Exhibit 10.1

 

SEPARATION AGREEMENT
AND RELEASE

 

THIS SEPARATION AGREEMENT AND RELEASE (the “Agreement”) is made and entered into
by and between, on the one hand, David M. Grimm (“Grimm”), individually and on
behalf of his spouse, representatives, heirs, executors and assigns, and, on the
other hand, Forestar Group Inc. (the “Company” and, together with Grimm, the
“Parties” and each a “Party”).

 

WHEREAS, the Parties intend that Grimm’s employment with the Company shall
terminate effective as of April 14, 2017 (the “Termination Date”);

 

WHEREAS, the Company is entering into that certain Agreement and Plan of Merger
by and among Terra Firma Merger Parent, L.P., Terra Firma Merger Sub, L.P.
(“MergerSub”) and the Company, dated as of April 13, 2017, pursuant to which it
is contemplated that the Company will merge with and into MergerSub (such
merger, the “Starwood Merger”);

 

WHEREAS, the Parties, together with Temple-Inland Inc., are party to a certain
Change in Control/Severance Agreement dated July 15, 2007 (the “CIC Agreement”);

 

WHEREAS, upon and subject to the consummation of either (i) the Starwood Merger
or (ii) any other transaction that would constitute a “Change in Control” within
the meaning of the CIC Agreement (provided such transaction is effected pursuant
to an agreement executed on or before the expiration of the ninety (90) day
period beginning on the Termination Date (any such other transaction, an “Other
Merger”)), the Company desires to provide to Grimm the payments and benefits
that would have been provided to him under the CIC Agreement upon a qualifying
termination of employment following a Change in Control, in any event reduced as
applicable by the amounts payable hereunder upon Grimm’s termination of
employment; and

 

WHEREAS, the Parties intend that Grimm shall be available to provide certain
consulting services to the Company for the period beginning immediately
following the Termination Date and ending on the earlier of ninety (90) days
later or upon the date of consummation of the Starwood Merger or any Other
Merger (the “Consulting Period”).

 

NOW, THEREFORE, in consideration of the mutual representations, promises and
covenants contained herein, the adequacy and sufficiency of which are hereby
acknowledged, the Parties voluntarily covenant and agree as follows:

 

1.                                      Meaning of Term “Forestar”: Grimm
understands and the Parties agree that the term “Forestar” as used in this
Agreement, includes Forestar Group Inc. (the “Company”) and its Board of
Directors, past, present or future parents, subsidiaries, related or affiliated
entities of the Company and all of their and the Company’s respective past,
present and future officers, trustees, directors, shareholders, employees,
agents, representatives, insurers, legal counsel, and successors and assigns of
all of the foregoing (and expressly excludes Grimm).

 

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2.                                      Actions by Company: For and in
consideration of the actions by Grimm described in Section 3 of this Agreement,
which include Grimm’s Release of Claims described in Section 3.a., the Company
agrees to the following:

 

a.                                      Grimm’s Separation of Employment:
Grimm’s employment with the Company is terminated effective as of the
Termination Date.

 

b.                                      Payment by the Company: In exchange for
Grimm’s complete compliance with and performance of all actions, promises and
representations contained in this Agreement and providing all other
consideration contained in this Agreement, the Company will: (i) pay Grimm
$550,000.00, less payroll taxes and applicable withholdings, as well as all
other applicable taxes, to be paid to Grimm within ten days after this Agreement
becomes effective and non-revocable in accordance with Section 18. below (the
“Payment”), and (ii) if applicable, provide the Contingent Obligations as set
forth in Section 2.d. below. The Payment is contingent on Grimm’s complete
compliance with all of Grimm’s obligations under this Agreement, including,
without limitation, compliance with Sections 3.c. and 3.d. below, as well as all
other terms and conditions of this Agreement.

 

c.                                       Insurance: The Company also agrees to
reimburse Grimm for the cost incurred to obtain COBRA coverage for his
dependents and him for the one-year period encompassing May 1, 2017 through
June 30, 2018 (the “End Date”) and to reimburse Grimm for the premiums entailed
to convert his basic life insurance and accidental death and dismemberment
insurance policies (collectively “Life/AD&D Coverage”) furnished by the Company
to Grimm and in effect as of the Termination Date; provided, however, that if
before the End Date, Grimm obtains employment that entails Grimm’s receiving
reasonably comparable or superior corresponding insurance benefits for health
care, dental care, and Life/AD&D Coverage to that provided to Grimm by Forestar,
Forestar’s respective reimbursement obligations under this Section 2.c. shall
cease immediately upon Grimm’s becoming eligible for such insurance benefits.
Within seven (7) days after obtaining such new employment and becoming eligible
for such insurance benefits, Grimm agrees to provide written notice to Forestar
Group Inc. to the attention of: Ms. Erin Scarborough, 6300 Bee Cave Road,
Building 2, Suite 500, Austin, Texas 78746-5149.

 

d.                                      Contingent Obligations: Upon the
consummation of the Starwood Merger or an Other Merger (such consummation, the
“Closing”), the Company shall provide Grimm with all payments and benefits that
he would be entitled to receive under the CIC Agreement as if he were terminated
by the Company without “Cause” (within the meaning of the CIC Agreement)
immediately following the Closing based on his compensation in effect
immediately prior to the Termination Date and utilizing 60% of his base salary
immediately prior to the Termination Date in any calculation requiring the
current fiscal year “target annual bonus” (as such phrase is utilized in the CIC
Agreement), less the gross amount of the Payment and any other benefits actually
provided to Grimm pursuant to Section 2.c. above or 3.h. below (the “Contingent
Obligations”). Company shall provide the Contingent Obligations to Grimm in
accordance with the time periods and in all other respects in the manner
required by the CIC Agreement as if (i) Grimm were employed by Company and the
CIC Agreement were in effect at the time of the Closing, and (ii) Grimm’s
employment was terminated immediately following the Closing.

 

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3.                                      Actions by Grimm: For and in
consideration of the agreement by the Company to make the Payment described in
Section 2.b. and to provide, if applicable, the Contingent Obligations described
in Section 2.d. of this Agreement, to which consideration Grimm acknowledges he
would not otherwise be entitled and as to which consideration Grimm acknowledges
the sufficiency and receipt, Grimm agrees to the following:

 

a.                                      Grimm’s Release of Claims (“Release of
Claims”): GRIMM KNOWINGLY AND VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY,
HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES Forestar with respect to any and
all claims and causes of action of any nature, both past and present, known and
unknown, foreseen and unforeseen, at law or in equity, which Grimm possesses or
may in the future possess or which could be asserted now or in the future on
Grimm’s behalf by any other person, entity or governmental authority, resulting
from or relating to any act, agreement, event, occurrence, representation, or
omission of any kind occurring on or before the Effective Date of this
Agreement. Grimm understands and agrees that this Release of Claims includes,
but is not limited to, the following:

 

(i.)                                 All claims and causes of action arising
under contract, tort, or other common law, including, without limitation, breach
of contract; wrongful discharge; non-reimbursement; negligence; negligent
hiring, supervision, or retention; false imprisonment; assault; battery;
intentional infliction of emotional distress; defamation; disparagement;
slander; libel; fraud; invasion of privacy; breach of any covenants of good
faith and fair dealing; breach of employment policies, practices and procedures;
and loss or interference with any type of third-party relationship;

 

(ii.)                             All claims and causes of action arising under
any and all federal, state, or local statutes, laws, regulations, rules, or
ordinances, including, without limitation, the Texas Commission on Human Rights
Act; Chapters 21 and 451 of the Texas Labor Code; the Texas Payday Law; the
National Labor Relations Act; the Civil Rights Acts of 1866, 1964, and 1991; 42
U.S.C. §§ 1981 and 1983; the Equal Pay Act; the Occupational Safety and Health
Act; the Family and Medical Leave Act; the Age Discrimination in Employment Act;
the Older Workers Benefit Protection Act; the Americans with Disabilities Act,
as amended by the ADA Amendments Act of 2008; the Fair Labor Standards Act; the
Texas Securities Act; the United States Securities Act of 1933; the United
States Securities Exchange Act of 1934; the Dodd-Frank Wall Street Reform and
Consumer Protection Act; the Sarbanes-Oxley Act of 2002; the Employee Retirement
Income Security Act (excluding claims or causes of action for vested benefits
under a covered retirement plan); and all claims and causes of action for
discrimination, harassment, or retaliation, including those which could have
been or could be alleged in any lawsuit or administrative charge, claim, or
proceeding that could have been or could be filed or asserted against Forestar,
including any person or entity comprising Forestar, by Grimm or on Grimm’s
behalf by any other person, entity or governmental authority; and all claims
under the Constitutions of the United States or the State of Texas;

 

(iii.)                         All claims and causes of action for any types of
damages and equitable relief, including, without limitation, lost wages;
bonuses; expenses; benefits; liquidated, punitive, exemplary, personal,
compensatory, physical, mental, emotional, or property damages; interest;

 

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any other injury, loss, damage, or expense; or any other legal or equitable
remedy of any kind whatsoever; and

 

(iv.)                          All claims and causes of action arising out of or
in any way connected with, directly or indirectly, Grimm’s employment at the
Company, including, without limitation, Forestar’s treatment of Grimm, the terms
and conditions of Grimm’s employment, and Grimm’s termination from employment.

 

Notwithstanding the foregoing, this knowing, voluntary, non-revocable and
unconditional release, acquittal and discharge by Grimm does not operate to
waive Grimm’s rights to: (1) enforce this Agreement, including specifically the
Payment described in Section 2.b., continuation of insurance benefits as
described in Section 2.c., and payment as described in Section 2.g.; (2) if
applicable, receive the Contingent Obligations as described in Section 2.d.;
(3) receive all amounts to which Grimm is entitled under the Company’s 2007
Stock Incentive Plan, as amended, and any agreements issued thereunder, whether
such amounts are to be settled in stock or cash; (4) receive the amount due
under the Company’s Supplemental Executive Retirement Plan, as amended;
(5) receive indemnification and any other benefits that may be applicable under
that certain Indemnification Agreement dated December 12, 2007, between Forestar
Real Estate Group Inc. and Grimm; and (6) receive coverage, as may be applicable
and available, under the Company’s directors and officers liability insurance
that covers actions by Grimm during the course and scope of Grimm’s employment
with the Company undertaken in good faith and as otherwise permitted or required
by governing Company documents and any such applicable and available policy of
directors and officers liability insurance.

 

b.                                      Covenant Not to Sue; No Violation of
Laws; Full Compensation/Reimbursement:  Grimm agrees, promises and covenants not
to sue or bring any legal action in any court or in any arbitration against
Forestar (collectively a “Proceeding”) for claims of any nature released in this
Agreement. In the event that Grimm breaches this agreement, promise and covenant
not to sue, Grimm agrees to reimburse the Company for the Payment received under
Section 2.b. of this Agreement, the value of any benefits provided under
Section 2.c. of this Agreement, any Contingent Obligations paid in accordance
with Section 2.d. of this Agreement, and any amounts paid in accordance with
Section 3.h. of this Agreement, and pay Forestar’s attorneys’ fees, expenses and
costs incurred in defending, or otherwise acting in response to or addressing,
the Proceeding. Grimm acknowledges, represents, warrants and agrees that: (i) he
is unaware of any suspected or actual violations of laws or regulations that
should be reported pursuant to the Company’s standards of business conduct and
ethics, or otherwise; (ii) he did not commit any potential or actual violation
of any laws, regulations, standards, policies or procedures that he should have
properly reported to the Company or otherwise properly addressed pursuant to
applicable laws, regulations, policies, procedures or the Company’s standards of
business conduct and ethics, or otherwise; and (iii) any issue, concern or
complaint in any way concerning the Company’s proper adherence to any applicable
laws, regulations, standards, policies or procedures was properly reported by
him to, and properly addressed by, the Company. Grimm acknowledges, represents,
warrants and agrees that the Company has fully compensated and reimbursed him
for all business-related expenses incurred by him in connection with his
employment with the Company, except for business-related expenses incurred
within the 30-day period preceding the Termination Date for which reimbursement
will be sought (accompanied by supporting documentation) prior to the Effective
Date of this Agreement.

 

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c.                                       Non-Disparagement:

 

Grimm agrees, represents and warrants that he has not made, will not make, will
not assist others in making, or cause to be made any oral, electronic, digital
or written communications that are or could reasonably be construed to be
disparaging, negative, defamatory or critical in any way concerning Forestar,
including all persons and entities comprising Forestar, relating in any way to,
without limitation, Forestar’s business, financial affairs, operations,
management, personnel, strategies, practices, technology, initiatives or
procedures, as well as Forestar’s employment policies or practices, to any
person, corporation, entity, agency or authority, including, without limitation,
any member or representative of the media or news organizations, investors,
potential investors and analysts covering the Company stock, or in or to any
forum, including, without limitation, any conference, business meeting, business
article, social media article, communication, article or post, trade show, or
trade publication. Nothing in this Section 3.c. shall prevent Grimm from
providing truthful testimony in response to any lawful subpoena or from
providing factually accurate statements in response to specific inquiries,
subject to the provisions of Section 3.d. below and otherwise in this Agreement.

 

d.                                      Confidentiality and
Confidential/Proprietary Information: Grimm represents, warrants and agrees that
during his employment with the Company he obtained and had access to
confidential and proprietary information regarding Forestar and Forestar’s
operations, the disclosure of which would cause substantial and irreparable
harm, loss of goodwill or injury to Forestar. He agrees that he has not
disclosed and he will not at any time disclose to anyone, including, without
limitation, any person, firm, corporation or other entity, or publish, or use
for any purpose, any of Forestar’s confidential or proprietary information,
including Confidential Information as defined immediately below. As used in this
Section, “Confidential Information” includes all non-public information or trade
secrets that an employee, including Grimm, conceives, originates, learns of,
discovers, or develops, in whole or in part, or that was obtained, received,
generated or accessed as a result of one’s employment with the Company,
including, without limitation, actual or proposed business plans, initiatives,
projections; strategies; financial information; business trends and projections;
policies and procedures; and personnel matters. Grimm further represents and
agrees that he has taken and will take all reasonable measures to protect the
secrecy of and avoid the disclosure and unauthorized use of any Confidential
Information he prepared or obtained or to which he had access during his
employment with the Company.

 

If Grimm is requested by way of subpoena or otherwise to disclose and becomes
legally compelled to disclose, information in contravention of the terms of this
Section 3.d., he will: (1) provide the Company with prompt written advance
notice of such event so that Forestar will be afforded the opportunity to pursue
timely a protective order or other appropriate remedy, and (2) cooperate with
the efforts of Forestar in this regard. Grimm, for himself and on behalf of his
attorneys, financial advisors and persons under his control, agrees to furnish
only that portion of such information as is legally required to be disclosed,
following the disposition of any applicable challenges or pursuit of applicable
remedies by Forestar, or on Forestar’s behalf, and Grimm agrees and represents
that he will exercise all reasonable efforts to cooperate with Forestar to
obtain confidential treatment of all such information. If the Company, or as
applicable, Forestar, establishes, as may be required in any action or
proceeding, that Grimm—or

 

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Grimm’s financial advisors or attorneys or persons under Grimm’s
control—breached, or is in imminent risk or threatened act of breaching, any
obligations under this Section 3.d., Forestar, in addition to all other relief
and damages, shall, as allowed under applicable law and equity principles, be
entitled to equitable relief, including, but not limited to, injunctive relief,
as well as monetary damages.

 

e.                                       Violation of Non-Disparagement
Section or Confidentiality Section: Grimm agrees, represents and warrants that
any violation of Section 3.c. or 3.d. shall constitute a material breach of this
Agreement, subjecting him to a claim for damages resulting from such breach as
well as a claim for equitable relief. Grimm understands and agrees that Forestar
will be harmed by any violation of the Non-Disparagement Section or the
Confidentiality/Proprietary Information Section (Sections 3.c. and 3.d.,
respectively), with the amount of such harm likely to be very substantial. Grimm
further agrees to pay all costs, expenses and attorneys’ fees incurred by
Forestar in connection with any action or proceeding undertaken by a person or
entity comprising Forestar, in which a person or entity comprising Forestar is a
prevailing party, for the breach of or to enforce the Non-Disparagement or
Confidentiality/Proprietary Information provisions, Sections 3.c. and 3.d.
above, or to recover damages or other relief for violation of either of these
Sections. Grimm agrees that no bond or other security shall be required of
Forestar to obtain any such equitable relief as expressly authorized in this
Agreement or by applicable law, and Grimm consents to the issuance of equitable
relief in connection with any violation, including any threatened violation, of
Section 3.c. or 3.d.

 

Notwithstanding any other provision of or Section in this Agreement, Forestar
shall have the right, at the Company’s sole election, to pursue recourse,
whether legal or equitable or both, for any alleged, threatened or anticipated
violation of Section 3.c. or 3.d. in court or in arbitration. (Any such
court-action or arbitration proceeding shall be referred to, as applicable, as
the “Non-Disparagement Proceeding” or the “Confidentiality Proceeding.”) If the
Company elects, at its sole election, to pursue any such Non-Disparagement
Proceeding or Confidentiality Proceeding in court, Travis County, Texas shall be
the exclusive venue for any such Non-Disparagement Proceeding or any such
Confidentiality Proceeding. If the Company elects to pursue any such
Non-Disparagement Proceeding or Confidentiality Proceeding via arbitration, the
Non-Disparagement Proceeding or Confidentiality Proceeding pursued and elected
by the Company, shall be brought in accordance with the provisions of Section 7
below, subject to the following terms and conditions set forth in this
Section 3.e. If the Company at its sole election opts to initiate the
Non-Disparagement Proceeding or Confidentiality Proceeding via arbitration, the
terms of Section 7 below shall control; provided however, the opportunity to
reach a resolution or meet and confer pre-filing as set forth in Section 7 shall
not apply in connection with any such Non-Disparagement Proceeding or
Confidentiality Proceeding alleged by Forestar. Forestar shall have the
exclusive right to file for immediate Court relief or arbitration relief without
any applicability of the preliminary processes or procedures set forth in
Section 7 attendant to a pre-filing effort to achieve resolution. Grimm agrees
to inform his spouse, attorneys, accountants and tax advisors who receive the
terms of this Agreement of the Non-Disparagement and Confidentiality/Proprietary
Information Sections, and Grimm agrees to be liable for any violation of either
Section 3.c. or 3.d. by his attorneys, accountants or tax advisors or by any
others under his control.

 

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f.                                        Return of Company’s Property: Grimm
represents, warrants, and agrees that he has returned, or prior to the end of
the Consulting Period will return, to the Company all of the Company’s property,
including, without limitation, all laptops, computer disks, credit cards, keys,
notebooks, materials, equipment, and any photocopies of or original Forestar
Confidential Information or other documents regardless where such items are
located, including, without limitation, the Company’s offices in Austin, Texas
(collectively, all of the foregoing description of the “Company’s property”
shall be referenced below as “Devices”); provided, however, that Grimm shall be
permitted to retain the mobile phone and iPad that the Company furnished him and
which he presently maintains; and provided further that within five days
following the expiration of the Consulting Period: (1) he transfers the mobile
phone number and all associated charges, expenses, fees, assessments and data
plan(s) to his own data plan(s); (2) he transfers all associated post-Consulting
Period iPad charges, expenses, fees, assessments and data plan(s) to his own
data plan(s); (3) he is exclusively responsible for and obligated to make the
payment of all post-Consulting Period fees, charges, expenses and invoices
associated with the referenced mobile phone and iPad and the corresponding data
plan(s); and (4) he represents, warrants and agrees that all information and
data received or generated in connection with Grimm’s employment with the
Company, specifically including, without limitation, Confidential Information,
have been completely, irreversibly and permanently eliminated from the
referenced mobile phone and iPad. Grimm further represents, warrants and agrees
that at the expiration of the Consulting Period, he will not have retained,
copied, or otherwise copied from, any such Devices, including, without
limitation, the mobile phone and iPad, any information and data received or
generated in connection with Grimm’s employment with the Company, except to the
extent approved by the Company.

 

g.                                      Consulting During Transition: Grimm
agrees that he will make himself reasonably available at the request of Forestar
on an as-needed basis during the Consulting Period to facilitate the transition
of his duties and responsibilities and the continued operations of the Company,
in consideration of which the Company will pay Grimm $25,000.00 following the
conclusion of each consecutive 30-day period during the Consulting Period
(pro-rated for any portion of the Consulting Period that ends upon consummation
of the Starwood Merger or any Other Merger). It is further agreed that the
Company will reimburse Grimm for approved out-of-pocket expenses (including
travel) incurred by Grimm to perform the requested consulting services during
the Consulting Period. It is understood and agreed, however, that during the
Consulting Period, Grimm will have no authority to act on behalf of Forestar or
make any representations or statements on behalf of Forestar. In addition, it is
understood and agreed that: (i) during the Consulting Period, Grimm will not be
considered an employee of the Company for any purpose; and (ii) because it is
expected that the services to be provided by Grimm during the Consulting Period
may exceed twenty percent (20%) of his average level of bona fide services
performed for the Company during the thirty-six (36) months preceding the
Termination Date, Grimm will not experience a “separation from service” with the
Company (within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (“Section 409A”)) until the expiration of the Consulting
Period.

 

h.                                      Outplacement Assistance: The Company
agrees to reimburse Grimm or to pay directly on his behalf up to a maximum
amount of $25,000.00 in fees and charges actually incurred by Grimm (the
“Allowable Outplacement Expense”) for formal contractually engaged professional
outplacement assistance furnished by an “Outplacement Service Provider,”
provided

 

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that: (1) Grimm contractually engages the Outplacement Service Provider and
incurs the Allowable Outplacement Expense within six months of the Termination
Date; (2) the Company receives a copy of the Outplacement Service Provider’s
contractual engagement and all invoice(s) in this regard within six months of
the Termination Date; and (3) Grimm actually utilizes the services of the
Outplacement Service Provider under the contractual engagement.

 

i.                                         Cooperation in the Defense of
Actions: Grimm agrees to cooperate, at the request of Forestar, in the defense
or prosecution of any charges, claims, arbitrations, lawsuits or proceedings
relating in any way to matters occurring while Grimm was employed by the Company
or about which Grimm may have relevant information.

 

j.                                         No Involvement in Actions: Grimm
shall not directly or indirectly, or by the use or participation of another,
counsel, assist, aid, or abet any person or entity in the prosecution of a
claim, proceeding or suit against Forestar. Grimm shall not receive or accept
any compensation, directly or indirectly, from any person or entity for the
prosecution of any such claim whether by suit or settlement. Grimm, unless at
Forestar’s request, shall not voluntarily (i.e., absent proper subpoena or court
order or other proper legal process) testify, whether by deposition, affidavit,
or in person, in any legal proceeding in which Forestar is a party or
prospective party. In the event Grimm is legally required to give testimony,
Grimm agrees to give Forestar reasonable advance notice of same.

 

k.                                      Non-Admission: Grimm and the Company
agree and acknowledge that nothing contained in this Agreement or otherwise
constitutes admission by Grimm or Forestar of any violation of law or of any
liability or wrongdoing whatsoever. Grimm further agrees not to assert in any
Proceeding or otherwise that this Agreement or any other alleged act, omission,
occurrence or agreement is, or constitutes, an admission of any violation of law
or of liability or of wrongdoing on the part of Forestar.

 

l.                                         Limitation of Liability: Grimm
represents, warrants and agrees that with respect to this Agreement, including
any Proceeding relating to its enforcement or alleged breach, he shall not
obtain any liability or recovery as against any shareholder, officer, director,
agent, member, employee, or other person or entity comprising Forestar and that
he will look solely to the assets of the Company for satisfaction of this
Agreement.

 

4.                                      Inclusive Listing of Actions: The
Parties acknowledge and agree that the Release of Claims in Section 3.a. is
intended only to be inclusive and not exclusive and that the intent of
Section 3.a. is to be as broad and comprehensive as possible so that Forestar
shall never be held liable, directly or indirectly, to Grimm for any claims or
causes of action arising prior to the Effective Date. Nothing in this Agreement,
including the Release of Claims in Section 3.a., is intended to conflict with or
limit Grimm’s right to file a charge or claim with or participate in any
investigation or proceeding conducted by any federal, state, local or
administrative agency charged with the enforcement of any law.

 

5.                                      Release Limitations:

 

a.                                      Grimm and Forestar expressly agree that
this Agreement is not intended to conflict with or violate any law, rule, or
regulation restricting the waiver of employee rights.

 

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b.                                      Pursuant to 18 U.S.C. § 1833(b), Grimm
will not be held criminally or civilly liable under any Federal or State trade
secret law for the disclosure of a trade secret of Forestar that (a) is made
(i) in confidence to a Federal, State, or local government official, either
directly or indirectly, or to Grimm’s attorney and (ii) solely for the purpose
of reporting or investigating a suspected violation of law; or (b) is made in a
complaint or other document that is filed under seal in a lawsuit or other
proceeding.  If Grimm files a lawsuit for retaliation by Forestar for reporting
a suspected violation of law, Grimm may disclose the trade secret to Grimm’s
attorney and use the trade secret information in the court proceeding, if Grimm
(I) files any document containing the trade secret under seal and (II) does not
disclose the trade secret, except pursuant to court order.  Nothing in this
Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability
for disclosures of trade secrets that are expressly allowed by such section. 
Further, nothing in any agreement Grimm has with Forestar shall prohibit or
restrict Grimm from making any voluntary disclosure of information or documents
related to any violation of law to any governmental agency or legislative body,
or any self-regulatory organization, in each case, without advance notice to the
Company.

 

6.                                      Other Proceedings: Grimm hereby
represents and confirms that he has not filed or otherwise initiated any
lawsuit, arbitration, complaint, charge, or other proceeding against Forestar in
any local, state, or federal court or agency based upon events, acts,
representations, agreements, conduct or omissions occurring prior to the
Effective Date of this Agreement. Grimm expressly waives any right to damages or
other legal or equitable relief awarded by any government agency, arbitrator, or
court relating to any lawsuit, complaint, charge, or other proceeding
(regardless by whom filed), that is pending or that is filed in the future and
which is based on events, representations, acts, agreements or omissions
occurring on, in connection with, or prior to the Effective Date of this
Agreement.

 

7.                                      Arbitration of Disputes Regarding
Agreement: Grimm and the Company agree that any dispute between Grimm and
Forestar concerning the interpretation, enforcement, application, or claimed
breach of this Agreement, including the arbitrability of such dispute and
injunctive or equitable relief for alleged violations of or to enforce this
Agreement, shall be exclusively submitted to binding, confidential arbitration
in Austin, Texas, with the sole exception of any claim brought by Forestar
concerning alleged or threatened violation of Section 3.c. (Non-Disparagement),
or Section 3.d. (Confidentiality/Proprietary Information), as to which the
Company shall have the right to elect, at its sole option, whether to initiate
an action in Travis County, Texas District Court or via arbitration in Austin,
Texas under the terms set forth in this Section 7. Any arbitration shall be
administered by and conducted pursuant to the rules of the American Arbitration
Association (“AAA”) governing employment disputes and, as applicable, and/or the
AAA Rules for Emergency Protection, before an arbitrator licensed to practice
law in Texas and familiar with employment law disputes. Prior to submitting the
matter to arbitration, the Parties shall first attempt to resolve the matter by
the claimant notifying the other Party in writing of the claim; by giving the
other Party the opportunity to respond in writing to the claim within ten
(10) days of receipt of the claim; and by giving the other Party the opportunity
to meet and confer. If the matter is not resolved in this manner within thirty
(30) days of the initial notice, the dispute may then proceed to arbitration at
the request of either Party. The arbitrator shall have authority to award
damages and such other relief as may be appropriate. The Parties shall bear
equally the arbitrator’s fees and expenses, as well as the administrative costs
assessed by the AAA; however, the prevailing Party in arbitration shall be
entitled to recover its

 

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reasonable attorneys’ fees, as well as all costs and expenses incurred in
connection with the arbitration, including, without limitation, any arbitration
fees and expenses, expert witness fees and court reporter costs incurred in
discovery or in connection with the arbitration proceeding, unless the
arbitrator determines that such payment would be manifestly unfair to the Party
charged with such fees, expenses and costs. In the event any Party institutes
any court action against the other with respect to any claim released by this
Agreement, or pursues any arbitrable dispute by any method other than
arbitration as provided for in this Section 7. or as otherwise authorized by
Forestar (including any person or entity comprising Forestar), which is
exclusively allowed to bring suit in Travis County Texas District Court, at the
Company’s sole election, in connection with a Non-Disparagement Proceeding or
Confidentiality Proceeding, including the arbitrability of such dispute, the
responding Party shall be entitled to recover from the initiating Party all
damages, costs, expenses, and attorneys’ fees incurred as a result of such
action. Arbitration will be governed by the Federal Arbitration Act, if
applicable; otherwise, applicable Texas law will control. As set forth in
Section 3.e., the provisions in this Section 7. concerning attempts for
resolution and opportunities to meet and confer in advance of initiating any
arbitration proceeding shall not apply with regard to any Non-Disparagement
Proceeding or any Confidentiality Proceeding brought by Forestar, including any
person or entity comprising Forestar, via a court filing in Travis County, Texas
District Court or via arbitration in Austin, Texas. To the extent that any
inconsistency or conflict exists between, on the one hand, Section 3.e., and, on
the other hand, Section 7. concerning the pre-arbitration proceedings or the
arbitration serving as the exclusive forum for any dispute between Grimm and
Forestar concerning this Agreement, Section 3.e. shall control over Section 7.

 

8.                                      Non-assignment and Indemnification:
Grimm represents that no claim or cause of action specifically released in this
Agreement has been assigned or given to anyone else and that no other person or
entity has an interest in any such claim or cause of action, through subrogation
or otherwise. Grimm agrees to INDEMNIFY AND HOLD HARMLESS Forestar from any
further claim, proceeding or suit (including attorneys’ fees and other expenses
incurred in the defense of such claim, proceeding or suit) by or on behalf of
Grimm, Grimm’s spouse, Grimm’s children, heirs, executors, administrators, or
any other person or entity in privity with Grimm concerning any matter
encompassed by this Agreement.

 

9.                                      Tax Consequences and Indemnification:
The Payment to Grimm under this Agreement shall be subject to all applicable
withholding taxes, payroll withholdings, and any other applicable amounts or
taxes required by law to be withheld. The Company shall be responsible for
properly withholding all such taxes and amounts in conjunction with the Payment
(the “Company Withholdings”). Grimm hereby releases Forestar from any liability,
obligation or responsibility for any tax consequences, including interest and
penalties, and agrees to assume full responsibility to any federal, state, or
local taxing authorities for any tax consequences, including interest and
penalties, which may arise as a result of this Agreement or the Payment made by
the Company under Section 2.b. of this Agreement, payment of Contingent
Obligations in accordance with Section 2.d. of this Agreement, and the provision
of any payments or benefits under Sections 2.c., 2.g. or 3.h. of this Agreement.
Grimm agrees to INDEMNIFY, DEFEND AND HOLD HARMLESS Forestar from and against
any taxes, fines, penalties, expenses, fees (including attorneys’ fees)
interest, liens, claims, lawsuits, and any other liability whatsoever arising
out of any such tax consequences; provided, however, Grimm shall not have any
indemnification obligations under this Section 9. solely with respect to the
Company

 

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Withholdings to the extent that the applicable governing taxing authority
conclusively determines and final, non-appealable court judgment establishes
that the Company Withholdings were erroneously made by the Company. Grimm shall
be solely responsible for the payment of all income taxes and the employee’s
share of any employment taxes, including any interest or penalties, with respect
to Grimm’s Payment under this Agreement. Grimm acknowledges and agrees that
Forestar and its legal counsel have made no representations regarding the proper
tax treatment of the Payment set out in Section 2.b, any Contingent Obligations
payable in accordance with Section 2.d., or any other payments or benefits to be
provided to Grimm pursuant to this Agreement (including without limitation those
under Sections 2.c., 2.g. and 3.h.).

 

10.                               Construction: Grimm and the Company have
collaborated in the drafting of this Agreement, and all Parties have had the
opportunity to confer with legal counsel before signing this Agreement.
Accordingly, all Parties take responsibility for the drafting of this Agreement.
This Agreement shall in all cases be construed as a whole, according to its fair
meaning, and not strictly for or against any party, irrespective of any choice
of law rule or principle to the contrary. The terms “or” and “and” as used in
this Agreement shall be construed either conjunctively or disjunctively to bring
within the scope of any provision any aspect which might otherwise be construed
outside its scope.

 

11.                               Severability: If any Section, sentence, or
clause of this Agreement should be found unenforceable, it shall be severed and
the remaining Sections, sentences, and clauses shall be enforced in accordance
with the intent of this Agreement and to the greatest possible degree legally
allowed.

 

12.                               Governing Law: Texas law shall govern the
validity and interpretation of this Agreement insofar as federal law does not
control.

 

13.                               Waiver of Breach: The Parties agree that one
or more waivers of breaches of any covenant, term, provision, or Section of this
Agreement by any Party shall not be construed as a waiver of a subsequent breach
of the same covenant, term, provision, or Section; or as a waiver of a breach of
any other covenant, term, provision or Section; or as a waiver of any other
covenant, term, provision or Section.

 

14.                               Captions: The titles and captions used in this
Agreement are for convenience only and are not to be construed in interpreting
this Agreement.

 

15.                               Entire Agreement: This Agreement, the CIC
Agreement, and such other agreements and obligations identified above contain
the entire understanding and agreement between Grimm and Forestar and supersede
all prior agreements and understandings, oral or written, relating to the
subject matter of this Agreement. Grimm acknowledges and agrees that the Company
and its legal counsel did not make, directly or indirectly, any representations
or warranties, other than those contained in this Agreement. This Agreement
shall not be modified, amended, or terminated unless such modification,
amendment, or termination is executed in writing by Grimm and an authorized
representative of the Company

 

16.                               Agreement Execution: The Parties agree that
this Agreement may be executed in duplicate original counterparts with the same
force and effect as if all Parties executed a single

 

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instrument. This Agreement may be executed by signatures that may be transmitted
via facsimile or electronically, each of which shall be deemed an original and
all of which together shall constitute one document. A photocopy, facsimile copy
or electronic copy of this Agreement may be utilized in the same manner as and
shall have the same weight and effect as an original.

 

17.                               Advice of Attorney: Grimm acknowledges and
agrees that he has been represented and advised by an attorney of his choice, at
his expense, before executing this Agreement. Grimm acknowledges and agrees he
is not represented by or relying on any advice, statements, actions or
representations of any attorney representing the Company or anyone else
associated with or encompassed in Forestar in connection with this Agreement.

 

18.                               Time to Consider Agreement/Revocation Period:
Pursuant to the Older Workers Benefit Protection Act of 1990, Grimm has up to
twenty-one (21) calendar days to consider and sign this Agreement. Grimm may
sign this Agreement prior to the expiration of the twenty-one (21) calendar day
consideration period. Grimm hereby acknowledges that he will not be entitled to
receive the payment(s) described in Section 2.b., any Contingent Obligations
under Section 2.d., or any payments or benefits under Sections 2.c. or 3.h.
unless this Agreement is executed within the twenty-one (21) calendar day
consideration period. For a period of seven (7) calendar days following Grimm’s
execution (signing) of this Agreement, Grimm may revoke this Agreement by
delivering written notice within the seven (7) calendar day period to Ms. Erin
Scarborough, Forestar Group Inc., 6300 Bee Cave Road, Building Two, Suite 500,
Austin, Texas 78746-5149. This Agreement will become “effective” and enforceable
on the eighth (8th) calendar day after Grimm properly signs and dates it, if it
has not been revoked during the revocation period (the “Effective Date”). Grimm
acknowledges that if he revokes this Agreement within the seven (7) calendar day
period, he will not be entitled to the Payment described in Section 2.b., , any
Contingent Obligations under Section 2.d., or any payments or benefits under
Sections 2.c. or 3.h., and any and all originals or copies of this Agreement
must be returned to the Company at the time of revocation.

 

19.                               Certification of Understanding of Agreement:
Grimm hereby represents and certifies that he: (1) has carefully read this
Agreement and fully understands all of its provisions; (2) has been given a fair
opportunity to discuss and negotiate the terms of this Agreement; (3) has
consulted with an attorney of his choice before executing this Agreement;
(4) has not been influenced to execute this Agreement by any statement or
representation by the Company or any of its representatives not contained in
this Agreement and is not relying on any statement or representation not
contained in this Agreement; (5) is not waiving any right or claim that may
arise based on acts or omissions occurring after the Effective Date of this
Agreement; and (6) enters into this Agreement knowingly and voluntarily of his
own free will and without any coercion, threat, intimidation, duress or undue
influence of any kind or type whatsoever by Forestar.

 

20.                               Successors, Heirs and Assigns: The Parties
agree that this Agreement shall be binding upon them, as well as Grimm’s spouse
and the Parties’ respective heirs, executors, successors, assigns and all other
persons and entities acting in privity with them.

 

21.                               Section 409A:  The intent of the Parties is
that payments and benefits under this Agreement comply with Section 409A, to the
extent subject thereto, and, accordingly, to the

 

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maximum extent permitted, this Agreement shall be interpreted and administered
to be in compliance therewith.  Notwithstanding anything herein to the contrary:
(i) if at the time of Grimm’s termination of employment with the Company, Grimm
is a “specified employee” as defined in Section 409A and the deferral of the
commencement of any payments or benefits otherwise payable hereunder as a result
of such termination of employment is necessary in order to prevent any
accelerated or additional tax under Section 409A, then the Company shall defer
the commencement of the payment of any such payments or benefits hereunder until
the date that is six (6) months following Grimm’s separation from service with
the Company within the meaning of Section 409A (or the earliest date as is
permitted under Section 409A); (ii) to the extent required in order to avoid
accelerated taxation and/or tax penalties under Section 409A, Grimm shall not be
considered to have terminated employment with the Company for purposes of this
Agreement and no payment shall be due to Grimm under this Agreement, until Grimm
would be considered to have incurred a “separation from service” from the
Company within the meaning of Section 409A; (iii) each amount to be paid or
benefit to be provided to Grimm pursuant to this Agreement that constitutes
deferred compensation subject to Section 409A shall be construed as a separate
identified payment for purposes of Section 409A; (iv) in no event shall the
timing of Grimm’s execution of this Agreement result, directly or indirectly, in
Grimm designating the calendar year of any payment hereunder, and, to the extent
required by Section 409A, if a payment hereunder could be made in more than one
taxable year depending on the time of its execution by Grimm, payment shall be
made in the later taxable year; and (v) to the extent required to avoid
accelerated taxation and/or tax penalties under Section 409A, amounts
reimbursable to Grimm shall be paid to Grimm on or before the last day of the
year following the year in which the expense was incurred and the amount of
expenses eligible for reimbursement (and in-kind benefits provided) during any
one year may not affect amounts reimbursable or provided in any subsequent year.

 

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ACCEPTED AND AGREED:

 

/s/ David M. Grimm

 

April 13, 2017

David M. Grimm

 

Date Executed

 

 

 

 

 

 

 

 

 

FORESTAR GROUP INC.

 

 

 

 

 

 

 

 

By:

/s/ Phillip J. Weber

 

April 13, 2017

 

Phillip J. Weber

 

Date Executed

 

Chief Executive Officer

 

 

 

[Signature Page to Separation Agreement and Release]

 

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