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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) April 23, 1998
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SECURITY CAPITAL INDUSTRIAL TRUST
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(Exact Name of Registrant as Specified in its Charter)
Maryland
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(State or Other Jurisdiction of Incorporation)
1-12846 74-2604728
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(Commission File Number) (I.R.S. Employer Identification No.)
14100 East 35th Place, Aurora, Colorado 80011
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(Address of Principal Executive Offices) (Zip Code)
(303) 375-9292
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On April 23, 1998, Security Capital Industrial Trust, a Maryland
real estate investment trust ("SCI"), completed the pricing of an offering
of its Common Shares of Beneficial Interest, par value $0.01 per share (the
"Common Shares"). On April 29, 1998, SCI will close the offering of the
Common Shares to Merrill Lynch, Pierce, Fenner & Smith Incorporated. A copy of
the Purchase Agreement relating to the Common Shares is filed as an exhibit
hereto and is hereby incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Sequential
Exhibit No. Document Description Page No.
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1.1 Purchase Agreement dated
April 23, 1998 between Merrill
Lynch, Pierce, Fenner & Smith
Incorporated and Security
Capital Industrial Trust.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
SECURITY CAPITAL INDUSTRIAL TRUST
Dated: April 28, 1998 By: /s/ Jeffrey A. Klopf
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Jeffrey A. Klopf
Secretary
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Security Capital Industrial Trust
Common Shares of Beneficial Interest
(par value $0.01 per share)
Purchase Agreement
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April 23, 1998
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center, North Tower
New York, New York 10281
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 Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Underwriter") ___________Common Shares of Beneficial Interest, par value
$0.01 per share of the Company (the "Shares"). The Underwriter intends to
deposit the Shares with the trustee of the Equity Investor Fund Cohen & Steers
Realty Majors Portfolio (a Unit Investment Trust) (the "Trust"), a registered
unit investment trust under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), for which Merrill Lynch, Pierce, Fenner & Smith
Incorporated acts as sponsor and depositor, in exchange for units in the Trust.
1. The Company represents and warrants to, and agrees with, the
Underwriter 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
Underwriter, 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 Underwriter); and no stop
order suspending the effectiveness of any 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
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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 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 Underwriter 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
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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 Underwriter
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
Underwriter 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
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
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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;
(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
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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 Underwriter;
(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 caption "Certain Federal Income
Tax Considerations" and in the Prospectus under the
caption "Description of Common Shares," insofar as they
purport to constitute a summary of the terms of the
Shares, and under the caption "Federal Income Tax
Considerations," 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 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) Arthur Andersen 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;
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(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 1995
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 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, the
Company agrees to issue and sell to the Underwriter, and the Underwriter agrees
to purchase from the Company, at a purchase price per share of $________, the
number of Shares set forth.
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3. Upon the authorization by you of the release of the Shares,
the Underwriter proposes to deposit the Shares with the trustee of the Trust, a
registered unit investment trust under the Investment Company Act, for
which Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as sponsor
and depositor, in exchange for units in the Trust as soon after the
execution and delivery hereof as in the judgment of the Underwriter is
advisable.
4. Certificates for the Shares to be purchased by the
Underwriter hereunder, and in such authorized denominations and registered in
such names as the Underwriter 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 Underwriter, against payment by the Underwriter 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 9:00 a.m.,
New York time, on April ___, 1998, 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 Shares is herein called the "Time of Delivery." Such certificates will
be made available for checking and packaging at least twenty-four hours
prior to the Time of Delivery at the office of Merrill Lynch, Pierce,
Fenner & Smith Incorporated, World Financial Center, North Tower, New York,
New York 10281.
5. The Company agrees with the Underwriter:
(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 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;
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(c) On the business day next succeeding the date hereof,
and from time to time, to furnish the Underwriter with
copies of the Prospectus as amended or supplemented in
New York City in such quantities as you may reasonably
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 Time of Delivery,
without the prior written consent of the Underwriter, not
to, directly or indirectly, offer, sell, contract to sell
or otherwise dispose of any Shares or securities which
are convertible into or exchangeable for Shares, except
for shares issued in connection with property
acquisitions by the Company or 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 Shares or
securities which are convertible into or exchangeable for
Shares for 90 days after the Time of Delivery, without the
prior written consent of the Underwriter;
(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 (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;
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(h) During a period of three years from the date of this
Agreement, to furnish to the Underwriter copies of all
reports or other communications (financial or other)
furnished to shareholders, and to deliver to the
Underwriter (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 Underwriter 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 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 Underwriter 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 Underwriter 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;
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(c) all expenses in connection with the qualification of the 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 Underwriter
in connection with such qualification and in connection with the blue sky
survey(s); (d) all fees and expenses in connection with the listing of the
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 Underwriter will pay all of
its own costs and expenses, including the fees of counsel for the
Underwriter, 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 Underwriter hereunder, as to the
Shares to be delivered at the Time of Delivery, shall be subject, in the
discretion of the Underwriter, to the condition that all representations and
warranties and other statements of the Company herein are, at and as of the
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 Underwriter, shall have
furnished to you such opinion or opinions, dated the Time of
Delivery, with respect to the validity of the Shares being
delivered at the 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) Mayer, Brown & Platt shall have furnished to you their
written opinion, dated the Time of Delivery, in form and
substance satisfactory to you, to the effect that:
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(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 the 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 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;
(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;
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(vi) This Agreement has been duly authorized, executed
and delivered by the Company;
(vii) The issue and sale of the Shares being delivered at
the 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 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 Underwriter;
(xi) 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 them 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 caption "Certain Federal Income Tax
Considerations" and in the Prospectus under the captions
"Description of Common 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;
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<PAGE>
(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;
(xiii) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto
made by the Company prior to the 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
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<PAGE>
(xiv) The Registration Statement and the Prospectus and
any further amendments and supplements thereto made by
the Company prior to the 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 the 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 the 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 the Time of Delivery,
either the Registration Statement or the Prospectus or
any further amendment or supplement thereto made by the
Company prior to the 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 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, Mayer, Brown & Platt 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, Mayer, Brown & Platt shall state that they believe that they and the
Underwriter are reasonably justified in relying on such other counsel. In
rendering the opinions contained in paragraphs (xii) (insofar as said
opinion refers to information in the Prospectus under the caption "Federal
Income Tax Considerations") and (xiii), 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
Mayer, Brown & Platt.
(d) On the date hereof and also at the Time of Delivery, Arthur
Andersen 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 I hereto;
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<PAGE>
(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 market the Shares on the terms and
in the manner contemplated in the Prospectus or to enforce contracts for
the sale of the units of the Trust;
(g) On or after the date hereof (i) no downgrading shall have occurred
in the rating accorded the Company's debt securities or 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 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 the 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 the Time of Delivery, as to
the performance by the Company of all of its obligations hereunder to be
performed at or prior to the 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.
15
<PAGE>
8. (a) The Company will indemnify and hold harmless the
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which the Underwriter 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
Underwriter for any legal or other expenses reasonably incurred by the
Underwriter 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 Underwriter 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
Underwriter (or to the benefit of any person controlling the Underwriter)
if the person asserting any such losses, claims, damages or liabilities
purchased Shares from the Underwriter 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.
(b) The Underwriter 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 Underwriter 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.
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<PAGE>
(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 hand and the Underwriter 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 Underwriter 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 Underwriter 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 Underwriter. 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 Underwriter 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
Underwriter 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 Underwriter 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 Underwriter has 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.
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(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 Underwriter within the meaning of the Act; and the obligations
of the Underwriter under this Section 8 shall be in addition to any
liability which the Underwriter 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 Underwriter, 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 Underwriter or any controlling person
of the Underwriter, or the Company or any officer or trustee or controlling
person of the Company, and shall survive delivery of and payment for the
Shares.
10. If the Shares are not delivered by or on behalf of the Company as
provided herein, the Company will reimburse the Underwriter for all
out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred by the Underwriter 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 Underwriter 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 Underwriter shall be delivered or sent
by mail, telex or facsimile transmission to Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, at World Financial Center,
North Tower, New York, New York 10281, Attention: Tjarda V.S. Clagett; 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 Underwriter, 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 Underwriter, 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 Underwriter 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.
18
<PAGE>
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:______________________________
Name:
Title:
Accepted as of the date hereof:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By:____________________________________
Authorized Signatory
19
<PAGE>
ANNEX I
Pursuant to Section 7(d) of the Purchase Agreement, Arthur
Andersen LLP shall furnish letters to the Underwriter 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
Underwriter;
(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 Underwriter; 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;
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<PAGE>
(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 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
or (ii) 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;
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(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
Underwriter, 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 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 Underwriter, or any
increases in any items specified by the Underwriter, in each case
as compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Underwriter, 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 Underwriter 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 Underwriter or in documents incorporated by reference in
the Prospectus specified by the Underwriter, 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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