AMERICAN OLEAN TILE COMPANY, INC.
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AMERICAN OLEAN TURNAROUND PLAN
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Section 1. Purpose
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The purpose of the American Olean Turnaround Plan (the "Plan") is to enhance the
value, growth and profitability of American Olean Tile Company, Inc., a New York
corporation ("AO" or the "Company"), by providing the incentive of long-term
rewards to key employees who are capable of having a significant impact on the
performance of AO.
Section 2. Definitions
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For the purpose of the Plan, the following terms shall have the meanings
indicated:
(a) "Armstrong" means Armstrong World Industries, Inc., and any
corporation, partnership, or other organization of which Armstrong
owns or controls, directly or indirectly, not less than 50 percent
of the total combined voting power of all classes of stock or other
equity interests. For purposes of this Plan, the term "Armstrong"
shall include any successor thereto.
(b) "Board" means the Board of Directors of AO.
(c) "Committee" means the Compensation Committee of the American Olean
Board of Directors.
(d) "Common Stock" means the Common Stock, par value $1.00 per share, of
Armstrong World Industries, Inc., a Pennsylvania corporation.
(e) "Disability" means total and permanent disability within the meaning
of Section 22(e)(3) of the Code.
(f) "AO Phantom Share" means a stock unit equivalent of American Olean
which unit does not convey to the Participant holder any interest,
right, or title to American Olean.
(g) "Fair Market Value" means the closing price of the Common Stock as
reported on the New York Stock Exchange Composite Tape on the
applicable date or, if no sales were made on such date, on the next
preceding date on which the sales of the Common Stock were made.
(h) "Investment Award" means a right to earn an award based upon AO
attaining designated performance goals established by the Committee.
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(i) "Investment Period" means one or more Performance Periods during
which time AO Phantom Shares earned shall be subject to
restrictions.
(j) "Participant" means any key employee who has met the eligibility
requirements set forth in Section 4 hereof and to whom a grant has
been made and is outstanding under the Plan.
(k) "Performance Period" means, in relation to an Investment Award, any
period for which performance goals have been established.
(l) "Retirement" means termination from employment with Armstrong after
the Participant has attained age 55 and has completed five years of
service with Armstrong or termination of employment under
circumstances which the Committee deems equivalent to retirement.
Section 3. Administration
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The Plan shall be administered by the Committee which shall consist of appointed
directors of the Company, none of whom is eligible to participate in the Plan.
Subject to the provisions of the Plan and to directions by the Board, the
Committee is authorized to interpret the Plan, to adopt administrative rules,
regulations, and guidelines for the Plan, and to impose such terms, conditions,
and restrictions on grants as it deems appropriate.
Section 4. Eligibility and Participation
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Participation in the Plan shall be limited to selected members of the management
team, who may also be members of the Board of Directors, and other key employees
of the Company. The Committee retains the right to discontinue a Participant's
participation in the Plan in the event of transfer to a new position within the
Company, transfer to an Armstrong affiliate, or under circumstances which the
Committee determines to warrant such action.
Section 5. Awards Under the Plan
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5.1 Target Investment Award
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For each Performance Period, a Participant shall be assigned a target
Investment Award. The amount of the Investment Award shall vary
depending on the Participant's level of responsibility. Each Participant
shall receive a written document indicating the target Investment Award
amount for each Performance Period.
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5.2 Performance Goals
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At any time before or during a Performance Period, the Committee shall
establish financial performance goals for such Performance Period. In
establishing the performance goals, the Committee shall determine both a
minimum performance level, below which no Investment Award shall be earned,
and a performance schedule under which the amount of the Investment Award
earned may be less than, equal to, or greater than the target amount.
5.3 Determination of Investment Award Amount and Conversion to American
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Olean Phantom Shares
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At the conclusion of each Performance Period, the amount of the Investment
Award earned will be determined as specified in the Committee approved
performance schedule. The Investment Award amount earned shall be
converted to AO Phantom Shares in accordance with a method specified by the
Committee. The AO Phantom Shares earned shall be credited to an account to
be maintained for each Participant until such time the AO Phantom Shares
are converted to cash or Common Stock.
5.4 Payment of Awards
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Following the end of an Investment Period specified by the Committee, a
Participant shall have the right to convert previously earned AO Phantom
Shares into cash or shares of Armstrong Common Stock. The President of AO
shall not be permitted to receive payment in Armstrong Common Stock. The
value of the AO Phantom Shares shall be determined according to paragraph
5.5. The number of shares of Armstrong Common Stock awarded shall be based
on the Fair Market Value on the date of conversion.
A Participant may elect to defer receipt of Armstrong Common Stock pursuant
to Section 8 hereof.
5.5 AO Phantom Share Conversion Value
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The value of the AO Phantom Shares shall be determined in accordance with a
share price schedule established by the Committee.
The Committee reserves the right to adjust the method by which AO Phantom
Shares are valued. Such changes may be triggered by investments,
acquisitions, divestitures, distributions, changes in tax or accounting
policies, or other unusual or extraordinary events.
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Section 6. Transfer to an Armstrong Affiliate
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In the event a Participant transfers to an Armstrong affiliate:
(a) The Committee shall determine if the Participant shall be entitled
to receive an Investment Award for the year in which such transfer
occurs.
(b) All restrictions shall remain in effect on all AO Phantom Shares
earned under the Plan unless otherwise provided for by the
Committee.
(c) At the conclusion of any Investment Period following such transfer,
the Committee has the right to require the Participant to take
payment in cash or in shares of Armstrong Common Stock. Any
Participant who is subject to Section 16 of the Securities Exchange
Act of 1934, as amended, shall not have the option to receive
Armstrong Common Stock.
Section 7. Termination of Employment
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(a) In the event a Participant terminates employment with Armstrong on
or after July 1 by reason of death, Disability, or Retirement, the
Participant or the Participant's designated beneficiary, shall be
entitled to receive AO Phantom Shares with regard to an outstanding
Investment Award prorated for the number of months of employment
during the year in which such termination occurs. In the event a
Participant terminates employment with Armstrong prior to July 1,
the Participant shall not be entitled to receive an Investment
Award.
(b) In the event a Participant terminates employment with Armstrong by
reason of death or Disability, restrictions shall lapse on all AO
Phantom Shares earned at the conclusion of the applicable Investment
Period. If termination of employment is by reason of death, the
Participant's designated beneficiary shall be entitled to receive
the Participant's award payment under the Plan. If termination of
employment is by reason of Retirement, any applicable Investment
Period shall continue in effect, but in no event beyond the end of
the calendar year of the three-year period following the
Participant's Retirement.
(c) In the event a Participant terminates employment with Armstrong for
any reason other than death, Disability or Retirement, the
Participant shall forfeit all rights to earn an Investment Award and
AO Phantom Shares not held for the full duration of the Investment
Period unless otherwise provided for by the Committee.
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(d) Notwithstanding Sections 7(a) and 7(b), in the event a Participant's
employment with Armstrong is terminated under special circumstances,
the Committee may, in its sole discretion, continue a Participant's
rights to earn any or all Investment Awards in the year of
termination and waive in whole or in part any or all remaining
restrictions applicable to outstanding AO Phantom Shares.
Section 8. Deferral of Payment
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At the discretion of the Committee, a Participant may be offered the right to
defer the receipt of all or any portion of the Participant's award value beyond
the conclusion of the Investment Period. Such right shall be exercised by
execution of a written agreement by the Participant at least one year in advance
of the end of the Investment Period. Award payments may be deferred in the form
of shares of Armstrong Common Stock based on the Fair Market Value on the date
of conversion. The President of American Olean shall not be permitted to defer
payment in the form of Armstrong Common Stock.
If a Participant elects to defer in the form of Armstrong Common Stock, the
shares of Common Stock subject to the deferral shall remain in the custody of
Armstrong. Cash dividends paid with respect to these shares shall be reinvested
to purchase additional shares of Common Stock that shall be subject to the same
deferral provisions.
Section 9. Miscellaneous
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9.1 No Right to Employment
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Nothing contained in the Plan, nor in any grant pursuant to the Plan,
shall confer upon any Participant any right with respect to continuance
of employment by the Company or Armstrong, nor interfere in any way with
the right of the Company or Armstrong to terminate the employment or
change the compensation of any employee at any time.
9.2 Nontransferability
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A Participant's rights under the Plan, including the right to any
amounts or shares payable, may not be assigned, pledged or otherwise
transferred except, in the event of a Participant's death, to the
Participant's designed beneficiary or, in the absence of such a
designation, by will or by the laws of descent and distribution.
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9.3 Designation of Beneficiary
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A Participant may designate, in writing delivered to the Company before
the Participant's death, a person or persons to receive, in the event of
the Participant's death, any rights to which the Participant would be
entitled under the Plan. If a Participant fails to designate a
beneficiary, then the Participant's estate shall be deemed to be the
beneficiary.
9.4 Withholding
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Armstrong shall have the right to require the Participant to satisfy any
federal, state, local or other tax withholding requirements unless the
Participant elects to defer receipt of award payments pursuant to
Section 8 hereof.
9.5 Governing Law
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The Plan shall be construed and its provisions enforced and administered
in accordance with the laws of the Commonwealth of Pennsylvania
applicable to contracts entered into and performed entirely in such
State.
9.6 Rights as a Shareholder
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The recipient of any grant under the Plan shall have no rights as a
shareholder with respect thereto unless and until certificates for
shares of Common Stock are issued to such recipient.
9.7 Unfunded Plan
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Unless otherwise determined by the Committee, the Plan shall be unfunded
and shall not create (or be construed to create) a trust or separate
funds. With respect to any payment not yet made to a Participant,
nothing contained herein shall give any Participant any rights that are
greater than those of a general creditor of Armstrong.
9.8 Other Compensation Plans
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No payment under the Plan shall be taken into account in determining any
benefits under any retirement, group insurance, or other employee
benefit plan of Armstrong. Nothing contained in this Plan shall prevent
the Company from adopting other or additional compensation arrangements,
subject to Armstrong shareholder approval if such approval is required.
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9.9 Termination of Employment - Certain Forfeitures
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Notwithstanding any other provision of the Plan and except for Armstrong
Common Stock which would otherwise be free of restrictions and the
receipt of which has been deferred pursuant to Section 8, a Participant
shall have no right to earn an Investment Award or receive payment of
the value of any AO Phantom Shares if: (1) the Participant is discharged
for willful, deliberate, or gross misconduct as determined by the
Committee in its sole discretion or (2) if following the Participant's
termination of employment with Armstrong, and within a period of three
years thereafter, the Participant engages in any business or enters into
any employment which the Committee in its sole discretion determines to
be (a) directly or indirectly competitive with the business of Armstrong
or (b) substantially injurious to Armstrong's financial interest. A
Participant may request the Committee in writing to determine whether
any proposed business or employment activity would justify such a
forfeiture. Such a request shall fully describe the proposed activity
and the Committee's determination shall be limited to the specific
activity so described.
Section 10. Amendment and Termination
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The Board may modify, amend, discontinue or terminate the Plan without the
consent of Armstrong shareholders or Participants, except that, without the
approval of the shareholders of Armstrong, no amendment, discontinuation or
termination shall be made if Armstrong shareholder approval is required by any
federal or state law or regulation.
Section 11. Shares Subject to the Plan
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The total number of shares of Armstrong Common Stock that may be distributed
under the Plan shall be 100,000. Shares of Armstrong Common Stock distributed
under the Plan may be treasury shares or authorized but unissued shares. No
fractional shares shall be issued under the Plan.
Section 12. Effective Date and Duration of Plan
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The Plan shall become effective on January 1, 1993 and remain in effect until
terminated by the Board.