EX-10.1:



 






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.




 









 







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:	 	 
	

	 	 	 	

	

	 	 	 	          John P. Jones III






ACKNOWLEDGED AND AGREED this




_____ day of ____________________, 200__.




_____________________________________




      «Name»




Exhibit




 









 





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.




 









 












	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,





 









 











	   	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




 









 






	   	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.




 









 






	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.




 









 












	   	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.





 









 





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