Exhibit 10.12


SENIOR EXECUTIVE
SEVERANCE AGREEMENT


AGREEMENT dated as
of                          ,
20     between The Ryland Group, Inc., a Maryland
corporation (the “Corporation”), and                                       (the “Executive”).


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


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


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


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













1.2           Accelerated Vesting
and Supplemental Pavments.  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 the amount of these
rights, awards and benefits in a cash lump sum payment, or other form of
compensation as provided in accordance with the applicable benefit, document or
plan, within thirty (30) days of the date of Termination of Employment or, if
later, upon the earliest date as may be permitted in accordance with Section
409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), without
the imposition of additional taxes or interest penalties under Section 409A.


1.3           Insurance and Other
Special Benefits.  The Executive’s
participation in the life, accident and health insurance, employee welfare
benefit plans (as defined in the Employee Retirement Income Security Act of
1974), personal health services allowance, and health and social club benefits
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 Termination of Employment.  If for any reason the Responsible Corporation
is unable to continue the Benefits, as required by the preceding sentence, the
Responsible Corporation shall pay to the Executive a lump sum cash payment
equal to the value of the Benefits which the Responsible Corporation is unable
to provide.  Notwithstanding anything
herein to the contrary, in no event shall the aggregate present value of the
Benefits to be provided under this Section 1.3, as determined as of the
date of the Executive’s Termination of Employment 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 years
immediately preceding the date of Termination of Employment.  In the event that the aggregate present value
of the Benefits to be provided under this Section 1.3 would, but for the
preceding sentence, exceed the Benefits Threshold, the Executive shall
determine which such Benefit or Benefits shall be reduced or forgone to comply
with the limitation set forth in the preceding sentence.


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



 2
 









assistance and benefits which are provided by the
Corporation under its relocation plan as in effect immediately prior to the
Change of Control.  All payments made
pursuant to this Section 1.4 shall be made consistent with, and within the
permissible timeframe under, the reimbursement arrangements provisions under
Section 409A.


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 be exercisable on the date of Termination of
Employment.


1.6           Outplacement
Assistance.  The Executive shall be
reimbursed by the Responsible Corporation for the costs of all outplacement
services obtained by the Executive within the two (2) year period after the
date of the Executive’s Termination of Employment provided the total
reimbursement shall be limited to an amount equal to twenty-five percent (25%)
of the Executive’s Annual Compensation for the calendar year immediately preceding
the date of the Executive’s Termination of Employment.  All payments made pursuant to this Section
1.6 shall be made consistent with, and within the permissible timeframe under,
the reimbursement arrangements provisions under Section 409A.


1.7           Definitions.


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


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


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


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



 3
 









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


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


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


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


(v)           “Good Reason” shall
mean (a) the Executive is assigned any duties or responsibilities that are
inconsistent in any respect with his position, duties, responsibilities or
status prior to a Change of Control Period, (b) the Corporation requires
the Executive, without his or her consent, to be based at a location which is
more than fifty (50) miles from the



 4
 









Executive’s then current primary residence,
(c) the Executive’s base salary, bonus or any other benefits, incentive
compensation or compensation plans are reduced, or (d) the Executive
experiences in any year a reduction in the ratio of the Executive’s incentive
compensation, bonus or other such payments to his base compensation, or a
reduction in the method of calculation of the Executive’s incentive
compensation, bonus or other such payments if these benefits or payments are
calculated other than as a percentage of base salary.  An isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Corporation promptly
after receipt of notice thereof given by the Executive shall be excluded.


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


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


2.             General.


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


2.2           Dispute Resolution.  Either the Executive or the Corporation may
elect to have any good faith dispute or controversy arising under or in
connection with this



 5
 









Agreement settled by binding arbitration, by providing
written notice of such election to the other party, specifying the nature of
the dispute to be arbitrated.  If
arbitration is selected, such proceeding shall be conducted before a panel of three
(3) arbitrators sitting in a location agreed to by the Corporation and the
Executive within fifty (50) miles from the location of the Executive’s
principal place of employment in accordance with the rules of the American
Arbitration Association.  Judgment may be
entered on the award of the arbitrators in any court having competent
jurisdiction.  If the Executive prevails
to any extent in any arbitration seeking to enforce the provisions of this
Agreement, the Executive shall be entitled to reimbursement by the Corporation
of all expenses, including reasonable legal fees and expenses, and costs and
disbursements incurred as a result of such dispute or legal proceeding,
including costs of enforcement.


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


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


2.5           Successors.  This Agreement shall be binding upon and
inure to the benefit of the Executive and his estate, and the Corporation and
any successor of the Corporation or affiliate of a successor to the
Corporation, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by the



 6
 









Executive.  All
references in this Agreement to the Corporation shall include its subsidiaries
and affiliates and any successors, affiliates of successors or assigns of the
Corporation. Any successor of the Corporation shall be deemed substituted for
all purposes of the “Corporation” under the terms of this Agreement.  As used in this Agreement, the term “successor”
shall mean any person, firm, corporation or business entity or affiliate
thereof which at any time, whether by merger, purchase or otherwise, directly
or indirectly acquires all or substantially all of the assets or the business
of the Corporation, including any entity that shall be the surviving
corporation in a merger with the Corporation or the acquiring person or
affiliate of the acquiring person in an acquisition of the Corporation and/or
of all or substantially all of its business or assets, regardless of whether
such transaction constitutes a Change of Control.  In all cases, the Corporation, Responsible
Corporation or successor shall remain jointly and severally liable for all
obligations hereunder.


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


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


2.8           Modification.  This Agreement shall not be varied, altered,
modified, canceled, changed or in any way amended except by mutual agreement of
the Executive and the Corporation in a written instrument executed by the Executive
and the Corporation.  The Corporation and
the Executive agree that they will execute any and all amendments to this
Agreement as they mutually agree in good faith may be necessary to ensure
compliance with the distribution provisions of Section 409A.


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


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



 7
 









2. 11        Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or unenforceability
of any other provision of this Agreement, which shall remain in full force and
effect and be interpreted so as to effect the original intent of the parties to
this Agreement to the end that the obligations and agreements contained herein
are fulfilled.


2.12         Delay of Payment
Pursuant to Section 409A.  Should any
of the payments made to the Executive in accordance with Section 1 of this
Agreement be determined to be payments from a nonqualified deferred
compensation plan, as defined by Section 409A, then notwithstanding
anything in this Agreement to the contrary, these payments will be made on the
first business day that is six (6) months after the Executive’s separation from
service, as defined by Section 409A.


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


	
  THE RYLAND GROUP, INC.

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  R. Chad Dreier,
  President and Chief

  	
   

  	
   

  
	
  Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Timothy J.
  Geckle, Secretary

  	
   

  	
   

  



 



 8