Document:

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                                                                   Exhibit 10.54

                          [WESTERN DIGITAL LETTERHEAD]

October 19, 2001

Mr. D. Scott Mercer
848 Nash Road
Los Altos CA  94024

Dear Scott:

It is with great pleasure that we at Western Digital Corporation (the "Company")
extend this offer of employment to you. Your position will be Senior Vice
President and Chief Financial Officer, reporting to me. As you know, this is an
interim position, as we are conducting a search for a Chief Financial Officer
and you will assist us in that search. This is an exempt, at-will position and
will pay an annualized base salary of $337,500.00 paid bi-weekly.

Contingent upon approval by the Board of Directors, we will recommend a stock
option grant amount of 225,000 shares, subject to the provisions of Western
Digital's Stock Option Agreement and stock option plan. This grant will have our
customary three (3) year vesting schedule, which is 25% after six months, 25%
after 12 months, 25% after 24 months and 25% after 36 months. Vesting will cease
upon termination of your service as Senior Vice President and Chief Financial
Officer of the Company.

In addition to the above stock option grant, we will also recommend to our Board
of Directors a restricted stock grant of 150,000 shares. As with the above stock
option grant, this grant is contingent upon Board approval and will be subject
to the Western Digital Broad Based Stock Incentive Plan and agreement. Forty
percent (40%) or 60,000 of these restricted shares will vest on 1/31/03. The
remaining sixty percent (60%) or 90,000 shares will vest the following year on
1/31/04. Vesting will cease upon termination of your service as Senior Vice
President and Chief Financial Officer of the Company.

You will be eligible to participate in-full for first half of Fiscal Year 2002,
July through December, Incentive Compensation Plan (ICP). Funding will be based
on corporate business results. Your participation and potential pay out will be
based on your individual accomplishments and is contingent upon approval by the
Western Digital Compensation Committee. Your potential ICP payout will be 65% of
base salary.

<PAGE>

                                                             Mr. D. Scott Mercer
                                                                          Page 2
                                                                October 19, 2001

You will be eligible for participation in the Company's Change in Control
Severance Plan and will be covered by the Company's customary indemnification
policies for elected officers. In addition to your Incentive Compensation Plan
participation, you will be eligible to receive a one- time Chief Financial
Officer transition bonus in the amount of up to $120,000. You will be paid this
bonus at the time you and the Company transition you out of your Chief Financial
Officer role and install a new full-time employee status Chief Financial
Officer. Payment of this bonus will be at the sole discretion of the President
and Chief Executive Officer. Your eligibility for this bonus requires your
employee status as Chief Financial Officer during the entire time of transition
to a new Chief Financial Officer.

The Company will provide you with furnished apartment style housing in the
Orange County, California area, where the Company's headquarters is located, for
the period of your employment, but not to exceed twelve months from your start
date.

If you are not replaced as Chief Financial Officer prior to the twelve month
period, this housing provision may be renegotiated or extended upon mutual
agreement depending on the circumstances at that time. Cost considerations
associated with this provision, such as apartment rent, furniture rental, etc.
will be mutually agreed upon by you and the Company.

During the period of your employment, but not to exceed 12 months, the Company
will reimburse you for reasonable travel expenses between your home in Los
Altos, California and Orange County, California on a weekly basis. Reimbursement
of these expenses will follow the guidelines outlined in the Company's travel
and expense policy. This offer is contingent upon successful completion of all
pre-employment criteria as outlined on Western Digital's Application for
Employment, which is enclosed for completion and your signature.

As a condition of employment, immediately upon date of hire, you will be
required to sign an Employee Agreement governing the inventions, proprietary
information and such other subject matter that the company considers vital to
protect its operation. Your employment will be "at will," which means that there
will be no fixed duration to your employment relationship. You can terminate
your employment at any time and for any reason, and the Company can terminate
your employment at any time for any reason.

You will be eligible on your first day of employment for Beneflex, our flexible
benefits plan that allows you to choose the coverage that fits your needs. As a
Senior Vice President, you will receive an additional $5,000 medical expense
allowance per benefit year. This allowance can be used to cover out-of-pocket
expenses not covered in the medical plan you choose. You will be eligible to
join the Western Digital Savings (401k) Plan immediately. You will receive a
complete benefits summary during your orientation on your first day of
employment.

Your vacation and sick leave accruals will be at the fifty percent (50%) level.
As a rehired employee, a calculation will be performed taking into account your
original start date and your break in service. This will result in creation of
an "affiliation date" that will give you credit for time served in relation to
your vacation accrual.

<PAGE>

                                                             Mr. D. Scott Mercer
                                                                          Page 3
                                                                October 19, 2001

Additionally, as a Senior Vice President, you will be eligible to receive
reimbursement of up to $5,000 for financial planning services provided to you by
a service provider of your choice. This allowance is subject to federal and
state supplemental tax rates.

On your first day of employment, at 8:00 a.m. at 20511 Lake Forest Drive, in
Lake Forest, you will be required to provide authentic documents that establish
identity and employment eligibility. Please refer to the attached List of
Acceptable Documents. We are required by law to verify this information and will
need one document from List A or two documents, one from List B and one from
List C.

Please return the signed and dated original indicating your acceptance within
one week from the date of this letter. A copy has been enclosed for your
records. If you have any questions, please do not hesitate to call.

Sincerely,

/s/ Matthew E. Massengill

Matthew E. Massengill
President & CEO

ACCEPTANCE: /s/ Scott Mercer
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                      Signature                                  Date

DATE YOU PLAN TO START WORK:
                            --------------------------------------------------<PAGE>
                                                                     EXHIBIT 4.1

                               WILLIAM LYON HOMES
                      EXECUTIVE DEFERRED COMPENSATION PLAN
                        EFFECTIVE AS OF FEBRUARY 11, 2002

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
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ARTICLE 1      DEFINITIONS.........................................................................1

        1.1.   Accrued Benefit.....................................................................1

        1.2.   Affiliate...........................................................................1

        1.3.   Base Salary.........................................................................1

        1.4.   Beneficiary.........................................................................2

        1.5.   Calendar Year.......................................................................2

        1.6.   Cause.  ............................................................................2

        1.7.   Change in Control ..................................................................2

        1.8.   Code................................................................................3

        1.9.   Compensation........................................................................3

        1.10.  Deferral Account....................................................................4

        1.11.  Disability..........................................................................4

        1.12.  Effective Date......................................................................4

        1.13.  Election of Deferral................................................................4

        1.14.  Eligible Employee...................................................................4

        1.15.  ERISA...............................................................................4

        1.16.  Good Reason.........................................................................4

        1.17.  Normal Retirement Date..............................................................5

        1.18.  Participant.........................................................................5

        1.19.  Participant Annual Deferral.........................................................5

        1.20.  Plan................................................................................5

        1.21.  Plan Administrator..................................................................5

        1.22.  Plan Year...........................................................................5

        1.23.  Retirement..........................................................................5
</TABLE>

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<TABLE>
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        1.24.  Valuation Date......................................................................5

ARTICLE 2      ELIGIBILITY AND PARTICIPATION.......................................................5

        2.1.   Eligibility.........................................................................5

        2.2.   Participation.......................................................................5

ARTICLE 3      CONTRIBUTIONS AND CREDITS...........................................................6

        3.1.   Deferral Election...................................................................6

        3.2.   Corporation Discretionary Contributions.............................................6

ARTICLE 4      DEFERRAL ACCOUNTS AND ALLOCATION OF FUNDS...........................................7

        4.1.   Deferral Account Allocations........................................................7

        4.2.   Investment Election and Declared Rates..............................................7

        4.3.   Determination of Accounts...........................................................8

ARTICLE 5      ENTITLEMENT TO BENEFITS.............................................................8

        5.1.   Vesting of Benefits.................................................................8

        5.2.   Retirement Benefit..................................................................9

        5.3.   Fixed Payment Date Benefit.........................................................10

        5.4.   Disability Retirement Benefit......................................................10

        5.5.   Death Benefits.....................................................................11

        5.6.   Termination of Employment Benefits.................................................11

        5.7.   Hardship Distribution..............................................................12

        5.8.   Withdrawal Election................................................................13

        5.9.   Effect of Change in Control........................................................13

        5.10.  Adverse Action on Participant or Plan..............................................13

        5.11.  Excise Tax Limitation..............................................................14

ARTICLE 6      RIGHTS ARE LIMITED.................................................................15
</TABLE>

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<TABLE>
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<S>     <C>                                                                                       <C>
        6.1.   Benefits Payable Only From General Corporate Assets: Unsecured General
               Creditor Status of Participant.....................................................15

        6.2.   No Contract of Employment..........................................................16

        6.3.   Benefits Not Transferable..........................................................16

        6.4.   No Trust Created...................................................................16

ARTICLE 7      BENEFICIARIES......................................................................16

        7.1.   Beneficiary Designation............................................................16

        7.2.   Spouse's Interest..................................................................16

        7.3.   Facility of Payment................................................................17

ARTICLE 8      PLAN ADMINISTRATION................................................................17

        8.1.   Responsibility of Administration of the Plan.......................................17

        8.2.   Claims Procedure...................................................................18

        8.3.   Arbitration........................................................................22

        8.4.   Notice.............................................................................24

ARTICLE 9      AMENDMENT OR TERMINATION...........................................................25

        9.1.   Amendment or Termination...........................................................25

ARTICLE 10     THE TRUST..........................................................................25

        10.1.  Establishment of Trust.............................................................25

        10.2.  Interrelationship of the Plan and the Trust........................................25

        10.3.  Contribution to the Trust..........................................................25

ARTICLE 11     MISCELLANEOUS......................................................................26

        11.1.  Governing Law......................................................................26

        11.2.  Withholding........................................................................26

EXHIBIT A      Participant Enrollment and Election Form
EXHIBIT B      Deemed Investment Elections..........................................................

EXHIBIT C      Designation of Beneficiary...........................................................
</TABLE>

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<PAGE>
                               WILLIAM LYON HOMES
                      EXECUTIVE DEFERRED COMPENSATION PLAN

        THIS PLAN is adopted as of the 11th day of February, 2002, by William
Lyon Homes, a Delaware corporation (the "Corporation"), as follows:

                                    RECITALS

        WHEREAS, the Corporation wishes to establish the William Lyon Homes
Executive Deferred Compensation Plan (the "Plan") to provide additional
retirement benefits and income tax deferral opportunities for a select group of
management and highly compensated employees; and

        WHEREAS, the Corporation intends that the Plan shall at all times be
administered and interpreted in such a manner as to constitute an unfunded
nonqualified deferred compensation plan for a select group of management or
highly compensated employees and to qualify for all available exemptions from
the provisions of ERISA;

        NOW, THEREFORE, the Corporation hereby adopts the following Executive
Deferred Compensation Plan.

                                   ARTICLE 1

                                   DEFINITIONS

        DEFINITION OF TERMS. Certain words and phrases are defined when first
used in later sections of this plan. In addition, the following words and
phrases when used herein, unless the context clearly requires otherwise, shall
have the following respective meanings.

1.1.    ACCRUED BENEFIT. The sum of all amounts deferred hereunder by or on
        behalf of a Participant, including (i) any contributions made by the
        Corporation, and (ii) any earnings, gains, losses, and changes in value
        credited to the Participant or his or her Beneficiaries pursuant to the
        Plan, which shall be reflected in the Deferral Account.

1.2.    AFFILIATE. Any corporation, partnership, joint venture, association, or
        similar organization or entity, which is a member of a controlled group
        of companies which includes, or which is under common control with, the
        Corporation under Section 414 of the Code, including, but not limited
        to, William Lyon Homes, Inc., a California corporation, and Duxford
        Financial, Inc., a California corporation.

1.3.    BASE SALARY. The annual compensation (excluding bonuses, commissions,
        overtime, incentive payments, non-monetary awards, directors fees and
        other fees, stock options and grants, and car allowances) paid to a
        Participant for services rendered to the Corporation, before reduction
        for compensation deferred pursuant to all qualified, non-qualified and
        Code Section 125 plans of the Corporation.

                                      -1-
<PAGE>
1.4.    BENEFICIARY. The Beneficiary designated by a Participant under Article
        7, or, if the Participant has not designated a Beneficiary under Article
        7, the person or persons entitled to receive distributions of benefits
        under Section 5.5.

1.5.    CALENDAR YEAR. January 1 to December 31.

1.6.    CAUSE. For purposes of this Agreement "Cause" shall mean any of the
        following acts or circumstances: (i) willful destruction by the
        Participant of property of the Corporation or an Affiliate having a
        material value to the Corporation or such Affiliate; (ii) fraud,
        embezzlement, theft, or comparable dishonest activity committed by the
        Participant (excluding acts involving a de minimis dollar value and not
        related to the Corporation or an Affiliate); (iii) the Participant's
        conviction of or entering a plea of guilty or nolo contendere to any
        crime constituting a felony or any misdemeanor involving fraud,
        dishonesty or moral turpitude (excluding acts involving a de minimis
        dollar value and not related to the Corporation or an Affiliate); (iv)
        the Participant's breach, neglect, refusal, or failure to materially
        discharge the Participant's duties (other than due to physical or mental
        illness) commensurate with the Participant's title and function or the
        Participant's failure to comply with the lawful directions of the Board
        or the Chief Executive Officer of the Corporation, or of the Board of
        Directors or the Chief Executive Officer of the Affiliate that employs
        the Participant, in any such case that is not cured within fifteen (15)
        days after the Participant has received written notice thereof from such
        Board of Directors or Chief Executive Officer; (v) any willful
        misconduct by the Participant which may cause substantial economic or
        reputational injury to the Corporation, including, but not limited to,
        sexual harassment, or (vi) a willful and knowing material
        misrepresentation to the Board or the Chief Executive Officer of the
        Corporation or to the Board of Directors or the Chief Executive Officer
        of the Affiliate that employs the Participant.

1.7.    CHANGE IN CONTROL shall mean the occurrence of any of the following:

        (i)     Any "Person" or "Group", as such terms are defined in Section
                13(d) of the Securities Exchange Act of 1934 (the "Exchange
                Act") and the rules and regulations promulgated thereunder,
                excluding any Excluded Stockholder, who is or becomes the
                "Beneficial Owner" (within the meaning of Rule 13d-3 under the
                Exchange Act), directly or indirectly, of securities of the
                Corporation, or of any entity resulting from a merger or
                consolidation involving the Corporation, representing more than
                fifty percent (50%) of the combined voting power of the then
                outstanding securities of the Corporation or such entity.

        (ii)    The individuals who, as of the time immediately following the
                election of directors at the Corporation's 2001 Annual Meeting
                of Stockholders, are members of the Board (the "Existing
                Directors"), cease, for any reason, to constitute more than
                fifty percent (50%) of the number of authorized directors of the
                Corporation as determined in the manner prescribed in the
                Corporation's Certificate of

                                      -2-
<PAGE>

                Incorporation and Bylaws; provided, however, that if the
                election, or nomination for election, by the Corporation's
                stockholders of any new director was approved by a vote of at
                least fifty percent (50%) of the Existing Directors, such new
                director shall be considered an Existing Director; provided
                further, however, that no individual shall be considered an
                Existing Director if such individual initially assumed office as
                a result of either an actual or threatened "Election Contest"
                (as described in Rule 14a-11 promulgated under the Exchange Act)
                or other actual or threatened solicitation of proxies by or on
                behalf of anyone other than the Board (a "Proxy Contest"),
                including by reason of any agreement intended to avoid or settle
                any Election Contest or Proxy Contest.

        (iii)   The consummation of (x) a merger, consolidation or
                reorganization to which the Corporation is a party, whether or
                not the Corporation is the Person surviving or resulting
                therefrom, or (y) a sale, assignment, lease, conveyance or other
                disposition of all or substantially all of the assets of the
                Corporation, in one transaction or a series of related
                transactions, to any Person other than the Corporation, where
                any such transaction or series of related transactions as is
                referred to in clause (x) or clause (y) above in this
                subparagraph (iii) (singly or collectively, a "Transaction")
                does not otherwise result in a "Change in Control" pursuant to
                subparagraph (i) of this definition of "Change in Control";
                provided, however, that no such Transaction shall constitute a
                "Change in Control" under this subparagraph (iii) if the Persons
                who were the stockholders of the Corporation immediately before
                the consummation of such Transaction are the Beneficial Owners,
                immediately following the consummation of such Transaction, of
                fifty percent (50%) or more of the combined voting power of the
                then outstanding voting securities of the Person surviving or
                resulting from any merger, consolidation or reorganization
                referred to in clause (x) above in this subparagraph (iii) or
                the Person to whom the assets of the Corporation are sold,
                assigned, leased, conveyed or disposed of in any transaction or
                series of related transactions referred in clause (y) above in
                this subparagraph (iii), in substantially the same proportions
                in which such Beneficial Owners held voting stock in the
                Corporation immediately before such Transaction.

        For purposes of the foregoing definition, the term "Excluded
        Stockholder" means General William Lyon, his spouse, children or
        grandchildren, or any trust for the benefit of such persons, or any
        corporation or other entity, the majority of whose beneficial interests
        are owned or controlled by any of such persons or trusts.

1.8.    CODE. The Internal Revenue Code of 1986, as amended from time to time.

1.9.    COMPENSATION. The Base Salary and bonuses paid out by the Corporation to
        an employee for a calendar year.

                                      -3-
<PAGE>

1.10.   DEFERRAL ACCOUNT. Book entries maintained by the Corporation reflecting
        the Participant's Accrued Benefit, provided, however, that the existence
        of such book entries and the Deferral Account shall not create, and
        shall not be deemed to create, a trust of any kind, or a fiduciary
        relationship between the Corporation and the Participant, his or her
        Beneficiaries.

1.11.   DISABILITY. Eligibility to receive benefits under the Corporation's
        group long-term disability plan, or, if the Corporation ceases to
        maintain a long-term disability plan, the total and permanent incapacity
        of the Participant, due to physical impairment or legally established
        mental incompetence, to perform the usual duties of his employment with
        the Corporation.

1.12.   EFFECTIVE DATE.  February 11, 2002.

1.13.   ELECTION OF DEFERRAL. A written notice filed by the Participant with the
        Human Resources Department of the Corporation in substantially the form
        attached hereto as Exhibit A, the Participant Enrollment and Election
        Form, specifying the amount (if any) of Base Salary and bonus to be
        deferred.

1.14.   ELIGIBLE EMPLOYEE. Any employee of the Corporation or an Affiliate who
        is selected to participate herein in accordance with the provisions of
        Section 2.1 hereof, and one of a select group of management or highly
        compensated employees, as defined by ERISA.

1.15.   ERISA. The Employee Retirement Income Security Act of 1974, as amended
        from time to time.

1.16.   GOOD REASON means the occurrence, on or after the occurrence of a Change
        in Control, of any of the following:

        (a)     The Corporation or any of its Affiliates reduces the
                Participant's Base Salary.

        (b)     The Corporation discontinues its bonus plan in which the
                Participant participates as in effect immediately before the
                Change in Control without immediately replacing such bonus plan
                with a plan that is the substantial economic equivalent of such
                bonus plan, or a successor to the Corporation fails or refuses
                to assume the obligations of the Corporation under such bonus
                plan as in effect immediately before the Change in Control or
                under a plan that is the substantial economic equivalent of such
                bonus plan.

        (c)     Without the Participant's express written consent, the
                Corporation or any of its Affiliates requires the Participant to
                change the location of the Participant's job or office, so that
                the Participant will be based at a location more than 100 miles
                from the former location of the Participant's job or office.

                                      -4-
<PAGE>

        (d)     Without the Participant's express written consent, the
                Corporation or any of its Affiliates reduces the Participant's
                responsibilities or directs the Participant to report to a
                person of lower rank or responsibilities than the person to whom
                the Participant reported before the Change in Control.

1.17.   NORMAL RETIREMENT DATE. The date the Participant attains 65 years of
        age.

1.18.   PARTICIPANT. An Eligible Employee designated as a participant by the
        Plan Administrator.

1.19.   PARTICIPANT ANNUAL DEFERRAL. The portion of a Participant's
        compensation, which he or she elects to defer for the Calendar Year in
        question.

1.20.   PLAN. This Plan, together with any and all amendments or supplements
        thereto.

1.21.   PLAN ADMINISTRATOR. The Board of Directors of William Lyon Homes (a
        Delaware corporation) or its designee, except as provided in Section
        5.9.

1.22.   PLAN YEAR. The Calendar Year, except that the first Plan Year shall be
        the short year beginning February 11, 2002 and ending December 31, 2002.

1.23.   RETIREMENT. The termination of a Participant's employment with the
        Corporation and all Affiliates after the Participant has reached his
        Normal Retirement Date.

1.24.   VALUATION DATE. The last day of each quarter during the Plan Year, or
        such other dates as the Plan Administrator may establish in its
        discretion.

                                   ARTICLE 2

                          ELIGIBILITY AND PARTICIPATION

2.1.    ELIGIBILITY.

        (a)     An Eligible Employee shall become a Participant in the Plan if
                such Employee is designated as a Participant by the Corporation,
                in writing.

        (b)     Once an employee becomes a Participant, he or she shall remain a
                Participant until his or her termination of employment with the
                Corporation and all Affiliates, and thereafter until all
                benefits to which he or she (or his or her Beneficiaries) is
                entitled under the Plan have been paid.

2.2.    PARTICIPATION.

        (a)     The Participant may elect a Participant Annual Deferral
                hereunder by filing an Election of Deferral. The initial
                Election of Deferral must be filed on or before February 19,
                2002 and shall be effective on the first payroll thereafter and
                for the first annual bonus determined thereafter by the
                Compensation Committee of the Corporation's Board of Directors.

                                      -5-
<PAGE>

        (b)     Each Election of Deferral shall be effective only for Base
                Salary and bonus which would otherwise be paid in the Calendar
                Year to which the Election of Deferral applies, and shall be
                irrevocable during such Calendar Year. Any subsequent Election
                of Deferral, to be effective, must be filed at least 10 days
                prior to the beginning of the Calendar Year for which deferral
                is sought. Any employee who becomes an Eligible Employee and is
                designated as a Participant by the Plan Administrator during the
                Plan Year may elect to participate and commence deferrals by
                filing an Election of Deferral within 30 days following his
                designation as a Participant.

                                   ARTICLE 3

                            CONTRIBUTIONS AND CREDITS

3.1.    DEFERRAL ELECTION.

        (a)     Commencing on the Effective Date, and continuing through the
                date on which the Participant's employment terminates because of
                his or her death, Retirement, Disability, or any other cause,
                each Participant shall be entitled to elect to defer into his or
                her Deferral Account, by filing with the Plan Administrator an
                Election of Deferral at least 10 days prior to the beginning of
                the Plan Year (or before February 19, 2002 in the case of the
                initial election), a portion of the Base Salary and bonus that
                the Participant would be entitled to receive from the
                Corporation during the Plan Year. Such deferrals shall be
                accomplished by payroll deduction.

        (b)     In the Election of Deferral, the Participant shall specify the
                amount to be deferred, which such specification may be separate
                for the Base Salary and the bonus, and may be expressed as a
                percentage of the Base Salary or bonus or as a fixed dollar
                amount. However, the total amount of the deferrals made by each
                Participant in any Calendar Year (i) shall not exceed twenty
                percent (20%) of the Participant's total Base Salary and bonus,
                and (ii) shall not be less than Ten Thousand Dollars
                ($10,000.00). The Plan Administrator and the Corporation shall
                disregard any deferral election to the extent such deferral
                election exceeds twenty percent (20%) of the Participant's total
                Base Salary and bonus, or if such deferral election is less than
                Ten Thousand Dollars ($10,000.00).

3.2.    CORPORATION DISCRETIONARY CONTRIBUTIONS.

        (a)     The Corporation may make contributions to the Plan as it may
                determine from time to time and may direct that such
                contributions be allocated among the Deferral Accounts of those
                Participants that it may select. If a Participant is not
                employed by the Corporation as of the last day of a Plan Year
                other than by reason of his or her Retirement, Disability or
                death, the Corporation Discretionary Contribution for such Plan
                Year shall be zero. In the event of Retirement, Disability or
                death, a Participant shall be credited with the

                                      -6-
<PAGE>

                Corporation Discretionary Contribution (if any) for the Plan
                Year in which he or she Retires, becomes Disabled or dies.

        (b)     No participant shall have a right to compel the Corporation to
                make a discretionary contribution under this Section 3.2 and no
                Participant shall have the right to share in the allocation of
                any such contribution for any Plan Year unless selected by the
                Corporation, in its sole discretion.

                                   ARTICLE 4

                    DEFERRAL ACCOUNTS AND ALLOCATION OF FUNDS

4.1.    DEFERRAL ACCOUNT ALLOCATIONS.

        (a)     Compensation which is deferred under the Plan shall be deemed to
                be added to the Deferral Account on the first day of the
                following month in which the Compensation would otherwise have
                been paid.

        (b)     Corporation Discretionary Contributions (if any) shall be
                credited to the Participant's Deferral Account at such time as
                directed by the Plan Administrator.

        (c)     All amounts paid from a Deferral Account shall be deemed to be
                paid on the first day of the month following the month in which
                such payments are made.

        (d)     Based on the Investment Elections of a Participant made under
                Section 4.2, the Participant's Deferral Account shall be
                credited with investment earnings, gains, losses or changes in
                value effective at the end of each calendar quarter during the
                Plan Year, except as otherwise provided in this Plan.

        (e)     The Plan Administrator may, at any time, change the timing or
                methods for crediting or debiting earnings, gains, losses, and
                changes in value of investment options, deferrals of
                Compensation, Company Discretionary Contributions, and payments
                of benefits and withdrawals under this Plan; provided, however,
                that the times and methods for crediting or debiting such items
                in effect at any particular time shall be uniform among all
                Participants and Beneficiaries.

4.2.    INVESTMENT ELECTION AND DECLARED RATES.

        (a)     Investment Elections may be made from any of the various
                investment alternatives selected by the Participant from among
                those made available by the Corporation from time to time, which
                are outlined in Exhibit B.

        (b)     A Participant (or, in the event of the Participant's death, the
                Participant's Beneficiary) shall make Investment Elections for
                the Participant's Deferral Account by filing a form
                substantially in the form of Exhibit B (or another form
                acceptable to the Plan Administrator) with the Plan
                Administrator. A Participant may elect to have his or her
                Deferral Account deemed to be

                                      -7-
<PAGE>

                invested in up to ten (10) investment alternatives, provided,
                however, that such investment alternative must be applied to at
                least ten percent (10%) of the total balance in his or her
                Deferral Account and must be in a whole percentage amount.
                Investment Elections shall remain in effect until changed and
                may be changed once during each calendar quarter, with such
                change to be effective on the first day of the succeeding
                calendar quarter.

        (c)     At the end of each calendar quarter (or such shorter period as
                the Plan Administrator may determine), the Corporation shall
                compute the total return for the quarter (or such shorter
                period) as to each Participant's Investment Elections and reduce
                such returns for that quarter's (or shorter period's) money
                management fees, mortality charges, cost of insurance and
                investment expenses associated specifically with each investment
                alternative. The total return for each investment alternative
                shall be that investment alternative's total return for that
                quarter (or shorter period) reduced for expenses as described
                above.

        (d)     From time to time, and at its sole discretion, the Corporation
                may change the investment alternatives which it makes available
                to the Participant. However, notwithstanding the provisions of
                this Section 4.2, the Corporation may invest contributions in
                investments other than the investments selected by such
                Participant but the Participant's return will solely be based on
                the results of his or her Investment Election reduced for
                expenses as described in Section 4.2(c) above. Nothing in this
                Plan shall require the Corporation actually to acquire or hold
                any particular investment.

4.3.    DETERMINATION OF ACCOUNTS. A Participant's Accrued Benefit and Deferral
        Account balance as of each Valuation Date shall consist of the balance
        of deferrals of Compensation, Corporation Discretionary Contributions,
        and investment earnings, gains, losses, and changes in value in his or
        her Deferral Account determined in accordance with this Section 4.

                                   ARTICLE 5

                             ENTITLEMENT TO BENEFITS

5.1.    VESTING OF BENEFITS. The portion of a Participant's Deferral Account
        that is attributable to his or her compensation deferral and deemed
        investment earnings, gains, losses and changes in value credited thereon
        shall be immediately fully vested. The portion of the Participant's
        Deferral Account that is attributable to Corporation Discretionary
        Contributions and deemed investment earnings, gains, losses and changes
        in value credited thereon (if any), shall vest based on the following
        table:

                                      -8-
<PAGE>
<TABLE>
<CAPTION>
    Completed Years of Plan Participation                      Percent Vested
    -------------------------------------                      --------------
<S>                                                            <C>
                 Less than 1                                          0%
              1 but less than 2                                      20
              2 but less than 3                                      40
              3 but less than 4                                      60
              4 but less than 5                                      80
                  5 or more                                         100
</TABLE>

For purposes of this Section 5.1, the term "Completed Years of Plan
Participation" shall mean the continuous (except for leaves of absence approved
by the Corporation) period of time beginning on the date on which an Eligible
Employee becomes a Participant and ending on the termination of the employment
of the Participant with the Corporation and all Affiliates for any reason.

Notwithstanding the foregoing, but subject to Sections 5.6(b) and 5.8, a
Participant, or his or her Beneficiary in the case of a death benefit, shall
become fully vested in the portion of his Deferral Account that is attributable
to Corporation Discretionary Contributions and deemed investment earnings,
gains, losses and changes in value credited thereon (if any), upon his Normal
Retirement Date, death, or Disability.

5.2.    RETIREMENT BENEFIT.

        (a)     From and after the Retirement of the Participant, the
                Corporation shall thereafter pay to the Participant his or her
                Accrued Benefit, unless the Participant has validly elected a
                later fixed payment date under Section 5.3. Such benefits shall
                be payable in the manner elected by the Participant as follows:

                -       Lump Sum

                -       Monthly over 2 years

                -       Monthly over 5 years

                -       Monthly over 10 years

                -       Monthly over 15 years

                -       Monthly over 20 years

        Such election may be changed by the Participant by giving written notice
        to the Corporation not later than one year before Retirement or
        Disability. Such payments shall commence on or about the first day of
        the first month following the Participant's Retirement, unless the
        Participant has validly elected a later fixed payment date under Section
        5.3. The amount of each installment to be paid during the Calendar Year
        in which payment begins shall be equal to the total amount payable to
        the Participant as of his or her Normal Retirement Date, divided by the
        total number of installment payments to be made.

                                      -9-
<PAGE>

        (b)     As of January 1 of each subsequent Calendar Year during the
                benefit payment period, the amount of each installment to be
                paid during such Calendar Year shall be recalculated and shall
                be equal to:

                (i)     the remaining balance in the Participant's Deferral
                        Account as of January 1; divided by

                (ii)    the number of installment payments to be made in or
                        after such subsequent Calendar Year.

        (c)     The final installment payment shall be equal to the remaining
                amount payable to the Participant. In no event shall the amount
                of any installment payment exceed the remaining amount payable
                to the Participant.

        (d)     Notwithstanding the foregoing, a Participant's retirement
                benefit will be distributed in one lump sum rather than in
                installments if the balance in the Participant's Deferral
                Account as of his Normal Retirement Date is less than Twenty
                Five Thousand Dollars ($25,000.00).

5.3.    FIXED PAYMENT DATE BENEFIT.

        (a)     A Participant may select a fixed payment date for the payment or
                commencement of payment of his or her vested Accrued Benefit.
                Payments made under this election will be payable in the manner
                elected by the Participant in the same manner as retirement
                benefits are paid under Section 5.2. A Participant may extend a
                fixed payment date by written notice to the Plan Administrator,
                provided that the Participant gives such written notice at least
                one (1) year before the fixed payment date before such
                extension. Such fixed payment dates may not be accelerated.

        (b)     Any fixed payment date elected by a Participant as provided
                under Section 5.3(a) above (i) may be before or after the
                Participant's Retirement or termination of employment with the
                Corporation and all Affiliates for any reason other than Cause,
                Disability, Retirement, or death, but (ii) must be no earlier
                than the January 1 of the third calendar year after the calendar
                year in which the election is made or in which the Participant
                gives a written notice of extension.

5.4.    DISABILITY RETIREMENT BENEFIT. The Participant shall be entitled to
        receive payments hereunder prior to his or her Normal Retirement Date if
        he or she is Disabled. If the Participant's employment is terminated
        pursuant to this Section 5.4, the benefit payable hereunder shall be the
        same amount as would have been payable as a Retirement Benefit under
        Section 5.2 above had the Participant attained his or her Normal
        Retirement Date on the date of the disability determination, and shall
        be paid on account of the Participant's Disability even if the
        Participant has validly elected a later fixed payment date under Section
        5.3. If the total amount of benefits payable is less than Twenty Five
        Thousand Dollars ($25,000.00), the plan administrator will be required
        to pay the benefit in a lump sum rather than in installments.

                                      -10-
<PAGE>

5.5.    DEATH BENEFITS.

        (a)     DEATH BENEFIT PRIOR TO COMMENCEMENT OF BENEFITS. In the event of
                the Participant's death while in the employment of the
                Corporation or an Affiliate and prior to commencement of benefit
                payments, the Corporation shall pay a survivor benefit in an
                amount equal to the greater of: (a) the Participant's Accrued
                Benefit at the date of death, or (b) a specified dollar amount
                stated in a written notice given by the Corporation to the
                Participant; provided, however, that (i) the Corporation may
                increase, decrease or eliminate such specified dollar amount at
                any time by giving a written notice of such change to the
                Participant, and (ii) the Corporation shall not be obligated to
                give such notice or to specify any dollar amount under this
                clause (b), and, if the Corporation does not give such notice or
                specify any dollar amount, the specified dollar amount shall be
                deemed to be zero. The death benefit payable under this Section
                5.5 shall be distributed to the Participant's Beneficiary in a
                lump sum on or about the first day of the third month following
                the Participant's date of death (even if the Participant has
                validly elected a later fixed payment date under Section 5.3)
                and based on the last Beneficiary designation received by the
                Corporation from the Participant prior to his or her death. If
                no such designation has been received by the Corporation, such
                payment shall be made to the Participant's surviving legal
                spouse. If the Participant is not survived by a legal spouse,
                the said payment shall be made to the then living children of
                the Participant, if any, in equal shares. If there are no
                surviving children, the balance of the Accrued Benefit shall be
                paid to the estate of the Participant.

        (b)     DEATH BENEFIT AFTER COMMENCEMENT OF RETIREMENT BENEFITS. In the
                event of the Participant's death after the commencement of
                benefit payments, but prior to the completion of such payments
                due to and owing hereunder, the Corporation shall continue to
                make such payments, in installments over the remainder of the
                period specified in Sections 5.2 or 5.3 hereof that would have
                been applicable to the Participant had he or she survived. Such
                continuing payment shall be made to the Participant's designated
                Beneficiary in accordance with the last such designation
                received by the Corporation from the Participant prior to his
                death. If no such designation has been received by the
                Corporation, such payments shall be made to the Participant's
                surviving legal spouse. If such spouse dies before receiving all
                payments to which he or she is entitled hereunder, then the
                balance of the Accrued Benefit shall be paid to the spouse's
                estate. If the Participant is not survived by a legal spouse,
                then the said payments shall be made to the then living children
                of the Participant, if any, in equal shares. If there are no
                surviving children, the balance of the Accrued Benefit shall be
                paid to the estate of the Participant.

5.6.    TERMINATION OF EMPLOYMENT BENEFITS.

        (a)     In the event of the Participant's termination of employment with
                the Corporation or an Affiliate for any reason other than for
                Cause, Disability,

                                      -11-
<PAGE>

                Retirement or death, the Corporation shall pay to the
                Participant a Termination Benefit equal to the vested value of
                the Participant's Accrued Benefit, unless the Participant has
                validly elected a later fixed payment date under Section 5.3.
                Such termination benefit shall be payable in a lump sum on or
                about the first day of the third month following the date of
                termination, unless the Participant has validly elected a later
                fixed payment date under Section 5.3.

        (b)     In the event the Participant's employment is terminated for
                Cause, no benefits of any kind will be due or payable under the
                terms of this Plan from amounts credited to the Participant's
                Deferral Account attributable to Corporate Discretionary
                Contributions, and any cumulative earnings, gains, and changes
                in value thereon, and all rights of the Participant, his or her
                designated Beneficiary, executors, or administrators, or any
                other person, to receive payments thereof shall be forfeited.
                If, after installment payments of benefits under this Plan have
                begun, the Plan Administrator determines that Cause existed
                before the Participant's Retirement or Disability, such
                installment payments shall be reduced by amounts credited to the
                Participant's Deferral Account attributable to Corporate
                Discretionary Contributions, and any cumulative earnings, gains,
                and changes in value thereon.

5.7.    HARDSHIP DISTRIBUTION.

        (a)     HARDSHIP WITHDRAWAL. In the event that the Plan Administrator,
                upon the written request of a Participant, determines, in its
                sole discretion, that the Participant has suffered an
                unforeseeable financial emergency, the Corporation shall pay to
                the Participant, as soon as practicable following such
                determination, an amount necessary to meet the emergency (the
                "Hardship Withdrawal"), but not exceeding the vested balance of
                such Participant's Deferral Account as of the date of such
                payment. For purposes of this Section 5.7(a), an "unforeseeable
                financial emergency" shall mean an event that the Plan
                Administrator determines to give rise to an unexpected need for
                cash arising from an illness, casualty loss, sudden financial
                reversal or other such unforeseeable occurrence. Amounts of
                Hardship Withdrawal may not exceed the amount the Plan
                Administrator reasonably determines to be necessary to meet such
                emergency needs (including taxes incurred by reason of a taxable
                distribution).

        (b)     RULES ADOPTED BY PLAN ADMINISTRATOR. The Plan Administrator
                shall have the authority to adopt additional rules relating to
                hardship distributions. In administering these rules, the Plan
                Administrator shall act in accordance with the principle that
                the primary purpose of this Plan is to provide additional
                retirement income, not additional funds for current consumption.

        (c)     LIMIT ON NUMBER OF HARDSHIP DISTRIBUTIONS. No participant may
                receive more than one hardship distribution in any Calendar
                Year.

                                      -12-
<PAGE>

        (d)     PROHIBITION OF FURTHER DEFERRALS. A Participant who receives a
                hardship distribution, and who is still employed by the
                Corporation or an Affiliate, shall be prohibited from making
                deferrals under section 3.1 for the remainder of the Calendar
                Year in which the distribution is made.

5.8.    WITHDRAWAL ELECTION. A Participant may elect, at any time, to withdraw
        all of his or her vested Accrued Benefit, calculated as if such
        Participant were receiving a Termination Benefit, less a 10 percent
        withdrawal penalty (the net amount shall be referred to as the
        "Withdrawal Amount"). No partial withdrawals of that balance shall be
        allowed. The Participant shall make this election by giving the Plan
        Administrator advance written notice of the election in a form
        determined from time to time by the Plan Administrator. The penalty
        shall be equal to 10 percent of the Participant's vested Accrued Benefit
        determined immediately prior to the date of his or her election. Once
        the Withdrawal Amount is paid, the Participant shall be suspended
        permanently from further participation in the Plan.

5.9.    EFFECT OF CHANGE IN CONTROL. A Participant shall become fully vested in
        the portion of his Deferral Account that is attributable to Corporation
        Discretionary Contributions and deemed investment earnings, gains,
        losses and changes in value credited thereon (if any) if, within one
        year after the occurrence of a Change in Control, his employment is
        involuntarily terminated by the Corporation or any of its Affiliates for
        any reason other than Cause or his death or Disability, or he
        voluntarily terminates his employment with the Corporation and all
        Affiliates for Good Reason.

        From and after the occurrence of a Change in Control, the Plan
        Administrator shall consist of a committee of the individuals who were
        members of the Corporation's Board of Directors 90 days before the
        occurrence of the Change in Control, with any vacancy in such committee
        occurring thereafter being filled with a person or persons selected by
        the other members of such committee.

5.10.   ADVERSE ACTION ON PARTICIPANT OR PLAN.

        (a)     Notwithstanding any other provision hereof, in the event there
                is a determination by the Internal Revenue Service, or in the
                event of a final determination by a court or competent
                jurisdiction, that amounts credited to the Participants'
                Deferral Accounts hereunder are includable in the gross incomes
                of the Participants or Beneficiaries, the Plan Administrator may
                in its sole discretion distribute the vested amount credited to
                the Participants' Deferral Accounts to the Participants or
                Beneficiaries, or cause the termination of future deferrals of
                Compensation by the Participants, or both.

        (b)     In the event that there is a determination by the Department of
                Labor, or a final determination of a court of competent
                jurisdiction, that the Plan is subject to Part 2, 3 or 4 of
                Title I of ERISA, the Plan Administrator may in its sole
                discretion distribute the vested amount credited to the
                Participants' Deferral Accounts to the Participants or
                Beneficiaries, or cause the termination of future deferrals of
                Compensation by the Participants, or both.

                                      -13-
<PAGE>

5.11.   EXCISE TAX LIMITATION.

        (a)     Notwithstanding anything contained in this Plan to the contrary,
                in the event that any payment or benefit (within the meaning of
                Section 280G(b)(2) of the Code) to the Participant or for the
                Participant's benefit paid or payable or distributed or
                distributable (including, but not limited to, the acceleration
                of the time for the vesting or payment of such benefit or
                payment) pursuant to the terms of this Plan or otherwise in
                connection with, or arising out of, the Participant's employment
                with the Corporation or any of its Affiliates or a change of
                control within the meaning of Section 280G of the Code (a
                "Payment" or "Payments"), would be subject to the excise tax
                imposed by Section 4999 of the Code (the "Excise Tax"), then the
                Payments shall be reduced (but not below zero) but only to the
                extent necessary that no portion thereof shall be subject to the
                excise tax imposed by Section 4999 of the Code (the "Section
                4999 Limit"). Unless the Participant shall have given prior
                written notice specifying a different order to the Corporation
                to effectuate the limitations described in the preceding
                sentence, the Corporation shall reduce or eliminate the Payments
                by first reducing or eliminating those Payments or benefits
                which are not payable in cash and then by reducing or
                eliminating cash Payments, in each case in reverse order
                beginning with payments or benefits which are to be paid the
                farthest in time from the Determination (as hereinafter
                defined). Any notice given by the Participant pursuant to the
                preceding sentence shall take precedence over the provisions of
                any other plan, arrangement or agreement governing the
                Participant's rights and entitlements to any benefits or
                compensation.

        (b)     All determinations required to be made under this Section 5.11
                (each, a "Determination") shall be made, at the Corporation's
                expense, by the accounting firm which is the Corporation's
                accounting firm prior to the Change in Control or another
                nationally recognized accounting firm designated by the Board
                (or a committee thereof) prior to the Change in Control (the
                "Accounting Firm"). The Accounting Firm shall provide its
                calculations, together with detailed supporting documentation,
                both to the Corporation and to the Participant before payment of
                the Participant's benefits hereunder (if requested at that time
                by the Corporation or the Participant) or such other time as
                requested by the Corporation or the Participant (in either case
                provided that the Corporation or the Participant believe in good
                faith that any of the Payments may be subject to the Excise
                Tax); provided, however, that if the Accounting Firm determines
                that no Excise Tax is payable by the Participant with respect to
                a Payment or Payments, it shall furnish the Participant with an
                opinion reasonably acceptable to the Participant that no Excise
                Tax will be imposed with respect to any such Payment or
                Payments. Within ten (10) calendar days of the delivery of the
                Determination to the Participant, the Participant shall have the
                right to dispute the Determination (the "Dispute"). The
                existence of any Dispute shall not in any way affect the
                Participant's right to receive the Payments in accordance with
                the Determination. If there is no Dispute, the Determination by
                the Accounting Firm shall be final, binding and conclusive

                                      -14-
<PAGE>

                upon the Corporation and the Participant, subject to the
                application of Section 5.11(c). Any Dispute shall be resolved by
                arbitration in accordance with the provisions of this Plan.

        (c)     As a result of the uncertainty in the application of Sections
                4999 and 280G of the Code, it is possible that the Payments
                either will have been made or will not have been made by the
                Corporation, in either case in a manner inconsistent with the
                limitations provided in Section 5.11(a) (an "Excess Payment" or
                "Underpayment", respectively). If it is established pursuant to
                (i) a final determination of a court for which all appeals have
                been taken and finally resolved or the time for all appeals has
                expired, or (ii) an Internal Revenue Service (the "IRS")
                proceeding which has been finally and conclusively resolved,
                that an Excess Payment has been made, such Excess Payment shall
                be deemed for all purposes to be a loan to the Participant made
                on the date the Participant received the Excess Payment and the
                Participant shall repay the Excess Payment to the Corporation on
                demand, together with interest on the Excess Payment at one
                hundred twenty percent (120%) of the applicable federal rate (as
                defined in Section 1274(d) of the Code) compounded semi-annually
                from the date of the Participant's receipt of such Excess
                Payment until the date of such repayment. If it is determined
                (i) by the Accounting Firm, the Corporation (which shall include
                the position taken by the Corporation, together with its
                consolidated group, on its federal income tax return) or the
                IRS, (ii) pursuant to a determination by a court, or (iii) upon
                the resolution to the Participant's satisfaction of the Dispute,
                that an Underpayment has occurred, the Corporation shall pay an
                amount equal to the Underpayment to the Participant within ten
                (10) calendar days of such determination or resolution, together
                with interest on such amount at one hundred twenty percent
                (120%) of the applicable federal rate compounded semi-annually
                from the date such amount should have been paid to the
                Participant pursuant to the terms of this Plan or otherwise, but
                for the operation of this Section 5.11(c), until the date of
                payment.

                                   ARTICLE 6

                               RIGHTS ARE LIMITED

6.1.    BENEFITS PAYABLE ONLY FROM GENERAL CORPORATE ASSETS: UNSECURED GENERAL
        CREDITOR STATUS OF PARTICIPANT.

        (a)     Payment to the Participant or any Beneficiary hereunder shall be
                made from assets which shall continue, for all purposes, to be
                part of the general, unrestricted assets of the Corporation; no
                person shall have any interest in any such asset by virtue of
                any provision of this Plan. The Corporation's obligation
                hereunder shall be an unfunded and unsecured promise to pay
                money in the future. To the extent that any person acquires a
                right to receive payments from the Corporation under the
                provisions hereof, such right shall be no greater than the right
                of any unsecured general creditor of the

                                      -15-
<PAGE>

                Corporation; no such person shall have or acquire any legal or
                equitable right, interest or claim in or to any property or
                assets of the Corporation.

        (b)     In the event that, in its discretion, the Corporation purchases
                an insurance policy or policies insuring the life of a
                Participant, or any employee of the Corporation, to allow the
                Corporation to recover or meet the cost of providing benefits in
                whole or in part, hereunder, no Participant or Beneficiary shall
                have any rights whatsoever therein or in said policy or the
                proceeds therefrom. The Corporation shall be the sole owner and
                beneficiary of any such insurance policy or property and shall
                possess and may exercise all incidents of ownership therein.

6.2.    NO CONTRACT OF EMPLOYMENT. Nothing contained herein shall be construed
        to be a contract of employment for any term of years, nor as conferring
        upon the Participant the right to continue to be employed by the
        Corporation in his or her present capacity or in any capacity. It is
        expressly understood that this Plan relates only to the payment of
        deferred compensation for the Participant's services.

6.3.    BENEFITS NOT TRANSFERABLE. No Participant or Beneficiary under this Plan
        shall have any power or right to transfer, assign, anticipate,
        hypothecate or otherwise encumber any part of all the amounts payable
        hereunder. No part of the amounts payable shall, prior to actual
        payment, be subject to seizure or sequestration for the payment of any
        debts, judgments, alimony or separate maintenance owed by a Participant
        or any other person, nor be transferable by operation of law in the
        event of a Participant's or any other person's bankruptcy or insolvency,
        or dissolution of marriage. Any such attempted assignment shall be void.

6.4.    NO TRUST CREATED. Nothing contained in this Plan, and no action taken
        pursuant to its provisions by any person shall create, or be construed
        to create, a trust of any kind, or a fiduciary relationship between the
        Corporation and any other person.

                                   ARTICLE 7

                                  BENEFICIARIES

7.1.    BENEFICIARY DESIGNATION. The Participant shall have the right, at any
        time, to submit in substantially the form attached hereto as Exhibit C,
        a written designation of primary and secondary beneficiaries to whom
        payment under this Plan shall be made in the event of his or her death
        prior to complete distribution of the benefits payable. Each Beneficiary
        designation shall become effective only when receipt thereof is
        acknowledged in writing by the Plan Administrator. The Plan
        Administrator shall have the right, in its sole discretion, to reject
        any Beneficiary designation, which is not in substantially the form
        attached hereto as Exhibit C. Any attempt to designate a Beneficiary,
        otherwise than as provided in this Section 7.1, shall be ineffective.

7.2.    SPOUSE'S INTEREST. A Participant's Beneficiary designation shall be
        deemed automatically revoked if the Participant names a spouse as
        Beneficiary and the marriage is later dissolved or the spouse dies.
        Without limiting the generality of the

                                      -16-
<PAGE>

        foregoing, the interest in the benefits hereunder of a spouse of a
        Participant who has predeceased the Participant or whose marriage with
        the Participant has been dissolved 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.

7.3.    FACILITY OF PAYMENT. If a distribution is to be made to a minor, or to a
        person who is otherwise incompetent, then the Plan Administrator may, in
        its discretion, make such distribution (i) to the legal guardian, or if
        none, to a parent of a minor payee with whom the payee maintains his or
        her residence, or (ii) to the conservator or committee or, if none, to
        the person having custody of an incompetent payee. Any such distribution
        shall fully discharge the Plan Administrator, the Corporation and Plan
        from further liability on account thereof.

                                   ARTICLE 8

                               PLAN ADMINISTRATION

8.1.    RESPONSIBILITY OF ADMINISTRATION OF THE PLAN.

        (a)     The Plan Administrator shall be responsible for the management,
                operation and administration of the Plan. The Plan Administrator
                may employ others to render advice with regard to its
                responsibilities under this Plan. It may also allocate its
                responsibilities to others and may exercise any other powers
                necessary for the discharge of its duties. The Plan
                Administrator shall be entitled to rely conclusively upon all
                tables, valuations, certifications, opinions and reports
                furnished by any actuary, accountant, controller, counsel or
                other person employed or engaged by the Plan Administrator with
                respect to the Plan.

        (b)     The primary responsibility of the Plan Administrator is to
                administer the Plan for the benefit of the Participants and
                their beneficiaries, subject to the specific terms of the Plan.
                The Plan Administrator shall administer the Plan in accordance
                with its terms and shall have the power to determine all
                questions arising in connection with the administration,
                interpretation, and application of the Plan. Any such
                determination shall be conclusive and binding upon all persons
                and their heirs, executors, beneficiaries, successors and
                assigns. The Plan Administrator shall have all powers necessary
                or appropriate to accomplish its duties under the Plan. The Plan
                Administrator shall also have the discretion and authority to
                make, amend, interpret, and enforce all appropriate rules and
                regulations for the administration of this Plan and decide or
                resolve any and all questions, including but not limited to,
                interpretations of this Plan and entitlement to or amount of
                benefits under this Plan, as may arise in connection with the
                Plan.

                                      -17-
<PAGE>

8.2.    CLAIMS PROCEDURE.

        (a)     CLAIM. A person who believes that he or she is being denied a
                benefit to which he or she is entitled under the Plan or such
                person's authorized representative (hereinafter collectively
                referred to as a "Claimant") may file a written request for such
                benefit with the Vice President of Human Resources, setting
                forth his or her claim. The request must be addressed to the
                Vice President of Human Resources at his then principal place of
                business. A Claimant shall not be charged a fee or be liable for
                any costs associated with making a claim or appealing an adverse
                benefit determination pursuant to this Section 8.2.

        (b)     CLAIM DECISION. Upon receipt of a claim, the Vice President of
                Human Resources shall advise the Claimant that a reply will be
                forthcoming within 90 days and that the Vice President of Human
                Resources shall, in fact, deliver such reply within such period.
                The Vice President of Human Resources may, however, extend the
                reply period for an additional 90 days for reasonable cause,
                provided that the Vice President of Human Resources provides the
                Claimant with a written or electronic Notice of Extension, as
                defined in Section 8.2(c) of this Plan, within the initial 90
                day period. In no event shall an extension exceed a period of
                180 days from the date the claim was initially received by the
                Vice President of Human Resources. Upon receipt of a Disability
                claim, the Vice President of Human Resources shall advise the
                Claimant that a reply will be forthcoming within 45 days and
                that the Vice President of Human Resources shall, in fact,
                deliver such reply within such period. This period may be
                extended by the Vice President of Human Resources for up to 30
                days, provided that the Vice President of Human Resources (i)
                determines that such extension is necessary due to matters
                beyond his control, and (ii) provides a written or electronic
                Notice of Extension to the Claimant prior to the termination of
                the initial 45-day period. If, prior to the end of the first
                30-day extension period, the Vice President of Human Resources
                determines that, due to matters beyond his control, he cannot
                make a determination within the extension period, the period for
                making a determination may be extended for an additional 30
                days, provided that the Vice President of Human Resources
                provides the Claimant with a Notice of Extension prior to the
                expiration of the initial extension period. In the event the
                Vice President of Human Resources extends the determination
                period of any claim due to a Claimant's failure to submit
                information necessary to decide the claim, the period for making
                the determination shall be tolled from the date the Notice of
                Extension is sent to the Claimant until the date the Vice
                President of Human Resources receives the information. If a
                claim is denied in whole or in part, the Vice President of Human
                Resources shall adopt a written opinion, using language
                calculated to be understood by the Claimant, setting forth to
                the extent applicable:

                (i)     The specific reasons for such denial;

                                      -18-
<PAGE>

                (ii)    Specific reference to pertinent provisions of this Plan
                        on which such denial is based;

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

                (iv)    Appropriate information as to the steps to be taken if
                        the Claimant wishes to submit the claim for review;

                (v)     The time limits for requesting a review under Section
                        8.2(d) and for review under Section 8.2(e) of this Plan;

                (vi)    A statement that the Claimant has the right to arbitrate
                        under Section 8.3 of this Plan and to bring a civil
                        action under Section 502(a) of ERISA following an
                        adverse determination on review;

                (vii)   The date by which an appeal must be filed with respect
                        to the adverse determination; and

                (viii)  If the adverse determination is in connection with a
                        Disability claim and if the Vice President of Human
                        Resources relied on an internal rule, guideline,
                        protocol, or other similar criterion in making the
                        adverse determination, the Notice shall either (i) state
                        the specific rule, guideline, protocol, or other similar
                        criterion, or (ii) include a statement that such
                        internal rule, guideline, protocol, or other similar
                        criterion was relied upon in making the adverse
                        determination and that a copy of such internal rule,
                        guideline, protocol, or other similar criterion shall be
                        provided free of charge to the Claimant upon request.

        (c)     NOTICE OF EXTENSION. For purposes of this Section 8.2, a "Notice
                of Extension" means a notice provided to a Claimant that
                indicates (i) the date the notice is sent to the Claimant, (ii)
                the special circumstances requiring an extension of time, and
                (iii) the date by which the Vice President of Human Resources or
                the Plan Administrator, as the case may be, expects to render
                the determination. In the case of a Disability claim, the Notice
                shall also (i) explain the standards on which entitlement to
                benefits is based, (ii) explain the unresolved issues that
                prevent a decision on the claim, (iii) specify the additional
                information needed to resolve those issues, if any, and (iv)
                provide the Claimant with at least 45 days to provide the
                specified information. If the Notice of Extension is in
                connection with a Claimant's failure to submit information
                necessary to decide the claim, the Notice shall also state that
                the determination period is tolled from the date the Notice is
                sent until the date the Vice President of Human Resources or the
                Plan Administrator, as the case may be, receives the
                information.

        (d)     REQUEST FOR REVIEW. The Claimant may request in writing no later
                than 60 days from the date the notice provided under Section
                8.2(b) of this Plan is

                                      -19-
<PAGE>

                sent to the Claimant that the Plan Administrator review the
                determination of the Vice President of Human Resources. Such
                request must be addressed to the Plan Administrator at its then
                principal place of business. The date an appeal is filed shall
                be the date the Plan Administrator receives the written request
                from the Claimant, without regard to whether all the information
                necessary to make a benefit determination is filed with such
                request. The Plan Administrator shall issue its written decision
                on each appeal no later than the date of the regularly scheduled
                meeting of the Plan Administrator that immediately follows the
                Claimant's request for a review, unless the request for review
                is filed within 30 days preceding the date of such meeting, in
                which event the Plan Administrator shall make a determination no
                later than the date of the second regularly scheduled meeting of
                the Plan Administrator following the receipt of the request for
                review by the Plan Administrator. If special circumstances (such
                as the need to hold a hearing or obtain additional information)
                require an extension of the time for processing the appeal, the
                Plan Administrator shall issue its decision as soon as possible
                but not later than the Board of Director's third regularly
                scheduled meeting after the date on which the appeal is filed.
                The Plan Administrator shall provide a Claimant with a written
                Notice of Extension prior to the commencement of the extension.
                If the Vice President of Human Resources denies a Disability
                claim in whole or in part, a request for review must be filed
                with the Plan Administrator no later than 180 days from the date
                the notice provided under Section 8.2(b) is sent to the
                Claimant. The Plan Administrator shall issue its written
                decision on each appeal of a Disability claim within 45 days
                after the receipt thereof, unless special circumstances (such as
                the need to hold a hearing or obtain additional information)
                require an extension of the time for processing the appeal, in
                which event the Plan Administrator shall issue its decision as
                soon as possible but not later than 90 days from the date the
                appeal is filed. If the Plan Administrator determines that an
                extension of time for processing is required, a Notice of
                Extension shall be provided to the Claimant prior to the
                termination of the 45-day period. In the event the Plan
                Administrator requires an extension of time to make its
                determination due to a Claimant's failure to submit information
                necessary to decide a claim, the period for making a benefit
                determination shall be tolled from the date the Notice of
                Extension is sent to the Claimant until the date the Plan
                Administrator receives the information. If the Claimant does not
                request a review of the adverse determination within the
                applicable time limitations, he or she shall be barred and
                estopped from challenging the determination.

        (e)     REVIEW OF DECISION. The Plan Administrator shall provide the
                Claimant an opportunity to submit written comments, documents,
                records, and other information relating to the claim for
                benefits. The Plan Administrator shall review and 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 Claimant shall be provided
                upon request and free of charge, reasonable access to, and
                copies of, all documents, records, and other

                                      -20-
<PAGE>

                information relevant to the Claimant's claim for benefits. A
                document, record, or other information shall be considered
                relevant for purposes of the preceding sentence if such
                document, record, or information was (i) relied upon by the Vice
                President of Human Resources in making the benefit
                determination, (ii) was submitted, considered, or generated in
                the course of making the benefit determination, without regard
                to whether such document, record, or other information was
                relied upon by the Vice President of Human Resources in making
                the benefit determination, or (iii) demonstrates compliance with
                the administrative processes and safeguards required under
                Department of Labor Regulation Section 2560.501-1. In addition,
                in the event of an adverse determination of a Disability claim,
                (i) any member of the Plan Administrator who is either the Vice
                President of Human Resources who issued the initial adverse
                determination or a subordinate of such individual shall not
                participate with the Plan Administrator for purposes of the
                review of such claim, and (ii) the Plan Administrator shall not
                provide any deference to the initial adverse determination of
                the Vice President of Human Resources. If the appeal of a
                Disability claim is based in whole or in part on a medical
                judgment, the Plan Administrator shall consult with a health
                care professional who has appropriate training and experience in
                the field of medicine involved in the medical judgment. Any
                health care professional the Plan Administrator engages for
                purposes of such consultation shall be an individual who is
                neither an individual who was consulted in connection with the
                adverse benefit determination that is the subject of the appeal
                nor the subordinate of any such individual. The Vice President
                of Human Resources shall provide the identification of the
                medical or vocational experts whose advice was obtained on
                behalf of the Plan in connection with the Claimant's adverse
                benefit determination, without regard to whether the advice was
                relied upon by the Vice President of Human Resources in making
                the adverse determination.

        (f)     ADVERSE BENEFIT DETERMINATION ON APPEAL-INFORMATION ACCESS. In
                the event of an adverse benefit determination by the Plan
                Administrator, the Plan Administrator shall provide the Claimant
                access to, and copies of, documents, records, and other
                information relating to the adverse benefit determination on
                appeal, whether or not such information was relied on by the
                Plan Administrator in reaching a determination on the claim.

        (g)     NOTICE OF AN ADVERSE BENEFIT DETERMINATION ON APPEAL. If the
                claim is granted on review, the Plan Administrator shall provide
                the Claimant written notice of such determination and the
                appropriate distribution, adjustment, or other action shall be
                made or taken within a reasonable period of time. If the Plan
                Administrator denies the claim in whole or in part, the Plan
                Administrator shall provide the Claimant with written
                notification of its determination as soon as possible, but no
                later than 5 days after the adverse benefit determination is
                made. The written notice issued by the Plan Administrator shall
                set forth, in a manner calculated to be understood by the
                Claimant, the following:

                                      -21-
<PAGE>

                (i)     The specific reasons for the adverse determination;

                (ii)    The specific references to the pertinent Plan provisions
                        on which the decision is based;

                (iii)   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 to the Claimant's claim for
                        benefits; and

                (iv)    A statement of the Claimant's right to arbitrate under
                        Section 8.3 of this Plan and to bring a civil action
                        under Section 502(a) of ERISA.

                If the adverse benefit determination is in connection with a
                Disability claim, the notice shall also provide the following:

                (v)     If the Plan Administrator relied on an internal rule,
                        guideline, protocol, or other similar criterion in
                        making the adverse determination, the notice shall
                        either (i) state the specific rule, guideline, protocol,
                        or other similar criterion, or (ii) include a statement
                        that such internal rule, guideline, protocol, or other
                        similar criterion was relied upon in making the adverse
                        determination and that a copy of such internal rule,
                        guideline, protocol, or other similar criterion shall be
                        provided free of charge to the Claimant upon request;
                        and

                (vi)    The following statement: "You and your plan may have
                        other voluntary alternative dispute resolution options,
                        such as mediation. One way to find out what may be
                        available is to contact your local U.S. Department of
                        Labor Office and your State insurance regulatory
                        agency."

8.3.    ARBITRATION. Any claim or controversy between the parties which the
        parties are unable to resolve themselves, and which is not resolved
        through the claims procedure set forth in Section 8.2, including any
        claim arising out of a Participant's employment or the termination of
        that employment, and including any claim arising out of, connected with,
        or related to the formation, interpretation, performance or breach of
        any provision of this Plan, and any claim or dispute as to whether a
        claim is subject to arbitration, shall be submitted to and resolved
        exclusively by expedited arbitration by a single arbitrator in
        accordance with the following procedures:

        (a)     In the event of a claim or controversy subject to this
                arbitration provision, the complaining party shall promptly send
                written notice to the other party identifying the matter in
                dispute and the proposed remedy. Following the giving of such
                notice, the parties shall meet and attempt in good faith to
                resolve the matter. In the event the parties are unable to
                resolve the matter within 21 days, the parties shall meet and
                attempt in good faith to select a single arbitrator acceptable
                to both parties. If a single arbitrator is not selected by
                mutual consent within 10 business days following the giving of

                                      -22-
<PAGE>

                the written notice of dispute, an arbitrator shall be selected
                from a list of nine persons each of whom shall be an attorney
                who is either engaged in the active practice of law or a
                recognized arbitrator and who, in either event, is experienced
                in serving as an arbitrator in disputes between employers and
                employees, which list shall be provided by the main Orange
                County office of the American Arbitration Association ("AAA") or
                of the Federal Mediation and Conciliation Service. If, within
                three business days of the parties' receipt of such list, the
                parties are unable to agree upon an arbitrator from the list,
                then the parties shall each strike names alternatively from the
                list, with the first to strike being determined by the flip of a
                coin. After each party has had four strikes, the remaining name
                on the list shall be the arbitrator. If such person is unable to
                serve for any reason, the parties shall repeat this process
                until an arbitrator is selected.

        (b)     Unless the parties agree otherwise, within 60 days of the
                selection of the arbitrator, a hearing shall be conducted before
                such arbitrator at a time and a place in Orange County agreed
                upon by the parties. In the event the parties are unable to
                agree upon the time or place of the arbitration, the time and
                place within Orange County shall be designated by the arbitrator
                after consultation with the parties. Within 30 days of the
                conclusion of the arbitration hearing, the arbitrator shall
                issue an award, accompanied by a written decision explaining the
                basis for the arbitrator's award.

        (c)     In any arbitration hereunder, the Corporation shall pay all
                administrative fees of the arbitration and all fees of the
                arbitrator, except that the Participant or Beneficiary may, if
                he wishes, pay up to one-half of those amounts. Each party shall
                pay its own attorneys' fees, costs, and expenses, unless the
                arbitrator orders otherwise. The prevailing party in such
                arbitration, as determined by the arbitrator, and in any
                enforcement or other court proceedings, shall be entitled, to
                the extent permitted by law, to reimbursement from the other
                party for all of the prevailing party's costs (including but not
                limited to the arbitrator's compensation), expenses, and
                attorneys' fees. The arbitrator shall have no authority to add
                to or to modify this Plan, shall apply all applicable law, and
                shall have no lesser and no greater remedial authority than
                would a court of law resolving the same claim or controversy.
                The arbitrator shall, upon an appropriate motion, dismiss any
                claim without an evidentiary hearing if the party bringing the
                motion establishes that it would be entitled to summary judgment
                if the matter had been pursued in court litigation. The parties
                shall be entitled to reasonable discovery subject to the
                discretion of the arbitrator.

        (d)     The decision of the arbitrator shall be final, binding, and
                non-appealable, and may be enforced as a final judgment in any
                court of competent jurisdiction.

        (e)     This arbitration provision of the Plan shall extend to claims
                against any parent, subsidiary, or affiliate of each party, and,
                when acting within such capacity, any officer, director,
                shareholder, Participant, Beneficiary, or agent of each party,
                or of any of the above, and shall apply as well to claims
                arising

                                      -23-
<PAGE>

                out of state and federal statutes and local ordinances as well
                as to claims arising under the common law or under this Plan.

        (f)     Notwithstanding the foregoing, and unless otherwise agreed
                between the parties, either party may, in an appropriate matter,
                apply to a court for provisional relief, including a temporary
                restraining order or preliminary injunction, on the ground that
                the arbitration award to which the applicant may be entitled may
                be rendered ineffectual without provisional relief.

        (g)     Any arbitration hereunder shall be conducted in accordance with
                the employee benefit plan claims rules and procedures of the AAA
                then in effect; provided, however, that, (i) all evidence
                presented to the arbitrator shall be in strict conformity with
                the legal rules of evidence, and (ii) in the event of any
                inconsistency between the employee benefit plan claims rules and
                procedures of the AAA and the terms of this Plan, the terms of
                this Plan shall prevail.

        (h)     If any of the provisions of this Section 8.3 are determined to
                be unlawful or otherwise unenforceable, in whole or in part,
                such determination shall not affect the validity of the
                remainder of this Section 8.3, and this Section 8.3 shall be
                reformed to the extent necessary to carry out its provisions to
                the greatest extent possible and to insure that the resolution
                of all conflicts between the parties, including those arising
                out of statutory claims, shall be resolved by neutral, binding
                arbitration. If a court should find that the provisions of this
                Section 8.3 are not absolutely binding, then the parties intend
                any arbitration decision and award to be fully admissible in
                evidence in any subsequent action, given great weight by any
                finder of fact, and treated as determinative to the maximum
                extent permitted by law.

        (i)     In the case of a Disability claim, the timeframes provided for
                an appeal under Section 8.2 of this Plan shall apply for
                purposes of this Section 8.3. Arbitration of a Disability claim
                under this Section 8.3 shall (i) be considered one of the two
                levels of mandatory appeals permitted under Department of Labor
                Regulation Section 2560.503-1 and (ii) shall not preclude the
                Claimant from challenging the decision of the arbitrator under
                Section 502(a) of ERISA.

8.4.    NOTICE. Any notice, consent or demand required or permitted to be given
        under the provisions of this Plan shall be in writing and shall be
        signed by the party giving or making the same. If such notice, consent
        or demand is mailed, it shall be sent by United States certified mail,
        postage prepaid, addressed to the addressee's last known address as
        shown on the records of the Corporation. The date of such mailing shall
        be deemed the date of notice consent or demand. Any person may change
        the address to which notice is to be sent by giving notice of the change
        of address in the manner aforesaid.

                                      -24-
<PAGE>

                                   ARTICLE 9

                            AMENDMENT OR TERMINATION

9.1.    AMENDMENT OR TERMINATION.

        (a)     This Plan may be amended or terminated by the Corporation at any
                time, without notice to or consent of any person, pursuant to
                resolutions adopted by its Board of Directors. Any such
                amendment or termination shall take effect as of the date
                specified therein and, to the extent permitted by law.

                However, no such amendment or termination shall reduce:

                (i)     the amount then credited to the Participant's Deferral
                        Account, or

                (ii)    his or her vested percentage under Section 5.1.

        If the Plan is terminated, benefits will be distributed in one lump sum.

        (b)     Any other provision of this Plan to the contrary
                notwithstanding, the Plan may be amended by the Corporation at
                any time, to the extent that, in the opinion of the Corporation,
                such amendment shall be necessary in order to ensure that the
                Plan will be characterized as a plan maintained for a select
                group of management or highly compensated employees, as
                described in sections 201(2), 301(a)(3) and 401(a)(1) of ERISA,
                or to conform the Plan to the requirements of any applicable
                law, including ERISA and the Code. No such amendment shall be
                considered prejudicial to any interest of a Participant or
                Beneficiary hereunder.

                                   ARTICLE 10

                                    THE TRUST

10.1.   ESTABLISHMENT OF TRUST. The Corporation shall establish a grantor trust,
        of which the Corporation is the grantor, within the meaning of subpart
        E, part I, subchapter J, subtitle A of the Code, to pay benefits under
        this Plan (the "Trust").

10.2.   INTERRELATIONSHIP OF THE PLAN AND THE TRUST. The provisions of the Plan
        shall govern the rights of a Participant to receive distributions
        pursuant to the Plan. The provisions of the Trust shall govern the
        rights of the Participant and the creditors of the Corporation to the
        assets transferred to the Trust. The Corporation shall at all times
        remain liable to carry out its obligations under the Plan. The
        Corporation's obligations under the Plan may be satisfied with Trust
        assets distributed pursuant to the terms of the Trust.

10.3.   CONTRIBUTION TO THE TRUST. Amounts may be contributed by the Corporation
        to the Trust in the sole discretion of the Corporation.

                                      -25-
<PAGE>

                                   ARTICLE 11

                                  MISCELLANEOUS

11.1.   GOVERNING LAW. The Plan and the rights and obligations of all persons
        hereunder shall be governed by and construed in accordance with the laws
        of the State of California, other than its laws regarding choice of law,
        to the extent that such state law is not preempted by federal law.

11.2.   WITHHOLDING. Any and all payments to be made to Participant or
        Participant's Beneficiaries pursuant to this Plan shall be subject to
        all federal, state and local income and employment taxes and such taxes
        may be withheld accordingly by the Corporation from benefits under this
        Plan or from salary, bonuses or other amounts due to the Participant as
        determined by the Plan Administrator.

        IN WITNESS WHEREOF, the Corporation has executed this Plan as of the day
and year above first written.

                                       The "Corporation"

                                       WILLIAM LYON HOMES

                                       By: /s/ Wade H. Cable
                                          --------------------------------------
                                          Wade H. Cable
                                          Title:  President and Chief Operating
                                                  ------------------------------
                                                  Officer
                                                  ------------------------------

                                      -26-
<PAGE>
                               WILLIAM LYON HOMES
                      EXECUTIVE DEFERRED COMPENSATION PLAN
                    PARTICIPANT ENROLLMENT AND ELECTION FORM

                                    EXHIBIT A

        This Agreement is entered into this ____day of February, 2002 between
WILLIAM LYON HOMES, hereinafter referred to as the "Corporation," and
_______________________, hereinafter referred to as the "Participant".

        I acknowledge that, as an Executive of the Corporation, I have been
offered an opportunity to participate in the Corporation's Executive Deferred
Compensation Plan for the Plan year beginning February 11, 2002. I am electing
the alternatives set forth as indicated below:

I.      ELECTION TO DEFER
        (Please check all that apply)

        [ ]  I WILL participate in the Corporation's Executive Deferred
             Compensation Plan for the forthcoming Plan Year and duly authorize
             the Corporation to make the appropriate deductions from my
             paycheck.

I hereby elect to defer receipt of salary and/or bonus for the forthcoming Plan
Year as set forth below (up to a maximum of 20% of base salary and bonus, but
not less than $10,000):

     [ ] ____% or $________ of my base annual salary to be withdrawn from my
         salary in equal amounts during the rest of the year.

     [ ] ____% or $________ of my bonus which is determined by the Compensation
         Committee of the Corporation's Board of Directors after my election, to
         be withdrawn as applicable during the year.

     [ ] I will NOT participate in the Corporation's Executive Deferred
         Compensation Plan for the forthcoming Plan Year.

NOTE:  THIS ELECTION IS IRREVOCABLE FOR THE FORTHCOMING PLAN YEAR.

II.     DISTRIBUTION OF BENEFITS ELECTION (PER ARTICLE 5):
        (Please check one of A (Retirement Benefits) OR B (Fixed Payment Date
        Benefits)

                                      -27-
<PAGE>
[ ]     A. RETIREMENT OR DISABILITY BENEFITS.  I hereby elect to have my
        retirement or disability benefits distributed to me in the following
        manner:

        Distribution to be paid (check one):

        [ ]  Lump Sum

        [ ]  Monthly over 2 years

        [ ]  Monthly over 5 years

        [ ]  Monthly over 10 years

        [ ]  Monthly over 15 years

        [ ]  Monthly over 20 years

NOTE: THIS ELECTION MAY BE CHANGED BY THE PARTICIPANT BY GIVING WRITTEN NOTICE
TO THE CORPORATION NOT LATER THAN ONE YEAR BEFORE RETIREMENT OR DISABILITY.

[ ]     B. FIXED PAYMENT DATE BENEFITS. I hereby elect to have my fixed payment
        date benefits distributed to me in the following manner:

        Date for fixed payments to commence ____________________________ (This
        date may be no earlier than the January 1 of the third calendar year
        after the calendar year in which this election is made.

        Distribution to be paid (check one):

        [ ]  Lump Sum

        [ ]  Monthly over 2 years

        [ ]  Monthly over 5 years

        [ ]  Monthly over 10 years

        [ ]  Monthly over 15 years

        [ ]  Monthly over 20 years

NOTE: THIS ELECTION MAY BE CHANGED TO EXTEND THE PAYMENT DATE TO A LATER DATE SO
LONG AS (a) YOU MAKE THE ELECTION TO SO EXTEND THE DATE AT LEAST ONE YEAR BEFORE
THE ORIGINAL DATE, AND (b) THE EXTENDED DATE IS NO EARLIER THAN JANUARY 1 OF THE
THIRD CALENDAR YEAR AFTER YOU MAKE THE ELECTION TO EXTEND. SUCH DATES MAY NOT BE
ACCELERATED.

                                       PARTICIPANT

                                       -----------------------------------------
                                       [First Name] [Last Name]

                                      -28-
<PAGE>
                               WILLIAM LYON HOMES
                      EXECUTIVE DEFERRED COMPENSATION PLAN
                           DEEMED INVESTMENT ELECTIONS

                                    EXHIBIT B

This Agreement is entered into this _____ day of ________, 20___ between WILLIAM
LYON HOMES, hereinafter referred to as the "Corporation," and
____________________, hereinafter referred to as the "Participant."

Investment Elections

I elect to have my Deferral Account credited with a rate of return based on the
following Declared Rate(s). This Investment Election shall supersede any prior
election which I have made and shall continue until such time as I make a new
Investment Election in accordance with the terms of the Plan. (Investment
elections may be changed by a participant once a quarter and each account must
have at least a 10% allocation of the Participant's deferral.) Please see
accompanying material and prospectus for a detailed explanation of investment
options.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Investment Options                                        Participant Allocation
--------------------------------------------------------------------------------
<S>                                                       <C>
Hartford 40 Portfolio (Capital Preservation)              %
--------------------------------------------------------------------------------
Hartford 60 Portfolio (Balanced Income)                   %
--------------------------------------------------------------------------------
Hartford 80 Portfolio (Balanced Growth)                   %
--------------------------------------------------------------------------------
Hartford 100 Portfolio (Growth)                           %
--------------------------------------------------------------------------------
Hartford 120 Portfolio (Aggressive Growth)                %
--------------------------------------------------------------------------------
Bank of America Prime Rate plus 1%, adjusted quarterly    %
--------------------------------------------------------------------------------

                                                          TOTAL             100%
                                                                            ----
</TABLE>

                                       PARTICIPANT

                                       -----------------------------------------
                                       [First Name] [Last Name]

                                      -29-
<PAGE>
                               WILLIAM LYON HOMES
                      EXECUTIVE DEFERRED COMPENSATION PLAN
                           DESIGNATION OF BENEFICIARY

                                    EXHIBIT C

        TO:  WILLIAM LYON HOMES (hereinafter referred to as the "Corporation"),

In accordance with the rights granted to me in the William Lyon Homes Executive
Deferred Compensation Plan, between the Corporation and me, I do hereby
designate as Beneficiary thereunder to receive payments thereunder in the event
of my death:

        PRIMARY Beneficiary:
                            -----------------------------------------
        Relationship:
                       ----------------------------------------------
        1ST CONTINGENT Beneficiary:
                                    ---------------------------------
        Relationship:
                       ----------------------------------------------

I further reserve the privilege of changing the Beneficiary herein named at any
time or times without the consent of any such beneficiary.

        This designation is made upon the following terms and conditions:

1. The word "Beneficiary" as used herein shall include the plural,
Beneficiaries, wherever the Plan permits.

2. For purposes of this Beneficiary Designation, no person shall be deemed to
have survived the Participant if that person dies within thirty (30) days of the
Participant's death.

3. Beneficiary shall mean the Primary Beneficiary if such Primary Beneficiary
survives the Participant by at least thirty (30) days, and shall mean the 1st
Contingent Beneficiary if the Primary Beneficiary does not survive the
Participant by at least thirty (30) days.

4. If the Primary Beneficiary shall be deceased on any annual payment date
provided in said Agreement, any and all remaining annual payments shall be
payable to the 1st Contingent Beneficiary unless the executors or administrators
of said deceased Beneficiary are named as Primary Beneficiary hereinabove.

5. If more than one Beneficiary is named within the same class (i.e., Primary or
1st Contingent), then annual payments shall be made equally to such
Beneficiaries unless otherwise provided hereinabove. If any such Beneficiary
dies while receiving annual payments under said Agreement, any and all remaining
payments shall continue to be made to the surviving Beneficiaries of such class
and to the legal heirs of the deceased Beneficiary, which legal heirs shall
receive the amount which was being received by said deceased Beneficiary. If all
of the Beneficiaries of a class shall die, any and all remaining payments shall
be made to the next class of Beneficiaries, as provided under Paragraph 4 above.

6. If none of the Beneficiaries named hereinabove are living on any said annual
payment date, any and all remaining payments shall be made to my executors or
administrators, or upon their written request, to any person or persons so
designated by them.

7. If any such annual payments shall be payable to any trust, the Corporation
shall not be liable to see to the application by the Trustee of any payment
hereunder at any time, and may rely upon the sole signature of the Trustee to
any receipt, release or waiver, or to any transfer or other instrument to
whomsoever made purporting to affect this nomination or any right hereunder.

8. A Participant's Beneficiary designation shall be deemed automatically revoked
if the Participant names a spouse as Beneficiary and the marriage is later
dissolved or the spouse dies. Without limiting the generality of the foregoing,
the interest in the benefits hereunder of a spouse of a Participant who has
predeceased the Participant or whose marriage with the Participant has been
dissolved 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.

                                      -30-
<PAGE>
THIS DESIGNATION CANCELS AND SUPERSEDES ANY DESIGNATION OF BENEFICIARY
HERETOFORE MADE BY ME WITH RESPECT TO SAID PLAN AND THE RIGHT TO RECEIVE
PAYMENTS THEREUNDER.

Dated:
       --------------------------           ------------------------------------
                                            Executive

I am the spouse of the Participant/Executive named above. I have read and
understood the foregoing Designation of Beneficiary, and especially paragraph 8
thereof. I understand that the Plan does not permit the assignment of my
spouse's benefits to me in the event of the dissolution of my marriage. I also
understand that, even if my spouse names me as a Beneficiary, my rights may be
impaired in the event of the dissolution of my marriage or my death before my
spouse.

Dated:
       --------------------------------     ------------------------------------
                                            Spouse

Received this     day of         , 20       By:
              ---       ---------    --        ---------------------------------

                                      -31-
<PAGE>
                      ANNUAL ELECTION TO DEFER COMPENSATION
                                     FOR THE
                WILLIAM LYON EXECUTIVE DEFERRED COMPENSATION PLAN

       NOTE: TO BE EFFECTIVE, THIS ELECTION MUST BE DELIVERED TO THE HUMAN
            RESOURCES DEPARTMENT ON OR BEFORE DECEMBER 20, _______ .

Name of Participant:  ______________________________________________________

Social Security No.:  ___________________________

The undersigned employee hereby elects as follows:

1. The employee hereby elects to defer receipt of the following portion of
his/her salary and/or bonus (up to a maximum of 20% of base salary and bonus,
but not less than $10,000) otherwise payable by the Corporation in _______ .

Check appropriate box(es):

[ ]     $____________ or percent ______ % of SALARY
[ ]     The employee elects not to defer any salary for ________.

[ ]     $____________ or percent ______ % of BONUS
[ ]     The employee elects not to defer any bonus for ________.

2. The employee requests and authorizes the Corporation to credit the amount(s)
so deferred, and any corporate contribution(s), to the employee's Deferral
Account(s) under the Plan.

3. The employee understands and acknowledges that this Election will be
effective only for the following Plan Year. If the employee wishes to change
his/her deferral election in subsequent Plan Years, he/she must deliver a new
Election of Deferral form to the Human Resources Department of the Corporation
on or before December 20 of the year before the Plan Year when the deferral will
be effective.

4. IN WITNESS WHEREOF, this Agreement has been executed by the parties this
______ day of___________,_______.

-------------------------------                    ----------------------------
Witness                                            Employee

                                                   WILLIAM LYON HOMES

-------------------------------                    ----------------------------
Witness                                            Its Duly Authorized Officer

                                      -32-
<PAGE>
                     DEEMED INVESTMENT ELECTION CHANGE FORM
                                     FOR THE
             WILLIAM LYON HOMES EXECUTIVE DEFERRED COMPENSATION PLAN

                FOR THE PERIOD BEGINNING ______________________

-----------------------------------                  ---------------------------
Participant's Name                                   Social Security Number

-----------------------------------
Date Received

Method of Request:
[ ]  Phone        [ ]  Fax       [ ]  E-Mail        [ ] Other:
                                                              ------------------

I hereby request that my current period deferrals and existing account balances
be allocated as follows:
(Minimum allocation is 10% - total must equal 100%)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Investment Options                                        Participant Allocation
--------------------------------------------------------------------------------
<S>      <C>
Hartford 40 Portfolio (Capital Preservation)              %
--------------------------------------------------------------------------------
Hartford 60 Portfolio (Balanced Income)                   %
--------------------------------------------------------------------------------
Hartford 80 Portfolio (Balanced Growth)                   %
--------------------------------------------------------------------------------
Hartford 100 Portfolio (Growth)                           %
--------------------------------------------------------------------------------
Hartford 120 Portfolio (Aggressive Growth)                %
--------------------------------------------------------------------------------
Bank of America Prime Rate plus 1%, adjusted quarterly    %
--------------------------------------------------------------------------------
                                                          TOTAL             100%
                                                                            ----
</TABLE>

IMPORTANT: The Participant acknowledges that he/she has received information
regarding each of the above funds, including a copy of the prospectus. The
Participant further acknowledges that the Plan Administrator has discretion as
to whether his/her deferrals are actually invested in the funds selected above;
the Corporation is not obligated to acquire or hold any of the investments
selected above.

AGREED AND ACCEPTED BY THE PARTICIPANT

---------------------------------------              ---------------------------
Signature of Participant                             Date

AGREED AND ACCEPTED BY THE CORPORATION

---------------------------------------              ---------------------------
Signature of Corporation Officer                     Date

                                      -33-

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