SC 13D/A

0000950123-08-010363.txt : 20080828 0000950123-08-010363.hdr.sgml : 20080828 20080828173023 ACCESSION NUMBER: 0000950123-08-010363 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20080828 DATE AS OF CHANGE: 20080828 GROUP MEMBERS: D.E. SHAW & CO., L.L.C. GROUP MEMBERS: D.E. SHAW & CO., L.P. GROUP MEMBERS: D.E. SHAW OCULUS PORTFOLIOS, L.L.C. GROUP MEMBERS: DAVID E. SHAW SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Huntsman CORP CENTRAL INDEX KEY: 0001307954 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 421648585 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-80566 FILM NUMBER: 081046418 BUSINESS ADDRESS: STREET 1: 500 HUNTSMAN WAY CITY: SALT LAKE CITY STATE: UT ZIP: 84108 BUSINESS PHONE: (801) 584-5700 MAIL ADDRESS: STREET 1: 500 HUNTSMAN WAY CITY: SALT LAKE CITY STATE: UT ZIP: 84108 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: D. E. Shaw Valence Portfolios, L.L.C. CENTRAL INDEX KEY: 0001294704 IRS NUMBER: 134046559 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 120 WEST FORTY-FIFTH STREET STREET 2: 39TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: (212) 478-0000 MAIL ADDRESS: STREET 1: 120 WEST FORTY-FIFTH STREET STREET 2: 39TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10036 SC 13D/A 1 y66919sc13dza.htm AMENDMENT #1 TO SCHEDULE 13D SC 13D/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Amendment No. 1)
Under the Securities Exchange Act of 1934

HUNTSMAN CORPORATION

(Name of Issuer)

Common Stock, $0.01 par value

(Title of Class Securities)

447011107

(CUSIP Number)

D. E. Shaw & Co., L.P.
Attn: Compliance Department
120 West Forty-Fifth Street
Floor 39, Tower 45
New York, NY 10036
212-478-0000

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

August 28, 2008

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act.


1	NAME OF REPORTING PERSON. I.R.S. IDENTIFICATION D. E. Shaw Valence Portfolios, L.L.C. FEIN 13-4046559


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	WC

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

		7	SOLE VOTING POWER

NUMBER OF			-0-

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			14,687,786

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			-0-

WITH		10	SHARED DISPOSITIVE POWER

			14,687,786

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	14,687,786

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	6.3%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	OO


1	NAME OF REPORTING PERSON. I.R.S. IDENTIFICATION D. E. Shaw Oculus Portfolios, L.L.C. FEIN 20-0805088


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	WC

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

		7	SOLE VOTING POWER

NUMBER OF			-0-

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			7,036,275

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			-0-

WITH		10	SHARED DISPOSITIVE POWER

			7,036,275

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	7,036,275

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	3.0%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	OO


1	NAME OF REPORTING PERSON. I.R.S. IDENTIFICATION D. E. Shaw & Co., L.L.C. FEIN 13-3799946


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	AF

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

		7	SOLE VOTING POWER

NUMBER OF			-0-

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			7,037,856

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			-0-

WITH		10	SHARED DISPOSITIVE POWER

			7,037,856

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	7,037,856

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	3.0%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	OO


1	NAME OF REPORTING PERSON. I.R.S. IDENTIFICATION D. E. Shaw & Co., L.P. FEIN 13-3695715


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	AF

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Delaware

		7	SOLE VOTING POWER

NUMBER OF			-0-

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			21,725,642

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			-0-

WITH		10	SHARED DISPOSITIVE POWER

			21,725,642

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	21,725,642

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	9.3%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	IA, PN


1	NAME OF REPORTING PERSON. I.R.S. IDENTIFICATION David E. Shaw


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS (SEE INSTRUCTIONS)

	AF

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	United States

		7	SOLE VOTING POWER

NUMBER OF			-0-

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			21,725,642

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			-0-

WITH		10	SHARED DISPOSITIVE POWER

			21,725,642

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	21,725,642

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	9.3%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

	IN

This Amendment No. 1 amends certain information in the Statement on Schedule 13D filed on June 30, 2008 (the “Schedule 13D”) by D. E. Shaw Valence Portfolios, L.L.C., a Delaware limited liability company (“Valence”), D. E. Shaw Oculus Portfolios, L.L.C., a Delaware limited liability company (“Oculus”), D. E. Shaw & Co., L.L.C., a Delaware limited liability company (“DESCO LLC”), D. E. Shaw & Co., L.P., a Delaware limited partnership (“DESCO LP”), and David E. Shaw, a citizen of the United States of America (“David E. Shaw”, and together with Valence, Oculus, DESCO LLC, and DESCO LP, collectively, the “Reporting Persons”), relating to the shares of common stock, $0.01 par value per share (the “Common Shares”), of Huntsman Corporation (the “Issuer”). Capitalized terms used but not defined herein have the meanings previously ascribed to them in the Schedule 13D.

Neither the present filing nor anything contained herein shall be construed as an admission that any Reporting Person constitutes a “person” for any purposes other than Section 13(d) of the Exchange Act.

Item 4. Purpose of Transaction

Item 4 is amended by the addition of the following:

Proposed Additional Financing Commitment

On August 28, 2008, Valance and Oculus (the “D. E. Shaw Stockholders”) and certain other institutional investors delivered a letter (the “Proposal Letter”) to Hexion and Apollo Global Management, LLC (“Apollo”) indicating their willingness to enter into a legally-binding commitment to subscribe, together with other large investors in the Issuer, for at least $500 million of Contingent Value Rights (“CVRs”) to be issued by Hexion upon consummation of the merger contemplated by the Merger Agreement. The Proposal Letter included a draft Additional Financing Commitment Letter and accompanying term sheet and stated that the D. E. Shaw Stockholders and other signatories to the Proposal Letter (together, with the D. E. Shaw stockholders the “Initial Investors”) were willing to enter into the Additional Financing Commitment Letter in the form attached, or to discuss any comments or suggestions of Hexion and Apollo. Copies of the Proposal Letter and the draft Additional Financing Commitment Letter are attached hereto as Exhibits 4 and 5, respectively, and each are incorporated herein by reference.

Under the terms of the draft Additional Financing Commitment Letter, the Initial Investors would make several commitments to purchase an aggregate of $245,022,716 of Contingent Value Rights directly from Hexion, subject to the terms and conditions described in the Additional Financing Commitment Letter. The D. E. Shaw Stockholders would be responsible only for their own several commitment, in an aggregate amount of $79,075,582.04 of Contingent Value Rights.

The Initial Investors also would agree in the draft Additional Financing Commitment Letter that they or their affiliates would hold a certain portion of their current investments in the Common Shares until the earlier of the consummation of the Merger or the termination of the commitments in accordance with the Additional Financing Letter. The D. E. Shaw Stockholders would agree to hold during such period 3,010,840 Common Shares, which would have a value (at the Merger price) of approximately $86,983,140.

The several commitments of the D. E. Shaw Stockholders and the other Initial Investors would be subject to the conditions set forth in the Additional Financing Commitment Letter. Of particular note:

•

The Initial Investors’ commitments of $245,022,716 in notional amount are subject to Hexion receiving similar commitments from a limited number of other large investors in the Issuer (“Additional Commitments”) such that the aggregate notional amount of all CVR commitments is at least $500 million. Representatives of the Reporting Persons have discussed this proposal with Peter Huntsman and requested that the Huntsman family and certain of their controlled entities join the attached commitment letter (the “Huntsman Family Stockholders”). Peter Huntsman has informed the Initial Investors that it is his expectation that the Huntsman Family Stockholders will subscribe for an aggregate of $186,233,986.12 in notional amount of CVRs on the terms and conditions set forth in the commitment letter at such time as sufficient Additional Commitments are received such that the aggregate of all CVR commitments, including the commitments of the Huntsman Family Stockholders, is at least

			$500 million. Based on the Reporting Person’s analysis of the institutional ownership of the Issuer’s common equity, they believe that sufficient Additional Commitments can be obtained from other large stockholders who see the situation in the same terms as the Initial Investors. In the event that Hexion receive excess Additional Commitments, the Initial Investors will agree that Hexion may increase the total amount of CVRs rather than reduce the Initial Investors’ commitments.

	•		Each Initial Investor’s commitment also is subject to Hexion’s acceptance of the commitment letter by September 15, 2008. In accepting the commitment letter, the Initial Investors ask Hexion to confirm that, assuming the “Company Material Adverse Effect” condition in the Merger Agreement will be satisfied or waived as of the closing date, Hexion has no other reason to believe that any condition precedent to any party’s obligation to effect the merger will not be timely satisfied or that any party has or will have the right to terminate the Merger Agreement prior to the consummation of the merger.

	•		The Initial Investor’s commitments are subject to the consummation of the merger on the terms and at the price specified in the Merger Agreement.

As a result of the potential arrangements described in the Proposal Letter and draft Additional Financing Commitment Letter, the Reporting Persons may be deemed a member of a “group” for purposes of Section 13(d) of the Exchange Act, with the other Initial Investors and the Huntsman Family Stockholders. The Reporting Persons expressly disclaim membership in a group with the Initial Investors, the Huntsman Family Stockholders, or any other person.

The D. E. Shaw Stockholders propose to make a CVR investment because they believe it may facilitate the merger and still yield for them an acceptable net cash price in the merger. Assuming that the D. E. Shaw Stockholders decide to hold all of their 21,724,061 common shares through the consummation of the merger and the D. E. Shaw Stockholders subscribe for $79,075,582.04 in notional amount of CVRs, the D. E. Shaw Stockholders expect to receive $28.89 per share (or $627,608,122.29 in the aggregate) in cash proceeds from the merger pursuant to the Merger Agreement and immediately re-invest $3.64 per share (or $79,075,582.04 in the aggregate) of those proceeds in CVRs issued by Hexion, for a net cash payment to the D. E. Shaw Stockholders on the merger closing date of $25.25 per share (or $548,532,540.25 in the aggregate).

Other than as described herein, the Reporting Persons do not have any other plans or proposals described in paragraphs (a) through (j) of Item 4 of Schedule 13D. However, the Reporting Persons intend to continuously evaluate their investment in the Issuer and may acquire or dispose of Common Shares, other securities of the Issuer or Hexion, or loans or other interests in the Issuer or Hexion, or take any of the actions described in the Schedule 13D with respect to their investment or the transactions contemplated by the Merger Agreement. The Reporting Persons may work with the Initial Investors, the Huntsman Family Stockholders and/or other investors in the Issuer or Hexion in connection with the transactions contemplated by the Proposal Letter, Additional Financing Commitment Letter or Merger Agreement or to develop other plans or proposals. The plans or proposals may involve or relate to one or more of the matters described in the Schedule 13D.

The Reporting Persons may hedge all or a portion of their commitment to purchase, or investment in, the CVRs.

Item 5. Interest in Securities of the Issuer

Item 5 is amended by the addition of the following:

As a result of the arrangements as disclosed in Item 4, the Reporting Persons may be deemed a group with the other Initial Investors and the Huntsman Family Stockholders and, therefore, may be deemed to beneficially own the shares of Common Shares beneficially owned by the other Initial Investors and the Huntsman Family Stockholders. Based solely on information provided to the Reporting Person and in Schedules 13D and Forms 4 filed by the other Initial Investors and the Huntsman Family Stockholders, Citadel Investment Group, L.L.C. and its related entities (the “Citadel Entities”) beneficially own 18,587,111 Common Shares and have ‘long’ economic exposure under certain cash-settled total return swap transactions to an additional 3,561,700 Common Shares (for a total of 22,148,811 Common Shares) based on information provided by the Citadel Entities and their Schedule 13D filed on July 22, 2008; MatlinPatterson Global Advisers LLC and its related entities (the “Matlin Entities”) have beneficial ownership of at least 19,870,000 Common Shares based on information provided by the Matlin Entities and as reported in their Schedule 13D filed on August 2, 2007; Pentwater Capital Management L.P. and its related entities beneficially own 565,000 Common Shares and have ‘long’ economic exposure under certain cash-settled total return swap transactions to an additional 3,500,000 Common Shares (for a total of 4,065,000 Common Shares) based on information received from Pentwater Capital Management L.P.; and Huntsman Family Holdings Company LLC, Jon M. Huntsman, Peter R. Huntsman, the Jon and Karen Huntsman Foundation and certain related entities have beneficial ownership of 51,163,183 Common Shares based on information provided by such persons and reported in Schedules 13D filed on August 2, 2007 and July 12, 2007 and in Forms 4 filed on June 3, 2008. The aggregate number of Common Shares described herein does not include Common Shares beneficially owned by any other member of any “group” within the meaning of Section 13(d) of the Exchange Act, in which any of the Reporting Persons may be deemed a member, and the Reporting Persons expressly disclaim such membership.

The decrease in Common Shares beneficially owned by Valence from 14,694,586 to 14,687,786 (and the corresponding decreases in Common Shares beneficially owned by DESCO LP and David E. Shaw) since the time of our Schedule 13D, filed on June 30, 2008, is not the result of any trading by Valence or any of the Reporting Persons but is a result of a consolidation of positions at the custodian through which Valence holds Common Shares.

None of the Reporting Persons may be deemed to have beneficially owned any Common Shares as of August 28, 2008 other than as set forth herein.

Item 6. Contracts, Arrangements, Understandings or Relationship with Respect to the Securities of the Issuer

Item 6 is amended by the addition of the following:

See “Item 4. Purpose of Transaction” for a description of the Proposal Letter and the draft Additional Financing Commitment Letter, each of which are qualified in their entirety by reference to the respective letter and commitment letter, copies of each of which are filed as exhibits hereto and are incorporated herein by reference.

Item 7. Materials to be Filed as Exhibits

Item 7 is amended the addition of the following:


Exhibit No.		Exhibit
Exhibit 4		Proposal Letter, dated August 28, 2008, from Citadel Limited Partnership, D. E. Shaw Valence Portfolios, L.L.C., D. E. Shaw Oculus Portfolios, L.L.C., MatlinPatterson Global Opportunities Partners L.P., MatlinPatterson Global Opportunities Partners (Bermuda) L.P. Pentwater Growth Fund Ltd. to Hexion Specialty Chemicals, Inc. and Apollo Global Management, LLC.

Exhibit 5		Draft Additional Financing Commitment Letter, dated August 28, 2008, from Citadel Limited Partnership, D. E. Shaw Valence Portfolios, L.L.C., D. E. Shaw Oculus Portfolios, L.L.C., MatlinPatterson Global Opportunities Partners L.P., MatlinPatterson Global Opportunities Partners (Bermuda) L.P. and Pentwater Growth Fund Ltd. to Hexion Specialty Chemicals, Inc.

SIGNATURE

After reasonable inquiry and to the best of their knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete, and correct.

Dated: August 28, 2008


D. E. SHAW VALENCE PORTFOLIOS, L.L.C.

By: D. E. SHAW & CO., L.P., as Managing Member

	By:	/s/ Julius Gaudio Name: Julius Gaudio
		Title: Managing Director

D. E. SHAW OCULUS PORTFOLIOS, L.L.C.

By: D. E. SHAW & CO., L.L.C., as Managing Member

	By:	/s/ Julius Gaudio

		Name: Julius Gaudio
		Title: Managing Director

D. E. SHAW & CO., L.L.C.

	By:	/s/ Julius Gaudio

		Name: Julius Gaudio
		Title: Managing Director

D. E. SHAW & CO., L.P.

	By:	/s/ Julius Gaudio

		Name: Julius Gaudio
		Title: Managing Director

DAVID E. SHAW

	By:	/s/ Julius Gaudio

		Name: Julius Gaudio
		Title: Attorney-in-Fact for David E. Shaw

EX-99.4 2 y66919exv99w4.htm EX-99.4: PROPOSAL LETTER EX-99.4

Exhibit 4

CONFIDENTIAL

August 28, 2008

Hexion Specialty Chemicals, Inc.,

180 East Broad Street,
Columbus, Ohio 43215.

Attention: Wiliam H. Carter
Executive Vice President and Chief Financial Officer

Attention: Joshua J. Harris
President

Apollo Global Management, LLC,

9 West 57^th Street, 43^rd Floor,
New York, New York 10019.

Ladies and Gentlemen:

The undersigned institutional investors are stockholders of Huntsman Corporation (“Huntsman”), or affiliates of such stockholders, interested in facilitating the consummation of the acquisition of Huntsman by Hexion Specialty Chemicals Inc. (“Hexion”) pursuant to the Agreement and Plan of Merger, dated July 12, 2007 (the “Merger Agreement”), among Hexion, Huntsman and Nimbus Merger Sub Inc.

We do not wish to comment on the details of your dispute with Huntsman other than to state our own working assumptions, based on publicly-available information, that Hexion can close the transaction on the current terms of the Merger Agreement. From our perspective as equity investors, we believe the main issue at hand is your expected rate of return to Hexion stockholders after giving effect to the merger.

We are prepared to finance, together with a limited number of other Huntsman stockholders, at least $500 million of the consideration due under the Merger Agreement in the form of a subscription for Contingent Value Rights (“CVRs”) as described in the attached commitment letter. This financing serves the dual purpose of enhancing what we believe is your already reasonable rate of return and facilitating a mutually-beneficial resolution of the current disagreement between you and Huntsman.

The CVRs are similar to an earn-out; they entitle the holders to repayment of the invested amount only if the future cumulative rate of return on Hexion equity passes a certain hurdle rate. If Hexion equity holders do not earn the hurdle rate of return, the CVRs expire without payment. The CVRs are repaid only if the rate of



Hexion Specialty Chemicals, Inc.
Apollo Global Management, LLC		-2-

return on Hexion equity outperforms the hurdle rate, a result that we believe is likely enough to warrant our investment.

From Hexion’s perspective, the financing provided in exchange for the CVRs can be used to supplement debt financing for the merger consideration and post-merger liquidity. The result will be less debt service costs and a higher rate of return on equity. The higher returns will be shared with the CVR holders only to the extent that rate of return is in excess of the hurdle rate, which we propose to set at a cumulative annual rate of return of 20%. Note that returns above the hurdle rate are not paid entirely to the CVR holders, but instead are split in equal parts between the CVR holders and Hexion’s other owners. The CVR holders’ total return is then capped at the initially invested amount, after which point all returns are paid 100% to Hexion’s other owners.

The attached commitment letter is in draft form for your review and comment. We are prepared to enter into it immediately in the form attached, or to discuss any comments or suggestions you may have. We also are open to discussing alternative transaction structures (including common or preferred equity investments or mezzanine loans) that reach a similar economic result but are more efficient in your view for tax or other reasons.

Our additional financing proposal does not require due diligence or the review of material non-public information. However, our commitment would be subject to the conditions set forth in the commitment letter. Of particular note:

•

Our own commitments of $245,022,716 are subject to Hexion’s receipt of similar commitments from a limited number of other large investors in Huntsman (“Additional Commitments”) such that the aggregate notional amount of all CVR commitments is at least $500,000,000. We have discussed this proposal with Peter Huntsman and requested that the Huntsman family and certain of their controlled entities (the “Huntsman Family Stockholders”) join the attached commitment letter. Peter Huntsman has informed us that it is his expectation that the Huntsman Family Stockholders will commit to subscribe for an aggregate of $186,233,986 in notional amount of CVRs on the terms and conditions set forth in the commitment letter at such time as sufficient Additional Commitments are received such that the aggregate of all CVR commitments,



Hexion Specialty Chemicals, Inc.
Apollo Global Management, LLC		-3-

			including the commitments of the Huntsman Family Stockholders, is at least $500,000,000. Based on our analysis of the institutional ownership of Huntsman common equity, we believe that at least the requisite amount of Additional Commitments ($68,743,298) can be obtained from other large stockholders who see the situation in the same terms that we do. In the event that you receive Additional Commitments in excess of that amount, we agree that you may increase the total amount of CVRs rather than reduce our own commitments.

	•		Our commitments also are subject to Hexion’s acceptance of the commitment letter by September 15, 2008. In accepting the commitment letter, we ask Hexion to confirm that, assuming the “Company Material Adverse Effect” condition in the Merger Agreement will be satisfied or waived as of the closing date, Hexion has no other reason to believe that any condition precedent to any party’s obligation to effect the merger will not be timely satisfied or that any party has or will have the right to terminate the Merger Agreement prior to the consummation of the merger. We feel it is important to verify this as part of a bona fide acceptance of our commitments, which require us to allocate capital for the CVR investment and hold a minimum amount of Huntsman stock until consummation of the merger. We do not believe that acceptance of our commitment letter will limit Hexion’s ability to argue (now or later) that a “Company Material Adverse Effect” has occurred.

	•		Finally, our commitments are subject to the consummation of the merger on the terms and at the price specified in the Merger Agreement. Obviously, we do not intend to subscribe for CVRs on the terms described in the commitment letter if the consideration payable under the Merger Agreement is reduced or delayed, or other changes adverse to us are made without our consent.

Please understand that none of us represents Huntsman or has the authority to bind it. We are making this proposal solely on our own behalf as institutional investors, and not on behalf of Huntsman, the Huntsman family or any other Huntsman stockholders.



Hexion Specialty Chemicals, Inc.
Apollo Global Management, LLC		-4-

We are available at your convenience to discuss the term sheet and are ready to proceed quickly to definitive documentation once the term sheet is agreed. If you have any questions, please feel free to contact any of the undersigned.

Very truly yours,



Hexion Specialty Chemicals, Inc.
Apollo Global Management, LLC		-5-


		CITADEL LIMITED PARTNERSHIP

		By:		CITADEL INVESTMENT GROUP, L.L.C., its General Partner

		By:		/s/ John C. Nagel

				Name: John C. Nagel
				Title: Authorized Signatory

		D. E. SHAW VALENCE PORTFOLIOS, L.L.C.

		By:		D. E. SHAW & CO., L.P., as Managing Member

		By:		/s/ Julius Gaudio

				Name: Julius Gaudio
				Title: Managing Director

		D. E. SHAW OCULUS PORTFOLIOS, L.L.C.

		By:		D. E. SHAW & CO., L.L.C., as Managing Member

		By:		/s/ Julius Gaudio

				Name: Julius Gaudio
				Title: Managing Director



Hexion Specialty Chemicals, Inc.
Apollo Global Management, LLC		-6-


		MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS L.P.

		By:		MATLINPATTERSON GLOBAL ADVISERS LLC, its Investment Advisor

		By:

				Name:
				Title:

(Attachments)

cc: Andrew J. Nussbaum (with attachments)
(Wachtell, Lipton, Rosen & Katz)



Hexion Specialty Chemicals, Inc.
Apollo Global Management, LLC		-7-


		MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS (BERMUDA) L.P.

		By:		MATLINPATTERSON GLOBAL ADVISERS LLC, its Investment Advisor

		By:		/s/ Robert H. Weiss

				Name: Robert H. Weiss
				Title: General Counsel

		PENTWATER GROWTH FUND LTD.

		By:		/s/ Matthew C. Halbower

				Name: Matthew C. Halbower
				Title: CEO/Portfolio Manager



Hexion Specialty Chemicals, Inc.
Apollo Global Management, LLC		-8-


		MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS L.P.

		By:		MATLINPATTERSON GLOBAL ADVISERS LLC, its Investment Advisor

		By:		/s/ Robert H. Weiss

				Name: Robert H. Weiss
				Title: General Counsel

(Attachments)

cc: Andrew J. Nussbaum (with attachments)
(Wachtell, Lipton, Rosen & Katz)

EX-99.5 3 y66919exv99w5.htm EX-99.5: DRAFT ADDITIONAL FINANCING COMMITMENT LETTER EX-99.5

Exhibit 5

Draft of August 28, 2008

August [28], 2008

Hexion Specialty Chemicals, Inc.
180 East Broad St.
Columbus, OH 43215


Attention:		William H. Carter
		Executive Vice President
		and Chief Financial Officer

Additional Financing Commitment Letter
US$500 Million Contingent Value Rights

Ladies and Gentlemen:

Hexion Specialty Chemicals, Inc. (the “Issuer” or “you”) has advised each of the institutional investors identified on Schedule 1 to this letter (the “Initial Investors” and, together with each person who subsequently executes a Joinder Agreement in the form attached as Exhibit B, an “Investor”) that the Issuer desires to issue and sell contingent value rights to the Investors on the terms contemplated herein (the “CVRs”) and apply the proceeds thereof, together with the proceeds of the indebtedness contemplated by the Commitment Letter, dated July 11, 2007 (the “Debt Commitment Letter”), among Hexion LLC, the Issuer and affiliates of each of Credit Suisse and Deutsche Bank, to pay the cash consideration and other costs and expenses associated with, and to provide working capital after, the acquisition of Huntsman Corporation (“Huntsman”) by the Issuer pursuant to the Agreement and Plan of Merger, dated as of July 12, 2007 (the “Merger Agreement”, and the merger contemplated thereby, the “Merger”), among the Issuer, Nimbus Merger Sub Inc. and Huntsman.

1. Several Commitments of the Investors

Subject to the terms and conditions described in this letter agreement and the attached Exhibit A (“Exhibit A”, and together with this letter agreement, Schedule 1 and Exhibit B, the “Additional Financing Commitment Letter”), each Investor is pleased to inform the Issuer of its several commitment to purchase, or to cause one or more of its affiliates to purchase, on the date of the Closing (as defined in the Merger Agreement) of the Merger (the “Closing Date”), the notional amount of CVRs set forth opposite its name on Schedule 1 or its Joinder Agreement, as applicable, at a purchase price equal to 100% of the applicable notional amount. The aggregate notional amount of the commitments of all Investors is expected to be at least $500 million, and may exceed this amount with your approval. The Issuer may at any time prior to the fifth Business Day before the Closing Date by written notice to the Initial Investors reduce the

notional amounts of the commitment hereunder so long as (a) the aggregate notional amount of the commitments hereunder remains in excess of $50 million and (b) the Issuer continues to have adequate funds to consummate the Merger in accordance with the Merger Agreement after giving effect to the reduced commitments. Any reductions in commitments shall be made on a pro rata basis among the Investors.

The commitments of the Investors are several, and not joint. No Investor shall have any liability for the failure of any other Investor to purchase the CVRs or to comply with any obligation under or relating to this Additional Financing Commitment Letter or the definitive documentation for the transactions contemplated hereby. No Investor is the agent of, or otherwise has the authority to bind or represent, you or any other Investor. You will appoint no underwriter, arranger, syndication agent, placement agent, bookrunner or manager with respect to the CVRs without the prior written consent of each Investor.

2. Conditions Precedent to the Commitments

Each Investor’s commitment hereunder is subject to:

(a) your acceptance of this Additional Financing Commitment Letter on or prior to September 15, 2008 and your confirmation in writing to each Investor on and as of the date of your acceptance that, assuming the condition precedent in Section 6.2(e) of the Merger Agreement relating to a “Company Material Adverse Effect” is satisfied or waived in accordance with the terms thereof, you have no reason to believe that any condition precedent to any party’s obligation to effect the Merger will not be timely satisfied or that any party has or will have the right to terminate the Merger Agreement prior to the consummation of the Merger;

(b) the execution and delivery by the Issuer and each Investor of definitive documentation for the purchase of the CVRs in form and substance reasonably satisfactory to such Investor (the “Definitive Documentation”), which Definitive Documentation each Investor and the Issuer agrees to use commercially reasonable efforts to finalize as promptly as practicable following the Issuer’s acceptance of this Additional Financing Commitment Letter;

(c) the consummation of the Merger, prior to or simultaneously with the purchase and sale of the CVRs, at $28.00 per share, as adjusted pursuant to Section 2.1(b)(i) of the Merger Agreement, in cash, and otherwise in accordance with the Merger Agreement without giving effect to any amendment, waiver or modification thereof unless made with the prior written consent of the Investors (such consent not to be unreasonably withheld);

(d) no dividends, distributions, share repurchases, recapitalizations or similar transactions involving the Issuer prior to the Merger, except as reflected in the agreed Initial Equity Value of the Issuer (as defined in Exhibit A);

(e) a limited number of additional institutional investors or other accredited investors (as defined in Rule 501(a) under the Securities Act of 1933, as amended) reasonably acceptable to the Initial Investors shall have executed and delivered Joinder Agreements in the form attached as Exhibit B or made other commitments to the Issuer to purchase

CVRs in form and substance satisfactory to the other Investors, such that the aggregate commitments of all Investors and other Huntsman stockholders equals at least $500 million in notional amount; and

(f) other reasonable and customary closing conditions, including compliance with the terms of this Additional Financing Commitment Letter and the Definitive Documentation in all material respects, delivery of legal opinions, officers’ certificates, a solvency certificate consistent with the certificate contemplated by the Merger Agreement and the existing Debt Commitment Letter, accuracy of representations and warranties, absence of defaults, absence of material litigation concerning the Merger or its financing, payment of fees and expenses, and other closing documents and informational and other undertakings for a Section 4(2) private placement of securities.

3. Commitment Termination

Each Investor’s commitment hereunder will terminate on the earlier of (a) written notice by such Investor of the Issuer’s breach of any material obligation under this Additional Financing Commitment Letter, (b) November 2, 2008, and (c) the termination of the Merger Agreement by any party thereto or the amendment of the Merger Agreement unless made with the prior consent of the Investors (such consent not to be unreasonably withheld). Sections 4 through 9 below shall survive the termination of the Investor’s commitment hereunder.

4. Indemnification

The Issuer will indemnify and hold harmless the Investors and each of their affiliates, officers, directors, employees, agents, advisors and representatives (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities, costs and reasonable out-of-pocket expenses (including, without limitation, reasonable fees and disbursements of counsel), that may be incurred by or asserted or awarded against any Indemnified Party (including, without limitation, in connection with any investigation, litigation or proceeding or the preparation of any defense in connection therewith), in each case arising out of or in connection with or relating to this Additional Financing Commitment Letter or the transactions contemplated hereby or any actual or proposed use of the proceeds of the CVRs, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted primarily from the gross negligence or willful misconduct of such Indemnified Party. In the case of an investigation, litigation or other proceeding to which the indemnity in this paragraph applies, such indemnity will be effective whether or not such investigation, litigation or proceeding is brought by the Issuer or Huntsman or any of their respective directors, security holders or creditors, and whether or not the transactions contemplated hereby are consummated.

No Indemnified Party will have any liability (whether direct or indirect, in contract, tort or otherwise) to the Issuer, Huntsman or any of their respective affiliates or security holders or creditors for or in connection with the transactions contemplated hereby, except to the extent such liability is determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted primarily from the gross negligence or willful misconduct of such Indemnified Party. In addition, no Indemnified Party will be liable on any theory of liability for any special, indirect, consequential or punitive damages (including without limitation loss of profits, business or anticipated savings, regardless of foreseeability).

5. Minimum Holding; Limitation to Sophisticated Investors

Each Investor, for the benefit of the Issuer and each other Investor, (i) hereby represents, as to itself, that (A) it owns (directly or indirectly) as of the date hereof a number of shares of common stock of Huntsman with a value (at the Merger price) at least equal to 110.00% of the notional amount of its CVR commitment (such number of shares of common stock, its “Minimum Holding”) and (B) other than as described in the Schedule 13D to be filed by such Investor on or promptly after the date on which such Investor becomes a party hereto and as amended from time to time, none of such Investor, its affiliates or its associates (as such terms are defined under Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)) is the beneficial owner (as such term is defined under Rule 13d-3 of the Exchange Act) of any common stock of Huntsman or has any agreement, arrangement or understanding with any person for the purpose of acquiring, holding, voting or disposing of any securities of Huntsman, and (ii) hereby agrees that it will maintain ownership of shares of common stock of Huntsman at least equal to its Minimum Holding from the date hereof until the earlier of the consummation of the Merger or the termination of its commitment in accordance with paragraph 3. For purposes of calculating the Minimum Holding, an Investor may aggregate positions held by any affiliated entity so long as (i) such affiliate is a direct or indirect wholly-owned subsidiary of the Investor, (ii) the Investor is a direct or indirect wholly-owned subsidiary of such affiliate or (iii) the Investor and such affiliate are direct or indirect wholly-owned subsidiaries of a common parent company.

In addition, each Investor, for the benefit of the Issuer and each other Investor, hereby represents and warrants that (i) it is an ‘accredited investor’ within the meaning of Rule 501(a) under the Securities Act of 1933, as amended, and a sophisticated financial investor making its own decision to commit to purchase CVRs in light of its economic interest in Huntsman stock and the Merger, (ii) the CVRs are illiquid instruments in large denominations for which there will be no trading market and such Investor is prepared to hold the CVRs until their maturity, at which time there may be no recovery under the terms of the CVRs, (iii) the publicly-available information available to it concerning Huntsman and the Issuer provides a sufficient basis for its own investment decision in the context of the CVRs as an effective ‘earn-out’ or contingent price adjustment in connection with the Merger and (iv) it has made its own, independent review and analysis of all information that it considers adequate for purposes of its investment decision and has not relied on the advice or recommendation of, or any information or analyses by, any other Investor in deciding to commit to CVRs in connection with the Merger.

6. Other Activities of the Investors

You acknowledge that the Investors are engaged in securities trading as well as providing other financial services. You agree that the Investors may employ the services of its affiliates in connection with the transactions contemplated by this Additional Financing Commitment Letter and such affiliates will be entitled to the benefits afforded to each Investor hereunder. Notwithstanding their involvement in the transactions contemplated by this Additional Financing Commitment Letter or the possible receipt of confidential information in connection therewith, you understand and agree that each Investor and its affiliates may conduct other transactions for its or its affiliates’ own account or the account of customers in equity, debt, securities, derivatives and other financial instruments issued by or relating to the Issuer, its affiliates and other companies with which the Issuer or its affiliates may have a commercial or competitive relationship, and (b) may provide investment advisory, financial advisory and other services to the Issuer or any of its Representatives or to persons and companies whose interests compete with those of the Issuer or its affiliates, provided that each Investor and its affiliates will not use confidential information received from the Issuer or its representatives in connection with the transactions contemplated by this Additional Financing Commitment Letter when conducting such transactions or performing such services.

The Issuer acknowledges and agrees that this Additional Financing Commitment Letter and the activities of the Investors and each of their affiliates hereunder in connection with the transactions contemplated by this Additional Financing Commitment Letter do not create a fiduciary, advisory or agency relationship between the Issuer and the Investors, and the Issuer understands and accepts the terms, risks and conditions of the transactions contemplated by this Additional Financing Commitment Letter. To the fullest extent permitted by applicable law, the Issuer hereby waives any claims it may have against any Investor based upon or relating to any allegation that it owes the Issuer a fiduciary duty, and the Issuer hereby agrees that no Investor shall have any liability (whether direct or indirect) in respect of any claim for breach of fiduciary duty to the Issuer or to any other person, including any stockholders, employees or creditors asserting a claim derivatively, in the Issuer’s name or otherwise on its behalf.

7. No Third Party Reliance; Limitations on Assignment and Amendment

The agreements of each Investor hereunder are made solely for the benefit of the Issuer and may not be relied upon or enforced by any other person (other than any Indemnified Parties or, in the case of Section 5, the other Investors). The Issuer may not assign or delegate any of its rights or obligations hereunder without the Investor’s prior written consent, and any attempted assignment without such consent shall be void. An Investor may assign or delegate its commitment and other rights and obligations hereunder before or after the Closing Date to any person that would be a permitted transferee of CVRs after the Closing Date pursuant to Exhibit A, provided that no transfer of commitments prior to the date hereof shall release any Investor of its obligation to purchase the CVRs on the Closing Date unless such transfer is made (a) to another Investor or (b) with the prior written consent of the Issuer (such consent not to be unreasonably withheld, conditioned or delayed). This Additional Financing Commitment Letter may not be amended, restated, modified, or any provision hereof waived, except by a written agreement signed by all parties hereto.

8. Governing Law; Entire Agreement

This Additional Financing Commitment Letter shall be governed by, and construed in accordance with, the laws of the State of New York. This Additional Financing Commitment Letter sets forth the entire agreement among the parties with respect to the matters addressed herein and supersedes all prior communications, written or oral, with respect hereto.

9. Waiver of Jury Trial; Jurisdiction

Each party hereto irrevocably waives to the full extent permitted by applicable law all right to trial by jury in any suit, action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Additional Financing Commitment Letter or the transactions contemplated hereby or the actions of the parties hereto in the negotiation, performance or enforcement hereof.

With respect to all matters arising out of or relating to this Additional Financing Commitment Letter, each party hereto hereby irrevocably (i) submits to the non-exclusive jurisdiction of any New York State or Federal court sitting in the State of New York, County of New York, and any appellate court from any thereof, (ii) agrees that all claims related hereto may be heard and determined in such courts, (iii) waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum, (iv) agrees that a final judgment of such courts shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law and (v) waives any immunity (sovereign or otherwise) from jurisdiction of any court or from any legal process or setoff to which you or your properties or assets may be entitled.

10. Signing and Effectiveness

This Additional Financing Commitment Letter shall be effective only upon delivery of an executed signature page (or counterpart signature page) by each of the Investors and the Issuer. If it does not become effective by 5:00 p.m. New York City time on September 15, 2008, this Additional Financing Commitment Letter shall be void ab initio.

This Additional Financing Commitment Letter may be executed in any number of counterparts, each of which, when so executed, shall be deemed to be an original and all of which, when taken together, shall constitute a single instrument.

[Signature Page Follows]


		Very truly yours,

		CITADEL LIMITED PARTNERSHIP

		By:		CITADEL INVESTMENT GROUP, L.L.C., its General Partner

		By:

				Name:
				Title:

		D. E. SHAW VALENCE PORTFOLIOS, L.L.C.

		By:		D. E. SHAW & CO., L.P., as Managing Member

		By:

				Name:
				Title:

		D. E. SHAW OCULUS PORTFOLIOS, L.L.C.

		By:		D. E. SHAW & CO., L.L.C., as Managing Member

		By:

				Name:
				Title:


		MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS L.P.

		By:		MATLINPATTERSON GLOBAL ADVISERS LLC, its Investment Advisor

		By:

				Name:
				Title:

		MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS (BERMUDA) L.P.

		By:		MATLINPATTERSON GLOBAL ADVISERS LLC, its Investment Advisor

		By:

				Name:
				Title:

		PENTWATER GROWTH FUND LTD.

		By:

				Name:
				Title:

ACCEPTED AND AGREED
on , 2008:

HEXION SPECIALTY CHEMICALS, INC.


By:
		Name: William H. Carter
		Title: Executive Vice President and Chief Financial Officer

SCHEDULE 1


INITIAL INVESTOR	NOTIONAL AMOUNT
Citadel Limited Partnership	$	80,080,000
D.E. Shaw Valence Portfolios, L.L.C.	$	53,463,541.04
D.E. Shaw Oculus Portfolios, L.L.C.	$	25,612,041
MatlinPatterson Global Opportunities Partners L.P.	$	52,704,830.36
MatlinPatterson Global Opportunities Partners (Bermuda) L.P.	$	18,365,703.72
Pentwater Growth Fund Ltd.	$	14,796,600
TOTAL	$	245,022,716

Annex A
Indicative Terms for Contingent Value Rights


Issuer		Hexion Specialty Chemicals, Inc. (the “Issuer”)

Instrument		Contingent Value Rights (“CVRs”)

Notional Amount		At least $500 million

Term		The CVRs will mature on the [8]^th anniversary of the merger closing.¹

Purchase Price		100% of Notional Amount²

Use of Proceeds		Merger consideration

Initial Equity Investors		[Apollo Fund VI]

Hurdle Rate		20%

Contingency		Actual or deemed distributions on or with respect to the Common Stock of the Issuer (defined to exclude qualifying employee ownership plans) representing a cumulative rate of return (taken together with all other actual or deemed distributions on or with respect to such Common Stock) on the Initial Equity Value of the Common Stock equal to the Hurdle Rate.

Initial Equity Value		US$[ ], representing the agreed value of the Common Stock of Hexion immediately prior to the merger.³

Payments Due		To the extent the Contingency is satisfied, the Issuer will make matching payments on the CVRs with respect to excess distributions or deemed distributions on the Common Stock as follows. Each Payment will reduce the Notional Amount, and the CVRs will be cancelled when the Notional Amount is reduced to zero.


¹		Intended to be one year beyond maturity date for Hexion debt financing.

²		The CVRs are expected to be treated as an element of merger consideration for U.S. federal income tax purposes from the standpoint of the Issuer and the Investors, subject to review and confirmation.

³		Assumes no outstanding capital stock other than Common Stock subject to CVR and qualifying employee stock ownership plans. Holders of Common Stock should own no other investments in the Issuer and receive no management fees or other consideration (any consideration paid will constitute a distribution for purposes determining satisfaction of the Contingency).

	(a)		The Issuer will pay holders of CVRs, simultaneously with any dividend, distribution or repurchase of Common Stock, an aggregate amount equal to 100% of the Fair Market Value of any dividend, distribution or repurchase consideration in excess of the Contingency.

	(b)		Upon any direct or indirect sale or other transfer (other than a qualified public offering pursuant to clause (d) below) of any Common Stock by the Initial Equity Investors, the Issuer will pay holders of CVRs simultaneously with (or promptly following) the effectiveness of such transaction(s), an aggregate amount equal to 100% of the Fair Market Value of the consideration received by the Initial Equity Investors in excess of the Contingency.

	(c)		Upon any merger, recapitalization or other transaction where Common Stock of the Issuer is directly or indirectly exchanged for cash, stock or property, the Issuer will pay holders of CVRs, simultaneously with (and as a condition to) the effectiveness of such transaction, an aggregate amount equal to 100% of the Fair Market Value of the consideration paid to stockholders in excess of the Contingency.

	(d)		Upon the expiration of the term of the CVRs or an earlier qualified public offering (to be defined), the Appraiser will determine the Fair Market Value of the Common Stock and the Issuer will make a final payment on the CVRs as if the entire Fair Market Value were distributed to the holders of Common Stock on the expiration date.


		“Fair Market Value” will mean (i) the amount of any cash, (ii) the average 30-day closing price of any NYSE- or NASDAQ-listed securities, (iii) the fair market value of any other assets or property as determined by the Appraiser.

		“Appraiser” means a leading valuation firm (unaffiliated with the Issuer) agreed by the Issuer and holders of a majority in notional amount of the CVRs. If an Appraiser cannot be promptly agreed, each of the Issuer and majority holders shall appoint a leading valuation firm (unaffiliated with the Issuer) and the two firms shall choose a third to be the Appraiser.


Optional Redemption		At option of the Issuer at any time on 10 Business Day’s notice at the outstanding Notional Amount.

Offer to Repurchase		As a condition to a change of control (to be defined), the Issuer will offer to repurchase the CVRs within 10 Business Days at a repurchase price equal to payment that would be due on the CVRs if the entire Fair Mair Market Value of the Common Stock were distributed to holders of Common Stock immediately prior to the change of control.

Certain Covenants		To be reasonably agreed, and including:

	•		No merger, sale of substantially all assets, or similar transaction without assumption of CVRs.

	•		No issuance of preferred stock, multiple classes of common stock, common stock issued by subsidiaries, or other changes to capital structure that could adversely affect value of the CVRs (unless appropriate adjustments are agreed in definitive documentation).

	•		No transactions with affiliates except on arm’s-length terms and, above a threshold to be agreed, with the approval of majority holders of the CVRs.

	•		Further assurances and no transactions that circumvent purposes of CVRs.


Adjustments		Standard adjustments for dividends, stock splits or other dilutive events. The details of such adjustments are to be reasonably agreed.

Events of Default		To be reasonably agreed, and including:

	•		payment default on CVRs;

	•		bankruptcy events or liquidation of the Issuer;

	•		breach of representation and warranty; and

	•		breach of covenant.


		An Event of Default will entitle the holders of the CVRs to the immediate payment of the Face Amount regardless of whether the Contingency has been satisfied, but subject to “Ranking” below.


Ranking		The CVRs will rank as senior unsecured securities/instruments, provided that upon liquidation of the Issuer the CVRs will not entitle their holder to any payment except to the extent a distribution could be made on Common Stock under applicable law.

Fees and Expenses		No fees, other than up to 0.5% upon funding of CVRs to reimburse costs and expenses of CVR investors.

Indemnity		Customary for providers of acquisition financing

Governing Law		New York

Dispute Resolution		Arbitration

Offering and Transfer Restrictions		Offered privately to a limited number of highly-sophisticated accredited investors with direct or indirect positions in the common stock of Huntsman. Offering will be a 4(2) private placement with minimum initial subscriptions of at least $10 million. Investors will be required to make customary securities law representations as a condition to their investment. Transfers will be permitted in accordance with applicable securities laws (a) after the second anniversary of the merger, (b) to affiliates or funds managed by affiliates, or (c) after an Event of Default.

Exhibit B

JOINDER AGREEMENT

Reference is made to that certain Additional Financing Commitment Letter Agreement, dated August [___], 2008, among Hexion Specialty Chemicals, Inc. and the Investors named therein (the “Agreement”). Capitalized terms used but not defined in this Joinder Agreement have the meanings specified in the Agreement.

[ ] (the “New Investor”) has reviewed the Agreement and hereby commits to purchase CVRs with a notional amount of US$[ ] subject to the terms and conditions of the Agreement. Each of the New Investor and the Issuer agree that the New Investor shall be an “Investor” for all purposes of the Agreement as if an original party thereto.


Address for Notices:				With Copies to:


	[NEW INVESTOR]
	By:
		Name:
		Title

Accepted and Agreed by:

HEXION SPECIALTY CHEMICALS, INC.


By:
		Name: William H. Carter
		Title: Executive Vice President and Chief Financial Officer