Modified Benefits To Eligible, Non-excluded Employees of Engelhard

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


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