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Form of Severance Agreement

This is an actual contract between AIR Products & Chemicals and AIR Products And Chemicals.

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Sectors: Chemicals, Materials+and+Construction
Governing Law: Pennsylvania, View Pennsylvania State Laws
Effective Date: November 20, 2003
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Exhibit 10.25


SEVERANCE AGREEMENT


THIS AGREEMENT by and between Air Products and Chemicals, Inc., a Delaware corporation (hereinafter "Air Products" or the "Company"), with its principal office in Allentown, Pennsylvania, and John P. Jones III (the "Executive"), an individual residing at 220 North Main Street, Allentown, Pennsylvania, 18104, dated and effective as of November 20, 2003.


WHEREAS, the Executive is the Chairman, Chief Executive Officer and President of the Company and has made and is expected to continue to make major contributions to the short and long term profitability, growth, and financial strength of the Company; and


WHEREAS, the Management Development and Compensation Committee of the Board of Directors of Air Products has determined that it is in the best interests of the Company and its shareholders to take appropriate steps to encourage the continued attention and dedication of the Executive to his assigned duties without distraction; and


WHEREAS, in consideration of the Executive's continued employment with the Company, the Company desires to provide the Executive with certain compensation and benefits set forth in this Agreement to ameliorate the financial and career impact on the Executive were the Executive's employment with the Company to be terminated under certain circumstances.


NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:


1. Certain Defined Terms. In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement with initial capital letters:


(a) "Benefit" or "Benefits" means any or all of the benefits that the Executive is entitled to receive pursuant to Section 2 of this Agreement.


(b) "Board" means the Board of Directors of Air Products.


(c) "Bonus" means 100% of the midpoint target bonus for the Executive's salary grade, determined as of the Executive's Employment Termination Date under the grant guidelines for the Air Products Annual Incentive Plan or similar successor or substitute annual incentive plan or program.


(d) "Cause" means:


(i) the willful and continued failure by the Executive to substantially perform his duties with the Company (other than any such failure resulting from his


Disability or occurring after the issuance by the Executive of a notice of Constructive Termination) over a period of not less than thirty days after a demand for substantial performance is delivered to the Executive by the Board which identifies the manner in which the Board believes that the Executive has not substantially performed his duties; or


(ii) the willful misconduct of the Executive materially and demonstrably injurious to the Company (including ,without limitation, any willful breach by the Executive of Appendix B of this Agreement as if in effect at the time the willful misconduct took place); provided that no act or failure to act on the Executive's part will be considered willful if done, or omitted to be done, by him in good faith and with reasonable belief that his action or omission was in the best interest of the Company.


(e) "Change in Control" means "change in control" as such term is defined in that certain severance agreement between the Executive and the Company dated September 16, 1999 (the "CIC Agreement").


(f) "Code" means the Internal Revenue Code of 1986, as amended.


(g) "Committee" means the Management Development and Compensation Committee of the Board, that may act on behalf of the Company with respect to the Agreement as provided herein.


(h) "Company" means Air Products and Chemicals, Inc. The term "Company" shall include any Subsidiary or any successor to Air Products such as a corporation succeeding to the business of Air Products or any Subsidiary, by merger, consolidation or liquidation, or purchase of assets or stock or similar transaction.


(i) "Constructive Termination" means the termination of the Executive's employment with the Company by the Executive as a result of one of the following events, without the Executive's express written consent unless the event is remedied by the Company within 30 days after receipt of written notice thereof given by the Executive:


(i) A material change in or failure to hold the titles and positions of Chairman of the Board and Chief Executive Officer, other than a circumstance where the Executive continues to serve as a director but relinquishes the title and position of Chairman of the Board in order for the Company to comply with applicable law or conform to stock exchange listing standards;


(ii) A material reduction in overall compensation opportunity, taking into account combined Salary and Bonus and Long-Term Incentive Plan compensation as in effect on the date of this Agreement or thereafter, if higher; or


(iii) A termination of or a material adverse amendment to this Agreement.


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In no event shall the termination of the Executive's employment with the Company on account of death, voluntary resignation other than on account of Constructive Termination, Disability or Cause be deemed to be a Constructive Termination.


A termination of employment by the Executive on account of Constructive Termination shall be effectuated by giving the Company written notice of the termination, setting forth in reasonable detail the specific conduct of the Company that constitutes Constructive Termination and the specific provision(s) of this Agreement on which the Executive relies. A termination of employment by the Executive on account of Constructive Termination shall be effective as of the first business day following the end of the Company's 30-day cure period, unless a later date is agreed upon by the Company and the Executive.


(j) "Disability" means the Executive incurs a permanent disability within the meaning of the Company's long-term disability plan.


(k) "Employment Termination Date" means the date specified or agreed to by the Executive or the Committee in writing, as applicable, on which the active employment relationship between the Executive and the Company is to be and is in fact terminated.


(l) "Fiscal Year" means each period commencing on October 1 and ending on the subsequent September 30 during which this Agreement is in effect.


(m) "Involuntary Termination" means the termination of the Executive's active employment relationship with the Company either: (i) by the Company for any reason other than Cause, death, or Disability not later than the thirtieth day following written notice of such termination by the Company to the Executive; or (ii) on account of a Constructive Termination.


(n) "Long-Term Incentive Plan" means the Air Products Long-Term Incentive Plan approved by Air Products' shareholders most recently on January 23, 2003, together with all predecessor and similar successor or substitute intermediate and/or long-term incentive compensation plan or program.


(o) "Salary" means an amount equal to the annual rate of the Executive's base salary payable to the Executive in all capacities with the Company and its Subsidiaries or affiliates for the Fiscal Year in which the Executive's Employment Termination Date occurs.


(p) "Subsidiary" means any corporation in which the Company owns, directly or indirectly, more than 50% of the voting securities


2. Involuntary Termination. In the event that the Executive's employment is terminated on account of an Involuntary Termination, upon the Executive's Employment Termination Date and his satisfaction of the conditions specified in Section 3, the


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Executive shall be entitled to receive the Benefits described in (a) through (c) below in accordance with the payout provisions of Section 4:


(a) Cash Benefits.


(i) a cash severance Benefit equal to three times the aggregate of the Executive's Salary plus Bonus,


(ii) an amount in lieu of the Executive's bonus which would have been paid under the Air Products Annual Incentive Plan or similar successor or substitute annual incentive plan or program for the Fiscal Year in which the Employment Termination Date occurs, equal to the Bonus multiplied by a fraction, the numerator of which is the number of days in the current Fiscal Year through the Executive's Employment Termination Date, and the denominator of which is 365,


(iii) any accrued but unpaid vacation pay, any similar unpaid items that have accrued and to which the Executive has become entitled as of his Employment Termination Date, including declared but unpaid bonuses and unreimbursed employee business expenses,


(iv) a $40,000 stipend to cover miscellaneous transition expenses including outplacement assistance and legal fees incurred at the time of or in connection with the Involuntary Termination, and


(v) supplemental pension benefits paid by the Company equal to the excess of (i) those pension benefits calculated by adding three years of service to the Executive's actual service credited for benefit accrual purposes under the the Company's Pension Plan for Salaried Employees and Supplementary Pension Plan (together, the "Pension Plans") and assuming that the Executive had satisfied as of the Employment Termination Date the age and service requirements for any early retirement subsidy available under the Pension Plans over (ii) the Executive's accrued vested pension benefits under the Pension Plans as of the Employment Termination Date. The supplemental pension benefits payable hereunder shall be paid at the same time and in the same form as the Executive elects for his Supplementary Pension Plan benefit.


(b) Long-Term Incentive Plan Benefits. In addition to the Benefits payable under (a) above, the Executive's outstanding Long-Term Incentive Plan awards shall be treated as follows:


(i) All stock options and stock appreciation rights which are outstanding as of the Executive's Employment Termination Date shall continue to vest in accordance with their normal vesting schedule (if not fully vested as of the Employment Termination Date) and shall remain in effect for the remainder of their stated term, as set forth in the agreements governing such awards, in each case as if the Executive had continued in employment following the Employment Termination Date; provided, however, that the number of shares subject to any stock option granted less than one year


4 prior to the Employment Termination Date shall be reduced by multiplying the number of shares by a fraction the numerator of which is the number of days worked in the Fiscal Year in which the Employment Termination Date occurs and the denominator of which is 365.


(ii) All unearned performance shares or other awards with performance-based vesting or earnout shall earn out or vest consistent with the decision made by or on behalf of the Company for other senior executives for the relevant cycle and shall be paid out promptly following earn-out or vesting (or, if later, the end of the revocation period of the release described in Section 3).


(iii) All awards, including career shares and earned but deferred performance shares, which are subject to time-based vesting or other non-performance-based conditions, shall be paid out promptly following the Executive's Employment Termination Date (or, if later, the end of the revocation period of the release described in Section 3).


(c) Medical Benefits. For the period described in the next sentence, the Company will provide to the Executive and his dependents benefits equivalent to those provided by the Company under the medical plan in which the Executive was participating on the Employment Termination Date; provided, however, that the Company may elect to pay the Executive cash in lieu of coverage under such plans or programs in an amount equal to Executive's after-tax cost of continuing such coverage, where such coverage may not be continued (or where such continuation would adversely affect the tax status of the plan or program pursuant to which the coverage is provided). The period during which any of these benefits shall be provided shall commence on the day after the revocation period for the release required by Section 3 expires, but retroactive to the Employment Termination Date, and shall continue until the earliest of (i) the Executive's death, (ii) the third anniversary of the Executive's Employment Termination Date, or (iii) the date on which any such benefit would otherwise have ceased to be provided to the Executive under any such plans or programs, as in effect on the Executive's Employment Termination Date had the Executive not incurred an Employment Termination Date. In the event of the Executive's death during the period specified above, benefits in respect of the Executive or the Executive's beneficiaries shall be provided in accordance with the terms of each of the plans or programs applicable to active employees of the Company. Any continuation of health benefits pursuant to this subparagraph shall not run concurrent with any continuation rights owed to the Executive pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), and for purposes of applying COBRA with respect to the Executive's coverage under any group health plan, the end of coverage under this subparagraph shall be deemed to be the date of a qualifying event resulting from the termination of a covered employee.


3. Conditions to Entitlement to Benefit. To be eligible to receive any Benefits under this Agreement after the Executive's Employment Termination Date has been set, the Executive must (a) continue in his then current office and perform such duties for the


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Company as are typically related to the Executive's position (or such other position as the Committee reasonably requests) including identifying, recruiting and/or transitioning the Executive's successor, in all events performing all assigned duties in the manner reasonably directed by the Committee, in its sole discretion, but consistent with his title and position with the Company, and cease his employment on, and not retire before, the Employment Termination Date; (b) execute a release and discharge (without revocation) of the Company, in substantially the form attached hereto as Appendix A, from any and all claims, demands or causes of action (other than as provided in said Appendix A), within 21 days of its presentation to the Executive; and (c) execute the Noncompetition, Nonsolicitation, and Nondisparagement Agreement that extends for the three-year period following the Executive's Employment Termination Date in substantially the form attached hereto as Appendix B, with such changes therein as the Committee shall reasonably determine to be required by applicable law or regulation, or as otherwise mutually agreed. Benefits due hereunder shall be paid in accordance with Section 4 provided that the Executive has complied in all respects with the requirements of this Section 3. On the date that the Executive's release becomes irrevocable, the Company shall execute a release in favor of the Executive, substantially in the form attached hereto as Annex 1, with such changes therein as the Committee shall reasonably determine to be required by applicable law.


4. Method of Payment. The cash Benefits to which the Executive is entitled, as determined pursuant to Section 2(a) hereof, shall be paid in a lump sum following the Executive's Employment Termination Date, subject to all employment and withholding taxes applicable to the type of payments made. In general, payments shall be made within 30 days after the Executive's Employment Termination Date or, if later, after the expiration of any revocation period for the release signed by the Executive pursuant to Section 3. Long-Term Incentive Plan awards, referred to in Section 3, will be paid in the form, and subject to applicable withholding, as provided in the respective award agreements.


5. Death or Disability.


(a) If the Executive incurs a Disability or dies before the Employment Termination Date has been set, no payments or other benefits will be due and owing under this Agreement to the Executive or, in the case of his death, to his estate or beneficiary.


(b) If the Executive incurs a Disability or dies after his Employment Termination Date has been set but not attained, the Committee shall cause any payments and benefits due under this Agreement to be paid to the Executive or, in the case of his death, to the Executive's designated beneficiary or to his estate; provided, however, that if the Executive dies after he has retired prior to attaining the Employment Termination Date, no payments and benefits shall be due and owing under this Agreement to the Executive's designated beneficiary, his estate, or any other person. For this purpose, "retire" means to have separated from employment and begun to receive an immediate pension benefit under a Company-sponsored defined benefit pension plan.


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The Executive's beneficiary designation shall be made in the manner, and at the time, prescribed by the Committee in its sole discretion. In the absence of an effective beneficiary designation hereunder, the Executive's estate shall be deemed to be the designated beneficiary.


6. Change in Control. In the event of a Change in Control of the Company, the CIC Agreement shall continue in full force and effect and this Agreement shall be null and void; and, if the Change in Control occurs after the Employment Termination Date has been set but before the Employment Termination Date, the C
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