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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
USG CORPORATION
(Name of Issuer)
Common Stock, par value $.10 per share
(Title of Class of Securities)
0009032931
(CUSIP Number)
James B. McHugh, Esq.
The Goldman Sachs Group, L.P.
85 Broad Street
New York, NY 10004
(212) 902-1000
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
March 9, 1994
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box. [ ]
Check the following box if a fee is being paid with the statement. [ ] (A
fee is not required, only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
<PAGE>
This statement constitutes Amendment No. 3 ("Amendment No. 3")
to the Statement on Schedule 13D, dated May 6, 1993, as amended by
Amendment No. 1, dated January 7, 1994, and Amendment No. 2, dated
February 22, 1994 (collectively, the "Schedule 13D"), filed by Water
Street Corporate Recovery Fund I, L.P. ("Water Street"), Goldman, Sachs &
Co. ("Goldman Sachs") and The Goldman Sachs Group, L.P. ("GS Group" and
together with Water Street and Goldman Sachs, the "Reporting Persons") in
respect of the beneficial ownership by the Reporting Persons of shares of
the common stock, par value $.10 per share (the "Common Stock"), of USG
Corporation, a Delaware corporation (the "Company"). Capitalized terms
used but otherwise not defined herein shall have the meaning ascribed to
them in the Schedule 13D.
Item 4 is hereby amended as follows:
Item 4. Purpose of the Transaction.
On March 9, 1994, the Company filed a registration
statement (the "Registration Statement") for an underwritten public
offering of Common Stock (the "Offering"). The Registration Statement
constitutes Post-Effective Amendment No. 1 to Registration Statement No.
33-51845, as amended, which was originally filed on January 7, 1994 in
respect of the Offering. The Registration Statement covers the sale in
the Offering of 5,500,000 shares of Common Stock by Water Street
(6,475,000 shares if the underwriters' overallotment options are exercised
in full).
Item 5 is hereby amended as follows:
Item 5. Interest in Securities of the Issuer.
On March 9, 1994, the Company filed the Registration
Statement for an underwritten public offering of Common Stock of 7,000,000
shares of Common Stock by the Company (7,900,000 shares if the
underwriters' overallotment options are exercised in full) and 5,500,000
shares of Common Stock by Water Street (6,475,000 shares if the
underwriters' overallotment options are exercised in full).
The public offering price per share of Common Stock in
the Offering is $29.875. The closing of the Offering, which is subject to
certain conditions that are customary for an underwritten public offering,
is scheduled for
<PAGE>
March 16, 1994. Assuming consummation of the Offering,
Water Street would receive aggregate proceeds of $156,920,500
($184,738,225 if the underwriters overallotment options are exercised in
full), or $28.531 per share, in each case, net of the underwriting
discount (but before payment of Water Street's other expenses).
Assuming consummation of the Offering, (i) Water Street
would beneficially own 10,393,231 shares of Common Stock (9,418,231 shares
if the underwriters' overallotment options are exercised in full) and
Warrants to purchase 116,070 shares of Common Stock and (ii) Goldman Sachs
and GS Group would beneficially own 10,489,770 shares of Common Stock
(9,514,770 shares if the underwriters' overallotment options are exercised
in full) and Warrants to purchase 116,070 shares of Common Stock. Based
on the foregoing, Water Street, Goldman Sachs and GS Group would
beneficially own (without giving effect to the Warrants owned by Water
Street) 24% (21% if the underwriters' overallotment options are exercised
in full) of the outstanding shares of Common Stock after the Offering.
Assuming that Water Street exercises all of its Warrants, but that no
other Warrants are exercised, Water Street, Goldman Sachs and GS Group
would beneficially own 24% (21% if the underwriters' overallotment options
are exercised in full) of the outstanding shares of Common Stock after the
Offering.
Item 6 is hereby amended as follows:
Item 6. Contracts, Arrangements, Understandings
or Relationships with Respect to Securities of the Issuer.
In connection with the Offering, Water Street entered
into a U.S. and International Underwriting Agreement containing customary
terms and conditions, copies of which are filed as Exhibits G and H,
respectively, to this Amendment No. 3 and incorporated by reference.
In connection with the Offering, Goldman Sachs and
Water Street agreed with the underwriters that during the 120-day period
after the effective date of the Offering, Water Street and Goldman Sachs
will not sell or otherwise dispose of any shares of Common Stock or
Warrants, except that, at any time after 90 days after the effective date
of the Offering, Water Street may distribute all or any portion of its
shares of Common Stock or Warrants to its partners in accordance with its
governing partnership agreement and except that Water Street and Goldman
Sachs may exercise their Warrants. A copy of that agreement is filed as
Exhibit I to this Amendment No. 3 and incorporated by reference.
<PAGE>
Item 7. Material to be Filed as Exhibits
(G) U.S. Underwriting Agreement, dated March 8, 1994,
between the Company, Water Street, and Salomon
Brothers Inc, Lazard Freres & Co. and Smith Barney
Shearson Inc., as representatives of the several
U.S. underwriters.
(H) International Underwriting Agreement, dated March
8, 1994, between the Company, Water Street, and
Salomon Brothers International Limited, Lazard
Brothers & Co., Limited and Smith Barney Shearson
Inc., as representatives of the several
international underwriters.
(I) Agreement, dated March 8, 1994, by Goldman Sachs
and Water Street.
<PAGE>
SIGNATURE
Each of the undersigned certifies, after reasonable inquiry and
to the best of its knowledge and belief, that the information set forth in
this statement is true, complete and correct.
WATER STREET CORPORATE RECOVERY FUND I, L.P.
By: GOLDMAN, SACHS & CO.
General Partner
By: /s/ Richard A. Friedman
Name: Richard A. Friedman
Title: General Partner
GOLDMAN, SACHS & CO.
By: /s/ Richard A. Friedman
Name: Richard A. Friedman
Title: General Partner
THE GOLDMAN SACHS GROUP, L.P.
By: /s/ Richard A. Friedman
Name: Richard A. Friedman
Title: General Partner
Dated: March 14, 1994
<PAGE>
Index to Exhibits
Exhibit Description Page
(G) U.S. Underwriting 7
Agreement, dated
March 8, 1994,
between the Company,
Water Street, and
Salomon Brothers
Inc, Lazard Freres &
Co. and Smith Barney
Shearson Inc., as
representatives of
the several U.S.
underwriters.
(H) International Underwriting 37
Agreement, dated
March 8, 1994,
between the Company,
Water Street, and
Salomon Brothers
International
Limited, Lazard
Brothers & Co.,
Limited and Smith
Barney Shearson
Inc., as
representatives of
the several
international
underwriters.
(I) Agreement, dated March 8, 66
1994, by Goldman Sachs
and Water Street.
<PAGE>
USG Corporation
Exhibit G
12,500,000 Shares 1
Common Stock
($.10 par value)
U.S. Underwriting Agreement
New York, New York
March 8, 1994
Salomon Brothers Inc
Lazard Freres & Co.
Smith Barney Shearson Inc.
As Representatives of the Several Underwriters,
c/o Salomon Brothers Inc
7 World Trade Center
New York, New York 10048
Dear Sirs:
USG Corporation, a Delaware corporation (the "Company"),
proposes to sell to the underwriters named in Schedule I hereto (the
"Underwriters"), for which you are acting as representatives (the
"Representatives"), 5,950,000 shares (the "Company Underwritten
Securities") of common stock, $.10 par value per share (the "Common
Stock"), of the Company, and Water Street Corporate Recovery Fund I, L.P.
("Water Street" or the "Selling Stockholder") proposes to sell to the
Underwriters 4,675,000 shares of Common Stock (the "Selling Stockholder
Securities" and together with the Company Underwritten Securities, the
"Underwritten Securities"). In addition, solely for the purpose of
covering overallotments, the Company proposes to grant to the Underwriters
an option to purchase up to an additional 765,000 shares (the "Company
Option Securities") of Common Stock and the Selling Stockholder proposes
to grant to the Underwriters an option to purchase up to an additional
828,750 shares of Common Stock (the "Selling Stockholder Option Securi-
ties" and together with the Company Option Securities, the "U.S. Option
Securities"). The Underwritten Securities and the Option Securities are
hereinafter referred to as the "U.S. Securities." The parties hereto
acknowledge that the underwriting discount on the sale of the Securities
will be 4.5% of the aggregate price to the public.
It is understood that the Company and the Selling Stockholder
are concurrently entering into an International Underwriting Agreement
dated the date hereof (the "International Underwriting Agreement")
providing for the issue and sale by the Company of an aggregate of
1,050,000 shares of Common Stock (the "International Company Underwritten
Securities") and the sale by the Selling Stockholder of an aggregate of
825,000 shares of Common Stock (the "International Selling Stockholder
Underwritten Securities" and together with the International Company
Underwritten Securities, the "International Underwritten Securities"), in
each case, outside the United States and Canada through arrangements with
certain underwriters outside the United States and Canada (the "Managers")
for whom Salomon Brothers
_________________
1 Plus options to purchase from USG Corporation up to 900,000 additional
shares and from the Selling Stockholder up to 975,000 additional shares
to cover overallotments.
<PAGE>
International Limited, Lazard Brothers & Co.,
Limited and Smith Barney Shearson Inc. are acting as representatives (the
"International Representatives"), and providing for the grant by the
Company to the Managers of an option to purchase up to 135,000 additional
shares of Common Stock (the "International Company Option Securities") and
by the Selling Stockholder to the Managers of an option to purchase up to
146,250 additional shares of Common Stock (the "International Selling
Stockholder Option Securities," together with the International Company
Option Securities, the "International Option Securities," and together
with the International Underwritten Securities, the "International
Securities") solely for the purpose of covering overallotments. The U.S.
Securities together with the International Securities are hereinafter
called the "Securities." It is further understood and agreed that the
Managers and the Underwriters are entering into an agreement dated the
date hereof (the "Agreement Between U.S. Underwriters and the Managers"),
pursuant to which, among other things, the Managers may purchase from the
Underwriters a portion of the U.S. Securities to be sold pursuant to the
U.S. Underwriting Agreement and the Underwriters may purchase from the
Managers a portion of the International Securities to be sold pursuant to
International Underwriting Agreement.
The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term "the Effective Date" shall mean
each date that the Registration Statement and any post-effective amendment
or amendments thereto became or become effective. "Execution Time" shall
mean the date and time that this Agreement is executed and delivered by
the parties hereto. The "Preliminary Prospectus" shall mean any pre-
liminary prospectus with respect to the offering of the Securities
referred to in Section 1(a)(i) below and any preliminary prospectus with
respect to the offering of the Securities included in the Registration
Statement at the Effective Date that omits Rule 430A Information;
"Registration Statement" shall mean the registration statement referred to
in Section 1(a)(i) below, including exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution Time,
in the form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the Closing
Date, shall also mean such registration statement as so amended. Such
term shall include any Rule 430A Information deemed to be included therein
at the Effective Date as provided by Rule 430A. "Rule 424" and "Rule
430A" and "Regulation S-K" refer to such rules under the Act. "Rule 430A
Information" means information with respect to the Securities and the
offering thereof permitted to be omitted from the Registration Statement
pursuant to Rule 430A when the Registration Statement becomes effective.
1. Representations and Warranties. (a) The Company
represents and warrants to, and agrees with, each Underwriter as follows:
(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (file number
33-51845) on Form S-1, including a related preliminary prospectus,
for the registration under the Securities Act of 1933, as amended
(the "Act") of the offering and sale of the Securities. The Company
may have filed one or more amendments thereto, including the related
preliminary prospectus, each of which has previously been furnished
to you. The Company will next file with the Commission either (i)
prior to the effectiveness of such registration statement, a further
amendment to such registration statement
<PAGE>
(including the form of
final prospectus) or (ii) after the effectiveness of such regis-
tration statement, a final prospectus in accordance with Rules 430A
and 424(b)(1) or (4). In the case of clause (ii), the Company has
included in such registration statement, as amended at the Effective
Date, all information (other than Rule 430A Information) required by
the Act and the rules thereunder to be included in the final
prospectus with respect to the Securities and the offering thereof.
As filed, such amendment and form of final prospectus, or such final
prospectus, shall contain all Rule 430A Information, together with
all other such required information, with respect to the Securities
and the offering thereof and, except to the extent the
Representatives shall agree in writing to a modification, shall be
in all substantive respects in the form furnished to you prior to
the Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and
other changes (beyond those contained in the latest Preliminary
Prospectus) as the Company has advised you, prior to the Execution
Time, will be included or made therein.
The form of prospectus relating to the Securities as first
filed pursuant to Rule 424(b) or, if no filing pursuant to Rule
424(b) is made, such form of prospectus included in the Registration
Statement at the Effective Date, is hereinafter called the
"Prospectus."
(ii) On the Effective Date, the Registration Statement
did or will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on each Closing Date (as defined in
Section 3 hereof) the Prospectus (and any supplement thereto) will,
comply in all material respects with the applicable requirements of
the Act and the rules thereunder; on the Effective Date, the Reg-
istration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading; and, on the Effective Date, the Prospectus, if not
filed pursuant to Rule 424(b), did not or will not, and on the date
of any filing pursuant to Rule 424(b) and on each Closing Date, the
Prospectus (together with any supplement thereto) will not, include
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or
warranties as to the information contained in or omitted from the
Registration Statement, or the Prospectus (or any supplement
thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any
Underwriter through the Representatives, or Water Street
specifically for use in connection with the preparation of the
Registration Statement or the Prospectus (or any supplement
thereto).
(iii) Each of the Company and its subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation; all of the
issued shares of capital stock of each subsidiary have been duly and
validly authorized and issued, are fully paid and nonassessable, and
(except for directors' qualifying shares and those shares not held
by the Company or any of its Affiliates) are owned directly or
indirectly by the Corporation, free and clear of all liens,
encumbrances, equities or claims, except for the shares of capital
stock of USG Interiors (Europe) SA and except as provided under the
Collateral Trust
<PAGE>
Agreement (as such term is defined in the
Prospectus). Each of the Company and its subsidiaries has the
requisite corporate power and authority to own or lease and operate
its properties and to carry on its business as described in the
Prospectus except where the failure to have such power and authority
would not reasonably be expected to result in a material adverse
change in the financial condition, assets or operations of the
Company and its subsidiaries taken as a whole (a "MAC"). The
Company has the requisite power and authority to authorize the
offering of the Securities to be sold by it, and to issue, sell and
deliver the Securities to be sold by it. The Company has the
requisite power and authority to enter into each of the following
agreements and to perform its obligations thereunder: the letter
agreement, dated February 25, 1993, as amended (the "Water Street
Agreement"), among the Company, Water Street, Goldman, Sachs & Co.
and The Goldman Sachs Group, L.P.; this Agreement; and the
International Underwriting Agreement (collectively, the
"Agreements"). It being understood and agreed that the Company will
have to deliver good standing certificates and similar documentation
only with respect to United States Gypsum Company, USG Interiors,
Inc., L&W Supply Corporation, USG Industries, Inc., USG Foreign
Investments, Ltd., La Mirada Products Co., Inc., Westbank Planting
Company and American Metals Corporation (individually a "Major
Subsidiary" and collectively the "Major Subsidiaries").
(iv) Each of the Company and its subsidiaries is duly
qualified or licensed and in good standing as a foreign corporation
duly authorized to do business in each jurisdiction in which it owns
or leases properties, or conducts any business, so as to require
such qualification or licensure, except where the failure to be so
qualified and authorized would not reasonably be expected to result
in a MAC.
(v) Except as may be disclosed in the Registration
Statement and the Prospectus, there are no actions, proceedings or
investigations pending or to the best of the Company's knowledge
threatened (solely in the case of such actions, proceedings or
investigations which would result in a MAC, in writing) which
question the validity of this Agreement or the International
Underwriting Agreement or any action taken or to be taken pursuant
hereto or thereto which would result in a MAC, or which is required
to be disclosed in the Registration Statement or Prospectus which is
not adequately disclosed in the Registration Statement or
Prospectus, as the case may be, and, to the Company's knowledge,
there is no franchise, contract or other document required to be
described in the Registration Statement or Prospectus, or required
to be filed as an exhibit to the Registration Statement, which is
not so described or filed.
(vi) The Company and its subsidiaries are not in breach
or violation of any term or provision of any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation,
domestic or foreign, applicable to the Company or its subsidiaries
or to any of their respective properties or assets, which breach,
breaches, violation or violations would reasonably be expected to
individually or in the aggregate result in a MAC, and the Company
and its subsidiaries are not in violation of any term of their
respective charters or by-laws. The compliance by the Company with
all of the provisions of the Agreements, and the performance of the
transactions contemplated by the Agreements will not result in any
such violation or be in conflict with or
<PAGE>
constitute a default under
any such term, which conflict or default would result in a MAC or
result in the creation of any mortgage, lien, charge or encumbrance
upon any of the properties or assets of the Company pursuant to any
such term which would reasonably be expected to result in a MAC. No
consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the
Company and the subsidiaries of the transactions contemplated
herein, except such as have been obtained under the Act and such as
may be required under the Blue Sky Laws of any jurisdiction in
connection with the distribution of the Securities and such other
approvals as have been obtained.
(vii) The Securities to be issued and sold by the Company
to the Underwriters 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 nonassessable and
will conform in all material respects to the description of the
Common Stock contained in the Prospectus.
(viii) Each of the Agreements has been duly authorized
and validly executed and delivered by the Company and constitutes a
valid and legally binding agreement of the Company, enforceable
against the Company in accordance with its terms (assuming the due
execution and delivery by the parties thereto other than the
Company) subject to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent conveyance and
other similar laws relating to or affecting the enforcement of
rights of secured or unsecured creditors generally.
(ix) Except as disclosed in the Prospectus, no holder of
any security of the Company has or will have any right to require
the registration of such security by virtue of any transactions
contemplated by this Agreement other than any such right that has
been expressly waived in writing. No holder of any of the
outstanding shares of capital stock of the Company is entitled to
preemptive or other rights to subscribe for the Securities.
(x) The Securities have been duly authorized for trading
on the New York Stock Exchange, Inc., subject to official notice of
issuance.
(b) The Selling Stockholder represents and warrants to, and
agrees with, each Underwriter as follows:
(i) The Selling Stockholder is a partnership duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization. The Selling Stockholder has
all necessary power and authority to enter into this Agreement and
the International Underwriting Agreement. Each of the Agreements
has been duly authorized, executed and delivered by the Selling
Stockholder and constitutes a valid and binding obligation of the
Selling Stockholder, enforceable against it in accordance with its
terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect
and to general principles of equity and except with respect to the
indemnification provisions contained in the Agreements and assuming
due execution
<PAGE>
by the parties thereto other than Water Street). No
consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by
Water Street of any of the transactions contemplated herein except
for those under the Act or any state securities laws or Blue Sky
laws. The sale of the Securities by Water Street and the
consummation by Water Street of the transactions contemplated by
this Agreement and the International Underwriting Agreement will not
conflict with, result in a breach or violation of, or constitute a
default under any law, agreement of limited partnership of Water
Street, the Water Street Agreement or the terms of any indenture or
other agreement or instrument to which Water Street is a party or
bound, or any judgment, order or decree applicable to Water Street
of any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over Water Street.
(ii) Water Street has good and valid title to the
Securities to be sold by Water Street and upon sale and delivery of,
and payment for, such Securities, as provided herein, Water Street
will convey good and valid title to such Securities, free and clear
of all liens, encumbrances, equities and claims whatsoever.
(iii) On the Effective Date, the Registration Statement
did not or will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
and on the Effective Date the Prospectus, if not filed pursuant to
Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(together with any supplements thereto) will not, include any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided
that the Selling Stockholder makes no representations or warranties
as to any statements in or omissions from the Registration Statement
or Prospectus or any amendments or supplements thereto, except for
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of
the Selling Stockholder specifically for use in connection with the
preparation thereof.
2. Purchase and Sale. (a) Subject to the terms and
conditions and in reliance upon the representations and warranties herein
set forth, the Company and the Selling Stockholder agree, severally and
not jointly, to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company and the Selling
Stockholder at a purchase price of $28.5306 per share, the amount of
Underwritten Securities set forth opposite such Underwriter's name in
Schedule I hereto. The amount of Securities to be purchased by each
Underwriter from the Company and the Selling Stockholder shall be as
nearly as practicable in the same proportion to the total amount of
Securities to be purchased by such Underwriter as the total amount of
Securities to be sold by each of the Company and the Selling Stockholder
bears to the total amount of Securities to be sold pursuant hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company and the
Selling Stockholder hereby grant, severally and not jointly, an option to
the several Underwriters to purchase, severally and not jointly, up to
765,000 shares and
<PAGE>
828,750 shares of the U.S. Option Securities,
respectively, at the same purchase price per share as the Underwriter
shall pay for the Underwritten Securities. Said options may be exercised
solely to cover overallotments in the sale of the Underwritten Securities.
Said options may be exercised in whole or in part at any time (but not
more than once) on or before the 30th day after the date of the Prospectus
upon written or telegraphic notice by the Representatives to the Company
and the Selling Stockholder setting forth the number of shares of the U.S.
Option Securities as to which the several Underwriters are exercising the
option and the settlement date. Delivery of the shares of U.S. Option
Securities, and payment therefor, shall be made as provided in Section 3
hereof. The number of shares of the U.S. Option Securities to be
purchased by each Underwriter shall be the same percentage of the total
number of shares of the U.S. Option Securities to be purchased by the
several Underwriters as such Underwriter is purchasing of the Underwritten
Securities, subject to such adjustments as you in your absolute discretion
shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities shall be made at the offices of Wachtell, Lipton,
Rosen & Katz, 51 W. 52nd Street (or such other place as mutually may be
agreed upon), New York, New York, at 10:00 a.m., New York City time, on
March 16, 1994, or such later date (not later than April 1, 1994) as the
Representatives shall designate, which date and time may be postponed by
agreement among the Representatives, the Company and the Selling
Stockholder or as provided in Section 9 hereof (such date and time of
delivery and payment for the Securities being herein called the "First
Closing Date"). Delivery of the Underwritten Securities shall be made to
the Representatives for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representatives of the purchase price therefor to or upon the order of the
Company and the Selling Stockholder by certified or official bank check or
checks drawn on or by a New York Clearing House bank and payable in next
day funds. The Underwritten Securities shall be registered in such names
and in such denominations as the Representatives may request not less than
three full business days in advance of the First Closing Date.
The overallotment option may be exercised during the term
thereof by written notice by you to the Company and the Selling
Stockholder. Such notice shall set forth the aggregate number of U.S.
Option Securities as to which the option is being exercised, the name or
names in which such U.S. Option Securities are to be registered, the
authorized denominations in which such U.S. Option Securities are to be
issued, and the time and date, as determined by you, when such U.S. Option
Securities are to be delivered (an "Additional Closing Date"); provided,
however, that no Additional Closing Date shall be earlier than the First
Closing Date nor earlier than the third business day after the date on
which the notice of the exercise of the option shall have been given nor
later than the eighth business day after the date on which such notice
shall have been given. Delivery and payment for such U.S. Option Securi-
ties is to be at the offices set forth above for delivery and payment of
the Underwritten Securities. The First Closing Date and any Additional
Closing Date are individually referred to as a "Closing Date" and
collectively referred to as the "Closing Dates."
The Company and the Selling Stockholder agree to use their
best efforts to have the Underwritten Securities and the U.S. Option
Securities, as the case may be, to be delivered at each Closing
<PAGE>
Date available for inspection, checking and packaging
by the Representatives in
New York, New York, not later than 1:00 p.m. on the business day prior to
such Closing Date.
4. Offering by Underwriters. It is understood that the
several Underwriters propose to offer the Securities for sale to the
public as set forth in the Prospectus. The Representatives agree to
advise the Company promptly following the completion of the distribution
of the Securities.
5. Agreements. (a) The Company agrees with the several
Underwriters and Water Street that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and
any amendment thereof, to become effective. Prior to the
termination of the offering of the Securities, the Company will not
file any amendment of the Registration Statement or supplement to
the Prospectus without your prior consent, which consent shall not
be unreasonably withheld. Subject to the foregoing sentence, if the
Registration Statement has become or becomes effective pursuant to
Rule 430A, or filing of the Prospectus is otherwise required under
Rule 424(b), the Company will cause the Prospectus, properly
completed, and any supplement thereto to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The
Company will promptly advise the Representatives (i) when the Reg-
istration Statement, if not effective at the Execution Time, and any
amendment thereto, shall have become effective, (ii) when the
Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b), (iii) when,
prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have been filed or
become effective, (iv) of any request by the Commission for any
amendment of the Registration Statement or supplement to the
Prospectus or for any additional information, (v) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the Company becoming aware of the
institution or threatening of any proceeding for that purpose, and
(vi) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding
for such purpose. The Company will use its best efforts to prevent
the issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event
occurs as a result of which the Prospectus as then supplemented
would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, or if it shall be necessary to amend the Registration
Statement or supplement the Prospectus to comply with the Act or the
rules thereunder, the Company will promptly prepare and file with
the Commission, subject to the second sentence of Section 5(a)(i),
an amendment or supplement which will correct such statement or
omission or effect such compliance.
<PAGE>
(iii) As soon as practicable, but in any event not later
than sixteen (16) months after the Effective Date, the Company will
make generally available to its security holders and to the
Representatives an earnings statement or statements of the Company
and its subsidiaries which satisfies the provisions of Section 11(a)
of the Act and Rule 158 under the Act. Filing reports under Section
13 of the Securities Exchange Act of 1934 on a timely basis shall
constitute compliance with this paragraph (iii), provided that the
provisions of Section 11(a) of the Act and Rule 158 are thereby
satisfied.
(iv) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, two signed copies of
the Registration Statement (including exhibits thereto) and to each
other Underwriter a copy of the Registration Statement (without
exhibits thereto) and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of
each Preliminary Prospectus and the Prospectus and any supplement
thereto as the Representatives may reasonably request. The Company
will pay the expenses of printing or other production of all
documents relating to the offering.
(v) The Company will cooperate with you and your counsel
in connection with endeavoring to obtain qualification of the
Securities for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in
effect so long as required for the distribution of the Securities;
provided, however, that the Company shall not be obligated to
qualify as a foreign corporation to do business under the laws of
any jurisdiction in which it shall not then be qualified but for the
requirements of this Section 4(a)(v), to subject itself to taxation
in any such jurisdiction to which it shall not then be so subject or
to consent to general service of process in any such jurisdiction to
which it shall not then be so subject.
(vi) For a period of 120 days following the Execution
Time, the Company will not, without the prior written consent of the
Representatives, offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering of, any
other shares of Common Stock or any securities convertible into, or
exercisable or exchangeable for, shares of Common Stock, other than
through the exercise of warrants or management stock options.
(vii) The Company will apply the net proceeds of the
offering and the sale of the Securities in the manner set forth in
the Prospectus under the caption "Purpose of the Offering and Use of
Proceeds."
(viii) The Company confirms as of the date hereof that it
is in compliance with all provisions of Section 1 of the Laws of
Florida, Chapter 92-198, An Act Relating to Disclosure of Doing
Business with Cuba, Section 517.075 of the Florida Securities and
Investor Protection Act, and the Company further agrees that if it
or any of its affiliates commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba
after the date the Registration Statement becomes or has become
effective with the Commission or with the Florida
<PAGE>
Department of
Banking and Finance (the "Department"), whichever date is later, or
if the information reported in the Prospectus, if any, concerning
the Company's business with Cuba or with any person or affiliate
located in Cuba changes in any material way, the Company will
provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
(ix) The Company will comply with its obligations with
respect to the Securities under Article 4 of the Water Street
Agreement.
(b) Water Street agrees with the several Underwriters that:
(i) Water Street will not (and any assignees of Water
Street's rights under Section 4.1 of the Water Street Agreement will
not) request any registration of shares of Common Stock pursuant to
Section 4.1 of the Water Street Agreement for a period of 120 days
following the Effective Date.
(ii) For a period of 120 days following the Execution
Time, Water Street and Goldman, Sachs & Co. will not, without the
prior written consent of the Representatives, offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly,
or announce the offering of, any other shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for,
shares of Common Stock; provided, however, Water Street may
distribute such shares or securities held by it to its partners at
any time after 90 days following the Effective Date, which partners
(other than Goldman, Sachs & Co.) shall not be bound by the
limitations in this paragraph (ii); provided, further, that Water
Street and Goldman, Sachs & Co. may exercise any of their Warrants
to purchase Common Stock.
(c) Each Underwriter covenants and agrees with the Company
and Water Street that it will comply with the obligations of an
underwriter with respect to the Securities under Article 4 of the Water
Street Agreement, it being understood that such obligations do not include
those set forth under Sections 4.8(a), (b), (c), (d)(iii) and (d)(iv) of
such Agreement.
(d) Each Underwriter agrees that (i) it is not purchasing any
of the U.S. Securities for the account of anyone other than a United
States or Canadian Person, (ii) it has not offered or sold, and will not
offer or sell, directly or indirectly, any of the U.S. Securities or
distribute any domestic Prospectus to any person outside the United States
or Canada, or to anyone other than a United States or Canadian Person, and
(iii) any dealer to whom it may sell any of the U.S. Securities will
represent that it is not purchasing for the account of anyone other than a
United States or Canadian Person and agree that it will not offer or
resell, directly or indirectly, any of the U.S. Securities outside the
United States or Canada, or to anyone other than a United States or
Canadian Person or to any other dealer who does not so represent and
agree; provided, however, that the foregoing shall not restrict (A)
purchases and sales between the Underwriters on the one hand and the Man-
agers on the other hand pursuant to Section 1(b) of the Agreement Between
Underwriters and Managers, (B) stabilization transactions contemplated
under Section 2 of the Agreement Between
<PAGE>
Underwriters and Managers,
conducted through Salomon Brothers Inc as part of the distribution of the
Securities, and (C) sales to or through (or distributions of domestic
Prospectuses or domestic Preliminary Prospectuses to) United States or
Canadian Persons who are investment advisors, or who otherwise exercise
investment discretion, and who are purchasing for the account of anyone
other than a United States or Canadian Person. "United States or Canadian
Person" shall mean any person who is a national or resident of the United
States or Canada, a corporation, partnership, or other entity created or
organized in or under the laws of the United States or Canada or of any
political subdivision thereof, or any estate or trust the income of which
is subject to United States or Canadian federal income taxation,
regardless of its source (other than any non-United States or non-Canadian
branch of any United States or Canadian Person), and shall include any
United States or Canadian branch of a person other than a United States or
Canadian Person. "US" or "United States" shall mean the United States of
America (including the states thereof and the District of Columbia), its
territories, its possessions and other areas subject to its jurisdiction.
(e) The agreements of the Underwriters set forth in paragraph
(d) of this Section 5 shall terminate upon the earlier of the following
events:
(i) a mutual agreement of the Representatives and the
International Representative to terminate the selling restrictions
set forth in paragraph (d) of this Section 5 and in Section 5(d) of
the International Underwriting Agreement; or
(ii) the expiration of a period of 30 days after the
Closing Date, unless (a) the Representatives shall have given notice
to the Company and the International Representative that the
distribution of the U.S. Securities by the Underwriters has not yet
been completed, or (b) the International Representative shall have
given notice to the Company and the Underwriters that the dis-
tribution of the International Securities by the Managers has not
yet been completed. If such notice by the Representatives or the
International Representative is given, the agreements set forth in
such paragraph (b) shall survive until the earlier of (1) the event
referred to in clause (i) of this subsection (e) or (2) the
expiration of any additional period of 30 days from the date of any
such notice.
(f) Each Underwriter represents and agrees to make any offer
of the Securities in Canada only pursuant to an exemption from the
Prospectus requirements in any jurisdiction in Canada in which such offer
is made.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Securities to be delivered
at each Closing Date shall be subject to the accuracy of the
representations and warranties on the part of the Company and Water Street
contained herein as of the Execution Time and as of such Closing Date (as
if made at such Closing Date), to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company and Water Street of their obligations hereunder
and to the following additional conditions:
<PAGE>
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representatives agree in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 p.m. New York City time on the
date of determination of the public offering price, if such
determination occurred at or prior to 3:00 p.m. New York City time
on such date or (ii) 12:00 Noon on the business day following the
day on which the public offering price was determined, if such
determination occurred after 3:00 p.m. New York City time on such
date; if filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such
supplement, will be filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the effective-
ness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or
threatened.
(b) On each Closing Date, the Company shall have furnished to
the Representatives and Water Street the opinion of Kirkland &
Ellis, counsel for the Company as to paragraphs (i), (iv), (vii),
(viii), (ix) and (x), and of the General Counsel or the Assistant
General Counsel of the Company with respect to paragraphs (ii),
(iii), (v), (vi), (xi) and (xii), each dated as of such Closing
Date, to the effect that:
(i) The Company has been duly incorporated and the
Company is validly existing as a corporation under the laws of
the State of Delaware, with full corporate power and authority
to own its properties and conduct its businesses as described
in the Prospectus;
(ii) Each of the Major Subsidiaries has been duly
incorporated and all the Major Subsidiaries are validly
existing as corporations under the laws of their respective
jurisdictions of incorporation, with full corporate power and
authority to own their respective properties and conduct their
respective businesses as described in the Prospectus, and the
Company and each of the Major Subsidiaries are duly qualified
to do business as foreign corporations under the laws of each
jurisdiction in which the character of the business conducted
or the location of the properties owned or leased make such
qualifications necessary and in which the consequences of a
failure to so qualify would have a material adverse effect on
the properties or businesses of the Company and its
subsidiaries taken as whole:
(iii) all the outstanding shares of capital stock of
each Major Subsidiary have been duly and validly authorized
and issued and are fully paid and nonassessable, and have not
been issued and are not owned or held in violation of any
statutory preemptive right of stockholders; to the knowledge
of such counsel after due inquiry, such shares are not held in
violation of any other preemptive right of stockholders and,
except as otherwise set forth in the Registration Statement,
all outstanding shares of capital stock of the Major
Subsidiaries are owned by the Company either directly or
through wholly owned subsidiaries free and clear of any
perfected security interest and, to the knowledge of such
<PAGE>
counsel, after due inquiry, any other material security
interests, stockholders agreements or voting trusts;
(iv) the Company's authorized equity capitalization is
as set forth in the Prospectus; the capital stock of the
Company conforms to the description thereof contained in the
Prospectus; the Securities being sold hereunder and under the
International Underwriting Agreement, as the case may be, have
been duly and validly authorized, and, in the case of the
Securities sold to the Underwriters by the Company, when
issued and delivered to and paid for by the Underwriters
pursuant to this Agreement or pursuant to the International
Underwriting Agreement, will be fully paid and nonassessable;
the Securities have been duly authorized for trading, subject
to official notice of issuance, on the New York Stock
Exchange, Inc.; and the holders of outstanding shares of capi-
tal stock of the Company are not entitled to statutory
preemptive or, to the best of such counsel's knowledge after
due inquiry, contractual rights to subscribe for the
Securities;
(v) the outstanding shares of Common Stock have been
duly and validly authorized and issued and are fully paid and
nonassessable;
(vi) there is no pending or, to the knowledge of such
counsel, threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Company or any of the subsidiaries of
a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus,
and there is no contract or other document of a character
required to be described in the Registration Statement or the
Prospectus, or to be filed as an exhibit, which is not
described or filed as required;
(vii) the Registration Statement and all post-effective
amendments thereto have become effective under the Act; any
required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) and Rule 430A have been made
in the manner and within the time period required by such
Rules; to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has
been issued, no proceedings for that purpose have been
instituted or threatened and the Registration Statement and
the Prospectus (other than the financial statements and other
financial and statistical information contained 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 thereunder;
(viii) each of the Agreements has been duly authorized,
executed and delivered by the Company;
(ix) no consent, approval, authorization, license,
certificate, permit or order of any court or governmental
agency or body is required for the consummation of the
<PAGE>
transactions contemplated herein, except such as have been
obtained under the Act or as may be required under the blue
sky laws of any jurisdiction in connection with the purchase
and distribution of the Securities by the Underwriters (as to
which such counsel need not opine) and such other approvals as
have been obtained;
(x) neither the execution and delivery of this
Agreement or the International Underwriting Agreement nor the
issue and sale of the Securities, nor the consummation of any
other of the transactions contemplated herein or therein nor
the fulfillment of the terms hereof or thereof will conflict
with, result in a breach of, or constitute a default under the
charter or by-laws of the Company or the terms of any
agreement listed on Exhibit A attached hereto;
(xi) neither the execution and delivery of this
Agreement or the International Underwriting Agreement nor the
issue and sale of the Securities, nor the consummation of any
other of the transactions contemplated herein or therein nor
the fulfillment of the terms hereof or thereof will conflict
with, result in a breach of, or constitute a default under any
agreement filed as an exhibit to the Registration Statement
(other than any such agreement listed on Exhibit A to the
opinion of Kirkland & Ellis delivered pursuant to this
Agreement) or under any judgment, order or regulation known to
such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction
over the Company or any of its subsidiaries; and
(xii) except as disclosed in the Prospectus, no holders
of securities of the Company have rights to the registration
of such securities under the Registration Statement.
Each of such counsel shall state that it has participated in
conferences with representatives of the Company, at which conferences the
contents of the Registration Statement, the Prospectus, each amendment
thereof and supplement thereto and related matters were discussed, and,
although such counsel has not independently checked or verified and is not
passing upon and assumes no responsibility for the factual accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Prospectus, any amendment thereof or supplement thereto, no
facts have come to the attention of such counsel to cause such counsel to
believe (A) that either the Registration Statement or any amendment
thereto (other than the financial statements and related schedules and
other financial and statistical information contained therein, or omitted
therefrom), at the time the Registration Statement became effective
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein not misleading or
(B) that the Prospectus, as amended and supplemented (other than the
financial statements and related schedules and other financial and
statistical information contained therein, or omitted therefrom), at the
time the Registration Statement became effective or on each Closing Date
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
<PAGE>
In rendering such opinions, each such counsel may rely (A) as
to matters involving the application of laws of any jurisdiction other
than the States of Illinois and Delaware or the United States, to the
extent they deem proper and specified in such opinions, upon the opinion
of other counsel of good standing whom they believe to be reliable and who
are satisfactory to counsel for the Underwriters and (B) as to matters of
fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials. Reference to the Prospectus
in this paragraph (b) include any supplements thereto at the Closing Date.
(c) On each Closing Date, Water Street shall have furnished
to the Representatives the opinion of Fried, Frank, Harris, Shriver
& Jacobson, counsel for Water Street, dated as of such Closing Date,
to the effect that:
(i) Each of this Agreement and the International
Underwriting Agreement has been duly authorized, executed and
delivered by the Selling Stockholder. No consent, approval,
authorization or order of any court or governmental agency or
body of the State of New York or the United States of America
is required for the consummation by Water Street of any of the
transactions contemplated herein except for those under the
Act or any state securities laws or Blue Sky laws. The sale
of the Securities to be sold by Water Street and the
consummation by Water Street of the transactions contemplated
by this Agreement and the International Underwriting Agreement
will not result in a breach or violation of any term or provi-
sion of Water Street's agreement of limited partnership or the
Water Street Agreement.
(ii) Assuming the Underwriters purchase the
Securities to be transferred by Water Street on the applicable
Closing Date in good faith and without notice of any adverse
claim as such term is used in Section 8-302 of the Uniform
Commercial Code in effect in the State of New York, valid
title to such Securities, free and clear of all liens, encum-
brances, equities, or other adverse claims will pass to the
Underwriters when appropriate entries to the accounts of the
Underwriters are made on the books of The Depository Trust
Company.
(d) The Representatives shall have received from Wachtell,
Lipton, Rosen & Katz, counsel for the Underwriters, such opinion or
opinions, dated as of each Closing Date, with respect to the
issuance and sale of the Securities, the Registration Statement, the
Prospectus (together with any supplement thereto) and other related
matters as the Representatives may reasonably require, and the Com-
pany shall have furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon
such matters.
(e) The Company shall have furnished to the Representatives
and to Water Street a certificate of the Company, signed by the
Chief Financial Officer and the Vice President-Controller of the
Company, each in his official capacity as an officer of the Company
and not as an individual, dated as of each Closing Date, to the
effect that the signers of such certificate have carefully
<PAGE>
examined the Registration Statement, the Prospectus, any supplement to the
Prospectus, this Agreement and the International Underwriting
Agreement and that:
(i) the representations and warranties of the Company
in this Agreement and the International Underwriting Agreement
are true and correct in all material respects on and as of
such Closing Date with the same effect as if made on the
Closing Date and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no MAC, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(f) Water Street shall have furnished to the Representatives
a certificate of Water Street, dated as of each Closing Date, to the
effect that the representations and warranties of Water Street in
this Agreement are true and correct in all material respects on and
as of such Closing Date with the same effect as if made on the
Closing Date and Water Street has complied in all material respects
with all the agreements and satisfied all the conditions on their
part to be performed or satisfied at or prior to the Closing Date.
(g) At the Execution Time and at each Closing Date, Arthur
Andersen & Co. shall have furnished to the Representatives a letter
or letters, dated respectively as of the Execution Time and as of
such Closing Date, in form and substance satisfactory to the
Representatives, stating in 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
any supplementary financial information and schedules examined
by them and included in the Prospectus or the Registration
Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with
standards established by the American Institute of Certified
Public Accountants of the unaudited consolidated interim
financial statements of the Company for the periods specified
in such
<PAGE>
letter, as indicated in their reports thereon, copies
of which have been furnished to the Representatives;
(iii) The unaudited summary, condensed and selected
financial information with respect to the consolidated results
of operations and financial position of the Company for the
six most recent fiscal years (or such shorter period as
applicable) included in the Prospectus agrees with the cor-
responding amounts (after restatements where applicable) in
the audited consolidated financial statements for such period;
and the pro forma financial information complies in all
material respects as to form with all applicable accounting
requirements of the Act;
(iv) On the basis of limited procedures, not
constituting an examination 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 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) the unaudited consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus do
not comply as to form in all material respects with the
applicable accounting requirements of the Act and the
related published rules and regulations thereunder, or
are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent
with the basis for the audited consolidated statements
of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus;
(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, if any, were not determined on a basis substan-
tially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements
included in the Prospectus;
(C) the unaudited financial statements which were
not included in the Prospectus but from which were
derived any 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
<PAGE>
not determined on a basis substantially consistent with the
basis for the audited consolidated financial statements
included in the Prospectus;
(D) any unaudited pro forma consolidated
condensed financial statements included 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 five
days prior to the date of such letter, there have been
any changes in the consolidated capital stock 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 prior to the Execution Time by the
Representatives, or any increases in any items specified
prior to the Execution Time by the Representatives, in
each case as compared with amounts shown in the latest
balance sheet included 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 in the Prospectus to the
specified date referred to in Clause E there were any
decreases in consolidated net sales, operating profit
data as compared to the preceding period or other items
specified by the Representatives, or any increases in
any items specified prior to the Execution Time by the
Representatives, in each case as compared with the
comparable period of the preceding year and with any
other period of corresponding length specified prior to
the Execution Time by the Representatives, except in
each case for decreases or increases which the
Prospectus discloses, have occurred or may occur or
which are described in such letter; and
(v) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (ii) and (iv) above, they
have carried out certain specified procedures, not
constituting an examination in accordance with generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information specified prior to the
Execution Time by the Representatives, which are derived from
the general accounting records of the Company and its
Subsidiaries, which appear in the Prospectus, or in Part II
of, or in exhibits and schedules to, the Registration
Statement specified prior to the Execution Time by the
Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting
records of the Company and the Subsidiaries and have found
them to be in agreement.
<PAGE>
References to the Prospectus in this paragraph (g)
include any supplement thereto at the date of the letter.
(h) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive
of any supplement thereto), there shall not have been (i) any change
or decrease specified in the letter or letters referred to in
paragraph (g) of this Section 6 or (ii) any change, or any develop-
ment involving a prospective change, in or affecting the business or
properties of the Company and its subsidiaries the effect of which,
in any case referred to in clause (i) or (ii) above, is, in the
judgment of the Representatives, so material and adverse as to make
it impractical or inadvisable to proceed with the public offering or
the delivery of the Securities as contemplated by the Registration
Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto).
(i) Prior to each Closing Date, the Company shall have
furnished to the Representatives such further information,
certificates and documents as the Representatives may
reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in
this Agreement, or if any of the opinions and certificates mentioned
above or elsewhere in this Agreement shall not be in all material
respects reasonably satisfactory in form and substance to the Repre-
sentatives and their counsel, this Agreement and all obligations of
the Underwriters hereunder may be cancelled at, or at any time prior
to, each Closing Date by the Representatives. Notice of such
cancellation shall be given to the Company and the Selling
Stockholder in writing or by telephone or telegraph confirmed in
writing.
6A. Conditions to the Obligations of Water Street. The
obligation of Water Street to sell the Securities to be delivered at each
Closing Date shall be subject to the accuracy of the representations on
the part of the Company contained herein as of the Execution Time and as
of such Closing Date (as if made at such Closing Date), to the accuracy of
the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to additional conditions identical to those set forth in
Section 6 (other than paragraph (c) thereof). If any of the conditions
specified in this Section 6A shall not have been fulfilled in all material
respects when and as provided in this Agreement, Water Street may, by
written notice to the Company and the Representatives, terminate its
obligations under this Agreement at, or at any time prior to, each Closing
Date.
7. Expenses. The Company agrees with Water Street that it
will pay or cause to be paid all Registration Expenses (as defined in the
Water Street Agreement) in connection with the Registration Statement and
this Agreement and the International Underwriting Agreement (it being
understood that such Registration Expenses shall not include any expenses
relating to the preparation of any amendment to the Water Street Agree-
ment). If the sale of the Securities provided for herein is not
consummated because any
<PAGE>
condition to the obligations of the Underwriters
set forth in Section 6 hereof is not satisfied (other than the conditions
specified in paragraphs 6(d) and, if the Underwriters shall have not
exercised their judgment reasonably, 6(h)), because of any termination
pursuant to Section 10 hereof or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or com-
ply with any provision hereof other than by reason of a default by any of
the Underwriters, the Company will reimburse the Underwriters severally
upon demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees
to indemnify and hold harmless each Underwriter, the directors, officers,
employees and agents of each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Securities
Exchange Act of 1934 (the "Exchange Act") against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of
them may become subject under the Act, the Exchange Act or other Federal
or state statutory law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the registration
statement for the registration of the Securities as originally filed or in
any amendment thereof, or in any Preliminary Prospectus or the Prospectus,
or in any amendment thereof 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 agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that (i) the Company will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives specifically for use in connection with the preparation
thereof, (ii) the Company will not be liable for the amount paid in
settlement of any litigation commenced or threatened or of any claim
whatsoever arising out of or based upon any (actual or alleged) untrue
statement or omission unless such settlement is effected with the written
consent of the Company and (iii) such indemnity with respect to any Pre-
liminary Prospectus shall not inure to the benefit of an Underwriter (or
any person controlling such Underwriter) from whom the person asserting
any such loss, claim, damage or liability purchased the Securities which
are the subject thereof if such person did not receive a copy of the
Prospectus (or the Prospectus as supplemented) excluding documents
incorporated therein by reference at or prior to the confirmation of the
sale of such Securities to such person in any case where such delivery is
required by the Act and the untrue statement or omission of a material
fact contained in such Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as supplemented). This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(b) The Selling Stockholder agrees to indemnify and hold
harmless the Underwriter and each person who controls the Underwriter
within the meaning of the Act or the Exchange Act to the same extent as
the foregoing indemnity in paragraph (a) of this Section from the Company
to the Underwriter, but
<PAGE>
only with reference to written information
furnished to the Company by or on behalf of the Selling Stockholder
specifically for use in preparation of the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which the Selling Stockholder may otherwise have.
Notwithstanding the provisions of this subsection (b), the Selling
Stockholder shall not be required to pay an amount in excess of the net
proceeds received by the Selling Stockholder from the Securities sold by
it hereunder. The Company, the Selling Stockholder and the Underwriters
acknowledge that the statements set forth under the heading "Ownership of
Common Stock -- Selling Stockholder and its Affiliates" in the Prospectus
(and not any information to which reference is made under such heading)
constitutes the only information furnished in writing by or on behalf of
Water Street for inclusion in the documents referred to in the foregoing
indemnity, and Water Street confirms that such statements are correct and
complete.
(c) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who
signs the Registration Statement, and each person who controls the Company
within the meaning of either the Act or the Exchange Act and the Selling
Stockholder and its respective directors, officers, partners, employees
and agents and each other person, if any, who controls the Selling Stock-
holder within the meaning of the Act or the Exchange Act, to the same
extent as the foregoing indemnity in paragraph (a) of this Section from
the Company to each Underwriter, but only with reference to written
information relating to such Underwriter furnished to the Company by or on
behalf of such Underwriter through the Representatives specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have. The Company acknowledges that the
statements set forth in the last paragraph of the cover page and under the
heading "Underwriting" in any Preliminary Prospectus and the Prospectus
constitute the only information furnished in writing by or on behalf of
the several Underwriters for inclusion in any Preliminary Prospectus or
the Prospectus, and you, as the Representatives, confirm that such
statements are correct.
(d) Each of the Company and Water Street hereby confirms its
indemnification obligations contained in Section 4.9 of the Water Street
Agreement, which Section is incorporated herein by reference.
(e) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph
(a), (b) or (c) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the
indemnifying party of any material right or defense and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a), (b) or (c) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate
counsel retained by the indemnified party or parties except as set forth
below); provided, however, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint
<PAGE>
counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel in its reasonable judgment
with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
the institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. It being understood and agreed that the
indemnifying party shall bear the fees, costs and expenses of only one
counsel pursuant to this paragraph. An indemnifying party will not,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or
not the indemnified parties are actual or potential parties to such claim
or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding. No indemnifying party
shall be liable for any settlement of any commenced or threatened action
or proceeding effected without its written consent.
(f) In the event that the indemnity provided in paragraph
(a), (b) or (c) of this Section 8 is unavailable to or insufficient to
hold harmless an indemnified party for any reason, the Company, the
Selling Stockholder and the Underwriters agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company, the Selling
Stockholder and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other
hand; provided, however, that in no case shall any Underwriter (except as
may be provided in any agreement among underwriters relating to the
offering of the Securities) be responsible for any amount in excess of the
underwriting discount or commission applicable to the Securities purchased
by such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, or if such
allocation provides a lesser sum to the indemnified party than the amount
hereinafter calculated then the Company, the Selling Stockholder and the
Underwriters shall contribute in such proportion as is appropriate to
reflect not only such relative fault but also the relative benefits of the
indemnifying party and the indemnified party as well as any other
equitable considerations. Benefits received by the Company shall be
deemed to be equal to the net proceeds from the offering (before deducting
expenses) received by the Company, benefits received by the Selling
Stockholder shall be deemed to be equal to the net proceeds from the
offering (before deducting expenses) received by the Selling Stockholders
and benefits received by the Underwriters shall be deemed to be equal to
the total underwriting discounts and commissions, in each case as set
forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to whether any alleged untrue statement or
omission relates to information provided by the Company, the Selling
Stockholder or the Underwriters. The Company, the Selling Stockholder and
the Underwriters agree that it would not be just and equitable if
contribution were
<PAGE>
determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8(f),
the Selling Stockholder shall not be required to contribute any amount
under this Section 8(f) in excess of the amount by which the net proceeds
received by the Selling Stockholder from the sale of Securities in the
offering exceed the aggregate amount the Selling Stockholder has otherwise
paid pursuant hereto and pursuant to Section 8(b); and 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. For purposes of this Section 8,
each person who controls the Underwriter within the meaning of either the
Act or the Exchange Act and each director, officer, employee and agent of
the Underwriter shall have the same rights to contribution as the
Underwriter, each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall
have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, and each person
who controls the Selling Stockholder within the meaning of either the Act
or the Exchange Act and each director, officer, partner, employee and
agent of the Selling Stockholder shall have the same rights to
contribution as the Selling Stockholder, subject in each case to the
applicable terms and provisions of this paragraph (f). Contribution
payments made under this Section 8 are losses for purposes of Section 4.9
of the Water Street Agreement.
9. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the Securities
agreed to be purchased by such Underwriter or Underwriters hereunder, and
such failure to purchase shall constitute a default in the performance of
its or their obligations under this Agreement, the remaining Underwriters
shall be obligated severally to take up and pay for (in the respective
proportions which the amount of Securities set forth opposite their names
in Schedule I hereto bears to the aggregate amount of Securities set forth
opposite the names of all the remaining Underwriters) the Securities which
the defaulting Underwriter or Underwriters agreed but failed to purchase;
provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of Securities
set forth in Schedule I hereto, the remaining Underwriters shall have the
right to purchase all, but shall not be under any obligation to purchase
any, of the Securities, and if such nondefaulting Underwriters do not
purchase all the Securities, this Agreement will terminate without
liability to any nondefaulting Underwriter, the Company or the Selling
Stockholder. In the event of a default by any Underwriter as set forth in
this Section 9, the Closing Date shall be postponed for such period, not
exceeding seven days, as the Representatives shall determine in order that
the required changes in the Registration Statement and the Prospectus or
in any other documents or arrangements may be effected. Nothing contained
in this Agreement shall relieve any defaulting Underwriter of its
liability, if any, to the Company, the Selling Stockholder and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice
given to the Company and the Selling Stockholder prior to the Closing Date
if prior to such time (i) trading in the Company's Common Stock shall have
been suspended by the Securities and Exchange Commission or the New York
Stock Exchange or trading in securities generally on the New York Stock
Exchange shall have been suspended or limited or minimum prices shall have
been established on
<PAGE>
such Exchange, (ii) a banking moratorium shall have
been declared either by Federal or New York State authorities or (iii)
there shall have occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the
judgment of the Representatives, impracticable to market the Securities.
11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers, of the Selling Stockholder, and
of the Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by
or on behalf of the Underwriters, the Selling Stockholder, or the Company
or any of the officers, directors, partners or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment
for the Securities. The provisions of Sections 7 and 8 hereof shall
survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will
be mailed, delivered or telecopied and confirmed to them at Salomon
Brothers Inc, at 7 World Trade Center, New York, New York 10048, attn:
Scott W. Stearns; or, if sent to the Company, will be mailed, delivered or
telecopied and confirmed to it at USG Corporation, 125 S. Franklin Street,
Chicago, Illinois 60606, attn: Secretary, with a copy to Kirkland &
Ellis, 200 E. Randolph Drive, Chicago, Illinois 60601, attn: Francis J.
Gerlits, P.C.; or, if sent to the Selling Stockholder, will be mailed,
delivered or telecopied and confirmed to it at c/o Goldman, Sachs & Co.,
85 Broad Street, New York, New York 10004, attn: Barry S. Volpert; with a
copy to Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New
York, New York 10004, attn: David J. Greenwald, Esq.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
the officers, directors, partners, employees, agents and controlling
persons referred to in Section 8 hereof, and no other person will have any
right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York, without
giving affect to the conflicts of laws principles thereof.
15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original but all
of which shall constitute one and the same agreement.
16. Entire Agreement. This Agreement and the Water Street
Agreement constitute the entire agreement among the parties hereto with
respect to the transactions contemplated hereby.
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding
agreement among the Company, the Selling Stockholder and the several
Underwriters.
Very truly yours,
USG CORPORATION
By:
Its:
WATER STREET CORPORATE
RECOVERY FUND I, L.P.
By: GOLDMAN, SACHS & CO.,
General Partner
By:
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
Lazard Freres & Co.
Smith Barney Shearson Inc.
By: Salomon Brothers Inc
By:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
<PAGE>
SCHEDULE I
Number of Shares
Underwriters to be Purchased
SALOMON BROTHERS INC 1,923,334
LAZARD FRERES & CO. 1,923,333
SMITH BARNEY SHEARSON INC. 1,923,333
BEAR, STEARNS & CO. INC. 145,000
CS FIRST BOSTON CORPORATION 145,000
ALEX. BROWN & SONS INCORPORATED 145,000
BT SECURITIES CORPORATION 145,000
DEAN WITTER REYNOLDS INC. 145,000
DILLON, READ & CO. INC. 145,000
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION 145,000
A.G. EDWARDS & SONS, INC. 145,000
KIDDER, PEABODY & CO. INCORPORATED 145,000
LEHMAN BROTHERS INC. 145,000
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED 145,000
MONTGOMERY SECURITIES 145,000
J.P. MORGAN SECURITIES INC. 145,000
MORGAN STANLEY & CO. INCORPORATED 145,000
NATWEST SECURITIES LIMITED 145,000
OPPENHEIMER & CO., INC. 145,000
PRUDENTIAL SECURITIES INCORPORATED 145,000
S.G. WARBURG & CO. INC. 145,000
WERTHEIM SCHRODER & CO. INCORPORATED 145,000
WILLIAM BLAIR & COMPANY 75,000
DAIN BOSWORTH INCORPORATED 75,000
KEMPER SECURITIES, INC. 75,000
LEGG MASON WOOD WALKER, INCORPORATED 75,000
MCDONALD & COMPANY SECURITIES, INC. 75,000
MORGAN KEEGAN & COMPANY, INC. 75,000
PIPER JAFFRAY INC. 75,000
RAYMOND JAMES & ASSOCIATES, INC. 75,000
THE ROBINSON-HUMPHREY COMPANY, INC. 75,000
SUTRO & CO. INCORPORATED 75,000
TUCKER ANTHONY INCORPORATED 75,000
WHEAT FIRST BUTCHER & SINGER CAPITAL MARKETS 75,000
ADVEST INC. 40,000
ARNHOLD AND S. BLEICHROEDER, INC. 40,000
ROBERT W. BAIRD & CO. INCORPORATED 40,000
BAIRD, PATRICK & CO., INC. 40,000
GEORGE K. BAUM & COMPANY 40,000
THE CHICAGO CORPORATION 40,000
<PAGE>
Number of Shares
Underwriters to be Purchased
CLEARY GULL REILAND & MCDEVITT INC. 40,000
FIRST ALBANY CORPORATION 40,000
FIRST EQUITY CORPORATION OF FLORIDA 40,000
FIRST MICHIGAN CORPORATION 40,000
GENESIS MERCHANT GROUP SECURITIES 40,000
HAMILTON INVESTMENTS, INC. 40,000
JANNEY MONTGOMERY SCOTT INC. 40,000
EDWARD D. JONES & CO. 40,000
LADENBURG, THALMANN & CO. INC. 40,000
C.J. LAWRENCE/DEUTSCHE BANK SECURITIES CORPORATION 40,000
WR LAZARD, LAIDLAW & MEAD INCORPORATED 40,000
LUTHER, SMITH & SMALL INC. 40,000
NEEDHAM & COMPANY, INC. 40,000
THE OHIO COMPANY 40,000
PARKER/HUNTER INCORPORATED 40,000
PENNSYLVANIA MERCHANT GROUP LTD 40,000
THE PRINCIPAL/EPPLER, GUERIN & TURNER, INC. 40,000
RAGEN MACKENZIE INCORPORATED 40,000
SAMUEL A. RAMIREZ & CO. INC. 40,000
RAUSCHER PIERCE REFSNES, INC. 40,000
RODMAN & RENSHAW, INC. 40,000
SOUTHCOAST CAPITAL CORPORATION 40,000
STIFEL, NICOLAUS & COMPANY, INCORPORATED 40,000
WEDBUSH MORGAN SECURITIES 40,000
TOTAL 10,625,000
<PAGE>
EXHIBIT A
AGREEMENTS
Letter Agreement, dated February 25, 1993, among USG
Corporation, Water Street Corporate Recovery Fund I, L.P., Goldman, Sachs
& Co. and The Goldman Sachs Group, L.P.
Amendment No. 1, dated February 22, 1994, to Letter Agreement,
dated February 25, 1993, among USG Corporation, Water Street Corporate
Recovery Fund I, L.P., Goldman, Sachs & Co. and The Goldman Sachs Group,
L.P.
Amended and Restated Credit Agreement dated as of May 6, 1993
between USG Corporation and USG Interiors, Inc. as borrowers; the
Financial Institutions listed on the signature pages thereof, as senior
lenders; Bankers Trust Company, Chemical Bank and Citibank, N.A., as
agents; and Citibank, N.A., as Administrative Agent (the "Amended and
Restated Credit Agreement")
First Amendment, dated August 1, 1993, to Amended and Restated
Credit Agreement
Second Amendment, dated as of January 31, 1994, to Amended and
Restated Credit Agreement
Indenture, dated October 1, 1986, between USG Corporation and
Harris Trust and Savings Bank, as supplemented
Indenture, dated as of April 26, 1993, among USG Corporation,
certain guarantors and State Street Bank and Trust Company, as Trustee
(the "10 1/4% Senior Notes Indenture")
Indenture, dated as of August 10, 1993, among USG Corporation,
certain guarantors and State Street Bank and Trust Company, as Trustee
Amended and Restated Subsidiary Guarantees, dated as of May 6,
1993
Contingent Payment Guarantees issued pursuant to the 10 1/4%
Senior Notes Indenture
Amended and Restated Collateral Trust Agreement, dated as of
May 6, 1993 between USG Corporation, USG Interiors, Inc. and USG Foreign
Investments, Ltd., as guarantors, and Wilmington Trust Company and William
J. Wade, as trustees (the "Amended and Restated Collateral Trust
Agreement")
First Amendment, dated August 1, 1993, to Amended and Restated
Collateral Trust Agreement
Second Amendment, dated as of January 31, 1994, to Amended and
Restated Collateral Trust Agreement.
First Amendment, dated August 1, 1993, to Amended and Restated
Subsidiary Guarantees
Reaffirmation, dated as of January 31, 1994, of Guarantees.
<PAGE>
EXHIBIT B
LOCK-UP AGREEMENT
March , 1994
Salomon Brothers Inc
Lazard Freres & Co.
Smith Barney Shearson Inc.
As Representatives of the
Several Underwriters,
c/o Salomon Brothers Inc
7 World Trade Center
New York, New York 10048
Salomon Brothers International Limited
Lazard Brothers & Co., Limited
Smith Barney Shearson Inc.
As International Representatives of the
Several International Underwriters
c/o Salomon Brothers International Limited
Victoria Plaza
111 Buckingham Palace Road
London SW1W 0SB, England
Gentlemen and Ladies:
The undersigned understand that USG Corporation, a Delaware
corporation (the "Company"), has filed a Registration Statement on Form
S-1 (file number 33-51845) (as amended, the "Registration Statement") with
the Securities and Exchange Commission (the "SEC") in connection with a
proposed underwritten public offering (the "Offering") of its Common
Stock, par value $0.10 per share (the "Common Stock"). All capitalized
terms not defined herein shall have the meanings ascribed in the Reg-
istration Statement.
At your request, and in consideration of your agreeing to act
as underwriters in connection with the Offering and for other good and
valuable consideration, the undersigned hereby agree that, without the
prior written consent of the representatives (the "Representatives") of
the U.S. Underwriters and the International Underwriters, for a period of
120 days following the date hereof, the undersigned will not offer, sell
or contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, any other shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock; provided, however, Water Street may distribute such shares
or securities held by it to its partners at any time after 90 days
following the effective date of the Registration Statement, which partners
(other than Goldman, Sachs & Co.) shall not be bound by this Agreement;
provided, further, that Water Street and Goldman, Sachs & Co. may exercise
any of their Warrants to purchase Common Stock.
<PAGE>
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
Very truly yours,
GOLDMAN, SACHS & CO.
By:________________________________
Name:
Title:
WATER STREET CORPORATE RECOVERY
FUND I, L.P.
By: GOLDMAN, SACHS & CO.,
General Partner
By:_________________________________
Name:
Title:
Accepted as of the date hereof:
Salomon Brothers Inc
Lazard Freres & Co.
Smith Barney Shearson, Inc.
By: Salomon Brothers Inc
By:
Title:
For itself and the Several
U.S. Underwriters
Salomon Brothers International Limited
Lazard Brothers & Co. Limited
Smith Barney Shearson Inc.
By: Salomon Brothers International
Limited
By:
Title:
For itself and the Several Managers.
<PAGE>
USG Corporation
Exhibit H
12,500,000 Shares 1
Common Stock
($.10 par value)
International Underwriting Agreement
London, England
March 8, 1994
Salomon Brothers International Limited
Lazard Brothers & Co., Limited
Smith Barney Shearson Inc.
As Representatives of the Several
International Underwriters,
c/o Salomon Brothers International Limited
Victoria Plaza
111 Buckingham Palace Road
London SW1W OSB, England
Dear Sirs:
USG Corporation, a Delaware corporation (the "Company"),
proposes to sell to the underwriters named in Schedule I hereto (the
"International Underwriters"), for which you are acting as representatives
(the "International Representatives"), 1,050,000 shares (the "Company
Underwritten Securities") of common stock, $.10 par value per share (the
"Common Stock"), of the Company, and Water Street Corporate Recovery Fund
I, L.P. ("Water Street" or the "Selling Stockholder") proposes to sell to
the International Underwriters 825,000 shares of Common Stock (the
"Selling Stockholder Securities" and together with the Company
Underwritten Securities, the "Underwritten Securities"). In addition,
solely for the purpose of covering overallotments, the Company proposes to
grant to the International Underwriters an option to purchase up to an
additional 135,000 shares (the "Company Option Securities") of Common
Stock and the Selling Stockholder proposes to grant to the International
Underwriters an option to purchase up to an additional 146,250 shares of
Common Stock (the "Selling Stockholder Option Securities" and together
with the Company Option Securities, the "Option Securities"). The
Underwritten Securities and the Option Securities are hereinafter referred
to as the "International Securities." The parties hereto acknowledge that
the underwriting discount on the sale of the Securities will be 4.5% of
the aggregate price to the public.
It is understood that the Company and the Selling Stockholder
are concurrently entering into a U.S. Underwriting Agreement dated the
date hereof (the "U.S. Underwriting Agreement") providing for the issue
and sale by the Company of an aggregate of 5,950,000 shares of Common
Stock (the "U.S. Company Underwritten Securities") and the sale by the
Selling Stockholder of an aggregate of 4,675,000 shares of Common Stock
(the "U.S. Selling Stockholder Underwritten Securities" and together with
the U.S. Company Underwritten Securities, the "U.S. Underwritten
Securities") with certain underwriters (the "U.S. Underwriters") for whom
Salomon Brothers Inc, Lazard Freres & Co., and Smith Barney Shearson Inc.
are
___________________
1 Plus options to purchase from USG Corporation up to 900,000 additional
shares and from the Selling Stockholder up to 975,000 additional shares to
cover overallotments.
<PAGE>
acting as representatives (the "U.S. Representatives"), and providing
for the grant by the Company to the U.S. Underwriters of an option to pur-
chase up to 765,000 additional shares of Common Stock (the "U.S. Company
Option Securities") and by the Selling Stockholder to the U.S.
Underwriters of an option to purchase up to 828,750 additional shares of
Common Stock (the "U.S. Selling Stockholder Option Securities," together
with the U.S. Company Option Securities, the "U.S. Option Securities," and
together with the U.S. Underwritten Securities, the "U.S. Securities")
solely for the purpose of covering overallotments. The U.S. Securities
together with the International Securities are hereinafter called the
"Securities". It is further understood and agreed that the International
Underwriters and the U.S. Underwriters are entering into an agreement
dated the date hereof (the "Agreement Between U.S. Underwriters and the
Managers"), pursuant to which, among other things, the International
Underwriters may purchase from the U.S. Underwriters a portion of the U.S.
Securities to be sold pursuant to the U.S. Underwriting Agreement and the
U.S. Underwriters may purchase from the International Underwriters a
portion of the International Securities to be sold pursuant to the
International Underwriting Agreement.
The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term "the Effective Date" shall mean
each date that the Registration Statement and any post-effective amendment
or amendments thereto became or become effective. "Execution Time" shall
mean the date and time that this Agreement is executed and delivered by
the parties hereto. The "Preliminary Prospectus" shall mean any pre-
liminary prospectus with respect to the offering of the Securities
referred to in Section 1(a)(i) below and any preliminary prospectus with
respect to the offering of the Securities included in the Registration
Statement at the Effective Date that omits Rule 430A Information;
"Registration Statement" shall mean the registration statement referred to
in Section 1(a)(i) below, including exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution Time,
in the form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the Closing
Date, shall also mean such registration statement as so amended. Such
term shall include any Rule 430A Information deemed to be included therein
at the Effective Date as provided by Rule 430A. "Rule 424" and "Rule
430A" and "Regulation S-K" refer to such rules under the Act. "Rule 430A
Information" means information with respect to the Securities and the
offering thereof permitted to be omitted from the Registration Statement
pursuant to Rule 430A when the Registration Statement becomes effective.
1. Representations and Warranties. (a) The Company
represents and warrants to, and agrees with, each International
Underwriter as follows:
(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (file number
33-51845) on Form S-1, including a related preliminary prospectus,
for the registration under the Securities Act of 1933, as amended
(the "Act") of the offering and sale of the Securities. The Company
may have filed one or more amendments thereto, including the related
preliminary prospectus, each of which has previously been furnished
to you. The Company will next file with the Commission either (i)
prior to the effectiveness of such registration statement, a further
amendment to such registration statement (including the form of
final prospectus) or (ii) after the effectiveness of such regis-
tration statement, a final prospectus in accordance with Rules 430A
and 424(b)(1) or (4). In the case of clause (ii), the Company has
included in such registration statement, as amended at the Effective
Date, all information (other than Rule 430A Information) required by
the Act and the rules thereunder to be
<PAGE>
included in the final
prospectus with respect to the Securities and the offering thereof.
As filed, such amendment and form of final prospectus, or such final
prospectus, shall contain all Rule 430A Information, together with
all other such required information, with respect to the Securities
and the offering thereof and, except to the extent the International
Representatives shall agree in writing to a modification, shall be
in all substantive respects in the form furnished to you prior to
the Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and
other changes (beyond those contained in the latest Preliminary
Prospectus) as the Company has advised you, prior to the Execution
Time, will be included or made therein.
The form of prospectus relating to the Securities as first
filed pursuant to Rule 424(b) or, if no filing pursuant to Rule
424(b) is made, such form of prospectus included in the Registration
Statement at the Effective Date, is hereinafter called the
"Prospectus."
(ii) On the Effective Date, the Registration Statement did
or will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on each Closing Date (as defined in
Section 3 hereof) the Prospectus (and any supplement thereto) will,
comply in all material respects with the applicable requirements of
the Act and the rules thereunder; on the Effective Date, the Reg-
istration Statement did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading; and, on the Effective Date, the Prospectus, if not
filed pursuant to Rule 424(b), did not or will not, and on the date
of any filing pursuant to Rule 424(b) and on each Closing Date, the
Prospectus (together with any supplement thereto) will not, include
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or
warranties as to the information contained in or omitted from the
Registration Statement, or the Prospectus (or any supplement
thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any
International Underwriter through the International Representatives,
or Water Street specifically for use in connection with the
preparation of the Registration Statement or the Prospectus (or any
supplement thereto).
(iii) Each of the Company and its subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation; all of the
issued shares of capital stock of each subsidiary have been duly and
validly authorized and issued, are fully paid and nonassessable, and
(except for directors' qualifying shares and those shares not held
by the Company or any of its Affiliates) are owned directly or
indirectly by the Corporation, free and clear of all liens,
encumbrances, equities or claims, except for the shares of capital
stock of USG Interiors (Europe) SA and except as provided under the
Collateral Trust Agreement (as such term is defined in the
Prospectus). Each of the Company and its subsidiaries has the
requisite corporate power and authority to own or lease and operate
its properties and to carry on its business as described in the
Prospectus except where the failure to have such power and authority
would not reasonably be expected to result in a material adverse
change in the financial condition, assets or operations of the
Company and its subsidiaries taken as a whole (a "MAC"). The
Company has the requisite power and authority to authorize the
offering of the Securities to be sold by it, and to issue, sell and
deliver the Securities to be sold by it. The Company has the
requisite power and authority to enter
<PAGE>
into each of the following
agreements and to perform its obligations thereunder: the letter
agreement, dated February 25, 1993, as amended (the "Water Street
Agreement"), among the Company, Water Street, Goldman, Sachs & Co.
and The Goldman Sachs Group, L.P.; this Agreement; and the U.S.
Underwriting Agreement (collectively, the "Agreements"). It being
understood and agreed that the Company will have to deliver good
standing certificates and similar documentation only with respect to
United States Gypsum Company, USG Interiors, Inc., L&W Supply
Corporation, USG Industries, Inc., USG Foreign Investments, Ltd., La
Mirada Products Co., Inc., Westbank Planting Company and American
Metals Corporation (individually a "Major Subsidiary" and
collectively the "Major Subsidiaries").
(iv) Each of the Company and its subsidiaries is duly
qualified or licensed and in good standing as a foreign corporation
duly authorized to do business in each jurisdiction in which it owns
or leases properties, or conducts any business, so as to require
such qualification or licensure, except where the failure to be so
qualified and authorized would not reasonably be expected to result
in a MAC.
(v) Except as may be disclosed in the Registration
Statement and the Prospectus, there are no actions, proceedings or
investigations pending or to the best of the Company's knowledge
threatened (solely in the case of such actions, proceedings or
investigations which would result in a MAC, in writing) which
question the validity of this Agreement or the U.S. Underwriting
Agreement or any action taken or to be taken pursuant hereto or
thereto which would result in a MAC, or which is required to be dis-
closed in the Registration Statement or Prospectus which is not
adequately disclosed in the Registration Statement or Prospectus, as
the case may be, and, to the Company's knowledge, there is no
franchise, contract or other document required to be described in
the Registration Statement or Prospectus, or required to be filed as
an exhibit to the Registration Statement, which is not so described
or filed.
(vi) The Company and its subsidiaries are not in breach or
violation of any term or provision of any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation,
domestic or foreign, applicable to the Company or its subsidiaries
or to any of their respective properties or assets, which breach,
breaches, violation or violations would reasonably be expected to
individually or in the aggregate result in a MAC, and the Company
and its subsidiaries are not in violation of any term of their
respective charters or by-laws. The compliance by the Company with
all of the provisions of the Agreements, and the performance of the
transactions contemplated by the Agreements will not result in any
such violation or be in conflict with or constitute a default under
any such term, which conflict or default would result in a MAC or
result in the creation of any mortgage, lien, charge or encumbrance
upon any of the properties or assets of the Company pursuant to any
such term which would reasonably be expected to result in a MAC. No
consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the
Company and the subsidiaries of the transactions contemplated
herein, except such as have been obtained under the Act and such as
may be required under the Blue Sky Laws of any jurisdiction in
connection with the distribution of the Securities and such other
approvals as have been obtained.
<PAGE>
(vii) The Securities to be issued and sold by the Company
to the International Underwriters have been duly and validly autho-
rized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and fully paid and
nonassessable and will conform in all material respects to the
description of the Common Stock contained in the Prospectus.
(viii) Each of the Agreements has been duly authorized and
validly executed and delivered by the Company and constitutes a
valid and legally binding agreement of the Company, enforceable
against the Company in accordance with its terms (assuming the due
execution and delivery by the parties thereto other than the
Company) subject to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent conveyance and
other similar laws relating to or affecting the enforcement of
rights of secured or unsecured creditors generally.
(ix) Except as disclosed in the Prospectus, no holder of
any security of the Company has or will have any right to require
the registration of such security by virtue of any transactions
contemplated by this Agreement other than any such right that has
been expressly waived in writing. No holder of any of the
outstanding shares of capital stock of the Company is entitled to
preemptive or other rights to subscribe for the Securities.
(x) The Securities have been duly authorized for trading
on the New York Stock Exchange, Inc., subject to official notice of
issuance.
(b) The Selling Stockholder represents and warrants to, and
agrees with, each International Underwriter as follows:
(i) The Selling Stockholder is a partnership duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization. The Selling Stockholder has
all necessary power and authority to enter into this Agreement and
the U.S. Underwriting Agreement. Each of the Agreements has been
duly authorized, executed and delivered by the Selling Stockholder
and constitutes a valid and binding obligation of the Selling
Stockholder, enforceable against it in accordance with its terms
(subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect and to
general principles of equity and except with respect to the
indemnification provisions contained in the Agreements and assuming
due execution by the parties thereto other than Water Street). No
consent, approval, authorization or order of any court or govern-
mental agency or body is required for the consummation by Water
Street of any of the transactions contemplated herein except for
those under the Act or any state securities laws or Blue Sky laws.
The sale of the Securities by Water Street and the consummation by
Water Street of the transactions contemplated by this Agreement and
the U.S. Underwriting Agreement will not conflict with, result in a
breach or violation of, or constitute a default under any law,
agreement of limited partnership of Water Street, the Water Street
Agreement or the terms of any indenture or other agreement or
instrument to which Water Street is a party or bound, or any
judgment, order or decree applicable to Water Street of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over Water Street.
<PAGE>
(ii) Water Street has good and valid title to the
Securities to be sold by Water Street and upon sale and delivery of,
and payment for, such Securities, as provided herein, Water Street
will convey good and valid title to such Securities, free and clear
of all liens, encumbrances, equities and claims whatsoever.
(iii) On the Effective Date, the Registration Statement
did not or will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
and on the Effective Date the Prospectus, if not filed pursuant to
Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(together with any supplements thereto) will not, include any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided
that the Selling Stockholder makes no representations or warranties
as to any statements in or omissions from the Registration Statement
or Prospectus or any amendments or supplements thereto, except for
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of
the Selling Stockholder specifically for use in connection with the
preparation thereof.
2. Purchase and Sale. (a) Subject to the terms and
conditions and in reliance upon the representations and warranties herein
set forth, the Company and the Selling Stockholder agree, severally and
not jointly, to sell to each International Underwriter, and each
International Underwriter agrees, severally and not jointly, to purchase
from the Company and the Selling Stockholder at a purchase price of
$28.5306 per share, the amount of Underwritten Securities set forth
opposite such International Underwriter's name in Schedule I hereto. The
amount of Securities to be purchased by each International Underwriter
from the Company and the Selling Stockholder shall be as nearly as
practicable in the same proportion to the total amount of Securities to be
purchased by such International Underwriter as the total amount of
Securities to be sold by each of the Company and the Selling Stockholder
bears to the total amount of Securities to be sold pursuant hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company and the
Selling Stockholder hereby grant, severally and not jointly, an option to
the several International Underwriters to purchase, severally and not
jointly, up to 135,000 shares and 146,250 shares of the Option Securities,
respectively, at the same purchase price per share as the International
Underwriter shall pay for the Underwritten Securities. Said options may
be exercised solely to cover overallotments in the sale of the
Underwritten Securities. Said options may be exercised in whole or in
part at any time (but not more than once) on or before the 30th day after
the date of the Prospectus upon written or telegraphic notice by the
International Representatives to the Company and the Selling Stockholder
setting forth the number of shares of the Option Securities as to which
the several International Underwriters are exercising the option and the
settlement date. Delivery of the shares of Option Securities, and payment
therefor, shall be made as provided in Section 3 hereof. The number of
shares of the Option Securities to be purchased by each International
Underwriter shall be the same percentage of the total number of shares of
the Option Securities to be purchased by the several International Under-
writers as such International Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your
absolute discretion shall make to eliminate any fractional shares.
<PAGE>
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities shall be made at the offices of Wachtell, Lipton,
Rosen & Katz, 51 W. 52nd Street (or such other place as mutually may be
agreed upon), New York, New York, at 10:00 a.m., New York City time, on
March 16, 1994, or such later date (not later than April 1, 1994) as the
International Representatives shall designate, which date and time may be
postponed by agreement among the International Representatives, the
Company and the Selling Stockholder or as provided in Section 9 hereof
(such date and time of delivery and payment for the Securities being
herein called the "First Closing Date"). Delivery of the Underwritten
Securities shall be made to the International Representatives for the
respective accounts of the several International Underwriters against pay-
ment by the several International Underwriters through the International
Representatives of the purchase price therefor to or upon the order of the
Company and the Selling Stockholder by certified or official bank check or
checks drawn on or by a New York Clearing House bank and payable in next
day funds. The Underwritten Securities shall be registered in such names
and in such denominations as the International Representatives may request
not less than three full business days in advance of the First Closing
Date.
The overallotment option may be exercised during the term
thereof by written notice by you to the Company and the Selling
Stockholder. Such notice shall set forth the aggregate number of Option
Securities as to which the option is being exercised, the name or names in
which the Option Securities are to be registered, the authorized denomi-
nations in which such Option Securities are to be issued, and the time and
date, as determined by you, when such Option Securities are to be deli-
vered (an "Additional Closing Date"); provided, however, that no
Additional Closing Date shall be earlier than the First Closing Date nor
earlier than the third business day after the date on which the notice of
the exercise of the option shall have been given nor later than the eighth
business day after the date on which such notice shall have been given.
Delivery and payment for such Option Securities is to be at the offices
set forth above for delivery and payment of the Underwritten Securities.
The First Closing Date and any Additional Closing Date are individually
referred to as a "Closing Date" and collectively referred to as the
"Closing Dates."
The Company and the Selling Stockholder agree to use their
best efforts to have the Underwritten Securities and the Option
Securities, as the case may be, to be delivered at each Closing Date
available for inspection, checking and packaging by the Representatives in
New York, New York, not later than 1:00 p.m. on the business day prior to
such Closing Date.
4. Offering by Underwriters. It is understood that the
several International Underwriters propose to offer the Securities for
sale to the public as set forth in the Prospectus. The International
Representatives agree to advise the Company promptly following the
completion of the distribution of the Securities.
5. Agreements. (a) The Company agrees with the several
International Underwriters and Water Street that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and
any amendment thereof, to become effective. Prior to the
termination of the offering of the Securities, the Company will not
file any amendment of the Registration Statement or supplement to
the Prospectus without your prior consent, which consent shall not
be unreasonably withheld. Subject to the foregoing sentence, if the
Registration Statement has
<PAGE>
become or becomes effective pursuant to
Rule 430A, or filing of the Prospectus is otherwise required under
Rule 424(b), the Company will cause the Prospectus, properly
completed, and any supplement thereto to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence
satisfactory to the International Representatives of such timely
filing. The Company will promptly advise the International
Representatives (i) when the Registration Statement, if not effec-
tive at the Execution Time, and any amendment thereto, shall have
become effective, (ii) when the Prospectus, and any supplement
thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b), (iii) when, prior to termination of the
offering of the Securities, any amendment to the Registration
Statement shall have been filed or become effective, (iv) of any
request by the Commission for any amendment of the Registration
Statement or supplement to the Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
Company becoming aware of the institution or threatening of any
proceeding for that purpose, and (vi) of the receipt by the Company
of any notification with respect to the suspension of the quali-
fication of the Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The
Company will use its best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event
occurs as a result of which the Prospectus as then supplemented
would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, or if it shall be necessary to amend the Registration
Statement or supplement the Prospectus to comply with the Act or the
rules thereunder, the Company will promptly prepare and file with
the Commission, subject to the second sentence of Section 5(a)(i),
an amendment or supplement which will correct such statement or
omission or effect such compliance.
(iii) As soon as practicable, but in any event not later
than sixteen (16) months after the Effective Date, the Company will
make generally available to its security holders and to the
International Representatives an earnings statement or statements of
the Company and its subsidiaries which satisfies the provisions of
Section 11(a) of the Act and Rule 158 under the Act. Filing reports
under Section 13 of the Securities Exchange Act of 1934 on a timely
basis shall constitute compliance with this paragraph (iii),
provided that the provisions of Section 11(a) of the Act and Rule
158 are thereby satisfied.
(iv) The Company will furnish to the International
Representatives and counsel for the International Underwriters,
without charge, two signed copies of the Registration Statement
(including exhibits thereto) and to each other Underwriter a copy of
the Registration Statement (without exhibits thereto) and, so long
as delivery of a prospectus by an International Underwriter or
dealer may be required by the Act, as many copies of each
Preliminary Prospectus and the Prospectus and any supplement thereto
as the International Representatives may reasonably request. The
Company will pay the expenses of printing or other production of all
documents relating to the offering.
<PAGE>
(v) The Company will cooperate with you and your counsel
in connection with endeavoring to obtain qualification of the
Securities for sale under the laws of such jurisdictions as the
International Representatives may designate, will maintain such
qualifications in effect so long as required for the distribution of
the Securities; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation to do business under
the laws of any jurisdiction in which it shall not then be qualified
but for the requirements of this Section 4(a)(v), to subject itself
to taxation in any such jurisdiction to which it shall not then be
so subject or to consent to general service of process in any such
jurisdiction to which it shall not then be so subject.
(vi) For a period of 120 days following the Execution
Time, the Company will not, without the prior written consent of the
International Representatives, offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce the
offering of, any other shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, shares of
Common Stock, other than through the exercise of warrants or
management stock options.
(vii) The Company will apply the net proceeds of the
offering and the sale of the Securities in the manner set forth in
the Prospectus under the caption "Purpose of the Offering and Use of
Proceeds."
(viii) The Company confirms as of the date hereof that it
is in compliance with all provisions of Section 1 of the Laws of
Florida, Chapter 92-198, An Act Relating to Disclosure of Doing
Business with Cuba, Section 517.075 of the Florida Securities and
Investor Protection Act, and the Company further agrees that if it
or any of its affiliates commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba
after the date the Registration Statement becomes or has become
effective with the Commission or with the Florida Department of
Banking and Finance (the "Department"), whichever date is later, or
if the information reported in the Prospectus, if any, concerning
the Company's business with Cuba or with any person or affiliate
located in Cuba changes in any material way, the Company will
provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
(ix) The Company will comply with its obligations with
respect to the Securities under Article 4 of the Water Street
Agreement.
(b) Water Street agrees with the several International
Underwriters that:
(i) Water Street will not (and any assignees of Water
Street's rights under Section 4.1 of the Water Street Agreement will
not) request any registration of shares of Common Stock pursuant to
Section 4.1 of the Water Street Agreement for a period of 120 days
following the Effective Date.
(ii) For a period of 120 days following the Execution
Time, Water Street and Goldman, Sachs & Co. will not, without the
prior written consent of the International Representatives, offer,
sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any other shares of Common
Stock or any securities convertible into, or
<PAGE>
exercisable or
exchangeable for, shares of Common Stock; provided, however, Water
Street may distribute such shares or securities held by it to its
partners at any time after 90 days following the Effective Date,
which partners (other than Goldman, Sachs & Co.) shall not be bound
by the limitations in this paragraph (ii); provided, further, that
Water Street and Goldman, Sachs & Co. may exercise any of their
Warrants to purchase Common Stock.
(c) Each International Underwriter covenants and agrees with
the Company and Water Street that it will comply with the obligations of
an underwriter with respect to the Securities under Article 4 of the Water
Street Agreement, it being understood that such obligations do not include
those set forth under Sections 4.8(a), (b), (c), (d)(iii) and (d)(iv) of
such Agreement.
(d) Each International Underwriter agrees that (i) it is not
purchasing any of the International Securities for the account of any
United States or Canadian Person, (ii) it has not offered or sold, and
will not offer or sell, directly or indirectly, any of the International
Securities or distribute any international Prospectus to any person inside
the United States or Canada, or to any United States or Canadian Person,
and (iii) any dealer to whom it may sell any of the International
Securities will represent that it is not purchasing for the account of any
United States or Canadian Person and agree that it will not offer or
resell, directly or indirectly, any of the International Securities inside
the United States or Canada, or to any United States or Canadian Person or
to any other dealer who does not so represent and agree; provided,
however, that the foregoing shall not restrict (A) purchases and sales
between the Underwriters on the one hand and the International
Underwriters on the other hand pursuant to Section 1(b) of the Agreement
Between Underwriters and Managers, (B) stabilization transactions
contemplated under Section 2 of the Agreement Between Underwriters and
Managers, conducted through Salomon Brothers Inc as part of the
distribution of the Securities, and (C) sales to or through (or
distributions of international Prospectuses or international Preliminary
Prospectuses to) persons not United States or Canadian Persons who are
investment advisors, or who otherwise exercise investment discretion, and
who are purchasing for the account of United States or Canadian Persons.
"United States or Canadian Person" shall mean any person who is a national
or resident of the United States or Canada, a corporation, partnership, or
other entity created or organized in or under the laws of the United
States or Canada or of any political subdivision thereof, or any estate or
trust the income of which is subject to United States or Canadian federal
income taxation, regardless of its source (other than any non-United
States or non-Canadian branch of any United States or Canadian Person),
and shall include any United States or Canadian branch of a person other
than a United States or Canadian Person. "US" or "United States" shall
mean the United States of America (including the states thereof and the
District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.
(e) The agreements of the International Underwriters set
forth in paragraph (b) of this Section 5 shall terminate upon the earlier
of the following events:
(i) a mutual agreement of the International Repre-
sentatives and the U.S. Representatives to terminate the selling
restrictions set forth in paragraph (d) of this Section 5 and in
Section 5(d) of the U.S. Underwriting Agreement; or
(ii) the expiration of a period of 30 days after the
Closing Date, unless (a) the International Representatives shall
have given notice to the Company and the U.S. Representatives that
the distribution of the International Securities by the
International
<PAGE>
Underwriters has not yet been completed, or (b) the
U.S. Representatives shall have given notice to the Company and the
International Underwriters that the distribution of the U.S.
Securities by the U.S. Underwriters has not yet been completed. If
such notice by the International Representatives or the U.S.
Representatives is given, the agreements set forth in such paragraph
(b) shall survive until the earlier of (1) the event referred to in
clause (i) of this subsection (e) or (2) the expiration of any
additional period of 30 days from the date of any such notice.
(f) Each International Underwriter represents and agrees
that:
(i) it has not offered or sold and will not offer or sell
in the United Kingdom, by means of any document, any International
Securities other than to persons whose ordinary business it is to
buy or sell shares or debentures, whether as principal or agent or
in circumstances which do not constitute an offer to the public
within the meaning of the Companies Act 1985;
(ii) it has complied and will comply with all applicable
provisions of The Financial Services Act 1986 with respect to
anything done by it in relation to the International Securities in,
from or otherwise involving the United Kingdom;
(iii) it has only issued or passed on and will only issue
or pass on to any person in the United Kingdom any document received
by it in connection with the issue of the International Securities
if that person is of a kind described in Article 9(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1988; and
(iv) it has not offered or sold and will not offer or sell
any International Securities in violation of any applicable law or
financial regulation in a country where such International Securi-
ties are to be sold.
6. Conditions to the Obligations of the International
Underwriters. The obligations of the International Underwriters to
purchase the Securities to be delivered at each Closing Date shall be
subject to the accuracy of the representations and warranties on the part
of the Company and Water Street contained herein as of the Execution Time
and as of such Closing Date (as if made at such Closing Date), to the
accuracy of the statements of the Company made in any certificates pur-
suant to the provisions hereof, to the performance by the Company and
Water Street of their obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the International
Representatives agree in writing to a later time, the Registration
Statement will become effective not later than (i) 6:00 p.m. New
York City time on the date of determination of the public offering
price, if such determination occurred at or prior to 3:00 p.m. New
York City time on such date or (ii) 12:00 Noon on the business day
following the day on which the public offering price was determined,
if such determination occurred after 3:00 p.m. New York City time on
such date; if filing of the Prospectus, or any supplement thereto,
is required pursuant to Rule 424(b), the Prospectus, and any such
supplement, will be filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the effec-
tiveness of the Registration
<PAGE>
Statement shall have been issued and no
proceedings for that purpose shall have been instituted or
threatened.
(b) On each Closing Date, the Company shall have furnished to
the International Representatives and Water Street the opinion of
Kirkland & Ellis, counsel for the Company as to paragraphs (i),
(iv), (vii), (viii), (ix) and (x), and of the General Counsel or the
Assistant General Counsel of the Company with respect to paragraphs
(ii), (iii), (v), (vi), (xi) and (xii), each dated as of such
Closing Date, to the effect that:
(i) The Company has been duly incorporated and the
Company is validly existing as a corporation under the laws of
the State of Delaware, with full corporate power and authority
to own its properties and conduct its businesses as described
in the Prospectus;
(ii) Each of the Major Subsidiaries has been duly
incorporated and all the Major Subsidiaries are validly
existing as corporations under the laws of their respective
jurisdictions of incorporation, with full corporate power and
authority to own their respective properties and conduct their
respective businesses as described in the Prospectus, and the
Company and each of the Major Subsidiaries are duly qualified
to do business as foreign corporations under the laws of each
jurisdiction in which the character of the business conducted
or the location of the properties owned or leased make such
qualifications necessary and in which the consequences of a
failure to so qualify would have a material adverse effect on
the properties or businesses of the Company and its
subsidiaries taken as whole;
(iii) all the outstanding shares of capital stock of
each Major Subsidiary have been duly and validly authorized
and issued and are fully paid and nonassessable, and have not
been issued and are not owned or held in violation of any
statutory preemptive right of stockholders; to the knowledge
of such counsel after due inquiry, such shares are not held in
violation of any other preemptive right of stockholders and,
except as otherwise set forth in the Registration Statement,
all outstanding shares of capital stock of the Major
Subsidiaries are owned by the Company either directly or
through wholly owned subsidiaries free and clear of any
perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other material security
interests, stockholders, agreements or voting trusts;
(iv) the Company's authorized equity capitalization is
as set forth in the Prospectus; the capital stock of the
Company conforms to the description thereof contained in the
Prospectus; the Securities being sold hereunder and under the
U.S. Underwriting Agreement, as the case may be, have been
duly and validly authorized, and, in the case of the Securi-
ties sold to the International Underwriters by the Company,
when issued and delivered to and paid for by the Underwriters
pursuant to this Agreement or pursuant to the U.S.
Underwriting Agreement, will be fully paid and nonassessable;
the Securities have been duly authorized for trading, subject
to official notice of issuance, on the New York Stock
Exchange, Inc.; and the holders of outstanding shares of capi-
tal stock of the
<PAGE>
Company are not entitled to statutory
preemptive or, to the best of such counsel's knowledge after
due inquiry, contractual rights to subscribe for the Se-
curities;
(v) the outstanding shares of Common Stock have been
duly and validly authorized and issued and are fully paid and
nonassessable;
(vi) there is no pending or, to the knowledge of such
counsel, threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Company or any of the subsidiaries of
a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus,
and there is no contract or other document of a character
required to be described in the Registration Statement or the
Prospectus, or to be filed as an exhibit, which is not
described or filed as required;
(vii) the Registration Statement and all post-effective
amendments thereto have become effective under the Act; any
required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) and Rule 430A have been made
in the manner and within the time period required by such
Rules; to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has
been issued, no proceedings for that purpose have been
instituted or threatened and the Registration Statement and
the Prospectus (other than the financial statements and other
financial and statistical information contained 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 thereunder;
(viii) each of the Agreements has been duly authorized,
executed and delivered by the Company;
(ix) no consent, approval, authorization, license,
certificate, permit or order of any court or governmental
agency or body is required for the consummation of the
transactions contemplated herein, except such as have been
obtained under the Act or as may be required under the blue
sky laws of any jurisdiction in connection with the purchase
and distribution of the Securities by the International Under-
writers (as to which such counsel need not opine) and such
other approvals as have been obtained;
(x) neither the execution and delivery of this
Agreement or the U.S. Underwriting Agreement nor the issue and
sale of the Securities, nor the consummation of any other of
the transactions contemplated herein or therein nor the
fulfillment of the terms hereof or thereof will conflict with,
result in a breach of, or constitute a default under the char-
ter or by-laws of the Company or the terms of any agreement
listed on Exhibit A attached hereto;
(xi) neither the execution and delivery of this
Agreement or the U.S. Underwriting Agreement nor the issue and
sale of the Securities, nor the consummation of any other of
the transactions contemplated herein or therein nor the
fulfillment of the terms
<PAGE>
hereof or thereof will conflict with,
result in a breach of, or constitute a default under any
agreement filed as an exhibit to the Registration Statement
(other than any such agreement listed on Exhibit A to the
opinion of Kirkland & Ellis delivered pursuant to this
Agreement) or under any judgment, order or regulation known to
such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction
over the Company or any of its subsidiaries; and
(xii) except as disclosed in the Prospectus, no holders
of securities of the Company have rights to the registration
of such securities under the Registration Statement.
Each of such counsel shall state that it has participated in
conferences with representatives of the Company, at which conferences the
contents of the Registration Statement, the Prospectus, each amendment
thereof and supplement thereto and related matters were discussed, and,
although such counsel has not independently checked or verified and is not
passing upon and assumes no responsibility for the factual accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Prospectus, any amendment thereof or supplement thereto, no
facts have come to the attention of such counsel to cause such counsel to
believe (A) that either the Registration Statement or any amendment
thereto (other than the financial statements and related schedules and
other financial and statistical information contained therein, or omitted
therefrom), at the time the Registration Statement became effective
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein not misleading or
(B) that the Prospectus, as amended and supplemented (other than the
financial statements and related schedules and other financial and
statistical information contained therein, or omitted therefrom), at the
time the Registration Statement became effective or on each Closing Date
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
In rendering such opinions, each such counsel may rely (A) as
to matters involving the application of laws of any jurisdiction other
than the States of Illinois and Delaware or the United States, to the
extent they deem proper and specified in such opinions, upon the opinion
of other counsel of good standing whom they believe to be reliable and who
are satisfactory to counsel for the Underwriters and (B) as to matters of
fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials. Reference to the Prospectus
in this paragraph (b) include any supplements thereto at the Closing Date.
(c) On each Closing Date, Water Street shall have furnished
to the International Representatives the opinion of Fried, Frank,
Harris, Shriver & Jacobson, counsel for Water Street, dated as of
such Closing Date, to the effect that:
(i) Each of this Agreement and the U.S. Underwriting
Agreement has been duly authorized, executed and delivered by
the Selling Stockholder. No consent, approval, authorization
or order of any court or governmental agency or body of the
State of New York or the United States of America is required
for the consummation by Water Street of any of the trans-
actions contemplated herein except for those under the Act or
any state securities laws or Blue Sky laws. The sale of the
Securities to be sold by Water Street and
<PAGE>
the consummation by Water Street of the transactions contemplated by this
Agreement and the International Underwriting Agreement will
not result in a breach or violation of any term or provision
of Water Street's agreement of limited partnership or the
Water Street Agreement.
(ii) Assuming the International Underwriters purchase
the Securities to be transferred by Water Street on the
applicable Closing Date in good faith and without notice of
any adverse claim as such term is used in Section 8-302 of the
Uniform Commercial Code in effect in the State of New York,
valid title to such Securities, free and clear of all liens,
encumbrances, equities, or other adverse claims will pass to
the International Underwriters when appropriate entries to the
accounts of the International Underwriters are made on the
books of The Depository Trust Company.
(d) The International Representatives shall have received
from Wachtell, Lipton, Rosen & Katz, counsel for the International
Underwriters, such opinion or opinions, dated as of each Closing
Date, with respect to the issuance and sale of the Securities, the
Registration Statement, the Prospectus (together with any supplement
thereto) and other related matters as the International
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the International
Representatives and to Water Street a certificate of the Company,
signed by the Chief Financial Officer and the Vice
President-Controller of the Company, each in his official capacity
as an officer of the Company and not as an individual, dated as of
each Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplement to the Prospectus, this Agreement and the
U.S. Underwriting Agreement and that:
(i) the representations and warranties of the Company
in this Agreement and the U.S. Underwriting Agreement are true
and correct in all material respects on and as of such Closing
Date with the same effect as if made on the Closing Date and
the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at
or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no MAC, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(f) Water Street shall have furnished to the International
Representatives a certificate of Water Street, dated as of each
Closing Date, to the effect that the representations and warranties of
<PAGE>
Water Street in this Agreement are true and correct in all
material respects on and as of such Closing Date with the same
effect as if made on the Closing Date and Water Street has complied
in all material respects with all the agreements and satisfied all
the conditions on their part to be performed or satisfied at or
prior to the Closing Date.
(g) At the Execution Time and at each Closing Date, Arthur
Andersen & Co. shall have furnished to the International
Representatives a letter or letters, dated respectively as of the
Execution Time and as of such Closing Date, in form and substance
satisfactory to the International Representatives, stating in 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 any
supplementary financial information and schedules examined by
them and included in the Prospectus or the Registration
Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with
standards established by the American Institute of Certified
Public Accountants of the unaudited consolidated interim
financial statements of the Company for the periods specified
in such letter, as indicated in their reports thereon, copies
of which have been furnished to the International
Representatives;
(iii) The unaudited summary, condensed and selected
financial information with respect to the consolidated results
of operations and financial position of the Company for the
six most recent fiscal years (or such shorter period as
applicable) included in the Prospectus agrees with the corre-
sponding amounts (after restatements where applicable) in the
audited consolidated financial statements for such period; and
the pro forma financial information complies in all material
respects as to form with all applicable accounting
requirements of the Act;
(iv) On the basis of limited procedures, not
constituting an examination 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 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) the unaudited consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus do
not comply as to form in all material respects with the applicable
<PAGE>
accounting requirements of the Act and the
related published rules and regulations thereunder, or
are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent
with the basis for the audited consolidated statements
of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus;
(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, if any, were not determined on a basis substan-
tially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements
included in the Prospectus;
(C) the unaudited financial statements which were
not included in the Prospectus but from which were
derived any 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 consolidated financial statements
included in the Prospectus;
(D) any unaudited pro forma consolidated
condensed financial statements included 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 five
days prior to the date of such letter, there have been
any changes in the consolidated capital stock 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 prior to the Execution Time by the
International Representatives, or any increases in any
items specified prior to the Execution Time by the
International Representatives, in each case as compared
with amounts shown in the latest balance sheet included
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 in the Prospectus to the
specified date referred to in Clause E there were any
decreases in consolidated net sales, operating profit
data as compared to the preceding period or other items
specified by the International Representatives, or any
increases in any items specified prior to the Execution
Time by the International Representatives, in each case
as compared with the comparable period of the preceding
year and with any other period of corresponding length
specified prior to the Execution Time by the Interna-
tional Representatives, except
<PAGE>
in each case for decreases or increases which the Prospectus discloses,
have occurred or may occur or which are described in
such letter; and
(v) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (ii) and (iv) above, they
have carried out certain specified procedures, not
constituting an examination in accordance with generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information specified prior to the
Execution Time by the International Representatives, which are
derived from the general accounting records of the Company and
its Subsidiaries, which appear in the Prospectus, or in Part
II of, or in exhibits and schedules to, the Registration
Statement specified prior to the Execution Time by the
International Representatives, and have compared certain of
such amounts, percentages and financial information with the
accounting records of the Company and the Subsidiaries and
have found them to be in agreement.
References to the Prospectus in this paragraph (g)
include any supplement thereto at the date of the letter.
(h) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive
of any supplement thereto), there shall not have been (i) any change
or decrease specified in the letter or letters referred to in
paragraph (g) of this Section 6 or (ii) any change, or any develop-
ment involving a prospective change, in or affecting the business or
properties of the Company and its subsidiaries the effect of which,
in any case referred to in clause (i) or (ii) above, is, in the
judgment of the International Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the
public offering or the delivery of the Securities as contemplated by
the Registration Statement (exclusive of any amendment thereof) and
the Prospectus (exclusive of any supplement thereto).
(i) Prior to each Closing Date, the Company shall have
furnished to the International Representatives such further
information, certificates and documents as the International
Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in
this Agreement, or if any of the opinions and certificates mentioned
above or elsewhere in this Agreement shall not be in all material
respects reasonably satisfactory in form and substance to the
International Representatives and their counsel, this Agreement and
all obligations of the International Underwriters hereunder may be
cancelled at, or at any time prior to, each Closing Date by the
International Representatives. Notice of such cancellation shall be
given to the Company and the Selling Stockholder in writing or by
telephone or telegraph confirmed in writing.
6A. Conditions to the Obligations of Water Street. The
obligation of Water Street to sell the Securities to be delivered at each
Closing Date shall be subject to the accuracy of the representations on
<PAGE>
the part of the Company contained herein as of the Execution Time and as
of such Closing Date (as if made at such Closing Date), to the accuracy of
the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to additional conditions identical to those set forth in
Section 6 (other than paragraph (c) thereof). If any of the conditions
specified in this Section 6A shall not have been fulfilled in all material
respects when and as provided in this Agreement, Water Street may, by
written notice to the Company and the International Representatives,
terminate its obligations under this Agreement at, or at any time prior
to, each Closing Date.
7. Expenses. The Company agrees with Water Street that it
will pay or cause to be paid all Registration Expenses (as defined in the
Water Street Agreement) in connection with the Registration Statement and
this Agreement and the U.S. Underwriting Agreement (it being understood
that such Registration Expenses shall not include any expenses relating to
the preparation of any amendment to the Water Street Agreement). If the
sale of the Securities provided for herein is not consummated because any
condition to the obligations of the International Underwriters set forth
in Section 6 hereof is not satisfied (other than the conditions specified
in paragraphs 6(d) and, if the International Underwriters shall have not
exercised their judgment reasonably, 6(h)), because of any termination
pursuant to Section 10 hereof or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or
comply with any provision hereof other than by reason of a default by any
of the International Underwriters, the Company will reimburse the Interna-
tional Underwriters severally upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have
been incurred by them in connection with the proposed purchase and sale of
the Securities.
8. Indemnification and Contribution. (a) The Company agrees
to indemnify and hold harmless each International Underwriter, the
directors, officers, employees and agents of each International
Underwriter and each person who controls any International Underwriter
within the meaning of either the Act or the Securities Exchange Act of
1934 (the "Exchange Act") against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for
the registration of the Securities as originally filed or in any amendment
thereof, or in any Preliminary Prospectus or the Prospectus, or in any
amendment thereof 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 agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that (i) the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any International Underwriter through the In-
ternational Representatives specifically for use in connection with the
preparation thereof, (ii) the Company will not be liable for the amount
paid in settlement of any litigation commenced or threatened or of any
claim whatsoever arising out of or based upon any (actual or alleged)
untrue statement or omission unless such settlement is effected with the
written consent of the Company and (iii) such indemnity with respect to
any Preliminary Prospectus shall not inure to the benefit of an Inter-
national Underwriter (or any person controlling such International
<PAGE>
Underwriter) from whom the person asserting any such loss, claim, damage
or liability purchased the Securities which are the subject thereof if
such person did not receive a copy of the Prospectus (or the Prospectus as
supplemented) excluding documents incorporated therein by reference at or
prior to the confirmation of the sale of such Securities to such person in
any case where such delivery is required by the Act and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as
supplemented). This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) The Selling Stockholder agrees to indemnify and hold
harmless the International Underwriter and each person who controls the
International Underwriter within the meaning of the Act or the Exchange
Act to the same extent as the foregoing indemnity in paragraph (a) of this
Section from the Company to the International Underwriter, but only with
reference to written information furnished to the Company by or on behalf
of the Selling Stockholder specifically for use in preparation of the
documents referred to in the foregoing indemnity. This indemnity
agreement will be in addition to any liability which the Selling
Stockholder may otherwise have. Notwithstanding the provisions of this
subsection (b), the Selling Stockholder shall not be required to pay an
amount in excess of the net proceeds received by the Selling Stockholder
from the Securities sold by it hereunder. The Company, the Selling Stock-
holder and the International Underwriters acknowledge that the statements
set forth under the heading "Ownership of Common Stock -- Selling
Stockholder and its Affiliates" in the Prospectus (and not any information
to which reference is made under such heading) constitutes the only
information furnished in writing by or on behalf of Water Street for
inclusion in the documents referred to in the foregoing indemnity, and
Water Street confirms that such statements are correct and complete.
(c) Each International Underwriter severally agrees to
indemnify and hold harmless the Company, each of its directors, each of
its officers who signs the Registration Statement, and each person who
controls the Company within the meaning of either the Act or the Exchange
Act and the Selling Stockholder and its respective directors, officers,
partners, employees and agents and each other person, if any, who controls
the Selling Stockholder within the meaning of the Act or the Exchange Act,
to the same extent as the foregoing indemnity in paragraph (a) of this
Section from the Company to each International Underwriter, but only with
reference to written information relating to such International
Underwriter furnished to the Company by or on behalf of such International
Underwriter through the International Representatives specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any
International Underwriter may otherwise have. The Company acknowledges
that the statements set forth in the last paragraph of the cover page and
under the heading "Underwriting" in any Preliminary Prospectus and the
Prospectus constitute the only information furnished in writing by or on
behalf of the several International Underwriters for inclusion in any
Preliminary Prospectus or the Prospectus, and you, as the International
Representatives, confirm that such statements are correct.
(d) Each of the Company and Water Street hereby confirms its
indemnification obligations contained in Section 4.9 of the Water Street
Agreement, which Section is incorporated herein by reference.
(e) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement
<PAGE>
thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph
(a), (b) or (c) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the
indemnifying party of any material right or defense and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a), (b) or (c) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate
counsel retained by the indemnified party or parties except as set forth
below); provided, however, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel in its reasonable judgment
with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
the institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. It being understood and agreed that the
indemnifying party shall bear the fees, costs and expenses of only one
counsel pursuant to this paragraph. An indemnifying party will not,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or
not the indemnified parties are actual or potential parties to such claim
or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding. No indemnifying party
shall be liable for any settlement of any commenced or threatened action
or proceeding effected without its written consent.
(f) In the event that the indemnity provided in paragraph
(a), (b) or (c) of this Section 8 is unavailable to or insufficient to
hold harmless an indemnified party for any reason, the Company, the
Selling Stockholder and the International Underwriters agree to contribute
to the aggregate losses, claims, damages and liabilities (including legal
or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company, the Selling
Stockholder and one or more of the International Underwriters may be
subject in such proportion as is appropriate to reflect the relative fault
of the indemnifying party on the one hand and the indemnified party on the
other hand; provided, however, that in no case shall any International
Underwriter (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount
in excess of the underwriting discount or commission applicable to the
Securities purchased by such International Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable
for any reason, or if such allocation provides a lesser sum to the
indemnified party than the amount hereinafter calculated then the Company,
the Selling Stockholder and the International Underwriters shall
contribute in such proportion as is appropriate to reflect not only such
relative fault but also the relative benefits of the indemnifying party
and the indemnified party as well as any other equitable considerations.
Benefits
<PAGE>
received by the Company shall be deemed to be equal to the net
proceeds from the offering (before deducting expenses) received by the
Company, benefits received by the Selling Stockholder shall be deemed to
be equal to the net proceeds from the offering (before deducting expenses)
received by the Selling Stockholders and benefits received by the
International Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on the
cover page of the Prospectus. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the Company, the Selling Stockholder or the
International Underwriters. The Company, the Selling Stockholder and the
International Underwriters agree that it would not be just and equitable
if contribution were determined by pro rata allocation or any other method
of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8(f),
the Selling Stockholder shall not be required to contribute any amount
under this Section 8(f) in excess of the amount by which the net proceeds
received by the Selling Stockholder from the sale of Securities in the
offering exceed the aggregate amount the Selling Stockholder has otherwise
paid pursuant hereto and pursuant to Section 8(b); and 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. For purposes of this Section 8,
each person who controls the International Underwriter within the meaning
of either the Act or the Exchange Act and each director, officer, employee
and agent of the International Underwriter shall have the same rights to
contribution as the International Underwriter, each person who controls
the Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement
and each director of the Company shall have the same rights to
contribution as the Company, and each person who controls the Selling
Stockholder within the meaning of either the Act or the Exchange Act and
each director, officer, partner, employee and agent of the Selling Stock-
holder shall have the same rights to contribution as the Selling
Stockholder, subject in each case to the applicable terms and provisions
of this paragraph (f). Contribution payments made under this Section 8
are losses for purposes of Section 4.9 of the Water Street Agreement.
9. Default by an International Underwriter. If any one or
more International Underwriters shall fail to purchase and pay for any of
the Securities agreed to be purchased by such International Underwriter or
International Underwriters hereunder, and such failure to purchase shall
constitute a default in the performance of its or their obligations under
this Agreement, the remaining International Underwriters shall be
obligated severally to take up and pay for (in the respective proportions
which the amount of Securities set forth opposite their names in Schedule
I hereto bears to the aggregate amount of Securities set forth opposite
the names of all the remaining International Underwriters) the Securities
which the defaulting International Underwriter or International Under-
writers agreed but failed to purchase; provided, however, that in the
event that the aggregate amount of Securities which the defaulting Inter-
national Underwriter or International Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth
in Schedule I hereto, the remaining International Underwriters shall have
the right to purchase all, but shall not be under any obligation to pur-
chase any, of the Securities, and if such nondefaulting International
Underwriters do not purchase all the Securities, this Agreement will
terminate without liability to any nondefaulting International Under-
writer, the Company or the Selling Stockholder. In the event of a default
by any International Underwriter as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding seven days,
as the International Representatives shall determine in order that the
required changes in the Registration Statement and the Prospectus or in
any other documents or arrangements may be effected. Nothing contained in
this Agreement shall relieve any
<PAGE>
defaulting International Underwriter of
its liability, if any, to the Company, the Selling Stockholder and any
nondefaulting International Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the International
Representatives, by notice given to the Company and the Selling
Stockholder prior to the Closing Date if prior to such time (i) trading in
the Company's Common Stock shall have been suspended by the Securities and
Exchange Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been
suspended or limited or minimum prices shall have been established on such
Exchange, (ii) a banking moratorium shall have been declared either by
Federal or New York State authorities or (iii) there shall have occurred
any outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United States
is such as to make it, in the judgment of the International
Representatives, impracticable to market the Securities.
11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers, of the Selling Stockholder, and
of the International Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the International Underwriters, the
Selling Stockholder, or the Company or any of the officers, directors,
partners or controlling persons referred to in Section 8 hereof, and will
survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of
this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the International
Representatives, will be mailed, delivered or telecopied and confirmed to
them at Salomon Brothers International Limited at Victoria Plaza, 111
Buckingham Plaza Road, London SW1W OSB, attn: ; or, if sent to
the Company, will be mailed, delivered or telecopied and confirmed to it
at USG Corporation, 125 S. Franklin Street, Chicago, Illinois 60606, attn:
Secretary, with a copy to Kirkland & Ellis, 200 E. Randolph Drive,
Chicago, Illinois 60601, attn: Francis J. Gerlits, P.C.; or, if sent to
the Selling Stockholder, will be mailed, delivered or telecopied and
confirmed to it at c/o Goldman, Sachs & Co., 85 Broad Street, New York,
New York 10004, attn: Barry S. Volpert; with a copy to Fried, Frank,
Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004,
attn: David J. Greenwald, Esq.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
the officers, directors, partners, employees, agents and controlling
persons referred to in Section 8 hereof, and no other person will have any
right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York, without
giving affect to the conflicts of laws principles thereof.
15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original but all
of which shall constitute one and the same agreement.
16. Entire Agreement. This Agreement and the Water Street
Agreement constitute the entire agreement among the parties hereto with
respect to the transactions contemplated hereby.
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding
agreement among the Company, the Selling Stockholder and the several
International Underwriters.
Very truly yours,
USG CORPORATION
By:
Its:
WATER STREET CORPORATE
RECOVERY FUND I, L.P.
By: GOLDMAN, SACHS & CO.,
General Partner
By:
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers International Limited
Lazard Brothers & Co., Limited
Smith Barney Shearson Inc.
By: Salomon Brothers International Limited
By:
For themselves and the other several
International Underwriters named in
Schedule I to the foregoing Agreement.
<PAGE>
SCHEDULE I
Number of Shares
International Underwriters to be Purchased
Salomon Brothers Interntional Limited 537,500
Lazard Brothers and Co., Limited 537,500
Smith Barney Shearson Inc. 537,500
ABN AMRO Bank N.V. 43,750
Banque Paribas 43,750
Barclays de Zoete Wedd Limited 43,750
Deutsche Bank Aktiengsellschaft 43,750
NatWest Securities Limited 43,750
Yamaichi International (Europe) Limited 43,750
TOTAL 1,875,000
<PAGE>
EXHIBIT A
AGREEMENTS
Letter Agreement, dated February 25, 1993, among USG
Corporation, Water Street Corporate Recovery Fund I, L.P., Goldman, Sachs
& Co. and The Goldman Sachs Group, L.P.
Amendment No. 1, dated February 22, 1994, to Letter Agreement,
dated February 25, 1993, among USG Corporation, Water Street Corporate
Recovery Fund I, L.P., Goldman, Sachs & Co. and The Goldman Sachs Group,
L.P.
Amended and Restated Credit Agreement dated as of May 6, 1993
between USG Corporation and USG Interiors, Inc. as borrowers; the
Financial Institutions listed on the signature pages thereof, as senior
lenders; Bankers Trust Company, Chemical Bank and Citibank, N.A., as
agents; and Citibank, N.A., as Administrative Agent (the "Amended and
Restated Credit Agreement")
First Amendment, dated August 1, 1993, to Amended and Restated
Credit Agreement
Second Amendment, dated as of January 31, 1994, to Amended and
Restated Credit Agreement
Indenture, dated October 1, 1986, between USG Corporation and
Harris Trust and Savings Bank, as supplemented
Indenture, dated as of April 26, 1993, among USG Corporation,
certain guarantors and State Street Bank and Trust Company, as Trustee
(the "10 1/4% Senior Notes Indenture")
Indenture, dated as of August 10, 1993, among USG Corporation,
certain guarantors and State Street Bank and Trust Company, as Trustee
Amended and Restated Subsidiary Guarantees, dated as of May 6,
1993
Contingent Payment Guarantees issued pursuant to the 10 1/4%
Senior Notes Indenture
Amended and Restated Collateral Trust Agreement, dated as of
May 6, 1993 between USG Corporation, USG Interiors, Inc. and USG Foreign
Investments, Ltd., as guarantors, and Wilmington Trust Company and William
J. Wade, as trustees (the "Amended and Restated Collateral Trust
Agreement")
First Amendment, dated August 1, 1993, to Amended and Restated
Collateral Trust Agreement
Second Amendment, dated as of January 31, 1994, to Amended and
Restated Collateral Trust Agreement
First Amendment, dated August 1, 1993, to Amended and Restated
Subsidiary Guarantees
Reaffirmation, dated as of January 31, 1994, of Guarantees
<PAGE>
EXHIBIT B
LOCK-UP AGREEMENT
March , 1994
Salomon Brothers Inc
Lazard Freres & Co.
Smith Barney Shearson Inc.
As Representatives of the
Several Underwriters,
c/o Salomon Brothers Inc
7 World Trade Center
New York, New York 10048
Salomon Brothers International Limited
Lazard Brothers & Co., Limited
Smith Barney Shearson Inc.
As International Representatives of the
Several International Underwriters
c/o Salomon Brothers International Limited
Victoria Plaza
111 Buckingham Palace Road
London SW1W 0SB, England
Gentlemen and Ladies:
The undersigned understand that USG Corporation, a Delaware
corporation (the "Company"), has filed a Registration Statement on Form
S-1 (file number 33-51845) (as amended, the "Registration Statement") with
the Securities and Exchange Commission (the "SEC") in connection with a
proposed underwritten public offering (the "Offering") of its Common
Stock, par value $0.10 per share (the "Common Stock"). All capitalized
terms not defined herein shall have the meanings ascribed in the
Registration Statement.
At your request, and in consideration of your agreeing to act
as underwriters in connection with the Offerings and for other good and
valuable consideration, the undersigned hereby agree that, without the
prior written consent of the representatives (the "Representatives") of
the U.S. Underwriters and the International Underwriters, for a period of
120 days following the date hereof, the undersigned will not offer, sell
or contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, any other shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock; provided, however, Water Street may distribute such shares
or securities held by it to its partners at any time after 90 days
following the effective date of the Registration Statement, which partners
(other than Goldman, Sachs & Co.) shall not be bound by this Agreement;
provided, further, that Water Street and Goldman, Sachs & Co. may exercise
any of their Warrants to purchase Common Stock.
<PAGE>
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
Very truly yours,
GOLDMAN, SACHS & CO.
By:
Name:
Title:
WATER STREET CORPORATE RECOVERY
FUND I, L.P.
By: GOLDMAN, SACHS & CO.,
General Partner
By:
Name:
Title:
Accepted as of the date hereof:
Salomon Brothers Inc
Lazard Freres & Co.
Smith Barney Shearson, Inc.
By: Salomon Brothers Inc
By:
Title:
For itself and the Several
U.S. Underwriters
Salomon Brothers International Limited
Lazard Brothers & Co. Limited
Smith Barney Shearson Inc.
By: Salomon Brothers International
Limited
By:
Title:
For itself and the Several Managers
<PAGE>
EXHIBIT I
LOCK-UP AGREEMENT
March __, 1994
Salomon Brothers Inc
Lazard Freres & Co.
Smith Barney Shearson Inc.
As Representatives of the
Several Underwriters
c/o Salomon Brothers Inc
7 World Trade Center
New York, New York 10048
Salomon Brothers International Limited
Lazard Brothers & Co., Limited
Smith Barney Shearson Inc.
As International Representatives of the
Several International Underwriters
c/o Salomon Brothers International Limited
Victoria Plaza
111 Buckingham Palace Road
London SW1W OSB, England
Gentlemen and Ladies:
The undersigned understand that USG Corporation, a Delaware
corporation (the "Company"), has filed a Registration Statement on Form
S-1 (file number 33-51845) (as amended, the "Registration Statement") with
the Securities and Exchange Commission (the "SEC") in connection with a
proposed underwritten public offering (the "Offering") of its Common
Stock, par value $0.10 per share (the "Common Stock"). All capitalized
terms not defined herein shall have the meanings ascribed in the
Registration Statement.
At your request, and in consideration of your agreeing to act as
underwriters in connection with the Offering and for other good and
valuable consideration, the undersigned hereby agree that, without the
prior written consent of the representatives (the "Representatives") of
the U.S. Underwriters and the International Underwriters, for a period of
<PAGE>
120 days following the date hereof, the undersigned will not offer, sell
or contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, any other shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock; provided, however, Water Street may distribute such shares
or securities held by it to its partners at any time after 90 days
following the effective date of the Registration Statement, which partners
(other than Goldman, Sachs & Co.) shall not be bound by this Agreement;
provided, further, that Water Street and Goldman, Sachs & Co. may exercise
any of their Warrants to purchase Common Stock.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
Very truly yours,
GOLDMAN, SACHS & CO.
By:
Name:
Title:
WATER STREET CORPORATE RECOVERY
FUND I, L.P.
By: GOLDMAN, SACHS & CO.,
General Partner
By:
Name:
Title:
<PAGE>
Accepted as of the date hereof:
Salomon Brothers Inc
Lazard Freres & Co.
Smith Barney Shearson, Inc.
By: Salomon Brothers Inc
By:
Title:
For itself and the Several
U.S. Underwriters
Salomon Brothers International Limited
Lazard Brothers & Co. Limited
Smith Barney Shearson Inc.
By: Salomon Brothers International
Limited
By:
Title:
For itself and the Several Managers
