Document:

Exhibit 10.9

 

Walter Industries, Inc.

Long-Term Incentive Award Plan

Restricted Stock Unit Award Agreement

 

THIS
AGREEMENT, effective as of the Date of Grant set forth below,
represents a grant of restricted stock units (“RSUs”) by Walter Industries,
Inc., a Delaware corporation (the “Company”), to the Participant named below,
pursuant to the provisions of the Amended 1995 Long-Term Incentive Stock Plan
of Walter Industries, Inc. (the “Plan”). You have been selected to receive a
grant of RSUs pursuant to the Plan, as specified below.

 

The Plan provides a
complete description of the terms and conditions governing the grant of RSUs.  If there is any inconsistency between the
terms of this Agreement and the terms of the Plan, the Plan’s terms shall
completely supersede and replace the conflicting terms of this Agreement.  All capitalized terms shall have the meanings
ascribed to them in the Plan, unless specifically set forth otherwise herein.

 

Participant:
«FirstName» «MI» «LastName»

 

Date of
Grant: << date>>

 

Number of
RSUs Granted: «RSU_Shares»

 

Purchase
Price: None

 

Annual
Share Price Targets:

 

	
  First Anniversary

  	
  $

  
	
  Second Anniversary

  	
  $

  
	
  Third Anniversary

  	
  $

  
	
  Fourth Anniversary

  	
  $

  
	
  Fifth Anniversary

  	
  $

  
	
  Sixth Anniversary

  	
  $

  
	
  Seventh Anniversary

  	
  $

  

 

The parties hereto agree
as follows:

 

1.                                      Employment
with the Company.  Except as may
otherwise be provided in Section 6, the RSUs granted hereunder are granted
on the condition that the Participant remains an Employee of the Company or its
Subsidiaries from the Date of Grant through (and including) the vesting date,
as set forth in Section 2 (referred to herein as the “Period of
Restriction”).

 

This grant of RSUs shall
not confer any right to the Participant (or any other Participant) to be
granted RSUs or other Awards in the future under the Plan.

 

1

 

2.                                      Vesting.
 RSUs shall vest one hundred percent
(100%) at the end of the seventh anniversary following the Date of Grant;
provided, however, if the predetermined Annual Share Price Targets (as set
forth on page 1) are achieved and you remain employed by the Company, vesting
of the RSUs shall accelerate as follows:

 

(a)                                  Twenty-five
percent (25%) of the total number of RSUs granted shall vest on the first
anniversary of the Date of Grant (i.e., you must be employed by the Company on
such anniversary date and achieve the Annual Share Price Target to vest) if the
closing price of the Company’s stock is at least equal to <<  >>dollars and <<  >>cents
($  ) for any period of sixty (60) consecutive calendar days during
the calendar year preceding the first anniversary.

 

(b)                                 Fifty
percent (50%) of the total number of RSUs granted, less the number of any RSUs
previously vested, shall vest on the second anniversary of the Date of Grant
(i.e., you must be employed by the Company on such anniversary date and achieve
the Annual Share Price Target to vest) if the closing price of the Company’s
stock is at least equal to << >> dollars and << >>
cents ($   ) for any period of sixty (60) consecutive calendar
days preceding the second anniversary.

 

(c)                                  Seventy-five
percent (75%) of the total number of RSUs granted, less the number of any RSUs
previously vested, shall vest on the third anniversary of the Date of Grant
(i.e., you must be employed by the Company on such anniversary date and achieve
the Annual Share Price Target to vest) if the closing price of the Company’s
stock is at least equal to << >> dollars and << >>
cents ($   ) for any period of sixty (60) consecutive calendar
days preceding the third anniversary.

 

(d)                                 One
hundred percent (100%) of the total number of RSUs granted, less the number of
any RSUs previously vested, shall vest on the fourth anniversary of the Date of
Grant (i.e., you must be employed by the Company on such anniversary date and
achieve the Annual Share Price Target to vest) if the closing price of the
Company’s stock is at least equal to << >> dollars and
<< >> cents ($   ) for any period of sixty (60)
consecutive calendar days preceding the fourth anniversary.

 

(e)                                  One
hundred percent (100%) of the total number of RSUs granted, less the number of
any RSUs previously vested, shall vest at any time up to and including the
fifth anniversary of the Date of Grant if the closing price of the Company’s
stock is at least equal to << >> dollars and << >>
cents ($   ) for any period of sixty (60) consecutive calendar
days preceding the fifth anniversary.  Unless
otherwise elected in a properly executed Deferral Election Form, payout will
occur as soon as administratively feasible after fulfilling the Annual Share
Price Target goal.

 

2

 

(f)                                    One
hundred percent (100%) of the total number of RSUs granted, less the number of
any RSUs previously vested, shall vest at any time up to and including the
sixth anniversary of the Date of Grant if the closing price of the Company’s
stock is at least equal to << >> dollars and << >>
cents ($   ) for any period of sixty (60) consecutive calendar
days preceding the sixth anniversary.  Unless
otherwise elected in a properly executed Deferral Election Form, payout will
occur as soon as administratively feasible after fulfilling the Annual Share
Price Target goal.

 

(g)                                 One
hundred percent (100%) of the total number of RSUs granted, less the number of
any RSUs previously vested, shall vest at any time up to and including the
seventh anniversary of the Date of Grant if the closing price of the Company’s
stock is at least equal to << >> dollars and << >>
cents ($   ) for any period of sixty (60) consecutive calendar
days preceding the seventh anniversary.  Unless
otherwise elected in a properly executed Deferral Election Form, payout will
occur as soon as administratively feasible after fulfilling the Annual Share
Price Target goal.

 

The following table summarizes
the vesting treatment of a hypothetical grant of 1,000 RSUs, based upon whether
or not annual Share Price Targets are achieved.

 

	
  Earliest Date on Which RSUs Vest

  	
   

  	
  Number of RSUs That Vest

  	
   

  
	
   

  	
  If Share Price

  Targets Achieved

  	
   

  	
  If Share Price

  Targets Not Achieved

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First anniversary of Date of Grant

  	
   

  	
  250

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Second anniversary of Date of Grant

  	
   

  	
  500 less RSUs
  previously vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Third anniversary of Date of Grant

  	
   

  	
  750 less RSUs
  previously vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fourth anniversary of Date of Grant

  	
   

  	
  1,000 less RSUs
  previously vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fifth anniversary of Date of Grant

  	
   

  	
  1,000 less RSUs
  previously vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sixth anniversary of Date of Grant

  	
   

  	
  1,000 less RSUs
  previously vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Seventh anniversary of Date of Grant

  	
   

  	
  1,000 less RSUs
  previously vested

  	
   

  	
  1,000

  	
   

  

 

3.                                      Timing
of Payout.  Payout of all RSUs shall
occur as soon as administratively feasible after vesting, unless a Participant
elects to defer the payout of RSUs upon vesting by completing in writing and
returning to the Company an irrevocable deferral election form within six (6)
months of the Date of Grant.

 

4.                                      Form
of Payout.  Vested RSUs will be paid
out solely in the form of shares of stock of the Company.

 

5.                                      Voting
Rights and Dividends.  Until such
time as the RSUs are paid out in shares of Company stock, the Participant shall
not have voting rights.  Further, no
dividends shall be paid on any RSUs.

 

3

 

6.                                      Termination
of Employment.  In the event of the
Participant’s termination of employment with the Company or its Subsidiaries
for any reason during the Period of Restriction, all RSUs held by the
Participant at the time of employment termination and still subject to
the Period of Restriction shall be forfeited by the Participant to the
Company.  However, the Committee may, in
its sole discretion, vest all or any portion of the RSUs held by the
Participant.  For all previously vested
RSUs that have been properly deferred, payout shall occur upon the earlier to
occur of the elected deferred vesting date or the date of your employment
termination for any reason.

 

7.                                      Change
in Control.  Notwithstanding anything
to the contrary in this Agreement, in the event of a Change in Control of
the Company during the Period of Restriction and prior to the Participant’s
termination of employment, the Period of Restriction imposed on the RSUs shall
immediately lapse, with all such RSUs vesting subject to applicable federal and
state securities laws.

 

8.                                      Restrictions
on Transfer.  Unless and until actual
shares of stock of the Company are received upon payout, RSUs granted pursuant
to this Agreement may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated (a “Transfer”), other than by will or by the laws of
descent and distribution, except as provided in the Plan.  If any Transfer, whether voluntary or
involuntary, of RSUs is made, or if any attachment, execution, garnishment, or
lien shall be issued against or placed upon the RSUs, the Participant’s right
to such RSUs shall be immediately forfeited by the Participant to the Company,
and this Agreement shall lapse.

 

9.                                      Recapitalization.
 In the event of any change in the
capitalization of the Company such as a stock split or a corporate transaction
such as any merger, consolidation, separation, or otherwise, the number and
class of RSUs subject to this Agreement may be equitably adjusted by the
Committee, in its sole discretion, to prevent dilution or enlargement of rights.

 

10.                               Beneficiary
Designation.  The Participant may,
from time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under this Agreement is to be
paid in case of his or her death before he or she receives any or all of such
benefit.  Each such designation shall
revoke all prior designations by the Participant, shall be in a form prescribed
by the Company, and will be effective only when filed by the Participant in
writing with the Secretary of the Company during the Participant’s lifetime.  In the absence of any such designation,
benefits remaining unpaid at the Participant’s death shall be paid to the
Participant’s estate.

 

11.                               Continuation
of Employment.  This Agreement shall
not confer upon the Participant any right to continue employment with the
Company or its Subsidiaries, nor shall this Agreement interfere in any way with
the Company’s or its Subsidiaries’ right to terminate
the Participant’s employment at any time.

 

4

 

12.                               Miscellaneous.

 

(a)                                  This
Agreement and the rights of the Participant hereunder are subject to all the
terms and conditions of the Plan, as the same may be amended from time to time,
as well as to such rules and regulations as the Committee may adopt for
administration of the Plan.  The
Committee shall have the right to impose such restrictions on any shares
acquired pursuant to this Agreement, as it may deem advisable, including,
without limitation, restrictions under applicable federal securities laws,
under the requirements of any stock exchange or market upon which such shares
are then listed and/or traded, and under any blue sky or state securities laws
applicable to such shares.  It is
expressly understood that the Committee is authorized to administer, construe,
and make all determinations necessary or appropriate to the administration of
the Plan and this Agreement, all of which shall be binding upon the
Participant.

 

(b)                                 The
Committee may terminate, amend, or modify the Plan; provided, however, that no
such termination, amendment, or modification of the Plan may in any material
way adversely affect the Participant’s rights under this Agreement, without the
written consent of the Participant.

 

(c)                                  The
Participant may elect, subject to any procedural rules adopted by the
Committee, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold and sell shares having an
aggregate Fair Market Value on the date the tax is to be determined, equal to
the amount required to be withheld.

 

The Company shall have the power and the right to
deduct or withhold from the Participant’s compensation, or require the
Participant to remit to the Company, an amount sufficient to satisfy federal,
state, and local taxes (including the Participant’s FICA obligation), domestic
or foreign, required by law to be withheld with respect to any payout to the
Participant under this Agreement.

 

(d)                                 The
Participant agrees to take all steps necessary to comply with all applicable
provisions of federal and state securities laws in exercising his or her rights
under this Agreement.

 

(e)                                  This
Agreement shall be subject to all applicable laws, rules, and regulations, and
to such approvals by any governmental agencies or national securities exchanges
as may be required.

 

(f)                                    All
obligations of the Company under the Plan and this Agreement, with respect to
the RSUs, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company.

 

(g)                                 To
the extent not preempted by federal law, this Agreement shall be governed by,
and construed in accordance with, the laws of the state of Delaware.

 

5

 

IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed effective as of the Date of
Grant.

 

	
   

  	
  Walter
  Industries, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Chairman,
  President, and Chief

  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Participant

  
					

 

6Exhibit 10.10

 

NON-STATUTORY STOCK OPTION AGREEMENT

 

AGREEMENT dated <<   >> (hereinafter sometimes called the
Grant Date) between Walter Industries, Inc., a Delaware corporation having its
principal executive offices at 4211 W. Boy Scout Blvd., Tampa, Florida 33607
(hereinafter called the Company), and «First_Name»«MI». «Last_Name»
(hereinafter called the Employee).

 

WHEREAS, the Employee is a key employee of the
Company and the Company, in consideration of the Employee’s continued
employment by the Company or a subsidiary corporation, desires to grant the
Employee the right and option to purchase shares of common stock, par value
$.01 per share, of the Company (hereinafter called Common Stock) on the terms
and conditions set forth in this Agreement;

 

NOW, THEREFORE, it is agreed hereby as follows:

 

1.                                       (a)                                  The
Company hereby grants to the Employee the right and option (hereinafter called
the Option) to purchase from the Company at a price of $ << >> per
share an aggregate number of «Target_NQ_Stock_Options»
shares of Common Stock (hereinafter called the Option Shares).  The Option shall be exercisable only in
accordance with the terms and conditions set forth in this Agreement.

 

(b)                                 The Option may not be
exercised at any time for a fractional share nor for fewer than 100 shares,
unless fewer than 100 shares remain subject to the Option at such time, in
which case the Option may be exercised for the full
balance of the shares which remain subject to the Option at such time.

 

2.                                       (a)                                  In no event shall the Option be exercisable after the tenth
anniversary of the Grant Date (the ten year period extending from the Grant
Date to (and including) the tenth anniversary of the Grant Date being
hereinafter called the Option Term).

 

(b)                                 Subject to
subparagraph 2(a) and the other provisions of this Agreement, the Option may be
exercised at any time or from time to time during the Option Term, provided
that (i) the Employee shall have been in the continuous employ of the Company
or a subsidiary during the entire period extending from the Grant Date to (and
including) the date of exercise, and (ii) the Option may not be exercised with
respect to (A) any of the Option Shares until the first anniversary of the
Grant Date, nor (B) more than one-third of the Option Shares prior to the
second anniversary of the Grant Date, nor (C) more than two-thirds of the
Option Shares prior to the third anniversary of the Grant Date.

 

3.                                       (a)                                  If the Employee’s employment with the Company and its
subsidiaries shall terminate within the Option Term for cause, the Option shall
terminate in all respects coincident with such termination of employment.

 

1

 

(b) 
(i)  If the Employee’s employment
with the Company and its subsidiaries shall terminate during the Option Term as
a result of the Employee’s “Retirement” (as defined in subparagraph 3(d)
hereof), death or disability, then (A) the Employee or the person or persons to
whom the Option shall have been transferred by will or the laws of descent and
distribution, or the Employee’s legal representative, shall have the right,
subject to the provisions of subparagraph 3(e) below, within three years from
the date on which the Employee’s employment with the Company and its
subsidiaries terminated as a result of Retirement, death or disability, to
exercise the unexercised portion of the Option, but only to the extent, if any,
that the Employee was entitled to exercise it pursuant to subparagraph 2(b)
above immediately prior to such termination of employment, and (B) the Option
shall terminate in all respects at the expiration of such three year period or,
if sooner, at the expiration of the Option Term.

 

(ii)  If the Employee shall die during the three
year period following the termination of the Employee’s employment as a result
of Retirement or disability, or during the three-months’ period following the
termination of the Employee’s employment for any reason other than cause,
Retirement, death or disability, then (A) the person or persons to whom the
Option shall have been transferred by will or the laws of descent and
distribution, or the legal representative of the Employee’s estate, shall have
the right, subject to the provisions of subparagraph 3(e) below, within three
years from the date of the Employee’s death, to exercise the unexercised
portion of the Option, but only to the extent, if any, that the Employee was
entitled to exercise it pursuant to subparagraph 3(b)(i) above or subparagraph
3(c) below immediately prior to the Employee’s death, and (B) the Option shall
terminate in all respects at the expiration of such three year period or, if
sooner, at the expiration of the Option Term.

 

(c)  If the Employee’s employment with the Company
and its subsidiaries shall terminate during the Option Term for any reason not
covered by the preceding provisions of this paragraph 3 (i.e., for any reason
other than cause, Retirement, death or disability), (i) the Employee, subject
to the provisions of subparagraphs 2(a) and 3(b)(ii), shall have the right, at
any time during the three months’ period ending at the close of the 90th day
after the Employee’s last day of employment with the Company and its
subsidiaries, to exercise the unexercised portion of the Option to the extent,
if any, that the Employee was entitled to do so pursuant to subparagraph 2(b)
above immediately prior to such termination of employment, and (ii) the Option
shall terminate in all respects at the expiration of such three months’ period
or, if sooner, at the expiration of the Option Term.

 

(d)  Whether
the Employee’s absence from employment by reason of illness, military or
government service or other causes shall constitute termination of employment,
and whether the termination of Employee’s employment shall be for cause or
disability, shall be determined by, and in the sole discretion of, the
Compensation Committee (as defined in subparagraph 13(b) hereof), whose
determination shall be final, binding and conclusive on the Employee, on any
person or entity claiming under or through the Employee, and on all other
interested parties, including the Company. 
For all purposes of this paragraph 3, “Retirement” shall mean
termination of the Employee’s employment with the Company and its subsidiaries
(i) other than for cause,

 

2

 

and
(ii) either (A) on or after the date on which the Employee attains the age of
sixty (60), or (B) on a date on which the sum of the Employee’s age and
completed years of employment with the Company and its subsidiaries is at least
eighty (80).

 

(e)  No provision of this Agreement, including but
not limited to this paragraph 3, shall be deemed to extend the Option
Term.  Any provision of this Agreement to
the contrary notwithstanding, (i) in no event shall the Option be exercisable
after the expiration of the Option Term, and (ii) in no event shall the Option
be exercisable more than three months after termination of the Employee’s
employment with the Company and its subsidiaries, except in the event of the
Retirement, death or disability of the Employee, as provided in subparagraph
3(b) above.

 

4.                                       Any
provision of this Agreement to the contrary notwithstanding, in no event
(whether before or after termination of employment) shall the Employee be
entitled to exercise the Option unless the Employee shall have refrained, at
all times prior to such exercise, from conduct which the Compensation Committee
determines in its sole discretion is contrary to the best interests of the
Company, including but not limited to competition with the Company.

 

5.                                       The
Option may be exercised by written notice signed by the Employee or, in the
event of the Employee’s death, by the person or persons entitled to exercise
the same under this Agreement, and delivered to the Secretary of the Company at
the Company’s principal executive offices at the address set forth above,
specifying the number of Option Shares in respect of which the Option is being
exercised.  Upon such exercise, payment
of the full purchase price for the shares so specified shall be made by tendering
to the Company cash, certified check, bank draft, postal or express money
order, personal check (subject to collection), whole shares of Common Stock
already owned by the Employee, or a combination of the foregoing forms of
payment, or by delivering to the Company a properly executed exercise notice
together with irrevocable instructions to a stockbroker that the Company
determines satisfies the provisions of section 220.3(e)(4) (or a successor
provision) of Regulation T promulgated by the Board of Governors of the Federal
Reserve System (hereinafter referred to as Regulation T) and such other
criteria as the Company may in it sole discretion establish, provided that (a)
in no event shall the sum of the cash, certified check, bank draft, postal or
express money order, personal check (subject to collection) and the fair market
value on the date of such exercise of any shares with which such purchase price
is paid be less than the full purchase price, and (b) the Committee may, but
need not, at any time or from time to time, without advance notice to the
Employee, direct (or rescind any direction) that shares of Common Stock
tendered in payment of all or part of the purchase price of the Option shall
have been owned by the Employee for a specified period of time prior to such
tender.  Neither the Employee nor the
Employee’s legal representative, legatee(s) or distributee(s), as the case may
be, will be, or will be deemed to be a holder of any shares pursuant to the
exercise of an Option until the date of the issuance of a stock certificate for
such shares.  Notice of exercise shall be
deemed to have been delivered and the Option duly exercised in respect of the
shares specified in the notice if and when such notice is received by the
Secretary of the Company and payment in cash or in the form of a certified
check, bank draft or postal

 

3

 

or express money order,
or in the form of a personal check subject to collection, or in the form of a
certificate or certificates, properly endorsed, for whole shares of Common
Stock that have been held for such period of time, if any, prior to the
delivery as the Committee may direct, or in a combination of the foregoing
forms of payment, shall have been mailed by registered or certified mail to the
executive offices of the Company, attention of the Secretary of the Company, or
shall have been received by the Secretary of the Company, or when the properly
executed exercise notice and irrevocable instructions to a stockbroker that the
Company determines satisfies the provisions of Regulation T and such other
criteria as the Company may establish have been received by the Secretary of
the Company.  It shall be a condition of
the delivery by the Company of the certificate for the shares in respect of
which the Option shall have been exercised that provision shall have been made
for payment of any taxes that the Company determines are required to be
withheld.

 

6.                                       The
Employee agrees that if, in the opinion of counsel for the Company, such
representation(s), or evidence may be required by law, there shall be delivered
to the Company (a) a representation in writing signed by the person or persons
who shall exercise the Option, and such other evidence as may reasonably be
required by counsel for the Company, that such shares of stock are being
acquired for investment and not for resale or distribution, and (b) such other
representation(s) or evidence as in the opinion of counsel is necessary to
satisfy the requirements of any federal or state law at the time in effect
relating to the acquisition of shares to which the Option relates.

 

7.                                       The
Option is not transferable by the Employee otherwise than by will or the laws
of descent and distribution and is exercisable, during the Employee’s lifetime,
only by the Employee.  Once transferred
by will or by the laws of descent and distribution, the Option shall not be
further transferable.  Any transferee of
the Option must take the Option subject to the terms and conditions of this
Agreement.  No such transfer of the
Option shall be effective to bind the Company unless the Company shall have
been furnished with written notice thereof, if by will, with a copy of the
Employee’s will, and with such evidence as counsel for the Company may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee(s) of the terms and conditions of this Agreement.  No sale, assignment, transfer or other
disposition of the Option, whether voluntary or involuntary, by operation of
law or otherwise, except a transfer by the Employee by will or by the laws of
descent and distribution, shall vest in the purported assignee or transferee
any interest or right hereunder whatsoever.

 

8.                                       The
Employee shall have no rights as a stockholder with respect to any share
subject to the Option until the Employee shall have become the holder of record
of such share and, subject to the provisions of paragraph 10 hereof, no
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash or securities or other property) or other distributions or other rights in
respect of such share as to which the record date therefor is prior to the date
upon which the Employee shall become the holder of record of such share.

 

4

 

9.                                       The
existence of the Option shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company’s capital
structure or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, 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.

 

10.                                 If
all or any portion of the Option shall be exercised subsequent to any stock
dividend, split-up, spin-off, recapitalization, merger, consolidation,
combination or exchange of shares, reorganization or liquidation occurring
after the date hereof, as a result of which shares of any class or other
property shall be issued in respect of outstanding shares of Common Stock, or
shares of Common Stock shall be changed into the same or a different number of
shares of the same or another class or classes, the person(s) so exercising the
Option shall receive, for the aggregate price paid upon such exercise, the
aggregate number and class of shares and amount of property which, if shares of
Common Stock (as authorized at the date hereof) had been purchased at the date
hereof for the same aggregate price (on the basis of the price per share set
forth in paragraph 1(a) hereof) and had not been disposed of, such person(s)
would be holding, at the time of such exercise, as a result of such purchase
and all such stock dividends, split-ups, spin-offs, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, reorganizations or
liquidations; provided, however, that no fractional shares shall be issued upon
any such exercise, and the aggregate price paid shall be appropriately reduced
on account of any fractional share not issued. 
No adjustment shall be made in the minimum number of shares which may be
purchased at any one time, as fixed by paragraph 1(b) hereof.

 

11.                                 Neither
this Agreement nor any provision hereof shall be deemed to create any
limitation or restriction upon the right of the Company to terminate the
employment of the Employee at any time with or without cause.

 

12.                                 The
exercise of the Option shall be subject to all requirements as to (a) the
listing, registration or qualification of the Option Shares for trading on any
securities exchange or securities trading system on which shares of the Common
Stock are listed or traded or under any applicable federal or state law, and
(b) the consent or approval of any governmental regulatory body determined by
the Compensation Committee, in its sole discretion, to be necessary or
desirable, and anything in this Agreement to the contrary notwithstanding, the
Option may not be exercised in whole or in part unless and until the Company
has been able to comply with all such requirements free of any conditions not
acceptable to the Committee.  The Company
shall make reasonable efforts at its own cost to comply with all such
requirements.

 

5

 

13.                                 As used in this Agreement:

 

(a)                                  With
reference to employment with the Company, the term “Company” shall be deemed to
include any successor to the Company, whether by merger, consolidation or
otherwise, including any entity which acquires all or substantially all of the
assets of the Company, and any corporation now or hereafter a subsidiary
corporation of the Company, as that term is used in Section 424 of the
Internal Revenue Code of 1986, as amended, as well as any entity in which the
Company or its subsidiaries owns 50% or more of the equity; and

 

(b)                                 The
term “Compensation Committee” shall mean the Compensation Committee of the
Board of Directors of the Company or such other committee as such Board may
appoint to administer the plan under which the Option was granted.

 

14.                                 Any dispute or
disagreement which shall arise under or as a result of this Agreement shall be
determined by the Compensation Committee in its sole discretion.  The Compensation Committee shall have the
power to administer, interpret and construe all the provisions of this
Agreement.  Any such determination by the
Compensation Committee, and any administration, interpretation or construction
of the provisions of this Agreement by the Compensation Committee shall be
final, binding and conclusive on all interested parties.

 

15.                                 This Agreement shall be
binding upon and inure to the benefit of any successor(s) of the Company and
the person(s) to whom the Option may have been transferred by will or the laws
of descent and distribution.  All
agreements by the Employee hereunder shall, in the event of the Employee’s
death, be deemed to refer to, and be binding upon, such last-mentioned
person(s).

 

16.                                 The Option has been
granted pursuant to and subject to the provisions of the Amended 1995 Long-Term
Incentive Stock Plan of the Company (the Plan), which is enclosed with this
Agreement and hereby incorporated herein by this reference.  Any provision of this Agreement to the
contrary notwithstanding, each and every provision of this Agreement shall be
subject to the terms and conditions of the Plan.

 

17.                                 The Option is not
intended to be an incentive stock option within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended.  Each and every provision of this Agreement
shall be administered, construed and interpreted so that the Option shall not
be treated for Federal income tax purposes as such an incentive stock option,
and any provision of this Agreement that cannot be so administered, construed
and interpreted shall be disregarded.

 

18.                                 This
Agreement may only be amended in writing signed by the Employee and an officer
of the Company duly authorized to do so.

 

6

 

IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed in its corporate name by one of its officers thereunto
duly authorized and its seal to be hereunto affixed and to be duly attested,
and the Employee has executed this Agreement as of the day and year first above
written.

 

 

	
   

  	
  WALTER
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Don DeFosset

  	
   

  
	
   

  	
  Chairman,
  President and Chief

  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Employee

  

 

Plan enclosed

 

7

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