WALTER INDUSTRIES, INC.

SUPPLEMENTAL PENSION PLAN

AMENDED AND RESTATED

AS OF

JANUARY 1, 2008

Table of Contents

WALTER INDUSTRIES, INC.

SUPPLEMENTAL PENSION PLAN

AMENDED AND RESTATED

AS OF

JANUARY 1, 2008

ARTICLE I

Purpose

Walter Industries, Inc. (the “Company”) previously established the Walter Industries, Inc. Supplemental Pension Plan (the “Plan”) to be effective as of July 31, 1989.  The Company has determined it would be in the best interests of the Participants to amend and restate the Plan effective as of January 1, 2008 to comply with Section 409A of the Internal Revenue Code of 1986, as amended from time to time (the “Code”).  The Plan is an unfunded plan established and maintained to provide supplemental benefits for employees who substantially contribute to the success of the Company or a Related Employer.  The purpose of the Plan is to supplement the benefits of those select management or highly compensated employees whose pension benefits under the Pension Plan for Salaried Employees of Walter Industries, Inc. Subsidiaries, Divisions and Affiliates (the “Qualified Plan”) are limited by reason of the restrictions under Sections 401(a)(17) and 415 of the Code.  The Plan is a nonqualified deferred compensation plan that is intended to comply with Section 409A of the Code.

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ARTICLE II

Definitions

Whenever used hereinafter, the following terms shall have the meaning set forth below.

(a)           “ Accrued Benefit ” shall mean the Supplemental Benefit which the Participant is entitled to as of the date of determination, calculated under paragraph (a) of Article V and paid in accordance with Article VII.

(b)           “ Actuarial Equivalent ” shall mean a benefit of equivalent current value to the benefit that would otherwise have been provided to the Participant, determined in accordance with the rules established by the Plan Administrator using the actuarial methods and actuarial assumptions set forth under the Qualified Plan.

(c)           “ Actuarial Present Value ” shall mean, with respect to determining the amount of a lump sum payment, an amount determined by using the actuarial assumptions set forth in the Qualified Plan.

(d)           “ Affiliate ” shall mean, with respect to the Company, any corporation other than such Company that is a member of a controlled group of corporations, within the meaning of Section 414(b) of the Code, of which such Company is a member; all other trades or businesses (whether or not incorporated) under common control, within the meaning of Section 414(c) of the Code, with such Company; any service organization other than such Company that is a member of an affiliated service group, within the meaning of Section 414(m) of the Code, of which such Company is a member; and any other organization that is required to be aggregated with such Company under Section 414(o) of the Code.

(e)           “ Board of Directors ” shall mean the Board of Directors of the Company.

(f)            “ Change in Control ” of the Company shall mean the occurrence of any one (1) or more of the following events:

(1)           A change in the effective control of the Company, which occurs only on either of the following dates:

(A)          The date any Person or more than one Person acting as a group (other than the Company or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, and any trustee or other fiduciary holding securities under an employee benefit plan of the Company or such proportionately owned corporation), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) ownership of stock of the Company representing more than thirty percent (30%) of the total voting power of the stock of the Company; or

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(B)           The date a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election;

provided that, in any event, the transaction must constitute a “change in the effective control” of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations Section 1.409A-3(i)(5)(vi).

(2)           The date any Person or more than one Person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) all or substantially all of the Company’s assets; provided that the transaction must constitute a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations Section 1.409A-3(i)(5)(vii).

Notwithstanding the foregoing, in no event shall a Change in Control of the Company be deemed to have occurred if the Company undergoes a strategic realignment of its businesses (such as a split-up or spin-off transaction), with or without a shareholder vote.

(3)           Notwithstanding the foregoing, it shall not be considered a Change in Control for the chief executive officer of Jim Walter Resources, if the Company undergoes a strategic realignment of its businesses (such as a split-up or spin-off transaction), with or without a shareholder vote, and provided that he retains the position of chief executive officer of Jim Walter Resources with the same compensation arrangements that existed prior to such strategic realignment.

(g)           “ Code ” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time, or any successor statute.  Reference to a specific section of the Code shall include a reference to any successor provision.

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

(i)            “ Effective Date ” shall mean, with respect to this amendment and restatement, January 1, 2008.  The Plan was originally effective July 31, 1989.

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

(k)           “ Person ” shall have the meaning ascribed to such term in the Code and Treasury Regulations.

(l)            “ Plan ” shall mean the Walter Industries, Inc. Supplemental Pension Plan as it may be amended from time to time.

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(m)          “ Plan Administrator ” shall mean the Executive Compensation Committee of the Board of the Company.

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

(o)           “ Qualified Plan ” shall mean the Pension Plan for Salaried Employees of Walter Industries, Inc. Subsidiaries, Divisions and Affiliates.

(p)           “ Related Employer ” shall mean any Affiliate who adopts this Plan with the consent of the Company.

(q)           “ Separation from Service shall mean the Participant’s termination of employment with the employer within the meaning of Section 409A(a)(2)(A)(i) of the Code and the default rules of Treasury Regulations Section 1.409A-1(h). For this purpose, the “ employer ” is the Company and every entity or other person which collectively with the Company constitutes a single service recipient (as that term is defined in Treasury Regulations Sections 1.409A-1(g)) as the result of the application of the rules of Treasury Regulations Sections 1.409A-1(h)(3); provided that an 80% standard (in lieu of the default 50% standard) shall be used for purposes of determining the service recipient/employer for this purpose.

(r)            “ Service Recipient ” shall mean the Company or an Affiliate of the Company for which the Employee performs services and any Affiliates of the Company or a subsidiary of the Company that are required to be considered a single employer under Sections 414(b) and 414(c) of the Code.

(s)           “ Specified Employee ” shall mean a key employee of the Service Recipient within the meaning of Section 409A(a)(2)(B)(i) of the Code and Treasury Regulations Section 1.409A-1(i), as determined in accordance with the procedures adopted by the Company that are then in effect, or, if no such procedures are then in effect, in accordance with the default procedures set forth in Treasury Regulations Section 1.409A-1(i).

(t)            “ Spouse ” shall mean a person legally married to the Participant in accordance with Federal law.

(u)           “ Supplemental Benefit ” shall mean the benefit provided for a Participant by the Company in accordance with Article V.

(v)           “ Year of Service ” shall mean each 12-month period of employment with the Company or Related Employer or an Affiliate of the Company or Related Employer commencing on the Participant’s initial date of hire.  Periods of employment of less than 12 months will be aggregated.

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ARTICLE III

Administration

(a)           Plan Administrator .

(1)           The Plan Administrator shall have complete control and discretion to manage the operation and administration of the Plan, with all powers necessary to enable it to carry out its duties in that respect.  Not in limitation, but in amplification of the foregoing, the Plan Administrator shall have the following powers:

(A)          To determine all questions relating to the eligibility of Participants to continue to participate;

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

(C)           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;

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

(E)           To process claims for benefits under the Plan by the Participant or any Beneficiary;

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

(G)           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.

(2)           The Plan Administrator may designate employees of the Company to assist the Plan Administrator in the administration of the Plan and perform the duties required of the Plan Administrator hereunder.

(b)           Plan Administrator’s Authority .  The Plan Administrator may consult with Company’s officers, legal and financial advisers 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 .  A Participant or a beneficiary (the “Claimant”) may file with the Plan Administrator a written claim for benefits if the Participant 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

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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.  Notice must be provided