Exhibit 10.5
This document constitutes part of a prospectus
covering securities
that have been registered under the Securities Act of
1933.
STOCK OPTION PROGRAM FOR DIRECTORS
(THE “PROGRAM”)
TABLE OF CONTENTS
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Page
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Stock Option Program for Directors
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1
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1
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Eligibility and Administration
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1
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1
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3
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3
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Amendment and Discontinuance; No
Discretion
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5
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Notice of Exercise of Stock Option
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6
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Administrative Procedures Regarding Transfer of
Stock Option Awards (the “Procedures”)
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7
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Discussion of Tax and Social Security
Consequences of the Stock Option Program for Directors
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12
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STOCK OPTION PROGRAM FOR DIRECTORS
( THE “PROGRAM”)*
1. PURPOSES OF THE
PROGRAM
The
purposes of this Program are (i) to assist Air Products and
Chemicals, Inc. (the “Company”) in attracting and
retaining individuals of superior talent, experience, and
achievement as directors of the Company and (ii) to associate
more closely the interests of such directors with those of the
Company’s shareholders by encouraging and enabling directors
to acquire a financial interest in the Company through ownership in
equity securities of the Company. The Program is provided under the
Air Products and Chemicals, Inc. Long Term Incentive Plan (the
“Plan”) and is subject to the terms thereof. Certain
capitalized terms used herein have the meanings set forth in
Section 6(i) hereof.
2. ELIGIBILITY AND
ADMINISTRATION
Participation in
the Program is limited to directors of the Company who have not
ever been employees of the Company or any of its subsidiaries or
their respective predecessors. The Program is administered by the
Corporate Governance and Nominating Committee of the Board of
Directors (the “Committee”).
3. AWARDS
Two
thousand (2,000) stock options (“Options” or
“Stock Options”) shall automatically be granted to each
eligible director who is serving as a director of the Company
immediately following each annual organizational meeting of the
Board of Directors. Each such director shall receive an option
agreement dated as of the date of each such organizational meeting
of the Board of Directors, which shall be the date of grant of each
such award, evidencing the automatic annual award of such Stock
Options pursuant to this Program. Stock Options are rights to
purchase shares of common stock of the Company, par value $1.00
(“Common Stock”).(1)/
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(*)
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The Air
Products and Chemicals, Inc. Stock Option Plan for Directors was
adopted by Board resolution on 21 October 1993; effective 27
January 1994; amended effective 15 October 1998 and 21
October 1999. Effective 23 January 2003 this Plan was
combined with the Long Term Incentive Plan and offered as a program
thereunder.
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(1)/
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Amended and
approved by the Board of Directors on 15 October 1998;
effective 15 October 1998.
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J-1
All
Stock Options granted under the Program shall be granted on the
following terms and conditions:
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(a)
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Price. The purchase price per share
of Common Stock covered by each Stock Option shall be 100% of the
Fair Market Value of a share of Common Stock on the date of grant
of such Option.
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(b)
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Term and Exercisability. Stock
Options shall become exercisable six (6) months from date of
grant, and shall remain exercisable until the earlier
of:
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(i)
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ten
(10) years and one (1) day from the date of grant,
and
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(ii)
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the
date as of which the director ceases to serve as a member of the
Board of Directors.
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Notwithstanding the foregoing, the
director (in the case he or she ceases to serve on the Board of
Directors of the Company by reason of retirement or disability) or,
the director’s Designated Beneficiary or, if none, his or her
legal representative (in the case of the director’s death
before or after retirement or disability), shall continue to have
the same rights to exercise any unexercised portion of the
director’s Stock Option which is exercisable at the time of
such termination or death, as the director would have had if he or
she had continued to be an active director of the
Company.
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(c)
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Exercise. A director 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
and payment shall be the “Exercise Date” for such Stock
Option or portion thereof.
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(d)
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Payment. The purchase price of
shares of Common Stock purchased upon exercise of any Stock Option
shall be paid in full in cash at the time of exercise of the
Option. Subject to any administrative rules from time to time
adopted by the Committee, payment of the purchase price may also be
made by delivery 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 purchase price.
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J-2
4. DILUTION
ADJUSTMENTS
Notwithstanding
any other provision of the Plan, in the event of any change in the
outstanding shares of Common Stock by reason of any stock dividend
or split, recapitalization, merger, consolidation, combination or
exchange of shares or other similar corporate change, an equitable
adjustment shall be made, as determined by the Board of Directors
(but subject to the first paragraph of Section 6), in
(i) the kind of shares subject to Stock Options, (ii) the
number or kind of shares or purchase price per share subject to
outstanding Stock Options, (iii) any other aspect or aspects
of the Program or outstanding awards made thereunder as specified
by the Board of Directors, or (iv) any combination of the
foregoing, as shall be necessary to maintain the proportionate
interest of the optionees and to preserve, without increasing, the
value of outstanding awards. Such adjustments shall be made by the
Board of Directors and shall be conclusive and binding for all
purposes of the Program and Plan.
5. MISCELLANEOUS
PROVISIONS
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(a)
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The
holder of a Stock Option shall have no rights as a Company
shareholder with respect thereto unless, and until the date as of
which, certificates for shares of Common Stock are issued upon
exercise or payment in respect of such award.
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(b)
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No
Stock Option or any rights or interests therein of the recipient
thereof shall be assignable or transferable by such recipient
except by gift to his or her family member(s) or to trust(s) of
which such family member(s) are beneficiaries (but only on and
after the date upon which, and to the extent such Stock Options
have become exercisable in accordance with their terms, and subject
to the administrative procedures and conditions set forth in the
“Administrative Procedures Regarding Transfers of Stock
Option Awards dated 21 October 1999” attached as
Exhibit A); to his or her Designated Beneficiary; or by will
or the laws of descent and distribution.
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(c)
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All
Stock Options granted under the Program shall be evidenced by
agreements in such form and containing and/or incorporating such
terms and conditions as are set forth in this Program.
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(d)
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No
shares of Common Stock shall be issued, delivered or transferred
upon exercise of any Stock Options granted hereunder unless and
until all legal requirements applicable to the issuance, delivery
or transfer of such shares have been complied with including,
without limitation, compliance with the provisions of the
Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, and the applicable requirements of the exchanges
on which the Company’s Common Stock may, at the time, be
listed.
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(e)
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The
Company shall require, as a condition of delivery of shares of
Common Stock upon the exercise of a Stock Option, that the director
or other person receiving such Common Stock pay to the Company at
the time of distribution thereof the amount
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J-3
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of any taxes
which the Company is required to withhold with respect to such
exercise. The obligation of the Company to make delivery of Common
Stock shall be subject to currency or other restrictions imposed by
any government.
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(f)
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Distributions of shares of Common
Stock upon exercise, in payment or in respect of awards made under
this Program, may be made either from shares of authorized but
unissued Common Stock reserved for such purpose by the Board of
Directors or from shares of authorized and issued Common Stock
reacquired by the Company and held in its treasury, as from time to
time determined by the Board of Directors.
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(g)
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The
costs and expenses of administering this Program shall be borne by
the Company and not charged to any award nor to any director
receiving an award.
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(h)
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This Program shall be unfunded. The
Company shall not be required to establish any special or separate
fund or to make any other segregation of assets to assure the
payment of any award under this Program and payment of awards shall
be subordinate to the claims of the Company’s general
creditors.
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(i)
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In
addition to the terms defined elsewhere herein, the following terms
as used in this Program description shall have the following
meanings:
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“Designated Beneficiary”
shall mean the person or persons last designated as such by the
Participant on a form filed by him or her with the
Company.
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“Fair Market Value” of a
share of Common Stock of the Company on any date set forth herein
shall mean an amount equal to the mean of the high and low sale
prices on the New York Stock Exchange, as reported on the composite
transaction tape, for such date.
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“Retirement” shall mean
(i) resigning from serving as a director, failing to stand for
re-election as a director or failing to be re-elected as a director
after being duly nominated, and (ii) in any such case having
the right to immediate or deferred pension benefits under the
Company’s Pension Plan for Directors as then in effect or, in
the absence of such Pension Plan or another pension plan being
applicable to any director, after at least six (6) full years
of service as a director of the Company. More than six
(6) months’ service during any twelve (12) month
period after a director’s first election by the shareholders
to the Board shall be considered as a full year’s service for
this purpose.
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(j)
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Notices. All notices to the Company
under this Program shall be in writing and shall be given as
follows:
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Air Products
and Chemicals, Inc.
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