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PERSONAL &
CONFIDENTIAL
Michael D. Lockhart
Office of the Chairman
Subject: yyyy Long-Term Incentive
Equity Grants
Dear Mike:
The Management Development and
Compensation Committee of the Board of Directors (the
“Committee”) of Armstrong World Industries, Inc.
(“AWI” or the “Company”) granted you the
following Long-Term Incentive Equity Grants effective
mm/dd/yyyy .
xxxxx
Stock Options to purchase AWI common stock
xxxxx
Performance Restricted Shares
These awards are made under the
Company’s 2006 Long-Term Incentive Plan (the
“Plan”), and are subject to the terms of the Plan and
of this grant letter. In the event of any questions or dispute
concerning these awards, the decisions and interpretations of the
Board of Directors and, where applicable, the Committee
administering the Plan, will be binding, conclusive and
final.
A copy of the Plan is enclosed. Also
enclosed is the 2006 Long-Term Incentive Plan Summary, which
together with the Company’s current Form 10-K Annual Report
constitutes part of the Prospectus covering the securities. Form
10-K Annual Reports are available from the Treasurer’s
Office.
Stock Options
Each Stock Option entitles you to
purchase one share of AWI common stock at an exercise price equal
to $xx.xx which was the closing price of AWI shares as reported by
the New York Stock Exchange on mm/dd/yyyy .
These option grants are
“non-qualified” stock options for tax purposes and
accordingly are not subject to the additional restrictions or tax
treatment applicable to qualified (also called
“incentive”) stock options. The Stock Options will have
a ten-year term starting mm/dd/yyyy . The Stock Options will
vest and become exercisable in three installments at one, two and
three years from mm/dd/yyyy as follows: xxxx shares on
mm/dd/yyyy ; xxxx shares on mm/dd/yyyy ; and xxxx
shares on mm/dd/yyyy . If you remain employed by Armstrong
on a scheduled vesting date, you will become entitled to exercise
the respective Stock Option installment, subject to the provisions
set out below and in the Plan.
If you terminate employment due to
voluntary resignation without “Good Reason”
(“Good Reason” is defined pursuant to the terms of an
individual Change in Control Agreement in effect on that date), or
if you are terminated due to willful, deliberate or gross
misconduct, you will forfeit all vested and unvested Stock
Options.
If you terminate employment due to
voluntary retirement (minimum age 55 with 5 years of service)
without Good Reason, you will forfeit all unvested Stock Options,
and you will have until the earlier of five years from the date of
retirement or the Stock Option expiration date to exercise any
vested Stock Options.
If you are involuntarily terminated for
reasons other than willful, deliberate or gross misconduct, you
will forfeit all unvested Stock Options, and you will have until
the earlier of three months from the date of termination or the
Stock Option expiration date to exercise any vested Stock
Options.
In the event of your long-term
disability or death which occurs after mm/dd/yyyy , all
unvested Stock Options will immediately vest and be exercisable.
You or your beneficiary will have until the earlier of three years
from the date of disability or death, or the Stock Option
expiration date to exercise any outstanding Stock Options, provided
that in the case of death, your legal representative or beneficiary
will have a minimum of one year from the date of
2
death to exercise any outstanding Stock
Options without regard to the scheduled Stock Option expiration
date. In the event of your long-term disability or death on or
before mm/dd/yyyy , you will forfeit all unvested Stock
Options.
If you resign or ret
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