exv4w1



 





Exhibit 4.1




 


Rights Agreement




Dated as of December 21, 2006




by and between




USG Corporation




and




Computershare Investor Services, LLC




 










 









 












TABLE OF CONTENTS




	 	 	 	 	 
	1. Certain Definitions
	 	 	1	 
	 
	 	 	 	 
	2. Appointment of Rights Agent
	 	 	6	 
	 
	 	 	 	 
	3. Issue of Right Certificates
	 	 	6	 
	 
	 	 	 	 
	4. Form of Right Certificates
	 	 	7	 
	 
	 	 	 	 
	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
	 	 	10	 
	 
	 	 	 	 
	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
	 	 	24	 
	 
	 	 	 	 
	17. Right Certificate Holder Not Deemed a Stockholder
	 	 	25	 
	 
	 	 	 	 
	18. Concerning the Rights Agent
	 	 	25	 
	 
	 	 	 	 
	19. Merger or Consolidation or Change of Name of Rights Agent
	 	 	26	 
	 
	 	 	 	 
	20. Duties of Rights Agent
	 	 	26	 
	 
	 	 	 	 
	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	 






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	31. Severability
	 	 	33	 
	 
	 	 	 	 
	32.
Descriptive Headings, Etc.
	 	 	33	 
	 
	 	 	 	 
	33. Determinations and Actions by the Board
	 	 	34	 
	 
	 	 	 	 
	34. Effective Time
	 	 	34	 
	 
	 	 	 	 
	35. Counterparts
	 	 	34	 
	 
	 	 	 	 
	36. Force Majeure
	 	 	34	 
	 
	 	 	 	 
	Exhibit A
	 	 	A-1	 
	 
	 	 	 	 
	Exhibit B
	 	 	B-1	 






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RIGHTS AGREEMENT




     This Rights Agreement, dated as of December 21, 2006, is made and entered into by and between
USG Corporation, a Delaware corporation (the “Company”), and Computershare Investor Services, LLC,
as Rights Agent (the “Rights Agent”).



RECITALS




     WHEREAS, on December 21, 2006, 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 January 2, 2007 (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 or any
Restricted Person) who or which, together with all Affiliates and Associates of such Person, is the
Beneficial Owner of 15% or more of the then-outstanding Common Shares; provided,
however, that (i) any Person who would otherwise qualify as an Acquiring Person on the date
of this Agreement (including any Person that would otherwise qualify as an Acquiring Person but for
being a Restricted Person on such date) will not be deemed to be an Acquiring Person for any
purpose of this Agreement unless and until such time as (A) such Person or any Affiliate or
Associate of such Person thereafter becomes the Beneficial Owner of additional Common Shares
representing 1% or more of the then-outstanding Common Shares, 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 then-outstanding Common Shares becomes a 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 Affiliates and Associates
of such Person, ceases to Beneficially Own 15% 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 Affiliate or Associate of such Person thereafter becomes the Beneficial Owner of additional
Common Shares representing 1% or more of the then-outstanding 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 representing
1% or more of the then-outstanding Common Shares thereafter becomes a 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) “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, 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.



     (c) 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 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 Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or




          (ii) which such Person or any of such Person’s 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




          (iii) of which any other Person is the Beneficial Owner, if such Person or any of such
Person’s 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




2









 







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(c) 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.




     (d) “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.



     (e) “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.



     (f) “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.



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



     (h) “Distribution Date” means the earlier of: (i) the Close of Business on the tenth calendar
day following the Share Acquisition Date (or, if the tenth calendar
day after the Share Acquisition
Date occurs before the Record Date, the Close of Business on the Record 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 or a Restricted Person), if upon the consummation thereof such Person would be the
Beneficial Owner of 15% or more of the then-outstanding Common Shares.



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



     (j) “Expiration Date” means the earliest of (i) the Close of Business on the tenth anniversary
of the Record Date, (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.



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



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



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



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



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



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



     (q) “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.



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



     (s) “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.



     (t) “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.



     (u) “Restricted Person” means (A) 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
(provided further that, solely for purposes of this Agreement, the Investor shall
not be in breach of Section 2(a) of the Shareholders’ Agreement by virtue of the circumstances
described in clauses (x) and (y) thereof unless and until the Investor, any Controlled Affiliate,
or any group described in clause (A)(iii) above purchases or otherwise becomes (as a result of
actions taken by such persons to increase their Beneficial Ownership (as defined in the
Shareholders’ Agreement), other than pursuant to Equity Securities (as defined in the Shareholders’
Agreement) received by such persons with respect to Equity Securities then held by such persons, or
the exercise or conversion of Equity Securities described in this parenthetical, the Beneficial
Owner of additional Common Shares constituting 1% or more of the then-Outstanding Voting Securities
(as defined in the Shareholders’ Agreement) on a Fully Diluted Basis (as defined in the
Shareholders’ Agreement)), and such breach has not been cured



4









 




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 (A)(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 and (B) following the Standstill Period (i) the Investor, (ii) any
Controlled Affiliate, 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 the Investor is a member, provided that
the Investor, any Controlled Affiliate and any group described in clause (B)(iii) above shall
immediately and automatically cease to be a Restricted Person upon the purchase (although such
persons may continue to hold) of additional Equity Securities (other than Equity Securities
distributed or issued, directly or indirectly, with respect to Equity Securities then held by such
persons or on the exercise or conversion of any Equity Securities described in this parenthetical)
that bring their Beneficial Ownership of Voting Securities (as defined in the Shareholders’
Agreement) to greater than 50% of the Voting Securities on a Fully Diluted Basis (as defined in the
Shareholder’s Agreement) unless such purchase occurs pursuant to an offer to purchase all
outstanding Common Shares, which offer remains open for at least 60 calendar days.




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



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



     (x) “Rights Agent” means Computershare Investor Services LLC, 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.



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



     (z) “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.



     (aa) “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.



     (bb) “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.



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



5









 





     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, upon ten days’ prior written notice to the
Rights Agent. The Rights Agent shall have no duty to supervise, and in no event shall be liable
for, the acts or omissions of any such co-Rights Agent. 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. Commencing as promptly as
practicable after the Record Date, the Company will make available a copy of a Summary of Rights to
Purchase Preferred Stock in substantially the form attached as Exhibit B to any holder of
Rights who may request it from time to time prior to the Expiration Date.



     (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 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 Rights Agreement, dated as of December 21, 2006 (the “Rights
Agreement”), adopted by USG Corporation, 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



6









 







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 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



7









 




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 countersigned by the Rights
Agent, either manually or by facsimile signature, 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.



     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 Right 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.
Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate until the registered holder shall
have completed and signed the certificate contained in the form of assignment on the reverse side



8









 




of such Right Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. 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 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



9









 




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 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.



10









 





     (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, 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, 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
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



11









 




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 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



12









 




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 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



13









 




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 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



14









 




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 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

15









 








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
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



16









 




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 such market 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 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

17









 








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 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



18









 




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 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



19









 




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:



          (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

20









 








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
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



21









 




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;



     (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



22









 




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 such market 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 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



23









 




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 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;



24









 





     (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 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 gross 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



25









 




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
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



26









 




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 gross 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 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



27









 




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 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



28









 




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
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



29









 




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 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



30









 




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 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



31









 




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: Corporate Secretary




     (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 follows:


Computershare Investor Services, LLC

2 North LaSalle Street

Chicago, Illinois 60602

Attention: Relationship Management




     (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, 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 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



32









 




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, 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



33









 




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 the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. 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. Effective Time. Notwithstanding anything in this Agreement to the contrary, this
Agreement will not be effective until the Close of Business on December 31, 2006.



     35. 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.



     36. Force Majeure. Notwithstanding anything to the contrary contained herein, Rights
Agent shall not be liable for any delays or failures in performance resulting from acts beyond its
reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply,
breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data
due to power failures or mechanical difficulties with information storage or retrieval systems,
labor difficulties, war, or civil unrest.


[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:
	 	/s/ Stanley L. Ferguson
	 

	 	 	 	 
	 

	 	 	 	Name: Stanley L. Ferguson
	 

	 	 	 	Title: Executive Vice President and General
Counsel
	 
	 	 	 	 
	 	 	RIGHTS AGENT:
	 
	 	 	 	 
	 	 	COMPUTERSHARE INVESTOR SERVICES, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ David L. Adamson
	 

	 	 	 	 
	 

	 	 	 	Name: David L. Adamson
	 

	 	 	 	Title: Senior Relationship Manager






 









 





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 Rights Agreement, dated as of December 21, 2006 (the “Rights
Agreement”), between USG Corporation (the “Company”) and Computershare Investor Services LLC (the
“Rights Agent”) 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:




COMPUTERSHARE INVESTOR SERVICES LLC




	 	 	 	 	 	 	 
	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: 
	 	 	 	 
	 

	 

	 	 






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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.




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EXHIBIT B




SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK




     On December 21, 2006, the Board of Directors of USG Corporation adopted a rights plan and
declared a dividend of one preferred share purchase right for each outstanding share of USG’s
Common Stock, par value $0.10 per share. The dividend is payable on January 2, 2007 to our
stockholders of record on that date. The terms of the rights and the rights plan are set forth in
a Rights Agreement, dated as of December 21, 2006, by and between USG and Computershare Investor
Services LLC, as rights agent.



     Our Board adopted the rights plan to protect our stockholders from coercive takeover practices
or takeover bids that are inconsistent with their best interests. In general terms, the rights
plan imposes a significant penalty upon any person or group that acquires 15% or more of our
outstanding common stock without the prior approval of our Board. A person or group that acquires
a percentage of our common stock in excess of that threshold is called an “acquiring person.” Any
rights held by an acquiring person are void and may not be exercised. Based on an earlier
agreement with USG, through August 1, 2013 Berkshire Hathaway Inc. is allowed to acquire 40% of our
common stock, calculated on a fully diluted basis, without becoming an acquiring person.
Thereafter, Berkshire Hathaway may acquire 50% of our fully diluted common stock without becoming
an acquiring person or such greater percentage of our common stock that Berkshire Hathaway acquires
through an offer to purchase all of our common stock that remains open for at least 60 days.



     This summary of rights provides a general description of the rights plan. Because it is only
a summary, this description should be read together with the entire rights plan, which we
incorporate in this summary by reference. We have filed the rights plan with the Securities and
Exchange Commission as an exhibit to our registration statement on Form 8-A. Upon written request,
we will provide a copy of the rights plan free of charge to any stockholder.



     The Rights. Our Board of Directors authorized the issuance of one right per each outstanding
share of our common stock on January 2, 2007. If the rights become exercisable, each right would
allow its holder to purchase from us one one-hundredth of a share of our Junior Participating
Preferred Stock, Series D, for a purchase price of $200.00. Each fractional share of preferred
stock would give the stockholder approximately the same dividend, voting and liquidation rights as
does one share of our common stock. Prior to exercise, however, a right does not give its holder
any dividend, voting or liquidation rights.



     Exercisability. The rights will not be exercisable until the earlier of:




	•	 	10 days after a public announcement by USG that a person or group has become an acquiring
person; and
	 
	•	 	10 business days (or a later date determined by our Board) after a person or group begins a
tender or exchange offer that, if completed, would result in that person or group becoming an
acquiring person.





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     We refer to the date that the rights become exercisable as the “distribution date.” Until the
distribution date, our common stock certificates will also evidence the rights and will contain a
notation to that effect. Any transfer of shares of common stock prior to the distribution date
will constitute a transfer of the associated rights. After the distribution date, the rights will
separate from the common stock and be evidenced by rights certificates, which we will mail to all
holders of rights that have not become void.



     Flip-in Event. After the distribution date, if a person or group already is or becomes an
acquiring person, all holders of rights, except the acquiring person, may exercise their rights
upon payment of the purchase price to purchase shares of our common stock (or other securities or
assets as determined by the Board) with a market value of two times the purchase price.



     Flip-over Event. After the distribution date, if a flip-in event has already occurred and USG
is acquired in a merger or similar transaction, all holders of rights except the acquiring person
may exercise their rights upon payment of the purchase price, to purchase shares of the acquiring
corporation with a market value of two times the purchase price of the rights.



     Rights may be exercised to purchase our preferred shares only after the distribution date
occurs and prior to the occurrence of a flip-in event as described above. A distribution date
resulting from the commencement of a tender offer or exchange offer described in the second bullet
point above could precede the occurrence of a flip-in event, in which case the rights could be
exercised to purchase our preferred shares. A distribution date resulting from any occurrence
described in the first bullet point above would necessarily follow the occurrence of a flip-in
event, in which case the rights could be exercised to purchase shares of common stock or other
securities as described above.



     Expiration. The rights will expire on January 2, 2017 unless earlier redeemed or exchanged.



     Redemption. Our Board may redeem all (but not less than all) of the rights for a redemption
price of $0.001 per right at any time before the date of the first public announcement or
disclosure by USG that a person or group has become an acquiring person. Once the rights are
redeemed, the right to exercise rights will terminate, and the only right of the holders of rights
will be to receive the redemption price. The redemption price will be adjusted if we declare a
stock split or issue a stock dividend on our common stock.



     Exchange. After the date of the first public announcement by USG that a person or group has
become an acquiring person, but before an acquiring person owns 50% or more of our outstanding
common stock, our Board may exchange each right (other than rights that have become void) for one
share of common stock or an equivalent security.



     Anti-Dilution Provisions. Our Board may adjust the purchase price of the preferred shares,
the number of preferred shares issuable and the number of outstanding rights to prevent dilution
that may occur as a result of certain events, including among others, a stock dividend, a stock
split or a reclassification of the preferred shares or our common stock. No adjustments to the
purchase price of less than 1% will be made.



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     TIDE Policy. Our Board also adopted a Three-Year Independent Director Evaluation (“TIDE”)
policy with respect to the rights plan. The TIDE policy requires a Board committee comprised
solely of independent directors to review the rights plan at least once every three years to
determine whether to modify the rights plan in light of all relevant factors.



     Amendments. Before the time rights cease to be redeemable, our Board may amend or supplement
the rights plan without the consent of the holders of the rights, except that no amendment may
decrease the redemption price below $0.001 per right. At any time thereafter, our Board may amend
or supplement the rights plan only to cure an ambiguity, to alter time period provisions, to
correct inconsistent provisions or to make any additional changes to the rights plan, but only to
the extent that those changes do not impair or adversely affect any rights holder and do not result
in the rights again becoming redeemable. The limitations on our Board’s ability to amend the
rights plan does not affect our Board’s power or ability to take any other action that is
consistent with its fiduciary duties, including without limitation accelerating or extending the
expiration date of the rights, making any amendment to the rights plan that is permitted by the
rights plan or adopting a new rights plan with such terms as our Board determines in its sole
discretion to be appropriate.


* * *





B-3