Agreement. During this period, the
                             Executive's estate, personal representative or
                             beneficiary shall have the right to exercise the
                             Option to the extent it is exercisable on the date
                             of death.

                      (iv)   The expiration of three (3) years after the date
                             the Executive's employment is terminated due to
                             Disability or retirement. During this period, the
                             Executive shall have the right to exercise the
                             Option to the extent it is exercisable on the date
                             of termination.

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               (f)    Merger, Consolidation or Share Exchange

                      After any merger, consolidation or share exchange in which
                      the Company is the surviving or resulting corporation, the
                      Executive shall be entitled, upon the exercise of an
                      Option, to receive the number and class of shares of stock
                      or other consideration to which the Executive would have
                      been entitled, if, immediately prior to such merger,
                      consolidation or share exchange, the Executive had
                      exercised the Option in accordance with and subject to the
                      terms of this Agreement and the Plan. If the Company is
                      not the surviving or resulting corporation in any merger,
                      consolidation or share exchange, the surviving or
                      resulting corporation shall tender stock options to
                      purchase its shares on terms and conditions that
                      substantially preserve the rights and benefits under this
                      Option.

        5.6    STOCK UNITS

               (a)    Prior Grant of Stock Units (January 1997)

                      Pursuant to the terms and conditions of the Plan, the
                      Company previously granted to the Executive an award of
                      45,000 Stock Units pursuant to Section 10 of the Plan.

                      The Stock Units become vested and payable in accordance
                      with the following vesting schedule:

                                               VESTING DATE
                                               ------------

                      15,000 Stock Units     November 1, 1999

                      30,000 Stock Units     November 1, 2000

               (b)    Current Grant of Stock Units

                      Pursuant to the terms and conditions of the Plan, the
                      Company grants to the Executive an award of 90,000 Stock
                      Units pursuant to Section 10 of the Plan.

                      Subject to Subsection (c) below, the Stock Units become
                      vested and payable in accordance with the following
                      vesting schedule:

                                               VESTING DATE
                                               ------------

                      30,000 Stock Units     February 15, 2001

                      30,000 Stock Units     February 15, 2002
                                             unless the Company's Return on
                                             Equity (ROE) for the year ended
                                             December 31,

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                                             2000 exceeds the average ROE for
                                             fiscal years ending in the year
                                             2000 for the homebuilding companies
                                             listed below (the "Competitor
                                             Group"), in which case this
                                             "Vesting Date" is the earlier of
                                             June 1, 2001 or when the
                                             competitive data becomes available
                                             and has been reviewed and approved
                                             by the Compensation Committee.

                      30,000 Stock Units     February 15, 2003
                                             unless the Company's ROE for the
                                             year ended December 31, 2001
                                             exceeds the average ROE for fiscal
                                             years ending in the year 2001 for
                                             the Competitor Group, in which case
                                             this "Vesting Date" is June 1, 2002
                                             or when the competitive data
                                             becomes available and has been
                                             reviewed and approved by the
                                             Compensation Committee.

                      The Company's ROE for the fiscal years used in the
                      determination of the "Vesting Dates" above is the
                      Company's consolidated net earnings after taxes and
                      extraordinary items and before the payment of dividends on
                      the Company's common and preferred stock divided by the
                      Company's beginning common stockholder's equity during
                      such fiscal year period, all of which is determined under
                      generally accepted accounting principles on a basis
                      consistent with the Company's audited consolidated
                      financial statements.

                      The following homebuilding companies are the "Competitor
                      Group" for the purpose of the foregoing determination of
                      the "Vesting Dates":

                             Beazer Homes                      Lennar
                             Centex                            M/I Schottenstein
                             DR Horton                         MDC Holdings
                             K. Hovnanian                      NVR
                             Kaufman & Broad                   Pulte
                                                               Toll Brothers

               (c)    Vesting of Stock Units.

                      If the Executive terminates employment with the Company
                      for any reason prior to any vesting date, all unvested
                      Stock Units are immediately forfeited and cancelled.
                      Notwithstanding the foregoing, all unvested Stock Units
                      shall vest and be paid by the Company to the Executive
                      upon the occurrence of a Change of Control (as defined in
                      Section 7.2 below).

               (d)    Payment of Stock Units.

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                      Upon each vesting date on which the Executive is employed
                      by the Company, the number of Stock Units which become
                      vested on such date shall be paid to the Executive in an
                      equal number of shares of Common Stock of the Company and,
                      upon payment, such Stock Units are automatically fully
                      paid and cancelled.

               (e)    Dividend Equivalents.

                      As of each dividend payment date with respect to Common
                      Stock, the Executive shall receive a cash dividend
                      equivalent payment equal to the product of (i) the
                      per-share cash dividend amount payable with respect to
                      each share of Common Stock on that date and (ii) the total
                      number of Stock Units which have not been vested, paid or
                      cancelled as of the record date corresponding to such
                      dividend payment date.

               (f)    Delivery of Stock Certificates.

                      The stock certificate for shares of Common Stock issued to
                      the Executive in payment of any vested Stock Unit shall be
                      delivered to the Executive on the applicable vesting date.

               (g)    Tax Matters.

                      If any taxes, including income taxes or withholding taxes,
                      result or become due and payable as a result of the Stock
                      Units, including the grant, vesting and payment of the
                      Stock Units to the Executive, the Executive shall receive
                      a payment sufficient to place the Executive in the same
                      net after-tax position that the Executive would have been
                      in had such tax not resulted or been imposed and had the
                      Executive not incurred any interest charges or penalties,
                      if any, with respect to the imposition of such tax.

               (h)    Rights of Executive With Respect to Stock Units.

                      The Executive shall have no rights as a stockholder with
                      respect to any Stock Unit or any share of Common Stock to
                      be issued with respect to any Stock Unit until the date of
                      vesting and payment. The Executive's rights with respect
                      to Stock Units shall be the rights of a general unsecured
                      creditor of the Company until the Stock Units vest and
                      shares of Common Stock are actually issued to the
                      Executive.

               (i)    Adjustments.

                      The number of Stock Units shall be appropriately adjusted,
                      as determined by the Board of Directors or Compensation
                      Committee of the Board of Directors pursuant to the Plan,
                      in the event of any stock split, combination or similar
                      transaction.

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                (j)   Stock Units Subject to Terms and Conditions of the Plan.

                      The Stock Units and all shares of Common Stock issued with
                      respect to Stock Units shall be subject to the terms and
                      conditions of the Plan, which is incorporated herein by
                      this reference.

6.      EMPLOYMENT TERMINATION.

        6.1    TERMINATION DUE TO RETIREMENT OR DEATH. In the event the
               Executive's employment is terminated by reason of retirement or
               death, the Executive's benefits shall be determined in accordance
               with the Company's retirement, survivor's benefits, insurance or
               other applicable program then in effect. Upon the effective date
               of termination, the Company's obligation to pay and provide the
               compensation described in Section 5 shall expire, except to the
               extent the benefits described in Section 5 continue after
               retirement or death. In addition, the Company shall pay to the
               Executive or the Executive's beneficiaries or estate a pro rata
               share of the Bonus for the year in which the termination occurs
               based on the results of the Company for that fiscal year. This
               pro rata Bonus shall be determined by multiplying the Bonus for
               the applicable fiscal year by a fraction, the numerator of which
               is the number of days in such fiscal year prior to the date of
               termination and the denominator of which is the total number of
               days in such fiscal year. The pro rata Bonus shall be paid within
               sixty (60) days of the end of the applicable fiscal year.

        6.2    TERMINATION DUE TO DISABILITY. In the event the Executive becomes
               Disabled (as defined below) and is unable to perform his duties
               for more than one hundred twenty (120) days during any period of
               twelve (12) months or, in the reasonable determination of the
               Board of Directors, the Executive's Disability (as defined below)
               will exist for more than one hundred twenty (120) days, the
               Company has the right to terminate the Executive's employment and
               the Company's obligation to pay and provide the compensation
               described in Section 5 shall expire, except to the extent the
               benefits described in Section 5 continue after Disability. In
               addition, the Company shall pay to the Executive a pro rata share
               of the Bonus for the year in which the termination occurs based
               on the results of the Company for

               that fiscal year determined as provided in Section 6.1. The pro
               rata Bonus shall be paid within sixty (60) days of the end of the
               applicable fiscal year.

               The term "Disabled" or "Disability" means the incapacity of the
               Executive, due to injury, illness, disease or bodily or mental
               infirmity, to engage in the performance of his duties with the
               Company. A Disability is determined by the Board of Directors
               upon receipt of and in reliance on competent medical advice from
               one or more individuals selected by the Board who are qualified
               to give professional medical advice.

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        6.3    VOLUNTARY TERMINATION BY THE EXECUTIVE. The Executive may
               terminate this Agreement at any time by giving the Board of
               Directors written notice of intent to terminate delivered at
               least ninety (90) days prior to the effective date of such
               termination. Upon the expiration of this ninety (90) day period,
               the termination by the Executive shall become effective. The
               Company shall pay the Executive his Base Salary through the
               effective date of termination plus all benefits to which the
               Executive has a vested right at that time. The Executive shall
               not receive a Bonus for the fiscal year in which voluntary
               termination occurs. Upon the date of termination, the Company and
               the Executive shall have no further obligations under this
               Agreement except as set forth in Sections 8 and 9.

        6.4    TERMINATION BY THE COMPANY WITHOUT CAUSE. Other than during a
               Change of Control Period (as defined in Section 7.2), the Board
               of Directors may terminate the Executive's employment for reasons
               other than death, Disability, retirement or for Cause (as defined
               in Section 6.5) by notifying the Executive in writing at least
               thirty (30) days prior to the effective date of termination. Upon
               the expiration of this thirty (30) day period, the termination by
               the Company is effective. Within thirty (30) days after the date
               of termination, the Company shall pay to the Executive a lump sum
               cash payment equal to the greater of (a) the Base Salary in
               effect for the remaining term of this Agreement, or (b)
               twenty-four (24) months of the Base Salary in effect as of the
               effective date of termination, and shall provide to the Executive
               a continuation of his health and welfare benefits for the greater
               of (a) such remaining term of this Agreement or (b) twenty-four
               (24) months. If the Company is unable to provide health and
               welfare benefits as required by this Section 6.4, the Company
               shall provide equivalent benefits to the Executive or pay to the
               Executive a lump sum cash payment equal to the value of the
               benefits which the Company is unable to provide. The Company
               shall pay the Executive an annual Bonus for the year in which
               termination occurs based upon the performance of the Company
               through the end of the fiscal year in which the termination
               occurs. This annual Bonus shall be paid within sixty (60) days of
               the end of the applicable fiscal year. The Company shall also pay
               the Executive all benefits to which the Executive has a vested
               right at the time of termination. For purposes of this Section
               6.4: (i) with respect to the fiscal year in which termination
               occurs, the Executive shall be fully vested in any prior year
               awards that remain unvested or awards made for the fiscal year in
               which termination occurs under the TRG Incentive Plan or any
               successor plan, and (ii) all vested awards under any incentive
               programs shall be paid notwithstanding any provision of the
               governing plan or program calling for forfeiture of benefits upon
               termination. If for any reason the Company is unable to comply
               with the preceding sentence, the Company shall pay the Executive
               a lump-sum cash payment equal to the value of the benefits or
               awards it is unable to vest, pay or give credit for. Upon the
               date of termination, the Company and the Executive shall have no
               further obligations under this Agreement except as set forth in
               Sections 8 and 9.

        6.5    TERMINATION FOR CAUSE. The Board of Directors may terminate the
               Executive's employment at any time for "Cause." "Cause" is
               determined by the Board of

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               Directors and is defined as fraud, embezzlement, theft or other
               criminal act constituting a felony under U.S. laws, or the
               failure of the Executive to perform any material obligations
               under this Agreement for reasons other than the Executive's
               death, Disability or retirement. In the event this Agreement is
               terminated by the Board of Directors for Cause, the Company shall
               pay the Executive his Base Salary through the date of termination
               and the Executive shall forfeit all rights and benefits he is
               entitled to receive including any right to a Bonus for the fiscal
               year in which the termination occurs. The Company and the
               Executive thereafter shall have no further obligations under this
               Agreement except as set forth in Sections 8 and 9.

        6.6    TERMINATION FOR GOOD REASON. The Executive may terminate this
               Agreement for Good Reason (as defined below) by giving the Board
               of Directors thirty (30) days written notice of intent to
               terminate, which notice sets forth the facts and circumstances
               for the termination. Upon the expiration of this thirty (30) day
               period, the termination by the Executive is effective and the
               Company shall pay the Executive the benefits set forth in Section
               6.4 unless the provisions of Section 7 apply.

               "Good Reason" means, without the Executive's written consent, the
               occurrence of any of the following:

               (a)    The assignment of the Executive to duties materially
                      inconsistent with, or a reduction or alteration in the
                      nature or status of, the Executive's authorities, duties,
                      responsibilities or status as an executive officer of the
                      Company from those in effect during the preceding year;

               (b)    The Company requires the Executive to be based at a
                      location which is more than fifty (50) miles from the
                      Executive's then current primary residence;

               (c)    A reduction by the Company in the Executive's Base Salary;
                      or

               (d)    The failure of the Company to obtain an agreement from any
                      successor to the Company to perform this Agreement.

7.      CHANGE IN CONTROL.

        7.1    TERMINATION AFTER CHANGE OF CONTROL. In lieu of the compensation
               and benefits provided in Sections 5 or 6, which will be
               superseded and replaced by the provisions of this Section 7, the
               following payments and benefits will be provided to the Executive
               by the Company (in addition to any compensation or benefits to
               which the Executive may otherwise be entitled under any other
               agreement, plan or arrangement with the Corporation, other than a
               plan, policy or other arrangement providing for payments due to
               severance of employment) in the event of a Termination of
               Employment (as defined below) during a Change of Control Period
               (as defined below) of the Company:

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               (a)    Lump Sum Cash Payment. On or before the Executive's last
                      day of employment with the Company or any successor
                      corporation, the Company or any successor corporation will
                      pay the Executive an amount equal to the Executive's
                      unpaid Base Salary for the year in which the Termination
                      of Employment occurs and a pro rata Bonus through the date
                      of Termination of Employment determined in accordance with
                      Section 6.1. Also, on or before the Executive's last day
                      of employment with the Company or any successor
                      corporation, the Company or any successor corporation will
                      pay the Executive a lump sum cash payment equal to three
                      (3) times the highest Annual Compensation (as defined
                      below) for any of the three (3) calendar years immediately
                      preceding the date of Termination of Employment.

               (b)    Accelerated Vesting and Supplemental Payments. All rights,
                      awards and benefits of the Executive provided pursuant to
                      this Agreement, the TRG Incentive Plan or other incentive
                      plan, Stock Units granted pursuant to this Agreement, any
                      deferred compensation plans (including the Retirement
                      Savings Opportunity Plan, Executive and Director Deferred
                      Compensation Plan and any successor or replacements plans)
                      and any incentive, bonus, stock option, equity incentive,
                      restricted stock, insurance or split dollar insurance
                      program, relocation equity program, or other benefit plans
                      of the Company in which the Executive participates prior
                      to the Change of Control shall immediately vest in full
                      and the Executive shall receive the amount of these
                      rights, awards and benefits in a cash lump sum payment or
                      other form of compensation as provided in accordance with
                      the applicable benefit, document or plan within thirty
                      (30) days of the date of Termination of Employment. To the
                      extent that any of the plans of the Company would not
                      under applicable law permit accelerated vesting, the
                      Executive will be paid supplementally or receive
                      equivalent payments by the Company in the amount of
                      additional benefits or payments that would be payable if
                      full vesting had taken place under these plans as of the
                      date of Termination of Employment. All supplemental
                      payments are provided on an unfunded basis, are not
                      intended to meet the qualification requirements of Section
                      401 of the Internal Revenue Code, and shall be payable
                      solely from the general assets of the Company or any
                      successor corporation or affiliate of such successor
                      corporation.

               (c)    Insurance and Other Special Benefits. The Executive's
                      participation in the life, accident and health insurance,
                      employee welfare benefit plans (as defined in the Employee
                      Retirement Income Security Act of 1974) and supplemental
                      early retirement plan, split dollar insurance program,
                      personal health services allowance, health or social club
                      benefits, benefits outlined in the Executive's
                      Compensation Program and any other fringe benefits (the
                      "Benefits") provided to the Executive prior to the Change
                      of Control shall be continued or equivalent benefits
                      provided by the Company or any successor corporation or
                      affiliate of such successor

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                      corporation (the "Responsible Company") at no cost to the
                      Executive for a period of two (2) years from the date of
                      the Executive's Termination of Employment. If for any
                      reason the Responsible Company is unable to continue the
                      Benefits as required by the preceding sentence, the
                      Responsible Company shall pay to the Executive a lump sum
                      cash payment equal to the value of the Benefits which the
                      Responsible Company is unable to provide.

               (d)    Relocation Assistance. Should the Executive move his
                      residence in order to pursue professional or career
                      opportunities within two (2) years after the date of the
                      Executive's Termination of Employment, he will be
                      reimbursed by the Responsible Company for any expenses
                      incurred in that relocation, including taxes payable on
                      the reimbursement, as well as any reduction in value from
                      the original purchase price of the Executive's residence.
                      Benefits under this paragraph will include assistance in
                      and payment of all costs and commissions related to
                      selling the Executive's home, moving costs, as well as all
                      other assistance and benefits which are provided by the
                      Company under its relocation plan as in effect immediately
                      prior to the Change of Control.

               (e)    Stock Rights. All stock options, stock appreciation
                      rights, stock purchase rights, restricted stock rights and
                      any similar rights which the Executive holds shall become
                      fully vested and be exercisable on the date of Termination
                      of Employment.

               (f)    Outplacement Assistance. The Executive shall be reimbursed
                      by the Company for the cost of all outplacement services
                      obtained by the Executive within the two (2) year period
                      after the date of Termination of Employment provided the
                      total reimbursement shall be limited to an amount equal to
                      fifteen percent (15%) of the Executive's Annual
                      Compensation for the calendar year immediately preceding
                      the date of Termination of Employment. Alternatively, the
                      Executive, upon request, will receive, in lieu of the
                      foregoing reimbursement, a cash payment equal to ten
                      percent (10%) of the Executive's Annual Compensation for
                      the calendar year immediately preceding the date of the
                      Executive's Termination of Employment.

        7.2    DEFINITIONS.

               (a)    A "Change of Control" shall take place on the date of the
                      earlier to occur of any of the following events:

                      (i)    The acquisition by any person, other than the
                             Company or any employee benefit plan of the
                             Company, of beneficial ownership of 20% or more of
                             the combined voting power of the Company's then
                             outstanding voting securities;

                                       12
<PAGE>   13

                      (ii)   The first purchase under a tender offer or exchange
                             offer, other than an offer by the Company or any
                             employee benefit plans of the Company, pursuant to
                             which shares of common stock have been purchased;

                      (iii)  During any period of two (2) consecutive years,
                             individuals who at the beginning of such period
                             constitute the Board of Directors of the Company
                             cease for any reason to constitute at least a
                             majority thereof, unless the election or the
                             nomination for the election by stockholders of the
                             Company of each new director was approved by a vote
                             of at least two-thirds (2/3) of the directors then
                             still in office who were directors at the beginning
                             of the period; or

                      (iv)   Approval by stockholders of the Company of a
                             merger, consolidation, liquidation or dissolution
                             of the Company, or the sale of all or substantially
                             all of the assets of the Company.

               (b)    "Annual Compensation" shall mean the sum of the Base
                      Salary paid or earned and the Bonus paid or earned, even
                      though paid in a subsequent year, to the Executive, vested
                      or unvested, and all amounts credited to the Executive,
                      vested or unvested, under any incentive compensation or
                      other benefit or compensation plans of the Company in
                      which the Executive participates during a calendar year.

               (c)    A "Termination of Employment" shall take place in the
                      event that (a) the Executive's employment is terminated
                      for any reason other than as a consequence of death,
                      disability or normal retirement, (b) the Executive is
                      assigned any duties or responsibilities that are
                      inconsistent in any respect with his position, duties,
                      responsibilities or status prior to a Change of Control
                      Period, (c) the Company requires the Executive to be based
                      at a location which is more than fifty (50) miles from the
                      Executive's then current primary residence, (d) the
                      Executive's Base Salary, bonus or any other benefits,
                      incentive compensation or compensation plans are reduced,
                      (e) the Executive experiences in any year a reduction in
                      the ratio of his incentive compensation, bonus or other
                      such payments to his base compensation or (f) the Company
                      gives the Executive notice of an intent not to renew or
                      does not renew the term of this Agreement at any time
                      during a Change of Control Period.

               (d)    A "Change of Control Period" shall mean the period of time
                      commencing with the date of a Change of Control or on
                      which the Company becomes aware of or enters into any
                      discussions or negotiations that could involve a Change of
                      Control or a proposed transaction which could result in a
                      Change of Control, and ending on the first to occur of:
                      (a) two (2) years after the effective date of the Change
                      of Control, or (b) the date on which the proposed Change
                      of Control is no longer discussed or proposed to occur.

                                       13
<PAGE>   14

        7.3    SUBSEQUENT IMPOSITION OF EXCISE TAX. If it is ultimately
               determined by a court or pursuant to a final determination by the
               Internal Revenue Service that any portion of the payments to the
               Executive is considered to be an "excess parachute payment,"
               subject to the excise tax under Section 4999 of the Code, the
               Executive shall be entitled to receive a lump sum cash payment
               sufficient to place the Executive in the same net after-tax
               position, computed by using the "Special Tax Rate" as such term
               is defined below, that the Executive would have been in had such
               payment not been subject to such excise tax, and had the
               Executive not incurred any interest charges or penalties with
               respect to the imposition of such excise tax. For purposes of
               this Agreement, the "Special Tax Rate" shall be the highest
               effective Federal and state marginal tax rates applicable to the
               Executive in the year in which the payment contemplated under
               this Section 7.3 is made.

8.      NONCOMPETITION AND PROPRIETARY INFORMATION.

        8.1    PROHIBITION ON COMPETITION. During the term of this Agreement and
               for twenty-four (24) months following the expiration or
               termination of this Agreement as a result of notice of nonrenewal
               by Executive pursuant to Section 2 or following the effective
               date of a termination of this Agreement by the Executive pursuant
               to Section 6.3 (the "Restrictive Period"), the Executive shall
               not, as a stockholder, partner, employee or officer, engage,
               directly or indirectly, in any business or enterprise which is
               "in competition" with the Company. For purposes of this
               Agreement, a business or enterprise will be "in competition" if
               it is engaged in any significant business activity of the Company
               or its subsidiaries within the United States.

               The Executive shall be allowed to purchase and hold for
               investment less than three percent (3%) of the shares of any
               corporation whose shares are regularly traded on a national
               securities exchange or in the over-the-counter market.

        8.2    DISCLOSURE OF INFORMATION. The Executive recognizes that he has
               access to and knowledge of certain confidential and proprietary
               information of the Company which is essential to the performance
               of his duties under this Agreement. The Executive will not,
               during or after the term of his employment by the Company, in
               whole or in part, disclose such information to any person, firm,
               corporation, association or other entity for any reason or
               purpose whatsoever, nor shall he make use of any such information
               for his own purposes.

        8.3    COVENANTS REGARDING OTHER EMPLOYEES. During the term of this
               Agreement and the Restrictive Period, the Executive agrees not to
               attempt to induce any employee of the Company to terminate his or
               her employment with the Company, accept employment with any
               competitor of the Company, or interfere in a similar manner with
               the business of the Company.

        8.4    SPECIFIC PERFORMANCE. The parties recognize that the Company will
               have no adequate remedy at law for breach of the requirements of
               this Section 8 and, in the

                                       14
<PAGE>   15

               event of such breach, the Company and the Executive agree that,
               in addition to the right to seek monetary damages, the Company
               will be entitled to a decree of specific performance, mandamus,
               or other appropriate remedy to enforce performance of these
               requirements.

9.      INDEMNIFICATION. The Company covenants and agrees to indemnify and hold
        harmless the Executive fully, completely and absolutely against any and
        all actions, suits, proceedings, claims, demands, judgments, costs,
        expenses (including reasonable attorney's fees), losses and damages
        resulting from the Executive's good faith performance of his duties
        under this Agreement subject to the requirements and limitations imposed
        by the Company's Articles of Incorporation and By-Laws and applicable
        law.

10.     ASSIGNMENT.

        10.1   ASSIGNMENT BY COMPANY. This Agreement may be assigned or
               transferred to, and shall be binding upon and inure to the
               benefit of, any successor of the Company, and any successor shall
               be deemed substituted for all purposes of the "Company" under the
               terms of this Agreement. As used in this Agreement, the term
               "successor" shall mean any person, firm, corporation or business
               entity which at any time, whether by merger, purchase or
               otherwise acquires all or substantially all of the assets or the
               business of the Company. Notwithstanding such assignment, the
               Company shall remain jointly and severally liable for all
               obligations hereunder.

        10.2   ASSIGNMENT BY EXECUTIVE. The services to be provided by the
               Executive to the Company are personal to the Executive and the
               Executive's duties may not be assigned by the Executive. This
               Agreement shall, however, inure to the benefit of and be
               enforceable by the Executive's personal or legal representatives,
               executors, administrators, successors, heirs, distributees,
               devisees and legatees. If the Executive dies while any amounts
               payable to the Executive remain outstanding, all such amounts
               shall be paid to the Executive's designee, estate or
               beneficiaries.

11.     DISPUTE RESOLUTION. Either the Executive or the Company may elect to
        have any good faith dispute or controversy arising under or in
        connection with this Agreement settled by arbitration by providing
        written notice of such election to the other party specifying the nature
        of the dispute to be arbitrated. If arbitration is selected, such
        proceeding shall be conducted before a panel of three (3) arbitrators
        sitting in a location agreed to by the Company and the Executive within
        fifty (50) miles from the location of the Executive's principal place of
        employment in accordance with the rules of the American Arbitration
        Association. Judgment may be entered on the award of the arbitrators in
        any court having competent jurisdiction. To the extent that the
        Executive prevails in any litigation or arbitration seeking to enforce
        the provisions of this Agreement, the Executive shall be entitled to
        reimbursement by the Company of all expenses of such litigation or
        arbitration, including reasonable legal fees and expenses and necessary
        costs and disbursements.

                                       15
<PAGE>   16

12.     MISCELLANEOUS.

        12.1   ENTIRE AGREEMENT. This Agreement supersedes any prior agreements
               or understandings, oral or written, between the Executive and the
               Company with respect to the subject matter hereof, and
               constitutes the entire agreement of the parties with respect
               thereto.

        12.2   MODIFICATION. This Agreement shall not be varied, altered,
               modified, cancelled, changed or in any way amended except by
               mutual agreement of the parties in a written instrument executed
               by the parties or their legal representatives.

        12.3   SEVERABILITY. In the event that any provision or portion of this
               Agreement shall be determined to be invalid or unenforceable for
               any reason, the remaining provisions of this Agreement shall be
               unaffected and shall remain in full force and effect.

        12.4   TAX WITHHOLDING. The Company may withhold all Federal, state,
               city or other taxes required pursuant to any law or governmental
               regulation or ruling.

        12.5   BENEFICIARIES. The Executive may designate one or more persons or
               entities as the primary and/or contingent beneficiaries of any
               amounts to be received under this Agreement. Such designation
               must be in a signed writing acceptable to the Board of Directors,
               the Company or designees of the Board or Company. The Executive
               may change such designation at any time.

        12.6   BOARD COMMITTEE. Any action taken or determination made by the
               Board of Directors under this Agreement may be taken or made by
               the Compensation Committee or any other Committee of the Board of
               Directors.

        12.7   GOVERNING LAW. To the extent not preempted by Federal law, the
               provisions of this Agreement shall be construed and enforced in
               accordance with the laws of the State of Maryland.

        12.8   NOTICE. Any notices, requests, demands or other communications
               required by or provided for in this Agreement shall be sufficient
               if in writing and sent by registered or certified mail to the
               Executive at the last address he has filed in writing with the
               Company or, in the case of the Company, at its principal office.

                                       16
<PAGE>   17

IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement
as of the date first above written.

THE RYLAND GROUP, INC.                                 EXECUTIVE:

By: /s/ Robert J. Cunnion III                          /s/ R. Chad Dreier
    --------------------------------------------       -------------------------
    Robert J. Cunnion III, Senior Vice President       R. Chad Dreier

Attest: /s/ Timothy J. Geckle
        ----------------------------------------
        Timothy J. Geckle, Secretary

                                       17<PAGE>   1
                                                                    EXHIBIT 10.8

                      SENIOR EXECUTIVE SEVERANCE AGREEMENT

AGREEMENT dated as of ___________ between The Ryland Group, Inc., a Maryland
corporation (the "Corporation"), and ______________________________ (the
"Executive").

The purpose of this Agreement is to ensure that the Corporation will receive the
continued dedication, loyalty, and service of, and the availability of objective
advice and counsel from, the Executive notwithstanding the possibility, threat
or occurrence of a bid or other action to take over control of the Corporation.

In consideration of the services provided by the Executive and the covenants and
agreements contained herein, and for other good and valuable consideration the
sufficiency of which is acknowledged, the Corporation and the Executive agree as
follows:

1.      Termination After a Change of Control. The following payments and
        benefits will be provided to the Executive by the Corporation (in
        addition to any compensation or benefits to which the Executive may
        otherwise be entitled under any other agreement, plan or arrangement
        with the Corporation, other than a plan, policy or other arrangement
        providing for payments due to severance of employment) in the event of a
        Termination of Employment (as hereinafter defined) of the Executive
        during a Change of Control Period (as hereinafter defined) of the
        Corporation:

        1.1    Lump Sum Cash Payment. On or before the Executive's last day of
               employment with the Corporation or any successor corporation, the
               Corporation or any successor corporation will pay the Executive
               an amount equal to the Executive's unpaid, annualized base salary
               for the remainder of the year in which the Termination of
               Employment occurs and a pro rata bonus through the date of
               Termination of Employment. Also, on or before the Executive's
               last day of employment with the Corporation or any successor
               corporation, the Corporation or any successor corporation will
               pay the Executive a lump sum cash payment equal to two (2) times
               the highest Annual Compensation (as hereinafter defined) for any
               of the three (3) calendar years immediately preceding the date of
               Termination of Employment. For purposes of this Section 1.1, the
               pro-rata bonus shall be an amount equal to the highest bonus
               earned by the Executive within the three (3) calendar years
               immediately preceding the date of Termination of Employment, pro
               rated for the period served during the year in which the
               Termination of Employment occurs.

        1.2    Accelerated Vesting and Supplemental Payments. All rights, awards
               and benefits of the Executive provided pursuant to this
               Agreement, the TRG Incentive Plan, any deferred compensation
               plans (including the Retirement Savings Opportunity Plan,
               Executive and Director Deferred Compensation Plan and any
               successor or

<PAGE>   2

               replacement plans) and any incentive, bonus, stock option, equity
               incentive, restricted stock, insurance or split dollar insurance
               program, relocation equity program, or other benefit plans of the
               Corporation in which the Executive participates prior to the
               Change of Control shall immediately vest in full and the
               Executive shall receive the amount of these rights, awards and
               benefits in a cash lump sum payment or other form of compensation
               as provided in accordance with the applicable benefit, document
               or plan within thirty (30) days of the date of Termination of
               Employment. To the extent that any of the plans of the
               Corporation would not under applicable law permit accelerated
               vesting, the Executive will be paid supplementally or receive
               equivalent payments by the Corporation in the amount of
               additional benefits or payments that would be payable if full
               vesting had taken place under these plans as of the date of
               Termination of Employment. All supplemental payments are provided
               on an unfunded basis, are not intended to meet the qualification
               requirements of Section 401 of the Internal Revenue Code, and
               shall be payable solely from the general assets of the
               Corporation or any successor corporation or affiliate of such
               successor corporation.

        1.3    Insurance and Other Special Benefits. The Executive's
               participation in the life, accident and health insurance,
               employee welfare benefit plans (as defined in the Employee
               Retirement Income Security Act of 1974) and supplemental early
               retirement plan, split dollar insurance program, personal health
               services allowance, health or social club benefits, benefits
               outlined in the Executive's Compensation Program and any other
               benefits (the "Benefits") provided to the Executive prior to the
               Change of Control shall be continued or equivalent benefits
               provided by the Corporation or any successor corporation or
               affiliate of such successor corporation (the "Responsible
               Corporation"), at no cost to the Executive, for a period of two
               (2) years from the date of the Executive's Termination of
               Employment. If for any reason the Responsible Corporation is
               unable to continue the Benefits, as required by the preceding
               sentence, the Responsible Corporation shall pay to the Executive
               a lump sum cash payment equal to the value of the Benefits which
               the Responsible Corporation is unable to provide.

        1.4    Relocation Assistance. Should the Executive move his residence in
               order to pursue professional or career opportunities within two
               (2) years after the date of the Executive's Termination of
               Employment, he will be reimbursed by the Responsible Corporation
               for any expenses incurred in that relocation, including taxes
               payable on the reimbursement, as well as any reduction in value
               from the original purchase price of the Executive's residence.
               Benefits under this paragraph will include assistance in and
               payment of all costs and commissions related to selling the
               Executive's home, moving costs and all other assistance and
               benefits which are provided by the Corporation under its
               relocation plan as in effect immediately prior to the Change of
               Control Period.

                                       2
<PAGE>   3

        1.5    Stock Rights. All stock options, stock appreciation rights, stock
               purchase rights, restricted stock rights and any similar rights
               which the Executive holds shall become fully vested and be
               exercisable on the date of Termination of Employment.

        1.6    Outplacement Assistance. The Executive shall be reimbursed by the
               Responsible Corporation for the costs of all outplacement
               services obtained by the Executive within the two (2) year period
               after the date of the Executive's Termination of Employment
               provided the total reimbursement shall be limited to an amount
               equal to twenty-five percent (25%) of the Executive's Annual
               Compensation for the calendar year immediately preceding the date
               of the Executive's Termination of Employment. Alternatively, the
               Executive, upon request, will receive, in lieu of the foregoing
               reimbursement, a cash payment equal to ten percent (10%) of the
               Executive's Annual Compensation for the calendar year immediately
               preceding the date of the Executive's Termination of Employment.

        1.7    Definitions.

               (i)    A "Change of Control" shall take place on the date of the
                      earlier to occur of any of the following events:

                      (a)    The acquisition by any person, other than the
                             Corporation or any employee benefit plan of the
                             Corporation, of beneficial ownership of twenty
                             percent (20%) or more of the combined voting power
                             of the Corporation's then outstanding voting
                             securities;

                      (b)    The first purchase under a tender offer or exchange
                             offer, other than an offer by the Corporation or
                             any employee benefit plans of the Corporation,
                             pursuant to which shares of common stock have been
                             purchased;

                      (c)    During any period of two (2) consecutive years,
                             individuals who at the beginning of such period
                             constitute the Board of Directors of the
                             Corporation cease for any reason to constitute at
                             least a majority thereof, unless the election or
                             the nomination for the election by stockholders of
                             the Corporation of each new director was approved
                             by a vote of at least two-thirds (2/3) of the
                             directors then still in office who were directors
                             at the beginning of the period; or

                      (d)    Approval by stockholders of the Corporation of a
                             merger, consolidation, liquidation or dissolution
                             of the Corporation, or the sale of all or
                             substantially all of the assets of the Corporation.

                                       3
<PAGE>   4

               (ii)   "Annual Compensation" shall mean the sum of the annual
                      base salary paid or earned and annual bonus paid or
                      earned, even though paid in a subsequent year, by the
                      Executive and all amounts credited to the Executive,
                      vested and unvested, under any incentive compensation or
                      other benefit or compensation plans in which the Executive
                      participates during a calendar year. In the event the
                      Executive has not been employed by the Corporation for a
                      complete calendar year, the determination of Annual
                      Compensation shall involve a pro forma projection of
                      annual base salary, annual bonus and amounts that are
                      projected to be credited, vested and unvested, under any
                      incentive compensation or other benefit or compensation
                      plans in which the Executive participates.

               (iii)  A "Termination of Employment" shall take place in the
                      event that the Executive's employment is terminated (a) by
                      the Corporation without Cause (as hereinafter defined) or
                      (b) by the Executive with Good Reason (as hereinafter
                      defined).

               (iv)   "Cause" shall mean (a) the Executive's willful and
                      continued failure substantially to perform the material
                      duties of his or her position (other than as a result of
                      disability, as defined in Section 22(e)(3) of the Internal
                      Revenue Code, or as a result of termination by the
                      Executive for Good Reason) after written notice to the
                      Executive by the Board specifying such failure, provided
                      that such "Cause" shall have been found by a majority vote
                      of the Board after at least ten (10) days' written notice
                      to the Executive specifying the failure on the part of the
                      Executive and after an opportunity for the Executive to be
                      heard at a meeting of the Board and take corrective action
                      to remedy or eliminate such failure; (b) any willful act
                      or omission by the Executive constituting dishonesty,
                      fraud or other malfeasance, and any act or omission by the
                      Executive constituting immoral conduct, which in any such
                      case is injurious to the financial condition or business
                      reputation of the Corporation and so proven by
                      independently verified evidence of such conduct; or (c)
                      the Executive's conviction of a felony under the laws of
                      the United States or any state thereof or any other
                      jurisdiction in which the Corporation conducts business.

               (v)    "Good Reason" shall mean (a) the Executive is assigned any
                      duties or responsibilities that are inconsistent in any
                      respect with his position, duties, responsibilities or
                      status prior to a Change of Control Period, (b) the
                      Corporation requires the Executive, without his or her
                      consent, to be based at a location which is more than
                      fifty (50) miles from the Executive's then current primary
                      residence, (c) the Executive's base salary, bonus or any
                      other benefits, incentive compensation or compensation
                      plans are reduced, or (d) the Executive experiences in any
                      year a reduction in the ratio of the Executive's incentive
                      compensation,

                                       4
<PAGE>   5

                      bonus or other such payments to his base compensation, or
                      a reduction in the method of calculation of the
                      Executive's incentive compensation, bonus or other such
                      payments if these benefits or payments are calculated
                      other than as a percentage of base salary. An isolated,
                      insubstantial and inadvertent action not taken in bad
                      faith and which is remedied by the Corporation promptly
                      after receipt of notice thereof given by the Executive
                      shall be excluded.

               (vi)   A "Change of Control Period" shall mean the period of time
                      commencing with the date of a Change of Control or on
                      which the Company becomes aware of or enters into any
                      discussions or negotiations that could involve a Change of
                      Control or a proposed transaction which could result in a
                      Change of Control, and ending on the first to occur of:
                      (a) two (2) years after the effective date of the Change
                      of Control, or (b) the date on which the proposed Change
                      of Control is no longer discussed or proposed to occur.

        1.8    Subsequent Imposition of Excise Tax. If it is ultimately
               determined by a court or pursuant to a final determination by the
               Internal Revenue Service that any portion of the payments to the
               Executive is considered to be an "excess parachute payment,"
               subject to the excise tax under Section 4999 of the Internal
               Revenue Code, the Executive shall be entitled to receive a lump
               sum cash payment sufficient to place the Executive in the same
               net after-tax position, computed by using the "Special Tax Rate"
               as such term is defined below, that the Executive would have been
               in had such payment not been subject to such excise tax, and had
               the Executive not incurred any interest charges or penalties with
               respect to the imposition of such excise tax. For purposes of
               this Agreement, the "Special Tax Rate" shall be the highest
               effective Federal and state marginal tax rates applicable to the
               Executive in the year in which the payment contemplated under
               this Section 1.8 is made.

2.      General.

        2.1.   Indemnification. If litigation shall be brought to enforce or
               interpret any provision contained herein, then, provided that the
               Executive prevails to any extent, the Corporation shall reimburse
               or indemnify the Executive for the Executive's reasonable
               attorneys' fees, expenses and disbursements incurred in such
               litigation, including costs of enforcement.

        2.2    Dispute Resolution. Either the Executive or the Corporation may
               elect to have any good faith dispute or controversy arising under
               or in connection with this Agreement settled by binding
               arbitration, by providing written notice of such election to the
               other party, specifying the nature of the dispute to be
               arbitrated. If arbitration is selected, such proceeding shall be
               conducted before a panel of three (3) arbitrators sitting in a
               location agreed to by the Corporation and the Executive

                                       5
<PAGE>   6

               within fifty (50) miles from the location of the Executive's
               principal place of employment in accordance with the rules of the
               American Arbitration Association. Judgment may be entered on the
               award of the arbitrators in any court having competent
               jurisdiction. If the Executive prevails to any extent in any
               arbitration seeking to enforce the provisions of this Agreement,
               the Executive shall be entitled to reimbursement by the
               Corporation of all expenses, including reasonable legal fees and
               expenses, and costs and disbursements incurred as a result of
               such dispute or legal proceeding, including costs of enforcement.

        2.3    Payment of Obligations Absolute. The Responsible Corporation's
               obligation to pay the compensation and to make the arrangements
               provided in this Agreement shall be absolute and unconditional
               and shall not be affected by any circumstances, including any
               offset, counterclaim, recoupment, defense or other right which
               the Responsible Corporation may have against the Executive or
               anyone else, provided, however, that as a condition to payment of
               amounts under this Agreement, the Executive shall execute a
               general release and waiver, in form and substance reasonably
               satisfactory to the Responsible Corporation, of all claims
               relating to the Executive's employment by the Corporation and the
               termination of such employment, including, but not limited to,
               discrimination claims, employment-related tort claims, contract
               claims and claims under this Agreement (other than claims with
               respect to benefits under the Corporation's tax-qualified
               retirement plans or continuation of coverage or benefits solely
               as required by Part 6 of Title I of the Employee Retirement
               Income Security Act of 1974). All amounts payable by the
               Responsible Corporation shall be paid without notice or demand.
               Each and every payment made by the Responsible Corporation shall
               be final, and the Responsible Corporation will not seek to
               recover all or any part of such payment. The Executive shall not
               be obligated to seek other employment in mitigation of the
               amounts payable or arrangements made under this Agreement, and
               the obtaining of any other employment shall not result in a
               reduction of the Responsible Corporation's obligations to make
               the payments, benefits and arrangements required to be made under
               this Agreement.

        2.4    Continuing Obligations. The Executive shall retain in confidence
               any confidential information known to him concerning the
               Corporation, its subsidiaries and their respective businesses so
               long as such information is not publicly disclosed.

        2.5    Successors. This Agreement shall be binding upon and inure to the
               benefit of the Executive and his estate, and the Corporation and
               any successor of the Corporation or affiliate of a successor to
               the Corporation, but neither this Agreement nor any rights
               arising hereunder may be assigned or pledged by the Executive.
               All references in this Agreement to the Corporation shall include
               its subsidiaries and affiliates and any successors, affiliates of
               successors or assigns of the Corporation. Any successor of the
               Corporation shall be deemed substituted for all purposes of the
               "Corporation" under the terms of this Agreement. As used in

                                       6
<PAGE>   7

               this Agreement, the term "successor" shall mean any person, firm,
               corporation or business entity or affiliate thereof which at any
               time, whether by merger, purchase or otherwise, directly or
               indirectly acquires all or substantially all of the assets or the
               business of the Corporation, including any entity that shall be
               the surviving corporation in a merger with the Corporation or the
               acquiring person or affiliate of the acquiring person in an
               acquisition of the Corporation and/or of all or substantially all
               of its business or assets, regardless of whether such transaction
               constitutes a Change of Control. In all cases, the Corporation,
               Responsible Corporation or successor shall remain jointly and
               severally liable for all obligations hereunder.

        2.6    Severability. Any provisions in this Agreement which is
               prohibited or unenforceable in any jurisdiction shall, as to such
               jurisdiction, be ineffective only to the extent of such
               jurisdiction, be ineffective only to the extent of such
               prohibition or unenforceability, without invalidating or
               affecting the remaining provisions hereof, and any such
               prohibition or unenforceability in any jurisdiction shall not
               invalidate or render unenforceable such provision in any other
               jurisdiction.

        2.7    Controlling Law. This Agreement shall be governed by, and
               construed in accordance with, the laws of the State of Maryland.

        2.8    Modification. This Agreement shall not be varied, altered,
               modified, canceled, changed or in any way amended except by
               mutual agreement of the Executive and the Corporation in a
               written instrument executed by the Executive and the Corporation.

        2.9    Entire Agreement. This Agreement contains the entire agreement
               between the parties with respect to the subject matter described
               herein and supercedes any prior written agreement between the
               parties regarding such subject matter. Any oral or written
               agreements, representations, warranties, written inducements, or
               other communications made prior to the execution of this
               Agreement with respect to the subject matter described herein
               shall be void and ineffective for all purposes.

        2.10   Tax Withholding. The Corporation may withhold all federal, state,
               city or other taxes required pursuant to any law or governmental
               regulation or ruling.

        2.11   Validity. The invalidity or unenforceability of any provision of
               this Agreement shall not affect the validity or unenforceability
               of any other provision of this Agreement, which shall remain in
               full force and effect and be interpreted so as to effect the
               original intent of the parties to this Agreement to the end that
               the obligations and agreements contained herein are fulfilled.

                                       7
<PAGE>   8

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

THE RYLAND GROUP, INC.                      EXECUTIVE

-----------------------------------         ------------------------------------
R. Chad Dreier, President and Chief         [Executive]
        Executive Officer

ATTEST:

----------------------------------
Timothy J. Geckle, Secretary

                                       8

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