MID-STATE TRUST VI
$287,750,000 [ ]% Asset Backed Notes, Class A-1
$ 57,750,000 [ ]% Asset Backed Notes, Class A-2
$ 45,100,000 [ ]% Asset Backed Notes, Class A-3
$ 48,550,000 [ ]% Asset Backed Notes, Class A-4
UNDERWRITING AGREEMENT
May __, 1997
LEHMAN BROTHERS INC.,
as representative of the
several Underwriters named
in Schedule I hereto
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Mid-State Homes, Inc. (the "Company"), a Florida corporation and an
indirect, wholly-owned subsidiary of Walter Industries, Inc. ("Walter
Industries"), has entered into a trust agreement dated as of March 1, 1997 (the
"Trust Agreement") with Wilmington Trust Company, a Delaware banking corporation
(not in its individual capacity, but solely as trustee under the Trust
Agreement, together with its permitted successors and assigns, the "Owner
Trustee") creating Mid-State Trust VI, a business trust established under the
laws of the state of Delaware ("Trust VI" or the "Issuer"). The Issuer will act
at all times through the Owner Trustee.
The Company proposes to direct the Owner Trustee to issue the [ ]% Asset
Backed Notes, Class A-1 (the "Class A-1 Notes"), [ ]% Asset Backed Notes, Class
A-2 (the "Class A-2 Notes"), [ ]% Asset Backed Notes, Class A-3 (the "Class A-3
Notes") and [ ]% Asset Backed Notes, Class A-4 (the "Class A- 4 Notes"), each in
the aggregate principal amount set forth above (the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and Class A-4 Notes collectively referred to as the
"Notes"). The Notes shall be issued under an indenture (the "Indenture"), dated
as of May 1, 1997, between the Owner Trustee, not in its individual capacity,
but solely as trustee under the Trust Agreement, and
First Union National Bank of Florida (the "Trustee"). Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture. The
Company also proposes to direct the Owner Trustee to cause the Notes to be sold
to the Underwriters named in Schedule I hereto (the "Underwriters" or "you")
with respect to the public offering by the Underwriters of the Notes.
The Notes are secured by (i) certain building and installment sale
contracts, promissory notes, related mortgages and other security instruments
("Accounts") owned directly or indirectly by the Company and having an aggregate
outstanding Economic Balance of $462,287,289 as of February 28, 1997 (the
"Cut-Off Date"), (ii) the Collection Account established under the Indenture and
(iii) Trust VI's rights under the Servicing Agreement (the "Servicing
Agreement") dated as of May 1, 1997 among the Issuer, the Trustee and the
Company (in its capacity as Servicer under the Servicing Agreement, together
with its successors and assigns, the "Servicer"). The Company will sell the
Accounts to the Issuer pursuant to the Purchase and Sale Agreement dated as of
the Closing Date (the "Purchase Agreement").
The Company (acting on behalf of Trust VI) has filed with the Securities
and Exchange Commission (the "Commission") a registration statement on Form S-11
(No. 333-23667) and related preliminary prospectus for the registration of the
Notes under the Securities Act of 1933, as amended (the "1933 Act"), has filed
such amendments thereto, if any, and such amended preliminary prospectuses as
may have been required to the date hereof, and will file such additional
amendments thereto and such amended prospectuses as may hereafter be required.
Such registration statement (as amended, if applicable) and the prospectus
constituting a part thereof (including in each case the information, if any,
deemed to be a part thereof pursuant to Rule 430A(b) of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")),
as from time to time amended or supplemented pursuant to the 1933 Act, but
excluding the Statement of Eligibility and Qualification (Form T-1) under the
Trust Indenture Act of 1939, as amended (the "1939 Act"), are hereinafter
referred to as the "Registration Statement" and as the "Prospectus",
respectively, except that if any revised prospectus shall be provided to you by
the Company for use in connection with the offering of the Notes which differs
from the Prospectus on file at the Commission at the time the Registration
Statement becomes effective (whether or not such revised prospectus is required
to be filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations),
the term "Prospectus" shall refer to such revised prospectus from and after the
time it is first provided to you for such use.
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The Company understands that you propose to make a public offering of the
Notes as soon as you deem advisable after the Registration Statement becomes
effective and the initial public offering price has been determined. This
Agreement shall confirm the arrangements with respect to your purchase of the
Notes.
SECTION 1. Representations and Warranties. (a) Each of the Company and
Walter Industries represents and warrants to you as of the date hereof and as of
the date of the Prospectus as follows:
(i) The Registration Statement (i) has been prepared by the Company
in conformity with the requirements of the 1933 Act and the 1933 Act
Regulations of the Commission thereunder, (ii) has been filed with the
Commission under the 1933 Act and (iii) has become effective under the
1933 Act. Copies of such Registration Statement have been delivered by the
Company to the Underwriters. As used in this Agreement, "Effective Time"
means the date and the time as of which such Registration Statement, or
the most recent post-effective amendment thereto, if any, was or is
declared effective by the Commission; "Effective Date" means the date of
the Effective Time. The Commission has not issued any order preventing or
suspending the use of any preliminary prospectus. There are no contracts
or documents of the Company which are required to be filed as exhibits to
the Registration Statement pursuant to the 1933 Act or the 1933 Act
Regulations which have not been so filed or incorporated by reference
therein on or prior to the Effective Date of the Registration Statement.
The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(ii) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the
requirements of the 1933 Act and the 1933 Act Regulations. The
Registration Statement, as of the Effective Date thereof and of any
post-effective amendment thereto, did not or will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. The Prospectus as of its date, and as amended or supplemented
as of the Closing Date, does not and will not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that no representation or
warranty
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is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with
written information furnished to the Company in writing by Lehman Brothers
Inc. ("Lehman") on behalf of the Underwriters expressly for use therein.
(iii) As of the Effective Date, the Indenture was or will be duly
qualified under, and conformed in all material respects with, the
requirements of the 1939 Act and the rules and regulations thereunder (the
"1939 Act Regulations"), and on the Closing Date, the Indenture will be so
qualified and in conformity.
(iv) Price Waterhouse LLP are independent public accountants with
respect to the Company and Walter Industries as required by the 1933 Act
and the 1933 Act Regulations.
(v) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change, or any development
involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company or Walter Industries, whether or not arising in
the ordinary course of business and (B) there have been no transactions
entered into by the Company or Walter Industries, other than those in the
ordinary course of business, which are material with respect to the
Company.
(vi) Each of the Company and Walter Industries has been duly
incorporated and is validly existing as a corporation and is in good
standing under the laws of the jurisdiction of its incorporation, with
corporate power to own, lease and operate its property; and the Company is
qualified to do business and is in good standing in each jurisdiction to
the extent necessary to permit the servicing of each Account in accordance
with the terms of the Servicing Agreement.
(vii) The issuance and sale of the Notes to the Underwriter, the
execution, delivery and performance by the Company and Walter Industries,
as applicable, of this Agreement, the Servicing Agreement, the Purchase
Agreement, the Trust Agreement or any other agreement or instrument
contemplated therein or herein and the assignment to Trust VI of the
Accounts and the authorization by the Company of the execution, delivery
and performance by the Owner Trustee of the Indenture and the issuance of
the Notes are within the corporate power and authority of the Company and
Walter
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Industries, as applicable, and have been duly authorized by all necessary
corporate action on the part of the Company or Walter Industries, as
applicable; and neither the issuance and sale of the Notes to the
Underwriters nor the execution, delivery and performance of this
Agreement, the Servicing Agreement, the Purchase Agreement, the Trust
Agreement or any other agreement or instrument contemplated herein or
therein nor the consummation of the transactions contemplated herein or
therein nor compliance by the Company with the provisions hereof or
thereof, nor the assignment to the Owner Trustee of the Accounts, nor the
execution, delivery and performance by the Owner Trustee of the Indenture
and the issuance of the Notes, nor compliance by the Owner Trustee with
the provisions thereof conflicts with or results in a material breach or
violation of any of the terms or provisions of or (with or without notice,
lapse of time or both) constitutes a default under any statute, indenture,
mortgage, deed of trust, note or other agreement or instrument to which
the Company is a party or by which it or any of its property is bound, the
Company's certificate of incorporation or by-laws or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or any of its properties or results in the creation or
imposition of any lien, charge or encumbrance upon any of its property
pursuant to the terms or provisions of any statute, indenture, mortgage,
deed of trust, note or other agreement or instrument, except for the liens
created or contemplated by the Indenture.
(viii) This Agreement has been and on or prior to the Closing Date,
the Servicing Agreement, the Trust Agreement, and the Purchase Agreement
will have each been duly authorized, executed and delivered by the Company
and, assuming due authorization, execution and delivery by the other
parties hereto and thereto, this Agreement, the Servicing Agreement, the
Trust Agreement, and the Purchase Agreement each constitutes or will
constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and subject,
as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(ix) The Notes and the Indenture will conform in all material
respects to all statements relating thereto in the related Prospectus, and
are duly and validly authorized and, when the related Notes have been
executed, authenticated and
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delivered in accordance with the Indenture, and delivered to and paid for
by the Underwriters as provided herein, the related Notes will be entitled
to the benefits and security afforded by the Indenture, and will
constitute legal, valid and binding obligations of the Issuer enforceable
in accordance with their terms and the terms of the Indenture.
(x) Neither the Company nor Walter Industries is in violation of its
certificate of incorporation or any applicable administrative or court
order or decree.
(xi) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company or Walter Industries, threatened, against or
affecting either the Company or Walter Industries, which is required to be
disclosed in the Registration Statement (other than as disclosed therein);
all pending legal or governmental proceedings to which the Company or
Walter Industries is a party or of which any of their properties or assets
are the subject which are not described in the Registration Statement
including ordinary routine litigation incidental to the business, are,
considered in the aggregate, not material;
(xii) Each of the Company and Walter Industries possesses such
licenses, certificates, authorities or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary to
conduct the business now conducted by it and, in the case of the Company,
to perform the servicing obligations under the Servicing Agreement, and
neither the Company nor Walter Industries has received notice of
proceedings relating to the revocation or modification of any such
license, certificate, authority or permit which, singly or in the
aggregate, if the subject of any unfavorable decision, ruling or finding,
would materially and adversely affect the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company or Walter Industries.
(xiii) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the issue and sale of the Notes, or the consummation by the
Company or Walter Industries of the other transactions contemplated by
this Agreement, the Indenture, the Trust Agreement or any other agreement
or instrument contemplated therein or herein, except filings required to
perfect the liens of the Indenture and except such as may be required
under the 1933
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Act or the 1933 Act Regulations or state securities laws and such as have
been obtained and are in effect.
(xiv) Upon the payment by the Issuer for the Accounts in accordance
with the Purchase Agreement, the Company will have duly and validly sold
and assigned all right, title and interest in the Accounts to the Issuer;
the Issuer will have good and valid title to the Accounts free and clear
of all liens, encumbrances, and other interests of others except to the
extent permitted in the Indenture; and the Company will be the sole
beneficial owner of the Issuer.
(xv) The Agreement is effective to establish the Trust under and
pursuant to the laws of the State of Delaware.
(xvi) The Company, Walter Industries and the Issuer are not, and
will not be required as a result of the offer and sale of the Notes to
register as, an "investment company" under the Investment Company Act of
1940, as amended (the "1940 Act") and neither the Company, Walter
Industries nor the Issuer is "controlled" by an "investment company" as
defined in the 1940 Act.
(xvii) The Accounts conform in all material respects to the
statements and description thereof contained in the Registration
Statement.
(b) Any certificate signed by any officer of the Company or Walter
Industries and delivered to you or your counsel shall be deemed a representation
and warranty by the Company or Walter Industries (or by the Company acting
through Walter Industries) as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters: Closing. (a) On the basis of
the representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to direct the Owner Trustee to
sell on behalf of the Issuer to each Underwriter, severally and not jointly, and
each Underwriter, severally and not jointly, agrees to purchase from the Owner
Trustee acting on behalf of the respective Issuer, the principal amounts of
Notes set forth opposite the name of such Underwriter at a price equal to
_________% of the principal amount thereof plus accrued interest, if any, from
April 1, 1997 to but not including the Closing Date.
(b) Payment of the purchase price for, and delivery of, the Notes shall be
made at the offices of Brown & Wood LLP, One World Trade Center, New York, New
York 10048, or at such other place as shall be agreed upon by the Underwriters
and the Company at 10:00 A.M. on May __, 1997 or such other time not later than
ten
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business days after such date as shall be agreed upon by the Underwriter and the
Company (such time and date of delivery being herein called the "Closing Date").
Payment shall be made to the Owner Trustee in same day funds against delivery of
the Notes to, or at the direction of, the Underwriters. The Notes to be so
delivered will be initially represented by one or more Notes registered in the
name of Cede & Co., the nominee of The Depository Trust Company ("DTC"). The
interests of beneficial owners of the Notes will be represented by book entries
on the records of DTC and participating members thereof. The Notes will be made
available for examination by the Underwriters not later than 10:00 A.M. on the
last business day prior to the Closing Date. The Notes will be delivered to The
Depository Trust Company in New York, New York on the business day prior to the
Closing Date, to be released upon the purchase thereof and payment therefor in
accordance herewith.
SECTION 3. Covenants. The Company covenants with you as follows:
(i) To prepare the Prospectus in a form approved by the Underwriters
and to file such Prospectus pursuant to Rule 424(b) under the 1933 Act not
later than the Commission's close of business on the second business day
following the execution and delivery of this Agreement; to make no further
amendment or any supplement to the Registration Statement or to the
Prospectus prior to the Closing Date except as permitted herein; to advise
the Underwriters, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus
has been filed and to furnish the Underwriters with copies thereof; to
promptly advise the Underwriters of its receipt of notice of the issuance
by the Commission of any stop order or of: (i) any order preventing or
suspending the use of any preliminary prospectus or the Prospectus; (ii)
the suspension of the qualification of the Notes for offering or sale in
any jurisdiction; (iii) the initiation of or threat of any proceeding for
any such purpose; (iv) any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information. In the event of the issuance of any stop order or
of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus or suspending any such qualification, the
Company promptly shall use its best efforts to obtain the withdrawal of
such order by the Commission.
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(ii) To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and of each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.
(iii) To deliver promptly to the Underwriters such number of the
following documents as the Underwriters shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with
the Commission and each amendment thereto (in each case including
exhibits); (ii) the preliminary prospectus and the Prospectus; and (iii)
any document incorporated by reference in the Prospectus (including
exhibits thereto). If the delivery of a prospectus is required at any time
prior to the expiration of nine months after the Effective Time in
connection with the offering or sale of the Notes, and if at such time any
events shall have occurred as a result of which the Prospectus as then
amended would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it
shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in order to comply with the 1933 Act or the
Exchange Act, the Company shall notify the Underwriters and, upon the
Underwriters' request, shall file such document and prepare and furnish
without charge to the Underwriters and to any dealer in securities as many
copies as the Underwriters may from time to time reasonably request of an
amended Prospectus which corrects such statement or omission or effects
such compliance, and in case the Underwriters are required to deliver a
Prospectus in connection with sales of any of the Notes (including without
limitation sales of Notes in the secondary market after the initial
distribution) at any time nine months or more after the Effective Time,
upon the request of the Underwriters, but at their expense, the Company
shall prepare and deliver to the Underwriters as many copies as the
Underwriter may reasonably request of an amended Prospectus complying with
Section 10(a)(3) of the 1933 Act.
(iv) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the Underwriters,
be required by the 1933 Act or requested by the Commission.
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(v) Prior to filing with the Commission any (i) preliminary
prospectus, (ii) amendment to the Registration Statement or Prospectus, or
document incorporated by reference in the Prospectus, or (iii) Prospectus
pursuant to Rule 424 of the 1933 Act Regulations, to furnish a copy
thereof to the Underwriters and counsel for the Underwriters and obtain
the consent of the Underwriters to the filing.
(vi) To use its best efforts, in cooperation with the Underwriters,
to qualify the Notes for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States as the
Underwriters may designate, and maintain or cause to be maintained such
qualifications in effect for as long as may be required for the
distribution of the Notes. The Company will file or cause the filing of
such statements and reports as may be required by the laws of each
jurisdiction in which the Notes have been so qualified.
(vii) Not, without the Underwriters' prior written consent, to
publicly offer or sell or contract to sell any mortgage pass-through
securities, collateralized mortgage obligations or other similar
securities representing interests in or secured by other mortgage-related
assets originated or owned by the Company for a period of thirty (30) days
following the commencement of the offering of the Notes to the public.
(viii) The Issuer will use the net proceeds received by it from the
sale of the Notes in the manner specified in the related Prospectus under
"Use of Proceeds."
(ix) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance
upon Rule 430A of the 1933 Act Regulations, then immediately following the
determination of such information by the Underwriters, the Company will
prepare, and file or transmit for filing with the Commission in accordance
with such Rule 430A and Rule 424(b) of the 1933 Act Regulations, copies of
an amended Prospectus, or, if required by such Rule 430A, a post-effective
amendment to the Registration Statement (including an amended Prospectus),
containing all information so omitted.
(x) The Company will cause the Issuer to file with the Commission
such reports on Form SR as may be required pursuant to Rule 463 under the
1933 Act.
(xi) As soon as practicable, the Company will cause to be made
generally available to holders of the Notes and to
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the Underwriters an earnings statement or statements of the Issuer which
will satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158
under the 1933 Act.
(xii) So long as any of the Notes shall be outstanding, the Company
will deliver to you each annual statement as to compliance delivered to
the Trustee pursuant to Section 3.09 of the Indenture, and each statement
of a firm of independent public accountants furnished to the Trustee
pursuant to Section 8.08 of the Indenture, as soon as such statements are
furnished to the Trustee, and will furnish to you monthly a copy of the
magnetic tape containing the Schedule of Accounts information.
SECTION 4. Payment of Expenses. The Company agrees to pay: (a) the
costs incident to the authorization, issuance, sale and delivery of the Notes
and any taxes payable in connection therewith; (b) the costs incident to the
preparation, printing and filing under the 1933 Act of the Registration
Statement and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statement as originally filed and each
amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), the preliminary prospectus, the Prospectus and any
amendment to the Prospectus or any document incorporated by reference
therein, all as provided in this Agreement; (d) the costs of reproducing and
distributing this Agreement; (e) the fees and expenses of qualifying the
Notes under the securities laws of the several jurisdictions as provided in
Section 3(vi) hereof and of preparing, printing and distributing a Blue Sky
Memorandum (including related fees and expenses of counsel to the
Underwriters); (f) any fees charged by securities rating services for rating
the Notes; (g) all costs and expenses related to the issuance and delivery of
"True Sale" and tax opinions by Brown & Wood LLP; and (h) all other costs
and expenses incident to the performance of the obligations of the
Underwriters (including half of the costs and expenses of your counsel);
provided that, except as provided in this Section 4, the Underwriters shall
pay any transfer taxes on the Notes which they may sell and the expenses of
advertising any offering of the Notes made by the Underwriters and half the
costs and expenses of their counsel.
If this Agreement is terminated by the Underwriters in accordance with the
provisions of Section 5 or Section 9, the Company shall reimburse the
Underwriters for all reasonable out-of-pocket expenses, including fees and
disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties of the Company and Walter Industries herein contained, to the
performance by the
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Company and Walter Industries of their obligations hereunder, and to the
following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date hereof, or at such later time and date as you
may approve; and on the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act or proceedings therefor initiated or threatened by the
Commission.
(b) The Underwriters shall not have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement as
amended at the Effective Time or thereafter or the Prospectus or any
amendment or supplement thereto contained or contains an untrue statement
of a fact or omitted or omits to state a fact which, in the opinion of
Brown & Wood LLP, counsel for the Underwriters, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) All corporate proceedings and other legal matters relating to
the authorization, form and validity of this Agreement, the Indenture, the
Trust Agreement, the Purchase Agreement, the Servicing Agreement, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be satisfactory in all respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
(d) On the Closing Date, the Underwriters shall have
received:
(1) The opinion, dated the Closing Date, of Cadwalader, Wickersham &
Taft, counsel for the Issuer, substantially in the form attached hereto as
Exhibit A.
(2) The opinion, dated the Closing Date, of Carlton Fields, counsel
for the Company, substantially in the form attached hereto as Exhibit B.
(3) The favorable opinion, dated the Closing Date, of Edward A.
Porter, General Counsel to Walter Industries, in form and substance
satisfactory to you and counsel for the Underwriters, to the effect that:
(i) Walter Industries has been duly organized and is
validly existing as a corporation in good standing under the
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laws of the State of Delaware with corporate power and authority to own,
lease and operate its properties and conduct its business as described in
the Prospectus.
(ii) Walter Industries is not, and will not be, as a result of its
entering into this Agreement and consummating the transactions
contemplated hereby, in violation of its Restated Certificate of
Incorporation or bylaws.
(iii) Except as disclosed in the Registration Statement, there is no
action, suit or proceeding before or by any court or governmental agency
or body, domestic or foreign, now pending, or, to the best of such
counsel's knowledge, against Walter Industries which could reasonably be
expected to interfere with or adversely affect the consummation of the
transactions contemplated herein.
(iv) This Agreement has been duly authorized, executed and delivered
by Walter Industries.
(v) No filing or registration with, notice to or consent, approval,
authorization or order or other action of, any court or governmental
authority or agency, is required for the consummation by Walter Industries
of the transactions contemplated by this Agreement, except such as have
been obtained and except such as may be required under state securities or
Blue Sky laws.
(4) The favorable opinion, dated as of the Closing Date of Richards,
Layton & Finger, P.A., counsel for the Owner Trustee, substantially in the
form attached hereto as Exhibit C.
(5) The favorable opinions of local counsel to the Company in those
jurisdictions determined by the Underwriters, dated the Closing Date, in
form and substance acceptable to the Underwriters and its counsel.
(6) The favorable opinion, dated the Closing Date, of Morris, James,
Hitchens and Williams, counsel for the Trustee, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) The Trustee, at the time of its execution and delivery of the
Indenture, had full power and authority to execute and deliver the
Indenture and has full power and authority to perform its obligations
thereunder.
(ii) The Indenture has been duly and validly authorized, executed
and delivered by the Trustee and,
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assuming due authorization, execution and delivery thereof by the Issuer,
constitutes the valid and binding agreement of the Trustee enforceable
against the Trustee in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency or other laws relating to
or affecting creditors' rights or by general principles of equity.
(iii) No consent, approval or authorization of, or registration,
declaration or filing with, any court or governmental agency or body of
the United States of America or any state thereof was or is required for
the execution, delivery or performance by the Trustee of the Indenture.
(7) The favorable opinion, dated the Closing Date, of Brown & Wood
LLP, counsel for the Underwriters, with respect to the issue and sale of
the Notes, the Registration Statement, this Agreement, the Prospectus and
such other related matters as the Underwriters may require.
(e) On the Closing Date, there shall not have been, since the date
hereof or since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company or Walter Industries, and the
Underwriters shall have received a certificate of the Chairman of the
Board, the President or any Vice President of Walter Industries, on behalf
of each of Walter Industries and the Company, dated as of the Closing
Date, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1 are true and
correct with the same force and effect as though expressly made at and as
of the Closing Date, (iii) each of the Company and Walter Industries has
complied with all agreements and satisfied all conditions on its part to
be performed or satisfied at or prior to the Closing Date and (iv) no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been initiated or
threatened by the Commission.
(f) At the Closing Date, Price Waterhouse LLP shall have furnished
to you a letter of such firm (I) to the effect that (i) they have made a
statistical sample of the Accounts, compared certain attributes from the
files relating to such Accounts to a magnetic tape prepared by the Issuer,
(ii) as a result of such comparison they are [95]% confident that the
information in Account files for the attributes so tested will not vary
from the corresponding
14
information on such magnetic tape by more than [3]% and (iii) based on
certain assumptions supplied to them by the Issuer, the amounts in the
Collection Account on each Payment Date will be sufficient to make the
payment of interest and principal on the Notes issued by the Issuer due on
such Payment Date and to pay the final installment of principal of such
Notes on or before the Maturity Date for such Notes and (II) to the effect
of the letter furnished by them to the Trustee pursuant to Section 2.12(g)
of the Indenture in connection with the issuance of the Notes. (Such
letter may consist of a copy of the letter furnished to the Trustee
accompanied by a letter addressed to you indicating that you may rely on
such letter as if it were addressed to you directly.)
(g) On the Closing Date, Price Waterhouse LLP shall have furnished
to you a letter or letters, dated as of the Closing Date, addressed to
you, to such effect as you reasonably may request in respect of the
Prospectus.
(h) On the Closing Date, you shall have received from the Trustee a
certificate signed by one or more duly authorized officers of the Trustee,
dated as of the Closing Date, as to the due acceptance of the Indenture by
the Trustee and the due execution and delivery of the Notes delivered by
the Trustee thereunder and such other matters as you shall request.
(i) By the Closing Date, the Class A-1 Notes shall be rated "AAA" by
Standard and Poor's and "Aaa" by Moody's, the Class A-2 Notes shall be
rated at least "AA" by Standard and Poor's and "Aa2" by Moody's, the Class
A-3 Notes shall be rated at least "A" by Standard and Poor's and "A2" by
Moody's and the Class A-4 Notes shall be rated at least "BBB" by Standard
and Poor's and "Baa2" by Moody's.
(j) The Holding Account Agreement shall have been duly authorized,
executed and delivered by all parties thereto.
(k) The Purchase Agreement shall have been duly authorized, executed
and delivered by all parties thereto.
(l) Form UCC-1 financing statements with respect to the Trust Estate
shall have been filed in the appropriate offices in (i) the State of
Florida naming the Issuer as seller/debtor and the Trustee as
buyer/secured party and the Company as debtor and the Issuer as secured
party and (ii) the State of Delaware naming the Issuer as debtor and the
Trustee as secured party.
15
(m) On the Closing Date, counsel for the Underwriters shall have
been furnished with such documents and opinions as they may require for
the purpose of enabling them to pass upon the issuance and sale of the
Notes as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions herein contained; and all proceedings
taken by the Company and Walter Industries in connection with the issuance
and sale of the Notes as herein contemplated shall be satisfactory in form
and substance to the Underwriters and counsel for the Underwriters.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriters by notice to the Company at any time at or prior to the Closing
Date, and such termination shall be without liability of any party to any other
party except as provided in Section 4.
SECTION 6. Indemnification. A. The Company and Walter Industries, jointly
and severally, agree to indemnify and hold harmless the Underwriters and each
person if any, who controls the Underwriters within the meaning of Section 15 of
the 1933 Act from and against any and all loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases and sales
of the Notes), to which the Underwriters or any such controlling person may
become subject, under the 1933 Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (iii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus or (iv) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, provided, however, that the Company
and Walter Industries shall not be liable in any such case if such untrue
statement or omission or such alleged untrue statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company or Walter Industries by any Underwriter through you expressly for use in
the Registration Statement (or any amendment thereto) or in any preliminary
prospectus or each Prospectus (or any amendment or supplement thereto). The
Company and Walter Industries, jointly and severally, shall reimburse the
Underwriters and each such
16
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by the Underwriters or such controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that neither the Company nor Walter Industries shall be liable in any
such case to the extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in the Prospectus or the
Registration Statement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any of the Underwriters
specifically for inclusion therein. The foregoing indemnity agreement is in
addition to any liability which the Company may otherwise have to the
Underwriters or any controlling person of the Underwriters.
B. The Underwriters agree to indemnify and hold harmless the Company, each
of its directors, each of its officers who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act against any and all loss, claim, damage or liability, or any
action in respect thereof, to which the Company or any such director, officer or
controlling person may become subject, under the 1933 Act or otherwise, insofar
as such loss, claim, damage, liability or action arises out of, or is based
upon, (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, (iii) any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus or (iv)
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company or Walter Industries in writing by Lehman
Brothers Inc. on behalf of the Underwriters specifically for inclusion in the
Registration Statement (or any amendment thereto) or in any preliminary
prospectus or each Prospectus (or any amendment or supplement thereto) and shall
reimburse the Company and any such director, officer or controlling person for
any legal or other expenses reasonably incurred by the Company or any director,
officer or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which the Underwriters
17
may otherwise have to the Company or any such director, officer or controlling
person.
C. Promptly after receipt by any indemnified party under this Section 6 of
notice of any claim or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 6, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 6 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify any
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section 6.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall not be
liable to the indemnified party under this Section 6 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially
18
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to local
counsel) at any time for all such indemnified parties, which firm shall be
designated in writing by the Underwriters, if the indemnified parties under this
Section 6 consist of the Underwriters or any of their controlling persons, or by
the Company, if the indemnified parties under this Section 6 consists of the
Company or any of the Company's directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 6(A) and (B), shall use its best efforts to cooperate with
the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in Section 6
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 6(A) or (B) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Notes or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and the Underwriters on the
19
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations.
The relative benefits of the Underwriters and the Company shall be deemed
to be in such proportion so that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount appearing
on the cover page of the final Prospectus bears to the public offering price
appearing on the final cover page of the final Prospectus.
The relative fault of the Underwriters and the Company shall be determined
by reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission and other equitable
considerations.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 7 were to be determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 7
shall be deemed to include, for purposes of this Section 7, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
In no case shall the Underwriters be responsible for any amount in excess
of the underwriting discount applicable to the Notes purchased by the
Underwriters hereunder. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
SECTION 8. Representations Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company and Walter Industries
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Underwriters or
controlling person thereof, or by or on behalf of the Company and Walter
Industries and shall survive delivery of the Notes to the Underwriters.
20
SECTION 9. Termination of Agreement. (a) The Underwriters may terminate
this Agreement, by notice to the Company and Walter Industries at any time at or
prior to the Closing Date (i) if there has been, since the date of this
Agreement or since the respective dates as of which information is given in the
Registration Statement, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company or Walter Industries whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or any outbreak of hostilities or other
calamity or crisis, the effect of which is such as to make it, in the judgment
of the Underwriter, impracticable to market the Notes or to enforce contracts
for the sale of the Notes, or (iii) if trading generally on either the American
Stock Exchange or the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said Exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by either Federal or New York authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters participating in the offering of Notes shall fail on the
Closing Date to purchase the Notes which it or they are obligated to purchase
hereunder (the "Defaulted Notes"), then such of you as are named herein on
Schedule I shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted Notes in
such amounts as may be agreed upon and upon the terms herein set forth. If,
however, you have not completed such arrangements within such 24-hour period,
then:
(1) if the aggregate principal amount of Defaulted Notes does not
exceed 10% of the aggregate principal amount of the Notes to be purchased
hereunder, the non-defaulting Underwriters named in Schedule I hereto
shall be obligated to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to the
underwriting obligations of all such non-defaulting Underwriters, or
(2) if the aggregate principal amount of Defaulted Notes exceeds 10%
of the aggregate principal amount of the
21
Notes to be purchased hereunder, this Agreement shall terminate, without
any liability on the part of any non-defaulting Underwriters.
No action taken pursuant to this Section shall relieve any defaulting
Underwriters from liability with respect to any default of such Underwriters
under this Agreement.
In the event, of a default by any Underwriters as set forth in this
Section, either you or the Company shall have the right to postpone the Closing
Date for a period of time not exceeding seven days in order that any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements may be effected.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to you shall be
directed to you at Lehman Brothers Inc., Three World Financial Center, 200 Vesey
Street, New York, New York 10285, Attention: Syndicate Department (Fax:
212-528-8822); notices to the Company and Walter Industries shall be directed to
the Company and Walter Industries at 1500 North Dale Mabry Highway, Tampa,
Florida 33622, Attention: Dean M. Fjelstul.
SECTION 12. Parties. This Agreement shall each inure to the benefit of and
be binding upon the Underwriters, the Company, Walter Industries, and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the parties hereto or thereto and their respective successors and the
controlling persons and officers and directors referred to in Section 6 and
their heirs and legal representatives, any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision herein or therein
contained. This Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the parties and their
respective successors and said controlling persons and officers and directors
and their heirs and legal representatives and for the benefit of no other
person, firm or corporation. No purchaser of a Note from the Underwriter shall
be deemed to be a successor by reason merely of such purchase.
SECTION 13. Governing Law and Time. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State. Specified times of day refer
to New York City time.
22
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and Walter Industries
counterparts hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement among the Underwriter, the Company and Walter
Industries in accordance with its terms.
Very truly yours,
MID-STATE HOMES, INC.
By:
-----------------------------------
Name:
Title:
WALTER INDUSTRIES, INC.
By:
-----------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
LEHMAN BROTHERS INC.
as representative of the Underwriters
By:
-----------------------------------
Name:
Title:
23
Schedule I
Principal Principal Principal Principal
Amount of Amount of Amount of Amount of
Class A-1 Class A-2 Class A-3 Class A-4
Underwriter Notes Notes Notes Notes
- ----------- --------- --------- --------- ---------
Lehman Brothers Inc. $____________ $__________ $__________ $__________
Donaldson, Lufkin & Jenrette
Securities Corporation $____________ $__________ $__________ $__________
Merrill Lynch & Co. $____________ $__________ $__________ $__________
NationsBank Capital
Markets, Inc. $____________ $__________ $__________ $__________
Salomon Brothers Inc $____________ $__________ $__________ $__________
Total $ $ $ $
============ ========== ========== ==========
24
EXHIBIT A
[Form of New York Counsel Opinion]
A-1
EXHIBIT B-l
[Form of Florida Counsel Opinion]
B-1-1
EXHIBIT B-2
[Form of Florida Counsel Opinion]
B-2-1
EXHIBIT C
[Form of Owner Trustee Opinion]
C-1