Exhibit 10.2


 


Executive Change-in-Control

Severance Agreement


 


Walter Industries, Inc.


 


January 2004


 





















 


Contents


 


	
  Article 1. Definitions

  	
   

  
	
   

  	
   

  
	
  Article 2.
  Severance Benefits

  	
   

  
	
   

  	
   

  
	
  Article 3.
  Form and Timing of Severance Benefits

  	
   

  
	
   

  	
   

  
	
  Article 4.
  Noncompetition and Confidentiality

  	
   

  
	
   

  	
   

  
	
  Article 5.
  Excise Tax Equalization Payment

  	
   

  
	
   

  	
   

  
	
  Article 6.
  The Company’s Payment Obligation

  	
   

  
	
   

  	
   

  
	
  Article 7. Term
  of Agreement

  	
   

  
	
   

  	
   

  
	
  Article 8. Legal
  Remedies

  	
   

  
	
   

  	
   

  
	
  Article 9. Successors

  	
   

  
	
   

  	
   

  
	
  Article 10.
  Miscellaneous

  	
   

  



 





















 


Walter Industries,
Inc. 

Executive Change-in-Control Severance Agreement


 


THIS EXECUTIVE CHANGE-IN-CONTROL SEVERANCE AGREEMENT
is made, entered into, and is effective this                             day of                         ,
2004 (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 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; and


 


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.


 


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:


 


(a)           “Agreement” means this 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.


 


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(c)           “Beneficial Owner” shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations under the Exchange
Act.


 


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


 


(e)           “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 (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


 


(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, 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.


 


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


 


(i)            Any
Person (other than the Company, Kohlberg Kravis Roberts & Co. (“KKR”) or
its affiliates, 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), is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company representing more
than thirty percent (30%) of the combined voting power of the Company’s
then outstanding securities;


 


(ii)           During
any period of not more than thirty-six (36) consecutive months, individuals who
at the beginning of such period constitute the Board of Directors of the
Company, and any new director whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at least a
majority (rounded up to the nearest whole number) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;


 


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(iii)          The
consummation of a merger or consolidation of the Company with any
other corporation, other than: (i) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than
sixty-six and two-thirds percent (66-2/3%) of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person acquires more than thirty percent (30%)
of the combined voting power of the Company’s then outstanding securities; or


 


(iv)          The
Company’s stockholders approve a plan or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets
(or any transaction or series of transactions having a similar effect).


 


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


 


(h)           “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.


 


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


 


(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, without the Executive’s express written
consent, the occurrence after a Change in Control of the Company of any one (1)
or more of the following:


 


(i)            The
assignment of the Executive to duties materially inconsistent with the
Executive’s authorities, duties, responsibilities, and status (including
offices, titles, and reporting requirements) as an executive and/or officer of
the Company, or a material reduction or alteration in the nature or status of
the Executive’s


 


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authorities, duties, or responsibilities from those in
effect as of ninety (90) calendar days prior to the Change in Control, other
than an insubstantial and inadvertent act that is remedied by the Company
promptly after receipt of notice thereof given by the Executive;


 


(ii)           The
Company’s 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
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;


 


(iv)          The
failure of the Company to continue in effect any of the Company’s short- and
long-term incentive compensation plans, or employee benefit or retirement
plans, policies, practices, or other compensation arrangements in which the
Executive participates unless such failure to continue the plan, policy,
practice, or arrangement pertains to all plan participants generally; or the
failure by the Company to continue the Executive’s participation therein on
substantially the same basis, both in terms of the amount of benefits provided
and the level of the Executive’s participation relative to other participants,
as existed immediately prior to the Change in Control of the Company;


 


(v)           The
failure of the Company to obtain a satisfactory agreement from any successor to
the Company to assume and agree to perform the Company’s obligations under this
Agreement, as contemplated in Article 9 herein; and


 


(vi)          A
material breach of this Agreement by the Company which is not remedied by the
Company within ten (10) business days of receipt of written notice of such
breach delivered by the Executive to the Company.


 


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 constitute consent to, or a waiver
of rights with respect to, any circumstance constituting Good Reason herein.


 


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


 


(p)           “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, including a “group” as defined in Section 13(d).


 


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(q)           “Qualifying Termination” means any of the events described in
Section 2.2 herein, the occurrence of which triggers the payment of
Severance Benefits hereunder.


 


(r)            “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’s employment with the Company shall
end 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 is terminated for Cause, or if his employment with the
Company ends due to death, Disability, voluntary normal retirement (as defined
under the then established rules of the Company’s tax-qualified retirement
plan), or due to a voluntary termination of employment for reasons other than
as specified in Section 2.2(b) herein.


 


No Executive shall be entitled to receive duplicative
severance benefits under any other Company-related plans or programs if
benefits are triggered hereunder.


 


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)           The
Company’s involuntary termination of the Executive’s employment without Cause;
and


 


(b)           The
Executive’s voluntary employment termination for Good Reason.


 


For purposes of this Agreement, a Qualifying
Termination shall not include a termination of employment by reason of death,
Disability, or voluntary normal retirement (as such term is defined under the
then established rules of the Company’s tax-qualified retirement plan), the
Executive’s voluntary termination for reasons other than as specified in Section 2.2(b)
herein, or the Company’s 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 to the Executive and provide him with the following
Severance Benefits:


 


(a)           A lump-sum
amount equal to the Executive’s unpaid Base Salary, accrued vacation pay,
unreimbursed business expenses, and all other items earned by and owed to the
Executive through and including the Effective Date of Termination.


 


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(b)           A lump-sum
amount equal to the Executive’s annual bonus award earned as of the Effective
Date of Termination, based on actual year-to-date performance, as determined at
the Committee’s discretion (excluding any special bonus payments). This payment
will be in lieu of any other payment to be made to the Executive under the
annual bonus plan in which the Executive is then participating for the plan
year.


 


(c)           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.


 


(d)           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 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.


 


(e)           Upon a
Qualifying Termination, vesting and cash-out of any and all outstanding
cash-based long-term incentive awards held by the Executive, as granted to the
Executive by the Company as a component of the Executive’s compensation.
The cash-out shall be in a lump-sum amount equal to the target award level
established for each award, multiplied by a fraction the numerator of which is
the full number of completed days in the preestablished performance period as of
the Effective


 


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Date of termination, and the denominator of which is
the full number of days in the entire performance period (i.e., typically
thirty-six (36) months). This payment will be in lieu of any other payment
to be made to the Executive under these long-term performance-based award
plans.


 


(f)            Upon the
occurrence of a change in control, 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 awards held by
the Executive. This provision shall override any conflicting language contained
in the Executive’s respective Award Agreements.


 


(g)           Retirement
benefits under the Walter Industries, Inc. Profit Sharing Plan will become
immediately fully vested, to the extent not already fully vested, upon a
Qualifying Termination.


 


(h)           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.


 


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.


 


(i)            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
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.


 


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2.4          Termination
for Total and Permanent Disability. Following a Change in Control, if the
Executive’s employment is terminated with the Company 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’s
employment with the Company is terminated by reason of his voluntary normal
retirement (as defined under the then established rules of the Company’s
tax-qualified retirement plan), or 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’s employment is terminated either: (i) by
the Company for Cause; or (ii) voluntarily by the Executive for reasons other
than as specified in Section 2.2(b) herein, the Company shall pay the
Executive his full Base Salary at the rate then in effect, accrued vacation,
and other items earned by and owed to the Executive through the Effective Date
of Termination, plus all other amounts to which the Executive is entitled under
any compensation plans of the Company at the time such payments are due, and
the Company shall have no further obligations to the Executive under this
Agreement.


 


2.7          Notice
of Termination. Any termination of the Executive’s employment by the
Company for Cause or 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. The Severance Benefits described in Sections 2.3(a),
2.3(b), 2.3(c), and 2.3(d) herein shall be paid in cash to the Executive in a
single lump sum as soon as practicable following the Effective Date of
Termination, but in no event beyond ten (10) calendar days from such date.


 


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.


 


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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 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.


 


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(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 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 as soon as possible following the date
of the Executive’s Qualifying Termination, but in no event later than ten (10)
calendar days from such date.


 


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.


 


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.


 


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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(g) and 2.3(h) 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.


 


Article 7. Term of Agreement


 


This Agreement will commence on the Effective Date and
shall continue in effect for two (2) full years. However, at the end of such
two (2) year period and, if extended, at the end of each additional year
thereafter, the term of this Agreement shall be extended automatically for
one (1) additional year, unless either party delivers written notice six
(6) months prior to the end of such term, or extended term, stating that the
Agreement will not be extended. In such case, the Agreement will terminate at
the end of the term, or extended term, then in progress.


 


However, in the event of a Change in Control of the
Company, the term of this Agreement shall automatically be extended for two (2)
years from the date of the Change in Control.


 


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.


 


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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).


 


10.2        Entire
Agreement. This Agreement contains the entire understanding of the Company
and the Executive with respect to the subject matter hereof. In addition, the
payments provided for under this Agreement in the event of the Executive’s
termination of employment shall be in lieu of any severance benefits payable
under any severance plan, program, or policy of the Company to which he might
otherwise be entitled.


 


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.


 


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Notwithstanding any other provisions of this Agreement
to the contrary, if there is any inconsistency between the terms and provisions
of this Agreement and the terms and provisions of Company-sponsored
compensation and welfare plans and programs, the Agreement’s terms and
provisions shall completely supersede and replace the conflicting terms of the
Company-sponsored compensation and welfare plans and programs, where
applicable.


 


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.


 


IN WITNESS WHEREOF, the parties have executed this
Agreement on this                           day
of                           ,
2004.


 


	
   

  	
  ATTEST

  
	
   

  	
   

  
	
   

  	
  Walter
  Industries, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Executive

  
					



 


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