Forestar Group Inc. (Form: 8-K, Received: 10/10/2017 06:08:31)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):

October 5, 2017

FORESTAR GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware		001-33662		26-1336998
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification Number)

6300 Bee Cave Road, Building Two, Suite 500, Austin, Texas 78746

(Address of principal executive offices, including zip code)

(512) 433-5200

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Introduction

Forestar Group Inc. (“Forestar”) is providing the disclosure contained in this Current Report on Form 8-K in connection with the completion of the merger (the “Merger”) of Forestar and Force Merger Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of D.R. Horton Inc. (“D.R. Horton”), pursuant to the Agreement and Plan of Merger, dated as of June 29, 2017 (the “Merger Agreement”), among D.R. Horton, Merger Sub, and Forestar. In the Merger, Merger Sub merged with and into Forestar and Forestar continued as the surviving entity in the Merger. At the effective time (“Effective Time”) of the Merger, D.R. Horton owned approximately 75% of the New Forestar Common Stock.

Item 1.01. Entry into a Material Definitive Agreement.

Letter of Credit Facility

On October 5, 2017, Forestar, through its wholly owned subsidiary Forestar (USA) Real Estate Group Inc. (“Forestar Real Estate”), entered into a Letter of Credit Facility Agreement (the “LC Facility Agreement”) providing for a $30 million secured standby letter of credit facility (the “LC Facility”) with Keybank National Association, a national banking association (together with the other lending institutions that are or may become parties thereto, the “Banks”), Keybank National Association, as administrative agent (the “Agent”) and Keybanc Capital Markets, as sole arranger and sole bookrunner.

The LC Facility is secured by $30 million in cash deposited by Forestar Real Estate with the Agent, as such amount is replenished or increased from time to time at the request of the Agent. Forestar Real Estate is required to pay a letter of credit fee calculated at the rate of one hundred twenty five basis points (1.25%) on the outstanding face amount of the letters of credit issued under the LC Facility, as well as other customary fees and expenses. Forestar Real Estate is also required to pay an unused facility fee calculated at the rate of fifteen basis points (0.15%) per annum, in each case on the daily amount by which the aggregate Commitments (as defined in the LC Facility Agreement) from time to time exceed the sum of the Outstanding Letters of Credit (as defined in the LC Facility Agreement) during each fiscal quarter or portion thereof.

The LC Facility Agreement includes certain representations and warranties, affirmative and negative covenants and other undertakings, which are subject to important qualifications and limitations set forth in the LC Facility Agreement. The LC Facility Agreement also contains certain events of default, including (subject to certain materiality thresholds and grace periods) payment defaults, failure to comply with covenants, material inaccuracy of representations or warranties, and bankruptcy or insolvency proceedings. If an event of default occurs, the Banks may terminate all or any portion of the commitments under the LC Facility and/or exercise any rights they may have under any of the related facility documents (including against the collateral), subject to certain limitations.

The foregoing description of the LC Facility does not purport to be complete and is qualified in its entirety by reference to the LC Facility Agreement, a copy of which is filed herewith as Exhibit 10.1 and is incorporated into this Item 1.01 by reference.

Stockholder’s Agreement

As previously announced, in connection with Forestar’s entry into the Merger Agreement, Forestar and D.R. Horton entered into a Stockholder’s Agreement, dated as of June 29, 2017 (the “Stockholder’s Agreement”), the terms of which became effective at the Effective Time. The description of the Stockholder’s Agreement set forth in Forestar’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on June 29, 2017 is incorporated into this Item 1.01 by reference.

The Stockholders Agreement provides that at all times when D.R. Horton and its affiliates beneficially own 20% or more of the voting securities of Forestar, no committee of the board of directors of Forestar (the “Board”) will have more than three members unless otherwise agreed in writing between Forestar (as approved by a majority of the independent directors) and D.R. Horton. The Stockholders Agreement further provides that during the Lock-

Up Period (as defined in the Stockholders Agreement), the nominating and governance committee of the Board (the “Nominating and Governance Committee”) will have three members, including the Legacy Director (as defined in the Stockholders Agreement). On October 6, 2017, D.R. Horton and the Board, including the Legacy Director and each of the other members of the Board that are considered “independent” under the rules of the SEC and the New York Stock Exchange (the “Independent Directors”), elected to waive the requirement that the Nominating and Governance Committee consist of three directors, set the size of each of the Nominating and Governance Committee, the compensation committee of the Board (the “Compensation Committee”) and the audit committee of the Board (the “Audit Committee”) at four directors, and appointed each of the four Independent Directors, including the Legacy Director, as members of the Nominating and Governance Committee, the Compensation Committee and the Audit Committee.

Master Supply Agreement

As previously announced, in connection with Forestar’s entry into the Merger Agreement, Forestar and D.R. Horton entered into a Master Supply Agreement, dated as of June 29, 2017 (the “Master Supply Agreement”), the terms of which became effective as of the Effective Time. The description of the Master Supply Agreement set forth in Forestar’s Current Report on Form 8-K filed with the SEC on June 29, 2017 is incorporated into this Item 1.01 by reference.

Third Supplemental Indenture

On October 5, 2017, in connection with the consummation of the Merger, Forestar and U.S. Bank National Association, as trustee (the “Trustee”), entered into a Third Supplemental Indenture, dated as of October 5, 2017 (the “Third Supplemental Indenture”), to the Indenture, dated as of February 26, 2013, between Forestar and the Trustee (the “Base Indenture”), as supplemented by the First Supplemental Indenture, dated as of February 26, 2013, between Forestar and the Trustee (the “First Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), relating to Forestar’s 3.75% Convertible Senior Notes due 2020 (the “Convertible Notes”).

Pursuant to the Third Supplemental Indenture, the Convertible Notes are no longer convertible into shares of Former Forestar Common Stock (as defined below) and instead are convertible into cash and shares of New Forestar Common Stock based on the per-share weighted average of the cash and shares of New Forestar Common Stock received by Forestar stockholders that affirmatively made an election in connection with the Merger. As a result of such elections, for each share of Former Forestar Common Stock a holder of Convertible Notes was previously entitled to receive upon conversion of Convertible Notes, such holder shall instead be entitled to receive $14.19785 in cash and 0.20012 of a share of New Forestar Common Stock.

The foregoing description of the Third Supplemental Indenture is not complete and is qualified in its entirety by reference to the Third Supplemental Indenture, which is filed as Exhibit 4.1 hereto and incorporated into this Item 1.01 by reference.

Shared Services Agreement

On October 6, 2017, Forestar and D.R. Horton entered into a Shared Services Agreement (the “Shared Services Agreement”). Pursuant to the Shared Services Agreement, D.R. Horton will provide certain administrative, compliance, operational and procurement services to Forestar.

The foregoing description of the Shared Services Agreement is not complete and is qualified in its entirety by reference to the Shared Services Agreement, which is filed as Exhibit 10.2 hereto and incorporated into this Item 1.01 by reference.

Item 1.02. Termination of a Material Definitive Agreement.

On October 5, 2017, in connection with the entry by Forestar Real Estate into the LC Facility described in Item 1.01 above, Forestar terminated its existing Third Amended and Restated Revolving and Term Credit Agreement by and among Forestar, Forestar Real Estate, the subsidiaries of Forestar party thereto, Keybank National Association, as lender, swing line lender and agent, the lenders party thereto, and the other parties thereto (as amended, the “Prior Credit Facility”).

The Prior Credit Facility provided for a $50,000,000 revolving line of credit that was scheduled to mature on May 15, 2018. This Prior Credit Facility could be prepaid at any time without penalty and included a $50,000,000 sublimit for letters of credit, of which $14,597,712 were outstanding at the time of termination.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 above with respect to the LC Facility is incorporated into this Item 2.03 by reference.

Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

Under the Indenture, the completion of the Merger constitutes a Fundamental Change (as defined in the Indenture) of Forestar. In accordance with the Indenture, Forestar is required, within 10 days of the Effective Time, to give notice of the Fundamental Change to holders of the Convertible Notes and to make an offer to purchase (a “Fundamental Change Offer”) all or any part (equal to $1,000 or an integral multiple of $1,000) of every holder’s Convertible Notes pursuant to the Fundamental Change Offer on the terms set forth in the Indenture. In the Fundamental Change Offer, Forestar is required to offer to repurchase the Convertible Notes for a price in cash equal to 100% of the aggregate principal amount of Convertible Notes repurchased plus accrued and unpaid interest, if any, on the Convertible Notes repurchased, to the date of repurchase, which date is to be no less than 20 business days and no more than 35 business days from the date on which the notice is mailed.

Item 3.03. Material Modification of Rights of Securityholders.

Completion of Merger

The information set forth in the Introduction above regarding the Merger and in Item 5.03 below is incorporated into this Item 3.03 by reference.

In the Merger, each existing share of common stock, par value $1.00 per share, of Forestar issued and outstanding immediately prior to the Effective Time (the “Former Forestar Common Stock”) (except for shares of Forestar common stock that were held by Forestar as treasury shares or by Forestar or D.R. Horton or their respective subsidiaries) were converted into the right to receive, at the election of the holders of such shares of Former Forestar Common Stock, either an amount in cash equal to $17.75 (the “Cash Consideration”) or one new share of common stock, par value $1.00 per share, of Forestar (the “New Forestar Common Stock”), subject to proration procedures applicable to oversubscription and undersubscription for the Cash Consideration described in the Merger Agreement. The aggregate amount of Cash Consideration paid to holders of Former Forestar Common Stock in the Merger was $558,256,368. In the Merger, 10,487,873 shares of New Forestar Common Stock (representing approximately 25% of the outstanding shares of New Forestar Common Stock immediately after the Effective Time) were issued to the holders of Forestar common stock and 31,451,063 shares of New Forestar Common Stock (representing approximately 75% of the outstanding share of the New Forestar Common Stock immediately after the Effective Time) were issued to D.R. Horton.

Subject to the terms of the Merger Agreement, at the Effective Time, each award made or otherwise denominated in shares of Former Forestar Common Stock (an “Equity Award”) that was outstanding immediately prior to the Effective Time under Forestar’s benefit plans was cancelled and of no further force or effect as of the Effective Time. In exchange for the cancellation of such Equity Awards, each holder of such Equity Award is entitled to receive from Forestar the Cash Consideration for each share of Former Forestar Common Stock

underlying such Equity Award (plus payment of cash of all accrued dividend equivalents, if any, with respect to such Equity Awards and, in the case of Equity Awards that are stock options or stock appreciation rights, less the aggregate exercise or strike price thereunder, but not less than $0), whether or not otherwise vested as of the Effective Time. With respect to any Forestar market-leveraged stock units, the number of shares of Former Forestar Common Stock subject to such Equity Awards will be determined pursuant to the terms set forth in the applicable award agreements and based on a per share value equal to $17.75 plus reinvested dividends, if any.

New Forestar Common Stock will continue to be listed and traded on the New York Stock Exchange under the ticker symbol, “FOR.”

The foregoing description of the Merger does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which was attached as Exhibit 2.1 to Forestar’s Current Report on Form 8-K filed with the SEC on June 29, 2017, and is incorporated into this Item 3.03 by reference.

Expiration of Tax Benefits Preservation Plan

On October 5, 2017 immediately prior to the Effective Time, the Tax Benefit Preservation Plan, dated as of January 5, 2017 (as amended, the “Plan”), between Forestar and Computershare Trust Company, N.A., expired pursuant to its terms and all “Rights” (as defined in the Plan) previously distributed to the holders of Forestar’s common stock pursuant to the Plan expired.

Item 5.01. Changes in Control of Registrant.

The information set forth in Item 1.01 and Item 3.03 is incorporated into this Item 5.01 by reference. D.R. Horton funded the payment of the Cash Consideration with cash on hand.

Item 5. 02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Board of Directors

On October 5, 2017, effective upon the closing of the Merger and in accordance with the terms of the Merger Agreement, the size of the board of directors of Forestar (the “Board”) was decreased to five members, and James A. Rubright, Daniel B. Silvers, Richard M. Smith, Richard D. Squires and Phillip J. Weber resigned from their positions as directors of Forestar. There were no disagreements between such resigning Forestar directors with Forestar relating to Forestar’s operations, policies or practices.

M. Ashton Hudson continues to serve as a director of Forestar. On October 5, 2017, effective upon the closing of the Merger, the following individuals were appointed by the Board as directors of Forestar pursuant to the terms of the Merger Agreement and the Stockholder’s Agreement to fill the vacancies resulting from the resignations of the individuals referred to above: Samuel R. Fuller, G.F. (Rick) Ringler, III, Donald C. Spitzer and Donald J. Tomnitz. Donald J. Tomnitz was elected as Chairman of the Board.

Effective October 6, 2017, at a meeting of the Board of Directors, the Board’s committees were constituted as follows:

Audit Committee : Samuel R. Fuller, M. Ashton Hudson, G.F. (Rick) Ringler, III and Donald C. Spitzer (Chair);

Nominating and Corporate Governance Committee : Samuel R. Fuller, M. Ashton Hudson, G.F. (Rick) Ringler, III (Chair) and Donald C. Spitzer;

Compensation Committee : Samuel R. Fuller (Chair), M. Ashton Hudson, G.F. (Rick) Ringler, III; and

Donald C. Spitzer; and

Executive Committee : Donald J. Tomnitz (Chair).

The newly elected directors, aside from Mr. Tomnitz, executive Chairman of the Board, will receive: (1) a $50,000 annual retainer, (2) a fee of $5,000 per year for each member of the Audit Committee; (3) a fee of $5,000 per year for each member of the Nominating and Governance Committee; (4) a fee of $5,000 per year for each member of the Compensation Committee; and (5) a fee of $2,500 per year for service as the Chairman of the Audit Committee, Nominating and Governance Committee, or Compensation Committee. All such annual fees are pro-rated and paid quarterly. In addition, each new non-management director will receive a grant of 6,000 restricted stock units, which units will vest in three equal installments on each of the first three anniversaries of the grant date. Mr. Tomnitz does not receive any additional compensation from the Company for his service as a director.

None of Messrs. Tomnitz, Fuller, Ringler or Spitzer has engaged in any related party transaction with Forestar that would require disclosure pursuant to Item 404(a) of Regulation S-K. Each of Messrs. Tomnitz, Fuller, Ringler and Spitzer were designated by D.R. Horton and appointed to the Board pursuant to the terms of the Merger Agreement and the Stockholder’s Agreement.

Executive Officers

In connection with the consummation of the Merger, effective October 5, 2017, Donald J. Tomnitz, age 69, was appointed as Executive Chairman of Forestar.

Mr. Tomnitz served as the Vice Chairman and Chief Executive Officer of D.R. Horton, Forestar’s majority stockholder, from November 1998 to September 2014. From 1996 until 1998, Mr. Tomnitz was President of D.R. Horton’s Homebuilding Division. In 1998, he was elected an Executive Vice President of D.R. Horton and in 2000, he became President of D.R. Horton as well. Before joining D.R. Horton, Mr. Tomnitz was a Captain in the U.S. Army, a Vice President of RepublicBank of Dallas, N.A., and a Vice President of Crow Development Company, a Trammell Crow Company. Mr. Tomnitz holds a Bachelor of Arts Degree in Economics from Westminster College and a Masters of Business Administration in Finance from Western Illinois University.

Mr. Tomnitz does not have any family relationship with any of Forestar’s executive officers or directors nor has he engaged in any related party transaction with Forestar that would require disclosure pursuant to Item 404(a) of Regulation S-K. There were no understandings or other agreements or arrangements between Mr. Tomnitz and any other person pursuant to which Mr. Tomnitz was chosen to become an officer.

In connection with his appointment as Executive Chairman, the Compensation Committee of the Board (the “Compensation Committee”) set Mr. Tomnitz’s base salary at $300,000 and awarded him a performance bonus in an amount of up to $400,000, which may be earned based upon the achievement of certain performance targets to be established by the Compensation Committee Forestar’s annual incentive plan. In addition, the independent members of the Board approved a grant of 12,000 restricted stock units to Mr. Tomnitz, which units will vest in three equal installments on each of the first three anniversaries of the grant date.

Also in connection with the consummation of the Merger, effective October 6, 2017, Michael Quinley, who formerly served as President — Community Development of Forestar, was named a Region President of Forestar. No changes were made to Mr. Quinley’s compensation in connection with his appointment to the new position.

Each of Phillip J. Weber, Forestar’s Chief Executive Officer, and Charles D. Jehl, Forestar’s Chief Financial Officer, continue to serve in such roles following the consummation of the Merger.

Indemnification

Pursuant to indemnification agreements entered into by Forestar with each director and Executive Officer of Forestar (each, an “Indemnitee”), if an Indemnitee is, or is threatened to be made, a party to or participant in any threatened, pending or completed proceeding, Forestar will, under the circumstances and to the extent provided for in the indemnification agreement, indemnify, and advance certain expenses to, the Indemnitee to the fullest extent permitted by applicable law and to any greater extent as such law may thereafter from time to time permit. The indemnification agreement further provides procedures for the determination of an Indemnitee’s right to receive indemnification and the advancement of expenses. This summary of the form of indemnification agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the form of indemnification agreement, which is filed as Exhibit 10.3 hereto.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

In connection with the completion of the Merger and pursuant to the terms of the Merger Agreement, on October 5, 2017, Forestar amended and restated its certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) and its bylaws (the “Amended and Restated Bylaws”).

The Amended and Restated Certificate of Incorporation was filed with the Delaware Secretary of State on October 5, 2017 and is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated into this Item 5.03 by reference.

The Amended and Restated Bylaws are filed as Exhibit 3.2 to this Current Report on Form 8-K and are incorporated into this Item 5.03 by reference.

As a consequence of the adoption of the Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws, the rights of the holders of the New Forestar Common Stock were modified. The material terms of the Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws and the general effect upon the rights of holders of the New Forestar Common Stock are described beginning on page 120 of Amendment No. 1 to Forestar’s Registration Statement on Form S-4 filed with the SEC on August 23, 2017 in the section entitled “ Comparison of Rights of Stockholders Before and After the Merger ,” which section is incorporated into this Item 5.03 by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

2.1		Agreement and Plan of Merger, dated as of June 29, 2017, by and among D.R. Horton, Inc., Force Merger Sub, Inc. and Forestar Group Inc. (incorporated by reference to Exhibit 2.1 to Forestar’s Current Report on Form 8-K filed with the SEC on June 29, 2017)
3.1		Amended and Restated Certificate of Incorporation of Forestar Group Inc.
3.2		Amended and Restated Bylaws of Forestar Group Inc.
4.1		Third Supplemental Indenture, dated October 5, 2017, between Forestar Group Inc. and U.S. Bank National Association
10.1		Letter of Credit Facility Agreement, dated October 5, 2017, among Forestar Group Inc., Keybank National Association, as lender and administrative agent, and Keybanc Capital Markets, as sole arranger and sole bookrunner
10.2		Shared Services Agreement, dated October 6, 2017, between Forestar Group Inc. and D.R. Horton, Inc.
10.3		Form of Indemnification Agreement

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FORESTAR GROUP INC.

Dated: October 10, 2017	By:	/s/ Thomas Montano
		Name:	Thomas Montano
		Title:	Vice President and Secretary

Exhibit 3.1

SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
FORESTAR GROUP INC.

ARTICLE I
NAME

The name of the corporation (hereinafter called the “ Corporation ”) is Forestar Group Inc.

ARTICLE II
AGENT

The address of the Corporation’s registered office in the State of Delaware is Corporation Service Company, 251 Little Falls Drive, Wilmington, Delaware 19808, in the County of New Castle. The name of the Corporation’s registered agent at such address is Corporation Service Company.

ARTICLE III
PURPOSE

The purposes of the Corporation are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “ GCL ”).

ARTICLE IV
STOCK

Section 4.1 The total number of shares of all classes of stock that the Corporation shall have authority to issue is 225,000,000, consisting of (1) 25,000,000 shares of Preferred Stock, par value $0.01 per share (“ Preferred Stock ”), and (2) 200,000,000 shares of Common Stock, par value $1.00 per share (“ Common Stock ”). The consideration for the issuance of the shares shall be paid to or received by the Corporation in full before the issuance and shall not be less than the par value per share. The consideration shall be as permitted by the laws of the State of Delaware. In the absence of actual fraud in the transaction, the judgment of the Board of Directors as to the value of such consideration shall be conclusive. Upon payment of such consideration, such shares shall be deemed to be fully paid and nonassessable. In the case of a stock dividend, that part of the surplus of the Corporation that is transferred to stated capital upon the issuance of shares as a stock dividend shall be deemed to be consideration for such issuance.

Section 4.2 Subject to any qualifications, limitations and restrictions set forth elsewhere in this Article IV or in Article VII, the Board of Directors is hereby expressly authorized, by resolution or resolutions from time to time adopted, to provide, out of the unissued shares of Preferred Stock, for the issuance of serial Preferred Stock. Before any shares of any such series are issued, subject to any qualifications, limitations and restrictions set forth elsewhere in this Article IV or in Article VII, the Board of Directors shall fix and state, and hereby is expressly empowered to fix, by resolution or resolutions, the designations, preferences, and relative, participating, optional or other special rights of the shares of each such series, and

the qualifications, limitations or restrictions thereon, including but not limited to, determination of any of the following:

(a) the designation of such series, the number of shares to constitute such series and the stated value thereof if different from the par value thereof;

(b) whether the shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may be full or limited;

(c) the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation that such dividends shall bear to the dividends payable on any shares of stock of any other class or any other series of this class;

(d) whether the shares of such series shall be subject to redemption by the Corporation, other than as set forth in Section 4.4, and, if so, the times, prices and other terms and conditions of such redemption;

(e) the amount or amounts payable upon shares of such series upon, and the rights of the holders of such series in, the voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Corporation;

(f) whether the shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;

(g) whether the shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or any other series of this class or any other class or classes of securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange;

(h) the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation of, the Common Stock or shares of stock of any other class or any other series of this class;

(i) the conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issue of any additional stock, including additional shares of such series or of any other series of this class or of any other class; and

(j) any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions thereof.

The powers, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. All shares of any one series of Preferred Stock shall be identical in all respects with all other shares of such series, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon shall be cumulative. The Board of Directors may increase the number of shares of the Preferred Stock designated for any existing series by a resolution adding to such series authorized and unissued shares of the Preferred Stock not designated for any other series. The Board of Directors may decrease the number of shares of Preferred Stock designated for any existing series by a resolution subtracting from such series unissued shares of the Preferred Stock designated for such series, and the shares so subtracted shall become authorized, unissued, and undesignated shares of the Preferred Stock.

Section 4.3 Each holder of Common Stock shall be entitled to one vote for each share of Common Stock held of record on all matters on which stockholders generally are entitled to vote. Subject to the provisions of law and the rights of the Preferred Stock and any other class or series of stock having a preference as to dividends over the Common Stock then outstanding, dividends may be paid on the Common Stock out of assets legally available for dividends, but only at such times and in such amounts as the Board of Directors shall determine and declare. Upon the dissolution, liquidation or winding up of the Corporation, after any preferential amounts to be distributed to the holders of the Preferred Stock and any other class or series of stock having a preference over the Common Stock then outstanding have been paid or declared and set apart for payment, the holders of the Common Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by them, respectively.

Section 4.4 Notwithstanding any other provision of this Certificate of Incorporation to the contrary, but subject to the provisions of any resolution or resolutions of the Board of Directors adopted pursuant to this Article IV creating any series of Preferred Stock or any other class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, outstanding shares of Common Stock, Preferred Stock or any other class or series of stock of the Corporation, shall always be subject to redemption by the Corporation, by action of the Board of Directors, if in the judgment of the Board of Directors such action should be taken, pursuant to Section 151(b) of the General Corporation Law of the State of Delaware (or by any other applicable provision of law), to the extent necessary to prevent the loss or secure the reinstatement of any license or franchise from any governmental agency held by the Corporation or any Subsidiary to conduct any portion of the business of the Corporation or such Subsidiary, which license or franchise is conditioned upon some or all of the holders of the Corporation’s stock of any class or series possessing prescribed qualifications. The terms and conditions of such redemption shall be as follows:

(a) the redemption price of the shares to be redeemed pursuant to this Section 4.4 shall be equal to the Fair Market Value of such shares;

(b) the redemption price of such shares may be paid in cash, Redemption Securities or any combination thereof;

(c) if less than all the shares held by Disqualified Holders are to be redeemed, the shares to be redeemed shall be selected in such manner as shall be determined by the Board of Directors, which may include selection first of the most recently purchased shares thereof, selection by lot or selection in any other manner determined by the Board of Directors;

(d) at least 30 days written notice of the Redemption Date shall be given to the record holders of the shares selected to be redeemed (unless waived in writing by any such holder), provided that the Redemption Date may be the date on which written notice shall be given to record holders if the cash or Redemption Securities necessary to effect the redemption shall have been deposited in trust for the benefit of such record holders and subject to immediate withdrawal by them upon surrender of the stock certificates for their shares to be redeemed;

(e) from and after the Redemption Date, any and all rights of whatever nature, which may be held by the owners of shares selected for redemption (including without limitation any rights to vote or participate in dividends declared on stock of the same class or series as such shares), shall cease and terminate and they shall thenceforth be entitled only to receive the cash or Redemption Securities payable upon redemption; and

(f) such other terms and conditions as the Board of Directors shall determine.

For purposes of this Section 4.4:

(i) “ Disqualified Holder ” shall mean any holder of shares of stock of the Corporation of any class or series whose holding of such stock may result in the loss of any license or franchise from any governmental agency held by the Corporation or any Subsidiary to conduct any portion of the business of the Corporation or any Subsidiary.

(ii) “ Fair Market Value ” of a share of the Corporation’s stock of any class or series shall mean the average (unweighted) Closing Price for such a share for each of the 45 most recent days on which shares of stock of such class or series shall have been traded preceding the day on which notice of redemption shall be given pursuant to Section 4.4(d); provided , however , that if shares of stock of such class or series are not traded on any registered securities exchange or in the over-the-counter market, “ Fair Market Value ” shall be determined by the Board of Directors in good faith; and provided further , however , that “ Fair Market Value ” as to any stockholder who purchased his stock within 120 days of a Redemption Date need not (unless otherwise determined by the Board of Directors) exceed the purchase price paid by him. “ Closing Price ” on any day means the reported last sales price regular way or, in case no such sale takes place, the average of the reported closing bid and asked prices regular way on the NYSE Composite Tape, or, if stock of the class or series in question is not quoted on such Composite Tape, on the New York Stock Exchange (the “ NYSE ”), or, if such stock is not listed on such Exchange, on the principal United States registered securities exchange on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing sales price or bid quotation for such stock on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such prices or quotations are available, the fair market value on the day in question as determined by the Board of Directors in good faith.

(iii) “ Redemption Date ” shall mean the date fixed by the Board of Directors for the redemption of any shares of stock of the Corporation pursuant to this Section 4.4.

(iv) “ Redemption Securities ” shall mean any debt or equity securities of the Corporation, any Subsidiary or any other corporation, or any combination thereof, having such terms and conditions as shall be approved by the Board of Directors and which, together with any cash to be paid as part of the redemption price, in the opinion of any nationally recognized investment banking firm selected by the Board of Directors (which may be a firm that provides other investment banking, brokerage or other services to the Corporation), has a value, at the time notice of redemption is given pursuant to Section 4.4(d), at least equal to the Fair Market Value of the shares to be redeemed pursuant to this Section 4.4 (assuming, in the case of Redemption Securities to be publicly traded, such Redemption Securities were fully distributed and subject only to normal trading activity).

(v) “ Subsidiary ” shall mean any corporation more than 50% of whose outstanding stock having ordinary voting power in the election of directors is owned by the Corporation, by a Subsidiary or by the Corporation and one or more Subsidiaries.

ARTICLE V
BOARD OF DIRECTORS

Section 5.1 At all times when the ratio, expressed as a percentage, of (i) the number of votes entitled to be cast generally in the election of directors (“ Votes ”) by the Common Stock and any class of capital stock or other securities of the Corporation other than the Common Stock that are entitled to vote generally in the election of directors (the “ Voting Securities ”) Beneficially Owned by D.R. Horton, Inc. (the “ Stockholder ”) to (ii) the aggregate Votes entitled to be cast by all then-outstanding Voting Securities (such ratio, the “ Stockholder’s Voting Percentage ”) is twenty percent (20%) or more, the number of directors constituting the entire Board of Directors shall be five, unless otherwise agreed in writing between the Corporation (as approved by a majority of the Independent Directors) and the Stockholder. Otherwise, the number of directors constituting the entire Board of Directors shall be fixed by, or in the manner provided in, the Bylaws of the Corporation, or as provided in accordance with any Certificate of Designation. For purposes of this Certificate of Incorporation, the Stockholder’s Voting Percentage shall include the cumulative number of Votes entitled to be cast by the holders of the Voting Securities Beneficially Owned by the Stockholder and its Subsidiaries. For purposes of this Certificate of Incorporation, “ Independent Directors ” shall mean any directors to be considered “independent” under the rules of the Securities and Exchange Commission (the “ SEC ”), the NYSE and any other or additional exchange on which the securities of the Corporation are listed, including for purposes of Rule 10A-3 promulgated under the Securities Exchange Act of 1934, as amended (or any successor rule thereto).

Section 5.2 All of the directors of the Corporation shall be of one class and shall be elected annually. Each director shall hold office until the next annual meeting of stockholders and, the foregoing notwithstanding, shall serve until his successor shall have been duly elected and qualified or until his earlier death, resignation, retirement, disqualification or removal.

Section 5.3 At all times when the Stockholder’s Voting Percentage is twenty percent (20%) or more, the Stockholder shall have the right to designate a number of individuals to the Board of Directors (“ Stockholder Designees ”) equal to the Stockholder’s Voting Percentage multiplied by the total number of directors of the Board of Directors that the Corporation would have if there were no vacancies, rounded up to the nearest whole number (and in any event not less than one), and the Corporation and the Stockholder shall use their reasonable best efforts to cause such Stockholder Designees to be appointed or elected to the Board of Directors. The Nominating and Governance Committee shall have the right to designate the remaining number of individuals (and in any event not less than one) to the Board of Directors (the “ Non-Stockholder Designees ”), and the Corporation and the Stockholder shall use their reasonable best efforts to cause such Non-Stockholder Designees to be appointed or elected to the Board of Directors and to cause the Legacy Director to be nominated as a Non-Stockholder Designee at the Corporation’s annual meeting to be held in 2018. Neither the Board of Directors nor any committee thereof shall designate an individual as a nominee for election or appointment to the Board of Directors until the Stockholder has been afforded the opportunity to exercise its rights to appoint the Stockholder Designees in accordance with this Section 5.3. At all times when the Stockholder’s Voting Percentage is twenty percent (20%) or more, the Stockholder shall have the right to designate the Executive Chairman of the Company.

For purposes of Article V, Article VI and Article VII,

(i) “ Beneficially Own ” shall mean, with respect to any securities, (i) having “beneficial ownership” of such securities for purposes of Rule 13d-3 or 13d-5 under the Exchange Act (or any successor statute or regulation), (ii) having the right to become the Beneficial Owner of such securities (whether such right is exercisable immediately or only after the passage of time or the occurrence of conditions) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise, or (iii) having an exercise or conversion privilege or a settlement payment or mechanism with respect to any option, warrant, convertible security, stock appreciation right, swap agreement or other security, contract right or derivative position, whether or not currently exercisable, at a price related to the value of the securities for which Beneficial Ownership is being determined or a value determined in whole or part with reference to, or derived in whole or in part from, the value of the securities for which Beneficial Ownership is being determined that increases in value as the value of the securities for which Beneficial Ownership is being determined increases or that provides to the holder an opportunity, directly or indirectly, to profit or share in any profit derived from any increase in the value of the securities for which Beneficial Ownership is being determined (excluding any interests, rights, options or other securities set forth in Rule 16a-1(c)(1)-(5) or (7) promulgated pursuant to the Exchange Act).

(ii) “ Legacy Director ” shall mean one individual from the Board of Directors currently serving as the date hereof designated by mutual agreement of the Corporation and the Stockholder prior to the date hereof.

(iii) “ Subsidiary ” shall mean, with respect to any Person, any entity, whether incorporated or unincorporated, of which (i) voting power to elect a majority of the board

of directors, management committee or others performing similar functions with respect to such other Person is held by the first mentioned Person and/or by any one or more of its Subsidiaries, (ii) a general partnership interest is held by such first mentioned Person and/or by any one or more of its Subsidiaries (excluding partnerships where such first mentioned Person (A) does not Beneficially Own a majority of the general partnership interests or voting interests and (B) does not otherwise Control such entity, directly or indirectly, by contract, arrangement or otherwise), or (iii) at least 50% of the equity interests of such other Person is, directly or indirectly, owned or Controlled by such first mentioned Person and/or by any one or more of its Subsidiaries.

Section 5.4 Any vacancies of the Board of Directors resulting from resignation, retirement, death or other removal (with or without cause) from office may be filled as provided in the Bylaws of the Corporation; provided that upon any such vacancy resulting in any Stockholder Designee ceasing to serve as a director at a time when the Stockholder has the right under Section 5.3 to designate a replacement Stockholder Designee, (i) the Stockholder shall be entitled promptly to designate a replacement Stockholder Designee, and (ii) the Corporation shall cause the prompt appointment or election of such replacement Stockholder Designee as a director; provided further that upon any such vacancy resulting in any Legacy Director or Non-Stockholder Designee ceasing to serve as a director, (i) the Nominating and Governance Committee shall be entitled promptly to designate a replacement Non-Stockholder Designee and (ii) the Corporation and the Stockholder shall, and the Stockholder shall cause each member of the Stockholder Group and its and their respective Affiliates and Representatives to, cause the prompt appointment or election of such replacement Non-Stockholder Designee as a director. For purposes of this Section 5.4, (a) “ Company Group ” shall mean the Corporation, each Subsidiary of the Corporation and each other Person that is Controlled either directly or indirectly by the Company, (b) “ Representatives ” shall mean, with respect to any Person, such Person’s officers, directors employees, accountants, counsel and consultants, and (c) “ Stockholder Group ” shall mean the Stockholder and each Person (other than any member of the Company Group) that is an Affiliate of the Stockholder.

Section 5.5 Advance notice of nominations for the election of directors shall be given in the manner and to the extent provided in the Bylaws of the Corporation.

Section 5.6 Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.

Section 5.7 Subject to the rights of the holders of any class or series of Preferred Stock then outstanding, any director may be removed from office at any time, with or without cause, by the affirmative vote of the holders of at least a majority of the voting power of all of the outstanding shares of the Corporation’s capital stock entitled to elect such director, voting separately as a class, at a duly organized meeting of stockholders or by written consent; provided that no Stockholder Designee may be removed under this Section 5.7 without the prior written consent of the Stockholder.

Section 5.8 Notwithstanding anything contained herein to the contrary, if at any time the Stockholder’s Voting Percentage is less than fifteen percent (15%), all of the rights of the

Stockholder set forth in this Article V shall forever terminate and be of no further force and effect.

ARTICLE VI
COMMITTEES

Section 6.1 Board Committees . At all times when the Stockholder’s Voting Percentage is twenty percent (20%) or more:

(a) no committee of the Board of Directors shall have more than three members unless otherwise agreed in writing between the Corporation (as approved by a majority of the Independent Directors) and the Stockholder;

(b) the Corporation and the Stockholder shall cause the Board of Directors to maintain a Nominating and Governance Committee;

(c) the Corporation and the Stockholder shall cause each committee of the Board to include in its membership a number of Stockholder Designees equal to the Stockholder’s Voting Percentage multiplied by the total number of members that such committee would have if there were no vacancies on such committee, rounded up to the nearest whole number (and in any event not less than one), except to the extent that such membership would violate the rules of the SEC, the NYSE or any other or additional exchange on which the securities of the Corporation are listed, or any other applicable securities laws. Each committee of the Board shall include at least one Non-Stockholder Designee, and, notwithstanding the preceding sentence, the number of Stockholder Designees included in the membership of any committee of the Board shall be reduced to ensure that each committee of the Board includes at least one Non-Stockholder Designee; and

(d) the Legacy Director shall be a member of the Nominating and Governance Committee immediately following the date hereof, and the Corporation and the Stockholder shall cause, and the Stockholder shall cause each member of the Stockholder Group and its and their respective Affiliates and Representatives to cause, (A) the Legacy Director to serve on the Nominating and Governance Committee for so long as such Legacy Director serves on the Board and (B) during the fifteenth-month period commencing on the date hereof, (x) the Nominating and Governance Committee to have three members and (y) the Legacy Director, for so long as such Legacy Director serves on the Board of Directors, and at least one additional Independent Director to serve on the Nominating and Governance Committee.

Section 6.2 Investment Committee

(a) The Corporation shall establish, and thereafter maintain, an Investment Committee (which shall not be considered a committee of the Board) (the “ Investment Committee ”), the members of which shall be officers or employees of the Corporation who are (A) experienced professionals in the land acquisition and development business or (B) the Chief Executive Officer, the Chief Financial Officer, the General Counsel or the President of Community Development (or any person serving in an equivalent role). Subject to Section 7.1, the Investment Committee shall be vested with sole responsibility over investment decisions of the Corporation and its Subsidiaries (each, an “ Investment Decision ”) involving, in any single

transaction or series of related transactions, Capital Expenditures of $20,000,000 or less (each such transaction or series of related transactions, an “ Investment Committee Approval Transaction ”). All decisions of the Investment Committee shall require the approval of a majority of the members of the Investment Committee. For purposes of this Certificate of Incorporation, (a) “ Capital Expenditure ” shall mean a capital expenditure made or incurred by the Company or any of its Subsidiaries, including property acquisitions and the incurrence of any asset-level or secured Indebtedness; provided, that, in the case of an acquisition of land for a development of residential lots, the dollar amount of such Capital Expenditure shall be deemed to include the purchase price of such development, plus the total expected development costs required (i) to prepare the initial phase of lots for the construction of homes, in the case of a development to be conducted in phases, or (ii) to prepare the land for the construction of homes, in the case of a development not to be conducted in phases and (b) “ Indebtedness ” shall mean, with respect to any Person, (i) all indebtedness for money borrowed and any obligations evidenced by bonds, debentures, notes or similar debt instruments; (ii) all liabilities secured by any mortgage, deed of trust, deed to secure debt, pledge, security interest, lien, charge or other encumbrance existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed; (iii) all guarantees, endorsements and other contingent obligations whether direct or indirect in respect of indebtedness of others, including any obligation to supply funds to or in any manner to invest directly or indirectly in a Person, to purchase indebtedness, or to assure the owner of indebtedness against loss through an agreement to purchase goods, supplies or services for the purpose of enabling the debtor to make payment of the indebtedness held by such owner, through indemnity or otherwise, and the obligation to reimburse the issuer in respect of any letter of credit; (iv) any obligation as a lessee or obligor under a capitalized lease; (v) all reimbursement obligations with respect to letters of credit or similar instruments issued by a Person; and (vi) all indebtedness, obligations or other liabilities under or with respect to (x) interest rate swap, collar, cap or similar agreements providing interest rate protection and (y) foreign currency exchange agreements.

(b) The Executive Chairman of the Corporation, if there be one, shall be a member of the Investment Committee at all times. The other members of the Investment Committee shall be appointed by the Nominating and Governance Committee.

(c) Any Investment Decision that does not involve an Investment Committee Approval Transaction shall be subject to approval by the Board of Directors.

(d) Notwithstanding anything contained herein to the contrary, if at any time the Stockholder’s Voting Percentage is less than fifteen percent (15%), all of the obligations of the Corporation and rights of the Stockholder set forth in this Article VI shall forever terminate and be of no further force and effect.

ARTICLE VII
CONSENTS

Section 7.1 In addition to any other vote, consent or approval required by the Corporation’s Organizational Documents, the Stockholder’s Agreement or applicable law, for so long as the Stockholder’s Voting Percentage is 35% or more, the Corporation shall not, and shall cause its Subsidiaries not to, take or agree to take any of the following actions, in each case

without the prior written consent of the Stockholder, which consent the Stockholder may withhold in its sole discretion:

(a) declare or make any extraordinary or in-kind dividend with respect to any of the equity (or equity-linked) securities of the Corporation or any of its Subsidiaries, other than a dividend on a pro rata basis with respect to all stockholders of the Corporation or a dividend to the Corporation or any of its wholly owned Subsidiaries;

(b) issue, sell or place any new class of capital stock, equity or equity-linked securities or other Voting Securities of the Corporation or any of its Subsidiaries;

(c) issue any equity or equity-linked securities or other Voting Securities of the Corporation or any of its Subsidiaries, in any single transaction or series of related transactions: (i) in the case of securities issued pursuant to an option plan, equity plan, employment agreements, compensation arrangements or otherwise to managers, officers, directors or employees of the Corporation, constituting 1% or more of the then outstanding shares of Common Stock in any calendar year; or (ii) in any case, constituting 10% or more of the then outstanding shares of Common Stock;

(d) create, incur, issue, assume or otherwise become liable for (including through a merger, acquisition or otherwise) or refinance or guarantee any Indebtedness, in a single or series of related transactions, that would result in the Corporation and its Subsidiaries, on a consolidated basis, having or being liable for Indebtedness in an aggregate principal amount that would cause the Total Leverage Ratio to exceed 40%;

(e) select, terminate or remove the Executive Chairman, the Chief Executive Officer, the Chief Financial Officer, the General Counsel or the President of Community Development (or any person serving in an equivalent role);

(f) change or adopt any compensation arrangements for the Executive Chairman, the Chief Executive Officer, the Chief Financial Officer, the General Counsel or the President of Community Development (or any Person serving in an equivalent role);

(g) make or approve any fundamental change in the Corporation’s business of developing residential and mixed-use real estate;

(h) acquire (including by way of merger, exchange offer, recapitalization, reorganization, liquidation or dissolution) any business, debt or equity interests, operations or assets of any Person, or make any investment in or loan to any Person, in any single transaction or series of related transactions, involving Capital Expenditures in excess of $20,000,000;

(i) (A) effect or approve any voluntary liquidation, dissolution or winding-up of the business and affairs of the Corporation or any of its Subsidiaries; (B) make or approve any filing of any bankruptcy petition or assignment for the benefit of creditors generally; (C) commence any voluntary proceeding that seeks reorganization or other relief under any bankruptcy or similar law; (D) seek the appointment of a trustee, receiver, custodian or other similar official with respect to the Corporation or any of its Subsidiaries or any substantial part of the Corporation’s or any of its Subsidiaries’ property; (E) consent to any involuntary bankruptcy

or similar proceeding; or (F) authorize, approve, adopt or give effect to any resolution or agreement or plan of voluntary liquidation, dissolution or winding-up of the Corporation or any of its Subsidiaries;

(j) enter into or permit any Subsidiary to enter into any strategic alliance or commercial agreement with a Person other than the Stockholder or a Subsidiary of the Stockholder that is of a nature similar to the Master Supply Agreement, of even date herewith, by and between the Corporation and the Stockholder; or

(k) effect any election of a Physical Settlement, Cash Settlement or Combination Settlement (each as defined in the First Supplemental Indenture) of Convertible Senior Notes in connection with any election by a holder of Convertible Senior Notes to convert its Convertible Senior Notes in accordance with the terms of the First Supplemental Indenture.

For purposes of this Article VII:

(i) “ Convertible Senior Notes ” shall mean the 3.75% Convertible Senior Notes due 2020 issued under the First Supplemental Indenture.

(ii) “ First Supplemental Indenture ” shall mean the First Supplemental Indenture, dated as of February 26, 2013, between the Corporation and U.S. Bank National Association, as trustee.

(iii) “ Organizational Documents ” shall mean, with respect to any Person, such Person’s articles or certificate of association, incorporation, formation or organization, by-laws, limited liability company agreement, partnership agreement or other constituent document or documents, each in its currently effective form as amended from time to time.

(iv) “ Related Party Transaction ” shall mean any transaction between any member of the Company Group, on one hand, and any member of the Stockholder Group, on the other hand.

(v) “ Stockholder’s Agreement ” shall mean the Stockholder’s Agreement, by and between the Corporation and the Stockholder, dated as of October [5], 2017.

(vi) “ Total Debt ” shall mean an amount equal to the sum of all liability balances classified as “Debt” on the Corporation’s most recent monthly consolidated balance sheet.

(vii) “ Total Equity ” shall mean an amount equal to the balance of “Total Equity” on the Corporation’s most recent monthly consolidated balance sheet.

(viii) “ Total Leverage Ratio ” shall mean an amount equal to the quotient of (A) Total Debt, divided by (B) the sum of Total Debt and Total Equity.

Section 7.2 In addition to any other vote, consent or approval required by the Corporation’s Organizational Documents, the Stockholder’s Agreement or applicable law, at all

times when the Stockholder’s Voting Percentage is 35% or more, no member of the Company Group shall, subject to the provisos in Section 7.2(a) and Section 7.2(d), take or agree to take any of the following actions, in each case without approval of a majority of the Independent Directors who are not Affiliated Directors:

(a) enter into, amend, modify, terminate or approve any Related Party Transaction, or enter into any waiver, consent or election thereunder, including any amendment or modification to, termination of, or waiver, consent or election under, the Master Supply Agreement, in each case except to the extent any of the foregoing constitutes, or is the subject of, an Investment Committee Approval Transaction;

(b) amend, modify or terminate, or enter into any waiver, consent or election under, the Stockholder’s Agreement or enter into any merger or business combination with any member of the Stockholder Group;

(c) consummate or approve any merger, business combination or similar transaction as to the Corporation in which the Stockholder receives consideration for its shares of the Common Stock of the Corporation that is greater in value on a per share basis than that received by the by holders of Minority Common Stock, or represents a different form of consideration from the form of consideration received by holders of Minority Common Stock for their shares of Common Stock; or

(d) settle any claim between the Corporation and the Stockholder, except to the extent such claim constitutes, or is the subject of, an Investment Committee Approval Transaction.

For purposes of this Certificate of Incorporation, “ Minority Common Stock ” shall mean shares of Common Stock not Beneficially Owned by a member of the Stockholder Group.

Section 7.3 In addition to any other vote, consent or approval required by the Corporation’s Organizational Documents, the Stockholder’s Agreement or applicable law, for so long as the Stockholder’s Voting Percentage is twenty percent (20%) or more, the Corporation shall not amend or seek to amend its Organizational Documents or the Organizational Documents of any Subsidiary of the Corporation (including, for the avoidance of doubt, the creation of any shareholder rights plan or other amendment intended to limit the Stockholder’s ownership or acquisition of securities of the Corporation or any Subsidiary of the Corporation) in any manner that could limit, restrict or adversely affect the Stockholder’s rights under the Stockholder’s Agreement. In addition to any other vote, consent or approval required by the Corporation’s Organizational Documents, the Stockholder’s Agreement or applicable law, the Corporation shall not amend or seek to amend its Organizational Documents or the Organizational Documents of any Subsidiary of the Corporation (including, for the avoidance of doubt, the creation of any shareholder rights plan or other amendment intended to limit ownership or acquisition of securities of the Corporation or any Subsidiary of the Corporation by holders of Minority Common Stock) in any manner that could limit, restrict or adversely affect the rights of holders of Minority Common Stock under the Stockholder’s Agreement.

Section 7.4 Notwithstanding anything contained herein to the contrary, if at any time the Stockholder’s Voting Percentage is less than fifteen percent (15%), all of the obligations of the Corporation and rights of the Stockholder set forth in Section 7.1, Section 7.2 and Section 7.3 shall forever terminate and be of no further force and effect.

ARTICLE VIII

Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing setting forth the action so taken shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

ARTICLE IX

In furtherance and not in limitation of the powers conferred upon it by law, subject to any qualifications, limitations and restrictions set forth in Article VII, the Board of Directors is expressly authorized to adopt, repeal, alter or amend the Bylaws of the Corporation by the vote of a majority of the entire Board of Directors.

ARTICLE X

Section 10.1 Except as otherwise provided in the Certificate of Incorporation, without any accountability to the Corporation or any stockholder, (a) the Stockholder and its Affiliates, and their respective officers, directors, shareholders, partners, stockholders, agents and employees (collectively, the “ Corporate Opportunities Group ”), shall not in any way be prohibited or restricted from engaging or investing in, independently or with others, any business opportunity of any type or description; (b) subject to the proviso in Section 10.1(c), the Corporation shall not have any right in or to such other business opportunities of the Stockholder or any Person in the Corporate Opportunities Group or to the income or proceeds derived therefrom; and (c) neither the Stockholder nor any Person in the Corporate Opportunities Group shall be obligated to present any business opportunity to the Corporation or any other stockholder, even if the opportunity is of the character that, if presented to the Corporation, could be taken by the Corporation, or if presented to any other stockholder, could be taken by such stockholder; provided, that with respect to any business opportunity that is offered in writing (including by e-mail or other electronic transmission) to any officer or director of the Corporation (or any of its Affiliates) who is also an officer, director or employee of Stockholder (or any of its Affiliates) which business opportunity is expressly offered to such individual in (and as a direct result of) his or her capacity as a director or officer of the Corporation (or any of its Affiliates), such business opportunity shall not be taken by Stockholder (or its Affiliate) without the approval of a majority of the Independent Directors.

Section 10.2 For purposes of this Certificate of Incorporation: (a) “ Affiliate ” shall mean with respect to any Person, a Person that directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with such Person, provided that the Stockholder shall not be deemed to be an Affiliate of the Company and vice versa; (b) “ Control ” shall mean the possession, direct or indirect, of the power to direct, or cause the direction of, the management and policies of a Person, whether through the ownership of voting securities, voting equity, limited liability company interests, general partner interests, or voting interests, by contract or otherwise; and (c) “ Person ” shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, governmental entity or other entity of any kind or nature.

Section 10.3 To the fullest extent permitted by law, any Person purchasing or otherwise acquiring any interest in any shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article X and Article XI.

ARTICLE XI

No director shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director. Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law (i) for breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the GCL or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article XI shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.

ARTICLE XII

This Corporation shall not be governed by Section 203 of the GCL until such time as the Stockholder gives public notice that the Stockholder’s Voting Percentage is less than fifteen percent (15%), whereupon the Corporation shall, upon such public notice, immediately and automatically, without further action on the part of the Corporation or any holder of stock of the Corporation become governed by Section 203 of the GCL.

Exhibit 3.2

SECOND AMENDED AND RESTATED BYLAWS
OF
FORESTAR GROUP INC.

ARTICLE I
OFFICES

Section 1.1 Registered Office . The registered office of Forestar Group Inc. (the “ Company ”) in the State of Delaware shall be at 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle, and the registered agent in charge thereof shall be Corporation Service Company.

Section 1.2 Other Offices . The Company may also have an office or offices, and keep the books and records of the Company, except as may otherwise be required by law, at such other place or places, either within or without the State of Delaware, as the Board of Directors may from time to time determine or the business of the Company require.

ARTICLE II
MEETINGS OF STOCKHOLDERS

Section 2.1 Place of Meeting . All meetings of the stockholders of the Company shall be held at the office of the Company or at such other places, within or without the State of Delaware, as may from time to time be fixed by the Board of Directors or the Chairman of the Board.

Section 2.2 Annual Meeting . The annual meeting of the stockholders of the Company for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on such date and at such hour as may from time to time be determined by the Board of Directors.

Section 2.3 Special Meetings . Except as otherwise required by law and subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, special meetings of the stockholders for any purpose or purposes may be called only by (i) the Chairman of the Board or (ii) the Secretary of the Company at the request in writing of a majority of the entire Board of Directors. Special meetings of the stockholders may be called at such place and on such date and at such time as fixed by the appropriate person calling such special meeting of the stockholders. Only such business as is specified in the notice of any special meeting of the stockholders shall come before such meeting.

Section 2.4 Notice of Meetings . Except as otherwise provided by law, written notice of each meeting of the stockholders, whether annual or special, shall be given, either by personal delivery or by mail, not less than 10 nor more than 60 days before the date of the meeting to each stockholder of record entitled to notice of the meeting. If mailed, such notice shall be deemed given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Company. Each such notice shall state the place, date and hour of the meeting, and the purpose or purposes for which the meeting is called. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy without protesting, at the commencement of the meeting, the lack of proper notice to such stockholder, or who shall waive notice thereof as provided in Article X of these Bylaws.

Section 2.5 Quorum . Except as otherwise provided by law or by the Certificate of Incorporation of the Company, the holders of a majority of the votes entitled to be cast by the stockholders entitled to vote, which if any vote is to be taken by classes shall mean the holders of a majority of the votes entitled to be cast by the stockholders of each such class, present in person or by proxy, shall constitute a quorum for the transaction of business at any meeting of the stockholders.

Section 2.6 Adjournments . In the absence of a quorum, the holders of a majority of the votes entitled to be cast by the stockholders, present in person or by proxy, may adjourn the meeting from time to time, without notice to the stockholders, until a quorum is present, if the time and place to which it is adjourned are

announced at such meeting, unless the adjournment is for more than 30 days or, after adjournment, a new record date is fixed for the adjourned meeting. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called.

Section 2.7 Order of Business . At each meeting of the stockholders, one of the following persons, in the order in which they are listed (and in the absence of the first, the next, and so on), shall serve as chairman of the meeting: Chairman of the Board, Vice-Chairmen of the Board (in the order of their seniority if more than one), Chief Executive Officer, President, Vice Presidents (in the order of their seniority if more than one) and Secretary. The order of business at each such meeting shall be as determined by the chairman of the meeting. The chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, the establishment of procedures for the maintenance of order and safety, limitations on the time allotted to questions or comments on the affairs of the Company, restrictions on entry to such meeting after the time prescribed for the commencement thereof, and the opening and closing of the voting polls.

Section 2.8 List of Stockholders . It shall be the duty of the Secretary or other officer of the Company who has charge of the stock ledger to prepare and make, at least 10 days before each meeting of the stockholders, a complete list of the stockholders entitled to vote thereat, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in such stockholder’s name. Such list shall be produced and kept available at the times and places required by law.

Section 2.9 Voting . Except as otherwise provided by law or by the Certificate of Incorporation of the Company, each stockholder of record of any class or series of stock having a preference over the Common Stock of the Company as to dividends or upon liquidation shall be entitled on each matter submitted to a vote at each meeting of stockholders to such number of votes for each share of such stock as may be fixed in the Certificate of Incorporation or in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such stock, and each stockholder of record of Common Stock shall be entitled at each meeting of stockholders to one vote for each share of such stock, in each case, registered in such stockholder’s name on the books of the Company:

(1) on the date fixed pursuant to Section 7.6 of these Bylaws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting; or

(2) if no such record date shall have been so fixed, then at the close of business on the day next preceding the day on which notice of such meeting is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

Each stockholder entitled to vote at any meeting of stockholders may authorize not in excess of three persons to act for such stockholder by a proxy signed by such stockholder or such stockholder’s attorney-in-fact. Any such proxy shall be delivered to the secretary of such meeting at or prior to the time designated for holding such meeting, but in any event not later than the time designated in the order of business for so delivering such proxies. No such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period.

At each meeting of the stockholders, all corporate actions to be taken by vote of the stockholders (except as otherwise required by law and except as otherwise provided in the Certificate of Incorporation) shall be authorized by a majority of the votes cast by the stockholders entitled to vote thereon, present in person or represented by proxy, and where a separate vote by class is required, a majority of the votes cast by the stockholders of such class, present in person or represented by proxy, shall be the act of such class.

Unless required by law or determined by the chairman of the meeting to be advisable, the vote on any matter, including the election of directors, need not be by written ballot. In the case of a vote by written ballot, each ballot shall be signed by the stockholder voting, or by such stockholder’s proxy, and shall state the number of shares voted.

Section 2.10 Inspectors . Either the Board of Directors or, in the absence of a designation of inspectors by the Board, the chairman of any meeting of stockholders may, in its or such person’s discretion, appoint one or more inspectors to act at any meeting of stockholders. Such inspectors shall perform such duties as shall be specified

by the Board or the chairman of the meeting. Inspectors need not be stockholders. No director or nominee for the office of director shall be appointed such inspector.

Section 2.11 Advance Notification . At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder who (i) was a stockholder of record at the time of giving of advance notice provided for in this Section 2.11 and at the time of the annual meeting, (ii) is entitled to vote at the meeting and (iii) complies with the advance notice procedures set forth in this Section 2.11 as to such business. For business to be properly brought before an annual meeting by a stockholder, if such business relates to the election of directors of the Company, the procedures in Section 3.3 must be complied with. If such business relates to any other matter, the stockholder must have given timely notice thereof in writing to the Secretary and such business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice must be delivered or mailed by first class United States mail, postage prepaid, to and received by the Secretary at the principal executive offices of the Company not less than 75 days nor more than 100 days prior to the anniversary date of the immediately preceding annual meeting of stockholders of the Company; provided, however, that in the event that the annual meeting is called for a date (including any change in a date designated by the Board of Directors pursuant to Section 2.2) more than 50 days prior to such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was first mailed or public disclosure of the date of the meeting was first made, whichever first occurs. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above. A stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (b) the name and address, as they appear on the Company’s books, of the stockholder proposing such business and the name and address of the beneficial owner, if any, on whose behalf the proposal is made; (c) as of the date of the notice and as of the record date for the meeting (and if the record date is subsequent to the date notice is delivered to the Secretary as provided above, then such stockholder shall deliver in writing to the Secretary at the principal executive offices of the Company the information as of the record date promptly following the later of the record date and the date notice of the record date is first publicly disclosed) (i) the class or series and number of shares of the Company that are beneficially owned by such stockholder and such beneficial owner, (ii) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Company or with a value derived in whole or in part from the value of any class or series of shares of the Company, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Company or otherwise (a “ derivative instrument ”) directly or indirectly owned beneficially by such stockholder or beneficial owner and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Company, (iii) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder or such beneficial owner has a right to vote any shares of any security of the Company, (iv) any short interest in any security of the Company (for purposes of this Section 2.11 a person or entity shall be deemed to have a short interest in a security if such person or entity directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (v) any rights to dividends on the shares of the Company owned beneficially by such stockholder or beneficial owner that are separated or separable from the underlying shares of the Company, (vi) any proportionate interest in shares of the Company or derivative instruments held, directly or indirectly, by a general or limited partnership in which such stockholder or beneficial owner is a general partner or, directly or indirectly, beneficially owns an interest in a general partner thereof, and (vii) any performance-related fees (other than an asset-based fee) that such stockholder or beneficial owner is entitled to based on any increase or decrease in the value of shares of the Company or derivative instruments as of the date of such notice, including without limitation any such interests held by members of such stockholder’s or beneficial owner’s immediate family sharing the same household (which information shall be supplemented by such stockholder not later than 10 days after the record date for the meeting to disclose such ownership as of the record date); (d) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the proposal pursuant to Section 14 of the Securities Exchange

Act of 1934, as amended (the “ Exchange Act ”), and the rules and regulations promulgated thereunder; (e) as of the date of the notice and as of the record date for the meeting (and if the record date is subsequent to the date notice is delivered to the Secretary as provided above, then such stockholder shall deliver in writing to the Secretary at the principal executive offices of the Company the information as of the record date promptly following the later of the record date and the date notice of the record date is first publicly disclosed) (i) any material interest of such stockholder and beneficial owner, if any, in such business and (ii) a description of all agreements, arrangements, and understandings between such stockholder and beneficial owner, if any, and any other person or entity (including their names) in connection with such business or the proposal thereof by such stockholder; and (f) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose such business. Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 2.11 and except that, with respect to any business related to the election of directors of the Company, the procedures in Section 3.3 must be complied with.

The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 2.11, and if he should so determine, the chairman shall so declare to the meeting that any such business not properly brought before the meeting shall not be transacted. In addition, unless otherwise required by law, if a stockholder (or a qualified representative of the stockholder) intending to propose business at an annual meeting pursuant to this Section 2.11 does not appear at the meeting to present the proposed business, such business shall not be transacted, notwithstanding that proxies in respect of such business may have been received by the Company.

Nothing in this Section 2.11 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Company’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

ARTICLE III
BOARD OF DIRECTORS

Section 3.1 General Powers . The business and affairs of the Company shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the Company and do all such lawful acts and things as are not by law or by the Certificate of Incorporation of the Company or by these Bylaws directed or required to be exercised or done by the stockholders.

Section 3.2 Number, Qualification and Election .

(a) Number . Except as otherwise fixed by or pursuant to the provisions of the Certificate of Incorporation of the Company, the number of the directors of the Company shall be as specified from time to time by vote of a majority of the entire Board of Directors, but not less than three.

(b) Election . Except as provided in Section 3.14, a nominee for director shall be elected if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election; provided, however, that the directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which (i) the Secretary of the Company receives a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for stockholder nominees for director set forth in Section 3.3 of these Bylaws and (ii) such nomination has not been withdrawn by such stockholder on or prior to the seventh day preceding the date the Company first mails its notice of meeting for such meeting to the stockholders.

Section 3.3 Notification of Nominations . Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nominations for election to the Board of Directors of the Company at a meeting of stockholders may be made (a) by the Board of Directors or (b) at an annual meeting of stockholders or at a special meeting of stockholders at which directors are to be elected as specified in the Company’s notice of special meeting, by any stockholder of the Company who (i) was a stockholder of record at the time of giving of advance notice provided for in this Section 3.3 and at the time of the meeting, (ii) is entitled to vote for the election of directors at such meeting and (iii) complies with the advance notice procedures set forth in this Section 3.3. Nominations with respect to an election of directors to be held at an annual meeting, other than those nominations made by or on behalf of the Board of Directors, shall be made by notice in writing delivered or mailed by first class United States mail, postage prepaid, to and received by the Secretary at the principal executive offices

of the Company not less than 75 days nor more than 100 days prior to the anniversary date of the immediately preceding annual meeting of stockholders of the Company; provided, however, that in the event that the annual meeting is called for a date (including any change in a date designated by the Board pursuant to Section 2.2) more than 50 days prior to such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was first mailed or public disclosure of the date of the annual meeting was first made, whichever first occurs. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above. Nominations with respect to an election of directors to be held at a special meeting of stockholders, other than nominations made by or on behalf of the Board of Directors, shall be made by notice in writing delivered or mailed by first class United States mail, postage prepaid, to and received by the Secretary at the principal executive offices of the Company no later than the close of business on the 10th day following the day on which such notice of the date of the special meeting was first mailed or public disclosure of the date of the special meeting was first made, whichever first occurs. Each notice under this Section 3.3 shall set forth (a) as to each proposed nominee (i) the name, age, business address and, if known, residence address of each such nominee, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of stock of the Company that are beneficially owned by each such nominee, (iv) any other information concerning the nominee that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Exchange Act (as defined in Section 2.11) (including such person’s written consent to be named as a nominee and to serve as a director if elected) and (v) a description of all direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the three fiscal years of the Company prior to the date of such meeting, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K (or any successor provision) if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, or any affiliate or associate thereof, or any person acting in concert therewith, were the “registrant” for purposes of such rules and the nominee were a director or executive officer of such registrant; and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the Company’s books, of such stockholder and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (ii) as of the date of the notice and as of the record date for the meeting (and if the record date is subsequent to the date notice is delivered to the Secretary as provided above, then such stockholder shall deliver in writing to the Secretary at the principal executive offices of the Company the information as of the record date promptly following the later of the record date and the date notice of the record date is first publicly disclosed) (A) the class or series and number of shares of the Company which are beneficially owned by such stockholder and such beneficial owner, (B) any derivative instrument (as defined in Section 2.11) directly or indirectly owned beneficially by such stockholder or beneficial owner and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Company, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder or such beneficial owner has a right to vote any shares of any security of the Company, (D) any short interest in any security of the Company (for purposes of this Section 3.3 a person or entity shall be deemed to have a short interest in a security if such person or entity directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (E) any rights to dividends on the shares of the Company owned beneficially by such stockholder or beneficial owner that are separated or separable from the underlying shares of the Company, (F) any proportionate interest in shares of the Company or derivative instruments held, directly or indirectly, by a general or limited partnership in which such stockholder or beneficial owner is a general partner or, directly or indirectly, beneficially owns an interest in a general partner thereof, and (G) any performance-related fees (other than an asset-based fee) that such stockholder or beneficial owner is entitled to based on any increase or decrease in the value of shares of the Company or derivative instruments as of the date of such notice, including without limitation any such interests held by members of such stockholder’s or beneficial owner’s immediate family sharing the same household (which information shall be supplemented by such stockholder not later than 10 days after the record date for the meeting to disclose such ownership as of the record date); (c) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and (d) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at the

meeting and intends to appear in person or by proxy at the meeting to present such nomination. Each nominee for election or reelection to the Board of Directors must complete, execute and deliver a questionnaire, representation and agreement as described below. The Company may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as a director of the Company and to be independent as determined under applicable rules and regulations, and that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nomine

The chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. In addition, unless otherwise required by law, if a stockholder (or a qualified representative of the stockholder) intending to make a nomination at an annual or special meeting pursuant to this Section 3.3 does not appear at the meeting to present the nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such nomination may have been received by the Company.

To be eligible to be a nominee for election or reelection as a director of the Company, the prospective nominee must deliver (in accordance with the time periods prescribed for delivery of notice under this Section 3.3) to the Secretary at the principal executive offices of the Company a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request). The prospective nominee must also provide to the Secretary at the principal executive offices of the Company a written representation and agreement (in the form provided by the Secretary upon written request) that such person (a) is not and will not become a party to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Company, will act or vote on any issue or question (a “ Voting Commitment ”) that has not been disclosed to the Company or (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Company, with such person’s fiduciary duties under applicable law, (b) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Company with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (c) would be in compliance, if elected as a director of the Company, and will comply with, applicable law and all applicable publicly disclosed corporate governance, conflict of interest, corporate opportunity, confidentiality and stock ownership and trading policies and guidelines of the Company.

Section 3.4 Quorum and Manner of Acting . Except as otherwise provided by law, the Certificate of Incorporation of the Company or these Bylaws, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board, and, except as so provided, the vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board. In the absence of a quorum, a majority of the directors present may adjourn the meeting to another time and place. Notice of any adjourned meeting shall be given as set forth in Section 3.8. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called and noticed.

Section 3.5 Place of Meeting . The Board of Directors may hold its meetings at such place or places within or without the State of Delaware as the Board may from time to time determine or as shall be specified or fixed in the respective notices or waivers of notice thereof.

Section 3.6 Regular Meetings . Regular meetings of the Board of Directors shall be held at such times and places as the Board shall from time to time by resolution determine. If any day fixed for a regular meeting shall be a legal holiday under the laws of the place where the meeting is to be held, the meeting that would otherwise be held on that day shall be held at the same hour on the next succeeding day not a legal holiday.

Section 3.7 Special Meetings . Special meetings of the Board of Directors shall be held whenever called by the Chairman of the Board or by the Secretary upon the request of a majority of the directors.

Section 3.8 Notice of Meetings . Notice of regular meetings of the Board of Directors or of any adjourned meeting thereof need not be given. Notice of each special meeting of the Board shall be mailed to each

director, addressed to such director at such director’s residence or usual place of business, at least two days before the day on which the meeting is to be held or shall be sent to such director at such place by facsimile, telegraph or electronic mail transmission or be given personally or by telephone, not later than the day before the meeting is to be held, but notice need not be given to any director who shall, either before or after the meeting, submit a signed waiver of such notice or who shall attend such meeting without protesting, prior to or at its commencement, the lack of notice to such director. Every such notice shall state the time and place but need not state the purpose of the meeting.

Section 3.9 Rules and Regulations . The Board of Directors may adopt such rules and regulations not inconsistent with the provisions of law, the Certificate of Incorporation of the Company or these Bylaws for the conduct of its meetings and management of the affairs of the Company as the Board may deem proper.

Section 3.10 Participation in Meeting by Means of Communications Equipment . Any one or more members of the Board of Directors or any committee thereof may participate in any meeting of the Board or of any such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

Section 3.11 Action Without Meeting . Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if all of the members of the Board or of any such committee consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board or of such committee.

Section 3.12 Resignations . Any director may resign at any time upon notice given in writing or by electronic transmission to the Chairman of the Board or to the Secretary. A resignation is effective when the resignation is delivered unless the resignation specifies (a) a later effective date or (b) an effective date determined upon the happening of an event or events (including but not limited to a failure to receive a majority of the votes cast in an election and the acceptance of the resignation by the Board of Directors).

Section 3.13 Removal of Directors . Directors may be removed only as provided in Section 5.7 of the Certificate of Incorporation of the Company.

Section 3.14 Vacancies . Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock of the Company as to dividends or upon liquidation and except as provided otherwise in the Certificate of Incorporation of the Company, any vacancies on the Board of Directors resulting from resignation, retirement, death or other removal (with or without cause), shall only be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining director, and newly created directorships resulting from any increase in the number of directors shall be filled by the Board of Directors, or if not so filled, by the stockholders at the next annual meeting thereof or at a special meeting called for that purpose in accordance with Section 2.3 of these Bylaws. Any director elected in accordance with the preceding sentence of this Section 3.14 shall hold office until the next annual meeting of stockholders or until such director’s successor shall have been elected and qualified.

Section 3.15 Compensation . Each director who shall not at the time also be a salaried officer or employee of the Company or any of its subsidiaries (hereinafter referred to as an “ outside director ”), in consideration of such person serving as a director, shall be entitled to receive from the Company such amount per annum and such fees for attendance at meetings of the Board of Directors or of committees of the Board, or both, as the Board shall from time to time determine. In addition, each director, whether or not an outside director, shall be entitled to receive from the Company reimbursement for the reasonable expenses incurred by such person in connection with the performance of such person’s duties as a director. Nothing contained in this Section 3.15 shall preclude any director from serving the Company or any of its subsidiaries in any other capacity and receiving proper compensation therefor.

ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES

Section 4.1 Executive Committee . Except as otherwise provided by the Certificate of Incorporation, the Board of Directors may, by resolution adopted by a majority of the entire Board, designate annually three or more of its members to constitute members or alternate members of an Executive Committee, which Committee shall have and may exercise, between meetings of the Board, all the powers and authority of the Board in the management of the business and affairs of the Company, including, if such Committee is so empowered and authorized by resolution adopted by a majority of the entire Board, the power and authority to declare a dividend and to authorize the issuance of stock, and may authorize the seal of the Company to be affixed to all papers which may require it, except that the Executive Committee shall not have such power or authority in reference to:

(a) amending the Certificate of Incorporation of the Company;

(b) adopting an agreement of merger or consolidation involving the Company;

(c) recommending to the stockholders the sale, lease or exchange of all or substantially all of the property and assets of the Company;

(d) recommending to the stockholders a dissolution of the Company or a revocation of a dissolution;

(e) adopting, amending or repealing any Bylaw;

(f) filling vacancies on the Board or on any committee of the Board, including the Executive Committee;

(g) fixing the compensation of directors for serving on the Board or on any committee of the Board, including the Executive Committee; or

(h) amending or repealing any resolution of the Board that by its terms may be amended or repealed only by the Board.

Except as otherwise provided in the Certificate of Incorporation of the Company, the Board shall have power at any time to change the membership of the Executive Committee, to increase or decrease (but not below the number three (3)) the membership of the Executive Committee, to designate alternate members who may replace absent or disqualified members of it, to fill all vacancies in it and to discharge it or any member thereof, either with or without cause.

Section 4.2 Other Committees . Except as otherwise provided in the Certificate of Incorporation of the Company, the Board of Directors may, by resolution adopted by a majority of the entire Board, designate from among its members one or more other committees, each of which shall, except as otherwise prescribed by law, have such authority of the Board as may be specified in the resolution of the Board designating such committee. A majority of all the members of such committee may determine its action and fix the time and place of its meetings, unless the Board shall otherwise provide. Except as otherwise provided in the Certificate of Incorporation of the Company, the Board shall have power at any time to change the membership of, to increase or decrease the membership of, to fill all vacancies in and to discharge any such committee, or any member thereof, either with or without cause.

Section 4.3 Procedure; Meetings; Quorum . Regular meetings of the Executive Committee or any other committee of the Board of Directors, of which no notice shall be necessary, may be held at such times and places as shall be fixed by resolution adopted by a majority of the members thereof. Special meetings of the Executive Committee or any other committee of the Board shall be called at the request of any member thereof. Notice of each special meeting of the Executive Committee or any other committee of the Board shall be sent by mail, electronic mail, facsimile, telegraph or telephone, or be delivered personally to each member thereof not later

than the day before the day on which the meeting is to be held, but notice need not be given to any member who shall, either before or after the meeting, submit a signed waiver of such notice or who shall attend such meeting without protesting, prior to or at its commencement, the lack of such notice to such member. Any special meeting of the Executive Committee or any other committee of the Board shall be a legal meeting without any notice thereof having been given, if all the members thereof shall be present thereat. Notice of any adjourned meeting of any committee of the Board need not be given. The Executive Committee or any other committee of the Board may adopt such rules and regulations not inconsistent with the provisions of law, the Certificate of Incorporation of the Company or these Bylaws for the conduct of its meetings as the Executive Committee or any other committee of the Board may deem proper. A majority of the Executive Committee or any other committee of the Board shall constitute a quorum for the transaction of business at any meeting, and the vote of a majority of the members thereof present at any meeting at which a quorum is present shall be the act of such committee. In the absence or disqualification of a member, the remaining members, whether or not a quorum, may fill a vacancy. The Executive Committee or any other committee of the Board of Directors shall keep written minutes of its proceedings, a copy of which is to be filed with the Secretary of the Company, and shall report on such proceedings to the Board.

ARTICLE V
OFFICERS

Section 5.1 Number; Term of Office; Compensation . The officers of the Company shall be a Chief Executive Officer, a Chief Financial Officer and/or a Treasurer, a Secretary, one or more Vice Presidents, which may be designated as Executive Vice President, Senior Vice President, and one or more of whom may be designated as Group Vice Presidents, or such other designation as deemed appropriate, from time to time, by the Board of Directors, and such other officers or agents with such titles and such duties as the Board of Directors may from time to time determine, each to have such authority, functions or duties as in these Bylaws provided or as the Board of Directors may from time to time determine, and each to hold office for such term as may be prescribed by the Board of Directors and as to those offices as determined to be mandatory under the provisions hereof until such person’s successor shall have been chosen and shall qualify, all until any of such person’s death or resignation or until such person’s removal in the manner hereinafter provided. The Chairman of the Board and any Vice-Chairman of the Board shall be elected from among the directors. One person may hold the offices and perform the duties of any two or more of said officers; provided, however, that no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument is required by law, the Certificate of Incorporation of the Company or these Bylaws to be executed, acknowledged or verified by two or more officers. Except as otherwise provided in the Certificate of Incorporation of the Company, the Board may from time to time authorize any officer to appoint and remove any such other officers and agents and to prescribe their powers and duties. The Board may require any officer or agent to give security for the faithful performance of such person’s duties. Except as otherwise provided in the Certificate of Incorporation of the Company, the Board shall establish the salaries of the officers of the Company.

Section 5.2 Removal . Except as otherwise provided in the Certificate of Incorporation of the Company, any officer may be removed, either with or without cause, by the Board of Directors at any meeting thereof called for the purpose, or, except in the case of any officer elected by the Board, by any committee or superior officer upon whom such power may be conferred by the Board.

Section 5.3 Resignation . Subject at all times to the right of removal as provided in Section 5.2, any officer may resign at any time by giving notice to the Board of Directors, the Chairman of the Board or the Secretary of the Company. Any such resignation shall take effect at the date of receipt of such notice or at any later date specified therein; provided that the Chairman of the Board or, in the event of the resignation of the Chairman of the Board, the Board of Directors may designate an effective date for such resignation which is earlier than the date specified in such notice but which is not earlier than the date of receipt of such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 5.4 Vacancies . Except as otherwise provided in the Certificate of Incorporation of the Company, a vacancy in any office because of resignation, retirement, death or other removal (with or without cause) may be filled for the unexpired portion of the term in the manner prescribed in these Bylaws for election to such office.

Section 5.5 Chief Executive Officer . The Chief Executive Officer shall have general supervision and direction of the business and affairs of the Company (subject to the control of the Board of Directors) and shall see that all orders and resolutions of the Board of Directors are carried into effect. The Chief Executive Officer may sign and execute in the name of the Company deeds, mortgages, bonds, contracts or other instruments authorized by the Board or any committee thereof empowered to authorize the same. The Chief Executive Officer, or his or the Board’s designee, shall vote all securities held by the Company.

Section 5.6 Chief Financial Officer . The Chief Financial Officer of the Company shall have general supervision over the financial operations of the Company, subject to the direction of the Chairman of the Board or the Board of Directors. The Chief Financial Officer may sign and execute in the name of the Company deeds, mortgages, bonds, contracts or other instruments authorized by the Board or any committee thereof empowered to authorize the same.

Section 5.7 Vice Presidents . Each Vice President shall have such powers and duties as shall be prescribed by the Chairman of the Board or the Board of Directors. Any Vice President may sign and execute in the name of the Company deeds, mortgages, bonds, contracts or other instruments authorized by the Board or any committee thereof empowered to authorize the same.

Section 5.8 Treasurer . The Treasurer shall perform all duties incident to the office of Treasurer, and shall have such other duties as from time to time may be assigned to the Treasurer by the Chief Financial Officer, the Chairman of the Board or the Board of Directors.

The Treasurer shall serve as Chief Financial Officer if no other person is elected to the office of Chief Financial Officer.

Section 5.9 Secretary . It shall be the duty of the Secretary to act as secretary at all meetings of the Board of Directors, and of the stockholders and to attend and record the proceedings of such meetings in a book or books to be kept for that purpose; the Secretary shall see that all notices required to be given by the Company are duly given and served; the Secretary shall be custodian of the seal of the Company and shall affix the seal or cause to be affixed to all certificates of stock of the Company (unless the seal of the Company on such certificates shall be a facsimile, as hereinafter provided) and to all documents, the execution of which on behalf of the Company under its seal is duly authorized in accordance with the provision of these Bylaws. The Secretary shall have charge of the stock ledger and also of the other books, records and papers of the Company and shall see that the reports, statements and other documents required by law are properly kept and filed; and shall in general perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to such person by the Chairman of the Board or the Board of Directors.

Section 5.10 Assistant Treasurers and Assistant Secretaries . The Assistant Treasurers and the Assistant Secretaries shall perform such duties as shall be assigned to them by the Treasurer or Secretary, respectively, or by the Chairman of the Board or the Board of Directors.

ARTICLE VI
INDEMNIFICATION

Section 6.1 Power to Indemnify in Actions, Suits or Proceedings Other Than Those by or in the Right of the Company . Subject to Section 6.3, the Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that he is or was a director, officer or employee of the Company, or is or was a director, officer or employee of the Company or any direct or indirect wholly owned subsidiary of the Company serving at the request of the Company as a director, officer, employee or agent of any such subsidiary or another corporation, savings and loan association, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct unlawful. The termination of any action, suit or proceeding by

judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

Section 6.2 Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Company . Subject to Section 6.3, the Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that he is or was a director, officer or employee of the Company, or is or was a director, officer or employee of the Company or any direct or indirect wholly owned subsidiary of the Company serving at the request of the Company as a director, officer, employee or agent of any such subsidiary or another corporation, savings and loan association, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

Section 6.3 Authorization of Indemnification . Any indemnification under this Article VI (unless ordered by a court) shall be made by the Company only as authorized in the specific case as permitted by applicable law upon a determination that indemnification of the director, officer or employee is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 6.1 or Section 6.2, as the case may be. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. To the extent, however, that a director, officer or employee has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith, without the necessity of authorization in the specific case.

Section 6.4 Good Faith Defined . For purposes of any determination under Section 6.3, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account of the Company or another enterprise, or on information supplied to him by the officers of the Company or another enterprise in the course of their duties, or on the advice of legal counsel for the Company or another enterprise or on information or records given or reports made to the Company or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Company or another enterprise. The terms “ another enterprise ” or “ other enterprise ” as used in this Article VI shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enter price of which such person is or was serving at the request of the Company as a director, officer, employee or agent. The provisions of this Section 6.4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Section 6.1 or Section 6.2, as the case may be.

Section 6.5 Indemnification by a Court . Notwithstanding any contrary determination in the specific case under Section 6.3, and notwithstanding the absence of any determination thereunder, any director, officer or employee may apply to any court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Section 6.1 and Section 6.2. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director, officer or employee is proper in the circumstances because he has met the applicable standards of conduct set forth in Section 6.1 or Section 6.2, as the case may be. Neither a contrary determination in the specific case under Section 6.3 nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director, officer or employee seeking indemnification has not met any applicable standard of conduct. Notice of any application for

indemnification pursuant to this Section 6.5 shall be given to the Company promptly upon the filing of such application.

Section 6.6 Expenses Payable in Advance . Expenses incurred in defending or investigating a threatened or pending action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer or employee to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Company as authorized in this Article VI.

Section 6.7 Non-exclusivity of Indemnification and Advancement of Expenses . The indemnification and advancement of expenses provided by or granted pursuant to this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any Bylaw, agreement, contract, vote of stockholders or disinterested directors or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, it being the policy of the Company that indemnification of the persons specified in Section 6.1 and Section 6.2 shall be made to the fullest extent permitted by law. The provisions of this Article VI shall not be deemed to preclude the indemnification of any person who is not specified in Section 6.1 or Section 6.2 but whom the Company has the power or obligation to indemnify under the provisions of the General Corporation Law of the State of Delaware, or otherwise.

Section 6.8 Insurance . The Company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, savings and loan association, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Company would have the power or the obligation to indemnify him against such liability under the provisions of this Article VI.

Section 6.9 Certain Definitions . For purposes of this Article VI, references to “the Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees, so that any person who is or was a director, officer or employee of such constituent corporation, or is or was a director, officer or employee of such constituent corporation or any direct or indirect wholly owned subsidiary of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of any such subsidiary or another corporation, savings and loan association, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article VI with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article VI, references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, officer or employee of the Company which imposes duties on, or involves services by, such director, officer or employee with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Article VI.

Section 6.10 Survival of Indemnification and Advancement of Expenses . The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer or employee and shall inure to the benefit of the heirs, executors and administrators of such a person.

ARTICLE VII
CAPITAL STOCK

Section 7.1 Certificates for Shares . Shares of the capital stock of the Company may be certificated or uncertificated, as provided under the General Corporation Law of the State of Delaware. Each stockholder, upon written request to the transfer agent or registrar of the Company, shall be entitled to a certificate representing the

capital stock of the Company in such form as may from time to time be prescribed by the Board of Directors. Certificates representing shares of stock of each class shall be issued in consecutive order and shall be numbered in the order of their issue, shall be signed by, or in the name of, the Company by the Chairman of the Board, the President, or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the Company, and sealed with the seal of the Company, which may be by a facsimile thereof. Any or all such signatures may be facsimiles if countersigned by a transfer agent or registrar. Although any officer, transfer agent or registrar whose manual or facsimile signature is affixed to such a certificate ceases to be such officer, transfer agent or registrar before such certificate has been issued, it may nevertheless be issued by the Company with the same effect as if such officer, transfer agent or registrar were still such at the date of its issue. Absent a specific request for such a certificate by the registered owner or transferee thereof, all shares may be uncertificated upon the original issuance thereof by the Company or upon surrender of the certificate representing such shares to the Company or its transfer agent.

The stock ledger and blank share certificates shall be kept by the Secretary or by a transfer agent or by a registrar or by any other officer or agent designated by the Board.

Section 7.2 Transfer of Shares . Transfers of shares of stock of each class of the Company shall be made only on the books of the Company by the holder thereof, or by such holder’s attorney there unto authorized by a power of attorney duly executed and filed with the Secretary of the Company or a transfer agent for such stock, if any, and on surrender of the certificate or certificates for such shares properly endorsed or accompanied by a duly executed stock transfer power or other evidence of succession, assignment or authority to transfer and the payment of all taxes thereon. The person in whose name shares stand on the books of the Company shall be deemed the owner thereof for all purposes as regards the Company; provided, however, that whenever any transfer of shares shall be made for collateral security and not absolutely, and written notice thereof shall be given to the Secretary or to such transfer agent, such fact shall be stated in the entry of the transfer. No transfer of shares shall be valid as against the Company, its stockholders and creditors for any purpose, except to render the transferee liable for the debts of the Company to the extent provided by law, until it shall have been entered in the stock records of the Company by an entry showing from and to whom transferred.

Section 7.3 Addresses of Stockholders . Each stockholder shall designate to the Secretary or transfer agent of the Company an address at which notices of meetings and all other corporate notices may be served or mailed to such person, and, if any stockholder shall fail to designate such address, corporate notices may be served upon such person by mail directed to such person at such person’s post office address, if any, as the same appears on the share record books of the Company or at such person’s last known post office address.

Section 7.4 Lost, Destroyed and Mutilated Certificates . The holder of any share of stock of the Company shall immediately notify the Company of any loss, theft, destruction or mutilation of the certificate therefor. The Company may issue uncertificated shares, or if requested by the registered owner a new certificate or cause a new certificate to be issued, in place of any certificate theretofore issued by the Company alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. The Board of Directors, or a committee designated thereby, or the transfer agents and registrars for the stock, may, in their discretion, require the owner of the lost, stolen or destroyed certificate, or such person’s legal representative, to give the Company a bond in such sum and with such surety or sureties as they may direct to indemnify the Company and said transfer agents and registrars against any claim that may be made on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

Section 7.5 Regulations . The Board of Directors may make such additional rules and regulations as it may deem expedient concerning the issue and transfer of certificates representing shares of stock of each class of the Company and may make such rules and take such action as it may deem expedient concerning the issue of certificates in lieu of certificates claimed to have been lost, destroyed, stolen or mutilated.

Section 7.6 Fixing Date for Determination of Stockholders of Record . In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournments thereof, or entitled to receive payment of any dividend or other distribution or allotment or any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 60 nor less than 10

days before the date of such meeting, nor more than 60 days prior to any other action. A determination of stockholders entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

ARTICLE VIII
SEAL

The Board of Directors shall provide a corporate seal, which shall be in the form of a circle and shall bear the full name of the Company and the words and figures “Corporate Seal Delaware”, or such other words or figures as the Board of Directors may approve and adopt. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. Unless otherwise provided in these Bylaws or by law, it shall not be mandatory that the corporate seal or its facsimile be impressed or affixed on any document executed on behalf of the Company.

ARTICLE IX
FISCAL YEAR

The fiscal year of the Company shall end at the close of business on December 31 in each year.

ARTICLE X
WAIVER OF NOTICE

Whenever any notice whatsoever is required to be given by these Bylaws, by the Certificate of Incorporation of the Company or by law, the person entitled thereto may, either before or after the meeting or other matter in respect of which such notice is to be given, waive such notice in writing, which writing shall be filed with or entered upon the records of the meeting or the records kept with respect to such other matter, as the case may be, and in such event such notice need not be given to such person and such waiver shall be deemed equivalent to such notice.

ARTICLE XI
AMENDMENTS

Except as otherwise provided in the Certificate of Incorporation of the Company, any Bylaw (other than this Bylaw) may be adopted, repealed, altered or amended by a majority of the entire Board of Directors at any meeting thereof, provided that such proposed action in respect thereof shall be stated in the notice of such meeting and any such action by the Board of Directors shall be effective without the necessity for any approval or ratification by the stockholders of the Company.

ARTICLE XII
MISCELLANEOUS

Section 12.1 Execution of Documents . The Board of Directors shall designate the officers, employees and agents of the Company who shall have power to execute and deliver deeds, contracts, mortgages, bonds, debentures, checks, drafts and other orders for the payment of money and other documents for and in the name of the Company and may authorize such officers, employees and agents to delegate such power (including authority to redelegate) by written instrument to other officers, employees or agents of the Company. Such delegation may be by resolution or otherwise and the authority granted shall be general or confined to specific matters, all as the Board may determine. In the absence of such designation referred to in the first sentence of this Section, the officers of the Company shall have such power so referred to, to the extent incident to the normal performance of their duties.

Section 12.2 Deposits . All funds of the Company not otherwise employed shall be deposited from time to time to the credit of the Company or otherwise as the Board of Directors or any officer of the Company to whom power in that respect shall have been delegated by the Board shall select.

Section 12.3 Checks . All checks, drafts and other orders for the payment of money out of the funds of the Company, and all notes or other evidences of indebtedness of the Company, shall be signed on behalf of the Company in such manner as shall from time to time be determined by resolution of the Board of Directors or of any committee thereof empowered to authorize the same.

Section 12.4 Proxies in Respect of Stock or Other Securities of Other Corporations . The Board of Directors shall designate the officers of the Company who shall have authority from time to time to appoint an agent or agents of the Company to exercise in the name and on behalf of the Company the powers and rights which the Company may have as the holder of stock or other securities in any other corporation, and to vote or consent in respect of such stock or securities; such designated officers may instruct the person or persons so appointed as to the manner of exercising such powers and rights; and such designated officers may execute or cause to be executed in the name and on behalf of the Company and under its corporate seal, or otherwise, such written proxies, powers of attorney or other instruments as they may deem necessary or proper in order that the Company may exercise its said powers and rights.

ARTICLE XIII
FORUM FOR ADJUDICATION OF CERTAIN DISPUTES

Section 13.1 Forum for Adjudication of Certain Disputes . Unless the Company consents in writing to the selection of an alternative forum (an “ Alternative Forum Consent ”), the Court of Chancery of the State of Delaware shall be, to the fullest extent permitted by law, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, stockholder, employee or agent of the Company to the Company or the Company’s stockholders, or any action asserting a claim for aiding and abetting any such breach of fiduciary duty, (iii) any action asserting a claim against the Company or any director, officer, stockholder, employee or agent of the Company arising out of or relating to any provision of the Delaware General Corporation Law or the Company’s Certificate of Incorporation or these Bylaws, or (iv) any action asserting a claim against the Company or any director, officer, stockholder, employee or agent of the Company governed by the internal affairs doctrine of the State of Delaware; provided, however, that, in the event that the Court of Chancery of the State of Delaware lacks subject matter jurisdiction over any such action or proceeding, the sole and exclusive forum for such action or proceeding shall be another court of the State of Delaware, or if no court of the State of Delaware has jurisdiction, the federal district court for the District of Delaware, in each such case, unless the Court of Chancery (or such other state or federal court located within the State of Delaware, as applicable) has dismissed a prior action by the same plaintiff asserting the same claims because such court lacked personal jurisdiction over an indispensable party named as a defendant therein. Failure to enforce the foregoing provisions would cause the Company irreparable harm and the Company shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provision, including, without limitation, an anti-suit injunction to enforce Article XIII and to preclude suit in any other forum. Any person or entity holding, purchasing or otherwise acquiring any interest in shares of capital stock of the Company shall be deemed to have notice of and to consent to (i) the personal jurisdiction of the Court of Chancery of the State of Delaware (or if the Court of Chancery does not have jurisdiction, another court of the State of Delaware, or if no court of the State of Delaware has jurisdiction, the federal district court for the District of Delaware) in any proceeding brought to enjoin, or otherwise enforce this Article XIII with respect to, any action by that person or entity that is inconsistent with the exclusive jurisdiction provided for in this Article XIII (an “ Inconsistent Action ”) and (ii) having service of process made upon such person or entity in any such proceeding by service upon such person’s or entity’s counsel in such Inconsistent Action as agent for such person or entity.

ADOPTED as of this 5th day of October 2017.


	/s/ Matthew S. Stark
	Matthew S. Stark
	General Counsel, Senior Vice President and
	Corporate Secretary

Exhibit 4.1

THIRD SUPPLEMENTAL INDENTURE

THIRD SUPPLEMENTAL INDENTURE, dated as of October 5, 2017 (this “ Third Supplemental Indenture ”), by and between Forestar Group Inc., a Delaware corporation (the “ Company ”), and U.S. Bank National Association (the “ Trustee ”), as trustee, supplements the Indenture dated February 26, 2013 (the “ Base Indenture ”), between the Company and the Trustee, as supplemented by the First Supplemental Indenture, dated as of February 26, 2013 (the “ First Supplemental Indenture ” and together with the Base Indenture, the “ Indenture ”), by and between the Company and the Trustee.

RECITALS OF THE COMPANY

WHEREAS, pursuant to the Indenture, the Company issued $125,000,000 aggregate principal amount of 3.75% Convertible Senior Notes due 2020 (the “ Securities ”);

WHEREAS, pursuant to the Agreement and Plan of Merger (the “ Merger Agreement ”), dated as of June 29, 2017, among D.R. Horton, Inc., a Delaware corporation (“ D.R. Horton ”), Force Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of D.R. Horton (“ Merger Sub ”), and the Company, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation (the “ Merger ”);

WHEREAS, pursuant to the Merger Agreement, at the Effective Time (as defined in the Merger Agreement) (the “ Effective Time ”), each share of common stock of the Company, par value $1.00 per share (“ Common Stock ”) issued and outstanding immediately prior to the Effective Time, including any Company restricted stock but not including the Cancelled Shares or the Dissenting Shares (each as defined in the Merger Agreement), will be converted into the right to receive, without interest, (i) for each share of Common Stock for which a Cash Election (as defined in the Merger Agreement) has been made, $17.75 in cash or (ii) for each share of Common Stock for which a Stock Election (as defined in the Merger Agreement) has been made, one share of common stock of the surviving entity in the Merger, par value $1.00 per share (the “ Surviving Entity Common Stock ”), in each case, subject to proration pursuant to Section 3.2 of the Merger Agreement;

WHEREAS, pursuant to Section 4.07(a) of the First Supplemental Indenture, the Company and the Trustee are required to enter into a supplemental indenture providing that from and after the Effective Time of a Merger Event in which each share of Common Stock is converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), the Securities will become convertible into the per-share of Common Stock weighted average of the types and amounts of merger consideration received by the holders of Common Stock that affirmatively make such an election (the “ Weighted Average Merger Consideration ”);

WHEREAS, as a result of the elections affirmatively made by the holders of Common Stock in connection with the Merger, the Weighted Average Merger Consideration

attributable to one share of Common Stock consists of (i) $14.19785 in cash and (ii) 0.20012 shares of the Surviving Entity Common Stock;

WHEREAS, Section 8.01(f) of the First Supplemental Indenture provides that the Company and the Trustee may, at any time and from time to time, enter into one or more supplemental indentures, in form satisfactory to the Trustee without the consent of any Holder, to provide for the conversion of the Securities in accordance with the terms of the Indenture;

WHEREAS, the Board of Directors has duly adopted resolutions authorizing the Company to execute and deliver this Third Supplemental Indenture;

WHEREAS, the Company has requested that the Trustee execute and deliver this Third Supplemental Indenture; and

WHEREAS, all conditions precedent provided for in the Indenture relating to the execution of this Third Supplemental Indenture have been complied with.

NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH, for and in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto mutually covenant and agree for the equal and proportionate benefit of the Holders as follows:

ARTICLE I
TERMS

Section 1.01 Definitions . Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Indenture.

“ Unit of Reference Property ” means (i) $14.19785 in cash and (ii) 0.20012 shares of the Surviving Entity Common Stock.

ARTICLE II
EFFECT OF MERGER

Section 2.01 Conversion Right . Pursuant to Section 4.07(a) of the First Supplemental Indenture, as a result of the Merger, from and after the Effective Time, the number of shares of Common Stock that the Company would be required to deliver upon conversion of the Securities in accordance with Sections 4.03 and 4.06 of the First Supplemental Indenture shall instead be deliverable in Units of Reference Property, so that upon conversion, the converting Holder, for each $1,000 principal amount of the Securities being converted, shall be entitled to receive the number of Units of Reference Property equal to the applicable Conversion Rate, provided, however , that at and after the Effective Time (x) the Company will continue to have the right to determine the Settlement Method pursuant to Section 4.03(a) of the First Supplemental Indenture and (y)(i) any amount payable in cash upon conversion of the Securities in accordance with Sections 4.03 and 4.06 of the First Supplemental Indenture shall continue to be payable in cash and (ii) the Daily VWAP and the Last Reported Sale Price will, to the extent reasonably possible, be calculated based on the value of a Unit of Reference Property and the

definitions of VWAP Trading Day and VWAP Market Disruption Event shall be determined by reference to the Surviving Entity Common Stock, and provided further that the provisions of the Indenture, as modified herein, including without limitation, (i) all references and provisions respecting the terms “Common Stock,” “Conversion Price” and “Conversion Rate,” and (ii) the provisions of Section 4.01(b) of the First Supplemental Indenture respecting when a Holder of Securities may surrender its Securities for conversion, shall continue to apply, mutatis mutandis , to the Holders’ right to convert each Security into the Reference Property.

Section 2.02 Adjustments to Conversion Rate . As and to the extent required by Section 4.07(a) of the Indenture, the Conversion Rate shall be adjusted as a result of events occurring subsequent to the date hereof with respect to the Reference Property as nearly equivalent as possible to the adjustments provided for in Article 4 of the First Supplemental Indenture. For the avoidance of doubt, immediately following the Effective Time, the Conversion Rate shall be 40.8351 Units of Reference Property per $1,000 principal amount of Securities, subject thereafter to adjustment as set forth in the Indenture, as supplemented by this Third Supplemental Indenture.

ARTICLE III
ACCEPTANCE OF THIRD SUPPLEMENTAL INDENTURE

Section 3.01 Trustee’s Acceptance . The Trustee hereby accepts this Third Supplemental Indenture and agrees to perform the same under the terms and conditions set forth in the Indenture.

ARTICLE IV
MISCELLANEOUS PROVISIONS

Section 4.01 Governing Law; Waiver of Trial by Jury . This Third Supplemental Indenture shall be governed by, and construed in accordance with, the internal laws of the State of New York.

EACH PARTY HERETO, AND EACH HOLDER OF A SECURITY BY ACCEPTANCE THEREOF, HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS THIRD SUPPLEMENTAL INDENTURE.

Section 4.02 Trust Indenture Act . Notwithstanding Section 16.02 of the Base Indenture, if any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Indenture, the provision of the Trust Indenture Act shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of the Trust Indenture Act shall be deemed to apply to this Indenture as so modified or be excluded, as the case may be.

Section 4.03 Benefits of Supplemental Indenture . Notwithstanding anything to the contrary in Section 16.09 of the Base Indenture, nothing in this Third Supplemental Indenture, expressed or implied, will give to any Person, other than the parties hereto, any Paying Agent, any Conversion Agent, any authenticating agent, any Registrar or their successors hereunder or the Holders of the Securities, any benefit or any legal or equitable right, remedy or claim under this Third Supplemental Indenture.

Section 4.04 Execution in Counterparts . This Third Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

Section 4.05 Ratification of Indenture . The Indenture, as supplemented by this Third Supplemental Indenture, is in all respects ratified and confirmed, and this Third Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein provided.

Section 4.06 The Trustee . The recitals in this Third Supplemental Indenture are made by the Company only and not by the Trustee, and all of the rights, privileges, protections, immunities and benefits afforded to the Trustee under the Indenture are deemed to be incorporated herein, and shall be enforceable by the Trustee hereunder, in each of its capacities hereunder as if set forth herein in full.

Section 4.07 Effect on Successors and Assigns . Notwithstanding Section 16.09 of the Base Indenture, all agreements of the Company, the Trustee, the Registrar, the Paying Agent and the Conversion Agent in this Third Supplemental Indenture will bind their respective successors.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the day and year first written above.

	FORESTAR GROUP INC.

	By:	/s/ Phillip J. Weber
		Name: Phillip J. Weber
		Title: Chief Executive Officer

[Signature Page to Third Supplemental Indenture]

	U.S. BANK NATIONAL ASSOCIATION as Trustee

	By:	/s/ Susan C. Chadbourne
		Name: Susan C. Chadbourne
		Title: Vice President

[Signature Page to Third Supplemental Indenture]

Exhibit 10.1

EXECUTION VERSION

LETTER OF CREDIT FACILITY AGREEMENT

DATED AS OF OCTOBER 5, 2017

AMONG

FORESTAR (USA) REAL ESTATE GROUP INC.,

as Borrower,

AND

KEYBANK NATIONAL ASSOCIATION,

as a Bank, LC Issuer and Agent

AND

THE OTHER BANKS WHICH MAY BECOME

PARTIES TO THIS AGREEMENT

AND

KEYBANC CAPITAL MARKETS

as Sole Arranger and Sole Book Runner

TABLE OF CONTENTS

			Page
§1.	DEFINITIONS AND RULES OF INTERPRETATION		1
	§1.1	Definitions	1
	§1.2	Rules of Interpretation	9

§2.	LETTERS OF CREDIT		9
	§2.1	Letters of Credit	9
	§2.2	Unused Facility Fee	12

§3.	REPAYMENT AND REDUCTION IN COMMITMENT		12
	§3.1	Stated Maturity; Extension Option	12
	§3.2	Reduction and Termination of Commitment	13

§4.	CERTAIN GENERAL PROVISIONS		14
	§4.1	Certain Fees	14
	§4.2	Letter of Credit Fees	14
	§4.3	Funds for Payments	14
	§4.4	Computations	15
	§4.5	Additional Costs, Etc.	15
	§4.6	Capital Adequacy	17
	§4.7	Indemnity by Borrower	17
	§4.8	Late Charge; Default Rate	17
	§4.9	Certificate	17
	§4.10	Limitation on Interest	18

§5.	COLLATERAL SECURITY		18
	§5.1	Cash Collateral	18
	§5.2	Cash Collateral Account	18

§6.	REPRESENTATIONS AND WARRANTIES		18
	§6.1	Corporate Authority, Etc.	19
	§6.2	Approvals	19
	§6.3	No Material Changes	19
	§6.4	Litigation	19
	§6.5	Compliance with Organizational Documents, Other Instruments, Laws, Etc.	20
	§6.6	No Event of Default	20
	§6.7	Investment Company Act	20
	§6.8	Setoff, Etc.	20
	§6.9	Employee Benefit Plans	20
	§6.10	Credit Documents	21
	§6.11	OFAC	21
	§6.12	No Fraudulent Intent	21
	§6.13	Transaction in Best Interests of Borrower; Consideration	21
	§6.14	Solvency	21
	§6.15	No Bankruptcy Filing	22

§7.	AFFIRMATIVE COVENANTS OF BORROWER		22
	§7.1	Punctual Payment	22
	§7.2	[Reserved]	22
	§7.3	Records and Accounts	22
	§7.4	Notices	22
	§7.5	Existence	23
	§7.6	Compliance with Laws, Licenses, and Permits	23
	§7.7	Further Assurances	23
	§7.8	Plan Assets	23
	§7.9	Business Operations	24

§8.	CERTAIN NEGATIVE COVENANTS OF BORROWER		24
	§8.1	Restrictions on Liens, Etc.	24
	§8.2	Merger, Consolidation	24

§9.	CONDITIONS TO ALL LETTERS OF CREDIT		24
	§9.1	Representations True; No Default	24
	§9.2	No Legal Impediment	24
	§9.3	Letter of Credit Request	25

§10.	EVENTS OF DEFAULT; ACCELERATION; ETC.		25
	§10.1	Events of Default and Acceleration	25
	§10.2	Limitation of Cure Periods	26
	§10.3	Termination of Commitments	27
	§10.4	Remedies	27
	§10.5	Distribution of Cash Collateral Proceeds	27

§11.	SETOFF		28

§12.	THE AGENT		28
	§12.1	Authorization	28
	§12.2	Employees and Agents	28
	§12.3	No Liability	29
	§12.4	No Representations	29
	§12.5	Payments	30
	§12.6	Indemnity	31
	§12.7	Agent as Bank	31
	§12.8	Resignation	31
	§12.9	Duties in the Case of Enforcement	32
	§12.10	Request for Agent Action	32
	§12.11	Removal of Agent	33
	§12.12	Bankruptcy	33
	§12.13	Right to Realize on Cash Collateral	33

§13.	EXPENSES		33

§14.	INDEMNIFICATION		34

§15.	SURVIVAL OF COVENANTS, ETC.		34

§16.	ASSIGNMENT AND PARTICIPATION		35
	§16.1	Conditions to Assignment by Banks	35
	§16.2	Register	36
	§16.3	Participations	36
	§16.4	Pledge by Bank	37
	§16.5	No Assignment by Borrower	37
	§16.6	Cooperation; Disclosure	37
	§16.7	Mandatory Assignment	37
	§16.8	Co-Agents, Syndication Agent, and Co-Documentation Agent	38
	§16.9	Treatment of Certain Information; Confidentiality	38
	§16.10	Withholding Tax	39

§17.	NOTICES		40

§18.	RELATIONSHIP		41

§19.	GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE		41

§20.	HEADINGS		42

§21.	COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION		42

§22.	ENTIRE AGREEMENT, ETC.		43

§23.	WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS		43

§24.	DEALINGS WITH THE BORROWER		43

§25.	CONSENTS, AMENDMENTS, WAIVERS, ETC.		43

§26.	SEVERABILITY		45

§27.	NO UNWRITTEN AGREEMENTS		45

§28.	ACKNOWLEDGMENT OF INDEMNITY OBLIGATIONS		45

§29.	TIME IS OF THE ESSENCE		45

§30.	RIGHTS OF THIRD PARTIES		45

§31.	CLOSING CONDITIONS		46
	§31.1	Credit Documents	46
	§31.2	Certified Copies of Organizational Documents	46
	§31.3	Resolutions	46
	§31.4	Incumbency Certificate; Authorized Signers	46
	§31.5	Opinion of Counsel	46
	§31.6	Payment of Fees	47
	§31.7	Performance; No Default	47
	§31.8	Representations and Warranties	47

iii

		§31.9		Cash Collateral	47
		§31.10		Existing Credit Agreement	47

Exhibit A				Form of Assignment and Assumption Agreement
Exhibit B				Patriot Act and OFAC Transferee and Assignee Identifying Information Form
Exhibit C				Form of Letter of Credit Request

Schedule 1.1				Banks and Commitments
Schedule 2				Prior Letters of Credit
Schedule 6.4				Litigation

LETTER OF CREDIT FACILITY AGREEMENT

THIS LETTER OF CREDIT FACILITY AGREEMENT is made as of the 5th day of October, 2017, by and among FORESTAR (USA) REAL ESTATE GROUP INC. , a Delaware corporation, as borrower (“ Borrower ”), having its principal place of business at 6300 Bee Cave Road, Building Two, Suite 500, Austin, Texas 78746, KEYBANK NATIONAL ASSOCIATION , a national banking association (“ KeyBank ”), as Bank, and with the other lending institutions that are or may become parties hereto pursuant to §16 as lenders (“ Banks ”), KEYBANK NATIONAL ASSOCIATION , as administrative agent and its successors and assigns (“ Agent ”) for itself, the other Banks and LC Issuers (as hereinafter defined), and KEYBANC CAPITAL MARKETS , as sole arranger and sole bookrunner.

RECITALS

WHEREAS , Banks (as hereinafter defined) are willing to issue letters of credit upon the terms and conditions contained herein;

NOW, THEREFORE , in consideration of the recitals herein and the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows:

§1. DEFINITIONS AND RULES OF INTERPRETATION

§1.1 Definitions

The following terms shall have the meanings set forth in this §1 or elsewhere in the provisions of this Agreement referred to below:

Affected Bank . See §16.7(iii).

Affiliates . As applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means (a) the possession, directly or indirectly, of the power to vote fifty percent (50%) or more of the stock, shares, voting trust certificates, beneficial interests, partnership interests, member interests or other interests having voting power for the election of directors of such Person or otherwise to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise, or (b) the ownership of (i) a general partnership interest, (ii) a managing member’s interest in a limited liability company or (iii) a limited partnership interest or preferred stock (or other ownership interest) representing fifty percent (50%) or more of the outstanding limited or general partnership interests, preferred stock or other ownership interests of such Person. In no event shall Agent, any LC Issuer or any Bank be deemed an Affiliate of Borrower.

Agent . As defined in the preamble hereto.

Agent’s Office . Agent’s office located at 127 Public Square, Cleveland, Ohio 44114, or at such other location as Agent may designate from time to time by notice to Borrower and the other Banks.

Agent’s Special Counsel . Bryan Cave LLP or such other counsel as may be selected by Agent.

Agreement . This Letter of Credit Facility Agreement, including the Schedules and Exhibits hereto.

Agreement Regarding Fees . Means, collectively, (i) the fee letter agreement dated as of October 5, 2017 among Agent, Arranger and Borrower regarding certain fees payable by Borrower in connection with this Agreement, and (ii) that certain letter agreement dated as of October 5, 2017, between Borrower and Synovus Bank.

Applicable Extension Notice . See §3.1(b)(ii)(A).

Arranger . KeyBanc Capital Markets.

Assignment and Assumption Agreement . See §16.1(a)(i).

Banks . KeyBank and the other lending institutions which may become parties to this Agreement, pursuant to §16 hereof, as is defined in the first paragraph of this Agreement, to include Banks, together with their permitted successors and assigns.

Base Rate . The term Base Rate shall mean, for any day, a fluctuating interest rate per annum as shall be in effect from time to time which rate per annum shall at all times be equal to the greatest of: (i) the rate of interest established by KeyBank from time to time as its “prime rate” whether or not publicly announced, which interest rate may or may not be the lowest rate charged by it for commercial loans or other extensions of credit; or (ii) the Federal Funds Effective Rate in effect from time to time, determined one Business Day in arrears, plus ½ of one percent (0.5%) per annum; or (iii) the then-applicable LIBOR Rate for a one (1) month interest period, plus two percent (2%) per annum.

Basel III . See §4.5.

Borrower . As defined in the preamble hereto.

Borrower’s Knowledge or Knowledge . The actual knowledge of the chief executive officer, Principal Financial Officer, chief financial officer (if different from the Principal Financial Officer) or general counsel of Borrower, after having conducted a reasonable investigation and inquiry thereof; provided, however, the foregoing shall not be deemed to require Borrower to obtain any written environmental site assessment reports.

Business Day . Any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state of New York, the State of Texas, and the State where Agent’s Office is located.

Cash Collateral . The $30,000,000 in cash deposited by Borrower with Agent in the Cash Collateral Account, as such amount is replenished or increased from time to time at request of Agent.

Cash Collateral Account . As defined in §5.2(a).

Change of Control . A Change of Control shall exist upon the occurrence of any of the following:

(a) a transaction in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) (other than Permitted Investors) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Forestar Group ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect a majority of the board of directors of Forestar Group, who did not have such power before such transaction; or

(b) Borrower ceases for any reason to be a wholly owned, direct or indirect Subsidiary of Forestar Group.

Closing Date . October 5, 2017.

Closing Date Deposit Account Control Agreement . The Deposit Account Control Agreement entered into on September 27, 2017 with respect to the Cash Collateral Account.

Code . The Internal Revenue Code of 1986, as amended.

Commitment . With respect to each Bank, the amount set forth on Schedule 1.1 hereto as the amount of such Bank’s commitment to purchase participations in Letters of Credit issued by any LC Issuer for the account of Borrower on behalf of itself, any of its Subsidiaries or any joint venture in which Borrower is a member, partner or similar entity in accordance with §2.1, as the same may be changed from time to time in accordance with the terms of this Agreement.

Commitment LC Fee . See §4.2.

Commitment Percentage . With respect to each Bank, the percentage set forth on Schedule 1.1 hereto as such Bank’s percentage of the aggregate Commitments of all of Banks.

Credit Documents . Collectively, this Agreement, the Agreement Regarding Fees, the Security Documents, and all other documents, instruments or agreements now or hereafter assumed, executed or delivered by or on behalf of Borrower in favor of Agent or Banks, as the same may be amended, modified, renewed, extended, consolidated, supplemented or restated from time to time.

Default . See §10.1.

Default Rate . See §4.8.

Defaulting Bank . Any Bank that has (a)(i) been adjudicated as or determined by any Governmental Authority having regulatory authority over such Bank or its assets to be insolvent or has a parent company that has been adjudicated as or determined by any Governmental Authority having regulatory authority over such Bank or its assets to be insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment, (b) given notice to Agent or Borrower that it will not make, or that it has disaffirmed or repudiated any obligation to issue any Letters of Credit hereunder (unless such notice is given by or on behalf of all Banks), or (c) become and remains a Delinquent Bank under §12.4(c).

Delinquent Bank . See §12.5(c)(ii).

Deposit Account Bank . KeyBank National Association.

Deposit Account Control Agreement . Each deposit account control agreement, in form and substance satisfactory to Agent, from time to time executed by a Deposit Account Bank in favor of Agent for the benefit of Agent and Banks.

Dodd-Frank . See §4.5.

Dollars or $ . Dollars in lawful currency of the United States of America.

Eligible Assignee : (a) Any Bank or any Affiliate of a Bank; (b) any commercial bank, savings bank, savings and loan association, investment or mutual fund, or similar financial institution which (i) has total assets of $5,000,000,000 or more, (ii) is “well capitalized” within the meaning of such term under the regulations promulgated under the auspices of the Federal Deposit Insurance Corporation Improvement Act of 1991, as amended, (iii) in the sole judgment of Agent, is engaged in the business of lending money and extending credit, and buying loans or participations in loans under credit facilities substantially similar to those extended under this Agreement, and (iv) in the sole judgment of Agent, is operationally and procedurally able to meet the obligations of a Bank hereunder; (c) any insurance company in the business of writing insurance which (i) has total assets of $5,000,000,000 or more (ii) is “best capitalized” within the meaning of such term under the applicable regulations of the National Association of Insurance Commissioners, and (iii) meets the requirements set forth in subclauses (iii) and (iv) of clause (b) above; and (d) any other financial institution having total assets of $5,000,000,000 (including a mutual fund or other fund under management of any investment manager having under its management total assets of $5,000,000,000 or more, and any of its Related Funds) which meets the requirement set forth in subclauses (iii) and (iv) of clause (b) above; provided that each Eligible Assignee must (A) be organized under the Laws of the United States of America, any State thereof or the District of Columbia, or, if a commercial bank, be organized under the Laws of the United States of America, any State thereof or the District of Columbia, the Cayman Islands or any country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of such a country, (B) act under the Credit Documents through a branch, agency or funding office located in the United States of America, (C) be exempt from withholding of tax on payments hereunder and deliver the documents related thereto pursuant to the Internal Revenue Code as in effect from time to time, and (D) not be Borrower or an Affiliate of Borrower.

Employee Benefit Plan . Any employee benefit plan within the meaning of §3(3) of ERISA maintained or contributed to by Borrower or any ERISA Affiliate, other than a Multiemployer Plan.

Equity Interests . With respect to any Person, all shares of capital stock, partnership interests, membership interests in a limited liability company or other ownership in participation or equivalent interests (however designated, whether voting or non-voting) of such Person’s equity capital (including any warrants, options or conversion or other purchase rights with respect to the foregoing) whether outstanding on the Closing Date or issued thereafter.

ERISA . The Employee Retirement Income Security Act of 1974, as amended and in effect from time to time and any rules and regulations promulgated pursuant thereto.

ERISA Affiliate . Any Person which is treated as a single employer with Borrower under §414 (b) or (c) of the Code.

ERISA Reportable Event . A reportable event with respect to a Guaranteed Pension Plan within the meaning of §4043 (c) of ERISA and the regulations promulgated thereunder as to which the requirement of notice has not been waived.

Event of Default . See §10.1.

Excluded Taxes . See §4.3(b)(v).

Existing Credit Agreement . The Third Amended and Restated Revolving Credit Agreement dated as of May 15, 2014 as amended prior to the Closing Date, among Forestar (USA) Real Estate Group Inc.,

the guarantors from time to time party thereto, KeyBank National Association as agent, and the other lenders party thereto.

Extended Letter of Credit . See §2.1(l).

Extension Effective Date . See §3.1(b)(i).

Extension Period . See §3.1(b)(i).

Facility Fee . See §2.2.

FATCA . Sections 1471 through 1474 of the Code and any regulations (whether final, temporary or proposed) that are issued thereunder or official government interpretations thereof.

Federal Funds Effective Rate . For any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by Agent from three (3) Federal funds brokers of recognized standing selected by Agent. Any change in the Federal Funds Effective Rate shall become effective as of the opening of business on the day on which such change in the Federal Funds Effective Rate becomes effective, without notice or demand of any kind.

Forestar Group . Forestar Group Inc., a Delaware corporation.

GAAP . Generally accepted accounting principles in the United States, applied on a basis consistent with the principles used in preparing Forestar Group’s audited consolidated financial statements as of the date of this Agreement, as such principles may be revised as a result of changes in such accounting principles implemented by Forestar Group and its consolidated Subsidiaries subsequent to such date. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth herein and Borrower or Required Banks shall so request, Agent, Banks, and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of Required Banks); provided that, until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein.

Governmental Authority . Any international, foreign, federal, state, county or municipal government, or political subdivision thereof; any governmental, quasi-governmental or regulatory agency, authority, board, bureau, commission, department, instrumentality or public body; or any court or administrative tribunal.

Guaranteed Pension Plan . Any employee pension benefit plan within the meaning of §3(2) of ERISA maintained or contributed to by Borrower or any ERISA Affiliate the benefits of which are guaranteed on termination in full or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan.

Horton Transaction . The transactions contemplated by the Agreement and Plan of Merger, dated as of June 29, 2017, among D.R. Horton, Inc., a Delaware corporation, Force Merger Sub, Inc., a Delaware corporation and Forestar Group.

Indemnified Taxes . Taxes other than Excluded Taxes.

KeyBank . As defined in the preamble hereto.

Late Charge . See §4.8.

LC Issuance Fee . See §4.2.

LIBOR Rate. The rate of interest calculated by Lender on a daily basis equal to the one month rate of interest (rounded upward to the next highest 1/16th of 1%) of the one month London interbank offered rate, as shown by Reuters, for deposits in U.S. Dollars at approximately 11:00 a.m. (London time) on the second preceding LIBOR Business Day, as determined and adjusted from time to time in Lender’s sole discretion. If Reuters no longer reports such rate or Lender determines in good faith that the rate so reported no longer accurately reflects the rate available to Lender in the London Interbank Market, Lender may select a replacement index. In the event that the LIBOR Rate is determined to be less than zero, such LIBOR Rate shall be deemed to be zero for purposes of this Agreement.

LC Issuer . Agent, in its capacity as issuer of the Prior Letters of Credit and any other Letters of Credit hereunder; Synovus Bank, in its capacity as issuer of the Prior Letters of Credit and any other Letter of Credit hereunder; and any other Bank that may from time to time be designated as an LC Issuer in accordance with the provisions of §2.1(m).

Letter of Credit . An irrevocable standby letter of credit issued by any LC Issuer pursuant to §2.1 for the account of Borrower on behalf of itself, any of its Subsidiaries or any joint venture in which Borrower is a member, partner or similar entity in respect of obligations of Borrower incurred pursuant to contracts made or performances undertaken or to be undertaken in the ordinary course of its business which is payable upon presentation of a sight draft and other documents described in the Letter of Credit, if any, as originally issued pursuant to this Agreement or as amended, modified, extended, renewed or supplemented.

Letter of Credit Fees . The fees due in connection with the Outstanding Letters of Credit pursuant to §4.2.

Letter of Credit Request . A written request from Borrower to any LC Issuer (a copy of which is contemporaneously provided to Agent) in the form of Exhibit C attached hereto, requesting the issuance of a Letter of Credit pursuant to §2.1(b).

Liens . See §8.1.

Material Adverse Effect . A materially adverse effect on (a) the business, assets, liabilities, condition (financial or otherwise), or results of operations of Borrower and its Subsidiaries, taken as a whole, (b) the ability of Borrower to perform its payment obligations under the Credit Documents, (c) the validity or enforceability of any of the Credit Documents, or (d) the material rights, benefits or interests of Banks, LC Issuers and Agent in and to this Agreement, any other Credit Document or the Cash Collateral.

Maturity Date . October 5, 2018, as the same may be extended pursuant to §3.1.

Moody’s . Moody’s Investors Service, Inc.

Multiemployer Plan . Any multiemployer plan within the meaning of §3(37) of ERISA to which Borrower or any ERISA Affiliate is making, or is required to make, contributions.

Non-Consenting Bank . See §16.7(i).

Notice . See §17.

Obligations . All indebtedness, obligations and liabilities of Borrower to any of Banks, LC Issuers and Agent, individually or collectively, under this Agreement or any of the other Credit Documents or in respect of any of the Letters of Credit, or other instruments at any time evidencing any of the foregoing, whether existing on the date of this Agreement or arising or incurred hereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, and including interest and fees that accrue after the commencement by or against Borrower of any proceeding under the United States Bankruptcy Code or other similar federal or State law, naming such Person as the debtor in such proceeding, regardless of whether or not such interest and fees are allowed claims in such proceeding.

OFAC Review Process . That certain review process established by Agent to determine if any potential transferee of any interests or any assignee of any portion of the Obligations or any of their members, officers or partners are a party with whom Agent and any Bank are restricted from doing business under (i) the regulations of OFAC, including those Persons named on OFAC’s Specially Designated and Blocked Persons list, or (ii) any other statute, executive order or other governmental action or list (including the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism).

Organizational Document . With respect to any Person other than a natural person, its articles or certificate of incorporation, formation or organization, partnership agreement, operating agreement, by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized Equity Interests.

Outstanding . With respect to issued Letters of Credit, the aggregate undrawn amounts under issued Letters of Credit as of any date of determination.

Patriot Act Customer Identification Process . That certain customer identification and review process established by Agent pursuant to the requirements of 31 U.S.C. §5318(1) and 31 C.F.R. §103.121 to verify the identity of all permitted transferees of interests in Borrower and any assignees of a portion of the Obligations hereunder.

PBGC . The Pension Benefit Guaranty Corporation created by §4002 of ERISA and any successor entity or entities having similar responsibilities.

Person . Any individual, corporation, partnership, limited liability company, trust, unincorporated association, business, or other legal entity, and any government or any governmental agency or political subdivision thereof.

Permitted Investors . D.R. Horton, Inc., a Delaware corporation and any of its Subsidiaries or Affiliates, individually or collectively.

Plan Assets . Assets of any Employee Benefit Plan subject to Part 4, Subtitle A, Title I of ERISA.

Principal Financial Officer . The primary officer or the authorized agent of Borrower or Forestar Group, as the case may be, responsible for the preparation and certification of financial statements.

Prior Letter of Credit . Any letter of credit issued prior to the Closing Date for the account of Borrower on behalf of itself, any of its Subsidiaries or any joint venture in which Borrower is a member, partner or similar entity and which will remain outstanding after the Closing Date, including, without

limitation those letters of credit issued on behalf of Forestar Petroleum Corporation and United Oil Corporation. The letters of credit existing on the Closing Date are set forth on Schedule 2 attached hereto.

Reimbursement Agreement . The applications made and agreements entered into between any LC Issuer and Borrower relating to a Letter of Credit on the form then in use by such LC Issuer as its standard form agreement with respect to similar letters of credit.

Related Fund . With respect to any fund that invests in loans, any other fund that invests in loans that is managed by the same investment advisor as such Bank or by an Affiliate of such Bank or such investment advisor.

Related Parties . With respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

Required Banks . As of any date, Bank or Banks (not including any Defaulting Bank which shall not be entitled to vote) whose aggregate Commitment Percentage exceeds fifty percent (50%) provided , however, that so long as there are less than three (3) Banks, the term “ Required Banks ” shall mean all of the non-Defaulting Banks. For purposes of this definition, a Bank shall be deemed to participate in a Letter of Credit to the extent such Bank has acquired a participation therein under the terms of this Agreement and has not failed to perform its obligations in respect of such participation.

Requirements . Any applicable federal or state law or governmental regulation, or any local ordinance, order or regulation.

S&P . Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies.

Security Documents . Collectively, the Deposit Account Control Agreements and any further collateral assignments now or hereafter delivered by Borrower to Agent for the benefit of Banks, including, without limitation, UCC-1 financing statements filed or recorded in connection therewith, as each may be further amended, modified, renewed, consolidated, supplemented or extended, from time to time.

Standby Letters of Credit . All Letters of Credit issued by any LC Issuer for the account of Borrower on behalf of itself, any of its Subsidiaries or any joint venture in which Borrower is a member, partner or similar entity pursuant to the terms set forth in this Agreement other than Trade Letters of Credit.

State . A state of the United States of America, or the District of Columbia.

Subsidiary . Any corporation, association, partnership, limited liability company, trust or other business or legal entity of which the designated parent shall at any time own, directly or indirectly through a Person or Persons, a greater than fifty percent (50%) ownership interest.

Taxes . See §4.3(b).

Trade Letters of Credit . All trade or documentary Letters of Credit issued by Agent for the account of Borrower on behalf of itself, any of its Subsidiaries or any joint venture in which Borrower is a member, partner or similar entity pursuant to the terms set forth in this Agreement, in connection with the purchase by Borrower of goods or services in the ordinary course of business.

§1.2 Rules of Interpretation .

(a) A reference to any document or agreement shall include such document or agreement as amended, modified, supplemented, extended, renewed, restated or replaced from time to time in accordance with its terms and the terms of this Agreement.

(b) The singular includes the plural and the plural includes the singular.

(d) A reference to any Person includes its permitted successors and permitted assigns.

(e) Accounting terms not otherwise defined herein have the meanings assigned to them by GAAP applied on a consistent basis by the accounting entity to which they refer.

(f) The words “include”, “includes” and “including” are not limiting.

(g) The words “approval” and “approved” as the context so determines, means an approval in writing given to the party seeking approval after full and fair disclosure to the party giving approval of all material facts necessary in order to determine whether approval should be granted.

(h) All terms not specifically defined herein or by GAAP, which terms are defined in the Uniform Commercial Code as in effect in the State of New York, have the meanings assigned to them therein.

(i) Reference to a particular “§”, refers to that section of this Agreement unless otherwise indicated.

(j) The words “herein”, “hereof”, “hereunder” and words of like import shall refer to this Agreement as a whole and not to any particular section or subdivision of this Agreement.

(k) All references in this Agreement to “Cleveland time” shall refer to prevailing time in Cleveland, Ohio.

§2. LETTERS OF CREDIT

§2.1 Letters of Credit .

(a) Issuance of Letters of Credit . Subject to the terms and conditions set forth in this Agreement, at any time and from time to time from the Closing Date through the day that is thirty (30) days prior to the Maturity Date, each LC Issuer shall issue such Letters of Credit as Borrower may request upon the delivery of a Letter of Credit Request as set forth in §2.1(b), provided that (i) no Default or Event of Default shall have occurred and be continuing, (ii) upon issuance of such Letter of Credit, the Outstanding Letters of Credit shall not exceed $30,000,000, (iii) upon the issuance of such Letter of Credit, the amount of all Outstanding Letters of Credit, shall not exceed the aggregate Commitments of all Banks, (iv) the conditions set forth in §11 shall have been satisfied, and (v) in no event shall any amount drawn under a Letter of Credit be available for reinstatement or a subsequent drawing under such Letter of Credit. The foregoing requirements shall not limit the ability of Borrower to obtain Letters of Credit in face amounts that are not rounded to the nearest $1,000 or other amount. Each Letter of Credit shall be issued pursuant to a Reimbursement Agreement; provided that to the extent any of the terms of the Reimbursement Agreement are contrary to the terms of this Agreement, the terms of this Agreement shall

control. Each Prior Letter of Credit shall be continued hereunder and shall be deemed to be a Letter of Credit issued pursuant to this Agreement. Each Bank acknowledges and agrees that, if and to the extent Agent agrees to reimburse or otherwise indemnify the issuer of each Prior Letter of Credit for draws thereunder or other obligations of Borrower arising in connection therewith, such Bank shall be deemed to have purchased a participation in such reimbursement or indemnification obligation of such LC Issuer in an amount equal to its Commitment Percentage of the amount of each such Prior Letter of Credit (if any).

(b) Letter of Credit Requests . Each Letter of Credit Request shall be submitted by Borrower to the applicable LC Issuer (with a copy to Agent if such LC Issuer is not Agent) at least five (5) Business Days prior to the date upon which the requested Letter of Credit is to be issued by such LC Issuer. Each Letter of Credit Request shall be executed by an authorized officer of Borrower. Each LC Issuer shall be entitled to conclusively rely on such Person’s authority to request a Letter of Credit on behalf of Borrower. No LC Issuer shall have the duty to verify the authenticity of any signature appearing on a Letter of Credit Request. Each such Letter of Credit Request shall contain (i) a statement as to whether such Letter of Credit is a Standby Letter of Credit or a Trade Letter of Credit, and (ii) a certification that the conditions to the issuance of such Letter of Credit set forth in §11 hereof have been satisfied. Borrower shall further deliver to the applicable LC Issuer such additional applications and documents as such LC Issuer reasonably may require, in conformity with the then standard practices of its letter of credit department, in connection with the issuance of such Letter of Credit. Following the receipt of a Letter of Credit Request (or a copy thereof, as applicable), Agent shall promptly notify each Bank of the Letter of Credit Request. Borrower assumes all risks with respect to the use of the Letters of Credit, under §2.1(i).

(c) LC Issuer Approval . Subject to the conditions set forth in this Agreement, the applicable LC Issuer, if it reasonably approves of the Letter of Credit Request, shall issue the Letter of Credit on or before five (5) Business Days following receipt of the documents required in §2.1(b), or at such later date as Borrower may direct in writing. Each Letter of Credit shall be in form and substance satisfactory to the applicable LC Issuer in its sole discretion.

(d) Bank Participation . Upon the issuance of a Letter of Credit, each Bank shall be deemed to have purchased a participation therein from the applicable LC Issuer in an amount equal to its Commitment Percentage of the amount of such Letter of Credit.

(e) Amounts Drawn . If and to the extent that any amounts are drawn upon any Letter of Credit, unless reimbursed by Borrower on the date such draw is honored by the applicable LC Issuer, from the date of payment thereof by such LC Issuer then each other Bank, shall reimburse such LC Issuer by its applicable Commitment Percentage. Agent then shall reimburse each Bank from the Cash Collateral.

(f) Bankruptcy . If after the issuance of a Letter of Credit by the applicable LC Issuer, but prior to the funding of any portion thereof by such LC Issuer or a Bank, one of the events described in §10.1(e), (f) or (g) shall have occurred, each Bank will immediately transfer to the applicable LC Issuer in immediately available funds an amount equal to such Bank’s Commitment Percentage of the Outstanding Letters of Credit issued by such LC Issuer, such amount to be held by the applicable LC Issuer as security for the payment of the Letters of Credit.

(g) Repayment to Banks . Whenever at any time after any LC Issuer has received from any Bank such Bank’s payment of funds under a Letter of Credit and thereafter such LC Issuer receives any payment on account thereof, then such LC Issuer will distribute to such Bank its participating interest in such amount (appropriately adjusted in the case of interest payments to reflect the period of time during which such Bank’s participating interest was outstanding and funded); provided , however , that in

the event that such payment received by such LC Issuer is required to be returned, such Bank will return to such LC Issuer any portion thereof previously distributed by such LC Issuer to it.

(h) Funds for Draws . Upon the receipt by an LC Issuer of any draw or other presentation for payment of a Letter of Credit and the payment of any amount under a Letter of Credit, the applicable LC Issuer shall notify Agent and Agent shall, without notice to or the consent of Borrower, direct Banks to fund to such LC Issuer in accordance with §2.7 on or before 2:00 p.m. (Cleveland time) on the next Business Day their respective Commitment Percentages of the amount so paid by such LC Issuer. The proceeds of such funding shall be paid to such LC Issuer to reimburse such LC Issuer for the payment made by it under the Letter of Credit. The provisions of §2.7 shall apply to any Bank or Banks failing or refusing to fund its Commitment Percentage of any such draw.

(i) Risks . The Obligations of Borrower to LC Issuers and Banks under this Agreement in connection with the issuance of a Letter of Credit shall be absolute, unconditional and irrevocable, and shall be paid and performed strictly in accordance with the terms of this Agreement, notwithstanding any of the following circumstances: (i) any improper use which may be made of any Letter of Credit or any improper acts or omissions of any beneficiary or transferee of any Letter of Credit in connection therewith; (ii) the existence of any claim, set-off, defense or any right which Borrower may have at any time against any beneficiary or any transferee of any Letter of Credit (or persons or entities for whom any such beneficiary or any such transferee may be acting) or Banks (other than the defense of payment to Banks in accordance with the terms of this Agreement) or any other Person, whether in connection with any Letter of Credit, this Agreement, any other Credit Document, or any unrelated transaction; (iii) any statement or any other documents presented to an LC Issuer under any Letter of Credit proving to be insufficient, forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; (iv) any breach of any agreement between Borrower and any beneficiary or transferee of any Letter of Credit; (v) any irregularity in the transaction with respect to which any Letter of Credit is issued, including any fraud by the beneficiary or any transferee of such Letter of Credit; and (vi) payment by any LC Issuer under any Letter of Credit against presentation of a sight draft or a certificate which does not comply with the terms of such Letter of Credit in any non-material respect; provided , that Borrower shall not be precluded from asserting any claim for damages suffered by Borrower to the extent caused by the bad faith, willful misconduct or gross negligence of any LC Issuer in determining whether a request presented under any Letter of Credit issued by it complied on its face with the terms of such Letter of Credit.

(j) Non-Renewal . Each LC Issuer may, at its option, during the existence of a Default or Event of Default, elect not to renew any Letter of Credit by giving written notice of non-renewal to Borrower at least thirty (30) days prior to the expiration date of such Letter of Credit.

(k) Subsequent Issuance . The issuance of any supplement, modification, amendment, renewal or extension to or of any Letter of Credit shall be treated in all respects the same as the issuance of a new Letter of Credit.

(l) Extended Letters of Credit; Cash Collateral . Notwithstanding any contrary provisions of §2.1, any Letters of Credit issued with expiry dates later than the scheduled Maturity Date or any extended Maturity Date in which Borrower does not elect to give an Extension Notice (any such Letter of Credit, an “ Extended Letter of Credit ”), then from the date that is five (5) days prior to the scheduled Maturity Date and at all times thereafter when any Extended Letters of Credit are Outstanding, Borrower shall maintain cash collateral in a special purpose interest bearing collateral account in the name of Borrower, but subject to the sole dominion and control of Agent, in an amount not less than one hundred five percent (105%) of the aggregate Extended Letters of Credit then Outstanding.

(m) Designation of LC Issuers . Upon request by Borrower and approval by Agent (such approval not to be unreasonably withheld or delayed), a Bank may at any time agree to be designated as an LC Issuer hereunder, which designation shall be set forth in a written instrument or instruments delivered by Borrower, Agent and such Bank. Agent shall promptly notify the other Banks of such designation. From and after such designation and unless and until such Bank resigns as an LC Issuer in accordance with the further provisions of this §2.1(m), such Bank shall have all of the rights and obligations of an LC Issuer hereunder. An LC Issuer shall continue to be an LC Issuer unless and until (i) it shall have given Borrower and Agent notice that it has elected to resign as an LC Issuer and (ii) unless there is, at the time of such notice, at least one other LC Issuer, another Bank shall have agreed to be a replacement LC Issuer and shall have been approved in writing by Agent and Borrower. A resigning LC Issuer shall continue to have the rights and obligations of an LC Issuer hereunder solely with respect to Letters of Credit theretofore issued by it, notwithstanding the designation of a replacement LC Issuer hereunder, but upon its notice of resignation (or, if at the time of such notice, there is not at least one other LC Issuer, then upon such designation of a replacement LC Issuer), the resigning LC Issuer shall not thereafter issue any Letter of Credit (unless it shall again thereafter be designated as an LC Issuer in accordance with the provisions of this §2.1(m)). The assignment of, or grant of a participation interest in, all or any part of its Commitment by a Bank that is also an LC Issuer shall not constitute an assignment or transfer of any of its rights or obligations as an LC Issuer.

(n) LC Issuer Reporting Requirements . Each LC Issuer shall, no later than the third (3 rd ) Business Day following the last day of each month, provide to Agent a schedule of the Letters of Credit issued by it showing the issuance date, account party, original face amount, amount (if any) paid thereunder, expiration date and the reference number of each Letter of Credit Outstanding at any time during such month and the aggregate amount (if any) payable by Borrower or other account party to such LC Issuer during the month pursuant to §2.1. Copies of such reports shall be provided to each Bank by Agent within five (5) Business Days following receipt by Agent. Agent shall, within five (5) Business Days following receipt from all LC Issuers of the reports provided for in this §2.1 for the months of March, June, September and December, respectively, deliver to Borrower a quarterly statement of the Letter of Credit Fees then due and payable.

§2.2 Unused Facility Fee .

Commencing on the Closing Date and ending on the Maturity Date, Borrower agrees to pay to Agent for the account of Banks in accordance with their respective Commitment Percentages an unused facility fee (the “ Facility Fee ”) calculated at the rate of fifteen one hundredths of one percent (0.15%) per annum, in each case on the daily amount by which the aggregate Commitments from time to time exceed the sum of the Outstanding Letters of Credit during each fiscal quarter or portion thereof. The Facility Fee shall be payable quarterly in arrears on the first day of each fiscal quarter of Borrower for the immediately preceding fiscal quarter, with a final payment due and payable on the Maturity Date. Any payment due under this Section shall be prorated for any partial fiscal quarter. The Facility Fee shall be fully earned when due and non-refundable when paid. Notwithstanding the foregoing, no Facility Fee shall accrue on the Commitment of a Defaulting Bank so long as such Bank shall be a Defaulting Bank and any Facility Fee accrued with respect to the Commitment of a Defaulting Bank during the period prior to the time such Bank became a Defaulting Bank and unpaid at such time shall not be payable by the Borrower so long as such Bank shall be a Defaulting Bank.

§3. REPAYMENT AND REDUCTION IN COMMITMENT

§3.1 Stated Maturity; Extension Option .

(a) Maturity Date . Borrower promises to pay on the applicable Maturity Date, and there shall become absolutely due and payable on such Maturity Date, the entire Outstanding Obligations subject to such Maturity Date outstanding on such date, together with any and all accrued and unpaid interest thereon.

(b) Extension Options .

(i) At any time after the Closing Date, Borrower shall have the option to extend the Maturity Date for a one (1) year period (“ Extension Period ”) by giving Agent written Notice of such election to extend at least sixty (60) days but not more than one hundred-twenty (120) days prior to the then existing Maturity Date with effective date of such extension being the then existing Maturity Date (“ Extension Effective Date ”), subject to satisfaction of each of the applicable conditions set forth in subparagraph (ii) of this §3.1(b).

(ii) (A) no Default or Event of Default exists on the date Notice of the applicable extension is given to Agent (the “ Applicable Extension Notice ”) and no Default or Event of Default exists on the Extension Effective Date (B) each of the representations and warranties made by Borrower in this Agreement or the other Credit Documents or in any document or instrument delivered pursuant to or in connection with this Agreement shall be true in all material respects as of the date they were made, as of the date the Applicable Extension Notice is given to Agent and as of the Extension Effective Date (except to the extent of changes resulting from transactions permitted by the Credit Documents, it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date), (C) Borrower executes and delivers such amendments or modifications to the Security Documents as Agent may require in order to evidence such extension and to maintain the effectiveness and priority of the Security Documents, and (D) Borrower shall have paid to Agent on the Extension Effective Date, for the account of Banks in accordance with their respective percentage of the aggregate Commitments of all Banks, an extension fee equal to fifteen one hundredths of one percent (0.15%) of the aggregate Commitments of Banks as of the Extension Effective Date.

§3.2 Reduction and Termination of Commitment .

Borrower shall have the right at any time and from time to time upon five (5) Business Days’ prior written notice to Agent to reduce by $1,000,000 or an integral multiple of $1,000,000 in excess thereof (provided that in no event shall the Commitments be reduced in such manner to an amount less than the amount of Outstanding Letters of Credit unless all Obligations are being repaid or prepaid and this Agreement is terminated) or to terminate entirely the unborrowed portion of the Commitments, whereupon the Commitments of Banks shall be reduced pro rata in accordance with their respective Commitment Percentages of the amount specified in such notice or, as the case may be, terminated, any such termination or reduction to be without penalty; provided , however , that no such termination or reduction shall be permitted if, after giving effect thereto, the sum of Outstanding Letters of Credit would exceed the Commitments of all Banks as so terminated or reduced. Promptly after receiving any notice from Borrower delivered pursuant to this §3.2, Agent will notify Banks of the substance thereof. Upon the effective date of any such reduction or termination, Borrower shall pay to Agent for the respective accounts of Banks the full amount of any Facility Fee under §2.2 then accrued on the amount of the reduction. No reduction or termination of the Commitment may be reinstated.

§4. CERTAIN GENERAL PROVISIONS

§4.1 Certain Fees .

Borrower agrees to pay to KeyBank certain fees for services rendered or to be rendered in connection with the issuance of Letters of Credit as provided in the Agreement Regarding Fees. All such fees shall be fully earned when due and non-refundable when paid.

§4.2 Letter of Credit Fees.

(a) Borrower shall pay to Agent, for the account of the applicable LC Issuer, one-eighth of one percent (0.125%) times the amount of such Letter of Credit (the “ LC Issuance Fee ”), with respect to each Letter of Credit issued or renewed under this Agreement; provided that such LC Issuance Fee shall not be due and payable with respect to any Prior Letter of Credit on the Closing Date. All LC Issuance Fees shall be due upon issuance or at time of renewal of such Letter of Credit and paid to Agent. Upon receipt of any LC Issuance Fee, Agent shall pay to the applicable LC Issuer such LC Issuance Fee as a fee due to such LC Issuer.

(b) Additionally, Borrower shall pay to Agent, for the account of the Banks a Letter of Credit commitment fee with respect to all Letters of Credit equal to one and quarter percent (1.25%) per annum on the amount of the Outstanding Letters of Credit for any given month (“ Commitment LC Fee ”, together with the LC Issuance Fee, the “ Letter of Credit Fees ”). All Commitment LC Fees shall be paid monthly in arrears on the first day of each calendar month. Upon receipt of the Commitment LC Fee, Agent shall remit to each Bank an amount equal to each such Bank’s Commitment Percentage of the Commitment LC Fee.

§4.3 Funds for Payments .

(a) All payments of principal, interest, Facility Fees, Letter of Credit Fees, Agent’s fees, closing fees, and any other amounts due hereunder or under any of the other Credit Documents shall be made to Agent, for the respective accounts of Banks, LC Issuers and Agent, as the case may be, at Agent’s Office, no later than 1:00 p.m. (Cleveland time) on the day when due, in each case in lawful money of the United States in immediately available funds.

(b) Unless otherwise required by law, any and all payments by Borrower to or for the account of any Bank or any LC Issuer hereunder or under any other Credit Document shall be made without setoff or counterclaim and free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges and withholdings (collectively, “ Taxes ”) and all liabilities with respect thereto, excluding: (i) Taxes imposed on or measured by the net income (including branch profits or similar Taxes) of, and gross receipts, franchise or similar taxes imposed on, any Bank, any LC Issuer or Agent by the jurisdiction (or subdivision thereof) under the laws of which such Bank, such LC Issuer or Agent is organized or in which its principal executive office is located or in which its applicable lending office is located or in which it is otherwise doing business, (ii) in the case of each Bank, each LC Issuer or Agent, any United States withholding tax imposed on such payments, but other than in the case of an assignee pursuant to the election by Borrower under §4.9, only to the extent that such Bank or Agent is subject to United States withholding tax at the time such Bank, such LC Issuer or Agent first becomes a party to this Agreement or changes its applicable lending office, (iii) any backup withholding tax imposed by the United States of America (or any state or locality thereof) on a Bank, a LC Issuer or Agent, (iv) any Taxes imposed as the result of the failure of a recipient of such payment to comply with

§4.4(c) or §18.11, and (v) any Taxes imposed by FATCA (all such excluded Taxes being hereinafter referred to as “ Excluded Taxes ”). If Borrower shall be required by law to deduct any Indemnified Taxes from or in respect of any sum payable hereunder or under any other Credit Document to any Bank, any LC Issuer or Agent, (A) the sum payable shall be increased as necessary so that after making all such required deductions (including deductions applicable to additional sums payable under this §4.3(b)) such Bank or such LC Issuer receives an amount equal to the sum it would have received had no such deductions for Indemnified Taxes been required, (B) Borrower shall make such deductions, (C) Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (D) Borrower shall furnish to Agent, for delivery to such Bank or such LC Issuer, the original or a certified copy of a receipt evidencing payment thereof.

(c) Each Bank and each LC Issuer organized under the laws of a jurisdiction outside the United States, if requested in writing by Borrower (but only so long as such Bank remains lawfully able to do so), shall provide Borrower with such duly executed form(s) or statement(s) which may, from time to time, be prescribed by law and, which, pursuant to applicable provisions of (i) an income tax treaty between the United States and the country of residence of such Bank or such LC Issuer, (ii) the Code, or (iii) any applicable rules or regulations in effect under (i) or (ii) above, indicates the withholding status of such Bank or such LC Issuer; provided that nothing herein (including without limitation the failure or inability to provide such form or statement) shall relieve Borrower of its obligations under §4.4(b). In the event that Borrower shall have delivered the certificates or vouchers described above for any payments made by Borrower and such Bank receives a refund of any taxes paid by Borrower pursuant to §4.4(b), such Bank or such LC Issuer will pay to Borrower the amount of such refund promptly upon receipt thereof; provided that if at any time thereafter such Bank or such LC Issuer is required to return such refund, Borrower shall promptly repay to such Bank or such LC Issuer the amount of such refund.

(d) Each Bank and each LC Issuer that is organized under the laws of a jurisdiction other than the United States shall comply with any certification, documentation, information or other reporting necessary to establish an exemption from withholding under FATCA and shall provide any other documentation reasonably requested by Borrower or Agent sufficient for Agent and Borrower to comply with their obligations under FATCA and to determine that such Bank or such LC Issuer has complied with such applicable reporting requirements.

(e) Each Bank, each LC Issuer and Agent that is a United States person (within the meaning of Section 7701(a)(30) of the Code) shall, upon the request of Borrower, provide a duly executed IRS Form W-9 to Borrower certifying that such Bank or such LC Issuer is exempt from backup withholding.

§4.4 Computations .

All computations of fees to the extent applicable shall be based on a 365-day year and paid for the actual number of days elapsed. Whenever a payment hereunder or under any of the other Credit Documents becomes due on a day that is not a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and interest shall accrue during such extension.

§4.5 Additional Costs, Etc.

Subject to §4.4, if any present or future applicable law, or any amendment or modification of present applicable law, which expression, as used herein, includes statutes, rules and regulations thereunder and legally binding interpretations thereof by any competent court or by any governmental or other regulatory body or official with appropriate jurisdiction charged with the administration or the interpretation thereof and requests, directives, instructions and notices at any time or from time to time

hereafter made upon or otherwise issued to any Bank, any LC Issuer or Agent by any central bank or other fiscal, monetary or other authority (whether or not having the force of law) and including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines and directives under or issued in connection therewith (collectively, “ Dodd-Frank ”) and all requests, rules, guidelines or directives promulgated by Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III (collectively, “ Basel III ”), shall:

(a) subject any Bank, any LC Issuer or Agent to any tax, levy, impost, duty, charge, fee, deduction or withholding of any nature with respect to this Agreement, the other Credit Documents, such Bank’s Commitment, a Letter of Credit, participation in a Letter of Credit (other than Excluded Taxes), or

(b) materially change the basis of taxation (except for changes in taxes on income or profits) of payments to any Bank or any LC Issuer of the principal of or the interest on any Letter of Credit or participation therein or any other amounts payable to any Bank or any LC Issuer under this Agreement or the other Credit Documents, or

(c) impose or increase or render applicable any special deposit, reserve, assessment, liquidity, capital adequacy or other similar requirements (whether or not having the force of law) against assets held by, or deposits in or for the account of, or Letters of Credit by, or commitments of an office of any Bank or any LC Issuer, or

(d) impose on any Bank, any LC Issuer or Agent any other conditions or requirements with respect to this Agreement, the other Credit Documents, such Bank’s Commitment, a Letter of Credit or participation therein or any class of loans or commitments of which any of the Letters of Credit or such Bank’s Commitment forms a part, and the result of any of the foregoing is

(i) to increase the cost to any Bank or LC Issuer of making, funding, issuing, renewing, extending or maintaining any of the Letters of Credit (or of maintaining its obligation to participate in or to issue any Letters of Credit) or such Bank’s Commitment, or

(ii) to reduce the amount of principal, interest or other amount payable to such Bank, such LC Issuer or Agent hereunder on account of such Bank’s Commitment or any of the Letters of Credit, or

(iii) to require such Bank, such LC Issuer or Agent to make any payment or to forego any interest or other sum payable hereunder, the amount of which payment or foregone interest or other sum is calculated by reference to the gross amount of any sum receivable or deemed received by such Bank, such LC Issuer or Agent from Borrower hereunder;

then, and in each such case, Borrower will, within fifteen (15) days of demand made by such Bank, such LC Issuer or (as the case may be) Agent at any time and from time to time and as often as the occasion therefor may arise, pay to such Bank, such LC Issuer or Agent such additional amounts as such Bank, such LC Issuer or Agent shall determine in good faith to be sufficient to compensate such Bank, such LC Issuer or Agent for such additional cost, reduction, payment or foregone interest or other sum. Each Bank, each LC Issuer and Agent in determining such amounts may use any reasonable averaging and attribution methods, generally applied by such Bank, such LC Issuer or Agent.

§4.6 Capital Adequacy .

If after the Closing Date any Bank or any LC Issuer determines that (a) the adoption of or change in any law, rule, regulation, guideline, directive or request (whether or not having the force of law) regarding liquidity or capital requirements for banks or bank holding companies or any change in the interpretation or application thereof by any Governmental Authority, central bank or comparable agency charged with the administration thereof, and for purposes hereof, Dodd-Frank and Basel III shall each be deemed a change described herein regardless of the date enacted, adopted or issued, or (b) compliance by such Bank or such LC Issuer or its parent bank holding company with any guideline, request or directive of any such entity regarding liquidity and capital adequacy or any amendment or change in interpretation of any existing guideline, request or directive (whether or not having the force of law), has the effect of reducing the return on such Bank’s, such LC Issuer’s or such holding company’s capital as a consequence of such LC Issuer’s commitment to issue Letters of Credit hereunder to a level below that which such Bank, such LC Issuer or holding company could have achieved but for such adoption, change or compliance (taking into consideration such Bank’s, such LC Issuer’s or such holding company’s then existing policies with respect to liquidity and capital adequacy and assuming the full utilization of such entity’s capital) by any amount deemed by such Bank or such LC Issuer to be material, then such Bank or such LC Issuer may notify Borrower thereof. Borrower agrees to pay to such Bank or such LC Issuer the amount of such reduction in the return on capital as and when such reduction is determined, upon presentation by such Bank or such LC Issuer of a statement of the amount setting for such Bank’s or such LC Issuer’s calculation thereof. In determining such amount, such Bank or such LC Issuer may use any reasonable averaging and attribution methods.

§4.7 Indemnity by Borrower .

Borrower agrees to indemnify each Bank and to hold each Bank harmless from and against any loss, cost or expense that such Bank may sustain or incur as a consequence of a default by Borrower in making the payments or performing its obligations under §§4.8, 4.9, 4.10 or 4.12.

§4.8 Late Charge; Default Rate .

Following the occurrence and during the continuance of any Event of Default, and regardless of whether or not Banks shall have accelerated the maturity of the Obligations, at the election of Required Banks, all Obligations shall bear interest payable on demand at a rate per annum equal to two percent (2%) above the Base Rate (the “ Default Rate ”), until such amount shall be paid in full (after as well as before judgment), or if such rate shall exceed the maximum rate permitted by law, then at the maximum rate permitted by law. Borrower shall pay Agent, for the account of the applicable Banks, a late charge equal to five percent (5%) of any amount payable hereunder or under the Credit Documents (a “ Late Charge ”), which is not paid within ten (10) days of the date when due. Such late charge is and shall be deemed to be a charge to compensate Agent and Banks for administrative services and costs incurred in connection with the related delinquent payment and shall under no circumstances constitute or be deemed to be a charge for the use of money.

§4.9 Certificate .

A certificate setting forth any amounts payable pursuant to §4.5, §4.6, §4.7 or §4.8 and a reasonably detailed explanation and calculation of such amounts which are due, submitted by any Bank, any LC Issuer or Agent to Borrower, shall be conclusive in the absence of manifest error.

§4.10 Limitation on Interest .

Notwithstanding anything in this Agreement to the contrary, all agreements between Borrower and Banks and Agent, whether now existing or hereafter arising and whether written or oral, are hereby limited so that in no contingency, whether by reason of acceleration of the maturity of any of the Obligations or otherwise, shall the interest contracted for, charged or received by Banks exceed the maximum amount permissible under applicable law. If, from any circumstance whatsoever, interest would otherwise be payable to Banks in excess of the maximum lawful amount, the interest payable to Banks shall be reduced to the maximum amount permitted under applicable law; and if from any circumstance Banks shall ever receive anything of value deemed interest by applicable law in excess of the maximum lawful amount, an amount equal to any excessive interest shall be applied to the reduction of the principal balance of the Obligations and to the payment of interest or, if such excessive interest exceeds the unpaid balance of principal of the Obligations, such excess shall be refunded to Borrower. All interest paid or agreed to be paid to Banks shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full period until payment in full of the principal of the Obligations (including the period of any renewal or extension thereof) so that the interest thereon for such full period shall not exceed the maximum amount permitted by applicable law. This section shall control all agreements between Borrower and Banks and Agent.

§5. COLLATERAL SECURITY

§5.1 Cash Collateral .

The Obligations shall be secured by (i) a perfected first priority lien or security title and security interest to be held by Agent for the benefit of Banks in the Cash Collateral Account and the Cash Collateral from time to time held therein and (ii) such additional collateral, if any, as Borrower may agree to grant and Agent for the benefit of Banks from time to time may accept as security for the Obligations.

§5.2 Cash Collateral Account .

(a) On or prior to the Closing Date, Agent opened an account at KeyBank National Bank in the name of Borrower with the account number described in document (i) of the definition of “Agreement Regarding Fees” (the “ Cash Collateral Account ”) to hold the Cash Collateral in an interest bearing account as collateral security for the Obligations. Borrower hereby grants to Agent, for the benefit of the Banks, a perfected, first-in-priority security interest in and to the Cash Collateral Account and all funds now or at any time hereafter held on deposit in the Cash Collateral Account to secure the payment and performance of the Obligations, and, Agent shall have the right to exercise all rights and remedies available to a secured party under the Uniform Commercial Code with respect to such funds. Notwithstanding anything to the contrary contained herein or in any other Loan Document, it is understood and agreed that Agent shall not give instructions under the Closing Date Deposit Account Control Agreement unless an Event of Default has occurred and is continuing.

(b) Borrower hereby agrees to maintain and replenish the Cash Collateral in the Cash Collateral Account within three (3) Business Days of demand from Agent in the event that any Cash Collateral has been applied to the Obligations. Failure to replenish the Cash Collateral will result in an automatic Event of Default hereunder.

§6. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Agent and LC Issuers as follows:

§6.1 Corporate Authority, Etc .

(a) Organization; Good Standing . Borrower is a Delaware corporation duly organized pursuant to its certificate of incorporation filed with the Secretary of State of Delaware and is validly existing under the laws of the State of Delaware. Borrower (i) has all requisite power to own its properties and conduct its business as now conducted and as presently contemplated, and (ii) is duly authorized to do business in each other jurisdiction where a failure to be so authorized in such other jurisdiction could reasonably be expected to have a material adverse effect on the Borrower’s business, assets or financial condition.

(b) Authorization . The execution, delivery and performance of this Agreement and the other Credit Documents to which Borrower is or becomes a party and the transactions contemplated hereby and thereby (i) are within the authority of such Person, (ii) have been duly authorized by all necessary proceedings on the part of such Person, (including any required stockholder, partner or member approval), (iii) do not and will not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which such Person is subject or any judgment, order, writ, injunction, license or permit applicable to such Person, except for such conflicts or breaches that, individually and the aggregate, could not reasonably be expected to have a Material Adverse Effect, (iv) do not and will not conflict with or constitute a default (whether with the passage of time or the giving of notice, or both) under any provision of the Organizational Documents of, or any mortgage, indenture, agreement, contract or other instrument binding upon, such Person or any of its properties or to which such Person is subject, except for such conflicts or defaults that, individually and in the aggregate, could not reasonably be expected to have a Material Adverse Effect and (v) do not and will not result in or require the imposition of any Lien or other encumbrance on any of the properties, assets or rights of such Person except for the Liens and security title granted by the Credit Documents.

(c) Enforceability . The execution and delivery of this Agreement and the other Credit Documents to which Borrower is or becomes a party are valid and legally binding obligations of such Person enforceable in accordance with the respective terms and provisions hereof and thereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.

§6.2 Approvals .

The execution, delivery and performance by Borrower of this Agreement and the other Credit Documents to which is or becomes a party and the transactions contemplated hereby and thereby do not require the approval or consent of, or filing with, any Person or the authorization, consent or approval of, or any license or permit issued by, or any filing or registration with, or the giving of any notice to, any court, department, board, commission or other governmental agency or authority, in each case other than those already obtained and the filing of the Security Documents in the appropriate records office with respect thereto, or where failure to obtain or make such authorizations, consents, approvals, licenses, permits or registrations or to give notice that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

§6.3 No Material Changes .

As of the Closing Date there has occurred no materially adverse change in the financial condition or business of Forestar Group and any of its Subsidiaries, taken as a whole, as shown on or reflected in the balance sheet of Forestar Group or its Subsidiaries as of June 30, 2017, or its statement of income or cash

flows for the fiscal quarter then ended, other than (i) changes in the ordinary course of business that have not had any materially adverse effect either individually or in the aggregate on the business or financial condition of Borrower and its Subsidiaries and (ii) changes resulting from the Horton Transaction.

§6.4 Litigation .

As of the Closing Date, except as described on Schedule 6.4 hereto or as disclosed in Forestar Group’s annual, quarterly or current reports, each as filed with the Securities and Exchange Commission prior to the Closing Date, there are no actions, suits, proceedings or investigations of any kind pending or to Borrower’s Knowledge, threatened in writing, against Borrower or its Subsidiaries before any court, tribunal, administrative agency or board, mediator or arbitrator that, if adversely determined, individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. As of the Closing Date, there are no judgments outstanding against or affecting Borrower or any of the Cash Collateral.

§6.5 Compliance with Organizational Documents, Other Instruments, Laws, Etc .

Borrower is not in violation of any provision of its Organizational Documents, or any decree, order, judgment, statute, license, rule or regulation, in any of the foregoing cases in a manner that could reasonably be expected to result in the imposition of substantial penalties or materially and adversely affect the financial condition, properties or business of such Person.

§6.6 No Event of Default .

No Default or Event of Default has occurred and is continuing.

§6.7 Investment Company Act .

Borrower is not an “investment company”, or an “affiliated company” or a “principal underwriter” of an “investment company”, as such terms are defined in the Investment Company Act of 1940.

§6.8 Setoff, Etc.

Borrower is the owner of the Cash Collateral free from any lien, security interest, encumbrance or other claim or demand, except those encumbrances permitted in the Security Documents.

§6.9 Employee Benefit Plans .

Borrower and each ERISA Affiliate has fulfilled its obligations under the minimum funding standards of ERISA and the Code with respect to each Guaranteed Pension Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each Employee Benefit Plan. Neither Borrower nor any ERISA Affiliate has (a) sought a waiver of the minimum funding standard under Section 412 of the Code in respect of any Employee Benefit Plan, (b) failed to make any contribution or payment to any Guaranteed Pension Plan, or made any amendment to any Guaranteed Pension Plan, which has resulted in the imposition of a Lien or the posting of a bond or other security under ERISA or the Code, or (c) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. None of the assets of Borrower constitute a Plan Asset.

§6.10 Credit Documents .

All of the representations and warranties of Borrower made in this Agreement and the other Credit Documents or any document or instrument delivered by Borrower to Agent or Banks pursuant to or in connection with any of such Credit Documents are true and correct in all material respects, and Borrower has not failed to disclose such information as is necessary to make such representations and warranties not misleading. The information, reports, financial statements, exhibits and schedules (other than information of a general economic or industry specific nature, projected financial information or other forward looking information which were prepared in good faith) furnished by Borrower to Agent and Banks in connection with the negotiation, preparation or delivery of this Agreement and the other Credit Documents or included herein or therein or delivered pursuant hereto or thereto, when taken as a whole, do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein not misleading. All projections delivered to the Agent and Banks are based on reasonable estimates, on the date as of which such information is stated or certified; it being understood by the Agent and Banks that such projections are as to future events and are not to be viewed as facts, the projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may significantly differ from the projected results and such differences may be material

§6.11 OFAC .

Borrower is not a person with whom Agent is restricted from doing business under OFAC (including, those Persons named on OFAC’s Specially Designated and Blocked Persons list) or under any statute, executive order (including, the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action and is not and shall not engage in any dealings or transactions or otherwise be associated with such persons. In addition, Borrower hereby agrees to provide Agent with any additional information that Agent deems necessary from time to time in order to ensure compliance with all applicable laws concerning money laundering and similar activities.

§6.12 No Fraudulent Intent .

Neither the execution and delivery of this Agreement or any of the other Credit Documents nor the performance of any actions required hereunder or thereunder is being undertaken by Borrower with or as a result of any actual intent by any of such Persons to hinder, delay or defraud any entity to which any of such Persons is now or will hereafter become indebted.

§6.13 Transaction in Best Interests of Borrower; Consideration .

The transactions evidenced by this Agreement and the other Credit Documents are in the best interests of Borrower. The direct and indirect benefits to inure to Borrower pursuant to this Agreement and the other Credit Documents constitute substantially more than “reasonably equivalent value” (as such term is used in Section 548 of Bankruptcy Code) and “valuable consideration,” “fair value,” and “fair consideration,” (as such terms are used in any applicable state fraudulent conveyance law), in exchange for the Obligations of Borrower pursuant to this Agreement and the other Credit Documents.

§6.14 Solvency .

As of the Closing Date and after giving effect to the transactions contemplated by this Agreement and the other Credit Documents, including all of the Letters of Credit issued or to be issued, hereunder,

with respect to Borrower and its Subsidiaries, taken as a whole, (a) the fair value of their assets on a going concern basis is greater than the amount of their liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated, (b) the present fair saleable value of their assets is not less than the amount that will be required to pay the probable liability on their debts as they become absolute and matured, (c) they will be able to pay their debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business (taking into account all available financing options), (d) they do not intend to, and do not believe that they will, incur debts or liabilities beyond their ability to pay as such debts and liabilities mature and (e) they are not engaged in business or a transaction, and are not about to engage in business or a transaction, for which their property would constitute unreasonably small capital.

§6.15 No Bankruptcy Filing .

Borrower is not contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of its assets or property, and to Borrower’s Knowledge, no Person is contemplating the filing of any such petition against Borrower.

§7. AFFIRMATIVE COVENANTS OF BORROWER

Borrower covenants and agrees that, so long as any Letter of Credit or other Obligation (other than contingent indemnification obligations for which no claim has been asserted) is Outstanding or any LC Issuer has any obligation to issue any Letter of Credit:

§7.1 Punctual Payment .

Borrower will duly and punctually pay or cause to be paid all interest and fees provided for in this Agreement, all in accordance with the terms of this Agreement as well as all other sums owing pursuant to the Credit Documents.

§7.2 [Reserved].

§7.3 Records and Accounts .

Borrower will, and will cause its Subsidiaries to, keep true and accurate records and books of account in which full, true and correct entries will be made in accordance with GAAP, as revised from time to time. Borrower shall not, without the prior written consent of Agent, make, or permit any of its Subsidiaries to make, any material change to the accounting procedures used by them in preparing its financial statements except as required by law or as required by GAAP. Borrower shall not change its fiscal year without the prior written consent of Agent.

§7.4 Notices .

(a) Defaults . Borrower will, promptly upon obtaining knowledge thereof, notify Agent in writing of the occurrence of any Default or Event of Default.

(b) Notice of Litigation and Judgments . Borrower will give notice to Agent in writing within fifteen (15) days of becoming aware of any litigation or proceedings threatened in writing or any pending litigation and proceedings affecting Borrower or to which Borrower is or is to become a party involving an uninsured claim against Borrower that could reasonably be expected to have a Material Adverse Effect and stating the nature and status of such litigation or proceedings.

(c) ERISA . Borrower will give notice to Agent within five (5) Business Days after Borrower or any ERISA Affiliate (i) gives or is required to give notice to the PBGC of any ERISA Reportable Event with respect to any Guaranteed Pension Plan, or knows that the plan administrator of any such plan has given or is required to give notice of any such ERISA Reportable Event; (ii) receives a copy of any notice of withdrawal liability under Title IV of ERISA with respect to a Multiemployer Plan; or (iii) receives any notice from the PBGC under Title IV of ERISA of an intent to terminate or appoint a trustee to administer any Guaranteed Pension Plan.

(d) Notice of Material Adverse Effect . Borrower will give notice to Agent in writing within fifteen (15) days of becoming aware of the occurrence of any event or circumstance which could reasonably be expected to have a Material Adverse Effect.

(e) Maintenance of Office . Borrower will provide prompt written notice to Agent in the event Borrower changes the location of its chief executive office from 6300 Bee Cave Road, Building Two, Suite 500, Austin, Texas 78746.

§7.5 Existence .

Except as permitted under §8.2, Borrower will do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence and good standing in its jurisdiction of incorporation. Except as permitted under §8.2, Borrower will do or cause to be done all things necessary to preserve or establish its good standing as a foreign entity and due authorization to do business in the jurisdictions described in §6.1(a). Except as permitted under §8.2, Borrower will do or cause to be done all things necessary to preserve and keep in full force all of its rights and franchises, except where the failure to preserve such rights and franchises would not reasonably be expected to have a Material Adverse Effect.

§7.6 Compliance with Laws, Licenses, and Permits .

Borrower will comply with (i) all applicable laws, ordinances, regulations and requirements now or hereafter in effect wherever its business is conducted, (ii) the provisions of its Organizational Documents, and (iii) all licenses and permits required by applicable laws and regulations for the conduct of its business or the ownership, use or operation of its properties, except in each case where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. If at any time while any Letter of Credit is Outstanding or LC Issuer has any obligation to issue Letters of Credit hereunder, any authorization, consent, approval, permit or license from any officer, agency or instrumentality of any government shall become necessary or required in order that Borrower may fulfill any of its obligations hereunder or under the other Credit Documents, Borrower will promptly take or cause to be taken all steps necessary to obtain such authorization, consent, approval, permit or license and furnish Agent and LC Issuers with evidence thereof.

§7.7 Further Assurances .

Borrower will cooperate with Agent and LC Issuers and execute such further instruments and documents as Agent and LC Issuers shall reasonably request to carry out to their satisfaction the transactions contemplated by this Agreement and the other Credit Documents.

§7.8 Plan Assets .

Borrower will do, or cause to be done, all things necessary to ensure that none of the Cash Collateral will be deemed to be Plan Assets at any time.

§7.9 Business Operations .

Borrower shall operate its business generally in substantially the same manner as has been previously conducted and businesses reasonably related thereto, and Borrower shall not materially change the nature of such business or engage in any other unrelated businesses or activities.

§8. CERTAIN NEGATIVE COVENANTS OF BORROWER

Borrower covenants and agrees that, so long as any Letter of Credit or other Obligation (other than contingent indemnification obligations for which no claim has been asserted) is outstanding or any LC Issuer has any obligation to issue any Letter of Credit:

§8.1 Restrictions on Liens, Etc .

Borrower will not create or incur or suffer to be created or incurred or to exist any lien, encumbrance, mortgage, pledge, negative pledge, charge, restriction or other security interest of any kind upon the Cash Collateral other than (i) the Liens securing the Obligations and (ii) (x) Liens of a collecting bank arising in the ordinary course of business under Section 4-210 of the Uniform Commercial Code in effect in the relevant jurisdiction and (y) Liens of any depositary bank in connection with statutory, common law and contractual rights of setoff and recoupment with respect to any deposit account of the Borrower.

§8.2 Merger, Consolidation .

Borrower will not become a party to any dissolution, liquidation, merger, reorganization, consolidation or other business combination, or agree to or effect any asset acquisition or stock acquisition or other acquisition which may have a similar effect as any of the foregoing without the prior written consent of Agent and LC Issuers other than the Horton Transaction.

§9. CONDITIONS TO ALL LETTERS OF CREDIT

The obligations of any LC Issuer to issue any Letter of Credit, whether on or after the Closing Date, shall also be subject to the satisfaction of the following conditions precedent:

§9.1 Representations True; No Default .

Each of the representations and warranties made by Borrower contained in this Agreement, the other Credit Documents or in any document or instrument delivered pursuant to or in connection with this Agreement shall be true in all material respects both as of the date as of which they were made and shall also be true in all material respects as of the time of the issuance of such Letter of Credit (as the case may be), with the same effect as if made at and as of that time, except to the extent of changes resulting from transactions permitted by the Credit Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date), and no Default or Event of Default shall have occurred and be continuing, or shall result from the issuance of such Letter of Credit.

§9.2 No Legal Impediment .

No change shall have occurred in any law or regulations thereunder or interpretations thereof that in the reasonable opinion of any Bank or any LC Issuer would make it illegal for such LC Issuer to issue such Letter of Credit.

§9.3 Letter of Credit Request .

In the case of any request for a Letter of Credit, Agent and the applicable LC Issuer shall have received a fully completed Letter of Credit Request.

§10. EVENTS OF DEFAULT; ACCELERATION; ETC.

§10.1 Events of Default and Acceleration .

If any of the following events (“ Events of Default ” or, if the giving of notice or the lapse of time or both is required, then, prior to such notice or lapse of time, “ Defaults ”) shall occur:

(a) Borrower shall fail to pay any sums due hereunder or under any of the other Credit Documents when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment, and such failure shall continue for ten (10) days (provided that such grace period will not apply to interest due upon the maturity of the Obligations);

(b) Borrower shall fail to comply with any covenant contained in §7.4, or §8;

(c) Borrower shall fail to perform any other term, covenant or agreement contained herein or in any of the other Credit Documents (other than those specified in the other subclauses of this §10); and such failure shall continue for thirty (30) days after written notice thereof shall have been given to Borrower by Agent;

(d) Any representation or warranty made by Borrower in this Agreement or any other Credit Document, or in any report, certificate, financial statement, request for a Letter of Credit, or in any other document or instrument delivered pursuant to or in connection with this Agreement, the issuance of any Letter of Credit or any of the other Credit Documents shall prove to have been false or misleading in any material respect upon the date when made or deemed to have been made or repeated;

(e) Borrower (1) shall make an assignment for the benefit of creditors, or admit in writing its general inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of Borrower or of any substantial part of the assets of any thereof, (2) shall commence any case or other proceeding relating to Borrower under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or (3) shall take any action to authorize or in furtherance of any of the foregoing;

(f) A petition or application shall be filed for the appointment of a trustee or other custodian, liquidator or receiver of Borrower, or any substantial part of the assets of any thereof, or a case or other proceeding shall be commenced against Borrower under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, and Borrower thereof shall indicate its approval thereof, consent thereto or acquiescence therein or such petition, application, case or proceeding shall not have been dismissed within ninety (90) days following the filing or commencement thereof;

(g) A decree or order is entered appointing any such trustee, custodian, liquidator or receiver or adjudicating Borrower thereof bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of Borrower thereof in an involuntary case under federal bankruptcy laws as now or hereafter constituted;

(h) There shall remain in force, undischarged, unsatisfied and unstayed, for more than thirty (30) days, whether or not consecutive, any final judgment against Borrower, that, with other outstanding final judgments, undischarged, against Borrower exceeds in the aggregate $10,000,000 (to the extent not paid or covered by insurance);

(i) If any of the Credit Documents shall be canceled, terminated, revoked or rescinded otherwise than in accordance with the terms thereof or with the express prior written agreement, consent or approval of Banks, or any action at law, suit in equity or other legal proceeding to cancel, revoke or rescind any of the Credit Documents shall be commenced by or on behalf of Borrower or any of their respective stockholders, partners, members or beneficiaries, or any court or any other governmental or regulatory authority or agency of competent jurisdiction shall make a determination that, or issue a judgment, order, decree or ruling to the effect that, any one or more of the Credit Documents is illegal, invalid or unenforceable in accordance with the terms thereof;

(j) Any dissolution, termination, partial or complete liquidation, merger or consolidation of Borrower, or any sale, transfer or other disposition of all or substantially all of the assets of Borrower, other than as permitted under the terms of this Agreement or the other Credit Documents;

(k) Borrower shall be indicted for a federal crime, a punishment for which could include the forfeiture of any assets of such Person included in the Cash Collateral;

(l) With respect to any Guaranteed Pension Plan, an ERISA Reportable Event shall have occurred that reasonably could be expected to result in liability of any of Borrower to the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000 and such event in the circumstances occurring reasonably could constitute grounds for the termination of such Guaranteed Pension Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Guaranteed Pension Plan; or a trustee shall have been appointed by the United States District Court to administer such Guaranteed Pension Plan; or the PBGC shall have instituted proceedings to terminate such Guaranteed Pension Plan;

(m) A Change of Control shall occur without the prior written approval of all Banks (which consent may be withheld by Banks in their sole and absolute discretion); or

(n) Any Event of Default, as defined in any of the other Credit Documents, shall occur;

then, and in any such event, Agent may, and upon the request of Required Banks shall, by notice in writing to Borrower declare all amounts owing with respect to this Agreement and the other Credit Documents to be, and they shall thereupon forthwith become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower; provided that in the event of any Event of Default specified in §10.1(e), §10.1(f) or §10.1(g), all such amounts shall become immediately due and payable automatically and without any requirement of notice from any of Banks or Agent.

§10.2 Limitation of Cure Periods .

Notwithstanding anything in this Agreement or any other Credit Document to the contrary, any reference in this Agreement or any other Credit Document to “the continuance of a default” or “the continuance of an Event of Default” or any similar phrase shall not create or be deemed to create any right on the part of Borrower or any other party to cure any default following the expiration of any applicable grace or notice and cure period.

§10.3 Termination of Commitments .

If any one or more Events of Default specified in §10.1(e), §10.1(f) or §10.1(g) shall occur, then immediately and without any action on the part of Agent or any Bank any unused portion of the credit hereunder shall terminate and LC Issuers shall be relieved of any further obligation to issue Letters of Credit, pursuant to this Agreement. If any other Event of Default shall have occurred and be continuing, Agent may, and upon the election of Required Banks shall, by notice to Borrower terminate the obligation to issue Letters of Credit hereunder. No termination under this §10.3 shall relieve Borrower of their respective obligations to Banks arising under this Agreement or the other Credit Documents. Nothing in this Section shall limit or impair the terms of this Agreement (including §2.1) which provide that Banks shall have no obligation to issue Letters of Credit upon the occurrence of a Default or Event of Default.

§10.4 Remedies .

(a) In case any one or more of the Events of Default shall have occurred and be continuing, and whether or not Banks shall have accelerated the maturity of the Obligations pursuant to §10.1, Agent on behalf of Banks may, and upon direction of Required Banks shall, proceed to protect and enforce their rights and remedies under this Agreement, or any of the other Credit Documents by suit in equity, action at law or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Agreement and the other Credit Documents or any instrument pursuant to which the Obligations are evidenced, including to the full extent permitted by applicable law the obtaining of the ex parte appointment of a receiver, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right. No remedy herein conferred upon Agent, any Bank or any LC Issuer is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of law. In the event that all or any portion of the Obligations is collected by or through an attorney-at-law, Borrower shall pay all costs of collection including, but not limited to, reasonable attorney’s fees. Each Bank and LC Issuer acknowledges and agrees that only Agent may exercise any remedies arising by reason of a Default or Event of Default. Notwithstanding anything herein to the contrary, upon the occurrence of any Event of Default, an amount equal to the aggregate amount of the Outstanding Letters of Credit shall, at Required Banks’ option, without demand or further notice to Borrower, be deemed to have been paid or disbursed by the applicable LC Issuer under the Letter of Credit and the Cash Collateral shall be immediately disbursed to Banks.

§10.5 Distribution of Cash Collateral Proceeds .

In the event that, following the occurrence or during the continuance of any Event of Default, any monies are received in connection with the enforcement of any of the Credit Documents, or otherwise with respect to the realization upon any of the assets of Borrower or any other Person liable with respect to the Obligations (including the Cash Collateral), such monies shall be distributed for application as follows:

(a) First , to the payment of, or (as the case may be) the reimbursement of, Agent for or in respect of all reasonable costs, expenses, disbursements and losses which shall have been incurred or sustained by Agent to protect or preserve the Cash Collateral or in connection with the collection of such monies by Agent, for the exercise, protection or enforcement by Agent of all or any of the rights, remedies, powers and privileges of Agent under this Agreement or any of the other Credit Documents or in respect of the Cash Collateral or in support of any provision of adequate indemnity to Agent against any taxes or liens which by law shall have, or may have, priority over the rights of Agent to such monies;

(b) Second , to all other Obligations in the following order: (i) first to the payment of any fees or charges outstanding hereunder or under the other Credit Documents, including without limitation, any Default Rate interest, (ii) next to any accrued and outstanding Late Charge, (iii) next to any accrued and Outstanding Letter of Credit Fees, and Facility Fees, and (iv) last to any remaining Obligations in such order as Required Banks may determine; and

§11. SETOFF

Regardless of the adequacy of any Cash Collateral, during the continuance of any Event of Default, any deposits (general or specific, time or demand, provisional or final, regardless of currency, maturity, or the branch of where such deposits are held) or other sums credited by or due from Agent or any of Banks to Borrower and any securities or other property of Borrower in the possession of Agent or any Bank may be applied to or set off against the payment of Obligations and any and all other liabilities, direct, or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of Borrower to such Bank. Each Bank agrees with each other Bank that if such Bank shall receive from Borrower, whether by voluntary payment, exercise of the right of setoff, or otherwise, and shall retain and apply to the payment of the Obligations owed such Bank any amount in excess of its ratable portion of the payments received by all of Banks with respect to the Obligations owed to all of Banks, such Bank will make such disposition and arrangements with the other Banks with respect to such excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise as shall result in each Bank receiving its proportionate payment as contemplated by this Agreement; provided that if all or any part of such excess payment is thereafter recovered from such Bank, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest.

§12. THE AGENT

§12.1 Authorization .

Each Bank and each LC Issuer hereby irrevocably appoints KeyBank to act on its behalf as Agent hereunder and under the other Credit Documents and authorizes Agent to take such actions on its behalf and to exercise such powers as are delegated to Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incident thereto, provided that no duties or responsibilities not expressly assumed herein or therein shall be implied to have been assumed by Agent. The obligations of Agent hereunder are primarily administrative in nature, and nothing contained in this Agreement or any of the other Credit Documents shall be construed to constitute Agent as a trustee or fiduciary for any Bank or any LC Issuer or to create any agency or fiduciary relationship. Agent shall act as the contractual representative of Banks and LC Issuers hereunder, and notwithstanding the use of the term “Agent”, it is understood and agreed that Agent shall not have any fiduciary duties or responsibilities to any Bank by reason of this Agreement or any other Credit Document and is acting as an independent contractor, the duties and responsibilities of which are limited to those expressly set forth in this Agreement and the other Credit Documents. Borrower and any other Person shall be entitled to conclusively rely on a statement from Agent that it has the authority to act for and bind Banks and LC Issuers pursuant to this Agreement and the other Credit Documents.

§12.2 Employees and Agents .

Agent may exercise its rights and powers and execute any and all of its duties hereunder or under any other Credit Document by or through employees or agents and shall be entitled to take, and to rely on,

advice of counsel concerning all matters pertaining to its rights and duties under this Agreement and the other Credit Documents. Agent and any such agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Section shall apply to any such agent and to the Related Parties of Agent and any such agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent. Agent may utilize the services of such Persons as Agent may reasonably determine, and all reasonable fees and expenses of any such Persons shall be paid by Borrower.

§12.3 No Liability .

Neither Agent nor any of its shareholders, directors, officers or employees nor any other Person assisting them in their duties nor any agent, or employee thereof, shall be liable to Banks and LC Issuers for any waiver, consent or approval given or any action taken, or omitted to be taken, in good faith by it or them hereunder or under any of the other Credit Documents, or in connection herewith or therewith, or be responsible for the consequences of any oversight or error of judgment whatsoever, except that Agent or such other Person, as the case may be, shall be liable for losses due to its willful misconduct or gross negligence. Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) reasonably believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Agent also may rely upon any statement made to it orally or by telephone and reasonably believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Bank or a LC Issuer, Agent may presume that such condition is satisfactory to such Bank or such LC Issuer unless Agent shall have received notice to the contrary from such Bank or such LC Issuer prior to the issuance of such Letter of Credit, as applicable. Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

§12.4 No Representations .

Agent shall not have any duties or obligations except those expressly set forth herein and in the other Credit Documents. Without limiting the generality of the foregoing, Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Credit Documents that Agent is required to exercise as directed in writing by Required Banks (or such other number or percentage of Banks as shall be expressly provided for herein or in the other Credit Documents), provided that Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Agent to liability or that is contrary to any Credit Document or applicable law; and

(c) shall not, except as expressly set forth herein and in the other Credit Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as Agent or any of its Affiliates in any capacity.

Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of Required Banks (or such other number or percentage of Banks as shall be necessary, or as Agent shall believe in good faith shall be necessary, under the circumstances as provided in §25 and §10.4) or (ii) in the absence of its own gross negligence or willful misconduct. Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to Agent by Borrower, any Bank or any LC Issuer.

Agent shall not be responsible for the execution or validity or enforceability of this Agreement, any of the other Credit Documents or any instrument at any time constituting, or intended to constitute, collateral security for the Obligations, or for the value of any such collateral security or for the validity, enforceability or collectibility of any such amounts owing, or for any recitals or statements, warranties or representations made herein, or any agreement, instrument or certificate delivered in connection therewith or in any of the other Credit Documents or in any certificate or instrument hereafter furnished to it by or on behalf of Borrower, or be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or in any other of the Credit Documents.

Agent shall not be bound to ascertain whether any notice, consent, waiver or request delivered to it by Borrower or any Bank shall have been duly authorized or is true, accurate and complete. Agent has not made nor does it now make any representations or warranties, express or implied, nor does it assume any liability to Banks and LC Issuers, with respect to the creditworthiness or financial condition of Borrower or the value of the Cash Collateral or any other assets of such Persons.

Each Bank and each LC Issuer acknowledges that it has, independently and without reliance upon Agent or any other Bank or LC Issuer or any of their Related Parties, and based upon such information and documents as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank and each LC Issuer also acknowledges that it will, independently and without reliance upon Agent or any other Bank or any other LC Issuer or any of their Related Parties, based upon such information and documents as it deems appropriate at the time, continue to make its own credit analysis and decisions in taking or not taking action under or based upon this Agreement, any other Credit Document or any related agreement or any document furnished hereunder or thereunder.

§12.5 Payments .

(a) A payment by Borrower to Agent hereunder or under any of the other Credit Documents for the account of any Bank or any LC Issuer shall constitute a payment to such Bank or such LC Issuer. Agent agrees to distribute to each Bank and each LC Issuer not later than one (1) Business Day after Agent’s receipt of good funds, determined in accordance with Agent’s customary practices, such Bank’s or such LC Issuer’s pro rata share of payments received by Agent for the account of Banks or LC Issuers except as otherwise expressly provided herein or in any of the other Credit Documents.

(b) If in the opinion of Agent the distribution of any amount received by it in such capacity hereunder or under any of the other Credit Documents might involve it in liability, it may refrain from making distribution until its right to make distribution shall have been adjudicated by a court of competent jurisdiction. If a court of competent jurisdiction shall adjudge that any amount received and distributed by Agent is to be repaid, each Person to whom any such distribution shall have been made shall either repay to Agent its proportionate share of the amount so adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be determined by such court.

(c) Notwithstanding anything to the contrary contained in this Agreement or any of the other Credit Documents, any Bank that fails (i) to make available to Agent its pro rata share of any reimbursement obligation that it is obligated to make under the terms of this Agreement, unless such

obligation is the subject of a bona fide , good faith dispute of which Agent has received written notice from such Bank (it being agreed that any such notice given later than three (3) Business Days after such failure shall be ineffective for purposes of this paragraph (c)), or (ii) to comply with the provisions of §13 with respect to making dispositions and arrangements with the other Banks, where such Bank’s share of any payment received, whether by setoff or otherwise, is in excess of its pro rata share of such payments due and payable to all of Banks, in each case as, when and to the full extent required by the provisions of this Agreement, shall be deemed delinquent (a “ Delinquent Bank ”) and shall be deemed a Delinquent Bank until such time as such delinquency is satisfied. A Delinquent Bank shall be deemed to have assigned any and all payments due to it from Borrower, whether on account of Outstanding Letters of Credit, interest, fees or otherwise, to the remaining non-Delinquent Banks for application to, and reduction of, their respective pro rata shares of all Outstanding Letters of Credit in accordance with the terms of this Agreement. The Delinquent Bank hereby authorizes Agent to distribute such payments to the non-Delinquent Banks in proportion to their respective pro rata shares of all Outstanding Letters of Credit in accordance with the terms of this Agreement. A Delinquent Bank shall be deemed to have satisfied in full a delinquency, and to no longer be a Delinquent Bank, when and if, as a result of application of the assigned payments to all Outstanding Letters of Credit of the non-Delinquent Banks or as a result of other payments by the Delinquent Banks to the non-Delinquent Banks, Banks’ respective pro rata shares of all Outstanding Letters of Credit have returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency.

§12.6 Indemnity .

Banks and LC Issuers ratably agree hereby to indemnify and hold harmless Agent from and against any and all claims, actions and suits (whether groundless or otherwise), losses, damages, costs, expenses (to the extent of any losses, damages, costs and expenses for which Agent has not been reimbursed by Borrower as required by §15 or §16), and liabilities of every nature and character arising out of or related to this Agreement, the Letters of Credit or any of the other Credit Documents or the transactions contemplated or evidenced hereby or thereby, or Agent’s actions taken hereunder or thereunder, except to the extent that any of the same shall be directly caused by Agent’s willful misconduct or gross negligence.

§12.7 Agent as Bank .

In its individual capacity, KeyBank shall have the same obligations and the same rights, powers and privileges in respect to its Commitment and the Letters of Credit issued by it, as it would have were it not also Agent and the term “Bank” or “Banks” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with Borrower, or any Subsidiary or other Affiliate thereof as if such Person were not Agent hereunder and without any duty to account therefor to Banks.

§12.8 Resignation .

Agent may resign at any time by giving thirty (30) calendar days’ prior written notice thereof to Banks, LC Issuers and Borrower. Upon any such resignation, Required Banks, subject to the terms of §18.1 and the consent of Borrower (not to be unreasonably withheld, conditioned or delayed), shall have the right to appoint as a successor Agent any Bank or any other bank whose senior debt obligations are rated not less than “A” or its equivalent by Moody’s or not less than “A” or its equivalent by S&P and which has a net worth of not less than $500,000,000. Any such resignation shall be effective upon appointment and acceptance of a successor agent selected by Required Banks. If no successor Agent shall

have been so appointed and shall have accepted such appointment within thirty (30) days after the retiring Agent’s giving of notice of resignation, then the retiring Agent may, on behalf of Banks and LC Issuers, appoint a successor Agent, which shall be a bank whose debt obligations are rated not less than “A” or its equivalent by Moody’s or not less than “A” or its equivalent by S&P Corporation and which has a net worth of not less than $500,000,000, provided that if Agent shall notify Borrower, Banks and LC Issuers that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Credit Documents (except that in the case of any collateral security held by Agent on behalf of Banks under any of the Credit Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through Agent shall instead be made by or to each Bank and each LC Issuer directly, until such time as Required Banks appoint a successor Agent as provided for above in this paragraph. Unless a Default or Event of Default shall have occurred and be continuing, such successor Agent shall be reasonably acceptable to Borrower. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder as Agent. The fees payable by Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor. After any retiring Agent’s resignation, the provisions of this Agreement and the other Credit Documents shall continue in effect for the benefit of such retiring Agent, its agents and their respective Related Parties in respect of any actions taken or omitted to be taken by it while it was acting as Agent.

§12.9 Duties in the Case of Enforcement .

In case one or more Events of Default have occurred and shall be continuing, and whether or not acceleration of the Obligations shall have occurred, Agent may and shall, if (a) so requested by Required Banks and (b) Banks have provided to Agent such additional indemnities and assurances against expenses and liabilities as Agent may reasonably request, proceed to enforce the provisions of the Security Documents authorizing the sale or other disposition of all or any part of the Cash Collateral and exercise all or any other legal and equitable and other rights or remedies as it may have. The Required Banks may direct Agent in writing as to the method and the extent of any such exercise, Banks hereby agreeing to indemnify and hold Agent harmless from all liabilities incurred in respect of all actions taken or omitted in accordance with such directions, provided that Agent need not comply with any such direction to the extent that Agent reasonably believes Agent’s compliance with such direction to be unlawful or commercially unreasonable in any applicable jurisdiction.

§12.10 Request for Agent Action .

LC Issuers hereby expressly authorize Agent to (a) release any Lien on any assets of Borrower granted to or otherwise held by Agent under or in connection with such other actions or agreements as may be desirable by Agent or any tenant necessary in the ordinary course of Borrower’s business, (b) execute consents, approvals, or other agreements in form and substance reasonably satisfactory to Agent in connection with such other actions or agreements as may be desirable by Agent or any tenant necessary in the ordinary course of Borrower’s business (c) execute and deliver with Borrower and any tenant, subordination, attornment and non-disturbance agreements with respect to any lease upon such terms as Agent in its good faith reasonable judgment determines are appropriate (Agent in the exercise of its good faith reasonable judgment may agree to allow some or all of the casualty, condemnation, restoration or other provisions of the applicable lease to control over the applicable provisions of the Credit Documents).

§12.11 Removal of Agent .

The Required Banks may remove Agent from its capacity as agent in the event of Agent’s willful misconduct or gross negligence. Such removal shall be effective upon appointment and acceptance of a successor agent selected by Required Banks. Any successor Agent must satisfy the conditions set forth in §12.8. Upon the acceptance of any appointment as agent hereunder by a successor agent, such successor agent shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the removed Agent, and the removed Agent shall be discharged from all further duties and obligations as Agent under this Agreement and the Credit Documents (subject to Agent’s right to be indemnified as provided in the Credit Documents); provided that Agent shall remain liable to the extent provided herein or in the Credit Documents for its acts or omissions occurring prior to such removal or resignation.

§12.12 Bankruptcy .

In the event a bankruptcy or other insolvency proceeding is commenced by or against any of Borrower, Agent shall have the sole and exclusive right and duty to file and pursue a joint proof of claim on behalf of all Banks. Each Bank irrevocably waives its right to file or pursue a separate proof of claim in any such proceedings.

§12.13 Right to Realize on Cash Collateral .

Anything contained in any of the Credit Documents to the contrary notwithstanding, Borrower, Agent and each Bank hereby agree that no Bank shall have any right individually to realize upon any of the Cash Collateral or any of the Security Documents, it being understood and agreed that all powers, rights and remedies hereunder and under such Security Documents may be exercised solely by Agent.

§13. EXPENSES

Borrower agrees to pay (a) the reasonable and documented out-of-pocket costs of producing and reproducing this Agreement, the other Credit Documents, and the other agreements and instruments mentioned herein, (b) any taxes (including any interest and penalties in respect thereto) payable by Agent, any of Banks or any LC Issuers, including any taxes payable on or with respect to the transactions contemplated by this Agreement (other than Excluded Taxes, except that Agent, Banks and LC Issuers shall be entitled to indemnification for any and all amounts paid by them in respect of taxes based on income or other taxes assessed by any State in which Cash Collateral is located, such indemnification to be limited to taxes due solely on account of the granting of Cash Collateral under the Security Documents, including any such taxes payable by Agent, any of Banks or any LC Issuer after the Closing Date (Borrower hereby agreeing to indemnify Agent and each Bank with respect thereto)), (c) all appraisal fees, engineer’s fees, charges of Agent for commercial finance exams and engineering and environmental reviews and the reasonable and documented fees, expenses and disbursements of Agent, Agent’s Special Counsel and any other counsel to Agent, counsel for KeyBank and any local counsel to Agent incurred in connection with the performance of due diligence and the preparation, negotiation, administration, or interpretation of the Credit Documents, and other instruments mentioned herein, the addition and release of Cash Collateral, each closing hereunder, and amendments, modifications, approvals, consents, or waivers hereto or hereunder, (d) the reasonable and documented out-of-pocket fees, expenses and disbursements of Agent incurred by Agent in connection with the performance of due diligence, underwriting analysis, credit reviews and the preparation, negotiation, administration, syndication or interpretation of the Credit Documents, and other instruments mentioned herein, credit evaluations, (e) all reasonable and documented out-of-pocket expenses (including reasonable and documented out-of-pocket attorneys’ fees and costs of one outside counsel) incurred by any Bank, any LC Issuer or Agent in connection with (i) the enforcement of or preservation of rights under any of the Credit Documents against

Borrower or the administration thereof after the occurrence of a Default or Event of Default, (ii) the failure of Borrower to perform or observe any provision of the Credit Documents, and (iii) any litigation, proceeding or dispute whether arising hereunder or otherwise, in any way related to Agent’s, any of Banks’ or any LC Issuers’ relationships with Borrower, and (f) all reasonable and documented out-of-pocket fees, expenses and disbursements of Agent incurred in connection with Uniform Commercial Code searches, Uniform Commercial Code filings. The covenants of this §13 shall survive payment or satisfaction of the Obligations.

§14. INDEMNIFICATION

Borrower agrees to indemnify and hold harmless Agent, Banks and LC Issuers and each director, officer, employee, agent and Person who controls Agent, any Bank or any LC Issuer from and against any and all claims, actions and suits, whether groundless or otherwise, and from and against any and all liabilities, losses, damages and expenses of every nature and character arising out of or relating to this Agreement or any of the other Credit Documents or the transactions contemplated hereby and thereby including, without limitation, (a) any leasing fees and any brokerage, finders or similar fees asserted against any Person indemnified under this §14 based upon any agreement, arrangement or action made or taken, or alleged to have been made or taken, by Borrower, (b) any actual or proposed use of a Letter of Credit by any beneficiary of a Letter of Credit (including any refusal by any LC Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (c) Borrower entering into or performing this Agreement or any of the other Credit Documents, or (d) any actual or alleged violation of any law, ordinance, code, order, rule, regulation, approval, consent, permit or license relating to the Cash Collateral; provided , however , that Borrower shall not be obligated under this §14 to indemnify any such Person nor its Related Parties for liabilities arising from such Person’s or such Person’s Related Parties’ own bad faith, gross negligence, or willful misconduct, as determined by a court of competent jurisdiction in a final and non-appealable judgment. In litigation, or the preparation therefor, Banks, LC Issuers and Agent shall be entitled to select a single law firm as their own counsel and, in addition to the foregoing indemnity, Borrower agrees to pay promptly all Court costs and other expenses of litigation incurred by Agent, Banks and LC Issuers, including the reasonable and documented out-of-pocket fees and expenses of such counsel. If, and to the extent that the obligations of Borrower under this §14 are unenforceable for any reason, Borrower hereby agrees to make the maximum contribution to the payment in satisfaction of such obligations which is permissible under applicable law. There shall be specifically excluded from the foregoing indemnification any claims, actions, suits, liabilities, losses, damages and expenses arising from disputes among Banks or LC Issuers with respect to the Letters of Credit or the Credit Documents. In the event that any such claims, actions, suits, liabilities, losses, damages and expenses involve both a dispute among Banks and LC Issuers, or any of them and other matters covered by this indemnification provision, Agent shall make a reasonable good faith allocation of all losses, damages and expenses incurred between Banks’ and LC Issuers’ dispute and the other matters covered by this indemnification provision, which allocation by Agent shall, absent manifest error, be final and binding upon the parties hereto. All amounts payable by Borrower pursuant to this §14 shall constitute Obligations until paid in full by Borrower. The provisions of this §14 shall survive the termination of the obligations of LC Issuers hereunder.

§15. SURVIVAL OF COVENANTS, ETC.

All covenants, agreements, representations and warranties made herein, in any of the other Credit Documents or in any documents or other papers delivered by or on behalf of Borrower pursuant hereto or thereto shall be deemed to have been relied upon by Banks and Agent, notwithstanding any investigation heretofore or hereafter made by any of them, and shall survive the issuance by LC Issuers of any Letter of Credit, as herein contemplated, and shall continue in full force and effect so long as any amount due under this Agreement or any of the other Credit Documents remains outstanding or any Letter of Credit is

Outstanding or any Bank has any reimbursement obligations or any LC Issuer has any obligation to issue a Letter of Credit. The indemnification obligations of Borrower provided herein and the other Credit Documents shall survive the full repayment of amounts due and the termination of the obligations of Banks hereunder and thereunder to the extent provided herein and therein. All statements contained in any certificate or other paper delivered to any Bank, any LC Issuer or Agent at any time by or on behalf of Borrower pursuant hereto or in connection with the transactions contemplated hereby shall constitute representations and warranties as to the matters contained in such certificate or other paper by Borrower hereunder.

§16. ASSIGNMENT AND PARTICIPATION

§16.1 Conditions to Assignment by Banks .

(a) Each Bank shall have the right to assign, transfer, sell, negotiate, pledge or otherwise hypothecate this Agreement and any of its rights and security hereunder and under the other Credit Documents to any other Eligible Assignee with the prior written consent of Agent and with the prior written consent of Borrower, which consents by Agent and Borrower shall not unreasonably withheld or conditioned and shall be given or denied in each case within ten (10) Business Days after receipt of any request for consent (provided that no consent of Borrower shall be required if the Eligible Assignee is also a Bank or an Affiliate thereof or if an Event of Default then exists) and no consent of Agent shall be required if the Eligible Assignee is also a Bank or an Affiliate thereof; provided , however , that (i) the parties to each such assignment shall execute and deliver to Agent, for its approval and acceptance, an Assignment and Assumption Agreement in the form of Exhibit A attached hereto and made a part hereof (an “ Assignment and Assumption Agreement ”), (ii) each such assignment shall be of a constant, and not a varying, percentage of the assigning Bank’s rights and obligations under this Agreement, (iii) if the potential assignee is not already a Bank hereunder, at least ten (10) days prior to the settlement date of the assignment, the potential assignee shall deliver to Agent the fully completed Patriot Act and OFAC forms attached as Exhibit B attached hereto and made a part hereof and such other information as Agent shall require to successfully complete Agent’s Patriot Act Customer Identification Process and OFAC Review Process, (iv) unless Agent and, so long as no Event of Default exists, Borrower otherwise consent, the aggregate amount of the total Commitment of the assigning Bank being assigned pursuant to each such assignment shall in no event be less than $2,000,000, (v) Agent shall receive from the assigning Bank a processing fee of $3,500, (vi) if the assignment is less than the assigning Bank’s entire participation interest, the assigning Bank must retain at least a $5,000,000 Commitment, unless the assigning Bank assigns its entire interest under the Commitment, in which case, the assigning Bank must retain at least a $5,000,000 Commitment. Upon such execution, delivery, approval and acceptance, and upon the effective date specified in the applicable Assignment and Assumption Agreement, (a) the Eligible Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Assumption Agreement, have the rights and obligations of a Bank hereunder and under the other Credit Documents, and Borrower hereby agrees that all of the rights and remedies of Banks in connection with the interest so assigned shall be enforceable against Borrower by an Eligible Assignee with the same force and effect and to the same extent as the same would have been enforceable but for such assignment provided that no assignment shall increase Borrower’s obligations under §4.4 or §4.9, (b) the assigning Bank thereunder shall, to the extent that rights and obligations hereunder and under the other Credit Documents have been assigned by it pursuant to such Assignment and Assumption Agreement, relinquish its rights and be released from its obligations hereunder and thereunder, and (c) Agent may unilaterally amend Schedule 1.1 to reflect such assignment. For purposes of this paragraph, in connection with any assignment or simultaneous, multiple assignments by any Bank which is a fund to one or more of its Related Funds: (1) compliance with the minimum amounts for assigned Commitments, and for retained Commitments as hereinabove provided shall be determined in the aggregate for such assigning fund and any of its Related Funds that are or are to become

Banks as part of any assignment transaction or simultaneous, multiple assignment transactions; (2) after giving effect to such assignment or assignments, no such assignor or assignee fund in connection with a partial assignment of the assigning fund’s Commitment shall hold a Commitment of less than $5,000,000, and (3) only one processing fee shall be payable to Agent in connection with simultaneous, multiple assignment transactions.

(b) By executing and delivering an Assignment and Assumption Agreement, the assigning Bank thereunder and the Eligible Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) except as provided in such Assignment and Assumption Agreement, such assigning Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Credit Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Credit Document or any other instrument or document furnished in connection therewith; (ii) such assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance or observance by Borrower of any of its obligations under any Credit Document or any other instrument or document furnished in connection therewith; (iii) such Eligible Assignee confirms that it has received a copy of this Agreement together with such financial statements, Credit Documents and other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into the Assignment and Assumption Agreement and to become a Bank hereunder; (iv) such Eligible Assignee will, independently and without reliance upon Agent, the assigning Bank or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such Eligible Assignee appoints and authorizes Agent to take such action as Agent on its behalf and to exercise such powers under this Agreement and the other Credit Documents as are delegated to Agent by the terms hereof and thereof, together with such powers as are reasonably

incidental thereto; (vi) such Eligible Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Bank.

§16.2 Register .

Agent shall maintain a copy of each assignment delivered to it and a register or similar list (the “ Register ”) for the recordation of the names and addresses of Banks and the Commitment Percentages, reimbursement obligations owing to Banks from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and Borrower, Agent and Banks shall treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes of this Agreement. The Register shall be available for inspection by Borrower and Banks at any reasonable time and from time to time upon reasonable prior notice.

§16.3 Participations .

Each Bank may sell participations to one or more banks or other entities in all or a portion of such Bank’s rights and obligations under this Agreement and the other Credit Documents; provided that (a) any such sale or participation shall not affect the rights and duties of the selling Bank hereunder to Borrower, (b) such participation shall not entitle such participant to any rights or privileges under this Agreement or the Credit Documents, including, without limitation, the right to approve waivers, amendments or modifications, (c) such participant shall have no direct rights against Borrower except the rights granted to Banks pursuant to §13, (d) such sale is effected in accordance with all applicable laws, and (e) such participant shall not be a Person controlling, controlled by or under common control with, or which is not otherwise free from influence or control by, Borrower. Any Bank which sells a participation shall promptly notify Agent and Borrower of such sale and the identity of the purchaser of the interest.

§16.4 Pledge by Bank .

Any Bank may at any time pledge all or any portion of its interest and rights under this Agreement to secure obligations of such Bank, including without limitation, (a) any pledge or assignment to secure obligations to any of the twelve Federal Reserve Banks organized under §4 of the Federal Reserve Act, 12 U.S.C. §341, to any Federal Home Loan Bank or to any institution within the Farm Credit System, and (b) for any Bank that is a fund, any pledge or assignment to any holders of obligations owed, or securities issued, by such Bank including any trustee for, or any other representative of, such holders. In addition, any Bank may, with the consent of Agent (which may be granted or withheld in Agent’s sole discretion) pledge all or any portion of its interests and rights under the Agreement to a Person approved by Agent. Notwithstanding anything to the contrary contained herein, no pledge permitted pursuant to this Section or the enforcement thereof shall release the pledgor Bank from its obligations hereunder or under any of the other Credit Documents.

§16.5 No Assignment by Borrower .

Borrower shall not assign or transfer any of its rights or obligations under any of the Credit Documents without the prior written consent of each Bank.

§16.6 Cooperation; Disclosure .

Borrower agrees to promptly cooperate with any Bank in connection with any proposed assignment or participation of all or any portion of its Commitment. Borrower agree that in addition to disclosures made in accordance with standard lending practices any Bank may disclose information obtained by such Bank pursuant to this Agreement to assignees or participants and potential assignees or participants hereunder, subject to the provisions of §18.10. Notwithstanding anything herein to the contrary, Agent and each Bank may disclose to any and all Persons, without limitation of any kind, any information with respect to the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to Agent or any Bank relating to such tax treatment and tax structure; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structure of the obligations and transactions contemplated hereby. In order to facilitate assignments to Eligible Assignees and sales to Eligible Assignees, Borrower shall execute such further documents, instruments or agreements as Banks may reasonably require. In addition, Borrower agree to cooperate fully with Banks in the exercise of Banks’ rights pursuant to this Section, including providing such information and documentation regarding Borrower as any Bank or any potential Eligible Assignee or participant may reasonably request and to meet with potential Eligible Assignees.

§16.7 Mandatory Assignment .

In the event (i) Borrower requests that certain amendments, modifications or waivers be made to this Agreement or any of the other Credit Documents which request is approved by Agent or Required Banks but is not approved by one or more of Banks (any such non-consenting Bank shall hereafter be referred to as the “ Non-Consenting Bank ”), (ii) Borrower becomes obligated to pay additional amounts to any Bank pursuant to §4.4 or §4.9, or any Bank gives notice of the occurrence of any circumstances described in §4.10, or (iii) any Bank with a Commitment defaults in the obligation to issue Letters of Credit or make any reimbursement obligations payments hereunder or is otherwise a Defaulting Bank (any such Bank shall hereafter be referred to as an “ Affected Bank ”) then, within thirty (30) days after Borrower’s receipt of notice of such disapproval by such Non-Consenting Bank, or, in the case of clause

(ii) or (iii) above at any time after the occurrence of such event, Borrower shall have the right as to such Affected Bank, to be exercised by delivery of written notice delivered to Agent and the Affected Bank, to elect to cause the Affected Bank to transfer its Commitments. Agent shall promptly notify the remaining Banks that each of such Banks shall have the right, but not the obligation, to acquire a portion of the Commitment, pro rata based upon their relevant Commitment Percentages, of the Affected Bank (or if any of such Banks does not elect to purchase its pro rata share, then to such remaining Banks in such proportion as approved by Agent). In the event that Banks do not elect to acquire all of the Affected Bank’s Commitment, then Agent shall use commercially reasonable efforts to find a new Bank or Banks to acquire such remaining Commitment. Upon any such purchase of the Commitments of the Affected Bank, the Affected Bank’s interests in the Obligations and its rights hereunder and under the Credit Documents shall terminate at the date of purchase, and the Affected Bank shall promptly execute and deliver any and all documents reasonably requested by Agent to surrender and transfer such interest, including, without limitation, an assignment and assumption agreement in the form attached hereto as Exhibit A . The purchase price for the Affected Bank’s Commitment shall equal any and all amounts outstanding and owed by Borrower to the Affected Bank, including all accrued and unpaid interest or fees, plus any applicable prepayment fees which would be owed to such Affected Bank if such Obligations were to be repaid in full on the date of such purchase of the Affected Bank’s Commitment.

§16.8 Co-Agents, Syndication Agent, and Co-Documentation Agent .

Agent may designate any Bank to be a “Co-Agent”, an “Arranger”, a “Syndication Agent”, a “Co-Documentation Agent” or similar title, but such designation shall not confer on such Bank the rights or duties of Agent. Any such “Co-Agent”, “Arranger”, a “Syndication Agent”, or a “Co-Documentation Agent” shall not have any additional rights or obligations under the Credit Documents, except for those rights and obligations, if any, as a Bank.

§16.9 Treatment of Certain Information; Confidentiality .

Each of Agent and Bank agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Credit Document or any action or proceeding relating to this Agreement or any other Credit Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or participant in, or, with Borrower’s consent, any prospective assignee of or participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to Borrower and its obligations, (g) with the consent of Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to Agent, any Bank, or any of their respective Affiliates on a non-confidential basis from a source other than Borrower.

For purposes of this Section, “ Information ” means all information received from Borrower or any of their Subsidiaries relating to Borrower or any of their Subsidiaries or any of their respective businesses, other than any such information that is available to Agent or any Bank on a non-confidential basis prior to disclosure by Borrower or any of their Subsidiaries. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so

if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

§16.10 Withholding Tax .

(a) If any Bank is a “foreign corporation, partnership or trust” within the meaning of the Code and such Bank is entitled to claim exemption from, or a reduction of, United States withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees with and in favor of Agent and Borrower, to deliver to Agent and Borrower:

(i) if such Bank claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, properly completed IRS Form W-8BEN before the payment of any interest in the first calendar year and before the payment of any interest in each third succeeding calendar year during which interest may be paid under this Agreement;

(ii) if such Bank claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Bank, two (2) properly completed and executed copies of IRS Form W-8ECI before the payment of any interest is due in the first taxable year of such Bank and in each succeeding taxable year of such Bank during which interest may be paid under this Agreement;

(iii) such other form or forms as may be required under the Code or other laws of the United States as a condition to exemption from, or reduction of, United States withholding tax; and

(iv) in the case of any Bank claiming exemption from United States withholding tax under Sections 871(b) or 881(c) of the Code, with respect to payments of “Portfolio Interest,” a Form W-8BEN, or any subsequent versions thereof or successors thereto, and if Bank delivers a Form W-8BEN, a certificate representing that such Bank is not a bank for purposes of Section 881(c) of the Code, is not a ten percent (10%) shareholder (within the meaning of Section 871(h)(3)(b) of the Code) of Borrower, and is not a controlled foreign corporation related to Borrower (within the meaning of Section 864(d)(4) of the Code).

Each such certificate and form shall be properly completed and duly executed by such Bank claiming complete exemption from or a reduced rate of United States withholding tax on payments by Borrower under the Credit Documents. Each Bank agrees to promptly notify Agent and Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

(b) If any Bank claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing IRS Form W-8BEN, and such Bank sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrower to such Bank, such Bank agrees to notify Agent and Borrower of the percentage amount in which it is no longer the beneficial owner of Obligations of Borrower to such Bank. To the extent of such percentage amount, Agent will treat such Bank’s IRS Form W-8BEN as no longer valid.

(c) If any Bank claiming exemption from United States withholding tax by filing IRS Form W-8ECI with Agent sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrower to such Bank, such Bank agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code.

(d) If any Bank is entitled to a reduction in the applicable withholding tax, Agent may withhold from any interest payment to such Bank an amount equivalent to the applicable withholding tax

after taking into account such reduction. If the forms or other documentation required by §18.11(a) above are not delivered to Agent, then Agent may withhold from any interest payment to such Bank not providing such forms or other documentation an amount equivalent to the applicable withholding tax.

(e) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Agent or Borrower did not properly withhold tax from amounts paid to or for the account of any Bank (because the appropriate form was not delivered, was not properly executed, or because such Bank failed to notify Agent or Borrower of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Bank shall indemnify Agent and Borrower fully for all amounts paid, directly or indirectly, by Agent or Borrower as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent or Borrower under this §16.10, together with all costs and expenses (including reasonable attorneys’ fees and legal expenses). The obligation of Banks under this subsection (e) shall survive the payment of all Obligations and the resignation or replacement of Agent.

§17. NOTICES

Each notice, demand, election or request provided for or permitted to be given pursuant to this Agreement (hereinafter in this §17 referred to as “ Notice ”), but specifically excluding to the maximum extent permitted by law any notices of the institution or commencement of foreclosure proceedings, must be in writing and shall be deemed to have been properly given or served by personal delivery or by sending same by overnight courier or by depositing same in the United States Mail, postpaid and registered or certified, return receipt requested, or as expressly permitted herein, sent by facsimile, and, to the extent permitted by §21, email addressed as follows:

If to Agent or any Bank or any LC Issuer, at the address set forth on the signature page for Agent or such Bank or such LC Issuer, and in the case of each notice to Agent pursuant to §7.4, with a copy to:

Agent’s Special Counsel:

Bryan Cave LLP

1201 West Peachtree Street, NW

14 th Floor

Atlanta, Georgia 30309-3488

Facsimile: (404) 572-6999

Attention: Robert C. Lewinson, Esq.

and

if to Borrower:

Forestar (USA) Real Estate Group Inc.
6300 Bee Cave Road
Building Two, Suite 500
Austin, Texas 78746
Facsimile: (512) 433-5203

Attention: Chief Financial Officer

with a copy to:

Forestar (USA) Real Estate Group Inc.
6300 Bee Cave Road
Building Two, Suite 500
Austin, Texas 78746
Facsimile: (512) 433-5203

Attention: General Counsel

and to each other Bank which may hereafter become a party to this Agreement at such address as may be designated by such Bank. Each Notice shall be effective upon being personally delivered or upon being sent by overnight courier or upon being deposited in the United States Mail as aforesaid. The time period in which a response to such Notice must be given or any action taken with respect thereto (if any), however, shall commence to run from the date of receipt if personally delivered or sent by overnight courier, or if so deposited in the United States Mail, the earlier of three (3) Business Days following such deposit or the date of receipt as disclosed on the return receipt. Rejection or other refusal to accept or the inability to deliver because of changed address for which no notice was given shall be deemed to be receipt of the Notice sent. By giving at least fifteen (15) days prior Notice thereof, Borrower, a Bank or Agent shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America.

§18. RELATIONSHIP

Neither Agent nor any Bank has any fiduciary relationship with or fiduciary duty to Borrower arising out of or in connection with the Agreement or the other Credit Documents or the transactions contemplated hereunder and thereunder, and the relationship between each Bank and Borrower is solely that of a lender and borrower, and nothing contained herein or in any of the other Credit Documents shall in any manner be construed as making the parties hereto partners, joint venturers or any other relationship other than lender and borrower, or lender and guarantor (as the case may be). In addition, Borrower agrees that notwithstanding any other relationship that KeyBank or any affiliate thereof may have with Borrower or its Subsidiaries and Affiliates, in any proceeding relating to Borrower, or any of them, under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution, liquidation or similar proceeding, Borrower will not challenge Banks’ right to receive payment of the Obligations as a creditor of Borrower on the grounds of the equitable subordination principles contained in §510 of the United States Bankruptcy Code (11 U.S.C. §101 et seq.), as from time to time amended, or any similar provision under any applicable law. The covenants contained in this §18 are a material consideration and inducement to Banks to enter into the Agreement.

§19. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE

THIS AGREEMENT AND EACH OF THE OTHER CREDIT DOCUMENTS, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS

SPECIFIED IN §17. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.

§20. HEADINGS

The captions in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof.

§21. COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION

(a) Counterparts; Integration; Effectiveness . This Agreement and any amendment hereof may be executed in several counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute one instrument. In proving this Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought. This Agreement and the other Credit Documents, any separate letter agreements with respect to fees payable to Agent (including the Agreement Regarding Fees) and any provisions of any commitment letter or similar letter relating to the transactions contemplated by this Agreement that expressly survive the Closing Date, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective when (i) it shall have been executed by Agent and when Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto and (ii) the Second Amendment shall have become effective. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

(b) Electronic Execution of Assignments . The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

(c) Electronic Communication . Notices and other communications to Agent and Banks hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Agent, provided that the foregoing shall not apply to notices to any Bank pursuant to Article 4 if such Bank has notified Agent that it is incapable of receiving notices under such Article by electronic communication. Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the

foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

§22. ENTIRE AGREEMENT, ETC.

The Credit Documents and any other documents executed in connection herewith or therewith express the entire understanding of the parties with respect to the transactions contemplated hereby. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided in §25.

§23. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER, AGENT, LC ISSUERS AND BANKS HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER CREDIT DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY LAW, BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK OR AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH BANK OR AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT AGENT AND BANKS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED IN THIS §23. BORROWER ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW THIS §23 WITH ITS LEGAL COUNSEL AND THAT BORROWER AGREES TO THE FOREGOING AS ITS FREE, KNOWING AND VOLUNTARY ACT.

§24. DEALINGS WITH THE BORROWER

The Banks and their affiliates may accept deposits from, extend credit to and generally engage in any kind of banking, trust or other business with Borrower or any of its Affiliates regardless of the capacity of Bank hereunder.

§25. CONSENTS, AMENDMENTS, WAIVERS, ETC.

Except as otherwise expressly provided in this Agreement, any consent or approval required or permitted by this Agreement may be given, and any term of this Agreement or of any other Credit Document may be amended, and the performance or observance by Borrower of any terms of this Agreement or such other instrument or the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent or approval of Required Banks, and in such case such consent or approval shall be binding on all Banks. Notwithstanding the foregoing provisions of this Section:

(a) none of the following may occur without the written consent of each Bank directly affected thereby:

(i) an increase in the amount of the Commitment of such Bank;

(ii) a forgiveness, reduction or waiver of any unpaid Obligations owing to such Bank or any interest thereon or fee payable to such Bank under the Credit Documents (other than in connection with the imposition or rescission of the Late Charge or Default Rate);

(iii) a decrease in the amount of any fee payable to such Bank hereunder;

(iv) an extension of a Maturity Date except as provided in §3.1(b) with respect to the Maturity Date;

(v) the release of Borrower or any of the Cash Collateral except as otherwise provided herein;

(vi) a change to this §25;

(vii) any postponement of any date fixed for any payment of principal of or interest on, or fees in respect of, the Letters of Credit owing to such Bank except as provided in §3.1(b) with respect to the Maturity Date;

(viii) any change in the manner of distribution of any payments to such Bank;

(ix) an amendment of the definition of Required Banks or of any requirement for consent by all Banks; or

(x) an amendment of any provision of this Agreement or the Credit Documents which requires the approval of all Banks or Required Banks to require a lesser number of Banks to approve such action.

(b) Other Consents . No amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by Borrower therefrom, shall:

(i) increase the Commitment of any Bank over the amount thereof then in effect without the consent of such Bank; provided , no amendment, modification or waiver of any condition precedent, covenant, Default or Event of Default shall constitute an increase in any Commitment of any Bank;

(ii) increase the aggregate Commitments over the amount thereof then in effect without the consent of Required Banks;

(iii) amend the definition of Required Banks without the consent of Required Banks; provided , subject to §25(b)(viii), additional extensions of credit pursuant hereto may be included in the determination of such Required Banks on substantially the same basis as the Commitments are included on the Closing Date;

(iv) amend, modify, terminate or waive any provision hereof relating to the issuance of any Letters of Credit or the Letters of Credit without the consent of each LC Issuer;

(v) amend, modify, terminate or waive any obligation of Banks relating to the purchase of participations in Letters of Credit as provided in §2.1(d) without the written consent of Agent and each LC Issuer; or

(vi) amend, modify, terminate or waive the amount or timing of payment of any fee or other amount payable to Agent for its own account, any provision of §14 as the same applies to Agent, or any other provision hereof or of any other Credit Document as the same applies to the rights or obligations of Agent, in each case without the consent of Agent.

No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing or delay or omission on the part of Agent or any Bank in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon Borrower shall entitle Borrower to other or further notice or demand in similar or other circumstances. In the event any Bank fails to expressly grant or deny any consent, amendment or waiver sought under this Agreement within ten (10) days of a written request therefor submitted by Agent or Agent’s Special Counsel, such Bank shall be deemed to have granted to Agent an irrevocable proxy with respect to such specific matter. The right of any Bank to consent under subsections (a) and (b) of this §25 shall not apply to a Defaulting Bank, except for purposes of subsections (a)(v) and (b)(i) of this §25.

§26. SEVERABILITY

The provisions of this Agreement are severable, and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction.

§27. NO UNWRITTEN AGREEMENTS

THE WRITTEN CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

§28. ACKNOWLEDGMENT OF INDEMNITY OBLIGATIONS

BORROWER HEREBY ACKNOWLEDGES THAT THIS AGREEMENT CONTAINS INDEMNITY OBLIGATIONS OF BORROWER.

§29. TIME IS OF THE ESSENCE

Time is of the essence with respect to each and every covenant, agreement and obligation of Borrower under this Agreement and the other Credit Documents.

§30. RIGHTS OF THIRD PARTIES

This Agreement and the other Credit Documents are made and entered into for the sole protection and legal benefit of Borrower, Banks and Agent, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Credit Documents. All conditions to the performance of the obligations of Agent and Banks under this Agreement, including the obligation to issue Letters of Credit, are imposed solely and exclusively for the benefit of Agent and Banks and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Agent and Banks will refuse to issue Letters of Credit in the absence of strict compliance with any or all thereof and no other Person shall, under any circumstances, be deemed to be a

beneficiary of such conditions, any and all of which may be freely waived in whole or in part by Agent and Banks at any time if in their sole discretion they deem it desirable to do so. In particular, Agent and Banks make no representations and assume no obligations as to third parties concerning the quality of the construction by Borrower of any development or the absence therefrom of defects.

§31. CLOSING CONDITIONS

The obligations of Agent and Banks to issue any Letters of Credit shall be subject to the satisfaction of the following conditions precedent on or prior to the Closing Date:

§31.1 Credit Documents .

Each of the Credit Documents shall have been duly executed and delivered by the respective parties thereto, shall be in full force and effect and shall be in form and substance satisfactory to Agent. Agent shall have received a fully executed copy of each such document.

§31.2 Certified Copies of Organizational Documents .

Agent shall have received from Borrower a copy, certified as of a recent date by the appropriate officer of each State in which Borrower, is organized and a duly authorized member, manager, partner or officer of Borrower to be true and complete, of the Organizational Documents of Borrower or its qualification to do business, as applicable, as in effect on such date of certification.

§31.3 Resolutions .

All action on the part of Borrower necessary for the valid execution, delivery and performance by Borrower of this Agreement and the other Credit Documents (as applicable) to which such Person is or is to become a party shall have been duly and effectively taken, and evidence thereof satisfactory to Agent shall have been provided to Agent. Agent shall have received from Borrower true copies of its resolutions adopted by its board of directors or other governing body authorizing the transactions described herein, each certified by its secretary, assistant secretary or other appropriate representative as of a recent date to be true and complete.

§31.4 Incumbency Certificate; Authorized Signers .

Agent shall have received from Borrower, an incumbency certificate, dated as of the Closing Date, signed by a duly authorized officer of Borrower and giving the name and bearing a specimen signature of each individual who shall be authorized to sign, in the name and on behalf of Borrower, each of the Credit Documents to which such Person is or is to become a party. Agent shall have also received from Borrower a certificate, dated as of the Closing Date, signed by a duly authorized officer of Borrower and giving the name and specimen signature of each individual who shall be authorized to make Letter of Credit Requests, and give notices and to take other action on behalf of Borrower under the Credit Documents.

§31.5 Opinion of Counsel .

Agent shall have received a favorable opinion addressed to Banks and Agent and dated as of the Closing Date, in form and substance reasonably satisfactory to Agent, from counsel of Borrower as to such matters as Agent shall reasonably request.

§31.6 Payment of Fees .

Borrower shall have paid to Agent the fees payable pursuant to §4.2.

§31.7 Performance; No Default .

Borrower shall have performed and complied with all terms and conditions herein required to be performed or complied with by them on or prior to the Closing Date, and on the Closing Date there shall exist no Default or Event of Default.

§31.8 Representations and Warranties .

The representations and warranties made by Borrower or otherwise made by or on behalf of Borrower in connection therewith on the date thereof shall have been true and correct in all material respects when made and shall also be true and correct in all material respects on the Closing Date, in each case, except to the extent that such representations and warranties relate specifically to another date, and Agent shall have received written confirmation thereof from Borrower.

§31.9 Cash Collateral .

Borrower shall have deposited the Cash Collateral with Agent.

§31.10 Existing Credit Agreement .

The Existing Credit Agreement shall have been terminated, the commitments thereunder have been terminated and all Obligations other than with respect to the Prior Letters of Credit have been satisfied.

[SIGNATURES BEGIN ON FOLLOWING PAGE]

IN WITNESS WHEREOF , the undersigned have duly executed this Agreement as of the date first set forth above.


BORROWER:

FORESTAR (USA) REAL ESTATE GROUP INC. , a Delaware corporation


By:	/s/ Charles D. Jehl
	Name:	Charles D. Jehl
	Title:	Chief Financial Officer & Treasurer

[SIGNATURES CONTINUED ON FOLLOWING PAGES]

LETTER OF CREDIT FACILITY AGREEMENT

AGENT and BANKS:


KEYBANK NATIONAL ASSOCIATION , as a LC Issuer and as Agent


By:	/s/ Nathan Weyer
	Name:	Nathan Weyer
	Title:		Senior RM

Address:

KeyBank National Association
1200 Abernathy Road, NE
Suite 1550
Atlanta, Georgia 30328
Attn: Daniel Silbert
Facsimile: (770) 510-2195

LETTER OF CREDIT FACILITY AGREEMENT

SYNOVUS BANK , as a Bank and a LC Issuer


By:	/s/ David W. Bowman
Name:			David W. Bowman
Title:		Director

Address:

800 Shades Creek Parkway

Birmingham, AL 35209

[END OF SIGNATURES]

LETTER OF CREDIT FACILITY AGREEMENT

Exhibit 10.2

SHARED SERVICES AGREEMENT

by and between

D.R. HORTON, INC.

And

FORESTAR GROUP INC.

DATED AS OF OCTOBER 6, 2017

SHARED SERVICES AGREEMENT

This SHARED SERVICES AGREEMENT, dated as of October 6, 2017 (this “ Services Agreement ”), is entered into by and between D.R. HORTON, INC., a Delaware corporation (“ D.R. Horton ”), and FORESTAR GROUP INC., a Delaware corporation and majority owned Subsidiary of D.R. Horton (“ Forestar ”). Capitalized terms used herein but not defined herein shall have the meaning set forth in that certain Agreement and Plan of Merger (“ Merger Agreement ”) by and among D.R. Horton, Inc., Force Merger Sub, Inc. and Forestar Group Inc., dated June 29, 2017 or in that certain Stockholder’s Agreement (“ Stockholder’s Agreement ”) by and between Forestar Group Inc. and D.R. Horton, Inc. dated June 29, 2017 or in that certain Master Supply Agreement (“ Master Supply Agreement ”) between D.R. Horton, Inc. and Forestar Group Inc. dated June 29, 2017.

WHEREAS, pursuant to the Merger Agreement, on October 5, 2017, D.R. Horton acquired approximately 75% of the common stock of Forestar and at that time Forestar became a majority owned subsidiary of D.R. Horton.

WHEREAS, upon closing of the merger (“ Merger ”) pursuant to the Merger Agreement, Forestar will continue to be a publicly traded company whose common stock will be traded on the New York Stock Exchange;

WHEREAS, in connection with the closing of the Merger, (a) Forestar desires to procure certain services from D.R. Horton, and D.R. Horton is willing to provide such services to Forestar, during a period commencing on the Effective Date, on the terms and conditions set forth in this Services Agreement.

NOW THEREFORE, in consideration of the mutual agreements, covenants and other provisions set forth in this Services Agreement, the Parties hereby agree as follows:

ARTICLE I

Definitions

1.1. All terms used herein and not defined herein shall have the meanings assigned to them in the Merger Agreement, the Stockholder’s Agreement or the Master Supply Agreement.

ARTICLE II

Agreement To Provide and Accept Services

2.1 Provision of Services .

(a) On the terms and subject to the conditions contained herein, D.R. Horton shall provide, or shall cause its Subsidiaries and Affiliates and their respective employees designated by D.R. Horton (such designated Subsidiaries, Affiliates and employees, together with D.R. Horton, being herein collectively referred to as (“ Service Providers ” or “ D.R. Horton ”) to provide, to Forestar, the services or equipment listed on the Schedule of Services (see Schedules attached to this Agreement) agreed upon and exchanged between the Parties on the date hereof (the “ Services Schedule ”) as being performed by D.R. Horton. Subject to Section 3.1 , all decisions as to which Service Providers (including the decisions to use third parties) shall provide the Services shall be made by D.R. Horton in its sole discretion, except to the extent specified in the Services Schedule. Each D.R. Horton Service shall be provided in exchange for the consideration set forth with respect to such D.R. Horton Service on the Services Schedule or as the Parties may otherwise agree in writing. Each D.R. Horton Service shall be provided and accepted in accordance with the terms, limitations and conditions set forth herein and on the Services Schedule.

2.2 Books and Records; Availability of Information . D.R. Horton shall maintain reasonable invoicing procedures and related records in connection with the provision of the Services performed or caused to be performed by it and, upon reasonable notice from Forestar, shall make available for review by such other Forestar’s agents such books and records during reasonable business hours with such review occurring no more than one (1) time during a

fiscal quarter. Moreover, such review shall be conducted by Forestar or its agents in a manner that will not unreasonably interfere with the normal business operations of the Service Provider. Forestar shall make available on a timely basis to the Service Providers all information and materials reasonably requested by such Service Providers to enable them to provide the Services. Forestar shall provide to the Service Providers reasonable access to Forestar’s premises to the extent necessary for the purpose of providing the Services.

ARTICLE III

Services; Payment; Independent Contractors

3.1. Services To Be Provided .

(a) Unless otherwise agreed by the Parties (including to the extent specified on the Services Schedule), (i) the Service Providers shall be required to perform the Services only in a manner, scope, nature and quality as provided by or within D.R. Horton that is similar in all material respects to the manner in which such Services were performed immediately prior to the Effective Date, and (ii) the Services shall be used for substantially the same purposes and in substantially the same manner (including as to volume, amount, level or frequency, as applicable) as the Services have been used immediately prior to the Effective Date; provided , however , that the Services Schedule shall control the scope of the Service to be performed (to the extent provided therein) unless otherwise agreed in writing. Each Party and the Service Providers shall act under this Services Agreement solely as an independent contractor and not as an agent or employee of any other Party or any of such Party’s Affiliates. As an independent contractor, all overhead and personnel necessary to the Services required of the Service Providers hereunder shall be the Service Provider’s sole responsibility and shall be at the Service Provider’s sole cost and expense. No Service Provider shall have the authority to bind Forestar by contract or otherwise.

(b) The provision of Services by Service Providers shall be subject to Article V hereof.

3.2. The Parties will use good-faith efforts to reasonably cooperate with each other in all matters relating to the provision and receipt of Services. Such cooperation shall include obtaining all consents, licenses or approvals necessary to permit each Party to perform its obligations hereunder; provided , however , under no circumstances shall any Service Provider be required to make any payments to any third party in respect of any such consents, licenses or approvals nor shall any Service Provider be required to make any alternative arrangements in the event that any such consents, licenses or approvals are not obtained.

3.3. Additional Services .

(a) From time to time during the term, Forestar may request D.R. Horton (i) to provide additional (including as to volume, amount, level or frequency, as applicable) or different services which D.R. Horton is not expressly obligated to provide under this Agreement if such services are of the type and scope provided within D.R. Horton, (ii) to expand the scope of any Service (such additional or expanded services, the “ Additional Services ”). If D.R. Horton receives such request it shall consider such request in good faith and shall use reasonable efforts to provide such Additional Services; provided , D.R. Horton shall not be obligated to provide any Additional Services if it does not, in its judgment, have adequate resources to provide such Additional Services or if the provision of such Additional Services would interfere with the operation of its business. If D.R. Horton receives the request for Additional Services, it shall notify the Forestar within fifteen (15) calendar days as to whether it will or will not provide the Additional Services.

(b) If D.R. Horton agrees to provide Additional Services pursuant to Section 3.03(a) , then a representative of each party shall in good faith negotiate the terms of a supplement to the Services Schedule which will describe in detail the service, project scope, term, price and payment terms to be charged for the Additional Services. Once agreed to in writing, the supplement to the Services Schedule shall be deemed part of this Services Agreement as of such date and the Additional Services shall be deemed “Services” provided hereunder, in each case subject to the terms and conditions of this Agreement.

3.4. Payments . Except as may be set forth on the Services Schedule, statements will be delivered to Forestar within 15 calendar days after the end of each month by D.R. Horton for Services provided to Forestar during the preceding month, and each such statement shall set forth a brief description of such Services, the amounts charged therefor, and, except as the parties may agree or as set forth on the Services Schedule, such amounts shall be due and payable by the Receiving Party within 30 calendar days after the date of such statement. Statements not paid within such 30 day period shall be subject to late charges, calculated at an interest rate per annum equal to the LIBOR plus 2% (or the maximum legal rate, whichever is lower), and calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment. Payments shall be made by wire transfer to an account designated in writing from time to time by Service Provider.

3.5. Disclaimer of Warranty . EXCEPT AS EXPRESSLY SET FORTH IN THIS SERVICES AGREEMENT, THE SERVICES TO BE PROVIDED UNDER THIS SERVICES AGREEMENT ARE FURNISHED AS IS, WHERE IS, WITH ALL FAULTS AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.

3.6. Taxes . In the event that any Tax is properly chargeable on the provision of the Services as indicated on the Services Schedule, Forestar shall be responsible for and shall pay the amount of any such Tax in addition to and at the same time as the Service fees. All Service fees and other consideration will be paid free and clear of and without withholding or deduction for or on account of any Tax, except as may be required by law.

3.7. Use of Services . Forestar shall not, and shall cause its Affiliates not to, resell any Services to any person whatsoever or permit the use of the Services by any person other than in connection with Forestar’s ongoing operations.

ARTICLE IV

Term of Services

4.1. The provision of Services shall commence on the Effective Date and shall terminate 30 calendar days after it is determined that D.R Horton owns less than 20% of the fully diluted common stock of Forestar, unless mutually agreed in writing by both parties to continue the agreement. The foregoing notwithstanding and subject to Section 7.2 , (i) D.R. Horton may immediately terminate any single or multiple Service provided to Forestar in the event that Forestar fails to make payments for such Service under Section 3.4 and has not cured such failure within thirty (30) days of written notice of such failure from D.R. Horton, and (ii) upon ninety (90) days’ written notice, D.R. Horton may terminate any Service provided to Forestar at such time as D.R. Horton no longer provides the same Service to itself for its own account.

4.2. In the event Forestar requests an extension of the term applicable to the provision of Services, such request shall be considered in good faith by D.R. Horton. Any terms, conditions or costs or fees to be paid by Forestar for Services provided during an extended term will be on mutually acceptable terms. For the avoidance of doubt, under no circumstances shall D.R. Horton be required to extend the term of provision of any Service if (i) the Service Provider does not, in its reasonable judgment, have adequate resources to continue providing such Services, (ii) the extension of the term would interfere with the operation of D. R. Horton’s business or (iii) the extension would require capital expenditure on the part of D.R. Horton or otherwise require D.R. Horton to renew or extend any Contract with any third party.

ARTICLE V

Force Majeure

5.1. The Service Providers shall not be liable for any expense, loss or damage whatsoever arising out of any interruption of Service or delay or failure to perform under this Services Agreement that is due to acts of God, acts of a public enemy, acts of terrorism, acts of security breach or data breach, acts of a nation or any state, territory, province or other political division thereof, changes in applicable law, fires, hurricanes, floods, epidemics, riots, theft, quarantine restrictions, freight embargoes or other similar causes beyond the reasonable control of the Service Providers. In any such event, the Service Providers’ obligations hereunder shall be postponed for such time as its performance is suspended or delayed on account thereof. The Service Provider will promptly notify the recipient of the Service, either orally or in writing, upon learning of the occurrence of such event of the force majeure. Upon the cessation of the force majeure event, such Service Provider will use commercially reasonable efforts to resume, or to cause any other relevant Service Provider to resume, its performance with the least practicable delay.

ARTICLE VI

Liabilities

6.1. Consequential and Other Damages . None of the Service Providers shall be liable to Forestar with respect to this Services Agreement, whether in contract, tort (including negligence and strict liability) or otherwise, for any special, indirect, incidental or consequential damages whatsoever which in any way arise out of, relate to or are a consequence of, the performance or nonperformance by it hereunder or the provision of, or failure to provide, any Service hereunder, including with respect to loss of profits, business interruptions or claims of customers.

6.2. Limitations of Liability . Subject to Section 6.3 hereof, the liability of any Service Provider with respect to this Services Agreement or any act or failure to act in connection herewith (including, but not limited to, the performance or breach hereof), or from the sale, delivery, provision or use of any Service provided under or covered by this Services Agreement, whether in contract, tort (including negligence and strict liability) or otherwise, shall be limited to actions or omissions resulting from intentional breach of this Services Agreement or gross negligence, and, in any event, such liability shall not exceed the fees previously paid to such Service Provider under this Services Agreement.

6.3. Obligation To Re-perform . In the event of any breach of this Services Agreement by any Service Provider resulting from any error or defect in the performance of any Service (which breach such Service Provider can reasonably be expected to cure by re-performance in a commercially reasonable manner), the Service Provider shall use its reasonable commercial efforts to correct in all material respects such error, defect or breach or re-perform in all material respects such Service upon receipt of the written request of Forestar.

6.4. Indemnity . Except as otherwise provided in this Service Agreement (including the limitation of liability provisions in this Article VI ), each Party shall indemnify, defend and hold harmless the other Party from and against any Liability arising out of the intentional breach hereunder or gross negligence of the Indemnifying Party or its Affiliates, employees, agents, or contractors (including with respect to the performance or nonperformance of any Service hereunder).

ARTICLE VII

Termination

7.1. Termination . Notwithstanding anything herein to the contrary, this Services Agreement shall terminate, and the obligation of the Service Providers to provide or cause to be provided any Service shall cease, on the earliest to occur of (i) thirty (30) calendar days after it is determined that D.R Horton owns less than 20% of the

fully diluted common stock of Forestar, or (ii) the date on which the provision of all Services has been terminated or canceled pursuant to Article IV hereof, or (iii) by mutual written consent of both D.R. Horton and Forestar.

7.2. Breach of Services Agreement; Dispute Resolution . Subject to Article VI hereof, and without limiting a Party’s obligations under Section 4.1 , if a Party shall cause or suffer to exist any material breach of any of its obligations under this Services Agreement, including any failure to make a payment within thirty (30) days after receipt of the statement describing the Services provided for pursuant to Section 3.4 with respect to more than one Service provided hereunder, and that Party does not cure such default in all material respects within 30 days after receiving written notice thereof from the non-breaching Party, the non-breaching Party shall have the right to terminate this Services Agreement immediately thereafter.

7.3. Sums Due . In addition to any other payments required pursuant to this Services Agreement, in the event of a termination of this Services Agreement, the Service Providers shall be entitled to the immediate payment of, and Forestar shall within 15 Business Days, pay to the Service Providers, all accrued amounts for Services, Taxes and other amounts due under this Services Agreement as of the date of termination.

7.4. Effect of Termination . Section 2.2 hereof and Articles V , VI , VII and VIII hereof shall survive any termination of this Services Agreement.

ARTICLE VIII

Miscellaneous

8.1. Ownership of Work Product . Subject to the terms of the Separation Agreement, (i) each Service Provider acknowledges and agrees that it will acquire no right, title or interest (including any license rights or rights of use) to any work product resulting from the provision of Services hereunder for Forestar’s exclusive use and such work product shall remain the exclusive property of Forestar and (ii) Forestar acknowledges and agrees that it will acquire no right, title or interest (other than a non-exclusive, worldwide right of use) to any work product resulting from the provision of Services hereunder that is not for Forestar’s exclusive use and such work product shall remain the exclusive property, subject to license, of the Service Provider.

IN WITNESS WHEREOF, the Parties have caused this Services Agreement to be executed by their duly authorized representatives.

	D.R. HORTON, INC.


	By:	/s/ Michael J. Murray
	Name:	Michael J. Murray
	Title:	Executive Vice President and
		Chief Operating Officer


	FORESTAR GROUP, INC.


	By:	/s/ Donald J. Tomnitz
	Name:	Donald J. Tomnitz
	Title:	Executive Chairman

Schedule 1

Accounting, Finance and Treasury Services

Scope of Services : Subject to the limitations set forth below, D.R. Horton shall make D.R. Horton in-house personnel reasonably available to Forestar personnel to provide the specific services set forth below.

Accounting Services

To be determined

Finance and Treasury Services

To be determined

No information or assistance may be provided to the extent it would create a conflict of interest, violate any confidentiality obligations, risk the loss of attorney-client privilege, expose D.R. Horton to potential liability or otherwise interfere with the operation of D.R. Horton’s business.

Schedule 2

Tax Services

Scope of Services : Subject to the limitations set forth below, D.R. Horton shall make D.R. Horton in-house tax personnel reasonably available to Forestar, including outside consultants if needed, to provide assistance related to tax matters.

To be determined

Schedule 3

Human Resources, Employment, Payroll and Benefits Services

A. Scope of Services : Subject to the limitations set forth below, D.R. Horton shall make D.R. Horton in-house personnel reasonably available to Forestar personnel to provide the specific services set forth below.

To be determined

Schedule 4

Legal Services — Securities, Corporate Governance and Secretarial

Scope of Services : Subject to the limitations set forth below, D.R. Horton shall make D.R. Horton in-house corporate and securities attorneys and paralegals reasonably available to Forestar to assist Forestar as follows:

Board and Corporate Goverance Matters : to be determined

SEC Compliance Matters : to be determined

Schedule 5

Legal Services — Real Estate

Scope of Services : Subject to the limitations set forth below, D.R. Horton shall make D.R. Horton in-house real estate attorneys and paralegals reasonably available to Forestar to assist Forestar as follows:

Real Estate matters : to be determined

Schedule 6

Legal Services — Litigation and Risk Management

Scope of Services : Subject to the limitations set forth below, D.R. Horton shall make D.R. Horton in-house litigation and risk attorneys and paralegals reasonably available to Forestar to assist Forestar as follows:

Litigation Services : to be determined

Risk Management and Insurance : to be determined

Schedule 8

Information Technology

Scope of Services : Subject to the limitations set forth below, D.R. Horton shall make D.R. Horton in-house information technology personnel reasonably available to Forestar to assist Forestar as follows:

Information Technology Matters : to be determined

Information Technology Support Matters : to be determined

Information Technology Equipment : to be determined

Schedule 9

Investor and Public Relations

Scope of Services : Subject to the limitations set forth below, D.R. Horton shall make D.R. Horton investor relations and public relations personnel available to Forestar to assist Forestar as follows:

To be determined

No information or assistance may be provided to the extent it would create a conflict of interest, violate any confidentiality obligations, risk the loss of attorney-client privilege

Schedule 10

Real Estate Development and Materials Procurement

Scope of Services : Subject to the limitations set forth below, D.R. Horton shall make D.R. Horton real estate development and materials procurement personnel available to Forestar to assist Forestar as follows:

To be determined

No information or assistance may be provided to the extent it would create a conflict of interest, violate any confidentiality obligations, risk the loss of attorney-client privilege

Exhibit 10.3

INDEMNIFICATION AGREEMENT

This Indemnification Agreement ( “ Agreement ” ) is made as of the day of , by and between Forestar Group Inc., a Delaware corporation ( the “ Company ” ), and , an officer or director of the Company ( the “ Indemnitee ” ).

RECITALS

A. The Indemnitee is presently serving as an officer or director of the Company and the Company desires the Indemnitee to continue to serve in such capacity. The Indemnitee is willing, subject to certain conditions including without limitation the execution and performance of this Agreement by the Company, to continue to serve in such capacities.

B. In addition to the indemnification to which the Indemnitee is entitled under the certificate of incorporation of the Company ( the “ Certificate ”), the Company may in its discretion obtain at its sole expense insurance protecting its officers and directors including the Indemnitee against certain losses arising out of actual or threatened actions, suits or proceedings to which such persons may be made or threatened to be made parties. If such insurance is obtained, there can be no assurance that such insurance will not be cancelled by the insurer or that the Company will elect not to continue or renew such insurance.

Accordingly, and in order to induce the Indemnitee to continue to serve in his present capacity, the Company and Indemnitee agree as follows:

1. Continued Service . The Indemnitee will continue to serve as an officer or director of the Company at the pleasure of its Board of Directors ( the “ Board ”) so long as he is duly appointed or elected by the Board or until he resigns in writing in accordance with applicable law.

2. Initial Indemnity . (a) The Company shall indemnify the Indemnitee

when he was or is a party or is threatened to be made a party to any pending, threatened or completed action, suit or proceeding, whether civil, administrative, investigative or criminal (other than an action by or in the name of the Company), by reason of the fact that he is or was or had agreed to become an officer or director of the Company, or is or was serving or had agreed to serve at the written request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, in any such case owned or controlled by the Company, or by reason of any action alleged to have been taken or omitted in such capacity, against any and all costs, charges and expenses, including without limitation, attorneys’ and others’ fees and expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by the Indemnitee in connection therewith and any appeal therefrom if the Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the Indemnitee did not satisfy the foregoing standard of conduct to the extent applicable thereto.

(b) The Company shall indemnify the Indemnitee when he was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact that he is or was or had agreed to become an officer or director of the Company, or is or was serving or had agreed to serve at the written request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, in any such case owned or controlled by the Company, against costs, charges and expenses (including attorneys’ and

others’ fees and expenses) actually and reasonably incurred by him in connection with the defense or settlement thereof or any appeal therefrom if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and except that no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery or the court in which such action, suit or proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

(c) To the extent that the Indemnitee has been successful on the merits or otherwise, including without limitation the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to in Sections 2(a) or 2(b) hereof or in defense of any claim, issue or matter therein, he shall be indemnified against costs, charges and expenses (including attorneys’ and others’ fees and expenses) actually and reasonably incurred by him in connection therewith.

(d) Any indemnification under Sections 2(a) or 2(b) (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination in accordance with Section 4 hereof or any applicable provision of the Certificate, bylaws of the Company (“ Bylaws ”), other agreement, resolution or otherwise. Such determination shall be made (i) by the Board, by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding or (ii) if such a quorum of disinterested directors is not available or so directs, by independent legal counsel (designated in the manner provided below in this subsection (d)) in a written opinion or (iii) by the stockholders of the Company ( the

“ Stockholders ” ). Independent legal counsel shall be designated by vote of a majority of the directors; provided , however , that if the Board is unable or fails to so designate, such designation shall be made by the Indemnitee subject to the approval of the Company (which approval shall not be unreasonably withheld). Independent legal counsel shall not be any person or firm who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of such independent legal counsel and to indemnify fully such counsel against costs, charges and expenses (including attorneys’ and others’ fees and expenses) actually and reasonably incurred by such counsel in connection with this Agreement or the opinion of such counsel pursuant hereto.

(e) All expenses (including attorneys’ and others’ fees and expenses) incurred by the Indemnitee in his capacity as an officer or director of the Company in defending a civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding in the manner prescribed by Section 4(b) hereof.

(f) The Company shall not adopt any amendment to the Certificate or Bylaws the effect of which would be to deny, diminish or encumber the Indemnitee’s rights to indemnity pursuant to the Certificate, Bylaws, the General Corporation Law of the State of Delaware (the “ DGCL ” ) or any other applicable law as applied to any act or failure to act occurring in whole or in part prior to the date ( the “ Effective Date ” ) upon which the amendment was approved by the Board or the Stockholders, as the case may be. In the event that the Company shall adopt any amendment to the Certificate or Bylaws the effect of which is to so deny, diminish or encumber the Indemnitee’s rights to indemnity, such amendment shall apply only to acts or failures to act occurring entirely after the Effective Date thereof unless the Indemnitee shall have voted in favor

of such adoption as a holder of record of the Company’s voting stock, as the case may be.

3. Additional Indemnification . (a) Pursuant to Section 145(f) of the DGCL, without limiting any right which the Indemnitee may have pursuant to Section 2 hereof, the Certificate, the Bylaws, the DGCL, any policy of insurance or otherwise, but subject to the limitations on the maximum permissible indemnity which may exist under applicable law at the time of any request for indemnity hereunder determined as contemplated by Section 3(a) hereof, the Company shall indemnify the Indemnitee against any amount which he is or becomes legally obligated to pay relating to or arising out of any claim made against him because of any act, failure to act or neglect or breach of duty, including any actual or alleged error, misstatement or misleading statement, which he commits, suffers, permits or acquiesces in while acting in his capacity as an officer or director of the Company, or, at the written request of the Company, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, in any such case owned or controlled by the Company. The payments which the Company is obligated to make pursuant to this Section 3 shall include without limitation damages, judgments, settlements and charges, costs, expenses, expenses of investigation and expenses of defense of legal actions, suits, proceedings or claims and appeals therefrom, and expenses of appeal, attachment or similar bonds; provided , however , that the Company shall not be obligated under this Section 3(a) to make any payment in connection with any claim against the Indemnitee:

(i) to the extent of any fine or similar governmental imposition which the Company is prohibited by applicable law from paying which results in a final, non-appealable order; or

(ii) to the extent based upon or attributable to the Indemnitee gaining in fact a personal profit to which he was not legally entitled, including without

limitation profits made from the purchase and sale by the Indemnitee of equity securities of the Company which are recoverable by the Company pursuant to Section 16(b) of the Securities Exchange Act of 1934, and profits arising from transactions in publicly traded securities of the Company which were effected by the Indemnitee in violation of Section 10(b) of the Securities Exchange Act of 1934, including Rule l0b-5 promulgated thereunder.

The determination of whether the Indemnitee shall be entitled to indemnification under this Section 3(a) may be, but shall not be required to, be made in accordance with Section 4(a) hereof. If that determination is so made, it shall be binding upon the Company and the Indemnitee for all purposes.

(b) Expenses (including without limitation attorneys’ and others’ fees and expenses) incurred by Indemnitee in defending any actual or threatened civil or criminal action, suit, proceeding or claim shall be paid by the Company in advance of the final disposition thereof as authorized in accordance with Section 4(b) hereof.

4. Certain Procedures Relating to Indemnification and Advancement of Expenses . (a) Except as otherwise permitted or required by the DGCL, for purposes of pursuing his rights to indemnification under Sections 2(a), 2(b) or 3(a) hereof, as the case may be, the Indemnitee may, but shall not be required to, (i) submit to the Board a sworn statement of request for indemnification substantially in the form of Exhibit 1 attached hereto and made a part hereof ( the “ Indemnification Statement ” ) averring that he is entitled to indemnification hereunder; and (ii) present to the Company reasonable evidence of all indemnification amounts for which payment is requested. Submission of an Indemnification Statement to the Board shall create a presumption that the Indemnitee is entitled to indemnification under Sections 2(a), 2(b) or 3(a) hereof, as the

case may be, and the Board shall be deemed to have determined that the Indemnitee is entitled to such indemnification unless within 30 calendar days after submission of the Indemnification Statement the Board shall determine by vote of a majority of the directors at a meeting at which a quorum is present, based upon clear and convincing evidence (sufficient to rebut the foregoing presumption) and the Indemnitee shall have received notice within such period in writing of such determination that the Indemnitee is not so entitled to indemnification, which notice shall disclose with particularity the evidence in support of the Board’s determination. The foregoing notice shall be sworn to by all persons who participated in the determination and voted to deny indemnification. The provisions of this Section 4(a) are intended to be procedural only and shall not affect the right of the Indemnitee to indemnification under this Agreement and any determination by the Board that the Indemnitee is not entitled to indemnification and any failure to make the payments requested in the Indemnification Statement shall be subject to judicial review as provided in Section 6 hereof.

(b) For purposes of determining whether to authorize advancement of expenses pursuant to Section 2(e) hereof, the Indemnitee shall submit to the Board a sworn statement of request for advancement of expenses substantially in the form of Exhibit 2 attached hereto and made a part hereof ( the “ Undertaking ” ), averring that (i) he has reasonably incurred or will reasonably incur actual expenses in defending an actual civil or criminal action, suit, proceeding or claim and (ii) he undertakes to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Company under this Agreement or otherwise. For purposes of requesting advancement of expenses pursuant to Section 3(b) hereof, the Indemnitee may, but shall not be required to, submit an Undertaking or such other form of request as he determines to be appropriate ( an “ Expense Request ” ). Upon receipt of an Undertaking or Expense Request, as

the case may be, the Board shall within 10 calendar days authorize immediate payment of the expenses stated in the Undertaking or Expense Request, as the case may be, whereupon such payments shall immediately be made by the Company. No security shall be required in connection with any Undertaking or Expense Request and any Undertaking or Expense Request shall be accepted without reference to the Indemnitee’s ability to make repayment.

5. Subrogation; Duplication of Payments . (a) In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.

(b) The Company shall not be liable under this Agreement to make any payment in connection with any claim made against the Indemnitee to the extent the Indemnitee has actually received payment (under any insurance policy, the Certificate, the Bylaws or otherwise) of the amounts otherwise payable hereunder.

6. Enforcement . (a) If a claim for indemnification made to the Company pursuant to Section 4 hereof is not paid in full by the Company within 30 calendar days after a written claim has been received by the Company, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim.

(b) In any action brought under Section 6(a) hereof, it shall be a defense to a claim for indemnification pursuant to Sections 2(a) or 2(b) hereof (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the Undertaking, if any is required, has been tendered to the Company) that the Indemnitee has not met the standards of conduct which make it permissible under the DGCL for

the Company to indemnify the Indemnitee for the amount claimed, but the burden of proving such defense shall be on the Company. Neither the failure of the Company (including the Board, independent legal counsel or the Stockholders) to have made a determination prior to commencement of such action that indemnification of the Indemnitee is proper in the circumstances because he has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Company (including the Board, independent legal counsel or the Stockholders) that the Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct.

(c) It is the intent of the Company that the Indemnitee not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. Accordingly, if it should appear to the Indemnitee that the Company has failed to comply with any of its obligations under the Agreement or in the event that the Company or any other person takes any action to declare the Agreement void or unenforceable, or institutes any action, suit or proceeding designed (or having the effect of being designed) to deny, or to recover from, the Indemnitee the benefits intended to be provided to the Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee from time to time to retain counsel of his choice, at the expense of the Company as hereafter provided, to represent the Indemnitee in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company or any director, officer, stockholder or other person affiliated with the Company, in any jurisdiction. Regardless of the outcome thereof, the Company shall pay and be solely responsible for any and all costs, charges and expenses, including

without limitation attorneys’ and others’ fees and expenses, reasonably incurred by the Indemnitee (i) as a result of the Company’s failure to perform this Agreement or any provision thereof or (ii) as a result of the Company or any person contesting the validity or enforceability of this Agreement or any provision thereof as aforesaid.

7. Merger or Consolidation . In the event that the Company shall be a constituent corporation in a consolidation, merger or other reorganization, the Company, if it shall not be the surviving, resulting or other corporation therein, shall require as a condition thereto the surviving, resulting or acquiring corporation to agree to indemnify the Indemnitee to the full extent provided in Section 3 hereof. Whether or not the Company is the resulting, surviving or acquiring corporation in any such transaction, the Indemnitee shall also stand in the same position under this Agreement with respect to the resulting, surviving or acquiring corporation as he would have with respect to the Company if its separate existence had continued.

8. Nonexclusivity and Severability . (a) The right to indemnification provided by this Agreement shall not be exclusive of any other rights to which the Indemnitee may be entitled under the Certificate, Bylaws, the DGCL, any other statute, insurance policy, agreement, vote of Stockholders or of directors or otherwise, both as to actions in his official capacity and as to actions in another capacity while holding such office, and shall continue after the Indemnitee has ceased to be a director, officer, employee or agent and shall inure to the benefit of his heirs, executors and administrators.

(b) If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall be

reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

9. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflict of laws thereof.

10. Modification; Survival . This Agreement contains the entire agreement of the parties relating to the subject matter hereof. This Agreement may be modified only by an instrument in writing signed by both parties hereto. The provisions of this Agreement shall survive the death, disability, or incapacity of the Indemnitee or the termination of the Indemnitee’s service as an officer or director of the Company and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators.

11. Certain Terms . For purposes of this Agreement, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on Indemnitee with respect to any employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, the Indemnitee with respect to an employee benefit plan, its participants or beneficiaries; references to the masculine shall include the feminine and vice versa ; references to the singular shall include the plural and vice versa ; and if the Indemnitee acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan he shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to herein.

IN WITNESS WHEREOF , the parties hereto have duly executed this Agreement as of the date first above written.

	FORESTAR GROUP INC.


	By:
		Name:
		Title:

	By:
		Name:
		Title:


		Name:
		Title:

Exhibit 1

INDEMNIFICATION STATEMENT

STATE OF		‘

		‘ SS.

COUNTY OF		‘

I, , being first duly sworn, do depose and say as follows:

1. This Indemnification Statement is submitted pursuant to the Indemnification Agreement, dated as of , 20 , between Forestar Group Inc., a Delaware corporation ( the “ Company ” ), and the undersigned.

2. I am requesting indemnification against charges, costs, expenses (including attorneys’ and others’ fees and expenses), judgments, fines and amounts paid in settlement, all of which ( collectively, “ Liabilities ” ) have been or will be incurred by me in connection with an actual or threatened action, suit, proceeding or claim to which I am a party or am threatened to be made a party.

3. With respect to all matters related to any such action, suit, proceeding or claim, I am entitled to be indemnified as herein contemplated pursuant to the aforesaid Indemnification Agreement.

4. Without limiting any other rights which I have or may have, I am requesting indemnification against Liabilities which have or may arise out of .


	Name:
	Title:

Subscribed and sworn to before me, a Notary Public in and for said County and State, this day of , 20 .

[Seal]

My commission expires the day of , 20 .

Exhibit 2

UNDERTAKING

STATE OF		‘

		‘ SS

COUNTY OF		‘

I, , being first duly sworn do depose and say as follows:

1. This Undertaking is submitted pursuant to the Indemnification Agreement, dated as of , 20 , between Forestar Group Inc., a Delaware corporation ( the “ Company ” ), and the undersigned.

2. I am requesting advancement of certain costs, charges and expenses which I have incurred or will incur in defending an actual or pending civil or criminal action, suit, proceeding or claim.

3. I hereby undertake to repay this advancement of expenses if it shall ultimately be determined that I am not entitled to be indemnified by the Company under the aforesaid Indemnification Agreement or otherwise.

4. The costs, charges and expenses for which advancement is requested are, in general, all expenses related to .


	Name:
	Title:

Subscribed and sworn to before me, a Notary Public in and for said County and State, this day of , 20 .

[Seal]

My commission expires the day of , 20 .