Exhibit 10.15.1

 

CONFIDENTIAL

 

December 22, 2008

 

Mr. Victor P. Patrick

4211 West Boy Scout Blvd.

Tampa, FL 33607

 

Dear Vic:

 

The terms of your employment with Walter Industries, Inc. (the “Company”) are
currently governed by a letter employment agreement dated August 1, 2006 (the
“Original Agreement”). New tax rules under Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) require that certain provisions of our
Original Agreement be amended. Accordingly, you and the Company hereby amend the
terms of your employment as set forth below. To the extent the terms of this
letter agreement are inconsistent with the terms of the Original Agreement, the
terms of this letter agreement will control.

 

1.     Section 2(d) of the Original Agreement is deleted in its entirety and
replaced with the following:

 

“(d)         You will receive a vehicle allowance of $2,000 per month, subject
to usual withholding and employment taxes, payable in cash during the succeeding
month in accordance with normal payroll practices.”

 

2.     Section 3 of the Original Agreement is deleted in its entirety and
replaced with the following:

 

“3.           Severance Benefits

 

a)  In the event of your Involuntary Termination (as defined below), other than
for “Cause” (as defined in Section 9), or your Constructive Termination (as
defined below), but, in each case, excluding any separation from service by
reason of your death or disability, you will be eligible for the following
severance benefits:

 

(i)            Eighteen (18) months of base salary continuation at the rate in
effect at the date of your separation from service (the “Severance Date”);
provided that base salary will be paid in accordance with the payroll dates in
effect on the Severance Date, and such payment dates will not be affected by any
subsequent change in payroll practices.

 

(ii)           Payment of an amount equal to one and a half (1.5) times your
target bonus for the year that includes the Severance Date

 

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under the Executive Incentive Plan (or successor annual bonus plan), payable as
follows: (A) one (1) times your target bonus shall be paid during the year
following the year that includes the Severance Date, and (B) one-half (0.5)
times your target bonus shall be paid during the second year following the year
that includes the Severance Date.

 

(iii)          Except as provided below, continuation of all fringe benefits at
the level in effect on the Severance Date, in each case beginning immediately
upon the Severance Date and continuing until the earlier of (A) the date that is
eighteen (18) months after the Severance Date, (B) the last date you are
eligible to participate in the benefit under applicable law, or (C) the date you
are eligible to receive comparable benefits from a subsequent employer, as
determined solely by the Company in good faith. Such benefits shall be provided
to you at the same coverage level and cost to you as in effect on the Severance
Date. Notwithstanding the foregoing, your participation in the Employee Stock
Purchase Plan and long-term disability insurance plan, and your ability to make
deferrals under the 401(k) plan, will cease effective on the Severance Date.

 

To the extent required by law, you shall qualify for COBRA health benefit
continuation coverage beginning upon expiration of the eighteen (18) month
benefit continuation period described above.

 

For purposes of enforcing this subsection (iii), you 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.

 

b)             Notwithstanding anything to the contrary in this agreement, if
you are a Specified Employee (as defined below) on the Severance Date, to the
extent that you are 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
Severance Date, such benefits or payments shall not be provided or paid to you
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 you on the first business
day after the date that is six (6) months after the Severance Date (or, if
earlier, within fifteen (15) days following your date of death). If you are
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(b), you shall be
entitled to reimbursement for such payments on the first business day after the
date that is six (6) months after the Severance Date (or, if earlier, within
fifteen (15) days following your date of death). All

 

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benefits or payments otherwise required to be provided or paid on or after the
date that is six (6) months after the Severance Date shall not be affected by
this Section 3(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(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(b) is
intended to comply with the requirements of Section 409A(a)(2)(B)(i) of the
Code.

 

c) For purposes of this agreement, the following terms have the meanings set
forth below:

 

(i) “Involuntary Termination” means your involuntary separation from service
within the meaning of Treasury Regulations Section 1.409A-1(n)(1).

 

(ii) “Constructive Termination” means your voluntary separation from service for
Good Reason. “Good Reason” means the occurrence of any of the following
conditions (in each case arising without your consent): (A) a change in the
principal geographic location at which you must perform services to a location
that is more than more than 50 miles from current headquarters in Tampa,
Florida, (B) a material breach of this agreement by the Company, including
Section 14 of this agreement, or (C) a material diminution in your authority,
duties or responsibilities or the authority, duties, or responsibilities of the
supervisor to whom your are required to report. Notwithstanding the foregoing,
your voluntary separation from service shall be a Constructive Termination only
if (x) you provide 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.

 

(iii) “Separation from service” means your “separation from service” from your
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,
your “employer” is the Company and every entity or other person which
collectively with the

 

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Company 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.

 

(iv)”Specified Employee” means a “specified employee” of the service recipient
that includes the Company (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).

 

d)            You shall not be entitled to severance benefits under this
agreement in the event you experience a separation from service within
twenty-four months after a Change in Control of the Company (as defined in your
Executive Change in Control Severance Agreement with the Company). Severance
benefits payable upon a separation from service during such period, if any,
shall be determined and paid under such Executive Change in Control Severance
Agreement.”

 

3.     The definition of “Constructive Termination” in Section 9 of the Original
Agreement (the second paragraph thereof) is deleted in its entirety. Further,
the parties agree that “Good Reason” (as defined above) will not exist solely
because of the occurrence of any of the events described in the current third
paragraph of Section 9 of the Original Agreement.

 

4.     The penultimate sentence of Section 11 of the Original Agreement is
deleted in its entirety and replaced with the following:

 

“This payment shall be paid to you as promptly as possible after you remit the
related taxes and in any event no later than the end of your taxable year
immediately following your taxable year in which you remit the related taxes.”

 

5.     A new Section 13 and new Section 14 are inserted immediately after
Section 12 of the Original Agreement, as follows:

 

“13.         To the extent this agreement provides for reimbursements of
expenses incurred by you 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 in which you are employed by the Company or during the other
period of time specifically

 

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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 your 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.

 

14.           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
you, 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.”

 

6.     This letter agreement records the final, complete, and exclusive
understanding among the parties regarding the amendment of the Original
Agreement. As amended by this letter agreement, the Original Agreement is
ratified and remains in full force and effect in accordance with its terms.

 

If you are in agreement with the foregoing terms, please sign and return one
copy of this letter agreement, and retain one for your record.

 

Very truly yours,

 

 

/s/ Larry E. Williams

 

Name:

Larry E. Williams

 

Title:

Senior Vice President

 

 

 

Agreed and Accepted:

 

 

/s/ Victor P. Patrick

 

Victor P. Patrick

 

 

 

Date:

12-31-2008

 

 

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