Exhibit No. 10(iii)(l)
INDEMNIFICATION AGREEMENT
This Agreement is made effective as of the ___ day of
________, 19__, by and between Armstrong World Industries, Inc., a Pennsylvania
corporation (the "Corporation") and XXXXXXXXXXXXXXX (the "Indemnitee"), a
director of the Corporation.
WHEREAS, it is essential that the Corporation retain and
attract as directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a member of the Board of Directors of
the Corporation and in that capacity is performing a valuable service for the
Corporation; and
WHEREAS, the Corporation has purchased and maintained policies
of Directors and Officers Liability Insurance ("D & 0 Insurance") covering
certain liabilities which may be incurred by its directors and officers in their
performance of services for the Corporation; and
WHEREAS, developments with respect to the terms, renewal, and
availability of D & 0 Insurance have raised questions concerning the continued
adequacy and reliability of the protection available to corporate directors and
officers; and
WHEREAS, the shareholders of the Corporation have adopted a
bylaw (the "Bylaw") which provides for indemnification of and advancement of
expenses to the officers and directors of the Corporation unless the act or
failure to act giving rise to the claim for indemnification is determined by a
court to have constituted willful misconduct or recklessness, and the Bylaw and
the applicable indemnification statutes of the Commonwealth of Pennsylvania
provide that they are not exclusive; and
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Corporation in an effective manner, the increasing
difficulty in obtaining satisfactory D & 0 Insurance coverage, and Indemnitee's
reliance on the Bylaws, and in part to provide Indemnitee with specific
contractual assurance that the protection promised by the Bylaws will be
available to Indemnitee (regardless of, among other things, any amendment to or
revocation of the Bylaws or any change in the composition of the Corporation's
Board of Directors or acquisition transaction relating to the Corporation), the
Corporation wishes to provide in this Agreement for the indemnification of and
the advancing of expenses to Indemnitee to the fullest extent (whether partial
or complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of indemnitee under
the Corporation's D & 0 Insurance policies.
NOW, THEREFORE, in consideration of the premises and of
Indemnitee continuing to serve the Corporation directly or, at its request,
another enterprise, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Indemnity of Indemnitee.
(a) The Corporation shall hold harmless and indemnify the
Indemnitee against any and all reasonable expenses, including attorneys' fees,
and any and all liability and loss, including judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement, incurred or
paid by Indemnitee in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter "a proceeding") and whether or not by or in the right
of the Corporation or otherwise, to which the Indemnitee is, was or at any time
becomes a party, or is threatened to be made a party or is involved (as a
witness or otherwise) by reason of the fact that Indemnitee is or was a
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director or officer of the Corporation or is or was serving at the request of
the Corporation as director, officer, trustee or representative of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity, or in any other
capacity while serving, as a director, officer, trustee or representative,
unless the act or failure to act giving rise to the claim for indemnification is
determined by a court to have constituted willful misconduct or recklessness;
provided, however, that the Corporation shall indemnify the Indemnitee in
connection with a proceeding (or part thereof) initiated by the Indemnitee
(other than a proceeding to enforce the Indemnitee's rights to indemnifica-tion
under this Agreement or otherwise) prior to a Change of Control, as defined in
Section 2(d), only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation.
(b) Subject to the foregoing limitation concerning certain
pro-ceedings initiated by the Indemnitee prior to a Change of Control, the
Corporation shall pay the expenses (including attorneys' fees) incurred by
Indemnitee in connection with any proceeding in advance of the final disposition
thereof promptly after receipt by the Corporation of a request therefor stating
in reasonable detail the expenses incurred or to be incurred.
(c) If a claim under paragraph (a) or (b) of this section is
not paid in full by the Corporation within forty-five (45) days after a written
claim has been received by the Corporation, the Indemnitee may, at any time
thereafter, bring suit against the Corporation to recover the unpaid amount of
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the claim. The burden of proving that indemnification or advances are not
appropriate shall be on the Corporation. The Indemnitee shall also be entitled
to be paid the expenses of prosecuting such claim to the extent he or she is
successful in whole or in part on the merits or otherwise in establishing his or
her right to indemnification or to the advancement of expenses. The Corporation
shall pay such fees and expenses in advance of the final disposition of such
action on the terms and conditions set forth in Section 1(b).
2. Maintenance of Insurance and Funding.
(a) The Corporation represents that as of _____ __, 19__, it
had in force and effect the following policies of D & 0 Insurance (the
"Insurance Policies"):
Insurer Amount*
------- -------
*Deductible zero where Company not permitted/required to indemnify; otherwise
$2 million.
Subject only to the provisions of Section 2(b) hereof, the
Corporation agrees that, so long as Indemnitee shall continue to serve as an
officer or director of the Corporation (or shall continue at the request of the
Corporation to serve as a director, officer, trustee or representative of
another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan) and thereafter so
long as Indemnitee shall be subject to any possible claim or threatened, pending
or completed action, suit or proceeding, whether civil, criminal or
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investigative, by reason of the fact that Indemnitee was a director or officer
of the Corporation (or served in any of said other capacities), the Corporation
shall purchase and maintain in effect for the benefit of Indemnitee one or more
valid, binding and enforceable policy or policies of D & 0 Insurance providing
coverage at least comparable to that provided pursuant to the Insurance
Policies.
(b) The Corporation shall not be required to maintain said
policy or policies of D & 0 Insurance in effect if, in the reasonable business
judgment of the then directors of the Corporation (i) the premium cost for such
insurance is substantially disproportionate to the amount of coverage, (ii) the
coverage provided by such insurance is so limited by exclusions that there is
insufficient benefit from such insurance or (iii) said insurance is not
otherwise reasonably available; provided however, that in the event the then
directors make such a judgment, the Corporation shall purchase and maintain in
force a policy or policies of D & 0 Insurance in the amount and with such
coverage as the then directors determine to be reasonably available.
Notwithstanding the general provisions of this Section 2(b), following a Change
of Control, any decision not to maintain any policy or policies of D & 0
Insurance or to reduce the amount or coverage under any such policy or policies
shall be effective only if there are "disinterested directors" (as defined in
Section 2(d) hereof) and shall require the concurrence of a majority of the
"disinterested directors."
(c) If and to the extent the Corporation, acting under Section
2(b), does not purchase and maintain in effect the policy or policies of D & 0
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Insurance described in Section 2(a), the Corporation shall indemnify and hold
harmless the Indemnitee to the full extent of the coverage which would otherwise
have been provided by such policies. The rights of the Indemnitee hereunder
shall be in addition to all other rights of Indemnitee under the remaining
provisions of this Agreement.
(d) In the event of a Potential Change of Control or if and to
the extent the Corporation is not required to maintain in effect the policy or
policies of D & 0 Insurance described in Section 2(a) pursuant to the provisions
of Section 2(b), the Corporation shall, upon written request by indemnitee,
create a "Trust" for the benefit of Indemnitee and from time to time, upon
written request by Indemnitee, shall fund such Trust in an amount sufficient to
pay any and all expenses, including attorneys' fees, and any and all liability
and loss, including judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement actually and reasonably incurred by him
or on his behalf for which the Indemnitee is entitled to indemnification or with
respect to which indemnification is claimed, reasonably anticipated or proposed
to be paid in accordance with the terms of this Agreement or otherwise; provided
that in no event shall more than $100,000 be required to be deposited in any
Trust created hereunder in excess of the amounts deposited in respect of
reasonably anticipated expenses, including attorneys' fees. The amounts to be
deposited in the Trust pursuant to the foregoing funding obligation shall be
determined by the Reviewing Person whose determination shall be final and
conclusive. The Reviewing Person shall have no liability to the Indemnitee for
his decisions hereunder.
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The terms of the Trust shall provide that upon a Change of Control (i) the Trust
shall not be revoked or the principal thereof invaded, without the written
consent of the Indemnitee, (ii) the Trust shall advance, within two business
days of a request by the Indemnitee, any and all expenses, including attorneys'
fees, to the Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust
under the circumstances under which the Indemnitee would be required to
reimburse the Trustee under Section 5 of this Agreement), (iii) the Trust shall
continue to be funded by the Corporation in accordance with the funding
obligation set forth above, (iv) the Trustee shall promptly pay to the
Indemnitee all amounts for which the Indemnitee shall be entitled to
indemnification pursuant to this Agreement or otherwise, and (v) all unexpended
funds in such Trust shall revert to the Corporation upon a final determination
by the Reviewing Party or a court of competent jurisdiction, as the case may be,
that the Indemnitee has been fully indemnified under the terms of this
Agreement. The Trustee shall be a bank or trust company or other individual or
entity chosen by the Indemnitee and acceptable and approved of by the
Corporation.
(e) For the purposes of this Agreement:
(i) a "Change of Control" shall occur if and when
(A) any person acquires "beneficial ownership" of more than 28% of the then
outstanding "voting stock" of the Company and within five years thereafter,
"disinterested directors" no longer constitute at least a majority of the entire
Board of Directors or (B) there shall occur a "business combination"
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with an "interested shareholder" not approved by a majority of the
"disinterested directors".
(ii) a "Potential Change of Control" shall occur if
(A) the Corporation enters into an agreement or arrangement, the consummation of
which would result in the occurrence of a Change in Control; (B) any person
publicly announces a tender offer or comparable action which if consummated
would constitute a Change of Control; (C) any person (other than a trustee or
other fiduciary holding securities under an employee benefit plan of the
Corporation acting in such capacity or a corporation owned, directly or
indirectly, by the shareholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation), who is or becomes
the beneficial owner, directly or indirectly, of securities of the Corporation
representing 10% or more of the combined voting stock increases his beneficial
ownership of such securities by 5% or more over the percentage so owned by such
person on the date hereof; or (D) the Board adopts a resolution to the effect
that, for the purposes of this Agreement, a Potential Change of Control has
occurred.
(iii) a "Reviewing Person" means any appropriate
person or body consisting of a member or members of the Corporation's Board of
Directors or any other person or body appointed by the Board which, following a
Change of Control, shall require the concurrence of a majority of the
"disinterested directors" or shall be independent legal counsel approved and
accepted by the Indemnitee who is not a party to the particular claim for which
Indemnitee is seeking indemnification.
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For purposes of this subsection, the terms "person,"
"beneficial ownership," "voting stock," "disinterested director," "business
combination," and
"interested shareholder" shall have the meaning given to them in Article 7 of
the Company's Articles of Incorporation as in effect on May l, 1985.
3. Continuation of Indemnity.
All agreements and obligations of the Corporation
contained in this Agreement shall continue during the period the Indemnitee is a
director or officer of the Corporation (or is or was serving at the request of
the Corporation as a director, officer, trustee or representative of another
corporation, partnership, joint venture, trust or other enterprise, including
any employee benefit plan) and shall continue thereafter so long as the
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investi-
gative, by reason of the fact that the Indemnitee was a director or officer of
the Corporation or serving in any other capacity referred to herein.
4. Notification and Defense of Claim.
As soon as practicable after receipt by the
Indemnitee of actual knowledge of any action, suit or proceeding the Indemnitee
will notify the Corporation thereof, if a claim in respect thereof may be or is
being made by the Indemnitee against the Corporation under this Agreement. With
respect to any action, suit or proceeding as to which the Indemnitee has so
notified the Corporation:
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(a) The Corporation will be entitled to participate
therein at its own expense; and
(b) Except as otherwise provided below, the
Corporation may assume the defense thereof, with counsel reasonably satisfactory
to the Indemnitee. After the Corporation notifies the Indemnitee of its election
to so assume the defense, the Corporation will not be liable to the Indemnitee
under this Agreement for any legal or other expenses subsequently incurred by
the Indemnitee in connection with the defense, other than reasonable costs of
investigation, including an investigation in connection with determining whether
there exists a conflict of interest of the type described in (ii) of this
paragraph, or as otherwise provided in this paragraph. The Indemnitee shall have
the right to employ his or her counsel in such action, suit or proceeding but
the fees and expenses of such counsel incurred after the Corporation notifies
the Indemnitee of its assumption of the defense shall be at the expense of the
Indemnitee unless (i) the Corporation authorizes the Indemnitee's employment of
counsel which, following a "Change of Control", shall be effective if authorized
by a majority of the "disinterested directors" (which terms are defined in
Section 2(d)), although less than a quorum or majority of a quorum of the
directors then in office; (ii) the Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Corporation and the
Indemnitee in the conduct of the defense or (iii) the Corporation shall not have
employed counsel to assume the defense of such action, in each of which cases
the fees and expenses of counsel shall be at the expense of the Corporation. The
Corporation shall not
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be entitled to assume the defense of any action, suit or proceeding brought by
or on behalf of the Corporation or as to which the Indemnitee shall have made
the conclusion described in (ii) of this paragraph.
(c) The Corporation shall not be obligated to
indemnify the Indemnitee under this Agreement for any amounts paid in settlement
of any action or claim effected without its written consent. The Corporation
shall not settle any action or claim in any manner which would impose any
penalty limitation on the Indemnitee without the Indemnitee's written consent.
Neither the Corporation nor the Indemnitee shall unreasonably withhold their
consent to any proposed settlement.
5. Undertaking to Repay Expenses.
In the event it shall ultimately be determined that
the Indemnitee is not entitled to be indemnified for the expenses paid by the
Corporation pursuant to Section 1(b) hereof or otherwise or was not entitled to
be fully indemnified, the Indemnitee shall repay to the Corporation such amount
of the expenses or the appropriate portion thereof, so paid or advanced.
6. Notice.
Any notice to the Corporation shall be directed to
Armstrong World Industries, Inc., Liberty and Charlotte Streets, Lancaster,
Pennsylvania 17603 Attention: Secretary (or such other address as the
Corporation shall designate in writing to the Indemnitee).
7. Enforcement.
In the event the Indemnitee is required to bring any
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action to enforce rights or to collect monies due under this Agreement, the
Corporation shall pay to the Indemnitee the fees and expenses incurred by the
Indemnitee in bringing and pursuing such action to the extent the Indemnitee is
successful, in whole or in part, on the merits or otherwise, in such action. The
Corporation shall pay such fees and expenses in advance of the final disposition
of such action on the terms and conditions set forth in Section 1(b).
8. Severability.
If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever:
(a) the validity, legality and enforceability of the
remaining provisions o this Agreement (including without limitation, each
portion of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and
(b) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, each portion of any Section of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.
9. Indemnification Under this Agreement Not Exclusive.
The indemnification provided by this Agreement shall
not be deemed exclusive of any other rights to which the Indemnitee may be
entitled
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under the Articles of Incorporation of the Corporation or its bylaws, any other
agreement, any vote of stockholders or directors, or otherwise, both as to
action in the Indemnitee's official capacity and as to action in another
capacity while holding such office.
10. Miscellaneous:
(a) This Agreement shall be interpreted and enforced
in accordance with the laws of the Commonwealth of Pennsylvania.
(b) This Agreement shall be binding upon the
Indemnitee and upon the Corporation, its successors and assigns, and shall inure
to the benefit of the Indemnitee, his heirs, executors, personal representatives
and assigns and to the benefit of the Corporation, its successors and assigns.
If the Corporation shall merge or consolidate with another corporation or shall
sell, lease, transfer or otherwise dispose of all or substantially all of its
assets to one or more persons or groups (in one transaction or series of
transactions), (i) the Corporation shall cause the successor in the merger or
consolidation or the transferee of the assets that is receiving the greatest
portion of the assets or earning power transferred pursuant to the transfer of
the assets, by agreement in form and substance satisfactory to the Indemnitee,
to expressly assume all of the Corporation's obligations under and agree to
perform this Agreement, and (ii) the term "Corporation" whenever used in this
Agreement shall mean and include any such successor or transferee .
(c) No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
both of the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement
on and as of the day and year first above written.
ARMSTRONG WORLD INDUSTRIES, INC.
By
-------------------------------
Title: Chairman and CEO
------------------------------------
Indemnitee
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ATTACHMENT TO EXHIBIT
The Company has entered into Indemnification Agreements substantially similar to
the attached Form of Indemnification Agreement with each of the following
nonemployee directors of the Company:
H. Jesse Arnelle
Van C. Campbell
Donald C. Clark
James E. Marley
J. Phillip Samper
Jerre L. Stead