Exhibit 10.4
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Deferred Compensation Plan
for Directors*/
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1. Name and Purpose
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The name of this plan is the Air Products and Chemicals, Inc. Deferred
Compensation Plan for Directors (the "Plan"), the purpose of which is to
provide
(a) A vehicle for Air Products and Chemicals, Inc. (the "Company") to
compensate persons serving as Directors in the form of Company
equity securities to align the interests of Directors with those of
the Company's shareholders ("Mandatory Deferrals"); and
(b) The opportunity for Directors who so choose to defer compensation
earned as a Director or otherwise in connection with his or her
services in connection with the business of the Company and its
subsidiaries ("Elective Deferrals").
2. Term
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The Plan was adopted effective as of 1 January 1980. Section 9 was
revised effective as of 25 January 1990. Section 8 and Section 9 were
revised effective as of 15 October 1992. Sections 4, 6, 8, and 9 were
revised effective as of 19 October 1995. Sections 1, 4, 5, 7, 8, and 9
were amended effective 21 November 1996. Sections 2, 7, 8, 9(a), 9(b),
17, the first paragraph of 9(c), and the Election Form (Exhibit A) were
amended effective 19 May 1998. Section 11 was amended effective 20
September 2001.
3. Participants
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Any Director of the Company who is not an employee of the Company or of a
subsidiary of the Company is eligible to participate in the Plan.
4. Mandatory Deferrals
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There shall be established for each Director who has never been employed
by the Company (a "Nonemployee Director"), an account under the Air
Products
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*/ Adopted 1 January 1980; amended 25 January 1990, 15 October 1992,
- - 19 October 1995, 21 November 1996, 19 May 1998, and 20 September 2001.
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Stock Account described under section 5(b) below to which shall
be credited all compensation which is to be paid by the Company in the
form of deferred stock units in accordance with the Compensation Program
for Nonemployee Directors applicable for calendar year 1997 and later
periods (the "Program"); and for each such Nonemployee Director who had
not served as a Director for at least six years as of January 1, 1997,
the actuarial present value of his or her prorated accrued pension (the
"Pension Amount") under the Pension Plan for Directors (the "Pension
Plan") in connection with the termination of said Pension Plan.
Dollar amounts to be so credited shall be converted into deferred stock
units in the manner described under Section 5(b) below on the quarterly
or other specified crediting date for such 1997 and later compensation,
and on 21 November 1996, as to the Pension Amount; and using such date(s)
as the valuation date(s) for determining Fair Market Value.
5. Elective Deferrals
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Directors may elect to defer receipt of all or a specified portion of the
compensation (exclusive of expense reimbursements) otherwise payable to
him or her in cash for serving on the Board of Directors of the Company,
attending meetings or committee meetings thereof or performing other
services in connection with the business of the Company and its
subsidiaries. Such compensation will be credited on the date the
compensation is otherwise payable, to one or both of the following
hypothetical investment accounts as directed by the Director:
(a) An account deemed to earn interest at rates established on the
first business day of each calendar quarter based upon the
published average long-term yields of corporate bonds of "A" rated
Industrial Companies appearing in Moody's Bond Survey or an
equivalent Bond Rating Service on such day (the "Interest
Account"); and
(b) An account (the "Air Products Stock Account") deemed to be invested
in Air Products and Chemicals, Inc. common stock, par value $1.00
("common stock"). The Company shall credit the Air Products Stock
Account with that number of units (including fractions) obtained by
dividing the amount of such deferred compensation by the Fair
Market Value of a share of common stock on the date credited to
the Air Products Stock Account (with the units thus calculated
herein referred to as "deferred stock units"). For purposes of the
Plan, Fair Market Value of a share of common stock on any date
(the "valuation date") shall be 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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or, if no sales were quoted on such date, on the most recent
preceding date on which sales were quoted.
Nonemployee Directors who had served for six years or more within the
meaning of the Pension Plan as of January 1, 1997, may elect to have the
actuarial present value of his or her accrued pension benefit under the
Pension Plan credited to the Air Products Stock Account on or before
December 31, 1996. Such Pension Amount shall be credited and converted to
deferred stock units in the manner described in Section 5(b) above, as of
the business day the Company's Corporate Secretary's Office receives an
Election Form therefor (by mail or fax); and using such date as the
valuation date for determining Fair Market Value.
6. Earnings on Plan Accounts
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Each participant's Plan account will be credited on behalf of such
participant with interest on deferred compensation credited to the
Interest Account, and with dividend equivalents on deferred compensation
credited to the Air Products Stock Account on behalf of such participant,
as provided below, until the date of payment to the Director (which shall
be deemed to be December 31 of the year preceding payment unless payment
is made because of death or a Change in Control, in which event the date
of payment shall be deemed the date of death or the date of termination
of service as a Director following the Change in Control, respectively).
(a) Earnings on Interest Account. Interest shall be compounded
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quarterly and earned from the datecompensation is credited to the
Account to the date of payment to the Director.
(b) Earnings on Air Products Stock Account. Earnings shall be credited
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quarterly in an amount equal to the dividends payable during the
quarter just ended with respect to that number of shares of Air
Products Stock equal to the number of deferred stock units
credited to the Air Products Stock Account during such quarter.
The amount so credited shall then be converted into deferred stock
units in the manner described under Section 4(b) above using the
quarterly crediting date as the valuation date for determining
Fair Market Value.
7. Time and Manner of Making Elective Deferrals
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An election to defer compensation must be made by a Director prior to the
time such compensation is earned. An election shall continue in effect
until the end of the participant's service to the Company as a Director
and otherwise in connection with its business or until the Company is
notified in writing of the revocation or modification of the election,
whichever shall occur first.
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A participant may elect, modify or revoke a prior election to defer
compensation by giving written notice to the Company in a form
substantially similar to the Election Form attached hereto as Exhibit A
(the "Election Form"). Such Election Form shall specify:
(a) The amount or percentage of compensation to be deferred beginning
on a future date specified in the notice until such notice is
revoked or modified as to future compensation (the "Elective
Deferred Compensation Amount");
(b) The percentage of the Elective Deferred Compensation Amount to be
credited to the Interest Account and the percentage to be credited
to the Air Products Stock Account; and
(c) The timing of payment, i.e., either a lump-sum payment or a
specified number of consecutive annual installment payments (not
to exceed ten) of all Elective Deferred Compensation Amounts, and
the year in which the lump-sum payment is to be received or the
first annual installment payment is to commence.
Any modification or revocation of a prior election described in
Section 7(a) or 7(b) above shall relate only to future compensation, and
shall not apply to any amounts previously credited to the participant's
Plan account.
8. Timing of Payment of Mandatory Deferrals
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The amount of each Mandatory Deferral (the "Mandatory Deferred
Compensation Amount") will be paid as a lump sum in the first year after
the year in which service as a Director ends unless the Director has an
Elective Deferral in effect at the time of crediting the Mandatory
Deferral, in which case the Director's election as to time of payment of
the Elective Deferral will also govern the time of payment of the
Mandatory Deferral.
9. Payment of Deferred Compensation
--------------------------------
No payment may be made from the participant's Plan account in respect of
Elective Deferred Compensation Amounts or Mandatory Deferred Compensation
Amounts (together, "Deferred Compensation Amounts") except as provided
below.
(a) Changes in Election of Timing of Payment. A participant may change
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his or her election in regard to the timing of payment of his or
her Deferred Compensation Amount as described in Section 7(c)
above, by so specifying in an Election Form. Such a change in
election of timing of payment will become effective one year from
the date the Election Form is received by
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the Company unless payments under a prior election commence before
such effective date, in which case the new election will expire
and the prior election will control the timing of payment of all
Deferred Compensation Amounts. Such a change in election of timing
of payment, when effective, shall supersede all prior elections
and shall apply to all of the participant's prior and future
Deferred Compensation Amounts, until a later election becomes
effective.
(b) Payment Following Termination of Service. The value of each
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Deferred Compensation Amount credited to the Interest Account of a
participant's Plan account is payable in cash, and the value of
each Deferred Compensation Amount credited to the Air Products
Stock Account is payable by delivery of a share of common stock
for each deferred stock unit credited to the participant's Plan
account, in either case in a lump sum or in annual installments,
in accordance with the participant's election.
All payments from Plan accounts must be completed by the tenth
year after the year in which service as a Director terminates. All
payments will be made in January of the applicable year or as soon
thereafter as reasonably possible. If annual installments are to
be paid, the amount of the first payment shall be a fraction of
the value of the participant's Plan account attributable to the
particular Deferred Compensation Amount as of the December 31
preceding payment, the numerator of which is one and the
denominator of which is the total number of such installments
elected. The amount of each subsequent payment shall be a fraction
of the value as of the December 31 preceding each subsequent
payment, the numerator of which is one and the denominator of
which is the total number of installments elected minus the number
of installments previously paid as to such Deferred Compensation
Amount. The number of shares of common stock to be delivered in
payment from the Air Products Stock Account shall be equal to the
number of deferred stock units represented by the payment owed,
calculated as aforesaid, rounded up to the next whole share of
common stock.
(c) Accelerated Payment. Notwithstanding the deferral period and
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timing of payment determined in accordance with Sections 9(a) and
(b) above, the participant's Plan account shall be paid on an
accelerated basis as follows under the circumstances described
below (including, under the circumstances described in Section
9(c)(i) or (iii) below, any deferred stock units which may not yet
have vested as provided by the applicable Program).
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(i) Payment on Death. In the event of a participant's death,
the value of his or her Plan account (including interest
and dividend equivalents) determined as of the date of
death shall be paid in a single cash lump sum to the
participant's estate or designated beneficiary on the
earlier of the January 15 or July 15 following such date or
as soon thereafter as reasonably possible. The amount of
any cash payment in respect of deferred stock units in the
Air Products Stock Account shall be determined by
multiplying the number of such units, including fractional
units, by the Fair Market Value of a share of common stock
as of the date of death.
(ii) Change in Legal Circumstances. In the event of a Change in
Legal Circumstance, the Nominating and Corporate Governance
Committee of the Board of Directors may, in its sole
discretion, authorize the immediate distribution of the
Plan account or appropriate modification to the terms of
deferral of a participant domiciled outside of the United
States. A Change in Legal Circumstances shall be deemed to
occur when, due to a change in the laws or regulations of
the United States or the country of domicile, the terms of
deferral operate as a disincentive to service on the Board
or otherwise become inconsistent with the purpose of the
Plan.
(iii) Change in Control. In the event of a "Change in Control" of
the Company followed by a participant's termination of
service as a Director of the Company, the value of his or
her Plan account (including interest and dividend
equivalents) determined as of the date of termination of
service as a Director following or in connection with the
Change in Control, shall be immediately due and payable to
the participant in a single cash lump sum. The amount of
any cash payment in respect of deferred stock units in the
Air Products Stock Account shall be determined by
multiplying the number of such units, including fractional
units, by the Fair Market Value of a share of common stock
as of such date of termination of service.
The term "Change in Control" shall mean the first to occur
of any one of the events described below:
(x) Stock Acquisition. Any "person" (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934 (the "Act")), other than the
Company or a corporation, a majority of whose
outstanding stock entitled to vote is owned, directly
or indirectly, by the Company, or a trustee of an
employee benefit plan sponsored solely by the Company
and/or
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such a corporation, is or becomes, other than by
purchase from the Company or such a corporation, the
"beneficial owner" (as such term is defined in
Rule 13d-3 under the Act), directly or indirectly, of
securities of the Company representing 20% or more of
the combined voting power of the Company's then
outstanding voting securities. Such a Change in
Control shall be deemed to have occurred on the first
to occur of the date securities are first purchased by
a tender or exchange offeror, the date on which the
Company first learns of acquisition of 20% of such
securities, or the later of the effective date of any
agreement for the merger, consolidation or other
reorganization of the Company or the date of approval
thereof by a majority of the Company shareholders, as
the case may be.
(y) Change in Board. During any period of two consecutive
years, individuals who at the beginning of such period
were members of the Board of Directors cease for any
reason to constitute at least a majority of the Board
of Directors, unless the election or nomination for
election by the Company's shareholders of each new
director was approved by a vote of at least two-thirds
of the directors then still in office who were
directors at the beginning of the period. Such a
Change in Control shall be deemed to have occurred on
the date upon which the requisite majority of
directors fails to be elected by the shareholders of
the Company.
(z) Other Events. Any other event or series of events
which, notwithstanding any other provision of this
definition, is determined, by a majority of the
outside members of the Board of Directors of the
Company serving in office at the time such event or
events occur, to constitute a change in control of
the Company for purposes of this Plan. Such a Change
in Control shall be deemed to have occurred on the
date of such determination or on such other date as
such majority of outside members of the Board shall
specify.
(d) Miscellaneous Provisions.
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(i) Withholding of Taxes. The rights of a participant to
payments under this Plan shall be subject to the Company's
obligations at any time to withhold income or other taxes
from such payments including, without limitation, by
reducing the number of shares of common stock to be
distributed in payment of deferred stock units by the
number of shares equal in value to the amount of such taxes
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required to be withheld, using the date of issuance of the
shares as the valuation date for determining Fair Market
Value.
(ii) Rights as to Common Stock. No participant with deferred
compensation credited to the Air Products Stock Account
shall have 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
payment of such deferred compensation. No shares of common
stock shall be issued and delivered 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 Act and of the Securities Act of 1993, as
amended, and the applicable requirements of the exchanges
on which the Company's common stock may, at the time, be
listed. Distributions of shares of common stock in payment
under this Plan 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, or pursuant to delegations from, the Board
of Directors.
(iii) Adjustments to Avoid Dilution. In the event of any change
in the common stock of the Company by reason of any stock
dividend or split, recapitalization, merger, consolidation,
combination or exchange of shares, or a rights offering to
purchase common stock at a price substantially below fair
market value, or other similar corporate change, including
without limitation in connection with a Change in Control
of the Company, the value and attributes of each deferred
stock unit shall be appropriately adjusted consistent with
such change to the same extent as if such deferred stock
units were issued and outstanding shares of common stock of
the Company, so as to preserve, without increasing, the
value of Plan deferred compensation credited to the Air
Products Stock Account. Such adjustments shall be made by
the Board of Directors and shall be conclusive and binding
for all purposes of the Plan.
10. Participant's Rights Unsecured
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The right of any participant to the payment of deferred compensation and
earnings thereon under the Plan shall be an unsecured and unfunded claim
against the general assets of the Company.
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11. Nonassignability
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The right of a participant to the payment of deferred compensation and
earnings thereon under the Plan shall not be assigned, transferred,
pledged or encumbered or be subject in any manner to alienation or
anticipation, except by gift to the director participant's family
member(s) or to trust(s) of which such family member(s) are beneficiaries
and subject to the administrative procedures and conditions set forth in
the "Administrative Procedures Regarding Transfers of the Right to
Payment of Deferred Compensation dated 20 September 2001" attached hereto
as Exhibit B; to his or her designated beneficiary; or by will or the
laws of descent and distribution.
12. Statement of Account
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Statements will be sent to participants during February as to the value
of their Plan accounts as of the end of December of the previous year.
13. Administration
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The Administrator of this Plan shall be the Corporate Secretary of the
Company. The Administrator shall have authority to adopt rules and
regulations for carrying out the Plan and to interpret, construe and
implement the provisions thereof.
14. Business Days
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If any date specified herein falls on a Saturday, Sunday or legal
holiday, such date shall be deemed to refer to the next business day
thereafter.
15. Amendment and Termination
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This Plan may at any time be amended, modified or terminated by the Board
of Directors of the Company. No amendment, modification or termination
shall, without the consent of a participant, adversely affect such
participant's rights with respect to amounts theretofore accrued in his
or her deferred compensation account.
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16. Notices
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All notices to the Company under this Plan shall be in writing and shall
be given as follows:
Corporate Secretary
Air Products and Chemicals, Inc.
7201 Hamilton Boulevard
Allentown, PA 18195-1501
17. Governing Law
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This Plan shall be governed by the laws of the Commonwealth of
Pennsylvania and shall be construed for all purposes in accordance with
the laws of said state without giving effect to principles of conflicts
of laws.
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