Document:

Exhibit 10.21

 

AMENDED AND
RESTATED

2007
LONG-TERM INCENTIVE AWARD PLAN

OF

JWH HOLDING
COMPANY, LLC

 

JWH Holding Company, LLC, a Delaware limited liability company, has
adopted the 2007 Long-Term Incentive Award Plan of JWH Holding Company, LLC,
(the “Plan”), effective March 1, 2007, for the benefit of its eligible
employees, consultants and directors.

 

The purposes of the Plan are as follows:

 

(1) To
provide an additional incentive for Employees (as defined below) to further the
growth, development and financial success of the Company by personally
benefiting through the ownership of Company equity and/or rights which
recognize such growth, development and financial success.

 

(2) To
enable the Company to obtain and retain the services of Employees considered
essential to the long-range success of the company by offering them an
opportunity to own equity in the Company and/or rights which will reflect the
growth, development and financial success of the Company.

 

ARTICLE I.

DEFINITIONS

 

Wherever the following terms are used in the Plan, they shall have the
meanings specified below, unless the context clearly indicates otherwise. The
singular pronoun shall include the plural where the context so indicates.

 

1.1. “Administrator”
shall mean the entity that conducts the general administration of the Plan as
provided herein.

 

1.2. “Award” shall mean
an Option that may be awarded or granted under the Plan.

 

1.3. “Award Agreement”
shall mean a written agreement executed by an authorized officer of the Company
and the Holder that shall contain such terms and conditions with respect to an
Award as the Administrator shall determine, consistent with the Plan.

 

1.4. “Award Limit” shall
mean 0.2 LLC Interests, as adjusted pursuant to Section 8.3.

 

1.5. “Board” shall mean
the Board of Directors of Walter.

 

1.6. “Change in Control”
shall mean a change in ownership or control of the Company effected through any
of the following:

 

(a) Any
person or related group of persons (other than Walter or a person that, prior
to such transaction, directly of indirectly controls, is controlled by, or is
under common control with, Walter) directly or indirectly acquires beneficial
ownership of securities, possessing more than 40% of the total combined voting
power of the Company’s outstanding securities, or

 

(b) There
is a change in the composition of the Board over a period of 36 consecutive
months (or less) such that a majority of the Board members (rounded up to the
nearest whole 

 

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number) ceases to be
comprised of individuals who either (i) have been Board members
continuously since the beginning of such period, or (ii) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (i) who were still in
office at the time such election or nomination was approved by the Board; or

 

(c) The
equity holders of the Company approve a merger or consolidation of the Company
with any other corporation (or other entity), other than 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 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; provided, however, that a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires more than 25% of the combined
voting power of the Company’s then outstanding securities shall not constitute
a Change in Control; or

 

(d) The
equity holders of the Company approve a plan of complete liquidation of the
Company of an agreement for the sale, lease or other disposition by the Company
of all or substantially all of the Company’s assets.

 

1.7. “Code” shall mean the Internal Revenue
Code of 1986, as amended.

 

1.8. “Committee” shall
mean the Compensation Committee of the Board, or another committee or
subcommittee of the Board, appointed as provided in Section 7.1.

 

1.9. “Common Equity”
shall mean the LLC Interests of the Company.

 

1.10. “Company” shall
mean JWH Holding Company, LLC, a Delaware limited liability company.

 

1.11. “Director” shall
mean a member of the Board.

 

1.12. “DRO” shall mean a
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.

 

1.13. “Employee” shall
mean any officer, or other employee (as defined in accordance with Section 3401
(c) of the Code) of the Company, or of any Subsidiary.  An employee
may be a Director.

 

1.14. “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.

 

1.15. “Fair Market Value”
shall have the meaning assigned in the applicable Award Agreement. Fair Market
Value of the LLC Interests shall be established by the Administrator acting in
good faith based on a reasonable valuation method that is consistent with the
requirements of Section 409A of the Code and all other applicable rules and
regulations.

 

1.16. “Holder” shall mean
a person who has been granted or awarded an Award.

 

1.17. “Independent Director”
shall mean a member of the Board who is not an Employee of the Company.

 

1.18. “Option” shall mean
an equity option granted under Article IV of the Plan.

 

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119. “Plan” shall mean
the 2007 Long-Term Incentive Award Plan of JWH Holding Company, LLC.

 

1.20. “Rule 16b-3”
shall mean Rule 16b-3 promulgated under the Exchange Act, as such Rule may
be amended from time to time.

 

1.21. “Section 162(m) Participant”
shall mean any Employee whose compensation for a given fiscal year may be
subject to the limit on deductible compensation imposed by Section 162(m) of
the Code.

 

1.22. “Securities Act”
shall mean the Securities Act of 1933, as amended.

 

1.23. “Subsidiary” shall
mean any corporation in an unbroken chain of corporations beginning with the
Company if each of the corporations other than the last corporation in the
unbroken chain then owns equity possessing 50% or more of the total combined
voting power of all classes of equity in one of the other corporations in such
chain.

 

1.24. “Substitute Award”
shall mean an Option granted under this Plan upon the assumption of, or in
substitution for, outstanding equity awards previously granted by a company or
other entity in connection with a corporate transaction, such as a merger, combination,
consolidation or acquisition or property or equity; provided, however, that in no event shall the term “Substitute
Award” be construed to refer to an award made in connection with the
cancellation and repricing of an Option.

 

1.25. “Termination of Employment”
shall mean the time when the employee-employer relationship between a Holder
and the Company or any Subsidiary is terminated for any reason, with or without
cause, including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (a) terminations
where there is a simultaneous reemployment or continuing employment of a Holder
by the Company or any Subsidiary, (b) at the discretion of the
Administrator, terminations which result in a temporary severance of the
employee-employer relationship, and (c) at the discretion of the
Administrator, terminations which are followed by the simultaneous
establishment of a consulting relationship by the Company or a Subsidiary with
the former employee. The Administrator, in its discretion, shall determine the
effect of all matters and questions relating to Terminations of Employment,
including, but not by way of limitation, the question of whether a Termination
of Employment resulted from a discharge for good cause, and all questions of
whether a particular leave of absence constitutes a Termination of Employment.

 

1.26. “Walter” shall mean
Walter Industries, Inc.

 

ARTICLE II.

LLC
INTERESTS SUBJECT TO PLAN

 

2.1. LLC Interests Subject to Plan.

 

(a) The
LLC Interests subject to Awards shall be Common Equity. Subject to adjustment
as provided in Section 8.3, the aggregate number of such LLC Interests
which may be issued upon exercise of Awards under the Plan shall not exceed
0.2.

 

(b) The
maximum number of LLC Interests which may be subject to Awards granted under
the Plan to any individual in any calendar year shall not exceed the Award
Limit.

 

2.2 Add-back of Options and Other
Rights; Certain Acquired Entities

 

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(a) If
any Option expires or is canceled without having been fully exercised, or is
exercised in whole or in part for cash as permitted by the Plan, the number of
LLC Interests subject to such Options but as to which such Option was not
exercised prior to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder, subject to the limitations of Section 2.1.
Furthermore, any LLC Interests subject to Award which are adjusted pursuant to Section 8.3
and become exercisable with respect to equity of another corporation shall be
considered cancelled and may again be optioned, granted or awarded hereunder
subject to the limitations of Section 2.1. LLC Interests which are
delivered by the Holder or withheld by the company upon the exercise of any
Award under the Plan, in payment of the exercise price thereof or tax
withholding thereon, may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1.

 

(b) Subject
to Sections 3.2(d) and 3.3, any LLC Interests that are issued by the
Company, and any Awards that are granted as a result of the assumption of, or
in substitution for, outstanding awards previously granted by an acquired
entity shall not be counted against the limitations set forth in Section 2.1.

 

ARTICLE
III.

GRANTING OF
AWARDS

 

3.1 Award Agreement. Each
Award shall be evidenced by an Award Agreement.

 

3.2. Provisions Applicable to Section 162(m) Participants.

 

(a) The
Committee, in its discretion, may determine whether an Award is to qualify as
performance-based compensation as described in Section 162(m) (4) (C) of
the Code.

 

(b) Notwithstanding
anything in the Plan to the contrary, the Committee may grant any Award to a Section 162(m) Participant.

 

(c) Furthermore,
notwithstanding any other provision of the Plan, any Award which is granted to
a Section 162(m) Participant and is intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of
the Code shall be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or
any regulations or rulings issued thereunder that are requirements for
qualification as performance-based compensation as described in Section 162(m)(4)(C) of
the Code, and the Plan shall be deemed amended to the extent necessary to
conform to such requirements.

 

3.3. Limitations Applicable to Section 16
Persons. Notwithstanding any other provisions of the Plan, the Plan,
and any Award granted or awarded to any individual who is then subject to Section 16
of the Exchange Act, shall be subject to any additional limitations set forth
in any applicable exemptive rule under Section 16 of the Exchange Act
(including any amendment to Rule 16b-3 of the Exchange Act) that are requirements
for the application of such exemptive rule. To the extent permitted by
applicable law, the Plan and Awards granted or awarded hereunder shall be
deemed amended to the extent necessary to conform to such applicable exemptive
rule.

 

3.4. Consideration. In
consideration of the granting of an Award under the Plan, the Holder shall
agree, in the Award Agreement, to remain in the employ of the Company or any
Subsidiary for a period of at least one year (of such shorter period as may be
fixed in the Award Agreement of by action of the Administrator following grant
of the Award) after the Award is granted.

 

3.5. At-Will Employment.
Nothing in the Plan or in any Award Agreement hereunder shall confer upon any
Holder any right to continue in the employ of the Company or any Subsidiary, or
as a director 

 

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of
the Company, or shall interfere with or restrict in any way the rights of the
Company and any Subsidiary, which are hereby expressly reserved, to discharge
any Holder at any time for any reason whatsoever, with or without cause, except
to the extent expressly provided otherwise in a written employment agreement
between the Holder and the Company or any Subsidiary.

 

3.6 Non-Qualified Deferred Compensation. In
the event that any Award granted under the Plan is determined to constitute
nonqualified deferred compensation within the meaning of Section 409A of
the Code (a “NQDC Award”), in whole or in part, the Award Agreement evidencing
such NQDC Award shall contain such terms and conditions as may be necessary to
meet the applicable provisions of Section 409A of the Code.

 

ARTICLE IV.

GRANTING OF
OPTIONS

 

4.1. Eligibility. Any
Employee selected by the Administrator pursuant to Section 4.4(a)(i) shall
be eligible to be granted an Option.

 

4.2. Granting of Options to
Employees.

 

(a) The
Administrator shall from time to time, in its discretion, and subject to
applicable limitations of the Plan:

 

(i) Select
from among the Employees (including Employees who have previously received
Awards under the Plan) such of them as in its opinion should be granted
Options;

 

(ii) Subject
to the Award Limit, determine the number of LLC Interests to be subject to such
Options granted to the selected Employees;

 

(iii) Subject
to Section 4.3, determine whether such Options are to be Incentive Equity
Options or Non-Qualified Equity Options and determine whether such Options are
to qualify as performance-based compensation as described in Section 162(m)(4)(C) of
the Code; and

 

(iv) Determine
the terms and conditions of such Options, consistent with the Plan; provided, however, that the terms and
conditions of Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall include, but not
be limited to, such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code.

 

(b) Upon
the selection of an Employee to be granted an Option, the Administrator shall
instruct the Secretary of the Company to issue the Option and may impose such
conditions on the grant of the Option as it deems appropriate.

 

ARTICLE V.

TERMS OF
OPTIONS

 

5.1. Option Price; Options Exempt
from Section 409A.

 

(a) The
exercise price of the LLC Interests subject to each Option granted to Employees
shall be set by the Administrator, provided,
however, that in the case of Options intended to 

 

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qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, such
exercise price shall not be less than 100% of the Fair Market Value of the LLC
Interests subject to the Award on the date the Option is granted.

 

(b) In
the case of a Option that is intended not to provide for a deferral of
compensation within the meaning of Section 409A (and is therefore intended
to qualify for the exemption from the requirements of Section 409A of the
Code for non-qualified stock options under Treasury Regulations Section 1.409A-1(b)(5)):
(i) the exercise price of the Option shall not be less than 100% of the
Fair Market Value of the LLC Interests subject to the Option on the date the
Option is granted, (ii) the number of LLC Interests subject to the Option
shall be fixed on the date the Option is granted, and (iii) the Option
shall not include any feature for the deferral of compensation within the
meaning of Treasury Regulations Section 1.409A-1(b)(5) other than the
deferral of recognition of income until the later of the exercise or
disposition of the Option under Treasury Regulation Section 1.83-7, or the
time the LLC Interests acquired pursuant to the exercise of the Option becomes
substantially vested within the meaning of Treasury Regulations Section 1.83-3(b).

 

5.2. Option Term. 
The term of an Option granted to an Employee shall be set by the Administrator
in its discretion.  The Administrator may in its discretion (a) extend
the term of any outstanding Option in connection with any Termination of
Employment, or amend any other term or condition of such Option relating to
such a termination or (b) grant an Option for a term of less than 10 years
and subsequently extend the term of such Option to 10 years without
consideration. Notwithstanding the foregoing, the Administrator shall not
permit the modification or extension (in each case as defined under Section 409A)
of an Option that is exempt from the requirements of Section 409A of the
Code in a manner that would cause such Option to become subject to the
requirements of Section 409A of the Code, or would otherwise violate any applicable
requirement of Section 409A of the Code.

 

5.3. Option Vesting.

 

(a) The
period during which the right to exercise, in whole or in part, an Option
granted to an Employee vests in the Holder shall be set by the Administrator
and the Administrator may determine that an Option may not be exercised in
whole or in part for a specified period after it is granted.  At any time
after grant of an Option, the Administrator may, in its discretion and subject
to whatever terms and conditions it selects, accelerate the period during which
an Option granted to an Employee vests.

 

(b) No
portion of an Option granted to an Employee which is unexercisable at
Termination of Employment shall thereafter become exercisable, except as may be
otherwise provided by the Administrator either in the Award Agreement or by
action of the Administrator following the grant of the Option.

 

5.4. Substitute Awards. 
Notwithstanding the foregoing provisions of this Article V to the
contrary, but subject to compliance with the applicable requirements of Section 409A
of the Code, in the case of an Option that is a Substitute Award, the price per
share of the LLC Interests subject to such Option may be less than the Fair
Market Value per share on the date of grant, provided, that the excess of:

 

(a) The
aggregate Fair Market Value (as of the date such Substitute Award is granted)
of the LLC Interests subject to the Substitute Award; over

 

(b) The aggregate exercise price thereof; does
not exceed the excess of:

 

(c) The
aggregate fair market value (as of the time immediately preceding the
transaction giving rise to the Substitute Award, such fair market value to be
determined by the Administrator) 

 

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of the LLC Interests of the
predecessor entity that were subject to the grant assumed or substituted for by
the Company; over

 

(d) The
aggregate exercise price of such LLC Interests.

 

ARTICLE VI.

EXERCISE OF
OPTIONS

 

6.1. Partial Exercise. An
exercisable Option may be exercised in whole or in part.  However, the
Administrator may require that by the terms of the Option, a partial exercise
be with respect to a minimum number of LLC Interests.

 

6.2. Manner of Exercise. 
All or a portion of an exercisable Option shall be deemed exercised upon
delivery of all of the following to the Secretary of the Company or his or her
office;

 

(a) A
written notice complying with the applicable rules established by the
Administrator stating that the Option, or a portion thereof, is
exercised.  The notice shall be signed by the Holder or other person then
entitled to exercise the Option or such portion of the Option;

 

(b) Such
representations and documents as the Administrator, in its discretion, deems
necessary or advisable to effect compliance with all applicable provisions of
the Securities Act and any other federal or state securities laws or
regulations.   The Administrator may, in its discretion, also take
whatever additional actions it deems appropriate to effect such compliance
including, without limitation, placing legends on share certificates and
issuing stop-transfer notices to agents and registrars;

 

(c) Any
form or forms of identification requested by the Administrator and, in the
event that the Option shall be exercised pursuant to Section 8.1 by any
person or persons other than the Holder, appropriate proof of the right of such
person or persons to exercise the Option; and

 

(d) Full
cash payment to the Secretary of the Company for the LLC Interests with respect
to which the Option, or portion thereof, is exercised.  However, the
Administrator may, in its discretion, (i) allow payment, in whole or in
part, through the delivery of LLC Interests which have been owned by the Holder
for at least six months with a Fair Market Value on the date of delivery equal
to the aggregate exercise price of the Option or exercised portion thereof; (ii) allow
payment, in whole or in part, through the surrender of LLC Interests then
issuable upon exercise of the Option having a Fair Market Value on the date of
Option exercise equal to the aggregate exercise price of the Option or
exercised portion thereof; (iii) allow payment, in whole or in part,
through the delivery of property of any kind which continues good and valuable
consideration, or (iv) allow payment through any combination of the
consideration provided in the foregoing subparagraphs (i), (ii) and (iii).

 

6.3. Conditions to Issuance of LLC
Interests.  The Company shall not be required to issue or
deliver any LLC Interests purchased upon the exercise of any Option or portion
thereof prior to fulfillment of all of the following conditions:

 

(a) The
completion of any registration or other qualification of such LLC Interests
under any state or federal law, or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body
which the Administrator shall, in its discretion, deem necessary or advisable;

 

7

 

(b) The
obtaining of any approval or other clearance from any state or federal
governmental agency which the Administrator shall, in its discretion, determine
to be necessary or advisable;

 

(c) The
lapse of such reasonable period of time following the exercise of the Option as
the Administrator may establish from time to time for reasons of administrative
convenience; and

 

(d) The
receipt by the Company of full payment for such LLC Interests, including
payment of any applicable withholding tax, which in the discretion of the
Administrator may be in the form of consideration used by the Holder to pay for
such LLC Interests under Section 6.2(d).

 

6.4. Rights as Equity Holders. 
Holders shall not be, nor have any of the rights or privileges of, equity
holders of the Company in respect of any LLC Interests purchasable upon the
exercise of any part of an Option unless and such LLC Interests have been
issued by the Company to such Holders.

 

6.5. Ownership and Transfer
Restrictions.  The Administrator, in its discretion, may impose
such restrictions on the ownership and transferability of the LLC Interests
purchasable upon the exercise of an Option as it deems appropriate; provided, however, that with respect to any LLC Interests
purchasable on the exercise of an Option intended to be exempt from the
requirements of Section 409A of the Code, the Administrator shall not
impose any restrictions that would cause such LLC Interests to fail to qualify
as “service recipient stock” within the meaning of Section 409A of the Code. 
Any such restrictions shall be set forth in the respective Award Agreement.

 

6.6. Additional Limitations on
Exercise of Options.  Holders may be required to comply with
any timing or other restrictions with respect to the settlement or exercise of
an Option, including a window-period limitation, as may be imposed in the
discretion of the Administrator.

 

ARTICLE
VII.

ADMINISTRATION

 

7.1. Compensation Committee.
The Compensation Committee (or one or more other committees or subcommittees of
the Board assuming the functions of the Committee under the Plan) shall consist
solely of two or more Independent Directors appointed by and holding office at
the pleasure of the Board, each of whom is both a “non-employee director” as
defined by Rule 16b-3 and an “outside director” for purposes of Section 162(m) of
the Code.  Appointment of Committee members shall be effective upon
acceptance of appointment.  Committee members may resign at any time by
delivering written notice to the Board.  Vacancies in the Committee may be
filled by the Board.

 

7.2. Duties and Powers of
Administrator.  It shall be the duty of the Administrator to
conduct the general administration of the Plan in accordance with its
provisions.  The administrator shall have the power to interpret the Plan
and the Award Agreements, and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith, to
interpret, amend or revoke any such rules and to amend any Award Agreement
provided that the rights or obligations of the Holder of the Award that is the
subject of any such Award Agreement are not affected adversely.  Any such
grant or award under the Plan need not be the same with respect to each
Holder.  In its discretion, the Board may at any time and from time to
time exercise any and all rights and duties of the Administrator under the Plan
except with respect to matters which under Rule 16b-3 or Section 162(m) of
the Code, or any regulations or rules issued thereunder, are required to
be determined in the discretion of the Committee.

 

7.3. Majority Rule; Unanimous
Written Consent.  The Committee shall act by a majority of its
members in attendance at a meeting at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.

 

8

 

7.4. Compensation; Professional
Assistance; Good Faith Actions.  Members of the Committee shall
receive such compensation, if any, for their services as members as may be determined
by the Board.  All expenses and liabilities which members of the Committee
incur in connection with the administration of the Plan shall be borne by the
Company.  The Committee may, with the approval of the Board, employ
attorneys, consultants, accountants, appraisers, brokers or other
persons.  The Committee, the Company and the Company’s officers and
Directors shall be entitled to rely upon the advice, opinions or valuations of
any such persons.  All actions shall be taken and all interpretations and
determinations shall be made by the Administrator reasonably and in good
faith.  No member of the Administrator shall be personally liable for any
action, determination or interpretation made in good faith with respect to the
Plan or Awards, and all members of the Administrator shall be fully protected
by the Company in respect of any such action, determination or interpretation.

 

7.5. Delegation of Authority to
Grant Awards.  The Committee may, but need not, delegate from
time to time some or all of its authority to grant Awards under the Plan to a
committee consisting of one or more members of the Committee or of one or more
officers of the Company; provided, however,
that the Committee may not delegate its authority to grant Awards to
individuals (a) who are subject on the date of the grant to the reporting rule under
Section 16(a) of the Exchange Act, (b) who are Section 162(m) Participants,
or (c) who are officers of the Company who are delegated authority by the
Committee hereunder.  Any delegation hereunder shall be subject to the
restrictions and limits that the Committee specifies at the time of such
delegation of authority and may be rescinded at any time by the
Committee.  At all times, any committee appointed under this Section 7.5
shall serve in such capacity at the pleasure of the Committee.

 

7.6 No Warranty as to Tax Treatment.  It is the intention of the Company that
the Awards granted under the Plan will be exempt from, or will comply with the
requirements of, Section 409A of the Code, and the Plan and the terms and
conditions of all Awards shall be interpreted, construed and administered
consistent with such intent. Although the Company intends for the Awards to be
in compliance with Section 409A of the Code or an exemption thereto, the
Company does not warrant that the terms of any Award or the Company’s
administration thereof will be exempt from, or will comply with the
requirements of, Section 409A of the Code. The Company shall not be liable
to any Holder or any other person for any tax, interest, or penalties that the
person may incur as a result of an Award or the Company’s administration
thereof not satisfying any of the requirements of Section 409A of the Code
or an exemption thereto.

 

ARTICLE
VIII.

MISCELLANEOUS
PROVISIONS

 

8.1. Transferability of Awards.

 

(a)           Except as otherwise provided in Section 8.1(b),
and subject to compliance with the applicable requirements of Section 409A
of the Code:

 

(i) No
Award under the Plan may be sold, pledged, assigned or transferred in any
manner other than by will or the laws of descent and distribution or, subject
to the consent of the Administrator, pursuant to a DRO, unless and until such
Award has been exercised, or the LLC Interests underlying such Award have been
issued, and all restrictions applicable to such LLC Interests have lapsed;

 

(ii) No
Award or interest or right therein shall be liable for the debts, contracts or
engagements of the Holder or his or her successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings 

 

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(including bankruptcy), and
any attempted disposition is permitted by the preceding sentence; and

 

(iii) During
the lifetime of the Holder, only he or she may exercise an Option (or any
portion thereof) granted to him or her under the Plan, unless it has been
disposed of pursuant to a DRO; after the death of the Holder, any exercisable
portion of an Option may, prior to the time when such portions becomes
unexercisable under the Plan or the applicable Award Agreement, be exercised by
his or her personal representative or by any person empowered to do so under
the deceased Holder’s will or under the then applicable laws of descent and
distributions.

 

(b) Notwithstanding
Section 8.1(a), the Administrator, in its discretion, may determine to
permit a Holder to transfer an Option to any one or more Permitted Transferees
(as defined below), subject to the following terms and conditions: (i) an
Option transferred to a Permitted Transferee shall not be assignable or
transferable by the Permitted Transferee other than by will of the laws of
descent and distribution; (ii) any Option which is transferred to a
Permitted Transferee shall continue to be subject to all the terms and
conditions of the Option as applicable to the original Holder (other than the
ability to further transfer the Option); and (iii) the Holder and the
Permitted Transferee shall execute any and all documents requested by the
Administrator, including, without limitation documents to (A) confirm the
status of the transferee as a Permitted Transferee, (B) satisfy any
requirements for an exemption for the transfer under applicable federal and
state securities laws and (C) evidence the transfer. For purposed of this Section 8.1(b),
“Permitted Transferee” shall mean with respect to a Holder, any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, and person sharing the Holder’s household (other than a tenant
or employee), a trust in which these persons (or the Holder) control the
management of assets, and any other entity in which these persons (or the
Holder) own more than fifty percent of the voting interests, or any other
transferee specifically approved by the Administrator after taking into account
any state or federal tax or securities laws applicable to transferable Options.

 

8.2. Amendments, Suspension, or
Termination of the Plan. Except as otherwise provided in this Section 8.2,
the Plan may be wholly or partially amended or otherwise modified, suspended or
terminated at any time or from time to time by the Administrator. However,
without approval of the Company’s equity holders, no action of the Administrator
may, except as provided in Section 8.3, increase the limits imposed in Section 8.1
on the maximum number of LLC Interests which may be issued under the Plan. No
amendment, suspension or termination of the Plan shall, without the consent of
the Holder, alter or impair any rights or obligations under any Award
theretofore granted or awarded, unless the Award itself otherwise expressly so
provides. No awards may be granted or awarded during any period of suspension
or after termination of the Plan.

 

Notwithstanding anything to the contrary, the Administrator shall have
the right to amend the Plan and any outstanding Awards or adopt other policies
and procedures applicable to the Plan and Awards (including amendments,
policies and procedures with retroactive effect) without Holder consent as may
be necessary or appropriate to comply with the requirements of Section 409A
of the Code or an exemption thereto.

 

8.3. Changes in Common Equity or
Assets of the Company, Acquisition or Liquidation of the Company and Other
Corporate Events.

 

(a) Subject
to Section 8.3(d), in the event that the Administrator determines that any
dividend or other distribution (whether in the form of cash, Common Equity,
other securities or other property), recapitalization, reclassification, equity
split, reverse equity split, reorganization, 

 

10

 

merger, consolidation,
split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale,
transfer, exchange or other disposition of all or substantially all of the
assets of the Company, or exchange of Common Equity or other securities of the
company, issuance of warrants or other rights to purchase Common Equity or
other securities of the Company, or other similar corporate transaction or
event, in the Administrator’s discretion, affects the Common Equity such that
an adjustment is determined by the Administrator to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan or with respect to an Award, then the
Administrator shall, in such manner as it may deem equitable, adjust any or all
of:

 

(i) The
number and kind of LLC Interests (or other securities or property) with respect
to which Awards may be granted or awarded (including, but not limited to,
adjustments of the limitations in Section 8.1 on the maximum number and
kind of LLC Interests which may be issued and adjustments of the Award
limited);

 

(ii) The
number and kind of LLC Interests (or other securities or property) subject to
outstanding Awards; and

 

(iii) The grant or exercise price with respect
to any Award.

 

(b) Subject
to Sections 8.3(b)(vi) and 8.3(d), in the event of any transaction or
event described in Section 8.3(a) or any unusual or nonrecurring
transactions or events affecting the Company, any affiliate of the Company, or
the financial statements of the Company or any affiliate, or of changes in
applicable laws, regulations or accounting principles, the Administrator, in its
discretion, and on such terms and conditions as it deems appropriate, either by
the terms of the Award or by action taken prior to the occurrence of such
transaction or event and either automatically or upon the Holder’s request, is
hereby authorized to take any one or more of the following actions whenever the
Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Award under the Plan, to
facilitate such transactions or events or to give effect to such changes in
laws, regulations or principles:

 

(i) To
provide for either the purchase of any such Award for an amount of cash equal
to the amount that could have been attained upon the exercise of such Award or
realization of the Holder’s rights had such Award been currently exercisable or
payable or fully vested or the replacement of such Award with other rights or
property selected by the Administrator in its discretion;

 

(ii) To
provide that the Award cannot vest, be exercised or become payable after such
event;

 

(iii) To
provide that such Award shall be exercisable as to all LLC Interests covered
thereby, notwithstanding anything to the contrary in Section 5.3 or 5.4 or
the provisions of such Award;

 

(iv) To
provide that such Award be assumed by the successor or survivor corporation, or
a parent of subsidiary thereof, or shall be substituted for by similar options,
rights or awards covering the equity of the successor or survivor corporation,
or a parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of LLC Interests and prices; and

 

(v) To
make adjustments in the number and type of LLC Interests (or other securities
or property) subject to outstanding Awards and/or in the terms and conditions 

 

11

 

of (including the grant or
exercise price), and the criteria included in, outstanding options, and options
that may be granted in the future.

 

(vi) Notwithstanding
any other provision of the Plan, but subject to compliance with the applicable
requirements of Section 409A of the Code, in the event of a Change in
Control, each outstanding Award shall, immediately prior to the effective date
of the Change in Control, automatically become fully exercisable for all of the
LLC Interests at the time subject to such rights and may be exercised for any
or all of those LLC Interests as fully-vested LLC Interests.

 

(c) Subject
to Sections 8.3(d), the Administrator may, in its discretion, include such
further provisions and limitations in any Award, agreement or certificate, as
it may deem equitable and in the best interests of the Company.

 

(d) No
adjustment or action described in this Section 8.3 or in any other
provision of the Plan shall be authorized to the extent such adjustment or
action would result in short-swing profits liability under Section 16 or
violate the exemptive conditions of Rule 16b-3 unless the Administrator
determines that the Award is not to comply with such exemptive conditions.
Furthermore, no adjustment or action described in this Section 8.3 or in
any other provision of the Plan shall be authorized to the extent such
adjustment or action would cause any Award that is otherwise exempt from the
requirements of Section 409A of the Code to become subject to Section 409A
of the Code, or would cause any Award that is subject to Section 409A of
the Code to fail to satisfy any requirement of Section 409A of the Code.

 

(e) The
existence of the plan, the Award Agreement and the Awards granted hereunder
shall not affect or restrict in any way the right or power of the Company or
the equity holders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any
issue of equity or of options, warrants or rights to purchase equity or of
bonds, debentures, preferred or prior preference equitys whose rights are superior
to or affect the Common Equity or the rights thereof or which are convertible
into or exchangeable for Common Equity, or the dissolution or liquidation of
the company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.

 

8.4. Tax Withholding. 
The company shall be entitled to require payment in cash or deduction from
other compensation payable to each Holder of any sums required by federal,
state or local tax law to be withheld with respect to any Award.

 

8.5. Forfeiture Provisions. 
Pursuant to its general authority to determine the terms and conditions
applicable to Awards under the Plan, the Administrator shall have the right to
provide, in the terms of Awards made under the plan, or to require a Holder to
agree by separate written instrument, that (a)(i) any proceeds, gains or
other economic benefit actually or constructively received by the Holder upon
any receipt or exercise of the Award, or upon the receipt or resale of any
Common Equity underlying the Award, must be paid to the Company, and (ii) the
Award shall terminate and any unexercised portion of the Award (whether or not
vested) shall be forfeited, if (b)(i) a Termination of Employment occurs
prior to a specified date, or within a specified time period following receipt
or exercise of the Award, or (ii) the Holder at any time, or during a
specified time period, engages in any activity in competition with the Company,
or which is inimical, contrary or harmful to the interests of the Company, as
further defined by the Administrator or (iii) the Holder incurs a
Termination of Employment for cause.

 

8.6. Effect of Plan Upon Options and
Compensation Plans.  The adoption of the Plan shall not affect
any other compensation or incentive plans in effect for the Company or any
Subsidiary.  Nothing in 

 

12

 

the
Plan shall be construed to limit the right of the Company (a) to establish
any other forms of incentives or compensation for Employees of the Company or
any Subsidiary, or (b) to grant or assume options or other rights or
awards otherwise than under the Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, equity or assets of any
corporation, partnership, limited liability company, firm or association.

 

8.7. Compliance with Laws. 
The Plan, the granting and vesting of Awards under the Plan and the issuance
and delivery of LLC Interests and the payment of money under the Plan or under
Awards granted or awarded hereunder are subject to compliance with all
applicable federal and state laws, rules and regulations (including but
not limited to state and federal securities law and federal margin
requirements) and to such approvals by any listing, regulatory or governmental
authority as may, in the option of counsel for the Company, be necessary or
advisable in connection therewith.  Any securities delivered under the
Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable
to assure compliance with all applicable legal requirements.  To the
extent permitted by applicable law, the Plan and Awards granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.

 

8.8. Titles.  Titles
are provided herein for convenience only and are not to serve as a basis for
interpretation or construction of the Plan.

 

8.9. Governing Law. 
The Plan and any agreements hereunder shall be administered, interpreted and
enforced under the internal laws of the State of Delaware without regard to
conflicts of laws thereof.

 

8.10 Effective Date. The Plan was
originally adopted by the Company effective as of March 1, 2007. The Plan was
amended and restated by the Company effective as of December 17, 2008.

 

13Exhibit 10.23

 

WALTER INDUSTRIES, INC.

INVOLUNTARY SEVERANCE BENEFIT PLAN

 

EFFECTIVE AS OF JANUARY 1, 2008

 

 

WALTER
INDUSTRIES, INC.

INVOLUNTARY
SEVERANCE BENEFIT PLAN

EFFECTIVE
AS OF JANUARY 1, 2008

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  POLICY

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  3.

  	
  ELIGIBILITY AND PARTICIPATION

  	
  5

  
	
   

  	
   

  	
   

  
	
  4.

  	
  SEVERANCE PAY

  	
  6

  
	
   

  	
   

  	
   

  
	
  5.

  	
  DISTRIBUTION OF BENEFITS

  	
  9

  
	
   

  	
   

  	
   

  
	
  6.

  	
  PLAN ADMINISTRATION

  	
  11

  
	
   

  	
   

  	
   

  
	
  7.

  	
  PLAN MODIFICATION OR TERMINATION

  	
  12

  
	
   

  	
   

  	
   

  
	
  8.

  	
  GENERAL PROVISIONS

  	
  12

  

 

 

WALTER
INDUSTRIES, INC.

INVOLUNTARY
SEVERANCE BENEFIT PLAN

EFFECTIVE
AS OF JANUARY 1, 2008

 

THIS
INVOLUNTARY SEVERANCE BENEFIT PLAN is hereby established effective the 1st day
of January, 2008, by Walter Industries, Inc. (the “Company”).

 

1.                                      POLICY

 

Circumstances may make it
necessary for an employee to be involuntarily separated from employment with
Walter Industries, Inc. This involuntary severance benefit plan has been
established to assist eligible terminating Employees of the Participating
Employer affected by such circumstances to reduce the adverse financial effects
of their termination of employment.  All
other policies, practices, procedures and plans providing for severance
payments, whether known as severance pay, separation pay, termination pay,
notice, layoff allowance, supplemental unemployment benefits, or the like, on
behalf of Participants (except for any Change of Control Severance Agreement or
Employment Agreement between the Participant and the Service Recipient), are
hereby superseded.

 

2.                                      DEFINITIONS

 

2.1                                 “Board”
shall mean the Board of Directors of the Company.

 

2.2                                 “Cause”
shall include, but is not limited to:

 

(a)                                  Acts
or omissions constituting dishonesty, potential breach of fiduciary obligation
or intentional wrongdoing or malfeasance, potential violation or negligent
disregard for workplace rules and procedures, insubordination, theft,
violent acts or threats of violence or possession of alcohol or controlled
substances on the property of a Participating Employer;

 

(b)                                 Conviction
of a criminal violation involving fraud or dishonesty;

 

(c)                                  The
failure to materially satisfy the conditions and requirements of an Employee’s
employment with a Participating Employer, and such failure by its nature is
incapable of being cured, or such failure remains uncured for more than 30 days
following receipt by the Employee of written notice from the Participating
Employer specifying the nature of the failure and demanding the cure
thereof.  For purposes of this Section,
inattention by the Employee to his duties shall be deemed a failure capable of
cure.

 

Cause shall be determined
by the Plan Administrator in its sole discretion.

 

1

 

2.3                                 “Code” means the Internal Revenue Code
of 1986, as amended, and any successor statute.

 

2.4                                 “Company” means Walter Industries, Inc.
and any successor thereto by merger, purchase or otherwise which expressly
adopts the Plan.

 

2.5                                 “Effective Date” of the Plan is January 1,
2008.

 

2.6                                 “Eligible
Employee” means an Employee who is employed at the corporate headquarters
of Walter Industries, Inc. or any other Participating Employer as a
Salaried Employee or Non-Union Hourly Employee. 
No temporary, occasional or seasonal Employee, as defined within the
payroll records of the Participating Employer, is an Eligible Employee under
the Plan.  Further, Employees covered by
a collective bargaining agreement will not be considered Eligible
Employees.  An employee who is on a leave
of absence covered by the Family and Medical Leave Act, or who is otherwise on
a leave of absence with guaranteed reinstatement rights, shall be deemed to
qualify as an Eligible Employee if, immediately prior to taking such leave of
absence, he would have qualified as an Eligible Employee.

 

Each Eligible Employee
shall be provided with notice indicating that he is eligible for the Plan and
has been categorized into one of four groups (Group A, Group B, Group C or
Group D)  by the Compensation Committee of the
Board.  The Compensation Committee of the
Board of Directors has the sole discretion to determine to which group an
Eligible Employee belongs.

 

2.7                                 “Employee” means any common law
employee employed by a Participating Employer.

 

2.8                                 “Good Reason” means existence of the
following conditions, arising without the Eligible Employee’s consent:  the Participating Employer requiring the
Eligible Employee to be based at a location in excess of fifty (50) miles from
the location of the Eligible Employee’s principal job location, and/or a
material reduction of the Eligible Employee’s base salary from his previous
position.  Notwithstanding anything to
the contrary, the existence of any of the above conditions shall not constitute
Good Reason unless the Eligible Employee provides notice to the Participating
Employer of the existence of the condition within 90 days after the initial
existence of the condition and the Participating Employer does not
remedy the condition within 30 days after it receives such notice.

 

2.9                                 “Individual Employment Agreement”
means any Change of Control Severance Agreement or Employment Agreement between
the Employee and a Participating Employer that provides benefits upon
Separation from Service.

 

2.10                           “Involuntary Separation from Service”
means a Separation form Service without Cause due to:

 

2

 

(a)                                  a
reduction in work force (including layoffs and consolidations of operations);

 

(b)                                 the
transfer of work to another location; or

 

(c)                                  a
determination that an Employee’s ability to satisfy the criteria of his
position has declined through no fault of the Employee as determined in the
sole discretion of the Plan Administrator.

 

For
purposes of the Plan, an Involuntary Separation from Service includes a
Separation from Service for Good Reason, provided that the Separation from
Service occurs within two (2) years following the initial existence of
Good Reason.  The foregoing definition is
intended to meet the definition of an “involuntary separation from service”
within the meaning of Treasury Regulations Section 1.409A-1(n)(1), and 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, and both shall be interpreted, construed, administered, and
applied consistently therewith.

 

2.11                           “Non-Union
Hourly Employee” means an Employee identified as a “Non-Union Hourly
Employee” within the payroll records of the Participating Employer.

 

2.12                           “Participant”
means an Eligible Employee who participates in the Plan pursuant to the
provisions of Article 3.

 

2.13                           “Participating
Employer” means the Company and any other Service Recipient that adopts
this Plan as set forth on Appendix A, as amended from time to time.

 

2.14                           “Pay”
means the annual base rate of pay of an Eligible Employee on his Severance Date
at his stated rate as set forth within the payroll records of the Participating
Employer.  “Pay” does not include any
remuneration other than base salary.  “Week’s
Pay” and “Month’s Pay” shall be calculated in accordance with a Participating
Employer’s regular payroll procedures (including the division of annual base
rate of pay by 52 for Week’s Pay, and 12 for Month’s Pay). For part-time
Employees, the base rate of pay will be a pro-rated salary computation based on
the ratio of scheduled part-time hours compared to scheduled full-time hours
during the twelve (12) months immediately preceding his Severance Date.  The annual base rate of pay for Employees
subject to a sales commission plan shall be based on the actual earnings during
the most recent 24-month period.

 

2.15                           “Plan”
means the Walter Industries, Inc. Involuntary Severance Benefit Plan as
set forth herein, as amended from time to time.

 

2.16                           “Plan
Administrator” means the Company.

 

3

 

2.17                           “Plan
Year” means the twelve (12) consecutive month period beginning on January 1
and ending on December 31.

 

2.18                           “Salaried
Employee” means an Employee identified as a “Salaried Employee” within the
payroll records of the Participating Employer.

 

2.19                           “Separation
Agreement, Waiver and General Release” means the documentation prescribed
by the Plan Administrator pursuant to which a Participant waives and/or
releases any and all claims, demands or causes of action of any kind whatsoever
arising out of the Participant’s employment and/or termination of employment.

 

2.20                           “Separation
from Service”  means the termination of the Employee’s
employment with the Service Recipient, determined as follows:

 

(a)                                  The Employee’s employment will be
considered terminated effective as of the date that both the Employee and the
Participating Employer reasonably anticipate, based on all of the facts and
circumstances, that either (A) no services will be performed by the
Employee for the Service Recipient after such date, whether as an employee or
as an independent contractor, or (B) the level of bona fide services that
the Employee will perform for the Service Recipient after such date, whether as
an employee or as an independent contractor, will be permanently reduced to no
more than twenty percent (20%) of the average level of bona fide services the
Employee performed over the immediately preceding thirty-six (36) month period
(or, if less, the Employee’s full period of service to the Service Recipient).

 

(b)                                 If the Employee is on a “bona fide leave
of absence” (as defined below) from the Service Recipient, the Employee’s
employment will be considered terminated, notwithstanding that the Employee is
reasonably expected to return to perform services for the Service Recipient (at
a level such that the Employee’s employment is not terminated pursuant to
subsection (a) above), on the later of: (A) the first date
immediately following the end of the Six-Month Period (as defined below), or (B) the
date the Employee’s right to reemployment under applicable law or contract, if
any, expires. A “bona fide leave of absence” is a leave of absence, including
military leave or sick leave, in which there is a reasonable expectation that
the Employee will return to perform service for the Service Recipient. The “Six-Month
Period” is the period that begins on the date the leave of absence commences
and ends on the date that is six months thereafter.

 

(c)                                  The foregoing definition is intended to meet
the requirements for a “separation from service” from the Service Recipient
within the meaning of Section 409A(a)(2)(A)(i) of the Code and
Treasury Regulations Section 1.409A-1(h), and shall be interpreted,
construed, administered and applied consistently therewith. Without limiting
the generality of the foregoing, for purposes of this 

 

4

 

definition,
the definition of the term “Participating Employer” set forth below shall be
modified as provided in Treasury Regulations Section 1.409A-1(h)(3).

 

2.21                           “Service”
means the Employee’s periods of eligible service with the Service Recipient or
any other entity that was a Service Recipient at the time the service was
performed.  For purposes of determining
Service for each Employee who was employed by a Participating Employer on January 1,
2008, all continuous service ending with a Severance Date will be taken into
account.  In addition, non-continuous
periods of service will be taken into account under the following limited
circumstances:  If an Employee has
terminated employment with a Participating Employer after January 1, 2008
and has been rehired within less than six (6) months, prior service as an
Employee of a Participating Employer will be taken into consideration.

 

2.22                           “Service Recipient” means the
Company or an affiliate of the Company for which the Employee performs services
and any affiliates of the Company or a subsidiary of the Company that are
required to be considered a single employer under Sections 414(b) and 414(c) of
the Code.

 

2.23                           “Severance
Date” means the date after the Effective Date on which an Employee
involuntarily has a Separation from Service without Cause.

 

2.24                           “Severance
Pay” or “Severance Payment” or “Severance Payments” means
payments to eligible Employees pursuant to Section 4 hereof.

 

2.25                           “Specified Employee” means a key
employee of the Service Recipient 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 the Company 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).

 

2.26                           “Staff
Reduction Policy” means any administrative policy adopted by the Company,
as in effect from time to time, and attached hereto as Appendix B, which sets
forth the policies for the Participating Employer with respect to management
initiated terminations resulting from force/skills and balances, site closings,
and job eliminations.

 

2.27                           “Year
of Service” means each twelve (12) months of Service.  “Years of Service” shall be determined as of
the Employee’s Severance Date.

 

3.                                      ELIGIBILITY AND
PARTICIPATION

 

3.1                                 An
Eligible Employee will become a Participant under the Plan for purposes of
receiving benefits upon his Severance Date.

 

5

 

The Plan Administrator
shall have complete power and discretion to determine if and when an Eligible
Employee shall participate in the Plan; provided, however, that the Plan
Administrator’s decision shall be made in accordance with the terms of the Plan
and the requirements of any Staff Reduction Policy.

 

3.2                                 An
Employee shall not be eligible to receive a benefit from the Plan if his
Separation from Service occurs by reason of death or disability, as determined
in the discretion of the Board (other than any disability described in, and
subject to, Section 4.8) or if the Separation from Service is for Cause or
is voluntary (unless such voluntary Separation from Service is for a Good
Reason).

 

4.                                      SEVERANCE PAY

 

4.1                                 Basic
Severance.  Each Participant who
incurs a Severance Date and is not provided severance benefits under an
Individual Employment Agreement shall be entitled to receive basic Severance
Pay pursuant to this Section 4.1. 
The amount of basic Severance Pay to be paid to a Participant shall be
determined in accordance with the following schedule:

 

	
  Years of Service

  	
   

  	
  Pay

  
	
   

  	
   

  	
   

  
	
  Less than 1 year

  	
   

  	
  1 week

  
	
  1 year or more

  	
   

  	
  1⁄2 month

  

 

4.2                                 Additional
Severance.  Except as otherwise
provided in this Section 4, each Participant who incurs a Severance Date
and is not provided severance benefits under an Individual Employment Agreement
will be entitled to the greater of the Severance Pay provided by Option
A or Option B below:

 

(a)                                  Option A:  Two weeks Severance Pay
per Years of Service, minus the Basic Severance Pay set forth in Section 4.1,
up to a maximum of fifty-two (52) weeks’
Pay and a minimum of four (4) weeks’ Pay for each salaried exempt
Employee, and a maximum of twenty-six (26) weeks’ Pay and a minimum of
four (4) weeks’ Pay for a Non-Union Non-Exempt or Non-Union Hourly
Employee.

 

(b)                                 Option
B:  Basic Severance as noted in Section 4.1,
plus the combination of (1), (2), and (3) below, as applicable:

 

(1)                                  Participants
age 40 through 45 at the time of their Severance Date will receive an
additional half month’s Pay.

 

(2)                                  Participants
age 46 and above at the time of their Severance Date will receive one
additional month’s Pay.

 

(3)                                  Severance
Pay determined in accordance with the following schedule:

 

6

 

	
  Years of Service

  	
   

  	
  Pay

  
	
   

  	
   

  	
   

  
	
  Less than 1 year

  	
   

  	
  1 week

  
	
  1 to 3 years

  	
   

  	
  1⁄2 month

  
	
  3 to 6 years

  	
   

  	
  1 month

  
	
  6 to 9 years

  	
   

  	
  1 1⁄2 months

  
	
  9 to 12 years

  	
   

  	
  2 1⁄2 months

  
	
  12 to 15 years

  	
   

  	
  3 months

  
	
  15 to 18 years

  	
   

  	
  3 1⁄2 months

  
	
  18 to 21 years

  	
   

  	
  4 1⁄2 months

  
	
  21 to 24 years

  	
   

  	
  5 months

  
	
  24 to 27 years

  	
   

  	
  5 1⁄2 months

  
	
  27 + years

  	
   

  	
  6 months

  

 

(4)  A Non-Union
Non-Exempt or Non-Union Hourly Employee is entitled to a maximum of 32.5 weeks
of Severance Pay when combining the Basic Severance set forth in Section 4.1
and this Severance set forth in Option B.

 

4.3                                 Additional
Group Severance.

 

(a)                                  Group
A employees will receive 26 weeks of Severance Pay in addition to Severance Pay
provided by an Individual Employment Agreement or Severance Pay as defined and
provided in Sections 4.1 and 4.2.

 

(b)                                 Group
B employees will receive 13 weeks of Severance Pay in addition to Severance Pay
provided by an Individual Employment Agreement or Severance Pay as defined and
provided in Sections 4.1 and 4.2.

 

(c)                                  Group
C employees (salaried exempt Employees not in Group A or Group B) will not
receive any additional group severance pursuant to this section.

 

(d)                                 Group
D employees (Non-Union Non-Exempt and Non-Union Hourly Employees) will not receive
any additional group severance pursuant to this section.

 

4.4                                 The
additional Severance Pay described in Sections 4.2 and 4.3 shall be contingent
upon the Participant’s timely execution of a Separation Agreement, Waiver and
General Release, which releases and discharges each Participating Employer and
Affiliate (and its officers, employees and agents) from all claims, demands or
causes of action of any kind whatsoever arising out of the Participant’s
employment and termination of employment. 
No Participant shall be eligible to receive additional Severance Pay
unless he executes a Separation Agreement, Waiver and General Release in a
manner as may be prescribed by the Plan Administrator.

 

7

 

4.5                                 To
the extent permitted by law, if the Participating Employer is obligated by law
to pay any severance type remuneration other than unemployment compensation,
including but not limited to payments pursuant to the Worker Adjustment and
Retraining Notification Act (WARN), on account of, or in connection with, a
Participant’s termination of employment on a Severance Date, the Severance
Payments pursuant to this Article, as applicable, shall be reduced, dollar for
dollar, by the amount of any such remuneration, without regard to the minimum
amount of Severance Pay specified in this Article, as applicable.

 

4.6                                 To
the extent permitted by law and unless otherwise provided by an administrative
policy adopted by the Company, the amount of an Employee’s Severance Pay will
be reduced by any amounts the Employee owes a Participating Employer or other
Service Recipient, including but not limited to, salary and expense advances
and employee loans, as of the Severance Date.

 

4.7                                 Notwithstanding
any other provision of the Plan and unless otherwise provided by an
administrative policy adopted by the Company, if a Participant violates the
Company’s business practices and/or policies and/or fails to continue to
fulfill his obligations not to disclose the private, confidential or
proprietary information of the Service Recipient, the Participant shall not be
entitled to receive any payment pursuant to Sections 4.2 or 4.3, or if payments
have been made, he will be required to repay to the Company all Plan payments.

 

4.8                                 If
an Employee incurs an Involuntary Separation from Service without Cause while
receiving disability benefits from the Participating Employer, the Severance
Payments pursuant to this Article, as applicable, shall be reduced, dollar for
dollar, by the amount of any such disability payments to the Employee, without
regard to the minimum amount of Severance Pay specified in this Article.

 

4.9                                 If
a Participant becomes (a) reemployed by (i) the Company, (ii) any
Service Recipient, or (iii) any other company that participates in any
retirement plan sponsored by Walter Industries, Inc. that is tax-qualified
under Internal Revenue Code Section 401(a), or (b) employed within
sixty (60) days of his Severance Date by any purchaser or surviving business of
the Company, then the Participant shall not be entitled to receive any payment
under the terms of this Plan.  If a
former Participant has received a payment and becomes reemployed (or employed,
as described above), he shall be required to repay to the Participating
Employer the difference between the total number of weeks for which payments
were made and the number of weeks from the former Participant’s Severance Date
to the effective date of his reemployment. 
For example, if the Participant receives sixteen (16) weeks’ Pay and is
reemployed after eight (8) weeks, the equivalent of eight (8) weeks’
Pay must be repaid to the Participating Employer.

 

4.10                           Unless
an Individual Employment Agreement provides otherwise, and notwithstanding
anything above in this Article 4, if a Participant is a “disqualified
individual” (as defined in Section 280G(c) of the Code), and the
Severance Payment 

 

8

 

provided for in this Article 4,
together with any other payments which the Participant has the right to receive
from a Participating Employer (or other Service Recipient), would constitute a “parachute
payment” (as defined in Section 280(G)(b)(2) of the Code), the
Severance Payment shall be reduced.  The
reduction shall be in an amount so that the present value of the total amount
received by the Participant from the Participating Employer (or other Service
Recipient) will be one dollar ($1.00) less than three (3) times the
Employee’s base amount (as defined in Section 280G of the Code) and so
that no portion of the amounts received by the Employee shall be subject to the
excise tax imposed by Section 4999 of the Code (excise tax).  The determination as to whether any reduction
in the Severance Payment is necessary shall be made by the Plan Administrator
in good faith, and the determination shall be conclusive and binding on the
Participant.  If through error or
otherwise the Participant should receive payments under this Plan, together
with other payments the Participant has the right to receive from the
Participating Employer (or other Service Recipient), excluding deferred
compensation plan payments, in excess of one dollar ($1.00) less than three
times his base amount, the Participant shall immediately repay the excess to
his employer upon notification that an overpayment has been made.

 

4.11                           The
Plan Administrator will provide an Employee with a notification of the Employee’s
right to continue health and dental insurance coverage (hereinafter referred to
as “Health Insurance”) under COBRA (ERISA §§ 601-606; 29 USCS §§ 1161-1166) as
a result of his Severance Date in accordance with the Participating Employer’s
usual procedures. If an Employee does not elect continuation coverage under
COBRA, the Employee’s health and dental insurance coverage will cease in
accordance with the Participating Employer’s usual practice as permitted under
applicable law and the terms of the relevant benefit plan document and/or
underlying insurance policy.

 

5.                                      DISTRIBUTION OF
BENEFITS

 

5.1                                 (a)                                  Except as set forth in Section 5.1(b), basic
Severance Pay to which a Participant may be entitled pursuant to Section 4.1
shall be paid under the regular payroll schedule in effect on the Severance
Date, starting not later than fifteen (15) days following the Participant’s
Severance Date.  Additional Severance Pay
to which a Participant may be entitled pursuant to Sections 4.2 and/or 4.3
shall be paid on regular paydays, starting after the full amount of basic
Severance Pay is paid to a Participant.

 

All applicable
federal, state and local taxes (including Social Security taxes) and all other
welfare benefit plan coverage payments will be deducted and withheld from all
Severance Payments.

 

Subject to the
requirements of Section 409A, the Employee shall be eligible to receive
payment for any earned and unused vacation, in accordance with the
Participating Employer’s policy in existence on the Severance Date.

 

9

 

(b)                                 If
the Participant is a Specified Employee as of his Severance Date, to the extent
the Participant is entitled to receive any benefit or payment under this Plan
that constitutes deferred compensation within the meaning of Section 409A
(and exceeds the limits on any exceptions to deferred compensation permitted
under Section 409A with respect to severance pay and other types of
payments) of the Code (after first
accounting for all other separation pay, as that term is defined under Section 409A
of the Code, to be paid or provided to the Participant, including under any
Individual Employment Agreement) before the date that is six (6) months
after the Severance Date, such benefits or payments shall not be provided or
paid to the Participant 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
the Participant on the first business day after the date that is six (6) months
after the Severance Date. All 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 5(b) and shall
be provided or paid in accordance with the payment schedule applicable to such
benefit or payment under this Plan. Prior to the imposition of the six month
delay as set forth in this Section 5.1(b), it is intended that (i) each
installment under this Plan be regarded as a separate “payment” for purposes of
Treasury Regulations Section 1.409A-2(b)(2)(i), and (ii) all benefits
or payments provided under this Plan satisfy, to the greatest extent possible,
the exemptions from the application of Section 409A 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 5.1(b) is
intended to comply with the requirements of Section 409A(a)(2)(B)(i) of
the Code and shall be interpreted, construed, administered and applied
consistently therewith.

 

5.2                                 Severance
Payments shall be made from the general assets of the Participant’s
Participating Employer.

 

5.3                                 (a)                                  In
the event of a claim by an Employee as to entitlement or the amount of any
distribution or its method of payment, such Employee shall present the reason
for his claim in writing to the Plan Administrator.  The Plan Administrator shall, within ninety
(90) days after receipt of such written claim, send a written notification to
the Employee as to its disposition, unless the Plan Administrator determines
that special circumstances require an extension of time for processing the
claim.  If the Plan Administrator
determines that an extension of time for processing is required, written notice
of the extension will be furnished to the Employee prior to the termination of
the initial 90-day period.  In no event
will such extension exceed a period of 90 days from the end of such initial
period.  The extension notice will
indicate the special circumstances requiring an extension of time and the date
by which the plan expects to render the benefit determination.

 

10

 

(b)                                 In
the event the claim is wholly or partially denied, such written notification
shall (i) state specifically the reason or reasons for the denial, (ii) reference
to the specific Plan provisions on which the determination is based, (iii) provide
a description of any additional material or information necessary for the
Employee to perfect the claim and an explanation of why such material or
information is necessary, and (iv) set forth the procedure by which the
Employee may appeal the denial of the claim.

 

(c)                                  In
the event an Employee wishes to appeal the denial of his claim, he may request
a review of such denial by making application in writing to the Plan
Administrator within sixty (60) days after the receipt of the denial.  Such Employee (or his duly authorized legal
representative) may, upon written request to the Plan Administrator, review any
documents pertinent to his claim, and submit in writing issues and comments in
support of his position.  Within sixty
(60) days after receipt of the written appeal (unless special circumstances,
such as the need to hold a hearing, require an extension of time, but in no
event more than one hundred twenty (120) days after such receipt), the Plan
Administrator shall notify the Employee of the final decision. The final
decision shall be in writing and shall include specific reasons for the
decision, written in a manner calculated to be understood by the claimant, and
specify references to the pertinent Plan provisions on which the decision is
based.

 

6.                                      PLAN ADMINISTRATION

 

6.1                                 The Plan shall be interpreted, administered
and operated by the Plan Administrator who shall have complete authority and
discretion, subject to the express provisions of the Plan and any Staff
Reduction Policy, to determine who shall be eligible to participate in the Plan
and receive Severance Pay, to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, and to make all other
determinations necessary or advisable for the administration of the Plan.

 

6.2                                 All questions of any character whatsoever
arising in connection with the interpretation of the Plan or its administration
or operation shall be submitted to and settled and determined by the Plan
Administrator in accordance with the procedure for claims and appeals described
in Section 5.3.  Any such settlement
and determination shall be final and conclusive, and shall bind and may be
relied upon by each Participating Employer, each of the Employees and all other
parties in interest.

 

6.3                                 The Plan Administrator may delegate any of
the duties hereunder to such person or persons from time to time as it may
designate.  Except to the extent
prohibited by law, any person acting hereunder pursuant to the delegation of
the Plan Administrator shall be indemnified for actions taken pursuant to such
delegation, by the Company.

 

11

 

7.                                      PLAN
MODIFICATION OR TERMINATION

 

7.1                                 Subject to Code Section 409A, the Plan
may be modified or amended at any time by the Company, with or without
notice.  Without limiting the foregoing,
subject to Code Section 409A, the Plan may be modified or amended to
increase, decrease or eliminate the Severance Payments to any Employee who
incurs a Severance Date after such modification or amendment.

 

7.2                                 It is the intention of the Company to
continue the Plan and make Severance Payments to all eligible terminating
Employees.  However, the Company may, for
any reason subject to Code Section 409A, terminate the Plan or amend the
Plan to withhold its application as to all or some Employees in a location or
other portion of the Company, a Participating Employer or other Service
Recipient, and the Plan Administrator may, accordingly, make no Severance
Payment to anyone who has not incurred a Severance Date at the time of such
termination or amendment.  The Company
may also extend the applicability of the Plan to all or some Employees in a
location or other portion of the Company, a Participating Employer or other
Service Recipient.

 

7.3                                 Any modification, amendment, termination,
withholding, extension or other action shall be in writing and apply only to
Employees with Severance Dates occurring after such action.  Any such modification, amendment,
termination, withholding, extension or other action shall be authorized or
ratified by the Company’s Board.  No such
action shall reduce or eliminate the Severance Pay of any Employee whose
Severance Date occurs before such action is taken.

 

8.                                      GENERAL
PROVISIONS

 

8.1                                 This
Plan is intended to be an unfunded employee welfare benefit plan for the
purposes of providing severance benefits to a Participating Employer’s eligible
terminating Employees.  The Plan is
subject to Department of Labor Regulation 2510.3-1 and, notwithstanding any
other provision of this Plan, will not provide a benefit to exceed twice the
equivalent of an Employee’s annual compensation during the year preceding
termination of employment.  In addition,
all Severance Payments hereunder will be completed within twenty-four (24)
months of an Employee’s Severance Date.

 

8.2                                 Nothing
in the Plan shall be deemed to give any Employee the right to be retained in
the employ of a Participating Employer, or to interfere with the right of the
Participating Employer to discharge him at any time and for any lawful reason,
without notice.

 

8.3                                 Except
as otherwise provided herein or by law, no right or interest of any Employee
under the Plan shall be assignable or transferable, in whole or in part, either
directly or by operation of law or otherwise, including, without limitation, by
execution, levy or garnishment, attachment, or pledge.  No attempted assignment or transfer thereof
shall be effective, and no right or interest of any Employee under the Plan
shall 

 

12

 

be liable for, or subject
to, any obligation or liability of such Employee.  As to an Employee who is unable to care for
his affairs, payment pursuant to this Plan may be made directly to his legal
guardian or personal representative, in which case all liabilities of the Plan
to any such Employee shall be fully discharged.

 

8.4                                 If
an Employee dies after a Severance Date, but before receiving all Severance
Payments due pursuant to this Plan, remaining payments will be made in one lump
sum to his beneficiary(ies) entitled to receive any available death benefits
under the Walter Industries, Inc. Profit Sharing Plan, or any successor to
that plan, or if the Participant does not participate in that plan, then the
beneficiary designated under the Walter Industries, Inc. 401(k) Plan,
or any successor to that plan, or if no beneficiary is so designated, to his
estate within 90 days of death.

 

8.5                                 The
Plan shall be governed by, and construed in accordance with, the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), and all
applicable rules and regulations thereunder, and, to the extent not
preempted by ERISA, with the laws of the State of Florida.

 

8.6                                 Descriptive
headings within this Plan are for convenience and reference only.  The words of the headings will in no way be
held or deemed to define, describe, explain, modify or limit the meaning of any
provision, or the scope or the intent of this Plan document.

 

8.7                                 Whenever
the Company or another Participating Employer under the terms of this Plan is
permitted or required to do or perform any act, it shall be done and performed
by the board of directors of the Company or such other Participating Employer
or any properly authorized designee of the board of directors.

 

8.8                                 Throughout
this Plan, and whenever appropriate, the masculine gender shall be deemed to
include the feminine and neuter; the singular, the plural; and vice versa.

 

8.9                                 Section 409A; Taxes.  This Plan is intended to conform
in all respects to the requirements under Section 409A of the Code. Accordingly,
the Plan should be interpreted, construed, administered and applied in a manner
as shall meet and comply with the requirements of Section 409A of the
Code, and the Board may amend this Plan in its discretion so as to comply with
any such requirement. Any reference in this Plan to Section 409A of the
Code, or any subsection thereof, shall be deemed to mean and include, to the
extent then applicable and then in force and effect (but not to the extent
overruled, limited or superseded), published rulings, notices and similar
announcements issued by the Internal Revenue Service under or interpreting Section 409A
of the Code and regulations (proposed, temporary or final) issued by the
Secretary of the Treasury under or interpreting Section 409A of the Code.
Notwithstanding any other provision of this Plan, neither the Company nor any
individual acting as a director, officer, employee, agent or other
representative of the Company shall be liable to the Employee or any other
Person for any claim, loss, liability or expense arising out of any interest,
penalties 

 

13

 

or
additional taxes due by the Employee or any other Person as a result of this
Plan or the Company’s administration of the terms of this Plan not satisfying
any of the requirements of Section 409A of the Code.

 

IN WITNESS WHEREOF, this
Plan has been executed this 17th day of October, 2008.

 

 

	
   

  	
  WALTER INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  Larry E. Williams

  
	
   

  	
   

  	
  Senior Vice President

  

 

14

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