Exhibit
10.12
SENIOR EXECUTIVE SEVERANCE
AGREEMENT
AGREEMENT dated as
of
, 20 between The Ryland Group,
Inc., a Maryland corporation (the “Corporation”), and
(the “Executive”).
The purpose of
this Agreement is to ensure that the Corporation will receive the
continued dedication, loyalty, and service of, and the availability
of objective advice and counsel from, the Executive notwithstanding
the possibility, threat or occurrence of a bid or other action to
take over control of the Corporation.
In consideration
of the services provided by the Executive and the covenants and
agreements contained herein, and for other good and valuable
consideration the sufficiency of which is acknowledged, the
Corporation and the Executive agree as follows:
1.
Termination After a Change of Control . The following
payments and benefits will be provided to the Executive by the
Corporation (in addition to any compensation or benefits to which
the Executive may otherwise be entitled under any other agreement,
plan or arrangement with the Corporation, other than a plan, policy
or other arrangement providing for payments due to severance of
employment) in the event of a Termination of Employment (as
hereinafter defined) of the Executive during a Change of Control
Period (as hereinafter defined) of the Corporation:
1.1
Lump Sum Cash Payment . On or before the
Executive’s last day of employment with the Corporation or
any successor corporation, the Corporation or any successor
corporation will pay the Executive, as an amount earned for
services rendered, a pro rata bonus through the date of Termination
of Employment. Also, on or before the Executive’s last
day of employment with the Corporation or any successor
corporation, the Corporation or any successor corporation will pay
the Executive a lump sum cash payment equal to two (2) times the
highest Annual Compensation (as hereinafter defined) for any of the
three (3) calendar years immediately preceding the date of
Termination of Employment. For purposes of this Section 1.1,
the pro-rata bonus shall be an amount equal to the target annual
bonus for the year in which the Termination of Employment occurs
and, in the absence of a specified target annual bonus for such
year, the highest bonus earned by the Executive within the three
(3) calendar years immediately preceding the date of Termination of
Employment, in either case pro rated for the period served during
the year in which the Termination of Employment occurs.
1.2
Accelerated Vesting and Supplemental Pavments . All
rights, awards and benefits of the Executive provided pursuant to
the TRG Incentive Plan and any other incentive or bonus plans of
the Corporation in which the Executive participates prior to the
Change of Control shall immediately vest in full and the Executive
shall receive the amount of these rights, awards and benefits in a
cash lump sum payment, or other form of compensation as provided in
accordance with the applicable benefit, document or plan, within
thirty (30) days of the date of Termination of Employment or, if
later, upon the earliest date as may be permitted in accordance
with Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”), without the imposition of additional
taxes or interest penalties under Section 409A.
1.3
Insurance and Other Special Benefits . The
Executive’s participation in the life, accident and health
insurance, employee welfare benefit plans (as defined in the
Employee Retirement Income Security Act of 1974), personal health
services allowance, and health and social club benefits provided to
the Executive prior to the Change of Control (collectively, the
“Benefits”) shall be continued or equivalent benefits
provided by the Corporation or any successor corporation or
affiliate of such successor corporation (the “Responsible
Corporation”), at the Responsible Corporation’s
expense, for a period of two (2) years from the date of the
Executive’s Termination of Employment. If for any
reason the Responsible Corporation is unable to continue the
Benefits, as required by the preceding sentence, the Responsible
Corporation shall pay to the Executive a lump sum cash payment
equal to the value of the Benefits which the Responsible
Corporation is unable to provide. Notwithstanding anything
herein to the contrary, in no event shall the aggregate present
value of the Benefits to be provided under this Section 1.3,
as determined as of the date of the Executive’s Termination
of Employment in the discretion of the Responsible Corporation
applying reasonable assumptions, exceed an amount (the
“Benefits Threshold”) equal to ninety-nine hundredths
(0.99) times the highest Annual Compensation (as hereinafter
defined) for any of the three (3) calendar years immediately
preceding the date of Termination of Employment. In the event
that the aggregate present value of the Benefits to be provided
under this Section 1.3 would, but for the preceding sentence,
exceed the Benefits Threshold, the Executive shall determine which
such Benefit or Benefits shall be reduced or forgone to comply with
the limitation set forth in the preceding sentence.
1.4
Relocation Assistance . Should the Executive move his
residence in order to pursue professional or career opportunities
within two (2) years after the date of the Executive’s
Termination of Employment, he will be reimbursed by the Responsible
Corporation for any expenses incurred in that relocation, including
taxes payable on the reimbursement, as well as any reduction in
value from the original purchase price of the Executive’s
residence. Benefits under this paragraph will include
assistance in and payment of all costs and commissions related to
selling the Executive’s home, moving costs as well as all
other
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assistance and benefits which are provided by
the Corporation under its relocation plan as in effect immediately
prior to the Change of Control. All payments made pursuant to
this Section 1.4 shall be made consistent with, and within the
permissible timeframe under, the reimbursement arrangements
provisions under Section 409A.
1.5
Stock Rights . All stock options, stock appreciation
rights, stock purchase rights, restricted stock, restricted stock
units, performance shares, performance units, and any similar
rights which the Executive holds shall become fully vested and be
exercisable on the date of Termination of Employment.
1.6
Outplacement Assistance . The Executive shall be
reimbursed by the Responsible Corporation for the costs of all
outplacement services obtained by the Executive within the two (2)
year period after the date of the Executive’s Termination of
Employment provided the total reimbursement shall be limited to an
amount equal to twenty-five percent (25%) of the Executive’s
Annual Compensation for the calendar year immediately preceding the
date of the Executive’s Termination of Employment. All
payments made pursuant to this Section 1.6 shall be made consistent
with, and within the permissible timeframe under, the reimbursement
arrangements provisions under Section 409A.
1.7
Definitions .
(i)
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, of beneficial ownership
of twenty percent (20%) 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 (2) 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 (2/3) of the
directors then still in office who were directors at the beginning
of the period; or
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(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
