Document:

exv10w17

 

Exhibit 10.17

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE REDACTED PORTIONS. THE CONFIDENTIAL REDACTED
PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. SUCH REDACTIONS
ARE INDICATED WITH THREE ASTERISKS.

STOCK OPTION AGREEMENT

Pursuant To

K12 INC.

STOCK OPTION PLAN

          THIS STOCK OPTION AGREEMENT (“Agreement”), is entered into as of July 12, 2007, by and between
K12 INC., a Delaware corporation (the “Company”), and Ronald J. Packard (the “Optionee”).

RECITALS

          WHEREAS, the Company has adopted, with stockholder approval, the K12 Inc. Stock Option Plan
(as amended from time to time, the “Plan”); and

          WHEREAS, the Plan provides for the granting of Stock Options by the Board to directors,
officers, employees and independent contractors of the Company to purchase shares of Common Stock
of the Company (the “Stock”) in accordance with the terms and provisions thereof; and

          WHEREAS, the Board considers the Optionee to be a person who is eligible for a grant of Stock
Options under the Plan, and has determined that it would be in the best interests of the Company to
grant the Stock Options documented herein.

          NOW THEREFORE, the parties agree as follows:

     1. Grant of Stock Options. Subject to the terms and conditions hereinafter set forth, the
Company, with the approval and at the direction of the Board, hereby grants to the Optionee, as of
the date hereof, the followings option to purchase shares of Stock (the “Options”).

	 	(a)	 	Options to purchase up to Eight Hundred Thousand (800,000) shares of Stock at
an option exercise price of Two Dollars and Sixty-Eight Cents ($2.68) per share (the
“First Group of Options”); and
	 
	 	(b)	 	Options to purchase up to One Million Five Hundred and Fifty Thousand
(1,550,000) shares of Stock at an option exercise price of Two Dollars and Sixty-Eight
Cents ($2.68) per share (the “Second Group of Options”).

The shares of Stock purchasable upon exercise of the Options are hereinafter sometimes collectively
referred to as the “Option Shares.” The Options are not intended to be, and shall

 

 

not be treated
as, incentive stock options (as such term is defined under Section 422 of the Internal Revenue Code
of 1986, as amended (the “Code”)).

     2. Vesting Schedule. Subject to the provisions of Section 3 below and provided that the
Optionee remains employed by the Company or its Affiliates on the applicable vesting dates, the
Options shall vest and become exercisable as provided below:

	 	(a)	 	The First Group of Options shall vest and become exercisable in
installments of 228,571 Options on each of June 30, 2008, June 30, 2009 and June 30,
2010, and an installment of 114,287 Options on January 1, 2011;
	 
	 	(b)	 	The Second Group of Options shall vest and become exercisable upon Optionee’s
fulfillment of the vesting conditions set forth on Exhibit A attached hereto as
determined in the sole discretion of the Compensation Committee of the Board.

          Notwithstanding the foregoing, upon the occurrence of a Vesting Acceleration Event all
unvested Options shall automatically accelerate and become immediately vested as of the date of the
Vesting Acceleration Event. As used herein, a “Vesting Acceleration Event” means the occurrence of
any of the following events while Optionee is employed with the Company: (i) a sale of all or
substantially all of the assets of the Company, or (ii) a merger or consolidation of the Company
into or with another corporation which results in the Company’s stockholders immediately prior to
such transaction owning less than fifty percent (50%) of the Company’s voting power immediately
after such transaction, or (iii) a sale of outstanding securities of the Company by stockholders of
the Company (but excluding any sale in connection with an initial public offering) which results in
the Company’s stockholders immediately prior to such transaction owning less than fifty percent
(50%) of the Company’s voting power immediately after such transaction.

     3. Termination of Options.

          (a) Subject to earlier termination as provided in the other provisions of this Agreement, the
Options and all rights hereunder with respect thereto, to the extent such rights shall not have
been exercised, shall terminate and become null and void on July 12, 2015 (the “Option Term”).

          (b) Upon the death of Optionee, the Options may be exercised, but only to the extent that the
Options were outstanding and exercisable on the date of death, by Optionee’s estate, provided that
such exercise occurs within both the remaining Option Term and six months after Optionee’s death.
The Options held by Optionee to the extent exercisable on the date of Optionee’s death shall
terminate at the end of the Option Term or six months after Optionee’s death, whichever is earlier.
The Options held by Optionee to the extent not exercisable on the date of Optionee’s death shall
terminate upon Optionee’s death.

          (c) Upon termination of Optionee’s employment or engagement with the Company by reason of
permanent disability (as determined by the Board, or if Optionee has an

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employment or engagement
agreement with the Company, then as determined pursuant to the applicable provisions of said
agreement, if any), the Options may be exercised by Optionee, but only to the extent that the
Options were outstanding and exercisable on the date of Optionee’s termination, provided that such
exercise occurs within both the remaining Option Term and within six months from the date of
Optionee’s termination. The Options held by Optionee to the extent exercisable on the date of
Optionee’s termination shall terminate at the end of the Option Term or six months after Optionee’s
termination, whichever is earlier. The Options held by Optionee to the extent not exercisable on
the date of Optionee’s termination shall terminate on the date of Optionee’s termination.

          (d) Upon Optionee’s termination of employment or engagement with the Company by resignation or
upon termination of Optionee’s employment or engagement with the Company for cause (as that term is
defined in the Plan), all Options granted to Optionee shall terminate on the date of termination of
employment or engagement.

          (e) If Optionee’s employment or engagement with the Company terminates for any reason other
than as described in paragraphs (b), (c) or (d) of this Section 3, then the Options held by
Optionee to the extent not exercisable on the date of Optionee’s termination shall terminate on the
date of Optionee’s termination. The Options, to the extent exercisable on the date of Optionee’s
termination, may be exercised by Optionee, provided that such exercise occurs within both the
remaining Option Term and within three months from the date of Optionee’s termination. The Options
held by Optionee to the extent exercisable on the date of Optionee’s termination shall terminate at
the end of the Option Term or three months after Optionee’s termination, whichever is earlier.
Notwithstanding the foregoing, if Optionee’s employment or engagement with the Company is
terminated by the Company without “Cause” or due to “Constructive Termination” (as those terms are
defined in the Amended and Restated Employment Agreement between Optionee and the Company,
effective as of July 1, 2007), the Options held by Optionee to the extent exercisable on the date
of Optionee’s termination may be exercised by Optionee until, and shall terminate upon, the earlier
of (i) ninety (90) days after the expiration of any “lock-up” period applicable to the Company’s
initial underwritten public offering of Stock, or (ii) the expiration of the Option Term.

     4. Exercise of Options.

          (a) The Optionee may exercise the Options with respect to all or any part of the number of
Option Shares then exercisable hereunder by giving the Chief Financial Officer of the Company
written notice of exercise. The notice of exercise shall specify the number of Option Shares as to
which the Options are to be exercised and the date of exercise thereof, which date shall be at
least five days (but not more than fifteen days) after the giving of such notice unless an earlier
time shall have been mutually agreed upon by Optionee and the Company.

          (b) Full payment of the option price for the Option Shares being purchased by the Optionee
shall be made by the Optionee in cash (in U.S. dollars) prior to the date of exercise specified in
the notice of exercise.

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          (c) The Company shall cause to be delivered to the Optionee a certificate or certificates for
the Option Shares then being purchased (out of theretofore unissued Stock or reacquired Stock, as
the Company may elect) as soon as is reasonably practicable after the full payment for such Option
Shares and satisfaction of all other conditions to exercise set forth in this Agreement.

          (d) If the Optionee fails to pay for any of the Option Shares specified in a notice of
exercise or fails to accept delivery thereof, the Optionee’s right to purchase such Option Shares
shall terminate.

          (e) Notwithstanding any other provision of this Agreement, the Optionee’s right to exercise
Options and be issued Option Shares is subject to the conditions set forth in this Section 4(e) in
addition to any other conditions set forth elsewhere in this Agreement. The Optionee may not
exercise any Options in whole or in part or be issued any Option Shares unless (i) the transaction
is in compliance with all applicable state and Federal securities laws, (ii) the transaction is
exempt from the qualification and registration requirements of applicable state and Federal
securities laws, and (iii) the Company and the Optionee comply with any requirements applicable to
the transaction, if any, that are contained in any credit or loan agreement to which the Company is
a party. In addition, the obligation of the Company to deliver Stock shall be subject to the
condition that if at any time the Company shall determine that the listing, registration, or
qualification of the Options or the Option Shares upon any securities exchange or under any state
or Federal law, or the consent or approval of any governmental regulatory body, is necessary as a
condition of, or in connection with, the Options or the issuance or purchase of Stock thereunder,
the Options may not be exercised in whole or in part unless such listing, registration,
qualification, consent, or approval shall have been effected or obtained free of any conditions not
acceptable to the Board.

     5. Adjustment of and Changes in Stock of the Company. In the event of any change in the
outstanding shares of Stock by reason of a stock dividend, recapitalization, merger, consolidation,
split-up, combination, exchange of shares, or the like, the Board shall appropriately adjust the
number and kind of shares of Stock subject to the Options and the option price.

     6. No Rights of Stockholders. Neither the Optionee nor any personal representative shall be,
or shall have any of the rights and privileges of, a stockholder of the Company with respect to any
shares of Stock purchasable or issuable upon the exercise of the Options, in whole or in part,
prior to the date certificates for shares of Stock are issued to the Optionee.

     7. Non-Transferability of Options. During the Optionee’s lifetime, the Options hereunder
shall be exercisable only by the Optionee or any guardian or legal representative of the Optionee,
and the Options shall not be transferable except, in case of the death of the
Optionee, by will or the laws of descent and distribution, nor shall the Options be subject to
attachment, execution, or other similar process. In the event of (a) any attempt by the Optionee
to alienate, assign, pledge, hypothecate, or otherwise dispose of the Options, except as provided
for herein, or (b) the levy of any attachment, execution, or similar process upon the

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rights or
interest hereby conferred, the Company may terminate the Options by notice to the Optionee and they
shall thereupon become null and void.

     8. Employment/Engagement Not Affected. Neither the granting of the Options nor exercise
thereof shall be construed as granting to the Optionee any right with respect to continuance of
employment or engagement with the Company or affect any right which the Company may have to
terminate the employment or engagement of Optionee.

     9. Amendment of Options. The Options may be amended by the Board at any time (i) if the Board
determines, in its reasonable discretion, that amendment is necessary or advisable in the light of
any addition to or change in the Internal Revenue Code of 1986, as amended, or in the regulations
issued thereunder, or any federal or state securities law or other law or regulation, which change
occurs after the date of grant of an Option and by its terms applies to the Option; or (ii) other
than in the circumstances described in clause (i), with the consent of the Optionee.

     10. Sale, Merger, Consolidation and Liquidation of the Company. In the event of a sale of the
Company (whether by merger, consolidation, sale of assets, sale of stock or otherwise), if the
surviving or acquiring entity or purchaser does not expressly agree to assume the Options issued
hereunder, all Options issued hereunder which are unvested shall terminate and all Options issued
hereunder which are vested (including all Options that become vested as a result of a Vesting
Acceleration Event) but not exercised prior to or as of the closing of such event shall terminate.
In the event of a dissolution or liquidation of the Company, all Options issued hereunder which are
unvested shall terminate and all Options issued hereunder which are vested but not exercised prior
to such dissolution or liquidation shall terminate.

11. Restrictions on Transfer of Option Shares and Related Provisions.

          (a) Except as otherwise expressly set forth in this Section 11, Optionee shall not,
voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise, sell,
transfer, assign, hypothecate, pledge or in any way alienate any Option Shares now or hereafter
owned by the Optionee or any right or interest therein (hereinafter, a “Transfer”) without the
prior written consent of the Board, which the Board may withhold in its sole discretion. Any
attempt to consummate a Transfer in violation of this Agreement shall be null and void.

          (b) Notwithstanding the restrictions contained in Section 11(a) above, (i) Optionee may
Transfer Optionee’s Option Shares to the Company or a designee of the Company, or (ii) Optionee may
contribute Optionee’s Option Shares to a trust formed solely for the benefit of Optionee and/or
Optionee’s immediate family, or (iii) upon the death of Optionee, Optionee’s Option Shares may be
transferred to Optionee’s estate, personal representative or heirs by will or the laws of descent
and distribution; provided, however, that as a condition to any transfer under
clause (i), (ii) or (iii) above, the tranferee(s) shall hold the
Option Shares subject to the terms and conditions of this Agreement and the tranferee(s) shall
execute and deliver to the Company an agreement in form and substance satisfactory to the Company
agreeing to be bound by the terms and conditions of this Agreement.

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          (c) The Company shall have the option (the “Repurchase Option”) exercisable at any time after
six (6) months and one (1) day after the date of termination of Optionee’s employment or engagement
with the Company for any reason, including, but not limited to, termination with or without cause,
death, permanent disability or voluntary termination, to repurchase all or any portion of the
Option Shares held by Optionee (or by a permitted transferee or Optionee’s estate or legal
representative, if applicable). If the Company elects to exercise the Repurchase Option in whole
or in part, it shall give written notice of such election (the “Repurchase Notice”) to Optionee (or
permitted transferee or Optionee’s estate or legal representative, if applicable). The Company
shall pay to Optionee (or permitted transferee or Optionee’s estate or legal representative, if
applicable) in cash the fair market value of the Option Shares being purchased within thirty (30)
days after the later of: (i) the date of the Repurchase Notice, or (ii) the final determination of
fair market value. For purposes hereof, fair market value of the Option Shares shall be determined
as of the last day of the Company’s fiscal quarter ended immediately preceding the date of the
Repurchase Notice. Fair market value of the Option Shares shall be determined as provided in the
Plan. Optionee agrees to execute (and directs Optionee’s permitted transferee or estate or legal
representative to execute, if applicable) such documents and instruments as are reasonably
necessary to effectuate such purchase. The Company may exercise the Repurchase Option as many
times as the Company may decide.

          (d) Anything contained in this Agreement to the contrary notwithstanding, the Option Shares
with respect to which the Company’s Repurchase Option has been exercised shall be deemed to have
been repurchased by the Company effective as of the date of exercise of such option and such Option
Shares shall be deemed to be canceled, retired and no longer issued or outstanding effective as of
such date without further act of the parties.

          (e) All Option Shares now or hereafter owned by Optionee shall be subject to all of the terms
and conditions of this Agreement. All certificates representing such Option Shares shall contain
legends to the following effect:

ANY SALE, TRANSFER, PLEDGE, ASSIGNMENT OR ENCUMBRANCE OF THIS SECURITY IS SUBJECT TO THE
PROVISIONS OF A STOCK OPTION AGREEMENT BETWEEN THE CORPORATION AND THE STOCKHOLDER, DATED AS
OF JULY 12, 2007, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE CORPORATION.

THE OFFER AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN QUALIFIED
OR REGISTERED UNDER ANY STATE OR FEDERAL SECURITIES LAWS. SUCH SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF EITHER QUALIFICATION AND
REGISTRATION UNDER STATE AND FEDERAL SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY
TO THE ISSUER THAT SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED.

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          (f) The provisions of Sections 11(a) through 11(d) shall terminate effective upon the
consummation an underwritten public offering of shares of Stock by the Company that results in such
shares being listed for trading on a national securities exchange or being authorized for trading
on the NASDAQ National Market System.

     12. Representations.

          (a) By executing this Stock Option Agreement, Optionee represents and warrants to the Company
that Optionee is acquiring the Options for Optionee’s own account, for investment purposes only and
not with the intent of distributing, transferring or selling all or any part of the Options.

          (b) In connection with the exercise of any portion of the Options, Optionee represents and
warrants to the Company as of the date of such exercise as follows:

               (i) Optionee is acquiring the Stock for Optionee’s own account, for investment purposes only
and not with the intent of distributing, transferring or selling all or any part thereof in
violation of applicable securities laws.

               (ii) Optionee acknowledges that the Stock has not been registered under any Federal or state
securities laws and is being issued pursuant to one or more exemptions from the registration and
qualification requirements of such securities laws.

               (iii) Optionee acknowledges that the Company is under no obligation to register or qualify the
Stock and that the Stock may not be sold unless it is so registered and qualified or an exemption
from registration and qualification is available.

     13. Lock Up In Connection with Public Offering.

          (a) In order to induce the underwriters that may participate in a public offering of the
Company’s equity securities to continue their efforts in connection with such a public offering,
the Optionee, during the period commencing 30 days prior to and ending 180 days after the effective
date of any underwritten public offering of the Company’s equity securities (except as part of such
underwritten registration):

               (i) agrees not to (x) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase,
or otherwise transfer or dispose of, directly or indirectly, any Stock or any securities
convertible into or exercisable or exchangeable for Stock (including, without limitation, Stock or
securities convertible into or exercisable or exchangeable for Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and regulations of the
Securities and Exchange Commission) or (y) enter into any swap or other
arrangement that transfers all or a portion of the economic consequences associated with the
ownership of any Stock (regardless of whether any of the transactions described in clause (x) or
(y) is to be settled by the delivery of Stock, or such other securities, in cash or otherwise),
without prior written consent of the lead managing underwriter of such public offering;

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               (ii) agrees not to make any demand for, or exercise any right with respect to, the
registration of any Stock or any securities convertible into or exercisable or exchangeable for
Stock, without the prior written consent of the lead underwriter; and

               (iii) authorizes the Company to cause the transfer agent to decline to transfer and/or to note
stop transfer restrictions on the transfer books and records of the Company with respect to any
Stock and any securities convertible into or exercisable or exchangeable for Stock for which the
Optionee is the record holder and, in the case of any such shares or securities for which the
Optionee is the beneficial but not the record holder, agrees to cause the record holder to cause
the transfer agent to decline to transfer and/or to note stop transfer restrictions on such books
and records with respect to such shares or securities.

Upon the Company’s request, the Optionee agrees to execute any additional documents necessary or
desirable to confirm Optionee’s obligations set forth above and/or in connection with the
enforcement of the foregoing provisions. The foregoing provisions shall survive the death or
incapacity of the Option and any obligations of the Optionee set forth above shall be binding upon
the heirs, personal representatives, successors and assigns of the Optionee.

     14. Notice. Any notice to the Company provided for in this instrument shall be addressed as
follows:

K12 Inc.

2300 Corporate Park Drive, Suite 200

Herndon, Virginia 20171

Attention: Compensation Committee

With a copy to:

K12 Inc.

2300 Corporate Park Drive, Suite 200

Herndon, Virginia 20171

Attention: Office of the General Counsel

And any notice to the Optionee shall be addressed to the Optionee at the current address shown on
the records of the Company.

Any notice shall be deemed to be duly given if and when properly addressed and posted by registered
or certified mail, postage prepaid.

     15. Incorporation of Plan by Reference. The Options are granted pursuant to the terms of the
Plan, the terms of which are incorporated herein by reference, and the Options
shall in all respects be interpreted in accordance with the Plan. Unless the context
otherwise requires, any terms used herein without definition shall have the meanings as defined in
the Plan. The Board shall interpret and construe the Plan and this instrument, and its
interpretations and determinations shall be conclusive and binding on the parties hereto and

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any
other person claiming an interest hereunder, with respect to any issue arising hereunder or
thereunder.

     16. Income Tax Consequences. Optionee acknowledges, represents, and warrants that the Company
has made no representations whatsoever to Optionee concerning the specific Federal and/or state
income tax and alternative minimum tax consequences to Optionee of the Options granted hereunder or
the exercise thereof, and Optionee shall be responsible for consulting with Optionee’s personal tax
advisor regarding such matters. Without limiting the generality of the foregoing, Optionee
acknowledges that pursuant to Code Section 409A, an option that is granted with a per share
exercise price that is determined by the Internal Revenue Service (the “IRS”) to be less than the
fair market value of a share of Stock on the date of grant (a “discount option”) may be considered
“deferred compensation.” An option that is a “discount option” may result in (i) income
recognition by the Optionee prior to the exercise of the option, (ii) an additional twenty percent
(20%) tax payable by Optionee, and (iii) potential penalty and interest charges payable by
Optionee. Optionee acknowledges that the Company cannot and has not guaranteed that in the event
of an examination the IRS will agree that the per share exercise price of the Stock that is subject
to this Option equals or exceeds the fair market value of a share of Stock on the date of grant.
Optionee agrees that if the IRS determines that the Option was granted with a per share exercise
price that was less than the fair market value of a share of Stock on the date of grant, Optionee
will be solely responsible for all consequences to Optionee related to such a determination.

     17. Withholding Taxes. Whenever the Company issues or transfers shares of Stock hereunder,
the Company shall have the right to require the Optionee to remit to the Company an amount
sufficient to satisfy any Federal, state, and/or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares. Alternatively, the Company may (but
shall not be obligated to) issue or transfer such shares of Stock net of the number of shares
sufficient to satisfy the withholding tax requirements. For withholding tax purposes, the shares
of Stock shall be valued on the date the withholding obligation is incurred.

     18. Governing Law. The validity, construction, interpretation, and effect of this Agreement
shall exclusively be governed by and determined in accordance with the laws of the State of
Delaware (without regard to conflicts of law principles), except to the extent preempted by Federal
law, which shall to such extent govern.

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     IN WITNESS WHEREOF, the Company and Optionee have executed this Agreement effective as of the
date first set forth above.

	 	 	 	 	 
	 	“Company”

K12 INC.

a Delaware corporation

 	 
	 	By:  	 /s/
Andrew Tisch	 
	 	 	Andrew Tisch 	 
	 	 	Chair, Compensation Committee 	 
	 

	 	 	 	 	 
	 	“Optionee”

 	 
	 	 /s/
Ronald J. Packard	 
	 	Ronald J. Packard 	 
	 	 	 

10

 

	 	 	 	 	 

EXHIBIT A

NUMBER OF OPTIONS AND VESTING CONDITIONS

	 	 	 
	Number of Options	 	Vesting Conditions
	750,000 
	 	*** of such Options shall vest for each opening of a new jurisdiction on or after January 1, 2009
that enrolls 250 full-time students (up to *** jurisdictions and therefore a maximum of 750,000
Options shall be entitled to vest).

	 
	 	 

	400,000 
	 	One third of such Options shall vest for each of the 2008, 2009 and 2010 fiscal years based
upon achievement of EBIDTA and Revenue targets consistent with internal models developed in
connection with the Company’s initial public offering and mutually agreed to by Executive and
the Board for fiscal years 2008, 2009 and 2010.

	 
	 	 

	400,000 
	 	Achievement of a smooth and successful transition of the Company from a private to a public
company, as determined by the Board in its sole discretion.

11exv4w1

 

Exhibit 4.1

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	AMERICAN BANK NOTE COMPANY

	 	 	 
	 	 	PRODUCTION COORDINATOR: TODD DeROSSETT 931-490-1720	 
	 	711 ARMSTRONG LANE

	 	 	 
	 	 	PROOF OF: OCTOBER 31, 2007	 
	 	COLUMBIA, TENNESSEE 38401

	 	 	 
	 	 	FORESTAR REAL ESTATE GROUP INC.	 
	 	(931) 388-3003

	 	 	 
	 	 	TSB 28556 FC	 
	 	 	 	 	 	 	 	 	 
	 	SALES: JAYNE DICKINSON 708-385-9112

	 	 	 
	 	 	OPERATOR:            AP           	 
	 	 	 	 	 	 	 	 	 
	 	7 / LIVE JOBS / F / FORESTAR 28556 FC

	 	 	 
	 	 	Rev. 1	 
	 	 	 	 	 	 	 	 	 

COLORS
SELECTED FOR PRINTING: Logo Prints PMS 5615 AT 60% AND BLACK. Background prints PMS 5665 at
50%. Intaglio prints in SC-4 olive.

COLOR: This proof was printed from a digital file or artwork on a graphics quality, color laser
printer. It is a good representation of the color as it will appear on the final product.
However, it is not an exact color rendition, and the final printed product may appear slightly
different from the proof due to the difference between the dyes and printing ink.

PLEASE
INITIAL THE APPROPRIATE SELECTION FOR THIS PROOF: ___ OK  AS IS ___ OK WITH CHANGES ___ MAKE CHANGES AND
SEND ANOTHER PROOF

 

 

Forestar Real Estate Group Inc.

     The Corporation will furnish without charge to each shareholder who so requests a full statement of
the designations, preferences, limitations and relative rights of each class of stock or series thereof of the Corporation and the
variations in the relative rights and preferences between the shares of any series of preferred stock, so far as the same have been fixed
and determined, and the authority of the board of directors to fix and determine the relative rights and preferences of any series of
preferred stock. Such requests may be made to the Corporation or to the transfer agent.

ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of this certificate, shall be
construed as though they were written out in full according to applicable laws or regulations:

	 	 	 	 	 	 	 	 	 	 	 
	TEN COM

	 	—
	 	as tenants in common
	 	 
	 	UNIF GIFT MIN ACT —
	 	                     Custodian                     
	TEN ENT

	 	—
	 	as tenants by the entireties
	 	 
	 	 
	 	     (Cust)                   
       (Minor)
	JT TEN

	 	—
	 	as joint tenants with right of
	 	 	 	 	 	under Uniform Gifts to Minors
	 

	 	 	 	survivorship and not as tenants
	 	 	 	 	 	Act                                                             
	 

	 	 	 	in common
	 	 	 	 	 	                    (State)

Additional abbreviations may also be used though not in the above list.

     FOR
VALUE RECEIVED,
_________________________________________________________
 hereby sell, assign and transfer unto

	 	 	 
	PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

	 	 
	 	 	 

 

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

 

 

 

Shares of the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and
appoint

 

Attorney
to transfer the said Shares on the books of the within named Corporation with full power of
substitution in the premises.

Dated                                         

	 	 	 	 	 
	 

	 	 	 	Signature(s):
	 

	 	X
	 	 
	 

	 	X
	 	 
	 

	 	NOTICE:
	 	THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF
THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.

Signature(s) Guaranteed

	 	 	 	 	 
	By 

	 	 
 

	 	  
	THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.	 	 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	AMERICAN BANK NOTE COMPANY

	 	 	 
	 	 	PRODUCTION COORDINATOR: TODD DeROSSETT 931-490-1720	 
	 	711 ARMSTRONG LANE

	 	 	 
	 	 	PROOF OF: OCTOBER 29, 2007	 
	 	COLUMBIA, TENNESSEE 38401

	 	 	 
	 	 	FORESTAR REAL ESTATE GROUP INC.	 
	 	(931) 388-3003

	 	 	 
	 	 	TSB 28556 BK	 
	 	 	 	 	 	 	 	 	 
	 	SALES: JAYNE DICKINSON 708-385-9112

	 	 	 
	 	 	OPERATOR:            ANTHONY           	 
	 	 	 	 	 	 	 	 	 
	 	7 / LIVE JOBS / F / FORESTAR 28556 BK

	 	 	 
	 	 	NEW	 
	 	 	 	 	 	 	 	 	 

     PLEASE INITIAL THE APPROPRIATE SELECTION FOR THIS PROOF: ___ OK AS IS ___ OK WITH CHANGES ___ MAKE CHANGES AND
SEND ANOTHER PROOF

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