EXHIBIT 1.1
Security Capital Industrial Trust
Series D Cumulative Redeemable Preferred Shares
of Beneficial Interest
(par value $0.01 per share)
(Liquidation Preference $25.00 Per Share)
Purchase Agreement
------------------
April 7, 1998
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
X.X. Xxxxxxx & Sons, Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
Prudential Securities Incorporated
Xxxxx Xxxxxx Inc.
as Representatives of the several Underwriters
c/x Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxxxx Xxxxx World Headquarters
World Financial Center
North Tower
New York, New York 10281-1305
Ladies and Gentlemen:
Security Capital Industrial Trust, a real estate investment trust organized
under the laws of the State of Maryland (the "Company"), proposes, subject to
the terms and conditions stated herein, to issue and sell to Xxxxxxx Xxxxx &
Co., Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), X.X.
Xxxxxxx & Sons, Inc. ("X.X. Xxxxxxx"), Xxxxxx Xxxxxxx & Co. Incorporated
("Xxxxxx Xxxxxxx"), Prudential Securities Incorporated ("Prudential") and Xxxxx
Xxxxxx Inc. ("Xxxxx Xxxxxx"), together with each of the Underwriters named in
Annex I hereto (collectively, the "Underwriters"), for whom Xxxxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxxxxxxx and Xxxxx Xxxxxx are acting as
representatives (in such capacity, Xxxxxxx Xxxxx, X.X. Xxxxxxx, Xxxxxx Xxxxxxx,
Prudential and Xxxxx Xxxxxx are hereinafter collectively referred to as the
"Representatives"), 10,000,000 Series D Cumulative Redeemable Preferred Shares
of Beneficial Interest, par value $0.01 per share, Liquidation Preference $25.00
Per Share (the "Firm Shares"), of the Company (the "Preferred Shares"), and, at
the election of the Representatives up to 1,500,000 additional Preferred Shares
(the "Optional Shares") (the Firm Shares and the Optional Shares which the
Representatives elect to purchase pursuant to Section 2 hereof being
collectively called the "Shares").
1. The Company represents and warrants to, and agrees with, the
Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-39797) in
respect of the Shares has been filed with the Securities and Exchange
Commission (the "Commission"); such registration statement and any
post-effective amendment thereto, each in the form heretofore
delivered or to be delivered to the Representatives, has been declared
effective by the Commission in such form; no other document with
respect to such registration statement or document incorporated by
reference therein has heretofore been filed, or transmitted for
filing, with the Commission (other than prospectuses filed pursuant to
Rule 424(b) of the rules and regulations of the Commission under the
Securities Act of 1933, as amended (the "Act"), each in the form
heretofore delivered to the Underwriters); and no stop order
suspending the effectiveness of such registration statement has been
issued and no proceedings for that purpose have been initiated or
threatened by the Commission (any preliminary prospectus included in
such registration statement or filed with the Commission pursuant to
Rule 424(a) under the Act is hereinafter called a "Preliminary
Prospectus"; the various parts of such registration statement,
including all exhibits thereto and the documents incorporated by
reference in the prospectus contained in the registration statement at
the time such part of the registration statement became effective,
each as amended at the time such part of the registration statement
became effective, are hereinafter collectively called the
"Registration Statement"; the prospectus relating to the Shares, in
the form in which it has most recently been filed, or transmitted for
filing, with the Commission on or prior to the date of this Agreement,
is hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include any
documents filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and incorporated by reference
in such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment to the Registration Statement shall be
deemed to refer to and include any annual report of the Company filed
pursuant to Section 13(a) or 15(d) of the Exchange Act after the
effective date of the Registration Statement that is incorporated by
reference in the Registration Statement; and any reference to the
Prospectus as amended or supplemented shall be deemed to refer to the
Prospectus as amended or supplemented in the form in which it is filed
with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 5(a) hereof, including any documents
incorporated by reference therein as of the date of such filing);
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder, and did 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, in the
light of the
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circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by the Representatives
expressly for use therein;
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the
Act or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder, and none of such documents contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment
or supplement thereto, when such documents become effective or are
filed with the Commission, as the case may be, will conform in all
material respects to the requirements of the Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission
thereunder and 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; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by the Representatives
expressly for use in the Prospectus as amended or supplemented;
(d) The Registration Statement and the Prospectus conform, and any
amendments or supplements to the Registration Statement or the
Prospectus conform or will conform, in all material respects to the
requirements of the Act and the rules and regulations of the
Commission thereunder and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment
thereto and as of the applicable filing date as to the Prospectus and
any amendment or supplement thereto, 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;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by the
Representatives expressly for use in the Prospectus as amended or
supplemented relating to such Shares;
(e) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries, or any material adverse change, or any
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development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
shareholders' equity, or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus as amended or supplemented (as used herein, "subsidiaries"
shall include any entities in which the Company owns, directly or
indirectly, any controlling or general partnership interest or a
majority of the economic interest);
(f) The Company and its subsidiaries have good and marketable title in
fee simple to all real property described in the Prospectus as amended
or supplemented as owned by them, and good and marketable title to all
personal property (including interests in partnerships or other
entities) owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the
Prospectus as amended or supplemented or such as do not materially
affect the value of such property and do not interfere with the use
made or proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries and described in the Prospectus are
held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made
or proposed to be made of such property and buildings by the Company
and its subsidiaries;
(g) The Company has been duly organized and is validly existing as a
real estate investment trust of unlimited duration with transferable
shares of beneficial interest in good standing under the laws of the
State of Maryland, with power and authority to own its properties and
conduct its business as described in the Prospectus as amended or
supplemented, and has been duly qualified for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction; and each subsidiary of the Company
has been duly organized and is validly existing as a corporation,
partnership or trust in good standing under the laws of its
jurisdiction of organization;
(h) The Company has an authorized capitalization as set forth in the
Prospectus as amended or supplemented, and all of the issued shares of
capital stock of the Company have been duly and validly authorized and
issued, are fully paid and, except as described in the Prospectus as
amended or supplemented, non-assessable and conform to the description
thereof contained in the Prospectus; and all of the issued shares of
capital stock or other equity interest of each subsidiary of the
Company have been duly and validly authorized and issued, are fully
paid and, with respect to subsidiaries that are corporations, non-
assessable and (except for directors' qualifying shares and except as
set forth in the Prospectus) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or
claims;
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(i) The unissued Shares have been duly and validly authorized, and,
when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and, except as
described in the Prospectus as amended or supplemented, non-assessable
and will conform to the description of the Shares contained in the
Prospectus as amended or supplemented, and the holders of outstanding
capital stock of the Company are not entitled to preemptive or other
rights afforded by the Company to subscribe for the Shares;
(j) The issue and sale of the Shares by the Company and the compliance
by the Company with all of the provisions of this Agreement and the
consummation of the transactions contemplated herein will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the
provisions of the Amended and Restated Declaration of Trust, as
amended (the "Declaration of Trust"), or Bylaws of the Company or any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any
such court or governmental agency or governmental body is required for
the issue and sale of the Shares or the consummation by the Company of
the transactions contemplated by this Agreement, except (A) the
registration under the Act of the Shares and (B) such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or blue sky laws in connection with
the purchase and distribution of the Shares by the Underwriters;
(k) Neither the Company nor any of its subsidiaries is in violation of
its declaration of trust, certificate or articles of incorporation,
partnership agreement or bylaws, as applicable, or in default in the
performance or observance of any material obligation, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or any other agreement or instrument to which it is a
party or by which it or its properties may be bound;
(l) The statements set forth in the Prospectus as amended or
supplemented under the captions "Description of Series D Preferred
Shares" and "Certain Federal Income Tax Considerations," insofar as
they purport to constitute a summary of the terms of the Preferred
Shares, and under the captions "Federal Income Tax Considerations" and
"Description of Preferred Shares," insofar as they purport to describe
factual matters and the provisions of the laws and the documents
referred to therein, are accurate and complete in all material
respects;
(m) Other than as set forth in the Prospectus as amended or
supplemented, there are no legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a party or of which
any property of the Company or any
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of its subsidiaries is the subject, which, if determined adversely to
the Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the consolidated financial
position, shareholders' equity or results of operations of the Company
and its subsidiaries taken as a whole; and, to the best of the
Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(n) Xxxxxx Xxxxxxxx LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of
the Commission thereunder;
(o) With respect to all tax periods regarding which the Internal
Revenue Service is or will be entitled to assert any claim, the
Company has met the requirements for qualification as a real estate
investment trust under Sections 856 through 860 of the Internal
Revenue Code, as amended, and the Company's present and contemplated
operations, assets and income will enable the Company to continue to
meet such requirements; and the Company is not, and upon the
consummation of the offering of the Shares and the application of the
proceeds thereof will not be, an open-end investment company, unit
investment trust, closed-end investment company or face amount
certificate company that is or is required to be registered under
Section 8 of the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(p) The Company has no knowledge of (i) the presence of any hazardous
substances, hazardous materials, toxic substances or waste materials
(collectively, "Hazardous Materials") on any of the properties owned
by it in violation of law or in excess of regulatory action levels, or
of (ii) any unlawful spills, releases, discharges or disposal of
Hazardous Materials that have occurred or are presently occurring on
or off such properties as a result of any construction on or operation
and use of such properties, which presence or occurrence would
materially adversely affect the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company.
In connection with the construction on or operation and use of the
properties owned by the Company, the Company represents that, as of
the date of this Agreement, it has no knowledge of any material
failure to comply with all applicable local, state and federal
environmental laws, regulations, ordinances and administrative and
judicial orders relating to the generation, recycling, reuse, sale,
storage, handling, transport, and disposal of any Hazardous Materials;
and
(q) Each of the partnership agreements (the "Partnership Agreements")
of SCI Limited Partnership-I, SCI Limited Partnership-II, SCI Limited
Partnership-III and SCI Limited Partnership-IV described in the
Company's 1997 Annual Report on Form 10-K incorporated by reference in
the Prospectus has been duly authorized, executed and delivered by the
Company or a wholly owned subsidiary thereof and constitutes a legal,
valid and binding agreement enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
6
applicability relating to or affecting creditors' rights and the
effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion of
the court before which any proceeding therefor may be brought; and the
execution and delivery of each such agreement and the performance
thereof by the Company or such subsidiary are within the power and
authority of the Company, did not and do not violate any provision of
or constitute a default under any agreement or instrument to which the
Company or such subsidiary is a party or by which the Company or such
subsidiary is bound, and do not require the consent, approval,
authorization or order of any court or governmental agency or body.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to the Representatives, and the Underwriters agree to
purchase from the Company, at a purchase price per share of $24.2125, the number
of Firm Shares set forth above and (b) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional Shares as provided
below, the Company agrees to issue and sell to the Underwriters, and the
Underwriters agree to purchase from the Company, at the purchase price per share
set forth in clause (a) of this Section 2, the number of Optional Shares as to
which such election shall have been exercised.
The Company hereby grants to the Underwriters the right to purchase at its
election up to 1,500,000 Optional Shares, at the purchase price per share set
forth in the paragraph above, for the sole purpose of covering over-allotments
in the sale of the Firm Shares. Any such election to purchase Optional Shares
may be exercised only by written notice from you to the Company, given within a
period of 30 calendar days after the date of this Agreement, setting forth the
number of Optional Shares to be purchased and the date on which such Optional
Shares are to be delivered, as determined by you but in no event earlier than
the First Time of Delivery (as defined in Section 4 hereof) or, unless you and
the Company otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
Underwriters propose to offer the Firm Shares for sale upon the terms and
conditions set forth in the Prospectus as amended or supplemented.
4. Certificates for the Firm Shares and the Optional Shares to be purchased
by the Underwriters hereunder, and in such authorized denominations and
registered in such names as the Underwriters may request upon at least forty-
eight hours' prior notice to the Company, shall be delivered by or on behalf of
the Company to the Underwriters, against payment by the Underwriters of the
purchase price therefor by wire transfer or certified or official bank check or
checks, payable to the order of the Company in immediately available funds, all
at the offices of Brown & Wood llp, One World Trade Center, New York, New York
10048. The time and date of such delivery and payment shall be, with respect to
the Firm Shares, 9:00 a.m., New York time, on April 3, 1998, or at such other
time and date as you and the Company may agree upon in writing, and, with
respect to the Optional Shares, 9:00 a.m., New York time, on the date specified
by you in the written notice given by you of the Representatives' election to
purchase such Optional Shares, or at such other time and date as you and the
Company may agree upon in writing. Such time and date for delivery of the Firm
Shares is herein called the "First Time of
7
Delivery," such time and date for delivery of the Optional Shares, if not the
First Time of Delivery, is herein called the "Second Time of Delivery," and each
such time and date for delivery is herein called a "Time of Delivery." Such
certificates will be made available for checking and packaging at least twenty-
four hours prior to each Time of Delivery at the office of Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated, World Financial Center, North Tower, New
York, New York 10281.
5. The Company agrees with the Underwriters:
(a) To prepare the Prospectus as amended or supplemented in a form
approved by you and to file such Prospectus pursuant to Rule 424(b)
under the Act not later than the Commission's close of business on the
second business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required by
Rule 424(b); to make no further amendment or any supplement to the
Registration Statement or Prospectus as amended or supplemented prior
to the last Time of Delivery which shall be reasonably disapproved by
you promptly after reasonable notice thereof; to advise you, promptly
after it receives notice thereof, of the time when the Registration
Statement, or any amendment thereto, has been filed or becomes
effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof; to
file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act for
so long as the delivery of a prospectus is required in connection with
the offering or sale of the Shares; to advise you, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any such
stop order or of any such order preventing or suspending the use of
any prospectus relating to the Shares or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) If necessary, promptly from time to time to take such action as
you may reasonably request to qualify the Shares for offering and sale
under the securities laws of such jurisdictions as you may request and
to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction;
(c) On the business day next succeeding the date hereof and from time
to time, to furnish the Representatives with copies of the Prospectus
as amended or supplemented in New York City in such quantities as you
may reasonably
8
request, and, if the delivery of a prospectus is required at any time
prior to the expiration of nine months after the time of issue of the
Prospectus as amended or supplemented in connection with the offering
or sale of the Shares and if at such time any event shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an 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 Exchange Act
any document incorporated by reference in the Prospectus in order to
comply with the Act or the Exchange Act, to notify you and upon your
request to file such document and to prepare and furnish without
charge to you and to any dealer in securities as many copies as you
may from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or
omission or effect such compliance;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule
158(c) under the Act), an earning statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(e) During a period of 90 days from the last Time of Delivery, without
the prior written consent of the Representatives, not to, directly or
indirectly, offer, sell, contract to sell or otherwise dispose of any
Preferred Shares or securities which are substantially similar to the
Preferred Shares, except for shares issued pursuant to the Company's
Share Option Plan for Outside Trustees or pursuant to the Company's
Dividend Reinvestment Plan or shares issued upon exchange of limited
partnership units or upon exercise or conversion of outstanding
options or warrants and except for the issuance of limited partnership
interests (which partnership interests may be exchangeable for common
shares of beneficial interest after such 90-day period);
(f) To cause Security Capital Group Incorporated ("SCG") and certain
officers and each trustee of the Company not to offer, sell, contract
to sell or otherwise dispose of any Preferred Shares or securities
which are substantially similar to the Preferred Shares owned or to be
acquired by SCG or such person for 90 days after the last Time of
Delivery, without the prior written consent of the Underwriters;
(g) To furnish to its shareholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet
and statements of income, shareholders' equity and cash flows of the
Company and its consolidated subsidiaries, certified by independent
public accountants) and, as soon as practicable after the end of each
of the first three quarters of each fiscal year
9
(beginning with the fiscal quarter ending after the effective date of
the Registration Statement), consolidated summary financial
information of the Company and its subsidiaries for such quarter in
reasonable detail;
(h) During a period of three years from the date of this Agreement, to
furnish to the Representatives copies of all reports or other
communications (financial or other) furnished to shareholders, and to
deliver to the Representatives (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed
with the Commission or any national securities exchange on which any
class of securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as the Representatives may from time to time reasonably
request (such financial statements to be on a consolidated basis to
the extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its shareholders generally or to
the Commission);
(i) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(j) To continue to elect to qualify as a "real estate investment
trust" under the Internal Revenue Code of 1986, as amended, and to use
its best efforts to continue to meet the requirements to qualify as a
"real estate investment trust"; and
(k) Not to be or become, at any time prior to the expiration of three
years after the last Time of Delivery, an open-end investment trust,
unit investment trust, closed-end investment company or face-amount
certificate company that is or is required to be registered under
Section 8 of the Investment Company Act.
6. The Company covenants and agrees with the Underwriters that the Company
will pay or cause to be paid the following: (a) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to the Representatives and
dealers; (b) the cost of printing or producing this Agreement, any blue sky
Memorandum and any other documents in connection with the offering, purchase,
sale and delivery of the Shares; (c) all expenses in connection with the
qualification of the Preferred Shares for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the blue sky survey(s); (d) all fees and
expenses, if any, in connection with the listing of the Preferred Shares on the
New York Stock Exchange and, if any, the filing fees incident to securing any
required review by the NASD of the terms of sale of the Shares; (e) the cost of
preparing certificates for the Shares; (f) the cost and charges of any transfer
agent or registrar or dividend disbursing agent; and (g) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. It is understood, however,
that, except as provided in this Section, and Sections 8 and 10 hereof, the
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Representatives will pay all of their own costs and expenses, including the fees
of counsel for the Representatives, transfer taxes on resale of any of the
Shares by them, and any advertising expenses connected with any offers they may
make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in the discretion of the
Underwriters, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of such Time of Delivery, true
and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Prospectus as amended or supplemented shall have been filed
with the Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the rules and regulations under
the Act and in accordance with Section 5(a) hereof; no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission
shall have been complied with to your reasonable satisfaction;
(b) Brown & Wood LLP, counsel to the Underwriters, shall have
furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to the validity of the Shares being delivered
at such Time of Delivery, the Registration Statement, the Prospectus
and such other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) Xxxxx, Xxxxx & Xxxxx shall have furnished to you their written
opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company has been duly organized and is validly existing as a
real estate investment trust in good standing under the laws of the
State of Maryland, with power and authority to own its properties and
conduct its business as described in the Prospectus as amended or
supplemented;
(ii) The Company has an authorized capitalization as set forth in the
Prospectus as amended or supplemented; and all of the issued shares of
beneficial interest of the Company (including the Shares being
delivered at such Time of Delivery) have been duly and validly
authorized and issued and are fully paid and, except as described in
the Prospectus as amended or supplemented, non-assessable; and the
Preferred Shares conform, in all material respects, to the description
thereof contained in the Prospectus as amended or supplemented; and
the holders of outstanding capital stock of the Company are not
entitled to preemptive or other rights afforded by the Company to
subscribe for the Shares;
11
(iii) The Company has been duly qualified for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, or is subject to no
material liability or disability by reason of failure to be so
qualified in any such jurisdiction (such counsel being entitled to
rely in respect of the opinion in this clause upon opinions of local
counsel and in respect of matters of fact upon certificates of public
officials or officers of the Company, provided that such counsel shall
state that they believe that both you and they are justified in
relying upon such opinions and certificates);
(iv) Each subsidiary of the Company has been duly organized and is
validly existing in good standing under the laws of its jurisdiction
of organization; and all of the issued shares of capital stock or
other equity interest of each such subsidiary have been duly and
validly authorized and issued, are fully paid and, with respect to
subsidiaries that are corporations, non-assessable, and (except for
directors' qualifying shares and except as otherwise set forth in the
Prospectus) are owned directly or indirectly by the Company, free and
clear of all perfected liens, encumbrances, equities or claims (such
counsel being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of matters of
fact upon certificates of public officials or officers of the Company
or its subsidiaries, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such
opinions and certificates);
(v) To the best of such counsel's knowledge and other than as set
forth in the Prospectus as amended or supplemented, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which, if determined adversely to
the Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the consolidated financial
position, shareholders' equity, or results of operations of the
Company and its subsidiaries; and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(vi) This Agreement has been duly authorized, executed and delivered
by the Company;
(vii) The issue and sale of the Shares being delivered at such Time of
Delivery by the Company and the compliance by the Company with all of
the provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such counsel
to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the
provisions of the Declaration of Trust or Bylaws of the Company
12
or any statute or any order, rule or regulation known to such counsel
of any court or governmental agency or governmental body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties, the breach or violation of which is of material
significance in respect of the business or financial condition of the
Company;
(viii) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or
governmental body is required for the issue and sale of the Shares or
the consummation by the Company of the transactions contemplated by
this Agreement or the terms of the Shares, except such as have been
obtained under the Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or blue sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(ix) Neither the Company nor any of its subsidiaries is in violation
of its declaration of trust, certificate or articles of incorporation,
partnership agreement or bylaws, as applicable, or in default in the
performance or observance of any material obligation, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or any other agreement or instrument known to us to
which it is a party or by which it or its properties may be bound;
(x) The statements set forth in the Prospectus as amended or
supplemented under the captions "Description of Series D Preferred
Shares" and "Certain Federal Income Tax Considerations and in the
Prospectus under the captions "Description of Preferred Shares" and
"Federal Income Tax Considerations" to the extent such statements
relate to matters of law or regulation or constitute summaries of
documents described therein, are true and accurate in all material
respects;
(xi) The Company has qualified to be taxed as a real estate investment
trust pursuant to Sections 856 through 860 of the Internal Revenue
Code, as amended, for its taxable years ended December 31, 1993,
December 31, 1994, December 31, 1995, December 31, 1996 and December
31, 1997, and the Company's present and contemplated organization,
ownership, method of operation, distributions, assets and income are
such that the Company is in a position under present law to so qualify
for the taxable year ending December 31, 1998 and in the future; SCI
Limited Partnership-I, SCI Limited Partnership-II, SCI Limited
Partnership-III and SCI Limited Partnership-IV are properly treated
(x) as partnerships for federal income tax purposes and (y) not as
"publicly traded partnerships"; and the Company is not, and upon the
consummation of the offering of the Shares and the application of the
proceeds thereof will not be, an open-end investment company, unit
investment trust, closed-end investment company or face-amount
certificate company that is or is required to be registered under
Section 8 of the Investment Company Act;
(xii) The investments of the Company described in the Prospectus are
permitted investments under the Declaration of Trust of the Company;
13
(xiii) The documents incorporated by reference in the Prospectus or
any further amendment or supplement thereto made by the Company prior
to such Time of Delivery (other than the financial statements and
related schedules therein and other financial information included or
incorporated by reference therein, as to which such counsel need
express no opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder; and they have no reason to believe that any of such
documents, when such documents became effective or were so filed, as
the case may be, contained, in the case of a registration statement
which became effective under the Act, an untrue statement of a
material fact, or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or, in the case of other documents which were filed under
the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made when such documents were so filed, not
misleading; and
(xiv) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such
Time of Delivery (other than the financial statements and related
schedules therein and other financial information included or
incorporated by reference therein, as to which such counsel need
express no opinion) comply as to form in all material respects with
the requirements of the Act and the rules and regulations thereunder;
they have no reason to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel
need express no opinion) contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that, as
of its date, the Prospectus or any further amendment or supplement
thereto made by the Company prior to such Time of Delivery (other than
the financial statements and related schedules therein and other
financial information included or incorporated by reference therein,
as to which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading or that, as of
such Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related schedules therein and other financial
information included or incorporated by reference therein, as to which
such counsel need express no opinion) contains an untrue statement of
a material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances in which they
were made (in the case of the Prospectus), not misleading; and they do
not know of any amendment to the Registration Statement required to be
filed or of any contracts or other documents of a character required
to be filed as an exhibit to the Registration Statement or required to
be incorporated by reference
14
into the Prospectus or required to be described in the Registration
Statement or the Prospectus which are not filed or incorporated by
reference or described as required.
In rendering such opinion, Xxxxx, Xxxxx & Xxxxx may rely as to matters
governed by the laws of states other than Illinois, New York or Federal laws on
local counsel in such jurisdictions, provided that in each case, Xxxxx, Xxxxx &
Xxxxx shall state that they believe that they and the Underwriters are
reasonably justified in relying on such other counsel. In rendering the opinions
contained in paragraphs (x) (insofar as said opinion refers to information in
the Prospectus under the captions "Federal Income Tax Considerations" and
"Certain Federal Income Tax Considerations") and (xi), such opinions may be
based upon (a) the Internal Revenue Code, as amended, and the rules and
regulations promulgated thereunder, (b) Maryland and Delaware law existing and
applicable to the Company, (c) facts and other matters set forth in the
Prospectus, (d) the provisions of the Declaration of Trust of the Company, and
(e) certain statements and representations made by the Company to Xxxxx, Brown &
Xxxxx.
(d) On the date hereof and also at each Time of Delivery, Xxxxxx Xxxxxxxx
LLP shall have furnished to you a letter or letters, dated the respective date
of delivery thereof, in form and substance satisfactory to you, to the effect
set forth in Annex II hereto;
(e) (i) Neither the Company, nor any of its subsidiaries, shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus, and
(ii) since the respective dates as of which information is given in the
Prospectus, there shall not have been any change in the capital stock or long-
term debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity, or results of operations
of the Company and its subsidiaries, otherwise than as set forth or contemplated
in the Prospectus, the effect of which, in any such case described in clause (i)
or (ii), is in your judgment so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the delivery of the Shares
on the terms and in the manner contemplated in the Prospectus as amended or
supplemented;
(f) On or after the date hereof, there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the Company's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities declared
by either Federal or New York State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such event
specified in this clause (iv) in your judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Firm
Shares or Optional Shares or both on the terms and in the manner contemplated in
the Prospectus;
15
(g) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities or preferred stock (including
the Preferred Shares) by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities or preferred
stock (including the Preferred Shares);
(h) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of Prospectuses as amended or supplemented
on the business day next succeeding the date hereof; and
(i) The Company shall have furnished or caused to be furnished to you at
each Time of Delivery certificates of officers of the Company satisfactory to
you as to the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as to the performance by the Company
of all of its obligations hereunder to be performed at or prior to such Time of
Delivery, as to the matters set forth in subsections (a) and (e) of this Section
and as to such other matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless the Underwriters
against any losses, claims, damages or liabilities, joint or several, to which
the Underwriters may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Shares, or any amendment
or supplement thereto, or arise out of or are based upon 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, and will reimburse the
Underwriters for any legal or other expenses reasonably incurred by the
Underwriters in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability (or action in respect thereof) arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented and any other
prospectus relating to the Shares, or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Representatives expressly for use therein; and provided further,
that the foregoing indemnity with respect to any Preliminary Prospectus shall
not inure to the benefit of the Underwriters (or to the benefit of any person
controlling the Underwriters) if the person asserting any such losses, claims,
damages or liabilities purchased Shares from the Underwriters and if such untrue
statement or omission or alleged untrue statement or omission made in such
Preliminary Prospectus is eliminated or remedied in the Prospectus (as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) and, if required by law, a copy of the Prospectus (as so
amended or supplemented) shall not have been furnished to such person at or
prior to the written confirmation of the sale of such Shares to such person.
16
(b) The Underwriters will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Shares, or any amendment or supplement thereto, or arise out of
or are based upon 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, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented and any other
prospectus relating to the Shares, or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Representatives expressly for use therein; and will reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by the indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to the indemnified party
otherwise than under such subsection. In case any such action shall be brought
against the indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, assume the defense thereof, with
counsel satisfactory to the indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to the indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to the indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by the
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. Neither the indemnifying nor the indemnified party
shall, without the written consent of the other party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the other party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the other party
from all liability arising out of such action or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act, by
or on behalf of the other party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless the indemnified party under subsection (a)
or (b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then the indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one
17
hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then the indemnifying party shall
contribute to such amount paid or payable by the indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from such offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or the Underwriters on the other and the party's
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this subsection
(d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by the indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by the indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), the Underwriters shall
not be required to contribute any amount in excess of the amount by which the
total price at which the applicable Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
the Underwriters have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Underwriters within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and trustee of the Company and to each person, if
any, who controls the Company within the meaning of the Act.
9. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Underwriters, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of the Underwriters or any controlling person of the Underwriters, or the
Company or any officer or trustee or controlling person of the Company, and
shall survive delivery of and payment for the Shares.
18
10. If the Shares are not delivered by or on behalf of the Company as
provided herein, the Company will reimburse the Underwriters for all out-of-
pocket expenses, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company shall then be under no
further liability to the Underwriters except as provided in Sections 6 and 8
hereof.
11. All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the Representatives at Xxxxxxx Xxxxx World
Headquarters, World Financial Center, North Tower, New York, New York 10281,
Attention: Tjarda V.S. Xxxxxxx; and if to the Company shall be delivered or sent
by mail, telex or facsimile transmission to the address of the Company set forth
in the Registration Statement, Attention: Secretary.
12. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Sections 8 and
9 hereof, the officers and trustees of the Company and each person who controls
the Company or the Underwriters, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from the Underwriters shall be deemed a successor or assign by reason
merely of such purchase.
13. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
14. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
15. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
16. Under the terms of the Company's Declaration of Trust, all persons
dealing with the Company shall look solely to the Company property for
satisfaction of claims of any nature, and no trustee, officer, agent or
shareholder of the Company shall be held to any person liable in tort, contract
or otherwise as the result of the execution and delivery of this Agreement by
the Company.
19
If the foregoing is in accordance with your understanding, please sign and
return to us four counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between you and the Company.
Very truly yours,
Security Capital Industrial Trust
By: /s/ X. Xxxxxx Xxxxxx, Xx.
------------------------------
Name: X. Xxxxxx Xxxxxx, Xx.
Title: Senior Vice President
Chief Financial Officer
Accepted as of the date hereof:
XXXXXXX XXXXX & CO.
XXXXXXX XXXXX, XXXXXX, XXXXXX & XXXXX
INCORPORATED
X.X. XXXXXXX & SONS, INC.
XXXXXX XXXXXXX & CO. INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
XXXXX XXXXXX INC.
By: XXXXXXX XXXXX, XXXXXX, XXXXXX & XXXXX
INCORPORATED
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Authorized Signatory
20
ANNEX I
Underwriters
------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
X.X. Xxxxxxx & Sons, Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
Prudential Securities Incorporated
Xxxxx Xxxxxx Inc.
BT Xxxx Xxxxx Incorporated
Xxxxxx X. Xxxxx & Co. Incorporated
CIBC Xxxxxxxxxxx Corp.
Xxxxx & Company
Xxxx Xxxxxxxx Incorporated
EVEREN Securities, Inc.
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
Xxxxx Xxxxxxx Inc.
Xxxxxxx Xxxxx & Associates, Inc.
The Xxxxxxxx-Xxxxxxxx Company, LLC
Xxxxxx Xxxxxxx Incorporated
US Clearing Corp.
Wheat First Securities, Inc.
21
ANNEX II
Pursuant to Section 7(d) of the Purchase Agreement, Xxxxxx Xxxxxxxx LLP
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to the
Company and its subsidiaries within the meaning of the Act and the applicable
published rules and regulations thereunder;
(ii) In their opinion, the financial statements and financial statement
schedule audited by them and included or incorporated by reference in the
Registration Statement or the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations thereunder;
and they have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the consolidated interim
financial statements, selected financial data, pro forma financial information,
financial forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been separately
furnished to the Underwriters;
(iii) They have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited condensed
consolidated statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus and/or included in the
Company's quarterly report on Form 10-Q incorporated by reference into the
Prospectus as indicated in their reports thereon copies of which have been
separately furnished to the Underwriters; and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether the
unaudited condensed consolidated financial statements referred to in paragraph
(v)(A)(i) below comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related
published rules and regulations, nothing came to their attention that caused
them to believe that the unaudited condensed consolidated financial statements
do not comply as to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for the
five most recent fiscal years included in the Prospectus and included or
incorporated by reference in Item 6 of the Company's Annual Report on Form 10-K
for the most recent fiscal year agrees with the corresponding amounts (after
restatement where applicable) in the audited consolidated financial statements
for such five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
(v) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below, a
reading of the latest available interim financial statements of the Company and
its
22
subsidiaries, inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of officials of the
Company and its subsidiaries responsible for financial and accounting matters
and such other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of earnings,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included or incorporated by reference in
the Company's Quarterly Reports on Form 10-Q incorporated by reference in
the Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act as it applies to
Form 10-Q and the related published rules and regulations thereunder (ii)
or any material modifications should be made to the unaudited consolidated
statements of earnings, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus and/or included in the
Company's Quarterly Reports on Form 10-Q incorporated by reference in the
Prospectus for them to be in conformity with generally accepted accounting
principles;
(B) any other unaudited income statement data and balance sheet items
included in the Prospectus do not agree with the corresponding items in the
unaudited consolidated financial statements from which such data and items
were derived, and any such unaudited data and items were not determined on
a basis substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included or
incorporated by reference in the Company's Annual Report on Form 10-K for
the most recent fiscal year;
(C) the unaudited financial statements which were not included in the
Prospectus but from which were derived the unaudited condensed financial
statements referred to in Clause (A) and any unaudited income statement
data and balance sheet items included in the Prospectus and referred to in
Clause (B) were not determined on a basis substantially consistent with the
basis for the audited financial statements included or incorporated by
reference in the Company's Annual Report on Form 10-K for the most recent
fiscal year;
(D) any unaudited pro forma consolidated condensed financial statements
included or incorporated by reference in the Prospectus do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical amounts
in the compilation of those statements;
(E) as of a specified date not more than three days prior to the date of
such letter, there have been any changes in the shareholder's equity (other
than issuances of capital stock upon exercise of options which were
outstanding on the date of the latest balance sheet included or
incorporated by reference in the Prospectus) or any increase in the
consolidated long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or net assets or other items
specified by the Underwriter, or any increases in any items specified by
the Underwriters, in each case as compared with amounts shown in the latest
balance sheet included or incorporated by reference in the Prospectus,
except in each case for changes, increases or decreases which the
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Prospectus discloses have occurred or may occur or which are described in
such letter; and
(F) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the specified
date referred to in Clause (E) there were any decreases in consolidated net
income or net earnings from operations or the total or per share amounts of
consolidated net income or other items specified by the Underwriters, or
any increases in any items specified by the Underwriters, in each case as
compared with the comparable period of the preceding year and with any
other period of corresponding length specified by the Underwriters, except
in each case for increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(vi) In addition to the audit referred to in their report(s) included or
incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (v) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and financial
information specified by the Underwriters which are derived from the general
accounting records of the Company and its subsidiaries, which appear in the
Prospectus (excluding documents incorporated by reference) or in Part II of, or
in exhibits and schedules to, the Registration Statement specified by the
Underwriters or in documents incorporated by reference in the Prospectus
specified by the Underwriters, and have compared certain of such amounts,
percentages and financial information with the accounting records of the Company
and its subsidiaries and have found them to be in agreement.
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