Exhibit 10.1

Armstrong World Industries, Inc.

2016 Directors Stock Unit Plan

1. Purpose

The purposes of this 2016 Directors Stock Unit Plan (the “Plan”) are to promote
the growth and profitability of Armstrong World Industries, Inc. (the “Company”)
by increasing the mutuality of interests between directors and the shareholders
of the Company.

The Plan is a successor to the 2008 Directors Stock Unit Plan, as amended and
restated (the “2008 Plan”). No additional grants will be made under the 2008
Plan after the Effective Date of this Plan. Outstanding grants under the 2008
Plan shall continue in effect according to their terms, consistent with the 2008
Plan.

2. Definitions

The following terms shall have the meanings shown:

2.1 “2008 Plan” shall have the meaning ascribed to the term in Section 1.

2.2 “Affiliate” shall mean, with respect to any Person, any other Person that,
at any time that a determination is made hereunder, directly or indirectly,
controls, is controlled by, or is under common control with such first Person.
For the purpose of this definition, “control” shall mean, as to any Person, the
possession, directly or indirectly, of the power to elect or appoint a majority
of directors (or other persons acting in similar capacities) of such Person or
otherwise to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.

2.3 “Beneficial Owner” and “Beneficially Own” shall have the meaning set forth
in Rules 13d-3 and 13d-5 promulgated under the Exchange Act or any successor
provision.

2.4 “Board” shall mean the Board of Directors of the Company.

2.5 “Change in Control” of the Company shall be deemed to have occurred if the
event set forth in any one of the following sections shall have occurred:

(a) Any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities Beneficially Owned by
such Person any securities acquired directly from the Company or its Affiliates)
representing thirty-five percent (35%) or more of the combined voting power of
the Company’s then outstanding securities, excluding any Person who becomes such
a Beneficial Owner in connection with a transaction described in clause (i) of
subsection (c) below;

(b) The following individuals cease for any reason to constitute a majority of
the number of directors then serving: individuals who, on the date hereof,
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by the Board
or nomination for election by the Company’s shareholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or recommended;

(c) There is consummated a merger or consolidation of the Company or any direct
or indirect subsidiary of the Company with any other corporation, other than
(i) a merger or consolidation immediately following which the individuals who
comprise the Board immediately prior thereto constitute at least a majority of
the board of directors of the Company, the entity surviving such

 

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merger or consolidation or, if the Company or the entity surviving such merger
is then a subsidiary, the ultimate parent thereof, or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company or its Affiliates) representing thirty-five percent (35%) or
more of the combined voting power of the Company’s then outstanding securities;
or

(d) The shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets immediately following which the individuals who comprise
the Board immediately prior thereto constitute at least a majority of the board
of directors of the entity to which such assets are sold or disposed or any
parent thereof.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred (i) by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions or (ii) by
virtue of the consummation of a spin-off of any business line or business unit
of the Company or a sale of (or similar transaction with respect to) all or
substantially all of the assets that comprise a business line or business unit
of the Company. The Committee may provide in a grant agreement for another
definition of Change in Control, including as necessary to comply with
Section 409A of the Code.

2.6 “Committee” shall mean the Nominating and Governance Committee of the Board,
or any other committee designated by the Board to administer the Plan.

2.7 “Common Stock” shall mean Common Stock of the Company.

2.8 “Company” shall have the meaning ascribed to the term in Section 1.

2.9 “Deferred Payment Date” shall have the meaning set forth in Section 4.3(c).

2.10 “Dividend Equivalent” shall mean the right to receive an amount equal to
any cash dividend that is paid on a share of Common Stock underlying a Unit,
including regular cash dividends and extraordinary cash dividends.

2.11 “Effective Date” shall have the meaning ascribed to the term in
Section 5.14.

2.12 “Exchange Act” shall mean Securities Exchange Act of 1934, as amended.

2.13 “Non-Employee Director” shall mean a member of the Board who is not an
employee of the Company or its subsidiaries.

2.14 “Participant” shall mean a Non-Employee Director to whom Units are granted
under the Plan.

2.15 “Person” shall mean any individual, entity or group, including any “person”
or “group” within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act, or any successor provision.

2.16 “Plan” shall have the meaning ascribed to the term in Section 1.

2.17 “Separation from Service” shall mean a “separation from service” with the
Company and its subsidiaries under Section 409A of the Code.

 

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2.18 “Unit” shall mean a right granted by the Committee pursuant to Section 4.1
to receive one share of Common Stock as of a specified date, which right may be
made conditional upon continued service or the occurrence or nonoccurrence of
specified events as herein provided.

3. General

3.1 Administration. The Plan may be administered by the Board or, if so
delegated, to the Committee. Administration shall be delegable to the extent it
does not adversely affect the exemption provided by Rule 16b-3 of the Exchange
Act and provided that such delegation complies with applicable law and
applicable stock exchange requirements. To the extent that the Board or
Committee administers the Plan, references in the Plan to the “Committee” shall
be deemed to refer to the Board or the Committee, as applicable.

(a) Committee Membership. Unless the Plan is administered by the Board, each
member of the Committee shall at the time of any action under the Plan be a
“Non-Employee Director” within the meaning of Rule 16b-3(b) (or any successor
rule) promulgated under the Exchange Act, and to the extent any member of the
Committee is not a “Non-Employee Director” within the meaning of Rule 16b-3(b)
(or any successor rule) promulgated under the Exchange Act, such member shall
abstain or recuse himself or herself from such action, provided that, upon such
abstention or recusal, the Committee remains composed of two or more
“Non-Employee Directors.”

(b) Committee Authority. The Committee shall have the authority in its sole
discretion from time to time: (i) to make discretionary grants of Units to
eligible directors as provided herein; (ii) to prescribe such terms, conditions,
limitations and restrictions, not inconsistent with the Plan, applicable to any
grant as deemed appropriate; and (iii) to interpret the Plan, to adopt, amend
and rescind rules and regulations relating to the Plan, and to make all other
determinations and take all other action necessary or advisable for the
implementation and administration of the Plan. A majority of the Committee shall
constitute a quorum, and the action of a majority of the members of the
Committee present at any meeting at which a quorum is present, or acts
unanimously adopted in writing without the holding of a meeting, shall be the
acts of the Committee. All such actions of the Committee shall be final,
conclusive and binding upon the Participant.

(c) Indemnification. No member of the Committee and no employee of the Company
shall be liable for any act or failure to act hereunder, except in circumstances
involving his or her bad faith or willful misconduct, or for any act or failure
to act hereunder by any other member or employee or by any agent to whom duties
in connection with the administration of this Plan have been delegated. The
Company shall indemnify members of the Committee and any agent of the Committee
who is an employee of the Company, a subsidiary or an affiliate against any and
all liabilities or expenses to which they may be subjected by reason of any act
or failure to act with respect to their duties on behalf of the Plan, except in
circumstances involving such person’s bad faith or willful misconduct.

3.2 Eligibility. A grant of Units under the Plan may be made to any Non-Employee
Director of the Company.

3.3 Common Stock Available under the Plan.

(a) Aggregate Limitation. The aggregate number of shares of Common Stock that
may be issued in connection with Units granted under the Plan shall not exceed
250,000 shares, subject to adjustments pursuant to Section 5.4.

(b) Individual Participant Limitation. For grants made on or after the Effective
Date, the maximum grant date value of shares of Common Stock subject to grants
of Units made to any Participant during any one calendar year, taken together
with any cash fees earned by such Participant for services rendered during the
calendar year, shall not exceed $600,000 in total value. For purposes of this
limit, the value of such grants shall be calculated based on the grant date fair
value of such grants for financial reporting purposes.

 

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(c) Source of Shares. Shares of Common Stock issued under the Plan may be
authorized but unissued shares of Common Stock or reacquired shares of Common
Stock, including shares purchased by the Company on the open market for purposes
of the Plan.

(d) Share Counting. If and to the extent any Units granted under this Plan are
forfeited, terminated, or otherwise are not paid in full, the shares reserved
for such grants shall again be available for purposes of the Plan. The
provisions of this Section 3.3(d) shall apply only for purposes of determining
the aggregate number of shares of Common Stock that may be issued under the
Plan, but shall not apply for purposes of determining the maximum number of
shares of Common Stock with respect to which grants may be granted to any
individual Participant under the Plan.

4. Units

4.1 Grant of Units. Each Non-Employee Director shall be granted Units under the
Plan in accordance with the provisions set forth below, contingent upon his or
her continued service as a director of the Company:

(a) Annual Grants. Unless the Committee determines otherwise, each year, each
Non-Employee Director shall be granted a number of Units based on a formula
approved by the Committee. The Committee shall establish appropriate terms and
conditions for the annual grants.

(b) Pro-Rated Grants. In the case of a Non-Employee Director who is elected to
the Board other than at the annual meeting of shareholders, the Committee may
pro-rate the amount of the annual grant of Units awarded to such director to
correspond to the period of time to be served by the Non-Employee Director
between such Non-Employee Director’s election and the next annual meeting of
shareholders.

(c) Discretionary Grants. Units may also be granted to eligible Non-Employee
Directors at such times, in such amounts, and upon such terms and conditions as
the Committee deems appropriate.

4.2 Grant Agreements. The grant of Units shall be evidenced by a written
agreement executed by the Company and the Participant, stating the number of
Units granted and such other terms and conditions of the grant as the Committee
may from time to time determine. Units granted under the Plan shall be made
conditional upon the Participant’s acknowledgement, in writing or by acceptance
of the Units, that all decisions and determinations of the Committee shall be
final and binding on the Participant, his or her successors and any other person
having or claiming an interest under such Units.

4.3 Standard Terms and Conditions of Units. Unless otherwise determined by the
Committee, each grant of Units shall be made on the following terms and
conditions, in addition to such other terms and conditions as the Committee may
prescribe:

(a) Vesting. The date on which each Unit shall vest, contingent upon the
Participant’s continued service as a director of the Company on such date, shall
be the first to occur of:

(i) The date of the next annual shareholders meeting;

(ii) The date on which the Participant has a Separation from Service on account
of death or total and permanent disability of the Participant (as determined by
the Committee); or

(iii) The date of a Change in Control.

(b) Payment Date. Each vested Unit shall be paid upon vesting of the Units in
accordance with Section 4.3(d) below, unless the Participant has made an
effective deferral election in accordance with Section 4.3(c) below.

 

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(c) Deferral Elections. A Participant may elect to defer payment of vested Units
that will be granted in a designated year, consistent with the requirements of
Section 409A of the Code. The deferral election may provide for payment upon the
first to occur of (i) the date of the Participant’s Separation from Service for
any reason other than cause (as determined by the Committee) or (ii) a Change in
Control that meets the requirements of a “a change in the ownership or effective
control, or a change in the ownership of a substantial portion of the assets,”
of the Company under Section 409A of the Code. The first to occur of (i) or
(ii) is referred to as the “Deferred Payment Date.” Any election to defer
payment of Units must be made in writing in a form approved by the Committee and
must be made prior to January 1 of the calendar year in which the Units are to
be granted to the Participant, or as otherwise permitted under Section 409A of
the Code. The Company shall create a bookkeeping account for each Participant
who defers Units, and shall credit the Participant’s deferred Units to such
bookkeeping account.

(d) Time and Form of Payment. Vested Units shall be paid in the form of shares
of Common Stock, with one share of Common Stock delivered for each vested Unit,
within 60 days after the date of vesting in accordance with Section 4.3(b) or
within 60 days after the Deferred Payment Date in accordance with
Section 4.3(c), as applicable.

(e) Forfeiture of Units. Upon the effective date of a Separation from Service
for cause, as determined by the Committee, all Units that have not been paid,
whether or not vested, shall immediately be forfeited to the Company without
consideration or further action being required of the Company or the
Participant. Upon the effective date of a Separation from Service for any reason
other than cause, as determined by the Committee, all unvested Units (other than
those that vest in accordance with Section 4.4(a)(ii)) shall immediately be
forfeited to the Company without consideration and without further action being
required of the Company or the Participant.

(f) Dividend Equivalents. If an award of Units is outstanding as of the record
date for determining the shareholders of the Company entitled to receive a cash
dividend on its outstanding shares of Common Stock, each Participant shall be
entitled to be credited with Dividend Equivalents with respect to the
Participant’s outstanding Units. Dividend Equivalents will accrue as of the date
of the dividend payment and, if applicable, will be credited to a bookkeeping
account established by the Company for the Participant. Dividend Equivalents on
unvested Units will accrue and be paid in cash within 60 days after the date of
vesting of the underlying Units. Dividend Equivalents on vested Units that have
been deferred will be paid in cash on the payment date for the applicable
dividend. If and to the extent that the underlying Units are forfeited, all
related accrued Dividend Equivalents shall also be forfeited. No interest shall
accrue on Dividend Equivalents.

4.4 Optional Terms and Conditions of Units. To the extent not inconsistent with
the Plan, the Committee may prescribe such terms and conditions applicable to
any grant of Units as it may in its discretion determine, notwithstanding the
provisions of Section 4.3. The Committee shall have discretion to accelerate
vesting of Units in such circumstances as the Committee deems appropriate.

4.5 Transfer Restriction. No Unit shall be assignable or transferable by another
than by will, or if the Participant dies intestate, by the laws of descent and
distribution of the state of domicile at the time of death.

4.6 Continued Service as an Employee. Unless the Committee determines otherwise,
if a Participant ceases serving as a director and, immediately thereafter, he or
she is employed by the Company or any subsidiary, then such Participant will not
be deemed to have ceased service for purposes of the Plan at that time, and his
or her continued employment by the Company or any subsidiary will be deemed to
be continued service for purposes of the Plan; provided, however, that such
service shall cease as of the date of a Separation from Service, and such former
director will not be eligible for additional grants of Units under the Plan
while he or she is an employee of the Company or a subsidiary.

5. Miscellaneous

5.1 No Right to Continued Service. Nothing in the Plan or in any agreement
entered into pursuant to the Plan shall confer upon any Participant the right to
continue in the service as a director of the Company or an employee of the
Company or any of its subsidiaries, nor shall it affect any right that the
Company or its shareholders may have to elect or remove directors or hire or
fire any employees.

 

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5.2 Non-Uniform Determinations. The Committee’s determinations under the Plan
need not be uniform and may be made by it selectively among persons who receive,
or are eligible to receive, grants under the Plan, whether or not such persons
are similarly situated.

5.3 No Rights as Shareholders. Recipients of grants under the Plan shall have no
rights as shareholders of the Company with respect thereto until shares of
Common Stock are delivered in payment therefor.

5.4 Adjustments of Stock. Units granted under the Plan and any agreements
evidencing such grants, the maximum number of shares of Common Stock that may be
issued under the Plan as stated in Section 3.3(a) and the maximum number of
shares of Common Stock with respect to which grants may be made to any one
Participant as stated in Section 3.3(b) shall be subject to mandatory adjustment
or substitution, as determined by the Committee in its sole discretion, as to
the number, price or kind of a share of Common Stock or other consideration
subject to such Units or as otherwise determined by the Committee to be
equitable:

(i) in the event of changes in the outstanding Common Stock or in the capital
structure of the Company by reason of stock or extraordinary cash dividends,
stock splits, reverse stock splits, spinoffs, recapitalization, reorganizations,
mergers, consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the date of grant of any such Units, or

(ii) in the event of any change in applicable laws or any change in
circumstances which results in or would result in any substantial dilution or
enlargement of the rights granted to, or available for, Participants, or which
otherwise warrants equitable adjustment because it interferes with the intended
operation of the Plan.

The adjustments of grants under this Section 5.4 shall include adjustment of
shares or other terms and conditions, as appropriate. The Company shall give
each Participant notice of an adjustment hereunder and, upon notice, such
adjustment shall be conclusive and binding for all purposes.

5.5 Amendment or Termination of the Plan.

(a) Amendment. The Board may from time to time amend the Plan as it may deem
advisable; provided, however, that approval of the shareholders of the Company
will be required if such approval is required in order to comply with applicable
law or stock exchange requirements. An amendment of this Plan will, unless the
amendment provides otherwise, be immediately and automatically effective for all
outstanding grants. The Committee may amend any outstanding grants under this
Plan, provided the grants, as amended, contain only such terms and conditions as
would be permitted or required for a new grant under this Plan.

(b) Termination. The Plan shall terminate on the day immediately preceding the
tenth (10th) anniversary of the Effective Date, unless the Plan is terminated
earlier by the Board or is extended by the Board with the approval of the
shareholders. The termination of the Plan shall not impair the power and
authority of the Committee with respect to outstanding grants.

5.6 Unfunded Plan. Participants shall have no right, title, or interest
whatsoever in or to any investments which the Company may make to aid it in
meeting its obligations under the Plan. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship between the Company and any
Participant, beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall be paid
from the general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in the Plan. The Plan is not intended to
be subject to the Employee Retirement Income Security Act of 1974, as amended.

 

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5.7 No Fractional Shares. No fractional shares of Common Stock shall be issued
or delivered pursuant to the Plan or any grant. The Committee shall determine
whether cash or other property shall be issued or paid in lieu of fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.

5.8 Company Policies. All Units granted under the Plan shall be subject to any
applicable clawback or recoupment policies, share trading policies and other
policies that may be implemented by the Board from time to time. Unless the
Committee determines otherwise, Non-Employee Directors must hold a portion of
the net after-tax shares received upon payment of Units under this Plan until
the applicable stock ownership guidelines are met, in accordance with the
Company’s stock ownership policy applicable to Non-Employee Directors.

5.9 Requirements for Issuance of Shares. No Common Stock shall be issued in
connection with any grant hereunder unless and until all legal requirements
applicable to the issuance of such Common Stock have been complied with to the
satisfaction of the Committee.

The Committee shall have the right to condition any grant to any Participant
hereunder on such Participant’s undertaking in writing to comply with such
restrictions on his or her subsequent disposition of such shares of Common Stock
as the Committee shall deem necessary or advisable, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Common Stock issued under the Plan will be
subject to such stop-transfer orders and other restrictions as may be required
by applicable laws, regulations and interpretations, including any requirement
that a legend be placed thereon. No Participant shall have any right as a
shareholder with respect to Common Stock covered by a grant until shares have
been issued to the Participant.

5.10 Compliance with Law. The Plan and the obligations of the Company to issue
or transfer shares of Common Stock in accordance with grants under the Plan
shall be subject to all applicable laws and to approvals by any governmental or
regulatory agency as may be required. With respect to persons subject to
Section 16 of the Exchange Act, it is the intent of the Company that the Plan
and all transactions under the Plan comply with all applicable provisions of
Rule 16b-3 or its successors under the Exchange Act. To the extent that any
legal requirement of Section 16 of the Exchange Act ceases to be required under
Section 16 of the Exchange Act, that Plan provision shall cease to apply. The
Committee may revoke any grant under the Plan if it is contrary to law or modify
a grant to bring it into compliance with any valid and mandatory government
regulation. The Committee may also adopt rules regarding the withholding of
taxes on payments to Participants. The Committee may also, in its sole
discretion, agree to limit its authority under this Section.

5.11 Grants in Connection with Corporate Transactions and Otherwise. Nothing
contained in this Plan shall be construed to (a) limit the right of the
Committee to make grants under this Plan in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the business or assets
of any corporation, firm or association, including grants to persons who become
Non-Employee Directors of the Company, or for other proper corporate purposes,
or (b) limit the right of the Company to make stock-based awards outside of this
Plan. The terms and conditions of the grants hereunder may vary from the terms
and conditions required by the Plan and from those of the substituted stock
incentives, as determined by the Committee.

5.12 Section 409A. The Plan is intended to comply with the requirements of
Section 409A of the Code, to the extent applicable. All grants shall be
construed and administered such that the grant either (a) qualifies for an
exemption from the requirements of Section 409A of the Code or (b) satisfies the
requirements of Section 409A of the Code. If a grant is subject to Section 409A
of the Code, (i) distributions shall only be made in a manner and upon an event
permitted under Section 409A of the Code, including, if required by
Section 409A, the six-month delay applicable to payments to specified employees
upon Separation from Service, (ii) payments to be made upon a termination of
service shall only be made upon a Separation from Service under Section 409A of
the Code, (iii) unless the grant specifies otherwise, each installment payment
shall be treated as a separate payment for purposes of Section 409A of the Code,
and (iv) in no event shall a Participant, directly or indirectly, designate the
calendar year in which a distribution is made except in accordance with
Section 409A of the Code.

 

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5.13 Governing Law. This Plan, grants hereunder and actions taken in connection
herewith shall be governed and construed in accordance with the laws of the
Commonwealth of Pennsylvania (regardless of the law that might otherwise govern
under applicable Pennsylvania principles of conflict of laws).

5.14 Effective Date. The Plan shall be effective as of July 8, 2016, subject to
shareholder approval of the Plan (the “Effective Date”).

 

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