Document:

exv10w7

Exhibit 10.7

AIRGAS, INC.

EXECUTIVE BONUS PLAN

Purpose of the Plan

Airgas, Inc. (the “Company”) believes in providing incentives to attract, retain and reward
Executive Officers who are responsible for providing leadership to the Company in attaining
established business objectives.

The purpose of the Airgas, Inc. Executive Bonus Plan (the “Plan”) is to align management’s efforts
with the strategic goals of the Company through competitive annual incentive opportunities. The
Plan will be effective from April 1, 2008 to March 31, 2009 (the “Plan Year”) and will
automatically renew upon the anniversary date of the Plan unless terminated by the Governance and
Compensation Committee of the Board of Airgas, Inc. (the “Committee”).

Eligibility

The Chief Executive Officer and Executive Officers (“Participants”) are eligible for participation
in the Plan provided that such officers are employed by the Company on the date Awards (as defined
below) are paid pursuant to the Plan (unless previously terminated due to retirement, disability or
death as more fully described herein). For purposes of the Plan, an Executive Officer is defined
as those employees who constitute “officers” for the purposes of Section 16 of the Securities
Exchange Act of 1934, and any other employee deemed to be a “covered employee” within the meaning
of Section 162(m) of the Internal Revenue Code of 1986, as amended, as such section may be amended.

Target Awards

Participants in the Executive Bonus Plan will be eligible for an annual cash incentive award (the
“Award”) based on the achievement of predetermined goals as set forth in the Performance
Measurement section of the Plan. Participants will have an assigned Award target equal to a
specific percentage of salary earned during the Plan Year. For this purpose, salary is defined as
the base pay an individual earns during the Plan Year. An annual Award target is determined based
on the Participant’s position in the organization. The maximum Award that may be paid in any
single year to any Participant is $1,500,000.

Performance Measurement

All Awards payable shall be based solely upon the achievement of specific performance targets based
on one or more of the following criteria:

	•	 	Earnings per share (EPS)
	 
	•	 	Return on capital (ROC)
	 
	•	 	Return on average capital employed (RACE)
	 
	•	 	Earnings before interest, taxes, depreciation and amortization (EBITDA)
	 
	•	 	Sales
	 
	•	 	Return on equity (ROE)
	 
	•	 	After tax cash flow (ATCF)
	 
	•	 	Free cash flow (FCF)
	 
	•	 	Operating expense as a percentage of sales
	 
	•	 	Gross profit
	 
	•	 	Days purchases outstanding (DPO)
	 
	•	 	Operating income (OI)
	 
	•	 	Days sales outstanding (DSO)

 

 

	•	 	Working capital

Final Award payments will vary based on the level of achievement measured against pre-determined
performance targets. Depending upon a Participant’s position and responsibilities, these various
performance measures, assessed based on different weightings, will determine the Award.

The Committee will establish the specific performance targets for the Plan within each of the above
criteria within 90 days after the beginning of the respective Plan Year.

Funding

The Plan will be self-funding, as profitability targets will be established net of target Award
payments under the Plan. Therefore, achievement of profitability targets will ensure that the Plan
has funded itself.

Executive Bonus Plan Payment

At the end of the Plan Year, after all financial results have been finalized, the actual Award
payment will be determined. The Award will be paid in cash no later than 75 days following the end
of the Plan Year.

Administration of the Plan

The Committee shall have full power to administer and interpret the Plan and, in its sole
discretion, may establish or amend rules of general application for the administration of the plan
and may amend or terminate the Plan at any time.

Partial Year Eligibility

Participants who are eligible for the Plan for a portion of the year will receive a prorated Award
based on the base salary earned while they are eligible for the Plan or such other arrangement as
agreed upon when hired.

	•	 	New hires
	 
	 	 	Newly hired Participants will immediately be eligible for the Plan.

Base salary will be accumulated from the date of hire to the end of the Plan Year, unless
eligibility ceases prior to that date.

	•	 	Transfers

For Participants who transfer from one job or employee status to another, eligibility will
depend on their award eligibility before and after transferring.

If a Participant transfers from a position that is not Plan eligible to a position that is
eligible for an Award under the Plan, the Award will be prorated based on the time in the Plan
eligible position. All calculations are done using Plan Year-end financial data.

If a Participant transfers from a position that is eligible for an Award under the Plan to a
position that is not Plan eligible, the Award will be prorated based on the length of time in
the Plan eligible position. All calculations are done using Plan Year-end financial data.

If a Participant transfers from one position that is eligible for an Award under the Plan to
another position that is eligible for an Award under the Plan, participation in the Plan will
continue
uninterrupted. However, if the transfer involves a move that will change the weightings used
to

 

 

determine a Participant’s Award, the Award calculation will be based on the pro-rated time
spent in each position. All calculations will be done using Plan Year-end data.
Accountabilities must be separately established and assessed for each position.

	•	 	Promotions

If a Participant is promoted during the Plan Year, new accountabilities must be established to
reflect the new position.

	•	 	Terminations

Employees who are not employed by the Company on the date the Award is paid are not deemed to
be Participants and therefore are ineligible to receive any Award under the Plan, except for
the following circumstances:

Participants who retire, become disabled or die during the Plan Year will be eligible for a
prorated Award. The Award will be calculated from the date when they become eligible,
normally the beginning of the Plan Year to the date of retirement, disability or death.

	•	 	Leave of absence

If a Participant is on a leave of absence at the end of the Plan Year, he or she will be
eligible for an Award provided that he or she returns to work as an active employee. Any
Award paid will be prorated based upon the length of time the Participant was actively working
during the Plan Year. The calculation will be made using Plan Year-end financial data. The
Award payment will be made in the next regularly scheduled payroll cycle at the end of the
Participant’s first month of employment following his or her return from leave of absence.

If a Participant is on a leave of absence during the Plan Year and returns during the Plan
Year, he or she will be eligible for an Award. Any Award paid will be prorated based upon the
length of time a Participant was actively working during the Plan Year. The calculation will
be made using Plan Year-end financial data.

Tax Considerations and Withholding

Participants will be required to report taxable income in the year the Award is received. The
Company will withhold taxes in the appropriate amount on all payouts.

Bankruptcy

In the event that The Company declares bankruptcy, the Committee, at its discretion, may
immediately discontinue the Plan. In the event that the Plan is discontinued, all participants
will forfeit the right to any payments under the Plan.

Future Employment

Payment of an Award under the Plan does not imply a contractual agreement to extend or continue
employment of a Participant beyond receipt of the Award.exv10w12

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.

 

 

          (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.

 

 

          (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

 

 

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:

 

 

          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

 

 

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.

 

 

          (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

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