Document:

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                                                                     EXHIBIT 4.2

                      FORM OF STOCK OPTION AWARD AGREEMENT

                             Parker Drilling Company
                   Third Amended and Restated 1997 Stock Plan

         THIS STOCK OPTION AWARD AGREEMENT (this "Agreement") is made and
entered into as of ___________ by and between Parker Drilling Company, a
Delaware corporation ("Parker"), and the below named individual ("Participant").

                                    RECITALS

         WHEREAS, in consideration of the presently existing relationship
between the Company and the Participant, and as an additional inducement to
provide employees, directors or consultants who are in a position to contribute
to the growth, management and success of the business of the Company and its
subsidiaries, it is agreed between the Company and Participant as follows:

         1. Defined Terms. As used herein, the following terms shall have the
following meanings:

         (a)      "Compensation Committee" shall mean the Compensation Committee
                  of the Board which shall be composed of at least two
                  non-employee directors as determined by the Board.

         (b)      "Plan" shall mean the Parker Drilling Company 1997 Stock Plan,
                  including any amendments thereto.

         (c)      "Participant" shall mean ___________.

         (d)      "Prospectus" shall mean the prospectus describing the terms
                  and conditions of the Plan, as amended.

         (e)      "Option Shares" shall mean ______ shares of the Common Stock
                  of the Company, par value 16-2/3 cents per share.

         (f)      "Expiration Date" shall mean ____________.

         (g)      "Board" shall mean the Board of Directors of Parker.

         Any other capitalized terms used herein shall be defined in accordance
with the definitions in the Plan.

          2. Option Grant. The Company hereby grants to Participant, subject to
the terms hereof and the terms of the Plan, the right and option to purchase all
or any part of

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the Option Shares on or before the Expiration Date (the "Option"); provided,
that the Option shall vest and become exercisable as non-qualified stock options
in _____l installments of _________ on ___________. No exercise as to a portion
of the Option Shares shall preclude a later exercise or exercises as to
additional portions. Further, the Option shall be exercisable upon vesting only
(a) as provided in paragraph 3(b) hereof, (b) during such time as Participant
remains an employee, director or consultant of the Company, (c) in the event of
disability (for purposes of this Agreement, Participant shall be considered
disabled if he/she is unable to engage in substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months) during employment, until the
earlier of the Expiration Date or one year after commencement of Participant's
disability, (d) in the event of death during employment, until the earlier of
the Expiration Date or one year after Participant's death, or (e) as otherwise
provided in the Plan.

         3. Terms and Conditions of the Option. The Option shall be subject to
the following terms and conditions:

                  (a) Option Price. The price to be paid for each of the Option
         Shares with respect to which the Option is exercised, shall be $ _____
         (the "Option Price").

                  (b) Exercise of Option. The option to purchase the Option
         Shares shall be exercisable as specified herein and in the Plan.
         Payment of the Option Price for the number of shares as to which the
         option is being exercised may be paid (i) in cash, (ii) in shares of
         Common Stock held by the Participant having an aggregate Fair Market
         Value, as determined as of the close of business on the day on which
         such Option is exercised, equal to the Option Price, (iii) if permitted
         by the Board or the Compensation Committee, by delivery of
         Participant's promissory note in the amount of the Option Price, which
         note shall provide for full personal liability and contain such terms
         and provisions as the Board or Compensation Committee may determine,
         including without limitation the right to repay the note partially or
         wholly with Common Stock, (iv) by delivery of irrevocable instructions
         to a broker to promptly deliver to the Company the amount of sale or
         loan proceeds necessary to pay for all Common Stock acquired through
         such exercise and any tax withholding obligations resulting from such
         exercise, (v) if permitted by the Board or Compensation Committee, by
         the withholding by the Company, pursuant to a written election
         delivered by the Participant to the Administrator of the Plan on or
         prior to the date of exercise, from the shares of Common Stock issuable
         upon any exercise of the Option that number of shares having a Fair
         Market Value as of the close of business on the day prior to the day on
         which such Option is exercised equal to such Option Price, (vi) if
         permitted by the Board or Compensation Committee, by constructive
         delivery of shares of Common Stock held by the Participant having an
         aggregate Fair Market Value, as determined as of the close of business
         on the day of exercise, equal to the Option Price effected through
         providing the Company with a notarized statement on or before the day
         of exercise attesting to the number of shares owned by the Participant
         that will serve as the Option Price payment shares, or (vii) by a

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         combination of such methods. The option shall not be exercisable with
         respect to fractions of a share.

                  (c) Notice of Exercise. Each exercise of the Option shall be
         by written notice to the Company. Each such notice shall state the
         number of Option Shares with respect to which the Option is being
         exercised and shall specify a date, not less than five nor more than
         ten days after the date of such notice, as the date on which the shares
         will be delivered and payment made therefor at the principal offices of
         the Company. If any law or regulation requires the Company to take any
         action with respect to the shares specified in such notice, then the
         date for delivery of such shares against payment therefor shall be
         extended for the period necessary to take such action. In the event of
         any failure to pay for the number of shares specified in such notice on
         the date set forth therein, subject to such date being extended as
         provided above, the Option shall terminate with respect to such number
         of shares, but shall continue with respect to the remaining shares
         covered by this Agreement and not yet acquired by exercise of the
         Option or any portion thereof.

                  (d) Investment Representation. If shares of stock issued
         pursuant to exercise of the Option have not been registered under the
         Securities Act of 1933, as amended (the "Securities Act"), Participant
         agrees to represent and warrant in writing at the time of any exercise
         of the Option or any portion thereof that the Option Shares are being
         purchased only for investment and without any present intention to sell
         or distribute such shares, and further agrees that shares so acquired
         may be appropriately legended and will be sold or transferred only in
         accordance with the rules and regulations of the Securities and
         Exchange Commission (the "SEC") or any applicable law, regulation, or
         rule of any governmental agency.

                  (e) Taxes. Participant shall pay all original issue or
         transfer taxes and all other fees and expenses incident to the issue,
         transfer, or delivery of Option Shares.

                  (f) Nonassignability. Except as specifically authorized by the
         Board, the Option shall be exercisable during Participant's lifetime
         only by Participant, and shall not be assigned, transferred, pledged,
         hypothecated, sold or otherwise disposed of, in whole or in part,
         voluntarily or involuntarily, any such assignment, transfer, pledge,
         hypothecation, sale or other disposition being void and of no effect;
         provided, however, that the Option shall be transferable by will or the
         laws of descent and distribution.

                  (g) No Rights Until Issue. No right to vote or receive
         dividends or any other rights as a stockholder of the Company shall
         exist with respect to the Option Shares, notwithstanding the exercise
         of the Option, until the underlying shares have been duly listed on the
         New York Stock Exchange and the issuance to the Participant of a stock
         certificate or certificates representing such shares.

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                  (h) Anti-dilution. In the event of a merger, consolidation,
         reorganization, recapitalization, stock dividend, stock split or other
         change in the corporate structure or capitalization of the Company, the
         number of Option Shares and the Option Price shall be subject to
         appropriate adjustments as described in the Plan.

The Option is also subject to, and, by accepting and executing this Agreement,
Participant agrees to be bound by, all of the terms, provisions, limitations and
conditions of the Plan.

         4. Cancellation or Reduction. The Board may elect to cancel the Option
or reduce the number of Option Shares at any time prior to the exercise of the
Option, as described in the Plan.

         5. The Plan. Participant acknowledges receipt of a copy of the
Prospectus and the Plan and represents that he/she is familiar with the terms
and provisions thereof and hereby accepts the Option subject to all the terms
and provisions of the Plan.

         6. Relationship. Nothing in the Plan or in this Agreement shall confer
upon Participant any right to continued relationship as an employee, director or
consultant of the Company or interfere in any way with the right of the Company
to terminate Participant's relationship at any time.

         7. Binding Agreement. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, trustees, successors and assigns.

         EXECUTED as of the day and year first above written.

Parker Drilling Company                      Participant

By:
   -----------------------------             ----------------------------
Name:                                        Name:
Its:

                                       4<PAGE>
                                                                   Exhibit 10.1

                              EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT dated as of the 1st day of July 2002, 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.       TERM OF EMPLOYMENT. The Company agrees to employ the Executive until
         December 30, 2007. This Agreement shall automatically renew for a one
         (1) year renewal period on December 30, 2007, 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 30, 2007, 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 30, 2007, 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 6.2
         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 1.

2.       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.

3.       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.

4.       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:

         4.1      BASE SALARY. The Company shall pay the Executive a Base
                  Salary in the fixed amount of one million dollars
                  ($1,000,000) 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.

         4.2      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 two percent (2%)
                  of the Company's earnings before taxes and extraordinary
                  items as reflected in the audited consolidated financial
                  statements 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.

         4.3      INCENTIVE PLANS. The Executive shall participate in the TRG
                  Incentive Plan and shall have an individual target
                  performance award equal to 150% of the Executive's Base

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                  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.

         4.4      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.

         4.5      STOCK UNITS

                  (a)      Grant of Stock Units

                           Pursuant to the terms and conditions of The Ryland
                           Group, Inc. 2002 Equity Incentive Plan (the Plan),
                           the Company grants to the Executive an award of
                           235,000 Stock Units.

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

                                 VESTING DATE

<TABLE>
<S>                                                            <C>
                           2003
                           ----

                           47,000 Stock Units                   May 1, 2003
                           plus an amount equal to              unless the Company's return on equity (ROE)
                           2003 federal and state income and    for the period of July 1, 2002 through
                           medicare taxes assuming the          December 31, 2002 is less than 60% of the
                           highest marginal tax rate.           ten-year median return on equity of the
                                                                industrial companies within the Fortune 500
                                                                for the ten-year period ending with the 2001
                                                                calendar year in which event this installment
                                                                of the Stock Unit grant is forfeited.

                           2004
                           ----

                           47,000 Stock Units                   February 15, 2004
                           plus an amount equal to              unless the Company's return on equity (ROE) for
                           2004 federal and state income and    the year ended December 31, 2003 is less than
                           medicare taxes assuming the          60% of the ten-year median return on equity of
                           highest marginal tax rate.           the industrial companies within the Fortune 500
                                                                for the ten-year period ending with the 2002
                                                                calendar year in  which event this installment
                                                                of the Stock  Unit grant is forfeited.
</TABLE>

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<TABLE>
<S>                                                            <C>
                           2005
                           ----

                           47,000 Stock Units                   February 15, 2005
                           plus an amount equal to              unless the Company's return on equity (ROE) for
                           2005 federal and state income and    the year ended December 31, 2004 is less than
                           medicare taxes assuming  the         60% of the ten-year median return on equity of
                           highest marginal tax rate.           the industrial companies within the Fortune 500
                                                                for the ten-year period ending with the 2003
                                                                calendar year in which event this installment
                                                                of the Stock Unit grant is forfeited.

                           2006
                           ----

                           47,000 Stock Units                   February 15, 2006
                           plus an amount equal to              unless the Company's return on equity (ROE) for
                           2006 federal and state income and    the year ended December 31, 2005 is less than
                           medicare taxes assuming the          60% of the ten-year median return on equity of
                           highest marginal tax rate.           the industrial companies within the Fortune 500
                                                                for the ten-year period ending with the 2004
                                                                calendar year in which event this installment
                                                                of the Stock Unit grant is forfeited.

                           2007
                           ----

                           47,000 Stock Units                   February 15, 2007
                           plus an amount equal to              unless the Company's return on equity (ROE) for
                           2007 federal and state income and    the year ended December 31, 2006 is less than
                           medicare taxes assuming the          60% of the ten-year median return on equity of
                           highest marginal tax rate.           the industrial companies within the Fortune 500
                                                                for the ten-year period ending with the 2005
                                                                calendar year in which event this installment
                                                                of the Stock Unit grant is forfeited.

</TABLE>

                           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 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.

                  (b)      Vesting of Stock Units.

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                           If the Executive terminates employment with the
                           Company voluntarily or because of death,
                           Disability, retirement or for Cause (as defined in
                           Section 5) 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 6.2 below)
                           or a termination by the Company without Cause (as
                           stated in Section 5.4).

                  (c)      Payment of Stock Units.

                           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.

                  (d)      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.

                  (e)      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.

                  (f)      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.

                  (g)      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.

                   (h)     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.

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         4.6      SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Executive shall
                  receive the benefit payable under the Supplemental Executive
                  Retirement Plan (SERP) in the amount and form and pursuant
                  to the terms and conditions set forth in Exhibit A attached
                  to this Agreement. The Company shall establish a grantor
                  "rabbi" trust (the "Trust"), having a commercial trustee,
                  and to which the Company shall deposit an amount of cash or,
                  in its discretion, other assets, including if desirable
                  securities issued by the Company, equal to $3.4 million per
                  annum for the five (5) year period commencing July 1, 2002.
                  Immediately before the closing of any transaction
                  constituting a Change of Control (as defined in Section
                  6.2), 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 to equal the present value of the SERP Benefit (as
                  defined in the SERP) calculated using an 8% discount rate.

         4.7      EXECUTIVE RETIREMENT HEALTH INSURANCE PROGRAM. The Executive
                  shall be provided with an Executive Retirement Health
                  Insurance Program for the Executive and the Executive's
                  spouse at the time that the Executive is eligible to receive
                  his Vested SERP Benefit as provided within the SERP. This
                  Program shall be provided to the Executive and the
                  Executive's Spouse for a period of fifteen (15) years. This
                  Executive Retirement Health Insurance Program is at the
                  expense of the Company and shall be equivalent to and
                  provide the same coverage and benefits as the Company's
                  executive health insurance program in which the Executive
                  participated prior to the time of eligibility to receive his
                  Vested SERP Benefit or prior to Retirement as defined with
                  the SERP.

         5.       EMPLOYMENT TERMINATION.

         5.1      TERMINATION DUE TO RETIREMENT OR DEATH. In the event the
                  Executive's employment is terminated by reason of Retirement
                  (as defined below) or death, the Executive's benefits shall
                  be determined in accordance with the Company's Retirement,
                  SERP survivor's benefits, insurance or other applicable
                  program then in effect. Upon the effective date of
                  termination of employment by reason of Retirement or death,
                  the Company's obligation to pay and provide the compensation
                  described in Section 4 shall expire, except to the extent
                  the benefits described in Section 4 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.
                  "Retirement" is defined as a termination of employment on or
                  after the first day of the month after attaining age 60.

         5.2      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 4 shall expire, except to the extent
                  the benefits described in Section 4 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

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                  Section 5.1. The pro rata Bonus shall be paid within sixty
                  (60) days of the end of the applicable fiscal year.

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                  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.

         5.3      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 rights or obligations under this Agreement, except
                  as set forth in Sections 7 and 8, and shall have no further
                  rights or obligations with respect to unvested awards under
                  this Agreement, any incentive plan or other compensation
                  arrangement or plan.

         5.4      TERMINATION BY THE COMPANY WITHOUT CAUSE. Other than during
                  a Change of Control Period (as defined in Section 6.2), the
                  Board of Directors may terminate the Executive's employment
                  for reasons other than death, Disability, Retirement or for
                  Cause (as defined in Section 5.5) by notifying the Executive
                  in writing at least sixty (60) days prior to the effective
                  date of termination. Upon the expiration of this sixty (60)
                  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 aggregate amount of Base
                  Salary as then in effect, payable for the remaining term of
                  this Agreement, or (b) the aggregate amount of twenty-four
                  (24) months of the Base Salary as in effect prior to the
                  date of notice of termination, and shall provide to the
                  Executive a continuation of his health and welfare benefits
                  for the greater of (a) the 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 5.4, 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 also pay the
                  Executive a Bonus for the year in which termination occurs
                  equal to the Bonus paid or payable in respect of the fiscal
                  year prior to the year in which termination occurs
                  multiplied by the number of fiscal years that end within the
                  remaining term of this Agreement (including the fiscal year
                  in which the termination occurs if the termination becomes
                  effective on the last day of the year). This Bonus payment
                  shall be paid within thirty (30) days after the date of
                  termination. The Company shall also pay the Executive all
                  benefits to which the Executive has a vested right at the
                  time of termination as well as the SERP. The Executive shall
                  be fully vested in the grant of Stock Units pursuant to
                  Section 4.5 of this Agreement, and shall be fully vested in
                  any prior year awards that remain unvested or any awards
                  made for the fiscal year in which termination occurs under
                  the TRG Incentive Plan or any successor plan. All vested
                  awards under any equity incentive or other 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 7 and 8.

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         5.5      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 Directors and is defined as
                  the Executive'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 Executive 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. 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 under this
                  Agreement including any right to a Bonus for the fiscal year
                  in which the termination occurs, but excluding any benefits
                  (inclusive of any vested benefit under the SERP) that he has
                  a vested right at that time to receive. The Company and the
                  Executive thereafter shall have no further obligations under
                  this Agreement except as set forth in Sections 7 and 8.

         5.6      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 compensation and benefits provided for and
                  payable in accordance with and as set forth in Section 5.4
                  unless the provisions of Section 6 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 formula under which the Bonus is
                           determined; or

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

6.       CHANGE IN CONTROL.

         6.1      TERMINATION AFTER CHANGE OF CONTROL. In lieu of the
                  compensation and benefits provided in Sections 4 or 5, which
                  will be superseded and replaced by the provisions of this
                  Section 6, 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 Company, other than a plan, policy or
                  other arrangement providing for payments due to severance

                                      8

<PAGE>

                  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:

                  (a)      Lump Sum Cash Payment.  On or before the
                           Executive's last day of employment with the Company
                           or any successor corporation or affiliate of the
                           successor corporation, the Company or any successor
                           corporation or affiliate of the successor
                           corporation will pay the Executive an amount equal
                           to the Executive's unpaid 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 determined in
                           accordance with Section 5.1. but based on the
                           results of the year preceding the year in which the
                           Termination of Employment occurs.  Also, on or
                           before the Executive's last day of employment with
                           the Company or any successor corporation or
                           affiliate of the successor corporation, the Company
                           or any successor corporation or affiliate of the
                           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 Plan, 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 the 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), any supplemental early
                           retirement plan other than the SERP, split dollar
                           insurance program, personal health services
                           allowance, health or social club benefits, 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 the successor corporation (the "Responsible
                           Company") at no cost to the Executive for a period
                           of three (3) 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

                                      9

<PAGE>

                           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 and
                           complete reimbursement for improvements to the
                           Executive's residence that occurred after the date
                           of the Executive's purchase of the residence.
                           Benefits under this paragraph will include
                           assistance in and payment of all costs and
                           commissions related to selling the Executive's
                           home, the payment of all moving costs, as well as
                           all other assistance and benefits which are
                           provided by the Company under its relocation plan
                           as in effect prior to the Change of Control.

                  (e)      Stock Rights. All stock options, stock units, 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 Responsible 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
                           Base Salary 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 Base Salary for the calendar year
                           immediately preceding the date of the Executive's
                           Termination of Employment.

         6.2      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;

                           (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

                                      10

<PAGE>

                                    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, other than a merger
                                    transaction in which the Company is the
                                    surviving entity and the shareholders of
                                    the Company immediately prior to the
                                    merger will hold a majority of the Common
                                    Stock of the Company following the merger.

                  (b)      "Annual Compensation" shall mean the sum of the
                           Base Salary paid and earned, the Bonus paid or
                           earned, even though paid in a subsequent year, to
                           the Executive, vested and unvested, and all amounts
                           and the cash value of any restricted stock credited
                           or paid to the Executive, vested and unvested,
                           under any incentive compensation or other benefit
                           or compensation plans of the Company in which the
                           Executive participates, during a calendar year
                           (including The Ryland Group, Inc. Incentive Plan or
                           the 2002 Equity Incentive Plan).

                  (c)      A "Termination of Employment" shall take place in
                           the event that (a) the Executive terminates his
                           employment with the Company for Good Reason  (as
                           defined in Section 5.6) during a Change of Control
                           Period but prior to the consummation of the
                           transaction constituting a Change of Control, (b)
                           the Executive terminates his employment with the
                           Company, the successor corporation and all
                           affiliates of the successor corporation coincident
                           with or during the three (3) year period after the
                           consummation of the transaction constituting a
                           Change of Control for any reason other than as a
                           consequence of death or disability, or (c) the
                           Executive's employment is terminated during a
                           Change of Control Period by the Company, the
                           successor corporation or affiliate of the successor
                           corporation for any reason other than as a
                           consequence of death or disability.

                  (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)
                           three (3) 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 and is determined not to occur or be
                           consummated or effected.

         6.3      CERTAIN ADDITIONAL PAYMENTS.

                  (a)      Gross-Up Payment Amount.

                           Notwithstanding anything in this Agreement to the
                           contrary, in the event it shall be determined that
                           any payment or distribution by the Company to or
                           for the benefit of the Executive, whether paid,
                           payable, distributed or distributable pursuant to
                           this Agreement or otherwise (a "Payment") would be
                           subject to the excise tax imposed by Section 4999
                           of the Internal Revenue Code of 1986 (the "Code")
                           (or any successor provision) or any interest or
                           penalties with respect to such excise tax (such
                           excise tax, together with any such interest and
                           penalties, are collectively referred to in this
                           Agreement as the "Excise Tax"), then the

                                      11

<PAGE>

                           Executive shall be entitled to receive an
                           additional payment (a "Gross-Up Payment") in an
                           amount such that after the payment by the Executive
                           of all taxes (including any interest or penalties
                           imposed with respect to such taxes), including any
                           Excise Tax, imposed upon the Gross-Up Payment, the
                           Executive retains an amount of the Gross-Up Payment
                           equal to the Excise Tax imposed upon the Payment.

                  (b)      Determinations.

                           Subject to the provisions of Section 6.3(c), all
                           determinations required to be made under this
                           Section 6.3, including whether and when a Gross-Up
                           Payment is required and the amount of such Gross-Up
                           Payment and the assumptions to be utilized in
                           arriving at such determination, shall be made by a
                           nationally recognized certified public accounting
                           firm designated by the Executive (the "Accounting
                           Firm"), which shall provide detailed supporting
                           calculations both to the Company and the Executive
                           within fifteen (15) business days of the receipt of
                           notice from the Executive that there has been a
                           Payment, or such earlier time as is requested by
                           the Company. Any Gross-Up Payment, as determined
                           pursuant to this Section 6.3, shall be paid by the
                           Company to the Executive within five (5) days of
                           the receipt of the Accounting Firm's determination.
                           All fees and expenses of the Accounting Firm shall
                           be borne solely by the Company. Any determination
                           by the Accounting Firm shall be binding upon the
                           Company and the Executive. As a result of the
                           uncertainty in the application of Section 4999 of
                           the Code at the time of the initial determination
                           by the Accounting Firm hereunder, it is possible
                           that Gross-Up Payments that will not have been made
                           by the Company should have been made
                           ("Underpayment"), consistent with the calculations
                           required to be made hereunder. In the event that
                           the Company exhausts its remedies pursuant to
                           Section 6.3(c) and the Executive thereafter is
                           required to make a payment of any Excise Tax, the
                           Accounting Firm shall determine the amount of the
                           Underpayment that has occurred and any such
                           Underpayment shall be promptly paid by the Company
                           to or for the benefit of the Executive.

                  (c)      IRS Claims.

                           The Executive shall notify the Company in writing
                           of any claim by the Internal Revenue Service that,
                           if successful, would require the payment by the
                           Company of the Gross-Up Payment. Such notification
                           shall be given as soon as practicable but no later
                           than ten (10) business days after the Executive is
                           informed in writing of such claim and shall apprise
                           the Company of the nature of such claim and the
                           date on which such claim is requested to be paid.
                           The Executive shall not pay such claim prior to the
                           expiration of the thirty (30) day period following
                           the date on which the Executive gives such notice
                           to the Company (or such shorter period ending on
                           the date that any payment of taxes with respect to
                           such claim is due). If the Company notifies the
                           Executive in writing prior to the expiration of
                           such period that it desires to contest such claim,
                           the Executive shall:

                           (i)      give the Company any information
                                    reasonably requested by the Company
                                    relating to such claim,

                           (ii)     take such action in connection with
                                    contesting such claim as the Company shall
                                    reasonably request in writing from time to
                                    time,

                                      12

<PAGE>

                                    including, without limitation, accepting
                                    legal representation with respect to such
                                    claim by an attorney reasonably selected
                                    by the Company,

                           (iii)    cooperate with the Company in good faith
                                    in order effectively to contest such
                                    claim, and

                           (iv)     permit the Company to participate in any
                                    proceedings relating to such claim;
                                    provided, however, that the Company shall
                                    bear and pay directly all costs and
                                    expenses (including additional interest
                                    and penalties) incurred in connection with
                                    such contest and shall indemnify and hold
                                    the Executive harmless, on an after-tax
                                    basis, for any Excise Tax or income tax
                                    (including interest and penalties with
                                    respect thereto) imposed as a result of
                                    such representation and payment of costs
                                    and expenses.  Without limitation on the
                                    foregoing provisions of this Section, the
                                    Company shall control all proceedings
                                    taken in connection with such contest and,
                                    at its sole option, may pursue or forgo
                                    any and all administrative appeals,
                                    proceedings, hearings and conferences with
                                    the taxing authority in respect of such
                                    claim and may, at its sole option, either
                                    direct the Executive to pay the tax
                                    claimed and sue for a refund or contest
                                    the claim in any permissible manner, and
                                    the Executive agrees to prosecute such
                                    contest to a determination before any
                                    administrative tribunal, in a court of
                                    initial jurisdiction and in one or more
                                    appellate courts, as the Company shall
                                    determine; provided, however, that if the
                                    Company directs the Executive to pay such
                                    claim and sue for a refund, the Company
                                    shall advance the amount of such payment
                                    to the Executive, on an interest-free
                                    basis and shall indemnify and hold the
                                    Executive harmless, on an after-tax basis,
                                    from any Excise Tax or income tax
                                    (including interest or penalties with
                                    respect thereto) imposed with respect to
                                    such advance or with respect to any
                                    imputed income with respect to such
                                    advance; and further provided that any
                                    extension of the statute of limitations
                                    relating to payment of taxes for the
                                    taxable year of the Executive with respect
                                    to which such contested amount is claimed
                                    to be due is limited solely to such
                                    contested amount.  Furthermore, the
                                    Company's control of the contest shall be
                                    limited to issues with respect to which a
                                    Gross-Up Payment would be payable
                                    hereunder and the Executive shall be
                                    entitled to settle or contest, as the case
                                    may be, any other issue raised by the
                                    Internal Revenue Service or any other
                                    taxing authority.

                  (d)      Refunds.

                           If, after the receipt by the Executive of an amount
                           advanced by the Company pursuant to Section 6.3(c),
                           the Executive becomes entitled to receive any
                           refund with respect to such claim, the Executive
                           shall (subject to the Company's complying with the
                           requirements of such Section) promptly pay to the
                           Company the amount of such refund (together with
                           any interest paid or credited thereon after taxes
                           applicable thereto). If, after the receipt by the
                           Executive of an amount advanced by the Company
                           pursuant to Section 6.3(c), a determination is made
                           that the Executive shall not be entitled to any
                           refund with respect to such claim and the Company
                           does not notify the Executive in writing of its
                           intent to contest such denial of refund prior to
                           the expiration of thirty (30) days after such
                           determination, then such advance shall be forgiven
                           and shall not be required to

                                      13

<PAGE>

                           be repaid and the amount of such advance shall
                           offset, to the extent thereof, the amount of
                           Gross-Up Payment required to be paid.

7.       PROPRIETARY INFORMATION.

         7.1      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.

         7.2      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.

         7.3      SPECIFIC PERFORMANCE. The parties recognize that the Company
                  will have no adequate remedy at law for breach of the
                  requirements of this Section 7 and, in the 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.

8.       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.

9.       ASSIGNMENT.

         9.1      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
                  or affiliate of a 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
                  or affiliate of the foregoing 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.

         9.2      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.

                                      14

<PAGE>

10.      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 or decision made by 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 is entitled
         to reimbursement by the Company of all expenses of such litigation or
         arbitration, including any legal fees and expenses and any costs and
         disbursements.

11.      MISCELLANEOUS.

         11.1     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, including the Amended and Restated Employment
                  Agreement dated as of April 21, 1999, and constitutes the
                  entire agreement of the parties with respect thereto.

         11.2     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.

         11.3     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.

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

         11.5     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.

         11.6     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.

         11.7     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.

         11.8     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.

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

                                      15

<PAGE>

<TABLE>
<S>                                                          <C>
THE RYLAND GROUP, INC.                                        EXECUTIVE:

By: /s/  Robert E. Mellor                                     /s/  R. Chad Dreier
   -----------------------------------------                  -----------------------------------
   Robert E. Mellor, Chairman                                 R. Chad Dreier
   Compensation Committee of the
   Board of Directors

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

Attest: /s/  Timothy J. Geckle
        ------------------------------------
        Timothy J. Geckle, Secretary
</TABLE>

                                      16

<PAGE>
                                                                      Exhibit A

THE RYLAND GROUP, INC.
Dreier Supplemental Executive Retirement Plan
-------------------------------------------------------------------------------
===============================================================================

                            EFFECTIVE JULY 1, 2002

<PAGE>

THE RYLAND GROUP, INC.
Dreier Supplemental Executive Retirement Plan

-------------------------------------------------------------------------------
===============================================================================

                              TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                       PAGE
                                                                                       ----
<S>                <C>                                                                <C>
ARTICLE 1           DEFINITIONS...........................................................1

ARTICLE 2           VESTING...............................................................3

      2.1           VESTING IN BENEFITS...................................................3

ARTICLE 3           BENEFITS..............................................................3

      3.1           ELIGIBILITY FOR BENEFITS..............................................3
      3.2           DEATH BENEFIT.........................................................4
      3.3           FORMS OF PAYMENT; ELECTIONS...........................................4
      3.4           WITHDRAWAL ELECTION...................................................4
      3.5           COMMITTEE DISCRETION..................................................5
      3.6           WITHHOLDING AND PAYROLL TAXES.........................................5

ARTICLE 4           TERMINATION, AMENDMENT OR MODIFICATION OF THE AGREEMENT...............5

      4.1           TERMINATION OR AMENDMENT..............................................5
      4.2           TERMINATION OF AGREEMENT..............................................5

ARTICLE 5           OTHER BENEFITS AND AGREEMENTS.........................................5

      5.1           COORDINATION WITH OTHER BENEFITS......................................5

ARTICLE 6           ADMINISTRATION OF THIS AGREEMENT......................................5

      6.1           COMMITTEE DUTIES......................................................5
      6.2           ADMINISTRATION UPON CHANGE IN CONTROL.................................6
      6.3           AGENTS................................................................6
      6.4           BINDING EFFECT OF DECISIONS...........................................6
      6.5           INDEMNITY OF COMMITTEE................................................7
      6.6           COMPANY INFORMATION...................................................7

ARTICLE 7           CLAIMS PROCEDURES.....................................................7

      7.1           PRESENTATION OF CLAIM.................................................7
      7.2           NOTIFICATION OF DECISION..............................................7
      7.3           REVIEW OF A DENIED CLAIM..............................................8
      7.4           DECISION ON REVIEW....................................................8
      7.5           LEGAL ACTION..........................................................9
      7.6           NAMED FIDUCIARY.......................................................9

ARTICLE 8           BENEFICIARY DESIGNATION...............................................9
</TABLE>

                                     -i-

<PAGE>

THE RYLAND GROUP, INC.
Dreier Supplemental Executive Retirement Plan

-------------------------------------------------------------------------------
===============================================================================

<TABLE>
<S>                <C>                                                                <C>
      8.1           BENEFICIARY...........................................................9
      8.2           BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT......................9
      8.3           ACKNOWLEDGEMENT.......................................................9
      8.4           NO BENEFICIARY DESIGNATION............................................9
      8.5           DOUBT AS TO BENEFICIARY...............................................9
      8.6           DISCHARGE OF OBLIGATIONS.............................................10

ARTICLE 9           TRUST................................................................10

      9.1           ESTABLISHMENT OF THE TRUST...........................................10
      9.2           INTERRELATIONSHIP OF THE AGREEMENT AND THE TRUST.....................10
      9.3           DEPOSITS TO THE TRUST................................................10

ARTICLE 10          MISCELLANEOUS........................................................10

     10.1           STATUS OF AGREEMENT..................................................10
     10.2           UNSECURED GENERAL CREDITOR...........................................11
     10.3           COMPANY'S LIABILITY..................................................11
     10.4           NONASSIGNABILITY.....................................................11
     10.5           FURNISHING INFORMATION...............................................11
     10.6           TERMS................................................................11
     10.7           CAPTIONS.............................................................11
     10.8           GOVERNING LAW........................................................11
     10.9           VALIDITY.............................................................11
     10.10          NOTICE...............................................................12
     10.11          SUCCESSORS...........................................................12
     10.12          SPOUSE'S INTEREST....................................................12
     10.13          INCOMPETENT..........................................................12
     10.14          COURT ORDER..........................................................12
     10.15          DISTRIBUTION IN THE EVENT OF TAXATION................................12
     10.16          LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL.................13
</TABLE>

                                     -ii-

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                            THE RYLAND GROUP, INC.
                DREIER SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

         THIS DREIER SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (this "Agreement")
is entered into as of July 1, 2002 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, of beneficial
                  ownership of 20% or more of the combined voting power of the
                  Company's then outstanding voting securities;

         (b)      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;

         (c)      During any period of two consecutive years, individuals who
                  at the beginning of such period constitute the Board of
                  Directors of the Company cease for any reason to constitute
                  at least a majority thereof, unless the election or
                  nomination for the election by

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                  stockholders of the Company of each new director was
                  approved by a vote of at least two-thirds of the directors
                  then still in office who were directors at the beginning of
                  such period; or

         (d)      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.

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 7.

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
         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.

1.10     "Election Form" shall mean the form upon which the Participant elects
         the manner of distribution of his SERP 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 voluntary or involuntary termination of
         the Participant's employment with the Company for any reason other
         than death.

1.13     "SERP Benefit" shall mean a benefit in the amount of (i) $2,400,000
         per annum, payable in annual installments for a period of 15 years,
         or (ii) the present value equivalent of such benefit stream payable
         in a lump sum, calculated using an 8% discount rate.

1.14     "Termination of Employment Without Cause" shall mean an involuntary
         termination of the Participant's employment 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.

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1.15     "Trust" shall mean the trust established pursuant to that certain
         Master Trust Agreement, dated as of _____________, 2002, between the
         Company and the trustee named therein, as amended from time to time.

1.16     "Vested SERP Benefit" shall mean the Participant's SERP 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 Benefit
                  according to the following vesting schedule, provided that
                  he is continuously employed with the Company from July 1,
                  2002, through the specified date of vesting:

<TABLE>
<CAPTION>
                 ------------------------------------------------------------
                        DATE OF VESTING              VESTING PERCENTAGE
                 ------------------------------------------------------------
<S>              <C>                                <C>
                       December 31, 2002                     0%
                 ------------------------------------------------------------
                       December 31, 2003                     20%
                 ------------------------------------------------------------
                       December 31, 2004                     40%
                 ------------------------------------------------------------
                       December 31, 2005                     60%
                 ------------------------------------------------------------
                       December 31, 2006                     80%
                 ------------------------------------------------------------
                       December 31, 2007                    100%
                 ------------------------------------------------------------
</TABLE>

         (b)      SPECIAL. Notwithstanding anything to the contrary in this
                  Section 2.1, the Participant shall immediately become 100%
                  vested (if he is not already vested in accordance with the
                  above vesting schedule) in the SERP Benefit upon the
                  occurrence of a Change in Control or if he experiences a
                  Termination of Employment Without Cause.

                                  ARTICLE 3
                                   BENEFITS

3.1      ELIGIBILITY FOR BENEFITS.

         (a)      SERP BENEFIT.  Upon Retirement, the Participant shall be
                  eligible to receive his Vested SERP Benefit.

         (b)      COMMENCEMENT OF SERP BENEFIT. The payment of the
                  Participant's Vested SERP Benefit shall commence within
                  sixty (60) days of the later of (i) January 1, 2008, or (ii)
                  the date of the Participant's Retirement.

3.2      DEATH BENEFIT.

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         (a)      DEATH BENEFIT. In the event of the Participant's death
                  before Retirement, or after Retirement but before the
                  Participant's Vested SERP Benefit has been paid in full, the
                  Participant's Beneficiary shall receive a Death Benefit.

         (b)      COMMENCEMENT OF DEATH BENEFIT. The Death Benefit shall be
                  paid to the Participant's Beneficiary no later than sixty
                  (60) days after the date on which the Committee is provided
                  with proof that is satisfactory to the Committee of the
                  Participant's death.

3.3      FORMS OF PAYMENT; ELECTIONS. The Participant shall elect on an
         Election Form to have his (i) SERP 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 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 or any subsequent
         elections by submitting new Election Forms to the Committee, provided
         that any such Election Forms are submitted to and accepted by the
         Committee in its sole discretion at least one (1) year prior to the
         date on which the payment of the applicable benefit commences. The
         Election Forms most recently accepted by the Committee shall govern
         the payout of the Participant's SERP Benefit and Death Benefit. If
         the Participant does not make an election with respect to the form of
         payment of his SERP Benefit or if his initial election is not
         submitted in a taxable year prior to the taxable year in which the
         date of his Retirement falls, then such benefits shall be payable in
         fifteen (15) equal annual installments. Similarly, if the Participant
         does not make an election with respect to the form of payment of his
         Death Benefit, then such benefits shall be paid in a lump sum.

3.4      WITHDRAWAL ELECTION. On or after the date that payments commence
         under this Agreement, the Participant, or his Beneficiary, as the
         case may be, may elect to receive all or a percentage of the
         Participant's remaining unpaid Vested SERP Benefit payments or Death
         Benefit payments, in a lump sum, less a penalty as described below.
         The lump sum payment shall be equal to (i) the present value of the
         applicable percentage of the Participant's remaining unpaid Vested
         SERP Benefit payments or Death Benefit payments, calculated using an
         8% discount rate, less (ii) a penalty equal to 10% of the amount
         computed under clause (i) (the net amount shall be referred to as the
         "Benefit Amount"). The Participant, or his Beneficiary, shall make
         this election by giving the Committee advance written notice of the
         election in a form determined from time to time by the Committee. The
         Participant, or his Beneficiary, shall be paid the Benefit Amount
         within sixty (60) days of the election date. In the event that a
         Participant elects to receive less than 100% of his remaining unpaid
         Vested SERP Benefit payments or Death Benefit payments as a
         distribution under this Section, any remaining annual installments
         payable pursuant to Article 3 shall be adjusted accordingly.

3.5      COMMITTEE DISCRETION. Upon the request of the Participant, the
         Committee, in its sole discretion and consistent with its established
         procedures and rules, may consider other forms of benefit payments,
         or the timing of benefit payments, as it deems necessary and prudent
         under the circumstances.

3.6      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

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         be withheld by the Company in connection with the benefits hereunder,
         in amounts to be determined in the sole discretion of the Company.

                                  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.

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 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 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

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         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

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

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         claims must be made within 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

         (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

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         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.

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 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.

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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
         cause the Company to withhold such payments until this matter is
         resolved to the Committee's satisfaction.

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 establish a Trust by a trust
         agreement with a third party, the trustee, to which 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 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 $3.4 million per
         annum for the five (5) year period commencing July 1, 2002.
         Immediately before the closing of any transaction constituting a
         Change of 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
         to equal the present value of the SERP Benefit calculated using an 8%
         discount rate.

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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). This Agreement shall be administered
         and interpreted to the extent possible in a manner consistent with
         that intent.

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.

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.

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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.

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.

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.

10.15    DISTRIBUTION IN THE EVENT OF TAXATION.

                                     -11-

<PAGE>

THE RYLAND GROUP, INC.
Dreier Supplemental Executive Retirement Plan

--------------------------------------------------------------------------------
================================================================================

         (a)      IN GENERAL.  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 Participant may
                  petition the Committee for a distribution of that portion of
                  his or her benefit that has become taxable.  Upon the grant
                  of such a petition, which grant shall not be unreasonably
                  withheld, 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 Benefit
                  under the Agreement).  If the petition is granted, the tax
                  liability distribution shall be made within ninety (90) days
                  of the date when the Participant's petition is granted. Such
                  a distribution shall affect and reduce the benefits to be
                  paid under this Agreement.

         (b)      TRUST. If the Trust terminates in accordance with its terms
                  and benefits are distributed from the Trust to the
                  Participant or his Beneficiary in accordance therewith, the
                  Participant's benefits under this Agreement shall be reduced
                  to the extent of such distributions.

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.

                                     -12-

<PAGE>

THE RYLAND GROUP, INC.
Dreier Supplemental Executive Retirement Plan

--------------------------------------------------------------------------------
================================================================================

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:      /s/ Robert J. Cunnion, III
                                      --------------------------------
                                            Robert J. Cunnion, III
                                            Senior Vice President

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

                             Date:    August 26, 2002
                                      --------------------------------

                             "Participant"
                             R. Chad Dreier

                             /s/ R. Chad Dreier
                             -----------------------------------------

                             Date:          August 26, 2002
                                            --------------------------

                                     -13-

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