EX 10.3 - Salary Coninuation Policy


    Exhibit
      10.3

    


    ENGELHARD
      CORPORATION

    SALARY
      CONTINUATION POLICY

     

    (POLICY
      3.11A)

     

    I. Purpose
      and Objective

     

    This
      Salary Continuation Policy (“Policy”) is intended to provide salary continuation
      and modified benefits to eligible, non-excluded employees of Engelhard
      Corporation (hereinafter “Engelhard” or “Company”) whose employment is
      involuntarily terminated in certain circumstances during the period that the
      terms of this Policy are in effect. This Policy is effective November 1, 2005
      and replaces and supersedes the Salary Continuation Policy, which was effective
      September 1, 2004. (The September 1, 2004 Salary Continuation Policy is hereby
      terminated.)

     

    Any
      otherwise eligible, non-excluded employee who either (1) was terminated from
      active employment prior to November 1, 2005, or (2) is receiving payments from
      the Salary Continuation Policy which was effective September 1, 2004 will
      continue to receive salary and other benefits under the terms of the September
      1, 2004 Salary Continuation Policy, but will not qualify for any benefits under
      this Policy.

     

    II. Eligibility

     

    Only
      those employees who meet all the criteria set forth in this Paragraph II will
      be
      considered as eligible for salary continuation. Subject to Paragraph III of
      this
      Policy, a U.S.-based, full-time regular non-represented, salaried or hourly-paid
      employee is eligible under this Policy, provided such employee:

     

    
      	 	
              1.

            	
              has
                his/her employment involuntarily terminated during the period that
                the
                terms of this Policy are in effect (a) because of lack of work, reduction
                in force, or elimination of a department or (b) because of performance
                or
                other work related deficiencies;
                and

            


    

     

    
      	 	
              2.

            	
              is
                not subject to any of the Exclusions contained in Paragraph IV;
                and

            


    

     

    
      	 	
              3.

            	
              executes,
                prior to receiving any salary continuation payments under this Policy,
                the
                applicable termination agreement,
                including a covenant not to sue and a release in favor of Engelhard
                and
                any affiliated predecessor or successor company covering any claim,
                lawsuit or cause of action with respect to any matters, known or
                unknown,
                existing as of the date the agreement is signed, including any claims
                of
                discrimination, notification of any plant or business closing or
                employee
                layoff and/or breach of express or implied condition of employment
                during
                the time of employment or in connection with his or her termination
                of
                employment. Such

            


    

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    applicable
      termination agreement must be in such form as approved by Engelhard and must
      be
      executed and delivered within a reasonable time as specified by Engelhard;
      and

     

    
      	 	
              4.

            	
              executes,
                prior to receiving any salary continuation payments under this Policy,
                Engelhard Corporation Policies of Business Conduct certification
                form. The
                certification form would be the most recent version in use by Engelhard
                and must be executed and delivered within a reasonable time as specified
                by Engelhard; and

            


    

     

    
      	 	
              5.

            	
              is
                employed by Engelhard, or is employed by a wholly-owned subsidiary
                of
                Engelhard whose employees are covered by this Salary Continuation
                Policy
                pursuant to a decision by Engelhard made in accordance with Paragraph
                XI
                of this Policy.

            


    

     

    Any
      individual designated by the Company as an independent contractor, consultant,
      or temporary employee is excluded from any and all benefits under this
      Policy.

     

    III. Preferential
      Rehire Option

     

    Certain
      Employees described in Paragraph III (A) scheduled to be involuntarily
      terminated during the period that the terms of this Policy are in effect because
      of lack of work, reduction in force, or elimination of a department affected
      by
      a layoff, may, depending on the needs of the business, be given the option
      of
      (i) electing the benefits outlined in this Policy or (ii) waiving any right
      to
      these benefits for the opportunity to be considered for re-hire within a twelve
      (12) month period following separation from employment (Preferential Rehire
      Option or PRO).

     

    It
      is
      within Management’s discretion to determine if, when and to whom the PRO will be
      offered within the eligible group as defined in Paragraph III(A)(1) and
      (2).

     

    A. Eligibility

     

    
      	 	
              1.

            	
              Only
                non-represented, non-exempt salaried or hourly front line production
                and
                maintenance employees may be offered the opportunity to elect to
                take the
                PRO option.

            


    

     

    
      	 	
              2.

            	
              Employees
                in these classifications who have received a “Needs Improvement” on their
                most recent performance appraisal will not be eligible for the
                PRO.

            


    

     

    
      	 	
              3.

            	
              Employees
                not in the classifications described in III(A)(1) are not eligible
                for the
                PRO.

            


    

     

    B. Terms

     

    
      	 	
              1.

            	
              Eligible
                employees electing the PRO will receive early consideration for re-hire
                into any position for which they are qualified and
                eligible.

            


    

     


    
      
         

      

      
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              2.

            	
              Business
                need, prior job performance and skill sets will be factors used by
                the
                Company to determine the order in which eligible employees may be
                offered
                re-hire.

            


    

     

    
      	 	
              3.

            	
              Preferential
                rehire status will continue for twelve (12) months from the date
                the
                layoff commenced.

            


    

     

    C. Procedure

     

    
      	 	
              1.

            	
              Eligible
                employees will receive a notice of layoff and a General Release and
                Waiver
                of Rights containing an election
                option.

            


    

     

    
      	 	
              2.

            	
              Eligible
                employees must complete and return the General Release and Waiver
                of
                Rights to Human Resource Department by a date
                certain.

            


    

     

    
      	 	
              3.

            	
              Eligible
                employees, who elect to take salary continuation benefits in lieu
                of the
                PRO, will be subject to all of the terms and conditions of this Salary
                Continuation Policy, including the eligibility requirements of Paragraph
                II.

            


    

     

    
      	 	
              4.

            	
              Eligible
                employees who elect the PRO will be required to abide by the terms
                of the
                General Release and Waiver of Rights which includes waiving any rights
                to
                Salary Continuation benefits under this Policy, and a covenant not
                to sue
                and a release in favor of Engelhard and any affiliated predecessor
                or
                successor company covering any claim, lawsuit or cause of action
                with
                respect to any matters, known or unknown, existing as of the date
                the
                agreement is signed, including any claims of discrimination, notification
                of any plant or business closing or employee layoff and/or breach
                of
                express or implied condition of employment during the time of employment
                or in connection with his or her termination of employment. Such
                applicable termination agreement must be in such form as approved
                by
                Engelhard and must be executed and delivered within a time specified
                by
                Engelhard.

            


    

     

    D. Termination
      of Preferential Rehire Option

     

    Preferential
      rehire rights will terminate when an eligible employee:

     

    
      	 	
              1.

            	
              Exceeds
                12 months from commencement of PRO without being rehired by the Company.
                At the end of the 12 month period, the Company will provide employees
                who
                have not been rehired a lump sum payment as follows: two weeks’ base
                salary for employees with credited service of six (6) months or less;
                or
                one weeks’ base salary for each completed year of credited service of more
                than six (6) months but less than twenty-five (25) years; or fifty-two
                weeks’ base salary for credited service of twenty-five (25) years or more.
                Please note: Employees who elect PRO will not accrue credited service
                for
                any purpose during the period of the
                PRO.

            


    

     

    
      	 	
              2.

            	
              Resigns
                or retires from Company employment.

            


    

     


    
      
         

      

      
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              3.

            	
              Does
                not return to work when recalled;
                or

            


    

     

    
      	 	
              4.

            	
              Refuses
                a rehire offer.

            


    

     

    Any
      eligible employee whose preferential rehire rights have terminated pursuant
      to
      Paragraph III(D)(2), (3) or (4)
      of
      this Policy will not be eligible for a lump sum payment or any other payment
      pursuant to this Policy.

     

    IV. Exclusions

     

    An
      employee shall be excluded from the receipt of any Salary Continuation and
      benefits under this Policy if such employee either (i) resigns, (ii) dies,
      (iii)
      retires, (iv) transfers from a non-represented position to a represented
      position, (v) is terminated for:

     

    
      	 	
              ·

            	
              violating
                any Company policy,

            


    

    
      	 	
              ·

            	
              failing
                to perform job requirements without consistent demonstrable attempts
                to
                achieve them,

            


    

    
      	 	
              ·

            	
              a
                substantive lapse in procedures (including procedures with respect
                to
                safety and environmental), which results in actual or significant
                potential injury to any person or damage to property to the extent
                the
                Company deems it to be substantial,

            


    

    
      	 	
              ·

            	
              engaging
                in any conduct amounting to fraud, dishonesty, negligence, willful
                misconduct, insubordination, excessive tardiness or absence from
                work,
                revealing trade secrets or confidential information of the Company,
                or any
                other conduct contrary to the interest of the
                Company,

            


    

    


    (vi)
      has
      a written employment contract, (vii) is offered a comparable position with
      the
      Company, its subsidiaries or affiliates at the same location or at a
      significantly different location in the same general geographic area, (viii)
      is
      offered immediate employment by an acquiring company at substantially the same
      or greater base salary, (ix) is not working because operations have been
      limited, interrupted or suspended due to a strike, work stoppage or slowdown,
      civil disturbance or other circumstance beyond the Company’s reasonable control,
      (x) is terminated at a time when the terms of this Policy are no longer in
      effect, (xi) is terminated under any otherwise eligible circumstances which
      are
      determined to constitute a special situation for which the Company, in its
      discretion, deems necessary and/or are reasonable to establish a separate salary
      continuation or severance policy applicable to that situation only, (xii)
      receives payment of salary continuation or other benefits under the Engelhard
      Salary Continuation Policy effective April 1, 1996, (xiii) pursuant to Paragraph
      III, elects to be placed on a preferential rehire list and waive benefits under
      this Policy.

    


    If
      an
      eligible employee accepts an immediate offer of employment from an acquiring
      company while the terms of this Policy are in effect at substantially the same
      or greater base salary and is thereafter terminated by the acquiring company
      within six months after the acquisition under conditions which, if such employee
      had been terminated by Engelhard, this Policy would otherwise have applied,
      Engelhard will pay base salary to such employee under this Policy based upon
      the
      employee’s Credited Service and base salary at the time of prior termination of
      employment with Engelhard, provided that the value of any severance or other
      termination benefits paid by the acquiring company shall operate to reduce
      on a
      dollar-for-dollar

     


    
      
         

      

      
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    basis
      any
      such Salary Continuation under this Policy. Any Salary Continuation paid
      pursuant to this Paragraph shall be paid in a lump sum and notwithstanding
      Paragraph IX of this Policy, no employee benefits shall be paid or provided
      to
      employees who receive Salary Continuation pursuant to this
      Paragraph.

     

    V.
       Salary
      Continuation Benefits

     

    Salary
      Continuation is primarily continued salary in lieu of active employment for
      a
      pre-determined period based on Credited Service, during which period most
      employee benefits, including participation in the Retirement Income Plan and
      Salary Deferral Savings Plan, are continued.

     

    The
      eligibility of any employee for Salary Continuation hereunder, as well as the
      amount of the Salary Continuation which may be paid, will be determined by
      the
      terms of this Policy as in effect at the time of the commencement of the Salary
      Continuation. For all purposes, an employee’s employment with Engelhard will be
      deemed terminated as of the end of the Salary Continuation period. No employee
      shall have any rights under or with respect to the benefits provided by this
      Policy except to the extent that its provisions are in effect on the date of
      the
      commencement of the Salary Continuation.

     

    The
      maximum amount of Salary Continuation that an eligible, non-excluded employee
      may be paid shall be based upon the amount of Credited Service that the employee
      has accumulated at the time his/her salary continuation
      commences. “Credited Service”, as used in this Policy, shall have the same
      definition as under Paragraph 3.6 of the Retirement Income Plan for Salaried
      Employees of Engelhard Corporation, as amended and restated as of January 1,
      2001.

     

    The
      Salary Continuation schedule for all eligible, non-excluded employees who are
      involuntarily terminated because of lack of work, reduction in force or
      elimination of a department is as follows:

     

    
      	 	
              1.

            	
              Credited
                Service of six (6) months or less:

            


    

     

    
      	 	 	
              Two
                weeks’ base salary.

            


    

     

    
      	 	
              2.

            	
              Credited
                Service of more than six (6) months but less than twenty-five (25)
                years:

            


    

     

    
      	 	 	
              Four
                (4) weeks’ base salary, plus one (1) week’s base salary for each completed
                year of Credited Service.

            


    

     

    
      	 	
              3.

            	
              Credited
                Service of twenty-five (25) years or
                more:

            


    

     

    
      	 	 	
              Fifty-two
                (52) weeks’ base salary total.

            


    

     

    The
      amount of Salary Continuation for eligible, non-excluded employees involuntarily
      terminated because of performance or work related deficiencies (see Paragraph
      II(1)(b)), which do not constitute an Exclusion as defined
      in Paragraph IV, will be within the sole discretion of

     


    
      
         

      

      
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    the
      Company based on the circumstances of each case,
      provided that the amount of Salary Continuation paid will not exceed the
      schedule set forth above.

     

    For
      purposes of this Paragraph V, one week’s base salary for salaried employees not
      paid on a weekly basis shall be determined by dividing the eligible employee’s
      annual base salary by fifty-two (52) and one week’s base salary
      for hourly paid employees shall be determined by multiplying the eligible
      employee’s base hourly rate by forty (40).

     

    VI. Payment
      of Salary Continuation

     

    Eligible,
      non-excluded employees will receive Salary Continuation in payments according
      to
      the regular payroll schedule. During the Salary Continuation period determined
      pursuant to Paragraph V hereof (the “Salary Continuation
      period”), (1) the employee will continue to be treated as an employee, (2)
the
      employee will be expected to periodically report in or call in to the Company
      and be required to perform such services as the Company may
      request,
      and (3)
      the employee’s benefits will generally continue during the Salary Continuation
      period (see Paragraph IX below).

     

    VII. Termination/Re-Employment

     

    The
      employee’s employment with Engelhard normally will terminate at the conclusion
      of the Salary Continuation period, unless the employee is returned to full-time
      active service at the conclusion of the Salary Continuation
      period.

     

    An
      employee who has received Salary Continuation benefits may not
      re-apply for employment with Engelhard. This provision may be waived by the
      Company.

     

    VIII. Termination
      of Salary Continuation

     

    Salary
      Continuation and benefits shall terminate upon the occurrence of one or more
      of
      the following conditions: 

     

    
      	 	
              ·

            	
              When
                maximum payments have been made pursuant to this
                Policy;

            


    

    
      	 	
              ·

            	
              When
                the Company determines that the employee has acted or is acting contrary
                to the Company’s interest;

            


    

    
      	 	
              ·

            	
              When
                the employee returns to full-time service with the Company or any
                of its
                subsidiaries or affiliates;

            


    

    
      	 	
              ·

            	
              When
                the employee dies;

            


    

    
      	 	
              ·

            	
              When
                the employee fails to report in or call in to the Company or fails
                to
                perform such services as the Company may request;
                or

            


    

    
      	 	
              ·

            	
              When
                the employee fails to cooperate in any internal investigations or
                interviews arising after the employee’s last day of active service and
                during the period of salary
                continuation.

            


    

    


    In
      the
      event that an employee commences other employment during the Salary Continuation
      period, the employee’s employment and benefits with the Company will
      be

     


    
      
         

      

      
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    terminated
      and any remaining Salary Continuation benefits that are due will be paid in
      a
      lump sum and no further payments shall be owed.

     

    IX. Other
      Employee Benefits

     

    Group
      term life insurance, business travel accident insurance, group health care
      (medical and dental), participation in the Retirement Income Plan (pension)
      and,
      if applicable, participation in the flexible spending accounts and in the Salary
      Deferral Savings Plan will remain in effect during the Salary Continuation
      period in accordance with the terms of the applicable benefit plans.
Long-term
      disability coverage will end at the time of the commencement of Salary
      Continuation.
      Vacation
      will not accrue during the Salary Continuation period in accordance with the
      terms of the applicable vacation policy.

     

    Notwithstanding
      anything in this Policy to the contrary, in no event will any employee benefit
      continue beyond the date at which the employee commences other
      employment.

     

    X. Miscellaneous

     

    This
      Policy provides for salary continuation payments to the employee, which are
      generally greater than any severance, or salary continuation payments required
      by local law. In such circumstances, the payment made hereunder shall be deemed
      to include and fully satisfy all applicable legal requirements for such
      payments.

     

    The
      right
      of interest of each eligible employee under this Policy shall not be assignable
      or transferable, in whole or in part.

     

    XI. Administration
      and Procedure

     

    The
      Sponsor of this Policy (as well as the Plan Administrator) is the Company and
      the Plan Sponsor’s employer identification number is 22-1586002. The plan number
      assigned to the policy is 531.

     

    The
      Policy is an employee welfare benefit plan providing salary continuation and
      benefits as described in this Policy document. All benefits under the Policy
      will be paid directly by the Company from its general assets, and the rights
      of
      an eligible employee to any benefits hereunder shall not be superior to those
      of
      an unsecured general creditor of the Company. The Policy shall operate on a
      calendar year basis for purposes of maintaining its fiscal records and reporting
      under the Employee Retirement Income Security Act of 1974, as
      amended.

     

    Except
      as
      set forth in the next succeeding paragraph, (i) this Policy is not a
      contract and (ii) the Company reserves the sole and exclusive right to
      terminate, suspend, revoke, withdraw, amend or modify the Salary Continuation
      schedule and any other provisions of this Policy at any time by (1) resolution
      of the Company’s Board of Directors, (2) resolution of the Company’s Pension and
      Employee Benefit Plans Committee or (3) written direction of the Company’s Vice
      President of Human Resources, as hereinafter described. In the event that there
      is a contradiction between action taken by two or more of the three entities
      with the foregoing authority, a resolution of the Company’s Board of Directors
      shall supersede action by the remaining two entities and a resolution of the
      Company’s Pension and Employee Benefit Plans Committee shall

     


    
      
         

      

      
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    take
      precedence over written direction of the Company’s Vice President of Human
      Resources. The Company also reserves the sole and exclusive right to determine
      in each instance whether an exclusion from eligibility by virtue of special
      circumstances should exist.

     

    Notwithstanding
      any provision of this Salary Continuation Policy to the contrary, during any
      period beginning on the date of a Change of Control (as defined in the Engelhard
      Corporation 2002 Long Term Incentive Plan, as in effect on January 20, 2006)
      and
      ending on December 31, 2007, this Policy may not be terminated, suspended,
      revoked, withdrawn, amended or modified in a manner that adversely affects
      the
      rights of any employee of the Company without the prior written consent of
      the
      employee, and during such period any statement in the Salary Continuation Policy
      that the Policy is not a contract shall not apply.

     

    All
      claims and disputes arising out of or relating to this Policy shall be processed
      and determined as follows:

     

    If
      an
      employee does not receive a benefit to which he believes he is entitled under
      this Policy, or if he believes that he is entitled to a greater benefit than
      was
      approved, he must, within sixty (60) days following the termination of his
      employment, file a written claim setting forth the details of the claim with
      the
      Plan Administrator. The Plan Administrator or its designees shall investigate
      the claim and shall render a written decision with respect thereto, which shall
      be furnished to the employee within sixty (60) days from the date upon which
      the
      claim is received. If the claim is denied, the written decision shall specify
      the reasons for the denial (including the pertinent Policy provisions upon
      which
      the denial is based) and any additional material needed from the employee in
      order to perfect his claim, as well as an explanation of how the employee may
      obtain a further review.

     

    Such
      further review will be heard by the Pension and Employee Benefit Plans
      Administrative Committee (“Committee”) which shall be comprised of employees of
      Engelhard as designated by the Pension and Employee Benefit Plans Committee
      of
      the Board of Directors of the Company. The Committee shall have the sole and
      exclusive right to interpret the terms and provisions of the Policy and to
      determine any and all questions arising under this Policy or in connection
      with
      the administration thereof, including without limitation the right to remedy
      or
      resolve possible ambiguities, inconsistencies or omissions. The decisions,
      interpretations and determinations of the Committee in resolving claims and
      otherwise administering the Policy shall be final, conclusive and binding on
      all
      persons.

     

    To
      obtain
      a review by the Committee, the employee must, within sixty (60) days following
      the receipt of written notice that a claim has been denied, send a request
      for
      such review in writing to the Committee. The request must set forth the reasons
      why the employee believes the denial was erroneous and describe whatever
      evidence the employee believes supports his position. If the employee or his
      representative wishes to examine any Company documents, the request must so
      state and specify the documents requested. If the request is relevant and if
      the
      Committee deems it appropriate to conduct an evidentiary or other hearing with
      respect to the claim, it will so inform the Company and the employee or his
      representative, and such hearing will be held at a time and place and in the
      manner specified by the Committee.

     


    
      
         

      

      
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    Within
      sixty (60) days (or, if warranted by special circumstances, one hundred twenty
      (120) days) following a request for review, the Committee shall render its
      written decision with respect thereto specifying the reasons for the decision,
      including the pertinent Policy provisions upon which it is based. If such
      decision is delayed beyond 60 days because of special circumstances, written
      notice of the extension shall be furnished to the claimant by the Committee
      prior to the commencement of the extension.

     

     

     

     

     

     

     

     

     

     

     

     

     

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