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:


 


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(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


 


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(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.


 


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(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


 


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(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 


 


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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 


 


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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.


 


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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]


 


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


 


	
   

  	
  ATTEST

  	
   

  	
  Walter
  Industries, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Corporate
  Secretary

  	
   

  	
  Title: