Document:

EXHIBIT 10.1

 

	
  Sonus
  Networks, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
  7 Technology Park Drive, Westford, MA 01886

  

 

December 11, 2008

Mr. Gurudutt Pai

 

Dear Guru:

 

I am pleased to provide you in this letter
(the “Agreement”) with the terms and conditions of our offer of employment to you
by Sonus Networks, Inc. (the “Company”).

 

1.                                       Position.  The Company agrees to employ
you as Senior Vice President, reporting to the President and Chief Executive
Officer.  As the Company’s organization
evolves, in addition to performing duties and responsibilities associated with
the position of Senior Vice President, you may be assigned other Executive
duties and responsibilities as the Company may determine.

 

As a full-time employee of the Company, you will be
expected to devote your full business time and energies to the business and
affairs of the Company.

 

1.                                       Commencement Date/Nature of Relationship.  Your
employment shall commence no later than December 15, 2008 (the “Commencement
Date”).  Subject to the severance and
other provisions of Section 11 below, your employment shall not be for any
specified period of time.  Employment at
Sonus Networks, Inc. is “at will” and either you or the Company may
terminate the employment relationship at any time and for any reason or no
reason, subject to the provisions of Section 11 below.

 

2.                                       Base Compensation.  Your
initial base salary (“Base Salary”) will be at the annualized rate of $275,000,
less applicable state and federal withholdings, paid twice monthly in
accordance with the Company’s normal payroll practices.  The Company will review your Base Salary on
an annual basis and such base salary may be adjusted at the discretion of the
Compensation Committee of the Board of Directors; provided that you may elect
to terminate your employment for Good Reason under Section 12(b)(A) below
if the Compensation Committee reduces your Base Salary.

 

3.                                       Target Bonus.  You
will be eligible to participate in the Officer Bonus Program during each year
you are employed by the Company with a target bonus of at least 50% of your
then-current annual base salary (“Target Bonus”).  For 2008, your Target Bonus will be $6,404.11
and your pro rata Target Bonus for 2008 is guaranteed and payable by March 15,
2009.  Specific objectives for your
Target Bonus for 2009 will be agreed upon with the Compensation Committee of
the Board of Directors within the first sixty (60) days of your employment for
2009 and on or about January 1 of each subsequent calendar year with
respect to an award for such year.  Your
annual bonus shall be paid as soon as practicable following the Company’s
public disclosure of its financial results for the applicable bonus year.

 

4.                                       Stock Option Grants.  You
will be granted non-qualified options to purchase 300,000 shares of common
stock under the Company’s 2007 Stock Plan, subject to the terms of the Plan and
the terms of the Company’s stock option agreement which shall reflect the terms
of this Agreement.  The grant date will
be on the earliest 15th day of a month that next follows your Commencement Date
or the first 

 

1

 

business day thereafter if that day is not a
business day.  The per share exercise
price will be the per share closing price of the Company’s common stock on the
grant date (“2008 Option Exercise Price”). 
Subject to the provisions of this Agreement, the option shall vest and
become exercisable as follows: (A) 25% of the shares (75,000 shares) shall
vest on the first anniversary of the Commencement Date and, (B) the
remaining 75% of the shares (225,000 shares) shall vest in equal monthly
increments of 2.0833% of the shares (6,250 shares per month) thereafter through
the fourth anniversary of the Commencement Date.

 

5.                                       Restricted Stock Grants.  You
will be granted Restricted Shares of the Company’s common stock, $0.001 par
value per share (“Restricted Shares”) as follows:

 

(a)                                  You will be granted 300,000 shares of the
Company’s common stock under the Company’s 2007 Stock Plan, subject to the
terms of the Plan and the Company’s restricted stock agreement, which shall
reflect the terms of this Agreement.  The
grant date will be on the earliest 15th day of a month that next follows your
Commencement Date or the first business day thereafter if that day is not a
business day.  The Restricted Shares
shall vest as follows: (A) 25% of the Restricted Shares (75,000 Restricted
Shares) shall vest on the first anniversary of the Commencement Date and, (B) 75%
of the Restricted Shares (225,000 Restricted Shares) shall vest in six equal
increments of 12.5% of the Restricted Shares (37,500 Restricted Shares)
semi-annually thereafter through the fourth anniversary of the Commencement
Date;

 

(b)                                 You may elect under Section 83(b) of
the Internal Revenue Code of 1986, as amended, to be taxed at the time the
Restricted Shares are acquired on the Grant Date (“Section 83(b) Election”).  A Section 83(b) Election, if made,
must be filed with the Internal Revenue Service within thirty (30) days of the
Grant Date.  You are obligated to pay to
the Company the amount of any federal, state, local or other taxes of any kind
required by law to be withheld with respect to the granting (if a Section 83(b) Election
is made) or vesting (if a Section 83(b) Election is not made) of the
shares.  If you do not make a Section 83(b) Election,
you shall satisfy such tax withholding obligations by delivery to the Company,
on each date on which shares vest, such number of shares that vest on such date
as have a fair market value (calculated using the last reported sale price of
the common stock of the Company on the NASDAQ Global Select Market on the
trading date immediately prior to such vesting date) equal to the amount of the
Company’s withholding obligation; provided, however, that the total tax
withholding cannot exceed the Company’s minimum statutory withholding
obligations (based on minimum statutory withholding rates for federal and state
tax purposes, including payroll taxes, that are applicable to such supplemental
taxable income).  Such delivery of shares
to the Company shall be deemed to happen automatically, without any action
required on your part, and the Company is hereby authorized to take such
actions as are necessary to effect such delivery of shares to the Company.

 

(c)                                  Change in Control.  In
the event of a Change in Control (defined below), (i) 100% of all unvested
options granted to you to purchase the Company’s common stock shall accelerate
and all such options shall immediately become vested and exercisable, and (ii) 100%
of all Restricted Shares granted to you shall accelerate and become fully
vested and any and all restrictions on such Restricted Shares shall be
terminated and any and all legends shall be removed.

 

6.                                       Employment Eligibility.  In
compliance with the Immigration Reform and Control Act of 1986, you are
required to establish your identity and employment eligibility.  Therefore, on your first day of 

 

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employment you will be required to fill out an
Employment Verification Form and present documents in accordance with this
form.

 

7.                                       Benefits.  You will be entitled as an
employee of the Company to receive such benefits as are generally provided its
employees in accordance with Company policy as in effect from time to
time.  Company benefits include group
health, life and dental insurance, and liberal holidays, vacation and 401K
programs.  All employees begin accruing
three (3) weeks of vacation upon date of hire.  The Company is committed to providing a
healthy work environment for every employee. 
Therefore, we provide a smoke free environment and require all employees
to comply.  The Company retains the right
to change, add or cease any particular benefit.

 

8.                                       Confidentiality.  The
Company considers the protection of its confidential information, proprietary
materials and goodwill to be very important. 
Therefore, as a condition of your employment and the stock option and
restricted stock grants described above, you and the Company will become
parties to a Noncompetition and Confidentiality Agreement.  Two copies of this agreement are sent with
this offer letter.  Both copies must be
signed and returned to the Company prior to the Commencement Date.

 

9.                                       Indemnity.  As an executive of the
Company, you will enter into an Indemnity Agreement with the Company.  Two copies of this agreement are sent with
this offer letter.  Both copies must be
signed and returned to the Company upon your employment.

 

10.                                 Termination and Eligibility for Severance.  If
your employment with the Company is terminated by the Company without Cause (as
defined below) or you terminate your employment with the Company for Good
Reason (as defined below), the Company will provide you the following severance
and related post-termination benefits:

 

(a)                                  a lump sum payment equal to the sum of your
then annual base salary and your then target annual bonus, less applicable
state and federal withholdings;

 

(b)                                 continuation of payment of the Company’s
share of medical, dental and vision insurance premiums for you and your
dependents for the twelve (12) month period following the termination of your
employment; provided, that if immediately prior to the termination of your
employment you were required to contribute towards the cost of such premiums as
a condition of receiving such insurance, you may be required to continue
contributing towards the cost of such premiums under the same terms and
conditions as applied to you and your dependents immediately prior to the
termination of your employment in order to receive such continued insurance
coverage;

 

(c)                                  any allowable unreimbursed expenses and any
accrued but unused vacation pay owing to you at the time of termination;

 

(d)                                 any stock options granted to you by the
Company to purchase the Company’s common stock that are unvested as of the
termination date and would vest during the twelve (12) months following your
termination will accelerate and immediately vest and become exercisable upon
termination, and your stock options that are or become vested will remain
outstanding and exercisable for the shorter of three (3) years following
your termination date or the original remaining life of the options; and

 

(e)                                  any Restricted Shares granted to you by the
Company that are unvested as of the termination date will accelerate and
immediately vest upon termination, and any and all 

 

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restrictions
on such Restricted Shares shall be terminated and any and all legends shall be
removed so that the shares be and are freely marketable.

 

The Company’s provision of the benefits
described in Section 11(a), (b), (d) and (e) above shall be
contingent upon your execution of a release of all claims of any kind or nature
in favor of the Company in a form to be provided by the Company (the “Release
Agreement”), which Release Agreement must be delivered to the Company within
fifty-two (52) days following the termination of your employment.  The lump sum payment described in Section 11(a) above
shall be made on the sixtieth (60) day following the termination of your
employment, after the Company’s receipt of the executed Release Agreement and
the expiration of any revocation period described in the Release
Agreement.  The Company shall have no
further obligation to you in the event your employment with the Company terminates
at any time, other than those obligations specifically set forth in this Section 11.

 

The Company may terminate your employment at
any time with or without Cause by written notice to you specifying the date of
termination.  You may terminate your
employment with or without Good Reason by providing written notice to the
Company at least thirty (30) days prior to the date of termination.  If you seek to terminate your employment for
Good Reason, the Company shall have ten (10) business days following its
receipt of written notice of termination to cure the circumstance giving rise
to Good Reason.

 

11.                                 Definitions.  As used in this Agreement, the
following terms shall have the following meanings:

 

(a)                                  “Change in Control”
as used in this Agreement shall have the meaning set forth on Annex A attached
hereto.

 

(b)                                 “Good Reason” as
used in this Agreement means the occurrence of any of the following without
your consent: (A) a reduction in your annual Base Salary set forth above; (B) the
assignment to you of a lower position in the organization in terms of your
title, responsibility, authority or status unless agreed to in writing by you,
or (C) the relocation of the Company to a location that is more than fifty
(50) miles from the Company’s current headquarters location in Westford, MA.

 

(c)                                  “Cause” as used
in this Agreement means the occurrence of any of the following: (i) your
indictment for, formal admission to (including a plea of guilty or nolo contendere to), or conviction of a felony, a crime of
moral turpitude, dishonesty, breach of trust or unethical business conduct, or
any crime involving the Company, (ii) gross negligence or willful
misconduct by you in the performance of your duties that is likely to have an
adverse affect on the Company or its reputation; (iii) your commission of
an act of fraud or dishonesty in the performance of your duties; (iv) repeated
failure by you to perform your duties which are reasonably and in good faith
requested in writing by the Chief Executive Officer of the Company or the Board
of Directors of the Company; (v) material breach of this Agreement by you,
which you do not cure within ten (10) days following receipt by you of
such written notice notifying you of such breach, or material breach by you of
any confidentiality agreement with the Company.

 

12.                                 Tax Implications of Termination Payments. 
Subject to this Section 13, any payments or benefits required to be
provided under Section 11 shall be provided only after the date of your “separation
from service” with the Company as defined under Section 409A of the U.S.
Internal Revenue Code of 1986, as amended, and the guidance issued thereunder (“Section 409A”).
The following rules shall apply with respect to distribution of the
payments and benefits, if any, to be provided to you under Section 11:

 

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(a)                                  It is intended that each installment of the
payments and benefits provided under Section 11 shall be treated as a
separate “payment” for purposes of Section 409A.  Neither the Company nor you shall have the
right to accelerate or defer the delivery of any such payments or benefits
except to the extent specifically permitted or required by Section 409A.

 

(b)                                 If, as of the date of your “separation from
service” with the Company, you are not a “specified employee” (each within the
meaning of Section 409A), then each installment of the payments and
benefits shall be made on the dates and terms set forth in Section 11; and

 

(c)                                  If, as of the date of your “separation from
service” with the Company, you are a “specified employee” (each, for purposes
of this Agreement, within the meaning of Section 409A), then:

 

(i)                                     Each installment of the payments and benefits
due under Section 11 that, in accordance with the dates and terms set
forth herein, will in all circumstances, regardless of when the separation from
service occurs, be paid within the short-term deferral period (as defined for
the purposes of Section 409A) shall be treated as a short-term deferral
within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the
maximum extent permissible under Section 409A; and

 

(ii)                                  Each installment of the payments and benefits
due under Section 11 that is not paid within the short-term deferral
period or otherwise cannot be treated as a short-term deferral within the
meaning of Treasury Regulation Section 1.409A-1(b)(4) and that would,
absent this subsection, be paid within the six-month period following your “separation
from service” with the Company shall not be paid until the date that is six
months and one day after such separation from service (or, if earlier, upon
your death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that
is six months and one day following your separation from service and any
subsequent installments, if any, being paid in accordance with the dates and
terms set forth herein; provided, however, that the preceding provisions of
this sentence shall not apply to any installment of payments if and to the
maximum extent that that such installment is deemed to be paid under a
separation pay plan that does not provide for a deferral of compensation by
reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating
to separation pay upon an involuntary separation from service).  Any installments that qualify for the
exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must
be paid no later than the last day of the second taxable year following the
taxable year in which your separation from service occurs.

 

13.                                 Section 409A of the Code.  This
Agreement is intended to comply with the provisions of Section 409A and
this Agreement shall, to the extent practicable, be construed in accordance
therewith.  Terms used in this Agreement
shall have the meanings given such terms under Section 409A if and to the
extent required in order to comply with Section 409A.  Notwithstanding the foregoing, to the extent
that this Agreement or any payment or benefit hereunder shall be deemed not to
comply with Section 409A, then neither the Company, the Board of Directors
nor its or their designees or agents shall be liable to you or any other person
for any actions, decisions or determinations made in good faith.

 

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14.                                 Other Agreements.  You
represent and warrant to the Company that you are not bound by any agreement
with a previous employer or other party which you would in any way violate by
accepting employment with the Company or performing your duties as an employee
of the Company.  You further represent
and warrant that, in the performance of your duties with the Company, you will
not utilize or disclose any confidential information in breach of an agreement
with a previous employer or any other party.

 

15.                                 Assignment.  This Agreement is personal in
nature and neither of the parties hereto shall, without the written consent of
the other, assign or otherwise transfer this Agreement or its obligations,
duties and rights under this Agreement; provided, however, that in the event of
the merger, consolidation, transfer or sale of all or substantially all of the
assets of the Company, this Agreement shall, subject to the provisions hereof,
be binding upon and inure to the benefit of such successor and such successor
shall discharge and perform all of the promises, covenants, duties and
obligations of the Company hereunder.

 

16.                                 General.

 

(a)                                  Entire Agreement; Modification.  This
Agreement contains the entire agreement of the parties relating to the subject
matter hereof, and the parties hereto have made no agreements, representations
or warranties relating to the subject matter of this Agreement that are not set
forth otherwise herein.  This Agreement
supersedes any and all prior agreements, written or oral, between you and the
Company.  For the avoidance of doubt, the
parties agree that the Consulting Services Agreement dated November, 2008
between you and the Company shall hereinafter be cancelled and shall have no
further force or effect, except with respect to the confidentiality provisions
therein.  No modification of this
Agreement shall be valid unless made in writing and signed by the parties
hereto.

 

(b)                                 Severable Provisions.  The
provisions of this Agreement are severable and if any one or more provisions
may be determined to be illegal or otherwise unenforceable, in whole or in
part, the remaining provisions of this Agreement shall nevertheless be binding
and enforceable.  Notwithstanding the
foregoing, if there are any conflicts between the terms of this Agreement and
the terms of any Plan document referred to in this Agreement, then the terms of
this Agreement shall govern and control. 
Except as modified hereby, this Agreement shall remain unmodified and in
full force and effect.

 

(c)                                  Governing Law.  This
Agreement shall be governed by and interpreted in accordance with the laws of
the Commonwealth of Massachusetts, without regard to the conflict of laws
provisions hereof.

 

(d)                                 Arbitration.

 

(i)                                     Any controversy, dispute or claim arising out
of or relating to this Agreement or the breach hereof which cannot be settled
by mutual agreement will be finally settled by binding arbitration in the
commonwealth of Massachusetts, under the jurisdiction of the American
Arbitration Association or other mutually agreeable alternative arbitration
dispute resolution service, before a single arbitrator appointed in accordance
with the arbitration rules of the American Arbitration Association or
other selected service, modified only as herein expressly provided.  The arbitrator may enter a default decision
against any party who fails to participate in the arbitration proceedings.

 

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(ii)                                  The decision of the arbitrator on the points
in dispute will be final, non-appealable and binding, and judgment on the award
may be entered in any court having jurisdiction thereof.

 

(iii)                               The fees and expenses of the arbitrator will
be shared equally by the parties, and each party will bear the fees and
expenses of its own attorney.

 

(iv)                              The parties agree that this Section 17(d) has
been included to resolve any disputes between them with respect to this
Agreement, and that this Section 17(d) will be grounds for dismissal
of any court action commenced by either party with respect to this Agreement,
other than post-arbitration actions seeking to enforce an arbitration award or
actions seeking an injunction or temporary restraining order.  In the event that any court determines that
this arbitration procedure is not binding, or otherwise allows any litigation
regarding a dispute, claim, or controversy covered by this Agreement to
proceed, the parties hereto hereby waive any and all right to a trial by jury
in or with respect to such litigation.

 

(v)                                 The parties will keep confidential, and will
not disclose to any person, except as may be required by law or the rules and
regulations of the Securities and Exchange Commission, the existence of any
controversy hereunder, the referral of any such controversy to arbitration or
the status or resolution thereof

 

(e)                                  Notices.  All
notices shall be in writing and shall be delivered personally (including by
courier), sent by facsimile transmission (with appropriate documented receipt
thereof), by overnight receipted courier service (such as UPS or FedEx) or sent
by certified, registered or express mail, postage prepaid, to the Company at
the following address:  General Counsel,
Sonus Networks, Inc., 7 Technology Park Drive, Westford, MA 01886, and to
you at the following address: 101 Sherwood Drive, North Andover, MA 01845.  Any such notice shall be deemed given when so
delivered personally, or if sent by facsimile transmission, when transmitted,
or, if by certified, registered or express mail, postage prepaid mailed,
forty-eight (48) hours after the date of deposit in the mail.  Any party may, by notice given in accordance
with this paragraph to the other party, designate another address or person for
receipt of notices hereunder.

 

(f)                                    Counterparts.  This
Agreement may be executed in more than one counterpart, each of which shall be
deemed to be an original, and all such counterparts together shall constitute
one and the same instrument.

 

You may accept this offer of employment and
the terms and conditions thereof by confirming your acceptance in writing by December 11,
2008.  Please send your signed letter to
the company, or via e-mail to kharris@sonusnet.com which execution will
evidence your agreement with the terms and conditions set forth herein and
therein.  We are enthusiastic about your
joining us, and believe that our technical and business goals will provide
every opportunity for you to achieve your personal and professional objectives.

 

****

 

7

 

I am looking forward to your joining the team
to help us take Sonus to the next level.

 

Very truly yours,

 

	
  Very
  truly yours,

  	
   

  
	
   

  	
   

  
	
  /s/
  Richard Nottenburg

  	
   

  
	
  Dr. Richard
  Nottenburg

  	
   

  
	
  President
  and CEO

  	
   

  

 

 

Accepted
by:

 

 

	
  /s/
  Gurudutt Pai

  	
   

  	
  December 11,
  2008

  
	
  Gurudutt
  Pai

  	
   

  	
  Date

  

 

8

 

Annex
A

 

A
“Change in Control” as used in this Agreement of which this Annex is a part
shall mean the first to occur of any of the following:

 

(a)                                  any “person,” as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) (other than the Company or its Affiliates), is or
becomes the “beneficial owner” (as defined in Rule 1 3d-3 under the
Exchange Act), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such person any securities
acquired directly from the Company or you) representing fifty percent (50%) or
more of the combined voting power of the Company’s then outstanding securities;
or

 

(b)                                 in the event that the individuals who as of
the date hereof constitute the Board of Directors, and any new director whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of at least a majority of the Board then still in office
who either were members of the Board as of the date hereof or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority thereof; or

 

(c)                                  the consummation of a merger or consolidation
of the Company with or the sale of the Company to any other entity and, in
connection with such merger, consolidation or sale; individuals who constitute
the Board immediately prior to the time any agreement to effect such merger or
consolidation is entered into fail for any reason to constitute at least a
majority of the board of directors of the surviving or acquiring corporation
following the consummation of such merger, consolidation or sale;

 

(d)                                 the stockholders of the Company approve a
plan of complete liquidation of the Company; or

 

(e)                                  the consummation of the sale or disposition
by the Company of all or substantially all of the Company’s assets to an entity
not controlled by the Company.

 

9Exhibit
10.1

 

SETTLEMENT AGREEMENT AND RELEASE

 

This
Settlement Agreement (“Agreement”) is entered into and is effective as of this
14th day of December, 2008 (the “Effective Date”), by and between, on the one
hand, Hexion Specialty Chemicals, Inc. (“Hexion”), Hexion LLC, Nimbus
Merger Sub Inc., and Craig O. Morrison (collectively, the “Hexion Parties”),
and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo
Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Netherlands
Partners V(A), L.P., Apollo Netherlands Partners V(B), L.P., Apollo German
Partners V GmbH & Co. KG, Apollo Investment Fund VI, L.P., Apollo
Overseas Partners VI, L.P., Apollo Overseas Partners (Delaware) VI, L.P.,
Apollo Overseas Partners (Delaware 892) VI, L.P, Apollo Overseas Partners
(Germany) VI, L.P., Apollo Advisors IV, L.P., Apollo Management IV, L.P.,
Apollo Advisors V, L.P., Apollo Management V, L.P., Apollo Advisors VI, L.P.,
Apollo Management VI, L.P., Apollo Management, L.P., Apollo Global Management,
LLC.,  Leon Black and Joshua J. Harris
(collectively, the “Apollo Parties”); and, on the other, Huntsman Corp. (“Huntsman”),
Jon M. Huntsman and Peter Huntsman (collectively, the “Huntsman Parties”) and
Huntsman Family Holdings Company LLC, The Jon and Karen Huntsman Foundation,
Karen H. Huntsman Inheritance Trust, Huntsman Financial Corporation, and Brynn
B. Huntsman, as Custodian under the Utah Uniform Transfers to Minors Act, for
the benefit of Rebecca Brynn Huntsman, Rachel Brynn Huntsman, Caroline Brynn
Huntsman, Amber Brynn Huntsman, Virginia Brynn Huntsman and James B. Huntsman
(collectively, the “Huntsman Family Shareholders”), (the Hexion Parties, the
Apollo Parties, the Huntsman Parties and the Huntsman Family Shareholders
collectively, the “Parties,” and each individually a “Party”).

 

 

WHEREAS,
prior to the execution of this Agreement, Huntsman validly terminated the
Merger Agreement;

 

WHEREAS,
one or more of the Parties are involved in the following litigations in which
the parties thereto have asserted claims, counterclaims or third-party claims
arising from or related to the Agreement and Plan of Merger among Hexion
Specialty Chemicals, Inc., Nimbus Merger Sub Inc. and Huntsman
Corporation, dated as of July 12, 2007 (the “Merger Agreement”), the
Transactions referred to therein, and related matters:

 

·                                          Hexion
Specialty Chemicals, Inc.; Nimbus Merger Sub Inc.; Apollo Investment Fund
IV, L.P.; Apollo Overseas Partners IV, L.P.; Apollo Advisors IV, L.P.; Apollo
Management IV, L.P.; Apollo Investment Fund V, L.P.; Apollo Overseas Partners
V, L.P.; Apollo Netherlands Partners V(A), L.P.; Apollo Netherlands Partners
V(B), L.P.; Apollo German Partners V GmbH & Co. Kg; Apollo Advisors V,
L.P.; Apollo Management V, L.P.; Apollo Investment Fund VI, L.P.; Apollo
Overseas Partners VI, L.P.; Apollo Overseas Partners (Delaware) VI, L.P.;
Apollo Overseas Partners (Delaware 892) VI, L.P.; Apollo Overseas Partners
(Germany) VI, L.P.; Apollo Advisors VI, L.P.; Apollo Management VI, L.P.;
Apollo Management, L.P.; and Apollo Global Management, LLC v. Huntsman Corp., C.A. No. 3841-VCL (Court of Chancery,
Delaware) (the “Delaware Action”);

 

·                                          Huntsman Corp. v. Leon Black, Joshua J.
Harris, Apollo Global Management, L.L.C., Apollo Management, L.P., Apollo
Management IV, L.P., Apollo Management V, L.P., Apollo Management VI, L.P.,
Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo
Advisors IV, LP., Apollo Investment Fund V, L.P., Apollo Overseas Partners V,
L.P., Apollo Netherlands Partners V(A),L.P., Apollo Netherlands Partners V(B),
L.P., Apollo German Partners V GmbH & Co. KG, Apollo Advisors V, L.P.,
Apollo Investment Fund VI, L.P., Apollo Overseas Partners VI, L.P., Apollo
Overseas Partners (Delaware) VI, L.P., Apollo Overseas Partners (Delaware 892)
VI, L.P., Apollo Overseas Partners (Germany) VI, L.P., and Apollo Advisors VI,
L.P., Cause No. 08-06-06037 (Montgomery County, Texas) (the “Texas
Action Against Apollo”);

 

·                                          Hexion Specialty Chemicals, Inc., Hexion LLC and Nimbus Merger Sub
Inc. v. Credit Suisse, Cayman Islands Branch,
Credit Suisse Securities 

 

2

 

(USA) LLC, Deutsche Bank AG Cayman Islands Branch,
Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., and Deutsche
Bank Trust Company Americas, Index No. 114552/08 (New
York Supreme Court, New York County) (the “New York Action Against the Banks”);

 

·                                          Huntsman Corp. v. Credit Suisse Securities
(USA) LLC, and Deutsche Bank
Securities, Inc., Cause No. 08-09-09258 (Montgomery
County, Texas) (the “Texas Action Against the Banks”);

 

·                                          Hexion Specialty Chemicals, Inc.; Apollo Global Management, LLC; Apollo Management,
L.P.; Apollo Management IV, L.P.; Apollo Management V, L.P.; Apollo Management
VI, L.P.;  Apollo Investment Fund IV,
L.P.; Apollo Overseas Partners IV, L.P.; Apollo Advisors IV, L.P.; Apollo
Investment Fund V, L.P.; Apollo Overseas Partners V, L.P.; Apollo Netherlands
Partners V(A), L.P.; Apollo Netherlands Partners V(B), L.P.; Apollo German
Partners V GmbH & Co. Kg; Apollo Advisors V, L.P.; Apollo Investment
Fund VI, L.P.; Apollo Overseas Partners VI, L.P.; Apollo Overseas Partners
(Delaware) VI, L.P.; Apollo Overseas Partners (Delaware 892) VI, L.P.; Apollo
Overseas Partners (Germany) VI, L.P.; Apollo Advisors VI, L.P.; Leon Black and Joshua
Harris v. Huntsman
Corp., Index No. 602394/08 (New York Supreme Court, New
York County) (the “New York Action Against Huntsman”); and

 

·                                          Sandra Lifschitz et al. v. Hexion
Specialty Chemicals, Inc., Craig O. Morrison and Joshua J. Harris,
08-CV-06394 (RMB) (S.D.N.Y.) (the “Huntsman Shareholder Action”) (all the
foregoing collectively, the “Litigations”);

 

WHEREAS,
without any admission by any Party of any fact or issue of law, or concerning
the merits of any claim or defense that has been, could have been, or could be
asserted in the Litigations, the Parties desire to settle all disputes and
controversies between them upon the terms and subject to the conditions set
forth below.

 

NOW
THEREFORE, in consideration of the mutual promises, covenants and agreements
contained herein, the adequacy and sufficiency of all of which are hereby
acknowledged, the Parties agree as follows:

 

1.                                      Capitalized Terms.  Capitalized terms not otherwise defined in this Agreement shall be
defined as set forth in the Merger Agreement.

 

3

 

2.                                      Termination
of the Merger Agreement.  Huntsman
has validly terminated the Merger Agreement in accordance with its terms
pursuant to Section 7.1 of the
Merger Agreement.  Promptly following the
Effective Date, Hexion shall take all actions reasonably required to
terminate any tender offers for securities of Huntsman and its affiliates then
outstanding in connection with the Transactions contemplated by the Merger
Agreement, including the Debt Offer.

 

3.                                      Settlement
Payments.

 

(a)                                  The
Apollo entities set forth in Paragraph 1 of Annex A attached hereto shall
purchase from Huntsman $250 million ($250,000,000) of convertible notes of
Huntsman on substantially the terms and conditions set forth in Annex B
attached hereto and such other terms and conditions as may be reasonably agreed
to by the parties to such purchase.  The
parties to the purchase shall negotiate in good faith the documentation
relating to such purchase to effect the purchase on or before December 31,
2008.

 

(b)                                 In
settlement of the claim against the Apollo entities set forth in Paragraph 2 of
Annex A attached hereto by Huntsman in the Delaware Action for commercial
disparagement, the Apollo entities set forth in Paragraph 2 of Annex A, on a
joint and several basis, shall pay Huntsman the amount of $200 million
($200,000,000).

 

(c)                                  In
settlement of the claim against Hexion and the Apollo entities set forth in
Paragraph 3 of Annex A attached hereto by Huntsman in the Delaware Action for
commercial disparagement, Hexion, on a joint and several basis with the Apollo
entities set forth in Paragraph 3 of Annex A attached hereto, shall pay
Huntsman the amount of $225 million ($225,000,000).  In the event that any of the 

 

4

 

Apollo entities set forth
in Paragraph 3 of Annex A attached hereto satisfies any portion of such amount,
Hexion agrees to use diligent efforts to obtain reimbursement or other recovery
from its insurance providers; provided, however, that this obligation to use
diligent efforts shall not be deemed to require Hexion to waive or compromise
its rights to insurance coverage for any other liability or claim.  Any amounts so recovered, net of expenses
incurred for such recovery, shall be promptly paid by Hexion pro rata to the
Apollo entity or entities set forth in Paragraph 3 of Annex A attached hereto
up to the amount that such entity has paid in satisfaction of the payment
obligation set forth in this paragraph.

 

(d)                                 Hexion shall pay
Huntsman the $325 million ($325,000,000) termination fee, which fee is due and
payable pursuant to Section 7.3(d) of the Merger Agreement.  The Hexion Parties shall (i) use
diligent efforts to finalize the documentation for the Termination Facility
with the Banks on terms consistent with the Commitment Letter and to execute
the Termination Facility, (ii) draw down the Termination Facility and upon
receipt of the proceeds deliver them to Huntsman, and (iii) use diligent
efforts to pursue appropriate remedies in the event the Banks refuse to
finalize such documentation or to fund the Termination Facility.  The Huntsman Parties shall cooperate in good
faith with and provide reasonable assistance to Hexion to secure the proceeds
of the Termination Facility.

 

(e)                                  At least $500 million ($500,000,000) of the
purchases from and payments to Huntsman set forth in Paragraphs 3(a)-(c) above
shall be made on or before December 31, 2008 and, in addition, the payment
set forth in paragraph 3(d) above will be paid as soon as any of the
Hexion Parties receives the proceeds of the Termination 

 

5

 

Facility.  Any purchases from and payments to Huntsman
set forth in Paragraphs 3(a)-(d) above that have not been made on or
before December 31, 2008 shall be made on or before March 31, 2009
whether or not the Hexion Parties have received the proceeds from the
Termination Facility.

 

(f)                                    The
Apollo entities set forth in Paragraph 4 of Annex A attached hereto shall
provide financing to Hexion LLC in an amount equal to $200 million ($200,000,000)
on terms and conditions as may be reasonably agreed to by Hexion LLC and the
Apollo entities set forth in Paragraph 4 of Annex A attached hereto.

 

(g)                                 Except
as provided in Paragraphs 3(a)-(e) above, the Hexion Parties and Apollo
Parties shall have no obligation to make any payment to the Huntsman Parties in
connection with the Merger Agreement, the Transactions or the Indemnified
Matters (as defined in Paragraph 7(a) below).

 

(h)                                 Each
Party shall retain all payments previously made under the Merger Agreement.

 

(i)                                     The
Apollo Parties (except for Leon Black and Joshua J. Harris) and the Hexion
Parties (except for Craig O. Morrison) are jointly and severally liable for the
payment of all sums due to Huntsman under this Paragraph 3.  In the event any payment by or on behalf of
any of the Hexion Parties is rescinded or required by any court to be returned
for any reason having to do with the Hexion Parties, the joint and several
obligation of the Apollo Parties (except for Leon Black and Joshua J. Harris)
and the Hexion Parties (except for Craig O. Morrison) to pay such amount shall
continue in full force and effect.

 

6

 

4.                                      Undertakings
Concerning the Litigations.

 

(a)                                  Upon
full and final payment of all amounts due Huntsman under Paragraph 3 above, the
Parties shall promptly take all necessary and appropriate action to obtain the
dismissal with prejudice of the Delaware Action, the Texas Action Against
Apollo and the New York Action Against Huntsman, with each Party to bear its
own costs, expenses, and attorneys’ fees in connection with the Delaware
Action, the Texas Action Against Apollo and the New York Action Against Huntsman.  Pending dismissal, the Parties will jointly
move to stay the Delaware Action, the Texas Action Against Apollo and the New
York Action Against Huntsman.

 

(b)                                 Huntsman
will promptly move to sever and dismiss the Apollo Parties from the Texas
Action Against the Banks.

 

(c)                                  Promptly
after the Effective Date, Hexion will seek leave to withdraw its claims in the
New York Action Against the Banks, except that Hexion will not be required to
withdraw any claims in the New York Action Against the Banks relating to the
Termination Facility.

 

(d)                                 Huntsman
will cooperate with the Hexion Parties and the Apollo Parties in the Huntsman
Shareholder Action.

 

(e)                                  The
Apollo Parties and the Hexion Parties agree to make witnesses available for
reasonable times and dates and to cooperate in the presentation of Huntsman’s
claims in the Texas Action Against the Banks, including by providing witness
interviews and appearing voluntarily for oral depositions without the necessity
of a subpoena.  Hexion and the Apollo
entities shall also cause Craig O. Morrison, William 

 

7

 

Carter, Joshua J. Harris
and Jordan Zaken to appear in Texas to testify at the trial of the Texas Action
Against the Banks if Huntsman so requests.

 

5.                                      Mutual
Releases.

 

(a)                                  Upon
full and final payment of all amounts due Huntsman under Paragraph 3 above, the
Hexion Parties on behalf of themselves and each of their parents, affiliates,
predecessors, successors and assigns, and on behalf of each of their respective
current and former officers, directors, managers, members, employees, agents
and other representatives in their capacities as such (collectively, the “Hexion
Releasors”), hereby release, acquit, and forever discharge the Huntsman
Parties, the Huntsman Family Shareholders and each of their parents,
affiliates, predecessors, successors and assigns, and their respective current
and former officers, directors, employees, contractors, subcontractors, agents,
security holders, attorneys and other representatives in their capacities as
such (collectively, the “Huntsman Releasees”) and the Apollo Parties and their
respective parents, affiliates, predecessors, successors and assigns, and their
respective current and former officers, directors, managers, members, partners,
employees, contractors, subcontractors, agents, security holders, attorneys and
other representatives in their capacities as such (collectively, the “Apollo
Releasees”), from any and all actions, causes of action, counterclaims, suits,
debts, sums of money, accounts, contracts, agreements, promises, contribution,
indemnification, damages, judgments, executions and demands whatsoever, at law,
in equity or otherwise, which the Hexion Releasors, or any of them, now or
hereafter can, shall or may have against the Huntsman Releasees and/or the
Apollo Releasees, or any of them, whether known or unknown, from the beginning
of the world to the date of this Agreement; provided, 

 

8

 

however, that this
release does not extend to claims arising out of ordinary course of business
commercial dealings between the Hexion Releasors and either the Apollo
Releasees or the Huntsman Releasees.  The
claims released by the Hexion Releasors against the Apollo Releasees pursuant
to this paragraph include but are not limited to any and all claims that the
Hexion Releasors may have against Joshua J. Harris or Craig O. Morrison and
rights of contribution that the Hexion Releasors may have against Joshua J.
Harris or Craig O. Morrison arising from the Huntsman Shareholder Action.  The Hexion Releasors also acknowledge that
nothing contained in this Agreement shall in any way negate or reduce or
otherwise affect the rights of indemnification of Joshua J. Harris or Craig O.
Morrison or any other Apollo Releasee under applicable law, including any
contractual agreements, or the By-Laws or Articles of Incorporation of Hexion.

 

(b)                                 Upon
full and final payment of all amounts due Huntsman under Paragraph 3 above, the
Apollo Parties on behalf of themselves and each of their parents, affiliates,
predecessors, successors and assigns, and on behalf of their respective current
and former officers, directors, managers, members, employees, agents, security
holders, attorneys and other representatives in their capacities as such
(collectively, the “Apollo Releasors”), hereby release, acquit, and forever
discharge the Huntsman Releasees and the Hexion Parties and their parents,
affiliates, predecessors, successors and assigns, and its and their respective
current and former officers, directors, employees, contractors, subcontractors,
agents, security holders, attorneys and other representatives in their
capacities as such (collectively, the “Hexion Releasees”) from any and all
actions, causes of action, counterclaims, suits, debts, sums of money,
accounts, contracts, agreements, promises, contribution, indemnification,
damages, judgments, executions 

 

9

 

and demands whatsoever,
at law, in equity or otherwise, which the Apollo Releasors, or any of them, now
or hereafter can, shall or may have against the Huntsman Releasees and/or the
Hexion Releasees, or any of them, whether known or unknown, from the beginning
of the world to the date of this Agreement; provided, however, that this
release does not extend to claims arising out of ordinary course of business
commercial dealings between the Apollo Releasors and either the Hexion
Releasees or the Huntsman Releasees.  The
claims released by the Apollo Releasors against the Hexion Releasees pursuant
to this paragraph include but are not limited to any and all claims that the
Apollo Releasors may have against Joshua J. Harris or Craig O. Morrison and
rights of contribution that the Apollo Releasors may have against Joshua J.
Harris or Craig O. Morrison arising from the Huntsman Shareholder Action.  The Apollo Releasors also acknowledge that
nothing contained in this Agreement shall in any way negate or reduce or
otherwise affect the obligations of indemnification of any of the Hexion
Releasees to Joshua J. Harris or Craig O. Morrison or any other Apollo Releasor
under applicable law, including any contractual agreements, or the By-Laws or
Articles of Incorporation of Hexion.

 

(c)                                  Upon
full and final payment of all amounts due Huntsman under Paragraph 3 above,
including purchase of the convertible notes, the Huntsman Parties and the
Huntsman Family Shareholders on behalf of themselves and their parents,
affiliates, predecessors, successors and assigns, and on behalf of their
respective current and former officers, directors, trustees, beneficiaries,
employees, agents, security holders, attorneys and other representatives in
their capacities as such (collectively, the “Huntsman Releasors”), hereby
release, acquit, and forever discharge the Apollo 

 

10

 

Releasees and the Hexion
Releasees from any and all actions, causes of action, counterclaims, suits,
debts, sums of money, accounts, contracts, agreements, promises, contribution,
indemnification, damages, judgments, executions and demands whatsoever, at law,
in equity or otherwise, which the Huntsman Releasors, or any of them, now or
hereafter can, shall or may have against the Hexion Releasees and/or the Apollo
Releasees, or any of them, for, whether known or unknown, from the beginning of
the world to the date of this Agreement; provided, however, that this release
does not extend to claims arising out of ordinary course of business commercial
dealings between the Huntsman Releasors and either the Hexion Releasees or the
Apollo Releasees.  The claims released by
the Huntsman Releasors against the Apollo Releasees and the Hexion Releasees
pursuant to this paragraph include but are not limited to any and all claims
that Jon M. Huntsman, Peter Huntsman and the Huntsman Family Shareholders, each
and all as shareholders of Huntsman, may have in the Huntsman Shareholder
Action or as a result of any settlement of the Huntsman Shareholder Action and,
with respect to Peter Huntsman and Jon M. Huntsman, to the extent of their
beneficial ownership interests in any shares of Huntsman common stock held by
the HMP Equity Trust.

 

(d)                                 The
claims released pursuant to this Paragraph 5 include but are not limited to all
claims, if any, the Hexion and Apollo Releasees may have that are in any way
related to the April 29, 2006 fire at the Port Arthur Base Chemicals Light
Olefins Unit in the Aromatic and Olefins Plant in Port Arthur, Texas (the “April 29,
2006 Fire”), including claims in connection with: (i) Ace Am. Ins.
Co., et al. v. Huntsman Corp. and IRIC,
U.S. District Court Southern District of Texas; Civil Action No. 4:07-CV-02796,
(ii) Huntsman Corp.  and
IRIC v. Ace Am. Ins.
Co., et al., U.S. District Court 

 

11

 

Southern District of
Texas, Civil Action No. 4:08-CV-1542, (iii) any insurance proceeds or
other monies received by Huntsman through the adjustment process, by settlement
or otherwise in connection with the April 29, 2006 Fire, or (iv) the
adjustment or payment of insurance proceeds in connection with the April 29,
2006 Fire.

 

(e)                                  Nothing
in this Agreement is intended or shall be construed to release or discharge any
of the Parties from any obligation set forth, or liability for any representation
or warranty made, in this Agreement, Annex A or B attached hereto, or any
agreements entered into in connection with the purchase provided for in
Paragraph 3(a) of this Agreement or the financing provided for in
Paragraph 3(f) of this Agreement.

 

(f)                                    Nothing
in this Agreement is intended or shall be construed to release or waive any
claims that the Parties have against the Banks.

 

6.                                      Covenant
Not to Sue.  Each of the Parties
covenants, on behalf of itself and, in the case of the Huntsman Parties, on
behalf of the Huntsman Releasors; in the case of the Apollo Parties, on behalf
of the Apollo Releasors; and in the case of the Hexion Parties, on behalf of
the Hexion Releasors, not to bring any claim or cause of action released
pursuant to Paragraph 5 of this Agreement before any court, arbitrator, or
other tribunal in any jurisdiction, whether as a claim, cross-claim,
counterclaim or otherwise.  Any Party
released pursuant to Paragraph 5 of this Agreement may plead this Agreement as
a complete bar to any such claim, cause of action or defense brought in
derogation of this covenant not to sue.

 

7.                                      Indemnification.

 

(a)                                  Huntsman
shall indemnify and hold the Hexion Releasees and Apollo Releasees harmless
from any claim for indemnification or contribution or any 

 

12

 

other claim asserted
against either the Hexion Releasees or the Apollo Releasees by any of Credit
Suisse, Cayman Islands Branch, Credit Suisse Securities (USA) LLC, Deutsche
Bank AG Cayman Islands Branch, Deutsche Bank AG New York Branch, Deutsche Bank
Securities Inc., and Deutsche Bank Trust Company Americas, or any of their
respective affiliates or assignees (collectively, the “Banks”), that in any way
relates to or arises out of any claims made by the Huntsman Parties against the
Banks (collectively, the “Indemnified Matters”).  Such indemnification by Huntsman shall
include but is not limited to the claim for indemnification asserted by the
Banks against Hexion in the New York Action Against the Banks, and the claim
for contribution asserted by the Banks against the Apollo Parties in the Texas
Action Against the Banks; provided, however, that Huntsman will not be required
to indemnify the Apollo Parties or the Hexion Parties for any legal fees or
expenses incurred by the Banks.  The
aggregate amount paid by Huntsman to the Hexion Releasees and/or the Apollo
Releasees pursuant to the terms of this paragraph shall not exceed the amounts
of Huntsman’s recovery collected, if any, in the Texas Action Against the Banks
net of attorney fees, costs and expenses related to the Texas Action Against
the Banks.  Notwithstanding the
foregoing, the Hexion Releasees and Apollo Releasees shall bear and not be
indemnified for their own attorneys fees and expenses in defending such Banks’
claims.

 

(b)                                 In
furtherance of but without limiting its indemnification obligation, Huntsman
agrees that it will reduce or credit, against any judgment or settlement that
it may obtain against any of the Banks, an amount equal to the full amount of
any judgment that the Banks may at any time obtain or have obtained against any
of the Hexion Releasees or Apollo Releasees on any claim, including any claim
for 

 

13

 

contribution or indemnification,
that in any way relates to or arises out of any of the Indemnified Matters.

 

(c)                                  In
the event Huntsman settles any claim against any of the Banks that in any way
relates to or arises out of any of the Indemnified Matters, Huntsman shall
obtain a release in favor of the Hexion Releasees and the Apollo Releasees of
any and all liability that any of the Hexion Releasees or the Apollo Releasees
may have to any of the Banks that arises out of the Indemnified Matters.

 

(d)                                 Huntsman
shall take all appropriate and necessary actions (including delaying
distribution of amounts payable under a judgment) so as to assure the full and
complete effectuation of the protections set forth in this section of the
Settlement Agreement.  It is agreed that
any breach of the obligations set forth in this Paragraph 7 will result in
irreparable injury to the Hexion Releasees and the Apollo Releasees and that
Huntsman shall be subject to (in addition to and without limiting any other
available remedies) injunctive relief and shall be liable for all attorneys’
fees, costs and expenses incurred in connection with procuring injunctive
relief or otherwise enforcing the obligations set forth herein.

 

(e)                                                                                  The
Hexion Releasees and the Apollo Releasees agree to use diligent efforts to
vigorously defend and contest any claim, action or proceeding in respect of
which indemnification could be sought under this Paragraph 7.  The Hexion Releases and the Apollo Releasees
agree that they will not settle, compromise or consent to the entry of any
judgment with respect to any claim, action or proceeding in respect of which
indemnification could be sought under this Paragraph 7 without the prior
written consent of the Huntsman Parties, which consent shall not be
unreasonably withheld.

 

14

 

8.                                      Representations
and Warranties.

 

(a)                                  Each
of the Parties acknowledges, agrees, represents and warrants to the other
Parties and the releasees hereunder that:

 

(i)                                     It
has not heretofore assigned or transferred, or purported to assign or transfer,
to any person or entity any claim or cause of action released pursuant to
Paragraph 5 of this Agreement;

 

(ii)                                  There
are no liens or claims of lien, or assignments in law or equity or otherwise,
of or against any claim or cause of action released pursuant to Paragraph 5 of
this Agreement;

 

(iii)                               It has duly executed and
delivered this Agreement and is fully authorized to enter into and perform this
Agreement and every term hereof;

 

(iv)                              It
has been represented by legal counsel in the negotiation and joint preparation
of this Agreement, has received advice from legal counsel in connection with
this Agreement and is fully aware of this Agreement’s provisions and legal
effect;

 

(v)                                 It
enters into this Agreement freely, without coercion, and based on its own
judgment and not in reliance upon any representations or promises made by the
other Party, apart from those set forth in this Agreement; and

 

(vi)                              It
has the authority, and has obtained all necessary approvals, including but not
limited to approval of the Parties’ respective Boards of Directors, as
necessary, to enter into this Agreement and all the releases, undertakings,
covenants, representations, warranties and other obligations and provisions
contained in this Agreement.

 

15

 

(b)                                 Each
of the Parties acknowledges the materiality of the foregoing representations
and warranties.

 

9.                                      No
Admission or Acknowledgement.  The
Hexion Parties and the Apollo Parties, on the one hand, and the Huntsman
Parties, on the other hand, deny and in no way admit any liability to each
other with respect to any and all matters that were or could have been alleged
in the Litigations.  This Agreement has
been made to spare the Parties the burden and expense of further litigation and
shall not be considered an admission of fact, issue of law or liability by any
Party for any purpose.

 

10.                               Mutual Non-Disparagement.  The Huntsman Parties shall not make or
knowingly encourage any other person to make any public or private statement,
whether written or oral, that disparages, defames, is derogatory about, or
misrepresents the rights of the Hexion Parties and/or the Apollo Parties in
connection with the matters alleged in or that are the subject of the Litigations. 
Neither the Hexion Parties nor the Apollo Parties shall make or knowingly
encourage any other person to make, any public or private statement, whether
written or oral, that disparages, defames, is derogatory about, or
misrepresents the rights of Huntsman in connection with the matters alleged in
or that are the subject of the Litigations. Nothing herein prevents any Party
from taking any position or making any statement in the Litigations.

 

11.                               Announcement of Settlement.  Immediately following the execution and delivery of this Agreement,
each of Huntsman, Hexion and Apollo shall issue a press release announcing the
execution of this Agreement, which press releases shall be subject to the prior
review and approval of the other Parties. 
Other than as a Party may determine is necessary to respond to any legal
or regulatory process or 

 

16

 

proceeding
or to give appropriate testimony or file any necessary documents in any legal
or regulatory proceeding or as may be required by law, each of the Parties will
use its commercially reasonable efforts not to make any public statements
(including in any filing with the SEC or any other regulatory or governmental
agency, including any stock exchange) that are inconsistent with, or otherwise
contrary to, the jointly approved statements in the press release(s) issued
pursuant to this Paragraph 11.

 

12.                               Choice
of Law.  This Agreement and all
matters arising out of or relating to this Agreement, and all transactions and
events contemplated hereby or thereby, shall be governed by, and construed,
performed, and enforced in accordance with, the laws of the State of Delaware,
without giving effect to its conflicts or choice of law rules.

 

13.                               Jurisdiction.  Any action or proceeding asserting any claim
of any kind between the Parties or brought by any Party in any way arising from
or related to, or to enforce, this Agreement or any term hereof shall be
brought exclusively in the Court of Chancery of the State of Delaware or, if
that Court lacks jurisdiction, the Superior Court of the State of
Delaware.  The parties unconditionally
waive any right to trial by jury in any such action or proceeding.

 

14.                               General
Provisions.

 

(a)                                  No
Third Party Beneficiaries.  Except as
provided in Paragraphs 5, 6, 7 and 8 of this Agreement, nothing in this
Agreement is intended to or shall be construed to give to any person or entity,
other than the Parties, any legal or equitable right, remedy, or claim under or
in respect of this Agreement or any provisions contained herein.

 

17

 

(b)           Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns.  This Agreement shall
not be assignable except by operation of law or by mutual written consent of
the Parties.  Any assignment in
derogation of this provision shall be null and void.

 

(c)           Severability.  Whenever possible, each provision and term of
this Agreement shall be interpreted in such a manner as to be valid and
enforceable.  In the event that any such
provision or term should be determined to be or rendered invalid or
unenforceable, all other provisions and terms of this Agreement shall remain
unaffected to the extent permitted by law.

 

(d)           Confidentiality.   This Agreement and all
correspondence related hereto are intended to be confidential to the Parties,
and except as specifically provided herein, no Party shall publish, reproduce,
transmit or disclose any of the information contained in this Agreement or any
related correspondence (hereinafter “Confidential Information”) to any
non-party without the prior written consent of the non-disclosing Party.  Such obligation shall not apply to
disclosures to professional advisers of the Parties or their respective
insurers or accountants, or to any information publicly disclosed pursuant to
Paragraph 11.  In addition, such
obligations shall not apply to disclosures required by any appropriate
governmental authority having specific jurisdiction or to the extent required by
applicable law or any applicable listing agreement with any securities
exchange; provided, however, that prior to any such disclosure the disclosing
Party shall:  (i) provide the
non-disclosing Party with timely advance written notice of its intent to so
disclose; (ii) use reasonable efforts to minimize 

 

18

 

the amount of
Confidential Information to be provided in a manner consistent with the
interests of the non-disclosing Party and the requirements of the governmental
authority involved; and (iii) use reasonable efforts (which shall include,
to the extent reasonably practicable, participation by the non-disclosing Party
in discussions with the governmental authority involved) to secure confidential
treatment of the Confidential Information to be provided.

 

(e)           Amendments.  No provision or term
of this Agreement shall be amended, waived, discharged or terminated except by
an instrument in writing signed by the Parties expressly referring to the
provision or term of this Agreement to which such instrument relates; and no
such amendment or waiver shall extend to, or affect or impair any right with
respect to, any obligation that is not dealt with expressly therein.  No course of dealing or delay or omission on
the part of any of the Parties in exercising any right under or pursuant to
this Agreement shall operate as a waiver thereof or otherwise be prejudicial
thereto.

 

(f)            Counterparts.  This Agreement may
be executed simultaneously or in actual or telecopied counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.

 

(g)           Entire  Agreement.  This Agreement, together with the annexes
hereto, represents the entire agreement between the Parties concerning the
subject matter hereof and supersedes all prior written or oral negotiations,
representations and agreements with respect thereto.  No Party is relying on any statement or
representation other than as explicitly stated in this Agreement.

 

19

 

	
   

  	
  HEXION SPECIALTY CHEMICALS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Craig O. Morrison

  
	
   

  	
   

  	
  Name:
  Craig O. Morrison

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEXION LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Craig O. Morrison

  
	
   

  	
   

  	
  Name:
  Craig O. Morrison

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NIMBUS MERGER SUB INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Craig O. Morrison

  
	
   

  	
   

  	
  Name:
  Craig O. Morrison

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/
  Craig O. Morrison

  
	
   

  	
  Craig
  O. Morrison

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APOLLO INVESTMENT FUND IV, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Advisors IV, L.P., its general 

  
	
   

  	
   

  	
  partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Capital Management IV, Inc., its

  
	
   

  	
   

  	
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
  Name:
  John J. Suydam

  
	
   

  	
   

  	
  Title:
  Vice President

  
					

 

 

	
   

  	
  APOLLO OVERSEAS PARTNERS IV, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo Advisors IV, L.P., its managing 

  
	
   

  	
   

  	
  partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo Capital Management IV, Inc., its 

  
	
   

  	
   

  	
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
  Name:
  

  	
  John
  J. Suydam

  
	
   

  	
   

  	
  Title:
  

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  APOLLO INVESTMENT FUND VI, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo Advisors VI, L.P., its general 

  
	
   

  	
   

  	
  partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo Capital Management VI, LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
  Name:
  

  	
  John
  J. Suydam

  
	
   

  	
   

  	
  Title:
  

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  APOLLO OVERSEAS PARTNERS VI, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo Advisors VI, L.P.,

  
	
   

  	
   

  	
  its managing
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo Capital Management VI, LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
  Name:
  

  	
  John
  J. Suydam

  
	
   

  	
   

  	
  Title:
  

  	
  Vice
  President

  
								

 

 

	
   

  	
  APOLLO OVERSEAS PARTNERS

  
	
   

  	
  (DELAWARE) VI, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Advisors VI, L.P.,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Capital Management VI, LLC,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Suydam

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APOLLO OVERSEAS PARTNERS

  
	
   

  	
  (DELAWARE 892) VI, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Advisors VI, L.P.,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Capital Management VI, LLC,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Suydam

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APOLLO OVERSEAS PARTNERS

  
	
   

  	
  (GERMANY) VI, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Advisors VI, L.P.,

  
	
   

  	
   

  	
  its
  managing general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Capital Management VI, LLC,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Suydam

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
													

 

 

	
   

  	
  APOLLO INVESTMENT FUND V, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Advisors V, L.P.,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Capital Management V, Inc.,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Suydam

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  APOLLO OVERSEAS PARTNERS V, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Advisors V, L.P.,

  
	
   

  	
   

  	
  its
  managing general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Capital Management V, Inc.,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Suydam

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APOLLO NETHERLANDS PARTNERS V(A), 

  
	
   

  	
  L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Advisors V, L.P.,

  
	
   

  	
   

  	
  its
  managing general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Capital Management V, Inc.,

  
	
   

  	
   

  	
   its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
  Name:
  

  	
  John
  J. Suydam

  
	
   

  	
   

  	
  Title:
  

  	
  Vice
  President

  
													

 

 

	
   

  	
  APOLLO NETHERLANDS PARTNERS V(B), 

  
	
   

  	
  L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Advisors V, L.P.,

  
	
   

  	
   

  	
  its
  managing general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  Apollo Capital
  Management V, Inc.,

  
	
   

  	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
    /s/ John J.
  Suydam

  
	
   

  	
   

  	
   

  	
  Name: John J. Suydam

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  APOLLO GERMAN PARTNERS V

  
	
   

  	
  GMBH & CO., KG

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Advisors V, L.P.,

  
	
   

  	
   

  	
  its
  managing limited partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  Apollo Capital Management V, Inc.,

  
	
   

  	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
    /s/ John J.
  Suydam

  
	
   

  	
   

  	
   

  	
  Name: John J. Suydam

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  

 

 

	
   

  	
  APOLLO ADVISORS IV, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Capital Management IV, Inc., its

  
	
   

  	
   

  	
  general
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ John J. Suydam

  
	
   

  	
   

  	
  Name: John J. Suydam

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

	
   

  	
  APOLLO MANAGEMENT IV, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Management, L.P., its general 

  
	
   

  	
   

  	
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Management GP, LLC, its 

  
	
   

  	
   

  	
  general
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   
  /s/ John J. Suydam

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Suydam

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
						

 

 

	
   

  	
  APOLLO ADVISORS V, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Capital Management V, Inc., its 

  
	
   

  	
   

  	
  general
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   
  /s/ John J. Suydam

  
	
   

  	
   

  	
  Name:

  	
  John
  J. Suydam

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
					

 

 

	
   

  	
  APOLLO MANAGEMENT V, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  AIF
  V Management, LLC, its general 

  
	
   

  	
   

  	
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   
  /s/ John J. Suydam

  
	
   

  	
   

  	
  Name:
  John J. Suydam

  
	
   

  	
   

  	
  Title:
  Vice President

  
				

 

 

	
   

  	
  APOLLO ADVISORS VI, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo
  Capital Management VI, LLC,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   
  /s/ John J. Suydam

  
	
   

  	
   

  	
  Name:
  John J. Suydam

  
	
   

  	
   

  	
  Title:
  Vice President

  
				

 

 

	
   

  	
  APOLLO MANAGEMENT VI, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  AIF
  VI Management, LLC,

  
	
   

  	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
   

  	
  Name:
  John J. Suydam

  
	
   

  	
   

  	
   

  	
  Title:   Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  APOLLO MANAGEMENT, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Apollo
  Management GP, LLC,

  
	
   

  	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
   

  	
  Name:
  John J. Suydam

  
	
   

  	
   

  	
   

  	
  Title:   Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  APOLLO GLOBAL MANAGEMENT, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  AGM
  Management, LLC, its Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  BRH
  Holdings GP, Ltd., its Sole 

  
	
   

  	
   

  	
   

  	
  Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  John J. Suydam

  
	
   

  	
   

  	
   

  	
  Name:
  John J. Suydam

  
	
   

  	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
    /s/
  Leon D. Black

  
	
   

  	
  Leon
  D. Black

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
    /s/
  Joshua J. Harris

  
	
   

  	
  Joshua
  J. Harris

  
					

 

 

	
   

  	
  HUNTSMAN CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  Peter R. Huntsman

  
	
   

  	
  Name:

  	
  Peter
  R. Huntsman

  
	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/
  Jon M. Huntsman

  
	
   

  	
  Jon
  M. Huntsman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/
  Peter R. Huntsman

  
	
   

  	
  Peter
  R. Huntsman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HUNTSMAN FAMILY HOLDINGS 

  
	
   

  	
  COMPANY LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/
  Jon M. Huntsman

  
	
   

  	
  Name:

  	
  Jon
  M. Huntsman

  
	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE JON AND KAREN HUNTSMAN 

  
	
   

  	
  FOUNDATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
       /s/
  Jon M. Huntsman

  
	
   

  	
  Name:

  	
  Jon
  M. Huntsman

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  KAREN H. HUNTSMAN INHERITANCE 

  
	
   

  	
  TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  Karen H. Huntsman

  
	
   

  	
  Name:

  	
  Karen
  H. Huntsman

  
	
   

  	
  Title:

  	
  Trustee

  
				

 

 

	
   

  	
  HUNTSMAN FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  Jon M. Huntsman

  
	
   

  	
  Name:

  	
  Jon
  M. Huntsman

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BRYNN B. HUNTSMAN, AS CUSTODIAN UNDER THE UTAH
  UNIFORM TRANSFERS TO MINORS ACT, FOR THE BENEFIT OF REBECCA BRYNN
  HUNTSMAN, RACHEL BRYNN HUNTSMAN, CAROLINE BRYNN HUNTSMAN, AMBER BRYNN
  HUNTSMAN, VIRGINIA BRYNN HUNTSMAN, AND JAMES B. HUNTSMAN

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
     /s/
  Brynn B. Huntsman

  
	
   

  	
  Brynn
  B. Huntsman

  
				

 

 

Annex A

 

[Redacted]

 

 

Annex B

 

Terms of the Huntsman Convertible Notes

 

	
  Issuer:

  	
   

  	
  Huntsman
  Corporation (“Issuer”)

  
	
   

  	
   

  	
   

  
	
  Investor:

  	
   

  	
  Affiliates
  of Apollo Investment Fund VI, L.P. (“Investor”)

  
	
   

  	
   

  	
   

  
	
  Security:

  	
   

  	
  7%
  Convertible Senior Notes (the “Notes”)

  
	
   

  	
   

  	
   

  
	
  Principal
  Amount:

  	
   

  	
  $250
  million

  
	
   

  	
   

  	
   

  
	
  Conversion:

  	
   

  	
  The
  Notes shall be convertible at any time, at the option of the holder, into the
  number of shares of Common Stock determined by dividing (i) the
  principal amount of the Notes so converted by (ii) the Conversion Price
  then in effect. The initial “Conversion Price” equals 135% of the
  Original Common Price, subject to anti-dilution provisions as described
  further below. The “Original Common Price” means the closing price for
  one share of common stock of the Issuer (“Common Stock”) on
  December 10, 2008. The Issuer shall provide appropriate notice prior to
  the record date for any dividend or similar payment or other distribution on
  the Common Stock to the holders of the Notes to permit conversion, and
  provided notice of conversion has been received by the Issuer prior to the
  applicable record date, the holder will be entitled to the dividend or other
  payment or distribution at such time as it is made to holders of Common
  Stock. Interest payments on the Notes shall cease as of the date of notice of
  conversion.

  
	
   

  	
   

  	
   

  
	
  Interest:

  	
   

  	
  The
  Notes shall bear interest at the rate of 7% per annum. Interest shall be
  payable semi-annually on July 1 and January 1 of each year,
  beginning July 1, 2009. Interest shall be payable either in cash, or at
  the option of the Issuer, by delivery of shares of Common Stock having a then
  current market value equal to the interest payment.

   

  The
  Issuer and Investor will use reasonable efforts to exempt shares issued in
  payment of interest or payment of principal at maturity pursuant to the Notes
  from the short-swing profit rules of Section 16 of the Exchange
  Act.

  
	
   

  	
   

  	
   

  
	
  Maturity:

  	
   

  	
  The
  tenth anniversary of the issue date. At maturity, the Issuer shall have the
  option to pay the principal amount of the Notes in Common Stock by delivering
  Common Stock having a value equal to the principal amount of such Notes, plus
  an amount equal to the underwriting spread of a nationally recognized 

  

 

 

	
   

  	
   

  	
  underwriter
  chosen by the Issuer that would be paid by a seller of such shares at such
  time, in shares of Common Stock valued at the then current market price.

  
	
   

  	
   

  	
   

  
	
  Redemption:

  	
   

  	
  The
  Issuer shall be entitled to redeem the Notes in whole, for cash, at the
  principal amount plus accrued and unpaid interest, at any time after the
  third anniversary of the issue date provided that the closing price of the
  Common Stock, for at least 20 consecutive trading days prior to such notice
  of redemption, exceeds 135% of the Conversion Price then in effect. The
  Issuer shall not be entitled to redeem the Notes prior to the third
  anniversary of the issue date.

  
	
   

  	
   

  	
   

  
	
  Change
  of Control

  	
   

  	
  Upon
  a Non-Stock Change of Control, holders of Notes shall have the option, but
  not the obligation, to require the Issuer to redeem Notes in whole or in part
  for an amount equal to the principal amount thereof. Notes not so redeemed
  shall become convertible into consideration received by Common Stockholders.

   

  “Non-Stock
  Change of Control” means the occurrence of any of the following:
  (i) the acquisition by any person or “group” (as defined in
  Rule 13d-3 under the Securities and Exchange Act of 1934) of
  (a) more than 50% of the outstanding voting stock of Issuer (whether by
  merger, stock purchase, recapitalization, reorganization, redemption,
  issuance of capital stock or otherwise) or (b) assets constituting all
  or substantially all of the assets of Issuer, (ii) continuing directors
  (i.e., members of the Issuer’s board of directors currently or persons who
  become such members subsequently and whose appointment, election or
  nomination for election is duly approved by a majority of the continuing
  directors on the board at the time of such approval) cease to constitute a
  majority of the board, or (iii) any merger, consolidation or
  reorganization, or series of such related transactions, involving the Issuer,
  unless the stockholders of the Issuer immediately prior to such transaction
  or transactions will own at least 50% of the combined equity and voting power
  of the Issuer (or if the Issuer will not be the surviving entity in such
  merger, consolidation or reorganization, such surviving entity or a parent
  thereof). Notwithstanding the foregoing, no transaction described in clause
  (i) or (iii) above shall be a Non-Stock Change of Control unless,
  in such transaction, the outstanding shares of Common Stock are converted
  into or exchanged for consideration that is less than 90% publicly traded
  common equity securities.

  

 

 

	
  Anti-Dilution:

  	
   

  	
  The
  Notes shall be protected against dilution if the Issuer effects a subdivision
  or combination of its outstanding Common Stock or in the event of a
  reclassification, recapitalization, stock split, stock dividend or other
  distribution payable in securities of the Issuer or any other person or any
  dilutive Issuer self-tender offer. The Conversion Price of the Notes shall be
  adjusted to prevent dilution from other dividends or distributions, except no
  such adjustment shall be made with respect to (i) regular cash dividends
  paid on the Common Stock in a per share amount per quarter that does not exceed
  $0.15 cents per quarter, (ii) any dividend or distribution made out of
  (or in an amount that could be made out of) proceeds received by the Issuer
  or its affiliates from any settlement or other recovery with respect to the
  Hexion merger agreement and related transactions to the extent made within
  one year of receipt of such proceeds, or (iii) any dividend or
  distribution in which the Holders of Notes otherwise participate on an as
  converted basis.

  
	
   

  	
   

  	
   

  
	
  Ranking:

  	
   

  	
  The
  Notes shall rank equally with the Issuer’s other senior unsecured
  indebtedness.

  
	
   

  	
   

  	
   

  
	
  Transfer
  Restrictions

  	
   

  	
  For
  a period of one year following issuance of the Notes (the “Lock-Up Period”),
  Investor shall not, without the prior written consent of the Issuer, sell or
  otherwise transfer any Notes or the Common Stock issued upon conversion
  thereof (but not including Common Stock issued in lieu of interest payments)
  to any unaffiliated third-party.

  
	
   

  	
   

  	
   

  
	
  Information
  Rights

  	
   

  	
  If
  the Issuer is no longer subject to the reporting requirements of the Securities
  Exchange Act of 1934, Holders of Notes will be entitled, upon their request,
  to receive (i) no later than 45 days after the end of each of the first
  three fiscal quarters of each year, unaudited quarterly financial statements
  of the Issuer and its consolidated subsidiaries, and (ii) no later than
  90 days after the end of each fiscal year, annual audited financial
  statements of the Issuer and its consolidated subsidiaries

  
	
   

  	
   

  	
   

  
	
  Registration
  Rights:

  	
   

  	
  The
  Issuer will cause to be effective, promptly after the Lock-Up Period, and
  thereafter maintain in effect a customary resale shelf registration statement
  covering the Common Stock that may be issued upon conversion of the Notes or
  in respect of interest thereon. The Issuer shall be reimbursed by the requesting
  holders for registration fees incurred in connection with any such
  registration and the Issuer shall be responsible for its other costs of such
  registration.

  

 

 

	
  Voting
  / Standstill

  Agreement:

  	
   

  	
  Apollo,
  Issuer and Investor shall enter into a Voting/Standstill Agreement containing
  terms satisfactory to Issuer and Apollo, which terms shall include :

   

  (a)                   The Apollo-related stockholders and their
  Affiliates shall not beneficially own Issuer common shares or securities
  exercisable for or convertible into Issuer common shares other than the
  shares issuable upon conversion of the Notes, received in payment of interest
  or principal thereon and shares beneficially owned on the Effective Date or
  otherwise pursuant to a distribution or dividend on the Notes or shares of
  Common Stock issued pursuant to the Notes.

   

  (b)                  In connection with any matter in which the
  Apollo-related stockholders and their Affiliates have voting rights, the
  Issuer shares held by Apollo-related stockholders and their Affiliates will
  be voted, at the election of Issuer, either in the manner recommended by a
  majority of the Issuer Board or in the same proportion as the other Issuer
  shareholders. These voting restrictions shall be applicable to any transferee
  of the Notes or other securities other than transferees pursuant to
  (i) a firm commitment underwritten public offering involving a broad
  distribution, (ii) sales in regular broker transaction pursuant to
  Rule 144 or (iii) private sales to persons who after such sale beneficially
  and of record own less than 5% of the Issuer’s outstanding voting securities.

   

  (c)                   Neither the Apollo-related stockholders nor
  any of their Affiliates shall seek or propose to influence or control
  (whether through a 13D Group or otherwise) the management, Board of Directors,
  policies or affairs of Huntsman or any of its subsidiaries.

   

  (d)                  Neither the Apollo-related stockholders nor
  any of their Affiliates shall initiate (or solicit other Persons to initiate)
  or make any public statement regarding any tender or exchange offer for
  voting securities or other securities of Huntsman or any of its Subsidiaries,
  or any Business Combination or recapitalization, restructuring, liquidation
  or dissolution involving Huntsman or any of its Subsidiaries.

   

  (e)                   Neither the Apollo-related stockholders nor
  any of their Affiliates shall form, join or participate in a 13D Group (other
  than among themselves) with respect to acquiring, 

  

 

 

	
   

  	
   

  	
  disposing
  or voting of voting securities.

   

  (f)                     Neither the Apollo-related stockholders nor
  any of their Affiliates shall request Huntsman (or any of its directors,
  officers, employees or agents), directly or indirectly, to amend or waive any
  of the provisions of the Standstill/Voting Agreement (except in a manner that
  does not require or result in disclosure publicly or to third parties)

   

  (g)                  The Apollo-related stockholders and each of
  their Affiliates shall not disclose any intention, plan or arrangement
  inconsistent with any of the foregoing.

   

  (h)                  Neither the Apollo-related stockholders nor
  any of their Affiliates shall advise, assist or knowingly encourage any other
  Persons to do any of the foregoing.

   

  (i)                      Neither the Apollo-related stockholders nor
  any of their Affiliates shall engage in any short sales or other derivative
  or hedging activities with respect to the Notes or the Common Stock.

   

  (j)                      Standstill Agreement terminates upon the
  later to occur of (i) December 31, 2010 or (ii) the date on
  which none of the Apollo-Related Stockholders or their Affiliates
  beneficially or of record own Notes or any securities issued in respect
  thereof or otherwise which represent 3% or more of the outstanding Common
  Stock.

   

  For
  purposes of the foregoing paragraphs (a)-(j), with respect to Affiliates of
  Apollo that are portfolio companies of Apollo investment funds (other than
  Hexion Specialty Chemicals and its subsidiaries or any other portfolio
  company substantially engaged in the chemical business), the obligations of
  Apollo and its other Affiliates would be limited to (i) not directing or
  otherwise affirmatively causing or encouraging such portfolio company to
  violate such provisions, and (ii) if they become aware of a portfolio
  company acquiring securities of Huntsman or otherwise violating such
  provisions, using reasonable efforts to cause them to sell such securities or
  otherwise comply with such provisions.

  
	
   

  	
   

  	
   

  
	
  Documentation:

  	
   

  	
  Subject
  to customary definitive documentation. Representations and warranties shall
  only address customary and fundamental matters for transactions of this type,
  but shall not include any disclosure or other substantive representations
  about business or

  

 

 

	
   

  	
   

  	
  financial
  matters concerning the Issuer, and the Investor shall waive any claims with
  respect to representations not expressly given.

  
	
   

  	
   

  	
   

  
	
  Regulatory
  Matters:

  	
   

  	
  The
  Issuer and Apollo will reasonably cooperate with respect to any required
  regulatory approvals regarding the issuance of shares of Common Stock
  hereunder, in order to facilitate the prompt conversion of the Notes at such
  time as they may be converted, and to the extent provided herein, provide the
  benefits of conversion from the date of delivery of the conversion notice,
  despite the fact that there may be a delay in conversion due to regulatory
  approvals.

  

 

 

Annex C

 

December    ,
2008

 

Dear                      :

 

This letter memorializes our agreement as of the Effective Date of the
Settlement Agreement and Release dated December      ,
2008 between and among the Huntsman Parties, the Hexion Parties, and the Apollo
Parties (capitalized terms not otherwise defined in this letter are used as
defined in the Settlement Agreement and Release), that Huntsman shall pay the
Apollo Parties an amount in cash equal to 20% of the value of any cash and
noncash consideration that is in excess of $500 million ($500,000,000) that
Huntsman may obtain or receive in settlement in connection with any claims made
by Huntsman against the Banks arising from or relating to the Merger Agreement,
the Transactions referred to therein (including but not limited to the
Financing), and related matters, such claims including but not limited to the
Texas Action Against the Banks (the “settlement”), after Huntsman first
recovers its attorneys’ fees, costs, and expenses in making that claim;
provided, however, that:

 

(1)                                  in no circumstance shall the aggregate amount
of any payments owed by Huntsman to the Apollo Parties under this letter exceed
$425 million ($425,000,000);

 

(2)                                  in the event trial commences in the Texas
Action Against the Banks, any interest on the part of the Apollo Parties shall
terminate immediately, and Huntsman shall not owe any portion of any subsequent
recovery to the Apollo Parties under this letter; and

 

(3)                                  in the event that Huntsman or any of its
subsidiaries issues a security or debt instrument to any of the Banks in
connection with the settlement, the amount of consideration deemed to be
obtained or received by Huntsman in connection therewith shall be the excess of
any of the value of the consideration provided by the Banks over the value of
the security or debt instrument issued.

 

For the purposes of this
letter, the value of (1) any consideration consisting of securities listed
on a national securities exchange or traded on the NASDAQ shall be equal to the
average closing price per share of such security as reported on such exchange or
NASDAQ for the 10 trading days prior to the date of settlement; and (2) any
other form of noncash consideration shall be the full market value of that
noncash consideration as determined by a nationally recognized independent 

 

 

investment banking firm
mutually selected within three business days after the Huntsman Parties advise
the Apollo Parties of the settlement, by the Huntsman Parties and the Apollo
Parties, which determination shall be made by such investment banking firm
within 15 business days after the date of their engagement.  The determination of the investment banking
firm shall be binding upon the parties.

 

Payment in full of all
amounts due to Huntsman under the Settlement Agreement is a condition precedent
to the obligation to pay any sums of money pursuant to this letter for the
benefit of the Huntsman Parties and if such condition precedent is not met
prior to April 1, 2009, this letter shall terminate.  The obligations of this letter are also
separate and severable, in their entirety, from the Settlement Agreement.  The Huntsman Parties shall not challenge in
any way the validity or enforceability of this letter or any provision
thereof.  In the event that this letter
or any provision hereof is invalid or unenforceable, or fails for any reason,
it shall have no effect on the validity or enforceability of the Settlement
Agreement.

 

The provisions of
the Settlement Agreement relating to Choice of Law and Jurisdiction shall also
apply to this letter.

 

This letter may be executed simultaneously or in
actual or telecopied counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same letter.

 

Please countersign below to indicate your acceptance
of these terms.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED AND ACCEPTED:

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