Document:

Filed by Bowne Pure Compliance

Exhibit No. 10.2

As Amended December 8, 2008,

effective as of January 1, 2005

RETIREMENT BENEFIT EQUITY PLAN

OF

ARMSTRONG WORLD INDUSTRIES, INC.

This Retirement Benefit Equity Plan was originally established, pursuant to the authority of
the Board of Directors of Armstrong World Industries, Inc., effective January 1, 1976 to pay
supplemental retirement benefits to certain employees of the Company who have qualified or may
qualify for benefits under the Retirement Income Plan for Employees of Armstrong World Industries,
Inc. The Retirement Benefit Equity Plan was previously amended and restated as of March 1, 2004.

The Retirement Benefit Equity Plan is hereby amended and restated as of January 1, 2005 to
comply with the requirements of Section 409A of the Internal Revenue Code of 1986 as amended and
the guidance (including transitional guidance) thereunder.

All benefits payable under this Plan shall be paid out of the general assets of the Company,
or from a trust, if any, established by the Company for the purpose of paying benefits under the
Plan, the assets of which shall remain subject to the claims of judgment creditors of the Company
in accordance with the provisions of any such trust.

Article 1. Definitions

	 	1.01.	 	“Actuarial Equivalent Present Value” shall refer to the present value of a
Member’s supplemental benefits. With respect to any Member who is eligible to retire
or has retired under the Retirement Income Plan, such present value shall be determined
using the actuarial assumptions and factors reasonably utilized under the Retirement
Income Plan as of the date of determination applied to a single life annuity payable
immediately. With respect to any Member who is not eligible to retire or has not
retired under the Retirement Income Plan, such present value shall be determined using
the actuarial assumptions and factors reasonably utilized under the Retirement Income
Plan as of the date of determination applied to an age 65 single life annuity. The
determination of Actuarial Equivalent Present Value shall reflect future assumed
increases in the limitations under Section 415 of the Internal Revenue Code, with such
future assumed increases being based on the interest rate that is used by the Committee
to determine the amount of any employment taxes that may be owed under Section 3121(v)
of the Internal Revenue Code.
	 
	 	1.02.	 	“Board of Directors” shall mean the Board of Directors of the Company.

 

 

 

	 	1.03.	 	“Change in Control” shall mean the first to occur of any of the following
events: (i) a Change in Ownership of the Company, (ii) a Change in Effective Control
of the Company or (iii) a Change in the Ownership of a Substantial Portion of the
Assets of the Company.

	 	(a)	 	A “Change in Ownership” of the Company occurs on the date that
any one person, or more than one person acting as a group acquires ownership of
stock of the Company that, together with stock held by such person or group,
constitutes more than 50 percent of the total fair market value or total voting
power of the stock of the Company.

	 	(b)	 	A “Change in Effective Control” of the Company occurs on the
date that either:

	 	(i)	 	Any one person, or more than one person acting as a
group, acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or persons) ownership
of stock of the Company possessing 30 percent or more of the total voting
power of the stock of the Company; or

	 	(ii)	 	a majority of members of the Company’s board of
directors is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the members of
the Company’s board of directors prior to the date of the appointment or
election.

	 	(c)	 	A “Change in the Ownership of a Substantial Portion of the
Assets of the Company” occurs on the date that any one person, or more than one
person acting as a group, acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons)
assets from the Company that have a total gross fair market value equal to or
more than 40 percent of the total gross fair market value of all of the assets
of the Company immediately prior to such acquisition or acquisitions. For this
purpose, gross fair market value means the value of the assets being disposed
of, determined without regard to any liabilities associated with such assets.
There is no Change in Control event under this Section 1.03(c) when there is a
transfer to an entity that is controlled by the shareholders of the
transferring corporation immediately after the transfer.

The determination of whether a Change in Control event has occurred will be made in
accordance with the requirements of Code Section 409A and the guidance issued
thereunder. The foregoing definition of Change in Control shall exclude the
occurrence of the date(s) on which (i) the Chapter 11 Plan of Reorganization of the
Company shall become effective and (ii) the creation by the Company of the Asbestos
Personal Injury Trust.

	 	1.04.	 	“Committee” shall mean the Retirement Committee as provided for in Article 4.

	 	1.05.	 	“Company” shall mean Armstrong World Industries, Inc. or any successor by
merger, purchase or otherwise, with respect to its employees. The term Company
shall also mean any other company participating in the Retirement Income Plan with
respect to its employees if such Company adopts this Plan.

 

2

 

	 	1.06.	 	“Compensation” shall mean a Member’s “compensation” as determined under the
Retirement Income Plan without regard to limitations under Section 401(a)(17) of the
Internal Revenue Code, plus amounts deferred by the Member under the Armstrong Deferred
Compensation Plan, if any, and amounts contributed by the Company to the Bonus
Replacement Retirement Plan of Armstrong World Industries, Inc. (the “Bonus Replacement
Retirement Plan”) on behalf of the Member in the year in which such contribution is
made.

	 	1.07.	 	“Effective Date” shall mean January 1, 1976.

	 	1.08.	 	“Member” shall mean any person included in the membership of the Plan as
provided in Article 2.

	 	1.09.	 	“Plan” shall mean the Retirement Benefit Equity Plan of Armstrong World
Industries, Inc. as described herein or as hereafter amended.

	 	1.10.	 	“Specified Employee” shall mean, as determined pursuant to Section 409A of the
Internal Revenue Code and regulations thereunder, a key employee (as defined in
Section 416(i) of the Code without regard to paragraph 5 thereof) of the Company if any
stock of the Company is publicly traded on an established securities market or
otherwise.

	 	1.11.	 	“Retirement Income Plan” shall mean the Retirement Income Plan for Employees
of Armstrong World Industries, Inc. as amended and restated as of January 1, 2007 as
may be amended from time to time.

Article 2. Membership

	 	2.01.	 	Every person who was a member of the Plan as in effect on December 31, 1999
shall remain a Member of the Plan on or after January 1, 2000.

	 	2.02.	 	Every other employee of the Company shall become a Member of the Plan on the
first day of the calendar year in which the Committee determines that:

	 	(a)	 	the employee’s benefit calculated under the Retirement Income
Plan exceeds the allowed benefit under Section 415 of the Internal Revenue
Code,

	 	(b)	 	the employee’s compensation exceeds the maximum allowed under
Section 401(a)(17) of the Internal Revenue Code,

	 	(c)	 	the employee has compensation deferred under the terms of the
Armstrong Deferred Compensation Plan,

 

3

 

	 	(d)	 	the employee is a key executive designated by the Board of
Directors, or its delegate, to receive credit for employment prior to his
Company employment for purposes of calculating his Retirement Income Plan benefit, as
provided under Section 3.01(a)(iii) of this Plan, or

	 	(e)	 	the employee has a contribution made on his behalf to the Bonus
Replacement Retirement Plan.

Effective January 1, 2008, every other employee of the Company shall become a Member
of the Plan on the first day of the calendar year following the calendar year in
which the Committee makes the determination described above.

	 	2.03.	 	Membership under the Plan shall terminate if a Member’s employment with the
Company terminates unless at that time the Member is entitled to retirement income
payments pursuant to the Retirement Income Plan or benefits described in Section 3.04.

Article 3. Amount and Payment of Supplemental Benefits

	 	3.01.	 	The supplemental benefits under this Plan shall be payable by the Company only
with respect to a Member who has retired or otherwise terminated his employment with
the Company after becoming vested under the Retirement Income Plan. Any such
supplemental benefits shall be payable from the general assets of the Company or from a
trust, if any, established by the Company for the purpose of paying benefits under the
Plan, the assets of which shall remain subject to the claims of judgment creditors of
the Company in accordance with the provisions of any such trust.

The amount of any supplemental benefits payable to a Member pursuant to this Plan,
expressed as a single life annuity payable as of the Member’s “normal retirement
date” (as that term is defined in the Retirement Income Plan) or in the event the
Member defers his retirement beyond his normal retirement date, his “deferred
retirement date” (as that term is defined in the Retirement Income Plan), shall be
equal to (a) minus (b) minus (c) minus (d), where:

	 	(a)	 	is the benefit calculated under the provisions of the
Retirement Income Plan, but:

	 	(i)	 	disregarding any reduction in the amount of
benefits under the Retirement Income Plan attributable to any provision
therein incorporating limitations imposed by Section 415 of the Internal
Revenue Code or Section 401(a)(17) of the Internal Revenue Code;

	 	(ii)	 	disregarding any reduction due to compensation
deferred under the Armstrong Deferred Compensation Plan;

	 	(iii)	 	including, for purposes of calculating Total
Service under the Retirement Income Plan, years of employment for a
Member described in Section 2.02(d) which precede his Company employment
to the extent so designated by the Board of Directors, or its delegate,
at the time such individual is designated as eligible for membership in the
Plan; and

 

4

 

	 	(iv)	 	including, for purposes of determining
compensation, any amounts contributed on the Member’s behalf to the Bonus
Replacement Retirement Plan; and

	 	(v)	 	excluding any amount attributable to (1) an
Extraordinary Event (as defined in the Retirement Income Plan) and (2)
all retirement enhancements related to past and future service that may
become payable due to a job loss following a Change in Control (as
defined in the Retirement Income Plan) under the Retirement Income Plan.

	 	(b)	 	is the actual amount of benefits payable to or on account of
the Member as calculated under the Retirement Income Plan, excluding any
amounts attributable to (1) an Extraordinary Event (as defined in the
Retirement Income Plan) and (2) all retirement enhancements related to past and
future service that may become payable due to a job loss following a Change in
Control (as defined in the Retirement Income Plan) under the Retirement Income
Plan;

	 	(c)	 	is the value of the benefit (excluding the portion of such
benefit attributable to employee contributions) which is payable, which has
been paid or which will become payable to a Member described in Section 2.02(d)
from a qualified defined benefit plan to the extent such plan takes into
account the period of employment described in Section 3.01(a)(iii). In the
event the Member has received, is receiving, or is scheduled to receive
benefits from another such plan in any form other than a single life annuity or
at a time other than when benefits commence under this Plan, the benefit to be
taken into account under this subsection (c) shall be determined by the Company
based on actuarial assumptions and factors reasonably utilized under the
Retirement Income Plan as of the date of determination; and

	 	(d)	 	is the actuarial equivalent value of any supplemental benefits
previously paid to the Member under this Plan, provided that the actuarial
equivalent value of any supplemental benefits paid as a single sum shall be
determined using the actuarial assumptions and factors reasonably utilized
under the Retirement Income Plan as of the date of determination.

Notwithstanding the preceding provisions of this Section 3.01, in the event a
retired or terminated Member’s benefit calculated under the Retirement Income Plan
is increased for any reason after the Member’s supplemental benefit payments have
commenced in an annuity form, the amount of any supplemental benefits payable to or
on account of such Member under this Plan shall be reduced correspondingly on a
prospective basis, and in the event such increase is made retroactively resulting in
the overpayments of any or all of the Member’s supplemental benefits, future benefit
payments under this Plan shall be reduced to reflect such prior overpayments in any manner determined by the Committee, in its
discretion, and applied on a consistent basis to all similarly situated Members,
until an amount equal to the total overpayments in the Member’s supplemental benefit
payments are recovered.

 

5

 

	 	3.02.	 	Subject to the following rules, an employee of the Company who becomes a
Member under this Plan in accordance with Section 2.02 shall elect in writing the form
and timing of payment of the supplemental benefits payable on behalf of such Member
under this Plan within the thirty (30) day period following the Committee’s
determination that such employee has become a Member.

	 	(a)	 	The Member may elect to have his supplemental benefits paid in
the form of any annuity that is offered under the Retirement Income Plan (other
than a level income life annuity or a level income joint and survivor annuity).
Effective January 1, 2005, a Member may initially elect to have his benefit
paid in the form of a “life annuity” and then, immediately prior to
commencement of payment, elect the specific form of actuarially equivalent life
annuity among those offered under the Retirement Income Plan.

	 	(b)	 	In no event shall the Member elect to have his supplemental
benefits commence or be paid earlier than the later of: (i) the Member’s
attainment of age 55, or (ii) the date the Member first becomes eligible to
receive his benefits under the Retirement Income Plan and in no event shall the
Member elect to have his supplemental benefits commence or be paid later than
the Member’s attainment of age 65 or, if later, his actual retirement from the
Company.

In no event shall the Member elect to have his supplemental benefits commence
to be paid later than April 1 of the calendar year following the later of (x)
the calendar year in which the Member attains age 70 1/2, or (y) the calendar
year in which the Member terminates employment.

	 	(c)	 	In the event the Member fails to affirmatively elect the form
and timing of payment of his supplemental benefits hereunder, the Member shall
be deemed to have elected to have his supplemental benefits paid in the form
and at the time that his benefits are paid under the Retirement Income Plan.
Effective January 1, 2009, in the event the Member fails to affirmatively elect
the form and timing of payment of his supplemental benefits hereunder, the
Member shall be deemed to have elected to have his supplemental benefits paid
in the form of a life annuity and at the later of the Member’s attainment of
age 55 or termination of employment.

	 	(d)	 	Notwithstanding any other provision of the Plan to the
contrary, in the event the Member elects to receive a period certain annuity or
joint and survivor annuity and either the beneficiary designated by the Member
dies prior to the date the Member commences receiving his supplemental benefits
or the Member designates his spouse as his beneficiary and the Member is not
legally married to such spouse immediately preceding the date the Member
commences receiving his supplemental benefits, the Member’s election to receive
such period certain annuity or joint and survivor annuity shall automatically
be converted to an election to receive a single life annuity.

 

6

 

	 	3.03.	 	Notwithstanding the provisions of Section 3.02, a Member who has not commenced
receiving payment of his supplemental benefits may request in writing to the Committee
to amend the commencement date of his supplemental benefits elected by the Member under
Section 3.02, in accordance with the following rules:

	 	(a)	 	A Member who has not commenced receiving payment of his
supplemental benefits may request to amend the timing and/or form of payment of
the supplemental benefits (subject to the limitations of Section 3.02(a))
provided: (i) the commencement date in the absence of such distribution
election amendment is not within twelve (12) months of the date of the
amendment; (ii) his amended commencement date is at least twelve (12) months
(five (5) years for election amendments made on or after January 1, 2009) after
the date of the distribution election amendment; (iii) for election amendments
made on or after January 1, 2009, such election amendment will not take effect
until twelve (12) months after the date it is received by the Committee; and
(iv) his amended commencement date is otherwise in conformance with the
provisions of Section 3.02(b). Notwithstanding the foregoing: (i) during
calendar year 2007, a Member who has not yet commenced receiving payment of his
supplemental benefits may request in writing to the Committee to amend the
timing and/or form of payment (subject to the limitations of Section 3.02(a))
provided the amendment shall only apply to amounts that would not otherwise be
payable in 2007 and shall not cause an amount to be paid in 2007 that would not
otherwise be payable in 2007; and (ii) during calendar year 2008, a Member who
has not yet commenced receiving payment of his supplemental benefits may
request in writing to the Committee to amend the timing and/or form of payment
(subject to the limitations of Section 3.02(a)) provided the amendment shall
only apply to amounts that would not otherwise be payable in 2008 and shall not
cause an amount to be paid in 2008 that would not otherwise be payable in 2008.

	 	3.04.	 	Notwithstanding the provisions of Section 3.01 and Section 3.02, supplemental
benefits shall be payable under this Plan to or on account of a Member described in
Section 2.02(d) who: (i) is involuntarily terminated after completing one year of
service but prior to becoming vested in the Retirement Income Plan, and (ii) receives
severance pay benefits under the Severance Pay Plan for Salaried Employees of Armstrong
World Industries, Inc. or any individual severance agreement. The Member’s
supplemental benefits will be calculated using the guaranteed pension schedule for
Salaried Employees of Armstrong World Industries, Inc. under the Retirement Income Plan
multiplied by the total years of service credited for employment prior to his Company
employment, as determined in Section 2.02(d) and his years of Company employment and shall be
payable in the form of a single life annuity commencing as of the later of the
Member’s attainment of age 62 or the Member’s termination date.

 

7

 

	 	3.05.	 	Effective for periods prior to January 1, 2005, if a Member is restored to
employment with the Company after having retired, any monthly payments under the Plan
shall be discontinued and, upon subsequent retirement or termination of employment with
the Company, the Member’s benefits under the Plan shall be recomputed in accordance
with Section 3.01 and shall again become payable to such Member in accordance with the
provisions of the Plan, including his election under Section 3.02.

	 	3.06.	 	In the event the dollar amount of the maximum benefit under the Retirement
Income Plan pursuant to Section 415 of the Internal Revenue Code increases because of
adjustments in the cost of living, the supplemental benefits of any Member payable
under the Plan, whether or not in pay status, shall be recalculated to take into
account the higher maximum benefit payable from the Retirement Income Plan. If
payments have already commenced under the Retirement Income Plan and this Plan, benefit
amounts under both plans shall be adjusted to reflect the higher maximum benefit, by
increasing the amount paid under the Retirement Income Plan and decreasing the amount
paid under this Plan, as soon as administratively possible after such a change.
Notwithstanding the above, if the Retirement Income Plan is terminated, no adjustments
shall be made to benefits payable under this Plan with respect to changes in the
maximum benefit after the date of such termination.

	 	3.07	 	In the event a Member dies after becoming vested under the Retirement Income
Plan but prior to the date his supplemental benefits under this Plan are scheduled to
commence or be paid, a spouse’s benefit shall be payable to the Member’s surviving
spouse. The spouse’s benefit shall be paid to the Member’s surviving spouse in a life
annuity, beginning as of the first day of the month immediately following the date of
the Member’s death or, if later, the date the Member would have attained age 55 if he
had lived, under which each payment shall equal one-half (1/2) of the amount that would
have been payable to the Member under Section 3.01 if the Member had elected a single
life annuity under Section 3.02 with payments commencing as of the same date as the
spouse’s benefit.

	 	3.08.	 	Effective as of March 1, 2004, all rights and / or obligations of the Company
to honor single-sum withdrawal requests shall be terminated.

 

8

 

	 	3.09.	 	Effective January 1, 2005, notwithstanding any provision of this Plan to the
contrary, if the Member is considered a Specified Employee at termination of employment
under such procedures as established by the Company in accordance with Section 409A of
the Internal Revenue Code, benefit distributions that are made by reason of termination
of employment may not commence earlier than six (6) months after the date of such
termination of employment. Therefore, in the event this Section 3.09 is applicable to
a Member, any distribution that would otherwise be paid to the Member within the first six months following the
termination of employment shall be accumulated and paid to the Participant in a lump
sum (payable with interest determined based upon the short-term applicable federal
rate (AFR) for purposes of Section 1274(d) of the Internal Revenue Code for the
November preceding the calendar year of the termination of employment) on the first
day of the seventh month following the termination of employment. All subsequent
distributions shall be paid in the manner specified.

	 	3.10.	 	Notwithstanding any other provision of the Plan to the contrary, a Member may
request at any time to receive a lump sum distribution of a portion of his supplemental
benefit due to an “Unforeseeable Emergency” as follows:

	 	(a)	 	“Unforeseeable Emergency” shall mean any severe financial
hardship to the Member resulting from an illness or accident of the Member or
his spouse or dependent (as defined in Section 152 of the Internal Revenue
Code, without regard to Sections 152(b)(1), (b)(2) and (d)(1)(B) thereof), loss
of the Member’s property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Member.

	 	(b)	 	Any distribution pursuant to this provision is limited to the
amount necessary to meet the emergency, and any amounts necessary to pay any
federal, state, local or foreign income taxes or penalties reasonably
anticipated to result from such distribution.

	 	(c)	 	The circumstances that will constitute an Unforeseeable
Emergency will depend upon the facts of each case, but, in any case, payment
may not be made to the extent that such hardship is or may be relieved (i)
through reimbursement or compensation by insurance or otherwise or (ii) by
liquidation of the Participant’s assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship.

	 	(d)	 	If the Committee determines that a Participant has demonstrated
an Unforeseeable Emergency, the determination to make a distribution pursuant
to this Section 3.10 remains in the sole discretion of the Committee.

	 	(e)	 	Any distribution due to an Unforeseeable Emergency shall be
made by determining the Actuarial Equivalent Present Value of the Member’s
supplemental benefits and a lump sum distribution shall not be in excess of
such Actuarial Equivalent Present Value. In the event the distribution is less
than the Actuarial Equivalent Present Value, the Actuarial Equivalent Present
value of the Member’s supplemental benefits shall then be reduced in accordance
with Section 3.01(d).

 

9

 

Article 4. Administration

	 	4.01.	 	The administration of the Plan and the responsibility for carrying out its
provisions are vested in a Retirement Committee which shall be composed of the
members of the Retirement Committee provided for under Article IX of the Retirement
Income Plan. The provisions of Article IX of the Retirement Income Plan concerning
powers of the Committee shall apply under this Plan. The Retirement Committee shall
have the full and exclusive discretion and authority to interpret the Plan and to
determine all benefits and to resolve all questions arising from the administration,
interpretation, and application of Plan provisions, either by general rules or by
particular decisions, including determinations as to whether a claimant is eligible
for benefits, the amount, form and timing of benefits, and any other matter
(including any question of fact) raised by a claimant or identified by the
Retirement Committee. All decisions of the Committee shall be conclusive and
binding upon all affected persons. The expenses of the Committee shall be paid
directly by the Company.

Article 5. General Provisions

	 	5.01.	 	The establishment of the Plan shall not be construed as conferring any legal
rights upon any person for a continuation of employment, nor shall it interfere with
the rights of the Company to discharge any employee and to treat him without regard to
the effect which such treatment might have upon him as a Member of the Plan. No legal
or beneficial interest in any of the Company’s assets is intended to be conferred by
the terms of the Plan.

	 	5.02.	 	In the event that the Committee shall find that a Member or other person
entitled to benefits hereunder is unable to care for his affairs because of illness or
accident, the Committee may direct that any benefit payment due him, unless claim shall
have been made therefor by a duly appointed legal representative, be paid to his
spouse, a child, a parent or other blood relative, or to a person with whom he resides,
and any such payment so made shall be a complete discharge of the liabilities of the
Company and the Plan therefor.

	 	5.03.	 	The Company shall have the right to deduct from each payment to be made under
the Plan any required withholding taxes.

	 	5.04.	 	Subject to any applicable law, no benefit under the Plan shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance
or charge, any attempt so to do shall be void, nor shall any such benefit be in any
manner liable for or subject to garnishment, attachment, execution or levy, or liable
for or subject to the debts, contracts, liabilities, engagements or torts of the
Member. In the event that the Committee shall find that any Member or other person
entitled to benefits hereunder has become bankrupt or has made any such attempt with
respect to any such benefit, such benefit shall cease and terminate, and in that event
the Board shall hold or apply the same to or for the benefit of such Member or other
person entitled to benefits.

 

10

 

	 	5.05.	 	(a)	 	In the event that a Member (i) is discharged for willful, deliberate, or
gross misconduct as determined by the Board of Directors or a duly constituted
committee thereof; or (ii) if following the Member’s termination
of employment with the Company and, within a period of three years thereafter,
the Member engages in any business or enters into any employment which the
Board of Directors or a duly constituted committee thereof determines to be
either directly or indirectly competitive with the business of the Company or
substantially injurious to the Company’s financial interest (the occurrence of
an event described in (i) or (ii) shall be referred to as “Injurious Conduct”),
all benefits which would otherwise be payable to him under the Plan shall be
forfeited. Further, the Board of Directors or a duly constituted committee
thereof, in its discretion, may require the Member who has engaged in Injurious
Conduct to return any amounts previously received by the Member, provided the
right to require repayment under this subsection (a) must be exercised within
ninety (90) days after the Board (or committee, as the case may be) first
learns of the Injurious Conduct, but in no event later than twenty-four (24)
months after the Member’s termination of employment with the Company. A Member
may request the Board of Directors or a duly constituted committee thereof, in
writing, to determine whether any proposed business or employment activity
would constitute Injurious Conduct. Such a request shall fully describe the
proposed activity and the Board’s (or the committee’s, as the case may be)
determination shall be limited to the specific activity so described.
	 
	 	 	 	(b)	 	Notwithstanding the foregoing, benefits shall not cease or be
forfeited or be required to be repaid merely because the Member (1) owns
publicly traded shares of stock of a corporation which competes with the
Company, or (2)(a) acts as a consultant for, (b) has an investment in, or (c)
is a Board member of a business where after the Member notifies the Company in
writing in advance of his potential involvement under (2)(a), (b) or (c), the
Company’s Board of Directors or a duly constituted committee thereof determines
that the Member will not be in violation of the Company’s Conflicts of Interest
policy, or (3) becomes associated with a business which competes with the
Company within two years following a “Change in Control” and is eligible for
benefits under any individual severance agreement.

	 	5.06.	 	The Plan shall be constructed, regulated and administered under the laws of
the Commonwealth of Pennsylvania.

	 	5.07.	 	The masculine pronoun shall mean the feminine wherever appropriate.

 

11

 

	 	5.08.	 	The Board of Directors may, through written resolutions adopted by the Board
of Directors, amend or discontinue the Retirement Benefit Equity Plan at any time;
provided, however, that if the Plan is amended to discontinue or reduce the amount of
supplemental benefit payments (except as may be required pursuant to any plan arising
from insolvency or bankruptcy proceedings) (a) any Member who is being paid his
supplemental benefits immediately prior to the effective date of the amendment shall
continue to be paid his supplemental benefits in the amount and manner (as provided
under Article 3 hereof) as they were being paid at the time of such amendment, and (b) any Member who is not being paid his
supplemental benefits immediately prior to the effective date of the amendment shall
be entitled to receive (i) the supplemental benefits accrued by such Member as of
the effective date of the amendment, with such supplemental benefits being paid at
the time elected by the Member under Section 3.02, and (ii) any legal fees and
related expenses incurred by the Member in receiving such supplemental benefits (as
permitted under Section 5.09(e)) and interest under Section 5.09(f) (to the extent
applicable). Notwithstanding the preceding sentence, any written employment
agreement between the Executive Committee and any Member described in clause (b) of
the preceding sentence shall govern to the extent such agreement either amends or
discontinues the Member’s supplemental benefits under the Plan, and Section 5.05
shall govern to the extent any Member engages in Injurious Conduct as defined under
that section.

	 	5.09.	 (a)	 	 	Any person claiming a benefit, requesting an interpretation or ruling
under the Plan, or requesting information under the Plan shall present the request in
writing to the Committee which shall respond in writing as soon as practicable.

	 	(b)	 	If the claim or request is denied, the written notice of denial
shall state:

	 	(i)	 	The reasons for denial, with specific reference to
the Plan provisions on which the denial is based.

	 	(ii)	 	A description of any additional material or
information required and an explanation of why it is necessary.

	 	(iii)	 	An explanation of the Plan’s claim review
procedure.

	 	(c)	 	Any person whose claim or request is denied or who has not
received a response within thirty (30) days may request review by notice given
in writing to the Committee. The claim or request shall be reviewed by the
Committee who may, but shall not be required to, grant the claimant a hearing.
On review, the claimant may have representation, examine pertinent documents,
and submit issues and comments in writing.

 

12

 

	 	(d)	 	The decision on review shall normally be made within sixty (60)
days. If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be one
hundred twenty (120) days. The decision shall be in writing and shall state
the reasons and the relevant Plan provisions. All decisions on review shall be
final and bind all parties concerned.

	 	(e)	 	In the event a Member’s claim for supplemental benefits under
this Plan is denied and the Member successfully appeals the denial of such
claim under the foregoing procedures, the Company shall pay or reimburse the
legal fees and expenses directly incurred by the Member in connection with his
appeal subject to a maximum payment or reimbursement of one-third of the
Actuarial Equivalent Present Value of the supplemental benefits to which the
Member is entitled. For purposes of the preceding sentence, actuarial
equivalence shall be determined using the actuarial assumptions and factors
reasonably utilized under the Retirement Income Plan as of the date of
determination. Any such legal fees and expenses shall be paid by the Company
to, or on behalf of, the Member no later than thirty (30) days following the
Member’s written request for the payment of such legal fees and expenses,
provided the Member supplies the Committee with evidence of the fees and
expenses incurred by the Member that the Committee, in its sole discretion,
determines is sufficient.

	 	(f)	 	Further, in the event a Member’s claim for supplemental
benefits under this Plan is denied and the Member successfully appeals the
denial of such claim under the foregoing procedures, the Company shall pay to
the Member interest on the portion of the Member’s supplemental benefits that
were not otherwise paid when due because of the initial denial of the claim.
For purposes of the preceding sentence, interest shall accrue at an annual rate
equal to the prime rate as quoted in the Wall Street Journal as of the date the
supplemental benefits would otherwise have been paid if the claim had not
initially been denied, plus five percent (5%), and shall be adjusted as
necessary to reflect any partial payment or payments of the amounts owed to the
Member.

 

13Filed by Bowne Pure Compliance

Exhibit No. 10.13

ARMSTRONG WORLD INDUSTRIES, INC.

2006 LONG-TERM INCENTIVE PLAN

EFFECTIVE AS OF October 2, 2006

Index of Defined Terms

	 	 	 	 	 
	Term	 	Section Where Defined or First Used
	Beneficial Owner
	 	14	(c)(ii)
	Benefits
	 	 	4	 
	Cash Awards
	 	 	10	 
	Change in Control
	 	14	(c)(iii)
	Code
	 	 	2	(a)
	Committee
	 	 	2	(a)
	Common Stock
	 	 	5	(a)
	Company
	 	 	1	 
	Dividend Equivalent Right
	 	 	9	(c)
	Effective Date
	 	 	24	 
	Exchange Act
	 	 	2	(a)
	Fair Market Value
	 	 	17	 
	Incentive Stock Option
	 	 	6	(a)
	Injurious Conduct
	 	 	13	 
	Non-Employee Director
	 	 	2	(a)
	Nonqualified Stock Option
	 	 	6	(a)
	Parent Corporation
	 	 	6	(f)
	Performance-Based Awards
	 	 	11	(a)
	Person
	 	14	(c)(iv)
	Plan
	 	 	1	 
	Restoration Stock Options
	 	 	6	(e)
	Restricted Stock Award
	 	 	8	 
	Stock Appreciation Rights
	 	 	7	 
	Stock Options
	 	 	6	 
	Stock Unit
	 	 	9	(c)
	Subsidiary Corporation
	 	 	6	(f)

 

 

 

ARMSTRONG WORLD INDUSTRIES, INC.

2006 LONG-TERM INCENTIVE PLAN

1. Purpose. Armstrong World Industries, Inc. 2006 Long-Term Incentive Plan (the
“Plan”) is intended to provide incentives which will attract, retain and motivate highly
competent persons as officers and key employees of Armstrong World Industries, Inc., a Pennsylvania
corporation (the “Company”), and its subsidiaries and affiliates, by providing them with
appropriate incentives and rewards to encourage them to enter into and continue in the employ of
the Company, to acquire a proprietary interest in the long-term success of the Company and to
reward the performance of individuals in fulfilling their personal responsibilities for long-range
achievements.

2. Administration.

(a) Committee. The Plan will be administered by a committee (the “Committee”)
appointed by the Board of Directors of the Company from among its members (which may be the
Management Development and Compensation Committee) and shall be comprised, unless otherwise
determined by the Company’s Board of Directors, solely of not less than two (2) members who shall
be (i) “Non-Employee Directors” within the meaning of Rule 16b-3(b)(3) (or any successor
rule) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and (ii) “outside directors” within the meaning of Treasury Regulation Section
1.162-27(e)(3) under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”).

(b) Authority. The Committee is authorized, subject to the provisions of the Plan, to
establish such rules and regulations as it deems necessary for the proper administration of the
Plan and to make such determinations and interpretations and to take such action in connection with
the Plan and any Benefits granted hereunder as it deems necessary or advisable. All determinations
and interpretations made by the Committee shall be binding and conclusive on all participants and
their legal representatives.

(c) Indemnification. No member of the Committee and no employee of the Company shall
be liable for any act or failure to act hereunder, except in circumstances involving his or her bad
faith or willful misconduct, or for any act or failure to act hereunder by any other member or
employee or by any agent to whom duties in connection with the administration of this Plan have
been delegated. The Company shall indemnify members of the Committee and any agent of the
Committee who is an employee of the Company, a subsidiary or an affiliate against any and all
liabilities or expenses to which they may be subjected by reason of any act or failure to act with
respect to their duties on behalf of the Plan, except in circumstances involving such person’s bad
faith or willful misconduct.

 

1

 

(d) Delegation and Advisers. The Committee may delegate to one or more of its
members, to management or to one or more agents, such administrative duties as it may deem
advisable; provided, such delegation does not adversely effect the exemption provided by Rule 16b-3
of the Exchange Act, prevent a Benefit from qualifying as a Performance-Based Award, if so
intended, and complies with applicable law. The Committee, or any person to whom it
has delegated duties as aforesaid, may employ one or more persons to render advice with
respect to any responsibility the Committee or such person may have under the Plan. The Committee
may employ such legal or other counsel, consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion or computation received from any such
counsel, consultant or agent. Expenses incurred by the Committee in the engagement of such
counsel, consultant or agent shall be paid by the Company, or the subsidiary or affiliate whose
employees have benefited from the Plan, as determined by the Committee.

3. Participants. Participants will consist of such officers and key employees of the Company
and its subsidiaries and affiliates as the Committee in its sole discretion determines to be
significantly responsible for the success and future growth and profitability of the Company and
whom the Committee may designate from time to time to receive Benefits under the Plan. Designation
of a participant in any year shall not require the Committee to designate such person to receive a
Benefit in any other year or, once designated, to receive the same type or amount of Benefit as
granted to the participant in any other year. The Committee shall consider such factors as it
deems pertinent in selecting participants and in determining the type and amount of their
respective Benefits.

4. Type of Benefits. Benefits under the Plan may be granted in any one or a combination of
(a) Stock Options, (b) Stock Appreciation Rights, (c) Restricted Stock Awards, (d) Stock Units and
(e) Cash Awards (each as described below, and collectively, the “Benefits”). Restricted
Stock Awards, Stock Units and Cash Awards may, as determined by the Committee in its discretion,
constitute Performance-Based Awards, as described in Section 11 hereof. Benefits granted under the
Plan may be evidenced by an agreement (which need not be identical) that may provide additional
terms and conditions associated with such Benefits, as determined by the Committee in its sole
discretion, provided, however, that in the event of any conflict between the provisions of the Plan
and any such agreement, the provisions of the Plan shall prevail.

5. Common Stock Available Under the Plan.

(a) Basic Limitations. The aggregate number of shares of common stock of the Company
(the “Common Stock”) that may be subject to Benefits, granted under this Plan shall be
5,349,000 shares of Common Stock, which may be authorized and unissued shares or treasury shares or
may be purchased on the open market or by private purchase, subject to any adjustments made in
accordance with Section 14(a) hereof. The maximum number of shares of Common Stock with respect to
which Benefits may be granted or measured to any individual participant under the Plan in any one
calendar year shall not exceed 750,000 (subject to adjustments made in accordance with Section
14(a) hereof).

 

2

 

(b) Additional Shares. Any shares of Common Stock subject to (or referenced by) a
Benefit which are not ultimately used to settle a Benefit shall again be available for Benefits
under this Plan and any shares of Common Stock delivered to the Company as part or full payment for
the exercise of a Stock Option, Stock Appreciation Right, or Restricted Stock Award or to satisfy a
tax obligation shall also be available for Benefits under this Plan. This includes shares of
Common Stock that are: (i) covered by a Stock Option or referenced by a
Stock Appreciation Right which for any reason is cancelled or terminated without having been
exercised, (ii) subject to Restricted Stock Awards or Stock Units which are forfeited, and (iii)
not delivered to a participant because all or a portion of a Benefit is settled in cash. The
preceding sentences of this Section shall apply only for purposes of determining the aggregate
number of shares of Common Stock subject to Benefits but shall not apply for purposes of
determining the maximum number of shares of Common Stock with respect to which Benefits (including
the maximum number of shares of Common Stock subject to Stock Options and Stock Appreciation
Rights) that may be granted to any individual participant under the Plan.

(c) Acquisitions. In connection with the acquisition of any business by the Company
or any of its subsidiaries or affiliates, any outstanding grants, awards or sales of options or
other similar rights pertaining to such business may be assumed or replaced by Benefits under the
Plan upon such terms and conditions as the Committee determines in its sole discretion.

6. Stock Options.

(a) Generally. Stock Options will consist of awards from the Company that will enable
the holder to purchase a number of shares of Common Stock, at set terms. Stock Options may be
“incentive stock options” (“Incentive Stock Options”), within the meaning of
Section 422 of the Code, or Stock Options which do not constitute Incentive Stock Options
(“Nonqualified Stock Options”). The Committee will have the authority to grant to any
participant one or more Incentive Stock Options, Nonqualified Stock Options, or both types of Stock
Options (in each case with or without Stock Appreciation Rights). Each Stock Option shall be
subject to such terms and conditions, including vesting, consistent with the Plan as the Committee
may impose from time to time, subject to the following limitations.

(b) Exercise Price. Each Nonqualified Stock Option granted hereunder shall have a
per-share exercise price as the Committee may determine on the date of grant.

(c) Payment of Exercise Price. The option exercise price may be paid in cash or, in
the discretion of the Committee, by the delivery of shares of Common Stock of the Company then
owned by the participant, provided such shares have been held by such participant for at least six
(6) months. In the discretion of the Committee, payment may also be made by delivering a properly
executed exercise notice to the Company together with a copy of irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the exercise
price as long as such transaction does not constitute an impermissible loan to an executive officer
under the Sarbanes-Oxley Act of 2002. To facilitate the foregoing, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms. The Committee may
prescribe any other method of paying the exercise price that it determines to be consistent with
applicable law and the purpose of the Plan, including, without limitation, in lieu of the exercise
of a Stock Option by delivery of shares of Common Stock of the Company then owned by a participant,
providing the Company with a notarized statement attesting to the number of shares owned, where
upon verification by the Company, the Company would issue to the participant only the number of
incremental shares to which the participant is entitled upon exercise of the Stock Option.

 

3

 

(d) Exercise Period. Stock Options granted under the Plan shall be exercisable at
such time or times and subject to such terms and conditions, including vesting, as shall be
determined by the Committee; provided, however, that no Stock Option shall be exercisable later
than ten (10) years after the date it is granted. All Stock Options shall terminate at such
earlier times and upon such conditions or circumstances as the Committee shall in its discretion
set forth in such option agreement on the date of grant.

(e) Restoration of Stock Options. The Committee may, at the time of grant of an
option, provide for the grant of a subsequent Restoration Stock Option if the exercise price is
paid for by delivering previously owned shares of Common Stock of the Company. Restoration Stock
Options (i) may be granted in respect of no more than the number of shares of Common Stock tendered
in exercising the predecessor Stock Option, (ii) shall have an exercise price equal to the Fair
Market Value (as defined in Section 17 below) on the date the Restoration Stock Option is granted,
and (iii) may have an exercise period that does not extend beyond the remaining term of the
predecessor Stock Option. In determining which methods a participant may utilize to pay the
exercise price, the Committee may consider such factors as it determines are appropriate.

(f) Limitations on Incentive Stock Options. Incentive Stock Options may be granted
only to participants who are employees of the Company or of a “Parent Corporation” or
“Subsidiary Corporation” (as defined in Sections 424(e) and (f) of the Code, respectively)
on the date of grant. The aggregate Fair Market Value (determined as of the time the Stock Option
is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for
the first time by a participant during any calendar year (under all option plans of the Company and
of any Parent Corporation or Subsidiary Corporation) shall not exceed one hundred thousand dollars
($100,000), provided, however, that if such $100,000 limit is exceeded, the excess Incentive Stock
Options shall be treated as Nonqualified Stock Options. For purposes of the preceding sentence,
Incentive Stock Options will be taken into account in the order in which they are granted. The
per-share exercise price of an Incentive Stock Option shall not be less than one hundred percent
(100%) of the Fair Market Value of the Common Stock on the date of grant, and no Incentive Stock
Option may be exercised later than ten (10) years after the date it is granted.

(g) Additional Limitations on Incentive Stock Options for Ten Percent Shareholders.
Incentive Stock Options may not be granted to any participant who, at the time of grant, owns stock
possessing (after the application of the attribution rules of Section 424(d) of the Code) more than
ten percent (10%) of the total combined voting power of all classes of stock of the Company or any
Parent Corporation or Subsidiary Corporation, unless the exercise price of the option is fixed at
not less than one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the
date of grant and the exercise of such option is prohibited by its terms after the expiration of
five (5) years from the date of grant of such option.

 

4

 

7. Stock Appreciation Rights.

(a) Generally. The Committee may, in its discretion, grant Stock Appreciation Rights,
including a concurrent grant of Stock Appreciation Rights in tandem with any Stock Option grant. A
Stock Appreciation Right means a right to receive a payment in cash,
Common Stock or a combination thereof, as determined by the Committee, in an amount equal to
the excess of (i) the Fair Market Value, or other specified valuation, of a specified number of
shares of Common Stock on the date the right is exercised over (ii) the Fair Market Value of such
shares of Common Stock on the date the right is granted, or other specified amount, all as
determined by the Committee; provided, however, that if a Stock Appreciation Right is granted in
tandem with or in substitution for a Stock Option, the designated Fair Market Value in the award
agreement shall reflect the Fair Market Value on the date such Stock Option was granted. Each
Stock Appreciation Right shall be subject to such terms and conditions, including vesting, as the
Committee shall impose from time to time, provided, however, that if a Stock Appreciation Right is
granted in connection with a Stock Option, the Stock Appreciation Right shall become exercisable,
be transferable and shall expire according to the same vesting, transferability and expiration
rules as the corresponding Stock Option.

(b) Exercise Period. Stock Appreciation Rights granted under the Plan shall be
exercisable at such time or times and subject to such terms and conditions, including vesting, as
shall be determined by the Committee; provided, however, that no Stock Appreciation Rights shall be
exercisable later than ten (10) years after the date it is granted. All Stock Appreciation Rights
shall terminate at such earlier times and upon such conditions or circumstances as the Committee
shall in its discretion set forth in such right at the date of grant.

8. Restricted Stock Awards.

(a) Generally. The Committee may, in its discretion, grant Restricted Stock Awards
consisting of Common Stock issued or transferred to participants with or without other payments
therefor.

(b) Payment of the Purchase Price. If the Restricted Stock Award requires payment
therefor, the purchase price of any shares of Common Stock subject to a Restricted Stock Award may
be paid in any manner authorized by the Committee, which may include any manner authorized under
the Plan for the payment of the exercise price of a Stock Option. Restricted Stock Awards may also
be made in consideration of services rendered to the Company or its subsidiaries or affiliates.

(c) Additional Terms. Restricted Stock Awards may be subject to such terms and
conditions, including vesting, as the Committee determines appropriate, including, without
limitation, (i) restrictions on the sale or other disposition of such shares, and (ii) the right of
the Company to reacquire such shares for no consideration upon termination of the participant’s
employment within specified periods, the participant’s competition with the Company, or the
participant’s breach of other obligations to the Company. Restricted Stock Awards may constitute
Performance-Based Awards, as described in Section 11 hereof. The Committee may require the
participant to deliver a duly signed stock power, endorsed in blank, relating to the Common Stock
covered by such an Award. The Committee may also require that the stock certificates evidencing
such shares be held in custody or bear restrictive legends until the restrictions thereon shall
have lapsed.

 

5

 

(d) Rights as a Shareholder. The participant shall have, with respect to the shares
of Common Stock subject to a Restricted Stock Award, all of the rights of a holder of shares of
Common Stock of the Company, including the right to vote the shares. At the discretion of the
Committee, cash dividends and stock dividends with respect to the Restricted Stock may be either
currently paid to the participant or withheld by the Company for the participant’s account, and
interest may be credited on the amount of cash dividends withheld at a rate and subject to such
terms as determined by the Committee. The cash dividends or stock dividends so withheld by the
Committee and attributable to any particular share of Restricted Stock (and earnings thereon, if
applicable) shall be distributed to the participant upon the release of restrictions on such shares
and, if such share is forfeited, the participant shall have no right to such cash dividends or
stock dividends.

9. Stock Units.

(a) Generally. The Committee may, in its discretion, grant Stock Units (as defined in
subsection (c) below) to participants hereunder. Stock Units may be subject to such terms and
conditions, including vesting, as the Committee determines appropriate. Stock Units may constitute
Performance-Based Awards, as described in Section 11 hereof. A Stock Unit granted by the Committee
shall provide payment in shares of Common Stock at such time as the award agreement shall specify.
Shares of Common Stock issued pursuant to this Section 9 may be issued with or without other
payments therefor as may be required by applicable law or such other consideration as may be
determined by the Committee. The Committee shall determine whether a participant granted a Stock
Unit shall be entitled to a Dividend Equivalent Right (as defined in subsection (c) below).

(b) Settlement of Stock Units. Shares of Common Stock representing the Stock Units
shall be distributed to the participant unless the Committee provides for the payment of the Stock
Units in cash equal to the value of the shares of Common Stock which would otherwise be distributed
to the participant or partly in cash and partly in shares of Common Stock.

(c) Definitions. A “Stock Unit” means a notional account representing one (1)
share of Common Stock. A “Dividend Equivalent Right” means the right to receive the amount
of any dividend paid on the share of Common Stock underlying a Stock Unit, which shall be payable
in cash or in the form of additional Stock Units.

10. Cash Awards.
The Committee may, in its discretion, grant awards to be settled solely in cash (“Cash
Awards”). Cash Awards may be subject to such terms and conditions, including vesting, as the
Committee determines appropriate. Cash Awards may constitute Performance-Based Awards, as
described in Section 11 hereof. The maximum Cash Award payout that may be made to any participant
in any one year is $3,000,000.

 

6

 

11. Performance-Based Awards.

(a) Generally. Any Benefits granted under the Plan may be granted in a manner such
that the Benefits qualify for the performance-based compensation exemption of Section 162(m) of the
Code (“Performance-Based Awards”). As determined by the Committee in its sole discretion,
either the granting or vesting of such Performance-Based Awards shall be based
on achievement of performance objectives that are based on one or more of the business
criteria described below that apply to the individual participant, one or more business units or
the Company as a whole.

(b) Business Criteria. The business criteria shall be as follows, individually or in
combination: (i) net earnings; (ii) earnings per share; (iii) sales; (iv) operating income; (v)
earnings before interest and taxes (EBIT); (vi) earnings before interest, taxes, depreciation and
amortization (EBITDA); (vii) cash flow; (viii) working capital targets; (ix) return on equity; (x)
return on capital; (xi) market price per share; and (xii) total return to shareholders. In
addition, Performance-Based Awards may include comparisons to the performance of other companies,
such performance to be measured by one or more of the foregoing business criteria.

(c) Establishment of Performance Goals. With respect to Performance-Based Awards, the
Committee shall establish in writing (i) the performance goals applicable to a given period, and
such performance goals shall state, in terms of an objective formula or standard, the method for
computing the amount of compensation payable to the participant if such performance goals are
obtained and (ii) the individual employees or class of employees to which such performance goals
apply; provided, however, that such performance goals shall be established in writing no later than
ninety (90) days after the commencement of the applicable performance period (but in no event after
twenty-five percent (25%) of such performance period has elapsed).

(d) Certification of Performance. No Performance-Based Awards shall be payable to or
vest with respect to, as the case may be, any participant for a given period until the Committee
certifies in writing that the objective performance goals (and any other material terms) applicable
to such period have been satisfied.

(e) Modification of Performance-Based Awards. With respect to any Benefits intended
to qualify as Performance-Based Awards, after establishment of a performance goal, the Committee
shall not revise such performance goal or increase the amount of compensation payable thereunder
(as determined in accordance with Section 162(m) of the Code) upon the attainment of such
performance goal. Notwithstanding the preceding sentence, the Committee may reduce or eliminate
the number of shares of Common Stock or cash granted or the number of shares of Common Stock vested
upon the attainment of such performance goal.

12. Foreign Laws. The Committee may grant Benefits to individual participants who are subject
to the tax laws of nations other than the United States, which Benefits may have terms and
conditions as determined by the Committee as necessary to comply with applicable foreign laws. The
Committee may take any action which it deems advisable to obtain approval of such Benefits by the
appropriate foreign governmental entity; provided, however, that no such Benefits may be granted
pursuant to this Section 12 and no action may be taken which would result in a violation of the
Exchange Act, the Code or any other applicable law.

 

7

 

13. Certain Terminations of Employment; Forfeitures.

(a) Forfeiture of Unsettled Benefits. Unless the Committee or any agreement providing
for Benefits under this Plan shall otherwise provide, a participant shall forfeit all Benefits,
which have not been settled under this Plan (other than fully vested Restricted Stock Awards) if:

(i) the participant’s employment with the Company or with any Parent Corporation or
Subsidiary Corporation is terminated for willful, deliberate, or gross misconduct, as determined
by the Committee, in its sole discretion, or

(ii) following the participant’s termination of employment with the Company (or with any
Parent Corporation or Subsidiary Corporation) and for a period of two (2) years thereafter, the
participant engages in any business or enters into any employment relationship which the
Committee in its sole discretion determines to be either directly or indirectly competitive with
the business of the Company or substantially injurious to the Company’s business interest.

The activities described in (i) and (ii) above are hereafter referred to as “Injurious
Conduct”.

(b) Forfeiture of Settled Benefits. If the Committee determines that a participant
has engaged in Injurious Conduct during the course of his employment (or during the two (2) year
period following his or her termination of employment), the Committee may in its discretion require
the participant to return to the Company any Common Stock or cash received in settlement of any
Benefit under this Plan. If the Common Stock acquired in settlement of a Benefit has been disposed
of by the participant, then the Company may require the participant to pay to the Company the
economic value of the Common Stock as of the date of disposition.

(c) Timing. The Committee shall exercise the right of forfeiture provided to the
Company in this Section 13 within ninety (90) days after the discovery of the activities giving
rise to the Company’s right of forfeiture, which activities must have occurred no later than
twenty-four (24) months after the participant’s termination of employment.

(d) Determination from the Committee. A participant may make a request to the
Committee in writing for a determination regarding whether any proposed business or activity would
constitute Injurious Conduct. Such request shall fully describe the proposed business or activity.
The Committee shall respond to the participant in writing and the Committee’s determination shall
be limited to the specific business or activity so described.

(e) Condition Precedent. Unless the Committee or any agreement providing for Benefits
under this Plan shall otherwise provide, no Benefit shall be deemed awarded to any participant
under this Plan unless and until the participant agrees to the applicability of this Section 13.

(f) Enforceability. The purpose of this Section 13 is to protect the Company (and any
Parent and Subsidiaries) from Injurious Conduct. To the extent that this Section 13 is not fully
enforceable as written, the unenforceable provisions shall be modified so as to provide the Company
with the fullest protection permitted by law.

 

8

 

14. Adjustment Provisions; Change in Control.

(a) Adjustment. Benefits granted under the Plan and any agreements evidencing such
Benefits, the maximum number of shares of Common Stock subject to all Benefits stated in Section
5(a) and the maximum number of shares of Common Stock with respect to which Benefits may be granted
to any one person during any period stated in Section 5(a) shall be subject to mandatory adjustment
or substitution, as determined by the Committee in its sole discretion, as to the number, price or
kind of a share of Common Stock or other consideration subject to such Benefits or as otherwise
determined by the Committee to be equitable (i) in the event of changes in the outstanding Common
Stock or in the capital structure of the Company by reason of stock or extraordinary cash
dividends, stock splits, reverse stock splits, recapitalization, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in capitalization occurring
after the date of grant of any such Benefit or (ii) in the event of any change in applicable laws
or any change in circumstances which results in or would result in any substantial dilution or
enlargement of the rights granted to, or available for, participants, or which otherwise warrants
equitable adjustment because it interferes with the intended operation of the Plan. Any adjustment
in Incentive Stock Options under this Section 14 shall be made only to the extent not constituting
a “modification” within the meaning of Section 424(h)(3) of the Code, and any adjustments under
this Section 14 shall be made in a manner which does not adversely affect the exemption provided
pursuant to Rule 16b-3 under the Exchange Act. Further, with respect to Benefits intended to
qualify as “performance-based compensation” under Section 162(m) of the Code, such adjustments or
substitutions shall be made only to the extent that the Committee determines that such adjustments
or substitutions may be made without causing the Company to be denied a tax deduction on account of
Section 162(m) of the Code. The Company shall give each participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.

(b) Effect of a Change in Control. Notwithstanding any other provision of this Plan,
if there is a Change in Control (as defined in subsection (c) below) of the Company, all then
outstanding Stock Options, Stock Appreciation Rights and Stock Units shall immediately vest and
become exercisable and any restrictions on Restricted Stock Awards or Stock Units shall immediately
lapse. Thereafter, insofar as any Benefit is provided in shares of stock of the Company or in
Stock Options or Stock Appreciation Rights or is determined based on the value or other attributes
of a share of stock of the Company, such Benefit shall be subject to the same terms to which a
share of stock of the Company is subject in accordance with any agreement effecting the Change in
Control, which agreement, may provide, without limitation, that each Stock Option and Stock
Appreciation Right outstanding hereunder shall terminate within a specified number of days after
notice to the holder, and that such holder shall receive, with respect to each share of Common
Stock subject to such Stock Option or Stock Appreciation Right, an amount equal to the excess of
the Fair Market Value of such shares of Common Stock immediately prior to the occurrence of such
Change in Control over the exercise price per share underlying such Stock Option or Stock
Appreciation Right with such amount payable in cash, in one or more kinds of property (including
the property, if any, payable in the transaction) or in a combination thereof, as the Committee, in
its discretion, shall determine.

 

9

 

(c) Definitions. For purposes of this Section 14, the following words shall have the
meaning ascribed to them below:

(i) “Affiliate’ means (i) any entity that directly or indirectly is controlled by,
controls or is under common control with the Company and (ii) any entity in which the Company
has a significant equity interest, in either case as determined by the Committee.

(ii) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.

(iii) “Change in Control” of the Company, with respect to any participant, shall be
deemed to have occurred upon any of the following events (unless another definition is provided
in any applicable individual change in control agreement between the Company and the
participant, in which case such agreement shall govern):

(A) Any Person becomes the Beneficial Owner, directly or indirectly, of securities
of the Company (not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its affiliates) representing twenty
percent (20%) or more of either the then outstanding shares of Common Stock 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 transaction described in clause
(i) of Paragraph (C) below;

(B) The following individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, on the Effective Date (as defined in
Section 24 below), constitute the Board of Directors 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 of Directors or nomination for election by the Company’s shareholder’s was
approved by a vote of least two-thirds (2/3) of the directors then still in office who
either were directors on the Effective Date 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 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 sixty-six and two-thirds percent
(66-2/3%) of the combined voting power of the voting securities of the Company or such
surviving entity 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 or
indirectly, of 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
twenty percent (20%) or more of either the then outstanding shares of Common Stock or
the combined voting power of the Company’s then outstanding securities;

 

10

 

(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 seventy-five percent (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 immediately prior to such
transaction or series of transactions continue to have substantially the same
proportionate ownership in the entity which owns all or substantially all of the assets
of the Company immediately following such transaction or series of transactions.

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

15. Nontransferability. Each Benefit granted under the Plan to a participant (other than
awards of unrestricted Stock Awards, vested restricted Stock Awards and vested Cash Awards) shall
not be transferable otherwise than by will or the laws of descent and distribution, and shall be
exercisable, during the participant’s lifetime, only by the participant. In the event of the death
of a participant, each Stock Option or Stock Appreciation Right theretofore granted to him or her
shall be exercisable during such period after his or her death as the Committee shall in its
discretion set forth in such option or right at the date of grant and then only by the executor or
administrator of the estate of the deceased participant or the person or persons to whom the
deceased participant’s rights under the Stock Option or Stock Appreciation Right shall pass by will
or the laws of descent and distribution. Notwithstanding the foregoing, at the discretion of the
Committee, an award of a Benefit other than an Incentive Stock Option may permit the
transferability of a Benefit by a participant solely to the participant’s spouse, siblings,
parents, children and grandchildren or trusts for the benefit of such persons or partnerships,
corporations, limited liability companies or other entities owned solely by such persons, including
trusts for such persons, subject to any restriction included in the award of the Benefit.

 

11

 

16. Other Provisions. The award of any Benefit under the Plan may also be subject to such
other provisions (whether or not applicable to the Benefit awarded to any other participant) as the
Committee determines appropriate, including, without limitation, for the forfeiture of, or
restrictions on resale or other disposition of, Common Stock acquired under any form of Benefit,
for the acceleration of exercisability or vesting of Benefits, or to comply with federal and state
securities laws, or understandings or conditions as to the participant’s employment in addition to
those specifically provided for under the Plan.

17. Fair Market Value. For purposes of this Plan and any Benefits awarded hereunder, Fair
Market Value on any given date means (i) if the Common Stock is listed on a national securities
exchange or is quoted in the National Market System of the National Association of Securities
Dealers Automated Quotation System (“NASDAQ”) on a last sale basis, the closing price reported as
having occurred on the such date, or, if there is no sale on such date, then on the last preceding
date on which such a sale was reported, or (ii) if the Common Stock is not listed on a national
securities exchange nor quoted in NASDAQ on a last sale basis, the amount determined by the
Committee to be the fair market value based upon a good faith attempt to value the Common Stock
accurately. Notwithstanding, the Committee may determine another appropriate means to determine
the Fair Market Value of the initial Stock Option and Restricted Stock Awards on October 2, 2006.

18. Withholding. All payments or distributions of Benefits made pursuant to the Plan shall be
net of any amounts required to be withheld pursuant to applicable federal, state and local tax
withholding requirements. If the Company proposes or is required to distribute Common Stock
pursuant to the Plan, it may require the recipient to remit to it or to the corporation that
employs such recipient an amount sufficient to satisfy such tax withholding requirements prior to
the delivery of any certificates for such Common Stock. In lieu thereof, the Company or the
employing corporation shall have the right to withhold the amount of such taxes from any other sums
due or to become due from such corporation to the recipient as the Committee shall prescribe. The
Committee may, in its discretion and subject to such rules as it may adopt (including any as may be
required to satisfy applicable tax and/or non-tax regulatory requirements), permit an optionee or
award or right holder to pay all or a portion of the federal, state and local withholding taxes
arising in connection with any Benefit consisting of shares of Common Stock by electing to have the
Company withhold shares of Common Stock having a Fair Market Value equal to the amount of tax to be
withheld, such tax calculated at minimum statutory withholding rates.

19. Employment Rights. Neither the Plan nor any action taken hereunder shall be construed as
giving any participant the right to be retained in the employ or service of the company or any of
its subsidiaries or affiliates.

20. Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to
any investments which the Company may make to aid it in meeting its obligations under the Plan.
Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary relationship between the Company and any
participant, beneficiary, legal representative or any other person. To the extent that any person
acquires a right to receive payments from the Company under the Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company.
All payments to be made hereunder shall be paid from the general funds of the Company and no
special or separate fund shall be established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the Plan. The Plan is not intended to be
subject to the Employee Retirement Income Security Act of 1974, as amended.

 

12

 

21. No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered
pursuant to the Plan or any Benefit. The Committee shall determine whether cash, or Benefits, or
other property shall be issued or paid in lieu of fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.

22. Duration, Amendment and Termination. No Benefit shall be granted more than ten (10) years
after the Effective Date. The Company may amend the Plan from time to time or suspend or terminate
the Plan at any time. No amendment of the Plan may be made without approval of the majority of the
shareholders of the Company if the amendment will: (i) increase the aggregate number of shares of
Common Stock that may be delivered through Stock Options under the Plan; (ii) increase the maximum
number of shares that may be awarded to any participant under Section 5 hereof or the maximum Cash
Award that can be paid to any individual under Section 10 hereof; (iii) change the types of
business criteria on which Performance-Based Awards are to be based under the Plan; or (iv) modify
the requirements as to eligibility for participation in the Plan.

23. Governing Law. This Plan, Benefits granted hereunder and actions taken in connection
herewith shall be governed and construed in accordance with the laws of the Commonwealth of
Pennsylvania (regardless of the law that might otherwise govern under applicable Pennsylvania
principles of conflict of laws).

24. Effective Date. This Plan is adopted by the Company in anticipation of its emergence from
chapter 11 of title 11 of the United States Bankruptcy Code, as a publicly-owned SEC reporting
issuer. Stock Options and Restricted Stock Awards provided for in the Company’s plan of
reorganization will be provided under this Plan. The Plan shall be effective as of the date on
which all the conditions to the effectiveness of the Company’s plan of reorganization (the
“Effective Date”, namely October 2, 2006), provided that the Plan is approved by the sole
shareholder of the Company on the Effective Date. Such shareholder approval shall be a condition
to the right of each participant to receive any Benefits hereunder. Any Benefits granted under the
Plan prior to such shareholder approval shall be effective as of the date of grant (unless, with
respect to any Benefit, the Committee specifies otherwise at the time of grant), but no such
Benefit may be exercised or settled and no restrictions relating to any Benefit may lapse prior to
such shareholder approval, and if such shareholder approval is not obtained as provided hereunder,
any such Benefit shall be cancelled.

 

13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00153-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00153-of-00352.parquet"}]]