EXHIBIT 10(iii)(i)
SEVERANCE PAY PLAN FOR SALARIED EMPLOYEES
OF
ARMSTRONG WORLD INDUSTRIES, INC.
The Severance Pay Plan for Salaried Employees of Armstrong World Industries,
Inc. (the "Plan") has been authorized by the Executive Committee of the Board of
Directors of Armstrong World Industries, Inc. to be effective on and after May
1, 1989. This Plan supersedes, with the exception of the Armstrong Employment
Protection Plan, all prior separation pay policies, practices, and plans of the
Company whether in writing or otherwise.
1. DEFINITIONS
1.01 "Company" shall mean Armstrong World Industries, Inc., and any
subsidiary or parent corporation of Armstrong World Industries, Inc. that shall
have adopted this Plan.
1.02 "Committee" shall mean the Severance Pay Committee where
membership shall include at least three salaried employees of the Company who
are appointed by the President to administer the Plan.
1.03 "Date of Termination" shall mean the date on which an eligible
Participant terminates service pursuant to Subsection 2.02 hereof.
1.04 "Disability" shall mean such incapacity due to physical or mental
illness or injury as causes an Employee to be absent from employment duties for
180 consecutive calendar days.
1.05 "Employee" shall mean an individual who is either a Regular
Full-Time Salaried Employee; Regular Part-Time Salaried Employee; or a Job
Sharing Employee.
1.06 "Job Sharing Employee" shall mean an individual who is employed by
the Company on a salaried basis as an employee on a continuing basis and is
expected to work less than the normal number of work hours while sharing
responsibility for a full-time salaried job with another Job Sharing Employee.
1.07 "Eligible Earnings" shall mean:
(1) For the period November 1, 2000 through July 1, 2000
(inclusive), the Employee's current unadjusted annual base salary, plus the
Employee's target bonus/incentive.
(2) For the period beginning July 2, 2001, the Employee's
unadjusted annual base salary.
1.08 "Regular Full-Time Employee" shall mean any individual who is
employed by the Company on a salaried basis as an employee on a continuing basis
and is expected to work the normal number of work hours for the location as
determined by the Company.
1.09 "Years of Service" shall mean the eligible Participant's period of
service with the Company, including partial years. A Participant who is a key
executive as designated by the Board of Directors, or its delegate, will receive
credit for years of service for employment prior to such Participant's Company
employment.
1.10 "Regular Part-Time Employee" shall mean any individual who is
employed by the Company on a salaried basis as an employee on a continuing basis
and is expected to work for the Company less than the normal number of work
hours.
1.11 "Weekly Eligible Earnings" shall mean Eligible Earnings divided by
52.
2. PARTICIPATION AND ELIGIBILITY
2.01 Participants. The participants in the Plan are all Regular
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Full-Time or Regular Part-Time Employees of the Company. Any employee who was
previously employed by the Company and is rehired shall be entitled to credit
for any prior period(s) of employment with the Company for the purpose of
calculating Years of Service referenced in Section 1.09 and Section 3.01, in the
event that the Employee's reemployment is terminated under conditions which
would otherwise entitle the Employee to benefits under the Plan. Any Employee
who was previously employed by the Company and who terminated employment and
received benefits under this Plan and is subsequently reemployed by the Company
shall not be entitled to receive credit for any prior period of employment for
which benefits have been paid under this Plan.
2.02 Eligibility.
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(a) Any Participant who is involuntarily terminated (1)
due to a reduction in the workforce of the office on
location where he/she is employed; or (2) due to the
fact that his/her position or position status has
fundamentally altered, including changes due to a
lack of promotability, will be eligible
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for severance benefits set forth in Schedule 2,
provided (i) the Participant is notified in writing
after November 1, 2000 that he/she will be
terminated, and his or her employment ends on or
before July 1, 2001; and (ii) the Participant is not
otherwise excluded from receiving benefits under
Paragraph (c) below.
(b) Any Participant who is involuntarily terminated (1)
due to a reduction in the workforce of the office or
location where he/she is employed; or (2) due to the
fact that his/her position or position status has
been fundamentally altered, including changes due to
a lack of promotability, will be eligible for
severance benefits set forth in Schedule 1, provided
(i) the Participant is notified in writing after July
1, 2001, that he/she will be terminated, and (ii) the
Participant is not otherwise excluded from receiving
benefits under Paragraph (c) below, or other.
(c) Any Participant whose employment with the Company is
terminated by the Company for any of the reasons
listed below shall not be eligible for benefits under
the Plan:
(1) because of the death or Disability of the
Employee;
(2) by the Company due to unacceptable job
performance, or other disciplinary reasons,
such as, for example, attendance issues,
theft, insubordination
(3) by the Employee;
(4) by the Company in connection with the sale
or transfer of a plant, unit, division, or
subsidiary of the Company to a successor
(whether by reason of a sale of stock or
assets), by means of which the Employee
continues employment with the successor
organization or is offered employment with
the successor organization in essentially
the same or a similar position, with
comparable compensation, within the same
geographical area, even if not at the same
plant or office;
(5) by the Company and the employee was offered
essentially the same or a similar position,
with comparable compensation, within the
same geographical area, even if not at the
same plant, office or location.
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2.04 Effect of Participant's Eligibility to Retire. No eligible
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Participant will be denied severance benefits solely because such Participant is
also eligible for retirement benefits under another plan of the Company.
2.05 Reservation of Rights. The Company reserves the right for the
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Committee to depart from the Schedules listed in the Appendix where the eligible
Participant's attendance, job performance, or other job-related conduct appears
to the Company to justify an upward or downward adjustment in benefits. However,
in no event shall the maximum benefit payable under the Plan exceed twice such
Participant's annual compensation, as defined in 29 C.F.R. Section
2510.3-2(b)(2); nor shall the maximum payment period exceed 24 months after the
termination of the Participant's employment.
2.06 Classification of Employees to Whom the Plan Does Not Relate. The
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severance policies and procedures contained in this Plan do not apply to
employees classified by the Company as temporary or hourly paid employees.
3. BENEFITS
3.01 Amount and Schedule of Benefit Payments. The Company will provide
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severance pay and benefits, as described in paragraphs (a) through (e) below, to
a Participant eligible for benefits under this Plan.
(a) Accrued Salary. Any accrued salary not yet paid to the
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Participant for services performed prior to the Date of
Termination shall be paid in compliance with state law, but
not later than 20 calendar days following the Date of
Termination.
(b) Vacation Pay. The Participant will be reimbursed for vacation
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pay to the Date of Termination in accordance with Company
policy.
(c) Severance Pay. Effective November 1, 2000, except for
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Employees notified in writing prior to that date, whose
severance pay shall be calculated in the manner effect prior
to that date, the Participant shall be paid a severance amount
related to the Participant's Years of Service and Eligible
Earnings. The amount of severance payment shall be calculated
using the relevant Schedule as determined under Sections 2.02
and 2.05. Weeks of Severance for partial years of service will
be calculated proportionately. Weekly Eligible Earnings shall
be Eligible Earnings divided by 52.
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(d) Mode of Payment. After the eligible Participant has satisfied
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all conditions precedent to receive severance benefits, such
benefits will be paid to the Participant in a lump sum within
30 days of termination, unless the Plan Administrator approves
payment by salary continuation or some combination of periods
or lump lump sum payments.
(e) Insurance Benefits. An eligible Participant's insurance
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benefits shall be determined in accordance with the applicable
insurance benefit plan.
3.02 Other Circumstances That Can Result in Disqualification,
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Forfeiture, Reduction or Suspension of Severance Benefits.
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(a) Elective Deductions. An eligible Participant may elect to have
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insurance premiums for Company-sponsored insurance plans
deducted from severance payments.
(b) Legally Required Deductions. Appropriate federal, state and
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local taxes will be withheld from all severance payments.
(c) Effect of Rehire or Reinstatement (Or An Offer of Same). If an
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eligible Participant is granted severance benefits and the
Participant is either rehired or reinstated as a regular
salaried employee on a regular full-time basis by the Company
(or is offered rehire or reinstatement on a full-time basis by
the Company) before the end of the pay continuation period,
then the Participant forfeits any unpaid severance payments
for the periods following rehire or reinstatement (or the date
of offer of same). In addition, to the extent the number of
weeks of severance paid to the Participant exceeds the length
of the Participant's break in service, the Participant will be
required to refund or reimburse the Company for the excess
severance already paid to the Participant.
(d) Effect of Sale of Portion of Business Assets. Any Participant
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whose employment with the Company is terminated during or in
anticipation of a sale of some, but not all, assets of the
Company is not entitled to severance benefits if the purchaser
of such assets offers to employ the Participant for
substantially the same or greater compensation as the
Participant was receiving immediately prior to the Date of
Termination, and such offer of employment is made by the
purchaser within no later than eight (8) weeks after the
termination of the Participant's employment by the Company.
Any severance paid to the Participant shall be repaid to the
Company.
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(e) Effect of Participant Misconduct. Any Participant who accepts
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severance benefits is obligated to reimburse the Company for
the full amount of such payments if the Participant
subsequently discloses any of the Company's trade secrets,
violates any written covenants between the Participant and the
Company, or otherwise engages in conduct that may adversely
affect the Company's reputation or business relations.
Likewise, a Participant who engages in such conduct shall
forfeit any right to any unpaid severance payments.
(f) Effect of Adverse Economic Conditions. The Company may
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permanently suspend benefits under severance allowances in pay
status (1) in the event of the Company's insolvency,
liquidation, or bankruptcy reorganization or (2) in the event
the cost of providing such benefits would lead to the
Company's insolvency, liquidation, or bankruptcy
reorganization.
(g) Effect of Other Severance Pay Laws. Any severance benefits
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provided by the Company under this Plan shall be reduced
dollar-for-dollar by any severance, separation, or any other
termination pay benefit that the Company or any of its
subsidiaries is required to pay to an eligible Participant
under any federal or state law.
(h) Effect of Catastrophes and Other Extraordinary Events.
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Severance payments will not be made if the Participant's
employment is terminated because of fire, flood, explosion,
bombing, earthquake or other disaster causing damage to the
location facilities or when strikes, work stoppages or civil
disturbances prevent continued operations.
(i) Effect of Temporary Layoffs. Severance payments will not be
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made if a layoff is deemed to be temporary and of limited
duration, e.g., a need for inventory reduction in a production
facility or activities closely aligned with it. During such
periods, Participants are encouraged to take any available
vacation to which they may be entitled.
(j) Non-Compete Agreement. The Participant who has been
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involuntarily terminated may be required to execute a
Non-Compete Agreement when the Committee determines that such
an Agreement is required to protect the Company. Any
Participant who is asked to execute a Noncompete Agreement
will receive severance in the amount of One Thousand Dollars
($1,000) as consideration for the Noncompete Agreement. The
Non-Compete Agreement must be signed and returned to the
Company within 60 days after the Participant's termination
date in order for the Participant to receive benefits under
this Plan.
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3.03 Condition Precedent to Severance Payments. For the Employee who
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becomes eligible for severance payments under Section 2.02 of the Plan because
the Company eliminates the Participant's position or because the Participant's
position has been fundamentally altered, severance payments will not be paid
under any circumstances until the eligible Participant executes a Company
approved release of the Participant's then existing rights and claims against
the Company. The release must be signed and returned to the Company within 30
days after the Participant's Date of Termination in order for the Participant to
receive benefits under this Plan.
3.04 Impact of Armstrong Employment Protection Plan. Notwithstanding
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anything to the contrary in this Plan, in the event the Participant's Date of
Termination coincides with or follows a change in control, as defined in the
Armstrong Employment Protection Plan, no benefits will be paid under this Plan.
This Plan applies only in the case of an eligible Participant whose employment
has been terminated by the Company prior to the change in control and who is
otherwise eligible to receive a benefit hereunder.
4. AMENDMENT OR TERMINATION.
The Executive Committee of the Board of Directors of the Company may by
written resolution terminate or amend this Plan at any time, provided that no
amendment or termination of the Plan may adversely affect the amount, type, or
timing of payment of benefits accrued and due and payable hereunder with respect
to Participants whose employment has been terminated, except as provided in
Section 3.02 of this Plan. Notwithstanding the foregoing, the Executive
Committee of the Board of Directors has delegated the authority to amend the
Plan to the Retirement Committee; provided, however, that the Executive
Committee reserves the right to rescind or modify such delegation at any time
and for any reason and retains the right to amend the Plan itself at any time.
5. ADMINISTRATION
5.01 Responsibility for administration of the Plan shall be vested in
the Committee, which shall have the sole and exclusive discretionary authority
to determine conclusively all questions arising in connection with the
administration, interpretation and application of the Plan, either by general
rules or by particular decisions, including (but not limited to) questions
regarding eligibility for benefits hereunder and the amount, form and timing of
payments thereof, and any other matter (including any question of fact) raised
by a claimant or identified by the Committee. Any such determination by the
Committee shall be binding and conclusive upon all persons. The Committee may
correct any defect, supply any information, or reconcile any inconsistency in
such manner and to such extent as shall be deemed necessary or advisable by it
to carry out the purpose of this Plan. The Committee may delegate administrative
tasks as necessary to persons who are not Committee members.
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5.02 All expenses of administering the Plan shall be borne by the
Company. No member of the Committee shall receive any remuneration for service
in such capacity. However, expenses of the Committee or its members paid or
incurred in connection with administering the Plan shall be reimbursed by the
Company.
5.03 The Company may purchase insurance to cover potential liability of
the Plan's fiduciaries. The Plan may purchase insurance for its fiduciaries
and/or for itself to cover liability and losses occurring by reason of the act
or omission of a fiduciary.
5.04 The Plan is unfunded and all severance payments under the Plan
shall be made from the general assets of the Company.
6. SUCCESSORS; BINDING AGREEMENT
6.01 In the event of a sale or transfer of a plant, unit, division, or
subsidiary of the Company to a successor (whether by reason of a sale of stock
or assets) by means of which any Employee continues employment with the
successor organization or is offered employment with the successor organization,
the Company shall not be obliged to negotiate with the successor organization
over whether to establish any severance pay plan, policy, or practice with
respect to such Employees or whether to cover such Employees under any existing
severance pay plan, policy, or practice already maintained by the successor
organization.
6.02 All rights of an eligible Employee hereunder shall inure to the
benefit of and be enforceable by such Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If an eligible Employee should die after having satisfied
all conditions precedent to the receipt of such benefits, but prior to receiving
all amounts of benefits payable hereunder, all such amounts, unless otherwise
provided herein, shall be paid in a lump sum in accordance with the terms of
this Plan to the Employee's devisee, legatee, or other designee or, if there be
no such designee, to the Employee's estate.
7. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Plan shall be settled exclusively by arbitration in Lancaster County,
Pennsylvania, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction.
8. MISCELLANEOUS
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8.01 No amount payable under the Plan shall be subject to assignment,
transfer, sale, pledge, encumbrance, alienation or change by an eligible
Employee or the beneficiary of such Employee except as may be required by law.
8.02 Neither the Plan nor any action taken hereunder shall be construed
either (1) as giving any individual employed by the Company any right to receive
severance benefits of a type or in any amount similar to the benefits described
in Section 3.01 above, unless the individual qualifies for benefits under this
Plan; or (2) as giving any Employee any right to be retained in the employ of
the Company.
8.03 Payments of benefits under this Plan shall be made in lieu of
payments of any severance benefits of a type similar to the benefits described
in Section 3.01 above that may be offered under any written or unwritten
severance pay policy maintained by the Company and there shall be no duplication
of benefits previously paid under any such policy.
8.04 This Plan shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania except to the extent preempted by
the Employee Retirement Income Security Act or any other federal law.
8.05 The invalidity or unenforceability of any provision of this Plan
shall not affect the validity or enforceability of any other provision of this
Plan, which shall remain in full force and effect.
8.06 Any notice or other communication provided for in this Plan shall
be in writing and, unless otherwise expressly stated herein, shall be deemed to
have been duly given if mailed by United States registered mail, return receipt
requested, postage prepaid addressed in the case of an Employee to the
Employee's office at the Company with a copy to the Employee's residence and in
the case of the Company to its principal executive offices, attention of the
Severance Plan Administrator.
As Amended Through 10/31/00
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The APPENDIX
Severance Pay Schedules
Effective November 1, 2000
Number of Weeks
Years of Service Schedule 1 Schedule 2
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1 or less 2.0 2.0
2 2.0 2.0
3 3.0 3.0
4 4.0 4.0
5 5.0 5.0
6 6.0 6.0
7 7.0 7.0
8 8.0 8.0
9 9.0 9.0
10 10.0 10.0
11 11.0 11.0
12 12.0 12.0
13 13.0 13.0
14 14.0 14.0
15 16.0 16.0
16 18.0 18.0
17 20.0 20.0
18 22.0 22.0
19 24.0 24.0
20 26.0 26.0
21 28.0 28.0
22 30.0 30.0
23 32.0 32.0
24 34.0 34.0
25 36.0 36.0
26 38.0 38.0
27 39.0 40.0
28 39.0 44.0
29 39.0 48.0
30+ 39.0 52.0