Exhibit 10.3
AMENDED AND RESTATED PLEDGE AGREEMENT
THIS AMENDED AND RESTATED PLEDGE AGREEMENT (this “Pledge Agreement”), dated as
of November 23, 2010, is by and among the parties identified as “Pledgors” on
the signature pages hereto and such other parties as may become Pledgors
hereunder after the date hereof (individually a “Pledgor”, and collectively the
“Pledgors”) and BANK OF AMERICA, N.A., as collateral agent (in such capacity,
the “Collateral Agent”) for the holders of the Secured Obligations referenced
below.
W I T N E S S E T H
WHEREAS, revolving credit and term loan facilities were established in favor of
Armstrong World Industries, Inc., a Pennsylvania corporation (“AWI”), pursuant
to the terms of that certain credit agreement dated as of October 2, 2006 (as
amended and modified prior to the Closing Date, the “Existing Credit Agreement”)
among AWI, certain of its Subsidiaries, as guarantors thereunder, the lenders
party thereto and Bank of America, N.A., as administrative agent for the lenders
thereunder;
WHEREAS, in connection with the Existing Credit Agreement, AWI and certain of
its Subsidiaries entered into that certain Pledge Agreement dated as of
October 2, 2006 (the “Existing Pledge Agreement”);
WHEREAS, AWI has requested certain modifications to the revolving credit and
term loan facilities under the Existing Credit Agreement;
WHEREAS, the Lenders have agreed to the requested modifications on the terms and
conditions provided in that certain Amended and Restated Credit Agreement, dated
as of the date hereof (as amended and modified, the “Credit Agreement”), among
AWI and Armstrong Wood Products, Inc., a Delaware corporation (“Armstrong Wood
Products”; together with AWI, the “Borrowers”), certain of their Subsidiaries,
as guarantors thereunder, the lenders party thereto and Bank of America, N.A.,
as administrative agent for the lenders thereunder;
WHEREAS, this Pledge Agreement is required under the terms of the Credit
Agreement, and is given in amendment to, restatement of and substitution for the
Existing Pledge Agreement provided in connection with the Existing Credit
Agreement;
NOW, THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions.
(a) Capitalized terms used and not otherwise defined herein shall have the
meanings provided in the Credit Agreement. In addition, the following terms,
which are defined in the UCC as in effect in the State of New York on the date
hereof, are used as defined therein: Accession, Financial Asset, Proceeds and
Security.

 

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(b) As used herein, the following terms shall have the meaning set forth below:
“Borrowers” has the meaning provided in the recitals hereof.
“Collateral Agent” has the meaning provided in the introductory paragraph
hereof, together with its successors and assigns.
“Credit Agreement” has the meaning provided in the recitals hereof.
“Event of Default” has the meaning provided in Section 8 hereof.
“Existing Credit Agreement” has the meaning provided in the recitals hereof.
“Existing Pledge Agreement” has the meaning provided in the recitals hereof.
“Pledge Agreement” has the meaning provided in the introductory paragraph
hereof, as amended and modified.
“Pledged Collateral” has the meaning provided in Section 2 hereof.
“Pledged Shares” has the meaning provided in Section 2(a) hereof.
“Pledgors” has the meaning provided in the introductory paragraph hereof.
“Secured Obligations” means, without duplication, (a) all Obligations and (b)
all costs and expenses incurred in connection with enforcement and collection of
the Secured Obligations, including reasonable attorneys’ fees and expenses.
“UCC” means the Uniform Commercial Code as in effect in the state of New York
from time to time.
2. Pledge and Grant of Security Interest. To secure the prompt payment and
performance in full when due, whether by lapse of time, acceleration, mandatory
prepayment or otherwise, of the Secured Obligations, each Pledgor hereby grants,
pledges and assigns to the Collateral Agent, for the benefit of the holders of
the Secured Obligations, a continuing security interest in, and a right to
set-off against, any and all right, title and interest of such Pledgor in and to
the following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “Pledged Collateral”):
(a) Pledged Shares. (i) One hundred percent (100%) (or, if less, the full amount
owned by such Pledgor) of the issued and outstanding Capital Stock owned by such
Pledgor of each Material Domestic Subsidiary set forth on Schedule 2(a) attached
hereto and (ii) sixty-five percent (65%) (or, if less, the full amount owned by
such Pledgor) of the issued and outstanding Capital Stock owned by such Pledgor
of each Material First-Tier Foreign Subsidiary set forth on Schedule 2(a)
attached hereto, in each case together with the certificates (or other
agreements or instruments), if any, representing such Capital Stock, and all
options and other rights, contractual or otherwise, with respect thereto
(collectively, together with the Capital Stock described in Section 2(b) and
2(c) below, the “Pledged Shares”), including the following:
(A) all shares, securities, membership interests or other equity interests
representing a dividend on any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged Shares, or
resulting from a stock split, revision, reclassification or other exchange
therefor, and any subscriptions, warrants, rights or options issued to the
holder of, or otherwise in respect of, the Pledged Shares; and

 

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(B) without affecting the obligations of the Pledgors under any provision
prohibiting such action hereunder or under the Credit Agreement, in the event of
any consolidation or merger involving the issuer of any Pledged Shares and in
which such issuer is not the surviving entity, all Capital Stock of the
successor entity formed by or resulting from such consolidation or merger.
(b) Additional Shares. (i) One hundred percent (100%) (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding Capital Stock owned
by such Pledgor of any Person that hereafter becomes a Material Domestic
Subsidiary and (ii) sixty-five percent (65%) (or, if less, the full amount owned
by such Pledgor) of the issued and outstanding Capital Stock owned by such
Pledgor of any Person that hereafter becomes a Material First-Tier Foreign
Subsidiary, including the certificates (or other agreements or instruments)
representing such Capital Stock.
(c) Accessions and Proceeds. All Accessions and all Proceeds of any and all of
the foregoing.
Without limiting the generality of the foregoing, it is hereby specifically
understood and agreed that a Pledgor may from time to time hereafter deliver
additional Capital Stock to the Collateral Agent as collateral security for the
Secured Obligations. Upon delivery to the Collateral Agent, such additional
Capital Stock shall be deemed to be part of the Pledged Collateral of such
Pledgor and shall be subject to the terms of this Pledge Agreement whether or
not Schedule 2(a) is amended to refer to such additional Capital Stock.
Notwithstanding anything to the contrary contained herein, the security
interests granted under this Pledge Agreement shall not extend to, and the
“Pledged Collateral” shall not include, any Excluded Property.
3. Security for Secured Obligations. The security interest created hereby in the
Pledged Collateral of each Pledgor constitutes continuing collateral security
for all of the Secured Obligations.
4. Delivery of the Pledged Collateral. To the extent that Pledged Collateral is
certificated, each Pledgor hereby agrees that:
(a) Each Pledgor shall (subject to the provisions of Section 7.14 of the Credit
Agreement) deliver to the Collateral Agent (i) simultaneously with or prior to
the execution and delivery of this Pledge Agreement, all certificates
representing the Pledged Shares of such Pledgor and (ii) promptly upon the
receipt thereof by or on behalf of such Pledgor, all other certificates and
instruments constituting Pledged Collateral of such Pledgor. Prior to delivery
to the Collateral Agent, all such certificates and instruments constituting
Pledged Collateral of a Pledgor shall be held in trust by such Pledgor for the
benefit of the Collateral Agent pursuant hereto. All such certificates shall be
delivered in suitable form for transfer by delivery or shall be accompanied by
duly executed instruments of transfer or assignment in blank, substantially in
the form provided in Exhibit 4(a) attached hereto.
(b) Additional Securities. If such Pledgor shall receive by virtue of its being
or having been the owner of any Pledged Collateral, any (i) certificate,
including any certificate representing a dividend or distribution in connection
with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares or other equity interests,
stock splits, spin-off or split-off, promissory notes or other instruments;
(ii) option or right, whether as an addition to, substitution for, or an
exchange for, any Pledged Collateral or otherwise; (iii) dividends payable in
securities; or (iv) distributions of securities in connection with a partial or
total liquidation, dissolution or reduction of capital, capital surplus or
paid-in surplus, then such Pledgor shall receive such certificate, instrument,
option, right or distribution in trust for the benefit of the Collateral Agent,
shall segregate it from such Pledgor’s other property and shall deliver it
forthwith to the Collateral Agent in the exact form received together with any
necessary endorsement and/or appropriate stock power duly executed in blank,
substantially in the form provided in Exhibit 4(a), to be held by the Collateral
Agent as Pledged Collateral and as further collateral security for the Secured
Obligations.

 

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(c) Financing Statements. Each Pledgor authorizes the Collateral Agent to file
one or more financing statements (which may describe the Collateral as “all
assets” or “all personal property”) disclosing the Collateral Agent’s security
interest in the Pledged Collateral. Each Pledgor shall execute and deliver to
the Collateral Agent such other applicable financing statements and other
filings as may be reasonably requested by the Collateral Agent in order to
perfect and protect the security interest created hereby in the Pledged
Collateral of such Pledgor.
5. Representations and Warranties. Each Pledgor hereby represents and warrants
to the Collateral Agent, for the benefit of the holders of the Secured
Obligations, that so long as any of the Secured Obligations remains outstanding
and until all of the commitments relating thereto have been terminated:
(a) Authorization of Pledged Shares. The Pledged Shares are duly authorized and
validly issued, are fully paid and nonassessable and are not subject to the
preemptive rights of any Person.
(b) Title. Each Pledgor has good and indefeasible title to the Pledged
Collateral of such Pledgor and is the legal and beneficial owner of such Pledged
Collateral free and clear of any Lien, other than Permitted Liens. There exists
no “adverse claim” within the meaning of Section 8-102 of the UCC with respect
to the Pledged Shares of such Pledgor.
(c) Exercising of Rights. The exercise by the Collateral Agent of its rights and
remedies hereunder will not violate any Law or governmental regulation or any
material contractual restriction binding on or affecting a Pledgor or any of its
property.
(d) Pledgor’s Authority. No authorization, approval or action by, and no notice
or filing with any Governmental Authority or with the issuer of any Pledged
Stock is required either (i) for the pledge made by a Pledgor or for the
granting of the security interest by a Pledgor pursuant to this Pledge Agreement
(except as have been already obtained) or (ii) for the exercise by the
Collateral Agent or the holders of the Secured Obligations of their rights and
remedies hereunder (except as may be required by Laws affecting the offering and
sale of securities).
(e) Security Interest/Priority. This Pledge Agreement creates a valid security
interest in favor of the Collateral Agent for the benefit of the holders of the
Secured Obligations, in the Pledged Collateral. The taking of possession, in the
State of New York, by the Collateral Agent of the certificates representing the
Pledged Shares, to the extent constituting Securities, and all other
certificates and instruments constituting Pledged Collateral, will perfect and
establish the first priority of the Collateral Agent’s security interest in the
Pledged Shares and, when properly perfected by filing or registration, in all
other Pledged Collateral represented by such Pledged Shares and instruments
securing the Secured Obligations. Except as set forth in this Section 5(e)
hereof, no action is necessary to perfect or otherwise protect such security
interest.

 

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(f) Partnership and Membership Interests. Except as previously disclosed to the
Collateral Agent, none of the Pledged Shares consisting of partnership or
limited liability company interests (i) is dealt in or traded on a securities
exchange or in a securities market, (ii) by its terms expressly provides that it
is a security governed by Article 8 of the UCC, (iii) is an investment company
security, (iv) is held in a securities account or (v) constitutes a Security or
a Financial Asset.
(g) No Other Interests. As of the Closing Date, pursuant to the terms of the
Credit Agreement, no Pledgor is required to pledge any Capital Stock in any
Subsidiary other than as set forth on Schedule 2(a) attached hereto.
6. Covenants. Each Pledgor hereby covenants, that so long as any of the Secured
Obligations remains outstanding and until all of the commitments relating
thereto have been terminated, such Pledgor shall:
(a) Books and Records. Upon the reasonable request of the Collateral Agent, mark
its books and records (and shall cause the issuer of the Pledged Shares of such
Pledgor to mark its books and records) to reflect the security interest granted
to the Collateral Agent, for the benefit of the holders of the Secured
Obligations, pursuant to this Pledge Agreement.
(b) Defense of Title. Warrant and defend title to and ownership of the Pledged
Collateral of such Pledgor at its own expense against the claims and demands of
all other parties claiming an interest therein, keep the Pledged Collateral free
from all Liens, except for Permitted Liens, and not sell, exchange, transfer,
assign, lease or otherwise dispose of Pledged Collateral of such Pledgor or any
interest therein, except as permitted under the Credit Agreement and the other
Loan Documents.
(c) Further Assurances. Promptly execute and deliver at its expense all further
instruments and documents and take all further action that may be necessary and
desirable or that the Collateral Agent may reasonably request in order to
(i) perfect and protect the security interest created hereby in the Pledged
Collateral of such Pledgor (including any and all action necessary to satisfy
the Collateral Agent that the Collateral Agent has obtained a first priority
perfected security interest in all Pledged Collateral); (ii) enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder in
respect of the Pledged Collateral of such Pledgor; and (iii) otherwise effect
the purposes of this Pledge Agreement.
(d) Amendments. Not make or consent to any amendment or other modification or
waiver with respect to any of the Pledged Collateral of such Pledgor or enter
into any agreement or allow to exist any restriction with respect to any of the
Pledged Collateral of such Pledgor other than pursuant hereto or as may be
permitted under the Credit Agreement.
(e) Compliance with Securities Laws. File all reports and other information now
or hereafter required to be filed by such Pledgor with the United States
Securities and Exchange Commission and any other state, federal or foreign
agency in connection with the ownership of the Pledged Collateral of such
Pledgor.
(f) Issuance or Acquisition of Capital Stock Consisting of an Interest in a
Partnership or a Limited Liability Company. Not, without executing and
delivering, or causing to be executed and delivered, to the Collateral Agent
such agreements, documents and instruments as the Collateral Agent may require,
issue or acquire any Capital Stock of a Subsidiary consisting of an interest in
a partnership or a limited liability company that (i) is dealt in or traded on a
securities exchange or in a securities market, (ii) by its terms expressly
provides that it is a security governed by Article 8 of the UCC, (iii) is an
investment company security, (iv) is held in a securities account or
(v) constitutes a Security or a Financial Asset.

 

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7. Advances by Holders of the Secured Obligations. On failure of any Pledgor to
perform any of the covenants and agreements contained herein and upon prior
written notice to the Pledgor, the Collateral Agent may, at its sole option and
in its sole discretion, perform the same and in so doing may expend such sums as
the Collateral Agent may reasonably deem advisable in the performance thereof,
including the payment of any insurance premiums, the payment of any taxes, a
payment to obtain a release of a Lien or potential Lien, expenditures made in
defending against any adverse claim and all other expenditures that the
Collateral Agent may make for the protection of the security hereof or may be
compelled to make by operation of Law. All such sums and amounts so expended
shall be repayable by the Pledgors on a joint and several basis promptly upon
timely notice thereof and demand therefor, shall constitute additional Secured
Obligations and shall, subjection to Section 2.08 of the Credit Agreement, bear
interest from the date said amounts are expended at the rate then applicable to
Revolving Loans that are Base Rate Loans. No such performance of any covenant or
agreement by the Collateral Agent on behalf of any Pledgor, and no such advance
or expenditure therefor, shall relieve the Pledgors of any default under the
terms of this Pledge Agreement, the other Loan Documents or any other documents
relating to the Secured Obligations. The Collateral Agent may make any payment
hereby authorized in accordance with any bill, statement or estimate procured
from the appropriate public office or holder of the claim to be discharged
without inquiry into the accuracy of such bill, statement or estimate or into
the validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent such payment is being contested in good faith by a Pledgor
in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.
8. Events of Default. The occurrence of an event that would constitute an Event
of Default under the Credit Agreement shall be an Event of Default hereunder (an
“Event of Default”).
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and during the
continuation thereof, the Collateral Agent and the holders of the Secured
Obligations shall have, in addition to the rights and remedies provided herein,
in the Loan Documents, in any other documents relating to the Secured
Obligations, or by Law (including levy of attachment and garnishment), the
rights and remedies of a secured party under the UCC of the jurisdiction
applicable to the affected Pledged Collateral.
(b) Sale of Pledged Collateral. Upon the occurrence of an Event of Default and
during the continuation thereof, without limiting the generality of this
Section 9 and without notice, the Collateral Agent may, in its sole discretion,
sell or otherwise dispose of or realize upon the Pledged Collateral, or any part
thereof, in one or more parcels, at public or private sale, at any exchange or
broker’s board or elsewhere, at such price or prices and on such other terms as
the Collateral Agent may deem commercially reasonable, for cash, credit or for
future delivery or otherwise in accordance with applicable Law. To the extent
permitted by Law, any holder of the Secured Obligations may in such event, bid
for the purchase of such securities. Each Pledgor agrees that, to the extent
notice of sale shall be required by Law and has not been waived by such Pledgor,
any requirement of reasonable notice shall be met if notice, specifying the
place of any public sale or the time after which any private sale is to be made,
is personally served on or mailed, postage prepaid, to such Pledgor, in
accordance with the notice provisions of Section 11.02 of the Credit Agreement
at least ten (10) days before the time of such sale. The Collateral Agent shall
not be obligated to make any sale of Pledged Collateral of such Pledgor
regardless of notice of sale having been given. The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

 

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(c) Private Sale. Upon the occurrence of an Event of Default and during the
continuation thereof, the Pledgors recognize that the Collateral Agent may deem
it impracticable to effect a public sale of all or any part of the Pledged
Shares or any of the securities constituting Pledged Collateral and that the
Collateral Agent may, therefore, determine to make one or more private sales of
any such Pledged Collateral to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such Pledged Collateral for
their own account, for investment and not with a view to the distribution or
resale thereof. Each Pledgor hereby waives any claims against the Collateral
Agent arising by reason that any such private sale shall not have been made in a
commercially reasonable manner and that the Collateral Agent shall have no
obligation to delay sale of any such Pledged Collateral for the period of time
necessary to permit the issuer of such Pledged Collateral to register such
Pledged Collateral for public sale under the Securities Act. Each Pledgor
further acknowledges and agrees that any offer to sell such Pledged Collateral
that has been (i) publicly advertised on a bona fide basis in a newspaper or
other publication of general circulation in the financial community of New York,
New York (to the extent that such offer may be advertised without prior
registration under the Securities Act), or (ii) made privately in the manner
described above shall be deemed to involve a “public sale” under the UCC,
notwithstanding that such sale may not constitute a “public offering” under the
Securities Act, and the Collateral Agent may, in such event, bid for the
purchase of such Pledged Collateral.
(d) Retention of Pledged Collateral. To the extent permitted under applicable
Law, in addition to the rights and remedies hereunder, upon the occurrence and
continuance of an Event of Default, the Collateral Agent may, after providing
the notices required by Sections 9-620 and 9-621 of the UCC or otherwise
complying with the requirements of applicable Law of the relevant jurisdiction,
accept or retain all or any portion of the Pledged Collateral in satisfaction of
the Secured Obligations. Unless and until the Collateral Agent shall have
provided such notices, however, the Collateral Agent shall not be deemed to have
accepted or retained any Pledged Collateral in satisfaction of any Secured
Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any sale, collection or
realization are insufficient to pay all amounts to which the Collateral Agent or
the holders of the Secured Obligations are legally entitled, the Pledgors shall
be jointly and severally liable for the deficiency (subject to Section 25
hereof), together with interest thereon at the Default Rate, together with the
costs of collection and reasonable attorneys’ fees and expenses. Any surplus
remaining after the full payment and satisfaction of the Secured Obligations
shall be returned to the Pledgors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.
10. Rights of the Collateral Agent.
(a) Power of Attorney. In addition to other powers of attorney contained herein,
each Pledgor hereby designates and appoints the Collateral Agent, on behalf of
the holders of the Secured Obligations, and each of its designees or agents, as
attorney-in-fact of such Pledgor, irrevocably and with power of substitution,
with authority to take any or all of the following actions upon the occurrence
and during the continuation of an Event of Default:
(i) to demand, collect, settle, compromise and adjust, and give discharges and
releases concerning the Pledged Collateral, all as the Collateral Agent may
reasonably deem appropriate;
(ii) to commence and prosecute any actions at any court for the purposes of
collecting any of the Pledged Collateral and enforcing any other right in
respect thereof;

 

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(iii) to defend, settle or compromise any action brought and, in connection
therewith, give such discharge or release as the Collateral Agent may reasonably
deem appropriate;
(iv) to pay or discharge taxes, liens, security interests or other encumbrances
levied or placed on or threatened against the Pledged Collateral;
(v) to direct any parties liable for any payment in connection with any of the
Pledged Collateral to make payment of any and all monies due and to become due
thereunder directly to the Collateral Agent or as the Collateral Agent shall
direct;
(vi) to receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any
Pledged Collateral;
(vii) to sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Pledged Collateral;
(viii) to execute and deliver all assignments, conveyances, statements,
financing statements, renewal financing statements, security and pledge
agreements, affidavits, notices and other agreements, instruments and documents
that the Collateral Agent may reasonably deem appropriate in order to perfect
and maintain the security interests and liens granted in this Pledge Agreement
and in order to fully consummate all of the transactions contemplated therein;
(ix) to exchange any of the Pledged Collateral or other property upon any
merger, consolidation, reorganization, recapitalization or other readjustment of
the issuer thereof and, in connection therewith, deposit any of the Pledged
Collateral with any committee, depository, transfer agent, registrar or other
designated agency upon such terms as the Collateral Agent may reasonably deem
appropriate;
(x) to vote for a shareholder resolution, or to sign an instrument in writing,
sanctioning the transfer of any or all of the Pledged Collateral into the name
of the Collateral Agent or one or more of the holders of the Secured Obligations
or into the name of any transferee to whom the Pledged Collateral or any part
thereof may be sold pursuant to Section 9 hereof; and
(xi) to do and perform all such other acts and things as the Collateral Agent
may reasonably deem appropriate or convenient in connection with the Pledged
Collateral.

 

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This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Secured Obligations shall remain
outstanding and until all of the commitments relating thereto shall have been
terminated. The Collateral Agent shall be under no duty to exercise or withhold
the exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Collateral Agent in this Pledge Agreement, and shall
not be liable for any failure to do so or any delay in doing so. The Collateral
Agent shall not be liable for any act or omission or for any error of judgment
or any mistake of fact or Law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross negligence or
willful misconduct. This power of attorney is conferred on the Collateral Agent
solely to protect, preserve and realize upon its security interest in the
Pledged Collateral.
(b) Assignment by the Collateral Agent. The Collateral Agent may assign the
Secured Obligations and any portion thereof and/or the Pledged Collateral and
any portion thereof to a successor collateral agent appointed pursuant to
Section 10.06 of the Credit Agreement, and the assignee shall be entitled to all
of the rights and remedies of the Collateral Agent under this Pledge Agreement
in relation thereto.
(c) The Collateral Agent’s Duty of Care. Other than the exercise of reasonable
care to assure the safe custody of the Pledged Collateral while being held by
the Collateral Agent hereunder, the Collateral Agent shall have no duty or
liability to preserve rights pertaining thereto, it being understood and agreed
that the Pledgors shall be responsible for preservation of all rights in the
Pledged Collateral, and the Collateral Agent shall be relieved of all
responsibility for the Pledged Collateral upon surrendering it or tendering the
surrender of it to the Pledgors. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own property,
which shall be no less than the treatment employed by a reasonable and prudent
agent in the industry, it being understood that the Collateral Agent shall not
have responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Pledged Collateral, whether or not the Collateral Agent has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against any parties with respect to any of the Pledged Collateral.
(d) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and be continuing, to the
extent permitted by Law, each Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral of such Pledgor or any
part thereof for any purpose not inconsistent with the terms of this Pledge
Agreement or the Credit Agreement; and
(ii) Upon the occurrence and during the continuance of an Event of Default and
notice from the Collateral Agent to the applicable Pledgor that the Collateral
Agent intends to exercise its rights pursuant to this paragraph (ii), all rights
of a Pledgor to exercise the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to paragraph (i) of this subsection
shall cease and all such rights shall thereupon become vested in the Collateral
Agent, which shall then have the sole right to exercise such voting and other
consensual rights.
(e) Dividend Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and be continuing and
subject to Section 4(b) hereof, each Pledgor may receive and retain any and all
dividends (other than stock dividends and other dividends constituting Pledged
Collateral addressed hereinabove) or interest paid in respect of the Pledged
Collateral to the extent they are allowed under the Credit Agreement.

 

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(ii) Upon the occurrence and during the continuance of an Event of Default and
notice from the Collateral Agent to the applicable Pledgor that the Collateral
Agent intends to exercise its rights pursuant to this paragraph (e):
(A) all rights of a Pledgor to receive the dividends and interest payments that
it would otherwise be authorized to receive and retain pursuant to paragraph (i)
of this subsection shall cease and all such rights shall thereupon be vested in
the Collateral Agent, which shall then have the sole right to receive and hold
as Pledged Collateral such dividends and interest payments; and
(B) all dividends and interest payments that are received by a Pledgor contrary
to the provisions of paragraph (A) of this subsection shall be received in trust
for the benefit of the Collateral Agent, shall be segregated from other property
or funds of such Pledgor, and shall be forthwith paid over to the Collateral
Agent as Pledged Collateral in the exact form received, to be held by the
Collateral Agent as Pledged Collateral and as further collateral security for
the Secured Obligations.
(f) Release of Pledged Collateral. The Collateral Agent may release any of the
Pledged Collateral from this Pledge Agreement or may substitute any of the
Pledged Collateral for other Pledged Collateral without altering, varying or
diminishing in any way the force, effect, lien, pledge or security interest of
this Pledge Agreement as to any Pledged Collateral not expressly released or
substituted, and this Pledge Agreement shall continue as a first priority lien
on all Pledged Collateral not expressly released or substituted.
11. Rights of Required Lenders. All rights of the Collateral Agent hereunder, if
not exercised by the Collateral Agent, may be exercised by the Required Lenders.
12. Application of Proceeds. Upon the occurrence and during the continuation of
an Event of Default, any payments in respect of the Secured Obligations and any
proceeds of the Pledged Collateral, when received by the Collateral Agent or any
of the holders of the Secured Obligations in cash or its equivalent, will be
applied in reduction of the Secured Obligations in the order set forth in the
Credit Agreement or other document relating to the Secured Obligations, and each
Pledgor irrevocably waives the right to direct the application of such payments
and proceeds and acknowledges and agrees that the Collateral Agent shall have
the continuing and exclusive right to apply and reapply any and all such
payments and proceeds in the Collateral Agent’s sole discretion, notwithstanding
any entry to the contrary upon any of its books and records.
13. Costs of Counsel. At all times hereafter, whether or not upon the occurrence
of an Event of Default, the Pledgors agree to promptly pay upon demand any and
all reasonable costs and expenses (including reasonable attorneys’ fees and
expenses) of the Collateral Agent and the holders of the Secured Obligations
(a) as required under Section 11.04 of the Credit Agreement and (b) as necessary
to protect the Pledged Collateral or to exercise any rights or remedies under
this Pledge Agreement or with respect to any of the Pledged Collateral. All of
the foregoing costs and expenses shall constitute Secured Obligations hereunder.

 

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14. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in every respect and
shall remain in full force and effect so long as any of the Secured Obligations
remains outstanding (other than contingent indemnity obligations not yet due and
payable) and until all of the commitments relating thereto have been terminated.
Upon such payment and termination, this Pledge Agreement shall be automatically
terminated and the Collateral Agent shall, upon the request and at the expense
of the Pledgors, forthwith release all of its liens and security interests
hereunder and shall execute and deliver all UCC termination statements and/or
other documents reasonably requested by the Pledgors evidencing such
termination. Notwithstanding the foregoing, all indemnities provided hereunder
shall survive termination of this Pledge Agreement.
(b) This Pledge Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in part, of
any of the Secured Obligations is rescinded or must otherwise be restored or
returned by the Collateral Agent or any holder of the Secured Obligations as a
preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency
or similar Law, all as though such payment had not been made; provided that in
the event payment of all or any part of the Secured Obligations is rescinded or
must be restored or returned, all reasonable costs and expenses (including
reasonable attorneys’ fees and expenses) incurred by the Collateral Agent or any
holder of the Secured Obligations in defending and enforcing such reinstatement
shall be deemed to be included as a part of the Secured Obligations.
15. Amendments and Waivers. This Pledge Agreement and the provisions hereof may
not be amended, waived, modified, changed, discharged or terminated except as
set forth in Section 11.01 of the Credit Agreement.
16. Successors in Interest. This Pledge Agreement shall create a continuing
security interest in the Collateral and shall be binding upon each Pledgor, its
successors and assigns, and shall inure, together with the rights and remedies
of the Collateral Agent and the holders of the Secured Obligations hereunder, to
the benefit of the Collateral Agent and the holders of the Secured Obligations
and their successors and permitted assigns; provided, however, that none of the
Pledgors may assign its rights or delegate its duties hereunder without the
prior written consent of the requisite Lenders under the Credit Agreement.
17. Notices. All notices required or permitted to be given under this Pledge
Agreement shall be given as provided in Section 11.02 of the Credit Agreement.
18. Counterparts. This Pledge Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Pledge Agreement to produce or account for
more than one such counterpart.
19. Headings. The headings of the sections and subsections hereof are provided
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Pledge Agreement.

 

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20. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE COLLATERAL AGENT SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK, NEW YORK OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION
AND DELIVERY OF THIS PLEDGE AGREEMENT, EACH PARTY HERETO CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
PLEDGE AGREEMENT OR OTHER DOCUMENT RELATED HERETO. EACH PARTY HERETO WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.
(c) EACH PARTY TO THIS PLEDGE AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
PLEDGE AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS PLEDGE
AGREEMENT, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS PLEDGE AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
21. Severability. If any provision of this Pledge Agreement or any related
document is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Pledge Agreement
and any other related document shall not be affected or impaired thereby and
(b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
22. Entirety. This Pledge Agreement, the other Loan Documents and the other
documents relating to the Secured Obligations comprise the complete and
integrated agreement of the parties on the subject matter hereof and thereof and
supersedes all prior agreements, written or oral, on such subject matter. This
Pledge Agreement was drafted with the joint participation of the respective
parties thereto and shall be construed neither against nor in favor of any
party, but rather in accordance with the fair meaning thereof.
23. Survival. All representations and warranties made hereunder or other
document delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent, the Collateral Agent, and each Lender, regardless of any
investigation made by the Administrative Agent, the Collateral Agent or any
Lender or on their behalf and notwithstanding that the Administrative Agent, the
Collateral Agent or any Lender may have had notice or knowledge of any Default
at the time of any Credit Extension, and shall continue in full force and effect
as long as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied or any Letter of Credit shall remain outstanding.

 

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24. Other Security. To the extent that any of the Secured Obligations are now or
hereafter secured by property other than the Pledged Collateral (including real
and other personal property owned by a Pledgor), or by a guarantee, endorsement
or property of any other Person, then the Collateral Agent shall have the right
to proceed against such other property, guarantee or endorsement upon the
occurrence of any Event of Default, and the Collateral Agent shall have the
right, in its sole discretion, to determine which rights, security, liens,
security interests or remedies the Collateral Agent shall at any time pursue,
relinquish, subordinate, modify or take with respect thereto, without in any way
modifying or affecting any of them or the Secured Obligations or any of the
rights of the Collateral Agent or the holders of the Secured Obligations under
this Pledge Agreement, under any of the other Loan Documents or under any other
document relating to the Secured Obligations.
25. Joint and Several Obligations of Pledgors.
(a) Subject to subsection (c) of this Section 25, each of the Pledgors is
accepting joint and several liability hereunder in consideration of the
financial accommodation to be provided by the holders of the Secured
Obligations, for the mutual benefit, directly and indirectly, of each of the
Pledgors and in consideration of the undertakings of each of the Pledgors to
accept joint and several liability for the obligations of each of them.
(b) Subject to subsection (c) of this Section 25, each of the Pledgors jointly
and severally hereby irrevocably and unconditionally accepts joint and several
liability with the other Pledgors with respect to the payment of all of the
Secured Obligations arising under this Pledge Agreement, the other Loan
Documents and any other documents relating to the Secured Obligations, it being
the intention of the parties hereto that all the payment Secured Obligations
shall be the joint and several obligations of each of the Pledgors without
preferences or distinction among them.
(c) Notwithstanding any provision to the contrary contained herein, in any other
of the Loan Documents or in any other documents relating to the Secured
Obligations, the obligations of each Guarantor under the Credit Agreement and
the other Loan Documents shall be limited to an aggregate amount equal to the
largest amount that would not render such obligations subject to avoidance under
Section 548 of the Bankruptcy Code of the United States or any other applicable
Debtor Relief Law (including any comparable provisions of any applicable state
law).
26. Replacement of Existing Pledge Agreement. As of the date hereof, the
Existing Pledge Agreement shall be amended, restated and superseded and replaced
in its entirety by this Pledge Agreement.

 

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27. Termination and Release.
(a) This Pledge Agreement and all security interests granted hereby shall
terminate when (i) all of the Obligations under the Loan Documents (excluding
contingent obligations as to which no claim has been made) have been paid in
full in cash, (ii) all Commitments have terminated or expired and (iii) the
aggregate amount available to be drawn under Letters of Credit has been reduced
to zero (including as a result of obtaining the consent of the applicable L/C
Issuer through the provision of Cash Collateral or other arrangement
satisfactory to the applicable L/C Issuer) and no L/C Issuer has any further
obligation to issue or amend Letters of Credit under the Credit Agreement.
(b) All security interests granted hereby shall also terminate and be released
at the time or times and in the manner set forth in Section 10.10 of the Credit
Agreement.
(c) In connection with any termination or release pursuant to subsection (a) or
(b) of this Section 27, the Collateral Agent shall execute and deliver to any
Pledgor, at such Pledgor’s expense, all documents that such Pledgor shall
reasonably request to evidence such termination or release so long as the
applicable Pledgor shall have provided the Administrative Agent such
certifications or documents as the Collateral Agent shall reasonably request in
order to demonstrate compliance with this Section 27. Any execution and delivery
of documents by the Collateral Agent pursuant to this Section shall be without
recourse to or warranty by the Collateral Agent.
[Signatures on Following Pages]

 

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Each of the parties hereto has caused a counterpart of this Pledge Agreement to
be duly executed and delivered as of the date first above written.

          PLEDGORS:  ARMSTRONG WORLD INDUSTRIES, INC.,
a Pennsylvania corporation
      By:   /s/ Thomas J. Waters         Name:   Thomas J. Waters       
Title:   Vice President and Treasurer        ARMSTRONG REALTY GROUP, INC.,
a Pennsylvania corporation
      By:   /s/ Thomas J. Waters         Name:   Thomas J. Waters       
Title:   Treasurer and Assistant Secretary        ARMSTRONG VENTURES, INC.,
a Delaware corporation
      By:   /s/ Thomas J. Waters         Name:   Thomas J. Waters       
Title:   Assistant Treasurer        ARMSTRONG WOOD PRODUCTS, INC.,
a Delaware corporation
      By:   /s/ Thomas J. Waters         Name:   Thomas J. Waters       
Title:   Treasurer        AWI LICENSING COMPANY,
a Delaware corporation
      By:   /s/ Thomas J. Waters         Name:   Thomas J. Waters       
Title:   Treasurer        ARMSTRONG HARDWOOD FLOORING COMPANY,
a Tennessee corporation
      By:   /s/ Thomas J. Waters         Name:   Thomas J. Waters       
Title:   Treasurer     

ARMSTRONG WORLD INDUSTRIES, INC.
PLEDGE AGREEMENT

 

 

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            PATRIOT FLOORING SUPPLY, INC.,
a Delaware corporation
      By:   /s/ Thomas J. Waters         Name:   Thomas J. Waters       
Title:   Vice President and Treasurer        HOMERWOOD HARDWOOD FLOORING
COMPANY,
a Delaware corporation
      By:   /s/ Thomas J. Waters         Name:   Thomas J. Waters       
Title:   Treasurer     

ARMSTRONG WORLD INDUSTRIES, INC.
PLEDGE AGREEMENT

 

 

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Accepted and agreed to as of the date first above written.

          COLLATERAL AGENT:  BANK OF AMERICA, N.A.,
as Collateral Agent
      By:   /s/ Kimberly D. Williams         Name:   Kimberly D. Williams       
Title:   Vice President   

ARMSTRONG WORLD INDUSTRIES, INC.
PLEDGE AGREEMENT

 

 

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SCHEDULES

     
Schedule 2(a)
  Pledged Stock

EXHIBITS

     
Exhibit 4(a)
  Form of Stock Power

 

 

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Schedule 2(a)
to
Amended and Restated Pledge Agreement
dated as of November 23, 2010
in favor of Bank of America, N.A.,
as Collateral Agent
PLEDGED STOCK

                              Number     Certificate   Pledgor   Issuer   of
Shares     Number   Armstrong World Industries, Inc.  
Armstrong Realty Group, Inc.
    1,000       1   Armstrong World Industries, Inc.  
Armstrong Ventures, Inc.
    505       1   Armstrong World Industries, Inc.  
AWI Licensing Company
    1,000       1   Armstrong World Industries, Inc.  
Armstrong Wood Products, Inc.
    1,000     NCS-2   Armstrong Wood Products, Inc.  
Armstrong Hardwood Flooring Company
    65,700       101   Armstrong Wood Products, Inc.  
Patriot Flooring Supply, Inc.
    1       3   Armstrong Hardwood Flooring Company  
HomerWood Hardwood Flooring Company
    10       1  

 

 

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Exhibit 4(a)
to
Amended and Restated Pledge Agreement
dated as of November 23, 2010
in favor of Bank of America, N.A.,
as Collateral Agent
Form of Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to the
following shares of capital stock of                                         
[ISSUER], a                      corporation:

      No. of Shares   Certificate No.

and irrevocably appoints
                                                             its agent and
attorney-in-fact to transfer all or any part of such capital stock and to take
all necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.
The effectiveness of a transfer pursuant to this stock power shall be subject to
any and all transfer restrictions referenced on the face of the certificates
evidencing such interest or in the certificate of incorporation or bylaws of the
subject corporation, to the extent they may from time to time exist.

            [HOLDER]
      By:           Name:           Title: