Document:

exv10w1

Exhibit 10.1

FORESTAR GROUP INC.

STOCK APPRECIATION RIGHT AGREEMENT

     This Agreement is entered into between FORESTAR GROUP INC., a Delaware corporation
(“Forestar”) and the Employee named above, and is an integral and inseparable term of Employee’s
employment as a salaried employee of Forestar or one of its Affiliates. In consideration of the
mutual covenants hereinafter set forth and for other good and valuable consideration, Forestar and
the Employee hereby agree as follows:

	1.	 	Grant of Stock Appreciation Right. Pursuant to, and subject to the terms and
conditions set forth in the Plan, Forestar hereby irrevocably grants to the Employee, as a
matter of separate agreement and not in lieu of salary or any other compensation for services,
a Stock Appreciation Right covering the number of shares of Common Stock stated above on the
terms and conditions herein set forth (the “SAR”).

	2.	 	Governing Documents. This Agreement and the award hereunder are subject to all the
restrictions, terms and provisions of the Forestar Group Inc. 2007 Stock Incentive Plan (as
amended, the “Plan”) and of the Forestar Group Inc. Stock Appreciation Right Terms and
Conditions (the “Terms and Conditions”; and together with the Plan, the “Plan Documents”)
which are herein incorporated by reference and to the terms of which the Employee hereby
agrees. Capitalized terms used in this Agreement that are not defined herein shall have the
meaning set forth in the Plan Documents.

	3.	 	Exercise of SAR. The SAR shall become exercisable in installments on and after each
“Date Exercisable” as stated above. The SAR may be exercised in whole, at any time, or in
part , from time to time, as to all or any of the shares as to which the SAR is then
exercisable under the SAR (provided that the SAR may not be exercised as to less than the
lesser of 100 shares or the number of shares as to which the SAR is then exercisable). The
term of the SAR shall commence on the Date of Grant and shall expire on the Expiration Date
stated above or such earlier date as is prescribed in the Plan Documents. Except as otherwise
provided in the Plan Documents, the SAR shall not be exercisable unless the Employee shall, at
the time of exercise, be an employee of Forestar or one of its Affiliates. The SAR may be
exercised only upon notice to Forestar in accordance with, and subject to the terms and
conditions of, this Agreement and the Plan Documents.

	4.	 	No Stockholder Rights. The Employee shall have none of the rights of a stockholder
with respect to the shares covered by the SAR.

	5.	 	Payment Upon Exercise of SAR. Upon exercise of the SAR, the Employee shall be
entitled to receive from Forestar, without payment to Forestar (but subject to required tax
withholding), in the amount as determined under Section 3c. of the Terms and Conditions and in
the form as determined by the Committee in its discretion at the time of payment.

	6.	 	Employment Requirement. The Employee agrees that the Employee will remain in the
employ of Forestar or of an Affiliate for a period ending on one year from the date hereof and
that the Employee will, during such employment, devote his or her time, energy and skill to
the service of Forestar or such Affiliate and the promotion of its interests, subject to
vacations, sick leave and other absences in accordance with the regular policies of Forestar
or such Affiliate. Notwithstanding the foregoing, if the Employee has been granted one or
more Options or stock appreciation rights under the Plan, the period of time during which the
Employee shall be obligated to remain in the employ of Forestar or of an Affiliate hereunder
and under the terms of such other option or stock appreciation right agreement or agreements
shall run concurrently and not

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consecutively. Such employment shall be at the pleasure of Forestar or such Affiliate and
shall be at such compensation as Forestar or such Affiliate shall determine from time to
time. Upon termination of the Employee’s employment (voluntary or involuntary, with or
without cause) within the one (1) year period described above without the written consent of
Forestar or such Affiliate to waive this requirement, the SAR shall forthwith terminate.

	7.	 	Arbitration. The Employee and Forestar agree that this Agreement arises out of, and
is inseparable from, the Employee’s employment with Forestar or any of its Affiliates. The
Employee and Forestar further agree to final and binding arbitration as the exclusive forum
for resolution of any dispute of any nature whatsoever, whether initiated by the Employee or
Forestar, arising out of, related to, or connected with Employee’s employment with, or
termination by, Forestar or any of its Affiliates. This includes, without limitation, any
dispute arising out of the application, interpretation, enforcement, or claimed breach of
this Agreement. The only exceptions to the scope of this arbitration provision are claims
arising under any written agreement between the Employee and Forestar or its Affiliate that
expressly provides that such claims are not subject to binding arbitration. Arbitration
under this provision shall be conducted under the employment dispute rules and procedures of
either the American Arbitration Association or of JAMS/Endispute, according to the preference
of the party initiating such arbitration. Appeal from, or confirmation of, any arbitration
award under this paragraph may be made to any court of competent jurisdiction under standards
applicable to appeal or confirmation of arbitration awards under the Federal Arbitration Act.
This arbitration provision and related proceedings shall be subject to and governed by the
Federal Arbitration Act.

	8.	 	Miscellaneous. The Committee may from time to time modify or amend this
Agreement in accordance with the provisions of the Plan Documents. This Agreement shall
be binding upon and inure to the benefit of Forestar and its successors and assigns and
shall be binding upon and inure to the benefit of the Employee and his or her legatees,
distributees and personal representatives. This Agreement may be executed by Forestar and
the Employee by means of electronic or digital signatures, which shall have the same force
and effect as manual signatures. Participant agrees that clicking “I Accept” in
connection with or response to any electronic communication or other medium has the effect
of affixing the Participant’s electronic signature to this Agreement. By signing this
Agreement, the Employee acknowledges and expressly agrees that the Employee has read the
Agreement and the Plan Documents and agrees to their terms. This Agreement shall be
governed by and construed in accord with federal law, where applicable, and otherwise with
the laws of the State of Texas.

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FORESTAR GROUP INC.

STOCK APPRECIATION RIGHT TERMS AND CONDITIONS

	1.	 	Definitions: For purposes of this Forestar Group Inc. Stock Appreciation Right Terms
and Conditions (the “Terms and Conditions”), the Forestar Group Inc. 2007 Stock Incentive Plan
(as amended, the “Plan”; and together with the Terms and Conditions, the “Plan Documents”),
and the Stock Appreciation Rights (“SARs”) to which this Terms and Conditions applies, the
following terms shall have the meanings set forth below:

	 	a.	 	Cause: means “cause” as defined in Participant’s employment or service
agreement or in the absence of such an agreement or such a definition, “Cause” will
mean a determination by the Committee that Participant (i) has engaged in personal
dishonesty, willful violation of any law, rule, or regulation (other than minor traffic
violations or similar offenses), or breach of fiduciary duty involving personal profit,
(ii) is unable to satisfactorily perform or has failed to satisfactorily perform
Participant’s duties and responsibilities for Forestar or any Affiliate, (iii) has been
convicted of, or plead nolo contendere to, any felony or a crime involving moral
turpitude, (iv) has engaged in negligence or willful misconduct in the performance of
his or her duties, including but not limited to willfully refusing without proper legal
reason to perform Participant’s duties and responsibilities, (v) has materially
breached any corporate policy or code of conduct established by Forestar or any
Affiliate as such policies or codes may be adopted from time to time, (vi) has violated
the terms of any confidentiality, nondisclosure, intellectual property,
nonsolicitation, noncompetition, proprietary information and inventions, or any other
agreement between Participant and the Forestar related to Participant’s Service, or
(vii) has engaged in conduct that is likely to have a deleterious effect on Forestar or
any Affiliate or their legitimate business interests, including but not limited to
their goodwill and public image.
	 
	 	b.	 	Change in Control:

	 	i.	 	A change in control shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:

	 	(1)	 	any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of Forestar (not including in the
securities beneficially owned by such Person any securities acquired
directly from Forestar or its Affiliates) representing 20% or more of the
combined voting power of Forestar’s then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in connection
with a transaction described in clauses (a), (b) or (c) of paragraph (3)
below;
	 
	 	(2)	 	within any twenty-four (24) month period, the
following individuals cease for any reason to constitute a majority of
the number of directors then serving on the Board: individuals who, on
the Effective Date, constitute the Board and any new director (other than
a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of Forestar)
whose appointment or election by the Board or nomination for election by
Forestar’s shareholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors on the date hereof or whose appointment, election or nomination
for election was previously so approved or recommended;

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	 	(3)	 	there is consummated a merger, consolidation of
Forestar or any direct or indirect subsidiary of Forestar with any other
corporation or any recapitalization of Forestar (for purposes of this
paragraph (III), a “Business Event”) unless, immediately following such
Business Event (a) the directors of Forestar immediately prior to such
Business Event continue to constitute at least a majority of the board of
directors of Forestar, the surviving entity or any parent thereof, (b)
the voting securities of Forestar outstanding immediately prior to such
Business Event continue to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of
Forestar or any subsidiary of Forestar, at least 60% of the combined
voting power of the securities of Forestar or such surviving entity or
any parent thereof outstanding immediately after such Business Event, and
(c) in the event of a recapitalization, no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of Forestar or
such surviving entity or any parent thereof (not including in the
securities Beneficially Owned by such Person any securities acquired
directly from Forestar or its Affiliates) representing 20% or more of the
combined voting power of the then outstanding securities of Forestar or
such surviving entity or any parent thereof (except to the extent such
ownership existed prior to the Business Event);
	 
	 	(4)	 	the shareholders of Forestar approve a plan of
complete liquidation or dissolution of Forestar;
	 
	 	(5)	 	there is consummated an agreement for the sale,
disposition or long-term lease by Forestar of substantially all of
Forestar’s assets, other than (a) such a sale, disposition or lease to an
entity, at least 50% of the combined voting power of the voting
securities of which are owned by shareholders of Forestar in
substantially the same proportions as their ownership of Forestar
immediately prior to such sale or disposition or (b) the distribution
directly to Forestar’s shareholders (in one distribution or a series of
related distributions) of all of the stock of one or more subsidiaries of
Forestar that represent substantially all of Forestar’s assets; or
	 
	 	(6)	 	any other event that the Board, in its sole
discretion, determines to be a Change in Control for purposes of this
Agreement.
	 
	 	 	 	Notwithstanding the foregoing, a “Change in Control” under clauses (1)
through (5) above shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated transactions
immediately following which the record holders of the common stock of
Forestar immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate
ownership in one or more entities which, singly or together,
immediately following such transaction or series of transactions, own
all or substantially all of the assets of Forestar as constituted
immediately prior to such transaction or series of transactions.

	 	ii.	 	For purposes of this definition of “Change in Control”:

	 	(1)	 	“Affiliate” shall have the meaning set forth in
Rule 12b-2 promulgated under Section 12 of the Exchange Act.
	 
	 	(2)	 	“Beneficial Owner” shall have the meaning set forth
in Rule 13d-3 under the

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	 	 	 	Exchange Act.
	 
	 	(3)	 	“Effective Date” means the Date of Grant of the
applicable SAR.
	 
	 	(4)	 	“Exchange Act” shall mean the Securities Exchange
Act of 1934, as amended from time to time.
	 
	 	(5)	 	“Person” shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include (i) Forestar or
any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of Forestar or any of its
Affiliates, (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a corporation owned, directly
or indirectly, by the stockholders of Forestar in substantially the same
proportions as their ownership of stock of Forestar.

	 	c.	 	Exercise Price: means the Exercise Price, as set forth in the
applicable SAR Agreement, which shall not be less than Fair Market Value on the Date of
Grant .
	 
	 	d.	 	Disability: means Termination of Service due to a Participant’s
becoming disabled (within the meaning of Section 409A of the Code).
	 
	 	e.	 	Group: means Forestar and its Affiliates.
	 
	 	f.	 	Participant: means any Employee who has been granted a SAR, or any
transferee of a SAR by reason of the death of the Employee or pursuant to the
requirements of applicable law.
	 
	 	g.	 	Plan: means the Forestar Group Inc. 2007 Stock Incentive Plan, as
amended.
	 
	 	h.	 	Retirement: means a Participant’s Termination of Service after either
(i) attaining age 65 or (ii) attaining age 55 and completing at least five years of
service with Forestar or any of its Affiliates.
	 
	 	i.	 	Forestar: means Forestar Group Inc. and any successor.
	 
	 	j.	 	SAR Agreement: means an Agreement representing a SAR granted under the
Plan and subject to these Terms and Conditions.
	 
	 	k.	 	Termination of Service: means the Employee’s termination of employment
by the Group for any reason.

	 	 	Capitalized terms used herein but not defined herein shall have the meaning assigned to such
terms in the Plan.
	 
	2.	 	Acceptance of SAR Agreement: A SAR grant shall be immediately cancelled and expire
if the applicable SAR Agreement is not accepted (in such manner as may be specified by
Forestar) by a Participant (or his or her agent or attorney) and delivered to Forestar (in
such manner as may be specified by Forestar) within 60 days after the Date of Grant of the SAR
(unless an extension of such deadline for extenuating circumstances is approved by a Vice
President of Forestar).

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	 	 	3. Exercise of SARs:

	 	a.	 	In order to exercise a SAR, notice must be provided to Forestar in such form as
may be specified by Forestar. Such notice shall state that the Participant elects to
exercise a specified SAR award and the number of Shares in respect of which it is being
exercised.
	 
	 	b.	 	Except as provided in paragraph 5, no SAR may be exercised at any time unless
the holder thereof is then an Employee of the Group.
	 
	 	c.	 	The applicable SAR Agreement will specify whether the payment under the SAR is
to be made in cash or Shares, or both, or will reserve to the Committee the right to
make that determination prior to or upon the exercise of the Stock Appreciation Right.
Alternatively, the Committee may provide in an Agreement that the Participant has the
discretion whether to accept payment in cash or Shares, or both. If payment is to be
made in cash, the amount of the payment will equal the product of (a) the number of
shares of Common Stock as to which the SAR is being exercised, and (b) the excess of
(a) the Fair Market Value of a share of Common Stock on the date of exercise over (b)
the Exercise Price of the SAR (the “Cash Payment”). If the payment under a SAR is to be
made in Shares, the number of Shares to be issued will equal the Cash Payment, divided
by the Fair Market Value of a Share on the date of exercise, rounded to the nearest
Share. All payments will be made within 60 days of the exercise of the SAR

	4.	 	Withholding: Forestar’s obligation to pay a Participant upon exercise of a SAR, in
accordance with and subject to the terms of the applicable SAR Agreement, shall be subject to
the satisfaction of applicable federal, state and local tax withholding requirements. SAR
payments that are withheld to satisfy applicable withholding taxes shall be determined based
on the Fair Market Value of the Common Stock on the date the withholding tax obligation
arises. Only the required statutory minimum tax may be withheld; excess tax withholding is not
allowed.
	 
	5.	 	Termination of Employment: In the event of the Termination of Service of a
Participant to whom a SAR has been granted, the SAR may, subject to the provisions of
paragraph 3 hereof, be exercised as follows:

	 	 	 	 	 
	Termination	 	Vested SAR Exercise Period	 	Treatment of Unvested SARs
	Death
	 	12 months
	 	Immediately Vest
	 	 	 	 	 
	Disability
	 	36 months
	 	Immediately Vest
	 	 	 	 	 
	Retirement
	 	Until Expiration of SAR
	 	Immediately Vest
	 	 	 	 	 
	For Cause
	 	None—All unexercised
Shares are immediately
forfeited.
	 	Forfeited
	 	 	 	 	 
	Other Termination
of Service
	 	3 months
	 	Forfeited

	 	 	Notwithstanding the foregoing, in no event may a SAR be exercised after expiration of its
stated term, and in no event shall such term exceed ten years. SAR awards granted under the
Plan to a Participant shall not be affected by any change of employment so long as the
Participant continues to be an Employee of the Group. A SAR Agreement may contain such
provisions as the Committee may approve with respect to the effect of approved leaves of
absence for employees.

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	6. 	 	Adjustments upon Changes in Capitalization; Other Changes: Notwithstanding any other
provisions of the Plan, in the event of any change in the outstanding Common Stock by reason
of any stock dividend, split-up, spin-off, recapitalization, reclassification, combination or
exchange of shares, merger, consolidation or liquidation and the like, the Committee shall
provide for a substitution for or adjustment in (i) the number and class of shares covered by
outstanding SAR awards, and (ii) the Exercise Prices of outstanding SARs. The Committee’s
determinations with regard to the adjustments or substitutions provided for by this paragraph
shall be conclusive. The Committee may at any time, in its sole discretion, make such
amendments to the terms of SAR Agreements as it deems necessary or appropriate to reflect any
adjustments or substitutions made under the Plan or pursuant to this paragraph.
	 
	7.	 	Change in Control: Notwithstanding any contrary waiting period, installment period
or other limitation or restriction in any SAR Agreement or in the Plan, each outstanding SAR
award granted under the Plan shall become exercisable in full for the aggregate number of
shares covered thereby in the event of a Change in Control. Any provision of the Plan
Documents or any SAR Agreement to the contrary notwithstanding, in the event of a merger or
consolidation to which Forestar is a party, the Committee shall take such actions, if any, as
it deems necessary or appropriate to prevent the enlargement or diminishment of Participants’
rights under any SAR award, and may, in its discretion, cause any SAR award to be canceled in
consideration of a payment equal to the product of (a) the number of shares of Common Stock
that the SAR award covers (and has not previously been exercised) and (b) the excess, if any,
of the Fair Market Value of a share of Common Stock as of the date of cancellation over the
Exercise Price of the applicable SAR.
	 
	8.	 	Nonalienation of Benefits: Except as required by applicable law, no right or benefit
under the Plan or any SAR award shall be subject to anticipation, alienation, sale,
assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge, and any attempt
to anticipate, alienate, sell, assign, hypothecate, transfer, pledge, exchange, transfer,
encumber or charge the same shall be void. No right or benefit under the Plan or any SAR
award shall in any manner be liable for or subject to the debts, contracts, liabilities or
torts of the person entitled to such benefit. If any Participant shall become bankrupt or
attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer,
encumber or charge any right or benefit under the Plan or any SAR award, then such right or
benefit shall, in the discretion of the Committee, cease and terminate, and in such event, the
Committee in its discretion may hold or apply the same or any part thereof for the benefit of
the Participant or his beneficiary, spouse, children or other dependents, or any of them, in
such manner and in such proportion as the Committee may deem proper.
	 
	9. 	 	No Right to Continued Employment; No Additional Rights: Nothing contained in the
Plan or in any SAR Agreement shall confer on any Participant any right to continue in the
employ of Forestar or any of its Affiliates or interfere in any way with the right of Forestar
or an Affiliate to terminate the employment of a Participant at any time, with or without
cause, notwithstanding the possibility that the number of shares of Common Stock purchasable
by such person under his or her SAR award (or SAR awards) may thereby be reduced or
eliminated. Nothing in the Plan Documents or any SAR Agreement shall be construed to give any
employee of Forestar or any Affiliate any right to receive a SAR award or as evidence of any
agreement or understanding, express or implied, that Forestar or any Affiliate will employ the
Participant in any particular position or at any particular rate of remuneration, or for any
particular period of time. In no event shall a SAR award provide any Participant with
dividend equivalency rights with respect to the Shares covered by a SAR award.
	 
	10.	 	Exclusion from Pension, Profit-Sharing and Other Benefit Computations: By acceptance
of a SAR award under the Plan, a Participant shall be deemed to have agreed that any
compensation arising from the SAR award constitutes special incentive compensation that shall
not be taken into account as “salary”, “pay”, “compensation” or “bonus” in determining the
amount of any payment under any pension, retirement or profit-sharing plan of Forestar or any
Affiliate. In addition, each Participant shall be deemed to have agreed
that neither the award, vesting, nor exercise of a SAR shall be taken into account in
determining the amount of any life insurance coverage or short or long-term disability
coverage provided by Forestar or any Affiliate.

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	11.	 	Applicability: This Terms and Conditions shall apply to all SAR awards to which the
Committee designates it as applying, and the Committee may designate it as applying to a SAR
award in whole or in part in its discretion.
	 
	12.	 	Plan Controls: In the event of any conflict between the Plan and the terms of a SAR
Agreement or the Terms and Conditions, the Plan shall govern.

Stock Appreciation Right Agreement

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Exhibit 10.2

FORESTAR GROUP INC.

RESTRICTED STOCK UNITS AGREEMENT

(Tier I)

          This Agreement is entered into between FORESTAR GROUP INC., a Delaware corporation
(“Forestar”), and Participant, and is an integral and inseparable term of Participant’s service as
an employee, non-employee director, or other service provider of Forestar or an Affiliate. In
consideration of the mutual covenants hereinafter set forth and for other good and valuable
consideration, Forestar and the Participant hereby agree as follows:

	 	1.	 	Grant of Restricted Stock Units. Subject to the restrictions, terms and conditions
of this Agreement (the “RSU Agreement”), the Forestar Group Inc. 2007 Stock Incentive Plan
(as amended, the “Plan”) and the Forestar Standard Terms and Conditions for Restricted Stock
Units (the “Standard Terms and Conditions” ; together with the Plan and the RSU Agreement,
the “Plan Documents”), Forestar hereby awards to the Participant the number of restricted
stock units stated above (the “Restricted Stock Units”).
	 
	 	2.	 	Grant of DERs. Subject to the terms and conditions of the Plan Documents, the
Participant is hereby granted a Dividend Equivalency Right (“DER”) to accompany each
Restricted Stock Unit. Upon payment of a dividend to a holder of Common Stock, Participant
will be entitled to payment of an amount equal to the amount of such per Share dividend
payment, multiplied by the number of RSUs granted pursuant to this RSU Agreement, provided
that the Participant has not experienced a Separation from Service with Forestar and its
Affiliates through the date that such dividend payment was made (the “Dividend Payment
Date”). Payment under each DER shall be made by the later of December 31st of the
year in which the Dividend Payment Date occurred or 2 1/2 months after such Dividend Payment
Date. The form of payment under a DER will be made (at sole discretion of the Committee) in
cash or in a number of shares equal to amount of such payment, divided by the Fair Market
Value of a Share on the Dividend Payment Date, rounded to the nearest Share.
	 
	 	3.	 	Governing Documents. The Restricted Stock Units and DERs awarded hereby are
subject to all the restrictions, terms and provisions of the Plan Documents, which are herein
incorporated by reference, and to the terms of which the Participant hereby agrees.
Capitalized terms used in this RSU Agreement that are not defined herein shall have the
meaning set forth in the Plan Documents.
	 
	 	4.	 	No Stockholder Rights. The Restricted Stock Units will be represented by a book
entry credited in the name of the Participant and are not actual shares of Common Stock. The
Participant will not have the right to vote the Restricted Stock Units or any other rights of
a holder of Common Stock as a result of this grant of Restricted Stock Units. The Participant
acknowledges and agrees that (a) the Participant’s sole rights with respect to dividend
payments are with respect to the payments that arise from the DERs and, (b) the Participant
has no rights under this RSU Agreement or the Plan Documents with respect to the payment of
dividend payments or the adjustment of the Restricted Stock Units to reflect the payment of
cash dividends.
	 
	 	5.	 	General Vesting Requirements. Except as otherwise provided in the Plan Documents
and subject to the conditions of Paragraph 6 hereof, Restricted Stock Units shall vest in
accordance with the Vesting

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	 	 	 	Schedule above as of the occurrence of a Vesting Date (including
the Scheduled Vesting Date as set forth above), provided that the Participant has not
experienced a Separation from Service with
Forestar and its Affiliates through such Vesting Date. Notwithstanding the Vesting
Schedule provided above, upon a Change in Control, all unvested Restricted Stock Units
shall immediately vest. Upon an Participant’s Separation from Service for any reason
prior to a Vesting Date, all Restricted Stock Units that are not vested and payable under
Paragraph 7, and all accompanying DERs, shall be forfeited, and the Participant shall not
thereafter have any rights with respect to the Restricted Stock Units and DERs so
forfeited.
	 
	 	6.	 	Committee Certification of Performance Goals. Except in connection with vesting
upon a Change in Control, in no event shall any Restricted Stock Units vest as of the
scheduled Vesting Date unless the Committee has certified that the Performance Goal set forth
in Exhibit A (if any) hereto has been achieved.
	 
	 	7.	 	Payment of Restricted Stock Units. Subject to the terms and conditions of the Plan
Documents, Forestar will pay to the Participant an amount equal to the Fair Market Value per
Share of Common Stock on the Vesting Date, multiplied by the number of RSUs that vest on such
Vesting Date (the “Payment”). The Payment will be made as soon as practicable after the
Vesting Date, but not later than ninety days after the Vesting Date (or, if earlier, March 15
of the calendar year following the year in which the Vesting Date occurs), provided that if
the Vesting Date occurs upon or after a Change in Control, the Payment shall be made not
later than the fifth business day after the Vesting Date. The form of the Payment will be
made (at sole discretion of the Committee) in cash or in a number of shares equal to amount
of the Payment, divided by the Fair Market Value of a Share on the Vesting Date, rounded to
the nearest Share.
	 
	 	8.	 	Arbitration. The Participant and Forestar agree that this RSU Agreement arises out
of, and is inseparable from, the Participant’s employment or other service with Forestar or
any of its Affiliates. The Participant and Forestar further agree to final and binding
arbitration as the exclusive forum for resolution of any dispute of any nature whatsoever,
whether initiated by the Participant or Forestar, arising out of, related to, or connected
with Participant’s employment or other service with, or termination by, Forestar or any of
its Affiliates. This includes, without limitation, any dispute arising out of the
application, interpretation, enforcement, or claimed breach of this RSU Agreement. The only
exceptions to the scope of this arbitration provision are claims arising under any written
agreement between the Participant and Forestar or its Affiliate that expressly provides that
such claims are not subject to binding arbitration. Arbitration under this provision shall
be conducted under the employment dispute rules and procedures of either the American
Arbitration Association or of JAMS/Endispute, according to the preference of the party
initiating such arbitration. Appeal from, or confirmation of, any arbitration award under
this paragraph may be made to any court of competent jurisdiction under standards applicable
to appeal or confirmation of arbitration awards under the Federal Arbitration Act. This
arbitration provision and related proceedings shall be subject to and governed by the Federal
Arbitration Act. 
	 
	 	9.	 	Section 409A Acknowledgement and Release. Participant understands that payments
under the Plan and this RSU Agreement are potentially subject to Section 409A of the Code
(“409A”) and that if the Plan and this RSU Agreement do not satisfy an exception to 409A or
do not comply with the requirements of 409A and the applicable guidance thereunder, then
Participant may incur adverse tax consequences under 409A. Participant acknowledges and
agrees that (a) Participant is solely responsible for all obligations arising as a result of
the tax consequences associated with payments under this RSU Agreement including, without
limitation, any taxes, interest or penalties associated with 409A, (b) Participant is not
relying upon any written or oral statement or representation by Forestar or any Affiliate
thereof, or any of their respective employees, directors, officers, attorneys or

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	 	 	 	agents
(collectively, the “Company Parties”) regarding the tax effects associated with the execution
of this RSU Agreement and the payment under this RSU Agreement and the Plan, and (c) in
deciding to
enter into this RSU Agreement, Participant is relying on his or her own judgment and the
judgment of the professionals of his or her choice with whom Participant has consulted.
Participant hereby releases, acquits and forever discharges the Company Parties from all
actions, causes of actions, suits, debts, obligations, liabilities, claims, damages,
losses, costs and expenses of any nature whatsoever, known or unknown, on account of,
arising out of, or in any way related to the tax effects associated with the execution of
this RSU Agreement and any payment under the Plan and this RSU Agreement.
	 
	 	10.	 	Miscellaneous. The Committee may from time to time modify or amend this RSU
Agreement in accordance with the provisions of the Plan. This RSU Agreement shall be binding
upon and inure to the benefit of Forestar and its successors and assigns and shall be binding
upon and inure to the benefit of the Participant and his or her legatees, distributees and
personal representatives. This RSU Agreement may be executed by Forestar and the Participant
by means of electronic or digital signatures, which shall have the same force and effect as
manual signatures. Participant agrees that clicking “I Accept” in connection with or
response to any electronic communication or other medium has the effect of affixing the
Participant’s electronic signature to this RSU Agreement. Participant acknowledges and
expressly agrees that the Participant has read the RSU Agreement and the Plan Documents and
agrees to their terms. This RSU Agreement shall be governed by and construed in accord with
federal law, where applicable, and otherwise with the laws of the State of Texas.

Restricted Stock Units Agreement — Tier I

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FORESTAR GROUP INC.

STANDARD TERMS AND CONDITIONS

FOR RESTRICTED STOCK UNITS

	1.	 	Certain Definitions: For purposes of this Forestar Group Inc. Terms and Conditions
for Restricted Stock Units (the “Standard Terms and Conditions”), the Forestar Group Inc. 2007
Stock Incentive Plan (as amended, the “Plan”), and the Agreement that evidences the grant of
Restricted Stock Units under the Plan (the “RSU Agreement”) to which this Standard Terms and
Conditions applies, the following terms shall have the meanings set forth below:

	 	a.	 	Change in Control:

	 	i.	 	A change in control shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:

	 	(1)	 	any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of Forestar (not including in the
securities beneficially owned by such Person any securities acquired
directly from Forestar or its Affiliates) representing 20% or more of the
combined voting power of Forestar’s then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in connection
with a transaction described in clauses (a), (b) or (c) of paragraph (3)
below;
	 
	 	(2)	 	within any twenty-four (24) month period, the
following individuals cease for any reason to constitute a majority of
the number of directors then serving on the Board: individuals who, on
the Effective Date, constitute the Board and any new director (other than
a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of Forestar)
whose appointment or election by the Board or nomination for election by
Forestar’s shareholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors on the date hereof or whose appointment, election or nomination
for election was previously so approved or recommended;
	 
	 	(3)	 	there is consummated a merger, consolidation of
Forestar or any direct or indirect subsidiary of Forestar with any other
corporation or any recapitalization of Forestar (for purposes of this
paragraph (III), a “Business Event”) unless, immediately following such
Business Event (a) the directors of Forestar immediately prior to such
Business Event continue to constitute at least a majority of the board of
directors of Forestar, the surviving entity or any parent thereof, (b)
the voting securities of Forestar outstanding immediately prior to such
Business Event continue to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of
Forestar or any subsidiary of Forestar, at least 60% of the combined
voting power of the securities of Forestar or such surviving entity or
any parent thereof outstanding immediately after such Business Event, and
(c) in the event of a

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	 	 	 	recapitalization, no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of Forestar or
such surviving entity or any parent
thereof (not including in the securities Beneficially Owned by such
Person any securities acquired directly from Forestar or its
Affiliates) representing 20% or more of the combined voting power of
the then outstanding securities of Forestar or such surviving entity or
any parent thereof (except to the extent such ownership existed prior
to the Business Event);
	 
	 	(4)	 	the shareholders of Forestar approve a plan of
complete liquidation or dissolution of Forestar;
	 
	 	(5)	 	there is consummated an agreement for the sale,
disposition or long-term lease by Forestar of substantially all of
Forestar’s assets, other than (a) such a sale, disposition or lease to an
entity, at least 50% of the combined voting power of the voting
securities of which are owned by shareholders of Forestar in
substantially the same proportions as their ownership of Forestar
immediately prior to such sale or disposition or (b) the distribution
directly to Forestar’s shareholders (in one distribution or a series of
related distributions) of all of the stock of one or more subsidiaries of
Forestar that represent substantially all of Forestar’s assets; or
	 
	 	(6)	 	any other event that the Board, in its sole
discretion, determines to be a Change in Control for purposes of this
Agreement.
	 
	 	 	 	Notwithstanding the foregoing, a “Change in Control” under clauses (1)
through (5) above shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated transactions
immediately following which the record holders of the common stock of
Forestar immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate
ownership in one or more entities which, singly or together,
immediately following such transaction or series of transactions, own
all or substantially all of the assets of Forestar as constituted
immediately prior to such transaction or series of transactions.

	 	ii.	 	For purposes of this definition of “Change in Control”:

	 	(1)	 	“Affiliate” shall have the meaning set forth in
Rule 12b-2 promulgated under Section 12 of the Exchange Act.
	 
	 	(2)	 	“Beneficial Owner” shall have the meaning set forth
in Rule 13d-3 under the Exchange Act.
	 
	 	(3)	 	“Effective Date” means, the Date of Grant of the
applicable Restricted Stock Units.
	 
	 	(4)	 	“Exchange Act” shall mean the Securities Exchange
Act of 1934, as amended from time to time.
	 
	 	(5)	 	“Person” shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include (i) Forestar or
any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of Forestar or any

Restricted Stock Units Agreement — Tier I

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	 	 	 	of its
Affiliates, (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a corporation owned, directly
or indirectly,
by the stockholders of Forestar in substantially the same proportions
as their ownership of stock of Forestar.

	 	b.	 	Dividend Equivalency Rights or DERs: means a right granted in
connection with a Restricted Stock Unit to receive payment on the terms and conditions
set forth in the Plan Documents of an amount equivalent to any dividend paid to a
holder of Common Stock.
	 
	 	c.	 	Forestar: means Forestar Group Inc. and any successor thereto.
	 
	 	d.	 	Plan Documents: means the Plan, the RSU Agreement and the Standard
Terms and Conditions.
	 
	 	e.	 	RSU Agreement: means the written Agreement executed by Forestar and a
Participant evidencing a grant of Restricted Stock Units under the Plan.
	 
	 	f.	 	Separation From Service: means a Participant’s separation from service
(within the meaning of Treasury Regs. § 1.409A-1(h)) with Forestar and its Affiliates
after the Date of Grant of the relevant Restricted Stock Units.
	 
	 	g.	 	Vesting Date: means, with respect to any award of Restricted Stock
Units hereunder, the earliest of (a) such date or dates as the Committee shall specify
in the Restricted Stock Units Agreement evidencing such award of Restricted Stock Units
as the Scheduled Vesting Date(s), (b)  the occurrence of a Change in Control, (c) the
Participant’s death, or (d) the Participant’s becoming disabled (within the meaning of
Section 409A of the Code).

	 	 	Capitalized terms used herein but not defined herein shall have the meaning assigned to such
terms in the Plan.
	 
	2.	 	Restricted Stock Unit Agreement; Acceptance and Execution: The grant of Restricted
Stock Units shall be evidenced by, and subject to the terms and conditions of, a RSU
Agreement. The RSU Agreement shall identify the Participant who has been granted the RSUs,
the Date of Grant, the number of Restricted Stock Units and accompanying DERs (if any) granted
pursuant to an Award, the dates upon which Restricted Stock Units and accompanying DERs (if
any) become vested an are payable. Restricted Stock Units shall be immediately cancelled and
expire if the applicable RSU Agreement is not executed (in such manner as may be specified by
Forestar) by such Participant (or his or her agent or attorney) and delivered to Forestar (in
such manner as may be specified by Forestar) within 60 days after the Date of Grant of the
Restricted Stock Units (unless an extension of such deadline for extenuating circumstances is
approved by a Vice President of Forestar). 
	 
	3.	 	Form of Awards: Restricted Stock Units and accompanying DERs, when issued, will be
represented by a book entry in the name of the Participant. Unless and until a certificate or
certificates representing Shares will have been issued by Forestar to Participant for payment
under a Restricted Stock Unit, Participant will not be or have any of the rights or privileges
of a shareholder of Forestar with respect to Shares issuable upon vesting of this RSU.
	 
	4.	 	Vesting and Time of Payment: Provided that a Participant has not experienced a
Separation from Service with Forestar or an Affiliate through the Vesting Date, the
Participant shall vest and be entitled to payment under a Restricted Stock Unit on the Vesting
Date for such Restricted Stock Unit. The payment under a Restricted Stock Unit shall be made
no later than March 15th of the year following the year in which the Vesting Date
occurs. Notwithstanding the above, payment under a Restricted Stock Unit shall be subject to
paragraph 9 herein.
	 
	5.	 	Payment Amount: Payment under an RSU may be made in cash or in shares, or both, at
the discretion of the Committee or as otherwise set forth in the Agreement. If payment is
made in Shares, a Participant shall be entitled to a Share for each RSU that vests on a given
Vesting Date. If payment in made in cash, the amount of payment under each Restricted Stock
Unit shall be equal to the Fair Market Value per Share of Common Stock on the Vesting Date of
each such Restricted Stock Unit.

Restricted Stock Units Agreement — Tier I

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	6.	 	Dividend Equivalency Rights: Upon the payment of a dividend to a holder of Common
Stock, the holder of a DER will either be paid an amount equal to such dividend or be credited
such amount to a bookkeeping account, with such the amount reflected in such account to be
paid upon the vesting and payment of the underlying DER, provided a Participant has not
experienced a Separation from Service with Forestar or an Affiliate through the date such
dividend payment is made to a holder of Common Stock. Upon the Participant’s Separation from
Service with Forestar and its Affiliates or the vesting and payment of the accompanying RSU,
the DER will expire, and Participant shall not longer be entitled to payment under such DER.
	 
	7.	 	Nonalienation of Benefits: Except as required by applicable law, no right or benefit
under the Plan or any Restricted Stock Units Agreement shall be subject to anticipation,
alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance or
charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, transfer, pledge,
exchange, transfer, encumber or charge the same shall be void. No right or benefit hereunder
shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of
the person entitled to such benefit. If any Participant shall become bankrupt or attempt to
anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or
charge any right or benefit under the Plan or any Restricted Stock Units Agreement, then such
right or benefit shall, in the discretion of the Committee, cease and terminate, and in such
event, the Committee in its discretion may hold or apply the same or any part thereof for the
benefit of the Participant or his beneficiary, spouse, children or other dependents, or any of
them, in such manner and in such proportion as the Committee may deem proper.
	 
	8.	 	Withholding: Forestar’s obligation to pay Restricted Stock Units in accordance with,
and subject to the terms of, the applicable Restricted Stock Units Agreement, shall be subject
to the satisfaction of applicable federal, state and local tax withholding requirements (if
any). Restricted Stock Unit payments that are withheld to satisfy applicable withholding
taxes shall be determined based on the Fair Market Value of the Common Stock on the date the
withholding tax obligation arises. Only the required statutory minimum tax may be withheld;
excess tax withholding is not allowed.
	 
	9.	 	Section 409A: Notwithstanding any provision to the contrary in an RSU Agreement or
the Plan, if a Participant is a “specified employee” (within the meaning of Section
409A(a)(2)(B) of the Code) and the payment under this RSU otherwise constitutes a deferral of
compensation (within the meaning of Treas. Reg. § 1.409A-1(b)), then to the extent required by
Section 409A(a)(2)(B) of the Code, no payment of Restricted Stock Units shall be made to the
Participant prior to the earlier of (a) the expiration of the six month period measured from
the date of the Participant’s Separation From Service, and (b) the date of the Participant’s
death.
	 
	10.	 	No Right to Continued Employment; No Additional Rights: Nothing contained in the
Plan or in any Restricted Stock Units Agreement shall confer on any Participant any right to
continue in the employ or service of Forestar or any of its Affiliates or interfere in any way
with the right of Forestar or an Affiliate to terminate the employment or service of a
Participant at any time, with or without cause, notwithstanding the Restricted Stock Units
awarded to the Participant may be forfeited. Nothing in the Plan Documents or any Restricted
Stock Units Agreement shall be construed to give any employee, director or consultant of
Forestar or any Affiliate any right to receive an award of Restricted Stock Units or as
evidence of any agreement or understanding, express or implied, that Forestar or any Affiliate
will employ or retain the Participant in any particular position or at any particular rate of
remuneration, or for any particular period of time.
	 
	11.	 	Changes in Stock: In the event of any change in the outstanding stock covered by
Restricted Stock Units by reason of any stock dividend, split-up, spin-off, recapitalization,
reclassification, combination

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	 	 	or exchange of shares, merger, consolidation or liquidation or
the like, the Committee shall provide for a substitution for or adjustment in the number and
class of shares covered by the Restricted Stock Units. The Committee’s determination with
regard to any such substitution or adjustment shall be conclusive.
The Committee may at any time, in its sole discretion, make such amendments to the terms of
Restricted Stock Units Agreements as it deems necessary or appropriate to reflect any
adjustments or substitutions made pursuant to this paragraph.
	 
	12.	 	Exclusion from Pension, Profit-Sharing and Other Benefit Computations: By acceptance
of a Restricted Stock Units award under the Plan, a Participant shall be deemed to have agreed
that any compensation arising out of the award constitutes special incentive compensation that
shall not be taken into account as “salary”, “pay”, “compensation” or “bonus” in determining
the amount of any payment under any pension, retirement or profit-sharing plan of Forestar or
any Affiliate. In addition, each Participant shall be deemed to have agreed that neither the
award, vesting nor payment of Restricted Stock Units shall be taken into account in
determining the amount of any life insurance coverage or short or long-term disability
coverage provided by Forestar or any Affiliate.
	 
	13.	 	Applicability: These Standard Terms and Conditions shall apply to Restricted Stock
Units as to which the Committee designates it as applying, and the Committee may designate it
as applying in whole or in part in its discretion to a Restricted Stock Units award.
	 
	14.	 	Plan Controls: In the event of any conflict between the Plan and the terms of a
Restricted Stock Units Agreement or the Standard Terms and Conditions, the Plan shall govern.

Restricted Stock Units Agreement — Tier I

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