Exhibit 10.1

10 December 2004

«Name»
«Addr1»
«Addr2»
«Addr3»
«Addr4»

Long-Term Incentive Plan - Fiscal Year 2005 Awards

Dear «Nickname»:

One of the priorities of our Management Compensation Program is to provide you
with the opportunity to share in the long-term success of Air Products. You play
an important role in the present and future performance of our Company. As a
result of your performance during the past year, I am pleased to present your
2005 stock awards under the Company’s Long-Term Incentive Program.

As in the past, our long-term incentive awards recognize your contributions to
the business, align individual goals and performance with shareholder interests
and the longer-term Company focus, and provide you with a competitive pay
opportunity. Your 2005 awards include:

•   A Nonstatutory Stock Option to purchase «Nqo_Grnt» shares of Common Stock at
a purchase price of $54.17 per share, which is 100% of the 1 October 2004 Fair
Market Value of a share of Common Stock.

•   An award of «Nqo_Grnt» Restricted Shares of Company Common Stock issued to
you as of 4 October 2004; and

•   «Nqo_Grnt» Deferred Stock Units for the Cycle 1A performance period,
«Nqo_Grnt» Deferred Stock Units for the Cycle 1B performance period, and
«Nqo_Grnt» Deferred Stock Units for the Cycle 1C performance period, each Unit
(a “Performance Share”) being equivalent in value to one share of common Stock
(see Exhibit D).

We are committed to offering long-term incentive awards for our employees who
contribute to our success — both now and in the future. Thank you again for your
dedication and on-going contributions to Air Products.

 

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Your 2005 Awards are subject to and contingent upon your agreement to the
conditions described in Paragraph 17 of Exhibit 1 (the “Conditions”). In order
for your 2005 Awards to become effective, please countersign this letter, make a
copy for your records, and return the original of the letter in the enclosed
envelope to Jim Bell, Manager of Compensation, by 17 January 2005 in
acknowledgment of your agreement to the Conditions.

This letter, together with its Exhibit, constitutes the agreement governing your
2005 Awards (this “Awards Agreement”). Your 2005 Awards are also at all times
subject to the applicable provisions of the Long-Term Incentive Plan (the
“Plan”) and to any determinations made by the Management Development and
Compensation Committee of the Board of Directors (or its delegate) with respect
to your 2005 Awards as contemplated or permitted by the Plan or the Conditions.
In addition, the Committee has established a one-year holding period for a
portion of your Nonstatutory Stock Option. You are expected to hold, for one
year, 50% of the net shares (after taxes and commissions) that you receive upon
an exercise of the Stock Option.

Neither your 2005 Awards, this Awards Agreement or the Plan constitute a
contract of employment, nor do they guarantee your continued employment for any
period required for all or any of your 2005 Awards to vest or become
exercisable, or to be earned or paid out. Except as otherwise indicated all
capitalized words used in this Awards Agreement have the meanings described in
the Plan.

WITNESSETH the due execution of this Awards Agreement at Allentown, Pennsylvania
effective as of the 1st day of October 2004 intending to be legally bound
hereby.

              AIR PRODUCTS AND CHEMICALS, INC.
 
       
 
       

  By:    

     

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                John P. Jones III

ACKNOWLEDGED AND AGREED this

_____ day of ____________________, 200__.

_____________________________________

      «Name»

Exhibit

 

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EXHIBIT I

AIR PRODUCTS AND CHEMICALS, INC.
LONG TERM INCENTIVE PLAN
FY2005 AWARDS AGREEMENT

1.   As described in the foregoing grant letter, you are hereby granted FY2005
Awards consisting of Stock Options (“Options”), shares of Company Common Stock
(“Restricted Shares”), and Deferred Stock Units to be called “Performance
Shares” under the Air Products and Chemicals, Inc. Long Term Incentive Plan as
amended and restated on January 23, 2003 (the “Plan”). The Options are
“Nonstatutory Stock Options” as described in Section 6 of the Plan. The
Restricted Shares are described in Section 8 of the Plan. The Deferred Stock
Units are described in Section 9 of the Plan. The Management Development and
Compensation Committee of the Company’s Board of Directors has approved these
Awards subject to the applicable provisions of the Plan and the terms of this
Agreement, and contingent upon your execution of this Agreement. All capitalized
terms used in this Agreement have the meaning ascribed to them in the Plan.

2.   Each Option entitles you to purchase one share of Common Stock (“Share”) at
a purchase price of $54.17 as described below. You can first purchase Shares as
follows: (i) up to one-third of the Shares may be purchased on or after 1
October 2005 and (ii) up to an additional one-third of such Shares may be
purchased on or after 1 October 2006 and 2007, respectively. The Options cannot
be exercised with respect to fractional Shares, and, accordingly, the number of
Shares will be rounded down to the nearest Share on the first two of the
foregoing dates and up to the nearest Share on the third such date to eliminate
fractional Shares. The Options were granted on 1 October 2004 and will continue
for a period of ten (10) years and one day from such grant date and will expire
and no longer be exercisable on 2 October 2014.

3.   You may purchase Shares by delivering to the Company, at its principal
offices in Allentown, Pennsylvania, written notice of exercise of the Option on
forms to be provided by the Company and the full purchase price of the Shares.
Payment of the purchase price may be made in cash, by the delivery of an
irrevocable exercise notice coupled with irrevocable instructions to a
designated broker to simultaneously sell the Shares and deliver to the Company
on the settlement date the portion of the proceeds representing the purchase
price and any taxes to be withheld, or by delivery or attestation of ownership
of other shares of Common Stock owned by you. Payment of any taxes required to
be withheld at the time of exercise may be made in cash (including from a broker
on the settlement date) or by having the number of Shares acquired in the
exercise reduced by an amount equal in value to the amount of such taxes
required to be withheld.

 

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4.   Your Options terminate as of the close of business on the last day of your
employment with the Company or a Subsidiary, unless your employment ends due to
your death, Disability or Retirement. However, Options which have been held for
less than one year from the date of grant terminate when employment ends for any
reason. Upon your, death, Disability or Retirement on or after 30
September 2005, any unexercisable portion of the Options will be extended for
the remaining term of the award (that is, will become vested and be exercisable)
as if you have continued to be an active employee of the Company or a
Subsidiary.

5.   In the event of a Change in Control, the Options become exercisable on the
later of the Change in Control or the first date more than six months from
grant. Further, during the 30-day period following a Change in Control, Options
may be surrendered for payment of 100% of the “spread” between the value of the
Shares (as defined in Section 11(a)(A) of the Plan), and the purchase price.

6.   Options are nonassignable and nontransferable except to your Designated
Beneficiary, by will or by the laws of descent and distribution, or by gift to
family members or to trusts of which only family members are beneficiaries.
Transfers by gift can be made only after the Option has become exercisable and
subject to such administrative procedures and to such restrictions and
conditions as the officers of the Company shall determine to be consistent with
the purposes of the Plan and the interests of the Company and/or to be necessary
or appropriate for compliance with all applicable tax and other legal
requirements. Subject to the foregoing, you may transfer Options by gift only by
delivering to the Company at its principal offices in Allentown, Pennsylvania,
written notice of the intent to transfer the Options on forms to be provided by
the Company.

7.   The Restricted Shares shall be issued to you, contingent upon your
execution of this Agreement, as of 4 October 2004. Upon issuance of the
Restricted Shares, you shall have all the rights of a shareholder with respect
to the Restricted Shares, including the right to vote such Restricted Shares and
receive all dividends or other distributions paid with respect to the Restricted
Shares, subject only to the restrictions contained in Paragraph 8 below. In the
event of any change in the outstanding shares of Common Stock of the Company or
the occurrence of certain other events described in Section 12 of the Plan, an
equitable adjustment of the number of Restricted Shares covered by this
Agreement shall be made consistent with the impact of such change or event upon
the rights of the Company’s other shareholders, and any additional shares of
Common Stock issued to you as a result of such adjustment shall be Restricted
Shares subject to this Agreement, including, without limitation, the
restrictions contained in Paragraph 8.

8.   The “Restriction Period” with respect to the Restricted Shares shall be the
period beginning 4 October 2004 and ending upon the earliest of your death,

 

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    Disability, Retirement or a Change in Control of the Company. During the
Restriction Period, the Restricted Shares may not be sold, assigned,
transferred, encumbered, or otherwise disposed of by you; provided however, that
upon your exercise of Stock Options, such Restricted Shares may be used to pay
the purchase price by attestation, with the stipulation that the Restricted
Shares attested will remain subject to the restrictions of this Paragraph 8 and
the terms of this Agreement. If your employment by the Company and all its
Subsidiaries is terminated for any reason prior to October 1, 2005, or for any
reason other than death, Disability or Retirement after September 30, 2005, the
Restricted Shares shall be returned to the Company and forfeited in their
entirety; provided that, in the event of a Change in Control of the Company,
your rights to the Restricted Shares shall become immediately transferable and
nonforfeitable.   9.   At the end of the Restriction Period, and, if earlier,
upon your election to include the value of the Restricted Shares in your federal
taxable income pursuant to Internal Revenue Code Section 83(b), payment of taxes
required to be withheld by the Company must be made. When taxation occurs at the
end of the Restriction Period, applicable taxes will be withheld by reducing the
number of the Restricted Shares issued to you by an amount equal in market value
to the taxes required to be withheld. In the event you make a section 83(b)
election, applicable taxes must be paid in cash to the Company at the time the
election is filed with the Internal Revenue Service.   10.   In the event your
employment is terminated due to your death on or after September 30, 2005, the
Restricted Shares shall be transferred free of restriction, net of any
applicable taxes, to your Designated Beneficiary or, if none, to your legal
representative.   11.   The Performance Shares granted to you will be divided
into three portions to be earned over three separate performance cycles as
follows: (A) the Cycle 1A award and shall be earned at the percentage indicated
on the attached Schedule for the level of Operating Return on Net Assets
(“ORONA”) achieved for one year performance cycle ending September 30, 2005;
(B) the Cycle 1B award and shall be earned at the percentage indicated on the
attached Schedule for the level of average annual ORONA achieved for a two year
performance cycle ending September 30, 2006 ; and (C) the Cycle 1C award and
shall be earned at the percentage indicated on the attached Schedule for the
level of average annual ORONA achieved for a three year performance cycle ending
September 30, 2007. Subject to the forfeiture conditions contained in
Paragraph 12, each earned Performance Share will entitle you to receive, at the
end of the Deferral Period (as defined below), a payment equal to the value of
one share of Company Common Stock.   12.   The Deferral Period will begin on the
date of this Agreement and will end on the respective date your Performance
Shares are paid as described in Paragraph 13. If your employment by the Company
and all its affiliates is

 

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    terminated for any reason prior to 1 October 2005, all your Performance
Shares will be automatically forfeited in their entirety. If your employment by
the Company and all its affiliates terminates after 30 September 2005 other than
due to death, Disability or Retirement, you will forfeit all of your Performance
Shares for which the performance cycle is not completed. If your employment by
the Company and all its affiliates is terminated after 30 September 2005 due to
death, Disability, or Retirement, you will forfeit a pro-rata portion of your
earned Cycle 1B Performance Shares if your employment is terminated before 1
October 2006 and/or a pro rata portion of your earned Cycle 1C Performance
Shares if your employment is terminated before 1 October 2007, which portion in
each case shall be based on the number of full months you worked following the
grant date.   13.   Performance Shares earned and not forfeited for each
performance cycle shall be paid as follows, in each case as soon as
administratively practical after the due date: one-half shall be paid in a cash
payment at the end of the applicable performance cycle which shall be equal to
the Fair Market Value, as of the last day of the performance cycle, of the
number of shares of Company Common Stock representing half of the Performance
Shares earned; and the remaining half of the earned Performance Shares shall be
paid in shares of Company Common Stock (“Deferred Shares”) at the end of the
two-year period following the end of the performance cycle. No portion of the
Deferred Shares will be distributed to you if you terminate employment by the
Company and all its affiliates prior to the end of the Deferral Period other
than due to death, Disability, or Retirement. No cash dividends or other amounts
shall be payable with respect to the Performance Shares during the Deferral
Period. If your employment by the Company and all affiliates is terminated
during the Deferral Period due to death, Disability, or Retirement, your earned
Deferred Shares will be paid as follows: Deferred Shares for which the
performance cycle is complete will be paid on the earlier of the date they would
have been paid if you remained employed or six months after your employment
terminates, and Deferred Shares for which the performance cycle is not complete
will be paid on the later of six months after the termination of your employment
or the completion of the performance cycle. At the end of the Deferral Period
for each earned and nonforfeited Performance Share, the Company will also pay to
you, an additional cash payment equal to the dividends which would have been
paid on a share of Common Stock during the Deferral Period, net of applicable
taxes. Additional information regarding a voluntary election to defer the payout
of your earned Performance Shares will be sent to you in a future communication.
  14.   If your employment by the Company or a Subsidiary terminates during the
Deferral Period due to death, payment in respect of earned Performance Shares
that are not forfeited and of related Dividend Equivalents shall be made to your
Designated Beneficiary or, if none, your legal representative.

 

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15.   Following or in connection with a Change in Control, all outstanding
Performance Shares, together with any Dividend Equivalents for the period for
which such Performance Shares have been outstanding, shall be paid in accordance
with Section 11(e) of the Plan.   16.   In the event of any change in the
outstanding shares of Common Stock of the Company or the occurrence of certain
other events as described in Section 12 of the Plan, an equitable adjustment of
the number of Performance Shares covered by this Agreement shall be made as
provided in the Plan.   17.   Notwithstanding the above, your FY2005 Awards are
granted subject to forfeiture for breach of the following conditions
(“Conditions”):

  (i)   You continue to comply with the terms of your employee patent and trade
secret agreement and with all other agreements with, and obligations and duties
to, the Company and any of its subsidiaries and affiliates (hereafter, together,
the “Company”), and refrain from conducting yourself in a manner adversely
affecting the Company;

  (ii)   Without limiting the generality of the foregoing, while employed by the
Company and for two years following your separation from service with the
Company for any reason, you

  •   Refrain from engaging in any activity in competition with the Company,
whether as an officer, director, employee, consultant, advisor, agent, broker,
independent contractor, partner, shareholder, or principal of any corporation,
partnership, proprietorship, firm, association, person or other entity;

  •   Refrain from undertaking any employment or activity wherein the
fulfillment of your duties would call upon you to reveal, to make judgments on,
or otherwise to use any “confidential information” of the Company;

  •   Refrain from directly or indirectly, either for yourself or for any other
person, diverting or taking away or attempting to divert or take away (or
calling on or soliciting or attempting to call on or solicit) any of the
Company’s customers or patrons, including but not limited to those upon whom you
called or whom you solicited or with whom you became acquainted while employed
by the Company; and

  •   Refrain from directly or indirectly or by action in concert with others,
inducing or influencing (or seeking to induce or influence) any person who is
engaged (as an employee, agent, independent contractor, or otherwise) by the
Company to terminate his or her employment or engagement.

 

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    If, in the Committee’s sole discretion, it is determined that you have
breached any of the foregoing Conditions, after notice by registered mail
directed to your last known address, all of your outstanding awards under the
Plan, including any unexercised Options and any Restricted Shares which are
still subject to restriction will be completely terminated. Notwithstanding any
other provisions hereof, following or in connection with a Change in Control,
the foregoing Conditions shall lapse and be of no further force or effect.  
18.   Neither your FY2005 Awards, this Award Agreement, nor the Plan constitute
a contract of employment; nor do they guarantee your continued employment for
any period required for all or any of your Options to vest or become
exercisable.

 

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ATTACHMENT I

ORONA Performance Schedule

The following schedule will be used to determine the earnout for each of the
three cycles of the fiscal year 2005 Performance Share award.

      ORONA   Earnout Factor
12%
  200%
11%
  100%
10.5%
  50%
10%
  35% subject to further reduction at
 
  the discretion of the MD&CC