exv10w2



 






Exhibit 10.2




EQUITY COMMITMENT AGREEMENT




January 30, 2006




Berkshire Hathaway Inc.

1440 Kiewit Plaza

Omaha, Nebraska 68131




Ladies and Gentlemen:




     USG Corporation, a Delaware corporation (as a debtor in possession and a reorganized debtor,
as applicable, the “Company”), proposes to offer and sell shares of its common stock, par
value $0.10 per share (together with any associated share purchase rights other than the Rights,
“Common Stock”), pursuant to a rights offering (the “Rights Offering”) whereby the
Company will distribute at no charge, one purchase right (each, a “Right”) per share of
Common Stock outstanding and held of record as of a record date (the “Record Date”) to be
set by the Board of Directors of the Company. Each Right will entitle the holder thereof to
purchase one share of Common Stock (a “Share”) for $40.00 (the “Purchase Price”).
In order to facilitate the Rights Offering, pursuant to this Equity Commitment Agreement (the
“Agreement”), and subject to the terms, conditions and limitations set forth herein, (a)
Berkshire Hathaway Inc., a Delaware corporation (the “Investor”), agrees to purchase, and
the Company agrees to sell, for the Purchase Price, one Share for each Right that was not properly
exercised by the holder thereof as of the Expiration Time (as defined herein) up to a maximum of
45,000,000 shares (the “Share Cap”), less the Investor Rights Offering Shares (as defined
herein) purchased by Investor (such Shares in the aggregate, the “Unsubscribed Shares”) and
(b) with respect to Shares beneficially owned (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934 (the “Exchange Act”)) by the Investor on the date of this Agreement
(the “Investor Owned Shares”), the Investor agrees to exercise the Rights distributed on
such Investor Owned Shares (the Shares to be issued upon exercise of such Rights, the “Investor
Rights Offering Shares”, and the Unsubscribed Shares and the Investor Rights Offering Shares
are referred to herein, together, as the “Investor Additional Shares”).



     The Company proposes to conduct the Rights Offering in connection with a plan of
reorganization (the “Plan”) approved by the court (together with the applicable District
Court, to the extent District Court approval of the Plan is sought or required, the “Bankruptcy
Court”) administering the Company’s proceedings under the United States Bankruptcy Code, 11
U.S.C. §§ 101, et seq. (the “Bankruptcy Code”). Attached hereto as Exhibit A is a
term sheet for the Company’s restructuring (the “Restructuring Term Sheet”) and attached
hereto as Exhibit B is a term sheet with the asbestos claimants’ committee and the asbestos
futures representative (the “Asbestos Term Sheet”).



     Simultaneously with the delivery of this Agreement, the Company and the Investor have entered
into (i) a registration rights agreement in the form attached hereto as Exhibit C (the
“Registration Rights Agreement”) and (ii) a shareholder’s agreement in the form attached
hereto as Exhibit D (the “Shareholder Agreement”). The Company



 









 







and the Investor will also enter into an escrow agreement substantially in the form attached
hereto as Exhibit E (the “Escrow Agreement”) with a trust company or bank in good
standing having a reported capital and surplus of not less than $500,000,000, as escrow agent,
providing for an escrow funded by the Investor (the “Escrow”). Simultaneously with the
delivery of this Agreement, the Company has also amended the Rights Agreement, dated as of March
27, 1998, by and between the Company and Harris Trust and Savings Bank in the form attached hereto
as Exhibit F (as amended, the “Existing Shareholder Rights Plan”) and adopted the
Reorganization Rights Plan, dated as of the date hereof, by and between the Company and Harris
Trust and Savings Bank in the form of Exhibit G (the “Reorganization Rights Plan”).



     In consideration of the foregoing, and the representations, warranties and covenants set forth
herein, and other good and valuable consideration, the Company and the Investor agree as follows:



     1. The Rights Offering. The Rights Offering will be conducted as follows:



     (a) Subject to the terms and conditions of this Agreement, the Company hereby
undertakes to offer Shares for subscription by holders of Rights as set forth in this
Agreement.



     (b) One Right to subscribe for one Share will be distributed by the Company to each
holder of each Share outstanding on the Record Date (the “Shareholders”). The
number of Rights issued will be equal to the number of shares of Common Stock
outstanding on the Record Date. No Rights will be distributed or issued with respect
to any treasury stock.



     (c) The Company will distribute Rights as soon as reasonably practicable after
entry of the order of the Bankruptcy Court confirming the Plan (including, to the
extent necessary, any order of the applicable District Court affirming the injunction
under section 524(g) of the Bankruptcy Code to be included in the Plan or any other
provision of the Plan requiring such affirmance in conjunction with confirmation, the
“Confirmation Order”) and the effective date of the registration statement
relating to the Rights Offering (including each amendment and supplement thereto, the
“Registration Statement”) to be filed with the Securities and Exchange
Commission (the “Commission”) (the date of such distribution, the
“Distribution Date”). The Company will be responsible for effecting the
distribution of certificates representing Rights, the Rights Offering prospectus and
any related materials to each Shareholder.



     (d) The Rights may be exercised during a period (the “Rights Exercise
Period”) specified in the Rights Offering prospectus, which period will commence on
the Distribution Date and will end at the Expiration Time. For the purposes of this
Agreement, the “Expiration Time” means 5:00 p.m. New York City time on the
20th calendar day (or if such day is not a Business Day, the next Business
Day) after the Distribution Date, or such
later date as the Company may specify, in its discretion, in a notice provided to
the Shareholders before 9:00 a.m. New York City time on the Business Day before the
then-effective Expiration Time. For the purposes of this



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Agreement, “Business
Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a
day on which banking institutions in New York City are generally authorized or
obligated by law or executive order to close.



     (e) The Company will use reasonable efforts to cause the Rights to be admitted for
trading on the New York Stock Exchange (the “NYSE”) during the Rights Exercise
Period until the close of trading on the last Business Day of the Rights Exercise
Period.



     (f) There will be no over-subscription rights provided to the Shareholders in
connection with the Rights Offering.



     (g) The Company will issue the Shares to the Shareholders upon proper exercise of
Rights promptly after the Expiration Time, and in any event in compliance with the
terms of the Rights Offering and prior to the Closing Date (as defined herein).



     (h) The Company hereby agrees and undertakes to give the Investor written notice by
electronic facsimile transmission of a certification by an executive officer of the
Company (who is an “Authorized Person” as defined in the Escrow Agreement) of either
(i) the number of Unsubscribed Shares and the aggregate Purchase Price therefor (a
“Purchase Notice”) or (ii) in the absence of any Unsubscribed Shares, of the
fact that there are no Unsubscribed Shares and that the Backstop Commitment (as defined
herein) is terminated (a “Satisfaction Notice”) as soon as practicable after
the Expiration Time and, in any event, not later than noon New York City time on the
second Business Day following the Expiration Time (the date of transmission
confirmation of a Purchase Notice or a Satisfaction Notice, the “Determination
Date”). If neither a Purchase Notice nor a Satisfaction Notice is provided by 5:00
p.m. New York City time on the Business Day following the Expiration Time, the Company
will provide the Investor with an estimate, based on information available to it, of
the number of Unsubscribed Shares, if any, by such time.



     2. The Backstop Commitment.



     (a) On the basis of the representations and warranties herein contained, but
subject to the conditions set forth in Section 7, (i) the Investor agrees to subscribe
for and purchase, and the Company agrees to sell and issue, at the aggregate Purchase
Price therefor, all Unsubscribed Shares as of the Expiration Time (subject to the Share
Cap less the number of Investor Rights Offering Shares purchased by the Investor), and
(ii) the Investor agrees to purchase (or to exercise the Rights for), and the Company
agrees to issue and sell, all of the Investor Rights Offering Shares by (x) payment
of the aggregate Purchase Price therefor at the Closing Date or (y) by exercise of
Rights issued on the Investor Owned Shares in accordance with the terms of the
Rights Offering (except that, in either case, the Investor may pay the aggregate
Purchase Price for the Investor Rights Offering Shares by transfer of funds from the
Escrow) (the commitments set forth in (i) and (ii) above, together, the
“Backstop Commitment”).



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     (b) On the basis of the representations and warranties herein contained, but
subject to the Agreement Order (as defined herein) becoming a Final Agreement Order (as
defined herein), the Company will pay to the Investor a commitment fee of $100 million
(the “Commitment Fee”). Such Commitment Fee will be paid in U.S. dollars on
the Business Day after the Agreement Order becomes a Final Agreement Order. The
Commitment Extension Fee (as defined herein), if any, will be paid by the Company as
provided in Section 10(b)(ii). Payment of the Commitment Fee and the Commitment
Extension Fee, if any, will be made by wire transfer of federal (same day) funds to the
account specified by the Investor to the Company at least 24 hours in advance. The
Commitment Fee and the Commitment Extension Fee, if any, will be nonrefundable when
paid. Simultaneously with the Agreement Order becoming a Final Agreement Order, and
thereafter on demand, the Company will reimburse or pay, as the case may be, the
standard fees and out-of-pocket expenses of one law firm retained by the Investor for
purposes of the transactions contemplated hereby and incurred since January 1, 2006
within 10 days of presentation of an invoice approved by the Investor, without
Bankruptcy Court review or further Bankruptcy Court order. The filing fee required by
the HSR Act (as defined herein) shall be paid by the Company on behalf of the Investor
when filings under the HSR Act are made. These obligations are in addition to, and do
not limit, the Company’s obligations under Section 8.



     (c) The Company will provide a Purchase Notice or a Satisfaction Notice to the
Investor as provided above, setting forth a true and accurate determination of the
aggregate number of Unsubscribed Shares, if any; provided, that on the Closing
Date the Investor will purchase, and the Company will sell, only such number of
Unsubscribed Shares as are listed in the Purchase Notice, without prejudice to the
rights of the Investor to seek later an upward or downward adjustment if the number of
Unsubscribed Shares in such Purchase Notice is inaccurate.



     (d) Delivery of the Unsubscribed Shares and, to the extent not previously issued in
the Rights Offering, delivery of the Investor Rights Offering Shares, will be made by
the Company to the account of the Investor (or to such other accounts as the Investor
may designate) at 9.00 a.m., New York City time, on the next Business Day following the
Determination Date (the “Closing Date”) against payment of the aggregate
Purchase Price for
the Shares by wire transfer of federal (same day) funds to the account specified by
the Company to the Investor at least 24 hours in advance, which may be satisfied by
transfer of like funds from the Escrow.



     (e) All Investor Additional Shares will be delivered with any and all issue, stamp,
transfer or similar taxes or duties payable in connection with such delivery duly paid
by the Company. The Investor Rights Offering Shares will (i) be issued by the Company
promptly, but not later than the Closing Date or (ii) if issued pursuant to the
exercise of Rights, be issued promptly in accordance with the terms of the Rights
Offering.



     (f) The documents to be delivered on the Closing Date by or on behalf of the
parties hereto and the Investor Additional Shares (other than any such shares
previously issued in accordance with the terms of the Rights Offering) will be
delivered



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at the offices of Jones Day, 222 East 41st Street, New York, New
York, 10017 on the Closing Date.



     (g) Notwithstanding anything to the contrary in this Agreement the Investor, in its
sole discretion, may designate that some or all of the Investor Additional Shares be
issued in the name of, and delivered to, one or more of its Subsidiaries (as defined
herein).



     3. Representations and Warranties of the Company. The Company represents and warrants
to, and agrees with, the Investor as set forth below. Each representation, warranty and
agreement is made as of the date hereof and as of the Closing Date:



     (a) The Company has been duly incorporated and is validly existing as a corporation
in good standing under the laws of Delaware, with the requisite power and authority to
own its properties and conduct its business as currently conducted. The Company has
been duly qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification, except to the
extent the failure to be so qualified or be in good standing has not had or could not
reasonably be expected to have, individually or in the aggregate, a material adverse
effect on the business or, results of operations of the Company and its Subsidiaries
taken as a whole or on the ability of the Company, subject to the approvals and other
authorizations set forth in Section 3(i) below, to consummate the transactions
contemplated by this Agreement and the Shareholder Agreement, and to consummate in all
material respects the transactions contemplated by the Escrow Agreement, the
Registration Rights Agreement or the Plan (a “Material Adverse Effect”). For
the purposes of this Agreement, a “Subsidiary” of any person means, with
respect to such person, any corporation, partnership, joint venture or other legal
entity of which such person (either alone or through or together with any other
subsidiary), owns, directly or indirectly, more than 50% of the stock or other
equity interests, has the power to elect a majority of the board of directors or
similar governing body, or has the power to direct the business and policies.



     (b) The Company has the requisite corporate power and authority to enter into,
execute and deliver this Agreement, the Escrow Agreement, the Registration Rights
Agreement, the Shareholder Agreement and the Existing Shareholder Rights Plan, and,
subject to entry of the Agreement Order and the Confirmation Order (together, the
“Court Orders”) and the expiration, or waiver by the Bankruptcy Court, of the
10-day period set forth in Rules 6004(h) and 3020(e) of the Federal Rules of Bankruptcy
Procedure (the “Bankruptcy Rules”), respectively, to perform its obligations
hereunder and thereunder, including the issuance of the Rights and Shares. The Company
has taken all necessary corporate action required for the due authorization, execution,
delivery and performance by it of this Agreement, the Escrow Agreement, the
Registration Rights Agreement, the Shareholder Agreement, the Existing Shareholder
Rights Plan and the Reorganization Rights Plan, including the issuance of the Rights
and Shares, other than board of directors’ approval of, or other board action to be
taken



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with respect to, the documents to implement the Rights Offering, including the
Rights Offering prospectus, the setting of the Record Date and the declaration of the
Rights and distribution thereof, all of which will be taken prior to the Distribution
Date and will be consistent with the Plan.



     (c) Each of this Agreement, the Registration Rights Agreement, the Shareholder
Agreement, the Existing Shareholder Rights Plan and the Reorganization Rights Plan has
been duly and validly executed and delivered by the Company, the Escrow Agreement, when
executed and delivered by the Company, will be duly and validly executed and delivered
by the Company, and, upon the entry of the Agreement Order and the expiration, or
waiver by the Bankruptcy Court, of the 10-day period set forth in Bankruptcy Rule
6004(h), each such document will constitute the valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective terms.



     (d) Prior to the entry of the Agreement Order, the Company will have the requisite
corporate power and authority to execute the Plan and to file the Plan with the
Bankruptcy Court and, subject to entry of the Confirmation Order and the expiration, or
waiver by the Bankruptcy Court, of the 10-day period set forth in Bankruptcy Rule
3020(e), to perform its obligations thereunder, and will have taken all necessary
corporate actions required for the due authorization, execution, delivery and
performance by it of the Plan.



     (e) The Plan will be duly and validly filed with the Bankruptcy Court by the
Company and, upon the entry of the Confirmation Order and the expiration, or waiver by
the Bankruptcy Court, of the 10-day period set forth in Bankruptcy Rule 3020(e), will
constitute the valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.



     (f) The authorized capital stock of the Company consists solely of (i) 200,000,000
shares of Common Stock, par value $0.10 per share, of which, as of the date of this
Agreement, 44,637,221 shares are issued and outstanding and 5,348,001 are held in
treasury, and (ii) 36,000,000 shares of Preferred Stock, par value $1.00 per share,
none of which is issued and outstanding. All of the issued shares of capital stock of
the Company have been duly and validly authorized and issued and are fully paid and
non-assessable, and none of them has been issued in violation of preemptive or similar
rights. As of the date of this Agreement there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights, exchange
rights or other agreements or rights to purchase or otherwise acquire shares of capital
stock of the Company other than pursuant to the Shareholder Rights Plan, the
Reorganization Rights Plan and options to purchase 605,000 shares of Common Stock under
existing equity plans of the Company.



     (g) The distribution of the Rights and issuance of the Shares, including the Shares
to be issued and sold by the Company to the Investor hereunder, have been duly and
validly authorized and, when the Shares are issued and delivered against payment
therefor in the Rights Offering or to Investor hereunder, will be duly and validly



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issued, fully paid and non-assessable, and free and clear of all taxes, liens,
pre-emptive rights, rights of first refusal, subscription and similar rights. Upon the
distribution by the Company of Rights in respect of shares of Common Stock, such Rights
will be duly and validly issued, free and clear of all taxes, liens, pre-emptive
rights, rights of first refusal, subscription and similar rights, and enforceable in
accordance with their terms, and holders of Rights will be entitled to the rights
described in the Rights certificates.



     (h) Subject to the entry of the Court Orders and the expiration, or waiver by the
Bankruptcy Court, of the 10-day period set forth in Bankruptcy Rules 6004(h) and
3020(e), as applicable, the distribution of the Rights, the sale, issuance and delivery
of the Shares upon exercise of the Rights and the consummation of the Rights Offering
by the Company and the execution and delivery (or, with respect to the Plan, the
filing) by the Company of this Agreement, the Escrow Agreement, the Registration Rights
Agreement, the Shareholder Agreement, the Existing Shareholder Rights Plan, the
Reorganization Rights Plan and the Plan and compliance by the Company with all of the
provisions hereof and thereof and the consummation of the transactions contemplated
herein and therein (including compliance by the
Investor with its obligations hereunder and thereunder) (i) will not conflict with
or result in a breach or violation of, any of the terms or provisions of, or
constitute a default under (with or without notice or lapse of time, or both), or
result, except to the extent provided in or contemplated by the Plan, in the
acceleration of, or the creation of any lien under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound or to which any of the property or assets of the Company or any of its
Subsidiaries is subject, (ii) will not result in any violation of the provisions of
the Certificate of Incorporation or By-laws of the Company, (iii) will not result in
any violation of, or any termination or material impairment of any rights under, any
statute or any license, authorization, injunction, judgment, order, decree, rule or
regulation of any court or governmental agency or body having jurisdiction over the
Company or any of its Subsidiaries or any of their properties, and (iv) will not
trigger the distribution of “Right Certificates” (as defined by Section 3(a) of the
Existing Shareholder Rights Plan and Section 1(bb) of the Reorganization Rights
Plan), except in any such case described in subclause (i) or (iii) as will not have
or could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and except in any such case described in subclause (i), for
(x) the registration under the Securities Act of 1933 (the “Securities Act”)
of issuance of the Shares upon exercise of Rights, (y) filings with respect to and
the expiration or termination of the waiting period under the Hart-Scott-Rodino
Antitrust Act (the “HSR Act”) relating to the placement of Shares with the
Investor, and (z) such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase of the Shares by the Investor.



     (i) No consent, approval, authorization, order, registration or qualification of or
with any court or governmental agency or body having jurisdiction over the Company or
any of its Subsidiaries or any of their properties is required for the distribution of
the Rights, the sale, issuance and delivery of the Shares upon exercise of the Rights
or to Investor hereunder and the consummation of the Rights Offering by the Company and



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the execution and delivery by the Company of this Agreement, the Escrow Agreement, the
Registration Rights Agreement, the Shareholder Agreement or the Plan and performance of
and compliance by the Company with all of the provisions hereof and thereof and the
consummation of the transactions contemplated herein and therein, except (i) the entry
of the Court Orders and the expiration, or waiver by the Bankruptcy Court, of the
10-day period set forth in Bankruptcy Rules 6004(h) and 3020(e), as applicable, (ii)
the registration under the Securities Act of issuance of the Shares upon exercise of
Rights, (iii) filings with respect to and the expiration or termination of the waiting
period under the HSR Act relating to the placement of Shares with the Investor, and
(iv) such consents, approvals,
authorizations, registrations or qualifications (x) as may be required under NYSE
rules and regulations in order to consummate the transactions contemplated herein,
(y) as may be required under state securities or Blue Sky laws in connection with
the purchase of the Shares by the Investor or (z) the absence of which will not have
or could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.



     (j) The audited consolidated financial statements of the Company included in the
Annual Report on Form 10-K of the Company for the year ended December 31, 2004 and the
unaudited consolidated financial statements of the Company included in the Quarterly
Report on Form 10-Q of the Company for the quarter ended September 30, 2005, present
fairly in all material respects, and the audited consolidated financial statements of
the Company to be filed in the Annual Report on Form 10-K of the Company for the year
ended December 31, 2005 when filed with the Commission will present fairly in all
material respects, in each case together with the related notes, the financial position
of the Company and its consolidated Subsidiaries at the dates indicated and the
statements of earnings, stockholders’ equity (deficit) and cash flows of the Company
and its consolidated Subsidiaries for the periods specified; such financial statements
have been prepared or will be prepared in conformity with generally accepted accounting
principles in the United States, except as otherwise noted in such financial
statements, applied on a consistent basis throughout the periods involved and in
conformity with the rules and regulations of the Commission. The Investor acknowledges
that the Company’s financial statements described above do not reflect the terms of the
Plan as described in the Restructuring Term Sheet and the Asbestos Term Sheet, and that
such terms will affect the Company’s financial statements once they are fully
reflected.



     4. Representations and Warranties of the Investor. The Investor represents and warrants
to, and agrees with, the Company as set forth below. Each representation, warranty and
agreement is made as of the date hereof and as of the Closing Date:



     (a) The Investor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Delaware.



     (b) The Investor has the requisite corporate power and authority to enter into,
execute and deliver this Agreement, the Escrow Agreement, the Registration Rights
Agreement and the Shareholder Agreement and to perform its obligations hereunder



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and thereunder and has taken all necessary corporate action required for the due
authorization, execution, delivery and performance by it of this Agreement, the Escrow
Agreement, the Registration Rights Agreement and the Shareholder Agreement.



     (c) Each of this Agreement, the Escrow Agreement, the Registration Rights Agreement
and the Shareholder Agreement has been duly and validly executed and delivered by the
Investor and constitutes its valid and binding obligation, enforceable against it in
accordance with its terms.



     (d) The Shares are being acquired under this Agreement by the Investor in good
faith solely for its own account, for investment and not with a view toward resale or
other distribution within the meaning of the Securities Act; provided,
however, that the disposition of the Investor’s property will at all times be
under its control. The Shares will not be offered for sale, sold or otherwise
transferred by the Investor except pursuant to a registration statement or in a
transaction exempt from or not subject to registration under the Securities Act and any
applicable state securities laws.



     (e) The Investor has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its investment in the
Shares being acquired hereunder. The Investor is an “accredited investor” within the
meaning of Rule 501(a) under the Securities Act. The Investor understands and is able
to bear any economic risks associated with such investment (including, without
limitation, the necessity of holding the Shares for an indefinite period of time).



     (f) The Investor acknowledges that it has been afforded the opportunity to ask
questions and receive answers concerning the Company and to obtain additional
information that it has requested to verify the accuracy of the information contained
herein. Notwithstanding the foregoing, nothing contained herein will operate to modify
or limit in any respect the representations and warranties of the Company or to relieve
it from any obligations to the Investor for breach thereof or the making of misleading
statements or the omission of material facts in connection with the transactions
contemplated herein.



     5. Additional Covenants of the Company. The Company agrees with the Investor:



     (a) To file a motion and supporting papers (the “Agreement Motion”) in the
form attached hereto as Exhibit H (including an order) seeking an order of the
Bankruptcy Court (the “Agreement Order”) approving this Agreement, the exhibits
attached hereto, and the payment of the Commitment Fee. The Company will use its
reasonable efforts to have the Agreement Order become a Final Agreement Order as soon
as practicable following the filing of the motion therefor, and in any event by March
15, 2006. The Company will give appropriate notice, including such notice as the
Bankruptcy Court may direct, and provide appropriate opportunity for hearing, to all
parties entitled thereto, of all motions, orders, hearings or other proceedings
relating to this Agreement or the transactions
contemplated hereby. For purposes of this Agreement, “Final Agreement
Order” means an order or judgment of the Bankruptcy



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Court as entered on the
docket, which is immediately appealable and that (i) has not been reversed, stayed,
modified, or amended and as to which the time to appeal, seek certiorari or move for
reargument or rehearing has expired, and no appeal, petition for certiorari, or
motion for reargument or rehearing has been timely taken, or (ii) as to which any
appeal has been taken, any petition for certiorari or motion for reargument or
rehearing has been filed, and such appeal, petition or motion has been conclusively
withdrawn or resolved by the highest court to which the order or judgment was
appealed or from which certiorari, reargument or rehearing was sought.



     (b) To file the Plan in a form that is consistent in all material respects with the
Asbestos Term Sheet and the Restructuring Term Sheet, and to use reasonable efforts to
obtain the entry of the Confirmation Order by the Bankruptcy Court. The Company will
use reasonable efforts to adopt a Plan that (i) is consistent in all respects with this
Agreement, (ii) is consistent in all material respects with the Asbestos Term Sheet and
the Restructuring Term Sheet, (iii) does not change the total amount of or conditions
to the payments made or to be made under the Asbestos Term Sheet, (iv) provides for the
release and exculpation of the Investor, its affiliates, representatives and advisors
to the fullest extent permitted under applicable law, and (v) has conditions to
confirmation and the effective date of the Plan (and to what extent any such conditions
can be waived and by whom) that are acceptable to Investor and consistent with this
Agreement. At least one week prior to the hearing on the Agreement Motion, the Company
will (A) provide a copy of the Plan and the related disclosure statement (the
“Disclosure Statement”) to the Investor and its counsel; and (B) incorporate
any reasonable comments of the Investor and its counsel into such documents. In
addition, the Company will provide to the Investor and its counsel a copy of the
Confirmation Order and a reasonable opportunity to review and comment on such order
prior to such order being filed with the Bankruptcy Court and promptly after discussion
of such order with its asbestos constituencies. In addition, prior to the hearing on
the Agreement Motion, the Company shall have negotiated with Investor the terms of the
Confirmation Order that pertain to this Agreement, and the Confirmation Order filed by
the Company shall contain such terms.



     (c) To use reasonable efforts to effectuate the Rights Offering as provided herein.



     (d) To provide the Investor with a reasonable opportunity to review the
Registration Statement before any filing with the Commission; to advise the Investor,
promptly after it receives notice thereof, of the time when the Registration Statement
has been filed or has become effective or any prospectus or prospectus supplement has
been filed and to furnish the
Investor with copies thereof; to advise the Investor promptly after it receives
notice thereof of any comments or inquiries by the Commission (and to furnish the
Investor with copies of any correspondence related thereto), of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of any
prospectus, of the initiation or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or supplementing of the
Registration Statement or prospectus or for additional information.



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     (e) To use reasonable efforts to (i) list and maintain the listing of the Common
Stock (and associated share purchase rights) on the NYSE, (ii) admit for trading and
maintain the admission for trading of the Rights on the NYSE during the Rights
Offering, and (iii) if required by the NYSE, to obtain by July 15, 2006 any shareholder
approval required in connection therewith.



     (f) To notify, or to cause the subscription agent for the Rights Offering (the
“Subscription Agent”) to notify, on each Friday during the Rights Exercise
Period, or more frequently if reasonably requested by the Investor, the Investor of the
aggregate number of Rights known by the Company or the Subscription Agent to have been
exercised pursuant to the Rights Offering as of the close of business on the preceding
Business Day or the most recent practicable time before such request, as the case may
be.



     (g) To determine the number of Unsubscribed Shares, if any, in good faith, to
provide a Purchase Notice or a Satisfaction Notice that accurately reflects the number
of Unsubscribed Shares as so determined and to provide to the Investor a certification
by the Subscription Agent of the Unsubscribed Shares or, if such certification is not
available, such backup to the determination of the Unsubscribed Shares as Investor may
reasonably request.



     (h) Without the written consent of the Investor, not to issue any shares of capital
stock of the Company, or options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, securities convertible into or exchangeable for
capital stock of the Company, or other agreements or rights to purchase or otherwise
acquire capital stock of the Company after the date of this Agreement, except for (i)
Rights and Common Stock issuable upon exercise of Rights, (ii) the issuance of Common
Stock upon the exercise of stock options outstanding on the date of this Agreement and
described in Section 3(f), (iii) the distribution of rights to holders of Common Stock
upon the issuance of any shares of such Common Stock permitted hereunder pursuant to
the Shareholder Rights Plan or the Reorganization Rights Plan or the distribution of
rights to all holders of outstanding Common Stock in connection with the adoption of
the Reorganization Rights Plan (but not the exercise of such rights), (iv) up to 2.1
million shares of Common Stock or securities convertible into Common Stock to be issued
to employees and directors of
the Company and available for grant as of the date hereof under the Company’s
existing equity plans, and (v) shares of Common Stock or options exercisable for
common stock issued to employees and directors of the Company under a plan approved
by stockholders after the date hereof, provided that any shares issued
thereunder must remain restricted until the Closing Date or thereafter and any
options exercisable for Common Stock issued thereunder must not be exercisable prior
to the Closing Date. In the event of any stock split, stock dividend, stock
combination or similar transaction affecting the number of issued and outstanding
shares of Common Stock, the Purchase Price and the Share Cap will be proportionally
adjusted to reflect the increase or decrease in the number of issued and outstanding
shares of Common Stock.



11









 





     (i) To use reasonable efforts to promptly prepare and file all necessary
documentation and to effect all applications that are necessary or advisable under the
HSR Act so that the applicable waiting period shall have expired or been terminated
thereunder with respect to the purchase of Investor Additional Shares hereunder, and
not to take any action that is intended or reasonably likely to materially impede or
delay the ability of the parties to obtain any necessary approvals required for the
transactions contemplated by this Agreement.



     6. Additional Covenants of the Investor. The Investor agrees with the Company:



     (a) To use reasonable efforts to facilitate the entry of the Agreement Order as
soon as practicable following the filing of the motion therefor.



     (b) To use reasonable efforts to facilitate the entry of the Confirmation Order as
soon as practicable following the filing of the Plan.



     (c) To provide the Company with such information as the Company reasonably requests
regarding the Investor for inclusion in the Registration Statement and the Disclosure
Statement.



     (d) To use reasonable efforts to promptly prepare and file all necessary
documentation and to effect all applications that are necessary or advisable under the
HSR Act so that the applicable waiting period shall have expired or been terminated
thereunder with respect to the purchase of Investor Additional Shares hereunder, and
not to take any action that is intended or reasonably likely to materially impede or
delay the ability of the parties to obtain any necessary approvals required for the
transactions contemplated by this Agreement.



     (e) To not file any pleading or take any other action in the Bankruptcy Court with
respect to this Agreement, the Plan, the Disclosure Statement or the Confirmation Order
or the consummation of the transactions contemplated
hereby or thereby that is inconsistent with this Agreement or the Company’s efforts
to obtain the entry of the Court Orders consistent with this Agreement.



     (f) To approve the documents listed in Section 7(b) within the time limits set
forth therein so long as such documents satisfy the criteria set forth in subparts (i)
through (iii) of such section.



     7. Conditions to the Obligations of the Investor. The obligation of the Investor to
purchase Investor Additional Shares pursuant to the Backstop Commitment on the Closing Date
are subject to the following conditions:



     (a) The Agreement Order shall have been entered by the Bankruptcy Court in the form
attached hereto as Exhibit H with no modifications thereto without the consent
of Investor and the Agreement Order shall have become a Final Agreement Order;



12









 





     (b) The Investor shall have approved in writing (i) by the hearing on the Agreement
Motion, a draft of the Plan that (A) is consistent in all respects with this Agreement,
(B) is consistent in all material respects with the Asbestos Term Sheet and the
Restructuring Term Sheet, (C) does not change the total amount of or conditions to the
payments made or to be made under the Asbestos Term Sheet, (D) provides for the release
and exculpation of the Investor, its affiliates, representatives and advisors to the
fullest extent permitted under applicable law, and (E) has conditions to confirmation
and the effective date of the plan (and to what extent any such conditions can be
waived and by whom) that are acceptable to Investor and consistent with this Agreement;
(ii) by the hearing on the Agreement Motion, a draft of the Disclosure Statement that
is consistent in all material respects with the Plan as described herein; (iii) prior
to filing with the Bankruptcy Court, a draft of the Confirmation Order, that is
consistent in all respects with the provisions of the Plan specified in 7(b)(i)(A)-(E)
above and, with respect to other provisions, consistent in all material respects with
the Plan; (iv) prior to the hearing on the Agreement Motion, the terms of the
Confirmation Order that pertain to this Agreement; and (v) prior to filing with the
Bankruptcy Court, drafts of any amendments or supplements to any of the foregoing, to
the extent any such amendment or supplement effects a material change to the Plan or
any other document or agreement described herein or any change to the total amount of
or conditions to the payments made or to be made under the Asbestos Term Sheet or any
change inconsistent with this Agreement;



     (c) The Company shall not have made a public announcement, entered into an
agreement or filed any pleading or document with the Bankruptcy Court evidencing its
intention to support, or otherwise supported, any transaction inconsistent with the
Plan approved by the Investor in accordance with Section 7(b) or this Agreement;



     (d) The Confirmation Order shall have been entered by the Bankruptcy Court and such
order shall be nonappealable, shall not have been appealed within ten calendar days of
entry or, if such order is appealed, shall not have been stayed pending appeal, and
there shall not have been entered by any court of competent jurisdiction any reversal,
modification or vacatur, in whole or in part, of the Confirmation Order;



     (e) The Plan, as approved, and the Confirmation Order as entered, by the Bankruptcy
Court, shall be in the form approved by Investor in accordance with Section 7(b), with
such amendments, modifications or changes that (i) are consistent in all respects with
this Agreement, (ii) are consistent in all material respects with the form of the Plan
and the Confirmation Order approved by the Investor pursuant to
Section 7(b), (iii) provide for the release and exculpation of the Investor, its affiliates,
representatives and advisors to the fullest extent permitted under applicable law, (iv)
do not change the total amount of or conditions to the payments made or to be made
under the Asbestos Term Sheet, (v) otherwise are consistent in all material respects
with the Restructuring Term Sheet and the Asbestos Term Sheet, and (vi) individually or
in the aggregate, will not, and could not reasonably be expected to, result in a
pre-tax loss by or damage to the Company, in the amount of $500 million or more;



13









 





     (f) The conditions to confirmation and the conditions to the effective date of the
Plan have been satisfied or waived by the Company in accordance with the Plan, and the
effective date of the Plan shall have occurred or will occur on the Closing Date;



     (g) The Company shall have commenced the Rights Offering, the Rights Offering shall
have been conducted in all material respects in accordance with this Agreement and the
Rights Offering prospectus and the Expiration Time shall have occurred;



     (h) The Investor shall have received a Purchase Notice in accordance with Section
1(h) from the Company, dated as of the Determination Date, certifying as to the number
of Unsubscribed Shares to be purchased pursuant to the Backstop Commitment;



     (i) The Investor Additional Shares shall be, upon payment of the aggregate Purchase
Price as provided herein, validly issued, fully paid, non-assessable and free and clear
of all taxes, liens, pre-emptive rights, rights of first refusal, subscription and
similar rights;



     (j) No judgment, injunction, decree or other legal restraint shall prohibit the
consummation of the Plan, the Rights Offering or the transactions contemplated by this
Agreement;



     (k) The Investor shall have received payment of the Commitment Fee, and, if
required by Section 10(b)(ii), the Commitment Extension Fee; neither the Commitment Fee
nor the Commitment Extension Fee, if any, shall have been required to be repaid to the
Company;



     (l) If the purchase of Shares is subject to the terms of the HSR Act, the
applicable waiting period shall have expired or been terminated thereunder with respect
to such purchase;



     (m) This Agreement shall be valid and enforceable against the Company and the
Company shall not be in breach of this Agreement;



     (n) The Common Stock issuable upon exercise of the Rights shall be approved for
trading on the NYSE, subject to official notice of issuance, and, if any shareholder
approval is required therefore by the NYSE, the Company shall have obtained such
approval by July 15, 2006; and



     (o) The representations and warranties of the Company in Paragraphs (a) through (i)
of Section 3 shall be true and correct in all material respects as if made on the
Closing Date (except for representations and warranties made as of a specified date,
which shall be true and correct in all material respects as of such specified date).



     For the avoidance of doubt, the accuracy or continuing accuracy of the Company’s
representations and warranties in Section 3(j) will not be a condition of the Investor’s
obligations hereunder, the Investor’s remedy therefor being indemnification



14









 







as provided in Section
8 hereof or an action against the Company for breach of this Agreement.



     8. Indemnification. (a) Whether or not the Rights Offering is consummated or this
Agreement or the Backstop Commitment is terminated, the Company will indemnify, defend,
protect, save and hold harmless the Investor, its affiliates and their respective officers,
directors, employees, advisors, shareholders, members, managers, partners, attorneys, agents
and representatives (the “Indemnitees”), from and against all losses, claims, damages,
liabilities, costs (including, without limitation, the costs of investigation and attorneys’
fees) and expenses (collectively, “Losses”) to which any of the Indemnitees becomes subject
arising out of or in connection with any third-party claim, challenge, litigation,
investigation or proceedings with respect to the Rights Offering, the Backstop Commitment,
this Agreement, the Escrow Agreement, the Shareholder Agreement, the Plan, the Agreement
Order, the Confirmation Order, the Existing Shareholder Rights Plan, the Reorganization Rights
Plan or the transactions contemplated by the foregoing, including, without limitation, payment
of the Commitment Fee and the Commitment Extension Fee, if any, funding and administration of,
and disbursements, from the Escrow, distribution of Rights, purchase and sale of Shares in the
Rights Offering and purchase and sale of Shares pursuant to the Backstop Commitment, or any
breach by the Company of
this Agreement, the Escrow Agreement or the Shareholder Agreement, and to reimburse each of
the Indemnitees for any legal or other costs and expenses incurred in connection with
investigating or defending, participating or testifying in any of the foregoing;
provided, however, that the foregoing indemnity will not apply to Losses to
the extent that they are found by a final, non-appealable judgment of a court of competent
jurisdiction to have resulted from (A) a breach by the Investor of this Agreement, the
Escrow Agreement or the Shareholder Agreement or (B) bad faith, the willful misconduct or
gross negligence of such Indemnitees. Such legal or other expenses shall be promptly
reimbursed as and when they are incurred. The Company acknowledges and agrees that if
either the Commitment Fee or the Commitment Extension Fee, if any, once paid, is required to
be refunded to the Company or otherwise, at any time or for any reason other than as a
result of clauses (A) or (B) above, the amount so refunded shall constitute an indemnifiable
Loss under this Agreement. This indemnification provision will be in addition to the rights
of each and all of the Indemnitees to bring an action against the Company for breach of any
term of this Agreement. None of the Indemnitees shall be liable to the Company for any
special, indirect, consequential, incidental or punitive damages.



     (b) In case any proceeding shall be instituted in respect of which indemnity may be
sought pursuant to the paragraph above, the Indemnitee shall promptly notify the
Company. In any event, failure to notify the Company will not relieve the Company from
any liability which it may have on account of this indemnity or otherwise, except to
the extent the Company is materially prejudiced by such failure. Upon the Company’s
prompt written notice to the Investor, the Company may retain counsel reasonably
satisfactory to the Investor to represent the Investor and any Indemnitee and will pay
the fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnitee will have the right to retain its own counsel, but the fees



15









 







and expenses of such counsel shall be at the expense of such Indemnitee unless (i) the
Company and the Investor have mutually agreed to the retention of such counsel or (ii)
the Indemnitee has been advised by counsel that there are actual or potential
conflicting interests between the Company and the Indemnitee, including situations in
which there are one or more legal defenses available to the Indemnitee that are
different from or additional to those available to the Company. It is understood that
the Company shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such Indemnitees in any matter or series of
related matters.



     9. Survival of Representations and Warranties, Etc. Notwithstanding any investigation
at any time made by or on behalf of any party hereto, all representations and warranties made
in this Agreement will survive the execution and delivery of this Agreement until the earlier
of the date of termination of this Agreement or the Closing Date, except that (i) the
representations and
warranties made in Section 3(j) will survive for a period of eighteen months following the
Determination Date, (ii) the representations and warranties made in Section 3(f) will
survive for a period of one year following the Determination Date, and (iii) the
representations and warranties made in Section 3(g) will survive indefinitely.



     10. Termination.



     (a) Either the Company or the Investor may terminate this Agreement, if the
Bankruptcy Court has not entered the Agreement Order or if such Agreement Order has not
become a Final Agreement Order by March 15, 2006; provided, however,
that in the case of the Company, the Company shall have given the Investor two Business
Days’ notice of its intention to terminate.



     (b) The Investor may terminate the this Agreement:



          (i) On or after the Business Day following the date the Commitment
Fee has become payable and has not been received by Investor;




          (ii) On or after September 30, 2006; provided that if the
Company notifies the Investor in writing by 3:00 p.m. New York City time on
September 23, 2006 that it wishes to extend such date until November 14, 2006,
then the Investor may not terminate pursuant to this paragraph (b)(ii) until
November 14, 2006, provided that, as a condition to the effectiveness
of such extension, the Company has paid to the Investor not later than 3:00
p.m. New York City time on September 30, 2006 a fee (the “Commitment
Extension Fee”) in the amount of $20 million, which amount will be paid to
the Investor by the Company by wire transfer of immediately available funds;




          (iii) Upon (x) the occurrence of a “flip-in event” or any similar
event that triggers the right to purchase Common Stock at a discount to market
price under, or (y) the exercise of any right issued under, or the issuance by
the Company of any shares of Common Stock, securities convertible into Common
Stock or options exercisable for Common Stock or for securities convertible
into Common Stock, pursuant to the




16









 




Existing Shareholder Right Plan, the
Reorganization Rights Plan or any other plan, agreement, rights, securities or
instruments that are commonly referred to as a “poison pill”;




          (iv) Upon the failure of the Company to pay the Commitment Fee or
the Commitment Extension Fee, if any, when due; and




          (v) Upon the failure of any of the conditions set forth in Section
7 hereof to be satisfied, which failure cannot be cured by September
30, 2006 or, if the Commitment Extension Fee has been paid, November 14,
2006.




     (c) Prior to the earlier of (i) the commencement of the Rights Offering or (ii)
July 15, 2006, so long as the Agreement Order has been entered and has become a Final
Agreement Order and the Commitment Fee has been paid by the Company, the Company may
provide written notice to the Investor of its determination not to proceed with such
Rights Offering, whereupon this Agreement will terminate.



     (d) Prior to the commencement of the Rights Offering, the Company may terminate the
Agreement by written notice to the Investor after September 30, 2006 or, if the
Commitment Extension Fee has been paid, November 14, 2006.



     (e) In no event will the Commitment Fee or the Commitment Extension Fee, if any, be
refundable upon termination of this Agreement pursuant to this Section 10.



     (f) Upon termination under this Section 10, the covenants and agreements made by
the parties herein under Sections 8, 9 and 11 through 18 will survive indefinitely in
accordance with their terms.



     11. Notices. All notices and other communications in connection with this Agreement will
be in writing and will be deemed given (and will be deemed to have been duly given upon
receipt) if delivered personally, sent via electronic facsimile (with confirmation), mailed by
registered or certified mail (return receipt requested) or delivered by an express courier
(with confirmation) to the parties at the following addresses (or at such other address for a
party as will be specified by like notice):



     (a) If to Investor, to:



          Berkshire Hathaway Inc.

          1440 Kiewit Plaza

          Omaha, Nebraska 68131

          Attention: Marc D. Hamburg

          Fax: (402) 346-3375





17









 





          with a copy to:




          Munger, Tolles & Olson LLP

          355 South Grand Avenue

          35th Floor

          Los Angeles, California 90071-1560

          Attention: Robert E. Denham

          Fax: (213) 687-3702




     (b) If to the Company, to:



          USG Corporation

          125 South Franklin Street

          Chicago, Illinois 60606-4647

          Attention: Stanley L. Ferguson

          Fax: (312) 606-5316





          with a copy to:




          Jones Day

          222 East 41st Street

          New York, New York 10017-6702

          Attention: Robert A. Profusek

          Fax: (212) 755-7306





     12. Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement will be assigned by any of the parties (whether
by operation of law or otherwise) without the prior written consent of the other party.
Notwithstanding the previous sentence, this Agreement, or the Investor’s obligations
hereunder, may be assigned, delegated or transferred, in whole or in part, by the Investor to
any Affiliate (as defined in Rule 12b-2 under the Exchange Act) of the Investor over which the
Investor or any of its Affiliates exercises investment authority, including, without
limitation, with respect to voting and dispositive rights; provided, that any such
assignee assumes the obligations of the Investor hereunder and agrees in writing to be bound
by the terms of this Agreement in the same manner as the Investor. Notwithstanding the
foregoing or any other provisions herein, no such assignment will relieve the Investor of its
obligations hereunder if such assignee fails to perform such obligations. This Agreement will
be binding upon, inure to the benefit of and be enforceable by each of the parties and their
respective successors and assigns. This Agreement (including the documents and instruments
referred to in this Agreement) is not intended to and does not confer upon any person other
than the parties hereto any rights or remedies under this Agreement.



     13. Prior Negotiations; Entire Agreement. This Agreement (including the agreements
attached as exhibits to and the documents and instruments referred to in this Agreement)
constitutes the entire agreement of the parties and supersedes all prior agreements and
understandings, whether written or oral, between the parties with



18









 







respect to the subject
matter of this Agreement, except that the parties hereto acknowledge that any confidentiality
agreements heretofore executed among the parties will continue in full force and effect.



     14. GOVERNING LAW; VENUE. THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO
ANY APPLICABLE CONFLICT OF LAWS PRINCIPLES. EACH PARTY TO THIS AGREEMENT IRREVOCABLY SUBMITS TO THE
JURISDICTION OF, AND VENUE IN, THE DISTRICT COURTS OF THE UNITED STATES SITTING IN THE STATE
OF DELAWARE OR COURTS OF THE STATE OF DELAWARE AND WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS.



     15. Counterparts. This Agreement may be executed in any number of counterparts, all of
which will be considered one and the same agreement and will become effective when
counterparts have been signed by each of the parties and delivered to the other party
(including via facsimile or other electronic transmission), it being understood that each
party need not sign the same counterpart.



     16. Waivers and Amendments. This Agreement may be amended, modified, superseded,
cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived,
only by a written instrument signed by the parties or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in exercising any right, power or
privilege pursuant to this Agreement will operate as a waiver thereof, nor will any waiver on
the part of any party of any right, power or privilege pursuant to this Agreement, nor will
any single or partial exercise of any right, power or privilege pursuant to this Agreement,
preclude any other or further exercise thereof or the exercise of any other right, power or
privilege pursuant to this Agreement. The rights and remedies provided pursuant to this
Agreement are cumulative and are not exclusive of any rights or remedies which any party
otherwise may have at law or in equity.



     17. Headings. The headings in this Agreement are for reference purposes only and will
not in any way affect the meaning or interpretation of this Agreement.



     18. Specific Performance. The parties acknowledge and agree that any breach of the terms
of this Agreement would give rise to irreparable harm for which money damages would not be an
adequate remedy, and, accordingly, the parties agree that, in addition to any other remedies,
each will be entitled to enforce the terms of this Agreement by a decree of specific
performance without the necessity of proving the inadequacy of money damages as a remedy and
without the necessity of posting bond.



[Signature Page Follows]




19









 





     If the foregoing is in accordance with your understanding, please sign and return to us a
counterpart hereof, and upon the acceptance hereof by you, this letter and such acceptance hereof
will constitute a binding agreement between you and the Company.



	 	 	 	 	 
	 	Very truly yours,



USG CORPORATION

 	 
	 	By:  	/s/ William C. Foote
 	 
	 	 	Name:  	William C. Foote 	 
	 	 	Title:  	Chairman and Chief Executive
Officer 	 
	 



Accepted as of the date hereof:




BERKSHIRE HATHAWAY INC.




By:   /s/ Marc D. Hamburg                                        

      Name: Marc D. Hamburg

      Title: Vice President




[Signature Page of Equity Commitment Agreement]





 









 






Exhibit A




Restructuring Term Sheet




A-1









 








Proposed Plan Term Sheet For




USG Corporation and Its Debtor Subsidiaries




Dated January 30, 2006




PRELIMINARY STATEMENT




     The following is a preliminary discussion outline of potential terms for a plan of
reorganization (the “Plan”) for USG Corporation (“USG”) and its debtor subsidiaries (collectively,
including USG, the “Debtors”). This discussion term sheet (the “Discussion Term Sheet”) is
nonbinding and is subject to, among a variety of other things, further negotiation, due diligence,
internal approvals, acceptable documentation of any Plan and any court-approved Disclosure
Statement related thereto, acceptable documentation of any other related agreements and the other
terms and conditions of such Plan.



     This Discussion Term Sheet is being submitted in furtherance of discussions with the Investor
and other parties in interest and is not intended to be definitive. This Discussion Term Sheet is
proffered in the nature of a settlement proposal in furtherance of settlement negotiations and is
intended to be entitled to the protections of Federal Rule of Evidence 408 and any other applicable
statutes or doctrines.



CLASSES OF CLAIMS AND INTERESTS AND THE TREATMENT THEREOF




     The following chart sets forth the classification and proposed treatment of all claims against
the Debtors as of the effective date of the Plan (the “Effective Date”). 1  The
Plan will be treated as a separate plan of reorganization for each of the Debtors.



UNCLASSIFIED CLAIMS




	 	 	 
	CLAIMS	 	PROPOSED TREATMENT
	Administrative Claims (other than

DIP Facility Claims)

	 	On the Effective Date, each holder
of an allowed Administrative Claim
will be paid (i) in full by the
applicable Debtor, (ii) in
accordance with the terms of the
underlying transaction or (iii) as
otherwise agreed by such holder and
the applicable Debtor or reorganized
Debtor.
	 
	 	 
	DIP Letter of Credit Facility Claims

	 	On the Effective Date or such later
time as agreed to by the applicable
Debtor and the DIP Lender, (i) any
allowed Administrative Claims under
or evidenced by the DIP Credit
Agreement will be paid in full by
the applicable Debtor and (ii) the
DIP Lender will (A) receive
cancellation without draw of all
outstanding letters of credit issued
under the DIP Credit Agreement or
(B) have such letters of credit
refinanced or replaced in the
ordinary course of business on or
after the Effective Date.








 




			
	1	 	Payments under the Plan to be made on the
Effective Date will be deemed timely if made within 60 days of the Effective
Date. In addition, a claim will not be eligible for payment under the Plan
until such claim becomes a liquidated allowed claim under the Plan, a final
order of the Bankruptcy Court or other court of competent jurisdiction or an
agreement with the applicable reorganized Debtor after the Effective Date.





 









 





	 	 	 
	CLAIMS	 	PROPOSED TREATMENT
	Priority Tax Claims

	 	On the Effective Date, each holder
of an allowed Priority Tax Claim
will be paid in full by the
applicable Debtor.






CLASSIFIED CLAIMS 2




	 	 	 
	CLAIMS	 	PROPOSED TREATMENT
	Class 1: Unsecured
Priority Claims

	 	On the Effective Date, each holder of an allowed claim in Class 1, if
any, will receive cash equal to the allowed amount of such claim plus
postpetition interest on such allowed amount.
	 
	 	 
	Class 2: Secured Claims

	 	On the Effective Date, unless otherwise agreed by the holder of a
claim and the applicable Debtor or reorganized Debtor, each holder of
an allowed claim in Class 2, if any, at the election of the applicable
Debtor or reorganized Debtor, will (i) receive cash equal to the
allowed amount of such claim plus postpetition interest or (ii) have
its claim reinstated. Any allowed deficiency claim of a holder of an
allowed Secured Claim will be entitled to treatment as an allowed
Class 6 Claim.
	 
	 	 
	Class 3: Credit
Facility Claims Against
USG

	 	On the Effective Date, each holder of an allowed claim in Class 3 will
receive cash equal to the allowed amount of such claim plus
postpetition interest (including default rate interest) on such
allowed amount and any applicable fees and charges under the credit
facility agreement.
	 
	 	 
	Class 4: Senior Note
Claims Against USG

	 	On the Effective Date, each holder of an allowed claim in Class 4 will
receive cash equal to the allowed amount of such claim plus
postpetition interest on such allowed amount.
	 
	 	 
	Class 5: Industrial
Revenue Bond Claims
Against USG and United
States Gypsum Company

	 	On the Effective Date, each holder of an allowed Industrial Revenue
Bond Claim, at the election of the applicable Debtor or reorganized
Debtor, will (i) receive cash equal to the allowed amount of such
claim or (ii) have its claim reinstated.
	 
	 	 
	Class 6: General
Unsecured Claims

	 	On the Effective Date, each holder of an allowed General Unsecured
Claim, at the election of the applicable Debtor or reorganized Debtor,
will (i) receive cash equal to the allowed amount of such claim or
(ii) have its claim reinstated.








 




			
	2	 	The Plan may further segregate the claims
within certain of the following classes, but the treatment of such claims will
remain consistent with the treatment set forth herein. With respect to claims
in Classes 5, 6 and 8, the allowed amount of such claims will include
postpetition interest to the extent such interest is required by applicable law
or the underlying contract or is otherwise agreed to by the holder of such
claim and the applicable Debtor.





-2-









 





	 	 	 
	CLAIMS	 	PROPOSED TREATMENT
	Class 7: Asbestos
Personal Injury Claims

     

Capitalized terms not
otherwise defined
herein and used in the
Proposed Treatment for
this Class 7, as well
as such Proposed
Treatment itself, shall
be as defined in and
consistent with Exhibit
B to the Equity
Commitment Agreement,
dated January 30, 2006
(the “Equity Commitment
Agreement”).

	 	On the Effective Date, all Asbestos Personal Injury Claims against any
Debtor will be channeled to the Asbestos Personal Injury Trust, which
will be funded pursuant to the Plan. All Asbestos Personal Injury
Claims will be determined and paid pursuant to the terms of the
Asbestos Personal Injury Trust Distribution Procedures and the
Asbestos Personal Injury Trust Agreement. The sole recourse of the
holder of an Asbestos Personal Injury Claim will be to the Asbestos
Personal Injury Trust, and such holder will have no right whatsoever
at any time to assert its Asbestos Personal Injury Claim against any
party protected by the injunctions issued under the Plan. Without
limiting the foregoing, on the Effective Date, except as set forth
above, all entities will be permanently and forever stayed, restrained
and enjoined from taking any actions for the purpose of, directly or
indirectly, collecting, recovering or receiving payment of, on or with
respect to any Asbestos Personal Injury Claim.
	 
	 	 
	Class 8: Asbestos
Property Damage Claims

	 	On the Effective Date, each holder of an allowed Asbestos Property
Damage Claim, at the election of the applicable Debtor or reorganized
Debtor, will (i) receive cash equal to the allowed amount of such
claim or (ii) have its claim reinstated.
	 
	 	 
	Class 9: Environmental
Claims

	 	On the Effective Date, allowed Environmental Claims will be reinstated.
	 
	 	 
	Class 10: Insured Claims

	 	On the Effective Date, allowed Insured Claims will be paid in full as
soon as practicable by the applicable insurer of such claim.
	 
	 	 
	Class 11: Intercompany
Claims

	 	On the Effective Date, allowed Intercompany Claims will be reinstated.
	 
	 	 
	Class 12: Stock
Interests of Subsidiary
Debtors

	 	On the Effective Date, Stock Interests of Subsidiary Debtors will be
reinstated.
	 
	 	 
	Class 13: Stock
Interests of USG

	 	On the Effective Date, Stock Interests of USG will be reinstated.






-3-









 






MEANS FOR IMPLEMENTATION OF THE PLAN




Exit Financing




     On the Effective Date, the reorganized Debtors will fund their respective obligations under
the Plan through a combination of equity and/or debt financing, which will include the Rights
Offering (as such term is defined in the Equity Commitment Agreement) to be commenced on or shortly
after the confirmation of the Plan, the proceeds of tax refunds and the Debtors’ cash balances and
operations.



Creation of Asbestos Personal Injury Trust




     The Plan will provide for the creation and funding of the Asbestos Personal Injury Trust.
Appended to the Plan and approved in connection with the Plan will be various trust documents and
trust distribution procedures.



Asbestos Permanent Channeling Injunction




     The Bankruptcy Court or the District Court will, in conjunction with the entry of an order
confirming the Plan or an affirmance of such order by the District Court, enter an asbestos
permanent channeling injunction in accordance with section 524(g) of the Bankruptcy Code to
supplement the injunctive effect of a discharge of the Debtors pursuant to the Bankruptcy Code.



Executory Contracts




     Pursuant to the Plan, on the Effective Date, the Debtors will assume substantially all of
their executory contracts and unexpired leases. The Plan will contain exhibits providing a
non-exclusive list of assumed contracts and unexpired leases and a list of any specific contracts
or unexpired leases that the Debtors wish to reject as of the Effective Date.



Conditions Precedent to Confirmation and Consummation of the Plan




     The Plan will contain several conditions precedent to confirmation and consummation of the
Plan that must be satisfied or waived. The Debtors may waive these conditions in whole or in part
at any time without an order of the Bankruptcy Court or the District Court.




-4-










 






Exhibit B




Asbestos Term Sheet




B-1
















 








EXECUTION COPY




HIGHLY CONFIDENTIAL




FOR SETTLEMENT PURPOSES ONLY;

Not admissible in any litigation or

other proceeding between the parties.




SETTLEMENT TERM SHEET





	A.	 	Preliminary Statement.






	 	1.	 	On June 25, 2001 (the “Petition Date”), USG Corporation (“USG”) and its debtor
subsidiaries (collectively, including USG, the “Debtors”; the term “Debtors” as used
herein includes the reorganized Debtors when applicable) commenced voluntary
reorganization cases (the “Reorganization Cases”) under title 11 of the United States
Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of
Delaware (the “Bankruptcy Court”).
	 
	 	2.	 	This Settlement Term Sheet (this “Term Sheet”) is being executed by and among
(a) the Debtors; (b) the Official Committee of Asbestos Personal Injury Claimaints
appointed in the Reorganization Cases (the “ACC”) and counsel for each member of the
ACC in its individual capacity and on behalf of such member (each an “ACC Member’s
Counsel” and, collectively, the “ACC Members’ Counsel”); and (c) Dean M. Trafelet, in
his capacity as the Legal Representative for Future Claimants in the Reorganization
Cases (the “FCR” and, collectively with the Debtors, the ACC and the ACC Members’
Counsel, the “Parties”).
	 
	 	3.	 	This Term Sheet sets forth the basic terms on which the Parties have agreed to
settle certain disputes relating to the Debtors’ alleged liability for asbestos-related
personal injury claims and demands, the treatment of such claims and demands in the
Reorganization Cases and certain related matters.
	 
	 	4.	 	Upon its execution (the “Execution Date”), this Term Sheet shall be binding
upon the Parties and each of their respective successors and assigns to the fullest
extent permitted by applicable law. The implementation of the settlement set forth in
this Term Sheet is subject to definitive documentation of the settlement terms, which
may be accomplished through the Debtors’ plan of reorganization incorporating the terms
of this Term Sheet (the “Plan”).






	B.	 	Funding of the Asbestos Personal Injury Trust.






	 	1.	 	On the effective date of the Plan (the “Effective Date”), the Debtors (a) will
pay $890 million in cash to the qualified settlement trust established by the Debtors
under the Plan, which trust shall satisfy the requirements of section 524(g) of the
Bankruptcy Code (the “Asbestos Personal Injury Trust”); and (b) issue a promissory note
in the principal amount of $10 million to the Asbestos Personal Injury Trust (the “Note”), the terms and provisions of which shall be reasonably
acceptable to the Debtors, the ACC, the ACC Members’ Counsel and the FCR.














 












	 	 	 	Each of
the Debtors shall be a co-obligor under the Note and each Debtor shall be jointly
and severally liable for the obligations thereunder.
	 
	 	2.	 	On the Effective Date, the Debtors will provide a contingent payment note in
the amount of $3.05 billion to the Asbestos Personal Injury Trust (the “Contingent
Payment Note”), the terms and provisions of which shall be reasonably acceptable to the
Debtors, the ACC, the ACC Members’ Counsel and the FCR and the payment of which shall
only be subject to the condition precedent (the “Condition Precedent”) that The
Fairness in Asbestos Injury Resolution Act of 2005 or any substantially similar
legislation creating a national trust or similar fund (collectively referred to herein
as the “Fair Act”) has not been enacted and made law on or before the date that is 10
days (excluding Sundays) after final adjournment sine die of the 109th
Congress of the United States (the “Trigger Date”); provided, however, that:






	 	a.	 	If the Fair Act is not enacted and made law on or before the
Trigger Date, the obligations under the Contingent Payment Note shall vest and
the Debtors shall satisfy the Contingent Payment Note as set forth in Section
B.5 below.
	 
	 	b.	 	If the Fair Act is enacted and made law on or before the
Trigger Date, and is not subject to a constitutional challenge to its validity
(a “Challenge Proceeding”) on or before 60 days after the Trigger Date, the
obligations under the Contingent Payment Note shall not vest and the Contingent
Payment Note shall be fully cancelled.
	 
	 	c.	 	If the Fair Act is enacted and made law on or before the
Trigger Date, but is subject to a Challenge Proceeding as of 60 days after the
Trigger Date, the obligations under the Contingent Payment Note shall not vest,
subject to the resolution of the Challenge Proceeding by a final,
non-appealable order (a “Final Order”) as follows:






	 	(i)	 	If the Challenge Proceeding is resolved by a
Final Order such that the Fair Act is unconstitutional in its entirety
or as applied to debtors in chapter 11 cases whose plans of
reorganization have not yet been confirmed and become substantially
consummated (i.e., debtors that are then similarly situated to the
Debtors as of February 1, 2006 (in a chapter 11 case with a plan of
reorganization that has not yet been confirmed)), so that such debtors
will not be subject to the Fair Act, then the obligations under the
Contingent Payment Note shall vest and the Debtors shall satisfy the
Contingent Payment Note, with the first payment of $1.9 billion being
due within 30 days after such Final Order and the second payment of
$1.15 billion being due within 180 days after such Final Order.




2









 












	 	(ii)	 	If the Challenge Proceeding is resolved by a
Final Order in a manner other than as contemplated by the immediately
preceding clause (i), then the obligations under the Contingent Payment
Note shall not vest and the Contingent Payment Note shall be fully
cancelled.






	 	 	 	Each of the Debtors shall be a co-obligor under the Contingent Payment Note and each
Debtor shall be jointly and severally liable for the obligations thereunder.
	 
	 	3.	 	On the Effective Date, the Debtors will assign any of their respective rights
in and to insurance policies to the extent related to Asbestos Personal Injury Claims
to the Asbestos Personal Injury Trust on terms that are reasonably acceptable to the
Debtors, the ACC, the ACC Members’ Counsel and the FCR, which terms will, among other
things, enjoin entities other than the Asbestos Personal Injury Trust (and, to the
extent necessary, the Debtors) from pursuing or collecting under such insurance
policies to the extent related to Asbestos Personal Injury Claims.
	 
	 	4.	 	The Note will be issued by the Debtors and will be secured by 51 percent of the
voting stock of United States Gypsum Company. The Note shall be payable on December
31, 2006. The Note will bear annual interest at a fixed rate equivalent to the rate of
90-day LIBOR plus 40 basis points as at the Effective Date, which interest shall accrue
from the Effective Date until maturity.
	 
	 	5.	 	If the Condition Precedent is met, subject to Section B.2.c above, then $1.9
billion of the Contingent Payment Note will be payable within 30 days after the Trigger
Date, with the remaining $1.15 billion of the Contingent Payment Note payable within
180 days after the Trigger Date. The Contingent Payment Note will bear annual interest
at a fixed rate equivalent to the rate of 90-day LIBOR plus 40 basis points as at the
Trigger Date, which interest shall accrue from 30 days after the Trigger Date until the
Contingent Payment Note is paid in full. In addition, the Debtors will grant to the
Asbestos Personal Injury Trust a right to 51 percent of the voting stock of one of the
reorganized Debtors, exercisable upon the occurrence of certain specified
contingencies, to secure the payment of the first $1.9 billion of the Contingent
Payment Note, consistent with the Debtors’ need to obtain necessary financing.
	 
	 	6.	 	Until such time as the Contingent Payment Note is either paid in full or
cancelled, reorganized USG will not declare any dividend to the holders of its stock or
repurchase its stock in an amount that exceeds $150 million.
	 
	 	7.	 	Until such time as the Contingent Payment Note is either paid in full or
cancelled, the amount of the reorganized Debtors’ indebtedness that is senior to the
Contingent Payment Note (through any combination of the granting of security and/or
subordination) will be limited to:






	 	a.	 	an exit financing facility in an amount not to exceed $750
million;




3









 












	 	b.	 	amounts necessary to fund any Plan distributions, after taking
into account available cash, including, without limitation, payments to the
Asbestos Personal Injury Trust (including payments on the Note and the
Contingent Payment Note), payments to unsecured creditors and payments to
asbestos property damage claimants;
	 
	 	c.	 	amounts necessary to fund the operations, capital expenditures
and working capital of the reorganized Debtors;
	 
	 	d.	 	other customary items such as leases, hedging, interest rate
protection, taxes and similar items;
	 
	 	e.	 	$125 million general basket; and
	 
	 	f.	 	any refinancing of the above.






	C.	 	Permanent Channeling Injunction and Release.






	 	1.	 	The Bankruptcy Court or the United States District Court for the District of
Delaware (the “District Court”) shall enter and, if applicable, affirm, in conjunction
with the entry of an order confirming the Plan (a “Confirmation Order”), an order,
pursuant to section 524(g) of the Bankruptcy Code (the “Permanent Channeling
Injunction”), permanently and forever staying, restraining and enjoining any entity
from taking any actions against any Protected Party (as such term is defined below) for
the purpose of, directly or indirectly, collecting, recovering or receiving payment of,
on or with respect to any Asbestos Personal Injury Claim (as such term is defined
below), all of which shall be channeled to the Asbestos Personal Injury Trust for
resolution as set forth in the Trust Agreement for the Asbestos Personal Injury Trust
(the “Trust Agreement”) and the related Asbestos Personal Injury Trust Distribution
Procedures (the “TDPs”), including, without limitation:






	 	a.	 	commencing, conducting or continuing in any manner, directly or
indirectly, any suit, action or other proceeding (including, without
limitation, a judicial, arbitral, administrative or other proceeding) in any
forum against any Protected Party or any property or interests in property of
any Protected Party;
	 
	 	b.	 	enforcing, levying, attaching (including, without limitation,
any prejudgment attachment), collecting or otherwise recovering by any means or
in any manner, whether directly or indirectly, any judgment, award, decree or
other order against any Protected Party or any property or interests in
property of any Protected Party;
	 
	 	c.	 	creating, perfecting or otherwise enforcing in any manner,
directly or indirectly, any Encumbrance against any Protected Party or any
property or interests in property of any Protected Party;




4









 












	 	d.	 	setting off, seeking reimbursement of, contribution from or
subrogation against, or otherwise recouping in any manner, directly or
indirectly, any amount against any liability owed to any Protected Party or any
property or interests in property of any Protected Party; and
	 
	 	e.	 	proceeding in any manner in any place with regard to any matter
that is subject to resolution pursuant to the Asbestos Personal Injury Trust,
except in conformity and compliance therewith.






	 	2.	 	The Plan and the Permanent Channeling Injunction shall provide that the
Asbestos Personal Injury Trust shall protect, defend, indemnify and hold harmless, to
the fullest extent permitted by applicable law, each Protected Party from and against
any Asbestos Personal Injury Claim and any related damages.
	 
	 	3.	 	“Asbestos Personal Injury Claim” means any claim, remedy, liability or demand
now existing or hereafter arising against any Debtor, whether or not such claim,
remedy, liability or demand is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, whether or not the facts of or legal bases therefor are known or unknown,
under any theory of law, equity, admiralty or otherwise, for death, bodily injury,
sickness, disease, medical monitoring or other personal injuries (whether physical,
emotional or otherwise) to the extent allegedly arising out of or based on, directly or
indirectly, in whole or in part, the presence of or exposure to asbestos or
asbestos-containing products or things that were installed, engineered, designed,
manufactured, fabricated, constructed, sold, supplied, produced, specified, selected,
distributed, released, marketed, serviced, maintained, repaired, purchased, owned,
occupied, used, removed, replaced or disposed by any Debtor or an entity for whose
products or operations the Debtors allegedly have liability or for which any Debtor is
otherwise allegedly liable, including, without limitation, any claim, remedy, liability
or demand for compensatory damages (such as loss of consortium, wrongful death, medical
monitoring, survivorship, proximate, consequential, general and special damages) or
punitive damages, and any claim, remedy, liability or demand for reimbursement,
indemnification, subrogation or contribution (including, without limitation, any
indirect claim or demand), and any claim under any settlement entered into by or on
behalf of any Debtor prior to the petition date relating to an Asbestos Personal Injury
Claim. Neither any asbestos property damage claim nor a workers’ compensation claim
brought directly by a past or present employee of any Debtor under an applicable
workers’ compensation statute shall constitute an Asbestos Personal Injury Claim.
	 
	 	4.	 	"Protected Party” means any of the following parties:






	 	a.	 	any Debtor, reorganized Debtor or any affiliate of the
foregoing;




5









 












	 	b.	 	any former or present director, officer or employee of any
Debtor, reorganized Debtor or any affiliate of the foregoing but only in their
capacity as such;
	 
	 	c.	 	any stockholder of any Debtor but only in their capacity as
such;
	 
	 	d.	 	any entity that, pursuant to the Plan or on or after the
Effective Date, becomes a direct or indirect transferee of, or successor to,
any assets of any Debtor, any reorganized Debtor or the Asbestos Personal
Injury Trust (but only to the extent that liability is asserted to exist by
reason of it becoming such a transferee or successor);
	 
	 	e.	 	any entity that, pursuant to the Plan or on or after the
Effective Date, makes a loan to any Debtor or reorganized Debtor or the
Asbestos Personal Injury Trust or to a successor to, or transferee of, any
assets of any Debtor, reorganized Debtor or the Asbestos Personal Injury Trust
(but only to the extent that liability is asserted to exist by reason of such
entity becoming such a lender or to the extent any pledge of assets made in
connection with such a loan is sought to be upset or impaired); or
	 
	 	f.	 	any entity to the extent he, she or it is alleged to be
directly or indirectly liable for the conduct of, claims against or demands on
any Debtor, reorganized Debtor or the Asbestos Personal Injury Trust to the
extent that such alleged liability arises by reason of one or more of the
following:






	 	(i)	 	such entity’s ownership of a financial interest
in any Debtor, reorganized Debtor, a past affiliate of any Debtor to
the extent such past affiliate is listed in the schedule to be annexed
to the Plan, which schedule shall be reasonably acceptable to the
Debtors, the ACC, the ACC Members’ Counsel and the FCR (the “Plan
Schedule”) (such past affiliate being referred to herein as a “Past
Affiliate”), a present affiliate of any Debtor or reorganized Debtor or
a predecessor in interest of any Debtor or reorganized Debtor to the
extent such predecessor in interest is listed in the Plan Schedule
(such predecessor in interest being referred to herein as a
“Predecessor in Interest”);
	 
	 	(ii)	 	such entity’s involvement in the management of
any Debtor, any reorganized Debtor or any Predecessor in Interest;
	 
	 	(iii)	 	such entity’s service as an officer, director
or employee of any Debtor, any reorganized Debtor, any Past Affiliate,
any present affiliate of any Debtor or reorganized Debtor, any
Predecessor in Interest or any entity that owns or at any time has
owned a financial interest in any Debtor, any reorganized Debtor, any
Past Affiliate, any present affiliate of any Debtor or any reorganized
Debtor or any Predecessor in Interest; or




6









 












	 	(iv)	 	such entity’s involvement in a transaction
changing the corporate structure, or in a loan or other financial
transaction affecting the financial condition, of any Debtor, any
reorganized Debtor or any Past Affiliate, any present affiliate of any
Debtor or any reorganized Debtor, any Predecessor in Interest or any
entity that owns or at any time has owned a financial interest in any
Debtor, any reorganized Debtor, any Past Affiliate, any present
affiliate of any Debtor or any reorganized Debtor or any Predecessor in
Interest.






	 	5.	 	The settlement set forth in this Term Sheet represents a full and complete
settlement of any and all alleged liabilities of the Debtors and any of the Debtors’
affiliates relating to or involving A.P. Green Industries, Inc., A.P. Green
Refractories Co. or any of their affiliates or predecessors to the extent such
predecessors are listed in the Plan Schedule (collectively, “A.P. Green”).






	D.	 	Certain Matters Relating to the Plan.






	 	1.	 	The Plan will propose to pay allowed general unsecured claims in full, with
postpetition interest, or to reinstate such claims.
	 
	 	2.	 	With respect to the claims represented by the Official Committee of Asbestos
Property Damage Claimants (the “Property Damage Committee”), the Debtors will attempt
to resolve such claims on separate terms prior to the Effective Date and, to the extent
not resolved, will pass such claims through the Reorganization Cases or otherwise
resolve such claims post-Effective Date.
	 
	 	3.	 	The Plan will contain, among other things, conditions to the Confirmation Order
and the Effective Date that the Debtors, in their sole discretion, determine are
appropriate or necessary and that are reasonably acceptable to the ACC, the ACC
Members’ Counsel and the FCR.
	 
	 	4.	 	The Plan will contain such other provisions as the Debtors, in their sole
discretion, determine are appropriate or necessary, which provisions shall be
reasonably acceptable to the ACC, the ACC Members’ Counsel and the FCR. As set forth
in more detail below, the ACC, the ACC Members’ Counsel and the FCR shall cooperate
fully with the Debtors and shall take all reasonable actions requested by the Debtors
in connection with the Plan process in the Reorganization Cases. Notwithstanding the
foregoing, the ACC, the ACC Members’ Counsel and the FCR shall draft the Trust
Agreement and the related TDPs and select the trustee(s) for the Asbestos Personal
Injury Trust, all of which shall be (a) delivered to the Debtors for review in time for
filing with a disclosure statement on February 15, 2006; (b) reasonably acceptable to
the Debtors and to each of the ACC, the ACC Members’ Counsel and the FCR in all
respects; (c) consistent with all provisions of the Bankruptcy Code, including, without
limitation, section 1129 of the Bankruptcy Code; and (d) incorporated into, or attached
as exhibits to, the Plan. The TDPs shall provide for the execution of a




7









 












release of the Asbestos Personal Injury Trust, the Debtors and the Debtors’ estates,
reasonably acceptable in form and substance to the Debtors, by any claimant
receiving a distribution from the Asbestos Personal Injury Trust. In connection
with the Trust Agreement, to the extent that the ACC and the FCR agree on trustees
and require the service of such trustees in advance of confirmation of the Plan, the
Debtors agree to pay the reasonable compensation of such trustees prior to
confirmation, with such amounts to be reimbursed to the Debtors through a deduction
from the first payment due to the Asbestos Personal Injury Trust.




	E.	 	Representations, Agreements and Covenants of the ACC, the ACC Members’ Counsel and the
FCR.






	 	1.	 	From and after the Execution Date, to the fullest extent permitted by
applicable law, the ACC, the ACC Members’ Counsel and the FCR, each on behalf of itself
and on behalf of those claimants that it represents, agrees to: (a) support the Plan
(and the ACC shall provide the Debtors with a letter, endorsed by all members of the
ACC, recommending the Plan, which may be included in the Plan solicitation materials);
(b) not file any objection to the disclosure statement relating to the Plan or to
confirmation of the Plan; and (c) recommend that its respective constituencies or
clients vote in favor of the Plan and use its best efforts to cause such constituencies
or clients to so vote. In addition, the ACC, the ACC Members’ Counsel and the FCR
shall cooperate fully with the Debtors and shall take all reasonable actions requested
by the Debtors in connection with the Plan process in the Reorganization Cases,
including, without limitation, with respect to (a) the filing and confirmation of the
Plan; (b) the filing and approval of any request by the Debtors for financing or
related relief in connection with the Plan; (c) the filing and approval of any
pleadings, which may be the Plan, to approve the settlement set forth in this Term
Sheet; and (d) information needed for, and the timing of, the solicitation of votes to
accept or reject the Plan. Without limiting the foregoing, the ACC, the ACC Members’
Counsel and the FCR shall provide the Debtors with (a) the information necessary for
the solicitation process for the Plan described in Section E.2 below on a timely basis
as set forth herein and (b) the Trust Agreement, the TDPs and the related documents
that are to be attached as exhibits to the Plan on a timely basis as set forth herein.
	 
	 	2.	 	The ACC Members’ Counsel shall cooperate fully with the Debtors and use their
best efforts to provide the Debtors, on a timely basis, with all information relating
to Asbestos Personal Injury Claims (including, without limitation, all Asbestos
Personal Injury Claims asserted against the Debtors by, through or on account of A.P.
Green) that is necessary for, or appropriate in connection with, the solicitation
process for the Plan.
	 
	 	3.	 	The ACC, the ACC Members’ Counsel and the FCR each hereby represents that,
subject to the approval of the Bankruptcy Court or District Court, as applicable, it
has the requisite authority to enter into and perform under this Term Sheet.




8









 












	F.	 	Representations, Agreements and Covenants of the Debtors.






	 	1.	 	USG represents that, subject to the approval of its Board of Directors and the
Bankruptcy Court or District Court, as applicable, it has the requisite authority to
enter into and perform under this Term Sheet.
	 
	 	2.	 	USG will use its best efforts to obtain the approval of its Board of Directors
of this Term Sheet on or before January 29, 2006.
	 
	 	3.	 	The Official Committee of Equity Holders appointed in the Reorganization Cases
(the “Equity Committee”) supports the settlement set forth in this Term Sheet. The
Equity Committee, the ACC, the ACC Members’ Counsel and the FCR each reserves all of
its respective rights with respect to all matters not specifically delineated in this
Term Sheet.
	 
	 	4.	 	USG will use its reasonable best efforts to have the Effective Date occur on or
before July 1, 2006.






	G.	 	Termination of the Term Sheet.






	 	1.	 	Unless otherwise agreed in writing by the Parties, this Term Sheet shall
terminate automatically upon the occurrence of any of the following:






	 	a.	 	USG’s Board of Directors does not approve the Term Sheet on or
before January 29, 2006.
	 
	 	b.	 	Any of the ACC, the ACC Members’ Counsel or the FCR has not
executed this Term Sheet on or before January 27, 2006.
	 
	 	c.	 	The Effective Date has not occurred on or before August 1,
2006.






	 	2.	 	This Term Sheet may be terminated at any time by the written agreement of the
Parties.
	 
	 	3.	 	No Party shall bear any liability for the termination of this Term Sheet in
accordance with Sections G.1 and G.2 above.






	H.	 	Miscellaneous.






	 	1.	 	Notwithstanding anything to the contrary herein, this Term Sheet shall not
affect or impair the Debtors’, the ACC’s or the FCR’s ability to perform their
respective fiduciary duties.
	 
	 	2.	 	Notwithstanding anything to the contrary herein, this Term Sheet shall not
affect or impair any matter concerning the corporate governance of the Debtors or the
reorganized Debtors.




9









 












	 	3.	 	From and after the Execution Date, the Debtors, the ACC and the FCR will
jointly seek to obtain a stay of the estimation litigation currently pending before the
District Court with respect to asbestos personal injury claims asserted against the
Debtors until the termination of this Term Sheet; provided, however, that within 30
days after the termination of this Term Sheet, the claimants’ questionnaires in such
litigation shall be completed and delivered to the Debtors.
	 
	 	4.	 	The Parties shall treat all negotiations regarding this Term Sheet as
confidential. Without the prior written consent of USG, counsel to the ACC and counsel
to the FCR, neither the contents nor the existence of this Term Sheet shall be
disclosed by any Party, either orally or in writing, except to its directors, officers,
employees, legal counsel, financial advisors, accountants and clients on a confidential
basis, or when necessary to comply with court orders, or in an action to enforce the
terms and conditions of this Term Sheet itself. Notwithstanding the foregoing, the
Parties agree that this Term Sheet or the terms of this Term Sheet may be disclosed to
the Official Committee of Unsecured Creditors appointed in the Reorganization Cases,
the Property Damage Committee and the Equity Committee, subject to appropriate
confidentiality restrictions. In addition, USG may, in its sole discretion, disclose
this Term Sheet or the terms of this Term Sheet (a) to potential financing sources; (b)
as it determines is necessary to comply with its SEC disclosure obligations, including,
without limitation, the issuance of a press release and a Form 8-K filing upon full
execution of this Term Sheet; and (c) as it determines is necessary to obtain
Bankruptcy Court or District Court, as applicable, approval of the Term Sheet and the
Plan, as set forth herein, or to otherwise comply with its fiduciary duties. USG will
provide counsel to the ACC and counsel to the FCR an opportunity to review any press
release relating to this Term Sheet prior to its issuance.
	 
	 	5.	 	Neither this Term Sheet nor the settlement set forth herein constitutes, and
shall not be construed, interpreted or otherwise read to constitute any admission by
(a) any of the Debtors with respect to any alleged asbestos-related liabilities arising
out of, resulting from or attributable to the business or operations of the Debtors or
their respective predecessors or (b) the ACC, the ACC Members’ Counsel or the FCR
regarding the amount of any such alleged asbestos-related liabilities.
	 
	 	6.	 	This Term Sheet and the settlement set forth herein shall be governed by the
laws of Delaware.
	 
	 	7.	 	This Term Sheet may be executed by facsimile and in any number of counterparts,
each of which shall be deemed to be an original as against any Party whose signature
appears thereon, and all of which shall together constitute one and the same
instrument.








10









 








AGREED TO AND ACCEPTED BY:




Dated: January 24, 2006




	 	 	 	 	 
	 	THE DEBTORS:

USG CORPORATION

 	 
	 	By:  	                                /s/ Stanley Ferguson
 	 
	 	 	Name:  	Stanley Ferguson 	 
	 	 	Title:  	Executive Vice
President and General
Counsel 	 
	 
	 	The ACC:

CAPLIN & DRYSDALE, CHTD., ON BEHALF OF AND	 
	 	IN
ITS CAPACITY AS COUNSEL TO THE ACC	 
	 	By:  	/s/ Elihu Inselbuch
 	 
	 	 	Name:  	Elihu Inselbuch 	 
	 	 	Title:  	 	 
	 
	 	KAZAN, MCCAIN, EDISES, SIMON & ABRAMS, IN ITS

INDIVIDUAL CAPACITY AND ON BEHALF OF MICHAEL
ABBOTT	 
	 	By:  	/s/ Steven Kazan
 	 
	 	 	Name:  	Steven Kazan 	 
	 	 	Title:  	Managing Partner 	 
	 
	 	GOLDBERG, PERSKY, JENNINGS & WHITE, P.C., IN

ITS INDIVIDUAL CAPACITY AND ON BEHALF OF BETTY
BISE	 
	 	By:  	/s/ Theodore Goldberg
 	 
	 	 	Name:  	Theodore Goldberg 	 
	 	 	Title:  	President 	 
	 
	 	EARLY, LUDWICK & SWEENEY, LLC, IN ITS

INDIVIDUAL CAPACITY AND ON BEHALF OF DONALD R.
BOYER	 
	 	By:  	/s/ James E. Early
 	 
	 	 	Name:  	James E. Early 	 
	 	 	Title:  	President 	 



11









 






	 	 	 	 	 



	 	 	 	 	 
	 	LEVY PHILLIPS & KONIGSBERG, LLP, IN ITS

INDIVIDUAL CAPACITY AND ON BEHALF OF CHARLES

BRINCAT

 	 
	 	By:  	/s/ Robert I. Komitor
 	 
	 	 	Name:  	Robert I. Komitor 	 
	 	 	Title:  	Partner 	 
	 
	 	JAQUES ADMIRALTY LAW FIRM, IN ITS INDIVIDUAL

CAPACITY AND ON BEHALF OF JOSE LOUIS DELROSARIO

 	 
	 	By:  	/s/ Alan Kellman
 	 
	 	 	Name:  	Alan Kellman 	 
	 	 	Title:  	Partner 	 
	 
	 	WEITZ & LUXENBERG, P.C., IN ITS INDIVIDUAL

CAPACITY AND ON BEHALF OF NICHOLAS FERRANTE

 	 
	 	By:  	/s/ Perry Weitz
 	 
	 	 	Name:  	Perry Weitz 	 
	 	 	Title:  	 	 
	 
	 	LAW OFFICES OF SHEPARD A. HOFFMAN, IN ITS

INDIVIDUAL CAPACITY AND ON BEHALF OF ERICH

SPANGENBERG

 	 
	 	By:  	/s/ Shepard A. Hoffman
 	 
	 	 	Name:  	Shepard A. Hoffman 	 
	 	 	Title:  	Principal/Attorney 	 
	 
	 	SILBER PEARLMAN, LLP IN ITS INDIVIDUAL CAPACITY

AND ON BEHALF OF VIRGIE LEE TOLIVER

 	 
	 	By:  	Steven T. Baron
 	 
	 	 	Name:  	Steven T. Baron 	 
	 	 	Title:  	Partner 	 
	 
	 	BARON & BUDD, P.C., IN ITS INDIVIDUAL CAPACITY

AND ON BEHALF OF GERALD FREDERICK VOGT

 	 
	 	By:  	/s/ Russell Budd
 	 
	 	 	Name:  	Russell Budd 	 
	 	 	Title:  	 	 



12









 






	 	 	 	 	 



	 	 	 	 	 
	 	JACOBS & CRUMPLAR, P.A., IN ITS INDIVIDUAL

CAPACITY AND ON BEHALF OF EDWARD WALLEY	 
	 	By:  	/s/ Robert Jacobs & Thomas Crumplar
 	 
	 	 	Name:  	Robert Jacobs, Esq. & Thomas Crumplar, Esq. 	 
	 	 	Title:  	Attorneys 	 
	 
	 	COONEY & CONWAY, IN ITS
INDIVIDUAL

 CAPACITY AND
ON BEHALF OF JUDITH WILLIAMS
	 
	 	By:  	/s/ John Cooney
 	 
	 	 	Name:  	John Cooney 	 
	 	 	Title:  	Partner 	 
	 
	 	THE FCR:

DEAN M. TRAFELET, IN HIS CAPACITY AS
 THE LEGAL
REPRESENTATIVE FOR FUTURE CLAIMANTS IN
 THE
REORGANIZATION CASES	 
	 	By:  	/s/ Dean M. Trafelet
 	 
	 	 	Name:  	 	 
	 	 	 	 
	 




13









 






Exhibit C




Registration Rights Agreement




C-1
















 








REGISTRATION RIGHTS AGREEMENT




     This Registration Rights Agreement (this “Agreement”), dated as of January 30, 2006,
is made by and between USG Corporation, a Delaware corporation (as debtor in possession and a
reorganized debtor, as applicable, the “Company”), and Berkshire Hathaway Inc., a Delaware
corporation (the “Investor”).



RECITALS




     A. In connection with the consummation of the transactions contemplated by that certain Equity
Commitment Agreement dated as of January 30, 2006 (the “Equity Commitment Agreement”) by
and between the Company and the Investor, the Investor may acquire shares of common stock, par
value $0.10 per share, of the Company (the “Common Stock”) in accordance with the
provisions of the Equity Commitment Agreement (such shares, the “Investor Shares”).



     B. In consideration of the Investor’s commitment to purchase, or to cause its designee to
purchase, the Investor Shares pursuant to and on the terms and conditions set forth in the Equity
Commitment Agreement, the Company has agreed to enter into a registration rights agreement with
respect to certain securities held by Investor and certain of its Affiliates.



AGREEMENTS




     NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements contained
herein and in the Equity Commitment Agreement, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:



Article I. Definitions




     For purposes of this Agreement, the following terms have the following meanings:



     “Affiliate”: As defined in Rule 12b-2 under the Exchange Act.



     “Blackout Period”: Any period during which, in accordance with Article IV,
the Company is not required to effect the filing of a Registration Statement or is entitled to
postpone the preparation, filing or effectiveness or suspend the effectiveness of a Registration
Statement.



     “Business Day”: Any day, other than a Saturday or Sunday, on which national banking
institutions in New York, New York, are open.



     “Company”: As defined in the introductory paragraph hereof.



     “Exchange Act”: The Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations of the SEC thereunder.



 









 





     “Filing Date”: (a) With respect to a Registration Statement to be filed on Form S-1
(or any applicable successor form), not later than 90 days after receipt by the Company of a
request for such Registration Statement and (b) with respect to a Registration Statement to be
filed on Form S-3 (or any applicable successor form), not later than 60 days after receipt by the
Company of a request for such Registration Statement.



     “Free Writing Prospectus”: A free writing prospectus as defined in Rule 405 under the
Securities Act.



     “Holders”: The Investor or any member of the Restricted Group (as defined in the
Shareholder’s Agreement) that is or becomes the owner of Registrable Securities.



     “Indemnified Party”: As defined in Section 6.3.



     “Indemnifying Party”: As defined in Section 6.3.



     “Issuer Free Writing Prospectus”: An issuer free writing prospectus as defined in
Rule 433 under the Securities Act.



     “Losses”: As defined in Section 6.1.



     “Other Holders”: Any Person having rights to participate in a registration of the
Company’s securities.



     “Permitted Free Writing Prospectus”: As defined in Article VII.



     “Person”: Any individual, corporation, general or limited partnership, limited
liability company, joint venture, trust or other entity or association, including without
limitation any governmental authority.



     “Piggyback Notice”: As defined in Section 3.1.



     “Piggyback Registration”: As defined in Section 3.1.



     “Prospectus”: The prospectus included in the applicable Registration Statement, as
supplemented by any and all prospectus supplements and as amended by any and all amendments
(including post-effective amendments) and including all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.



     “Registrable Securities”: (a) Any shares of Common Stock held by any of the Holders
now or at any time in the future and (b) any securities paid, issued or distributed in respect of
any such shares by way of stock dividend, stock split or distribution, or in connection with a
combination of shares, recapitalization, reorganization, merger or consolidation, or otherwise;
provided, however, that as to any Registrable Securities, such securities will irrevocably cease to
constitute Registrable Securities upon the earliest to occur of: (i) the date on which the
securities are disposed of pursuant to an



2









 







effective registration statement under the Securities Act; (ii) the date on which the
securities are distributed to the public pursuant to Rule 144 (or any successor provision) under
the Securities Act; (iii) the date on which the securities may be freely sold publicly without
registration under the Securities Act; (iv) the date on which the securities have been transferred
to any Person other than a Holder; (v) the date on which the securities cease to be outstanding;
and (vi) the seventh anniversary of the first day of the Standstill Period (as defined in the
Shareholder’s Agreement); provided, that this subsection (vi) shall not apply with respect to the
Investor Additional Shares (as defined in the Equity Commitment Agreement) held by the Holders if
such Investor Additional Shares exceed 1% of the then-outstanding Common Stock.



     “Registration Expenses”: As defined in Section 5.4(a).



     “Registration Statement”: Any registration statement of the Company under the
Securities Act that covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the related Prospectus, all amendments and supplements to such registration
statement (including post-effective amendments), and all exhibits and all materials incorporated by
reference or deemed to be incorporated by reference in such registration statement.



     “Required Period”: With respect to a “shelf registration” requested pursuant to
Section 2.1(b), two years following the first day of effectiveness of such Registration
Statement, and with respect to any other Registration Statement, 90 days following the first day of
effectiveness of such Registration Statement.



     “Rule 144”: Rule 144 promulgated under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.



     “SEC”: The United States Securities and Exchange Commission and any successor United
States federal agency or governmental authority having similar powers.



     “Securities Act”: The Securities Act of 1933, as amended, or any successor statute,
and the rules and regulations of the SEC thereunder.



     “Shareholder’s Agreement”: That certain Shareholder’s Agreement dated as of January
30, 2006 by and between the Company and the Investor.



     “Underwritten Registration” or “Underwritten Offering”: A registration in
which securities of the Company are sold to an underwriter for reoffering to the public.



Article II. Demand Registration




     2.1 Right to Demand Registration.



          (a) At any time and from time to time, any Holder or group of Holders representing at least
75% of all Registrable Securities may request in writing that the



3









 







Company effect the registration of all or part of such Holder’s or Holders’ Registrable
Securities with the SEC under and in accordance with the provisions of the Securities Act (which
written request will specify (i) the then current name and address of such Holder or Holders, (ii)
the aggregate number of shares of Registrable Securities requested to be registered, (iii) the
total number of shares of Common Stock then held by such Holder or Holders, and (iv) the intended
means of distribution). The Company will file a Registration Statement covering such Holder’s or
Holders’ Registrable Securities requested to be registered as promptly as practicable (and, in any
event, by the applicable Filing Date) after receipt of such request; provided, however, that the
Company will not be required to take any action pursuant to this Article II:




     (A) if prior to the date of such request, the Company has effected three
registrations pursuant to this Article II;




     (B) if within the 12-month period preceding such request the Company has
effected either (1) two registrations pursuant to this Article II or (2) one
registration pursuant to this Article II and a registration statement of
the Company under the Securities Act has been declared effective within the 12-month
period preceding such request and at least 10% of the then-outstanding Registrable
Securities were entitled pursuant to the terms of this Agreement to be included in
such registration statement;




     (C) if a Registration Statement is effective at the time such request is made
and such Registration Statement may be utilized for the offering and sale of the
Registrable Securities requested to be registered;




     (D) in the case of an Underwritten Offering, unless the Registrable Securities
requested to be registered (1) have an aggregate then-current market value of $100
million or more (before deducting underwriting discounts and commission) or (2)
constitute all of the then-outstanding Registrable Securities held by Holders; or




     (E) during the pendency of any Blackout Period.



          (b) If a Holder or Holders request that the Company effect a registration pursuant to this
Section 2.1 and the Company is at such time eligible to use Form S-3, the Holder or Holders
making such request may specify that the requested registration be a “shelf registration” for an
offering on a delayed or continuous basis pursuant to Rule 415 under the Securities Act.



     2.2 Effective Demand Registrations.



          (a) The Company may satisfy its obligations under Section 2.1 by amending (to the
extent permitted by applicable law) any registration statement previously filed by the Company
under the Securities Act so that such amended registration statement will permit the disposition
(in accordance with the intended methods of disposition specified as aforesaid) of all of the
Registrable Securities for



4









 







which a demand for registration has been properly made under Section 2.1. If the
Company so amends a previously filed registration statement, it will be deemed to have effected a
registration for purposes of Section 2.1; provided that the date such registration
statement is amended pursuant to this Section 2.2(a) shall be the “the first day of
effectiveness” of such registration statement for purposes of determining the Required Period with
respect to such registration statement.



          (b) A registration requested pursuant to Section 2.1 will not be deemed to be effected
by the Company for purposes of Section 2.1 if it has not been declared effective by the SEC
or become effective in accordance with the Securities Act and kept effective as contemplated by
Section 2.3.



     2.3 Continuous Effectiveness of Registration Statement.



          (a) The Company will use its reasonable efforts to keep a Registration Statement that has
become effective as contemplated by this Article II continuously effective, and not subject
to any stop order, injunction or other similar order or requirement of the SEC, until the earlier
of (a) the expiration of the Required Period (subject to extension pursuant to Section
2.3(b) or Section 5.3) and (b) the date on which all Registrable Securities covered by
such Registration Statement (i) have been disposed of pursuant to such Registration Statement or
(ii) cease to be Registrable Securities; provided, however, that in no event will such period
expire prior to the expiration of the applicable period referred to in Section 4(3) of the
Securities Act and Rule 174 promulgated thereunder.



          (b) In the event of any stop order, injunction or other similar order or requirement of the
SEC relating to any Registration Statement, the Required Period for such Registration Statement
will be extended by the number of days during which such stop order, injunction or similar order or
requirement is in effect.



     2.4 Underwritten Demand Registration.



          (a) In the event that a registration requested pursuant to Section 2.1 is to be an
Underwritten Registration, the Company shall in its reasonable discretion and with the consent of
the Investor (which consent shall not be unreasonably withheld) select an investment banking firm
of national standing to be the managing underwriter for the Underwritten Offering relating thereto.
All Holders proposing to distribute their securities through an Underwritten Offering agree to
enter into an underwriting agreement with the underwriters, provided that the underwriting
agreement is in customary form and reasonably acceptable to the Holders of a majority of the
Registrable Securities to be included in the Underwritten Offering.



          (b) If so requested (pursuant to a timely notice) by the managing underwriter for the
Underwritten Offering relating thereto, the Company will agree not to effect any underwritten
public sale or distribution of any securities that are the same as, or similar to, the Registrable
Securities, or any securities convertible into, or exchangeable or exercisable for, any securities
of the Company that are the same as,



5









 







or similar to, the Registrable Securities, during a period specified by the managing
underwriter not to exceed 30 days.



     2.5 Priority on Demand Registrations. No securities to be sold for the account of any
Person other than a Holder (including the Company) shall be included in a registration pursuant to
Section 2.1 if, in the case that such registration is to be an Underwritten Registration,
the managing underwriter of the Underwritten Offering relating thereto advises the Holders (or, in
the case that such registration is not to be an Underwritten Registration, the Holders requesting
registration determine in good faith) that the total amount of Registrable Securities requested to
be registered, together with such other securities that the Company and any Other Holders propose
to include in such offering is such as to adversely affect the success of such offering, then the
Company will include in such registration all Registrable Securities requested to be included
therein, up to the full amount that, in the view of such managing underwriter or such Holders
requesting registration, as the case may be, can be sold without adversely affecting the success of
such offering, before including any securities of any Person (including the Company) other than the
Holder(s) making such request.



     2.6 Revocation of Demand Registration. Holders of at least a majority of the
Registrable Securities to be included in a Registration Statement pursuant to Section 2.1
may, at any time prior to the effective date of the Registration Statement relating to such
registration, revoke their request to have Registrable Securities included therein by providing a
written notice to the Company. In the event such Holders of Registrable Securities revoke such
request, either (a) the Holders of Registrable Securities who revoke such request shall reimburse
the Company for all of its out-of-pocket expenses incurred in the preparation, filing and
processing of the Registration Statement or (b) the requested registration that has been revoked
will be deemed to have been effected for purposes of Section 2.1.



Article III. Piggyback Registration




     3.1 Right to Piggyback. If at any time, and from time to time, the Company proposes
to file a registration statement under the Securities Act with respect to an offering of any class
of equity securities (other than a registration statement (a) on Form S-8 or any successor form
thereto, (b) on Form S-4 or any successor form thereto relating solely to the sale of securities to
employees, directors, officers, consultants or advisors of the Company or its Affiliates pursuant
to a stock option, stock purchase or similar benefit plan or (c) relating solely to a transaction
under Rule 145 under the Securities Act), whether or not for its own account, on a form that would
permit registration of Registrable Securities for sale to the public under the Securities Act, then
the Company will give written notice (the “Piggyback Notice”) of such proposed filing to
the Holders at least 10 Business Days before the anticipated filing date. Such notice will include
the number and class of equity securities proposed to be registered, the proposed date of filing of
such registration statement, any proposed means of distribution of such equity securities, any
proposed managing underwriter of such equity securities and a good faith estimate by the Company of
the proposed maximum offering price of such equity securities as such price is proposed to appear
on the facing page of



6









 







such registration statement, and will offer the Holders the opportunity to register such
amount of Registrable Securities as each Holder may request on the same terms and conditions as the
registration of the Company’s or Other Holders’ securities, as the case may be (a “Piggyback
Registration”). The Company will include in each Piggyback Registration all Registrable
Securities for which the Company has received written requests for inclusion within 5 Business Days
after delivery of the Piggyback Notice, subject to Section 3.2.



     3.2 Priority on Piggyback Registrations.



          (a) If the Piggyback Registration is an Underwritten Offering, the Company will cause the
managing underwriter of that proposed offering to permit the Holders that have requested
Registrable Securities to be included in the Piggyback Registration to include all such Registrable
Securities on the same terms and conditions as any similar securities, if any, of the Company.
Notwithstanding the foregoing, if the managing underwriter of such Underwritten Offering advises
the Company and the selling Holders that, in its view, the total amount of securities that the
Company, such Holders and any Other Holders propose to include in such offering is such as to
adversely affect the success of such Underwritten Offering, then:




     (i) if such Piggyback Registration is a primary registration by the Company for its own
account, the Company will include in such Piggyback Registration: (A) first, all securities
to be offered by the Company; (B) second, (1) if Registrable Securities constitute 10% or
more of the outstanding securities of any class of equity securities of the Company, up to
the full amount of securities requested to be included in such Piggyback Registration by the
Holders, or (2) if Registrable Securities constitute less than 10% of the outstanding
securities of any class of equity securities of the Company, up to the full amount of
securities requested to be included in such Piggyback Registration by the Holders and any
Other Holders having registration rights on a pari passu basis, allocated pro rata among
such holders, on the basis of the amount of securities requested to be included therein by
each such holder; and (C) third, up to the full amount of securities requested to be
included in such Piggyback Registration by any Other Holders in accordance with the
priorities, if any, then existing among the Company and the Other Holders so that the total
amount of securities to be included in such Underwritten Offering is the full amount that,
in the view of such managing underwriter, can be sold without adversely affecting the
success of such Underwritten Offering; and




     (ii) if such Piggyback Registration is an underwritten secondary registration for the
account of holders of securities of the Company, the Company will include in such
registration: (A) first, all securities of the Persons exercising “demand” registration
rights requested to be included therein; (B) second, up to the full amount of securities
proposed to be included in the registration by the Company, (C) third, up to the full amount
of securities requested to be included in such Piggyback Registration by the Holders and any
Other Holders having registration rights on a pari passu basis, allocated pro rata among
such holders,



7









 







on the basis of the amount of securities requested to be included therein by each such
holder; and (D) fourth, up to the full amount of securities requested to be included in such
Piggyback Registration by the Other Holders in accordance with the priorities, if any, then
existing among the Company and the Other Holders so that the total amount of securities to
be included in such Underwritten Offering is the full amount that, in the view of such
managing underwriter, can be sold without adversely affecting the success of such
Underwritten Offering.



          (b) If so requested (pursuant to a timely notice) by the managing underwriter in any
Underwritten Offering, the Holders participating in such Underwritten Offering will agree not to
effect any public sale or distribution (or any other type of sale as the managing underwriter
reasonably determines is appropriate in order to not adversely affect the Underwritten Offering) of
any such Registrable Securities, including a sale pursuant to Rule 144 (but excluding any
Registrable Securities included in such Underwritten Offering), during the 10 days prior to, and
during a period specified by the managing underwriter not to exceed 90 days (or such additional
period as the managing underwriter reasonably determines is appropriate in order to not adversely
affect the Underwritten Offering) following, the closing date of such Underwritten Offering. In
the event of such a request, the Company may impose, during such period, appropriate stop-transfer
instructions with respect to the Registrable Securities subject to such restrictions.



     3.3 Withdrawal of Piggyback Registration.



          (a) If at any time after giving the Piggyback Notice and prior to the effective date of the
Registration Statement filed in connection with the Piggyback Registration, the Company determines
for any reason not to register or to delay the Piggyback Registration, the Company may, at its
election, give notice of its determination to all Holders, and in the case of a determination not
to register, will be relieved of its obligation to register any Registrable Securities in
connection with the abandoned Piggyback Registration, without prejudice, provided, however, that
such Registration Statement will not be counted for purposes of Section 2.1.



          (b) Any Holder of Registrable Securities requesting to be included in a Piggyback Registration
may withdraw its request for inclusion by giving written notice to the Company of its intention to
withdraw from that registration, provided, however, that (i) the Holder’s request be made in
writing and (ii) the withdrawal will be irrevocable and, after making the withdrawal, a Holder will
no longer have any right to include its Registrable Securities in that Piggyback Registration.



          (c) An election by the Company to withdraw a Piggyback Registration under this Section
3.3 shall not be deemed to be a breach of the Company’s obligations with respect to such
Piggyback Registration.



     3.4 Most-Favored-Nations for Piggyback Registration. If the Company grants any Person
any rights with respect to the registration of any shares of equity securities of the Company or
any securities convertible or exercisable into shares of any equity



8









 







securities of the Company that are more favorable to such Person than the rights of the
Holders set forth in this Agreement, the Company shall grant to the Holders the rights granted to
such other Person.



Article IV. Blackout Period




     4.1 Demand Blackout. Notwithstanding anything contained in Article II to the
contrary, if (a) at any time during which Holders may request a registration pursuant to
Section 2.1, the Company files or proposes to file a registration statement with respect to
an offering of equity securities of the Company for its own account and (b) with reasonable prior
notice (i) the Company (in the case of an offering that is not an Underwritten Offering) advises
the Holders that the Company has determined in good faith that a sale or distribution of
Registrable Securities would adversely affect such offering or (ii) the managing underwriter, if
any, advises the Company (in which case the Company will notify the Holders) that a sale or
distribution of Registrable Securities would adversely affect such offering, then the Company will
not be obligated to effect the initial filing of a Registration Statement pursuant to Section
2.1 beginning the 10 days prior to the date the Company in good faith estimates will be the
date of the filing of, and ending on the date which is 90 days following the effective date of,
such registration statement.



     4.2 Demand and Piggyback Blackout. Notwithstanding anything contained in Articles
II or III to the contrary, if the Board of Directors of the Company determines in good
faith that the registration and distribution of Registrable Securities (a) would materially impede,
delay or interfere with any financing, acquisition, corporate reorganization or other significant
transaction, or any negotiations, discussions or pending proposals with respect thereto, involving
the Company or any of its subsidiaries or (b) would require disclosure of non-public material
information, the disclosure of which would materially and adversely affect the Company, the Company
will promptly give the Holders notice of such determination and will be entitled to postpone the
preparation, filing or effectiveness or suspend the effectiveness of a Registration Statement for a
reasonable period of time not to exceed 90 days.



     4.3 Blackout Period Limits. Notwithstanding anything contained in this Article
IV to the contrary, in no event will the number of days included in all Blackout Periods during
any consecutive 12-month period exceed an aggregate of 120 days and in no event will the Company be
entitled to postpone the preparation, filing or effectiveness or suspend the effectiveness of a
Registration Statement pursuant to this Article IV unless it postpones or suspends during
the Blackout Period the effectiveness of any registration statements required pursuant to the
registration rights of the Other Holders.



Article V. Procedures and Expenses




     5.1 Registration Procedures. In connection with the Company’s registration
obligations pursuant to Articles II and III, the Company will use its reasonable
efforts to effect such registrations to permit the sale of Registrable Securities by a Holder in



9









 







accordance with the intended method or methods of disposition thereof, and pursuant thereto
the Company will as promptly as reasonably practicable:



          (a) prepare and file with the SEC a Registration Statement on an appropriate form under the
Securities Act available for the sale of the Registrable Securities by the selling Holders in
accordance with the intended method or methods of distribution thereof; provided, however, that the
Company will, before filing, furnish to each selling Holder and the managing underwriter, if any,
copies of the Registration Statement or Prospectus proposed to be filed and provide each selling
Holder, the managing underwriter, if any, and their counsel with a reasonable opportunity to
comment on such Registration Statement or Prospectus;



          (b) furnish, at its expense, to the selling Holders such number of conformed copies of the
Registration Statement and each amendment thereto, of the Prospectus and each supplemental thereto,
and of such other documents as the selling Holders reasonably may request from time to time;



          (c) subject to Section 2.3, prepare and file with the SEC any amendments and
post-effective amendments to the Registration Statement as may be necessary and any supplements to
the Prospectus as may be required or appropriate, in the view of the Company and its counsel, by
the rules, regulations or instructions applicable to the registration form used by the Company or
by the Securities Act to keep the Registration Statement effective until the earlier of (i) such
time as all Registrable Securities covered by the Registration Statement are sold in accordance
with the intended plan of distribution set forth in the Registration Statement or supplement to the
Prospectus and (ii) the termination of the Required Period (giving effect to any extensions thereof
pursuant to Section 2.3(b) or Section 5.3);



          (d) promptly following its actual knowledge thereof, notify the selling Holders and the
managing underwriter, if any:




     (i) when a Registration Statement, Prospectus, Issuer Free Writing Prospectus or any
supplement or amendment has been filed and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective;




     (ii) of any request by the SEC or any other governmental authority for amendments or
supplements to a Registration Statement, Prospectus or Issuer Free Writing Prospectus or for
additional information;




     (iii) of the issuance by the SEC or any other governmental authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose;




     (iv) of the receipt by the Company of any written notification with respect to the
suspension of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose;



10









 






     (v) of the occurrence of any event which makes any statement made in the Registration
Statement or Prospectus or any Issuer Free Writing Prospectus untrue in any material respect
or which requires the making of any changes in a Registration Statement, Prospectus, Issuer
Free Writing Prospectus or other documents so that it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and




     (vi) of the Company’s reasonable determination that a post-effective amendment to a
Registration Statement is necessary;



          (e) use its reasonable efforts to prevent the issuance or obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the
qualification or exemption from qualification of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable date;



          (f) prior to any public offering of Registrable Securities, register or qualify and cooperate
with the selling Holders, the managing underwriter, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the securities or blue sky
laws of such jurisdictions within the United States as the selling Holders or the managing
underwriter reasonably requests in writing and maintain each registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is required to be kept
effective; provided, however, that the Company will not be required to qualify generally to do
business in any jurisdiction in which it is not then so qualified or take any action which would
subject it to general service of process or material taxation in any jurisdiction in which it is
not then so subject;



          (g) as promptly as practicable upon the occurrence of any event contemplated by Sections
5.1(d)(v) or 5.1(d)(vi) hereof, prepare (and furnish, at its expense, to the selling
Holders a reasonable number of copies of) a supplement or post-effective amendment to each
Registration Statement or a supplement to the related Prospectus (including by means of an Issuer
Free Writing Prospectus), or file any other required document so that, as thereafter delivered to
the purchasers of the Registrable Securities being sold thereunder, such Prospectus or Issuer Free
Writing Prospectus will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements therein not
misleading;



          (h) in the case of an Underwritten Offering, enter into customary agreements (including an
underwriting agreement) and take other actions reasonably necessary to expedite the disposition of
the Registrable Securities, and in connection therewith:




     (i) use its reasonable efforts to obtain opinions of counsel to the Company (such
counsel being reasonably satisfactory to the managing



11









 







underwriter, if any) and updates thereof covering matters customarily covered in
opinions of counsel requested in Underwritten Offerings, addressed to each selling Holder
and the managing underwriter;




     (ii) use its reasonable efforts to obtain “comfort” letters and updates thereof from
the independent certified public accountants of the Company addressed to each selling Holder
and the managing underwriter, if any, covering matters customarily covered in “comfort”
letters in connection with Underwritten Offerings; and




     (iii) provide officers’ certificates and other customary closing documents reasonably
requested by the managing underwriter;



          (i) upon reasonable notice and at reasonable times during normal business hours, make
available for inspection by a representative of each selling Holder and the managing underwriter,
if any, participating in any disposition of Registrable Securities and any attorney or accountant
retained by any selling Holder or any underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the officers, directors and employees
of the Company to supply all information reasonably requested by any such representative,
underwriter, attorney or accountant in connection with the Registration Statement;



          (j) use its reasonable efforts to comply with all applicable rules and regulations of the SEC
relating to such registration and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the Securities Act, provided that the
Company will be deemed to have complied with this Section 5.1(j) if it has satisfied the
provisions of Rule 158 under the Securities Act (or any similar rule promulgated under the
Securities Act);



          (k) use its reasonable efforts to cause all Registrable Securities to be listed on the New
York Stock Exchange; and



          (l) use its reasonable efforts to procure the cooperation of the Company’s transfer agent in
settling any offering or sale of Registrable Securities.



     5.2 Information from Holders.



          (a) Each selling Holder that has requested inclusion of its Registrable Securities in any
Registration Statement shall furnish to the Company such information regarding such Holder and its
plan and method of distribution of such Registrable Securities as the Company may, from time to
time, reasonably request in writing. The Company may refuse to proceed with the registration of
such Holder’s Registrable Securities if such Holder unreasonably fails to furnish such information
within a reasonable time after receiving such request.



          (b) Each selling Holder will promptly (i) following its actual knowledge thereof, notify the
Company of the occurrence of any event that makes any statement made in a Registration Statement,
Prospectus, Issuer Free Writing Prospectus or other



12









 







Free Writing Prospectus regarding such selling Holder untrue in any material respect or that
requires the making of any changes in a Registration Statement, Prospectus or Free Writing
Prospectus so that, in such regard, it will not contain any untrue statement of a material fact or
omit any material fact required to be stated therein or necessary to make the statements not
misleading and (ii) provide the Company with such information as may be required to enable the
Company to prepare a supplement or post-effective amendment to any such Registration Statement or a
supplement to such Prospectus or Free Writing Prospectus.



          (c) With respect to any Registration Statement for an Underwritten Offering, the inclusion of
a Holder’s Registrable Securities therein will be conditioned, at the managing underwriter’s
request, upon the execution and delivery by such Holder of an underwriting agreement in form, scope
and substance as is customary in Underwritten Offerings.



     5.3 Suspension of Disposition.



          (a) Each selling Holder will be deemed to have agreed that, upon receipt of any notice from
the Company of the occurrence of any event of the type described in Sections 5.1(d)(ii),
5.1(d)(iii), 5.1(d)(iv), 5.1(d)(v) or 5.1(d)(vi), such Holder will
discontinue disposition of Registrable Securities covered by a Registration Statement, Prospectus
or Free Writing Prospectus and suspend use of such Prospectus or Free Writing Prospectus until such
Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 5.1(g) or until it is advised by the Company that the use of the applicable
Prospectus or Free Writing Prospectus may be resumed and have received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by reference in such
Prospectus or Free Writing Prospectus. In the event the Company shall give any such notice, the
period of time for which a Registration Statement must remain effective as set forth in Section
2.3 will be extended by the number of days during the time period from and including the date
of the giving of such notice to and including the date when each selling Holder of Registrable
Securities covered by such Registration Statement has received (i) the copies of the supplemented
or amended Prospectus or Issuer Free Writing Prospectus contemplated by Section 5.1(g) or
(ii) the advice referenced in this Section 5.3(a).



          (b) Each selling Holder will be deemed to have agreed that, upon receipt of any notice from
the Company of the happening of an event specified in Section 4.2, such selling Holder will
discontinue disposition of Registrable Securities covered by a Registration Statement, Prospectus
or Free Writing Prospectus and suspend use of such Prospectus or Free Writing Prospectus until the
earlier to occur of the Holder’s receipt of (i) copies of a supplemented or amended Prospectus or
Issuer Free Writing Prospectus describing the event giving rise to the aforementioned suspension
and (ii) (A) notice from the Company that the use of the applicable Prospectus or Issuer Free
Writing Prospectus may be resumed and (B) copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or Issuer Free Writing
Prospectus; provided, however, that in no event will the number of days during which the offer and
sale of Registrable



13









 







Securities is discontinued pursuant to this Section 5.3(b) during any consecutive
12-month period, together with any other Blackout Periods in such 12-month period, exceed an
aggregate of 120 days. In the event the Company gives any such notice, the period of time for
which a Registration Statement must remain effective as set forth in Section 2.3 will be
extended by the number of days during the time period from and including the date of giving of such
notice to and including the date when each selling Holder of Registrable Securities covered by such
Registration Statement receives (i) a supplemented or amended Prospectus or Issuer Free Writing
Prospectus describing the event giving rise to the aforementioned suspension or (ii) notice from
the Company that use of the applicable Prospectus or Issuer Free Writing Prospectus may resume.



     5.4 Registration Expenses.



          (a) All fees and expenses incurred by the Company in complying with Articles II and
III and Section 5.1 (“Registration Expenses”) will be borne by the Company.
These fees and expenses will include without limitation (i) all registration, filing and
qualification fees, (ii) printing, duplicating and delivery expenses, (iii) fees and disbursements
of counsel for the Company, (iv) fees and expenses of complying with state securities or “blue sky”
laws (including the fees and expenses of any local counsel in connection therewith), (v) fees and
disbursements of all independent certified public accountants referred to in Section
5.1(h)(ii) (including the expenses of any special audit and “comfort” letters required by or
incident to such performance) and (vi) fees and expenses in connection with listing the Registrable
Securities on the New York Stock Exchange.



          (b) The Company will also reimburse or pay, as the case may be, the standard fees and
out-of-pocket expenses of one law firm retained by all Holders, considered collectively, relating
to any action taken pursuant to Article II within 10 days of presentation of a detailed
invoice approved by the Investor.



          (c) Notwithstanding anything contained herein to the contrary, all underwriting fees,
discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable
Securities will be borne by the Holder owning such Registrable Securities.



Article VI. Indemnification




     6.1 Indemnification by the Company. The Company will indemnify and hold harmless, to
the fullest extent permitted by law, each Holder owning Registrable Securities registered pursuant
to this Agreement, such Holder’s Affiliates, officers, directors, managers, partners, stockholders,
employers, advisors, agents and other representatives, and each Person who controls such Holder
(within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) from and
against all losses, claims, damages, liabilities, costs (including without limitation reasonable
attorneys’ fees and disbursements) and expenses (collectively, “Losses”) arising out of or
based upon any untrue or alleged untrue statement of a material fact contained or incorporated by
reference in any Registration Statement, Prospectus or preliminary



14









 







prospectus or Issuer Free Writing Prospectus, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as the same are based solely upon
information furnished in writing to the Company by or on behalf of such Holder expressly for use
therein; provided, however, that the Company will not be liable to any Holder to the extent that
any Losses arise out of or are based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any preliminary prospectus if either (a) such untrue statement
or alleged untrue statement or such omission or alleged omission was corrected in a Prospectus or
Issuer Free Writing Prospectus provided to such Holder prior to the confirmation of the sale of
Registrable Securities to the Person asserting the claim from which such Losses arise, and such
Holder thereafter failed to send or deliver a copy of the Prospectus or Issuer Free Writing
Prospectus with or prior to the delivery of written confirmation of such sale in any case in which
such delivery is required under the Securities Act or (b) such untrue statement or alleged untrue
statement or omission or alleged omission was corrected in an amendment or supplement to the
Prospectus or Issuer Free Writing Prospectus previously furnished by or on behalf of the Company
and such Prospectus or Issuer Free Writing Prospectus as so amended or supplemented was provided to
such Holder prior to the confirmation of the sale of Registrable Securities to the Person asserting
the claim from such Losses arise, and such Holder thereafter failed to send or deliver such
Prospectus or Issuer Free Writing Prospectus as so amended or supplemented with or prior to the
delivery of written confirmation of such sale in any case in which such delivery is required under
the Securities Act. The indemnity provided in this Section 6.1 shall survive any transfer
or disposal of the Registrable Securities by the Holders.



     6.2 Indemnification by Holders. In the event of the filing of any registration
statement relating to the registration of any Registrable Securities, each Holder (severally and
not jointly) will indemnify and hold harmless, to the fullest extent permitted by law, the Company,
its Affiliates, officers, directors, managers, partners, stockholders, employers, advisors, agents
and other representatives, and each Person who controls the Company (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) from and against all Losses arising out
of or based upon any untrue or alleged untrue statement of a material fact contained or
incorporated by reference in any Registration Statement, Prospectus or preliminary prospectus or
Issuer Free Writing Prospectus, or arising out of or based upon any omission or alleged omission of
a material fact required to be stated therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in conformity with
information so furnished in writing by or on behalf of such Holder to the Company expressly for use
in such Registration Statement, Prospectus or preliminary prospectus or Issuer Free Writing
Prospectus. In no event will the liability of any Holder be greater in amount than the dollar
amount of the net proceeds (after any discounts, commissions, transfer taxes, fees and expenses)
received by such Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.



15









 





     6.3 Conduct of Indemnification Proceedings. If any Person becomes entitled to
indemnity hereunder (an “Indemnified Party”), such Indemnified Party will give prompt
notice to the party from which indemnity is sought (the “Indemnifying Party”) of any claim
or of the commencement of any action or proceeding with respect to which the Indemnified Party
seeks indemnification or contribution pursuant hereto; provided, however, that the failure to so
notify the Indemnifying Party will not relieve the Indemnifying Party from any obligation or
liability except to the extent that the Indemnifying Party has been prejudiced materially by such
failure. If such an action or proceeding is brought against the Indemnified Party, the
Indemnifying Party will be entitled to participate therein and, to the extent it may elect by
written notice delivered to the Indemnified Party promptly after receiving the notice referred to
in the immediately preceding sentence, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. Notwithstanding the foregoing, the Indemnified Party will
have the right to employ its own counsel in any such case, but the fees and expenses of that
counsel will be at the expense of the Indemnified Party unless (a) the employment of the counsel
has been authorized in writing by the Indemnifying Party, (b) the Indemnifying Party has not
employed counsel to take charge of such action or proceeding within a reasonable time after notice
of commencement thereof or (c) the Indemnified Party reasonably concludes, based upon the opinion
of counsel, that there are defenses or actions available to it which are different from or in
addition to those available to the Indemnifying Party which, if the Indemnifying Party and the
Indemnified Party were to be represented by the same counsel, could result in a conflict of
interest for such counsel or materially prejudice the prosecution of defenses or actions available
to the Indemnified Party. If any of the events specified in clause (a), (b) or (c) of the
immediately preceding sentence are applicable, then the reasonable fees and expenses of separate
counsel for the Indemnified Party will be borne by the Indemnifying Party; provided, however, that
in no event will the Indemnifying Party be liable for the fees and expenses of more than one
separate firm for all Indemnified Parties. If, in any case, the Indemnified Party employs separate
counsel, the Indemnifying Party will not have the right to direct the defense of the action or
proceeding on behalf of the Indemnified Party. All fees and expenses required to be paid to the
Indemnified Party pursuant to this Article VI will be paid periodically during the course
of the investigation or defense, as and when reasonably itemized bills therefor are delivered to
the Indemnifying Party in respect of any particular Loss that is incurred. Notwithstanding
anything contained in this Section 6.3 to the contrary, an Indemnifying Party will not be
liable for the settlement of any action or proceeding effected without its prior written consent.
The Indemnifying Party will not, without the consent of the Indemnified Party (which consent will
not be unreasonably withheld), consent to entry of any judgment or enter into any settlement or
otherwise seek to terminate any action or proceeding in which any Indemnified Party is or could be
a party and as to which indemnification or contribution could be sought by such Indemnified Party
under this Article VI, unless such judgment, settlement or other termination provides
solely for the payment of money and includes as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release, in form and substance reasonably
satisfactory to the Indemnified Party, from all liability in respect of such claim or litigation
for which such Indemnified Party would be entitled to indemnification hereunder.



16









 





     6.4 Contribution, etc.



          (a) If the indemnification provided for in this Article VI is unavailable to an
Indemnified Party under Sections 6.1 or 6.2 in respect of any Losses or is
insufficient to hold the Indemnified Party harmless, then each applicable Indemnifying Party
(severally and not jointly), in lieu of indemnifying the Indemnified Party, will contribute to the
amount paid or payable by the Indemnified Party as a result of the Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party or Indemnifying Parties, on the
one hand, and the Indemnified Party, on the other hand, in connection with the actions, statements
or omissions that resulted in the Losses as well as any other relevant equitable considerations.
The relative fault of the Indemnifying Party or Indemnifying Parties, on the one hand, and the
Indemnified Party, on the other hand, will be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission of a material fact, has been taken or made by, or related to
information supplied by, the Indemnifying Party or Indemnifying Parties or the Indemnified Party,
and the parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such action, statement or omission.



          (b) The parties hereto agree that it would not be just and equitable if contribution pursuant
to this Section 6.4 were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding anything contained in this Section 6.4 to
the contrary, an Indemnifying Party that is a selling Holder will not be required to contribute any
amount in excess of the amount by which the total net proceeds (after any discounts, commissions,
transfer taxes, fees and expenses) received by such Holder upon the sale of the Registrable
Securities exceeds the amount of any damages which such selling Holder has, in the aggregate,
otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.



Article VII. Free Writing Prospectuses




     Each Holder represents that it has not prepared or had prepared on its behalf or used or
referred to, and agrees that it will not prepare or have prepared on its behalf or use or refer to,
any Free Writing Prospectus, and has not distributed and will not distribute any written materials
in connection with the offer or sale of Common Stock without the prior written consent of the
Company and, in connection with any Underwritten Offering, the underwriters. Any such Free Writing
Prospectus consented to by the Company and the underwriters, as the case may be, is hereinafter
referred to as a “Permitted Free Writing Prospectus.” The Company represents and agrees
that it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as
an Issuer Free Writing Prospectus, including in respect of timely filing with the SEC, legending
and record keeping.



17









 





Article VIII. Rule 144




     To the extent the following make available the benefits of certain rules and regulations of
the SEC which may permit the sale of registered securities to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to (a) make and keep public information
available as those terms are understand and defined in Rule 144; (b) use its reasonable efforts to
file with the SEC in a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; (c) furnish to any Holder promptly upon written request a
written statement by the Company as to its compliance with the reporting requirements of Rule 144
and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly
report of the Company and such other reports and documents as any Holder reasonably may request in
availing itself of any rule or regulation of the SEC allowing such Holder to sell any Registrable
Securities without registration; and (d) take such other actions as may be reasonably required by
the Company’s transfer agent to consummate any distribution of Registrable Securities in accordance
with the terms and conditions of Rule 144.



Article IX. Participation in Underwritten Offerings




     Notwithstanding anything contained herein to the contrary, no Person may participate in any
Underwritten Offering pursuant to a registration hereunder unless that Person (a) agrees to sell
its securities on the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.



Article X. Miscellaneous




     10.1 Notices. All notices and other communications in connection with this Agreement
will be in writing and will be deemed given (and will be deemed to have been duly given upon
receipt) if delivered personally, sent via facsimile (with confirmation), mailed by registered or
certified mail (return receipt requested) or delivered by an express courier (with confirmation) to
the parties at the following addresses (or at such other address for a party as will be specified
by like notice):



          (a) If to the Company:




USG Corporation

125 South Franklin Street

Chicago, Illinois 60606-4647

Attention: Stanley L. Ferguson

Facsimile: (312) 606-5316



18









 






with a copy to:




Jones Day

222 E. 41st Street

New York, New York 10017

Attention: Robert A. Profusek

Facsimile: (212) 755-7306



          (b) If to the Investor:




Berkshire Hathaway Inc.

1440 Kiewit Plaza

Omaha, Nebraska 68131

Attention: Marc D. Hamburg

Facsimile: (402) 346-3375




with a copy to:




Munger, Tolles & Olson LLP

355 South Grand Avenue

35th Floor

Los Angeles, California 90071-1560

Attention: Robert E. Denham

Facsimile: (213) 687-3702



          (c) If to any Holder (other than the Investor), to such Holder’s address on file with the
Company’s transfer agent.



     10.2 Confidentiality. Each Holder will, and will cause its officers, directors,
employees, legal counsel, accountants, financial advisors and other representatives to, hold in
confidence any material nonpublic information received by them pursuant to this Agreement,
including without limitation any material nonpublic information included in any Registration
Statement or Prospectus proposed to be filed with the SEC (until such Registration Statement or
Prospectus has been filed) or provided pursuant to Section 5.1(i). This Section
10.2 shall not apply to any information which (a) is or becomes generally available to the
public, (b) was already in the Holder’s possession from a non-confidential source prior to its
disclosure by the Company, (c) is or becomes available to the Holder on a non-confidential basis
from a source other than the Company, provided that such source is not known by the Holder to be
bound by confidentiality obligations or (d) is required to be disclosed by law.



     10.3 Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement will be assigned by any of the parties
(whether by operation of law or otherwise) without the prior written consent of the other party.
This Agreement will be binding upon, inure to the benefit of and be enforceable by each of the
parties and their respective successors and assigns. This Agreement (including the documents and
instruments referred to in this Agreement) is



19









 







not intended to and does not confer upon any person other than the parties hereto any rights
or remedies under this Agreement.



     10.4 Entire Agreement. This Agreement (including the documents and instruments
referred to in this Agreement) constitutes the entire agreement of the parties and supersedes all
prior agreements and understandings, whether written or oral, between the parties with respect to
the subject matter of this Agreement, except that the parties hereto acknowledge that any
confidentiality agreements heretofore executed among the parties shall continue in full force and
effect.



     10.5 Waivers and Amendments. This Agreement may be amended, modified, superseded,
cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only
by a written instrument signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power or privilege pursuant
to this Agreement will operate as a waiver thereof, nor will any waiver on the part of any party of
any right, power or privilege pursuant to this Agreement, nor will any single or partial exercise
of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege pursuant to this Agreement. The
rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any
rights or remedies which any party otherwise may have at law or in equity.



     10.6 Counterparts. This Agreement may be executed in any number of counterparts, all
of which will be considered one and the same agreement and will become effective when counterparts
have been signed by each of the parties and delivered to the other party (including via facsimile
or other electronic transmission), it being understood that each party need not sign the same
counterpart.



     10.7 Governing Law; Venue. THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ANY APPLICABLE
CONFLICT OF LAWS PRINCIPLES. EACH PARTY TO THIS AGREEMENT IRREVOCABLY SUBMITS TO THE JURISDICTION
OF, AND VENUE IN, THE DISTRICT COURTS OF THE UNITED STATES SITTING IN THE STATE OF DELAWARE OR THE
COURTS OF THE STATE OF DELAWARE AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.



     10.8 Headings. The headings in this Agreement are for reference purposes only and
will not in any way affect the meaning or interpretation of this Agreement.



     10.9 Specific Performance. The parties acknowledge and agree that any breach of the
terms of this Agreement would give rise to irreparable harm for which money damages would not be an
adequate remedy, and, accordingly, the parties agree that, in addition to any other remedies, each
will be entitled to enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy and without the necessity of
posting bond.



20









 





     10.10 Termination. Notwithstanding anything to the contrary contained herein, this
Agreement will terminate simultaneously with the termination of the Equity Commitment Agreement if
the Rights Offering (as defined in the Equity Commitment Agreement) is not consummated prior to
such termination of the Equity Commitment Agreement.



[Signature Page Follows]




21









 





     IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date first
written above.



	 	 	 	 	 
	 	USG CORPORATION

 	 
	 	By:  	/s/ William C. Foote
 	 
	 	 	Name:  	William C. Foote 	 
	 	 	Title:  	Chairman and Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	BERKSHIRE HATHAWAY INC.

 	 
	 	By:  	/s/ Marc D. Hamburg
 	 
	 	 	Name:  	Marc D. Hamburg 	 
	 	 	Title:  	Vice President 	 
	 



[Signature Page of Registration Rights Agreement]















 






Exhibit D




Shareholder Agreement




D-1
















 









SHAREHOLDER’S AGREEMENT




     This Shareholder’s Agreement (this “Agreement”) is entered into as of January 30,
2006, by and between USG Corporation, a Delaware corporation (as debtor in possession and a
reorganized debtor, as applicable, the “Company”), and Berkshire Hathaway Inc., a Delaware
corporation (the “Shareholder”).



RECITALS




     A. This Agreement is being entered into in connection with the transactions contemplated by
the Equity Commitment Agreement, dated as of the date hereof (the “Equity Commitment
Agreement”), by and between the Company and the Shareholder.



     B. In connection with the transactions contemplated by the Equity Commitment Agreement, the
Shareholder will purchase shares of common stock of the Company, par value $0.10 per share (the
“Common Stock”), in connection with the Rights Offering.



     C. The parties have reached certain agreements with respect to the Shareholder’s Beneficial
Ownership of Common Stock.



AGREEMENTS




     The parties hereby agree as follows:




	1.	 	     Definitions.






	 	(a)	 	     All capitalized terms used and not otherwise defined herein have the respective
meanings set forth in the Equity Commitment Agreement.
	 
	 	(b)	 	     In addition to the terms defined elsewhere herein, the following terms have the
following meanings when used herein with initial capital letters:





     “Affiliate” has the meaning assigned in Rule 405 under the Securities Act as in effect
on the Agreement Date.



     “Agreement Date” means January 30, 2006.



     “Beneficially Owns” (or comparable variations thereof) has the meaning set forth in
Rule 13d-3 under the Exchange Act as in effect on the Agreement Date, except that Common Stock and
Convertible Securities owned by independently trusteed employee benefit plans of the Shareholder or
its Subsidiaries who acquire such securities without the knowledge or approval of any employee of
the Shareholder will not be deemed Beneficially Owned by the Shareholder.



 









 





     “Control” has the meaning given to that term under Rule 405 under the Securities Act
(and “Controlled” and “Controlling” shall have correlative meanings); provided, however, that no
Person shall be deemed to Control another Person solely by his or her status as a director of such
other Person.



     “Convertible Securities” means securities of the Company that are convertible or
exchangeable (whether presently convertible or exchangeable or not) into Voting Securities.



     “Equity Securities” means Voting Securities, Convertible Securities and Rights to
Purchase Voting Securities.



     “Fully Diluted Basis” means the Voting Securities that would be outstanding after
giving effect to the conversion or exchange of all outstanding Convertible Securities and the
exercise of all outstanding Rights to Purchase Voting Securities, in each case, whether or not
presently convertible, exchangeable or exercisable.



     “Maximum Percentage” means the greater of (i) 40% of the Voting Securities of the
Company on a Fully Diluted Basis, or (ii) that percentage of the Voting Securities of the Company
that the Restricted Group Beneficially Owns on the Closing Date, on a Fully Diluted Basis, after
giving effect to any purchase of Investor Additional Shares pursuant to the Equity Commitment
Agreement, in each case, based on the latest information reported by the Company in its filings
with the Commission.



     “Outstanding Voting Securities” means at any time the then-issued and outstanding
Voting Securities based on the latest information reported by the Company in its filings with the
Commission.



     “Person” means any individual, corporation, partnership, trust, other entity or group
(within the meaning of Section 13(d)(3) of the Exchange Act).



     “Poison Pill” means the Existing Shareholder Rights Plan, Reorganization Rights Plan
or any subsequent plan, agreement, rights, securities or instruments that are commonly referred to
as a “poison pill” because they have the effect of diluting or otherwise discriminating against a
particular “acquiring person” by reason of such person’s ownership of a particular amount of Voting
Securities.



     “Pre-Plan Shares” means the (i) Measurement Date Shares, (ii) the Investor Rights
Offering Shares, and (iii) any Equity Securities distributed or issued, directly or indirectly,
with respect to the Measurement Date Shares or the Investor Rights Offering Shares.



     “Restricted Group” means (i) the Shareholder, (ii) any Controlled Affiliate of the
Shareholder, 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 Shareholder or any Person
directly or indirectly Controlling or Controlled by the Shareholder is a member.



2









 





     “Rights to Purchase Voting Securities” means options, warrants and rights issued by
the Company (whether presently exercisable or not) to purchase Voting Securities or Convertible
Securities, excluding any rights issued under any Poison Pill.



     “Standstill Period” means the period beginning on the Closing Date and ending on a
date seven years from the Closing Date; provided, however, that if the Expiration Time shall have
occurred in the Rights Offering, and there is no Closing Date solely because there are no
Unsubscribed Shares, the Standstill Period shall mean the period beginning on the date the
Shareholder purchases the Investor Rights Offering Shares and ending on a date seven years from
such date of purchase.



     “Voting Securities” means the Common Stock and any other securities of the Company of
any kind or class having power generally to vote for the election of directors.




	2.	 	     Standstill Agreement. During the Standstill Period, the Shareholder agrees that no
member of the Restricted Group will, and each will cause its Controlled Affiliates not to,
directly or indirectly:






	 	(a)	 	     acquire (other than (i) as required or permitted by the Equity Commitment
Agreement or (ii) Equity Securities distributed or issued, directly or indirectly, with
respect to Equity Securities then held by the Restricted Group, or the exercise or
conversion of any Equity Securities described in this clause (ii)) Equity Securities if
immediately after giving effect to the acquisition the Restricted Group would have
Beneficial Ownership of Voting Securities over the Maximum Percentage; provided,
however, that the Restricted Group will not be in violation of this provision by virtue
of (x) the expiration, termination or cancellation of Convertible Securities or Rights
to Purchase Voting Securities or (y) a share repurchase or other action taken by the
Company to reduce, or which has the effect of reducing, the number of shares of
Outstanding Voting Securities or votes per share of then-Outstanding Voting Securities;
	 
	 	(b)	 	     solicit proxies or become a participant in a proxy solicitation with respect to
any securities of the Company; or
	 
	 	(c)	 	     except in connection with the Equity Commitment Agreement, make any public
announcement with respect to, or submit a proposal for, or offer in respect of (with or
without conditions) any merger, consolidation, business combination, tender or exchange
offer, restructuring, liquidation, recapitalization, dissolution or similar
transactions or other extraordinary transaction of or involving the Company or any of
its Subsidiaries or its Equity Securities or assets unless such action (i) is
specifically requested in writing by the Board of Directors of the Company (the
“Board”) prior to the making of such announcement, proposal or offer or (ii) is
made to the Board on a confidential basis and provides that (A) it may not be
consummated unless




3









 






	 	 	 	it is (1) approved by a majority of Outstanding Voting Securities not Beneficially
Owned by the Restricted Group and (2) determined by the Board to be fair to the
shareholders of the Company and (B) unless the transaction is a tender offer for all
shares of Common Stock or an offer for the entire Company, it is accompanied by an
undertaking that, if the conditions in clause (A) are satisfied, such person will
offer to acquire all shares of Common Stock still outstanding after completion of a
transaction, if any, at the same price per share paid in such transaction.






	3.	 	     Voting.






	 	(a)	 	     Except as set forth in Section 3(c), Pre-Plan Shares are not subject to
any voting requirements.
	 
	 	(b)	 	     During the Standstill Period, the Shareholder will, and will cause each of its
Controlled Affiliates to, vote all shares of Common Stock Beneficially Owned by any of
them, other than Pre-Plan Shares, on all matters that come before the shareholders of
the Company for a vote (or in the case of action by written consent, consent with
respect to such shares), in proportion to the votes cast (or consents given) by all
Outstanding Voting Securities (including the Pre-Plan Shares); provided, however, that
the Shareholder and its Controlled Affiliates will not be required to vote any shares
of Common Stock in favor of a Poison Pill that, if adopted, would be contrary to
Section 5(a).
	 
	 	(c)	 	     To the extent NYSE rules or regulations require stockholder approval of the
issuance of Rights or Common Stock as contemplated by the Equity Commitment Agreement,
and the Board recommends that stockholders vote in favor of such transactions, the
Shareholder will, and will cause each of its Controlled Affiliates to, vote all shares
of Common Stock Beneficially Owned by any of them in favor of such transactions.






	4.	 	     Beneficial Ownership of Common Stock. As of the close of business on the last
trading day immediately prior to the Agreement Date, (a) the Shareholder Beneficially Owned
6,500,000 shares of Common Stock and (b) the Restricted Group Beneficially Owned the same
6,500,000 shares of Common Stock (the “Measurement Date Shares”).
	 
	5.	 	     Shareholder Rights Plan.






	 	(a)	 	     During the Standstill Period, the Company (i) will not amend or supplement the
Existing Shareholder Rights Plan or Reorganization Rights Plan, or adopt a replacement
Poison Pill, that would result in the Restricted Group or any member thereof becoming
an “Acquiring Person” (as defined in the Existing Shareholder Rights Plan,
Reorganization Rights Plan or Poison Pill, or the similar person in or having a status
under a Poison Pill that allows other shareholders to exercise a right issued




4









 






	 	 	 	thereunder (or purchase a security contemplated thereby) in a manner that has
different economic consequences than for such person (together, an “Acquiring
Person”)) or otherwise allows other shareholders to exercise a right issued
thereunder (or purchase a security contemplated thereby) in a manner that has
different economic consequences for the Restricted Group, in each case, by virtue of
Beneficial Ownership of Common Stock by the Restricted Group or any member thereof
that is not in violation of this Agreement, and (ii) if the Existing Shareholder
Rights Plan, Reorganization Rights Plan or a Poison Pill is in effect or is adopted,
will amend or supplement the Existing Shareholder Rights Plan, Reorganization Rights
Plan or Poison Pill as necessary to ensure, or will only adopt a Poison Pill if it
provides, that no member of the Restricted Group shall become an Acquiring Person as
a result of (A) the acquisition or Beneficial Ownership of Voting Securities in an
amount that, immediately after giving effect thereto, does not exceed the Maximum
Percentage or (B) any member of the Restricted Group having Beneficial Ownership of
Voting Securities exceeding the Maximum Percentage solely as a result of (x) the
expiration, termination or cancellation of Convertible Securities or Rights to
Purchase Voting Securities or (y) a reduction in the number of outstanding shares or
votes per share of outstanding shares of the Company’s Voting Securities, unless and
until the Shareholder purchases or otherwise becomes (as a result of actions taken
by the Shareholder and the Restricted Group to increase its Beneficial Ownership,
other than pursuant to Equity Securities received by the Restricted Group with
respect to Equity Securities then held by the Restricted Group, including Pre-Plan
Shares, or the exercise or conversion of any Equity Securities described in this
parenthetical) the Beneficial Owner of additional shares of Common Stock
constituting 1% or more of the then-Outstanding Voting Securities on a Fully Diluted
Basis.
	 	 	 	 
	 
	 	(b)	 	     During such time after the Standstill Period that the Shareholder is the owner
of any Equity Securities, a Poison Pill adopted or in effect (including, without
limitation, the Existing Shareholder Rights Plan or the Reorganization Rights Plan)
shall exempt the Beneficial Ownership of Equity Securities by the Restricted Group and
shall not cause any member of the Restricted Group to be an “Acquiring Person” or cause
any other consequences as a result of Beneficial Ownership of Equity Securities by the
Restricted Group; provided, however, that such Poison Pill may require that the
Restricted Group not purchase (although the members of the Restricted Group may
continue to hold) additional Equity Securities (other than Equity Securities
distributed or issued, directly or indirectly, with respect to Equity Securities then
held by the Restricted Group or the exercise or conversion of any Equity Securities
described in this parenthetical) that bring its Beneficial Ownership of Voting
Securities to greater than 50% of the Voting Securities on a Fully Diluted Basis unless
the Restricted Group does so pursuant to an offer to purchase all




5









 






	 	 	 	outstanding Common Stock, which offer remains open for at least 60 calendar days.






	6.	 	     Tax Asset Standstill. During the Tax Limitation Period (as defined herein) if the
Company determines that (a) the acquisition of additional Equity Securities or (b) the sale or
other disposition of Equity Securities, in each case by a member of the Restricted Group,
would prevent the Company from carrying back under Sections 172 and 382 of the Internal
Revenue Code a net operating loss attributable to a payment to the Asbestos Personal Injury
Trust (as defined in the Asbestos Term Sheet), the Company shall provide notice to the
Shareholder and, following the receipt of such notice, the members of the Restricted Group
shall not (i) acquire any Equity Securities (other than any Equity Securities issued by the
Company to the Restricted Group, including rights to purchase Equity Securities or dividends
of Equity Securities) or (ii) sell or otherwise dispose of Equity Securities in an amount
that, alone or in combination with sales or other dispositions by other shareholders during
the applicable testing period, would prevent such net operating loss carryback (such amount to
be advised by the Company in its notice). “Tax Limitation Period” means the period,
if any, that begins on (w) the date of final adjournment sine die of the 109th
Congress of the United States without enacting the FAIR Act (as defined in the Asbestos Term
Sheet) or (x) if the FAIR Act is enacted and made law before such final adjournment, but is
subject to a Challenge Proceeding (as defined in the Asbestos Term Sheet) as of 60 days after
the Trigger Date (as defined in the Asbestos Term Sheet), the day such Challenge Proceeding is
resolved by Final Order (as defined in the Asbestos Term Sheet) in a manner that causes the
Contingent Payment Note (as defined in the Asbestos Term Sheet) to vest, and ends on the
earlier of (y) the day after the date on which the Company makes the first payment on the
Contingent Payment Note and (z) the day on which the Company provides written notice to the
Shareholder that the limitation imposed by the notice is no longer needed.
	 
	7.	 	     Miscellaneous.






	 	(a)	 	     Notices. All notices and other communications in connection with this
Agreement will be in writing and will be deemed given (and will be deemed to have been
duly given upon receipt) if delivered personally, sent via electronic facsimile (with
confirmation), mailed by registered or certified mail (return receipt requested) or
delivered by an express courier (with confirmation) to the parties at the following
addresses (or at such other address for a party as will be specified by like notice):




6









 












If to the Shareholder:




Berkshire Hathaway Inc.

1440 Kiewit Plaza

Omaha, Nebraska 68131

Attention: Marc D. Hamburg

Fax: (402) 346-3375




with a copy to:




Munger, Tolles & Olson LLP

355 South Grand Avenue

35th Floor

Los Angeles, California 90071-1560

Attention: Robert E. Denham

Fax: (213) 687-3702




If to the Company:




USG Corporation

125 South Franklin Street

Chicago, Illinois 60606-4647

Attention: Stanley L. Ferguson

Fax: (312) 606-5316




with a copy to:




Jones Day

222 East 41st Street

New York, New York 10017-6702

Attention: Robert A. Profusek

Fax: (212) 755-7306




	 	(b)	 	     Assignment; Third Party Beneficiaries. Neither this Agreement nor any
of the rights, interests or obligations under this Agreement will be assigned by any of
the parties (whether by operation of law or otherwise) without the prior written
consent of the other party. This Agreement will be binding upon, inure to the benefit
of and be enforceable by each of the parties and their respective successors and
assigns. This Agreement (including the documents and instruments referred to in this
Agreement) is not intended to and does not confer upon any person other than the
parties hereto any rights or remedies under this Agreement.
	 
	 	(c)	 	     Governing Law; Venue. THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ANY
APPLICABLE CONFLICT OF LAWS PRINCIPLES. EACH




7









 






	 	 	 	PARTY TO THIS AGREEMENT IRREVOCABLY SUBMITS TO THE JURISDICTION OF, AND VENUE IN,
THE DISTRICT COURTS OF THE UNITED STATES SITTING IN THE STATE OF DELAWARE OR THE
COURTS OF THE STATE OF DELAWARE AND WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS.
	 	 	 	 
	 
	 	(d)	 	     Counterparts. This Agreement may be executed in any number of
counterparts, all of which will be considered one and the same agreement and will
become effective when counterparts have been signed by each of the parties and
delivered to the other party (including via facsimile or other electronic
transmission), it being understood that each party need not sign the same counterpart.
	 
	 	(e)	 	     Entire Agreement. This Agreement (including the Equity Commitment
Agreement and the other documents and instruments referred to in this Agreement)
constitutes the entire agreement of the parties and supersedes all prior agreements and
understandings, whether written or oral, between the parties (or any of them) with
respect to the subject matter of this Agreement, except that the parties hereto
acknowledge that any confidentiality agreements heretofore executed among the parties
(or any of them) will continue in full force and effect.
	 
	 	(f)	 	     Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions of this
Agreement may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any party
in exercising any right, power or privilege pursuant to this Agreement will operate as
a waiver thereof, nor will any waiver on the part of any party of any right, power or
privilege pursuant to this Agreement, nor will any single or partial exercise of any
right, power or privilege pursuant to this Agreement, preclude any other or further
exercise thereof or the exercise of any other right, power or privilege pursuant to
this Agreement. The rights and remedies provided pursuant to this Agreement are
cumulative and are not exclusive of any rights or remedies which any party otherwise
may have at law or in equity.
	 
	 	(g)	 	     Headings. The headings in this Agreement are for reference purposes
only and will not in any way affect the meaning or interpretation of this Agreement.
	 
	 	(h)	 	     Specific Performance. The parties acknowledge and agree that any
breach of the terms of this Agreement would give rise to irreparable harm for which
money damages would not be an adequate remedy, and, accordingly, the parties agree
that, in addition to any other remedies, each will be entitled to enforce the terms of
this Agreement by a decree of specific performance without the necessity of proving the
inadequacy of money damages as a remedy and without the necessity of posting bond.




8









 












	8.	 	     Termination. Notwithstanding anything to the contrary contained herein, this
Agreement will terminate simultaneously with the termination of the Equity Commitment
Agreement if the Rights Offering is not consummated prior to such termination of the Equity
Commitment Agreement.





[Signature Page Follows]




9









 





     IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written
above.



	 	 	 	 	 
	 	USG CORPORATION

 	 
	 	By:  	/s/
William C. Foote	 
	 	 	Name:  	William C. Foote	 
	 	 	Title:  	Chairman and Chief Executive Officer	 
	 



	 	 	 	 	 
	 	BERKSHIRE HATHAWAY INC.

 	 
	 	By:  	/s/
Marc D. Hamburg	 
	 	 	Name:  	Marc D. Hamburg	 
	 	 	Title:  	Vice President	 
	 



[Signature Page of Shareholder’s Agreement]















 






Exhibit E




Escrow Agreement




E-1









 








ESCROW AGREEMENT




     This Escrow Agreement (this “Agreement”), dated as of January 30, 2006, is among USG
Corporation, a Delaware corporation (as debtor in possession and a reorganized debtor, as
applicable, the “Company”), Berkshire Hathaway Inc., a Delaware corporation (the
“Investor”), and
                    , as escrow agent (the “Escrow Agent”).



RECITALS




     A. This Agreement is being entered into in connection with the transactions contemplated by
the Equity Commitment Agreement, dated as of the date hereof (the “Equity Commitment
Agreement”), by and between the Company and the Investor.



     B. In connection with the transactions contemplated by the Equity Commitment Agreement and to
secure performance of the Investor’s obligations thereunder, the Investor will deposit short-term
U.S. Treasury securities having a market value of $1.8 billion with the Escrow Agent to be held and
disbursed by the Escrow Agent in accordance with the terms and conditions set forth below.



AGREEMENTS




     The parties hereby agree as follows:



     1. Definitions. All capitalized terms used and not otherwise defined herein have the
respective meanings set forth in the Equity Commitment Agreement.



     2. Appointment of Escrow Agent. The Company and the Investor hereby appoint
                    , a national banking association, as Escrow Agent for the purposes
herein set forth, and the Escrow Agent hereby accepts such appointment and agrees to be bound by
the terms and conditions of this Agreement.



     3. Deposit into Escrow.



          (a) On the Business Day following the date on which the Agreement Order becomes a Final
Agreement Order, the Investor will deposit with the Escrow Agent short-term U.S. Treasury
securities having a market value on such date of $1.8 billion (including any proceeds thereof, any
investments made or interest earned pursuant to Section 7 and any amounts received upon
liquidation of such securities pursuant to Section 8, the “Escrowed Funds”). Upon
deposit of the Escrowed Funds, the Escrow Agent will acknowledge receipt of such Escrowed Funds by
delivery of a written notice to the Company and the Investor.



          (b) The deposit of the securities constituting the Escrowed Funds by the Investor is
irrevocable except as otherwise provided in the Equity Commitment Agreement or in this Agreement.
The Escrowed Funds will be held by the Escrow Agent for the benefit of the Company and the Investor
in a segregated account in the name of the Escrow Agent over which the Escrow Agent has sole
dominion and control.



 









 




All funds or assets held by the Escrow Agent as part of the Escrowed Funds
shall be clearly identified at all times as being held by the Escrow Agent under this Agreement.




     4. Escrowed Funds Not Subject to Bankruptcy Estates. The Company and the Investor
intend and agree that, upon deposit, the Escrowed Funds will not be considered property of the
bankruptcy estates of the Company or any of its Affiliates, will not be subject to the bankruptcy
estates of the Company or any of its Affiliates in the Company’s proceedings under the Bankruptcy
Code and will not be subject to the jurisdiction or control of the Bankruptcy Court, any bankruptcy
trustee or the creditors of the Company or any of its Affiliates.



     5. Accretions. To the extent the market value of the Escrowed Funds exceeds $1.8
billion, Escrowed Funds in an amount, or with a market value, equal to such excess will be
distributed by the Escrow Agent to the Investor on the Disbursement Date (as hereinafter defined),
unless the Escrowed Funds have been distributed to the Investor previously in accordance with
Section 9.



     6. Taxes. Any and all taxes relating to the Escrowed Funds incurred in connection
herewith will be paid by the Investor. Promptly following the execution of this Agreement, the
Investor will furnish to the Escrow Agent a certified copy of a Form W-9 and any other tax-related
documentation reasonably requested by the Escrow Agent.



     7. Investments. During the term of this Agreement, the Escrowed Funds shall be
invested and reinvested by the Escrow Agent as directed by the Investor; provided that such
investments and reinvestments shall be made in short-term U.S. Treasury securities. Any income
received from investments of the Escrowed Funds pursuant to this Section 7 shall be added to
the Escrowed Funds and disbursed in accordance with this Agreement. Monthly statements will be
provided to the Company and the Investor reflecting transactions executed in connection with the
investment and reinvestment of Escrowed Funds.



     8. Liquidation. The Escrow Agent will have the power to sell or liquidate the
short-term U.S. Treasury securities deposited as Escrowed Funds to the extent necessary to (a)
satisfy any requirement pursuant to Section 9 that Escrowed Funds be distributed in cash or
(b) to divide the Escrowed Funds between the Company and the Investor in accordance with the
Purchase Notice and Disbursement Instructions (as hereinafter defined). To the extent that sale or
liquidation of the short-term U.S. Treasury securities deposited as Escrowed Funds is not necessary
pursuant to the preceding sentence, the Escrow Agent will disburse Escrowed Funds in the form of
short-term U.S. Treasury securities.



     9. Disbursement of Escrowed Funds. Other than disbursements of the Escrowed Funds
pursuant to the provisions of this Agreement, the Escrow Agent will not make, and none of the
parties hereto will have any right to, distributions of the Escrowed Funds. The Escrowed Funds
will be distributed by the Escrow Agent in accordance with the following:



2









 





          (a) Following the Determination Date, in the event that the Company delivers a Satisfaction
Notice to the Investor, promptly following receipt of such Satisfaction Notice (whether from the
Company or the Investor), the Escrow Agent will distribute to the Investor the Escrowed Funds.



          (b) Following the Determination Date, in the event that the Company delivers a Purchase Notice
to the Investor signed by an Authorized Person (as hereinafter defined) of the Company, following
receipt of such Purchase Notice (whether from the Company or the Investor) and written instructions
from the Investor (the “Disbursement Instructions”), signed by an Authorized Person of the
Investor, the Escrow Agent will distribute Escrowed Funds to the Company in the amount set forth in
the Purchase Notice and the balance of the Escrowed Funds to the Investor on the date specified in
the Disbursement Instructions (the “Disbursement Date”). Escrowed Funds to be distributed
to the Company will be distributed in cash. The parties acknowledge that any amounts to be
released to the Company pursuant to this Section 9(b) will be on account of the purchase by
the Investor (or the Investor’s designee, to the extent permitted by the Equity Commitment
Agreement) of Investor Rights Offering Shares (which were not previously issued in accordance with
the terms of the Rights Offering) or Unsubscribed Shares pursuant to the provisions of the Equity
Commitment Agreement.



          (c) Promptly following receipt of joint written instructions of termination of this Agreement
from the Company and the Investor (“Termination Instructions”), signed by Authorized Persons
of each such party, the Escrow Agent will distribute the Escrowed Funds to the Investor.



     10. Term of Escrow. This Agreement will terminate upon the disbursement of all
Escrowed Funds in accordance with the terms of this Agreement. The Company agrees that it promptly
will execute Termination Instructions in the event that the Investor satisfies its payment
obligations with respect to the purchase of Investor Additional Shares pursuant to the Equity
Commitment Agreement in cash.



     11. Escrow Agent Fees; Expense Reimbursement; Indemnification.



          (a) The Company and the Investor will be responsible jointly and severally for payment or
reimbursement, as the case may be, of the compensation of the Escrow Agent for its services as set
forth in the fee letter attached as Exhibit A hereto (the “Fee Letter”).



          (b) Each of the Company and the Investor agrees, jointly and severally, to reimburse the
Escrow Agent on demand for all reasonably incurred costs and expenses in connection with the
administration of this Agreement or the escrow created hereby or the performance or observance of
its duties hereunder that are in excess of its compensation for normal services hereunder,
including without limitation payment of reasonable legal fees and expenses incurred by the Escrow
Agent in connection with resolution of any claim by any party hereunder.



3









 





          (c) Each of the Company and the Investor covenants and agrees, jointly and severally, to
indemnify the Escrow Agent (and its directors, officers and employees) and hold it (and such
directors, officers and employees) harmless from and against any loss, liability, damage, cost and
expense of any nature incurred by the Escrow Agent arising out of or in connection with this
Agreement or with the administration of its duties hereunder, including but not limited to
reasonable attorney’s fees and other out-of-pocket costs and expenses of defending or preparing to
defend against any claim of liability unless and except to the extent such loss, liability, damage,
cost and expense will be caused by the Escrow Agent’s gross negligence or willful misconduct. The
foregoing indemnification and agreement to hold harmless will survive the termination of this
Agreement.



          (d) Without altering or limiting the joint and several liability of any of the parties to the
Escrow Agent hereunder, each of the Company and the Investor agrees, as among themselves, that all
amounts payable to the Escrow Agent pursuant to this Agreement will be paid 50% by the Company and
50% by the Investor. All invoices for amounts payable to the Escrow Agent will be sent to the
Company and the Investor in accordance with Section 12 hereof.



          (e) Notwithstanding anything herein to the contrary, the Escrow Agent will have and is hereby
granted a possessory lien on and security interest in the Escrowed Funds, and all proceeds thereof,
to secure payment of all amounts owing to it from time to time hereunder, whether now existing or
hereafter arising. If unpaid after 90 days following the issuance of a fee invoice, the Escrow
Agent will have the right to deduct from the Escrowed Funds, and proceeds thereof, any such sums,
upon three Business Days’ notice to the Company and the Investor of its intent to do so.



     12. Notices. All notices and other communications in connection with this Agreement
will be in writing and will be deemed given (and will be deemed to have been duly given upon
receipt) if delivered personally, sent via electronic facsimile (with confirmation), mailed by
registered or certified mail (return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other address for a party as
will be specified by like notice):




	 	(a)	 	If to the Company:






USG Corporation

125 South Franklin Street

Chicago, Illinois 60606-4647

Attention: Stanley L. Ferguson

Facsimile: (312) 606-5316


With a copy to:


Jones Day

222 East 41st Street

New York, New York 10017-6702




4









 







Attention: Robert A. Profusek

Facsimile: (212) 755-7306





	 	(b)	 	If to the Investor:






Berkshire Hathaway Inc.

1440 Kiewit Plaza

Omaha, Nebraska 68131

Attention: Marc D. Hamburg

Facsimile: (402) 346-3375


with a copy to:


Munger, Tolles & Olson LLP

355 South Grand Avenue

35th Floor

Los Angeles, California 90071-1560

Attention: Robert E. Denham

Facsimile: (213) 687-3702




	 	(c)	 	If to the Escrow Agent:








[                    ]

[Address]

Attention:

Facsimile:



All instructions required under this Agreement to be delivered to the Escrow Agent will be executed
by authorized persons (each, an “Authorized Person”) of the respective parties. With
respect to the Company, the identity of such Authorized Persons, as well as their specimen
signatures, will be delivered to the Escrow Agent in the form of an incumbency certificate in the
form of Exhibit B attached hereto and will remain in effect until such party notifies the
Escrow Agent of any change, and with respect to the Investor, the identity of such Authorized
Persons, as well as their specimen signatures, will be delivered to Escrow Agent in the form of an
incumbency certificate in the form of Exhibit C attached hereto and will remain in effect
until such party notifies the Escrow Agent of any change.




     13. Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement will be assigned by any of the parties
(whether by operation of law or otherwise) without the prior written consent of the other parties.
No assignment, transfer, conveyance or hypothecation of any right, title or interest in and to the
subject matter of this Agreement will be binding upon the Escrow Agent unless written notice
thereof has been served upon the Escrow Agent and all fees, costs and expenses incident to such
transfer of interest have been paid. This Agreement will be binding upon, inure to the benefit of
and be enforceable by each of the parties and their respective successors and assigns. This
Agreement (including



5









 




the documents and instruments referred to in this Agreement) is not intended
to and does not confer upon any person other than the parties hereto any rights or remedies under
this Agreement.




     14. Governing Law; Venue. THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ANY APPLICABLE CONFLICT OF LAWS
PRINCIPLES. EACH PARTY TO THIS AGREEMENT IRREVOCABLY SUBMITS TO THE JURISDICTION OF, AND VENUE IN,
THE DISTRICT COURTS OF THE UNITED STATES SITTING IN THE STATE OF DELAWARE OR THE COURTS OF THE
STATE OF DELAWARE AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.



     15. Disputes.



          (a) In the event of a dispute under this Agreement, the Escrow Agent may hold the Escrowed
Funds and await settlement or other resolution of any dispute in accordance with Section
15(b) of this Agreement.



          (b) If the Company or the Investor objects to any proposed disbursement as described in
Section 9 of this Agreement, such dispute under this Agreement must be settled either: (i)
by mutual agreement of the parties concerned within 10 calendar days of the objecting party’s
written notice of such objection (such agreement to be evidenced by appropriate instructions in
writing to the Escrow Agent, signed by the Company and the Investor) or (ii) if the Company and the
Investor are unable to resolve the dispute within such 10-day period, by the courts of the United
States sitting in the State of Delaware or the courts of the State of Delaware, which will have
exclusive jurisdiction over disputes under this Agreement. The Escrow Agent is under no duty
whatsoever to institute or defend any such proceedings. Before the settlement of any dispute under
this Agreement, the Escrow Agent is authorized and directed to retain in its possession, without
liability to anyone, that portion of the Escrowed Funds that is the subject of such dispute.



     16. Counterparts. This Agreement may be executed in any number of counterparts, all of
which will be considered one and the same agreement and will become effective when counterparts
have been signed by each of the parties and delivered to the other parties (including via facsimile
or other electronic transmission), it being understood that each party need not sign the same
counterpart.



     17. Entire Agreement. This Agreement (including the documents and instruments referred
to in this Agreement) constitutes the entire agreement of the parties and supersedes all prior
agreements and understandings, whether written or oral, between the parties (or any of them) with
respect to the subject matter of this Agreement, except that the parties hereto acknowledge that
any confidentiality agreements heretofore executed among the parties (or any of them) will continue
in full force and effect in accordance with their respective terms.



6









 





     18. Waivers and Amendments. This Agreement may be amended, modified, superseded,
cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only
by a written instrument signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power or privilege pursuant
to this Agreement will operate as a waiver thereof, nor will any waiver on the part of any party of
any right, power or privilege pursuant to this Agreement, nor will any single or partial exercise
of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege pursuant to this Agreement. The
rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any
rights or remedies which any party otherwise may have at law or in equity.



     19. Headings. The headings in this Agreement are for reference purposes only and will
not in any way affect the meaning or interpretation of this Agreement.



     20. Specific Performance. The parties acknowledge and agree that any breach of the
terms of this Agreement would give rise to irreparable harm for which money damages would not be an
adequate remedy, and, accordingly, the parties agree that, in addition to any other remedies, each
will be entitled to enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy and without the necessity of
posting bond.



[Signature Page Follows]




7









 








     IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date
first written above.



	 	 	 	 	 
	 	USG CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	BERKSHIRE HATHAWAY INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



[Signature Page of Escrow Agreement]




S-1









 








	 	 	 	 	 
	 	[ESCROW AGENT] 

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



[Signature Page of Escrow Agreement]





S-2










 






Exhibit F




Existing Shareholder Rights Plan




F-1









 








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).”



2









 






	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



3









 







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]




4









 





     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 L. 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 	 



S-1









 






	 	 	 	 	 



Exhibit G




Reorganization Rights Plan




G-1










 




 

 


USG Corporation




Reorganization Rights Plan




Dated as of January 30, 2006



 

 


 










 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	1.

	 	Certain Definitions
	 	 	1	 
	2.

	 	Appointment of Rights Agent
	 	 	6	 
	3.

	 	Issue of Right Certificates
	 	 	6	 
	4.

	 	Form of Right Certificates
	 	 	8	 
	5.

	 	Countersignature and Registration
	 	 	8	 
	6.

	 	Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates
	 	 	8	 
	7.

	 	Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	9	 
	8.

	 	Cancellation and Destruction of Right Certificates
	 	 	10	 
	9.

	 	Company Covenants Concerning Securities and Rights
	 	 	11	 
	10.

	 	Record Date
	 	 	12	 
	11.

	 	Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights
	 	 	12	 
	12.

	 	Certificate of Adjusted Purchase Price or Number of Securities
	 	 	20	 
	13.

	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	20	 
	14.

	 	Fractional Rights and Fractional Securities
	 	 	23	 
	15.

	 	Rights of Action
	 	 	24	 
	16.

	 	Agreement of Rights Holders
	 	 	25	 
	17.

	 	Right Certificate Holder Not Deemed a Stockholder
	 	 	25	 
	18.

	 	Concerning the Rights Agent
	 	 	26	 
	19.

	 	Merger or Consolidation or Change of Name of Rights Agent
	 	 	26	 
	20.

	 	Duties of Rights Agent
	 	 	27	 
	21.

	 	Change of Rights Agent
	 	 	28	 
	22.

	 	Issuance of New Right Certificates
	 	 	29	 
	23.

	 	Redemption
	 	 	29	 
	24.

	 	Exchange
	 	 	30	 
	25.

	 	Notice of Certain Events
	 	 	31	 
	26.

	 	Notices
	 	 	32	 
	27.

	 	Supplements and Amendments
	 	 	32	 
	28.

	 	Successors; Certain Covenants
	 	 	33	 
	29.

	 	Benefits of This Agreement
	 	 	33	 
	30.

	 	Governing Law
	 	 	33	 
	31.

	 	Severability
	 	 	33	 






 









 






	 	 	 	 	 	 	 
	32.

	 	Descriptive Headings, Etc
	 	 	34	 
	33.

	 	Determinations and Actions by the Board
	 	 	34	 
	34.

	 	Counterparts
	 	 	34	 
	Exhibit A

	 	 	 	 	A-1	 






(ii)





 









 








REORGANIZATION RIGHTS PLAN




     This Agreement, dated as of January 30, 2006, adopted by USG Corporation, a Delaware
corporation (the “Company”), with the Person identified on the signature page hereof, as Rights
Agent (the “Rights Agent”) establishes the Company’s Reorganization Rights Plan.



RECITALS




     WHEREAS, on January 29, 2006 (the “Adoption Date”), the Board of Directors of the
Company authorized and declared a dividend distribution of one right (a “Right”) for each share of
common stock, par value $0.10 per share, of the Company (a “Common Share”) outstanding as of the
Close of Business (as hereinafter defined) on February 9, 2006 (the “Record Date”), each
Right initially representing the right to purchase one one-hundredth of a Preferred Share (as
hereinafter defined), on the terms and subject to the conditions herein set forth, and further
authorized and directed the issuance of one Right (subject to adjustment as provided herein) with
respect to each Common Share issued or delivered by the Company (whether originally issued or
delivered from the Company’s treasury) after the Record Date but prior to the earlier of the
Distribution Date (as hereinafter defined) and the Expiration Date (as hereinafter defined) or as
provided in Section 22.



     NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto
hereby agree as follows:



     1. Certain Definitions. For purposes of this Agreement, the following terms have the
meanings indicated:



     (a) “Acquiring Person” means any Person (other than the Company, any Related Person, any
Restricted Person or any Exempt Person) who or which, together with all controlled Affiliates and
Associates of such Person, is the Beneficial Owner of 5% or more of the then-outstanding Common
Shares; provided, however, that (i) any Person who would otherwise qualify as an
Acquiring Person as of the Close of Business on the Adoption Date (including any Person that would
otherwise qualify as an Acquiring Person but for being a Restricted Person on such date, or by
reason of any agreement, arrangement or understanding (whether or not in writing) or regular-way
purchase order for Common Shares that is in effect prior to the Adoption Date and confirmed or
consummated after the Adoption Date) will not be deemed to be an Acquiring Person for any purpose
of this Agreement prior to, or after such date unless and until such time as (A) such Person or any
controlled Affiliate or Associate of such Person thereafter becomes by reason of a subsequent
transaction the Beneficial Owner of additional Common Shares representing 1% or more of the Common
Shares outstanding as of the Close of Business on the Adoption Date, other than as a result of a
stock dividend, rights dividend, stock split or similar transaction effected by the Company in
which all holders of Common Shares are treated equally, or (B) any other Person who is the
Beneficial Owner of Common Shares representing 1% or more of the Common Shares outstanding as of
the Close of Business on the Adoption Date thereafter becomes a controlled Affiliate or Associate
of such Person, provided that the foregoing exclusion shall cease to apply with respect to
any Person at such time as such Person, together with all controlled Affiliates and Associates of
such Person, ceases to Beneficially Own



 









 





     5% or more of the then-outstanding Common Shares, and (ii) a Person will not be deemed to have
become an Acquiring Person solely as a result of a reduction in the number of Common Shares
outstanding unless and until such time as (A) such Person or any controlled Affiliate or Associate
of such Person thereafter becomes the Beneficial Owner of any additional Common Shares, 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 (B) any other Person who is the
Beneficial Owner of Common Shares thereafter becomes a controlled 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 Section 1(a) has become such inadvertently, and such Person divests as
promptly as practicable or agrees in writing with the Company to divest, 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 Section 1(a), then such Person shall not be deemed to be an
“Acquiring Person” for any purposes of this Agreement.



     (b) “Adoption Date” has the meaning set forth in the Recitals to this Agreement.



     (c) “Affiliate” and “Associate” will have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date of
this Agreement, and to the extent not included within the foregoing clause of this Section 1(c),
will also include, with respect to any Person, any other Person (other than a Related Person, a
Restricted Person or an Exempt Person) whose Common Shares would be deemed constructively owned by
such first Person pursuant to the provisions of Section 382 of the Internal Revenue Code of 1986,
as amended (the “Code”), or any successor provision or replacement provision, provided, however,
that a Person will not be deemed to be the Affiliate or Associate of another Person solely because
either or both Persons are or were Directors of the Company.



     (d) A Person will be deemed the “Beneficial Owner” of, and to “Beneficially Own,” any
securities:



          (i) the beneficial ownership of which such Person or any of such Person’s controlled
Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement
or understanding (whether or not in writing), or upon the exercise of conversion rights, exchange
rights, warrants, options or other rights (in each case, other than upon exercise or exchange of
the Rights); provided, however, that a Person will not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person’s controlled Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; or



          (ii) which such Person or any of such Person’s controlled Affiliates or Associates, directly
or indirectly, has or shares the right to vote or dispose of, including pursuant to any agreement,
arrangement or understanding (whether or not in writing); or



2









 





          (iii) of which any other Person is the Beneficial Owner, if such Person or any of such
Person’s controlled Affiliates or Associates has any agreement, arrangement or understanding
(whether or not in writing) with such other Person (or any of such other Person’s Affiliates or
Associates) with respect to acquiring, holding, voting or disposing of any securities of the
Company;


provided, however, that a Person will not be deemed the Beneficial Owner of, or to
Beneficially Own, any security (A) if such Person has the right to vote such security pursuant to
an agreement, arrangement or understanding (whether or not in writing) which (1) arises solely from
a revocable proxy given to such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report), or (B) if such beneficial ownership arises solely as a result of such Person’s
status as a “clearing agency,” as defined in Section 3(a)(23) of the Exchange Act; provided
further, however, that nothing in this Section 1(d) will cause a Person engaged in
business as an underwriter of securities to be the Beneficial Owner of, or to Beneficially Own, any
securities acquired through such Person’s participation in good faith in an underwriting syndicate
until the expiration of 40 calendar days after the date of such acquisition, or such later date as
the Directors of the Company may determine in any specific case. Notwithstanding anything herein
to the contrary, to the extent not within the foregoing provisions of this Section 1(d), a Person
shall be deemed the “Beneficial Owner” of and shall be deemed to “beneficially own” or have
“beneficial ownership” of, and securities which such Person would be deemed to constructively own
pursuant to Section 382 of the Code, or any successor provision or replacement provision.




     (e) “Business Day” means any day other than a Saturday, Sunday or a day on which banking
institutions in the State of New York (or such other state in which the principal office of the
Rights Agent is located) are authorized or obligated by law or executive order to close.



     (f) “Close of Business” on any given date means 5:00 p.m., New York City time, on such date;
provided, however, that if such date is not a Business Day it means 5:00 p.m., New
York City time, on the next succeeding Business Day.



     (g) “Code” has the meaning set forth in Section 1(c).



     (h) “Common Shares” when used with reference to the Company means the shares of common stock,
par value $0.10 per share, of the Company; provided, however, that if the Company
is the continuing or surviving corporation in a transaction described in Section 13(a)(ii), “Common
Shares” when used with reference to the Company means shares of the capital stock or units of the
equity interests with the greatest aggregate voting power of the Company. “Common Shares” when
used with reference to any corporation or other legal entity other than the Company, including an
Issuer, means shares of the capital stock or units of the equity interests with the greatest
aggregate voting power of such corporation or other legal entity.



     (i) “Company” means USG Corporation, a Delaware corporation.



3









 





     (j) “Distribution Date” means the earlier of: (i) the Close of Business on the tenth calendar
day following the Share Acquisition Date, or (ii) the Close of Business on the tenth Business Day
(or, unless the Distribution Date shall have previously occurred, such later date as may be
specified by the Board of Directors of the Company) after the commencement of a tender or exchange
offer by any Person (other than the Company, any Related Person, a Restricted Person or any Exempt
Person), if upon the consummation thereof such Person would be the Beneficial Owner of 5% or more
of the then-outstanding Common Shares.



     (k) “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     (l) “Exempt Person” means a Person whose Beneficial Ownership (together with all Affiliates
and Associates of such Person) of 5% of more of the then-outstanding Common Shares (but less than
15% of the then-outstanding Common Shares) will not, as determined by the Company’s Board of
Directors in its sole discretion pursuant to a duly adopted resolution, jeopardize or endanger the
availability to the Company of any income tax benefit, provided, however, that such a Person will
cease to be an Exempt Person if the Board makes a contrary determination with respect to the effect
of such Person’s Beneficial Ownership (together with all Affiliates and Associates of such Person)
regardless of the reason therefor.



     (m) “Expiration Date” means the earliest of (i) the later of (A) the Close of Business on
December 31, 2006, so long as as of such time (x) no Person is an Acquiring Person and (y) no
tender offer or exchange offer has been commenced that if consummated would cause a Distribution
Date to occur and (B) the Close of Business on the 30th calendar day following the date
of effectiveness of the Plan of Reorganization, provided, that such effectiveness is not
stayed or the transactions provided therein enjoined or restrained, and so long as as of such time
(x) the Fair Act has not been enacted and made law, (y) no Person is an Acquiring Person, and (z)
no tender offer or exchange offer has been commenced that if consummated would cause a Distribution
Date to occur, (ii) the time at which the Rights are redeemed as provided in Section 23, and (iii)
the time at which all exercisable Rights are exchanged as provided in Section 24.



     (n) “Flip-in Event” means any event described in clauses (A), (B) or (C) of Section 11(a)(ii).



     (o) “Flip-over Event” means any event described in clauses (i), (ii) or (iii) of Section
13(a).



     (p) “Investor” means Berkshire Hathaway Inc., a Delaware corporation.



     (q) “Issuer” has the meaning set forth in Section 13(b).



     (r) “Nasdaq” means The Nasdaq Stock Market.



     (s) “Person” means any individual, firm, corporation or other legal entity, and includes any
successor (by merger or otherwise) of such entity.



4









 





     (t) “Plan of Reorganization” means the Plan of Reorganization approved by the U.S. Bankruptcy
Court administering the Company’s reorganization proceedings under the United States Bankruptcy
Code, 11. U.S.C. §§ 101, et seq.



     (u) “Preferred Shares” means shares of Junior Participating Preferred Stock, Series D, par
value $1.00 per share, of the Company.



     (v) “Purchase Price” means initially $200.00 per one one-hundredth of a Preferred Share,
subject to adjustment from time to time as provided in this Agreement.



     (w) “Record Date” has the meaning set forth in the Recitals to this Agreement.



     (x) “Redemption Price” means $0.001 per Right, subject to adjustment by resolution of the
Board of Directors of the Company to reflect any stock split, stock dividend or similar transaction
occurring after the Record Date.



     (y) “Related Person” means (i) any Subsidiary of the Company or (ii) any employee benefit or
stock ownership plan of the Company or of any Subsidiary of the Company or any entity holding
Common Shares for or pursuant to the terms of any such plan.



     (z) “Restricted Person” means, during the Standstill Period (as defined in the Shareholder’s
Agreement, dated as of January 30, 2006, as it may be amended from time to time (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 (as defined in the
Shareholder’s Agreement), 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 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 day following the Investor’s receipt of the
Company’s written notice of such breach.



     (aa) “Right” has the meaning set forth in the Recitals to this Agreement.



     (bb) “Right Certificates” means certificates evidencing the Rights, in substantially the form
attached as Exhibit A.



     (cc) “Rights Agent” means the Person designated as such on the signature page, unless and
until a successor Rights Agent has become such pursuant to the terms of this Agreement, and
thereafter, “Rights Agent” means such successor Rights Agent.



     (dd) “Securities Act” means the Securities Act of 1933, as amended.



5









 





     (ee) “Settlement Term Sheet” means the Settlement Term Sheet, dated as of January 24, 2006, by
and among the Company and the other parties thereto, as it may be amended from time to time.



     (ff) “Share Acquisition Date” means the first date of public announcement by the Company (by
press release, filing made with the Securities and Exchange Commission or otherwise) that an
Acquiring Person has become such.



     (gg) “Subsidiary” when used with reference to any Person means any corporation or other legal
entity of which a majority of the voting power of the voting equity securities or equity interests
is owned, directly or indirectly, by such Person; provided, however, that for
purposes of Section 13(b), “Subsidiary” when used with reference to any Person means any
corporation or other legal entity of which at least 20% of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly, by such Person.



     (hh) “Trading Day” means any day on which the principal national securities exchange on which
the Common Shares are listed or admitted to trading is open for the transaction of business or, if
the Common Shares are not listed or admitted to trading on any national securities exchange, a
Business Day.



     (ii) “Triggering Event” means any Flip-in Event or Flip-over Event.



     2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act
as agent for the Company and the holders of the Rights (who, in accordance with Section 3, will
also be, prior to the Distribution Date, the holders of the Common Shares) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such appointment and hereby
certifies that it complies with the requirements of the New York Stock Exchange governing transfer
agents and registrars. The Company may from time to time act as Co-Rights Agent or appoint such
Co-Rights Agents as it may deem necessary or desirable. Any actions which may be taken by the
Rights Agent pursuant to the terms of this Agreement may be taken by any such Co-Rights Agent. To
the extent that any Co-Rights Agent takes any action pursuant to this Agreement, such Co-Rights
Agent will be entitled to all of the rights and protections of, and subject to all of the
applicable duties and obligations imposed upon, the Rights Agent pursuant to the terms of this
Agreement.



     3. Issue of Right Certificates. (a) Until the Distribution Date, (i) the Rights will
be evidenced by the certificates representing Common Shares registered in the names of the record
holders thereof (which certificates representing Common Shares will also be deemed to be Right
Certificates), (ii) the Rights will be transferable only in connection with the transfer of the
underlying Common Shares, and (iii) the surrender for transfer of any certificates evidencing
Common Shares in respect of which Rights have been issued will also constitute the transfer of the
Rights associated with the Common Shares evidenced by such certificates.



     (b) Rights will be issued by the Company in respect of all Common Shares (other than Common
Shares issued upon the exercise or exchange of any Right) issued or delivered by the Company
(whether originally issued or delivered from the Company’s treasury) after the Record Date but
prior to the earlier of the Distribution Date and the Expiration Date. Certificates



6









 







evidencing such Common Shares will have stamped on, impressed on, printed on, written on, or
otherwise affixed to them the following legend or such similar legend as the Company may deem
appropriate and as is not inconsistent with the provisions of this Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or transaction reporting system on which the Common Shares
may from time to time be listed or quoted, or to conform to usage:




This Certificate also evidences and entitles the holder hereof to certain Rights as
set forth in a Reorganization Rights Plan, dated as of January 30, 2006 (the “Rights
Agreement”), adopted by USG Corporation on January 29, 2006, the terms of which are
hereby incorporated herein by reference and a copy of which is on file at the
principal executive offices of USG Corporation. The Rights are not exercisable
prior to the occurrence of certain events specified in the Rights Agreement. Under
certain circumstances, as set forth in the Rights Agreement, such Rights may be
redeemed, may be exchanged, may expire, may be amended, or may be evidenced by
separate certificates and no longer be evidenced by this Certificate. USG
Corporation will mail to the holder of this Certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without charge promptly after
receipt of a written request therefor. Under certain circumstances as set forth in
the Rights Agreement, Rights that are or were beneficially owned by an Acquiring
Person or any Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement) may become null and void.



     (c) Any Right Certificate issued pursuant to this Section 3 that represents Rights
beneficially owned by an Acquiring Person or any Associate or Affiliate thereof and any Right
Certificate issued at any time upon the transfer of any Rights to an Acquiring Person or any
Associate or Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate
and any Right Certificate issued pursuant to Section 6 or 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this sentence, shall be
subject to and contain the following legend or such similar legend as the Company may deem
appropriate and as is not inconsistent with the provisions of this Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to
conform to usage:




The Rights represented by this Right Certificate are or were beneficially owned by a
Person who was an Acquiring Person or an Affiliate or an Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement). This Right Certificate
and the Rights represented hereby may become null and void in the circumstances
specified in Section 11(a)(ii) or Section 13 of the Rights Agreement.



     (d) As promptly as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send), by first class, insured, postage prepaid mail, to each
record holder of Common Shares as of the Close of Business on the Distribution Date, at the address
of such holder shown on the records of the Company, a Right Certificate evidencing




7










 





one Right for each Common Share so held, subject to adjustment as provided herein. As of and
after the Distribution Date, the Rights will be evidenced solely by such Right Certificates.




     (e) In the event that the Company purchases or otherwise acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such Common Shares will
be deemed canceled and retired so that the Company will not be entitled to exercise any Rights
associated with the Common Shares so purchased or acquired.



     4. Form of Right Certificates. The Right Certificates (and the form of election to
purchase and the form of assignment to be printed on the reverse thereof) will be substantially in
the form attached as Exhibit A with such changes and marks of identification or
designation, and such legends, summaries or endorsements printed thereon, as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange or transaction reporting system on which the
Rights may from time to time be listed or quoted, or to conform to usage. Subject to the
provisions of Section 22, the Right Certificates, whenever issued, on their face will entitle the
holders thereof to purchase such number of one one-hundredths of a Preferred Share as are set forth
therein at the Purchase Price set forth therein, but the Purchase Price, the number and kind of
securities issuable upon exercise of each Right and the number of Rights outstanding will be
subject to adjustment as provided herein.



     5. Countersignature and Registration. (a) The Right Certificates will be executed on
behalf of the Company by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and will have affixed thereto the Company’s seal or a facsimile
thereof which will be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates will be manually countersigned by the
Rights Agent and will not be valid for any purpose unless so countersigned. In case any officer of
the Company who signed any of the Right Certificates ceases to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery by the Company, such Right
Certificates, nevertheless, may be countersigned by the Rights Agent, and issued and delivered by
the Company with the same force and effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf
of the Company by any person who, at the actual date of the execution of such Right Certificate, is
a proper officer of the Company to sign such Right Certificate, although at the date of the
execution of this Agreement any such person was not such officer.



     (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at the
principal office of the Rights Agent designated for such purpose and at such other offices as may
be required to comply with any applicable law or with any rule or regulation made pursuant thereto
or with any rule or regulation of any stock exchange or any transaction reporting system on which
the Rights may from time to time be listed or quoted, books for registration and transfer of the
Right Certificates issued hereunder. Such books will show the names and addresses of the
respective holders of the Right Certificates, the number of Rights evidenced on its face by each of
the Right Certificates and the date of each of the Right Certificates.



8









 





     6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates. (a) Subject to the provisions of Sections 7(d)
and 14, at any time after the Close of Business on the Distribution Date and prior to the
Expiration Date, any Right Certificate or Right Certificates representing exercisable Rights may be
transferred, split up, combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths of a Preferred
Share (or other securities, as the case may be) as the Right Certificate or Right Certificates
surrendered then entitled such holder (or former holder in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split up, combine or exchange any such Right
Certificate or Rights Certificates must make such request in a writing delivered to the Rights
Agent and must surrender the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent designated for such purpose.
Thereupon or as promptly as practicable thereafter, subject to the provisions of Sections 7(d) and
14, the Company will prepare, execute and deliver to the Rights Agent, and the Rights Agent will
countersign and deliver, a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.



     (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Right Certificate and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them, and, if requested
by the Company, reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will prepare, execute and deliver a new Right Certificate of
like tenor to the Rights Agent and the Rights Agent will countersign and deliver such new Right
Certificate to the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.



     7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) The registered
holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date and prior to the
Expiration 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 office or offices of the Rights
Agent designated for such purpose, together with payment in cash, in lawful money of the United
States of America by certified check or bank draft payable to the order of the Company, equal to
the sum of (i) the exercise price for the total number of securities as to which such surrendered
Rights are exercised and (ii) an amount equal to any applicable transfer tax required to be paid by
the holder of such Right Certificate in accordance with the provisions of Section 9(d).



     (b) Upon receipt of a Right Certificate representing exercisable Rights with the form of
election to purchase duly executed, accompanied by payment as described above, the Rights Agent
will promptly (i) requisition from any transfer agent of the Preferred Shares (or make available,
if the Rights Agent is the transfer agent) certificates representing the number of one
one-hundredths of a Preferred Share to be purchased (and the Company hereby irrevocably



9









 







authorizes and directs its transfer agent to comply with all such requests), or, if the
Company elects to deposit Preferred Shares issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts representing such
number of one one-hundredths of a Preferred Share as are to be purchased (and the Company hereby
irrevocably authorizes and directs such depositary agent to comply with all such requests), (ii)
after receipt of such certificates (or depositary receipts, as the case may be), cause the same to
be delivered to or upon the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder, (iii) when appropriate, requisition from
the Company or any transfer agent therefor (or make available, if the Rights Agent is the transfer
agent) certificates representing the number of equivalent common shares to be issued in lieu of the
issuance of Common Shares in accordance with the provisions of Section 11(a)(iii), (iv) when
appropriate, after receipt of such certificates, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such name or names as may
be designated by such holder, (v) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of the issuance of fractional shares in accordance with the provisions of
Section 14 or in lieu of the issuance of Common Shares in accordance with the provisions of Section
11(a)(iii), (vi) when appropriate, after receipt, deliver such cash to or upon the order of the
registered holder of such Right Certificate, and (vii) when appropriate, deliver any due bill or
other instrument provided to the Rights Agent by the Company for delivery to the registered holder
of such Right Certificate as provided by Section 11(l).



     (c) In case the registered holder of any Right Certificate exercises less than all the Rights
evidenced thereby, the Company will prepare, execute and deliver a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised and the Rights Agent will countersign and
deliver such new Right Certificate to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14.



     (d) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company will be obligated to undertake any action with respect to any purported transfer, split
up, combination or exchange of any Right Certificate pursuant to Section 6 or exercise of a Right
Certificate as set forth in this Section 7 unless the registered holder of such Right Certificate
has (i) completed and signed the certificate following the form of assignment or the form of
election to purchase, as applicable, set forth on the reverse side of the Right Certificate
surrendered for such transfer, split up, combination, exchange or exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company may reasonably request.



     8. Cancellation and Destruction of Right Certificates. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or exchange will, if
surrendered to the Company or to any of its stock transfer agents, be delivered to the Rights Agent
for cancellation or in canceled form, or, if surrendered to the Rights Agent, will be canceled by
it, and no Right Certificates will be issued in lieu thereof except as expressly permitted by the
provisions of this Agreement. The Company will deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent will so cancel and retire, any other Right Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent will deliver
all canceled Right Certificates to the Company, or will, at the written



10









 







request of the Company, destroy such canceled Right Certificates, and in such case will
deliver a certificate of destruction thereof to the Company.



     9. Company Covenants Concerning Securities and Rights. The Company covenants and
agrees that:



     (a) It will cause to be reserved and kept available out of its authorized and unissued
Preferred Shares or any Preferred Shares held in its treasury, a number of Preferred Shares that
will be sufficient to permit the exercise in full of all outstanding Rights in accordance with
Section 7.



     (b) So long as the Preferred Shares (and, following the occurrence of a Triggering Event,
Common Shares and/or other securities) issuable upon the exercise of the Rights may be listed on a
national securities exchange, or quoted on Nasdaq, it will endeavor to cause, from and after such
time as the Rights become exercisable, all securities reserved for issuance upon the exercise of
Rights to be listed on such exchange, or quoted on Nasdaq, upon official notice of issuance upon
such exercise.



     (c) It will take all such action as may be necessary to ensure that all Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares and/or other securities) delivered
upon exercise of Rights, at the time of delivery of the certificates for such securities, will be
(subject to payment of the Purchase Price) duly authorized, validly issued, fully paid and
nonassessable securities.



     (d) It will pay when due and payable any and all federal and state transfer taxes and charges
that may be payable in respect of the issuance or delivery of the Right Certificates and of any
certificates representing securities issued upon the exercise of Rights; provided,
however, that the Company will not be required to pay any transfer tax or charge which may
be payable in respect of any transfer or delivery of Right Certificates to a person other than, or
the issuance or delivery of certificates or depositary receipts representing securities issued upon
the exercise of Rights in a name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise, or to issue or deliver any certificates or depositary
receipts representing securities issued upon the exercise of any Rights until any such tax or
charge has been paid (any such tax or charge being payable by the holder of such Right Certificate
at the time of surrender) or until it has been established to the Company’s reasonable satisfaction
that no such tax is due.



     (e) It will use its best efforts (i) to file on an appropriate form, as soon as practicable
following the later of the Share Acquisition Date and the Distribution Date, a registration
statement under the Securities Act with respect to the securities issuable upon exercise of the
Rights, (ii) to cause such registration statement to become effective as soon as practicable after
such filing, and (iii) to cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the earlier of (A) the date as
of which the Rights are no longer exercisable for such securities and (B) the Expiration Date. The
Company will also take such action as may be appropriate under, or to ensure compliance with, the
securities or “blue sky” laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time after the date set forth in



11









 







clause (i) of the first sentence of this Section 9(e), the exercisability of the Rights in
order to prepare and file such registration statement and to permit it to become effective. Upon
any such suspension, the Company will issue a public announcement stating that the exercisability
of the Rights has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company determines that a registration
statement should be filed under the Securities Act or any state securities laws following the
Distribution Date, the Company may temporarily suspend the exercisability of the Rights in each
relevant jurisdiction until such time as a registration statement has been declared effective and,
upon any such suspension, the Company will issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. Notwithstanding anything in this Agreement to
the contrary, the Rights will not be exercisable in any jurisdiction if the requisite registration
or qualification in such jurisdiction has not been effected or the exercise of the Rights is not
permitted under applicable law.



     (f) Notwithstanding anything in this Agreement to the contrary, after the later of the Share
Acquisition Date and the Distribution Date the Company will not take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably foreseeable that such action
will eliminate or otherwise diminish the benefits intended to be afforded by the Rights.



     (g) In the event that the Company is obligated to issue other securities of the Company and/or
pay cash pursuant to Section 11, 13, 14 or 24 it will make all arrangements necessary so that such
other securities and/or cash are available for distribution by the Rights Agent, if and when
appropriate.



     10. Record Date. Each Person in whose name any certificate representing Preferred
Shares (or Common Shares and/or other securities, as the case may be) is issued upon the exercise
of Rights will for all purposes be deemed to have become the holder of record of the Preferred
Shares (or Common Shares and/or other securities, as the case may be) represented thereby on, and
such certificate will be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and all applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is a date upon which the
transfer books of the Company for the Preferred Shares (or Common Shares and/or other securities,
as the case may be) are closed, such Person will be deemed to have become the record holder of such
securities on, and such certificate will be dated, the next succeeding Business Day on which the
transfer books of the Company for the Preferred Shares (or Common Shares and/or other securities,
as the case may be) are open. Prior to the exercise of the Rights evidenced thereby, the holder of
a Right Certificate will not be entitled to any rights of a holder of any security for which the
Rights are or may become exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions, or to exercise any preemptive rights, and will not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.



     11. Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights.
The Purchase Price, the number and kind of securities issuable upon exercise of each



12









 







Right and the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.



     (a) (i) In the event that the Company at any time after the Record Date (A) declares a
dividend on the Preferred Shares payable in Preferred Shares, (B) subdivides the outstanding
Preferred Shares, (C) combines the outstanding Preferred Shares into a smaller number of Preferred
Shares, or (D) issues any shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise provided in this Section
11(a), the Purchase Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification and/or the number and/or kind
of shares of capital stock issuable on such date upon exercise of a Right, will be proportionately
adjusted so that the holder of any Right exercised after such time is entitled to receive upon
payment of the Purchase Price then in effect the aggregate number and kind of shares of capital
stock which, if such Right had been exercised immediately prior to such date and at a time when the
transfer books of the Company for the Preferred Shares were open, the holder of such Right would
have owned upon such exercise (and, in the case of a reclassification, would have retained after
giving effect to such reclassification) and would have been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that in
no event shall the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock issuable upon exercise of one Right. If an
event occurs which would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) or Section 13, the adjustment provided for in this Section 11(a)(i) will be in addition
to, and will be made prior to, any adjustment required pursuant to Section 11(a)(ii) or Section 13.



          (ii) Subject to the provisions of Section 24, if:




     (A) any Person becomes an Acquiring Person; or



     (B) any Acquiring Person or any Affiliate or Associate of any Acquiring Person, directly or
indirectly, (1) merges into the Company or otherwise combines with the Company and the Company is
the continuing or surviving corporation of such merger or combination (other than in a transaction
subject to Section 13), (2) merges or otherwise combines with any Subsidiary of the Company, (3) in
one or more transactions (otherwise than in connection with the exercise, exchange or conversion of
securities exercisable or exchangeable for or convertible into shares of any class of capital stock
of the Company or any of its Subsidiaries) transfers cash, securities or any other property to the
Company or any of its Subsidiaries in exchange (in whole or in part) for shares of any class of
capital stock of the Company or any of its Subsidiaries or for securities exercisable or
exchangeable for or convertible into shares of any class of capital stock of the Company or any of
its Subsidiaries, or otherwise obtains from the Company or any of its Subsidiaries, with or without
consideration, any additional shares of any class of capital stock of the Company or any of its
Subsidiaries or securities exercisable or exchangeable for or convertible into shares of any class
of capital stock of the Company or any of its Subsidiaries (otherwise than as part of a pro rata
distribution to all holders of shares of any class of capital stock of the Company, or any of its
Subsidiaries), (4) sells, purchases, leases, exchanges, mortgages, pledges, transfers or otherwise
disposes (in one or more transactions) to, from, with



13









 







or of, as the case may be, the Company or any of its Subsidiaries (otherwise than in a
transaction subject to Section 13), any property, including securities, on terms and conditions
less favorable to the Company than the Company would be able to obtain in an arm’s-length
transaction with an unaffiliated third party, (5) receives any compensation from the Company or any
of its Subsidiaries other than compensation as a director or a regular full-time employee, in
either case at rates consistent with the Company’s (or its Subsidiaries’) past practices, or (6)
receives the benefit, directly or indirectly (except proportionately as a stockholder), of any
loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its Subsidiaries; or



     (C) during such time as there is an Acquiring Person, there is any reclassification of
securities of the Company (including any reverse stock split), or any recapitalization of the
Company, or any merger or consolidation of the Company with any of its Subsidiaries, or any other
transaction or series of transactions involving the Company or any of its Subsidiaries (whether or
not with or into or otherwise involving an Acquiring Person), other than a transaction subject to
Section 13, which has the effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity securities of the Company or
any of its Subsidiaries, or of securities exercisable or exchangeable for or convertible into
equity securities of the Company or any of its Subsidiaries, of which an Acquiring Person, or any
Affiliate or Associate of any Acquiring Person, is the Beneficial Owner;


then, and in each such case, from and after the latest of the Distribution Date, the Share
Acquisition Date and the date of the occurrence of such Flip-in Event, proper provision
will be made so that each holder of a Right, except as provided below, will thereafter have
the right to receive, upon exercise thereof in accordance with the terms of this Agreement
at an exercise price per Right equal to the product of the then-current Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the date of the occurrence of such Flip-in Event (or, if
any other Flip-in Event shall have previously occurred, the product of the then-current
Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to the date of the first occurrence of a
Flip-in Event), in lieu of Preferred Shares, such number of Common Shares as equals the
result obtained by (x) multiplying the then-current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to
the date of the occurrence of such Flip-in Event (or, if any other Flip-in Event shall have
previously occurred, multiplying the then-current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to
the date of the first occurrence of a Flip-in Event), and dividing that product by (y) 50%
of the current per share market price of the Common Shares (determined pursuant to Section
11(d)) on the date of the occurrence of such Flip-in Event. Notwithstanding anything in
this Agreement to the contrary, from and after the first occurrence of a Flip-in Event, any
Rights that are Beneficially Owned by (A) any Acquiring Person (or any Affiliate or
Associate of any Acquiring Person), (B) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the occurrence of a Flip-in Event,
or (C) a transferee of any Acquiring


14









 






Person (or any such Affiliate or Associate) who became a transferee prior to or
concurrently with the occurrence of a Flip-in Event pursuant to either (1) a transfer from
an Acquiring Person to holders of its equity securities or to any Person with whom it has
any continuing agreement, arrangement or understanding regarding the transferred Rights or
(2) a transfer which the Directors of the Company have determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding the provisions of
this Section 11(a)(ii), and subsequent transferees of any of such Persons, will be void
without any further action and any holder of such Rights will thereafter have no rights
whatsoever with respect to such Rights under any provision of this Agreement. The Company
will use all reasonable efforts to ensure that the provisions of this Section 11(a)(ii) are
complied with, but will have no liability to any holder of Right Certificates or any other
Person as a result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. Upon the occurrence of a
Flip-in Event, no Right Certificate that represents Rights that are or have become void
pursuant to the provisions of this Section 11(a)(ii) will thereafter be issued pursuant to
Section 3 or Section 6, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of this Section
11(a)(ii) will be canceled. Upon the occurrence of a Flip-over
 Event, any Rights that
shall not have been previously exercised pursuant to this Section 11(a)(ii) shall
thereafter be exercisable only pursuant to Section 13 and not pursuant to this Section
11(a)(ii).




          (iii) Upon the occurrence of a Flip-in Event, if there are not sufficient Common Shares
authorized but unissued or issued but not outstanding to permit the issuance of all the Common
Shares issuable in accordance with Section 11(a)(ii) upon the exercise of a Right, the Board of
Directors of the Company will use its best efforts promptly to authorize and, subject to the
provisions of Section 9(e), make available for issuance additional Common Shares or other equity
securities of the Company having equivalent voting rights and an equivalent value (as determined in
good faith by the Board of Directors of the Company) to the Common Shares (for purposes of this
Section 11(a)(iii), “equivalent common shares”). In the event that equivalent common shares are so
authorized, upon the exercise of a Right in accordance with the provisions of Section 7, the
registered holder will be entitled to receive (A) Common Shares, to the extent any are available,
and (B) a number of equivalent common shares, which the Board of Directors of the Company has
determined in good faith to have a value equivalent to the excess of (x) the aggregate current per
share market value on the date of the occurrence of the most recent Flip-in Event of all the Common
Shares issuable in accordance with Section 11(a)(ii) upon the exercise of a Right (the “Exercise
Value”) over (y) the aggregate current per share market value on the date of the occurrence of the
most recent Flip-in Event of any Common Shares available for issuance upon the exercise of such
Right; provided, however, that if at any time after 90 calendar days after the
latest of the Share Acquisition Date, the Distribution Date and the date of the occurrence of the
most recent Flip-in Event, there are not sufficient Common Shares and/or equivalent common shares
available for issuance upon the exercise of a Right, then the Company will be obligated to deliver,
upon the surrender of such Right and without requiring payment of the Purchase Price, Common Shares
(to the extent available), equivalent common shares (to the extent available) and then cash (to the
extent permitted by applicable law and any agreements or instruments to which the Company is a
party in effect immediately prior

15









 








to the Share Acquisition Date), which securities and cash have an aggregate value equal to the
excess of (1) the Exercise Value over (2) the product of the then-current Purchase Price multiplied
by the number of one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the occurrence of the most recent Flip-in Event (or, if any other
Flip-in Event shall have previously occurred, the product of the then-current Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share for which a Right would have
been exercisable immediately prior to the date of the occurrence of such Flip-in Event if no other
Flip-in Event had previously occurred). To the extent that any legal or contractual restrictions
prevent the Company from paying the full amount of cash payable in accordance with the foregoing
sentence, the Company will pay to holders of the Rights as to which such payments are being made
all amounts which are not then restricted on a pro rata basis and will continue to make payments on
a pro rata basis as promptly as funds become available until the full amount due to each such
Rights holder has been paid.




     (b) In the event that the Company fixes a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred Shares (or securities
having equivalent rights, privileges and preferences as the Preferred Shares (for purposes of this
Section 11(b), “equivalent preferred shares”)) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent preferred share (or having
a conversion price per share, if a security convertible into Preferred Shares or equivalent
preferred shares) less than the current per share market price of the Preferred Shares (determined
pursuant to Section 11(d)) on such record date, the Purchase Price to be in effect after such
record date will be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which is the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the aggregate offering
price of the total number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so to be offered)
would purchase at such current per share market price and the denominator of which is the number of
Preferred Shares outstanding on such record date plus the number of additional Preferred Shares
and/or equivalent preferred shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock issuable upon exercise of one
Right. In case such subscription price may be paid in a consideration part or all of which is in a
form other than cash, the value of such consideration will be as determined in good faith by the
Board of Directors of the Company, whose determination will be described in a statement filed with
the Rights Agent. Preferred Shares owned by or held for the account of the Company will not be
deemed outstanding for the purpose of any such computation. Such adjustment will be made
successively whenever such a record date is fixed, and in the event that such rights, options or
warrants are not so issued, the Purchase Price will be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.



     (c) In the event that the Company fixes a record date for the making of a distribution to all
holders of Preferred Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation) of



16









 







evidences of indebtedness, cash (other than a regular periodic cash dividend), assets, stock
(other than a dividend payable in Preferred Shares) or subscription rights, options or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in effect after such
record date will be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which is the current per share market price of the
Preferred Shares (as determined pursuant to Section 11(d)) on such record date or, if earlier, the
date on which Preferred Shares begin to trade on an ex-dividend or when issued basis for such
distribution, less the fair market value (as determined in good faith by the Board of Directors of
the Company, whose determination will be described in a statement filed with the Rights Agent) of
the portion of the evidences of indebtedness, cash, assets or stock so to be distributed or of such
subscription rights, options or warrants applicable to one Preferred Share, and the denominator of
which is such current per share market price of the Preferred Shares; provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock issuable upon exercise of one
Right. Such adjustments will be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price will again be adjusted to be the
Purchase Price which would then be in effect if such record date had not been fixed.



     (d) (i) For the purpose of any computation hereunder, the “current per share market price” of
Common Shares on any date will be deemed to be the average of the daily closing prices per share of
such Common Shares for the 30 consecutive Trading Days immediately prior to such date;
provided, however, that in the event that the current per share market price of the
Common Shares is determined during a period following the announcement by the issuer of such Common
Shares of (A) a dividend or distribution on such Common Shares payable in such Common Shares or
securities convertible into such Common Shares (other than the Rights) or (B) any subdivision,
combination or reclassification of such Common Shares, and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the current per share
market price will be appropriately adjusted to take into account ex-dividend trading or to reflect
the current per share market price per Common Share equivalent. The closing price for each day
will be the last sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on the New York Stock Exchange or, if the Common Shares are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national securities exchange on
which the Common Shares are listed or admitted to trading or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter market, as
reported by Nasdaq or such other system then in use, or, if on any such date the Common Shares are
not quoted by any such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Common Shares selected by the Board of
Directors of the Company. If the Common Shares are not publicly held or not so listed or traded,
or are not the subject of available bid and asked quotes, “current per share market price” will
mean the fair value per share as determined in good



17









 







faith by the Board of Directors of the Company, whose determination will be described in a
statement filed with the Rights Agent.



          (ii) For the purpose of any computation hereunder, the “current per share market price” of the
Preferred Shares will be determined in the same manner as set forth above for Common Shares in
Section 11(d)(i), other than the last sentence thereof. If the current per share market price of
the Preferred Shares cannot be determined in the manner provided above, the “current per share
market price” of the Preferred Shares will be conclusively deemed to be an amount equal to the
current per share market price of the Common Shares multiplied by one hundred (as such number may
be appropriately adjusted to reflect events such as stock splits, stock dividends,
recapitalizations or similar transactions relating to the Common Shares occurring after the date of
this Agreement). If neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, or the subject of available bid and asked quotes, “current per share market
price” of the Preferred Shares will mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination will be described in a statement filed
with the Rights Agent. For all purposes of this Agreement, the current per share market price of
one one-hundredth of a Preferred Share will be equal to the current per share market price of one
Preferred Share divided by one hundred.




     (e) Except as set forth below, no adjustment in the Purchase Price will be required unless
such adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section 11(e) are
not required to be made will be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 will be made to the nearest cent or to the
nearest one one-millionth of a Preferred Share or one ten-thousandth of a Common Share or other
security, as the case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 will be made no later than the earlier of (i) three years
from the date of the transaction which requires such adjustment and (ii) the Expiration Date.



     (f) If as a result of an adjustment made pursuant to Section 11(a), the holder of any Right
thereafter exercised becomes entitled to receive any securities of the Company other than Preferred
Shares, thereafter the number and/or kind of such other securities so receivable upon exercise of
any Right (and/or the Purchase Price in respect thereof) will be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to
the Preferred Shares (and the Purchase Price in respect thereof) contained in this Section 11, and
the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares (and the
Purchase Price in respect thereof) will apply on like terms to any such other securities (and the
Purchase Price in respect thereof).



     (g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder will evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-hundredths of a Preferred Share issuable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.



     (h) Unless the Company has exercised its election as provided in Section 11(i), upon each
adjustment of the Purchase Price pursuant to Section 11(b) or Section 11(c), each Right outstanding
immediately prior to the making of such adjustment will thereafter evidence the right



18









 







to purchase, at the adjusted Purchase Price, that number of one one-hundredths of a Preferred
Share (calculated to the nearest one one-millionth of a Preferred Share) obtained by (i)
multiplying (x) the number of one one-hundredths of a Preferred Share issuable upon exercise of a
Right immediately prior to such adjustment of the Purchase Price by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.



     (i) The Company may elect, on or after the date of any adjustment of the Purchase Price, to
adjust the number of Rights in substitution for any adjustment in the number of one one-hundredths
of a Preferred Share issuable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights will be exercisable for the number of one one-hundredths of
a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights will become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company will make a public announcement of
its election to adjust the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. Such record date may be the date on
which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, will be at least 10 calendar days later than the date of the public announcement. If
Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company will, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing, subject to the
provisions of Section 14, the additional Rights to which such holders are entitled as a result of
such adjustment, or, at the option of the Company, will cause to be distributed to such holders of
record in substitution and replacement for the Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof if required by the Company, new Right Certificates
evidencing all the Rights to which such holders are entitled after such adjustment. Right
Certificates so to be distributed will be issued, executed, and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and
will be registered in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.



     (j) Without respect to any adjustment or change in the Purchase Price and/or the number and/or
kind of securities issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the number and kind of securities
which were expressed in the initial Right Certificate issued hereunder.



     (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
one one-hundredth of the then par value, if any, of the Preferred Shares or below the then par
value, if any, of any other securities of the Company issuable upon exercise of the Rights, the
Company will take any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and nonassessable Preferred Shares
or such other securities, as the case may be, at such adjusted Purchase Price.



     (l) In any case in which this Section 11 otherwise requires that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may



19









 







elect to defer until the occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of Preferred Shares or other securities of the Company,
if any, issuable upon such exercise over and above the number of Preferred Shares or other
securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company delivers to
such holder a due bill or other appropriate instrument evidencing such holder’s right to receive
such additional Preferred Shares or other securities upon the occurrence of the event requiring
such adjustment.



     (m) Notwithstanding anything in this Agreement to the contrary, the Company will be entitled
to make such reductions in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that in its good faith judgment the Board of Directors of
the Company determines to be advisable in order that any (i) consolidation or subdivision of the
Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at less than the current per
share market price therefor, (iii) issuance wholly for cash of Preferred Shares or securities which
by their terms are convertible into or exchangeable for Preferred Shares, (iv) stock dividends, or
(v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Shares is not taxable to such stockholders.



     (n) Notwithstanding anything in this Agreement to the contrary, in the event that the Company
at any time after the Record Date prior to the Distribution Date (i) pays a dividend on the
outstanding Common Shares payable in Common Shares, (ii) subdivides the outstanding Common Shares,
(iii) combines the outstanding Common Shares into a smaller number of shares, or (iv) issues any
shares of its capital stock in a reclassification of the outstanding Common Shares (including any
such reclassification in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), the number of Rights associated with each Common Share then
outstanding, or issued or delivered thereafter but prior to the Distribution Date, will be
proportionately adjusted so that the number of Rights thereafter associated with each Common Share
following any such event equals the result obtained by multiplying the number of Rights associated
with each Common Share immediately prior to such event by a fraction the numerator of which is the
total number of Common Shares outstanding immediately prior to the occurrence of the event and the
denominator of which is the total number of Common Shares outstanding immediately following the
occurrence of such event. The adjustments provided for in this Section 11(n) will be made
successively whenever such a dividend is paid or such a subdivision, combination or
reclassification is effected.



     12. Certificate of Adjusted Purchase Price or Number of Securities. Whenever an
adjustment is made as provided in Section 11 or Section 13, the Company will promptly (a) prepare a
certificate setting forth such adjustment and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the Preferred Shares
and the Common Shares a copy of such certificate, and (c) if such adjustment is made after the
Distribution Date, mail a brief summary of such adjustment to each holder of a Right Certificate in
accordance with Section 26.



     13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. (a) In the
event that:



20









 





          (i) at any time after a Person has become an Acquiring Person, the Company consolidates with,
or merges with or into, any other Person and the Company is not the continuing or surviving
corporation of such consolidation or merger; or




          (ii) at any time after a Person has become an Acquiring Person, any Person consolidates with
the Company, or merges with or into the Company, and the Company is the continuing or surviving
corporation of such merger or consolidation and, in connection with such merger or consolidation,
all or part of the Common Shares is changed into or exchanged for stock or other securities of any
other Person or cash or any other property; or




          (iii) at any time after a Person has become an Acquiring Person, the Company, directly or
indirectly, sells or otherwise transfers (or one or more of its Subsidiaries sells or otherwise
transfers), in one or more transactions, assets or earning power (including without limitation
securities creating any obligation on the part of the Company and/or any of its Subsidiaries)
representing in the aggregate more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons other than the Company or one or more of
its wholly owned Subsidiaries;



then, and in each such case, proper provision will be made so that from and after the latest of the
Share Acquisition Date, the Distribution Date and the date of the occurrence of such Flip-over
Event (A) each holder of a Right thereafter has the right to receive, upon the exercise thereof in
accordance with the terms of this Agreement at an exercise price per Right equal to the product of
the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share
for which a Right was exercisable immediately prior to the Share Acquisition Date, such number of
duly authorized, validly issued, fully paid, nonassessable and freely tradeable Common Shares of
the Issuer, free and clear of any liens, encumbrances and other adverse claims and not subject to
any rights of call or first refusal, as equals the result obtained by (x) multiplying the
then-current Purchase Price by the number of one one-hundredths of a Preferred Share for which a
Right is exercisable immediately prior to the Share Acquisition Date and dividing that product by
(y) 50% of the current per share market price of the Common Shares of the Issuer (determined
pursuant to Section 11(d)), on the date of the occurrence of such Flip-over Event; (B) the Issuer
will thereafter be liable for, and will assume, by virtue of the occurrence of such Flip-over
Event, all the obligations and duties of the Company pursuant to this Agreement; (C) the term
“Company” will thereafter be deemed to refer to the Issuer; and (D) the Issuer will take such steps
(including without limitation the reservation of a sufficient number of its Common Shares to permit
the exercise of all outstanding Rights) in connection with such consummation as may be necessary to
assure that the provisions hereof are thereafter applicable, as nearly as reasonably may be
possible, in relation to its Common Shares thereafter deliverable upon the exercise of the Rights.




     (b) For purposes of this Section 13, “Issuer” means (i) in the case of any Flip-over Event
described in Sections 13(a)(i) or (ii) above, the Person that is the continuing, surviving,
resulting or acquiring Person (including the Company as the continuing or surviving corporation of
a transaction described in Section 13(a)(ii) above), and (ii) in the case of any Flip-over Event
described in Section 13(a)(iii) above, the Person that is the party receiving the greatest portion
of the assets or earning power (including without limitation securities creating any obligation on
the part of the Company and/or any of its Subsidiaries) transferred pursuant to such transaction or



21









 







transactions; provided, however, that, in any such case, (A) if (1) no class
of equity security of such Person is, at the time of such merger, consolidation or transaction and
has been continuously over the preceding 12-month period, registered pursuant to Section 12 of the
Exchange Act, and (2) such Person is a Subsidiary, directly or indirectly, of another Person, a
class of equity security of which is and has been so registered, the term “Issuer” means such other
Person; and (B) in case such Person is a Subsidiary, directly or indirectly, of more than one
Person, a class of equity security of two or more of which are and have been so registered, the
term “Issuer” means whichever of such Persons is the issuer of the equity security having the
greatest aggregate market value. Notwithstanding the foregoing, if the Issuer in any of the
Flip-over Events listed above is not a corporation or other legal entity having outstanding equity
securities, then, and in each such case, (x) if the Issuer is directly or indirectly wholly owned
by a corporation or other legal entity having outstanding equity securities, then all references to
Common Shares of the Issuer will be deemed to be references to the Common Shares of the corporation
or other legal entity having outstanding equity securities which ultimately controls the Issuer,
and (y) if there is no such corporation or other legal entity having outstanding equity securities,
(I) proper provision will be made so that the Issuer creates or otherwise makes available for
purposes of the exercise of the Rights in accordance with the terms of this Agreement, a kind or
kinds of security or securities having a fair market value at least equal to the economic value of
the Common Shares which each holder of a Right would have been entitled to receive if the Issuer
had been a corporation or other legal entity having outstanding equity securities; and (II) all
other provisions of this Agreement will apply to the issuer of such securities as if such
securities were Common Shares.



     (c) The Company will not consummate any Flip-over Event if, (i) at the time of or immediately
after such Flip-over Event, there are or would be any rights, warrants, instruments or securities
outstanding or any agreements or arrangements in effect which would eliminate or substantially
diminish the benefits intended to be afforded by the Rights, (ii) prior to, simultaneously with or
immediately after such Flip-over Event, the stockholders of the Person who constitutes, or would
constitute, the Issuer for purposes of Section 13(a) shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates, or (iii) the form or nature
of the organization of the Issuer would preclude or limit the exercisability of the Rights. In
addition, the Company will not consummate any Flip-over Event unless the Issuer has a sufficient
number of authorized Common Shares (or other securities as contemplated in Section 13(b) above)
which have not been issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior to such consummation the Company and the Issuer
have executed and delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in subsections (a) and (b) of this Section 13 and further providing that as promptly as
practicable after the consummation of any Flip-over Event, the Issuer will:



     (A) prepare and file a registration statement under the Securities Act with respect to the
Rights and the securities issuable upon exercise of the Rights on an appropriate form, and use its
best efforts to cause such registration statement to (1) become effective as soon as practicable
after such filing and (2) remain effective (with a prospectus at all times meeting the requirements
of the Securities Act) until the Expiration Date;



22









 





     (B) take all such action as may be appropriate under, or to ensure compliance with, the
securities or “blue sky” laws of the various states in connection with the exercisability of the
Rights; and



     (C) deliver to holders of the Rights historical financial statements for the Issuer and each
of its Affiliates which comply in all respects with the requirements for registration on Form 10
under the Exchange Act.



     (d) The provisions of this Section 13 will similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Flip-over Event occurs at any time
after the occurrence of a Flip-in Event, except for Rights that have become void pursuant to
Section 11(a)(ii), Rights that shall not have been previously exercised will cease to be
exercisable in the manner provided in Section 11(a)(ii) and will thereafter be exercisable in the
manner provided in Section 13(a).



     14. Fractional Rights and Fractional Securities. (a) The Company will not be required
to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, the Company will pay as promptly as practicable to the
registered holders of the Right Certificates with regard to which such fractional Rights otherwise
would be issuable, an amount in cash equal to the same fraction of the current market value of one
Right. For the purposes of this Section 14(a), the current market value of one Right is the
closing price of the Rights for the Trading Day immediately prior to the date on which such
fractional Rights otherwise would have been issuable. The closing price for any day is the last
sale price, regular way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by Nasdaq or such other system then in
use, or, if on any such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If the Rights are not publicly held or
are not so listed or traded, or are not the subject of available bid and asked quotes, the current
market value of one Right will mean the fair value thereof as determined in good faith by the Board
of Directors of the Company, whose determination will be described in a statement filed with the
Rights Agent.



     (b) The Company will not be required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share may, at the
election of the Company, be evidenced by depositary receipts pursuant to an appropriate agreement
between the Company and a depositary selected by it, provided that such



23









 







agreement provides that the holders of such depositary receipts have all the rights,
privileges and preferences to which they are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the Company may pay to any Person to
whom or which such fractional Preferred Shares would otherwise be issuable an amount in cash equal
to the same fraction of the current market value of one Preferred Share. For purposes of this
Section 14(b), the current market value of one Preferred Share is the closing price of the
Preferred Shares (as determined in the same manner as set forth for Common Shares in the second
sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date of such exercise;
provided, however, that if the closing price of the Preferred Shares cannot be so
determined, the closing price of the Preferred Shares for such Trading Day will be conclusively
deemed to be an amount equal to the closing price of the Common Shares (determined pursuant to the
second sentence of Section 11(d)(i)) for such Trading Day multiplied by one hundred (as such number
may be appropriately adjusted to reflect events such as stock splits, stock dividends,
recapitalizations or similar transactions relating to the Common Shares occurring after the date of
this Agreement); provided further, however, that if neither the Common
Shares nor the Preferred Shares are publicly held or listed or admitted to trading on any national
securities exchange, or the subject of available bid and asked quotes, the current market value of
one Preferred Share will mean the fair value thereof as determined in good faith by the Board of
Directors of the Company, whose determination will be described in a statement filed with the
Rights Agent.



     (c) Following the occurrence of a Triggering Event, the Company will not be required to issue
fractions of Common Shares or other securities issuable upon exercise or exchange of the Rights or
to distribute certificates which evidence any such fractional securities. In lieu of issuing any
such fractional securities, the Company may pay to any Person to whom or which such fractional
securities would otherwise be issuable an amount in cash equal to the same fraction of the current
market value of one such security. For purposes of this Section 14(c), the current market value of
one Common Share or other security issuable upon the exercise or exchange of Rights is the closing
price thereof (as determined in the same manner as set forth for Common Shares in the second
sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date of such exercise or
exchange; provided, however, that if neither the Common Shares nor any such other
securities are publicly held or listed or admitted to trading on any national securities exchange,
or the subject of available bid and asked quotes, the current market value of one Common Share or
such other security will mean the fair value thereof as determined in good faith by the Board of
Directors of the Company, whose determination will mean the fair value thereof as will be described
in a statement filed with the Rights Agent.



     15. Rights of Action. All rights of action in respect of this Agreement, excepting
the rights of action given to the Rights Agent under Section 18, are vested in the respective
registered holders of the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the holder of any Common
Shares), may in his own behalf and for his own benefit enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner



24









 







provided in such Right Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically acknowledged that the holders
of Rights would not have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under this Agreement, and injunctive relief
against actual or threatened violations of the obligations of any Person subject to this Agreement.



     16. Agreement of Rights Holders. Every holder of a Right by accepting the same
consents and agrees with the Company and the Rights Agent and with every other holder of a Right
that:



     (a) Prior to the Distribution Date, the Rights are transferable only in connection with the
transfer of the Common Shares;



     (b) After the Distribution Date, the Right Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal office of the Rights Agent designated for
such purpose, duly endorsed or accompanied by a proper instrument of transfer;



     (c) The Company and the Rights Agent may deem and treat the person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificate or the associated Common Share
certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent will be affected by any notice to the contrary;



     (d) Such holder expressly waives any right to receive any fractional Rights and any fractional
securities upon exercise or exchange of a Right, except as otherwise provided in Section 14.



     (e) Notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent will have any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction
or by a governmental, regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however, that the
Company will use its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.



     17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any
Right Certificate will be entitled to vote, receive dividends, or be deemed for any purpose the
holder of Preferred Shares or any other securities of the Company which may at any time be issuable
upon the exercise of the Rights represented thereby, nor will anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote for the election of Directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to
any corporate action, or to receive notice of meetings or other actions



25









 







affecting stockholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions of this Agreement or exchanged pursuant
to the provisions of Section 24.



     18. Concerning the Rights Agent. (a) The Company will pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time to time, on demand
of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in
the administration and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company will also indemnify the Rights Agent for, and hold it harmless against, any
loss, liability, suit, action, proceeding or expense, incurred without negligence, bad faith, or
willful misconduct on the part of the Rights Agent, for anything done or omitted to be done by the
Rights Agent in connection with the acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability arising therefrom, directly or
indirectly.



     (b) The Rights Agent will be protected and will incur no liability for or in respect of any
action taken, suffered, or omitted by it in connection with its administration of this Agreement in
reliance upon any Right Certificate or certificate evidencing Preferred Shares or Common Shares or
other securities of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper
or document believed by it to be genuine and to be signed, executed, and, where necessary, verified
or acknowledged, by the proper Person or Persons.



     19. Merger or Consolidation or Change of Name of Rights Agent. (a) Any corporation
into which the Rights Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent is a party, or any corporation succeeding to the corporate
trust business of the Rights Agent or any successor Rights Agent, will be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21. If at the time such
successor Rights Agent succeeds to the agency created by this Agreement any of the Right
Certificates shall have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and if at that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates will have the full force provided in the Right Certificates and in this
Agreement.



     (b) If at any time the name of the Rights Agent changes and at such time any of the Right
Certificates have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so countersigned; and if at
that time any of the Right Certificates have not been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed name; and in all



26









 







such cases such Right Certificates will have the full force provided in the Right Certificates
and in this Agreement.



     20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions, by all of which the Company and
the holders of Right Certificates, by their acceptance thereof, will be bound:



     (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel will be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such
opinion.



     (b) Whenever in the performance of its duties under this Agreement the Rights Agent deems it
necessary or desirable that any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chairman of the Board, the President, any Vice President,
the Secretary or the Treasurer of the Company and delivered to the Rights Agent, and such
certificate will be full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such certificate.



     (c) The Rights Agent will be liable hereunder only for its own negligence, bad faith or
willful misconduct.



     (d) The Rights Agent will not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Right Certificates (except its countersignature
thereof) or be required to verify the same, but all such statements and recitals are and will be
deemed to have been made by the Company only.



     (e) The Rights Agent will not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution and delivery hereof by the
Rights Agent) or in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor will it be responsible for any breach by the Company of any covenant
contained in this Agreement or in any Right Certificate; nor will it be responsible for any
adjustment required under the provisions of Sections 11 or 13 (including any adjustment which
results in Rights becoming void) or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates after actual notice
of any such adjustment); nor will it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of stock or other securities to be
issued pursuant to this Agreement or any Right Certificate or as to whether any shares of stock or
other securities will, when issued, be duly authorized, validly issued, fully paid and
nonassessable.



     (f) The Company will perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other acts, instruments



27









 







and assurances as may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.



     (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from any one of the Chairman of the Board, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it will not be liable for any action
taken or suffered to be taken by it in good faith in accordance with instructions of any such
officer.



     (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not Rights Agent under
this Agreement. Nothing herein will preclude the Rights Agent from acting in any other capacity
for the Company or for any other Person.



     (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent will not be answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection and continued
employment thereof. The Rights Agent will not be under any duty or responsibility to ensure
compliance with any applicable federal or state securities laws in connection with the issuance,
transfer or exchange of Right Certificates.



     (j) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise,
transfer, split up, combination or exchange, either (i) the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 or 2 thereof, or (ii) any other actual or suspected
irregularity exists, the Rights Agent will not take any further action with respect to such
requested exercise, transfer, split up, combination or exchange without first consulting with the
Company, and will thereafter take further action with respect thereto only in accordance with the
Company’s written instructions.



     21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon 30 calendar days’ notice in writing
mailed to the Company and to each transfer agent of the Preferred Shares or the Common Shares by
registered or certified mail, and to the holders of the Right Certificates by first class mail.
The Company may remove the Rights Agent or any successor Rights Agent upon 30 calendar days’ notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Preferred Shares and the Common Shares by registered or certified mail, and
to the holders of the Right Certificates by first class mail. If the Rights Agent resigns or is
removed or otherwise becomes incapable of acting, the Company will appoint a successor to the
Rights Agent. If the Company fails to make such appointment within a period of 30 calendar days
after giving notice of such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the



28









 







holder of a Right Certificate (who will, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, will be a corporation or other legal
entity organized and doing business under the laws of the United States or of the State of New York
(or of any other state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of New York), in good standing, having a principal
office in the State of New York, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or state authority
and which has at the time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent will be vested with the same
powers, rights, duties and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent will deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company will file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Preferred Shares or the Common Shares, and mail a
notice thereof in writing to the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, will not affect the
legality or validity of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.



     22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price per share and the number or kind of securities
issuable upon exercise of the Rights made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale by the Company of Common Shares following the
Distribution Date and prior to the Expiration Date, the Company (a) will, with respect to Common
Shares so issued or sold pursuant to the exercise, exchange or conversion of securities (other than
Rights) issued prior to the Distribution Date which are exercisable or exchangeable for, or
convertible into Common Shares, and (b) may, in any other case, if deemed necessary, appropriate or
desirable by the Board of Directors of the Company, issue Right Certificates representing an
equivalent number of Rights as would have been issued in respect of such Common Shares if they had
been issued or sold prior to the Distribution Date, as appropriately adjusted as provided herein as
if they had been so issued or sold; provided, however, that (i) no such Right Certificate will be
issued if, and to the extent that, in its good faith judgment the Board of Directors of the Company
determines that the issuance of such Right Certificate could have a material adverse tax
consequence to the Company or to the Person to whom or which such Right Certificate otherwise would
be issued and (ii) no such Right Certificate will be issued if, and to the extent that, appropriate
adjustment otherwise has been made in lieu of the issuance thereof.



     23. Redemption. (a) Prior to the Expiration Date, the Board of Directors of the
Company may, at its option, redeem all but not less than all of the then-outstanding Rights at the
Redemption Price at any time prior to the Close of Business on the later of (i) the Distribution



29









 







Date and (ii) Share Acquisition Date. Any such redemption will be effective immediately upon
the action of the Board of Directors of the Company ordering the same, unless such action of the
Board of Directors of the Company expressly provides that such redemption will be effective at a
subsequent time or upon the occurrence or nonoccurrence of one or more specified events (in which
case such redemption will be effective in accordance with the provisions of such action of the
Board of Directors of the Company).



     (b) Immediately upon the effectiveness of the redemption of the Rights as provided in Section
23(a), and without any further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights will be to receive the Redemption
Price, without interest thereon. Promptly after the effectiveness of the redemption of the Rights
as provided in Section 23(a), the Company will publicly announce such redemption and, within 10
calendar days thereafter, will give notice of such redemption to the holders of the
then-outstanding Rights by mailing such notice to all such holders at their last addresses as they
appear upon the registry books of the Company; provided, however, that the failure
to give, or any defect in, any such notice will not affect the validity of the redemption of the
Rights. Any notice that is mailed in the manner herein provided will be deemed given, whether or
not the holder receives the notice. The notice of redemption mailed to the holders of Rights will
state the method by which the payment of the Redemption Price will be made. The Company may, at
its option, pay the Redemption Price in cash, Common Shares (based upon the current per share
market price of the Common Shares (determined pursuant to Section 11(d)) at the time of
redemption), or any other form of consideration deemed appropriate by the Board of Directors of the
Company (based upon the fair market value of such other consideration, determined by the Board of
Directors of the Company in good faith) or any combination thereof. The Company may, at its
option, combine the payment of the Redemption Price with any other payment being made concurrently
to holders of Common Shares and, to the extent that any such other payment is discretionary, may
reduce the amount thereof on account of the concurrent payment of the Redemption Price. If legal
or contractual restrictions prevent the Company from paying the Redemption Price (in the form of
consideration deemed appropriate by the Board of Directors) at the time of redemption, the Company
will pay the Redemption Price, without interest, promptly after such time as the Company ceases to
be so prevented from paying the Redemption Price.



     24. Exchange. (a) The Board of Directors of the Company may, at its option, at any
time after the later of the Share Acquisition Date and the Distribution Date, exchange all or part
of the then-outstanding and exercisable Rights (which will not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii)) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the Record Date (such exchange ratio being hereinafter referred
to as the “Exchange Ratio”). Any such exchange will be effective immediately upon the action of
the Board of Directors of the Company ordering the same, unless such action of the Board of
Directors of the Company expressly provides that such exchange will be effective at a subsequent
time or upon the occurrence or nonoccurrence of one or more specified events (in which case such
exchange will be effective in accordance with the provisions of such action of the Board of
Directors of the Company). Notwithstanding the foregoing, the Board of Directors of the Company
will not be empowered to effect such exchange at any time after any Person (other than the Company
or any Related Person), who or which, together with all Affiliates and



30









 







Associates of such Person, becomes the Beneficial Owner of 50% or more of the then-outstanding
Common Shares.



     (b) Immediately upon the effectiveness of the exchange of any Rights as provided in Section
24(a), and without any further action and without any notice, the right to exercise such Rights
will terminate and the only right with respect to such Rights thereafter of the holder of such
Rights will be to receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. Promptly after the effectiveness of the exchange of
any Rights as provided in Section 24(a), the Company will publicly announce such exchange and,
within 10 calendar days thereafter, will give notice of such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the Rights Agent;
provided, however, that the failure to give, or any defect in, such notice will not
affect the validity of such exchange. Any notice that is mailed in the manner herein provided will
be deemed given, whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange
will be effected pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii)) held by each holder of Rights.



     (c) In any exchange pursuant to this Section 24, the Company, at its option, may substitute
for any Common Share exchangeable for a Right (i) equivalent common shares (as such term is used in
Section 11(a)(iii)), (ii) cash, (iii) debt securities of the Company, (iv) other assets, or (v) any
combination of the foregoing, in any event having an aggregate value, as determined in good faith
by the Board of Directors of the Company (whose determination will be described in a statement
filed with the Rights Agent), equal to the current market value of one Common Share (determined
pursuant to Section 11(d)) on the Trading Day immediately preceding the date of the effectiveness
of the exchange pursuant to this Section 24.



     25. Notice of Certain Events. (a) If, after the Distribution Date, the Company
proposes (i) to pay any dividend payable in stock of any class to the holders of Preferred Shares
or to make any other distribution to the holders of Preferred Shares (other than a regular periodic
cash dividend), (ii) to offer to the holders of Preferred Shares rights, options or warrants to
subscribe for or to purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its Preferred Shares
(other than a reclassification involving only the subdivision of outstanding Preferred Shares),
(iv) to effect any consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of assets or earning power (including, without limitation, securities creating any
obligation on the part of the Company and/or any of its Subsidiaries) representing more than 50% of
the assets and earning power of the Company and its Subsidiaries, taken as a whole, to any other
Person or Persons other than the Company or one or more of its wholly owned Subsidiaries, (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to declare or pay any
dividend on the Common Shares payable in Common Shares or to effect a subdivision, combination or
reclassification of the Common Shares then, in each such case, the Company will give to each holder
of a Right Certificate, to the extent feasible and in accordance



31









 







with Section 26, a notice of such proposed action, which specifies the record date for the
purposes of such stock dividend, distribution or offering of rights, options or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein by the holders of
the Common Shares and/or Preferred Shares, if any such date is to be fixed, and such notice will be
so given, in the case of any action covered by clause (i) or (ii) above, at least 10 calendar days
prior to the record date for determining holders of the Preferred Shares for purposes of such
action, and, in the case of any such other action, at least 10 calendar days prior to the date of
the taking of such proposed action or the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, whichever is the earlier.



     (b) In case any Triggering Event occurs, then, in any such case, the Company will as soon as
practicable thereafter give to the Rights Agent and each holder of a Right Certificate, in
accordance with Section 26, a notice of the occurrence of such event, which specifies the event and
the consequences of the event to holders of Rights.



     26. Notices. (a) Notices or demands authorized by this Agreement to be given or made
by the Rights Agent or by the holder of any Right Certificate to or on the Company will be
sufficiently given or made if sent by first class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:



	 	 	 
	 

	 	USG Corporation
	 

	 	125 South Franklin Street
	 

	 	Chicago, Illinois 60606-4678
	 

	 	Attention:                                         






     (b) Subject to the provisions of Section 21 hereof, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the
Rights Agent will be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as to the address specified
on the signature page hereof:



     (c) Notices or demands authorized by this Agreement to be given or made by the Company or the
Rights Agent to the holder of any Right Certificate (or, if prior the Distribution Date, to the
holder of any certificate evidencing Common Shares) will be sufficiently given or made if sent by
first class mail, postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.



     27. Supplements and Amendments. Prior to the time at which the Rights cease to be
redeemable pursuant to Section 23, and subject to the penultimate sentence of this Section 27 or
such later date as the Board of Directors may determine by resolution adopted in the exercise of
its business judgment, the Company may in its sole and absolute discretion, and the Rights Agent
will if the Company so directs, supplement or amend any provision of this Agreement in any respect
without the approval of any holders of Rights or Common Shares. From and after the time at which
the Rights cease to be redeemable pursuant to Section 23, and subject to the penultimate sentence
of this Section 27, the Company may, and the Rights Agent will if the Company so directs,
supplement or amend this Agreement without the approval of any holders



32









 







of Rights or Common Shares in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any other provisions
herein, (iii) to shorten or lengthen any time period hereunder, or (iv) to supplement or amend the
provisions hereunder in any manner which the Company may deem desirable; provided,
however, that no such supplement or amendment shall adversely affect the interests of the
holders of Rights as such (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person), and no such supplement or amendment shall cause the Rights again to become
redeemable or cause this Agreement again to become supplementable or amendable otherwise than in
accordance with the provisions of this sentence. Without limiting the generality or effect of the
foregoing, this Agreement may be supplemented or amended to provide for such voting powers for the
Rights and such procedures for the exercise thereof, if any, as the Board of Directors of the
Company may determine to be appropriate. Upon the delivery of a certificate from an officer of the
Company which states that the proposed supplement or amendment is in compliance with the terms of
this Section 27, the Rights Agent will execute such supplement or amendment; provided, however,
that the failure or refusal of the Rights Agent to execute such supplement or amendment will not
affect the validity of any supplement or amendment adopted by the Board of Directors of the
Company, any of which will be effective in accordance with the terms thereof. Notwithstanding
anything in this Agreement to the contrary, no supplement or amendment may be made which decreases
the stated Redemption Price to an amount less than $0.001 per Right. 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.



     28. Successors; Certain Covenants. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent will be binding on and inure to the
benefit of their respective successors and assigns hereunder.



     29. Benefits of This Agreement. Nothing in this Agreement will be construed to give
to any Person other than the Company, the Rights Agent, and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement. This Agreement will be for the sole and exclusive benefit of
the Company, the Rights Agent, and the registered holders of the Right Certificates (or prior to
the Distribution Date, the Common Shares).



     30. Governing Law. This Agreement, each Right and each Right Certificate issued
hereunder will be deemed to be a contract made under the internal substantive laws of the State of
Delaware and for all purposes will be governed by and construed in accordance with the internal
substantive laws of such State applicable to contracts to be made and performed entirely within
such State.



     31. Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable,



33









 







the remainder of the terms, provisions, covenants and restrictions of this Agreement will
remain in full force and effect and will in no way be affected, impaired or invalidated; provided,
however, that nothing contained in this Section 31 will affect the ability of the Company under the
provisions of Section 27 to supplement or amend this Agreement to replace such invalid, void or
unenforceable term, provision, covenant or restriction with a legal, valid and enforceable term,
provision, covenant or restriction.



     32. Descriptive Headings, Etc. Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and will not control or affect the meaning or
construction of any of the provisions hereof. Unless otherwise expressly provided, references
herein to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of or to this
Agreement.



     33. 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 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 33 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.



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



[Signatures on Following Page]




34









 








     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.



	 	 	 	 	 	 	 
	 	 	USG CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	RIGHTS AGENT	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Rights Agent Legal Names and address for	 	 
	 	 	purposes of notices:	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 






35










 







EXHIBIT A




FORM OF RIGHT CERTIFICATE




			
	 	 	 
	Certificate No. R-                    
	 	                     Rights





NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT). THE
RIGHTS ARE SUBJECT TO REDEMPTION, EXCHANGE AND AMENDMENT AT THE OPTION OF THE COMPANY, ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT,
RIGHTS THAT ARE OR WERE BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR A TRANSFEREE THEREOF
MAY BECOME NULL AND VOID.




Right Certificate




USG CORPORATION




     This certifies that                     , or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof, subject to the terms,
provisions, and conditions of the Reorganization Rights Plan, dated as of January 30, 2006 (the
"Rights Agreement”), adopted by USG Corporation (the “Company”) to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m. (New York City time) on the Expiration Date (as such term is defined in the Rights
Agreement) at the principal office or offices of the Rights Agent designated for such purpose, one
one-hundredth of a fully paid nonassessable share of Junior Participating Preferred Stock, Series
D, par value $1.00 per share (the “Preferred Shares”), of the Company, at a purchase price of
$200.00 per one one-hundredth of a Preferred Share (the “Purchase Price”), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase and related Certificate
duly executed. If this Right Certificate is exercised in part, the holder will be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates for the number of
whole Rights not exercised. The number of Rights evidenced by this Right Certificate (and the
number of one one-hundredths of a Preferred Share which may be purchased upon exercise thereof) set
forth above, and the Purchase Price set forth above, are the number and Purchase Price as of the
date of the Rights Agreement, based on the Preferred Shares as constituted at such date.



     As provided in the Rights Agreement, the Purchase Price and/or the number and/or kind of
securities issuable upon the exercise of the Rights evidenced by this Right Certificate are subject
to adjustment upon the occurrence of certain events.



     This Right Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities of the



A-1









 







Rights Agent, the Company and the holders of the Right Certificates, which limitations of
rights include the temporary suspension of the exercisability of the Rights under the circumstances
specified in the Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and can be obtained from the Company without charge upon
written request therefor. Terms used herein with initial capital letters and not defined herein
are used herein with the meanings ascribed thereto in the Rights Agreement.



     Pursuant to the Rights Agreement, from and after the occurrence of a Flip-in Event, any Rights
that are Beneficially Owned by (i) any Acquiring Person (or any Affiliate or Associate of any
Acquiring Person), (ii) a transferee of any Acquiring Person (or any such Affiliate or Associate)
who becomes a transferee after the occurrence of a Flip-in Event, or (iii) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who became a transferee prior to or
concurrently with the Flip-in Event pursuant to either (a) a transfer from an Acquiring Person to
holders of its equity securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (b) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or understanding which has
the purpose or effect of avoiding certain provisions of the Rights Agreement, and subsequent
transferees of any of such Persons, will be void without any further action and any holder of such
Rights will thereafter have no rights whatsoever with respect to such Rights under any provision of
the Rights Agreement. From and after the occurrence of a Flip-in Event, no Right Certificate will
be issued that represents Rights that are or have become void pursuant to the provisions of the
Rights Agreement, and any Right Certificate delivered to the Rights Agent that represents Rights
that are or have become void pursuant to the provisions of the Rights Agreement will be canceled.



     This Right Certificate, with or without other Right Certificates, may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certificates entitling the holder
to purchase a like number of one one-hundredths of a Preferred Share (or other securities, as the
case may be) as the Right Certificate or Right Certificates surrendered entitled such holder (or
former holder in the case of a transfer) to purchase, upon presentation and surrender hereof at the
principal office of the Rights Agent designated for such purpose, with the Form of Assignment (if
appropriate) and the related Certificate duly executed.



     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company at its option at a redemption price of $0.001 per Right or may be
exchanged in whole or in part. The Rights Agreement may be supplemented and amended by the
Company, as provided therein.



     The Company is not required to issue fractions of Preferred Shares (other than fractions which
are integral multiples of one one-hundredth of a Preferred Share, which may, at the option of the
Company, be evidenced by depositary receipts) or other securities issuable upon the exercise of any
Right or Rights evidenced hereby. In lieu of issuing such fractional Preferred Shares or other
securities, the Company may make a cash payment, as provided in the Rights Agreement.



     No holder of this Right Certificate, as such, will be entitled to vote or receive dividends or
be deemed for any purpose the holder of the Preferred Shares or of any other securities of the



A-2









 







Company which may at any time be issuable upon the exercise of the Right or Rights represented
hereby, nor will anything contained herein or in the Rights Agreement be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate have been exercised in accordance with the provisions of the Rights Agreement.



     This Right Certificate will not be valid or obligatory for any purpose until it has been
countersigned by the Rights Agent.



     WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.
Dated as of                     ,      .



	 	 	 	 	 
	ATTEST:

	 	 	 	USG CORPORATION
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:






	 	 	 	 	 
	Countersigned:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Authorized Signature
	 	 






A-3









 






Form of Reverse Side of Right Certificate




FORM OF ASSIGNMENT




(To be executed by the registered holder if such

holder desires to transfer the Right Certificate)




     FOR VALUE RECEIVED,                      hereby sells, assigns and transfers unto



 




(Please print name and address of transferee)




 





this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint                      Attorney, to transfer
the within Right Certificate on the books of the within-named Company, with full power of
substitution.




Dated:                     ,      




	 	 	 
	 

	 	 
	 

	 	Signature





Signature Guaranteed:                                                             





A-4









 








CERTIFICATE




     The undersigned hereby certifies by checking the appropriate boxes that:



     (1) the Rights evidenced by this Right Certificate [   ] are [   ] are not being sold, assigned,
transferred, split up, combined or exchanged by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are defined in the Rights
Agreement);



     (2) after due inquiry and to the best knowledge of the undersigned, it [   ] did [   ] did not
acquire the Rights evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.


Dated:                     ,      




	 	 	 
	 

	 	 
	 

	 	Signature






A-5









 






FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to

exercise the Right Certificate)




     To USG Corporation:



     The undersigned hereby irrevocably elects to exercise                      Rights represented by this
Right Certificate to purchase the one one-hundredths of a Preferred Share or other securities
issuable upon the exercise of such Rights and requests that certificates for such securities be
issued in the name of and delivered to:



	 	 	 
	Please insert social security
	 	 
	or other identifying number:

	 	 
	 

	 	 





 




(Please print name and address)




     If such number of Rights is not all the Rights evidenced by this Right Certificate, a new Right
Certificate for the balance remaining of such Rights will be registered in the name of and
delivered to:



	 	 	 
	Please insert social security
	 	 
	or other identifying number:

	 	 
	 

	 	 





 




(Please print name and address)




 





Dated:                     ,      




	 	 	 
	 

	 	 
	 

	 	Signature





Signature Guaranteed:                                                             



A-6









 









CERTIFICATE




     The undersigned hereby certifies by checking the appropriate boxes that:



     (1) the Rights evidenced by this Right Certificate [   ] are [   ] are not being exercised by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such
Person (as such terms are defined pursuant to the Rights Agreement);



     (2) after due inquiry and to the best knowledge of the undersigned, it [   ] did [   ] did not
acquire the Rights evidenced by this Right Certificate from any Person who is, was, or became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.



Dated:                     ,      




	 	 	 
	 

	 	 
	 

	 	Signature






NOTICE




     Signatures on the foregoing Form of Assignment and Form of Election to Purchase and in the
related Certificates must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.



     Signatures must be guaranteed by an eligible guarantor institution (banks, stockbrokers,
savings and loan associations and credit unions with membership in an approved medallion signature
program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended.




A-7









 






Exhibit H




Agreement Order




H-1









 





UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE




	 	 	 	 	 	 	 	 	 
	In re:	 	:	 	Chapter 11	 	 
	 

	 	 	 	:	 	 	 	 
	USG CORPORATION,	 	:	 	Jointly Administered	 	 
	a Delaware corporation, et al.,1	 	:	 	Case No. 01-2094 (JKF)	 	 
	 

	 	 	 	:	 	 	 	 
	 

	 	Debtors.
	 	:
	 	Re: Docket No.:
	 	/Agenda No.:
	 

	 	 	 	:
	 	Hearing Date:	 	 






ORDER
AUTHORIZING USG CORPORATION TO ENTER INTO EQUITY

COMMITMENT AGREEMENT AND PAY RELATED COMMITMENT FEE




     This matter coming before the Court on the Motion of Debtors for An Order Approving Equity
Commitment Agreement, Including Authorizing Payment of Related Commitment Fee (the “Motion”) filed
by the above-captioned debtors (collectively, the “Debtors”), the Court having reviewed the Motion
and having heard the statements of counsel regarding the relief requested in the Motion at a
hearing before the Court (the “Hearing”); the Court finding that (a) the Court has jurisdiction
over this matter pursuant to 28 U.S.C. §§ 157 and 1334, (b) this is a core proceeding pursuant to
28 U.S.C. § 157(b)(2), (c) notice of the Motion and the Hearing was sufficient under the
circumstances, (d) a sound business purpose exists for USG Corporation (“USG”) to enter into the
Equity Commitment Agreement, pursuant to 11 U.S.C. § 363(b) and (e) the Standby Purchaser and its
affiliates, representatives and advisors have acted in good faith and at arms length with respect
to the Equity Commitment Agreement, the exhibits and attachments and related negotiations, as well
as this Motion; and the Court having determined that the legal and factual bases set forth in the
Motion and at the Hearing establish just cause for the relief granted herein;





 




			
	1	 	The Debtors are the following 11
entities: USG Corporation, United States Gypsum Company, USG Interiors, Inc.,
USG Interiors International, Inc., L&W Supply Corporation, Beadex
Manufacturing, LLC, B-R Pipeline Company, La Mirada Products Co., Inc., USG
Industries, Inc. USG Pipeline Company and Stocking Specialists, Inc.




 









 










     IT IS HEREBY ORDERED THAT:



     1. The Motion is GRANTED and the Equity Commitment Agreement, including, as required, any and
all attachments and exhibits related thereto, are hereby approved pursuant to sections 105(a) and
363(b) of the Bankruptcy Code in all respects.



     2. USG is authorized and directed to execute, deliver, and implement the Equity Commitment
Agreement and all exhibits and attachments thereto, and such agreements and documents shall be
binding and enforceable against USG and the Standby Purchaser in accordance with their terms.



     3. USG is authorized and directed to pay the Standby Purchaser the Commitment Fee as provided
for in the Equity Commitment Agreement, as well as any increased fee set forth in paragraph
10(b)(ii) of such agreement in exchange for an increase in the length of the Standby Purchaser’s
commitment pursuant to the Equity Commitment Agreement. Such fees shall be non-refundable as set
forth in the Equity Commitment Agreement. USG also is authorized to make all other payments to the
Standby Purchaser required under the Equity Commitment Agreement and any exhibit or attachment
thereto, on the terms set forth therein, without further order of the Court.



     4. The Standby Purchaser and its affiliates, and their respective officers, directors,
employees, members, managers, agents, attorneys, representatives, and advisors hereby are released
from any and all claims, obligations, suits, judgments, damages, rights, liabilities, or causes of
action whatsoever, whether liquidated or unliquidated, fixed or contingent, matured or unmatured,
known or unknown, foreseen or unforeseen, now existing, in law, equity, or otherwise that the
Debtors may have against such parties as of the date of entry of this order based in whole or in
part upon any act or omission, event, transaction, or occurrence associated



2









 







with, arising from, or related to such parties’ participation in the Equity Committee, the
Debtors’ bankruptcy cases, and/or the transactions described in this Motion, other than such
parties’ contractual liability to the Debtors pursuant to the Equity Commitment Agreement and any
exhibit or attachment thereto.



     5. This order is a final and not interlocutory order and is immediately subject to appeal
pursuant to 28 U.S.C. § 158(a). This order shall be effective upon the expiration of the ten day
period pursuant to Bankruptcy Rule 6004(h) and shall not be revised, modified, or amended by the
confirmation order for any plan or any other further order of this Court.



	 	 	 
	Dated:.              
                          ,
2006
	 	 
	 

	 	 
	 

	 	UNITED STATES BANKRUPTCY JUDGE







3