Document:

Exhibit 10.1

 

AMENDED AND RESTATED

DAWSON GEOPHYSICAL COMPANY
 2006 STOCK AND PERFORMANCE INCENTIVE PLAN

 

 

Table of Contents

 

	
ARTICLE I Introduction
    	
1
    
	
ARTICLE II Objectives
    	
1
    
	
ARTICLE III Definitions
    	
2
    
	
Section 3.1
    	
Definitions
    	
2
    
	
ARTICLE IV Eligibility
    	
6
    
	
Section 4.1
    	
Employees
    	
6
    
	
Section 4.2
    	
Directors
    	
6
    
	
Section 4.3
    	
Consultants
    	
6
    
	
ARTICLE V Common Stock   Available for Awards
    	
6
    
	
Section 5.1
    	
Award Limitations
    	
6
    
	
Section 5.2
    	
Unissued Awards
    	
7
    
	
ARTICLE VI Administration.
    	
7
    
	
Section 6.1
    	
Administration by the Committee
    	
7
    
	
Section 6.2
    	
Liability of the Committee
    	
8
    
	
Section 6.3
    	
Authority of the Board
    	
8
    
	
Section 6.4
    	
Delegation of Authority
    	
9
    
	
ARTICLE VII Employee Awards   and Consultant Awards
    	
9
    
	
Section 7.1
    	
Employee Awards
    	
9
    
	
Section 7.2
    	
Limitations
    	
12
    
	
Section 7.3
    	
Consultant Awards
    	
12
    
	
ARTICLE VIII Director Awards
    	
12
    
	
Section 8.1
    	
Grant of Director Awards
    	
12
    
	
Section 8.2
    	
Options
    	
13
    
	
Section 8.3
    	
Stock Appreciation Rights
    	
13
    
	
Section 8.4
    	
Stock Awards
    	
13
    
	
Section 8.5
    	
Performance Awards
    	
13
    
	
Section 8.5
    	
Limitations
    	
13
    
	
ARTICLE IX Change of Control
    	
14
    
	
Section 9.1
    	
Acceleration of Vesting
    	
14
    
	
Section 9.2
    	
Exercise Period for Options and SARs
    	
14
    
	
ARTICLE X Non-United States   Participants
    	
14
    
	
ARTICLE XI Payment of Awards
    	
14
    
	
Section 11.1
    	
General
    	
14
    
	
Section 11.2
    	
Dividends, Earnings and Interest
    	
14
    
	
Section 11.3
    	
Cash-out of Awards
    	
15
    
	
ARTICLE XII Option Exercise
    	
15
    
	
Section 12.1
    	
Exercise in General
    	
15
    
	
Section 12.2
    	
Exercise through Attestation
    	
15
    
	
ARTICLE XIII Taxes
    	
15
    
	
ARTICLE XIV Amendment,   Modification, Suspension, or Termination of the Plan
    	
16
    
	
Section 14.1
    	
In General
    	
16
    
	
Section 14.2
    	
Exceptions
    	
16
    

 

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ARTICLE XV Assignability
    	
16
    
	
ARTICLE XVI Adjustments
    	
17
    
	
Section 16.1
    	
Adjustments in General
    	
17
    
	
Section 16.2
    	
Proportionate Adjustments
    	
17
    
	
ARTICLE XVII Restrictions
    	
18
    
	
ARTICLE XVIII Unfunded Plan
    	
18
    
	
ARTICLE XIX Right to   Employment
    	
19
    
	
ARTICLE XX Successors
    	
19
    
	
ARTICLE XXI Governing Law
    	
19
    
	
ARTICLE XXII Effectiveness   and Term
    	
19
    

 

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RECITALS

 

WHEREAS, Dawson Geophysical Company, a Texas corporation (“Pre-Merger Dawson”), has maintained the Dawson Geophysical Company 2006 Stock and Performance Incentive Plan (the “Prior Plan”); and

 

WHEREAS, pursuant to Section 4.1(e) of the Merger Agreement by and among Pre-Merger Dawson, TGC Industries, Inc. (the “Company”) and certain other parties thereto, dated October 8, 2014 (the “Merger Agreement”), the Company shall assume, as of the Effective Time (as defined in the Merger Agreement) the Prior Plan and the Rollover Awards thereunder (as defined in the Merger Agreement), and the Prior Plan and each such Rollover Award shall become, respectively, a plan and award of the Company (the “Assumption”); and

 

WHEREAS, in connection with the Assumption, such adjustments shall be made to the Prior Plan and the Rollover Awards as may be necessary to reflect the merger and associated transactions contemplated by the Merger Agreement (the “Merger”), including the substitution of Parent Common Stock (as defined in the Merger Agreement) for the Pre-Merger Dawson common stock thereunder, such that, except with respect to such adjustments, the Rollover Awards shall be subject to the same terms and conditions as set forth in the applicable award agreements thereto and the Prior Plan; and

 

WHEREAS, pursuant to Section 2.1 of the Merger Agreement, the Company shall change its name to “Dawson Geophysical Company” immediately prior to the Merger; and

 

WHEREAS, the Company desires to amend, restate and continue the Prior Plan, effective as of the Effective Time, to reflect the Merger Agreement and the Assumption.

 

NOW, THEREFORE, pursuant to the provisions set forth below, the Prior Plan is hereby amended and restated in its entirety to read as follows:

 

ARTICLE I
 INTRODUCTION

 

Effective as of the Effective Time (as defined in the Merger Agreement) (February 11, 2015), the Company has assumed the Prior Plan as the Amended and Restated Dawson Geophysical Company 2006 Stock and Performance Incentive Plan (the “Plan”) in order to reward certain corporate officers and employees, consultants and nonemployee directors of the Company and its Subsidiaries by providing for certain cash benefits and by enabling such persons to acquire shares of Common Stock of the Company.

 

ARTICLE II
 OBJECTIVES

 

The purpose of the Plan is to further the interests of the Company, its Subsidiaries and its shareholders by providing incentives in the form of Awards to certain employees, consultants and nonemployee directors who can contribute materially to the success and profitability of the Company and its Subsidiaries.  Such Awards will recognize and reward outstanding performance and individual contributions and give Participants in the Plan an interest in the Company that is parallel to that of the shareholders, thus enhancing the proprietary and personal interest of such Participants in the Company’s continued success and progress.  This Plan will also enable the

 

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Company and its Subsidiaries to attract and retain such employees, consultants and nonemployee directors.

 

ARTICLE III
 DEFINITIONS

 

Section 3.1                                    Definitions.  As used herein, the terms set forth below shall have the following respective meanings:

 

“Award” means an Employee Award, a Director Award or a Consultant Award, which Award shall include a Rollover Award.

 

“Award Agreement” means one or more Employee Award Agreement, Director Award Agreement or Consultant Award Agreement.

 

“Board” means the Board of Directors of the Company.

 

“Cash Award” means an Award denominated in cash.

 

“Change of Control” means one or more events reflected in an Award Agreement, which:

 

(i)                                     impact the control of:

(A)                               the Company, or

(B)                               the Board, or

(ii)                                  reflect a significant change in the ownership of:

(A)                               the Company or its Subsidiaries, or

(B)                               the assets of the Company.

 

Notwithstanding the paragraph above or the definition contained in an Award Agreement, in the event an Award is or becomes subject to section 409A of the Code, if the payment associated with such Award is permitted upon the occurrence of a Change of Control, the events that constitute a Change of Control shall be limited to the extent necessary to comply with the requirements of section 409A of the Code.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Committee” means the Compensation Committee of the Board or such other committee of the Board as is designated by the Board to administer certain portions of the Plan.

 

“Common Stock” means Dawson Geophysical Company common stock, par value $0.01 per share.

 

“Company” means Dawson Geophysical Company, a Texas corporation.

 

“Consultant” means a person other than an Employee or a Nonemployee Director providing bona fide services to the Company or any of its Subsidiaries as a consultant or advisor,

 

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as applicable, who was not serving as a consultant or advisor of the Company or any of its Subsidiaries immediately prior to the Effective Time (as defined in the Merger Agreement); provided that such person is a natural person and that such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for any securities of the Company.

 

“Consultant Award” means the grant of any Nonqualified Stock Option, SAR, Stock Award, Cash Award or Performance Award, whether granted singly, in combination, or in tandem, to a Consultant pursuant to such applicable terms, conditions and limitations as may be established in order to fulfill the objectives of the Plan.

 

“Consultant Award Agreement” means one or more agreements between the Company and a Consultant setting forth the terms, conditions and limitations applicable to a Consultant Award.

 

“Director” means an individual serving as a member of the Board who was not serving as such a member of the Board of the Company immediately prior to the Effective Time (as defined in the Merger Agreement).

 

“Director Award” means the grant of any Nonqualified Stock Option, SAR, Stock Award, Cash Award, or Performance Award, whether granted singly, in combination, or in tandem, to a Participant who is a Nonemployee Director pursuant to such applicable terms, conditions and limitations as may be established in order to fulfill the objectives of the Plan.

 

“Director Award Agreement” means one or more agreements between the Company and a Nonemployee Director setting forth the terms, conditions and limitations applicable to a Director Award.

 

“Dividend Equivalents” means, with respect to Restricted Stock Units or shares of Restricted Stock that are to be issued at the end of the Restriction Period, an amount equal to all dividends and other distributions (or the economic equivalent thereof) that are payable to stockholders of record during the Restriction Period on a like number of shares of Common Stock.

 

“Effective Date” means the date described in ARTICLE XXII.

 

“Employee” means (i) an employee of the Company or any of its Subsidiaries who was not serving as an employee of the Company or any of its Subsidiaries immediately prior to the Effective Time (as defined in the Merger Agreement), and (ii) an individual who has agreed to become such an employee of the Company or any of its Subsidiaries and is expected to become such an employee within the following six (6) months.

 

“Employee Award” means the grant of any Option, SAR, Stock Award, Cash Award or Performance Award, whether granted singly, in combination, or in tandem, to an Employee pursuant to such applicable terms, conditions and limitations (including treatment as a Performance Award) as may be established in order to fulfill the objectives of the Plan.

 

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“Employee Award Agreement” means one or more agreements between the Company and an Employee setting forth the terms, conditions and limitations applicable to an Employee Award.

 

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

 

“Fair Market Value” of a share of Common Stock means, as of a particular date:

 

(a)                                 if shares of Common Stock are listed on a national securities exchange, the mean between the highest and lowest sales price per share of the Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, or, at the discretion of the Committee, the price prevailing on the exchange at the time of exercise or other relevant time (as determined under procedures established by the Committee),

 

(b)                                 if shares of Common Stock are not so listed but are quoted by The Nasdaq Stock Market, Inc., the mean between the highest and lowest sales price per share of Common Stock reported on the consolidated transaction reporting system for The Nasdaq Stock Market, Inc., or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, or, at the discretion of the Committee, the price prevailing as quoted by The Nasdaq Stock Market, Inc. at the time of exercise,

 

(c)                                  if the Common Stock is not so listed or quoted, the mean between the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, as reported by The Nasdaq Stock Market, Inc., or, if not reported by The Nasdaq Stock Market, Inc., by the National Quotation Bureau Incorporated, or

 

(d)                                 if shares of Common Stock are not publicly traded, the most recent value determined by an independent appraiser appointed by the Company for such purpose.

 

“Grant Date” means the date an Award is granted to a Participant pursuant to the Plan.  The Grant Date for a substituted award is the grant date of the original award.

 

“Grant Price” means the price at which a Participant may exercise his or her right to receive cash or Common Stock, as applicable, under the terms of an Award.

 

“Incentive Stock Option” means an Option that is intended to comply with the requirements set forth in Section 422 of the Code.

 

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“Incumbent Board” means the members who, as of the Effective Date, comprise the Board.

 

“Nonemployee Director” means an individual serving as a member of the Board who is not an Employee who was not serving as such a member of the Board of the Company immediately prior to the Effective Time (as defined in the Merger Agreement).

 

“Nonqualified Stock Option” means an Option that is not an Incentive Stock Option.

 

“Option” means a right to purchase a specified number of shares of Common Stock at a specified Grant Price, which right may be an Incentive Stock Option or a Nonqualified Stock Option.

 

“Participant” means an Employee, Director or Consultant to whom an Award has been granted under this Plan.

 

“Performance Award” means an award made pursuant to this Plan that is subject to the attainment of one or more Performance Goals.

 

“Performance Goal” means one or more organizational or individual standards preestablished by the Committee to determine in whole or in part whether a Performance Award shall be earned.  Performance standards shall relate to a performance period of at least twelve (12) consecutive months in which the Employee, Director or Consultant performs services for the Company or any Subsidiary.  Performance standards shall be considered preestablished if they are established in writing by not later than ninety (90) days after the commencement of the period of service to which the standards relate, and only if the outcome is substantially uncertain at the time the standards are established.

 

“Plan” means the Amended and Restated Dawson Geophysical Company 2006 Stock and Performance Incentive Plan, as such Plan may be amended from time to time.

 

“Reload” means the automatic grant of a new Option or SAR upon the exercise of an existing Option or SAR.

 

“Restricted Stock” means any shares of Common Stock that are restricted or subject to forfeiture provisions.

 

“Restricted Stock Unit” means a Stock Unit that is restricted or subject to forfeiture provisions.

 

“Restriction Period” means a period of time beginning as of the Grant Date of an Award of Restricted Stock or Restricted Stock Units and ending as of the date upon which the Common Stock subject to such Award is no longer restricted or subject to forfeiture provisions.

 

“SAR” means a Stock Appreciation Right.

 

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“Stock Appreciation Right” means a right to receive a payment, in cash or Common Stock, equal to the excess of the Fair Market Value of a specified number of shares of Common Stock on the date the right is exercised over the Fair Market Value of such shares on the Grant Date, in each case, as determined by the Committee.

 

“Stock Award” means an Award in the form of shares of Common Stock or Stock Units, including an award of Restricted Stock or Restricted Stock Units.

 

“Stock Based Awards Limitations” means the limitations set forth in Section 7.2(b) and Section 7.2(a) below.

 

“Stock Unit” means a unit evidencing the right to receive in specified circumstances one share of Common Stock or equivalent value (as determined by the Committee).

 

“Subsidiaries” means more than one Subsidiary.

 

“Subsidiary” means in the case of a corporation, any corporation of which the Company directly or indirectly owns shares representing fifty percent (50%) or more of the combined voting power of the shares of all classes or series of capital stock of such corporation which have the right to vote generally on matters submitted to a vote of the stockholders of such corporation, in the case of a partnership or other business entity not organized as a corporation, any such business entity of which the Company directly or indirectly owns fifty percent (50%) or more of the voting, capital or profits interests (whether in the form of partnership interests, membership interests or otherwise), and any other corporation, partnership or other entity that is a “subsidiary” of the Company within the meaning of Rule 405 promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended.

 

ARTICLE IV
 ELIGIBILITY

 

Section 4.1                                    Employees.  All Employees are eligible for the grant of Employee Awards under this Plan in the discretion of the Committee.

 

Section 4.2                                    Directors.  Nonemployee Directors are eligible for the grant of Director Awards under this Plan.

 

Section 4.3                                    Consultants.  All Consultants are eligible for the grant of Consultant Awards under this Plan.

 

ARTICLE V
 COMMON STOCK AVAILABLE FOR AWARDS

 

Section 5.1                                    Award Limitations.  Subject to the provisions of ARTICLE XVI hereof, no Award shall be granted if it shall result in the aggregate number of shares of Common Stock issued under the Plan plus the number of shares of Common Stock covered by or subject to Awards then outstanding under this Plan (after giving effect to the grant of the Award in 

 

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question) to exceed 828,106 (it being understood that such number originally amounted to 750,000 under the Prior Plan).

 

Section 5.2                                    Unissued Awards

 

(a)                                 The number of shares of Common Stock that are the subject of Awards under this Plan that are forfeited or terminated, expire unexercised, are settled in cash in lieu of Common Stock or in a manner such that all or some of the shares covered by an Award are not issued to a Participant or are exchanged for Awards that do not involve Common Stock, shall again immediately become available for Awards hereunder.  If the Grant Price or other purchase price of any Option or other Award granted under the Plan is satisfied by tendering shares of Common Stock to the Company, or if the tax withholding obligation resulting from the settlement of any such Option or other Award is satisfied by tendering or withholding shares of Common Stock, only the number of shares of Common Stock issued net of the shares of Common Stock tendered or withheld shall be deemed delivered for purposes of determining usage of shares against the maximum number of shares of Common Stock available for delivery under the Plan or any sublimit set forth above.

 

(b)                                 Shares of Common Stock delivered under the Plan as an Award or in settlement of an Award issued or made:

 

(i)                                     upon the assumption, substitution, conversion or replacement of outstanding awards under a plan or arrangement of an entity acquired in a merger or other acquisition; or

 

(ii)                                  as a post-transaction grant under such a plan or arrangement of an acquired entity

 

shall, in each case, not reduce or be counted against the maximum number of shares of Common Stock available for delivery under the Plan, to the extent that the exemption for transactions in connection with mergers and acquisitions from the shareholder approval requirements of the Nasdaq National Market for equity compensation plans applies.

 

(c)                                  The Committee may from time to time adopt and observe such rules and procedures concerning the counting of shares against the Plan maximum or any sublimit as it may deem appropriate, including rules more restrictive than those set forth above to the extent necessary to satisfy the requirements of any national stock exchange on which the Common Stock is listed or any applicable regulatory requirement.  The Board and the appropriate officers of the Company are authorized to take from time to time whatever actions are necessary, and to file any required documents with governmental authorities, stock exchanges and transaction reporting systems to ensure that shares of Common Stock are available for issuance pursuant to Awards.

 

ARTICLE VI
 ADMINISTRATION.

 

Section 6.1                                    Administration by the Committee.

 

(a)                                 This Plan shall be administered by the Committee, except as otherwise provided herein.  Subject to the provisions hereof, the Committee shall have 

 

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full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof.  The Committee shall also have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan, as it may deem necessary or proper.  Any decision of the Committee in the interpretation and administration of this Plan shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned.

 

(b)                                 The Committee, in its discretion, may:

 

(i)                                     provide for the extension of the exercisability of an Employee Award or Consultant Award,

 

(ii)                                  accelerate the vesting or exercisability of an Employee Award or Consultant Award,

 

(iii)                               eliminate or make less restrictive any restrictions applicable to an Employee Award or Consultant Award,

 

(iv)                              waive any restriction or other provision of this Plan (insofar as such provision relates to Employee Awards or to Consultant Awards) or an Employee Award or Consultant Award,

 

(v)                                 otherwise amend or modify an Employee Award or Consultant Award in any manner, or

 

(vi)                              correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems necessary or desirable to further the Plan purposes.

 

(c)                                  The Committee may do the preceding actions in any manner that is either:

 

(i)                                     not adverse to the Participant to whom such Employee Award or Consultant Award was granted or

 

(ii)                                  consented to by such Participant.

 

(d)                                 Notwithstanding anything herein to the contrary, the Committee shall not be considered to have any discretion to amend or modify an Employee Award or Consultant Award in any manner than would cause the Award or the Participant who holds the Award to be subject to, or violate, the provisions of section 409A of the Code with respect to such Award, unless otherwise agreed to by the Participant.

 

Section 6.2                                    Liability of the Committee.  No member of the Committee shall be liable for anything done or omitted to be done by him or her, by any member of the Committee or by any officer of the Company in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute.

 

Section 6.3                                    Authority of the Board.  The Board shall have the same powers, duties, and authority to administer the Plan with respect to Director Awards as the Committee retains with respect to Employee Awards and Consultant Awards.

 

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Section 6.4                                    Delegation of Authority. The Committee may engage or authorize the engagement of a third party administrator to carry out administrative functions under the Plan.

 

ARTICLE VII
 EMPLOYEE AWARDS AND CONSULTANT AWARDS

 

Section 7.1                                    Employee Awards.  The Committee shall determine the type or types of Employee Awards to be made under this Plan and shall designate from time to time the Employees who are to be the recipients of such Awards.  Each Employee Award may, in the discretion of the Committee, be embodied in an Employee Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Committee in its sole discretion and, if required by the Committee, shall be signed by the Participant to whom the Employee Award is granted and signed for and on behalf of the Company.  Employee Awards may consist of those Awards listed in this ARTICLE VII and may be granted singly, in combination or in tandem.  Employee Awards may also be granted in combination or in tandem with, in replacement of (subject to the last sentence of ARTICLE XIV), or as alternatives to, grants or rights under this Plan or any other employee plan of the Company or any of its Subsidiaries, including the plan of any acquired entity.  An Employee Award may provide for the grant or issuance of additional, replacement or alternative Employee Awards upon the occurrence of specified events, including the exercise of the original Employee Award granted to a Participant.  All or part of an Employee Award may be subject to conditions established by the Committee, which may include, but are not limited to, continuous service with the Company and its Subsidiaries, achievement of specific business objectives, items referenced in Section 7.1(e)(ii)(B) below, and other comparable measurements of performance.  Upon the termination of employment by a Participant who is an Employee, any unexercised, deferred, unvested, or unpaid Employee Awards shall be treated as set forth in the applicable Employee Award Agreement or as otherwise specified by the Committee.

 

(a)                                 Options.  An Employee Award may be in the form of an Option, which may be an Incentive Stock Option or a Nonqualified Stock Option.  The Grant Price of an Option shall be not less than the Fair Market Value of the Common Stock subject to such Option on the Grant Date.  The term of the Option shall extend no more than ten (10) years after the Grant Date.  Options may not include provisions that Reload the Option upon exercise.  Similarly, Options may not be repriced or otherwise modified in any way that would constitute a reduction in the Grant Price associated with such Options.  Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Options awarded to Employees pursuant to this Plan, including the Grant Price, the term of the Options, the number of share subject to the Option and the date or dates upon which they become exercisable, shall be determined by the Committee.

 

(b)                                 Stock Appreciation Rights.  An Employee Award may be in the form of an SAR.  On the Grant Date, the Grant Price of an SAR shall be not less than the Fair Market Value of the Common Stock subject to such SAR.  The holder of a tandem SAR may elect to exercise either the option or the SAR, but not both.  The exercise period for an SAR shall extend no more than ten (10) years after the Grant Date.  SARs may not include provisions that Reload the SAR upon exercise.  Similarly, SARs may not be repriced or otherwise modified in any way that would constitute a reduction in the 

 

9

 

Grant Price associated with such SARs.  Subject to the foregoing provisions, the terms, conditions and limitations applicable to any SARs awarded to Employees pursuant to this Plan, including the Grant Price, the term of any SARs, and the date or dates upon which they become exercisable, shall be determined by the Committee.

 

(c)                                  Stock Awards.  An Employee Award may be in the form of a Stock Award.  The terms, conditions and limitations applicable to any Stock Awards granted pursuant to this Plan shall be determined by the Committee, subject to the limitations set forth below.

 

(d)                                 Cash Awards.  An Employee Award may be in the form of a Cash Award.  The terms, conditions and limitations applicable to any Cash Awards granted pursuant to this Plan shall be determined by the Committee.

 

(e)                                  Performance Awards.  Any Employee Award may be in the form of a Performance Award.  The terms, conditions and limitations applicable to any Performance Awards granted to Participants pursuant to this Plan shall be determined by the Committee, subject to the limitations set forth below.  Any Stock Award granted as an Employee Award which is a Performance Award shall have a minimum Restriction Period of twelve (12) months from the Grant Date, provided that the Committee may provide for earlier vesting upon a termination of employment by reason of death, disability, layoff, retirement or change in control.  The Committee shall set Performance Goals in its discretion which, depending on the extent to which they are met, will determine the value and/or amount of Performance Awards that will be paid out to the Participant and/or the portion of an Award that may be exercised.

 

(i)                                     Nonqualified Performance Awards.  Performance Awards granted to Employees that are not intended to qualify as qualified performance-based compensation under section 162(m) of the Code, or that are Options or SARs, shall be based on achievement of Performance Goals and be subject to such terms, conditions and restrictions as the Committee or its delegate shall determine.

 

(ii)                                  Qualified Performance Awards

 

(A)                               Performance Awards granted to Employees under the Plan that are intended to qualify as qualified performance-based compensation under Section 162(m) of the Code shall be paid, vested, or otherwise deliverable solely on account of the attainment of one or more pre-established, objective Performance Goals, which are established by the Committee while the outcome is substantially uncertain and prior to the earlier to occur of the following:

 

(I)                                   ninety (90) days after the commencement of the period of service to which the Performance Goal relates, and

 

(II)                              the lapse of twenty-five percent (25%) of the period of service (as scheduled in good faith at the time the goal is established).

 

(B)                               A Performance Goal is objective if a third party having knowledge of the relevant facts could determine whether the goal 

 

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is met.  Such a Performance Goal may be based on one or more business criteria that apply to the Employee, one or more business units, divisions or sectors of the Company, or the Company as a whole, and if so desired by the Committee, by comparison with a peer group of companies.  A Performance Goal may include one or more of the following:

 

(I)                                   Increased revenue;

 

(II)                              Net income measures (including but not limited to income after capital costs and income before or after taxes);

 

(III)                         Stock price measures (including but not limited to growth measures and total shareholder return);

 

(IV)                          Market share;

 

(V)                               Earnings per share (actual or targeted growth);

 

(VI)                          Earnings before interest, taxes, depreciation, and amortization (“EBITDA”);

 

(VII)                     Economic value added (“EVA”);

 

(VIII)                Cash flow measures (including but not limited to net cash flow and net cash flow before financing activities);

 

(IX)                          Return measures (including but not limited to return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity);

 

(X)                               Operating measures (including operating income, funds from operations, cash from operations, after-tax operating income, sales volumes, production volumes, and production efficiency);

 

(XI)                          Expense measures (including but not limited to finding and development costs, overhead cost and general and administrative expense);

 

(XII)                     Margins;

 

(XIII)                Shareholder value;

 

(XIV)                 Total shareholder return;

 

(XV)                      Proceeds from dispositions;

 

(XVI)                 Production volumes;

 

(XVII)            Total market value; and

 

(XVIII)       Corporate values measures (including ethics compliance, environmental, and safety).

 

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(iii)                               Unless otherwise stated, a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria).  In interpreting Plan provisions applicable to Performance Awards that are intended to qualify as qualified performance-based compensation under Section 162(m) of the Code, it is the intent of the Plan to conform with the standards of Section 162(m) of the Code and Treasury Regulation §1.162-27(e)(2)(i), as to grants to those Employees whose compensation is, or is likely to be, subject to Section 162(m) of the Code, and the Committee in establishing such goals and interpreting the Plan shall be guided by such provisions.  Prior to the payment of any compensation based on the achievement of Performance Goals for such Performance Awards, the Committee must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied.  Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Performance Awards, which are intended to qualify as qualified performance-based compensation under Section 162(m) of the Code, shall be determined by the Committee.

 

Section 7.2                                    Limitations.  Notwithstanding anything to the contrary contained in this Plan, the following limitations shall apply to any Employee Awards made hereunder:

 

(a)                                 no Participant may be granted, during any calendar year, Employee Awards consisting of Options or SARs (including Options or SARs that are granted as Performance Awards) that are exercisable for more than 176,000 shares of Common Stock (it being understood that such number amounted to 100,000 under the Prior Plan immediately prior to the Effective Time (as defined in the Merger Agreement)); and

 

(b)                                 no Participant may be granted, during any calendar year, Stock Awards (including Stock Awards that are granted as Performance Awards) covering or relating to more than 176,000 shares of Common Stock (it being understood that such number amounted to 100,000 under the Prior Plan immediately prior to the Effective Time (as defined in the Merger Agreement)).

 

Section 7.3                                    Consultant Awards.  Subject to the limitations described in this ARTICLE VII, the Committee shall have the sole responsibility and authority to determine the type or types of Consultant Awards to be made under this Plan and the terms, conditions and limitations applicable to such Awards.

 

ARTICLE VIII
 DIRECTOR AWARDS

 

Section 8.1                                    Grant of Director Awards.  The Board may grant Director Awards to Nonemployee Directors of the Company from time to time in accordance with this ARTICLE VIII.  Director Awards may consist of those Awards listed in this ARTICLE VIII and may be granted singly, in combination, or in tandem.  Each Director Award may, in the discretion of the Board, be embodied in a Director Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Board in its sole discretion and, if required by the 

 

12

 

Board, shall be signed by the Participant to whom the Director Award is granted and signed for and on behalf of the Company.

 

Section 8.2                                    Options.  A Director Award may be in the form of an Option; provided that Options granted as Director Awards shall not be Incentive Stock Options.  The Grant Price of an Option shall be not less than the Fair Market Value of the Common Stock subject to such Option on the Grant Date.  In no event shall the term of the Option extend more than ten (10) years after the Grant Date.  Options may not include provisions that Reload the Option upon exercise.  Similarly, Options may not be repriced or otherwise modified in any way that would constitute a reduction in the Grant Price associated with such Options.  Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Options awarded to Directors pursuant to this ARTICLE VIII, including the Grant Price, the term of the Options, the number of shares subject to the Option and the date or dates upon which they become exercisable, shall be determined by the Board.

 

Section 8.3                                    Stock Appreciation Rights.  A Director Award may be in the form of an SAR.  On the Grant Date, the Grant Price of an SAR shall be not less than the Fair Market Value of the Common Stock subject to such SAR.  The holder of a tandem SAR may elect to exercise either the option or the SAR, but not both.  The exercise period for an SAR shall extend no more than ten (10) years after the Grant Date.  SARs may not include provisions that Reload the SAR upon exercise.  Similarly, SARs may not be repriced or otherwise modified in any way that would constitute a reduction in the Grant Price associated with such SARs.  Subject to the foregoing provisions, the terms, conditions and limitations applicable to any SARs awarded to Directors pursuant to this Plan, including the Grant Price, the term of any SARs, and the date or dates upon which they become exercisable, shall be determined by the Board.

 

Section 8.4                                    Stock Awards.  A Director Award may be in the form of a Stock Award.  Any terms, conditions and limitations applicable to any Stock Awards granted to a Nonemployee Director pursuant to this Plan, including but not limited to rights to Dividend Equivalents, shall be determined by the Board.

 

Section 8.5                                    Performance Awards.  Without limiting the type or number of Director Awards that may be made under the other provisions of this Plan, a Director Award may be in the form of a Performance Award.  Any additional terms, conditions and limitations applicable to any Performance Awards granted to a Nonemployee Director pursuant to this Plan shall be determined by the Board.  The Board shall set Performance Goals in its discretion which, depending on the extent to which they are met, will determine the value and/or amount of Performance Awards that will be paid out to the Nonemployee Director.

 

Section 8.5                                    Limitations.  Notwithstanding anything to the contrary contained in this Plan the following limitations shall apply to any Director Awards made hereunder:

 

(a)                                 no Participant may be granted, during any fiscal year, Director Awards consisting of Options or SARs (including Options or SARs that are granted as Performance Awards) that are exercisable for more than 176,000 shares of Common Stock (it being understood that such number amounted to 100,000 under the Prior Plan immediately prior to the Effective Time (as defined in the Merger Agreement)); and

 

(b)                                 no Participant may be granted, during any fiscal year, Director Awards consisting of Stock Awards (including Stock Awards that are granted as 

 

13

 

Performance Awards) covering or relating to more than 176,000 shares of Common Stock (it being understood that such number amounted to 100,000 under the Prior Plan immediately prior to the Effective Time (as defined in the Merger Agreement)).

 

ARTICLE IX
 CHANGE OF CONTROL

 

Section 9.1                                    Acceleration of Vesting.  Except as provided in ARTICLE XVI, notwithstanding any other provisions of the Plan, including ARTICLE VII and ARTICLE VIII hereof, unless otherwise expressly provided in the applicable Award Agreement, in the event of a Change of Control during a Participant’s employment (or service as a Nonemployee Director or Consultant) with the Company or one of its Subsidiaries, each Award granted under this Plan to the Participant shall become immediately vested and fully exercisable and any restrictions applicable to the Award shall lapse (regardless of the otherwise applicable vesting or exercise schedules or performance goals provided for under the Award Agreement).

 

Section 9.2                                    Exercise Period for Options and SARs.  In the event of a Change of Control, outstanding Options and SARs shall remain exercisable until:

 

(a)                                 the expiration of the term of the Award or,

 

(b)                                 if the Participant should die before the expiration of the term of the Award, until the earlier of:

 

(i)                                     the expiration of the term of the Award or

 

(ii)                                  two (2) years following the date of the Participant’s death.

 

ARTICLE X
 NON-UNITED STATES PARTICIPANTS

 

The Committee may grant Awards to persons outside the United States under such terms and conditions as, in the judgment of the Committee, may be necessary or advisable to comply with the laws of the applicable foreign jurisdictions and, to that end, may establish sub-plans, modified option exercise procedures and other terms and procedures.  Notwithstanding the above, no actions may be taken by the Committee, and no Awards shall be granted, that would violate the Exchange Act, the Code, any securities law, any governing statute, or any other applicable law.

 

ARTICLE XI
 PAYMENT OF AWARDS

 

Section 11.1                             General.  Payment made to a Participant pursuant to an Award may be made in the form of cash or Common Stock, or a combination thereof.

 

Section 11.2                             Dividends, Earnings and Interest.  Rights to dividends or Dividend Equivalents may be extended to and made part of any Stock Award, subject to such terms, conditions and restrictions as the Committee may establish, including such terms, conditions and restrictions as may be necessary to ensure that the Stock Awards do not provide for the deferral of compensation within the meaning of section 409A of the Code.

 

14

 

Section 11.3                             Cash-out of Awards.  At the discretion of the Committee, an Award that is an Option or SAR may be settled by a cash payment equal to the difference between the Fair Market Value per share of Common Stock on the date of exercise and the Grant Price of the Award, multiplied by the number of shares with respect to which the Award is exercised.  With respect to all Awards other than Options or SARs, at the discretion of the Board or the Committee, as applicable, such Awards may be settled by a cash payment in an amount that the Board or the Committee, as applicable, shall determine in its sole discretion is equal to the fair market value of such Awards.

 

ARTICLE XII
 OPTION EXERCISE

 

Section 12.1                             Exercise in General.  The Grant Price shall be paid in full at the time of exercise in cash or, if permitted by the Committee and elected by the optionee, the optionee may purchase such shares by means of tendering Common Stock or surrendering another Award, including Restricted Stock, valued at Fair Market Value on the date of exercise, or any combination thereof.  The Committee shall determine acceptable methods for Participants who are Employees or Consultants to tender Common Stock or other Employee Awards or Consultant Awards; provided that any Common Stock that is or was the subject of an Employee Award or Consultant Award may be so tendered only if it has been held by the Participant for six (6) months unless otherwise determined by the Committee.  The Committee may provide for procedures to permit the exercise or purchase of such Awards by use of the proceeds to be received from the sale of Common Stock issuable pursuant to an Award.  Unless otherwise provided in the applicable Award Agreement, in the event shares of Restricted Stock are tendered as consideration for the exercise of an Option, a number of the shares issued upon the exercise of the Option, equal to the number of shares of Restricted Stock used as consideration therefor, shall be subject to the same restrictions as the Restricted Stock so submitted as well as any additional restrictions that may be imposed by the Committee.  The Committee may adopt additional rules and procedures regarding the exercise of Options from time to time, provided that such rules and procedures are not inconsistent with the provisions of this ARTICLE XII.

 

Section 12.2                             Exercise through Attestation.  An optionee desiring to pay the Grant Price of an Option by tendering Common Stock using the method of attestation may, subject to any such conditions and in compliance with any such procedures as the Committee may adopt, do so by attesting to the ownership of Common Stock of the requisite value in which case the Company shall issue or otherwise deliver to the optionee upon such exercise a number of shares of Common Stock subject to the Option equal to the result obtained by dividing (a) the excess of the aggregate Fair Market Value of the shares of Common Stock subject to the Option for which the Option (or portion thereof) is being exercised over the Grant Price payable in respect of such exercise by (b) the Fair Market Value per share of Common Stock subject to the Option, and the optionee may retain the shares of Common Stock the ownership of which is attested.

 

ARTICLE XIII
 TAXES

 

The Company or its designated third party administrator shall have the right to deduct applicable taxes from any Employee Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan, an appropriate amount of cash or number of

 

15

 

shares of Common Stock or a combination thereof for payment of taxes or other amounts required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes.  The Committee may also permit withholding to be satisfied by the transfer to the Company of shares of Common Stock theretofore owned by the holder of the Employee Award with respect to which withholding is required.  If shares of Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair Market Value when the tax withholding is required to be made.  The Committee may provide for loans, to the extent not otherwise prohibited by law, on either a short term or demand basis, from the Company to a Participant who is an Employee or Consultant to permit the payment of taxes subject to and required by law.

 

ARTICLE XIV
 AMENDMENT, MODIFICATION, SUSPENSION, OR TERMINATION OF THE PLAN

 

Section 14.1                             In General.  The Board may amend, modify, suspend, or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that:

 

(a)                                 no amendment or alteration that would adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without the consent of such Participant, and

 

(b)                                 no amendment or alteration shall be effective prior to its approval by the stockholders of the Company to the extent such approval is required by applicable legal requirements or the applicable requirements of the securities exchange on which the Company’s Common Stock is listed.

 

Section 14.2                             Exceptions.  Notwithstanding anything herein to the contrary, Options issued under the Plan will not be repriced, replaced, or regranted through cancellation or by decreasing the exercise price of a previously granted Option except as expressly provided by the adjustment provisions of ARTICLE XVI.

 

ARTICLE XV
 ASSIGNABILITY

 

Unless otherwise determined by the Committee and provided in the Award Agreement or the terms of the Award, no Award or any other benefit under this Plan shall be assignable or otherwise transferable except by will, by beneficiary designation, or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder.  In the event that a beneficiary designation conflicts with an assignment by will or the laws of descent and distribution, the beneficiary designation will prevail.  The Committee may prescribe and include in applicable Award Agreements or the terms of the Award other restrictions on transfer.  Any attempted assignment of an Award or any other benefit under this Plan in violation of this ARTICLE XV shall be null and void.

 

16

 

ARTICLE XVI
 ADJUSTMENTS

 

Section 16.1                             Adjustments in General.  The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the existing Common Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above.

 

Section 16.2                             Proportionate Adjustments              (a)         In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, each of the following shall be proportionately adjusted by the Board as appropriate to reflect such transaction:

 

(i)                                     the number of shares of Common Stock reserved under this Plan and the number of shares of Common Stock available for issuance pursuant to specific types of Awards as described in ARTICLE V,

 

(ii)                                  the number of shares of Common Stock covered by outstanding Awards,

 

(iii)                               the Grant Price or other price in respect of such Awards,

 

(iv)                              the appropriate Fair Market Value and other price determinations for such Awards, and

 

(v)                                 the Stock Based Awards Limitations.

 

(b)                                 In the event of any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting Common Stock or any distribution to holders of Common Stock of securities or property (including cash dividends that the Board determines are not in the ordinary course of business but excluding normal cash dividends or dividends payable in Common Stock), the Board shall make appropriate adjustments to:

 

(i)                                     the number of shares of Common Stock reserved under this Plan and the number of shares of Common Stock available for issuance pursuant to specific types of Awards as described in ARTICLE V,

 

(ii)                                  the number of shares of Common Stock covered by Awards,

 

(iii)                               the Grant Price or other price in respect of such Awards,

 

(iv)                              the appropriate Fair Market Value and other price determinations for such Awards, and

 

(v)                                 the Stock Based Awards Limitations to reflect such transaction; provided that such adjustments shall only be such as are necessary to maintain the proportionate interest of the holders of the Awards and preserve, without increasing, the value of such Awards.

 

17

 

(c)                                  In the event of a corporate merger, consolidation, acquisition of assets or stock, separation, reorganization, or liquidation, the Board shall be authorized to:

 

(i)                                     to assume under the Plan previously issued compensatory awards, or to substitute Awards for previously issued compensatory awards as part of such adjustment; if such event constitutes a Change of Control,

 

(ii)                                  to cancel Awards that are Options or SARs and give the Participants who are the holders of such Awards notice and opportunity to exercise for fifteen (15) days prior to such cancellation, or

 

(iii)                               to cancel any such Awards and to deliver to the Participants cash in an amount that the Board shall determine in its sole discretion is equal to the fair market value of such Awards on the date of such event, which in the case of Options or SARs shall be the excess of the Fair Market Value of Common Stock on such date over the exercise or strike price of such Award.

 

ARTICLE XVII
 RESTRICTIONS

 

No Common Stock or other form of payment shall be issued with respect to any Award unless the Company shall be satisfied based on the advice of its counsel that such issuance will be in compliance with applicable federal and state securities laws.  Certificates evidencing shares of Common Stock delivered under this Plan (to the extent that such shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation and any applicable federal or state securities law.  The Committee may cause a legend or legends to be placed upon such certificates (if any) to make appropriate reference to such restrictions.

 

ARTICLE XVIII
 UNFUNDED PLAN

 

This Plan shall be unfunded.  Although bookkeeping accounts may be established with respect to Participants under this Plan, any such accounts shall be used merely as a bookkeeping convenience, including bookkeeping accounts established by a third party administrator retained by the Company to administer the Plan.  The Company shall not be required to segregate any assets for purposes of this Plan or Awards hereunder, nor shall the Company, the Board or the Committee be deemed to be a trustee of any benefit to be granted under this Plan.  Any liability or obligation of the Company to any Participant with respect to an Award under this Plan shall be based solely upon any contractual obligations that may be created by this Plan and any Award Agreement or the terms of the Award, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company.  Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan.

 

18

 

ARTICLE XIX
 RIGHT TO EMPLOYMENT

 

Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or its Subsidiaries to terminate any Participant’s employment or other service relationship at any time, or confer upon any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Company or its Subsidiaries.

 

ARTICLE XX
 SUCCESSORS

 

All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

ARTICLE XXI
 GOVERNING LAW

 

This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Texas.

 

ARTICLE XXII
 EFFECTIVENESS AND TERM

 

The Plan, as amended and restated, shall be effective as of the Effective Time (as defined in the Merger Agreement).  No Award shall be made under the Plan ten (10) years or more after such date that the Prior Plan was approved by the shareholders of Pre-Merger Dawson on January 29, 2007.

 

19USG_EX10.3_12.31.14 10K

EXHIBIT 10.3

USG CORPORATION
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this “Agreement”) is effective as of [DATE] (the “Effective Date”) between USG Corporation, a Delaware corporation (the “Company”), and [NAME] (the “Executive”).
RECITALS:
WHEREAS, the Company desires to continue to employ the Executive and the Executive desires to accept such continued employment with the Company;
WHEREAS, as of the Effective Date, the Company shall employ the Executive on the terms and conditions set forth in this Agreement, and the Executive shall be retained and employed by the Company to perform services under the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
		
	1.
	Certain Definitions.  Certain words or phrases with initial capital letters not otherwise defined herein shall have the meanings set forth in Section 9 hereof.

		
	2.
	Employment.  The Company shall employ the Executive, and the Executive accepts employment with the Company, as of the Effective Date, upon the terms and conditions set forth in this Agreement for the period beginning on the Effective Date and ending as provided in Section 5 hereof (the “Employment Period”).

		
	3.
	Position and Duties.  During the Employment Period, the Executive shall serve as the [TITLE] of the Company effective [DATE] and shall have the normal duties, responsibilities and authority of an executive serving in such position, subject to the power of the Chief Executive Officer to expand or limit such duties, responsibilities and authority, either generally or in specific instances.  The Executive shall perform the Executive’s duties and responsibilities to the best of the Executive’s abilities in a diligent, trustworthy, businesslike and efficient manner.

		
	4.
	Compensation and Benefits.

		
	(a)
	Salary.  The Company agrees to pay the Executive a salary (“Base Salary”) during the Employment Period in installments based on the Company’s practices as may be in effect from time to time.  The Executive’s initial Base Salary shall be at the rate of [$   ] per year.  The Executive’s Base Salary shall be reviewed annually and may be increased from time to time.

		
	(b)
	Incentive Plans.  The Executive shall be eligible to participate in the Company’s annual and long-term incentive plans, on a basis comparable to other similarly situated executives of the Company.

		
	(c)
	Expense Reimbursement.  The Company shall reimburse the Executive for all reasonable expenses incurred by the Executive during the Employment Period in the course of performing the Executive’s duties under this Agreement that are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements applicable generally with respect to reporting and documentation of such expenses.  To the extent that the right to receive such reimbursement would constitute a “deferral of compensation” under Section 409A of the Code, any such reimbursement shall be made not later than the last day of the Executive’s tax year following the year in which the Executive incurs the expense.  In no event will the amount of expenses so reimbursed by the Company in one year affect the amount of expenses eligible for reimbursement to be provided in any other taxable year.

		
	(d)
	Standard Executive Benefits.  The Executive shall be entitled during the Employment Period to participate (on the same basis as other similarly situated executives of the Company) in the Company’s benefit plans (including health and life insurance, retirement and investment plans (including supplements thereto), vacation, perquisites and other benefits, but excluding, except as hereinafter provided in Section 6, any severance pay program or policy of the Company) for which substantially all other similarly situated executives of the Company are from time to time generally eligible, as determined from time to time by the Board or a committee of the Board.

		
	(e)
	Indemnification.  The Executive shall be eligible to enter into the Company’s standard Indemnification Agreement that is entered into with other similarly situated senior executives of the Company.

		
	5.
	Employment Period.

		
	(a)
	Except as hereinafter provided, the Employment Period shall begin on the Effective Date and shall extend until [DATE], with automatic one-year renewals thereafter unless either party notifies the other at least 120 days before the scheduled expiration date that the Employment Period is not to renew.

		
	(b)
	Notwithstanding (a) above, the Employment Period shall end early upon the first to occur of any of the following events:

		
	(i)
	the Executive’s death;

		
	(ii)
	the Company’s termination of the Executive’s employment on account of Disability;

		
	(iii)
	a Termination for Cause;

		
	(iv)
	a Termination without Cause; or

		
	(v)
	a Voluntary Termination.

		
	6.
	Post-Employment Period Payments.

		
	(a)
	At the end of the Employment Period for any reason, the Executive shall cease to have any rights to salary, bonus, expense reimbursements or other benefits, except that the Executive shall be entitled to receive: (i) on the sixty-first (61st) day after the Termination Date, any Base Salary which has accrued but is unpaid, any reimbursable expenses which have been incurred but are unpaid, and payment for any unexpired vacation days which have accrued under the Company’s or a Subsidiary’s vacation policy but are unused, as of the end of the Employment Period, (ii) any plan benefits which by their terms extend beyond termination of the Executive’s employment (but only to the extent provided in any such benefit plan in which the Executive has participated as an employee of the Company or a Subsidiary and excluding, except as hereinafter provided in Section 6, any severance pay program or policy of the Company or a Subsidiary), (iii) payments or benefits payable pursuant to the terms of any annual and/or long-term incentive plan of the Company or a Subsidiary in accordance with the terms thereof, and (iv) any benefits to which the Executive is entitled under Part 6 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as amended (“COBRA”).  In addition, the Executive shall be entitled to the additional benefits and amounts described in the succeeding subsections of this Section 6, in the circumstances described in such subsections.

		
	(b)
	If the Employment Period ends pursuant to Section 5 hereof on account of death, a Voluntary Termination, a Termination for Cause or a termination on account of the Executive’s Disability, the Company shall make no further payments to the Executive except as contemplated in Section 6(a) above.

		
	(c)
	If the Employment Period ends early pursuant to Section 5 on account of a Termination without Cause, the Executive shall be entitled to the payments contemplated in Section 6(a) above and as set forth below:

		
	(i)
	On the sixty-first (61st) day after the Termination Date, the Executive shall be entitled to a lump sum payment in an amount equal to one (1) times the sum of (A) Base Salary (at the highest rate in effect for any period within two years prior to the Termination Date), plus (B) annual bonus (in an amount equal to target annual bonus for the year in which the Termination Date occurs).

		
	(ii)
	On the sixty-first (61st) day after the Termination Date, the Executive shall be entitled to a lump sum payment equal to the total cost (including both the Executive’s and the Company’s portion of such costs as paid while the Executive was employed) of continuing the medical, dental, vision, long-term disability and life insurance benefits (excluding benefits under the executive death benefit plan) substantially similar to those that the Executive was receiving or entitled to receive immediately prior to the Termination Date for a period of eighteen (18) months; provided, however, if any benefit described in this Section 6(c)(ii) is subject to tax, the Company will pay to the Executive, at the same time the lump sum cash payment is made, an additional amount such that after payment by the Executive or the Executive’s dependents or beneficiaries, as the case may be, of all taxes so imposed, the recipient retains an amount equal to such taxes.

		
	(iii)
	The Executive shall be entitled to outplacement services for a time period (not less than six (6) months) established by the Company, by a firm selected by the Company in its sole discretion, and at the expense of the Company; provided, however, that all such outplacement services must be completed by December 31 of the second calendar year following the calendar year in which the Termination Date occurs and the Company will be required to make all payments to the Executive for such outplacement services by December 31 of the third calendar year following the calendar year in which the Termination Date occurs.

		
	(iv)
	Notwithstanding anything to the contrary contained in this Agreement, if any payment or reimbursement, or the provision of any benefit under this Agreement that is paid or provided upon the Executive's "separation from service" with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code would constitute a “deferral of compensation” under Section 409A of the Code and the Executive is a “specified employee” (as determined pursuant to procedures adopted by the Company in compliance with Section 409A of the Code) on the date of the Executive’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code, the Executive (or the Executive’s beneficiary) will receive payment or reimbursement of such amounts or the provision of such benefits upon the earlier of (i) the first day of the seventh month following the date of the Executive’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code or (ii) the Executive’s death.  In addition, if payment to the Executive of any amount pursuant to Section 6(a) or this Section 6(c) would constitute a “deferral of compensation” under Section 409A of the Code and if the Executive’s termination does not constitute a “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code, then payment of such amount shall be made, to the extent necessary to comply with Section 409A of the Code and subject to the preceding sentence, to the Executive on the later of (i) the payment date identified in the applicable paragraph of this Section 6 or (ii) on the earlier of (A) the Executive’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code, (B) the Executive's disability (within the meaning of Section 409A of the Code), (C) a change in control of the Company within the meaning of Section 409A of the Code or (D) the Executive’s death.

		
	(d)
	It is expressly understood that the Company’s payment obligations under Section 6(c) shall cease in the event the Executive breaches any of his or her agreements in Section 7 hereof and, in the event of any such breach, the Executive shall repay in cash immediately to the Company any amounts previously paid to the Executive under Section 6(c) of this Agreement.

		
	(e)
	The Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise.

		
	7.
	Competitive Activity; Confidentiality; Nonsolicitation.  

		
	(a)
	Acknowledgements and Agreements.  The Executive hereby acknowledges and agrees that in the performance of the Executive’s duties for the Company during the Employment 

Period, the Executive will be brought into frequent contact, either in person, by telephone or through the mails, with existing and potential customers of the Company throughout the United States.  The Executive also agrees that trade secrets and confidential information of the Company, more fully described in Section 7(i) of this Agreement, gained by the Executive during the Executive’s association with the Company, have been developed by the Company through substantial expenditures of time, effort and money and constitute valuable and unique property of the Company.  The Executive further understands and agrees that the foregoing makes it necessary for the protection of the business of the Company that the Executive not compete with the Company during the Employment Period and not compete with the Company for a reasonable period thereafter, as further provided in the following subsections.

		
	(b)
	Covenants During the Employment Period.  During the Employment Period, the Executive will not compete with the Company anywhere that the Company conducts its business.  In accordance with this restriction, but without limiting its terms, during the Employment Period, the Executive will not:

		
	(i)
	enter into or engage in any business which competes with the business of the Company;

		
	(ii)
	solicit customers, business, patronage or orders for, or sell, any products and services in competition with, or for any business that competes with, the business of the Company;

		
	(iii)
	divert, entice or otherwise take away any customers, business, patronage or orders of the Company or attempt to do so; or

		
	(iv)
	promote or assist, financially or otherwise, any person, firm, association, partnership, corporation or other entity engaged in any business which competes with the business of the Company.

		
	(c)
	Covenants Following Termination.  For a period of two (2) years following the termination of the Executive’s employment for any reason, unless the Executive is entitled to severance benefits under a severance agreement between the Executive and the Company providing for payment of benefits upon a termination of employment following a change in control of the Company and containing covenants made by the Executive with respect to the subject matter of this Section 7(c) (a “Severance Agreement”), in which case those covenants contained in such Severance Agreement shall apply to the Executive in lieu of the application of this Section 7, the Executive will not:

		
	(i)
	enter into or engage in any business which competes with the Company’s business within the United States;

		
	(ii)
	solicit customers, business, patronage or orders for, or sell, any products and services in competition with, or for any business, wherever located, that competes with, the Company’s business within the United States;

		
	(iii)
	divert, entice or otherwise take away any customers, business, patronage or orders of the Company within the United States, or attempt to do so; or

		
	(iv)
	promote or assist, financially or otherwise, any person, firm, association, partnership, corporation or other entity engaged in any business which competes with the Company’s business within the United States.

		
	(d)
	Indirect Competition.  For the purposes of Sections 7(b) and 7(c), but without limitation thereof, the Executive will be in violation thereof if the Executive engages in any or all of the activities set forth therein directly as an individual on the Executive’s own account, or indirectly as a general partner, joint venturer, employee, agent, salesperson, consultant, officer and/or director of any firm, association, partnership, corporation or other entity, or as a limited partner, member or stockholder of any limited partnership, limited liability company, or corporation in which the Executive or the Executive’s spouse, child or parent owns, directly or indirectly, individually or in the aggregate, more than five percent (5%) of the limited partnership interests, limited liability company interests or outstanding stock, as the case may be.

		
	(e)
	The Company.  For purposes of this Section 7, the Company shall include any and all Subsidiaries of the Company.

		
	(f)
	The Company’s Business.  For the purposes of Sections 7(b), 7(c), 7(j) and 7(k), the Company’s business is defined to be the manufacture and distribution of gypsum wallboard, joint compound and related gypsum products, cement board, gypsum fiber panels, ceiling panels and grid, the distribution of building products and any future businesses the Company may enter, as further described in any and all manufacturing, marketing and sales manuals and materials of the Company as the same may be altered, amended, supplemented or otherwise changed from time to time, or of any other products or services substantially similar to or readily substitutable for any such described products and services. 

		
	(g)
	Extension.  If it shall be judicially determined that the Executive has violated any of the Executive’s obligations under Section 7(c), then the period applicable to each obligation that the Executive shall have been determined to have violated shall automatically be extended by a period of time equal in length to the period during which such violation(s) occurred.

		
	(h)
	Non-Solicitation.  Until the expiration of three (3) years following the Termination Date, the Executive will not directly or indirectly at any time solicit or induce or attempt to solicit or induce any employee(s), sales representative(s), agent(s) or consultant(s) of the Company and/or of its Subsidiaries to terminate their employment, representation or other association with the Company and/or its Subsidiaries.

		
	(i)
	Further Covenants.

		
	(i)
	The Executive will keep in strict confidence, and will not, without the prior written consent of the Company or as may otherwise be required by law or legal process, directly or indirectly, at any time during or after the Executive’s employment with the Company, disclose, furnish, disseminate, make available or, except in the course of performing the Executive’s duties of employment, use any trade secrets or non-public confidential business and technical information of the Company or its customers or vendors, including without limitation as to when or how the Executive 

may have acquired such information before or during employment.  Such confidential information shall include, without limitation, the Company’s unique non-public confidential selling, manufacturing and servicing methods and business techniques, training, service and business manuals, promotional materials, training courses and other training and instructional materials, vendor and product information, customer and prospective customer lists, other customer and prospective customer information and other business information.  The Executive specifically acknowledges that all such non-public confidential information, whether reduced to writing, maintained on any form of electronic media, or maintained in the Executive’s mind or memory and whether compiled by the Company and/or the Executive, derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or use, that reasonable efforts have been made by the Company to maintain the secrecy of such information, that such information is the sole property of the Company and that any retention and use of such information by the Executive during the Executive’s employment with the Company (except in the course of performing the Executive’s duties and obligations to the Company) or after the termination of the Executive’s employment shall constitute a misappropriation of the Company’s trade secrets.

		
	(ii)
	The Executive agrees that upon termination of the Executive’s employment with the Company, for any reason, the Executive shall return to the Company, in good condition, all property of the Company, including without limitation, the originals and all copies of any materials which contain, reflect, summarize, describe, analyze or refer or relate to any items of information listed in Section 7(i)(i) of this Agreement.  In the event that such items are not so returned, the Company will have the right to charge the Executive for all reasonable damages, costs, attorneys’ fees and other expenses incurred in searching for, taking, removing and/or recovering such property.

		
	(j)
	Discoveries and Inventions; Work Made for Hire.

		
	(i)
	The Executive hereby assigns and agrees to assign to the Company, its successors, assigns or nominees, all of the Executive’s rights to any discoveries, inventions and improvements, whether patentable or not, made, conceived or suggested, either solely or jointly with others, by the Executive while in the Company’s employ with the use of the Company’s time, material or facilities or in any way within or related to the existing or contemplated scope of the Company’s business.  Any discovery, invention or improvement relating to any subject matter with which the Company was concerned during the Executive’s employment and made, conceived or suggested by the Executive, either solely or jointly with others, within one (1) year following termination of the Executive’s employment under this Agreement or any successor agreements shall be irrebuttably presumed to have been so made, conceived or suggested in the course of such employment with the use of the Company’s time, materials or facilities.  Upon request by the Company with respect to any such discoveries, inventions or improvements, the Executive will execute and deliver to the Company, at any time during or after the Executive’s employment, all appropriate documents for use in applying for, obtaining and maintaining such domestic and foreign patents as the Company may desire, and all 

proper assignments therefor, when so requested, at the expense of the Company, but without further or additional consideration.

		
	(ii)
	The Executive acknowledges that, to the extent permitted by law, all work papers, reports, documentation, drawings, photographs, negatives, tapes and masters therefor, prototypes and other materials (hereinafter, “items”), including without limitation, any and all such items generated and maintained on any form of electronic media, generated by the Executive during the Executive’s employment with the Company shall be considered a “work made for hire” and that ownership of any and all copyrights in any and all such items shall belong to the Company.  The item will recognize the Company as the copyright owner, will contain all proper copyright notices, e.g., “(creation date) USG Corporation, All Rights Reserved,” and will be in condition to be registered or otherwise placed in compliance with registration or other statutory requirements throughout the world.

		
	(k)
	Communication of Contents of Agreement.  During the Executive’s employment and for two (2) years thereafter, the Executive will communicate the contents of this Agreement to any person, firm, association, partnership, corporation or other entity which the Executive intends to be employed by, associated with, or represent and which is engaged in a business that is competitive to the business of the Company.

		
	(l)
	Non-Disparagement.  The Executive and his immediate family agree to refrain from criticizing or making disparaging or derogatory comments about the Company or any Subsidiary and any of their respective officers, directors, employees and agents or any products or services of the Company or any Subsidiary.

		
	(m)
	Relief.  The Executive acknowledges and agrees that the remedy at law available to the Company for breach of any of the Executive’s obligations under this Agreement would be inadequate.  The Executive therefore agrees that, in addition to any other rights or remedies that the Company may have at law or in equity, temporary and permanent injunctive relief may be granted in any proceeding which may be brought to enforce any provision contained in Sections 7(b), 7(c), 7(h), 7(i), 7(j) 7(k) and 7(l) of this Agreement, without the necessity of proof of actual damage.

		
	(n)
	Reasonableness.  The Executive acknowledges that the Executive’s obligations under this Section 7 are reasonable in the context of the nature of the Company’s business and the competitive injuries likely to be sustained by the Company if the Executive was to violate such obligations.  The Executive further acknowledges that this Agreement is made in consideration of, and is adequately supported by, the agreement of the Company to perform its obligations under this Agreement and by other consideration, which the Executive acknowledges constitutes good, valuable and sufficient consideration.

		
	8.
	Section 280G.  The amounts payable to the Executive under Section 6 may be adjusted as set forth in this Section 8 if the sum (the “combined amount”) of the amounts payable under Section 6 and all other payments or benefits which the Executive has received or has the right to receive from the Company which are defined in Section 280G(b)(2)(A)(i) of the Code, would, but for the application of this Section 8, constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code).  In such event, the combined amount shall be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as 

so reduced, constitutes a parachute payment; provided, however, that the foregoing reduction shall be made only if and to the extent that such reduction would result in an increase in the aggregate payments and benefits to be provided to the Executive, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income taxes).  To the extent the reduction referred to in the second sentence of this Section 8 applies, such reduction shall be made to the combined amount by reduction of the aggregate amount of the lump sum payments described in Sections 6(c)(i) and 6(c)(ii) of this Agreement and, to the extent further reductions are required, in such payments due to the Executive as the Company may determine.  Any determinations required to be made under this Section 8 shall be made by the Company’s independent accountants, which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the date of termination or such earlier time as is requested by the Company, and shall be made at the expense of the Company.  The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 8 shall not of itself limit or otherwise affect any other rights of the Executive under this Agreement.  

		
	9.
	Definitions.

		
	(a)
	“Board” means the Board of Directors of the Company.

		
	(b)
	“Cause” means that, prior to the termination of the Employment Period, the Executive shall have:  

		
	(i)
	committed a felony or a fraud;

		
	(ii)
	engaged in conduct that brings the Company or any of its Subsidiaries into substantial public disgrace or disrepute;

		
	(iii)
	committed gross negligence or gross misconduct with respect to the Company or any of its Subsidiaries;

		
	(iv)
	repudiated this Agreement or abandoned employment with the Company;

		
	(v)
	failed to follow the directives of the Board or the Chief Executive Officer and such failure is not cured within five (5) business days after written notice thereof to the Executive from the Company;

		
	(vi)
	breached any of the agreements in Section 7 hereof; 

		
	(vii)
	breached a material employment policy of the Company which is not cured within five (5) business days after written notice thereof to the Executive from the Company; or

		
	(viii)
	committed any other breach of this Agreement which is material and which is not cured within thirty (30) days after written notice thereof to the Executive from the Company.

		
	(c)
	“Code” means the Internal Revenue Code of 1986, as amended.

		
	(d)
	“Disability” means the Executive’s having become unable (as determined in good faith by the Chief Executive Officer), with reasonable accommodations, to regularly perform the Executive’s duties hereunder by reason of illness or incapacity.

		
	(e)
	“Release Agreement” means an agreement, in substantially the form customarily used by the Company for similarly situated executives of the Company in similar instances, pursuant to which the Executive releases, to the extent permitted by law, all current or future claims, known or unknown, arising on or before the date of the release against the Company, its subsidiaries and its officers.

		
	(f)
	“Subsidiary” means a corporation, company or other entity (i) at least 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but at least 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company.

		
	(g)
	“Termination Date” means the date on which the Executive’s employment is terminated by the Company or any Subsidiary.

		
	(h)
	“Termination for Cause” means the Company’s termination of the Executive’s employment for Cause.

		
	(i)
	“Termination without Cause” means the Company’s termination of the Executive’s employment other than a Termination for Cause.

		
	(j)
	“Voluntary Termination” means Executive’s termination of the Executive’s employment for any reason, including retirement.

		
	10.
	Representations.

		
	(a)
	Executive Representations.  The Executive represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by the Executive does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Executive is a party or by which the Executive is bound, (ii) the Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of the Executive, enforceable in accordance with its terms.

		
	(b)
	Company Representation.  The Company represents and warrants to the Executive that upon the execution and delivery of this Agreement by the Executive, this Agreement shall be the valid and binding obligation of the Company, enforceable in accordance with its terms.

		
	11.
	Release Agreement.  No payments shall be made under Section 6(c) hereof unless the Executive, on or before the sixtieth (60th) day following the Executive’s Termination Date, (i) signs and returns the Release Agreement within the number of days that the Company determines is required under applicable law, but in no event more than forty-five (45) days after the Company delivers the Release Agreement to the Executive and (ii) does not revoke the Release Agreement within the time period provided therein, such time period not to exceed seven (7) days.  If the Executive becomes entitled to payments under Section 6(c) hereof, the Company shall deliver to the Executive a copy of the Company’s standard form of Release Agreement within seven (7) days of the Executive’s Termination Date.

		
	12.
	Survival.  Subject to any limits on applicability contained therein, Section 7 hereof shall survive and continue in full force in accordance with its terms notwithstanding any termination of the Employment Period.

		
	13.
	Withholding of Taxes.  The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as the Company is required to withhold pursuant to any applicable law, regulation or ruling.

		
	14.
	Notices.  For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder will be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or three business days after having been sent by a nationally recognized overnight courier service such as FedEx or UPS, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive office and to the Executive at the Executive’s principal residence, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt.

		
	15.
	Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid or unenforceable provision had never been contained herein.

		
	16.
	Complete Agreement.  This Agreement embodies the complete agreement and understanding between the parties with respect to the employment of the Executive and the subject matter hereof and effective as of its date supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way, including any prior Employment Agreements between the Company and the Executive.  The severance benefits provided in Section 6(c) hereof shall be in lieu of any severance benefits under any plans, programs, policies or practices of the Company; provided, however, that if the Executive is entitled to benefits under this Agreement and a Severance Agreement, the Executive will be entitled to severance benefits under either this Agreement or such Severance Agreement, whichever agreement provides for greater benefits, but will not be entitled to benefits under both agreements.

		
	17.
	Counterparts.  This Agreement may be executed in separate counterparts, each of which shall be deemed to be an original and both of which taken together shall constitute one and the same agreement.

		
	18.
	Successors and Assigns.  This Agreement shall bind and inure to the benefit of and be enforceable by the Executive, the Company and their respective heirs, executors, personal representatives, successors and assigns, except that neither party may assign any rights or delegate any obligations hereunder without the prior written consent of the other party.  The Executive hereby consents to the assignment by the Company of all of its rights and obligations hereunder to any successor to the Company by merger or consolidation or purchase of all or substantially all of the Company’s assets, provided such transferee or successor assumes the liabilities of the Company hereunder.

		
	19.
	Governing Law.  The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Delaware and federal law, without giving effect to the principles of conflict of laws of such State, except as expressly provided herein.

		
	20.
	Amendment and Waiver.  The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and the Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

		
	21.
	Section 409A of the Code.  Each payment or reimbursement and the provision of each benefit under this Agreement shall be considered to be a separate payment and not one of a series of payments for purposes of Section 409A of the Code.  To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Executive.  This Agreement shall be administered in a manner consistent with this intent.  Reference to Section 409A of the Code is to Section 409A of the Internal Revenue Code of 1986, as amended, and will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
	
		
	 
	USG CORPORATION

	 
	 

	 
	By:

	 
	Name:

	 
	Title:

	 
	 

	 
	 

	 
	Executive

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