Exhibit 10.1






	 	 	 	 	 



Exhibit 10.1




CONFORMED COPY




SEPARATION AGREEMENT AND RELEASE





This Separation Agreement and Release (“Separation Agreement”) is entered into by and between
Michael D. Lockhart (“Executive” or “you”) and Armstrong World Industries, Inc. (the “Company”),
and confirms the agreement that has been reached with you in connection with your separation from
the Company.



1. Termination of Employment. You agree that your separation shall be effective as of
February 28, 2010 (the “Separation Date”) and as of such date you shall cease to be employed by the
Company in any capacity and your separation shall become effective from all positions you then hold
with the Company and its subsidiaries and as a member of the Board of Directors of the Company (as
well as of the Board of Directors of any of the Company’s subsidiaries). The parties hereto hereby
waive all notice of termination requirements and date of termination requirements including those
set forth in Sections 7.1 and 7.2 of the Change in Control Agreement between you and the Company
dated as of October 27, 2008 (the “Change in Control Agreement”). You further agree to execute
promptly upon request by the Company any additional documents necessary to effectuate the
provisions of this paragraph 1.



2. Separation Pay and Benefits. In consideration of your execution of this Separation
Agreement and your compliance with its terms and conditions, the Company agrees to pay or provide
you (subject to the terms and conditions set forth in this Separation Agreement) with the benefits
described in this paragraph 2 and to adhere to the non-disparagement restrictions set forth in
paragraph 5.b. below, which exceed any payment and benefits to which you are otherwise entitled.
The benefits below shall be in full satisfaction of the Company’s obligations under the terms of
the Change in Control Agreement. The payments specified in paragraphs 2.b., 2.c. and 2.e. shall be
paid on the first business day that is at least six months after the Separation Date; provided that
such amounts shall be paid within ten days of the date of your death during such six-month period;
and provided further that the payments required by this paragraph 2 shall not be made unless the
Effective Date (as defined below) has occurred no later than March 31, 2010. The amounts suspended
for six months as specified above shall earn interest at the annual rate of 0.72%, compounded
monthly.



a. The Company shall continue to pay you at your current rate of base salary through the
Separation Date, in accordance with the Company’s payroll practices, less applicable withholdings.



b. The Company shall pay you an aggregate of $7,774,667 (the “Separation Amount”), less
applicable withholdings, in full satisfaction of the Company’s obligations under Sections 6.1(A)
and (B) of the Change in Control Agreement.


 


 









 





c. The Company shall pay you an aggregate of $3,143,077, less applicable withholdings, in full
satisfaction of the Company’s obligations under Section 6.1(C) of the Change in Control Agreement.



d. The Company shall provide you with continued welfare benefit plan coverage in accordance
with the terms of Sections 6.1(D) and 6.3(B) of the Change in Control Agreement, each of which are
incorporated herein by reference, for the period of time specified, and subject to reduction, as
set forth therein.



e. The Company shall pay you an aggregate of $78,525.64 with respect to 20.83 days’ vacation,
less applicable withholdings, in full satisfaction of the Company’s obligations under Section
6.1(F) of the Change in Control Agreement.



f. In full satisfaction of the Company’s obligations under Section 6.1(G) of the Change in
Control Agreement, the Company shall, no later than the last day of the calendar year in which the
expenses are incurred, pay the reasonable fees and expenses for a full service nationally
recognized executive outplacement firm, in 2010 and each year thereafter through the last day of
2012, subject to an annual cap of $65,333. Any amount paid in any year pursuant to this paragraph
2.f. shall not affect the amount payable in any other year pursuant to this
paragraph 2.f.



g. The Company shall pay you a cash lump sum of $1,543,500, less applicable withholdings,
which shall represent your bonus awarded with respect to 2009 under the Management Achievement
Plan, at such time as such bonuses are paid to the Company’s senior executives generally.



3. Accrued Benefits. Whether or not you execute this Separation Agreement, you will
be paid for any accrued but unused vacation days (which the parties agree shall be $11,935.90), and
for unreimbursed business expenses (in accordance with usual Company policies and practices, and in
no event later than December 31, 2010), to the extent not theretofore paid. In addition, following
the Separation Date, you will be entitled to receive vested amounts payable to you under the
Company’s 401(k) plan and other retirement and deferred compensation plans in accordance with the
terms of such plans and applicable law. Except as specifically set forth herein, your
participation in all Company plans (including outstanding stock option awards, restricted stock
awards and performance stock awards) shall remain subject to the terms and conditions of such plans
and agreements as in effect from time to time and you agree that such terms and conditions are
binding on you and the Company. Without limiting the generality of the foregoing, the Company
acknowledges that you have satisfied the eligibility requirements for the Company’s post-retirement
health and life insurance programs, as applicable, and that receipt of such benefits shall commence
on the date on which the benefits due under paragraph 2.d. above terminate. Schedule A hereto sets
forth an inventory of your Company equity awards outstanding as of the date hereof. Other than as
set forth in this Agreement, after the Separation Date, you shall not receive any base salary,
annual bonus, long term incentive award, welfare, retirement, perquisite, fringe benefit, or other
benefit plan coverage or coverage under any other practice, policy or program as may be in effect
from time to time, applying to senior officers or other employees of the Company. Notwithstanding
the foregoing, the Company shall pay the cost for your executive physical to the extent completed
no later than February 28, 2010.


 


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4. No Other Payments or Benefits. You acknowledge and agree that, other than the
payments and benefits expressly set forth in this Agreement, you have received all compensation to
which you are entitled from the Company, and you are not entitled to any other payments or benefits
from the Company.




5. Nondisparagement.



a. You agree that you will not, with intent to damage, disparage or encourage or induce others
to disparage the Company, its subsidiaries, and its current directors and officers and each of
their successors and assigns (collectively, the “Company Entities and Persons”); provided that such
limitation shall extend to directors and officers only in their capacities as such or in respect of
their relationship with the Company and its affiliates.



b. The Company agrees that none of the Company, its subsidiaries, or their successors and
assigns will, with intent to damage, disparage or induce others to disparage you. The Company
shall instruct all of its directors and officers not to disparage you or induce others to disparage
you.



c. Nothing in this Separation Agreement is intended to or shall prevent either party from
providing, or limiting testimony in response to a valid subpoena, court order, regulatory request
or other judicial, administrative or legal process or otherwise as required by law. Executive
shall notify the Company in writing as promptly as practicable after receiving any request for
testimony or information in response to a valid subpoena, court order, regulatory request or other
judicial, administrative or legal process or otherwise as required by law, regarding the
anticipated testimony or information to be provided and at least ten (10) days prior to providing
such testimony or information (or, if such notice is not possible under the circumstances, with as
much prior notice as is possible).



6. Cooperation. Prior to and after the Separation Date, Executive shall reasonably
cooperate with the Company, its subsidiaries and affiliates, at any level, and any of their
officers, directors, shareholders, or employees: (A) concerning requests for information about the
business of the Company or its subsidiaries or affiliates or Executive’s involvement and
participation therein, (B) in connection with any investigation or review by any federal, state or
local regulatory, quasi-regulatory or self-governing authority (including, without limitation, the
Securities and Exchange Commission) as any such investigation or review relates to events or
occurrences that transpired
while Executive was employed by the Company and (C) with respect to transition and succession
matters. Executive’s cooperation shall include, but not be limited to (taking into account
Executive’s obligations to any new employer or entity to which he provides services), being
available to meet and speak with officers or employees of



 


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the Company and/or the Company’s counsel
at reasonable times and locations, executing accurate and truthful documents and taking such other
actions as may reasonably be requested by the Company and/or the Company’s counsel to effectuate
the foregoing. Executive shall be entitled to reimbursement, upon receipt by the Company of
suitable documentation, for reasonable and necessary travel and other expenses which Executive may
incur at the specific request of the Company and as approved by the Company in advance and in
accordance with its policies and procedures established from time to time.



7. Confidentiality; Company Property. You agree that you shall not, without the prior
written consent of the Company, disclose to any entity or person any information which is treated
as confidential by the Company or any of their subsidiaries or affiliates, and is not generally
known or available to the public, provided, that you may make disclosures of such confidential
information to the extent required by law or legal process. On or prior to the Separation Date,
you shall return to the Company all Company property in your possession or use, including, without
limitation, all automobiles, fax machines, printers, cell phones, credit cards, building-access
cards and keys, other electronic equipment, and any records, software or other data from your
personal computers or laptops which are not themselves Company property, however stored, relating
to confidential information, as discussed above; provided that the Executive will continue to have
access to his electronic mail account at the Company through March 10, 2010. You recognize that
irreparable injury would be caused to the Company, not adequately compensable by money damages, by
your violation of the provisions of this paragraph. You further agree that in the event of any
such violation or threatened violation of this confidentiality provision, in addition to such other
rights and remedies as may exist in the Company’s favor, the Company will be entitled to recover
its attorneys’ fees and costs in any action to enforce any provision of this paragraph, but only in
the event the Company is the prevailing party in any such action, and if the Company is not the
prevailing party then it shall pay or reimburse you for your attorneys’ fees and costs incurred by
you in defense of such action. Notwithstanding the foregoing, the Executive may elect to purchase
his Company-issued laptop computer for the fair market value thereof. The Company shall be
entitled to inspect said computer, at its option, to verify its contents and remove any Company
confidential information prior to final sale to the Executive. The Company acknowledges that the
Executive is entitled to the return of all fitness equipment that he personally paid for in the
Company’s gymnasium. This equipment will be removed from the gymnasium and delivered to a location
designated by the Executive in Lancaster, Pennsylvania at the expense of the Company.



8. Taxes. The parties acknowledge and agree that: the form and timing of the
Separation Amount and the other payments and benefits to be provided pursuant to this Agreement
are intended to be exempt from or to comply with one or more exceptions to the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended, and applicable Treasury Regulations
thereunder (“Section 409A”), including the requirement for a six-month suspension on payments to
“specified employees” as defined in Section 409A that are not otherwise permitted to be paid within
the six-month suspension period. Notwithstanding any provision of this Agreement to the contrary,
the Company, its affiliates, subsidiaries, successors, and each of their respective officers,
directors, employees and representatives, neither represent nor warrant the tax treatment under any
federal, state, local, or foreign laws or regulations thereunder (individually and collectively
referred to as the “Tax Laws”) of any payment or benefits contemplated by this Separation Agreement
including, but not limited to, when and to what extent such payments or benefits may be subject to
tax, penalties and interest under the Tax Laws.



 


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9. Release.



a. You agree that, in consideration of the benefits to be provided to you under this
Separation Agreement, you hereby waive, release and forever discharge any and all claims and rights
which you ever had, now have or may have against the Company and any of its subsidiaries or
affiliated companies, and their respective successors and assigns, current and former officers,
agents, directors, representatives and employees, various benefits committees, and their respective
successors and assigns, heirs, executors
and personal and legal representatives, based on any act,
event or omission occurring before you execute this Separation Agreement arising out of, during or
relating to your employment or services with the Company or the termination of such employment or
services, except as provided below. This waiver and release includes, but is not limited to, any
claims which could be asserted now or in the future, under: common law, including, but not limited
to, breach of express or
implied duties, wrongful termination, defamation, or violation of public policy; any policies,
practices, or procedures of the Company; any federal or state statutes or regulations including,
but not limited to, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e et
seq., the Civil Rights Act of 1866 and 1871, the Americans With Disabilities Act, 42 U.S.C. §12101
et seq., the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §1001 et seq. (excluding
those rights relating exclusively to employee pension benefits as governed by ERISA), the Family
and Medical Leave Act, §2601 et. seq., any comparable state laws, any contract of employment,
express or implied; any provision of the United States or of a state; any provision of any other
law, common or statutory, of the United States, or any applicable state. Notwithstanding the
foregoing, nothing contained in this paragraph 9.a. shall (i) subject to paragraph 9.c, impair any
rights or potential claims that you may have under the federal Age Discrimination in Employment Act
of 1967 (the “ADEA”); (ii) be construed to prohibit Executive from bringing appropriate proceedings
to enforce this Separation Agreement; (iii) affect any rights of indemnification, or to be held
harmless, or any coverage under directors and officers liability insurance or rights or claims of
contribution that you have or (iv) affect any rights as a shareholder of the Company that you have.



b. The Company agrees that, in consideration of your waiver, release and discharge of any and
all claims and rights pursuant to paragraph 9.a. and all other consideration provided in this
Separation Agreement, except as provided below, it shall and shall cause its subsidiaries to waive,
release and forever discharge you of any and all claims and rights which the Company and any of its
subsidiaries and their respective successors and assigns ever had, now has or may have against you,
your heirs, executors, administrators, successors and assigns. This waiver and release includes,
but is not limited to, any claims which could be asserted now or in the future, under: common law,
including, but not limited to, breach of express or implied duties, defamation, or violation of
public policy; any policies, practices, or procedures of the Company; any federal or state statutes
or regulations; any provision of any other law, common or statutory, of the United States, or any
applicable state. Notwithstanding the foregoing, nothing contained in this paragraph 9.b. shall
(i) be construed to prohibit the Company from bringing appropriate proceedings to enforce this
Separation Agreement or (ii) operate to waive, release or discharge any claims arising out of your
fraud or criminal misconduct.



 


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c. By signing this Separation Agreement, the parties represent that they have not and will not
in the future commence any action or proceeding arising out of the matters released hereby, and
that neither party will seek or be entitled to any award of legal or equitable relief in any such
action or proceeding that may be commenced on either parties’ behalf. The Company has advised you
to consult with an attorney of your choosing prior to signing this Separation Agreement. You
represent that you understand and agree that you have the right and have been given the opportunity
to review this Separation Agreement and the ADEA Release (defined below), with an attorney. You
further represent that you understand and agree that the Company is under no obligation to offer
this Separation Agreement, and that you are under no obligation to consent to the waiver.



d. In accordance with the ADEA release contained in Exhibit A hereto (the “ADEA Release”), you
shall have twenty-one (21) days from the date of this Agreement to consider the ADEA Release and,
once you have signed the ADEA Release, you shall have seven (7) additional days from the date of
execution to revoke your consent to the ADEA Release. Any such revocation shall be made in writing
so as to be received by the Company prior to the eighth (8th) day following your
execution of the ADEA Release. If no such revocation occurs, the ADEA Release shall become
effective on the eighth (8th) day following your execution, no earlier than the
Separation date, of the ADEA Release (the “Effective Date”).



10. Enforcement. If any provision of this Separation Agreement is held by a court of
competent jurisdiction to be illegal, void or unenforceable, such provision shall have no effect;
however, the remaining provisions shall be enforced to the maximum extent possible. Further, if a
court should determine that any portion of this Separation Agreement is overbroad or unreasonable,
such provision shall be given effect to the maximum extent possible by narrowing or enforcing in
part that aspect of the provision found overbroad or unreasonable. In addition, you agree that
your willful and knowing failure to return Company property that relates to the maintenance of
security of the Company Entities and Persons shall entitle the Company to injunctive and other
equitable relief.



11. No Admission. This Separation Agreement is not intended, and shall not be
construed, as an admission that either you or the Company Entities and Persons have violated any
federal, state or local law (statutory or decisional), ordinance or regulation, breached any
contract or committed any wrong whatsoever.


 


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12. Successor. This Separation Agreement is binding upon, and shall inure to the
benefit of, the parties and their respective heirs, executors, administrators, successors and
assigns.



13. Choice of Law. This Separation Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania without regard to the principles of
conflicts of law.



14. Entire Agreement. You acknowledge that this Separation Agreement constitutes the
complete understanding between the Company and you and supersedes any and all agreements,
understandings, and discussions, whether written or oral, between you and any of the Company
Entities and Persons, including the Employment Agreement between you and the Company as amended and
restated as of October 27, 2008, which shall terminate on the Separation Date, and the Change in
Control Agreement; provided, however, that notwithstanding the foregoing, the provisions of Section
6.4 of the Change in Control Agreement shall remain in full force and effect. No other promises or
agreements shall be binding on the Company unless in writing and signed by both the Company and you
after the date of this Separation Agreement.



15. Effective Date. You may accept this Separation Agreement by signing it and
returning it to the Company’s General Counsel at Armstrong World Industries, Inc., Lancaster, PA
17604, with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, NY
10036, Attention: Peter A. Atkins. The effective date of this Separation Agreement shall be the
date it is signed by both parties, provided that the provisions of paragraph 2 shall not become
effective until the Effective Date, as defined in paragraph 9.d. In the event you do not accept
this Separation Agreement as set forth in this paragraph 15, this Separation Agreement, including
but not limited to the obligation of the Company hereunder to provide the payments and other
benefits described herein, shall be deemed automatically null and void.



16. Headings. The headings used herein are for the convenience of reference only, do
not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of
the provisions of this Agreement.



17. Counterparts. This Agreement may be executed in one or more counterparts,
including emailed or telecopied facsimiles, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.


 


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IN WITNESS WHEREOF, the Executive has executed this Separation Agreement as of the date set forth
below.



	 	 	 	 	 	 	 
	Signature:

	 	/s/ Michael D. Lockhart
	 	    Date: 02/10/2010	 	 
	 

	 	 

Michael D. Lockhart
	 	 
	 	 
	 
	 	 	 	 	 	 
	ARMSTRONG WORLD INDUSTRIES, INC.	 	 	 	 






	 	 	 	 	 	 	 
	By:  

	/s/ Jeffrey D. Nickel
	  	    Date: 02/10/2010	 	 
	 

	 

	 	 
	 	 
	 
	Title:  	Senior Vice President, Secretary	 	 	 	 
	

	 	and General Counsel	 	 	 	 





 


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SCHEDULE A




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stock Options(1)
	 
	Grant Date	 	Grant Price	 	 	Vest Date	 	 	# of Options	 
	 	10/2/2006	 	 	 
	 	$	29.37	 	 	 	10/2/2008       	 (v)	 	 	78,855	 
	 	 	 	 	 
	 	 	 	 	 	 	8/28/2009       	 (v)	 	 	78,855	 
	 	 	 	 	 
	 	 	 	 	 	 	8/28/2009       	 (v)	 	 	78,855	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	236,565	 
	 
	 	2/19/2007	 	 	 
	 	$	39.88	 	 	 	2/19/2008       	 (v)	 	 	23,360	 
	 	 	 	 	 
	 	 	 	 	 	 	2/19/2009       	 (v)	 	 	21,090	 
	 	 	 	 	 
	 	 	 	 	 	 	8/28/2009       	 (v)	 	 	19,650	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	64,100	 
	 
	 	2/25/2008	 	 	 
	 	$	28.45	 	 	 	2/25/2009       	 (v)	 	 	47,189	 
	 	 	 	 	 
	 	 	 	 	 	 	8/28/2009       	 (v)	 	 	43,902	 
	 	 	 	 	 
	 	 	 	 	 	 	8/28/2009       	 (v)	 	 	40,813	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	131,904	 
	 
	 	2/23/2009	 	 	 
	 	$	13.46	 	 	 	8/28/2009       	 (v)	 	 	76,986	 
	 	 	 	 	 
	 	 	 	 	 	 	8/28/2009       	 (v)	 	 	73,575	 
	 	 	 	 	 
	 	 	 	 	 	 	8/28/2009       	 (v)	 	 	69,058	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	219,619	 
	 
	(v) = vested	 	 
	 	 	 	 	 	 	 	 	 	 	 	 








 




	 	 	 
	(1)	 	All options expire on the 10th anniversary of the Grant Date.




 


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EXHIBIT A




WAIVER OF RIGHTS UNDER THE

AGE DISCRIMINATION AND EMPLOYMENT ACT





1. Michael D. Lockhart (“Executive” or “you”) knowingly and voluntarily, on behalf of
yourself and your agents, attorneys, successors, assigns, heirs and executors, releases and
forever discharges Armstrong World Industries, Inc. (the “Company”) and all of their
subsidiaries and affiliates, together with all of their respective past and present
directors, managers, officers, shareholders, partners, employees, agents, attorneys and
servants, representatives, administrators and fiduciaries (except that in the case of
agents, representatives, administrators, attorneys and fiduciaries, only to the extent in
any way related to her employment with, or the business affairs of the Company) and each of
their predecessors, successors and assigns (collectively, the “Releasees”) from any and all
claims, charges, complaints, promises, agreements, controversies, liens, demands, causes of
action, obligations, suits, disputes, judgments, debts, bonds, bills, covenants, contracts,
variances, trespasses, executions, damages and liabilities of any nature whatsoever relating
in any way to your rights under the Age Discrimination in Employment Act of 1967, as amended
(the “ADEA”), whether known or unknown, suspected or unsuspected, which against you or your
executors, administrators, successors or assigns ever had, now have, or may hereafter claim
to have against the Releasees in law or equity, by reason of any matter, cause or thing
whatsoever arising on or before the date this ADEA Release (as defined below) is executed by
you, and whether or not previously asserted before any state or federal court or before any
state or federal agency or governmental entity (the “ADEA Release”). This ADEA Release
includes, without limitation, any rights or claims relating in any way to your employment
relationship with the Company or any of the Releasees, or the termination thereof, arising
under the ADEA, including compensatory damages, punitive damages, attorney’s fees, costs,
expenses, and any other type of damage or relief. You represents that you have not
commenced or joined in any claim, charge, action or proceeding whatsoever against the
Company or any of the Releasees arising out of or relating any of the matters set forth in
this ADEA Release. You further agree that you shall not be entitled to any personal
recovery in any claim, charge, action or proceeding whatsoever against the Company or any of
the Releasees for any of the matters set forth in this ADEA Release.




2. The Company has advised you to consult with an attorney of your choosing prior to signing
this ADEA Release. You represent that you understand and agree that you have the right and
have been given the opportunity to review this ADEA Release with an attorney. You further
represent that you understand and agree that the Company is under no obligation to offer you
this ADEA Release, and that you are under no obligation to consent to the ADEA Release, and
that you have entered into this ADEA Release freely and voluntarily.


 


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3. You shall have twenty-one (21) days to consider this ADEA Release, and once you have
signed this ADEA Release, you shall have seven (7) additional days from the date of
execution to revoke your consent to this ADEA Release. Any such revocation shall be made in
writing so as to be received by the Company’s General Counsel prior to the eighth
(8th) day following your execution of this ADEA Release. If no such revocation
occurs, this ADEA Release shall become effective on the eighth (8th) day
following your execution of this ADEA Release (the “Effective Date”). In the event that you
revoke your consent, this ADEA Release shall be null and void.




IN WITNESS WHEREOF, the Executive has executed this ADEA Release as of the date set forth
below.



	 	 	 	 	 
	 

	 	 

Michael D. Lockhart
	 	 
	 
	 	 	 	 
	 

	 	 

Date
	 	 





 


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