EX-10.36









EXHIBIT 10.36




USG CORPORATION




NONQUALIFIED STOCK OPTION AGREEMENT




          WHEREAS, the “Optionee” is an employee of USG Corporation (the “Company”) or a Subsidiary;




          WHEREAS, the Board of Directors of the Company (the “Board”) has granted to the Optionee, as
set forth in the Grant Summary on the Smith Barney website the “Date of Grant”, an Option Right
(the “Option”) pursuant to the Company’s Long-Term Incentive Plan, as amended (the “Plan”) to
purchase Common Shares of the Company at a price per share, which represents the Market Value per
Share on the Date of Grant (the “Option Price”), subject to the terms and conditions of the Plan
and the terms and conditions hereinafter set forth;




          WHEREAS, the execution of a Nonqualified Stock Option Agreement substantially in the form
hereof to evidence the Option has been authorized by a resolution of the Board; and




          WHEREAS, the Option is intended as a nonqualified stock option and shall not be treated as an
“incentive stock option” within the meaning of that term under Section 422 of the Internal Revenue
Code of 1986, as amended.




          NOW, THEREFORE, the Company and the Optionee agree as follows:





	1.	 	Right to Exercise.






	 	(a)	 	Subject to Sections 1(b) and (c), Section 3 and Section 5 below, the Option
will become exercisable as set forth in the Grant Summary if the Optionee remains
continuously employed until such time. To the extent the Option is exercisable, it may
be exercised in whole or in part.
	 
	 	(b)	 	Notwithstanding Section 1(a) above, the Option shall become immediately
exercisable in full, if at any time prior to the termination of the Option, a Change in
Control shall occur.
	 
	 	(c)	 	Notwithstanding Section 1(a) above, if the Optionee should die or become
permanently and totally disabled while in the employ of the Company or any Subsidiary,
or the Optionee should Retire (as hereinafter defined) (“Retirement”), this Option
shall immediately become exercisable in full and shall remain exercisable until
terminated in accordance with Section 3 below. The Grantee shall be considered to have
become permanently and totally disabled if the Grantee has suffered a total disability
within the meaning of the Company’s Long-Term Disability Plan for Salaried Employees.
“Retire” shall mean the Optionee’s retirement under a retirement plan (including,
without limitation, any




 









 












	 	 	 	supplemental retirement plan) of the Company or any Subsidiary, or the Optionee’s
retirement from employment with the Company or any Subsidiary after completing at
least three years of continuous service with the Company or any Subsidiary and
attaining the age of 62.






	2.	 	Payment. The Option Price shall be payable (a) in cash or by check acceptable to the
Company, (b) by actual or constructive transfer to the Company of nonforfeitable, unrestricted
Common Shares that have been owned by the Optionee for more than six (6) months prior to the
date of exercise, or (c) by a combination of such methods of payment; provided however, that
clauses (b) and (c) shall not apply if the Optionee is residing in Canada. The requirement of
payment in cash shall be deemed satisfied if the Optionee shall have made arrangements
satisfactory to the Company with a bank or a broker who is a member of the National
Association of Securities Dealers, Inc. to sell on the exercise date a sufficient number of
the shares being purchased so that the net proceeds of the sale transaction will at least
equal the Option Price plus payment of any applicable withholding taxes and pursuant to which
the bank or broker undertakes to deliver the full Option Price plus payment of any applicable
withholding taxes to the Company on a date satisfactory to the Company, but not later than the
date on which the sale transaction will settle in the ordinary course of business.
	 
	3.	 	Termination. This Option shall terminate on the earliest of the following dates:






	 	(a)	 	The date on which the Optionee ceases to be an employee of the Company or any
Subsidiary, if the Optionee’s employment with the Company or a Subsidiary is terminated
for Cause (for purposes of this Agreement and regardless of the meaning of such term
under labor laws of the place where the Optionee resides, “Cause” being defined as (i)
failure by the Optionee to substantially perform the Optionee’s duties, or (ii)
misconduct by the Optionee in violation of the Company’s or any Subsidiary’s
established business rules and procedures, or (iii) breach of any confidentiality,
non-competition or non-solicitation agreement entered into between the Optionee and the
Company);
	 
	 	(b)	 	Six (6) months after the Optionee ceases to be an employee of the Company or a
Subsidiary, unless the Optionee ceases to be such employee by reason of death,
permanent and total disability, Retirement or termination for Cause;
	 
	 	(c)	 	One (1) year after the death of the Optionee if the Optionee dies while an
employee of the Company or a Subsidiary (in which case the Option becomes immediately
exercisable in full pursuant to Section 1(c) herein);
	 
	 	(d)	 	Three (3) years after the permanent and total disability of the Optionee if the
Optionee becomes permanently and totally disabled (as described in Section 1(c) above)
while an employee of the Company or a Subsidiary (in which case the Option becomes
immediately exercisable in full pursuant to Section 1(c) herein);
	 
	 	(e)	 	Five (5) years after the date that the Optionee shall Retire;
	 
	 	(f)	 	Ten (10) years from the Date of Grant; and




2









 






	 	(g)	 	Immediately upon a finding by the Board (or a committee of the Board) that the
Optionee has engaged in any fraud or intentional misconduct as described in Section 17
hereof.






	4.	 	Option Nontransferable. This Option is not transferable by the Optionee otherwise than by
will or the laws of descent and distribution.
	 
	5.	 	Compliance with Law. This Option shall not be exercisable if such exercise would involve a
violation of any applicable federal, state or other securities law.
	 
	6.	 	Adjustments. The Board (or a committee of the Board) shall make such adjustments in the
Option Price and in the number or kind of Common Shares or other securities covered by this
Option as the Board (or a committee of the Board) in its sole discretion, exercised in good
faith, may determine is equitably required to prevent dilution or enlargement of the rights of
the Optionee that otherwise would result from (a) any stock dividend, extraordinary dividend,
stock split, combination of shares, recapitalization or other change in the capital structure
of the Company, or (b) any Change in Control, merger, consolidation, spin-off, split-off,
spin-out, split-up, reorganization or partial or complete liquidation, or other distribution
of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate
transaction or event having an effect similar to any of the foregoing. Moreover, in the event
of any such transaction or event, the Board (or a committee of the Board), in its discretion,
may provide in substitution for any or all of the Option Rights provided for herein such
alternative consideration as it may determine to be equitable in the circumstances.
	 
	7.	 	Taxes and Withholding. If the Company shall be required to withhold any federal, state,
local or foreign tax in connection with exercise of this Option, it shall be a condition to
such exercise that the Optionee pay or make provision satisfactory to the Company for payment
of all such taxes. The Optionee may elect that all or any part of such withholding
requirement be satisfied by retention by the Company of a portion of the shares purchased upon
exercise of this Option. If such election is made, the shares so retained shall be credited
against such withholding requirement at the Market Value per Share on the date of exercise.
In no event, however, shall the Company accept Common Shares for payment of taxes in excess of
required tax withholding rates.
	 
	8.	 	Continuous Employment. For purposes of this Agreement, the continuous employment of the
Optionee with the Company or a Subsidiary shall not be deemed to have been interrupted, and
the Optionee shall not be deemed to have ceased to be an employee of the Company or
Subsidiary, by reason of the (a) transfer of the Optionee’s employment among the Company and
its Subsidiaries or (b) an approved leave of absence.
	 
	9.	 	No Right to Future Grants; No Right of Employment; Extraordinary Item: In accepting the
grant, Grantee acknowledges that: (a) the Plan is established voluntarily by the Company, it
is discretionary in nature and it may be modified, suspended or terminated by the Company at
any time, as provided in the Plan and this Award Agreement; (b) the grant of the Stock
Options is voluntary and occasional and does not create any contractual or other right to
receive future grants of Stock Options , or




3









 






	 	 	benefits in lieu of Stock Options , even if Stock Options have been granted repeatedly in
the past; (c) all decisions with respect to future grants, if any, will be at the sole
discretion of the Company; (d) your participation in the Plan is voluntary; (e) the Stock
Options are an extraordinary item that does not constitute compensation of any kind for
services of any kind rendered to the Company, its Affiliates and/or Subsidiaries, and which
is outside the scope of Grantee’s employment contract, if any; (f) the Stock Options are
not part of normal or expected compensation or salary for any purposes, including, but not
limited to, calculating any severance, resignation, termination, redundancy, end of service
payments, bonuses, long-service awards, pension or retirement benefits or similar payments;
(g) in the event that Grantee is an employee of an Affiliate or Subsidiary of the Company,
the grant will not be interpreted to form an employment contract or relationship with the
Company; and furthermore, the grant will not be interpreted to form an employment contract
with the Affiliate or Subsidiary that is Grantee’s employer; (h) the future value of the
underlying Shares is unknown and cannot be predicted with certainty; (i) no claim or
entitlement to compensation or damages arises from forfeiture or termination of the Stock
Options or diminution in value of the Stock Options or the Shares and Grantee irrevocably
releases the Company, its Affiliates and/or its Subsidiaries from any such claim that may
arise; and (j) notwithstanding any terms or conditions of the Plan to the contrary, in the
event of involuntary termination of Grantee’s employment, Grantee’s right to receive Stock
Options and vest in Stock Options under the Plan, if any, will terminate effective as of
the date that Grantee is no longer actively employed and will not be extended by any notice
period mandated under local law (e.g., active employment would not include a period of
“garden leave” or similar period pursuant to local law); furthermore, in the event of
involuntary termination of employment, Grantee’s right to vest in the Stock Options after
termination of employment, if any, will be measured by the date of termination of Grantee’s
active employment and will not be extended by any notice period mandated under local law.
	 
	10.	 	Employee Data Privacy: Grantee hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of Grantee’s personal data as
described in this document by and among, as applicable, the Company, its Affiliates and its
Subsidiaries (“the Company Group”) for the exclusive purpose of implementing, administering
and managing your participation in the Plan. Grantee’s understands that the Company Group
holds certain personal information about Grantee, including, but not limited to, Grantee’s
name, home address and telephone number, date of birth, social insurance number or other
identification number, salary, nationality, job title, any Shares of stock or directorships
held in the Company, details of all Restricted Stock Units or any other entitlement to Shares
of stock awarded, canceled, exercised, vested, unvested or outstanding in Grantee’s favor, for
the purpose of implementing, administering and managing the Plan (“Data”). Grantee understands
that Data may be transferred to any third parties assisting in the implementation,
administration and management of the Plan, that these recipients may be located in your
country or elsewhere, and that the recipient’s country may have different data privacy laws
and protections than your country. You understand that you may request a list with the names
and addresses of any potential recipients of the Data by contacting Grantee’s local human
resources representative. Grantee authorizes the recipients to receive, possess, use, retain
and transfer the Data, in electronic or other form, for the purposes of implementing,
administering and managing




4









 






	 	 	Grantee’s participation in the Plan, including any requisite transfer of such Data as may be
required to a broker or other third party with whom Grantee may elect to deposit any Shares
acquired. Grantee understands that Data will be held only as long as is necessary to
implement, administer and manage Grantee’s participation in the Plan. Grantee understands
that Grantee may, at any time, view Data, request additional information about the storage
and processing of Data, require any necessary amendments to Data or refuse or withdraw the
consents herein, in any case without cost, by contacting in writing Grantee’s local human
resources representative. Grantee understands, however, that refusing or withdrawing
Grantee’s consent may affect Grantee’s ability to participate in the Plan. For more
information on the consequences of Grantee’s refusal to consent or withdrawal of consent,
Grantee understand that Grantee may contact Grantee’s local human resources representative.
	 
	11.	 	Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. In the
event of any inconsistency between the provisions of this Agreement and the Plan, the Plan
shall govern. All terms used herein with initial capital letters and not otherwise defined
herein that are defined in the Plan shall have the meanings assigned to them in the Plan. The
Board (or a committee of the Board) acting pursuant to the Plan, as constituted from time to
time, shall, except as expressly provided otherwise herein, have the right to determine any
questions which arise in connection with the grant of the Option hereunder.
	 
	12.	 	Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement
to the extent that the amendment is applicable hereto; provided, however, that
no amendment shall adversely affect the rights of the Optionee under this Agreement without
the Optionee’s consent.
	 
	13.	 	Severability. Subject to Section 17, if any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held invalid, unenforceable or
otherwise illegal, the remainder of this Agreement and the application of such provision to
any other person or circumstances shall not be affected, and the provisions so held to be
invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the
extent) necessary to make it enforceable, valid and legal.
	 
	14.	 	Successors and Assigns. Without limiting Section 4 hereof, the provisions of this Agreement
shall inure to the benefit of, and be binding upon, the successors, administrators, heirs,
legal representatives and assigns of the Optionee, and the successors and assigns of the
Company.




5









 






	15.	 	Governing Law. This Agreement shall be governed by and construed in accordance with the
internal substantive laws of the State of Delaware, without giving effect to any principle of
law that would result in the application of the law of any other jurisdiction.
	 
	16.	 	The Optionee acknowledges that by clicking on the “Accept” button on the Smith Barney web
page titled “Step 3: Confirm the Review/Acceptance of your Award,” the Optionee agrees to be
bound by the electronic execution of this Award Agreement.
	 
	17.	 	In accordance with Section 20(d) of the Plan, if the Board (or a committee of the Board) has
determined that any fraud or intentional misconduct by the Optionee was a significant
contributing factor to the Company having to restate all or a portion of its financial
statement(s), to the extent permitted by applicable law the Optionee shall: (a) return to the
Company, in exchange for payment by the Company of the Option Price paid therefor, all Common
Shares that the Optionee has not disposed of that were purchased pursuant to this Agreement;
and (b) with respect to any Common Shares that the Optionee has disposed of that were
purchased pursuant to this Agreement, pay to the Company in cash the difference between (i)
the Option Price paid therefor by the Optionee pursuant to this Agreement, and (ii) the
closing price of the Common Shares on the New York Stock Exchange on the date of such purchase
(or on the last trading day prior to such purchase, if there was no trading on the purchase
date). The remedy specified herein shall not be exclusive, and shall be in addition to every
other right or remedy at law or in equity that may be available to the Company.
Notwithstanding any other provision of this Agreement or the Plan to the contrary, if this
Section 17 is held invalid, unenforceable or otherwise illegal, the remainder of this
Agreement shall be deemed to be unenforceable due to a failure of consideration, and the
Optionee’s rights to the Option that would otherwise be granted under this Agreement shall be
forfeited.




6









 











     Executed in the name and on behalf of the Company at Chicago, Illinois as of the      
day of                     , 20     .



	 	 	 	 	 
	 	USG CORPORATION




Name: Brian J. Cook

Title:   Senior Vice President,

            Human Resources

 	 
	 	 	 
	 	 	 
	 	 	 
	 




     The undersigned Optionee hereby accepts the Option Rights evidenced by this Nonqualified Stock
Option Agreement on the terms and conditions set
forth herein and in the Plan.



PLEASE PRINT AND KEEP A COPY FOR YOUR RECORDS.





7