Exhibit No. 10.27
Armstrong World Industries Inc.
2008 Directors Stock Unit Plan
Adopted by Armstrong World Industries, Inc. Board of Directors on April 11, 2008
I. Purpose
The purposes of this 2008 Directors Stock Unit Plan (the “Plan”) are to promote
the growth and profitability of Armstrong World Industries, Inc. (the
“Corporation”) by increasing the mutuality of interests between directors and
the shareholders of the Corporation.
II. Definitions
The following terms shall have the meanings shown:

  2.1   “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”).     2.2  
“Board” shall mean the Board of Directors of the Corporation.     2.3   “Change
in Control Event” shall mean the occurrence of the event set forth in any one of
the following paragraphs with respect to the Corporation:

  (a)   Any Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Corporation (not including in the securities beneficially
owned by such Person any securities acquired directly from the Corporation or
its affiliates) representing 20% or more of either the then outstanding shares
of common stock of the Corporation or the combined voting power of the
Corporation’s then outstanding securities, excluding any Person who becomes such
a Beneficial Owner in connection with a transaction described in clause (i) of
paragraph (c) below; or

  (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 Corporation) whose appointment or election by the
Board or nomination for election by the Corporation’s shareholders was approved
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

 

 

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  (c)   There is consummated a merger or consolidation of the Corporation
(including a triangular merger to which the Corporation is a party) with any
other corporation other than (i) a merger or consolidation which would result in
the voting securities of the Corporation outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the voting
securities of the Corporation or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the Corporation (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Corporation or its subsidiaries) representing 20% or more of either the
then outstanding shares of common stock of the Corporation or the combined
voting power of the Corporation’s then outstanding securities; or

  (d)   The shareholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or there is consummated an
agreement for the sale or disposition by the Corporation of all or substantially
all of the Corporation’s assets, other than a sale or disposition by the
Corporation of all or substantially all of the Corporation’s assets to an
entity, at least 75% of the combined voting power of the voting securities of
which are owned by shareholders of the Corporation in substantially the same
proportions as their ownership of the Corporation immediately prior to such
sale. Notwithstanding the foregoing, no “Change in Control” shall be deemed to
have occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Corporation 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 Corporation
immediately following such transaction or series of transactions.

  2.4   “Committee” shall mean the Nominating and Governance Committee of the
Board, or any successor committee.     2.5   “Common Stock” shall mean Common
Stock of the Corporation.     2.6   “Delivery Date” shall have the meaning set
forth in Section 4.4(b).     2.7   “Fair Market Value” shall mean the closing
price of the Common Stock on the stock exchange on which the Common Stock is
listed on the relevant date, or, if no sale shall have been made on such
exchange on that date, the closing price on the following day on which there was
a sale.     2.8   “Participant” shall mean a non-employee director to whom Units
are granted under the Plan.

 

 

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  2.9   “Person” shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Corporation or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Corporation or any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, (iv) a
corporation owned, directly or indirectly, by the shareholders of the
Corporation in substantially the same proportions as their ownership of stock of
the Corporation, or (v) an entity or entities which are eligible to file and
have filed a Schedule 13G under Rule 13d-1(b) of the Exchange Act, which
Schedule indicates beneficial ownership of 15% or more of the outstanding shares
of common stock of the Corporation or the combined voting power of the
Corporation’s then outstanding securities.

  2.10   “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 the occurrence or nonoccurrence of other
specified events as herein provided.     2.11   “Section 409A Change in Control
Event” shall mean the first to occur of any of the following events with respect
to the Corporation:

  (a)   Any one person, or more than one person acting as a group (as determined
for purposes of 13d-3 of the Securities Exchange Act of 1934, as amended),
acquires ownership of stock of the Corporation that, together with stock held by
such person or group, constitutes more than 50% of the total fair market value
or total voting power of the stock of the Corporation. However, if any one
person, or more than one person acting as a group, is considered to own more
than 50% of the total fair market value or total voting power of the stock of
the Corporation, the acquisition of additional stock by the same person or
persons is not considered to cause a change in the ownership of the Corporation
(or to cause a change in the effective control of the corporation (as determined
for purposes of 13d-3 of the Securities Exchange Act of 1934, as amended). An
increase in the percentage of stock owned by any one person, or persons acting
as a group, as a result of a transaction in which the Corporation acquires its
stock in exchange for property will be treated as an acquisition of stock for
purposes of this paragraph. This paragraph applies only when there is a transfer
of stock of the Corporation (or issuance of stock of the Corporation) and stock
in the Corporation remains outstanding after the transaction.     (b)   (i) Any
one person, or more than one person acting as a group (as determined for
purposes of 13d-3 of the Securities Exchange Act of 1934, as amended), acquires
(or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of the
Corporation possessing 30% or more of the total voting power of the stock of the
Corporation; or (ii) A majority of members of the Corporation’s Board of
Directors is replaced during any 12-month period by directors whose appointment
or election is not endorsed by a majority of the members of the Corporation’s
Board of Directors before the date of the appointment or election.

 

 

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Notwithstanding the foregoing, if any one person, or more than one person acting
as a group, is considered to effectively control the Corporation (as determined
for purposes of 13d-3 of the Securities Exchange Act of 1934, as amended), the
acquisition of additional control of the Corporation by the same person or
persons is not considered to cause a change in the effective control of the
Corporation (or to cause a change in the ownership of the Corporation within the
meaning of Treas. Reg. §1.409A-3(i)(5)(v)).

  (c)   Any one person, or more than one person acting as a group (as determined
for purposes of 13d-3 of the Securities Exchange Act of 1934, as amended),
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Corporation
that have a total gross fair market value equal to or more than 40% of the total
gross fair market value of all of the assets of the Corporation immediately
before such acquisition or acquisitions. For this purpose, gross fair market
value means the value of the assets of the Corporation, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with such assets. Notwithstanding the foregoing, there is no change
in control event when there is a transfer to an entity that is controlled by the
shareholders of the Corporation immediately after the transfer. A transfer of
assets by the Corporation is not treated as a change in the ownership of such
assets if the assets are transferred to: (i) a shareholder of the Corporation
(immediately before the asset transfer) in exchange for or with respect to its
stock; (ii) an entity, 50% or more of the total value or voting power of which
is owned, directly or indirectly, by the Corporation; (iii) a person, or more
than one person acting as a group, that owns, directly or indirectly, 50% or
more of the total value or voting power of all the outstanding stock of the
Corporation; or (iv) an entity, at least 50% of the total value or voting power
of which is owned, directly or indirectly, by a person described in (iii) of
this paragraph.

III. General

  3.1   Administration. The Plan may be administered by the Board or, if
delegated, to the Committee. Administration shall be delegable to the extent
provided by law. If authority is delegated to the Committee, the following
provisions would apply:

  (a)   Each member of the Committee shall at the time of any action under the
Plan be a “disinterested person” as then defined under Rule 16b-3 under the
Exchange Act or any successor rule.     (b)   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.

 

 

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  (c)   All such actions shall be final, conclusive and binding upon the
Participant. No member of the Committee shall be liable for any action taken or
decision made in good faith relating to the Plan or any grant thereunder.

  3.2   Eligibility. A grant of Units under the Plan may be made to any
non-employee director of the Corporation.     3.3   Aggregate Limit on Grants.
The aggregate number of shares of Common Stock which may be issued in connection
with Units granted under the Plan shall not exceed 300,000 shares, subject to
adjustments pursuant to Sections 5.4 and 5.5. Shares subject to grants under
this Plan may either be authorized but unissued shares or previously issued
shares that have been reacquired by the Corporation. Shares authorized under the
Plan may be used to satisfy obligations of the Corporation for units granted
under the 2006 Phantom Stock Unit Plan based upon election by Participants
holding such units.     3.4   Election to Satisfy Units under the 2006 Plan.
Participants who hold units granted under the 2006 Phantom Stock Unit Plan may
elect to have the Corporation satisfy its payment obligations in respect of such
units in the same manner in which the Corporation satisfies its payment
obligations for units granted under this Plan, e.g., by delivering one share of
common stock for each unit granted under that plan out of the reserve for shares
authorized for issuance under this Plan. Payments to Participants who have made
such election in respect of units under that 2006 Plan will be made according to
the terms of this Plan.     3.5   Term. Grants under this Plan may be made
through October 2017. No further grants may be made after that date unless
shareholders have approved an extension of the Plan.

IV. Units

  4.1   Grant of Units. Each non-employee director of the Corporation shall be
granted the number of Units set forth below, contingent upon their service on
the Board in such capacity on the date of grant:

  (a)   Annual Grants. On the first business day following the regular meeting
of the Board each October (or if there is no regular meeting scheduled in that
month, then the last business day of that month), each non-employee director
shall be granted a number of Units equal to (i) 55% of the total compensation
payable to the non-employee director as an annual retainer divided by (ii) the
Fair Market Value of a share of Common Stock on that date, rounded to the next
highest whole number.     (b)   Discretionary Grants. Units may also be granted
at such times, and in amounts to such eligible non-employee directors, upon such
terms and conditions as are deemed appropriate.

 

 

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  4.2   Grant Agreements. The grant of any Units shall be evidenced by a written
agreement executed by the Corporation and the Participant, stating the number of
Units granted and such other terms and conditions of the grant as the Board or
the Committee may from time to time determine. The Plan has been written with
the intent of complying with Section 409A of the U.S. Internal Revenue Code.
However, if any grant shall be deemed to constitute a deferral of compensation
subject to said section, in the discretion of the Committee, the grant may be
unilaterally modified to comply with the requirements of said section or
cancelled.     4.3   Optional Terms and Conditions of Units. To the extent not
inconsistent with the Plan, the Board or the Committee may prescribe such terms
and conditions applicable to any grant of Units as it may in its discretion
determine.     4.4   Standard Terms and Conditions of Units. Unless otherwise
determined by the Board or the Committee pursuant to Section 4.3, each grant of
Units shall be made on the following terms and conditions, in addition to such
other terms, conditions, limitations and restrictions as the Board or Committee,
in its discretion, may determine to prescribe:

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

  (i)   the one-year anniversary of the grant;     (ii)   the death or total and
permanent disability of the Participant; or     (iii)   the date of any Change
in Control Event.

  (b)   Delivery Date. The date on which each vested Unit shall be paid
(“Delivery Date”) shall be the earlier of:

  (i)   the six-month anniversary of the director’s separation from service from
the Corporation for any reason other than a removal for cause; or

  (ii)   the date of any Change in Control Event, provided that Participant is a
director of the Corporation on such date and that such Change in Control Event
also qualifies as a Section 409A Change in Control Event.

Upon the Delivery Date, the Corporation shall deliver to the Participant shares
of Common Stock in payment for the vested Units, with one share of Common Stock
delivered for each vested Unit.

 

 

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  (c)   Forfeiture of Units. Upon the effective date of a separation of the
Participant’s service as a director with the Corporation for cause, as
determined by the Board or the Committee, all Units for which the Delivery Date
has not occurred, whether or not vested, shall immediately be forfeited to the
Corporation without consideration or further action being required of the
Corporation. Upon the effective date of a separation of the Participant’s
service as a director with the Corporation for any reason other than cause, as
determined by the Board or the Committee, all unvested Units shall immediately
be forfeited to the Corporation without consideration or further action being
required of the Corporation. For purposes of the two immediately preceding
sentences, the effective date of the Participant’s separation shall be the date
on which the Participant ceases to perform services as a director of the
Corporation as determined under Section 409A of the Code.     (d)   Dividend
Equivalents. If an award of Units is outstanding as of the record date for
determination of the shareholders of the Corporation entitled to receive a cash
dividend on its outstanding shares of Common Stock, the awardee shall be
entitled to a cash payment in an amount equal to (a) the per share amount of
such dividend, multiplied by (b) the number of outstanding Units awarded to be
paid on the payment date for such dividend, provided the Participant is serving
as a director of the Corporation on such date.

  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.

V. 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 Corporation or affect any right
which the Corporation or its shareholders may have to elect or remove directors.
    5.2   Non-Uniform Determinations. The Board’s or 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
Corporation with respect thereto until shares of Common Stock are delivered in
payment therefor.     5.4   Adjustments of Stock. In the event of any change or
changes in the outstanding Common Stock, the Committee shall in its discretion
appropriately adjust the number of Units which may be granted under the Plan,
the number of Units subject to grants made under the Plan and any and all other
matters deemed appropriate by the Committee.

 

 

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  5.5   Reorganization. In the event that the outstanding Common Stock shall be
changed in number, class or character by reason of any split-up, change of par
value, stock dividend, combination or reclassification of shares, merger,
consolidation or other corporate change, or shall be changed in value by reason
of any spin-off, dividend in partial liquidation or other special distribution,
the Board or the Committee shall make such changes as it may deem equitable in
outstanding Units granted pursuant to the Plan and the number and character of
Units available for future grants.

  5.6   Amendment or Termination of the Plan. The Board may at any time
terminate the Plan and may from time to time amend the Plan as it may deem
advisable; provided, however, that approval of the shareholders of the
Corporation will be required for any amendment:

  (a)   To increase the total number of shares issuable under the Plan under
Section 3.3 (except for adjustments under Section 5.4 or 5.5); or     (b)   That
would otherwise constitute a “material revision” within the meaning of
applicable rules of the New York Stock Exchange in effect at that time.

An amendment of this Plan will, unless the amendment provides otherwise, be
immediately and automatically effective for all outstanding grants. The Board
may also 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.

  5.7   Governing Law. This Plan will be governed by the laws of the
Commonwealth of Pennsylvania, without regard to any conflict of law rules.