AIR PRODUCTS AND CHEMICALS,
INC.
LONG-TERM INCENTIVE PLAN
As Amended and Restated
Effective January 26, 2006
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Page
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Purposes of the
Plan
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1
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Administration
of the Plan
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1
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Eligibility for
Participation
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2
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Shares of Stock
Subject to the Plan
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3
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Awards
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3
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Stock
Options
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4
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Stock
Appreciation Rights
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7
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Restricted
Shares
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8
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Deferred Stock
Units
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9
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Other Stock
Awards
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11
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Change in
Control
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11
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Dilution and
Other Adjustments
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13
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Miscellaneous
Provisions
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13
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Definitions
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16
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Amendments and
Termination; Requisite Shareholder Approval
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18
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Effective Date,
Amendment and Restatement, and Term of the Plan
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19
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The purposes of
this Plan are: (i) to provide long-term incentives and rewards
to nonemployee directors (“Eligible Directors”) and to
those executives or other key employees who are either in a
position to contribute to the long-term success and growth of Air
Products and Chemicals, Inc. (the “Company”) and
Participating Subsidiaries, or who have high potential for assuming
greater levels of responsibility or who have demonstrated their
critical importance to the operation of their organizational unit;
(ii) to assist the Company and Participating Subsidiaries in
attracting and retaining directors, executives and other key
employees with experience and ability; and (iii) to associate
more closely the interests of such directors, executives and other
key employees with those of the Company’s
shareholders.
2.
Administration of the Plan
(a)
Employee Awards . With regard to Plan Awards granted to
employees (“Employee Awards”), the Plan shall be
administered by the Management Development and Compensation
Committee of the Company’s Board of Directors (the
“Board”) or such other committee thereof consisting of
such members (not less than three) of the Board as are appointed
from time to time by the Board (the “Committee”), each
of the members of which, at the time of any action under the Plan,
shall be (i) a “non-employee director” as then defined
under Rule 16b-3 under the Act (or meeting comparable
requirements of any successor rule relating to exemption from
Section 16(b) of the Act), (ii) an “outside
director” as then defined under Code Section 162(m) and
(iii) an “independent director” as then defined
under the rules of the New York Stock Exchange (or meeting
comparable requirements of any stock exchange on which the
Company’s Common Stock may then be listed).
(b)
Director Awards . With regard to Plan Awards granted to
Eligible Directors (“Director Awards”), the Plan shall
be administered by the Board.
(c)
Powers of the Committee and Board . As used herein, the term
“Administrator” shall mean the Committee with respect
to Employee Awards and the Board with respect to Director Awards.
The Administrator shall have all necessary powers to administer and
interpret the Plan, including authority to adopt such rules,
regulations, agreements, and instruments for the administration of
the Plan as the Administrator deems necessary or advisable. The
Administrator’s interpretations of the Plan and all action
taken and determinations made by the Administrator pursuant to the
powers vested in it hereunder shall be conclusive and binding on
all parties concerned, including the Company, its shareholders and
any director or employee of the Company or any
Subsidiary.
(i) Powers of the
Committee include exclusive authority (within the limitations
described and except as otherwise provided in the Plan) to select
the employees or determine classes of employees to be granted
Awards under the Plan, to determine the aggregate amount, type,
size, and terms of the Awards to be made to eligible employees, and
to determine the time when Awards will be granted. The Committee
may take into consideration recommendations from the appropriate
officers of the Company and of each
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Participating
Subsidiary with respect to making the foregoing determinations as
to Plan awards, administration, and interpretation. Notwithstanding
any other provision of the Plan to the contrary, the Committee may
delegate to appropriate Company officers its authority to take all
final action with respect to granting and administering Plan Awards
granted to Participants who are at the time of such action not
members of the Board or “officers” within the meaning
of Rule 16a-1(f) of the Act, including without limitation
selecting executives and key employees to whom such Awards will be
granted; determining the amount of any such Awards to be made to
such executives and key employees; and taking all action on behalf
of the Company with respect to administering, vesting of, and
paying such Awards; provided, however, that (i) all such
Awards shall be granted within the limitations and subject to the
terms and conditions required by the Plan and established by the
Committee and subject to the Committee’s interpretations of
the Plan (ii) the aggregate of such Awards granted under the
Plan for or with respect to a given Fiscal Year shall not, when
added to the Awards approved by the Committee for granting to
individuals who are “officers” within the meaning of
Rule 16a-1(f) of the Act for or with respect to the same Fiscal
Year, exceed the total amount of Awards approved by the Committee
for or with respect to such Fiscal Year; (iii) only the
Committee may grant Awards of restricted or unrestricted shares;
and (iv) any action with respect to such Awards taken because
of or in connection with a Change in Control of the Company or as
contemplated by Section 12 shall be taken by the Committee.
With respect to matters so delegated, the term
“Committee” as used herein shall mean the
delegate.
(ii) The
Board has exclusive authority to determine the awards amount, type,
size, and terms of to be provided to Eligible Directors under the
Plan by resolution, including by adoption of programs specifying
timing, amounts, terms, and conditions of Plan awards to be made
annually or otherwise regularly without further action by it. The
Corporate Governance and Nominating Committee shall recommend to
the Board the type, size, timing, and terms of grants to Eligible
Directors. Notwithstanding any provision of the Plan to the
contrary, the Board may delegate to appropriate Company officers or
to a Committee of the Board by its resolution, adoption of a
Committee charter, or adoption of a written compensation program,
authority to take all final action with respect to granting and
administering Plan awards to Eligible Directors, including
administering and taking all action on behalf of the Company with
respect to vesting and payment of Awards. With respect to matters
so delegated, the term “Board,” as used herein, shall
mean the delegate.
3.
Eligibility for Participation
Participation in
the Plan shall be limited to (i) Eligible Directors and
(ii) executives or other key employees (including officers and
directors who are also employees) of the Company and its
Participating Subsidiaries selected on the basis of such criteria
as the Committee may determine. As used herein, the term
“employee” shall mean any person employed full time or
part time by the Company or a Participating Subsidiary on a
salaried basis, and the term “employment” shall mean
full-time or part-time salaried employment by the Company or a
Subsidiary.
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4. Shares of
Stock Subject to the Plan
The shares that
may be subject to Awards granted under the Plan on or after
January 26, 2006, (including Incentive Stock Options) shall
not exceed in the aggregate 7,000,000 shares of common stock of the
Company (“Common Stock”), plus the sum of (i) the
number of shares previously authorized under the Plan but not then
issued or subject to an outstanding Award, and (ii) the number
of shares subject to Awards granted under the Plan prior to
January 26, 2006 and then outstanding which are not delivered
because the Award expires, is forfeited, or terminates unexercised
or because payment under the Award is made in other than in shares.
No more than 20% of the cumulative shares of Common Stock subject
to Awards granted on or after October 1, 2001 may be used for
restricted shares, deferred stock units or other Awards providing
for the acquisition of the shares for a consideration less than the
Fair Market Value of the shares as of the date of grant. Any share
subject to a Plan Award which is not delivered because the Award
expires, is forfeited, or terminates unexercised, or because
payment under the Award is made in a form other than in Common
Stock, shall not be considered as having been issued or delivered
for purposes of the limitations under the preceding sentences and
may again be subject to an award subsequently granted under the
Plan; provided that, any stock appreciation right Award delivered
in Common Stock shall be counted as use of a number of shares equal
to the number of stock appreciation rights exercised, rather than
the net shares delivered.
Awards granted to
employee Participants or Eligible Directors under the Plan may be
of the following types: (i) stock options,
(ii) restricted shares, (iii) deferred stock units,
and/or (iv) other stock awards. Employee Participants may also
be granted stock appreciation rights. Stock options are rights to
purchase Common Stock from the Company at a price designated at the
time of grant (“Stock Options”). Stock Options granted
to employees may be either Nonstatutory Stock Options or Incentive
Stock Options, both as described below. The Committee shall
designate each Stock Option grant to an employee as being either a
Nonstatutory Stock Option or an Incentive Stock Option. If the same
employee receives both Nonstatutory Stock Options and Incentive
Stock Options, each type shall be clearly identified and separately
granted. Stock appreciation rights (“Stock Appreciation
Rights”) are rights to receive cash and/or Common Stock
equivalent in value to the “spread” between
(a) the Fair Market Value of a share of Common Stock on the
date the Stock Appreciation Right is exercised and (b) the
Fair Market Value of a share of Common Stock on the date the Stock
Appreciation Right was granted. Restricted shares are shares of
Common Stock awarded subject to restrictions and to possible
forfeiture upon the occurrence of specified events
(“Restricted Shares”). Deferred stock units are rights
to receive at the end of a deferral period cash and/or Common Stock
equivalent in value to one share of Common Stock for each unit
(”Deferred Stock Units”). Other stock awards are awards
in such form as the Board or Committee may determine that are
denominated or payable in, valued in whole or in part by reference
to, or otherwise based on or related to shares of Common Stock
(“Other Stock Awards”).
Nonstatutory Stock
Options, Restricted Shares, Deferred Stock Units and Other Stock
Awards, and, in the case of employee Participants, Incentive Stock
Options and Stock
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Appreciation
Rights, may be granted to the same Participant as separate Awards
at or for the same period of time under terms whereby the issuance
of shares or payment under one Award has no effect on any other
Award. Stock Appreciation Rights may be granted to an employee
Participant in relation to (i.e., in “tandem” with) a
previously or concurrently granted Stock Option under terms whereby
the issuance of shares or payment under one Award reduces directly
the number of shares, units, and/or rights remaining available
under the related Award(s). Nonstatutory Stock Options may also be
granted in tandem with other Plan Awards.
(a) Director Stock Options
All Stock Options
granted to Eligible Directors under the Plan shall be Nonstatutory
Stock Options. The purchase price per share of Common Stock covered
by each such Stock Option shall be determined by the Board but
shall not be less than 100% of the Fair Market Value of a share of
Common Stock on the date of grant of such Stock Option.
(b) Employee Stock Options
Stock Options
granted to eligible employees under the Plan may be either
Incentive Stock Options or Nonstatutory Stock Options, as
determined by the Committee at the time of grant. The Committee may
grant Stock Options to eligible employees either alone or in
conjunction with and related to Stock Appreciation Rights and may
also grant Nonstatutory Stock Options in conjunction with and
related to other Plan Awards. No Incentive Stock Option shall be
granted under this Plan more than 10 years after the most
recent date this Plan is adopted or approved by the shareholders of
the Company.
The purchase price
per share of Common Stock covered by each Stock Option shall be
determined by the Committee but shall not be less than 100% of the
Fair Market Value of a share of Common Stock on the date of grant
of such Stock Option. If an Incentive Stock Option is granted to an
employee who, on the date of grant, owns stock possessing more than
10% of the total combined voting power of all outstanding classes
of stock of the Company or any affiliate, the purchase price per
share under such Incentive Stock Option shall be at least 110% of
the Fair Market Value of a share of Common Stock on the date of
grant of such Incentive Stock Option, and such Incentive Stock
Option shall not be exercisable after the expiration of five years
from its date of grant.
The Committee will
determine, absolutely or by formula related to the Fair Market
Value of a share of Common Stock, the number of shares of Common
Stock to be subject to each Stock Option. In no event shall the
number of shares subject to Stock Options (and any related Stock
Appreciation Rights) granted to any Participant in any Fiscal Year
exceed 1,000,000, subject to adjustment as provided in
Section 12.
The aggregate Fair
Market Value, determined on the date of grant, of Common Stock with
respect to which Incentive Stock Options are exercisable for the
first time by a Participant
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during any
calendar year (under this Plan and all other plans of the Company
and any predecessor, parent, subsidiary or affiliate) shall not
exceed $100,000 (as such figure may be adjusted under Code
Section 422(d)). If the aggregate Fair Market Value,
determined on the date of grant, of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by
a Participant during any calendar year (under this Plan and all
other plans of the Company and any predecessor, parent, subsidiary,
or affiliate) exceeds the limitation described in the preceding
sentence, that portion of the Incentive Stock Option that does not
exceed the applicable dollar limit shall be an Incentive Stock
Option and the remainder shall be a Nonqualified Stock Option, and
in all other respects the terms of the original Award agreement
shall remain in full force and effect. If the limitation of this
paragraph is exceeded, the determination of which Stock Options
shall be Incentive Stock Options and which Stock Options shall be
Nonqualified Stock Options shall be made in accordance with the
ordering rules prescribed in the Code. For the avoidance of doubt,
the exercise date of Incentive Stock Options may be accelerated as
provided for in Section 11, in which case the provisions
regarding the $100,000 limitation and the resulting treatment if
that limit is exceeded, as described above, shall apply.
(c) Terms Applicable to all Stock
Options.
Except as
otherwise determined by the Administrator and reflected in the
applicable Award agreement or an amendment thereto, Stock Options
shall be granted on the following additional terms and conditions
(and such other terms and conditions that the Administrator may
establish which are consistent with the Plan and applicable
law):
(i) Term
and Exercise Dates . The Administrator shall fix the term
during which each Stock Option may be exercised, but no Stock
Option shall be exercisable after the tenth anniversary of its date
of grant plus one day. No employee Stock Option shall be
exercisable prior to one year from its date of grant, except as
otherwise provided in Section 11. Except as otherwise provided
in Section 11, each employee Stock Option shall become
exercisable in installments: one-third of the shares subject to
such Stock Option may be purchased commencing on the first, second
and third one year anniversaries of the date of grant. Each
Eligible Director Stock Option shall be exercisable commencing six
months from the date of grant.
Notwithstanding
any other provision of the Plan, the Committee may determine with
respect to an Employee Award that the date on which any outstanding
Stock Option or any portion thereof is exercisable shall be
advanced to an earlier date or dates designated by the Committee in
accordance with such terms and subject to such conditions, if any,
as the Committee shall specify; provided, however, that any such
earlier date shall not be prior to one year from the date of grant
of such Stock Option, except as otherwise provided in
Section 11.
(ii)
Exercise . A Participant wishing to exercise his or her
Stock Option in whole or in part shall give written notice of such
exercise to the Company, accompanied by full payment of the
purchase price. The date of receipt of such notice (including by
facsimile
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transmission)
and payment shall be the “Exercise Date” for such Stock
Option or portion thereof; provided, however, that if the
Participant engages in a simultaneous Stock Option exercise and
sale of shares of Common Stock, the Exercise Date shall be the date
of sale of the shares purchased by exercising such Stock Option. No
partial exercise of a Stock Option may be for less than 100 shares
of Common Stock.
(iii)
Payment . The purchase price of shares purchased upon
exercise of any Option shall be paid in full in cash at the time of
exercise of the Stock Option, except that the Administrator, in its
sole discretion, and on such terms and conditions as it may
specify, may approve payment by the exchange of shares of Common
Stock having a Fair Market Value on the Exercise Date equal to the
purchase price of such shares or by a combination of cash and
Common Stock having a Fair Market Value on the Exercise Date equal
to the portion of such purchase price not paid in cash; provided,
however, that except as the Administrator shall otherwise
determine, any such shares submitted in the exchange must have been
beneficially owned by the Participant for a certain period prior to
the Exercise Date, the duration of such period to be determined by
the Administrator but in no event to be less than six months.
Subject to any administrative rules from time to time adopted by
the Administrator for administering Stock Option exercises, payment
of the exercise price of the Stock Option will be permitted through
the delivery (including by facsimile transmission) of an
irrevocable exercise notice coupled with irrevocable instructions
to a designated broker to simultaneously sell the underlying shares
of Common Stock and deliver to the Company on the settlement date
the portion of the proceeds representing the exercise price (and
any taxes to be withheld).
(iv)
Termination of Employment or Death .
(A) Except
as otherwise provided by the Committee in the applicable Stock
Option agreement or amendment thereto, in the event an employee
Participant ceases to be employed due to Retirement, Disability, or
death, his or her Stock Options shall continue to be or become
exercisable following such cessation of employment as if the
Participant had continued to be an active employee and such Stock
Options may be exercised by the Participant or, in the event of
death, his or her Designated Beneficiary on the same terms and
conditions as would have applied to such Participant had such
Participant continued to be an active employee; provided that,
Stock Options whose date of grant is less than one year from the
date of such cessation of employment shall be forfeited.
(B) Except
as provided in clause (A) of this Section 6(c)(iv), if,
prior to the expiration or cancellation of any Stock Option, an
employee Participant ceases to be employed by the Company or a
Subsidiary, any unexercised portion of his or her outstanding Stock
Option shall automatically terminate unless the Committee, in its
sole discretion, shall determine otherwise, and except that when
the Participant’s employment has ceased due to a leave of
absence or involuntary termination due to position elimination,
such Participant’s Stock Option shall be
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treated in
accordance with guidelines for such situations established by the
Committee.
(C) In
the event an Eligible Director ceases to be a director due to
Retirement, Disability, or death, his or her Stock Options shall
continue to be or become exercisable as if the Eligible Director
had continued to be a director and such stock options may be
exercised by the director or, in the event of death, his or her
Designated Beneficiary on the same terms and conditions as would
have applied to such director had such eligible director continued
to serve on the Board. Except as otherwise provided by the Board in
the applicable Award agreement or amendment thereto, in the event
an Eligible Director ceases to be a director other than due to
Retirement, Disability, or death, his or her Stock Options shall
become exercisable in accordance with their terms and be
exercisable until two years following the Director’s last day
of service.
(D) No
provision of this Section 6(c)(iv) shall be deemed to permit
the exercise of any Stock Option after the expiration of the normal
stated term of such Stock Option.
7. Stock
Appreciation Rights
The Committee may
grant Stock Appreciation Rights to employees either alone or in
conjunction with and related to previously or concurrently granted
Stock Options and/or other Plan Awards. Except as otherwise
determined by the Committee and reflected in the applicable Stock
Appreciation Rights agreement or an amendment thereto, all Stock
Appreciation Rights shall be granted on the following terms and
conditions (and such other terms and conditions that the Committee
may establish which are consistent with the Plan and applicable
law):
(a)
Number of Rights . The Committee shall determine, absolutely
or by formula related to the Fair Market Value of a share of Common
Stock, the number of Stock Appreciation Rights which shall be
granted. As to any Stock Appreciation Rights granted in tandem with
a Stock Option, such number shall not be greater than the number of
shares which are then subject to the related Stock Option, and the
number of such Stock Appreciation Rights will be reduced on a
one-for-one basis to the extent that shares under the related Stock
Option are purchased. In no event shall the number of Stock
Appreciation Rights granted to any Participant in any Fiscal Year
(excluding Stock Appreciation Rights granted in tandem with a Stock
Option, which shall be subject to the limitation in
Section 6(b)), exceed 1,000,000, subject to adjustment as
provided in Section 12.
(b)
Exercise . Stock Appreciation Rights shall entitle the
Participant to receive upon exercise, without any payment to the
Company, an amount of cash and/or a number of shares determined and
payable as provided in Section 7(c). Except as otherwise
determined by the Committee and reflected in the applicable Award
agreement or amendment thereto, Stock Appreciation Rights shall be
exercisable to the extent and upon the same conditions that Stock
Options are exercisable under Section 6(c). A Participant
wishing to exercise Stock Appreciation
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Rights shall
give written notice of such exercise to the Company. The date of
receipt of such notice shall be the “Exercise Date” for
such Stock Appreciation Rights. Promptly after the Exercise Date
the Company shall pay and/or deliver to the Participant the cash
and/or shares to which he or she is entitled.
(c)
Amount of Cash and/or Number of Shares . Except as otherwise
provided in Section 11, the amount of the payment to be made
upon exercise of Stock Appreciation Rights shall be determined by
multiplying (i) that portion of the total number of shares as
to which the Participant exercises the Stock Appreciation Rights
award as of the Stock Appreciation Right Exercise Date, by
(ii) 100% of the amount by which the Fair Market Value of a
share of Common Stock on the Exercise Date exceeds the Fair Market
Value of a share of Common Stock on the date the Stock Appreciation
Rights were granted. The Committee may make payment in cash or
partly in cash and partly in Common Stock, all as determined by the
Committee in its sole discretion. To the extent that payment is
made in Common Stock, the number of shares to be paid shall be
determined by dividing the amount of such payment by the Fair
Market Value of a share of Common Stock on the Exercise Date. No
fractional shares shall be issued, but instead the Participant
shall be entitled to receive a cash adjustment equal to the same
fraction of the Fair Market Value on the Exercise Date.
(d)
Termination of Employment or Death . Except as otherwise
provided by the Committee in the applicable Award agreement or
amendment thereto, in the event that a recipient of Stock
Appreciation Rights ceases to be employed by the Company or a
Subsidiary by reason of Retirement, Disability or death, his or her
Stock Appreciation Rights shall co
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