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


 


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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 


 


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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


 


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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.”


 


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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

  	
   

  	
   

  	
   

  
						



 


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