exv10w3



 







Exhibit 10.3




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.



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     “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




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	 	 	 	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




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	 	 	 	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




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	 	 	 	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):




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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




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	 	 	 	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.




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	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]




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     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]