Key Terms of the Plan

Owens Corning announced on May 10, 2006 that it achieved its long-standing objective to reach agreement with key creditor groups on a consensual reorganization plan that would resolve all Chapter 11-related issues. This is an extremely important development in our Chapter 11 case and is good for our company, our employees, our customers and our creditors. Our ability to reach this agreement is a direct result of the strong business performance Owens Corning achieved in the past several quarters.

Key Terms of the Agreement, which are subject to bankruptcy court approval and final documentation, are summarized below.

• Existing Owens Corning stock will be cancelled when an approved reorganization plan becomes effective. 131.4 million shares of new stock will be issued, resulting in $3.942 billion of total equity value at emergence. The distribution of shares is described below.
• Bank creditors will receive a full recovery, amounting to approximately $2.4226 billion in cash, including interest calculated as of March 31, 2006. Interest will continue to accrue through the date of payment.
• Non-bondholder senior and junior unsecured creditors will receive approximately $283.8 million in cash.
• Bondholders and asbestos claimants reached an agreement regarding their forms of recovery. Bondholders will receive equity, and asbestos claimants will receive cash and, if the FAIR Act does not become law, some equity.
• Bondholders will receive approximately 27 million shares of the reorganized company's common stock. In addition, bondholders and certain other general unsecured creditors had the right to purchase a pro rata share (based on size of claim) of 72.9 million shares of the reorganized company's common stock at $30 per share via an equity rights offering. Very few bondholders chose to exercise this right. Consequently, those bondholders who signed the Equity Commitment Agreement (J.P. Morgan, D.E. Shaw, King Street and Davidson Kempner and approximately 11 others) will purchase the balance of the 72.9 million shares that were unsubscribed (just over 70 million.)
• Owens Corning and Fibreboard asbestos claimants collectively will receive $2.6402 billion in cash (including certain escrow accounts). The cash will be deposited into a 524(g) trust fund that Owens Corning will establish in accordance with the United States Bankruptcy Code. In addition, Owens Corning will assign all rights to any insurance recoveries to the trust.
• Owens Corning and Fibreboard asbestos claimants also will receive a contingent payment right in the aggregate amount of $1.491 billion in cash (which will accrue interest at a rate of 7 percent from the effective date through the payment date) and 26.9 million shares of the reorganized company's common stock. This contingency payment right for asbestos claimants will vest if the FAIR Act (proposed federal asbestos legislation setting up a national trust fund) is not enacted within 10 days of the conclusion of the 109th Congress. If the FAIR Act is enacted within that timeframe, the contingent payment right will be cancelled and the cash and shares comprising the contingent payment right will not be transferred to the 524(g) trust.
• Holders of Owens Corning 6.5% Convertible Monthly Income Preferred Securities (MIPS) will receive warrants to purchase 10 percent of the fully diluted shares of the reorganized company, assuming exercise of all warrants but ignoring management options, at a strike price of $43 per share. The warrants can be exercised within seven years of the effective date.
• Existing holders of Owens Corning common stock (which will be cancelled upon emergence) will receive warrants to purchase 5 percent of the fully diluted shares of the reorganized company, assuming exercise of all warrants but ignoring management options, at a strike price of $45.25 per share. The warrants can be exercised within seven years of the effective date.
• In the event that the FAIR Act is enacted into law and the contingency payment to asbestos claimants is not made, existing Owens Corning shareholders and MIPS would have the right to exchange the aforementioned warrants for 14.75 percent and 5.5 percent, respectively, of the fully diluted shares of the reorganized company.

Owens Corning's total enterprise value at emergence is estimated to be $5.858 billion, including $3.942 billion of new equity, $1.8 billion of new debt financing, $55 million from existing debt at non-debtor Owens Corning entities, and $61 million in new tax notes.

The agreement assumes a total recovery value of $8.576 billion, which includes a total enterprise value of $5.858 billion, excess cash of $1.250 billion, Fibreboard trust and asbestos trust assets of $1.622 billion, less existing debt of $55 million and $99 million worth of shares reserved for employee incentive programs.