Exhibit 10.2

 

Amended and Restated Executive Change-in-Control Severance Agreement for

 

Adopted:

 

Amended and Restated: December, 2008

 

--------------------------------------------------------------------------------

 

Contents

 

Article 1. Definitions

 

1

 

 

 

Article 2. Severance Benefits

 

5

 

 

 

Article 3. Form and Timing of Severance Benefits

 

8

 

 

 

Article 4. Noncompetition and Confidentiality

 

9

 

 

 

Article 5. Excise Tax Equalization Payment

 

10

 

 

 

Article 6. The Company’s Payment Obligation

 

11

 

 

 

Article 7. [RESERVED]

 

12

 

 

 

Article 8. Legal Remedies

 

12

 

 

 

Article 9. Successors

 

12

 

 

 

Article 10. Miscellaneous

 

12

 

--------------------------------------------------------------------------------

 

WALTER INDUSTRIES, INC.
AMENDED AND RESTATED EXECUTIVE CHANGE-IN-CONTROL SEVERANCE AGREEMENT

 

THIS AMENDED AND RESTATED EXECUTIVE CHANGE-IN-CONTROL SEVERANCE AGREEMENT is
made, entered into, and is effective this       day of                         ,
2008 (hereinafter referred to as the “Effective Date”), by and between Walter
Industries, Inc. (the “Company”), a Delaware corporation, and
                                                     (the “Executive”).

 

WHEREAS, the Executive is currently employed by
                                           (“      ”), a [subsidiary of the
Company,] and possesses considerable experience and knowledge of the business
and affairs of the Company concerning its policies, methods, personnel, and
operations; and

 

WHEREAS, the Company is desirous of assuring insofar as possible, that it will
continue to have the benefit of the Executive’s services; and the Executive is
desirous of having such assurances; and

 

WHEREAS, the Company recognizes that circumstances may arise in which a Change
in Control of the Company occurs, through acquisition or otherwise, thereby
causing uncertainty of employment without regard to the Executive’s competence
or past contributions. Such uncertainty may result in the loss of the valuable
services of the Executive to the detriment of the Company and its shareholders;
and

 

WHEREAS, both the Company and the Executive are desirous that any proposal for a
Change in Control or acquisition will be considered by the Executive objectively
and with reference only to the business interests of the Company and its
shareholders;

 

WHEREAS, the Executive will be in a better position to consider the Company’s
best interests if the Executive is afforded reasonable security, as provided in
this Agreement, against altered conditions of employment which could result from
any such Change in Control or acquisition; and

 

WHEREAS, the Company and the Executive previously entered into an Executive
Change-in-Control Severance Agreement dated as of
                                       (“Prior Agreement”); and

 

WHEREAS, the Company and the Executive now desire to amend and restate the terms
of Executive’s Executive Change-in-Control Severance Agreement in its entirety
in order to comply with the requirements of Section 409A of the Code.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements of the parties set forth in this Agreement, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

 

ARTICLE 1. DEFINITIONS

 

Wherever used in this Agreement, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word is
capitalized:

 

1

--------------------------------------------------------------------------------

 

(a)                            “Agreement” means this Amended and Restated
Executive Change-in-Control Severance Agreement.

 

(b)                           “Base Salary” means, at any time, the then regular
annual rate of pay which the Executive is receiving as annual salary, excluding
amounts: (i) received under short-term or long-term incentive or other bonus
plans, regardless of whether or not the amounts are deferred, or (ii) designated
by the Company as payment toward reimbursement of expenses.

 

(c)                            “Board” means the Board of Directors of the
Company.

 

(d)                           “Cause” shall be determined solely by the
Committee in the exercise of good faith and reasonable judgment, and shall mean
the occurrence of any one or more of the following:

 

(i)                                    The Executive’s willful and continued
failure to substantially perform his duties with the Company and/or one or more
of its subsidiaries (other than any such failure resulting from the Executive’s
Disability), after a written demand for substantial performance is delivered to
the Executive that specifically identifies the manner in which the Committee
believes that the Executive has not substantially performed his duties, and the
Executive has failed to remedy the situation within fifteen (15) business days
of such written notice from the Company or a subsidiary; or

 

(ii)                                 The Executive’s conviction of a felony; or

 

(iii)                              The Executive’s willful engaging in conduct
that is demonstrably and materially injurious to the Company and/or one or more
of its subsidiaries, monetarily or otherwise. However, no act or failure to act
on the Executive’s part shall be deemed “willful” unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that the
action or omission was in the best interests of the Company and/or one or more
of its subsidiaries.

 

(e)                            “Change in Control” of the Company shall mean the
occurrence of any one (1) or more of the following events:

 

(i)                                    A change in the effective control of the
Company, which occurs only on either of the following dates:

 

(A)                                                      The date any Person or
more than one Person acting as a group (other than the Company or any
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
and any trustee or other fiduciary holding securities under an employee benefit
plan of the Company or such proportionately owned corporation), acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such Person or Persons) ownership of stock of the Company
representing more than thirty percent (30%) of the total voting power of the
stock of the Company; or

 

2

--------------------------------------------------------------------------------

 

(B)                                                        The date a majority
of the members of the Board is replaced during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the members of
the Board before the date of the appointment or election;

 

provided that, in any event, the transaction must constitute a “change in the
effective control” of the Company within the meaning of
Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations
Section 1.409A-3(i)(5)(vi).

 

(ii)                                 The date any Person or more than one Person
acting as a group acquires (or has acquired during the 12-month period ending on
the date of the most recent acquisition by such Person or Persons) all or
substantially all of the Company’s assets; provided that the transaction must
constitute a “change in the ownership of a substantial portion of the assets” of
the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code and
Treasury Regulations Section 1.409A-3(i)(5)(vii).

 

Notwithstanding the foregoing, in no event shall a Change in Control of the
Company be deemed to have occurred if the Company undergoes a strategic
realignment of its businesses (such as a split-up or spin-off transaction), with
or without a shareholder vote, including, without limitation, a spin-off or
other transaction separating Jim Walter Homes, Inc., Walter Mortgage Company or
JWH Holding Company, LLC from the Company.

 

(f)                              “Code” means the Internal Revenue Code of 1986,
as amended.

 

(g)                           “Committee” means the Compensation Committee of
the Board of Directors of the Company, or, if no Compensation Committee exists,
then the full Board of Directors of the Company, or a committee of Board
members, as appointed by the full Board to administer this Agreement.

 

(h)                           “Company” means Walter Industries, Inc., a
Delaware corporation, or any successor thereto as provided in Article 9 herein.

 

(i)                               “Constructive Termination” means the
Executive’s voluntary Separation from Service for Good Reason; provided that a
voluntary Separation from Service shall be a Constructive Termination only if
(i) Executive provides written notice of the facts or circumstances constituting
a Good Reason condition to the Company within 30 days after the initial
existence of the Good Reason condition, (y) the Company does not remedy the Good
Reason condition within 30 days after it receives such notice, and (z) the
voluntary Separation from Service occurs within 90 days after the initial
existence of the Good Reason condition. The foregoing definition of Constructive
Termination is intended to qualify for the safe harbor under Treasury
Regulations Section 1.409A-1(n)(2)(ii) for treating a voluntary separation from
service as an involuntary separation from service.

 

3

--------------------------------------------------------------------------------

 

(j)                               “Disability” or “Disabled” shall have the
meaning ascribed to such term in the Executive’s governing long-term disability
plan, or if no such plan exists, at the discretion of the Board.

 

(k)                            “Effective Date” means the date this Agreement is
approved by the Board, or such other date as the Board shall designate in its
resolution approving this Agreement, and as specified in the opening sentence of
this Agreement.

 

(l)                               “Effective Date of Termination” means the date
on which a Qualifying Termination occurs, as provided in Section 2.2 herein,
which triggers the payment of Severance Benefits hereunder.

 

(m)                         “Exchange Act” means the Securities Exchange Act of
1934, as amended.

 

(n)                           “Good Reason” means the occurrence of any of the
following conditions after a Change in Control of the Company (in each case
arising without the Executive’s consent):

 

(i)                       A material diminution of the Executive’s authority,
duties or responsibilities from those in effect as of ninety (90) calendar days
prior to the Change in Control;

 

(ii)                    The Company requiring the Executive to be based at a
location in excess of fifty (50) miles from the location of the Executive’s
principal job location or office immediately prior to the Change in Control;
except for required travel on the Company’s business to an extent substantially
consistent with the Executive’s then present business travel obligations;

 

(iii)                 A material reduction by the Company of the Executive’s
Base Salary in effect on the Effective Date hereof, or as the same shall be
increased from time to time; or

 

(iv)                A material breach of this Agreement by the Company,
including Section 9.1.

 

Unless the Executive becomes Disabled, the Executive’s right to terminate
employment for Good Reason shall not be affected by the Executive’s incapacity
due to physical or mental illness. The Executive’s continued employment shall
not, by itself, constitute consent to, or a waiver of rights with respect to,
any circumstance constituting Good Reason herein.

 

(o)                           “Involuntary Termination” means the Executive’s
involuntary Separation from Service within the meaning of Treasury Regulations
Section 1.409A-1(n)(1).

 

(p)                           “Normal Retirement Age” means the earliest normal
retirement age available under the established rules of the Company’s
tax-qualified retirement plans in which the Executive is eligible to
participate.

 

(q)                           “Notice of Termination” shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon, and shall set forth in reasonable

 

4

--------------------------------------------------------------------------------

 

detail the facts and circumstances claimed to provide a basis for termination of
the Executive’s employment under the provision so indicated.

 

(r)                              “Person” shall have the meaning ascribed to
such term in the Code and Treasury Regulations.

 

(s)                            “Qualifying Termination” means a Separation from
Service described in Section 2.2 herein, the occurrence of which triggers the
payment of Severance Benefits hereunder.

 

(t)                              “Separation from Service” means the Executive’s
“separation from service” from Executive’s employer within the meaning of
Section 409A(a)(2)(A)(i) of the Code and the default rules of Treasury
Regulations Section 1.409A-1(h). For this purpose, Executive’s “employer” is JWR
and every entity or other person which collectively with JWR constitutes a
single “service recipient” (as that term is defined in Treasury Regulations
Sections 1.409A-1(g)) as the result of the application of the rules of Treasury
Regulations Sections 1.409A-1(h)(3); provided that an 80% standard (in lieu of
the default 50% standard) shall be used for purposes of determining the service
recipient / employer for this purpose.

 

(u)                           “Specified Employee” means a “specified employee”
of the service recipient that includes JWR (as determined under Treasury
Regulations Sections 1.409A-1(g))  within the meaning of
Section 409A(a)(2)(B)(i) of the Code and Treasury Regulations
Section 1.409A-1(i), as determined in accordance with the procedures adopted by
such service recipient that are then in effect, or, if no such procedures are
then in effect, in accordance with the default procedures set forth in Treasury
Regulations Section 1.409A-1(i).

 

(v)                           “Severance Benefits” mean the payment of severance
compensation as provided in Section 2.3 herein.

 

ARTICLE 2. SEVERANCE BENEFITS

 

2.1                         Right to Severance Benefits. The Executive shall be
entitled to receive from the Company Severance Benefits as described in
Section 2.3 herein, if there has been a Change in Control of the Company and if,
within twenty-four (24) calendar months thereafter, the Executive experiences a
Separation from Service for any reason specified in Section 2.2 herein as being
a Qualifying Termination.

 

The Executive shall not be entitled to receive Severance Benefits if he
experiences an Involuntary Termination for Cause, a Separation from Service by
reason of his death or Disability, a voluntary Separation from Service after
attaining his Normal Retirement Age, or a voluntary Separation from Service that
is not a Constructive Termination.

 

2.2                         Qualifying Termination. The occurrence of any one of
the following events within twenty-four (24) calendar months after a Change in
Control of the Company shall trigger the payment of Severance Benefits to the
Executive under this Agreement:

 

(a)                            An Involuntary Termination without Cause; or

 

5

--------------------------------------------------------------------------------

 

(b)                           A Constructive Termination.

 

For purposes of this Agreement, a Qualifying Termination shall not include a
Separation from Service by reason of the Executive’s death or Disability, a
voluntary Separation from Service after attaining his Normal Retirement Age, a
voluntary Separation from Service that is not a Constructive Termination, or an
Involuntary Termination for Cause.

 

2.3        Description of Severance Benefits. In the event the Executive becomes
entitled to receive Severance Benefits, as provided in Sections 2.1 and 2.2
herein, the Company shall pay or provide, as the case may be, to the Executive
the following Severance Benefits:

 

(a)                            A lump-sum amount equal to the Executive’s
accrued but unpaid Base Salary, accrued but unused vacation pay and unreimbursed
business expenses (in accordance with the standard reimbursement policy
applicable to the Executive then in effect) earned by and owed to the Executive
through and including the Effective Date of Termination.

 

(b)                           A lump-sum amount equal to one and one-half (1.5)
multiplied by the sum of the following: (i) the higher of: (A) the Executive’s
annual rate of Base Salary in effect upon the Effective Date of Termination, or
(B) the Executive’s annual rate of Base Salary in effect on the date of the
Change in Control; and (ii) the average of the actual annual bonus earned
(whether or not deferred) by the Executive under the annual bonus plan
(excluding any special bonus payments) in which the Executive participated in
the three (3) years preceding the year in which the Executive’s Effective Date
of Termination occurs. If the Executive has less than three (3) years of annual
bonus participation preceding the year in which the Executive’s Effective Date
of Termination occurs, then the Executive’s annual target bonus established
under the annual bonus plan in which the Executive is then participating for the
bonus plan year in which the Executive’s Effective Date of Termination occurs
shall be used for each year that the Executive did not participate in the annual
bonus plan, up to a maximum of three (3) years, to calculate the three (3) year
average bonus payment.

 

(c)                            A lump-sum amount equal to one-half (.5)
multiplied by the sum of the following: (i) the higher of: (A) the Executive’s
annual rate of Base Salary in effect upon the Effective Date of Termination, or
(B) the Executive’s annual rate of Base Salary in effect on the date of the
Change in Control; and (ii) the average of the actual annual bonus earned
(whether or not deferred) by the Executive under the annual bonus plan
(excluding any special bonus payments) in which the Executive participated in
the three (3) years preceding the year in which the Executive’s Effective Date
of Termination occurs. If the Executive has less than three (3) years of annual
bonus participation preceding the year in which the Executive’s Effective Date
of Termination occurs, then the Executive’s annual target bonus established
under the annual bonus plan in which the Executive is then participating for the
bonus plan year in which the Executive’s Effective Date of Termination occurs
shall be used for each year that the Executive did not participate in the annual
bonus plan, up to a maximum of three (3) years, to

 

6

--------------------------------------------------------------------------------

 

calculate the three (3) year average bonus payment. Such amount shall be in
consideration for the Executive entering into a noncompete agreement as
described in Article 4 herein.

 

(d)                           Upon the occurrence of a Change in Control, to the
extent permitted by Section 409A of the Code, an immediate full vesting and
lapse of all restrictions on any and all outstanding equity based long term
incentives, including but not limited to stock options and restricted stock unit
awards held by the Executive. This provision shall override any conflicting
language contained in the Executive’s respective Award Agreements.

 

(e)                            The Executive shall continue to be entitled to
receive payments or benefits under any annual bonus plan and/or long-term
incentive plans, whether cash-based or equity-based, or retirement plans and
insurance plans in which Executive is a participant, if any, in each case in
accordance with the terms and conditions of such plans. The Committee shall
authorize a pro-rata bonus under the Executive Incentive Plan (or successor
annual bonus plan) (“EIP”) earned as of the Effective Date of Termination, based
on actual year to date performance, as determined at the Committee’s discretion.
Such pro-rata bonus shall be paid during the year following the year that
includes the Effective Date of Termination in accordance with the terms of the
EIP.

 

(f)                              Continuation for twenty-four (24) months of the
Executive’s medical insurance and life insurance coverage. These benefits shall
be provided by the Company to the Executive beginning immediately upon the
Effective Date of Termination. Such benefits shall be provided to the Executive
at the same coverage level and cost to the Executive as in effect immediately
prior to the Executive’s Effective Date of Termination.

 

To the extent required by law, the Executive shall qualify for full COBRA health
benefit continuation coverage beginning upon the expiration of the
aforementioned twenty-four (24) month period.

 

Notwithstanding the above, these medical and life insurance benefits shall be
discontinued prior to the end of the stated continuation period in the event the
Executive receives substantially similar benefits from a subsequent employer, as
determined solely by the Committee in good faith. For purposes of enforcing this
offset provision, the Executive shall be deemed to have a duty to keep the
Company informed as to the terms and conditions of any subsequent employment and
the corresponding benefits earned from such employment, and shall provide, or
cause to provide, to the Company in writing correct, complete, and timely
information concerning the same.

 

(g)                           For a period of up to twenty-four (24) months
following a Qualifying Termination, the Executive shall be entitled, at the
expense of the Company, to receive standard outplacement services from a
nationally recognized outplacement firm of the Executive’s selection. However,
the Company’s total obligation shall not exceed

 

7

--------------------------------------------------------------------------------

 

thirty-five percent (35%) of the Executive’s final annual rate of Base Salary
with the Company, and such Company obligation shall end prior to the end of the
twenty-four (24) month period upon the Executive becoming employed by a
subsequent employer.

 

2.4        Termination for Total and Permanent Disability. Following a Change in
Control, if the Executive experiences a Separation from Service due to
Disability, the Executive’s benefits shall be determined in accordance with the
Company’s retirement, insurance, and other applicable plans and programs then in
effect.

 

2.5        Termination for Retirement or Death. Following a Change in Control,
if the Executive experiences a Separation from Service by reason of a voluntary
Separation from Service after attaining his Normal Retirement Age, or by reason
of his death, the Executive’s benefits shall be determined in accordance with
the Company’s retirement, survivor’s benefits, insurance, and other applicable
programs then in effect.

 

2.6        Termination for Cause or by the Executive Other Than for Good Reason.
Following a Change in Control, if the Executive experiences (i) an Involuntary
Termination for Cause, or (ii) a voluntary Separation from Service that is not a
Constructive Termination, the Company shall pay the Executive his accrued but
unpaid Base Salary at the rate then in effect and accrued but unused vacation
pay. Further, the Executive shall continue to be entitled to receive payments or
benefits under any annual bonus plan and/or long-term incentive plans, whether
cash-based or equity-based, or retirement plans and insurance plans in which
Executive is a participant, if any, in each case in accordance with the terms
and conditions of such plans.

 

2.7        Notice of Termination. Any Involuntary Termination by the Company for
Cause or voluntary Separation from Service by the Executive for Good Reason
shall be communicated by Notice of Termination to the other party.

 

ARTICLE 3. FORM AND TIMING OF SEVERANCE BENEFITS

 

3.1        Form and Timing of Severance Benefits.

 

(a)                            The amount described in Section 2.3(a) herein
and, except as provided in Section 3.1(b) herein, the amounts described in
Sections 2.3(b), 2.3(c) and 5.1 herein shall be paid in cash to the Executive in
a single lump sum within ten (10) calendar days following the Effective Date of
Termination.

 

(b)                           Notwithstanding anything to the contrary in this
agreement, if Executive is a Specified Employee on the Effective Date of
Termination, to the extent that Executive is entitled to receive any benefit or
payment under this Agreement that constitutes deferred compensation within the
meaning of Section 409A of the Code before the date that is six (6) months after
the Effective Date of Termination, such benefits or payments shall not be
provided or paid to Executive on the date otherwise required to be provided or
paid. Instead, all such amounts shall be accumulated and paid in a single lump
sum to Executive on the first business day after the date that is six (6) months
after the Effective Date of Termination (or, if earlier, within fifteen (15)
days following Executive’s date of death). If Executive

 

8

--------------------------------------------------------------------------------

 

is required to pay for a benefit that is otherwise required to be provided by
the Company under this Agreement by reason of this Section 3.1(b), Executive
shall be entitled to reimbursement for such payments on the first business day
after the date that is six (6) months after the Effective Date of Termination
(or, if earlier, within fifteen (15) days following Executive’s date of death).
All benefits or payments otherwise required to be provided or paid on or after
the date that is six (6) months after the Effective Date of Termination shall
not be affected by this Section 3.1(b) and shall be provided or paid in
accordance with the payment schedule applicable to such benefit or payment under
this Agreement.  Prior to the imposition of the six month delay as set forth in
this Section 3.1(b), it is intended that (i) each installment under this
Agreement be regarded as a separate “payment” for purposes of Section 409A of
the Code, and (ii) all benefits or payments provided under this Agreement
satisfy, to the greatest extent possible, the exemptions from the application of
Section 409A of the Code provided under Treasury Regulations Sections
1.409A-1(b)(4) (short-term deferral) or 1.409A-1(b)(9) (certain separation pay
plans). This Section 3.1(b) is intended to comply with the requirements of
Section 409A(a)(2)(B)(i) of the Code.

 

3.2        Withholding of Taxes. The Company shall withhold from any amounts
payable under this Agreement all federal, state, city, or other taxes as legally
shall be required.

 

3.3        Reimbursement and In-Kind Benefits. To the extent this Agreement
provides for reimbursements of expenses incurred by Executive or in-kind
benefits the provision of which are not exempt from the requirements of
Section 409A of the Code, the following terms apply with respect to such
reimbursements or benefits: (1) the reimbursement of expenses or provision of
in-kind benefits will be made or provided only during the period of time
specifically provided herein; (2) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year will not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year; (3) all reimbursements will be made upon
Executive’s request in accordance with the Company’s normal policies but no
later than the last day of the calendar year immediately following the calendar
year in which the expense was incurred; and (4) the right to the reimbursement
or the in-kind benefit will not be subject to liquidation or exchange for
another benefit.

 

ARTICLE 4. NONCOMPETITION AND CONFIDENTIALITY

 

In the event the Executive becomes entitled to receive Severance Benefits as
provided in Section 2.3 herein, the following shall apply:

 

(a)                            Noncompetition. During the term of employment and
for a period of twelve (12) months after the Effective Date of Termination, the
Executive shall not: (i) directly or indirectly act in concert or conspire with
any person employed by the Company in order to engage in or prepare to engage in
or to have a financial or other interest in any business or any activity which
he knows (or reasonably should have known) to be directly competitive with the
business of the Company as then being carried on; or (ii) serve as an employee,
agent, partner, shareholder, director or consultant for, or in any other
capacity participate, engage, or have a financial or other interest in any
business or any activity which he knows (or reasonably should have known) to be
directly competitive with the business of

 

9

--------------------------------------------------------------------------------

 

the Company as then being carried on (provided, however, that notwithstanding
anything to the contrary contained in this Agreement, the Executive may own up
to two percent (2%) of the outstanding shares of the capital stock of a company
whose securities are registered under Section 12 of the Securities Exchange
Act of 1934).

 

(b)                           Confidentiality. The Company has advised the
Executive and the Executive acknowledges that it is the policy of the Company to
maintain as secret and confidential all Protected Information (as defined
below), and that Protected Information has been and will be developed at
substantial cost and effort to the Company. All Protected Information shall
remain confidential permanently and no Executive shall at any time, directly or
indirectly, divulge, furnish, or make accessible to any person, firm,
corporation, association, or other entity (otherwise than as may be required in
the regular course of the Executive’s employment with the Company), nor use in
any manner, either during the term of employment or after termination, at any
time, for any reason, any Protected Information, or cause any such information
of the Company to enter the public domain.

 

For purposes of this Agreement, “Protected Information” means trade secrets,
confidential and proprietary business information of the Company, and any other
information of the Company, including, but not limited to, customer lists
(including potential customers), sources of supply, processes, plans, materials,
pricing information, internal memoranda, marketing plans, internal policies, and
products and services which may be developed from time to time by the Company
and its agents or employees, including the Executive; provided, however, that
information that is in the public domain (other than as a result of a breach of
this Agreement), approved for release by the Company or lawfully obtained from
third parties who are not bound by a confidentiality agreement with the Company,
is not Protected Information.

 

(c)                            Nonsolicitation. During the term of employment
and for a period of twelve (12) months after the Effective Date of Termination,
the Executive shall not employ or retain or solicit for employment or arrange to
have any other person, firm, or other entity employ or retain or solicit for
employment or otherwise participate in the employment or retention of any person
who is an employee or consultant of the Company.

 

(d)                           Cooperation. Executive agrees to cooperate with
the Company and its attorneys in connection with any and all lawsuits, claims,
investigations, or similar proceedings that have been or could be asserted at
any time arising out of or related in any way to Executive’s employment by the
Company or any of its subsidiaries.

 

(e)                            Nondisparagement. At all times, the Executive
agrees not to disparage the Company or otherwise make comments harmful to the
Company’s reputation.

 

ARTICLE 5. EXCISE TAX EQUALIZATION PAYMENT

 

5.1        Excise Tax Equalization Payment. If any portion of the Severance
Benefits or any other payment under this Agreement, or under any other agreement
with, or plan of the Company (in the aggregate, “Total Payments”) would
constitute an “excess parachute payment,” such that a golden parachute excise
tax is due, the Company shall provide to the Executive, in cash, an additional

 

10

--------------------------------------------------------------------------------

 

payment in an amount sufficient to cover the full cost of any excise tax and all
of the Executive’s additional federal, state, and local income, excise, and
employment taxes that arise on this additional payment (cumulatively, the “Full
Gross-Up Payment”), such that the Executive is in the same after-tax position as
if he had not been subject to the excise tax. For this purpose, the Executive
shall be deemed to be in the highest marginal rate of federal, state, and local
income taxes in the state and locality of the Executive’s residence on the
Effective Date of Termination. This payment shall be made in accordance with
Section 3.1.

 

For purposes of this Agreement, the term “excess parachute payment” shall have
the meaning assigned to such term in Section 280G of the Internal Revenue Code,
as amended (the “Code”), and the term “excise tax” shall mean the tax imposed on
such excess parachute payment pursuant to Sections 280G and 4999 of the Code.

 

5.2        Subsequent Recalculation. In the event the Internal Revenue Service
subsequently adjusts the excise tax computation herein described, the Company
shall reimburse the Executive for the full amount necessary to make the
Executive whole on an after-tax basis (less any amounts received by the
Executive that the Executive would not have received had the computations
initially been computed as subsequently adjusted), including the value of any
underpaid excise tax, and any related interest and/or penalties due to the
Internal Revenue Service. This payment shall be made as promptly as possible
after Executive remits the related taxes and in any event no later than the end
of the Executive’s taxable year immediately following the Executive’s taxable
year in which Executive remits the related taxes.

 

ARTICLE 6. THE COMPANY’S PAYMENT OBLIGATION

 

6.1        Payment Obligations Absolute. The Company’s obligation to make the
payments and the arrangements provided for herein shall be absolute and
unconditional, and shall not be affected by any circumstances including, without
limitation, any offset, counterclaim, recoupment, defense, or other right which
the Company may have against the Executive or anyone else. All amounts payable
by the Company hereunder shall be paid without notice or demand. Each and every
payment made hereunder by the Company shall be final, and the Company shall not
seek to recover all or any part of such payment from the Executive or from
whomsoever may be entitled thereto, for any reasons whatsoever.

 

The Executive shall not be obligated to seek other employment in mitigation of
the amounts payable or arrangements made under any provision of this Agreement,
and the obtaining of any such other employment shall in no event effect any
reduction of the Company’s obligations to make the payments and arrangements
required to be made under this Agreement, except to the extent provided in
Sections 2.3(f) and 2.3(g) herein.

 

6.2        Contractual Rights to Benefits. This Agreement establishes and vests
in the Executive a contractual right to the benefits to which he is entitled
hereunder. However, nothing herein contained shall require or be deemed to
require, or prohibit or be deemed to prohibit, the Company to segregate,
earmark, or otherwise set aside any funds or other assets, in trust or
otherwise, to provide for any payments to be made or required hereunder.

 

11

--------------------------------------------------------------------------------

 

ARTICLE 7. [RESERVED]

 

ARTICLE 8. LEGAL REMEDIES

 

8.1        Dispute Resolution. The Executive shall have the right and option to
elect to have any good faith dispute or controversy arising under or in
connection with this Agreement settled by litigation or arbitration. If
arbitration is selected, such proceeding shall be conducted by final and binding
arbitration before a panel of three (3) arbitrators in accordance with the laws
then in effect and under the administration of the American Arbitration
Association.

 

8.2        Payment of Legal Fees. In the event that it shall be necessary or
desirable for the Executive to retain legal counsel and/or to incur other costs
and expenses in connection with the enforcement of any or all of his rights
under this Agreement, the Company shall pay (or the Executive shall be entitled
to recover from the Company) the Executive’s attorneys’ fees, costs, and
expenses in connection with the enforcement of his rights including the
enforcement of any arbitration award. This shall include, without limitation,
court costs and attorneys’ fees incurred by the Executive as a result of any
claim, action, or proceeding, including any such action against the Company
arising out of, or challenging the validity or enforceability of, this Agreement
or any provision hereof.

 

ARTICLE 9. SUCCESSORS

 

9.1        Successors to the Company. The Company shall require any successor
(whether direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation, or otherwise) of all or a
significant portion of the assets of the Company by agreement, in form and
substance satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
Regardless of whether such agreement is executed, this Agreement shall be
binding upon any successor in accordance with the operation of law and such
successor shall be deemed the “Company” for purposes of this Agreement.

 

9.2        Assignment by the Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. If the Executive dies while any amount would still be
payable to him hereunder had he continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive’s devisee, legatee, or other designee, or if there is
no such designee, to the Executive’s estate.

 

ARTICLE 10. MISCELLANEOUS

 

10.1      Employment Status. This Agreement is not, and nothing herein shall be
deemed to create, an employment contract between the Executive and the Company
or any of its subsidiaries. The Executive acknowledges that the rights of the
Company remain wholly intact to change or reduce at any time and from time to
time his compensation, title, responsibilities, location, and all other aspects
of the employment relationship, or to discharge him prior to a Change in Control
(subject to such discharge possibly being considered a Qualifying Termination
pursuant to Section 2.2).

 

12

--------------------------------------------------------------------------------

 

10.2      Entire Agreement. This Agreement contains the entire understanding of
the Company and the Executive with respect to the subject matter hereof, and
amends and restates in its entirety the Prior Agreement.

 

10.3      Notices. All notices, requests, demands, and other communications
hereunder shall be sufficient if in writing and shall be deemed to have been
duly given if delivered by hand or if sent by registered or certified mail to
the Executive at the last address he has filed in writing with the Company or,
in the case of the Company, at its principal offices.

 

10.4      Execution in Counterparts. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed to be original,
but all such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.

 

10.5      Conflicting Agreements. The Executive hereby represents and warrants
to the Company that his entering into this Agreement, and the obligations and
duties undertaken by him hereunder, will not conflict with, constitute a breach
of, or otherwise violate the terms of, any other employment or other agreement
to which he is a party, except to the extent any such conflict, breach, or
violation under any such agreement has been disclosed to the Board in writing in
advance of the signing of this Agreement.

 

10.6      Severability. In the event any provision of this Agreement shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included. Further, the captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.

 

Notwithstanding any other provisions of this Agreement to the contrary, the
Company shall have no obligation to make any payment to the Executive hereunder
to the extent, but only to the extent, that such payment is prohibited by the
terms of any final order of a federal or state court or regulatory agency of
competent jurisdiction; provided, however, that such an order shall not affect,
impair, or invalidate any provision of this Agreement not expressly subject to
such order.

 

10.7      Modification. No provision of this Agreement may be modified, waived,
or discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and by a member of the Board, as applicable,
or by the respective parties’ legal representatives or successors.

 

10.8      Applicable Law. To the extent not preempted by the laws of the United
States, the laws of Delaware shall be the controlling law in all matters
relating to this Agreement without giving effect to principles of conflicts of
laws.

 

[signature page follows]

 

13

--------------------------------------------------------------------------------

 

              IN WITNESS WHEREOF, the parties have executed this Agreement on
this          day of                             , 2008.

 

 

ATTEST

 

Walter Industries, Inc.

 

 

 

 

By:

 

 

By:

 

 

Corporate Secretary

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------