Document:

Exhibit 10.14.1

 

AMENDMENT NO. 1 TO

VARIABLE FUNDING LOAN AGREEMENT

 

THIS AMENDMENT NO. 1 TO VARIABLE FUNDING LOAN
AGREEMENT, dated as of November 28, 2005 (this “Amendment”), is entered into by and
among THREE PILLARS FUNDING LLC, a Delaware limited liability company (together
with its successors and assigns, the “Lender”),
MID-STATE TRUST XIV, a Delaware statutory trust, as borrower (the “Borrower”), WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association, as custodian and collateral agent
(the “Collateral Agent”)
and SUNTRUST CAPITAL MARKETS, INC., a Tennessee corporation, as agent and
administrative trustee (in such capacities, the “Agent” and “Administrative
Trustee”), and SUNTRUST BANK, as a bank investor (in such
capacity, a “Bank Investor”).  Capitalized terms used and not otherwise
defined herein are used as defined in the Agreement (as defined below and
amended hereby).

 

WHEREAS, the Lender, the Borrower, the
Collateral Agent, the Agent, the Administrative Trustee and the Bank Investor have
entered into that certain Variable Funding Loan Agreement, dated as of February
4, 2005 (as amended, restated, supplemented or otherwise modified to the date
hereof, the “Agreement”);

 

WHEREAS, the Lender, the Borrower, the
Collateral Agent, the Agent, the Administrative Trustee and the Bank Investor
desire to amend the Agreement in certain respects as hereinafter set forth;

 

NOW THEREFORE, in consideration of the
premises and the other mutual covenants contained herein, the parties hereto
agree as follows:

 

SECTION
1.           Amendments.  The
Agreement is hereby amended as follows:

 

(a)           The
definition of “Eligible Account” in Annex A to the Agreement is hereby
amended as follows:

 

(i)            by deleting clause (u) in its
entirety and substituting in lieu thereof the following new clause (u):

 

“(u)         which
the aggregate Principal Balance for Jumbo Accounts does not represent greater
than 15% of the Borrowing Base;”

 

(ii)           by deleting clause (y) in its
entirety and substituting in lieu thereof the following new clause (y):

 

“(y)         with
respect to which the related Mortgaged Property is located in the United
States; provided, however, that (i) the aggregate Principal
Balance related to Mortgaged Properties in any one of the following States (the
“Specified States”):  Mississippi, Alabama, South Carolina,
Louisiana, Georgia, North Carolina, Tennessee, Arkansas, Oklahoma, Virginia,
Kentucky, West Virginia, Indiana, Ohio, New Mexico, Illinois and Michigan, may
not exceed 20% of the aggregate Principal Balance of all Eligible Accounts,
(ii) the aggregate Principal

 

 

Balance related to Mortgaged Properties in the State of California or
the State of Florida may not exceed 30% of the aggregate Principal Balance of
all Eligible Accounts, (iii) the aggregate Principal Balance related to
Mortgaged Properties in the State of Texas may not exceed 50% of the aggregate
Principal Balance of all Eligible Accounts, (iv) the aggregate Principal
Balance related to Mortgaged Properties in any State other than any Specified
State, the State of California, the State of Florida or the State of Texas may
not exceed 10% of the aggregate Principal Balance of all Eligible Accounts, (v)
the aggregate Principal Balance related to Mortgaged Properties located in any
single zip code may not exceed 6% of the aggregate Principal Balance of all
Eligible Accounts and (vi) the aggregate Principal Balance related to Mortgaged
Properties with a zip code characterized as unknown by the Master Servicer
and/or Subservicer may not exceed 15% of the aggregate Principal Balance of all
Eligible Accounts;”

 

(iii)          by deleting clause (bb) in its
entirety and substituting in lieu thereof the following new clause (bb):

 

“(bb)       with
respect to any Account originated (or in the case of Walter Mortgage Company,
originated or purchased) by an Eligible Originator, such Account was originated
(or in the case of Walter Mortgage Company, originated or purchased) in
accordance with the Credit Policy;”

 

(iv)          by deleting clause (hh) in its
entirety and substituting in lieu thereof the following new clause (hh):

 

“(hh)       which
is a Full Documentation Account; provided, however, if such
Account is a Low Documentation Account, the Principal Balance thereof, together
with the Principal Balance of all other such Accounts, may not represent
greater than 20% of the Borrowing Base;”

 

(v)           by deleting clause (kk) in its
entirety and substituting in lieu thereof the following new clause (kk):

 

“(kk)       with
respect to which, if such Account is an Adjustable Rate Account, then (i) the
related Account Note evidences an Account having fully amortizing monthly
payments with no negative amortization, (ii) such Account shall provide (A) for
periodic rate adjustments (caps) of no less than 1.0% and (B) the margin over
the applicable index shall not be subject to any decrease and (C) for a
lifetime interest rate cap of no less than 6.0% higher than the initial
interest rate, (iii) such Account was not a Resale Account at the time such
loan was acquired or originated by WMC and (iv) the Principal Balance thereof
together with the aggregate Principal Balance of all other Adjustable Rate
Accounts may not exceed 30% of the Borrowing Base;”

 

(vi)          by deleting clause (mm) in its
entirety and substituting in lieu thereof the following new clause (mm):

 

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“(mm) which the aggregate Principal Balance
of all Ninety Percent Or More Complete Accounts does not represent less than
90% of the aggregate Principal Balance of all Eligible Accounts;”

 

(vii)         by deleting the word “and” at the end of
clause (oo), deleting the period at the end of clause (pp) and replacing it
with a semicolon and by inserting the following new clauses (qq) and (rr):

 

“(qq)       with respect to which, if such Account is
a Manufactured Home Account, the amount thereof, together with the amount of
all other Manufactured Home Accounts, would not represent greater than 5% of
the Borrowing Base; and

 

(rr) with
respect to which, if such Account is an Account with respect to which the
related Mortgaged Property is a two- to four-family dwelling, an individual
condominium unit in a condominium project or an individual unit in a townhouse
the amount thereof, together with the amount of all other such Accounts, would
not represent than 5% of the Borrowing Base;

 

provided,
however that the provisions of clauses (y)(i) - (vi), (kk) and (hh) of
this definition shall not be applicable at any time that the aggregate amount
of Loans outstanding is less than or equal to $75,000,000. “

 

(b)           Annex
A to the Agreement is hereby amended by inserting the following definitions
in alphabetical order:

 

“Full Documentation Account” means any Account with respect to
which the related mortgage file includes at a minimum an application completed
and fully executed and verification of employment and which shall include, as
applicable, either a verification of assets or a verification of mortgage
and/or rent payments.

 

“Jumbo Account” means any Account the amount of which exceeds
the size limit set for purchase or securitization by the Federal National
Mortgage Association.

 

“Low Documentation Account” means, any Account with respect to
which the related mortgage file does not include each item listed in the
definition of Full Documentation Account.

 

“Manufactured Home” means a single family residential unit that
is constructed in a factory in sections and that is intended to be so
constructed in accordance with the Federal Manufactured Home Construction and
Safety Standards adopted on June 15, 1976, by the Department of Housing and
Urban Development (“HUD Code”), as amended in 2000, which preempts state and
local building codes. The manufactured home is built on a non-removable,
permanent frame chassis that supports the complete unit of walls, floors, and
roof.

 

“Manufactured Home Account” means, any Account with respect to
which the related Mortgaged Property is a Manufactured Home.

 

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(c)           Annex
A to the Agreement is hereby amended by deleting the definition of “Ninety
Percent Complete Account” in its entirety and substituting in lieu thereof the
following new definition:

 

“Ninety Percent Or More Complete Account” means an Account with
respect to which the related Mortgaged Property includes a home that has a
completed interior except for interior paint, floor covering and utility
hook-up.

 

(d)           Annex
A to the Agreement is hereby amended by deleting the definition of “Scheduled
Termination Date” in its entirety and substituting in lieu thereof the
following new definition:

 

“Scheduled Termination Date” means November 27, 2006, or such
later date to which the Scheduled Termination Date may be extended by the
Agent, the Borrower and some or all of the Bank Investors, each in its sole
discretion, pursuant to Section 2.15 of the Loan Agreement.

 

SECTION 2.           Effectiveness and Effect.

 

This Amendment
shall become effective as of the date (the “Effective
Date”) that each of the following conditions precedent shall
have been satisfied:

 

(a)           (i)
This Amendment and (ii) Amendment No. 1 to the Liquidity Asset Purchase
Agreement, dated as of the date hereof, shall have been executed and delivered
by a duly authorized officer of each party thereto.

 

(b)           The
Borrower shall each be in compliance with each of its covenants set forth
herein and each of the Operative Documents to which it is a party.

 

(c)           No
event has occurred which constitutes a Facility Termination Event or a
Potential Facility Termination Event and the Facility Termination Date shall
not have occurred.

 

SECTION
3.                                Reference to and Effect on the Agreement and the
Related Documents.

 

(a)           Upon
the effectiveness of this Amendment, (i) the Borrower hereby reaffirms all
representations and warranties made by it in Article III of the
Agreement (as amended hereby) and agrees that all such representations and
warranties shall be deemed to have been restated as of the effective date of
this Amendment, (ii) the Borrower hereby represents and warrants that no
Facility Termination Event or Potential Facility Termination Event shall have
occurred and be continuing and (iii) each reference in the Agreement to “this
Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean
and be, and any references to the Agreement in any other document, instrument
or agreement executed and/or delivered in connection with the Agreement shall
mean and be, a reference to the Agreement as amended hereby.

 

(b)           The
Borrower hereby agrees that in addition to any costs otherwise required to be
paid pursuant to the Operative Documents, the Borrower shall pay the reasonable
legal fees and out-of pocket expenses of each of the Collateral Agent’s and the
Administrative Trustee’s

 

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counsel, and all
audit fees and due diligence costs incurred by the Administrative Trustee in
connection with the consummation of this Amendment.

 

SECTION 4.           Governing Law.

 

THIS LOAN
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

SECTION 5.           Severability.

 

Each provision
of this Amendment shall be severable from every other provision of this
Amendment for the purpose of determining the legal enforceability of any
provision hereof, and the unenforceability of one or more provisions of this
Amendment in one jurisdiction shall not have the effect of rendering such
provision or provisions unenforceable in any other jurisdiction.

 

SECTION 6.           Counterparts.

 

This Amendment
may be executed in one or more counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute one and the same instrument.  Delivery of an executed counterpart of a
signature page by facsimile shall be effective as delivery of a manually
executed counterpart of this Amendment.

 

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4Exhibit 10.18
 
CONFIDENTIAL
 
March 13, 2006
 
George Richmond
Northport, AL
 
Dear George,
 
In light of your many valuable contributions to Walter Industries, Inc. over 29 years of service, and in recognition of your potential future continuing contributions to the Corporation, we hereby amend the terms of your employment as follows:
 
1.                 Your title is changed to “Chief Executive Officer — Jim Walter Resources.”  You will continue to report to Gregory E. Hyland, Chairman, President and Chief Executive Officer of Walter Industries until the contemplated spin-off of the Corporation’s Water Products Business.  Thereafter, you will report to Mr. Hyland’s successor as Chairman of the Board of Directors.  As Chief Executive Officer of Jim Walter Resources, you will be responsible for all aspects of the operations of the Corporation’s Jim Walter Resources subsidiary and such other duties as may be assigned to you by the Chairman.
 
2.                 Your compensation arrangements will be as follows:
 
                    a) Your base salary will be $413,437 per year (salary grade 22), subject to annual review and adjustment by the Compensation Committee of Walter’s Board of Directors.
 
                    b) Your annual target bonus under the Walter Industries Executive Incentive Plan (EIP) will be 65% of base pay. The amount of your annual bonus will fluctuate based upon actual performance under Walter’s EIP as in effect from time to time.
 
                    c) You will receive a special one-time grant of 200,000 non-qualified stock options.  These options will vest at the rate of 1/3 per year over a three-year period and will be subject to the terms of Walter’s Long Term Incentive Plan and your individual stock option agreement.  You will also receive a 2006 award under the LTIP of 9,500 shares of restricted stock, vesting on February 28, 2009.  You will continue to participate in annual awards under the LTIP.
 
                    d) You will receive a car allowance of $2,000 per month, subject to usual withholding taxes.
 
3.                 You will have the right to allocate up to 100,000 non-qualified stock options to members of your senior management team.
 
 

 
4.                 Your supplemental pension plan balance will be funded in a rabbi trust, which will pay out to you upon your retirement or upon a change in control.  It shall not be considered a change in control 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 you remain the chief executive officer of Jim Walter Resources with the same compensation arrangements that existed prior to such strategic realignment.
 
5.                 In the event of your involuntary termination, other than for “cause”, or your resignation following a significant diminution in pay or responsibilities, you will be eligible for the following severance benefits:
 
                                                             a) Eighteen months of base salary continuation at the rate in effect at the date of termination, plus a pro rata bonus for the portion of the fiscal year actually worked computed in accordance with plan terms to the date of termination, plus twelve months of additional bonus computed at the target level at the date of termination.
 
                                                             b) Continuing fringe benefits for the duration of your base salary payments (18 months) and participation in the Company’s group life and health programs to the extent such plans permit continuing participation. In any event, health and life insurance will continue for the period of your contractual salary severance payments, but not beyond the availability of such insurance from a subsequent employer. The COBRA election period will not commence until the expiration of coverage under the Walter Industries plans.
 
6.                 You agree that all inventions, improvements, trade secrets, reports, manuals, computer programs, systems, tapes and other ideas and materials developed or invented by you during the period of your employment with Walter Industries, either solely or in collaboration with others, which relate to the actual or anticipated business or research of the Company, result from or are suggested by any work you may do for the Company, or which result from use of the Company’s premises or the Company’s or its customers’ property (collectively, the “Developments”) shall be the sole and exclusive property of the Company. You hereby assign to the Company your entire right and interest it any such Development, and will hereafter execute any documents in connection therewith that the company may reasonably request. This section does not apply to any inventions that you made prior to your employment by the Company, or to any inventions that you develop entirely on your own time without using any of the Company’s equipment, supplies, facilities or the Company’s or its customers’ confidential information and which do not relate to the Company’s business, anticipated research and development, the work you have performed for the Company.
 
7.                 As an inducement to Walter Industries to make this offer to you, you represent and warrant that you are not a party to any agreement or obligation for personal services, and that there exists no impediment or restraint, contractual or otherwise on your power, right or ability to accept this offer and to perform the duties and obligations specified herein.
 
 
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8.                 You acknowledge and agree that you will respect and safeguard Walter Industries property, trade secrets and confidential information. You acknowledge that the Company’s electronic communication systems (such as email and voicemail) are maintained to assist in the conduct of the Company’s business and that such systems and data exchanged or stored thereon are Company property. In the event that you leave the employ of the Company, will not disclose any trade secrets or confidential information you acquired while an employee of the Company to any other person or entity, including, without limitation, a subsequent employer, or use such information in any manner.
 
9.                 During the term of your employment and for a period of three years after termination of your employment, you shall not: (i) directly or indirectly act in concert or conspire with any person employed by the Company in order to engage in or prepare to engage in or to have a financial or other interest in any business or any activity which you knows (or reasonably should have known) to be directly competitive with the business of the Company as then being carried on; or (ii) serve as an employee, agent, partner, shareholder, director or consultant for, or in any other capacity participate, engage, or have a financial or other interest in any business or any activity which you know (or reasonably should have known) to be directly competitive with the business of the Company as then being carried on (provided, however, that notwithstanding anything to the contrary contained in this Agreement, you may own up to two percent (2%) of the outstanding shares of the capital stock of a company whose securities are registered under Section 12 of the Securities Exchange Act of 1934).
 
10.               Definitions
 
                                                             (a)  “Cause” shall mean your (i) conviction or guilty plea of a felony involving fraud or dishonesty, (ii) theft or embezzlement of property from the company (iii) willful and continued refusal to perform the duties of your position (other than any such failure resulting from your incapacity due to physical or mental illness) or (iv) fraudulent preparation of financial information of the Company.
 
                                                             (b) For purposes of this agreement, a significant diminution in pay or responsibilities shall not have occurred if (i) the amount of your bonus or equity opportunity fluctuates due to performance considerations under the company’s bonus and long term incentive plans in effect from time to time, (ii) 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 you remain the chief executive officer of Jim Walter Resources with the same compensation arrangements that existed prior to such strategic realignment or (iii) you are transferred to a position of comparable responsibility and compensation with the company, even though that position may report to an officer who in turn reports to the Chairman of the Board.
 
11.               In the event that any portion of any payment under this Agreement, or under any other agreement with, or plan of the Company (in the aggregate, “Total Payments”) 

 

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would constitute an
“excess parachute payment,” such that a golden parachute excise tax is due, the
Company shall provide to you, in cash, an additional payment in an amount
sufficient to cover the full cost of any excise tax and all of your additional
federal, state, and local income, excise, and employment taxes that arise on
this additional payment (cumulatively, the “Full Gross-Up Payment”), such that
you are in the same after-tax position as if you had not been subject to the
excise tax. For this purpose, you shall be deemed to be in the highest marginal
rate of federal, state, and local income taxes in the state and locality of
your residence on the date of your termination. This payment shall be made as
soon as possible following the date of your termination, but in no event later
than ten (10) calendar days from such date. 
For purposes of this Agreement, the term “excess parachute payment”
shall have the meaning assigned to such term in Section 280G of the Internal
Revenue Code, as amended (the “Code”), and the term “excise tax” shall mean the
tax imposed on such excess parachute payment pursuant to Sections 280G and 4999
of the Code.

12.               It is agreed and understood that this letter, if and when accepted, shall constitute our entire agreement with respect to the subject matter hereof and shall supersede all prior agreements, discussions, understandings and proposals (written or oral) relating to your employment with the Company.
 
If you are in agreement with the foregoing terms, please sign and return one copy of this letter, and retain one for your records.
 
Very truly yours,
 

	/s/ Gregory E. Hyland

	Gregory E. Hyland

	 

	Agreed and Accepted:

	 

	/s/ George Richmond

	George Richmond

	 

	March 13, 2006

	Date

 
 
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