Contents:
Employment Agreement
First Amendment to Employment Agreement
 
EXHIBIT 10(a)

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made as of August 7, 2000 (the "Agreement") by
and between ARMSTRONG HOLDINGS, INC., a Pennsylvania corporation (the
"Company"), and MICHAEL D. LOCKHART (the "Executive");

                                   WITNESSETH:

     WHEREAS, the Company desires to employ the Executive and the Executive
desires to become an employee of the Company on the terms and conditions set
forth in this Agreement;

     NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

     1.   DEFINED TERMS.
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     The definitions of capitalized terms used in this Agreement, unless
otherwise defined herein, are provided in the last Section hereof.

     2.   EMPLOYMENT.
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     The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to serve the Company and its subsidiaries and affiliates, on the terms
and conditions set forth herein, during the Term of this Agreement.

     3.   TERM OF AGREEMENT.
          -----------------

     The Term will commence on the date first above written (the "Effective
Date") and shall continue until the third anniversary of the Effective Date;
provided, that, the Term of this Agreement shall automatically be extended for
one (1) additional year on such third anniversary date and each succeeding
anniversary date unless the Company shall have given written notice to the
Executive at least 180 days prior to the third anniversary date or any
succeeding anniversary date thereafter to the effect that the Term of this
Agreement shall not be extended. Notwithstanding anything in this Agreement to
the contrary, the Company may terminate this Agreement in the event of
Executive's Disability; provided, that any such termination shall not, by
itself, terminate the Executive's employment with the Company.

     4.   POSITION AND DUTIES.
          -------------------

     During the Term of this Agreement, the Executive shall serve as Chairman of
the Board and Chief Executive Officer of the Company and as a member of the
Board and shall also serve in any other executive officer position of the
Company and its subsidiaries and affiliates as the Board may reasonably request.
The Executive shall be the chief executive officer of the Company and shall have
such duties and responsibilities as are customary for the Executive's

                                       
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position and such other duties not inconsistent therewith as the Board may
reasonably assign from time to time. During the Term of this Agreement,
excluding any periods of vacation and sick leave to which the Executive is
entitled under the Company's policies and practices (as the same may be
increased in the future), the Executive shall devote substantially all his
working time and efforts to the business and affairs of the Company and its
subsidiaries and affiliates and shall diligently and faithfully perform his
duties to the best of his ability; provided, however, that the Executive may
engage in activities relating to personal matters (including personal financial
matters) and in such corporate, industry, civic and charitable activities,
including membership on corporate and charitable boards of directors or trustees
of non-affiliated companies and organizations, so long as such service does not
substantially interfere with the performance of his duties hereunder or violate
his obligations under Section 10 hereof.

     5.   COMPENSATION AND RELATED MATTERS.
          --------------------------------

     5.1  HIRING COMPENSATION.
          -------------------

          (a) On the Effective Date, the Company shall pay to the Executive a
cash signing bonus of $5,000,000.

          (b) As of the Effective Date, the Company shall award the Executive
150,000 shares of restricted Common Stock under the Company's Stock Award Plan,
which shares of restricted Common Stock shall vest and shall become free of
restrictions in equal annual installments on the first, second and third
anniversary of the Effective Date and the Executive shall have the opportunity
to make a voluntary deferral election prior to the lapse of the restrictions on
such restricted Common Stock. Notwithstanding anything in the Company's Stock
Award Plan to the contrary, the Executive shall be entitled to receive any cash
dividends paid on the shares of restricted Common Stock. At the Executive's
election, the Executive will either pay the Company an amount of cash or
authorize the Company to withhold shares from any shares of Common Stock which
vest and become free of restrictions, in order to permit the Company to satisfy
its tax withholding obligations with respect to such shares.

          (c) The Company shall grant the Executive stock options for 300,000
shares of Common Stock under the Company's Long-Term Incentive Plan, which
options shall be granted as follows: (i) 100,000 options on the Effective Date,
(ii) 100,000 options on the four month anniversary of the Effective Date and
(iii) 100,000 options on the eight month anniversary of the Effective Date. Such
stock options shall have an exercise price equal to the fair market value of the
Common Stock on the date of grant. Each such stock option shall vest in equal
annual installments over a term of three years from the date of grant and will
have a ten year term. Notwithstanding anything in the Company's Long-Term
Incentive Plan to the contrary, in the event of the termination of the
Executive's employment, vested options shall be exercisable as follows: (A) in
the event of the Executive's death or disability (as defined for purposes of the
Company's Long-Term Incentive Plan), for a period equal to the remaining Term
under this Agreement, (B) in the event of the Executive's retirement which is
approved by the Board, for the remaining Term of this Agreement, (C) in the
event of the termination of the Executive's employment by the Executive for Good
Reason or by the Company without Cause, for the remaining Term of this
Agreement, (D) in the event of a termination of the Executive's

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employment by the Executive other than for Good Reason, for the three (3) months
after the Date of Termination, and (E) in the event of the termination of the
Executive for Cause, the stock options shall not be exercisable and shall be
forfeited, and the agreement evidencing the grant shall so provide.

     (d) The Company will hold the Executive harmless against any and all losses
that he may directly or indirectly incur as a result of (i) any third party
claims brought against the Executive (other than by any taxing authority) with
respect to the Company's performance of, or (ii) the Company's failure to
perform any commitment made to the Executive in, this Section 5.

     5.2 BASE SALARY. The Company shall pay, or cause to be paid, to the
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Executive an annual base salary ("Base Salary") during the Term of this
Agreement which shall be at an initial rate of not less than $800,000 per year.
The Base Salary shall be paid in accordance with the Company's payroll practices
for its senior officers, but not less frequently than monthly, in arrears. For
purposes of this Agreement, "Base Salary" shall include any increases in Base
Salary during the Term of this Agreement. The Base Salary in effect from time to
time shall not be decreased during the Term of this Agreement except in
connection with across-the-board salary reductions similarly affecting all
senior officers of the Company and all senior officers of any person in control
of the Company which have been agreed to by the Executive. Compensation of the
Executive by Base Salary payments shall not be deemed exclusive and shall not
prevent the Executive from participating in any other compensation or benefit
plan of the Company. The Base Salary payments (including any increased Base
Salary payments) shall not in any way limit or reduce any other obligation of
the Company hereunder, and no other compensation, benefit or payment hereunder
shall in any way limit or reduce the obligation of the Company to pay the
Executive's Base Salary.

     5.3 BENEFIT PLANS. During the Term, the Executive and his eligible
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dependents shall be entitled to participate in and receive benefits under all
"employee benefit plans" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended from time to time ("ERISA")), and
employee benefit arrangements in which senior officers of the Company generally
participate, including without limitation, (i) all savings, deferred
compensation, profit sharing and retirement plans, practices, policies and
programs and (ii) all welfare benefit plans, practices, policies and programs
(including all medical, prescription, dental, disability, employee life
insurance, group life insurance, group hospitalization, health, accidental death
and travel accident insurance plans and programs) as are made generally
available to senior officers of the Company, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans,
practices, policies and programs, including provisions which permit such plans,
practices, policies and programs to be modified or terminated, provided, that if
the Company reduces the benefits provided under or terminates any such employee
benefit plan, practice, policy or program in which the Executive participates,
the Company shall offer to the Executive participation in another plan or
program that provides the Executive with benefits at least comparable to those
that were reduced or eliminated, and provided, further, that all eligibility
requirements under any such plan, practice, policy or program shall be waived.
The Executive shall not be entitled to credit for service at any prior employer
for purposes of the level of benefits to which the Executive is entitled under
any such plan, practice, policy or program. The Executive's participation in
such employee benefit plans,

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practices, policies and programs shall be at a level appropriate for the
Executive's position. Such employee benefit plans, practices, policies and
programs, shall include, without limitation, the plans, programs, policies and
practices in which the senior officers of the Company generally participate on
the date of this Agreement. Notwithstanding anything to the contrary in this
Agreement, in the Company's Retirement Income Plan or in the Company's
Retirement Benefit Equity Plan, the Executive shall be credited with that amount
of service equal to two times the service with which he would otherwise be
credited for purposes of determining his retirement benefits under the
Retirement Income Plan. To the extent that the Executive's retirement benefits
as so determined are not payable under the Retirement Income Plan, they shall be
paid by the Company under the Retirement Benefit Equity Plan or otherwise.

     5.4  INCENTIVE COMPENSATION.
          ----------------------

          (a) During the Term of this Agreement, the Executive shall be entitled
to participate in and receive benefits under all annual incentive (bonus) plans
and long-term incentive compensation plans in which other senior officers of the
Company generally participate, including all restricted share, performance
restricted share and stock option plans of the Company. The Executive's
participation in such incentive plans shall be at a level appropriate for the
Executive's position. Except as otherwise provided in this Agreement, such
incentive compensation shall be subject to and on a basis consistent with the
terms, conditions and overall administration of such plans, including provisions
which permit such plans to be modified or terminated, provided, that if the
Company reduces the incentive compensation opportunities provided under or
terminates any such plan in which the Executive participates, the Company shall
offer to the Executive participation in another plan that provides the Executive
with an incentive compensation opportunity at least comparable to that which was
reduced or eliminated. The target performance measures under the Company's
annual incentive program for each year shall be based on a reasonably achievable
level of net income, Economic Value Added or other performance measures
established by the Management Development and Compensation Committee of the
Board, adjusted for extraordinary events.

          (b) Without limiting the generality of the foregoing Section 5.4(a),
(i) during the Term of this Agreement, the Company shall provide the Executive
with an annual cash incentive opportunity which at target performance levels is
at least equal to 125% of the Executive's Base Salary, provided, however, that
the minimum cash incentive award payable to the Executive for the remainder of
calendar year 2000 shall not be less than a pro rata portion of $1,000,000,
based on the period from the Effective Date to December 31, 2000; and (ii)
beginning in March 2001, the Company shall provide the Executive with annual
long-term incentive awards under the Company's stock incentive plan or plans
then in effect and available for the issuance of long-term incentive awards to
senior officers of the Company generally, consisting of approximately 40% stock
options and 60% three-year performance restricted share grants (based on the
present value of the awards), with an aggregate present value on the date of
grant at least equal to 150% of Executive's target annual cash compensation for
the year, which is the sum of the Executive's Base Salary and annual incentive
opportunity at target performance levels. For purposes of the preceding
sentence, the present value of the awards shall be determined applying
reasonable Black Scholes assumptions in the case of stock options and using the
market value of the Common Stock on the date of grant in the case of restricted
stock.

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     5.5 OTHER BENEFITS. The Executive shall participate on the same terms and
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conditions as all other senior officers of the Company in all other benefit
plans, programs, or arrangements as may be now or hereafter sponsored or
maintained for senior officers of the Company generally and shall participate on
the same terms and conditions as other senior officers generally participate.

     5.6 FRINGE BENEFITS. During the Term of this Agreement, the Executive shall
         ---------------
be entitled to receive all perquisites and fringe benefits which the Company
makes available to senior officers of the Company generally. Without limiting
the generality of the foregoing, the Executive shall be entitled to (i) the
reasonable use of the Company's aircraft for personal use, provided such
aircraft is available, and (ii) the reimbursement of all reasonable and
documented expenses of relocating his home to Lancaster, Pennsylvania, and in
each case, the Company shall pay to the Executive, promptly upon receipt of a
certification from the Executive's tax preparer, a "gross up" payment in an
amount such that after payment by the Executive of all taxes, including, without
limitation, any income taxes imposed upon such gross-up payment, the Executive
retains an amount of such gross-up payment equal to the income tax imposed with
respect to such benefits.

     5.7 EXPENSES. During the Term of this Agreement, the Executive is
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authorized to incur, and shall be reimbursed by the Company for all reasonable
and customary business-related expenses, including travel, entertainment, gifts
and similar items, incurred by the Executive in connection with his employment
hereunder.

     5.8 WORKING FACILITIES. During the Term of this Agreement, the Company
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shall furnish the Executive with offices and working facilities in the Company's
principal executive offices and shall provide secretarial and other assistance
suitable to Executive's position and adequate for the performance of his duties
hereunder.

     5.9 VACATION. During the Term of this Agreement, the Executive shall be
         --------
entitled to vacation in accordance with the Company's current policies and
practices, provided that the Executive shall be entitled to not less than five
(5) weeks of vacation during each year of this Agreement, or such greater period
as the Board shall approve, without reduction in salary or other benefits.

     5.10 ANNUAL REVIEW. During the Term of this Agreement, the Board (or the
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Management Development and Compensation Committee of the Board) shall in good
faith review the Executive's total compensation package (including but not
limited to the Base Salary provided for in Section 5.2, the benefit plans
provided for in Section 5.3 and the short and long-term incentive compensation
opportunity provided for in Section 5.4) at least annually for possible
increase, taking into account, among other things, (i) the performance of the
Executive, (ii) the performance of the Company, and (iii) the overall
compensation of executives in similar positions at comparable companies.

     6.   COMPENSATION IN THE EVENT OF EXECUTIVE'S DISABILITY.
          ---------------------------------------------------

     During the Term of this Agreement, during any period that the Executive
fails to perform the Executive's full-time duties hereunder as a result of
incapacity due to physical or mental

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illness, the Company shall pay, or cause to be paid, to the Executive his Base
Salary 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 for the benefit of the Executive during such period, until this
Agreement is terminated by the Company for Disability; provided, however, that
such payments shall be reduced by the sum of the amounts, if any, payable to the
Executive at or prior to the time of any such payment under disability benefit
plans of the Company, which amounts were not previously applied to reduce any
such payment.

     7.   TERMINATION COMPENSATION AND BENEFITS.
          -------------------------------------

     7.1 If the Executive's employment is terminated for any reason during the
Term of this Agreement, the Company shall pay to the Executive (or in accordance
with Section 11.2 in the event of the Executive's death), (i) the Executive's
Base Salary through the Date of Termination at the rate in effect immediately
prior to the time the Notice of Termination is given, (ii) all compensation and
benefits (other than severance compensation and benefits) payable to the
Executive through the Date of Termination or thereafter under the terms of any
compensation or benefit plan, program or arrangement maintained by the Company
during such period, including any short-term or long-term incentive compensation
to which the Executive is entitled, by virtue of previous awards, in accordance
with the terms of the plans in which Executive participates, and (iii) any
unreimbursed expenses payable pursuant to Section 5.7 of the Agreement that were
incurred before the Date of Termination.

     7.2 In the event the Executive's employment is terminated prior to the
third anniversary of the Effective Date by the Executive for Good Reason or by
the Company for any reason other than Cause, death of the Executive or
Disability, the Company shall (i) pay the Executive, in addition to amounts
payable under Section 7.1 and 7.5, a lump sum cash payment to be made within
thirty (30) days after the Date of Termination equal to the product of (A) the
sum of (w) the higher of the Base Salary in effect immediately prior to the
occurrence of the event or circumstance upon which the Notice of Termination is
based or the Base Salary in effect immediately prior to the date of the Notice
of Termination plus (x) the higher of the annual cash incentive award that may
be earned by the Executive if target performance levels are achieved in the year
in which the Date of Termination occurs or the highest annual incentive award
that was actually paid by the Company to the Executive for any year in the three
preceding years, times (B) the greater of (y) two or (z) the number of years and
fraction thereof remaining in the Term of this Agreement from the Date of
Termination; and (ii) continue the benefits provided for in Section 5.3 of this
Agreement for a period equal to the greater of (A) two years, or (B) the
remaining Term of this Agreement, provided that such benefits shall be
discontinued if comparable benefits are obtained from a subsequent employer
during the remaining Term of this Agreement.

     7.3 In the event the Executive's employment is terminated after the third
anniversary of the Effective Date by the Executive for Good Reason or by the
Company for any reason other than Cause, death of the Executive or Disability,
the Company shall (i) pay the Executive, in addition to amounts payable under
Section 7.1 and 7.5, a lump sum cash payment to be made within thirty (30) days
after the Date of Termination equal to the product of (A) the sum of (w)

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the higher of the Base Salary in effect immediately prior to the occurrence of
the event or circumstance upon which the Notice of Termination is based or the
Base Salary in effect immediately prior to the date of the Notice of Termination
plus (x) the higher of the annual cash incentive award that may be earned by the
Executive if target performance levels are achieved in the year in which the
Date of Termination occurs or the highest annual incentive award that was
actually paid by the Company to the Executive for any year in the three
preceding years, times (B) the greater of (y) one or (z) a fraction the
numerator of which is the number of months (rounded up to the nearest whole
month) remaining in the Term of this Agreement from the Date of Termination and
the denominator of which is 12; and (ii) continue the benefits provided for in
Section 5.3 of this Agreement for the remaining Term of this Agreement, provided
that such benefits shall be discontinued if comparable benefits are obtained
from a subsequent employer during the remaining Term of this Agreement.

     7.4 In the event that the Executive's employment is terminated by the
Executive for any reason other than death, Disability or Good Reason or is
terminated by the Company for Cause, the Company shall pay the Executive any
amounts due pursuant to Section 7.1 and 7.5 hereof and the Executive shall pay
the Company: (i) a lump sum cash payment of $3,000,000 if such termination is
prior to the second anniversary date of the Effective Date; or (ii) a lump sum
cash payment of $1,500,000 if such termination is prior to the third anniversary
date of the Effective Date;

     7.5 If the Executive's employment is terminated for any reason during the
Term of this Agreement, the Company shall pay the Executive's normal
post-termination compensation and benefits (other than severance compensation
and benefits) to the Executive as such payments become due. Such normal
post-termination compensation and benefits (other than severance 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 arrangements (other than this Agreement), as applicable.

     7.6 (a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, benefit, or distribution by the
Company or its affiliates 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 with respect to such
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 ("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 Excise Tax imposed upon 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 7.6(c) hereof, all
determinations required to be made under this Section 7.6, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be used in arriving at such determinations, shall be made by the
Company's principal outside accounting firm (the

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"Accounting Firm") which shall provide detailed supporting calculations both to
the Board and the Executive within fifteen (15) business days after the Date of
Termination and/or such earlier date(s) as may be requested by the Company or
the Executive (each such date and the Date of Termination shall be referred to
as a "Determination Date" for purposes of this Section 7.6(b) and Section 7.7
hereof). All fees and expenses of the Accounting Firm shall be borne solely by
the Company. The initial Gross-Up Payment, if any, as determined pursuant to
this Section 7.6(b), shall be paid by the Company to the Executive within thirty
(30) days of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion that failure to report the
Excise Tax on the Executive's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty. Any determination
by the Accounting Firm under this Section 7.6(b) 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 7.6(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 an Underpayment. 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 thirty (30)
day period following the date on which he gives such notice to the Company (or
such shorter period ending on the date that 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 to
effectively contest such claim; and

               (iv) permit the Company to participate in any proceeding 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 with such contest

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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 7.6(c),
the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo 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 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 provided,
further, 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 7.6(c) hereof, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's compliance with the requirements of Section 7.6(c) hereof)
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 7.6(c) hereof, 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 thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid.

     7.7 The payments provided for in Section 7.6 hereof (other than Section
7.6(c) and (d)) shall be made not later than the thirtieth (30th) day following
each Determination Date; provided, however, that if the amounts of 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 by the Executive, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest at 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 forty-fifth (45th) day after each
Determination Date. 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 the rate
provided in Section 1274(b)(2)(B) of the Code).

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     8.   TERMINATION PROCEDURES.
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     8.1  NOTICE OF TERMINATION. During the Term of this Agreement, any 
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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 12 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, in the case of a termination by the Company for Cause or by the Executive
for Good Reason, 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 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 the definition of Cause herein,
and specifying the particulars thereof in detail.

     8.2  DATE OF TERMINATION. "Date of Termination," with respect to any
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purported termination of the Executive's employment during the Term of this
Agreement, shall mean (i) if the Executive's employment is terminated by his
death, the date of his death, (ii) if the Executive's employment is terminated
by the Executive other than for Good Reason, the date specified in the Notice of
Termination (which shall not be less than one hundred eighty (180) days after
such Notice of Termination is given), (iii) if the Executive's employment is
terminated by the Company for Cause, on the date that the Notice of Termination
is sent by the Board in accordance with Section 8.1, and (iv) if the Executive's
employment is terminated for any other reason, the date specified in the Notice
of Termination (which shall not be less than sixty (60) days) after such Notice
of Termination is given.

     9.   NO MITIGATION.
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     The Company agrees that, if the Executive's employment hereunder is
terminated 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 hereunder. Further, the amount of any payment or
benefit provided for hereunder (other than pursuant to Section 7.2, 7.3, 7.4 or
7.6(d) 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, provided, that the proviso to Section 7.2(ii), Section 7.3(ii),
Section 7.4 and Section 7.6(d) shall apply.

     10.  CONFIDENTIALITY AND NONCOMPETITION.
          ----------------------------------

     10.1 The Executive shall not, during or after the Term of this Agreement,
without the prior written consent of the Company disclose to any entity or
person any information which is treated as confidential by the Company or any of
their subsidiaries or affiliates (each, a 

                                       10
<PAGE>
 
"Company Entity"), and is not generally known or available in to the public,
provided, that the Executive may make disclosures of such confidential
information (i) during the Term of this Agreement in the course of and to the
extent required by and consistent with the performance of his duties hereunder,
and (ii) to the extent required by law or legal process.

     10.2 Except as permitted by the Company with its prior written consent, the
Executive shall not, during the Executive's employment with the Company and for
the period ending twenty-four (24) months after the Executive's employment with
the Company terminates for any reason, directly or indirectly, own, enter into
the employ of or render, any services (whether as a consultant or otherwise) to
any person, firm or corporation within the United States or any foreign country
in which the Company is doing or is contemplating doing business on the Date of
Termination which is a competitor of any Company Entity with respect to products
which any Company Entity is then producing or services which any Company Entity
is then providing (a "Competitor"), or approach, canvass, solicit, or otherwise
endeavor to entice away from the Company, any customer in respect of any service
or product in any way competitive with the services or products supplied by any
Company Entity to such customer, or solicit the services of, or endeavor to
entice away from the Company, any director, executive officer or employee of the
Company; provided, that it shall not be a violation of this provision for the
Executive to be employed by, or render services to, a Competitor, if the
Executive renders those services only with respect to those lines of business of
the Competitor which are not directly competitive with a line of business of any
Company Entity or are located in any country in which the Company does not do
business and was not contemplating doing business on the Date of Termination.

     10.3 The Executive acknowledges and agrees that any breach of this Section
10 by the Executive will result in immediate and irreparable harm to the
Company, the amount of which will be extremely difficult to ascertain, and that
the Buyer could not be reasonably or adequately compensated by damages in an
action at law. For these reasons, the Company shall have the right to obtain
such preliminary, temporary or permanent mandatory or restraining injunctions,
orders or decrees as may be necessary to protect the Company against or on
account of any breach by the Executive of the provisions of this Section 10
without proof of any actual damage caused to the Company.

     11.  SUCCESSORS; BINDING AGREEMENT.
          -----------------------------

     11.1 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 and/or assets of the Company, as the case may be, 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
upon 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, except that, for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination.

                                       11
<PAGE>
 
     11.2 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.

                                       12
<PAGE>
 
     12.  NOTICES.
          -------

     For the purpose of this Agreement, notices and all 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 to the respective
addressees 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 Holdings, Inc.
     2500 Columbia Avenue
     Lancaster, PA 17603
     Attention:  Executive Vice President, Human Resources
     Telecopy:  717-396-6119

     To the Executive:

     At the Executive's residence address as maintained by the Company in the
regular course of its business for payroll purposes.

     13.  MISCELLANEOUS.
          -------------

     If the Executive, in his capacity as a director, votes for, or in his
capacity as an officer, approves in writing, any action that will adversely
affect the Executive's rights under this Agreement, such vote or approval shall
be deemed to constitute the Executive's consent to such action under this
Agreement; otherwise, 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 officers as may be specifically designated
by the Board. No waiver by any party hereto at any time of any breach by any
other party hereto of, or 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. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by any party
which are not expressly set forth in this Agreement, provided that nothing
contained herein shall be interpreted to amend or nullify those obligations of
the Company and the Executive pursuant to the Change in Control Agreement and
the Indemnification Agreement by and between the Company and the Executive, as
the same may be amended from time to time. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and canceled, except as otherwise provided in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the Commonwealth of Pennsylvania, without
giving effect to choice of law principles.

                                       13
<PAGE>
 
     All references to sections of the Code shall be deemed also to refer to any
successor provisions to such sections. There shall be withheld from any payments
provided for hereunder any amounts required to be withheld under federal, state
or local law and any additional withholding amounts to which the Executive has
agreed. The obligations under this Agreement of the Company or the Executive
which by their nature and terms require satisfaction after the end of the Term
shall survive such event and shall remain binding upon such party.

     14.  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.

     15.  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.

     16.  SETTLEMENT OF DISPUTES; ARBITRATION.
          -----------------------------------

     All claims by the Executive for benefits under this Agreement shall be in
writing and shall be directed to and initially determined by the Board. Any
denial by the Board 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
Board 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
Board a decision of the Board within sixty (60) days after notification by the
Board that the Executive's claim has been denied. To the extent permitted by
applicable law and subject to the right of the Company to seek equitable relief
in a court pursuant to Section 10.3, 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 for
the resolution of employment law disputes of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction.

     17.  FEES AND EXPENSES.
          -----------------

     The Company shall pay to the Executive all reasonable legal fees and
expenses incurred by the Executive (i) in connection with his pre-signing review
of this Agreement and the related Change in Control Agreement and
Indemnification Agreement, and (ii) in disputing any termination or 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; provided, however, the Company shall not be required
to pay to the Executive legal fees and expenses to the extent such legal fees
and expenses were incurred in connection with a contest controlled by the
Company pursuant to Section 7.6(c) hereof in connection with which the Company
complied with its obligations under said Section 7.6(d). Such payments shall be
made within thirty (30)

                                       14
<PAGE>
 
business days after delivery of the Executive's written request for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.

     18.  OTHER AGREEMENTS.
          ----------------

     Simultaneously with the execution of this Agreement, the Company and the
Executive shall enter into a Change in Control Agreement ("Change in Control
Agreement") and a Indemnification Agreement ("Indemnification Agreement"), and
forms of which are attached hereto as Exhibits A and B, respectively.

     19.  COORDINATION OF BENEFITS.
          ------------------------

     Notwithstanding anything in this Agreement to the contrary, if the
Executive is paid "Severance Payments" under the Change in Control Agreement
dated the date hereof between the Company and the Executive, in connection with
a Change in Control (as defined therein), then this Agreement (including Section
10.2 hereof) shall forthwith terminate and the Executive shall not be entitled
to the payment of any amounts under this Agreement other than pursuant to
Section 7.1 hereof (and any amounts theretofore paid to the Executive pursuant
to Section 7.2 or 7.3 hereof shall be credited against any "Severance Payments"
to which the Executive is entitled under said Change in Control Agreement).

     20.  DEFINITIONS.
          -----------

     For purposes of this Agreement, the following terms shall have the meaning
indicated below:

     (a) "Base Salary" shall have the meaning stated in Section 5.1 hereof.

     (b) "Board" shall mean the Board of Directors of Armstrong Holdings, Inc.

     (c) "Cause" for termination by the Company of the Executive's employment,
for purposes of this Agreement, shall mean (i) the willful and continued failure
by the Executive to substantially perform the Executive's duties hereunder
(other than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure after the
issuance of a Notice of Termination for Good Reason by the Executive pursuant to
Section 8.1) after a written demand for substantial performance is delivered to
the Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties, or (ii) the willful engaging by the Executive in conduct
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, or (iv) a material breach by the Executive of this
Agreement, including a violation of Section 10. For purposes of clauses (i) and
(ii) of this definition, no act, or failure to act, on the Executive's part
shall be deemed "willful" unless done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that the Executive's act, or
failure to act, was in the best interest of the Company. In the event of a
dispute concerning the application of this provision,

                                       15
<PAGE>
 
no claim by the Company that Cause exists shall be given effect unless the
Company establishes to the Board by clear and convincing evidence that Cause
exists.

     (d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

     (e) "Common Stock" shall mean the common stock, par value $1.00 per share
of the Company.

     (f) "Date of Termination" shall have the meaning stated in Section 8.2
hereof.

     (g) "Disability" shall be deemed the reason for the termination of this
Agreement by the Company, 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 hereunder for a period of six
(6) consecutive months, the Company shall have given the Executive 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.

     (h) "Excise Tax" shall have the meaning stated in Section 7.6(a) hereof.

     (i) "Executive" shall mean the individual named in the first paragraph of
this Agreement.

     (j) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express written
consent), 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
paragraphs (i) or (ii) 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
alteration in the nature or status of the Executive's responsibilities
consistent with the title set forth in Section 4, unless the Executive has
indicated to the Company his intention to terminate his employment prior to the
end of the Term, and such assignment or alteration is made by the Board in good
faith in order to facilitate a transition to successor management;

          (ii) any material breach of any provision of this Agreement by the
Company;

          (iii) the relocation of the Executive's principal place of employment
to a location more than 250 miles from the Executive's principal place of
employment (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) a reduction by the Company in the Executive's Base Salary as in
effect on the date hereof or as the same may be increased from time to time
except for across-the-board salary

                                       16
<PAGE>
 
reductions similarly affecting all senior officers of the Company and all senior
officers of any person in control of the Company; or

          (v) the failure by the Company to continue in effect any employee
benefit plan or incentive compensation plan in which the Executive currently
participates which is material to the Executive's total compensation, unless
such plan or arrangement has been replaced by a new 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.

          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.

     (k) "Gross-Up Payment" shall have the meaning stated in Section 7.6(a)
hereof.

     (l) "Notice of Termination" shall have the meaning stated in Section 8.1
hereof.

     (m) "Severance Payments" shall mean those payments described in Section 7.2
and 7.3 hereof.

     (n) "Term" shall have the meaning stated in Section 3 hereof.

                                       17
<PAGE>
 
     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.

                       ARMSTRONG HOLDINGS, INC.

                       By:      
                                ---------------------------
                                Name:  Douglas L. Boles
                                Title: Executive Vice President, Human Resources

                       The undersigned, Armstrong World Industries, Inc., agrees
                       to be jointly and severally bound by the terms of this
                       Agreement, including specifically with respect to the
                       obligations of the Company hereunder.

                       ARMSTRONG WORLD INDUSTRIES, INC.

                       By:     
                                --------------------------- 
                                Name:  Douglas L. Boles
                                Title: Executive Vice President, Human Resources

                       EXECUTIVE

                       ---------------------------------
                       Michael D. Lockhart
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                                                                      EXHIBIT 10
                                                                      ----------



                   FIRST AMENDMENT TO THE EMPLOYMENT AGREEMENT
                                     BETWEEN
                ARMSTRONG HOLDINGS, INC. AND MICHAEL D. LOCKHART
                              DATED AUGUST 7, 2000

     This Amendment to the Employment Agreement dated August 7, 2000
("Employment Agreement") between ARMSTRONG HOLDINGS, INC. ("Company") and
MICHAEL D. LOCKHART ("Executive") is made and effective as of February 26, 2001
by the Company and Executive.

RECITALS:

     A. The Company and Executive are parties to the Employment Agreement which
sets forth the material terms and conditions of Executive's employment with the
Company, including Executive's right to annual long-term incentive awards to
permit cash incentive awards in lieu of grants of stock options and performance
restricted shares.

     B. The Company and Executive desire to modify the Employment Agreement with
respect to annual long-term incentive awards to permit cash incentive awards in
lieu of grants of stock options and performance restricted shares.

AGREEMENT:

     In consideration of the premises and the mutual covenants set forth herein,
the Company and Executive hereby agree to amend the Employment Agreement as
follows:

     1. Section 5.4 (b) of the Employment Agreement is amended by adding the
following new provisions at the end thereof:

     Notwithstanding the preceding sentence, the Company may provide the
     Executive with his annual long-term incentive award in the form of cash
     incentive awards rather than stock option and performance restricted share
     grants. Such cash incentive awards shall be based on the achievement of
     performance measures covering a period of more than a single year, as
     established by the Management Development and Compensation Committee in its
     discretion.

     2. In all other respects, the provisions of the Employment Agreement shall
continue in effect and are hereby confirmed.
<PAGE>
 
         The parties hereto have executed and delivered this Amendment as of the
date noted in the first paragraph hereof.


                                            ARMSTRONG HOLDINGS, INC.



                                            By:
                                               ---------------------------------
                                                 Name:  Matthew J. Angello
                                                 Title: Sr. Vice President



                                            The undersigned Armstrong World
                                            Industries, Inc., agrees to be
                                            jointly and severally bound by the
                                            terms of this Amendment, including
                                            specifically with respect to the
                                            obligations of the Company
                                            hereunder.


                                            ARMSTRONG WORLD INDUSTRIES, INC.



                                            By: 
                                               ---------------------------------
                                                 Name:   Walter T. Gangl
                                                 Title:  Assistant Secretary




                                            ----------------------------------
                                                      MICHAEL D. LOCKHART
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