exv10w1









 




    Exhibit
    10.1



 




    CONTINGENT
    VALUE RIGHTS AGREEMENT



 



    CONTINGENT VALUE RIGHTS AGREEMENT (this
    “Agreement”) dated as of
 May 7,
    2009, by and among EPIX Pharmaceuticals, Inc., a Delaware
    corporation (the “Company”), and
    U.S. Bank National Association, a national banking
    association organized under the laws of the United States, as
    Rights Agent (the “Rights Agent”), in
    favor of each person (a “Holder”) who
    from time to time holds one or more contingent value rights (the
    “CVRs”) to receive contingent payments,
    in the amounts and subject to the terms and conditions set forth
    herein.



 




    RECITALS



 



    WHEREAS, the Holders are being issued CVRs pursuant to an
    exchange (the “Exchange”) for the
    Company’s 3.00% Convertible Senior Notes due
    June 15, 2024 (the “Notes”) as
    provided in the tender offer statement on the Company’s
    Schedule TO filed with the Commission (as defined below) on
    April 7, 2009; and



 



    WHEREAS, the Company, pursuant to the Exchange, agreed
    (a) to the allocation of (i) a cash payment of
    $180.00, (ii) 339 shares of the Company’s common
    stock, par value $0.01 per share, and (iii) one
    (1) CVR for each $1,000 of aggregate principal amount of
    the Notes tendered by Holders in the Exchange, each such CVR
    payable in an amount equal to the CVR Payment Amount (as defined
    below) and (b) to enter into this Agreement with the Rights
    Agent in favor of each Holder.



 




    AGREEMENT



 



    NOW THEREFORE, in consideration of the mutual promises and
    obligations contained herein, the parties agree as follows:



 




    ARTICLE I

    DEFINITIONS



 



    1.1.  Definitions.  As used in
    this Agreement, the following terms will have the following
    respective meanings:



 



    “Affiliate” means, with respect to any
    Person, any other Person that directly or indirectly through one
    or more intermediaries, controls, is controlled by, or is under
    common control with, such Person. For purposes of this
    definition, “control” of a Person means the power,
    directly or indirectly, to direct or cause the direction of the
    management and policies of such Person whether through holding
    beneficial ownership interests in such other Person, by contract
    or otherwise.



 



    “Agreement” is defined in the Preamble.



 



    “Board of Directors” means the board of
    directors of the Company.



 



    “Board Resolution” means a copy of a
    resolution certified by the secretary or an assistant secretary
    of the Company to have been duly adopted by the Board of
    Directors and to be in full force and effect on the date of such
    certification, and delivered to the Rights Agent.



 



    “Business Day” means any day that is not
    a Saturday, a Sunday or a day on which banks in the State of New
    York or in the State in which the Rights Agent is located are
    generally closed for business.



 



    “Closing Date” means the date of
    consummation of the Exchange.



 



    “Code” means the Internal Revenue Code
    of 1986, as amended from time to time.



 



    “Commission” means the Securities and
    Exchange Commission, or any other federal agency at the time
    administering the Securities Act or the Exchange Act.













 






    “Company” is defined in the Preamble.



 



    “CVRs” is defined in the Preamble.



 



    “CVR Payment Amount” means an amount per
    CVR equal to (a) the Fair Market Value paid to any
    Non-Tendering Holder for each $1,000 of aggregate principal
    amount outstanding of the Notes tendered by such Non-Tendering
    Holder in connection with the CVR Payment Event, minus
    (b) $180.00 plus the Fair Market Value of 339 shares
    of common stock, minus (c) all aggregate CVR Payment
    Amounts per CVR previously received by such Holder. For the
    avoidance of doubt, in no event shall the total of all CVR
    Payment Amounts, when aggregated with the Fair Market Value of
    the consideration received in the Exchange for each $1,000
    principal amount of Notes, exceed $1,000.00. The CVR Payment
    Amount shall be payable, at the Company’s option,
    (i) in cash or (ii) in the same form and type of
    consideration paid to such Non-Tendering Holder in connection
    with the CVR Payment Event. In the event the Company elects to
    pay the CVR Payment Amount in accordance with clause (ii)
    above and the consideration paid consists of a combination of
    cash and property other than cash, the CVR Payment Amount shall
    be paid by the Company in the same proportion of such
    consideration paid to such Non-Tendering Holder in connection
    with the CVR Payment Event.



 



    “CVR Payment Date” means the date set
    forth in Section 2.4(f) on which the CVR Payment
    Amount is to be paid by the Rights Agent to the Holders.



 



    “CVR Payment Event” means any exchange,
    redemption, repurchase, prepayment or similar event by the
    Company on account of, or with respect to, the Notes held by any
    Non-Tendering Holder prior to the applicable Termination Date
    and which results in aggregate cash or non-cash payments to such
    Non-Tendering Holder having a fair market value (as set forth in
    the definitive agreement executed by the Company and the other
    parties in connection with the CVR Payment Event) in excess of
    the sum of (a) $180, (b) the lower of (i) $170
    and (ii) the Exchange Issuance Price (as defined below) and
    (c) the amount of any prior CVR Payment Amounts paid to a
    Holder for each $1,000 of aggregate principal amount outstanding
    of the Notes tendered by such Non-Tendering Holder, other than
    an exchange, redemption, repurchase or payment made solely as a
    result of a Designated Event (as defined in the Indenture). For
    purposes of this definition, notwithstanding the definition of
    Designated Event (as set forth in the Indenture), a Change in
    Control (as defined in the Indenture) that occurs on or prior to
    the date that is three (3) months after the Closing Date
    shall be deemed a CVR Payment Event hereunder.



 



    “CVR Payment Compliance Certificate” is
    defined in Section 2.4(a) of this Agreement.



 



    “CVR Payment Non-Compliance Certificate”
    is defined in Section 2.4(b) of this
    Agreement.



 



    “CVR Register” is defined in
    Section 2.3(b) of this Agreement.



 



    “DTC” means The Depository
    Trust Company.



 



    “Exchange” is defined in the Recitals.



 



    “Exchange Act” means the Securities
    Exchange Act of 1934, and any successor to such statute, and the
    rules and regulations of the Commission issued under such Act,
    as they each may, from time to time, be amended and in effect.



 



    “Fair Market Value” means (a) with
    respect to cash, the amount of cash payments, (b) with
    respect to shares of common stock of the Company, (i) if
    the common stock of the Company is traded on the NASDAQ Global
    Market or NASDAQ Capital Market as of the date of determination,
    each share of common stock will be valued at a price equal to
    the greater of book value or the closing bid price of such share
    on the NASDAQ Global Market or NASDAQ Capital Market, as
    applicable, as of the Closing Date (such price, the
    “Exchange Issuance Price”) and
    (ii) if the common stock is not traded on the NASDAQ Global
    Market or NASDAQ Capital Market as of the date of determination,
    the fair market value of such property as set forth in the
    definitive agreement executed by the Company and the other
    parties in connection with the CVR Payment Event, and
    (c) with respect to property other than cash or common
    stock, the fair market value of such property as set forth in
    the definitive agreement executed by the Company and the other
    parties in connection




    

    2








 






    with the CVR Payment Event; provided, that, such
    determination is reasonable and has been determined in good
    faith. For purposes of clause (b)(i) above, in the event
    (1) Rule 4350(i) of the NASDAQ Rules or any
    interpretation thereof is amended to provide a different
    threshold for purposes of determining whether shares of stock
    are issued at a discount, (2) Rule 4350(i) of the
    NASDAQ Rules or any interpretation thereof is eliminated for
    purposes of determining whether shares of stock are issued at a
    discount or (3) NASDAQ applies Rule 4350(i) of the
    NASDAQ Rules to the Exchange in a manner that would allow a
    lower threshold for determining whether the shares of Common
    Stock issued in the Exchange (including those issued under the
    CVR) are issued at a discount, then the Fair Market Value shall
    be the greater of (x) the amount determined in accordance
    with clause (b)(ii) above and (y) the amount determined in
    accordance with such revised threshold pursuant to (1),
    (2) and (3) above.



 



    “Financing” means any sale by the
    Company of equity or equity-linked securities or other
    securities convertible into equity.



 



    “Governmental Authority” means any
    federal, state, municipal, local or any foreign government,
    governmental, regulatory or administrative authority, agency or
    commission or any court, tribunal, or judicial or arbitral body.



 



    “Holder” is defined in the Preamble.



 



    “Indenture” means the Indenture, dated
    as of June 7, 2004, by and between the Company and
    U.S. Bank National Association, as Trustee, as amended by
    the First Supplemental Indenture, dated as of January 5,
    2007, as may be further amended from time to time.



 



    “Notes” is defined in the Recitals.



 



    “Non-Tendering Noteholder” means any
    holder of Notes who does not tender Notes in the Exchange.



 



    “Officer’s Certificate” means a
    certificate signed by the chief executive officer, president,
    chief financial officer, any vice president, the controller, the
    treasurer or the secretary, in each case of the Company, in his
    or her capacity as such an officer, and delivered to the Rights
    Agent.



 



    “Permitted Transfer” means: a transfer
    of CVRs (a) on death by will or intestacy;
    (b) pursuant to a court order; (c) made by operation
    of law (including a consolidation or merger) or without
    consideration in connection with the dissolution, liquidation or
    termination of any corporation, limited liability company,
    partnership or other entity; (d) in the case of CVRs held
    in book-entry or other similar nominee form, from a nominee to a
    beneficial owner, to the extent allowable by DTC; (e) to
    any Affiliate of the Holder or to any holder of equity interests
    in, or any general or limited partner or member of, such Holder;
    or (f) as provided in Section 2.5.



 



    “Person” means any individual,
    partnership, corporation, company, association, trust, joint
    venture, limited liability company, unincorporated organization,
    entity or division, or any government, governmental department
    or agency or political subdivision thereof.



 



    “Qualified Financing” means one or more
    Financings consummated by the Company after the Closing Date
    which has resulted in aggregate gross cash proceeds of at least
    $10,000,000 to the Company after the Closing Date.



 



    “Rights Agent” is defined in the
    Preamble.



 



    “Securities Act” means the Securities
    Act of 1933, and any successor to such statute, and the rules
    and regulations of the Commission issued under such Act, as they
    each may, from time to time, be amended and in effect.



 



    “Termination Date” means the earlier to
    occur of (a) a Qualified Financing and (b) nine
    (9) months after the Closing Date.




    

    3








 







    ARTICLE II

    CONTINGENT VALUE RIGHTS



 



    2.1.  CVRs.  Each CVR represents the
    right to receive contingent payments equal to the CVR Payment
    Amount. Each Holder shall be entitled to one (1) CVR for
    each $1,000 of aggregate principal amount of the Notes tendered
    by such Holder in the Exchange.



 



    2.2.  Nontransferable.  The CVRs
    shall not be sold, assigned, transferred, pledged, encumbered or
    in any other manner transferred or disposed of, in whole or in
    part, other than through a Permitted Transfer or in connection
    with pledges in connection with bona fide margin accounts or
    other loan or financing agreement secured by the CVRs.



 



    2.3.  No Certificate; Registration; Registration of
    Transfer; Change of Address.



 



    (a) The CVRs shall not be evidenced by a certificate or
    other instrument.



 



    (b) The Rights Agent shall keep a register (the
    “CVR Register”) for the purpose of
    registering CVRs and transfers of CVRs as herein provided. The
    CVR Register will initially show one position for
    Cede & Co. representing all the CVRs held by DTC on
    behalf of the street holders of Notes tendered by such holders
    in the Exchange. The Rights Agent will have no responsibility
    whatsoever directly to the street holders with respect to
    transfers of CVRs unless and until such CVRs are transferred
    into the name of such street holders in accordance with
    Section 2.2, upon which the Rights Agent’s sole
    responsibility to such holders shall be to maintain the CVR
    Register and comply with the payment procedures as expressly
    provided in Section 2.4 herein. In the event the
    Company elects to pay all or a portion of a CVR Payment Amount
    in cash, with respect to any payments to be made under
    Section 2.4 below, the Rights Agent will disburse
    the payment (i) in the case of CVRs held by DTC as the
    registered holder on behalf of the street holders of Notes
    tendered by such holders in the Exchange, by sending one lump
    payment to DTC or (ii) in the case of CVRs held in the name
    of a beneficial owner, by sending the payment to such beneficial
    owner, provided that such beneficial owner has been added to the
    CVR Register pursuant to Section 2.3(c) and has provided
    the Rights Agent its address and, if applicable, wire
    instructions. In the event the Company elects to pay all or a
    portion of a CVR Payment Amount in property other than cash,
    with respect to any payments to be made under
    Section 2.4 below, the Company will, or will cause
    Computershare Trust Company, as the transfer agent for the
    common stock of the Company to, as applicable, disburse the
    payment (A) in the case of CVRs held by DTC as the
    registered holder on behalf of the street holders of Notes
    tendered by such holders in the Exchange, by sending one global
    security registered in the name of or held by DTC or its nominee
    or (B) in the case of CVRs held in the name of a beneficial
    owner or in the case of payment in a form other than a DTC
    eligible security, by sending the payment
    and/or
    security, as applicable, to such beneficial owner.



 



    The Rights Agent will have no responsibilities whatsoever with
    regards to distribution of payments by DTC to such street
    holders. The Rights Agent shall have no liability for the
    actions or inactions of Computershare Trust Company
    hereunder.



 



    (c) Subject to the restrictions on transferability set
    forth in Section 2.2, every request made to transfer
    a CVR must be in writing and accompanied by a written instrument
    of transfer in the form attached hereto as
    Exhibit A, duly executed by the Holder thereof, his
    attorney duly authorized in writing, personal representative or
    survivor and, in the case of a transfer to a person that is not
    a DTC participant, by the DTC participant from which the CVRs
    are being transferred. Upon receipt of such written notice, the
    Rights Agent shall, subject to its reasonable determination that
    the transfer instrument is in proper form, register the transfer
    of the CVRs in the CVR Register. All duly transferred CVRs
    registered in the CVR Register shall be the valid obligations of
    the Company, evidencing the same right, and shall entitle the
    transferee to the same benefits and rights under this Agreement,
    as those held by the transferor. No transfer of a CVR shall be
    valid until registered in the CVR Register, and any transfer not
    duly registered in the CVR Register will be void ab initio. Any
    transfer or assignment of the CVRs shall be without charge
    (other than the cost of any transfer tax) to the Holder. In the
    case of a transfer to a Person that is not a DTC participant,
    the Rights Agent shall direct DTC to update the position of the
    DTC participant from which such Permitted Transfer was made.




    

    4








 






    (d) A Holder may make a written request to the Rights Agent
    to change such Holder’s address of record in the CVR
    Register. The written request must be duly executed by the
    Holder. Upon receipt of such written notice, the Rights Agent
    shall promptly record the change of address in the CVR Register.



 



    2.4.  Payment Procedures.



 



    (a) If a CVR Payment Event shall occur, then within ten
    (10) Business Days following the occurrence of such CVR
    Payment Event the Company shall deliver to the Rights Agent
    (i) a certificate (the “CVR Payment Compliance
    Certificate”) certifying the date of the
    satisfaction of the CVR Payment Event and that the Holders are
    entitled to receive the applicable CVR Payment Amount as
    calculated and set forth in such certificate and (ii) the
    aggregate amount of the CVR Payment Amount payable to the
    Holders.



 



    (b) If a CVR Payment Event has not occurred prior to the
    Termination Date, then, no later than five (5) Business
    Days after the Termination Date, the Company shall deliver to
    the Rights Agent a certificate (the “CVR Payment
    Non-Compliance Certificate”) certifying that no CVR
    Payment Event has occurred, and as a result the Holders are not
    entitled to receive any CVR Payment Amount.



 



    (c) The Rights Agent shall, within three (3) Business
    Days of receipt from the Company of a CVR Payment Compliance
    Certificate or CVR Payment Non-Compliance Certificate, as
    applicable, send each Holder at its address listed in the CVR
    Register a copy of each certificate delivered by the Company
    pursuant to this Section 2.4.



 



    (d) Upon written notice by any Holder or Holders of at
    least 20% in the aggregate of the outstanding CVRs received by
    the Rights Agent within ten (10) Business Days after
    distribution by the Rights Agent of a CVR Payment Compliance
    Certificate or a CVR Payment Non-Compliance Certificate (the
    “Objection Period”), the Rights Agent
    shall forward such notice to the Company, which notice must
    certify that such Holder or Holders hold at least 20% in the
    aggregate of the outstanding CVRs, and further shall,
    (i) specify that such Holder or Holders object to the
    determination of the Company (A) that a CVR Payment Event
    did not occur or (B) of the aggregate amount of the CVR
    Payment Amount payable to the Holders, as applicable and
    (ii) state in reasonable detail the basis upon which such
    Holder or Holders have determined that (i) a CVR Payment
    Event has occurred on or prior to the Termination Date or
    (ii) the Company’s determination of the aggregate
    amount of the CVR Payment Amount is incorrect (a
    “Notice of Objection”). Any dispute
    arising from a Notice of Objection related to a CVR Payment
    Non-Compliance Certificate shall be resolved by the Company and
    Holder(s) in accordance with Section 6.6 and any
    dispute arising from a Notice of Objection related to a CVR
    Payment Compliance Certificate shall be resolved by the Company
    and Holder(s) in accordance with the procedures set forth in
    Section 6.7, which decision shall be binding on the
    parties hereto and the Holders. The Company and Holder(s) shall
    provide the Rights Agent with joint written direction specifying
    the resolution of any dispute pursuant to this
    Section 2.4(d), and the Rights Agent shall act in
    accordance with such direction.



 



    (e) If a Notice of Objection with respect to a CVR Payment
    Non-Compliance Certificate has not been received by the Rights
    Agent within the Objection Period, then the Holders shall have
    no right to receive the CVR Payment Amount, and the Company and
    the Rights Agent shall have no further obligations with respect
    to the CVR Payment Amount.



 



    (f) If the Company delivers a CVR Payment Compliance
    Certificate to the Rights Agent or if a CVR Payment Amount is
    determined to be payable pursuant to Section 2.4(d) above,
    the Company shall establish a CVR Payment Date that is within
    twenty (20) calendar days of the date of the CVR Payment
    Compliance Certificate or the date of final determination
    pursuant to Section 2.4(d) above, as applicable, and shall
    notify the Rights Agent of such date in writing. In the event
    the Company elects to pay all or a portion of a CVR Payment
    Amount in cash, at least three (3) Business Days prior to
    such CVR Payment Date, the Company shall cause the applicable
    cash portion of such CVR Payment Amount to be delivered to the
    Rights Agent, who will in turn, on the CVR Payment Date, or if
    such date is not a Business Day, the following Business Day,
    distribute the applicable cash portion of such CVR Payment
    Amount to the Holders in accordance with
    Section 2.3(b) (the amount to which each Holder is
    entitled to receive will be calculated by the Company and based
    on the applicable cash portion of such CVR Payment Amount
    multiplied by the number of CVRs held




    

    5








 






    by such Holder as reflected on the CVR Register) by check mailed
    to the address of each Holder as reflected in the CVR Register
    as of the close of business on the last Business Day prior to
    such CVR Payment Date. In the event the Company elects to pay
    all or a portion of a CVR Payment Amount in property other than
    cash, on the CVR Payment Date, or if such date is not a Business
    Day, the following Business Day, the Company shall distribute or
    cause to be distributed by Computershare Trust Company, as
    the transfer agent for the common stock of the Company to, as
    applicable, the applicable non-cash portion of such CVR Payment
    Amount to the Holders in accordance with
    Section 2.3(b) (the amount to which each Holder is
    entitled to receive will be calculated by the Company and based
    on the applicable non-cash portion of such CVR Payment Amount
    multiplied by the number of CVRs held by such Holder as
    reflected on the CVR Register) by property other than cash
    mailed to the address of each Holder as reflected in the CVR
    Register as of the close of business on the last Business Day
    prior to such CVR Payment Date. Any funds held by the Rights
    Agent hereunder shall remain uninvested.



 



    (g) Tax Withholding.



 



    (i) The Rights Agent shall be entitled to deduct and
    withhold, or cause to be deducted or withheld, from each CVR
    Payment Amount otherwise payable pursuant to this Agreement,
    such amounts as it is required to deduct and withhold with
    respect to the making of such payment under the Code, or any
    provision of state, local or foreign tax law. To the extent that
    amounts are so withheld and paid over to or deposited with the
    relevant Governmental Authority, such withheld amounts shall be
    treated for all purposes of this Agreement as having been paid
    to the Holder in respect of which such deduction and withholding
    was made.



 



    (ii) Each Holder shall deliver to the Rights Agent and the
    Company two properly completed and duly executed copies of
    either U.S. Internal Revenue Service
    Form W-9,
    W-8BEN,
    W-8ECI or
    W-8IMY or
    any subsequent versions thereof or successors thereto, in each
    case claiming complete exemption from U.S. Federal
    withholding and U.S. Federal backup withholding tax, as
    applicable, with respect to payments of the CVR Payment Amount.
    In addition, in the case of a Holder claiming exemption from
    U.S. Federal withholding tax under Section 871(h) or
    881(c) of the Code, such Holder hereby represents that such
    Holder is not a bank for purposes of Section 881(c) of the
    Code, is not a 10-percent shareholder (within the meaning of
    Section 871(h)(3)(B) of the Code) of the Company and is not
    a controlled foreign corporation related to the Company (within
    the meaning of Section 864(d)(4) of the Code), and such
    Holder agrees that it shall promptly notify the Rights Agent and
    the Company in the event any such representation is no longer
    accurate. Such forms shall be delivered by each Holder on or
    before the date of this Agreement, or upon becoming a Holder
    pursuant to Section 2.3(c). In the event that any
    previously supplied tax forms become invalid or obsolete, such
    Holder shall notify the Rights Agent and the Company of the
    invalidity or obsolescence of such forms, and to the extent
    permitted by then applicable law, such Holder shall deliver
    updated or new tax forms. In addition, each Holder shall deliver
    such forms within 20 days after receipt of a written
    request therefor from the Rights Agent or the Company.



 



    (iii) Should the Rights Agent become liable for the payment
    of taxes, including withholding taxes relating to any funds,
    including interest and penalties thereon, held by it pursuant to
    this Agreement or any payment made hereunder, the Company agrees
    to reimburse the Rights Agent for such taxes, interest and
    penalties upon demand.



 



    (h) Any portion of any CVR Payment Amount that remains
    undistributed to the Holders for six (6) months after any
    CVR Payment Date shall be delivered by the Rights Agent to the
    Company and any Holder shall thereafter look only to the Company
    for payment of such CVR Payment Amount, but shall have no
    greater rights against the Company than may be accorded to
    general unsecured creditors of the Company under applicable law,
    and the Rights Agent shall have no further duties or obligations
    hereunder.



 



    (i) Neither the Company nor the Rights Agent shall be
    liable to any person in respect of any CVR Payment Amount
    delivered to a public official pursuant to any applicable
    abandoned property, escheat or similar law. If any CVR Payment
    Amount has not been paid prior to two (2) years after the
    applicable CVR Payment Date (or immediately prior to such
    earlier date on which the CVR Payment Amount would otherwise
    escheat to or become the property of any Governmental
    Authority), any such CVR Payment Amount shall, to




    

    6








 






    the extent permitted by applicable law, become the property of
    the Company, free and clear of all claims or interest of any
    person previously entitled thereto.



 



    2.5.  Ability to Abandon the
    CVR.  The Holder of a CVR may at any time at its
    option abandon all of its remaining rights in such CVR by
    transferring the CVR to the Company without consideration
    therefor. Nothing in this Section 2.5 is intended to
    prohibit the Company from offering to acquire CVRs for
    consideration in its sole discretion; provided that any such
    offer shall be made to all the Holders of CVRs under
    substantially similar terms.



 




    ARTICLE III

    THE RIGHTS AGENT



 



    3.1.  Certain Duties And
    Responsibilities.  The Rights Agent and its
    directors, officers and employees shall not have any liability
    to Holders and their permitted successors and assigns hereunder
    for any actions taken or not taken in connection with this
    Agreement. The Rights Agent and its directors, officers and
    employees shall not have any liability to the Company for any
    actions taken or not taken in connection with this Agreement,
    except to the extent of its willful misconduct, bad faith or
    gross negligence. No provision of this Agreement shall require
    the Rights Agent to expend or risk its own funds or otherwise
    incur any financial liability in the performance of any of its
    duties hereunder or in the exercise of any of its rights or
    powers. In no event shall the Rights Agent or its directors,
    officers and employees be liable to a Holder, the Company or any
    third party for special, indirect or consequential damages, or
    lost profits, arising in connection with this Agreement.



 



    3.2.  Certain Rights of Rights
    Agent.  The Rights Agent undertakes to perform
    such duties and only such duties as are specifically set forth
    in this Agreement, and no implied covenants or obligations shall
    be read into this Agreement against the Rights Agent. In
    addition:



 



    (a) the Rights Agent may rely and shall be protected in
    acting or refraining from acting upon any resolution,
    certificate, statement, instrument, opinion, report, notice,
    request, direction, consent, order or other paper or document
    believed by it to be genuine and to have been signed or
    presented by the proper party or parties;



 



    (b) whenever the Rights Agent shall deem it desirable that
    a matter be proved or established prior to taking, suffering or
    omitting any action hereunder, the Rights Agent may, in the
    absence of bad faith, gross negligence or willful misconduct on
    its part, rely upon an Officer’s Certificate;



 



    (c) the Rights Agent may engage and consult with counsel of
    its selection and the written advice of such counsel or any
    opinion of counsel shall be full and complete authorization and
    protection in respect of any action taken, suffered or omitted
    by it hereunder in good faith and in reliance thereon;



 



    (d) the permissive rights of the Rights Agent to do things
    enumerated in this Agreement shall not be construed as a duty;



 



    (e) the Rights Agent shall not be required to give any note
    or surety in respect of the execution of such powers or
    otherwise in respect of the premises;



 



    (f) the Company agrees to indemnify the Rights Agent for,
    and hold the Rights Agent harmless against, any loss, liability,
    claim, demands, suits or expense arising out of or in connection
    with the Rights Agent’s duties under this Agreement,
    including the costs and expenses (including reasonable
    attorney’s fees) of defending the Rights Agent against any
    claims, charges, demands, suits or loss, unless such loss shall
    have been determined by a court of competent jurisdiction to be
    a result of the Rights Agent’s gross negligence, bad faith
    or willful or intentional misconduct; and



 



    (g) the Company agrees (i) to pay the fees and
    expenses of the Rights Agent in connection with this Agreement
    as agreed upon in writing by the Rights Agent and the Company,
    and (ii) to reimburse the Rights Agent for all taxes and
    governmental charges, reasonable expenses and other charges of
    any kind and nature incurred by the Rights Agent in the
    execution of this Agreement (other than taxes measured




    

    7








 






    by the Rights Agent’s net income). The Rights Agent shall
    also be entitled to reimbursement from the Company for all
    reasonable and necessary out-of-pocket expenses (including
    reasonable attorneys’ fees) paid or incurred by it in
    connection with the administration by the Rights Agent of its
    duties hereunder.



 



    3.3.  Resignation And Removal; Appointment of
    Successor.



 



    (a) The Rights Agent may resign at any time by giving
    written notice thereof to the Company specifying a date when
    such resignation shall take effect, which notice shall be sent
    at least sixty (60) days prior to the date so specified.
    The Company shall have the right to remove the Rights Agent at
    any time by a Board Resolution specifying a date when such
    removal shall take effect. Notice of such removal shall be given
    by the Company to the Rights Agent, which notice shall be sent
    at least sixty (60) days prior to the date so specified.



 



    (b) If the Rights Agent shall resign, be removed or become
    incapable of acting, the Company, by a Board Resolution, shall
    promptly appoint a qualified successor Rights Agent. The
    successor Rights Agent so appointed shall, forthwith upon its
    acceptance of such appointment in accordance with this
    Section 3.3(b), become the successor Rights Agent.



 



    (c) The Company shall give notice of each resignation and
    each removal of a Rights Agent and each appointment of a
    successor Rights Agent by mailing written notice of such event
    by first-class mail, postage prepaid, to the Holders as their
    names and addresses appear in the CVR Register. Each notice
    shall include the name and address of the successor Rights
    Agent. If the Company fails to send such notice within ten
    (10) days after acceptance of appointment by a successor
    Rights Agent, the successor Rights Agent shall cause the notice
    to be mailed at the expense of the Company.



 



    3.4.  Acceptance of Appointment By
    Successor.  Every successor Rights Agent appointed
    hereunder shall execute, acknowledge and deliver to the Company
    and to the retiring Rights Agent an instrument accepting such
    appointment and a counterpart of this Agreement, and thereupon
    such successor Rights Agent, without any further act, deed or
    conveyance, shall become vested with all the rights, powers,
    trusts and duties of the retiring Rights Agent; but, on request
    of the Company or the successor Rights Agent, such retiring
    Rights Agent shall execute and deliver an instrument
    transferring to such successor Rights Agent all the rights,
    powers and trusts of the retiring Rights Agent.



 




    ARTICLE IV

    COVENANTS



 



    4.1.  List of Holders.  The Company
    shall furnish or cause to be furnished to the Rights Agent in
    such form as the Company receives from its transfer agent (or
    other agent performing similar services for the Company), the
    names and addresses of the Holders within ten (10) Business
    Days of the date hereof.



 



    4.2.  Payment of CVR Payment
    Amount.  The Company shall duly and promptly
    deposit with the Rights Agent for payment to each Holder the
    applicable CVR Payment Amount, if any, in the manner provided
    for in Section 2.4 and in accordance with the terms
    of this Agreement.



 



    4.3.  Ability to Make Prompt
    Payment.  The Company shall not enter into any
    agreement that would restrict the Company’s right to be
    able to promptly make payments to the Holders under this
    Agreement or otherwise restrict the Company’s ability to
    fund such payments.



 




    ARTICLE V

    AMENDMENTS



 



    5.1.  Amendments Without Consent of Holders.



 



    (a) Without the consent of any Holders or the Rights Agent,
    the Company, when authorized by a Board Resolution, at any time
    and from time to time, may enter into one or more amendments
    hereto, to evidence the succession of another Person to the
    Company and the assumption by any such successor of the
    covenants




    

    8








 






    of the Company herein as provided in Section 6.4;
    provided that no such amendment shall affect the rights,
    immunities, duties or indemnities of the Rights Agent without
    its prior written consent.



 



    (b) Without the consent of any Holders, the Company, when
    authorized by a Board Resolution, and the Rights Agent, in the
    Rights Agent’s sole and absolute discretion, at any time
    and from time to time, may enter into one or more amendments
    hereto, for any of the following purposes:



 



    (i) to evidence the succession of another Person as a
    successor Rights Agent and the assumption by any successor of
    the covenants and obligations of the Rights Agent herein;



 



    (ii) to add to the covenants of the Company such further
    covenants, restrictions, conditions or provisions as the Board
    of Directors and the Rights Agent shall consider to be for the
    protection of the Holders; provided that, in each case, such
    provisions shall not adversely affect the interests of the
    Holders;



 



    (iii) to cure any ambiguity, to correct or supplement any
    provision herein that may be defective or inconsistent with any
    other provision herein, or to make any other provisions with
    respect to matters or questions arising under this Agreement;
    provided that, in each case, such provisions shall not adversely
    affect the interests of the Holders;



 



    (iv) as may be necessary or appropriate to ensure that the
    CVRs are not subject to registration under the Securities Act or
    the Exchange Act; provided that such provisions shall not
    adversely affect the interests of the Holders; or



 



    (v) any other amendments hereto for the purpose of adding,
    eliminating or changing any provisions of this Agreement, unless
    such addition, elimination or change is adverse to the interests
    of the Holders.



 



    (c) Promptly after the execution by the Company and the
    Rights Agent of any amendment pursuant to the provisions of this
    Section 5.1, the Company shall mail (or cause the
    Rights Agent to mail) a notice thereof by first class mail to
    the Holders at their addresses as they shall appear on the CVR
    Register, setting forth in general terms the substance of such
    amendment.



 



    5.2.  Amendments With Consent of Holders.



 



    (a) Subject to Section 5.1 (which amendments
    pursuant to Section 5.1 may be made without the
    consent of the Holders), with the consent of the Holders of not
    less than a majority of the outstanding CVRs, whether evidenced
    in writing or taken at a meeting of the Holders, the Company,
    when authorized by a Board Resolution, and the Rights Agent may
    enter into one or more amendments hereto for the purpose of
    adding, eliminating or changing any provisions of this
    Agreement, even if such addition, elimination or change is
    materially adverse to the interest of the Holders.



 



    (b) Promptly after the execution by the Company and the
    Rights Agent of any amendment pursuant to the provisions of this
    Section 5.2, the Company shall mail (or cause the
    Rights Agent to mail) a notice thereof by first class mail to
    the Holders at their addresses as they shall appear on the CVR
    Register, setting forth in general terms the substance of such
    amendment.



 



    (c) No consideration shall be offered or paid by or on
    behalf of the Company to any Holder to amend or consent to a
    waiver or modification of any provision of any of this Agreement
    or the CVRs unless the same consideration also is offered to all
    other Holders.



 



    5.3.  Execution of Amendments.  In
    executing any amendment permitted by this Article V,
    the Rights Agent shall be entitled to receive, and shall be
    fully protected in relying upon, an opinion of counsel selected
    by the Company stating that the execution of such amendment is
    authorized or permitted by this Agreement. The Rights Agent may,
    but is not obligated to, enter into any such amendment that
    affects the Rights Agent’s own rights, privileges,
    covenants or duties under this Agreement or otherwise.



 



    5.4.  Effect of Amendments.  Upon the
    execution of any amendment under this Article V,
    this Agreement shall be modified in accordance therewith, such
    amendment shall form a part of this Agreement for all purposes
    and every Holder shall be bound thereby.




    

    9








 







    ARTICLE VI

    OTHER PROVISIONS OF GENERAL APPLICATION



 



    6.1.  Notices To Rights Agent and the
    Company.  Any request, demand, authorization,
    direction, notice, consent, waiver or other document provided or
    permitted by this Agreement shall be sufficient for every
    purpose hereunder if in writing and sent by facsimile
    transmission, delivered personally, or by certified or
    registered mail (return receipt requested and first-class
    postage prepaid) or sent by a nationally recognized overnight
    courier (with proof of service), addressed as follows:



 



    (a) if to the Rights Agent, addressed to it at
    U.S. Bank, National Association, One Federal Street,
    10th Floor, Boston, MA 02110, Attention: Karen Beard, or at
    any other address previously furnished in writing to the Holders
    and the Company by the Rights Agent; or



 



    (b) if to the Company, addressed to it at EPIX
    Pharmaceuticals, Inc., 4 Maguire Road, Lexington, MA 02421,
    Attention: Chief Financial Officer, or at any other address
    previously furnished in writing to the Rights Agent and the
    Holders by the Company, with a copy to Goodwin Procter LLP,
    Exchange Place, 53 State Street, Boston, MA 02109, Attention:
    Edward A. King, Esq.



 



    6.2.  Notice To Holders.  Where this
    Agreement provides for notice to Holders, such notice shall be
    sufficiently given (unless otherwise herein expressly provided)
    if in writing and mailed, first-class postage prepaid, to each
    Holder affected by such event, at his, her or its address as it
    appears in the CVR Register, not later than the latest date, and
    not earlier than the earliest date, prescribed for the giving of
    such notice with a copy, which shall not constitute notice, to
    Schulte Roth & Zabel LLP, 919 Third Avenue, New York,
    NY 10022, Attention: Eleazer N. Klein, Esq. In any case
    where notice to Holders is given by mail, neither the failure to
    mail such notice, nor any defect in any notice so mailed, to any
    particular Holder shall affect the sufficiency of such notice
    with respect to other Holders.



 



    6.3.  Effect of Headings.  The
    headings contained in this Agreement are for convenience
    purposes only and will not in any way affect the meaning or
    interpretation hereof.



 



    6.4.  Successors and Assigns.  This
    Agreement will be binding upon and inure to the benefit of the
    successors and assigns of the respective parties hereto.



 



    6.5.  Benefits of Agreement.  Nothing
    in this Agreement, express or implied, shall give to any Person
    (other than the parties hereto, the Holders and their permitted
    successors and assigns hereunder) any benefit or any legal or
    equitable right, remedy or claim under this Agreement or under
    any covenant or provision herein contained, all such covenants
    and provisions being for the sole benefit of the parties hereto,
    the Holders and their permitted successors and assigns.



 



    6.6.  Governing Law.  This Agreement,
    the rights of the parties and all claims, actions, causes of
    action, suits, litigation, controversies, hearings, charges,
    complaints or proceedings arising in whole or in part under or
    in connection herewith, will be governed by and construed in
    accordance with the domestic substantive laws of the State of
    New York, without giving effect to any choice or conflict of law
    provision or rule that would cause the application of the laws
    of any other jurisdiction. Each party hereby irrevocably submits
    to the non-exclusive jurisdiction of the state and federal
    courts sitting in The City of New York, Borough of Manhattan,
    for the adjudication of any dispute hereunder or in connection
    herewith or with any transaction contemplated hereby or
    discussed herein, and hereby irrevocably waives, and agrees not
    to assert in any suit, action or proceeding, any claim that it
    is not personally subject to the jurisdiction of any such court,
    that such suit, action or proceeding is brought in an
    inconvenient forum or that the venue of such suit, action or
    proceeding is improper. Each party hereby irrevocably waives
    personal service of process and consents to process being served
    in any such suit, action or proceeding by mailing a copy thereof
    to such party at the address for such notices to it under this
    Agreement and agrees that such service shall constitute good and
    sufficient service of process and notice thereof. Nothing
    contained herein shall be deemed to limit in any way any right
    to serve process in any manner permitted by law. EACH PARTY
    HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
    TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
    HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
    AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.




    

    10








 






    6.7.  Dispute of the CVR Payment
    Amount.  If any Holder and the Company are unable
    to agree upon the determination or calculation of the CVR
    Payment Amount within three (3) Business Days of receipt of
    the applicable Notice of Objection, within two (2) Business
    Days thereafter the Company will submit via facsimile the
    disputed determination of the CVR Payment Amount to an
    independent, reputable investment bank selected by the Company
    and approved by such Holder. The Company shall cause the
    investment bank to perform the determinations or calculations
    and notify the Company and the Holder of the results no later
    than ten (10) Business Days from the time it receives the
    disputed determinations or calculations. The cost of the
    investment bank shall be paid by the party whose estimate of the
    disputed CVR Payment Amount differs most greatly from the
    determination of the investment bank. Such investment
    bank’s determination or calculation, as the case may be,
    shall be binding upon all parties absent demonstrable error.



 



    6.8.  Legal Holidays.  In the event
    that the CVR Payment Date shall not be a Business Day, then,
    notwithstanding any provision of this Agreement to the contrary,
    any payment required to be made in respect of the CVRs on such
    date need not be made on such date, but may be made on the next
    succeeding Business Day with the same force and effect as if
    made on the CVR Payment Date.



 



    6.9.  Severability Clause.  If any
    provision of this Agreement is found by any court of competent
    jurisdiction to be invalid or unenforceable, the provision that
    would otherwise be prohibited, invalid or unenforceable shall be
    deemed amended to apply to the broadest extent that it would be
    valid and enforceable, and the invalidity or unenforceability of
    such provision shall not affect the validity of the remaining
    provisions of this Agreement so long as this Agreement as so
    modified continues to express, without material change, the
    original intentions of the parties as to the subject matter
    hereof and the prohibited nature, invalidity or unenforceability
    of the provision(s) in question does not substantially impair
    the respective expectations or reciprocal obligations of the
    parties or the practical realization of the benefits that would
    otherwise be conferred upon the parties. The parties will
    endeavor in good faith negotiations to replace the prohibited,
    invalid or unenforceable provision(s) with a valid provision(s),
    the effect of which comes as close as possible to that of the
    prohibited, invalid or unenforceable provision(s).



 



    6.10.  Counterparts.  This Agreement
    may be executed in any number of counterparts, each of which
    will be deemed an original, but all of which together will
    constitute but one and the same instrument.



 



    6.11.  Termination.  This Agreement
    shall be terminated and of no force or effect, the parties
    hereto shall have no liability hereunder, and no payments shall
    be required to be made on the Termination Date. The provisions
    of Section 3.2 and 3.3 hereof shall survive the termination
    of this Agreement or the resignation or removal of the Rights
    Agent.



 



    6.12.  Entire Agreement.  This
    Agreement, together with any documents, instruments and
    certificates explicitly referred to herein, constitutes the
    entire agreement among the parties hereto with respect to the
    subject matter hereof and supersedes any and all prior
    discussions, negotiations, proposals, undertakings,
    understandings and agreements, whether written or oral, with
    respect thereto. No provision of this Agreement may be amended
    except by a written agreement executed by the parties and in
    compliance with the terms of Article V.



 




    [REMAINDER
    OF PAGE INTENTIONALLY LEFT BLANK]




    

    11








 






    IN WITNESS WHEREOF, the parties have caused this Contingent
    Value Rights Agreement to be executed by their duly authorized
    representative as of the date first above written.




THE COMPANY:



	 	 	 	 	 
	 	EPIX PHARMACEUTICALS, INC.

 
	 
	 	By:  	/s/ Kim C. Drapkin
 	 
	 	 	Name:  	Kim C. Drapkin 	 
	 	 	Title:  	CFO 	 
	 








THE RIGHTS AGENT:





	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION,

as Rights Agent 



	 
	 	By:  	/s/
Karen R. Beard
 	 
	 	 	Name:  	Karen R. Beard 	 
	 	 	Title:  	Vice President 	 
	 








    [SIGNATURE
    PAGES TO CONTINGENT VALUE RIGHTS AGREEMENT]




    

    12








 







    Exhibit A



 





    Permitted
    Transfer Form



 



    Reference is made to the Contingent Value Rights Agreement dated
    as of
May 7,
    2009 by and between EPIX Pharmaceuticals, Inc., a Delaware
    corporation (the “Company”), and
    U.S. Bank National Association, a national banking
    association organized under the laws of the United States, as
    Rights Agent (the “CVR Agreement”).
    Capitalized terms not all capitalized terms used but not
    otherwise defined herein will have the meanings ascribed thereto
    in the CVR Agreement.



 



    The undersigned hereby represents, in his, her or its capacity
    listed below, that
    [          #          ]
    CVRs (the “Transferred CVRs”) shall be
    transferred from the undersigned’s account held by [NAME
    OF DTC PARTICIPANT] to [NAME OF TRANSFEREE] in
    reliance on the following Permitted Transfer (check one):



 


	 	 	 	 	 
	
 
	
    o
    
	
 
	
 
	

    1. Transfer upon death of the beneficial holder, by will or
    intestacy (evidence of which is attached to this form)



	
 
	
    o
    
	
 
	
 
	

    2. Transfer pursuant to a court order (a copy of which is
    attached to this form)



	
 
	
    o
    
	
 
	
 
	

    3. Transfer made by operation of law (including a
    consolidation or merger) or without consideration in connection
    with the dissolution, liquidation or termination of any
    corporation, limited liability company, partnership or other
    entity (evidence of which is attached to this form)



	
 
	
    o
    
	
 
	
 
	

    4. Transfer of CVRs held in book-entry or other similar
    nominee form that are being transferred from a nominee to a
    beneficial owner, to the extent allowable by DTC



	
 
	
    o
    
	
 
	
 
	

    5. Transfer of CVRs to the Company without consideration
    therefore.



	
 
	
    o
    
	
 
	
 
	

    6. Transfer to an Affiliate of the Holder or to a holder of
    equity interests in, or a general or limited partner or member
    of, such Holder.











 



    The undersigned hereby provides the following information to the
    Rights Agent regarding the transferee:



 



    Name: ­
    ­



 


			
	    Address: 
	
    

	 



 





 



    Telephone: ­
    ­



 



    Fax: ­
    ­



 



    E-Mail: ­
    ­



 



    Wire Instructions (if any payment pursuant to a CVR is made in
    cash and via wire transfer):



 





 





 





 



    The information contained in this Permitted Transfer Form is
    true and correct in all respects.



 



    Name: ­
    ­



 



    Capacity (if
    applicable): ­
    ­




    

    1 of 2








 







    CONSENT
    OF DTC PARTICIPANT



 



    The DTC participant that currently holds the Transferred CVRs
    must sign the following acknowledgement:



 



    [NAME OF DTC PARTICIPANT] hereby acknowledges and agrees
    that, in connection with the transfer of the Transferred CVRs to
    the beneficial owner of the Transferred CVRs, DTC will reduce
    the number of CVRs held in book-entry or other similar nominee
    form by [NAME OF DTC PARTICIPANT] by the number of
    Transferred CVRs.



 



    [NAME OF DTC PARTICIPANT]




 



    By: ­
    ­



 



    Its: ­
    ­




    

    2 of 2