Document:

Exhibit 10.3

 

 

HUNTSMAN CORPORATION

 

 

VOTING AND STANDSTILL AGREEMENT

 

 

Dated December 23, 2008

 

 

 

TABLE OF CONTENTS

 

	
  SECTION 1.

  	
   

  	
  Standstill Provisions

  	
  2

  
	
  1.1 

  	
   

  	
  Acquisition and Transfer of Voting Securities

  	
  2

  
	
  1.2 

  	
   

  	
  Further Restrictions on Conduct

  	
  2

  
	
  1.3 

  	
   

  	
  Legends

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  Voting Provisions

  	
  3

  
	
  2.1 

  	
   

  	
  Voting of Voting Securities

  	
  3

  
	
  2.2 

  	
   

  	
  Transfer of Voting Restrictions

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  Portfolio Companies

  	
  4

  
	
  3.1 

  	
   

  	
  Portfolio Companies

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  Representations and Warranties

  	
  4

  
	
  4.1 

  	
   

  	
  Representations and Warranties of Huntsman

  	
  4

  
	
  4.2 

  	
   

  	
  Representations and Warranties of Apollo-Related Stockholders

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  Miscellaneous

  	
  5

  
	
  5.1 

  	
   

  	
  Term

  	
  5

  
	
  5.2 

  	
   

  	
  Notices

  	
  5

  
	
  5.3 

  	
   

  	
  Amendments; No Waivers

  	
  6

  
	
  5.4 

  	
   

  	
  Successors and Assigns

  	
  6

  
	
  5.5 

  	
   

  	
  Severability

  	
  6

  
	
  5.6 

  	
   

  	
  Counterparts

  	
  6

  
	
  5.7 

  	
   

  	
  Specific Performance

  	
  6

  
	
  5.8 

  	
   

  	
  Governing Law

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule A

  	
  Defined
  Terms

  	
   

  
	
  Schedule B

  	
  Current
  Beneficial Ownership

  	
   

  

 

 

VOTING AND STANDSTILL AGREEMENT

 

This Voting and Standstill Agreement, dated as of December 23,
2008 (this “Agreement”), among on the one hand
Huntsman Corporation, a Delaware corporation (“Huntsman”);
and on the other hand Apollo Investment Fund VI, L.P., a Delaware limited
partnership; Apollo Overseas Partners VI, L.P., a Cayman Island exempted
limited partnership; Apollo Overseas Partners (Delaware) VI, L.P., a Delaware
limited partnership; Apollo Overseas Partners (Delaware 892) VI, L.P., a
Delaware limited partnership; Apollo Overseas Partners (Germany) VI, L.P., a
Cayman Islands exempted limited partnership; and AAA Guarantor—Co-Invest VI,
L.P., a Guernsey limited partnership (collectively, the “Apollo
Purchasers”), and Apollo Investment Fund IV, L.P., a Delaware
limited partnership; Apollo Overseas Partners IV, L.P., a Cayman Islands exempted
limited partnership; Apollo Investment Fund V, L.P., a Delaware limited
partnership; Apollo Overseas Partners V, L.P., a Cayman Islands exempted
limited partnership; Apollo Netherlands Partners V(A), L.P., a Cayman Islands
exempted limited partnership; Apollo Netherlands Partners V(B), L.P., a Cayman
Islands exempted limited partnership; Apollo German Partners V GmbH &
Co. KG, a German limited partnership; Apollo Advisors IV, L.P., a Delaware
limited partnership; Apollo Management IV, L.P., a Delaware limited
partnership; Apollo Advisors V, L.P., a Delaware limited partnership; Apollo
Management V, L.P., a Delaware limited partnership; Apollo Advisors VI, L.P., a
Delaware limited partnership; Apollo Management VI, L.P., a Delaware limited
partnership; Apollo Management, L.P., a Delaware limited partnership; Apollo
Global Management, LLC, a Delaware limited liability company; Leon D. Black and
Joshua J. Harris (collectively, including the Apollo Purchasers, the “Apollo Parties”), and Hexion Specialty Chemicals, Inc.,
a New Jersey corporation (“Hexion”);
Hexion LLC, a Delaware limited liability company; Nimbus Merger Sub Inc., a
Delaware corporation; and Craig O. Morrison (collectively, the “Hexion Parties” and, together with the Apollo Parties, the “Apollo-Related Stockholders”).  Certain capitalized and other terms used in
this Agreement are defined on Schedule A and references to a “Schedule” are, unless otherwise specified, to a Schedule
attached to this Agreement.

 

WHEREAS, Huntsman, Jon M. Huntsman, Peter R. Huntsman, the Huntsman
Family Stockholders (as defined therein) and the Apollo-Related Stockholders
have entered into that certain Settlement Agreement and Release dated as of December 14,
2008 (the “Settlement Agreement”) and
Huntsman and the Apollo Purchasers are concurrently entering into that certain
Note Purchase Agreement (the “Purchase Agreement”)
pursuant to which the Apollo Purchasers will purchase from Huntsman
$250,000,000 in principal amount of 7% Convertible Senior Notes due 2018 (the “Convertible Notes”) that are convertible into shares of
common stock, par value $0.01 per share, of Huntsman (“Common Stock”);
and

 

WHEREAS, the parties’ entering into this Agreement is a condition to
the parties entering into, and done in consideration of the parties’ mutual
agreements under, the Settlement Agreement and the Purchase Agreement;

 

 

NOW, THEREFORE, Huntsman and the Apollo-Related Stockholders, intending
to be legally bound, hereby agree, effective as of the date hereof (the “Effective Time”), as follows:

 

SECTION 1.     STANDSTILL
PROVISIONS

 

Section 1.1                                      Acquisition and Transfer of Voting Securities.

 

(a)                                  The Apollo-Related
Stockholders agree that neither they nor any of their Affiliates, shall hold or
acquire Beneficial Ownership of any Voting Securities, or securities
exercisable for or convertible into Voting Securities, other than any shares of
Common Stock issuable upon conversion of the Convertible Notes or received in
payment of interest or principal on the Convertible Notes (the “Underlying Common Shares”) (such Underlying Common Shares,
together with the Convertible Notes, the “Settlement Securities”),
any Common Stock issued as dividends on or distributed in respect of such
Settlement Securities and any shares of Common Stock Beneficially Owned as of
the Effective Time and set forth on Schedule B.  If at any time the Apollo-Related
Stockholders become aware that they or any of their Affiliates are not in
compliance with the foregoing, then the Apollo-Related Stockholders shall as
promptly as reasonably practicable take all actions necessary, including the
divestiture of securities in a commercially reasonable period, to comply with
this Section 1.1(a).

 

(b)                                 Subject to Section 2.2,
the Apollo-Related Stockholders agree that, for a period of one year from the
date hereof (the “Lock Up Period”),
neither they nor any of their Affiliates will, without the prior written
consent of Huntsman, Transfer any Settlement Securities to any Person.  Notwithstanding the foregoing, the
prohibition on transfer set forth in the preceding sentence shall not apply to (i) any
shares of Common Stock received in payment of interest on the Convertible
Notes, (ii) Transfers to an Affiliate of the Apollo-Related Stockholders (other than Hexion and any of its Subsidiaries or any such
Affiliate that is then a Portfolio Company), or (iii) pledges
of Voting Securities as a security for borrowings in a bona fide financing from
an unaffiliated financial institution provided such financial institution
agrees in writing that, upon any foreclosure, it will be bound by the
provisions of this Agreement as though it were an Apollo-Related Stockholder.

 

Section 1.2     Further Restrictions on Conduct.  The Apollo-Related Stockholders agree that:

 

(a)                                  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 and shall not initiate or propose any stockholder proposal or
action or make any “solicitation” of “proxies” (as such terms are defined in
Regulation 14A under the Exchange Act, as in effect on the date hereof) with
respect to the voting of or consenting with respect to, any Voting Securities,
or become a “participant” in a “solicitation” (as such terms are defined in
Regulation 14A under the Exchange Act, as in effect on the date hereof) in any
election contest with respect to the election or removal of any director of
Huntsman or in opposition to the publicly disclosed recommendation of the
majority of the directors of Huntsman with respect to any other matter relating
to the management and affairs of Huntsman or make any public statement (or take
any 

 

2

 

action which would reasonably be expected to require or result in
disclosure publicly of their position) regarding any of the foregoing;

 

(b)                                 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;

 

(c)                                  Neither the
Apollo-Related Stockholders nor any of their Affiliates shall form, join or
participate in any 13D Group (other than among themselves) with respect to
acquiring, disposing or voting Voting Securities;

 

(d)                                 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 this Agreement (except
in a manner that does not require or result in disclosure publicly or to third
parties);

 

(e)                                  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 Convertible
Notes or the Common Stock;

 

(f)                                    The Apollo-Related
Stockholders and each of their Affiliates shall not disclose any intention,
plan or arrangement inconsistent with any of the foregoing; and

 

(g)                                 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; provided,
however, that this Section 1.2(g) shall not limit or preclude
ordinary course of business commercial dealings of any Portfolio Company.

 

Section 1.3                                      Legends.  The
Apollo-Related Stockholders and their Affiliates agree that stop transfer
instructions reflecting the terms of this Agreement will be given to Huntsman’s
transfer agent with respect to the Underlying Common Shares and any Common
Stock issued as dividends on or distributed in respect of Settlement Securities
and that there will be placed on the certificates representing all Settlement
Securities an appropriate legend to ensure compliance with the terms of this
Agreement.  Huntsman agrees to take such
steps as are necessary such that such instructions and legends will be removed
effective as of the time the restrictions imposed by this Agreement no longer
apply.

 

SECTION 2.     VOTING
PROVISIONS

 

Section 2.1                                      Voting of Voting Securities. 
The Apollo-Related Stockholders agree that, in connection with any
matter in which the Apollo-Related Stockholders and their Affiliates have
voting rights in their capacity as stockholders (and for the avoidance of doubt
not as a holder of Convertible Notes), any Voting Securities held by the
Apollo-Related Stockholders and each of their Affiliates shall be cast for,
against or abstain in respect of any matter submitted to the holders of Voting
Securities, at the election of Huntsman, either (a) in the same proportion
as the votes cast for, against or abstain by all holders of Voting Securities
(other than the 

 

3

 

Apollo-Related Stockholders) or (b) in the manner recommended by a
majority of the Board of Directors.  With
respect to such voting matters, Huntsman shall provide adequate advance notice
of its election hereunder and shall assist the Apollo-Related Stockholders in
implementing such election.

 

Section 2.2                                      Transfer of Voting Restrictions.  The Apollo-Related Stockholders agree that
neither they nor any of their Affiliates will Transfer any Settlement
Securities or any shares of Voting Securities to any Person unless and until
such transferee has agreed in writing to be bound by the restrictions set forth
in Section 2.1, with such transferee being deemed to be an Apollo-Related
Stockholder for purposes of Section 2 (provided that this Section 2.2
and the limitations in Section 2.1 shall not apply to Transfers (a) to
any Person or 13D Group in a public or private sale which would, immediately
after giving effect to such Transfer, Beneficially Own and of record own less
than 5% of the outstanding Voting Securities, (b) in an underwritten
public offering involving a Distribution or (c) effected in a regular
broker transaction pursuant to Rule 144).

 

SECTION 3.     PORTFOLIO
COMPANIES

 

Section 3.1                                      Portfolio Companies.  For
the purposes of the provisions of Sections 1.1(a), 1.2, 2.1 and 2.2 of this
Agreement, with respect to Affiliates of the Apollo-Related Stockholders that
are Portfolio Companies, the obligations of the Apollo-Related Stockholders and
their other Affiliates are limited to (i) not directing or otherwise
affirmatively causing or encouraging such Portfolio Company to violate the provisions
of Sections 1.1(a), 1.2, 2.1 and 2.2 of this Agreement and (ii) if they
become aware of a Portfolio Company acquiring Voting Securities of Huntsman or
otherwise violating the provisions of Sections 1.1(a), 1.2, 2.1 and 2.2 of this
Agreement, using reasonable efforts to cause such Portfolio Company to sell
such Voting Securities or otherwise comply with the provisions of Sections
1.1(a), 1.2, 2.1 and 2.2 of this Agreement.

 

SECTION 4.     REPRESENTATIONS
AND WARRANTIES

 

Section 4.1                                      Representations and Warranties of Huntsman.  Huntsman represents and warrants to the
Apollo-Related Stockholders that (a) Huntsman is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder, (b) the execution
and delivery of this Agreement by Huntsman and the consummation by Huntsman of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Huntsman and (c) this Agreement has been
duly executed and delivered by Huntsman and constitutes a valid and binding
obligation of Huntsman, and is enforceable against Huntsman in accordance with
its terms.

 

Section 4.2                                      Representations and Warranties of Apollo-Related Stockholders.  Each Apollo-Related Stockholder represents
and warrants to Huntsman that (a) with respect to each Apollo-Related
Stockholder that is not a natural person, such Apollo-Related Stockholder is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of its state of incorporation or formation and has the
power and authority to enter into this Agreement and to carry out its
obligations hereunder, (b) the execution and delivery of this 

 

4

 

Agreement by each of the Apollo-Related Stockholders and the
consummation thereby of the transactions contemplated hereby have been duly
authorized by all necessary action on its part and no other proceedings on its
part are necessary to authorize this Agreement or any of the transactions
contemplated hereby and (c) this Agreement has been duly executed and
delivered by each of the Apollo-Related Stockholders and constitutes a valid
and binding obligation of each of them, and is enforceable against each of them
in accordance with its terms.

 

SECTION 5.     MISCELLANEOUS

 

Section 5.1                                    Term.  This Agreement,
including the obligations and restrictions imposed on the Apollo-Related
Stockholders hereunder shall terminate upon the later to occur of (i) 11:59
p.m., New York City time on December 31, 2010 and (ii) the date on
which none of the Apollo-Related Stockholders or their Affiliates (including
any Portfolio Company so long as such Portfolio Company remains an Affiliate)
Beneficially Own or own of record Convertible Notes or any securities issued in
respect thereof or otherwise that represent 3% or more of the then-outstanding
Common Stock.

 

Section 5.2                                    Notices.  All notices
and communications provided for hereunder shall be in writing and sent (a) by
facsimile if the sender on the same day sends a confirming copy of such notice
by a recognized overnight delivery service (charges prepaid), or (b) by
registered or certified mail with return receipt requested (postage prepaid),
or (c) by a recognized overnight delivery service (with charges
prepaid).  Any such notice must be sent:

 

(i)                                     If
to the Company, to the Company at 500 Huntsman Way, Salt Lake City, Utah 84108  to the attention of
the Treasurer, facsimile number: (801) 584-5788 (with a copy to the
General Counsel, facsimile number: (801) 584-5782), or at such other address as
the Company shall have specified to the holder of each Note in writing.

 

(ii)                                  If
to any of the Apollo Parties, to Apollo Global Management, LLC at 9 West 57th
Street, 43rd Floor, New York, New York 10019  to
the attention of the General Counsel, facsimile number: (646) 607-0539 , or at
such other address as any of the Apollo Parties shall have specified to the
Company in writing.

 

(iii)                               If
to any of the Hexion Parties, to Hexion Specialty Chemicals, Inc., 180
East Broad Street, Columbus, Ohio  43215  to the attention of the General Counsel, facsimile number:
(216) 479-8776, or at such other address as any of the Hexion Parties shall
have specified to the Company in writing.

 

(iv)                              If
to any subsequent transferee pursuant to Section 2.2 that has agreed in
writing to be bound by the restrictions set forth in Section 2.1, to such
transferee at such other address as such transferee shall have specified to the
Company in writing.

 

Notices under this Section 5.2 will be deemed given only (x) when
actually delivered (or if such delivery is not on a Business Day, on the next
Business Day), (y) when facsimile confirmation is received (or if such
receipt is not on a Business Day, on the next Business Day) or, (z) if
sent by registered or certified mail, three Business Days after the date of
mailing.

 

5

 

Section 5.3                                      Amendments; No Waivers.

 

(a)                                  Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by the parties hereto, or
in the case of a waiver, by the party against whom the waiver is to be
effective.

 

(b)                                 No failure or delay by
any party hereto in the exercise of any right hereunder shall impair such right
or be construed as a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right.  All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.

 

Section 5.4                                      Successors and Assigns. 
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns whether so expressed or not.

 

Section 5.5                                      Severability.  Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

 

Section 5.6                                      Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
an original but all of which together shall constitute one instrument.  Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.

 

Section 5.7                                      Specific Performance. 
The parties hereto each acknowledge and agree, and agree not to assert
otherwise in any proceeding, that a breach or threatened breach of any of the
provisions of this Agreement by a party will cause irreparable injury to the
other parties to this Agreement for which remedies at law would be inadequate
and, in recognition of that fact, agrees that, in the event of a breach or
threatened breach by any of them of the provisions of this Agreement, in
addition to any remedies at law, the aggrieved party, without posting any bond
and without any showing of irreparable injury, shall be entitled to obtain
equitable relief in the form of specific performance, a temporary restraining
order, a temporary or permanent injunction or any other equitable remedy which
may then be available.  The provisions of
this Section 5.7 are without prejudice to any other rights that the
parties hereto may have for any breach of this Agreement.  The parties further agree not to assert in any
proceeding that grounds for any equitable relief are not satisfied.

 

Section 5.8                                      Governing Law.  This
Agreement shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the laws of the State of Delaware, without
regard to the conflict of law principles thereof.  Any suit, action or proceeding arising out of
or relating to this Agreement shall only be instituted in the Delaware Chancery
Court, and if such court should decline jurisdiction, then in the Federal
courts within the State of Delaware. 
Each party agrees to personal jurisdiction in any action brought in any
court within 

 

6

 

the State of Delaware having subject matter jurisdiction over the
matters arising under this Agreement. 
Each party waives any objection which it may have now or hereafter to
the laying of the venue of such action or proceeding and irrevocably submits to
the jurisdiction of any such court in any such suit, action or proceeding.  The parties unconditionally waive any right
to trial by jury in any such suit, action or proceeding.

 

*    *   
*    *    *

 

7

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.

 

	
   

  	
  APOLLO-RELATED
  STOCKHOLDERS

  
	
   

  	
   

  
	
   

  	
  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

  

 

[Signature page to Voting and Standstill Agreement]

 

 

	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AAA GUARANTOR - CO-INVEST VI, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  AAA MIP Limited,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Apollo Alternative Assets, L.P.,

  
	
   

  	
   

  	
   

  	
  its investment manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Apollo Alternative Assets GP Limited,

  
	
   

  	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John J. Suydam

  
	
   

  	
   

  	
   

  	
  Name: John J. Suydam

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
  [Signature page to Voting and Standstill
  Agreement]

  

 

 

	
   

  	
  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 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

  
	
   

  	
   

  	
   

  	
   

  
	
  [Signature page to Voting and Standstill
  Agreement]

  

 

 

	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  
	
  [Signature page to Voting and Standstill
  Agreement]

  

 

 

	
   

  	
  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

  
	
   

  	
   

  	
   

  
	
  [Signature page to Voting and Standstill
  Agreement]

  

 

 

	
   

  	
  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

  
	
   

  	
   

  	
   

  
	
  [Signature page to Voting and Standstill
  Agreement]

  

 

 

	
   

  	
  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 Black

  
	
   

  	
  Leon Black

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Joshua J. Harris

  
	
   

  	
  Joshua J. Harris

  
	
   

  	
   

  
	
   

  	
  HEXION SPECIALTY CHEMICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig O. Morrison

  
	
   

  	
   

  	
  Name: Craig O. Morrison

  
	
   

  	
   

  	
  Title: President & Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
  HEXION LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig O. Morrison

  
	
   

  	
   

  	
  Name: Craig O. Morrison

  
	
   

  	
   

  	
  Title: President & Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  NIMBUS MERGER SUB INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig O. Morrison

  
	
   

  	
   

  	
  Name: Craig O. Morrison

  
	
   

  	
   

  	
  Title: President & Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Craig O. Morrison

  
	
   

  	
  Craig O. Morrison

  
	
   

  	
   

  
	
  [Signature page to Voting and Standstill
  Agreement]

  

 

 

	
   

  	
  HUNTSMAN
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel D. Scruggs

  
	
   

  	
   

  	
  Name: Samuel D. Scruggs

  
	
   

  	
   

  	
  Title: Executive Vice President
  General Counsel

  
	
   

  	
   

  	
   

  
	
  [Signature page to Voting and Standstill
  Agreement]

  

 

 

Schedule A

 

DEFINED
TERMS

 

For purposes of this Agreement, the following terms shall have the
following meanings:

 

“Affiliate” of any specified Person
means any other person which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such specified Person.  For purposes of this definition, control of a
Person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.

 

“Beneficially Own” or “Beneficial Ownership” with respect to any securities shall
mean having “beneficial ownership” of such securities (as determined pursuant
to Rule 13d-3 under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing.  For purposes of this Agreement, a Person
shall be deemed to “Beneficially Own” any securities that are the subject of a
derivative transaction entered into by such Person, or derivative security
acquired by such Person, which gives such Person the economic equivalent of
ownership of an amount of such securities due to the fact that the value of the
derivative is explicitly determined by reference to the price or value of such
securities, without regard to whether (a) such derivative conveys any
voting rights in such securities to such Person, (b) the derivative is
required to be, or capable of being, settled through delivery of such
securities, or (c) such Person may have entered into other transactions
that hedge the economic effect of such derivative.  In determining the number of Common Shares
deemed Beneficially Owned by virtue of the operation of the preceding sentence,
the subject Person shall be deemed to “Beneficially Own” (without duplication)
the number of shares of Common Stock that are synthetically owned pursuant to
such derivative transactions or such derivative securities.

 

“Board of Directors” shall mean the
board of directors of Huntsman.

 

“Business Combination” shall mean any
merger, consolidation, share, exchange, or similar business combination
transaction or any transfer, assignment, conveyance, lease or other disposition
by a referenced Person of all or substantially all of its assets.

 

“Business Day” means any day other than
a Saturday, a Sunday or a day on which commercial banks in New York, New York
or Houston, Texas are required or authorized to be closed.

 

“Distribution” shall mean a “distribution”
as defined in Rule 100 of Regulation M under the Securities Act.

 

“Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time in effect.

 

“Person” shall mean any individual,
partnership (limited or general), joint venture, limited liability company, corporation,
association, business entity, trust, business trust, unincorporated
organization, government or department or agency of a government.

 

 

“Portfolio Company”
means a company in which one or more Apollo Parties or their Affiliates own
debt or equity securities that (i) is actively engaged in providing goods
or services to third-party customers (i.e., is not purely a “captive” business
of an Apollo Party), and (ii) has its day-to-day operations managed by
individuals who are not employees of any Apollo Party and (iii) that is
not substantially engaged in the chemical business; provided, however, that
clause (iii) shall not apply to the definition of Portfolio Company for
purposes of the second sentence of Section 1.1(b).  For the avoidance of doubt, none of Hexion or
any of its Subsidiaries will be considered Portfolio Companies under this
Agreement.

 

“Rule 144” means Rule 144
promulgated under the Securities Act of 1933, as amended, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC having substantially the same effect as such rule.

 

“SEC” means the Securities and Exchange
Commission.

 

“Securities Act” shall mean the
Securities Act of 1933, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.

 

“Subsidiary” shall mean, as to any
Person, any Person at least a majority of the shares of stock or other equity
interests of which having general voting power under ordinary circumstances to
elect a majority of the board of directors (or comparable governing body)
thereof (irrespective of whether or not at the time stock or equity of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency) is, at the time as of which the determination is
being made, owned by such Person, or one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries.

 

“13D Group” shall mean any group of
Persons acquiring, holding, voting or disposing of securities which would be
required under Section 13(d) of the Exchange Act and the rules and
regulations thereunder (as in effect, and based on legal interpretations
thereof existing, on the date hereof) to file a statement on Schedule 13D with
the SEC as a “person” within the meaning of Section 13(d)(3) of the
Exchange Act if such group beneficially owned securities representing more than
5% of any class of securities then outstanding.

 

“Transfer” shall mean any sale,
exchange, transfer, pledge, encumbrance or other disposition, and “to Transfer”
shall mean to sell, exchange, transfer, pledge, encumber or otherwise dispose
of.

 

“Voting Securities” shall mean at any
time shares of any class of capital stock of Huntsman that are then entitled to
vote generally in the election of directors.

 

2

 

Schedule B

 

CURRENT
BENEFICIAL OWNERSHIP

 

None.Exhibit 10.1

 

EXECUTION
COPY

 

CONTINGENT
VALUE RIGHTS AGREEMENT

 

THIS
CONTINGENT VALUE RIGHTS AGREEMENT, dated as of December 23,
2008 (this “Agreement”),
is entered into by and among LIGAND
PHARMACEUTICALS INCORPORATED, a Delaware corporation (“Buyer”), PHARMACOPEIA, INC., a Delaware corporation
(“Target”),
and MELLON INVESTOR SERVICES LLC, a New
Jersey limited liability company, as Rights Agent (the “Rights Agent”).

 

Preamble

 

Buyer, Margaux
Acquisition Corp., a Delaware corporation (“Sub”), Latour Acquisition, LLC, a
Delaware limited liability company, and Target have entered into an Agreement
and Plan of Merger dated as of September 24, 2008 (the “Merger Agreement”),
pursuant to which Sub will merge with and into Target (the “Merger”), with Target (or a successor
entity) surviving the Merger as a subsidiary of Buyer.

 

Pursuant to
the Merger Agreement, Buyer agreed to create and issue to Target’s stockholders
of record immediately prior to the effective time of the Merger and other
securityholders of Target, contingent value rights as hereinafter described.

 

The parties
have done all things necessary to make the contingent value rights, when issued
pursuant to the Merger Agreement and hereunder, the valid obligations of Buyer
and to make this Agreement a valid and binding agreement of Buyer, in
accordance with its terms.

 

NOW,
THEREFORE, for and in consideration of the premises and the consummation of the
transactions referred to above, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders (as hereinafter defined), as
follows:

 

ARTICLE
I

DEFINITIONS

 

Section 1.1
Definitions.

 

(a) For
all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:

 

(i) the
terms defined in this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular;

 

(ii) all
accounting terms used herein and not expressly defined herein shall have the
meanings assigned to such terms in accordance with U.S. generally accepted
accounting principles, as in effect on the date hereof;

 

(iii) the
words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section or
other subdivision;

 

(iv) unless
the context otherwise requires, words describing the singular number shall
include the plural and vice versa, words denoting any gender shall include all
genders and words 

 

 

denoting natural Persons shall include
corporations, partnerships and other Persons and vice versa; and

 

(v) all
references to “including” shall be deemed to mean including without limitation.

 

(b) Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed
thereto in the Merger Agreement. The following terms shall have the meanings
ascribed to them as follows:

 

“Achievement Certificate” has the meaning set forth in Section 2.4(a).

 

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

 

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

 

“Business Day” means any day other than a
Saturday, Sunday or a day on which banking institutions in California, New York
or New Jersey are authorized or obligated by law or executive order to remain
closed.

 

“CVR Payment Amount” means an amount equal
to $15 million, payable in cash.

 

“CVR Payment Date” means the date that the
CVR Payment Amount is payable by Buyer to the Holders, which date shall be
established pursuant to Section 2.4.

 

“CVR Payment Event” means the entry by Buyer or any of its
subsidiaries into a license or sale agreement related to DARA, or any other
agreement for the development, marketing or sale of DARA, or any option to
enter into any such agreements, with any third party, other than Bristol-Myers
Squibb Company or any of its Affiliates, on or prior to December 31, 2011.

 

“CVR Register” has the meaning set forth in Section 2.3(b).

 

“CVR Registrar” has the meaning set forth in Section 2.3(b).

 

“CVRs” means the contingent value rights
issued by Buyer pursuant to the Merger Agreement and this Agreement.

 

“DARA” means any product candidate from Target’s dual-acting
angiotensin and endothelin receptor antagonist program (including Target’s
Phase 2 product candidate identified by code PS433540), including related
back-up compounds, research data, Intellectual Property and any other related
rights or assets.

 

“Holder” means a Person in whose name a CVR
is registered in the CVR Register.

 

“Non-Achievement Certificate” has the meaning set forth in Section 2.4(d).

 

“Notice of Objection” has the meaning set forth in Section 2.4(d).

 

“Objection Period” has the meaning set forth in Section 2.4(d).

 

2

 

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

 

“Permitted Transfer” means: (i) the
transfer of any or all of the CVRs (upon the death of the Holder) by will or
intestacy; (ii) transfer by instrument to an inter vivos or testamentary
trust in which the CVRs are to be passed to beneficiaries upon the death of the
trustee; (iii) transfers made pursuant to a court order of a court of
competent jurisdiction (such as in connection with divorce, bankruptcy or
liquidation); (iv) if the Holder is a partnership or limited liability
company, a distribution by the transferring partnership or limited liability
company to its partners or members, as applicable; or (v) a transfer made
by operation of law (including a consolidation or merger) or in connection with
the dissolution, liquidation or termination of any corporation, limited
liability company, partnership or other entity.

 

“Person” means any individual, corporation
(including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company), firm
or other enterprise, association, organization, entity or governmental entity.

 

“Rights Agent” means the Rights Agent named
in the first paragraph of this Agreement, until a successor Rights Agent shall
have become such pursuant to the applicable provisions of this Agreement, and
thereafter “Rights Agent” shall mean such successor Rights Agent.

 

“Rights Agent Fee” means the fee of the Rights Agent to act
in such capacity pursuant to the terms of this Agreement.

 

“Surviving Person” has the meaning set forth in Section 6.1(a)(i).

 

ARTICLE
II

CONTINGENT
VALUE RIGHTS

 

Section 2.1
Issuance of CVRs; Appointment of Rights Agent.

 

(a) The
CVRs shall be issued pursuant to the Merger Agreement at the time and in the
manner set forth in the Merger Agreement.

 

(b) Buyer
hereby appoints Mellon Investor Services LLC as the Rights Agent to act as
rights agent for Buyer in accordance with the terms and conditions set forth in
this Agreement, and the Rights Agent hereby accepts such appointment.

 

Section 2.2
Nontransferable.

 

The CVRs shall
not be sold, assigned, transferred, pledged, encumbered or in any other manner
transferred or disposed of, in whole or in part, other than through a Permitted
Transfer.

 

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

 

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

 

3

 

(b) The
Rights Agent shall keep a register (the “CVR Register”) for the registration of CVRs.
The Rights Agent is hereby initially appointed “CVR Registrar” for the purpose of
registering CVRs and transfers of CVRs as herein provided.

 

(c) Subject
to the restriction on transferability set forth in Section 2.2, every
request made to transfer a CVR must be in writing and accompanied by a written
instrument or instruments of transfer and any other requested documentation in
form reasonably satisfactory to Buyer and the CVR Registrar, properly completed
and duly executed by the registered Holder or Holders thereof or by the duly
appointed legal representative thereof or by a duly authorized attorney, such
signature to be guaranteed by a participant in a recognized Signature Guarantee
Medallion Program. A request for a transfer of a CVR shall be accompanied by
such documentation establishing satisfaction that the transfer is a Permitted
Transfer as may be reasonably requested by Buyer and the CVR Registrar
(including opinions of counsel), if appropriate. Upon receipt of such written
notice by Buyer and the CVR Registrar, the CVR Registrar shall, subject to the
Buyer’s confirmation in writing to the CVR Registrar that the transfer
instrument is in proper form and the transfer otherwise complies with the other
terms and conditions herein, register the transfer of the CVRs in the CVR
Register. All duly transferred CVRs registered in the CVR Register shall be the
valid obligations of Buyer, evidencing the same right and shall entitle the
transferee to the same benefits and rights under this Agreement, as those held
by the transferor. No transfer of a CVR shall be valid until registered in the
CVR Register, and any transfer not duly registered in the CVR Register will be
void ab initio. Any transfer or assignment of the CVRs shall be without charge
(other than the cost of any transfer tax or governmental charge which shall be
the responsibility of the transferor) to the Holder.

 

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

 

(e) Any
Holder may make a written request (which must be duly executed by such Holder)
to Buyer for a list containing the names, addresses and number of CVRs of the
Holders that are registered in the CVR Register.  Within three Business
Days following the date of receipt by Buyer of such request, Buyer shall make a
written request to the CVR Registrar for such list, which request shall specify
the name of the requesting Holder.  Upon receipt of such written request
from Buyer, the CVR Registrar shall promptly (and in any event within three
Business Days) deliver a copy of such list to the requesting Holder at the
address for such Holder in the CVR Register.

 

Section 2.4
Payment Procedures.

 

(a) Promptly
following the occurrence of the CVR Payment Event, of which date Buyer shall
notify the Rights Agent in writing, but in no event later than ten Business
Days after such event, Buyer shall deliver to the Rights Agent a certificate
(the “Achievement
Certificate”), certifying that the Holders are entitled to receive
the CVR Payment Amount.  The Rights Agent
shall have no duty or obligation to verify or confirm the accuracy, validity or
sufficiency of the CVR Payment Amount and shall have no duty or obligation to
verify or confirm whether a CVR Payment Event has occurred.  No transaction in compliance with Section 6.1
hereof shall give the Holders the right to receive the CVR Payment Amount.

 

4

 

(b) If a
CVR Payment Event has not occurred on or prior to December 31, 2011, then,
within five Business Days after such date, Buyer shall deliver to the Rights
Agent a certificate (the “Non-Achievement
Certificate”), stating that a CVR Payment Event did not occur.

 

(c) Except
as otherwise requested by any Holder, the Rights Agent shall promptly (and in
no event later than five Business Days after receipt thereof) send each Holder
a copy of any Achievement Certificate or Non-Achievement Certificate at its
address as reflected in the CVR Register as of the date the Rights Agent
received such Achievement Certificate or Non-Achievement Certificate.

 

(d) Upon
demand by any Holder or Holders of at least 20% in the aggregate of the
outstanding CVRs received within 45 calendar days after distribution by the
Rights Agent of a Non-Achievement Certificate (the “Objection
Period”), the Rights Agent shall deliver a written notice to
Buyer, which shall be prepared by such Holder or Holders, (i) specifying
that such Holder or Holders object to the determination of Buyer that a CVR
Payment Event did not occur and (ii) stating the reason upon which such
Holder or Holders have determined that a CVR Payment Event has occurred on or
prior to December 31, 2011 (a “Notice of Objection”).  Any dispute arising from a Notice of
Objection shall be resolved in accordance with the procedure set forth in Section 7.12,
which decision shall be binding on the parties hereto and the Holders.

 

(e) If a
Notice of Objection has not been delivered to Buyer within the Objection
Period, then the Holders shall have no right to receive the CVR Payment Amount,
and Buyer and the Rights Agent shall have no further obligations with respect
to the CVR Payment Amount.

 

(f) If
Buyer delivers an Achievement Certificate to the Rights Agent or if the CVR
Payment Amount is determined to be payable pursuant to Section 2.4(d) above,
Buyer shall establish a CVR Payment Date that is within 15 calendar days of the
date of the Achievement Certificate or the date of final determination pursuant
to Section 2.4(d) above, as applicable, and shall notify the Rights
Agent of such date in writing. At least five Business Days prior to such CVR
Payment Date, Buyer shall cause the CVR Payment Amount to be delivered to the
Rights Agent, who will in turn, on the CVR Payment Date, distribute the CVR
Payment Amount to the Holders (each Holder being entitled to receive its pro rata share of the CVR Payment Amount based on the number
of CVRs held by such Holder as reflected on the CVR Register, which pro rata
amount shall be provided by Buyer in writing to the Rights Agent) by check
mailed to the address of each Holder as reflected in the CVR Register as of the
close of business on the last Business Day prior to such CVR Payment Date.  The determination by Buyer of any CVR Payment
Amount shall be final and binding on Buyer, the Rights Agent and each Holder.

 

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

 

(h) Buyer
shall promptly furnish to the Rights Agent all information and documentation in
connection with this Agreement and the CVRs that the Rights Agent or any Holder
or Holders of 

5

 

at least 5% in the aggregate of the
outstanding CVRs may reasonably request in connection with the determination of
whether the CVR Payment Event has occurred. The Rights Agent shall forward any
information and documentation it receives to the Holders who request such
information.

 

Section 2.5 No
Voting, Dividends or Interest; No Equity or Ownership Interest in Buyer.

 

(a) The
CVRs shall not have any voting or dividend rights, and interest shall not
accrue on any amounts payable on the CVRs to any Holder.

 

(b) The
CVRs shall not represent any equity or ownership interest in Buyer or in any
constituent company to the Merger.

 

Section 2.6 Sole
Discretion and Decision Making Authority.

 

Notwithstanding
anything contained herein to the contrary, the development of pharmaceutical
products, such as DARA, is uncertain and expensive and as a result, Buyer shall
have sole discretion and decision making authority over whether to continue to
invest, how much to invest in DARA and whether and on what terms, if any, to
enter into (i) a license or sale agreement related to DARA, (ii) any
other agreement for the development, marketing or sale of DARA, or (iii) any
option to enter into any such agreements.

 

ARTICLE
III

THE
RIGHTS AGENT

 

Section 3.1
Certain Duties and Responsibilities.

 

The Rights
Agent shall not have any liability for any actions taken, suffered or omitted
to be taken in connection with this Agreement, except to the extent of its
willful misconduct, bad faith or gross negligence (which willful misconduct,
bad faith or gross negligence must be determined by a final, non-appealable
judgment of a court of competent jurisdiction). 
Anything to the contrary notwithstanding, in no event shall the Rights
Agent be liable for any special, punitive, indirect, consequential or
incidental loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage.  Any liability of
the Rights Agent will be limited to the amount of annual fees paid by Buyer to
the Rights Agent.  No provision of this
Agreement shall require the Rights Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers.

 

Section 3.2
Certain Rights of Rights Agent.

 

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

 

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

 

6

 

(b) whenever
the Rights Agent shall deem it necessary or desirable that a fact or matter be
proved or established prior to taking, suffering or omitting any action
hereunder (including, without limitation, the identity of a Holder), the Rights
Agent may rely upon an Officer’s Certificate, and such Officer’s Certificate
shall be full and complete authorization and protection to the Rights
Agent.  The Rights Agent shall incur no
liability for or in respect of any action taken, suffered or omitted by it
absent bad faith under the provisions of this Agreement in reliance on such
Officer’s Certificate;

 

(c) the
Rights Agent shall not be subject to, nor be required to comply with, or
determine if any person or entity has complied with, the Merger Agreement or
any other agreement between or among the parties hereto, even though reference
thereto may be made in this Agreement, or to comply with any notice,
instruction, direction, request or other communication, paper or document other
than as expressly set forth in this Agreement;

 

(d) the Rights
Agent may engage and consult with counsel of its selection (who may be legal
counsel for Buyer) and the advice or opinion of such counsel shall be full and
complete authorization and protection for the Rights Agent, and the Rights
Agent shall incur no liability for or in respect of any action taken, suffered
or omitted by it absent bad faith in accordance with such advice or opinion;

 

(e) the
Rights Agent may engage and consult with tax experts, valuation firms and other
experts and third parties that it, in its sole and absolute discretion, deems
appropriate or necessary to enable it to discharge its duties hereunder;

 

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

 

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

 

(h) Buyer
agrees that it shall perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged or delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights Agent
for the carrying out or performing by the Rights Agent of the provisions of
this Agreement;

 

(i) the
Rights Agent shall not be deemed to have any knowledge of any event which it
was supposed to have received notice thereof hereunder, and the Rights Agent
shall be fully protected and shall incur no liability for failing to take any
action in connection therewith unless and until it has received such notice;

 

(j) the
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from an officer of Buyer,
and to apply to such officer for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in accordance with instructions from such officer;

 

(k) the
Rights Agent shall not incur any liability for not performing any act, duty,
obligation or responsibility by reason of any occurrence beyond the control of
the Rights Agent (including, without limitation, any act or provision of any
present or future law or regulation or governmental authority, any act of God,
war, civil disorder or failure of any means of communication);

 

7

 

(l) the
Rights Agent and any stockholder, director, officer or employee of the Rights
Agent may buy, sell or deal in any of the CVRs or other securities of Buyer or
become pecuniarily interested in any transaction in which Buyer may be
interested, or contract with or lend money to Buyer or otherwise act as fully
and freely as though the Rights Agent were not Rights Agent under this
Agreement.  Nothing herein shall preclude
the Rights Agent from acting in any other capacity for Buyer or for any other
Person;

 

(m)  the
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself (through its directors,
officers or employees) or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, omission, default,
neglect or misconduct of any such attorneys or agents or for any loss to Buyer
or any other Person resulting from any such act, default, neglect or
misconduct, absent willful misconduct, bad faith or gross negligence (which
willful misconduct, bad faith or gross negligence must be determined by a
final, non-appealable judgment of a court of competent jurisdiction);

 

(n) in
the event the Rights Agent reasonably believes any ambiguity or uncertainty
exists hereunder or in any notice, instruction, direction, request or other
communication, paper or document received by the Rights Agent hereunder, the
Rights Agent may, in its sole discretion, refrain from taking any action, and
shall be fully protected and shall not be liable in any way to Buyer or other
person or entity for refraining from taking such action, unless the Rights
Agent receives written instructions signed by Buyer which eliminates such
ambiguity or uncertainty to the reasonable satisfaction of the Rights Agent.

 

(o) the
recitals or statements of fact contained herein shall be taken as statements of
Buyer, and the Rights Agent assumes no responsibility for their correctness nor
shall it be required to verify the same. 
The Rights Agent shall be under no responsibility for the validity or
sufficiency of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of the CVRs, nor shall it be responsible for any breach by Buyer of
any covenant or condition contained in this Agreement or any CVR.

 

(p) Buyer
agrees to indemnify, defend, protect, save and keep harmless the Rights Agent
and its affiliates and their respective successors, assigns, directors,
officers, managers, employees, agents, attorneys, accountants and experts
(collectively, the “Indemnitees”), against any
and all loss, liability, obligation, damage, fine, settlement, penalty, action,
judgment, suit, cost, disbursement, proceeding, investigation, claim, demand or
expense of any kind or nature whatsoever (including, without limitation, the
reasonable fees and expenses of legal counsel and the costs and expenses of defending
the Indemnitee against any claim of liability arising therefrom) (collectively,
“Losses”) that may be imposed on,
incurred by, or asserted against any Indemnitee, at any time, and in any way
relating to, arising out of or in connection with the execution, delivery or
performance of this Agreement, the enforcement of any rights or remedies in
connection with this Agreement, and the payment, transfer or other application
of funds pursuant to this Agreement, or as may arise by reason of any act, omission
or error of the Indemnitee; provided, however, that no Indemnitee shall be
entitled to be so indemnified, defended, protected, saved or kept harmless to
the extent such Loss was caused by its own willful misconduct, bad faith or
gross negligence (each as determined by a final, non-appealable judgment of a
court of competent jurisdiction).

 

8

 

(q) Buyer
agrees (i) to pay the fees and expenses of the Rights Agent in connection
with this Agreement, as set forth on Schedule 1 hereto, and (ii) to
reimburse the Rights Agent for all taxes and governmental charges, reasonable
expenses and other charges of any kind and nature (including, without
limitation, reasonable fees and disbursements of counsel) incurred in connection
with the preparation, negotiation, amendment, modification, waiver, execution,
delivery, performance or enforcement of this Agreement (other than taxes
measured by the Rights Agent’s net income). An invoice for the Rights Agent Fee
will be rendered a reasonable time prior to, and paid on, the effective date of
the transaction. An invoice for any out-of-pocket expenses and per item fees
realized will be rendered and payable within thirty (30) days after
receipt by Buyer, except for postage and mailing expenses, which funds must be
received by the Rights Agent one (1) Business Day prior to the scheduled
mailing date.

 

Section 3.3
Resignation and Removal; Appointment of Successor.

 

(a) The
Rights Agent may resign at any time by giving written notice thereof to Buyer
specifying a date when such resignation shall take effect, which notice shall
be sent at least 30 days prior to the date so specified.

 

(b) If
the Rights Agent shall resign, be removed or become incapable of acting, Buyer,
by way of a Board Resolution, shall promptly appoint a qualified successor
Rights Agent who may be a Holder but shall not be an officer of Buyer. The
successor Rights Agent so appointed shall, forthwith upon its acceptance of
such appointment in accordance with this Section 3.3(b), become the
successor Rights Agent.

 

(c) Buyer
shall give notice of each resignation and each removal of a Rights Agent and
each appointment of a successor Rights Agent by mailing written notice of such
event by first-class mail, postage prepaid, to the Holders as their names and
addresses appear in the CVR Register. Each notice shall include the name and
address of the successor Rights Agent. If Buyer fails to send such notice
within ten days after acceptance of appointment by a successor Rights Agent,
the successor Rights Agent shall cause such notice to be mailed at the expense
of Buyer. Failure to give any notice provided for in this Section 3.3,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of a
successor Rights Agent, as the case may be.

 

Section 3.4
Acceptance of Appointment by Successor.

 

Every
successor Rights Agent appointed hereunder shall execute, acknowledge and
deliver to Buyer and to the retiring Rights Agent an instrument accepting such
appointment and a counterpart of this Agreement, and thereupon such successor
Rights Agent, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Rights Agent; provided,
that upon the request of Buyer or the successor Rights Agent, such retiring
Rights Agent shall execute and deliver an instrument transferring to such
successor Rights Agent all the rights, powers and trusts of the retiring Rights
Agent.

 

9

 

ARTICLE
IV

COVENANTS

 

Section 4.1 List
of Holders.

 

Buyer shall
furnish or cause to be furnished to the Rights Agent (a) in such form as
Buyer receives from its transfer agent (or other agent performing similar
services for Buyer), the names, addresses and shareholdings of the Holders
within five Business Days of the effective time of the Merger, (b) at such
other times as the Rights Agent may request in writing, within five days after
receipt by Buyer of any such request, a list, in such form as Buyer receives
from its transfer agent (or other agent performing similar services for Buyer),
of the names and the addresses of the Holders as of a date not more than 15
days prior to the time such list is furnished, and (c) any other
information reasonably requested by the Rights Agent.  Buyer shall also furnish or cause to be
furnished to the Rights Agent with respect to each holder of any Assumed
Company Option and New Warrant, such holder’s name, address and the number of
shares of Buyer’s common stock issuable upon exercise of such Assumed Company
Option or New Warrant.  Upon such
exercise, such holder shall be a “Holder” for all purposes of this Agreement.  The Rights Agent shall not be deemed to have
knowledge of, and shall not have any duty or liability with respect to, any
holder of any Assumed Company Option or New Warrant unless and until it shall
have received written notice from Buyer regarding such Holder’s name, address
and shareholding.

 

Following the
distribution by the Rights Agent of the CVR Payment Amount, if any, to the
Holders in accordance with Section 2.4 hereof, any remaining undistributed
amount will be promptly returned to Buyer to be held by Buyer for distribution
to the appropriate Holders.

 

Section 4.2
Payment of CVR Payment Amount.

 

Buyer shall
duly and promptly pay the CVR Payment Amount, if any, in immediately available
funds, to the Rights Agent to be distributed to the Holders in the manner
provided for in Section 2.4 and in accordance with the terms of this
Agreement.

 

Section 4.3
Ability to Make Prompt Payment.

 

Neither Buyer
nor any of its Subsidiaries shall enter into any agreement that would restrict
Buyer’s right to be able to promptly make payments to the Holders under this
Agreement or otherwise restrict Buyer’s ability to fund such payments.

 

Section 4.4 Assignment.

 

Buyer shall
not, in whole or in part, assign any of its rights or obligations under this
Agreement other than in accordance with the terms of Section 6.1 hereof.

 

Section 4.5 Registration

 

If required
pursuant to applicable U.S. securities laws, the CVRs will be registered
pursuant to the Registration Statement under the Securities Act and Buyer
covenants and agrees:

 

(a) to
prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith as may
be necessary to keep the Registration Statement effective through the CVR
Payment Date or until such time as the CVRs terminate in accordance with the
terms hereof and to use its reasonable efforts to keep the Registration
Statement effective during such period; and

 

(b) to
use its reasonable efforts to register or qualify the CVRs under the securities
or blue sky laws of each jurisdiction in which such registration or
qualification is necessary.

 

10

 

Buyer shall be solely responsible for
monitoring compliance with this Section 4.5.  In addition, the Rights Agent will not be
under any duty or responsibility to insure compliance with any applicable
federal or state securities laws, including but not limited to the Securities
Act, in connection with the issuance, transfer, exchange, registration or
qualification of the CVRs.

 

ARTICLE
V

AMENDMENTS

 

Section 5.1
Amendments Without Consent of Holders.

 

(a) Without
the consent of any Holders or the Rights Agent, Buyer, when authorized by a
Board Resolution, at any time and from time to time, may enter into one or more
amendments hereto, for any of the following purposes:

 

(i) to
evidence the succession of another Person to Buyer and the assumption by any
such successor of the covenants of Buyer herein in a transaction contemplated
by Section 6.1 hereof; or

 

(ii) to
evidence the termination of the CVR Registrar and the succession of another
Person as a successor CVR Registrar and the assumption by any successor of the
obligations of the CVR Registrar herein.

 

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

 

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

 

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

 

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

 

(iv) to
add, eliminate or change any provision of this Agreement unless such addition,
elimination or change is adverse to the interests of the Holders.

 

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

 

11

 

Section 5.2
Amendments With Consent of Holders.

 

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

 

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

 

Section 5.3
Execution of Amendments.

 

Prior to
executing any amendment permitted by this Article V, the Rights Agent
shall be entitled to receive, and shall be fully protected in relying upon, an
Officer’s Certificate and an opinion of counsel stating that the execution of
such amendment is authorized or permitted by this Agreement. Notwithstanding
anything herein to the contrary, the Rights Agent may, but is not obligated to,
enter into any such amendment that affects the Rights Agent’s own rights,
privileges, covenants, duties, obligations or immunities under this Agreement
or otherwise, and the Rights Agent shall not be bound by amendments not
executed by it.

 

Section 5.4
Effect of Amendments.

 

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

 

ARTICLE
VI

CONSOLIDATION,
MERGER, SALE OR CONVEYANCE

 

Section 6.1
Buyer May Consolidate, Etc.

 

(a) Buyer
shall not consolidate with or merge into any other Person or convey, transfer
or lease its properties and assets substantially as an entirety to any Person,
unless:

 

(i) the
Person formed by such consolidation or into which Buyer is merged or the Person
that acquires by conveyance or transfer, or that leases, the properties and
assets of Buyer substantially as an entirety (the “Surviving Person”)
shall expressly assume payment of amounts on all the CVRs and the performance
of every duty and covenant of this Agreement on the part of Buyer to be
performed or observed; and

 

(ii) Buyer
has delivered to the Rights Agent an Officer’s Certificate and an opinion of
counsel, stating that such consolidation, merger, conveyance, transfer or lease
complies with this Article VI and that all conditions precedent herein
provided for relating to such transaction have been complied with.

 

(b) For
purposes of this Section 6.1 only, “convey, transfer or lease its
properties and assets substantially as an entirety” shall mean (i) properties
and assets contributing in the aggregate at least 80% of Buyer’s total
consolidated revenues for the current period as reported in Buyer’s 

 

12

 

last available periodic financial report
(quarterly or annual, as the case may be) or (ii) properties and assets
constituting in the aggregate at least 80% of Buyer’s total assets for the
current period as reported in Buyer’s last available periodic financial report
(quarterly or annual, as the case may be).

 

(c) In
the event Buyer conveys, transfers or leases its properties and assets
substantially as an entirety in accordance with the terms and conditions of
this Section 6.1, Buyer and the Surviving Person shall be jointly and
severally liable for the payment of the CVR Payment Amount and the performance
of every duty and covenant of this Agreement on the part of Buyer to be
performed or observed.

 

Section 6.2 Successor
Substituted.

 

Upon any
consolidation of or merger by Buyer with or into any other Person, or any
conveyance, transfer or lease of the properties and assets substantially as an
entirety to any Person in accordance with Section 6.1, the Surviving Person
shall succeed to, and be substituted for, and may exercise every right and
power of, Buyer under this Agreement with the same effect as if the Surviving
Person had been named as Buyer herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and
covenants under this Agreement and the CVRs.

 

ARTICLE
VII

OTHER
PROVISIONS OF GENERAL APPLICATION

 

Section 7.1
Notices to Rights Agent and Buyer.

 

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

 

(a) if to
the Rights Agent, addressed to it at Newport Office Center VII, 480 Washington
Blvd., Jersey City, NJ  07310, Attention:
Relationship Manager, facsimile at (501) 760-1538, with a copy to Newport
Office Center VII, 480 Washington Blvd., Jersey City, NJ  07310, Attention:  General Counsel, or at any other address
previously furnished in writing to the Holders and Buyer by the Rights Agent in
accordance with this Section 7.1; or

 

(b) if to
Buyer, addressed to it at 10275 Science Center Drive, San Diego, California
92121, facsimile at (858) 550-7272, or at any other address previously
furnished in writing to the Rights Agent and the Holders by Buyer in accordance
with this Section 7.1.

 

Section 7.2
Notice to Holders.

 

Where this
Agreement provides for notice to Holders, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his, her
or its address as it appears in the CVR Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such 

 

13

 

notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders.

 

Section 7.3
Effect of Headings.

 

The Article and
Section headings herein are for convenience only and shall not affect the
construction hereof.

 

Section 7.4
Successors and Assigns.

 

All covenants
and agreements in this Agreement by Buyer shall bind its successors and
assigns, whether so expressed or not.

 

Section 7.5
Benefits of Agreement.

 

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

 

Section 7.6
Governing Law.

 

This Agreement
and the CVRs shall be governed by and construed in accordance with the laws of
the State of Delaware without regards to its rules of conflicts of laws;
provided, however, that all provisions regarding the rights, duties,
responsibilities and obligations of the Rights Agent will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such state.

 

Section 7.7
Legal Holidays.

 

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

 

Section 7.8
Severability Clause.

 

In case any
one or more of the provisions contained in this Agreement shall for any reason
be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement, but this Agreement shall be construed as if such
invalid or illegal or unenforceable provision had never been contained herein.
Upon such determination that any term or other provision is invalid, illegal or
unenforceable, the court or other tribunal making such determination is
authorized and instructed to modify this Agreement so as to effect the original
intent of the parties as closely as possible so that the transactions and
agreements contemplated herein are consummated as originally contemplated to
the fullest extent possible; provided, however, that if such modified provision
shall affect the rights, immunities, duties or obligations of the Rights Agent,
the Rights Agent shall be entitled to resign immediately.

 

14

 

Section 7.9
Counterparts.

 

This Agreement
may be signed in any number of counterparts (which may be effectively delivered
by facsimile or other electronic means), each of which shall be deemed to
constitute but one and the same instrument.

 

Section 7.10
Termination.

 

This Agreement
shall terminate and be of no further force or effect, and the parties hereto
shall have no liability hereunder, upon the earlier to occur of (a) the
payment of the CVR Payment Amount, (b) in the event that a Notice of
Objection is not delivered within the Objection Period, the expiration of the
Objection Period or (c) in the event of the delivery of a Notice of
Objection, either (i) the final determination in accordance with this
Agreement that a CVR Payment Event has not been achieved or (ii) the
fulfillment of any payment or other obligation required pursuant to a final
determination made in accordance with this Agreement.

 

Section 7.11
Entire Agreement.

 

As between
Buyer and Target only, this Agreement and the Merger Agreement represent their
entire understanding with reference to the CVRs, and this Agreement supersedes
any and all other oral or written agreements between Buyer and Target made with
respect to the CVRs, except for the Merger Agreement.  If and to the extent that any provision of
this Agreement is inconsistent or conflicts with the Merger Agreement, this
Agreement shall govern and be controlling.

 

Section 7.12
Negotiation; Arbitration.

 

(a) Prior
to any arbitration pursuant to Section 7.12(b), Buyer and any Holder or
Holders of at least 5% in the aggregate of the outstanding CVRs shall negotiate
in good faith for a period of 30 days to resolve any controversy or claim
arising out of or relating to this Agreement or the breach thereof.

 

(b) After
expiration of the 30-day period contemplated by Section 7.12(a), such
controversy or claim, including any claims for breach of this Agreement, shall
be settled by arbitration administered by the American Arbitration Association
under its Commercial Arbitration Rules, and judgment on the award rendered by
the arbitrators may be entered in any court having jurisdiction thereof. Buyer and any Holder or Holders of at
least 20% in the aggregate of the outstanding CVRs may initiate an arbitration
for any matter relating to this Agreement. However, in the event of a dispute
arising from the delivery of a Notice of Objection, the sole matter to be
settled by arbitration shall be whether a CVR Payment Event has occurred on or
prior to December 31, 2011.  The
number of arbitrators shall be three. Within 15 days after the commencement of
arbitration, each party shall select one person to act as arbitrator, and the
two selected shall select a third arbitrator within 15 days of their
appointment. If the arbitrators selected by the parties are unable or fail to
agree upon the third arbitrator, the third arbitrator shall be selected by the
American Arbitration Association. The place of the arbitration shall be New
York, New York. The arbitrators shall be lawyers or retired judges with
experience in the life sciences industry and with mergers and acquisitions.
Except as may be required by law, neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder without
the prior written consent of both parties (provided that the Rights Agent may
disclose to the Holders any such information without the consent of Buyer). Any
award payable in favor of the Holders as a result of arbitration shall be
distributed to the Holders on a pro rata 

 

15

 

basis, based on the number of CVRs held by
each Holder. Buyer shall pay all fees and expenses incurred in connection with
any arbitration, including the costs and expenses billed by the arbitrators in
connection with the performance of their duties described herein; provided,
however, that if the arbitrator rules in favor of Buyer, the
Arbitrator’s fees and expenses shall be offset against the CVR Payment Amount,
if any.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

16

 

IN WITNESS WHEREOF,
each of the parties has caused this Agreement to be executed on its behalf by
its duly authorized officers as of the day and year first above written.

 

	
   

  	
  LIGAND PHARMACEUTICALS

  INCORPORATED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John L Higgins

  
	
   

  	
   

  	
  Name: John L
  Higgins

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PHARMACOPEIA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian M.
  Posner

  
	
   

  	
   

  	
  Name: Brian
  M. Posner

  
	
   

  	
   

  	
  Title:
  Executive Vice President, Chief Financial Officer

  and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MELLON
  INVESTOR SERVICES LLC,

  as Rights Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark
  Cano

  
	
   

  	
   

  	
  Name: Mark
  Cano

  
	
   

  	
   

  	
  Title:
  Relationship Manager

  

 

 

Schedule 1

Fees and Expenses of the Rights Agent

 

	
  Issues
  Covered:

  	
  Recordkeeping Cusip (1)

  
	
  (additional
  issues are subject to additional fees.)

  	
   

  

 

	
  Administration & Account
  Maintenance

  	
   

  	
   

  	
   

  
	
  Acceptance Fee

  	
   

  	
  $

  	
  3,500.00

  	
   

  
	
  Recordkeeping Up to 500 Accounts

  	
   

  	
  $

  	
  5,000.00

  	
   

  
	
  Excercising of Rights

  	
   

  	
  By Appraisal

  	
   

  
	
  Rights Redemption Payment

  	
   

  	
  By Appraisal

  	
   

  
	
  Legal Out-of-Pocket Expenses*

  	
   

  	
   

  	
   

  
	
  Fee for reviewing the Agreement

  	
   

  	
  $

  	
  2,000.00

  	
   

  
	
  Fee for reviewing an Amendment

  	
   

  	
  $

  	
  900.00

  	
   

  

 

* All
rights agreements will be reviewed by outside counsel.  The expenses associated with the review by
outside counsel will be passed on to the client as an out-of-pocket
expense.  The amounts quoted above
represent approximate billing amounts for the work described.  The amount charged to the client could be
more, or less, depending on the complexity of the work done outside counsel.

 

Additional fees will apply if the annual allowances below are exceeded

 

	
  Account Administration

  	
   

  	
  Allowance

  	
   

  	
  Fee

  	
   

  
	
  Number of active accounts maintained

  	
   

  	
  500

  	
   

  	
  $

  	
  4.00

  	
   

  
	
  Number of reports or analyses

  	
   

  	
  4

  	
   

  	
  See Below

  	
   

  
	
  Number of lists or labels

  	
   

  	
  4

  	
   

  	
  See Below

  	
   

  
							

 

Additional Lists & Mailings Upon Request

 

	
  Shareholder
  Lists and Analysis
 (Minimum charge for each of the below services)

  	
   

  	
  $

  	
  500.00

  	
   

  
	
  Lists, per name listed

  	
   

  	
  $

  	
  0.05

  	
   

  
	
  (c)                                  Labels,
  per label printed

  	
   

  	
  $

  	
  0.05

  	
   

  
	
  (d)                                 Analysis,
  per name passed on database

  	
   

  	
  $

  	
  0.02

  	
   

  
	
  (e)                                  Analysis,
  per name listed in report

  	
   

  	
  $

  	
  0.05

  	
   

  
	
  Custom Lists or Analyses

  	
   

  	
  By Appraisal

  	
   

  
	
  Standard
  Mailing Services
 (Minimum charge for each of the below services)

  	
   

  	
  $

  	
  500.00

  	
   

  

 

 

	
  Addressing mailing medium, per name

  	
   

  	
  $

  	
  0.05

  	
   

  
	
  Affixing labels, per label

  	
   

  	
  $

  	
  0.05

  	
   

  
	
  Machine Inserting

  	
   

  	
   

  	
   

  
	
  1st Enclosure, per piece 

  	
   

  	
  $

  	
  0.05 

  	
   

  
	
  2nd Enclosure, per piece 

  	
   

  	
  $

  	
  0.04 

  	
   

  
	
  Each Enclosure thereafter, per piece

  	
   

  	
  $

  	
  0.03

  	
   

  
	
  Manual Inserting

  	
   

  	
  By Appraisal

  	
   

  

 

Account Maintenance Functions

 

·                  Opening new accounts

·                  Posting debits and credits

·                  Maintaining certificate history

·                  Placing and releasing stop transfer
notations

·                  Consolidating accounts

·                  Coding accounts requiring special
handling (e.g. “bad address,” “do not mail,” “VIP,” etc.)

·                  Processing address changes

·                  Responding to shareholder
correspondence (includes address changes, coding changes, W8/W9 Inquiries, 1099
duplicate requests, statement inquiries, check replacements, and other routine
transactions)

·                  Providing a toll-free phone number
for shareholder inquiries

·                  Obtaining and posting Taxpayer
Identification Number certifications pursuant to IDTCA regulations

·                  Maintaining inactive accounts for the
purpose of research and tax reporting

·                  Closing (purging) inactive accounts
that meet selected criteria

·                  Maintaining shareholder consents to
electronic delivery of materials

·                  Review and reporting of information
required by the Office of Foreign Asset Control

·                  Provide and process safekeeping
requests

·                  Replacing lost, destroyed or stolen
certificates (charge imposed on shareholder)

·                  Supporting custodial arrangements for
selling stockholders or otherwise as requested by Client in connection with
public offerings

 

19

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