Exhibit 10.12
AMENDED AND RESTATED
EXECUTIVE SEVERANCE AGREEMENT
     This Amended and Restated Executive Severance Agreement (the “Agreement”)
is made as of the 29th day of May 2009 by and between Airgas, Inc., a Delaware
corporation (the “Company”), and Peter McCausland (the “Executive”).
     WHEREAS, Executive is an executive of the Company, currently serving as its
Chairman of the Board, President and Chief Executive Officer; and
     WHEREAS, the Company and Executive previously entered into a letter
agreement for severance payments, dated July 24, 1992 (the “Prior Agreement”),
pursuant to which Executive is entitled to certain payments and benefits in the
event that Executive’s employment is terminated as set forth in the Prior
Agreement; and
     WHEREAS, the Company and Executive previously entered into a Change of
Control Agreement, dated March 17, 1999 (as amended, restated, or otherwise
modified from time to time, the “COC Agreement”), pursuant to which Executive is
entitled to certain payments and benefits in the event of a termination of his
employment in connection with a Change of Control as defined in and set forth in
the COC Agreement; and
     WHEREAS, the Company and Executive desire to amend and restate the
provisions of the Prior Agreement in their entirety to comply with the
requirements of section 409A of the Internal Revenue Code of 1986, as amended,
and the final regulations issued thereunder, and to eliminate any conflicts with
the provisions of the COC Agreement.
     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, and intending to be legally bound hereby,
the Company and Executive (individually a “Party” and together, the “Parties”)
agree that the Prior Agreement is hereby amended and restated as follows:
     1. Definitions.
          (a) “Board” shall mean the Board of Directors of the Company.
          (b) “Cause” shall be as defined in Section 2.4 of the COC Agreement.
          (c) “Change of Control” shall be as defined in Section 2.2.1 of the
COC Agreement.
          (d) “Code” means the Internal Revenue Code of 1986, as amended.
          (e) “Good Reason” shall be as defined in Section 2.3.1 of the COC
Agreement.

 

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          (f) “Notice of Termination” means a written notice which (i) indicates
the specific Cause for termination, and (ii) briefly summarizes the facts deemed
to provide a basis for the Cause for termination of Executive’s employment under
the provision so indicated.
          (g) “Termination Date” shall mean the last day of Executive’s
employment with the Company.
          (h) “Termination of Employment” shall mean the termination of
Executive’s active employment relationship with the Company.
     2. Termination of Employment Not Related to a Change of Control.
          (a) Termination Not Related to a Change of Control. In the event that
Executive’s employment with the Company is terminated by the Company for any
reason other than Cause, and not in connection with a Change of Control,
Executive shall be entitled to the benefits provided in subsection (b) of this
Section 2.
          (b) Compensation Upon Termination Not Related to a Change of Control.
Subject to the provisions of this Agreement, in the event a termination
described in subsection (a) of this Section 2 occurs, the Company shall provide
Executive with the following:
               i. Executive shall receive a cash payment equal to two (2) times
Executive’s annual base salary as in affect immediately prior to the Termination
Date. Except as otherwise provided in this Agreement, payment shall be made in a
lump sum within thirty (30) days after the date that is six (6) months following
the Termination Date.
               ii. Executive shall receive cash payments equal to the premium
cost that Executive pays, at COBRA rates, to continue the Company’s medical and
dental coverage for Executive and, where applicable, Executive’s spouse and
dependents, if receiving such coverage on the Termination Date, for a period of
thirty-six (36) months following the Termination Date. Except as provided in
Section 19(b), payments shall be made commencing within thirty (30) days after
the date that is six (6) months following Termination Date, with the first such
payment to include the amounts payable hereunder for the months preceding such
first payment.
               iii. All stock options and restricted stock held by Executive
will become fully vested and exercisable, as the case may be, on the Termination
Date, and all stock options shall remain exercisable after the Termination Date
until the option’s expiration date, without regard to Executive’s Termination of
Employment.
          (c) Notice of Termination. Any termination described in this Section 2
shall be communicated by a Notice of Termination to Executive given in
accordance with Section 13 hereof.
     3. Termination of Employment in Connection with a Change of Control.

 

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          (a) Termination in Connection with a Change of Control. In the event
that Executive’s employment with the Company is terminated in connection with a
Change of Control, as set forth in Section 2.3 of the COC Agreement, including
but not limited to a voluntary resignation by Executive for Good Reason,
Executive shall be entitled to the benefits provided in subsection (b) of this
Section 3, in addition to the benefits provided for in the COC Agreement.
          (b) Compensation upon Termination in Connection with a Change of
Control. Subject to the provisions of this Agreement, in the event a termination
described in subsection (a) of this Section 3 occurs, the Company shall provide
Executive with a cash payment equal to two (2) times the greater of executive’s
annual base salary as in effect (i) immediately prior to the Termination Date,
or (ii) at the time a Change of Control occurred. Except as otherwise provided
in this Agreement, payment shall be made in a lump sum within thirty (30) days
after the date that is six (6) months following the Termination Date.
          (c) Notice of Termination. Any termination on account of this
Section 3 shall be communicated as provided for in the COC Agreement.
     4. Other Payments. The payments due under Sections 2 and 3 hereof shall be
in addition to and not in lieu of any payments or benefits due to Executive
under any other plan, policy or program of the Company, except that no cash
payments shall be paid to Executive under the Company’s then current severance
pay policies. In addition, Executive shall receive any amounts earned, accrued
or owing but not yet paid to Executive as of the Termination Date, payable in a
lump sum in the first payroll following the Termination Date, in accordance with
the terms of any applicable benefit plans and programs of the Company.
     5. No Mitigation. Executive shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for herein be reduced by any compensation earned by other employment or
otherwise.
     6. Non-Exclusivity of Rights. Except as provided in Section 4, nothing in
this Agreement shall prevent or limit Executive’s continuing or future
participation in or rights under any benefit, bonus, incentive or other plan or
program provided by the Company or any of its subsidiaries or affiliates and for
which Executive may qualify.
     7. No Set-Off. The Company’s obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against Executive or others.
     8. Taxes. Any payment required under this Agreement shall be subject to all
requirements of the law with regard to the withholding of taxes, filings, making
of reports and the like, and the Company shall use its best efforts to satisfy
promptly all such requirements.
     9. Reduction of Benefits. If any payment or benefit provided to Executive
by the Company pursuant to this Agreement or otherwise, including any payments
due under the COC

 

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Agreement, may be considered an “Excess Parachute Payment”, as defined in Code
section 280G(b)(1), then in that event, the provisions of sections 3.2.1 and
3.2.2 of the COC Agreement shall govern, and the references in the COC Agreement
to the “Payment” and “Agreement Payments” shall include the aggregate of all
amounts due to Executive under both this Agreement and the COC Agreement, and
the “Agreement” shall mean both this Agreement and the COC Agreement, in
determining whether there shall be any reduction of benefits.
     10. Deferral of Benefits. If the Company, based on written advice of
reputable counsel, a copy of which shall be provided to Executive, determines
that in the aggregate any benefit or payment under this Agreement and under any
other arrangement or agreement between the Company and Executive would not be
deductible for federal income taxes by the Company solely as a result of the
application of Code section 162(m), the payment of any amounts otherwise payable
under this Agreement in the then current year shall be reduced, but not below
zero, by the amount of any such non-deductible amounts. The Company shall pay
the entire non-deductible amount to Executive during Executive’s first taxable
year in which the Company reasonably anticipates, or should reasonably
anticipate, that if the payment is made during such year, the deduction of such
payment will not be barred by the application of Code section 162(m). The
Company shall pay interest accrued on such deferred payments, calculated at the
federal short-term rate, from the date that Executive would have been entitled
to payment under this Agreement without application of this Section 10 until the
date of payment. All scheduled payments to Executive pursuant to this Agreement
and any other agreement between Executive and the Company that could be delayed
to avoid the application of Code section 162(m) shall be delayed. In addition,
payments made pursuant to this Section 10 that are made on or after the
Termination Date are subject to the provisions of Section 19 of this Agreement.
     11. Confidential Information. Executive shall remain subject to the terms
and conditions of Executive’s Employee Confidentiality Agreement, which shall
continue in full force and effect, except as specifically modified herein.
     12. Term of Agreement. This Agreement shall continue in full force and
effect for the duration of Executive’s employment with the Company so long as
Executive holds the position of Chief Executive Officer of the Company;
provided, however, that after the termination of Executive’s employment during
the term of this Agreement, this Agreement shall remain in effect until all of
the obligations of the Parties hereunder are satisfied or have expired.
     13. Notice. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be delivered personally or mailed by registered or certified mail,
return receipt requested, or by overnight express courier service, as follows:

 

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          If to the Company, to:
Airgas, Inc.
259 N. Radnor-Chester Road
Suite 100
Radnor, PA 19087
Attn: General Counsel
          If to Executive, to:
Peter McCausland
1113 Brynlawn Road
Villanova, PA 19085
or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to the other Parties hereto in the manner
specified in this Section; provided, however, that if no such notice is given by
the Company following a change of control, notice at the last address of the
Company or to any successor pursuant to this Section 13 shall be deemed
sufficient for the purposes hereof. Any such notice shall be deemed delivered
and effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
     14. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Delaware without giving effect to any conflict of
laws provisions.
     15. Contents of Agreement, Amendment and Assignment.
          (a) This Agreement supersedes all prior agreements, and sets forth the
entire understanding between the Parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment executed by Executive and executed on the Company’s
behalf by a duly authorized officer. Notwithstanding, it is specifically
understood and agreed that in the event if any conflict between the provisions
of this Agreement and the COC Agreement, the provisions of this Agreement are to
control. The provisions of this Agreement may provide for payments to Executive
under certain compensation or bonus plans under circumstances where such plans
would not provide for payment thereof. It is the specific intention of the
Parties that the provisions of this Agreement shall supersede any provisions to
the contrary in such plans, and such plans shall be deemed to have been amended
to correspond with this Agreement without further action by the Company or the
Board, except to the extent that shareholder or other approvals are required by
the terms of such plans in order to amend such plans.
          (b) All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
representatives, successors and assigns of the Parties hereto. If Executive
should die after the Termination Date and while any amount payable hereunder
would still be payable to Executive hereunder if Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance

 

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with the terms of this Agreement to Executive’s devises, legates or other
designees or, if there is no such designee, to Executive’s estate.
     16. Severability. If any provision of this Agreement or application thereof
to anyone or under any circumstances shall be determined to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
     17. Remedies Cumulative; No Waiver. No right conferred upon the Parties by
this Agreement is intended to be exclusive of any other right or remedy, and
each and every such right or remedy shall be cumulative and shall be in addition
to any other right or remedy given hereunder or now or hereafter existing at law
or in equity. No delay or omission by a Party in exercising any right, remedy or
power hereunder or existing at law or in equity shall be construed as a waiver
thereof.
     18. Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
     19. Section 409A.
          (a) Interpretation. This Agreement shall be interpreted to avoid any
penalty sanctions under section 409A of the Code. If any payment or benefit
cannot be provided or made at the time specified herein without incurring
sanctions under section 409A of the Code, then such benefit or payment shall be
provided in full at the earliest time thereafter when such sanctions will not be
imposed. All payments to be made upon Termination of Employment under this
Agreement may only be made upon a “separation from service” under section 409A
of the Code. For purposes of section 409A of the Code, each payment made under
this Agreement shall be treated as a separate payment. In no event may
Executive, directly or indirectly, designate the calendar year of payment.
          (b) Payment Delay. Notwithstanding any provision to the contrary in
this Agreement, if on the Termination Date, Executive is a “specified employee”
(as such term is defined in section 409A(a)(2)(B)(i) of the Code and its
corresponding regulations) as determined by the Company (or any successor
thereto) in its sole discretion in accordance with its “specified employee”
determination policy, then all cash severance payments payable to Executive
under this Agreement that are deemed as deferred compensation subject to the
requirements of section 409A of the Code shall be postponed for a period of six
months following Executive’s “separation from service” with the Company (or any
successor thereto). The postponed amounts shall be paid to Executive in a lump
sum within thirty (30) days after the date that is six (6) months following
Executive’s “separation from service” with the Company (or any successor
thereto). If Executive dies during such six-month period and prior to payment of
the postponed cash amounts hereunder, the amounts delayed on account of section
409A of the Code shall be paid to the personal representative of Executive’s
estate within sixty (60) days after Executive’s death. No interest shall be paid
on any amounts delayed pursuant to this subsection.

 

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          (c) Reimbursements. All reimbursements provided under this Agreement
shall be made or provided in accordance with the requirements of section 409A,
including, where applicable, the requirement that (i) any reimbursement is for
expenses incurred during Executive’s lifetime (or during a shorter period of
time specified in this Agreement), (ii) the amount of expenses eligible for
reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year, (iii) the reimbursement of an eligible
expense will be made on or before the last day of the taxable year following the
year in which the expense is incurred, and (iv) the right to reimbursement is
not subject to liquidation or exchange for another benefit. If expenses are
incurred in connection with any tax audit or litigation, any reimbursements for
such expenses to which Executive may be entitled shall be paid not later than
the end of Executive’s taxable year following Executive’s taxable year in which
(i) the tax audit or litigation is resolved if no taxes are paid or (ii) the
taxes that are subject to such audit or litigation are remitted to the taxing
authority. Any tax gross up payments to be made hereunder shall be made not
later than the end of Executive’s taxable year next following Executive’s
taxable year in which the related taxes are remitted to the taxing authority.
     IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.

     
 
  AIRGAS, INC.
 
   
 
  By: /s/ Dwight Wilson
 
 
 
Attest: /s/ Judy Pellegrino
 
  Its: Senior Vice President, Human Resources 
 
 
 
 
   
/s/ Vickie Perry
  /s/ Peter McCausland
 
   
Witness
  PETER MCCAUSLAND