# Exhibit 10.12

# SENIOR EXECUTIVESEVERANCE AGREEMENT

AGREEMENT dated asof                          ,20     between The Ryland Group, Inc., a Marylandcorporation (the “Corporation”), and                                       (the “Executive”).

The purpose ofthis Agreement is to ensure that the Corporation will receive the continueddedication, loyalty, and service of, and the availability of objective adviceand counsel from, the Executive notwithstanding the possibility, threat oroccurrence of a bid or other action to take over control of the Corporation.

In considerationof the services provided by the Executive and the covenants and agreementscontained herein, and for other good and valuable consideration the sufficiencyof which is acknowledged, the Corporation and the Executive agree as follows:

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

1.1           Lump Sum CashPayment.  On or before the Executive’slast day of employment with the Corporation or any successor corporation, theCorporation or any successor corporation will pay the Executive, as an amountearned for services rendered, a pro rata bonus through the date of Terminationof Employment.  Also, on or before theExecutive’s last day of employment with the Corporation or any successorcorporation, the Corporation or any successor corporation will pay theExecutive a lump sum cash payment equal to two (2) times the highest AnnualCompensation (as hereinafter defined) for any of the three (3) calendar yearsimmediately preceding the date of Termination of Employment.  For purposes of this Section 1.1, thepro-rata bonus shall be an amount equal to the target annual bonus for the yearin which the Termination of Employment occurs and, in the absence of a specifiedtarget annual bonus for such year, the highest******bonusearned by the Executive within the three (3) calendar years immediatelypreceding the date of Termination of Employment, in either case pro rated forthe period served during the year in which the Termination of Employmentoccurs.

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1.2           Accelerated Vestingand Supplemental Pavments.  Allrights, awards and benefits of the Executive provided pursuant to the TRGIncentive Plan and any other incentive or bonus plans of the Corporation inwhich the Executive participates prior to the Change of Control shallimmediately vest in full and the Executive shall receive the amount of theserights, awards and benefits in a cash lump sum payment, or other form ofcompensation as provided in accordance with the applicable benefit, document orplan, within thirty (30) days of the date of Termination of Employment or, iflater, upon the earliest date as may be permitted in accordance with Section409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), withoutthe imposition of additional taxes or interest penalties under Section 409A.

1.3           Insurance and OtherSpecial Benefits.  The Executive’sparticipation in the life, accident and health insurance, employee welfarebenefit plans (as defined in the Employee Retirement Income Security Act of1974), personal health services allowance, and health and social club benefitsprovided to the Executive prior to the Change of Control (collectively, the “Benefits”)shall be continued or equivalent benefits provided by the Corporation or anysuccessor corporation or affiliate of such successor corporation (the “ResponsibleCorporation”), 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 Corporationis unable to continue the Benefits, as required by the preceding sentence, theResponsible Corporation shall pay to the Executive a lump sum cash paymentequal to the value of the Benefits which the Responsible Corporation is unableto provide.  Notwithstanding anythingherein to the contrary, in no event shall the aggregate present value of theBenefits to be provided under this Section 1.3, as determined as of thedate of the Executive’s Termination of Employment in the discretion of theResponsible Corporation applying reasonable assumptions, exceed an amount (the “BenefitsThreshold”) equal to ninety-nine hundredths (0.99) times the highest AnnualCompensation (as hereinafter defined) for any of the three (3) calendar yearsimmediately preceding the date of Termination of Employment.  In the event that the aggregate present valueof the Benefits to be provided under this Section 1.3 would, but for thepreceding sentence, exceed the Benefits Threshold, the Executive shalldetermine which such Benefit or Benefits shall be reduced or forgone to complywith the limitation set forth in the preceding sentence.

1.4           RelocationAssistance.  Should the Executivemove his residence in order to pursue professional or career opportunitieswithin two (2) years after the date of the Executive’s Termination ofEmployment, he will be reimbursed by the Responsible Corporation for anyexpenses incurred in that relocation, including taxes payable on thereimbursement, as well as any reduction in value from the original purchaseprice of the Executive’s residence. Benefits under this paragraph will include assistance in and payment ofall costs and commissions related to selling the Executive’s home, moving costsas well as all other

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

1.5*          *Stock Rights.  All stock options, stock appreciation rights,stock purchase rights, restricted stock, restricted stock units, performanceshares, performance units, and any similar rights which the Executive holds shallbecome fully vested and be exercisable on the date of Termination ofEmployment.

1.6           OutplacementAssistance.  The Executive shall bereimbursed by the Responsible Corporation for the costs of all outplacementservices obtained by the Executive within the two (2) year period after thedate of the Executive’s Termination of Employment provided the totalreimbursement shall be limited to an amount equal to twenty-five percent (25%)of the Executive’s Annual Compensation for the calendar year immediately precedingthe date of the Executive’s Termination of Employment.  All payments made pursuant to this Section1.6 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 followingevents:

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

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

(c)           During any period oftwo (2) consecutive years, individuals who at the beginning of such periodconstitute the Board of Directors of the Corporation cease for any reason toconstitute at least a majority thereof, unless the election or the nominationfor the election by stockholders of the Corporation of each new director wasapproved by a vote of at least two-thirds (2/3) of the directors then still inoffice who were directors at the beginning of the period; or

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(d)           Approval bystockholders of the Corporation of a merger, consolidation, liquidation ordissolution of the Corporation, or the sale of all or substantially all of theassets of the Corporation.

(ii)           “Annual Compensation”shall mean the sum of the annual base salary paid or earned and annual bonuspaid or earned, even though paid in a subsequent year, by the Executive and allamounts credited to the Executive, vested and unvested, under any incentivecompensation or other benefit or compensation plans in which the Executiveparticipates during a calendar year.  Inthe event the Executive has not been employed by the Corporation for a completecalendar year, the determination of Annual Compensation shall involve a pro formaprojection of annual base salary, annual bonus and amounts that are projectedto be credited, vested and unvested, under any incentive compensation or otherbenefit 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 performthe material duties of his or her position (other than as a result ofdisability, as defined in Section 22(e)(3) of the Internal Revenue Code, or asa result of termination by the Executive for Good Reason) after written noticeto 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 theExecutive and after an opportunity for the Executive to be heard at a meetingof 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 Executiveconstituting immoral conduct, which in any such case is injurious to thefinancial condition or business reputation of the Corporation and is proven byindependently verified evidence of such conduct; or (c) the Executive’sconviction of a felony under the laws of the United States or any state thereofor any other jurisdiction in which the Corporation conducts business.

(v)           “Good Reason” shallmean (a) the Executive is assigned any duties or responsibilities that areinconsistent in any respect with his position, duties, responsibilities orstatus prior to a Change of Control Period, (b) the Corporation requiresthe Executive, without his or her consent, to be based at a location which ismore than fifty (50) miles from the

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

(vi)          A “Change of ControlPeriod” shall mean the period of time commencing with the date of a Change ofControl or on which the Company becomes aware of or enters into any discussionsor negotiations that could involve a Change of Control or a proposedtransaction which could result in a Change of Control, and ending on the firstto occur of: (a) two (2) years after the effective date of the Change ofControl, or (b) the date on which the proposed Change of Control is nolonger discussed or proposed to occur.

1.8           SubsequentImposition of Excise Tax.  If it isultimately determined by a court or pursuant to a final determination by theInternal Revenue Service that any portion of the payments to the Executive isconsidered to be an “excess parachute payment,” subject to the excise tax underSection 4999 of the Internal Revenue Code, the Executive shall be entitled toreceive a lump sum cash payment sufficient to place the Executive in the samenet after-tax position, computed by using the “Special Tax Rate” as such termis defined below, that the Executive would have been in had such payment notbeen subject to such excise tax, and had the Executive not incurred anyinterest charges or penalties with respect to the imposition of such excisetax.  For purposes of this Agreement, the“Special Tax Rate” shall be the highest effective Federal and state marginaltax rates applicable to the Executive in the year in which the paymentcontemplated under this Section 1.8 is made.

2.             General.

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

2.2           Dispute Resolution.  Either the Executive or the Corporation mayelect to have any good faith dispute or controversy arising under or inconnection with this

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Agreement settled by binding arbitration, by providingwritten notice of such election to the other party, specifying the nature ofthe dispute to be arbitrated.  Ifarbitration is selected, such proceeding shall be conducted before a panel of three(3) arbitrators sitting in a location agreed to by the Corporation and theExecutive within fifty (50) miles from the location of the Executive’sprincipal place of employment in accordance with the rules of the AmericanArbitration Association.  Judgment may beentered on the award of the arbitrators in any court having competentjurisdiction.  If the Executive prevailsto any extent in any arbitration seeking to enforce the provisions of thisAgreement, the Executive shall be entitled to reimbursement by the Corporationof all expenses, including reasonable legal fees and expenses, and costs anddisbursements incurred as a result of such dispute or legal proceeding,including costs of enforcement.

2.3           Payment ofObligations Absolute.  TheResponsible Corporation’s obligation to pay the compensation and to make thearrangements provided in this Agreement shall be absolute and unconditional andshall not be affected by any circumstances, including any offset, counterclaim,recoupment, defense or other right which the Responsible Corporation may haveagainst the Executive or anyone else, provided, however, that asa condition to payment of amounts under this Agreement, the Executive shallexecute a general release and waiver, in form and substance reasonablysatisfactory to the Responsible Corporation, of all claims relating to theExecutive’s employment by the Corporation and the termination of suchemployment, 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’stax-qualified retirement plans or continuation of coverage or benefits solelyas required by Part 6 of Title I of the Employee Retirement Income Security Actof 1974).  All amounts payable by theResponsible Corporation shall be paid without notice or demand.  Each and every payment made by theResponsible Corporation shall be final, and the Responsible Corporation willnot seek to recover all or any part of such payment.  The Executive shall not be obligated to seekother employment in mitigation of the amounts payable or arrangements madeunder this Agreement, and the obtaining of any other employment shall notresult in a reduction of the Responsible Corporation’s obligations to make thepayments, benefits and arrangements required to be made under this Agreement.

2.4           ContinuingObligations.  The Executive shallretain in confidence any confidential information known to him concerning theCorporation, its subsidiaries and their respective businesses so long as suchinformation is not publicly disclosed.

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

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Executive.  Allreferences in this Agreement to the Corporation shall include its subsidiariesand affiliates and any successors, affiliates of successors or assigns of theCorporation. Any successor of the Corporation shall be deemed substituted forall 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 affiliatethereof which at any time, whether by merger, purchase or otherwise, directlyor indirectly acquires all or substantially all of the assets or the businessof the Corporation, including any entity that shall be the survivingcorporation in a merger with the Corporation or the acquiring person oraffiliate of the acquiring person in an acquisition of the Corporation and/orof all or substantially all of its business or assets, regardless of whethersuch transaction constitutes a Change of Control.  In all cases, the Corporation, ResponsibleCorporation or successor shall remain jointly and severally liable for allobligations hereunder.

2.6           Severability.  Any provisions in this Agreement which isprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective only to the extent of such jurisdiction, be ineffective only tothe extent of such prohibition or unenforceability, without invalidating oraffecting the remaining provisions hereof, and any such prohibition orunenforceability in any jurisdiction shall not invalidate or renderunenforceable such provision in any other jurisdiction.

2.7           Controlling Law.  This Agreement shall be governed by, andconstrued 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 ofthe Executive and the Corporation in a written instrument executed by the Executiveand the Corporation.  The Corporation andthe Executive agree that they will execute any and all amendments to thisAgreement as they mutually agree in good faith may be necessary to ensurecompliance with the distribution provisions of Section 409A.

2.9           Entire Agreement.  This Agreement contains the entire agreementbetween the parties with respect to the subject matter described herein andsupercedes any prior written agreement between the parties regarding suchsubject matter.  Any oral or written agreements,representations, warranties, written inducements, or other communications madeprior to the execution of this Agreement with respect to the subject matterdescribed 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 governmentalregulation or ruling.

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

2.12         Delay of PaymentPursuant to Section 409A.  Should anyof the payments made to the Executive in accordance with Section 1 of thisAgreement be determined to be payments from a nonqualified deferredcompensation plan, as defined by Section 409A, then notwithstandinganything in this Agreement to the contrary, these payments will be made on thefirst business day that is six (6) months after the Executive’s separation fromservice, as defined by Section 409A.

INWITNESS WHEREOF, the parties have executed this Agreement as of the date firstabove written.
| **THE RYLAND GROUP, INC.**           | ** ** | **EXECUTIVE** |
|--------------------------------------|------------|---------------|
| ** **                           | ** ** | ** **    |
| ** **                           | ** ** | ** **    |
| ** **                           | ** ** | ** **    | ** ** | ** ** |
| R. Chad Dreier,  President and Chief |       |          |
| Executive Officer                    |       |          |
|                                 |       |          |
|                                 |       |          |
| **ATTEST:**                          |       |          |
| ** **                           |       |          |
| ** **                           |       |          |
| ** **                           | ** ** |          |   |
| Timothy J.  Geckle, Secretary        |       |          |

 

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