Exhibit 10.3
USG CORPORATION
RESTRICTED STOCK UNITS AGREEMENT
DATE OF GRANT: MARCH 23, 2007
     WHEREAS, _______ (the “Grantee”) is an employee of USG Corporation, a
Delaware corporation (the “Company”) or a Subsidiary;
     WHEREAS, the Board of Directors of the Company (the “Board”) has granted to
the Grantee, effective as of March 23, 2007 (the “Date of Grant”), _______
Restricted Stock Units (as defined in the Plan) (the “RSUs”) pursuant to the
Company’s Long-Term Incentive Plan, as amended (the “Plan”), subject to the
terms and conditions of the Plan and the terms and conditions hereinafter set
forth; and
     WHEREAS, the execution of a Restricted Stock Units Agreement substantially
in the form hereof to evidence the RSUs has been authorized by a resolution of
the Board.
     NOW, THEREFORE, the Company and the Grantee agree as follows:

1.   Payment of RSUs. The RSUs covered by this Agreement shall become payable to
the Grantee if they become nonforfeitable in accordance with Section 2,
Section 3 or Section 4 hereof.

2.   Vesting of RSUs. Subject to the terms and conditions of Sections 3, 4 and 5
hereof, the Grantee’s right to receive the Common Shares subject to the RSUs
shall become nonforfeitable to the extent of one hundred percent (100%) of the
total number of RSUs on the fifth anniversary of the Date of Grant (the “Vesting
Date”) if the Grantee remains continuously employed until such time.

3.   Effect of Change in Control. In the event of a Change in Control prior to
the RSUs becoming nonforfeitable as provided in Section 2 above, the RSUs
covered by this Agreement shall become nonforfeitable.

 

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4.   Effect of Termination Due to Death or Disability. Notwithstanding Section 2
above, if the Grantee should die or become permanently and totally disabled
while in the employ of the Company or any Subsidiary, the RSUs covered by this
Agreement shall immediately become nonforfeitable. The Grantee shall be
considered to have become permanently and totally disabled if the Grantee has
suffered a total disability within the meaning of the Company’s Long Term
Disability Plan for Salaried Employees.

5.   Other Employment Terminations. In the event that the Grantee’s employment
shall terminate in a manner other than any specified in Section 4 above, the
Grantee shall forfeit any RSUs that have not become nonforfeitable by such
Grantee upon such termination.

6.   Form and Time of Payment of RSUs. Except as otherwise provided for in
Section 9, payment for the RSUs shall be made in the form of Common Shares at
the time they become nonforfeitable in accordance with Section 2, Section 3 or
Section 4 hereof. To the extent that the Company is required to withhold
federal, state, local or foreign taxes in connection with the delivery of Common
Shares to the Grantee or any other person under this Agreement, the number of
Common Shares to be delivered to the Grantee or such other person shall be
reduced (based on the Market Value per Share as of the date the RSUs become
payable) to provide for the taxes required to be withheld, with any fractional
shares that would otherwise be delivered being rounded up to the next nearest
whole share. The Board (or a committee of the Board) may, at its discretion,
adopt any alternative method of providing for taxes to be withheld.

7.   Payment of Dividend Equivalents. From and after the Date of Grant and until
the earlier of (a) the time when the RSUs become nonforfeitable and payable in
accordance with Section 2, Section 3 or Section 4 hereof or (b) the time when
the Grantee’s right to receive Common Shares upon payment of RSUs is forfeited
in accordance with Section 5 hereof, on the date that the Company pays a cash
dividend (if any) to holders of Common Shares generally, the Grantee shall be
entitled to a number of additional whole RSUs determined by dividing (i) the
product of (A) the dollar amount of the cash dividend paid per Common Share on
such date and (B) the total number of RSUs (including dividend equivalents paid
thereon) previously credited to the Grantee as of such date, by (ii) the Market
Value per Share on such date. Such dividend equivalents (if any) shall be
subject to the same terms and conditions and shall be settled or forfeited in
the same manner and at the same time as the RSUs to which the dividend
equivalents were credited.

8.   RSUs Nontransferable. Neither the RSUs granted hereby nor any interest
therein or in the Common Shares related thereto shall be transferable other than
by will or the laws of descent and distribution prior to payment.

9.   Adjustments. In the event of any change in the aggregate number of
outstanding Common Shares by reason of (a) any stock dividend, extraordinary
dividend, stock split, combination of             shares, recapitalization or
other change in the capital structure of the

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    Company, or (b) any Change in Control, merger, consolidation, spin-off,
split-off, spin-out, split-up, reorganization or partial or complete
liquidation, or other distribution of assets, issuance of rights or warrants to
purchase securities, or (c) any other corporate transaction or event having an
effect similar to any of the foregoing, then the Board (or a committee of the
Board) shall adjust the number of RSUs then held by the Grantee in such manner
as to prevent dilution or enlargement of the rights of the Grantee that
otherwise would result from such event. Moreover, in the event of any such
transaction or event, the Board (or a committee of the Board), in its
discretion, may provide in substitution for any or all of the Grantee’s rights
under this Agreement such alternative consideration as it may determine to be
equitable in the circumstances.

10.   Compliance with Section 409A of the Code. To the extent applicable, it is
intended that this Agreement and the Plan comply with the provisions of
Section 409A of the Code, so that the income inclusion provisions of
Section 409A(a)(1) do not apply to the Grantee. This Agreement and the Plan
shall be administered in a manner consistent with this intent, and any provision
that would cause the Agreement or the Plan to fail to satisfy Section 409A of
the Code shall have no force and effect until amended to comply with
Section 409A of the Code (which amendment may be retroactive to the extent
permitted by Section 409A of the Code and may be made by the Company without the
consent of the Grantee). In particular, to the extent that the RSUs become
nonforfeitable and the event causing the RSUs to become nonforfeitable is an
event that does not constitute a permitted distribution event under
Section 409A(a)(2) of the Code, then notwithstanding anything to the contrary in
Section 6 above, issuance of the Common Shares underlying the RSUs will be made,
to the extent necessary to comply with the provisions of Section 409A of the
Code, to the Grantee on the earlier of (a) the Grantee’s “separation from
service” with the Company (determined in accordance with Section 409A);
provided, however, that if the Grantee is a “specified employee” (within the
meaning of Section 409A), the Grantee’s date of issuance of the Common Shares
underlying the RSUs shall be the date that is six months after the date of the
Grantee’s separation of service with the Company, (b) an applicable Vesting
Date, or (c) the Grantee’s death. Reference to Section 409A of the Code is to
Section 409A of the Internal Revenue Code of 1986, as amended, and will also
include any proposed, temporary or final regulations, or any other guidance,
promulgated with respect to such Section by the U.S. Department of the Treasury
or the Internal Revenue Service.

11.   Continuous Employment. For purposes of this Agreement, the continuous
employment of the Grantee with the Company or a Subsidiary shall not be deemed
to have been interrupted, and the Grantee shall not be deemed to have ceased to
be an employee of the Company or Subsidiary, by reason of (a) the transfer of
the Grantee’s employment among the Company and its Subsidiaries or (b) an
approved leave of absence.

12.   No Employment Contract. The grant of the RSUs to the Grantee is a
voluntary, discretionary award being made on a one-time basis and it does not
constitute a commitment to make any future awards. The grant of the RSUs and any
payments made

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    hereunder will not be considered salary or other compensation for purposes
of any severance pay or similar allowance, except as otherwise required by law.
Nothing in this Agreement will give the Grantee any right to continue employment
with the Company or any Subsidiary, as the case may be, or interfere in any way
with the right of the Company or a Subsidiary to terminate the employment of the
Grantee.

13.   Information. Information about the Grantee and the Grantee’s participation
in the Plan may be collected, recorded and held, used and disclosed for any
purpose related to the administration of the Plan. The Grantee understands that
such processing of this information may need to be carried out by the Company
and its Subsidiaries and by third party administrators whether such persons are
located within the Grantee’s country or elsewhere, including the United States
of America. The Grantee consents to the processing of information relating to
the Grantee and the Grantee’s participation in the Plan in any one or more of
the ways referred to above.

14.   Relation to Plan. This Agreement is subject to the terms and conditions of
the Plan. In the event of any inconsistency between the provisions of this
Agreement and the Plan, the Plan shall govern. All terms used herein with
initial capital letters and not otherwise defined herein that are defined in the
Plan shall have the meanings assigned to them in the Plan. The Board (or a
committee of the Board) acting pursuant to the Plan, as constituted from time to
time, shall, except as expressly provided otherwise herein, have the right to
determine any questions which arise in connection with the grant of the RSUs.

15.   Amendments. Any amendment to the Plan shall be deemed to be an amendment
to this Agreement to the extent that the amendment is applicable hereto;
provided, however, that no amendment shall adversely affect the rights of the
Grantee under this Agreement without the Grantee’s consent.

16.   Severability. If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid, unenforceable
or otherwise illegal, the remainder of this Agreement and the application of
such provision to any other person or circumstances shall not be affected, and
the provisions so held to be invalid, unenforceable or otherwise illegal shall
be reformed to the extent (and only to the extent) necessary to make it
enforceable, valid and legal.

17.   Successors and Assigns. Without limiting Section 8 hereof, the provisions
of this Agreement shall inure to the benefit of, and be binding upon, the
successors, administrators, heirs, legal representatives and assigns of the
Grantee, and the successors and assigns of the Company.

18.   Governing Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws of the State of Delaware, without
giving effect to any principle of law that would result in the application of
the law of any other jurisdiction.

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     Executed in the name and on behalf of the Company at Chicago, Illinois as
of the 23rd day of March, 2007.

     
 
  USG CORPORATION
 
   
 
   

     The undersigned Grantee hereby accepts the award of RSUs evidenced by this
Restricted Stock Units Agreement on the terms and conditions set forth herein
and in the Plan.

               
Dated:
             
 
             
 
          [GRANTEE NAME]