8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 13, 2007

WALTER INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-13711	13-3429953
(State or other jurisdiction of	(Commission	(IRS Employer
incorporation or organization)	File Number)	Identification No.)
4211 W. Boy Scout Boulevard, Tampa, Florida		33607
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code: (813) 871-4811
NOT APPLICABLE
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13-4(c))

Item 5.02Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 13, 2006, Mr. Joseph B. Leonard informed Walter Industries, Inc. (the “Company”) that he would not stand for re-election to the Board of Directors of the Company effective at the Company’s annual meeting of stockholders to be held on April 25, 2007. Mr. Leonard has served on the Company’s Board of Directors since 2005 and currently serves on the Company’s Audit and Nominating and Corporate Governance Committees. Mr. Leonard’s decision not to stand for re-election is not the result of any disagreement with the Company.

Effective March 15, 2007, JWH Holding Company, LLC (“JWH Holding”), the Company and Mark J. O’Brien, Chairman and Chief Executive Officer of JWH Holding and Charles E. Cauthen, Chief Financial Officer of JWH Holding (each a “Grantee”) entered into LLC interests in the Company’s Financing and Homebuilding subsidiary, JWH Holding, pursuant to the terms of their individual employment agreements. Mr. O’Brien was granted an option to acquire 7.5% of the equity of JWH Holding and Mr. Cauthen was granted an option to acquire 2.5% of the equity of JWH Holding. The options were granted under the 2007 Long-Term Incentive Award Plan of JWH Holding, which was effective March 1, 2007. The exercise price of these options was fair value at the date of grant as determined by independent third parties. One-third of the options are vested and the remaining options vest over a two-year period and expire on March 2, 2016. The options will vest upon a change in control of the Company’s Financing and Homebuilding businesses, not to include a spin-off or other separation of the Company’s Financing and Homebuilding businesses from the Company. In the event of termination for cause or involuntary termination, unvested options will expire immediately and the Grantee will have 90 days to exercise vested options. In the event of termination by any other reason, resignation following a significant diminution in pay or responsibilities, or retirement after the third anniversary of the March 2, 2006 letter agreement, a material breach of the letter agreement, or death, the options accelerate and fully vest and the Grantee will have two years after such termination to exercise the options. The form of the Option Agreement executed by each Grantee is attached to this Current Report as Exhibit 10.1 and The 2007 Long-Term Incentive Award Plan of JWH Holding Company, LLC is attached to this Current Report as Exhibit 10.2.

Item 9.01Financial Statements and Exhibits

The following exhibits are filed herewith:

(d)	Exhibits
10.1	Form of Option Agreement dated March 15, 2007 between JWH Holding
	Company, LLC, the Company and Grantee
10.2	The 2007 Long-Term Incentive Award Plan of JWH Holding Company, LLC

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	WALTER INDUSTRIES, INC.
	By:	/s/ Victor P. Patrick
	Title:	Victor P. Patrick
		Vice Chairman, General Counsel and Secretary
Date: March 20, 2007

EX-10.1

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]

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EX-10.2

Exhibit 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.

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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;

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(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.

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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

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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;

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(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

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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.

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