Employment Agreement - The Ryland Group Inc. and R. Chad Dreier


                           EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT dated as of the 31st day of December 1994, by and 
between The Ryland Group, Inc., a Maryland corporation (the 'Company'), and  
R. Chad Dreier (the 'Executive').

                        W  I  T  N  E  S  S  E  T  H:

     The Executive is presently employed by the Company in the capacity of its 
Chairman of the Board, President and Chief Executive Officer and possesses 
considerable experience and an intimate knowledge of the business and affairs 
of the Company, its policies, methods, personnel and operations.  The Company 
recognizes that the Executive's contributions have been substantial and 
meritorious and that the Executive has demonstrated unique qualifications to 
act in an executive capacity for the Company.  The Company is desirous of 
assuring the continued employment of the Executive and the Executive is 
desirous of having such assurance.

     NOW THEREFORE, in consideration of the foregoing and of the mutual     
covenants and agreements of the parties set forth in this Agreement, and of 
other good and valuable consideration the receipt and sufficiency of which are 
hereby acknowledged, the parties hereto, intending to be legally bound, agree 
as follows: 

1.   TERM OF EMPLOYMENT.  The Company hereby agrees to employ the Executive 
and the Executive hereby agrees to continue to serve the Company, in 
accordance with the terms and conditions set forth herein, for an initial 
period of three (3) years, commencing as of January 1, 1995 (the 'Effective 
Date'); subject, however, to earlier termination as expressly provided herein.  
The initial three (3) year period of employment automatically shall be 
extended for one (1) additional year at the end of the initial three (3) year 
term, and then again after each successive year thereafter. However, either 
party may terminate this Agreement at the end of the initial three (3) year 
period, or at the end of any successive one (1) year term thereafter, by 
giving the other party written notice of intent not to renew, delivered at 
least one hundred eighty (180) days prior to the end of such initial period or 
successive term.  In the event such notice of intent not to renew is properly 
delivered, this Agreement, along with all corresponding rights, duties and 
covenants, automatically shall expire at the end of the initialperiod or 
successive term then in progress (except as otherwise provided in Section 6 
and 9 hereof).

Regardless of the above, if at any time during the initial period of 
employment, or successive term, a Change in Control of the Company occurs (as 
defined in Section 7 hereof), then the term of this Agreement thereafter shall 
be the longer of: (a) two (2) years beyond the month in which the effective 
date of such Change in Control occurs; or (b) the term as otherwise provided 
by this Section 1.

2.   POSITION AND RESPONSIBILITIES.  During the term of this Agreement, the  
Executive shall serve as the President and Chief Executive Officer of the 
Company and, if so elected, as a member of the Company's Board of Directors 
and Chairman of the Board. In his capacity as President and Chief Executive 
Officer of the Company, the Executive shall be the Company's highest ranking 
executive officer and shall have full authority and responsibility, subject to 
the control of the Board of Directors of the Company, for formulating and 
administering the plans and policies of the Company. The Executive shall have 
the same status, privileges and responsibilities normally inherent in such 
capacities in corporations of similar size and character.

3.   PERFORMANCE OF DUTIES.  During the term of this Agreement, the Executive 
agrees to devote substantially his full time, attention and energies 
to the Company's business and will not engage in consulting work or any 
trade or business for his own account or for or on behalf of any other 
person, firm or corporation which competes or, in a material way, 
conflicts or interferes with the performance of his duties hereunder.
Subject to Section 9.1 herein, the Executive may serve as a director of 
other companies so long as such service does not interfere with the per-
formance of his duties to the Company.

4.   COMPENSATION.  As remuneration for all services to be rendered by the 
Executive during the term of this Agreement, and as consideration for 
complying with the covenants herein, the Company shall pay and provide to the 
Executive the following: 




4.1  BASE SALARY.  The Company shall pay the Executive a Base Salary in an 
amount which shall be established from time to time by the Board of Directors 
of the Company, provided that such Base Salary shall not be less than six 
hundred thousand dollars ($600,000) per year. This Base Salary shall be paid 
to the Executive in installments throughout the year consistent with the 
normal payroll practices of the Company.  The annual Base Salary shall be 
reviewed at least annually following the Effective Date of this Agreement to 
ascertain whether, in the judgment of the Board of Directors, such Base Salary 
should be increased, based on the performance of the Executive during the 
year, inflation and other factors deemed appropriate by the Board of 
Directors.  If so increased, the Base Salary as stated above shall, likewise, 
be increased for all purposes of this Agreement. 

4.2  ANNUAL BONUS.  In addition to his Base Salary, the Executive shall be 
eligible to receive an annual cash bonus (the 'Bonus') in respect of each 
fiscal year during the term of this Agreement equal to three-quarters of one 
percent (0.75%) of the Ordinary Course Pre-Tax Income.  For purposes of this 
Agreement, 'Ordinary Course Pre-Tax Income' shall mean the consolidated pre-
tax income of the Company and its subsidiaries as reflected in the audited 
consolidated financial statements of the Company, as adjusted in good faith by 
the Compensation Committee to eliminate the effect of nonrecurring gains and 
losses and other items not reflective of the ongoing ordinary course of 
business operating performance of the Company and its subsidiaries.

The Bonus shall be payable to the Executive in cash within sixty (60) days 
after the end of each fiscal year during the term of the Agreement, commencing 
with the fiscal year ending December 31, 1995.

4.3  INCENTIVE PLANS.  The Executive shall be eligible to participate in such 
profit-sharing, stock option, Bonus, incentive and performance award programs 
as are made available generally to executive officers of the Company, such 
participation to be on a basis which is commensurate with the Executive's 
position with the Company (and in any event a level of participation at least 
as favorable as that provided to executives with junior authority or duties).

4.4  OTHER BENEFITS.  The Executive shall be entitled to receive employee 
benefits, including, without limitation, pension, disability, group life, 
sickness, accident and health insurance programs and split-dollar life 
insurance programs, and perquisites as are made available generally to 
executive officers of the Company, such participation to be on a basis which 
is commensurate with the Executive's position within the Company (and in any 
event a level of participation at least as favorable as that provided to 
executives with junior authority or duties).

4.5  RIGHT TO CHANGE PLANS.  By reason of Sections 4.3 and 4.4 herein, the      
Company shall not be obligated to institute, maintain, or refrain from 
changing, amending, or discontinuing any benefit plan, program, or perquisite, 
so long as such changes are similarly applicable to executive employees 
generally. 

5.   EXPENSES.  The Company shall pay, or reimburse the Executive, for all 
ordinary and necessary expenses, in a reasonable amount, which the Executive 
incurs in performing his duties under this Agreement, including, but not 
limited to, travel, entertainment, professional dues and subscriptions, and 
all dues, fees, and expenses associated with membership in various 
professional, business, and civic associations and societies of which the 
Executive's participation is in the best interest of the Company. 

6.   EMPLOYMENT TERMINATIONS.

6.1  TERMINATION DUE TO RETIREMENT OR DEATH.  In the event the Executive's 
employment is terminated while this Agreement is in force by reason of 
Retirement (as defined under the then established rules of the Company's 
retirement plans), or death, the Executive's benefits shall be determined in 
accordance with the Company's retirement, survivor's benefits, insurance, and 
other applicable programs of the Company then in effect. Upon the effective 
date of such termination, the Company's obligation under this Agreement to pay 
and provide to the Executive the elements of pay described in Sections 4.1, 
4.2, 4.3 and 4.4 shall immediately expire, except to the extent that the 
benefits described in Section 4.4 continue after Retirement under the terms of 
the benefit plans and programs which apply generally to the Company's 
executives and except that the Executive shall receive all other rights and 
benefits that he is vested in pursuant to other plans and programs of the 
Company. In addition, the Company shall pay to the Executive (or the 
Executive's beneficiaries, or estate, as applicable), a pro rata share of his 
Bonus for the fiscal year in which employment termination occurs, based on the 
results of the Company for such fiscal year. This pro rata Bonus amount shall 
be determined by multiplying the Bonus which otherwise would apply or such 
full fiscal year by a fraction, the numerator of which is the number of days 
in such fiscal year prior to the date of employment termination and the 
denominator of which is the total number of days in such fiscal year. The pro 
rata Bonus shall be paid within sixty (60) days of the end of such fiscal 
year.




6.2  TERMINATION DUE TO DISABILITY.  In the event that the Executive becomes 
Disabled (as defined below) during the term of this Agreement and is, 
therefore, unable to perform his duties herein for more than one hundred 
twenty (120) total calendar days during any period of twelve (12) consecutive 
months, or in the event of the Board's reasonable expectation that the 
Executive's Disability will exist for more than a period of one hundred twenty 
(120) calendar days, the Company shall have the right to terminate the 
Executive's active employment as provided in this Agreement. However, the 
Board shall deliver written notice to the Executive of the Company's intent to 
terminate for Disability at least thirty (30) calendar days prior to the 
effective date of such termination.  A termination for Disability shall become 
effective upon the end of the thirty (30) day notice period. Upon such 
effective date, the Company's obligation to pay and provide to the Executive 
the elements of pay described in Sections 4.1, 4.2, 4.3 and 4.4 shall 
immediately expire, except to the extent that the benefits described in 
Section 4.4 continue after Disability or Retirement under the terms of the 
benefit plans and programs which apply generally to the Company's executives 
and except that the Executive shall receive all rights and benefits that he is 
vested in pursuant to other plans and programs of the Company. In addition, 
the Company shall pay to the Executive a pro rata share of his Bonus for the 
fiscal year in which employment termination occurs, based on the results for 
such fiscal year, determined as provided in Section 6.1.  The pro rata Bonus 
shall be paid within sixty (60) days of the end of such fiscal year.

The term 'Disability' shall mean, for all purposes of this Agreement, the 
incapacity of the Executive, due to injury, illness, disease, or bodily or 
mental infirmity, to engage in the performance of substantially all of the 
usual duties of employment with the Company as contemplated by Section 2 
herein, such Disability to be determined by the Board of Directors of the 
Company upon receipt and in reliance on competent medical advice from one (1) 
or more individuals, selected by the Board, who are qualified to give such 
professional medical advice.It is expressly understood that the Disability of 
the Executive for a period of one hundred twenty (120) calendar days or less 
in the aggregate during any period of twelve (12) consecutive months, in the 
absence of any reasonable expectation that his Disability will exist for more 
than such a period of time, shall not constitute a failure by him to perform 
his duties hereunder and shall not be deemed a breach or default and the 
Executive shall receive full compensation for any such period of Disability or 
for any other temporary illness or incapacity during the term of this 
Agreement.

6.3  VOLUNTARY TERMINATION BY THE EXECUTIVE.  The Executive may terminate this 
Agreement at any time by giving the Board of Directors of the Company written 
notice of intent to terminate, delivered at least ninety (90) days prior to 
the effective date of such termination.Upon the expiration of the ninety (90) 
day notice period, the termination by the Executive shall become effective.  
The Company shall pay the Executive his Base Salary, at the rate then in 
effect as provided in Section 4.1 herein, through the effective date of 
termination, plus all other benefits to which the Executive has a vested right 
to at that time (for this purpose, the Executive shall not be paid any Bonus 
with respect to the fiscal year in which voluntary termination under this 
Section 6.3 occurs).  The Company and the Executive shall have no further 
obligations under this Agreement after the effective date of such termination, 
except as set forth in Sections 9 or 10 hereof.

6.4  INVOLUNTARY TERMINATION BY THE COMPANY WITHOUT CAUSE.  The Board may 
terminate the Executive's employment, as provided under this Agreement, at any 
time, for reasons other than death, Disability, Retirement, or for Cause (as 
defined in Section 6.5 hereof), by notifying the Executive in writing of the 
Company's intent to terminate, at least thirty (30) calendar days prior the 
effective date of such termination.Upon the expiration of the thirty (30) day 
notice period the termination by the Company shall become effective, and the 
Company shall pay and provide to the Executive the benefits set forth in this 
Section 6.4 (plus, in the event of termination by the Company during a Change 
of Control Period, any additional benefits required by Section 7.1 hereof).

Upon a termination of the Executive's employment by the Company pursuant to 
this Section 6.4 at any time other than during a Change of Control Period, the 
Company shall pay to the Executive, within thirty (30) days after the 
effective date of such termination, a lump sum cash payment equal to the 
greater of: (a) the Base Salary then in effect for the remaining term of this 
Agreement (assuming no additional extensions of this Agreement's term beyond 
that in effect as of the effective date of termination); or (b) eighteen (18) 
full months of his Base Salary in effect as of the effective date of 
termination, and shall thereafter provide to the Executive a continuation of 
his health and welfare benefits for a period equal to the greater of such 
remaining term or eighteen (18) months, as applicable.  If for any reason the 
Company is unable to continue health and welfare benefits as required by the 
preceding sentence, the Company shall either provide equivalent benefits to 
the Executive or pay to the Executive a lump sum cash payment equal to the 
value of the benefits which the Company is unable to provide.  Continuation of 
health benefits under this Section 6.4 will count against, and will not 
extend, the period during which benefits are required to be continued under 
COBRA.




In addition, the Company shall make a prorated payment of the Executive's 
Bonus for the fiscal year in which termination occurs, calculated based upon 
the performance of the Company through the end of the month immediately 
preceding the effective date of the termination.  Payment of the Bonus shall 
be made in cash, in one lump sum, at the same time payment of Base Salary is 
made pursuant to this Section 6.4. Further, the Company shall pay the 
Executive all other benefits to which the Executive has a vested right at the 
time, according to the provisions of each governing plan or program. The 
Company and the Executive thereafter shall have no further obligations under 
this Agreement after the effective date of termination, except as set forth in 
Sections 7, 9 or 10 hereof.

6.5  TERMINATION FOR CAUSE.  Nothing in this Agreement shall be construed to 
prevent the Board from terminating the Executive's employment under this 
Agreement for 'Cause.'

'Cause' shall be determined by the Board in the exercise of good faith and 
reasonable judgment, and shall be defined as fraud, embezzlement, theft, or 
other criminal act constituting a felony under U.S. laws, or the failure of 
the Executive to perform any material covenants under this Agreement, for 
reasons other than the Executive's death, Disability or Retirement.  In the 
event this Agreement is terminated by the Board for Cause, the Company shall 
pay the Executive his Base Salary through the effective date of the employment 
termination and the Executive shall immediately thereafter forfeit all rights 
and benefits (other than vested benefits) he would otherwise have been 
entitled to receive under this Agreement, including any right to a Bonus for 
the fiscal year in which the termination occurs.  The Company and the 
Executive thereafter shall have no further obligations under this Agreement, 
except as set forth in Sections 9 or 10 hereof. 

6.6  TERMINATION FOR GOOD REASON.  At any time during the term of this 
Agreement, the Executive may terminate this Agreement for Good Reason (as 
defined below) by giving the Board of Directors of the Company thirty (30) 
calendar days written notice of intent to terminate, which notice sets forth 
in reasonable detail the facts and circumstances claimed to provide a basis 
for such termination.  Upon the expiration of the thirty (30) day notice 
period, the Good Reason termination shall become effective, and the Company 
shall pay and provide to the Executive the benefits set forth in this 
Section 6.6 (plus in the event of termination for Good Reason during a Change 
of Control Period, any additional benefits required by Section 7.1 hereof). 

Good Reason shall mean, without the Executive's express written consent, the 
occurrence of any one or more of the following: 

(a)  The assignment of the Executive to duties materially inconsistent with 
the Executive's authorities, duties, responsibilities and status (including 
offices, titles, and reporting requirements) as an officer of the Company, or 
a reduction or alteration in the nature or status of the Executive's 
authorities, duties, or responsibilities from those in effect during the 
immediately preceding fiscal year, other than an insubstantial and inadvertent 
act that is remedied by the Company promptly after receipt of notice thereof 
given by the Executive; 

(b)  Without the Executive's consent, the Company's requiring the Executive to 
be based at a location which is at least fifty (50) miles further from the 
Executive's current primary residence than is such residence from the 
Company's current headquarters, except for required travel on the Company's 
business; 

(c)  A reduction by the Company in the Executive's Base Salary as in effect on 
the Effective Date, as provided in Section 4.1 herein, or as the same shall be 
increased from time to time;

(d)  The failure of the Company to obtain a satisfactory agreement from any 
successor to the Company to assume and agree to perform this Agreement, as 
contemplated in Section 11.1 herein. 

Upon a termination of the Executive's employment for Good Reason at any time 
other than during a Change of Control Period, the Executive shall be entitled 
to receive the same payments and benefits as he is entitled to receive 
following an involuntary termination of his employment by the Company without 
Cause, as specified in Section 6.4 herein. The payment of Base Salary and pro 
rata Bonus shall be made to the Executive within thirty (30) calendar days 
following the effective date of employment termination. Upon a termination for 
Good Reason during a Change of Control Period the Executive shall be entitled 
to receive the payments and benefits set forth in Section 7.1 herein in lieu 
of those set forth in this Section 6.6. 

The Executive's right to terminate employment for Good Reason shall not be 
affected by the Executive's incapacity due to physical or mental illness. The 
Executive's continued employment shall not constitute consent to, or a waiver 
of rights with respect to, any circumstance constituting Good Reason herein. 

6.7  NON-RENEWAL BY COMPANY.  Upon any termination of this Agreement as a 
result of a notice of non-renewal by the Company pursuant to Section 1 hereof, 
upon the effective date of such termination, the Company shall pay to the 
Executive a lump sum cash payment equal to twelve (12) full months Base Salary 
then in effect and shall continue the Executive's health and welfare benefits 
for twelve (12) full months.  If for any reason the Company is unable to 
continue health and welfare benefits as required by the preceding sentence, 
the Company shall either provide equivalent benefits to the Executive or pay 
to the Executive a lump sum cash payment equal to the value of the benefits




the Company is unable to provide.  Continuation of health benefits under this 
Section 6.4 will count against, and will not extend, the period during which 
benefits are required to be continued under COBRA.In addition, the Company 
shall pay the Executive's Bonus for the finalyear within sixty (60) days after 
the effective date of the termination of this Agreement in accordance with the 
provisions of Section 4.2 hereof.

7.   CHANGE IN CONTROL.

7.1  Employment Terminations in Connection with a Change in Control. In the 
event of a Qualifying Termination (as defined below) during a Change of 
Control Period, the Company shall pay to the Executive and provide him with 
benefits in lieu of the benefits which otherwise would have been payable under 
this Agreement such that the total benefits payable to the Executive shall be 
as follows: 

(a)  A lump sum amount equal to three (3) times the highest rate of the 
Executive's annualized Base Salary rate in effect at any time up to and 
including the effective date of termination; 

(b)  A lump sum amount equal to three (3) times the higher of the Executive's 
Bonus for the last fiscal year prior to the Change in Control or the average 
annual Bonus paid to the Executive for the last three (3) fiscal years prior 
to the Change in Control;

(c)  An amount equal to the Executive's unpaid Base Salary and pro rata Bonus 
through the effective date of termination, determined as provided in Section 
6.4; and (d)  A continuation of health and welfare benefits for three (3) full 
years from the effective date of termination.  If for any reason the Company 
is unable to continue health and welfare benefits as required by the preceding 
sentence, the Company shall either provide equivalent benefits to the 
Executive or pay to the Executive a lump sum cash payment equal to the value 
of the benefits which the Company is unable to provide.  Continuation of 
health benefits under this Section 6.4 will count against, and will not 
extend, the period during which benefits are required to be continued under 
COBRA.  The continuation of these welfare benefits may be discontinued by the 
Company prior to the end of the three (3) year period in the event the 
Executive has available substantially similar benefits from a subsequent 
employer, as determined by the Company's Board of Directors. 

For purposes of this Section 7, a Qualifying Termination shall mean any 
termination of the Executive's employment other than:(1) by the Company for 
Cause; (2) by reason of death, Disability or Retirement; or (3) by the 
Executive without Good Reason.  Payment of any lump sum amounts pursuant to 
this Section 7.1 will be made within sixty (60) days after the effective date 
of the termination of the Executive's Employment

7.2  DEFINITION OF 'CHANGE IN CONTROL'.  A Change in Control of the Company 
shall be deemed to have occurred as of the first day any one or more of the 
following conditions shall have been satisfied: 

(a)  Any Person (as defined in Section 3(a)(9) of the Securities Exchange Act 
of 1934) (other than those Persons in control of the Company as of the 
Effective Date, and other than a trustee or other fiduciary holding securities 
under an employee benefit plan of the Company, or a corporation owned directly 
or indirectly by the stockholders of the Company in substantially the same 
proportions as their ownership of stock of the Company), becomes the 
Beneficial Owner (as defined in Rule 13d-3 of the General Rules and 
Regulations under the Securities Exchange Act of 1934), directly or 
indirectly, of securities of the Company representing over thirty percent 
(30%) of the combined voting power of the Company's common stock then 
outstanding; or 

(b)  During any period of two (2) consecutive years (not including any period 
prior to the Effective Date), individuals who at the beginning of such period 
constitute the Board of Directors (and any new Director, whose election was 
approved or recommended by a vote of at least two-thirds (2/3) of the 
Directors then still in office who either were Directors at the beginning of 
the period or whose election or nomination for election was so approved), 
cease for any reason to constitute a majority thereof; or 

(c)  The stockholders of the Company approve: (i) a plan of complete 
liquidation of the Company; or (ii) an agreement for the sale or disposition 
of all or substantially all the Company's assets (except as provided in 
(iii)); or (iii) a merger, consolidation, share exchange or reorganization of 
the Company with or involving any other corporation, other than a merger, 
consolidation, share exchange or reorganization that would result in the 
owners of common stock having more than fifty percent (50%) of the combined 
voting power of the common stock of the Company outstanding immediately prior 
thereto, continuing to have (either by such stock remaining outstanding or by 
being converted into common stock of another entity or entities), more than 
fifty percent (50%) of the combined voting power of the common stock which is 
outstanding immediately after such merger, consolidation, share exchange or 
reorganization. 




However, in no event shall a Change in Control be deemed to have occurred, 
with respect to the Executive, if the Executive is part of a purchasing group 
which consummates the Change in Control transaction. The Executive shall be 
deemed 'part of a purchasing group' for purposes of the preceding sentence if 
the Executive is an equity participant in the purchasing company or group 
(except for: (i) passive ownership of less than two percent (2%) of the stock 
of the purchasing company; or (ii) ownership of equity participation in the 
purchasing company or group which is otherwise not significant, as determined 
prior to the Change in Control by a majority of the nonemployee continuing 
Directors).

7.3  CHANGE OF CONTROL PERIOD.  'Change in Control Period' shall mean the 
period of time commencing with the date on which the Company becomes aware of 
the Change in Control or becomes aware of a proposed transaction which 
reasonably could be expected to result in a change in control and ending on 
the first to occur of  two (2) years after the effective date of the Change in 
Control or the date on which the proposed transaction no longer is reasonably 
expected to occur.

7.4  LIMITATION ON CHANGE IN CONTROL BENEFITS.  In the event that any of the 
amounts payable to the Executive by the Company pursuant to the provisions of 
Section 7.1 of this Agreement or otherwise would, if made, be nondeductible 
for Federal income tax purposes under Section 280G of the Internal Revenue 
Code of 1986, as amended (after application of Section 280G(b)(4)), the amount 
payable by the Company shall be reduced by the minimum amount necessary to 
cause the Executive to receive no payments which would be nondeductible by the 
Company for Federal income tax purposes under Section 280G of the Code.  For 
purposes of determining whether or not payments under Section 7.1 or otherwise 
would in fact be nondeductible to the Company under Code Section 280G, the 
following principles and guidelines are agreed to, and, absent contrary mutual 
agreement, shall be followed:  (i) all payments under or in respect of 
supplemental retirement plans, and stock option, bonus and other incentive 
compensation plans are intended to represent reasonable compensation for 
personal services performed by the Executive through the date of termination 
of the Executive's employment, (ii) if there is an issue as to whether any 
payments being made to the Executive constitute 'parachute payments' under 
Section 280G of the Code,and the Company and the Executive cannot agree upon 
the amount thereof within thirty (30) days after the effective date of the 
termination of the Executive's employment, the Executive and the Company 
shall, within forty-five (45) days after the effective date of the termination 
of Executive's employment, mutually agree upon and appoint a third party 
arbitrator who shall analyze the issue giving recognition to the foregoing 
intentions and shall issue a report within thirty (30) days of the appointment 
stating the arbitrator's best estimate of the amount of 'parachute payments' 
under Code Section 280G, if any, and the report of such arbitrator shall be 
conclusive and binding on the parties,(iii) the third party arbitrator 
selected shall be a nationally recognized accounting firm or a management 
consulting firm specializing in the area of executive compensation, who shall 
be entitled to engage independent legal counsel for advice with respect to 
legal matters in connection with the report, (iv) if the parties cannot agree 
upon a third party arbitrator within the specified forty-five (45) day time 
period, an arbitrator shall be selected and appointed by the Chief Judge of 
the United States District Court for the District of Maryland and (v) the 
costs and expenses of the arbitrator, including counsel's fees, shall be borne 
by the Company.The Executive and the Company agree that each will in all cases 
file tax returns on a basis consistent with any conclusions reached with 
respect to the deductibility of amounts under Code Section 280G, and will 
defend such position to the extent practicable in the event a contrary 
position is taken by the Internal Revenue Service.  The Executive shall be 
entitled to reimbursement of counsel fees in connection with any such defense 
as provided in Section 12.1 hereof.

In the event of any reduction of payments made or to be made to the Executive 
pursuant to Section 7.1 or otherwise as a result of this Section 7.4, the 
Executive shall be entitled to select the amount and form of compensation to 
be reduced or eliminated.

7.5  SUBSEQUENT IMPOSITION OF EXCISE TAX.  If, notwithstanding compliance with 
the provisions of Section 7.4 herein, it is ultimately determined by a court 
or pursuant to a final determination by the Internal Revenue Service that any 
portion of the payments to the Executive is considered to be an 'excess 
parachute payment,' subject to the excise tax under Section 4999 of the Code, 
which was not contemplated to be an 'excess parachute payment' at the time of 
payment (so as to accurately determine whether a limitation should have been 
applied to the payments to maximize the net benefit to the Executive, as 
provided in Section 7.4 hereof), the Executive shall be entitled to receive a 
lump sum cash payment sufficient to place the Executive in the same net after-
tax position, computed by using the 'Special Tax Rate' as such term is defined 
below, that the Executive would have been in had such payment not been subject 
to such excise tax, and had the Executive not incurred any interest charges or 
penalties with respect to the imposition of such excise tax. For purposes of 
this Agreement, the 'Special Tax Rate' shall be the highest effective Federal 
and state marginal tax rates applicable to the Executive in the year in which 
the payment contemplated under this Section 7.5 is  made. 

8.   Outplacement Assistance.  Following a Qualifying Termination (as defined 
in Section 7.1 herein) the Executive shall be reimbursed by the Company for 
the costs of all outplacement services obtained by the Executive within the 
two (2) year period after the effective date of termination; provided, 
however, that the total reimbursement shall be limited to an amount equal to 
fifteen percent (15%) of the Executive's Base Salary as of the effective date 
of termination. 




9.  NONCOMPETITION

9.1  PROHIBITION ON COMPETITION.  Without the prior written consent of the 
Company, during the term of this Agreement, and for twenty-four (24) months 
following termination of this Agreement by the Company for Cause or expiration 
or termination of this Agreement as a result of notice of the Executive to the 
Company pursuant to Section 1 or Section 6.3 hereof (the 'Restrictive Period') 
of this Agreement, the Executive shall not, as a stockholder, partner, 
employee or an officer, engage directly or indirectly in any business or 
enterprise which is 'in competition' with the Company or its successors or 
assigns. For purposes of this Agreement, a business or enterprise will be 
deemed to be 'in competition' if it is engaged in any significant business 
activity of the Company or its subsidiaries within the continental United 
States. 

However, the Executive shall be allowed to purchase and hold for investment 
less than two percent (2%) of the shares of any corporation whose shares are 
regularly traded on a national securities exchange or in the over-the-counter 
market. 

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

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

9.4  SPECIFIC PERFORMANCE.  The parties recognize that the Company will have 
no adequate remedy at law for breach by the Executive of the requirements of 
this Section 9 and, in the event of such breach, the Company and the Executive 
hereby agree that, in addition to the right to seek monetary damages, the 
Company will be entitled to a decree of specific performance, mandamus, or 
other appropriate remedy to enforce performance of such requirements. 

10.  INDEMNIFICATION.  The Company hereby covenants and agrees to indemnify 
and hold harmless the Executive fully, completely, and absolutely against and 
in respect to any and all actions, suits, proceedings, claims, demands, 
judgments, costs, expenses (including attorney's fees), losses, and damages 
resulting from the Executive's good faith performance of his duties and 
obligations under the terms of this agreement, subject to compliance with any 
applicable requirements and limitations improved by the Company's Articles of 
Incorporation and By-Laws as in effect on the date hereof and applicable law.


SECTION II.  ASSIGNMENT

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

Failure of the Company to obtain the agreement of any successor to be bound by 
the terms of this Agreement prior to the effectiveness of any such succession 
shall be a breach of this Agreement, and shall immediately entitle the 
Executive to compensation from the Company in the same amount and on the same 
terms as the Executive would be entitled in the event of a termination of 
employment for Good Reason during a Change in Control Period, as provided in 
Section 7 herein.Except as herein provided, this Agreement may not otherwise 
be assigned by the Company. 

11.2 ASSIGNMENT BY EXECUTIVE.  The services to be provided by the Executive to 
the Company hereunder are personal to the Executive, and the Executive's 
duties may not be assigned by the Executive; provided, however that this 
Agreement shall inure to the benefit of and be enforceable by the Executive's 
personal or legal representatives, executors, and administrators, successors, 
heirs, distributees, devisees, and legatees. If the Executive dies while any 
amounts payable to the Executive hereunder remain outstanding, all such 
amounts, unless otherwise provided herein, shall be paid in accordance with 
the terms of this Agreement to the Executive's devisee, legatee, or other 
designee or, in the absence of such designee, to the Executive's  estate. 





12.  DISPUTE RESOLUTION AND NOTICE.

12.1 Dispute Resolution.  Either the Executive or the Company may elect to 
have any good faith dispute or controversy arising under or in connection with 
this Agreement settled by arbitration, by providing written notice of such 
election to the other party hereto, specifying the nature of the dispute to be 
arbitrated, provided that if the other party objects to the use of arbitration 
within thirty (30) days of the receipt of such notice, the dispute may only be 
settled by litigation unless otherwise agreed.

If arbitration is selected, such proceeding shall be conducted before a panel 
of three (3) arbitrators sitting in a location agreed to by the Company and 
the Executive within fifty (50) miles from the location of the Executive's 
principal place of employment, in accordance with the rules of the American 
Arbitration Association/then in effect. Judgment may be entered on the award 
of the arbitrators in any court having competent jurisdiction.To the extent 
that the Executive prevails in any litigation or arbitration seeking to 
enforce the provisions of this Agreement, the Executive shall be entitled to 
reimbursement by the Company of all expenses of such litigation or 
arbitration, including the reasonabl fees and expenses of the legal 
representative for the Executive, and necessary costs and disbursements 
incurred as a result of such dispute or legal proceeding, .

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

13.  MISCELLANEOUS

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

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

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

13.4 TAX WITHHOLDING.  The Company may withhold from any benefits payable 
under this Agreement all Federal, state, city, or other taxes as may be 
required pursuant to any law or governmental regulation or ruling. 

13.5 BENEFICIARIES.  The Executive may designate one or more persons or 
entities as the primary and/or contingent beneficiaries of any amounts to be 
received under this Agreement. Such designation must be in the form of a 
signed writing acceptable to the Board or the Board's designee. The Executive 
may make or change such designation at any time. 

13.6 BOARD COMMITTEE.  Any action to be taken, or determination to be made, by 
the Board of Directors under this Agreement may be taken or made by the 
Compensation Committee or any other Committee authorized by the Board of 
Directors to act on its behalf.

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


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

The Ryland Group, Inc.                            Executive:


By:                                          \s\ R.Chad Dreier
       --------------------                  --------------------              
                                             R. Chad Dreier

Attest:--------------------