Document:

Exhibit 10.1

OPTION
AGREEMENT

THIS AGREEMENT (the “Agreement”),
dated March 15, 2007, is made by and between JWH Holding Company, LLC, a
Delaware limited liability company (the “Company”), Walter Industries, Inc., a Delaware
corporation (“Walter”) and _____________, an employee of the Company,
hereinafter referred to as the “Grantee”:

WHEREAS, pursuant to the
2007 Long-Term Incentive Award Plan of the Company (the “Plan”), the Company has granted to the Grantee a
non-qualified option to purchase fractional
limited liability company interest in
the Company on the terms and subject to the conditions set forth in this
Agreement and the Plan;

WHEREAS, this Agreement is intended to implement the
provisions of paragraph 3(c) of
the employment agreement dated _________ (the “Employment Agreement”) by and
between the Grantee and Walter, which
transferred its Homebuilding and Financing businesses to the Company and
currently owns 100% of the limited liability company interest in the
Company;

NOW, THEREFORE, in consideration
of the mutual covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto do
hereby agree as follows:

ARTICLE
I.

DEFINITIONS

Whenever the following
terms are used in this Agreement, they shall have the meaning specified below
unless the context clearly indicates to the contrary.  Capitalized terms used in this Agreement and
not defined in this Article or other
Articles of this Agreement shall have the meaning given such terms in the
Plan.  The masculine pronoun shall
include the feminine, and the singular the plural, where the context so
indicates.

Section 1.1     “Cause” shall have the meaning set
forth in paragraph 11 of the Employment Agreement.

Section 1.2     “Change in Control” shall have the
meaning set forth in Section 1.6 of the Plan; provided, however, that a
spin-off or other transaction separating the Company from Walter shall not be
considered a Change in Control.

Section 1.3     “Disability” shall mean any medical
condition whatsoever which leads to the absence of the Grantee from his or her
job function for a continuous period of six months without the Grantee being
able to resume such functions on a full time basis at the expiration of such
period, it being understood that unsuccessful attempts to return to work for
periods under thirty days shall not be deemed to have interrupted said
continuity.

Section 1.4      “Eligible Representative” shall
mean, upon the Grantee’s death, the Grantee’s personal representative or such
other person as is empowered under the deceased Grantee’s will or the then
applicable laws of descent and distribution to represent the Grantee hereunder.

 

 

Section 1.5     “Fair Market Value” of an LLC
interest as of a given date shall be (a) the mean of the high and low sales
prices (rounded to the nearest $0.01) of an LLC interest on the principal
exchange on which the Company’s LLC interests are then trading, if any (or as
reported on any composite index which includes such principal exchange), on the
trading day immediately preceding such date, or if LLC interests were not
traded on the trading day immediately preceding such date, then on the next
preceding date on which a trade occurred, or (b) if LLC interests are not
traded on an exchange but are quoted on Nasdaq or a successor quotation system,
the mean between the closing representative bid and asked prices for an LLC
interest on the trading day immediately preceding such date as reported by
Nasdaq or such successor quotation system, or (c) if LLC interests are not
publicly traded on an exchange and not quoted on Nasdaq or a successor
quotation system, the Fair Market Value of an LLC interest as established by
reference to the most recent valuation of the Company as a going concern and a
stand-alone public company conducted by a mutually agreeable, experienced
valuation firm of national reputation.

In calculating
Fair Market Value at any time pursuant to clause (c) above (including in the
case of a sale of all or substantially all of the assets of the Company or any
other Change in Control), the capitalization of the Company shall be assumed to
be the capital shown on a pro forma balance sheet prepared as of the date of
such calculation on a consistent basis with the Reference Balance Sheet.  Any calculation of Fair Market Value pursuant
to clause (c) above shall be based on results of operations and cash flows and
other pertinent operating and financial measures, both historical and forecast,
and shall assume adequate capitalization sufficient
to support the operations of the Company as a going concern and as a
stand-alone public company.

Section 1.6     “Plan” shall mean the 2007 Long-Term
Incentive Award Plan of JWH Holding Company, LLC.

Section 1.7     “Protected Party” shall have the
meaning set forth in Section 5.1(f).

Section 1.8     “Reference Balance Sheet” shall mean
the pro forma balance sheet of the Company as of March 1, 2006, attached hereto
as Schedule 1.  Intercompany accounts and
legacy tax issues as of March 1, 2006 have been excluded from the Reference
Balance Sheet, and shall not be included on any pro forma balance sheet
prepared as of any valuation date.

Section 1.9     “Retirement” shall mean the time
when the employee-employer relationship between the Grantee and the Company or
any Subsidiary is terminated (a) other than for Cause, and (b) such termination
occurs on or after March 2, 2009.

Section 1.10   “Secretary” shall mean the Secretary
of the Company.

ARTICLE
II.

GRANT OF OPTION

Section 2.1     Grant of Option.  In consideration of the Grantee’s agreement to
remain in the employ of the Company or its Subsidiaries and for other good and
valuable consideration, the Company has irrevocably granted to the Grantee the
option to purchase all or any part of __% of the total LLC interests of the
Company (the “Option”) upon the terms and conditions set forth in this
Agreement.

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Section 2.2     Options Subject to the Plan.  The Option granted hereunder is subject to
the terms and provisions of the Plan.

Section 2.3     Option Exercise Price.  The aggregate exercise price of the Option
shall be as shown in the pricing letter between Grantee and the Company of even
date herewith.  It is understood that
this valuation is based in part on the assumption that the capitalization of
the Company would be adequate to support the business of the Company as a going
concern and a stand-alone public company.

Section 2.4     Not a Contract of Employment.  Nothing in this Agreement or in the Plan
shall confer upon the Grantee any right to continue in the employ of the
Company or any of its Subsidiaries or shall interfere with or restrict in any
way the rights of the Company or its Subsidiaries, which are hereby expressly
reserved subject to the terms of the Employment Agreement, to discharge the
Grantee at any time for any reason whatsoever, with or without Cause.

ARTICLE
III.

PERIOD OF EXERCISABILITY

Section 3.1     Commencement of Exercisability

(a)           Subject to
subsections (b) and (c) of this Section 3.1 and to Section 3.3, the Option
shall become exercisable in three cumulative installments as follows:

(i)            The
first installment shall consist of one-third (1/3) of the LLC interests covered
by the Option and became exercisable on March 2, 2007;

(ii)           The second installment shall consist of one-third (1/3) of
the LLC interests covered by the Option and shall become exercisable on March
2, 2008; and

(iii)          The third installment shall consist of one-third (1/3) of
the LLC interests covered by the Option and shall become exercisable on March
2, 2009.

(b)           Notwithstanding subsection (a) above, but subject to subsection
(c) below and to Section 3.3, the Option shall become fully exercisable upon
the date of consummation of the first Change in Control, termination of Grantee’s employment by
the Company or a Subsidiary without Cause, Grantee’s resignation because of a
significant diminution in pay or responsibilities, Grantee’s resignation
because of the Company’s or Walter’s material breach of the Employment
Agreement which is not cured within a reasonable period after notice, or
Grantee’s death, Disability or Retirement.

(c)           No portion of the
Option which is unexercisable at or as a result of Termination of Employment shall thereafter
become exercisable.

Section 3.2     Duration of Exercisability.  The installments provided for in Section 3.1
are cumulative.  Each such installment
which becomes exercisable pursuant to Section 3.1 shall remain exercisable
until it becomes unexercisable under Section 3.3.

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Section 3.3     Expiration of Option.  The Option may not be exercised to any extent
by anyone after the first to occur of the following events:

(a)           The expiration of
ten years from March 2, 2006; or

(b)           Except
as the Administrator may otherwise approve, the date that is 90 days after the date of
the Grantee’s Termination of Employment by the Company or a Subsidiary for Cause or by Grantee for other than a reason specified in
Section 3.1(b); or

(c)           The expiration of two (2) years from the date of the
Grantee’s Termination of Employment for
a reason specified in Section
3.1(b).

ARTICLE IV.

EXERCISE OF OPTION

Section 4.1     Person Eligible to Exercise.  During the lifetime of the Grantee, only he
may exercise the Option or any portion thereof. 
After the death of the Grantee, any exercisable portion of the Option
may, prior to the time when the Option becomes unexercisable under Section 3.3,
be exercised by his Eligible Representative.

Section 4.2     Partial Exercise.  Any exercisable portion of the Option or the
entire Option, if then wholly exercisable, may be exercised in whole or in part
at any time prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.3; provided, however, that each partial exercise
shall be in respect of not less than 1/2 of 1% of the LLC interests of the
Company (or the total amount then exercisable pursuant to Section 3.1, if
smaller) and shall be for increments of 1/10 of 1% of the LLC interests of the
Company only.

Section 4.3     Gross-Up For Excise Tax.

(a)            To the extent that the vesting or exercise of the Option or the
payment (excluding the payments to be made pursuant to this Section 4.3)
received by Grantee under this Agreement and the Plan with respect to his
Option will be an “excess parachute payment” subject to the excise tax imposed
by Section 4999 of the Code, or any successor provision of the Code (the “Excise
Tax”), the Company shall pay Grantee an additional amount at the time the Excise Tax is due and payable equal to
the amount of the Excise Tax plus any federal, state and local income
and employment taxes and Excise Tax on the additional amount (the “Gross-Up Payment”).  For purposes of calculating the
Gross-Up Payment, Grantee shall be deemed to pay income taxes at the highest
applicable marginal rate of federal, state or local income taxation for the
calendar year in which the Gross-Up Payment is being made, net of the maximum
reduction in federal income taxes which could be obtained from deduction of any
such state and local taxes.

(b)           Subject to any
determinations made by the Internal Revenue Service (the “IRS”), all
determinations as to whether a Gross-Up Payment is required and the amount of
the Gross-Up Payment shall be made by the Company’s independent certified
public accounting firm and/or tax counsel selected by the Company
(collectively, the “Accountants”) in accordance with the principles of Section
280G of the Code and Internal Revenue
Service regulations thereunder. All fees and expenses of the Accountants
will be paid by the Company. All determinations made by the Accountants shall
be binding on the Company and Grantee, subject to any determinations made by
the IRS.

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(c)           In the event that the
Excise Tax is subsequently determined by the Accountants or the IRS to be less
than the amount taken into account under this Section 4.3 in calculating the
Gross-Up Payment, Grantee shall pay to the Company, on or before the date that
is ten (10) days after the date that the amount of such reduction in the Excise
Tax is finally determined, the portion of the Gross-Up Payment that would not have been payable had
the Gross-Up Payment been calculated
based on the amount of the finally determined Excise Tax, plus interest
on the amount of such payment at the prime rate published in the Wall Street
Journal on the date the Excise Tax is finally determined from the date the
Gross-Up Payment was made to the date such payment is made.

(d)           In the event that the
Excise Tax is subsequently determined by the Accountants or the IRS to be more
than the amount taken into account under this Section 4.3 in calculating the
Gross-Up Payment, the Company shall pay an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions payable by
Grantee with respect to such excess) on or before the date that is ten (10)
days after the date that the amount of such excess in the Excise Tax is finally
determined.

(e)           Grantee and the Company
shall each reasonably cooperate with the other in lawfully reducing the amount of Excise Tax that may be due and in
connection with any administrative or judicial proceedings concerning the
existence or amount of liability for Excise Tax with respect to the Option.
Grantee and the Company shall deliver to one another copies of any written
communications, and summaries of any verbal communications, with any taxing
authority regarding the application of Section 280G of the Code or the Excise
Tax to the Option. The Company will control all proceedings in the event of any
controversy with any taxing authority with regard to Section 280G of the Code
or the Excise Tax.

Section 4.3     Rights as Equity Owner.  The holder
of the Option shall not be, nor have any of the rights or privileges of, an
equity owner of the Company in respect of any LLC interests purchasable upon
the exercise of any part of the Option unless and until such LLC interests have
been purchased upon the exercise of the Option or portion thereof.

Section  4.4             Holding
Period/Put and Call Rights. 
Following the exercise of all or any part of the Option, the Company
shall, upon Grantee’s request made at any time on or after 185 days following
such exercise, purchase from Grantee for
cash at the then Fair
Market Value all or any portion of the LLC interests Grantee has acquired upon
exercise of the Option; provided, however,
that (a) in the event of the termination of Grantee’s employment with the
Company for any reason or in the event of any Change in Control Grantee’s put
right shall become immediately exercisable and (b) the Company shall have the
right to purchase from Grantee for cash
at the then Fair Market
Value all or any portion of the LLC interests Grantee has acquired upon
exercise of the Option.  In respect of
any such 185 day period, the Company shall pay Grantee an amount equal to (i)
the sum of (x) the exercise price plus (y) Grantee’s marginal federal income
tax rate times the amount of taxable income Grantee incurs upon such exercise,
multiplied by (ii) the then-current London Interbank Offered Rate for
similar principal amounts for the period from the exercise date to the date of
payment.

Section  4.5             Valuations.  At any time on or after March 2, 2007, unless
the Fair Market Value can be established pursuant to Section 1.5(a) or 1.5(b),
Grantee may demand in writing that the Company establish the Fair Market Value
pursuant to Section 1.5(c).  The
Company 

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may, at any time when the
Fair Market Value cannot be established
pursuant to Section 1.5(a) or 1.5(b), establish the Fair Market Value
pursuant to Section 1.5(c), but shall not do so within one year of a prior
valuation without the consent of the Grantee. 
In the event that a valuation is required under Section 1.5(c) in
connection with any transaction in which some of the assets and/or liabilities
of the Company are sold and Walter retains some of the assets and/or
liabilities of the Company, the Fair Market Value shall be the fair market
value of the proceeds received for the sale of such assets and liabilities plus
the net assets (or minus the net liabilities) retained by Walter.  Any calculation of the net assets or net
liabilities for purposes of the foregoing sentence shall be made by reference
to a balance sheet prepared on a consistent basis with the Reference Balance
Sheet.

Section
4.6             Restrictions on
Transfer.  Without limitation of
Grantee’s rights under Section 4.4 hereof, Grantee agrees not to sell, pledge,
hypothecate or transfer in any manner whatsoever any LLC Interests acquired
upon exercise of the Option, other than a testamentary transfer, without the
express written consent of the Company, which consent shall not be unreasonably
withheld; provided, however, that the consent of the Company shall not be
required (but prior notice shall be given by the Grantee to the
Company) (a) for a bona fide pledge of the LLC Interests as security
for a borrowing by Grantee from a financial institution engaged in the
day-to-day business of lending to individuals and (b) at any time when the
Company’s equity is publicly traded.

ARTICLE V.

OTHER AGREEMENTS

Section  5.1             Representations
and Warranties of Grantee.  By accepting this Agreement, Grantee
represents and warrants to the Company the following:

(a)  Grantee is accepting the Option solely for his own
account, as principal, without a view to, and not for resale in connection
with, any distribution or underwriting of it, and Grantee is not participating,
directly or indirectly, in any distribution or underwriting of the Option.  Grantee is not acquiring the Option as an
agent, nominee, or representative for the account or benefit of another person
or entity, and Grantee has not agreed or arranged to sell, assign, transfer,
subdivide, or otherwise dispose of all or any part of the Option to another
person or entity.

(b) Grantee
understands that (i) no state or federal agency has passed upon the Option or
made any finding or determination as to the fairness of the Option as an
investment, (ii) the Option has not been, and will not be, registered under
either the Securities Act, or any state securities law, and (iii) except as provided in Section 4.1, the Option cannot be offered for sale, sold,
assigned, foreclosed or otherwise transferred.

(c) Grantee
has been given adequate opportunity to evaluate this investment, including
opportunities to (i) examine the Company’s material books and records and all
material documents relating to this investment and the Plan, (ii) question
officers of the Company, (iii) obtain any additional information necessary to
evaluate the investment or to verify any information or representation
contained in the Plan, this Agreement or related documents, and 

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(iv) make such other investigation
that Grantee considered appropriate or necessary to evaluate the business and
financial affairs and condition of the Company.

(d) Grantee
has had access to all information regarding the Company and its present and
prospective businesses, assets, liabilities and financial condition that
Grantee considered important in making the decision to accept the Option.

(e)  Grantee is knowledgeable concerning the business of
the Company, and has carefully considered and understands the risks and other
factors affecting the suitability of the Option for him or her.  Additionally, Grantee has sufficient
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of his or her investment in the Option, on
the basis of his investment
experience, other business and professional experience and education.

(f)  Grantee understands that none of the Company,
Walter, their Subsidiaries, any officer or director of the Company, Walter or
any Subsidiary, or any professional advisor of the Company, Walter, or its
Subsidiaries (collectively, the “Protected Parties” and each a “Protected Party”),
makes any representation or warranty to Grantee with respect to, or assumes any
responsibility for, the tax consequences to Grantee with respect to the Option,
including, without limitation, the federal income tax consequences under
Section 409A of the Code.  Grantee
acknowledges that the Plan and the Option may be subject to Section 409A of the
Code and that his right to receive a payment with respect to the Option may be
delayed if his separation from service does not satisfy applicable rules
concerning payments following Grantee’s separation from service under Section
409A of the Code and that the Company intends to comply with all IRS reporting
requirements applicable to the Option. 
In the event that a payment to Grantee is delayed by virtue of Section
409A of the Code, the Company shall pay to Grantee an additional amount equal
to the amount of the delayed payment multiplied by the then-current London
Interbank Offered Rate for similar principal amounts for the period from the
exercise date to the date of payment.

(g)  Grantee has reviewed with his or her own tax
advisors the federal, state, and local tax consequences of participating in the
Plan, and Grantee relies solely on such advisors in respect of such matters.

Section 5.2             Release.  Grantee hereby irrevocably and
unconditionally releases each Protected Party from all liability for any
punitive, incidental, compensatory, consequential, or other damages or
obligations incurred by the Grantee for any act or omission in
respect of the Option by the Protected
Party (including the person’s own negligence), or by any agent, employee,
professional advisor, or other expert used or engaged by the Protected Party,
if the act or omission does not constitute gross negligence, willful misconduct
or a breach of the terms of this Agreement and is done or omitted in good faith, on behalf of the Company, and in a
manner believed by the Protected Party to be both in the best interests of the
Company and within the scope of the authority granted to the Protected Party by
the Plan; provided, however, notwithstanding the foregoing or any
representation or warranty made by Grantee in Section 5.1, the Company and
Walter shall not be released from liability to Grantee for any loss or damage
suffered by Grantee on account of breach by the Company or Walter of any
representation or warranty made by them in Section 5.3.

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Section 5.3     Representations
and Warranties of the Company and Walter. 
The Company and Walter represent and warrant to Grantee the following:

(a)           A valid election has been or will be
made under United States Treasury Regulation section 301.7701-3 to treat the
Company as a corporation for all federal tax purposes, and such election will
be continuously maintained in effect.

(b)           The Company is a limited liability
company duly and validly formed under applicable Delaware law.

(c)           The Reference Balance Sheet reflects
all the assets and liabilities of Walter’s Homebuilding and Financing
businesses as of March 1, 2006, and Walter has validly and effectively
transferred such businesses to the Company.

(d)           In
the event of a spin-off of the Company to the shareholders of Walter, the
capital of the Company shall be sufficient to support the operations of the
Company as a going concern and as a stand-alone public company.

(e)           The
Plan has been duly and properly adopted by the Company and approved by Walter.

ARTICLE VI.

MISCELLANEOUS

Section 6.1     Administration.  The Administrator shall have the power to
interpret this Agreement and to adopt such rules for the administration,
interpretation and application of this Option as are consistent therewith and
to interpret, amend or revoke any such rules. 
All actions taken and all interpretations and determinations made by the
Administrator in good faith shall be final and binding upon the Grantee, the
Company and all other interested persons. 
Neither the Administrator nor any member of the Board shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Option.

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Section 6.2     Transferability of Option. Neither
the Option nor any interest or right therein or part thereof shall be sold,
pledged, assigned, or transferred in any manner other than by will or the laws
of descent and distribution.  Neither the
Option nor any interest or right therein or part thereof shall be liable for
the debts, contracts or engagements of the Grantee or his 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 (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect,
except to the extent that such disposition is permitted by the preceding
sentence. In the event of a spin-off of the Company to the shareholders of
Walter, the Administrator shall adjust the Award under this Agreement into an
award of the Company at the time of such spin-off in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available with respect to this Award.

Section 6.3     Notices.  Any notice to be given under the terms of
this Agreement to the Company shall be addressed to the Company in care of its
Secretary, and any notice to be given to the Grantee shall be addressed to him
at the address reflected in the Company’s records.  By a notice given pursuant to this Section
6.3, either party may hereafter designate a different address for notices to be
given to him.  Any notice which is
required to be given to the Grantee shall, if the Grantee is then deceased, be
given to the Grantee’s personal representative if such representative has
previously informed the Company of his status and address by written notice
under this Section 6.3.  Any notice shall
be deemed duly given five (5) days after such notice is enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, and deposited as Certified
Mail or Registered Mail, Return Receipt Requested (with postage prepaid) in a
post office or branch post office regularly maintained by the United States
Postal Service; provided, however, that any notice to be given by the Grantee
relating to the exercise of the Option or any portion thereof shall be deemed
duly given upon receipt by the Secretary or his office.

Section 6.4     Entire Agreement.  This Agreement and the Plan constitute the
entire understanding between Grantee and the Company regarding the Option.  This Agreement and the Plan supersedes any
prior agreements, commitments or negotiations concerning the Option.

Section 6.5     Titles.  Titles are provided herein for convenience
only and are not to serve as a basis for interpretation or construction of this
Agreement.

Section 6.6     Construction.  This Agreement shall be administered,
interpreted and enforced under the internal laws of the State of Delaware
without regard to conflicts of laws thereof.

Section 6.7     Not a Registered Security.  The Grantee acknowledges that this Option is
a private contract and is not intended to conform to the provisions of the
Securities Act and the Exchange Act.

Section 6.8     Amendments or Terminations.  This Agreement and the Plan may be amended or
terminated without the consent of the Grantee provided that such amendment or
termination would not impair any rights of the Grantee under this
Agreement.  No amendment or termination
of this Agreement shall, without the consent of the Grantee, impair any rights
of the Grantee under this Agreement.

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IN
WITNESS WHEREOF, this Agreement has been executed and delivered by the parties
hereto.

	
   

  	
  JWH HOLDING COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  WALTER INDUSTRIES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its Sole Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its Vice Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
  WALTER INDUSTRIES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its: 

  	
   

  	
   

  
	
  [Grantee]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
								

 

 10Exhibit 10.2

THE 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

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(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 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.

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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1.19. “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.

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

(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.

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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 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.

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 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.  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 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.

 5
 

 

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.

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, 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) 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;

 6
 

 

(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;

(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.  Any such
restrictions shall be set forth in the respective Award Agreement.

 7
 

 

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.

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

 8
 

 

Committee.  At all times, any
committee appointed under this Section 7.5 shall serve in such capacity at the
pleasure of the Committee.

ARTICLE VIII.

MISCELLANEOUS PROVISIONS

8.1. Transferability of Awards.

(a)          Except as otherwise provided in Section
8.1(b):

(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 (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.

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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.

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, 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;

 10
 

 

(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 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, 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.

(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 the issuance, vesting, exercise or payment of 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 

 11
 

 

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 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.

 

 12

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