Document:

exv10w2

 

EXHIBIT 10.2

STOCK UNIT AGREEMENT

pursuant to

THE RYLAND GROUP, INC.

2005 EQUITY INCENTIVE PLAN

     AGREEMENT,
dated ____________, between The Ryland Group, Inc. (the “Corporation”), and
____________ (the “Executive”).

     NOW, THEREFORE, the Corporation and the Executive agree as follows:

     1. Grant of Stock Units.

          The Corporation grants to the Executive an Award of ______ Stock Units pursuant to
Section 6 of the 2005 Equity Incentive Plan (the “Plan”) unless the Corporation’s return on equity
(ROE) for the year ended December 31, 20__ is less than 60% of the 10-year median ROE of the
Fortune 500 industrial companies for the 10-year period ending with the 2004 calendar year, in
which event the stock unit grant is forfeited.

The Corporation’s ROE is the Corporation’s consolidated net earnings after taxes and extraordinary
items and before the payment of dividends on the Corporation’s common stock divided by the
Corporation’s beginning stockholders’ equity during such fiscal year period, all of which is
determined under generally accepted accounting principles on a basis consistent with the
Corporation’s audited consolidated financial statements.

     2. Vesting of Stock Units.

          The Stock Units granted in paragraph 1 of this Agreement become vested and payable in
accordance with the following vesting schedule:

	 	 	 
	VESTING DATE	 	VESTING
	
	 	______ Stock Units
	
	 	______ Stock Units
	
	 	______ Stock Units

If the Executive terminates employment with the Corporation for any reason prior to any Vesting
Date, all non-vested Stock Units are immediately forfeited and cancelled. Notwithstanding the
foregoing, all unvested Stock Units shall vest and be paid by the Corporation to the Executive in
accordance with paragraph 3 below upon the occurrence of a Change of Control (as defined below).

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, or more than one person acting as a group, together with stock held by such person
or group, of beneficial ownership of more than 50% of the total fair market value or total voting
power of the Corporation’s then outstanding voting securities;

 

 

     b. Any one person or more than one person acting as a group acquires, or has acquired during
the 12-month period ending on the date of the most recent acquisition by such person or group,
beneficial ownership of 35% or more of the total voting power of the Corporation’s then outstanding
voting securities;

     c. A majority of the members of the Corporation’s Board of Directors is replaced during any
12-month period by Directors whose appointment or election is not endorsed or approved by a
majority of the members of the Board of Directors who were members of the Board of Directors prior
to the initiation of the replacement; or

     d. Any one person or more than one person acting as a group acquires, or has acquired during
the 12-month period ending on the date of the most recent acquisition by such person or group,
assets of the Corporation that have a total gross fair market value of 40% or more of the total
gross fair market value of all of the assets of the Corporation immediately prior to the initiation
of the acquisition.

     3. Payment of Stock Units.

          Upon the vesting of Stock Units in accordance with this Agreement, the number of Stock Units
which become vested are paid to the Executive in an equal number of shares of Common Stock of the
Corporation and, upon payment, the vested and paid Stock Units are automatically deemed fully paid
and cancelled.

     4. Cash Dividend Equivalents.

          On each cash dividend payment date with respect to Common Stock, the Executive shall receive a
cash dividend equivalent payment equal to the product of (i) the per-share cash dividend amount
payable with respect to each share of Common Stock on that date and (ii) the total number of Stock
Units which have not been vested, paid or cancelled as of the record date corresponding to such
dividend payment date.

     5. Delivery of Stock Certificates.

          The stock certificate for shares of Common Stock issued to the Executive in payment of any
vested Stock Units shall be delivered to the Executive on the applicable Vesting Date.

     6. Tax Matters.

          If any taxes, including income taxes or withholding taxes, result or become due and payable as
a result of the Stock Units, including the grant, vesting and payment of the Stock Units to the
Executive, the Executive agrees that the Corporation may withhold, as applicable, any federal,
state or local taxes at such time and upon such terms and conditions as required by law or
determined by the Corporation.

     7. Rights of Executive With Respect to Stock Units.

          The Executive shall have no rights as a stockholder with respect to any Stock Unit or any
share of Common Stock to be issued with respect to any Stock Unit until the date of vesting and
payment. The Executive’s rights with respect to Stock Units shall be the rights of a

2

 

general unsecured creditor of the Corporation until the Stock Units vest and shares of Common
Stock are actually issued to the Executive.

     8. Adjustments.

          The number of Stock Units shall automatically adjust in accordance with, and be consistent
with, the terms of any stock dividend, stock split, combination or similar transaction.

     9. 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 Agreement settled by 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
arbitrators sitting in a location agreed to by the Corporation and the Executive within 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 or decision made by
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 is entitled to reimbursement by the Corporation of all expenses of such litigation or
arbitration, including any legal fees and expenses and any costs and disbursements.

     10. Stock Units Subject to Terms and Conditions of the Plan.

          The Stock Units and all shares of Common Stock issued with respect to Stock Units are subject
to the terms and conditions of the Plan, which are incorporated herein by this reference. This
Agreement is subject to the terms of the Plan, and wherever any conflict may arise between the
terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.

The Corporation agrees by offering this grant of Stock Units and the Executive agrees by acceptance
of this grant of Stock Units that the terms, conditions and provisions of this Agreement and the
Plan shall determine the rights and obligations of the Corporation and the Executive in connection
with this grant of Stock Units.

	 	 	 	 	 
	 	THE RYLAND GROUP, INC.

 
 	 
	 	By:  	 	 
	 	 	R. Chad Dreier	 
	 	 	Chairman, President and Chief Executive Officer 	 
	 

3exv10w3

 

EXHIBIT 10.3

The Ryland Group, Inc.

2004 Non-Employee Director Equity Plan

Stock Option Agreement

     AGREEMENT, dated this ______ day of _________, 200__, between THE RYLAND GROUP, INC. (the
“Corporation”) and ____________ (the “Director”).

1.   Grant of Option

     Subject to the terms and conditions set forth herein and in the 2004 Non-Employee Director
Equity Plan (the “Plan”), the Corporation grants to the Director during the period beginning on the
date of this Agreement and ending at the close of business on ____________, 20__ (the “Option
Period”), the option to purchase (the “Option”) from the Corporation at a price of $______ per share
up to but not exceeding in the aggregate ___shares of the Corporation’s common stock. The
Option is a non-statutory stock option not intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended.

2.   Exercise of Option

     The Option granted in Paragraph 1 may be exercised in whole or in part beginning _________, 200__.

3.   Method of Exercising Option and Payment of Exercise Price

     The Option shall be exercised by delivery of a written Notice of Exercise stating the number
of shares the Director desires to purchase. The form of Notice of Exercise is attached to this
Agreement as Exhibit A. Notice(s) should be delivered to Val Zook, The Ryland Group, Inc.,
24025 Park Sorrento, Suite 400, Calabasas, California 91302; Telephone No. (818) 223-7558;
Facsimile No. (818) 223-7675.

     The Director shall pay the exercise price in the following ways:

	     	(a)  	Cash or check payable to the order of the Corporation;

	 
	 	(b)  	Delivery of common stock (including executed stock powers attached thereto);
	 
	 	(c)  	Broker-assisted cashless exercise in accordance with Regulation T of the Board of
Governors of the Federal Reserve System through a brokerage firm approved by the Committee;
or
	 
	 	(d)  	Any combination of the foregoing methods.

     The value of shares of common stock used as payment for the exercise of an Option shall be the
closing price of such shares on the New York Stock Exchange on the date of exercise of an Option.

4.   Termination

     The Option shall terminate upon the happening of the following events:

	     	(a)  	The expiration of 10 years from the date of this Agreement; or
	 
	 	(b)  	The expiration of three years after the date of termination of the Director’s service
on the Board of Directors.

5.   Assignability

     The Option is not assignable or transferable except by will or the laws of descent and
distribution. The Option is exercisable during the Director’s lifetime only by the Director or the
Director’s guardian or legal representative.

 

 

6.   Rights as a Stockholder

     The Director shall have no rights as a stockholder with respect to any shares covered by the
Option until the date of issuance of the shares to the Director and then only from the date of the
stock certificate. No adjustment will be made for dividends, distributions or other rights for
which the record date is prior to the date of the stock certificate for the shares of common stock
related to the exercise of an Option.

7.   Director’s Agreement

     Notwithstanding any other provision of this Agreement, the Director agrees that Director will
not exercise any Option, and the Corporation shall not be obligated to deliver any shares of common
stock or make any cash payment, if counsel to the Corporation determines such exercise, delivery or
payment would violate any law or regulation or agreement to which the Corporation is subject.

8.   Construction

     This Agreement has been entered into in accordance with the terms of the Plan, and the terms
of the Plan shall control and govern at all times the terms and conditions of this Option. The
Director agrees by acceptance of the Option that the terms, conditions and provisions of this
Agreement and the Plan shall determine the rights and obligations of the Corporation and the
Director in connection with the Option.

	 	 	 	 	 
	 	THE RYLAND GROUP, INC.

 
 	 
	 	By:  	 	 
	 	 	R. Chad Dreier 	 
	 	 	Chairman, President and Chief Executive Officer

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