Document:

Exhibit 10.1

 

AMENDMENT NO. 3

 

TO

 

SENIOR EXECUTIVE SEVERANCE AGREEMENT.

 

The Ryland Group, Inc. (the “Company”) and                                    (the “Executive”) amend the Senior Executive Severance Agreement dated as of                          (the “Agreement”) to modify Section 1.8, “Subsequent Imposition of Excise Tax” to eliminate the “tax gross-up” benefit it provides to the Executive.

 

Accordingly, the Agreement is amended, effective October 1, 2012 to delete Section 1.8 in its entirety and substitute the following new Section 1.8:

 

1.                                    Section 1.8 is amended in its entirety, as follows:

 

“1.8 Golden Parachute Limitation.  Notwithstanding any other provision of this Agreement, in the event that it shall be determined that the aggregate payments or distributions to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Payments”), constitute “excess parachute payments” (as such term is defined under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) or any successor provision, and the regulations promulgated thereunder (collectively, “Section 280G”)) that would be subject to the excise tax imposed by Section 4999 of the Code or any successor provision (collectively, “Section 4999”) or any interest or penalties with respect to such excise tax (the total excise tax, together with any interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Payments shall be either (a) delivered in full, or (b) delivered to such lesser extent that would result in no portion of the Payments being subject to the Excise Tax (the “Capped Payment”), whichever of the foregoing amounts, taking into account the applicable Federal, state or local income and employment taxes and the Excise Tax, results in the receipt by the Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be subject to the Excise Tax.  If a reduction in the Payments is required so that the amount of the Payments equals the Capped Payment, the Payments shall be reduced in the following order: (1) reduction of cash Payments otherwise payable to Executive that are exempt from Code Section 409A; (2) reduction of any other payments and benefits otherwise payable to Executive that are exempt from Code Section 409A; (3) cancellation of accelerated vesting of equity awards (other than stock options) that are exempt from Code Section 409A; (4) cancellation of accelerated vesting of stock options that are exempt from Code Section 409A; and (5) reduction of any other payments and benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Code Section 409A, as determined by the Company.  If acceleration of vesting of Executives stock options or other equity awards is to be cancelled pursuant to clauses (3)

 

1

 

or (4) of the immediately preceding sentence, such cancellation of the acceleration of vesting shall be accomplished by first canceling such acceleration for the vesting installment that will vest last and continuing to the extent necessary by canceling such acceleration for the next vesting installment with the latest vesting.  All computations and determinations called for by this Section 1.8 shall be made and reported in writing to the Company and Executive by an independent accounting firm or independent tax counsel selected by the Executive subject to approval by the Company, which approval shall not be unreasonably withheld (the “Tax Advisor”).  The Company shall pay all fees and expenses charged by the Tax Advisor in connection with its services.  In no event shall any reduction or cancellation of Payments pursuant to this Section 1.8 result in an impermissible change in the form or timing of payments, or an impermissible acceleration of payments, in violation of Code Section 409A.”

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of                       , 2012.

 

 

	
THE RYLAND   GROUP, INC.
    	
 
    	
EXECUTIVE:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
William L. Jews
    	
 
    	
 
    
	
 
    	
Chairman of the Board   of Directors
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Attest:
    	
 
    	
 
    	
 
    
	
 
    	
Timothy J. Geckle
    	
 
    	
 
    
	
 
    	
Secretary
    	
 
    	
 
    
						

 

2Exhibit 10.2

 

	
 
    	
2012 Amended Executive   Officer
   Non-Qualified Stock Option Agreement
    pursuant to
   The Ryland Group, Inc.
   2011 Equity and Incentive Plan
    	

    

 

AGREEMENT, dated 3/1/2012, between THE RYLAND GROUP, INC. (the “Corporation”) and                     (the “Optionee”).

WHEREAS, pursuant to The Ryland Group, Inc. 2011 Equity and Incentive Plan (the “Plan”), which is amended effective October 1, 2012, the Board of Directors wishes to provide participation in the appreciated equity value of the Corporation by providing the Optionee with a grant of non-qualified stock options related to Ryland Common Stock (“Common Stock”), and thereby increase the Optionee’s proprietary interest in the success of the Corporation; and

WHEREAS, the Optionee desires to accept said grant in accordance with the terms and provisions of the Plan and this Agreement.

NOW THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the Corporation and the Optionee agree as follows:

 

1.              Grant of Option

Subject to the terms and conditions set forth herein, the Corporation hereby grants to the Optionee during the period ending at the close of business five years from the date hereof (the “Option Period”), the option to purchase (the “Option”) from the Corporation at a price of $18.22 per share up to but not exceeding in the aggregate 10,000 shares of the Corporation’s Common Stock. THE OPTION GRANTED UNDER THIS AGREEMENT SHALL NOT BE TREATED AS AN “INCENTIVE STOCK OPTION” WITHIN THE MEANING OF 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 in accordance with the following vesting schedule provided that the price of the Corporation’s Common Stock must equal or exceed $27.33 when this Option is exercised.

The aggregate number of shares of Common Stock optioned by this Agreement shall be divided into three installments.

 

The first installment for 3,334 shares may be exercised in whole or in part beginning 03/01/2013. 

 

The second installment for 3,333 shares may be exercised in whole or in part beginning 03/01/2014. 

 

The third installment for 3,333 shares may be exercised in whole or in part beginning 03/01/2015.

 

In case an installment is not immediately exercisable, the Board of Directors or the Compensation Committee of the Board may in its discretion accelerate the time at which the installment may be exercised. To the extent not exercised, installments shall accumulate and be exercisable by the Optionee during the Option Period. Continued accrual of installments shall cease immediately upon termination of employment for any reason whatsoever, subject to acceleration by the Board of Directors or the Compensation Committee.

 

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 Optionee desires to purchase. The form of Notice of Exercise is attached to this Agreement as Exhibit A. Notice(s) should be delivered to Marti Darnall, The Ryland Group, Inc., 3011 Townsgate Road, Suite 200, Westlake Village, CA 91361; Telephone No. (805) 367-3777; Facsimile No. (805) 367-3806.

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

(a)          cash payment (by certified check, bank draft or money order payable to the order of the Corporation);

(b)         if approved by the Corporation, cash payment may be made from the proceeds of an immediate sale of Common Stock receivable upon the exercise of the Option; or

(c)          if approved by the Corporation, delivery of Common Stock (including executed stock powers attached thereto).

The payment of the exercise price shall be delivered to Marti Darnall together with the Notice of Exercise.

The Corporation shall, subject to the receipt of withholding tax, issue to the Optionee the stock certificate for the number of shares of Common Stock with respect to which the Option is exercised.

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, or if no longer listed on such exchange, as otherwise determined by the Corporation, the Board of Directors or the Compensation Committee of the Board.

 

4.              Certain Tax Matters

Optionee agrees that the Corporation may withhold any federal, state or local taxes upon exercise of an Option, at such time and upon such terms and conditions as required by law or determined by the Corporation.

 

5.              Termination

The Option granted hereby shall terminate upon the happening of the earliest of the following events:

(a)          The expiration of seven years from the date of this Agreement;

(b)         The expiration of 90 days after the date of termination of the Optionee’s employment, except in the case of death, disability or retirement. During this period, the Optionee shall have the right to exercise the Option to the extent it is exercisable on the termination date.

 

 

(c)          The expiration of three years after the date of death of the Optionee if death occurs while the Optionee is in the employ of the Corporation. During this period, the Optionee’s estate, personal representative or beneficiary shall have the right to exercise the Option to the extent it is exercisable on the date of death.

(d)         The expiration of three years after the date the Optionee’s employment is terminated due to disability or retirement. During this period, the Optionee shall have the right to exercise the Option to the extent it is exercisable on the date of termination due to disability or retirement.

 

The Board of Directors or the Compensation Committee of the Board shall have absolute discretion to determine whether any other termination of Optionee’s employment is to be considered as retirement for the purposes of this Agreement and whether an authorized leave of absence or otherwise shall constitute a termination of employment for the purposes of this Agreement. Any determination made by the Board of Directors or the Compensation Committee of the Board with respect to any matter referred to in this paragraph 5 shall be final and conclusive on all persons affected thereby.

 

6.              Assignability

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

 

7.              Rights as a Stockholder

The Optionee 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 Optionee, and the Corporation has receipt of payment for the full exercise price of the Option shares. No adjustment will be made for dividends, distributions or other rights for which the record date is prior to the date of issuance of the shares of Common Stock related to the exercise of an Option.

 

8.              Merger, Consolidation or Share Exchange

After any merger, consolidation or share exchange in which the Corporation is the surviving or resulting corporation, the Optionee shall be entitled, upon the exercise of an Option, to receive the number and class of shares of stock or other consideration to which the Optionee would have been entitled, if, immediately prior to such merger, consolidation or share exchange, the Optionee had exercised the Option in accordance with and subject to the terms of this Agreement. If the Corporation is not the surviving or resulting corporation in any merger, consolidation or share exchange, the surviving or resulting corporation shall tender stock options to purchase its shares on terms and conditions that substantially preserve the rights and benefits under this Option.

 

9.              No Employment Agreement

Nothing in this Agreement or in the Plan shall confer any right to continued employment with the Corporation or its subsidiaries nor restrict the termination of the employment relationship with the Optionee at any time.

 

10.       Employee’s Agreement

Notwithstanding any other provision of this Agreement, Optionee agrees that Optionee 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 of any governmental authority or agreement to which the Corporation is subject.

 

11.       Resolution of Disputes

Any dispute or disagreement which shall arise under, or as a result of, or pursuant to, this Agreement shall be determined by the Board of Directors of the Corporation or the Compensation Committee of the Board of Directors in its absolute discretion, and any determination by the Board of Directors or the Compensation Committee under or pursuant to this Agreement and any interpretation by the Board of Directors or the Compensation Committee of the terms of this Agreement or the Plan shall be final, binding and conclusive on all persons affected thereby.

 

12.       Amendments

The Board of Directors of the Corporation or the Compensation Committee of the Board of Directors shall have the right, in its absolute discretion, to alter or amend this Agreement in any manner, and any alteration or amendment of this Agreement by the Board of Directors or the Compensation Committee shall, upon adoption thereof by the Board of Directors or the Compensation Committee, become and be binding and conclusive on all persons affected thereby without requirement of consent or other action with respect thereto. The Corporation shall give written notice to the Optionee of any alteration or amendment of this Agreement by the Board or the Compensation Committee as promptly as practical after the adoption thereof.

 

13.       Construction

This Agreement has been entered into in accordance with the terms of the Plan, and wherever a conflict may arise between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.

 

The Optionee hereby 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 Optionee in connection with the Option.

 

	
 
    	
THE RYLAND GROUP, INC.
    
	
 
    	
 
    
	
 
    	
By:

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