RYLAND GROUP INC 10-K (Annual Reports) 2009-02-25

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United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
˝ Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
For the fiscal year ended December 31, 2008
or
o Transition Report Pursuant to Section 13 or 15(d) of the Exchange Act
For the transition period from to

Commission File Number 001-08029
THE RYLAND GROUP, INC.

(Exact name of registrant as specified in its charter)
Maryland 52-0849948
(State or other jurisdiction (I.R.S. employer identification no.)
of incorporation or organization)
24025 Park Sorrento, Suite 400, Calabasas, California 91302

(Address of principal executive offices)
Registrant's telephone number, including area code: (818) 223-7500
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered

Common stock, par value $1.00 per share New York Stock Exchange
Preferred stock purchase rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ˝ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No ˝
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes ˝ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act.
Large accelerated filer ˝ Accelerated filer o Non-accelerated filer o Smaller reporting company o
(Do not check if a smaller
reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o No ˝
The aggregate market value of the common stock of The Ryland Group, Inc. held by nonaffiliates of the registrant (41,666,759 shares) at
June 30, 2008, was $908,752,014. The number of shares of common stock of The Ryland Group, Inc. outstanding on February 12, 2009, was
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42,872,897.
DOCUMENTS INCORPORATED BY REFERENCE
Name of Document Location in Report

Proxy Statement for the 2009 Annual Meeting of Stockholders Part III

FORM 10-K
INDEX
ITEM NO.
PART I
Item 1. Business 4
Item 1A. Risk Factors 9
Item 1B. Unresolved Staff Comments 12
Item 2. Properties 12
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
PART II
Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities 12
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 16
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 33
Item 8. Financial Statements and Supplementary Data 34
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 65
Item 9A. Controls and Procedures 65
Item 9B. Other Information 65
PART III
Item 10. Directors, Executive Officers and Corporate Governance 66

Item 11. Executive Compensation 67
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 67
Item 13. Certain Relationships and Related Transactions, and Director Independence 67
Item 14. Principal Accounting Fees and Services 67
PART IV
Item 15. Exhibits, Financial Statement Schedules 67
SIGNATURES 72
INDEX OF EXHIBITS 73
PART I
Item 1. Business
With headquarters in Southern California, The Ryland Group, Inc., a Maryland corporation (the "Company"), is one of the nation's largest
homebuilders and a mortgage-finance company. The Company is traded on the New York Stock Exchange ("NYSE") under the symbol "RYL."
Founded in 1967, the Company has built more than 280,000 homes. In addition, Ryland Mortgage Company and its subsidiaries ("RMC") have
provided mortgage financing and related services for more than 235,000 homebuyers. The Company consists of six operating business
segments: four geographically determined homebuilding regions; financial services; and corporate.
The Company's operations span all significant aspects of the homebuying process—from design, construction and sale to mortgage
origination, title insurance, escrow and insurance services. The homebuilding operations are, by far, the most substantial part of its business,
comprising approximately 97 percent of consolidated revenues in fiscal year 2008. The homebuilding segments generate nearly all of their
revenues from the sale of completed homes, with a lesser amount from the sale of land and lots. In addition to building single-family detached
homes, the homebuilding segments also build attached homes, such as town homes, condominiums and some mid-rise buildings that share
common walls and roofs. The Company builds homes for entry-level buyers, as well as for first- and second-time move-up buyers. Its prices
generally range from $100,000 to more than $500,000, with the average price of a home closed during 2008 being $252,000. The financial
services segment offers mortgage, title, escrow and insurance services to the Company's homeowners and subcontractors.
The Company has traditionally concentrated on expanding its operations by investing its available capital in both existing and new markets.
The Company focuses on achieving a high return on invested capital and establishing profitable operations in every one of its markets. New
and existing communities are evaluated based on return, profitability, and cash flow benchmarks, and both senior and local management are
incentivized based on their ability to achieve such returns. Management monitors the land acquisition process, sales revenues, margins and
returns achieved in each of the Company's markets as part of its capital evaluation process. (See discussion in Part I, Item 1A, "Risk Factors.")
The Company is highly diversified throughout the United States and attempts to have no more than 10 percent of its deployed capital
allocated to any given market. It believes diversification not only minimizes its exposure to economic and market fluctuations, but also
enhances its growth potential. Capital is strategically allocated to avoid concentration in any given geographic area and to reduce the risk
associated with excessive dependence on local market anomalies. Subject to macroeconomic and local market conditions, the Company
generally tries to either manage its exposure or to expand its presence in its existing markets in an effort to be among the largest builders in
each of those markets. It may continue diversification by selectively entering new markets, primarily through establishing start-up or satellite
operations in markets near its existing divisions.
The Company's national scale has provided opportunities for negotiation of volume discounts and rebates from material suppliers.
Additionally, it has access to a lower cost of capital due to the strength and transparency of its balance sheet, as well as to its banking and
capital markets relationships. While the Company's operating margins have suffered significantly in the current economic climate, the
Company believes that economies of scale and diversification have contributed to improvements in its operating margins during periods of
growth and mitigated its overall risk in most periods of declining housing demand.
Committed to product innovation, the Company conducts ongoing research into consumer preferences and trends. It is constantly adapting
and improving its house plans, design features, customized options and mortgage programs. It strives to offer value, selection, location and
quality to all homebuyers.
The Company is dedicated to building quality homes and customer relationships. With customer satisfaction as a major priority, it continues
to make innovative enhancements designed to attract homebuyers. The Company continues to develop its ability to collect customer feedback
via its Web site, which includes online systems for tracking requests, processing issues and improving customer interaction. In addition, it
uses a third party to analyze customer feedback in order to better serve its homebuyers' needs.
The Company enters into land development joint ventures, from time to time, as a means of building lot positions, reducing its risk profile and
enhancing its return on capital. It periodically partners with developers, other homebuilders or financial investors to develop finished lots for
sale to the joint ventures' members or other third parties.
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Aside from being an added value to customers, the financial services segment generates a profit for the Company while reducing its risk. A
competitively high capture rate for mortgage financing and other services allows the Company to monitor its backlog and closing process.
Risk is further reduced because the majority of loans originated are sold within one business day of the date they close. The third party
purchaser then services and manages the loans, assuming nearly all of the credit risk of borrower default.
Homebuilding
General
The Company's homes are built on-site and marketed in four major geographic regions, or segments. The Company operated in the following
metropolitan areas at December 31, 2008:
Region/Segment Major Markets Served

North Baltimore, Chicago, Delaware, Indianapolis, Minneapolis and Washington, D.C.
Southeast Atlanta, Charleston, Charlotte, Jacksonville, Myrtle Beach, Orlando and Tampa
Texas Austin, Dallas, Houston and San Antonio
West California's Central Valley, California's Coachella Valley, California's Inland Empire, Denver, Las Vegas
and Phoenix
The Company has decentralized operations to provide more flexibility to its local division presidents and management teams. Its homebuilding
divisions across the country generally consists of a division president, a controller and other management personnel focused on land
entitlement, acquisition and development, sales, construction, customer service, and purchasing; as well as accounting and administrative
personnel. The Company's operations in each of its homebuilding markets may differ due to a number of market-specific factors. These factors
include regional economic conditions and job growth; land availability and local land development; consumer preferences; competition from
other homebuilders; and home resale activity. The Company not only considers each of these factors upon entering into new markets, but also
in determining the extent of its operations and capital allocation in existing markets. The Company's local management teams are familiar with
these factors, and their market experience and expertise are critical in making decisions regarding local operations.
The Company provides oversight and centralizes key elements of its homebuilding business through its corporate and regional offices. The
Company has two regional offices, each generally consisting of a region president; vice president of financial operations; and additional
management personnel focused on human resources, real estate legal support, marketing and operations. Regional offices provide oversight
and standardization where appropriate. The staff in these offices monitors activities by using various operational metrics in order to achieve
Company return benchmarks.
The Company markets attached and detached single-family homes, which are generally targeted to entry-level and first- and second-time
move-up buyers. Its diverse product line is tailored to the local styles and preferences found in each of its geographic markets. The product
line offered in a particular community is determined in conjunction with the land acquisition process and is dependent upon a number of
factors, including consumer preferences, competitive product offerings and development costs. Architectural services are generally
outsourced to increase creativity and to ensure that the Company's home designs are consistent with local market trends.
Homebuyers are able to customize certain features of their homes by selecting from numerous options and upgrades displayed in the
Company's model homes and design centers. These design centers, which are conveniently located in most of the Company's markets, also
represent an increasing source of additional revenue and profit for the Company. Custom options contributed approximately 17.0 percent of
revenues in 2008 and resulted in significantly higher margins in comparison to base homes.
Land Acquisition and Development
The Company's long-term objective is to control a portfolio of building lots sufficient to meet its anticipated homebuilding requirements for a
period of approximately four to five years. The Company acquires land only after completing due diligence and feasibility studies. The land
acquisition process is controlled by a corporate land approval committee to help ensure that transactions meet the Company's standards for
financial performance and risk. In the ordinary course of its homebuilding business, the Company utilizes both direct acquisition and option
contracts to control building lots for use in the sale and construction of homes. The Company's direct land acquisition activities include the
purchase of finished lots from developers and the purchase of undeveloped entitled land from third parties. The Company generally does not
purchase unentitled or unzoned land.
5
Although control of lot inventory through the use of option contracts minimizes the Company's investment, such a strategy is not viable in
certain markets due to the absence of third-party land developers. In other markets, competitive conditions may prevent the Company from
controlling quality lots solely through the use of option contracts. In such situations, the Company may acquire undeveloped entitled land
and/or finished lots on a bulk basis. The Company utilizes the selective development of land to gain access to prime locations, increase
margins and position itself as a leader in the area through its influence over a community's character, layout and amenities. After determining
the size, style, price range, density, layout and overall design of a community, the Company obtains governmental and other approvals
necessary to begin the development process. Land is then graded; roads, utilities, amenities and other infrastructures are installed; and the
individual home sites are created.
Materials Costs
Substantially all materials used in construction are available from a number of sources but may fluctuate in price due to various factors. To
increase purchasing efficiencies, the Company not only standardizes certain building materials and products, but also acquires such products
through national supply contracts. The Company has, on occasion, experienced shortages of certain materials. If shortages were to occur in
the future, such shortages could result in longer construction times and higher costs than those experienced in the past.
Construction
Substantially all on-site construction is performed for a fixed price by independent subcontractors selected on a competitive-bid basis. The
Company generally requires a minimum of three competitive bids for each phase of construction. Construction activities are supervised by the
Company's production team, which schedules and coordinates subcontractor work, monitors quality and ensures compliance with local zoning
and building codes. The Company requires substantially all of its subcontractors to have workmans compensation insurance and general
liability insurance, including construction defect coverage. Construction time for homes depends on weather, availability of labor or
subcontractors, materials, home size, geological conditions and other factors. The duration of the home construction process is generally
between three and six months. The Company has an integrated financial and homebuilding management system that assists in scheduling
production and controlling costs. Through this system, the Company monitors construction status and job costs incurred for each home
during each phase of construction. The system provides for detailed budgeting and allows the Company to track and control actual costs,
versus construction bids, for each community and subcontractor. The Company has, on occasion, experienced shortages of skilled labor in
certain markets. If shortages were to occur in the future, such shortages could result in longer construction times and higher costs than those
experienced in the past.
The Company, its subcontractors and its suppliers maintain insurance, subject to deductibles and self-insured amounts, to protect against
various risks associated with homebuilding activities, including, among others, general liability, "all-risk" property, workmans compensation,
automobile and employee fidelity. The Company accrues for its expected costs associated with the deductibles and self-insured amounts,
when appropriate.
Marketing
The Company generally markets its homes to entry-level and first- and second-time move-up buyers through targeted product offerings in
each of the communities in which it operates. The Company's marketing strategy is determined during the land acquisition and feasibility stage
of a community's development. Employees and independent real estate brokers sell the Company's homes, generally by showing furnished
models. A new order is reported when a customer's sales contract has been signed by the homebuyer, approved by the Company and a
deposit is taken, subject to cancellation. The Company normally starts construction of a home when a customer has selected a lot, chosen a
floor plan and received preliminary mortgage approval. However, construction may begin prior to this in order to satisfy market demand for
completed homes and to facilitate construction scheduling and/or cost savings. Homebuilding revenues are recognized when home sales are
closed, title and possession are transferred to the buyer, and there is no significant continuing involvement from the homebuilder.
The Company advertises directly to potential homebuyers through the internet and in newspapers and trade publications, as well as with
marketing brochures and newsletters. It also uses billboards, radio and television advertising, and its Web site to market the location, price
range and availability of its homes. The Company also attempts to operate in conspicuously located communities that permit it to take
advantage of local traffic patterns. Model homes play a significant role in the Company's marketing efforts by not only creating an attractive
atmosphere, but also by displaying options and upgrades.
The Company's sales contracts typically require an earnest money deposit. The amount of earnest money required varies between markets and
communities. Additionally, buyers are generally required to pay additional deposits when they select
6
options or upgrades for their homes. Most of the Company's sales contracts stipulate that when homebuyers cancel their contracts with the
Company, it has the right to retain the homebuyers' earnest money and option deposits; however, its operating divisions may choose to
refund a portion of such deposits. The Company's sales contracts may also include contingencies that permit homebuyers to cancel and
receive a refund of their deposits if they cannot obtain mortgage financing at prevailing or specified interest rates within a specified time
period. The Company's contracts may also include other contingencies, such as the sale of an existing home. The length of time between the
signing of a sales contract for a home and delivery of the home to the buyer may vary, depending on customer preferences, permit approval
and construction cycles.
Customer Service and Warranties
The Company's operating divisions are responsible for pre-closing quality control inspections and responding to homebuyers' post-closing
needs. The Company believes that prompt and courteous acknowledgment of its homebuyers' needs during and after construction reduces
post-closing repair costs; enhances its reputation for quality and service; and ultimately leads to repeat and referral business.
The Company provides each homeowner with product warranties covering workmanship and materials for one year, certain mechanical
systems for two years and structural systems for ten years from the time of closing. The Company believes its warranty program meets or
exceeds terms customarily offered in the homebuilding industry. The subcontractors, who perform most of the actual construction, also
provide warranties on workmanship.
Seasonality
The Company experiences seasonal variations in its quarterly operating results and capital requirements. Historically, new order activity is
higher during the spring and summer months. This is primarily due to the preference of many homebuyers to act during those periods. As a
result, the Company typically has more homes under construction; closes more homes; and has greater revenues and better operating results
in the third and fourth quarters of a fiscal year. However, historical results are not necessarily indicative of current or future homebuilding
activities.
Financial Services
The Company's financial services segment provides mortgage-related products and services, as well as title, escrow and insurance services to
its homebuyers. The Company's financial services segment includes RMC, RH Insurance Company, Inc. ("RHIC"), LPS Holdings Corporation
and its subsidiaries ("LPS") and Columbia National Risk Retention Group, Inc. ("CNRRG"). By aligning its operations with the Company's
homebuilding segments, the financial services segment leverages this relationship to offer its lending services to homebuyers. In addition to
being a valuable asset to customers, the financial services segment generates a profit for the Company. Providing mortgage financing and
other services to its customers allows the Company to better monitor its backlog and closing process. The majority of loans originated are sold
within one business day of the date they close. The third party purchaser then services and manages the loans, assuming nearly all of the
credit risk of borrower default. In 2008, the Company entered into a mortgage warehouse facility in order to finance its mortgage loans and
increase the number of investors to which it sells the loans it originates. The Company also provided construction-related insurance to
subcontractors in its western markets through June 2008. Additionally, the financial services segment also offers insurance for liability risks,
specifically homeowners' structural warranty coverage, arising in connection with the homebuilding business of the Company.
Loan Origination
In 2008, RMC's mortgage origination operations consisted primarily of the Company's homebuilder loans, which were originated in connection
with the sale of the Company's homes. During the year, mortgage operations originated 5,634 loans, totaling $1.3 billion, of which 99.6 percent
was for purchases of homes built by the Company and the remaining amount was for either purchases of homes built by others, purchases of
existing homes or the refinancing of existing mortgage loans.
RMC arranges various types of mortgage financing, including conventional, Federal Housing Administration ("FHA") and Veterans
Administration ("VA") mortgages, with various fixed- and adjustable-rate features. RMC is approved to originate loans that conform to the
guidelines established by the Federal Home Loan Mortgage Corporation ("FHLMC") and the Federal National Mortgage Association
("FNMA"). The Company sells the loans it originates, along with the related servicing rights, to others.
7
Title and Escrow Services
Cornerstone Title Company, a wholly-owned subsidiary of RMC, doing business as Ryland Title Company, provides title services and acts as
a title insurance agent primarily for the Company's homebuyers. At December 31, 2008, it provided title services in Arizona, Colorado,
Delaware, Florida, Illinois, Indiana, Maryland, Minnesota, Nevada, Texas and Virginia. The Company also operated Ryland Escrow Company
until February 2008, which performed escrow and closing functions for the Company's homebuyers in California. During 2008, Ryland Title
Company and Ryland Escrow Company provided these services to 97.3 percent of the Company's homebuyers in the markets in which they
operate, compared to 96.8 percent during 2007.
Insurance Services
Ryland Insurance Services ("RIS"), a wholly-owned subsidiary of RMC, provides insurance services to the Company's homebuyers. At
December 31, 2008, RIS was licensed to operate in all of the states in which the Company's homebuilding segments operate. During 2008, it
provided insurance services to 49.5 percent of the Company's homebuyers, compared to 54.2 percent during 2007.
RHIC is a wholly-owned subsidiary of the Company that provided insurance services to the homebuilding segments' subcontractors in certain
markets. RHIC ceased providing such services, effective June 1, 2008. RHIC is registered and licensed under Section 431, Article 19 of the
Hawaii Revised Statutes and is required to meet certain minimum capital and surplus requirements. Additionally, no dividends may be paid
without prior approval of the Hawaii Insurance Commissioner.
CNRRG is a wholly-owned subsidiary of the Company and some of its affiliates. CNRRG was established to directly insure liability risks,
specifically homeowners' structural warranty coverage, arising in connection with the homebuilding business of the Company and its affiliates.
Corporate
Corporate is a non-operating business segment whose purpose is to support operations. Corporate departments are responsible for
establishing operational policies and internal control standards; implementing strategic initiatives; and monitoring compliance with policies
and controls throughout the Company's operations. Corporate acts as an internal source of capital and provides financial, human resource,
information technology, insurance, legal, marketing, national purchasing and tax compliance services. In addition, it performs administrative
functions associated with a publicly traded entity.
Real Estate and Economic Conditions
The Company is significantly affected by fluctuations in economic activity, interest rates and levels of consumer confidence. The effects of
these fluctuations differ among the various geographic markets in which the Company operates. Higher interest rates and the availability of
homeowner financing may affect the ability of buyers to qualify for mortgage financing and decrease demand for new homes. As a result,
rising interest rates generally will decrease the Company's home sales and mortgage originations. In addition, a continued decline in the
availability of mortgage products, due to the continued tightening of credit standards, negatively impacted the Company's ability to attract
homebuyers during 2008. The Company's business is also affected by local economic conditions, such as employment rates, consumer
confidence and housing demand, in the markets in which it operates. All of the Company's markets have experienced a significant decline in
housing demand.
Inventory risk can be substantial for homebuilders. The market value of land, lots and housing inventories fluctuates as a result of changing
market and economic conditions. The Company must continuously locate and acquire land not only for expansion into new markets, but also
for replacement and expansion of land inventory within current markets. The Company employs various measures designed to control
inventory risk, including a corporate land approval process and a continuous review by senior management. It cannot, however, assure that
these measures will avoid or eliminate this risk, and the Company has experienced substantial losses from inventory valuation adjustments and
write-offs in recent periods.
Competition
The Company competes in each of its markets with a large number of national, regional and local homebuilding companies. The strength and
expanded presence of national homebuilders, plus the viability of regional and local homebuilders, impacts the level of competition in many
markets. The Company also competes with other housing alternatives, including existing homes and rental properties. Principal competitive
factors in the homebuilding industry include price; design; quality; reputation; relationships with developers; accessibility of subcontractors;
availability and location of lots; and availability of customer financing. The Company's financial services segment competes with other
mortgage bankers to arrange financing
8
for homebuyers. Principal competitive factors include interest rates, fees and other features of mortgage loan products available to the
consumer.
Employees
At December 31, 2008, the Company had 1,303 employees. The Company considers its employee relations to be good. No employees are
represented by a collective bargaining agreement.
Web Site Access to Reports
The Company files annual, quarterly and special reports; proxy statements; and other information with the U.S. Securities and Exchange
Commission ("SEC") under the Exchange Act and the Securities Act of 1933, as amended (the "Securities Act"). Any document the Company
files may be read at the SEC's public reference room, Room 1580 at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC toll-free at 1-
800-SEC-0330 for information regarding its public reference room. The Company files information electronically with the SEC. The Company's
SEC filings are available from the SEC's Web site at www.sec.gov. Reports, proxy and information statements, and other information regarding
issuers that file electronically are readily obtainable there.
Stockholders, securities analysts and others seeking information about the Company's business operations and financial performance can
receive copies of its 2008 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to
those reports and other documents filed with the SEC, without charge, by contacting the Company's Corporate Secretary's office at (818) 223-
7500; by writing to The Ryland Group, Inc., Investor Relations, 24025 Park Sorrento, Suite 400, Calabasas, California 91302; or via e-mail at
investors@ryland.com. In addition, all filings with the SEC, news releases and quarterly earnings announcements, including live audio and
replays of the most recent quarterly earnings conference calls, can be accessed free of charge on the Company's Web site at www.ryland.com.
Information on the Company's Web site is not part of this report. The Company makes its Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act available on its Web site as soon as possible after it electronically files such material with, or furnishes it to, the SEC. To retrieve
any of this information, visit www.ryland.com, select "Investors" and scroll down the page to "SEC Filings." The Company uses its Web site
as one method for distributing information about the Company to the securities marketplace.
Item 1A. Risk Factors
The homebuilding industry is cyclical in nature and has experienced downturns, which have in the past and may in the future cause the
Company to incur losses in financial and operating results.
The Company is affected by the cyclical nature of the homebuilding industry which is sensitive to many factors, including fluctuations in
general and local economic conditions, interest rates, housing demand, employment levels, levels of new and existing homes for sale,
demographic trends, availability of homeowner financing and levels of consumer confidence. In 2008, the markets served by the Company and
the U.S. homebuilding industry as a whole continued to experience a significant and sustained decrease in demand for new homes and an
oversupply of new and existing homes available for sale. The homebuilding industry has been impacted by lack of consumer confidence,
housing affordability and large supplies of resale and new home inventories which has resulted in an industry-wide softening of demand for
new homes. In addition, an oversupply of alternatives to new homes, such as rental properties and existing homes, has depressed prices and
reduced margins for the sale of new homes. These trends resulted in overall fewer home sales, greater cancellations of home purchase
agreements by buyers, higher inventories of unsold homes and the increased use by homebuilders of discounts, incentives, price concessions
and other marketing efforts to close home sales in 2008 compared to the past several years. Reflecting these demand and supply trends, the
Company experienced a large drop in net orders, a decline in the selling price of new homes sold and a reduction in margins in 2008 relative to
prior years. The Company cannot predict how long these market conditions will continue and what affect they might have on the Company's
financial and operating performance.
Because almost all of the Company's homebuyers finance the purchase of their homes, the terms and availability of mortgage financing can
affect the demand for and the ability to complete the purchase of a home as well as the Company's future operating and financial results.
The Company's business and earnings depend on the ability of its homebuyers to obtain financing for the purchase of their homes. Many of
the Company's homebuyers must sell their existing homes in order to buy a home from the Company. During 2008, the mortgage lending
industry experienced significant instability due to, among other things, defaults on subprime loans and a resulting decline in the market value
of such loans. In light of these developments, lenders, investors, regulators and other third parties questioned the adequacy of lending
standards and other credit requirements for several loan programs made available to borrowers in recent years. This has led to tightened credit
requirements and reduced
9
liquidity. Deterioration in credit quality among subprime and other nonconforming loans has caused most lenders to eliminate subprime
mortgages and most other loan products that do not conform to Fannie Mae, Freddie Mac, FHA or VA standards. Fewer loan products and
tighter loan qualifications in turn make it more difficult for some categories of borrowers to finance the purchase of new homes or the purchase
of existing homes from potential move-up buyers who wish to purchase one of the Company's homes. In general, these developments have
resulted in a reduction in demand for the homes sold by the Company and have delayed any general improvement in the housing market.
Furthermore, they have resulted in a reduction in demand for the mortgage loans that the Company originates through RMC. If the Company's
potential homebuyers or the buyers of the homebuyers' existing homes cannot obtain suitable financing, the result will have an adverse effect
on the Company's operating and financial results and performance.
The Company is subject to inventory risk for its land, options for land, building lots and housing inventory.
The market value of the Company's land, building lots and housing inventories fluctuates as a result of changing market and economic
conditions. In addition, inventory carrying costs can result in losses in poorly performing projects or markets. Changes in economic and
market conditions have caused the Company to dispose of land, options for land and housing inventories on a basis that has resulted in a loss
and required the Company to write down or reduce the carrying value of its inventory. During the 12-month period ended December 31, 2008,
the Company decided not to pursue development and construction in certain areas where it held land or had made option deposits, which
resulted in $22.5 million in recorded write-offs of option deposits and preacquisition costs. In addition, market conditions led to recorded land-
related impairments on communities and land in the aggregate amount of $257.4 million during the same period. The Company can provide no
assurance that it will not need to record additional write-offs in the future.
In the course of its business, the Company makes acquisitions of land. Although it employs various measures, including its land approval
process and continued review by senior management designed to manage inventory risks, the Company cannot assure that these measures
will enable it to avoid or eliminate its inventory risk.
Construction costs can fluctuate and impact the Company's margins.
The homebuilding industry has from time to time experienced significant difficulties, including: shortages of qualified trades people; reliance
on local subcontractors who may be inadequately capitalized; shortages of materials; and volatile increases in the cost of materials,
particularly increases in the price of lumber, drywall and cement, which are significant components of home construction costs. The Company
may not be able to recapture increased costs by raising prices either because of market conditions or because it fixes its prices at the time
home sales contracts are signed.
Fluctuations in interest rates can affect the Company's business and profitability.
Interest rates can significantly affect the Company's lines of business. Higher interest rates affect the ability of buyers to qualify for mortgage
financing and decrease demand for new homes. As a result, rising interest rates can decrease the Company's home sales and mortgage
originations. Any of these factors could have an adverse impact on the Company's results of operations or financial position.
Because the homebuilding industry is competitive, the business practices of other homebuilders can have an impact on the Company's
financial results and cause these results to decline.
The residential housing industry is highly competitive. The Company competes in each of its markets with a large number of national, regional
and local homebuilding companies. In 2008, this competition caused the Company to adjust selling prices in response to competitive
conditions in the markets in which it operates and required the Company to increase selling incentives. We cannot predict whether these
measures will be successful or if additional incentives will be made in the future. The Company also competes with other housing alternatives,
including existing homes and rental housing. Principal competitive factors in homebuilding are home price, availability of customer financing,
design, quality, reputation, relationship with developers, accessibility of subcontractors, and availability and location of homesites. Any of the
foregoing factors could have an adverse impact on the Company's financial performance and results of operations.
The Company's financial services segment competes with other mortgage bankers to arrange financing for homebuyers. Principal competitive
factors include interest rates, fees and other features of mortgage loan products available to the consumer.
Because the Company's business is subject to various regulatory and environmental limitations, it may not be able to conduct its business
as planned.
The Company's homebuilding segments are subject to various local, state and federal laws, statutes, ordinances, rules and regulations
concerning zoning, building design, construction, stormwater permitting and discharge and similar matters, as well as open space, wetlands
and environmentally protected areas. These include local regulations that impose restrictive
10
zoning and density requirements in order to limit the number of homes that can be built within the boundaries of a particular area, as well as
other municipal or city land planning restrictions, requirements or limitations. The Company may also experience periodic delays in
homebuilding projects due to regulatory compliance, municipal appeals and other government planning processes in any of the areas in which
it operates.
With respect to originating, processing, selling and servicing mortgage loans, the Company's financial services segment is subject to the rules
and regulations of the FHA, FHLMC, FNMA, VA and U.S. Department of Housing and Urban Development. Mortgage origination activities
are further subject to the Equal Credit Opportunity Act, Federal Truth-in-Lending Act and the Real Estate Settlement Procedures Act and their
associated regulations. These and other federal and state statutes and regulations, prohibit discrimination and establish underwriting
guidelines which include provisions for audits, inspections and appraisals, require credit reports on prospective borrowers, fix maximum loan
amounts and require the disclosure of certain information concerning credit and settlement costs. The Company is required to submit audited
financial statements annually, and each agency or other entity has its own financial requirements. The Company's affairs are also subject to
examination by these entities at all times to assure compliance with applicable regulations, policies and procedures.
The Company's ability to grow the business and operations of the Company depends to a significant degree upon the Company's ability to
access capital on favorable terms.
The ability to access capital on favorable terms is an important factor in growing the Company's business and operations in a profitable
manner. In December 2007, Moody's lowered the Company's debt rating to non-investment grade with a negative outlook, and Standard &
Poor's also reduced the Company's investment grade rating to non-investment grade in May 2008. The Company has received additional
downgrades from these agencies and remains on negative watch. The loss of an investment grade rating affects the cost of borrowing,
capacity and covenants under the Company's revolving credit facility, and makes it more difficult and costly for the Company to access the
debt capital markets for funds that may be required to implement the Company's business plans and achieve growth objectives.
Natural disasters may have a significant impact on the Company's business.
The climates and geology of many of the states in which the Company operates present increased risks of natural disasters. To the extent that
hurricanes, severe storms, tornadoes, earthquakes, droughts, floods, wildfires or other natural disasters or similar events occur, its business in
those states may be adversely affected.
The Company's net operating loss carryforwards could be substantially limited if it experiences an ownership change as defined in the
Internal Revenue Code.
The Company has experienced and continue to experience substantial operating losses, including realized losses for tax purposes from sales of
inventory and land previously written down for financial statement purposes, which would produce net operating losses and unrealized losses
that may reduce potential future federal income tax obligations. It may also generate net operating loss carryforwards in future years.
Section 382 of the Internal Revenue Code contains rules that limit the ability of a company that undergoes an ownership change, which is
generally any change in ownership of more than 50.0 percent of its stock over a three-year period, to utilize its net operating loss carryforwards
and certain built-in losses recognized in years after the ownership change. These rules generally operate by focusing on ownership changes
among stockholders owning directly or indirectly 5.0 percent or more of the stock of a company and any change in ownership arising from a
new issuance of stock by the company.
If the Company undergoes an ownership change for purposes of Section 382 as a result of future transactions involving its common stock,
including purchases or sales of stock between 5.0 percent stockholders, the Company's ability to use its net operating loss carryforwards and
to recognize certain built-in losses would be subject to the limitations of Section 382. Depending on the resulting limitation, a significant
portion of the Company's net operating loss carryforwards could expire before it would be able to use them. The Company's inability to utilize
its net operating loss carryforwards could have a negative impact on its financial position and results of operations.
11
In December 2008, the Company announced that its Board of Directors adopted a stockholder rights plan designed to preserve stockholder
value and the value of certain tax assets primarily associated with net loss carryforwards and built in losses under Section 382 of the Internal
Revenue Code. The Company can provide no assurance that the rights plan will protect the Company's ability to use its net operating losses
and unrealized losses to reduce potential future federal income tax obligations. (See Note H, "Employee Incentive, Stock and Shareholder
Rights Plans.")
Because this report contains forward-looking statements, it may not prove to be accurate.
This report and other Company releases and filings with the SEC may contain forward-looking statements. The Company generally identifies
forward-looking statements using words like "believe," "intend," "expect," "may," "should," "plan," "project," "contemplate," "anticipate,"
"target," "estimate," "foresee," "goal," "likely," "will" or similar statements. Because these statements reflect its current views concerning
future events, they involve risks, uncertainties and assumptions, including the risks and uncertainties identified in this report. Actual results
may differ significantly from the results discussed in these forward-looking statements. The Company does not undertake to update its
forward-looking statements or risk factors to reflect future events or circumstances.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The Company leases office space for its corporate headquarters in Calabasas, California and for its IT Department and RMC's operations
center in Scottsdale, Arizona. In addition, the Company leases office space in the various markets in which it operates.
Item 3. Legal Proceedings
Contingent liabilities may arise from obligations incurred in the ordinary course of business or from the usual obligations of on-site housing
producers for the completion of contracts.
The Company is party to various other legal proceedings generally incidental to its businesses. Based on evaluation of these matters and
discussions with counsel, management believes that liabilities arising from these matters will not have a material adverse effect on the financial
condition of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the fiscal year ended December 31, 2008, there were no matters submitted to a vote of security holders.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market for Common Equity, Common Stock Prices and Dividends
The Company lists its common shares on the NYSE, trading under the symbol "RYL." The latest reported sale price of the Company's common
stock on February 12, 2009 was $17.49, and there were approximately 2,087 common stockholders of record.
The table below presents high and low market prices and dividend information for the Company.
DIVIDENDS DIVIDENDS
DEC LARED DECLARED
2008 HIGH LO W PER S HARE 2007 HIGH LOW P ER SHARE
First qu arte r $ 35.64 $ 20.25 $ 0.12 First quarter $60.13 $41.96 $ 0.12
S e con d quarte r 37.85 21.81 0.12 Second quarter 48.61 37.22 0.12
Th ird qu arte r 30.00 18.11 0.12 T hird quarter 39.33 20.19 0.12
Fourth qu arte r 27.75 9.95 0.03 Fourth quarter 29.67 19.51 0.12
12
Issuer Purchases of Equity Securities
The Company did not purchase any of its own equity securities during the year ended December 31, 2008.
On December 6, 2006, the Company announced that it had received authorization from its Board of Directors to purchase shares totaling
$175.0 million, or approximately 3.1 million shares, based on the Company's stock price on that date. During 2007, approximately 747,000 shares
had been repurchased in accordance with this authorization. At December 31, 2008, there were approximately 8.1 million additional shares
available for purchase in accordance with this authorization based on the Company's stock price on that date. This authorization does not
have an expiration date.
Performance Graph
The following performance graph and related information shall not be deemed "soliciting material" or be "filed" with the SEC, nor shall such
information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the
Company specifically incorporates it by reference into such filing.
The following graph compares the Company's cumulative total stockholder returns since December 31, 2003 to the Dow Jones U.S. Home
Construction and S&P 500 indices for the calendar years ending December 31:
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*

Among The Ryland Group, Inc., The S&P 500 Index
And The Dow Jones U.S. Home Construction Index
GRAPHIC
* $100 invested on 12/31/03 in stock or index-including reinvestment of dividends.
Securities Authorized for Issuance Under Equity Compensation Plans
The Company's equity compensation plan information as of December 31, 2008, is summarized as follows:
NUMBER O F S EC URITIES
REMAINING AVAILABLE FO R
FUTURE ISS UANC E UNDER
NUMBER O F S EC URITIES TO W EIGHTED-AVERAGE EQ UITY C O MPENS ATIO N
BE ISS UED UPO N EXERC ISE EXERC ISE PRIC E O F PLANS (EXC LUDING
O F O UTS TANDING O PTIO NS , O UTS TANDING O PTIO NS , S EC URITIES REFLEC TED IN
PLAN C ATEGO RY W ARRANTS AND RIGHTS W ARRANTS AND RIGHTS C O LUMN (a))
(a) (b) (c)
Equity compensation plans approved by stockholders 4,134,903 $ 37.97 2,518,606
Equity compensation plans not approved by

stockholders 1 – – –
1 The Com pany does not have any equity com pensation plans that have not been approved by stockholders.
13
Item 6. Selected Financial Data

(in m illions, except per share data) unaudited 2008 2007 2006 2005 2004
ANNUAL RES ULTS
REVENUES
Homebuilding $1,912 $2,960 $4,654 $4,726 $3,867
Financial services 64 92 126 117 107
T OT AL REVENUES 1,976 3,052 4,780 4,843 3,974
Cost of sales 2,003 3,034 3,640 3,538 2,970
(Earnings) loss from unconsolidated joint
ventures 44 – – – (6)
Selling, general and administrative 334 438 565 576 489
Expenses related to early retirement of debt 1 – 8 8 –
Earnings (loss) before taxes (406) (420) 567 721 521
T ax expense (benefit) (9) (86) 207 274 201
NET EARNINGS (LOSS) $ (397) $ (334) $ 360 $ 447 $ 320
YEAR-END PO S ITIO N
ASSET S
Cash and cash equivalents $ 423 $ 244 $ 215 $ 461 $ 88
Housing inventories 1,096 1,813 2,772 2,580 2,024
Other assets 344 494 430 346 313
T OT AL ASSET S 1,863 2,551 3,417 3,387 2,425
LIABILIT IES
Debt 790 839 950 922 559
Other liabilities and minority interest 348 587 956 1,089 809
T OT AL LIABILIT IES 1,138 1,426 1,906 2,011 1,368
ST OCKHOLDERS' EQUIT Y $ 725 $1,125 $1,511 $1,376 $1,057
PER C O MMO N S HARE DATA
NET EARNINGS (LOSS)
Basic $ (9.33) $ (7.92) $ 8.14 $ 9.52 $ 6.72
Diluted (9.33) (7.92) 7.83 9.03 6.36
DIVIDENDS DECLARED $ 0.39 $ 0.48 $ 0.48 $ 0.30 $ 0.21
ST OCKHOLDERS' EQUIT Y $16.97 $26.68 $35.46 $29.68 $22.32
O THER FINANC IAL DATA
Adjusted EBIT DA1 $ 33 $ 260 $ 744 $ 814 $ 604
Adjusted EBIT DA/interest incurred2 0.7X 4.2X 10.3X 12.2X 11.4X
Return on beginning equity3 (35.3)% (22.1)% 26.2% 42.3% 38.9%
Net debt-to-capital 4 33.6% 34.6% 32.7% 25.1% 30.8%
1 Earnings before interest, taxes, depreciation and am ortization and im pairm ents ("Adjusted EBITDA") is a m easure com m only used in the hom ebuilding
industry and is presented to assist in understanding the ability of the operations of the Com pany to generate cash beyond that which is needed to service
existing interest requirem ents and ongoing tax obligations. Adjusted EBITDA equals net earnings (loss) before (a) interest expense; (b) previously
capitalized interest am ortized to cost of sales; (c) incom e taxes; (d) depreciation and am ortization; and (e) inventory and other asset im pairm ent charges
and write-offs. Adjusted EBITDA is not a financial m easure recognized in accordance with generally accepted accounting principles ("GAAP"). Adjusted
EBITDA should neither be considered an alternative to net earnings determ ined in accordance with GAAP as an indicator of operating perform ance nor an
alternative to cash flows from operating activities determ ined in accordance with GAAP as a m easure of liquidity.
2 Adjusted EBITDA/interest incurred is calculated as Adjusted EBITDA (defined above) divided by total interest incurred, which is the sum of interest expense
and capitalized interest for the period.
3 Return on beginning equity is calculated as net earnings (loss) divided by total stockholders' equity at the beginning of the period.
4 Net debt-to-capital is calculated as debt, net of cash, divided by the sum of debt and total stockholders' equity, net of cash. The Com pany believes the net
debt-to-capital ratio is useful in understanding the leverage em ployed in its operations and in com paring it with other hom ebuilders.
14
The following table sets forth the computation of Adjusted EBITDA for each period presented:
YEAR ENDED DECEMBER 31,

(in thousands) 2008 2007 2006 2005 2004
Earnings (loss) before taxes $(405,764) $(420,098) $567,108 $721,051 $521,212
Inventory and other asset impairments and write-offs 325,480 583,363 81,314 3,798 1,588
Interest expense 220 98 205 738 1,227
Capitalized interest amortized to cost of sales 61,146 41,689 48,708 45,483 41,764
Depreciation and amortization 52,215 54,494 46,731 43,166 38,519
Adjusted EBIT DA $ 33,297 $ 259,546 $744,066 $814,236 $604,310
A reconciliation of Adjusted EBITDA to net cash provided by operations, the most directly comparable GAAP measure, is provided below for
each period presented:

(in thousands) 2008 2007 2006 2005 2004
Net cash provided by (used for) operating activities $ 248,426 $ 228,140 $ 14,637 $ 216,264 $ (78,471)
(Decrease) increase in inventories (383,237) (273,355) 263,444 494,769 587,150
T ax expense (benefit) (9,179) (86,572) 207,166 273,999 200,667
Deferred tax valuation allowance (143,784) (75,166) – – –
Interest expense 220 98 205 738 1,227
Capitalized interest amortized to cost of sales 61,146 41,689 48,708 45,483 41,764
Net change in other assets, payables and other liabilities 239,388 412,984 217,488 (175,358) (104,424)
Stock-based compensation expense (9,048) (12,257) (25,593) (18,862) (15,208)
Excess tax benefit from exercise of stock options and vesting of restricted stock 3,138 6,714 14,632 (30,505) (17,475)
Other 26,227 17,271 3,379 7,708 (10,920)
Adjusted EBIT DA $ 33,297 $ 259,546 $744,066 $ 814,236 $ 604,310
15
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Note: Certain statements in this Annual Report may be regarded as "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, and may qualify for the safe harbor provided for in Section 21E of the Exchange Act. These
forward-looking statements represent the Company's expectations and beliefs concerning future events, and no assurance can be given that
the results described in this Annual Report will be achieved. These forward-looking statements can generally be identified by the use of
statements that include words such as "anticipate," "believe," "estimate," "expect," "foresee," "goal," "intend," "likely," "may," "plan,"
"project," "should," "target," "will" or other similar words or phrases. All forward-looking statements contained herein are based upon
information available to the Company on the date of this Annual Report. Except as may be required under applicable law, the Company
does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise.
These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company's control,
that could cause actual results to differ materially from the results discussed in the forward-looking statements. The factors and
assumptions upon which any forward-looking statements herein are based are subject to risks and uncertainties which include, among
others:
• economic changes nationally or in the Company's local markets, including volatility and increases in interest rates, inflation,
continued weakness in consumer demand and confidence levels and the state of the market for homes in general;
• instability and uncertainty in the mortgage lending market, including revisions to underwriting standards for borrowers;
• the availability and cost of land and the future value of land held or under development;
• increased land development costs on projects under development;
• shortages of skilled labor or raw materials used in the production of houses;
• increased prices for labor, land and raw materials used in the production of houses;
• increased competition;
• failure to anticipate or react to changing consumer preferences in home design;
• increased costs and delays in land development or home construction resulting from adverse weather conditions;
• potential delays or increased costs in obtaining necessary permits as a result of changes to laws, regulations or governmental
policies (including those that affect zoning, density, building standards and the environment);
• delays in obtaining approvals from applicable regulatory agencies and others in connection with the Company's communities and
land activities;
• changes in the Company's effective tax rate and assumptions and valuations related to its tax accounts;
• the risk factors set forth in this Annual Report on Form 10-K; and
• other factors over which the Company has little or no control.
Results of Operations
Overview
Operating conditions became progressively worse during 2008 as the economy's decline accelerated late in the year, extending the industry's
downturn which began in 2006. Since the latter half of 2007, a lack of availability of mortgage products resulting from an industry-wide increase
in loan delinquency and foreclosure rates, as well as the related tightening of credit standards, has impacted the housing industry and the
Company's ability to attract qualified homebuyers. These factors have exacerbated already high inventory levels of new and resale homes,
increased cancellation levels and weakened consumer confidence. Demand pressure from foreclosures and unsettled credit markets continued
through 2008 while rising unemployment and declining consumer confidence slowed the decline in existing and new housing inventories.
Consequently, the Company continued to report declines in the volume of homes sold, decreases in prices, high sales contract cancellation
rates and as a result, recorded additional valuation adjustments. In an effort to compensate for these developments, it has continued its
operating strategy, focusing on cash generation and debt reduction through increased sales price discounts and other incentives;
opportunistic land sales; monetization of its deferred tax assets through consummation of transactions creating loss carrybacks to 2006;
reductions in excess inventory and existing commitments to purchase land through contract renegotiations and cancellations; controlled
development spending; renegotiations of contracts with subcontractors and suppliers; reductions in overhead expense to more closely match
projected volume levels; and repayment or repurchase of debt at a discount. As a result, the Company operated from 31.6 percent fewer active
communities in 2008 than in 2007, and its inventory of lots controlled as of December 31, 2008 was down 41.0 percent from a year ago. The
Company believes that access to traditional capital will be constrained in the early stages of a recovery and that lenders will migrate to
homebuilders with the strongest balance sheets. To insure that the Company participates in the initial stages of a recovery, it has formed a
limited liability company with Oaktree Capital, the purpose of which will be to jointly acquire and develop distressed and other residential real
estate assets. The Company believes that its cash balances, low net debt-to-capital ratio, manageable inventory pipelines, and early access to
liquidity and land will allow it to ultimately take advantage of opportunities that may arise facilitating accelerated growth and market share as
conditions improve.
16
Due to increased price reductions and sales incentives, evaluation of the Company's inventory through quarterly impairment analyses during
2008 resulted in $257.4 million of inventory valuation adjustments. Charges of $22.5 million related to the abandonment of land purchase option
contracts reflect the deterioration of specific related returns and the assumption that recent price reductions are indicative of price levels for
the foreseeable future. In addition, the Company recorded valuation allowances totaling $143.8 million against its deferred tax assets in
accordance with Statement of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." These assets were
largely the result of inventory impairments taken during the year and reflect uncertainty with regard to the duration of current conditions in
housing markets. Should the Company generate significant taxable income in future years, it will reverse the allowance in the form of a lower
effective income tax rate. Additionally, the Company evaluated the recoverability of its goodwill, which resulted in a $2.8 million impairment
charge during 2008. There was no remaining goodwill at December 31, 2008.
For the year ended December 31, 2008, the Company reported a consolidated net loss of $396.6 million, or $9.33 per diluted share, compared to
a net loss of $333.5 million, or $7.92 per diluted share, for 2007 and earnings of $359.9 million, or $7.83 per diluted share, for 2006. The decrease
in earnings over the past two years was due to a decline in revenues, inventory valuation adjustments and other write-offs resulting from
deteriorating market conditions, as well as from a more competitive sales environment in most markets.
Total revenues were $2.0 billion for the year ended December 31, 2008, compared to $3.1 billion for the same period in 2007, a decrease of
$1.1 billion, or 35.2 percent. This decrease was primarily due to a decline in closings, average closing price and mortgage originations. Total
revenues for 2007 decreased from 2006 levels by $1.7 billion, or 36.2 percent, primarily due to a decline in closing volume, average closing price
and mortgage originations. Homebuilding pretax operating margins were negative 20.2 percent for 2008, compared to negative 14.4 percent for
2007 and 12.3 percent for 2006. The decreases in margins were primarily due to increased price concessions and sales incentives in most
markets, as well as to inventory and other valuation adjustments and write-offs.
Adjusted EBITDA was $33.3 million for the year ended December 31, 2008, compared to $259.5 million and $744.1 million for the same periods
in 2007 and 2006, respectively. The Company's ratio of Adjusted EBITDA to interest incurred was 0.7 for the year ended December 31, 2008,
compared to 4.2 for 2007 and 10.3 for 2006. In an effort to position itself for competitive industry conditions in 2009, the Company generated
cash flow from its operations, in part, by reducing land acquisitions, development activity and its obligations to take down land in the future.
At December 31, 2008, it had 16,345 fewer lots under control, or a 41.0 percent decrease from year-end 2007.
Consolidated inventories owned by the Company, which include homes under construction; land under development and improved lots; and
inventory held-for-sale, declined 37.8 percent to $1.1 billion at December 31, 2008, from $1.7 billion at December 31, 2007. Homes under
construction decreased by 35.3 percent to $464.8 million at December 31, 2008, compared to $718.0 million at December 31, 2007. Land under
development and improved lots decreased by 42.4 percent to $547.3 million at December 31, 2008, compared to $949.7 million at December 31,
2007. Inventory held-for-sale decreased 0.4 percent and totaled $69.0 million at December 31, 2008, compared to $69.2 million at December 31,
2007.
The Company's balance sheet continues to reflect its conservative strategy and transparency. The Company ended the year with
$423.3 million in cash, $160.7 million in current taxes receivable, no borrowings against its revolving credit facility and no debt maturities until
2012. In January 2009, it gained access to additional capital through the formation of a joint venture for the acquisition and development of
new projects. The Company was not a significant participant in off–balance sheet financing outside of traditional option contracts with land
developers, and its investments in joint ventures at December 31, 2008, was not significant. The Company's net debt-to-capital ratio was
33.6 percent at December 31, 2008, compared to 34.6 percent and 32.7 percent for the same periods in 2007 and 2006, respectively. As a result of
the revaluation of a significant portion of inventory and deferred tax assets, and balancing of cash flow with inventory management and
leverage objectives, stockholders' equity per share declined by 36.4 percent to $16.97 in 2008, compared to $26.68 in 2007 and $35.46 in 2006.
The Company's book value at December 31, 2008, was 100.0 percent tangible.
17
Homebuilding Overview
The combined homebuilding operations reported pretax losses of $385.9 million and $425.0 million for 2008 and 2007, respectively, compared to
earnings of $573.1 million for 2006. Homebuilding results in 2008 improved from 2007 primarily due to lower inventory valuation adjustments
and write-offs, partially offset by a decline in closings and margins and higher losses from land sales. Homebuilding results in 2007 decreased
from 2006 due to a decline in closings and margins and to the impact of inventory valuation adjustments and write-offs.
STATEMENTS OF EARNINGS

(in thousands, except units) 2008 2007 2006
REVENUES
Housing $1,856,647 $2,937,435 $4,545,594
Land and other 54,984 22,759 108,326
TO TAL REVENUES 1,911,631 2,960,194 4,653,920
EXPENS ES
Cost of sales
Housing 1,642,389 2,434,774 3,481,882
Land and other 80,833 20,589 83,536
Valuation adjustments and write-offs 280,120 578,778 74,397
T otal cost of sales 2,003,342 3,034,141 3,639,815
(Earnings) loss from unconsolidated joint ventures 43,900 (342) 260
Selling, general and administrative 250,278 351,376 440,702
TO TAL EXPENS ES 2,297,520 3,385,175 4,080,777
PRETAX EARNINGS (LO S S ) $ (385,889) $ (424,981) $ 573,143
Closings (units) 7,352 10,319 15,392
Housing gross profit margins (3.2)% (0.4)% 21.8%
Selling, general and administrative expense 13.1% 11.9% 9.5%
New orders represent sales contracts that have been signed by the homebuyer and approved by the Company, subject to cancellation. The
dollar value of new orders decreased $953.0 million, or 39.2 percent, to $1.5 billion for the year ended December 31, 2008, from $2.4 billion for
the year ended December 31, 2007. The dollar value of new orders declined by 24.3 percent to $2.4 billion in 2007 from $3.2 billion for the same
period in 2006. This decrease in new orders was primarily attributable to the softening of demand and to the higher existing and new home
inventory levels in most markets that reflected a deteriorating economic environment. Additionally, market uncertainty and heightened price
competition among homebuilders led to rising cancellation rates by homebuyers and were a major factor in these declines. Cancellation rates
totaled 35.0 percent, 37.0 percent and 37.1 percent for the years ended December 31, 2008, 2007 and 2006, respectively. Unit orders decreased
32.7 percent to 6,042 new orders in 2008, compared to 8,982 new orders in 2007. Unit orders declined 19.3 percent to 8,982 new orders in 2007,
compared to 11,134 new orders in 2006.
Homebuilding revenues fell 35.4 percent for 2008, compared to 2007, due to a 28.8 percent decrease in closings and an 11.6 percent decrease in
average closing price. As a result of these same market trends, homebuilding revenues fell 36.4 percent for 2007, compared to 2006, due to a
33.0 percent decrease in closings and a 3.4 percent decrease in average closing price.
In order to manage risk and return of land investments, match land supply with anticipated volume levels and monetize marginal land positions
through the carryback of tax losses, the Company executed several land and lot sales during the year. Homebuilding revenues for the year
ended December 31, 2008, included $55.0 million from land and lot sales, compared to $21.2 million for 2007 and $94.3 million for 2006, which
contributed a net loss of $25.8 million to pretax losses in 2008, compared to net gains of $2.2 million and $24.8 million to pretax earnings in 2007
and 2006, respectively. Housing gross profit margins averaged negative 3.2 percent for 2008, a decrease from negative 0.4 percent for 2007 and
21.8 percent for 2006. The decline in 2008 was primarily attributable to increased price concessions and sales incentives, as well as to price
reductions that related to home deliveries. Housing gross profit margins, excluding inventory and joint venture valuation adjustments and
write-offs, were 11.6 percent, 17.1 percent and 23.4 percent for the years ended December 31, 2008, 2007 and 2006, respectively. Gross profit
margins from land sales were negative 47.0 percent for December 31, 2008, compared to 10.3 percent and 26.3 percent for the years ended
December 31, 2007 and 2006, respectively. Price concessions and sales incentives, as a percentage of revenues, totaled 15.0 percent,
12.1 percent and 7.1 percent for the years ended December 31, 2008, 2007 and 2006, respectively. The effect of price declines, valuation
18
adjustments and write-offs was partially offset by the amortization of valuation allowances based on home closings, which impacted housing
gross profit margins by 6.7 percent, 1.7 percent and 0.1 percent for the years ended December 31, 2008, 2007 and 2006, respectively.
In accordance with Statement of Financial Accounting Standards No. 144 ("SFAS 144"), "Accounting for the Impairment or Disposal of Long-
Lived Assets," inventory is reviewed for potential write-downs on an ongoing basis. SFAS 144 requires that, in the event that impairment
indicators are present, impairment charges are required to be recorded if the fair value of such assets is less than their carrying amounts. For
inventory held and used, undiscounted cash flow projections are generated at a community level based on estimates of revenues, costs and
other factors. The Company's analysis of these communities generally assumes current revenues equal to current sales orders for particular or
comparable communities. The Company's determination of fair value is primarily based on discounting the estimated cash flows at a rate
commensurate with inherent risks that are associated with assets and related estimated cash flow streams. When determining the value of
inventory held-for-sale, the Company considers recent offers, comparable sales and/or estimated cash flows. Valuation adjustments are
recorded against homes completed or under construction, land under development and improved lots when events or circumstances indicate
that the carrying values are greater than the fair values. Due to continued pressure on home prices symptomatic of excess home inventories in
many markets, the Company recorded inventory impairment charges of $257.4 million, $504.0 million and $62.9 million during the years ended
December 31, 2008, 2007 and 2006, respectively, in order to reduce the carrying value of the impaired communities to their estimated fair value.
Approximately 92 percent of these impairment charges were recorded to residential land and lots and land held for development, while
approximately 8 percent of these charges were recorded to residential construction in progress and finished homes in inventory. At
December 31, 2008, the fair value of the Company's inventory subject to valuation adjustments of $257.4 million during the year, net of
impairments, was $222.8 million. There were 112 communities with write-downs in 2008, compared to 101 communities in 2007. Inventory and
other impairment charges and write-offs of deposits and acquisition costs reduced total housing gross profit margins by 14.8 percent in 2008,
17.5 percent in 2007 and 1.6 percent in 2006. Should market conditions deteriorate or costs increase, it is possible that the Company's estimates
of undiscounted cash flows from its communities could decline, resulting in additional future inventory impairment charges.
The Company periodically writes off earnest money deposits and feasibility costs related to land and lot option contracts that it no longer
plans to pursue. During the year ended December 31, 2008, the Company wrote off $21.7 million of earnest money deposits and $795,000 of
feasibility costs. For the same period in 2007, write-offs of earnest money deposits and feasibility costs related to land purchase option
contracts that the Company would not pursue were $72.6 million and $4.6 million, respectively. For the same period in 2006, write-offs of
earnest money deposits and feasibility costs were $10.9 million and $6.9 million, respectively. Should weak homebuilding market conditions
persist and the Company be unsuccessful in its efforts to renegotiate certain land option purchase contracts, it may write off additional earnest
money deposits and feasibility costs in future periods.
Selling, general and administrative expenses, as a percentage of revenue, were 13.1 percent for 2008, 11.9 percent for 2007 and 9.5 percent for
2006. The percentage increase for 2008, compared to 2007, was mainly attributable to a decline in revenues, as well as to severance, relocation,
model abandonment and goodwill impairment costs and charges that collectively totaled $25.9 million, partially offset by lower marketing and
advertising costs per unit. Excluding these costs, selling, general and administrative expenses, as a percentage of revenue, were 11.7 percent,
11.0 percent and 9.4 percent for the years ended December 31, 2008, 2007 and 2006, respectively. Exclusive of the aforementioned one-time
charges, the percentage increase for 2007, compared to 2006, was mainly attributable to lower overhead leverage due to lower volume levels
and to higher marketing and advertising costs per unit, partially offset by reduced incentive compensation expense. Selling, general and
administrative expense dollars decreased $101.1 million for the year ended December 31, 2008, versus the same period in 2007, and $89.3 million
for the year ended December 31, 2007, versus the same period in 2006.
Interest, which was incurred principally to finance land acquisitions, land development and home construction, totaled $46.9 million,
$62.0 million and $71.8 million in 2008, 2007 and 2006, respectively. In 2008, 2007 and 2006, the homebuilding segments capitalized all interest
incurred, except $604,000 in charges related to the reduction of commitments for the Company's revolving credit facility in 2008, due to
continued development and construction activity. (See "Housing Inventories" within Note A, "Summary of Significant Accounting Policies.")
19
Homebuilding Segment Information
The Company's homebuilding operations consist of four geographically determined regional reporting segments: North, Southeast, Texas and
West.
Conditions have continued to be most challenging in geographical areas that have previously experienced the highest price appreciation, such
as the California, Chicago, Florida, Las Vegas, Phoenix and Washington, D.C., markets. As a result of declining affordability, decreased
demand and changes in buyer perception, the excess supply of housing inventory has been greater in these areas. In an attempt to maintain
market share and reduce inventory investment to better match current sales volume levels, the Company has increased its use of sales
discounting and incentives. As a result, it had to take additional inventory impairment charges in many markets. Of the Company's total lots or
homes with valuation adjustments during 2008, 28.9 percent of total lots were impaired in the North, 21.4 percent in the Southeast, 2.7 percent
in Texas and 47.0 percent in the West.
The following table provides a summary of the Company's inventory and other impairments taken for the years ended December 31, 2008, 2007
and 2006:
(in thousands) 2008 2007 2006

NO RTH
Inventory valuation adjustments $ 99,037 $ 86,957 $ 3,694
Option deposit and feasibility cost write-offs 4,906 27,337 3,853
Joint venture and other* impairments 35,903 – 71
T otal 139,846 114,294 7,618
S O UTHEAS T
Inventory valuation adjustments 74,813 112,721 1,789
Joint venture and other* impairments 3,390 2,073 438
T otal 84,037 140,044 8,095
TEXAS
Inventory valuation adjustments 11,126 2,744 100
Option deposit and feasibility cost write-offs 11,319 775 248
Joint venture and other* impairments 227 31 –
T otal 22,672 3,550 348
W ES T
Option deposit and feasibility cost write-offs 392 23,805 7,886
T otal 81,727 340,858 65,253
TO TAL
T otal $328,282 $598,746 $81,314
* Other includes im pairm ents to other assets.
New Orders
New order dollars decreased 39.2 percent for the year ended December 31, 2008, compared to 2007. New orders for 2008 decreased 29.1 percent
in the North, 33.4 percent in the Southeast, 27.9 percent in Texas and 44.1 percent in the West. New orders for 2007 decreased 16.4 percent in
the North, 22.2 percent in the Southeast, 27.1 percent in Texas and 4.6 percent in the West. In 2008 and 2007, the decline in new orders was
primarily due to a softening of demand and consumer confidence; rising levels of foreclosures and overall housing inventory; increasing
competition for a diminished number of buyers; and declining community counts resulting from project abandonment and low land acquisition
activity in most markets. The cancellation rate was 35.0 percent for the year ended December 31, 2008, versus 37.0 percent and 37.1 percent for
2007 and 2006, respectively.
20
The Company experiences seasonal variations in its quarterly operating results and capital requirements. Historically, new order activity is
higher in the spring and summer months. As a result, the Company typically has more homes under construction, closes more homes, and has
greater revenues and operating income in the third and fourth quarters of its fiscal year. However, historical results are not necessarily
indicative of current or future homebuilding activities.
The following table is a summary of the Company's new orders (units and aggregate sales value) for the years ended December 31, 2008, 2007
and 2006:
2008 % C HG 2007 % CHG 2006 % CHG

UNITS
North 1,770 (29.1)% 2,496 (16.4)% 2,987 (31.1)%
Southeast 1,640 (33.4) 2,461 (22.2) 3,164 (43.8)
T exas 1,701 (27.9) 2,359 (27.1) 3,237 (12.6)
West 931 (44.1) 1,666 (4.6) 1,746 (54.7)
T otal 6,042 (32.7)% 8,982 (19.3)% 11,134 (36.4)%
DO LLARS (in m illions)
North $ 471 (38.5)% $ 765 (21.1)% $ 970 (28.4)%
Southeast 403 (38.4) 653 (29.1) 921 (43.2)
T exas 368 (25.5) 494 (24.3) 653 (3.9)
West 235 (54.6) 518 (22.2) 666 (55.0)
T otal $1,477 (39.2)% $2,430 (24.3)% $ 3,210 (37.5)%
The following table provides the Company's cancellation percentages for the years ended December 31, 2008, 2007 and 2006:

2008 2007 2006
North 36.1% 34.8% 31.5%
Southeast 32.0 39.7 39.0
T exas 33.4 35.1 32.2
West 40.1 38.3 48.3
T otal 35.0% 37.0% 37.1%
The cancellation rate for the year ended December 31, 2008, was 35.0 percent, compared to 37.0 percent and 37.1 percent for the years ended
Closings
The following table provides the Company's closings and average closing prices for the years ended December 31, 2008, 2007 and 2006:
2008 % C HG 2007 % CHG 2006 % CHG

UNITS
North 2,162 (19.5)% 2,687 (25.4)% 3,604 (17.5)%
Southeast 2,187 (30.7) 3,154 (38.5) 5,126 4.9
T exas 1,908 (29.4) 2,703 (23.8) 3,546 5.4
West 1,095 (38.3) 1,775 (43.0) 3,116 (23.1)
T otal 7,352 (28.8)% 10,319 (33.0)% 15,392 (7.7)%
AVERAGE PRIC E (in thousands)
North $ 281 (11.6)% $ 318 (0.6)% $ 320 3.2%
Southeast 253 (13.4) 292 (0.3) 293 15.4
T exas 216 2.9 210 8.8 193 9.0
West 258 (23.0) 335 (13.0) 385 8.1
T otal $ 252 (11.6)% $ 285 (3.4)% $ 295 6.1%
21
Outstanding Contracts
Outstanding contracts denote the Company's backlog of homes sold but not closed, which are generally built and closed, subject to
cancellation, over the subsequent two quarters. At December 31, 2008, the Company had outstanding contracts for 1,559 units, representing a
45.7 percent decrease from year end 2007. The $407.1 million value of outstanding contracts at December 31, 2008, represented a decrease of
48.2 percent from December 31, 2007, primarily due to a 32.7 percent decline in unit orders. Average sales price decreases resulted primarily
from slowing market trends, high inventory levels for new and resale housing, and a more competitive sales environment.
DEC EMBER 31, 2008 DECEMBER 31, 2007 DECEMBER 31, 2006
AVERAGE AVERAGE AVERAGE
DO LLARS PRIC E DOLLARS P RICE DOLLARS P RICE
UNITS (in millions) (in thousands) UNIT S (in m illions) (in thousands) UNIT S (in m illions) (in thousands)
North 574 $ 161 $ 280 966 $ 298 $ 307 1,157 $ 387 $ 334
Southeast 399 107 267 946 257 272 1,639 526 321
T exas 469 111 238 676 155 230 1,020 228 224
West 117 28 242 281 76 269 390 153 391
T otal 1,559 $ 407 $ 261 2,869 $ 786 $ 274 4,206 $ 1,294 $ 308
22
The following summary provides results for the homebuilding segments for the years ended December 31, 2008, 2007 and 2006:
(in thousands) 2008 2007 2006

NO RTH
Revenues $ 639,814 $ 857,448 $1,196,335
Expenses
Cost of sales 689,455 806,851 917,804
(Earnings) loss from unconsolidated joint ventures 35,448 (902) –
Selling, general and administrative expenses 71,069 88,576 107,895
T otal expenses 795,972 894,525 1,025,699
P retax earnings (loss) $ (156,158) $ (37,077) $ 170,636
Housing gross profit margins (11.6)% 5.9% 23.7%
S O UTHEAS T
Revenues $ 558,194 $ 929,168 $1,522,123
Expenses
Cost of sales 577,451 886,763 1,128,636
(Earnings) loss from unconsolidated joint ventures – (28) (215)
T otal expenses 653,643 988,587 1,269,003
Housing gross profit margins (0.1)% 4.7% 25.9%
TEXAS
Revenues $ 415,761 $ 571,689 $ 695,356
Expenses
Cost of sales 383,243 479,826 564,107
(Earnings) loss from unconsolidated joint ventures (289) (24) (104)
T otal expenses 435,589 544,591 635,502
P retax earnings (loss) $ (19,828) $ 27,098 $ 59,854
Housing gross profit margins 8.8% 16.1% 18.5%
W ES T
Revenues $ 297,862 $ 601,889 $1,240,106
Expenses
Cost of sales 353,193 860,701 1,029,268
(Earnings) loss from unconsolidated joint ventures 8,741 612 579
T otal expenses 412,316 957,472 1,150,573
TO TAL
Revenues $1,911,631 $2,960,194 $4,653,920
Expenses
Cost of sales 2,003,342 3,034,141 3,639,815
T otal expenses 2,297,520 3,385,175 4,080,777
Homebuilding Segments 2008 versus 2007
North—Homebuilding revenues decreased by 25.4 percent to $639.8 million in 2008 from $857.4 million in 2007 primarily due to a 19.5 percent
decline in the number of homes delivered and an 11.6 percent decrease in average closing price. Gross margins on home sales were negative
11.6 percent in 2008, compared to 5.9 percent in 2007. This decrease was primarily attributable to inventory and other valuation adjustments
and write-offs of $136.2 million, as well as to increased price concessions and sales incentives that totaled 18.6 percent in 2008, versus
13.2 percent in 2007. As a result, the North region incurred $156.2 million of pretax losses in 2008, compared to $37.1 million of pretax losses in
2007.
23
Southeast—Homebuilding revenues were $558.2 million in 2008, compared to $929.2 million in 2007, a decrease of 39.9 percent, primarily due to
a 30.7 percent decline in the number of homes delivered and a 13.4 percent decrease in average closing price. Gross margins on home sales
were negative 0.1 percent in 2008, compared to 4.7 percent in 2007. This decrease was primarily attributable to inventory valuation adjustments
and write-offs of $69.7 million, as well as to increased price concessions and sales incentives that totaled 13.3 percent in 2008, versus
12.2 percent in 2007. In addition, selling, general and administrative costs were 13.6 percent of revenues in 2008, compared to 11.0 percent in
2007 due, in part, to a $2.8 million goodwill impairment charge. As a result, the Southeast region incurred $95.4 million of pretax losses in 2008,
compared to $59.4 million of pretax losses in 2007.
Texas—Homebuilding revenues decreased by 27.3 percent to $415.8 million in 2008 from $571.7 million in 2007 primarily due to a 29.4 percent
decline in the number of homes delivered, partially offset by a 2.9 percent increase in average sales price. Gross margins on home sales were
8.8 percent in 2008, compared to 16.1 percent in 2007. This decrease was primarily attributable to the mix of product delivered during the year,
as well as to inventory valuation adjustments and write-offs of $21.9 million, and to increased price concessions and sales incentives that
totaled 9.6 percent of revenues in 2008, versus 7.4 percent in 2007. As a result, the Texas region incurred $19.8 million of pretax losses in 2008,
compared to $27.1 million of pretax earnings in 2007.
West—Homebuilding revenues decreased by $304.0 million, or 50.5 percent, to $297.9 million in 2008, compared to $601.9 million in 2007,
primarily due to a 38.3 percent decline in the number of homes delivered and to a 23.0 percent decrease in average closing price. Gross margins
on home sales were negative 8.8 percent in 2008, compared to negative 33.1 percent in 2007. This change was primarily attributable to lower
inventory valuation adjustments and write-offs that totaled $46.7 million in 2008, compared to $260.7 million in 2007, partially offset by a rise in
price concessions and sales incentives that totaled 17.3 percent of revenues in 2008, compared to 14.7 percent in 2007. As a result, the West
region incurred $114.5 million of pretax losses in 2008, compared to $355.6 million of pretax losses in 2007.
Homebuilding Segments 2007 versus 2006
North—Homebuilding revenues decreased by 28.3 percent to $857.4 million in 2007 from $1.2 billion in 2006 primarily due to a 25.4 percent
decline in the number of homes delivered. Gross margins on home sales were 5.9 percent in 2007, compared to 23.7 percent in 2006. This
decrease was primarily attributable to inventory valuation adjustments and write-offs of $111.7 million, as well as to increased price
concessions and sales incentives that totaled 13.2 percent of revenues in 2007, versus 7.9 percent in 2006. As a result, the North region
incurred $37.1 million of pretax losses in 2007, compared to $170.6 million of pretax earnings in 2006.
Southeast—Homebuilding revenues were $929.2 million in 2007, compared to $1.5 billion in 2006, a decrease of 39.0 percent, primarily due to a
38.5 percent decline in the number of homes delivered. Gross margins on home sales were 4.7 percent in 2007, compared to 25.9 percent in 2006.
This decrease was primarily due to inventory valuation adjustments and write-offs of $138.9 million, as well as to increased price concessions
and sales incentives that totaled 12.2 percent of revenues in 2007, versus 5.6 percent in 2006. As a result, the Southeast region incurred
$59.4 million of pretax losses in 2007, compared to $253.1 million of pretax earnings in 2006.
Texas—Homebuilding revenues decreased by 17.8 percent to $571.7 million in 2007 from $695.4 million in 2006 primarily due to a 23.8 percent
decline in the number of homes delivered, partially offset by an 8.8 percent increase in average sales price. Gross margins on home sales
decreased to 16.1 percent in 2007, compared to 18.5 percent in 2006, primarily due to the mix of product delivered during the year, as well as to
inventory valuation adjustments and write-offs of $3.2 million and increased price concessions and sales incentives that totaled 7.4 percent of
revenues in 2007, versus 6.3 percent in 2006. As a result, the Texas region generated $27.1 million of pretax earnings in 2007, compared to
$59.9 million of pretax earnings in 2006.
West—Homebuilding revenues decreased $638.2 million, or 51.5 percent, to $601.9 million in 2007, compared to $1.2 billion in 2006, primarily
due to a 43.0 percent decline in the number of homes delivered and to a 13.0
percent decrease in average closing price. Gross margins on home sales were negative 33.1 percent in 2007, compared to 16.8 percent in 2006.
Gross margins on home sales decreased in 2007 due to inventory valuation adjustments and write-offs of $260.7 million, as well as to increased
price concessions and sales incentives that totaled 14.7 percent of revenues in 2007, compared to 8.7 percent in 2006. In addition, selling,
general and administrative costs were 16.0 percent of revenues in 2007, compared to 9.7 percent in 2006, due to declining leverage, severance
and relocation costs, and feasibility cost write-offs. As a result, the West region incurred $355.6 million of pretax losses in 2007, compared with
$89.5 million of pretax earnings in 2006.
24
Financial Services
The Company's financial services segment provides mortgage-related products and services, as well as title, escrow and insurance services, to
its homebuyers. By aligning its operations with the Company's homebuilding segments, the financial services segment leverages this
relationship to offer its lending services to homebuyers. In addition to being a valuable asset to customers, the financial services segment
generates a profit for the Company. Providing mortgage financing and other services to its customers allows the Company to better monitor its
backlog and closing process. The majority of loans originated are sold within one business day of the date they close. The third party
purchaser then services and manages the loans, assuming nearly all of the credit risk of borrower default. The Company also provided
construction-related insurance to subcontractors in its western markets through June 2008. Additionally, the financial services segment also
offers insurance for liability risks, specifically homeowners' structural warranty coverage, arising in connection with the homebuilding
business of the Company.
YEAR ENDED DECEMBER

31,
(in thousands, except units) 2008 2007 2006
REVENUES
Net gains on sales of mortgages $ 28,556 $ 31,126 $ 44,231
Origination fees 16,997 25,678 39,589
T itle/escrow/insurance 17,440 33,734 41,086
Interest and other 1,500 1,143 1,427
TO TAL REVENUES 64,493 91,681 126,333
EXPENS ES 41,466 50,754 58,638

PRETAX EARNINGS $ 23,027 $ 40,927 $ 67,695
Originations (units) 5,634 7,653 11,744
Ryland Homes origination capture rate 82.2% 78.8% 81.9%
Mortgage-backed securities and notes receivable average balance $ 370 $ 446 $ 1,707
In 2008, RMC's mortgage origination operations consisted primarily of mortgage loans originated in connection with the sale of the Company's
homes. The number of mortgage originations was 5,634 for 2008, compared to 7,653 for 2007 and 11,744 for 2006. During 2008, total dollar
originations were $1.3 billion, of which 99.6 percent was for purchases of homes built by the Company and the remaining amount was for either
purchases of homes built by others, purchases of existing homes or refinancing of existing mortgage loans. The capture rate of mortgages
originated for customers of the Company's homebuilding operations was 82.2 percent in 2008, compared to 78.8 percent in 2007 and
81.9 percent in 2006.
The financial services segment reported pretax earnings of $23.0 million for 2008, compared to $40.9 million for 2007 and $67.7 million for 2006.
The decrease in 2008, compared to 2007, was primarily attributable to a 26.4 percent decline in the number of mortgages originated due to a
slowdown in the homebuilding markets, a 10.1 percent decrease in average loan size and a $2.5 million decline in sales of its insurance renewal
rights in 2008, compared to 2007, partially offset by the recognition of a $1.7 million gain related to the 2008 implementation of Staff Accounting
Bulletin No. 109 ("SAB 109"), "Written Loan Commitments Recorded at Fair Value Through Earnings," which requires that servicing rights
related to interest rate lock commitments be recorded at fair value. The decrease in 2007, compared to 2006, was primarily attributable to a
34.8 percent decline in the number of mortgages originated due to a slowdown in the homebuilding markets, a decline in the availability of
mortgage products and a 1.8 percent decrease in loan size, partially offset by a $4.4 million gain on the sale of the segment's insurance renewal
rights in 2007.
Revenues for the financial services segment declined 29.7 percent to $64.5 million for 2008, compared to $91.7 million for 2007. The decrease
was primarily attributable to a 26.4 percent decline in the number of mortgages originated and sold due to a slowdown in the homebuilding
markets and to the midyear cessation of the subcontractor insurance program. In 2007, revenues for the financial services segment declined
27.4 percent to $91.7 million from $126.3 million in 2006. The decrease in 2007, compared to 2006, was primarily attributable to a 34.8 percent
decline in the number of mortgages originated and sold due to a slowdown in the homebuilding markets.
25
General and administrative expenses decreased to $41.5 million for the year ended December 31, 2008, from $50.8 million for the year ended
December 31, 2007, primarily due to personnel reductions made in an effort to align overhead with lower production volumes and lower
reserves for the subcontractor insurance program that was terminated midyear, partially offset by an increase of $3.7 million in indemnification
expense. General and administrative expenses decreased for the year ended December 31, 2007, compared to 2006, primarily due to personnel
reductions made in an effort to align overhead with lower production volumes, partially offset by an increase of $1.6 million in mortgage
indemnification expense.
In 2007, increased delinquencies of primarily "subprime" mortgages in secondary markets resulted in a significant decrease in the availability
of these mortgage products. During 2008, RMC did not originate mortgage loans that would be classified as "subprime" or "Alt-A." All of the
mortgage loans originated by RMC during the year were either "government" or "prime" mortgage loans. "Prime" mortgage loans are generally
defined as agency loans (FNMA/FHLMC) and any nonconforming loans that would otherwise meet agency criteria. Generally, they are
borrowers with FICO scores that exceed 620. Approximately 86 percent of the mortgage loans originated by RMC during 2008 were sold to
Countrywide Financial Corporation ("Countrywide") pursuant to their loan purchase agreement with the Company. The remaining loans were
sold to investors, such as U.S. Bank Corporation, CitiMortgage, Wells Fargo and Freddie Mac, or to specialized state bond loan programs.
Except in rare circumstances, RMC is not required to repurchase mortgage loans. Generally, the Company is required to indemnify
Countrywide, or another investor to which mortgage loans are sold, if there are losses due to origination errors caused by RMC, when it is
shown that there has been undiscovered fraud on the part of the borrower, or if the borrower does not make his first payment. The Company
paid $3.2 million and $375,000 in indemnification expense during 2008 and 2007, respectively, and held reserves of $5.4 million and $2.7 million
for future losses as of December 31, 2008 and 2007, respectively.
Corporate
Corporate expenses were $42.3 million for 2008, $35.6 million for 2007 and $66.0 million for 2006. Corporate expenses for 2008, compared to 2007,
increased primarily due to a $5.7 million rise in losses within the market value of investments included in the Company's benefit plans.
Corporate expenses for 2007, compared to 2006, declined primarily due to lower incentive compensation expense that resulted from declining
earnings and stock price.
In 2008, the Company recorded an expense of approximately $604,000 that was associated with the reduction of commitments for its revolving
credit facility. In 2007, the Company recorded an aggregate expense of approximately $490,000 that was associated with the early redemption of
$100.0 million of its 5.4 percent senior notes due June 2008. The Company redeemed $75.0 million and $25.0 million at stated call prices of
100.2 percent and 100.8 percent of the principal amount of the notes in August and December of 2007, respectively. In 2006, the Company
recorded an expense of $7.7 million that was associated with the early redemption of $150.0 million of its 9.1 percent senior subordinated notes
due June 2011, of which it owned $6.5 million, at a stated call price of 104.6 percent of the principal amount.
Investments in Joint Ventures
At December 31, 2008, the Company participated in six active joint ventures in the Austin, Chicago, Dallas, Denver and Orlando markets.
These joint ventures exist for the purpose of acquisition and co-development of land parcels and lots, which are then sold to the Company, its
joint venture partners or others at market prices. Depending on the number of joint ventures and the level of activity in the entities, annual
earnings from the Company's investment in joint ventures will vary significantly. The Company's investments in its unconsolidated joint
ventures totaled $12.5 million at December 31, 2008, compared to $30.8 million at December 31, 2007. The Company's equity in losses from
unconsolidated joint ventures in 2008 totaled $43.9 million, compared to earnings of $342,000 in 2007 and losses of $260,000 in 2006. (See
"Investments in Joint Ventures" within Note A, "Summary of Significant Accounting Policies.")
Income Taxes
The Company's provision for income tax presented an effective income tax benefit rate of 2.3 percent for the year ended December 31, 2008,
compared to an effective income tax benefit rate of 20.6 percent for the same period in 2007 and an effective income tax provision rate of
36.5 percent for the same period in 2006. The decrease in the effective tax rate for 2008, compared to 2007, was primarily due to noncash tax
charges in 2008 totaling $143.8 million for the Company's valuation allowance related to its deferred tax assets. The decrease in the effective tax
rate for 2007, compared to 2006, was primarily due to a noncash tax charge of $75.2 million for a valuation allowance related to the Company's
deferred tax assets, in accordance with SFAS 109, and to the impact of lower pretax earnings for the year. (See Note G, "Income Taxes.")
26
Financial Condition and Liquidity
The Company has historically funded its homebuilding and financial services operations with cash flows from operating activities, borrowings
under its revolving credit facilities and the issuance of new debt securities. In light of market conditions in 2008, the Company continued its
efforts toward generating cash, reducing debt levels and strengthening its balance sheet by selling excess or marginal land inventory;
monetizing tax losses; paying off a maturing senior note; terminating or renegotiating land option contracts; consolidating or exiting
underperforming markets; and downsizing and restructuring operating groups. As a result of this strategy, the Company lowered its total debt
in 2008 by $48.7 million, ending the year with $423.3 million in cash and cash equivalents and $160.7 million in current taxes receivable.
NET
ST OCKHOLDERS' DEBT -T O-CAP IT AL
(in m illions) EQUIT Y DEBT RAT IO
2006 $ 1,511 $ 950 32.7%
2007 $ 1,125 $ 839 34.6%
2008 $ 725 $ 790 33.6%
At December 31, 2008, the Company's net debt-to-capital ratio was 33.6 percent, a decrease from 34.6 percent at December 31, 2007. This
decrease was primarily due to debt repayments in 2008 and an increase in cash. The Company remains focused on maintaining its liquidity so
that it can be flexible in reacting to changing market conditions.
The following table summarizes the Company's cash flow activities for the years ended December 31, 2008, 2007 and 2006:
(in thousands) 2008 2007 2006

Operating activities $248,426 $ 228,140 $ 14,637
Investing activities (9,826) (31,397) (51,589)
Financing activities (58,955) (168,166) (209,394)
Net increase (decrease) in cash and cash equivalents $179,645 $ 28,577 $(246,346)
During 2008, the Company generated $248.4 million of cash from its operations. The Company invested $9.9 million in property, plant and
equipment and used $59.0 million in financing activities, including debt repayments of $70.8 million and dividends of $20.5 million, partially
offset by borrowings of $22.1 million from credit facilities. The net cash flow generated during the year ended December 31, 2008 was
$179.6 million.
equipment and used $168.2 million in financing activities, including debt repayments of $111.0 million, stock repurchases of $59.3 million and
dividends of $20.4 million. The net cash flow generated during the year ended December 31, 2007 was $28.6 million.
equipment and used $209.4 million in financing activities, including net debt proceeds of $28.1 million, outflows for stock repurchases of
$250.1 million and dividends of $21.7 million. The net cash used during the year ended December 31, 2006 was $246.3 million.
During the fourth quarter of 2008, the Board of Directors approved a reduction of the Company's common stock dividend by 75.0 percent to
$0.03 per share from $0.12 per share in the previous quarters. Dividends declared totaled $0.39, $0.48 and $0.48 per share for the annual periods
ended December 31, 2008, 2007 and 2006, respectively.
Consolidated inventories owned by the Company decreased by 37.8 percent to $1.1 billion at December 31, 2008, from $1.7 billion at
December 31, 2007. The Company attempts to maintain a projected four- to five-year supply of land. At December 31, 2008, it controlled 23,555
lots, with 19,239 lots owned and 4,316 lots, or 18.3 percent, under option. As a result of its efforts to match controlled inventory with current
unit volume levels, lots controlled declined by 41.0 percent at December 31, 2008, compared to 39,900 lots under control at December 31, 2007.
(See "Housing Inventories" within Note A, "Summary of Significant Accounting Policies.") The Company continues to evaluate its option
contracts for changes in the viability of communities and abandonment potential. In an effort to increase liquidity, models have been sold and
leased back on a selective basis for generally 3 to 18 months. The Company owned 86.5 percent and 76.1 percent of its model homes at
December 31, 2008 and 2007, respectively.
27
The homebuilding segments' borrowings include senior notes, an unsecured revolving credit facility and nonrecourse secured notes payable.
Senior Notes
Senior notes outstanding totaled $746.0 million and $800.0 million at December 31, 2008 and 2007, respectively. During 2008, the Company's
$50.0 million of 5.4 percent senior notes matured, and were repaid and the Company repurchased $4.0 million of its 5.4 percent senior notes due
January 2015. (See Note F, "Debt.")
During the first quarter of 2009, the Company repurchased $47.6 million of its senior notes for $35.9 million in the open market. (See Note L,
"Subsequent Events.")
The Company redeemed $75.0 million and $25.0 million of its 5.4 percent senior notes due June 2008 in August and December 2007,
respectively. The redemption prices were 100.2 percent and 100.8 percent of the principal amount of the notes outstanding, respectively, plus
accrued interest as of the redemption dates. The Company recognized an aggregate loss of approximately $490,000 related to the early
retirement of these notes in 2007.
The $250.0 million of 5.4 percent senior notes due May 2012; the $250.0 million of 6.9 percent senior notes due June 2013; and the $246.0 million
of 5.4 percent senior notes due January 2015 are subject to certain covenants that include, among other things, restrictions on additional
secured debt and the sale of assets. At December 31, 2008, the Company was in compliance with these covenants.
Unsecured Revolving Credit Facility
In February and June of 2008, the Company amended its unsecured revolving credit facility. The credit facility is used for general corporate
purposes and contains affirmative, negative and financial covenants, including a minimum consolidated tangible net worth requirement; a
permitted leverage ratio; and limitations on unsold home units, unsold land, lot inventory, investments and senior debt. The amendments
included, among other things: a) a decrease in the Company's borrowing availability from $750.0 million to $550.0 million; b) a reduction in the
base amount for the minimum consolidated tangible net worth covenant; c) an increase in the pricing grid, which is based on the Company's
leverage ratio and public debt rating; d) an adjustment in the permitted leverage ratio to no less than 55.0 percent for the fourth quarter of 2008
and the first quarter of 2009, 52.5 percent for the second, third and fourth quarters of 2009 and 50.0 percent thereafter; e) an increase in the
borrowing base by adding restricted cash up to $300.0 million; f) a change in the definition of material indebtedness to $20.0 million; and g) a
change in the restriction of the Company's book value of unsold land to 1.15x its consolidated tangible net worth.
In January 2009, the Company entered into the Fourth Amendment to Credit Agreement (the "Amendment"), among the Company, J.P.
Morgan Chase Bank, N.A., as Agent, and the lenders listed therein, which further amended its $550.0 million unsecured revolving credit
facility. The Amendment, among other things: a) decreased the Company's borrowing availability from $550.0 million to $200.0 million, subject
to further reduction if the consolidated tangible net worth is less than $400.0 million; b) changed the adjustments used to determine
compliance with the definition of consolidated tangible net worth covenant and reduced the base amount for the minimum consolidated
tangible net worth covenant default limit to $300.0 million; c) amended the leverage ratio restriction to be no more than 55.0 percent; d) agreed
to establish certain liquidity reserve accounts in the event the Company fails to satisfy an interest coverage test and an adjusted cash flow
from operations to interest incurred test; e) changed the restriction of the Company's book value of unsold land to 1.20x its consolidated
tangible net worth; f) changed the borrowing base to allow for 100.0 percent use of unrestricted cash in excess of $25.0 million, less any drawn
balances on the revolving credit facility; g) established a requirement for the Company to cash collateralize a pro rata share of a defaulting
lender's letter of credit and swing line exposure; h) established an annual common stock cash dividend limit of $10.0 million; and i) increased
the pricing grid, which is based on the Company's leverage ratio and public debt rating, as well as the interest coverage ratio. The credit
facility's maturity date of January 2011 remains unchanged, and the accordion feature has been reduced to a maximum of $300.0 million, subject
to the availability of additional lending commitments. The revolving credit facility includes a $75.0 million swing-line facility and the ability to
issue standby letters of credit. Amounts borrowed under the credit agreement are guaranteed on a joint and several basis by substantially all
of the Company's 100 percent-owned homebuilding subsidiaries. Such guarantees are full and unconditional. Interest rates on outstanding
borrowings under the amended facility are determined either by reference to LIBOR or an alternative base rate, with margins determined based
on changes in the Company's leverage ratio and credit ratings, plus, if the Company's interest coverage ratio is less than 2.0 to 1.0, an interest
premium is determined based on changes in the Company's interest coverage ratio. The Company uses its unsecured revolving credit facility
to finance
28
increases in its homebuilding inventory and working capital, when necessary. (See Note F, "Debt," and Note L, "Subsequent Events.")
There were no borrowings outstanding under the facility at December 31, 2008 or 2007. Under the facility, the Company had letters of credit
outstanding that totaled $95.7 million and $157.8 million at December 31, 2008 and 2007, respectively. Unused borrowing capacity under the
facility, as then in effect, totaled $454.3 million and $592.2 million at December 31, 2008 and 2007, respectively. At December 31, 2008, the
$550.0 million facility, then in effect, was subject to a borrowing base limitation covenant that restricted its borrowing capacity to
$338.1 million, of which $242.4 million was available. The Company was in compliance with its covenants at December 31, 2008. The reduction
in the revolving credit facility's commitments during 2008 resulted in an expense of $604,000, which represented a write-off of a pro rata portion
of unamortized debt costs and is included within "Expenses related to early retirement of debt" in the Consolidated Statement of Earnings. (See
Note F, "Debt.")
Nonrecourse Secured Notes Payable
To finance its land purchases, the Company may also use seller-financed nonrecourse secured notes payable. At December 31, 2008, such
notes payable outstanding amounted to $22.3 million, compared to $39.1 million at December 31, 2007.
Finance Subsidiaries
In January 2008, RMC entered into a mortgage warehouse line of credit agreement with Guaranty Bank (the "RMC Credit Agreement"). The
RMC Credit Agreement matured in January 2009 and provided for borrowings up to $40.0 million to fund RMC's mortgage loan origination
operations. It was secured by underlying mortgage loans and by other assets of RMC. Facility balances were repaid as loans funded under the
agreement were sold to third parties. The RMC Credit Agreement's interest rate was set at LIBOR plus 0.9 percent, with a commitment fee of
0.125 percent on the unused portion of the facility. The RMC Credit Agreement contained representations, warranties, covenants and
provisions defining events of default. The covenants required RMC to maintain a minimum net worth and certain financial ratios. The
Company was in compliance with these covenants and outstanding borrowings against this credit facility totaled $22.1 million at December 31,
2008.
In January 2009, RMC entered into the RMC Repurchase Facility, a $60.0 million repurchase facility, with Guaranty Bank and Buyers. The
facility became effective January 15, 2009 and replaces the RMC Credit Agreement that expired in January 2009. The agreement contains an
initial interest rate of LIBOR plus a margin of 1.75 percent, subject to a LIBOR floor of 2.0 percent. The facility contains representations,
warranties, covenants and provisions defining events of default. The covenants require RMC to maintain a minimum net worth and certain
financial ratios. (See Note L, "Subsequent Events.")
Other
On February 6, 2009, the Company filed a shelf registration with the SEC. The registration statement provides that securities may be offered,
from time to time, in one or more series and in the form of senior, subordinated or convertible debt; preferred stock; preferred stock represented
by depository shares; common stock; stock purchase contracts; stock purchase units; and warrants to purchase both debt and equity
securities. The Company's previous shelf registration statement expired in 2008 pursuant to the provisions of the SEC's Securities Offering
Reform. As of the date of this Annual Report on Form 10-K, the Company has not issued any securities under its shelf registration statement.
In the future, the Company intends to continue to maintain effective shelf registration statements that will facilitate access to the capital
markets. The timing and amount of future offerings, if any, will depend on market and general business conditions. (See Note L, "Subsequent
Events.")
During 2008, the Company did not repurchase any shares of its outstanding common stock. The Company had existing authorization from its
Board of Directors to purchase approximately 8.1 million additional shares at a cost of $142.3 million, based on the Company's stock price at
December 31, 2008. Outstanding shares were 42,754,467 and 42,151,085 at December 31, 2008 and 2007, respectively, an increase of 1.4 percent.
29
The following table provides a summary of the Company's contractual cash obligations and commercial commitments at December 31, 2008,
and the effect such obligations are expected to have on its future liquidity and cash flow.
CONT RACT UAL PAYMENT S DUE BY PERIOD

AFT ER
(in thousands) T OT AL 2009 2010–2011 2012–2013 2013
Debt, principal maturities $ 790,399 $32,716 $ 11,683 $ 500,000 $246,000
Interest on debt 201,865 43,848 87,695 56,549 13,773
Operating leases 35,650 9,594 15,793 5,916 4,347
Land option contracts 1 5,659 5,659 – – –
T otal at December 31, 2008 $1,033,573 $91,817 $ 115,171 $ 562,465 $264,120
1 Represents obligations under option contracts with specific perform ance provisions, net of cash deposits.
While the Company expects challenging economic conditions to continue, it is focused on managing overhead, land acquisitions,
development and construction activity in order to generate cash flow and maintain debt levels commensurate with its business. Absent a more
severe deterioration in market conditions, the Company believes that it will be able to continue to fund its homebuilding and financial services
operations, plus any future cash needs (including debt maturities), through its existing cash resources for the foreseeable future.
Off–Balance Sheet Arrangements
In the ordinary course of business, the Company enters into land and lot option purchase contracts in order to procure land or lots for the
construction of homes. Land and lot option purchase contracts enable the Company to control significant lot positions with a minimal capital
investment, thereby reducing the risks associated with land ownership and development. At December 31, 2008, the Company had
$31.0 million in cash deposits and letters of credit to purchase land and lots with an aggregate purchase price of $276.5 million. Only
$5.7 million of the $276.5 million in land and lot option purchase contracts contain specific performance provisions. Additionally, the
Company's liability is generally limited to forfeiture of the nonrefundable deposits, letters of credit and other nonrefundable amounts incurred.
Pursuant to Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities," as amended, the Company consolidated
$15.2 million of inventory not owned at December 31, 2008, of which $14.4 million pertained to land and lot option purchase contracts,
representing the fair value of the optioned property, and $799,000 pertained to one of its homebuilding joint ventures. (See "Variable Interest
Entities" and "Investments in Joint Ventures" within Note A, "Summary of Significant Accounting Policies.")
At December 31, 2008 and 2007, the Company had outstanding letters of credit under its revolving credit facility totaling $95.7 million and
$157.8 million, respectively. Additionally, it had development or performance bonds totaling $199.0 million at December 31, 2008, issued by
third parties, to secure performance under various contracts and obligations relating to land or municipal improvements, compared to
$313.2 million at December 31, 2007. The Company expects that the obligations secured by these letters of credit and performance bonds will
generally be satisfied in the ordinary course of business and in accordance with applicable contractual terms. To the extent that the
obligations are fulfilled, the related letters of credit and performance bonds will be released, and the Company will not have any continuing
obligations.
The Company has no material third-party guarantees other than those associated with its revolving credit facility, senior notes and
investments in joint ventures. (See "Investments in Joint Ventures" within Note A, "Summary of Significant Accounting Policies," and Note K,
"Supplemental Guarantor Information.")
Critical Accounting Policies
Preparation of the Company's consolidated financial statements requires the use of judgment in the application of accounting policies and
estimates of inherently uncertain matters. Listed below are those policies that management believes are critical and require the use of complex
judgment in their application.
Management has discussed the critical accounting policies with the Audit Committee of its Board of Directors, and the Audit Committee has
reviewed the disclosure. There are items within the financial statements that require estimation but are not considered critical.
30
Use of Estimates
In budgeting land acquisitions, development and homebuilding construction costs associated with real estate projects, the Company
evaluates market conditions; material and labor costs; buyer preferences; construction timing; and provisions for insurance and warranty
obligations. The Company accrues its best estimate of the probable cost for resolution of legal claims. Estimates, which are based on historical
experience and other assumptions, are reviewed continually, updated when necessary and believed to be reasonable under the circumstances.
Management believes that the timing and scope of its evaluation procedures are proper and adequate. Changes in assumptions relating to
such factors, however, could have a material effect on the Company's results of operations for a particular quarterly or annual period.
Income Recognition
In accordance with SFAS 66, revenues and cost of sales are recorded at the time each home or lot is closed; title and possession are
transferred to the buyer; and there is no significant continuing involvement from the homebuilder. In order to match revenues with related
expenses, land, land development, interest, taxes and other related costs (both incurred and estimated to be incurred in the future) are allocated
to the cost of homes closed, based upon the relative sales value basis of the total number of homes to be constructed in each community, in
accordance with Statement of Financial Accounting Standards No. 67 ("SFAS 67"), "Accounting for Costs and Initial Rental Operations of
Real Estate Projects." Estimated land, common area development and related costs of planned communities, including the cost of amenities, are
allocated to individual parcels or communities on a relative sales value basis. Changes to estimated costs, subsequent to the commencement
of the delivery of homes, are allocated to the remaining undelivered homes in the community. Home construction and related costs are charged
to the cost of homes closed under the specific-identification method.
Inventory Valuation
Housing projects and land held for development (inventory) and sale are stated at either the lower of cost or net realizable value. Inventory
includes land and development costs; direct construction costs; capitalized indirect construction costs; capitalized interest; and real estate
taxes. It may take one to three years to develop, sell and deliver all of the homes in a typical community. The Company assesses these assets
for recoverability in accordance with the provisions of SFAS 144. SFAS 144 requires that long-lived assets and assets held-for-sale be
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of housing inventories is measured by comparing the carrying amount of an asset to future undiscounted net cash flows
expected to be generated by that asset or by the sales of comparable assets. Assets held-for-sale are carried at the lower of cost or fair value
less cost to sell. These evaluations for impairment are significantly impacted by estimates of revenues, costs and expenses, as well as by other
factors. In addition, land, or costs related to future communities, whether owned or under option, are reviewed to determine if the Company will
proceed with development and if all related costs are recoverable. If these assets are considered to be impaired, the impairment loss is
measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets and is recognized within the same
period that it is identified. Management believes its processes are designed to properly assess the market and carrying values of assets.
Warranty Reserves
The Company's homes are sold with limited third-party warranties. Warranty reserves are established as homes close on a house-by-house
basis in an amount estimated to be adequate to cover expected costs of materials and outside labor during warranty periods. Certain factors
are considered in determining the reserves, including the historical range of amounts paid per house; experience with respect to similar home
designs and geographical areas; the historical amount paid as a percentage of home construction costs; any warranty expenditures not
considered to be normal and recurring; and conditions that may affect certain subdivisions. Improvements in quality control and construction
techniques expected to impact future warranty expenditures are also considered. Accordingly, the process of determining the Company's
warranty reserves balance necessarily requires estimates associated with various assumptions, each of which can positively or negatively
impact this balance.
Generally, warranty reserves are reviewed monthly to determine the reasonableness and adequacy of both the aggregate reserve and the per
unit reserve amount originally included in home cost of sales, as well as the timing of any reversals of the original reserve. General warranty
reserves not utilized for a particular house are evaluated for reasonableness in the aggregate on both a market-by-market and consolidated
basis. Warranty payments for an individual house may exceed the related reserve. Payments in excess of the reserve are evaluated in the
aggregate to determine if an adjustment to the warranty reserve should be recorded, which could result in a corresponding adjustment to home
cost of sales.
31
The Company continues to evaluate the adequacy of its warranty reserves and believes that its existing estimation process is materially
accurate. Because the Company's warranty reserves can be impacted by a significant number of factors, it is possible that changes to the
Company's assumptions could have a material impact on its warranty reserve balances.
Variable Interest Entities ("VIE")
FIN 46 requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss from the VIE's activities
and/or entitled to receive a majority of the VIE's residual returns. FIN 46 also requires disclosure about VIEs that the Company is not obligated
to consolidate but in which it has a significant, though not primary, variable interest. The Company enters into joint ventures, from time to
time, for the purpose of acquisition and co-development of land parcels and lots. Its investment in these joint ventures may create a variable
interest in a VIE, depending on the contractual terms of the arrangement. Additionally, in the ordinary course of business, the Company enters
into lot option purchase contracts in order to procure land for the construction of homes. Under such lot option purchase contracts, the
Company funds stated deposits in consideration for the right to purchase lots at a future point in time, usually at predetermined prices. In
accordance with the requirements of FIN 46, certain of the Company's lot option purchase contracts may result in the creation of a variable
interest in a VIE. The Company believes the accounting for joint ventures and land option purchase contracts using the variable interest
consolidation methodology is a critical accounting policy because compliance with FIN 46 requires the use of complex judgment in its
application.
Income Taxes
The Company calculates a provision for its income taxes by using the asset and liability method, under which deferred tax assets and liabilities
are recognized by identifying the temporary differences arising from the different treatment of items for tax and accounting purposes. The
Company evaluates its deferred tax assets on a quarterly basis to determine whether a valuation allowance is required. In accordance with
SFAS 109, the Company assesses whether a valuation allowance should be established based on its determination of whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends primarily
on the generation of future taxable income during the periods in which those temporary differences become deductible. Judgment is required in
determining the future tax consequences of events that have been recognized in the Company's consolidated financial statements and/or tax
returns. Differences between the amounts recognized in its financial statements and/or tax returns and actual outcomes may arise upon
issuance of regulations and final guidance from federal and state taxing authorities. These differences could have a material impact on the
Company's consolidated results of operations or financial position.
Share-Based Payments
Effective January 1, 2006, the Company follows the provisions of Statement of Financial Accounting Standards No. 123(R) ("SFAS 123(R)"),
"Share-Based Payment," which requires that compensation expense be measured and recognized at an amount equal to the fair value of share-
based payments granted under compensation arrangements. The Company calculates the fair value of stock options by using the Black-
Scholes-Merton option-pricing model. The determination of the fair value of share-based awards at the grant date requires judgment in
developing assumptions, which involve a number of variables. These variables include, but are not limited to, expected stock-price volatility
over the term of the awards, expected dividend yield and expected stock option exercise behavior. Additionally, judgment is also required in
estimating the number of share-based awards that are expected to forfeit. If actual results differ significantly from these estimates, stock-based
compensation expense and the Company's consolidated results of operations could be materially impacted. The Company believes the
accounting for stock-based compensation is a critical accounting policy because it requires the use of complex judgment in its application.
Outlook
In 2008, the Company experienced a decline in sales orders for new homes, compared to the same period last year, due to severe economic
conditions and broader market trends that contributed to soft demand for residential housing, as well as to a lower number of active
communities resulting from Company initiatives to react to such trends. Nearly all markets have been affected by reductions in the affordability
of homes, the availability of mortgage products and consumer demand for homes, leading to persistent high levels of new and resale home
inventories. The Company is prepared for prices and margins to remain under pressure for an extended period of time, knowing that additional
volume declines, inventory impairments and land option contract abandonment could result, though potentially less in magnitude. At
December 31, 2008, the Company's backlog of orders for new homes totaled 1,559 units, or a projected dollar value of $407.1 million, reflecting a
48.2 percent decrease in dollar value from December 31, 2007. Recent activity by the federal government designed to stimulate the economy
could improve demand, but the Company is unable to predict when or whether this will occur. As long as the imbalance of housing supply and
demand continues, the Company will not only remain focused on its
32
liquidity and balance sheet, while seeking to optimize its operating performance, but also on positioning itself for a return to a more favorable
economic environment.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk Summary
The following table provides information about the Company's significant financial instruments that are sensitive to changes in interest rates.
For debt obligations, the table presents principal cash flows and related weighted-average interest rates by expected maturity dates. For other
financial instruments, weighted-average rates are based on implied forward rates as of the reporting date.
Interest Rate Sensitivity

Principal Amount by Expected Maturity
FAIR
T HERE- VALUE
(in thousands) 2009 2010-2012 2013 AFT ER T OT AL 12/31/2008
Senior notes (fixed rate) $ – $ 250,000 $250,000 $ 246,000 $746,000 $ 559,851
Average interest rate –% 5.4% 6.9% 5.4% 5.9% 5.9%
Other financial instruments
Mortgage interest rate lock commitments:
Notional amount $ 88,824 $ – $ – $ – $ 88,824 $ 2,175
Average interest rate 5.6% – – – 5.6%
Forward-delivery contracts:
Notional amount 103,435 – – – 103,435 (1,400)
Average interest rate 5.4% – – – 5.4%
Options on futures contracts:
Notional amount 9,000 – – – 9,000 121
Investor financing commitments (optional):
Notional amount 1,489 – – – 1,489 19
Interest rate risk is a primary market risk facing the Company. Interest rate risk arises principally in the Company's financial services segment
and also in respect to the homebuilding segments' revolving credit facility. The Company enters into forward-delivery contracts, and may at
times use other hedging contracts, to mitigate its exposure to movements in interest rates on mortgage interest rate lock commitments
("IRLCs"). In managing interest rate risk, the Company does not speculate on the direction of interest rates. (See Note D, "Derivative
Instruments.")
33
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED STATEMENTS OF EARNINGS

(in thousands, except share data) 2008 2007 2006
REVENUES
Homebuilding $ 1,911,631 $ 2,960,194 $ 4,653,920
Financial services 64,493 91,681 126,333
TO TAL REVENUES 1,976,124 3,051,875 4,780,253
EXPENS ES
Cost of sales 2,003,342 3,034,141 3,639,815
Selling, general and administrative 250,278 351,376 440,702
Corporate 42,298 35,554 66,035
Expenses related to early retirement of debt 604 490 7,695
TO TAL EXPENS ES 2,381,888 3,471,973 4,213,145
EARNINGS (LO S S )
Earnings (loss) before taxes (405,764) (420,098) 567,108
T ax expense (benefit) (9,179) (86,572) 207,166
NET EARNINGS (LO S S ) $ (396,585) $ (333,526) $ 359,942
NET EARNINGS (LO S S ) PER C O MMO N S HARE
Basic $ (9.33) $ (7.92) $ 8.14
Diluted (9.33) (7.92) 7.83
AVERAGE C O MMO N S HARES O UTS TANDING
Basic 42,496,796 42,136,315 44,228,502
Diluted 42,496,796 42,136,315 45,944,448
DIVIDENDS DEC LARED PER C O MMO N S HARE $ 0.39 $ 0.48 $ 0.48
See Notes to Consolidated Financial Statem ents.
34
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
(in thousands, except share data) 2008 2007
AS S ETS
Cash and cash equivalents $ 423,259 $ 243,614
Housing inventories
Homes under construction 464,810 717,992
Land under development and improved lots 547,318 949,726
Inventory held-for-sale 68,971 69,225
Consolidated inventory not owned 15,218 76,734
T otal housing inventories 1,096,317 1,813,677
P roperty, plant and equipment 41,558 75,538
Current taxes receivable 160,681 9,141
Net deferred taxes – 158,065
Other 141,173 251,285
TO TAL ASS ETS 1,862,988 2,551,320
LIABILITIES
Accounts payable 73,464 114,050
Accrued and other liabilities 259,947 404,545
Debt 790,399 839,080
TO TAL LIABILITIES 1,123,810 1,357,675
MINO RITY INTERES T 13,816 68,919
S TO C KHO LDERS ' EQ UITY
P referred stock, $1.00 par value:
Authorized—10,000 shares Series A Junior
P articipating P referred, none outstanding – –
Common stock, $1.00 par value:
Authorized—199,990,000 shares
Issued—42,754,467 shares at December 31, 2008
(42,151,085 shares at December 31, 2007) 42,754 42,151
Retained earnings 679,317 1,078,521
Accumulated other comprehensive income 3,291 4,054
TO TAL STO C KHO LDERS ' EQ UITY 725,362 1,124,726
TO TAL LIABILITIES AND S TO C KHO LDERS ' EQ UITY $1,862,988 $2,551,320
See Notes to Consolidated Financial Statem ents.
35
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
ACCUMULAT ED
OT HER T OT AL
COMMON RET AINED COMP REHENSIVE ST OCKHOLDERS'
(in thousands, except per share data) ST OCK EARNINGS INCOME EQUIT Y
BALANCE AT JANUARY 1, 2006 $ 46,368 $ 1,326,689 $ 2,964 $ 1,376,021
Comprehensive income:
Net earnings 359,942 359,942
Other comprehensive income, net of tax:
Change in net unrealized gain on cash flow hedging instruments and
mortgage-backed securities net of taxes of $1,154 1,863 1,863
T otal comprehensive income 361,805
Common stock dividends (per share $0.48) (21,214) (21,214)
Repurchase of common stock (4,700) (245,418) (250,118)
Stock-based compensation and related income tax benefit 944 43,728 44,672
BALANCE AT DECEMBER 31, 2006 42,612 1,463,727 4,827 1,511,166
Comprehensive income (loss):
Net earnings (loss) (333,526) (333,526)
Other comprehensive income (loss), net of tax:
Change in net unrealized gain on cash flow hedging instruments and available-
for-sale securities, net of taxes of $479 (773) (773)
T otal comprehensive income (loss) (334,299)
Repurchase of common stock (1,265) (58,016) (59,281)
BALANCE AT DECEMBER 31, 2007 42,151 1,078,521 4,054 1,124,726
Comprehensive income (loss):
Net earnings (loss) (396,585) (396,585)
Other comprehensive income (loss), net of tax:
Change in net unrealized gain on cash flow hedging instruments and available-
for-sale securities, net of taxes of $473 (763) (763)
T otal comprehensive income (loss) (397,348)
BALANC E AT DEC EMBER 31, 2008 $ 42,754 $ 679,317 $ 3,291 $ 725,362
See Notes to Consolidated Financial Statements.
36
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) 2008 2007 2006
C AS H FLO W S FRO M O PERATING AC TIVITIES
Net earnings (loss) $(396,585) $(333,526) $ 359,942
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization 52,215 54,494 46,731
Stock-based compensation expense 9,048 12,257 25,593
Inventory and other asset impairments and write-offs 325,480 583,363 81,314
Deferred tax valuation allowance 143,784 75,166 –
Changes in assets and liabilities:
Decrease (increase) in inventories 383,237 273,355 (263,444)
Net change in other assets, payables and other liabilities (239,388) (412,984) (217,488)
Excess tax benefits from stock-based compensation (3,138) (6,714) (14,632)
Other operating activities, net (26,227) (17,271) (3,379)
Net cash provided by operating activities 248,426 228,140 14,637
C AS H FLO W S FRO M INVES TING AC TIVITIES
Additions to property, plant and equipment (9,866) (32,147) (53,839)
Other investing activities, net 40 750 2,250
Net cash used for investing activities (9,826) (31,397) (51,589)
C AS H FLO W S FRO M FINANC ING AC TIVITIES
Cash proceeds of long-term debt – – 250,000
Repayment of long-term debt (54,000) (100,000) (243,500)
Net borrowings against revolving credit facilities 22,125 – –
(Decrease) increase in short-term borrowings (16,806) (11,037) 21,647
Common stock dividends (20,510) (20,365) (21,666)
Common stock repurchases – (59,281) (250,118)
Issuance of common stock under stock-based compensation 7,098 15,803 19,611
Excess tax benefits from stock-based compensation 3,138 6,714 14,632
Net cash used for financing activities (58,955) (168,166) (209,394)
Net increase (decrease) in cash and cash equivalents 179,645 28,577 (246,346)
Cash and cash equivalents at beginning of period 243,614 215,037 461,383
C AS H AND C AS H EQ UIVALENTS AT END O F PERIO D $ 423,259 $ 243,614 $ 215,037
S UPPLEMENTAL DIS C LO S URES O F C AS H FLO W INFO RMATIO N
Cash paid for interest, net of capitalized interest $ 76 $ 1,097 $ 1,295
Cash paid (refunds received) for income taxes (20,111) 25,569 258,205
S UPPLEMENTAL DIS C LO S URES O F NO NC AS H AC TIVITIES
(Decrease) increase in consolidated inventory not owned related to land options $ (54,283) $(104,415) $ 9,139
See Notes to Consolidated Financial Statements.
37
Note A: Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of The Ryland Group, Inc. and its wholly-owned subsidiaries. Intercompany
transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the 2008 presentation.
Use of Estimates
The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual
results could differ from these estimates.
Cash and Cash Equivalents
At December 31, 2008, the Company had cash and cash equivalents of $423.3 million, of which $30.0 million was restricted. The Company
considers all highly liquid short-term investments and cash held in escrow to be cash equivalents. Cash equivalents totaled $364.6 million and
$193.6 million at December 31, 2008 and 2007, respectively.
Per Share Data
Basic net earnings per common share is computed by dividing net earnings by the weighted-average number of common shares outstanding.
Additionally, diluted net earnings per common share give effect to dilutive common stock equivalent shares. For the years ended December 31,
2008 and 2007, the effect of outstanding restricted stock units and stock options was not included in the diluted earnings per share calculation
as their effect would have been antidilutive due to the Company's net loss for the year.
Stock-Based Compensation
Effective January 1, 2006, the Company complies with the fair value recognition provisions of SFAS 123(R) by using the modified-prospective
transition method. Under that transition method, compensation cost recognized in 2008, 2007 and 2006 includes: (a) compensation cost for all
share-based payments granted prior to January 1, 2006, but not yet vested, based on the grant-date fair value estimated in accordance with the
original provisions of Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation," and
(b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in
accordance with the provisions of SFAS 123(R).
Homebuilding Revenues
In accordance with SFAS 66, homebuilding revenues are recognized when home and lot sales are closed; title and possession are transferred
to the buyer; and there is no significant continuing involvement from the homebuilder. Sales incentives offset revenues and are expensed
when homes are closed.
Housing Inventories
Housing inventories consist principally of homes under construction; land under development and improved lots; and inventory held-for-sale.
Inventory includes land and development costs; direct construction costs; capitalized indirect construction costs; capitalized interest; and real
estate taxes. The costs of acquiring and developing land and constructing certain related amenities, are allocated to the parcels to which these
costs relate. Interest and taxes are capitalized during active development and construction. Inventories to be held and used are stated at cost
unless a community is determined to be impaired, in which case the impaired inventories are written down to fair value. Inventories held-for-
sale are stated at the lower of cost or fair value less cost to sell. Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparing
the carrying amount of an asset to future undiscounted net cash flows expected to be generated by that asset or by the sales of comparable
assets. For inventory held and used, undiscounted cash flow projections are generated at a community level based on estimates of revenues,
costs and other factors. The Company's analysis of these communities generally assumes current revenues equal to current sales orders for
particular or comparable communities. The Company's determination of fair value is primarily based on discounting estimated cash flows at a
rate commensurate with inherent risks that are associated with assets and related estimated cash flow streams. When determining the value of
inventory held-for-sale, the Company considers recent offers, comparable sales and/or estimated cash flows. Inventories to be held and used
or disposed of are reported net of valuation reserves. Write-downs of impaired inventories to fair value are recorded as adjustments to the cost
basis of the respective inventory. Valuation reserves related to impaired inventories amounted to $445.2 million and $488.1 million at
December 31, 2008 and 2007, respectively. The net carrying values of
38
the related inventories amounted to $378.6 million and $388.3 million at December 31, 2008 and 2007, respectively. Inventory costs include
direct costs of land and land development; material acquisition; and home construction expenses. The costs of acquiring and developing land
and constructing certain related amenities, are allocated to the parcels to which these costs relate. Interest and taxes are capitalized during the
land development and construction stages.
The following table is a summary of capitalized interest:
(in thousands) 2008 2007

Capitalized interest at January 1 $119,267 $ 98,932
Interest capitalized 46,889 62,024
Interest amortized to cost of sales (61,146) (41,689)
Capitalized interest at December 31 $105,010 $119,267
The following table summarizes each reporting segment's total number of lots owned and lots controlled under option agreements:
DEC EMBER 31, 2008 DECEMBER 31, 2007

LO TS LO TS LOT S LOT S
O W NED O PTIO NED TO TAL OWNED OP T IONED T OT AL
North 4,381 2,755 7,136 5,999 5,787 11,786
Southeast 7,969 749 8,718 9,957 3,192 13,149
T exas 4,833 440 5,273 5,784 3,434 9,218
West 2,056 372 2,428 4,907 840 5,747
T otal 19,239 4,316 23,555 26,647 13,253 39,900
Variable Interest Entities
FIN 46 requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss from the VIE's activities
and/or entitled to receive a majority of the VIE's residual returns. FIN 46 also requires disclosures about VIEs that the Company is not
obligated to consolidate but in which it has a significant, though not primary, variable interest.
The Company enters into joint ventures, from time to time, for the purpose of acquisition and co-development of land parcels and lots. Its
investment in these joint ventures may create a variable interest in a VIE, depending on the contractual terms of the arrangement. Additionally,
in the ordinary course of business, the Company enters into lot option purchase contracts in order to procure land for the construction of
homes. Under such lot option purchase contracts, the Company funds stated deposits in consideration for the right to purchase lots at a
future point in time, usually at predetermined prices. In accordance with the requirements of FIN 46, certain of the Company's lot option
purchase contracts may result in the creation of a variable interest in a VIE.
In compliance with the provisions of FIN 46, the Company consolidated $15.2 million of inventory not owned at December 31, 2008, of which
$14.4 million pertained to land and lot option purchase contracts, representing the fair value of the optioned property, and $799,000 pertained
to one of its homebuilding joint ventures. (See further discussion that follows under "Investments in Joint Ventures.") While the Company
may not have had legal title to the optioned land or guaranteed the seller's debt associated with that property, under FIN 46 it had the primary
variable interest and was required to consolidate the particular VIE's assets under option at fair value. Additionally, to reflect the fair value of
the inventory consolidated under FIN 46, the Company eliminated $845,000 of its related cash deposits for lot option purchase contracts,
which are included in "Consolidated inventory not owned." Minority interest totaling $13.6 million was recorded with respect to the
consolidation of these contracts, representing the selling entities' ownership interests in these VIEs. At December 31, 2008, the Company had
cash deposits and letters of credit totaling $2.1 million relating to lot option purchase contracts that were consolidated, representing its current
maximum exposure to loss. Creditors of these VIEs, if any, have no recourse against the Company. At December 31, 2008, the Company had
cash deposits and/or letters of credit totaling $20.4 million that were associated with lot option purchase contracts having an aggregate
purchase price of $184.6 million and related to VIEs in which it did not have a primary variable interest.
Service Liabilities
Service, warranty and completion costs are estimated and accrued at the time a home closes and updated as experience requires.
39
Investments in Joint Ventures
The Company enters into joint ventures, from time to time, for the purpose of acquisition and co-development of land parcels and lots.
Currently, the Company participates in six active homebuilding joint ventures in the Austin, Chicago, Dallas, Denver and Orlando markets. It
participates in a number of joint ventures in which it has less than a controlling interest. The Company recognizes its share of the respective
joint ventures' earnings or losses from the sale of lots to other homebuilders. It does not, however, recognize earnings or losses from lots that
it purchases from the joint ventures. Instead, it reduces its cost basis in these lots by its share of the earnings from the lots.
The following table summarizes each reporting segment's total estimated share of lots owned and controlled by the Company under its joint
ventures:
DEC EMBER 31, 2008 DECEMBER 31, 2007

LO TS LO TS LOT S LOT S
O W NED O PTIO NED TO TAL OWNED OP T IONED T OT AL
North 578 – 578 681 – 681
Southeast – – – 45 – 45
T exas 145 – 145 189 – 189
West 166 1,209 1,375 410 1,209 1,619
T otal 889 1,209 2,098 1,325 1,209 2,534
At December 31, 2008 and 2007, the Company's investments in its unconsolidated joint ventures totaled $12.5 million and $30.8 million,
respectively, and were classified in the consolidated balance sheets under "Other" assets. For the year ended December 31, 2008, the
Company's equity in losses from unconsolidated joint ventures totaled $43.9 million, compared to earnings of $342,000 and losses of $260,000
for the same periods in 2007 and 2006, respectively. The increased loss in 2008, compared to 2007, was primarily attributable to an $8.7 million
impairment of inventory within two joint ventures in the West region and a $35.8 million impairment of inventory within a joint venture in the
Company's North region, partially offset by earnings from its other unconsolidated joint ventures. The aggregate debt of the unconsolidated
joint ventures in which the Company participated totaled $1.3 million and $508.4 million at December 31, 2008 and 2007, respectively.
One of the Company's unconsolidated joint ventures had recorded assets of $644.2 million and debt of $435.3 million at December 31, 2007.
During 2008, the debt related to this joint venture was declared in default, and the administrative agent for the lenders foreclosed on the real
estate securing the loan in a non-judicial foreclosure proceeding. The Company and its partners in the joint venture provided a limited
Repayment Guarantee of the outstanding debt that can only be pursued upon the occurrence of certain bankruptcy events with respect to the
joint venture, which have not occurred. In addition, a Completion Guarantee was also provided that pertained to development and
improvement costs estimated by the banks at $358.0 million, certain interest and other obligations. The Company has a 3.3 percent interest in
this joint venture, and its obligation with respect to the Repayment Guarantee and Completion Guarantee is limited to its pro rata percentage of
the guarantee and/or costs, as applicable. The administrative agent, under the loan documents, filed a complaint against the Company and
certain other partners in the joint venture during the fourth quarter of 2008 seeking enforcement of the Completion Guarantees, including a
damage claim for an alleged failure of performance. The Company wrote off its $7.2 million investment in this joint venture during the first
quarter of 2008.
The Company had an interest in another joint venture in which the Company had an investment of $2.9 million and $13.0 million at
December 31, 2008 and 2007, respectively. The decrease was primarily due to a $35.9 million impairment of the Company's share of inventory
within the venture. In addition, during 2008, an appraisal generated a lender demand for repayment of debt in the amount of $39.3 million, of
which the Company paid its pro rata share of $19.6 million. At December 31, 2008 and 2007, the actual borrowings against the revolving credit
facility for this joint venture were $1.3 million and $50.6 million, respectively, of which the Company's pro rata share of debt under a payment
guarantee was $646,000 and $25.3 million, respectively.
At December 31, 2008, one of the joint ventures in which the Company participated was consolidated in accordance with the provisions of
FIN 46, as the Company was determined to have the primary variable interest in this entity. In association with this consolidated joint venture,
the Company eliminates any pretax earnings or losses if any sales are made by the joint venture to the Company. The Company did not record
any pretax earnings or losses for the year ended December 31, 2008, in association with this consolidated joint venture. For the year ended
December 31, 2007, the Company recorded pretax earnings of $108,000 in connection with its consolidated joint ventures. The Company
consolidated approximately
40
$810,000 of assets, which included $799,000 of consolidated inventory not owned, $968,000 of total liabilities and approximately $242,000 of
minority interest at December 31, 2008. Total assets of approximately $782,000, including consolidated inventory not owned, and minority
interest of $1.1 million were consolidated at December 31, 2007.
Property, Plant and Equipment
Property, plant and equipment, which included model home furnishings of $38.6 million and $69.6 million at December 31, 2008 and 2007,
respectively, are carried at cost less accumulated depreciation and amortization. Depreciation is provided for, principally, by the straight-line
method over the estimated useful lives of the assets. Model home furnishings, which are amortized over the life of the community as homes are
closed, are included in selling, general and administrative expenses.
Purchase Price in Excess of Net Assets Acquired
Statement of Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets," requires that goodwill and
certain intangible assets no longer be amortized but be reviewed for impairment at least annually. Intangible assets with finite lives will
continue to be amortized over their estimated useful lives. SFAS 142 also requires that goodwill included in the carrying value of equity-
method investments no longer be amortized.
Goodwill is allocated to the reporting unit from which it originates. The Company performs impairment tests of its goodwill annually as of
March 31, or as needed. The Company tests goodwill for impairment by using the two-step process prescribed in SFAS 142. The first step
identifies potential impairment, while the second step measures the amount of impairment. The Company evaluated the recoverability of its
goodwill at December 31, 2008, which resulted in an impairment of its remaining goodwill that totaled $2.8 million, and reported it under
"Selling, general and administrative expenses." This impairment related to the 1998 acquisition of The Regency Organization, Inc. in the
Company's Southeast region. There was no goodwill remaining at December 31, 2008.
The Company recorded a $15.4 million goodwill impairment charge, which was reported under "Selling, general and administrative expenses,"
during the first quarter of 2007. This impairment was related to the 1986 acquisition of MJ Brock & Sons, a California homebuilder based in the
Company's West region.
As a result of the Company's application of the nonamortization provisions of SFAS 142, no amortization of goodwill was recorded in 2008,
2007 or 2006.
Income Taxes
The Company files a consolidated federal income tax return. Certain items of income and expense are included in one period for financial
reporting purposes and in another for income tax purposes. Deferred income taxes are provided in recognition of these differences. Deferred
tax assets and liabilities are determined based on enacted tax rates and are subsequently adjusted for changes in these rates. An allowance
against the Company's deferred tax assets may be established if it is more likely than not that all or some portion of the deferred tax assets will
not be realized. A change in deferred tax assets or liabilities results in a charge or credit to deferred tax expense. (See Note G, "Income Taxes.")
Loan Origination Fees, Costs, Mortgage Discounts and Loan Sales
Loan origination fees, net of loan discount points, were recognized in earnings upon the sale of related mortgage loans prior to January 2008,
in accordance with Statement of Financial Accounting Standards No. 140 ("SFAS 140"), "Accounting for Transfers and Servicing of Financial
Assets and Extinguishment of Liabilities," and Statement of Financial Accounting Standards No. 91 ("SFAS 91"), "Accounting for
Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases." Beginning January 2008,
upon the implementation of Statement of Financial Accounting Standards No. 159 ("SFAS 159"), "The Fair Value Option for Financial Assets
and Financial Liabilities," loan origination fees, net of loan discount points, were recognized in earnings upon the origination of related
mortgage loans, in accordance with SFAS 159.
Derivative Instruments
In the normal course of business and pursuant to its risk-management policy, the Company enters, as an end user, into derivative instruments,
including forward-delivery contracts for loans; options on forward-delivery contracts; futures contracts; and options on futures contracts, to
minimize the impact of movements in market interest rates on IRLCs. Major factors influencing the use of various hedging contracts include
general market conditions, interest rates, types of mortgages originated and the percentage of IRLCs expected to fund. The Company is
exposed to credit-related losses in the event of nonperformance by counterparties to certain hedging contracts. Credit risk is limited to those
instances where the Company
41
is in a net unrealized gain position. It manages this credit risk by entering into agreements with counterparties meeting its credit standards and
by monitoring position limits. The Company elected not to use hedge accounting treatment with respect to its economic hedging activities.
Accordingly, all derivative instruments used as economic hedges are carried in the consolidated balance sheets in "Other" assets or "Accrued
and other liabilities" at fair value, with changes in value recorded in current earnings. The Company's mortgage pipeline includes IRLCs, which
represent commitments that have been extended by the Company to those borrowers who have applied for loan funding and have met certain
defined credit and underwriting criteria. Additionally, RMC periodically purchases investor financing commitments ("IFCs") from a third party.
These commitments enable RMC to sell loans at a fixed rate for a stipulated period of time. The Company determined that its IRLCs and IFCs
meet the definition of derivatives under Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities," as amended.
Advertising Costs
The Company expenses advertising costs as they are incurred. Advertising costs totaled $14.4 million, $28.7 million and $34.9 million in 2008,
Comprehensive Income
Comprehensive income consists of net earnings or losses and the increase or decrease in unrealized gains or losses on the Company's
available-for-sale securities, as well as the decrease in unrealized gains associated with the treasury locks, net of applicable taxes.
Comprehensive losses totaled $397.3 million, compared to losses of $334.3 million and income of $361.8 million for the years ended
December 31, 2008, 2007 and 2006, respectively.
New Accounting Pronouncements

SFAS 157
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 ("SFAS 157"), "Fair-Value Measurements."
SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands
disclosures about fair-value measurements. SFAS 157 is effective as of the beginning of an entity's fiscal year that begins after November 15,
2007. In February 2008, the FASB issued Staff Position No. FAS 157-2, which partially defers the effective date of SFAS 157 for nonfinancial
assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis, until fiscal
years beginning after November 15, 2008. The partial adoption of SFAS 157 did not have a material impact on the Company's consolidated
financial statements. The Company is currently evaluating the impact of adopting the remaining provisions of SFAS 157; however, it is not
expected to have a material effect on the Company's consolidated financial statements.
SFAS 158
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158 ("SFAS 158"), "Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans—an Amendment of FASB Statements No. 87, 88, 106 and 132(R)." SFAS 158 requires that the
funded status of defined benefit pension plans and other postretirement plans be recognized in the balance sheet, along with a corresponding
after-tax adjustment to stockholders' equity. The recognition of the funded status provision of SFAS 158 applies prospectively and is effective
December 31, 2007. SFAS 158 also requires measurement of plan assets and benefit obligations at the entity's fiscal year-end, effective
December 31, 2008. SFAS 158 did not and is not expected to have a material effect on the Company's financial condition or results of
operations.
SFAS 160
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160 ("SFAS 160"), "Noncontrolling Interests in
Consolidated Financial Statements, an Amendment of ARB No. 51." SFAS 160 establishes accounting and reporting standards pertaining to
ownership interests in subsidiaries held by parties other than the parent; the amount of net income attributable to the parent and to the
noncontrolling interest; changes in a parent's ownership interest; and the valuation of any retained noncontrolling equity investment when a
subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of
the parent and the interests of the noncontrolling owners. SFAS 160 is required to be adopted prospectively for the first annual reporting
period beginning after December 15, 2008. The Company is currently reviewing this statement and has not yet determined the impact, if any, on
its consolidated financial statements.
42
SFAS 161
In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161 ("SFAS 161"), "Disclosures About Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No. 133." SFAS 161 expands the disclosure requirements in
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 161 is effective
for the Company's fiscal year beginning January 1, 2009. The Company does not expect the adoption of SFAS 161 to have a material effect on
its consolidated financial statements.
SFAS 162
In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162 ("SFAS 162"), "The Hierarchy of Generally Accepted
Accounting Principles." SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in
the preparation of financial statements for nongovernmental entities that are presented in conformity with GAAP. SFAS 162 will be effective
60 days following the SEC's approval of the Public Company Accounting Oversight Board's amendments to AU Section 411, "The Meaning of
Present Fairly in Conformity with Generally Accepted Accounting Principles." The Company does not expect the adoption of SFAS 162 to
have a material impact on its consolidated financial position, results of operations or cash flows.
SFAS 163
In May 2008, the FASB issued Statement of Financial Accounting Standards No. 163 ("SFAS 163"), "Accounting for Financial Guarantee
Insurance Contracts—an Interpretation of FASB Statement No. 60." SFAS 163 requires that an insurance entity recognize a claim liability prior
to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. SFAS 163
also clarifies the application of SFAS 60, "Accounting and Reporting by Insurance Enterprises," to financial guarantee insurance contracts
and expands disclosure requirements surrounding such contracts. SFAS 163 is effective for financial statements issued for fiscal years and
interim periods beginning after December 15, 2008. The Company is currently reviewing this statement and has not yet determined the impact,
if any, on its consolidated financial statements.
FSP 157-3
In October 2008, the FASB issued FASB Staff Position No. 157-3 ("FSP 157-3"), "Determining the Fair Value of a Financial Asset When the
Market for That Asset Is Not Active." The staff position clarifies the application of SFAS 157 to a market that is not active. FSP 157-3 became
effective upon issuance, including prior periods for which financial statements have not been issued. The Company adopted FSP 157-3 as of
September 30, 2008, and it did not have a material impact on its consolidated financial position, results of operations or cash flows.
Note B: Segment Information
The Company is a leading national homebuilder and mortgage-related financial services firm. As one of the largest single-family on-site
homebuilders in the United States, it operates in 15 states and 19 homebuilding divisions across the country. The Company consists of six
segments: four geographically determined homebuilding regions; financial services; and corporate. The Company's homebuilding operations
consist of four regional reporting segments, referred to as North, Southeast, Texas and West. The homebuilding segments specialize in the
sale and construction of single-family attached and detached housing. Its financial services segment includes RMC, RHIC, LPS and CNRRG.
The Company's financial services segment provides loan origination and offers mortgage, title, escrow and insurance services. Corporate is a
nonoperating business segment with the sole purpose of supporting operations. Certain corporate expenses are allocated to the homebuilding
and financial services segments, while certain assets relating to employee benefit plans are attributed to other segments in order to best reflect
the Company's financial position and results of operations.
The Company evaluates performance and allocates resources based on a number of factors, including segment pretax earnings and risk. The
accounting policies of the segments are the same as those described in Note A, "Summary of Significant Accounting Policies."
43
Selected Segment Information

(in thousands) 2008 2007 2006
REVENUES
Homebuilding
North $ 639,814 $ 857,448 $1,196,335
Southeast 558,194 929,168 1,522,123
T exas 415,761 571,689 695,356
West 297,862 601,889 1,240,106
T otal $1,976,124 $3,051,875 $4,780,253
EARNINGS (LO S S ) BEFO RE TAXES
Homebuilding
North $ (156,158) $ (37,077) $ 170,636
Southeast (95,449) (59,419) 253,120
T exas (19,828) 27,098 59,854
West (114,454) (355,583) 89,533
Corporate and unallocated (42,902) (36,044) (73,730)
T otal $ (405,764) $ (420,098) $ 567,108
DEPREC IATIO N AND AMO RTIZATIO N
Homebuilding
North $ 10,079 $ 9,080 $ 9,620
Southeast 16,566 8,252 10,913
T exas 8,589 6,856 7,366
West 15,415 27,552 15,981
Financial services 361 1,054 1,225
Corporate and unallocated 1,205 1,700 1,626
T otal $ 52,215 $ 54,494 $ 46,731
DECEMBER 31,
IDENTIFIABLE AS S ETS
Homebuilding
North $ 520,969 $ 724,105
Southeast 476,633 693,532
T exas 378,625 421,359
West 197,814 379,640
Financial services 98,540 93,200
Corporate and unallocated 190,407 239,484
T otal $1,862,988 $2,551,320
Note C: Earnings Per Share Reconciliation
The following table sets forth the computation of basic and diluted earnings per share:

(in thousands, except share data) 2008 2007 2006
NUMERATO R
Net earnings (loss) $ (396,585) $ (333,526) $ 359,942
DENO MINATO R
Basic earnings per share—weighted-average shares 42,496,796 42,136,315 44,228,502
Effect of dilutive securities:
Stock options – – 1,294,237
Equity incentive plan – – 421,709
Dilutive potential of common shares – – 1,715,946
Dilutive earnings per share—adjusted weighted-average shares and assumed conversions 42,496,796 42,136,315 45,944,448
NET EARNINGS (LO S S ) PER C O MMO N S HARE
Basic $ (9.33) $ (7.92) $ 8.14
Diluted (9.33) (7.92) 7.83
44
For the years ended December 31, 2008 and 2007, the effect of outstanding restricted stock units and stock options was not included in the
diluted earnings per share calculation as their effect would have been antidilutive due to the Company's net loss for the year. Options to
purchase 1.1 million shares of common stock at various prices were outstanding at December 31, 2006 but were not included in the
computation of diluted earnings per share because their effect would have been antidilutive since their exercise prices were greater than the
average market price of the common shares.
Note D: Derivative Instruments
The Company, which uses derivative financial instruments in its normal course of operations, has no derivative financial instruments that are
held for trading purposes.
The contract or notional amounts of these financial instruments at December 31 were as follows:

Mortgage interest rate lock commitments $ 88,824 $66,126
Hedging contracts:
Forward-delivery contracts 103,435 47,500
Options on futures contracts 9,000 21,000
Investor financing commitments 1,489 32,534
IRLCs represent loan commitments with customers at market rates generally up to 180 days before settlement. IRLCs expose the Company to
market risk as a result of increases in mortgage interest rates. IRLCs had interest rates generally ranging from 5.0 to 7.0 percent at December 31,
2008 and 2007.
Hedging contracts are regularly entered into by the Company for the purpose of mitigating its exposure to movements in interest rates on
IRLCs. The selection of these hedging contracts is based upon the Company's secondary marketing strategy, which establishes a risk-
tolerance level. Major factors influencing the use of various hedging contracts include general market conditions, interest rates, types of
mortgages originated and the percentage of IRLCs expected to fund. The market risk assumed while holding the hedging contracts generally
mitigates the market risk associated with IRLCs. The Company is exposed to credit-related losses in the event of nonperformance by
counterparties to certain hedging contracts. Credit risk is limited to those instances where the Company is in a net unrealized gain position.
The Company manages this credit risk by entering into agreements with counterparties meeting its credit standards and by monitoring
position limits.
During the second quarter of 2006, the Company terminated its $100.0 million treasury lock at 4.2 percent and its $150.0 million treasury lock at
4.1 percent. These hedges were entered into to facilitate the replacement of higher-rate senior and senior subordinated debt in 2006, which
were evaluated and deemed to be highly effective at the inception of the contracts. The Company accounted for the treasury locks as cash
flow hedges, in accordance with SFAS 133. As a result of changes in the timing of the Company's debt issuance and in the term of debt issued
in the second quarter of 2006, a gain of $9.2 million was recognized during that period, reflecting the ineffective portion of those cash flow
hedges. For the year ended 2006, the Company recognized pretax gains of $9.9 million from the termination of these treasury locks. The
$8.4 million effective portion of the settlement value of the $150.0 million treasury lock was recorded, net of income tax effect, in "Accumulated
other comprehensive income" and will be amortized over the seven-year life of the related debt instrument. The Company recorded
amortization of $1.2 million for the years ended December 31, 2008 and 2007, and approximately $704,000 for the year ended December 31, 2006,
related to the effective portion of this termination.
Note E: Fair Values of Financial Instruments
The Company's financial instruments are held for purposes other than trading. The fair values of these financial instruments are based on
quoted market prices, where available, or are estimated using other valuation techniques. Estimated fair values are significantly affected by the
assumptions used.
45
The table below sets forth the carrying values and fair values of the Company's financial instruments at December 31, 2008 and 2007. It
excludes nonfinancial instruments, and accordingly, the aggregate fair value amounts presented do not represent the underlying value of the
Company.
2008 2007
C ARRYING FAIR CARRYING FAIR
(in thousands) VALUE VALUE VALUE VALUE
O THER AS S ETS
Mortgage loans held-for-sale $ 26,291 $ 26,291 $ 12,557 $ 12,813
DEBT
Senior notes $ 746,000 $559,851 $ 800,000 $751,885
O THER FINANC IAL INSTRUMENTS
Mortgage interest rate lock commitments $ 2,175 $ 2,175 $ 298 $ 298
Forward-delivery contracts (1,400) (1,400) (181) (181)
Options on futures contracts 121 121 298 298
Investor financing commitments 19 19 15 15
The carrying amounts of cash and cash equivalents and secured notes payable are reported in the balance sheet and approximate their fair
values. The fair values of the senior notes, mortgage loans held-for-sale, forward-delivery contracts and IRLCs are based on either quoted
market prices or market prices for similar financial instruments. Beginning in 2008, the fair values of the IRLCs include amounts associated with
the future servicing of loans in accordance with SAB 109.
The fair values of financial instruments are based on quoted market prices, where available, or are estimated using other valuation techniques.
Estimated fair values are significantly affected by assumptions used. SFAS 157 categorizes fair value measurements as level 1, level 2 or
level 3, based on the type of inputs used in estimating fair value. The table below sets forth information regarding the Company's fair value
measurement methods and values.
DEC EMBER 31, 2008

FAIR VALUE
Q UO TED VALUATIO N VALUATIO N
PRIC ES UTILIZES UTILIZES
LO W ER O F IN AC TIVE O BS ERVABLE UNO BS ERVABLE
CO ST O R MARKETS INPUTS INPUTS
(in thousands) MARKET * (LEVEL 1) (LEVEL 2) (LEVEL 3) TO TAL
Mortgage loans held-for-sale $ 195 $ – $ 26,096 $ – $ 26,291
Mortgage interest rate lock commitments – – – 2,175 2,175
Forward-delivery contracts – – (1,400) – (1,400)
Options on futures contracts – 121 – – 121
Investor financing commitments – – – 19 19
* Loans originated prior to January 1, 2008
Options on futures contracts are exchange-traded and are valued based on quoted market exit prices (level 1). Loans held-for-sale and forward
delivery contracts are based on quoted market prices of similar instruments (level 2). As of December 31, 2008, contractual principal amounts of
loans held-for-sale totaled $25.8 million. IRLCs are valued at their aggregate market price premium or deficit, plus servicing premium, multiplied
by the projected close ratio. The market price premium or deficit is based on quoted market prices of similar instruments (level 2); the servicing
premium is based on contractual investor guidelines for each product (level 2); and the projected close ratio is determined utilizing an external
modeling system used widely within the industry to estimate customer behavior at an individual loan level (level 3). Investor financing
commitments are valued based on their intrinsic value, which is determined with reference to movements in market interest rates (level 2), plus
a time value factor that is extrapolated from current market prices of similar contracts (level 3).
In 2008, the Company implemented SAB 109, which revises and rescinds portions of Staff Accounting Bulletin No. 105 ("SAB 105"), "Loan
Commitments Accounted for as Derivative Instruments," and requires that expected net future cash flows related to the associated servicing
of a loan be included in the measurement of all written loan commitments that are accounted for at fair value through earnings. The provisions
of SAB 109 were applicable to written loan commitments issued or modified beginning on January 1, 2008, when SAB 109 was adopted. At
December 31, 2008, servicing rights of $1.7 million were included in net gains on the sale of mortgages and mortgage servicing rights in
accordance with SAB 109.
46
The Company adopted SFAS 159 on a prospective basis for mortgage loans held-for-sale, effective January 1, 2008. Accordingly, mortgage
loans held-for-sale that originated subsequent to January 1, 2008, are measured at fair value. Loans originated prior to that date are held at the
lower of cost or market on an aggregate basis, in accordance with Statement of Financial Accounting Standard No. 65, "Accounting for Certain
Mortgage Banking Activities." The application of SFAS 159 to loans held-for-sale improves the consistency of loan valuation between the
date of borrower lock and the date of loan sale. As of December 31, 2008, the difference between the aggregate fair value and the aggregate
unpaid principal balance for mortgage loans held-for-sale measured at fair value was $704,000. Consequently, this amount has been recognized
as a gain in current earnings within financial services revenues. The Company held two loans with payments 90 days or more past due, as of
December 31, 2008, that had an aggregate carrying value of $145,000.
While recorded fair values represent management's best estimate based on data currently available, future changes in interest rates or in
market prices for mortgage loans, among other factors, could have a material impact on the value of these items.
The following table represents a reconciliation of changes in fair values of level 3 items included in revenues under "Financial services" within
the Consolidated Statements of Earnings:
(in thousands) IRLC s IFCs

Fair value at January 1, 2008 $ 298 $ 15
(Gain) loss recognized on conversion to loans (6,475) –
Additions 9,346 1,497
Change in valuation of items held (994) (1,493)
Fair value at December 31, 2008 $ 2,175 $ 19
Note F: Debt
Debt consisted of the following at December 31:

Senior notes $746,000 $800,000
Secured notes payable 22,274 39,080
RMC warehouse line of credit 22,125 –
T otal debt $790,399 $839,080
At December 31, 2008, maturities of debt are scheduled as follows:
(in thousands)
2009 $ 32,716
2010 6,130
2011 5,553
2012 250,000
After 2012 496,000
T otal debt $790,399
At December 31, 2008, the Company had outstanding (a) $250.0 million of 5.4 percent senior notes due May 2012; (b) $250.0 million of
6.9 percent senior notes due June 2013; and (c) $246.0 million of 5.4 percent senior notes due January 2015. Each of the senior notes pays
interest semiannually and may be redeemed at a stated redemption price, at the option of the Company, in whole or in part, at any time.
During 2008, the Company's $50.0 million of 5.4 percent senior notes due June 2008 matured, and were repaid and the Company repurchased
$4.0 million of its 5.4 percent senior notes due January 2015. (See Management's Discussion and Analysis of Financial Condition and Results
of Operations, "Financial Condition and Liquidity.")
The senior notes and indenture agreements are subject to certain covenants that include, among other things, restrictions on additional
secured debt and the sale of assets. The Company was in compliance with these covenants at December 31, 2008.
47
In February and June of 2008, the Company amended its unsecured revolving credit facility. The credit facility is used for general corporate
purposes and contains affirmative, negative and financial covenants, including a minimum consolidated tangible net worth requirement; a
permitted leverage ratio; and limitations on unsold home units, unsold land, lot inventory, investments and senior debt. The amendments
included, among other things: a) a decrease in the Company's borrowing availability from $750.0 million to $550.0 million; b) a reduction in the
base amount for the minimum consolidated tangible net worth covenant; c) an increase in the pricing grid, which is based on the Company's
leverage ratio and public debt rating; d) an adjustment in the permitted leverage ratio to no less than 55.0 percent for the fourth quarter of 2008
and the first quarter of 2009, 52.5 percent for the second, third and fourth quarters of 2009 and 50.0 percent thereafter; e) an increase in the
borrowing base by adding restricted cash up to $300.0 million; f) a change in the definition of material indebtedness to $20.0 million; and g) a
change in the restriction of the Company's book value of unsold land to 1.15x its consolidated tangible net worth.
facility's maturity date of January 2011 remains unchanged, and the accordion feature has been reduced to a maximum of $300.0 million, subject
to the availability of additional lending commitments. The revolving credit facility includes a $75.0 million swing-line facility and the ability to
issue standby letters of credit. Amounts borrowed under the credit agreement are guaranteed on a joint and several basis by substantially all
of the Company's 100 percent-owned homebuilding subsidiaries. Such guarantees are full and unconditional. Interest rates on outstanding
borrowings under the amended facility are determined either by reference to LIBOR or an alternative base rate, with margins determined based
on changes in the Company's leverage ratio and credit ratings, plus, if the Company's interest coverage ratio is less than 2.0 to 1.0, an interest
premium is determined based on changes in the Company's interest coverage ratio. (See Note L, "Subsequent Events.")
There were no borrowings outstanding under the facility at December 31, 2008 or 2007. Letters of credit aggregating $95.7 million and
$157.8 million were outstanding under the facility at December 31, 2008 and 2007, respectively. Under the facility, the unused borrowing
capacity, as then in effect, totaled $454.3 million and $592.2 million at December 31, 2008 and 2007, respectively. At December 31, 2008, the
$550.0 million facility, then in effect, was subject to a borrowing base limitation covenant, which restricted its borrowing capacity to
$338.1 million, of which $242.4 million was available. The Company was in compliance with its covenants at December 31, 2008. The reduction
in the facility's commitments during 2008 resulted in an expense of $604,000, which represented the write-off of a pro rata portion of
unamortized debt costs and is included within "Expenses related to early retirement of debt" in the Consolidated Statement of Earnings. (See
Management's Discussion and Analysis of Financial Condition and Results of Operations, "Financial Condition and Liquidity.")
At December 31, 2008, the Company's obligations to pay principal, premium, if any, and interest under its unsecured revolving credit facility;
5.4 percent senior notes due May 2012; 6.9 percent senior notes due June 2013; and 5.4 percent senior notes due January 2015 are guaranteed
on a joint and several basis by substantially all of its 100 percent-owned homebuilding subsidiaries. Such guarantees are full and
unconditional. (See Note K, "Supplemental Guarantor Information.")
To finance its land purchases, the Company may also use seller-financed nonrecourse secured notes payable. At December 31, 2008 and 2007,
outstanding seller-financed nonrecourse notes payable were $22.3 million and $39.1 million, respectively.
48
RMC had a mortgage warehouse line of credit with Guaranty Bank, which matured in January 2009 and provided for borrowings up to
$40.0 million to fund RMC's mortgage loan origination operations. The RMC Credit Agreement is secured by underlying mortgage loans and
by other assets of RMC. Facility balances were repaid as loans funded under the agreement were sold to third parties. The RMC Credit
Agreement's interest rate was set at LIBOR plus 0.9 percent, with a commitment fee of 0.125 percent. The RMC Credit Agreement contained
representations, warranties, covenants and provisions defining events of default. The covenants required RMC to maintain certain financial
ratios, including a tangible net worth minimum of $13.0 million; an adjusted tangible net worth minimum of $5.0 million; a ratio of total
indebtedness to adjusted tangible net worth of 12:1; and consolidated net income for the four preceding fiscal quarters. The Company was in
compliance with these covenants, and outstanding borrowings against this credit facility totaled $22.1 million at December 31, 2008. (See
Management's Discussion and Analysis of Financial Condition and Results of Operations, "Financial Condition and Liquidity.")
financial ratios.
Note G: Income Taxes
Deferred tax assets are recognized for estimated tax effects that are attributable to deductible temporary differences and tax carryforwards
related to tax credits and operating losses. They are realized when existing temporary differences are carried back to profitable year(s) and/or
carried forward to future years having taxable income. Deferred tax assets are reduced by a valuation allowance if an assessment of their
components indicates that it is more likely than not that some portion of the deferred tax asset will not be realized. This assessment considers,
among other things, the nature, frequency and severity of current and cumulative losses; forecasts of future profitability; the duration of the
statutory carryforward periods; the Company's experience with loss carryforwards not expiring unused; and tax planning alternatives. The
Company generated additional deferred tax assets in 2008 and 2007 due to inventory impairments. In light of these additional impairments, the
continued downturn in the housing market and the uncertainty as to its duration, which limits the Company's ability to predict future taxable
income, the Company determined that an allowance against its deferred tax assets was required. Therefore, in accordance with SFAS 109, the
Company recorded valuation allowances totaling $143.8 million and $75.2 million against its deferred tax assets during 2008 and 2007,
respectively, which were reflected as noncash charges to income tax expense. The valuation allowance taken in 2008 was comprised of
$13.3 million of net state taxes and $130.5 million of federal taxes, which related to tax benefits generated in 2008. The valuation allowance taken
in 2007 was comprised of net state taxes of $21.7 million and federal taxes of $53.5 million. For the year ended December 31, 2006, no valuation
allowance for the deferred tax asset was required. The net increase in the valuation allowance was $143.8 million and the balance of the
deferred tax valuation allowance was $219.0 million as of December 31, 2008. For federal purposes, net operating losses can be carried forward
20 years and, for state purposes, can generally be carried forward 10 to 15 years depending on the taxing jurisdiction. To the extent that the
Company generates sufficient taxable income in the future to utilize the tax benefits of related deferred tax assets, it expects to experience a
reduction in its effective tax rate as the valuation allowance is reversed.
As a result of the noncash tax charges, the Company's effective income tax benefit rate was 2.3 percent for the year ended December 31, 2008,
compared to an effective income tax benefit rate of 20.6 percent and an effective provision rate of 36.5 percent for the years ended 2007 and
2006, respectively. The decrease in effective income tax benefit rate in 2008, compared to 2007, was primarily due to its noncash tax charges
that related to its deferred tax assets. The decrease in the effective tax rate for 2007, compared to 2006, was primarily due to a noncash tax
charge of $75.2 million for a valuation allowance related to its deferred tax assets and the impact of lower pretax earnings for 2007. The
Company had a net current tax receivable of $160.7 million and $9.1 million at December 31, 2008 and 2007, respectively.
49
The following table reconciles the statutory federal income tax rate to the Company's effective income tax rate for the years ended
December 31, 2008, 2007 and 2006:
2008 2007 2006

Income taxes at federal statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal tax 3.2 3.2 3.2
Domestic production activity deduction – – (0.9)
Resolution of tax contingency – 2.0 (1.0)
Goodwill (0.3) (1.4) –
Deferred tax asset allowance (35.4) (17.8) –
Other (0.2) (0.4) 0.2
Effective tax rate 2.3% 20.6% 36.5%
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities
at December 31 were as follows:

DEFERRED TAX ASS ETS
Warranty, legal and other accruals $ 21,813 $ 23,801
Employee benefits 28,678 48,574
Noncash charge for impairment of long-lived assets 170,517 187,385
Joint ventures 12,725 154
State net operating loss carryforwards 17,560 1,755
Other 1,418 4,281
T otal 252,711 265,950
Valuation allowance (218,950) (75,166)
T otal deferred tax assets 33,761 190,784
DEFERRED TAX LIABILITIES
Deferred recognition of income and gains (3,065) (2,224)
Capitalized expenses (27,708) (27,605)
Other (2,988) (2,890)
T otal deferred tax liabilities (33,761) (32,719)
NET DEFERRED TAX ASS ET $ – $158,065
The Company's expense for income taxes for the years ended December 31, 2008, 2007 and 2006, is summarized as follows:
(in thousands) 2008 2007 2006

C URRENT EXPENS E (BENEFIT)
Federal $(167,244) $(14,323) $206,635
State – 1,617 32,799
T otal current expense (benefit) (167,244) (12,706) 239,434
DEFERRED EXPENS E (BENEFIT)
Federal 158,065 (84,872) (27,848)
State – 11,006 (4,420)
T otal deferred expense (benefit) 158,065 (73,866) (32,268)
T otal expense (benefit) $ (9,179) $(86,572) $207,166
The Company accounts for unrecognized tax benefits under Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes."
The Company accounts for interest and penalties on unrecognized tax benefits through its provision for income taxes. As of December 31,
2008, the Company's liability for gross unrecognized tax benefits was $7.0 million, of which $4.7 million, if recognized, will affect the Company's
effective tax rate. The Company had $5.8 million and $2.6 million in accrued interest and penalties at January 1 and December 31, 2008,
respectively. As of December 31, 2007, the Company's liability for gross unrecognized tax benefits was $11.8 million, of which $8.3 million, if
recognized, will affect the Company's effective tax rate. The Company estimates that, within 12 months, $2.0 million of gross state unrecognized
tax benefits will reverse due to the anticipated expiration of time to assess tax.
50
The Company's summary of accounting for tax uncertainties at December 31, 2008 and 2007, and for the periods then ended follows:

Balance at January 1 $11,844 $15,555
Additions related to current year positions 634 1,947
(Reductions) additions related to prior year positions (2,448) 1,898
Reductions due to settlements (1,017) (300)
Reductions due to expiration of the statute of limitations (2,059) (7,256)
Balance at December 31 $ 6,954 $11,844
As of December 31, 2008, the 2005 through 2008 tax years remain open for examination.
Note H: Employee Incentive, Stock and Shareholder Rights Plans
Retirement Savings Opportunity Plan ("RSOP")
All full-time employees are eligible to participate in the RSOP. Part-time employees are eligible to participate in the RSOP following the
completion of 1,000 hours of service within the first 12 months of employment or within any plan year after the date of hire. Pursuant to
Section 401(k) of the Internal Revenue Code, the plan permits deferral of a portion of a participant's income into a variety of investment
options. Total compensation expense related to the Company's matching contributions for this plan amounted to $6.9 million, $10.0 million and
$12.0 million in 2008, 2007 and 2006, respectively.
Employee Stock Purchase Plan ("ESPP")
All full-time employees of the Company, with the exception of its executive officers, are eligible to participate in the ESPP. Eligible employees
authorize payroll deductions to be made for the purchase of shares. The Company matches a portion of the employee's contribution by
donating an additional 20.0 percent of the employee's payroll deduction. Stock is purchased by a plan administrator on a regular monthly
basis. All brokerage and transaction fees for purchasing the stock are paid for by the Company. The Company's expense related to its
matching contribution for this plan was approximately $233,000, $354,000 and $495,000 in 2008, 2007 and 2006, respectively.
Supplemental Executive Retirement Plans
The Company has supplemental nonqualified retirement plans, which generally vest over five-year periods beginning in 2003, pursuant to
which it will pay supplemental pension benefits to key employees upon retirement. In connection with these plans, the Company has
purchased cost-recovery life insurance on the lives of certain employees. Insurance contracts associated with the plans are held by trusts
established as part of the plans to implement and carry out their provisions and finance their related benefits. The trusts are owners and
beneficiaries of such contracts. The amount of coverage is designed to provide sufficient revenue to cover all costs of the plans if
assumptions made as to employment term, mortality experience, policy earnings and other factors are realized. At December 31, 2008 and 2007,
the cash surrender value of these contracts was $23.8 million and $28.5 million, respectively, and is included in "Other" assets. The net
periodic benefit cost of these plans for the year ended December 31, 2008, was $13.9 million and included service costs of $4.1 million, interest
costs of $1.9 million and investment losses of $7.9 million. The net periodic benefit cost of these plans for the year ended December 31, 2007,
was $5.7 million and included service costs of $4.5 million, interest costs of $1.4 million and investment earnings of $217,000. The $29.7 million
and $24.0 million projected benefit obligations at December 31, 2008 and 2007, respectively, were equal to the net liability recognized in the
balance sheet at those dates. The weighted-average discount rate used for the plans was 7.8 and 7.7 percent for 2008 and 2007, respectively.
Shareholder Rights Plan
On December 23, 2008, the Company announced that the Board of Directors adopted a shareholder rights plan (the "Rights Plan") designed to
preserve shareholder value and the value of certain tax assets primarily associated with net operating loss carryforwards ("NOLs") under
Section 382 of the Internal Revenue Code. The Company's ability to use its NOLs would be limited if there was an "ownership change" under
Section 382. This would occur if stockholders owning, or deemed under Section 382 to own, 5.0 percent or more of the Company's stock
increased their collective ownership of the aggregate amount of outstanding shares of the Company by more than 50.0 percentage points over
a defined period of time. The Rights Plan was adopted to reduce the likelihood of an "ownership change" occurring as defined by Section 382.
51
The Rights Plan is intended to act as a deterrent to any person or group acquiring 4.9 percent or more of the Company's outstanding common
stock (an "Acquiring Person") without the approval of its Board of Directors. Under the Rights Plan, one right was distributed for each share
of common stock outstanding as of the close of business on December 29, 2008. The rights initially are attached to and trade with the
Company's common stock. Subject to the terms, provisions and conditions of the Rights Plan, if the rights become exercisable, each right
would initially represent the right to purchase from the Company one ten-thousandth of a share of its Series A Junior Participating Preferred
Stock for a purchase price of $90.00 (the "Purchase Price"). After the rights become exercisable and there is an Acquiring Person, each holder
of a right, other than rights beneficially owned by the Acquiring Person (which will thereupon become void), will thereafter have the right to
receive, upon exercise of a right and payment of the Purchase Price, that number of shares of common stock, as the case may be, having a
market value of two times the Purchase Price.
Existing stockholders who currently own 4.9 percent or more of the outstanding shares of common stock will trigger a dilutive event only if
they acquire additional shares. The Company's Board of Directors may, in its sole discretion, exempt any person or group from being deemed
an Acquiring Person for purposes of the Rights Plan. The Rights Plan may be terminated by the Board at any time, prior to the rights being
triggered. The Rights Plan will continue in effect until December 18, 2018, unless it is terminated or redeemed earlier by the Board of Directors.
The Company plans to submit the continuation of the Rights Plan to a stockholder vote at its 2009 Annual Meeting of Stockholders, and the
failure to obtain this approval will result in termination of the Rights Plan on December 18, 2009.
Note I: Stock-Based Compensation
The Ryland Group, Inc. 2008 Equity Incentive Plan (the "Plan") permits the granting of stock options, restricted stock awards, stock units or
any combination of the foregoing to employees. Stock options granted in accordance with the Plan generally have a maximum term of five
years and vest in equal annual installments over three years. Certain outstanding stock options granted under predecessor plans have a
maximum term of ten years. Outstanding restricted stock units granted under predecessor plans generally vest in three equal annual
installments or a one year period with performance criteria. At December 31, 2008 and 2007, stock options or other awards or units available for
grant totaled 2,446,606 and 1,587,725, respectively.
The Ryland Group, Inc. 2006 Non-Employee Director Stock Plan (the "Director Plan") provides for a stock award of 3,000 shares to each non-
employee director on May 1 of each year. New non-employee directors will receive a pro-rata stock award 30 days after their date of
appointment or election based on the remaining portion of the plan year in which they are appointed or elected. Stock awards are fully vested
and non-forfeitable on their applicable award dates. At December 31, 2008 and 2007, there were 72,000 and 93,000 stock awards available for
future grant in accordance with the Director Plan, respectively. Previously, The Ryland Group, Inc. 2004 Non-Employee Director Equity Plan
and its predecessor plans provided for automatic grants of non-statutory stock options to directors. These stock options are fully vested and
have a maximum term of ten years.
All outstanding stock options, stock awards and restricted stock awards have been granted in accordance with the terms of the applicable
Plan, Director Plan and their respective predecessor plans, all of which were approved by the Company's stockholders. Certain option and
share awards provide for accelerated vesting if there is a change in control (as defined in the plans).
The Company recorded $9.0 million, $12.3 million and $25.6 million of stock-based compensation expense for the years ended December 31,
2008, 2007 and 2006, respectively. Stock-based compensation expenses have been allocated to the Company's reportable segments and are
reported in "Corporate," "Financial services" and "Selling, general and administrative" expenses.
SFAS 123(R) requires cash flows attributable to tax benefits resulting from tax deductions in excess of compensation cost recognized for those
stock options ("excess tax benefits") be classified as financing cash flows. Excess tax benefits of $3.1 million, $6.7 million and $14.6 million for
the 12 months ended December 31, 2008, 2007 and 2006, respectively, have been classified as financing cash inflows in the Consolidated
Statements of Cash Flows.
52
A summary of stock option activity in accordance with the Company's plans as of December 31, 2008, 2007 and 2006, and changes for the
years then ended follows:
WEIGHT ED-
WEIGHT ED- AVERAGE AGGREGAT E
AVERAGE REMAINING INT RINSIC
EXERCISE CONT RACT UAL VALUE
SHARES P RICE LIFE (in years) (in thousands)
Options outstanding at January 1, 2006 4,654,570 $ 25.91 5.7
Granted 374,500 62.31
Exercised (798,218) 12.34
Forfeited (66,710) 56.83
Options outstanding at December 31, 2006 4,164,142 $ 31.29 5.0 $ 106,250
Available for future grant 360,645
T otal shares reserved 4,524,787
Options exercisable at December 31, 2006 3,365,335 $ 25.54 5.0 $ 102,729
Options outstanding at January 1, 2007 4,164,142 $ 31.29 5.0
Granted 658,500 43.60
Exercised (638,232) 12.62
Forfeited (150,244) 53.07
Options outstanding at December 31, 2007 4,034,166 $ 35.44 4.3 $ 23,744
Available for future grant 1,680,725
T otal shares reserved 5,714,891
Options exercisable at December 31, 2007 3,103,087 $ 31.22 4.4 $ 23,744
O ptions ou tstan ding at Janu ary 1, 2008 4,034,166 $ 35.44 4.3
Grante d 503,000 31.88
Exe rcise d (541,720) 8.25
Forfe ite d (340,545) 46.21
O ptions ou tstan ding at De ce m be r 31, 2008 3,654,901 $ 37.97 3.8 $ 4,347
Available for fu ture grant 2,518,606
Total share s re se rve d 6,173,507
O ptions e xe rcisable at De ce m be r 31, 2008 2,719,574 $ 37.53 3.8 $ 4,347
A summary of stock options outstanding and exercisable at December 31, 2008 follows:
OP T IONS OUT ST ANDING OP T IONS EXERCISABLE

WEIGHT ED- WEIGHT ED- WEIGHT ED-
RANGE OF AVERAGE AVERAGE AVERAGE
EXERCISE NUMBER REMAINING EXERCISE NUMBER EXERCISE
P RICES OUT ST ANDING LIFE (in years) P RICE EXERCISABLE P RICE
$ 4.11 to $ 18.30 596,340 2.0 $ 10.41 596,340 $ 12.05
$ 20.99 to $ 27.38 600,903 4.0 22.39 495,903 21.39
$ 33.14 to $ 40.12 903,741 4.7 36.94 473,741 39.81
$ 44.32 to $ 57.54 863,918 4.1 45.18 546,599 56.28
$ 61.40 to $ 83.13 689,999 3.3 65.06 606,991 65.41
The total intrinsic values of stock options exercised during the years ended December 31, 2008, 2007 and 2006, were $9.3 million, $17.8 million
and $38.5 million, respectively. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds
the exercise price of the option.
The Company has determined the grant-date fair value of stock options using the Black-Scholes-Merton option-pricing formula. Expected
volatility is based upon the historical volatility of the Company's common stock. The expected dividend yield is based on an annual dividend
rate of $0.48 per common share. The risk-free interest rate for periods within the contractual life of the stock option award is based upon the
zero-coupon U.S. Treasury bond on the date the stock option is granted, with a maturity equal to the expected option life of the stock option
granted. The expected option life is derived from historical experience under the Company's share-based payment plans and represents the
period of time that stock option awards granted are expected to be outstanding.
53
The following table presents the weighted-average inputs used and fair values determined for stock options granted during the years ended
December 31, 2008, 2007 and 2006:
2008 2007 2006

Expected volatility 44.4% 35.8% 38.0%
Expected dividend yield 1.5% 1.1% 0.8%
Expected term (in years) 3.9 3.4 3.2
Risk-free rate 2.8% 4.6% 5.0%
Weighted-average grant-date fair value $10.60 $12.70 $19.17
The Company recorded stock-based compensation expense related to stock options of $4.5 million, $4.9 million and $10.4 million for the years
ended December 31, 2008, 2007 and 2006, respectively.
A summary of the Company's non-vested options as of and for the years ended December 31, 2008, 2007 and 2006, follows:
2008 2007 2006

W EIGHTED WEIGHT ED- WEIGHT ED-
AVERAGE AVERAGE AVERAGE
GRANT-DATE GRANT -DAT E GRANT -DAT E
S HARES FAIR VALUE SHARES FAIR VALUE SHARES FAIR VALUE
Nonvested options outstanding at January 1 931,079 $ 14.67 798,807 $ 16.40 1,294,035 $ 13.40
Granted 503,000 10.60 658,500 12.70 374,500 19.17
Vested (344,002) 15.22 (375,984) 14.57 (803,018) 12.82
Forfeited (154,750) 15.16 (150,244) 15.54 (66,710) 16.82
Nonvested options outstanding at December 31 935,327 $ 12.19 931,079 $ 14.67 798,807 $ 16.40
As of December 31, 2008, there was $7.4 million of total unrecognized compensation cost related to nonvested stock option awards granted
under the Company's plans. That cost is expected to be recognized over the next 2.8 years.
The Company has made several restricted stock awards to senior executives under the Plan and its predecessor plans. Compensation expense
recognized for such awards was $3.9 million, $6.1 million and $13.3 million for the years ended December 31, 2008, 2007 and 2006, respectively.
The following is a summary of activity relating to restricted stock awards:
2008 2007 2006

Restricted shares at January 1 242,000 435,664 441,000
Shares awarded 370,000 25,000 133,000
Shares vested (81,331) (182,664) (138,336)
Shares forfeited (50,667) (36,000) –
Restricted shares at December 31 480,002 242,000 435,664
At December 31, 2008, the outstanding restricted shares will vest as follows: 2009—246,672; 2010—136,665; and 2011—96,665.
The Company has granted stock awards to its non-employee directors pursuant to the terms of the Director Plan. The Company recorded
stock-based compensation expense related to such grants in the amount of $700,000, $1.2 million and $1.9 million during the years ended
December 31, 2008, 2007 and 2006, respectively.
Note J: Commitments and Contingencies
Commitments
In the normal course of business, the Company acquires rights under option agreements to purchase land or lots for use in future
homebuilding operations. At December 31, 2008 and 2007, it had cash deposits and letters of credit outstanding that totaled $31.0 million and
$74.7 million, respectively, for land options pertaining to land purchase contracts with an aggregate purchase price of $276.5 million and
$721.4 million, respectively. At December 31, 2008, the Company had
54
commitments with respect to option contracts having specific performance provisions of approximately $5.7 million, compared to $24.2 million
at December 31, 2007.
Rent expense primarily relates to office facilities, model homes, furniture and equipment.

(in thousands) 2008 2007 2006
T otal rent expense $ 22,270 $ 26,760 $ 23,232
Less income from subleases (681) (246) (950)
Net rent expense $ 21,589 $ 26,514 $ 22,282
At December 31, 2008, future minimum rental commitments under noncancelable leases with remaining terms in excess of one year are as
follows:
(in thousands)
2009 $ 9,594
2010 9,044
2011 6,749
2012 4,314
2013 1,602
T hereafter 4,347
Less sublease income (1,606)
T otal lease commitments $34,044
RMC purchases IFCs from third parties for the purpose of mitigating its exposure to movements in interest rates on customer-financing
commitments. RMC pays the investor a fixed one-time premium for these commitments. In return, RMC receives the option of selling a loan at a
fixed rate in the commitment for a stipulated period of time. IFCs are non-transferable, and RMC's risk is limited to the initial premium paid. IFCs
are valued based on their intrinsic value, which is determined with reference to movements in market interest rates, plus a time value factor that
is extrapolated from current market prices of similar contracts. The outstanding commitments at December 31, 2008 and 2007 were $1.5 million
and $32.5 million, respectively, with fair values of approximately $19,000 and $15,000, respectively.
Contingencies
As an on-site housing producer, the Company is often required by some municipalities to obtain development or performance bonds and
letters of credit in support of its contractual obligations. At December 31, 2008, total development bonds were $199.0 million, while
performance-related cash deposits and letters of credit were $54.3 million. In the event that any such bonds or letters of credit are called, the
Company would be required to reimburse the issuer; however, it does not expect that any currently outstanding bonds or letters of credit will
be called.
One of the Company's unconsolidated joint ventures had recorded assets of $644.2 million and debt of $435.3 million at December 31, 2007.
During 2008, the debt related to this joint venture was declared in default, and the administrative agent for the lenders foreclosed on the real
estate securing the loan in a non-judicial foreclosure proceeding. The Company and its partners in the joint venture provided a limited
Repayment Guarantee of the outstanding debt that can only be pursued upon the occurrence of certain bankruptcy events with respect to the
joint venture, which have not occurred. In addition, a Completion Guarantee was also provided that pertained to development and
improvement costs estimated by the banks at $358.0 million, certain interest and other obligations. The Company has a 3.3 percent interest in
this joint venture, and its obligation with respect to the Repayment Guarantee and Completion Guarantee is limited to its pro rata percentage of
the guarantee and/or costs, as applicable. The administrative agent, under the loan documents, filed a complaint against the Company and
certain other partners in the joint venture during the fourth quarter of 2008 seeking enforcement of the Completion Guarantees, including a
damage claim for an alleged failure of performance. The Company wrote off its $7.2 million investment in this joint venture during the first
quarter of 2008.
The Company had an interest in another joint venture in which the Company had an investment of $2.9 million and $13.0 million at
December 31, 2008 and 2007, respectively. The decrease was primarily due to a $35.9 million impairment of the Company's share of inventory
within the venture. In addition, during 2008, an appraisal generated a lender demand for repayment of debt in the amount of $39.3 million, of
which the Company paid its pro rata share of $19.6 million. At December 31, 2008 and 2007, the actual borrowings against the revolving credit
facility for this joint venture were
55
$1.3 million and $50.6 million, respectively, of which the Company's pro rata share of debt under a payment guarantee was $646,000 and
$25.3 million, respectively.
IRLCs represent loan commitments with customers at market rates generally up to 180 days before settlement. The Company had outstanding
IRLCs totaling $88.8 million and $66.1 million at December 31, 2008 and 2007, respectively. Hedging contracts are utilized to mitigate the risk
associated with interest rate fluctuations on IRLCs. (See Note D, "Derivative Instruments.")
Under certain circumstances, RMC is required to indemnify loan investors for losses incurred on sold loans. In general, this obligation arises if
the losses are due to origination errors made by RMC; if the borrower does not make their first payment; or if there is undiscovered fraud on
the part of the borrower. Reserves for losses related to future indemnification or repurchase of sold and held loans were $5.4 million and
$2.7 million at December 31, 2008 and 2007, respectively. Aggregate indemnification and repurchase expense was $5.9 million and $2.2 million at
December 31, 2008 and 2007, respectively.
The Company provides product warranties covering workmanship and materials for one year, certain mechanical systems for two years and
structural systems for ten years. The Company estimates and records warranty liabilities based upon historical experience and known risks at
the time a home closes, and in the case of unexpected claims, upon identification and quantification of the obligations. Actual future warranty
costs could differ from current estimates.
Changes in the Company's product liability reserve during the period are as follows:

Balance at January 1 $ 36,557 $ 44,102
Warranties issued 5,693 11,820
Settlements made (12,473) (19,365)
Balance at December 31 $ 29,777 $ 36,557
The Company requires substantially all of its subcontractors to have general liability insurance, which includes construction defect coverage,
and workmans compensation insurance. These insurance policies protect the Company against a portion of its risk of loss from claims, subject
to certain self-insured retentions, deductibles and other coverage limits. However, with fewer insurers participating, general liability insurance
for the homebuilding industry had become more difficult to obtain over the past several years. As a result, RHIC provided insurance services
to the homebuilding segments' subcontractors in certain markets. RHIC ceased providing such services, effective June 1, 2008. At
December 31, 2008, RHIC had $37.1 million in cash and cash equivalents, of which $28.5 million was restricted as collateral for letters of credit
for the same amount, and $28.3 million in subcontractor product liability reserves, which are included in the consolidated balance sheet under
"Cash and cash equivalents" and "Accrued and other liabilities," respectively. At December 31, 2007, RHIC had $34.1 million in cash and cash
equivalents, of which $13.5 million was restricted, and $28.3 million in subcontractor product liability reserves, which are included in the
consolidated balance sheet.
Changes in the Company's insurance reserves during the period are as follows:

Balance at January 1 $ 28,293 $ 22,521
Insurance expense provisions 40 5,772
Balance at December 31 $ 28,333 $ 28,293
The Company is party to various legal proceedings generally incidental to its businesses. Litigation reserves have been established based on
discussions with counsel and the Company's analysis of historical claims. The Company has, and requires the majority of its subcontractors to
have, general liability insurance to protect it against a portion of its risk of loss and cover it against construction-related claims. The Company
establishes reserves to cover its self-insured retentions and deductible amounts under those policies. Due to the high degree of judgment
required in determining these estimated reserve amounts and the inherent variability in predicting future settlements and judicial decisions,
actual future litigation costs could differ from the Company's current estimates. At December 31, 2008 and 2007, the Company had legal
reserves of $15.2 million and $15.3 million, respectively. (See Item 3, "Legal Proceedings.")
56
Note K: Supplemental Guarantor Information
The Company's obligations to pay principal, premium, if any, and interest under its $550.0 million unsecured revolving credit facility;
5.4 percent senior notes due May 2012; 6.9 percent senior notes due June 2013; and 5.4 percent senior notes due January 2015 are guaranteed
on a joint and several basis by substantially all of its 100 percent-owned homebuilding subsidiaries (the "Guarantor Subsidiaries"). Such
guarantees are full and unconditional.
In lieu of providing separate financial statements for the Guarantor Subsidiaries, the accompanying condensed consolidating financial
statements have been included. Management does not believe that separate financial statements for the Guarantor Subsidiaries are material to
investors and are, therefore, not presented.
The following information presents the consolidating statements of earnings, financial position and cash flows for (a) the parent company and
issuer, The Ryland Group, Inc. ("TRG, Inc."); (b) the Guarantor Subsidiaries; (c) the non-Guarantor Subsidiaries; and (d) the consolidation
eliminations used to arrive at the consolidated information for The Ryland Group, Inc. and subsidiaries.
CONSOLIDATING STATEMENTS OF EARNINGS
YEAR ENDED DEC EMBER 31, 2008

NO N-
GUARANTO R GUARANTO R C O NS O LIDATING C O NS O LIDATED
(in thousands) TRG, INC . S UBS IDIARIES S UBS IDIARIES ELIMINATIO NS TO TAL
REVENUES $ 1,158,775 $ 784,712 $ 64,493 $ (31,856) $ 1,976,124
EXPENS ES
Corporate, general and administrative 1,441,054 930,620 41,466 (31,856) 2,381,284
Expenses related to early retirement of debt 604 – – – 604
TO TAL EXPENS ES 1,441,658 930,620 41,466 (31,856) 2,381,888
Earnings (loss) before taxes (282,883) (145,908) 23,027 – (405,764)
T ax expense (benefit) (11,782) (6,077) 8,680 – (9,179)
Equity in net earnings (loss) of subsidiaries (125,484) – – 125,484 –
NET EARNINGS (LO S S ) $ (396,585) $ (139,831) $ 14,347 $ 125,484 $ (396,585)
YEAR ENDED DECEMBER 31, 2007
REVENUES $1,863,482 $ 1,147,957 $ 93,282 $ (52,846) $ 3,051,875
EXPENS ES
Corporate, general and administrative 2,034,125 1,437,849 52,355 (52,846) 3,471,483
Expenses related to early retirement of debt 490 – – – 490
TO TAL EXPENS ES 2,034,615 1,437,849 52,355 (52,846) 3,471,973
Earnings (loss) before taxes (171,133) (289,892) 40,927 – (420,098)
T ax expense (benefit) (37,985) (64,344) 15,757 – (86,572)
Equity in net earnings (loss) of subsidiaries (200,378) – – 200,378 –
NET EARNINGS (LO S S ) $ (333,526) $ (225,548) $ 25,170 $ 200,378 $ (333,526)
REVENUES $2,859,744 $ 1,908,416 $ 140,379 $ (128,286) $ 4,780,253
EXPENS ES
Corporate, general and administrative 2,450,382 1,810,670 72,684 (128,286) 4,205,450
Expenses related to early retirement of debt 7,695 – – – 7,695
TO TAL EXPENS ES 2,458,077 1,810,670 72,684 (128,286) 4,213,145
Earnings before taxes 401,667 97,746 67,695 – 567,108
T ax expense 145,125 36,655 25,386 – 207,166
Equity in net earnings of subsidiaries 103,400 – – (103,400) –
NET EARNINGS $ 359,942 $ 61,091 $ 42,309 $ (103,400) $ 359,942
57
CONSOLIDATING BALANCE SHEETS
DEC EMBER 31, 2008

NO N-
AS S ETS
Cash and cash equivalents $ 12,021 $ 349,082 $ 62,156 $ – $ 423,259
Consolidated inventories owned 705,365 375,734 – – 1,081,099
Consolidated inventories not owned 140 705 14,373 – 15,218
T otal inventories 705,505 376,439 14,373 – 1,096,317
Investment in subsidiaries/intercompany receivables 738,127 – 3,194 (741,321) –
Other assets 247,629 58,868 36,915 – 343,412
TO TAL ASS ETS 1,703,282 784,389 116,638 (741,321) 1,862,988
LIABILITIES
Accounts payable and other accrued liabilities 209,684 71,941 51,786 – 333,411
Debt 768,236 39 22,124 – 790,399
Intercompany payables – 438,119 – (438,119) –
TO TAL LIABILITIES 977,920 510,099 73,910 (438,119) 1,123,810
MINO RITY INTERES T – – 13,816 – 13,816
S TO C KHO LDERS ' EQ UITY 725,362 274,290 28,912 (303,202) 725,362
TO TAL LIABILITIES AND S TO C KHO LDERS '
EQ UITY $ 1,703,282 $ 784,389 $ 116,638 $ (741,321) $ 1,862,988
DECEMBER 31, 2007
AS S ETS
Cash and cash equivalents $ 12,908 $ 172,363 $ 58,343 $ – $ 243,614
Consolidated inventories owned 1,166,824 570,119 – – 1,736,943
Consolidated inventories not owned 1,179 6,940 68,615 – 76,734
T otal inventories 1,168,003 577,059 68,615 – 1,813,677
Investment in subsidiaries/intercompany receivables 758,282 – – (758,282) –
Other assets 362,697 95,239 36,093 – 494,029
TO TAL ASS ETS 2,301,890 844,661 163,051 (758,282) 2,551,320
LIABILITIES
Accounts payable and other accrued liabilities 342,090 114,842 61,663 – 518,595
Debt 835,074 4,006 – – 839,080
Intercompany payables – 311,692 4,428 (316,120) –
TO TAL LIABILITIES 1,177,164 430,540 66,091 (316,120) 1,357,675
MINO RITY INTERES T – – 68,919 – 68,919
S TO C KHO LDERS ' EQ UITY 1,124,726 414,121 28,041 (442,162) 1,124,726
TO TAL LIABILITIES AND S TO C KHO LDERS ' EQ UITY $2,301,890 $ 844,661 $ 163,051 $ (758,282) $ 2,551,320
58
CONSOLIDATING STATEMENTS OF CASH FLOWS

YEAR ENDED DEC EMBER 31, 2008

NO N-
Net operating earnings (loss) $ (396,585) $ (139,831) $ 14,347 $ 125,484 $ (396,585)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities 410,777 118,764 986 – 530,527
Changes in assets and liabilities 214,476 80,909 (26,052) (125,484) 143,849
Other operating activities, net (29,365) – – – (29,365)
Net cash provided by (used for) operating activities 199,303 59,842 (10,719) – 248,426
Net additions to property, plant and equipment (4,272) (5,583) (11) – (9,866)
Other investing activities, net – – 40 – 40
Net cash (used for) provided by investing activities (4,272) (5,583) 29 – (9,826)
(Decrease) increase in debt (66,839) (3,967) 22,125 – (48,681)
Common stock dividends, repurchases and
stock-based compensation and other (10,274) – – – (10,274)
Intercompany balances (118,805) 126,427 (7,622) – –
Net cash (used for) provided by financing activities (195,918) 122,460 14,503 – (58,955)
Net (decrease) increase in cash and cash equivalents (887) 176,719 3,813 – 179,645
Cash and cash equivalents at beginning of year 12,908 172,363 58,343 – 243,614
C AS H AND C AS H EQ UIVALENTS AT END O F
YEAR $ 12,021 $ 349,082 $ 62,156 $ – $ 423,259
Net operating earnings (loss) $(333,526) $ (225,548) $ 25,170 $ 200,378 $ (333,526)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities 439,486 284,210 1,584 – 725,280
Changes in assets and liabilities 26,332 63,056 (28,639) (200,378) (139,629)
Net cash provided by (used for) operating activities 108,307 121,718 (1,885) – 228,140
Net additions to property, plant and equipment (17,939) (14,256) 48 – (32,147)
Other investing activities, net – – 750 – 750
Net cash (used for) provided by investing activities (17,939) (14,256) 798 – (31,397)
Decrease in debt (106,025) (5,012) – – (111,037)
stock-based compensation and other (57,124) – (5) – (57,129)
Intercompany balances 42,560 (59,166) 16,606 – –
Net cash (used for) provided by financing activities (120,589) (64,178) 16,601 – (168,166)
Net (decrease) increase in cash and cash equivalents (30,221) 43,284 15,514 – 28,577
C AS H AND C AS H EQ UIVALENTS AT END O F YEAR $ 12,908 $ 172,363 $ 58,343 $ – $ 243,614
59
CONSOLIDATING STATEMENT OF CASH FLOWS

NON-
GUARANT OR GUARANT OR CONSOLIDAT ING CONSOLIDAT ED
(in thousands) T RG, INC. SUBSIDIARIES SUBSIDIARIES ELIMINAT IONS T OT AL
Net operating earnings $ 359,942 $ 61,091 $ 42,309 $ (103,400) $ 359,942
Adjustments to reconcile net earnings to
net cash provided by operating activities 62,606 89,040 1,992 – 153,638
Changes in assets and liabilities (438,743) (116,944) (28,645) 103,400 (480,932)
Net cash (used for) provided by operating activities (34,206) 33,187 15,656 – 14,637
Net additions to property, plant and equipment (31,280) (21,372) (1,187) – (53,839)
Other investing activities, net – – 2,250 – 2,250
Net cash (used for) provided by investing activities (31,280) (21,372) 1,063 – (51,589)
Increase (decrease) in debt 33,363 (5,216) – – 28,147
stock-based compensation and other (237,493) – (48) – (237,541)
Intercompany balances 230,850 (237,229) 6,379 – –
Net cash provided by (used for) financing activities 26,720 (242,445) 6,331 – (209,394)
Net (decrease) increase in cash and cash equivalents (38,766) (230,630) 23,050 – (246,346)
C AS H AND C AS H EQ UIVALENTS AT END O F YEAR $ 43,129 $ 129,079 $ 42,829 $ – $ 215,037
60
Note L: Subsequent Events
financial ratios.
facility's maturity date of January 2011 remains unchanged, and the uncommitted accordion feature has been reduced to a maximum of
$300.0 million.
During the first quarter of 2009, the Company repurchased $47.6 million of its senior notes for $35.9 million in the open market.
In January 2009, the Company and Oaktree Capital formed a limited liability company (the "Venture") to acquire and develop residential real
estate projects. Combining the Company's operational proficiency as a production homebuilder with Oaktree's expertise in investing in
distressed assets allows the Venture to take advantage of the current dislocation in the residential real estate market. An executive committee,
comprised of representatives from both firms, will make purchase decisions. The Venture will then provide the improvements and permits
necessary to ultimately sell the projects as finished lots. The Company will have the right to option all lots sold by the Venture.
Supplementary Data
QUARTERLY FINANCIAL DATA
2008 2007
(in thousands, except share data) unaudited DEC . 31 S EPT. 30 JUN. 30 MAR. 31 DEC. 31 SEPT . 30 JUN. 30 MAR. 31
C O NS O LIDATED RES ULTS
Revenues $ 528,233 $ 543,844 $ 487,881 $ 416,166 $ 859,790 $ 737,237 $743,734 $ 711,114
Earnings (loss) before taxes (89,148) (80,679) (189,771) (46,166) (206,111) (94,521) (88,825) (30,641)
T ax expense (benefit) (29,236) (14,961) 51,868 (16,850) (4,201) (39,781) (36,394) (6,196)
Net earnings (loss) $ (59,912) $ (65,718) $(241,639) $ (29,316) $(201,910) $ (54,740) $ (52,431) $ (24,445)
Net earnings (loss) per common share:
Basic $ (1.40) $ (1.54) $ (5.70) $ (0.69) $ (4.80) $ (1.30) $ (1.25) $ (0.58)
Diluted (1.40) (1.54) (5.70) (0.69) (4.80) (1.30) (1.25) (0.58)
Weighted-average common shares
outstanding:
Basic 42,726 42,607 42,422 42,232 42,096 41,958 42,011 42,485
Diluted 42,726 42,607 42,422 42,232 42,096 41,958 42,011 42,485
61
Report of Management
Management of the Company is responsible for the integrity and accuracy of the financial statements and all other annual report information.
The financial statements are prepared in conformity with generally accepted accounting principles and include amounts based on
management's judgments and estimates.
The accounting systems, which record, summarize and report financial information, are supported by internal control systems designed to
provide reasonable assurance, at an appropriate cost, that the assets are safeguarded and that transactions are recorded in accordance with
Company policies and procedures. Developing and maintaining these systems are the responsibility of management. Proper selection, training
and development of personnel also contribute to the effectiveness of the internal control systems. For the purpose of evaluating and
documenting its systems of internal control, management elected to use the integrated framework promulgated by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO"). The Company's systems, evaluation and test results were documented.
The Company's internal auditors regularly test these systems. Based on its evaluation, management believes that its systems of internal
control over financial reporting were effective and is not aware of any material weaknesses.
The Company's independent registered public accounting firm also reviewed and tested the effectiveness of these systems to the extent it
deemed necessary to express an opinion on the consolidated financial statements and systems of internal control.
The Audit Committee of the Board of Directors periodically meets with management, the internal auditors and the independent registered
public accounting firm to review accounting, auditing and financial matters. Both internal auditors and the independent registered public
accounting firm have unrestricted access to the Audit Committee.
/s/ Gordon A. Milne

Gordon A. Milne
Executive Vice President and
Chief Financial Officer
/s/ David L. Fristoe

David L. Fristoe
Senior Vice President, Controller and
Chief Accounting Officer
62
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders

The Ryland Group, Inc.
We have audited the accompanying consolidated balance sheets of The Ryland Group, Inc. and subsidiaries as of December 31, 2008 and
2007, and the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended
December 31, 2008. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The
Ryland Group, Inc. and subsidiaries at December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), The Ryland
Group, Inc.'s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2009
expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP

Ernst & Young LLP
Los Angeles, California
February 23, 2009
63
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders

We have audited The Ryland Group, Inc.'s internal control over financial reporting as of December 31, 2008, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO
criteria). The Ryland Group, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management. Our
responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides
a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, The Ryland Group, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31,
2008, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
balance sheets of The Ryland Group, Inc. and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of
earnings, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2008, and our report dated
February 23, 2009 expressed an unqualified opinion thereon.

Ernst & Young LLP
February 23, 2009
64
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
The Company has procedures in place for accumulating and evaluating information that enable it to prepare and file reports with the SEC. At
the end of the period covered by the report on Form 10-K, an evaluation was performed by the Company's management, including the CEO and
CFO, of the effectiveness of the Company's disclosure controls and procedures as defined in Rule 13a-15(e) promulgated under the Exchange
Act. Based on that evaluation, the Company's management, including the CEO and CFO, concluded that the Company's disclosure controls
and procedures were effective as of December 31, 2008.
The Company has a committee consisting of key officers, including the chief accounting officer and general counsel, to ensure that all
information required to be disclosed in the Company's reports is accumulated and communicated to those individuals responsible for the
preparation of the reports, as well as to all principal executive and financial officers, in a manner that will allow timely decisions regarding
required disclosures.
The Company's management, including the CEO and CFO, has evaluated any changes in the Company's internal control over financial
reporting that occurred during the quarterly period ended December 31, 2008, and has concluded that there was no change during this period
that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
At December 31, 2008, the Company completed a detailed evaluation of its internal control over financial reporting, including the assessment,
documentation and testing of its controls, as required by the Sarbanes-Oxley Act of 2002. No material weaknesses were identified. The
Company's management summarized its assessment process and documented its conclusions in the Report of Management, which appears in
Part II, Item 8, "Financial Statements and Supplementary Data."
NYSE Certification
The NYSE requires that the chief executive officers of its listed companies certify annually to the NYSE that they are not aware of violations by
their companies of NYSE corporate governance listing standards. The Company submitted a non-qualified certification by its Chief Executive
Officer to the NYSE last year in accordance with the NYSE's rules. Further, the Company files certifications by its Chief Executive Officer and
Chief Financial Officer with the SEC in accordance with the Sarbanes-Oxley Act of 2002. These certifications are filed as exhibits to this Annual
Report on Form 10-K.
Item 9B. Other Information
None.
65
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Executive Officers of the Company
The following sets forth certain information regarding the executive officers of the Company:
Position (date elected to position)

Name Age Prior Business Experience
R. Chad Dreier 61 Chairman of the Board of Directors (since 1994); President of the Company (1993-2008); Chief
Executive Officer of the Company (since 1993)
Larry T. Nicholson 51 President of the Company (since 2008); Chief Operating Officer of the Company (since 2007); Senior
Vice President of the Company and President of the Southeast Region of Ryland Homes (2005-2007);
President of the Orlando Division of Ryland Homes (1999-2005)
Gordon A. Milne 57 Executive Vice President and Chief Financial Officer of the Company (since 2002); Senior Vice
President and Chief Financial Officer of the Company (2000-2002)
Keith E. Bass 44 Senior Vice President of the Company and President of the South Region of Ryland Homes (since
2008); Senior Vice President of the Company and President of the Southeast Region of Ryland Homes
(2007-2008); President of the Orlando Division of Ryland Homes (2004-2007); Vice President of Land
Resources for the Southeast Region of Ryland Homes (2003-2004)
Robert J. Cunnion, III 53 Senior Vice President, Human Resources of the Company (since 1999)
Eric E. Elder 51 Senior Vice President, Marketing and Communications of the Company (since 2000)
David L. Fristoe 52 Senior Vice President, Controller and Chief Accounting Officer of the Company (since 2005); Senior
Vice President, Controller, Chief Accounting Officer and Chief Information Officer of the Company
(2000-2005)
Timothy J. Geckle 56 Senior Vice President, General Counsel and Secretary of the Company (since 1997)
Daniel G. Schreiner 51 Senior Vice President of the Company (since 1999); President of Ryland Mortgage Company (since
1998)
Peter G. Skelly 45 Senior Vice President of the Company and President of the North/West Region of Ryland Homes
(since 2008); Senior Vice President of the Company and President of the North Region of Ryland
Homes (2006-2008); President of the Chicago Division of Ryland Homes (1999-2006)
66
The Board of Directors elects all officers.
There are no family relationships between any director or executive officer, or arrangements or understandings pursuant to which the officers
listed above were elected. For a description of the Company's employment and severance arrangements with certain of its executive officers,
see the Company's Proxy Statement for the 2009 Annual Meeting of Stockholders (the "2009 Proxy Statement"), which is filed pursuant to
Regulation 14A under the Exchange Act.
Information as to the Company's directors, executive officers and corporate governance is incorporated by reference from the Company's 2009
Proxy Statement, including the determination by the Board of Directors, with respect to the Audit Committee's financial expert, and the identity
of each member of the Audit Committee of the Board of Directors.
The Company has adopted a code of ethics that is applicable to its senior officers, directors and employees. To retrieve the Company's code of
ethics, visit www.ryland.com, select "Investors" and scroll down the page to "Code of Ethics."
Item 11. Executive Compensation
The information required by this item is incorporated by reference from the 2009 Proxy Statement. The Compensation Committee Report to be
included in the 2009 Proxy Statement shall be deemed furnished in this Annual Report on Form 10-K and shall not be incorporated by
reference into any filing under the Securities Act or the Exchange Act as a result of such furnishing in this Item 11.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is set forth on page 13 of this Annual Report on Form 10-K and is incorporated by reference from the
2009 Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference from the 2009 Proxy Statement.
Item 14. Principal Accounting Fees and Services
The information required by this item is incorporated by reference from the 2009 Proxy Statement.
PART IV
Item 15. Exhibits, Financial Statement Schedules
Page No.
(a) 1. Financial Statements
Consolidated Statements of Earnings—years ended December 31, 2008, 2007 and 2006 34
Consolidated Balance Sheets—December 31, 2008 and 2007 35
Consolidated Statements of Stockholders' Equity—years ended December 31, 2008, 2007 and 2006 36
Consolidated Statements of Cash Flows—years ended December 31, 2008, 2007 and 2006 37
Notes to Consolidated Financial Statements 38
2. Financial Statement Schedule

Schedule II—Valuation and Qualifying Accounts 71
Schedules not listed above have been omitted either because they are inapplicable or because the required
information has been provided in the financial statements or notes thereto.
67
3. Exhibits
The following exhibits are included with this report or incorporated herein by reference as indicated below:
3.1 Articles of Restatement of The Ryland Group, Inc., as amended

(Incorporated by reference from Form 10-Q for the quarter ended March 31, 2005)
3.2 Bylaws of The Ryland Group, Inc., as amended

(Incorporated by reference from Form 10-K for the year ended December 31, 1996)
4.1 Senior Notes, dated as of January 11, 2005

(Incorporated by reference from Registration Statement on Form S-3, Registration No. 333-121469)
4.2 Articles Supplementary of The Ryland Group, Inc.

4.3 Senior Notes, dated as of May 9, 2005

4.4 Senior Notes, dated as of May 30, 2006

4.5 Rights Agreement, dated as of December 18, 2008, between The Ryland Group, Inc. and American
Stock Transfer & Trust Company, LLC
(Incorporated by reference from Form 8-A, filed December 29, 2008)
10.1 Credit Agreement, dated as of January 12, 2006, between The Ryland Group, Inc. and certain financial institutions
(Incorporated by reference from Form 8-K, filed January 13, 2006)
10.2 First Amendment to Credit Agreement, dated October 17, 2007, between The Ryland Group, Inc. and certain financial
institutions
(Incorporated by reference from Form 8-K, filed October 17, 2007)
10.3 Second Amendment to Credit Agreement, dated February 15, 2008, between The Ryland Group, Inc. and certain financial
institutions
(Incorporated by reference from Form 8-K, filed February 15, 2008)
10.4 Third Amendment to Credit Agreement, dated June 27, 2008, between The Ryland Group, Inc. and certain financial
institutions
(Incorporated by reference from Form 8-K, filed July 2, 2008)
10.5 Fourth Amendment to Credit Agreement, dated January 22, 2009, between The Ryland Group, Inc. and certain financial
institutions
(Filed herewith)
10.6 Credit Agreement, dated January 24, 2008, between Ryland Mortgage Company and Guaranty Bank
10.7 RMC Repurchase Agreement, dated December 31, 2008, between Ryland Mortgage Company and
Guaranty Bank and Buyers
10.8 2002 Equity Incentive Plan of The Ryland Group, Inc.

(Incorporated by reference from Form 10-Q for the quarter ended June 30, 2002)
10.9 Amendment and Restatement of 2005 Equity Incentive Plan of The Ryland Group, Inc.
(Filed herewith)
10.10 Amendment and Restatement of The Ryland Group, Inc. 2007 Equity Incentive Plan
(Filed herewith)
(Filed herewith)
68
3. Exhibits, continued
10.12 Form of Non-Qualified Stock Option Agreement

(Incorporated by reference from Form 8-K, filed April 29, 2005)
10.13 Form of Amended and Restated Stock Unit Agreement

10.14 Form of Stock Unit Agreement for Executive Officers

10.15 Amendment No. 1 to Form of Stock Unit Agreement for Executive Officers
(Filed herewith)
10.16 Non-Employee Directors' Stock Unit Plan, effective January 1, 2005

(Filed herewith)
10.17 2000 Non-Employee Director Equity Plan of The Ryland Group, Inc., as amended
10.18 2004 Non-Employee Director Equity Plan of The Ryland Group, Inc.
(Incorporated by reference from Form 10-Q for the quarter ended March 31, 2004)
10.19 Non-Employee Director Stock Plan, effective April 26, 2006

10.20 Amended and Restated Employment Agreement, dated as of April 20, 2005, between The Ryland Group, Inc. and R. Chad
Dreier
(Incorporated by reference from Form 8-K/A, filed May 4, 2005)
10.21 Amendment No. 1 to the Amended and Restated Employment Agreement, by and between The Ryland Group, Inc. and
R. Chad Dreier, effective January 1, 2005
(Filed herewith)
10.22 The Ryland Group, Inc. Dreier Supplemental Executive Retirement Plan
(Incorporated by reference from Form 10-Q for the quarter ended September 30, 2003)
10.23 Amendment and Restatement of The Ryland Group, Inc. Dreier Supplemental Executive Retirement Plan II
(Filed herewith)
10.24 Form of Stock Unit Agreement for R. Chad Dreier

10.25 Amendment and Restatement of The Ryland Group, Inc. Senior Executive Supplemental Retirement
Plan
(Filed herewith)
10.26 Form of Senior Executive Severance Agreement between The Ryland Group, Inc. and
certain executive officers of the Company
(Incorporated by reference from Form 10-Q for the quarter ended September 30, 2000)
10.27 Form of Amendment No. 1 to Senior Executive Severance Agreement between The Ryland Group, Inc. and certain
executive officers of the Company
(Filed herewith)
10.28 Form of 2007 Senior Executive Severance Agreement between The Ryland Group, Inc. and certain
10.29 Form of Amendment No. 1 to 2007 Senior Executive Severance Agreement between The Ryland Group, Inc. and certain
(Filed herewith)
69
3. Exhibits, continued
10.30 The Ryland Group, Inc. Executive and Director Deferred Compensation Plan II, effective
January 1, 2005
(Filed herewith)
10.31 TRG Incentive Plan, as amended and restated, effective January 1, 2005
(Filed herewith)
10.32 The Ryland Group, Inc. Performance Award Program

10.33 Amendment No. 1 to The Ryland Group, Inc. Performance Award Program
(Filed herewith)
10.34 The Ryland Group, Inc. Senior Executive Performance Plan

10.35 Amendment No. 1 to The Ryland Group, Inc. Senior Executive Performance Plan
(Filed herewith)
10.36 Lease Agreement, dated as of December 29, 1999, by and between The Ryland Group, Inc. and
Kilroy Realty Group
10.37 First Amendment to Office Building Lease, dated August 26, 2005, by and between
The Ryland Group, Inc. and Kilroy Realty, L.P.
10.38 Lease Agreement, dated February 28, 2006, by and between The Ryland Group, Inc. and
PCCP HC Kierland, LLC
(Incorporated by reference from Form 8-K, filed March 6, 2006)
12.1 Computation of Ratio of Earnings to Fixed Charges

(Filed herewith)
21 Subsidiaries of the Registrant

(Filed herewith)
23 Consent of Independent Registered Public Accounting Firm

(Filed herewith)
24 Power of Attorney
(Filed herewith)
31.1 Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(Filed herewith)
(Filed herewith)
(Filed herewith)
(Filed herewith)
70
The Ryland Group, Inc. and Subsidiaries

Schedule II—Valuation and Qualifying Accounts
BALANCE AT CHARGED T O DEDUCT IONS BALANCE AT
BEGINNING COST S AND AND END OF
(in thousands) OFP ERIOD EXPENSES T RANSFERS P ERIOD
Valuation allowances:
Homebuilding inventories
2008 $ 488,106 $ 257,389 $ (300,307) $ 445,188
2007 59,735 503,955 (75,584) 488,106
2006 486 62,910 (3,661) 59,735
Other real estate assets

2008 $ 2,381 $ 45,640 $ (14,451) $ 33,570
2007 670 2,241 (530) 2,381
2006 263 549 (142) 670
Deferred tax assets

2008 $ 75,166 $ 143,784 $ – $ 218,950
2007 – 75,166 – 75,166
71
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
By:
/s/ R. Chad Dreier
R. Chad Dreier February 25, 2009

Chairman and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Principal Executive Officer:
/s/ R. Chad Dreier
R. Chad Dreier February 25, 2009

Principal Financial Officer:
/s/ Gordon A. Milne
Gordon A. Milne February 25, 2009

Executive Vice President and
Chief Financial Officer
Principal Accounting Officer:
/s/ David L. Fristoe
David L. Fristoe February 25, 2009

Senior Vice President, Controller and
Chief Accounting Officer
A majority of the Board of Directors: R. Chad Dreier, Leslie M. Frécon, Roland A. Hernandez, William L. Jews, Ned Mansour, Robert E. Mellor,
Norman J. Metcalfe and Charlotte St. Martin
By:
/s/ Timothy J. Geckle
Timothy J. Geckle February 25, 2009

As Attorney-in-Fact
72
Index of Exhibits
10.5 Fourth Amendment to Credit Agreement, dated January 22, 2009, between The Ryland Group, Inc. and certain financial institutions
10.9 Amendment and Restatement of 2005 Equity Incentive Plan of The Ryland Group, Inc.
10.15 Amendment No. 1 to Form of Stock Unit Agreement for Executive Officers
10.16 Non-Employee Directors' Stock Unit Plan, effective January 1, 2005
10.21 Amendment No. 1 to the Amended and Restated Employment Agreement, by and between The Ryland Group, Inc. and R. Chad
Dreier, effective January 1, 2005
10.23 Amendment and Restatement of The Ryland Group, Inc. Dreier Supplemental Executive Retirement Plan II
10.25 Amendment and Restatement of The Ryland Group, Inc. Senior Executive Supplemental Retirement Plan
10.27 Form of Amendment No. 1 to Senior Executive Severance Agreement between The Ryland Group, Inc. and certain executive officers
of the Company
10.29 Form of Amendment No. 1 to 2007 Senior Executive Severance Agreement between The Ryland Group, Inc. and certain executive
officers of the Company
10.30 The Ryland Group, Inc. Executive and Director Deferred Compensation Plan II, effective January 1, 2005
10.31 TRG Incentive Plan, as amended and restated, effective January 1, 2005
10.33 Amendment No. 1 to The Ryland Group, Inc. Performance Award Program
10.35 Amendment No. 1 to The Ryland Group, Inc. Senior Executive Performance Plan
12.1 Computation of Ratio of Earnings to Fixed Charges
21 Subsidiaries of the Registrant
23 Consent of Independent Registered Public Accounting Firm
24 Power of Attorney
31.2 Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
73
QuickLinks
PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits, Financial Statement Schedules
Signatures
Index of Exhibits
Exhibit 10.5
FOURTH AMENDMENT TO CREDIT AGREEMENT
This FOURTH AMENDMENT TO CREDIT AGREEMENT (“Amendment”), dated as of January 22, 2009, among THE
RYLAND GROUP, INC., a Maryland corporation (the “Borrower”), the Lenders that are identified on the signature pages hereto and
JPMORGAN CHASE BANK, N.A., as Agent (the “Agent”).
RECITALS
WHEREAS, the Borrower, the Lenders identified on the signature pages hereto, certain other Lenders and Agent are parties
to that certain Credit Agreement dated as of January 12, 2006 (as amended by First Amendment to Credit Agreement dated as of October 17,
2007, a Second Amendment to Credit Agreement dated as of February 15, 2008, a Third Amendment to Credit Agreement dated as of June 27,
2008 and as it may be further amended, renewed and restated from time to time, the “Credit Agreement”) (all capitalized terms not defined
herein shall have the meanings given such terms in the Credit Agreement);
WHEREAS, the Borrower and the Lenders desire to amend the Credit Agreement for the purposes hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the parties hereto hereby agree as follows:
1. Amendment of Article 1.
(a) Amended Definitions. The following defined terms in Article I of the Credit Agreement are hereby amended and restated in
their entirety to read as follows:
“Alternate Base Rate” shall mean, for any day, a rate per annum equal to (i) the greatest of (a) the Prime Rate in effect on
such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (c) the Adjusted LIBO Rate for a one month
Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that,
for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing on the Reuters BBA Libor Rates
Page 3750 (or on any successor or substitute page of such page) at approximately 11:00 a.m. London time on such day plus (ii) the
Applicable Margin for the Alternate Base Rate. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal
Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime
Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.
“Applicable Margin” means a rate per annum equal to the “Applicable Margin” as determined from time to time pursuant to
the Pricing Schedule.
“Consolidated Interest Incurred” means, for any period, for the Borrower and the Guarantors (specifically excluding any
Subsidiaries that are not Guarantors) on a consolidated basis, interest expense plus interest capitalized into inventory in such period
less interest income included in revenues in determining Consolidated Net Income for such period. To the extent that under GAAP
premiums on prepayment of Indebtedness would be included in interest expense, such premiums shall not be included in
Consolidated Interest Incurred.
“Interest Coverage Ratio” means, as of the end of each fiscal quarter of the Borrower, for the twelve-month period ending on
such date, the ratio of (a) EBITDA for the applicable period to (b) Consolidated Interest Incurred for the applicable period.
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by the Fed. Board to which the Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
the Fed. Board). Such reserve percentages shall include those imposed pursuant to Regulation D. Eurodollar Loans shall be deemed
to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender under Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
“Unrestricted Cash” means cash and Cash Equivalents of the Borrower and the Guarantors (including cash and Cash
Equivalents in the Liquidity Reserve Account) that are free and clear of Liens and not subject to any restrictions on the use thereof to
pay Indebtedness or other obligations of the Borrower and Guarantors. Unrestricted Cash deposited into a Liquidity Reserve
Account shall not be subject to a “deposit arrangement” constituting a Lien under this Agreement or, for purposes of this definition,
be construed as subject to restrictions on use solely by reason of being held in such Liquidity Reserve Account.
(b) Deleted Definitions. The definitions of “Base CD Rate” and “Three-Month Secondary CD Rate” are deleted in their entirety
from Article 1 of the Credit Agreement.
.
(c) Additional Definitions. The following defined terms are hereby added to Article 1 of the Credit Agreement in correct
alphabetical order:
“ACFFO Ratio” means, for the period ending the last day of any fiscal quarter of the Borrower, the ratio of (i) Adjusted Cash
Flow from Operations for the four fiscal quarters then ended to (ii) Consolidated Interest Incurred by the Borrower and the Guarantors
(specifically excluding any Subsidiaries that are not Guarantors) on a consolidated basis for such four fiscal quarters.
“Adjusted Cash Flow From Operations” means, as of the end of any fiscal quarter of the Borrower, the sum of (a) cash
provided by (used in) operating activities for the Borrower and the Guarantors, as calculated using the “net cash provided by (used
in) operating activities” line of the Borrower’s and the Guarantors’ (specifically excluding any Subsidiaries that are not Guarantors)
consolidated statement of cash flow for the four consecutive fiscal quarters then ended as determined in accordance with GAAP,
plus Consolidated Interest Incurred by the Borrower and Guarantors (specifically excluding any Subsidiaries that are not Guarantors)
on a consolidated basis for such four consecutive fiscal quarters.
“Compliance Date” means, with respect to any fiscal quarter, the date on which annual or quarterly financials statements for
the period ending on the last day of such fiscal quarter are required to be furnished with respect thereto as set forth in
Section 6.1(a) or Section 6.1(b), without regard to whether such financial statements are actually furnished on such date.
2
“Defaulting Lender” means any Lender, as determined by the Agent, that has (a) failed to fund any portion of its Loans or
participations in Letters of Credit or Swing Line Loans within five Business Days of the date required to be funded by it hereunder,
(b) notified the Borrower, Agent, the LC Issuer or the Swing Line Lender in writing that it does not intend to comply with any of its
funding obligations under this Agreement, (c) otherwise failed to pay over to the Agent or any other Lender any other amount
required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or
(d) (i) becomes or is insolvent or (ii) becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee or custodian appointed for it, or consents to any such proceeding or appointment.
“Deferred Tax Valuation Allowance” means any valuation allowance applied to deferred income tax assets as a result of the
application of FASB Statement 109, Accounting for Income Taxes or as otherwise determined in accordance with GAAP and included
in the financial statements of the Borrower.
“Fourth Amendment Effective Date” means the date on which the Fourth Amendment to this Agreement dated as of
January 22, 2009 among the Borrower, the Agent and the Lenders becomes effective in accordance with its terms.
“Liquidity Reserve Account” means a segregated account(s) maintained by the Borrower with Liquidity Reserve Banks, free
and clear of any and all Liens into which account deposits shall be made, and may be withdrawn only, as provided in Section 6.26.
Unrestricted Cash deposited into a Liquidity Reserve Account shall not cease to be Unrestricted Cash solely by reason of being held
in such Liquidity Reserve Account.
“Liquidity Reserve Bank” means a Lender (other than a Defaulting Lender) designated by the Borrower from time to time in
accordance with Section 6.26.
“Liquidity Test” has the meaning set forth in Section 6.26(a).
(d) Definition of “Adjusted LIBO Rate”. The definition of “Adjusted LIBO Rate” in Article I of the Credit Agreement is hereby
amended to delete the fraction “1/100” and to insert in lieu thereof the fraction “1/16.”
(e) Definition of “Borrowing Base”. Clause (a) in the definition of “Borrowing Base” in Article I of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
(a) (i) 100% of the Unrestricted Cash of the Borrower and the Guarantors in excess of $25,000,000 minus (ii) the sum of
the outstanding principal amount of all Revolving Loans and Swing Line Exposure.
(f) Definition of “Permitted Leverage Ratio”. The definition of “Permitted Leverage Ratio” in Article I of the Credit Agreement
is hereby deleted in its entirety.
(g) Definition of “Senior Permitted Debt”. The definition of “Senior Permitted Debt” in Article I of the Credit Agreement is
amended to replace the parenthetical expression “(specifically excluding the Indebtedness of any Subsidiary that is not a Guarantor)” with the
parenthetical expression “(specifically excluding the Indebtedness of any Subsidiary that is not a Guarantor, LC Exposure in the amount of any
cash collateral therefor held pursuant to Sections 2.19.12 or 2.23(b) and Swing Line Exposure in the amount of any collateral therefor held
pursuant to Section 2.23(b)).”
3
2. Reduction of Aggregate Commitment. Pursuant to Section 2.5.2 of the Credit Agreement, the Aggregate Commitment is
hereby reduced from $550,000,000 to $200,000,000, allocated to each Lender’s Commitment ratably. The amounts of the reduced Commitments
of the Lenders are set forth in Schedule I hereto. The text of Section 2.5.2 is numbered “(i)” and immediately thereafter, a new subsection (ii) is
inserted to read as follows:
(ii) In the event that the Consolidated Tangible Net Worth determined as of the last day of any fiscal quarter is less
than $400,000,000, then effective as of the Compliance Date for such fiscal quarter, the Aggregate Commitment shall be permanently
reduced to $150,000,000 and may not thereafter be increased. Such reduction of the Aggregate Commitment shall reduce the
Commitments of the Lenders ratably. If the Aggregate Credit Exposure exceeds the Aggregate Commitment as so reduced, the
Borrower shall, on or before such Compliance Date, (i) repay outstanding Loans to the extent necessary to reduce the Aggregate
Credit Exposure to the amount of the Aggregate Commitment and (ii) if the Aggregate Credit Exposure upon such repayment would
exceed the Aggregate Commitment, pay to the Agent an amount equal to the amount by which the Aggregate Credit Exposure
(following the repayment under clause (i) above) exceeds the Aggregate Commitment, which payment under this clause (ii) shall be
held in a Facility LC Collateral Account in accordance with and subject to the terms of Section 2.19.12; provided that, to the extent not
applied to reimburse an LC Issuer for Reimbursement Obligations, such amount shall be returned to the Borrower from time to time to
the extent that the amount deposited exceeds by more than $2,000,000 the amount by which the Aggregate Credit Exposure exceeds
the Aggregate Commitment.
3. Increases in Aggregate Commitments. The third sentence of Subsection 2.5.3(i) of the Credit Agreement is amended to
replace the amount of “$1,500,000,000” in clause (D) with the amount”$300,000,000,” to delete the word “and” before clause (I), to insert the
word “and” at the end of clause (I) and to insert the following new clause (J) immediately thereafter:
(J) the Consolidated Tangible Net Worth set forth on any Compliance Certificate delivered to Agent prior to the Increase Date
pursuant to Section 6.2(b) was not less than $400,000,000;
The fourth sentence of Subsection 2.5.3(i) is amended to replace the phrase “clauses (E) through (I)” with the phrase “clauses (E) through (J).”
4. Defaulting Lenders. The words “or a Defaulting Lender” are inserted after the phrase “is a Rejecting Lender” each time such
phrase appears in Section 2.21(a); and a new Section 2.23 is hereby added to the Credit Agreement immediately after Section 2.22 to read as
follows:
2.23 Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting
Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(a) If such Defaulting Lender has failed to fund any portion of its Loans or participations in Letters of Credit or Swing
Line Loans or otherwise failed to pay over to the Agent or any other Lender any amount required to be paid by it hereunder, the
Commitment and Aggregate Credit Exposure of such Defaulting Lender shall not be included in determining the Required Lenders for
purposes of taking any action hereunder;
(b) subject to Section 2.23(d), if any LC Exposure or Swing Line Exposure exists at the time a Lender becomes a
Defaulting Lender, then the Borrower shall within one Business Day following notice by the Agent cash collateralize such Defaulting
Lender’s Pro Rata Share of the
4
LC Exposure and Swing Line Exposure in accordance with the procedures set forth in Section 2.19.12 (with references therein to LC
Issuers and LC Exposure being construed as including references to the Swing Line Lender and Swing Line Loans, respectively) for
so long as any such LC Exposure or Swing Line Exposure is outstanding, as though a Default had occurred; provided that, to the
extent not applied to reimburse an LC Issuer for Reimbursement Obligations or the Swing Line Lender for Swing Line Exposure,
amounts held as cash collateral pursuant to this Section 2.23(b) shall be returned to the Borrower from time to time (i) to the extent
that such amounts exceed by more than $2,000,000 the amount by which the Defaulting Lenders’ Pro Rata Shares of the Aggregate
Credit Exposure exceed such Defaulting Lenders’ Commitments, (ii) in full if all Defaulting Lenders cease to be parties to this
Agreement or otherwise cease to be Defaulting Lenders and (iii) in an amount equal to any Lender’s Pro Rata Share of such cash
collateral if such Lender ceases to be a party to this Agreement or otherwise ceases to be a Defaulting Lender.
(c) so long as any Lender is a Defaulting Lender, the Swing Line Lender shall not be required to fund any Swing Line
Loan; and
(d) notwithstanding the provisions of Sections 2.23(b), if, within one (1) Business Day following the Agent’s notice
under Section 2.23(b), the Borrower shall, by notice to the Agent, advise the Agent that, in accordance with Section 2.21, the
Borrower intends to effect the assignment by such Defaulting Lender of all of its right, title and interest under this Agreement to a
Person that is not a Defaulting Lender (subject to and in accordance with the provisions, of Section 12.1), the date by which the
Borrower shall be required to comply with Section 2.23(b) shall be extended to the 45th day after the date of the Agent’s notice;
provided that such extension shall not extend the date by which the Borrower is obligated to repay Swing Line Loans or cash
collateralize LC Exposure pursuant to any other provision of this Agreement.
This subsection 2.23 may not be amended without the prior written consent of the Swing Line Lender, the LC Issuers and the
Required Lenders.
5. Dividends. Section 6.16 of the Credit Agreement is hereby amended to add a new sentence at the end thereof to read as
follows:
In no event shall aggregate cash dividends paid by the Borrower in any fiscal year of the Borrower ending after the Fourth
Amendment Effective Date exceed $10,000,000.
6. Consolidated Tangible Net Worth. Section 6.24 of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:
6.24 Consolidated Tangible Net Worth. The Borrower shall not permit Consolidated Tangible Net Worth at any time to
be less than the sum of (a) $300,000,000 plus (b) 50% of the Consolidated Net Income (without deduction for losses sustained during
any fiscal quarter and excluding the effect of any decrease in or reversal of any Deferred Tax Valuation Allowance during any fiscal
quarter) for each fiscal quarter subsequent to the fiscal quarter ended December 31, 2008, plus (c) 50% of the net proceeds from any
equity offerings of the Borrower from and after December 31, 2008 plus (d) 100% of the amount of any reduction in or reversal of any
Deferred Tax Valuation Allowance for each fiscal quarter subsequent to the fiscal quarter ended December 31, 2008. Notwithstanding
the foregoing, in the event that the Borrower shall at any time engage in an Acquisition with a purchase price (determined under
GAAP) equaling or exceeding $100,000,000, the minimum Consolidated Tangible Net Worth requirement shall be adjusted to the sum
of (i) 80% of the Consolidated Tangible Net Worth at the end of the fiscal
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quarter in which the closing of such Acquisition occurs, plus (ii) an amount equal to 50% of the Consolidated Net Income (without
deduction for losses sustained in any fiscal quarter) for each fiscal quarter subsequent to the closing of such Acquisition, plus
(iii) 50% of the net proceeds received by the Borrower for any capital stock issued after the closing of such Acquisition; provided,
that the Consolidated Tangible Net Worth requirement shall be adjusted upon an Acquisition only if the resulting minimum
Consolidated Tangible Net Worth requirement is not less than the minimum Consolidated Tangible Net Worth requirement
immediately prior to giving effect to such Acquisition.
7. Permitted Leverage Ratio. Section 6.25 of the Credit Agreement is hereby amended and restated in its entirety to read as
follows.
6.25 Leverage Ratio. The Borrower shall not permit the Leverage Ratio at any time to exceed 55%.
8. Liquidity Reserve. A new Section 6.26 is hereby added to the Credit Agreement between Sections 6.25 and 6.27 to read as
follows:
6.26 Liquidity Reserve.
(a) If, at any time, the Borrower shall fail, as of the last day of a fiscal quarter for the four-quarter period ending on such
date to maintain an Interest Coverage Ratio of at least 1.50 to 1.00 and an ACCFO Ratio of at least 2.00 to 1.00 (the “Liquidity Test”),
the Borrower shall, not more than five (5) Business Days after the Compliance Date for such quarter, cause to be on deposit in one or
more Liquidity Reserve Accounts with one or more of the Liquidity Reserve Banks (as selected by the Borrower) an amount not less
than 200% of Consolidated Interest Incurred during such four-quarter period. Within ten (10) days following such Compliance Date
and on each Compliance Date thereafter, the Borrower shall furnish to the Agent a certificate confirming compliance with this
Section 6.26(a) and identifying the amounts on deposit in each Liquidity Reserve Account held by each Liquidity Reserve Bank.
(b) If the Borrower shall satisfy the Liquidity Test as of the last day of any fiscal quarter for the four-quarter period
ending on such day and shall have furnished the financial statements and Compliance Certificate required to be furnished under
Sections 6.1 and 6.2 with respect to such fiscal quarter evidencing the same, the Borrower may withdraw any and all funds from the
Liquidity Reserve Accounts and shall not thereafter be required to maintain any Liquidity Reserve Accounts unless and until
thereafter required pursuant to the provisions of Section 6.26(a). If, at any time that the Borrower is required to maintain amounts on
deposit in Liquidity Reserve Accounts, the amounts on deposit in Liquidity Reserve Accounts exceed 200% of the Consolidated
Interest Incurred determined as of the end of any fiscal quarter and the Borrower has furnished the financial statements and
Compliance Certificate required to be furnished under Sections 6.1 and 6.2 with respect to such fiscal quarter evidencing the same, the
Borrower may at any time prior to the Compliance Date for the fiscal quarter next succeeding such fiscal quarter withdraw from the
Liquidity Reserve Accounts an aggregate amount equal to such excess.
(c) If at any time any Liquidity Reserve Bank ceases to be a Lender under this Agreement or is a Defaulting Lender, all
funds held by such Liquidity Reserve Bank in a Liquidity Reserve Account shall be immediately transferred to another Liquidity
Reserve Account held by another Liquidity Reserve Bank (as designated by the Borrower or, in the absence of such designation, as
designated by the Agent).
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(d) The failure of the Borrower to satisfy the Liquidity Test alone shall not constitute a Default or Unmatured Default
unless the Borrower fails to make the deposits into the Liquidity Reserve Accounts and to maintain the same as required herein.
9. Land Inventory. Section 6.29 of the Credit Agreement is hereby amended to delete the ratio “1.15 to 1.00” and to insert in
lieu thereof the ratio “1.20 to 1.00.”
10. Compliance Certificate. The form of the Compliance Certificate provided for in the Credit Agreement shall be modified to
(a) add to Schedule 1 thereto disclosure of amounts, if any, held in each Liquidity Reserve Account with each Liquidity Reserve Bank as of the
relevant Compliance Date together with a computation of the Liquidity Test and (b) as applicable, otherwise to conform to the other terms of
this Amendment.
11. Borrowing Base Certificate. The form of the Borrowing Base Certificate attached as Exhibit A to the Credit Agreement is
replaced by Exhibit A attached hereto.
12. Pricing Schedule. The Pricing Schedule attached to the Credit Agreement is replaced by the Pricing Schedule appearing
immediately prior to the signature pages hereto, and the pricing set forth in Level II of the Pricing Schedule shall be in effect as of the date of
this Amendment.
13. Conditions Precedent. This Amendment shall be effective as of the date (“Amendment Effective Date”) upon which the
following conditions are satisfied:
(a) The Agent shall have received from the Borrower and the Required Lenders a counterpart of this Amendment signed on
behalf of each such party.
(b) The Agent shall have received from the Guarantors the Consent and Agreement substantially in the form attached hereto as
Appendix I.
(c) The Agent shall have received such documents and certificates as the Agent or its counsel may reasonably request relating
to the organization or formation, existence and good standing of the Borrower, the authorization of this Amendment and any other legal
matters relating to the Borrower, the Agreement or this Amendment, all in form and substance satisfactory to the Agent and its counsel.
(d) The Agent shall have received all fees and other amounts due and payable on or prior to the Amendment Effective Date,
including reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder.
The Agent shall notify the Borrower and the Lenders of the Amendment Effective Date, and such notice shall be conclusive and
binding.
14. Representations and Warranties. The Borrower hereby represents and warrants that as of the date hereof:
(a) The representations and warranties of the Borrower and each Guarantor in the Credit Agreement and the other
Loan Documents, as applicable, are true and correct in all material respects.
(b) There exists no Default or Unmatured Default.
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15. Ratification. The Credit Agreement, as amended hereby, is hereby ratified and remains in full force and effect.
16. Counterparts. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute
one agreement and any of the parties hereto may execute this Amendment by signing any such counterpart.
17. Choice of Law. This Agreement shall be construed in accordance with the internal laws (but without regard to the conflict of
laws provisions) of the State of New York, but giving effect to federal laws applicable to national banks.
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PRICING SCHEDULE
Level I Level II Level III
Rating Ba2/BB or above Ba3/BB- B1/B+ or below
Leverage Ratio < 45% > 45% < 50% > 50%
Applicable Margin for Eurodollar Advances 2.75% 3.25% 3.75%
Applicable Margin for Alternate Base Rate 1.75% 2.25% 2.75%
Applicable Fee Rate 0.35% 0.375% 0.5%
“Rating” means the higher of the publicly announced ratings of the Borrower’s senior unsecured public debt by Moody’s and S&P.
If only one of Moody’s or S&P announces a rating of the Borrower’s senior unsecured public debt, no Rating shall be deemed to exist.
If the Level as determined by the Rating is not the same as the Level as determined by the Leverage Ratio, but no more than one
Level apart, then the Applicable Margin and the Applicable Fee Rate shall correspond to the Level which causes pricing to be lower. If the
Level as determined by the Rating is more than one Level different from the Level as determined by the Leverage Ratio, then the Applicable
Margin and the Applicable Fee Rate shall be one Level lower (i.e., lower pricing) than the higher of such two Levels.
Notwithstanding the foregoing, at any time at which the Interest Coverage Ratio is less than 2.00 to 1.00, the Applicable Margin and
Applicable Fee Rate determined as provided above shall be increased based upon the Interest Coverage Ratio as follows:
Interest Coverage Ratio Less than 2.00 to 1.00 Less than 1.50 to 1.00 Less than 1.00 to 1.00
but greater than or equal but greater than or
to 1.50 to 1.00 equal to 1.00 to 1.00
Increase in Applicable 0.125% 0.25% 0.375%

Margin and Applicable Fee
Rate
The Applicable Margin and Applicable Fee Rate shall be determined in accordance with the foregoing table based on the Borrower’s
status as reflected in the then most recent Ratings and the then most recent annual or quarterly financial statements of the Borrower delivered
pursuant to Section 6.1(a) or (b) (the “Financials”). Adjustments, if any, to the Applicable Margin or Applicable Fee Rate resulting from
changes in the Leverage Ratio or Interest Coverage Ratio shall be effective five Business Days after the Agent has received the applicable
Financials. If the Borrower fails to deliver the Financials to the Agent at the time required pursuant to Section 6.1, then the Applicable Margin
and Applicable Fee Rate shall be the highest Applicable Margin and Applicable Fee Rate set forth in the foregoing table until five days after
such Financials are so delivered. The Rating in effect on any date for the purposes of this Schedule is that in effect at the close of business on
such date.
9
In the event that any of the Financials or any certificate delivered by Borrower under Section 6.2(b) is shown to be inaccurate
(regardless of whether this Agreement is in effect or any Loans or Commitments are outstanding when such inaccuracy is discovered), and
such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin and Applicable Fee Rate for any period (an
“Applicable Period”) than the Applicable Margin and Applicable Fee Rate actually applied for such Applicable Period, then (i) the Borrower
shall immediately deliver to the Agent a correct certificate under Section 6.2(b) for such Applicable Period, (ii) the Applicable Margin and
Applicable Fee Rate shall be determined at such higher Applicable Margin and Applicable Fee Rate for such Applicable Period, and (iii) the
Borrower shall immediately pay to the Agent (for the benefit of the Lenders) the accrued additional interest and additional fees owing as a
result of such higher Applicable Margin and Applicable Fee Rate for such Applicable Period.
In the event that any of the Financials or any certificate delivered by Borrower under Section 6.2(b) is shown to be inaccurate and
such inaccuracy, if corrected, would have led to the application of a lower Applicable Margin and Applicable Fee Rate for any Applicable
Period than the Applicable Margin and Applicable Fee Rate actually applied for such Applicable Period, and provided such inaccuracy was
not as a result of any fraudulent act, then (i) the Borrower may, within 60 days of its discovery of such inaccuracy (but in no event later than
one (1) year after delivery of the inaccurate Financials or certificate), deliver to the Agent a correct certificate under Section 6.2(b) for such
Applicable Period and (ii) provided this Agreement is then in effect, Borrower may, from time to time after timely delivery of such correct
certificate, offset, against payments of interest and fees thereafter payable under this Agreement to any Lender that received payments of
interest and fees for the Applicable Period (“ Overpayments”) in excess of the fees and interest that would have been payable to such Lender if
such payment had been made based upon the corrected Financials and certificate, amounts not to exceed in the aggregate the Overpayments
received by such Lender. No Lender shall have any liability or obligation with respect to any Overpayment received by any other Lender nor
shall any Lender have any liability or obligation with respect to any Overpayment received by it other than Borrower’s right of offset
hereunder.
IN WITNESS WHEREOF, the Borrower and the undersigned Lenders have caused this Amendment to be duly executed as
of the date first above written.
Borrower:
By: /s/ Gordon A. Milne

Name: Gordon A. Milne
Title: Executive Vice President and Chief Financial Officer
Lenders:
JPMORGAN CHASE BANK, N.A.,

As Lender and Agent
By: /s/ Kimberly Turner

Name: Kimberly Turner
Its: Executive Director
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SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT

WITH THE RYLAND GROUP, INC.
BANK OF AMERICA, N.A.
By: /s/ Michael W. Edwards

Name: Michael W. Edwards
Title: Senior Vice President
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THE ROYAL BANK OF SCOTLAND PLC
By: /s/ William McGinty

Name: William McGinty
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WACHOVIA BANK, NATIONAL

ASSOCIATION
By:
Name:
Title:
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CITICORP NORTH AMERICA, INC.
By: /s/ Marni McManus

Name: Marni McManus
Title: Vice President
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BARCLAYS BANK PLC
By: /s/ Nicholas A. Bell

Name: Nicholas A. Bell
Title: Director
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COUNTRYWIDE BANK, N.A.
By: /s/ Michael W. Edwards

Name: Michael W. Edwards
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GUARANTY BANK
By: /s/ Dan Killian

Name: Dan Killian
Title: Sr Vice President
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SUNTRUST BANK
By: /s/ W. John Wendler

Name: W. John Wendler
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JPMorgan Chase Bank, N.A. is the purchaser of the Commitment and Loans under the Credit Agreement referenced above from the Federal
Deposit Insurance Corporation acting as receiver for Washington Mutual Bank, formerly known as Washington Mutual Bank, F.A. and is the
successor owner of the Commitment and Loans.
JPMORGAN CHASE BANK, N.A.
By: /s/ Gary Handcox

Name: Gary Handcox
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WASHINGTON MUTUAL BANK, FA
By:
Name:
Title:
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REGIONS BANK
By: /s/ Ronny Hudspeth

Name: Ronny Hudspeth
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PNC BANK, NATIONAL ASSOCIATION
By: /s/ Douglas G. Paul

Name: Douglas G. Paul
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UBS LOAN FINANCE LLC
By: /s/ Irja R. Otsa

Name: Irja R. Otsa
Title: Associate Director
By: /s/ Richard L. Tavrow

Name: Richard L. Tavrow
Title: Director
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COMERICA BANK
By:
Name:
Title:
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NATIXIS
By: /s/ Natalie Trojan

Name: Natalie Trojan
Title: Director
By: /s/ Marie-Edith Dugeny

Name: Marie-Edith Dugeny
Title: Managing Director
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CALYON NEW YORK BRANCH
By: /s/ Robert Smith

Name: Robert Smith
By: /s/ Brian Myers

Name: Brian Myers
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CITY NATIONAL BANK
By: /s/ Xavier Barrera

Name: Xavier Barrera
Title: Vice President
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THE GOVERNOR AND COMPANY OF

THE BANK OF IRELAND
By: /s/ Conor Linehan

Name: Conor Linehan
Title: Director
By: /s/ Robert D. Gominiak

Name: Robert D. Gominiak
Title: Director
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CHANG HWA COMMERCIAL BANK,

LTD., LOS ANGELES BRANCH
By: /s/ Tom Tsai

Name: Tom Tsai
Title: VP & Assistant General Manager
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FIRST COMMERCIAL BANK,

LOS ANGELES BRANCH
By: /s/ Wen-Han Wu

Name: Wen-Han Wu
Title: Deputy and General Manager
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MALAYAN BANKING BERHAD,

NEW YORK BRANCH
By: /s/ Fauzi Zulkifli

Name: Fauzi Zulkifli
Title: General Manager
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SCHEDULE 1
COMMITMENTS
Pro forma
Commitment For
Pro rata Existing Fourth
Lender Share Commitment Amendment
JPMORGAN / WASHINGTON MUTUAL BANK 13.3216% $73,268,636.97 $26,643,140.72

REGIONS BANK 4.4111 24,261,138.07 8,822,232.03
BANK OF AMERICA, N.A. 8.8222 48,522,276.14 17,644,464.05
BANK OF IRELAND 1.9850 10,917,512.13 3,970,004.41
BARCLAYS BANK PLC 6.6167 36,391,707.10 13,233,348.04
CALYON NY BRANCH 2.6467 14,556,682.84 5,293,339.21
CHANG HWA COMMERCIAL BANK LTD. 0.8822 4,852,227.61 1,764,446.40
CITICORP NORTH AMERICA INC. 8.8222 48,522,276.14 17,644,464.05
CITY NATIONAL BANK, N.A. 2.2056 12,130,569.04 4,411,116.01
COMERICA BANK 3.0878 16,982,796.64 6,175,562.41
COUNTRYWIDE BANK, N.A. 6.6167 36,391,707.10 13,233,348.04
FIRST COMMERCIAL BANK 0.8822 4,852,227.61 1,764,446.40
GUARANTY BANK 5.7345 31,539,479.49 11,468,901.63
MALAYAN BANK BERHAD 0.4411 2,426,113.81 882,223.20
NATIXIS, SA 3.0878 16,982,796.64 6,175,562.41
PNC 3.9700 21,835,024.26 7,940,008.82
THE ROYAL BANK OF SCOTLAND PLC 8.8222 48,522,276.14 17,644,464.05
SUNTRUST BANK, INC. 5.2933 29,113,365.68 10,586,678.43
UBS AG 3.5289 19,408,910.45 7,057,785.62
WACHOVIA BANK, N.A. 8.8222 48,522,276.14 17,644,464.05
100.0000% $550,000,000.00 $200,000,000.00
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EXHIBIT A
BORROWING BASE CERTIFICATE
The undersigned, being the duly elected of The Ryland Group, Inc. (the “Company”) hereby certifies that the
following is a true and correct calculation of the Borrowing Base as of (the “Statement Date”). Capitalized terms used but not
defined herein shall have the meanings set forth in the Credit Agreement dated as of January 12, 2006, as amended, extended, supplemented or
otherwise modified from time to time (the “Agreement”), by and among the Company, the several financial institutions party thereto (the
“Lenders”) and JPMorgan Chase Bank, N,A,, as agent for the Lenders.
Period Ending/Statement Date: , 200
($000’s)
Homes Proceeds Receivables $

Sold - Construction in Progress/Completed $
Unsold - Construction in Progress/Completed $
Finished Lots $
Land Under Development $
Raw Land - Entitled $
Raw Land - Unentitled $
Total Inventory $
Borrowing Base Calculation
A. Borrowing Base.
1. The following Unencumbered Real Estate Inventory, Home Proceeds Receivables and Unrestricted Cash of the Company and any
Guarantor qualify for inclusion in the Borrowing Base (all figures are as of Statement Date):
100% of Unrestricted Cash in excess of $25,000,000 minus the sum of the principal amount of all
Revolving Loans and Swing Line Exposure: $
90% of Home Proceeds Receivable $
90% of the book value of Sold Construction in Progress and Sold Completed Units $
80% of the book value of Unsold Construction in Progress and Unsold Completed Units $
70% of the book value of Finished Lots $
50% of the book value of Land Under Development $
25% of the book value of Raw Land – Entitled $
Total $
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2. The sum of 70% of Finished Lots, 50% of Land Under Development and 25% of Raw Land Entitled shall not exceed 40% of the
Borrowing Base
70% of the book value of Finished Lots $

50% of the book value of Land Under Development $
25% of the book value of Raw Land - Entitled $
$
40% of Borrowing Base $
Cushion/(Violation) $
3. 25% of the book value of Raw Land - Entitled shall not exceed 10% of the Borrowing Base
25% of book value of Raw Land - Entitled $

10% of Borrowing Base $
Cushion/(Violation) $
4. The Total Borrowing Base equals the total in item 1 above
Less adjustments (if any) required under item 2 or 3 above $
Total Borrowing Base $
B. Senior Permitted Debt. The following figures are as of the Statement Date:
Senior Permitted Debt:

Loans, including Swing Line Loans (excluding Swing Line Exposure in the amount of cash collateral
held pursuant to Section 2.23(b) $
Outstanding Facility LCs issued under the Agreement (excluding LC Exposure in the amount of cash
collateral held pursuant to Sections 2.19.12 or 2.23(b) $
Reimbursement Obligations $
Other Senior Permitted Debt (as itemized in Annex I) $
Total Senior Permitted Debt $
Borrowing Base surplus/(deficit) $
IN WITNESS WHEREOF, the undersigned has executed this Borrowing Base Certificate as of , 200 .
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ANNEX I
TO BORROWING BASE CERTIFICATE
Description of other Senior Permitted Debt Amount
a. 5.375% Senior Notes due 2015 $

b. 5.375% Senior Notes due 2012 $
c. 6.875% Senior Notes due 2013 $
d. Third party financial LC’s $
e. $
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Appendix I
CONSENT AND AGREEMENT OF GUARANTORS
THIS CONSENT AND AGREEMENT OF GUARANTORS (“Consent”) is executed and delivered as of January 22, 2009, by the
undersigned (the “Guarantors”), in favor of the “Lenders” under that certain Credit Agreement dated January 12, 2006, among The Ryland
Group, Inc., the Lenders from time to time parties thereto and JPMorgan Chase Bank, N.A., in its capacity as Agent. Such Credit Agreement,
as it has been and may be amended, modified or supplemented from time to time, is hereinafter referred to as the “Credit Agreement.” Unless
otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Guarantors have executed and delivered a Guaranty dated January 12, 2006 in favor of the Lenders under the Credit
Agreement or a Supplemental Guaranty thereto (collectively, the “Guaranty”); and
WHEREAS, the Borrower, the Agent and certain Lenders have entered into that certain Fourth Amendment to Credit Agreement of
even date herewith amending the Credit Agreement (the “Amendment”); and
WHEREAS, it is a condition to the Amendment that the Guarantors shall have executed this Consent;
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Guarantors hereby consent to the Amendment and agree that (a) the Guaranty continues in full force and effect and (b) they have no defense,
counterclaims or offsets with respect to any of their respective obligations under the Guaranty..
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IN WITNESS WHEREOF, this Consent has been duly executed by the Guarantors as of the day and year first set forth above.
[Guarantors]
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Exhibit 10.9

2005 EQUITY INCENTIVE PLAN
Amendment and Restatement
1. Purpose and Types of Awards
The purpose of THE RYLAND GROUP, INC. 2005 EQUITY INCENTIVE PLAN (the “Plan”) is to promote the long-term growth and
profitability of the Corporation by providing key people with incentives to improve stockholder value and to contribute to the growth and
financial success of the Corporation.
The Plan permits the granting of stock options (including incentive stock options qualifying under Code section 422 and nonqualified
stock options), restricted stock awards, stock units or any combination of the foregoing.
2. Definitions
Under this Plan, except where the context otherwise indicates, the following definitions apply:
(a) “Administrator” means the Board, the Compensation Committee of the Board, or any committee or committees that are
appointed by the Compensation Committee or the Board that have authority to administer the Plan as provided in Section 3 hereof.
(b) “Affiliate” shall mean any entity, whether now or hereafter existing, which controls, is controlled by or is under common
control with the Corporation (including joint ventures, limited liability companies and partnerships). For this purpose, “control” shall mean
ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the entity.
(c) “Award” shall mean any stock option, restricted stock award or stock unit award.
(d) “Board” shall mean the Board of Directors of the Corporation.
(e) “Change in Control” shall mean:
(i) The acquisition by any person, other than the Corporation or any employee benefit plans of the Corporation, of
beneficial ownership of 20 percent or more of the combined voting power of the Corporation’s then outstanding voting securities;
(ii) The first purchase under a tender offer or exchange offer, other than an offer by the Corporation or any employee
benefit plans of the Corporation, pursuant to which shares of Common Stock have been purchased;
(iii) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board
of Directors of the Corporation cease for any reason to constitute at least a majority thereof, unless the election or the nomination for
the election by stockholders of the Corporation of each new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period; or
(iv) Approval by stockholders of the Corporation of a merger, consolidation, liquidation or dissolution of the
Corporation, or the sale of all or substantially all of the assets of the Corporation; provided, however, that for purposes of any Award
or subplan that constitutes a “nonqualified deferred compensation plan,” within the meaning of Code section 409A, the
Administrator, in its discretion, may specify a different definition of Change in Control in order to comply with the provisions of Code
section 409A.
(f) “Code” shall mean the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.
(g) “Common Stock” shall mean shares of common stock, $1.00 par value, of the Corporation.
(h) “Corporation” shall mean The Ryland Group, Inc. and its successors and assigns.
(i) “Designated Beneficiary” shall mean the beneficiary designated by an Award holder, in a manner and to the extent
determined by the Administrator, to receive amounts due or exercise rights of the Award holder in the event of the Award holder’s death. In
the absence of an effective designation by an Award holder, “Designated Beneficiary” shall mean the Award holder’s estate.
(j) “Effective Date” shall mean the date the Plan is approved by the stockholders of the Corporation.
(k) “Fair Market Value” shall mean, with respect to a share of the Corporation’s Common Stock or other property for any
purpose on a particular date, the value determined by the Administrator in good faith. However, if the Common Stock is registered under
Section 12(b) of the Securities Exchange Act of 1934, as amended, “Fair Market Value” with respect to a share of the Corporation’s Common
Stock shall mean, as applicable, (i) either the closing price or the average of the high and low sale price on the relevant date, as determined in
the Administrator’s discretion, quoted on the New York Stock Exchange, the American Stock Exchange, or the Nasdaq National Market; (ii) the
last sale price on the relevant date quoted on the Nasdaq SmallCap Market; (iii) the average of the high bid and low asked prices on the
relevant date quoted on the Nasdaq OTC Bulletin Board Service or by the National Quotation Bureau, Inc. or a comparable service as
determined in the Administrator’s discretion; or (iv) if the Common Stock is not quoted by any of the above,
2
the average of the closing bid and asked prices on the relevant date furnished by a professional market maker for the Common Stock, or by
such other source, selected by the Administrator. If no public trading of the Common Stock occurs on the relevant date, then Fair Market
Value shall be determined as of the next preceding date on which trading of the Common Stock does occur. For all purposes under this Plan,
the term “relevant date” as used in this Section 2(k) shall mean either the date as of which Fair Market Value is to be determined or the next
preceding date on which public trading of the Common Stock occurs, as determined in the Administrator’s discretion.
Effective for Awards granted on or after January 1, 2009, “Fair Market Value” shall mean, with respect to a share of the
Corporation’s Common Stock, the fair market value based upon the last sale before or the first sale after the grant, the closing price on the
trading day before or the trading day of the grant, the arithmetic mean of the high and low prices on the trading day before or the trading day
of the grant, or any other reasonable method using actual transactions in such stock as reported by such market.
(l) “Grant Agreement” shall mean a written document memorializing the terms and conditions of an Award granted pursuant to
the Plan and shall incorporate the terms of the Plan.
(m) “Plan Share Reserve” means the maximum number of shares of Common Stock that may be issued with respect to Awards
granted under the Plan.
(n) “Prior Plans” shall mean The Ryland Group, Inc. 1992 Equity Incentive Plan and the 2002 Equity Incentive Plan.
(o) “2002 Equity Incentive Plan” shall mean The Ryland Group, Inc. 2002 Equity Incentive Plan, the term of which expires on
April 24, 2012.
3. Administration
(a) Administration of the Plan. The Plan shall be administered by the Board, the Compensation Committee of the Board, or any
committee or committees that are appointed by the Compensation Committee or the Board from time to time.
(b) Powers of the Administrator. The Administrator shall have all the powers vested in it by the terms of the Plan, such powers
to include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such Awards
and establish programs for granting Awards.
The Administrator shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the
Plan, including, but not limited to, the authority to: (i) determine the eligible persons to whom, and the time or times at which Awards shall be
granted; (ii) determine the types of Awards to be granted; (iii) determine the number of shares to be covered by or used for reference purposes
for each Award; (iv) impose such terms, limitations, restrictions and conditions upon any such Award as the
3
Administrator shall deem appropriate; (v) modify, amend, extend or renew outstanding Awards, or accept the surrender of outstanding
Awards and substitute new Awards (provided however, that, except as provided in Section 7(c) of the Plan, (A) any modification that would
adversely affect any outstanding Award shall not be made without the consent of the holder, and (B) the exercise price for any outstanding
stock option granted under the Plan may not be decreased after the date of grant nor may any outstanding stock option granted under the
Plan be surrendered to the Corporation as consideration for the grant of a new stock option with a lower exercise price); (vi) accelerate or
otherwise change the time in which an Award may be exercised or becomes payable and to waive or accelerate the lapse, in whole or in part, of
any restriction or condition with respect to such Award, including, but not limited to, any restriction or condition with respect to the vesting or
exercisability of an Award following termination of any grantee’s employment or other service relationship with the Corporation; and (vii) to
establish, amend, modify, administer or terminate subplans, and prescribe, amend and rescind rules and regulations relating to such subplans.
The Administrator shall have full power and authority, in its sole and absolute discretion, to administer and interpret the Plan and to
adopt and interpret such rules, regulations, agreements, guidelines and instruments for the administration of the Plan and for the conduct of its
business as the Administrator deems necessary or advisable. To the extent permitted by applicable law, the Administrator may delegate to
one or more executive officers of the Corporation the power to (i) grant Awards to individuals who are not subject to Section 16 of the
Securities Exchange Act of 1934, as amended, or any successor provision and are not officers of the Corporation, and (ii) make all
determinations under the Plan with respect thereto, provided that the Administrator shall fix the maximum amount of such Awards for the
group and a maximum for any one Award recipient.
Notwithstanding anything in the Plan to the contrary, the Administrator shall not exercise its power and authority in a manner that
would add a feature for the deferral of compensation to an Award, making such Award subject to Code section 409A, nor shall the
Administrator exercise its power and authority in a manner that would cause the acceleration of payment in violation of Code section 409A to
the extent any Award granted under this Plan is determined to be subject to Code section 409A.
(c) Non-Uniform Determinations. The Administrator’s determinations under the Plan (including without limitation,
determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and
the Grant Agreements evidencing such Awards) need not be uniform and may be made by the Administrator selectively among persons who
receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.
(d) Limited Liability. To the maximum extent permitted by law, no member of the Administrator shall be liable for any action
taken or decision made in good faith relating to the Plan or any Award thereunder.
4
(e) Indemnification. To the maximum extent permitted by law and by the Corporation’s charter and by-laws, the members of the
Administrator shall be indemnified by the Corporation in respect of all their activities under the Plan.
(f) Effect of Administrator’s Decision. All actions taken and decisions and determinations made by the Administrator on all
matters relating to the Plan pursuant to the powers vested in it hereunder shall be in the Administrator’s sole and absolute discretion and shall
be conclusive and binding on all parties concerned, including the Corporation, its stockholders, any participants in the Plan and any other
employee, consultant, or director of the Corporation, and their respective successors in interest.
4. Shares Available for the Plan; Maximum Awards
(a) Plan Share Reserve. Subject to the following provisions of this Section 4 and adjustments as provided in Section 7(c) of the
Plan, the Plan Share Reserve shall be equal to the sum of: (i) 475,000 shares of Common Stock; (ii) 768,772 shares of Common Stock remaining
under the 2002 Equity Incentive Plan that are not subject to outstanding grants of Awards under Prior Plans; and (iii) any shares of Common
Stock that are represented by Awards granted under the Prior Plans that are forfeited, expire or are canceled without delivery of shares of
Common Stock or which result in the forfeiture of the shares of Common Stock back to the Corporation.
(b) Adjustments to Plan Share Reserve; Fixed ISO Limit. If any Award, or portion of an Award, under the Plan or the Prior
Plans expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled as to any
shares, the shares subject to such Award shall thereafter be available for Awards under the Plan; provided, however, that no more than the
number of shares available for issuance on the Effective Date shall be made available for purchase pursuant to incentive stock options.
(c) Cash Settlement of Awards. To the extent any shares of Common Stock covered by an Award are not delivered to an Award
holder or the holder’s Designated Beneficiary because the Award is settled in cash, such shares shall not be deemed to have been issued for
purposes of determining the maximum number of shares of Common Stock available for issuance under the Plan. Notwithstanding anything in
the Plan or Grant Agreement to the contrary, all payments of cash shall be made to the Award holder or the holder’s Designated Beneficiary no
later than the date that is two and one-half months following the end of year during which the Award holder becomes vested in the Award.
(d) Limitation on Restricted Stock and Stock Units. Notwithstanding the provisions of Section 4(a) of the Plan and subject to
adjustment as provided in Section 7(c) of the Plan, the maximum number of shares of Common Stock that may be issued in conjunction with
Awards granted pursuant to subsections (d) and (e) of Section 6 of the Plan (relating to restricted stock awards and stock units) shall be
425,000 shares of Common Stock; provided, however, that any shares of Common Stock that are forfeited back to the
5
Corporation with respect to any such Awards shall be available for further Awards under subsections (d) and (e) of Section 6 of the Plan.
(e) Code Section 162(m) Limit. Subject to adjustments as provided in Section 7(c) of the Plan, the maximum number of shares
of Common Stock subject to Awards of any combination that may be granted during any one fiscal year of the Corporation to any one
individual under this Plan shall be limited to 500,000 shares. Such per-individual limit shall not be adjusted to effect a restoration of shares of
Common Stock with respect to which the related Award is terminated, surrendered or canceled. The maximum cash amount that may be
payable in combination with any performance-based award distributable in restricted stock or stock units is the cash amount equal to the sum
of the fair market value of the underlying shares plus the federal and state income and Medicare taxes, assuming highest marginal tax rates,
associated with the grant, vesting or distribution of the related restricted stock or stock units.
5. Participation
Participation in the Plan shall be open to all employees, officers and other individuals providing bona fide services to or for the
Corporation or of any Affiliate of the Corporation, as may be selected by the Administrator from time to time. The Administrator may also
grant Awards to individuals in connection with hiring, retention or otherwise, prior to the date the individual first performs services for the
Corporation or an Affiliate provided that such Awards shall not become vested or exercisable, and no shares shall be issued to such
individual, prior to the date the individual first commences performance of such services.
6. Awards
(a) Terms of Awards. The Administrator, in its sole discretion, establishes the terms of all Awards granted under the Plan.
Awards may be granted individually or in tandem with other types of Awards. All Awards are subject to the terms and conditions provided in
the Grant Agreement, provided that all Awards shall have a minimum three-year graded vesting period, or a one-year vesting period plus
performance criteria established by the Administrator.
(b) Performance Factors. For purposes of ensuring that compensation arising from Awards granted under the Plan to officers
and key employees of the Company is deductible as qualified performance-based compensation within the meaning of Code section 162(m),
the Administrator may provide that the granting, vesting, right to exercise or lapse of restrictions associated with an Award (each, a
“performance-based award”) is contingent upon the attainment of one or more pre-established, objective performance goals based on any, or
any combination, of the following business criteria as it may apply to an individual, a business unit, or the Company: return on stockholder
equity, return on investment, total revenue, earnings before interest and taxes (“EBIT”), earnings before interest, taxes, depreciation and
appreciation (“EBITDA”), profits, stock price, earnings per share, or cost containment. Performance goals may include minimum, maximum and
target levels of performance, with the size of the performance-based award or the lapse of restrictions with
6
respect thereto based on the level attained. The Administrator may, at its sole discretion, modify the measurement criteria as applied to
performance-based awards to offset any unintended results arising from events not anticipated when the performance goals were established;
provided, that such modifications may be made with respect to an Award granted to any executive officer of the Company only to the extent
permitted by Code section 162(m).
(c) Stock Options. The Administrator may from time to time grant to eligible participants Awards of incentive stock options, as
that term is defined in Code section 422, or nonqualified stock options; provided, however, that Awards of incentive stock options shall be
limited to employees of the Corporation or of any current or hereafter existing “parent corporation” or “subsidiary corporation,” as defined in
Code sections 424(e) and (f), respectively, of the Corporation. No stock option shall be an incentive stock option unless so designated by the
Administrator at the time of grant or in the Grant Agreement evidencing such stock option. All stock options granted under the Plan must
have an exercise price at least equal to Fair Market Value as of the date of grant and may not have a term longer than five years. Except for
adjustments pursuant to Section 7(c), the exercise price for any outstanding stock option granted under the Plan may not be decreased after
the date of grant nor may any outstanding stock option granted under the Plan be surrendered to the Corporation as consideration for the
grant of a new stock option with a lower exercise price.
(d) Stock Awards. The Administrator may from time to time grant restricted stock Awards to eligible participants in such
amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be
required by law, as it shall determine. A stock Award may be paid in Common Stock, in cash, or in a combination of Common Stock and cash,
as determined in the sole discretion of the Administrator. Notwithstanding anything in the Plan or Grant Agreement to the contrary, all
payments of cash under this Section 6(d) shall be paid no later than the date that is two and one-half months following the end of year during
which the eligible participant becomes vested in the restricted stock Award.
(e) Stock Units. The Administrator may from time to time grant Awards to eligible participants denominated in stock-equivalent
units in such amounts and on such terms and conditions as it shall determine. Stock units granted to a participant shall be credited to a
bookkeeping reserve account solely for accounting purposes and shall not require a segregation of any of the Corporation’s assets. An
Award of stock units may be settled in Common Stock, in cash, or in a combination of Common Stock and cash, as determined in the sole
discretion of the Administrator. Notwithstanding anything in the Plan or Grant Agreement to the contrary, all payments of cash under this
Section 6(e) shall be paid no later than the date that is two and one-half months following the end of year during which the eligible participant
becomes vested in the Award of stock units. Shares of Common Stock awarded in connection with an Award of stock units may be issued for
such consideration as may be determined by the Administrator, including for no consideration or such minimum consideration as may be
required by law. Except as otherwise provided in the applicable Grant Agreement, the grantee shall not have the rights of a stockholder with
7
respect to any shares of Common Stock represented by a stock unit solely as a result of the grant of a stock unit to the grantee.
7. Miscellaneous
(a) Withholding of Taxes. Grantees and holders of Awards shall pay to the Corporation or its Affiliate, or make provision
satisfactory to the Administrator for payment of, any taxes required to be withheld in respect of Awards under the Plan no later than the date
of the event creating the tax liability. The Corporation or its Affiliate may, to the extent permitted by law, deduct any such tax obligations from
any payment of any kind otherwise due to the grantee or holder of an Award. Notwithstanding the above, in no event may holders of Awards
satisfy such tax liability through the tender or withholding of shares of Common Stock.
(b) Transferability. Except as otherwise determined by the Administrator, and in any event in the case of an incentive stock
option, no Award granted under the Plan shall be transferable by a grantee otherwise than by will or the laws of descent and distribution.
Unless otherwise determined by the Administrator in accord with the provisions of the immediately preceding sentence, an Award may be
exercised during the lifetime of the grantee, only by the grantee or, during the period the grantee is under a legal disability, by the grantee’s
guardian or legal representative.
(c) Adjustments; Business Combinations.
(i) Upon a stock dividend of, or stock split or reverse stock split affecting, the Common Stock of the Corporation,
(A) the maximum number of shares reserved for issuance or with respect to which Awards may be granted under the Plan and the
maximum number of shares with respect to which Awards may be granted during any one fiscal year of the Corporation to any
individual, as provided in Section 4 of the Plan, and (B) the number of shares covered by and the exercise price and other terms of
outstanding Awards, shall, without further action of the Board, be adjusted to reflect such event unless the Board determines, at the
time it approves such stock dividend, stock split or reverse stock split, that no such adjustment shall be made. The Administrator
may make adjustments, in its discretion, to address the treatment of fractional shares and fractional cents that arise with respect to
outstanding Awards as a result of the stock dividend, stock split or reverse stock split.
(ii) In the event of any other changes affecting the Corporation, the capitalization of the Corporation or the Common
Stock of the Corporation by reason of any spin-off, split-up, dividend, recapitalization, merger, consolidation, business combination
or exchange of shares and the like, the Administrator except as otherwise provided in Section 7(d), in its discretion and without the
consent of holders of Awards, may make: (A) appropriate adjustments to the maximum number and kind of shares reserved for
issuance or with respect to which Awards may be granted under the Plan, in the aggregate and with respect to any individual, as
provided in Section 4 of the Plan, and to the number, kind and price of shares covered
8
by outstanding Awards; and (B) any other adjustments in outstanding Awards, including but not limited to reducing the number of
shares subject to Awards or providing or mandating alternative settlement methods such as settlement of the Awards in cash or in
shares of Common Stock or other securities of the Corporation or of any other entity, or in any other matters which relate to Awards
as the Administrator shall, in its sole discretion, determine to be necessary or appropriate.
(iii) The Administrator is authorized to make, in its discretion and without the consent of holders of Awards,
adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events
affecting the Corporation, or the financial statements of the Corporation or any Affiliate, or of changes in applicable laws, regulations,
or accounting principles, whenever the Administrator determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the Plan and outstanding Awards.
(d) Change in Control. Notwithstanding the provisions of Section 7(c)(ii), in the event of a Change in Control, all Awards
under the Plan are automatically and fully vested and immediately exercisable or payable in whole or in part. The obligations of the
Corporation pursuant to the Plan and performance with respect to rights of Award holders thereunder shall be assumed by any participant,
successor-in-interest or beneficiary of or interested party in the Change in Control (collectively, the Change-in-Control Participant), and the
Change-in Control Participant shall cause the Awards to be assumed, or new rights substituted therefor, by another entity.
(e) Substitution of Awards in Mergers and Acquisitions in which the Corporation or an Affiliate is the Acquiring Entity.
Solely in the event that the Corporation or an Affiliate is an acquiring entity in a merger, acquisition and other business combination, Awards
may be granted under the Plan from time to time in substitution for Awards held by employees, officers, consultants or directors of a target
entity who become or are about to become employees, officers, consultants or directors of the Corporation or an Affiliate as the result of a
merger or consolidation of the employing entity with the Corporation or an Affiliate, or the acquisition by the Corporation or an Affiliate of the
assets or stock of the employing entity. The terms and conditions of any substitute Awards so granted may vary from the terms and
conditions set forth herein to the extent that the Administrator deems appropriate at the time of grant to conform the substitute Awards to the
provisions of the awards for which they are substituted.
(f) Compensation Committee Report. For each performance year and/or performance period, the Compensation Committee of
the Board shall determine and set forth in writing not later than 90 days after the commencement of the performance year and/or performance
period and in no event later than the point in time when 25% of the performance period has elapsed or the outcome of the performance
objectives is no longer substantially uncertain: (i) the participants under the Plan who are granted performance-based awards for the
performance period, (ii) the nature and amount (or the the objective formula for determining the amount) of the performance-based award that
will be earned if specified
9
performance objectives are met, (iii) the applicable performance factors, and (iv) any other objective terms and conditions that must be
satisfied by the participant in order to earn the performance-based award.
(g) Termination, Amendment and Modification of the Plan. The Administrator may terminate, amend or modify the Plan or any
portion thereof at any time; provided, however, that the provisions of Section 6(a) relating to stock option repricing shall not be amended
without approval by the Corporation’s stockholders, and any amendments to the Plan will not (i) materially increase the benefits accruing to
participants under the Plan, (ii) materially increase the aggregate number of securities that may be issued under the Plan, or (iii) materially
modify the requirements as to eligibility for participation in the Plan, without approval by the Corporation’s stockholders.
(h) Non-Guarantee of Employment or Service. Nothing in the Plan or in any Grant Agreement thereunder shall confer any right
on an individual to continue in the service of the Corporation or shall interfere in any way with the right of the Corporation to terminate such
service at any time with or without cause or notice. The Corporation expressly reserves the right at any time to dismiss an Award recipient free
from any liability or claim under the Plan, except as expressly provided in the applicable Grant Agreement.
(i) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of
any kind or a fiduciary relationship between the Corporation and a grantee or any other person. To the extent that any grantee or other person
acquires a right to receive payments from the Corporation pursuant to an Award, such right shall be no greater than the right of any unsecured
general creditor of the Corporation.
(j) Designated Beneficiaries. Unless otherwise provided in the applicable Grant Agreement, amounts or certificates due an
Award recipient after his or her death under an Award shall be paid or delivered to the Award recipient’s Designated Beneficiary in
accordance with the terms and conditions of the Award.
(k) Governing Law. The validity, construction and effect of the Plan, of Grant Agreements entered into pursuant to the Plan,
and of any rules, regulations, determinations or decisions made by the Administrator relating to the Plan or such Grant Agreements, and the
rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined exclusively in accordance with
applicable federal laws and the laws of the State of Maryland, without regard to its conflict of laws principles.
(l) Effective Date; Termination Date. The Amendment and Restatement of this Plan is effective as of the date on which the
Plan originally was approved by the stockholders of the Corporation. The Plan, as amended and restated, shall be unlimited in duration and, in
the event of Plan termination, shall remain in effect as long as any Awards under it are outstanding; provided, however, that no Awards shall
be granted under the Plan after the close of business on February 20, 2015.
10
Exhibit 10.10
The Plan permits the granting of stock options (including incentive stock options qualifying under Code Section 422 and nonqualified
2. Definitions
(a) “Administrator” means the Board, the Compensation Committee of the Board, or any committee or committees that are appointed
by the Compensation Committee or the Board that have authority to administer the Plan as provided in Section 3 hereof.
(b) “Affiliate” shall mean any entity, whether now or hereafter existing, which controls, is controlled by or is under common control
with the Corporation (including joint ventures, limited liability companies and partnerships). For this purpose, “control” shall mean ownership
of 50 percent or more of the total combined voting power or value of all classes of stock or interests of the entity.
(i) The acquisition by any person, other than the Corporation or any employee benefit plans of the Corporation, of beneficial
ownership of 20 percent or more of the combined voting power of the Corporation’s then outstanding voting securities;
(ii) The first purcha se under a tender offer or exchange offer, other than an offer by the Corporation or any employee benefit
plans of the Corporation, pursuant to which shares of Common Stock have been purchased;
(iii) During any period of two consecut ive years, individuals who at the beginning of such period constitute the Board of
Directors of the Corporation cease for any reason to constitute at least a majority thereof, unless the election or the nomination for the election
by stockholders of the Corporation of each new director was approved by a vote of at least two-thirds of the directors then still in office who
were directors at the beginning of the period; or
(iv) Approval by stockholders of the Corporat ion of a merger, consolidation, liquidation or dissolution of the Corporation, or
the sale of all or substantially all of the assets of the Corporation.
For purposes of any Award or subplan that constitutes a “nonqualified deferred compensation plan,” within the meaning of
Code Section 409A, the Administrator, in its discretion, may specify a different definition of Change in Control in order to comply with the
provisions of Code Section 409A.
(i) “Designated Beneficiary” shall mean the beneficiary designated by an Award holder, in a manner and to the extent determined by
the Administrator, to receive amounts due or exercise rights of the Award holder in the event of the Award holder’s death. In the absence of
an effective designation by an Award holder, “Designated Beneficiary” shall mean the Award holder’s estate.
(k) “Fair Market Value” shall mean, with respect to a share of the Corporation’s Common Stock or other property for any purpose on
a particular date, the value determined by the Administrator in good faith. However, if the Common Stock is registered under Section 12(b) of
the Securities Exchange Act of 1934, as amended, “Fair Market Value” with respect to a share of the Corporation’s Common Stock shall mean,
as applicable, (i) either the closing price or the average of the high and low sale price on the relevant date, as determined in the Administrator’s
discretion, quoted on the New York Stock Exchange, the American Stock Exchange, or the Nasdaq National Market; (ii) the last sale price on
the relevant date quoted on the Nasdaq SmallCap Market; (iii) the average of the high bid and low asked prices on the relevant date quoted on
the Nasdaq OTC Bulletin Board Service or by the National Quotation Bureau, Inc. or a comparable service as determined in the Administrator’s
discretion; or (iv) if the Common Stock is not quoted by any of the above, the average of the closing bid and asked prices on the relevant date
furnished by a professional market maker for the Common Stock, or by such other source, selected by the Administrator. If no public trading
of the Common Stock occurs on the relevant date, then Fair Market Value shall be determined as of the next preceding date on which trading of
the Common Stock does occur. For all purposes under this Plan, the term “relevant date” as used in this Section 2(k) shall mean either the date
as of which Fair Market Value is to be determined or the next preceding date on which public trading of the Common Stock
2
occurs, as determined in the Administrator’s discretion.
Effective for Awards granted on or after January 1, 2009, “Fair Market Value” shall mean, with respect to a share of the Corporation’s
Common Stock, the fair market value based upon the last sale before or the first sale after the grant, the closing price on the trading day before
or the trading day of the grant, the arithmetic mean of the high and low prices on the trading day before or the trading day of the grant, or any
other reasonable method using actual transactions in such stock as reported by such market.
(l) “Grant Agreement” shall mean a written document memorializing the terms and conditions of an Award granted pursuant to the
Plan and shall incorporate the terms of the Plan.
(m) “Plan Share Reserve” means the maximum number of shares of Common Stock that may be issued with respect to Awards granted
under the Plan.
(n) “Prior Plans” shall mean The Ryland Group, Inc. 1992 Equity Incentive Plan, The Ryland Group, Inc. 2002 Equity Incentive Plan
and the 2005 Equity Incentive Plan.
February 20, 2015.
3. Administration
(b) Powers of the Administrator. The Administrator shall have all the powers vested in it by the terms of the Plan, such powers to
include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such Awards
The Administrator shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan,
including, but not limited to, the authority to: (i) determine the eligible persons to whom, and the time or times at which Awards shall be
granted; (ii) determine the types of Awards to be granted; (iii) determine the number of shares to be covered by or used for reference purposes
for each Award; (iv) impose such terms, limitations, restrictions and conditions upon any such Award as the Administrator shall deem
appropriate; (v) modify, amend, extend or renew outstanding Awards, or accept the surrender of outstanding Awards and substitute new
Awards (provided however, that, except as provided in Section 7(c) of the Plan, (A) any modification that would adversely affect any
outstanding Award shall not be made without the consent of the holder, and (B) the exercise price for any outstanding stock option granted
under the Plan may not be decreased after the date of grant nor may any outstanding stock option granted under the Plan be surrendered to
the Corporation as consideration for the grant of a new stock option with a lower exercise price); (vi) accelerate or otherwise change the time in
which an Award may be exercised or becomes payable and to waive or accelerate the lapse, in whole or in part, of any restriction or
3
condition with respect to such Award, including, but not limited to, any restriction or condition with respect to the vesting or exercisability of
an Award following termination of any grantee’s employment or other service relationship with the Corporation; and (vii) to establish, amend,
modify, administer or terminate subplans, and prescribe, amend and rescind rules and regulations relating to such subplans.
business as the Administrator deems necessary or advisable. To the extent permitted by applicable law, the Administrator may delegate to
one or more executive officers of the Corporation the power to (i) grant Awards to individuals who are not subject to Section 16 of the
Securities Exchange Act of 1934, as amended, or any successor provision and are not executive officers of the Corporation, and (ii) make all
group and a maximum for any Award recipient.
(c) Non-Uniform Determinations. The Administrator’s determinations under the Plan (including without limitation, determinations of
the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the Grant
Agreements evidencing such Awards) need not be uniform and may be made by the Administrator selectively among persons who receive, or
are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.
(d) Limited Liability. To the maximum extent permitted by law, no member of the Administrator shall be liable for any action taken or
decision made in good faith relating to the Plan or any Award thereunder.
(e) Indemnification. To the maximum extent permitted by law and by the Corporation’s Charter and Bylaws, the members of the
(f) Effect of Administrator’s Decision. All actions taken and decisions and determinations made by the Administrator on all matters
relating to the Plan pursuant to the powers vested in it hereunder shall be in the Administrator’s sole and absolute discretion and shall be
conclusive and binding on all parties concerned, including the Corporation, its stockholders, any participants in the Plan and any other
4
(a) Plan Share Reserve. Subject to the following provisions of this Section 4 and adjustments as provided in Section 7(c) of the Plan,
the Plan Share Reserve shall be equal to the sum of: (i) 1,800,000 shares of Common Stock; (ii) 247,001 shares of Common Stock remaining
(b) Adjustments to Plan Share Reserve; Fixed ISO Limit. If any Award, or portion of an Award, under the Plan or the Prior Plans
expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled as to any shares, the
shares subject to such Award shall thereafter be available for Awards under the Plan; provided, however, that the tender of shares for
payment of the exercise price of an option or award shall not make any such surrendered or tendered shares available for issuance under the
Plan; and provided further, that no more than the number of shares available for issuance on the Effective Date shall be made available for
purchase pursuant to incentive stock options.
(c) Cash Settlement of Awards. To the extent any shares of Common Stock covered by an Award are not delivered to an Award
holder or the holder’s Designated Beneficiary because the Award is settled in cash, such shares shall not be deemed to have been issued for
600,000 shares of Common Stock; provided, however, that any shares of Common Stock that are forfeited back to the Corporation with respect
to any such Awards shall be available for further Awards under subsections (d) and (e) of Section 6 of the Plan.
(e) Code Section 162(m) Limit.? 0; Subject to adjustments as provided in Section 7(c) of the Plan, the maximum number of shares of
Common Stock subject to Awards of any combination that may be granted during any one fiscal year of the Corporation to any one individual
under this Plan shall be limited to 500,000 shares. Such per-individual limit shall not be adjusted to effect a restoration of shares of Common
Stock with respect to which the related Award is terminated, surrendered or canceled. The maximum cash amount that may be payable in
combination with any performance-based award distributable in restricted stock or stock units is the cash amount equal to the sum of the fair
market value of the underlying shares plus the federal and state income and Medicare taxes, assuming highest marginal tax rates, associated
with the grant, vesting or distribution of the related restricted stock or stock units.
5
5. Participation
Corporation or any Affiliate of the Corporation, as may be selected by the Administrator from time to time. The Administrator may also grant
Awards to individuals in connection with hiring, retention or otherwise, prior to the date the individual first performs services for the
6. Awards
(a) Terms of Awards. The Administrator, in its sole discretion, establishes the terms of all Awards granted under the Plan. Awards
may be granted individually or in tandem with other types of Awards. All Awards are subject to the terms and conditions provided in the
Grant Agreement, provided that all Awards shall have a minimum three-year pro-rated vesting period, or a one-year vesting period plus
(b) Performance Factors. For purposes of ensuring that compensation arising from Awards granted under the Plan to officers and
key employees of the Company is deductible as qualified performance-based compensation within the meaning of Code Section 162(m), the
Administrator may provide that the granting, vesting, right to exercise or lapse of restrictions associated with an Award (each, a “performance-
based award”) is contingent upon the attainment of one or more pre-established, objective performance goals based on any, or any
combination of, the following business criteria as it may apply to an individual, a business unit, or the Company: return on stockholders’
equity, return on investment, total revenue, earnings before interest and taxes (“EBIT”), earnings before interest, taxes, depreciation and
amortization (“EBITDA”), profits, stock price, earnings per share, or cost containment. Performance goals may include minimum, maximum and
target levels of performance, with the size of the performance-based award or the lapse of restrictions with respect thereto based on the level
attained. The Administrator may, at its sole discretion, modify the measurement criteria as applied to performance-based awards to offset any
unintended results arising from events not anticipated when the performance goals were established; provided, that such modifications may
be made with respect to an Award granted to any executive officer of the Company only to the extent permitted by Code Section 162(m).
(c) Stock Options. The Administrator may from time to time grant to eligible participants Awards of incentive stock options, as that
term is defined in Code Section 422, or nonqualified stock options; provided, however, that Awards of incentive stock options shall be limited
to employees of the Corporation or of any current or hereafter existing “parent corporation” or “subsidiary corporation,” as defined in Code
Sections 424(e) and (f), respectively, of the Corporation. No stock option shall be an incentive stock option unless so designated by the
the date of grant nor may any outstanding stock option granted under the Plan be surrendered to the Corporation as
6
consideration for the grant of a new stock option with a lower exercise price.
(d) Restricted Stock Awards. The Administrator may from time to time grant restricted stock Awards to eligible participants in such
required by law, as it shall determine. A restricted stock Award may be paid in Common Stock, in cash, or in a combination of Common Stock
and cash, as determined in the sole discretion of the Administrator. Notwithstanding anything in the Plan or Grant Agreement to the contrary,
all payments of cash under this Section 6(d) shall be paid no later than the date that is two and one-half months following the end of year
during which the eligible participant becomes vested in the restricted stock Award.
(e) Stock Unit Awards. The Administrator may from time to time grant Awards to eligible participants denominated in stock-
equivalent units in such amounts and on such terms and conditions as it shall determine. Stock units granted to a participant shall be credited
to a bookkeeping reserve account solely for accounting purposes and shall not require a segregation of any of the Corporation’s assets. An
Award of stock units may be settled in Common Stock, in cash, or in a combination of Common Stock and cash, as determined in the sole
discretion of the Administrator. Notwithstanding anything in the Plan or Grant Agreement to the contrary, all payments of cash under this
Section 6(e) shall be paid no later than the date that is two and one-half months following the end of year during which the eligible participant
becomes vested in the Award of stock units. Shares of Common Stock awarded in connection with an Award of stock units may be issued for
such consideration as may be determined by the Administrator, including for no consideration or such minimum consideration as may be
required by law. Except as otherwise provided in the applicable Grant Agreement, the grantee shall not have the rights of a stockholder with
respect to any shares of Common Stock represented by a stock unit solely as a result of the grant of a stock unit to the grantee.
7. Miscellaneous
(a) Withholding of Taxes. Grantees and holders of Awards shall pay to the Corporation or its Affiliate, or make provision satisfactory
to the Administrator for payment of, any taxes required to be withheld in respect of Awards under the Plan no later than the date of the event
creating the tax liability. The Corporation or its Affiliate may, to the extent permitted by law, deduct any such tax obligations from any
payment of any kind otherwise due to the grantee or holder of an Award. Notwithstanding the above, in no event may holders of Awards
satisfy such tax liability through the tender or withholding of shares of Common Stock.
(b) Transferability. Except as otherwise determined by the Administrator, and in any event in the case of an incentive stock option,
no Award granted under the Plan shall be transferable by a grantee otherwise than by will or the laws of descent and distribution. Unless
otherwise determined by the Administrator in accord with the provisions of the immediately preceding sentence, an Award may be exercised
during the lifetime of the grantee, only by the grantee or, during the period the grantee is under a legal disability, by the grantee’s guardian or
legal representative.
(i) Upon a stock dividend of, or stock split or reverse stock split affecting, the Common
7
Stock of the Corporation, (A) the maximum number of shares reserved for issuance or with respect to which Awards may be granted under the
Plan and the maximum number of shares with respect to which Awards may be granted during any one fiscal year of the Corporation to any
individual, as provided in Section 4 of the Plan, and (B) the number of shares covered by and the exercise price and other terms of outstanding
Awards, shall, without further action of the Board, be adjusted to reflect such event unless the Board determines, at the time it approves such
stock dividend, stock split or reverse stock split, that no such adjustment shall be made. The Administrator may make adjustments, in its
discretion, to address the treatment of fractional shares and fractional cents that arise with respect to outstanding Awards as a result of the
stock dividend, stock split or reverse stock split.
(ii) In the event of any other changes affecting the Corporation, the capitalization of the Corporation or the Common Stock of
the Corporation by reason of any spin-off, split-up, dividend, recapitalization, merger, consolidation, business combination or exchange of
shares and the like, the Administrator except as otherwise provided in Section 7(d), in its discretion and without the consent of holders of
Awards, may make: (A) appropriate adjustments to the maximum number and kind of shares reserved for issuance or with respect to which
Awards may be granted under the Plan, in the aggregate and with respect to any individual, as provided in Section 4 of the Plan, and to the
number, kind and price of shares covered by outstanding Awards; and (B) any other adjustments in outstanding Awards, including but not
limited to reducing the number of shares subject to Awards or providing or mandating alternative settlement methods such as settlement of
the Awards in cash or in shares of Common Stock or other securities of the Corporation or of any other entity, or in any other matters which
relate to Awards as the Administrator shall, in its sole discretion, determine to be necessary or appropriate.
(iii) The Administrator is authorized to make, in its discretion and without the consent of holders of Awards, adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Corporation, or the
financial statements of the Corporation or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the
Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan and outstanding Awards.
(d) Change in Control. Notwithstanding the provisions of Section 7(c)(ii), in the event of a Change in Control, all Awards under the
Plan are automatically and fully vested and immediately exercisable or payable in whole or in part. The obligations of the Corporation pursuant
to the Plan and performance with respect to rights of Award holders thereunder shall be assumed by any participant, successor-in-interest or
beneficiary of or interested party in the Change in Control (collectively, the Change-in-Control Participant), and the Change-in Control
Participant shall cause the Awards to be assumed, or new rights substituted therefor, by another entity.
(e) Substitution of Awards in Mergers and Acquisitions in which the Corporation or an Affiliate is the Acquiring Entity. Solely in
the event that the Corporation or an Affiliate is an acquiring entity in a merger, acquisition and other business combination, Awards may be
granted under the Plan from time to time in substitution for Awards held by employees, officers, consultants or directors of a target entity who
become or are about to become employees, officers, consultants or directors of the Corporation or an Affiliate as the result of a merger or
consolidation of the employing entity with the
8
Corporation or an Affiliate, or the acquisition by the Corporation or an Affiliate of the assets or stock of the employing entity. The terms and
conditions of any substitute Awards so granted may vary from the terms and conditions set forth herein to the extent that the Administrator
deems appropriate at the time of grant to conform the substitute Awards to the provisions of the awards for which they are substituted.
(f) Compensation Committee Report. For each performance year and/or performance period, the Compensation Committee of the
Board shall determine and set forth in writing not later than 90 days after the commencement of the performance year and/or performance
period and in no event later than the point in time when 25 percent of the performance period has elapsed or the outcome of the performance
objectives is no longer substantially uncertain: (i) the participants under the Plan who are granted performance-based awards for the
performance period; (ii) the nature and amount (or the objective formula for determining the amount) of the performance-based award that will
be earned if specified performance objectives are met; (iii) the applicable performance factors; and (iv) any other objective terms and
conditions that must be satisfied by the participant in order to earn the performance-based award.
(g) Termination, Amendment and Modification of the Plan. The Administrator may terminate, amend or modify the Plan or any
portion thereof at any time; provided, however, that the provisions of Section 6(a) relating to stock option repricing shall not be amended
without approval by the Corporation’s stockholders, and any amendments to the Plan will not (i) materially increase the benefits accruing to
participants under the Plan; (ii) materially increase the aggregate number of securities that may be issued under the Plan; or (iii) materially
(h) Non-Guarantee of Employment or Service. Nothing in the Plan or in any Grant Agreement thereunder shall confer any right on an
individual to continue in the service of the Corporation or shall interfere in any way with the right of the Corporation to terminate such service
at any time with or without cause or notice. The Corporation expressly reserves the right at any time to dismiss an Award recipient free from
any liability or claim under the Plan, except as expressly provided in the applicable Grant Agreement.
(i) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Corporation and a grantee or any other person. To the extent that any grantee or other person
acquires a right to receive payments from the Corporation pursuant to an Award, such right shall be no greater than the right of any unsecured
general creditor of the Corporation.
(j) Designated Beneficiaries. Unless otherwise provided in the applicable Grant Agreement, amounts or certificates due an Award
recipient after his or her death under an Award shall be paid or delivered to the Award recipient’s Designated Beneficiary in accordance with
the terms and conditions of the Award.
(k) Governing Law. The validity, construction and effect of the Plan, of Grant Agreements entered into pursuant to the Plan, and of
any rules, regulations, determinations or decisions made by the Administrator relating to the Plan or such Grant Agreements, and the rights of
any and all persons
9
having or claiming to have any interest therein or thereunder, shall be determined exclusively in accordance with applicable federal laws and
the laws of the State of Maryland, without regard to its conflict of laws principles.
(l) Effective Date; Termination Date. The Amendment and Restatement of this Plan is effective as of the date on which the Plan
originally was approved by the stockholders of the Corporation. The Plan, as amended and restated, shall be unlimited in duration and, in the
event of Plan termination, shall remain in effect as long as any Awards under it are outstanding; provided, however, that no Awards shall be
granted under the Plan after the close of business on February 20, 2017.
10
Exhibit 10.11

The Plan permits the granting of stock options (including incentive stock options qualifying under Code Section 422 and nonqualified
2. Definitions
(a) “Administrator” means the Board, the Compensation Committee of the Board, or any committee or committees that are appointed by
the Compensation Committee or the Board that have authority to administer the Plan as provided in Section 3 hereof.
(b) “Affiliate” shall mean any entity, whether now or hereafter existing, which controls, is controlled by or is under common control
with the Corporation (including joint ventures, limited liability companies and partnerships). For this purpose, “control” shall mean ownership
of 50 percent or more of the total combined voting power or value of all classes of stock or interests of the entity.
(i) The acquisition by any person, other than the Corporation or any employee benefit plans of the Corporation, of beneficial
ownership of 20 percent or more of the combined voting power of the Corporation’s then outstanding voting securities;
(ii) The first purchase under a tender offer or exchange offer, other than an offer by the Corporation or any employee benefit plans
of the Corporation, pursuant to which shares of Common Stock have been purchased;
(iii) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors
of the Corporation cease for any reason to constitute at least a majority thereof, unless the election or the nomination for the election by
stockholders of the Corporation of each new director was approved by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period; or
(iv) Approval by stockholders of the Corporation of a merger, consolidation, liquidation or dissolution of the Corporation, or the
sale of all or substantially all of the assets of the Corporation.
For purposes of any Award or subplan that constitutes a “nonqualified deferred compensation plan,” within the meaning of
Code Section 409A, the Administrator, in its discretion, may specify a different definition of Change in Control in order to comply with the
provisions of Code Section 409A.
(i) “Designated Beneficiary” shall mean the beneficiary designated by an Award holder, in a manner and to the extent determined by
the Administrator, to receive amounts due or exercise rights of the Award holder in the event of the Award holder’s death. In the absence of
an effective designation by an Award holder, “Designated Beneficiary” shall mean the Award holder’s estate.
(k) “Fair Market Value” shall mean, with respect to a share of the Corporation’s Common Stock or other property for any purpose on a
particular date, the value determined by the Administrator in good faith. However, if the Common Stock is registered under Section 12(b) of the
Securities Exchange Act of 1934, as amended, “Fair Market Value” with respect to a share of the Corporation’s Common Stock shall mean, as
applicable, (i) either the closing price or the average of the high and low sale price on the relevant date, as determined in the Administrator’s
discretion, quoted on the New York Stock Exchange, the American Stock Exchange, or the Nasdaq National Market; (ii) the last sale price on
the relevant date quoted on the Nasdaq SmallCap Market; (iii) the average of the high bid and low asked prices on the relevant date quoted on
the Nasdaq OTC Bulletin Board Service or by the National Quotation Bureau, Inc. or a comparable service as determined in the Administrator’s
discretion; or (iv) if the Common Stock is
not quoted by any of the above, the average of the closing bid and asked prices on the relevant date furnished by a professional market maker
for the Common Stock, or by such other source, selected by the Administrator. If no public trading of the Common Stock occurs on the
relevant date, then Fair Market Value shall be determined as of the next preceding date on which trading of the Common Stock does occur. For
all purposes under this Plan, the term “relevant date” as used in this Section 2(k) shall mean either the date as of which Fair Market Value is to
be determined or the next preceding date on which public trading of the Common Stock occurs, as determined in the Administrator’s
discretion.
Effective for Awards granted on or after January 1, 2009, “Fair Market Value” shall mean, with respect to a share of the
Corporation’s Common Stock, the fair market value based upon the last sale before or the first sale after the grant, the closing price on the
trading day before or the trading day of the grant, the arithmetic mean of the high and low prices on the trading day before or the trading day
of the grant, or any other reasonable method using actual transactions in such stock as reported by such market.
(l) “Grant Agreement” shall mean a written document memorializing the terms and conditions of an Award granted pursuant to the Plan
and shall incorporate the terms of the Plan.
(m) “Plan Share Reserve” means the maximum number of shares of Common Stock that may be issued with respect to Awards granted
under the Plan.
(n) “Prior Plans” shall mean The Ryland Group, Inc. 1992 Equity Incentive Plan, The Ryland Group, Inc. 2002 Equity Incentive Plan,
The Ryland Group, Inc. 2005 Equity Incentive Plan and the 2007 Equity Incentive Plan.
February 20, 2017.
3. Administration
(b) Powers of the Administrator. The Administrator shall have all the powers vested in it by the terms of the Plan, such powers to
include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such Awards
The Administrator shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan,
including, but not limited to, the authority to: (i) determine the eligible persons to whom, and the time or times at which Awards shall be
granted; (ii) determine the types of Awards to be granted; (iii) determine
the number of shares to be covered by or used for reference purposes for each Award; (iv) impose such terms, limitations, restrictions and
conditions upon any such Award as the Administrator shall deem appropriate; (v) modify, amend, extend or renew outstanding Awards, or
accept the surrender of outstanding Awards and substitute new Awards (provided however, that, except as provided in Section 7(c) of the
Plan, (A) any modification that would adversely affect any outstanding Award shall not be made without the consent of the holder, and
(B) the exercise price for any outstanding stock option granted under the Plan may not be decreased after the date of grant nor may any
outstanding stock option granted under the Plan be surrendered to the Corporation as consideration for the grant of a new stock option with a
lower exercise price); (vi) accelerate or otherwise change the time in which an Award may be exercised or becomes payable and to waive or
accelerate the lapse, in whole or in part, of any restriction or condition with respect to such Award, including, but not limited to, any restriction
or condition with respect to the vesting or exercisability of an Award following termination of any grantee’s employment or other service
relationship with the Corporation; and (vii) to establish, amend, modify, administer or terminate susbplans, and prescribe, amend and rescind
rules and regulations relating to such subplans.
business as the Administrator deems necessary or advisable. To the extent permitted by applicable law, the Administrator may delegate to one
or more executive officers of the Corporation the power to (i) grant Awards to individuals who are not subject to Section 16 of the Securities
Exchange Act of 1934, as amended, or any successor provision and are not executive officers of the Corporation, and (ii) make all
group and a maximum for any Award recipient.
(c) Non-Uniform Determinations. The Administrator’s determinations under the Plan (including without limitation, determinations of
the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the Grant
Agreements evidencing such Awards) need not be uniform and may be made by the Administrator selectively among persons who receive, or
are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.
(d) Limited Liability. To the maximum extent permitted by law, no member of the Administrator shall be liable for any action taken or
decision made in good faith relating to the Plan or any Award thereunder.
(e) Indemnification. To the maximum extent permitted by law, no member of the Corporation’s Charter and Bylaws, the members of the
(f) Effect of Administrator’s Decision. All actions taken and decisions and determinations made by the Administrator on all matters
relating to the Plan pursuant to the powers vested in it hereunder shall be in the Administrator’s sole and absolute discretion and shall be
conclusive and binding on all parties concerned, including the Corporation, its stockholders, any participants in the Plan and any other
(a) Plan Share Reserve. Subject to the following provisions of this Section 4 and adjustments as provided in Section 7(c) of the Plan,
the Plan Share Reserve shall be equal to the sum of: (i) 1,300,000 shares of Common Stock; (ii) 1,640,309 shares of Common Stock remaining
(b) Adjustments to Plan Share Reserve; Fixed ISO Limit. If any Award, or portion of an Award, under the Plan or the Prior Plans expires
or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled as to any shares, the shares
subject to such Award shall thereafter be available for Awards under the Plan; provided, however, that the tender of shares for payment of the
exercise price of an option or award shall not make any such surrendered or tendered shares available for issuance under the Plan; and
provided further, that no more than the number of shares available for issuance on the Effective Date shall be made available for purchase
pursuant to incentive stock options.
(c) Cash Settlement of Awards. To the extent any shares of Common Stock covered by an Award are not delivered to an Award holder
or the holder’s Designated Beneficiary because the Award is settled in cash, such shares shall not be deemed to have been issued for
1,200,000 shares of Common Stock; provided, however, that any shares of Common Stock that are forfeited back to the Corporation with
respect to any such Awards shall be available for further Awards under subsections (d) and (e) of Section 6 of the Plan.
(e) Code Section 162(m) Limit. Subject to adjustments as provided in Section 7(c) of the Plan, the maximum number of shares of
Common Stock subject to Awards of any combination that may be granted during any one fiscal year of the Corporation to any one individual
under this Plan shall be limited to 500,000 shares. Such per-individual limit shall not be adjusted to effect a restoration of shares of Common
Stock with respect to which the related Award is terminated, surrendered or canceled. The maximum cash amount that may be payable in
combination with any performance-based award distributable in restricted stock or stock units is the cash amount equal to the sum of the fair
market value of the underlying shares plus the federal and state income and Medicare taxes, assuming highest marginal tax rates, associated
with the grant, vesting or distribution of the related restricted stock or stock units.
5. Participation
Corporation or any Affiliate of the Corporation, as may be selected by the Administrator from time to time. The Administrator may also grant
Awards to individuals in connection with hiring, retention or otherwise, prior to the date the individual first performs services for the
6. Awards
(a) Terms of Awards; Vesting. The Administrator, in its sole discretion, establishes the terms of all Awards granted under the Plan.
Awards may be granted individually or in tandem with other types of Awards. All Awards are subject to the terms and conditions provided in
the Grant Agreement, provided that all Awards shall have a minimum three-year pro-rated vesting period, or a one-year vesting period plus
(b) Performance Factors. For purposes of ensuring that compensation arising from Awards granted under the Plan to officers and key
employees of the Company is deductible as qualified performance-based compensation within the meaning of Code Section 162(m), the
Administrator may provide that the granting, vesting, right to exercise or lapse of restrictions associated with an Award (each, a “performance-
based
award”) is contingent upon the attainment of one or more pre-established, objective performance goals based on any, or any combination of,
the following business criteria as it may apply to an individual, a business unit, or the Company: return on stockholders’ equity, net cash
provided by operating activities, return on investment, total revenue, earnings before interest and taxes (“EBIT”), earnings before interest,
taxes, depreciation and amortization (“EBITDA”), profits, stock price, earnings per share, or cost containment. Performance goals may include
minimum, maximum and target levels of performance, with the size of the performance-based award or the lapse of restrictions with respect
thereto based on the level attained. The Administrator may, at its sole discretion, modify the measurement criteria as applied to performance-
based awards to offset any unintended results arising from events not anticipated when the performance goals were established; provided,
that such modifications may be made with respect to an Award granted to any executive officer of the Company only to the extent permitted
by Code Section 162(m).
(c) Stock Options The Administrator may from time to time grant to eligible participants Awards of incentive stock options, as that term
is defined in Code Section 422, or nonqualified stock options; provided, however, that Awards of incentive stock options shall be limited to
employees of the Corporation or of any current or hereafter existing “parent corporation” or “subsidiary corporation,” as defined in Code
Sections 424(e) and (f), respectively, of the Corporation. No stock option shall be an incentive stock option unless so designated by the
the date of grant nor may any outstanding stock option granted under the Plan be surrendered to the Corporation as consideration for the
grant of a new stock option with a lower exercise price.
(d) Restricted Stock Awards. The Administrator may from time to time grant restricted stock Awards to eligible participants in such
required by law, as it shall determine. A restricted stock Award may be paid in Common Stock, in cash, or in a combination of Common Stock
and cash, as determined in the sole discretion of the Administrator. Notwithstanding anything in the Plan or Grant Agreement to the contrary,
all payments of cash under this Section 6(d) shall be paid no later than the date that is two and one-half months following the end of year
during which the eligible participant becomes vested in the restricted stock Award.
(e) Stock Unit Awards. The Administrator may from time to time grant Awards to eligible participants denominated in stock-equivalent
units in such amounts and on such terms and conditions as it shall determine. Stock units granted to a participant shall be credited to a
bookkeeping reserve account solely for accounting purposes and shall not require a segregation of any of the Corporation’s assets. An
Award of stock units may be settled in Common Stock, in cash, or in a combination of Common Stock and cash, as
determined in the sole discretion of the Administrator. Notwithstanding anything in the Plan or Grant Agreement to the contrary, all payments
of cash under this Section 6(e) shall be paid no later than the date that is two and one-half months following the end of year during which the
eligible participant becomes vested in the Award of stock units. Shares of Common Stock awarded in connection with an Award of stock units
may be issued for such consideration as may be determined by the Administrator, including for no consideration or such minimum
consideration as may be required by law. Except as otherwise provided in the applicable Grant Agreement, the grantee shall not have the rights
of a stockholder with respect to any shares of Common Stock represented by a stock unit solely as a result of the grant of a stock unit to the
grantee.
7. Miscellaneous
(a) Withholding of Taxes. Grantees and holders of Awards shall pay to the Corporation or its Affiliate, or make provision satisfactory to
the Administrator for payment of, any taxes required to be withheld in respect of Awards under the Plan no later than the date of the event
creating the tax liability. The Corporation or its Affiliate may, to the extent permitted by law, deduct any such tax obligations from any payment
of any kind otherwise due to the grantee or holder of an Award. Notwithstanding the above, in no event may holders of Awards satisfy such
tax liability through the tender or withholding of shares of Common Stock.
(b) Transferability. Except as otherwise determined by the Administrator, and in any event in the case of an incentive stock option, no
Award granted under the Plan shall be transferable by a grantee otherwise than by will or the laws of descent and distribution. Unless
otherwise determined by the Administrator in accord with the provisions of the immediately preceding sentence, an Award may be exercised
during the lifetime of the grantee, only by the grantee or, during the period the grantee is under a legal disability, by the grantee’s guardian or
legal representative.
(i) Upon a stock dividend of, or stock split or reverse stock split affecting, the Common Stock of the Corporation, (A) the
maximum number of shares reserved for issuance or with respect to which Awards may be granted under the Plan and the maximum number of
shares with respect to which Awards may be granted during any one fiscal year of the Corporation to any individual, as provided in Section 4
of the Plan, and (B) the number of shares covered by and the exercise price and other terms of outstanding Awards, shall, without further
action of the Board, be adjusted to reflect such event unless the Board determines, at the time it approves such stock dividend, stock split or
reverse stock split, that no such adjustment shall be made. The Administrator may make adjustments, in its discretion, to address the treatment
of fractional shares and fractional cents that arise with respect to outstanding Awards as a result of the stock dividend, stock split or reverse
stock split.
(ii) In the event of any other changes affecting the Corporation, the capitalization of the Corporation or the Common Stock of the
Corporation by reason of any spin-off, split-up, dividend, recapitalization, merger, consolidation, business combination or exchange of shares
and the like, the Administrator, except as otherwise provided in Section 7(d), in its discretion and without the consent of holders of Awards,
may make: (A) appropriate adjustments to the maximum number and kind of shares reserved for issuance or with respect to which Awards may
be granted under the Plan, in the aggregate and with respect to any individual, as provided in Section 4 of the Plan, and to the number, kind
and price of shares covered by outstanding Awards; and (B) any other adjustments in outstanding Awards, including but not limited to
reducing the number of shares subject to Awards or providing or mandating alternative settlement methods such as settlement of the Awards
in cash or in shares of Common Stock or other securities of the Corporation or of any other entity, or in any other matters which relate to
Awards as the Administrator shall, in its sole discretion, determine to be necessary or appropriate.
(iii) The Administrator is authorized to make, in its discretion and without the consent of holders of Awards, adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Corporation, or the
financial statements of the Corporation or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the
Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan and outstanding Awards.
(d) Change in Control. Notwithstanding the provisions of Section 7(c)(ii), in the event of a Change in Control, all Awards under the
Plan are automatically and fully vested and immediately exercisable or payable in whole or in part. The obligations of the Corporation pursuant
to the Plan and performance with respect to rights of Award holders thereunder shall be assumed by any participant, successor-in-interest or
beneficiary of or interested party in the Change in Control (collectively, the Change-in-Control Participant), and the Change-in-Control
Participant shall cause the Awards to be assumed, or new rights substituted therefor, by another entity.
(e) Substitution of Awards in Mergers and Acquisitions in which the Corporation or an Affiliate is the Acquiring Entity. Solely in the
event that the Corporation or an Affiliate is an acquiring entity in a merger, acquisition and other business combination, Awards may be
granted under the Plan from time to time in substitution for Awards held by employees, officers, consultants or directors of a target entity who
become or are about to become employees, officers, consultants or directors of the Corporation or an Affiliate as the result of a merger or
consolidation of the employing entity with the Corporation or an Affiliate, or the acquisition by the Corporation or an Affiliate of the assets or
stock of the employing entity. The terms and conditions of any substitute Awards so granted may vary from the terms and conditions set
forth herein to the extent that the Administrator deems appropriate at the time of grant to conform the substitute Awards to the provisions of
the awards for which they are substituted.
(f) Compensation Committee Report. For each performance year and/or performance period, the Compensation Committee of the Board
shall determine and set forth in writing not later than 90 days after the commencement of the performance year and/or performance period and
in no event later than the point in time when 25 percent of the performance period has elapsed or the outcome of the performance objectives is
no longer substantially uncertain: (i) the participants under the Plan who are granted performance-based awards for the performance period;
(ii) the nature and amount (or the objective formula for determining the amount) of the performance-based award that will be earned if specified
performance objectives are met; (iii) the applicable performance factors; and (iv) any other objective terms and conditions that must be
satisfied by the participant in order to earn the performance-based award.
(g) Termination, Amendment and Modification of the Plan. The Administrator may terminate, amend or modify the Plan or any portion
thereof at any time; provided, however, that the provisions of Section 6(c) relating to stock option repricing shall not be amended without
approval by the Corporation’s stockholders, and any amendments to the Plan will no (i) materially increase the benefits accruing to
participants under the Plan; (ii) materially increase the aggregate number of securities that may be issued under the Plan; or (iii) materially
(h) Non-Guarantee of Employment or Service. Nothing in the Plan or in any Grant Agreement thereunder shall confer any right on an
individual to continue in the service of the Corporation or shall interfere in any way with the right of the Corporation to terminate such service
at any time with or without cause or notice. The Corporation expressly reserves the right at any time to dismiss an Award recipient free from
any liability or claim under the Plan, except as expressly provided in the applicable Grant Agreement.
(i) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind
or a fiduciary relationship between the Corporation and a grantee or any other person. To the extent that any grantee or other person acquires
a right to receive payments from the Corporation pursuant to an Award, such right shall be no greater than the right of any unsecured general
creditor of the Corporation.
(j) Designated Beneficiaries. Unless otherwise provided in the applicable Grant Agreement, amounts or certificates due an Award
recipient after his or her death under an Award shall be paid or delivered to the Award recipient’s Designated Beneficiary in accordance with
the terms and conditions of the Award.
(k) Governing Law. The validity, construction and effect of the Plan, of Grant Agreements entered into pursuant to the Plan, and of any
rules, regulations, determinations or decisions made by the Administrator relating to the Plan or such Grant Agreements, and the rights of any
and all persons having or claiming to have any interest
therein or thereunder, shall be determined exclusively in accordance with applicable federal laws and the laws of the State of Maryland,
without regard to its conflict of laws principles.
(l) Effective Date; Termination Date. The Amendment and Restatement of this Plan is effective as of the date on which the Plan
originally was approved by the stockholders of the Corporation. The Plan, as amended and restated, shall be unlimited in duration and, in the
event of Plan termination, shall remain in effect as long as any Awards under it are outstanding; provided, however, that no Awards shall be
granted under the Plan after the close of business on February 20, 2018.
Exhibit 10.15
AMENDMENT NO. 1
TO
STOCK UNIT AGREEMENT
pursuant to
[________] EQUITY INCENTIVE PLAN
The STOCK UNIT AGREEMENT (the “Agreement”), dated as of [________________], by and between The Ryland Group, Inc. (the
“Corporation”), and [__________________] (the “Executive”), is amended to comply with the requirements of Internal Revenue Code section
409A.
NOW, THEREFORE, the Agreement is amended as follows:
1. Section 4, Cash Dividend Equivalents, is amended by adding the following sentence to the end of that Section:
“The Executive must be employed on a cash dividend payment date to be eligible for the cash dividend payment described in this
Section 4.”
2. Section 9, Dispute Resolution, is amended by adding the following provisions to the end of that Section:
“The Executive shall be entitled to reimbursement of the fees and expenses described under this Section 9 during the period
commencing on the effective date of this Agreement and ending on his or her death. Any reimbursement of fees under this Section 9
shall be made on or before the last day of the year following the year in which the expense is incurred. The amount of expenses
eligible for reimbursement during a year shall not affect the expenses eligible for reimbursement in any other year. The right to
reimbursement under this Section is not subject to liquidation or exchange for another benefit.”
IN WITNESS WHEREOF, this Amendment No. 1 has been duly executed by the Corporation, to be effective as of
[_______________________] [insert the effective date of the Stock Unit Agreement, or, if later, insert “January 1, 2005”].
ATTEST/WITNESS THE RYLAND GROUP, INC.
By:
R. Chad Dreier
Print Name:
Date:
Exhibit 10.16

NON-EMPLOYEE DIRECTORS’ STOCK UNIT PLAN
1. PURPOSE. The Ryland Group, Inc. Non-Employee Directors’ Stock Unit Plan grants Awards of Stock Units to non-employee members of
the Board to align their compensation program with the interests of the Company’s stockholders. The Plan provi des for annual grants of
Stock Units to Directors as part of their Annual Retainer. The Plan is being amended and restated effective January 1, 2005 to comply with the
requirements of section 409A of the Code, as added by the American Jobs Creation Act of 2004, and the Treasury regulations or any other
authoritative guidance issued thereunder. The Plan originally was effective January 1, 1998.
2. DEFINITIONS.
“ANNUAL RETAINER” shall mean the annual retainer fee paid to a Director for ser vices on the Board exclusive of any meeting fees or
expense reimbursement.
“AWARD” shall mean an award of Stock Units pursuant to the Plan.
“BOARD” shall mean the Board of Directors of the Company.
“COMMITTEE” shall mean the Compensation Committee of the Board or such other committee as may be designated by the Board.
“COMPANY” shall mean The Ryland Group, Inc.
“DIRECTOR” shall mean a non-employee director of the Company.
“EFFECTIVE DATE” sh all mean January 1, 1998.
“FAIR MARKET VALUE” of the Stock shall mean on a particular date or if a price is not available for that date, the last prior date for which
a price is determined in accordance herewith, the last reported sale price of the Stock on the New York Stock Exchange; or, if the Stock is not
listed on the New York Stock Exchange, the closing price on such other exchange on which the Stock is traded; or, if quoted on the NASDAQ
National Market System or other over-the-counter market, the last reported sales price on the NASDAQ National Market System or other over-
the-counter market; or, if the Stock is not publicly traded, such price as determined by the Committee to be the fair market value.
“PLAN” shall mean The Ryland Group, Inc. Non-Employee Directors’ Stock Unit Plan.
“STOCK” shall mean shares of common stock, par value $1.00 per share, of the Company.
“STOCK UNIT” shall mean a right to receive one share of Stock.

3. SOURCE OF SHARES DELIVERED UNDER STOCK UNITS. Any Stock delivered pursuant to an Award shall consist of shares of Stock
acquired by the Company on the open market.
4. DIRECTOR COMPENSATION.
(a) Each non-employee Director shall receive 50% of the Annual Retainer in cash an d 50% in Stock Units. The Stock Unit portion of the
Annual Retainer shall be awarded on the date of payment of the Annual Retainer or any portion of the Annual Retainer to which it relates (the
Award Date) in Stock Units having a Fair Market Value on the Award Date or, if Fair Market Value cannot be determined on the Award Date,
the closest prior date to the Award Date as determined in accordance with Section 2, equal to 50% of the Annual Retainer. Any fractions of
Stock Units are paid in cash.
(b) If a Director wishes to defer the receipt of payment of Stock Units, the Director shall make an irrevocable election to defer the receipt of
a payment of Stock Units before the December 31 preceding the year in which the services giving rise to the payment of Stock Units to be
deferred are to be performed. If a Director elects to defer the receipt of a payment of Stock in relation to a Stock Unit, such Stock is credited to
and shall be payable in accordance with the deferred account established for the Director pursuant to the Executive and Director Deferred
Compensation Plan II. During the elective deferral period, the Stock is held in the Director’s deferred account under the trust maintained in
connection with the Executive and Director Deferred Compensation Plan II.
5. TIME OF VESTING AND PAYMENT. Unless otherwise provided herein or deferred in accordance with Section 4(b), all payments of
Stock and transmittal of Stock certificates or other evidence of Stock ownership in rel ation to Stock Units will be distributed within 75 days
after the end of each quarter during which they are earned.
6. FORM OF PAYMENT. Stock Units are paid in shares of Stock. Each Stock Unit equals one share of Stock. The Company shall not issue
fractions of a share of Stock. Whenever under the terms of the Plan a fractional share is required to be issued, the Director is paid in cash for
such fractional share. Unless deferred in accordance with Section 4(b), any cash payment will be paid within 75 days after the end of each
quarter during which it is earned.
7. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Committee. The Committee shall have full power, discretion
and authority to interpret and administer the Plan.
8. AMENDMENT OR TERMINATION OF THE PLAN. The Committee may, at any time, amend or terminate the Plan.
9. GOVERNING LAW. The Plan and all actions taken thereunder shall be governed by and construed in accordance with the laws of the
State of Maryland and the appl icable laws of the United States.
Exhibit 10.21
AMENDMENT NO. 1
TO
THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT

BY AND BETWEEN
THE RYLAND GROUP, INC. AND R. CHAD DREIER.
The Ryland Group, Inc. (the “Company”) and R. Chad Dreier (the “Executive”) wish to amend the Employment Agreement originally
dated as of July 1, 2002, and subsequently amended and restated as of April 20, 2005, in order to comply with the final Regulations issued
under Internal Revenue Code section 409A.
Accordingly, the Agreement is amended as follows, effective January 1, 2005:
1. Section 5.5(e) is amended by adding the following sentence to the end of that Section:
“The Executive must be employed on each cash dividend equivalent payment date with respect to Common Stock to receive the cash
dividend equivalent payment described in this Section.”
2. The third sentence of Section 6.3 is amended in its entirety, as follows:
“The Company shall pay the Executive his Base Salary through the effective date of termination and shall pay all benefits to which
the Executive has a vested right at that time in accordance with the terms of the plan, document or agreement governing such
benefits.”
3. Section 6.4 is amended in its entirety as follows:

“6.4 Termination by the Company Without Cause. The Board of Directors may terminate the Executive’s employment for
reasons other than death, Disability, Retirement or for Cause (as defined in Section 6.5) by notifying the Executive in writing
at least sixty (60) days prior to the effective date of termination. Upon the expiration of this sixty (60) day period, the
termination by the Company is effective. Within thirty (30) days after the date of termination, unless Section 6.9 is
applicable to this payment, the Company shall pay to the Executive a lump sum cash payment equal to the greater of (a) the
aggregate amount of Base Salary as then in effect, payable for the remaining term of this Agreement, or (b) the aggregate
amount of twenty-four (24) months of the Base Salary as in effect prior to the date of notice of termination. Also, within
thirty (30) days after the date of termination, unless Section 6.9 is applicable to this payment, the Company shall pay to the
Executive a lump sum cash payment equal to the value coverage under the Company’s life, medical, dental, vision, AD&D,
prescription drug and long term disability insurance for a period equal to the greater of (a) the remaining term of this
Agreement, or (b) twenty-four (24) months; provided however, all or
1
a portion of this payment shall be forfeited to the extent the Executive otherwise has coverage for such benefits. The
Company shall also pay the Executive a Bonus for the year in which termination occurs equal to the Bonus paid or payable
in respect of the fiscal year prior to the year in which termination occurs multiplied by the number of fiscal years within the
remaining term of this Agreement (including the fiscal year in which the termination occurs). This Bonus payment shall be
paid within thirty (30) days after the date of termination, unless Section 6.9 is applicable to this payment. The Company shall
also pay to the Executive all benefits to which the Executive has a vested right at the time of termination, as well as the SERP
Benefit and the SERP II Benefit, in accordance with the terms of the plans, documents or agreements governing those
benefits. The Executive shall be fully vested in the grant of Stock Units pursuant to Section 5.5 of this Agreement and shall
be fully vested in any prior year awards that remain unvested or any awards made for the fiscal year in which termination
occurs under the TRG Incentive Plan or any successor plan. All vested awards under any equity incentive or other
incentive programs shall be paid in accordance with the terms of the governing plan or program, notwithstanding any
provision of the governing plan or program calling for forfeiture of benefits upon termination.”
4. The third sentence of Section 6.8 is amended in its entirety, as follows:
“The Company shall pay the Executive his Base Salary through the effective date of termination and shall pay all benefits to which
the Executive has a vested right at that time in accordance with the terms of the plan, document or agreement governing such
benefits.”
5. Section 6.9 is amended in its entirety, as follows:
“6.9 Delay of Payment Pursuant to Section 409A. Should any of the payments made to the Executive in accordance with
Section 6 (including Section 6.7) of this Agreement be determined to be payments from a nonqualified deferred
compensation plan, as defined by Section 409A of the Internal Revenue Code of 1986 as amended (the “Code”) (e.g.,
payments for termination for Good Reason pursuant to Section 6.6), these payments will be made on the date that is six
(6) months from the Executive’s date of “Separation from Service”. For purposes of this Section 6, a “Separation from
Service” means an anticipated permanent reduction in the level of bona fide services to twenty percent (20%) or less of the
average level of bona fide services performed over the immediately preceding thirty-six (36) month period.
Also, should any of the payments to be made to the Executive in accordance with Section 6 of this Agreement be determined
to be an acceleration of payment from a nonqualified deferred compensation plan in violation of Code section 409A (e.g.,
any bonus payable pursuant to a nonqualified deferred compensation plan, as defined by Section 409A of the Code), such
payment shall not be made until
2
the date determined in accordance with the terms of the plan, document or agreement governing such deferred
compensation.
6. Section 7.1(b) is amended by deleting the last two sentences from that Section.
7. Section 7.1(c) is amended in its entirety, as follows:
“(c) Insurance and Other Special Benefits. The Executive’s participation in the life, medical, dental, vision, AD&D, prescription
drug, long term disability and executive medical reimbursement program, as provided to the Executive prior to the Change of
Control, shall be continued or equivalent benefits provided by the Company or any successor corporation or affiliate of the
successor corporation (the “Responsible Company”) at no cost to the Executive for a period of three (3) years from the date
of the Change of Control. The benefits provided during one year shall not affect the benefits available to the Executive in
any other year. The right to benefits under this Section is not subject to liquidation or exchange for another benefit.
Also, within thirty (30) days of a Change of Control, the Responsible Company shall pay to the Executive a lump sum cash
payment equal to the value coverage for a period of three years under the Company’s supplemental early retirement plan
(other than SERP or SERP II), executive life insurance program, personal health services allowance and health club benefits
programs.”
8. Section 7.1(d) is amended by adding the following language to the end of that Section:
“Any reimbursement of relocation expenses under this Section shall be made on or before the last day of the year following the year
in which the expense is incurred. The amount of expenses eligible for reimbursement during a year shall not affect the expenses
eligible for reimbursement in any other year. The right to reimbursement for relocation expenses under this Section is not subject to
liquidation or exchange for another benefit. All reimbursements of taxes payable on the reimbursed amounts shall be paid by the last
day of the calendar year following the year in which the Executive remits the related tax payment.”
9. Section 7.1(e) is amended in its entirety, as follows:
“(e) Stock Rights. All stock options, stock units, stock appreciation rights, stock purchase rights, restricted stock rights and any
similar rights which the Executive holds shall become fully vested, and, to the extent permitted by, or exempt from, Code
section 409A, be exercisable on the date of the Change of Control.”
10. Section 7.1(f) is amended by adding the following language to the end of that Section:
“If the Executive wishes to receive the cash payment in lieu of the reimbursements, as provided above, the Executive must make an
irrevocable election for such cash payment
3
by December 31, 2008. As of the date the Executive’s election is submitted to the Company, the option not selected by the Executive
shall be deleted from the Agreement.
Any cash payment under this Section shall be made on (or within 30 days after) the date of Change of Control.
Any reimbursement of outplacement services expenses under this Section shall be made on or before the last day of the year
following the year in which the expense is incurred. The amount of expenses eligible for reimbursement during a year shall not affect
the expenses eligible for reimbursement in any other year. The right to reimbursement for relocation expenses under this Section is
not subject to liquidation or exchange for another benefit. All reimbursements of taxes payable on the reimbursed amounts shall be
paid by the last day of the calendar year following the year in which the Executive remits the related tax payment.”
11. Section 7.3 is amended by adding a new paragraph (e), as follows:
“(e) Timing of Payments to the Executive. Notwithstanding anything to the contrary in the preceding, any gross-up payment will
be made by the end of the year next following the year in which the Executive remits the related taxes. In addition, with
respect to the reimbursement of expenses incurred due to a tax audit or litigation addressing the existence or amount of a tax
liability, payment will be made by the end of the year following the year in which the taxes that are the subject of the audit or
litigation are remitted to the taxing authority, or where as a result of such audit or litigation no taxes are remitted, the end of
the year following the year in which the audit is completed or there is a final and nonappealable settlement or other
resolution of the litigation.”
12. Section 11 is amended by adding the following language to the end of that Section:
“The Executive shall be entitled to reimbursement of the fees and expenses described under this Section during the period
commencing on the effective date of this Agreement and ending on his death. Any reimbursement of fees and expenses under this
Section shall be made on or before the last day of the year following the year in which the expense is incurred. The amount of fees
and expenses eligible for reimbursement during a year shall not affect the expenses eligible for reimbursement in any other year. The
right to reimbursement under this Section is not subject to liquidation or exchange for another benefit.”
4
IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement as of the date first above written.
THE RYLAND GROUP, INC. EXECUTIVE:
By:
Robert E. Mellor, Chairman R. Chad Dreier
Compensation Committee of the
Board of Directors
By:
Robert J. Cunnion III,
Senior Vice President
Attest:
Timothy J. Geckle,
Secretary
Exhibit 10.23

Dreier Supplemental Executive Retirement Plan II

Effective January 1, 2005

TABLE OF CONTENTS
Page
ARTICLE 1 Definitions 3
ARTICLE 2 Vesting 5
2.1 Vesting in Benefits 5
ARTICLE 3 Benefits 6
3.1 Eligibility for Benefits 6

3.2 Death Benefit 6
3.3 Forms of Payment; Elections 7
3.4 Withholding and Payroll Taxes 7
3.5 Delays 7
ARTICLE 4 Termination, Amendment or Modification of the Agreement 7
4.1 Termination or Amendment 8

4.2 Termination of Agreement 8
ARTICLE 5 Other Benefits and Agreements 8
5.1 Coordination with Other Benefits 8
ARTICLE 6 Administration of this Agreement 8
6.1 Committee Duties 8

6.2 Administration Upon Change In Control 8
6.3 Agents 9
6.4 Binding Effect of Decisions 9
6.5 Indemnity of Committee 9
6.6 Company Information 9
ARTICLE 7 Claims Procedures 9
7.1 Presentation of Claim 10

7.2 Notification of Decision 10
7.3 Review of a Denied Claim 10
7.4 Decision on Review 11
7.5 Legal Action 11
7.6 Named Fiduciary 11
ARTICLE 8 Beneficiary Designation 11
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8.1 Beneficiary 11
8.2 Beneficiary Designation; Change; Spousal Consent 11
8.3 Acknowledgement 12
8.4 No Beneficiary Designation 12
8.5 Doubt as to Beneficiary 12
8.6 Discharge of Obligations 12
ARTICLE 9 Trust 12
9.1 Establishment of the Trust 12

9.2 Interrelationship of the Agreement and the Trust 12
9.3 Deposits to the Trust 13
ARTICLE 10 Miscellaneous 14
10.1 Status of Agreement 14

10.2 Unsecured General Creditor 14
10.3 Company’s Liability 14
10.4 Nonassignability 14
10.5 Furnishing Information 14
10.6 Terms 14
10.7 Captions 14
10.8 Governing Law 15
10.9 Validity 15
10.10 Notice 15
10.11 Successors 15
10.12 Spouse’s Interest 15
10.13 Incompetent 15
10.14 Court Order 16
10.15 Distribution in the Event of Taxation 16
10.16 Legal Fees To Enforce Rights After Change in Control 16
10.17 Aggregation of Employers 16
10.18 Aggregation of Plans 17
- ii - -


DREIER SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN II
THIS DREIER SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN II (this “Agreement”) is amended and restated as of January 1,
2005 between the Ryland Group, Inc. (the “Company”) and R. Chad Dreier (the “Participant”).
RECITALS
A. The Participant is the Chief Executive Officer of the Company, and the Company desires to have the continued services and counsel
of the Participant.
B. The purpose of this Agreement is to provide specified benefits to the Participant as more fully described below.
AGREEMENT
NOW THEREFORE, it is mutually agreed as follows:
ARTICLE 1
Definitions
For purposes hereof, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following
indicated meanings:
1.1 “Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated, in accordance with Article 8, that are
entitled to receive the Participant’s benefits under this Agreement upon the Participant’s death.
1.2 “Beneficiary Designation Form” shall mean the form established from time to time by the Committee that the Participant completes,
signs and returns to the Committee to designate a Beneficiary.
1.3 “Change in Control” shall mean the first to occur of any of the following events:
(a) The acquisition by any person other than the Company or any employee benefit plan of the Company, or more than one
person acting as a group, together with stock held by such person or group, of beneficial ownership of more than 50% of the
total fair market value or total voting power of the Company’s then outstanding voting securities;
(b) Any one person or more than one person acting as a group acquires, or has acquired during the 12-month period ending on
the date of the most recent acquisition by such person or group, beneficial ownership of 35% or more of the total voting
power of the Company’s then outstanding voting securities;
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(c) A majority of the members of the Company’s Board of Directors is replaced during any 12-month period by Directors whose
appointment or election is not endorsed or approved by a majority of the members of the Board of Directors who were
members of the Board of Directors prior to the initiation of the replacement; or
(d) Any one person or more than one person acting as a group acquires, or has acquired during the 12-month period ending on
the date of the most recent acquisition by such person or group, assets of the Company that have a total gross fair market
value of 40% or more of the total gross fair market value of all of the assets of the Company immediately prior to the initiation
of the acquisition.
1.4 “Claimant” shall have the meaning set forth in Section 7.1.
1.5 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
1.6 “Committee” shall mean the committee described in Article 6.
1.7 “Company” shall mean The Ryland Group, Inc., a Maryland corporation.
1.8 “Compensation Committee” shall mean the Compensation Committee of the Board of Directors of the Company.
1.9 “Death Benefit” shall mean the Participant’s unpaid Vested SERP II Benefit (i) payable in equal annual installments over the remaining
number of years and in the same amounts as such benefit would have been paid to the Participant had the Participant survived, or
(ii) the present value equivalent of such benefit stream payable in a lump sum, calculated using an 8% discount rate and an end of the
year payment convention for the purpose of calculating the lump sum payment.
1.10 “Election Form” shall mean the form upon which the Participant elects the manner of distribution of his SERP II Benefit and Death
Benefit, and shall be made in such form as the Committee may require, including thereon a power of attorney from the Participant’s
community property spouse, if any, authorizing the Participant to act on behalf of such spouse in making the election and agreeing to
be irrevocably bound by any such act with respect to any community property interest under this Agreement.
1.11 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
1.12 “Retirement” shall mean the Participant’s voluntary or involuntary separation of service from the Company for any reason other than
death.
1.13 “Separation from Service” shall mean the Participant’s “separation from service” within the meaning of Code section 409A, treating as
a Separation from Service an anticipated permanent reduction in the level of bona fide services to be performed by the Participant to
20% or less of the average level of bona fide services performed by the Participant over the immediately preceding 36
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month period (or the full period during which the Participant performed services for the Company, if that is less than 36 months).
Separation from Service includes Retirement.
1.14 “SERP I” shall mean the Dreier Supplemental Executive Retirement Plan entered as of July 1, 2002 between the Company and the
Participant.
1.15 “SERP Benefit” shall have the meaning set forth in Section 1.13 of the SERP I.
1.16 “SERP II Benefit” shall mean a benefit in the amount that is the sum of subparagraphs (a) and (b) below:
(a) (i) an amount per annum that when added to the SERP Benefit equals $2,400,000 per annum, payable in annual installments for a
period of fifteen (15) years, or (ii) the present value of the benefit stream in this Section 1.15 (a)(i) payable in a lump sum, calculated
using an 8% discount rate and an end of the year payment convention for the purpose of calculating the lump sum payment.
(b)(i) $1,440,000 per annum, payable in annual installments for a period of fifteen (15) years, or (ii) the present value of the benefit
stream in this Section 1.15(b)(i) payable in a lump sum, calculated using an 8% discount rate and an end of the year payment
convention for the purpose of calculating the lump sum payment.
1.17 “Termination of Employment Without Cause” shall mean the Participant’s involuntary separation of service with the Company other
than by reason of the Participant’s (i) willful and continued failure to perform the material duties of his position after receiving notice
of such failure and being given reasonable opportunity to cure such failure; (ii) willful misconduct which is demonstrably and
materially injurious to the Company; or (iii) conviction of a felony. No act or failure to act on the part of the Participant shall be
considered “willful” unless it is done or omitted to be done in bad faith or without reasonable belief that the action or omission was in
the best interest of the Company.
1.18 “Trust” shall mean the trust established pursuant to that certain Master Trust Agreement, dated as of June 27, 2002, between the
Company and the trustee named therein, as amended from time to time.
1.19 “Vested SERP II Benefit” shall mean the Participant’s SERP II Benefit multiplied by the applicable vesting percentage set forth in
Article 2 of this Agreement.
ARTICLE 2
Vesting
2.1 Vesting in Benefits.
(a) General. The Participant shall vest in his SERP II Benefit according to the following vesting schedules, provided that
the Participant is continuously employed with the Company through the specified date of vesting:
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(i) With respect to the SERP II Benefit set forth in Section 1.15 (a):
Date of Vesting Vesting Percentage

As of December 30, 2004 40%
December 30, 2005 60%
December 30, 2006 80%
December 30, 2007 100%
(ii) With respect to the SERP II Benefit set forth in Section 1.15(b):
Date of Vesting Vesting Percentage

December 30, 2005 through 0%
December 30, 2007
December 30, 2008 33 1/3%
December 30, 2009 66 2/3%
December 30, 2010 100%
(b) Accelerated Vesting. Notwithstanding anything to the contrary in this Section 2.1, the Participant shall immediately become
100% vested in the SERP II Benefit upon the occurrence of a Change in Control or a Termination of Employment Without
Cause.
ARTICLE 3
Benefits
3.1 Eligibility for Benefits.
(a) SERP II Benefit. Upon the first to occur of a Change in Control or Separation from Service, the Participant is eligible to
receive his Vested SERP II Benefit.
(b) Commencement of Payment of the SERP II Benefit. The payment of the Participant’s Vested SERP II Benefit shall commence
on the earlier of the date of a Change in Control or six (6) months after the date of the Participant’s Separation from Service.
3.2 Death Benefit.
(a) Death Benefit. In the event of the Participant’s death at any time before the Participant’s Vested SERP II Benefit has been
paid in full, the Participant’s Beneficiary shall receive a Death Benefit.
(b) Commencement of Death Benefit. The Death Benefit shall commence or be paid in full, depending on the Participant’s
Election Form, to the Participant’s Beneficiary on the
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date the Participant would have otherwise received the next SERP II Benefit payment had he lived (or within 60 days
thereafter)
3.3 Forms of Payment; Elections. At the time the Participant initially is eligible to participate in the Plan (or as otherwise permitted by
Code section 409A), the Participant shall elect on an Election Form to have his (i) SERP II Benefit paid in a lump sum or in equal
annual installments for fifteen (15) years, and (ii) Death Benefit paid in a lump sum or in equal annual installments over the remaining
number of years, at the same time and in the same amounts, as such benefit would have been paid to the Participant had the
Participant survived. The Participant may change his initial elections once during calendar year 2005 by submitting a new Election
Form to the Committee by December 31, 2005. Additionally, to the extent permitted under Code section 409A and by the Company,
the Participant may elect the form and timing of payment of his SERP II Benefit or Death Benefit during 2008 (except that a Participant
cannot change payment elections with respect to payments that the Participant would otherwise receive in 2008, or make an election
that causes payments scheduled for subsequent years to be made in 2008), and such election shall not be treated as a change in the
form and timing of payment or an acceleration of payment.
Thereafter, a new election can be made once if the Participant submits the new election on an Election Form to the Committee and that
election meets the following requirements: (i) the election cannot take effect until at least twelve (12) months after the date on which
the election is made, (ii) in the case of the SERP II Benefit only, the payment with respect to which such election is made must be
deferred for a period of five (5) years from the date such payment would otherwise have been made, and (iii) the election is accepted
by the Committee in its sole discretion. The Election Forms most recently accepted by the Committee in accordance with the
rules described above shall govern the payout of the Participant’s SERP II Benefit and Death Benefit. If the Participant does not
make an election with respect to the form of payment of his SERP II Benefit, then such benefit shall be paid in a lump sum. Similarly, if
the Participant does not make an election with respect to the form of payment of his Death Benefit, then such benefit shall be paid in a
lump sum. Notwithstanding anything in the Agreement to the contrary, no change submitted on an Election Form shall be accepted
by the Committee, and the Committee shall deny any change made on an Election Form, if the Committee determines that the change
violates the requirements under Code section 409A.
3.4 Withholding and Payroll Taxes. The Company shall withhold from any and all benefits made under this Article 3, all federal, state
and local income, employment and other taxes required to be withheld by the Company in connection with the benefits hereunder.
ARTICLE 4
Termination, Amendment or Modification of the Agreement
4.1 Termination or Amendment. This Agreement may be terminated or amended only by a written agreement executed by the Company
and the Participant. Notwithstanding the preceding, the
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Agreement may be amended by the Company at any time, retroactively if required in the opinion of the Company, in order to ensure
that the Agreement is characterized as a “top-hat” plan as described under ERISA Sections 201(2), 301(a)(3), and 401(a)(1) to conform
with the Plan to the requirements of Code Section 409A, and to conform the Plan to the provisions and requirements of any applicable
law (including ERISA and the Code). No such amendment shall be considered prejudicial to any interest of the Participant or a
Beneficiary hereunder. Upon a termination of the Plan pursuant to this Section 4.1, Vested SERP II Benefits shall be paid to the
Participant in accordance with Article 3. Notwithstanding the preceding, the Company, in its discretion, reserves the right, by action
of the Board, to terminate the Plan and distribute to the Participant his Vested SERP II Benefit as permitted in accordance with the
Code (e.g., Treas. Reg. 1.409A-3(j)(4)(ix)).
4.2 Termination of Agreement. Unless otherwise modified pursuant to Section 4.1 above, this Agreement shall terminate upon the full
payment of the Participant’s Vested SERP II Benefit or Death Benefit in accordance with Article 3.
ARTICLE 5
Other Benefits and Agreements
5.1 Coordination with Other Benefits. The benefits provided for the Participant under this Agreement are in addition to any other
benefits available to such Participant under any other plan or program for employees of the Company. This Agreement shall
supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly
provided.
ARTICLE 6
Administration of the Agreement
6.1 Committee Duties. This Agreement shall be administered by a Committee, which shall consist of the Compensation Committee, or
such committee as the Compensation Committee shall appoint. The Committee shall have the discretion and authority to (i) make,
amend, interpret and enforce all appropriate rules and regulations for the administration of this Agreement, (ii) make benefit
entitlement determinations, and (iii) decide or resolve any and all questions including interpretations of this Agreement, as may arise
in connection with the Agreement.
6.2 Administration Upon Change In Control. For purposes of this Agreement, the Committee shall be the “Administrator” at all times
prior to the occurrence of a Change in Control. Upon and after the occurrence of a Change in Control, the “Administrator” shall be an
independent third party selected by the Compensation Committee of the Board of Directors of the Company, as such committee was
constituted prior to the Change in Control. The Administrator shall have the discretionary power to determine all questions arising in
connection with the administration of the Agreement and the interpretation of the Agreement and Trust including, but not limited to
benefit entitlement determinations; provided, however, upon and after the occurrence of a Change in Control, the Administrator shall
have no power to direct the investment of Trust assets
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or select any investment manager or custodial firm for the Trust. Upon and after the occurrence of a Change in Control, the Company
must: (1) pay all reasonable administrative expenses and fees of the Administrator; (2) indemnify the Administrator against any costs,
expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the performance of the
Administrator hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the
Administrator or its employees or agents; and (3) supply full and timely information to the Administrator on all matters relating to the
Agreement, the Trust, the Participant and his Beneficiaries, the Participant’s benefits under this Agreement, the date and
circumstances of the Participant’s termination of employment or death, and such other pertinent information as the Administrator may
reasonably require. Upon and after a Change in Control, the Administrator may be terminated (and a replacement appointed) only
with the approval of the Compensation Committee of the Board of Directors of the Company, as such committee was constituted prior
to a Change in Control. Upon and after a Change in Control, the Administrator may not be terminated by the Company. If the
Administrator resigns or is removed and no successor is appointed and approved by the Compensation Committee of the Board of
Directors of the Company, as such committee was constituted prior to a Change in Control, the Participant may apply to a court of
competent jurisdiction for appointment of a successor third-party administrator.
6.3 Agents. In the administration of this Agreement, the Committee may employ agents and delegate to them such administrative duties
as it sees fit, (including acting through a duly appointed representative), and may from time to time consult with counsel who may be
counsel to the Company.
6.4 Binding Effect of Decisions. The decision or action of the Committee with respect to any question arising out of or in connection
with the administration, interpretation and application of the Agreement and the rules and regulations promulgated hereunder shall be
final and conclusive and binding upon all persons having any interest in the Agreement.
6.5 Indemnity of Committee. The Company shall indemnify and hold harmless the members of the Committee against any and all claims,
losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of
willful misconduct by the Committee or any of its members.
6.6 Company Information. To enable the Committee to perform its functions, the Company shall supply full and timely information to the
Committee on all matters relating to the compensation of the Participant, the date and circumstances of the Participant’s termination
of employment or death, and such other pertinent information as the Committee may reasonably require.
ARTICLE 7
Claims Procedures
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7.1 Presentation of Claim. The Participant or his Beneficiary (such Participant or Beneficiary being referred to below as a “Claimant”)
may deliver to the Committee a written claim for a determination with respect to the amounts distributable to such Claimant pursuant
to this Agreement. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty
(60) days after such notice was received by the Claimant. All other claims must be made within one hundred eighty (180) days of the
date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by
the Claimant.
7.2 Notification of Decision. The Committee shall consider a Claimant’s claim within a reasonable time, but no later than ninety (90) days
after receiving the claim. If the Committee determines that special circumstances require an extension of time for processing the claim,
written notice of the extension shall be furnished to the Claimant prior to the termination of the initial ninety (90) day period. In no
event shall such extension exceed a period of ninety (90) days from the end of the initial period. The extension notice shall indicate
the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit
determination. The Committee shall notify the Claimant in writing:
(a) that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and
such notice must set forth in a manner calculated to be understood by the Claimant:
(i) the specific reason(s) for the denial of the claim, or any part of it;
(ii) specific reference(s) to pertinent provisions of the Agreement upon which such denial was based;
(iii) a description of any additional material or information necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is necessary;
(iv) an explanation of the claim review procedure set forth in Section 7.3 below; and
(v) a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit
determination on review.
7.3 Review of a Denied Claim. On or before sixty (60) days after receiving a notice from the Committee that a claim has been denied, in
whole or in part, a Claimant (or the Claimant’s duly authorized representative) may file with the Committee a written request for a
review of the denial of the claim. The Claimant (or the Claimant’s duly authorized representative):
(a) may, upon request and free of charge, have reasonable access to, and copies of, all documents, records and other
information relevant to the claim for benefits;
(b) may submit written comments or other documents; and/or
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(c) may request a hearing, which the Committee, in its sole discretion, may grant.
7.4 Decision on Review. The Committee shall render its decision on review promptly, and no later than sixty (60) days after the Committee
receives the Claimant’s written request for a review of the denial of the claim. If the Committee determines that special circumstances
require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the
termination of the initial sixty (60) day period. In no event shall such extension exceed a period of sixty (60) days from the end of the
initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the
Committee expects to render the benefit determination. In rendering its decision, the Committee shall take into account all comments,
documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information
was submitted or considered in the initial benefit determination. The decision must be written in a manner calculated to be
understood by the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Agreement provisions upon which the decision was based;
(c) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of, all
documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for
benefits; and
(d) a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).
7.5 Legal Action. A Claimant’s compliance with the foregoing provisions of this Article 7 is a mandatory prerequisite to a Claimant’s
right to commence any legal action with respect to any claim for benefits under this Agreement.
7.6 Named Fiduciary. The Committee shall be the named fiduciary, within the meaning of ERISA, with respect to this Agreement solely
for purposes of this Article 7.
ARTICLE 8
Beneficiary Designation
8.1 Beneficiary. The Participant shall have the right, at any time, to designate his Beneficiary(ies) (both primary as well as contingent) to
receive any benefits payable under the Agreement to a beneficiary upon the Participant’s death. The Beneficiary designated under
this Agreement may be the same as or different from the Beneficiary designation under any other plan of the Company in which the
Participant participates. If the Participant does not make a Beneficiary designation under this Plan, the most recent beneficiary
designation made and accepted by the Committee under SERP I shall apply for purposes of this Plan.
8.2 Beneficiary Designation; Change; Spousal Consent. The Participant shall designate his Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the
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Committee or its designated agent. The Participant shall have the right to change a Beneficiary by completing, signing and otherwise
complying with the terms of the Beneficiary Designation Form and the Committee’s rules and procedures, as in effect from time to
time. If the Participant names someone other than his or her spouse as a Beneficiary and if the Committee requires that spousal
consent be obtained with respect to the Participant, a spousal consent, in the form designated by the Committee, must be signed by
the Participant’s spouse and returned to the Committee. Upon the acceptance by the Committee of a new Beneficiary Designation
Form, all Beneficiary designations previously filed shall be cancelled. The Committee shall be entitled to rely on the last Beneficiary
Designation Form filed by the Participant and accepted by the Committee prior to his death.
8.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted and
acknowledged in writing by the Committee or its designated agent.
8.4 No Beneficiary Designation. If the Participant fails to designate a Beneficiary as provided in Sections 8.2 and 8.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, then the
Participant’s spouse shall be the designated Beneficiary. If the Participant has no surviving spouse, the benefits remaining under the
Agreement shall be payable to the executor or personal representative of the Participant’s estate.
8.5 Doubt as to Beneficiary. If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this
Agreement, the Committee shall have the right, exercisable in its discretion, to distribute such payment to the Participant’s estate
without liability for any tax or other consequences which might flow therefrom, or may take such other action as the Company deems
to be appropriate. Any claim for benefits by a Beneficiary must be made in accordance with Treas. Reg. 1.409A-3(g) or any other
applicable guidance under Code section 409A..
8.6 Discharge of Obligations. The payment of benefits under this Agreement to a Beneficiary shall fully and completely discharge the
Company and the Committee from all further obligations under this Agreement with respect to the Participant, and this Agreement
shall terminate upon such full payment of benefits.
ARTICLE 9
Trust
9.1 Establishment of the Trust. In order to provide assets from which to fulfill the obligations to the Participant and his beneficiaries
under the Agreement, the Company shall update the existing Trust to include this Plan. The Company may, in its discretion,
contribute cash or other property, including securities issued by the Company, to provide for the benefit payments under the
Agreement.
9.2 Interrelationship of the Agreement and the Trust. The provisions of this Agreement shall govern the rights of the Participant to
receive distributions. The provisions of the Trust shall govern the rights of the Company, the Participant and the creditors of the
Company to the assets transferred to the Trust. The Company shall at all times remain liable to carry out its obligations
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under the Agreement. The Company’s obligations under the Agreement may be satisfied with Trust assets distributed pursuant to
the terms of the Trust, and any such distribution shall reduce the Company’s obligations under this Agreement.
9.3 Deposits to the Trust. The Company shall deposit into the Trust an amount of cash or, in its discretion, other assets, including if
desirable securities issued by the Company, equal to $3,471,991 per annum for the six (6) year period commencing January 1, 2005.
Immediately before the date of a Change in Control, the Company shall deposit into the Trust such amount of cash and other assets,
if any, sufficient in amount to cause the total value of the assets held in such Trust at that time, excluding the SERP Benefit, to equal
the present value of the entire SERP II Benefit set forth in both Section 1.15(a) and Section 1.15(b) calculated using an 8% discount
rate and the Participant as 100% vested.
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ARTICLE 10
Miscellaneous
10.1 Status of Agreement. This Agreement is intended to be a plan that is not qualified within the meaning of Code Section 401(a) and
that is “unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). In addition,
the Plan is intended to comply with Code Sections 409A(a)(1) to (4) and (b)(1) to (2). The Plan shall be administered and interpreted in
a manner consistent with those foregoing intents.
10.2 Unsecured General Creditor. The Participant and his Beneficiaries, successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of the Company. Any and all of the Company’s assets shall be, and remain, the general,
unpledged unrestricted assets of the Company.
10.3 Company’s Liability. The Company’s liability for the payment of benefits shall be defined only by this Agreement, as entered into
between the Company and the Participant.
10.4 Nonassignability. Neither the Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt, the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be, unassignable and non-
transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by the Participant or any other person, nor be transferable by operation
of law in the event of the Participant’s or any other person’s bankruptcy or insolvency.
10.5 Furnishing Information. The Participant or his Beneficiary will cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be requested in order to facilitate the administration of this
Agreement and the payments of benefits hereunder, including but not limited to taking such physical examinations as the Committee
may deem necessary.
10.6 Terms. Whenever any words are used herein in the masculine, they shall be construed as though they were in the feminine in all
cases where they would so apply; and wherever any words are used herein in the singular or in the plural, they shall be construed as
though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.
10.7 Captions. The captions of the articles, sections and paragraphs of this Agreement are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.
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10.8 Governing Law. Subject to ERISA, the provisions of this Agreement shall be construed and interpreted according to the internal
laws of the State of Maryland without regard to its conflict of laws principles.
10.9 Validity. In case any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect
the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal and invalid provision had never
been inserted herein; except to the extent that Code section 409A requires that this Section be disregarded because it purports to
nullify terms that are not in compliance with Code section 409A.
10.10 Notice. Any notice or filing required or permitted to be given to the Committee under this Agreement shall be sufficient if in writing
and hand-delivered, or sent by registered or certified mail, to the address below:
SERP Committee
24025 Park Sorrento
Suite 400
Calabasas, California 91302
Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on
the receipt for registration or certification.
Any notice or filing required or permitted to be given to the Participant under this Agreement shall be sufficient if in writing and
hand-delivered, or sent by mail, to the last known address of the Participant.
10.11 Successors. The provisions of this Agreement shall bind and inure to the benefit of the Company and its successors and assigns
and the Participant and his Beneficiary.
10.12 Spouse’s Interest. The interest in the benefits hereunder of a spouse of the Participant who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such
spouse’s will, nor shall such interest pass under the laws of intestate succession.
10.13 Incompetent. If the Committee determines in its discretion that a benefit under this Agreement is to be paid to a minor, a person
declared incompetent or to a person incapable of handling the disposition of that person’s property, the Committee may direct
payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or
incapable person. The Committee may require proof of minority, incompetency, incapacity or guardianship, as it may deem
appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the
Participant’s Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Agreement for such
payment amount.
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10.14 Court Order. The Committee is authorized to make any payments directed by court order in any action in which the Committee has
been named as a party. Notwithstanding the foregoing, the Committee shall interpret this provision in a manner that is consistent with
Code Section 409A and other applicable tax law, including but not limited to guidance issued after the effective date of this Plan (e.g.,
Treas. Reg. 1.409A-3(j)(4)).
10.15 Distribution in the Event of Taxation. If, for any reason, all or any portion of the Participant’s benefit under this Agreement becomes
taxable to the Participant prior to receipt, the Company shall distribute to the Participant immediately available funds in an amount
equal to the taxable portion of his or her benefit (which amount shall not exceed the Participant’s unpaid Vested SERP II Benefit under
the Agreement). Such a distribution shall affect and reduce the benefits to be paid under this Agreement. Notwithstanding the
foregoing, the Committee shall interpret this provision in a manner that is consistent with Code Section 409A and other applicable tax
law, including but not limited to guidance issued after the effective date of this Plan (e.g., Treas. Reg. 1.409A-3(j)(4)).
10.16 Legal Fees To Enforce Rights After Change in Control. The Company is aware that upon the occurrence of a Change in Control, the
Board or the board of directors of the Company (which might then be composed of new members) or a shareholder of the Company or
of any successor corporation or affiliate of a successor corporation might then cause or attempt to cause the Company or such
successor to refuse to comply with its obligations under the Agreement and might cause or attempt to cause the Company to
institute, or may institute, litigation seeking to deny the Participant the benefits intended under the Agreement. In these
circumstances, the purpose of the Agreement could be frustrated. Accordingly, if, following a Change in Control, it should appear to
the Participant that the Company or any successor corporation has failed to comply with any of its obligations under the Agreement
or any agreement thereunder or, if the Company or any other person takes any action to declare the Agreement void or unenforceable
or institutes any litigation or other legal action designed to deny, diminish or to recover from the Participant the benefits intended to
be provided, then the Company irrevocably authorizes such Participant to retain counsel of his choice at the expense of the Company
to represent such Participant in connection with the initiation or defense of any litigation or other legal action, whether by or against
the Company or any director, officer, shareholder, other person or entity affiliated with the Company or any successor corporation or
affiliate of a successor corporation thereto in any jurisdiction. The Participant shall be entitled to the benefits described under this
Section 10.16 during the period commencing on the effective date of the Agreement and ending on his death. The benefits provided
during a calendar year shall not affect the benefits available in any other calendar year. The benefits provided under this Section are
not subject to liquidation or exchange for another benefit.
10.17 Aggregation of Employers. If the Company is a member of a controlled group of corporations or a group of trades or business under
common control (as described in Code section 414(b) or (c), but substituting a 50% ownership level for the 80% level set forth in
those Code Sections), all members of the group shall be treated as a single employer for purposes of whether there has
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occurred a Separation from Service and for any other purposes under the Plan as Code section 409A shall require.
10.18 Aggregation of Plans. If the Company offers other non account balance deferred compensation plans in addition to the Agreement,
those plans together with this Agreement shall be treated as a single plan to the extent required under Code section 409A.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date and year indicated below.
“Company”
The Ryland Group, Inc., a Maryland corporation
By:
Robert J. Cunnion, III
Senior Vice President
Attest:
Timothy J. Geckle
Secretary
Date:
“Participant”
R. Chad Dreier
Date:
- 17 -
Exhibit 10.25

Senior Executive Supplemental Retirement Plan
Master Plan Document

Effective January 1, 2005

TABLE OF CONTENTS
Page
ARTICLE 1 Definitions 1
ARTICLE 2 Vesting 3
2.1 Vesting in Benefits 3
ARTICLE 3 Benefits 4
3.1 Eligibility for Benefits 4

3.2 Death Benefit 4
3.3 Lump Sum Payment and Change of Commencement Date 4
3.4 Committee Discretion 5
3.5 Withholding and Payroll Taxes 5
3.6 Transition Period 5
ARTICLE 4 Termination, Amendment or Modification of the Plan 5
4.1 Termination or Amendment 6

4.2 Termination of Agreement 6
ARTICLE 5 Other Benefits and Agreements 6
5.1 Coordination with Other Benefits 6
ARTICLE 6 Administration of this Plan 6
6.1 Committee Duties 6

6.2 Administration Upon Change in Control 7
6.3 Agents 7
6.4 Binding Effect of Decisions 7
6.5 Indemnity of Committee 7
6.6 Company Information 8
ARTICLE 7 Claims Procedures 8
7.1 Presentation of Claim 8

7.2 Notification of Decision 8
7.3 Review of a Denied Claim 9
7.4 Decision on Review 9
7.5 Legal Action 9
7.6 Named Fiduciary
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ARTICLE 8 Beneficiary Designation 10
8.1 Beneficiary 10
8.2 Beneficiary Designation; Change; Spousal Consent 10
8.3 Acknowledgement 10
8.4 No Beneficiary Designation 10
8.5 Doubt as to Beneficiary 10
8.6 Discharge of Obligations 10
ARTICLE 9 Trust 11
9.1 Establishment of the Trust 11

9.2 Interrelationship of the Plan and the Trust 11
9.3 Deposits 11
ARTICLE 10 Miscellaneous 11
10.1 Status of Plan 11

10.2 Unsecured General Creditor 11
10.3 Company’s Liability 12
10.4 Nonassignability 12
10.5 Furnishing Information 12
10.6 Terms 12
10.7 Captions 12
10.8 Governing Law 12
10.9 Validity 12
10.10 Notice 12
10.11 Successors 13
10.12 Spouse’s Interest 13
10.13 Incompetent 13
10.14 Court Order 13
10.15 Distribution in the Event of Taxation 13
10.16 Legal Fees To Enforce Rights After Change in Control 13
10.17 Aggregation of Employers 13
10.18 Aggregation of Plans 13
10.19 USERRA 19
- iii -


SENIOR EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
Amendment and Restatement Effective January 1, 2005
The purpose of this Plan is to provide specified benefits to a select group of management and highly compensated employees who
contribute materially to the continued growth, development and future business success of the Company. This Plan shall be unfunded for tax
purposes and for purposes of Title I of ERISA. The Plan is intended to comply with the requirements of section 409A of the Code, as added by
the American Jobs Creation Act of 2004, and the Treasury regulations or any other authoritative guidance issued thereunder.
ARTICLE 1
Definitions
For purposes hereof, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following
indicated meanings:
1.1 “Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated, in accordance with Article 8, that are
entitled to receive the Participant’s benefits under this Plan upon the Participant’s death.
1.2 “Beneficiary Designation Form” shall mean the form established from time to time by the Committee that the Participant completes,
signs and returns to the Committee to designate a Beneficiary.
1.3 “Change in Control” shall mean the first to occur of any of the following events:
(a) The acquisition by any person, other than the Company or any employee benefit plan of the Company, of beneficial
ownership of 20% or more of the combined voting power of the Company’s then outstanding voting securities;
(b) The first purchase under a tender offer or exchange offer, other than an offer by the Company or any employee benefit plans
of the Company, pursuant to which shares of common stock have been purchased;
(c) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of
Directors of the Company cease for any reason to constitute at least a majority thereof, unless the election or nomination for
the election by stockholders of the Company of each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such period; or
(d) Approval by stockholders of the Company of a merger, consolidation, liquidation or dissolution of the Company, or the sale
of all or substantially all of the assets of the Company.
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1.4 “Claimant” shall have the meaning set forth in Section 7.1.
1.5 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
1.6 “Committee” shall mean the committee described in Article 6.
1.7 “Company” shall mean The Ryland Group, Inc., a Maryland corporation.
1.8 “Compensation Committee” shall mean the Compensation Committee of the Board of Directors of the Company.
1.9 “Death Benefit” shall mean a benefit described in Section 3.2(c).
1.10 “Effective Date” shall mean the effective date of the amendment and restatement of the Plan, which is January 1, 2005. The original
effective date of the Plan was July 1, 2003.
1.11 “Election Form” shall mean the form upon which the Participant elects the manner of distribution of his or her Vested SERP Benefit
and/or Death Benefit, and shall be made in such form as the Committee may require.
1.12 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
1.13 “Initial Participants” are Mark L. Beisswanger, Robert J. Cunnion, III, Eric E. Elder, David L. Fristoe, John M. Garrity, Timothy J.
Geckle, Cathey S. Lowe, Gordon A. Milne, Daniel G. Schreiner and Kipling W. Scott.
1.14 “Involuntary Termination of Employment Without Cause” shall mean an involuntary termination of the Participant’s employment with
the Company other than by reason of the Participant’s (i) willful and continued failure to perform the material duties of his or her
position after receiving notice of such failure and being given reasonable opportunity to cure such failure; (ii) willful misconduct
which is demonstrably and materially injurious to the Company; or (iii) conviction of a felony. No act or failure to act on the part of
the Participant shall be considered “willful” unless it is done or omitted to be done in bad faith or without reasonable belief that the
action or omission was in the best interest of the Company.
1.15 “Lump Sum” shall mean the present value equivalent of a Participant’s remaining unpaid Vested SERP Benefit or Death Benefit, as the
case may be, using an 8% discount rate.
1.16 “Participant” shall mean any Employee (i) who is selected to participate in the Plan, (ii) who signs an Election Form and a Beneficiary
Designation Form, and (iii) whose participation in the Plan has not terminated. As of the original effective date of the Plan, the
Participants are the Initial Participants. A spouse or former spouse of a Participant, as such, shall not be treated as a Participant in the
Plan or have a SERP Benefit under the Plan, even if he or she has an interest in the Participant’s benefits under the Plan as a
beneficiary, or as a result of applicable law or property settlements resulting from legal separation or divorce.
1.17 “Plan” shall mean the Company’s Senior Executive Supplemental Retirement Plan, which shall be evidenced by this instrument, as it
may be amended from time to time.
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1.18 “SERP Benefit” shall mean a benefit described in Section 3.1(c).
1.19 “Separation from Service” shall mean the Participant’s “separation from service” within the meaning of Code section 409A, treating as
a Separation from Service an anticipated permanent reduction in the level of bona fide services to be performed by the Participant to
20% or less of the average level of bona fide services performed by the Participant over the immediately preceding 36 month period
(or the full period during which the Participant performed services for the Company, if that is less than 36 months). Separation from
Service includes a termination of employment, which shall mean the severing of employment with the Company, voluntarily or
involuntarily, for any reason.
1.20 “Trust” shall mean the trust established pursuant to that certain Master Trust Agreement, dated as of November 1, 2002, between the
Company and the trustee named therein, as amended from time to time.
1.21 “Vested SERP Benefit” shall mean a benefit described in Section 3.1(c).
ARTICLE 2
Vesting
2.1 Vesting in Benefits.
(a) General. The Participant shall vest in his or her SERP Benefit according to the following vesting schedule, provided that he
or she is continuously employed with the Company from his or her commencement of participation in the Plan (which for
Initial Participants is July 1, 2003) through the specified date of vesting:
Anniversary of Plan
Participation Vesting Percentage
1st Year 20%
2nd Year 40%
3rd Year 60%
4th Year 80%
5th Year 100%
(b) Special. For the Initial Participants in the Plan, the “Anniversary of Plan Participation” shall be determined using a Plan
Participation date of July 1, 2003 such that the Anniversary of Plan Participation for “1st Year” is July 1, 2004, for “2nd Year”
is July 1, 2005, for “3rd Year” is July 1, 2006, for “4th Year” is July 1, 2007 and for “5th Year” is July 1, 2008. Notwithstanding
anything to the contrary in this Section 2.1, the Participant shall immediately become 100% vested (if he or she is not already
vested in accordance with the above vesting schedule) in his or her SERP Benefit upon the occurrence of a Change in
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Control or if he or she experiences an Involuntary Termination of Employment Without Cause.
ARTICLE 3
Benefits
3.1 Eligibility for Benefits.
(a) SERP Benefit. The Participant shall be eligible to receive his or her Vested SERP Benefit starting on the date specified
below.
(b) Commencement of SERP Benefit. The payment of the Participant’s Vested SERP Benefit shall commence on the later of the
Participant’s Separation from Service or the January 1 following the Participant’s 60th birthday. All distributions upon
Separation from Service shall be made or shall commence on the date that is six months following the date of Separation from
Service (or within 30 days thereafter). All distributions upon a January 1 payment date shall commence within 60 days after
the January 1 date.
(c) SERP Benefit Amount. Unless the Participant elects otherwise pursuant to Section 3.3, a Participant’s “SERP Benefit” is a
benefit in the form of 15 annual payments in the amount of $150,000 each. A Participant’s “Vested SERP Benefit” is the
benefit specified in the preceding sentence multiplied for each payment by the applicable vesting percentage set forth in
Article 2 of this Plan.
3.2 Death Benefit.
(a) Death Benefit. In the event that the Participant dies before his or her Vested SERP Benefit has been paid in full, the
Participant’s Beneficiary shall receive a Death Benefit.
(b) Commencement of Death Benefit. Unless the Participant elects otherwise pursuant to Section 3.3, the Death Benefit shall be
paid to the Participant’s Beneficiary in a single lump sum payment. The Death Benefit payment shall be made or commence
no later than sixty (60) days after the date on which the Participant would have otherwise received his or her SERP payment
(or the next SERP Benefit payment, if payments to the Participant have commenced) had he or she lived.
(c) Death Benefit Amount. The “Death Benefit” paid to a Participant’s beneficiary as a result of the Participant’s death shall be
a benefit in the amount of the Participant’s remaining unpaid Vested SERP Benefit.
3.3 Change of Commencement Date or Form of Payment. At the time the Participant initially is eligible to participate in the Plan (or as
otherwise permitted by Code section 409A), the Participant may elect on an Election Form to have his or her Vested SERP Benefit and
Death Benefit paid in a Lump Sum or in annual payments (i.e., 15 annual payments or the remaining number of annual payments the
Participant would have otherwise received had he or she lived),
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and also may elect to have his or her Vested SERP Benefit paid on a later January 1 payment date, which date may be no later than the
January 1 following the Participant’s 65th birthday.
Subsequent to any initial election, the Participant may change the payment commencement day or the form of benefit payment (i.e.,
lump sum or 15 annual payments) by submitting a new Election Form to the Committee, provided that any such Election Form is
submitted to and accepted by the Committee in its sole discretion at least one (1) year prior to the date on which the payment of the
applicable benefit would have commenced without the new election and the payment commencement date is delayed for at least five
(5) full calendar years. Any election to change the time or form of payment under this paragraph shall not take effect until twelve (12)
months after the date on which the election is made. The Election Form most recently accepted by the Committee in accordance with
the rules described above shall govern the payout of the Participant’s Vested SERP Benefit and Death Benefit. If a Participant’s
election to change the commencement date of benefit payments or the form of benefit payments is not timely submitted, then such
change election shall be deemed void. Notwithstanding anything in the Plan to the contrary, no change submitted on a Participant
Election Form shall be accepted by the Committee, and the Committee shall deny any change made on a Participant Election Form, if
the Committee determines that the change violates the requirements under Code section 409A.
3.4 Committee Discretion. The Committee, in its discretion (without any direct or indirect election on the part of any Participant), may
accelerate distributions under the Plan to the extent permitted under Code section 409A (e.g., Treas. Reg. 1.409A-3(j)(4)), including,
but not limited to, payments necessary to comply with a domestic relations order, payments necessary to comply with certain conflict
of interest rules, and certain de minimis payments related to the Participant’s termination of his or her interest in the plan. A
distribution date may not be accelerated except as permitted by Code section 409A.
3.5 Withholding and Payroll Taxes. The Company shall withhold from any and all benefits made under this Article 3, all federal, state
and local income, employment and other taxes required to be withheld by the Company in connection with the benefits hereunder, in
amounts to be determined in the sole discretion of the Company.
3.6 Transition Period. Notwithstanding anything in the Plan to the contrary, to the extent permitted under Code section 409A and by the
Company, the Participant may elect the form and timing of payment of his or her Vested SERP Benefit or Death Benefit during 2008
(except that a Participant cannot change payment elections with respect to payments that the Participant would otherwise receive in
2008, or make an election that causes payments scheduled for subsequent years to be made in 2008), and such election shall not be
treated as a change in the form and timing of payment or an acceleration of payment.
ARTICLE 4
Termination, Amendment or Modification of the Plan
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4.1 Termination or Amendment. This Plan may be amended or terminated only by a written agreement executed by both the Company
and all of the current Participants. Notwithstanding the preceding, the Plan may be amended by the Company at any time,
retroactively if required in the opinion of the Company, in order to ensure that the Plan is characterized as a “top-hat” plan as
described under ERISA Sections 201(2), 301(a)(3), and 401(a)(1) to conform with the Plan to the requirements of Code Section 409A,
and to conform the Plan to the provisions and requirements of any applicable law (including ERISA and the Code). No such
amendment shall be considered prejudicial to any interest of a Participant or a Beneficiary hereunder. Upon a termination of the Plan
pursuant to this Section 4.1, Vested SERP Benefits shall be paid to Participants in accordance with Article 3. Notwithstanding the
preceding, the Company, in its discretion, reserves the right, by action of the Board, to terminate the Plan and distribute to
Participants their Vested SERP Benefit as permitted in accordance with the Code (e.g., Treas. Reg. 1.409A-3(j)(4)(ix)).
4.2 Termination of Agreement. Unless otherwise modified pursuant to Section 4.1 above, this Plan shall terminate upon the full payment
to all Participants of all Participants’ Vested SERP Benefits or Death Benefits in accordance with Article 3.
ARTICLE 5
Other Benefits and Agreements
5.1 Coordination with Other Benefits. The benefits provided for the Participant under this Plan are in addition to any other benefits
available to such Participant under any other plan or program for employees of the Company. This Plan shall supplement and shall
not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.
ARTICLE 6
Administration of the Plan
6.1 Committee Duties. This Plan shall be administered by a Committee, which shall consist of the Compensation Committee, or such
committee as the Compensation Committee shall appoint. The Committee shall have the discretion and authority to (i) make, amend,
interpret and enforce all appropriate rules and regulations for the administration of this Plan, (ii) make benefit entitlement
determinations, and (iii) decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with
the Plan.
6.2 Administration Upon Change in Control. For purposes of this Plan, the Committee shall be the “Administrator” at all times prior to
the occurrence of a Change in Control. Upon and after the occurrence of a Change in Control, the “Administrator” shall be an
independent third party selected by the Compensation Committee of the Board of Directors of the Company, as such Compensation
Committee was constituted prior to the Change in Control. The Administrator shall have the discretionary power to determine all
questions arising in connection with the
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administration of the Plan and the interpretation of the Plan and Trust including, but not limited to benefit entitlement determinations;
provided, however, upon and after the occurrence of a Change in Control, the Administrator shall have no power to direct the
investment of Trust assets or select any investment manager or custodial firm for the Trust. Upon and after the occurrence of a
Change in Control, the Company must: (1) pay all reasonable administrative expenses and fees of the Administrator; (2) indemnify the
Administrator against any costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in
connection with the performance of the Administrator hereunder, except with respect to matters resulting from the gross negligence
or willful misconduct of the Administrator or its employees or agents; and (3) supply full and timely information to the Administrator
on all matters relating to the Plan, the Trust, the Participant and his or her Beneficiaries, the Participant’s benefits under this Plan, the
date and circumstances of the Participant’s termination of employment or death, and such other pertinent information as the
Administrator may reasonably require. Upon and after a Change in Control, the Administrator may be terminated (and a replacement
appointed) only with the approval of the Compensation Committee of the Board of Directors of the Company, as such Compensation
Committee was constituted prior to a Change in Control. Upon and after a Change in Control, the Administrator may not be
terminated by the Company. If the Administrator resigns or is removed and no successor is appointed and approved by the
Compensation Committee of the Board of Directors of the Company, as such Compensation Committee was constituted prior to a
Change in Control, the Participant may apply to a court of competent jurisdiction for appointment of a successor third-party
administrator.
6.3 Agents. In the administration of this Plan, the Committee may employ agents and delegate to them such administrative duties as it
sees fit, (including acting through a duly appointed representative), and may from time to time consult with counsel who may be
counsel to the Company.
6.4 Binding Effect of Decisions. The decision or action of the Committee with respect to any question arising out of or in connection
with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final
and conclusive and binding upon all persons having any interest in the Plan.
6.5 Indemnity of Committee. The Company shall indemnify and hold harmless the members of the Committee against any and all claims,
losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful
misconduct by the Committee or any of its members.
6.6 Company Information. To enable the Committee to perform its functions, the Company shall supply full and timely information to the
Committee on all matters relating to the compensation of the Participant, the date and circumstances of the Participant’s termination
of employment or death, and such other pertinent information as the Committee may reasonably require.
ARTICLE 7
Claims Procedures
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7.1 Presentation of Claim. The Participant or his or her Beneficiary (such Participant or Beneficiary being referred to below as a
“Claimant”) may deliver to the Committee a written claim for a determination with respect to the amounts distributable to such
Claimant pursuant to this Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made
within sixty (60) days after such notice was received by the Claimant. All other claims must be made within 180 days of the date on
which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the
Claimant.
7.2 Notification of Decision. The Committee shall consider a Claimant’s claim within a reasonable time, but no later than ninety (90) days
after receiving the claim. If the Committee determines that special circumstances require an extension of time for processing the claim,
written notice of the extension shall be furnished to the Claimant prior to the termination of the initial ninety (90) day period. In no
event shall such extension exceed a period of ninety (90) days from the end of the initial period. The extension notice shall indicate
the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit
determination. The Committee shall notify the Claimant in writing:
(a) that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and
such notice must set forth in a manner calculated to be understood by the Claimant:
(i) the specific reason(s) for the denial of the claim, or any part of it;
(ii) specific reference(s) to pertinent provisions of the Plan upon which such denial was based;
(iii) a description of any additional material or information necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is necessary;
(iv) an explanation of the claim review procedure set forth in Section 7.3 below; and
(v) a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit
determination on review.
7.3 Review of a Denied Claim. On or before sixty (60) days after receiving a notice from the Committee that a claim has been denied, in
whole or in part, a Claimant (or the Claimant’s duly authorized representative) may file with the Committee a written request for a
review of the denial of the claim. The Claimant (or the Claimant’s duly authorized representative):
(a) may, upon request and free of charge, have reasonable access to, and copies of, all documents, records and other
information relevant to the claim for benefits;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion, may grant.
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7.4 Decision on Review. The Committee shall render its decision on review promptly, and no later than sixty (60) days after the Committee
receives the Claimant’s written request for a review of the denial of the claim. If the Committee determines that special circumstances
require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the
termination of the initial sixty (60) day period. In no event shall such extension exceed a period of sixty (60) days from the end of the
initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the
Committee expects to render the benefit determination. In rendering its decision, the Committee shall take into account all comments,
documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information
was submitted or considered in the initial benefit determination. The decision must be written in a manner calculated to be
understood by the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which the decision was based;
(c) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of, all
documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for
benefits; and
(d) a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).
7.5 Legal Action. A Claimant’s compliance with the foregoing provisions of this Article 7 is a mandatory prerequisite to a Claimant’s
right to commence any legal action with respect to any claim for benefits under this Plan.
7.6 Named Fiduciary. The Committee shall be the named fiduciary, within the meaning of ERISA, with respect to this Plan solely for
purposes of this Article 7.
ARTICLE 8
Beneficiary Designation
8.1 Beneficiary. The Participant shall have the right, at any time, to designate his or her Beneficiary(ies) (both primary as well as
contingent) to receive any benefits payable under the Plan to a beneficiary upon the Participant’s death. The Beneficiary designated
under this Plan may be the same as or different from the Beneficiary designation under any other plan of the Company in which the
Participant participates.
8.2 Beneficiary Designation; Change; Spousal Consent. The Participant shall designate his or her Beneficiary by completing and
signing the Beneficiary Designation Form, and returning it to the Committee or its designated agent. The Participant shall have the
right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation
Form and the Committee’s rules and procedures, as in effect from time to time. If the Participant names someone other than his or her
spouse as a Beneficiary and if the Committee requires that spousal consent be obtained with respect to the Participant, a spousal
consent, in the form designated by the
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Committee, must be signed by the Participant’s spouse and returned to the Committee. Upon the acceptance by the Committee of a
new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Committee shall be entitled to
rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Committee prior to his or her death.
8.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted and
acknowledged in writing by the Committee or its designated agent.
8.4 No Beneficiary Designation. If the Participant fails to designate a Beneficiary as provided in Sections 8.2 and 8.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, then the
Participant’s spouse shall be the designated Beneficiary. If the Participant has no surviving spouse, the benefits remaining under the
Plan shall be payable to the executor or personal representative of the Participant’s estate.
8.5 Doubt as to Beneficiary. If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the
Committee shall have the right, exercisable in its discretion, to distribute such payment to the Participant’s estate without liability for
any tax or other consequences which might flow therefrom, or may take such other action as the Company deems to be appropriate.
Any claim for benefits by a Beneficiary must be made in accordance with Treas. Reg. 1.409A-3(g) or any other applicable guidance
under Code section 409A.
8.6 Discharge of Obligations. The payment of benefits under this Plan to a Beneficiary shall fully and completely discharge the
Company and the Committee from all further obligations under this Plan with respect to the Participant, and this Plan shall terminate
upon such full payment of benefits.
ARTICLE 9
Trust
9.1 Establishment of the Trust. The Company shall establish the Trust. In order to provide the cash payments needed to fulfill the
obligations to Participants under the Plan, the Company shall at least annually transfer over to the Trust the amount of cash or other
property, including securities, to provide for all anticipated benefit payments under the Plan. In the event of a Change in Control, the
Company shall immediately transfer over to the Trust the amount of cash needed to provide for all benefit payments required under
Articles 2 and 3 for all Participants, including in connection with Section 2.1(b).
9.2 Interrelationship of the Plan and the Trust. The provisions of this Plan shall govern the rights of the Participant to receive
distributions. The provisions of the Trust shall govern the rights of the Company, the Participant and the creditors of the Company
to the assets transferred to the Trust. The Company shall at all times remain liable to carry out its obligations under the Plan. The
Company’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such
distribution shall reduce the Company’s obligations under this Plan.
9.3 Deposit. The Company shall deposit into the Trust an amount of cash or other assets, including securities, equal to all anticipated
benefits and payments under the Plan. Immediately upon a
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Change in Control, the Company shall deposit into the Trust the amount of cash or other assets sufficient in amount to cause the
total value of cash or other assets in the Trust to equal the present value of all payments of all SERP Benefits to all Participants under
Articles 2 and 3, including Section 2.1(b), using an 8% discount rate.
ARTICLE 10
Miscellaneous
10.1 Status of Plan. This Plan is intended to be a plan that is not qualified within the meaning of Code Section 401(a) and that is
“unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). This Plan shall
be administered and interpreted to the extent possible in a manner consistent with that intent.
10.2 Unsecured General Creditor. The Participant and his or her Beneficiaries, successors and assigns shall have no legal or equitable
rights, interests or claims in any property or assets of the Company. Any and all of the Company’s assets shall be, and remain, the
general, unpledged unrestricted assets of the Company.
10.3 Company’s Liability. The Company’s liability for the payment of benefits shall be defined only by this Plan.
10.4 Nonassignability. Neither the Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt, the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be, unassignable and non-
transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by the Participant or any other person, nor be transferable by operation
of law in the event of the Participant’s or any other person’s bankruptcy or insolvency.
10.5 Furnishing Information. The Participant or his or her Beneficiary will cooperate with the Committee by furnishing any and all
information requested by the Committee and take such other actions as may be requested in order to facilitate the administration of
this Plan and the payments of benefits hereunder, including but not limited to taking such physical examinations as the Committee
may deem necessary.
10.6 Terms. Whenever any words are used herein in the masculine, they shall be construed as though they were in the feminine in all
cases where they would so apply; and wherever any words are used herein in the singular or in the plural, they shall be construed as
though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.
10.7 Captions. The captions of the articles, sections and paragraphs of this Plan are for convenience only and shall not control or affect
the meaning or construction of any of its provisions.
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10.8 Governing Law. Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the internal laws of the
State of Maryland without regard to its conflict of laws principles.
10.9 Validity. In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted
herein; except to the extent that Code section 409A requires that this Section be disregarded because it purports to nullify Plan terms
that are not in compliance with Code section 409A.
10.10 Notice. Any notice or filing required or permitted to be given to the Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address below:
Senior Vice President, Human Resources

24025 Park Sorrento
Suite 400
Calabasas, California 91302
Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on
the receipt for registration or certification.
Any notice or filing required or permitted to be given to the Participant under this Plan shall be sufficient if in writing and hand-
delivered, or sent by mail, to the last known address of the Participant.
10.11 Successors. The provisions of this Plan shall bind and inure to the benefit of the Company and its successors and assigns and the
Participant and his or her Beneficiary.
10.12 Spouse’s Interest. The interest in the benefits hereunder of a spouse of the Participant who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such
spouse’s will, nor shall such interest pass under the laws of intestate succession.
10.13 Incompetent. If the Committee determines in its discretion that a benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of that person’s property, the Committee may direct payment of
such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable
person. The Committee may require proof of minority, incompetency, incapacity or guardianship, as it may deem appropriate prior to
distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the Participant’s
Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.
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10.14 Court Order. The Committee is authorized to make any payments directed by court order in any action in which the Committee has
been named as a party. However, payments may be accelerated only to the extent permitted under Treas. Reg. 1.409A-3(j)(4).
10.15 Distribution in the Event of Taxation. If, for any reason, all or any portion of the Participant’s benefit under this Plan becomes taxable
to the Participant prior to receipt, the Company shall distribute to the Participant immediately available funds in an amount equal to
the taxable portion of his or her benefit (which amount shall not exceed the Participant’s unpaid Vested SERP Benefit under the Plan).
Such a distribution shall affect and reduce the benefits to be paid under this Plan. Notwithstanding the foregoing, a distribution of
the Participant’s Vested SERP Benefit under this Section shall be made only if permitted by Treas. Reg. 1.409A-3(j)(4).
10.16 Legal Fees To Enforce Rights After Change in Control. The Company is aware that upon the occurrence of a Change in Control, the
Board of Directors of the Company (which might then be composed of new members) or a shareholder of the Company or of any
successor corporation or affiliate of a successor corporation might then cause or attempt to cause the Company or such successor to
refuse to comply with its obligations under the Plan and might cause or attempt to cause the Company to institute, or may institute,
litigation seeking to deny the Participant the benefits intended under the Plan. In these circumstances, the purpose of the Plan could
be frustrated. Accordingly, if, following a Change in Control, it should appear to the Participant that the Company or any successor
corporation has failed to comply with any of its obligations under the Plan or any agreement thereunder or, if the Company or any
other person takes any action to declare the Plan void or unenforceable or institutes any action, litigation or legal action designed to
deny, diminish or to recover from the Participant the benefits intended to be provided, then the Company irrevocably authorizes such
Participant to retain counsel of his or her choice at the expense of the Company to represent such Participant in connection with the
initiation or defense of any action, litigation or legal action, whether by or against the Company or any director, officer, shareholder,
other person or entity affiliated with the Company or any successor corporation or affiliate of a successor corporation thereto in any
jurisdiction. A Participant shall be entitled to the benefits described under this Section 10.16 during the period commencing on the
original effective date of the Plan and ending on his or her death. The benefits provided during a calendar year shall not affect the
benefits available in any other calendar year. The benefits provided under this Section are not subject to liquidation or exchange for
another benefit.
10.17 Aggregation of Employers. If the Company is a member of a controlled group of corporations or a group of trades or business under
common control (as described in Code section 414(b) or (c), but substituting a 50% ownership level for the 80% level set forth in
those Code Sections), all members of the group shall be treated as a single employer for purposes of whether there has occurred a
Separation from Service and for any other purposes under the Plan as Code section 409A shall require.
10.18 Aggregation of Plans. If the Company offers other non account balance deferred compensation plans in addition to the Plan, those
plans together with this Plan shall be treated as a single plan to the extent required under Code section 409A.
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10.19 USERRA. Notwithstanding anything herein to the contrary, any distribution election provided to a Participant as necessary to
satisfy the requirements of the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended, shall be
permissible hereunder.
IN WITNESS WHEREOF, the parties have executed this Amended and Restated Plan effective as of January 1, 2005.
“Company”
The Ryland Group, Inc., a Maryland corporation
By:
R. Chad Dreier
Chairman, President and Chief Executive Officer
Attest:
Timothy J. Geckle
Senior Vice President, General Counsel/Secretary
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Exhibit 10.27
AMENDMENT NO. 1
TO
SENIOR EXECUTIVE SEVERANCE AGREEMENT.
The Ryland Group, Inc. (the “Company”) and (the “Executive”) wish to amend the Severance Agreement originally
dated as of to comply with the final Regulations issued under Internal Revenue Code section 409A.
Accordingly, the Agreement is amended as follows, effective [enter original effective date of Agreement, if after 1/1/05]:
1. Section 1.1 is amended by replacing the phrase “On or before the Executive’s last day of employment with the Corporation” with the
phrase “On the date of the Executive’s Separation from Service with the Corporation” in both places where it appears.
“1.2 Accelerated Vesting. All rights, awards and benefits of the Executive provided pursuant to the TRG Incentive Plan and any
other incentive or bonus plans of the Corporation in which the Executive participates prior to the Change of Control shall
immediately vest in full and the Executive shall receive a distribution of the amount of these rights, awards and in
accordance with the applicable benefit, document or plan.”
“1.3 Insurance and Other Special Benefits. The Executive’s participation in the life, medical, dental, vision, AD&D, prescription
drug, long-term disability and executive medical reimbursement programs provided to the Executive prior to the Change of
Control (collectively, the “Benefits”) shall be continued or equivalent benefits provided by the Corporation or any
successor corporation or affiliate of such successor corporation (the “Responsible Corporation”), at the Responsible
Corporation’s expense, for a period of two (2) years from the date of the Executive’s Separation from Service. Additionally,
on the date of Separation from Service, the Responsible Corporation shall pay to the Executive a lump sum cash payment
equal to the value of coverage under the Company’s executive life insurance program, personal health services allowance
and health club benefit program for a period of two years. Notwithstanding anything herein to the contrary, in no event
shall the aggregate present value of the Benefits and single lump sum cash payment to be provided under this Section 1.3,
as determined as of the date of the Executive’s Separation from Service in the discretion of the Responsible Corporation
applying reasonable assumptions, exceed an amount (the “Benefits Threshold”) equal to ninety-nine hundredths (0.99)
times the highest Annual Compensation (as hereinafter defined) for any of the three (3) calendar
1
years immediately preceding the date of Separation from Service. In the event that the aggregate present value of the
Benefits and single lump sum cash payment to be provided under this Section 1.3 would, but for the preceding sentence,
exceed the Benefits Threshold, the Benefits and single lump sum cash payment shall be reduced or forgone to comply with
the limitation set forth in the preceding sentence by first reducing the single lump sum cash payment and then reducing the
Benefits provided.”
4. The first sentence of Section 1.4 is amended by adding the word “reasonable” before the phrase “expenses incurred in that
relocation”.
“1.5 Stock Rights. All stock options, stock appreciation rights, stock purchase rights, restricted stock, restricted stock units,
performance shares, performance units, and any similar rights which the Executive holds shall become fully vested and, to
the extent permitted by, or exempt from, Code section 409A, exercisable on the date of Separation from Service.”
6. The first sentence of Section 1.6 is amended by adding the word “reasonable” before the phrase “outplacement services obtained by
the Executive”.
7. Section 1.7(iii) is amended in its entirety, as follows:
“(iii) A “Separation from Service” shall take place in the event that the Executive’s employment is terminated (a) by the
Corporation without Cause (as hereinafter defined) or (b) by the Executive with Good Reason (as hereinafter defined). The
Executive’s employment is terminated as of the date the Corporation and the Executive reasonably anticipate that no further
services will be performed or that the level of bona fide services the Executive will perform will permanently decrease to no
more than 20% of the average level of bona fide services performed over the immediately preceding 36-month period (or the
full period of services to the Corporation if the Executive has been providing services to the Corporation for less than 36
months).”
8. The phrase “Termination of Employment” shall be replaced with the phrase “Separation from Service” in each place where it appears
in the Agreement.
9. Section 1.8 is amended by adding the following language to the end of that Section:
“Any payment under this Section shall be made to the Executive by the end of the calendar year following the calendar year in which
the Executive remits the related taxes.”
2
commencing on the date of Separation from Service and ending on death. Any reimbursement of fees and expenses under this
and expenses eligible for reimbursement during a year shall not affect the expenses eligible for reimbursement in any other year.”
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.
By:
R. Chad Dreier, Chairman [Executive]
and Chief Executive Officer
Attest:
Timothy J. Geckle,
Secretary
Exhibit 10.29
AMENDMENT NO. 1
TO
SENIOR EXECUTIVE SEVERANCE AGREEMENT.
The Ryland Group, Inc. (the “Company”) and (the “Executive”) wish to amend the Severance Agreement originally
dated as of to comply with the final Regulations issued under Internal Revenue Code section 409A.
Accordingly, the Agreement is amended as follows, effective January 1, 2005:
“1.1 Lump Sum Cash Payment. On the date of the Executive’s Separation from Service with the Corporation or any successor
corporation, the Corporation or any successor corporation will pay the Executive an amount equal to the Executive’s unpaid,
annualized base salary for the remainder of the year in which the Separation from Service occurs and a pro rata bonus
through the date of Separation from Service. Also, on the date of the Executive’s Separation from Service with the
Corporation or any successor corporation, the Corporation or any successor corporation will pay the Executive a lump sum
cash payment equal to two (2) times the highest Annual Compensation (as hereinafter defined) for any of the three
(3) calendar years immediately preceding the date of Separation from Service. For purposes of this Section 1.1, the pro-rata
bonus shall be an amount equal to the highest bonus earned by the Executive within the three (3) calendar years immediately
preceding the date of Separation from Service, pro rated for the period served during the year in which the Separation from
Service occurs. Notwithstanding the preceding, should the payment made to the Executive in accordance with this
Section be determined to be a payment from a nonqualified deferred compensation plan, as defined by section 409A of the
Internal Revenue Code of 1986 as amended (the “Code”) (e.g., payments for termination for Good Reason), this payments
will be made on the date that is six months after the date of the Executive’s Separation from Service.”
“1.2 Accelerated Vesting. All rights, awards and benefits of the Executive provided pursuant to this Agreement, the TRG
Incentive Plan, any deferred compensation plans (including the Executive and Director Deferred Compensation Plan and any
successor or replacement plans) and any incentive, bonus, stock option, equity incentive, restricted stock, insurance or split
dollar insurance program, relocation equity program, or other benefit plans of the Corporation in which the Executive
participates prior to the Change of Control shall immediately vest in full and the Executive shall receive a distribution of the
amount of these rights, awards and benefits in accordance with the applicable benefit, document or plan.”
1
3. Section 1.3 is amended in its entirety. as follows:
“1.3 Insurance and Other Special Benefits. The Executive’s participation in the life, medical, dental, vision, AD&D, prescription
drug, long-term disability, and executive medical reimbursement program outlined in the Executive’s Compensation Program
prior to the Change of Control shall be continued or equivalent benefits provided by the Corporation or any successor
corporation or affiliate of such successor corporation (the “Responsible Corporation”), at no cost to the Executive, for a
period of two (2) years from the date of the Executive’s Separation from Service. Additionally, on the date of Separation
from Service, the Responsible Corporation shall pay to the Executive a lump sum cash payment equal to the value of
coverage under the Company’s supplemental early retirement plan, executive life insurance program, personal health
services allowance and health club benefit program for a period of two years. Notwithstanding the preceding, should the
payment made to the Executive in accordance with this Section be determined to be a payment from a nonqualified deferred
compensation plan, as defined by section 409A of the Code (e.g., payments for termination for Good Reason), this payment
will be made on the date that is six months after the date of the Executive’s Separation from Service.”
4. The first sentence of Section 1.4 is amended by adding the word “reasonable” before the phrase “expenses incurred in that
relocation”.
5. Section 1.4 is further amended by adding the following language to the end of that Section:
“All reimbursements of relocation expenses under this Section shall be paid by the last day of the third calendar year following the
year in which the Executive has a Separation from Service. All reimbursements of taxes payable on the reimbursed amounts shall be
paid by the last day of the calendar year following the year in which the Executive remits the related tax payment.”
“1.5 Stock Rights. All stock options, stock appreciation rights, stock purchase rights, restricted stock rights and any similar
rights which the Executive holds shall become fully vested and, to the extent permitted by, or exempt from, Code section
409A, exercisable on the date of Separation from Service.”
1.6 Outplacement Assistance. The Executive shall be reimbursed by the Responsible Corporation for the costs of all reasonable
outplacement services obtained by the Executive within the two (2) year period after the date of the Executive’s Separation
from Service provided the total reimbursement shall be limited to an
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amount equal to twenty-five percent (25%) of the Executive’s Annual Compensation for the calendar year immediately
preceding the date of the Executive’s Separation from Service. Alternatively, the Executive may elect, by December 31, 2008,
to receive a cash payment equal to ten percent (10%) of the Executive’s Annual Compensation for the calendar year
immediately preceding the date of the Executive’s Separation from Service in lieu of the foregoing reimbursement.
All reimbursements of outplacement services expenses under this Section shall be paid by the last day of the third calendar
year following the year in which the Executive has a Separation from Service.
Any cash payment under this Section shall be made on (or within 30 days after) the date of Separation from Service.
Notwithstanding the preceding, should the payment made to the Executive in accordance with this Section (if any) be
determined to be a payment from a nonqualified deferred compensation plan, as defined by section 409A of the Code (e.g.,
payments for termination for Good Reason), this payment will be made on the date that is six months after the date of the
Executive’s Separation from Service.”
8. Section 1.7(iii) is amended in its entirety, as follows:
“(iii) A “Separation from Service” shall take place in the event that the Executive’s employment is terminated (a) by the
Corporation without Cause (as hereinafter defined) or (b) by the Executive with Good Reason (as hereinafter defined). The
Executive’s employment is terminated as of the date the Corporation and the Executive reasonably anticipate that no further
services will be performed or that the level of bona fide services the Executive will perform will permanently decrease to no
more than 20% of the average level of bona fide services performed over the immediately preceding 36-month period (or the
full period of services to the Corporation if the Executive has been providing services to the Corporation for less than 36
months).”
9. The phrase “Termination of Employment” shall be replaced with the phrase “Separation from Service” in each place where it appears
in the Agreement.
“Any payment under this Section shall be made to the Executive by the end of the calendar year following the calendar year in which
the Executive remits the related taxes.”
commencing on the date of Separation from Service
3
and ending on death. Any reimbursement of fees and expenses under this Section shall be made on or before the last day of the year
following the year in which the expense is incurred. The amount of fees and expenses eligible for reimbursement during a year shall
not affect the expenses eligible for reimbursement in any other year.”
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.
By:
R. Chad Dreier, Chairman [Executive]
and Chief Executive Officer
Attest:
Timothy J. Geckle,
Secretary
Exhibit 10.30

EXECUTIVE AND DIRECTOR
DEFERRED COMPENSATION PLAN II
Effective as of January 1, 2005


EXECUTIVE AND DIRECTOR DEFERRED COMPENSATION PLAN II
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
1.1 ACCOUNT 1
1.2 BENEFICIARY 1
1.3 CLAIMAINT 1
1.4 CODE 1
1.5 COMMITTEE 1
1.6 COMPANY 1
1.7 COMPENSATION 2
1.8 COMPENSATION DEFERRAL ACCOUNT 2
1.9 COMPENSATION DEFERRAL 2
1.10 DIRECTOR 2
1.11 DISPUTE 2
1.12 EFFECTIVE DATE 2
1.13 EMPLOYEE 2
1.14 EMPLOYER 2
1.15 EMPLOYER CONTRIBUTION CREDIT ACCOUNT 2
1.16 EMPLOYER CONTRIBUTION CREDITS 2
1.17 ERISA 2
1.18 MEASUREMENT FUNDS 2
1.19 PARTICIPANT 2
1.20 PARTICIPANT ELECTION FORM 3
1.21 PLAN 3
1.22 PLAN YEAR 3
1.23 SEPARATION FROM SERVICE 3
1.24 TRUST 3
1.25 TRUSTEE 3
1.26 VALUATION DATE 3
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.1 ELIGIBILITY 3
2.2 ENROLLMENT REQUIREMENTS 3
2.3 RE-EMPLOYMENT, ETC 4
2.4 CHANGE OF STATUS 4
i
ARTICLE 3
CONTRIBUTIONS AND CREDITS
3.1 EMPLOYER CONTRIBUTION CREDITS 4

3.2 PARTICIPANT COMPENSATION DEFERRALS 6
3.3 CONTRIBUTIONS TO THE TRUST 7
ARTICLE 4
ALLOCATION OF FUNDS
4.1 ALLOCATION OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS 7

4.2 ACCOUNTING FOR DISTRIBUTIONS 9
4.3 EXPENSES 9
ARTICLE 5
ENTITLEMENT TO BENEFITS
5.1 FIXED PAYMENT DATES; SEPARATION FROM SERVICE; DISABILITY; CHANGE IN CONTROL
5.2 UNFORESEEABLE EMERGENCY DISTRIBUTIONS 10
5.3 DEATH 11
5.4 TRUST 11
ARTICLE 6
DISTRIBUTION OF BENEFITS
6.1 AMOUNT 11
6.2 METHOD OF PAYMENT 11
6.3 DEATH BENEFITS 12
6.4 WITHHOLDING 12
6.5 EMPLOYER DISCRETION 13
6.6 PAYMENT OF BENEFITS 13
ARTICLE 7
BENEFICIARIES; PARTICIPANT DATA
7.1 DESIGNATION OF BENEFICIARIES 13

7.2 INFORMATION TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES; INABILITY TO LOCATE PARTICIPANTS OR
BENEFICIARIES 13
ARTICLE 8
ADMINISTRATION
8.1 ADMINISTRATIVE AUTHORITY 14

8.2 LITIGATION 15
8.3 CLAIMS PROCEDURE 15
ii
ARTICLE 9
AMENDMENT
9.1 RIGHT TO AMEND 18

9.2 AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN 18
ARTICLE 10
SUSPENSION OR TERMINATION OF THE PLAN
10.1 RIGHT TO SUSPEND PLAN 19

10.2 AUTOMATIC TERMINATION OF PLAN 19
10.3 TERMINATION AND LIQUIDATION OF THE PLAN 19
ARTICLE 11
THE TRUST
11.1 ESTABLISHMENT OF TRUST 19
ARTICLE 12
MISCELLANEOUS
12.1 LIMITATIONS ON LIABILITY OF EMPLOYER 20

12.2 CONSTRUCTION 20
12.3 SPENDTHRIFT PROVISION 20
12.4 LEAVE OF ABSENCE 20
12.5 LEGAL FEES 21
12.6 NONASSIGNABILITY 21
12.7 UNSECURED GENERAL CREDITOR 21
12.8 COURT ORDER 22
12.9 CODE SECTION 409A 22
12.10 UNVESTED ACCOUNT BALANCES UNDER PRIOR PLAN 22
12.11 AGGREGATION OF EMPLOYERS 22
12.12 AGGREGATION OF PLANS 22
12.13 USERRA 22
iii

EXECUTIVE AND DIRECTOR DEFERRED COMPENSATION PLAN II
RECITALS
The Ryland Group, Inc. Executive and Director Deferred Compensation Plan II (the “Plan”), is adopted by The Ryland Group, Inc.,
effective as of January 1, 2005. The Plan is maintained for the benefit of certain of the Employer’s executive employees and Directors.
The purpose of the Plan is to offer participants an opportunity to elect to defer the receipt of compensation in order to provide
deferred compensation benefits taxable pursuant to Code section 451, and to provide a deferred compensation vehicle to which the Employer
may credit certain amounts on behalf of participants. The Plan is intended to be a “top-hat” plan under sections 201(2), 301(a)(3) and
401(a)(1) of ERISA. The Plan is also intended to comply with the requirements of section 409A of the Code, as added by the American Jobs
Creation Act of 2004, and the Treasury regulations or any other authoritative guidance issued thereunder.
Accordingly, the following Plan is adopted.
ARTICLE 1
DEFINITIONS
1.1 ACCOUNT means the sum of the amounts credited to a Participant’s or Beneficiary’s Plan Employer Contribution Credit
Account and Compensation Deferral Account, including contribution credits and deemed income, gains and losses credited thereto, as such
accounts are defined in Article 3. A Participant’s or Beneficiary’s Account shall be determined as of the date of reference.
1.2 BENEFICIARY means any person or persons so designated in accordance with the provisions of Article 7.
1.3 CLAIMANT is defined in Section 8.3.
1.4 CODE means the Internal Revenue Code of 1986 and the regulations thereunder, as amended from time to time.
1.5 COMMITTEE shall mean the Committee chosen by the Company to oversee the administration of the Plan.
1.6 COMPANY means The Ryland Group, Inc. and its successors and assigns.
1
1.7 COMPENSATION means the annual cash compensation relating to services performed during any calendar year, whether or
not paid in such calendar year or included on the Federal Income Tax Form W-2 for such calendar year, excluding TRG Incentive Plan, Personal
Health and Services Allowance, Executive Health and Fitness, any discretionary bonus, fringe benefits, stock options, relocation expenses,
non-monetary awards and automobile and other allowances paid to a Participant for employment services rendered (whether or not such
allowances are included in the Participant’s gross income). Compensation shall be calculated before reduction for compensation voluntarily
deferred or contributed by the Participant pursuant to all qualified or non-qualified plans of any Employer and shall be calculated to include
amounts not otherwise included in the Participant’s gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans
established by any Employer; provided, however, that all such amounts will be included in compensation only to the extent that had there
been no such plan, the amount would have been payable in cash to the Employee. Compensation includes for Directors who participate in the
Plan retainer fees or stock awards payable in the Employer’s common stock in addition to cash payments.
1.8 COMPENSATION DEFERRAL ACCOUNT is defined in Section 3.2.
1.9 COMPENSATION DEFERRAL is defined in Section 3.2.
1.10 DIRECTOR means a non-employee member of the Board of Directors of The Ryland Group, Inc.
1.11 DISPUTE is defined in Section 12.5.
1.12 EFFECTIVE DATE means the general effective date of the Plan, which shall be January 1, 2005.
1.13 EMPLOYEE means a person who is an employee of the Employer.
1.14 EMPLOYER means The Ryland Group, Inc. and its successors and assigns unless otherwise herein provided, or any other
corporation or business organization which, with the consent of The Ryland Group, Inc., or its successors or assigns, assumes the Employer’s
obligations hereunder, or any other corporation or business organization which agrees, with the consent of The Ryland Group, Inc., to become
a party to the Plan.
1.15 EMPLOYER CONTRIBUTION CREDIT ACCOUNT is defined in Section 3.1.
1.16 EMPLOYER CONTRIBUTION CREDITS is defined in Section 3.1.
1.17 ERISA means the Employee Retirement Income Security Act of 1974.
1.18 MEASUREMENT FUNDS is defined in Section 4.1(c).
2
1.19 PARTICIPANT means any person so designated in accordance with the provisions of Article 2, including, where
appropriate according to the context of the Plan, any former employee or former member of the Employer’s Board of Directors who is or may
become (or whose Beneficiaries may become) eligible to receive a benefit under the Plan.
1.20 PARTICIPANT ELECTION FORM means the form or forms on which a Participant elects to defer Compensation hereunder
and/or on which the Participant makes certain other designations as required thereon.
1.21 PLAN is defined in the Recitals.
1.22 PLAN YEAR means the 12-month period ending on December 31 of each year during which the Plan is in effect.
1.23 SEPARATION FROM SERVICE means the Participant’s “separation from service” within the meaning of Code section 409A,
treating as a Separation from Service an anticipated permanent reduction in the level of bona fide services to be performed by the Participant to
20% or less of the average level of bona fide services performed by the Participant over the immediately preceding 36 month period (or the full
period during which the Participant performed services for the Employer, if that is less than 36 months).
1.24 TRUST means the Trust established pursuant to Article 11.
1.25 TRUSTEE means the trustee of the Trust established pursuant to Article 11.
1.26 VALUATION DATE means the last day of each Plan Year and any other date that the Employer, in its sole discretion,
designates as a Valuation Date.
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.1 ELIGIBILITY. Participation in the Plan shall be limited to a select group of management and highly compensated Employees
and/or Directors, as determined by the Company in its sole discretion. From that group, the Company shall select, in its sole discretion,
Employees and/or Directors to participate in the Plan. In order to participate in the matching contribution feature of this Plan, an otherwise
eligible Employee must make the maximum amount of salary deferrals to the Employer’s 401(k) Plan.
2.2 ENROLLMENT REQUIREMENTS. As a condition to participation, each selected Employee or Director shall complete,
execute and return to the Company a Participant Election Form within 30 days after he or she is selected to participate in the Plan. In addition,
the Company shall establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary.
Provided an Employee or Director selected to participate in the Plan has met all enrollment requirements set forth in this Plan and required by
the Company, including returning all required documents to the Company within the specified time period, that Employee or Director
3
shall commence participation in the Plan on a specified date as determined by the Company in its sole discretion. Upon commencement of
such participation, the Employee or Director shall become a Participant in the Plan. If an Employee or Director fails to meet all such
requirements within the period required, that Employee or Director shall not be eligible to participate in the Plan until the first day of the Plan
Year following the delivery to and acceptance by the Company of the required documents.
2.3 RE-EMPLOYMENT, ETC. If a Participant whose employment or Director status with the Employer is terminated and that
Participant is subsequently re-employed by or subsequently becomes a Director of the Employer, he or she may become a Participant in
accordance with the provisions of Section 2.1 and the terms and conditions of the Plan.
2.4 CHANGE OF STATUS. If the Company determines in good faith that a Participant no longer qualifies as a member of a
select group of management or highly compensated Employees, as membership in such group is determined in accordance with
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Company shall have the right, in its sole discretion, to prevent the Participant from
making future deferral elections.
ARTICLE 3
CONTRIBUTIONS AND CREDITS
3.1 EMPLOYER CONTRIBUTION CREDITS. There shall be established and maintained a separate Employer Contribution
Credit Account in the name of each Participant who is an Employee. Such account shall be credited or debited, as applicable, with (a) amounts
equal to the Employer’s Contribution Credits credited to that account, if any, and (b) any deemed earnings and losses (to the extent realized,
based upon deemed fair market value of the account’s deemed assets) allocated to that account.
The Employer’s Contribution Credits attributable to a Participant who is an Employee shall consist of the following:
(i) matching contribution amounts with respect to each pay period (but contributed with a frequency determined by the
Employer) equal to the Participant’s Compensation Deferral amounts for that pay period, provided however that the total
Employer matching contribution amounts under the Employer’s 401(k) plan and this Plan for any pay period shall not exceed
six percent of the Participant’s Compensation from the Employer for that pay period; and
(ii) for a particular Plan Year, any discretionary Employer contribution amounts that the Employer wishes to contribute, but is
prohibited under applicable law from contributing, as discretionary Employer contribution amounts, under the Employer’s
401(k) plan.
Notwithstanding the foregoing, any matching contributions credited to a Participant’s Employer Contribution Credit
Account with respect to any pay period in excess of the limit provided
4
in paragraph (i) above, as determined by the Employer in good faith, shall be returned to the Employer.
Participants shall become vested in amounts credited to their Employer Contribution Credit Accounts pursuant to the
following vesting schedule:
Years of Service Vested Percentage

Less than 1 0%
1 33%
2 66%
3 100%
For purposes of the foregoing, each Participant employed by the Employer will be credited with one Year of Service for each
12-month period of employment with the Employer.
Notwithstanding the foregoing, a Participant will become immediately vested in amounts credited to his or her Employer
Contribution Credit Account upon his or her death, his or her long-term disability (as determined by the Employer, in its discretion), his or her
retirement from service to the Employer on or after age 65, or a “Change in Control” of the Company. For this purpose, a Change in Control
shall occur upon any of the following:
(i) the acquisition by any person, other than the Employer or any employee benefit plan(s) of the Employer, of beneficial
ownership of 20% or more of the combined voting power of Company’s then outstanding voting securities;
(ii) the first purchase under a tender offer or exchange offer, other than an offer by the Employer or any employee benefit
plan(s) of the Company, pursuant to which shares of common stock of the Company have been purchased;
(iii) during any period of two consecutive years, individuals who, at the beginning of such period constitute the Board of
Directors of the Company cease for any reason to constitute at least a majority thereof, unless the election or the nomination
for the election by stockholders of the Company of each new Director was approved by a vote of at least two-thirds of the
Directors then still in office who were Directors at the beginning of the period; or
(iv) approval by stockholders of the Company of a merger, consolidation, liquidation or dissolution of the Company, or the sale
of all or substantially all of the assets of the Company.
When a Participant becomes vested in his or her Employer Contribution Credits, plus earnings thereon, the Employer shall
withhold from the Participant’s salary and/or bonus that is not deferred, in a manner determined by the Employer, the Participant’s share of
FICA and other employment taxes. If necessary, the Employer may reduce the vested portion of the Participant’s Employer Contribution
Credit Account to comply with this requirement.
3.2 PARTICIPANT COMPENSATION DEFERRALS. In connection with a Participant’s commencement of participation in the
Plan (or if a Participant again becomes eligible after having been ineligible for at least 24 months), the Participant may make an irrevocable
election, no later than 30 days after the date he or she becomes eligible to become a Participant, to defer Compensation to be earned for
services to be performed after the election, and must make such other elections as the Company deems necessary or desirable under the Plan.
For this purpose, an election will be deemed to apply to bonus Compensation for services performed after the election if the election applies to
no more than an amount equal to the total bonus for the performance period multiplied by the ratio of the number of days remaining in the
performance period after the election over the total number of days in the performance period. For these elections to be valid, the Participant
Election Form must be completed and signed by the Participant and timely delivered to the Company as described in Section 2.2.
For each succeeding Plan Year, an irrevocable deferral of Compensation election for that Plan Year, and such other elections
as the Company deems necessary or desirable under the Plan, shall be made by timely delivering to the Company, in accordance with its
rules and procedures, before the end of the Plan Year preceding the Plan Year in which the services giving rise to the Compensation to be
deferred are to be performed (or such earlier time as the Company may establish, in its sole discretion), a new Participant Election Form. If no
such Participant Election Form is timely delivered for a Plan Year, the Participant’s Compensation Deferral for that Plan Year shall be zero.
Notwithstanding the foregoing, the Committee may, in its sole discretion, determine that certain Compensation qualifies as
“performance-based compensation” under Code Section 409A. If and to the extent permitted by the Company, a Participant may make an
election to defer that portion (if any) of his or her Compensation which qualifies as Performance-Based Compensation no later than (and the
election shall become irrevocable no later than) six months prior to the last day of the period over which the services giving rise to the
Performance-Based Compensation are performed (provided that the Participant performs services continuously from the later of the beginning
of the performance period or the date the performance criteria are established through the date of the deferral election, and provided further
that in no event may an election to defer be made with respect to any portion of the Performance-Based Compensation that has become
reasonably ascertainable, as defined under Code section 409A, prior to making the election). “Performance-Based Compensation” means that
portion (if any) of a Participant’s Compensation which is contingent on the satisfaction of pre-established organizational or individual
performance criteria related to a performance period of at least 12 consecutive months, and which meets the requirements for “performance-
based compensation” under Code section 409A, including the requirement that the performance criteria be established in writing by not later
than (i) 90 days after the commencement of the period of service to which the criteria relates and (ii) the date the outcome ceases to be
substantially uncertain.
For each Plan Year, the deferral of compensation shall be withheld from each regularly scheduled salary payroll in the
percentage elected by the Participant. The bonus portion of the Compensation Deferral shall be withheld at the time the bonus would
otherwise be paid to the Participant. For each Plan Year in which Compensation is deferred, the Employer shall withhold from that portion of
the Participant’s salary and bonus that is not being deferred, in a manner
6
determined by the Employer, the Participant’s share of FICA and other employment taxes on such deferral amount, together with such other
withholdings for employee benefits as would the Employer otherwise withhold. Subject to Code Section 409A, if necessary, the Employer may
reduce the deferral amount in order to comply with this requirement.
After the deadline for making a deferral election (as set forth above) has passed, the Participant may not change or revoke
his or her Compensation Deferral election until the following Plan Year, except to the extent permitted by the Company and under Code section
409A upon a disability, unforeseeable emergency distribution, or a hardship distribution from the Ryland Retirement Savings Opportunity Plan
pursuant to section 1.401(k)-1(d)(3) of the Treasury Regulations. For purposes of this paragraph only, “disability” means any medically
determinable physical or mental impairment resulting in the Participant’s inability to perform the duties of his or her position or any
substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of
not less than six months.
There shall be established and maintained by the Employer a separate Compensation Deferral Account in the name of each
Participant to which shall be credited or debited: (a) amounts equal to the Participant’s Compensation deferrals, and (b) amounts equal to any
deemed earnings or losses (to the extent realized, based upon deemed fair market value of the account’s deemed assets) attributable or
allocable thereto. The amounts deferred shall be referred to as the Compensation Deferrals.
A Participant shall at all times be 100% vested in amounts credited to his or her Compensation Deferral Account.
3.3 CONTRIBUTIONS TO THE TRUST. Amounts shall be contributed by the Employer to the Trust maintained under
Section 11.1 equal to the amounts required to be credited to the Participant’s Account under Sections 3.1 and 3.2. The Employer shall make a
good faith effort to contribute these amounts to the Trust as soon as is practicable after such amounts are determined. Employer
contributions to the Trust shall be made in cash or in common stock of the Employer, as determined by the Company.
ARTICLE 4
ALLOCATION OF FUNDS
4.1 ALLOCATION OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS. In accordance with, and subject to, the rules and
procedures that are established from time to time by the Company, in its sole discretion, amounts shall be credited or debited to a Participant’s
Account in accordance with the following rules:
(a) A Participant, in connection with his or her initial deferral election shall elect one or more Measurement Fund(s) (as
described below) to be used to determine the additional amounts to be credited or debited to his or her Account. A Participant may (but is not
required to) elect to add or delete one or more available Measurement Fund(s) to be used to determine the additional amounts to be credited or
debited to his or her Account, or to change the portion of his or
7
her Account allocated to each previously or newly elected Measurement Fund. A Participant may elect to make such a change by submitting
a Participant Election Form, whether written or electronic (as determined by the Company from time to time and in its sole discretion), to the
Company (or its designee). Any election so made and accepted by the Company (or its designee) shall apply as soon as is reasonably
practicable following the Company’s (or its designee’s) acceptance of the election. Any such election shall continue to apply, unless
subsequently changed in accordance with this Section 4.1(a).
(b) In making any election described in Section 4.1(a), the Participant shall specify on the applicable form which may be
completed on-line, in increments of one percentage point, the percentage of his or her Account to be allocated to a Measurement Fund (as if
the Participant were making an investment in that Measurement Fund with that portion of his or her Account).
(c) A Participant may elect one or more Measurement Funds (the “Measurement Funds”) from among those selected
by the Company for the purpose of crediting or debiting additional amounts to his or her Account. As necessary, the Company may, in its
sole discretion, discontinue, substitute or add Measurement Funds. Each such action will take effect as of the first day of the calendar month
that follows by 30 days or more the day on which the Company gives Participants advance written notice of such change. In selecting the
Measurement Funds that are available from time to time, neither the Company nor any Employer shall be liable to any Participant for such
selection or adding, deleting or continuing any available Measurement Fund.
(d) The performance of each elected Measurement Fund (either positive or negative) will be reasonably determined by
the Company. A Participant’s Account shall be credited or debited on a daily basis based on the performance of each Measurement Fund
selected by the Participant.
(e) Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds
are to be used for measurement purposes only, and a Participant’s election of any such Measurement Fund, the allocation to his or her
Account thereof, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant’s Account shall not be
considered or construed in any manner as an actual investment of his or her Account in any such Measurement Fund. In the event that the
Company or the Trustee, in its sole discretion, decides to invest funds in any or all of the Measurement Funds, no Participant shall have any
rights in or to such investments themselves. Without limiting the foregoing, a Participant’s Account shall at all times be a bookkeeping entry
only and shall not represent any investment made on his or her behalf by the Company or the Trustee; and the Participant shall at all times
remain an unsecured creditor of the Company.
(f) Notwithstanding the foregoing provisions of this Section 4.1, the Company shall retain the overriding discretion
regarding the Participant’s designation of Measurement Funds under this Section 4.1. If a Participant fails to designate any Measurement
Fund under this Section 4.1, the Participant shall be deemed to have elected the money market fund, or such other fund as determined from
time to time by the Company in its sole discretion.
8
(g) The Participant shall bear full responsibility for all results associated with his or her selection of Measurement
Funds under this Section 4.1, and the Employer shall have no responsibility or liability with respect to the Participant’s selection of such
Measurement Funds. Each Participant hereunder, as a condition to his or her participation hereunder, agrees to indemnify and hold harmless
the Employer and its agents and representatives from any losses or damages of any kind relating to the deemed investment of the Participant’s
Account hereunder.
(h) Notwithstanding any contrary provision of the Plan, Participants shall not have the right to direct the deferral of
Director retainer fees or awards that otherwise would have been payable in Employer common stock. Rather, such deferrals shall initially be
deemed to be invested in the common stock of the Employer. Once deferred, the Participant may thereafter elect to have some or all of such
deferral amounts, plus earnings thereon, reallocated to one or more of the non-Employer common stock Measurement Funds available under
the Plan; provided, however, that the Employer may impose such restrictions on such transfers as the Employer deems necessary or advisable
in order to comply with federal or state securities laws (including, but not limited to, Rule 16b-3 of the Securities Exchange Act of 1934, as
amended). Any Participant subject to such restrictions shall be notified by the Employer. Once a Participant has transferred an amount out of
the Employer common stock Measurement Fund, he or she may not subsequently reallocate into that Measurement Fund.
(i) Each reference in this Article to a Participant shall be deemed to include, where applicable, a reference to a
Beneficiary.
4.2 ACCOUNTING FOR DISTRIBUTIONS. As of the date of any distribution hereunder, the distribution made hereunder to the
Participant or his or her Beneficiary or Beneficiaries shall be charged to such Participant’s Account.
4.3 EXPENSES. Expenses, including Trustee fees, allocable to the administration or operation of an Account maintained under
the Plan shall be paid by the Employer unless, in the discretion of the Employer, the Employer elects to charge such expenses, or any portion
thereof, against the appropriate Participant’s Account or Participants’ Accounts.
ARTICLE 5
ENTITLEMENT TO BENEFITS
5.1 FIXED PAYMENT DATES; SEPARATION FROM SERVICE; DISABILITY; CHANGE IN CONTROL. The Participant’s
vested Account will be valued and paid according to the provisions of Article 6 on the payment date elected by a Participant at the earlier of
the time of initial deferral or the time the Participant first has a legally binding right to Employer Contribution Credits (or as otherwise required
by Code section 409A).
The Participant may elect to receive payment of his or her vested Account at Separation from Service with the Employer, upon a fixed
payment date, or at the earlier of (or later of) a fixed payment date, Separation from Service, Disability, and/or Change in Control of the
Company or
9
Employer. In any case, the extension and non-acceleration rules discussed in this Plan shall apply to such timing of payment elections.
The “fixed payment date” elected by a Participant must be a date no earlier than the January 1 of the third calendar year after the
calendar year in which the initial election is made (or if applicable, the January 1 of the third calendar year in which a new election is made after
the Participant has received a distribution of his or her previously vested Account).
If a Participant fails to designate properly the timing of payment of the Account, the vested Account shall be distributed, or
commence to be distributed, as provided in Article 6, at the Participant’s Separation from Service with the Employer.
The Participant may elect to delay a payment, on a continual basis, so long as any election to delay the payment is made by the
Participant at least twelve (12) months prior to the date on which the distribution is to be made and, in the case of payment upon Separation
from Service, a fixed payment date or Change in Control, such delay is at least five (5) full calendar years in length. Any election to delay a
fixed payment date under this paragraph shall not take effect until twelve months after the date on which the election is made. A distribution
date may not be accelerated.
Notwithstanding the preceding, to the extent permitted under Code section 409A and by the Company, the Participant may elect the
timing of distributions during 2005, 2006, 2007 or 2008 (except that a Participant cannot in a year change payment elections with respect to
payments that the Participant would otherwise receive in that same year, or make an election that causes payments scheduled for subsequent
years to be made in the year the election is made), and such election shall not be treated as a change in the form and timing of payment or an
acceleration of payment.
For purposes of this Section, a “Change in Control” means a change in the ownership or effective control of the Company or
Employer, or a change in the ownership of a substantial portion of the assets of the Company or Employer, within the meaning of Code section
409A.
For purposes of this Section, a “Disability” means a period during which a Participant (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months, (ii) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of
the Employer, or (iii) is determined to be totally disabled by the Social Security Administration.
5.2 UNFORESEEABLE EMERGENCY DISTRIBUTIONS. In the event the Participant incurs an unforeseeable emergency, as
defined below, the Participant may apply to the Employer for the distribution of all or any part of his or her vested Account. The Employer
shall consider the circumstances of each such case, and the best interests of the Participant and his or her family, and shall have the right, in
its sole discretion, if applicable, to allow such distribution, or, if applicable, to direct a distribution of part of the amount requested, or to refuse
to allow any distribution; provided, however, that such distribution shall be permitted solely to the extent permitted under Code section
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409A. Upon a finding of an unforeseeable emergency, the Employer shall make the appropriate distribution to the Participant from amounts
held by the Employer in respect of the Participant’s vested Account. In no event shall the aggregate amount of the distribution exceed either
the full value of the Participant’s vested Account or the amount determined by the Employer to be necessary to satisfy the unforeseeable
emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to
which the unforeseeable emergency is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation
of the Participant’s assets (to the extent the liquidation of assets would not itself cause severe financial hardship), or by cessation of
Compensation Deferrals under this Plan.
“Unforeseeable emergency” means (a) a severe financial hardship to the Participant resulting from an illness or accident of the
Participant, the Participant’s spouse, beneficiary or dependent (as defined in Code section 152(a)) of the Participant, (b) loss of the
Participant’s property due to casualty, or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond
the control of the Participant, each as determined to exist by the Employer. A distribution may be made under this Section only with the
consent of the Employer.
5.3 DEATH. Upon the Participant’s death, the Participant’s vested Account shall be valued and paid to the Participant’s
Beneficiary(ies) as provided in Article 6.
5.4 TRUST. The Employer’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of
the Trust, and any such distribution shall reduce the Employer’s obligations under this Plan. The Trustee of the Trust shall be authorized,
upon written instructions received from the Company or investment manager appointed by the Company, to invest and reinvest the assets of
the Trust in accordance with the applicable Trust Agreement. A Participant shall have no preferred claim on, or any beneficial interest in, any
assets of the Trust. Any assets held by the Trust shall be subject to the claims of general creditors of the Employer in the event of the
Employer’s “insolvency” (i.e., the Employer is unable to pay its debts as they become due or is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code). If the Trust pays all or some of the Employer’s obligations to a Participant under the terms of this
Plan, such payment shall be treated as a payment by the Employer for purposes of this Plan.
ARTICLE 6
DISTRIBUTION OF BENEFITS
6.1 AMOUNT. A Participant (or his or her Beneficiary) shall become entitled to receive, on the date determined in accordance
with Article 5, a distribution in an aggregate amount equal to the Participant’s vested Account.
6.2 METHOD OF PAYMENT.
(a) Form of Payment. Payments under the Plan shall be made in cash, except that the portion of a Director’s Account
that is hypothetically invested in Employer common stock shall be paid in the form of Employer common stock (except as otherwise permitted
by the Company).
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(b) Timing and Manner of Payment. In the case of distributions to a Participant or his or her Beneficiary by virtue of an
entitlement pursuant to Section 5.1, an aggregate amount equal to the Participant’s vested Account will be paid, as provided in Section 6.1, in
a lump sum or in annual installments, not less than two nor greater than 15, using the Fractional Payment Method, as selected by the
Participant at the earlier of the time of initial deferral or the time the Participant first has a legally binding right to Employer Contribution Credits
(or as otherwise required by Code section 409A). “Fractional Payment Method” means annual installment payments over the number of years
selected by the Participant in accordance with this Plan, calculated as follows: the vested Account of the Participant shall be calculated each
year as of the applicable Valuation Date. The annual installment shall be calculated by multiplying this balance by a fraction, the numerator of
which is one, and the denominator of which is the remaining number of annual payments due the Participant. By way of example, if the
Participant elects 10 years, the first payment shall be 1/10 of the vested Account. For the following year, the payment shall be 1/9 of the
vested Account.
If a Participant fails to designate properly the manner of payment of the Participant’s benefit under the Plan, such payment
will be in a lump sum. If the whole or any part of a payment hereunder is to be in installments, the total to be so paid shall continue to be
deemed to be invested pursuant to Section 4.1 under such procedures as the Employer may establish.
A participant may elect to change the method of payment elected (or deemed elected) so long as any election to change the form of
payment is made by the Participant at least twelve (12) months prior to the date on which the distribution is to be made (or commence) and, in
the case of payment upon Separation from Service, a fixed payment date or Change in Control, the payment date (or commencement of
payments) is delayed for at least five (5) full calendar years. Any election to change the method of payment under this paragraph shall not
take effect until twelve months after the date on which the election is made.
Notwithstanding the preceding, to the extent permitted under Code section 409A and by the Company, the Participant may elect the
form of distributions during 2005, 2006, 2007 or 2008 (except that a Participant cannot in a year change payment elections with respect to
payments that the Participant would otherwise receive in that same year, or make an election that causes payments scheduled for subsequent
years to be made in the year the election is made), and such election shall not be treated as a change in the form and timing of payment or an
acceleration of payment.
6.3 DEATH BENEFITS. If a Participant dies before receiving the entire value of his or her vested Account, the remaining unpaid
portion of his or her vested Account shall be paid in a lump sum to the person or persons designated in accordance with Section 7.1.
6.4 WITHHOLDING. The Employer, or the Trustee of the Trust, shall withhold from any payments made to a Participant under
this Plan all federal, state and local income, employment and other taxes required to be withheld by the Employer, or the Trustee of the Trust, in
connection with such payments, in amounts and in a manner to be determined in good faith in the sole discretion of the Employer and the
Trustee of the Trust. All distributions under the Plan are subject to any applicable tax withholding, as determined by the Employer in its
discretion.
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6.5 EMPLOYER DISCRETION. Notwithstanding anything in the Plan to the contrary, no change submitted on a Participant
Election Form shall be accepted by the Employer, and the Employer shall deny any change made on a Participant Election Form, if the
Employer determines that the change violates the requirements under Code section 409A.
The Employer, in its discretion (without any direct or indirect election on the part of any Participant), may accelerate distributions
under the Plan to the extent permitted under Code section 409A (e.g., payments necessary to comply with a domestic relations order, payments
necessary to comply with certain conflict of interest rules, and certain de minimis payments related to the participant’s termination of his or her
interest in the plan).
6.6 PAYMENT OF BENEFITS. Except with respect to distributions upon Separation from Service, any payment made under
this Article 6 shall be made or commence within 90 days after the date of the payment event specified in the Plan; provided, however, such
payment shall not be made or commence later than the later of (i) the last day of the calendar year in which the payment event occurs, or, if
later, the 15th day of the third calendar month following the date of the payment event, or (ii) the last day of such other, extended period as the
IRS may prescribe, such as in the case of disputed payments or refusals to pay, provided the conditions of such extension have been satisfied.
All distributions upon Separation from Service shall be made or shall commence on the date that is six months following the date of Separation
from Service (or within 30 days thereafter).
ARTICLE 7
BENEFICIARIES; PARTICIPANT DATA
7.1 DESIGNATION OF BENEFICIARIES. Each Participant may designate any person or persons (who may be named
contingently or successively) to receive such benefits as may be payable under the Plan upon or after the Participant’s death, and such
designation may be changed from time to time by the Participant by filing a new designation. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the Employer, and will be effective only when filed in writing with the
Employer during the Participant’s lifetime.
In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due to a Beneficiary, there is no
living Beneficiary validly named by the Participant, the Employer shall pay any such benefit payment to the Participant’s spouse, if then living,
but otherwise to the Participant’s then living descendants, if any, per stirpes, but, if none, to the Participant’s estate. In determining the
existence or identity of anyone entitled to a benefit payment, the Employer may rely conclusively upon information supplied by the
Participant’s personal representative, executor or administrator.
If a question arises as to the existence or identity of anyone entitled to receive a benefit payment as aforesaid, or if a dispute
arises with respect to any such payment, then, notwithstanding the foregoing, the Employer, in its sole discretion, may distribute such
payment to the Participant’s estate without liability for any tax or other consequences which might flow therefrom, or may take such other
action as the Employer deems to be appropriate.
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7.2 INFORMATION TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES; INABILITY TO LOCATE

PARTICIPANTS OR BENEFICIARIES. Any communication, statement or notice addressed to a Participant or to a Beneficiary at his or her last
post office address as shown on the Employer’s records shall be binding on the Participant or Beneficiary for all purposes of the Plan. The
Employer shall not be obliged to search for any Participant or Beneficiary beyond the sending of a registered letter to such last known
address. If the Employer notifies any Participant or Beneficiary that he or she is entitled to an amount under the Plan and the Participant or
Beneficiary fails to claim such amount or make his or her location known to the Employer within ninety (90) days of the latest date upon which
the payment could have been timely made in accordance with the terms of the Plan and Code section 409A (unless, if not paid, the Participant
or Beneficiary takes further enforcement measures within one hundred eighty (180) days after such latest date) then, except as otherwise
required by law, the amount payable shall be deemed to be a forfeiture. If a benefit payable to an unlocated Participant or Beneficiary is subject
to escheat pursuant to applicable state law, the Employer shall not be liable to any person for any payment made in accordance with such law.
ARTICLE 8
ADMINISTRATION
8.1 ADMINISTRATIVE AUTHORITY. Except as otherwise specifically provided herein, the Company, acting through the
Committee, or the designee or designees thereof, shall have the sole responsibility for and the sole control of the operation and administration
of the Plan, and shall have the power and authority to take all action and to make all decisions and interpretations which may be necessary or
appropriate in order to administer and operate the Plan, including, without limiting the generality of the foregoing, the power, duty and
responsibility to:
(a) Resolve and determine all disputes or questions arising under the Plan, and to remedy any ambiguities,
inconsistencies or omissions in the Plan.
(b) Adopt such rules of procedure and regulations as in its opinion may be necessary for the proper and efficient
administration of the Plan and as are consistent with the Plan.
(c) Implement the Plan in accordance with its terms and the rules and regulations adopted as above.
(d) Make determinations with respect to the eligibility of any Employee or Director as a Participant and make
determinations concerning the crediting of Plan Accounts.
(e) Appoint any persons or firms, or otherwise act to secure specialized advice or assistance, as it deems necessary or
desirable in connection with the administration and operation of the Plan, and the Company shall be entitled to rely conclusively upon, and
shall be fully protected in any action or omission taken by it in good faith reliance upon, the advice or opinion of such persons or firms. The
Company shall have the power and authority to delegate from time to time by written instrument all or any part of its duties, powers or
responsibilities under the Plan, both ministerial and discretionary, as it deems appropriate, to any person or committee, and in the same manner
to revoke
14
any such delegation of duties, powers or responsibilities. Any action of such person or committee in the exercise of such delegated duties,
powers or responsibilities shall have the same force and effect for all purposes hereunder as if such action had been taken by the Company.
Further, the Company may authorize one or more persons to execute any certificate or document on behalf of the Company, in which event any
person notified by the Company of such authorization shall be entitled to accept and conclusively rely upon any such certificate or document
executed by such person as representing action by the Company until such notified person shall have been notified of the revocation of such
authority.
(f) Interpret this Plan in accordance with Code Section 409A.
8.2 LITIGATION. Except as may be otherwise required by law, in any action or judicial proceeding affecting the Plan, no
Participant or Beneficiary shall be entitled to any notice or service of process, and any final judgment entered in such action shall be binding
on all persons interested in, or claiming under, the Plan.
8.3 CLAIMS PROCEDURE. This Section 8.3 is based on final regulations issued by the Department of Labor and published in
the Federal Register on November 21, 2000 and codified at 29 C.F.R. section 2560.503-1. If any provision of this Section conflicts with the
requirements of those regulations, the requirements of those regulations will prevail.
(a) Initial Claim. A Participant or Beneficiary who believes he or she is entitled to any Benefit (a “Claimant”) under this
Plan may file a claim with the administrator under this Article 9 (the “Plan Administrator”). The Plan Administrator will review the claim itself or
appoint another individual or entity to review the claim.
(i) Benefit Claims that do not Require a Determination of Disability. If the claim is for a benefit other than a
disability benefit, the Claimant will be notified within ninety days after the claim is filed whether the claim is allowed or denied, unless the
Claimant receives written notice from the Plan Administrator or appointee of the Plan Administrator before the end of the ninety day period
stating that special circumstances require an extension of the time for decision, such extension not to extend beyond the day which is one
hundred eighty days after the day the claim is filed.
(ii) Disability Benefit Claims. In the case of a benefits claim that requires a determination by the Plan
Administrator of a Participant’s disability status, the Plan Administrator will notify the Claimant of the Plan’s adverse benefit determination
within a reasonable period of time, but not later than forty-five days after receipt of the claim. If, due to matters beyond the control of the Plan,
the Plan Administrator needs additional time to process a claim, the Claimant will be notified, within forty-five days after the Plan Administrator
receives the claim, of those circumstances and of when the Plan Administrator expects to make its decision but not beyond seventy-five days.
If, prior to the end of the extension period, due to matters beyond the control of the Plan, a decision cannot be rendered within that extension
period, the period for making the determination may be extended for up to one hundred five days, provided that the Plan Administrator notifies
the Claimant of the circumstances requiring the extension and the date as of which the Plan expects to render a decision. The extension notice
will specifically explain the standards on which
15
entitlement to a disability benefit is based, the unresolved issues that prevent a decision on the claim and the additional information needed
from the Claimant to resolve those issues, and the Claimant will be afforded at least forty-five days within which to provide the specified
information.
(iii) Manner and Content of Denial of Initial Claims. If the Plan Administrator denies a claim, it must provide to
the Claimant, in writing or by electronic communication:
(A) The specific reasons for the denial;
(B) A reference to the Plan provision or insurance contract provision upon which the denial is based;
(C) A description of any additional information or material that the Claimant must provide in order to
perfect the claim;
(D) An explanation of why such additional material or information is necessary;
(E) Notice that the Claimant has a right to request a review of the claim denial and information on the
steps to be taken if the Claimant wishes to request a review of the claim denial; and
(F) A statement of the participant’s right to bring a civil action under ERISA section 502(a) following
a denial on review of the initial denial.
In addition, in the case of a denial of disability benefits on the basis of the Plan Administrator’s independent determination
of the Participant’s disability status, the Plan Administrator will provide a copy of any rule, guideline, protocol, or other similar criterion relied
upon in making the adverse determination (or a statement that the same will be provided upon request by the Claimant and without charge).
(b) Review Procedures.
(i) Benefit Claims that do not Require a Determination of Disability. Except for claims requiring an independent
determination of a Participant’s disability status, a request for review of a denied claim must be made in writing to the Plan Administrator
within sixty days after receiving notice of denial. The decision upon review will be made within sixty days after the Plan Administrator’s
receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision will be
rendered not later than one hundred twenty days after receipt of a request for review. A notice of such an extension must be provided to the
Claimant within the initial sixty day period and must explain the special circumstances and provide an expected date of decision.
The reviewer will afford the Claimant an opportunity to review and receive, without charge, all relevant documents,
information and records and to submit issues and comments
16
in writing to the Plan Administrator. The reviewer will take into account all comments, documents, records and other information submitted by
the Claimant relating to the claim regardless of whether the information was submitted or considered in the initial benefit determination.
(ii) Disability Benefit Claims. In addition to having the right to review documents and submit comments as described
in (i) above, a Claimant whose claim for disability benefits requires an independent determination by the Plan Administrator of the Participant’s
disability status has at least one hundred eighty days following receipt of a notification of an adverse benefit determination within which to
request a review of the initial determination. In such cases, the review will meet the following requirements:
(A) The Plan will provide a review that does not afford deference to the initial adverse benefit determination
and that is conducted by an appropriate named fiduciary of the Plan who did not make the initial determination that is the subject of the
appeal, nor is a subordinate of the individual who made the determination.
(B) The appropriate named fiduciary of the Plan will consult with a health care professional who has
appropriate training and experience in the field of medicine involved in the medical judgment before making a decision on review of any
adverse initial determination based in whole or in part on a medical judgment. The professional engaged for purposes of a consultation in the
preceding sentence will not be an individual who was consulted in connection with the initial determination that is the subject of the appeal or
the subordinate of any such individual.
(C) The Plan will identify to the Claimant the medical or vocational experts whose advice was obtained on
behalf of the Plan in connection with the review, without regard to whether the advice was relied upon in making the benefit review
determination.
(D) The decision on review will be made within forty-five days after the Plan Administrator’s receipt of a
request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered not later
than ninety days after receipt of a request for review. A notice of such an extension must be provided to the Claimant within the initial forty-
five day period and must explain the special circumstances and provide an expected date of decision.
(iii) Manner and Content of Notice of Decision on Review. Upon completion of its review of an adverse initial claim
determination, the Plan Administrator will give the Claimant, in writing or by electronic notification, a notice containing:
(A) its decision;
(B) the specific reasons for the decision;
(C) the relevant Plan provisions or insurance contract provisions on which its decision is based;
17
(D) a statement that the Claimant is entitled to receive, upon request and without charge, reasonable access
to, and copies of, all documents, records and other information in the Plan’s files which is relevant to the Claimant’s claim for benefits;
(E) a statement describing the Claimant’s right to bring an action for judicial review under ERISA section
502(a); and
(F) if an internal rule, guideline, protocol or other similar criterion was relied upon in making the adverse
determination on review, a statement that a copy of the rule, guideline, protocol or other similar criterion will be provided without charge to the
Claimant upon request.
(c) Calculation of Time Periods. For purposes of the time periods specified in this Section, the period of time during which a
benefit determination is required to be made begins at the time a claim is filed in accordance with the Plan procedures without regard to
whether all the information necessary to make a decision accompanies the claim. If a period of time is extended due to a Claimant’s failure to
submit all information necessary, the period for making the determination will be tolled from the date the notification is sent to the Claimant
until the date the Claimant responds.
(d) Failure of Plan to Follow Procedures. If the Plan fails to follow the claims procedures required by this Section, a Claimant will
be deemed to have exhausted the administrative remedies available under the Plan and will be entitled to pursue any available remedy under
ERISA section 502(a) on the basis that the Plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of
the claim.
(e) Failure of Claimant to Follow Procedures. A Claimant’s compliance with the foregoing provisions of this Section 8.3 is a
mandatory prerequisite to the Claimant’s right to commence any legal action with respect to any claim for benefits under the Plan.
ARTICLE 9
AMENDMENT
9.1 RIGHT TO AMEND. The Company, by written instrument executed by a duly authorized representative of the Company,
shall have the right to amend the Plan, at any time and with respect to any provisions hereof, and all parties hereto or claiming any interest
hereunder shall be bound by such amendment; provided, however, that no such amendment shall deprive a Participant or a Beneficiary of a
right accrued hereunder prior to the date of the amendment.
9.2 AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN. Notwithstanding the provisions of Section 9.1,
the Plan may be amended by the Company at any time, retroactively if required in the opinion of the Company, in order to ensure that the Plan
is characterized as a “top-hat” plan as described under ERISA Sections 201(2), 301(a)(3), and 401(a)(1) to conform with the Plan to the
requirements of Code Section 409A, and to conform the Plan to the provisions and requirements of any applicable law (including ERISA and
the Code). No
18
such amendment shall be considered prejudicial to any interest of a Participant or a Beneficiary hereunder.
ARTICLE 10
SUSPENSION OR TERMINATION OF THE PLAN
10.1 RIGHT TO SUSPEND PLAN. The Company (or the Employer, with respect to its Employees or Directors) reserves the right
to suspend the operation of the Plan for a fixed or indeterminate period of time. In the event of a suspension of the Plan, during the period of
the suspension, the Employer shall continue all aspects of the Plan other than Employer Contribution Credits to the Plan and, effective with
the first day of the Plan Year following the date the Plan is suspended, Compensation Deferrals. Payments of distributions will continue to be
made during the period of the suspension in accordance with Articles 5 and 6.
10.2 AUTOMATIC TERMINATION OF PLAN. The Plan, but not the Trust, automatically shall terminate upon the dissolution
of the Company, or upon a merger into or consolidation with any other corporation or business organization if there is a failure by the
surviving corporation or business organization to adopt specifically and agree to continue the Plan. If the merger or consolidation qualifies as
a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a
corporation as defined in Treas. Reg. 1.409A-3(i)(5), the Plan shall be liquidated upon such a termination in accordance with Treas. Reg.
1.409A-3(j)(4)(ix)(B). If the Plan is not liquidated, payments of distributions will continue to be made following the termination in accordance
with Articles 5 and 6.
10.3 TERMINATION AND LIQUIDATION OF THE PLAN. The Company may terminate and liquidate the Plan in connection
with a corporate dissolution or approval by a bankruptcy court, certain change in control events, or the termination and liquidation of all plans
that are required to be aggregated, as described under Treas. Reg. 1.409A-3(j)(4)(ix). Upon the date of termination, the value of the vested
Accounts of all affected Participants and Beneficiaries shall be determined. After deduction of estimated expenses in liquidating and paying
Plan benefits, vested Accounts shall be paid to Participants and Beneficiaries in a lump sum distribution in accordance with Treas. Reg.
1.409A-3(j)(4)(ix).
ARTICLE 11
THE TRUST
11.1 ESTABLISHMENT OF TRUST. The Employer shall establish the Trust with the Trustee pursuant to such terms and
conditions as are set forth in the Trust agreement to be entered into between the Employer and the Trustee. The Trust is intended to be
treated as a “grantor” trust under the Code and the establishment of the Trust is not intended to cause the Participant to realize current income
on amounts contributed thereto, and the Trust shall be so interpreted.
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ARTICLE 12
MISCELLANEOUS
12.1 LIMITATIONS ON LIABILITY OF COMPANY AND EMPLOYER. Neither the establishment of the Plan nor any
modification thereof, nor the creation of any account under the Plan, nor the payment of any benefits under the Plan shall be construed as
giving to any Participant or other person any legal or equitable right against the Company or an Employer, or any officer or employee thereof
except as provided by law or by any Plan provision. The Company and the Employer do not in any way guarantee any Participant’s Account
from loss or depreciation, whether caused by poor investment performance of a deemed investment or the inability to realize upon an
investment due to an insolvency affecting an investment vehicle or any other reason. In no event shall the Company or Employer, or any
successor, employee, officer, director or stockholder of the Company or Employer, be liable to any person on account of any claim arising by
reason of the provisions of the Plan or of any instrument or instruments implementing its provisions, or for the failure of any Participant,
Beneficiary or other person to be entitled to any particular tax consequences with respect to the Plan, or any credit or distribution hereunder.
12.2 CONSTRUCTION. If any provision of the Plan is held to be illegal or void, such illegality or invalidity shall not affect the
remaining provisions of the Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provision
had never been inserted herein; except to the extent that Code section 409A requires that this Section be disregarded because it purports to
nullify Plan terms that are not in compliance with Code section 409A. For all purposes of the Plan, where the context permits, the singular shall
include the plural, and the plural shall include the singular. Headings of Articles and Sections herein are inserted only for convenience of
reference and are not to be considered in the construction of the Plan. The laws of the State of Maryland shall govern, control and determine
all questions of law arising with respect to the Plan and the interpretation and validity of its respective provisions, except where those laws are
preempted by the laws of the United States. Participation under the Plan will not give any Participant the right to be retained in the service of
the Employer or any right or claim to any benefit under the Plan unless such right or claim has specifically accrued hereunder.
12.3 SPENDTHRIFT PROVISION. No amount payable to a Participant or a Beneficiary under the Plan will, except as otherwise
specifically provided by law, be subject in any manner to anticipation, alienation, attachment, garnishment, sale, transfer, assignment (either at
law or in equity), levy, execution, pledge, encumbrance, charge or any other legal or equitable process, and any attempt to do so will be void;
nor will any benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled thereto.
Further, (i) the withholding of taxes from Plan benefit payments, (ii) the recovery under the Plan of overpayments of benefits previously made
to a Participant or Beneficiary, (iii) if applicable, the transfer of benefit rights from the Plan to another plan, or (iv) the direct deposit of benefit
payments to an account in a banking institution (if not actually part of an arrangement constituting an assignment or alienation) shall not be
construed as an assignment or alienation.
12.4 LEAVE OF ABSENCE. If a Participant is authorized by the Employer for any reason to take a paid leave of absence from the
employment of the Employer, the Participant shall continue
20
to be considered employed by the Employer and his or her elected annual deferral amount shall continue to be withheld during such paid leave
of absence. If a Participant is authorized by the Employer for any reason to take an unpaid leave of absence from the employment of the
Employer, the Participant shall continue to be considered employed by the Employer and the Participant shall be excused from making deferrals
until the Participant returns to a paid employment status. Upon such return, deferrals shall resume for the remaining portion of the Plan Year in
which the return occurs, based on the deferral election, if any, made for that Plan Year. If no election was made for that Plan Year, no deferral
shall be withheld. Notwithstanding the forgoing, the Committee shall interpret this Section 12.4 in a manner that is consistent with Code
Section 409A and the regulations thereunder, including without limitation, guidance issued in connection with that Section.
12.5 LEGAL FEES. If, following a Change in Control of the Company or Employer, it should appear to any Participant that the
Company, the Participant’s Employer or any successor corporation has failed to comply with any of its obligations under the Plan or any
agreement thereunder or, if the Company, such Employer or any other person takes any action to declare the Plan void or unenforceable or
institutes any litigation or other legal action designed to deny, diminish or to recover from any Participant the benefits intended to be provided
(collectively, the “Dispute”), then the Company and the Participant’s Employer shall pay, if the Participant prevails in the Dispute, the
Participant’s reasonable legal fees and court costs actually incurred by the Participant in the initiation or defense of the Dispute, whether by or
against the Company or the Participant’s Employer or any director, officer, shareholder or other person affiliated with the Company, the
Participant’s Employer or any successor thereto. A Participant shall be entitled to reimbursement of the legal fees described under this
Section 12.5 during the period commencing on the date of a Change in Control and ending on the date that is 10 years after the date of Change
in Control. Any reimbursement of legal fees under this Section 12.5 shall be made on or before the last day of the Plan Year following the Plan
Year in which the expense is incurred. The amount of expenses eligible for reimbursement during a Plan Year shall not affect the expenses
eligible for reimbursement in any other Plan Year. The right to reimbursement under this Section is not subject to liquidation or exchange for
another benefit.
12.6 NONASSIGNABILITY. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer,
pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No
part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the
event of a Participant’s or any other person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or
otherwise, except as provided in Section 12.8.
12.7 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal
or equitable rights, interests or claims in any property or assets of an Employer. For purposes of the payment of benefits under this Plan, any
and all of an Employer’s assets shall be, and remain, the general, unpledged unrestricted assets of the Employer. An Employer’s obligation
under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.
21
12.8 COURT ORDER. The Employer is authorized to make any payments directed by court order in any action in which the Plan
or the Employer has been named as a party. In addition, if a court determines that a spouse or former spouse of a Participant has an interest in
the Participant’s benefits under the Plan in connection with a property settlement or otherwise, the Employer, in its sole discretion, shall have
the right, notwithstanding any election made by a Participant, to immediately distribute the spouse’s or former spouse’s interest in the
Participant’s benefits under the Plan to that spouse or former spouse as permitted under Treas. Reg. 1.409A-3(j)(4)).
12.9 CODE SECTION 409A. It is intended that the Plan comply with Code Sections 409A(a)(1) to (4) and (b)(1) to (2). The Plan
shall be administered and interpreted in a manner consistent with those foregoing sections.
12.10 UNVESTED ACCOUNT BALANCES UNDER PRIOR PLAN. If a Participant participated in the Executive and Director
Deferred Compensation Plan, as amended and restated as of January 1, 2003, and all or a part of the Participant’s account balance under that
plan was unvested as of January 1, 2005, that unvested balance will be transferred to this Plan in accordance with Code Section 409A and the
regulations thereunder, and such balance shall be administered in accordance with the provisions of this Plan, provided, however, that the
vesting of that balance shall be based on the applicable vesting schedule(s) under the Executive and Director Deferred Compensation Plan,
which are incorporated herein by reference.
12.11 AGGREGATION OF EMPLOYERS. If the Employer is a member of a controlled group of corporations or a group of trades
or business under common control (as described in Code section 414(b) or (c), but substituting a 50% ownership level for the 80% level set
forth in those Code Sections), all members of the group shall be treated as a single Employer for purposes of whether there has occurred a
Separation from Service and for any other purposes under the Plan as Code section 409A shall require.
12.12 AGGREGATION OF PLANS. If the Company or an Employer offers other elective or non-elective account balance deferred
compensation plans in addition to the Plan, those plans together with the Plan shall be treated as a single plan to the extent required under
Code section 409A for purposes of determining whether a Participant may make a deferral election pursuant to Section 3.2 within 30 days of
becoming eligible to participate in the Plan, for purposes of cashing out de minimus amounts pursuant to Section 6.5 and for any other
purposes under the Plan as Code section 409A shall require.
12.13 USERRA. Notwithstanding anything herein to the contrary, any distribution election provided to a Participant as necessary
to satisfy the requirements of the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended, shall be permissible
hereunder.
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IN WITNESS WHEREOF, the Employer has caused this Plan to be executed and effective as of the 1st day of January, 2005.
ATTEST THE RYLAND GROUP, INC.
By:
Name: Name:
Title: Title:
Date:
23
Exhibit 10.31

TRG INCENTIVE PLAN
(as amended and restated, effective January 1, 2005)
The Ryland Group, Inc. (the “Company”) has established the TRG Incentive Plan (the “Plan”) to provide incentive compensation for
those key employees whose efforts may significantly affect the Company’s earnings and performance. The Plan provides for the payment of
cash awards as well as the issuance of Common Stock of the Company and the crediting of Stock Units as awards under The Ryland
Group, Inc. 2002 Equity Incentive Plan, the terms of which are incorporated herein by reference for all relevant purposes. The Plan is being
amended and restated effective January 1, 2005 to comply with the requirements of section 409A of the Code, as added by the American Jobs
Creation Act of 2004, and the Treasury regulations or any other authoritative guidance issued thereunder.
1. Definitions
The terms below shall have the following meanings:
(a) “Board” shall mean the Board of Directors of the Company.
(b) “Cash Account” shall mean an account established for each Participant to be credited with the cash portion of Performance
Awards. The Cash Account shall consist of separate sub-accounts for amounts credited, if any, with respect to each Performance Year.
(c) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time and any successor to such Code.
(d) “Committee” shall mean the Compensation Committee of the Board or a subcommittee of the Compensation Committee composed
of two or more “outside directors” as defined in Code Section 162(m) and the regulations thereunder.
(e) “Common Stock” shall mean shares of Common Stock of the Company.
(f) “Common Stock Account” shall mean an account established for each Participant to be credited with the Stock Unit portion, if
any, of Performance Awards. The Common Stock Account shall consist of separate sub-accounts for Stock Units credited, if any, with respect
to each Performance Year.
(g) “Company” shall mean The Ryland Group, Inc., its subsidiaries, partnerships and other related entities and affiliates, except where
the context applies solely to The Ryland Group, Inc. as determined by the Committee.
(h) “Disability” shall mean a period during which a Participant (i) is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, (ii) is, by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income
replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Employer, or
(iii) is determined to be totally disabled by the Social Security Administration.
(i) “Employee” shall mean any person employed by the Company.
(j) “Fair Market Value” shall mean a price or value for the Common Stock of the Company, as determined by the Committee to be the
fair market value of the Common Stock, which can be the opening, closing or other quoted price on the New York Stock Exchange or other
exchange on which the Common
Stock is traded or the first, last or other reported sales price if quoted on the NASDAQ National Market System or other over-the-counter
market.
(k) “Participant” shall mean an Employee selected to participate in the Plan pursuant to Section 2.
(l) “Performance Award” shall mean the amount of any award to a Participant based on the Company’s achievement of the
Performance Goal(s) for a Performance Period.
(m) “Performance Goal” shall mean the performance target selected by the Committee to determine the amount of any Performance
Award under the Plan.
(n) “Performance Period” shall mean the period as established pursuant to Section 4 over which the Performance Goal(s) are
measured for the purpose of determining the extent to which a Performance Award is earned.
(o) “Performance Year” shall mean the final fiscal year of the Company of the Performance Period over which Performance Goals are
measured for the purpose of determining the extent to which a Performance Award is earned.
(p) “Separation from Service” shall mean the Participant’s “separation from service” within the meaning of Code section 409A,
treating as a Separation from Service an anticipated permanent reduction in the level of bona fide services to be performed by the Participant to
20% or less of the average level of bona fide services performed by the Participant over the immediately preceding 36 month period (or the full
period during which the Participant performed services for the Employer, if that is less than 36 months).
(q) “Stock Unit” shall mean a unit representing one share of Common Stock.
(r) “Vested Deferred Award” shall mean the portion of any Deferred Award which is vested pursuant to the Plan, but which has not
been paid to the Participant.
2. Participants
The Committee periodically determines those Employees who are eligible and selected to participate in the Plan.
3. Administration
The Plan is administered by the Committee. The Committee shall establish the Performance Goal(s) for each Performance Period, review
the Company’s actual performance results to assess the extent to which Performance Goal(s) have been met and Performance Awards have
been earned, approve Performance Awards and make any other determinations, interpretations or decisions required in connection with the
Plan. The Committee shall have the authority to amend, modify and interpret the Plan and make all determinations relating to the Plan and the
Participants. Decisions of the Committee on all matters relating to the Plan are conclusive and binding on all parties, including the Company
and the Participants. No member of the Committee is liable for any act done or determination made in good faith in administering, construing or
interpreting the Plan.
4. Performance Awards
(a) Establishment of Performance Awards. For each Performance Year and/or Performance Period, the Committee shall determine and
set forth in writing not later than 90 days after the commencement of the Performance Year:
(i) the Participants;

(ii) the target amount of and formula for determining Performance Awards;
(iii) the Performance Goal or Goals for determining Performance Awards;
(iv) whether the Performance Awards will be paid in cash, Common Stock or Stock Units; and
(v) any other terms relating to Performance Awards under the Plan.
The Performance Goal or Goals shall be based upon the average return on stockholders’ equity of the Company as set forth in the
audited financial statements for the Performance Year and the two fiscal years prior to the Performance Year. The maximum Performance Award
that may be earned by any Participant for any Performance Year is $6,000,000. The Committee may reduce or eliminate Performance Awards for
any reason in its sole discretion, but may not increase the amount of a Performance Award payable to any Participant for a given Performance
Period after the Performance Goal for that period has been established.
(b) Determination, Payment and Crediting of Performance Awards.
(i) Within 90 days after the end of each Performance Year, the Committee shall determine and set forth in writing the amount of
any Performance Award earned by a Participant or group of Participants.
(ii) One-third of each Performance Award (the “Initial Payment”) shall vest as of December 31 of the related Performance Year
and shall be payable within 90 days thereafter, but not earlier than the Committee’s determination that such award was earned. As determined
by the Committee, either all or one-half of the Initial Payment shall be paid in cash and either none or one-half shall be paid in a whole number
of shares of Common Stock determined by dividing one-half of the Initial Payment by the Fair Market Value of the Common Stock on the first
trading day of the Company’s first fiscal year following the related Performance Year, provided that if a fractional number of shares results,
cash shall be paid in lieu of any fractional share.
(iii) The remaining two-thirds of each Performance Award (the “Deferred Award”) shall be credited to the Participant’s Cash
Account or, if applicable, to the Participant’s Common Stock Account, effective as of January 1 of the Company’s first fiscal year following the
related Performance Year. As determined by the Committee, either all or one-half of the Deferred Award shall be credited to the Participant’s
Cash Account and either none or one-half of the Deferred Award shall be credited in the form of Stock Units to the Participant’s Common
Stock Account. For the purposes of the foregoing, the number of Stock Units, if any, to be credited to the Participant’s Common Stock
Account shall be equal to one-half of the Deferred Award earned divided by the Fair Market Value of the Common Stock on the first trading
day of the Company’s first fiscal year following the related Performance Year. If a fractional number of shares results from the calculation of
the Stock Units credited to a Common Stock Account, cash will be credited to the Participant’s Cash Account in lieu of any fractional shares.
(iv) No Performance Award(s) shall be earned or credited for any Performance Year during which a Participant terminates
employment prior to December 31.
(c) Rights in Respect of Stock Units. Stock Units shall not represent an actual ownership interest in Common Stock and the
Participant shall have no voting or other rights as a stockholder in respect of Stock Units including, except as provided in the next sentence,
any right to payment on account of dividends or distributions in respect of the Common Stock represented thereby. With respect to the total
amount of any cash dividends paid annually in respect of the Company’s Common Stock, Participants are entitled to receive an annual cash
payment in an amount equal to the annual cumulative total of dividends declared and paid for any particular calendar year (the “Dividend
Determination Year”), to the extent of any dividends not previously paid to or received by a Participant, which the Participant would have
received if the Stock Units credited to the Participant’s Common Stock Account actually had represented shares of Common Stock as of the
record date (this payment is referred to as the “Annual Payment”). The right to this Annual Payment applies to the cumulative annual amount
of cash dividends paid on account of the Common Stock on any record date on or after the end of a Performance Year related to the Stock
Units credited to the Participant’s Common Stock Account, to the extent of any dividends not previously paid to or received by a Participant.
The Annual Payment shall be determined and paid within 45 days of the later of October 15th or the third quarter record date for a quarterly
cash dividend payable during the Company’s fiscal year for any applicable Dividend Determination Year. A Participant must be employed on
the date each Annual Payment is made to be entitled to payment.
(d) Earnings on Cash Account. Earnings can be credited to a Participant’s Cash Account on a basis, in a manner, and at the rate
established from time to time by the Committee that is reasonable under Section 162(m) of the Internal Revenue Code. Any earnings that are
credited to a Participant’s Cash Account shall be paid at the time and in the manner the Vested Deferred Award to which such earnings are
attributable is paid.
5. Vesting and Payment of Deferred Awards
(a) Vesting of Deferred Awards.
(i) The Deferred Award for a Performance Year will vest in two equal installments on December 31of each of the Company’s
first and second fiscal years following the related Performance Year (the “Vesting Date”) provided the Participant is employed by the Company
on the Vesting Date.
(ii) Notwithstanding Section 5(a)(i), upon the death, Disability or retirement (as defined by the Company, in its discretion) of a
Participant, all amounts of Deferred Awards shall become fully vested.
(iii) Upon a Participant’s voluntary termination of employment with the Company, all Vested Deferred Awards shall be paid to
the Participant in accordance with the terms of this Plan and any Deferred Awards which have not vested as of the effective date of the
Participant’s voluntary termination of employment shall be forfeited.
(iv) Upon a Participant’s involuntary termination of employment by the Company without cause, all Vested Deferred Awards
shall be paid to the Participant in accordance with the terms of this Plan and any Deferred Awards which have not vested as of the effective
date of the Participant’s involuntary termination of employment shall be forfeited.
(v) Upon a Participant’s termination of employment by the Company “for cause,” the Participant forfeits all Performance
Awards, all Initial Payments that have not been paid, and all unvested and Vested Deferred Awards credited to the Participant’s Cash or
Common Stock Accounts. A termination “for cause” is a termination pursuant to a finding or determination by the Company of theft, fraud,
embezzlement or any act which is detrimental or damaging to the business, operation or reputation of the Company.
(b) Payment of Vested Deferred Awards.
Vested Deferred Awards shall be paid on the earliest of the following events:
(i) On the December 31 of the Company’s first fiscal year following the related Performance Year (or within 90 days thereafter),
one-half of the Deferred Award (i.e., one-third of the total Performance Award) for a Performance Year, to the extent vested, shall be paid to the
Participant.
(ii) On the December 31 of the second fiscal year following the related Performance Year (or within 90 days thereafter), one-half
of the Deferred Award (i.e., one-third of the total Performance Award) for a Performance Year, to the extent vested, shall be paid to the
Participant.
(iii) Upon the Participant’s Disability or death (or within 90 days thereafter), the Participant’s entire Vested Deferred Award shall
be paid in a lump sum to the Participant (or, in the case of death, to the Participant’s beneficiary).
(iv) Upon the Participant’s Separation from Service, the Participant’s entire Vested Deferred Award (to the extent the Vested
Deferred Award is not forfeited pursuant to Section 5(a)(iii), (iv), or (v)) shall be paid in a lump sum to the Participant on the date that is six
months following the date of Separation from Service (or within 30 days thereafter).
(v) Payments shall be made in cash to the extent the Vested Deferred Award is credited to a Participant’s Cash Account and in a
number of shares of Common Stock equal to the Stock Units to the extent the Vested Deferred Award is credited to the Participant’s Common
Stock Account. The Stock Units credited to a Participant’s Common Stock Account in connection with a Vested Deferred Award can be
converted to and paid in cash, if determined by the Committee, in the amount of the closing Fair Market Value of the shares of Common Stock
related to the Stock Units converted and paid in cash on the first trading day of the Company’s fiscal year in which the conversion or cash
payment is made.
6. Dilution and Other Adjustments
The Committee can, in its sole discretion, require an adjustment in the Common Stock Accounts held by Participants in the event of any
change in the outstanding shares of Common Stock by reason of any stock dividend or stock split, recapitalization, reclassification, merger,
share exchange, consolidation, combination or exchange of shares or other similar change.
7. Change of Control
(a) For purposes of this Plan, a Change of Control shall mean the first to occur of any of the following events:
(i) The acquisition by any person other than the Company, or more than one person acting as a group, together with stock held by
such person or group, of beneficial ownership of more than 50% of the total fair market value or total voting power of the Company’s then
outstanding voting securities;
(ii) Any one person or more than one person acting as a group acquires, or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or group, beneficial ownership of 35% or more of the total voting power of the Company’s
then outstanding voting securities;
(iii) A majority of the members of the Company’s Board is replaced during any 12-month period by directors whose appointment or
election is not endorsed or approved by a majority of the members of the Board who were members of the Board prior to the initiation of the
replacement; or
(iv) Any one person or more than one person acting as a group acquires, or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or group, assets of the Company that have a total gross fair market value of 40% or more of
the total gross fair market value of all of the assets of the Company immediately prior to the initiation of the acquisition.
(b) Upon the occurrence of a Change of Control, all Deferred Awards shall immediately vest and be paid to Participants within 30 days
of the date on which the Change of Control occurs.
8. Miscellaneous
(a) Tax Withholding. The Company shall have the right to deduct from any payments made or benefits accrued under the Plan, any
Federal, state, or local taxes required by law to be withheld. In the case of awards paid in Common Stock, a Participant may elect to have any
portion of any withholding taxes
payable in respect of a distribution of Common Stock satisfied through the retention by the Company of shares of Common Stock having a
Fair Market Value on the date of withholding equal to the withholding amount, subject to compliance with any requirements of applicable law
and subject to such other restrictions as the Company may impose.
(b) Employment Rights. Neither the Plan nor any action taken hereunder shall be construed as giving an Employee or Participant any
right to be retained in the employ of the Company nor shall any action taken hereunder be construed as entitling the Company to the services
of any Employee or Participant for any period of time.
(c) Beneficiaries. Each Participant shall have the right, at any time, to designate a beneficiary or beneficiaries (both primary and
contingent) to whom payments under this Plan shall be made if the Participant dies and amounts under this Plan are payable following the
Participant’s death. Any beneficiary designation shall be made in writing and filed with the Company and shall become effective only when
received and accepted by the Company.
A Participant may change his beneficiary designation by filing a new designation with the Company. The filing of a new
beneficiary designation will cancel any and all beneficiary designations previously filed.
If a Participant fails to designate a beneficiary, or if all designated beneficiaries predecease the Participant or die prior to complete
distribution of the Participant’s benefits, the payments under this Plan shall be made to the Participant’s Estate.
(d) Nontransferability. A person’s rights and interest under this Plan, including amounts payable, shall be solely the rights of a
general unsecured creditor of the Company and such rights may not be assigned, pledged or transferred except to a designated beneficiary as
provided above.
(e) Governing Law. All matters relating to the Plan or to any Performance Awards granted under the Plan shall be governed by the
laws of the State of Maryland.
(f) Shareholder Approval. The Plan, as amended and restated herein, shall be submitted to the Company’s stockholders for approval
in accordance with Code Section 162(m). After the Plan is approved by the Company’s stockholders, this Plan may not be amended or
changed without stockholder approval if the amendment or change would limit the deductibility of Performance Awards paid or distributed
pursuant to the Plan under Code Section 162(m).
9. Amendments
Subject to Section 8(f) above, the Committee may, in its sole and absolute discretion, amend, suspend or terminate the Plan or any
portion of the Plan at any time. The Committee may also, at any time, in their sole and absolute discretion, amend, revise or modify the terms of
a Participant’s Performance Award(s) or any terms or conditions related to a Participant’s Performance Award(s), including the terms and
conditions related to the vesting of Performance Award(s), Initial Payment(s) and any Deferred Awards, notwithstanding anything in this Plan
or in any Performance Award to the contrary.
10. Aggregation of Employers
If the Company is a member of a controlled group of corporations or a group of trades or business under common control (as described
in Code section 414(b) or (c), but substituting a 50% ownership level for the 80% level set forth in those Code Sections), all members of the
group shall be treated as a single employer for purposes of whether there has occurred a Separation from Service and for any other purposes
under the Plan as Code section 409A shall require.
11. Aggregation of Plans.
If the Company offers other non-elective account balance deferred compensation plans in addition to this Plan, those plans together
with this Plan shall be treated as a single plan to the extent required under Code section 409A.
Exhibit 10.33
AMENDMENT NO. 1
TO

PERFORMANCE AWARD PROGRAM
The Compensation Committee of the Board of Directors of The Ryland Group, Inc. (the “Corporation”), pursuant to its power and
authority to amend the Performance Award Program (“Award Program”), amends the Award Program effective as of January 1, 2005, to confirm
that the Plan is exempt from the requirements of section 409A of the Internal Revenue Code as a short-term deferral program described under
Treas. Reg. 1.409A-1(b)(4).
Accordingly, the Award Program is amended by adding the following sentence to the end of the Section titled “Distribution of
Performance Awards”:
“Notwithstanding anything in the Award Program to the contrary, all payments of performance awards shall be made to Participants
within two and one-half months following the end of year during which the participant becomes vested in the performance award.”
IN WITNESS WHEREOF, this Amendment No. 1 has been duly executed by the Corporation, effective as of January 1, 2005.
____________________________________________________ By:________________________________________________
Print Name:__________________________________________ Print Name:_________________________________________
Date:______________________________________________
Exhibit 10.35
AMENDMENT NO. 1
TO

SENIOR EXECUTIVE PERFORMANCE PLAN
The Compensation Committee of the Board of Directors of The Ryland Group, Inc. (the “Corporation”), pursuant to its power and
authority to amend the Senior Executive Performance Plan (the “Plan”), amends the Plan effective as of January 1, 2005, to confirm that the Plan
is exempt from the requirements of section 409A of the Internal Revenue Code as a short-term deferral program described under Treas. Reg.
1.409A-1(b)(4).
Accordingly, the Plan is amended by adding the following sentence to the end of the Section titled “Bonuses”:
“Notwithstanding anything in the Plan to the contrary, bonuses payable pursuant to the Plan shall be paid in cash during the two
and one-half month period following the end of the year in which the bonus is earned and vested.”
IN WITNESS WHEREOF, this Amendment No. 1 has been duly executed by the Corporation, effective as of January 1, 2005.
____________________________________________________ By:________________________________________________
Print Name:__________________________________________ Print Name:_________________________________________
Date:______________________________________________
Exhibit 12.1: Computation of Ratio of Earnings to Fixed Charges

(in thousands, except ratio) 2004 2005 2006 2007 2008
Consolidated pretax income (loss) $521,212 $721,051 $567,108 $(420,098) $(405,764)
Share of distributed loss (income) of 50%-or-less-owned affiliates, net of equity pickup (5,772) (315) 260 (342) 43,900
Amortization of capitalized interest 41,764 45,483 48,708 41,689 61,146
Interest 53,242 66,697 71,955 62,122 47,109
Less interest capitalized during the period (52,015) (65,959) (71,750) (62,024) (46,889)
Interest portion of rental expense 5,639 5,678 7,736 8,911 7,416
EARNINGS (LO S S ) $564,070 $772,635 $624,017 $(369,742) $(293,082)
Interest $ 53,242 $ 66,697 $ 71,955 $ 62,122 $ 47,109

Interest portion of rental expense 5,639 5,678 7,736 8,911 7,416
FIXED C HARGES $ 58,881 $ 72,375 $ 79,691 $ 71,033 $ 54,525
Ratio of earnings (loss) to fixed charges 9.58 10.68 7.83 (5.21) (5.38)
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Exhibit 12.1: Computation of Ratio of Earnings to Fixed Charges
Exhibit 21: Subsidiaries of the Registrant
As of December 31, 2008, the following subsidiaries represent the significant subsidiaries of the Registrant:
Ryland Homes of California, Inc., a Delaware corporation

Ryland Homes of Texas, Inc., a Texas corporation
The Ryland Corporation, a California corporation
Ryland Organization Company, a California corporation
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Exhibit 21: Subsidiaries of the Registrant
Exhibit 23: Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-3 No. 333-100167) and related Prospectus of The Ryland Group, Inc.,
(6) Registration Statement (Form S-8 No. 33-32431) pertaining to The Ryland Group, Inc. Retirement Savings Opportunity Plan,
(7) Registration Statement (Form S-8 No. 333-68397) pertaining to The Ryland Group, Inc. Executive and Director Deferred Compensation
Plan and The Ryland Group, Inc. Non-Employee Directors' Stock Unit Plan,
(8) Registration Statement (Form S-8 No. 333-133602) pertaining to The Ryland Group, Inc. 2006 Non-Employee Director Stock Plan, and
(9) Registration Statement (Form S-8 No. 333-150465) pertaining to The Ryland Group, Inc. 2008 Equity Incentive Plan;
of our reports dated February 23, 2009, with respect to the consolidated financial statements and schedule of The Ryland Group, Inc. and the
effectiveness of internal control over financial reporting of The Ryland Group, Inc., included in this Annual Report (Form 10-K) for the year
ended December 31, 2008.

Ernst & Young LLP
February 25, 2009
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Exhibit 23: Consent of Independent Registered Public Accounting Firm
Exhibit 24: Power of Attorney
The undersigned directors of The Ryland Group, Inc., a Maryland corporation, constitute and appoint Timothy J. Geckle the true and lawful
agent and attorney-in-fact of the undersigned, with full power and authority in said agent and attorney-in-fact to sign for the undersigned, in
their respective names as directors of The Ryland Group, Inc., the Annual Report on Form 10-K of The Ryland Group, Inc. for the fiscal year
ended December 31, 2008, and any amendments thereto, to be filed with the Securities and Exchange Commission under the Exchange Act, as
amended.
Dated: February 25, 2009
/s/ R. Chad Dreier
R. Chad Dreier, Chairman of the Board and

Chief Executive Officer
/s/ Leslie M. Frécon
Leslie M. Frécon, Director
/s/ Roland A. Hernandez
Roland A. Hernandez, Director
/s/ William L. Jews
William L. Jews, Director
/s/ Ned Mansour
Ned Mansour, Director
/s/ Robert E. Mellor
Robert E. Mellor, Director
/s/ Norman J. Metcalfe
Norman J. Metcalfe, Director
/s/ Charlotte St. Martin
Charlotte St. Martin, Director

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Exhibit 24: Power of Attorney
Exhibit 31.1: Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)

Under the Exchange Act
I, R. Chad Dreier, certify that:
1. I have reviewed this Annual Report on Form 10-K of The Ryland Group, Inc. (the "Company");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this
report;
4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the Company and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the
Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting; and
5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's
internal control over financial reporting.
Date: February 25, 2009 /s/ R. Chad Dreier
R. Chad Dreier
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Exhibit 31.2: Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)

Under the Exchange Act
I, Gordon A. Milne, certify that:
1. I have reviewed this Annual Report on Form 10-K of The Ryland Group, Inc. (the "Company");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this
report;
4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the Company and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the
Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting; and
5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's
internal control over financial reporting.
Date: February 25, 2009 /s/ Gordon A. Milne
Gordon A. Milne
Executive Vice President and Chief Financial Officer
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Certification of Principal Executive Officer

Pursuant to 18 U.S.C. 1350
I, R. Chad Dreier, Chairman and Chief Executive Officer (principal executive officer) of The Ryland Group, Inc. (the "Company"), certify, to the
best of my knowledge, based upon a review of the Annual Report on Form 10-K for the year ended December 31, 2008 of the Company (the
"Report"), that:
(1) The Report fully complies with the requirements of Section 13(a) of the Exchange Act, as amended; and
(2) The information contained and incorporated by reference in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
/s/ R. Chad Dreier
R. Chad Dreier
February 25, 2009
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Certification of Principal Financial Officer

Pursuant to 18 U.S.C. 1350
I, Gordon A. Milne, Executive Vice President and Chief Financial Officer (principal financial officer) of The Ryland Group, Inc. (the
"Company"), certify, to the best of my knowledge, based upon a review of the Annual Report on Form 10-K for the year ended December 31,
2008 of the Company (the "Report"), that:
(1) The Report fully complies with the requirements of Section 13(a) of the Exchange Act, as amended; and
(2) The information contained and incorporated by reference in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
/s/ Gordon A. Milne
Gordon A. Milne
February 25, 2009
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RYLAND GROUP INC 10-K (Annual Reports) 2009-02-25

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RYLAND GROUP INC 10-K (Annual Reports) 2009-02-25

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For the fiscal year ended December 31, 2008

o Transition Report Pursuant to Section 13 or 15(d) of the Exchange Act

For the transition period from to

THE RYLAND GROUP, INC.

24025 Park Sorrento, Suite 400, Calabasas, California 91302

Registrant's telephone number, including area code: (818) 223-7500

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class Name of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Exchange Act: None

DOCUMENTS INCORPORATED BY REFERENCE

Name of Document Location in Report

THE RYLAND GROUP, INC.

Item 10. Directors, Executive Officers and Corporate Governance 66

Item 15. Exhibits, Financial Statement Schedules 67

Region/Segment Major Markets Served

Land Acquisition and Development

Customer Service and Warranties

Title and Escrow Services

Real Estate and Economic Conditions

Web Site Access to Reports

Item 1A. Risk Factors

Construction costs can fluctuate and impact the Company's margins.

Natural disasters may have a significant impact on the Company's business.

Item 1B. Unresolved Staff Comments

Item 3. Legal Proceedings

Item 4. Submission of Matters to a Vote of Security Holders

Market for Common Equity, Common Stock Prices and Dividends

Issuer Purchases of Equity Securities

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*

* $100 invested on 12/31/03 in stock or index-including reinvestment of dividends.

Securities Authorized for Issuance Under Equity Compensation Plans

Equity compensation plans not approved by

Item 6. Selected Financial Data

YEAR ENDED DECEMBER 31,

YEAR ENDED DECEMBER 31,

YEAR ENDED DECEMBER 31,

Homebuilding Segment Information

(in thousands) 2008 2007 2006

2008 % C HG 2007 % CHG 2006 % CHG

YEAR ENDED DECEMBER 31,

2008 % C HG 2007 % CHG 2006 % CHG

(in thousands) 2008 2007 2006

Homebuilding Segments 2008 versus 2007

Homebuilding Segments 2007 versus 2006

YEAR ENDED DECEMBER

EXPENS ES 41,466 50,754 58,638

Investments in Joint Ventures

Financial Condition and Liquidity

(in thousands) 2008 2007 2006

Unsecured Revolving Credit Facility

Nonrecourse Secured Notes Payable

CONT RACT UAL PAYMENT S DUE BY PERIOD

Off–Balance Sheet Arrangements

Critical Accounting Policies

Variable Interest Entities ("VIE")

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk Summary

Interest Rate Sensitivity

Item 8. Financial Statements and Supplementary Data

CONSOLIDATED STATEMENTS OF EARNINGS

YEAR ENDED DECEMBER 31,

CONSOLIDATED BALANCE SHEETS