COURT OF CHANCERY

OF THE
WILLIAM B. CHANDLER III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
December 14, 2010

Kenneth J. Nachbar Donald J. Wolfe, Jr.

William Lafferty Kevin R. Shannon
John P. DiTomo Potter Anderson & Corroon LLP
Morris, Nichols, Arsht & Tunnell LLP Hercules Plaza – 6th Floor
1201 N. Market Street 1313 N. Market Street
P.O. Box 1347 P.O. Box 951
Wilmington, DE 19899 Wilmington, DE 19899

Pamela S. Tikellis
Robert J. Kriner, Jr.
A. Zachary Naylor
Chimicles & Tikellis LLP
222 Delaware Ave.
P.O. Box 1035
Wilmington, DE 19899

Re: Air Products & Chemicals, Inc. v. Airgas, Inc., et al.

Civil Action No. 5249-CC
In re Airgas, Inc. S’holder Litig.
Civil Action No. 5256-CC

Dear Counsel:

I write to follow up on yesterday’s telephone conference. First, as I said

yesterday morning, the December 7, 2010 letter to Mr. van Roden from the three
recently-elected Airgas directors and Mr. van Roden’s December 8, 2010 response
to that letter are now part of the record. Those letters were filed under seal. I
understand that defendants have voluntarily released those letters publicly
yesterday afternoon. The only outstanding issue concerning the trial record is
whether the exhibits to Air Products’ Supplemental Post-Trial Brief will be
admitted. Airgas has filed its objections to those exhibits. The Airgas defendants
do not object to the record being supplemented with Air Products’ December 9
Schedule TO. Accordingly, Exhibit A to Air Products’ Supplemental Post-Trial
Brief is admitted. Airgas opposes the introduction of Air Products’ December 9,
2010 “Rebuttal to Airgas’[s] November 26, 2010 Presentation,” however that
presentation is a publicly filed document attached as an exhibit to Air Products’
Schedule TO. Although Airgas argues that the document contains misleading
information, I will allow the entirety of the Schedule TO to be admitted, including
exhibits, and will give it whatever weight it deserves. Airgas’s objections to the
other two exhibits to Air Products’ Supplemental Post-Trial Brief are sustained.
Exhibits B and C—letters from shareholders of Airgas (Pentwater Capital and
Mason Capital) to the Airgas board—are hearsay, and additionally, they are
irrelevant to the issues before me. Both exhibits shall not be made a part of the
record.

Second, Mr. Nachbar’s December 11, 2010 letter to the Court regarding the
above-referenced December 7 and 8 letters, consistent with my December 2, 2010
letter to the parties, did “not address the body of Defendants’ [supplemental post-
trial] submission.”1 In defendants’ submission, however, and in Mr. Shannon’s
December 12, 2010 letter to the Court, counsel for defendants argues that the
week-long trial that took place from October 4 through October 8, 2010, and the
lengthy post-trial briefings that have been filed in this matter were, essentially, all
part of one big “moot court exercise.”2 That is, according to defendants, in light of
Air Products’ increased offer of December 9, 2010, to acquire Airgas for $70 per
share, on which, as of this morning, the Airgas board has not yet made (to the
Court’s knowledge) a determination,3 “Air Products is asking the Court to
invalidate a Board decision that has not even been made and for which no record
exists.”4 Indeed, Mr. Wolinsky reiterated defendants’ position during the telephone
conference yesterday morning: “I hope it’s clear from our submission that we do
not believe that the Court should be going forward [] to decide the issue that we

1
Letter from Kenneth J. Nachbar to Court (Dec. 11, 2010), at 1.
2
Letter from Kevin R. Shannon to Court (Dec. 12, 2010), at 2.
3
See Defs.’ Opp. to Air Products’ Mot. to Supplement the Record 3 (“The Airgas Board as yet
has not taken any action with respect to the new offer.”).
4
Letter from Kevin R. Shannon to Court (Dec. 12, 2010), at 2. See also Defs.’ Supp. Post-Trial
Br. 1 (“[T]here is no reason for the Court to exercise its equitable powers with respect to Air
Products’ $65.50 offer and [] any claim regarding the $70 offer is not ripe.”); id. at 3 (“[I]n light
of this new bid . . . there is no controversy for the Court to decide.”); id. (“Since the Board has
made no decision with respect to the $70 offer, the fiduciary decision that matters has yet to be
made. Thus, no claim is ripe to be adjudicated, and there is no basis for the Court to order any
relief.”); id. at 21-22 (“[T]here is nothing for the Court to enjoin at this time. The Airgas Board
has not taken any action with respect to Air Products’ $70 per share offer . . . . The Court should
not, at this time and on this record, make any ruling with respect to Air Products’ $70 offer.”).
2
tried on the basis of the pleadings and the record that’s in front of you.”5 And
defendants further asserted this position today.6 In essence, say defendants, the
Court can stand down.

Air Products’ and the Shareholder Plaintiffs’ briefs, on the other hand,
suggest that there is still in fact a live controversy—whether Air Products’ now-$70
all-cash offer justifies keeping Airgas’s poison pill in place. As I understand
plaintiffs’ position(s), the increased offer in effect merely moves the price point for
the Unocal “threat” analysis; it does not “moot” or otherwise dispose of the issues
presented at trial.7 In other words, the issue remaining to be decided, according to
both Air Products and Shareholder Plaintiffs, is whether Airgas’s poison pill has
served its purpose and, therefore, “[a]t this stage of the process, there is no ‘threat’
that justifies the continued maintenance of the pill.”8

In light of the foregoing, if Air Products and the Shareholder Plaintiffs

would like an opportunity to respond to the arguments made in Airgas’s
supplemental brief and today’s opposition to supplement the record (in particular,
the contention that the poison pill analysis with respect to Air Products’ $65.50

5
Teleconference Tr. 10-11 (Dec. 13, 2010). See also Defs.’ Opp. to Air Products’ Mot. to
Supplement the Record 4 (“[I]f there is a dispute as to Airgas’[s] response to Air Products’ $70
offer, it ought to be litigated in a deliberative and fair manner based on an actual appropriate
record and opportunity to be heard.”); id. (“If plaintiffs choose to challenge whatever the Board
determines, they should be required to file a new lawsuit.”).
6
See Defs.’ Opp. to Air Products’ Mot. to Supplement the Record 1-2 (“[Plaintiffs press] the
Court to rule on Airgas’[s] response to Air Products’ new $70 offer—a response that has not even
occurred yet, and as to which there is no claim by any party before the Court.”); id. at 2 (“Air
Products’ original and currently pending claim is now moot and should be dismissed, and any
new claim is not ripe.”); id. at 3 (“The Airgas Board as yet has not taken any action with respect
to the new offer. When it does, there will be no claim, let alone a factual record, that would
permit the Court to review the basis for that action.”); id. at 5 (“[T]he Board should not be
denied a full and fair hearing challenging its yet unmade response to the $70 offer . . . . The
Court’s consideration of Air Products’ new $70 offer should await the response of the Airgas
Board to that offer and the submission of an appropriate pleading and factual record at a trial.”).
7
See, e.g., Air Products’ Supp. Post-Trial Br. 4 (“[$70 per share] is a final offer to the Airgas
shareholders. It is the highest price that Air Products is willing to pay. It is, therefore, the price
the Court should consider in addressing the “threat” analysis under Unocal.”); id. at 8 (“Air
Products’ $70 offer is not a threat.”); Shareholder Pls.’ Supp. Post-Trial Br. 4 (“If the only
‘threat’ identified by Airgas is the difference between the $70 offer and the $78 price that the
Airgas Board has posited as the minimum value of Airgas shares, the Court should decline to
find such a threat to be ‘cognizable’ under Unocal.”) (internal footnote omitted); id. at 20 (“Air
Products’ tender offer does not constitute a threat at $70.”).
8
Air Products’ Supp. Post-Trial Br. 24; see also Shareholder Pls.’ Supp. Post-Trial Br. 24.
3
offer is now moot, and the analysis with respect to Air Products’ $70 offer is not
yet ripe; thus, there is no claim or controversy for the Court to decide at this time),
I invite the parties to submit letter responses on or before Tuesday, December 21,
2010. I will not set a page limit on these letters but they need not be lengthy.

If defendants would like an opportunity to respond to Air Products’ and the

Shareholder Plaintiffs’ supplemental December 10 briefs, they may do so as well,
although I believe Airgas’s position on the question whether there is a live
controversy is abundantly clear. I do, however, ask defendants to answer the
following questions: (1) When exactly does the Airgas board intend to make its
determination on the $70 offer; and (2) Although I understand Airgas’s position on
question #3 to my December 2 letter, I do ask (once more) the likely date (or even
the “window of opportunity”) for the 2011 Airgas annual meeting, given that the
law of Delaware now requires the 2008 Airgas directors to stand for reelection
approximately three years after their initial election. The arithmetical calculation
of this date (now required under Delaware law) should, I assume, be clear to
someone. Thus, I again ask Airgas’s counsel to clarify its answer to question #3.

Depending on the responses that I receive, I also may decide to grant

plaintiffs and defendants an abbreviated discovery window as well as provide
counsel with an opportunity for oral argument with respect to whether or not the
$70 offer is a threat. Again, I regret the imposition on counsel and the parties
caused by my request for additional submissions and possibly oral argument.

IT IS SO ORDERED.

Very truly yours,

William B. Chandler III

WBCIII:slu