DEFERRED COMPENSATION PROGRAM FOR DIRECTORS

1.

General

The Deferred Compensation Program for Directors (the “Program”) is provided to:

(a)

Provide compensation for directors in the form of Company equity securities to align the interests of directors with those of the Company’s shareholders (“Mandatory Deferrals”); and

(b)

Provide directors the opportunity to defer compensation earned as a director or otherwise in connection with his or her services in connection with the business of the Company and its subsidiaries (“Elective Deferrals”).

The Program is provided under the Air Products and Chemicals, Inc. Long-Term Incentive Plan and is subject to the terms thereof.

2.

Term

The Air Products and Chemicals, Inc. Deferred Compensation Plan for Directors was adopted effective as of 1 January 1980. Section 9 was revised effective as of 25 January 1990. Section 8 and Section 9 were revised effective as of 15 October 1992. Sections 4, 6, 8, and 9 were revised effective as of 19 October 1995. Sections 1, 4, 5, 7, 8, and 9 were amended effective 21 November 1996. Sections 2, 7, 8, 9(a), 9(b), 17, the first paragraph of 9(c), and the Election Form (Exhibit A) were amended effective 19 May 1998. Section 11 was amended effective 20 September 2001. Section 5(b) was revised effective as of 1 October 2002. Effective 23 January 2003, the Plan was combined with the Long-Term Incentive Plan and offered as a program thereunder.

3.

Participants

Any director of the Company who is not an employee of the Company or of a subsidiary of the Company is eligible to participate in the Program.

4.

Mandatory Deferrals

There shall be established for each participant, an Air Products Stock Account described under section 5(b) below to which shall be credited all compensation which is to be paid by the Company in the form of deferred stock units in accordance with the Compensation Program for Nonemployee Directors applicable for calendar year 1997 and later periods; and for each participant who had not served as a director for at least six years as of January 1, 1997, the actuarial present value of his or her prorated accrued pension (the “Pension Amount”) under the Pension Plan for Directors (the “Pension Plan”) as determined in connection with the termination of said Pension Plan.

Dollar amounts to be so credited shall be converted into deferred stock units in the manner described under Section 5(b) below on the quarterly or other specified crediting date for such 1997 and later compensation, and on 21 November 1996, as to the Pension Amount.

5.

Elective Deferrals

Participants may elect to defer receipt of all or a specified portion of the compensation (exclusive of expense reimbursements) otherwise payable to him or her in cash for serving on the Board of Directors of the Company, attending meetings or committee meetings thereof or performing other services in connection with the business of the Company and its subsidiaries. Such compensation will be credited on the date the compensation is otherwise payable, to one or both of the following hypothetical investment accounts (“Accounts”) as directed by the participant:

(a)

An account deemed to earn interest at rates established on the first business day of each calendar quarter based upon the published average long-term yields of corporate bonds of “A” rated Industrial Companies appearing in Moody’s Bond Survey or an equivalent Bond Rating Service on such day (the “Interest Account”); and

(b)

An account (the “Air Products Stock Account”) deemed to be invested in Air Products and Chemicals, Inc. common stock, par value $1.00 (“common stock”). The Company shall credit the Air Products Stock Account with that number of units (including fractions) obtained by dividing the amount of such deferred compensation by the Fair Market Value of a share of common stock (i) on the second business day before the date credited to the Air Products Stock Account for retainer and meeting fees, and (ii) on the effective date specified in the Compensation Program for Non-employee Directors for crediting Directors with initial and annual deferred stock awards. For purposes of the Plan, Fair Market Value of a share of common stock on any date (the “valuation date”) shall be equal to

the mean of the high and low sale prices on the New York Stock Exchange, as reported on the composite transaction tape, for such date, or, if no sales were quoted on such date, on the most recent preceding date on which sales were quoted. The units thus calculated are herein referred to as “deferred stock units.”

Nonemployee directors who had served for six years or more within the meaning of the Pension Plan as of January 1, 1997, may elect to have the actuarial present value of his or her accrued pension benefit under the Pension Plan credited to the Air Products Stock Account on or before December 31, 1996. Such Pension Amount shall be credited and converted to deferred stock units in the manner described in Section 5(b) above, as of the business day the Company’s Corporate Secretary’s Office receives an Election Form therefor (by mail or fax); and using such date as the valuation date for determining Fair Market Value.

6.

Earnings on Accounts

Each participant’s Accounts will be credited on behalf of such participant with interest on deferred compensation credited to the Interest Account, and with dividend equivalents on deferred compensation credited to the Air Products Stock Account on behalf of such participant, as provided below, from the date credited until 31 December of the year preceding payment unless payment is made because of death or a Change in Control, in which event interest will be credited until the date of death or the date of termination of service as a director following the Change in Control, respectively.

(a)

Earnings on Interest Account. Interest shall be compounded quarterly.

(b)

Earnings on Air Products Stock Account. Earnings shall be credited quarterly in an amount equal to the dividends payable during the quarter just ended with respect to that number of shares of Air Products Stock equal to the number of deferred stock units credited to the Air Products Stock Account as of the end of the prior quarter. The amount so credited shall then be converted into deferred stock units in the manner described under Section 5(b) above using the quarterly crediting date as the valuation date for determining Fair Market Value.

7.

Time and Manner of Making Elective Deferrals

An election to defer compensation must be made by a director prior to the time such compensation is earned. An election shall continue in effect until the end of the participant’s service to the Company as a director or until the Company is notified in writing of the revocation or modification of the election, whichever shall occur first.

A participant may elect, modify or revoke a prior election to defer compensation by giving written notice to the Company in a form substantially similar to the Election Form attached hereto as Exhibit A (the “Election Form”). Such Election Form shall specify:

(a)

The amount or percentage of compensation to be deferred beginning on a future date specified in the notice until such notice is revoked or modified as to future compensation (the “Elective Deferred Compensation Amount”);

(b)

The percentage of the Elective Deferred Compensation Amount to be credited to the Interest Account and the percentage to be credited to the Air Products Stock Account; and

(c)

The timing of payment, i.e., either a lump-sum payment or a specified number of consecutive annual installment payments (not to exceed ten) of all Elective Deferred Compensation Amounts, and the year in which the lump-sum payment is to be received or the first annual installment payment is to commence.

Any modification or revocation of a prior election described in Section 7(a) or 7(b) above shall relate only to future compensation, and shall not apply to any amounts previously credited to the participant’s account.

8.

Timing of Payment of Mandatory Deferrals

The amount of each Mandatory Deferral (the “Mandatory Deferred Compensation Amount”) will be paid as a lump sum in the first year after the year in which service as a director ends unless the participant has an Elective Deferral in effect at the time of crediting the Mandatory Deferral, in which case the participant’s election as to time of payment of the Elective Deferral will also govern the time of payment of the Mandatory Deferral.

9.

Payment of Deferred Compensation

No payment may be made from the participant’s Accounts in respect of Elective Deferred Compensation Amounts or Mandatory Deferred Compensation Amounts (together, “Deferred Compensation Amount”) except as provided below.

(a)

Changes in Election of Timing of Payment. A participant may change his or her election in regard to the timing of payment of his or her Deferred Compensation Amount as described in Section 7(c) above, by so specifying in an Election Form. Such a change in election of timing of payment will

become effective one year from the date the Election Form is received by the Company unless payments under a prior election commence before such effective date, in which case the new election will expire and the prior election will control the timing of payment of all Deferred Compensation Amounts. Such a change in election of timing of payment, when effective, shall supersede all prior elections and shall apply to all of the participant’s prior and future Deferred Compensation Amounts, until a later election becomes effective.

(b)

Payment Following Termination of Service. The value of each Deferred Compensation Amount credited to the Interest Account of a participant’s Plan account is payable in cash, and the value of each Deferred Compensation Amount credited to the Air Products Stock Account is payable by delivery of a share of common stock for each deferred stock unit credited to the participant’s Account, in either case in a lump sum or in annual installments, in accordance with the participant’s election.

All payments from a participant’s Accounts must be completed by the tenth year after the year in which service as a director terminates. All payments will be made in January of the applicable year or as soon thereafter as reasonably possible. If annual installments are to be paid, the amount of the first payment shall be a fraction of the value of the participant’s Accounts attributable to the particular Deferred Compensation Amount as of the 31 December preceding payment, the numerator of which is one and the denominator of which is the total number of such installments elected. The amount of each subsequent payment shall be a fraction of the value as of the 31 December preceding each subsequent payment, the numerator of which is one and the denominator of which is the total number of installments elected minus the number of installments previously paid as to such Deferred Compensation Amount. The number of shares of common stock to be delivered in payment from the Air Products Stock Account shall be equal to the number of deferred stock units represented by the payment owed, calculated as aforesaid, rounded up to the next whole share of common stock.

(c)

Accelerated Payment. Notwithstanding the deferral period and timing of payment determined in accordance with Sections 9(a) and (b) above, the participant’s Accounts shall be paid on an accelerated basis as follows under the circumstances described below (including, under the circumstances described in Section 9(c)(i) or (iii) below, any deferred stock units which may not yet have vested).

(i)

Payment on Death. In the event of a participant’s death, the value of his or her Accounts (including interest and dividend equivalents)

determined as of the date of death shall be paid in a single cash lump sum to the participant’s estate or designated beneficiary on the earlier of the January 15 or July 15 following such date or as soon thereafter as reasonably possible. The amount of any cash payment in respect of deferred stock units in the Air Products Stock Account shall be determined by multiplying the number of such units, including fractional units, by the Fair Market Value of a share of common stock as of the date of death.

(ii)

Change in Legal Circumstances. In the event of a Change in Legal Circumstance, the Nominating and Corporate Governance Committee of the Board of Directors may, in its sole discretion, authorize the immediate distribution of the participant’s Accounts or appropriate modification to the terms of deferral of a participant domiciled outside of the United States. A Change in Legal Circumstances shall be deemed to occur when, due to a change in the laws or regulations of the United States or the country of domicile, the terms of deferral operate as a disincentive to service on the Board or otherwise become inconsistent with the purpose of the Program.

(iii)

Change in Control. In the event of a “Change in Control” of the Company followed by a participant’s termination of service as a Director of the Company, the value of his or her Acc