<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Section
240.14a-11(c) or Section 240.14a-12
AIRGAS, INC.
(Name of Registrant as Specified In Its Charter)
Nancy D. Weisberg, Esquire
MCCAUSLAND, KEEN & BUCKMAN
Radnor Court
259 Radnor-Chester Road, Suite 160
Radnor, Pennsylvania 19087-5240
(610) 341-1000
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Aggregate number of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and determined):
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) Proposed maximum aggregate value of transaction:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) Total fee paid:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[ ] Fee paid previously with preliminary materials.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Form, Schedule or Registration Statement No.:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) Filing Party:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) Date Filed:
<PAGE> 1
Radnor Court
259 Radnor-Chester Road, Suite 100
Radnor, Pennsylvania 19087-5240
July 1, 1997
TO OUR STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held on Monday, August 4, 1997, at 8:30 a.m., Eastern Daylight Time, in the
Ballroom of the Four Seasons Hotel, 18th Street and Benjamin Franklin Parkway,
Philadelphia, Pennsylvania.
The accompanying Notice of Meeting and Proxy Statement describe the
matters to be acted upon during the Annual Meeting. You are welcome to
present your views on these items and other subjects related to the Company's
operations. Your participation in the activities of the Company is important,
regardless of the number of shares you hold.
To ensure that your shares are represented at the Annual Meeting, whether
or not you are able to attend, please complete the enclosed proxy and return
it to us in the postage-paid envelope.
I hope you will attend the Annual Meeting.
Sincerely,
/s/ Peter McCausland
________________________________
Peter McCausland
Chairman, President and Chief Executive
Officer<PAGE>
<PAGE> 2
AIRGAS, INC.
___________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 4, 1997
___________________________
TO THE STOCKHOLDERS:
The Annual Meeting of the Stockholders of Airgas, Inc. (the "Company"), a
Delaware corporation, will be held on Monday, August 4, 1997, at 8:30 a.m.,
Eastern Daylight Time, in the Ballroom of the Four Seasons Hotel, 18th Street
and Benjamin Franklin Parkway, Philadelphia, Pennsylvania, for the following
purposes:
1. To elect three Directors of the Company.
2. To vote upon a proposal to approve the 1997 Stock Option Plan.
3. To vote upon a proposal to approve the 1997 Directors' Stock Option
Plan.
4. To vote upon a proposal to ratify the selection of KPMG Peat Marwick
LLP as the Company's independent accountants for the fiscal year
ending March 31, 1998.
5. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Stockholders of record at the close of business on June 9, 1997, are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person, but whether or not you plan to attend, please promptly sign, date and
mail the enclosed proxy in the return envelope. Returning your proxy does not
deprive you of the right to attend the Annual Meeting and vote your shares
in person.
By Order of the Board of Directors,
/s/ Todd R. Craun
______________________________________
Todd R. Craun, Esq.
Secretary
Radnor, Pennsylvania
July 1, 1997
The Company's Annual Report for the year ended March 31, 1997,
accompanies this notice, but is not incorporated as part of the proxy
statement and is not to be regarded as part of the proxy solicitation
material.<PAGE>
<PAGE> 3
AIRGAS, INC.
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies at the direction of the Board of Directors of Airgas, Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held on August
4, 1997.
Stockholders of record at the close of business on June 9, 1997, will be
entitled to vote at the Annual Meeting. At the close of business on June 9,
1997, 67,353,359 shares of the Company's $0.01 par value common stock ("Common
Stock") were outstanding. A stockholder is entitled to one vote for each
share of Common Stock held by such stockholder. This Proxy Statement and the
enclosed form of proxy are being mailed to the Company's stockholders on or
about July 1, 1997.
Shares represented by a proxy in the accompanying form, unless previously
revoked, will be voted at the Meeting if the proxy is returned to the Company
properly executed and in sufficient time to permit the necessary examination
and tabulation before a vote is taken. A proxy may be revoked at any
time prior to its exercise by giving written notice to the Secretary of the
Company, by giving a later dated proxy, or by voting in person at the meeting.
Mere attendance at the Annual Meeting will not revoke the proxy. Any specific
instructions indicated on your proxy will be followed. Unless contrary
instructions are given, your proxy will be voted FOR each of the proposals
described in this Proxy Statement and in the discretion of the proxy holders
on such other business as may properly come before the Annual Meeting.
Abstentions are counted as shares present for purposes of determining the
presence or absence of a quorum for the transaction of business. Brokers
holding shares for beneficial owners must vote their shares according to the
specific instructions they receive from the owners. If specific instructions
are not received, brokers may vote these shares in their discretion, except if
they are precluded from exercising their voting discretion on certain
proposals pursuant to the rules of the New York Stock Exchange. In such a
case, the broker may not vote on the proposal absent specific voting
instructions. This results in what is known as a "broker non-vote." A broker
non-vote has the effect of a negative vote when a majority of the shares
issued and outstanding is required for approval of the proposal. A broker
non-vote has the effect of reducing the number of required affirmative votes
when a majority of the shares present and entitled to vote or a majority of
the votes cast is required for approval of the proposal. The election of each
nominee for director (Proposal 1) requires a plurality of votes cast. Brokers
have discretionary authority to vote on this proposal. Approval of the 1997
Stock Option Plan (Proposal 2), the 1997 Directors' Stock Option Plan
(Proposal 3) and the ratification of the selection of the auditors (Proposal
4) requires the approval of a majority of the outstanding shares of Common
Stock represented and entitled to vote at the meeting. For purposes of
Proposals 2, 3, and 4, abstentions will have the same effect as a vote against
the proposal. Broker non-votes will have no effect on the approval of
Proposals 2, 3 and 4. The New York Stock Exchange determines whether brokers
have discretionary authority to vote on a given proposal.
The cost of proxy solicitation, including the cost of reimbursing banks
and brokers for forwarding proxies and proxy statements to beneficial owners
of the Common Stock, will be paid by the Company. Proxies will be solicited
without extra compensation by certain officers and regular employees of the
<PAGE> 4
Company by mail and, if found to be necessary, by telephone and personal
interviews. The Company has also retained Corporation Investor Communications,
Inc. to assist in the solicitation of proxies at an anticipated fee of $4,500.
All shares represented by valid proxies will be voted.
ELECTION OF DIRECTORS
The Bylaws of the Company presently provide that the Board of Directors
shall designate the number of directors constituting the Board of Directors,
which shall be no less than seven and no more than thirteen members.
Currently, that number has been fixed by the Board of Directors at nine. The
Board of Directors consists of three classes, with directors of one class to
be elected each year, for terms extending to the annual meeting of
stockholders held in the third year following the year of their election.
The three directors whose terms expire at the 1997 Annual Meeting have been
nominated to serve for a term expiring at the 2000 Annual Meeting.
The names and biographical summaries of the three persons who have been
nominated to stand for election at the 1997 Annual Meeting and the remaining
directors whose terms are continuing until the 1998 or 1999 Annual Meetings
appear below. Robert E. Naylor, Jr. and Robert L. Yohe were elected by the
stockholders at the 1994 Annual Meeting, and Rajiv L. Gupta has been nominated
to serve as a director. Of the continuing directors, W. Thacher Brown, Frank
B. Foster, III and Peter McCausland were elected at the 1995 Annual Meeting
and John A.H. Shober, Merril L. Stott and Argeris N. Karabelas were elected by
the stockholders at the 1996 Annual Meeting. Erroll C. Sult, a director since
1988, is not standing for re-election.
All nominees have indicated that they are willing and able to serve as
directors if elected. In the event that any nominee should become
unavailable, the proxy will be voted for the election of any substitute
nominee designated by the Board of Directors or its Nominating and
Compensation Committee.
The Board of Directors recommends that you vote FOR the election of
Messrs. Naylor, Yohe and Gupta.
Set forth below is certain information regarding the three nominees for
election at the Annual Meeting and the remaining six directors whose terms are
continuing until the 1997 and 1998 Annual Meetings.
Nominees For Election for Terms Expiring at the 2000 Annual Meeting:
Robert E. Naylor, Jr. Mr. Naylor, age 64, retired from the Rohm & Haas
Company, a specialty chemical manufacturer, in
December 1995. For ten years prior
to his retirement, he had been Group Vice
President and a director of Rohm & Haas Company.
Mr. Naylor has served as a director of the
Company since 1992.
Robert L. Yohe Mr. Yohe, age 61, is an independent investor,
corporate director and advisor. He was Vice
Chairman of Olin Corporation and a member of
its Board of Directors until 1994. Mr. Yohe is
a Director of BetzDearborn, Inc., Calgon Carbon
Corporation and The Middleby Corporation. He
<PAGE> 5
also is a trustee of Lafayette College. Mr.
Yohe has served as a director of the Company
since 1994.
Rajiv L. Gupta Mr. Gupta, age 51, has been a Vice President,
and the director for the Asia-Pacific region, of
Rohm and Haas Company, a specialty chemical
manufacturer, since 1993, where he oversees and
facilitates the growth of the company's
businesses in the Asia-Pacific area. In
addition, in 1996, Mr. Gupta was appointed to
Rohm and Haas' Chairman's Committee and is
responsible for overseeing the Shipley Company,
Rohm and Haas' electronic chemicals subsidiary.
Prior to that, from 1971 until 1993, he held
various financial and management positions
with Rohm and Haas, including business unit
director for the plastics additives business.
Mr. Gupta serves as a member of the boards of
trustees of International House and St.
Christopher's Hospital for Children.
Directors Serving for Terms Expiring at the 1998 Annual Meeting:
W. Thacher Brown Mr. Brown, age 49, has been the Chairman,
President and a director of 1838 Investment
Advisors, Inc., an investment management
company, and President of 1838 Investment
Advisors, L.P., since July 1988, and
has been President of 1838 Investment Advisors
Funds since 1995. He is a director of the 1838
Bond Debenture Trading Fund Inc., the 1838
Investment Advisors Funds and The Harleysville
Mutual Insurance Company, and was a Senior Vice
President and a director of Drexel Burnham
Lambert Incorporated for more than four years
prior to 1988. Mr. Brown has been a director of
the Company since 1989.
Frank B. Foster, III Mr. Foster, age 63, has been Chairman of DBH
Associates, a venture capital/consulting firm,
since 1989. He was President and CEO of
Diamond-Bathurst Inc., a publicly-held
manufacturer of glass containers, from 1975
until he founded DBH. He also serves as a
director of Contour Packaging, U.S. Precision
Glass, Fragrance Impressions, Ltd., Carr-Lowrey
Glass Company, 1838 Investment Advisors Funds
and OAO Technology Solutions, Inc. Mr. Foster
has been a director of the Company since 1986.
Peter McCausland Mr. McCausland, age 47, has been a Director of
the Company since June 1986, the Chairman of the
Board and Chief Executive Officer of the Company
since May 1987, President from June 1986 to
August 1988, from April 1, 1993 to November 30,
1995 and since April 1, 1997, and Chairman and
Chief Executive Officer of US Airgas since its
organization in February 1982. From January 1982
<PAGE> 6
until June 1990, Mr. McCausland was a partner in
the law firm of McCausland, Keen & Buckman,
Radnor, Pennsylvania, which provides legal
services to the Company. Mr. McCausland serves
as a director of Hercules, Inc.
Directors Serving for Terms Expiring at the 1999 Annual Meeting:
John A.H. Shober Mr. Shober, age 64, is a private investor and
corporate director. He has been a director of
Penn Virginia Corporation, a natural resources
company, since 1978, Vice Chairman of the Board
of Directors from 1992 to 1996, and President
and Chief Executive Officer from 1989 to
1992. He also serves as a director of
BetzDearborn, Inc., Anker Coal Group, Inc.,
Charter Power Systems, Inc., Ensign Bickford
Industries, Inc., First Reserve Corporation and
MIBRAG mbH, and is a member of the Board of
Managers of Pennsylvania Hospital and a member
of the Board of Trustees of Eisenhower Exchange
Fellowships. Mr. Shober has served as a
director of the Company since 1990.
Merril L. Stott Mr. Stott, age 68, has been providing management
consulting services to the Company since April
1, 1994. Prior to that, he was the Director
of Management Development for the Company from
April 1, 1993 to March 31, 1994, was President
from April 1, 1991 to March 31, 1993,
and was Vice President-Operations from August
1988 to March 31, 1991. Mr. Stott has served as
a director of the Company since 1993.
Argeris N. Karabelas Mr. Karabelas, age 44, has been the Executive
Vice President of SmithKline Beecham
Pharmaceuticals, a healthcare company, since
December 1996. From 1993 to December 1996, he
was President of SmithKline Beecham
Pharmaceuticals' North American Division. Prior
to 1993, he held a variety of marketing and
sales positions at SmithKline Beecham, including
Senior Vice President of Marketing from 1990 to
1993. From 1989 to 1990, Mr. Karabelas was CEO
of Cytotherapeutics, a biotechnology company.
Prior to that, he was an Assistant Professor
of Industrial Pharmacy and Pharmacokinetics at
the Massachusetts College of Pharmacy. Mr.
Karabelas has served as a director of the
Company since August 1996.
Board of Directors and Committees
The Board of Directors held 11 meetings during the year ended March 31,
1997. The average attendance by directors at these meetings was 100 percent,
and all incumbent directors attended 100 percent of the Board and Committee
meetings they were scheduled to attend.
<PAGE> 7
The standing committees of the Board of Directors are an Executive
Committee, a Nominating and Compensation Committee and an Audit Committee.
These committees held, respectively, one meeting, five meetings and three
meetings during the year ended March 31, 1997.
The members of the Executive Committee are Messrs. McCausland, Foster,
Shober and Stott. As authorized by Delaware law and the Company's Bylaws, the
Executive Committee may exercise all of the powers of the Board of Directors
when the Board is not in session, except that it may not elect directors or
appoint officers, amend the Bylaws, declare dividends, appoint members of the
Executive Committee, approve the acquisition of substantially all the assets
or capital stock of a corporation or business entity which has annual sales in
excess of 20% of the annual sales of the Company or take any other action
which may only be taken by the Board.
The members of the Nominating and Compensation Committee are Messrs.
Naylor, Shober and Karabelas. Its responsibilities include the review of
compensation practices and corporate benefit plans of the Company, and the
review and recommendation of prospective officers and Board members. The
Committee does not consider nominations for Board membership made by the
Company's stockholders.
The members of the Audit Committee are Messrs. Brown, Foster and Yohe.
Its duties include the selection of independent accountants subject to the
approval of the stockholders, review of the scope and results of the audit and
review of the organization and scope of the Company's internal auditing and
financial controls.
Compensation of Directors
Directors (other than those who are employees of the Company) are paid an
annual retainer of $9,000 plus a fee of $1,000 for each Board or Committee
meeting attended, and have been entitled to participate in the 1989
Non-Qualified Stock Option Plan for Directors (Non-Employees) (the "1989
Directors' Plan"). Under the 1989 Directors' Plan, on the date of each annual
meeting of stockholders, continuing directors were granted options to purchase
8,000 shares of the Company's Common Stock at an exercise price equal to the
fair market value on the date of grant. The options are exercisable
immediately and have terms of 10 years. Messrs. Brown, Foster, Karabelas,
Naylor, Shober, Sult, Stott and Yohe each received options to acquire 4,000
shares (after they each waived their right to options to acquire 4,000 shares)
in fiscal 1997. Subject to approval by the stockholders at the 1997 Annual
Meeting, the proposed 1997 Directors' Stock Option Plan (the "1997 Directors'
Plan") will replace the 1989 Directors' Plan. See "Proposal to Approve the
1997 Directors' Stock Option Plan" for a description of the 1997 Directors'
Plan. The Chairman of the Audit Committee and the Nominating and Compensation
Committee also receive an additional $3,000 annual retainer. Directors are
also reimbursed for their travel expenses for attendance at Board and
Committee meetings.
Filings Under Section 16(a)
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of the securities with the Securities and
Exchange Commission and the New York Stock Exchange. Such persons are also
required to furnish the Company with copies of all Section 16(a) forms they
<PAGE> 8
file. The Company knows of no greater than ten percent stockholders, other
than one person who is an officer and director.
Based solely on its review of the copies of the forms received by it with
respect to the 1997 fiscal year, or written representations from certain
reporting persons that no Forms 5 were required, the Company believes that all
of its officers and directors complied with all filing requirements applicable
to them.
<PAGE>
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation paid during the fiscal years ended
March 31, 1997, 1996 and 1995 to the Company's Chief Executive Officer and
each of the Company's four other most
highly compensated executive officers based on salary and bonus earned during
the 1997 fiscal year.
Summary Compensation Table (continued on next page)
Annual Compensation
Long Term Compensation
_______________________
Other Annual
Name and Principal Fiscal Compensation
Position Year Salary ($) Bonus ($) ($)(1)
_________________ ______ __________ _________ ____________
Peter McCausland 1997 500,000 405,000 (1)
Chairman and 1996 500,000 497,500
Chief Executive Officer 1995 325,000 580,280
Hermann Knieling 1997 250,000 73,750 (1)
President and Chief 1996 163,333 71,000
Operating Officer (3) 1995 120,000 64,733
E. Pat Baker 1997 150,000 84,750 (1)
Division President 1996 120,000 53,000
- -East (5) 1995 103,000 43,598
Alfred B. Crichton 1997 150,000 61,950 (1)
Division President 1996 127,500 53,000
- -West 1995 122,308 64,733
Kenneth A. Keeley 1997 150,556 49,988 (1)
Division President 1996 150,556 55,000
- - North (8) 1995 152,062 64,733
<PAGE>
<PAGE> 10
Summary Compensation Table (continued from previous page)
Long Term Compensation
______________________
Securities All Other
Name and Principal Restricted Underlying LTIP Compensation
Position Stock Awards Options (#) Payouts ($)(1)
_________________ ____________ ___________ ________ ____________
Peter McCausland None 100,000 None 3,911 (2)
Chairman and None 144,000 None 6,066
Chief Executive Officer None 216,000 None 5,766
Hermann Knieling None 35,000 None 6,373 (4)
President and Chief None 34,000 None 8,513
Operating Officer (3) None 40,400 None 6,900
E. Pat Baker 1997 None 23,000 None 6,150 (6)
Division President None 32,000 None 6,528
- -East (5) None 8,000 None 6,132
Alfred B. Crichton None 20,000 None 5,598 (7)
Division President None 34,000 None 6,383
- -West None 44,400 None 6,494
Kenneth A. Keeley None 20,000 None 6,161 (9)
Division President None 32,000 None 8,316
- - North (8) None 40,400 None 8,125
(1) Amount does not exceed the lesser of $50,000 or 10% of total salary and
bonus.
(2) Consists of $3,563 of employer matching contributions and additional
discretionary contributions based on the profitability of
the Company under the Company's 401(k) Plan, and the value of life
insurance premiums of $348 paid for the benefit of Mr. McCausland.
(3) Mr. Knieling served as President and Chief Operating Officer until
March 1997, and has been Executive Vice President and Group President -
Manufacturing, Business Engineering and International since April 1,
1997.
(4) Consists of $4,969 of employer matching contributions and discretionary
contributions based on the profitability of the Company under the
Company's 401(k) Plan and the value of life insurance premiums of
$1,404 paid for the benefit of Mr. Knieling.
(5) Mr. Baker served as Division President-Eastern Division until March
1997, and has been Group President-Distribution since April 1, 1997.
(6) Consists of $5,250 of employer matching contributions and additional
discretionary contributions based on the profitability of the Company
under the Company's 401(k) Plan, and the value of life insurance
premiums of $900 paid for the benefit of Mr. Baker.
(7) Consists of $5,250 of employer matching contributions and additional
discretionary contributions based on the profitability of the Company
under the Company's 401(k) Plan and the value of life insurance
premiums of $348 paid for the benefit of Mr. Crichton.
(8) Mr. Keeley retired from the Company on May 30, 1997.
(9) Consists of $5,261 of employer matching contributions and additional
discretionary contributions based on the profitability of the Company
under the Company's 401(k) Plan and the value of life insurance
premiums of $900 paid for the benefit of Mr. Keeley.
<PAGE> 11
Option Grants During 1997 Fiscal Year (continued on next page)
The following table provides information related to options granted to
the named executive officers during fiscal 1997. The Company does not have
any outstanding stock appreciation rights.
Individual Grants
______________________________________________________________________________
No. of
Securities % of Total
Underlying Options
Options Granted to
Granted Employees in Exercise Expiration
Name (#)(2) Fiscal Year Price ($/Sh) Date
____ _________ ____________ ____________ ___________
Peter McCausland 100,000 12.7% $22.00 May 24, 2006
Hermann Knieling 35,000 4.4 22.00 May 24, 2006
E. Pat Baker 23,000 2.9 22.00 May 24, 2006
Alfred B. Crichton 20,000 2.5 22.00 May 24, 2006
Kenneth A. Keeley 20,000 2.5 22.00 May 24, 2206
<PAGE>
<PAGE> 12
Options Granted During 1997 Fiscal Year (continued from previous page)
Potential Realization Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Term (1)
_______________________________
Name 0%($)(3) 5%($)(3) 10%($)(3)
____ ________ ________ _________
Peter McCausland $ 0 $1,383,568 $3,506,233
Hermann Knieling 0 484,249 1,227,182
E. Pat Baker 0 318,221 806,434
Alfred B. Crichton 0 276,714 701,247
Kenneth A. Keeley 0 276,714 701,247
__________________________
(1) These amounts, based on assumed appreciation rates of 0%, 5% and 10%
prescribed by the Securities and Exchange Commission rules, are not
intended to forecast possible future appreciation, if any, of the
Company's stock price.
(2) Options to acquire shares of Common Stock, which become exercisable in
four equal annual installments beginning May 24, 1997.
(3) No gain to the optionees is possible without an increase in stock
price, which will benefit all stockholders. If the named executive
officers realize the appreciated values based on the 5% and 10%
appreciation rates set forth in the table, total stockholder value will
have appreciated by approximately $919 million and $2.3 billion,
respectively, and the value of the named executive officers'
appreciation will be approximately 0.3% of the total stockholders'
appreciation. Potential stock price appreciation to all stockholders
is calculated based on a total of 66,818,522 shares of Common Stock
outstanding on May 30, 1997, and a price of $21.88 per share, the
weighted average exercise price of options granted in fiscal 1997
referred to in the table above.
<PAGE>
<PAGE> 13
Aggregated Option Exercises During 1997 Fiscal Year
and Fiscal Year-End Option Values (continued on next page)
The following table provides information related to employee options and
warrants exercised by the named executive officers during fiscal 1997 and the
number and value of such options held at fiscal year-end.
Shares Value
Acquired on Realized
Name Exercise (#) ($)(1)
____ ___________ ________
Peter McCausland ---- ----
Hermann Knieling ---- ----
E. Pat Baker 14,000 279,097
Alfred B. Crichton ---- ----
Kenneth A. Keeley ---- ----
<PAGE>
<PAGE> 14
(columns continued from previous page)
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Name at Fiscal Year-End (#) at Fiscal Year-End($)(2)
____ ____________________________ __________________________
Exercisable Unexercisable Exercisable Unexercisable
___________ _____________ ___________ _____________
Peter McCausland 1,044,000 384,000 $12,618,660 $1,328,420
Hermann Knieling 108,900 93,500 1,042,427 236,585
E. Pat Baker 66,720 55,440 749,060 105,111
Alfred B. Crichton 163,100 80,500 1,800,577 240,925
Kenneth A. Keeley 249,800 77,000 3,116,477 231,245
(1) Represents the difference between the option exercise price and the
market value on the date of exercise.
(2) Value based on the closing price of $16.88 per share on March 31,
1997, less the option exercise price.
Termination of Employment and Change in Control Arrangement
The Company has agreed that upon Mr. McCausland's termination of
employment or change in control of the Company, he is entitled to a payment
equal to two times annual salary, the continuation of health insurance and
other employee benefits for a three-year period and automatic vesting of all
previously granted stock options.
NOMINATING AND COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Nominating and Compensation Committee of the Board of Directors has
furnished the following report on executive compensation. Under the
supervision of the Nominating and Compensation Committee, the Company has
developed and implemented compensation policies, plans and programs. The
Committee is composed of three independent, nonemployee directors. Following
review and approval by the Nominating and Compensation Committee, all issues
pertaining to executive compensation (other than the granting of stock options
or restricted stock awards under the Company's stock option plan) are
submitted to the full Board of Directors for approval.
Since its inception, the Company has maintained the philosophy that
compensation of its entire management team, including executive officer level
positions through operating management positions at the Company's operating
subsidiaries, should be directly and materially linked to operating
performance. To achieve this linkage, compensation is heavily weighted
towards bonuses paid on the basis of performance and to the award of stock
options to a relatively broad level of operating management.
<PAGE> 15
Compensation Principles
The foundation of the management compensation program is based on beliefs
and guiding principles designed to align compensation with business strategy,
Company values and management initiatives. The program:
- - Rewards executives for long-term strategic management and the enhancement
of shareholder value through the award of stock options as a significant
percentage of total compensation.
- - Integrates compensation programs with both the Company's annual and
longer-term strategic planning and measurement processes.
- - Provides flexibility in order to maximize local autonomy, which the
Company views as an important element of its success.
Executive Compensation Program
The total compensation program consists of both cash and equity based
compensation. The annual compensation consists of a base salary and an annual
bonus under the Company's Management Incentive Plan. Incentive compensation
is closely tied to corporate and individual performance in a manner that
encourages a continuing focus on building profitability and shareholder value.
Once each year, the Committee determines the salary ranges for executive
officers upon review of salary ranges in companies comparable in size in terms
of annual sales and capitalization. The comparison group includes companies
in the specialty chemicals industry plus distribution companies and fast
growth companies outside of the Company's industrial classification. The
Committee included companies outside of the Company's industry in the
comparison group because it believes that the Company is similar in certain
respects to such companies. Actual salary changes are based upon individual
and Company-wide performance and generally are fixed at levels slightly below
salary levels paid at companies in the comparison group. The individual's
performance is measured against specific management objectives, such as
pre-tax profits, operating cash flow, debt repayment, safety targets, programs
for training and development of personnel and sales and marketing programs.
Offsetting the Company's lower base salary levels, however, is the
opportunity to earn significantly higher total compensation through incentive
bonus and stock option programs. The bonus and stock option components are
"at risk," meaning that the ultimate value of the compensation depends on such
factors as company financial performance, individual performance and stock
price. This at risk portion of the Company's executive compensation ranges
from approximately 60% to 75% of total compensation, which represents a higher
portion of total compensation than for most of the companies in the comparison
group. The Committee approves the participation of key executives in the
Management Incentive Plan. Awards for executive officers vary with a
combination of the Company's achievement of cash flow and earnings goals and
are then adjusted up or down for the executive's achievement of specified
objectives and individual job performance. The Company's objectives that the
Committee considers are the same as those used to determine salary. The
Committee relies on these quantitative and qualitative measures and it uses
subjective judgment and discretion in light of these measures and the
Company's compensation principles described above to determine base salaries
and bonuses.
<PAGE> 16
Long-term incentives are provided through the grant of stock options.
The Committee reviews and approves the participation of executive officers of
the Company and its subsidiaries under the Company's stock option plan. The
Committee has the authority to determine the individuals to whom stock options
are awarded, the terms of the options and the number of shares subject to each
option. The size of option grants are based upon position level. The
Committee determines the percentage of total compensation which is to consist
of the value of stock options for each position level and divides that
value by the estimated value of the options, using the Black-Scholes method.
During fiscal 1997, the value of options granted was generally between 45% and
55% of an executive officer's total compensation. Through grants of stock
options, the objective of aligning executive officers' long-range interests
with those of the stockholders are met by providing the executive officers
with the opportunity to build a meaningful stake in the Company. The Company
does not have a formal policy regarding stock ownership objectives for
executives and, therefore, the Committee does not consider stock option
grants previously made. As with the determination of base salaries and
bonuses, the Committee relies on quantitative and qualitative measures and
exercises subjective judgment and discretion in view of these measures and the
Company's general policies. Executive officers may also participate in the
Company's 401(k) Plan, which includes Company matching contributions and
discretionary contributions based on the Company's profitability, and the
Company's Employee Stock Purchase Plan, which permits eligible employees to
purchase shares of the Company's Common Stock at varying discounts from the
market price, depending on the employee's compensation level.
Chief Executive Officer Compensation
The Nominating and Compensation Committee reviewed the Chief Executive
Officer's compensation for fiscal year 1997 and determined that his base
salary would remain the same as it had been in fiscal 1996. This base salary
approximates the median level of chief executive officers of the comparison
group of companies and is consistent with the Company's objective of paying a
higher level of compensation through its at risk bonus and stock option
programs. The fiscal 1997 bonus award was based upon the achievement of
objective, pre-determined pre-tax profits, operating cash flow and debt
repayment (exclusive of acquisition related debt and certain non-recurring
charges) targets, as set forth in the Management Incentive Plan, and the Chief
Executive Officer's performance in meeting specific strategic and operating
objectives, such as the Company's acquisition goals and increases in
same-store sales. In determining the number of shares to be awarded as stock
options, the Committee considered the executive compensation paid by the
comparison group of companies, and upon the Chief Executive Officer's
performance.
Deductibility
The Company intends, to the extent practicable, to preserve deductibility
under the Internal Revenue Code (the "Code") of compensation paid to its
executive officers while maintaining compensation programs to attract and
retain highly qualified executives in a competitive environment.
Robert E. Naylor, Jr., Chairman
John A.H. Shober
A.N. Karabelas
<PAGE> 17
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly change in the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of the S&P Composite - 500 Stock Index and the S&P
Chemicals Composite Index for the period of five years commencing April 1,
1992 and ended March 31, 1997.
Airgas, Inc.
Comparison of Five Year Cumulative Total Return
900|------------------------------------------------------|
| |
| |
| |
800|------------------------------------------------------|
| |
| |
| |
700|------------------------------------------------------|
| * |
| |
| |
600|------------------------------------------------------|
| |
| * |
| |
D 500|------------------------------------------------------|
| |
O | * |
| |
L 400|------------------------------------------------------|
| |
L | * |
| |
A 300|------------------------------------------------------|
| |
R | & |
| * & $ |
S 200|------------------------------------------------------|
| $ |
| & |
| $ &$ $ |
| & |
100|---*&$------------------------------------------------|
| |
| |
| |
0|----|--------|--------|--------|--------|--------|----|
March 31, 1992 1993 1994 1995 1996 1997
* = Airgas & = Chemicals $ = S&P 500
<PAGE> 18
|-----------|-------|--------|--------|--------|--------|--------|
|March 31, | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 |
|-----------|-------|--------|--------|--------|--------|--------|
|* Airgas | 100 | 209.45 | 358.14 | 444.03 | 666.05 | 565.52 |
|-----------|-------|--------|--------|--------|--------|--------|
|& Chemicals| 100 | 102.27 | 122.24 | 147.32 | 208.47 | 243.24 |
|-----------|-------|--------|--------|--------|--------|--------|
|$ S&P | 100 | 115.23 | 116.93 | 135.13 | 178.51 | 213.89 |
|-----------|-------|--------|--------|--------|--------|--------|
The graph above assumes that $100 was invested on April 1, 1992, in Airgas,
Inc. Common Stock, the S&P Chemicals Composit Index and the S&P 500 Index.
<PAGE>
<PAGE> 19
CERTAIN TRANSACTIONS
The Company leases two properties from Mr. Knieling under two leases that
expire in fiscal 2002. During fiscal 1997, the Company made rental payments
to Mr. Knieling in the aggregate amount of $71,348. The leases were executed
in connection with the purchase by the Company of Mr. Knieling's business
prior to his employment by the Company. The Company believes that the terms
of the leases are no less favorable than could have been obtained in
arms-length transactions with unaffiliated third parties.
Since April 1, 1996, National Welders Supply Co., Inc., of which Mr. Sult
is the President and CEO, paid $443,000 to the Company for the purchase of
nitrous oxide, $131,000 to the Company for the purchase of specialty gases and
$1,093,000 to a joint venture of the Company for the purchase of calcium
carbide. The Company believes that the terms of the transactions are no less
favorable than could have been obtained in arms-length transactions with
unaffiliated third parties.
On June 28, 1996, the Company acquired, pursuant to the terms of a joint
venture agreement, 45% of the voting capital stock of National Welders Supply
Co., Inc. ("NWS") for cash and notes totaling approximately $47.6 million. In
connection with the agreement, during the three-year period beginning on July
1, 2006, the major shareholders of NWS have the right to cause NWS to redeem
their NWS preferred stock for either $58.1 million in cash or to exchange such
preferred stock for approximately 2.38 million shares of the Company's Common
Stock. The Company receives a fee from NWS for services rendered by the
Company on behalf of the joint venture. The fees earned by the Company for
the nine months ended March 31, 1997 totaled $627,000.
The Company leases cylinders from William A. Rice, Jr., Division
President - Industrial Distribution and Purchasing, of the Company, under a
capital lease continuing through December 1997. The lease was executed in
connection with the purchase by the Company of Mr. Rice's business prior
to his employment by the Company. During its 1997 fiscal year, the Company
made principal and interest payments totaling $174,000 under the cylinder
lease. The Company believes that the terms of the lease are no less favorable
than could have been obtained in arms-length transactions with unaffiliated
third parties.
In April 1997, the Company made an unsecured loan of $207,595 and a loan
of $199,999 secured by a pledge of shares of the Company's Common Stock to
Ronald B. Rush, Division President - South, to assist in the payment of the
purchase price of an interest in a subsidiary and taxes incurred as a result
of the exchange of the interest for the Company's Common Stock. Each loan
has an annual interest rate of 8%, with principal and interest due and payable
on or before December 31, 1997.
<PAGE>
<PAGE> 20
SECURITY OWNERSHIP
The following table sets forth certain information, according to
information supplied to the Company regarding the number and percentage of
shares of the Company's Common Stock beneficially owned on March 31, 1997 (i)
by each person who is the beneficial owner of more than 5% of the Common
Stock; (ii) by each nominee for director and director (who is a nominee or
continuing director); (iii) by each executive officer named in the Summary
Compensation Table; and (iv) by all directors and executive officers of the
Company as a group. Unless otherwise indicated, the stockholders listed
possess sole voting and investment power with respect to the shares listed.
Amount and Nature of Percentage of
Name of Beneficial Owner Beneficial Ownership(1) Shares Outstanding
________________________ ________________________ __________________
Peter McCausland
612 East Gravers Lane
Wyndmoor, PA . . . . . . 9,840,380 (2)(3)(4) 14.2%
W. Thacher Brown . . . . 118,000 (2)(5) *
Frank B. Foster, III . . 59,600 (2) *
John A. H. Shober. . . . 60,000 (2) *
Merril L. Stott. . . . . 206,984 (2)(6) *
Robert E. Naylor, Jr.. . 37,000 (2) *
Robert L. Yohe . . . . . 21,500 (2) *
Argeris N. Karabelas.. . 4,600 (2) *
Rajiv L. Gupta . . . . . -0- *
Hermann Knieling . . . . 251,617 (2)(4) *
E. Pat Baker . . . . . . 96,907 (2)(4) *
Alfred B. Crichton . . . 229,681 (2)(4) *
Kenneth A. Keeley. . . . 553,385 (2)(4)(7) *
Thomas W. Smith
323 Railroad Avenue
Greenwich, CT 06830. . . 3,695,600 (8) 5.4
Edward J. McAree
323 Railroad Avenue
Greenwich, CT 06830. . . 3,698,000 (8) 5.4
Thomas N. Tryforos
323 Railroad Avenue
Greenwich, CT 06380. . . 3,696,392 (8) 5.4
Putnam Investments, Inc.
One Post Office Square
Boston, Massachusetts 02109 . . 6,837,847 (9) 10.0
<PAGE> 21
The Capital Group Companies, Inc.
333 South Hope Street
Los Angeles, California 90071 . 4,064,300 (10) 6.0
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071 . 4,064,300 (10) 6.0
All directors and executive officers
as a group (24 persons) 13,068,675 (1)(2)(3)(4)(5)(6)(7) 18.4
________________________
* Less than 1% of the outstanding Common Stock
(1) Includes all options and other rights to acquire shares exercisable on
or within 60 days of March 31, 1997. Each of the amounts beneficially
owned have been adjusted to reflect a 2-for-1 stock split of Airgas'
Common Stock effective on April 15, 1996.
(2) Includes the following number of shares of Common Stock which may be
acquired by certain directors and executive officers through the
exercise of options which were exercisable as of March 31, 1997 or
became exercisable within 60 days of that date: Mr. McCausland,
1,227,000 shares; Mr. Brown, 54,000 shares; Mr. Foster, 46,000 shares;
Mr. Shober, 38,000 shares; Mr. Stott, 22,000 shares; Mr. Naylor,
14,000 shares; Mr. Karabelas, 4,000 shares; Mr. Keeley, 285,700 shares;
Mr. Knieling, 149,050 shares; Mr. Baker, 86,910 shares; Mr. Crichton,
200,500 shares; Mr. Yohe, 14,000 shares; and all directors and
executive officers as a group, 2,948,248 shares.
(3) Investment and/or voting power with respect to 2,167,144 of such shares
are shared with, or under the control of, members of Mr. McCausland's
immediate family, and 79,237 shares are held by a charitable
foundation of which Mr. McCausland is an officer and director.
(4) Includes the following shares of Common Stock held under Airgas' 401(k)
Plan as of January 31, 1997: Mr. McCausland, 32,452 shares; Mr.
Keeley, 18,191 shares; Mr. Knieling, 10,273 shares; Mr. Baker, 9,910
shares; Mr. Crichton, 7,255 shares; and all executive officers as a
group, 117,269 shares.
(5) Includes 8,000 shares owned by members of Mr. Brown's immediate family.
(6) Includes 180,800 shares owned in a living trust of which Mr. Stott and
his spouse are co-trustees and their children are the beneficiaries.
(7) Includes 253,084 shares owned in a living trust, of which Mr. Keeley is
both trustee and beneficiary and 2,200 shares held in a partnership,
the partners of which are Mr. Keeley and his two sons.
(8) Messrs. Smith, McAree and Tryforos jointly reported on a Schedule 13D,
dated February 11, 1994, (upon which Airgas has relied in making this
disclosure) that in their capacities as investment managers for certain
managed accounts consisting of three private investment limited
partnerships (of which each is a general partner) and an employee
profit sharing plan of a corporation of which Mr. Smith is the sole
stockholder (and for which each of them is a trustee) they had the
following voting and investment power for shares of the Common Stock:
<PAGE> 22
Messrs. Smith, McAree and Tryforos each have shared voting and
dispositive power for 3,695,600 shares; Mr. McAree has sole voting and
dispositive power for 2,400 shares; and Mr. Tryforos has sole voting
and dispositive power for 792 shares.
(9) Putnam Investments, Inc. ("PI"), a wholly-owned subsidiary of Marsh &
McLennan Companies, Inc., wholly owns Putnam Investment Management,
Inc. ("PIM") and The Putnam Advisory Company, Inc. ("PAC"). PI, PIM
and PAC together filed a Schedule 13G/A dated January 28, 1997, upon
which Airgas has relied in making this disclosure. PI has shared
voting power as to 131,545 shares and shared dispositive power as to
6,837,847 shares; PIM has shared dispositive power as to 6,604,702
shares and PAC has shared voting power as to 131,545 shares and shared
dispositive power as to 233,145 shares.
(10) Capital Research and Management Company ("Capital Research"), a
registered investment adviser, is a wholly-owned subsidiary of The
Capital Group Companies ("Capital Group"). Capital Research and
Capital Group reported that they have sole dispositive power and
therefore beneficially own 4,064,300 shares as the result of Capital
Research acting as investment adviser to various investment companies.
Capital Research and Capital Group together filed a Schedule 13G dated
February 22, 1997, upon which Airgas has relied in making this
disclosure.
PROPOSAL TO APPROVE THE
THE 1997 STOCK OPTION PLAN
On May 15, 1997, the Board of Directors adopted, subject to stockholder
approval, the 1997 Stock Option Plan (the "1997 Plan"). The text of the 1997
Plan is set forth in Exhibit A to this Proxy Statement. The following summary
is subject to, and qualified in its entirety by reference to, Exhibit A.
The Company believes that the granting of stock options and restricted stock
is an additional incentive to employees to enter into or remain employees of
the Company and to devote themselves to the Company's success. As of March
31, 1997, there were approximately 500 employees who were eligible to receive
options or restricted stock under the 1997 Plan.
Upon stockholder approval of the 1997 Plan, no additional options will be
granted under the 1984 Stock Option Plan.
Vote Required for Approval
To be adopted, the 1997 Plan must be approved by a majority of the
outstanding shares of Common Stock represented and entitled to vote at the
meeting.
The Board unanimously recommends a vote FOR the adoption of the 1997 Plan.
Description of the Plan
Eligibility
Those persons who are employees and independent contractors of the Company
are eligible to be selected by the Nominating and Compensation Committee (the
<PAGE> 23
"Committee") of the Board of Directors. In selecting participants, the
Committee may consider the nature of the person's services and
responsibilities, the person's present and potential contribution to the
Company's success, and other factors it deems relevant.
Types of Grants
The 1997 Plan authorizes (i) the granting of incentive stock options
("Incentive Options") to purchase shares of the Company's Common Stock, (ii)
the granting of nonqualified stock options ("Nonqualified Options") to
purchase shares of the Company's Common Stock, and (iii) the granting of
shares of the Company's Common Stock subject to conditions of forfeiture
("Restricted Stock Awards"). Unless the context otherwise requires, the term
"Option" includes both Incentive Options and Nonqualified Options.
Administration
The 1997 Plan is administered by the Committee which shall consist of at
least two non-employee members of the Board of Directors. The Committee in its
sole discretion determines the eligible persons to be awarded Options and
Restricted Stock Awards, the number of shares subject thereto and the exercise
price of Options, subject to certain limitations. In addition, the
determinations and the interpretation and construction of any provision of the
1997 Plan by the Committee is final, binding and conclusive.
Common Stock Subject to the 1997 Plan
A total of 8,000,000 shares of Common Stock (subject to adjustment as
discussed below) have been reserved for sale upon exercise of Options and
Restricted Stock Awards granted under the 1997 Plan, provided that the
Committee may not issue more than 1,000,000 shares as Restricted Stock
Awards, and that Restricted Stock Awards under the 1997 Plan and the 1997
Directors' Stock Option Plan (which is also being voted upon at the meeting)
in any calendar year may not exceed, in the aggregate, 0.5% of the shares of
Common Stock issued and outstanding on any date of grant.
Granting of Options
As of the date hereof, there were approximately 500 employees who were
eligible to receive Options and Restricted Stock Awards under the 1997 Plan.
The Committee will grant Options and Restricted Stock Awards from time to time
in its discretion. No determination has been made as to the number of Options
that in the future may be allocated to the individuals named in the Summary
Compensation Table, current executive officers as a group, or all employees
(including all current officers who are not executive officers) as a group, as
a result of the adoption of the 1997 Plan.
Exercise Price of Options
Options may not be granted with an exercise price per share that is less
than the closing price of a share of Common Stock at the date of grant.
Payment of Exercise Price
The exercise price of an Option may be paid in cash, by certified check, by
the delivery of already owned Common Stock having a fair market value equal to
the exercise price, by the use of the cashless exercise features of the 1997
Plan, or by such other mode of payment as the Committee may approve, provided,
<PAGE> 24
however, that if the optionee acquired such stock directly or indirectly from
the Company, he shall have owned such stock to be surrendered for six months
prior to tendering such stock for the exercise of an Option.
Special Provisions for Incentive Options
An employee may receive more than one Incentive Option, but the maximum
aggregate fair market value of the Common Stock (determined when the Incentive
Option is granted) with respect to which Incentive Options are first
exercisable by such employee in any calendar year cannot exceed $100,000. In
addition, no Incentive Option may be granted to an employee owning directly or
indirectly stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company unless the exercise price is set at not
less than 110% of the fair market value of the shares subject to such
Incentive Option on the date of grant and such Incentive Option expires not
later than five years from the date of grant.
Transferability of Options
No Incentive Option granted under the 1997 Plan is assignable or
transferable, otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order. The
Committee may grant Nonqualified Options that are transferable without
consideration, to immediate family members.
Exercisability of Options
Unless the Committee provides otherwise, Options are exercisable in four
cumulative, annual installments of 25% of the shares subject to the Option
beginning one year after grant, provided that the Optionee remains an employee
of the Company on such dates. If an optionee's employment terminates
due to death, disability or retirement, the next annual installment which
would become exercisable on the next anniversary will become exercisable. The
1997 Plan provides that upon the occurrence of certain changes in control,
mergers or sales of substantially all of the assets of the Company, each
Option shall immediately become exercisable in full.
Expiration of Options
The expiration date of an Option is determined by the Committee at the time
of the grant, but, unless otherwise provided by the Committee, Options will
not be exercisable after the expiration of 10 years from the date of grant of
the Option. Options generally terminate 90 days after the date that the
optionee's employment terminates, except that Incentive Options terminate on
the expiration of the Incentive Option if termination is due to death.
Nonqualified Options remain exercisable for the full term of the Option if
termination is due to death, disability or retirement. Options terminate
immediately if the Committee finds that the optionee has engaged in certain
dishonest acts, has disclosed trade secrets or confidential information or has
engaged in competition with the Company.
As described below, an Option becomes exercisable in full upon the
occurrence of certain corporate transactions.
<PAGE> 25
Restricted Stock Awards
A Restricted Stock Award is an award of Common Stock that vests at such time
and in such installments as may be determined by the Committee, and until it
vests, is subject to restrictions on transferability and to the possibility of
forfeiture. In addition, each grant of Restricted Stock Awards will be
subject to such other restrictions as are set by the Committee. If the
Committee finds that the participant has engaged in certain dishonest acts,
has disclosed trade secrets or confidential information or has engaged in
competition with the Company, the nonvested shares will be forfeited, and all
shares become nonforfeitable if a change in control occurs.
Adjustments
The 1997 Plan provides for adjustments to the number of shares under which
Options may be granted, to the number of shares subject to outstanding Options
and to the exercise price of such outstanding Options in the event of a
declaration of a stock dividend or any recapitalization resulting in a stock
split-up, combination or exchange of the Company's Common Stock.
Certain Corporate Transactions
All outstanding Options that are not exercisable automatically become
immediately exercisable upon a change in control, as defined in the 1997 Plan.
In general, a change in control is deemed to have
occurred when (1) a change in the majority of the Board of Directors occurs
during any two-year period without the approval of a majority of directors in
office at the beginning of such period, (2) any person or group, other than
the Company, an affiliate, or an employee benefit plan, becomes the beneficial
owner of securities representing more than 20% of combined voting power of
Company's outstanding securities, or (3) the stockholders approve a merger or
other disposition of all or substantially all of the Company's assets, if the
Company's stockholders immediately before the transaction own, immediately
after such transaction, equity securities possessing less than 50% of the
voting power of the surviving or acquiring corporation.
Amendments; Term of Plan
The Board may amend or terminate the 1997 Plan at any time subject to
stockholder approval in certain instances. The Board may not amend the 1997
Plan without stockholder approval to increase the number of shares of Common
Stock as to which Options or Restricted Stock Awards may be granted or to
change the class of individuals eligible to participate in the 1997 Plan. No
Options or Restricted Stock Awards may be granted under the 1997 Plan after
May 15, 2007.
Tax Withholding
A grantee of an Option or a Restricted Stock Award may elect to satisfy
withholding taxes by delivering to the Company shares of the Company's Common
Stock having a fair market value equal to such withholding taxes. The
Committee may impose such limitations and prohibitions on the use of
shares of Common Stock to satisfy withholding tax requirements as it deems
appropriate.
<PAGE> 26
Federal Income Tax Consequences
Grants of Options
Under current tax laws, the grant of an Option will not be a taxable event
to the recipient optionee and the Company will not be entitled to a deduction
with respect to such grant.
Exercise of Nonqualified Options and Subsequent Sale of Stock
Upon the exercise of a Nonqualified Option, an optionee will recognize
ordinary income at the time of exercise equal to the excess of the then fair
market value of the Company's Common Stock received over the exercise price.
The taxable income recognized upon exercise of a Nonqualified Option
will be treated as compensation income subject to withholding and the Company
will be entitled to deduct as a compensation expense an amount equal to the
ordinary income an optionee recognizes with respect to such exercise. When
shares of the Common Stock received upon the exercise of a Nonqualified
Option subsequently are sold or exchanged in a taxable transaction, the holder
thereof generally will recognize capital gain (or loss) equal to the
difference between the total amount realized and the fair market value of the
Common Stock on the date of exercise; the character of such gain or loss as
long-term or short-term capital gain or loss will depend upon the holding
period of the shares following exercise.
Exercise of Incentive Options and Subsequent Sale of Stock
The exercise of an Incentive Option will not be taxable to the optionee, and
the Company will not be entitled to any deduction with respect to such
exercise. However, to qualify for this favorable tax treatment of incentive
stock options under the Code, the optionee may not dispose of the Common Stock
acquired upon the exercise of an Incentive Option until after the later of two
years following the date of grant or one year following the date of exercise.
The surrender of shares of the Company's Common Stock acquired upon the
exercise of an Incentive Option in payment of the exercise price of an Option
within the required holding period for incentive stock options under the Code
will be a disqualifying disposition of the surrendered shares. Upon any
subsequent taxable disposition of the Company's Common Stock received upon
exercise of an Incentive Option, the optionee generally will recognize
long-term or short-term capital gain (or loss) equal to the difference between
the total amount realized and the exercise price of the Option.
If an Option that was intended to be an incentive stock option under the
Code does not qualify for favorable incentive stock option treatment under the
Code due to the failure to satisfy the holding period requirements, the
optionee may recognize ordinary income in the year of the disqualifying
disposition. Provided the amount realized in the disqualifying disposition
exceeds the exercise price, the ordinary income an optionee shall recognize in
the year of a disqualifying disposition shall be the lower of (i) the excess
of the amount realized over the exercise price or (ii) excess of the fair
market value of the Company's Common Stock at the time of the exercise over
the exercise price. In addition, the optionee shall recognize capital gain on
the disqualifying disposition in the amount, if any, by which the amount
realized in the disqualifying disposition exceeds the fair market value of
the Company's Common Stock at the time of the exercise. Such capital gain
shall be taxable as long-term or short-term capital gain, depending on the
optionee's holding period for such shares.
<PAGE> 27
Notwithstanding the favorable tax treatment of Incentive Options for regular
tax purposes, as described above, for alternative minimum tax purposes, an
Incentive Option is generally treated in the same manner as a Nonqualified
Option. Accordingly, an optionee must generally include in alternative
minimum taxable income for the year in which an Incentive Option is exercised
the excess of the fair market value on the date of exercise of the Company's
Common Stock received over the exercise price. If, however, an optionee
disposes of the Company's Common Stock acquired upon the exercise of an
Incentive Option in the same calendar year as the exercise, only an amount
equal to the optionee's ordinary income for regular tax purposes with respect
to such disqualifying disposition will be recognized for the optionee's
calculation of alternative minimum taxable income in such calendar year.
Restricted Stock Awards
The recipient of a Restricted Stock Award recognizes no income and the
Company can take no deduction for federal income tax purposes when a
Restricted Stock Award is granted, unless the recipient makes an election to
recognize income on the date of grant. On the date of vesting of shares
subject to a Restricted Stock Award (or if a participant so elects, on the
date of grant) a participant will realize ordinary income in an amount equal
to the fair market value of the shares on that date and the Company, upon
compliance with certain withholding tax rules, will be entitled to a deduction
in the same amount. If a participant who elects to recognize income on the
date of grant subsequently forfeits shares subject to the participant's
Restricted Stock Award, the participant will not be entitled to either a
deduction for the amount previously recognized as income with respect to the
forfeited shares or refund of any taxes paid thereon.
Stock Price Information
The closing price of the Company's Common Stock on the New York Stock
Exchange on June 20, 1997 was $20.
<PAGE>
<PAGE> 28
New Plan Benefits
The table below summarizes the number of options that would have been
granted to each of the indicated persons under the 1997 Plan (rather than
under the 1984 Stock Option Plan), had the 1997 Plan been in effect during the
last fiscal year.
Name and Position Number of Shares(1)
_________________ ___________________
Peter McCausland, Chairman
and Chief Executive Officer. . 100,000
Hermann Knieling, President
and Chief Operating Officer. . 35,000
E. Pat Baker, Division
President - East . . . . . . . 23,000
Alfred B. Crichton, Division
President - West . . . . . . . 20,000
Kenneth A. Keeley, Division
President - North. . . . . . . 20,000
Executive Officer Group . . . . . 329,750
Non-Executive Officer Employee Group . . . . . . 455,935
________________________
(1) Except for the options listed above which were granted in May 1996 under
the 1984 Stock Option Plan, it is not possible to determine what awards
the Committee will grant under the 1997 Plan since the 1997 Plan is a
discretionary plan.
<PAGE> 29
PROPOSAL TO APPROVE THE
1997 DIRECTORS' STOCK OPTION PLAN
On May 15, 1997, the Board of Directors adopted, subject to stockholder
approval, the 1997 Directors' Stock Option Plan (the "1997 Directors' Plan").
The text of the 1997 Directors' Plan is set forth in Exhibit B to this Proxy
Statement. The following summary is subject to, and qualified in its
entirety by reference to, Exhibit B.
The Company believes that the granting of stock options and restricted
stock will be beneficial to the Company and its stockholders since a
substantial portion of the compensation of its non-employee directors will be
linked to the performance of the Company. As of March 31, 1997, there were
eight non-employee directors who were eligible to receive options or
restricted stock under the 1997 Directors' Plan.
Upon stockholder approval of the 1997 Directors' Plan, no additional
options will be granted under the 1989 Non-Qualified Stock Option Plan for
Directors (Non-Employees).
Vote Required for Approval
To be adopted, the 1997 Directors' Plan must be approved by a majority of
the outstanding shares of Common Stock represented and entitled to vote at the
meeting.
The Board unanimously recommends a vote FOR the adoption of the 1997
Directors' Plan.
Description of the Plan
Eligibility
Those persons who are non-employee directors of the Company are eligible
to be selected by the Nominating and Compensation Committee (the "Committee")
of the Board of Directors. In selecting participants, the Committee may
consider the nature of the person's services and responsibilities, the
person's present and potential contribution to the Company's success and other
factors it deems relevant.
Types of Grants
The 1997 Directors' Plan authorizes (i) the granting of nonqualified
stock options ("Options") to purchase shares of the Company's Common Stock and
(ii) the granting of shares of the Company's Common Stock subject to
conditions of forfeiture ("Restricted Stock Awards").
Administration
The 1997 Directors' Plan is administered by the Committee which shall
consist of at least two non-employee members of the Board of Directors. The
Committee in its sole discretion determines the eligible persons to be awarded
Options and Restricted Stock Awards, the number of shares subject thereto
and the exercise price of Options, subject to certain limitations. In
addition, the determinations and the interpretation and construction of any
provision of the 1997 Directors' Plan by the Committee is final,
binding and conclusive.
<PAGE> 30
Common Stock Subject to the 1997 Directors' Plan
A total of 500,000 shares of Common Stock (subject to adjustment as
discussed below) have been reserved for sale upon exercise of Options and
Restricted Stock Awards granted under the 1997 Plan, provided that the
Committee may not issue more than 100,000 shares as Restricted Stock Awards,
and that Restricted Stock Awards under the 1997 Plan (which is also being
voted upon at the meeting) and the 1997 Directors' Plan in any calendar year
may not exceed, in the aggregate, 0.5% of the shares of Common Stock issued
and outstanding on any date of grant.
Granting of Options
The Committee will grant Options and Restricted Stock Awards from time to
time in its discretion. No determination has been made as to the number of
Options that in the future may be allocated to the non-employee directors as a
group, as a result of the adoption of the 1997 Directors' Plan. See "Election
of Directors - Compensation of Directors."
Exercise Price of Options
Options may not be granted with an exercise price per share that is less
than the closing price of a share of Common Stock at the date of grant.
Payment of Exercise Price
The exercise price of an Option may be paid in cash, by certified check,
by the delivery of already owned Common Stock having a fair market value equal
to the exercise price, by the use of the cashless exercise features of the
1997 Directors' Plan, or by such other mode of payment as the Committee may
approve, provided, however, that if the optionee acquired such stock directly
or indirectly from the Company, he shall have owned such stock to be
surrendered for six months prior to tendering such stock for the exercise of
an Option. The Committee may impose such limitations and prohibitions on the
use of shares of Common Stock to pay the exercise price as it deems
appropriate.
Transferability of Options
The Committee may grant Options that are transferable, without
consideration, to immediate family members.
Exercisability of Options
Unless the Committee provides otherwise, and subject to stockholder
approval, Options are exercisable in full on the date of grant. The 1997
Directors' Plan provides that upon the occurrence of certain changes in
control, mergers or sales of substantially all of the assets of the Company,
each Option that is not exercisable shall immediately become exercisable in
full.
Expiration of Options
The expiration date of an Option is determined by the Committee at the
time of the grant, but, unless otherwise provided by the Committee, Options
will not be exercisable after the expiration of 10 years from the date of
grant of the Option. Options generally terminate one year after termination
of service due to death. Options terminate immediately if the Committee
<PAGE> 31
finds that the optionee has engaged in certain dishonest acts, has disclosed
trade secrets or confidential information or has engaged in competition with
the Company.
As described below, an Options that is not exercisable in full becomes
exercisable in full upon the occurrence of certain corporate transactions.
Restricted Stock Awards
A Restricted Stock Award is an award of Common Stock that vests at such
time and in such installments as may be determined by the Committee, and until
it vests, is subject to restrictions on transferability and to the possibility
of forfeiture. In addition, each grant of Restricted Stock Awards will be
subject to such other restrictions as are set by the Committee. If the
Committee finds that the participant has engaged in certain dishonest acts,
has disclosed trade secrets or confidential information or has engaged in
competition with the Company, the nonvested shares will be forfeited, and all
shares become nonforfeitable if a change in control occurs.
Adjustments
The 1997 Directors' Plan provides for adjustments to the number of shares
under which Options may be granted, to the number of shares subject to
outstanding Options and to the exercise price of such outstanding Options in
the event of a declaration of a stock dividend or any recapitalization
resulting in a stock split-up, combination or exchange of the Company's Common
Stock.
Certain Corporate Transactions
All outstanding Options that are not exercisable automatically become
immediately exercisable upon a change in control, as defined in the 1997
Directors' Plan. In general, a change in control is deemed to have occurred
when (1) a change in the majority of the Board of Directors occurs during any
two-year period without the approval of a majority of directors in office at
the beginning of such period, (2) any person or group, other than the Company,
an affiliate, or an employee benefit plan, becomes the beneficial owner of
securities representing more than 20% of combined voting power of Company's
outstanding securities, or (3) the stockholders approve a merger or other
disposition of all or substantially all of the Company's assets, if the
Company's stockholders immediately before the transaction own, immediately
after such transaction, equity securities possessing less than 50% of the
voting power of the surviving or acquiring corporation.
Amendments; Term of Plan
The Board may amend the 1997 Directors' Plan at any time subject to
stockholder approval in certain instances. The Board may not amend the 1997
Directors' Plan without stockholder approval to increase the number of shares
of Common Stock as to which Options or Restricted Stock Awards may be granted.
No Options or Restricted Stock Awards may be granted under the 1997 Directors'
Plan after May 15, 2007.
<PAGE> 32
Federal Income Tax Consequences
Grants of Options
Under current tax laws, the grant of an Option will not be a taxable
event to the recipient optionee and the Company will not be entitled to a
deduction with respect to such grant.
Exercise of Nonqualified Options and Subsequent Sale of Stock
Upon the exercise of an Option, an optionee will recognize ordinary
income at the time of exercise equal to the excess of the then fair market
value of the Company's Common Stock received over the exercise price. The
taxable income recognized upon exercise of an Option will be treated as
ordinary income and the Company will be entitled to deduct as a compensation
expense an amount equal to the ordinary income an optionee recognizes with
respect to such exercise. When shares of the Common Stock received upon the
exercise of an Option subsequently are sold or exchanged in a taxable
transaction, the holder thereof generally will recognize capital gain (or
loss) equal to the difference between the total amount realized and the fair
market value of the Common Stock on the date of exercise; the character of
such gain or loss as long-term or short-term capital gain or loss will depend
upon the holding period of the shares following exercise.
Restricted Stock Awards
The recipient of a Restricted Stock Award recognizes no income and the
Company can take no deduction for federal income tax purposes when a
Restricted Stock Award is granted, unless the recipient makes an election to
recognize income on the date of grant. On the date of vesting of shares
subject to a Restricted Stock Award (or if a participant so elects, on the
date of grant) a participant will realize ordinary income in an amount equal
to the fair market value of the shares on that date and the Company
will be entitled to a deduction in the same amount. If a participant who
elects to recognize income on the date of grant subsequently forfeits shares
subject to the participant's Restricted Stock Award, the participant will not
be entitled to either a deduction for the amount previously recognized as
income with respect to the forfeited shares or refund of any taxes paid
thereon.
PROPOSAL TO RATIFY ACCOUNTANTS
The Board of Directors has selected the firm of KPMG Peat Marwick LLP as
independent certified public accountants to audit the financial statements of
the Company for the fiscal year ending March 31, 1998. The Board of Directors
has proposed that the stockholders ratify the selection of KPMG Peat Marwick
LLP. This firm audited the Company's financial statements for the fiscal year
ended March 31, 1997. Representatives of KPMG Peat Marwick LLP are expected
to attend the Annual Meeting, will have the opportunity to make a statement if
they desire to do so, and are expected to be available to respond to
appropriate questions.
The Board of Directors recommends that you vote FOR ratification of KPMG
Peat Marwick LLP as independent accountants.
<PAGE> 33
STOCKHOLDERS PROPOSALS FOR
NEXT ANNUAL MEETING
Any properly submitted proposal which a stockholder intends to present at
the next Annual Meeting of Stockholders must be received by the Company by
March 2, 1998, if it is to be included in the Company's proxy statement and
form of proxy relating to the next Annual Meeting.<PAGE>
<PAGE> 34
EXHIBIT A
AIRGAS, INC.
1997 STOCK OPTION PLAN
(Effective May 15, 1997)
1. Purpose. AIRGAS, INC. (the "Company") hereby adopts the Airgas,
Inc. 1997 Stock Option Plan effective May 15, 1997 (the "Plan") as an
additional incentive to eligible employees and eligible independent
contractors (as determined under Section 3) to enter into or remain in the
employ or service of the Company or any Affiliate (as defined below) and to
devote themselves to the Company's success by providing them with an
opportunity to acquire or increase their proprietary interest in the Company
through receipt of (a) rights (the "Options") to purchase the Company's Common
Stock, par value $0.01 per share (the "Common Stock") or (b) Common Stock
subject to conditions of forfeiture (the "Restricted Stock Awards"). Each
Option granted under the Plan shall specify whether or not it is intended
to be an incentive stock option ("ISO") within the meaning of section 422(b)
of the Internal Revenue Code of 1986, as amended (the "Code") or a
nonstatutory stock option ("NSO") for federal income tax purposes. For
purposes of the Plan, the term "Affiliate" shall mean a corporation which is a
parent corporation or a subsidiary corporation with respect to the Company
within the meaning of section 424(e) or (f) of the Code.
2. Administration.
(a) Committee. The Plan shall be administered by the Nominating
and Compensation Committee designated by the Company's Board of Directors (the
"Committee") which shall consist of at least two persons, each of whom is a
"non-employee director" as defined under Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act"), and an "outside director" as
defined under section 162(m) of the Code (the "Non-Employee Director"). If
any Committee member does not qualify as a Non-Employee Director, then such
member shall not participate in any way with respect to Committee action
under the Plan and shall not be treated as a member of the Committee for
purposes of the Plan.
(b) Meetings. The Committee shall hold meetings at such times and
places as it may determine. Acts approved at a meeting by a majority of the
directors who are members of the Committee and present at a meeting at which
there is a quorum or acts approved in writing by the unanimous consent
of the directors who are members of the Committee (not counting any director
who is an employee for either purpose) shall be the valid acts of the
Committee.
(c) Grants. The Committee shall from time to time at its
discretion direct the Company to grant Options or Restricted Stock Awards
pursuant to the terms of the Plan. Subject to the express provisions of the
Plan, the Committee shall have plenary authority to determine the persons to
whom and the times at which Options or Restricted Stock Awards shall be
granted, the number of shares of Common Stock to be granted under an Option or
Restricted Stock Award and the price and other terms and conditions thereof,
including a specification with respect to whether or not an Option is intended
to be an ISO. In making such determinations the Committee may take into
account the nature of the person's services and responsibilities, the person's
present and potential contribution to the Company's success and such other
factors as it may deem relevant. The Committee's interpretation of any
<PAGE> 35
provision of the Plan or of any Option or Restricted Stock Award granted under
it shall be final, binding and conclusive.
(d) Exculpation. Each Committee member shall be acting in the
capacity of a director of the Company for the purpose of Article VI of the
Company's Certificate of Incorporation in connection with the administration
of the Plan or the granting of Options or Restricted Stock Awards under the
Plan.
(e) Indemnification. Each Committee member shall be entitled to
indemnification by the Company in accordance with the provisions and
limitations of Article VII of the Company's Bylaws, as the same may be amended
from time to time, in connection with or arising out of any action, suit or
proceeding with respect to the administration of the Plan or the granting of
Options or Restricted Stock Awards under the Plan in which he may be involved
by reason of his being or having been a Committee member, whether or not he
continues to be a Committee member at the time of the action, suit or
proceeding.
3. Eligibility. All persons the Company or its Affiliates employ as
employees or retain as independent contractors (other than directors who are
not employees) who, in the Committee's judgment, hold positions of
responsibility or whose performance can have a significant or material effect
on the Company's long-term success or achievement of specific objectives shall
be eligible to participate (the "Participants"). The Committee, in its sole
discretion, shall determine whether an individual qualifies as a Participant.
Subject to the Plan's terms and restrictions, a Participant may receive more
than one Option or Restricted Stock Award; provided, however, a Participant
may not receive Options and Restricted Stock Awards in any one calendar year
for more than an aggregate of 1,000,000 Shares. A Participant who is
an independent contractor may not receive an Option which is intended to be an
ISO.
4. Available Shares. The aggregate maximum number of shares of the
Common Stock for which the Committee may issue Options or Restricted Stock
Awards under the Plan is 8,000,000 shares, adjusted as provided in Section 9
(the "Plan Shares" or "Shares"); provided, however, the Committee may
not issue more than 1,000,000 Shares as Restricted Stock Awards in the
aggregate, and Restricted Stock Awards under this Plan and the Company's 1997
Directors' Stock Option Plan in any calendar year may not exceed 0.5% of the
shares of Common Stock issued and outstanding on any date of grant. Plan
Shares shall be issued from authorized and unissued Common Stock or Common
Stock held in or hereafter acquired for the Company's treasury. If any
outstanding Option or Restricted Stock Award granted under the Plan expires,
lapses or is terminated for any reason, the Plan Shares allocable to the
unexercised portion of such Option or forfeited portion of such Restricted
Stock Award may again be the subject of grant pursuant to the Plan.
5. Term of Plan. The Plan is effective as of May 15, 1997, the date on
which it was adopted by the Company's Board of Directors. No Option or
Restricted Stock Award granted under the Plan shall be exercisable or
nonforfeitable unless the Plan is approved by vote of a majority of the
outstanding voting stock of the Company on or before May 15, 1998. No Option
or Restricted Stock Award may be granted under the Plan after May 15, 2007.
6. Terms and Conditions of Options. Options granted pursuant to the
Plan shall be evidenced by written documents (the "Option Documents") in such
form or forms as the Committee shall from time to time approve. Option
Documents shall comply with and be subject to the terms and conditions set
<PAGE> 36
forth below and such other terms and conditions which the Committee shall from
time to time specify with respect to a particular Option or Options provided
they are not inconsistent with the terms of the Plan. The applicable terms
need not be uniform between or among Options.
(a) Number of Shares. Each Option Document shall state the number
of Shares to which it pertains.
(b) Option Price. Each Option Document shall state the price at
which Shares under Option may be purchased (the "Option Price"), which shall
be at least 100% of the Common Stock's closing price on the New York Stock
Exchange (or such other exchange as the Committee selects) on the date the
Option is granted; provided, however, if an ISO is granted to a Participant
who then owns, directly or by attribution under section 424(d) of the Code,
shares possessing more than ten percent of the total combined voting power of
all classes of stock of the Company or an Affiliate, then the Option Price for
such ISO shall be at least 110% of the Common Stock's closing price on the
date the Option is granted.
(c) Exercisability.
(i) General Rule. Unless the Committee provides otherwise in
an Option Document, each Option granted under the Plan shall be exercisable in
cumulative equal installments of 25% of the Shares under Option on each of the
first four anniversaries of the date of grant provided the Participant remains
an employee of the Company or an Affiliate on such date(s). Further, if a
Participant terminates employment due to death, disability, or retirement (as
defined below) prior to the date an Option is 100% exercisable, the
installment which would become exercisable on the next anniversary shall
become exercisable. For the purposes of this Plan, a Participant's employment
will be deemed to terminate due to "retirement" if, on his termination date,
the Participant is at least age 65 or the sum of the Participant's age
and completed years of employment with the Company or an Affiliate measured
from his date of hire is at least 75. Except to the limited extent provided
in the preceding sentence, the portion of an Option which is exercisable shall
be fixed on the Participant's employment termination date. No Option shall be
exercisable after its term expires pursuant to subsection 6(e), 6(f) or 6(g).
(ii) Change in Control. If a Change in Control of the Company
(as defined below) occurs, then all Options which both were not exercisable
and have not terminated as of the date of such "Change in Control" shall as of
such date become immediately exercisable except to the extent the Participant
waives such accelerated right to exercise. A "Change in Control" shall be
deemed to have taken place upon the date when (A) as a result of a tender
offer, stock purchase, other stock acquisition, merger, consolidation,
recapitalization, reverse split, sale or transfer of any asset or other
transaction any person or group (as such terms are used in and under Section
13(d) of the Exchange Act) other than the Company, any Affiliate, or any
employee benefit plan of the Company or an Affiliate, shall become the
beneficial owner (as defined in Rule 13-d under the Exchange Act) directly or
indirectly of securities of the Company representing more than 20% of the
combined voting power of the Company's then outstanding securities; providing,
however, that this provision shall not apply to Peter McCausland
("McCausland"), unless and until McCausland, together with all affiliates and
associates, becomes the beneficial owner of 30% or more of the combined voting
power of the Company's then outstanding securities; (B) stockholders approve
the consummation of any merger of the Company or any sale or other disposition
of all or substantially all of its assets, if the Company's stockholders
immediately before such transaction own, immediately after consummation of
<PAGE> 37
such transaction, equity securities (other than options and other rights to
acquire equity securities) possessing less than 50% of the voting power of the
surviving or acquiring corporation; or (C) a change in the majority of the
individuals who constitute the Company's Board of Directors occurs during
any period of two years for any reason without the approval of at least a
majority of directors in office at the beginning of such period.
(d) Medium of Payment. A Participant shall pay for Shares under
Option (i) in cash, (ii) by certified check payable to the order of the
Company, (iii) in shares of the Common Stock held by the Participant for at
least six months as of the exercise date, (iv) by a combination of the
foregoing, (v) by delivery to the Company of a properly executed notice of
exercise together with irrevocable instructions to a broker to deliver to the
Company promptly the amount of the proceeds of the sale of all or a portion
of the Shares or of a loan from the broker to the Participant necessary to pay
the aggregate exercise price payable for the purchased Shares plus all
applicable federal, state and local income and employment taxes required to be
withheld by the Company by reason of such exercise or (vi) by such other mode
of payment as the Committee may approve. If payment is made in whole or in
part in shares of the Common Stock, then the Participant shall deliver to the
Company certificates registered in the name of such Participant representing
shares of Common Stock owned by such Participant, free of all liens, claims
and encumbrances of every kind and having a fair market value on the date of
delivery that is not greater than the Option Price of the Shares with respect
to which such Option is to be exercised, accompanied by stock powers duly
endorsed in blank by the Participant. Notwithstanding the foregoing, the
Committee may impose such limitations and prohibitions on the use of shares of
the Common Stock to exercise an Option as it deems appropriate.
(e) Termination of ISOs. Unless the Committee provides otherwise
in an Option Document, an ISO shall not be exercisable after the first to
occur of the following:
(i) Term Expiration. Expiration of the term specified in the
Option Document, which shall not exceed ten years from the date of grant or
five years from the date of grant if the Participant on the date of grant
owns, directly or by attribution under section 424(d) of the Code, shares
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or of an Affiliate;
(ii) Employment Termination. Expiration of 90 days from the
date the Participant's employment with the Company or its Affiliates
terminates unless any of subsection 6(e)(iii) - 6(e)(vi) applies;
(iii) Retirement. Expiration of 90 days from the date the
Participant's employment with the Company or its Affiliates terminates due to
"retirement";
(iv) Disability. Expiration of one year from the date the
Participant's employment with the Company or its Affiliates terminates if the
Participant terminates due to disability (within the meaning of section
22(e)(3) of the Code);
(v) Death. Expiration of the Option term if the Participant's
employment terminates due to death; or
<PAGE> 38
(vi) Forfeiture. The date on which forfeiture occurs under
subsection 6(g).
(f) Termination of NSOs. Unless the Committee provides otherwise
in an Option Document, an NSO shall not be exercisable after the first to
occur of the following:
(i) Term Expiration. Expiration of the term specified in the
option Document, which shall not exceed ten years from the date of grant;
(ii) Employment Termination Before Death, Disability or
Retirement. Expiration of 90 days from the date the Participant's employment
with the Company or its Affiliates terminates for reasons other than death,
disability (within the meaning of section 22(e)(3) of the Code) or
"retirement"; or
(iii) Forfeiture. The date on which forfeiture occurs
under subsection 6(g).
(g) Forfeiture. An Option shall terminate immediately upon a
finding by the Committee, after full consideration of the facts presented on
behalf of both the Company and the Participant, that the Participant has
engaged in any sort of disloyalty to the Company or an Affiliate,
including, without limitation, fraud, embezzlement, theft, commission of a
felony or proven dishonesty in the course of his employment or service or has
disclosed trade secrets or confidential information of the Company or an
Affiliate or engaged in competition with the Company or an Affiliate. In such
event, in addition to immediate termination of the Option, the Participant,
upon a determination by the Committee, shall automatically forfeit all Shares
for which the Company has not yet delivered the share certificates upon the
Company's refund of the Option Price.
(h) Transfers. Generally, a Participant may not transfer any
Option granted under the Plan, except that (i) during his lifetime, a
Participant may transfer an NSO to a spouse or a lineal ascendant
or descendant or a trust for the benefit of such a person or persons or a
partnership in which such persons are the only partners, provided the
Participant receives no consideration for any such transfer and (ii) at the
Participant's death, a Participant may transfer an Option by will or by the
laws of descent and distribution. If a transfer occurs under this subsection,
the transferred Option shall remain subject to all Plan provisions. A
transferee shall be required to furnish proof satisfactory to the Committee of
the transfer to him by gift or by will or laws of descent and distribution.
(i) Limits on ISOs. Each ISO shall provide that to the extent the
aggregate fair market value of Plan Shares with respect to which a Participant
may exercise an ISO for the first time during any calendar year under any
Company plan exceeds $100,000, then such Option shall be treated as an NSO
rather than as an ISO.
(j) Other Provisions. The Option Documents shall contain such
other provisions including, without limitation, additional restrictions upon
the exercise of the Option or additional limitations upon the term of the
Option, as the Committee shall deem advisable.
(k) Amendment. The Committee shall have the right to amend Option
Documents issued to a Participant subject to the Participant's consent.
<PAGE> 39
7. Method of Option Exercise.
(a) Notice. No Option shall be deemed to have been exercised prior
to the Company's receipt of written notice of such exercise and of payment in
full of the Option Price for the Shares to be purchased. Each such notice
shall specify the number of Shares to be purchased.
(b) Securities Laws. Each notice of exercise shall (unless the
Shares are covered by a then current registration statement under the
Securities Act of 1933, as amended (the "Act")), contain the Participant's
acknowledgment in form and substance satisfactory to the Company that (i) such
Option Shares are being purchased for investment and not for distribution or
resale (other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (ii) the Participant has been advised and understands
that (A) the Option Shares may not be registered under the Act and may be
"restricted securities" within the meaning of Rule 144 under the Act and may
be subject to restrictions on transfer and (B) the Company is under no
obligation to register the Option Shares under the Act or to take any action
which would make available to the Participant any exemption from such
registration, and (iii) such Option Shares may not be transferred without
compliance with all applicable federal and state securities laws.
Notwithstanding the foregoing, should the Company be advised by counsel that
issuance of Shares should be delayed pending (iv) registration under federal
or state securities laws or (v) the receipt of an opinion that an appropriate
exemption therefrom is available, the Company may defer exercise of any Option
granted hereunder until either such event in (iv) or (v) has occurred.
(c) Brokerage Account. Each notice of exercise may instruct the
Company, in such form as the Committee shall prescribe, to deliver Shares upon
Option exercise to any registered broker or dealer which the Company approves
in lieu of delivery to the Participant.
8. Terms and Conditions of Restricted Stock Awards. Restricted Stock
Awards made pursuant to the Plan shall be evidenced by written documents (the
"Award Documents") in such form or forms as the Committee shall from time to
time approve.
(a) Number of Shares. Subject to Section 4, each Award Document
shall state the number of Shares to which it pertains.
(b) Restrictions and Limitations. Each grant shall be subject to
such restrictions as the Committee may impose. The applicable restrictions
may lapse separately or in combination at such time or times, or in such
installments, as the Committee may deem appropriate. In addition, the
Committee may impose limits on the Participant's right to vote Shares or
receive dividends or distributions on Shares under a Restricted Stock Award
until such Shares become nonforfeitable. Each Award Document shall provide
that the Participant shall forfeit all forfeitable Shares upon a finding by
the Committee that the Participant has engaged in conduct which violates
subsection 6(g) and that all forfeitable Shares shall become nonforfeitable
upon the occurrence of a Change in Control (as defined in subsection
6(c)(ii)).
<PAGE> 40
(c) Legend. Any certificate issued in respect of a Restricted
Stock Award shall be registered in the Participant's name and shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable under the Plan and Award Document to the covered Shares. In
addition, until such time as all restrictions applicable to the Shares lapse,
the Committee may provide for the certificate to be held in escrow by an
escrow agent which the Committee selects and the Company compensates.
(d) Forfeiture.
(i) General Rule. If a Participant terminates employment
during any restriction period under circumstances which result in a forfeiture
of Shares covered by the Restricted Stock Award or any event occurs or fails
to occur which results in a forfeiture, the restricted Shares shall revert to
the Company. Notwithstanding the foregoing, the Committee may waive any
restriction applicable to any Restricted Stock Award whenever the Committee
determines that such waiver is in the Company's best interests.
(ii) Forfeiture for Cause. A Participant shall forfeit all
forfeitable Shares covered by a Restricted Stock Award immediately upon a
finding by the Committee, after full consideration of the facts presented on
behalf of both the Company and the Participant, that the Participant has
engaged in any sort of disloyalty to the Company or an Affiliate, including,
without limitation, fraud, embezzlement, theft, commission of a felony or
proven dishonesty in the course of his employment or service or has disclosed
trade secrets or confidential information of the Company or an Affiliate or
engaged in competition with the Company or an Affiliate.
(e) Transfers. Generally, a Participant may not transfer, assign,
alienate, sell, encumber, or pledge Shares under a Restricted Stock Award
until they are nonforfeitable and any purported transfer, assignment,
alienation, sale, encumbrance or pledge shall be void and unenforceable.
Notwithstanding the foregoing, (i) a Participant may transfer forfeitable
Shares under a Restricted Stock Award to a spouse or a lineal ascendant or
descendant or a trust for the benefit of such a person or persons or a
partnership in which such persons are the only partners, provided the
Participant receives no consideration for any such transfer and (ii) at the
Participant's death, a Participant may transfer forfeitable Shares under a
Restricted Stock Award by will or by the laws of descent and distribution. If
a permitted transfer occurs under this subsection, the transferred Shares
shall remain subject to all Plan provisions and all applicable conditions and
restrictions under the Award Document. A transferee shall be required to
furnish proof satisfactory to the Committee of the transfer to him by gift or
by will or laws of descent and distribution.
(f) Securities Laws. Upon the advice of counsel, the Committee may
require a Participant to take or defer any action with respect to Shares
covered under a Restricted Stock Award which counsel determines is necessary
to comply with federal or state securities laws.
9. Adjustments on Changes in Common Stock. The aggregate number of
shares and class of shares as to which Options or Restricted Stock Awards may
be granted hereunder, the number of Shares covered by each outstanding Option
and the Option Price thereof and each Restricted Stock Award shall be
appropriately adjusted in the event of a stock dividend, stock split,
recapitalization or other change in the number or class of issued and
outstanding equity securities of the Company resulting from a subdivision
<PAGE> 41
or consolidation of the Common Stock and/or other outstanding equity security
or a recapitalization or other capital adjustment (not including the issuance
of Common Stock upon the conversion of other securities of the Company which
are convertible into Common Stock) affecting the Common Stock which
is effected without receipt of consideration by the Company. The Committee
shall have authority to determine the adjustments to be made under this
Section and any such determination by the Committee shall be final, binding
and conclusive; provided, however, that no adjustment shall be made which
causes an ISO to lose its status as such without the consent of the
Participant.
10. Amendment of the Plan. The Board of Directors of the Company may
amend the Plan from time to time in such manner as it may deem advisable or
terminate the Plan in full. Nevertheless, the Board of Directors of the
Company may not, without obtaining approval by vote of a majority of the
outstanding voting stock of the Company within twelve months before or after
such action, change the class of individuals eligible to receive grants under
the Plan or increase the maximum number of shares of Common Stock as to which
Options or Restricted Stock Awards may be granted, except as provided in
Section 9 hereof.
11. Continued Employment. The grant of an Option or a Restricted Stock
Award pursuant to the Plan shall not be construed to imply or to constitute
evidence of any agreement, express or implied, on the part of the Company or
any Affiliate to retain the Participant in the employ of the Company or an
Affiliate or as a member of the Company's or an Affiliate's Board of Directors
or in any other capacity.
12. Withholding of Taxes.
(a) General Rule. As a condition for the receipt of an Option or
Restricted Stock Award, the Participant agrees that the Company (or the
Affiliate employing him) may deduct from wages or other amounts payable to him
or that he will pay over to the Company any amount necessary to satisfy
any federal, state and/or local withholding tax requirements and that the
Company shall have the right to take whatever action it deems necessary to
protect its interests with respect to tax liabilities resulting from
any act or event in connection with the Plan.
(b) Payment in Shares. The Participant may elect that the Company
satisfy any applicable minimum federal, state and/or local withholding tax
requirement by retaining Shares the Company would otherwise transfer to him
upon his exercise of an Option or satisfaction of all vesting conditions under
a Restricted Stock Award which have a fair market value equal to such
withholding requirement. Notwithstanding the foregoing, the Committee may
impose such limitations and prohibitions on the use of shares of the Common
Stock to satisfy withholding tax requirements as it deems appropriate.
13. Rules of Interpretation. Regardless of the number and gender
specifically used, words used in the Plan shall be deemed and construed to
include any other number (singular or plural) and any other gender (masculine,
feminine or neuter) as the context indicates is appropriate. Section headings
are for convenience only; they form no part of the Plan.
<PAGE>
<PAGE> 42 EXHIBIT B
AIRGAS, INC.
1997 DIRECTORS' STOCK OPTION PLAN
(Effective May 15, 1997)
1. Purpose. AIRGAS, INC. (the "Company") hereby adopts the Airgas,
Inc. 1997 Directors' Stock Option Plan effective May 15, 1997 (the "Plan") as
an additional incentive to non-employee members of the Company's Board of
Directors to commence or continue service and to devote themselves to the
Company's success by providing them with an opportunity to acquire or increase
their proprietary interest in the Company through receipt of (a) rights (the
"Options") to purchase the Company's Common Stock, par value $0.01 per share
(the "Common Stock") or (b) Common Stock subject to conditions of forfeiture
(the "Restricted Stock Awards").
2. Administration.
(a) Committee. The Plan shall be administered by the Nominating
and Compensation Committee designated by the Company's Board of Directors (the
"Committee") which shall consist of at least two persons, each of whom is a
"non-employee director" as defined under Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act") (the "Non-Employee Director"). If
any Committee member does not qualify as a Non-Employee Director, then such
member shall not participate in any way with respect to Committee action under
the Plan and shall not be treated as a member of the Committee for purposes of
the Plan.
(b) Meetings. The Committee shall hold meetings at such times and
places as it may determine. Acts approved at a meeting by a majority of the
directors who are members of the Committee and present at a meeting at which
there is a quorum, or acts approved in writing by the unanimous consent of the
directors who are members of the Committee (not counting any director who
is an employee for either purpose) shall be the valid acts of the Committee.
(c) Grants. The Committee shall from time to time at its
discretion direct the Company to grant Options or Restricted Stock Awards
pursuant to the terms of the Plan. Subject to the express provisions of the
Plan, the Committee shall have plenary authority to determine the persons to
whom and the times at which Options or Restricted Stock Awards shall be
granted, the number of shares of Common Stock to be granted under an Option or
Restricted Stock Award and the price and other terms and conditions thereof.
In making such determinations the Committee may take into account the nature
of the person's services and responsibilities, the person's present and
potential contribution to the Company's success and such other factors as it
may deem relevant. The Committee's interpretation of any provision of the
Plan or of any Option or Restricted Stock Award granted under it shall be
final, binding and conclusive.
(d) Exculpation. Each Committee member shall be acting in the
capacity of a director of the Company for the purpose of Article VI of the
Company's Certificate of Incorporation in connection with the administration
of the Plan or the granting of Options or Restricted Stock Awards under the
Plan.
(e) Indemnification. Each Committee member shall be entitled to
indemnification by the Company in accordance with the provisions and
limitations of Article VII of the Company's Bylaws, as the same may be amended
from time to time, in connection with or arising out of any action, suit or
proceeding with respect to the administration of the Plan or the granting of
Options or Restricted Stock Awards under the Plan in which he may be involved
<PAGE> 43
by reason of his being or having been a Committee member, whether or not he
continues to be a Committee member at the time of the action, suit or
proceeding.
3. Eligibility. Each member of the Company's Board of Directors who is
not an employee of the Company or an entity of which the Company owns,
directly or indirectly, at least 50% of the value or voting rights of the
outstanding equity securities shall be eligible to participate (the
"Participants"). The Committee, in its sole discretion, shall determine
whether an individual qualifies as a Participant. A Participant may receive
more than one Option or Restricted Stock Award, but only on the terms and
subject to the restrictions of the Plan.
4. Available Shares. The aggregate maximum number of shares of the
Common Stock for which the Committee may issue Options or Restricted Stock
Awards under the Plan is 500,000 shares, adjusted as provided in Section 9
(the "Plan Shares" or "Shares"); provided, however, the Committee may not
issue more than 100,000 Shares as Restricted Stock Awards in the aggregate,
and Restricted Stock Awards under this Plan and the Company's 1997 Stock
Option Plan in any calendar year may not exceed 0.5% of the shares of Common
Stock issued and outstanding on any date of grant. Plan Shares shall be
issued from authorized and unissued Common Stock or Common Stock held in or
hereafter acquired for the Company's treasury. If any outstanding Option or
Restricted Stock Award granted under the Plan expires, lapses or is terminated
for any reason, the Plan Shares allocable to the unexercised portion of such
Option or forfeited portion of such Restricted Stock Award may again be the
subject of grant pursuant to the Plan.
5. Term of Plan. The Plan is effective as of May 15, 1997, the date on
which it was adopted by the Company's Board of Directors. No Option or
Restricted Stock Award granted under the Plan shall be exercisable or
nonforfeitable unless the Plan is approved by vote of a majority of the
outstanding voting stock of the Company on or before May 15, 1998. No Option
or Restricted Stock Award may be granted under the Plan after May 15, 2007.
6. Terms and Conditions of Options. Options granted pursuant to the
Plan shall be evidenced by written documents (the "Option Documents") in such
form or forms as the Committee shall from time to time approve. Option
Documents shall comply with and be subject to the terms and conditions set
forth below and such other terms and conditions which the Committee shall from
time to time specify with respect to a particular Option or Options provided
they are not inconsistent with the terms of the Plan. The applicable terms
need not be uniform between or among Options.
(a) Number of Shares. Each Option Document shall state the number
of Shares to which it pertains.
(b) Option Price. Each Option Document shall state the price at
which Shares under Option may be purchased (the "Option Price"), which shall
be at least 100% of the Common Stock's closing price on the New York Stock
Exchange (or such other exchange as the Committee selects) on the date the
Option is granted.
<PAGE> 44
(c) Exercisability.
(i) General Rule. Unless the Committee provides otherwise in
an Option Document and contingent upon the Plan's approval under Section 5,
each Option granted under the Plan shall be exercisable in full on the date of
grant. No Option shall be exercisable after its term expires pursuant to
subsection 6(e) or 6(f).
(ii) Change in Control. If a Change in Control of the Company
(as defined below) occurs, then all Options which both were not exercisable
and have not terminated as of the date of such "Change in Control" shall as of
such date become immediately exercisable except to the extent the Participant
waives such accelerated right to exercise. A "Change in Control" shall be
deemed to have taken place upon the date when (A) as a result of a tender
offer, stock purchase, other stock acquisition, merger, consolidation,
recapitalization, reverse split, sale or transfer of any asset or other
transaction any person or group (as such terms are used in and under Section
13(d) of the Exchange Act) other than the Company, any Affiliate, or any
employee benefit plan of the Company or an Affiliate, shall become the
beneficial owner (as defined in Rule 13-d under the Exchange Act) directly or
indirectly of securities of the Company representing more than 20% of the
combined voting power of the Company's then outstanding securities; providing,
however, that this provision shall not apply to Peter McCausland
("McCausland"), unless and until McCausland, together with all affiliates and
associates, becomes the beneficial owner of 30% or more of the combined voting
power of the Company's then outstanding securities; (B) stockholders approve
the consummation of any merger of the Company or any sale or other disposition
of all or substantially all of its assets, if the Company's stockholders
immediately before such transaction own, immediately after consummation of
such transaction, equity securities (other than options and other rights to
acquire equity securities) possessing less than 50% of the voting power of the
surviving or acquiring corporation; or (C) a change in the majority of the
individuals who constitute the Company's Board of Directors occurs during any
period of two years for any reason without the approval of at least a majority
of directors in office at the beginning of such period.
(d) Medium of Payment. A Participant shall pay for Shares under
Option (i) in cash, (ii) by certified check payable to the order of the
Company, (iii) in shares of the Common Stock held by the Participant for at
least six months as of the exercise date, (iv) by a combination of the
foregoing, (v) by delivery to the Company of a properly executed notice of
exercise together with irrevocable instructions to a broker to deliver to the
Company promptly the amount of the proceeds of the sale of all or a portion of
the Shares or of a loan from the broker to the Participant necessary to pay
the aggregate exercise price payable for the purchased Shares plus all
applicable federal, state and local income and employment taxes required to be
withheld by the Company by reason of such exercise or (vi) by such other mode
of payment as the Committee may approve. If payment is made in whole or in
part in shares of the Common Stock, then the Participant shall deliver to the
Company certificates registered in the name of such Participant representing
shares of Common Stock owned by such Participant, free of all liens, claims
and encumbrances of every kind and having a fair market value on the date of
delivery that is not greater than the Option Price of the Shares with respect
to which such Option is to be exercised, accompanied by stock powers duly
endorsed in blank by the Participant. Notwithstanding the foregoing,
the Committee may impose such limitations and prohibitions on the use of
shares of the Common Stock to exercise an Option as it deems appropriate.
<PAGE> 45
(e) Termination of Options. Unless the Committee provides
otherwise in an Option Document, an Option shall not be exercisable after the
first to occur of the following:
(i) Term Expiration. Expiration of the term specified in the
Option Document, which shall not exceed ten years from the date of grant;
(ii) Death. Expiration of one year from the date the
Participant's service as a member of the Company's Board of Directors
terminates due to death; or
(iii) Forfeiture. The date on which forfeiture occurs
under subsection 6(f).
(f) Forfeiture. An Option shall terminate immediately upon a
finding by the Committee, after full consideration of the facts presented on
behalf of both the Company and the Participant, that the Participant has
engaged in any sort of disloyalty to the Company, including, without
limitation, fraud, embezzlement, theft, commission of a felony or proven
dishonesty in the course of his service or has disclosed trade secrets or
confidential information of the Company. In such event, in addition to
immediate termination of the Option, the Participant, upon a determination by
the Committee, shall automatically forfeit all Shares for which the Company
has not yet delivered the share certificates upon the Company's refund of the
Option Price.
(g) Transfers. Generally, a Participant may not transfer any
Option granted under the Plan, except that (i) during his lifetime, a
Participant may transfer an Option to a spouse or a lineal ascendant or
descendant or a trust for the benefit of such a person or persons or a
partnership in which such persons are the only partners, provided the
Participant receives no consideration for any such transfer and (ii) at the
Participant's death, a Participant may transfer an Option by will or by the
laws of descent and distribution. If a transfer occurs under this subsection,
the transferred Option shall remain subject to all Plan provisions. A
transferee shall be required to furnish proof satisfactory to the Committee of
the transfer to him by gift or by will or laws of descent and distribution.
(h) Other Provisions. The Option Documents shall contain such
other provisions including, without limitation, additional restrictions upon
the exercise of the Option or additional limitations upon the term of the
Option, as the Committee shall deem advisable.
(i) Amendment. The Committee shall have the right to amend Option
Documents issued to a Participant subject to the Participant's consent.
7. Method of Option Exercise.
(a) Notice. No Option shall be deemed to have been exercised prior
to the Company's receipt of written notice of such exercise and of payment in
full of the Option Price for the Shares to be purchased. Each such notice
shall specify the number of Shares to be purchased.
(b) Securities Laws. Each notice of exercise shall (unless the
Shares are covered by a then current registration statement under the
Securities Act of 1933, as amended (the "Act")), contain the Participant's
acknowledgment in form and substance satisfactory to the Company that (i) such
Option Shares are being purchased for investment and not for distribution or
<PAGE> 46
resale (other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (ii) the Participant has been advised and understands
that (A) the Option Shares may not be registered under the Act and may be
"restricted securities" within the meaning of Rule 144 under the Act and may
be subject to restrictions on transfer and (B) the Company is under no
obligation to register the Option Shares under the Act or to take any action
which would make available to the Participant any exemption from such
registration, and (iii) such Option Shares may not be transferred without
compliance with all applicable federal and state securities laws.
Notwithstanding the foregoing, should the Company be advised by counsel that
issuance of Shares should be delayed pending (iv) registration under federal
or state securities laws or (v) the receipt of an opinion that an appropriate
exemption therefrom is available, the Company may defer exercise of any Option
granted hereunder until either such event in (iv) or (v) has occurred.
(c) Brokerage Account. Each notice of exercise may instruct the
Company, in such form as the Committee shall prescribe, to deliver Shares upon
Option exercise to any registered broker or dealer which the Company approves
in lieu of delivery to the Participant.
8. Terms and Conditions of Restricted Stock Awards. Restricted Stock
Awards made pursuant to the Plan shall be evidenced by written documents (the
"Award Documents") in such form or forms as the Committee shall from time to
time approve.
(a) Number of Shares. Subject to Section 4, each Award Document
shall state the number of Shares to which it pertains.
(b) Restrictions and Limitations. Each grant shall be subject to
such restrictions as the Committee may impose. The applicable restrictions
may lapse separately or in combination at such time or times, or in such
installments, as the Committee may deem appropriate. In addition, the
Committee may impose limits on the Participant's right to vote Shares or
receive dividends or distributions on Shares under a Restricted Stock Award
until such Shares become nonforfeitable. Each Award Document shall provide
that the Participant shall forfeit all forfeitable Shares upon a finding by
the Committee that the Participant has engaged in conduct which violates
subsection 6(f) and that all forfeitable Shares shall become nonforfeitable
upon the occurrence of a Change in Control (as defined in subsection
6(c)(ii)).
(c) Legend. Any certificate issued in respect of a Restricted
Stock Award shall be registered in the Participant's name and shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable under the Plan and Award Document to the covered Shares. In
addition, until such time as all restrictions applicable to the Shares lapse,
the Committee may provide for the certificate to be held in escrow by an
escrow agent which the Committee selects and the Company compensates.
(d) Forfeiture.
(i) General Rule. If a Participant terminates service during
any restriction period under circumstances which result in a forfeiture of
Shares covered by the Restricted Stock Award or any event occurs or fails to
occur which results in a forfeiture, the restricted Shares shall revert to the
Company. Notwithstanding the foregoing, the Committee may waive any
restriction applicable to any Restricted Stock Award whenever the Committee
determines that such waiver is in the Company's best interests.
<PAGE> 47
(ii) Forfeiture for Cause. A Participant shall forfeit all
forfeitable Shares covered by a Restricted Stock Award immediately upon a
finding by the Committee, after full consideration of the facts presented on
behalf of both the Company and the Participant, that the Participant has
engaged in any sort of disloyalty to the Company or an Affiliate, including,
without limitation, fraud, embezzlement, theft, commission of a felony or
proven dishonesty in the course of his employment or service or has disclosed
trade secrets or confidential information of the Company or an Affiliate or
engaged in competition with the Company or an Affiliate.
(e) Transfers. Generally, a Participant may not transfer, assign,
alienate, sell, encumber, or pledge Shares under a Restricted Stock Award
until they are nonforfeitable and any purported transfer, assignment,
alienation, sale, encumbrance or pledge shall be void and unenforceable.
Notwithstanding the foregoing, (i) a Participant may transfer forfeitable
Shares under a Restricted Stock Award to a spouse or a lineal ascendant or
descendant or a trust for the benefit of such a person or persons or a
partnership in which such persons are the only partners, provided the
Participant receives no consideration for any such transfer and (ii) at the
Participant's death, a Participant may transfer forfeitable Shares under a
Restricted Stock Award by will or by the laws of descent and distribution.
If a permitted transfer occurs under this subsection, the transferred Shares
shall remain subject to all Plan provisions and all applicable conditions and
restrictions under the Award Document. A transferee shall be required to
furnish proof satisfactory to the Committee of the transfer to him by gift or
by will or laws of descent and distribution.
(f) Securities Laws. Upon the advice of counsel, the Committee may
require a Participant to take or defer any action with respect to Shares
covered under a Restricted Stock Award which counsel determines is necessary
to comply with federal or state securities laws.
9. Adjustments on Changes in Common Stock. The aggregate number of
shares and class of shares as to which Options or Restricted Stock Awards may
be granted hereunder, the number of Shares covered by each outstanding Option
and the Option Price thereof and each Restricted Stock Award shall be
appropriately adjusted in the event of a stock dividend, stock split,
recapitalization or other change in the number or class of issued and
outstanding equity securities of the Company resulting from a subdivision or
consolidation of the Common Stock and/or other outstanding equity security or
a recapitalization or other capital adjustment (not including the issuance of
Common Stock upon the conversion of other securities of the Company which are
convertible into Common Stock) affecting the Common Stock which is effected
without receipt of consideration by the Company. The Committee shall have
authority to determine the adjustments to be made under this Section and any
such determination by the Committee shall be final, binding and conclusive.
10. Amendment of the Plan. The Board of Directors of the Company may
amend the Plan from time to time in such manner as it may deem advisable or
terminate the Plan in full. Nevertheless, the Board of Directors of the
Company may not, without obtaining approval by vote of a majority of the
outstanding voting stock of the Company within twelve months after such
action, increase the maximum number of shares of Common Stock as to which
Options or Restricted Stock Awards may be granted, except as provided in
Section 9 hereof.
<PAGE> 48
11. Continued Service. The grant of an Option or a Restricted Stock
Award pursuant to the Plan shall not be construed to imply or to constitute
evidence of any agreement, express or implied, on the part of the Company to
retain the Participant as a member of the Company's Board of Directors or
in any other capacity.
12. Withholding of Taxes.
(a) General Rule. As a condition for the receipt of an Option or
Restricted Stock Award, the Participant agrees that the Company (or the
Affiliate employing him) may deduct from fees or other amounts payable to him
or that he will pay over to the Company any amount necessary to satisfy
any federal, state and/or local withholding tax requirements and that the
Company shall have the right to take whatever action it deems necessary to
protect its interests with respect to tax liabilities resulting
from any act or event in connection with the Plan.
(b) Payment in Shares. The Participant may elect that the Company
satisfy any applicable minimum federal, state and/or local withholding tax
requirement by retaining Shares the Company would otherwise transfer to him
upon his exercise of an Option or satisfaction of all vesting conditions under
a Restricted Stock Award which have a fair market value equal to such
withholding requirement. Notwithstanding the foregoing, the Committee may
impose such limitations and prohibitions on the use of shares of the Common
Stock to satisfy withholding tax requirements as it deems appropriate.
13. Rules of Interpretation. Regardless of the number and gender
specifically used, words used in the Plan shall be deemed and construed to
include any other number (singular or plural) and any other gender (masculine,
feminine or neuter) as the context indicates is appropriate. Section headings
are for convenience only; they form no part of the Plan.
<PAGE>
<PAGE> 49
AIRGAS, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS, AUGUST 4, 1997
The undersigned holder of Common Stock of Airgas, Inc. hereby appoints
Peter McCausland, Todd R. Craun and Thomas C. Deas, Jr., and each of them,
proxies, with powers of substitution in each, to vote on behalf of the
undersigned at the Annual Meeting of Stockholders to be held at 8:30 a.m. on
Monday, August 4, 1997, in the Ballroom of the Four Seasons Hotel, 18th Street
and Benjamin Franklin Parkway, Philadelphia, Pennsylvania, and at all
adjournments thereof, according to the number of shares which the undersigned
would be entitled to vote if then personally present, and in their discretion
upon such other business as may come before the Meeting.
SHARES WILL BE VOTED AS INSTRUCTED, BUT IF NO INSTRUCTION IS GIVEN, SHARES
WILL BE VOTED FOR ALL THE NOMINEES FOR DIRECTOR NAMED IN THE PROXY
STATEMENT, FOR THE PROPOSALS DESCRIBED IN THE PROXY STATEMENT AND WITH
DISCRETIONARY AUTHORITY ON SUCH OTHER MATTERS AS MAY COME BEFORE THE
MEETING.
(Continued, and to be signed, on the other side)
____________________________________________________
[to be inserted on back of proxy card]
Please mark [] or [] in blue or black ink.
1. Election of Directors.
Nominees: Robert E. Naylor, Jr., Robert L. Yohe and Rajiv L. Gupta
[] FOR all nominees listed above
[] FOR all nominees listed above; except vote withheld from following
nominees (if any): ___________________________________
[] VOTE WITHHELD from all nominees
2. Adopt the 1997 Stock Option Plan
[] FOR [] AGAINST [] ABSTAIN
3. Adopt the 1997 Directors' Stock Option Plan
[] FOR [] AGAINST [] ABSTAIN
4. Ratify the selection of KPMG Peat Marwick
LLP as independent auditors.
[] FOR [] AGAINST [] ABSTAIN
<PAGE> 50
5. In their discretion, upon such other matters as
may properly come before the Meeting.
The undersigned acknowledges receipt with this proxy of a copy of the
Notice of Annual Meeting of Stockholders and the Proxy Statement of the
Board of Directors.
NOTE: Please sign exactly as name(s) appears hereon.
Executors, administrators, trustees, etc. should
give full title as such.
Signature______________________________________________
Signature_______________________________________________
Dated____________________________________________, 1997
PLEASE SIGN AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
<PAGE>
