EXHIBIT (10)(iii)(k)
AGREEMENT
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THIS AGREEMENT, dated as of October 1, 1999, is made by and between
Armstrong World Industries, Inc., a Pennsylvania corporation (the "Company"),
and ((FirstName)) ((LastName)) (the "Executive").
WHEREAS, the Board considers it essential to the best interests of the
Company to foster the continued employment of key management personnel; and
WHEREAS, the Board recognizes that, as is the case with many publicly
held corporations, the possibility of a Change in Control exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used in this
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Agreement are provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date
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hereof and shall continue in effect through September 30, 2002; provided,
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however, that commencing on October 1, 2000 and each October 1 thereafter, the
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term of this Agreement shall automatically be extended for one additional year
unless, not later than June 30 of that year, the Company or the Executive shall
have given notice not to extend this Agreement or a Change in Control shall have
occurred prior to such October 1; and further provided, however, that if a
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Change in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than thirty-six (36)
months beyond the month in which such Change in Control occurred.
3. Company's Covenants Summarized. In order to induce the Executive
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to remain in the employ of the Company and in consideration of the Executive's
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the Severance Payments and the
other payments and benefits described herein. Except as provided in Section
10.1 hereof, no amount or benefit shall be payable under this Agreement unless
there shall have been (or, under the terms of the second sentence of Section 6.1
hereof, there shall be deemed to have been) a termination of the Executive's
employment with the Company following a Change in Control and during the term of
this Agreement. This Agreement shall not be construed as creating an express or
implied contract of employment and, except as otherwise agreed in writing
between the Executive and the Company, the Executive shall not have any right to
be retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that, subject to
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the terms and conditions of this Agreement, in the event of a Potential Change
in Control during the term of this Agreement, the Executive will remain in the
employ of the Company until the earliest of (i) a date which is six (6) months
after the date of such Potential Change in Control, (ii) the date of a Change in
Control, (iii) the date of termination by the Executive of the Executive's
employment for Good Reason or by reason of death or Disability, or (iv) the
termination by the Company of the Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
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5.1. Following a Change in Control and during the term of this
Agreement, during any period that the Executive fails to perform the Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Company shall pay the Executive's full salary to the
Executive 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 during such period, until the Executive's employment is terminated by
the Company for Disability.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control and during the term of this Agreement, the Company
shall pay the Executive's full salary to the Executive through the Date of
Termination at the rate in effect immediately prior to the Change in Control or
at the time the Notice of Termination is given, whichever is greater, together
with all compensation and benefits to which the Executive is entitled in respect
of all periods preceding the Date of Termination under the terms of the
Company's compensation and benefit plans, programs or arrangements.
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control and during the term of this Agreement, the Company
shall pay to the Executive the Executive's normal post-termination compensation
and benefits as such payments become due. Such post-termination 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
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arrangements as in effect immediately prior to the Change in Control or, if more
favorable to the Executive, as in effect immediately prior to the Date of
Termination.
6. Severance Payments.
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6.1. The Company shall pay the Executive the payments described in
this Section 6.1 (the "Severance Payments") upon the termination of the
Executive's employment following a Change in Control and during the term of this
Agreement, in addition to any payments and benefits to which the Executive is
entitled under Section 5 and 8 hereof, unless such termination is (i) by the
Company for Cause, (ii) by reason of death or Disability, or (iii) by the
Executive without Good Reason. For purposes of this Agreement, the Executive's
employment shall be deemed to have been terminated by the Company without Cause
or by the Executive with Good Reason following a Change in Control if (i) the
Executive's employment is terminated without Cause prior to a Change in Control
which actually occurs during the term of this Agreement and such termination was
at the request or direction of a Person who has entered into an agreement with
the Company the consummation of which would constitute a Change in Control, (ii)
the Executive terminates his employment with Good Reason prior to a Change in
Control which actually occurs during the term of this Agreement and the
circumstance or event which constitutes Good Reason occurs at the request or
direction of such Person, (iii) the Executive's employment is terminated by the
Company without Cause or by the Executive for Good Reason prior to a Change in
Control and the Executive reasonably demonstrates that such termination is
otherwise in connection with or in anticipation of a Change in Control which
actually occurs during the term of this Agreement; provided that any termination
of the Executive's employment by the Company without Cause or by the Executive
for Good Reason within the six (6) month period immediately preceding a Change
in Control which actually occurs during the term of this Agreement shall be
presumed to be a termination by the Company without Cause or by the Executive
for Good Reason following a Change in Control, or (iv) the Executive's
employment is terminated without Cause after a Potential Change in Control of
the type described in paragraph (I) of the definition of "Potential Change in
Control".
(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination and in lieu of any severance
benefit otherwise payable to the Executive, the Company shall pay to the
Executive a lump sum severance payment, in cash, equal to three (3) times
the sum of (i) the higher of the Executive's annual base salary in effect
immediately prior to the occurrence of the event or circumstance upon which
the Notice of Termination is based or the Executive's annual base salary in
effect immediately prior to the Change in Control (the "Change in Control
Salary"), and (ii) the higher of the highest annual bonus earned by the
Executive pursuant to any annual bonus or incentive plan maintained by the
Company in respect of the
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three (3) years immediately preceding that year in which the Date of
Termination occurs or the highest annual bonus so earned in respect of the
three (3) years immediately preceding that in which the Change in Control
occurs (the "Change in Control Bonus").
(B) Notwithstanding any provision of any annual incentive plan to
the contrary, the Company shall pay to the Executive a lump sum amount, in
cash, equal to a pro rata portion to the Date of Termination of the value
of the target incentive award under such plan for the then uncompleted
period under such plan, calculated by multiplying the Executive's target
award by the fraction obtained by dividing the number of full months and
any fractional portion of a month during such performance award period
through the Date of Termination by the total number of months contained in
such performance award period.
(C) The Company shall (i) establish an irrevocable grantor trust
holding an amount of assets sufficient to pay all such remaining premiums
owed by the Company (which trust shall be required to pay such premiums),
under any insurance policy insuring the life of the Executive under any
"split dollar" insurance arrangement in effect between the Executive and
the Company, and (ii) assign its interest in such policy or policies to the
grantor trust.
(D) In addition to the retirement benefits to which the Executive
is entitled under each Pension Plan or any successor plan thereto, the
Company shall pay the Executive a lump sum amount, in cash, equal to the
excess of (i) the actuarial equivalent of the aggregate retirement pension
(taking into account any early retirement subsidies associated therewith
and determined as a straight life annuity commencing at the date (but in no
event earlier than the third anniversary of the Date of Termination) as of
which the actuarial equivalent of such annuity is greatest) which the
Executive would have accrued under the terms of all Pension Plans (without
regard to any amendment to any Pension Plan made subsequent to the earlier
of a Potential Change in Control or a Change in Control and on or prior to
the Date of Termination, which amendment adversely affects in any manner
the computation of retirement benefits thereunder), determined as if the
Executive were fully vested thereunder and had accumulated (after the Date
of Termination) thirty-six (36) additional months of age and service credit
thereunder and had been credited under each Pension Plan during such period
with compensation at the higher of (1) the Executive's compensation (as
defined in such Pension Plan) during the twelve (12) months immediately
preceding the Date of Termination or (2) the Executive's compensation (as
defined in such Pension Plan) during the twelve (12) months immediately
preceding the Change in Control, over (ii) the actuarial equivalent of the
aggregate retirement pension (taking into account any early retirement
subsidies associated therewith and determined as a straight life annuity
commencing at the date (but in no event earlier than the Date of
Termination) as
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of which the actuarial equivalent of such annuity is greatest) which the
Executive had accrued pursuant to the provisions of the Pension Plans as of
the Date of Termination; provided, that the actuarial equivalent of such
payment shall reduce the amount of the benefit enhancement to which the
Executive may be entitled under the Company's Retirement Benefit Equity
Plan due to enhanced Change in Control benefits under Article I, Section
(35), Article VI, Section (2), Article VI, Section (7), and Article VII,
Section (6) of the Company's Retirement Income Plan. For purposes of this
Section 6.1(D), "actuarial equivalent" shall be determined using the same
assumptions utilized under the Company's Retirement Income Plan immediately
prior to the Change in Control, to determine lump sum present values under
Article VII, Section (7) of the Company's Retirement Income Plan.
(E) For the thirty-six (36) month period immediately following
the Date of Termination, the Company shall arrange to provide the Executive
(which includes the Executive's eligible dependents for purposes of this
paragraph (E)) with life, disability, accident and health insurance
benefits substantially similar to those which the Executive was receiving
immediately prior to the Notice of Termination (without giving effect to
any amendment to such benefits made subsequent to the earlier of a
Potential Change in Control or a Change in Control which amendment
adversely affects in any manner the Executive's entitlement to or the
amount of such benefits); provided, however, that, unless the Executive
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consents to a different method, such health insurance benefits shall be
provided through a third-party insurer. Benefits otherwise receivable by
the Executive pursuant to this Section 6.1(E) shall be reduced to the
extent comparable benefits (including continued coverage for any
preexisting medical condition of any person covered by the benefits
provided to the Executive and his eligible dependents immediately prior to
the Notice of Termination) are actually received by or made available to
the Executive by a subsequent employer without cost during the thirty-six
(36) month period following the Executive's termination of employment (and
any such benefits actually received by or made available to the Executive
shall be reported to the Company by the Executive).
(F) If the Executive would have become entitled to benefits under
the Company's post-retirement health care or life insurance plans (as in
effect immediately prior to a Potential Change in Control, the Change in
Control or the Date of Termination, whichever is most favorable to the
Executive) had the Executive's employment terminated at any time during the
period of thirty-six (36) months after the Date of Termination, the Company
shall provide such post-retirement health care or life insurance benefits
to the Executive (subject to any employee contributions required under the
terms of such plans at the level in effect immediately prior to the Change
in Control or the Date of Termination, whichever is more favorable to the
Executive) commencing on the later of (i) the
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date that such coverage would have first become available or (ii) the date
that benefits described in subsection (E) of this Section 6.1 terminate.
(G) The Company will pay the Executive, at a daily salary rate
calculated from the higher of the Executive's annual base salary in effect
immediately prior to the occurrence of the event or circumstance upon which
the Notice of Termination is based or the Executive's annual base salary in
effect immediately prior to the Change in Control, an amount equal to all
unused vacation days which would have been earned had the Executive
continued employment through December 31 of the year in which the Date of
Termination occurs.
(H) The Company shall pay the reasonable fees and expenses of a
full service nationally recognized executive outplacement firm until the
earlier of the date the Executive secures new employment or the date which
is thirty-six (36) months following the Executive's Date of Termination;
provided, that in no event shall the aggregate amount of such payment be
greater than 20% of the Executive's Change in Control Salary.
6.2. (A) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment or distribution by the
Company 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 are incurred by the
Executive with respect to the 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 (a "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 any interest and penalties imposed with respect thereto)
and Excise Tax imposed on 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 6.2(C), all
determinations required to be made under this Section 6.2, including
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by a nationally recognized accounting firm
designated by the Company (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive
within fifteen (15) business days after there has been a Payment, or such
earlier time as requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or
group effecting the Change in Control, the Company shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred
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to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 6, shall be paid by the Company to
the Executive within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm 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 6.2(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 the Gross-Up Payment. 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 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date 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
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
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
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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 6.2(C), the Company shall control
all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego 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
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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 further provided 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 6.2(C), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section
6.2(C)) 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 6.2(C), 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 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
6.3. The payments provided for in subsections (A), (B), (C), (D) and
(G) of Section 6.1 hereof shall be made not later than the thirtieth (30th) day
following the Date of Termination; provided, however, that if the amounts of
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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 in good faith
by the Executive of the minimum
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amount of such payments to which the Executive is clearly entitled and shall pay
the remainder of such payments (together with interest at 120% of 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 thirtieth (30th) day after the Date
of Termination; provided, however, that in the event the Executive becomes
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entitled to Severance Payments pursuant to the second sentence of Section 6.1
(except for a termination occurring with respect to clause (iv) of such
sentence, which shall be paid as set forth above) such payments shall be due and
payable within thirty (30) days following the actual Change in Control that
triggered the Severance Payments. 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
120% of the rate provided in Section 1274(b)(2)(B) of the Code). In the event
the Company should fail to pay when due the amounts described in subsections
(A), (B), (C), (D) and (G) of Section 6.1 hereof, the Executive shall also be
entitled to receive from the Company an amount representing interest on any
unpaid or untimely paid amounts from the due date, as determined under this
Section 6.3 (without regard to any extension of the Date of Termination pursuant
to Section 7.3 hereof), to the date of payment at a rate equal to 120% of the
rate provided in Section 1274(b)(2)(B) of the Code.
6.4. The Company also shall pay to the Executive all legal fees
and expenses incurred by the Executive in disputing in good faith any issue
hereunder relating to the termination of the Executive's employment, 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. Such payments shall be made within five (5) business
days after delivery of the Executive's written requests for payment accompanied
with such evidence of fees and expenses incurred as the Company reasonably may
require.
7. Termination Procedures and Compensation During Dispute.
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7.1. Notice of Termination. After a Potential Change in Control
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or, if there is no Potential Change in Control, after a Change in Control and
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 11 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 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
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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 clause (i) or (ii) of the
definition of Cause herein, and specifying the particulars thereof in detail.
7.2. Date of Termination. "Date of Termination," with respect to
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any purported termination of the Executive's employment after a Change in
Control and during the term of this Agreement, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
full-time performance of the Executive's duties during such thirty (30) day
period), and (ii) if the Executive's employment is terminated for any other
reason, the date specified in the Notice of Termination (which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except in
the case of a termination for Cause) and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than sixty (60)
days, respectively, from the date such Notice of Termination is given).
7.3. Dispute Concerning Termination. If within fifteen (15) days
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after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the date on which the dispute is finally resolved, either by mutual
written agreement of the parties or by a final judgment, order or decree of an
arbitrator or a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); provided, however, that the Date of Termination shall be
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extended by a notice of dispute given by the Executive only if such notice is
given in good faith and the Executive pursues the resolution of such dispute
with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination
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occurs following a Change in Control and during the term of this Agreement and
the Date of Termination is extended in accordance with Section 7.3 hereof, the
Company shall continue to pay the Executive the full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
salary) and continue the Executive as a participant in all compensation, benefit
and insurance plans in which the Executive was participating when the notice
giving rise to the dispute was given, until the Date of Termination, as
determined in accordance with Section 7.3 hereof. Amounts paid under this
Section 7.4 are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement.
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8. Acceleration of Certain Stock-Based Benefits.
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(A) Upon the occurrence of a Change in Control, all unvested
options with respect to the Company's stock held by the Executive shall vest and
become immediately exercisable and will be exercisable for a period ending on
the later of (i) the fifth anniversary of such Change in Control or (ii) the
last date that such option would otherwise be exercisable under the terms of the
option agreement or the plan pursuant to which such option was granted;
provided, that in no event shall any option be exercisable after the expiration
of the original term of the option.
(B) Upon the occurrence of a Change in Control, all unearned
performance restricted shares held by the Executive under the Company's Stock
Plan shall be deemed to have been earned to the maximum extent permitted under
the Stock Plan for any performance period not then completed and all earned but
unvested performance restricted shares, including those deemed to be earned
pursuant to this sentence, and all unvested restricted stock awards shall
immediately vest and the restrictions on all shares subject to restriction shall
lapse.
(C) For purposes of the Stock Plan and any stock option plan
pursuant to which any stock options, performance restricted shares or restricted
stock awards have been issued, this Agreement, which has been approved by the
Management Development and Compensation Committee of the Board, shall constitute
an amendment of the agreement or other instruments pursuant to which such stock
options, performance restricted shares and restricted stock awards were issued
in accordance with the terms of such plans. Notwithstanding the foregoing, in
the event that this Section 8(C) is determined for any reason to be inconsistent
with the terms of any plan pursuant to which such stock options, performance
restricted shares and restricted stock awards were issued, the terms of this
Agreement shall supersede the terms of such plan.
9. No Mitigation. The Company agrees that, if the Executive's
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employment with the Company terminates 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 pursuant to Section 6
hereof or Section 7.4 hereof. Further, the amount of any payment or benefit
provided for in this Agreement (other than Section 6.1(E) 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. Successors; Binding Agreement.
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10.1. 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
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and/or assets of the Company 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 prior to 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 after a Change in Control,
except that, for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination.
10.2. 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.
11. Notices. For the purpose of this Agreement, notices and all
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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, if to the
Executive, to the address shown for the Executive in the personnel records of
the Company and, if to the Company, to the address 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:
Armstrong World Industries, Inc.
2500 Columbia Avenue
Lancaster, Pennsylvania 17603
Attention: General Counsel
12. Miscellaneous. 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 officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or of any lack of 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. This
-12-
Agreement supersedes any other agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof which have been
made by either party. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Pennsylvania. All references to sections of the Exchange Act or the Code
shall be deemed also to refer to any successor provisions to such sections. Any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law and any additional withholding to
which the Executive has agreed. The obligations of the Company and the
Executive under Sections 6 and 7 hereof shall survive the expiration of the term
of this Agreement. If the Executive elects not to enter into this Agreement, he
will continue to be eligible for change in control benefits provided under the
Company's Employment Protection Plan (if applicable), Retirement Income Plan and
long-term incentive plans. The Executive agrees that this Agreement replaces
the benefits to which he may otherwise be entitled to under the Company's
Employment Protection Plan for salaried employees. The Company agrees that it
will not argue in any form for any purpose that this Agreement constitutes an
"employee benefit plan" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended.
13. 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.
14. 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.
15. Settlement of Disputes; Arbitration. All claims by the
-----------------------------------
Executive for benefits under this Agreement shall be directed in writing to and
determined by the Committee, which shall give full consideration to the
evidentiary standards set forth in this Agreement. Any denial by the Committee
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 Committee 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 Committee a
decision of the Committee within sixty (60) days after notification by the
Committee that the Executive's claim has been denied. 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 rules of the American Arbitration Association then in effect; provided,
--------
however, that the evidentiary standards set forth in this Agreement shall apply.
- -------
Judgment may be entered on the arbitrator's award in any court having
jurisdiction. Notwithstanding any provision of this Agreement to the contrary,
the Executive shall be entitled to seek
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specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
16. Definitions. For purposes of this Agreement, the following
-----------
terms shall have the meanings indicated below:
(A) "Accounting Firm" shall have the meaning stated in
Section 6.2(B) hereof.
(B) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.
(C) "Board" shall mean the Board of Directors of the
Company.
(D) "Cause" for termination by the Company of the
Executive's employment shall mean (i) the deliberate and continued failure
by the Executive to devote substantially all the Executive's business time
and best efforts to the performance of the Executive's duties after a
demand for substantial performance is delivered to the Executive by the
Board which specifically identifies the manner in which the Executive has
not substantially performed such duties; (ii) the deliberate engaging by
the Executive in gross misconduct 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.
For the purposes of this Agreement, no act, or failure to act, on the part
of the Executive shall be considered "deliberate" unless done, or omitted
to be done, by the Executive not in good faith and without reasonable
belief that such action or omission was in the best interests of the
Company. In the event of a dispute concerning the application of this
provision, no claim by the Company that Cause exists shall be given effect
unless the Company establishes to the Committee by clear and convincing
evidence that Cause exists.
(E) A "Change in Control" shall be deemed to have occurred
if the event set forth in any one of the following paragraphs shall have
occurred:
(I) any 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 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 transaction described
in clause (i) of paragraph (III) below; or
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(II) 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
either were directors on the date hereof or whose
appointment, election or nomination for election was
previously so approved; or
(III) 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 66 2/3% of the combined voting
power of the voting securities of the Company or such
surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a
recapitalization of the 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 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
(IV) 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
-15-
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.
(F) "Change in Control Salary" shall have the meaning
stated in Section 6.1 hereof.
(G) "Change in Control Bonus" shall have the meaning stated
in Section 6.1 hereof.
(H) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(I) "Committee" shall mean (i) the individuals (not fewer
than three in number) who, on the date six (6) months before a Change in
Control, constitute the Management Development and Compensation Committee
of the Board, plus (ii) in the event that fewer than three individuals are
available from the group specified in clause (i) above for any reason, such
individuals as may be appointed by the individual or individuals so
available (including for this purpose any individual or individuals
previously so appointed under this clause (ii)).
(J) "Company" shall mean Armstrong World Industries, Inc.
and, except in determining under Section 16(E) hereof whether or not any
Change in Control of the Company has occurred, shall include its
subsidiaries and any successor to its business and/or assets which assumes
and agrees to perform this Agreement by operation of law, or otherwise.
(K) "Date of Termination" shall have the meaning stated in
Section 7.2 hereof.
(L) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result
of the Executive's incapacity due to physical or mental illness, the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, the Company shall have given the Executive a Notice of Termination
for Disability, and, within thirty (30) days after such Notice of
Termination is given, the Executive shall not have returned to the full-
time performance of the Executive's duties.
(M) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
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(N) "Excise Tax" shall have the meaning stated in Section
6.2(A) hereof.
(O) "Executive" shall mean the individual named in the
first paragraph of this Agreement.
(P) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) after any Change in Control, or prior to a Change
in Control under the circumstances described in clauses (ii) or (iii) of
the second sentence of Section 6.1 hereof (treating all references in
paragraphs (I) through (VII) below to a "Change in Control" as references
to a "Potential Change in Control"), 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 paragraph (I), (V) , (VI) or (VII)
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 adverse
alteration in the nature or status of the Executive's
responsibilities from those in effect immediately prior to
the Change in Control;
(II) a reduction by the Company in the
Executive's annual base salary as in effect on the date
hereof or as the same may be increased from time to time
except for (i) across-the-board salary reductions similarly
affecting all salaried employees of the Company or (ii)
across-the-board salary reductions similarly affecting all
senior executive officers of the Company and all senior
executives of any Person in control of the Company;
(III) the relocation of the Executive's principal
place of employment to a location more than 50 miles from
the Executive's principal place of employment immediately
prior to the Change in Control (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) the failure by the Company, to pay to the
Executive any portion of the Executive's current
compensation or to pay to the Executive any portion of an
installment of deferred
-17-
compensation under any deferred compensation program of the
Company, within seven (7) days of the date such compensation
is due;
(V) the failure by the Company to continue in
effect any compensation plan in which the Executive
participates immediately prior to the Change in Control
which is material to the Executive's total compensation,
including but not limited to the Company's Base Salary Plan,
Management Achievement Plan, 1984 Long-Term Stock Option
Plan for Key Employees, 1993 Long-Term Stock Incentive Plan,
1999 Long-Term Incentive Plan, Armstrong Deferred
Compensation Plan, Retirement Income Plan and Retirement
Benefit Equity Plan, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has
been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein
(or in such substitute or alternative 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, as
existed immediately prior to the Change in Control;
(VI) the failure by the Company to continue to
provide the Executive with benefits substantially similar to
those enjoyed by the Executive under any of the Company's
pension, savings, life insurance, medical, health and
accident, or disability plans in which the Executive was
participating immediately prior to the Change in Control,
the taking of any action by the Company which would directly
or indirectly materially reduce any of such benefits or
deprive the Executive of any material fringe benefit enjoyed
by the Executive at the time of the Change in Control, or
the failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is
entitled on the basis of years of service with the Company
in accordance with the Company's normal vacation policy in
effect at the time of the Change in Control; or
(VII) any purported termination of the
Executive's employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of Section
7.1 hereof; for purposes of this Agreement, no such
purported termination shall be effective.
Notwithstanding anything herein to the contrary, a
termination of employment by the Executive for any reason during the 30-day
period commencing on the one (1) year anniversary of a Change in Control
shall
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constitute Good Reason; provided, however, that solely for purposes of this
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paragraph, the term Change in Control shall include a merger described by
Section 16(E)(III) in which the Company is the surviving corporation or
parent corporation and the holders of the voting securities of the Company
outstanding immediately prior to such merger represent less than 66 2/3% of
the combined voting power of the securities of the Company outstanding
immediately after such merger, only if an event described in Section
16(E)(II) also occurs.
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. For purposes of any
determination regarding the existence of Good Reason, any claim by the
Executive that Good Reason exists shall be presumed to be correct unless
the Company establishes to the Committee by clear and convincing evidence
that Good Reason does not exist.
(Q) "Gross-Up Payment" shall have the meaning stated in Section
6.2(A) hereof.
(R) "Notice of Termination" shall have the meaning stated in
Section 7.1 hereof.
(S) "Payment" shall have the meaning stated in Section 6.2(A)
hereof.
(T) "Pension Plan" shall mean any tax-qualified, supplemental or
excess benefit pension plan maintained by the Company and any other
agreement entered into between the Executive and the Company which is
designed to provide the Executive with supplemental retirement benefits.
(U) "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company, or (v) an entity or entities which are
eligible to file and have filed a Schedule 13G under Rule 13d-l(b) of the
Exchange Act, which Schedule indicates beneficial ownership of 15% or more
of the outstanding shares of common stock of the Company or the combined
voting power of the Company's then outstanding securities.
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(V) "Potential Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following paragraphs
shall have occurred:
(I) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(II) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control; or
(III) any Person becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing 15% 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 (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its affiliates).
(W) "Severance Payments" shall mean those payments described in
Section 6.1 hereof.
(X) "Stock Plan" shall mean the Company's Long-Term Stock
Incentive Plan, as the same may be amended from time to time, and any
successor plan to such plan.
(Y) "Underpayment" shall have the meaning stated in Section
6.2(B) hereof.
ARMSTRONG WORLD INDUSTRIES, INC.
By:___________________________________
Name: ((ByName))
Title: ((ByTitle))
______________________________________
((FirstName)) ((LastName))
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Exhibit No. 10(iii)(k)
SCHEDULE OF PARTICIPATING OFFICERS
The Company has entered into substantially similar agreements with certain of
its officers, including George A. Lorch, Marc R. Olivie, Robert J. Shannon,
Douglas L. Boles, Deborah K. Owen, Frank A. Riddick, III, William C. Rodruan, E.
Follin Smith, Floyd F. Sherman, and Stephen E. Stockwell. Ms. Owen's agreement
has been modified in that it does not include Section 6.1(C); Mr. Sherman's
agreement has been modified in that it does not include Sections 6.1(C) & (D);
Mr. Rodruan's agreement has been modified in that Section 6.1(A) has been
modified to provide a 2X multiplier, and Section 16(P) has been modified to
remove the "modified single trigger" provision; Ms. Smith's agreement has been
modified in that Section 6.1(A) has been modified to provide a 2X multiplier, it
does not include Section 6.1(C), and Section 16(P) has been modified to remove
the "modified single trigger" provision.