Document:

Exhibit 10.3

 

AMENDED AND RESTATED

PARAMETERS OF AWARDS OF STOCK OPTIONS AND RESTRICTED SHARES

 

1.               structure two types
of equity based awards:

 

a.               Performance
Shares: Restricted Shares the vesting of which is based on the
Corporation achieving agreed performance targets tied to the Return on Equity (“ROE”)
of the Corporation (“Performance Shares”).

 

i.                  Performance
Shares may be earned by Executive and Senior Officers.  The number of Performance Shares that may be
earned will be based on the Corporation’s ROE over a defined performance
period, with an additional period of time for vesting after the performance
period.  The initial performance period
shall be the 21-month period beginning on April 1, 2005 and ending on December
31, 2006.

 

ii.               The ROE
targets and award percentages for the Performance Shares shall be structured as
follows:

 

	
  Level*

  	
   

  	
  ROE

  Values**

  	
   

  	
  Percentage of

  Award to be Earned

  	
   

  
	
  Minimum

  	
   

  	
  14.0

  	
  %

  	
  50.0

  	
  %

  
	
  Target

  	
   

  	
  18.0

  	
  %

  	
  100

  	
  %

  
	
  Maximum

  	
   

  	
  22.0

  	
  %

  	
  120

  	
  %

  

 

*   No Performance Shares will be earned if the
Minimum ROE is not attained.  The number
of Performance Shares that may be earned for ROE Values between the Minimum and
Target, and between the Target and Maximum, will be determined by
interpolation.

 

**
The ROE Values are based on core net income and core book value, so there is no
effect of the non-cash mark-to-market of swaps.

 

iii.            No dividends
will be accrued or paid on the Performance Shares during the performance
period. Following the performance period, and prior to the full vesting of the
Performance Shares, dividends on earned Performance Shares will be accrued but
not paid until the vesting of the shares. 
Earned Performance Shares will vest on the date which is two years
following the end of the performance period.

 

iv.           If (a) there
is a material restatement of the Corporation’s financial results for any
financial reporting period and such financial reporting period also was part of
the performance period and (b) as a result of the restatement the Corporation’s
ROE for the performance period changes, then the number of Performance Shares
that may be earned shall be determined based on the Corporation’s ROE after
giving effect to the restatement.

 

b.              Options with
Dividend Equivalent Rights (“Options w/ DERs”) which vest after
four years, contingent on the recipient’s continued employment by the
Corporation, and have a seven-year term

 

c.               Both the
Performance Shares and the Options w/ DERs will be subject to forfeiture prior
to their vesting by a recipient that (i) terminates his employment with the
Corporation or (ii) whose employment by the Corporation is terminated for
Cause.

 

 

2.               award these
instruments as follows:

 

a.               Executive
and Senior Officers: annual awards of Options w/ DERs and Performance Shares,
with two year performance targets and two year cliff vesting of the earned
performance shares

 

b.              Other
Managers: periodic awards of Options w/ DERs only

 

c.               New hires
and other special situations are eligible to receive awards consistent with
their positions in the Corporation as recommended by the Chief Executive
Officer of the Corporation and approved by the Compensation Committee.

 

3.               ownership guidelines

 

a.               the Board
will establish ownership guidelines for the Corporation’s Directors and
Officers; Directors and Officers should own shares of the Corporation’s common
stock equal to a multiple of the recipient’s respective annual compensation as
follows:

 

	
   

  	
   

  	
  multiple

  
	
  i.

  	
   

  	
  CEO

  	
   

  	
  five

  
	
  ii.

  	
   

  	
  Executive Officers

  	
   

  	
  three

  
	
  iii.

  	
   

  	
  Senior Officers

  	
   

  	
  two

  
	
  iv.

  	
   

  	
  Other Managers

  	
   

  	
  n.a.

  

 

b.              the Chief
Executive Officer will recommend to the Board the portion of shares issued to
managers under the Incentive Plan that the Corporation expects the managers to
retain, after providing for the sale of sufficient shares by the managers to
meet their tax liabilities relative to the awards of the shares, with the
target retention percentage expected to be not less than 60% of the net, after
tax value of shares received.Exhibit 10.4

 

EXECUTION VERSION

 

AMENDMENT NO. 2

TO SECOND MASTER REPURCHASE AGREEMENT

 

Amendment
No. 2, dated as of February 22, 2006 (this “Amendment”), among CREDIT SUISSE FIRST BOSTON
MORTGAGE CAPITAL LLC (the “Buyer”),
FIELDSTONE MORTGAGE COMPANY (a “Seller”)
and FIELDSTONE INVESTMENT CORPORATION (a “Seller” and, together with Fieldstone Mortgage
Company, the “Sellers”).

 

RECITALS

 

The Buyer and the
Sellers are parties to that certain Second Amended and Restated Master
Repurchase Agreement, dated as of March 31, 2005, as amended by that certain
Amendment No. 1 to Second Master Repurchase Agreement, dated as of October 21,
2005 (as the same may have been amended and supplemented from time to time, and
as amended by this Amendment, the “Repurchase Agreement”).  Capitalized terms used but not otherwise
defined herein shall have the meanings given to them in the Repurchase
Agreement.

 

The Buyer and the
Sellers have agreed, subject to the terms and conditions of this Amendment,
that the Repurchase Agreement be amended to reflect certain agreed upon
revisions to the terms of the Repurchase Agreement.

 

Accordingly, the
Buyer and the Sellers hereby agree, in consideration of the mutual premises and
mutual obligations set forth herein, that the Repurchase Agreement is hereby
amended as follows:

 

SECTION 1.       Definitions.  Section 2 of the Repurchase Agreement is
hereby amended by deleting the definition of “Termination Date” in its entirety
and replacing the same with the following:

 

““Termination Date”
means the earlier of (a) April 30, 2006 or (b) the date of the occurrence of an
Event of Default.”

 

SECTION 2.       Conditions Precedent.  This Amendment shall become effective on
February 22, 2006 (the “Amendment
Effective Date”), subject to the satisfaction of the following
conditions precedent:

 

2.1           Delivered Documents. On the Amendment Effective
Date, the Buyer shall have received the following documents, each of which
shall be satisfactory to the Buyer in form and substance:

 

(a)           this Amendment,
executed and delivered by a duly authorized officer of the Buyer and Sellers;

 

(b)           such other documents
as the Buyer or counsel to the Buyer may reasonably request.

 

SECTION 3.       Representations and Warranties.  Each of the Sellers hereby represents and
warrants to the Buyer that they are in compliance with all the terms and

 

1

 

provisions set forth in the Repurchase
Agreement on their part to be observed or performed, and that no Event of
Default has occurred or is continuing, and hereby confirm and reaffirm the
representations and warranties contained in Section 13 of the Repurchase
Agreement.

 

SECTION 4.       Limited Effect.  Except as expressly amended and modified by
this Amendment, the Repurchase Agreement shall continue to be, and shall
remain, in full force and effect in accordance with its terms.

 

SECTION 5.       Counterparts. This Amendment may
be executed by each of the parties hereto on any number of separate
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same instrument.

 

SECTION 6.        GOVERNING LAW. THIS AMENDMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF.

 

[SIGNATURE PAGE FOLLOWS]

 

2

 

IN WITNESS
WHEREOF, the parties have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first
above written.

 

	
  Buyer:

  	
  CREDIT SUISSE FIRST BOSTON

  MORTGAGE CAPITAL LLC,

  as Buyer 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce S. Kaiserman

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Bruce S. Kaiserman

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  Seller:

  	
  FIELDSTONE MORTGAGE COMPANY,

  as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark C. Krebs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark C. Krebs

  
	
   

  	
   

  	
  Title:

  	
  Sr. Vice President & Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Seller:

  	
  FIELDSTONE INVESTMENT

  CORPORATION,

  as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark C. Krebs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark C. Krebs

  
	
   

  	
   

  	
  Title:

  	
  Sr. Vice President & TreasurerExhibit
10.1

 

February 23, 2006

 

Walter Industries, Inc.

4211 West Boy Scout Boulevard

Tampa, Florida 33607

Attention:  General Counsel

 

Mueller Water Products, Inc.

4211 West Boy Scout Boulevard

Tampa, Florida 33607

Attention: Jeffery W. Sprick

 

Ladies and Gentlemen:

 

Reference is made to the Agreement and Plan
of Merger dated as of June 17, 2005 (as amended, the “Merger
Agreement”) among Mueller Water Products, Inc., Walter Industries,
Inc., JW MergerCo, Inc. and DLJ Merchant Banking II, Inc., as the Stockholders’
Representative. Capitalized terms used but not defined herein shall have the
meanings specified in the Merger Agreement.

 

Following the delivery of the Closing
Statements by the Surviving Corporation, and delivery of a notice of
disagreement therewith by the Stockholders’ Representative, the parties hereto
have resolved all disputed items and amounts required to determine Final
Closing Cash and Final Working Capital and have agreed that the Shortfall
Amount is $10,527,000. Accordingly, the parties hereto have agreed that in
accordance with the Escrow Agreement, an officer of Buyer and an officer of the
Stockholders’ Representative shall, contemporaneously with the execution of
this letter agreement, execute and deliver the notice attached as Annex A
hereto to the Escrow Agent, to direct the Escrow Agent to release and
distribute all funds remaining in the Escrow Account in accordance with the
instructions set forth on such notice.

 

Upon the completion of the payments set forth
above, the parties confirm that all obligations of the parties under Sections
2.12 and 2.13 of the Merger Agreement shall have been performed and satisfied
in full.

 

This letter agreement shall not constitute an
amendment or waiver of any term or condition of the Merger Agreement or any
other Transaction Agreement, and all of such terms and conditions shall remain
in full force and effect. This letter agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts entered into and performed entirely in such state. This letter
agreement may be signed in any number of counterparts, each of which shall be
deemed an original, and all such counterparts shall together constitute one and
the same instrument.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this letter
agreement to be duly executed by their respective authorized officers as of the
day and year first above written.

 

 

	
   

  	
  DLJ MERCHANT BANKING II, INC.,

  
	
   

  	
  as the Stockholders’ Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ MICHAEL S. ISIKOW

  	
   

  
	
   

  	
   

  	
  Name: Michael S. Isikow

  
	
   

  	
   

  	
  Title:   Vice President

  

 

 

Agreed and Acknowledged

 

	
  WALTER INDUSTRIES, INC.

  
	
   

  
	
   

  
	
  By:

  	
    /s/  JOSEPH J. TROY

  	
   

  
	
   

  	
  Name: Joseph J. Troy

  
	
   

  	
  Title:   Senior Vice President

  
	
   

  
	
   

  
	
  MUELLER WATER PRODUCTS, INC.

  
	
   

  
	
   

  
	
  By:

  	
    /s/  VICTOR P. PATRICK

  	
   

  
	
   

  	
  Name: Victor P. Patrick

  
	
   

  	
  Title:   Vice President

  
				

 

 

Annex A

 

February 23, 2006

 

The Bank of New York

101 Barclay Street - 8W/Escrow

New York, NY 10286

Attention:  Carlos Luciano

 

Ladies and Gentlemen:

 

Reference is made to the Escrow Agreement dated as of October 3, 2005
among Mueller Water Products, Inc., Walter Industries, Inc., DLJ Merchant
Banking II, Inc., as the Stockholders’ Representative, and The Bank of New York
(the “Escrow Agreement”). Capitalized terms
used but not defined herein shall have the meanings specified in the Escrow
Agreement. This certificate is executed by Buyer and the Stockholders’
Representative pursuant to Section 5(a) of the Escrow Agreement.

 

The Escrow Agent is hereby directed to promptly release and deliver all
funds remaining in the Escrow Account as follows:

 

a)                                     $11,223,543.07,
plus 26.975% of all interest earned on the Escrow Amount to the date of payment,
to the Stockholders’ Representative, who shall distribute such amount to the
DLJ Entities in accordance with the provisions of the Merger Agreement:

 

	
  Bank:

  	
   

  	
  Citibank, N.A.

  
	
   

  	
   

  	
  399 Park Avenue

  
	
   

  	
   

  	
  New York, NY 10036

  
	
  ABA:  021000089

  
	
  Account Name:  DLJ Merchant
  Banking II, Inc.

  
	
  Account Number:  30554143

  
	
  Reference:  Mueller Water
  Products

  

 

b)                                    $3,228,793.03,
plus 7.760% of all interest earned on the Escrow Amount to the date of payment,
to the Company, which shall distribute such amount to the Stockholders and
holders of Company Warrants (in each case, other than the DLJ Entities),
subject to the deduction of the applicable withholding taxes, in accordance
with the provisions of the Merger Agreement:

 

	
  Bank:

  	
   

  	
  Mellon Bank

  
	
   

  	
   

  	
  Pittsburgh, PA

  
	
  ABA:

  	
   

  	
  043000261

  
	
  Account Name:  Mueller Water
  Products, Inc.

  
	
  Account Number: 077-1243

  

 

 

c)                                     $20,663.90 to
Davis Polk & Wardwell in respect of Transaction Expenses incurred after the
Effective Time (in each case, as defined in the Merger Agreement); and

 

	
  Bank:

  	
   

  	
  JPMorgan Chase Bank

  
	
   

  	
   

  	
  500 Stanton Christiana Rd.

  
	
   

  	
   

  	
  Newark, DE  19713

  
	
  ABA:  021 000021

  
	
  Account Name:  Davis Polk &
  Wardwell

  
	
  Account Number:  001533316

  
	
  Reference:  Mueller Water
  Products 14530/006

  

 

d)                                    $10,527,000,
plus 65.265% of all interest earned on the Escrow Amount to the date of payment,
to:

 

	
  Bank:

  	
   

  	
  Bank of America

  
	
   

  	
   

  	
  Charlotte, NC

  
	
  ABA:

  	
   

  	
  111000012

  
	
  Account Name:  Walter
  Industries, Inc.

  
	
  Account Number:  3750658039

  

 

The Escrow Agreement shall terminate in accordance with its terms when
the Escrow Agent shall have released all amounts in the Escrow Account pursuant
to the instructions set forth above.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the parties hereto have
caused this certificate to be duly executed by their respective authorized
officers as of the day and year first above written.

 

	
   

  	
  DLJ MERCHANT BANKING II, INC.,

  
	
   

  	
  as the Stockholders’ Representative

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ MICHAEL S. ISIKOW

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael S. Isikow

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WALTER INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ JOSEPH J. TROY

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joseph J. Troy

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

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