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                                                                   EXHIBIT 10(b)

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made as of August 7, 2000 (the "Agreement"),
by and among Armstrong Holdings, Inc., a Pennsylvania corporation (the
"Company"), and Frank A. Riddick III, an individual and resident of Lancaster
County, Pennsylvania (the "Executive");

                                   WITNESSETH:

     WHEREAS, the Executive is currently serving as the Chief Operating Officer
of the Company; and

     WHEREAS, the Company desires to provide for the continued employment of the
Executive and the Executive desires to serve the Company, in each case, on the
terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

1.   DEFINED TERMS.
     -------------

     The definitions of capitalized terms used in this Agreement, unless
otherwise defined herein, are provided in the last Section hereof.

2.   EMPLOYMENT.
     ----------

     The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to serve the Company and its subsidiaries and affiliates, on the terms
and conditions set forth herein, during the Term of this Agreement.

3.   TERM OF AGREEMENT.
     -----------------

     The Term will commence on the date first above written (the "Effective
Date") and shall continue until the third anniversary of the Effective Date
Time; provided, that commencing on the second anniversary of the Effective Date
and on each succeeding anniversary thereafter, the Term of this Agreement shall
automatically be extended for one (1) additional year unless the Company or the
Executive shall have given written notice to the other at least 180 days prior
to any such anniversary date to the effect that the Term of this Agreement shall
not be extended. Notwithstanding anything in this Agreement to the contrary, the
Company may terminate this Agreement in the event of Executive's Disability;
provided, that any such termination shall not, by itself, terminate the
Executive's employment with the Company.

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4.   POSITION AND DUTIES.
     -------------------

     During the Term of this Agreement, the Executive shall serve as President
and Chief Operating Officer of the Company and shall also serve in any other
executive officer position of the Company or its subsidiaries and affiliates as
the Board may reasonably request. The Executive shall be the chief operating
officer of the Company and shall have such duties and responsibilities as are
customary for the Executive's position and such other duties not inconsistent
therewith as the Board of Directors may reasonably assign from time to time.
During the Term of this Agreement, excluding any periods of vacation and sick
leave to which the Executive is entitled under the Company's policies and
practices (as the same may be increased in the future), the Executive shall
devote substantially all his working time and efforts to the business and
affairs of the Company and its subsidiaries and affiliates and shall diligently
and faithfully perform his duties to the best of his ability; provided, however,
that the Executive may engage in activities relating to personal matters
(including personal financial matters) and in such corporate, industry, civic
and charitable activities, including membership on corporate and charitable
boards of directors or trustees of non-affiliated companies and organizations,
so long as such service does not substantially interfere with the performance of
his duties hereunder or violate his obligations under Section 10 hereof.

5.   COMPENSATION AND RELATED MATTERS.
     --------------------------------

     5.1 HIRING COMPENSATION. On the Effective Date, the Company shall grant the
         -------------------
Executive 50,000 shares of restricted Common Stock under the Company's Stock
Award Plan, which shares of restricted Common Stock shall vest and shall become
free of restrictions in equal annual installments on the first, second and third
anniversary of the Effective Date. The Executive shall have the opportunity to
make a voluntary deferral election prior to the lapse of the restrictions on
such Common Stock.

     5.2 BASE SALARY. The Company shall pay, or cause to be paid, to the
         -----------
Executive an annual base salary ("Base Salary") during the Term of this
Agreement, which shall be at an initial rate of not less than $600,000 per year.
The Base Salary shall be paid in accordance with the Company's payroll practices
for its senior officers, but not less frequently than monthly, in arrears. For
purposes of this Agreement, "Base Salary" shall include any increases in Base
Salary during the Term of this Agreement. The Base Salary in effect from time to
time shall not be decreased during the Term of this Agreement except in
connection with across-the-board salary reductions similarly affecting all
senior officers of the Company and all senior officers of any person in control
of the Company which have been agreed to by the Executive. Compensation of the
Executive by Base Salary payments shall not be deemed exclusive and shall not
prevent the Executive from participating in any other compensation or benefit
plan of the Company. The Base Salary payments (including any increased Base
Salary payments) shall not in any way limit or reduce any other obligation of
the Company hereunder, and no other compensation, benefit or payment hereunder
shall in any way limit or reduce the obligation of the Company to pay the
Executive's Base Salary.

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     5.3 BENEFIT PLANS. During the Term, the Executive and his eligible
         -------------
dependents shall be entitled to participate in and receive benefits under all
"employee benefit plans" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended from time to time ("ERISA")), and
employee benefit arrangements in which senior officers of the Company generally
participate, including without limitation, (i) all savings, deferred
compensation, profit sharing and retirement plans, practices, policies and
programs and (ii) all welfare benefit plans, practices, policies and programs
(including all medical, prescription, dental, disability, employee life
insurance, group life insurance, group hospitalization, health, accidental death
and travel accident insurance plans and programs) as are made generally
available to senior officers of the Company, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans,
practices, policies and programs, including provisions which permit such plans,
practices, policies and programs to be modified or terminated, provided, that if
the Company reduces the benefits provided under or terminates any such employee
benefit plan, practice, policy or program in which the Executive participates,
the Company shall offer to the Executive participation in another plan or
program that provides the Executive with benefits at least comparable to those
that were reduced or eliminated. The Executive's participation in such employee
benefit plans, practices, policies and programs shall be at a level appropriate
for the Executive's position. Such employee benefit plans, practices, policies
and programs, shall include, without limitation, the plans, programs, policies
and practices in which the Executive participates on the date of this Agreement.

     5.4 INCENTIVE COMPENSATION. During the Term of this Agreement, the
         ----------------------
Executive shall be entitled to participate in and receive benefits under all
annual incentive (bonus) plans and long-term incentive compensation plans in
which other senior officers of the Company generally participate, including all
restricted share, performance restricted share and stock option plans of the
Company. The Executive's participation in such incentive plans shall be at a
level appropriate for the Executive's position. Without limiting the generality
of the foregoing, the Company shall provide the Executive with an annual
incentive opportunity, as a percentage of the Executive's Base Salary at target
performance levels, that is not less than the opportunity provided to the
Executive on the date of this Agreement, which levels shall be reasonable and
shall be adjusted for extraordinary events. Such incentive compensation shall be
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans, including provisions which permit such plans to be
modified or terminated, provided, that if the Company reduces the incentive
compensation opportunities provided under or terminates any such plan in which
the Executive participates, the Company shall offer to the Executive
participation in another plan that provides the Executive with an incentive
compensation opportunity at least comparable to that which was reduced or
eliminated. Such incentive compensation plans shall include, without limitation,
the plans in which the Executive participates on the date of this Agreement.

     5.5 OTHER BENEFITS. The Executive shall participate on the same terms and
         --------------
conditions as all other senior officers of the Company in all other benefit
plans, programs, or arrangements as may be now or hereafter sponsored or
maintained for senior officers of the Company generally and shall participate on
the same terms and conditions as other senior officers generally participate.

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     5.6 FRINGE BENEFITS. During the Term of this Agreement, the Executive shall
         ---------------
be entitled to receive all perquisites and fringe benefits which the Company
makes available to senior officers of the Company generally, including, but not
limited to, all perquisites and fringe benefits provided to the Executive on the
date of this Agreement.

     5.7 EXPENSES. During the Term of this Agreement, the Executive is
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authorized to incur, and shall be reimbursed by the Company for all reasonable
and customary business-related expenses, including travel, entertainment, gifts
and similar items, incurred by the Executive in connection with his employment
hereunder.

     5.8 WORKING FACILITIES. During the Term of this Agreement, the Company
         ------------------
shall furnish the Executive with offices and working facilities in the Company's
principal executive offices and shall provide secretarial and other assistance
suitable to Executive's position and adequate for the performance of his duties
hereunder.

     5.9 VACATION. During the Term of this Agreement, the Executive shall be
         --------
entitled to vacation in accordance with the Company's current policies and
practices, provided that the Executive shall be entitled to not less than five
(5) weeks of vacation during each year of this Agreement, or such greater period
as the Board shall approve, without reduction in salary or other benefits.

     5.10 ANNUAL REVIEW. During the Term of this Agreement, the Board (or the
          -------------
compensation committee of the Board) shall in good faith review the Executive's
total compensation package (including but not limited to the Base Salary
provided for in Section 5.2, the benefit plans provided for in Section 5.3 and
the short and long-term incentive compensation opportunity provided for in
Section 5.4) at least annually for possible increase, taking into account, among
other things, (i) the performance of the Executive, (ii) the performance of the
Company, and (iii) the overall compensation of executives in similar positions
at comparable companies.

6.   COMPENSATION IN THE EVENT OF EXECUTIVE'S DISABILITY.
     ---------------------------------------------------

     During the Term of this Agreement, during any period that the Executive
fails to perform the Executive's full-time duties hereunder as a result of
incapacity due to physical or mental illness, the Company shall pay, or cause to
be paid, to the Executive his Base Salary at the rate in effect at the
commencement of any such period, together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company for the benefit of the
Executive during such period, until this Agreement is terminated by the Company
for Disability; provided, however, that such payments shall be reduced by the
sum of the amounts, if any, payable to the Executive at or prior to the time of
any such payment under disability benefit plans of the Company, which amounts
were not previously applied to reduce any such payment.

7.   TERMINATION COMPENSATION AND BENEFITS.
     -------------------------------------

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     7.1 If the Executive's employment is terminated for any reason during the
Term of this Agreement, the Company shall pay to the Executive (or in accordance
with Section 11.2 in the event of the Executive's death), (i) the Executive's
Base Salary through the Date of Termination at the rate in effect immediately
prior to the time the Notice of Termination is given, (ii) all compensation and
benefits (other than severance compensation and benefits) payable to the
Executive through the Date of Termination or thereafter under the terms of any
compensation or benefit plan, program or arrangement maintained by the Company
during such period, including any short-term or long-term incentive compensation
to which the Executive is entitled, by virtue of previous awards, in accordance
with the terms of the long-term incentive plans in which Executive participates,
and (iii) any unreimbursed expenses payable pursuant to Section 5.7 of the
Agreement that were incurred before the Date of Termination.

     7.2 (a) In the event the Executive's employment is terminated during the
Term of this Agreement by the Executive for Good Reason or by the Company for
any reason other than Cause, death of the Executive or Disability, (i) the
Company shall pay the Executive, in addition to amounts payable under Sections
7.1 and 7.3, a lump sum cash payment to be made within thirty (30) days after
the Date of Termination equal to three times (the "Multiplier") the sum of (x)
the higher of the Base Salary in effect immediately prior to the occurrence of
the event or circumstance upon which the Notice of Termination is based or the
Base Salary in effect immediately prior to the date of the Notice of
Termination, and (y) the highest of the annual bonus that may be earned by the
Executive if target performance levels are achieved in the year in which the
Date of Termination occurs or the highest annual bonus earned by the Executive
in respect of the three (3) years immediately preceding the year in which the
Date of Termination occurs, in any case, pursuant to any annual incentive
(bonus) plan maintained by the Company, (ii) the restricted Common Stock awarded
to the Executive pursuant to Section 5.1 shall vest and shall become free of
restrictions upon the Date of Termination and (iii) the Company shall continue
the benefits provided for in Section 5.3 of this Agreement for thirty-six (36)
additional months after the Date of Termination. The payments provided for in
this Section 7.2(a) shall be in lieu of any severance compensation to which the
Executive would otherwise be entitled under any severance plan or policy
applicable to the Executive.

         (b) In the event that the Company gives notice to the Executive in
accordance with Section 3 of the Agreement that this Agreement shall not be
extended and will terminate at the end of the then current Term, then (i) the
Company shall, within thirty (30) days after the end of the Term, pay the
Executive a lump sum cash payment in an amount determined in accordance with
Section 7.2(a)(i) except that the Multiplier shall be one and one-half (1-1/2)
instead of three (3), (ii) the restricted Common Stock awarded to the Executive
pursuant to Section 5.1 shall vest and shall become free of restrictions at the
end of the Term, and (iii) the Company shall continue the benefits provided for
in Section 5.3 of this Agreement for eighteen (18) additional months after the
end of the Term. The payments provided for in this Section 7.2(b) shall be in
lieu of any severance compensation to which the Executive would otherwise be
entitled under any severance plan or policy applicable to the Executive.

     7.3 If the Executive's employment is terminated for any reason during the
Term of this Agreement, the Company shall pay the Executive's normal
post-termination compensation

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and benefits (other than severance compensation and benefits) to the Executive
as such payments become due. Such normal post-termination compensation and
benefits (other than severance compensation and benefits) shall be determined
under, and paid in accordance with the Company's retirement, insurance and other
compensation or benefit plans, programs and arrangements (other than this
Agreement), as applicable.

     7.4 (a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, benefit, or distribution by the
Company or its affiliates to or for the benefit of the Executive, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Code, or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment ("Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

         (b) Subject to the provisions of Section 7.4(c) hereof, all
determinations required to be made under this Section 7.4, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be used in arriving at such determinations, shall be made by the
Company's principal outside accounting firm (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Board and the Executive
within fifteen (15) business days after the Date of Termination and/or such
earlier date(s) as may be requested by the Company or the Executive (each such
date and the Date of Termination shall be referred to as a "Determination Date"
for purposes of this Section 7.4(b) and Section 7.5 hereof). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. The
initial Gross-Up Payment, if any, as determined pursuant to this Section 7.4(b),
shall be paid by the Company to the Executive within thirty (30) days of the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm under this Section 7.4(b) shall be binding upon the Company and
the Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment") consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 7.4(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

         (c) The Executive shall notify the Company in writing of any claim by

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the Internal Revenue Service that, if successful, would require the payment by
the Company of an Underpayment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:

          (i) give the Company any information reasonably requested by the
Company relating to such claim;

          (ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company;

          (iii) cooperate with the Company in good faith in order to effectively
contest such claim; and

          (iv) permit the Company to participate in any proceeding relating to
such claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 7.4(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that any extension of the
statute of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

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          (d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 7.4(c) hereof, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's compliance with the requirements of Section 7.4(c) hereof)
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 7.4(c) hereof, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid.

     7.5 The payments provided for in Section 7.4 hereof (other than Section
7.4(c) and (d)) shall be made not later than the thirtieth (30th) day following
each Determination Date; provided, however, that if the amounts of such payments
cannot be finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined by the Executive, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can
be determined but in no event later than the forty-fifth (45th) day after each
Determination Date. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess shall
constitute a loan by the Company to the Executive, payable on the fifth (5th)
business day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).

8.   TERMINATION PROCEDURES.
     ----------------------

     8.1 NOTICE OF TERMINATION. During the Term of this Agreement, any purported
         ---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 12 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and, in the
case of a termination by the Company for Cause or by the Executive for Good
Reason, shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated. Further, a Notice of Termination for Cause is required
to include a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board which was called and held for the purpose of considering
such termination (after reasonable notice to the Executive and an opportunity
for the Executive, together with the Executive's counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Executive was
guilty of conduct set forth in the definition of Cause herein, and specifying
the particulars thereof in detail.

     8.2 DATE OF TERMINATION. "Date of Termination," with respect to any
         -------------------
purported termination of the Executive's employment during the Term of this
Agreement, shall

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mean (i) if the Executive's employment is terminated by his death, the date of
his death, (ii) if the Executive's employment is terminated by the Executive
other than for Good Reason, the date specified in the Notice of Termination
(which shall not be less than one hundred eighty (180) days) after such Notice
of Termination is given, (iii) if the Executive's employment is terminated by
the Company for Cause, on the date that the Notice of Termination is sent by the
Board in accordance with Section 8.1, and (iv) if the Executive's employment is
terminated for any other reason, the date specified in the Notice of Termination
(which shall not be less than sixty (60) days) after such Notice of Termination
is given.

9.   NO MITIGATION.
     -------------

     The Company agrees that, if the Executive's employment hereunder is
terminated during the Term of this Agreement, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts payable to
the Executive by the Company hereunder. Further, the amount of any payment or
benefit provided for hereunder (other than pursuant to Section 7.4(d) hereof)
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.

10.  CONFIDENTIALITY AND NONCOMPETITION.
     ----------------------------------

     10.1 The Executive shall not, during or after the Term of this Agreement,
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 (each, a "Company Entity"), and is not
generally known or available in to the public, provided, that the Executive may
make disclosures of such confidential information (i) during the Term of this
Agreement in the course of and to the extent required by and consistent with the
performance of his duties hereunder, and (ii) to the extent required by law or
legal process.

     10.2 Except as permitted by the Company with its prior written consent, the
Executive shall not, during the Executive's employment with the Company and for
the period ending twenty-four (24) months after the Executive's employment with
the Company terminates for any reason, directly or indirectly, own, enter into
the employ of or render, any services (whether as a consultant or otherwise) to
any person, firm or corporation within the United States or any foreign country
in which the Company is doing or is contemplating doing business on the Date of
Termination which is a competitor of any Company Entity with respect to products
which any Company Entity is then producing or services which any Company Entity
is then providing (a "Competitor"), or approach, canvass, solicit, or otherwise
endeavor to entice away from the Company, any customer in respect of any service
or product in any way competitive with the services or products supplied by any
Company Entity to such customer, or solicit the services of, or endeavor to
entice away from the Company, any director, executive officer or employee of the
Company; provided, that it shall not be a violation of this provision for the
Executive to be employed by, or render services to, a Competitor, if the
Executive renders those services only with respect to those lines of business of
the Competitor which are not directly competitive with

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a line of business of any Company Entity or are located in any country in which
the Company does not do business and was not contemplating doing business on the
Date of Termination.

     10.3 The Executive acknowledges and agrees that any breach of this Section
10 by the Executive will result in immediate and irreparable harm to the
Company, the amount of which will be extremely difficult to ascertain, and that
the Buyer could not be reasonably or adequately compensated by damages in an
action at law. For these reasons, the Company shall have the right to obtain
such preliminary, temporary or permanent mandatory or restraining injunctions,
orders or decrees as may be necessary to protect the Company against or on
account of any breach by the Executive of the provisions of this Section 10
without proof of any actual damage caused to the Company.

11.  SUCCESSORS; BINDING AGREEMENT.
     -----------------------------

     11.1 In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any 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, as the case may be, 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 it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
upon the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason, except that, for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination.

     11.2 This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Executive's
estate.

12.  NOTICES.
     -------

     For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, addressed to the respective
addressees set forth below, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:

     To the Company:

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     Armstrong World Industries, Inc.
     2500 Columbia Avenue
     Lancaster, PA 17603
     Attention:  Executive Vice President, Human Resources
     Telecopy:  717-396-6119

     To the Executive:

     At the Executive's residence address as maintained by the Company in the
regular course of its business for payroll purposes.

13.  MISCELLANEOUS.
     -------------

     If the Executive, in his capacity as an officer, approves in writing, or if
the Executive is elected as a director, if the Executive, in his capacity as a
director, votes for any action that will adversely affect the Executive's rights
under this Agreement, such vote or approval shall be deemed to constitute the
Executive's consent to such action under this Agreement; otherwise, 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 the Executive
and such officers as may be specifically designated by the Board. No waiver by
any party hereto at any time of any breach by any 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 agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by any party which are not expressly set
forth in this Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein is hereby terminated
and canceled, except as otherwise provided in this Agreement. Nothing in this
Section 13 shall affect the Executive's rights under the Change in Control
Agreement or the Indemnification Agreement between the Company and the
Executive. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Pennsylvania,
without giving effect to choice of law principles.

     All references to sections of the Code shall be deemed also to refer to any
successor provisions to such sections. There shall be withheld from any payments
provided for hereunder any amounts required to be withheld under federal, state
or local law and any additional withholding amounts to which the Executive has
agreed. The obligations under this Agreement of the Company or the Executive
which by their nature and terms require satisfaction after the end of the Term
shall survive such event and shall remain binding upon such party.

14.  VALIDITY.
     --------

                                       11
<PAGE>

     The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.

15.  COUNTERPARTS.
     ------------

     This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and
the same instrument.

16.  SETTLEMENT OF DISPUTES; ARBITRATION.
     -----------------------------------

     All claims by the Executive for benefits under this Agreement shall be in
writing and shall be directed to and initially determined by the Board. Any
denial by the Board of a claim for benefits under this Agreement shall be
delivered to the Executive in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim and shall further allow the Executive to appeal to the
Board a decision of the Board within sixty (60) days after notification by the
Board that the Executive's claim has been denied. To the extent permitted by
applicable law and subject to the right of the Company to seek equitable relief
in a court pursuant to Section 10.3, any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in Allegheny County, Pennsylvania, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction.

17.  FEES AND EXPENSES.
     -----------------

     The Company shall pay to the Executive all reasonable legal fees and
expenses incurred by the Executive in disputing any termination or in seeking in
good faith to obtain or enforce any benefit or right provided by this Agreement
or in connection with any tax audit or proceeding to the extent attributable to
the application of Section 4999 of the Code to any payment or benefit provided
hereunder; provided, however, the Company shall not be required to pay to the
Executive legal fees and expenses to the extent such legal fees and expenses
were incurred in connection with a contest controlled by the Company pursuant to
Section 7.4(c) hereof in connection with which the Company complied with its
obligations under said Section 7.4(d). Such payments shall be made within thirty
(30) business days after delivery of the Executive's written request for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.

18.  COORDINATION OF BENEFITS.
     ------------------------

     Notwithstanding anything in this Agreement to the contrary, if the
Executive is paid "Severance Payments" under that certain Agreement dated
between the Company and the Executive in connection with a Change in Control (as
defined therein), then this Agreement (including Section 10.2 hereof) shall
forthwith terminate and the Executive shall not be entitled

                                       12
<PAGE>

to the payment of any amounts under this Agreement other than pursuant to
Section 7.1 hereof (and any amounts theretofore paid to the Executive pursuant
to Section 7.2, hereof shall be credited against any "Severance Payments" to
which the Executive is entitled under said Change in Control Agreement).

19.  DEFINITIONS.
     -----------

     For purposes of this Agreement, the following terms shall have the meaning
indicated below:

     (a) "Base Salary" shall have the meaning stated in Section 5.2 hereof.

     (b) "Board" shall mean the Board of Directors of the Company.

     (c) "Cause" for termination by the Company of the Executive's employment,
for purposes of this Agreement, shall mean (i) the willful and continued failure
by the Executive to substantially perform the Executive's duties hereunder
(other than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure after the
issuance of a Notice of Termination for Good Reason by the Executive pursuant to
Section 8.1) after a written demand for substantial performance is delivered to
the Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties, or (ii) the willful engaging by the Executive in conduct
which is demonstrably and materially injurious to the Company, monetarily or
otherwise, including but not limited to fraud or embezzlement by the Executive,
or (iii) the Executive's conviction (or entering into a plea bargain admitting
guilt) of any felony, or (iv) a material breach by the Executive of this
Agreement, including a violation of Section 10. For purposes of clauses (i) and
(ii) of this definition, no act, or failure to act, on the Executive's part
shall be deemed "willful" unless done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that the Executive's act, or
failure to act, was in the best interest of the Company.

     (d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

     (e) "Date of Termination" shall have the meaning stated in Section 8.2
hereof.

     (f) "Disability" shall be deemed the reason for the termination of this
Agreement by the Company, 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 hereunder for a period of six
(6) consecutive months.

     (g) "Excise Tax" shall have the meaning stated in Section 7.4(a) hereof.

     (h) "Executive" shall mean the individual named in the first paragraph of
this Agreement.

                                       13
<PAGE>

     (i) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express written
consent), of any one of the following acts by the Company, or failures by the
Company to act, unless, in the case of any act or failure to act described in
paragraphs (i) or (ii) below, such act or failure to act is corrected prior to
the Date of Termination specified in the Notice of Termination given in respect
thereof:

          (i) the assignment to the Executive of any duties inconsistent with
the Executive's status as an executive officer of the Company or a substantial
alteration in the nature or status of the Executive's responsibilities
consistent with the title set forth in Section 4, unless the Executive has
indicated to the Company his intention to terminate his employment prior to the
end of the Term, and such assignment or alteration is made by the Board in good
faith in order to facilitate a transition to successor management;

          (ii) any material breach of any provision of this Agreement by the
Company;

          (iii) the relocation of the Executive's principal place of employment
to a location more than 250 miles from the Executive's principal place of
employment (unless such relocation is closer to the Executive's principal
residence) or the Company's requiring the Executive to be based anywhere other
than such principal place of employment (or permitted relocation thereof) except
for required travel on the Company's business to an extent substantially
consistent with the Executive's present business travel obligations;

          (iv) a reduction by the Company in the Executive's Base Salary as in
effect on the date hereof or as the same may be increased from time to time
except for across-the-board salary reductions similarly affecting all senior
officers of the Company and all senior officers of any person in control of the
Company; or

          (v) the failure by the Company to continue in effect any employee
benefit plan or incentive compensation plan in which the Executive currently
participates which is material to the Executive's total compensation, unless
such plan or arrangement has been replaced by a new plan on a basis not
materially less favorable, both in terms of the amount or timing of payment of
benefits provided and the level of the Executive's participation relative to
other participants.

          The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.

     (j) "Gross-Up Payment" shall have the meaning stated in Section 7.4(a)
hereof.

     (k) "Notice of Termination" shall have the meaning stated in Section 8.1
hereof.

     (l) "Severance Payments" shall mean those payments described in Section 7.2
hereof.

     (m) "Term" shall have the meaning stated in Section 3 hereof.

                                       14
<PAGE>

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.

                       ARMSTRONG HOLDINGS, INC.

                       By:      ___________________________
                                Name:  Douglas L. Boles
                                Title: Executive Vice President, Human Resources

                       The undersigned, Armstrong World Industries, Inc., agrees
                       to be jointly and several bound by the terms of this
                       Agreement, including specifically with respect to the
                       obligations of the Company hereunder.

                       ARMSTRONG WORLD INDUSTRIES, INC.

                       By:      ___________________________
                                Name:  Douglas L. Boles
                                Title: Executive Vice President, Human Resources

                       EXECUTIVE

                       ---------------------------------
                       Frank A. Riddick III

                                       15<PAGE>

                                                                   EXHIBIT 10(c)

                              AMENDED AND RESTATED
                       EMPLOYMENT AND CONSULTING AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AND CONSULTING AGREEMENT is made as of
August 7, 2000 (the "Agreement") among ARMSTRONG HOLDINGS, INC., a Pennsylvania
corporation (the "Company"), ARMSTRONG WORLD INDUSTRIES, INC., a Pennsylvania
corporation and an indirect wholly-owned subsidiary of the Company
("Armstrong"), and GEORGE A. LORCH, an individual and resident of Lancaster
County, Pennsylvania (the "Executive"); WITNESSETH:

     WHEREAS, the Executive, Armstrong and the Company are parties to an
Employment Agreement dated December 13, 1999, as amended (the "Original
Agreement"), pursuant to which the Executive serves as Chairman of the Board,
President and Chief Executive Officer of the Company; and

     WHEREAS, the Executive and the Company desire to implement the transition
to successor management of the Company that was begun in January 2000, and to
that end they desire to amend and restate the Original Agreement its entirety to
provide for (i) the continued employment of the Executive in a non-executive
capacity, and (ii) a period after the termination of Executive's employment
during which he will provide consulting services.

     NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

1.   DEFINED TERMS.
     -------------

     The definitions of capitalized terms used in this Agreement, unless
otherwise defined herein, are provided in the last Section hereof.

2.   EMPLOYMENT AND CONSULTING ENGAGEMENT.
     ------------------------------------

     The Company hereby agrees to employ the Executive and to thereafter engage
the Executive as a consultant, and the Executive hereby agrees to serve the
Company and its subsidiaries and affiliates, on the terms and conditions set
forth herein, during the Term of this Agreement.

3.   TERM OF AGREEMENT.
     -----------------

     The Term will commence on the date first above written (the "Effective
Date") and shall continue until January 31, 2003. Notwithstanding anything in
this Agreement to the contrary, the Company may terminate this Agreement in the
event of Executive's Disability; provided, that any such termination shall not,
by itself, terminate the Executive's employment or consulting engagement with
the Company.

4.   POSITION AND DUTIES.
     -------------------

<PAGE>

     (a) Effective at the close of business on the Effective Date, which shall
be the effective date of the appointment by the Board of Directors of a Chairman
of the Board and Chief Executive Officer of the Company to succeed the
Executive, the Executive agrees to resign as Chairman of the Board, President
and Chief Executive Officer of the Company and as a director and officer of its
subsidiaries and affiliates, and such resignations shall be effective without
any further action by the Executive.

     (b) From the Effective Date until January 31, 2001 (the "Initial Period"),
the Company agrees to employ the Executive with the title Advisor to the
Chairman of the Board and Chief Executive Officer. In that capacity, the
Executive shall assist the new Chairman of the Board and Chief Executive Officer
of the Company with the transition to his office and to that end the Executive
will (i) advise the new Chairman of the Board and Chief Executive Officer on
issues and other matters affecting the Company, (ii) introduce the new Chairman
of the Board and Chief Executive Officer to customers and suppliers of the
Company, and (iii) perform such other duties, which duties shall not be
inconsistent with the foregoing, and have such other responsibilities as the new
Chairman of the Board and Chief Executive Officer of the Company or the Board of
Directors shall prescribe. During the Initial Period, the Executive shall devote
his full professional time and attention to the duties and responsibilities of
his position; provided, that so long as such activities do not substantially
interfere with the duties the Executive may devote a reasonable amount of time
to (i) service as a director on one or more corporate boards of directors, (ii)
civic and charitable activities, and (iii) personal estate and financial
planning and investment activities. The Executive will retire as an employee of
the Company effective February 1, 2001.

     (c) The Executive will continue to serve as a director of the Company
through the December 2000 meeting of the Board of Directors of the Company,
which is presently scheduled for December 11, 2000. Upon the appointment of his
successor to the office of Chairman of the Board of the Company, the Executive
shall have the title Chairman Emeritus of the Board of Directors of the Company.

     (d) From February 1, 2001 until January 31, 2003, the Company agrees to
engage the Executive as a consultant and the Executive agrees to serve the
Company in a consulting capacity (the "Consulting Period"). In that capacity,
the Executive shall make himself available to the Company upon the Company's
reasonable request at such times as the Company and the Executive shall mutually
agree to: (i) consult with officers and advisors to the Company regarding issues
and matters affecting the Company, (ii) introduce the new Chairman and Chief
Executive Officer customers and suppliers of the Company and otherwise entertain
customers and suppliers for the Company, and (iii) perform such other functions
as the Company and the Executive shall mutually agree.

5.   COMPENSATION AND RELATED MATTERS.
     --------------------------------

     5.1 BASE SALARY. During the Initial Period, the Company shall pay to the
         -----------
Executive a base salary ("Base Salary") at a rate of $835,000 per year. The Base
Salary shall be paid in accordance with the Company's payroll practices for its
senior officers, but not less frequently than monthly, in arrears. Compensation
of the Executive by Base Salary payments

                                       2
<PAGE>

shall not be deemed exclusive and shall not prevent the Executive from
participating in the incentive compensation and other benefits provided by the
Company as specified herein. The Base Salary payments shall not in any way limit
or reduce any other obligation of the Company hereunder, and no other
compensation, benefit or payment hereunder shall in any way limit or reduce the
obligation of the Company to pay the Executive's Base Salary.

     5.2 INCENTIVE COMPENSATION. For the period through December 31, 2000, the
         ----------------------
Executive shall be entitled to participate in and receive benefits under the
Management Achievement Plan at the level specified for the Executive prior to
the date of this Agreement. Such incentive compensation shall be subject to and
on a basis consistent with the terms, conditions and overall administration of
such plans.

     5.3 OTHER COMPENSATION. Following the Executive's retirement as an employee
         ------------------
and during the Consulting Period, the Company shall pay the Executive cash
compensation as follows: (a) $1.8 million in cash on February 1, 2001, and (b)
$125,000 cash per quarter, payable on February 1, May 1, August 1, and November
1 of each year commencing February 1, 2001 and ending November 1, 2002;
provided, that if during the Consulting Period the Executive is asked by the
Company to perform services for the Company for more than 10 days per quarter,
then, in addition to the foregoing, the Company shall also pay the Executive a
per diem of $1,500 per day for such additional days. These payments shall be in
lieu of any further compensation that would otherwise be due the Executive under
the Original Agreement. The Executive shall not be entitled to any incentive or
other compensation during the Consulting Period.

     5.4 FRINGE BENEFITS. During the Initial Period of this Agreement, and not
         ---------------
thereafter, the Executive shall be entitled to receive all perquisites and
fringe benefits which the Company makes available to senior officers of the
Company generally, including, but not limited to, all perquisites and fringe
benefits provided to the Executive on the date of this Agreement.

     5.5 EXPENSES. During the Term of this Agreement, the Executive shall be
         --------
reimbursed by the Company for all reasonable and customary business-related
expenses, including travel, entertainment, gifts and similar items, incurred by
the Executive in connection with his services hereunder; provided, that the
Company may establish a reasonable policy for the documentation and approval of
such expenses.

     5.6 WORKING FACILITIES. During the Initial Period of this Agreement, and
         ------------------
not thereafter, the Company shall furnish the Executive with offices and working
facilities in the Company's principal executive offices and shall provide
secretarial and other assistance suitable to Executive's position and adequate
for the performance of his duties hereunder. During the Consulting Period, the
Executive shall be responsible for obtaining and maintaining such working
facilities and administrative assistance as are reasonably necessary for the
performance of his duties and responsibilities under this Agreement.

     5.7 VACATION. During the Initial Period of this Agreement, the Executive
         --------
shall be entitled to vacation in accordance with the Company's current policies
and practices, provided that the Executive shall be entitled to not less than
six (6) weeks of vacation during each year, or such greater period as the Board
shall approve, without reduction in salary or other benefits.

                                       3
<PAGE>

6.   COMPENSATION IN THE EVENT OF EXECUTIVE'S DEATH OR DISABILITY.
     ------------------------------------------------------------

     During the Term of this Agreement, during any period that the Executive is
unable to perform the Executive's duties hereunder as a result of incapacity due
to physical or mental illness, the Company shall pay, or cause to be paid, all
amounts payable to the Executive pursuant to this Agreement as they become due.
In the event that the Company terminates this Agreement prior to February 1,
2001 pursuant the last sentence of Section 3 as a result of the Executive's
Disability or the Executive dies prior to February 1, 2001, the Company shall
nevertheless pay to the Executive (or his estate) on February 1, 2001 the cash
amount payable to him on February 1, 2001 pursuant to Section 5.3(a).

7.   TERMINATION COMPENSATION AND BENEFITS.
     -------------------------------------

     7.1 (a) If the Executive's employment or consulting engagement is
terminated by the Company other than for Cause during the Term of this Agreement
or in the event the Executive's employment or consulting engagement is
terminated during the Term of this Agreement by the Executive for Good Reason,
the Company shall pay to the Executive (or in accordance with Section 11.2 in
the event of the Executive's death), (i) all remaining amounts payable to the
Executive under this Agreement through February 1, 2003, in a lump sum payable
within thirty (30) days after the Date of Termination, and (ii) any unreimbursed
expenses payable pursuant to Section 5.5 of the Agreement that were incurred
before the Date of Termination.

         (b) In the event the Executive's employment or consulting engagement
is terminated during the Term of this Agreement by the Company for Cause or by
the Executive other than for Good Reason, the Company shall pay the Executive
any amounts due pursuant to this Agreement as of the Date of Termination and all
other amounts payable to the Executive under this Agreement shall be forfeited.

     7.2 (a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, benefit, or distribution by the
Company or its affiliates to or for the benefit of the Executive, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Code, or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment ("Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

         (b) Subject to the provisions of Section 7.2(c) hereof, all
determinations required to be made under this Section 7.2, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be used in arriving at such determinations, shall be made by the
Company's principal outside accounting firm (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Board and

                                       4
<PAGE>

the Executive within fifteen (15) business days after the Date of Termination
and/or such earlier date(s) as may be requested by the Company or the Executive
(each such date and the Date of Termination shall be referred to as a
"Determination Date" for purposes of this Section 7.2(b) and Section 7.3
hereof). All fees and expenses of the Accounting Firm shall be borne solely by
the Company. The initial Gross-Up Payment, if any, as determined pursuant to
this Section 7.2(b), shall be paid by the Company to the Executive within thirty
(30) days of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion that failure to report the
Excise Tax on the Executive's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty. Any determination
by the Accounting Firm under this Section 7.2(b) shall be binding upon the
Company and the Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment") consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 7.2(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

          (c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of an Underpayment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:

               (i) give the Company any information reasonably requested by the
Company relating to such claim;

               (ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company;

               (iii) cooperate with the Company in good faith in order to
effectively contest such claim; and

               (iv) permit the Company to participate in any proceeding relating
to such claim; provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such

                                       5
<PAGE>

representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 7.2(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that any extension of the
statute of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

          (d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 7.2(c) hereof, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's compliance with the requirements of Section 7.2(c) hereof)
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 7.2(c) hereof, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid.

     7.3 The payments provided for in Section 7.2 hereof (other than Section
7.2(c) and (d)) shall be made not later than the thirtieth (30th) day following
each Determination Date; provided, however, that if the amounts of such payments
cannot be finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined by the Executive, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can
be determined but in no event later than the forty-fifth (45th) day after each
Determination Date. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess shall
constitute a loan by the Company to the Executive, payable on the fifth (5th)
business day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).

8.   TERMINATION PROCEDURES.
     ----------------------

                                       6
<PAGE>

     8.1 NOTICE OF TERMINATION. During the Term of this Agreement, any purported
         ---------------------
termination of the Executive's employment or consulting engagement by the
Company or the Executive (other than by reason of death) shall be communicated
by written Notice of Termination from one party hereto to the other party hereto
in accordance with Section 13 hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and, in the case of a
termination by the Company for Cause or by the Executive for Good Reason, shall
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment or consulting engagement
under the provision so indicated. Further, a Notice of Termination for Cause is
required to include a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board which was called and held for the purpose of considering
such termination (after reasonable notice to the Executive and an opportunity
for the Executive, together with the Executive's counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Executive was
guilty of conduct set forth in the definition of Cause herein, and specifying
the particulars thereof in detail.

     8.2 DATE OF TERMINATION. "Date of Termination," with respect to any
         -------------------
purported termination of the Executive's employment or consulting engagement
during the Term of this Agreement, shall mean (i) if the Executive's employment
or consulting engagement is terminated by his death, the date of his death, (ii)
if the Executive's employment or consulting engagement is terminated by the
Executive other than for Good Reason, the date specified in the Notice of
Termination (which shall not be less than one hundred eighty (180) days) after
such Notice of Termination is given, (iii) if the Executive's employment or
consulting engagement is terminated by the Company for Cause, on the date that
the Notice of Termination is sent by the Board in accordance with Section 8.1,
and (iv) if the Executive's employment or consulting engagement is terminated by
the Company or the Executive for any other reason, the date specified in the
Notice of Termination (which shall not be less than sixty (60) days) after such
Notice of Termination is given.

9.   NO MITIGATION.
     -------------

     The Company agrees that, if the Executive's employment or consulting
engagement hereunder is terminated during the Term of this Agreement, the
Executive is not required to seek other employment or consulting engagements or
to attempt in any way to reduce any amounts payable to the Executive by the
Company hereunder. Further, the amount of any payment or benefit provided for
hereunder (other than pursuant to Section 7.2(d) hereof) shall not be reduced by
any compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.

10.  CONFIDENTIALITY AND NONCOMPETITION.
     ----------------------------------

     10.1 The Executive shall not, during or after the Term of this Agreement,
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 (each, a "Company Entity"), and is not
generally known or available in to the public, provided, that the

                                       7
<PAGE>

Executive may make disclosures of such confidential information (i) during the
Initial Period of this Agreement in the course of and to the extent required by
and consistent with the performance of his duties hereunder, and (ii) to the
extent required by law or legal process.

     10.2 Except as permitted by the Company with its prior written consent, the
Executive shall not, during the period ending January 31, 2003, directly or
indirectly, own, enter into the employ of or render any services (whether as a
consultant or otherwise) to any person, firm or corporation within the United
States or any foreign country in which the Company is doing or is at the time
contemplating doing business which is a substantial and direct competitor of any
Company Entity with respect to products which any Company Entity is then
producing or services which any Company Entity is then providing (a
"Competitor"), or approach, canvass, solicit, or otherwise endeavor to entice
away from the Company, any customer in respect of any service or product in any
way competitive with the services or products supplied by any Company Entity to
such customer, or solicit the services of, or endeavor to entice away from the
Company, any director, executive officer or employee of the Company; provided,
that it shall not be a violation of this provision for the Executive to be
employed by, or render services to, a Competitor, if the Executive renders those
services only with respect to those lines of business of the Competitor which
are not directly competitive with a line of business of any Company Entity or
are located in any country in which the Company does not do business and is not
contemplating doing business.

     10.3 The Executive acknowledges and agrees that any breach of this Section
10 by the Executive will result in immediate and irreparable harm to the
Company, the amount of which will be extremely difficult to ascertain, and that
the Company could not be reasonably or adequately compensated by damages in an
action at law. For these reasons, the Company shall have the right to obtain
such preliminary, temporary or permanent mandatory or restraining injunctions,
orders or decrees as may be necessary to protect the Company against or on
account of any breach by the Executive of the provisions of this Section 10
without proof of any actual damage caused to the Company.

11.  SUCCESSORS; BINDING AGREEMENT.
     -----------------------------

     11.1 In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any 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, as the case may be, 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 it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
upon the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment or
consulting engagement for Good Reason, except that, for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.

     11.2 This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees,

                                       8
<PAGE>

devisees and legatees. If the Executive shall die while any amount would still
be payable to the Executive hereunder (other than amounts which, by their terms,
terminate upon the death of the Executive) if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive's estate.

12.  CHANGE OF CONTROL.
     -----------------

     Notwithstanding anything in this Agreement to the contrary, that certain
Agreement between the Company and the Executive in connection with a Change of
Control (as defined therein) (the "Change in Control Agreement") shall remain in
full force and effect through January 31, 2001 and if the Executive is paid any
benefits under the Change in Control Agreement, then this Agreement (including
Section 10.2 hereof) shall forthwith terminate and the Executive shall not be
entitled to the payment of any amounts under this Agreement (and any amounts
theretofore paid to the Executive pursuant to Section 7.1 hereof shall be
credited against any "Severance Payments" to which the Executive is entitled
under said Change in Control Agreement). After January 31, 2001, the Change of
Control Agreement shall terminate (except that those provisions respecting the
acceleration of benefits under any employee benefit plan of the Company,
including the acceleration of vesting of unvested stock options, which shall
survive for the Term of this Agreement) and, thereafter, upon the occurrence of
a Change of Control, the Company shall pay to the Executive, within thirty (30)
days after the Change of Control, all amounts payable to the Executive pursuant
to this Agreement through February 1, 2003 in a lump sum cash payment.

13.  NOTICES.
     -------

     For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, addressed to the respective
addressees set forth below, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:

     To the Company and Armstrong:

     Armstrong Holdings, Inc.
     2500 Columbia Avenue
     Lancaster, PA 17603
     Attention:  Executive Vice President, Human Resources
     Telecopy:  717-396-6119

     To the Executive:

     At the Executive's residence address as maintained by the Company in the
regular course of its business for payroll purposes.

14.  MISCELLANEOUS.
     -------------

                                       9
<PAGE>

     No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by any party which are
not expressly set forth in this Agreement, provided that nothing contained
herein shall be interpreted to amend or nullify those obligations of the Company
and the Executive pursuant to the Indemnification Agreement between the Company
and the Executive. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all
prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein is hereby terminated
and canceled, except as otherwise provided in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the Commonwealth of Pennsylvania, without giving effect to choice
of law principles.

     All references to sections of the Code shall be deemed also to refer to any
successor provisions to such sections. There shall be withheld from any payments
provided for hereunder any amounts required to be withheld under federal, state
or local law and any additional withholding amounts to which the Executive has
agreed. The obligations under this Agreement of the Company or the Executive
which by their nature and terms require satisfaction after the end of the Term
shall survive such event and shall remain binding upon such party.

15.  VALIDITY.
     --------

     The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.

16.  COUNTERPARTS.
     ------------

     This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and
the same instrument.

17.  SETTLEMENT OF DISPUTES; ARBITRATION.
     -----------------------------------

     All claims by the Executive for payments under this Agreement shall be in
writing and shall be directed to and initially determined by the Board. Any
denial by the Board of a claim for benefits under this Agreement shall be
delivered to the Executive in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim and shall further allow the Executive to appeal to the
Board a decision of the Board within sixty (60) days after notification by the
Board that the Executive's claim has been denied. To the extent permitted by
applicable law and subject to the right of the Company to seek equitable relief
in a court pursuant to Section 10.3, any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in either Allegheny County or Philadelphia County, Pennsylvania, as
the parties shall mutually agree or, if the parties are unable to agree, in
either such county as the Board of Directors of the Company (or the compensation
committee thereof) shall specify, in accordance with the

                                       10
<PAGE>

Commercial Arbitration Rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.

18.  FEES AND EXPENSES.
     -----------------

     The Company shall pay to the Executive all reasonable legal fees and
expenses incurred by the Executive in disputing any termination or in seeking in
good faith to obtain or enforce any right or benefit provided by this Agreement
or in connection with any tax audit or proceeding to the extent attributable to
the application of Section 4999 of the Code to any payment or benefit provided
hereunder; provided, however, the Company shall not be required to pay to the
Executive legal fees and expenses to the extent such legal fees and expenses
were incurred in connection with a contest controlled by the Company pursuant to
Section 7.2(c) hereof in connection with which the Company complied with its
obligations under said Section 7.2(d). Such payments shall be made within thirty
(30) business days after delivery of the Executive's written request for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.

19.  DEFINITIONS.
     -----------

     For purposes of this Agreement, the following terms shall have the meaning
indicated below:

     (a) "Base Salary" shall have the meaning stated in Section 5.1 hereof.

     (b) "Board" shall mean the Board of Directors of the Company.

     (c) "Change of Control" shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:

          A. any person is or becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company (not including in the securities acquired directly from the Company or
its affiliates) representing 20% or more of either the then outstanding shares
of common stock of the Company or the combined voting power of the Company's
then outstanding securities, excluding any person who becomes such a beneficial
owner in connection with a transactions described in clause (i) of paragraph (C)
below; or

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

          C. there is consummated a merger or consolidation of the Company
(including a triangular merger to which the Company is a party) with any other
corporation other

                                       11
<PAGE>

than (i) a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) at least
66 2/3% of the combined voting power of the voting securities of the Company or
such surviving entity of any parent thereof outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no person is
or becomes the beneficial owner, directly of indirectly, of the securities of
the Company (not including in the securities beneficially owned by such person
any securities acquired directly from the Company or its subsidiaries)
representing 20% or more of either the then outstanding shares of common stock
of the Company or the combined voting power of the Company's then outstanding
securities; or

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

     (d) "Cause" for termination by the Company of the Executive's employment or
consulting engagement, for purposes of this Agreement, shall mean (i) the
willful and continued failure by the Executive to substantially perform the
Executive's duties hereunder (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for Good
Reason by the Executive pursuant to Section 8.1) after a written demand for
substantial performance is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive's duties, or (ii) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise, including but not
limited to fraud or embezzlement by the Executive, or (iii) the Executive's
conviction (or entering into a plea bargain admitting guilt) of any felony, or
(iv) a material breach by the Executive of this Agreement, including a violation
of Section 10. For purposes of clauses (i) and (ii) of this definition, no act,
or failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive not in good faith and without
reasonable belief that the Executive's act, or failure to act, was in the best
interest of the Company. (e) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.

     (e) "Date of Termination" shall have the meaning stated in Section 8.2
hereof.

     (f) "Disability" shall be deemed the reason for the termination of this
Agreement by the Company, if, as a result of the Executive's incapacity due to
physical or mental illness, the

                                       12
<PAGE>

Executive shall have been absent from the full-time performance of the
Executive's duties hereunder for a period of six (6) consecutive months.

     (g) "Excise Tax" shall have the meaning stated in Section 7.2(a) hereof.

     (h) "Executive" shall mean the individual named in the first paragraph of
this Agreement.

     (i) "Good Reason" for termination by the Executive of the Executive's
employment or consulting engagement shall mean the occurrence (without the
Executive's express written consent), of any one of the following acts by the
Company, or failures by the Company to act, unless, in the case of any act or
failure to act described in paragraphs (i) or (ii) below, such act or failure to
act is corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:

     (i) the assignment to the Executive of any duties which are materially
inconsistent with the duties specified in Sections 4(b)(i) and (ii) or 4(d)(i)
and (ii), unless the Executive has indicated to the Company his intention to
terminate his employment prior to the end of the Initial Period, and such
assignment is made by the Board in good faith in order to facilitate the
transition of the Executive;

     (ii) any material breach of any provision of this Agreement by the Company;

     (iii) the relocation of the Executive's principal place of employment or
consulting engagement to a location more than 250 miles from the Executive's
principal place of employment or consulting (unless such relocation is closer to
the Executive's principal residence) or the Company's requiring the Executive to
be based anywhere other than such principal place of employment or consulting
(or permitted relocation thereof) except for required travel on the Company's
business to an extent substantially consistent with the Executive's present
business travel obligations;

     (iv) a reduction by the Company during the Initial Term in the Executive's
Base Salary as in effect on the date hereof or as the same may be increased from
time to time except for across-the-board salary reductions similarly affecting
all senior officers of the Company and all senior officers of any person in
control of the Company; or

     (v) the failure by the Company during the Initial Period to continue in
effect any employee benefit plan or incentive compensation plan in which the
Executive currently participates which is material to the Executive's total
compensation, unless such plan or arrangement has been replaced by a new plan on
a basis not materially less favorable, both in terms of the amount or timing of
payment of benefits provided and the level of the Executive's participation
relative to other participants.

     The Executive's right to terminate the Executive's employment or consulting
engagement for Good Reason shall not be affected by the Executive's incapacity
due to physical or mental illness. The Executive's continued employment or
consulting shall not constitute

                                       13
<PAGE>

consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.

     (k) "Gross-Up Payment" shall have the meaning stated in Section 7.2(a)
hereof.

     (l) "Notice of Termination" shall have the meaning stated in Section 8.1
hereof.

     (m) "Term" shall have the meaning stated in Section 3 hereof.

                                       14
<PAGE>

         IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.

                               ARMSTRONG HOLDINGS, INC.

                               By:      ___________________________
                               Name:  Douglas L. Boles
                               Title:  Executive Vice President, Human Resources

                               ARMSTRONG WORLD INDUSTRIES, INC.

                               By:      ___________________________
                               Name:  Douglas L. Boles
                               Title:  Executive Vice President, Human Resources

                               EXECUTIVE

                               ---------------------------------
                               George A. Lorch

                                       15
<PAGE>

                       [Letterhead of Michael D. Lockhart]

                                October 30, 2000

Dear George:

     This will confirm our discussions relative to your continued relationship
with Armstrong under your Amended and Restated Employment Agreement dated as of
August 7, 2000.

 .    Your role as Advisor to the Chairman of the Board and Chief Executive
     Officer is now complete. To that end, you are electing to accelerate your
     retirement as a director and as an employee of Armstrong to December 1,
     2000. In doing so, you will not receive any compensation to which you would
     have been entitled as a director and as an employee under your Amended and
     Restated Employment Agreement. Your execution of this letter will
     constitute your resignation as a director effective December 1, 2000.

 .    Armstrong remains obligated to pay you the $2.8 million due to you on
     February 1, 2001 under your Amended and Restated Employment Agreement and
     under your Stock Option Surrender Agreement dated September 25, 2000 (less
     any required withholdings).

 .    From the date of your retirement as an employee of Armstrong, you stand
     ready to serve Armstrong as a consultant in accordance with the terms of
     your Amended and Restated Employment Agreement and you remain bound by the
     non-compete and the other provisions of that Agreement.

     Please acknowledge your agreement with the foregoing by signing this letter
where indicated below and returning it to me. This letter effectively amends the
Amended and Restated Employment Agreement.

     On behalf of the Board of Directors, thank you for your service to
Armstrong.

                              Very truly yours,

                              ARMSTRONG HOLDINGS, INC.

                              By:  ____________________________
                                       Michael D. Lockhart
                                       President and Chief Executive Officer, on
                              behalf of Armstrong Holdings, Inc. and
                       Armstrong World Industries, Inc.

Acknowledged and agreed,
intending to be legally bound:

----------------------------
George A. Lorch

                                       16

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