Share Sale and Subscription Agreement

Exhibit 2.2

 

Share Sale and Subscription Agreement

Australasia

USG Foreign Investments, Ltd.

USG Netherlands Global Holdings B.V.

USG Corporation

Boral Limited ACN ▇▇▇ ▇▇▇ ▇▇▇

Boral Building Materials Pty Limited ACN 090 736 888

Boral Australian Gypsum Limited ACN 004 231 976

▇▇▇▇▇ Day

▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇

▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇

Tel: ▇▇ ▇ ▇▇▇▇ ▇▇▇▇

Fax: ▇▇ ▇ ▇▇▇▇ ▇▇▇▇

▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇

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Share Sale and Subscription Agreement

 

 

1.		INTERPRETATION		5
2.		SUBSCRIPTION FOR SUBSCRIPTION SHARES AND SALE OF SALE SHARES		15
3.		PRE-COMPLETION		17
4.		CONDUCT OF THE BUSINESS PRIOR TO COMPLETION		19
5.		COMPLETION		28
6.		PURCHASE PRICE ADJUSTMENT		31
7.		WARRANTIES		37
8.		LIMITATIONS OF LIABILITY		40
9.		INDEMNITIES		48
10.		THIRD PARTY CLAIMS AND TAX DEMANDS		51
11.		CLAIMS		53
12.		TAX		54
13.		TERMINATION		56
14.		CONFIDENTIALITY AND ANNOUNCEMENTS		59
15.		EXCLUSIVITY		60
16.		DUTIES, COSTS AND EXPENSES		61
17.		GUARANTEES		61
18.		NOTICES		64
19.		GENERAL		65
SIGNING PAGES				68

SCHEDULE 1     WARRANTIES		70
SCHEDULE 2     ▇▇▇▇▇ ▇▇ WARRANTIES		97
SCHEDULE 3     BORAL TAX WARRANTIES		120
SCHEDULE 4     USG TAX WARRANTIES		123
SCHEDULE 5     COMPLETION STEPS		125
SCHEDULE 6     PERMITTED ACTIONS		130
SCHEDULE 7     GUARANTEES		131
SCHEDULE 8     CALCULATION OF EARN-OUT AMOUNTS		132
SCHEDULE 9     BAGL COMPLETION STATEMENT		141
SCHEDULE 10     USG COMPLETION STATEMENT		146
SCHEDULE 11     STRUCTURE DIAGRAMS		151
SCHEDULE 12     BORAL DISCLOSURE SCHEDULE		154
SCHEDULE 13     USG DISCLOSURE SCHEDULE		155

 

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SCHEDULE 14     LOANS AND BORROWINGS			156
SCHEDULE 15     FREEHOLD PROPERTIES			158
SCHEDULE 16     USG INTELLECTUAL PROPERTY REGISTRATIONS			160
SCHEDULE 17     BUSINESS NAMES			161
SCHEDULE 18     BANK ACCOUNT AND SIGNATORY TABLE			162
SCHEDULE 19     NOTICE DETAILS			164
SCHEDULE 20     FORM OF SHAREHOLDERS AGREEMENT			165
SCHEDULE 21     FORM OF USG AUSTRALASIA IP LICENCE			166
SCHEDULE 22     FORM OF BORAL AUSTRALASIA IP LICENCE			167
SCHEDULE 23     FORM OF USG TOSA			168
SCHEDULE 24     FORM OF BORAL TOSA			169
SCHEDULE 25     LEASE TERM SHEETS			170
SCHEDULE 26     DATA ROOM INDICES			171

 

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Share Sale and Subscription Agreement

 

DATE                                                                              OCTOBER 17, 2013

PARTIES

Boral Limited ACN ▇▇▇ ▇▇▇ ▇▇▇ of ▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (Boral)

Boral Building Materials Pty Limited ACN 090 736 888 of C/- Boral Limited, ‘AMP Centre’ ▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (Boral Seller)

Boral Australian Gypsum Limited ACN 004 231 976 of C/- Boral Limited, ‘AMP Centre’ ▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (BAGL)

USG Foreign Investments, Ltd. of ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America (Subscriber 1)

USG Netherlands Global Holdings B.V. a company incorporated under the laws of The Netherlands with Commercial Register No. 58458670 of ▇▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (insofar as it is acting in its capacity as subscriber of shares, Subscriber 2)

USG Netherlands Global Holdings B.V. a company incorporated under the laws of The Netherlands with Commercial Register No. 58458670 of ▇▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (insofar as it is acting in any capacity other than as a subscriber of shares, the Acquirer )

USG Corporation of ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (USG)

RECITALS

 

A.	Boral Seller is the registered holder of the entirety of the issued shares in BAGL.

 

▇.	▇▇▇▇▇ Seller wishes to contribute certain intellectual property rights to BAGL by executing the Boral Australasia IP Licences.

 

C.	Subscriber 1 wishes to contribute certain intellectual property to BAGL by executing the USG Australasia IP Licences in exchange for BAGL’s issuance of the Subscription 1 Shares on and subject to the terms of Completion.

 

D.	Subscriber 2 has agreed to contribute, and BAGL has agreed to acquire, the USG Contributed Shares in exchange for the Subscription 2 Shares on and subject to the terms of Completion.

 

E.

The execution of the Boral Australasia IP Licences, the execution of the USG Australasia IP Licences and the contribution of the USG Contributed Shares to BAGL are part of a single integrated transaction qualifying under sections 351 and 368 of the United States Internal Revenue Code of 1986, as amended.

 

▇.	▇▇▇▇▇ Seller has agreed to sell, and the Acquirer has agreed to purchase, the Sale Shares on and subject to the terms and conditions set out in this Agreement.

 

▇.	▇▇▇▇▇ has agreed to provide the Boral Warranties and the Boral Tax Warranties in respect to the BAGL Group and the ▇▇▇▇▇ ▇▇ Warranties in respect to the Boral Joint Ventures, on and subject to the terms and conditions set out in this Agreement.

 

H.	USG has agreed to provide the USG Warranties and the USG Tax Warranties in respect to the USG Contributed Entities on and subject to the terms and conditions set out in this Agreement.

 

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OPERATIVE PROVISIONS

 

1.	INTERPRETATION

 

 

1.1	Definitions

The following definitions apply in this Agreement unless the context requires otherwise.

Accepting Party means:

 

(a)

if the Notifying Party is Boral, the relevant USG Party (or Parties) which may be subject to a Boral Claim as contemplated by clause 10.1(a); and

 

(b)

if the Notifying Party is USG, the relevant Boral Party (or Parties) which may be subject to a USG Claim as contemplated by clause 10.1(b).

Agreement means this Agreement.

Anti-Corruption Laws means the Australian Criminal Code Amendment (Bribery of Foreign Public Officials) ▇▇▇ ▇▇▇▇ (Cth) (as amended from time to time), the US Foreign Corrupt Practices Act and any other analogous Legal Requirements (as defined in Schedule 1) that prohibit bribery, the provision or acceptance of unlawful gratuities, facilitation payments or other benefits to or from any Government Official (as defined in Schedule 1 or any other Person.

Application Forms means application forms for the subscription by the Subscribers for the Subscription Shares in the form agreed between USG and Boral (acting reasonably and in good faith having regard to customary market practice).

Asia Completion has the meaning given to the term “Completion” in the Asia Sale Agreement.

Asia Sale Agreement means the Share Sale and Subscription Agreement between BGA, Boral, Boral International Pty Limited, USG and USG Netherlands Global Holdings B.V. dated on or about the date of this Agreement.

Asia Sale Agreement Claim has the meaning given to the term “Claim” in the Asia Sale Agreement.

Asia Sale Agreement Party means a party to the Asia Sale Agreement.

BAGL Group means BAGL and its Subsidiaries, excluding the Boral Joint Ventures and excluding any entity which becomes a Subsidiary of BAGL at Completion as a result of this Agreement (and BAGL Group Member means any member of the BAGL Group from time to time).

BGA means Boral Gypsum Asia Sdn Bhd a company incorporated under the laws of Malaysia with company number 880595-D of ▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇/▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ Darul Ehsan Malaysia 47500.

BGA Group and BGA Group Member have the meanings given to that term in the Asia Sale Agreement.

Boral Asia IP Licences has the meaning given to that term in the Asia Sale Agreement.

 

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Boral Australasia IP Licences means:

 

(a)

the Umbrella Intellectual Property Licence Agreement in the form set out in Schedule 22 (or such other form as Boral and USG may agree before Completion); and

 

(b)

each agreement forming a schedule to that agreement (in each case in the form set out the relevant schedule at Schedule 22 (or such other form as Boral and USG may agree before Completion).

Boral Claim means a Claim of or brought by a Boral Claim Group Member in accordance with this Agreement, other than a Claim in relation to any Earn-Out Amount.

Boral Claim Group means Boral and the Boral Seller and Boral Claim Group Member means any of them.

Boral Consolidated Group means the Consolidated Group of which Boral Seller and any of the BAGL Group Members are members.

Boral Disclosure Schedule means the disclosure schedule relating to the Boral Warranties and the disclosure schedule relating to the ▇▇▇▇▇ ▇▇ Warranties set out in Schedule 12.

Boral Group means Boral and each of its Subsidiaries, but excluding the BGA Group and the BAGL Group (and for the avoidance of doubt after Completion the Joint Venture Group) and excluding the Boral Joint Ventures and their respective Subsidiaries (and Boral Group Member means any member of the Boral Group from time to time).

Boral Joint Ventures means Gypsum Resources Australia Pty Ltd and Rondo Building Services Pty Ltd.

▇▇▇▇▇ ▇▇ Warranty means each warranty stated in Schedule 2, given on the basis that the Warrantor is a Boral Group Member.

Boral Party means Boral and each other Boral Group Member who is a Party to this Agreement.

Boral Q&A Responses means the ‘Q&A’ responses provided by or on behalf of Boral via the relevant Data Room to questions asked during the due diligence process.

Boral Tax Sharing Agreement means the Tax Sharing Agreement entered into between Boral and each relevant BAGL Group Member dated 26 July 2010.

Boral Tax Warranty means each warranty stated in Schedule 3.

Boral TOSA means the services agreement substantially in the form set out in Schedule 24 (or such other form as Boral and USG may agree before Completion).

Boral Warranty means each warranty stated in Schedule 1, given on the basis that the Warrantor is a Boral Group Member (and so that for the avoidance of doubt such warranties are given in relation to the Boral Sale Group and not the USG Sale Group as defined in Schedule 1).

Business Day means a day on which banks are open for business in Sydney, Chicago and Kuala Lumpur and Singapore.

Claim means any claim, demand, proceeding or cause of action, whether arising in contract, tort, or under statute in connection with:

 

(a)

any provision of this Agreement;

 

(b)

the Subscription Shares or their issue and allotment to the Subscribers;

 

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(c)

the Sale Shares or their transfer to the Acquirer;

 

(d)

the USG Contributed Shares or their transfer to BAGL; or

 

(e)

any other matter connected with this Agreement,

but does not include any IP Claim, TOSA Claim, Asia Sale Agreement Claim or Lease Term Sheet Claim.

Claim Group means, in relation to any Claim, the Claimant Party as defined in clause 10.1 and each other member of:

 

(a)

the Boral Claim Group (if the Claimant Party is a member of the Boral Group); or

 

(b)

the USG Claim Group (if the Claimant Party is a member of the USG Group).

Code means the United States Internal Revenue Code of 1986, as amended.

Competing Proposal – USG means any enquiries, expressions of interest, offers or proposals from any Person (other than a Boral Group Member, BAGL Group Member or Person acting on their behalf):

 

(a)

relating to any acquisition or purchase of any interest in any USG Contributed Entity or otherwise in the USG Group’s gypsum operations in the Territory, or in the business or all or any material portion of the assets of any USG Contributed Entity (other than sales and purchases in the ordinary course of business);

 

(b)

to enter into any merger, recapitalisation, joint venture or other business combination with respect to any USG Contributed Entity or otherwise with respect to the USG Group’s gypsum operations in the Territory; or

 

(c)

to enter into any other extraordinary business transaction involving or otherwise in relation to any USG Contributed Entity or otherwise with respect to the USG Group’s gypsum operations in the Territory.

Competing Proposal – Boral means any enquiries, expressions of interest, offers or proposals from any Person (other than a USG Group Member or Person acting on its behalf):

 

(a)

relating to any acquisition or purchase of any interest in any BAGL Group Member or otherwise in the Boral Group’s gypsum operations in the Territory, or in the business or all or any material portion of the assets of any BAGL Group Member (other than sales and purchases in the ordinary course of business);

 

(b)

to enter into any merger, recapitalisation, joint venture or other business combination with respect to any BAGL Group Member or otherwise with respect to the Boral Group’s gypsum operations in the Territory; or

 

(c)

to enter into any other extraordinary business transaction involving or otherwise in relation to any BAGL Group Member or otherwise with respect to the Boral Group’s gypsum operations in the Territory.

Completion means completion of the issue and allotment of the Subscription Shares and the sale and purchase of the Sale Shares in accordance with clause 4.

Completion Date means the date on which Completion occurs.

Condition Satisfaction Date means the date on which all of the Conditions have been satisfied or waived in accordance with this Agreement.

Conditions means the conditions specified in clause 3.2.

 

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Consequential Loss means any Loss which would not fairly and reasonably be considered to arise naturally, that is according to the usual course of things, from the breach, event or act or omission giving rise to the relevant liability.

Consolidated Group means a Consolidated Group or a MEC group as those terms are defined in section 995-1 of the ITAA 1997.

Corporations Act means the ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ (Cth).

Disputing Action means, in respect of Tax Demand, any action to cause the Tax Demand to be withdrawn, reduced or postponed or to avoid, resist, object to, defend, appear against or compromise the Tax Demand and any judicial or administrative proceedings arising out of that action.

Duty means any stamp, transaction or registration duty or similar charge which is imposed by any Taxing Authority and includes any interest, fine, penalty, charge or other amount which is imposed in relation to that duty or charge.

Earn-Out Amounts means:

 

(a)

such part of the First Earn-Out Amount, as defined Schedule 8, as is characterised in clause 2.7(b)(i) of Schedule 8 as an adjustment to the Purchase Price under this Agreement; and

 

(b)

such part of the Second Earn-Out Amount, as defined Schedule 8, as is characterised in clause 2.8(b)(i) of Schedule 8 as an adjustment to the Purchase Price under this Agreement.

Encumbrance means a mortgage, charge, pledge, lien, encumbrance, security interest, title retention, or any other security agreement or arrangement in favour of any Person by way of security for the payment of a debt or any other monetary obligation or the performance of any other obligation, whether registered or unregistered.

End Date means 30 September 2014.

Environmental Warranties means the Warranties in paragraphs 11.13 to 11.16 of Schedule 1.

Exclusivity Period means the period commencing on the date of this Agreement and expiring on the earlier of Completion or termination of this Agreement in accordance with its terms.

Exit Payment means the payment required to be made by clause 4.8(c) in accordance with the Boral Tax Sharing Agreement and pursuant to section 721 35 of the ITAA 1997.

Final Adjustment Date is a Business Day that is no later than 5 Business Days after the date on which the BAGL Adjustment Amount and the USG Adjustment Amount are agreed or otherwise finally determined under clause 6.

Fund has the meaning given to it in Schedule 1 or Schedule 2 (as applicable).

Group Liability has the same meaning as that term is defined in section 721 10(1)(a) of the ITAA 1997.

Initial Purchase Price means US$155 million.

 

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Intellectual Property Rights means:

 

(a)

patents, design, trade marks and service marks (whether registered or unregistered) and any applications for, or rights to apply for, registration of any patent, design, trade ▇▇▇▇ or service ▇▇▇▇;

 

(b)

copyright (including copyright in software, websites, databases and advertising and other promotional materials);

 

(c)

all rights to have information (including trade secrets, know-how, operating procedures and technical information) kept confidential; and

 

(d)

all other rights or protecting having similar effect anywhere in the world.

IP Claim means any claim, demand, proceeding or cause of action whether arising in contract, tort, or under statute, made pursuant to the Boral Australasia IP Licences, the Boral Asia IP Licences, the USG Australasia IP Licences or the USG Asia IP Licences.

ITAA 1936 means the Income Tax Assessment ▇▇▇ ▇▇▇▇ (Cth).

ITAA 1997 means the Income Tax Assessment ▇▇▇ ▇▇▇▇ (Cth).

Joint Venture Group means, in respect of any period after Completion, BAGL, SingCo and their respective Subsidiaries and Joint Venture Group Member means any of them.

Lease Term Sheet Claim means any claim, demand, proceeding or cause of action whether arising in contract, tort, or under statute, made pursuant to any lease or sublease entered into as contemplated by clause 4.17.

Lease Term Sheets means the non-binding term sheets in Schedule 25.

Loss means any loss, damage, liability, cost or expense of any kind and however arising, including penalties, fines and interest, compliance, monitoring or investigation costs, and loss, liability, cost or expense that is prospective or contingent and the amount of which for the time being is not ascertained or ascertainable.

Material Adverse Change means:

 

(a)

in relation to Boral, a material adverse change in relation to the business, operations, financial condition or performance, results of operations, assets, liabilities or prospects of the BAGL Group and the BGA Group taken as a whole and which is reasonably expected to materially adversely impact the value of the aggregate consideration received at Completion by the USG Group under the Transaction Documents; and

 

(b)

in relation to USG, a material adverse change in relation to:

 

(i)

the business, operations, financial condition or performance, results of operations, assets, liabilities or prospects of the USG Contributed Entities and the ‘USG Contributed Entities’ as defined in the Asia Sale Agreement, taken as a whole; and

 

(ii)

the Intellectual Property Rights the subject of the USG Australasia IP Licences and the USG Asia IP Licences,

taken as a whole and which is reasonably expected to materially adversely impact the value of the aggregate consideration received at Completion by the Boral Group under the Transaction Documents (and for these purposes the consideration to the Boral Group is to be taken to include 50% of the value of assets and rights contributed by the USG Group to BAGL and SingCo at Completion in addition to the cash purchase price paid by USG under this Agreement and the Asia Sale Agreement at Completion).

 

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Notifying Party means:

 

(a)

in the circumstances contemplated by clause 10.1(a), Boral; and

 

(b)

in the circumstances contemplated by clause 10.1(b), USG.

Parent Guarantee means:

 

(a)

in relation to Boral, the guarantees, indemnities, charges or other securities listed in Part 1 of Schedule 7 and any other guarantees, indemnities, charges or other securities, including bank guarantees and cash deposits, given by a Boral Group Member to a Third Party to better secure the performance of a BAGL Group Member or required for the benefit of a BAGL Group Member; and

 

(b)

in relation to USG, the guarantees, indemnities, charges or other securities listed in Part 1 of Schedule 7 and any other guarantees, indemnities, charges or other securities, including bank guarantees and cash deposits, given by a USG Group Member to a Third Party to better secure the performance of a USG Contributed Entity or required for the benefit of a USG Contributed Entity.

Party means a party to this Agreement.

Person means any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, entity or Regulatory Authority.

Purchase Price means:

 

(a)

the Initial Purchase Price as adjusted in accordance with this Agreement; and

 

(b)

the Earn-Out Amounts (if any).

Receiving Party means:

 

(a)

if Boral or Boral Seller is the Claimant Party, USG; and

 

(b)

if USG, the Acquirer or any Subscriber is the Claimant Party, Boral.

Related Corporation means in relation to an entity, each body corporate:

 

(a)

that is a Subsidiary of that entity;

 

(b)

of which the entity is a Subsidiary; or

 

(c)

that is a Subsidiary of a company of which the entity is also a Subsidiary.

Representatives means the officers, employees, contractors, consultants, professional advisers and agents of a Party.

Sale Shares means 421,304,349 fully paid ordinary shares in BAGL.

Settle means to:

 

(a)

accept, compromise or pay;

 

(b)

agree to arbitrate, compromise or settle; or

 

(c)

make any admission or take any action in relation to,

any Claim or Third Party Claim or Tax Demand as relevant.

 

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Share Contribution Agreement means an agreement between Subscriber 1 and Subscriber 2 in which Subscriber 1 transfers the Subscription 1 Shares, which Subscriber 1 received in exchange for the USG Australasia IP License, to Subscriber 2 in exchange for share premium in Subscriber 2 (in a form substantially the same as that disclosed to Boral prior to the date of this Agreement).

Shareholders Agreement means the shareholders agreement in the form set out in Schedule 20 (or such other form as Boral and USG may agree before Completion).

Shareholding Percentage means, in respect of any time after Completion:

 

(a)

in relation to Boral, the Shareholding Percentage of Boral (in each case as defined in the Shareholders Agreement) for the purposes of the Shareholders Agreement at the relevant time; and

 

(b)

in relation to USG, the Shareholding Percentage of USG (in each case as defined in the Shareholders Agreement) for the purposes of the Shareholders Agreement at the relevant time.

SingCo means the Singapore company to be incorporated before Completion as contemplated by clause 2.4 of the Asia Sale Agreement.

Subscribers means:

 

(a)

Subscriber 1; and

 

(b)

Subscriber 2, acting in its capacity as a subscriber for shares.

Subscription 1 Shares means 99,130,435 fully paid ordinary shares in BAGL (to be issued to Subscriber 1).

Subscription 2 Shares means 49,565,217 fully paid ordinary shares in BAGL (to be issued to Subscriber 2).

Subscription Shares means the Subscription 1 Shares and Subscription 2 Shares.

Subsidiary has the meaning provided in Section 46 of the Corporations Act.

Subsidiary Guarantees means:

 

(a)

in relation to Boral, the guarantees, indemnities, charges or other securities listed in Part 2 of Schedule 7 and any other guarantees, indemnities, charges or other securities, including bank guarantees and cash deposits, given by a BAGL Group Member to a Third Party to better secure the performance of a Boral Group Member or required for the benefit of a Boral Group Member; and

 

(b)

in relation to USG, the guarantees, indemnities, charges or other securities listed in Part 2 of Schedule 7 and any other guarantees, indemnities, charges or other securities, including bank guarantees and cash deposits, given by a USG Contributed Entity to a Third Party to better secure the performance of a USG Group Member or required for the benefit of a USG Group Member.

Tax means any tax, levy, rates, deduction, excise, duty, charge, surcharge, contribution, withholding tax, impost or withholding obligation of whatever nature, whether direct or indirect, by whatever method collected or recovered, assessed, levied or imposed by the Commonwealth of Australia, a state or any other government, regional, municipal or local authority (Australian or overseas) and includes capital gains tax, fringe benefits tax, income tax, luxury car tax, superannuation guarantee charge, training guarantee levy, payroll tax, any tax associated with a franking account, goods and services tax, group tax, Pay As You Go withholding, withholding tax,

 

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land tax, customs duty, together with any fees, penalties, fines, interest or statutory charges and whether imposed by contract or imposed on a joint, several or secondary basis as a result of being a member of an affiliated group of companies or any payments required to be made under a valid Tax Sharing Agreement or Tax Funding Agreement.

Tax Attributes means any thing that would reduce the base on which Tax is assessed or the amount of Tax payable.

Tax Claim means a Claim arising from a breach of a Boral Tax Warranty or a USG Tax Warranty, or a Claim under an indemnity in clause 9.1(a) or 9.2(a).

Tax Cost means all costs, and expenses incurred in:

 

(a)

managing an inquiry by any Taxing Authority; or

 

(b)

conducting any action in relation to a Tax Demand to cause the Tax Demand to be withdrawn, reduced or postponed or to avoid, resist, object to, defend, appear against or compromise the Tax Demand and any judicial or administrative proceedings arising out of that action.

Tax Demand means:

 

(a)

a demand or assessment from a Taxing Authority requiring the payment of any Tax;

 

(b)

any document received from a Taxing Authority administering any Tax assessing, imposing or claiming any Tax; or

 

(c)

lodgement of a tax return or a request for an amendment under a law about self-assessment of Tax.

Tax Funding Agreement means any agreement where a BAGL Group Member may be required to pay an amount to Boral to pay a Group Liability or to reimburse Boral after payment of the Group Liability.

Tax Law means any:

 

(a)

Tax legislation in force; and

 

(b)

common law,

in each case which imposes Tax.

Tax Related Liabilities means the tax related liabilities set out in the table in section 721-10(2) of the ITAA 1997.

Tax Sharing Agreement means an agreement contemplated by section 721 25 of the ITAA 1997.

Taxing Authority means any governmental authority with the power to levy and collect Taxes or Duties.

Third Party Claim means any claim, demand, proceeding or cause of action, whether arising in contract, tort, or under statute against any Party to this Agreement, which is made or threatened by a Person other than a member of the Boral Group, the USG Group or the Joint Venture Group (including the USG Contributed Entities), but excludes a Tax Demand.

Territory has the meaning given to that term in the Shareholders Agreement.

Title Warranty means the Warranties in paragraphs 3.1 to 3.7, 4.1 and 4.3 of Schedule 1.

 

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Transaction Documents means:

 

(a)

this Agreement and the Asia Sale Agreement;

 

(b)

the Shareholders Agreement;

 

(c)

the Boral Australasia IP Licences and the Boral Asia IP Licences;

 

(d)

the USG Australasia IP Licences and the USG Asia IP Licences;

 

(e)

the Boral TOSA; and

 

(f)

the USG TOSA.

TOSA Claim means any claim, demand, proceeding or cause of action whether arising in contract, tort, or under statute, made pursuant to the Boral TOSA or the USG TOSA.

USG Asia IP Licences has the meaning given to that term in the Asia Sale Agreement.

USG Australasia IP Licences means:

 

(a)

the Umbrella Intellectual Property Licence Agreement in the form set out in Schedule 21 (or such other form as Boral and USG may agree before Completion); and

 

(b)

each agreement forming a schedule to that agreement (in each case in the form set out the relevant schedule at Schedule 21 (or such other form as Boral and USG may agree before Completion).

USG Claim means a Claim of or brought by a USG Claim Group Member in accordance with this Agreement.

USG Claim Group means USG, the Subscribers and the Acquirer and USG Claim Group Member means any of them.

USG Contributed Entities means:

 

(a)

USG Interiors Australia Pty Ltd ACN 000 852 175; and

 

(b)

USG Interiors Pacific Limited (a New Zealand company with registered number 77828).

USG Contributed Shares means:

 

(a)

all issued shares in USG Interiors Pacific Limited; and

 

(b)

all issued shares in USG Interiors Australia Pty Ltd to the extent not legally and beneficially owned by USG Interiors Pacific Limited.

USG Disclosure Schedule means the disclosure schedule relating to the USG Warranties set out in Schedule 13.

USG Group means USG and each of its Subsidiaries from time to time, but excluding the USG Contributed Entities (and USG Group Member means any member of the USG Group from time to time).

USG IP Warranty means a warranty given by a USG Group Member in the USG Australasia IP Licences and the USG Asia IP Licences.

USG Party means USG and each other USG Group Member who is a Party to this Agreement.

 

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USG Q&A Responses means the ‘Q&A’ responses provided by or on behalf of USG via the relevant Data Room to questions asked during the due diligence process.

USG Tax Warranty means each warranty stated in Schedule 4.

USG TOSA means the services agreement substantially in the form set out in Schedule 23 (or such other form as Boral and USG may agree before Completion);

USG Warranty means each warranty stated in Schedule 1, given on the basis that the Warrantor is a USG Group Member (and so that for the avoidance of doubt such warranties are given in relation to the USG Sale Group and not the Boral Sale Group as defined in Schedule 1).

Warranties means the Boral Warranties, the Boral Tax Warranties, the ▇▇▇▇▇ ▇▇ Warranties, the USG Warranties and the USG Tax Warranties.

Warranty Claim means a Claim arising from a breach of Warranty.

 

1.2	Interpretation

In this Agreement:

 

(a)

Headings and bold type are for convenience only and do not affect the interpretation of this Agreement.

 

(b)

The singular includes the plural and the plural includes the singular, words of any gender include all genders, and other parts of speech and grammatical forms of a word or phrase defined in this Agreement have a corresponding meaning.

 

(c)

A reference to a clause, party, schedule, attachment or exhibit is a reference to a clause of, and a party, schedule, attachment or exhibit to, this Agreement.

 

(d)

A reference to any legislation includes all delegated legislation made under it and amendments, consolidations, replacements or re-enactments of any of them.

 

(e)

A reference to a document includes all amendments or supplements to, or replacements or novations of, that document, and a reference to a party to a document includes that party’s successors and permitted assignees.

 

(f)

A reference to an agreement other than this Agreement includes a deed and any legally enforceable undertaking, agreement, arrangement or understanding, whether or not in writing.

 

(g)

A reference to a body, other than a party to this agreement (including an institute, association or authority), whether statutory or not:

 

(i)

which ceases to exist; or

 

(ii)

whose powers or functions are transferred to another body,

is a reference to the body which replaces it or which substantially succeeds to its powers or functions.

 

(h)

If a period of time is specified and dates from a given day or the day of an act or event, it is to be calculated exclusive of that day.

 

(i)

A reference to a day is to be interpreted as the period of time commencing at midnight and ending 24 hours later.

 

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(j)

If an act prescribed under this Agreement to be done by a Party on or by a given day is done after 5.00pm on that day, it is taken to be done on the next day.

 

(k)

A reference to time is a reference to Sydney time unless otherwise specified.

 

(l)

A reference to $ is to US dollars unless denominated otherwise.

 

1.3	Business Day

Where the day on or by which any thing is to be done is not a Business Day, that thing must be done on or by the next Business Day.

 

1.4	Inclusive expressions

Specifying anything in this agreement after the words ‘include’ or ‘for example’ or similar expressions does not limit what else is included.

 

1.5	Agreement components

This Agreement includes the schedules.

 

1.6	The rule about “contra proferentem”

This Agreement is not to be interpreted against the interests of a Party merely because that Party proposed this Agreement or some provision in it or because that Party relies on a provision of this Agreement to protect itself.

 

1.7	Reasonable endeavours

Any provision of this Agreement which requires a Party to use reasonable endeavours or all reasonable endeavours to procure that something is performed or occurs or does not occur does not include any obligation to commence any legal action or proceeding against any person, except where that provision expressly specifies otherwise.

 

1.8

Payments

 

(a)

Except to the extent this Agreement expressly provides otherwise in any given case, all payments required to be made under this agreement must be tendered in US Dollars by way of direct transfer of immediately available funds to the bank account nominated in writing by the recipient and by no later than 5:00 pm (recipient’s time) on the due Business Day for payment.

 

(b)

To the extent any payment to be made under this Agreement is calculated or original expressed in a currency other than US Dollars, the payment will be translated into US Dollars at the mid-market US$ exchange rate as quoted by Bloomberg on the relevant date of payment.

 

(c)

Any reference in this Agreement to a payment to any Party includes payment to another Person at the written direction of that Party.

 

2.	SUBSCRIPTION FOR SUBSCRIPTION SHARES AND SALE OF SALE SHARES

 

 

2.1

Agreement

 

(a)

Subject to the terms and conditions of this Agreement, on Completion (and without limiting any other steps any Party is required to take under this Agreement at Completion):

 

(i)

Subscriber 1 will enter into the USG Australasia IP Licences with BAGL;

 

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(ii)

Subscriber 2 must transfer to BAGL, and BAGL must acquire from Subscriber 2, the USG Contributed Shares free of all Encumbrances;

 

(iii)

BAGL agrees to allot and issue to Subscriber 1, and Subscriber 1 agrees to subscribe for, the Subscription 1 Shares free of all Encumbrances;

 

(iv)

BAGL agrees to allot and issue to Subscriber 2, and Subscriber 2 agrees to subscribe for, the Subscription 2 Shares free of all Encumbrances;

 

(v)

the Boral Seller will sell the Sale Shares to the Acquirer and the Acquirer will purchase from the Boral Seller the Sale Shares free from all Encumbrances.

 

(b)

The USG Contributed Shares must in each case be transferred from Subscriber 2 to BAGL with all rights, including dividend rights, attached or accruing to them on and from Completion.

 

(c)

The Sale Shares must be transferred from the Boral Seller to the Acquirer with all rights, including dividend rights, attached or accruing to them on and from Completion.

 

(d)

Legal and beneficial title to the USG Contributed Shares and property and risk in them passes to BAGL on Completion.

 

(e)

Legal and beneficial title to the Sale Shares and the Subscription Shares and property and risk in them passes to the Acquirer, Subscriber 1 and Subscriber 2 on Completion.

 

2.2	Consideration

 

(a)

The consideration for the issue of the Subscription 1 Shares to Subscriber 1 is the execution of the USG Australasia IP Licences.

 

(b)

The consideration for the issue of the Subscription 2 Shares to Subscriber 2 is the transfer of the USG Contributed Shares to BAGL.

 

(c)

The consideration for the sale of the Sale Shares to the Acquirer is the payment by the Acquirer to Boral Seller of the Purchase Price in accordance with the relevant provisions of this Agreement.

 

2.3	Payment of Purchase Price

The Purchase Price must be paid as follows:

 

(a)

the Initial Purchase Price must be paid by the Acquirer to Boral Seller at Completion;

 

(b)

adjustments to the Initial Purchase Price must be paid in accordance with the relevant provisions of this Agreement (including for the avoidance of doubt clause 5.5); and

 

(c)

the Parties covenant and agree that no value-added tax or goods and services tax is imposed or shall be invoiced with respect to the issuance of the Subscription Shares or the conveyance, transfer or sale of the Sale Shares; and

 

(d)

the Earn-Out Amounts (if any) must be paid by the Acquirer to Boral Seller in accordance with Schedule 8.

 

2.4

Loan

At Completion, Subscriber 1 must lend to BAGL an amount equal to the amount BAGL is obliged to pay to the Commissioner of Taxation pursuant to section 14-10 of Schedule 1 to the Taxation Administration Act 1953 (Cth) as a result of the entry into the USG Australia IP Licences. Subscriber 1 and BAGL must then set off this loan against the debt that will arise from Subscriber 1 to BAGL pursuant to section 14-15 of Schedule 1 to the Taxation Administration Act 1953 (Cth) (and after Completion USG and Boral must procure that BAGL does so).

 

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3.	PRE-COMPLETION

 

 

3.1	Pre-Completion

Boral and USG acknowledge and agree that if prior to Completion:

 

(a)

a Boral Group Member becomes aware of any facts, matters or circumstances which give or are reasonably likely to give rise to a breach of a Boral Warranty, a Boral Tax Warranty or a ▇▇▇▇▇ ▇▇ Warranty; or

 

(b)

a USG Group Member becomes aware of any facts, matters or circumstances which give or are reasonably likely to give rise to a breach of a USG Warranty or a USG Tax Warranty ;

then Boral or USG (as relevant) will promptly notify the other of such fact, matter or circumstance, provided that, for the avoidance of doubt, such notice will in no way constitute disclosure for the purpose of clause 7.1 of this Agreement or otherwise limit or exclude any Claim.

 

3.2	Conditions to Completion

Clause 2 will not bind the Parties and Completion will not proceed unless:

 

(a)

The Acquirer and the Subscribers have notified the Treasurer of the Commonwealth of Australia of the proposed acquisition of the Sale Shares and the Subscription Shares by the Acquirer and the Subscribers pursuant to this Agreement (FIRB Notification) and the Treasurer of the Commonwealth of Australia has either:

 

(i)

provided written advice or confirmation which is unconditional, or subject only to conditions acceptable to USG and Boral (acting reasonably), stating that there is no objection to the proposed acquisition of the Sale Shares and the Subscription Shares by the Acquirer and the Subscribers ; or

 

(ii)

has become or is precluded (at any time before Completion) from making an order in respect the proposed acquisition of the Sale Shares and the Subscription Shares by the Acquirer and the Subscribers pursuant to this Agreement;

 

(b)

USG and Boral have jointly submitted a courtesy letter to the Australian Competition and Consumer Commission (ACCC) informing the ACCC of the proposed acquisition of the Sale Shares and the Subscription Shares by the Acquirer and the Subscribers pursuant to this Agreement and of the proposed acquisition of the USG Contributed Shares by BAGL pursuant to this Agreement (ACCC Notification) and:

 

(i)

the ACCC has informed USG in writing that it does not propose to intervene in the matter pursuant to Section 50 of the Competition and Consumer ▇▇▇ ▇▇▇▇; or

 

(ii)

either of the following applies:

 

(A)

the ACCC has not, within 45 days from the date of the ACCC Notification, or if later, by the day on which all other Conditions have been satisfied or waived in accordance with this Agreement, requested that the Parties do not complete this Agreement or commenced an informal merger investigation in relation to the transactions contemplated by this Agreement (or any of them); or

 

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(B)

the ACCC has within the time period described in paragraph (A) above requested that the Parties do not complete this Agreement or commenced an informal merger investigation in relation to the transactions contemplated by this Agreement (or any of them), or both, but the ACCC has subsequently advised USG and Boral (or either of them) to the effect that the request no longer stands, it does not opposed the transaction in which the investigation was commenced, or both (as applicable);

 

(c)

USG and Boral have jointly submitted a courtesy notification to the New Zealand Commerce Commission (NZCC) informing the NZCC of the proposed acquisition of the Sale Shares and the Subscription Shares by the Acquirer and the Subscribers pursuant to this Agreement and of the proposed acquisition of the USG Contributed Shares by BAGL pursuant to this Agreement (NZCC Notification) and:

 

(i)

the NZCC has informed USG in writing that it does not propose to intervene in the matter pursuant to Section 47 of the Commerce ▇▇▇ ▇▇▇▇; or

 

(ii)

has not, within 45 days from the date of the NZCC Notification, or if later, by the day on which all other Conditions have been satisfied or waived in accordance with this Agreement, indicated that a formal clearance application under Section 66(1) of the Commerce Act 1986 would be appropriate, or otherwise indicated material concerns regarding the transaction that can be reasonably interpreted as suggesting an expectation that a formal clearance application be made, or if it has done so, USG and Boral have (or at least one of them has) submitted such an application and the NZCC has subsequently provided a letter advising that it gives clearance to USG and Boral to complete the transaction.

 

(d)

all conditions precedent to completion under the Asia Sale Agreement (other than the equivalent of the specific condition in this clause 3.2(d)) have been satisfied or waived in accordance with that agreement.

(Conditions).

 

3.3	Cooperation

 

(a)

Without limiting any specific obligations of a Party under the remaining provisions of this clause 3.3, the Parties must each use their commercially reasonable endeavours in good faith to satisfy the Conditions as soon as practicable after the date of this Agreement.

 

(b)

The Parties agree that:

 

(i)

The Parties provide all reasonable co-operation and assistance to each other (including through provision of relevant information) in preparing and submitting the FIRB Notification, the ACCC Notification and the NZCC Notification;

 

(ii)

USG must ensure that the FIRB Notification is prepared and lodged as soon as practicable after the date of this Agreement, and that the Parties will agree and submit the ACCC Notification and the NZCC Notification as soon as reasonably possible after the FIRB Notification; and

 

(iii)

prior to submission of any such documents, the Parties will consult with each other regarding the content of any documents to be submitted in relation to the FIRB Notification, ACCC Notification and the NZCC Notification in addition to providing copies of those documents to all Parties for their review and consideration.

 

(c)

The Parties will keep each other informed of progress with the FIRB Notification, ACCC Notification and NZCC Notification, and provide on request copies of all communications to or from FIRB, the ACCC and the NZCC in connection with the FIRB Notification, ACCC Notification and NZCC Notification respectively.

 

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3.4	Waiver of Conditions

The Conditions are for the benefit of both USG and Boral and may only be waived by written agreement between USG and Boral.

 

3.5	Result of non-satisfaction of Conditions

 

(a)

If:

 

(i)

the Conditions are not satisfied (or waived in accordance with clause 3.4); by the End Date or

 

(ii)

any of the Conditions becomes incapable of satisfaction or the parties agree that any of the Conditions cannot be satisfied (and the relevant Condition is not waived in accordance with clause 3.4 by the End Date),

then either USG or Boral may terminate this Agreement at any time before Completion by giving not less than 7 days written notice to the other Parties.

 

(b)

If Completion does not occur by the termination date specified in a notice under clause 3.5(a) then this Agreement will automatically terminate.

 

4.	CONDUCT OF THE BUSINESS PRIOR TO COMPLETION

 

 

4.1	Carrying on of business – BAGL Group

 

(a)

Subject to clause 4.2, between the date of this Agreement and the earlier of Completion and termination of this Agreement, Boral and the Boral Seller must ensure that the business of the BAGL Group is conducted materially in the ordinary course in accordance with past practice and, in particular, that no BAGL Group Member:

 

(i)

issues any shares, debentures, convertible notes, options or other securities that are convertible into shares or debentures, or other equity or debt securities in that BAGL Group Member (Securities);

 

(ii)

varies any rights attaching to or the class of any issued Securities or redeems, buys-back or cancels any issued Securities;

 

(iii)

distributes or returns any capital to its members (other than to another BAGL Group Member);

 

(iv)

declares or pays any dividends or declares or makes any other distributions in kind or in cash (other than to another BAGL Group Member);

 

(v)

alters its constitution or equivalent documents;

 

(vi)

ceases or makes any material change to the Business;

 

(vii)

acquires any business or shares or other equity securities in any entity;

 

(viii)

disposes any business or shares or other equity securities in any entity;

 

(ix)

enters into any new business, including the establishment of any business in a jurisdiction in which the BAGL Group or the BGA Group does not have existing operations at the date of this agreement;

 

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(x)

establishes any new Subsidiary or enters into any partnership, joint venture or profit or revenue sharing arrangement with any entity;

 

(xi)

enters into an agreement to or otherwise merges or amalgamates any BAGL Group Member with any other entity;

 

(xii)

makes an application or commences any proceedings or takes any other steps for the winding up, dissolution or appointment of an administrator to any BAGL Group Member or enters into an arrangement, compromise or composition for the benefit of that BAGL Group Member’s creditors, a class or them or any of them;

 

(xiii)

enters into, materially varies or terminates any agreement or arrangement involving:

 

(A)

consideration to or from a BAGL Group Member of more than A$10 million in relation to a customer/supplier arrangement;

 

(B)

subject to clause 4.1(a)(xiii)(A), consideration to or from a BAGL Group Member of more than A$1 million

 

(C)

transactions that are not on bona fide arms’ length terms or otherwise outside the ordinary course of business;

 

(D)

any non-compete undertakings, exclusivity provisions or similar restrictive covenants;

 

(E)

any BAGL Group Member assuming any ‘take or pay’ or similar obligations exceeding A$1 million;

or otherwise effecting any material, non-ordinary course business transaction or action;

 

(xiv)

enters into or varies any contract, agreement or arrangement (whether oral or in writing) with a Boral Group Member involving consideration to or from a BAGL Group Member of more than A$500,000 in any individual case or A$1 million in aggregate (and excluding ad hoc purchases or supplies of products or materials in the ordinary course);

 

(xv)

enters into or becomes liable under any guarantee or similar arrangement under which it might incur liability in respect of the financial obligation of any other person (including any other BAGL Group Member) other than performance guarantees in the ordinary course of business;

 

(xvi)

acquires, disposes or leases (whether as lessor or lessee) any assets (other than the sale or purchase of inventory, raw material materials, finished product and similar items in the ordinary course of the business), in any transaction or series of related transactions where the market value of such assets or the consideration in respect to the sale or acquisition of such assets is in excess of A$2 million or enter into any agreement to do so;

 

(xvii)

engages any new permanent employee with a total annual remuneration in excess of A$150,000, excluding replacements of existing roles in the ordinary course of business;

 

(xviii)

terminates the employment of ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇▇, other than for cause;

 

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(xix)

materially alters its arrangements with respect to any Fund relating to its employees;

 

(xx)

defers any capital expenditure or undertakes any capital expenditure that is, together with all such capital expenditure by all other BAGL Group Members in the relevant period, in excess of A$5 million;

 

(xxi)

enters into any financial accommodation or borrows any money (other from another BAGL Group Member and other than drawings on working capital facilities in the ordinary course and trade credit in the ordinary course consistent with past practice) in excess of A$2 million; or

 

(xxii)

provides any loan or financial accommodation to any person other than another BAGL Group Member, other than trade credit in the ordinary course consistent with past practice;

 

(xxiii)

purchases or enters into foreign currency swaps or other derivative instruments other than ▇▇▇▇▇▇ entered into in accordance with past practice;

 

(xxiv)

commences or settles (to the extent the settlement does not involve a cash payment) any litigation, arbitration or other proceedings, which will cause or is likely to cause, the BAGL Group to incur costs or expenses (including legal costs) in excess of A$500,000;

 

(xxv)

creates an Encumbrance over any of its assets other than in the ordinary course of business.

 

(b)

Subject to clause 4.2, between the date of this Agreement and the earlier of Completion and termination of this Agreement, the Boral Seller must ensure that:

 

(i)

any calls for capital or other funding (whether by way of equity or debt) to any BAGL Group Member from any Boral Joint Venture are met in full when due in accordance with the relevant shareholders agreement or other applicable contract; and

 

(ii)

no scheduled or proposed calls for capital or other funding by any Boral Joint Venture are deferred.

 

4.2	Permitted acts

Nothing in clause 4.1 restricts any Boral Group Member or any BAGL Group Member from doing any of the following permitted actions:

 

(a)

Transaction Agreements: anything that is required or expressly permitted in this Agreement or any Transaction Document (including in connection with the satisfaction of any Condition);

 

(b)

Permitted acts: anything (or part of anything) described in Part 1 of Schedule 6;

 

(c)

emergencies: anything to reasonably and prudently respond to an emergency or disaster (including a situation giving rise to a risk of personal injury or damage to property);

 

(d)

legal obligations: anything to the extent necessary for a BAGL Group Member to meet its legal or contractual obligations (such contractual obligations being as disclosed in the Data Room or the Boral Disclosure Schedule); or

 

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(e)

USG approval or non-objection: anything that is approved in writing by USG, such approval not to be unreasonably withheld or delayed, or in respect of which USG fails to notify Boral in writing of its objection to the doing of that thing within 3 business days (being normal business days in Sydney and Chicago) after receipt of written notice from Boral notifying USG of a Boral Group Member’s or a BAGL Group Member’s intention to do that thing. For these purposes USG must on the date of this agreement nominate at least two senior executives (each a USG Contact) to whom notifications of proposed actions can be submitted. Despite clause 18, notification to each USG Contact by email by or on behalf of Boral or BAGL will constitute written notice to USG of the relevant matter for the purposes of this clause 4.2(e), and any approval by email by any USG Contact of any action for the purposes of this clause 4 will be taken to be an approval in writing by USG. USG may from time to time during the period before Completion nominate additional or replacement USG Contacts by notice in writing to Boral (provided at least two remain current at all times).

 

4.3	Carrying on of business – USG Contributed Entities

 

(a)

Subject to clause 4.4, between the date of this Agreement and the earlier of Completion and termination of this Agreement, USG must ensure that the business of the USG Contributed Entities is conducted materially in the ordinary course and, in particular, that no USG Contributed Entity does anything described in clause 4.1(a) amended so that references to ‘BAGL Group Member’ are replaced with references to ‘USG Contributed Entity’ (and references to ‘USG’ are replaced with ‘Boral)’ and so that:

 

(i)

the amount in clause 4.1(a)(xiii)(A) is changed to US$10 million;

 

(ii)

the amount in clause 4.1(a)(xiii)(B) is changed to US$500,000;

 

(iii)

the amount in clause 4.1(a)(xiii)(E) is changed to US$500,000;

 

(iv)

the amount in clause 4.1(a)(xvi) is changed to US$1 million;

 

(v)

▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is replaced as the identified individuals in clause 4.1(a)(xviii); and

 

(vi)

the amount in clause 4.1(a)(xx) is changed to US$2.5 million; and

 

(vii)

any reference to A$ in any other provision is changed to US$.

 

4.4	Permitted acts

Nothing in clause 4.3 restricts any USG Group Member or any USG Contributed Entity from doing any of the following permitted actions:

 

(a)

Transaction Agreements: anything that is required or expressly permitted in this Agreement or any Transaction Document;

 

(b)

Permitted acts: anything (or part of anything) described in Part 2 of Schedule 6;

 

(c)

emergencies: anything to reasonably and prudently respond to an emergency or disaster (including a situation giving rise to a risk of personal injury or damage to property);

 

(d)

legal obligations: anything to the extent necessary for a USG Contributed Entity to meet its legal or contractual obligations (such contractual obligations being as disclosed in the USG Disclosure Schedule); or

 

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(e)

Boral approval or non-objection: anything that is approved in writing by Boral, such approval not to be unreasonably withheld or delayed, or in respect of which Boral fails to notify USG in writing of its objection to the doing of that thing within 3 business days (being normal business days in Chicago and Sydney) after receipt of written notice from USG notifying Boral of a USG Group Member’s or a USG Contributed Entity’s intention to do that thing. For these purposes Boral must on the date of this agreement nominate at least two senior executives (each a Boral Contact) to whom notifications of proposed actions can be submitted. Despite clause 18, notification to each Boral Contact by email by or on behalf of USG or any USG Contributed Entity will constitute written notice to Boral of the relevant matter for the purposes of this clause 4.4(e), and any approval by email by any Boral Contact of any action for the purposes of this clause 4 will be taken to be an approval in writing by Boral. Boral may from time to time during the period before Completion nominate additional or replacement Boral Contacts by notice in writing to USG (provided at least two remain current at all times).

 

4.5	Intra-group loans

 

(a)

Before Completion, Boral must (except where this Agreement expressly permits such loans to remain outstanding):

 

(i)

identify all existing loans between a Boral Group Member and a BAGL Group Member; and

 

(ii)

procure that all payments are made and such other actions are taken as may be necessary to ensure the payment in full of loan balances between any Boral Group Members on the one hand and any BAGL Group Members on the other hand (or that the relevant loan balances are capitalised provided that no additional shares are issued by BAGL which are inconsistent with any obligation under this Agreement).

 

(b)

Before Completion, USG must (except where this Agreement expressly permits such loans to remain outstanding):

 

(i)

identify all existing loans between a USG Group Member and a USG Contributed Entity; and

 

(ii)

procure that all payments are made and such other actions are taken as may be necessary to ensure the payment in full of loan balances between any USG Group Members on the one hand and any USG Contributed Entities on the other hand (or that the relevant loan balances are capitalised provided that no additional shares are issued by the USG Contributed Entities whose shares are USG Contributed Shares).

 

4.6	Parent Guarantees

 

(a)

Before Completion Boral and USG must take all reasonable steps to ensure that, effective from Completion each Boral Group Member and each USG Group Member is released from any actual, contingent or accrued liabilities under a Parent Guarantee given by it.

 

(b)

For the purposes of this clause 4.6, ‘reasonable steps’ includes USG (or another USG Group Member acceptable to the relevant Third Party) and Boral (another Boral Group Member acceptable to the relevant Third Party) providing the relevant Third Party with a replacement guarantee or security on terms the same or substantially the same as the terms of the existing Parent Guarantee but so that USG and Boral are severally liable in proportion to their respective Shareholding Percentages.

 

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(c)

If a Boral Group Member has not been released from a Parent Guarantee in accordance with clause 4.6(a) by Completion, USG must pay Boral an amount equal to USG’s Shareholding Percentage (at the time of the relevant Loss) of any Loss that the Boral Group Member pays, suffers, incurs or is liable for under or in relation to that Parent Guarantee after Completion.

 

(d)

If a USG Group Member has not been released from a Parent Guarantee in accordance with clause 4.6(a) by Completion, Boral must pay USG an amount equal to Boral’s Shareholding Percentage (at the time of the relevant Loss) of any Loss that the USG Group Member pays, suffers, incurs or is liable for under or in relation to that Parent Guarantee after Completion.

 

4.7	Subsidiary Guarantees

 

(a)

Before Completion Boral must ensure that, effective from (or before) Completion, each BAGL Group Member is released from any actual, contingent or accrued liabilities under a Subsidiary Guarantee given by it.

 

(b)

Before Completion USG must ensure that, effective from (or before) Completion, each USG Contributed Entity is released from any actual, contingent or accrued liabilities under a Subsidiary Guarantee given by it.

 

4.8	Exit from consolidated group

For each BAGL Group Member which is, or will be, a member of the Boral Consolidated Group with effect from a date prior to Completion, Boral must:

 

(a)

on or before Completion, provide USG with a copy of the Boral Tax Sharing Agreement;

 

(b)

at least 7 days prior to Completion, provide USG with a draft calculation of the Exit Payment for each relevant BAGL Group Member, for USG’s review;

 

(c)

procure that each BAGL Group Member pays the relevant Exit Payments to Boral at least one Business Day prior to Completion; and

 

(d)

procure that, at Completion, Boral releases each BAGL Group Member from its obligations under the Boral Tax Sharing Agreement or under any Tax Funding Agreement.

 

4.9

Access

 

(a)

During the period between the date of this Agreement up to the earlier of Completion and termination of this Agreement, Boral must ensure that USG and a reasonable number of persons authorised by USG are given, on reasonable notice:

 

(i)

reasonable, non-disruptive access during normal business hours at the relevant location to inspect the assets, premises, books and records of the BAGL Group Members; and

 

(ii)

reasonable, non-disruptive access during reasonable mutually agreed hours to senior management of the BAGL Group Members,

provided that USG must ensure that any persons provided with such access comply with the reasonable requirements of the BAGL Group Members or any relevant Third Party in respect of the access and do not interfere with the business or operations of the BAGL Group.

 

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(b)

During the period between the date of this Agreement up to the earlier of Completion and termination of this Agreement, USG must ensure that Boral and a reasonable number of persons authorised by Boral are given, during normal business hours and on reasonable notice:

 

(i)

reasonable, non-disruptive access to inspect the assets, premises, books and records of the USG Contributed Entities; and

 

(ii)

reasonable, non-disruptive access to senior management of the USG Contributed Entities,

provided that Boral must ensure that any persons provided with such access comply with the reasonable requirements of the USG Contributed Entities or any relevant Third Party in respect of the access and do not interfere with the business or operations of the USG Contributed Entities.

 

4.10	USG Financing

During the period prior to Completion, Boral shall cause the BAGL Group to promptly provide, in connection with any financing arrangement to be entered into by USG for the purpose of funding the payment of the Initial Purchase Price, such cooperation as may be reasonably requested by USG, including:

 

(a)

participation (whether in person or by phone) in a reasonable number of meetings or sessions with prospective lenders, investors and rating agencies;

 

(b)

furnishing USG and its financiers with financial and (subject to confidentiality undertakings satisfactory to Boral, acting reasonably) other pertinent information regarding the BAGL Group;

 

(c)

assisting with the preparation of customary offering documents and materials, including prospectuses, private placement memoranda, information memoranda and packages, lender and investor presentations, rating agency presentations, and similar documents and materials;

 

(d)

requesting assistance and cooperation of the BAGL Group’s independent accountants, including participation in a reasonable number of drafting and accounting due diligence sessions and provision of consents for the use of their reports in materials related to the aforementioned financing and customary “comfort” letters (including “negative assurance” comfort) with respect to the financial information to be included in any offering memorandum, and providing such accountants with any documentation reasonably requested by them in connection therewith; and

 

(e)

consenting to the use of the Accounts of BAGL Group and other BAGL Group financial information (in a form and substance satisfactory to Boral, acting reasonably having regard to the extent to which such information is publicly available) for the aforementioned offering documents and materials.

USG must promptly reimburse the Boral Group and the BAGL Group (as applicable) for all reasonable out-of-pocket costs and expenses incurred in providing co-operation at USG’s request under this clause 4.10.

 

4.11	Boral Australasia IP Licences

Boral must ensure that, before the Completion Date, the Boral Australasia IP Licences are executed by each Boral, Boral Seller and each BAGL Group Member which (in each case) is expressed to be a party to the relevant document.

 

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4.12

TOSAs

 

(a)

Boral and USG will work together in good faith to agree detailed service schedules for inclusion in the Boral TOSA and the USG TOSA as soon as practicable following the date of this Agreement.

 

(b)

Boral will before the Completion Date keep USG notified of Third Party Approvals obtained for the purposes of clause 5.1 of the Boral TOSA.

 

(c)

USG will before the Completion Date keep Boral notified of Third Party Approvals obtained for the purposes of clause 5.1 of the USG TOSA.

 

4.13	Third Party consents – general

 

(a)

Before Completion Boral must use reasonable endeavours to obtain consents from relevant counterparties (or meet other applicable contractual requirements) under ‘change of control’ or similar provisions in contracts or property leases to which any BAGL Group Member is party, to the extent such provisions would otherwise be triggered by the transactions contemplated by this Agreement, including without limitation Seeking consent from Port of Melbourne Corporation to change of control under the lease dated 26 May 2011 of the gypsum unloading facility at ▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ between Port of Melbourne Corporation and BAGL.

 

(b)

Before Completion USG must use reasonable endeavours to obtain consents from relevant counterparties (or meet other applicable contractual requirements) under ‘change of control’ or similar provisions in contracts or property leases to which any USG Contributed Entity is party, to the extent such provisions would otherwise be triggered by the transactions contemplated by this Agreement, including without limitation:

 

(i)

seeking consent from the relevant lessor to change of control under USG Australia’s lease of its office space in Melbourne; and

 

(ii)

seeking consent from ▇▇▇▇▇▇▇ Nominee (NZ) Limited to change of control under the deed of lease between USG Interiors Pacific Limited and ▇▇▇▇▇▇▇ Nominee (NZ) Limited in relation to the manufacturing and production facility in Auckland, New Zealand.

 

(c)

To the extent any consents referred to in clauses 4.13(a) or 4.13(b) are not obtained by Completion, Boral and USG will discuss in good faith how to address the situation having regard to the best interests of the Joint Venture Group going forward.

 

4.14

Safety

Boral and USG each acknowledge their respective commitments to ensuring safe workplaces. Boral and USG agree:

 

(a)

to co-operate in good faith between the date of this Agreement and Completion to agree proposed measures to be implemented following Completion to improve work practices and safety at sites under the control of any of the Boral Joint Ventures consistent with safety practices of Boral and USG;

 

(b)

to submit such agreed measures to the boards of BAGL and SingCo for approval as soon as practicable after Completion; and

 

(c)

to exercise the Joint Venture Group’s rights in relation to the Boral Joint Ventures after Completion to implement such agreed measures to the extent it is within the Joint Venture Group’s power to do so.

 

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4.15	BAGL conversion

Boral must do everything within its reasonable control to ensure that BAGL has been registered as a proprietary company in accordance with the Corporations Act prior to Completion.

 

4.16	USG restructure

Before Completion, USG must ensure that each of the following actions occurs (without cost or liability to any USG Contributed Entity):

 

(a)

CGC Inc. distributes its shares in USG ChinaLux S.à ▇.▇., to the Acquirer;

 

(b)

USG Latin America, LLC distributes its shares in USG Manufacturing Worldwide, Ltd. to the Acquirer;

 

(c)

USG Interiors International, LLC distributes its interests in USG Interiors Pacific, Ltd, USG Interiors Australia Pty Limited, and USG Cayman Holdings Ltd. to the Acquirer;

 

(d)

USG Interiors International, LLC is liquidated, distributing the shares in USG Asia Pacific Holdings Pte Ltd to the Acquirer;

 

(e)

USG Corporation licenses to USG Foreign Investments, Ltd, in exchange for preferred stock that is not section 351(g) stock, the Intellectual Property Rights to be licensed at Completion under the USG Australasia IP Licences and the USG Asia IP Licences;

 

(f)

United States Gypsum Company licenses to USG Foreign Investments, Ltd, in exchange for preferred stock that is not section 351(g) stock, the Intellectual Property Rights to be licensed at Completion under the USG Australasia IP Licences and the USG Asia IP Licences;

 

(g)

USG Interiors, LLC licenses to USG Foreign Investments, Ltd, in exchange for preferred stock that is not section 351(g) stock, the Intellectual Property Rights to be licensed at Completion under the USG Australasia IP Licences and the USG Asia IP Licences; and

 

(h)

the parties to the Share Contribution Agreement enter into that agreement with an effective date of the Completion Date.

 

4.17	Lease Term Sheets

USG and Boral will work together in good faith to agree the leases or subleases (as applicable), consistent with the terms of the Lease Term Sheets, for the properties referred to in the Lease Term Sheets as soon as practicable following the date of this Agreement and, to the extent the entry into a sublease is subject to landlord consent, Boral will use its reasonable commercial efforts to obtain that consent as soon as practicable after the date of this Agreement.

 

4.18	Share figures

If Boral and USG agree before Completion that there needs to be changes to any number of shares identified in this Agreement or the Asia Sale Agreement to be issued or transferred at Completion, the allocation of aggregate value between this Agreement and the Asia Sale Agreement (or both) they agree to work together in good faith to agree any consequential reallocation of the value of the USG contributed assets and the Boral contributed assets and any consequential changes to share numbers and the split of the aggregate initial purchase price across this Agreement and the Asia Sale Agreement (being US$500 million). For the avoidance of doubt any such changes will be an allocation exercise only and there is to be no change to the aggregate transaction value or to the aggregate purchase price.

 

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5.	COMPLETION

 

 

5.1	Date and place

Completion must take place at 10.00 am at the offices of ▇▇▇▇▇ Day, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, on the day which is:

 

(a)

the last Business Day of the month during which the Condition Satisfaction Date falls; or

 

(b)

if the Business Day determined under clause 5.1(a) would be less than 7 days after the Condition Satisfaction Date, the last Business Day of the following month,

or such other time or place as the parties may agree in writing.

 

5.2	Completion obligations

 

(a)

On Completion (or before where the nature of the action permits it), each Party must carry out the Completion steps referable to it in accordance with Schedule 5.

 

(b)

Subject to clause 5.4 Completion is taken to have occurred when each party has performed all its obligations under this clause 5.2 and Schedule 5.

 

5.3	Order of events at Completion

 

(a)

Subject to clause 5.3(c) (and except to the extent Schedule 5 requires certain actions to be taken before Completion), the actions to take place as contemplated by clause 5.2 and Schedule 5 are interdependent and must take place, as nearly as possible, simultaneously, but so that they are taken to have occurred in the following sequence:

 

(i)

first (to the extent not entered into before Completion as contemplated by clause 4.11 for any reason) the entry into the Boral Australasia IP Licences between Boral Seller and BAGL;

 

(ii)

second, the entry into the USG Australasia IP Licences between Subscriber 1 and BAGL in exchange for BAGL’s issuance of the Subscription 1 Shares to Subscriber 1;

 

(iii)

third, Subscriber 1’s contribution of the Subscription 1 Shares to Subscriber 2 in exchange for share premium of Subscriber 2;

 

(iv)

fourth, BAGL’s issuance of the Subscription 2 Shares to Subscriber 2 in exchange for Subscriber 2’s contribution of the USG Contributed Shares to BAGL;

 

(v)

fifth, the Acquirer (and the Boral Seller to the extent it holds any indirect interest in USG Interiors Pacific Limited at the relevant time) procuring that USG Interiors Pacific Limited takes all steps within its power to convert into an unlimited liability company; and

 

(vi)

sixth, the transfer of the Sale Shares by the Boral Seller to the Acquirer and all other actions.

 

(b)

If one action required by clause 5.2 and Schedule 5 does not take place, then without prejudice to any rights available to any party as a consequence:

 

(i)

there is no obligation on any party to undertake or perform any of the other actions;

 

(ii)

to the extent that such actions have already been undertaken, the parties must do everything reasonably required to reverse those actions; and

 

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(iii)

each Party must return to the relevant other Party all documents delivered to it under clause 5.2 and Schedule 5 and must each repay to the relevant other Party all payments received by it under clause 5.2 and Schedule 5, without prejudice to any other rights any Party may have in respect of that failure.

 

(c)

USG may, in its sole discretion, waive any or all of the actions that any Boral Group Member or BAGL Group Member is required to perform under Schedule 5 and Boral may, in its sole discretion, waive any or all of the actions that any USG Group Member is required to perform under Schedule 5.

 

5.4	Interdependency with Asia Completion

 

(a)

Completion under this Agreement is interdependent with, and is to occur (as far as possible having regard to clause 5.3 and the equivalent provision of the Asia Sale Agreement) simultaneously with, Asia Completion under the Asia Sale Agreement.

 

(b)

If Asia Completion under the Asia Sale Agreement does not occur for any reason, Completion under this Agreement will be taken not to have occurred (notwithstanding clause 5.2 and Schedule 5 having otherwise being complied with) and clause 5.3(b) will apply.

 

5.5	Notice to complete

 

(a)

If a Party (Failing Party) fails to satisfy all of its obligations under clause 5.2 and Schedule 5 on the day and at the place and time for Completion determined under clause 5.1 then:

 

(i)

if the Failing Party is a Boral Party or a BAGL Group Member, USG; or

 

(ii)

if the Failing Party is a USG Party, Boral,

(in each case the Notifying Party) may give the Failing Party a notice requiring the Failing Party to satisfy those obligations on any Business Day within a period of 14 days from the date of the notice and declaring time to be of the essence.

 

(b)

If the Failing Party fails to satisfy those obligations within those 14 days the Notifying Party may, without limitation to any other rights it may have, terminate this agreement with immediate effect by giving written notice to each other Party.

 

5.6	Post Completion actions

 

(a)

From Completion until the Sale Shares are registered in the name of the Acquirer, Boral Seller must:

 

(i)

appoint the Acquirer as its sole proxy as holder of Sale Shares to attend shareholders’ meetings and exercise the votes attaching to the Sale Shares;

 

(ii)

not vote at any shareholders’ meetings of BAGL in respect of the Sale Shares;

 

(iii)

take all other actions in the capacity of a registered holder of the Sale Shares as the Acquirer directs,

and the Acquirer indemnifies Boral Seller against all Loss suffered or incurred by it arising out of the implementation of any action taken in accordance with such proxy.

 

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(b)

From Completion until the USG Contributed Shares are registered in the name of BAGL, Subscriber 2 must:

 

(iv)

appoint BAGL as its sole proxy as holder of the relevant USG Contributed Shares to attend shareholders’ meetings and exercise the votes attaching to the USG Contributed Shares;

 

(v)

not attend and vote at any shareholders’ meetings of any USG Contributed Entity;

 

(vi)

take all other actions in the capacity of a registered holder of the USG Contributed Shares as BAGL directs,

and Boral indemnifies Subscriber 2 against all Loss suffered or incurred by it arising out of the implementation of any action taken in accordance with such proxy.

 

(c)

As soon as practicable following Completion (and in any event within applicable statutory timeframes) Boral and USG must procure that all requisite forms and notifications are lodged with the appropriate Governmental Agency in respect of the actions undertaken at Completion.

 

(d)

USG and Boral agree to procure that, as soon as practicable following Completion, a tax-transparent limited liability entity (for a specific nature to be agreed between Boral and USG in good faith) is interposed between BAGL and USG Interiors Pacific Limited (as the latter may be renamed following it conversion to an unlimited liability company).

 

5.7	Co-operation

 

(a)

Following Completion, Boral agrees to cooperate with USG in good faith to ensure that the ownership of entities by the Joint Venture Group are structured to enable the USG Group to maintain the level of ownership required by section 902 of the Code.

 

(b)

Boral acknowledges and agrees that the shares and assets owned by the following entities are subject to a gain recognition agreement filed with the U.S. government and that, from Completion, the Joint Venture Group will not sell or cause to be sold the shares or assets of these businesses prior to January 1, 2019:

 

(i)

USG Manufacturing Worldwide Ltd;

 

(ii)

USG ChinaLux S.a.r.l.;

 

(iii)

Star-USG Building Materials Co., Ltd.

 

(iv)

USG Asia Pacific Holdings Pte. Ltd.

 

(v)

USG Interiors Pacific Ltd.;

 

(vi)

USG Interiors Australia Pty Ltd; and

 

(vii)

USG Cayman Holdings Ltd.

 

(c)

Boral acknowledges and agrees that USG, as a U.S.-based multinational, is subject to various detailed reporting requirements (as amended from time to time) and that to comply with these reporting requirements the USG Group will require, and the Joint Venture Group will following Completion provide, detailed information regarding the computation of earnings and profits earned by each entity within the Joint Venture Group, and the nature of those earnings and will also need receipts evidencing foreign taxes paid by the entities within the Joint Venture Group.

 

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5.8	Long term incentive arrangements

 

(a)

Boral and USG acknowledge that:

 

(i)

certain employees and officers of the BAGL Group participate in the Boral Group’s long term incentive programs (Boral LTI); and

 

(ii)

certain employees and officers of the USG Contributed Entities participate in the USG Group’s long term incentive programs (USG LTI).

 

(b)

Boral and USG agree that:

 

(i)

the Boral Group will be solely responsible for, and after Completion Boral will reimburse the Joint Venture Group for any Loss suffered by any Joint Venture Group Member in respect of, long term incentive entitlements of BAGL Group employees and officers under the Boral LTI in respect of the Boral financial year ending 30 June 2014 (and for the avoidance of doubt in respect of all previous financial years); and

 

(ii)

the USG Group will be solely responsible for, and after Completion USG will reimburse the Joint Venture Group for any Loss suffered by any Joint Venture Group Member in respect of, long term incentive entitlements of USG Contributed Entity employees and officers under the USG LTI in respect of the USG financial year during which Completion occurs (and for the avoidance of doubt in respect of all previous financial years),

with the expectation that in respect of later periods the Joint Venture Group will establish its own standalone long term incentive arrangements.

 

(c)

This clause 5.8 does not apply in relation to bonus entitlements or similar short term incentives to which employees or officers of the BAGL Group or any USG Contributed Entity (including participants in the Boral LTI or the USG LTI) may be entitled. Following Completion these entitlements will be the responsibility of the Joint Venture Group.

 

5.9	Expatriates

Boral and USG agree that the USG Group will be solely responsible for, and USG will after Completion reimburse the Joint Venture Group for any Loss suffered by any Joint Venture Group Company in respect of, all costs of repatriation and re-employment of expatriate employees seconded by the USG Group to the USG Contributed Entities as at Completion.

 

6.	PURCHASE PRICE ADJUSTMENT

 

 

6.1	Definitions

The meanings of the terms used in this clause 6 are set out below.

BAGL Adjustment Amount has the meaning given in Part 1 of Schedule 9.

BAGL Completion Statement means a statement prepared under this clause 6, calculating the BAGL Adjustment Amount in the manner and format prescribed in Schedule 9 for the BAGL Group prepared as at close of business on the Completion Date.

Independent Expert has the meaning provided in clause 6.8(a).

Dispute Notice is defined in clause 6.5(b).

Review Period means the period of 30 days commencing on the later to occur of:

 

(a)

USG delivering a draft USG Completion Statement under clause 6.4(a); and

 

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(b)

Boral delivering a draft BAGL Completion Statement under clause 6.4(b).

Australasia USG Adjustment Amount has the meaning given in Part 1 of Schedule 10.

USG Completion Statement means a statement prepared under this clause 6, calculating the Australasia USG Adjustment Amount in the manner and format prescribed in Schedule 10 for the USG Contributed Entities prepared as at close of business on the Completion Date.

 

6.2	Purchase Price

The Initial Purchase Price will be adjusted:

 

(a)

at Completion, in accordance with clause 6.3; and

 

(b)

after Completion, in accordance with clauses 6.4 to 6.11.

 

6.3	Estimated positions at Completion

 

(a)

No later than 7 days before the scheduled date for Completion under clause 5.1:

 

(i)

USG must deliver to Boral a statement setting out USG’s estimate, prepared in good faith, of the Australasia USG Adjustment Amount as at that scheduled Completion date together with reasonable supporting workings; and

 

(ii)

Boral must deliver to USG a statement setting out Boral’s estimate, prepared in good faith, of the BAGL Adjustment Amount as at that scheduled Completion date together with reasonable supporting workings.

 

(b)

If either Boral or USG fails to deliver a statement complying with clause 6.3(a) by the date required by that clause, the relevant party will be taken to have delivered an estimated Australasia USG Adjustment Amount or estimated BAGL Adjustment Amount (as the case may be) of zero.

 

(c)

The Initial Purchase Price payable at Completion will be adjusted so that:

 

(i)

if the estimated BAGL Adjustment Amount is higher than the estimated Australasia USG Adjustment Amount, the Initial Purchase Price will be increased by an amount equal to 50% of the difference; and

 

(ii)

if the BAGL Adjustment Amount is lower than the Australasia USG Adjustment Amount, the Initial Purchase Price will be decreased by an amount equal to 50% of the difference,

provided that no adjustment will be made if the required increase or decrease would be, when aggregated with the corresponding required increase or decrease under the Asia Sale Agreement, less than US$200,000.

 

(d)

If Completion is delayed beyond the date for which the estimates were prepared, Boral and USG must consult in good faith regarding any material changes to their estimates (and if updated estimates are agreed the adjustments to the Initial Purchase Price under clause 6.3(c) will be made accordingly).

 

6.4	Post Completion – final adjustments

 

(a)

USG must procure that a draft of the USG Completion Statement is prepared in accordance with this clause 6 and delivered to Boral by the date which is 90 days after the Completion Date (or such other date as Boral and USG agree in writing).

 

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(b)

Boral must procure a draft of the BAGL Completion Statement is prepared in accordance with this clause 6 and delivered to USG by the date which is 90 days after the Completion Date (or such other date as Boral and USG agree in writing).

 

6.5	Review and dispute

 

(a)

By no later than the end of the Review Period:

 

(i)

Boral must give USG a written notice, which states that Boral either:

 

(A)

accepts the draft USG Completion Statement; or

 

(B)

disputes one or more items or the calculation of one or more items in the draft USG Completion Statement (in which case clause 6.5(b) will apply); and

 

(ii)

USG must give Boral a written notice, which states that USG either:

 

(A)

accepts the draft BAGL Completion Statement; or

 

(B)

disputes one or more items or the calculation of one or more items in the draft BAGL Completion Statement (in which case clause 6.5(b) will apply).

 

(b)

If Boral wishes to dispute any item or calculation of any item in the draft USG Completion Statement, or USG wishes to dispute any item or calculation of any item in the draft BAGL Completion Statement, then that Party must, before the end of the Review Period, also give a written notice (Dispute Notice) to the other which:

 

(i)

sets out details of each item or calculation of each item that is in dispute;

 

(ii)

sets out a separate dollar value for each of the disputed items; and

 

(iii)

sets out full details of the reasons why each of the relevant items is in dispute.

 

(c)

Boral may only give one Dispute Notice and USG may only give one Dispute Notice.

 

6.6	Acceptance and Deemed Acceptance

If either Boral or USG:

 

(a)

gives a notice under clause 6.5(a)(i) or 6.5(a)(ii) (as the case may be) accepting the draft BAGL Completion Statement or the draft USG Completion Statement(as relevant); or

 

(b)

notwithstanding the requirements of clause 6.5 fails to give the other a notice accepting or disputing the draft BAGL Completion Statement or the draft USG Completion Statement (as relevant) within the Review Period; or

 

(c)

gives a notice to the other purporting to dispute the draft BAGL Completion Statement or the draft USG Completion Statement (as relevant) after expiry of the Review Period; or

 

(d)

gives a notice to the other purporting to dispute the draft BAGL Completion Statement or the draft USG Completion Statement (as relevant) within the Review Period but fails to give a Dispute Notice within the Review Period,

then the draft BAGL Completion Statement or the draft USG Completion Statement (as relevant) in the form in which it was delivered under clause 6.4 will be taken to be the definitive “BAGL Completion Statement” or “USG Completion Statement” (as relevant) for the purposes of this Agreement, and will be final and binding on the Parties (including for the avoidance of doubt for the determination of the BAGL Adjustment Amount or the Australasia USG Adjustment Amount, as the case may be).

 

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6.7	Dispute Resolution Procedure

 

(a)

If either Boral or USG gives a Dispute Notice within the Review Period pursuant to clause 6.5(b), then Boral and USG must, within 30 days after expiry of the Review Period, use their reasonable endeavours in good faith to:

 

(i)

resolve the issues set out in the Dispute Notice or Dispute Notices; and

 

(ii)

reflect any resolution regarding those issues in a written agreement.

 

(b)

If any agreement reached under clause 6.7(a) resolves all outstanding issues in relation to the BAGL Completion Statement or the USG Completion Statement (as relevant), the parties must make any required changes that arise from that agreement to the draft BAGL Completion Statement or the draft USG Completion Statement (as relevant), and the resulting document will be taken to be the definitive “BAGL Completion Statement” or “USG Completion Statement” (as relevant) for the purposes of this Agreement, and will be final and binding on the Parties (including for the avoidance of doubt for the determination of the BAGL Adjustment Amount or the Australasia USG Adjustment Amount, as the case may be).

 

6.8	Referral to Independent Expert

 

(a)

If USG and Boral have not been able to resolve the issues set out in a Dispute Notice given pursuant to clause 6.5(b) within 30 days of the expiry of the Review Period, then the unresolved matters must be referred for resolution to an independent person agreed between USG and Boral within a further 7 days. If USG and Boral cannot agree on who the independent person will be within that time period, the dispute must be referred to one of the following accounting firms (to be drawn by lot in the presence of a representative of USG and Boral):

 

(i)

PwC Australia;

 

(ii)

Deloitte Australia;

 

(iii)

KPMG Australia;

 

(iv)

Ernst & Young Australia,

and if each of the above firms refuse the appointment, then a firm shall be selected from the following list (to be drawn by lot in the presence of a representative of USG and Boral):

 

(v)

BDO

 

(vi)

▇▇▇▇▇ ▇▇▇▇▇▇▇▇;

 

(vii)

PKF,

and the Independent Expert for the purposes of this clause 6 will be the person agreed or selected under this clause 6.8(a). For the avoidance of doubt, if both the BAGL Completion Statement and the USG Completion Statement are in dispute, both disputes must be referred to the same Independent Expert at the same time.

 

(b)

The Independent Expert must be instructed by USG and Boral:

 

(i)

to determine only the unresolved issues in the Dispute Notice or Dispute Notices;

 

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(ii)

to decide the procedures and timing to be followed in order to resolve the dispute (save as set out in this clause 6);

 

(iii)

to provide a written determination to USG and Boral no later 30 days after receipt of the submissions contemplated by clause 6.8(c) setting out the Independent Expert’s determination as to:

 

(A)

the unresolved issues;

 

(B)

amendments (if any) required to be made to the BAGL Completion Statement, the USG Completion Statement, or both (as the case may be depending on the subject matter of the dispute or disputes);

 

(C)

the BAGL Adjustment Amount, the Australasia USG Adjustment Amount, or both (as the case may be depending on the subject matter of the dispute or disputes); and

 

(D)

the allocation of the Independent Expert’s costs.

 

(c)

USG and Boral may make separate written submissions to the Independent Expert (to be delivered within 14 days after the Independent Expert is appointed) and may make a response to the submissions of the other.

 

(d)

The Independent Expert will act as an expert and not as an arbitrator in determining the dispute. The Independent Expert’s decision in relation to the matters in its written determination will be final, conclusive and binding on the Parties (except in the case of manifest error).

 

(e)

The Independent Expert must be instructed to, in reaching its determination:

 

(i)

apply the requirements of this clause 6 (and Schedule 9 or Schedule 10 (as applicable)) insofar as they relate to financial and accounting matters and the format of the respective completion statements;

 

(ii)

not take into account any other dispute that may be ongoing between the parties and unrelated to the Dispute Notice or Dispute Notices submitted to the Independent Expert; and

 

(iii)

rely solely on the submissions by the Parties to the Independent Expert and not independent review.

 

(f)

The Independent Expert must be instructed that, in resolving any disputed item, the Independent Expert may not assign a greater value to any such item than the greatest value for such item claimed by either USG or Boral in the written submissions to the Independent Expert or less than the lowest value for such item claimed by either USG or Boral in such submissions.

 

(g)

Any written correspondence between the Independent Expert and any of the Parties must be copied to each of the other Parties at the same time as it is sent to the principal recipient.

 

(h)

Each of the Parties must promptly provide the Independent Expert with any information, assistance and cooperation that the Independent Expert reasonably requests to assist in making his or her determination.

 

(i)

The costs of the Independent Expert will be borne in the proportion determined by the Independent Expert having regard to the outcome of the dispute or disputes referred to the Independent Expert (and failing any cost allocation by the Independent Expert,

 

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equally between USG and Boral. In addition, at the time of appointing the Independent Expert Boral and USG must agree to any customary terms of engagement of the Independent Expert, including as to indemnities in favour of the Independent Expert

 

6.9

Access

 

(a)

USG must ensure that each USG Group Member permits representatives of Boral and its advisers to have access to and take extracts from the books, correspondence, accounts or other records relating to the USG Contributed Entities for the period before Completion in their possession or control as Boral and its advisers reasonably request in relation to the review of, and agreement to, the USG Completion Statement.

 

(b)

Boral must ensure that each Boral Group Member permits representatives of USG and its advisers to have access to and take extracts from the books, correspondence, accounts or other records relating to the BAGL Group for the period before Completion in their possession or control as USG and its advisers reasonably request in relation to:

 

(i)

the preparation of, and agreement to, the USG Completion Statement; and

 

(ii)

the review of, and agreement to, the BAGL Completion Statement.

 

(c)

USG and Boral must use all reasonable endeavours to ensure (as ultimate shareholders in BAGL after Completion) that each BAGL Group Member permits representatives of USG, Boral and their respective advisers to have access to and take extracts from the books, correspondence, accounts or other records relating to the BAGL Group and the USG Contributed Entities for the period before Completion in their possession or control as USG, Boral and their respective advisers reasonably request in relation to the preparation and review of, and agreement to, the USG Completion Statement and the BAGL Completion Statement.

 

6.10	If Expert process fails

If this clause 6 requires any disputed matters to be referred to an Independent Expert for resolution but no Independent Expert determination on the relevant matters is possible because:

 

(a)

USG and Boral do not agree on the Independent Expert and none of the firms selected as potential Independent Experts agrees to the accept the appointment;

 

(b)

an Independent Expert is appointed but the Independent Expert subsequently withdraws or advises that it is for any reason unable to make a determination; or

 

(c)

for any other reason,

and USG and Boral cannot within a further 14 days agree on the appointment of an alternative Independent Expert, then the Independent Expert process will be taken to have failed and any party may commence proceedings in a court of competent jurisdiction in relation to the resolution of the relevant disputed matters (on the basis that each party will for the avoidance of doubt still have an obligation to make the payments required by clause 6.11).

 

6.11	Payment of final adjustments

 

(a)

If the BAGL Adjustment Amount finally agreed or determined in accordance with this clause 6 is higher than the Australasia USG Adjustment Amount finally agreed or determined in accordance with this clause 6, then subject to clause 6.11(c) on the Final Adjustment Date the Acquirer must pay to Boral Seller, as an increase to the Initial Purchase Price:

 

(i)

an amount equal to 50% of the difference; less

 

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(ii)

the amount (if any) by which the Initial Purchase Price paid at Completion was increased under clause 6.3(c),

provided that if the amount under clause 6.11(a)(i) above is smaller than the amount under clause 6.11(a)(ii) above so that the calculation results in a negative number (an Adjustment Shortfall):

 

(iii)

the Acquirer will have no obligation to make a payment to Boral Seller under this clause 6.11(a); and

 

(iv)

Boral Seller must instead pay to the Acquirer on the Final Adjustment Date an amount equal to the relevant Adjustment Shortfall.

 

(b)

If the BAGL Adjustment Amount finally agreed or determined in accordance with this clause 6 is lower than the Australasia USG Adjustment Amount finally agreed or determined in accordance with this clause 6, then then subject to clause 6.11(c) on the Final Adjustment Date Boral Seller must pay to the Acquirer, as a reduction to the Initial Purchase Price:

 

(i)

an amount equal to 50% of the difference; less

 

(ii)

the amount (if any) by which the Initial Purchase Price paid at Completion was reduced under clause 6.3(c),

provided that if the amount under clause 6.11(b)(i) above is smaller than the amount under clause 6.11(b)(ii) above so that the calculation results in a negative number (an Adjustment Shortfall):

 

(iii)

the Boral Seller will have no obligation to make a payment to the Acquirer under this clause 6.11(b); and

 

(iv)

the Acquirer must instead pay to Boral Seller on the Final Adjustment Date an amount equal to the relevant Adjustment Shortfall.

 

(c)

No amount will be payable by any Party (and no adjustment to the Initial Purchase Price will be made) under this clause 6.11 unless the amount determined under clause 6.11(a) or 6.11(b) would be, when aggregated with any amount payable by the Party (or any Related Body Corporate of the Party) under the corresponding provision under the Asia Sale Agreement, exceeds US$200,000.

 

6.12	Interaction with Asia Sale Agreement

If a dispute is referred to an Independent Expert under clause 6.8 in circumstances where:

 

(a)

a ‘Dispute Notice’ has also been given under the corresponding provisions of the Asia Sale Agreement; and

 

(b)

there are unresolved issues between the parties in relation to that Dispute Notice,

then both disputes must be referred to the same Independent Expert at the same time.

 

7.	WARRANTIES

 

 

7.1	Boral Warranties, ▇▇▇▇▇ ▇▇ Warranties and Boral Tax Warranties

Boral and Boral Seller warrant to USG, the Acquirer and the Subscribers that each of the Boral Warranties, the ▇▇▇▇▇ ▇▇ Warranties and the Boral Tax Warranties is true and correct.

 

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7.2	USG Warranties and USG Tax Warranties

USG, the Acquirer and the Subscribers warrant to Boral and the Boral Seller that each of the USG Warranties, the USG Tax Warranties, the USG IP Warranties is true and correct.

 

7.3	Effective dates

 

(a)

Subject to clause 7.3(b), the Warranties are given both as at the date of this Agreement and as at Completion.

 

(b)

Where a Warranty is expressed to be made as at a date, it is given with respect to that date only.

 

(c)

Where a Warranty is given as at Completion, that Warranty is given disregarding the change of ownership of the Sale Shares and the USG Contributed Shares that will occur upon Completion and the effect of that change of ownership.

 

7.4	Independent warranties

Each of the Warranties is to be construed independently of the others and is not limited by reference to any other Warranty.

 

7.5	Acknowledgment

 

(a)

The Boral Parties acknowledge that the USG Parties have entered into this Agreement and will complete this Agreement in reliance on the Boral Warranties, the ▇▇▇▇▇ ▇▇ Warranties and the Boral Tax Warranties.

 

(b)

The USG Parties acknowledge that the Boral Parties have entered into this Agreement and will complete this Agreement in reliance on the USG Warranties, the USG Tax Warranties.

 

7.6

No merger

The Warranties are continuing and do not merge on Completion but remain in full force, subject to the limitations set forth in this Agreement.

 

7.7	Warranties personal

Any rights of a Party to make a Claim for breach of a Warranty are personal to that Party and may not be assigned to any other Person.

 

7.8	No other warranties

 

(a)

Each of the Parties acknowledge that, except for the Warranties (and any express warranties in any other Transaction Document), no Party nor any of its Representatives makes any express or implied representation or warranty at all in relation to this Agreement and the transactions contemplated in this Agreement.

 

(b)

Without limiting the foregoing, each Party acknowledges that:

 

(i)

at no time has any Party or any of their respective Representatives made or given, nor has any Party relied on, any representation, warranty, promise, forward-looking statement, projection or forecast in connection with this Agreement except for the Warranties; and

 

(ii)

to the full extent permitted by applicable law, every condition, guarantee, warranty, term, provision, representation or undertaking (whether express, implied, written, oral, collateral, statutory or otherwise) in relation to the transactions contemplated by this Agreement except the Warranties is excluded.

 

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(c)

To the full extent permitted by law, each Party agrees not to make, and releases any right they may have to make, against any other Party or their respective Representatives any Claim based on Part 7.10 (including section 1041H) of the Corporations Act, Part 2 Division 2 (including section 12DA or 12DB) of the Australian Securities and Investments Commission ▇▇▇ ▇▇▇▇ (Cth), Parts 2-1, 2-2 or 3-1 (including sections 18, 20, 21, 22 and 29) of the Australian Consumer Law (Schedule 2 to the Competition and Consumer ▇▇▇ ▇▇▇▇ (Cth)) or on any corresponding provision of any State or Australian Territory legislation, or on a similar provision under any other applicable law, for any act or omission of another Party or for any statement or representation that is not expressly contained in this Agreement.

 

7.9	Mitigation of losses

Each Party must take, and must ensure each of its Related Corporations following Completion, takes, all reasonable action to mitigate any Loss suffered for which a Claim could be made against any Party pursuant to this Agreement. Nothing in this Agreement restricts or limits any general obligation at law to mitigate any Loss.

 

7.10

BAGL

 

(a)

The Parties acknowledge and agree that:

 

(i)

Boral Seller and the Acquirer will immediately following Completion each be 50% owners of the shares in BAGL;

 

(ii)

it is the intent of the Parties that BAGL is a party to this Agreement only insofar as it is required to undertake specified actions (which may be the subject of a claim for specific performance) and that it is not intended that BAGL should have, and BAGL will not have:

 

(A)

any liability in respect of any Claim by any other Party (except for specific performance of an obligation owed by it that is to be performed at or before Completion); or

 

(B)

any right to bring any Claim against any other Party (except for specific performance of an obligation owed to it that is to be performed at or before Completion.

 

(b)

To the extent this Agreement requires BAGL to do anything before or at Completion, Boral must procure that BAGL does the relevant thing in accordance with the relevant provisions of this Agreement. For the avoidance of doubt this does not apply to any matters after Completion.

 

(c)

In relation to Claims by or against BAGL:

 

(i)

each Party undertakes and agrees not to make any Claim against BAGL which is inconsistent with clause 7.10(a)(ii);

 

(ii)

Boral undertakes and agrees to ensure that BAGL does not make any Claim against any other Party at any time before Completion (or if Completion does not occur) which is inconsistent with clause 7.10(a)(ii); and

 

(iii)

BAGL undertakes and agrees (and Boral Seller and the Acquirer, as shareholders in BAGL, must ensure) that BAGL does not make any Claim against any other Party at any time after Completion which is inconsistent with clause 7.10(a)(ii).

 

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7.11	Claim to be reduction of Purchase Price

Any payment to a USG Party in respect of any Claim against a Boral Party is taken to be a reduction of the Purchase Price (and any Payment to a Boral Party in respect of any Claim against a USG Party is taken to be an increase in the Purchase Price).

 

8.	LIMITATIONS OF LIABILITY

 

 

8.1	Disclosure

 

(a)

None of Boral, the Boral Seller or BAGL is liable in respect of a Warranty Claim (other than a Claim arising from a breach of a Title Warranty) to the extent a fact, matter or circumstance giving rise to the Warranty Claim:

 

(i)

is disclosed or described in any Transaction Document (in the form such document exists at the date of this Agreement); or

 

(ii)

is fairly disclosed in the Data Room documents that are listed or referred to in the Boral Disclosure Schedule or in any narrative description in the Boral Disclosure Schedule (or both taken together) in circumstances where the relevant documents or narrative description (or both) are identified in the Boral Disclosure Schedule as being disclosed against:

 

(A)

the particular Warranty to which the relevant Warranty Claim relates; or

 

(B)

the group of Warranties (as classified by reference to the subject headings in the relevant Warranty schedule) in which that particular Warranty falls; or

 

(iii)

is fairly disclosed:

 

(A)

in the narrative of the Boral Q&A Responses; or

 

(B)

in any document referred to in a Boral Q&A Response (but in this case only to the extent the relevant fact, matter or circumstance relates to the question to which the relevant Boral Q&A Response responds); or

 

(iv)

is within the actual knowledge of Specified Executives of USG,

and each Party acknowledges that Boral, the Boral Seller and BAGL have disclosed or are deemed to have disclosed against the Boral Warranties, and the ▇▇▇▇▇ ▇▇ Warranties (other than the Title Warranties) and each Party will be treated as having actual knowledge of) all facts, matters and circumstances that fall within any of clauses 8.1(a)(i) to 8.1(a)(iv) above.

 

(b)

None of USG, the Acquirer or the Subscribers are liable in respect of a Warranty Claim (other than a Claim arising from a breach of a Title Warranty) to the extent a fact, matter or circumstance giving rise to the Warranty Claim:

 

(i)

is disclosed or described in any Transaction Document (in the form such document exists at the date of this Agreement); or

 

(ii)

is fairly disclosed in the Data Room documents that are listed or referred to in the USG Disclosure Schedule or in any narrative description in the USG Disclosure Schedule (or both taken together) where the relevant documents or narrative description (or both) are identified in the USG Disclosure Schedule as being disclosed against:

 

(A)

the particular Warranty to which the relevant Warranty Claim relates; or

 

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(B)

the group of Warranties (as classified by reference to the subject headings in the relevant Warranty schedule) in which that particular Warranty falls; or

 

(iii)

is fairly disclosed:

 

(A)

in the narrative of the USG Q&A Responses; or

 

(B)

in any document referred to in a USG Q&A Response (but in this case only to the extent the relevant fact, matter or circumstance relates to the question to which the relevant USG Q&A Response responds); or

 

(iv)

is within the actual knowledge of Specified Executives of Boral,

and each Party acknowledges that USG, the Acquirer and the Subscribers have disclosed or are deemed to have disclosed against the USG Warranties (other than the Title Warranties) and each Party will be treated as having actual knowledge of) all facts, matters and circumstances that fall within any of clauses 8.1(b)(i) to 8.1(b)(iv) above.

 

8.2	Fair disclosure and actual knowledge

 

(a)

For the purposes of clause 8.1, a fact, matter or circumstance is fairly disclosed if sufficient information has been disclosed that a sophisticated investor, experienced in transactions of the nature of those contemplated by this Agreement, would be aware of the substance and significance of the information and would be aware of the nature and extent of the relevant breach of Warranty.

 

(b)

For the purposes of clause 8.1, a fact, matter or circumstance is within the actual knowledge of a Specified Executive only if the fact, matter or circumstance is within the actual knowledge of that individual prior to the date of this Agreement and a sophisticated investor, experienced in transactions of the nature of those contemplated by this Agreement would be aware, prior to the date of this Agreement, of the substance and significance of that fact, matter or circumstance and the nature and extent of the relevant breach of Warranty.

 

8.3	Warranties not limited by inquiries or knowledge

 

(a)

Except as expressly set out in this Agreement, no Boral Warranty, ▇▇▇▇▇ ▇▇ Warranty or Boral Tax Warranty is excluded or limited by:

 

(i)

any inquiry or investigation made by or on behalf of USG, the Acquirer or the Subscribers or any of their respective Representatives;

 

(ii)

any actual or constructive knowledge of USG, the Acquirer, the Subscribers or any of their respective Representatives that any Boral Warranty, ▇▇▇▇▇ ▇▇ Warranty or Boral Tax Warranty is or may be incorrect; or

 

(iii)

any other act, matter or thing.

 

(b)

Except as expressly set out in this Agreement, no USG Warranty or USG Tax Warranty is excluded or limited by:

 

(i)

any inquiry or investigation made by or on behalf of Boral, BAGL or the Boral Seller or any of their respective Representatives;

 

(ii)

any actual or constructive knowledge of Boral, BAGL or the Boral Seller or any of their respective Representatives that any USG Warranty or USG Tax Warranty is or may be incorrect; or

 

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(iii)

any other act, matter or thing.

 

8.4	Time limits for Claims

 

A Party is not liable in respect of a Claim unless:

 

(a)

it has received a Claim Notice in accordance with clause 11.1 of this Agreement by no later than:

 

(i)

the date which is 6 years after the Completion Date in respect of a Claim arising from a breach of a Title Warranty;

 

(ii)

the end of any applicable statute of limitations with respect to a Tax Claim; and

 

(iii)

the date which is the earlier of:

 

(A)

2 years after the Completion Date; and

 

(B)

6 months after the completion of the audit of each of the Joint Venture Companies in respect of the first full financial year which occurs after the Completion Date,

in respect of any other Claim; and

 

(b)

within 6 months (or such longer period as may be agreed) after receipt of the Claim Notice:

 

(i)

the Claim has been agreed, compromised or settled; or

 

(ii)

the Party that gave the Claim Notice (or another member of the same Claim Group) has issued and served legal proceedings against the relevant Party (or another member of its Claim Group) in respect of the Claim,

provided that:

 

(iii)

if at the time the Claim Notice is given sufficient Claims have not been made that, in aggregate, exceed any relevant threshold referred to in clause 8.6, the 6 month period referred to in this clause 8.4(b) will commence from the earlier of the date the threshold is exceeded and the date the time period for Claims of the relevant type under clause 8.4(a) above expires; and

 

(iv)

if the Claim Notice relates to a liability that is a contingent liability, then provided always that:

 

(A)

clause 11.1 has been complied with in relation to the Claim; and

 

(B)

the events, matters or circumstances detailed in the relevant Claim Notice as the basis of the Claim occurred before the expiry of the applicable period under clause 8.4(a),

the 6 month period referred to in clause 8.4(b) above will commence from the earlier of the date the contingent becomes an actual liability and is due and payable and the date which is 6 years after the date of the Claim Notice.

 

8.5	Minimum amount for Claims

 

(a)

None of Boral, the Boral Seller or BAGL is liable in respect of a Claim (other than a Tax Claim or a Claim arising from a breach of a Title Warranty) unless the aggregate amount finally agreed or adjudicated to be payable in respect of that Claim and all other Claims by members of the same Claim Group arising from the same or similar facts, matters or circumstances is at least US$400,000.

 

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(b)

None of USG, the Acquirer or the Subscribers is liable in respect of a Claim (other than a Tax Claim or a Claim arising from a breach of a Title Warranty) unless the aggregate amount finally agreed or adjudicated to be payable in respect of that Claim and all other Claims by members of the same Claim Group arising from the same or similar facts, matters or circumstances is at least US$400,000.

 

8.6	Threshold for Claims

 

(a)

None of Boral, the Boral Seller or BAGL is liable in respect of a Claim (other than a Tax Claim or a Claim arising from a breach of a Title Warranty) unless the aggregate amount finally agreed or adjudicated to be payable in respect of that Claim either alone or together with the amount finally agreed or adjudicated to be payable in respect of other Claims and Asia Sale Agreement Claims by members of the USG Group that satisfy clause 8.5(a) (or the corresponding provision of the Asia Sale Agreement) is at least US$4 million, in which event Boral, the Boral Seller or BAGL (as relevant) is liable for the whole of that amount and not merely the excess.

 

(b)

None of USG, the Acquirer or the Subscribers is liable in respect of a Claim (other than a Tax Claim or a Claim arising from a breach of a Title Warranty) unless the aggregate amount finally agreed or adjudicated to be payable in respect of that Claim either alone or together with the amount finally agreed or adjudicated to be payable in respect of other Claims and Asia Sale Agreement Claims by members of the Boral Group that satisfy clause 8.5(b) (or the corresponding provision of the Asia Sale Agreement) is at least US$4 million, in which event USG, the Acquirer or the relevant Subscriber (as relevant) is liable for the whole of that amount and not merely the excess.

 

8.7	Maximum recovery

 

(a)

The maximum aggregate amount recoverable by the Boral Claim Group in relation to:

 

(i)

all Claims under this Agreement and all Asia Sale Agreement Claims:

 

(A)

excluding Tax Claims and Claims arising from breaches of Title Warranties and Environmental Warranties; and

 

(B)

excluding ‘Tax Claims’ as defined in the Asia Sale Agreement and Asia Sale Agreement Claims arising from breaches of ‘Title Warranties’ and ‘Environmental Warranties’ as defined in the Asia Sale Agreement,

is an amount equal to US$30 million;

 

(ii)

without limiting (i) above in relation to Claims to which it applies, all Claims under this Agreement and all Asia Sale Agreement Claims:

 

(A)

excluding Tax Claims and Claims arising from breaches of Title Warranties; and

 

(B)

excluding ‘Tax Claims’ as defined in the Asia Sale Agreement and Asia Sale Agreement Claims arising from breaches of ‘Title Warranties’ as defined in the Asia Sale Agreement,

but for the avoidance of doubt including all other Claims and Asia Sale Agreement Claims (including Claims arising from breaches of Environmental Warranties and Asia Sale Agreement Claims arising from breaches of ‘Environmental Warranties’ as defined in the Asia Sale Agreement) is an amount equal to US$60 million; and

 

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(iii)

all Claims under this Agreement and all Asia Sale Agreement Claims (including Claims excluded from paragraphs (i) and (ii) above) is an amount equal toUS$150 million.

 

(b)

The maximum aggregate amount recoverable by the USG Claim Group in relation to:

 

(i)

all Claims under this Agreement and all Asia Sale Agreement Claims:

 

(A)

excluding Tax Claims and Claims arising from breaches of Title Warranties and Environmental Warranties; and

 

(B)

excluding ‘Tax Claims’ as defined in the Asia Sale Agreement and Asia Sale Agreement Claims arising from breaches of ‘Title Warranties’ and ‘Environmental Warranties’ as defined in the Asia Sale Agreement,

is an amount equal to US$135 million;

 

(ii)

without limiting (i) above in relation to Claims to which it applies, all Claims under this Agreement and all Asia Sale Agreement Claims:

 

(A)

excluding Tax Claims and Claims arising from breaches of Title Warranties; and

 

(B)

excluding ‘Tax Claims’ as defined in the Asia Sale Agreement and Asia Sale Agreement Claims arising from breaches of ‘Title Warranties’ as defined in the Asia Sale Agreement,

but for the avoidance of doubt including all other Claims and Asia Sale Agreement Claims (including Claims arising from breaches of Environmental Warranties and Asia Sale Agreement Claims arising from breaches of ‘Environmental Warranties’ as defined in the Asia Sale Agreement) is an amount equal to US$270 million; and

 

(iii)

all Claims under this Agreement and all Asia Sale Agreement Claims (including Claims excluded from paragraphs (i) and (ii) above) is an amount equal to US$675 million.

 

8.8	No double recovery

 

(a)

A Party is not liable in respect of any Claim for any Loss to the extent that:

 

(i)

in respect to USG Claims, the Loss is recovered by any member of the USG Group under another Claim or an Asia Sale Agreement Claim or is made good or otherwise compensated for without material cost to the USG Group (including recovery under a policy of insurance) (and USG must ensure that any available insurance claims are pursued expeditiously and in good faith);

 

(ii)

in respect to Boral Claims, the Loss is recovered by any member of the Boral Group under another Claim or an Asia Sale Agreement Claim or is made good or otherwise compensated for without material cost to the Boral Group (including recovery under a policy of insurance) (and Boral must ensure that any available insurance claims are pursued expeditiously and in good faith);

 

(b)

If, after a Party has made a payment in respect of a Claim, the relevant recipient (or any other member of the same Claim Group) recovers, or is compensated for by any other means, any Loss to which that payment related, the relevant recipient must as soon as practicable pay to the Party who made the payment the amount of the Loss that was recovered or compensated for, less costs and expenses.

 

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8.9	Other limitations of liability

A Party is not liable in respect of any Claim (other than a Claim under clause 9.1(a) or 9.2(a)) for any Loss to the extent that:

 

(a)

the Loss arises out of anything done or omitted to be done in accordance with the terms of any Transaction Document or with the prior written approval of:

 

(i)

in respect to USG Claims, USG; or

 

(ii)

in respect to Boral Claims, Boral; or

 

(b)

the Loss arises from any of the following after the date of this Agreement;

 

(i)

the enactment or amendment of any legislation, regulations or other Legal Requirement;

 

(ii)

a change in the judicial or administrative interpretation of any Legal Requirement; or

 

(iii)

a change in the practice or policy of any Regulatory Authority;

 

(c)

the Loss would not have arisen but for a change after Completion in any accounting policy or practice of any member of the Joint Venture Group, any USG Contributed Entity, any Boral Joint Venture or:

 

(i)

in the case of USG Claims, any member of the USG Group; and

 

(ii)

in the case of Boral Claims, and member of the Boral Group,

that (in each case) applied before Completion;

 

(d)

the Loss is remediable, provided that:

 

(i)

in the case of USG Claims, it is remedied at the cost of the Boral Group to the satisfaction of USG, acting reasonably, within 60 days after the relevant Claimant Party gives written notice of the Claim under clause 11.1; and

 

(ii)

in the case of Boral Claims, it is remedied at the cost of the USG Group to the satisfaction of Boral, acting reasonably, within 60 days after the relevant Claimant Party gives written notice of the Claim under clause 11.1; or

 

(e)

the Loss is Consequential Loss, provided that this will not prevent recovery of Loss by the Claimant Party to the extent such Loss comprises costs associated with monitoring and ensuring compliance with anti-corruption or anti-bribery measures as required by any applicable law, regulation or regulator (including for avoidance of doubt the United States Foreign Corrupt Practices ▇▇▇ ▇▇▇▇ and the Securities and Exchange Commission) resulting from the matter giving rise to the relevant Claim.

 

8.10	Accounting provisions

 

(a)

A Party is not liable in respect of any Claim (including a Tax Claim) for any Loss to the extent of any amount that has been included as a provision, allowance, reserve or accrual that caters for the matter giving rise to the Claim:

 

(i)

in the case of a USG Claim, in the BAGL Completion Statement; or

 

(ii)

in the case of a Boral Claim, in the USG Completion Statement,

 

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up to a maximum reduction in liability of an amount equal to the amount of the relevant provision, allowance, reserve or accrual multiplied by:

 

(iii)

in the case of a USG Claim, USG’s Shareholding Percentage at the relevant time; or

 

(iv)

in the case of a Boral Claim, Boral’s Shareholding Percentage at the relevant time.

 

(b)

A Party is not liable in respect of any Claim under clause 9.1(a) or 9.2(a) in respect of Taxes relating to any period before Completion to the extent the liability of the BAGL Group or the USG Contributed Entities (as the case may be) is offset by Tax Attributes that relate to a financial year before Completion (with the intention that the relevant Party’s liability will be determined by reference to the net overall Tax liabilities of the relevant entities in respect of the period before Completion) provided that those Tax Attributes were not generated post Completion and carried back into a period ending on or prior to Completion and to the extent those Tax Attributes are not reflected as assets in the applicable Completion Statement.

 

(c)

If:

 

(i)

an accrual, allowance, provision or reserve in the BAGL Completion Statement in respect of a Tax exceeds the actual liability in respect of that Tax and that liability has been finally satisfied; or

 

(ii)

an entitlement to any Tax relief that is shown as an asset in the BAGL Completion Statement is understated and the amount of the understatement has been actually received by a member of the BAGL Group,

then the liability of the Boral Group in respect of any Claims (including Tax Claims) will be reduced by the amount of the actual excess or actual understatement (as applicable).

 

(d)

If:

 

(i)

an accrual, allowance, provision or reserve in the USG Completion Statement in respect of a Tax exceeds the actual liability in respect of that Tax and that liability has been finally satisfied; or

 

(ii)

an entitlement to any Tax relief that is shown as an asset in the USG Completion Statement is understated and the amount of the understatement has been actually received by a USG Contributed Entity,

then the liability of the USG Group in respect of any Claims (including Tax Claims) will be reduced by the amount of the actual excess or actual understatement (as applicable).

 

8.11	Opinions, estimates and forecasts

 

(a)

The parties acknowledge that no member of the Boral Group, the BAGL Group or the BGA Group is under any obligation to provide any member of the USG Group or its advisers with any information on the future financial performance or prospects of any member of the BAGL Group or the BGA Group or any Boral Joint Venture. If a member of the USG Group has received (including in the Boral Q&A Responses) opinions, estimates, projections, business plans, budget information or other forecasts in respect of any member or member of the BAGL Group or the BGA Group or any Boral Joint Venture, each USG Claim Group Member acknowledges and agrees that:

 

(i)

there are uncertainties inherent in attempting to make these estimates, projections, business plans, budgets and forecasts and the USG Claim Group is familiar with these uncertainties;

 

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(ii)

the USG Claim Group is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections, business plans, budgets and forecasts furnished to it; and

 

(iii)

none of Boral, the Boral Seller or BAGL is liable in respect of a Claim arising out of or relating to any opinions, estimates, projections, business plans, budgets or forecasts in respect of any member or members of the BAGL Group or the BGA Group or any Boral Joint Venture.

 

(b)

The parties acknowledge that no member of the USG Group is under any obligation to provide any member of the Boral Group or its advisers with any information on the future financial performance or prospects of any of the USG Contributed Entities. If a member of the Boral Group has received (including in the USG Q&A Responses) opinions, estimates, projections, business plans, budget information or other forecasts in respect of any of the USG Contributed Entities, each Boral Claim Group Member acknowledges and agrees that:

 

(i)

there are uncertainties inherent in attempting to make these estimates, projections, business plans, budgets and forecasts and the Boral Claim Group is familiar with these uncertainties;

 

(ii)

the Boral Claim Group is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections, business plans, budgets and forecasts furnished to it; and

 

(iv)

none of USG, the Acquirer or any of the Subscribers is liable in respect of a Claim arising out of or relating to any opinions, estimates, projections, business plans, budgets or forecasts in respect of any USG Contributed Entity.

 

(c)

Nothing in this clause 8.11 qualifies or limits the express rights and obligations of the parties in respect of the Earn-Out Amounts under clause 2.3(d) and Schedule 8.

 

8.12	Circumstances where limitations not to apply

 

(a)

Notwithstanding the foregoing, none of the limitations in the preceding clauses 8.1 to 8.10 (inclusive) apply to any Losses relating to or Claims brought by a Party:

 

(i)

for payment of any part of the Purchase Price (including the Earn-Out Amounts);

 

(ii)

for payment of any adjustment to the Purchase Price under clause 6.11; or

 

(b)

Notwithstanding the foregoing, none of the limitations in the preceding clauses 8.1 to 8.10 (inclusive) apply to any Losses in respect of a Claim to the extent that:

 

(i)

the Claim relates to a breach of Warranty given by a Party and the relevant Warranty was given dishonestly or fraudulently by that Party; or

 

(ii)

in the case of any other Claim, the Loss is a result of or arises from any fraud or dishonesty on the part of another Party.

 

8.13	No action against Representatives

 

(a)

The Parties waive, and Boral and USG must procure that each Boral Group Member and each USG Group Member waives, all rights and claims that they may have against current or former Representatives in relation to any matter arising directly or indirectly in connection with this Agreement except to the extent that such rights or claims arise out of the fraud, wilful misconduct, wilful concealment or wilful default of such person.

 

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(b)

The Parties acknowledge and agree that:

 

(i)

each Party has sought and obtained this waiver as agent for and on behalf of each of their respective current and former Representatives and holds the benefit of this clause 8.13 as trustee for them; and

 

(ii)

the provisions of this clause 8.13 may be enforced by a Party on behalf of and for the benefit of any of their respective current and former Representatives and those persons may plead this clause 8.13 in answer to any claim made by any Party against them.

 

9.	INDEMNITIES

 

 

9.1	Indemnities in favour of USG

 

(a)

After Completion Boral must pay to USG an amount equal to USG’s Shareholding Percentage at the relevant time (or in the case of any Tax or Tax Costs payable or incurred by a Boral Joint Venture or any Subsidiary of a Boral Joint Venture, USG’s Shareholding Percentage multiplied by the Joint Venture Group’s percentage holding in the Boral Joint Venture at the relevant time) of:

 

(i)

the amount of any Tax payable by a BAGL Group Member or by a Boral Joint Venture or any Subsidiary of a Boral Joint Venture to the extent that Tax relates to any period, or part period, up to and including Completion; and

 

(ii)

Tax Costs incurred by or on behalf of a BAGL Group Member or a Boral Joint Venture or any Subsidiary of a Boral Joint Venture to the extent those Tax Costs arise from or relate to any of the matters for which Boral may be liable under clause 9.1(a)(i),

except to the extent that Boral’s liability is limited or qualified under clause 8.

 

(b)

For the purpose of clause 9.1(a):

 

(i)

Taxes imposed on revenues, income or gain shall be apportioned to periods ending on or prior to the Completion Date based on a hypothetical closing of the books method; and

 

(ii)

Taxes imposed on the value of an item for a period shall be apportioned to periods ending on or prior to the Completion Date on a pro rata basis determined by multiplying the Taxes by a fraction, the numerator of which is the number of days in the period falling on or before the Completion Date, and the denominator of which is the total number of days in the period for which the Tax is imposed.

 

(c)

If any Joint Venture Group Member suffers any Loss (other than to another Joint Venture Group Member) after Completion as a result of any Third Party Claim (including any prosecution or regulatory investigation) against the Joint Venture Group Member in connection with:

 

(i)

any breach or alleged breach before Completion by any BAGL Group Member, any Boral Joint Venture or any Subsidiary of a Boral Joint Venture (Relevant Entity) of any Anti-Corruption Law applicable to the Relevant Entity;

 

(ii)

any conduct before Completion by a Relevant Entity or any of their employees or agents (in the case of agents, in the relevant agent’s work for the Relevant Entity as opposed to for other clients) of a type listed in Warranty 18.2(a); or

 

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(iii)

any breach or alleged breach before Completion by any Relevant Entity of any International Trade Law applicable to the Relevant Entity which is in the nature of a sanction or embargo,

(each a Relevant Event) then Boral must promptly pay to USG an amount equal to the relevant Loss multiplied by USG’s Shareholding Percentage at the relevant time.

 

(d)

In addition (except to the extent compensated under clause 9.1(c)) if any USG Group Member suffers any Loss after Completion as a result of any Third Party Claim (including any prosecution or regulatory investigation) against the USG Group Member in connection with any Relevant Event (as defined in clause 9.1(c))) then Boral indemnifies the relevant USG Group Member in respect of such Loss. USG holds the benefit of this indemnity on trust for each other USG Group Member which is not a party to this Agreement.

 

(e)

If any Joint Venture Group Member is required to pay any amount to any Person or otherwise suffers any Loss (other than, in either case to another Joint Venture Group Member) after Completion as a result of any liability it has incurred which is in respect of environmental law breaches or costs of remediation to the Camellia site at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇, ▇▇▇▇▇▇▇▇▇ (any such payment or Loss a Camellia Payment) then Boral must promptly pay to USG an amount equal to the Camellia Payment multiplied by USG’s Shareholding Percentage at the relevant time. Boral and USG will as soon as practicable after the date of this Agreement commission the preparation and delivery of a Phase II Environmental Site Assessment in respect of the site (with a scope to be agreed between Boral and USG, acting reasonably and in good faith) with a view to establishing a ‘baseline’ as at a date as close as possible to the Completion Date for the purposes of the indemnity given in this clause 9.1(e). The costs of the Phase II Environmental Site Assessment shall be borne by Boral and USG in accordance with clause 16.2(a)(iii).

 

(f)

If any Joint Venture Group Member is required to pay any amount to any Person or otherwise suffers any Loss (other than, in either case to another Joint Venture Group Member) after Completion as a result of the surrender of mining leases held at the date of this Agreement by Waratah Gypsum Pty Limited then Boral must promptly pay to USG an amount equal to the relevant payment or Loss multiplied by USG’s Shareholding Percentage at the relevant time.

 

(g)

If each of the following applies:

 

(i)

any Joint Venture Group Member is required to pay any amount to any Person or suffers any Loss (other than, in either case to another Joint Venture Group Member) after Completion in respect of BAGL’s obligations in relation to removal of the mill structure from the Northgate site at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇ under the Mill Deed dated in or about ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇) Pty Ltd and ▇▇▇▇▇ ▇▇▇▇▇▇ & Company Limited (Northgate Remediation Costs); and

 

(ii)

the aggregate amount of the Northgate Remediation Costs exceeds the amount provided in respect of the Northgate Remediation Costs in the BAGL Completion Statement,

then Boral must promptly pay to USG an amount equal to the excess multiplied by USG’s Shareholding Percentage at the relevant time.

 

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9.2	Indemnities in favour of Boral

 

(a)

After Completion USG must pay to Boral an amount equal to Boral’s Shareholding Percentage at the relevant time of:

 

(i)

the amount of any Tax payable by a USG Contributed Entity to the extent that Tax relates to any period, or part period, up to and including Completion; and

 

(ii)

Tax Costs incurred by or on behalf of USG Contributed Entity to the extent those Tax Costs arise from or relate to any of the matters for which USG may be liable under clause 9.2(a)(i),

except to the extent that USG’s liability is limited or qualified under clause 8.

 

(b)

For the purpose of clause 9.2(a):

 

(i)

Taxes imposed on revenues, income or gain shall be apportioned to periods ending on or prior to the Completion Date based on a hypothetical closing of the books method; and

 

(ii)

Taxes imposed on the value of an item for a period shall be apportioned to periods ending on or prior to the Completion Date on a pro rata basis determined by multiplying the Taxes by a fraction, the numerator of which is the number of days in the period falling on or before the Completion Date, and the denominator of which is the total number of days in the period for which the Tax is imposed;

 

(c)

If any Joint Venture Group Member suffers any Loss (other than, in either case to another Joint Venture Group Member) after Completion as a result of any Third Party Claim (including any prosecution or regulatory investigation) against the Joint Venture Group Member in connection with:

 

(i)

any breach or alleged breach before Completion by any USG Contributed Entity (Relevant Entity) of any Anti-Corruption Law applicable to the Relevant Entity;

 

(ii)

any conduct before Completion by a Relevant Entity or any of their employees or agents (in the case of agents, in the relevant agent’s work for the Relevant Entity as opposed to for other clients) of a type listed in Warranty 18.2(a); or

 

(iii)

any breach or alleged breach before Completion by any Relevant Entity of any International Trade Law applicable to the Relevant Entity which is in the nature of a sanction or embargo,

(each a Relevant Event) then USG must promptly pay to Boral an amount equal to the relevant Loss multiplied by Boral’s Shareholding Percentage at the relevant time.

 

(d)

In addition (except to the extent compensated under clause 9.2(d)) if any Boral Group Member suffers any Loss after Completion as a result of any Third Party Claim (including any prosecution or regulatory investigation) against the Boral Group Member in connection with any Relevant Event (as defined in clause 9.2(d)) then USG indemnifies the relevant Boral Group Member in respect of such Loss. Boral holds the benefit of this indemnity on trust for each other Boral Group Member which is not a party to this Agreement.

 

9.3	Claim Procedure

 

For the avoidance of doubt, any Claims brought by a Party pursuant to this clause 9 shall be subject to clause 11.

 

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10.	THIRD PARTY CLAIMS AND TAX DEMANDS

 

 

10.1

Notice

Without limiting any other rights of a Party under this Agreement:

 

(a)

if after Completion a Boral Party becomes aware of a Third Party Claim or Tax Demand which may give rise to a Boral Claim against a USG Group Member or a USG Claim against a Boral Group Member, Boral must promptly give notice to USG of that Third Party Claim or Tax Demand, copying each other Party under this agreement; and

 

(b)

if after Completion a USG Party becomes aware of a Third Party Claim or Tax Demand which may give rise to a USG Claim against a Boral Group Member or a Boral Claim against a USG Group Member, USG must promptly give notice to Boral of that Third Party Claim or Tax Demand, copying each other Party under this agreement.

Any notice under clause 10.1(a) or clause 10.1(b) must include reasonable details of the facts, matters or circumstances giving rise to the Third Party Claim or Tax Demand, the basis of the Third Party Claim or Tax Demand, copies of any relevant documentation and (if possible in the circumstances) an estimate of the amount of the Third Party Claim or Tax Demand.

 

10.2	Obligations not to Settle

 

(a)

This clause 10.2(a) applies in relation to any Third Party Claim or Tax Demand (whether or not notified under clause 10.1) that may lead to liability on the part of any USG Group Member under a Boral Claim. Where this clause 10.2(a) applies in relation to a Third Party Claim or Tax Demand:

 

(i)

Boral must not Settle, and must ensure that no Boral Group Member Settles; and

 

(ii)

Boral Seller and the Acquirer must each do everything within their control as shareholders in BAGL to procure that no Joint Venture Group Member Settles,

the relevant Third Party Claim or Tax Demand without USG’s prior written consent, which shall not be unreasonably withheld or delayed. However, a Boral Group Member or Joint Venture Group Member may pay any Tax to a Taxing Authority by the due date for payment without affecting any Boral Group Member’s rights under this Agreement. For the avoidance of doubt, any Settlement effected without the prior written consent of USG (whether or not unreasonably withheld or delayed) shall in no event be determinative of the validity of any Boral Claim against, or the amount of any Losses alleged to be the responsibility of, any USG Group Member.

 

(b)

This clause 10.2(b) applies in relation to any Third Party Claim or Tax Demand (whether or not notified under clause 10.1) that may lead to liability on the part of any Boral Group Member under a USG Claim. Where this clause 10.2(b) applies in relation to a Third Party Claim or Tax Demand:

 

(i)

USG must not Settle, and must ensure that no USG Group Member Settles; and

 

(ii)

Boral Seller and the Acquirer must each do everything within their control as shareholders in BAGL to procure that no Joint Venture Group Member Settles,

the relevant Third Party Claim or Tax Demand without Boral’s prior written consent, which shall not be unreasonably withheld or delayed. However, a USG Group Member or Joint Venture Group Member may pay any Tax to a Taxing Authority by the due date for payment without affecting any USG Group Member’s rights under this Agreement. For the avoidance of doubt, any Settlement effected without the prior written consent of Boral (whether or not unreasonably withheld or delayed) shall in no event be determinative of the validity of any USG Claim against, or the amount of any Losses alleged to be the responsibility of, any Boral Group Member

 

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10.3	Conduct of dispute

 

(a)

Following receipt of a notice under clause 10.1 (or equivalent information in a notice under clause 11, if not previously notified under clause 10.1), the Accepting Party may, by giving written notice to the Notifying Party, assume the conduct of the defence of the Third Party Claim or elect to contest the Tax Demand (as the case may be).

 

(b)

If the Accepting Party advises the Notifying Party that it wishes to assume the conduct of the defence of the Third Party Claim or to contest the Tax Demand:

 

(i)

provided that the Accepting Party provides the Notifying Party with an indemnity against all Loss which may result from such action, the Notifying Party must promptly take, and must procure that each other Boral Group Member or USG Group Member (as applicable) takes, all action reasonably requested by the Accepting Party to avoid, contest, compromise or defend the Third Party Claim, or to conduct Disputing Action in respect of the Tax Demand, including using professional advisers nominated by the Accepting Party and approved by the Accepting Party for this purpose;

 

(ii)

the Notifying Party must provide the Accepting Party with all reasonable assistance requested by it in relation to the Third Party Claim or Tax Demand, including:

 

(A)

reasonable access to such employees, witnesses and records of the Party as are required in connection with the Third Party Claim or Tax Demand; and

 

(B)

use all reasonable endeavours (including the reimbursement of all reasonable out of pocket expenses) to procure that employees and officers provide such witness statements and other evidence that is required to avoid, dispute, resist, defend, appeal, compromise or mitigate the Third Party Claim or to conduct Disputing Action in relation to the Tax Demand;

 

(iii)

in conducting any proceedings or actions in respect of the Third Party Claim or Tax Demand, the Accepting Party must:

 

(A)

act in good faith;

 

(B)

liaise with the Notifying Party in relation to the defence of the Third Party Claim or the conduct of Disputing Action in relation to the Tax Demand; and

 

(C)

provide the Notifying Party with reasonable access to a copy of any notice, correspondence or other document relating to the Third Party Claim or Tax Demand.

 

(c)

If the Accepting Party advises the Notifying Party that it does not wish to assume the conduct of the defence of the Third Party Claim (or to contest the Tax Demand, as the case may be), then the Notifying Party must procure that it and each other Boral Group Member or USG Group Member (as applicable) conducting any proceedings or actions in respect of that Third Party Claim or Tax Demand:

 

(i)

acts in good faith;

 

(ii)

liaises with the Accepting Party in relation to the defence of the Third Party Claim or contesting (or otherwise) of the Tax Demand as the case may be; and

 

(iii)

provide the Accepting Party with reasonable access to a copy of any notice, correspondence or other document relating to the Third Party Claim or Tax Demand.

 

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For the avoidance of doubt this clause 10 does not apply in relation to a Boral Claim in relation to any Earn-Out Amount.

 

11.

CLAIMS

 

 

11.1	Written notice of Claims

Subject to clause 7.10 and clause 11.4, if a Party (Claimant Party) decides to make a Claim against another Party to this Agreement, then the Claimant Party must promptly give a written notice to the relevant Receiving Party setting out the details of the Claim, including:

 

(a)

reasonable details of the events, matters or circumstances that give rise to the Claim, to the extent available to the Claimant Party at the time of the notice (but so that in any event the basis of the Claim is identified with reasonable specificity), and copies of any Third Party Claim or Tax Demand giving rise to the Claim;

 

(b)

the nature of the Claim;

 

(c)

the estimated amount of Loss claimed (Claim Amount); and

 

(d)

how the Claim Amount is calculated;

(Claim Notice), provided that (subject always to clause 8.4) clauses 11.1(c) and 11.1(d) do not limit a Party’s right to notify a Claim which relates to a contingent liability that is identified but has not yet become an actual liability or is not yet due and payable during the time periods identified above, provided the other required details are included and the omitted information is provided promptly upon the Claimant Party being reasonably able to provide it.

If the Claimant Party does not fully comply with this clause 11.1 in respect of a Claim, the Party against whom the Claim is made is not liable under the Claim to the extent that the non-compliance has increased the amount of the Claim.

 

11.2	Dealing with Claims

 

(a)

On receipt of a Claim Notice under clause 11.1, the Receiving Party will have 45 days (Consideration Period) to evaluate the Claim and the circumstances around it.

 

(b)

The Receiving Party must give the Claimant Party a written notice before the end of the Consideration Period if it disputes the Claim setting out:

 

(i)

in reasonable detail the reason why the Receiving Party disputes the Claim Notice; and

 

(ii)

the monetary amount (if any) admitted by the Receiving Party as owing to the Claimant Party for the Loss incurred or estimated to be incurred in respect of that Claim,

(Claim Dispute Notice).

 

(c)

If the Receiving Party does not give the Claimant Party a Claim Dispute Notice within the Consideration Period, then the Receiving Party (and any other Boral Group Member or USG Group Member, as the case may be, against which the relevant Claim has been made) will be taken to have admitted the full Claim Amount that is the subject of the Claim Notice.

 

(d)

If the Receiving Party gives the Claimant Party a Claim Dispute Notice within the Consideration Period that disputes the whole or part of the Claim Amount, then clause 11.3 applies.

 

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(e)

The Receiving Party (and any other Boral Group Member or USG Group Member, as the case may be, against which the relevant Claim has been made) is taken to have admitted any part (or the entirety) of the Claim Amount that is not disputed in the Claim Notice.

 

11.3	Lesser or no Claim Amount admitted

 

(a)

If a Claim Dispute Notice has been given under clause 11.2(b), the Claimant Party and the Receiving Party must seek to resolve the dispute through negotiations.

 

(b)

If the Claimant Party and the Receiving Party fail to reach agreement as to the amount (if any) to which the Receiving Party is entitled in relation to that Claim within a further 30 days, or if a party to the dispute refuses to participate in such negotiations, then any party to the dispute will be entitled to commence proceedings in relation to the Claim, and the part of the Claim Amount that is not admitted pursuant to clause 11.2(c) or clause 11.2(e), to proceedings.

 

11.4

Exclusion

This clause 11 does not limit or restrict the ability of a Party to bring a Claim for specific performance of this Agreement or to seek urgent injunctive or similar relief, and does not apply in respect to Claims relating to the adjustment of the Purchase Price pursuant to clause 6.11 or the calculation or payment of the Earn-Out Amount (if any) pursuant to clause 2.3(d) and Schedule 8.

 

11.5

Payment

To the extent a Party admits (or is taken to have admitted) liability for the whole or part of a Claim Amount pursuant to clause 11.2(c) or clause 11.2(e) (Admitted Claim Amount), then that Party must pay the Claimant Party the Admitted Claim Amount within 14 days of the end of the Consideration Period.

 

12.

TAX

 

 

12.1

GST

 

(a)

Words used in this clause 12.1 that have a defined meaning in the GST Law have the same meaning as in the GST Law unless the context indicates otherwise.

 

(b)

Unless expressly included, the consideration for any supply under or in connection with this Agreement does not include GST.

 

(c)

To the extent that any supply made under or in connection with this Agreement is a taxable supply (other than any supply made under another agreement that contains a specific provision dealing with GST), the recipient must pay, in addition to the consideration provided under this agreement for that supply (unless it expressly includes GST) an amount (additional amount) equal to the amount of that consideration (or its GST exclusive market value) multiplied by the rate at which GST is imposed in respect of the supply. The recipient must pay the additional amount at the same time as the consideration to which it is referable.

 

(d)

Whenever an adjustment event occurs in relation to any taxable supply to which clause 12.1(c) applies:

 

(i)

the supplier must determine the amount of the GST component of the consideration payable; and

 

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(ii)

if the GST component of that consideration differs from the amount previously paid, the amount of the difference must be paid by, refunded to or credited to the recipient, as applicable.

 

(e)

The supplier must issue a Tax Invoice to the recipient of a taxable supply to which any of clauses 12.1(b) to 12.1(d) applies no later than 7 days following payment of the GST inclusive consideration for that supply under that clause.

 

(f)

If a Party is entitled under this agreement to be reimbursed or indemnified by another Party for a cost or expense incurred in connection with this Agreement, the reimbursement or indemnity payment must not include any GST component of the cost or expense to the extent that the cost or expense is the consideration for a creditable acquisition made by the Party being reimbursed or indemnified, or by its representative member.

 

(g)

After Completion:

 

(i)

the Acquirer and Boral Seller (as shareholders of BAGL) must procure that each BAGL Group Member (and where applicable each USG Contributed Entity) gives the representative member of the GST Group to which it belongs (Boral GST Group) on a timely basis, all information that the relevant entity holds that is needed to lodge any GST return for any period prior to Completion; and

 

(ii)

Boral must ensure that the representative member of the Boral GST Group:

 

(A)

applies to the Commissioner of Taxation to revoke the approval of each BAGL Group Member as a member of the Boral GST Group; and

 

(B)

lodges the GST returns for the final period in which the relevant BAGL Group Member was a member of the Boral’s GST Group and remits all amounts in respect of GST for that period to the Commissioner of Taxation as and when required by the GST Law.

 

(h)

If:

 

(i)

before Completion a BAGL Group Member is a member of the Boral GST Group;

 

(ii)

the relevant BAGL Group Member has made a supply to, or has been the recipient of a supply made by, another member of the Boral GST Group;

 

(iii)

due to Completion the relevant BAGL Group Member ceases to be eligible to be a member of the Boral GST Group and as a consequence, the supply referred to in clause 12.1(h)(ii) above becomes a taxable supply;

 

(iv)

because the supply would have been to another member of the Boral GST Group, the supply would not have been treated as a taxable supply if it had been made while the relevant BAGL Group Member was a member of the Boral GST Group;

 

(v)

the supply is pursuant to an agreement made before Completion;

 

(vi)

that agreement does not contain a provision requiring the recipient to pay to the supplier any amount in respect of GST in addition to the consideration otherwise payable for the supply; and

 

(vii)

the consideration negotiated by the parties for the supply was not calculated to include GST,

then after Completion, Boral must ensure (if the recipient of a taxable supply is not the relevant BAGL Group Member), or the Acquirer and Boral Seller (as shareholders of

 

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BAGL) must ensure if the recipient of the taxable supply is BAGL or a BAGL Group Member) that the recipient of the taxable supply indemnifies the supplier of a taxable supply for any GST payable in respect of the supply and pays the amount of that GST in addition to the consideration for the supply.

 

12.2	Pre Completion tax returns

 

(a)

The parties will co-operate in connection with the preparation and filing of any Tax return or Tax statement of a BAGL Group Member or a USG Contributed Entity with respect to a period or part period before the Completion Date and any administrative proceeding involving any such Tax return or Tax statement.

 

(b)

Boral will, at its own cost and expense, have the sole conduct and control of the preparation and filing of all Tax returns, forms or statements of each BAGL Group Member to the extent they relate to any periods (or part periods) ending on or before the Completion Date.

 

(c)

USG will, at its own cost and expense, have the sole conduct and control of the preparation and filing of all Tax returns, forms or statements of each USG Contributed Entity to the extent they relate to any periods (or part periods) ending on or before the Completion Date.

 

(d)

The Joint Venture Group will, at its own cost and expense, have the sole control of the preparation and filing of all Tax returns, forms or statements of each BAGL Group Member and each USG Contributed Entity for any period that includes, but does not end on or before the Completion Date (Straddle Returns).

 

(e)

The Acquirer and Boral Seller (as shareholders of BAGL after Completion) must severally procure that each Straddle Return is prepared in a manner consistent with the requirements of any Tax Law and that each Straddle Return is delivered to:

 

(i)

Boral (in the case of a return relating to BAGL Group Members); or

 

(ii)

USG (in the case of a return relating to a USG Contributed Entity),

as soon as it is available but no later than 30 days before it is due to be filed for the relevant Party’s review and comment.

 

12.3	No Inconsistent Position

The Parties hereby covenant and agree that the Boral Australasia IP Licences are estimated to be worth at least US$6 million to BAGL and no Party will take any action or position that is inconsistent with that valuation.

 

13.	TERMINATION

 

 

13.1	Termination for breach of Agreement

 

(a)

Boral may terminate this Agreement at any time before Completion by notice in writing to the other Parties if any USG Party:

 

(i)

is in breach of any material provision of this Agreement (excluding a breach of Warranty) and does not effectively remedy that breach to the satisfaction of Boral (acting reasonably) within 21 days from the receipt of a written notice from Boral to the Party in default identifying the breach and requiring that the breach be remedied (or before the scheduled date for Completion under clause 5.1, if earlier); or

 

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(ii)

commits a breach of an essential term of this Agreement (excluding a breach of Warranty) which is incapable of remedy.

 

(b)

USG may terminate this Agreement at any time before Completion by notice in writing to the other Parties if any Boral Party or BAGL:

 

(i)

is in breach of any material provision of this Agreement (excluding a breach of Warranty) and does not effectively remedy that breach to the satisfaction of USG (acting reasonably) within 21 days from the receipt of a written notice from USG to the Party in default identifying the breach and requiring that the breach be remedied (or before the scheduled date for Completion under clause 5.1, if earlier); or

 

(ii)

commits a breach of an essential term of this Agreement (excluding a breach of Warranty) which is incapable of remedy

 

13.2	Termination for breach of warranty / Material Adverse Change

Without limiting any other rights or remedies available to a Party under this Agreement, at any time prior to Completion:

 

(a)

USG may terminate this Agreement by notice in writing to the other Parties if:

 

(i)

there is a breach or breaches of the Boral Warranties, the ▇▇▇▇▇ ▇▇ Warranties or the Boral Tax Warranties in circumstances that would be reasonably likely to result in an aggregate Loss claimable by the USG Claim Group in excess of US$40 million; or

 

(ii)

a Material Adverse Change occurs in relation to Boral; or

 

(iii)

any Boral Group Member, or any of their officers, employees, agents or advisers has engaged in fraud or dishonesty in relation to the entry by a USG Party into a Transaction Document.

 

(b)

Boral may terminate this Agreement by notice in writing to the other Parties if:

 

(i)

there is a breach or breaches of the USG Warranties, or the USG Tax Warranties in circumstances that would be reasonably likely to result in an aggregate Loss claimable by the Boral Claim Group in excess of US$40 million;

 

(ii)

there is a breach or breaches of the USG IP Warranties (on the assumption they were given at the date of this Agreement) that, in the reasonable and good faith opinion of Boral, would result in the loss in value of the intellectual property to be licensed under the USG Australasia IP Licences and the USG Asia IP Licences of US$20 million or more;

 

(iii)

any USG Group Member, or any of their officers, employees agents or advisers has engaged in fraud or dishonesty in relation to the entry by a Boral Party into a Transaction Document; or

 

(iv)

a Material Adverse Change occurs in relation to USG.

 

13.3	Termination for insolvency

 

(a)

USG may terminate this Agreement at any time before Completion by notice in writing to the other Parties if an Insolvency Event (other than one that is or forms part of a solvent restructuring to which the entity in question is party) occurs in relation to:

 

(i)

any BAGL Group Member; or

 

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(ii)

any Boral Party or any other Boral Group Member which is (or will at Completion become) a party to any Transaction Document.

 

(b)

Boral may terminate this Agreement at any time before Completion by notice in writing to the other Parties if an Insolvency Event (other than one that is or forms part of a solvent restructuring to which the entity in question is party) occurs in relation to:

 

(i)

any USG Contributed Entity

 

(ii)

any USG Party or any other USG Group Member which is (or will at Completion become) a party to any Transaction Document.

 

13.4	Definition of Insolvency Event

For the purposes of clause 13.3 an Insolvency Event occurs in relation to a person or entity (the Relevant Person) if any of the following occurs:

 

(a)

controller: any of the following occur:

 

(i)

a controller (as defined in section 9 of the Corporations Act) is appointed; or

 

(ii)

a resolution to appoint controller is passed,

to the Relevant Person or over an asset of the Relevant Person unless, in the case of an appointment, Boral or USG (being the Party with the potential right to terminate as the case may be) is satisfied that the appointment of the controller is capable of being set aside, and it is set aside, within 7 days of the appointment being made;

 

(b)

winding up: any of the following occur:

 

(i)

an order is made; or

 

(ii)

a resolution is passed,

for the winding up of the Relevant Person;

 

(c)

administration: any of the following occur:

 

(i)

an administrator is appointed to the Relevant Person; or

 

(ii)

a resolution to appoint an administrator to the Relevant Person is passed;

 

(d)

deregistration: the Relevant Person is deregistered;

 

(e)

suspends payment: the Relevant Person suspends payment of its debts generally;

 

(f)

insolvency: the Relevant Person is:

 

(i)

unable to pay its debts when they are due; or

 

(ii)

presumed to be insolvent under the Corporations Act;

 

(g)

arrangements: the Relevant Person enters into or resolves to enter into any arrangement, composition or compromise with, or assignment for the benefit of, any of its creditors;

 

(h)

ceasing business: the Relevant Person ceases to carry on business; or

 

(i)

analogous event: anything analogous to or having a substantially similar effect to any of the events specified in clauses 13.4(a) to 13.4(h) above happens in relation to the Relevant Person under the laws of any jurisdiction.

 

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13.5	Termination with Mutual Consent

This Agreement may be terminated at any time with the mutual consent in writing of Boral and USG.

 

13.6	Cross termination

This Agreement will terminate with immediate effect without the requirement for action by any Party if the Asia Sale Agreement terminates for any reason before Completion occurs.

 

13.7	Effect of termination

If this agreement is terminated under clause 3.5, clause 5.5 or this clause 13, then:

 

(a)

the Parties must procure that each Transaction Document (if permitted by the terms of that contract) that has already been executed is terminated in accordance with its terms;

 

(b)

each Party is released from its obligations to further perform its obligations under this Agreement and the Transaction Documents, except those expressed to survive termination;

 

(c)

each Party retains the rights it has against any other Party in respect of any breach of this Agreement occurring before termination;

 

(d)

the rights and obligations of each Party under each of the following provisions will (subject to the terms of each of those provisions) continue independently from the other obligations of the Parties and survive termination of this Agreement:

 

(i)

clause 1 (Interpretation);

 

(ii)

clause 12.1 (GST);

 

(iii)

clause 14 (Confidentiality and announcements);

 

(iv)

clause 15 (Exclusivity)

 

(v)

clause 16 (Duties, costs and expenses);

 

(vi)

clause 17 (Guarantees); and

 

(vii)

clause 19 (General).

 

13.8	No other right to terminate or rescind

No Party may terminate or rescind this Agreement (including on the grounds of any breach of Warranty or misrepresentation that occurs or becomes apparent before Completion) except as permitted under clause 3.5, clause 5.5 or this clause 13.

 

14.	CONFIDENTIALITY AND ANNOUNCEMENTS

 

 

14.1	Agreed announcement

A Party may not make any public announcement relating to this Agreement or a Transaction Document (including the fact that the parties have executed this Agreement or any Transaction Document) unless the other party has consented to the announcement, including the timing, form and content of that disclosure, or unless the announcement would be permitted under an exemption in clauses 14.2(a)(i), 14.2(a)(ii) or 14.2(a)(iii).

 

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14.2	Confidentiality

 

(a)

Each Party (recipient) must keep secret and confidential, and must not divulge or disclose any information relating to another Party or its business (which has been or which is disclosed to the recipient by the other Party or its Representatives), or the terms of this Agreement or any Transaction Document other than to the extent that:

 

(i)

the information is in the public domain as at the date of this agreement (or subsequently becomes in the public domain other than by breach of any obligation of confidentiality binding on the recipient);

 

(ii)

the recipient is required to disclose the information by applicable law or regulation or the rules of any recognised stock exchange on which its shares or the shares of any of its Related Corporations are listed, provided that the recipient has to the extent possible having regard to the required timing of the disclosure consulted with the provider of the information as to the form and content of the disclosure;

 

(iii)

the disclosure is expressly permitted under any Transaction Document;

 

(iv)

the disclosure is necessary to seek satisfaction of any of the Conditions provided that the relevant recipient is made aware of the confidential nature of the information and (except in the case of a Regulatory Authority has agreed for the benefit of both Boral and USG to maintain the confidentiality of the information disclosed);

 

(v)

the disclosure is required for use in legal proceedings regarding this Agreement or the transactions contemplated by it; or

 

(vi)

the Party to whom the information relates has consented in writing before the disclosure.

 

(b)

Each Party must ensure that its directors, officers, employees, agents, representatives and Related Corporations comply in all respects with the Party’s obligations as a recipient under this clause 14.2.

 

15.	EXCLUSIVITY

 

 

(a)

During the Exclusivity Period, USG must not, and must ensure that no member or Representative of the USG Group and no USG Contributed Entity or Representative of any USG Contributed Entity:

 

(i)

solicits, invites, initiates, encourages or accepts any Competing Proposal - USG;

 

(ii)

participates in any discussions, conversations, negotiations or communications with, or otherwise provides information to, any Third Party in relation to a Competing Proposal - USG; or

 

(iii)

otherwise facilitates, assists or participates in a Competing Proposal - USG.

 

(b)

During the Exclusivity Period, Boral must not, and must ensure that (no member or Representative of the Boral Group or the BAGL Group:

 

(i)

solicits, invites, initiates, encourages or accepts any Competing Proposal - Boral;

 

(ii)

participates in any discussions, conversations, negotiations or communications with, or otherwise provides information to, any Third Party in relation to a Competing Proposal - Boral; or

 

(iii)

otherwise facilitates, assists or participates in a Competing Proposal - Boral.

 

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(c)

For the avoidance of doubt, Boral and USG must immediately cease and cause to be immediately terminated any existing discussions, conversations, negotiations, or other communications with respect to a Competing Proposal – Boral or a Competing Proposal - USG.

 

16.	DUTIES, COSTS AND EXPENSES

 

 

16.1

Duties

 

(a)

The Acquirer must pay all Duty in respect of the execution, delivery and performance of this Agreement and any agreement or document entered into or signed under this Agreement, to the extent it relates to the subscription and issue of the Subscription Shares, the entry into the USG Australasia IP Licences or to the sale and transfer of the Sale Shares (and must satisfy any obligation of BAGL to pay any such Duty on BAGL’s behalf without recourse to BAGL).

 

(b)

Boral must pay all Duty in respect of the execution, delivery and performance of this Agreement and any agreement or document entered into or signed under this Agreement, to the extent it relates to the sale and transfer of the USG Contributed Shares to BAGL or the entry into the Boral Australasia IP Licences (and must satisfy any obligation of BAGL to pay any such Duty on BAGL’s behalf, without recourse to BAGL).

 

16.2	Costs and expenses

 

(a)

Unless otherwise provided for in this Agreement or any Transaction Document:

 

(i)

Boral must pay its own costs and expenses and the costs and expenses of each relevant Boral Group Member and each BAGL Group Member in respect of the negotiation, preparation, execution, delivery and registration of this Agreement and any other agreement or document entered into or signed under this Agreement (including each Transaction Document); and

 

(ii)

USG must pay its own costs and expenses and the costs and expenses of each relevant USG Group Member and each of the USG Contributed Entities in respect of the negotiation, preparation, execution, delivery and registration of this Agreement and any other agreement or document entered into or signed under this Agreement (including each Transaction Document); and

 

(iii)

Boral and USG must share equally the costs payable to the relevant provider of the Phase II Environmental Assessment referred to in clause 9.1(e).

 

(b)

Any action to be taken by any Party in performing its obligations under this Agreement or under any Transaction Document must be taken at its own cost and expense unless otherwise provided in this Agreement or any Transaction Document.

 

17.	GUARANTEES

 

 

17.1	Boral guarantee

 

(a)

Boral:

 

(i)

unconditionally and irrevocably guarantees to each other party on demand, the due and punctual performance of each other Boral Party’s obligations under this Agreement; and

 

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(ii)

as a separate and additional liability, indemnifies each USG Party against all Loss, actions, proceedings and judgments of any nature, incurred by, brought, made or recovered against the Party arising from any default or delay in the due and punctual performance of a Boral Party’s obligations under this Agreement.

 

(b)

The liability of Boral under this clause 17.1 is not affected by anything which, but for this clause 17.1, might operate to release or exonerate Boral in whole or in part from its obligations including any of the following, whether with or without the consent of Boral:

 

(i)

the grant to Boral, any other Boral Party or any other person of any time, waiver or other indulgence, or the discharge or release of Boral, any other Boral Party or any other person from any liability or obligation;

 

(ii)

any transaction or arrangement that may take place between any Party, any Related Corporation of a Party, Boral or any other person;

 

(iii)

any other Party exercising or refraining from exercising its rights under any security or any other rights, powers or remedies against Boral, any other Boral Party or any other person;

 

(iv)

the amendment, replacement, extinguishment, unenforceability, failure, loss, release, discharge, abandonment or transfer either in whole or in part and either with or without consideration, of any security now or in the future held by any Party or any Related Corporation of a Party from Boral, any other Boral Party or any other person or by the taking of or failure to take any security;

 

(v)

the failure or omission or any delay by any Party to give notice to Boral of any default by any Boral Party or any other person under this Agreement; and

 

(vi)

any legal limitation, disability, incapacity or other circumstances related to Boral, any other Boral Party or any other person.

 

(c)

This clause 17.1 is a principal obligation and is not to be treated as ancillary or collateral to any other right or obligation and extends to cover this Agreement as amended, varied, supplemented, renewed or replaced.

 

(d)

This clause 17.1 is a continuing obligation of Boral, and remains in full force and effect for so long as any Boral Party has any liability or obligation to any other Party under this Agreement and until all of those liabilities or obligations have been fully discharged.

 

(e)

Boral must make all payments which become due under this clause 17.1, free and clear and without deduction of all present and future withholdings (including taxes, duties, levies, imposts, deductions and charges of Australia or any other jurisdiction). If Boral is compelled by law to deduct any withholding, then, in addition to any payment under this clause 17.1, it must pay to the relevant beneficiary Party such amount as is necessary to ensure that the net amount received by that Party after withholding equals the amount the party would otherwise be entitled to if not for the withholding.

 

(f)

Boral must pay all moneys that it becomes liable to pay under this clause 17.1 in the currency in which they are payable under this Agreement and free of any commissions and expenses relating to foreign currency conversion or any other charges or expenses.

 

(g)

Boral has no right to set off, deduct or withhold any moneys which it may be or become liable to pay under this clause 17.1, against any moneys that any other Party may be, or become, liable to pay to a Boral Group Member whether under this Agreement or otherwise.

 

(h)

Boral’s liability under this clause 17.1 in respect of any Claim against any Boral Party will not exceed the relevant Boral Party’s liability in respect of that Claim.

 

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17.2 USG guarantee

 

(a)

USG:

 

(i)

unconditionally and irrevocably guarantees to each other party on demand, the due and punctual performance of each other USG Party’s obligations under this Agreement; and

 

(ii)

as a separate and additional liability, indemnifies each Boral Party against all Loss, actions, proceedings and judgments of any nature, incurred by, brought, made or recovered against the Party arising from any default or delay in the due and punctual performance of a USG Party’s obligations under this Agreement.

 

(b)

The liability of USG under this clause 17.2 is not affected by anything which, but for this clause 17.2, might operate to release or exonerate USG in whole or in part from its obligations including any of the following, whether with or without the consent of USG:

 

(i)

the grant to USG, any other USG Party or any other person of any time, waiver or other indulgence, or the discharge or release of USG, any other USG Party or any other person from any liability or obligation;

 

(ii)

any transaction or arrangement that may take place between any Party, any Related Corporation of a Party, USG or any other person;

 

(iii)

any other Party exercising or refraining from exercising its rights under any security or any other rights, powers or remedies against USG, any other USG Party or any other person;

 

(iv)

the amendment, replacement, extinguishment, unenforceability, failure, loss, release, discharge, abandonment or transfer either in whole or in part and either with or without consideration, of any security now or in the future held by any Party or any Related Corporation of a Party from USG, any other USG Party or any other person or by the taking of or failure to take any security;

 

(v)

the failure or omission or any delay by any Party to give notice to USG of any default by any USG Party or any other person under this Agreement; and

 

(vi)

any legal limitation, disability, incapacity or other circumstances related to USG, any other USG Party or any other person.

 

(c)

This clause 17.2 is a principal obligation and is not to be treated as ancillary or collateral to any other right or obligation and extends to cover this Agreement as amended, varied, supplemented, renewed or replaced.

 

(d)

This clause 17.2 is a continuing obligation of Boral, and remains in full force and effect for so long as any USG Party has any liability or obligation to any other Party under this Agreement and until all of those liabilities or obligations have been fully discharged.

 

(e)

USG must make all payments which become due under this clause 17.2, free and clear and without deduction of all present and future withholdings (including taxes, duties, levies, imposts, deductions and charges of Australia or any other jurisdiction). If USG is compelled by law to deduct any withholding, then, in addition to any payment under this clause 17.2, it must pay to the relevant beneficiary Party such amount as is necessary to ensure that the net amount received by that Party after withholding equals the amount the party would otherwise be entitled to if not for the withholding.

 

(f)

USG must pay all moneys that it becomes liable to pay under this clause 17.2 in the currency in which they are payable under this Agreement and free of any commissions and expenses relating to foreign currency conversion or any other charges or expenses.

 

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(g)

USG has no right to set off, deduct or withhold any moneys which it may be or become liable to pay under this clause 17.2, against any moneys that any other Party may be, or become, liable to pay to a USG Group Member whether under this Agreement or otherwise.

 

(i)

USG’s liability under this clause 17.2 in respect of any Claim against any USG Party will not exceed the relevant USG Party’s liability in respect of that Claim.

 

18.

NOTICES

 

 

18.1	Form of Notice

 

A notice or other communication to a Party under this Agreement (Notice) must be:

 

(a)

in writing and in English and signed on behalf of the sending Party; and

 

(b)

addressed to that Party in accordance with the details nominated in Schedule 19 (or any alternative details nominated to the sending Party by Notice).

 

18.2	How Notice must be given and when Notice is received

 

(a)

A Notice must be given by one of the methods set out in the table below.

 

(b)

A Notice is regarded as given and received at the time set out in the table below.

However, if this means the Notice would be regarded as given and received outside the period between 9.00am and 5.00pm (addressee’s time) on a Business Day (Business Hours Period), then the Notice will instead be regarded as given and received at the start of the following Business Hours Period.

 

Method of giving Notice		When Notice is regarded as given and received
By hand to the nominated address		When delivered to the nominated address
By a globally recognized courier to the nominated address		When confirmed delivered by the courier:   1  by 5.00 pm (local time in the place of receipt) on a Business Day – on that day; or   2  after 5.00 pm (local time in the place of receipt) on a Business Day, or on a day that is not a Business Day – on the next Business Day.
By email to the nominated email address		When the email (including any attachment) comes to the attention of the recipient party or a person acting on its behalf.

 

18.3	Notice must not be given by electronic communication

A Notice must not be given by electronic means of communication (other than email as permitted in clause 18.2).

 

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19.

GENERAL

 

 

19.1	Governing law and jurisdiction

 

(a)

This Agreement is governed by the law in force in New South Wales.

 

(b)

Each party irrevocably submits to the (non-exclusive, as between the two) jurisdiction of:

 

(i)

courts exercising jurisdiction in New South Wales, Australia and courts of appeal from them; and

 

(ii)

courts exercising jurisdiction in Illinois, United States of America, and courts of appeal from them,

in relation to any proceedings arising out of or in connection with this Agreement, and no party submits to the jurisdiction of any other courts in relation to any such proceedings.

 

19.2	Service of process

 

Without preventing any other mode of service, any document in an action (including, any writ of summons or other originating process or any third or other party notice) may be served on any party by being delivered to or left for that party at its address for service of Notices under clause 18.

 

19.3	Invalidity and enforceability

 

(a)

If any provision of this agreement is invalid under the law of any jurisdiction the provision is enforceable in that jurisdiction to the extent that it is not invalid, whether it is in severable terms or not.

 

(b)

Clause 19.3(a) does not apply where enforcement of the provision of this Agreement in accordance with clause 19.3(a) would materially affect the nature or effect of the parties’ obligations under this Agreement.

 

19.4

Waiver

 

(a)

No Party to this agreement may rely on the words or conduct of any other party as a waiver of any right unless the waiver is in writing and signed by the party granting the waiver.

 

(b)

In this clause 19.4:

 

(i)

conduct includes delay in the exercise of a right;

 

(ii)

right means any right arising under or in connection with this Agreement and includes the right to rely on this clause; and

 

(iii)

waiver includes an election between rights and remedies, and conduct which might otherwise give rise to an estoppel.

 

(c)

A provision of, or a right, discretion or authority created under, this Agreement may not be:

 

(i)

waived except in writing signed by the Party granting the waiver; and

 

(ii)

varied except in writing signed by the Parties.

 

(d)

A failure or delay in exercise, or partial exercise, of a power, right, authority, discretion or remedy arising from a breach of, or default under this Agreement does not result in a waiver of that right, power, authority, discretion or remedy.

 

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19.5	Assignment

 

Rights arising out of or under this Agreement are not assignable by a Party without the prior written consent of the other Parties.

 

19.6	Further action to be taken at each party’s own expense

 

Subject to clause 15, each Party must, at its own expense, do all things and execute all documents necessary to give full effect to this Agreement and the transactions contemplated by it.

 

19.7	Relationship of the Parties

 

(a)

Nothing in this Agreement gives a Party authority to bind any other Party in any way.

 

(b)

Nothing in this Agreement imposes any fiduciary duties on a Party in relation to any other Party.

 

19.8	Exercise of rights

 

(a)

Unless expressly required by the terms of this Agreement, a Party is not required to act reasonably in giving or withholding any consent or approval or exercising any other right, power, authority, discretion or remedy, under or in connection with this Agreement.

 

(b)

A Party may (without any requirement to act reasonably) impose conditions on the grant by it of any consent or approval, or any waiver of any right, power, authority, discretion or remedy, under or in connection with this Agreement. Any conditions must be complied with by the party relying on the consent, approval or waiver.

 

19.9	Remedies cumulative

 

Except as provided in this Agreement and permitted by law, the rights, powers and remedies provided in this Agreement are cumulative with and not exclusive to the rights, powers or remedies provided by law independently of this Agreement.

 

19.10

Counterparts

 

(a)

This Agreement may be executed in any number of counterparts.

 

(b)

All counterparts, taken together, constitute one instrument.

 

(c)

A Party may execute this agreement by signing any counterpart.

 

19.11

Entire Agreement

 

This Agreement and the Transaction Documents state all the express terms of the agreement between the parties in respect of their subject matter. They supersede all prior discussions, negotiations, understandings and agreements in respect of their subject matter.

 

19.12

Default Interest

 

(a)

If a Party fails to pay any amount payable under this Agreement on the due date for payment, that Party must in addition to a continuing liability to pay the amount unpaid pay interest on the amount unpaid at the higher of:

 

(i)

the daily 11.00am cash rate quoted on Reuters page RBA30, plus 3% per annum; or

 

(ii)

the rate (if any) fixed or payable under any judgment or other thing into which the liability to pay the amount becomes merged.

 

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(b)

The interest payable under clause 19.12(a):

 

(i)

accrues from day to day from and including the due date for payment up to and including the actual date of payment, before and, as an additional and independent obligation, after any judgment or other thing into which the liability to pay the amount becomes merged; and

 

(ii)

may be capitalised by the person to whom it is payable at monthly intervals on the basis of a 360 day year.

 

(c)

The right to require payment of interest under this clause 19.12 is without prejudice to any other rights the non-defaulting Party may have against the defaulting Party at law or in equity.

 

(d)

A failure to pay any amount under this agreement is not remedied until both the amount unpaid and any interest payable under this clause 19.12 have been paid in full.

 

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SIGNING PAGES

 

EXECUTED as an agreement

 

Executed for Boral Limited ACN ▇▇▇ ▇▇▇ ▇▇▇ by its attorneys
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Signature of attorney				Signature of attorney
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Name of attorney (print)				Name of attorney (print)

 

Executed for Boral Australian Gypsum Limited ACN 004 231 976 by it attorneys
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Name of attorney (print)				Name of attorney (print)

 

Executed by Boral Building Materials Pty Limited ACN 090 736 888 by its attorneys
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Name of attorney (print)						Name of attorney (print)

 

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Executed by USG Foreign Investments, Ltd.
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Signature of authorised signatory
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Name of authorised signatory (print)

 

Executed by USG Netherlands Global Holdings B.V.   By: USG Foreign Investments, Ltd. Its: Managing Director
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Signature of authorised signatory
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Name of authorised signatory (print)

 

Executed by USG Corporation
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇		¬
Signature of authorised signatory
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name of authorised signatory (print)

 

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