Document:

exv10w3

Exhibit 10.3

AMENDMENT TO

EMPLOYMENT AGREEMENT

     THIS  AMENDMENT (this “Amendment”) is entered into between Doral Financial
Corporation, a Puerto Rico corporation (the “Company”), and Robert E. Wahlman (the
“Executive”) under the following circumstances.

          WHEREAS, the Company and the Executive entered into an Employment Agreement on March 16, 2009
(the “Employment Agreement”); and

          WHEREAS, the Company would like the Executive to participate in a retention program
conditioned upon the Executive entering into this Amendment and the Executive would like to enter
into this Agreement and thereby participate in the retention program;

          NOW THEREFORE, the Executive agrees with the Company, in consideration for good and valuable
consideration (including, without limitation, the grant to the Executive on the date hereof of
restricted stock and a cash retention bonus), the receipt and sufficiency of which are hereby
acknowledged and accepted, to amend the Employment Agreement as follows, effective as of the date
this Amendment is executed as written below:

     1. The payment of the amounts and provision of the benefits set forth in Section 5(a)(ii) of
the Employment Agreement is amended to read as follows:

	 	(i)	 	...
	 
	 	(ii)	 	an amount equal to two (2) times his compensation (salary and
bonus) during the preceding year (the “Severance Payment”),

     2. The definition of “Change in Control” contained in Exhibit A of the Employment
Agreement is amended to read in its entirety as follows:

“Change in Control” will be deemed to have taken place if:

(i) any “person” (as such term is used in Section 3(a)(9) and Section 13(d) of the Exchange
Act) other than the Company or any employee benefit plan of the Company or any of it
subsidiaries, (x) becomes the “beneficial owner” (as such term is used in Rule 13d-3
promulgated under the Exchange Act) of Company securities having more than 50% of the
combined voting power of the then outstanding securities of the Company that may be cast for
the election of directors of the Company (other than as a result of the issuance of
securities initiated by the Company in the ordinary course of business) (“Voting
Securities”) or (y) becomes the “beneficial owner” of the Company of 25% or more of the
Voting Securities of the Company and such person has the power to appoint or elect a
majority of the member of the Board; or

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(ii) persons who, as of the effective date of this Agreement, constitute the Board (the
“Incumbent Directors”) cease for any reason, including without limitation, as a result of a
tender offer, proxy contest, merger or similar transaction, to constitute at least a
majority thereof, provided that any person becoming a director of the Company subsequent to
the effective date of this Agreement shall be considered an Incumbent Director if such
person’s election or nomination for election was approved by a vote of at least 50% of the
Incumbent Directors; but provided further, that any such person whose initial
assumption of office is in connection with an actual or threatened election contest relating
to the election of members of the Board or other actual or threatened solicitation of
proxies or consents by or on behalf of a “person” (as defined in Section 13(d) and 14(d) of
the Exchange Act) other than the Board, including by reason of agreement intended to avoid
or settle any such actual or threatened contest or solicitation, shall not be considered an
Incumbent Director; or

(iii) as the result of, or in connection with, any cash tender or exchange offer, merger or
other business combination, or any combination of the foregoing transactions, the holders of
all the Company’s securities entitled to vote generally in the election of directors of the
Company immediately prior to such transaction constitute, following such transaction, less
than a majority of the combined voting power of the then-outstanding securities of the
surviving entity (or in the event each entity survives, the ultimate parent entity resulting
from such transaction) (the “Surviving Entity”) entitled to vote generally in the election
to elect directors of the Surviving Entity after such transaction.

     3. Except as is provided in this Amendment, the Employment Agreement shall remain unchanged
and continue in full force and effect.

     4. This Amendment shall be governed by and construed in accordance with its express terms, and
otherwise in accordance with the laws of the Commonwealth of Puerto Rico, without reference to
principles of conflict of laws.

[Signature Page Follows]

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     IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as
of this 25th
day of June, 2010.

	 	 	 	 	 	 	 

	 	 	DORAL FINANCIAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Glen R. Wakeman
 

Glen R. Wakeman
	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	ROBERT WAHLMAN	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert Wahlman
 

	 	 

Page 3 of 3Exhibit 10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS
AGREEMENT (the “Agreement”) is hereby entered into as of
the 24th day of June, 2010 and is
effective as of July 26, 2010 or such other date on or before
August 1, 2010 as may be mutually agreed by the parties (the “Effective Date”), by and between Armstrong World Industries,
Inc. (the “Company”) and Matthew Espe (“Executive”) (each hereinafter referred to as a “party” and
collectively as “the parties”).

In consideration of the respective agreements of the parties contained herein, it is agreed as
follows:

	1.	 	Term. The initial term of Executive’s employment under this Agreement shall be for
the period commencing on the Effective Date and ending, subject to earlier termination as set
forth in Section 6, on the third anniversary of the Effective Date (such term, as may be
hereafter extended, the “Employment Term”); provided, however, that commencing with the third
anniversary of the Effective Date and on each anniversary thereof (each an “Anniversary
Date”), the Employment Term shall be automatically renewed for one (1) additional year beyond
the term otherwise established, unless one party provides written notice to the other party,
at least ninety (90) days in advance of an Anniversary Date, of its intent not to renew the
Employment Term for an additional one year period.
	 
	2.	 	Employment. During the Employment Term:

	 	(a)	 	Executive shall (i) serve as the Chief Executive Officer of the Company, with
such authority, power, duties and responsibilities as are commensurate with such
position and as are customarily exercised by a person situated in a similar executive
capacity at a similar company, (ii) report directly to the Board of Directors of the
Company (the “Board”) and (iii) initially be appointed to serve as a member of the
Board and thereafter be nominated to serve on the Board.

	 	(b)	 	Executive shall devote his full-time business attention to the business and
affairs of the Company and he shall perform his duties faithfully and efficiently
subject to the directions of the Board. Executive may serve on civil or charitable
boards or committees as long as such service does not interfere with the performance of
his responsibilities hereunder and subject to the Company’s code of conduct and other
applicable policies as in effect from time to time. Executive may manage personal and
family investments and affairs, participate in industry organizations and deliver
lectures at educational institutions, so long as such activities do not interfere with
the performance of Executive’s responsibilities hereunder. Executive may also continue
to serve as a member of the two outside corporate board set forth on Exhibit A,
so long as such activities do not interfere with the performance of Executive’s
responsibilities hereunder.

	 	(c)	 	Executive shall be subject to and shall abide by each of the Company’s
personnel policies applicable to other senior executives.

 

 

 

	3.	 	Annual Compensation.

	 	(a)	 	Base Salary. The Company agrees to pay or cause to be paid to Executive
during the Employment Term a base salary at the annual rate of $980,000 or such
increased amount as the Board may from time to time determine (hereinafter referred to
as the “Base Salary”); provided, however, that the Base Salary may be reduced by no
more than 10% in connection with an across-the-board salary reduction by the Company
similarly affecting all senior executives of the Company. The Base Salary shall be
payable in accordance with the Company’s customary practices applicable to its
executives. Such Base Salary shall be reviewed at least annually by the Board or by
the Management Development and Compensation Committee of the Board (the “Committee”)
pursuant to the Company’s normal performance review policies for senior executives.

	 	(b)	 	Incentive Compensation. For each fiscal year of the Company ending
during the Employment Term, beginning with the 2010 fiscal year, Executive shall be
eligible to receive a target annual cash bonus of 100% of the Base Salary as in effect
on the final day of such fiscal year (such target bonus, as may hereafter be increased,
the “Target Bonus”) with the opportunity to receive a maximum annual cash bonus of 200%
of the Target Bonus, as approved by the Committee in its sole discretion, if the
Company and Executive achieve certain performance targets set by the Committee. Such
annual cash bonus (“Incentive Compensation”) shall be paid in no event later than the
15th day of the third month following the end of the taxable year (of the Company or
Executive, whichever is later) in which the performance targets have been achieved.
Notwithstanding the foregoing, Executive’s Incentive Compensation paid with respect to
the fiscal year ending December 31, 2010 will be equal to at least the Target Bonus as
prorated based on Executive’s actual full and partial months of employment.

	 	(c)	 	Long-Term Incentive Opportunity. To the extent the Company determines
to award stock options, restricted stock units or other similar consideration to
management personnel based upon duration of employment, status as an officer of the
Company or achievement of performance targets, or any combination of the foregoing,
Executive shall be eligible to participate in such programs. For each fiscal year
during the Employment Term, beginning with the fiscal year commencing on January 1,
2011, Executive shall be eligible to receive equity-based compensation, subject to the
terms and conditions set forth in the applicable plan and agreements, and in all cases,
as determined by the Committee in its sole discretion, based on the performance of the
Executive and/or the Company.

 

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	4.	 	Sign-On Compensation and Benefits.

	 	(a)	 	Replacement Restricted Cash Bonus. Executive shall be entitled to
receive a cash bonus of $3.452 million (the “Replacement Cash Bonus”) subject to
continued
employment through November 1, 2010 (the “Vesting Date”). The Replacement Cash
Bonus shall be settled in cash within ten (10) business days of the Vesting Date.

	 	(b)	 	Replacement Restricted Stock Unit Grant. On or as soon as practicable
following the Effective Date, the Company shall grant Executive a number of restricted
stock units (the “Replacement RSUs”) with a grant date value of $1.1 million,
calculated by dividing 1,100,000 by the fair market value of Company common stock on
the date of grant, as determined under the Company’s 2006 Long Term Incentive Plan.
The terms and conditions of such Replacement RSUs shall be as set forth in the form of
Restricted Stock Unit Award Agreement attached hereto as Exhibit B.

	 	(c)	 	Inducement Time-Vesting Stock Option Grant. On or as soon as
practicable following the Effective Date, the Company shall grant Executive stock
options to purchase a number of shares of Company stock (the “Inducement Stock Option”)
which have a grant date value of $3.5 million, determined using the Black-Scholes
valuation model consistent with FASB ASC Topic 718 and the methodology used by the
Company in connection with the preparation of its financial statements. The Inducement
Stock Option shall have a per share exercise price equal to the fair market value of
Company common stock on the date of grant, as determined under the Company’s 2006 Long
Term Incentive Plan, and shall be subject to the terms and conditions set forth in the
form of Nonqualified Stock Option Agreement attached hereto as Exhibit C.

	 	(d)	 	Inducement Price-Vesting Restricted Stock Unit Grant. On or as soon as
practicable following the Effective Date, the Company shall grant Executive a number of
performance-based restricted stock units (the “Inducement RSUs”) with a grant date
value of $1.5 million, calculated by dividing 1,500,000 by the fair market value of
Company common stock on the date of grant, as determined under the Company’s 2006 Long
Term Incentive Plan. The terms and conditions of such Inducement RSUs shall be as set
forth in the form of Restricted Stock Unit Award Agreement attached hereto as
Exhibit D.

	5.	 	Other Benefits.

	 	(a)	 	Employee Benefits. During the Employment Term, Executive shall be
entitled to participate in all employee benefit plans, practices and programs
maintained by the Company and made available to employees generally (other than plans
in effect on the date hereof that are closed to new participants), to the extent
Executive is eligible under the terms of such plans. Executive’s participation in such
plans, practices and programs shall be on the same basis and terms as are applicable to
employees of the Company generally.

 

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	 	(b)	 	Executive Benefits. During the Employment Term, Executive shall be
entitled to participate in such executive benefit plans now maintained or hereafter
established by the Company for the benefit of senior executives of the Company
generally, on the same basis and terms as are applicable to such senior executives
generally. No additional compensation provided under any of such plans shall be
deemed to modify or otherwise affect the terms of this Agreement or any of
Executive’s entitlements hereunder.

	 	(c)	 	Fringe Benefits and Perquisites. During the Employment Term, Executive
shall be entitled to such fringe benefits and perquisites as are generally made
available by the Company to all senior executives, on the same basis and terms as are
applicable to such senior executives generally.

	 	(d)	 	Business Expenses. Upon submission of proper invoices in accordance
with the Company’s policies, Executive shall be entitled to receive prompt
reimbursement of all reasonable out-of-pocket business, entertainment and travel
expenses incurred by Executive in connection with the performance of Executive’s duties
hereunder and otherwise incurred in accordance with the Company’s travel and
entertainment policy in effect from time to time. Such reimbursement shall be made as
soon as practicable and in no event later than the end of the calendar year following
the calendar year in which the expenses were incurred.

	 	(e)	 	Office and Facilities. During the Employment Term, Executive shall be
provided with an appropriate office at the Company’s headquarters, with such
secretarial and other support facilities as are commensurate with Executive’s status
with the Company and adequate for the performance of Executive’s duties hereunder.

	 	(f)	 	Vacation and Sick Leave. Executive shall be entitled, without loss of
pay, to absent himself voluntarily from the performance of Executive’s employment under
this Agreement, pursuant to the following:

	 	(i)	 	Executive shall be entitled to annual vacation in accordance
with the vacation policies of the Company as in effect from time to time, which
shall in no event be less than five weeks per year; and

	 	(ii)	 	Executive shall be entitled to sick leave (without loss of pay)
in accordance with the Company’s policies as in effect from time to time.

	6.	 	Termination. The Employment Term and Executive’s employment hereunder may be
terminated under the circumstances set forth below; provided, however, that notwithstanding
anything contained herein to the contrary, Executive shall not have any duties or
responsibilities to the Company after Executive’s termination of employment during the
Employment Term or upon expiration of the Employment Term that would preclude Executive from
having a “separation from service” from the Company within the meaning of Section 409A of the
Code, upon expiration of the Employment Term.

 

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	 	(a)	 	Disability. The Company may terminate the Employment Term and
Executive’s employment hereunder, on written notice to Executive after having
reasonably established Executive’s Disability. For purposes of this Agreement,
Executive
will be deemed to have a “Disability” if, as a result of the Executive’s incapacity
due to physical or mental illness, the Executive shall have been absent from the
full-time performance of the Executive’s duties with the Company for a period of six
(6) consecutive months, the Company shall have given the Executive a Notice of
Termination for Disability, and, within thirty (30) days after such Notice of
Termination is given, the Executive shall not have returned to the full-time
performance of the Executive’s duties. Executive shall be entitled to the
compensation and benefits provided for under this Agreement for any period prior to
Executive’s termination by reason of Disability during which Executive is unable to
work due to a physical or mental infirmity in accordance with the Company’s policies
for similarly-situated executives.

	 	(b)	 	Death. Employment Term and Executive’s employment hereunder shall be
terminated as of the date of Executive’s death.

	 	(c)	 	Cause. The Company may terminate Employment Term and Executive’s
employment hereunder for “Cause” by providing a Notice of Termination (as defined in
Section 7 below) that notifies Executive of his termination for Cause, effective as of
the date of such notice. “Cause” shall mean, for purposes of this Agreement: (a) the
deliberate and continued failure to substantially perform Executive’s duties and
responsibilities under this Agreement; (b) the criminal felony conviction of, or a plea
of guilty or nolo contendere by, Executive; (c) the material violation of Company
policy; (d) the act of fraud or dishonesty resulting or intended to result in personal
enrichment at the expense of the Company; (e) the gross misconduct in performance of
duties that results in material economic harm to the Company; or (f) the material
breach of this Agreement by Executive. Notwithstanding the foregoing, in order to
establish “Cause” for Executive’s termination for purposes of clauses (a) and (f)
above, the Company must deliver a written demand to Executive which specifically
identifies the conduct that may provide grounds for Cause, and the Executive must have
failed to cure such conduct within thirty (30) days after such demand. Reference in
this paragraph to the Company shall also include direct and indirect subsidiaries of
the Company.

	 	(d)	 	Without Cause. The Company may terminate the Employment Term and
Executive’s employment hereunder other than for Cause, Disability or death. The
Company shall deliver to Executive a Notice of Termination (as defined in Section 7
below) prior to such termination other than for Cause, Disability or death, which
notice shall specify the termination date.

 

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	 	(e)	 	Good Reason. Executive may terminate the Employment Term and his
employment hereunder with the Company for Good Reason (as defined below) by delivering
to the Company a Notice of Termination not less than thirty (30) days prior to such
termination for Good Reason. The Company shall have the option of terminating
Executive’s duties and responsibilities prior to the expiration of such thirty-day
notice period. For purposes of this Agreement, “Good Reason” means any of the
following: (a) a material diminution in Executive’s duties, title or position; (b) a
reduction of ten percent (10%) or more by the Company in the
Executive’s Base Salary except for across-the-board salary reductions similarly
affecting all senior executive officers of the Company; or (c) a material breach by
the Company of its obligations under this Agreement. Good Reason shall not exist
unless Executive shall provide notice of the existence of the Good Reason condition
within ninety (90) days of the date Executive learns of the condition. The Company
shall have a period of thirty (30) days during which it may remedy the condition,
and in case of full remedy such condition shall not be deemed to constitute Good
Reason hereunder.

	 	(f)	 	Without Good Reason. Executive may voluntarily terminate the
Employment Term and Executive’s employment hereunder without Good Reason by delivering
to the Company a Notice of Termination not less than ninety (90) days prior to such
termination and the Company shall have the option of terminating Executive’s duties and
responsibilities prior to the expiration of such ninety-day notice period.

	7.	 	Notice of Termination. Any purported termination by the Company or by Executive shall
be communicated by written Notice of Termination to the other party hereto. For purposes of
this Agreement, a “Notice of Termination” shall mean a notice that indicates a termination
date, the specific termination provision in this Agreement relied upon and sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated. For purposes of this Agreement, no
such purported termination of Executive’s employment hereunder shall be effective without such
Notice of Termination (unless waived by the party entitled to receive such notice, in the
manner described in Section 15(h)).

	8.	 	Compensation Upon Termination. Upon termination of Executive’s employment during the
Employment Term, Executive shall be entitled to the following benefits:

	 	(a)	 	Termination by the Company for Cause or by Executive Without Good
Reason. If Executive’s employment is terminated by the Company for Cause or by
Executive without Good Reason, the Company shall provide Executive with the following
payments and benefits (collectively, the “Accrued Compensation”):

	 	(i)	 	any accrued and unpaid Base Salary;

	 	(ii)	 	any Incentive Compensation earned but unpaid in respect of any
completed fiscal year preceding the termination date;

	 	(iii)	 	reimbursement for any and all monies advanced or expenses
incurred in connection with Executive’s employment for reasonable and necessary
expenses incurred by Executive on behalf of the Company for the period ending
on the termination date;

	 	(iv)	 	any accrued and unpaid vacation pay;

 

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	 	(v)	 	any previous compensation that Executive has previously
deferred (including any interest earned or credited thereon), in accordance
with the terms and conditions of the applicable deferred compensation plans or
arrangements then in effect, to the extent vested as of Executive’s termination
date; and

	 	(vi)	 	any amount or benefit as provided under any plan, program,
agreement or corporate governance document of the Company or its affiliates
that are then-applicable (the “Company Arrangements”), in accordance with the
terms thereof.

	 	(b)	 	Termination by the Company for Disability. If Executive’s employment is
terminated by the Company for Disability, Executive shall be entitled to:

	 	(i)	 	the Accrued Compensation; and

	 	(ii)	 	accelerated vesting of the Replacement Cash Bonus which shall
be paid within ten (10) business days of the accelerated vesting date.

	 	(c)	 	Termination By Reason of Death. If Executive’s employment is terminated
by reason of Executive’s death, Executive shall be entitled to:

	 	(i)	 	the Accrued Compensation; and

	 	(ii)	 	accelerated vesting of the Replacement Cash Bonus which shall
be paid within ten (10) business days of the accelerated vesting date.

	 	(d)	 	Termination by the Company Other Than for Cause, Disability or Death, or by
Executive with Good Reason. If Executive’s employment with the Company shall be
terminated (x) by the Company other than for Cause, Disability or death, or (y) by
Executive with Good Reason, Executive shall be entitled to the following payments and
benefits; provided that, in the case of clauses (ii), (iii) and (iv) below, Executive
shall have executed and not revoked a release of claims in substantially the form set
forth in Exhibit E hereto:

	 	(i)	 	the Accrued Compensation;

	 	(ii)	 	an amount equal to the product of (A) the Incentive
Compensation that Executive would have been entitled to receive in respect of
the fiscal year in which Executive’s termination date occurs, had Executive
continued in employment until the end of such fiscal year, which amount shall
be determined based on the Company’s actual performance for such year
relative to the Company performance goals applicable to Executive (but
without any exercise of negative discretion with respect to Executive in
excess of that applied either to senior executives of the Company generally
for the applicable performance period or in accordance with the Company’s
historical past practice), and (B) a fraction (x) the numerator of which is
the number of days in such fiscal year through termination date and (y) the
denominator of which is 365; such amount shall be payable in a cash lump sum
payment at the time such bonus or incentive awards are payable to other
participants (but no later than March 15 of the following calendar year);

 

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	 	(iii)	 	in lieu of any further Base Salary or other compensation or
benefits not described in clauses (i), (ii), (iv), or (v) for periods
subsequent to the termination date, an amount in cash, which amount shall be
payable in a lump sum payment within sixty (60) days following such
termination, equal to two (2) times Executive’s Base Salary; and

	 	(iv)	 	accelerated vesting of the Replacement Cash Bonus which shall
be paid within sixty (60) days following such termination; and

	 	(v)	 	the Company shall provide Executive and Executive’s dependents
with continued coverage under any health, medical, dental, vision or life
insurance program or policy in which Executive was eligible to participate as
of the time of Executive’s employment termination, for two (2) years following
such termination on terms no less favorable to Executive and Executive’s
dependents (including with respect to payment for the costs thereof) than those
in effect immediately prior to such termination, which coverage shall cease, on
a benefit-by benefit basis, once any coverage is made available to Executive by
a subsequent employer. COBRA continuation coverage shall run concurrently with
such two-year period. Anything herein to the contrary notwithstanding, the
terms of this Section 8(d)(v) shall be modified to the extent required to meet
the provisions of any federal law applicable to the healthcare plans and
arrangements of the Company, including to the extent required to maintain the
grandfathered status of such plans or arrangements under federal law. Any
failure to provide the coverage specified herein shall not in and of itself
constitute a breach of this Agreement, provided, however, that the Company
shall use its reasonable efforts to provide economically equivalent payments or
benefits to Executive to the extent possible without adverse effects on the
Company, to the extent permitted by law.

	 	(e)	 	Expiration of Employment Term After Notice of Non-Renewal by the
Company. If the Employment Term ends after the Company delivers a notice of
non-renewal (as described in Section 1), or upon expiration of Employment Term, whether
or
not Executive terminates employment, Executive shall not be entitled to severance
benefits hereunder.

	 	(f)	 	No Mitigation. Executive shall not be required to mitigate the amount
of any payment provided for under this Agreement by seeking other employment or
otherwise and, except as provided in Sections 8(d)(v) above, no such payment shall be
offset or reduced by the amount of any compensation or benefits provided to Executive
in any subsequent employment.

 

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	9.	 	Section 409A. Notwithstanding anything contained herein to the contrary, to the
extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A
of the Code, (i) no amounts shall be paid to Executive under Section 8 of this Agreement until
Executive would be considered to have incurred a separation from service from the Company
within the meaning of Section 409A of the Code, and (ii) amounts that would otherwise be
payable and benefits that would otherwise be provided pursuant to this Agreement during the
six-month period immediately following Executive’s separation from service shall instead be
paid on the first business day after the date that is six months following Executive’s
separation from service (or death, if earlier). Each amount to be paid or benefit to be
provided to Executive pursuant to this Agreement, which constitutes deferred compensation
subject to Section 409A, shall be construed as a separate identified payment for purposes of
Section 409A. To the extent required to avoid an accelerated or additional tax under Section
409A, amounts reimbursable to Executive under this Agreement shall be paid to Executive on or
before the last day of the year following the year in which the expense was incurred and the
amount of expenses eligible for reimbursement (and in-kind benefits provided to Executive)
during any one year may not effect amounts reimbursable or provided in any subsequent year;
provided, however, that with respect to any reimbursements for any taxes which Executive would
become entitled to under the terms of this Agreement, the payment of such reimbursements shall
be made by the Company no later than the end of the calendar year following the calendar year
in which Executive remits the related taxes.
	 
	10.	 	Records and Confidential Data.

	 	(a)	 	Executive acknowledges that in connection with the performance of Executive’s
duties during the Employment Term, the Company will make available to Executive, or
Executive will develop and have access to, certain Confidential Information (as defined
below) of the Company and its subsidiaries. Executive acknowledges and agrees that any
and all Confidential Information learned or obtained by Executive during the course of
Executive’s employment by the Company or otherwise, whether developed by Executive
alone or in conjunction with others or otherwise, shall be and is the property of the
Company and its subsidiaries.

	 	(b)	 	Executive shall keep confidential all Confidential Information, shall not use
Confidential Information in any manner that is detrimental to the Company, shall not
use Confidential Information other than in connection with Executive’s discharge of
Executive’s duties hereunder, and shall safeguard the Company from
unauthorized disclosure; provided, however, that Confidential Information may be
disclosed by Executive (i) to the Company and its affiliates, or to any authorized
agent or representative of any of them, (ii) in connection with performing his
duties hereunder, (iii) subject to Section 11(c), when required to do so by law or
by a court, governmental agency, legislative body, arbitrator or other person with
apparent jurisdiction to order him to divulge, disclose or make accessible such
information, provided that Executive notify the Company prior to such disclosure,
(iv) in the course of any proceeding under Sections 12 or 13 of this Agreement or
(v) in confidence to an attorney or other professional advisor for the purpose of
securing professional advice, so long as such attorney or advisor is subject to
confidentiality restrictions no less restrictive than those applicable to Executive
hereunder.

 

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	 	(c)	 	As soon as possible following the termination of Executive’s employment
hereunder, Executive shall return to the Company all written Confidential Information
that is in his possession or control and destroy all of his copies of any analyses,
compilations, studies or other documents containing or reflecting any Confidential
Information. Within five (5) business days of the receipt of such request by Executive,
Executive shall, upon written request of the Company, deliver to the Company a document
certifying that such written Confidential Information has been returned or destroyed in
accordance with this Section 10(c).

	 	(d)	 	For the purposes of this Agreement, “Confidential Information” shall mean all
confidential and proprietary information of the Company and its subsidiaries,
including, without limitation,

	 	(i)	 	trade secrets concerning the business and affairs of the
Company and its subsidiaries, product specifications, data, know-how, formulae,
compositions, processes, non-public patent applications, designs, sketches,
photographs, graphs, drawings, samples, inventions and ideas, past, current,
and planned research and development, current and planned manufacturing or
distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code), computer
software and database technologies, systems, structures, and architectures (and
related formulae, compositions, processes, improvements, devices, know-how,
inventions, discoveries, concepts, ideas, designs, methods and information);

	 	(ii)	 	information concerning the business and affairs of the Company
and its subsidiaries (which includes unpublished financial statements,
financial projections and budgets, unpublished and projected sales, capital
spending budgets and plans, the names and backgrounds of key personnel, to the
extent not publicly known, personnel training and techniques and materials)
however documented; and

	 	(iii)	 	notes, analysis, compilations, studies, summaries, and other
material prepared by or for the Company or its subsidiaries containing or
based, in whole or in part, on any information included in the foregoing. For
purposes of this Agreement, the Confidential Information shall not include and
Executive’s obligations shall not extend to (i) information that is generally
available to the public, (ii) information obtained by Executive other than
pursuant to or in connection with this employment and (iii) information that is
required to be disclosed by law or legal process.

 

10

 

	11.	 	Covenant Not to Solicit, Not to Compete, Not to Disparage and to Cooperate in
Litigation.

	 	(a)	 	Covenant Not to Solicit. To protect the Confidential Information and
other trade secrets of the Company as well as the goodwill and competitive business of
the Company, Executive agrees, during the Employment Term and for a period of
twenty-four (24) months after Executive’s cessation of employment with the Company, (i)
not to solicit or participate in or assist in any way in the solicitation of any
employees of the Company (ii) not to solicit, influence or attempt to influence any
person who was a customer of the Company or its affiliates during the period of
Executive’s employment hereunder or solicit, influence or attempt to influence
potential customers who are or were identified through leads developed during the
course of employment with the Company, or otherwise divert or attempt to divert any
existing business of the Company and its affiliates. For purposes of clause (i) of
this covenant, “solicit” or “solicitation” means directly or indirectly influencing or
attempting to influence employees of the Company to cease employment with the Company
(except in the course of Executive’s duties to the Company) or to become employed with
any other person, partnership, firm, corporation or other entity, provided, that
solicitation through general advertising not targeted at the Company’s employees or the
provision of references shall not constitute a breach of such obligations. Executive
agrees that the covenants contained in this Section 11(a) are reasonable and desirable
to protect the Confidential Information of the Company.
	 
	 	(b)	 	Covenant Not to Compete.

	 	(i)	 	To protect the Confidential Information and other trade secrets
of the Company as well as the goodwill and competitive business of the Company,
Executive agrees, during the Employment Term and for a period of twenty-four
(24) months after Executive’s cessation of employment with the Company, that
Executive will not, except in the course of Executive’s employment hereunder,
directly or indirectly for the Executive or any third party, manage, operate,
control, or participate in the management, operation, or control of, be
employed by, associated with, or in any manner connected with, lend Executive’s
name to, or render services or advice to, any third party, or any business,
whose products compete (including as described below) with the material
products of the
Company; provided, however, that Executive may in any event (x) own
up to a 5% passive ownership interest in any public or private entity, and
(y) be employed by, or otherwise have material association with, any
business whose products compete with the material products of the Company so
long as his employment or association is solely with a separately managed
and operated division or affiliate of such business that does not compete
with the Company.

 

11

 

	 	(ii)	 	For purposes of this Section 11(b), any third party, or any
business, whose products compete includes any entity engaged in any business or
activity which is directly in competition with any services or products sold
by, or any business or activity engaged in by, the Company or any of its
affiliates, or any entity with which the Company has a product(s) licensing
agreement at the end of the Employment Term and any entity with which the
Company is, at the time of termination, negotiating, and eventually concludes
within twelve (12) months of the Employment Term, a product licensing or
acquisition agreement.

	 	(c)	 	Cooperation in Any Investigations and Litigation. Executive agrees
that Executive will reasonably cooperate with the Company, and its counsel, in
connection with any investigation, inquiry, administrative proceeding or litigation
relating to any matter in which Executive becomes involved or of which Executive has
knowledge as a result of Executive’s service with the Company by providing truthful
information. The Company agrees to promptly reimburse Executive for reasonable
expenses (including attorneys fees and other expenses of counsel) reasonably incurred
by Executive, in connection with Executive’s cooperation pursuant to this Section
11(c). Such reimbursements shall be made as soon as practicable, and in no event later
than the calendar year following the year in which the expenses are incurred.
Executive agrees that, in the event Executive is subpoenaed by any person or entity
(including, but not limited to, any government agency) to give testimony (in a
deposition, court proceeding or otherwise) which in any way relates to Executive’s
employment by the Company, Executive will, to the extent not legally prohibited from
doing so, give prompt notice of such request to the General Counsel of the Company so
that the Company may contest the right of the requesting person or entity to such
disclosure before making such disclosure. Nothing in this provision shall require
Executive to violate Executive’s obligation to comply with valid legal process.

	 	(d)	 	Nondisparagement. Executive covenants that during and following the
Employment Term, Executive will not disparage or encourage or induce others to
disparage the Company or its subsidiaries, together with all of their respective past
and present directors and officers, as well as their respective past and present
managers, officers, shareholders, partners, employees, agents, attorneys, servants and
customers and each of their predecessors, successors and assigns (collectively, the
“Company Entities and Persons”); provided that such limitation
shall extend to past and present managers, officers, shareholders, partners,
employees, agents, attorneys, servants and customers only in their capacities as
such or in respect of their relationship with the Company and its subsidiaries.
Nothing in this Agreement is intended to or shall prevent Executive 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, or in arbitration under Section 13.

 

12

 

	 	(e)	 	Blue Pencil. It is the intent and desire of Executive and the Company
that the provisions of this Section 11 be enforced to the fullest extent permissible
under the laws and public policies as applied in each jurisdiction in which enforcement
is sought. If any particular provision of this Section 11 shall be determined to be
invalid or unenforceable, such covenant shall be amended, without any action on the
part of either party hereto, to delete therefrom the portion so determined to be
invalid or unenforceable, such deletion to apply only with respect to the operation of
such covenant in the particular jurisdiction in which such adjudication is made.

	 	(f)	 	Survival. Executive’s obligations under this Section 11 shall survive
the termination of the Employment Term.

	12.	 	Remedies for Breach of Obligations under Sections 10 or 11 hereof. Executive
acknowledges that the Company will suffer irreparable injury, not readily susceptible of
valuation in monetary damages, if Executive breaches Executive’s obligations under Sections 10
or 11 hereof. Accordingly, Executive agrees that the Company will be entitled, in addition to
any other available remedies, to obtain injunctive relief against any breach or prospective
breach by Executive of Executive’s obligations under Sections 10 or 11 hereof in any Federal
or state court sitting in the Commonwealth of Pennsylvania, or, at the Company’s election, in
any other state in which Executive maintains Executive’s principal residence or Executive’s
principal place of business. Executive hereby submits to the non-exclusive jurisdiction of
all those courts for the purposes of any actions or proceedings instituted by the Company to
obtain that injunctive relief, and Executive agrees that process in any or all of those
actions or proceedings may be served by registered mail, addressed to the last address
provided by Executive to the Company, or in any other manner authorized by law.

	13.	 	Resolution of Disputes. Any claim or dispute arising out of or relating to this
Agreement, any other Company Arrangement, Executive’s employment with the Company, or any
termination thereof (collectively, “Covered Claims”) shall (except to the extent
otherwise provided in Section 12 with respect to certain requests for injunctive relief) be
resolved by binding confidential arbitration, to be held in Philadelphia, Pennsylvania, in
accordance with the rules for the resolution of employment law disputes of the American
Arbitration Association and this Section 13. Judgment upon such award may be entered in any
court having jurisdiction thereof. Each party shall bear its (or his) own costs, including,
without limitation, the fees and expenses of its (or his) own attorney, and the fees and
expenses of the arbitrator shall be borne equally by each party.

 

13

 

	14.	 	Representations and Warranties.

	 	(a)	 	The Company represents and warrants that (i) it is fully authorized by action
of the Board of Directors of the Company (and of any other person or body whose action
is required) to enter into this Agreement and to perform its obligations under it, (ii)
the execution, delivery and performance of this Agreement by it does not violate any
applicable law, regulation, order, judgment or decree or any agreement, arrangement,
plan or corporate governance document (x) to which it is a party or (y) by which it is
bound, and (iii) upon the execution and delivery of this Agreement by the parties, this
Agreement shall be its valid and binding obligation, enforceable against it in
accordance with its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally.

	 	(b)	 	Executive represents and warrants to the Company that Executive is not a party
to or otherwise bound by any agreement or arrangement (including, without limitation,
any license, covenant, or commitment of any nature), or subject to any judgment,
decree, or order of any court or administrative agency, that would conflict with or
will be in conflict with or in any way preclude, limit or inhibit Executive’s ability
to execute this Agreement or to carry out Executive’s duties and responsibilities
hereunder.

	15.	 	Miscellaneous.

	 	(a)	 	Successors and Assigns.

	 	(i)	 	This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and permitted assigns and the Company
shall require any successor or assign to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession or assignment had taken place. The
Company may not assign or delegate any rights or obligations hereunder except
to a successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the
Company. The term “the Company” as used herein shall include a corporation or
other entity acquiring all or substantially all the assets and business of the
Company (including this Agreement) whether by operation of law or otherwise.

	 	(ii)	 	Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by Executive, Executive’s beneficiaries or
legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by Executive’s legal personal representatives.

 

14

 

	 	(b)	 	Fees and Expenses. The Company shall pay reasonable and documented
legal fees and related expenses, up to a maximum amount of $25,000, incurred by
Executive in connection with the negotiation of this Agreement. Such
reimbursement shall be made as soon as practicable, but in no event later than the
end of the calendar year following the calendar year in which the expenses were
incurred.

	 	(c)	 	Indemnification. The Company shall indemnify Executive as provided in
Company’s by-laws and Certificate of Incorporation.

	 	(d)	 	Right to Counsel. Executive acknowledges that Executive has had the
opportunity to consult with legal counsel of Executive’s choice in connection with the
drafting, negotiation and execution of this Agreement and related employment
arrangements.

	 	(e)	 	Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of Termination)
shall be in writing and shall be deemed to have been duly given when personally
delivered or sent by Certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to the other, provided
that all notices to the Company shall be directed to the attention of the General
Counsel of the Company. All notices and communications shall be deemed to have been
received on the date of delivery thereof or on the third business day after the mailing
thereof, except that notice of change of address shall be effective only upon receipt.

	 	(f)	 	Withholding. The Company shall be entitled to withhold the amount, if
any, of all taxes of any applicable jurisdiction required to be withheld by an employer
with respect to any amount paid to Executive hereunder. The Company, in its sole and
absolute discretion, shall make all determinations as to whether it is obligated to
withhold any taxes hereunder and the amount hereof.

	 	(g)	 	Modification. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and
signed by Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement.

	 	(h)	 	Effect of Other Law. Anything herein to the contrary notwithstanding,
the terms of this Agreement shall be modified to the extent required to meet the
provisions of any federal law applicable to the employment arrangements between
Executive and the Company. Any delay in providing benefits or payments, any failure to
provide a benefit or payment, or any repayment of compensation that is required under
the preceding sentence shall not in and of itself constitute a breach of this
Agreement, provided, however, that the Company shall provide economically equivalent
payments or benefits to Executive to the extent permitted by law.

 

15

 

	 	(i)	 	Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania applicable to
contracts executed in and to be performed entirely within such Commonwealth, without
giving effect to the conflict of law principles thereof.

	 	(j)	 	Inconsistencies. In the event of any inconsistency between any
provision of this Agreement and any provision of any employee handbook, personnel
manual, program, policy, or arrangement of the Company or its affiliates (including,
without limitation, any provisions relating to notice requirements and post-employment
restrictions), the provisions of this Agreement shall control, unless the parties
otherwise agree in a writing that expressly refers to the provision of this Agreement
whose control he is waiving.

	 	(k)	 	Beneficiaries/References. In the event of Executive’s death or a
judicial determination of his incompetence, references in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal
representative.

	 	(l)	 	Survivorship. Except as otherwise set forth in this Agreement, the
respective rights and obligations of the parties hereunder shall survive the Employment
Term and any termination of the Executive’s employment.

	 	(m)	 	Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.

	 	(n)	 	Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any, understandings
and arrangements, oral or written, between the parties hereto with respect to the
subject matter hereof; provided, however, that this Agreement shall not supercede the
Change in Control Agreement between the Company and the Executive dated as of the day
and year first above written (the “Change in Control Agreement”). Notwithstanding
anything to the contrary contained herein, no payments shall be made (nor benefits
provided) under Section 8 of this Agreement in the event that the Executive is entitled
to payments or benefits under the Change in Control Agreement.

	 	(o)	 	Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this Agreement and
all of which, when taken together, will be deemed to constitute one and the same
agreement.

 

16

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer and Executive has executed this Agreement as of the day and year first above
written.

	 	 	 	 	 
	 	ARMSTRONG WORLD INDUSTRIES, INC.

 	 
	 	By:  	/s/ Jeffrey D. Nickel	 
	 	 	Name:  	Jeffrey D. Nickel 	 
	 	 	Title:  	Senior VP, Secretary & General Counsel 	 
	 
	 	MATTHEW ESPE

 	 
	 	/s/ Matthew Espe	 

 

17

 

EXHIBIT A

Current Board Memberships

Unisys Corporation

Graphic Packaging Holding Company

 

1

 

	 	 	 
	

	 	ARMSTRONG WORLD INDUSTRIES, INC.

2500 COLUMBIA AVE., LANCASTER, PA 17603

P.O. BOX 3001, LANCASTER, PA 17604

www.armstrong.com

Exhibit B

(Replacement Restricted Stock Unit Award)

{   }, 2010         

Mr. Matthew Espe

Subject: Long-Term Incentive Plan Restricted Stock Unit Award

Dear Matthew:

This letter is to inform you that Armstrong’s Management Development and Compensation
Committee granted you the following long-term incentive equity grant effective {   }, 2010:

{xxxxx} Restricted Stock Units

The award is subject to the terms of the 2006 Long-Term Incentive Plan and this grant letter.

Restricted Period. The restrictions will lapse and the restricted stock units will
vest in three installments at one, two and three years following grant as follows: {xxxx}
shares on {   }, 2011; {xxx} shares on {   }, 2012; and {xxx} shares on {   }, 2013. The
restricted stock units will be paid in stock within sixty (60) days of the applicable vesting
date.

Taxes. The company will use share tax withholding to satisfy your tax obligations
unless you provide a payment to cover the taxes.

Employment Events. The following chart outlines the provisions which apply to the
grant for various employment events.

	 	 	 
	 	 	Restricted Stock Unit
	Event	 	Provisions
	Voluntary resignation

	 	•    Forfeit unvested units

	Termination for Cause (as defined in
the Employment Agreement between you
and the Company dated June
 _____, 2010
(the “Employment Agreement”))

	 	•    Forfeit unvested units

	Involuntary termination without Cause

	 	•    Accelerated vesting

	Voluntary termination for Good Reason

(as defined in Employment Agreement)

	 	•    Accelerated vesting

 

1

 

	 	 	 
	 	 	Restricted Stock Unit
	Event	 	Provisions
	Death

	 	•    Accelerated vesting

	Long-Term disability

	 	•    Accelerated vesting

	Change in Control

	 	•    Accelerated vesting upon
failure of continuing or
successor entity to assume or
replace awards with new awards
of equivalent value

•    Accelerated vesting of
assumed or replaced award upon
involuntary termination without
Cause (as defined in the Change
in Control Agreement between you
and the Company dated June
 _____, 2010 (the “Change in Control
Agreement”)) or voluntary
termination for Good Reason (as
defined in the Change in Control
Agreement) within 24 months of a
Change in Control

Dividends. If the company makes cash dividend payments during the restriction
period, the value of the dividends will accrue in a non-interest bearing account. You will
receive a cash payment for the accrued dividends at the end of the restriction period. The
payment would be adjusted proportionate to the earned shares.

Please contact Eileen Beck (ext. 4050) if you have questions.

Sincerely,

Jeffrey D. Nickel

Senior Vice President, General Counsel & Secretary

Enclosure

    2006 Long-Term Incentive Plan

 

2

 

	 	 	 
	

	 	ARMSTRONG WORLD INDUSTRIES, INC.

2500 COLUMBIA AVE., LANCASTER, PA 17603 

P.O. BOX 3001, LANCASTER, PA 17604

www.armstrong.com

Exhibit C

(Inducement Stock Option Award)

{   }, 2010   

Mr. Matthew Espe

Subject: Long-Term Incentive Plan Nonqualified Stock Options

Dear Matthew:

This letter is to inform you that Armstrong’s Management Development and Compensation
Committee granted you the following long-term incentive equity grant effective {   }, 2010:

{xxxxx} Stock Options

The award is subject to the terms of the 2006 Long-Term Incentive Plan and this grant letter.

Stock Options

Each Stock Option entitles you to purchase one share of AWI common stock at an exercise price
equal to ${   }, the New York Stock Exchange closing price of AWI stock on {Date of Grant},
2010. You may pay the option exercise price in cash or by delivering shares of AWI stock you
have owned for at least six months.

The options are non-qualified and have a ten-year term starting {   }, 2010. They will vest
and become exercisable in three installments at one, two and three years following the date
of grant as follows: {xxxx} shares on {   }, 2011; {xxx} shares on {   }, 2012; and {xxx}
shares on {   }, 2013.

 

1

 

Employment Events

The following chart outlines the provisions which apply to the grant for various employment
events.

	 	 	 
	Event	 	Stock Option Provisions
	Voluntary resignation

	 	•    Forfeit vested and unvested options

	Termination for Cause (as defined in
the Employment Agreement between you
and the Company dated June
 _____, 2010
(the “Employment Agreement”))

	 	•    Forfeit vested and unvested options

	Retirement

	 	•    Forfeit unvested options

•    [ ] to exercise vested options (not to exceed original term)

	Involuntary termination without Cause

	 	•    Forfeit unvested options

•    3 years to exercise vested options (not to exceed original term)

	Voluntary termination for Good 

Reason (as defined in employment agreement)

	 	•    Forfeit unvested options

•    3 years to exercise vested options (not to exceed original term) 

	Death

	 	•    Accelerated vesting

•    3 years to exercise vested options (not to exceed original term)

	Long-Term disability

	 	•    Accelerated vesting

•    3 years to exercise vested options (not to exceed original term)

	Change in Control

	 	•    Accelerated vesting upon failure of continuing entity to assume
or replace awards with new awards of equivalent value

•    Accelerated vesting of, and 3 years to exercise, assumed or
replaced award upon involuntary termination without Cause (as defined
in the Change in Control Agreement between you and the Company dated
June
 _____, 2010 (the “Change in Control Agreement”)) or voluntary
termination for Good Reason (as defined in the Change in Control
Agreement) within 24 months of a Change in Control

Please contact Eileen Beck (ext. 4050) if you have questions.

Sincerely,

Jeffrey D. Nickel

Senior Vice President, General Counsel & Secretary

Enclosure

     2006 Long-Term Incentive Plan

 

2

 

	 	 	 
	

	 	ARMSTRONG WORLD INDUSTRIES, INC.

2500 COLUMBIA AVE., LANCASTER, PA 17603

P.O. BOX 3001, LANCASTER, PA 17604

www.armstrong.com

Exhibit D

(Inducement RSU Award)

{   }, 2010   

Mr. Matthew Espe

Subject: Long-Term Incentive Plan Restricted Stock Unit Award

Dear Matthew:

This letter is to inform you that Armstrong’s Management Development and Compensation
Committee granted you the following long-term incentive equity grant effective {   }, 2010:

{xxxxx} Restricted Stock Units

The award is subject to the terms of the 2006 Long-Term Incentive Plan and this grant letter.

Restricted Period. The restrictions will lapse and the restricted stock units will
become fully vested if the targeted stock price as described below (“Stock Price Target”) has
been achieved as of the applicable vesting date (“Time Vesting Date”) described below: (A)
50% of the restricted stock units will vest on December 31, 2012 IF the Stock Price Target of
$55.00 has been achieved; (B) 50% of the restricted stock units will vest on December 31,
2013 IF the Stock Price Target of $70.00 has been achieved; and (C) if the restricted stock
units do not vest in accordance with clause (A) and/or clause (B), the restricted stock units
will vest when the applicable Stock Price Target is achieved, but only if they are achieved
no later than December 31, 2014. To the extent that, as of December 31, 2014, the applicable
Stock Price Targets set forth above have not been met, the restricted stock units shall be
forfeited.

The company’s closing stock price must be equal to or above the Stock Price Target for
fifteen (15) trading days in a twenty (20) consecutive trading day period at any time prior
to the applicable Time Vesting Date (or by December 31, 2014) for awards to become vested.

The restricted stock units will be paid in stock within sixty (60) days of the applicable
vesting event.

The following chart outlines the vesting schedule:

	 	 	 	 	 
	Stock Price Target	 	Time Vesting Date	 	# (%) of RSUs Vesting
	$55
	 	12/31/12
	 	[   ] (50%)
	$70
	 	12/31/13
	 	[   ] (50%)

 

1

 

Taxes. The company will use share tax withholding to satisfy your tax obligations
unless you provide a payment to cover the taxes.

Employment Events. The following chart outlines the provisions which apply to the
grant for various employment events.

	 	 	 
	 	 	Restricted Stock Unit
	Event	 	Provisions
	Voluntary resignation

	 	•    Forfeit unvested units

	Termination for Cause (as defined in
the Employment Agreement between you
and the Company dated June
 _____, 2010
(the “Employment Agreement”))

	 	•    Forfeit unvested units

	Involuntary termination without Cause

	 	•    If Stock Price Targets have been achieved, vesting accelerates

•    If Stock Price Targets have not been achieved, forfeiture of unvested awards

	Voluntary termination for Good
Reason (as defined in Employment
Agreement)

	 	•    If Stock Price Targets have been achieved, vesting accelerates

•    If Stock Price Targets have not been achieved, forfeiture of unvested awards

	Death

	 	•    If Stock Price Targets have been achieved, vesting accelerates

•    If Stock Price Targets have not been achieved, pro-rata vesting

	Long-Term disability

	 	•    If Stock Price Targets have been achieved, vesting accelerates

•    If Stock Price Targets have not been achieved, pro-rata vesting

 

2

 

	 	 	 
	 	 	Restricted Stock Unit
	Event	 	Provisions
	Change in Control

	 	•    If Stock Price Targets have been achieved, accelerated vesting upon failure
of continuing entity to assume or replace awards with new awards of equivalent
value

•    If Stock Price Targets have been achieved and awards have been assumed or
replaced, accelerated vesting of awards upon involuntary termination without Cause
(as defined in the Change in Control Agreement between you and the Company dated
June
 _____, 2010 (the “Change in Control Agreement”)) or voluntary termination for
Good Reason (as defined in the Change in Control Agreement) within 24 months of a
Change in Control

•    If Stock Price Targets have not been achieved, forfeiture of unvested awards

Dividends. If the company makes cash dividend payments during the restriction
period, the value of the dividends will accrue in a non-interest bearing account. You will
receive a cash payment for the accrued dividends at the end of the restriction period. The
payment would be adjusted proportionate to the earned shares.

Please contact Eileen Beck (ext. 4050) if you have questions.

Sincerely,

Jeffrey D. Nickel

Senior Vice President, General Counsel & Secretary

Enclosure

     2006 Long-Term Incentive Plan

 

3

 

EXHIBIT E

FORM OF RELEASE AGREEMENT

THIS RELEASE AGREEMENT (the “Release”) is made as of this
 _____ 

day of
 _____,
 _____, by and
between Matthew Espe (“Executive”) and Armstrong World Industries, Inc. (the “Company”).

	1.	 	FOR AND IN CONSIDERATION of the payments and benefits provided in the Employment Agreement
between Executive and the Company dated as of
 _____ __, 2010, (the “Employment Agreement”),
Executive, for himself or herself, his or her successors and assigns, executors and
administrators, now and forever hereby releases and discharges the Company, together with all
of its past and present parents, subsidiaries, and affiliates, together with each of their
officers, directors, stockholders, partners, employees, agents, representatives and attorneys,
and each of their subsidiaries, affiliates, estates, predecessors, successors, and assigns
(hereinafter collectively referred to as the “Releasees”) from any and all rights,
claims, charges, actions, causes of action, complaints, sums of money, suits, debts,
covenants, contracts, agreements, promises, obligations, damages, demands or liabilities of
every kind whatsoever, in law or in equity, whether known or unknown, suspected or
unsuspected, which Executive or Executive’s executors, administrators, successors or assigns
ever had, now has or may hereafter claim to have by reason of any matter, cause or thing
whatsoever; arising from the beginning of time up to the date of the Release: (i) relating in
any way to Executive’s employment relationship with the Company or any of the Releasees, or
the termination of Executive’s employment relationship with the Company or any of the
Releasees; (ii) arising under or relating to the Employment Agreement; (iii) arising under any
federal, local or state statute or regulation, including, without limitation, the Age
Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection
Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990,
the Employee Retirement Income Security Act of 1974, and/or the applicable state law against
discrimination, each as amended; (iv) relating to wrongful employment termination or breach of
contract; or (v) arising under or relating to any policy, agreement, understanding or promise,
written or oral, formal or informal, between the Company and any of the Releasees and
Executive; provided, however, that notwithstanding the foregoing, nothing
contained in the Release shall in any way diminish or impair: (i) the Executive’s ability to
enforce the provisions of Section 8(d)(v) of the Employment Agreement, (ii) any direct or
indirect holdings of equity in Armstrong World Industries, Inc. or any vested awards (or
awards which may vest) which Executive has under any equity, equity-based, stock option or
similar plan, agreement or program, which equity and awards shall be subject to all the terms
and conditions of such documents; (iii) any claims for accrued and vested benefits under any
of the Company’s employee retirement and welfare benefit plans; and (iv) any rights or claims
Executive may have that cannot be waived under applicable law; (collectively, the
“Excluded Claims”). Executive further acknowledges and agrees that, except with
respect to Excluded Claims, the Company and the Releasees have fully satisfied any and all
obligations whatsoever owed to Executive arising out of Executive’s employment with the
Company or any of the Releasees, and that no further payments or benefits are owed to
Executive by the Company or any of the Releasees.

 

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	2.	 	Executive understands and agrees that, except for the Excluded Claims, Executive has
knowingly relinquished, waived and forever released any and all rights to any personal
recovery in any action or proceeding that may be commenced on Executive’s behalf arising out
of the aforesaid employment relationship or the termination thereof, including, without
limitation, claims for back pay, front pay, liquidated damages, compensatory damages, general
damages, special damages, punitive damages, exemplary damages, costs, expenses and attorneys’
fees.

	3.	 	Executive acknowledges and agrees that Executive has been advised to consult with an attorney
of Executive’s choosing prior to signing the Release. Executive understands and agrees that
Executive has the right and has been given the opportunity to review the Release with an
attorney of Executive’s choice should Executive so desire. Executive also agrees that
Executive has entered into the Release freely and voluntarily. Executive further acknowledges
and agrees that Executive has had at least forty-five (45) calendar days to consider the
Release, although Executive may sign it sooner if Executive wishes. In addition, once
Executive has signed the Release, Executive shall have seven (7) additional days from the date
of execution to revoke Executive’s consent and may do so by writing to: Armstrong World
Industries, Inc., P.O. Box 3001, Lancaster, Pennsylvania 17604, Attention: General Counsel.
The Release shall not be effective, and no payments shall be due under the Employment
Agreement, until the eighth (8th) day after Executive shall have executed the Release and
returned it to the Company, assuming that Executive had not revoked Executive’s consent to the
Release prior to such date.

	4.	 	It is understood and agreed by Executive that the payment made to Executive is not to be
construed as an admission of any liability whatsoever on the part of the Company or any of the
other Releasees, by whom liability is expressly denied.

	5.	 	The Release is executed by Executive voluntarily and is not based upon any representations or
statements of any kind made by the Company or any of the other Releasees as to the merits,
legal liabilities or value of Executive’s claims. Executive further acknowledges that
Executive has had a full and reasonable opportunity to consider the Release and that Executive
has not been pressured or in any way coerced into executing the Release.

	6.	 	The exclusive venue for any disputes arising hereunder shall be the state or federal courts
located in the Commonwealth of Pennsylvania, and each of the parties hereto irrevocably
waives, to the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an inconvenient forum.
Each of the parties hereto also agrees that any final and unappealable judgment against a
party hereto in connection with any action, suit or other proceeding may be enforced in any
court of competent jurisdiction, either within or
outside of the United States. A certified or exemplified copy of such award or judgment
shall be conclusive evidence of the fact and amount of such award or judgment.

 

2

 

	7.	 	The Release and the rights and obligations of the parties hereto shall be governed and
construed in accordance with the laws of the Commonwealth of Pennsylvania. If any provision
hereof is unenforceable or is held to be unenforceable, such provision shall be fully
severable, and this document and its terms shall be construed and enforced as if such
unenforceable provision had never comprised a part hereof, the remaining provisions hereof
shall remain in full force and effect, and the court construing the provisions shall add as a
part hereof a provision as similar in terms and effect to such unenforceable provision as may
be enforceable, in lieu of the unenforceable provision.

	8.	 	The Release shall inure to the benefit of and be binding upon the Company and its successors
and assigns.

IN WITNESS WHEREOF, Executive and the Company have executed the Release as of the date and year
first written above.

	 	 	 	 	 
	 	ARMSTRONG WORLD INDUSTRIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	MATTHEW ESPE

 	 
	 	 	 	 

 

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