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Exhibit 10.1
Date
Name and Address of
Officer
Dear Name of Officer:
Air
Products and Chemicals, Inc. (“Air Products”) considers
a sound and vital management to be essential to protecting and
enhancing its best interests and those of its shareholders. In this
connection, Air Products recognizes that, as is the case with any
publicly held corporation, the possibility of a change in control
of Air Products may develop, although no such change is now
expected or contemplated.
The
Management Development and Compensation Committee of the Air
Products Board of Directors and the Board believe it imperative
that the Company and the Board be able to rely upon key members of
the Company’s management to continue in their positions and
to act in the best financial interests of Air Products shareholders
in the event of a bid, offer or proposal to take control of Air
Products and following any change in control of Air Products.
Therefore, the Committee and the Board have determined that
appropriate steps should be taken to protect key members of the
Company’s management against significant negative personal
financial consequences that might result from a change in control,
and to reinforce and encourage the continued attention and
dedication of such key members of management to their duties
without distraction should the possibility of a change in control
of Air Products ever arise.
In order
to induce you to remain in the employ of the Company and to assure
your continued dedication and the availability of your advice and
counsel during the possibility and pendency of, and following, a
change in the control of Air Products, Air Products agrees that it
will provide you, or cause you to be provided the severance
benefits set forth in this change in control agreement (“the
Agreement”) in the event your employment with the Company is
terminated subsequent to a Change in Control under the
circumstances described herein.
“Act” means the Securities Exchange Act of 1934.
“Annual Incentive Plan” shall mean the Air Products and
Chemicals, Inc. Annual Incentive Plan and/or any similar, successor
or substitute short-term bonus plan, program or pay practice.
“Base Salary” shall mean your total annual salary
payable by the Company in accordance with its normal compensation
practices, including any amounts deferred pursuant to the Savings
Plans or Code Section 125.
“Benefit Plans” shall have the meaning set forth in
clause (F) under the definition of Good Reason.
“Board” shall mean the Board of Directors of Air
Products.
“Bonus Plans” shall have the meaning set forth in
clause (C) under the definition Good Reason.
“Cause” shall mean either of the following:
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(A) |
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The willful and continued failure by you to substantially
perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or
injury or any such actual or anticipated failure after the issuance
by you of a Termination Notice for Good Reason), over a period of
not less than forty-five days after a demand for substantial
performance is delivered to you by the Board which specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties; or |
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(B) |
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The willful engaging by you in gross misconduct materially and
demonstrably injurious to the Company; provided that no act or
failure to act on your part will be considered willful if done, or
omitted to be done, by you in good faith and with reasonable belief
that your action or omission was in the best interest of the
Company, or if any member of the Board who was not a party to such
act or omission had actual knowledge of it for at least twelve
months. |
“Change in Control” shall mean the first to occur
of:
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A. |
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Stock Acquisition . Any “person”, as such
term is used in Sections 13(d) and 14(d)(2) of the Act, other than
Air Products, or any corporation a majority of whose outstanding
stock entitled to vote is owned, directly or indirectly, by Air
Products (a “Subsidiary”), or a trustee of an employee
benefit plan sponsored solely by Air Products and/or such a
Subsidiary, is or becomes, other than by purchase from Air Products
or such a Subsidiary, the “beneficial owner”, as such
term is defined in Rule 13d-3 under the Act, directly or
indirectly, of securities of Air Products representing 30% or more
of the combined voting power of Air Products’ then
outstanding voting securities. Such a Change in Control will be
deemed to have occurred on the first to occur of the date
securities are first purchased by a tender or exchange offer or,
the date upon which Air Products first learns of the acquisition of
30% or more of such securities, or the later of the effective date
of an agreement for the merger, consolidation or other
reorganization of Air Products and the date of approval thereof by
a majority of Air Products’ shareholders. |
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B. |
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Change in Board . During any period of two consecutive
years, individuals who at the beginning of such period were members
of the Board cease for any reason to constitute at least a majority
thereof, unless the election or nomination for election by Air
Products’ shareholders of each new director was approved by a
vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period. Such a Change in
Control will be deemed to have occurred on the date upon which the
requisite majority of directors fails to be elected by the
shareholders of Air Products. |
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C. |
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Other Events . Any other event or series of events
which, notwithstanding any other provision of this definition to
the contrary, is determined, by a majority of the outside members
of the Board serving in office at the time such event or events
occur, to constitute a Change in Control of Air Products for
purposes of this Agreement. Such a Change in Control will be deemed
to have occurred on the date of such determination or on such other
date as said majority of outside members of the Board shall
specify. |
“Change in Control Price” shall mean the highest tender
or exchange offer price paid or to be paid for Common Stock
pursuant to the offer associated with the Change in Control (such
price to be determined by the administrator of the Long Term
Incentive Plan from such source or sources of information as it
shall determine including, without limitation, the
Schedule 13D or an amendment thereto filed by the offeror
pursuant to Rule 13d-1 under the Act), or the price paid or to
be paid for Common Stock under an agreement associated with the
Change in Control.
“Code” means the Internal Revenue Code of 1986, as
amended from time to time.
“Committee” means the Management Development and
Compensation Committee of the Board or a successor Committee of the
Board.
“Common Stock” means the common stock, $1 par value, of
Air Products.
“Company” means Air Products and any successor in
interest thereto, and any affiliate of Air Products in which it
holds, directly or indirectly, a controlling interest and to whom
your employment has been transferred with your consent.
“Contract Period” shall mean the period commencing on a
Change in Control and ending two years following the Change in
Control.
“Disability” shall exist where, as a result of your
incapacity due to physical or mental illness or injury you have
been absent from the performance of your duties with the Company
for at least six consecutive months.
“Fair Market Value” shall have the meaning set forth in
the Long-Term Incentive Plan.
“Fiscal Year” shall mean the fiscal year of the Company
which commences on October 1 of each calendar year and ends on
September 30 of the following calendar year, or such other
fiscal year as the Company may adopt for keeping its financial
records.
“Good Reason” shall mean the occurrence of any of the
following without your consent:
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A. |
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A material adverse change, during the Contract Period, in your
position or office with the Company, or a material diminution in
the duties, reporting responsibilities and authority with the
Company which you held and performed during the ninety-day period
immediately preceding the beginning of the Contract Period, or an
assignment to you of duties or responsibilities, which are
materially inconsistent with your status or position with the
Company immediately prior to the Change in Control; provided that,
any of the foregoing in connection with termination of your
employment for Cause, Retirement or Disability shall not constitute
Good Reason. Your determination that any of the foregoing has
occurred shall be presumed to be correct, unless refuted by the
Company by clear and convincing evidence. |
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B. |
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The failure by the Company to pay you a Base Salary, in
substantially equal installments conforming with the
Company’s normal pay practices, at a rate at least equal to
your Base Salary rate in effect immediately before the beginning of
the Contract Period or a failure to increase such Base Salary each
year, beginning one year after the last increase in your Base
Salary occurring before the beginning of the Contract Period, by an
amount which at least equals, on a percentage basis, the average
annual percentage increase in your Base Salary during the three
full Fiscal Years immediately preceding the beginning of the
Contract Period; provided , however , that the
Company may reduce your Base Salary or adjust your Base Salary on a
smaller percentage basis if such reduction or adjustment is no less
favorable to you on a percentage basis than the average annual
percentage reduction or adjustment during the applicable Fiscal
Year for all Highly Compensated Employees. |
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C. |
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The failure by the Company to continue the Annual Incentive
Plan or initiate and maintain other similar plans, programs or
practices (collectively, the “Bonus Plans”), in each
case on terms that provide to you, beginning no later than the
beginning of the first Fiscal Year after the beginning of the
Contract Period, annual incentive opportunities (i) at least
equal in amount to your “Target Annual Bonus” under the
Annual Incentive Plan for the Fiscal Year immediately preceding the
beginning of the Contract Period, and (ii) payable upon the
attainment of performance targets that are comparable (both in type
and level of difficulty) to those established under the Annual
Incentive Plan during the three Fiscal Years immediately preceding
the beginning of the Contract Period; provided ,
however , that the Company may reduce or adjust your annual
incentive opportunities to a lower amount if such reduction or
adjustment is on a basis no less favorable to you than the basis
upon which it reduces or adjusts annual incentive opportunities
under the Bonus Plans or comparable plans for all Highly
Compensated Employees during the applicable Fiscal Year; |
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D. |
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The failure by the Company to continue the Long-Term Incentive
Plan or initiate and maintain other plans, programs or practices
(collectively, the “Incentive Plans”), in each case on
terms that grant to you, beginning no later than the beginning of
the first Fiscal year after the beginning of the Contract Period,
annual awards that are at least equal in the aggregate to the
average value, determined based on valuation models normatively
used by publicly held corporations of similar size to the Company
in setting long term incentive compensation levels, of your
aggregate annual awards granted each year for the last three Fiscal
Years preceding the beginning of the Contract Period;
provided , however , that if the Company provides the
Incentive Plans or comparable plans for Highly Compensated
Employees, the Company may maintain the level of awards granted to
you each year under the Incentive Plans at a lower value if such
benefits are determined on a basis no less favorable to you than
for all Highly Compensated Employees during the applicable Fiscal
Year. |
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E. |
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The material breach by the Company of any of its obligations
under this Agreement, any other agreement entered into by you and
the Company, or a continued arbitrary refusal by the Company to pay
you your accrued benefits under any benefit plan, program or
arrangement maintained by the Company and in which you are a
participant; |
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F. |
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A material reduction in your aggregate benefits under, or a
failure by the Company to continue in effect, any employee pension
benefit or welfare benefit plan, program or practice in which you
are eligible to participate immediately before the beginning of the
Contract Period, including but not limited to, the Pension Plans,
the Savings Plans, and the Company’s life insurance, medical,
dental, health and accident, disability, severance and paid
vacation plans, programs and practices (such plans, programs and
practices herein together referred to as the “APCI Benefit
Plans”), or, in lieu thereof, to initiate and maintain other
plans, programs or practices providing you with benefits
substantially similar in type and amount to those under the APCI
Benefit Plans, with your aggregate benefits under the APCI Benefit
Plans and such similar benefit plans (together, the “Benefit
Plans”) being comparable in type and amount to your benefits
under the APCI Benefit Plans immediately before the beginning of
the Contract Period, or the Company’s failure to maintain for
you any other material fringe benefit or perquisite enjoyed by you
immediately before the beginning of the Contract Period;
provided however that the Company may reduce or
adjust the aggregate benefits payable to you if such reduction is
on a basis no less favorable to you than the basis on which the
Company reduces or adjusts aggregate benefits payable with respect
to Highly Compensated Employees. |
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G. |
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Any purported termination of your employment for Disability or
for Cause which is effected in breach of the procedures required in
Section 3. |
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H. |
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The breach by the Company of its obligations to obtain the
written assumption of this Agreement by any successor of the
Company prior to the effectiveness of any such succession. |
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I. |
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A requirement by the Company that you relocate your principal
place of employment by more than fifty (50) miles from the
location in effect immediately prior to the Change in Control. |
Notwithstanding anything to
the contrary contained herein, your termination of employment will
not be treated as for Good Reason as the result of the occurrence
of any event specified in the foregoing clauses A through I
(each such event, a “Good Reason Event”) unless, within
90 days following the occurrence of such event, you provide
written notice to the Company of the occurrence of such event,
which notice sets forth the exact nature of the event and the
conduct required to cure such event. The Company will have
30 days from the receipt of such notice within which to cure
such event (such period, the “Cure Period”). If, during
the Cure Period, such event is remedied, you will not be permitted
to terminate your employment for Good Reason. If, at the end of the
Cure Period, the Good Reason Event has not been remedied, your
voluntary termination of employment will be treated as for Good
Reason during the 90-day period that follows the end of the Cure
Period. If you terminate employment during such 90-day period, so
long as you have delivered the written notice to the Company of the
occurrence of the Good Reason Event at any time prior to the
expiration of this Agreement, for purposes of the payments,
benefits and other entitlements under this Agreement, the
termination of your employment pursuant thereto shall be deemed to
be a termination before the expiration of this Agreement. If you do
not terminate employment during such 90-day period, you will not be
permitted to terminate employment and receive the payments and
benefits set forth under this Agreement as a result of such Good
Reason Event.
“Gross-Up Payment” shall have the meaning set forth in
clause 4(B)(v).
“Highly Compensated Employees” shall mean the highest
paid one percent of employees of the Company together with all
corporations, partnerships, trusts, or other entities controlling,
controlled by, or under common control with, the Company.
“Incentive Plans” shall have the meaning set forth in
clause (D) under the definition of Good Reason.
“Long Term Incentive Plan” shall mean the Air Products
and Chemicals, Inc. Long Term Incentive Plan and/or any
similar, successor or substitute long-term incentive compensation
plan or program.
“Notice Date” shall mean the date a Termination Notice
prepared by the Company or you is received by you or the Company,
respectively.
“Payments” shall have the meaning set forth in
clause 4(B)(v).
“Pension Plans” shall mean, the Air Products and
Chemicals, Inc. Pension Plan for Salaried Employees, as amended
from time to time together with any similar, succeeding or
substitute plan, and the Supplementary Pension Plan of Air Products
and Chemicals, Inc. as amended from time to time, together with any
similar, succeeding or substitute plan, and any private annuity or
pension agreement between you and the Company.
“Retirement” shall mean (1) your voluntary
retirement before with an immediate non-actuarially reduced pension
under the Pension Plans, provided that Termination for Good
Reason before attaining normal retirement age under the Pension
Plans shall not be deemed a Retirement for purposes of this
Agreement even though you are eligible for and elect to receive, an
immediate non-actuarially reduced pension under the Pension Plans,
or (2) Termination of Employment in accordance with any
retirement arrangement other than under the Pension Plans which is
established with your consent with respect to you, provided
that Termination for Good Reason shall not be deemed a
Retirement for purposes of this Agreement even though you are
eligible to retire, and receive benefits under, any such retirement
arrangement, or (3) mandatory retirement as set forth under a
policy of the Company as it existed prior to the Change in Control
or as agreed to by you following a Change in Control.
“Retirement Savings Plan” shall mean the Air Products
and Chemicals, Inc. Retirement Savings Plan, as amended from time
to time, together with any similar, succeeding or substitute
plan.
“Safe Harbor Amount” shall have the meaning set forth
in clause 4(B)(v).
“Savings Plans” shall mean the Air Products and
Chemicals, Inc. Retirement Savings Plan, as amended from time to
time, together with any similar, succeeding or substitute plan, and
the Air Products and Chemicals, Inc. Deferred Compensation Plan, as
amended from time to time, together with any similar, succeeding or
substitute plan.
“Section 409A” shall mean Section 409A of the
Code and the regulations thereunder as in effect from time to
time.
“Target Annual Bonus” shall mean your target bonus
under the Annual Incentive Plan which is approved by the Committee
for the applicable Fiscal Year or, if no such target bonus has been
determined for such Fiscal Year, such target bonus for the most
recent Fiscal Year for which one was determined;
“Termination Date” means the effective date of a
Termination of Employment for any reason, including death,
Disability, or Retirement, whether by the Company or you, subject
to subsection 3B.
“Termination”, “Termination of Employment”
or “Termination of your Employment” shall mean the
termination of your employment with the Company, whether by you or
the Company.
“Termination Notice” shall mean the notice required by
Subsection 3A.
2.
TERM OF AGREEMENT
This
Agreement will commence on the date of your signing hereof and will
continue while you are in the active employment of the Company
until 30 September 2008 and, beginning on
1 October 2008 and each one year anniversary thereof, the
term of this Agreement will automatically be extended for one
additional year unless, at least (90) ninety days prior to
such date, either party gives written notice to the other that it
does not wish to extend this Agreement. Notwithstanding any such
written notice, if a Change in Control shall have occurred prior to
receipt of the notice or does occur within (90) ninety days of
receipt of the notice, the attempted termination of the Agreement
by the Company shall be ineffective and the Agreement shall
continue until the end of the Contract Period. If a Change in
Control otherwise occurs during the term of this Agreement, this
Agreement will continue in effect until the end of the Contract
Period.
3.
TERMINATION PROCEDURES
A.
Termination Notice . During the Contract Period, any
Termination of Employment by the Company or by you must be
communicated by a written Termination Notice to the other party
hereto. The “Termination Notice” must (i) specify
the Termination Date; (ii) indicate the specific provisions in
this Agreement, if any, applicable to the Termination and set forth
in reasonable detail the facts and circumstances, if any, claimed
to provide a basis for application of the provision so indicated;
and (iii) if given by the Company to you for other than
Disability or Cause, specify, with supporting calculations, the
amount the Company believes to be payable to you under this
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