Document:

Exhibit 10.3

 

WALTER INDUSTRIES

EXECUTIVE DEFERRED COMPENSATION

AND

SUPPLEMENTAL RETIREMENT PLAN

 

AMENDED & RESTATED

AS OF

JANUARY 1, 2005

 

 

WARD ROVELL

TAMPA, FL

 

 

 

WALTER INDUSTRIES

EXECUTIVE DEFERRED COMPENSATION

AND

SUPPLEMENTAL RETIREMENT PLAN

 

Table of Contents

 

	
  Article

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  Administration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  Eligibility
  and Participation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  Deferral
  Elections and Supplemental Retirement Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  Participant
  Accounts and Investment of Deferred Amounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  Plan Distributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  Amendment
  and Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  Miscellaneous

  	
   

  

 

 

WALTER INDUSTRIES

EXECUTIVE DEFERRED COMPENSATION

AND

SUPPLEMENTAL RETIREMENT PLAN

 

PURPOSE

 

Walter Industries, Inc.
(the “Company”) previously established the Walter Industries Executive Deferred
Compensation Plan (the “Plan”) and the Walter Industries, Inc. Supplemental
Profit Sharing Plan (the “Supplemental Plan”) for a select group of key
management and highly compensated personnel to ensure that the Company’s and
its Related Employer’s compensation program will attract, retain and motivate
qualified personnel.  The Plan is hereby
amended and restated effective as of January 1, 2005 to provide for the
merger of the Supplemental Plan into the Plan and to rename the Plan the “Walter
Industries Executive Deferred Compensation and Supplemental Retirement Plan”.  The purpose of this Plan is to provide
certain key management and highly compensated employees who contribute or who
are expected to contribute substantially to the success of the Company and its
Related Employers with the opportunity to defer the receipt of compensation and
to permit certain employees of the Company and its Related Employers who
participate in the Walter Industries, Inc. Retirement Savings Plan to receive
contributions equal to amounts in excess of the limitations on contributions
imposed by Section 415 and 401(a)(17) of the Code, on defined contribution
plans.  The Plan is intended to be an
unfunded plan.

 

ARTICLE I

Definitions

 

(a)                                  “Account” or “Accounts” shall mean a Participant’s Deferred Compensation Account,
and/or Supplemental Retirement Account as described in Article V.  These Accounts are bookkeeping accounts that
represent a Participant’s hypothetical interest with respect to the amounts
credited to such Accounts in accordance with Article V.

 

(b)                                 “Board” or “Board of Directors”
shall mean the board of directors of the Company.

 

(c)                                  “Code” shall mean the Internal
Revenue Code of 1986, as amended.

 

(d)                                 “Company” shall mean Walter
Industries, Inc. and its successors.

 

(e)                                  “Compensation” shall mean the same
as “Compensation” under the Qualified Plan.

 

(f)                                    “Deferred Compensation Account”
shall mean the Account established pursuant to Article V, Section (a)(1), to hold Participant deferrals under the Plan.

 

I-1

 

(g)                                 “Effective Date” shall mean, for
purposes of this amendment and restatement, January 1, 2005.  The Plan was originally effective January 1,
2002.  The Walter Industries, Inc.
Supplemental Profit Sharing Plan was originally effective June 16, 1983.

 

(h)                                 “Key Employee” shall mean an
employee as defined in Section 416(i) of the Code, without regard to
paragraph (5) thereof.

 

(i)                                     “Participant” shall mean any
employee of the Company or a Related Employer who is covered by this Plan as
provided in Article III.

 

(j)                                     “Plan” shall mean the Walter
Industries Executive Deferred Compensation and Supplemental Retirement Plan
hereby amended and restated and as it may be further amended from time to time.

 

(k)                                  “Plan Administrator” shall mean the
Retirement Plans Administrative Committee that has been appointed from time to
time by the Board of Directors of the Company to serve as the Plan
Administrator for the Plan.

 

(l)                                     “Plan Year” shall mean the 12-month
period ending on December 31.

 

(m)                               “Qualified Plan” shall mean the
Walter Industries, Inc. Retirement Savings Plan, as amended, and each
predecessor, successor or replacement profit sharing arrangement.

 

(n)                                 “Qualified Plan Contribution” shall
mean the total of all profit sharing contributions and/or matching
contributions made by the Company or a Related Employer for the benefit of a
Participant as well as any forfeitures allocated to a Participant’s Account
under and in accordance with the terms of the Qualified Plan in any Plan Year.

 

(o)                                 “Related Employer” shall mean any
affiliate of the Company who adopts the Plan with the consent of the Company.

 

(p)                                 “Supplemental Retirement Account”
shall mean the Account established pursuant to Article V, Section (a)(2) to hold Supplemental Retirement Contributions.

 

(q)                                 “Supplemental Retirement Contribution”
shall mean the contribution made by the Company or a Related Employer for the
benefit of a Participant under and in accordance with the terms of the Plan in
any Plan Year.

 

I-2

 

ARTICLE II

Administration

 

(a)                                  Plan Administrator.  The Plan Administrator shall have complete
control and discretion to manage the operation and administration of the
Plan.  Not in limitation, but in
amplification of the foregoing, the Plan Administrator shall have the following
powers:

 

(1)                                  To
determine all questions relating to the eligibility of employees to participate
or continue to participate;

 

(2)                                  To
maintain all records and books of account necessary for the administration of
the Plan;

 

(3)                                  To
interpret the provisions of the Plan and to make and to publish such
interpretive or procedural rules as are not inconsistent with the Plan and
applicable law;

 

(4)                                  To
compute, certify and arrange for the payment of benefits to which any
Participant or beneficiary is entitled;

 

(5)                                  To process claims for benefits under the Plan by
Participants or beneficiaries;

 

(6)                                  To engage consultants and professionals to assist the Plan
Administrator in carrying out its duties under this Plan; and

 

(7)                                  To
develop and maintain such instruments as may be deemed necessary from time to
time by the Plan Administrator to facilitate payment of benefits under the
Plan.

 

(b)                                 Plan Administrator’s Authority.  The Plan Administrator may consult with
Company officers, legal and financial advisers to the Company and others, but
nevertheless the Plan Administrator shall have the full authority and
discretion to act, and the Plan Administrator’s
actions shall be final and conclusive on all parties.

 

(c)                                  Claims and Appeal Procedure for Denial of Benefits.

 

(1)                                  A
Participant or a beneficiary (“Claimant”) may file with the Plan Administrator
a written claim for benefits if the Participant or beneficiary determines the
distribution procedures of the Plan have not provided him his proper interest
in the Plan.  The Plan Administrator must
render a decision on the claim within a reasonable period of time of the
Claimant’s written claim for benefits. 
The Plan Administrator must provide adequate notice in writing to the
Claimant whose claim for benefits under the Plan the Plan Administrator has
denied.  The Plan Administrator’s notice
to the Claimant must set forth:

 

II-1

 

(A)                              The
specific reason for the denial;

 

(B)                                Specific
references to pertinent Plan provisions on which the Plan Administrator based
its denial;

 

(C)                                A
description of any additional material and information needed for the Claimant
to perfect his claim and an explanation of why the material or information is
needed; and

 

(D)                               That
any appeal the Claimant wishes to make of the adverse determination must be
made in writing to the Plan Administrator within sixty (60) days after receipt
of the Plan Administrator’s notice of denial of benefits.  The Plan Administrator’s notice must further
advise the Claimant that his failure to appeal the action to the Plan
Administrator in writing will render the Plan Administrator’s determination
final, binding and conclusive.  The Plan
Administrator’s notice of denial of benefits must identify the name and address
of the Plan Administrator to whom the Claimant may forward his appeal.

 

(2)                                  If
the Claimant should appeal to the Plan Administrator, he, or his duly
authorized representative, must submit, in writing, whatever issues and
comments he, or his duly authorized representative, believes are
pertinent.  The Claimant, or his duly
authorized representative, may review pertinent Plan documents.  The Plan Administrator will re-examine all
facts related to the appeal and make a final determination as to whether the
denial of benefits is justified under the circumstances.  The Plan Administrator must advise the
Claimant of its decision within a reasonable period of time of the Claimant’s
written request for review.

 

II-2

 

ARTICLE III

Eligibility and Participation

 

(a)                                  Eligibility.  The Plan Administrator, in its sole
discretion, shall determine those employees of the Company or a Related
Employer eligible to participate in the Plan. 
Accordingly, an employee of the Company or a Related Employer who, in
the opinion of the Plan Administrator based upon its then current guidelines,
has contributed or is expected to contribute significantly to the growth and
successful operations of the Company or a Related Employer and who meets any
additional criteria for eligibility that the Plan Administrator, in its sole
discretion, may adopt from time to time, will be eligible to become a
Participant with respect to deferrals in accordance with Article IV, Section (a).  Only those employees of the Company or
Related Employer determined to be eligible for the Plan by the Plan
Administrator who participate in the Qualified Plan and who are restricted by
the limitations on contributions imposed by Code Sections 415 and 401(a)(17) shall be eligible to participate in the Plan for
purposes of receiving Supplemental Retirement Contributions, if any.

 

(b)                                 Participation.  An eligible employee shall become a
Participant upon being notified by the Company.

 

III-1

 

ARTICLE IV

Deferral Elections and Supplemental Retirement Contributions

 

(a)                                  Deferral Procedures.

 

(1)                                  Any
Participant may elect to defer for any calendar year all or any portion of his
base salary and/or cash bonus payable during such calendar year as may be
permitted by the Plan Administrator in its discretion; provided, however, that
the minimum annual deferral amount from a Participant’s base salary shall be
$2,000.

 

(2)                                  Any
deferral election under this paragraph (a) shall be in writing, signed by the
Participant, and delivered to the Plan Administrator prior to January 1 of
the calendar year in which the compensation to be deferred is otherwise payable
to the Participant; provided, however, that within the 30-day period following
a Participant’s eligibility to participate in the Plan, he shall be permitted
to defer compensation payable subsequent to his deferral election.

 

(3)                                  A
Participant’s deferral election shall remain in effect until modified or
revoked.  Except as provided in
subparagraph (4) below, any modification or revocation will not be effective
until the January 1 next following the date the modification or revocation
is received by the Plan Administrator.

 

(4)                                  (A)                              If a
Participant suffers an unforeseeable emergency (as defined in paragraph (e) of Article VI),
determined in the discretion of the Plan Administrator, the Participant will be
permitted to revoke his deferral election for the remainder of the calendar
year in which it is determined by the Plan Administrator that the unforeseeable
emergency has occurred.

 

(B)                                A
Participant who revokes his deferral election pursuant to this subparagraph (4)
shall be eligible to make a new deferral election pursuant to the provisions of
paragraph (a)(2) above effective as of the January 1 that next follows the
effective date of the revocation of his deferral election under paragraph
(a)(4)(A) above.

 

(b)                                 Election Forms.  Any election by a Participant under this Article IV
shall be made on a form or forms prescribed by the Plan Administrator (the
terms of which are incorporated herein by reference), and shall specify the
amount of compensation to be deferred.

 

(c)                                  Revocation or Change.  Any permitted revocation of or change in any
deferral election under this Article IV shall be in writing and shall be
on such form as may be approved by the Plan Administrator.

 

IV-1

 

(d)                                 Supplemental Retirement Contributions.

 

(1)                                  For
any Plan Year, the Company or a Related Employer may, in its discretion, credit
a Participant with a Supplemental Retirement Contribution in an amount equal to
the difference between (1) and (2) below:

 

(A)                              The
Qualified Plan Contribution which would have been contributed to the Qualified
Plan on behalf of the Participant for the Plan Year without giving effect to
any reduction in the Qualified Plan Contribution required by the limitations
imposed by Code Sections 415 or 401(a)(17) on the Qualified Plan;

 

LESS

 

(B)                                The
amount of the Qualified Plan Contribution actually contributed to the Qualified
Plan on behalf of the Participant for the Plan Year.

 

(2)                                  Supplemental
Retirement Contributions made for the benefit of a Participant for any Plan
Year shall be credited to a Supplemental Retirement Contribution Account
maintained under the Plan in the name of such Participant within thirty (30)
days after the profit sharing contribution under the Qualified Plan is
allocated to the Participant’s accounts in the Qualified Plan.

 

IV-2

 

ARTICLE V

Participant Accounts and Investment of Deferred Amounts

 

(a)                                  In General.

 

(1)                                  Any
compensation deferred pursuant to Section (a) of Article IV of this
Plan shall be recorded by the Plan Administrator in a Deferred Compensation
Account maintained in the name of the Participant.  The Deferred Compensation Account shall be
credited with all amounts that have been deferred by the Participant during the
Plan Year pursuant to Article IV, Section (a), and such Account shall
be charged from time to time with amounts that are distributed to the
Participant from such Account.

 

(2)                                  Any
Supplemental Retirement Contributions credited pursuant to this Plan shall be
recorded by the Plan Administrator in a Supplemental Retirement Account
maintained in the name of the Participant. 
The Supplemental Retirement Account shall be credited with all
Supplemental Retirement Contributions that have been credited to the
Participant during the Plan Year pursuant to Article IV, and such Account
shall be charged from time to time with all amounts that are distributed to the
Participant from such Account.

 

(3)                                  All
amounts that are credited to a Participant’s Accounts shall be credited solely
for purposes of accounting and computation. 
A Participant shall not have any interest in or right to such Accounts
at any time.

 

(b)                                 Subject to Claims.  The Plan constitutes an unsecured promise by
the Company or Related Employer to pay benefits in the future.  Participants shall have the status of general
unsecured creditors of the Company or Related Employer.  The Plan is unfunded for Federal tax purposes
and for purposes of Title I of the Employee Retirement Income Security Act of
1974.  All amounts credited to a
Participant’s Accounts will remain the general assets of the Company or Related
Employer and shall remain subject to the claims of the Company’s or Related
Employer’s creditors until such amounts are distributed to the Participants.

 

(c)                                  Crediting of Interest.

 

(1)                                  The
Plan Administrator shall allow a Participant to make a hypothetical allocation
of the amounts credited to his Accounts among investment options/indices that
the Plan Administrator shall make available from time to time.  The Plan Administrator shall establish
procedures regarding Participant investment allocations as are necessary, which
procedures shall be communicated to the Participants.

 

(2)                                  A
Participant’s Accounts shall be credited at least monthly with interest equal
to the aggregate/weighted average return on the investment options/indices
selected by the Participant, less expenses.

 

V-1

 

(d)                                 Valuation; Annual Statement.  The value of a Participant’s Accounts shall
be determined by the Plan Administrator and the Plan Administrator may
establish such accounting procedures as are necessary to account for the
Participant’s interest in the Plan.  Each
Participant’s Account shall be valued as of the last day of each Plan Year or
more frequently as determined by the Plan Administrator.  The Plan Administrator shall furnish each
Participant with an annual statement of his Accounts.

 

(e)                                  Accounting Procedures.  The Plan Administrator shall establish such
accounting procedures as are necessary to implement the provisions of the Plan.

 

(f)                                    Establishment of Trust.

 

(1)                                  The
Company may establish one or more trusts located in the United States
substantially in conformance with the terms of the model trust described in
Revenue Procedure 92-64 to assist in meeting its obligations to Participants
under this Plan.  Except as provided in
paragraph (b) above and the terms of the trust agreement, any such trust or
trusts shall be established in such manner as to permit the use of assets
transferred to the trust and the earnings thereon to be used by the trustee
solely to satisfy the liability of the Company in accordance with the Plan.

 

(2)                                  The
Company, in its sole discretion, and from time to time, may make contributions
to the trust.  Unless otherwise paid by
the Company, all benefits under the Plan and expenses chargeable to the Plan
shall be paid from the trust.

 

(3)                                  The
powers, duties and responsibilities of the trustee shall be as set forth in the
trust agreement and nothing contained in the Plan, either expressly or by
implication, shall impose any additional powers, duties or responsibilities
upon the trustee.

 

V-2

 

ARTICLE VI

Plan Distributions

 

(a)                                  Timing of Payment.  In the case of a Participant who terminates
employment for any reason and is no longer employed by the Company, a Related
Employer or any member of the Company’s or Related Employer’s controlled group,
payment of the amounts credited to a Participant’s Accounts shall commence, in
the form described in paragraph (c) below, as soon as administratively
practicable following the date of termination. 
Notwithstanding the foregoing, Participants who are Key Employees of the
Company or a publicly traded Related Employer cannot commence distribution
until six months following termination of employment, or if earlier, upon
death.

 

(b)                                 Vesting of Amounts Credited to Participants.  A Participant shall be fully vested in all of
his Accounts at all times.

 

(c)                                  Form of Benefit Payment.

 

(1)                                  A
Participant shall elect one of the following forms of payment for his benefit
(other than the death benefit) upon commencing participation in the Plan:

 

(A)                              a
lump sum, or

 

(B)                                annual installments over a period of 5, 10 or 15 years.

 

(2)                                  In
the event a Participant elects installment payments, each such payment shall be
equal to the balance in the Participant’s Account as of the end of the
valuation date immediately preceding the date of payment, divided by the number
of payment years remaining (the “Factor”). 
For example: 

 

	
  5 Year Installment

  	
   

  	
  10 Year Installment

  	
   

  	
  15 Year Installment

  	
   

  
	
  Payment

  	
   

  	
  Factor

  	
   

  	
  Payment

  	
   

  	
  Factor

  	
   

  	
  Payment

  	
   

  	
  Factor

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  5

  	
   

  	
  1

  	
   

  	
  10

  	
   

  	
  1

  	
   

  	
  15

  	
   

  
	
  2

  	
   

  	
  4

  	
   

  	
  2

  	
   

  	
  9

  	
   

  	
  2

  	
   

  	
  14

  	
   

  
	
  3

  	
   

  	
  3

  	
   

  	
  3

  	
   

  	
  8

  	
   

  	
  3

  	
   

  	
  13

  	
   

  
	
  4

  	
   

  	
  2

  	
   

  	
  4

  	
   

  	
  7

  	
   

  	
  4

  	
   

  	
  12

  	
   

  
	
  5

  	
   

  	
  1

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  5

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  7

  	
   

  	
  4

  	
   

  	
  7

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  8

  	
   

  	
  3

  	
   

  	
  8

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  9

  	
   

  	
  2

  	
   

  	
  9

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  10

  	
   

  	
  1

  	
   

  	
  10

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  11

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  12

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  13

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  14

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  15

  	
   

  	
  1

  	
   

  

 

VI-1

 

(3)                                  At
least 13 months prior to the distribution of benefits, the Participant may,
subject to the approval of the Plan Administrator, modify his election as to
the form of benefit payment.

 

(4)                                  (A)                              (i)                                     Notwithstanding
the foregoing, at the time of each election to defer under paragraph (a) of Article IV,
a Participant may elect to receive a distribution of such deferred amounts
(plus earnings or losses thereon) in a lump sum as of a specified future
calendar year date.  The date of
distribution elected by the Participant shall be at least five full calendar
years following the Participant’s deferral election under this subparagraph.

 

(ii)                                  Any
distribution pursuant to this subparagraph shall be made as of January 1
of the calendar year selected by the Participant for the receipt of his
distribution.

 

(iii)                               A Participant may modify
each election made pursuant to this subparagraph (4) to provide for a later
calendar year distribution date; provided, however, that only one such
modification per election may be made. 
Such modification must be made at least 13 months prior to the original
specified calendar year date of distribution and such modified date must be at
least five full calendar years following the Participant’s original payment
date.

 

(B)                                If
the Participant terminates employment with the Company prior to the
distribution date or dates elected in accordance with subparagraph (4)(A)
above, then any such election or elections under subparagraph (4)(A) shall be
null and void and the Participant’s benefit shall be distributed in accordance
with the otherwise applicable provisions of the Plan.

 

(5)                                  Notwithstanding
subparagraph (2) above, if the value of the Participant’s Account is less than
$5,000 as of the valuation date coincident with or immediately preceding the
date the distribution of such Account is to commence, the amount credited to
the Participant’s Account shall be paid in the form of a lump sum.

 

(d)                                 Payment to Beneficiary.

 

(1)                                  If
the Participant dies before he has commenced receiving benefits under the Plan,
the death benefit shall be paid to his beneficiary or beneficiaries designated
to receive such benefits in a lump sum.

 

(2)                                  If
a Participant dies after benefits have commenced, but before he has received
all of his benefits under the Plan, all unpaid amounts shall be paid to his
beneficiary or beneficiaries in a lump sum.

 

VI-2

 

(3)                                  A
designation of beneficiaries shall be made on a form prescribed by and filed
with the Plan Administrator, and may be changed at any time by filing a new
form with the Plan Administrator.  If the
Participant has designated no beneficiary, or if no beneficiary that he has
designated survives him, then such unpaid amounts shall be paid to his
estate.  In the event of any dispute as
to the entitlement of any beneficiary, the Plan Administrator’s determination
shall be final, and the Plan Administrator may withhold any payment until such
dispute has been resolved.

 

(e)                                  Accelerated Distribution for Unforeseeable
Emergency.

 

(1)                                  If
a Participant suffers an unforeseeable emergency, the Plan Administrator may,
in its discretion, accelerate the distribution of all or a portion of the
amounts credited to his Accounts.  Any
such accelerated distribution shall be made in a lump sum as soon as
administratively practicable following a determination that the Participant has
incurred an unforeseeable emergency.  The
amount of any such distribution shall be limited to the amount necessary to
satisfy the emergency need, including any amounts necessary to pay any federal,
state or local income taxes reasonably anticipated to result from the
distribution.

 

(2)                                  For
this purpose, the term “unforeseeable emergency” shall mean a severe financial
hardship to the Participant resulting from the Participant’s illness or
accident or that of the Participant’s spouse and dependents as defined in Code Section 152(a),
an extraordinary and unforeseeable loss of the Participant’s property due to
casualty as a result of events beyond the Participant’s control, or other
similar extraordinary and unforeseeable events beyond the control of the
Participant, which events cannot reasonably be relieved by reimbursement (by
insurance or otherwise), liquidation of the Participant’s assets (to the extent
the liquidation would not in itself cause a financial hardship) or cessation of
deferrals under the Plan.

 

(f)                                    Change of Control.

 

(1)                                  If
at any time there is a Change of Control (as described below), the trustee
shall promptly pay to a Participant the balance of his Account in a lump sum.

 

(2)                                  For
purposes of this Plan, a “Change of Control” shall be deemed to have occurred
when: (i) securities of the Company representing 30% or more of the combined
voting power of the Company’s then outstanding voting securities are acquired
pursuant to a tender offer or an exchange offer by a person or entity which is
not a wholly-owned subsidiary of the Company or an affiliate of the Company;
(ii) the Company (or an affiliate thereof) executes an agreement the
consummation of which will result in a merger, reorganization or consolidation
in which the Company is a constituent corporation and which results in less
than 50% of the outstanding voting securities of the surviving or resulting
entity being owned by the then existing stockholders of the Company; (iii) the
Company (or an affiliate thereof) adopts a plan of liquidation or dissolution;
or (iv) the Company (or an

 

VI-3

 

affiliate thereof) executes an
agreement the consummation of which will result in a sale of substantially all
of the Company’s assets.  Notwithstanding
the foregoing, if a different definition of “Change of Control” is required by
the regulations interpreting the American Jobs Creation Act, that definition
shall apply in lieu of the above definition.

 

VI-4

 

ARTICLE VII

Amendment and Termination

 

(a)                                  In General.

 

(1)                                  The
Plan may be amended at any time, or from time to time, by the Company, and the
Plan may be terminated at any time by the Company.

 

(2)                                  Any
such amendment or termination shall be ratified and approved by the Company’s
Board of Directors.

 

(b)                                 Effect of Amendment or Termination.  No amendment or termination of the Plan shall
affect the rights of any Participant with respect to any amounts credited to
the Accounts of a Participant prior to such amendment or termination.  No distribution will be made upon Plan
termination unless permitted by law.  If
permitted by law, the Participants (or their beneficiaries) shall be paid the
balance of their Account in a lump sum upon Plan termination.

 

VII-1

 

ARTICLE VIII

Miscellaneous

 

(a)                                  Payments to Minors and Incompetents.  If the Plan Administrator receives
satisfactory evidence that a person who is entitled to receive any benefit
under the Plan, at the time such benefit becomes available, is a minor or is
physically unable or mentally incompetent to receive such benefit and to give a
valid release therefore, and that another person or an institution is then
maintaining or has custody of such person, and that no guardian committee, or
other representative of the estate of such person shall have been duly
appointed, the Plan Administrator may authorize payment of such benefit
otherwise payable to such person to such other person or institution; and the release
of such other person or institution shall be a valid and complete discharge for
the payment of such benefit.

 

(b)                                 Plan Not a Contract of Employment.  The Plan shall not be deemed to constitute a
contract between the Company or a Related Employer and any Participant, nor to be consideration for the employment of any
Participant.  Nothing in the Plan shall
give a Participant the right to be retained in the employ of the Company or a
Related Employer; all Participants shall remain subject to discharge or
discipline as employees to the same extent as if the Plan had not been adopted.

 

(c)                                  No Interest in Assets.  Nothing contained in the Plan shall be deemed
to give any Participant any equity or other interest in the assets, business or
affairs of the Company or a Related Employer. 
No Participant in the Plan shall have a security interest in assets of
the Company or a Related Employer used to make contributions or pay benefits.

 

(d)                                 Recordkeeping.  Appropriate records shall be maintained for
the Plan, subject to the supervision and control of the Plan Administrator.

 

(e)                                  Non-Alienation of Benefits.  No benefit under the Plan shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to do so shall be void.  No benefit under the Plan shall in any manner
be liable for or subject to the debts, contracts, liabilities, engagements or
torts of any person.  If any person
entitled to benefits under the Plan shall become bankrupt or shall attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any
benefit under the Plan, or if any attempt shall be made to subject any such
benefit to the debts, contracts, liabilities, engagements or torts of the
person entitled to any such benefit, except as specifically provided in the
Plan, then such benefits shall cease and terminate at the discretion of the
Plan Administrator.  The Plan
Administrator may then hold or apply the same or any part thereof to or for the
benefit of such person or any dependent or beneficiary of such person in such
manner and proportions as it shall deem proper.

 

(f)                                    State Law.  This Plan shall be construed in accordance
with the laws of Florida.

 

VIII-1

 

(g)                                 Corporate Successors.  The Plan shall not be automatically
terminated by a transfer or sale of assets of the Company or a Related Employer
or by the merger or consolidated of the Company or a Related Employer into or
with any other corporation or other entity, but the Plan shall be continued
after such sale, merger or consolidation only if and to the extent that the
transferee, purchaser or successor entity agrees to continue the Plan.  In the event that the Plan is not continued
by the transferee, purchaser or successor entity, then the Plan shall terminate
subject to the provisions of Article VII.

 

(h)                                 Liability Limited.  In administering the Plan, neither the Plan
Administrator nor any officer, director or employee thereof, shall be liable
for any act or omission performed or omitted, as the case may be, by such
person with respect to the Plan; provided, that the foregoing shall not relieve
any person of liability for gross negligence, fraud or bad faith.  The Plan Administrator, its officers, directors
and employees shall be entitled to rely conclusively on all tables, valuations,
certificates, opinions and reports that shall be furnished by any actuary,
accountant, trustee, insurance company, consultant, counsel or other expert who
shall be employed or engaged by the Plan Administrator in good faith.

 

(i)                                     Protective Provisions.  Each Participant shall cooperate with the
Plan Administrator by furnishing any and all information requested by the Plan
Administrator in order to facilitate the payment of benefits hereunder, taking
such physical examinations as the Plan Administrator may deem necessary and
taking such other relevant action as may be requested by the Plan
Administrator.  If a Participant refuses
so to cooperate or makes any material misstatement of information or
nondisclosure of medical history, then no benefits will be payable hereunder to
such Participant or his beneficiary, provided that, in the Plan Administrator’s
sole discretion, benefits may be payable in an amount reduced to compensate the
Company or a Related Employer for any loss, cost, damage or expense suffered or
incurred by the Company as a result in any way of such action, misstatement or
nondisclosure.

 

(j)                                     General Conditions.  Any Qualified Plan Contribution shall be made
solely in accordance with the terms and conditions of the Qualified Plan and
nothing in this Plan shall operate or be construed in any way to modify, amend
or affect the terms and provisions of the Qualified Plan.

 

(k)                                  Plan Benefits Not Compensation.  The benefit payable to an Employee under this
Plan shall not be deemed salary or other compensation for the purpose of
computing any benefit to which an Employee may be entitled under the Company’s
Qualified Plan, group insurance plan or any other benefit program maintained by
the Company.

 

VIII-2Exhibit
10.5

 

WALTER INDUSTRIES, INC.

SUPPLEMENTAL PENSION PLAN

 

1.                                       The purpose of
this Plan is to provide supplemental benefits for employees whose pension
benefits are limited by reason of the restrictions set forth in Sections 401
and 415 of the Internal Revenue Code.

 

2.                                       As used herein,
the term “Plan” shall mean the plan set forth herein; “Qualified Pension Plan”
shall mean the Pension Plan for Salaried Employees of Walter Industries, Inc.
Subsidiaries, Divisions and Affiliates (a plan “qualified” under Section 401(a)
of the Internal Revenue Code); “Year” shall mean the 12-month period ending on
each December 31; “Company” shall mean Walter Industries, Inc. and its
subsidiaries, divisions and affiliates.

 

3.                                       A supplemental
benefit shall be established under this Plan for each employee participating in
the Qualified Pension Plan whose benefit under said Plan has been reduced by
reason of the limitation set forth in Section 401(a)(17)
and/or Section 415(b) of the Internal Revenue Code.  The supplemental benefit shall be an amount
equal to the value of the amount of pension benefit the employee would have
been entitled to without regard to the limitations imposed by Sections 401 and
415 of the Internal Revenue Code less the actual amount of pension benefit he
will receive.

 

4.                                       The Company
shall not be required to fund the benefits payable under this Plan or to
segregate any of its assets for such purpose. 
If the Company elects to earmark any assets to pay the benefits provided
hereunder, title to and beneficial ownership of such assets shall at all times
remain in the Company and employees shall not have any property interest
whatsoever in such assets.

 

5.                                       Upon termination
of employment, including termination due to death, an employee (or, in the case
of death, his designated beneficiary) shall be entitled to receive the
supplemental benefit described in paragraph 3 above, the payment of which shall
be subject to the same elections and options applicable to the benefits payable
from the Qualified Pension Plan. 
However, the Company may, in its sole discretion, elect to furnish any
and all benefits due under this Plan by purchasing annuities, or by other means
at its disposal, including payment of the present value of such benefits.

 

6.                                       When an employee’s
participation herein begins the employee shall be informed of such
participation and shall be given a copy of the Plan.

 

7.                                       Nothing
contained in this Plan and no action taken pursuant to the provisions of this
Plan shall be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any employee, his designated beneficiary
or any other person.

 

 

8.                                       If an employee
has not designated a beneficiary under this Plan, his beneficiary hereunder
shall be deemed to be the same as his designated beneficiary under the
Qualified Pension Plan.

 

9.                                       Nothing
contained herein shall be construed as conferring upon an employee the right to
continue in the employ of the Company as an executive or in any other capacity.

 

10.                                 The benefit payable to
an employee under this Plan shall not be deemed salary or other compensation
for the purpose of computing any benefit to which an employee may be entitled
under any other benefit programs.

 

11.                                 The Executive
Compensation Committee (“Committee”) of the Board of Walter Industries, Inc.
shall have full power and authority to interpret, construe and administer this
Plan, and its interpretations and construction thereof, including the amount or
recipient of the payment to be made therefrom, shall be binding and conclusive
on all persons for all purposes.  No
member of the Committee shall be liable to any person for any action taken or
omitted in connection with the interpretation and administration of this Plan
unless attributable to his own willful misconduct or lack of good faith.

 

12.                                 This Plan shall be
construed in accordance with and governed by the laws of the State of Florida.

 

13.                                 The use of the
masculine gender herein shall be deemed to include the feminine gender.

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