Exhibit 10.1
INDEMNIFICATION AGREEMENT FOR
DIRECTORS AND OFFICERS OF ARMSTRONG WORLD INDUSTRIES, INC.
This Agreement is made effective as of the
_____
day of
_____, 2010, by and between
Armstrong World Industries, Inc., a Pennsylvania corporation (the “Corporation”) and
_____
(“Indemnitee”).
WHEREAS, it is essential to the Corporation that the Corporation retain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is an officer and/or a member of the Board of Directors of the Corporation
(the “Board”) and in that capacity is performing a valuable service for the Corporation; and
WHEREAS, the Corporation has purchased and maintains one or more policies of Directors and
Officers Liability Insurance (“D&O Insurance”) covering certain liabilities which may be incurred
by directors and officers in their performance of services for the Corporation; and
WHEREAS, the Corporation has provisions in both its Articles of Incorporation and its Bylaws
(together referred to herein as the “Bylaws”) which provide for indemnification of and advancement
of Expenses to the officers and directors of the Corporation to the full extent permitted by law,
and the Bylaws and the applicable indemnification statutes of the Commonwealth of Pennsylvania
provide that they are not exclusive; and
WHEREAS, Indemnitee does not regard the protections provided for in the
Bylaws to be adequate protection against personal liability; and
WHEREAS, in recognition of Indemnitee’s need for substantial protection against personal
liability and in order to induce and retain Indemnitee’s service to the Corporation, the
Corporation wishes to provide Indemnitee with substantial protection against personal liability in
addition to the protections afforded under the Bylaws, and 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); and
WHEREAS, the Corporation intends to provide in this Agreement for the indemnification of, and
the advancement of expenses to, Indemnitee to the fullest extent permitted by applicable law, and
for the continued coverage of Indemnitee under the Corporation’s D&O Insurance policies.
NOW, THEREFORE, in consideration of the foregoing and of Indemnitee’s agreement to serve or
Indemnitee’s willingness to continue to serve the Corporation directly or, at the Corporation’s
request, at another enterprise, and intending to be legally bound hereby, the parties hereto agree
as follows:
The Corporation shall, to the fullest extent permitted by law, indemnify and hold harmless
Indemnitee against any and all reasonable fees and expenses, including attorneys’, experts’,
mediators’ and arbitrators’ fees and expenses and court costs (such reasonable fees, expenses and
costs, herein “Expenses”), and any and all
liability and loss, including damages, judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement, that are incurred or paid by Indemnitee in connection
with any threatened, potential, pending or completed action, suit, proceeding or matter, whether
civil, criminal, administrative or investigative (hereinafter “a
Proceeding”), and whether or not
brought by or in the right of the Corporation or otherwise, to which 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 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 or of a partnership, joint venture, trust or other
enterprise, including service with respect to any employee benefit plan or the Armstrong
Foundation, whether acting in an official capacity or in any other capacity (collectively the
foregoing is herein referred to as “Corporate Service”), unless the act or omission giving rise to
the claim for indemnification by Indemnitee is determined by a final adjudication of a court of
competent jurisdiction to have constituted willful misconduct or recklessness;
provided
,
however
, that the Corporation shall not indemnify Indemnitee in connection with (i) any
damages or disgorgement or other accounting of profits from an actual violation of Section 16(b) of
the Securities Exchange Act of 1934 or (ii) a Proceeding (or part thereof) initiated by Indemnitee
unless (x) such Proceeding is to enforce Indemnitee’s rights to advancement or indemnification
under this Agreement or (y) such Proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation.
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2.
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Advancement of Expenses; Mandatory Indemnification for Expenses of
Successful Party
.
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(a)
Advancement of Expenses
. The Corporation shall, to the fullest extent permitted
by law, advance, on a current and as-incurred basis, any and all Expenses actually incurred by
Indemnitee in connection with any Proceeding brought against Indemnitee by reason of Indemnitee’s
Corporate Service, in advance of the final disposition thereof. The Corporation shall make all
such advances promptly after receipt by the Corporation of a written request therefor stating in
reasonable detail the Expenses incurred. Such advances (i) shall be unsecured and interest free;
(ii) shall be made without regard to Indemnitee’s ability to repay the advances and without regard
to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this
Agreement; and (iii) shall include any and all Expenses actually incurred pursuing an action to
enforce any right of advancement or indemnification under this Agreement, including Expenses
actually incurred preparing and forwarding statements to the Corporation to support the advances
claimed. Indemnitee shall qualify for advancement of Expenses pursuant to this Section 2(a) solely
upon the execution and delivery to the Corporation of an unsecured written undertaking stating that
in the event it shall ultimately be determined by a final adjudication in a court of competent
jurisdiction that Indemnitee is not entitled under law to be indemnified for Expenses advanced by
the Corporation pursuant to this Section 2(a) or otherwise or was not entitled to be fully
indemnified for such advanced Expenses, Indemnitee shall repay to the Corporation such amount of
Expenses or the appropriate portion thereof, so paid or advanced. The obligation of the
Corporation to advance Expenses under this Section 2(a) shall not extend to Expenses incurred in
connection with any
Proceeding described in clause (ii) of the proviso in the first sentence of Section 1.
(b)
Mandatory Indemnification for Expenses of Successful Party
. In addition to the
other provisions of this Agreement, without limitation of Indemnitee’s other rights under this
Agreement and without regard to any determination of Indemnitee’s entitlement to indemnification
under Section 3, to the extent that Indemnitee is successful, on the merits or otherwise, in any
Proceeding to which 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 Indemnitee’s Corporate Service, or
in defense of any claim, issue or matter in such Proceeding, in whole or in part, the Corporation
shall be liable to indemnify Indemnitee against all Expenses actually incurred by Indemnitee in
connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful,
on the merits or otherwise, as to one or more but less than all claims, issues or matters in such
Proceeding, the Corporation shall be liable to indemnify Indemnitee against all Expenses actually
incurred by Indemnitee in connection with each successfully resolved claim, issue or matter. For
purposes of this Section 2(b) and without limitation of the foregoing, the termination of any
claim, issue or matter in a Proceeding to which 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
Indemnitee’s Corporate Service, by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.
3.
Procedure for Payment of Indemnification
.
(a) Indemnitee shall submit to the Corporation a written request for indemnification,
including such documentation and information as are reasonably
available to Indemnitee and necessary to establish that Indemnitee is entitled to
indemnification hereunder, specifying the amounts for which Indemnitee seeks payment under this
Agreement and the basis for the claim for indemnification. The time at which Indemnitee submits a
written request for indemnification shall be determined by Indemnitee in Indemnitee’s sole
discretion. The Corporation shall pay such indemnifiable amounts to or on behalf of Indemnitee
within ninety (90) calendar days of receipt of the request, unless Indemnitee agrees to a longer
period of time or unless a court orders payment of amounts indemnifiable under this Agreement
within a shorter period of time.
(b) To the extent, and only to the extent, that a determination of Indemnitee’s entitlement to
indemnification at the time of or prior to any award or payment of indemnification is required by
applicable law which cannot be waived, then such determination shall be made as follows:
(i) At the request of the Corporation, Indemnitee shall furnish such documentation and
information as are reasonably available to Indemnitee and necessary to establish that Indemnitee is
entitled to indemnification hereunder;
provided
,
however
, that Indemnitee shall not be required to
furnish any document or information protected from disclosure by the attorney-client privilege, the
work-product protection or other privilege or protection.
(ii) Once Indemnitee submits such a written request for indemnification (and only at such time
that Indemnitee submits such a written request for indemnification) pursuant to Section 3(a) of
this Agreement, a determination shall thereafter be made as to Indemnitee’s entitlement to
indemnification. In the event that
the Corporation objects to Indemnitee’s request for indemnification, the Corporation shall
submit a written objection to Indemnitee within 15 days after receipt of Indemnitee’s written
request for indemnification. In no event shall a determination of Indemnitee’s entitlement to
indemnification be made, or required to be made, as a condition to or otherwise in connection with
any advancement of Expenses pursuant to Section 2(a) of this Agreement. Any such determination of
Indemnitee’s entitlement to indemnification shall be made within seventy (70) days after receipt of
Indemnitee’s written request for indemnification pursuant to Section 3(a) of this Agreement, unless
Indemnitee agrees to a longer period or a court orders payment of the amounts indemnifiable under
this Agreement within a shorter period of time.
(iii) Any determination of Indemnitee’s entitlement to indemnification shall be made by
Independent Counsel, selected pursuant to Section 12 of this Agreement, in a written opinion to the
Corporation and Indemnitee, unless Indemnitee, in Indemnitee’s sole discretion, elects to have the
directors of the Corporation who are independent with respect to such claim and Proceeding (the
“Disinterested Directors”) make the determination, in which case the Disinterested Directors will
make the determination as elected by Indemnitee. Notwithstanding the preceding sentence, if a
quorum consisting of the Disinterested Directors is not obtainable, then such determination shall
be made by Independent Counsel. If a determination is made by either (A) Independent Counsel or
(B) a majority vote of a quorum consisting of the Disinterested Directors that Indemnitee is
entitled to indemnification, the Corporation shall make payment to Indemnitee within twenty (20)
days after such determination, unless Indemnitee agrees to a longer period or a court orders
payment within a
shorter period. Indemnitee shall reasonably cooperate with Independent Counsel or the
Disinterested Directors with respect to Indemnitee’s entitlement to indemnification, including
providing, upon reasonable advance request, any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee
and reasonably necessary to such determination. Any Expenses actually incurred by Indemnitee in so
cooperating with Independent Counsel or the Disinterested Directors shall be advanced and borne by
the Corporation in accordance with the terms and conditions for advancement of Expenses set forth
in Section 2(a) of this Agreement.
(iv) In making the determination required to be made under Pennsylvania law with respect to an
Indemnitee’s entitlement to indemnification hereunder, the person, persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under this Agreement if
Indemnitee has submitted a request therefor in accordance with Section 3(a) of this Agreement, and
the Corporation shall have the burden of proof to overcome that presumption in connection with the
making by any person, persons or entity of any determination contrary to that presumption.
(v) The Corporation shall be bound by and shall have no right to challenge a determination of
Indemnitee’s entitlement to indemnification by Independent Counsel (or, if so elected by
Indemnitee, by the Disinterested Directors) that is favorable to Indemnitee.
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4.
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Remedies of the Indemnitee
.
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(a) If a determination of Indemnitee’s entitlement to indemnification is made
and such determination is adverse to Indemnitee, Indemnitee shall have the right to commence a
Proceeding before a court of competent jurisdiction to challenge such adverse determination
pursuant to Section 11 of this Agreement. If Indemnitee fails to challenge an adverse
determination, or if Indemnitee challenges an adverse determination and such adverse determination
has been upheld by a final judgment of a court of competent jurisdiction from which no appeal can
be taken, then, to the extent and only to the extent required by such adverse determination or
final judgment, the Corporation shall not be obligated to indemnify Indemnitee under this
Agreement.
(b) If (i) a claim for indemnification under Section 1 of this Agreement is not paid in full
by the Corporation within the period of time specified in Section 3(a) of this Agreement or (ii) a
claim for advancement of Expenses under Section 2(a) of this Agreement is not paid in full by the
Corporation within thirty (30) days after a written request for advancement of Expenses has been
received by the Corporation, Indemnitee may, at any time thereafter, bring suit against the
Corporation to recover the unpaid amount of such claim for indemnification or advancement of
Expenses in any court of competent jurisdiction. The burden of proving that indemnification or
advancement of Expenses is not appropriate shall be on the Corporation. Indemnitee shall be
entitled to be advanced the Expenses actually incurred by Indemnitee in prosecuting such claim, and
the Corporation shall pay such Expenses actually incurred by Indemnitee in connection with
prosecuting, pursuing, investigating, preparing for, litigating, defending or settling any action
brought under this Section 4(b) in advance of the final disposition of such action and in
accordance with the terms
and conditions for advancement of Expenses set forth in Section 2(a) of this Agreement.
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5.
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Indemnification Trust
.
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(a)
Establishment of the Indemnification Trust
. In the event of a Potential Change
in Control or a Change in Control, the Corporation shall, upon written request by Indemnitee,
create a trust (the “Indemnification Trust”) for the benefit of Indemnitee, and from time to time
upon written request of Indemnitee shall fund such Indemnification Trust in an amount sufficient to
satisfy any and all Expenses reasonably anticipated at the time of each such request to be
reasonably incurred in connection with investigating, preparing for, participating in or defending
any Proceedings, and any and all judgments, fines, penalties and amounts to be paid in settlement
(including all interest, assessments and other charges paid or payable in connection with or in
respect of such judgments, fines, penalties and amounts paid in settlement) in connection with any
and all Proceedings to which 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 Indemnitee’s Corporate
Service, from time to time actually paid or claimed, reasonably anticipated or proposed to be paid.
The trustee of the Indemnification Trust (the “Trustee”) shall be a bank or trust company or other
individual or entity chosen by Indemnitee and reasonably acceptable to the Corporation. Nothing in
this Section 5(a) shall relieve the Corporation of any of its obligations under this Agreement.
The amount or amounts to be deposited in the Indemnification Trust pursuant to the foregoing
funding obligation shall be determined by mutual agreement of Indemnitee and the Corporation or, if
the Corporation and
Indemnitee are unable to reach such an agreement, by Independent Counsel selected in
accordance with Section 12 of this Agreement.
(b) The terms of the Indemnification Trust shall provide that, except upon the consent of both
Indemnitee and the Corporation: (i) the Indemnification Trust shall not be revoked or amended or
the principal thereof invaded, without the written consent of Indemnitee; (ii) the Trustee shall
advance, to the fullest extent permitted by applicable law, within two (2) business days of a
request by Indemnitee, any and all Expenses actually incurred by Indemnitee in connection with any
and all Proceedings to which 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 Indemnitee’s Corporate
Service; (iii) the Indemnification Trust shall continue to be funded by the Corporation in
accordance with the funding obligations set forth above; (iv) the Trustee shall promptly pay to
Indemnitee all amounts for which Indemnitee shall be entitled to indemnification pursuant to this
Agreement or otherwise; and (v) all unexpended funds in such Indemnification Trust shall revert to
the Corporation upon mutual agreement by Indemnitee and the Corporation or, if Indemnitee and the
Corporation are unable to reach such an agreement, upon determination by Independent Counsel
selected in accordance with Section 12 of this Agreement, that Indemnitee has been fully
indemnified under the terms of this Agreement;
provided
,
however
,
that the funds
shall not revert to the Corporation until the later of a dismissal with prejudice of all
then-outstanding claims or two years following any other termination of all outstanding claims.
(c) A “
Change in Control
” shall be deemed to have occurred if any of the
following shall have occurred after the date hereof:
(i) at any time (x) any Person (other than a Person that is, at such time, a Permitted Holder)
is or becomes the Beneficial Owner of 30% or more of the Voting Power of the Corporation and (y) no
Person that is, at such time, a Permitted Holder Beneficially Owns as of such time, without giving
effect to the existence of any group other than a group that is itself a Permitted Holder, a
greater percentage of the Voting Power of the Corporation than the percentage of the Voting Power
of the Corporation Beneficially Owned by the Person referred to under clause (x) at such time;
(ii) during any period of 12 consecutive months, the following individuals cease for any
reason (other than the occurrence of an emergency or other condition or event described in Section
1509(a) of the Pennsylvania Business Corporation Law) to constitute at least a majority of the
Board: (A) individuals who at the beginning of such period were members of the Board and (B) any
new director whose appointment or election by the Board or nomination for election by the
Corporation’s shareholders was (x) approved by a vote of at least a majority of those directors
then in office who were directors at the beginning of such 12-month period or whose election or
nomination for election was previously approved in accordance with this clause (B), or (y) approved
in writing by TPG, the Trust or TPG and the Trust, provided that, at the time of such approval,
such approving party or parties Beneficially Owns, without giving effect to the existence of any
group, 30% or more of the Voting Power of the Corporation), but excluding for purposes of both
clause (x) and (y) any such new director who is initially proposed for office in an actual or
threatened election contest or other actual or threatened solicitation of proxies or consents by or
on behalf of any Person other than
the Board, TPG or the Trust;
(iii) the consummation of (A) a merger or consolidation involving the Corporation, (B) a sale
or other disposition of all or substantially all of the assets of the Corporation (on a
consolidated basis), including a sale or disposition of all or substantially all of the assets of
the Corporation (on a consolidated basis) pursuant to a spin-off or split-up, or (C) any other
substantially similar transaction or series of related transactions involving the Corporation (each
of the transactions in clauses (A), (B) and (C), a “Corporate Transaction”), but excluding a
Non-Control Acquisition or a Spin-Off; or
(iv) the shareholders of the Corporation approve a plan of complete liquidation or dissolution
of the Corporation.
Notwithstanding anything to the contrary in the foregoing, for purposes of clause (i) of the
definition of Change in Control, the following transactions shall not constitute a Change in
Control:
(x) any Person becomes the Beneficial Owner of 30% or more of the Voting Power of the
Corporation as a result of a reduction in the number of shares of Common Stock pursuant to a
transaction or series of transactions that is approved by a majority of the Board, unless such
Person thereafter becomes the Beneficial Owner of additional shares of Common Stock representing 1%
or more of the Voting Power of the Corporation;
(y) if a majority of the Board determines in good faith that a Person has acquired Beneficial
Ownership of 30% or more of the Voting Power of the Corporation inadvertently and, no later than
the date set by the Board such Person divests a
sufficient number of shares so that, after such divestiture, such Person no longer
Beneficially Owns 30% or more of the Voting Power of the Corporation; or
(z) any Person becomes the Beneficial Owner of 30% or more of the Voting Power of the
Corporation as a result of an issuance or sale of securities by the Corporation or any of its
Subsidiaries.
Other definitions used in the “Change in Control” definition:
“
Affiliate
” shall mean with respect to any person or entity, any other person or
entity that, at any time that a determination is made hereunder, directly or indirectly, controls,
is controlled by, or is under common control with such first person or entity. For the purpose of
this definition, “control” shall mean, as to any person or entity, the possession, directly or
indirectly, of the power to elect or appoint a majority of directors (or other persons acting in
similar capacities) of such person or entity or otherwise to direct or cause the direction of the
management and policies of such person or entity, whether through the ownership of voting
securities, by contract or otherwise.
“
Beneficial Owner
”, “
Beneficially Own
” and “
Beneficial Ownership
”
shall have the meaning as set forth in Rules 13d-3 and 13d-5 promulgated under the Exchange Act or
any successor provision.
“
Common Stock
” shall mean the common stock of the Corporation.
“
Group
” or “
group
” shall have the meaning ascribed thereto in Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act or any successor provision.
“
Non-Control Acquisition
” shall mean a Corporate Transaction that is a merger or
consolidation involving the Corporation (or any other substantially similar transaction or series
of related transactions involving the Corporation) where:
(1) Persons who are the Beneficial Owners of the Voting Power of the Corporation immediately
prior to such Corporate Transaction will Beneficially Own, by reason of such immediately prior
Beneficial Ownership, immediately after such Corporate Transaction an aggregate of more than 45% of
the Voting Power of the surviving, resulting or acquiring entity in such Corporate Transaction; and
(2) such Corporate Transaction shall not result in a Change in Control with respect to the
surviving, resulting or acquiring entity under clause (i) of the definition of “Change in Control”
(as if such definition and the definition of “Permitted Holder” referred to such surviving,
resulting or acquiring entity and taking into account the paragraph beginning “Notwithstanding”
immediately following clause (iv) of such definition); and
(3) individuals who were members of the Board immediately prior to such Corporate Transaction
constitute at least a majority of the members of the board of directors (or similar governing body)
of the Corporation or other surviving, resulting or acquiring entity in such Corporate Transaction
immediately after such Corporate Transaction.
“
Permitted Holder
” shall mean any of (a) the Trust, (b) TPG, (c) the Corporation or
any entity controlled by the Corporation, (d) any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or by any entity controlled by the Corporation, (e) any
group of which any of the foregoing are members; provided, that, without giving effect to the
existence of such group or any other group, or giving effect to any agreements between the Trust
and/or TPG, on the one hand, and any other Person, on the other hand, the Trust and TPG
collectively Beneficially Own, a greater
percentage of the Voting Power of the Corporation than the percentage of such Voting Power
collectively Beneficially Owned by all other members of such group (together with their
Affiliates), or (f) any member of any group that is a Permitted Holder pursuant to clause (e) of
this definition at the time of the determination of whether such member is a Permitted Holder, and
any of such member’s Affiliates.
“
Person
” shall mean any individual, entity or group, including any “person” or “group”
within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor
provision.
“
Spin-Off
” shall mean a disposition of what the Board determines in good faith, after
consultation with its outside counsel, to be all or substantially all of the assets of the
Corporation (on a consolidated basis) pursuant to a spin-off, split-up or similar transaction where
Persons who are the Beneficial Owners of the Voting Power of the Corporation immediately prior to
such transaction will Beneficially Own, by reason of such immediately prior Beneficial Ownership,
an aggregate of more than 80% of the Voting Power of each of the entities resulting from such
transaction (including Armstrong World Industries, Inc.) immediately after such transaction;
provided, that, if another Corporate Transaction involving any entity resulting from such
transaction (including Armstrong World Industries, Inc.) occurs in connection with a Spin-Off, such
Corporate Transaction shall be analyzed separately for purposes of determining whether a Change in
Control has occurred with respect to the entity resulting from such Spin-Off that employs the
Executive immediately after such Spin-Off (which may be Armstrong World Industries, Inc.).
“
TPG
” shall mean Armor TPG Holdings LLC and its Affiliates as of the time of
the relevant determination hereunder.
“
Trust
” shall mean the Armstrong World Industries, Inc. Asbestos Personal Injury
Settlement Trust and its Affiliates as of the time of the relevant determination hereunder.
“
Voting Power
” shall mean, calculated at a particular point in time, the aggregate
votes represented by all the then outstanding securities of an entity then entitled to vote
generally in the election of directors of such entity (as applicable) but excluding any votes which
a Person shall have upon and by reason of the non-payment of dividends on preferred shares in
accordance with the terms of such preferred shares.
(d) A “
Potential Change in Control
” shall be deemed to occur if any of the following
shall have occurred after the date hereof: (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 in Control; or (C) the Board of the Corporation adopts a resolution to the
effect that, for the purposes of this Agreement, a Potential Change in Control has occurred.
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6.
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Maintenance of Insurance and Funding
.
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(a) The Corporation represents that as of the present date, it has in force and effect one or
more policies of D&O Insurance (the “Insurance Policies”), providing a minimum of $75,000,000 in
coverage. The Corporation hereby agrees that, so long as Indemnitee shall continue to perform
Corporate Service and thereafter so long as Indemnitee shall be subject to any possible claim or
threatened, pending or
contemplated Proceeding, whether civil, criminal or investigative, by reason of Indemnitee’s
Corporate Service, the Corporation (i) shall use its reasonable best efforts to maintain in effect
for the benefit of Indemnitee a binding and enforceable policy or policies of D&O insurance
providing coverage at least comparable to that provided pursuant to the Insurance Policies, and
agrees that Indemnitee shall continue to be covered by such policies in accordance with their terms
and to the maximum extent of the coverage available for any director or officer under the Insurance
Policies; provided, that, if the Corporation, after employing such reasonable best efforts,
determines in good faith that such comparable insurance is not reasonably available, then the
Corporation agrees that Indemnitee shall be covered by such policy or policies of D&O insurance as
provides the coverage to the maximum extent that is then provided to any director or officer of the
Corporation, and (ii) shall ensure that any successor-in-interest to the Corporation shall maintain
such insurance coverage for the benefit of Indemnitee.
(b) Upon receipt of a notice of a claim for indemnification or advancement of Expenses
pursuant to Section 1 or 2(a) of this Agreement, the Corporation shall give prompt notice of the
commencement of such Proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Corporation shall thereafter take all necessary or desirable action to
cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such
Proceeding in accordance with the terms of such policies.
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7.
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Continuation of Indemnity
.
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All agreements and obligations of the Corporation contained in this Agreement shall continue
during the period that Indemnitee is performing Corporate Service. Following termination of
Indemnitee’s Corporate Service or resignation by Indemnitee, all agreements and obligations of the
Corporation contained in this Agreement shall continue thereafter;
provided
,
however
, that such agreements and obligations of the Corporation shall continue only with
respect to any Proceeding arising out of, and by reason of, Indemnitee’s Corporate Service prior to
such termination of Indemnitee’s Corporate Service or resignation by Indemnitee.
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8.
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Notification and Defense of Claim
.
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As soon as practicable after receipt by Indemnitee of actual knowledge of any Proceeding to
which 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 Indemnitee’s Corporate Service, Indemnitee will
notify the Corporation thereof, if a claim in respect thereof may be or is being made by Indemnitee
against the Corporation under this Agreement. With respect to any such Proceeding as to which
Indemnitee has so notified the Corporation:
(a) Indemnitee shall be entitled to retain defense counsel of Indemnitee’s own choosing to
represent Indemnitee in the Proceeding to the extent such Proceeding involves Indemnitee. The
Corporation shall, in all events, be entitled to participate in the Proceeding at its own expense.
If Indemnitee is a participant in such Proceeding with any other person(s) to whom the Corporation
owes an obligation to advance expenses in connection with such Proceeding, the Corporation shall
not be required to advance expenses for more than one law firm (and, if necessary, one
additional law firm to act as local counsel) to represent collectively Indemnitee and such
other person(s) in respect of the same matter unless Indemnitee reasonably concludes that the
representation of Indemnitee and such other person(s) gives rise to an actual or potential conflict
of interest.
(b) The Corporation shall not be obligated to indemnify Indemnitee under this Agreement for
any amounts paid in settlement of such Proceeding to the extent effected without the Corporation’s
written consent. The Corporation shall not settle such Proceeding, whether or not including
Indemnitee, in any manner which would: (i) impose any penalty or limitation on Indemnitee, (ii)
include an admission of fault of, or adverse finding with respect to, Indemnitee, (iii) not
include, as an unconditional term thereof, the full release of Indemnitee from all liability in
respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to
Indemnitee, or (iv) have the actual or purported effect of extinguishing, limiting or impairing
Indemnitee’s rights hereunder, including without limitation the entry of any contribution bar
order, other bar order or other similar order, decree or stipulation pursuant to 15 U.S.C. § 78u-4
or any other foreign, federal or state statute, regulation, rule or law, without the written
consent of Indemnitee. Neither the Corporation nor Indemnitee will unreasonably withhold,
condition or delay consent to any proposed settlement.
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9.
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Undertaking to Repay Expenses
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In the event it shall ultimately be determined by a final adjudication in a court of competent
jurisdiction that Indemnitee is not entitled under law to be indemnified for Expenses advanced by
the Corporation pursuant to Section 2(a) hereof, by the Trustee pursuant to Section 5(b) hereof or
otherwise or was not entitled to be fully
indemnified for such advanced Expenses, Indemnitee shall repay to the Corporation such amount
of Expenses or the appropriate portion thereof, so paid or advanced. Such undertaking shall be
unsecured and interest-free.
Any notice to the Corporation shall be directed to Armstrong World Industries, Inc., 2500
Columbia Avenue, Lancaster, Pennsylvania 17603, Attention: Secretary (or such other address as the
Corporation shall designate in writing to Indemnitee).
In the event Indemnitee is required to bring any Proceeding to enforce rights or to collect
monies due under this Agreement, the Corporation shall advance to Indemnitee the Expenses actually
incurred by Indemnitee in investigating, preparing for, litigating, defending or settling any such
Proceeding in a court of competent jurisdiction. The Corporation shall pay Expenses actually
incurred by Indemnitee in connection with any such Proceeding in advance of the final disposition
of such action in accordance with the terms and conditions set forth in Section 2(a) of this
Agreement.
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12.
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Independent Counsel
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(a) “Independent Counsel” shall mean any law firm, or a member of a law firm, that (i) is
experienced in matters of Pennsylvania corporation law and (ii) is not, at such time, or has not
been in the five years prior to such time, retained to represent either (x) the Corporation or
Indemnitee in any matter material to either such party or (y) any other party to the Proceeding
giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term
“Independent Counsel” shall not
include any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Corporation or Indemnitee
in an action to determine Indemnitee’s rights under this Agreement.
(b) Independent Counsel shall be selected by Indemnitee, and Indemnitee shall give written
notice to the Corporation advising the Corporation of the identity of the Independent Counsel so
selected, simultaneously with providing the Corporation with the written request for
indemnification. The Corporation may, within ten (10) days after such written notice of selection
shall have been received, deliver to Indemnitee a written objection to such selection;
provided
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however
, that such objection may be asserted only on the grounds that the
Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined
in Section 12(a) of this Agreement, and the objection shall set forth with particularity the
factual basis of such assertion. Absent a proper and timely objection, the person so selected
shall act as Independent Counsel. If a written objection is so made and substantiated, the
Independent Counsel so selected may not serve as Independent Counsel unless and until such
objection is withdrawn or a court of competent jurisdiction has determined that such objection has
not been established by the Corporation. If, within twenty (20) days after such written notice of
selection shall have been received, no Independent Counsel shall have been selected and not
objected to, either the Corporation or the Indemnitees may petition to a court of competent
jurisdiction for resolution of any objection which shall have been made by the Corporation to
Indemnitee’s selection of Independent Counsel and/or for the appointment as Independent Counsel of
a person selected by such court, and the person with respect to whom all objections are so
resolved or the person so appointed shall act as Independent Counsel.
(c) The Corporation agrees to pay the reasonable fees and expenses of Independent Counsel and
to fully indemnify such Independent Counsel against any and all expenses, claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant hereto.
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 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 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.
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14.
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Indemnification Under this Agreement Not Exclusive
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The right to indemnification and advancement of Expenses provided by this Agreement shall not
be deemed exclusive of any other rights to which Indemnitee may
be entitled by reason of Indemnitee’s Corporate Service under the Bylaws or under any other
agreement, any vote of stockholders or directors, or otherwise; provided, however, that this
Agreement shall supersede any prior indemnification agreement between the Corporation and
Indemnitee. To the extent that a change in applicable law (whether by statute or judicial
decision) permits greater indemnification than would be afforded currently under the Bylaws,
applicable law or this Agreement, it is the intent of the parties that Indemnitee enjoy by this
Agreement the greater benefits so afforded by such change.
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15.
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Corporation as Primary Indemnitor
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The Corporation hereby acknowledges that Indemnitee may have certain rights to
indemnification, advancement of Expenses and/or insurance provided by a third party and its
affiliates (collectively, “Third-Party Indemnitors”). The Corporation hereby agrees (i) that it is
the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation
of the Third-Party Indemnitors to advance Expenses or to provide indemnification for the same
Expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to
advance the full amount of Expenses incurred by Indemnitee and shall be liable to Indemnitee for
the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the
extent legally permitted, and as required by the terms and conditions of this Agreement and the
Bylaws (or any other agreement between the Corporation and Indemnitee), without regard to any
rights Indemnitee may have against the Third-Party Indemnitors, and, (iii) that it irrevocably
waives, relinquishes and releases the Third-Party Indemnitors from any and all claims against the
Third-Party Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The
Corporation further agrees that no advancement or payment by the Third-Party Indemnitors on behalf
of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the
Corporation shall affect the foregoing and the Third-Party Indemnitors shall have a right of
reimbursement and/or be subrogated to the extent of such advancement or payment to all of the
rights of recovery of Indemnitee against the Corporation. The Corporation and Indemnitee agree
that the Third-Party Indemnitors are express third party beneficiaries of this Section 15.
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16.
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Subrogation; No Duplication of Payments
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(a) Except as provided in Section 15 above, in the event of any payment under this Agreement,
the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery
of Indemnitee (other than against the Third-Party Indemnitors), who shall execute all papers
required and take all action necessary to secure such rights, including execution of such documents
as are necessary to enable the Corporation to bring suit to enforce such rights.
(b) Except as provided in Section 15 above, the Corporation shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which
advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually
received such payment under any insurance policy, contract, agreement or otherwise.
(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 Indemnitee and upon the Corporation and its
successors and assigns, and shall inure to the benefit of Indemnitee, his or her heirs, executors,
personal representatives and assigns and to the benefit of the Corporation and 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 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 or any other surviving entity following any merger, consolidation, sale, lease, transfer
or otherwise of all or substantially all of the assets of the Corporation.
(c) No amendment, modification, termination or cancellation of this Agreement shall be
effective unless in writing signed by both of the parties hereto.
(d) This Agreement may be executed in one or more counterparts, each of which will be deemed
to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement. Delivery of executed
signature pages by facsimile or electronic transmission shall constitute effective and binding
execution of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.
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ARMSTRONG WORLD INDUSTRIES, INC.
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By:
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By:
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