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AMENDMENT NO. 1 TO RIGHTS AGREEMENT




     Amendment No. 1, dated as of January 30, 2006 (this “Amendment”), to the Rights Agreement,
dated as of March 27, 1998 (the “Rights Agreement”), by and between USG Corporation, a Delaware
corporation (“USG”), and Harris N.A. (successor to Harris Trust and Savings Bank) (the “Rights
Agent”).



RECITALS:




     A. USG and the Rights Agent wish to amend the Rights Agreement as set forth herein;



     B. No event has occurred that would cause any Person to be deemed an Acquiring Person under
the Rights Agreement; and



     C. Section 27 of the Rights Agreement permits the Company to amend the Rights Agreement in the
manner provided herein at any time before any Person becomes an Acquiring Person under the Rights
Agreement.



AGREEMENT:




     NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:




	1.	 	     Amendments to Section 1.






	 	(a)	 	     Section 1(a) of the Rights Agreement is hereby amended and restated in its
entirety as follows:





“(a) ‘Acquiring Person’ shall mean any Person (as such term is hereinafter defined)
who or which, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Common Shares of the Company then
outstanding, but shall not include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, any entity holding Common Shares for or pursuant to the
terms of any such plan, or any Restricted Person (as such term is hereinafter
defined); provided, that a Person will not be deemed to be an Acquiring
Person solely as the result of a reduction in the number of Common Shares
outstanding unless and until such time as (i) such Person or any Affiliate or
Associate of such Person thereafter becomes the Beneficial Owner of any additional
Common Shares of the Company other than as a result of a stock dividend, stock split
or similar transaction effected by the Company in which all holders of Common Shares
are treated equally or (ii) any other Person who is the Beneficial Owner of Common
Shares thereafter becomes an Affiliate or Associate of such Person. Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an



 









 





‘Acquiring Person,’ as defined pursuant to
the foregoing provisions of this paragraph (a), has become such inadvertently, and
such Person divests as promptly as practicable a sufficient number of Common Shares
so that such Person would no longer be an ‘Acquiring Person,’ as defined pursuant to
the foregoing provisions of this paragraph (a), then such Person shall not be deemed
to be an ‘Acquiring Person’ for any purposes of this Agreement.”




	 	(b)	 	     Section 1 of the Rights Agreement is hereby further amended by adding
the following additional definitions:





“(p) ‘Equity Commitment Agreement’ shall mean the Equity Commitment Agreement,
dated as of the date hereof, by and between the Company and XYZ Inc. (the
‘Investor’).



(q) ‘Reorganization Rights Plan’ shall mean the Reorganization Rights Plan, dated
as of January 30, 2006, as it may be amended from time to time, approved by the
Board of Directors of the Company on January 29, 2006.



(r) ‘Restricted Person’ shall mean, during the Standstill Period (as defined in the
Shareholder’s Agreement, dated as of the date hereof (the ‘Shareholder’s
Agreement’), by and between the Company and the Investor) and so long as the
Shareholder’s Agreement is in effect, (i) the Investor, (ii) any Controlled
Affiliate of the Investor, and (iii) any group that would be deemed to be a ‘person’
by Section 13(d)(3) of the Exchange Act with respect to securities of the Company of
which the Investor or any Person directly or indirectly Controlling or Controlled by
(each as defined in the Shareholder’s Agreement) the Investor is a member,
provided that if it is finally judicially determined by a court of competent
jurisdiction that the Investor breached any of the representations, warranties,
covenants or other provisions contained in the Shareholder’s Agreement, and such
breach has not been cured by the Investor within 30 calendar days following receipt
by the Investor of the Company’s written notice of such breach, then the Investor,
any Controlled Affiliate and any group described in clause (iii) above shall
immediately and automatically cease to be a Restricted Person as of the close of
business on the 30th calendar day following the Investor’s receipt of the
Company’s written notice of such breach.”




	 	(c)	 	     Section 1 of the Rights Agreement is hereby further amended by adding
the following paragraph at the end thereof:





“Notwithstanding anything in this Agreement to the contrary, no Person shall be
deemed to be an Acquiring Person, and none of a Shares Acquisition Date, a
Distribution Date, an event described in Section 11(a)(ii) or an event described in
Section 13 shall be deemed to have occurred during the period beginning on the
Adoption Date (as defined in the Reorganization Rights Plan and ending on the
Expiration Date (as defined in the Reorganization Rights Plan).”



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	2.	 	     Amendment to Section 7(a). Section 7(a) of the Rights Agreement is hereby amended
and restated in its entirety as follows:





“(a) The registered holder of any Right Certificates may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at any
time after the Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights Agent in Chicago, Illinois,
together with payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which the Rights are exercised, at or prior to the earliest of
(i) the close of business on March 27, 2008 (the “Final Expiration Date”), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof (the
“Redemption Date”), (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof, (iv) 12:01 a.m., New York City time, on the eleventh calendar day
after the effectiveness of a plan of reorganization approved by the U.S. Bankruptcy
Court administering the Company’s proceedings under the United States Bankruptcy
Code, 11 U.S.C. §§ 101, et seq., provided, that such effectiveness is not
stayed or the transactions provided therein enjoined or restrained, and (v)
immediately prior to the occurrence of a Distribution Date (as defined in the
Reorganization Rights Agreement adopted or to be adopted by the Company with a
rights agent to be selected by the Company) (such earliest date, the “Expiration
Date”).




	3.	 	     Section 27. Section 27 of the Rights Agreement is hereby amended by adding the
following paragraph at the end thereof:





“Notwithstanding anything in this Agreement to the contrary, the limitations on the
ability of the Board of Directors to amend this Agreement set forth in this Section
27 shall not affect the power or ability of the Board of Directors to take any other
action that is consistent with its fiduciary duties under Delaware law, including
without limitation accelerating or extending the Expiration Date or making any other
amendment to this Agreement that is permitted by this Section 27 or adopting a new
stockholder rights plan with such terms as the Board of Directors determines in its
sole discretion to be appropriate.”




	4.	 	     Section 34. The Rights Agreement is hereby further amended by adding the following
new Section 34 directly following Section 33 thereof:





“Section 34. Determinations and Actions by the Board.



For all purposes of this Agreement, any calculation of the number of Common Shares
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares of which any Person is the
Beneficial Owner, will be made in accordance with, as applicable, the last sentence
of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act
or the provisions of Section 382 of the Code, or any successor provision or
replacement provision. The Board of Directors of the



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Company will have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board of Directors of the Company or
to the Company, or as may be necessary or advisable in the administration of this
Agreement, including without limitation the right and power to (i) interpret the
provisions of this Agreement (including without limitation Section 27, this Section
34 and other provisions hereof relating to its powers or authority hereunder) and
(ii) make all determinations deemed necessary or advisable for the administration of
this Agreement (including without limitation any determination contemplated by
Section 1(a) or any determination as to whether particular Rights shall have become
void). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, any omission with respect to any of
the foregoing) which are done or made by the Board of Directors of the Company in
good faith will (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties and (y) not subject the Board
of Directors of the Company to any liability to any Person, including without
limitation the Rights Agent and the holders of the Rights.”




	5.	 	     No Other Amendments. Except as amended hereby, the Rights Agreement shall remain in
full force and effect and is hereby ratified and confirmed in all respects.






	6.	 	     Governing Law. This Amendment shall be deemed to be a contract made under the laws
of the State of Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed entirely within
such State.






	7.	 	     Counterparts. This Amendment may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute one and the same instrument.






	8.	 	     Descriptive Headings. Descriptive headings of the several Sections of this Amendment
are inserted for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.






	9.	 	     Other Defined Terms. Capitalized terms used without other definition in this
Amendment are used as defined in the Rights Agreement.






	10.	 	     Effectiveness. This Amendment shall be effective as of, and immediately prior to,
the execution and delivery of the Equity Commitment Agreement, and all references to the
Rights Agreement shall, from and after such time, be deemed to be references to the Rights
Agreement as amended hereby.






	11.	 	     Exhibits to the Rights Agreement. Exhibits B and C to the Rights Agreement shall be
deemed amended in a manner consistent with this Amendment.





[Signatures on following page]




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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed
by their respective authorized officers as of the day and year first above written.



	 	 	 	 	 
	 	USG CORPORATION

 	 
	 	By:  	/s/ Stanley Ferguson
 	 
	 	 	Name:  	Stanley L. Ferguson 	 
	 	 	Title:  	Executive Vice President and

General Counsel 	 
	 
	 	HARRIS N.A.

 	 
	 	By:  	/s/ Martin J. McHale
 	 
	 	 	Name:  	Martin J. McHale 	 
	 	 	Title:  	Vice President 	 
	 




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