function replacePremissions($fld){
	if($fld.Item -ne $null -and $fld.Item.HasUniqueRoleAssignments ){
		Write-Host "D:$($fld.ServerRelativeUrl)"
		updatePremissionsNotDelete($fld.Item)
	}
	if($fld.SubFolders.Count -gt 0){
		foreach($d in $fld.SubFolders){
			replacePremissions $d
		}
	}
}

function updatePremissionsNotDelete($itm){
	$perms2replace = @("Full Control", "Contribute")
	$permReplaceWith = "Contribute not Delete"
	$rdNew = $w.RoleDefinitions|?{$_.Name -eq $permReplaceWith }
	foreach($rdName in $perms2replace){
		$rd = $w.RoleDefinitions|?{$_.Name -eq $rdName }
		foreach($ra in $itm.RoleAssignments){
			if($ra.RoleDefinitionBindings.Contains($rd)){
				$ra.RoleDefinitionBindings.Remove($rd)
				$ra.RoleDefinitionBindings.Add($rdNew)
			}
			$ra.Update()
		}
	}
}

$w = Get-SPWeb http://xxxxxx.com/sites/Policies
$lists = @( "KEMH", "MWI")


foreach($list in $lists){
	$l = $w.Lists.TryGetList($list)

	if($l -eq $null){
		throw "List not found: $($list)"
	}

	updatePremissionsNotDelete $l
	$rf = $l.RootFolder
	replacePremissions $rf
}