Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2010

Commission file number: 1-9344

AIRGAS, INC.

(Exact name of registrant as specified in its charter)


Delaware		56-0732648
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

259 North Radnor-Chester Road, Suite 100 Radnor, PA		19087-5283
(Address of principal executive offices)		(ZIP code)

(610) 687-5253

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	þ		Accelerated filer	¨

Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Shares of common stock outstanding at August 4, 2010: 83,666,869 shares

AIRGAS, INC.

FORM 10-Q

June 30, 2010

INDEX


PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Earnings for the Three Months Ended June 30, 2010 and 2009 (Unaudited)		3
Consolidated Balance Sheets as of June 30, 2010 (Unaudited) and March 31, 2010		4
Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2010 and 2009 (Unaudited)		5
Notes to Consolidated Financial Statements (Unaudited)		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3. Quantitative and Qualitative Disclosures About Market Risk		31
Item 4. Controls and Procedures		32
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		34
Item 1A. Risk Factors		34
Item 6. Exhibits		34
SIGNATURE		35

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

AIRGAS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended June 30,
	2010			2009
Net Sales	$	1,052,656		$	981,991

Costs and Expenses:
Cost of products sold (excluding depreciation)		475,102			438,939
Selling, distribution and administrative expenses		390,549			378,744
Costs related to unsolicited takeover attempt		3,787			0
Depreciation		54,265			51,583
Amortization		6,202			4,816

Total costs and expenses		929,905			874,082

Operating Income		122,751			107,909
Interest expense, net		(13,319	)		(18,367	)
Discount on securitization of trade receivables		0			(1,615	)
Losses on the extinguishment of debt		(2,941	)		0
Other income (expense), net		(610	)		1,205

Earnings before income taxes		105,881			89,132
Income taxes		(41,082	)		(34,316	)

Net Earnings	$	64,799		$	54,816

Net Earnings Per Common Share:
Basic earnings per share	$	0.78		$	0.67

Diluted earnings per share	$	0.76		$	0.66

Weighted Average Shares Outstanding:
Basic		83,457			81,618

Diluted		85,281			83,287

See accompanying notes to consolidated financial statements.

AIRGAS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)


	(Unaudited) June 30, 2010			March 31, 2010
ASSETS
Current Assets
Cash	$	57,890		$	47,001
Trade receivables, less allowances for doubtful accounts of $26,242 and $25,359 at June 30, 2010 and March 31, 2010, respectively (Notes 2 and 6)		504,512			186,804
Inventories, net		344,644			333,961
Deferred income tax asset, net		50,185			48,591
Prepaid expenses and other current assets		79,985			94,978

Total current assets		1,037,216			711,335

Plant and equipment at cost		3,791,373			3,774,208
Less accumulated depreciation		(1,366,479	)		(1,346,212	)

Plant and equipment, net		2,424,894			2,427,996

Goodwill		1,106,881			1,109,276
Other intangible assets, net		207,011			212,752
Other non-current assets		38,827			34,573

Total assets	$	4,814,829		$	4,495,932

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable, trade	$	147,249		$	157,566
Accrued expenses and other current liabilities		357,221			307,822
Current portion of long-term debt		9,589			10,255

Total current liabilities		514,059			475,643

Long-term debt, excluding current portion (Notes 2 and 6)		1,711,630			1,499,384
Deferred income tax liability, net		658,944			652,389
Other non-current liabilities		69,231			72,972
Commitments and contingencies

Stockholders’ Equity
Preferred stock, 20,030 shares authorized, no shares issued or outstanding at June 30, 2010 and March 31, 2010		—			—
Common stock, par value $0.01 per share, 200,000 shares authorized, 86,375 and 86,253 shares issued at June 30, 2010 and March 31, 2010, respectively		864			863
Capital in excess of par value		582,475			568,421
Retained earnings		1,379,186			1,332,759
Accumulated other comprehensive income		1,374			3,442
Treasury stock, 2,834 and 3,027 shares at cost at June 30, 2010 and March 31, 2010, respectively		(102,934	)		(109,941	)

Total stockholders’ equity		1,860,965			1,795,544

Total liabilities and stockholders’ equity	$	4,814,829		$	4,495,932

See accompanying notes to consolidated financial statements.

AIRGAS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


(In thousands)	Three Months Ended June 30, 2010			Three Months Ended June 30, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$	64,799		$	54,816
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation		54,265			51,583
Amortization		6,202			4,816
Deferred income taxes		5,500			15,641
Loss on sales of plant and equipment		636			252
Stock-based compensation expense		10,269			9,914
Losses on the extinguishment of debt		2,941			0
Changes in assets and liabilities, excluding effects of business acquisitions:
Securitization of trade receivables (Note 2)		(295,000	)		(15,900	)
Trade receivables, net		(22,768	)		16,986
Inventories, net		(10,671	)		23,375
Prepaid expenses and other current assets		15,990			5,603
Accounts payable, trade		(6,509	)		(8,660	)
Accrued expenses and other current liabilities		43,519			6,039
Other non-current assets		1,293			1,190
Other non-current liabilities		(670	)		(3,396	)

Net cash (used in) provided by operating activities		(130,204	)		162,259

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(61,121	)		(67,312	)
Proceeds from sales of plant and equipment		3,338			2,510
Business acquisitions and holdback settlements		(2,474	)		(2,863	)
Other, net		66			(1,433	)

Net cash used in investing activities		(60,191	)		(69,098	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings (Note 2)		406,739			88,553
Repayment of debt		(202,688	)		(163,977	)
Financing costs		(854	)		0
Premium paid on redemption of senior subordinated notes		(2,650	)		0
Proceeds from the exercise of stock options		5,232			2,123
Stock issued for the Employee Stock Purchase Plan		3,580			3,888
Tax benefit realized from the exercise of stock options		1,952			1,334
Dividends paid to stockholders		(18,372	)		(14,701	)
Change in cash overdraft and other		8,345			2,163

Net cash provided by (used in) financing activities		201,284			(80,617	)

Change in cash	$	10,889		$	12,544
Cash – Beginning of period		47,001			47,188

Cash – End of period	$	57,890		$	59,732

See accompanying notes to consolidated financial statements.

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(1) BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Airgas, Inc. and its subsidiaries (“Airgas” or the “Company”). Intercompany accounts and transactions are eliminated in consolidation. The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). These consolidated financial statements do not include all disclosures required for annual financial statements. These consolidated financial statements should be read in conjunction with the more complete disclosures contained in the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2010.

The preparation of financial statements in accordance with GAAP requires the use of estimates. The consolidated financial statements reflect, in the opinion of management, reasonable estimates and all adjustments necessary to present fairly the Company’s results of operations, financial position and cash flows for the periods presented. The interim operating results are not necessarily indicative of the results to be expected for the entire year.

Prior Period Adjustments

Certain reclassifications were made to the Consolidated Statements of Earnings for the prior period, as well as the related notes, to conform to the current period presentation. These reclassifications resulted in increasing revenue and selling, distribution and administrative expenses and reducing cost of products sold (excluding depreciation). These reclassifications were the result of conforming the Company’s accounting policies in conjunction with its SAP implementation. For the three months ended June 30, 2009, the reclassifications increased net sales by $2.7 million, decreased cost of products sold (excluding depreciation) by $0.9 million and increased selling, distribution and administrative expenses by $3.6 million. The Company does not consider these reclassifications to be material to its results of operations. Consolidated operating income and net earnings for the prior period were not impacted by the reclassifications.

(2) ACCOUNTING AND DISCLOSURE CHANGES

(a) Recently adopted accounting pronouncements

On April 1, 2010, the Company adopted Accounting Standards Update (“ASU”) 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets (“ASU 2009-16”), which affected the accounting treatment of its trade receivables securitization program. The Company currently participates in a trade receivables securitization agreement (the “Securitization Agreement”) with three commercial banks to which it sells qualifying trade receivables on a revolving basis. The amount of receivables securitized under the Securitization Agreement was $295 million at both June 30, 2010 and March 31, 2010. Under the new guidance, proceeds received under the Securitization Agreement are treated as secured borrowings, whereas previously they were treated as proceeds from the sale of trade receivables. The impact of the new accounting treatment resulted in the recognition of both the trade receivables securitized under the program and the borrowings they collateralize on the Consolidated Balance Sheet, which led to a $295 million increase in trade receivables and long-term debt at June 30, 2010. Additionally, new borrowings under the Securitization Agreement are classified as financing activities on the Company’s Consolidated Statement of Cash Flows. Prior to April 1, 2010, they were treated as proceeds from the sale of trade receivables and reflected net of collections on the Consolidated Statement of Cash Flows as operating activities. With respect to the Company’s Consolidated Statement of Earnings, the amounts previously recorded within the line item “Discount on securitization of trade receivables,” which represented the difference between the proceeds from the sale and the carrying value of the receivables under the Securitization Agreement, are now reflected within “Interest expense, net” as borrowing costs, consistent with the new accounting treatment. There was no impact to the Company’s consolidated net earnings as a result of the change in accounting principle. Additionally, the Company’s debt covenants were not impacted by the balance sheet recognition of the borrowings as a result of the new accounting guidance, as borrowings under the Securitization Agreement were already factored into the debt covenant calculations.

Prior to the adoption of ASU 2009-16, the funding transactions under the Securitization Agreement were accounted for as sales of trade receivables. The Company retained a subordinated interest in the trade receivables sold, which was recorded at the trade receivables’ previous carrying value. Subordinated retained interests of approximately $142 million, net of an allowance for doubtful accounts of $23 million, were included in trade receivables in the accompanying Consolidated Balance Sheet at March 31, 2010. Under the previous accounting treatment, management calculated the fair value of the retained interest based on management’s best estimate of the undiscounted expected future cash collections on the trade receivables, with changes in the fair value recognized as bad debt expense.

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

On April 1, 2010, the Company adopted ASU No. 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (“ASU 2009-17”). ASU 2009-17 established new standards that changed the consolidation model for variable interest entities (“VIEs”), including (1) changes in considerations as to whether an entity is a VIE, (2) a qualitative rather than quantitative assessment to identify the primary beneficiary of a VIE, (3) an ongoing rather than event-driven assessment of the VIE’s primary beneficiary, and (4) the elimination of the qualified special purpose entity scope exception. The new guidance did not result in the deconsolidation of the Company’s existing VIE.

(b) Accounting pronouncements not yet adopted

In October 2009, the Financial Accounting Standards Board issued ASU No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements – a consensus of the FASB Emerging Issues Task Force (“ASU 2009-13”), which addresses the allocation of revenue in arrangements containing multiple deliverables. Specifically, ASU 2009-13 modifies existing GAAP by providing new guidance concerning (1) the determination of whether an arrangement involving multiple deliverables contains more than one unit of accounting, and (2) the manner in which arrangement consideration should be allocated to such deliverables. The guidance requires the use of an entity’s best estimate of the selling price of a deliverable if vendor specific objective evidence or third-party evidence of the selling price cannot be determined. Additionally, ASU 2009-13 eliminates the use of the residual method of allocating consideration when vendor specific objective evidence or third-party evidence of the selling price is known for some, but not all, of the delivered items in a multiple element arrangement. Finally, ASU 2009-13 requires expanded qualitative and quantitative disclosures in the financial statements. ASU 2009-13 is effective for fiscal years beginning on or after June 15, 2010, with early adoption permitted. Upon adoption, the guidance may be applied either prospectively from the beginning of the fiscal year for new or materially modified arrangements, or it may be applied retrospectively. The Company currently has contracts in place that contain multiple deliverables, principally product supply agreements for gases and container rental. The Company treats the deliverables in these arrangements under current GAAP as separate units of accounting with selling prices derived from Company specific or third-party evidence, and the new guidance is not expected to significantly modify the accounting for these types of arrangements. The Company is continuing to evaluate the effects that ASU 2009-13 may have on its consolidated financial statements.

(3) INVENTORIES, NET

Inventories, net, consist of:


(In thousands)	June 30, 2010		March 31, 2010
Hardgoods	$	242,616	$	225,832
Gases		102,028		108,129

	$	344,644	$	333,961

Hardgoods inventories determined using the LIFO inventory method totaled $34 million at June 30, 2010 and $32 million at March 31, 2010. The balance of the hardgoods inventories is valued using the FIFO and average-cost inventory methods. If the hardgoods inventories valued under the LIFO method had been valued using the FIFO method, the carrying value of hardgoods inventory would have been $10.5 million higher at June 30, 2010 and $10.3 million higher at March 31, 2010. Substantially all of the inventories are finished goods.

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

(4) GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a purchase business combination. The valuations of goodwill and other intangible assets from recent acquisitions are based on preliminary estimates of fair value and are subject to revision as the Company finalizes appraisals and other analyses. Changes in the carrying amount of goodwill for the three months ended June 30, 2010 were as follows:


(In thousands)	Distribution Business Segment			All Other Operations Business Segment			Total
Balance at March 31, 2010	$	922,718		$	186,558		$	1,109,276
Acquisitions ⁽¹⁾		(1,098	)		1			(1,097	)
Other adjustments, including foreign currency translation		(1,239	)		(59	)		(1,298	)

Balance at June 30, 2010	$	920,381		$	186,500		$	1,106,881

⁽¹⁾	Adjustments made to prior year acquisitions.

Other intangible assets amounted to $207 million and $213 million, net of accumulated amortization of $62 million and $56 million, at June 30, 2010 and March 31, 2010, respectively. These intangible assets primarily consist of customer relationships, which are amortized over the estimated benefit period which ranges from 7 to 17 years, and non-competition agreements, which are amortized over the term of the agreements. The determination of the estimated benefit period associated with customer relationships is based on the analysis of historical customer sales attrition information and other customer-related factors at the date of acquisition. There are no expected residual values related to these intangible assets. The Company evaluates the estimated benefit period and recoverability of its intangible assets when facts and circumstances indicate that the lives may not be appropriate and/or the carrying value of the asset may not be recoverable. If the carrying value is not recoverable, impairment is measured as the amount by which the carrying value exceeds its estimated fair value. Fair value is generally estimated based on either appraised value or other valuation techniques. Estimated future amortization expense by fiscal year is as follows: remainder of fiscal 2011 - $17.4 million; 2012 - $22.0 million; 2013 - $21.1 million; 2014 - $18.8 million; 2015 - $17.3 million and $110.4 million thereafter.

(5) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities include:


(In thousands)	June 30, 2010		March 31, 2010
Accrued payroll and employee benefits	$	83,646	$	86,320
Business insurance reserves		44,380		42,414
Income taxes ^(a)		35,333		526
Taxes other than income taxes		20,571		18,916
Cash overdraft		56,819		48,474
Deferred rental revenue		25,717		25,585
Accrued costs related to unsolicited takeover attempt (Note 16)		24,777		22,472
Other accrued expenses and current liabilities		65,978		63,115

	$	357,221	$	307,822

^(a)	At March 31, 2010, the Company was in a net U.S. federal income tax refund position which was reflected as a current asset.

With respect to the business insurance reserves above, the Company had corresponding insurance receivables of $11.6 million at June 30, 2010 and $10.6 million at March 31, 2010, which are included within “Prepaid expenses and other current assets” on the Company’s Consolidated Balance Sheets. The insurance receivables represent the balance of probable claim losses in excess of the Company’s self-insured retention for which the Company is fully insured.

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

(6) INDEBTEDNESS

Long-term debt consists of:


(In thousands)	June 30, 2010			March 31, 2010
Revolving credit borrowings - U.S.	$	159,000		$	198,500
Revolving credit borrowings - Multi-currency		31,178			31,514
Revolving credit borrowings - Canadian		9,343			10,333
Revolving credit borrowings - France		2,080			1,351
Trade receivables securitization		295,000			—
Term loans		285,000			307,500
Senior notes, net of discount		704,796			698,963
Senior subordinated notes		220,446			245,446
Acquisition and other notes		14,376			16,032

Total long-term debt		1,721,219			1,509,639
Less current portion of long-term debt		(9,589	)		(10,255	)

Long-term debt, excluding current portion	$	1,711,630		$	1,499,384

Senior Subordinated Note Redemption

During the quarter ended June 30, 2010, the Company repurchased $25.0 million of its 7.125% senior subordinated notes (the “2008 Notes”) maturing October 1, 2018 at an average price of 110.6% of the principal. Losses on the early extinguishment of debt were $2.9 million ($1.9 million after tax) for the quarter ended June 30, 2010 and related to the redemption premiums and write-off of unamortized debt issuance costs.

Senior Credit Facility

The Company maintains a senior credit facility (the “Credit Facility”) with a syndicate of lenders. At June 30, 2010, the Credit Facility permitted the Company to borrow up to $991 million under a U.S. dollar revolving credit line, up to $75 million (U.S. dollar equivalent) under a multi-currency revolving credit line, and up to C$40 million (U.S. $38 million) under a Canadian dollar revolving credit line. The Credit Facility also contains a term loan provision through which the Company borrowed $600 million with scheduled repayment terms. The term loans were repayable in quarterly installments of $22.5 million through June 30, 2010. The quarterly installments increase to $71.2 million from September 30, 2010 to June 30, 2011. Principal payments due over the next twelve months on the term loans are classified as “Long-term debt” in the Company’s Consolidated Balance Sheets based on the Company’s ability and intention to refinance the payments with borrowings under its long-term revolving credit facilities. As principal amounts under the term loans are repaid, no additional borrowing capacity is created under the term loan provision. The Credit Facility will mature on July 25, 2011. However, the Company anticipates entering into a similar long-term credit facility to replace the maturing facility prior to September 30, 2010.

As of June 30, 2010, the Company had approximately $485 million of borrowings under the Credit Facility: $159 million under the U.S. dollar revolver, $285 million under the term loans, $31 million (in U.S. dollars) under the multi-currency revolver and C$10 million (U.S. $9 million) under the Canadian dollar revolver. The Company also had outstanding letters of credit of $42 million issued under the Credit Facility. The U.S. dollar revolver borrowings and the term loans bear interest at the London Interbank Offered Rate (“LIBOR”) plus 50 basis points. The multi-currency revolver bears interest based on a spread of 50 basis points over the Euro currency rate applicable to each foreign currency borrowing. The Canadian dollar borrowings bear interest at the Canadian Bankers’ Acceptance Rate plus 50 basis points. As of June 30, 2010, the average effective interest rates on the U.S. dollar revolver, the term loans, the multi-currency revolver and the Canadian dollar revolver were 0.81%, 1.03%, 0.99% and 1.29%, respectively.

The Company also maintains a committed revolving line of credit of up to € 3.0 million (U.S. $3.7 million) to fund its expansion into France. These revolving credit borrowings are outside of the Company’s Credit Facility. At June 30, 2010, French revolving credit borrowings were € 1.7 million (U.S. $2.1 million). The variable interest rates on the French revolving credit borrowings are based on the Euro currency rate plus 50 basis points. As of June 30, 2010, the effective interest rate on the French revolving credit borrowings was 0.93%.

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

At June 30, 2010, the financial covenants of the Credit Facility did not restrict the Company’s ability to borrow on the unused portion of the Credit Facility. The Credit Facility contains customary events of default, including nonpayment and breach of covenants. In the event of default, repayment of borrowings under the Credit Facility may be accelerated. The Company’s Credit Facility also contains cross-default provisions whereby a default under the Credit Facility could result in defaults under the senior and senior subordinated notes discussed below. As of June 30, 2010, approximately $862 million remained unused under the Company’s Credit Facility.

Money Market Loans

The Company has an agreement with a financial institution that provides access to short-term advances not to exceed $35 million. The agreement expires on December 1, 2010, but may be extended subject to renewal provisions contained in the agreement. The advances are generally overnight or for up to seven days. The amount, term and interest rate of an advance are established through mutual agreement with the financial institution when the Company requests such an advance. At June 30, 2010, there were no advances outstanding under the agreement.

Senior Notes

At June 30, 2010, the Company had $400 million of 4.5% senior notes (the “2009 Notes”) outstanding. The 2009 Notes were issued at a discount and mature on September 15, 2014 with an effective yield of 4.527%. Interest on the 2009 Notes is payable semi-annually on March 15 and September 15 of each year. Additionally, the Company has the option to redeem the 2009 Notes prior to their maturity, in whole or in part, at 100% of the principal plus any accrued but unpaid interest and applicable make-whole payments.

At June 30, 2010, the Company had $300 million of 2.85% senior notes (the “2010 Notes”) outstanding. The 2010 Notes were issued at a discount and mature on October 1, 2013 with an effective yield of 2.871%. Interest on the 2010 Notes is payable semi-annually on April 1 and October 1 of each year, commencing on October 1, 2010. Additionally, the Company has the option to redeem the 2010 Notes prior to their maturity, in whole or in part, at 100% of the principal plus any accrued but unpaid interest and applicable make-whole payments.

Senior Subordinated Notes

The 2008, 2009 and 2010 Notes contain covenants that could restrict the payment of dividends, the repurchase of common stock, the issuance of preferred stock, and the incurrence of additional indebtedness and liens.

Acquisition and Other Notes

The Company’s long-term debt also includes acquisition and other notes, principally consisting of notes issued to sellers of businesses acquired, which are repayable in periodic installments. At June 30, 2010, acquisition and other notes totaled $14.4 million with an average interest rate of approximately 6% and an average maturity of approximately two years.

Trade Receivables Securitization

The Company participates in the Securitization Agreement with three commercial banks to which it sells qualifying trade receivables on a revolving basis. Effective April 1, 2010 under new accounting guidance, the Company’s sale of qualified trade receivables is now accounted for as a secured borrowing under which qualified trade receivables collateralize amounts borrowed from the commercial banks. Trade receivables that collateralize the Securitization Agreement are held in a bankruptcy-remote special purpose entity, which is consolidated for financial reporting purposes. Qualified trade receivables in the amount of the outstanding borrowing under the Securitization Agreement are not available to the general creditors of the Company. The maximum amount of the Securitization Agreement is $295 million and it bears interest at approximately LIBOR plus 95 basis points. At June 30, 2010, the amount of outstanding borrowing under the Securitization Agreement has been classified as long-term debt on the Consolidated Balance Sheet. Amounts borrowed under the Securitization Agreement fluctuate monthly based on the Company’s funding requirements and the level of qualified trade receivables available to collateralize the Securitization Agreement. The Securitization Agreement expires in March 2012 and contains customary events of

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

termination, including standard cross default provisions with respect to outstanding debt. The amount of outstanding borrowing under the Securitization Agreement at June 30, 2010 was $295 million.

Aggregate Long-term Debt Maturities

The aggregate maturities of long-term debt at June 30, 2010 are as follows:


(In thousands)	Debt Maturities ⁽¹⁾
June 30, 2011	$	9,589
March 31, 2012		783,769
March 31, 2013		1,450
March 31, 2014		300,518
March 31, 2015		400,472
Thereafter		220,624

	$	1,716,422

⁽¹⁾

The Company has the ability and intention of refinancing current maturities related to the term loans under its Credit Facility with its long-term revolving credit line. Therefore, principal payments due in the twelve months ending June 30, 2011 on term loans have been reflected as long-term in the aggregate maturity schedule.

Outstanding borrowings under the Securitization Agreement at June 30, 2010 are reflected as maturing at the agreement’s expiration in March 2012.

The 2009 and 2010 Notes are reflected in the debt maturity schedule at their maturity value rather than their carrying value, which is net of a discount of $408 thousand and $198 thousand, respectively, at June 30, 2010. The 2010 Notes also include additional carrying value of $5.4 million at June 30, 2010 related to the Company’s fair value hedges — see Note 7 for additional disclosure.

(7) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company manages its exposure to changes in market interest rates. The Company’s involvement with derivative instruments is limited to highly effective interest rate swap agreements used to manage well-defined interest rate risk exposures. The Company monitors its positions and credit ratings of its counterparties and does not anticipate non-performance by the counterparties. Interest rate swap agreements are not entered into for trading purposes. The Company recognizes certain derivative instruments as either assets or liabilities at fair value on the Consolidated Balance Sheet. At June 30, 2010, the Company was party to a total of twelve interest rate swap agreements with an aggregate notional amount of $550 million.

Cash Flow Hedges

The Company designates fixed interest rate swap agreements as cash flow hedges of interest payments on variable-rate debt associated with the Company’s Credit Facility. For derivative instruments designated as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (“AOCI”) and is reclassified into earnings in the same period or periods during which the hedge transaction affects earnings. Gains and losses on the derivative instruments representing hedge ineffectiveness are recognized in current earnings.

At June 30, 2010, the Company had seven fixed interest rate swap agreements outstanding with a notional amount of $250 million. These swaps effectively convert $250 million of variable interest rate debt associated with the Company’s Credit Facility to fixed rate debt. At June 30, 2010, these swap agreements required the Company to make fixed interest payments based on a weighted average effective rate of 3.21% and receive variable interest payments from the counterparties based on a weighted average variable rate of 0.96%. The remaining terms of these swap agreements range from three to six months. For the three months ended June 30, 2010, the fair value of the liability for the fixed interest rate swap agreements decreased and the Company recorded a corresponding adjustment to “Accumulated other comprehensive income” of $1.9 million, or $1.3 million after tax. For the three months ended June 30, 2009, the fair value of the liability for the fixed interest rate swap agreements decreased and the Company recorded a corresponding adjustment to “Accumulated other comprehensive income” of $4.5 million, or $2.9 million after tax.

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

The estimated net amount of existing losses recorded in “Accumulated other comprehensive income” at June 30, 2010 that is expected to be reclassified into earnings within the next twelve months is $1.3 million, net of estimated tax benefits of $704 thousand. The amount of gain or loss recognized in current earnings as a result of hedge ineffectiveness related to the designated cash flow hedges is immaterial for the three months ended June 30, 2010 and 2009.

Fair Value Hedges

The Company also has variable interest rate swap agreements, which are designated as fair value hedges. For derivative instruments designated as fair value hedges, the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in current earnings.

At June 30, 2010, the Company had five variable interest rate swaps outstanding with a notional amount of $300 million. These variable interest rates swaps effectively convert the Company’s $300 million of fixed rate 2010 Notes to variable rate debt. At June 30, 2010, these swap agreements required the Company to make variable interest payments based on a weighted average forward rate of 2.30% and receive fixed interest payments from the counterparties based on a fixed rate of 2.85%. The maturity of these fair value swaps coincides with the maturity date of the Company’s 2010 Notes in October 2013. During the three months ended June 30, 2010, the fair value of the variable interest rate swaps increased by $5.9 million to an asset of $5.3 million and was recorded in “Other non-current assets.” The corresponding increase in the carrying value of the 2010 Notes caused by the hedged risk was $5.8 million and was recorded in “Long-term debt.” The Company records the gain or loss on the hedged item (the 2010 Notes) and the gain or loss on the variable interest rate swaps in interest expense. Accordingly, the gain from the hedge was $122 thousand for the three months ended June 30, 2010 and was reflected as a reduction to interest expense. At June 30, 2009, the Company had no outstanding variable interest rate swaps.

Tabular Disclosure

The following tables reflect the fair values of derivative instruments on the Company’s Consolidated Balance Sheets as well as the effect of derivative instruments on the Company’s earnings and stockholders’ equity.

Fair Value of Derivatives Designated as Hedging Instruments


	June 30, 2010			March 31, 2010
(In thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate swaps:
Fixed interest rate swaps	Other non-current liabilities	($2,012	)	Other non-current liabilities	($	3,962	)
Variable interest rate swaps	Other non-current assets	$5,291		Other non-current liabilities	($	625	)

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Effect of Derivative Instruments on Earnings and Stockholders’ Equity


(In thousands)	Amount of Gain Recognized in OCI on Derivatives Three Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships
Derivatives in Cash Flow Hedging Relationships	2010			2009
Interest rate swaps	$	1,950		$	4,489
Tax expense		(683	)		(1,571	)

Net effect	$	1,267		$	2,918

(In thousands)	Amount of Loss Reclassified from AOCI into Pre-tax Income Three Months Ended June 30,
Location of Loss Reclassified from AOCI into Pre- tax Income for Derivatives in Cash Flow Hedging Relationships


	2010			2009
Interest expense, net	$	1,845		$	4,870


(In thousands)	Location of Gain (Loss) Recognized in Pre-tax Income	Amount of Gain (Loss) Recognized in Pre-Tax Income Three Months Ended June 30, 2010
Derivatives in Fair Value Hedging Relationships
Change in fair value of variable interest rate swaps	Interest expense, net	$	5,916
Change in carrying value of 2010 Notes	Interest expense, net		(5,794	)

Net effect	Interest expense, net	$	122

(8) FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are classified based upon the level of judgment associated with the inputs used to measure their fair value. The hierarchical levels related to the subjectivity of the valuation inputs are defined as follows:

•

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.

•

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable, directly or indirectly through corroboration with observable market data at the measurement date.

•

Level 3 inputs are unobservable inputs that reflect management’s best estimate of the assumptions (including assumptions about risk) that market participants would use in pricing the asset or liability at the measurement date.

The carrying value of cash, trade receivables, other current receivables, trade payables and other current liabilities (e.g., deposit liabilities, cash overdrafts, etc.) approximate fair value.

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Assets and liabilities measured at fair value on a recurring basis at June 30, 2010 and March 31, 2010 are categorized in the tables below based on the lowest level of significant input to the valuation.


(In thousands)	Balance at June 30, 2010		Quoted prices in active markets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3
Assets:
Deferred compensation plan assets	$	7,495	$	7,495	$	—	$	—
Derivative assets – variable interest rate swap agreements		5,291		—		5,291		—

Total assets measured at fair value on a recurring basis	$	12,786	$	7,495	$	5,291	$	—

Liabilities:
Deferred compensation plan liabilities	$	7,495	$	7,495	$	—	$	—
Derivative liabilities – fixed interest rate swap agreements		2,012		—		2,012		—

Total liabilities measured at fair value on a recurring basis	$	9,507	$	7,495	$	2,012	$	—


(In thousands)	Balance at March 31, 2010		Quoted prices in active markets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3
Assets:
Subordinated retained interest in trade receivables sold under the Company’s trade receivables securitization	$	142,310	$	—	$	—	$	142,310
Deferred compensation plan assets		7,596		7,596		—		—

Total assets measured at fair value on a recurring basis	$	149,906	$	7,596	$	—	$	142,310

Liabilities:
Deferred compensation plan liabilities	$	7,596	$	7,596	$	—	$	—
Derivative liabilities – fixed interest rate swap agreements		3,962		—		3,962		—
Derivative liabilities – variable interest rate swap agreements		625		—		625		—

Total liabilities measured at fair value on a recurring basis	$	12,183	$	7,596	$	4,587	$	—

The following is a general description of the valuation methodologies used for financial assets and liabilities measured at fair value:

Deferred compensation plan assets and corresponding liabilities — The Company’s deferred compensation plan assets consist of exchange traded open-ended mutual funds with quoted prices in active markets (Level 1). The Company’s deferred compensation plan liabilities are equal to the plan’s assets. Gains or losses on the deferred compensation plan assets are recognized as other income (expense), net, while gains or losses on the deferred compensation plan liabilities are recognized as compensation expense in the Consolidated Statement of Earnings.

Derivative liabilities and assets — interest rate swap agreements — The Company has both fixed and variable interest rate swap agreements, all with highly rated counterparties. The fixed interest rate swaps are designated as cash flow hedges and effectively convert portions of the Company’s variable rate debt to fixed rate debt. The Company’s variable interest rate swaps are designated as fair value hedges and effectively convert the Company’s fixed rate 2010 Notes to variable rate debt. The swap agreements are valued using an income approach that relies on observable market inputs such as interest rate yield curves and treasury spreads (Level 2). Expected future cash flows are converted to a present value amount based upon market expectations of the changes in these interest rate yield curves. The fair values of the Company’s interest rate swap agreements are included within “Other non-current assets” and “Other non-current liabilities” on the Consolidated Balance Sheets. See Note 7 for additional derivatives disclosures.

The carrying value of debt, which is reported in the Company’s Consolidated Balance Sheets, generally reflects the cash proceeds received upon its issuance, net of subsequent repayments. The fair value of the Company’s variable interest rate revolving credit borrowings and term loans disclosed in the table below were estimated based on observable forward yield curves and unobservable credit spreads management believes a market participant would assume for these facilities under market conditions as of the balance sheet date. The fair value of the fixed rate notes disclosed below were determined based on quoted prices from the

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

broker/dealer market, observable market inputs for similarly termed treasury notes adjusted for the Company’s credit spread and unobservable inputs management believes a market participant would use in determining imputed interest for obligations without a stated interest rate. The fair value of the securitized receivables approximate carrying value.


(In thousands)	Carrying Value at June 30, 2010		Fair Value at June 30, 2010		Carrying Value at March 31, 2010		Fair Value at March 31, 2010
Revolving credit borrowings	$	201,601	$	199,585	$	241,698	$	239,281
Term loans		285,000		282,150		307,500		304,425
2008 Notes		220,446		235,877		245,446		269,706
2009 Notes		399,592		418,237		399,568		412,542
2010 Notes		305,204		307,792		299,395		299,126
Trade receivables securitization		295,000		295,000		—		—
Acquisition and other notes		14,376		14,999		16,032		16,814

Total debt	$	1,721,219	$	1,753,640	$	1,509,639	$	1,541,894

(9) STOCKHOLDERS’ EQUITY

Changes in stockholders’ equity were as follows:


(In thousands of shares)	Shares of Common Stock $0.01 Par Value	Shares of Treasury Stock
Balance at March 31, 2010	86,253	3,027
Common stock issuance ^(a)	122	—
Reissuance of treasury stock for stock option exercises	—	(193	)

Balance at June 30, 2010	86,375	2,834


(In thousands)	Common Stock		Capital in Excess of Par Value		Retained Earnings			Accumulated Other Comprehensive Income			Treasury Stock			Total Stockholders’ Equity
Balance at March 31, 2010	$	863	$	568,421	$	1,332,759		$	3,442		$	(109,941	)	$	1,795,544
Comprehensive income:
Net earnings						64,799									64,799
Foreign currency translation adjustment									(3,335	)					(3,335	)
Net change in fair value of fixed interest rate swap agreements									1,950						1,950
Net tax expense of comprehensive income items									(683	)					(683	)

Total comprehensive income															62,731	^(d)
Common stock issuances and reissuances from treasury stock—employee benefit plans ^(b)		1		1,804								7,007			8,812
Tax benefit from stock option exercises				1,952											1,952
Dividends paid on common stock ($0.22 per share)						(18,372	)								(18,372	)
Stock-based compensation ^(c)				10,298											10,298

Balance at June 30, 2010	$	864	$	582,475	$	1,379,186		$	1,374		$	(102,934	)	$	1,860,965

^(a)	Issuance of common stock for purchases through the employee stock purchase plan.

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

^(b)	Issuance of common stock and reissuance of treasury stock for stock option exercises and purchases through the employee stock purchase plan.

^(c)	The Company recognized compensation expense with a corresponding amount recorded to capital in excess of par value.

^(d)

The Company’s comprehensive income was $63 million and $62 million for the three months ended June 30, 2010 and June 30, 2009, respectively. Comprehensive income consists of net earnings, foreign currency translation adjustments, the net change in the fair value of fixed interest rate swaps and the net tax expense or benefit of other comprehensive income items. Net tax expense or benefit of comprehensive income items pertains to the Company’s fixed interest rate swap agreements only, as foreign currency translation adjustments relate to permanent investments in foreign subsidiaries. The net change in the fair value of fixed interest rate swaps reflects valuation adjustments for changes in interest rates, as well as cash settlements with the counterparties. The table below presents the gross and net changes in and the balances within each component of “Accumulated other comprehensive income” for the three months ended June 30, 2010.


(In thousands)	Foreign Currency Translation Adjustment			Interest Rate Swap Agreements			Total Accumulated Other Comprehensive Income
Balance March 31, 2010	$	6,099		$	(2,657	)	$	3,442
Foreign currency translation adjustments		(3,335	)					(3,335	)
Change in fair value of fixed interest rate swap agreements					3,795			3,795
Reclassification adjustments to income					(1,845	)		(1,845	)

Net change in fair value of fixed interest rate swap agreements					1,950			1,950
Net tax expense of comprehensive income items					(683	)		(683	)

Net change after tax of comprehensive income items		(3,335	)		1,267			(2,068	)

Balance June 30, 2010	$	2,764		$	(1,390	)	$	1,374

(10) STOCK-BASED COMPENSATION

The Company recognizes stock-based compensation expense for its stock option plans and employee stock purchase plan. The following table summarizes stock-based compensation expense recognized by the Company for the three months ended June 30, 2010 and 2009:


	Three Months Ended June 30,
(In thousands)	2010			2009
Stock-based compensation expense related to:
Stock option plans	$	8,789		$	8,333
Employee stock purchase plan - options to purchase stock		1,480			1,581

		10,269			9,914
Tax benefit		(3,445	)		(3,274	)

Stock-based compensation expense, net of tax	$	6,824		$	6,640

Fair Value

The Company utilizes the Black-Scholes option pricing model to determine the fair value of stock options. The weighted-average grant date fair value of stock options granted during the three months ended June 30, 2010 and 2009 was $22.72 and $14.41, respectively.

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Summary of Stock Option Activity

The following table summarizes the stock option activity during the three months ended June 30, 2010:


	Number of Stock Options (In thousands)		Weighted-Average Exercise Price
Outstanding at March 31, 2010	6,707		$	36.15
Granted	936		$	62.23
Exercised	(193	)	$	27.11
Forfeited	(43	)	$	49.23

Outstanding at June 30, 2010	7,407		$	39.61

Vested or expected to vest at June 30, 2010	7,126		$	38.99

Exercisable at June 30, 2010	4,713		$	31.99

A total of 2.9 million shares of common stock were available for issuance under the Amended and Restated 2006 Equity Incentive Plan at June 30, 2010.

As of June 30, 2010, $41.7 million of unrecognized compensation expense related to non-vested stock options is expected to be recognized over a weighted-average vesting period of 2.0 years.

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (the “ESPP”) encourages and assists employees in acquiring an equity interest in the Company. The ESPP is authorized to issue up to 3.5 million shares of Company common stock, of which 322 thousand shares were available for issuance at June 30, 2010.

Compensation expense is measured based on the fair value of the employees’ option to purchase shares of common stock at the grant date and is recognized over the future periods in which the related employee service is rendered. The fair value per share of employee options to purchase shares under the ESPP was $16.01 and $12.52 for the three months ended June 30, 2010 and 2009, respectively. The fair value of the employees’ option to purchase shares of common stock was estimated using the Black-Scholes model.

The following table summarizes the activity of the ESPP during the three months ended June 30, 2010:


	Number of Purchase Options (In thousands)		Weighted-Average Exercise Price
Outstanding at March 31, 2010	122		$	28.53
Granted	297		$	52.73
Exercised	(122	)	$	28.53

Outstanding at June 30, 2010	297		$	52.73

(11) EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net earnings by the weighted average number of shares of the Company’s common stock outstanding during the period. Outstanding shares consist of issued shares less treasury stock. Diluted earnings per share is calculated by dividing net earnings by the weighted average common shares outstanding adjusted for the dilutive effect of common stock equivalents related to stock options and the Company’s ESPP.

Outstanding stock options that are anti-dilutive are excluded from the Company’s diluted earnings per share computation. There were approximately 0.9 million and 2.9 million outstanding stock options that were anti-dilutive for the three months ended June 30, 2010 and 2009, respectively.

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

The table below presents the computation of basic and diluted weighted average common shares outstanding for the three months ended June 30, 2010 and 2009:


	Three Months Ended June 30,
(In thousands)	2010	2009
Weighted average common shares outstanding:
Basic	83,457	81,618
Incremental shares from assumed exercises of stock options and options under the ESPP	1,824	1,669

Diluted	85,281	83,287

(12) COMMITMENTS AND CONTINGENCIES

Litigation

The Company is involved in various legal and regulatory proceedings that have arisen in the ordinary course of business and have not been fully adjudicated. In addition, the Company is the target of an unsolicited takeover attempt commenced by Air Products and Chemicals, Inc. (“Air Products”). In connection with this unsolicited takeover attempt, Air Products filed an action against the Company and members of its Board in the Delaware Court of Chancery. In the suit, Air Products seeks, among other things, an order declaring that members of the Company’s Board breached their fiduciary duties by refusing to negotiate with Air Products. The Company and its directors believe that the claims made by Air Products are without merit and intend to defend against them vigorously.

Additionally, a number of purported stockholder class action lawsuits were commenced against the Company and/or the members of the Airgas Board in the Delaware Court of Chancery. These suits, which have now been consolidated, allege, among other things, that the members of the Airgas Board have failed to fulfill their fiduciary duties by refusing to negotiate with Air Products, failing to seek more valuable alternatives and failing to redeem the Company’s shareholder rights plan. The plaintiffs seek equitable relief, as well as an award of compensatory damages, costs and attorneys’ fees. The Company and its directors believe that the claims made by the stockholder plaintiffs are without merit and intend to defend against them vigorously.

As disclosed in Note 16 — Unsolicited Takeover Attempt, the Company has incurred substantial legal and professional fees related to this unsolicited takeover attempt and associated litigation through June 30, 2010. A significant portion of these fees represent up-front accruals for the minimum obligations to the Company’s advisors. The Company expects to incur additional costs in the future in connection with the unsolicited takeover attempt, proxy contest and the related litigation.

(13) SUMMARY BY BUSINESS SEGMENT

Business segment information for the Company’s Distribution and All Other Operations business segments is presented below for the three months ended June 30, 2010 and 2009. Corporate operating expenses are generally allocated to each business segment based on sales dollars. However, the legal and professional fees incurred as a result of Air Products’ unsolicited takeover attempt were not allocated to the Company’s business segments, and are reflected in the “Eliminations and Other” column below:

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)


	Three Months Ended June 30, 2010									Three Months Ended June 30, 2009
(In thousands)	Distribution		All Other Ops.		Elimations and Other			Total		Distribution		All Other Ops.		Elimations			Total
Gas and rent	$	556,447	$	126,912	$	(7,544	)	$	675,815	$	532,982	$	111,328	$	(5,620	)	$	638,690
Hardgoods		375,393		1,453		(5	)		376,841		341,609		1,696		(4	)		343,301

Total net sales		931,840		128,365		(7,549	)		1,052,656		874,591		113,024		(5,624	)		981,991
Cost of products sold (excluding depreciation)		414,438		68,213		(7,549	)		475,102		384,290		60,273		(5,624	)		438,939
Selling, distribution and administrative expenses		357,885		32,664		—			390,549		348,383		30,361		—			378,744
Cost related to unsolicited takeover attempt		—		—		3,787			3,787		—		—		—			—
Depreciation		50,633		3,632		—			54,265		47,927		3,656		—			51,583
Amortization		5,040		1,162		—			6,202		4,243		573		—			4,816

Operating income	$	103,844	$	22,694	$	(3,787	)	$	122,751	$	89,748	$	18,161	$	—		$	107,909

(14) SUPPLEMENTAL CASH FLOW INFORMATION

Cash Paid for Interest and Taxes

Cash paid for interest and income taxes was as follows:


	Three Months Ended June 30,
(In thousands)	2010			2009
Interest paid	$	13,935		$	24,773
Discount on securitization		—			1,615
Income taxes (net of refunds) ^(a)		(23,832	)		(6,635	)

^(a)	During the three months ended June 30, 2010 and 2009, the Company applied for and received federal income tax refunds of $26 million and $10 million, respectively.

Significant Non-cash Investing and Financing Transactions

During the three months ended June 30, 2010 and 2009, the Company purchased $1.3 million and $0.9 million, respectively, of rental welders, which were financed directly by a vendor. The vendor financing was reflected as debt on the respective Consolidated Balance Sheets. Future cash payments in settlement of the debt will be reflected in the Consolidated Statement of Cash Flows when paid.

(15) BENEFIT PLANS

Historically, the Company has participated in a number of multi-employer pension plans (“MEPP”) providing defined benefits to union employees under the terms of collective bargaining agreements (“CBAs”). Contributions have been made to the plans in accordance with negotiated CBAs. The plans generally provide retirement benefits to participants based on their service to contributing employers.

In connection with the renewal of certain CBAs, the Company negotiated its withdrawal from MEPPs replacing those retirement plans for CBA employees with defined contribution plans. As part of the withdrawal from a MEPP, the Company is required to fund its portion of the MEPP’s unfunded pension obligation, if any. The ultimate amount of the withdrawal liability assessed by the MEPP is impacted by a number of factors, including investment returns, benefit levels, interest rates, and continued participation by the Company and other employers in the MEPP. During the three months ended June 30, 2010, the Company negotiated the withdrawal from MEPPs under two CBAs. The Company recognized charges

AIRGAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

related to the withdrawal from these plans of $3.2 million for the three months ended June 30, 2010. There were no withdrawal charges for the three months ended June 30, 2009. MEPP withdrawal liabilities amounted to $16.1 million at June 30, 2010 and $12.9 million at March 31, 2010. These estimates are subject to change based on future market conditions, employer contributions and benefit levels that will impact the ultimate withdrawal liability.

Over the remainder of fiscal 2011 and fiscal 2012, the Company intends to negotiate its withdrawal from the MEPPs provided for in its three remaining CBAs that provide for such plans. These CBAs cover approximately 30 employees and, assuming a complete withdrawal from these MEPPs, the Company estimates the additional withdrawal liability to be approximately $3 million as of June 30, 2010. Though the most recent plan data available from the remaining MEPPs was used in computing this estimate, it is subject to change based on future market conditions, employer contributions and benefit levels that will impact the ultimate withdrawal liability should the Company successfully negotiate the withdrawal from the MEPPs provided for in the remaining CBAs.

(16) UNSOLICITED TAKEOVER ATTEMPT

In February 2010, Air Products made public an unsolicited proposal to acquire the Company and subsequently commenced a $60 per share cash tender offer for all outstanding shares of common stock of the Company. After careful consideration and consultation with Airgas’ financial and legal advisors, the Airgas Board, by unanimous vote at a meeting on February 20, 2010, determined that the consideration to be received pursuant to the tender offer is inadequate and not in the best interests of Airgas or Airgas’ stockholders. On July 8, 2010, Air Products revised its tender offer to $63.50 per share in cash. After careful consideration at meetings on July 15 and July 20, 2010 and consultation with Airgas’ financial and legal advisors, the Airgas Board unanimously determined that the consideration to be received pursuant to the revised tender offer is inadequate and not in the best interests of Airgas or Airgas’ stockholders. Air Products has also initiated a proxy contest to elect three directors to Airgas’ Board and to amend certain provisions of the Company’s By-Laws. During the three months ended June 30, 2010, the Company incurred $3.8 million of legal and professional fees related to Air Products’ unsolicited takeover attempt. The Company expects to incur additional costs in the future in connection with Air Products’ unsolicited takeover attempt.

(17) SUBSEQUENT EVENT

On July 21, 2010, the Company announced that its Board of Directors declared a regular quarterly cash dividend of $0.25 per share, an increase of 14% over the previous quarterly dividend of $0.22 per share. The dividend is payable September 30, 2010 to stockholders of record as of September 15, 2010.

AIRGAS, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

Airgas, Inc. and its subsidiaries (“Airgas” or the “Company”) had net sales for the quarter ended June 30, 2010 (“current quarter”) of $1.05 billion compared to $982 million for the quarter ended June 30, 2009 (“prior year quarter”), an increase of 7%. Total same-store sales increased 6%, with hardgoods up 8% and gas and rent up 5%. Acquisitions contributed 1% sales growth in the quarter. The same-store sales growth for the current quarter was principally volume related, with sales volumes up 5% and pricing up 1%. The increase in sales volumes reflects improvement in most of the Company’s customer segments and geographies, led by manufacturing, while the increase in pricing reflects only one month of a broad-based price increase on gas, rent and hardgoods effective June 1, 2010.

Company management regularly reviews sales results not only in a year-over-year manner, but also on a sequential basis. Management also reviews sales results in terms of sales per selling day (“daily sales”), a metric commonly used in operating the business. Daily sales increased 5% sequentially from the quarter ended March 31, 2010 (“prior quarter”) to the current quarter, marking the third consecutive quarter of sequential daily sales growth. Both gas and rent as well as hardgoods improved sequentially on a daily sales basis, with gas and rent up 6% and hardgoods up 4% for the current quarter. Net sales for the current quarter increased 7% sequentially from the prior quarter driven by an incremental selling day and the sequential increase in daily sales.

Operating income margin increased 70 basis points to 11.7% in the current quarter compared to 11.0% in the prior year quarter. The increase in the current quarter’s operating income margin was driven by operating leverage on sales growth, partially offset by $3.8 million ($2.4 million after tax) or $0.03 per diluted share in costs related to an unsolicited takeover attempt and $3.2 million ($2.0 million after tax) or $0.02 per diluted share in multi-employer pension plan (“MEPP”) withdrawal charges. The costs related to the unsolicited takeover attempt and the MEPP withdrawal charges accounted for a 60 basis point reduction in operating income margin during the current quarter. Net earnings per diluted share rose 15% to $0.76 in the current quarter versus $0.66 in the prior year quarter. The results primarily reflect higher operating income (including the negative impact of the above mentioned unsolicited takeover attempt costs and MEPP withdrawal charges) and lower borrowing costs, partially offset by losses on the extinguishment of debt of $2.9 million ($1.9 million after tax) or $0.02 per diluted share.

Unsolicited Takeover Attempt

Multi-employer Pension Plan Withdrawal

The Company participates, with other employers, in a number of MEPPs providing defined benefits to union employees under the terms of collective bargaining agreements (“CBAs”). Contributions are made to the plans in accordance with those CBAs. The plans generally provide retirement benefits to participants based on their service to contributing employers. In connection with the renewal of certain CBAs during the current quarter, the Company negotiated its withdrawal from participation in underfunded MEPPs and will instead contribute to a defined contribution plan for the affected union employees. Ratification of the CBAs led to $3.2 million in MEPP withdrawal charges during the current quarter. Over the remainder of fiscal 2011 and fiscal 2012, the Company intends to negotiate its withdrawal from the MEPPs provided for in its three remaining CBAs that provide for such plans. These CBAs cover approximately 30 employees.

Losses on the Extinguishment of Debt

During the current quarter, the Company repurchased $25 million of its original $400 million 7.125% senior subordinated notes that are due on October 1, 2018 (the “2008 Notes”) at an average price of 110.6% of the principal. In conjunction with the repurchase

of the 2008 Notes, the Company recognized losses on the early extinguishment of debt of $2.9 million. The losses reflected the redemption premiums as well as writing-off the associated unamortized debt issuance costs.

Enterprise Information System

During the current quarter, the Company continued with the design and configuration phase of its SAP enterprise information system (“SAP”). Through June 30, 2010, the Company has incurred capital expenditures of approximately $60 million related to the project. On July 5, 2010, the Company began its phased, multi-year rollout of the SAP platform, whereby business units will implement the new system in succession, with the conversion of its Safety telesales and hardgoods infrastructure businesses. The Company expects returns on its SAP investment in excess of its hurdle rates of 15 – 20% internal rate of return and return on capital, and well above its cost of capital. Benefits from the SAP implementation will include customer-facing applications that will improve customers’ buying experience, assist with cross-selling, simplify account administration and enhance visibility for multi-location customers. The Company also expects significant gains and efficiencies in both the gases and hardgoods supply chains as well as in administrative processing as a result of the implementation, and the Company believes that the SAP tools and functionality will drive more structured and disciplined pricing.

Trade Receivables Securitization

The Company participates in a trade receivables securitization agreement (the “Securitization Agreement”) with three commercial banks to which it sells qualifying trade receivables on a revolving basis. The maximum amount of the Securitization Agreement is $295 million. On April 1, 2010, the Company adopted new accounting guidance which affected the presentation of its Securitization Agreement. Under the new guidance, proceeds received under the Securitization Agreement are treated as secured borrowings, whereas previously they were treated as proceeds from the sale of trade receivables. Furthermore, the new accounting treatment resulted in the recognition of both the trade receivables securitized under the agreement and the borrowings they collateralize on the Company’s Consolidated Balance Sheet, which led to a $295 million increase in trade receivables and long-term debt at June 30, 2010. New borrowings under the Securitization Agreement are classified as financing activities on the Company’s Consolidated Statement of Cash Flows. Prior to April 1, 2010, they were treated as proceeds from the sale of trade receivables and reflected net of collections on the Consolidated Statement of Cash Flows as operating activities. With respect to the Company’s Consolidated Statement of Earnings, the amounts previously recorded within the line item “Discount on securitization of trade receivables,” which represented the difference between the proceeds from the sale and the carrying value of the receivables under the Securitization Agreement, are now reflected within “Interest expense, net” as borrowing costs, consistent with the new accounting treatment. There was no impact to the Company’s consolidated net earnings as a result of the change in accounting principle. Additionally, the Company’s debt covenants were not impacted by the balance sheet recognition of the borrowings under the new accounting guidance, as borrowings under the Securitization Agreement were already factored into the debt covenant calculations.

Looking Forward

Looking forward, the Company expects earnings per diluted share for the second quarter ending September 30, 2010 to increase 20% to 26% from $0.65 in the quarter ended September 30, 2009 to $0.78 to $0.82. The earnings per diluted share range for the second quarter of fiscal 2011 includes an estimated $0.03 per diluted share of incremental expense associated with its SAP implementation, and earnings per diluted share for the second quarter of fiscal 2010 includes an aggregate of $0.03 per diluted share of debt extinguishment and MEPP withdrawal charges. For the full fiscal year 2011, the Company expects earnings per diluted share to increase 32% to 38% from $2.34 in the prior year to $3.08 to $3.23, which includes $0.10 per diluted share of incremental expense associated with its SAP implementation as well as the impact of the following charges recorded in the current quarter: $0.03 per diluted share in costs related to an unsolicited takeover attempt; $0.02 per diluted share in MEPP withdrawal charges; and $0.02 per diluted share of losses related to the early extinguishment of debt. The second quarter and fiscal 2011 guidance does not incorporate the impact of further debt extinguishment charges, MEPP withdrawal charges or costs related to the unsolicited takeover attempt.

RESULTS OF OPERATIONS: THREE MONTHS ENDED JUNE 30, 2010 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2009

STATEMENT OF EARNINGS COMMENTARY

Net Sales

Net sales increased 7% to $1.05 billion for the three months ended June 30, 2010 compared to the three months ended June 30, 2009, driven by same-store sales growth of 6% and incremental sales of 1% contributed by acquisitions. Gas and rent same-store sales increased 5% and hardgoods increased 8%. Same-store sales were driven by increased volumes of 5% and price of 1%. Higher sales volumes for the current quarter reflect improvement in most of the Company’s customer segments and geographies, led by manufacturing. The increase in pricing reflects the impact of only one month of a broad-based price increase on gas, rent and hardgoods effective June 1, 2010.

Strategic products account for more than 40% of net sales and include safety products, bulk, medical, and specialty gases, as well as carbon dioxide and dry ice. The Company has identified these products as strategic because it believes they have good long-term growth profiles relative to the Company’s core industrial gas and welding products due to favorable end customer markets, application development, increasing environmental regulation, strong cross-selling opportunities or a combination thereof. For the current quarter, sales of strategic products increased 9% on a same-store sales basis as compared to the prior year quarter, which was stronger than the overall same-store sales increase of 6%.

The Company estimates same-store sales growth based on a comparison of current period sales to prior period sales, adjusted for acquisitions and divestitures. The pro forma adjustments consist of adding acquired sales to, or subtracting sales of divested operations from, sales reported in the prior period. The table below reflects actual sales and does not include the pro forma adjustments used in calculating the same-store sales metric. The intercompany eliminations represent sales from the All Other Operations business segment to the Distribution business segment.


Net Sales	Three Months Ended June 30,						Increase
(In thousands)	2010			2009			Increase
Distribution	$	931,840		$	874,591		$	57,249		7	%
All Other Operations		128,365			113,024			15,341		14	%
Intercompany eliminations		(7,549	)		(5,624	)		(1,925	)

	$	1,052,656		$	981,991		$	70,665		7	%

The Distribution business segment’s principal products include industrial, medical, and specialty gases, and process chemicals; cylinder and equipment rental; and hardgoods. Industrial, medical, and specialty gases are distributed in cylinders and bulk containers. Equipment rental fees are generally charged on cylinders, cryogenic liquid containers, bulk and micro-bulk tanks, tube trailers, and welding equipment. Hardgoods consist of welding consumables and equipment, safety products, construction supplies, and maintenance, repair and operating supplies.

Distribution business segment sales increased 7% compared to the prior year quarter with an increase in same-store sales of 5% and incremental sales of 2% contributed by current and prior year acquisitions. The Distribution business segment’s gas and rent same-store sales increased 3% with volumes up 2% and pricing up 1%. Hardgoods same-store sales increased 8% with volumes up 7% and pricing up 1%. Both gas and rent and hardgoods volumes reflect the overall improvement in economic activity, while the increase in pricing was impacted in part by one month’s contribution from the June 1, 2010 price increase. Distribution business segment sales increased 5% sequentially from the prior quarter, driven by a 3% increase in daily sales rates and an incremental selling day. Both gas and rent and hardgoods sales within the Distribution business segment improved sequentially on a daily sales basis, with gas and rent up 3% and hardgoods up 4%.

Sales of strategic gas products sold through the Distribution business segment in the current quarter increased 6% from the prior year quarter. Among strategic gas products, bulk gas sales were up 8% due to strengthening sales of bulk nitrogen for food-freezing applications, supported by the Company’s launch of the FreezeRight ^® line of cryogenic freezers, and increasing bulk sales to industrial manufacturing customers in segments such as steel and auto. Sales of medical gases were up 3% as a result of new business signings, partially offset by a reduction in elective and non-critical medical procedures, which reduced overall demand. Sales of specialty gases were up 7% driven primarily by higher volumes and increased demand for core specialty gases, including further strengthening of the Company’s market position in EPA protocols and other calibration gas mixtures.

Contributing to the rise in Distribution hardgoods same-store sales were increases in both safety products and the Company’s Radnor ^® brand product offerings. Safety product sales increased 15% in the current quarter, reflecting broad-based increases that were

most pronounced in the manufacturing customer base, as operating rates have steadily improved. The Company’s Radnor ^® private label line was also up 15% for the current quarter, driven by the overall increase in hardgoods volumes.

Sales of core industrial gases, which experienced the sharpest volume declines during the recession, were flat for the current quarter compared to the prior year quarter, as were the related rental revenues. In addition, revenues from the Company’s rental welder business experienced a 12% decline in same-store sales during the current quarter. While the Company’s rental welder business showed improvement sequentially, continued weakness in non-residential construction drove same-store sales lower in the current quarter.

The All Other Operations business segment consists of six business units. The primary products manufactured and distributed are carbon dioxide, dry ice, nitrous oxide, ammonia and refrigerant gases.

The All Other Operations business segment sales increased 14% in total and 13% on a same-store basis compared to the prior year quarter. The sales increase was driven largely by strong performance in the refrigerants business, which benefited from an increase in demand as well as certain product shortages in the industry to which Airgas was able to respond.

Gross Profits (Excluding Depreciation)

Gross profits (excluding depreciation) do not reflect deductions related to depreciation expense and distribution costs. The Company reflects distribution costs as an element of selling, distribution and administrative expenses and recognizes depreciation on all its property, plant and equipment in the Consolidated Statement of Earnings line item, “Depreciation.” Other companies may report certain or all of these costs as elements of their cost of products sold and, as such, the Company’s gross profits (excluding depreciation) discussed below may not be comparable to those of other businesses.

Consolidated gross profits (excluding depreciation) increased 6% principally due to the same-store sales increase for the current quarter. The consolidated gross profit margin (excluding depreciation) in the current quarter declined 40 basis points to 54.9% compared to 55.3% in the prior year quarter. The decline in consolidated gross profit margin (excluding depreciation) primarily reflects the expected sales mix shift toward lower-margin hardgoods that is characteristic of an industrial economic recovery, as well as a mix shift within gas and rent to lower margin refrigerants.


Gross Profits (ex. Depr.)	Three Months Ended June 30,				Increase
(In thousands)	2010		2009		Increase
Distribution	$	517,402	$	490,301	$	27,101	6	%
All Other Operations		60,152		52,751		7,401	14	%

	$	577,554	$	543,052	$	34,502	6	%

The Distribution business segment’s gross profits (excluding depreciation) increased 6% compared to the prior year quarter. The Distribution business segment’s gross profit margin (excluding depreciation) was 55.5% versus 56.1% in the prior year quarter, a decrease of 60 basis points. The decline in the Distribution business segment’s gross profit margin (excluding depreciation) largely reflects the shift in sales mix toward hardgoods, which carry lower gross profit margins (excluding depreciation) than gas and rent. As a percentage of the Distribution business segment’s sales, gas and rent decreased 120 basis points to 59.7% in the current quarter as compared to 60.9% in the prior year quarter.

The All Other Operations business segment’s gross profits (excluding depreciation) increased 14% compared to the prior year quarter, primarily as a result of increased refrigerants sales. The All Other Operations business segment’s gross profit margin (excluding depreciation) increased 20 basis points to 46.9% in the current quarter from 46.7% in the prior year quarter. The slight increase in the All Other Operations business segment’s gross profit margin (excluding depreciation) was driven by margin expansion in the refrigerants business offset by margin compression in the ammonia business resulting from rising costs.

Operating Expenses

Selling, distribution and administrative (“SD&A”) expenses consist of labor and overhead associated with the purchasing, marketing and distributing of the Company’s products, as well as costs associated with a variety of administrative functions such as legal, treasury, accounting, tax and facility-related expenses. SD&A expenses increased $12 million, or 3%, in the current quarter as compared to the prior year quarter resulting from a $7 million increase in operating costs and approximately $5 million of incremental operating costs associated with acquired businesses. The $7 million increase in operating costs primarily reflects approximately $3 million of MEPP withdrawal charges for the current quarter as well as the post-recession reset of variable compensation. As a

percentage of net sales, SD&A expense decreased 150 basis points to 37.1% compared to 38.6% in the prior year quarter driven by the increase in sales and by the shift in sales mix to hardgoods, which carry lower operating expenses in relation to sales and corresponding lower gross margins.

During the current quarter, the Company incurred $3.8 million of legal and professional fees related to Air Products’ unsolicited takeover attempt and associated litigation.

Depreciation expense of $54 million increased $2 million, or 5%, in the current quarter as compared to $52 million in the prior year quarter. The increase primarily reflects a full quarter’s depreciation on the air separation unit in Carrollton, Kentucky (which came on-line during the prior year quarter) and capital investments in revenue generating assets to support customer demand, such as cylinders and bulk tanks, partially offset by lower overall capital expenditures and acquisition activity for the current quarter as compared to the prior year quarter. Amortization expense of $6 million in the current quarter increased slightly as compared to the prior year quarter’s amortization expense of $5 million.

Operating Income

Consolidated operating income of $123 million increased 14% in the current quarter driven by operating leverage on sales growth which more than offset the impact of MEPP withdrawal charges, variable compensation reset and costs related to the unsolicited takeover attempt. The consolidated operating income margin increased 70 basis points to 11.7% compared to 11.0% in the prior year quarter. The legal and professional fees related to the unsolicited takeover attempt were not allocated to the Company’s business segments, and are reflected in the “Other” line item in the table below.


Operating Income	Three Months Ended June 30,					Increase
(In thousands)	2010			2009		Increase
Distribution	$	103,844		$	89,748	$	14,096		16	%
All Other Operations		22,694			18,161		4,533		25	%
Other		(3,787	)		—		(3,787	)

	$	122,751		$	107,909	$	14,842		14	%

Operating income in the Distribution business segment increased 16% in the current quarter. The Distribution business segment’s operating income margin increased 80 basis points to 11.1% compared to 10.3% in the prior year quarter. The operating margin increase was driven by higher sales in the current quarter, partially offset by MEPP withdrawal charges (which are fully borne by the Distribution business segment) and the reset of variable compensation.

Operating income in the All Other Operations business segment increased 25% compared to the prior year quarter. The All Other Operations business segment’s operating income margin of 17.7% was 160 basis points higher than the operating income margin of 16.1% in the prior year quarter. The increase in operating margin was driven primarily by higher sales and margin expansion in the refrigerants business for the current quarter, partially offset by margin compression in the ammonia business resulting from rising costs.

Interest Expense, Net, and Discount on Securitization of Trade Receivables

Interest expense, net, and the discount on securitization of trade receivables totaled $13 million in the current quarter, representing a decrease of $7 million, or 33%, compared to the prior year quarter. As a result of a change in accounting treatment effective for the current quarter related to the Company’s trade receivables securitization program, costs formerly recognized as discount on securitization of trade receivables, which represented the difference between the carrying value of the receivables and the proceeds from their sale, are now reflected as interest expense, consistent with the new accounting treatment. The overall decrease in interest expense, net, for the current quarter primarily resulted from lower weighted-average interest rates related to the Company’s variable rate debt instruments and lower average debt levels. A majority of the Company’s variable rate debt is based on a spread over the London Interbank Offered Rate (“LIBOR”); the spread during the current quarter was 50 basis points, whereas in the prior year quarter it was 62.5 basis points.

Losses on the Extinguishment of Debt

During the current quarter, the Company repurchased $25 million of the 2008 Notes at an average price of 110.6%. In conjunction with the repurchase of the 2008 Notes, the Company recognized losses on the early extinguishment of debt of $2.9 million. The losses reflected the redemption premiums as well as writing-off the associated unamortized debt issuance costs.

Income Tax Expense

The effective income tax rate was 38.8% of pre-tax earnings in the current quarter compared to 38.5% in the prior year quarter. The Company expects the overall effective tax rate for fiscal 2011 to be between 38.0% and 39.0% of pre-tax earnings.

Net Earnings

Net earnings were $64.8 million, or $0.76 per diluted share, compared to $54.8 million, or $0.66 per diluted share, in the prior year quarter. The current quarter’s net earnings include costs related to the unsolicited takeover attempt of $3.8 million ($2.4 million after tax) or $0.03 per diluted share, charges related to withdrawals from MEPPs of $3.2 million ($2.0 million after tax) or $0.02 per diluted share and losses related to the early extinguishment of debt of $2.9 million ($1.9 million after tax) or $0.02 per diluted share.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Net cash used in operating activities was $130 million for the three months ended June 30, 2010, compared to net cash provided by operating activities of $162 million in the prior year quarter. The use of cash in operating activities during the first quarter of fiscal 2011 is driven by the new accounting treatment for the Company’s Securitization Agreement, which resulted in a $295 million use of cash in operating activities and a corresponding source of cash in financing activities in the current quarter. The underlying business activities generated strong operating cash flows. On April 1, 2010, the Company adopted new accounting guidance which affected the presentation of its trade receivables securitization program. Under the new guidance, proceeds received under the securitization are treated as secured borrowings, which are classified as a financing activity on the Consolidated Statement of Cash Flows, whereas previously they were treated as proceeds from the sale of trade receivables, which were classified as an operating activity on the Consolidated Statement of Cash Flows. Furthermore, the new accounting treatment resulted in the recognition of both the trade receivables securitized under the program and the borrowings they collateralize on the Company’s Consolidated Balance Sheet, which led to a $295 million increase in trade receivables and long-term debt at June 30, 2010. Accordingly, $295 million in new borrowings under the Securitization Agreement were classified as sources of cash under financing activities on the Company’s Consolidated Statement of Cash Flows. Prior to April 1, 2010, they were treated as proceeds from the sale of trade receivables and reflected net of collections on the Consolidated Statement of Cash Flows as operating activities. Additionally, the $295 million increase in trade receivables was classified as a use of cash from operating activities.

Other elements of working capital provided cash of $20 million in the current period versus $43 million during the prior year quarter. Improving sales contributed to the uses of cash related to trade receivables and inventory. However, these working capital uses of cash were principally offset by the timing of federal income tax payments, which was the primary contributor to the source of cash from accrued expenses. Net earnings adjusted for non-cash and non-operating items provided cash of $145 million versus $137 million in the prior year quarter.

Net cash used in investing activities in the current period totaled $60 million and primarily consisted of cash used for capital expenditures. Cash used in investing activities decreased $9 million from the comparable prior year period primarily due to lower capital expenditures on industrial gas and carbon dioxide fill plants during the current quarter.

Net cash provided by financing activities in the current period totaled $201 million, principally reflecting net debt borrowing of $204 million, driven by the new accounting guidance for the Securitization Agreement noted above. Partially offsetting the $295 million in proceeds from the Securitization Agreement was the repayment of $91 million in debt, principally on the Company’s senior credit facility and through open market purchases of the Company’s 2008 Notes. The Company also paid dividends of $18 million, or $0.22 per share in the current quarter, as compared to $15 million, or $0.18 per share in the first quarter in the prior year.

On July 21, 2010, the Company announced that its Board of Directors declared a regular quarterly cash dividend of $0.25 per share. The dividend is payable September 30, 2010 to stockholders of record as of September 15, 2010. Future dividend declarations and associated amounts paid will depend upon the Company’s earnings, cash flows, financial condition, loan covenants, capital requirements and other factors deemed relevant by management and the Company’s Board of Directors.

Financial Instruments

Senior Credit Facility

credit line. The Credit Facility also contains a term loan provision through which the Company borrowed $600 million with scheduled repayment terms. The term loans were repayable in quarterly installments of $22.5 million through June 30, 2010. The quarterly installments increase to $71.2 million from September 30, 2010 to June 30, 2011. Principal payments due over the next twelve months on the term loans are classified as “Long-term debt” in the Company’s Consolidated Balance Sheets based on the Company’s ability and intention to refinance the payments with borrowings under its long-term revolving credit facilities. As principal amounts under the term loans are repaid, no additional borrowing capacity is created under the term loan provision. The Credit Facility will mature on July 25, 2011. However, the Company anticipates entering into a similar long-term credit facility to replace the maturing facility prior to September 30, 2010.

As of June 30, 2010, the Company had approximately $485 million of borrowings under the Credit Facility: $159 million under the U.S. dollar revolver, $285 million under the term loans, $31 million (in U.S. dollars) under the multi-currency revolver and C$10 million (U.S. $9 million) under the Canadian dollar revolver. The Company also had outstanding letters of credit of $42 million issued under the Credit Facility. The U.S. dollar revolver borrowings and the term loans bear interest at LIBOR plus 50 basis points. The multi-currency revolver bears interest based on a spread of 50 basis points over the Euro currency rate applicable to each foreign currency borrowing. The Canadian dollar borrowings bear interest at the Canadian Bankers’ Acceptance Rate plus 50 basis points. As of June 30, 2010, the average effective interest rates on the U.S. dollar revolver, the term loans, the multi-currency revolver and the Canadian dollar revolver were 0.81%, 1.03%, 0.99% and 1.29%, respectively.

Total Borrowing Capacity

As of June 30, 2010, approximately $862 million remained unused under the Company’s Credit Facility. The Company believes that it has sufficient liquidity from cash from operations and under its revolving credit facilities to meet its working capital, capital expenditure and other financial commitments. The debt covenants under the Company’s Credit Facility require the Company to maintain a leverage ratio not higher than 4.0 and an interest coverage ratio not lower than 3.5. The leverage ratio is a contractually defined amount principally reflecting debt and, historically, the amounts outstanding under the Securitization Agreement divided by a contractually defined Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) for the trailing twelve-month period with pro forma adjustments for acquisitions. The debt covenants under the Company’s Credit Facility were not affected by the new accounting guidance adopted for the Securitization Agreement. The interest coverage ratio reflects the same contractually defined EBITDA divided by total interest expense with pro forma adjustments for acquisitions. Both ratios measure the Company’s ability to meet current and future obligations. At June 30, 2010, the Company’s leverage ratio was 2.7 and its interest coverage ratio was 10.4. At June 30, 2010, the financial covenants of the Credit Facility did not restrict the Company’s ability to borrow on the unused portion of the Credit Facility. The Credit Facility contains customary events of default, including nonpayment and breach of covenants. In the event of default, repayment of borrowings under the Credit Facility may be accelerated. The Company’s Credit Facility also contains cross default provisions whereby a default under the Credit Facility could result in defaults under the senior and senior subordinated notes discussed below.

The Company continues to look for acquisition candidates. The financial covenant calculations of the Credit Facility include the pro forma results of acquired businesses. Therefore, total borrowing capacity is not reduced dollar-for-dollar with acquisition financing.

The Company continually evaluates alternative financing and believes that it can obtain financing on reasonable terms. The terms of any future financing arrangements depend on market conditions and the Company’s financial position at that time.

Money Market Loans

Senior Notes

Senior Subordinated Notes

At June 30, 2010, the Company had $220 million of its 2008 Notes outstanding with a maturity date of October 1, 2018. The 2008 Notes bear interest at a fixed annual rate of 7.125%, payable semi-annually on October 1 and April 1 of each year. The 2008 Notes have a redemption provision, which permits the Company, at its option, to call the 2008 Notes at scheduled dates and prices. The first scheduled optional redemption date is October 1, 2013 at a price of 103.563% of the principal amount. The 2008, 2009 and 2010 Notes contain covenants that could restrict the payment of dividends, the repurchase of common stock, the issuance of preferred stock, and the incurrence of additional indebtedness and liens.

Acquisition and Other Notes

Trade Receivables Securitization

The Company participates in the Securitization Agreement with three commercial banks to which it sells qualifying trade receivables on a revolving basis. Effective April 1, 2010 under new accounting guidance, the Company’s sale of qualified trade receivables is now accounted for as a secured borrowing under which qualified trade receivables collateralize amounts borrowed. Trade receivables that collateralize the Securitization Agreement are held in a bankruptcy-remote special purpose entity, which is consolidated for financial reporting purposes. Qualified trade receivables in the amount of the outstanding borrowing under the Securitization Agreement are not available to the general creditors of the Company. The maximum amount of the Securitization Agreement is $295 million and it bears interest at approximately LIBOR plus 95 basis points. At June 30, 2010, the amount of outstanding borrowing under the Securitization Agreement has been classified as long-term debt on the Consolidated Balance Sheet. Amounts borrowed under the Securitization Agreement fluctuate monthly based on the Company’s funding requirements and the level of qualified trade receivables available to collateralize the Securitization Agreement. The Securitization Agreement expires in March 2012 and contains customary events of termination, including standard cross default provisions with respect to outstanding debt. The amount of outstanding borrowing under the Securitization Agreement at June 30, 2010 was $295 million.

Interest Rate Swap Agreements

rate of 0.96%. The remaining terms of these swap agreements range from three to six months. For the three months ended June 30, 2010, the fair value of the liability for the fixed interest rate swap agreements decreased and the Company recorded a corresponding adjustment to “Accumulated other comprehensive income” of $1.9 million, or $1.3 million after tax.

The Company measures the fair value of its interest rate swaps using observable market rates to calculate the forward yield curves used to determine expected cash flows for each interest rate swap agreement. The discounted present values of the expected cash flows are calculated using the same forward yield curve. The discount rate assumed in the fair value calculations is adjusted for non-performance risk, dependent on the classification of the interest rate swap as an asset or liability. If an interest rate swap is a liability, the Company assesses the credit and non-performance risk of Airgas by determining an appropriate credit spread for entities with similar credit characteristics as the Company. If, however, an interest rate swap is in an asset position, a credit analysis of counterparties is performed assessing the credit and non-performance risk based upon the pricing history of counterparty specific credit default swaps or credit spreads for entities with similar credit ratings to the counterparties. The Company does not believe it is at risk for non-performance by its counterparties. However, if an interest rate swap is in an asset position, the failure of one or more of its counterparties would result in an increase in interest expense and a reduction of earnings. The Company compares its fair value calculations to the contract settlement values calculated by the counterparties for each swap agreement for reasonableness.

Interest Expense

A majority of the Company’s variable rate debt is based on a spread over LIBOR. Based on the Company’s fixed to variable interest rate ratio, for every 25 basis point increase in LIBOR, the Company estimates that its annual interest expense would increase by approximately $2.1 million.

OTHER

New Accounting Pronouncements

See Note 2 to the Consolidated Financial Statements for a description of recent accounting pronouncements, including the expected dates of adoption.

Forward-looking Statements

This report contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding: the Company’s intention to negotiate its withdrawal from the MEPPs provided for in three remaining CBAs that provide for such plans over fiscal 2011 and fiscal 2012; the benefits to be derived from the SAP implementation; the Company’s expectation of earnings of $0.78 to $0.82 per diluted share for the second quarter ending September 30, 2010 and earnings per diluted share of $3.08 to $3.23 for the full fiscal year 2011; the Company’s expectation that its overall effective tax rate for fiscal 2011 will range from 38.0% to 39.0% of pre-tax earnings; the Company’s ability and intention enter into a similar long-term credit facility to replace its current Credit Facility; the Company’s belief that it can obtain financing on reasonable terms; the Company’s ability to manage its exposure to interest rate risk through the use of interest rate swap agreements; the performance of counterparties under interest rate swap agreements; the Company’s estimate that for every 25 basis point increase in LIBOR, annual interest expense will increase approximately $2.1 million; the estimate of future interest payments on the Company’s long-term debt obligations; and the estimate of future payments or receipts under interest rate swap agreements.

These forward-looking statements involve risks and uncertainties. Factors that could cause actual results to differ materially from those predicted in any forward-looking statement include, but are not limited to: the Company’s inability to meet its earnings estimates resulting from lower sales, decreased selling prices, higher product costs and/or higher operating expenses than that forecasted by the Company; weakening of the economy resulting in weakening demand for the Company’s products; weakening operating and financial performance of the Company’s customers, which can negatively impact the Company’s sales and the Company’s ability to collect its accounts receivable; changes in the environmental regulations that affect the Company’s sales of specialty gases; higher or lower overall tax rates in fiscal 2011 than that estimated by the Company resulting from changes in tax laws, changes in reserves and other estimates; increases in debt in future periods and the impact on the Company’s ability to pay and/or grow its dividend; a decline in demand from markets served by the Company; adverse customer response to the Company’s strategic product sales initiatives; a lack of cross-selling opportunities for the Company’s strategic products; a lack of specialty gas sales growth due to a downturn in certain markets; the negative effect of an economic downturn on strategic product sales and margins; the inability of strategic products to diversify against cyclicality; supply shortages of certain gases and the resulting inability of the Company to meet customer gas requirements; customers’ acceptance of current prices and of future price increases; adverse changes in customer buying patterns; a rise in product costs and/or operating expenses at a rate faster than the Company’s ability to increase prices; higher or lower capital expenditures than that estimated by the Company; the inability to refinance principal and interest payments on the term loans due to a lack of availability under the revolving credit facilities; the inability to enter into a new credit facility to replace its current Credit Facility; limitations on the Company’s borrowing capacity dictated by the Credit Facility; fluctuations in interest rates; the Company’s ability to continue to access credit markets on satisfactory terms; the impact of tightened credit markets on the Company’s customers; the impact of changes in tax and fiscal policies and laws; the extent and duration of current economic trends in the U.S. economy; higher than expected implementation costs of the SAP system; conversion problems related to the SAP system that disrupt the Company’s business and negatively impact customer relationships; potential disruption to the Company’s business from integration problems associated with acquisitions; the Company’s success in continuing its cost reduction program; the Company’s ability to successfully identify, consummate and integrate acquisitions to achieve anticipated acquisition synergies; increased liabilities arising from withdrawals from the Company’s MEPPs; the inability to pay dividends as a result of loan covenant restrictions; the inability to manage interest rate exposure; higher interest expense than that estimated by the Company due to changes in debt levels or increases in LIBOR; unanticipated non-performance by counterparties related to interest rate swap agreements; the effects of competition on products, pricing and sales growth; changes in product prices from gas producers and name-brand manufacturers and suppliers of hardgoods; changes in customer demand resulting in the inability to meet minimum product purchases under supply agreements; costs incurred associated with the Air Products’ unsolicited takeover attempt and proxy contest; and the effects of, and changes in, the economy, monetary and fiscal policies, laws and regulations, inflation and monetary fluctuations, both on a national and international basis. The Company does not undertake to update any forward-looking statement made herein or that may be made from time to time by or on behalf of the Company.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The Company manages its exposure to changes in market interest rates. The interest rate exposure arises primarily from the interest payment terms of the Company’s borrowing agreements. Interest rate swap agreements are used to adjust the interest rate risk exposures that are inherent in its portfolio of funding sources. The Company has not established, and will not establish, any interest rate risk positions for purposes other than managing the risk associated with its portfolio of funding sources. The counterparties to the interest rate swap agreements are major financial institutions. The Company has established counterparty credit guidelines and only enters into transactions with financial institutions with long-term credit ratings of at least a single ‘A’ rating by one of the major credit rating agencies. In addition, the Company monitors its position and the credit ratings of its counterparties, thereby minimizing the risk of non-performance by the counterparties.

The table below summarizes the Company’s market risks associated with debt obligations, interest rate swaps and the trade receivables securitization at June 30, 2010. For debt obligations and the trade receivables securitization, the table presents cash flows related to payments of principal and interest by fiscal year of maturity. For interest rate swaps, the table presents the notional amounts underlying the agreements by year of maturity. The notional amounts are used to calculate contractual payments to be exchanged and are not actually paid or received. Fair values were computed using market quotes, if available, or based on discounted cash flows using market interest rates as of the end of the period.


(In millions)	3/31/2011 ^(a)			3/31/2012			3/31/2013			3/31/2014			3/31/2015			Thereafter			Total		Fair Value
Fixed Rate Debt:
Acquisition and other notes	$	7.3		$	4.5		$	1.5		$	0.5		$	0.4		$	0.2		$	14.4	$	15.0
Interest expense		0.5			0.3			0.1			0.06			0.02			0.01			1.0
Average interest rate		6.16	%		6.19	%		6.19	%		5.97	%		4.62	%		3.53	%
Senior subordinated notes due 10/1/2018	$	—		$	—		$	—		$	—		$	—		$	220		$	220	$	236
Interest expense		11.8			15.7			15.7			15.7			15.7			55.0			129.6
Interest rate		7.13	%		7.13	%		7.13	%		7.13	%		7.13	%		7.13	%
Senior notes due 9/15/2014	$	—		$	—		$	—		$	—		$	400		$	—		$	400	$	418
Interest expense		13.5			18.0			18.0			18.0			8.3			—			75.8
Interest rate		4.50	%		4.50	%		4.50	%		4.50	%		4.50	%		—
Senior notes due 10/1/2013	$	—		$	—		$	—		$	300		$	—		$	—		$	300	$	308
Interest expense		6.3			8.6			8.6			4.3			—			—			27.8
Interest rate		2.85	%		2.85	%		2.85	%		2.85	%		—			—
Variable Rate Debt:
Revolving credit borrowings - U.S.	$	—		$	159		$	—		$	—		$	—		$	—		$	159	$	158
Interest expense		1.0			0.4			—			—			—			—			1.4
Interest rate ^(a)		0.81	%		0.81	%		—			—			—			—
Revolving credit borrowings - Canadian	$	—		$	9		$	—		$	—		$	—		$	—		$	9	$	9
Interest expense		0.1			0.03			—			—			—			—			0.1
Interest rate ^(a)		1.29	%		1.29	%		—			—			—			—
Revolving credit borrowings - Multi-currency	$	—		$	31		$	—		$	—		$	—		$	—		$	31	$	31
Interest expense		0.2			0.1			—			—			—			—			0.3
Interest rate ^(a)		0.99	%		0.99	%		—			—			—			—
Revolving credit borrowings - France	$	—		$	2		$	—		$	—		$	—		$	—		$	2	$	2
Interest expense		0.01			0.01			—			—			—			—			0.02
Interest rate ^(a)		0.93	%		0.93	%		—			—			—			—


(In millions)	3/31/2011 ^(a)			3/31/2012			3/31/2013		3/31/2014			3/31/2015		Thereafter		Total			Fair Value
Variable Rate Debt (cont):
Term loans ^(b)	$	—		$	285		$	—	$	—		$	—	$	—	$	285		$	282
Interest expense		2.2			0.8			—		—			—		—		3.0
Interest rate ^(b)		1.03	%		1.03	%		—		—			—		—
Interest Rate Swaps:
7 swaps receive variable/pay fixed notional amounts	$	250		$	—		$	—	$	—		$	—	$	—	$	250		$	2.0
7 swaps receive variable/pay fixed notional amounts	$	250		$	—		$	—	$	—		$	—	$	—	$	250		$	2.0
Swap payments (receipts)		2.0			—			—		—			—		—		2.0
Variable forward receive rate = 0.96%
Weighted average pay rate = 3.21%
5 swaps receive fixed/pay variable notional amounts	$	—		$	—		$	—	$	300		$	—	$	—	$	300		$	(5.3	)
Swap payments (receipts)		—			—			—		(5.3	)		—		—		(5.3	)
Variable forward pay rate = 2.30%
Weighted average receive rate = 2.85%
LIBOR-based Agreement:
Trade receivables securitization	$	—		$	295		$	—	$	—		$	—	$	—	$	295		$	295
Interest expense		2.9			3.7			—		—			—		—		6.6
Variable interest rate at 6/30/2010 of 1.29%

^(a)

The interest rate on the revolving credit facilities is the weighted average of the variable interest rates on each of the U.S. dollar revolving credit line, the multi-currency revolving credit line and the Canadian dollar credit line. The variable interest rates on the U.S. dollar revolving credit line are based on a spread over LIBOR applicable to each tranche under the U.S. credit line. The average of the variable interest rates on the multi-currency portions of the Credit Facility is based on a spread over the Euro currency rate applicable to each foreign currency borrowing under the multi-currency credit line. The variable interest rates on the French revolving credit borrowings are also based on a spread over the Euro currency rate. The average of the variable interest rates on the Canadian dollar portion of the Credit Facility is based on a spread over the Canadian Bankers’ Acceptance rate applicable to each tranche under the Canadian credit line.

^(b)	The consolidated financial statements reflect the term loan principal payments due through June 30, 2011 as long-term based on the Company’s ability and intention to refinance those principal payments with its U.S. dollar revolving credit line.

Limitations of the Tabular Presentation

As the table incorporates only those interest rate risk exposures that exist as of June 30, 2010, it does not consider those exposures or positions that could arise after that date. In addition, actual cash flows of financial instruments in future periods may differ materially from prospective cash flows presented in the table due to future fluctuations in variable interest rates, debt levels and the Company’s credit rating.

Foreign Currency Rate Risk

Canadian subsidiaries and the European operations of the Company are funded in part with local currency debt. The Company does not otherwise hedge its exposure to translation gains and losses relating to foreign currency net asset exposures. The Company considers its exposure to foreign currency exchange fluctuations to be immaterial to its financial position and results of operations.

Item 4.

Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of June 30, 2010. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, the Company’s disclosure controls and procedures were effective such that the information required to be disclosed in the Company’s Securities and Exchange Commission (“SEC”)

reports (i) is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.

(b) Changes in Internal Control

There were no changes in internal control over financial reporting that occurred during the quarter ended June 30, 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

As disclosed in Note 16 to the consolidated financial statements, the Company has incurred substantial legal and professional fees related to this unsolicited takeover attempt and associated litigation through June 30, 2010. A significant portion of these fees represent up-front accruals for the minimum obligations to the Company’s advisors. The Company expects to incur additional costs in the future in connection with the unsolicited takeover attempt, proxy contest and the related litigation.

Item 1A.

Risk Factors

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended March 31, 2010.

Item 6.

Exhibits

The following exhibits are being filed or furnished as part of this Quarterly Report on Form 10-Q:


Exhibit No.		Description

4		The Twelfth Amended and Restated Credit Agreement, dated as of July 25, 2006, among Airgas, Inc., Airgas Canada, Inc., Red-D-Arc Limited, Bank of America, N.A., as U.S. Administrative Agent and The Bank of Nova Scotia as Canadian Agent, as amended.

31.1		Certification of Peter McCausland as Chairman and Chief Executive Officer of Airgas, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Robert M. McLaughlin as Senior Vice President and Chief Financial Officer of Airgas, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Peter McCausland as Chairman and Chief Executive Officer of Airgas, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Robert M. McLaughlin as Senior Vice President and Chief Financial Officer of Airgas, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS		XBRL Instance Document.

*101.SCH		XBRL Taxonomy Extension Schema Document.

*101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

*101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

*101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

*101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

* Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in these exhibits are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise are not subject to liability under those sections.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Dated: August 6, 2010	AIRGAS, INC.

	(Registrant)

	BY:	/s/ T HOMAS M. S MYTH
		Thomas M. Smyth
		Vice President & Controller (Principal Accounting Officer)

Exhibit Index


Exhibit No.		Description

4		The Twelfth Amended and Restated Credit Agreement, dated as of July 25, 2006, among Airgas, Inc., Airgas Canada, Inc., Red-D-Arc Limited, Bank of America, N.A., as U.S. Administrative Agent and The Bank of Nova Scotia as Canadian Agent, as amended.

31.1		Certification of Peter McCausland as Chairman and Chief Executive Officer of Airgas, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Robert M. McLaughlin as Senior Vice President and Chief Financial Officer of Airgas, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Peter McCausland as Chairman and Chief Executive Officer of Airgas, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Robert M. McLaughlin as Senior Vice President and Chief Financial Officer of Airgas, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS		XBRL Instance Document.

*101.SCH		XBRL Taxonomy Extension Schema Document.

*101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

*101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

*101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

*101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

Exhibit 4

ANNEX I

TO THAT CERTAIN THIRD AMENDMENT TO CREDIT AGREEMENT

DATED AS OF JULY 28, 2008

TWELFTH AMENDED AND RESTATED

CREDIT AGREEMENT

Dated as of July 25, 2006

among

AIRGAS, INC.,

AIRGAS CANADA INC. and RED-D-ARC LIMITED,

as Borrowers

CERTAIN SUBSIDIARIES OF AIRGAS, INC.

FROM TIME TO TIME PARTY HERETO,

as Guarantors

THE SEVERAL LENDERS

FROM TIME TO TIME PARTY HERETO,

BANK OF AMERICA, N.A.,

as U.S. Agent

and

THE BANK OF NOVA SCOTIA,

as Canadian Agent,

JPMORGAN CHASE BANK, N.A.,

as Syndication Agent,

THE BANK OF NEW YORK,

THE BANK OF NOVA SCOTIA,

BANK OF TOKYO-MITSUBISHI TRUST COMPANY

and

PNC BANK, NATIONAL ASSOCIATION,

as Co-Documentation Agents,

and

BANC OF AMERICA SECURITIES LLC

and

J.P. MORGAN SECURITIES INC.,

as Joint Lead Arrangers and Co-Book Managers,

TABLE OF CONTENTS


ARTICLE I DEFINITIONS		1
1.1	Definitions	1
1.2	Computation of Time Periods	30
1.3	Accounting Terms	30
ARTICLE II.A U.S. DOLLAR CREDIT FACILITIES		31
2A.1	U.S. Revolving Loans	31
2A.2	Competitive U.S. Loan Subfacility	33
2A.3	U.S. Letter of Credit Subfacility	34
2A.4	U.S. Swingline Loan Subfacility	38
2A.5	U.S. Term Loan	40
ARTICLE II.B FOREIGN CURRENCY LOANS		43
2B.1	Foreign Currency Loans	43
2B.2	Exchange Rates; Currency Equivalents	45
2B.3	Additional Alternative Currencies	45
2B.4	Change of Currency	46
2B.5	Foreign Borrowers	46
ARTICLE III CANADIAN DOLLAR CREDIT FACILITIES		47
3.1	Canadian Revolving Loans	47
3.2	Canadian Swingline Loan Subfacility	48
3.3	Canadian Letter of Credit Subfacility	49
3.4	Bankers’ Acceptances	53
3.5	Removal of a Canadian Borrower	55
3.6	Reset Mechanism	55
3.7	Certain Waivers	56
ARTICLE IV OTHER PROVISIONS RELATING TO CREDIT FACILITIES		56
4.1	Default Rate	56
4.2	Extension and Conversion	56
4.3	Prepayments	58
4.4	Termination and Reduction of Commitments; Increase of Commitments	60
4.5	Fees	63
4.6	Capital Adequacy	65
4.7	Inability To Determine Interest Rate	66
4.8	Illegality	67
4.9	Requirements of Law	67
4.10	Taxes	69
4.11	Indemnity	70
4.12	Payments Generally; Agents’ Clawback	71
4.13	Sharing of Payments	73
4.14	Computations; Allocation of Payments Post-Acceleration	73
ARTICLE V CONDITIONS		75
5.1	Closing Conditions	75
5.2	Conditions to all Extensions of Credit	76
ARTICLE VI REPRESENTATIONS AND WARRANTIES		78
6.1	Financial Condition	78
6.2	No Change	78
6.3	Organization; Existence; Compliance with Law	79
6.4	Power; Authorization; Enforceable Obligations	79
6.5	No Legal Bar	79
6.6	No Material Litigation	79
6.7	No Default	79
6.8	Ownership of Property; Liens	80


6.9	Intellectual Property	80
6.10	No Burdensome Restrictions	80
6.11	Taxes	80
6.12	ERISA	80
6.13	Governmental Regulations, Etc.	81
6.14	Subsidiaries	82
6.15	Purpose of Loans and Letters of Credit	82
6.16	Environmental Matters	82
6.17	Solvency	83
6.18	Perfection of Security Interests in the Collateral	83
6.19	Perfection Information	83
ARTICLE VII AFFIRMATIVE COVENANTS		84
7.1	Information Covenants	84
7.2	Preservation of Existence and Franchises	85
7.3	Books and Records	86
7.4	Compliance with Law	86
7.5	Payment of Taxes and Other Indebtedness	86
7.6	Insurance	86
7.7	Maintenance of Property	86
7.8	Use of Proceeds	86
7.9	Audits/Inspections	86
7.10	Financial Covenants	87
7.11	[Reserved]	87
7.12	Additional Guarantors	87
7.13	Pledged Assets	87
7.14	Receivables Financing Further Assurances	89
ARTICLE VIII NEGATIVE COVENANTS		89
8.1	Indebtedness	89
8.2	Liens	89
8.3	Nature of Business	89
8.4	Consolidation, Merger, Amalgamation or Sale	90
8.5	Investments	91
8.6	Restricted Payments	92
8.7	Payments of Indebtedness, Etc.	92
8.8	Fiscal Year; Organizational Documents	93
8.9	Limitation on Restricted Actions	93
8.10	Subsidiary Stock	93
8.11	No Further Negative Pledges	93
8.12	Transactions with Affiliates	94
ARTICLE IX EVENTS OF DEFAULT		94
9.1	Events of Default	94
9.2	Acceleration; Remedies	97
ARTICLE X AGENCY PROVISIONS		98
10.1	Appointment and Authority	98
10.2	Rights as a Lender	98
10.3	Exculpatory Provisions	98
10.4	Reliance by the Agents	99
10.5	Delegation of Duties	99
10.6	Resignation of Agents	99
10.7	Non-Reliance on Agents and Other Lenders	100
10.8	No Other Duties; Etc.	101
10.9	U.S. Agent May File Proofs of Claim	101
10.10	Collateral and Guaranty Matters	102


ARTICLE XI MISCELLANEOUS		102
11.1	Notices and Other Communications; Facsimile Copies	102
11.2	Right of Set-Off	103
11.3	Benefit of Agreement	103
11.4	No Waiver; Remedies Cumulative	106
11.5	Payment of Expenses, Etc.	107
11.6	Amendments, Waivers and Consents	108
11.7	Counterparts	109
11.8	Headings	110
11.9	Survival	110
11.10	Governing Law; Submission to Jurisdiction; Venue	110
11.11	Severability	111
11.12	Entirety	111
11.13	Binding Effect; Termination	112
11.14	Confidentiality	112
11.15	Conflict	113
11.16	USA PATRIOT Act Notice	113
11.17	Replacement of Lenders	113
11.18	Designation as Senior Debt	114
11.19	No Advisory or Fiduciary Responsibility	114
11.20	Judgment Currency	114
ARTICLE XII GUARANTY		115
12.1	The Guaranty	115
12.2	Obligations Unconditional	116
12.3	Reinstatement	117
12.4	Certain Additional Waivers	117
12.5	Remedies	117
12.6	Rights of Contribution	118
12.7	Guarantee of Payment; Continuing Guarantee	118
12.8	Collateral and Guarantor Release Date; Subsequent Collateralization Date	118

iii

SCHEDULES AND EXHIBITS

Schedules


Schedule 1.1A		Excluded Asset Dispositions
Schedule 1.1B		Existing Canadian Letters of Credit
Schedule 1.1C		Existing U.S. Letters of Credit
Schedule 1.1D		Mandatory Cost Formulae
Schedule 1.1E		Liens
Schedule 2.1(a)		Lenders and Commitments
Schedule 5.1(d)		Legal Opinions
Schedule 6.14		Subsidiaries
Schedule 6.19		Perfection Information
Schedule 8.1		Indebtedness
Schedule 8.5		Investments
Schedule 11.1		Certain Notices

Exhibits


Exhibit 2A.1(b)(i)		Form of Notice of U.S. Borrowing
Exhibit 2B.1(b)(i)		Form of Notice of Foreign Currency Borrowing
Exhibit 2B.5(a)		Form of Foreign Borrower Request and Assumption Agreement
Exhibit 2B.5(b)		Form of Foreign Borrower Notice
Exhibit 3.1(b)(i)		Form of Notice of Canadian Borrowing
Exhibit 4.2		Form of Notice of Extension/Conversion
Exhibit 4.4		Form of New Commitment Agreement
Exhibit 7.1(c)		Form of Officer’s Compliance Certificate
Exhibit 7.12		Form of Joinder Agreement
Exhibit 11.3		Form of Assignment and Assumption

TWELFTH AMENDED AND RESTATED CREDIT AGREEMENT

THIS TWELFTH AMENDED AND RESTATED CREDIT AGREEMENT , dated as of July 25, 2006 (the “ Credit Agreement ”), is by and among AIRGAS, INC. , a Delaware corporation (“ Airgas ” and also a “ Borrower ”), AIRGAS CANADA INC. , a Canada corporation, and RED-D-ARC LIMITED , an Ontario corporation, (each a “ Canadian Borrower ” and together with Airgas and the Foreign Borrowers from time to time party hereto, the “ Borrowers ”), the Guarantors from time to time party hereto, the several lenders identified on the signature pages hereto as Lenders and such other lenders as may from time to time become a party hereto as Lenders (the “ Lenders ”), BANK OF AMERICA, N.A. , as administrative agent for the Lenders (in such capacity, the “ U.S. Agent ”) and THE BANK OF NOVA SCOTIA, as Canadian administrative agent for the Lenders (in such capacity, the “ Canadian Agent ”).

W I T N E S S E T H

WHEREAS , Airgas, the Canadian Borrowers and the Guarantors are parties to a Eleventh Amended and Restated Credit Agreement dated as of January 14, 2005 (as amended, supplemented or otherwise modified from time to time until (but not including) the date of this Credit Agreement, the “ Existing Credit Agreement ”) with the banks, financial institutions and other institutional lenders party thereto, Bank of America, N.A., as United States administrative agent for such lenders, and Canadian Imperial Bank of Commerce, as Canadian administrative agent for such lenders.

WHEREAS , the parties to this Credit Agreement desire to amend the Existing Credit Agreement as set forth herein and to restate the Existing Credit Agreement in its entirety to read as follows.

WHEREAS , the Credit Parties have requested that the (i) U.S. Revolving Lenders agree to extend credit to Airgas in an aggregate principal amount of up to $991,000,000, (ii) U.S. Term Lenders agree to extend credit to Airgas in an aggregate principal amount of up to $600,000,000 and (iii) Canadian Lenders agree to extend credit to the Canadian Borrowers in an aggregate principal amount of up to C$40,000,000, each for the purposes set forth in this Credit Agreement. The Lenders have indicated their willingness to agree to extend credit to Airgas and the Canadian Borrowers from time to time in such amount on the terms and conditions of this Credit Agreement

NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions .

As used in this Credit Agreement, the following terms shall have the meanings specified below unless the context otherwise requires:

“ Acceptance Fee ” means an amount equal to the product of (a) the Applicable Percentage for Bankers’ Acceptances as of the date of acceptance; (b) the aggregate Face Amount of Bankers’ Acceptances accepted by a Canadian Lender on the date of acceptance of the requested Bankers’ Acceptances; and (c) a fraction (i) the numerator of which is the term to maturity in days of such Bankers’ Acceptances, and (ii) the denominator of which is 365 days.

“ Acquisition ”, by any Consolidated Party, means the acquisition (whether or not involving a merger or consolidation) by such Consolidated Party of, to the extent not constituting a Consolidated Capital Expenditure, all or a majority of the Capital Stock or all or substantially all of the Property or a line of business or division of another Person.

“ Additional Commitment ” means, with respect to any Person which executes a New Commitment Agreement in accordance with Section 4.4(b), the commitment of such Lender in an aggregate principal amount up to the amount specified in such New Commitment Agreement (i) to (A) make U.S. Revolving Loans in accordance with the provisions of Section 2A.1(a), (B) purchase participation interests in U.S. Letters of Credit in accordance with the provisions of Section 2A.3(c), and (C) purchase participation interests in the U.S. Swingline Loans in accordance with the provisions of Section 2A.4(b)(iii), and/or (ii) to make U.S. Term Loans in accordance with the provisions of Section 2A.5(a) and/or (iii) to (A) make Canadian Revolving Loans in accordance with the provisions of Section 3.1(a), (B) purchase participation interests in Canadian Letters of Credit in accordance with the provisions of Section 3.3(c) and (C) accept Bankers’ Acceptances in accordance with the provisions of Section 3.4(a).

“ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the U.S. Agent or the Canadian Agent, as applicable.

“ Affiliate ” means, with respect to any Person, any other Person (i) directly or indirectly controlling or controlled by or under direct or indirect common control with such Person or (ii) directly or indirectly owning or holding ten percent (10%) or more of the equity interest in such Person. For purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Agents ” means the U.S. Agent and the Canadian Agent.

“ Airgas ” shall have the meaning assigned to such term in the heading hereof, together with any successors or assigns.

“ Applicable Percentage ” means, for purposes of calculating the applicable rate for any day for any U.S. Base Rate Loan, any Eurocurrency Loan, any Peso Rate Loan or any Canadian Base Rate Loan, the Acceptance Fee, the U.S. Revolving Commitment Unused Fee, the U.S. Term Commitment Unused Fee, the Canadian Unused Fee, the Foreign Currency Commitment Unused Fee, the issuance fee for standby U.S. Letters of Credit, the drawing fee for trade U.S. Letters of Credit, the issuance fee for standby Canadian Letters of Credit, the drawing fee for trade Canadian Letters of Credit, the appropriate applicable percentage, corresponding to the higher of the long term credit ratings of Airgas by S&P and Moody’s in effect as of such date:

Applicable Percentages


Pricing Level	Long term credit rating	Eurocurrency Loans and Peso Rate Loans		U.S. Base Rate Loans		Canadian Base Rate Loans		Bankers’ Acceptances		Issuance Fees for standby U.S. Letters of Credit and standby Canadian Letters of Credit		Drawing Fees for trade U.S. Letters of Credit and trade Canadian Letters of Credit		U.S. Revolving Commitment Unused Fee, U.S. Term Commitment Unused Fee, Canadian Unused Fee and Foreign Currency Commitment Unused Fee
I	> BBB/ > Baa2	0.500	%	0.00	%	0.00	%	0.500	%	0.500	%	0.2500	%	0.100	%
II	BBB-/Baa3	0.625	%	0.00	%	0.00	%	0.625	%	0.625	%	0.3125	%	0.125	%
III	BB+/Ba1	0.750	%	0.00	%	0.00	%	0.750	%	0.750	%	0.3750	%	0.175	%
IV	BB/Ba2	1.250	%	0.250	%	0.250	%	1.250	%	1.250	%	0.6250	%	0.275	%
V	< BB- or unrated by S&P / < Ba3 or unrated by Moody’s	1.750	%	0.750	%	0.750	%	1.750	%	1.750	%	0.8750	%	0.375	%

In the event that the long term credit ratings of Airgas by S&P and Moody’s for any day differ by more than one Pricing Level (or if Airgas is unrated by either S&P or Moody’s), the Applicable Percentage for such day shall be the appropriate applicable percentage corresponding to the Pricing Level which is one Pricing Level lower (with Pricing Level I begin the highest and Pricing Level V being the lowest) than the Pricing Level corresponding to the higher of the long term credit ratings of Airgas by S&P and Moody’s in effect as of such date.

“ Applicable Time ” means, with respect to any borrowing and payment in any Foreign Currency, the local time in the place of settlement for such Foreign Currency as may be determined by the U.S. Agent to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of such borrowing or payment.

“ Applicant Foreign Borrower ” has the meaning specified in Section 2B.5 .

“ Application Period ” means, in respect of any Asset Disposition, the period of 360 days (or such shorter period as provided for reinvestment of the proceeds thereof under any Junior Financing Documentation) following the consummation of such Asset Disposition.

“ Approved Fund ” means any Fund that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Asset Disposition ” means any disposition (including pursuant to an Asset Exchange or a Sale and Leaseback Transaction and including any Involuntary Disposition) of any or all of the Property (including without limitation the Capital Stock of a Subsidiary) of any Consolidated Party whether by sale, lease, licensing, transfer or otherwise; provided , however , that (i) the term “Asset Disposition” shall be deemed to include any “Asset Sale” (or any comparable term) under, and as defined in, any Junior Financing Documentation, and (ii) an issuance of Capital Stock shall not constitute an Asset Disposition.

“ Asset Disposition Prepayment Event ” means, without duplication, (i) with respect to any Asset Disposition (other than an Excluded Asset Disposition) occurring on any date, if any, on which the Applicable Percentage is based on “Pricing Level IV” or “Pricing Level V”, the failure of the Credit Parties to apply (or cause to be applied) the Net Cash Proceeds of such Asset Disposition to Eligible Reinvestments during the Application Period for such Asset Disposition and (ii) as long as the U.S. Term Loan is outstanding, the date five (5) Business Days prior to the date on which a failure of the Credit Parties to have applied the Net Cash Proceeds from any “Asset Sale” (or any comparable term) under, and as defined in, any Junior Financing Documentation in such a manner as to not create an obligation of Airgas to offer to purchase any Subordinated Debt with any such Net Cash Proceeds.

“ Asset Exchange ” means, in connection with any Asset Disposition by a Consolidated Party, any substantially contemporaneous exchange of Property of such Consolidated Party for Property (that would otherwise constitute an Eligible Reinvestment) of the other party to such Asset Disposition.

“ Attributed Principal Amount ” means, on any day, with respect to any Securitization Transaction, the aggregate principal amount outstanding thereunder.

“ BA Outstandings ” means, at any time, the sum of the Face Amount of all Bankers’ Acceptances outstanding at such time.

“ Bankers’ Acceptance ” means a draft (a) drawn by a Canadian Borrower under the Canadian Revolving Commitment for acceptance by a Canadian Lender, (b) denominated in Canadian Dollars and (c) issued and payable only in Canada.

“ Bank of America ” means Bank of America, N.A. and its successors.

“ Bankruptcy Code ” means the U.S. Bankruptcy Code in Title 11 of the United States Code, the Bankruptcy and Insolvency Act of Canada, or any other applicable debtor relief laws in any case, as amended, modified, succeeded or replaced from time to time.

“ Bankruptcy Event ” means, with respect to any Person, the occurrence of any of the following with respect to such Person: (i) a court or governmental agency having jurisdiction in the premises shall enter a decree or order for relief in respect of such Person in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or ordering the winding up or liquidation of its affairs; or (ii) a court or governmental agency having jurisdiction in the premises shall enter a decree or order appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property and such decree or order shall remain undismissed for a period of sixty (60) consecutive days; or (iii) there shall be commenced against such Person an involuntary case under

any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or any case, proceeding or other action for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or for the winding up or liquidation of its affairs, and such involuntary case or other case, proceeding or other action shall remain undismissed, undischarged or unbonded for a period of sixty (60) consecutive days; or (iv) such Person shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or make any general assignment for the benefit of creditors; or (v) such Person shall be unable to, or shall admit in writing its inability to, pay its debts generally as they become due.

“ BNS ” means The Bank of Nova Scotia and its successors.

“ Borrowers ” means a collective reference to each of Airgas, the Canadian Borrowers and the Foreign Borrowers.

“ Borrowing Minimum ” means (a) in the case of a Foreign Currency Loan denominated in U.S. Dollars, $5,000,000 and (b) in the case of a Foreign Currency Loan denominated in a Foreign Currency, the smallest amount of such Foreign Currency that is a multiple of 100,000 units of such Foreign Currency and has a U.S. Dollar Equivalent (using the applicable Spot Rate determined as of the relevant date of determination) in excess of $5,000,000.

“ Borrowing Multiple ” means (a) in the case of a Foreign Currency Loan denominated in U.S. Dollars, $1,000,000 and (b) in the case of a Foreign Currency Loan denominated in a Foreign Currency, 100,000 units of such Foreign Currency.

“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the state where the U.S. Agent’s office with respect to Credit Party Obligations denominated in U.S. Dollars is located and: (a) if such day relates to any interest rate settings as to a Eurocurrency Loan denominated in U.S. Dollars, any fundings, disbursements, settlements and payments in U.S. Dollars in respect of any such Eurocurrency Loan, or any other dealings in U.S. Dollars to be carried out pursuant to this Credit Agreement in respect of any such Eurocurrency Loan, means any such day on which dealings in deposits in U.S. Dollars are conducted by and between banks in the London interbank eurodollar market; (b) if such day relates to any interest rate settings as to a Eurocurrency Loan denominated in Euro, any fundings, disbursements, settlements and payments in Euro in respect of any such Eurocurrency Loan, or any other dealings in Euro to be carried out pursuant to this Credit Agreement in respect of any such Eurocurrency Loan, means a TARGET Day; (c) if such day relates to any interest rate settings as to a Eurocurrency Loan denominated in a currency other than U.S. Dollars or Euro, means any such day on which dealings in deposits in the relevant currency are conducted by and between banks in the London or other applicable offshore interbank market for such currency; (d) if such day relates to any fundings, disbursements, settlements and payments in a currency other than U.S. Dollars or Euro in respect of a Eurocurrency Loan denominated in a currency other than U.S. Dollars or Euro, or any other dealings in any currency other than U.S. Dollars or Euro to be carried out pursuant to this Credit Agreement in respect of any such Eurocurrency Loan (other than any interest rate settings), means any such day on which banks are open for foreign exchange business in the principal financial center of the country of such currency; and (e) if such day relates to any interest rate settings as to a Peso Rate Loan, means any such day on which dealings in deposits in Mexican deposits are conducted by and between banks in Mexico City, Mexico; provided , however , when used in connection with a Loan made by any of the Canadian Lenders, the term Business Day shall not include any day on which banking institutions in Toronto, Ontario are authorized by law or other governmental actions to close.

“ Canadian Agent ” shall have the meaning assigned to such term in the heading hereof, together with any successors or assigns.

“ Canadian Agent’s Fee Letter ” means that certain letter agreement, dated as of the Closing Date, between the Canadian Agent and Airgas, as amended, modified, restated or supplemented from time to time.

“ Canadian Base Rate ” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the higher of (i) the fluctuating rate of interest per annum equal to the rate of interest established and publicly announced by BNS, from time to time, as its prime rate for Canadian Dollar commercial loans made in Canada (with each change in such prime rate being effective on the date such change is publicly announced as effective (it being understood and agreed that such prime rate is a reference rate used by BNS in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit by BNS to any debtor)) and (ii) CDOR for such day plus the Applicable Percentage for Bankers’ Acceptances.

“ Canadian Base Rate Loan ” means any Loan bearing interest at a rate determined by reference to the Canadian Base Rate.

“ Canadian Borrowers ” shall have the meaning assigned to such term in the heading hereof, together with any successors or assigns.

“ Canadian Commitment Percentage ” means, for any Canadian Lender, the percentage identified as its Canadian Commitment Percentage on Schedule 2.1(a) , as such percentage may be modified in connection with any increase in the Canadian Revolving Committed Amount pursuant to Section 4.4(b) or any assignment made in accordance with the provisions of Section 11.3; provided , however , at any time that any Canadian Swingline Loan is outstanding (except to the extent that the Canadian Swingline Lender has demanded repayment of a particular Canadian Swingline Loan by way of a Canadian Revolving Loan as provided in Section 3.2(b)), (i) the Canadian Commitment Percentage of the Canadian Swingline Lender shall be reduced by an amount equal to the percentage amount of the Canadian Revolving Committed Amount then comprised of outstanding Canadian Swingline Loans and (ii) the Canadian Commitment Percentage of each other Canadian Lender shall be increased by an amount equal to the product of (A) the amount determined pursuant to clause (i) above multiplied by (B) the fraction determined from the ratio that the Canadian Commitment Percentage of such Canadian Lender bears to the total Canadian Commitment Percentages of all the Canadian Lenders other than the Canadian Swingline Lender.

“ Canadian Credit Parties ” means a collective reference to the Canadian Borrowers and the Canadian Subsidiary Guarantors, and “ Canadian Credit Party ” means any one of them.

“ Canadian Dollars ” and “ C$ ” means dollars in lawful currency of Canada.

“ Canadian Guarantors ” means collectively, Airgas, the U.S. Subsidiary Guarantors, the Foreign Borrowers, the Foreign Subsidiary Guarantors and the Canadian Subsidiary Guarantors, and “ Canadian Guarantor ” means any one of them.

“ Canadian Issuing Lender ” means BNS.

“ Canadian Lenders ” means (i) those Lenders that have Canadian Revolving Commitments and are identified as Lenders on the signature pages attached hereto and (ii) any Person which becomes a Canadian Lender by executing a New Commitment Agreement pursuant to Section 4.4(b), together with their successors and assigns.

“ Canadian Letter of Credit ” means (i) any standby or trade letter of credit issued by the Canadian Issuing Lender for the account of a Canadian Borrower in accordance with the terms of Section 3.3 and (ii) any Existing Canadian Letter of Credit.

“ Canadian LOC Commitment ” means the commitment of the Canadian Issuing Lender to issue Canadian Letters of Credit in an aggregate face amount at any time outstanding (together with the amounts of any unreimbursed drawings thereon) of up to the Canadian LOC Committed Amount.

“ Canadian LOC Committed Amount ” shall have the meaning assigned to such term in Section 3.3.

“ Canadian LOC Documents ” means, with respect to any Canadian Letter of Credit, such Canadian Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Canadian Letter of Credit) governing or providing for (i) the rights and obligations of the parties concerned or at risk or (ii) any collateral security for such obligations.

“ Canadian LOC Obligations ” means, at any time, the sum of (i) the maximum amount which is, or at any time thereafter may become, available to be drawn under Canadian Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such Canadian Letters of Credit plus (ii) the aggregate amount of all drawings under Canadian Letters of Credit honored by the Canadian Issuing Lender but not theretofore reimbursed. For all purposes of this Credit Agreement, if on any date of determination a Canadian Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

“ Canadian Obligations ” means without duplication, (i) all of the obligations of the Canadian Borrowers and the Canadian Guarantors, in their capacity as such, to the Canadian Lenders, the Agents and the Collateral Agent, whenever arising, under this Credit Agreement or any of the other Credit Documents (including, but not limited to, any interest owed with respect to such obligations which has accrued after the occurrence of a Bankruptcy Event with respect to any Canadian Credit Party, regardless of whether such interest is an allowed claim under the Bankruptcy Code) and (ii) all liabilities and obligations, whenever arising, owing from the Canadian Borrowers to any Canadian Lender, or any affiliate of a Canadian Lender, arising under any Hedging Agreement.

“ Canadian Revolving Commitment ” means, with respect to each Canadian Lender, the commitment of such Canadian Lender in an aggregate principal amount at any time outstanding of up to such Canadian Lender’s Canadian Commitment Percentage of the Canadian Revolving Committed Amount, (i) to make Canadian Revolving Loans in accordance with the provisions of Section 3.1(a), (ii) to purchase participation interests in Canadian Letters of Credit in accordance with the provisions of Section 3.3(c) and (iii) to accept Bankers’ Acceptances in accordance with the provisions of Section 3.4(a).

“ Canadian Revolving Committed Amount ” shall have the meaning assigned to such term in Section 3.1(a).

“ Canadian Revolving Loans ” shall have the meaning assigned to such term in Section 3.1(a).

“ Canadian Subsidiary ” means a direct or indirect Subsidiary of Airgas which is organized and existing under the laws of Canada or any province or other political subdivision thereof.

“ Canadian Subsidiary Guarantors ” means each of (i) Airgas, S.A. de C.V., (ii) Airgas West, S.A. de C.V., (iii) Red-D-Arc, S.A. de C.V., (iv) Red-D-Arc (UK) Limited, and (v) Red-D-Arc (Netherlands) B.V., and each Canadian Subsidiary which may hereafter guaranty the Canadian Obligations by its execution after the Third Amendment Date of a Joinder Agreement pursuant to Section 7.12, together with their successors and permitted assigns, and “ Canadian Subsidiary Guarantor ” means any one of them.

“ Canadian Swingline Commitment ” means the commitment of the Canadian Swingline Lender to make Canadian Swingline Loans in an aggregate principal amount at any time outstanding of up to the Canadian Swingline Committed Amount.

“ Canadian Swingline Committed Amount ” shall have the meaning assigned to such term in Section 3.2(a).

“ Canadian Swingline Lender ” means BNS.

“ Canadian Swingline Loan ” means a loan made pursuant to and defined in Section 3.2(a).

“ Canadian Unused Fee ” shall have the meaning assigned to such term in Section 4.5(a)(ii).

“ Capital Lease ” means, as applied to any Person, any lease of any Property (whether real, personal or mixed) by that Person as lessee which, in accordance with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person.

“ Capital Stock ” means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests and (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“ Cash Equivalents ” means (a) securities issued or directly and fully guaranteed or insured by the United States, the government of the Canada or any agency or instrumentality thereof (to the extent that the full faith and credit of the United States or Canada is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition; (b) U.S. Dollar or Canadian Dollar denominated time deposits and certificates of deposit of (1) any Lender, (2) any United States or Canadian commercial bank of recognized standing having capital and surplus in excess of $500,000,000 (or C$800,000,000, as the case may be) or (3) any bank whose short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody’s is at least P-1 or the equivalent thereof (any such bank being an “ Approved Bank ”), in each case with maturities of not more than 270 days from the date of acquisition; (c) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by, any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody’s and maturing within six months of the date of acquisition; (d) repurchase agreements entered into by any Person with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 (or C$800,000,000, as the case may be) for direct obligations issued by or fully guaranteed by the United States or Canada in which such Person shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations; (e) Investments, classified in accordance with GAAP as current assets, in money market investment programs registered under the Investment Company Act of 1940, as amended, which are administered by reputable financial institutions having capital of at least $500,000,000 and the portfolios of which are limited to Investments of the character described in the foregoing subdivisions (a) through (d); and (f) in the case of any Foreign Subsidiary, (i) direct obligations of the sovereign nation (or any agency thereof) in which such Foreign Subsidiary is organized and is conducting business or in obligations fully and unconditionally guaranteed by such sovereign nation (or any agency thereof) having maturities of not

more than twelve months from the date of acquisition, (ii) Investments of the type and maturity described in clauses (a) through (e) above of foreign obligors, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies or (iii) Investments of the type and maturity described in clauses (a) through (e) above of foreign obligors (or the parents of such obligors), which Investments or obligors (or the parents of such obligors) are not rated as provided in such clauses or in clause (ii) above but which are, in the reasonable judgment of Airgas, comparable in investment quality to such Investments and obligors (or the parents of such obligors).

“ CDOR ” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) quoted by BNS as the rate for its 30 day Canadian Dollar bankers’ acceptances appearing on the Reuters Screen CDOR page as of 10:00 A.M. (Toronto, Canada time) on such day, provided that if such rate does not appear on the Reuters Screen CDOR page at such time on such day, the rate for such day will be the average of all of the bankers’ acceptances discount rates posted on the Reuters Screen CDOR page for 30 day Canadian Dollar bankers’ acceptances at such time on such day with respect to the Schedule I chartered banks of Canada.

“ Closing Date ” means July 25, 2006.

“ Code ” means the U.S. Internal Revenue Code of 1986, as amended, and any successor thereto, as interpreted by the rules and regulations issued thereunder, in each case as in effect from time to time. References to sections of the Code shall be construed also to refer to any successor sections.

“ Collateral ” means a collective reference to all personal Property with respect to which Liens in favor of the Collateral Agent are purported to be granted pursuant to and in accordance with the terms of the Collateral Documents.

“ Collateral Agent ” means Bank of America, in its capacity as collateral agent under the Collateral Documents, together with any successors or assigns.

“ Collateral and Guarantor Release Date ” means the first date, if any, that occurs after the Closing Date or after a Collateralization Date (a) on which the Applicable Percentage is based on “Pricing Level I” or “Pricing Level II” and (b) that the Guaranty Obligations of all of the Guarantors of Airgas’ obligations under all Junior Financing Documentation have been released (or will be released contemporaneously upon the release of the Guarantors hereunder) (it being understood that a Collateral and Guarantor Release Date may occur more than once during the term of this Credit Agreement). For purposes of clarification, the occurrence of a Collateral and Guarantor Release Date shall not result in the release of Airgas from its obligations under Article XII .

“ Collateral Documents ” means a collective reference to the Pledge Agreement and any other pledge or similar agreement executed and delivered in accordance with Section 7.13.

“ Collateralization Date ” means the first date, if any, following a Collateral and Guarantor Release Date, on which either (a) the Applicable Percentage is based on “Pricing Level III”, “Pricing Level IV” or “Pricing Level V” or (b) any Subsidiary of Airgas guarantees Airgas’ obligations under any Junior Financing Documentation (it being understood that a Collateralization Date may occur more than once during the term of this Credit Agreement).

“ Commitment ” means (i) with respect to each U.S. Revolving Lender, the U.S. Revolving Commitment of such Lender, (ii) with respect to each U.S. Term Lender, the U.S. Term Loan Commitment of such Lender, (iii) with respect to each Canadian Lender, the Canadian Revolving Commitment of such Lender, (iv) with respect to the U.S. Swingline Lender, the U.S. Swingline Commitment, (v) with respect to

the Canadian Swingline Lender, the Canadian Swingline Commitment, (v) with respect to the U.S. Issuing Lenders, the U.S. LOC Commitment, (vi) with respect to the Canadian Issuing Lender, the Canadian LOC Commitment and (vii) with respect to each Foreign Currency Lender, the Foreign Currency Commitment of such Lender.

“ Competitive U.S. Bid ” means an offer by a U.S. Revolving Lender to make a Competitive U.S. Loan pursuant to the terms of Section 2A.2.

“ Competitive U.S. Bid Rate ” means, as to any Competitive U.S. Bid made by a U.S. Revolving Lender in accordance with the provisions of Section 2A.2, the fixed rate of interest offered by the U.S. Revolving Lender making the Competitive U.S. Bid.

“ Competitive U.S. Loan ” means a loan made by a U.S. Revolving Lender in its discretion pursuant to the provisions of Section 2A.2.

“ Consolidated Capital Expenditures ” means, for any period, all capital expenditures of the Consolidated Parties on a consolidated basis during such period, as determined in accordance with GAAP; provided , however , that Consolidated Capital Expenditures shall not include (i) capital expenditures constituting Eligible Reinvestments made with the proceeds of any Asset Disposition or (ii) Acquisitions.

“ Consolidated EBITDA ” means, for any period, the sum of (i) Consolidated Net Income for such period, plus (ii) an amount which, in the determination of Consolidated Net Income for such period, has been deducted for (A) Consolidated Interest Expense, (B) total federal, state, local and foreign income, value added and similar taxes, (C) depreciation and amortization expense, (D) one-time cash expenses incurred in connection with the refinancing of the Existing Credit Agreement, (E) non-cash, non-recurring charges, (F) any losses realized upon the disposition of Property other than the disposition of Inventory in the ordinary course of business, (G) other non-cash expenses (excluding any non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period) and (H) one-time charges resulting from the permanent closure of facilities, the termination of employees and other costs directly associated with the Project OT Acquisition to the extent such charges were incurred not later than March 31, 2008 and not exceeding $20,000,000 in the aggregate, minus (iii) an amount which, in the determination of Consolidated Net Income for such period, has been included for (A) non-cash gains during such period and (B) any gains realized upon the disposition of Property other than the disposition of Inventory in the ordinary course of business, all as determined in accordance with GAAP.

“ Consolidated Interest Coverage Ratio ” means, as of any date of determination, the ratio of (i) Consolidated EBITDA for the period of the four fiscal quarters most recently ended on or prior to such date to (ii) Consolidated Interest Expense for such period.

“ Consolidated Interest Expense ” means, for any period, the sum of (i) interest expense (including the amortization of debt discount and premium, the interest component under Capital Leases and Synthetic Leases) of the Consolidated Parties on a consolidated basis and (ii) the implied interest component and all other fees and expenses under the Permitted Receivables Financing.

“ Consolidated Leverage Ratio ” means, as of any date of determination, the ratio of (i) Funded Indebtedness of the Consolidated Parties on a consolidated basis as of such date to (ii) Consolidated EBITDA for the period of the four fiscal quarters most recently ended on or prior to such date.

“ Consolidated Net Income ” means, for any period, the sum of (i) the sum, without duplication, of net income (excluding extraordinary items) after taxes for such period of the Consolidated Parties, plus (ii) to the extent not included in the amount determined pursuant to clause (i) above and to the extent paid in cash to a Consolidated Party, equity earnings of unconsolidated Affiliates for such period minus (iii) to the extent

included in the amount determined pursuant to clause (i) above and to the extent not paid in cash to a Consolidated Party, equity earnings of Affiliates that are not consolidated (on the consolidation basis) with Airgas for such period, all as determined in accordance with GAAP.

“ Consolidated Net Tangible Assets ” means, as of any date of determination, the aggregate of the assets of the Consolidated Parties plus the Attributed Principal Amount under any Securitization Transaction minus all such assets properly classified as intangible assets, including, without limitation, goodwill, organization costs, patents, trademarks, copyrights, franchises and research and development costs minus current liabilities of the Consolidated Parties (excluding the current portion of long-term debt), in each case on a consolidated basis as determined in accordance with GAAP and after giving effect to purchase accounting.

“ Consolidated Parties ” means a collective reference to each of Airgas and its Restricted Subsidiaries.

“ Consolidated Senior Leverage Ratio ” means, as of any date of determination, the ratio of (i) the sum of (A) total Funded Indebtedness (other than Funded Indebtedness of the types described in clauses (viii), (ix) and (x) of the definition thereof) of the Consolidated Parties on a consolidated basis as of such date less (B) the outstanding principal amount of Subordinated Debt of the Consolidated Parties on a consolidated basis as of such date to (ii) Consolidated EBITDA for the period of the four fiscal quarters most recently ended on or prior to such date.

“ Credit Documents ” means a collective reference to this Credit Agreement, the Collateral Documents, the Intercreditor Agreement, the U.S. LOC Documents, the Canadian LOC Documents, Bankers’ Acceptances, each Joinder Agreement, any promissory notes issued by the Foreign Borrowers to the Foreign Currency Lenders hereunder, the U.S. Agent’s Fee Letter and the Canadian Agent’s Fee Letter.

“ Credit Parties ” means a collective reference to each of Airgas, the Canadian Borrowers, the Foreign Borrowers and the Guarantors.

“ Credit Party Obligations ” means without duplication, (i) all of the obligations of the Borrowers and the Guarantors to the Lenders, the Agents and the Collateral Agent, whenever arising, under this Credit Agreement or any of the other Credit Documents (including, but not limited to, any interest accruing after the occurrence of a Bankruptcy Event with respect to any Credit Party, regardless of whether such interest is an allowed claim under the Bankruptcy Code) and (ii) all liabilities and obligations, whenever arising, owing from the Borrowers to any Lender, or any affiliate of a Lender, arising under any Hedging Agreement.

“ Default ” means any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.

“ Defaulting Lender ” means any Lender that (a) has failed to fund any portion of the Loans, participations in LOC Obligations or participations in U.S. Swingline Loans or Canadian Swingline Loans required to be funded by it hereunder or create Bankers’ Acceptances as required by it hereunder, in each case, within one Business Day of the date required hereunder, (b) has otherwise failed to pay over to the applicable Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless such payment is the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

“ Discount Rate ” means (i) in respect of any Bankers’ Acceptances to be acquired pursuant to Section 3.4 by a Canadian Lender which is a Schedule I chartered bank, the discount rate quoted by the principal office of such Canadian Lender at approximately 10:00 A.M. (Toronto time) (or such other time as may be practicable for the determination of the Discount Rate) as the discount rate at which such

Canadian Lender would purchase bankers’ acceptances accepted by such Canadian Lender and with a term to maturity the same as the Bankers’ Acceptances to be acquired by such Canadian Lender on the date of acceptance of such Bankers’ Acceptances, and (ii) in respect of any Bankers’ Acceptances to be acquired pursuant to Section 3.4 by a Canadian Lender which is not a Schedule I chartered bank, the lesser of (a) the discount rate quoted by the principal office of such Canadian Lender at approximately 10:00 a.m (Toronto time) (or such other time as may be practicable for the determination of the Discount Rate) as the discount rate at which such Canadian Lender would purchase bankers’ acceptances accepted by such Canadian Lender and with a term to maturity the same as the Bankers’ Acceptances to be acquired by such Canadian Lender on the date of acceptance of such Bankers’ Acceptances and (b) the discount rate calculated pursuant to clause (i) plus 7.5 basis points.

“ Disqualified Stock ” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the Termination Date. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require Airgas to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that Airgas may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 8.6 of this Credit Agreement.

“ Domestic Subsidiary ” means any direct or indirect Subsidiary of Airgas (other than a direct or indirect Subsidiary of a Foreign Subsidiary) which is incorporated or organized under the laws of any State of the United States or the District of Columbia.

“ Eligible Assignee ” means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person) approved by (i) the U.S. Agent (and in the case of any assignment by a Canadian Lender, the Canadian Agent), (ii) in the case of any assignment of a U.S. Revolving Commitment, each U.S. Issuing Lender and the U.S. Swingline Lender, (iii) in the case of any assignment of a Canadian Revolving Commitment, the Canadian Issuing Lender and the Canadian Swingline Lender, and (iv) unless an Event of Default has occurred and is continuing, Airgas (each such approval in clauses (i) through (iv) not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include (1) Airgas or any of Airgas’ Affiliates or Subsidiaries or (2) in the case of any assignment of any Foreign Currency Commitment (and the related Foreign Currency Loans), any Person that, through its applicable lending offices, is not capable of lending the Foreign Currencies as of the effective date of such assignment to Airgas or the Foreign Borrowers as of such date without the imposition of additional withholding taxes (unless Airgas otherwise agrees in writing).

“ Eligible Reinvestment ” means (i) any acquisition (whether or not constituting a capital expenditure, but not constituting an Acquisition) of assets or any business (or any substantial part thereof) used or useful in the same or a similar or ancillary line of business as Airgas and its Restricted Subsidiaries were engaged in on the Closing Date (or any reasonable extensions or expansions thereof) and (ii) any Permitted Acquisition. The term “Eligible Reinvestment” shall not include any item which is not a permitted application of proceeds of an “Asset Sale” (or any comparable term) under, and as defined in, any Junior Financing Documentation.

“ EMU ” means the economic and monetary union in accordance with the Treaty of Rome 1957, as amended by the Single European Act 1986, the Maastricht Treaty of 1992 and the Amsterdam Treaty of 1998.

“ EMU Legislation ” means the legislative measures of the European Council for the introduction of, changeover to or operation of a single or unified European currency.

“ Environmental Laws ” means any and all lawful and applicable Federal, state, local, Canadian and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.

“ ERISA ” means the U.S. Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto, as interpreted by the rules and regulations thereunder, all as the same may be in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections.

“ ERISA Affiliate ” means an entity which is under common control with Airgas or any Subsidiary of Airgas within the meaning of Section 4001(a)(14) of ERISA, or is a member of a group which includes Airgas or any Subsidiary of Airgas and which is treated as a single employer under Sections 414(b), (c), (m), or (o) of the Code.

“ Euro ”, “ EUR ” and “ € ” mean the lawful currency of the Participating Member States introduced in accordance with the EMU Legislation.

“ Eurocurrency Base Rate ” means, for any Interest Period with respect to a Eurocurrency Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“ BBA LIBOR ”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the U.S. Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for deposits in the relevant currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the “ Eurocurrency Base Rate” for such Interest Period shall be the rate per annum determined by the U.S. Agent to be the rate at which deposits in the relevant currency for delivery on the first day of such Interest Period in Same Day Funds in the approximate amount of the Eurocurrency Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch (or other Bank of America branch or Affiliate) to major banks in the London or other offshore interbank market for such currency at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period

“ Eurocurrency Loan ” means any Loan bearing interest at a rate determined by reference to the Eurocurrency Rate.

“ Eurocurrency Rate ” means, for any Interest Period with respect to any Eurocurrency Loan, a rate per annum determined by the U.S. Agent to be equal to the quotient obtained by dividing (a) the Eurocurrency Base Rate for such Eurocurrency Loan for such Interest Period by (b) one minus the Eurocurrency Reserve Percentage for such Eurocurrency Loan for such Interest Period.

“ Eurocurrency Reserve Percentage ” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the Board of Governors of the Federal Reserve System of the United States for determining the maximum reserve requirement

(including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”). The Eurocurrency Rate for each outstanding Eurocurrency Loan shall be adjusted automatically as of the effective date of any change in the Eurocurrency Reserve Percentage.

“ Event of Default ” shall have the meaning assigned to such term in Section 9.1.

“ Excluded Asset Disposition ” means, with respect to any Consolidated Party, any Asset Disposition consisting of (i) the sale, lease, license, transfer or other disposition of inventory in the ordinary course of such Consolidated Party’s business, (ii) the sale, lease, license, transfer or other disposition of obsolete machinery and equipment or machinery and equipment no longer used or useful in the conduct of such Consolidated Party’s business, (iii) any sale, lease, license, transfer or other disposition of Property by such Consolidated Party to any U.S. Credit Party, (iv) any sale, lease, license, transfer or other disposition of Property by (A) a Canadian Subsidiary to any Canadian Credit Party and (B) any Foreign Subsidiary (other than a Canadian Subsidiary) to a Foreign Credit Party, (v) any portion of an Asset Disposition by such Consolidated Party constituting a Permitted Investment, (vi) if such Consolidated Party is not a Credit Party, any sale, lease, license, transfer or other disposition of Property by such Consolidated Party to any Consolidated Party, (vii) any sale, lease, license, transfer or other disposition of Property by such Consolidated Party to any other Consolidated Party so long as, at the time of such sale, lease, license, transfer or other disposition, the aggregate amount of all Property sold, leased, licensed, transferred or otherwise disposed pursuant to this clause (vii) does not exceed 5% of Consolidated Net Tangible Assets as of the last day of the most recently ended fiscal quarter of Airgas, (viii) the sale or disposition of Cash Equivalents for fair market value, (ix) the disposition of cash in connection with a transaction permitted under the Credit Agreement, (x) any sale of Securitization Assets by such Consolidated Party to the Receivables Subsidiary in connection with the Permitted Receivables Financing, (xi) to the extent constituting an Asset Disposition, the creation of any Permitted Lien, (xii) any Asset Disposition required or advisable by law, regulation or Governmental Authority as part of a Permitted Acquisition and (xiii) the sale of the assets identified on Schedule 1.1A ; provided , however , that the term “Excluded Asset Disposition” shall not include (A) any Asset Disposition to the extent that any portion of the proceeds of such Asset Disposition would be required under any Junior Financing Documentation to be applied to permanently retire Indebtedness of the Consolidated Parties and (B) any transfer of assets to any Person identified on Schedule 1.1A by a Consolidated Party not identified on Schedule 1.1A to the extent such transfer of assets was made in contemplation of an Asset Disposition permitted by clause (xiii) above.

“ Executive Officer ” means, in respect of any Person, the chief executive officer, chief operating officer, treasurer or chief financial officer of such Person.

“ Existing Canadian Letters of Credit ” means the letters of credit described by date of issuance, letter of credit number, undrawn amount, name of beneficiary and date of expiry on Schedule 1.1B hereto.

“ Existing Credit Agreement ” shall have the meaning assigned to such term in the recitals hereof.

“ Existing U.S. Letters of Credit ” means the letters of credit described by date of issuance, letter of credit number, undrawn amount, name of beneficiary and date of expiry on Schedule 1.1C hereto.

“ Face Amount ” means, in respect of a Bankers’ Acceptance, the amount payable to the holder thereof on maturity.

“ Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the

Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the U.S. Agent.

“ Foreign Borrower ” means each wholly-owned Foreign Subsidiary (whether directly or indirectly) of Airgas that is designated and approved as a “Foreign Borrower” under this Credit Agreement pursuant to Section 2B.5.

“ Foreign Borrower Notice ” has the meaning specified in Section 2B.5 .

“ Foreign Borrower Request and Assumption Agreement ” has the meaning specified in Section 2B.5 .

“ Foreign Credit Parties ” means a collective reference to the Foreign Borrowers and the Foreign Subsidiary Guarantors, and “ Foreign Credit Party ” means any one of them.

“ Foreign Currency ” means each of Euro, Sterling, Mexican Pesos and each other currency (other than U.S. Dollars) that is approved in accordance with Section 2B.3.

“ Foreign Currency Commitment ” means, with respect to each Foreign Currency Lender, the commitment of such Foreign Currency Lender in an aggregate principal amount at any time outstanding of up to such Foreign Currency Lender’s Foreign Currency Commitment Percentage of the Foreign Currency Committed Amount, to make Foreign Currency Loans in accordance with the provisions of Section 2B.1(a).

“ Foreign Currency Commitment Percentage ” means, for any Foreign Currency Lender, the percentage identified as its Foreign Currency Commitment Percentage on Schedule 2.1(a) , as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 11.3.

“ Foreign Currency Commitment Unused Fee ” shall have the meaning assigned to such term in Section 4.5(a)(iii).

“ Foreign Currency Committed Amount ” shall have the meaning assigned to such term in Section 2B.1(a).

“ Foreign Currency Lenders ” means those Lenders that have Foreign Currency Commitments, together with their successors and assigns.

“ Foreign Currency Loans ” shall have the meaning assigned to such term in Section 2B.1(a).

“ Foreign Guarantors ” means collectively, Airgas, the U.S. Subsidiary Guarantors, the Canadian Borrowers, the Canadian Subsidiary Guarantors and the Foreign Subsidiary Guarantors, and “ Foreign Guarantor ” means any one of them.

“ Foreign Obligations ” means without duplication, (i) all of the obligations of the Foreign Borrowers and the Foreign Guarantors, in their capacity as such, to the Foreign Currency Lenders, the Agents and the Collateral Agent, whenever arising, under this Credit Agreement or any of the other Credit Documents (including, but not limited to, any interest owed with respect to such obligations which has accrued after the occurrence of a Bankruptcy Event with respect to any Foreign Credit Party, regardless of whether such interest is an allowed claim under the Bankruptcy Code) and (ii) all liabilities and obligations, whenever arising, owing from the Foreign Borrowers to any Foreign Currency Lender, or any affiliate of a Foreign Currency Lender, arising under any Hedging Agreement.

“ Foreign Subsidiary ” means any direct or indirect Subsidiary of Airgas which is not is incorporated or organized under the laws of any State of the United States or the District of Columbia.

“ Foreign Subsidiary Guarantors ” means each Foreign Subsidiary (other than a Canadian Subsidiary) which may hereafter guaranty the Foreign Obligations by its execution of a Joinder Agreement after the Third Amendment Date pursuant to Section 7.12, together with their successors and permitted assigns, and “ Foreign Subsidiary Guarantor ” means any one of them.

“ Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

“ Funded Indebtedness ” means, with respect to any Person, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (iii) all obligations of such Person issued or assumed as the deferred purchase price of Property or services purchased by such Person (other than trade debt incurred in the ordinary course of business and due within six months of the incurrence thereof) which would appear as liabilities on a balance sheet of such Person, (iv) the implied principal component of all obligations of such Person under Capital Leases, (v) all Guaranty Obligations of such Person with respect to Funded Indebtedness of another Person, (vi) all net obligations of such Person in respect of Hedging Agreements, (vii) the maximum available amount of, and all unreimbursed drawings under, all standby letters of credit or acceptances issued or created for the account of such Person ( provided , however , in connection with any calculation hereunder of Funded Indebtedness of the Consolidated Parties on a consolidated basis, there shall be excluded any standby letter of credit or acceptance (together with any unreimbursed drawings under such letter of credit or acceptance) which supports any Funded Indebtedness of any Consolidated Party that would otherwise be included in such calculation), (viii) the principal portion of all obligations of such Person under Synthetic Leases, (ix) all Disqualified Stock of such Person, and (x) the Attributed Principal Amount under any Securitization Transaction of such Person or any of its Receivables Subsidiaries, and (xi) all Funded Indebtedness of others secured by (or for which the holder of such Funded Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, Property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed. The Funded Indebtedness of any Person (a) shall include the Funded Indebtedness of any partnership or joint venture in which such Person is a general partner or joint venturer to the extent that such Person is legally liable for such Funded Indebtedness and (b) shall not include any Indebtedness of a Consolidated Party owing to another Consolidated Party.

“ GAAP ” means generally accepted accounting principles in the United States applied on a consistent basis and subject to the terms of Section 1.3 hereof.

“ Governmental Authority ” means any Federal, state, provincial, local or foreign court or governmental agency, authority, instrumentality or regulatory body.

“ Guarantors ” means (a) with respect to the Credit Party Obligations, the U.S. Subsidiary Guarantors, (b) with respect to the Canadian Obligations, the Canadian Guarantors, and (c) with respect to the Foreign Obligations, the Foreign Guarantors, and “ Guarantor ” means any one of them.

“ Guaranty Obligations ” means, with respect to any Person, without duplication, any obligations of such Person (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing or intended to guarantee any Indebtedness of any other Person in any manner,

whether direct or indirect, and including without limitation any obligation, whether or not contingent, (i) to purchase any such Indebtedness or any Property constituting security therefor, (ii) to advance or provide funds or other support for the payment or purchase of any such Indebtedness or to maintain working capital, solvency or other balance sheet condition of such other Person (including without limitation keep well agreements, maintenance agreements, comfort letters or similar agreements or arrangements to the extent such agreements or arrangements constitute a legally binding monetary obligation) for the benefit of any holder of Indebtedness of such other Person, (iii) to lease or purchase Property, securities or services primarily for the purpose of assuring the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless the holder of such Indebtedness against loss in respect thereof. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness in respect of which such Guaranty Obligation is made.

“ Hedging Agreements ” means any interest rate protection agreement, commodities purchase agreement or foreign currency exchange agreement.

“ Immaterial Foreign Subsidiary ” means, at any time, any Foreign Subsidiary that does not (a) have total revenues for the most recently ended fiscal year in excess of $15,000,000 and (b) together with the other Foreign Subsidiaries for which the Credit Parties have not (i) delivered pledge or similar agreements that are governed by the laws of the jurisdictions of organization of such Foreign Subsidiaries and (ii) provided legal opinions of foreign counsel with respect to such Foreign Subsidiaries in connection with the execution of Joinder Agreements by such Foreign Subsidiaries and the pledge of the Capital Stock of such Foreign Subsidiaries pursuant to the Collateral Documents, have aggregate total revenues for the most recently ended fiscal year in excess of $50,000,000.

“ Indebtedness ” of any Person means, without duplication, (i) all Funded Indebtedness of such Person, (ii) all Guaranty Obligations of such Person, (iii) all obligations of such Person under conditional sale or other title retention agreements relating to Property purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business) and (iv) all obligations of such Person under take-or-pay or similar arrangements or under commodities agreements. The Indebtedness of any Person (a) shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or joint venturer to the extent that such Person is legally liable for such Indebtedness and (b) shall not include any Indebtedness of a Consolidated Party owing to another Consolidated Party.

“ Intercreditor Agreement ” means that certain Intercreditor Agreement dated as of the Closing Date among the Agents and the Lenders.

“ Interest Payment Date ” means (i) as to any U.S. Base Rate Loan, the last day of each March, June, September and December, the date of repayment of principal of such Loan and the Termination Date, (ii) as to any Canadian Revolving Loan, the first Business Day of each calendar month, the date of repayment of principal of such Loan and the Termination Date and (iii) as to any Eurocurrency Loan, any Peso Rate Loan, any Competitive U.S. Loan, any U.S. Swingline Loan or any Canadian Swingline Loan, the last day of each Interest Period for such Loan, the date of repayment of principal of such Loan and the Termination Date, and in addition where the applicable Interest Period is more than 3 months, then also on the date 3 months from the beginning of the Interest Period, and each 3 months thereafter. If an Interest Payment Date falls on a date which is not a Business Day, such Interest Payment Date shall be deemed to be the next succeeding Business Day, except that in the case of Eurocurrency Loans or Peso Rate Loans where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day.

“ Interest Period ” means (i) as to any Eurocurrency Loan, a period of one, two, three, six or twelve month’s duration, as the applicable Borrower may elect, commencing in each case, on the date of the borrowing (including conversions, extensions and renewals), (ii) as to any Competitive U.S. Loan, a period commencing in each case on the date of the borrowing and ending on the date specified in the applicable Competitive U.S. Bid whereby the offer to make such Competitive U.S. Loan was extended (such ending date in any event to be not more than 180 days from the date of the borrowing), (iii) as to any U.S. Swingline Loan, a period commencing in each case on the date of the borrowing and ending on the date agreed to by Airgas and the U.S. Swingline Lender in accordance with the provisions of Section 2A.4(b)(i) (such ending date in any event to be not more than thirty (30) days from the date of borrowing), (iv) as to any Canadian Swingline Loan, a period commencing in each case on the date of the borrowing and ending on the date agreed to by the applicable Canadian Borrower and the Canadian Swingline Lender and (v) as to any Peso Rate Loan, a period of twenty-eight (28) or ninety-one (91) days’ duration, as the applicable Borrower may elect, commencing on the date of the borrowing (including conversions, extensions and renewals); provided , however , (A) if any Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day (except that in the case of Eurocurrency Loans and Peso Rate Loans where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day), (B) no Interest Period shall extend beyond the Termination Date, and (C) in the case of Eurocurrency Loans and Peso Rate Loans, where an Interest Period begins on a day for which there is no numerically corresponding day in the calendar month in which the Interest Period is to end, such Interest Period shall end on the last day of such calendar month.

“ Investment ” in any Person means (a) the acquisition (whether for cash, property, services, assumption of Indebtedness, securities or otherwise) of assets (other than (i) equipment, inventory and supplies in the ordinary course of business, (ii) any acquisition of assets constituting a Consolidated Capital Expenditure and (iii) any acquisition of assets that are transferred by such Person to the acquirer through an Excluded Asset Disposition), Capital Stock, bonds, notes, debentures, partnership, joint ventures or other ownership interests or other securities of such other Person, (b) any deposit with, or advance, loan or other extension of credit to, such Person (other than deposits made in connection with the purchase of equipment, inventory and supplies in the ordinary course of business) or (c) any other capital contribution to or investment in such Person, including, without limitation, any Guaranty Obligations (including any support for a letter of credit issued on behalf of such Person) incurred for the benefit of such Person and any portion of an Asset Disposition (other than an Excluded Asset Disposition) to such Person for consideration less than the fair market value of the Property disposed in such transaction, but excluding any Restricted Payment to such Person. Investments which are capital contributions or purchases of Capital Stock which have a right to participate in the profits of the issuer thereof shall be valued at the amount actually contributed or paid to purchase such Capital Stock as of the date of such contribution or payment. Investments which are loans, advances, extensions of credit or Guaranty Obligations shall be valued at the principal amount of such loan, advance or extension of credit outstanding as of the date of determination or, as applicable, the principal amount of the loan or advance outstanding as of the date of determination actually guaranteed by such Guaranty Obligation.

“ Involuntary Disposition ” means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any Property of any Consolidated Party.

“ ISP ” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).

“ Joinder Agreement ” means a Joinder Agreement substantially in the form of Exhibit 7.12 hereto, executed and delivered by a Person required to become a Guarantor in accordance with the provisions of Section 7.12.

“ Junior Financing Documentation ” means (i) the Subordinated Note Indentures, (ii) the Subordinated Notes and (iii) any other documentation governing any Subordinated Debt.

“ Lenders ” means each Canadian Lender, each U.S. Revolving Lender, each Foreign Currency Lender and each U.S. Term Lender and, as the context requires, the U.S. Issuing Lenders, the Canadian Issuing Lender, the U.S. Swingline Lender and the Canadian Swingline Lender, together with their successors and permitted assigns.

“ Letter of Credit ” means any U.S. Letter of Credit or any Canadian Letter of Credit.

“ Lien ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the Uniform Commercial Code as adopted and in effect in the relevant jurisdiction, the Personal Property Security Act (Ontario) or other similar recording or notice statute, and any lease in the nature thereof).

“ Loan ” or “ Loans ” means the U.S. Revolving Loans, the Foreign Currency Loans, the U.S. Term Loans, the Competitive U.S. Loans, the Canadian Revolving Loans, the BA Outstandings, the U.S. Swingline Loans and/or the Canadian Swingline Loans, individually or collectively, as appropriate.

“ LOC Obligations ” means the U.S. LOC Obligations and the Canadian LOC Obligations.

“ Mandatory Cost ” means, with respect to any period, (a) the percentage rate per annum determined in accordance with Schedule 1.1D and (b) without duplication of any amount described in the foregoing clause (a), with respect to any Peso Rate Loan, any applicable charges (expressed as a percentage) imposed by the Instituto para la Proteccion al Ahorro Bancario , but solely to the extent that applicable law requires the imposition of such charges on the applicable Foreign Currency Lender as a direct result of the making by such Foreign Currency Lender of Peso Rate Loans (and only to the extent that the amount of such charges is determined under applicable law by reference to a percentage of such Peso Rate Loans so made).

“ Material Adverse Effect ” means a material adverse effect on (i) the condition (financial or otherwise), operations, business, assets or liabilities of the Consolidated Parties taken as a whole, (ii) the ability of the Credit Parties taken as a whole to perform any material obligation under the Credit Documents or (iii) the material rights and remedies of the Lenders under the Credit Documents.

“ Materials of Environmental Concern ” means any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Laws, including, without limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

“ Maximum Increase Amount ” means, as of any date of determination, an amount equal to the lesser of (a) the aggregate principal repayments made by Airgas on the U.S. Term Loan prior to such date and (b) $200,000,000.

“ Mexican Peso ” means the lawful currency of Mexico.

“ Mexico ” means the United Mexican States.

“ Moody’s ” means Moody’s Investors Service, Inc., or any successor or assignee of the business of such company in the business of rating securities.

“ Multiemployer Plan ” means a Plan which is a multiemployer plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.

“ Multiple Employer Plan ” means a Plan which a Consolidated Party or any ERISA Affiliate and at least one employer other than a Consolidated Party or any ERISA Affiliate are contributing sponsors.

“ Net Cash Proceeds ” means the aggregate cash or Cash Equivalents proceeds received by any Consolidated Party in respect of any Asset Disposition, net of (a) direct costs (including, without limitation, legal, accounting and investment banking fees, and sales commissions), (b) taxes paid or payable as a result thereof or in connection therewith or attributable thereto and (c) the amount necessary to retire any Indebtedness secured by a Permitted Lien (ranking senior to any Lien of the U.S. Agent) on the related Property; it being understood that “Net Cash Proceeds” shall include, without limitation, any cash or Cash Equivalents received upon the sale or other disposition of any non-cash consideration received by any such Consolidated Party in any Asset Disposition. In addition, the “Net Cash Proceeds” of any Asset Disposition shall include any other amounts which constitute “Net Proceeds” (or any comparable term) of such transaction under, and as defined in, any Junior Financing Documentation.

“ New Commitment Agreement ” shall have the meaning assigned to such term in Section 4.4(b).

“ Non-Excluded Taxes ” shall have the meaning assigned to such term in Section 4.10.

“ Notice of Borrowing ” means (a) in the case of U.S. Revolving Loans or the U.S. Term Loan, a written notice of borrowing in substantially the form of Exhibit 2A.1(b)(i) , as required by Section 2A.1(b)(i) or Section 2A.5(b), as applicable, (b) in the case of Foreign Currency Loans, a written notice of borrowing in substantially the form of Exhibit 2B.1(b)(i) , as required by Section 2B.1(b)(i), or (c) in the case of Canadian Revolving Loans, a written notice of borrowing in substantially the form of Exhibit 3.1(b)(i) as required by Section 3.1(b)(i).

“ Notice of Extension/Conversion ” means the written notice of extension or conversion in substantially the form of Exhibit 4.2 , as required by Section 4.2.

“ Operating Accounts ” shall have the meaning assigned to such term in Section 3.2(a).

“ Operating Lease ” means, as applied to any Person, any lease (including, without limitation, leases which may be terminated by the lessee at any time) of any Property (whether real, personal or mixed) which is not a Capital Lease other than any such lease in which that Person is the lessor.

“ Overnight Rate ” means, for any day, (a) with respect to any amount denominated in U.S. Dollars, the greater of (i) the Federal Funds Rate and (ii) an overnight rate determined by the U.S. Agent in accordance with banking industry rules on interbank compensation, (b) with respect to any amount denominated in Canadian Dollars, the interbank rate (as defined in the Canadian Payment Association Rules) and (c) with respect to any amount denominated in a Foreign Currency, the rate of interest per annum at which overnight deposits in the applicable Foreign Currency, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day by a branch or Affiliate of Bank of America in the applicable offshore interbank market for such currency to major banks in such interbank market.

“ Participant ” shall have the meaning assigned to such term in Section 11.3(d).

“ Participating Member State ” means each state so described in any EMU Legislation.

“ PBGC ” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA and any successor thereof.

“ Permitted Acquisition ” means an Acquisition by Airgas or any Subsidiary of Airgas permitted pursuant to the terms of Section 8.5(i).

“ Permitted Investments ” means, at any time, Investments by the Consolidated Parties permitted to exist at such time pursuant to the terms of Section 8.5.

“ Permitted Liens ” means:

(i) Liens arising under the Collateral Documents;

(ii) Liens (other than Liens created or imposed under ERISA) for taxes, assessments or governmental charges or levies not yet due or Liens for taxes being contested in good faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established (and as to which the Property subject to any such Lien is not yet subject to foreclosure, sale or loss on account thereof);

(iii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and suppliers and other Liens imposed by law or pursuant to customary reservations or retentions of title arising in the ordinary course of business, provided that such Liens secure only amounts not yet due and payable or, if due and payable, are unfiled and no other action has been taken to enforce the same or are being contested in good faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established (and as to which the Property subject to any such Lien is not yet subject to foreclosure, sale or loss on account thereof);

(iv) Liens (other than Liens created or imposed under ERISA) incurred or deposits made by the Consolidated Parties in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);

(v) Liens in connection with attachments or judgments (including judgment or appeal bonds) provided that the judgments secured shall, within 30 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall have been discharged within 30 days after the expiration of any such stay;

(vi) easements, rights-of-way, restrictions (including zoning restrictions), minor defects or irregularities in title and other similar charges or encumbrances not, in any material respect, impairing the use of the encumbered Property for its intended purposes;

(vii) Liens existing as of the Closing Date and set forth on Schedule 1.1E ;

(viii) Liens on Property of any Person securing purchase money Indebtedness, Capital Leases and Synthetic Leases of such Person, provided that (a) any such Lien attaches to such Property (and only such Property) concurrently with or within 90 days after the incurrence of the Indebtedness secured thereby; (b) the Indebtedness secured thereby shall not exceed the purchase price of the asset(s) financed and (c) the aggregate principal amount of all Indebtedness secured thereby does not exceed $25,000,000;

(ix) Liens on Property of any Person securing Indebtedness (other than purchase money Indebtedness and obligations under Capital Leases or Synthetic Leases) assumed or acquired by the Consolidated Parties in connection with a Permitted Acquisition, provided that (a) no such Lien shall

at any time be extended to or cover any Property other than the Property subject thereto on the date the related Permitted Acquisition is consummated, (b) the Indebtedness secured by such Lien was not created in anticipation of the related Permitted Acquisition and (c) the aggregate principal amount of all Indebtedness secured thereby does not exceed $50,000,000;

(x) leases or subleases granted to others not interfering in any material respect with the business of any Consolidated Party;

(xi) any interest of title of a lessor under, and Liens arising from Uniform Commercial Code financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) relating to, leases permitted by this Credit Agreement;

(xii) normal and customary rights of setoff upon deposits of cash in favor of banks or other depository institutions;

(xiii) [reserved];

(xiv) Liens in favor of the Receivables Subsidiary or Receivables Financier created or deemed to exist in connection with the Permitted Receivables Financing (including any related filings of any financing statements), but only to the extent that any such Lien relates to the Securitization Assets actually sold, contributed, financed or otherwise conveyed or pledged pursuant to such transaction; and

(xv) other Liens not described above, provided that such Liens do not secure obligations in excess of $25,000,000 at any one time outstanding.

“ Permitted Receivables Financing ” means (a) that certain Securitization Transaction pursuant to the Receivables Purchase Agreement dated as of December 19, 2002 among the Receivables Subsidiary, Airgas, the Amended and Restated Receivables Financiers party thereto and PNC Bank, National Association, as administrator, as such agreement has been amended, modified, extended, replaced, restated or substituted from time to time prior to the Closing Date or as such agreement may hereafter be amended, modified, extended, replaced, restated or substituted in accordance with the terms of this Credit Agreement; provided that (i) such Securitization Transaction shall not involve any recourse to any Consolidated Party for any reason other than (A) repurchases of non-eligible receivables and (B) indemnifications for losses other than credit losses related to the receivables sold in such financing and (ii) the documentation for such Securitization Transaction shall not be amended or modified, in any way that is adverse to Airgas or the Lenders in any material respect, without the prior approval of the U.S. Agent and (b) any other Securitization Transaction on substantially similar terms as the transaction described in the forgoing clause (a).

“ Person ” means any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise (whether or not incorporated) or any Governmental Authority.

“ Peso Rate ” means, for any Interest Period with respect to a Peso Rate Loan, the rate per annum equal to the Interbank Interest Equilibrium Rate ( Tasa de Interes Interbancaria de Equilibrio )for a twenty-eight (28) day period or ninety-one (91) day period, as applicable (“ TIIE ”), as published by Banco de Mexico in the Official Gazette of the Federation ( Diario Oficial de la Federacion ) on the Business Day on which such Interest Period is to commence.

“ Peso Rate Loan ” means a Foreign Currency Loan that bears interest at a rate based on the Peso Rate. All Peso Rate Loans must be denominated in Mexican Pesos and shall only be made to a Foreign Borrower that is organized under the laws of Mexico.

“ Plan ” means any employee benefit plan (as defined in Section 3(3) of ERISA) which is covered by ERISA and with respect to which Airgas, any Subsidiary of Airgas or any ERISA Affiliate is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” within the meaning of Section 3(5) of ERISA.

“ Pledge Agreement ” means the Amended and Restated Pledge Agreement dated as of the Closing Date among the Collateral Agent and the U.S. Credit Parties, as amended, modified, restated or supplemented from time to time.

“ Pro Forma Basis ” means, for purposes of calculating (utilizing the principles set forth in the second paragraph of Section 1.3) compliance with each of the financial covenants set forth in Section 7.10 in respect of a proposed transaction, that such transaction shall be deemed to have occurred as of the first day of the four fiscal-quarter period ending as of the most recent fiscal quarter end preceding the date of such transaction with respect to which the U.S. Agent has received the Required Financial Information. As used herein, “ transaction ” shall mean (i) any incurrence or assumption of Indebtedness as referred to in Section 8.1(a)(iv), (ii) any Asset Disposition as referred to in Section 8.4(b), (iii) any Acquisition as referred to in Section 8.5(i) and (iv) any Restricted Payment as referred to in Section 8.6(iii). In connection with any calculation of the financial covenants set forth in Section 7.10 upon giving effect to a transaction on a Pro Forma Basis:

(A) for purposes of any such calculation in respect of any incurrence or assumption of Indebtedness as referred to in Section 8.1(a)(iv), any Indebtedness which is retired in connection with such incurrence or assumption shall be excluded and deemed to have been retired as of the first day of the applicable period;

(B) for purposes of any such calculation in respect of any Asset Disposition as referred to in Section 8.4(b), (1) income statement items (whether positive or negative) attributable to the Property disposed of shall be excluded and (2) any Indebtedness which is retired in connection with such transaction shall be excluded and deemed to have been retired as of the first day of the applicable period;

(C) for purposes of any such calculation in respect of any Acquisition as referred to in Section 8.5(i), (1) any Indebtedness incurred by any Consolidated Party in connection with such transaction (x) shall be deemed to have been incurred as of the first day of the applicable period and (y) if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination, (2) income statement items (whether positive or negative) attributable to the Person or Property acquired shall be included beginning as of the first day of the applicable period and (3) pro forma adjustments may be included to the extent that such adjustments meet the requirements of Regulation S-X under the Securities Act of 1933, as amended, and all other accounting rules and regulations of the SEC promulgated thereunder; and

(D) for purposes of any such calculation in respect of any Restricted Payment as referred to in Section 8.6(iii), (1) any Indebtedness incurred by any Consolidated Party in connection with such transaction (x) shall be deemed to have been incurred as of the first day of the applicable period and (y) if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination.

“ Pro Forma Compliance Certificate ” means a certificate of an Executive Officer of Airgas delivered to the U.S. Agent in connection with (i) any incurrence, assumption or retirement of Indebtedness as referred to in Section 8.1(a)(iv), (ii) any Asset Disposition as referred to in Section 8.4(b), (iii) any Acquisition as referred to in Section 8.5(i) or (iv) any Restricted Payment as referred to in Section 8.6(iii), as applicable, and containing reasonably detailed calculations, upon giving effect to the applicable transaction on a Pro Forma Basis, of the Consolidated Leverage Ratio and the Consolidated Interest Coverage Ratio as of the most recent fiscal quarter end preceding the date of the applicable transaction with respect to which the U.S. Agent shall have received the Required Financial Information.

“ Project OT Acquisition ” means the acquisition, through a purchase of stock, assets or otherwise, by Airgas of the type of packaged gas and bulk gas assets or business located in the United States or Canada as generally identified by Airgas to the Lenders in the Confidential Offering Memorandum dated April, 2006.

“ Property ” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

“ Quoted Rate ” means, with respect to any Quoted Rate U.S. Swingline Loan, the fixed percentage rate per annum offered by the U.S. Swingline Lender and accepted by Airgas with respect to such U.S. Swingline Loan as provided in accordance with the provisions of Section 2A.4.

“ Quoted Rate U.S. Swingline Loan ” means a U.S. Swingline Loan bearing interest at a Quoted Rate.

“ Receivables Financier ” means any of the “Conduit Purchasers” or “Related Committed Purchasers” as such terms are defined in the documents governing a Permitted Receivables Financing.

“ Receivables Subsidiary ” means (i) Radnor Funding Corp., a Delaware corporation, and (ii) any other Subsidiary or Affiliate of Airgas to which any Consolidated Party sells, contributes or otherwise conveys any Securitization Assets in connection with a Permitted Receivables Financing.

“ Redemption Obligation ” means the contingent liability of any Consolidated Party with respect to cash redemption obligations relating to any Capital Stock issued by a Consolidated Party to any officer, director, shareholder or other principal of any Subsidiary created or acquired after the Closing Date.

“ Regulation D, U, or X ” means Regulation D, U or X, respectively, of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

“ Release ” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the environment (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Materials of Environmental Concern).

“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the post-event notice requirement is waived under subsections .13, .14, .18, .19, or .20 of PBGC Reg. Section 2615.

“ Required Canadian Lenders ” means, at any time, Lenders holding in the aggregate more than 50% of (a) the unfunded Commitments denominated in Canadian Dollars and the outstanding Loans denominated in Canadian Dollars, Canadian LOC Obligations and participations therein or (b) if the Commitments denominated in Canadian Dollars have been terminated, the outstanding Loans denominated in Canadian Dollars, Canadian LOC Obligations and participations therein. The unfunded Commitments of, and the outstanding Canadian Obligations held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Canadian Lenders.

“ Required Financial Information ” means, with respect to the last day of any fiscal quarter of Airgas, (i) the financial statements of the Consolidated Parties required to be delivered pursuant to Section 7.1(a) or (b) for the fiscal period or quarter ending as of such date, and (ii) the certificate of an Executive Officer of Airgas required by Section 7.1(c) to be delivered with the financial statements described in clause (i) above.

“ Required Foreign Currency Lenders ” means, at any time, Foreign Currency Lenders holding in the aggregate more than 50% of (a) the unfunded Foreign Currency Commitments and the U.S. Dollar Equivalent of the outstanding Foreign Currency Loans or (b) if the Foreign Currency Commitments have been terminated, the U.S. Dollar Equivalent of the outstanding Foreign Currency Loans. The unfunded Foreign Currency Commitments of, and the outstanding Credit Party Obligations held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Foreign Currency Lenders.

“ Required Lenders ” means, at any time, Lenders holding in the aggregate more than 50% of (a) the unfunded Commitments and the outstanding Loans (other than Competitive U.S. Loans at any time prior to the termination of the U.S. Revolving Commitments), LOC Obligations and participations therein or (b) if the Commitments have been terminated, the outstanding Loans, LOC Obligations and participations therein. The unfunded Commitments of, and the outstanding Credit Party Obligations held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

“ Required U.S. Lenders ” means, at any time, Lenders holding in the aggregate more than 50% of (a) the unfunded Commitments (other than Foreign Currency Commitments) denominated in U.S. Dollars and the outstanding Loans (other than Foreign Currency Loans) denominated in U.S. Dollars (other than Competitive U.S. Loans at any time prior to the termination of the U.S. Revolving Commitments), U.S. LOC Obligations and participations therein or (b) if the Commitments denominated in U.S. Dollars have been terminated, the outstanding Loans denominated in U.S. Dollars (other than Foreign Currency Loans), U.S. LOC Obligations and participations therein. The unfunded Commitments of, and the outstanding Credit Party Obligations held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required U.S. Lenders.

“ Requirement of Law ” means, as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its material property.

“ Restricted Payment ” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of Airgas or any of its Subsidiaries, now or hereafter outstanding, (ii) any redemption (including, without limitation, in connection with any Redemption Obligation), retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of Airgas or any of its Subsidiaries, now or hereafter outstanding or (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of Airgas or any of its Subsidiaries, now or hereafter outstanding. With respect to any Restricted Payment that is permitted by this Credit Agreement to be made (i) after demonstrating compliance with the financial covenants set forth in Section 7.10 on a Pro Forma Basis and (ii) so long as no Default or Event of Default exists at the time of such Restricted Payment or would result upon giving effect thereto, then solely for purposes of Section 8.6(iii), the amount of such Restricted Payment shall be deemed reduced (to an amount not less than zero) by an amount equal to the net cash proceeds received by Airgas from any issuances of Capital Stock occurring after the Closing Date.

“ Restricted Subsidiary ” means (i) any wholly-owned Subsidiary of Airgas (other than the Receivables Subsidiary) and (ii) any other Subsidiary of Airgas that, at the option of Airgas, executes a Joinder Agreement in accordance with Section 7.12.

“ Revaluation Date ” means with respect to any Foreign Currency Loan (other than a Foreign Currency Loan denominated in U.S. Dollars), each of the following: (a) each date of a borrowing of a Foreign Currency Loan denominated in a Foreign Currency, (b) each date of an extension of a Foreign Currency Loan denominated in a Foreign Currency pursuant to Section 4.2, and (c) such additional dates during the continuance of an Event of Default as the U.S. Agent shall reasonably request or the Required Foreign Currency Lenders shall require.

“ S&P ” means Standard & Poor’s Ratings Services Group, a division of The McGraw-Hill Companies, Inc., or any successor or assignee of the business of such division in the business of rating securities.

“ Sale and Leaseback Transaction ” means any arrangement pursuant to which any Consolidated Party, directly or indirectly, becomes liable as lessee, guarantor or other surety with respect to any lease, whether an Operating Lease or a Capital Lease, of any Property (a) which such Consolidated Party has sold or transferred (or is to sell or transfer) to a Person which is not a Consolidated Party or (b) which such Consolidated Party intends to use for substantially the same purpose as any other Property which has been sold or transferred (or is to be sold or transferred) by such Consolidated Party to another Person which is not a Consolidated Party in connection with such lease.

“ Same Day Funds ” means (a) with respect to disbursements and payments in U.S. Dollars, immediately available funds, and (b) with respect to disbursements and payments in any other currency, same day or other funds as may be determined by the applicable Agent to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant currency.

“ Securitization Assets ” means any accounts or trade receivable, notes receivable, rights to future lease payments or residuals or capital, or any other asset or a portion or interest therein that is or could be securitized, together with certain related property relating thereto and the right to collections thereon, which are subject to a Securitization Transaction.

“ Securitization Transaction ” means any transaction or series of transactions pursuant to which a Person may sell, convey or otherwise transfer to (i) a Subsidiary or Affiliate, or (ii) any other Person, or may grant a security interest in, any Securitization Assets (or any portion or interest therein) of such Person, including, without limitation, any sale, lease, whole loan sale, secured loan or other transfer.

“ Single Employer Plan ” means any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan.

“ Special Notice Currency ” means at any time a Foreign Currency, other than the currency of a country that is a member of the Organization for Economic Cooperation and Development at such time located in North America or Europe.

“ Spot Rate ” for any currency means the rate quoted by the U.S. Agent as the spot rate for the purchase by the U.S. Agent of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the U.S. Agent may obtain such spot rate from another financial institution designated by the U.S. Agent if the U.S. Agent does not have as of the date of determination a spot buying rate for any such currency.

“ Sterling ” and “ £ ” mean the lawful currency of the United Kingdom.

“ Subordinated Debt ” means (i) any Indebtedness evidenced and governed by the Subordinated Note Indentures and the Subordinated Notes, including any guarantees thereof by any Credit Party, and (ii) any other Indebtedness of Airgas, including any guarantees thereof by any Credit Party that is contractually subordinated to the Credit Party Obligations.

“ Subordinated Note ” means any one of (i) the 7.125% notes due 2018 or (ii) the 6.25% notes due 2014, issued by Airgas in favor of the Subordinated Noteholders pursuant to the respective Subordinated Note Indenture, as such Subordinated Notes may be amended, modified, exchanged as contemplated by the Subordinated Note Indentures, restated or supplemented and in effect from time to time in accordance with the terms hereof.

“ Subordinated Note Indentures ” means (i) the Indenture dated as of June 10, 2008, by and among Airgas, the guarantors named therein and The Bank of New York, as trustee, and (ii) the Indenture, dated as of March 8, 2004, by and among Airgas, the guarantors named therein and The Bank of New York, as trustee, as each Subordinated Note Indenture may be amended, modified, restated or supplemented and in effect from time to time in accordance with the terms hereof.

“ Subordinated Noteholder ” means any one of the holders from time to time of the Subordinated Notes.

“ Subsidiary ” means, as to any Person, (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time, any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries, and (b) any partnership, association, joint venture or other entity in which such Person directly or indirectly through Subsidiaries has more than 50% equity interest at any time. Unless otherwise specified, “Subsidiary” means a Subsidiary of Airgas.

“ Synthetic Lease ” means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an Operating Lease under GAAP.

“ TARGET Day ” means any day on which the Trans-European Automated Real-time Gross Settlement Express Transfer (TARGET) payment system (or, if such payment system ceases to be operative, such other payment system (if any) determined by the U.S. Agent to be a suitable replacement) is open for the settlement of payments in Euro.

“ Termination Date ” means July 25, 2011.

“ Termination Event ” means (i) with respect to any Plan, the occurrence of a Reportable Event or the substantial cessation of operations (within the meaning of Section 4062(e) of ERISA); (ii) the withdrawal by Airgas, any Subsidiary of Airgas or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a substantial employer (as such term is defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan; (iii) the distribution of a notice of intent to terminate or the actual termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA; (iv) the institution of proceedings to terminate or the actual termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; or (vi) the complete or partial withdrawal of any Consolidated Party or any ERISA Affiliate from a Multiemployer Plan.

“ Third Amendment Date ” means July 28, 2008.

“ United States ” means the United States of America.

“ U.S. Agent ” shall have the meaning assigned to such term in the heading hereof, together with any successors or assigns.

“ U.S. Agent’s Fee Letter ” means that certain letter agreement, dated as of March 30, 2005, between the U.S. Agent and Airgas, as amended, modified, supplemented or replaced from time to time.

“ U.S. Base Rate ” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.” The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“ U.S. Base Rate Loan ” means any Loan bearing interest at a rate determined by reference to the U.S. Base Rate.

“ U.S. Credit Parties ” shall mean a collective reference to Airgas and the U.S. Subsidiary Guarantors, and “ U.S. Credit Party ” shall mean any one of them.

“ U.S. Dollar Equivalent ” means, at any time, (a) with respect to any amount denominated in U.S. Dollars, such amount, and (b) with respect to any amount denominated in any currency other than U.S. Dollars, the equivalent amount thereof in U.S. Dollars as determined by the U.S. Agent at such time on the basis of the Spot Rate (determined as of the most recent Revaluation Date, unless otherwise specified herein) for the purchase of U.S. Dollars with such other currency.

“ U.S. Dollars ” and “ $ ” means dollars in lawful currency of the United States.

“ U.S. Issuing Lender ” means, with respect to a particular U.S. Letter of Credit, (i) The Bank of New York, in its capacity as issuer of such U.S. Letter of Credit or (ii) such other U.S. Revolving Lender selected by Airgas and consented to by such U.S. Revolving Lender (upon notice to the U.S. Agent) from time to time to issue such U.S. Letter of Credit.

“ U.S. Letter of Credit ” means (i) any standby or trade letter of credit issued by the U.S. Issuing Lender for the account of Airgas in accordance with the terms of Section 2A.3 and (ii) any Existing U.S. Letter of Credit.

“ U.S. LOC Commitment ” means the commitment of the U.S. Issuing Lender to issue U.S. Letters of Credit in an aggregate face amount at any time outstanding (together with the amounts of any unreimbursed drawings thereon) of up to the U.S. LOC Committed Amount.

“ U.S. LOC Committed Amount ” shall have the meaning assigned to such term in Section 2A.3.

“ U.S. LOC Documents ” means, with respect to any U.S. Letter of Credit, such U.S. Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such U.S. Letter of Credit) governing or providing for (i) the rights and obligations of the parties concerned or at risk or (ii) any collateral security for such obligations.

“ U.S. LOC Obligations ” means, at any time, the sum of (i) the maximum amount which is, or at any time thereafter may become, available to be drawn under U.S. Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such U.S. Letters of Credit plus (ii) the aggregate amount of all drawings under U.S. Letters of Credit honored by the U.S. Issuing Lender but not theretofore reimbursed. For all purposes of this Credit Agreement, if on any date of determination a U.S. Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

“ U.S. Revolving Commitment ” means, with respect to each U.S. Revolving Lender, the commitment of such U.S. Revolving Lender in an aggregate principal amount at any time outstanding of up to such U.S. Revolving Lender’s U.S. Revolving Commitment Percentage of the U.S. Revolving Committed Amount, (i) to make U.S. Revolving Loans in accordance with the provisions of Section 2A.1(a), (ii) to purchase participation interests in U.S. Letters of Credit in accordance with the provisions of Section 2A.3(c), and (iii) to purchase participation interests in the U.S. Swingline Loans in accordance with the provisions of Section 2A.4(b)(iii).

“ U.S. Revolving Commitment Percentage ” means, for any U.S. Revolving Lender, the percentage identified as its U.S. Revolving Commitment Percentage on Schedule 2.1(a) , as such percentage may be modified in connection with any increase in the U.S. Revolving Committed Amount pursuant to Section 4.4(b) or any assignment made in accordance with the provisions of Section 11.3.

“ U.S. Revolving Commitment Unused Fee ” shall have the meaning assigned to such term in Section 4.5(a)(i)(A).

“ U.S. Revolving Committed Amount ” shall have the meaning assigned to such term in Section 2A.1(a).

“ U.S. Revolving Lenders ” means (i) those Lenders that have U.S. Revolving Commitments and are identified as Lenders on the signature pages attached hereto and (ii) any Person which becomes a U.S. Revolving Lender by executing a New Commitment Agreement pursuant to Section 4.4(b), together with their successors and assigns.

“ U.S. Revolving Loans ” shall have the meaning assigned to such term in Section 2A.1(a).

“ U.S. Subsidiary Guarantors ” means each of the Persons identified as a “U.S. Subsidiary Guarantor” on the signature pages to that certain Third Amendment to this Credit Agreement, dated as of the Third Amendment Date, and each Person which may hereafter guaranty the Credit Party Obligations by its execution of a Joinder Agreement pursuant to Section 7.12, together with their successors and permitted assigns, and “ U.S. Subsidiary Guarantor ” means any one of them.

“ U.S. Swingline Commitment ” means the commitment of the U.S. Swingline Lender to make U.S. Swingline Loans in an aggregate principal amount at any time outstanding of up to the U.S. Swingline Committed Amount.

“ U.S. Swingline Committed Amount ” shall have the meaning assigned to such term in Section 2A.4(a).

“ U.S. Swingline Lender ” means Bank of America.

“ U.S. Swingline Loan ” means a loan made pursuant to and defined in Section 2A.4(a).

“ U.S. Term Commitment Unused Fee ” shall have the meaning assigned to such term in Section 4.5(a)(i)(B).

“ U.S. Term Lenders ” means (i) those Lenders that have U.S. Term Loan Commitments and are identified as Lenders on the signature pages attached hereto and (ii) any Person which becomes a U.S. Term Lender by executing a New Commitment Agreement pursuant to Section 4.4(b), together with their successors and assigns.

“ U.S. Term Loan ” shall have the meaning assigned to such term in Section 2A.5(a).

“ U.S. Term Loan Commitment ” means, with respect to each U.S. Term Lender, the commitment of such U.S. Term Lender to make U.S. Term Loans in accordance with Section 2A.5(a) in an aggregate principal amount equal to the amount specified on Schedule 2.1(a) or in the New Commitment Agreement executed by such U.S. Term Lender.

“ U.S. Term Loan Committed Amount ” shall have the meaning assigned to such term in Section 2A.5(a).

“ U.S. Term Loan Percentage ” means, for any U.S. Term Lender, the percentage obtained by dividing (i) the principal amount of the U.S. Term Loan Commitment of such U.S. Term Lender by (ii) the U.S. Term Loan Committed Amount, as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 11.3 or as the result of an increase in the amount of the U.S. Term Loan Committed Amount pursuant to Section 4.4(b).

“ Voting Stock ” means, with respect to any Person, Capital Stock issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency.

1.2 Computation of Time Periods .

For purposes of computation of periods of time hereunder, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.”

1.3 Accounting Terms .

Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall be prepared, in accordance with GAAP applied on a consistent basis; provided , however , that calculations of the implied principal component of all obligations under any Synthetic Lease or the implied interest component of any rent paid under any Synthetic Lease shall be made by Airgas in accordance with accepted financial practice and consistent with the terms of such Synthetic Lease. All calculations made for the purposes of determining compliance with this Credit Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP applied on a basis consistent with the most recent annual or quarterly financial statements delivered pursuant to Section 7.1 hereof (or, prior to the

delivery of the first financial statements pursuant to Section 7.1 hereof, consistent with the financial statements as of March 31, 2006); provided , however , if (a) Airgas shall object to determining such compliance on such basis at the time of delivery of such financial statements due to any change in GAAP or the rules promulgated with respect thereto or (b) the Agents or the Required Lenders shall so object in writing within 30 days after delivery of such financial statements, then such calculations shall be made on a basis consistent with the most recent financial statements delivered by Airgas to the Lenders as to which no such objection shall have been made.

Notwithstanding the above, the parties hereto acknowledge and agree that, for purposes of all calculations made under the financial covenants set forth in Section 7.10 (including without limitation for purposes of the definition of “Pro Forma Basis” set forth in Section 1.1), (i) after consummation of any Asset Disposition (A) income statement items (whether positive or negative) and capital expenditures attributable to the Property disposed of shall be excluded to the extent relating to any period occurring prior to the date of such transaction and (B) Indebtedness which is retired shall be excluded and deemed to have been retired as of the first day of the applicable period and (ii) after consummation of any Acquisition (A) income statement items (whether positive or negative) and capital expenditures attributable to the Person or Property acquired shall, to the extent not otherwise included in such income statement items for the Consolidated Parties in accordance with GAAP or in accordance with any defined terms set forth in Section 1.1, be included to the extent relating to any period applicable in such calculations, (B) to the extent not retired in connection with such Acquisition, Indebtedness of the Person or Property acquired shall be deemed to have been incurred as of the first day of the applicable period and (C) pro forma adjustments may be included to the extent that such adjustments meet the requirements of Regulation S-X under the Securities Act of 1933, as amended, and all other accounting rules and regulations of the SEC promulgated thereunder.

ARTICLE II.A

U.S. DOLLAR CREDIT FACILITIES

2A.1 U.S. Revolving Loans .

(a) U.S. Revolving Commitment . Subject to the terms and conditions hereof and in reliance upon the representations and warranties set forth herein, each U.S. Revolving Lender severally agrees to make available to Airgas such U.S. Revolving Lender’s U.S. Revolving Commitment Percentage of revolving credit loans requested by Airgas in U.S. Dollars (“ U.S. Revolving Loans ”) from time to time from the Closing Date until the Termination Date, or such earlier date as the U.S. Revolving Commitments shall have been terminated as provided herein for the purposes hereinafter set forth; provided , however , that the aggregate principal amount of outstanding U.S. Revolving Loans shall not exceed NINE HUNDRED NINETY-ONE MILLION U.S. DOLLARS ($991,000,000) (as such aggregate maximum amount may be increased or reduced from time to time as provided in Section 4.4, the “ U.S. Revolving Committed Amount ”); provided , further , (i) with regard to each U.S. Revolving Lender individually, such U.S. Revolving Lender’s outstanding U.S. Revolving Loans shall not exceed such U.S. Revolving Lender’s U.S. Revolving Commitment Percentage of the U.S. Revolving Committed Amount and (ii) with regard to the U.S. Revolving Lenders collectively, the aggregate principal amount of outstanding U.S. Revolving Loans plus the aggregate principal amount of outstanding Competitive U.S. Loans plus the aggregate principal amount of outstanding U.S. Swingline Loans plus U.S. LOC Obligations outstanding shall not exceed the U.S. Revolving Committed Amount. U.S. Revolving Loans may consist of U.S. Base Rate Loans or Eurocurrency Loans, or a combination thereof, as Airgas may request, and may be repaid and reborrowed in accordance with the provisions hereof; provided , however , that no more than eleven (11) Eurocurrency Loans which are U.S. Revolving Loans shall be outstanding hereunder at any time. For purposes hereof, Eurocurrency Loans with different Interest Periods shall be considered as separate Eurocurrency Loans, even if they begin on the same date, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing Interest Periods to constitute a new Eurocurrency Loan with a single Interest Period.

(b) U.S. Revolving Loan Borrowings .

(i) Notice of Borrowing . Airgas (by its duly authorized officers or representatives) shall request a U.S. Revolving Loan borrowing by written notice (or telephone notice promptly confirmed in writing) to the U.S. Agent not later than 11:00 A.M. (Charlotte, North Carolina time) on the Business Day of the requested borrowing in the case of U.S. Base Rate Loans, and on the third Business Day prior to the date of the requested borrowing in the case of Eurocurrency Loans. Each such request for borrowing shall be irrevocable and shall specify (A) that a U.S. Revolving Loan is requested, (B) the date of the requested borrowing (which shall be a Business Day), (C) the aggregate principal amount to be borrowed, and (D) whether the borrowing shall be comprised of U.S. Base Rate Loans, Eurocurrency Loans or a combination thereof, and if Eurocurrency Loans are requested, the Interest Period(s) therefor. If Airgas shall fail to specify in any such Notice of Borrowing (I) an applicable Interest Period in the case of a Eurocurrency Loan, then such notice shall be deemed to be a request for an Interest Period of one month, or (II) the type of U.S. Revolving Loan requested, then such notice shall be deemed to be a request for a U.S. Base Rate Loan hereunder. The U.S. Agent shall give notice to each U.S. Revolving Lender promptly upon receipt of each Notice of Borrowing pursuant to this Section 2A.1(b)(i), specifying the contents thereof and each such U.S. Revolving Lender’s share of any borrowing to be made pursuant thereto.

(ii) Minimum Amounts . Each Eurocurrency Loan or U.S. Base Rate Loan that is a U.S. Revolving Loan shall be in a minimum aggregate principal amount of $5,000,000 and integral multiples of $1,000,000 in excess thereof (or the remaining amount of the U.S. Revolving Committed Amount, if less).

(iii) Advances . Each U.S. Revolving Lender will make its U.S. Revolving Commitment Percentage of each U.S. Revolving Loan borrowing available to the U.S. Agent for the account of Airgas by 1:00 P.M. (Charlotte, North Carolina time) on the date specified in the applicable Notice of Borrowing in U.S. Dollars and in funds immediately available to the U.S. Agent. Such borrowing will then be made available to Airgas by the U.S. Agent in like funds as received by the U.S. Agent by (A) crediting the account of Airgas on the books of the U.S. Agent with the amount of such funds or (B) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the U.S. Agent by Airgas.

(d) Interest . Subject to the provisions of Section 4.1,

(i) U.S. Base Rate Loans . During such periods as U.S. Revolving Loans shall be comprised in whole or in part of U.S. Base Rate Loans, such U.S. Base Rate Loans shall bear interest at a per annum rate equal to the U.S. Base Rate plus the Applicable Percentage; and

(ii) Eurocurrency Loans . During such periods as U.S. Revolving Loans shall be comprised in whole or in part of Eurocurrency Loans, such Eurocurrency Loans shall bear interest at a per annum rate equal to the Eurocurrency Rate plus the Applicable Percentage.

Airgas promises to pay interest on U.S. Revolving Loans in arrears on each applicable Interest Payment Date (or at such other times as may be specified herein).

2A.2 Competitive U.S. Loan Subfacility .

(a) Competitive U.S. Loans . Subject to the terms and conditions and relying upon the representations and warranties herein set forth, Airgas may, from time to time from the Closing Date until the Termination Date, request and each U.S. Revolving Lender may, in its sole discretion, agree to make, Competitive U.S. Loans in U.S. Dollars to Airgas; provided , however , that (i) the aggregate principal amount of outstanding Competitive U.S. Loans shall not at any time exceed FIFTY MILLION U.S. DOLLARS ($50,000,000) and (ii) the sum of the aggregate principal amount of outstanding U.S. Revolving Loans plus the aggregate principal amount of outstanding Competitive U.S. Loans plus the aggregate principal amount of outstanding U.S. Swingline Loans plus U.S. LOC Obligations outstanding shall not at any time exceed the U.S. Revolving Committed Amount. Each Competitive U.S. Loan shall be not less than $1,000,000 in the aggregate and integral multiples of $500,000 in excess thereof (or the remaining portion of the U.S. Revolving Committed Amount, if less).

(b) Competitive U.S. Bid Requests . Airgas (by its duly authorized officers or representatives) may solicit by making a written, telefax or telephonic request to all of the U.S. Revolving Lenders for a Competitive U.S. Loan. To be effective, such request must be received by each of the U.S. Revolving Lenders by such time as determined by each such U.S. Revolving Lender in accordance with such U.S. Revolving Lender’s customary practices (in any event not to be later than 12:00 NOON (Charlotte, North Carolina time)) on the date of the requested borrowing and must specify (i) that a Competitive U.S. Loan is requested, (ii) the amount of such Competitive U.S. Loan and (iii) the Interest Period for such Competitive U.S. Loan.

(c) Competitive U.S. Bids . Upon receipt of a request by Airgas for a Competitive U.S. Loan, each U.S. Revolving Lender may, in its sole discretion, submit a Competitive U.S. Bid containing an offer to make a Competitive U.S. Loan in an amount up to the amount specified in the related request for Competitive U.S. Loans. Such Competitive U.S. Bid shall be submitted to Airgas by telephone notice by such time as determined by such U.S. Revolving Lender in accordance with such U.S. Revolving Lender’s customary practices (in any event not to be later than 1:00 P.M. (Charlotte, North Carolina time)) on the date of the requested Competitive U.S. Loan. Competitive U.S. Bids so made shall be irrevocable. Each Competitive U.S. Bid shall specify (i) the date of the proposed Competitive U.S. Loan, (ii) the maximum and minimum principal amounts of the Competitive U.S. Loan for which such offer is being made (which may be for all or a part of (but not more than) the amount requested by Airgas), (iii) the applicable Competitive U.S. Bid Rate, and (iv) the applicable Interest Period.

(d) Acceptance of Competitive U.S. Bids . Airgas (by its duly authorized officers or representatives) may, before such time as determined by the applicable U.S. Revolving Lender in accordance with such U.S. Revolving Lender’s customary practices (in any event until 2:00 P.M. (Charlotte, North Carolina time)) on the date of the requested Competitive U.S. Loan, accept any Competitive U.S. Bid by giving the applicable U.S. Revolving Lender and the U.S. Agent telephone notice (immediately confirmed in writing) of (i) the U.S. Revolving Lender or U.S. Revolving Lenders whose Competitive U.S. Bid(s) is/are accepted, (ii) the principal amount of the Competitive U.S. Bid(s) so accepted and (iii) the Interest Period of the Competitive U.S. Bid(s) so accepted. Airgas may accept any Competitive U.S. Bid in whole or in part; provided, however, that (a) the principal amount of each Competitive U.S. Loan may not exceed the maximum amount offered in the Competitive U.S. Bid and may not be less than the minimum amount offered in the Competitive U.S. Bid, (b) the principal amount of each Competitive U.S. Loan may not exceed the total amount requested pursuant to subsection (a) above, (c) Airgas shall not accept a Competitive U.S. Bid made at a particular Competitive U.S. Bid Rate if it has decided to reject a Competitive U.S. Bid made at a lower Competitive U.S. Bid Rate and (d) if Airgas shall accept a Competitive U.S. Bid or Bids made at a particular Competitive U.S. Bid Rate but the amount of such Competitive U.S. Bid or Bids shall cause the total amount of Competitive U.S. Bids to be accepted by Airgas to exceed the total amount requested pursuant to subsection (a) above, then Airgas shall accept a portion of such Competitive U.S. Bid or Bids in

an amount equal to the total amount requested pursuant to subsection (a) above less the amount of other Competitive U.S. Bids accepted with respect to such request, which acceptance, in the case of multiple Competitive U.S. Bids at the same Competitive U.S. Bid Rate, shall be made pro rata in accordance with each such Competitive U.S. Bid at such Competitive U.S. Bid Rate. Competitive U.S. Bids so accepted by Airgas shall be irrevocable.

(e) Funding of Competitive U.S. Loans . Upon acceptance by Airgas pursuant to subsection (d) above of all or a portion of any U.S. Revolving Lender’s Competitive U.S. Bid, such U.S. Revolving Lender shall, before such time as determined by such U.S. Revolving Lender in accordance with such U.S. Revolving Lender’s customary practices, on the date of the requested Competitive U.S. Loan, make such Competitive U.S. Loan available to the U.S. Agent in Federal or other immediately available funds. Upon receipt of such funds, the U.S. Agent will promptly make such funds available to Airgas at Account No. 3750353729 maintained at the offices of Bank of America; provided , however , that if on the date of such Competitive U.S. Loan Airgas is to repay all or any part of an outstanding U.S. Revolving Loan, then the U.S. Agent shall apply such Competitive U.S. Loan first to such repayment, and only an amount equal to the excess (if any) of the amount borrowed over the amount being repaid shall be made available to Airgas.

(f) Repayment of Competitive U.S. Loans . Airgas promises to repay to each U.S. Revolving Lender which has made a Competitive U.S. Loan on the last day of the Interest Period for such Competitive U.S. Loan the then unpaid principal amount of such Competitive U.S. Loan. Airgas may not prepay any Competitive U.S. Loan unless such prepayment is accompanied by payment of amounts specified in Section 4.11.

(g) Interest . Airgas promises to pay interest to each U.S. Revolving Lender on the unpaid principal amount of each Competitive U.S. Loan of such U.S. Revolving Lender from and including the date of such Competitive U.S. Loan to but excluding the stated maturity date thereof, at the applicable Competitive U.S. Bid Rate for such Competitive U.S. Loan (computed on the basis of the actual number of days elapsed over a year of 360 days). Interest on Competitive U.S. Loans shall be payable in arrears on each applicable Interest Payment Day (or at such other times as may be specified herein).

(h) Limitation on Number of Competitive U.S. Loans . Airgas shall not request a Competitive U.S. Loan if, assuming the maximum amount of Competitive U.S. Loans so requested is borrowed as of the date of such request, (i) the sum of the aggregate principal amount of outstanding U.S. Revolving Loans plus the aggregate principal amount of outstanding Competitive U.S. Loans plus the aggregate principal amount of outstanding U.S. Swingline Loans plus U.S. LOC Obligations outstanding would exceed the aggregate U.S. Revolving Committed Amount or (ii) the sum of the aggregate principal amount of outstanding Competitive U.S. Loans would exceed $50,000,000.

(i) Change in Procedures for Requesting Competitive U.S. Loans . Airgas and the U.S. Revolving Lenders hereby agree that, notwithstanding any other provision to the contrary contained in this Credit Agreement, upon mutual agreement of the U.S. Agent and Airgas and written notice by the U.S. Agent to the U.S. Revolving Lenders, all further requests by Airgas for Competitive U.S. Loans shall be made by Airgas to the U.S. Revolving Lenders through the U.S. Agent in accordance with such procedures as shall be prescribed by the U.S. Agent and acceptable to Airgas and each U.S. Revolving Lender.

2A.3 U.S. Letter of Credit Subfacility .

(a) Issuance . Subject to the terms and conditions hereof and of the U.S. LOC Documents, if any, and any other terms and conditions which the U.S. Issuing Lender may reasonably require, and in reliance upon the agreements of the Credit Parties and U.S. Revolving Lenders set forth herein, the U.S. Revolving Lenders will participate in the issuance by the U.S. Issuing Lender from time to time of such U.S. Letters of Credit in U.S. Dollars from the Closing Date until the Termination Date as Airgas may request, in a

form acceptable to the U.S. Issuing Lender; provided , however , that (i) the U.S. LOC Obligations outstanding shall not at any time exceed SIXTY-FIVE MILLION U.S. DOLLARS ($65,000,000) (the “ U.S. LOC Committed Amount ”) and (ii) the sum of the aggregate principal amount of outstanding U.S. Revolving Loans plus the aggregate principal amount of outstanding Competitive U.S. Loans plus the aggregate principal amount of outstanding U.S. Swingline Loans plus U.S. LOC Obligations outstanding shall not at any time exceed the aggregate U.S. Revolving Committed Amount. No U.S. Letter of Credit shall (x) except in the case where the U.S. Issuing Lender in respect of a U.S. Letter of Credit has been replaced by a successor U.S. Issuing Lender, have an original expiry date more than one year from the date of issuance (provided that such U.S. Letter of Credit may contain customary “evergreen” provisions pursuant to which the expiry date is automatically extended by a specific time period unless the U.S. Issuing Lender gives notice of non-renewal to the beneficiary of such U.S. Letter of Credit at least a specified time period prior to the expiry date then in effect), or (y) as originally issued or as extended, have an expiry date extending beyond the Termination Date. The U.S. Issuing Lender shall be under no obligation to issue any U.S. Letter of Credit if the issuance of such U.S. Letter of Credit would violate any applicable Requirement of Law or any policy of the U.S. Issuing Lender. Each U.S. Letter of Credit shall comply with the related U.S. LOC Documents. The issuance date of each U.S. Letter of Credit shall be a Business Day.

(b) Notice and Reports . The request for the issuance of a U.S. Letter of Credit shall be submitted by Airgas (by its duly authorized officers or representatives) to the U.S. Issuing Lender with a copy to the U.S. Agent at least three (3) Business Days prior to the requested date of issuance. The U.S. Issuing Lender will, at least quarterly and more frequently upon request, disseminate to each of the U.S. Revolving Lenders a detailed report specifying the U.S. Letters of Credit which are then issued and outstanding and any activity with respect thereto which may have occurred since the date of the prior report, and including therein, among other things, the beneficiary, the face amount, expiry date as well as any payment or expirations which may have occurred.

(c) Participation . Each U.S. Revolving Lender, upon issuance of a U.S. Letter of Credit (or, in the case of each Existing U.S. Letter of Credit, on the Closing Date), shall be deemed to have purchased without recourse a risk participation from the U.S. Issuing Lender in such U.S. Letter of Credit and the obligations arising thereunder, in each case in an amount equal to its pro rata share of the obligations under such U.S. Letter of Credit (based on the respective U.S. Revolving Commitment Percentages of the U.S. Revolving Lenders) and shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to the U.S. Issuing Lender therefor and discharge when due, its pro rata share of the obligations arising under such U.S. Letter of Credit. Without limiting the scope and nature of each U.S. Revolving Lender’s participation in any U.S. Letter of Credit, to the extent that the U.S. Issuing Lender has not been reimbursed as required hereunder or under any such U.S. Letter of Credit, each such U.S. Revolving Lender shall pay to the U.S. Issuing Lender its pro rata share of such unreimbursed drawing in same day funds on the day of notification by the U.S. Issuing Lender of an unreimbursed drawing pursuant to the provisions of subsection (d) hereof. The obligation of each U.S. Revolving Lender to so reimburse the U.S. Issuing Lender shall be absolute and unconditional and shall not be affected by the occurrence of a Default, an Event of Default or any other occurrence or event. Any such reimbursement shall not relieve or otherwise impair the obligation of Airgas to reimburse the U.S. Issuing Lender under any U.S. Letter of Credit, together with interest as hereinafter provided.

(d) Reimbursement . In the event of any drawing under any U.S. Letter of Credit, the U.S. Issuing Lender will promptly notify Airgas and the U.S. Agent. Unless Airgas shall immediately notify the U.S. Issuing Lender that Airgas intends to otherwise reimburse the U.S. Issuing Lender for such drawing, Airgas shall be deemed to have requested that the U.S. Revolving Lenders make a U.S. Revolving Loan in the amount of the drawing as provided in subsection (e) hereof on the related U.S. Letter of Credit, the proceeds of which will be used to satisfy the related reimbursement obligations. Airgas promises to reimburse the U.S. Issuing Lender on the day of drawing under any U.S. Letter of Credit (either with the proceeds of a U.S. Revolving Loan obtained hereunder or otherwise) in same day funds. If Airgas shall fail

to reimburse the U.S. Issuing Lender as provided hereinabove, the unreimbursed amount of such drawing shall bear interest at a per annum rate equal to the U.S. Base Rate plus the sum of (i) the Applicable Percentage and (ii) two percent (2%). Airgas’ reimbursement obligations hereunder shall be absolute and unconditional under all circumstances irrespective of any rights of setoff, counterclaim or defense to payment Airgas may claim or have against the U.S. Issuing Lender, the U.S. Agent, the U.S. Revolving Lenders, the beneficiary of the U.S. Letter of Credit drawn upon or any other Person, including without limitation any defense based on any failure of Airgas to receive consideration or the legality, validity, regularity or unenforceability of the U.S. Letter of Credit. The U.S. Agent will promptly notify the other U.S. Revolving Lenders of the amount of any unreimbursed drawing under any U.S. Letter of Credit and each U.S. Revolving Lender shall promptly pay to the U.S. Agent for the account of the U.S. Issuing Lender in U.S. Dollars and in immediately available funds, the amount of such U.S. Revolving Lender’s pro rata share of such unreimbursed drawing. Such payment shall be made on the day such notice is received by such U.S. Revolving Lender from the U.S. Issuing Lender if such notice is received at or before 2:00 P.M. (Charlotte, North Carolina time) otherwise such payment shall be made at or before 12:00 NOON (Charlotte, North Carolina time) on the Business Day next succeeding the day such notice is received. If such U.S. Revolving Lender does not pay such amount to the U.S. Issuing Lender in full upon such request, such U.S. Revolving Lender shall, on demand, pay to the U.S. Agent for the account of the U.S. Issuing Lender interest on the unpaid amount during the period from the date of such drawing until such U.S. Revolving Lender pays such amount to the U.S. Issuing Lender in full at a rate per annum equal to, if paid within two (2) Business Days of the date that such U.S. Revolving Lender is required to make payments of such amount pursuant to the preceding sentence, the Federal Funds Rate and thereafter at a rate equal to the U.S. Base Rate. Each U.S. Revolving Lender’s obligation to make such payment to the U.S. Issuing Lender, and the right of the U.S. Issuing Lender to receive the same, shall be absolute and unconditional, shall not be affected by any circumstance whatsoever and without regard to the termination of this Credit Agreement or the Commitments hereunder, the existence of a Default or Event of Default or the acceleration of the obligations of Airgas hereunder and shall be made without any offset, abatement, withholding or reduction whatsoever. Simultaneously with the making of each such payment by a U.S. Revolving Lender to the U.S. Issuing Lender, such U.S. Revolving Lender shall, automatically and without any further action on the part of the U.S. Issuing Lender or such U.S. Revolving Lender, acquire a participation in an amount equal to such payment (excluding the portion of such payment constituting interest owing to the U.S. Issuing Lender) in the related unreimbursed drawing portion of the U.S. LOC Obligation and in the interest thereon and in the related U.S. LOC Documents, and shall have a claim against Airgas with respect thereto.

(e) Repayment with U.S. Revolving Loans . On any day on which Airgas shall have requested, or shall be deemed to have requested, a U.S. Revolving Loan advance to reimburse a drawing under a U.S. Letter of Credit, the U.S. Agent shall give notice to the U.S. Revolving Lenders that a U.S. Revolving Loan has been requested or deemed requested by Airgas to be made in connection with a drawing under a U.S. Letter of Credit, in which case a U.S. Revolving Loan advance comprised of U.S. Base Rate Loans (or Eurocurrency Loans to the extent Airgas has complied with the procedures of Section 2A.1(b)(i) with respect thereto) shall be immediately made to Airgas by all U.S. Revolving Lenders (notwithstanding any termination of the Commitments pursuant to Section 9.2) pro rata based on the respective U.S. Revolving Commitment Percentages of the U.S. Revolving Lenders (determined before giving effect to any termination of the Commitments pursuant to Section 9.2) and the proceeds thereof shall be paid directly to the U.S. Issuing Lender for application to the respective U.S. LOC Obligations. Each U.S. Revolving Lender hereby irrevocably agrees to make its pro rata share of each such U.S. Revolving Loan immediately upon any such request or deemed request in the amount, in the manner and on the date specified in the preceding sentence notwithstanding (i) the amount of such borrowing may not comply with the minimum amount for advances of U.S. Revolving Loans otherwise required hereunder, (ii) whether any conditions specified in Section 5.2 are then satisfied, (iii) whether a Default or an Event of Default then exists, (iv) failure for any such request or deemed request for U.S. Revolving Loan to be made by the time otherwise required hereunder, (v) whether the date of such borrowing is a date on which U.S. Revolving Loans are otherwise permitted to be made hereunder or (vi) any termination of the Commitments relating thereto immediately prior to or

contemporaneously with such borrowing. In the event that any U.S. Revolving Loan cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code with respect to Airgas), then each U.S. Revolving Lender hereby agrees that it shall forthwith purchase (as of the date such borrowing would otherwise have occurred, but adjusted for any payments received from Airgas on or after such date and prior to such purchase) from the U.S. Issuing Lender such participation in the outstanding U.S. LOC Obligations as shall be necessary to cause each U.S. Revolving Lender to share in such U.S. LOC Obligations ratably (based upon the respective U.S. Revolving Commitment Percentages of the U.S. Revolving Lenders (determined before giving effect to any termination of the Commitments pursuant to Section 9.2)), provided that at the time any purchase of participation pursuant to this sentence is actually made, the purchasing U.S. Revolving Lender shall be required to pay to the U.S. Issuing Lender, to the extent not paid to the U.S. Issuing Lender by Airgas in accordance with the terms of subsection (d) hereof, interest on the principal amount of participation purchased for each day from and including the day upon which such borrowing would otherwise have occurred to but excluding the date of payment for such participation, at the rate equal to, if paid within two (2) Business Days of the date of the U.S. Revolving Loan advance, the Federal Funds Rate, and thereafter at a rate equal to the U.S. Base Rate.

(f) Designation of Subsidiaries as Account Parties . Notwithstanding anything to the contrary set forth in this Credit Agreement, including without limitation Section 2A.3(a) hereof, a U.S. Letter of Credit issued hereunder may contain a statement to the effect that such U.S. Letter of Credit is issued for the account of a Subsidiary of Airgas, provided that notwithstanding such statement, Airgas shall be the actual account party for all purposes of this Credit Agreement for such U.S. Letter of Credit and such statement shall not affect Airgas’ reimbursement obligations hereunder with respect to such U.S. Letter of Credit.

(g) Renewal, Extension . The renewal or extension of any U.S. Letter of Credit shall, for purposes hereof, be treated in all respects the same as the issuance of a new U.S. Letter of Credit hereunder.

(h) Applicability of ISP and UCP . Unless otherwise expressly agreed by the U.S. Issuing Lender and Airgas when a U.S. Letter of Credit is issued (including any such agreement applicable to an Existing U.S. Letter of Credit), (i) the rules of the ISP shall apply to each standby U.S. Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance shall apply to each trade U.S. Letter of Credit.

(i) Indemnification; Nature of U.S. Issuing Lender’s Duties .

(i) Airgas agrees to indemnify and hold harmless the U.S. Issuing Lender, each other U.S. Revolving Lender, the U.S. Agent and each of their respective officers, directors, affiliates, employees or agents (the “ Indemnitees ”) from and against any and all claims and damages, losses, liabilities, costs and expenses which the Indemnitees may incur (or which may be claimed against any Indemnitee) by any Person by reason of or in connection with the issuance or transfer of or payment or failure to pay under any U.S. Letter of Credit; provided that Airgas shall not be required to indemnify any Indemnitee for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, (A) caused by the willful misconduct or gross negligence of such Indemnitee in determining whether a request presented under any U.S. Letter of Credit complied with the terms of such U.S. Letter of Credit or (B) caused by the U.S. Issuing Lender’s failure to pay under any U.S. Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of such U.S. Letter of Credit (unless such payment is prohibited by any law, regulation, court order or decree).

(ii) Airgas agrees, as between Airgas and the U.S. Issuing Lender, Airgas shall assume all risks of the acts, omissions or misuse of any U.S. Letter of Credit by the beneficiary thereof.

(iii) The U.S. Issuing Lender shall not, in any way, be liable for any failure by the U.S. Issuing Lender or anyone else to pay any drawing under any U.S. Letter of Credit as a result of any cause beyond the control of the U.S. Issuing Lender.

(iv) Nothing in this subsection (i) is intended to limit the reimbursement obligations of Airgas contained in subsection (d) above. The obligations of Airgas under this subsection (i) shall survive the termination of this Credit Agreement. No act or omissions of any current or prior beneficiary of a U.S. Letter of Credit shall in any way affect or impair the rights of the U.S. Issuing Lender to enforce any right, power or benefit under this Credit Agreement.

(v) Notwithstanding anything to the contrary contained in this subsection (i), Airgas shall have no obligation to indemnify the U.S. Issuing Lender in respect of any liability incurred by the U.S. Issuing Lender (A) arising out of the gross negligence or willful misconduct of the U.S. Issuing Lender, or (B) caused by the U.S. Issuing Lender’s failure to pay under any U.S. Letter of Credit after presentation to it of a request strictly complying with the terms and conditions of such U.S. Letter of Credit, as determined by a court of competent jurisdiction, unless such payment is prohibited by any law, regulation, court order or decree.

(j) Responsibility of U.S. Issuing Lender . It is expressly understood and agreed that the obligations of the U.S. Issuing Lender hereunder to the U.S. Revolving Lenders are only those expressly set forth in this Credit Agreement and that the U.S. Issuing Lender shall be entitled to assume that the conditions precedent set forth in Section 5.2 have been satisfied unless it shall have acquired actual knowledge that any such condition precedent has not been satisfied; provided , however , that nothing set forth in this Section 2A.3 shall be deemed to prejudice the right of any U.S. Revolving Lender to recover from the U.S. Issuing Lender any amounts made available by such U.S. Revolving Lender to the U.S. Issuing Lender pursuant to this Section 2A.3 in the event that it is determined by a court of competent jurisdiction that the payment with respect to a U.S. Letter of Credit constituted gross negligence or willful misconduct on the part of the U.S. Issuing Lender.

(k) Conflict with U.S. LOC Documents . In the event of any conflict between this Credit Agreement and any U.S. LOC Document (including any letter of credit application), this Credit Agreement shall control.

(l) Role of U.S. Agent . Airgas and each U.S. Issuing Lender agree to provide the U.S. Agent with a copy of any notice or report otherwise required to be furnished by such Person to any other Person pursuant to Sections 2A.3(a), 2A.3(b) or 2A.3(d). Furthermore, all payments required to be made by any U.S. Revolving Lender to a U.S. Issuing Lender pursuant to Section 2A.3 shall be made to the U.S. Agent, for the account of such U.S. Issuing Lender, and the U.S. Agent shall distribute such payments to such U.S. Issuing Lender.

2A.4 U.S. Swingline Loan Subfacility .

(a) U.S. Swingline Commitment . Subject to the terms and conditions set forth herein and in reliance upon the agreements of the other U.S. Revolving Lenders set forth in this Section 2A.4, the U.S. Swingline Lender, in its individual capacity, agrees to make certain revolving credit loans requested by Airgas in U.S. Dollars to Airgas (each a “ U.S. Swingline Loan ” and, collectively, the “ U.S. Swingline

Loans ”) from time to time from the Closing Date until the Termination Date for the purposes hereinafter set forth; provided , however , (i) the aggregate principal amount of U.S. Swingline Loans outstanding at any time shall not exceed FIFTY MILLION U.S. DOLLARS ($50,000,000) (the “ U.S. Swingline Committed Amount ”), and (ii) the aggregate principal amount of outstanding U.S. Revolving Loans plus the aggregate principal amount of outstanding Competitive U.S. Loans plus the aggregate principal amount of outstanding U.S. Swingline Loans plus U.S. LOC Obligations outstanding shall not exceed the U.S. Revolving Committed Amount. U.S. Swingline Loans hereunder shall be made as U.S. Base Rate Loans or Quoted Rate U.S. Swingline Loans as Airgas may request in accordance with the provisions of this Section 2A.4, and may be repaid and reborrowed in accordance with the provisions hereof.

(b) U.S. Swingline Loan Advances .

(i) Notices; Disbursement . Whenever Airgas desires a U.S. Swingline Loan advance hereunder its duly authorized officer or representative shall give written notice (or telephone notice promptly confirmed in writing) to the U.S. Swingline Lender not later than 2:00 P.M. (Charlotte, North Carolina time) on the Business Day of the requested U.S. Swingline Loan advance. Each such notice shall be irrevocable and shall specify (A) that a U.S. Swingline Loan advance is requested, (B) the date of the requested U.S. Swingline Loan advance (which shall be a Business Day) and (C) the principal amount of the U.S. Swingline Loan advance requested. Each U.S. Swingline Loan shall be made as a U.S. Base Rate Loan or a Quoted Rate U.S. Swingline Loan and shall have such maturity date as the U.S. Swingline Lender and Airgas shall agree upon receipt by the U.S. Swingline Lender of any such notice from Airgas. The U.S. Swingline Lender shall credit the funds requested to an Airgas account maintained with the Swingline Lender by 3:00 P.M. (Charlotte, North Carolina time) on the Business Day of the requested borrowing.

(ii) Minimum Amounts . Each U.S. Swingline Loan advance shall be in a minimum principal amount of $100,000 and in integral multiples thereof (or the remaining amount of the U.S. Swingline Committed Amount, if less).

(iii) Repayment of U.S. Swingline Loans . Airgas promises to pay the principal amount of all U.S. Swingline Loans on the earlier of (A) the maturity date agreed to by the U.S. Swingline Lender and Airgas with respect to such U.S. Swingline Loan (which maturity date shall not be a date more than thirty (30) days from the date of advance thereof) or (B) the Termination Date. The U.S. Swingline Lender may, at any time, in its sole discretion, by written notice to Airgas and the U.S. Revolving Lenders, demand repayment of its U.S. Swingline Loans by way of a U.S. Revolving Loan advance, in which case Airgas shall be deemed to have requested a U.S. Revolving Loan advance comprised solely of U.S. Base Rate Loans in the amount of such U.S. Swingline Loans; provided , however , that any such demand (if not made prior thereto) shall be deemed to have been given one Business Day prior to the Termination Date and on the date of the occurrence of any Event of Default described in Section 9.1 (or if such date is not a Business Day, the first Business Day succeeding such date) and upon acceleration of the indebtedness hereunder and the exercise of remedies in accordance with the provisions of Section 9.2. Each U.S. Revolving Lender hereby irrevocably agrees to make its pro rata share of each such U.S. Revolving Loan in the amount, in the manner and on the date specified in the preceding sentence notwithstanding (I) the amount of such borrowing may not comply with the minimum amount for advances of U.S. Revolving Loans otherwise required hereunder, (II) whether any conditions specified in Section 5.2 are then satisfied, (III) whether a Default or an Event of Default then exists, (IV) failure of any such request or deemed request for a U.S. Revolving Loan to be made by the time otherwise required hereunder, (V) whether the date of such borrowing is a date on which U.S. Revolving Loans are otherwise permitted to be made hereunder or (VI) any termination of the Commitments relating thereto immediately prior to or contemporaneously with such borrowing. In the event that any U.S. Revolving Loan cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the

commencement of a proceeding under the Bankruptcy Code with respect to Airgas), then each U.S. Revolving Lender hereby agrees that it shall forthwith purchase (as of the date such borrowing would otherwise have occurred, but adjusted for any payments received from Airgas on or after such date and prior to such purchase) from the U.S. Swingline Lender such participations in the outstanding U.S. Swingline Loans as shall be necessary to cause each U.S. Revolving Lender to share in such U.S. Swingline Loans ratably based upon its U.S. Revolving Commitment Percentage of the U.S. Revolving Committed Amount (determined before giving effect to any termination of the Commitments pursuant to Section 9.2), provided that (A) all interest payable on the U.S. Swingline Loans shall be for the account of the U.S. Swingline Lender until the date as of which the respective participation is purchased and (B) at the time any purchase of participations pursuant to this sentence is actually made, the purchasing U.S. Revolving Lender shall be required to pay to the U.S. Swingline Lender, to the extent not paid to the U.S. Swingline Lender by Airgas in accordance with the terms of subsection (c)(ii) hereof, interest on the principal amount of participation purchased for each day from and including the day upon which such borrowing would otherwise have occurred to but excluding the date of payment for such participation, at the rate equal to the Federal Funds Rate.

(c) Interest on U.S. Swingline Loans . (i) Subject to the provisions of Section 4.1, each U.S. Swingline Loan shall bear interest as follows:

(A) U.S. Base Rate Loans . If such U.S. Swingline Loan is a U.S. Base Rate Loan, at a per annum rate (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be) equal to the U.S. Base Rate plus the Applicable Percentage; and

(B) Quoted Rate U.S. Swingline Loans . If such U.S. Swingline Loan is a Quoted Rate U.S. Swingline Loan, at a per annum rate (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to the Quoted Rate applicable thereto.

Notwithstanding any other provision to the contrary set forth in this Credit Agreement, in the event that the principal amount of any Quoted Rate U.S. Swingline Loan is not repaid on the last day of the Interest Period for such Loan, then such Loan shall be automatically converted into a U.S. Base Rate Loan at the end of such Interest Period.

(ii) Payment of Interest . Airgas promises to pay interest on U.S. Swingline Loans in arrears on each applicable Interest Payment Date (or at such other times as may be specified herein).

2A.5 U.S. Term Loan .

(a) U.S. Term Commitment . Subject to the terms and conditions hereof and in reliance upon the representations and warranties set forth herein, each U.S. Term Lender severally agrees to make available to Airgas in one or more drawings during the period from the Closing Date until the Termination Date term loans in U.S. Dollars (the “ U.S. Term Loans ”); provided , however , (i) with regard to the U.S. Term Lenders collectively, the aggregate principal amount of all U.S. Term Loans shall not exceed SIX HUNDRED MILLION U.S. DOLLARS ($600,000,000) (as such aggregate maximum amount may be increased or reduced from time to time as provided in Section 4.4, the “ U.S. Term Loan Committed Amount ”) and (ii) with regard to each U.S. Term Lender individually, such U.S. Term Lender’s outstanding U.S. Term Loans shall not exceed such U.S. Term Lender’s U.S. Term Loan Percentage of the U.S. Term Loan Committed Amount. U.S. Term Loans may consist of U.S. Base Rate Loans or Eurocurrency Loans, or a combination thereof, as Airgas may request; provided , however , that no more than five (5) Eurocurrency Loans which are U.S. Term Loans shall be outstanding hereunder at any time (it being understood that, for purposes hereof, Eurocurrency Loans with different Interest Periods

shall be considered as separate Eurocurrency Loans, even if they begin on the same date, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing Interest Periods to constitute a new Eurocurrency Loan with a single Interest Period). Amounts repaid on the U.S. Term Loans may not be reborrowed.

(b) Borrowing Procedures . Airgas shall submit an appropriate Notice of Borrowing to the U.S. Agent not later than 11:00 A.M. (Charlotte, North Carolina time) on the Business Day of the requested borrowing in the case of U.S. Base Rate Loans, or on the third Business Day prior to the Business Day of the requested borrowing in the case of Eurocurrency Loans. Such Notice of Borrowing shall be irrevocable and shall specify (i) that the funding of a U.S. Term Loan is requested and (ii) whether the funding of the U.S. Term Loan shall be comprised of U.S. Base Rate Loans, Eurocurrency Loans or a combination thereof, and if Eurocurrency Loans are requested, the Interest Period(s) therefor. If Airgas shall fail to deliver such Notice of Borrowing to the U.S. Agent by 11:00 A.M. (Charlotte, North Carolina time) on the third Business Day prior to the Business Day of the requested borrowing, then the full amount of the requested U.S. Term Loan shall be disbursed on the Business Day of the requested borrowing as a U.S. Base Rate Loan. Each U.S. Term Lender shall make its U.S. Term Loan Percentage of each U.S. Term Loan available to the U.S. Agent for the account of Airgas by 1:00 P.M. (Charlotte, North Carolina time) on the Business Day of the requested borrowing in U.S. Dollars and in funds immediately available to the U.S. Agent.

(c) Minimum Amounts . Each Eurocurrency Loan or U.S. Base Rate Loan that is part of a U.S. Term Loan shall be in an aggregate principal amount that is not less than $5,000,000 and integral multiples of $1,000,000 (or the then remaining principal balance of the U.S. Term Loan Committed Amount, if less).

(d) Repayment of U.S. Term Loans . Airgas promises to pay the outstanding principal amount of the U.S. Term Loans in consecutive installments commencing on the earlier of (i) March 31, 2007 if, prior to such date, any portion of the U.S. Term Loan Commitments is funded to finance the Project OT Acquisition or (ii) otherwise, June 30, 2007 (such date hereinafter referred to as the “ Amortization Commencement Date ”) as follows (as such installments may hereafter be adjusted as a result of prepayments made pursuant to Section 4.3 or as the result of an increase in the amount of the U.S. Term Loan Committed Amount pursuant to Section 4.4(b)), unless accelerated sooner pursuant to Section 9.2:


Payment Dates	Principal Amortization Payment due on the corresponding Payment Date
Amortization Commencement Date and the last day of each of the three subsequent fiscal quarters	3.75	%
the last day of each of the four subsequent fiscal quarters	3.75	%
the last day of each of the four subsequent fiscal quarters	3.75	%
the last day of each of the two subsequent fiscal quarters	3.75	%
the last day of each of the three subsequent fiscal quarters	11.875	%
either: (i) if the most recent scheduled amortization payment date occurred on March 31, 2011, June 30, 2011 or (ii) otherwise, the Termination Date	Unpaid Balance

(e) Interest . Subject to the provisions of Section 4.1,

(i) U.S. Base Rate Loans . During such periods as the U.S. Term Loan shall be comprised in whole or in part of U.S. Base Rate Loans, such U.S. Base Rate Loans shall bear interest at a per annum rate equal to the U.S. Base Rate plus the Applicable Percentage; and

(ii) Eurocurrency Loans . During such periods as the U.S. Term Loan shall be comprised in whole or in part of Eurocurrency Loans, such Eurocurrency Loans shall bear interest at a per annum rate equal to the Eurocurrency Rate plus the Applicable Percentage.

Airgas promises to pay interest on the U.S. Term Loan in arrears on each applicable Interest Payment Date (or at such other times as may be specified herein).

ARTICLE II.B

FOREIGN CURRENCY LOANS

2B.1 Foreign Currency Loans .

(a) Foreign Currency Commitment . Subject to the terms and conditions hereof and in reliance upon the representations and warranties set forth herein, each Foreign Currency Lender severally agrees to make available to Airgas and the Foreign Borrowers such Foreign Currency Lender’s Foreign Currency Commitment Percentage of revolving credit loans requested by Airgas or the applicable Foreign Borrower in U.S. Dollars or one or more Foreign Currencies (“ Foreign Currency Loans ”) from time to time from the Third Amendment Date until the Termination Date, or such earlier date as the Foreign Currency Commitments shall have been terminated as provided herein for the purposes hereinafter set forth; provided , however , that the U.S. Dollar Equivalent of the aggregate principal amount of outstanding Foreign Currency Loans shall not exceed SEVENTY-FIVE MILLION U.S. DOLLARS ($75,000,000) (as such aggregate maximum amount may be reduced from time to time as provided in Section 4.4, the “ Foreign Currency Committed Amount ”); provided , further , (i) with regard to each Foreign Currency Lender individually, the U.S. Dollar Equivalent of such Foreign Currency Lender’s outstanding Foreign Currency Loans shall not exceed such Foreign Currency Lender’s Foreign Currency Commitment Percentage of the Foreign Currency Committed Amount and (ii) with regard to the Foreign Currency Lenders collectively, the U.S. Dollar Equivalent of the aggregate principal amount of outstanding Foreign Currency Loans shall not exceed the Foreign Currency Committed Amount. Foreign Currency Loans denominated in Foreign Currencies (other than Mexican Pesos) shall consist of Eurocurrency Loans. Foreign Borrowers organized under the laws of Mexico shall only be permitted to (and shall be the only Foreign Borrowers permitted to) borrow Mexican Pesos (which borrowings shall consist of Peso Rate Loans). Foreign Currency Loans denominated in U.S. Dollars may consist of (A) in the case of borrowings by Airgas, U.S. Base Rate Loans, Eurocurrency Loans or a combination thereof, as Airgas may request, and (B) in the case of any Foreign Borrower, Eurocurrency Loans only. Foreign Currency Loans may be repaid and reborrowed in accordance with the provisions hereof; provided , however , that no more than seven (7) Peso Rate Loans and Eurocurrency Loans which are Foreign Currency Loans (combined) shall be outstanding hereunder at any time. For purposes hereof, Eurocurrency Loans and Peso Rate Loans with different Interest Periods shall be considered as separate Loans, even if they begin on the same date, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing Interest Periods to constitute a new Eurocurrency Loan or Peso Rate Loan, as applicable, with a single Interest Period.

(b) Foreign Currency Loan Borrowings .

(i) Notice of Borrowing . Airgas and each Foreign Borrower (by its duly authorized officers or representatives) shall request a Foreign Currency Loan borrowing by written notice (or telephone notice promptly confirmed in writing) to the U.S. Agent not later than 11:00 A.M. (Charlotte, North Carolina time) (1) three Business Days prior to the requested date of any borrowing of Eurocurrency Loans denominated in U.S. Dollars, (2) three Business Days (or four Business Days in the case of a Special Notice Currency) prior to the requested date of any borrowing of Eurocurrency Loans denominated in Foreign Currencies or any borrowing of Peso Rate Loans, and (3) on the requested date of any borrowing of U.S. Base Rate Loans. Each such request for borrowing shall be irrevocable and shall specify (A) that a Foreign Currency Loan is requested, (B) the date of the requested borrowing (which shall be a Business Day), (C) the aggregate principal amount to be borrowed, (D) the currency of such borrowing, (E) in the case of a Foreign Currency Loan to be denominated in U.S. Dollars, whether the borrowing shall be comprised of U.S. Base Rate Loans, Eurocurrency Loans or a combination thereof and (F) if applicable, the Interest Period(s) therefor. If Airgas or the applicable Foreign Borrower shall fail to

specify in any such Notice of Borrowing (I) an applicable Interest Period, then such notice shall be deemed to be a request for an Interest Period of one month, (II) the currency of Foreign Currency Loan requested, then such notice shall be rejected until a currency is specified or (III) in the case of a Foreign Currency Loan denominated in U.S. Dollars, the type of Foreign Currency Loan requested, then (A) with respect to any borrowing by Airgas, such notice shall be deemed to be a request for a U.S. Base Rate Loan hereunder and (B) with respect to any borrowing by any Foreign Borrower, such notice shall be deemed to be a request for a Eurocurrency Loan with an Interest Period of one month. The U.S. Agent shall give notice to each Foreign Currency Lender promptly upon receipt of each Notice of Borrowing pursuant to this Section 2B.1(b)(i), specifying the contents thereof and each such Foreign Currency Lender’s share of any borrowing to be made pursuant thereto.

(ii) Minimum Amounts . Each Foreign Currency Loan shall be in a minimum aggregate principal amount not less than the Borrowing Minimum and integral multiples of the Borrowing Multiple in excess thereof (or the remaining amount of the Foreign Currency Committed Amount, if less).

(iii) Advances . Each Foreign Currency Lender will make its Foreign Currency Commitment Percentage of each Foreign Currency Loan borrowing available to the U.S. Agent for the account of Airgas or the applicable Foreign Borrower in Same Day Funds at the U.S. Agent’s office for the applicable currency not later than (x) 1:00 p.m., in the case of any Foreign Currency Loan denominated in U.S. Dollars, and (y) the Applicable Time specified by the U.S. Agent in the case of any Foreign Currency Loan in a Foreign Currency, in each case on the Business Day specified in the applicable Notice of Borrowing. Such borrowing will then be made available to Airgas or the applicable Foreign Borrower by the U.S. Agent in like funds as received by the U.S. Agent by (A) crediting the account of Airgas or such Foreign Borrower on the books of the U.S. Agent with the amount of such funds or (B) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the U.S. Agent by Airgas or such Foreign Borrower, as the case may be. Each Foreign Currency Lender, at its option, may make any Foreign Currency Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan, provided that any exercise of such option shall not affect the obligation of the applicable Borrower to repay such Loan in accordance with the terms of this Credit Agreement.

(c) Repayment . Airgas and each Foreign Borrower promises to pay the principal amount of all Foreign Currency Loans owing by Airgas or such Foreign Borrower, as the case may be, in full on the Termination Date. With respect to any Peso Rate Loan, and in accordance with the Mexican Law of Credit Institutions ( Ley de Instituciones de Crédito ), the Credit Agreement, as amended, together with the corresponding account statements certified by an authorized accountant will act in a court of law as a credit instrument subject to summary judgment, without need to verify signatures or other requirements.

(d) Interest . Subject to the provisions of Section 4.1:

(i) U.S. Base Rate Loans . During such periods as Foreign Currency Loans shall be comprised in whole or in part of U.S. Base Rate Loans, such U.S. Base Rate Loans shall bear interest at a per annum rate equal to the U.S. Base Rate plus the Applicable Percentage;

(ii) Eurocurrency Loans . During such periods as Foreign Currency Loans shall be comprised in whole or in part of Eurocurrency Loans, such Eurocurrency Loans shall bear interest at a per annum rate equal to the Eurocurrency Rate plus the Applicable Percentage plus (in the case of a Eurocurrency Loan of any Foreign Currency Lender which is lent from a lending office in the United Kingdom or a Participating Member State) the Mandatory Cost (it being understood that the interest calculated pursuant to this clause (ii) with respect to any Foreign Currency Lender shall be increased by the Mandatory Cost only to the extent that such Foreign Currency Lender is required to pay such Mandatory Cost); and

(iii) Peso Rate Loans . During such periods as Foreign Currency Loans shall be comprised in whole or in part of Peso Rate Loans, such Peso Rate Loans shall bear interest at a per annum rate equal to the Peso Rate plus the Applicable Percentage plus (in the case of a Peso Rate Loan of any Foreign Currency Lender which is lent from a lending office in Mexico) the Mandatory Cost (it being understood that the interest calculated pursuant to this clause (iii) with respect to any Foreign Currency Lender shall be increased by the Mandatory Cost only to the extent that such Foreign Currency Lender is required to pay such Mandatory Cost).

Airgas and each Foreign Borrower promises to pay interest on the Foreign Currency Loans owing by such Person in arrears on each applicable Interest Payment Date (or at such other times as may be specified herein).

2B.2 Exchange Rates; Currency Equivalents .

The U.S. Agent shall determine, for any Foreign Currency Loan denominated in a Foreign Currency, the Spot Rate as of each Revaluation Date for such Foreign Currency Loan, which Spot Rate shall be used for calculating the U.S. Dollar Equivalent of such Foreign Currency Loan. Such Spot Rate shall become effective as of such Revaluation Date and shall be the Spot Rate for such Foreign Currency Loan until the next Revaluation Date to occur. Except as otherwise provided herein, the applicable amount of any Foreign Currency Loan for purposes of the Credit Documents shall be such U.S. Dollar Equivalent amount as so determined by the U.S. Agent.

2B.3 Additional Alternative Currencies .

(a) Airgas may from time to time request that Foreign Currency Loans be made in a currency other than those specifically listed in the definition of “Foreign Currency”; provided that such requested currency is a lawful currency (other than U.S. Dollars) that is readily available and freely transferable and convertible into U.S. Dollars. In the case of any such request with respect to the making of Foreign Currency Loans, such request shall be subject to the approval of the U.S. Agent and the Foreign Currency Lenders.

(b) Any such request shall be made to the U.S. Agent not later than 11:00 a.m., ten Business Days prior to the date of the desired borrowing (or, if requested by Airgas or a Foreign Borrower, such other time or date as may be agreed by the U.S. Agent in its sole discretion). The U.S. Agent shall promptly notify each Foreign Currency Lender thereof. Each Foreign Currency Lender shall notify the U.S. Agent, not later than 11:00 a.m., five Business Days after receipt of such request whether it consents, in its sole discretion, to the making of Foreign Currency Loans in such requested currency.

(c) Any failure by a Foreign Currency Lender to respond to such request within the time period specified in the preceding sentence shall be deemed to be a refusal by such Foreign Currency Lender to permit Foreign Currency Loans to be made in such requested currency. If the U.S. Agent and all the Foreign Currency Lenders consent to making Foreign Currency Loans in such requested currency, the U.S. Agent shall so notify Airgas and such currency shall thereupon be deemed for all purposes to be a Foreign Currency hereunder for purposes of any borrowings of Foreign Currency Loans. If the U.S. Agent shall fail to obtain consent to any request for an additional currency under this Section 2B.3, the U.S. Agent shall promptly so notify Airgas.

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