Document:

Exhibit 10.3

 

STOCK
UNIT AGREEMENT

pursuant to

THE
RYLAND GROUP, INC.

2008 EQUITY INCENTIVE PLAN

 

 

This STOCK UNIT AGREEMENT (the “Agreement”) is dated as of               ,
200_, by and between The Ryland Group, Inc. (the “Corporation”), and                             
(the “Executive”).

 

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

 

1.                                       Grant
of Awards.

 

The Corporation grants to the Executive an award of                   
Stock Units (the “Award”) pursuant to Section 6 of the 2008 Equity
Incentive Plan (the “Plan”).

 

2.                                       Vesting
of Awards.

 

Vesting of the Award is contingent upon the Corporation generating $
100 million or more of net cash provided by operating activities as contained
within the Corporation’s Consolidated Statements of Cash Flows for the fiscal
year 2008 (“2008 Cash Flow”).  If 2008
Cash Flow is less than $100 million, for each $1 million of net cash provided
by operating activities below $100 million generated by the Corporation in
fiscal year 2008, there is a corresponding reduction of one percent of the
amount of the Award (e.g., if 2008 Cash Flow of $25 million is achieved, the
Executive would only vest in 25 percent of the Award), and the remainder of the
Award is forfeited and cancelled.  If
2008 Cash Flow is negative, the Award shall be forfeited in its entirety.

 

Subject to any reduction of the Award pursuant to the prior paragraph
of this Section 2, the Award shall become vested and payable in three pro
rata installments in accordance with the following vesting schedule provided
that the Executive is employed by the Corporation on the applicable Vesting
Date:

 

	
  VESTING
  DATE

  	
   

  	
  VESTING

  
	
   

  	
   

  	
   

  
	
             ,
  200  

  	
   

  	
               Stock
  Units

  
	
             ,
  200  

  	
   

  	
               Stock
  Units

  
	
             ,
  200  

  	
   

  	
               Stock
  Units

  

 

If
the Executive terminates employment with the Corporation for any reason prior
to any Vesting Date, the unvested installments of the Award are immediately
forfeited and cancelled.

 

3.                                       Change
in Control.

 

Consistent with Section 7(d) of the Plan, any outstanding
unvested Stock Units shall vest and be immediately paid to the Executive upon
the occurrence of a Change in Control (as defined 

 

 

below and in the Plan).  A “Change in 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
plans of the Corporation, of beneficial ownership of 20 percent 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 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 of the directors then
still in office who were directors at the beginning of the period; or

 

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.

 

For purposes
of this Award, the Administrator, in its discretion, may specify a different
definition of Change in Control in order to comply with the provisions of
Internal Revenue Code Section 409A.

 

4.                                       Payment
of Stock Units.

 

Upon the vesting of Stock Units in accordance with this Agreement, the
number of Stock Units which become vested (the “Vested Number of Stock Units”)
are paid to the Executive in a number of shares of Common Stock of the
Corporation equal to 50% of the Vested Number of Stock Units and a cash amount
equal to the Fair Market Value (as defined in the Plan) of the remaining unpaid
amount of 50% of the Vested Number of Stock Units.  Upon payment, the vested and paid Stock Units
are automatically deemed fully paid and cancelled.

 

5.                                       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.

 

6.                                       Delivery
of Stock Certificate.

 

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 or about the applicable Vesting Date.

 

2

 

 

7.                                       Rights
of Executive With Respect to Stock Units.

 

The Executive shall have no rights as a
stockholder with respect to any unvested 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 general unsecured creditor of
the Corporation until the Stock Units vest and are paid 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 consistent with Section 7(c) of the Plan.

 

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:

  	
   

  	
   

  
	
   

  	
   

  	
  Robert J. Cunnion, III

  
	
   

  	
   

  	
  Senior Vice President, Human Resources

  

 

3Exhibit 10.4

 

STOCK
UNIT AGREEMENT

pursuant to

THE
RYLAND GROUP, INC.

2008 EQUITY INCENTIVE PLAN

 

 

This STOCK UNIT AGREEMENT (the “Agreement”) is dated as of May 1,
2008, by and between The Ryland Group, Inc. (the “Corporation”), and R.
Chad Dreier (the “Executive”).

 

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

 

1.                                       Grant
of Awards.

 

The Corporation grants to the Executive an award of 80,000 Stock Units
pursuant to Section 6 of the 2008 Equity Incentive Plan (the “Plan”) plus
an amount equal to federal and state income and Medicare taxes assuming the
highest marginal rate (together, the “Award”).

 

2.                                       Vesting of
Awards.  The Award granted in Section 1
of this Agreement shall become vested and payable on May 1, 2009 (the “Vesting
Date”), subject to the following conditions:

 

a)                                      The
Corporation must generate $100 million or more of net cash provided by
operating activities as contained within the Corporation’s Consolidated
Statements of Cash Flows for the fiscal year 2008 (“2008 Cash Flow”).  If 2008 Cash Flow is less than $100 million,
for each $1 million of net cash provided by operating activities below $100
million generated by the Corporation in fiscal year 2008, there is a
corresponding reduction of one percent of the amount of the Award that will
vest (e.g., if 2008 Cash Flow of $25 million is achieved, the Executive would
vest in 25 percent of the Award), and the remainder of the Award shall be
forfeited and cancelled.  If 2008 Cash
Flow is negative, the Award shall be forfeited in its entirety.

 

b)                                     If
the Executive vests in and receives the 2008 tranche of 40,000 Stock Units and
related tax assistance pursuant to Section 5.5(b) of his Amended and
Restated Employment Agreement, amended and restated as of April 20, 2005,
by and between the Corporation and the Executive (the “Employment Agreement”),
one-half of the Award shall be forfeited.

 

c)                                      If
the Executive terminates employment with the Corporation voluntarily or the
Executive is terminated for Cause (as defined in Section 6.5 of the Employment
Agreement) prior to the Vesting Date, the Award is immediately forfeited and
cancelled.  Notwithstanding the
foregoing, the Award shall vest and be paid by the Corporation to the Executive
upon the occurrence of a Change in Control (as defined below) or a termination
by the Corporation without Cause (as defined in Section 6.4 of the
Employment Agreement).

 

3.                                       Change
in Control.

 

Consistent with Section 7(d) of the Plan, the Award shall
vest and be immediately paid to the Executive upon the occurrence of a Change
in Control (as defined below and in the Plan). 
A “Change in 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
plans of the Corporation, of beneficial ownership of 20 percent 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 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 of the directors then
still in office who were directors at the beginning of the period; or

 

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.

 

For purposes
of this Award, the Administrator, in its discretion, may specify a different
definition of Change in Control in order to comply with the provisions of
Internal Revenue Code Section 409A.

 

4.                                       Payment of
Stock Units.

 

Upon vesting of the Award 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.

 

5.                                       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.

 

6.                                       Delivery
of Stock Certificate.

 

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 or about the Vesting Date.

 

7.                                       Rights
of Executive With Respect to Stock Units.

 

The Executive shall have no rights as a
stockholder with respect to any unvested Stock Unit or any share of Common
Stock to be issued with respect to any Stock Unit until the date of 

 

2

 

vesting and payment.  The Executive’s rights with respect to Stock
Units shall be the rights of a general unsecured creditor of the Corporation
until the Stock Units vest and are paid 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 consistent with Section 7(c) of
the Plan.

 

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.                                 Award
Subject to Terms and Conditions of the Plan.

 

The Award 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 Award grant and the Executive agrees by acceptance of this Award
grant 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 Award grant.

 

	
   

  	
  THE RYLAND GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Robert J. Cunnion, III

  
	
   

  	
   

  	
  Senior Vice President, Human Resources

  

 

3

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