Document:

exv10w3

Exhibit 10.3

NONQUALIFIED STOCK OPTION AGREEMENT

PURSUANT TO

K-V PHARMACEUTICAL COMPANY

2001 INCENTIVE STOCK OPTION PLAN

* * *

     NONQUALIFIED STOCK OPTION AGREEMENT (the “Agreement”) made as of the ___ day of
                    , 20___,
(the “Grant Date”) between K-V PHARMACEUTICAL COMPANY, a Delaware corporation (the “Company”), and
                                        
, a member of the Company’s Board of Directors (the “Optionee”).

W I T N E S S E T H:

     WHEREAS, the Company desires, by affording the Optionee an opportunity to purchase shares of
its Class A Common Stock, $.01 par value per share (the “Common Stock”), as hereinafter provided,
to carry out the purpose of the Company’s 2001 Incentive Stock Option Plan (the “Plan”):

     NOW THEREFORE, in consideration of the premises and of the mutual covenants and agreements
hereinafter contained, the parties hereto mutually covenant and agree as follows:

	1.	 	Grant of Option. The Company hereby grants to the Optionee a nonqualified stock
option (the “Option”) to purchase all or any part of an aggregate of                      shares of Common
Stock (such number being subject to adjustment as provided in Paragraph 6) on the terms and
conditions hereinafter set forth.
	 
	2.	 	Purchase Price. The purchase price of the shares of Common Stock issuable upon
exercise of the Option (the “Option Price”) shall be $___ per share, which is not less than
one hundred percent (100%) of the Fair Market Value Per Share of Common Stock on the Grant
Date. Payment shall be made in cash, by certified check or in shares of Common Stock in the
manner prescribed in Paragraph 7 hereof.
	 
	3.	 	Term of Option. The term of the Option shall be for a period of ten (10) years from
the Grant Date, subject to earlier termination as provided in Paragraph 5. The Option is
exercisable during its term only in accordance with the provisions of Exhibit A
attached hereto. Except as provided in Paragraph 5, the Option may not be exercised unless,
at the time the Option is exercised and at all times from the Grant Date, the Optionee shall
then be and shall have been, a Director of the Company.
	 
	4.	 	Nontransferability. The Option shall not be transferable otherwise than by will or
the laws of descent and distribution to the extent provided in Paragraph 5, and the Option may
be exercised, during the lifetime of the Optionee, only by the Optionee. More particularly
(but without limiting the generality of the foregoing), the Option may not be assigned,
transferred (except as provided above), pledged or hypothecated in any way, shall not be
assignable by operation of law, and shall not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of
the Option contrary to the provisions hereof and of the Plan, and the levy of any execution,
attachment,

 

 

	 	 	or similar process upon the Option, shall be null and void and without effect;
provided, however, that if the Optionee shall die while a Director of the Company, the
Optionee’s estate, personal representative, or beneficiary shall have the right to exercise
the Option to the extent provided in Paragraph 5.
	 
	5.	 	Termination of Option.

	 	(a)	 	If the Optionee shall cease to be a Director of the Company, then the Option,
to the extent that it is exercisable by the Optionee at the time the Optionee ceases to
be a Director of the Company, and only to the extent that the Option is exercisable as
of such time, may be exercised by the Optionee within three (3) years after such time,
but in no event beyond ten (10) years after the Grant Date.
	 
	 	(b)	 	If the Optionee shall cease to be a Director of the Company as the result of
the Optionee’s disability, as such term is defined in the Plan, then the Option, to the
extent that it is exercisable by the Optionee at the time the Optionee ceases to be a
Director of the Company, and only to the extent that the Option is exercisable as of
such time, may be exercised by the Optionee within three (3) years after such time, but
in no event beyond ten (10) years after the Grant Date.
	 
	 	(c)	 	If the Optionee shall die while a Director of the Company, the Optionee’s
estate, personal representative, or beneficiary shall have the right, subject to the
provisions of Paragraph 3, to exercise the Option (to the extent that the Optionee
would have been entitled to do so at the time of the Optionee’s death) at any time
within three (3) years from the date of the Optionee’s death, but in no event beyond
ten (10) years after the Grant Date.
	 
	 	(d)	 	Notwithstanding anything in this Section 5 to the contrary, if, in the 12-month
period following a Change of Control, Optionee shall cease to be a Director of the
Company, the Option shall become immediately exercisable in full, whether or not the
dates set forth in Exhibit A have passed, and may be exercised by the Optionee
within three (3) years after such termination of service, but in no event beyond ten
(10) years after the Grant Date. For the avoidance of doubt, if following a Change of
Control, Optionee’s service shall terminate as a result of the Optionee’s death or
disability, the provisions of (b) and (c) above shall apply,
respectively. For purposes of this Agreement, “Change of Control” will have the
meaning set forth on Exhibit B.

	6.	 	Changes in Capital Stock. Upon any readjustment or recapitalization of the Company’s
capital stock whereby the character of the Common Stock shall be changed, appropriate
adjustments shall be made so that the capital stock issuable upon exercise of the Option after
such readjustment or recapitalization shall be the substantial equivalent of the Common Stock
issuable upon exercise of the Option. In the case of a merger, sale of assets or similar
transaction which results in a replacement of the Common Stock with stock of another
corporation, the Company will make a reasonable effort, but shall not be required, to replace
any outstanding Options granted under the Plan with comparable options to purchase the stock
of such other corporation, or will provide for immediate maturity of all outstanding Options,
with all Options not being exercised within the time period specified by the Company’s Board
of Directors being terminated; provided, however, that in the event Optionee shall cease to be
a Director as described in Section 5(d), the terms set forth in Section 5(d) shall control.

2

 

	7.	 	Method of Exercising Option.

	 	(a)	 	Subject to the terms and conditions of this Agreement, the Option may be
exercised by written notice to the Company at its offices at One Corporate Woods Drive,
Bridgeton, Missouri 63044 (Attention: VP, Human Resources). Such notice shall state
that the Option is being exercised thereby and the number of shares of Common Stock in
respect of which it is being exercised. It shall be signed by the person or persons so
exercising the Option and shall be accompanied by payment in full of the Option Price
for such shares of Common Stock in cash, by certified check or in shares of Common
Stock (including shares issuable on exercise of the Option).
	 
	 	(b)	 	If shares of Common Stock are tendered as payment of the Option Price (or are
withheld from the shares issuable on exercise of the Option), the value of such shares
shall be their Fair Market Value Per Share as of the date of exercise. If such tender
would result in the issuance of fractional shares of Common Stock, the Company shall
instead return the balance in cash or by check to the Optionee. The Company shall
issue, in the name of the person or persons exercising the Option, and deliver a
certificate or certificates representing such shares as soon as practicable after
notice and payment shall be received.
	 
	 	(c)	 	In the event the Option shall be exercised by any person or persons other than
the Optionee, pursuant to Paragraph 5, such notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise the Option.
	 
	 	(d)	 	The Optionee shall have no rights of a stockholder with respect to shares of
Common Stock to be acquired by the exercise of the Option until a certificate or
certificates representing such shares are issued to the Optionee. All shares of Common
Stock purchased upon the exercise of the Option as provided herein shall be fully paid
and non-assessable.

	8.	 	General. The Company shall at all times during the term of the Option reserve and
keep available such number of shares of Common Stock as will be sufficient to satisfy the
requirements of this Agreement, shall pay all original issue taxes, if any, with respect to
the issuance of shares of Common Stock pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith, and shall, from time to time, use
its best efforts to comply with all laws and regulations which, in the opinion of counsel for
the Company, shall be applicable thereto.
	 
	9.	 	Notices. Each notice relating to this Agreement shall be in writing and delivered in
person or by first class mail, postage prepaid, to the address as hereinafter provided. Each
notice shall be deemed to have been given on the date it is received. Each notice to the
Company shall be addressed to it at its offices at One Corporate Woods Drive, Bridgeton,
Missouri 63044 (Attention: VP, Human Resources). Each notice to the Optionee or other person
or persons then entitled to exercise the Option shall be addressed to the Optionee or such
other person or persons at the Optionee’s last known address.
	 
	10.	 	Reimbursement of Expenses. If the Optionee is not a citizen or resident of the
United States, the Optionee, as a condition hereof, agrees to reimburse the Company at its
request for any foreign exchange premiums or license, transfer taxes or similar sums of money
payable outside the United States by the Company in connection with the exercise of the Option
under this Agreement.

3

 

	11.	 	Incorporation of Plan. A copy of the Plan has been delivered to the Optionee and is
hereby incorporated by reference.
	 
	12.	 	Interpretation. The interpretation and construction of any terms or conditions of
the Plan, or of this Agreement or other matters related to the Plan by the Compensation
Committee shall be final and conclusive.
	 
	13.	 	Enforceability. This Agreement shall be binding upon the Optionee, the Optionee’s
estate, the Optionee’s personal representatives and beneficiaries.

4

 

     IN WITNESS WHEREOF, the Company has caused this Agreement to be duly exercised by its officer
thereunto duly authorized, and the Optionee has hereunto set his or her hand all as of the day and
year first above written.

	 	 	 	 	 	 	 	 	 	 	 
	K-V PHARMACEUTICAL COMPANY	 	 	 	OPTIONEE	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:
	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Printed Name:
	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Address:
	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 

	 	 	 	 	 	 	 	 

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EXHIBIT A

TO

NONQUALIFIED STOCK OPTION AGREEMENT

The Option is exercisable during its term only in accordance with the following:

	 	 	 	 	 	 	 	 	 
	 	 	Percentage Exercisable
	Date	 	Per Time Period	 	Cumulative
	March 31, 20__
	 	25% = ____ shares	 	25% =     ____ shares
	 
	June 30, 20__
	 	25% = ____ shares	 	50% =     ____ shares
	 
	September 30, 20__
	 	25% = ____ shares	 	75% =   ____ shares
	 
	December 31, 20__
	 	25% = ____ shares	 	100% = ____ shares

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Exhibit B

          A “Change of Control” shall mean the occurrence of any of the following:

          (1) an acquisition by any individual, entity or group (within the meaning of Section 13d-3 or
14d-1 of the Securities Exchange Act of 1934, as amended (the “Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Act) of more than
50% of the combined voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors to the Board (the “Outstanding Company Voting
Securities”); provided, however, that “Change of Control” shall not include (i) the acquisition
by any corporation pursuant to a reorganization, merger, consolidation or similar corporate
transaction (in each case, a “Corporate Transaction”) if, pursuant to such Corporate
Transaction, the conditions described in (A) and (B) of clause (3) below are satisfied, and (ii)
for the avoidance of doubt, any acquisition after the Grant Date by any Person who beneficially
owned 50% or more of the combined voting power of the Outstanding Company Voting Securities prior
to the Grant Date;

          (2) a change in the composition of the Board such that the individuals who, as of the Grant
Date, constitute the Board (the Board as of the Grant Date shall be hereinafter referred to as the
(“Incumbent Board”)) cease for any reason to constitute at least a majority of the Board;
provided that, for purposes of this clause (2), any individual who becomes a member of the Board
subsequent to the Grant Date and whose election, or nomination for election by the Company’s
stockholders, was approved by a majority of the members of the Board who also are members of the
Incumbent Board (or so deemed to be pursuant to this proviso) shall be deemed a member of the
Incumbent Board; but, provided further, that any such individual whose initial assumption of office
is in connection with a Change of Control described in clause (1), (3) or (4) or whose initial
assumption of office occurs as a result of either an actual or threatened election contest or other
actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the
Board shall not be so deemed a member of the Incumbent Board; or

          (3) the consummation of a Corporate Transaction; excluding, however, such a Corporate
Transaction pursuant to which (A) the beneficial owners of the outstanding shares of the Company’s
common stock, par value of $.01 per share (the “Shares”) and Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will beneficially own, directly or
indirectly, more than fifty-one percent (51%) of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate Transaction and the combined voting power of
the outstanding voting securities of such corporation entitled to vote generally in the election of
directors, in substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the outstanding Shares and Outstanding Company Voting Securities, as the
case may be, and (B) individuals who were members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the corporation resulting from such Corporate
Transaction; or

          (4) the approval of the stockholders of the Company of (A) a complete liquidation or
dissolution of the Company or (B) the sale or other disposition of all or
substantially all the assets of the Company; excluding, however, such a sale or other
disposition to a corporation with respect to which, following such sale or other disposition, (y)
more than fifty-one percent (51%) of the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors will be then beneficially
owned, directly or indirectly,

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by the individuals and entities who were the beneficial owners,
respectively, of the outstanding Shares and Outstanding Company Voting Securities immediately prior
to such sale or other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the outstanding Shares and Outstanding
Company Voting Securities, as the case may be, and (z) individuals who were members of the
Incumbent Board will constitute at least a majority of the members of the board of directors of
such corporation.

8exv4w2

Exhibit 4.2

THE RYLAND GROUP, INC.

ARTICLES SUPPLEMENTARY

     The Ryland Group, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the
Maryland State Department of Assessments and Taxation that:

     FIRST:  Pursuant to authority expressly vested in the Board of Directors of the Corporation by
Section 2-208 of the Maryland General Corporation Law and Article SIXTH of the charter of the
Corporation, the Board of Directors has duly reclassified 10,000 shares of unissued common stock,
par value $1.00 per share (the “Common Stock”), of the Corporation into 10,000 shares of preferred
stock, par value $1.00 per share (the “Preferred Stock”).

     SECOND:  The reclassification increases the number of shares classified as Preferred Stock
from no shares immediately prior to the reclassification to 10,000 shares immediately after the
reclassification. The reclassification decreases the number of shares classified as Common Stock
from 200,000,000 shares immediately prior to the reclassification to 199,990,000 shares immediately
after the reclassification.

     THIRD: Pursuant to authority expressly vested in the Board of Directors of the Corporation by
Article SIXTH of the Charter of the Corporation, the Board of Directors has duly designated the
10,000 shares of the Preferred Stock as Series A Junior Participating Preferred Stock, par value
$1.00 per share, of the Corporation and has provided for the issuance of such series.

     FOURTH:  The terms of the Series A Junior Participating Preferred Stock as set by the Board of
Directors, including preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of redemption, are as follows:

	1.	 	The shares of such series will be designated as Series A Junior Participating
Preferred Stock (the “Series A Preferred Stock”) and the number of shares
constituting the Series A Preferred Stock is 10,000. Such number of shares may
be increased or decreased by resolution of the Board; provided, however, that no
decrease will reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation and convertible into Series A Preferred Stock.

	2.	 	(a)    Subject to the rights of the holders of any shares of any series of
Preferred Stock ranking prior to the Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock, in preference to
the holders of Common Stock, and of any other junior stock, will be entitled to
receive, when, as and if declared by the Board out of funds legally available
for the purpose, dividends payable in cash (except as otherwise provided below)
on such dates as are from time to time established for the payment of dividends
on the Common Stock (each such date being referred to herein as a “Dividend
Payment Date”), commencing on the first Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock (the
“First Dividend Payment Date”), in an amount per share (rounded to the nearest
cent) equal to, subject to the provision for adjustment hereinafter set forth,
the greater of (i) $1 and (ii) ten thousand (10,000) times the aggregate per
share amount of all cash dividends, and ten thousand (10,000) times the
aggregate per share amount (payable in kind) of all non-cash dividends, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Dividend Payment Date or,
with respect to the First Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock.

 

 

	 	 	In the event that the
Corporation at any time (i) declares a dividend on the outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivides the outstanding
shares of Common Stock, (iii) combines the outstanding shares of Common Stock
into a smaller number of shares or (iv) issues any shares of its capital stock
in a reclassification of the outstanding shares of Common Stock (including any
such reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), then, in each such case
and regardless of whether any shares of Series A Preferred Stock are then issued
or outstanding, the amount to which holders of shares of Series A Preferred
Stock would otherwise be entitled immediately prior to such event pursuant to
this paragraph 2(a) will be correspondingly adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

(b)    The Corporation will declare a dividend on the Series A Preferred Stock as
provided in paragraph 2(a) immediately after it declares a dividend on the
Common Stock (other than a dividend payable in shares of Common Stock). Each
such dividend on the Series A Preferred Stock will be payable immediately
prior to the time at which the related dividend on the Common Stock is
payable.

(c)    Dividends will accrue, and be cumulative, on outstanding shares of Series
A Preferred Stock from the Dividend Payment Date next preceding the date of
issue of such shares, unless (i) the date of issue of such shares is prior to
the record date for the First Dividend Payment Date, in which case dividends
on such shares will accrue from the date of the first issuance of a share of
Series A Preferred Stock or (ii) the date of issue is a Dividend Payment Date
or is a date after the record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive a dividend and before such
Dividend Payment Date, in either of which events such dividends will accrue,
and be cumulative, from such Dividend Payment Date. Accrued but unpaid
dividends will cumulate from the applicable Dividend Payment Date but will not
bear interest. Dividends paid on the shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares will be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.

 

 

The Board of Directors may fix
a record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date will be not more than 60 calendar days prior to the
date fixed for the payment thereof.

	3.	 	The holders of shares of Series A Preferred Stock shall have the following
voting rights:

(a)    Subject to the provision for adjustment hereinafter set forth and except
as otherwise provided in the Articles of Incorporation, as amended, or
required by law, each share of Series A Preferred Stock shall entitle the
holder thereof to 10,000 votes, on all matters upon which the holders of the
Common Stock of the Corporation are entitled to vote. In the event the
Corporation shall at any time after the Record Date declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which holders
of shares of Series A Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

(b)    Except as otherwise provided herein, in the Articles of Incorporation, as
amended, or in any other Articles Supplementary creating a series of Preferred
Stock or any similar stock, and except as otherwise required by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.

(c)    Except as set forth herein, or as otherwise provided by law, holders of
Series A Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.

 

 

	4.	 	(a)    Whenever dividends or other dividends or distributions payable on the
Series A Preferred Stock are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
A Preferred Stock outstanding have been paid in full, the Corporation will not:

(i)    Declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) (“Junior Stock”) to the shares
of Series A Preferred Stock;

(ii)    Declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) (“Parity Stock”) with the shares of Series A Preferred Stock, except dividends paid ratably on
the shares of Series A Preferred Stock and all such Parity Stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;

(iii)    Redeem, purchase or otherwise acquire for consideration shares of any Junior Stock; provided, however, that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such Junior Stock in exchange for shares of any other Junior Stock of the
Corporation; or

(iv)    Redeem, purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of Parity Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board) to all holders of such shares
upon such terms as the Board, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, may determine in good faith will result
in fair and equitable treatment among the respective series or
classes.

(b)    The Corporation will not permit any majority-owned subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph 4(a),
purchase or otherwise acquire such shares at such time and in such manner.

	5.	 	Any shares of Series A Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever will be retired and canceled promptly after
the acquisition thereof. All such shares will upon their cancellation become
authorized but unissued shares of Common Stock.

 

 

	6.	 	Upon any liquidation, dissolution or winding up of the Corporation, no
distribution will be made (a) to the holders of shares of Junior Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock have received
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment; provided, however, that
the holders of shares of Series A Preferred Stock will be entitled to receive an
aggregate amount per share, subject to the provision for adjustment hereinafter
set forth, equal to a minimum per share liquidation payment of $10,000 but will
be entitled to an aggregate per share liquidation payment of 10,000 times the
payment made per share of Common Stock or (b) to the holders of shares of Parity
Stock, except distributions made ratably on the shares of Series A Preferred
Stock and all such Parity Stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation at any time (i) declares a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivides the outstanding shares of Common Stock, (iii) combines the
outstanding shares of Common Stock into a smaller number of shares or (iv)
issues any shares of its capital stock in a reclassification of the outstanding shares of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Corporation is the continuing or surviving
corporation), then, in each such case and regardless of whether any shares of
Series A Preferred Stock are then issued or outstanding, the aggregate amount to
which each holder of shares of Series A Preferred Stock would otherwise be
entitled immediately prior to such event pursuant to this paragraph 6 will be
correspondingly adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

	7.	 	In the event that the Corporation enters into any consolidation, merger,
statutory share exchange, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then, in each such case, each share of Series A
Preferred Stock will at the same time be similarly exchanged for or changed into
an amount per share, subject to the provision for adjustment hereinafter set
forth, equal to ten thousand (10,000) times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation at any time (a) declares a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (b)
subdivides the outstanding shares of Common Stock, (c) combines the outstanding shares of Common Stock in a smaller number of shares or (d) issues any shares of
its capital stock in a reclassification of the outstanding shares of Common
Stock (including any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing or surviving corporation),
then, in each such case and regardless of whether any shares of Series A
Preferred Stock are then issued or outstanding, the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock will be correspondingly adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

 

 

	8.	 	The shares of Series A Preferred Stock are not redeemable.

	9.	 	The Series A Preferred Stock rank, with respect to the payment of dividends and
the distribution of assets, junior to all other series of the Corporation’s
Preferred Stock, unless the terms of such series shall so provide.

	10.	 	Series A Preferred Stock may be issued in fractions of a share that shall
entitle the holder, in proportion to such holder’s fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.

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     IN WITNESS WHEREOF, The Ryland Group, Inc., has caused these presents to be signed in its name
and on its behalf by its Senior Vice President and witnessed by its Assistant Secretary on December
22, 2008.

	 	 	 	 	 
	WITNESS:		THE RYLAND GROUP, INC.
	 
	 
	By:  	/s/ Andrea L. Riordan	 	By:  	/s/ Timothy J. Geckle
	 	Name:  Andrea L. Riordan	 	 	Name:  Timothy J. Geckle
	 	Title:  Assistant Secretary	 	 	Title:  Senior Vice President and General Counsel 	 

     THE UNDERSIGNED, Timothy J. Geckle, Senior Vice President and General Counsel of The Ryland
Group, Inc., who executed on behalf of the Corporation the foregoing Articles Supplementary of
which this Certificate is made a part, hereby acknowledges in the name and on behalf of said
Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and
hereby certifies that the matters and facts set forth herein with respect to the authorization and
approval thereof are true in all material respects under the penalties of perjury.

	 	 	 	 	 
	 	 	 
	 	                                         /s/ Timothy J. Geckle
 	 
	 	Timothy J. Geckle

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