Exhibit 10.1

 

Execution Version

 

PLAN SUPPORT AGREEMENT

 

THIS PLAN SUPPORT AGREEMENT IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES OR A
SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN WITHIN THE MEANING OF
SECTION 1125 OF THE BANKRUPTCY CODE. ANY SUCH OFFER OR SOLICITATION WILL COMPLY
WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE.
NOTHING CONTAINED IN THIS PLAN SUPPORT AGREEMENT SHALL BE AN ADMISSION OF FACT
OR LIABILITY OR, UNTIL THE OCCURRENCE OF THE SUPPORT EFFECTIVE DATE ON THE TERMS
DESCRIBED HEREIN, DEEMED BINDING ON ANY OF THE PARTIES HERETO.

 

This PLAN SUPPORT AGREEMENT (including all exhibits, and schedules attached
hereto, and as amended, restated, amended and restated, supplemented, or
otherwise modified from time to time in accordance with the terms hereof, this
“Agreement”), dated as of October 18, 2019 is entered into by and among:

 

(a)                                 EP Energy Corporation (“EP Parent”), EPE
Acquisition, LLC, EP Energy, LLC, Everest Acquisition Finance Inc., EP Energy
Global LLC, EP Energy Management, L.L.C., EP Energy Resale Company, L.L.C., and
EP Energy E&P Company, L.P., (each such entity, together with EP Parent, a
“Company Entity,” and collectively, and together with EP Parent, the “Company”);

 

(b)                                 [RESERVED]; and

 

(c)                                  the undersigned beneficial holders, or
investment managers, advisors, or subadvisors to beneficial holders (together
with their respective successors and permitted assigns, the “Supporting
Noteholders” and collectively with any subsequent person or entity that becomes
a party hereto in accordance with the terms hereof, the “Supporting Creditors”)
of (i) the notes issued pursuant to that certain Indenture, dated as of
February 6, 2017, by and between EP Energy LLC and Everest Acquisition Finance
Inc., as Issuers, the Subsidiary Guarantors party thereto from time to time, and
Wilmington Trust, National Association, as Trustee and Notes Collateral Agent,
for the issuance of $1,000 million in aggregate principal amount of 8.00% senior
secured notes due 2025 (the “2025 1.5L Indenture”; such notes, the “2025 1.5L
Notes”) and (ii) the notes issued pursuant to that certain Indenture, dated as
of January 3, 2018, by and between EP Energy LLC and Everest Acquisition Finance
Inc., as Issuers, the Subsidiary Guarantors party thereto from time to time, and
Wilmington Trust, National Association, as Trustee and Notes Collateral Agent,
for the issuance of $1,092 million in aggregate principal amount of 9.375%
senior secured notes due 2024 (the “2024 1.5L Indenture” and together with the
2025 1.5L Indenture, the “1.5L Indentures”; such notes, the “2024 1.5L Notes”
and (i) and (ii) together, the “1.5L Notes”).

 

The Company, each Supporting Noteholder, and any subsequent person or entity
that becomes a party hereto in accordance with the terms hereof are referred to
herein as the “Parties” and each individually as a “Party.”  Capitalized terms
used but not defined herein shall have the meanings ascribed to them, as
applicable, in the restructuring term sheet attached hereto as Exhibit A
(including any schedules and exhibits attached thereto) (the “Term Sheet”).

 

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When a reference is made in this Agreement to a Section, Exhibit, or Schedule,
such reference shall be to a Section, Exhibit, or Schedule, respectively, of or
attached to this Agreement unless otherwise indicated.  Unless the context of
this Agreement otherwise requires, (i) words using the singular or plural number
also include the plural or singular number, respectively, (ii) the terms
“hereof,” “herein,” “hereby,” and derivative or similar words refer to this
entire Agreement, (iii) the words “include,” “includes,” and “including” when
used herein shall be deemed in each case to be followed by the words “without
limitation,” and (iv) the word “or” shall not be exclusive and shall be read to
mean “and/or.”

 

Recitals

 

WHEREAS, the Parties have engaged in arm’s-length, good faith discussions
regarding a restructuring of certain of the Company’s indebtedness and other
obligations, including the Company’s indebtedness and obligations under the 1.5L
Notes;

 

WHEREAS, the Parties have agreed to a restructuring and recapitalization of the
Company’s capital structure (the “Restructuring”), the principal terms of which
are set forth in the Term Sheet;

 

WHEREAS, the Restructuring is anticipated to be implemented through the
Company’s voluntary cases under chapter 11 of title 11 of the United States Code
(the “Bankruptcy Code”; such cases, the “Chapter 11 Cases”) in the United States
Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) and
the solicitation of votes on, and confirmation and implementation of, a plan of
reorganization (as may be amended or modified from time to time in accordance
with this Agreement, the “Plan”; and such solicitation, the “Solicitation”);

 

WHEREAS, in connection with the Restructuring, the Initial 1.5L Noteholders (as
defined herein) and certain other parties have agreed to backstop $463 million
of an offering of up to $475 million of equity subscription rights to eligible
holders of 1.5L Notes (the “Rights Offering”) in accordance with the terms and
conditions specified in this Agreement, the Term Sheet, a backstop commitment
agreement to be entered into concurrently with the execution of this Agreement
(the “Backstop Agreement”), and the procedures governing the Rights Offering, as
set forth in the Backstop Agreement (the “Rights Offering Procedures”);

 

WHEREAS, as of the date hereof, the Supporting Noteholders hold approximately
79.3% of the aggregate outstanding principal amount of the 1.5L Notes,
approximately 52.0% of the aggregate outstanding principal amount of the 8.000%
Senior Secured Notes due 2024 (the “1.25L Notes”), and such other claims (as
defined in section 101 of the Bankruptcy Code) against the Debtors
(collectively, “Claims”) as are set forth on their respective signature
pages hereto;

 

WHEREAS, the Company has requested that each Supporting Creditor sign this
Agreement to support the Restructuring in the interests of all parties; and

 

WHEREAS, subject to the terms and conditions set forth herein, the Parties
desire to express to one another their mutual support for and commitment in
respect of the matters set forth in the Term Sheet and this Agreement.

 

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NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties, intending
to be legally bound, agree as follows:

 

1.                                      Certain Definitions.

 

As used in this Agreement, the following terms have the following meanings:(1)

 

(a)                                 “Alternative Restructuring” means any
dissolution, winding up, liquidation, reorganization, recapitalization,
assignment for the benefit of creditors, merger, transaction, consolidation,
business combination, joint venture, partnership, sale of all or substantially
all assets, financing (debt or equity), restructuring (in each case, of all or
substantially all of the Company, its assets, or its capital structure), or
repurchase, refinancing, extension or repayment of a material portion of the
Company’s funded debt (in each case, outside of the ordinary course of business)
other than in accordance with or in furtherance of the Restructuring.

 

(b)                                 “Business Day” means any day that is not a
Saturday, Sunday, or legal holiday on which banks in New York City are closed
for business.

 

(c)                                  “Definitive Documents” means (i)  this
Agreement, (ii) the Plan and the Plan Supplement, including the Schedule of
Rejected Contracts, (iii) the Disclosure Statement and the Solicitation
Materials, (iv) the Backstop Agreement and the Rights Offering Procedures,
(v) the DIP Credit Agreement and the DIP Documents, (vi) the order or orders of
the Bankruptcy Court approving (A) the Backstop Agreement, (B) the DIP Facility,
(C) the Rights Offering Procedures, and (D) the Disclosure Statement and the
procedures governing the Solicitation, (vii) the Confirmation Order, (viii) the
Exit Credit Agreement and the Exit Documents, (ix) the New Corporate Governance
Documents, (x) the EIP and any other documents or agreements related to any
management incentive or retention programs, including any management employment
agreements, (xi) any final orders granting any “first day” or “second day”
motions (but excluding retention applications), (xii) any and all motions filed
on or after the Support Effective Date to reject or assume and assign an
executory contract or unexpired lease and the order or orders of the Bankruptcy
Court approving such motions, (xiii) any and all other material agreements,
documents, motions, pleadings and orders reasonably necessary or desirable to
effectuate the transactions contemplated by the Restructuring, and (xiv) in the
case of each of the foregoing clauses (i) through (xiii), all material exhibits,
appendices, and supplements thereto.

 

(d)                                 “DIP Documents” means the DIP Credit
Agreement, any guaranty related thereto, any collateral and security
documentation related thereto, and any material ancillary documentation related
thereto.

 

(e)                                  “Effective Date” means the date upon which
(a) no stay of the Confirmation Order is in effect, (b) all conditions precedent
to the effectiveness of the Plan have been satisfied or are expressly waived in
accordance with the terms thereof, as the case may be, (c) the

 

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(1)         Capitalized terms used but not defined herein shall have the
meanings ascribed to them, as applicable, in the Term Sheet.

 

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transactions to occur on the Effective Date pursuant to the Plan become
effective or are consummated, and (d) the substantial consummation (as defined
in section 1101 of the Bankruptcy Code) of the Plan occurs.

 

(f)                                   “Exit Commitment Letter” means the
commitment letter for the DIP Credit Agreement and the Exit Credit Agreement
attached to the Term Sheet.

 

(g)                                  “Exit Documents” means the Exit Credit
Agreement, the Exit Commitment Letter, any guaranty related thereto, any
collateral and security documentation related thereto, and any material
ancillary documentation related thereto.

 

(h)                                 “Initial Supporting Noteholders” means each
of Apollo Management Holdings, L.P., Elliott Associates, L.P. and Elliott
International, L.P.

 

(i)                                     [RESERVED]

 

(j)                                    [RESERVED]

 

(k)                                 “Solicitation Materials” means the ballots
seeking votes to accept or reject the Plan, any notices permitting holders of
claims or interests to opt into or out of any releases or exculpations, any
notices of voting or non-voting status for any class of claims or interests, and
any motion and proposed order for approval of the procedures governing the
Solicitation.

 

(l)                                     “Support Period” means the period
commencing on the Support Effective Date and ending on the earlier of the
(i) date on which this Agreement is terminated in accordance with Section 6 and
(ii) the Effective Date.

 

(m)                             “Supporting Noteholder Counsel” means each of
Milbank LLP, Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Debevoise &
Plimpton LLP, each in its capacity as counsel to certain of the Supporting
Noteholders.

 

2.                                      Bankruptcy Process; Plan of
Reorganization.

 

Subject to the terms and conditions of this Agreement and the exhibits attached
hereto, during the Support Period, each Party agrees as follows:

 

(a)                                 Term Sheet.  The Term Sheet is expressly
incorporated into and made a part of this Agreement.  The terms and conditions
of the Restructuring are set forth in the Term Sheet; provided, however, that
the Term Sheet is supplemented by the terms and conditions of this Agreement. 
In the event of any inconsistencies between this Agreement and the Term Sheet,
the terms of the Term Sheet shall govern.  In the event of any inconsistencies
between this Agreement and any of the Exhibits hereto, the terms of such
Exhibit(s) shall govern.

 

(b)                                 Definitive Documents.  Each of the
Definitive Documents, including any amendments, supplements or modifications
thereof, shall (i) contain terms and conditions consistent in all material
respects with this Agreement and the Plan and (ii) otherwise be in form and
substance acceptable (including with respect to tax structuring and elections)
to the Company and the Initial Supporting Noteholders, except that the items set
forth in Sections 1(c)(xii) and

 

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(xiii) hereof and all material exhibits, appendices, and supplements thereto
shall be reasonably acceptable to the Company and the Initial Supporting
Noteholders.

 

(c)                                  Filing of the Plan and Disclosure
Statement.  As soon as reasonably practicable, but in no event later than
November 18, 2019, the Company shall file the Plan and the Disclosure Statement
with the Bankruptcy Court.

 

(d)                                 Confirmation of the Plan.  The Company shall
use commercially reasonable efforts to obtain entry of the Confirmation Order as
soon as reasonably practicable following October 3, 2019 (the “Petition Date”)
in accordance with the Bankruptcy Code and on terms consistent with this
Agreement, including timely filing any objection or opposition to any motion
filed with the Bankruptcy Court seeking the entry of an order modifying or
terminating the Company’s exclusive right to file and/or solicit acceptances of
a plan of reorganization.

 

3.                                      Agreements of the Supporting Creditors.

 

(a)                                 Voting; Support.  Subject to the terms and
conditions of this Agreement, each Supporting Creditor, severally and not
jointly, agrees that, for the duration of the Support Period, such Supporting
Creditor (on a several and not joint basis) shall:

 

(i)                                     timely vote or cause to be voted its
Claims, to the extent entitled to vote on the Plan, to accept the Plan by
delivering its duly executed and completed ballot or ballots and consent to and,
if applicable, not opt out of, the releases set forth in the Plan against each
Released Party, but subject to the actual receipt by such Supporting Creditor of
(a) the Disclosure Statement, approved by the Bankruptcy Court as containing
“adequate information” (as such term is defined in section 1125 of the
Bankruptcy Code) and the Solicitation Materials approved by the Bankruptcy
Court), and (b) fifteen (15) Business Days’ written notice of any voting record
date and/or voting deadline;

 

(ii)                                  not change or withdraw (or cause or direct
to be changed or withdrawn) any such vote or release described in clause
(i) above; provided, however, that notwithstanding anything in this Agreement to
the contrary, a Supporting Creditor’s vote and release may, upon written notice
to the Company, be revoked (and, upon such revocation, deemed void ab initio) by
such Supporting Creditor at any time following the termination of this Agreement
pursuant to the terms hereof with respect to such Supporting Creditor;

 

(iii)                               timely vote (or cause to be voted) its
Claims, to the extent entitled to vote with respect to an Alternative
Restructuring, against any Alternative Restructuring (subject to such Supporting
Creditor receiving at least fifteen (15) business days’ written notice of any
relevant voting record date and/or voting deadline);

 

(iv)                              not take any action which would result in the
occurrence of a Change of Control (as such term is defined in (i) the Indenture,
dated as of November 29, 2016 (the “1.125L Indenture”), by and among EP Energy
LLC and Everest Acquisition Finance Inc., the subsidiary guarantors party
thereto and BOKF, NA, as successor trustee and notes collateral agent and
(ii) the Indenture, dated as of May 23, 2018 (the “1.25L Indenture” and together
with the 1.125L Indenture, the “Reinstated Indentures”), by and among EP

 

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Energy LLC and Everest Acquisition Finance Inc., the subsidiary guarantors party
thereto and UMB Bank, National Association, as successor trustee and collateral
agent); provided that no Supporting Creditor shall be liable to any Company
Entity or any other Supporting Creditor for a breach of this
Section 3(a)(iv) that is solely the result of another Supporting Creditor’s
non-compliance with their obligations under this Agreement or the Backstop
Agreement;

 

(v)                                 not directly or indirectly, through any
person or entity (including any administrative agent, indenture trustee, or
collateral agent), seek, solicit, propose, support, assist, engage in
negotiations in connection with or participate in the formulation, preparation,
filing, or prosecution of any Alternative Restructuring or object to or take any
other action that is inconsistent with or that would reasonably be expected to
prevent, interfere with, delay, or impede the Chapter 11 Cases, Solicitation,
approval of the Disclosure Statement, or the confirmation and consummation of
the Plan and the Restructuring;

 

(vi)                              not direct any administrative agent, indenture
trustee, or collateral agent (as applicable) to take any action inconsistent
with such Supporting Creditor’s obligations under this Agreement or the Plan,
and, if any applicable administrative agent, indenture trustee, or collateral
agent takes any action inconsistent with such Supporting Creditor’s obligations
under this Agreement or the Plan, such Supporting Creditor shall direct and use
its commercially reasonable efforts (which shall exclude the incurrence or
provision of any indemnity obligations) to cause such administrative agent,
indenture trustee, or collateral agent to cease, withdraw, and refrain from
taking any such action; and

 

(vii)                           if reasonably requested by the Company, use
commercially reasonable efforts to support approval of the Disclosure Statement
and confirmation of the Plan by filing papers and appearing in the Bankruptcy
Court in support thereof.

 

(b)                                 Transfers.  Each Supporting Creditor,
severally and not jointly, agrees that, for the duration of the Support Period,
such Supporting Creditor shall not sell, transfer, assign, pledge, hypothecate,
participate, donate or otherwise encumber or dispose of, directly or indirectly
(including through derivatives, options, swaps, pledges, forward sales or other
transactions in which any Person receives the right to own or acquire any
current or future interest in) (each, a “Transfer”), or permit a transfer of,
directly or indirectly, in whole or in part, any of its Claims or, in each case,
any option thereon or any right or interest therein or any other claims against
the Company (including grant any proxies, deposit any Claims into a voting trust
or enter into a voting agreement with respect to any such Claims), unless the
transferee thereof either (i) is a Supporting Creditor or an entity that is
controlled by such Supporting Creditor or for which such Supporting Creditor
acts as investment manager, advisor or subadvisor, or (ii) prior to or
contemporaneously with such Transfer, agrees in writing for the benefit of the
Parties to become a Supporting Creditor and to be bound by all of the terms of
this Agreement applicable to Supporting Creditor (including with respect to any
and all Claims it already may hold against or in the Company prior to such
Transfer) by executing a joinder agreement, a form of which is attached hereto
as Exhibit B (the “Joinder Agreement”), and delivering an executed copy thereof
within five (5) Business Days following such execution, to Weil, Gotshal &
Manges LLP (“Weil”), as counsel to the Company and Supporting Noteholder
Counsel, in which event (A) the transferee (including the Supporting

 

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Creditor transferee, if applicable) shall be deemed to be a Supporting Creditor
hereunder to the extent of such transferred rights and obligations and (B) the
transferor shall be deemed to relinquish its rights (and be released from its
obligations, except for any claim for breach of this Agreement that occurs prior
to such Transfer) under this Agreement to the extent of such transferred rights
and obligations.  Each Supporting Creditor agrees that any Transfer of any Claim
that does not comply with the terms and procedures set forth herein shall be
deemed void ab initio, and the Company and each other Supporting Creditor shall
have the right to enforce the voiding of such Transfer.  Notwithstanding
anything to the contrary herein, a Supporting Creditor may Transfer its Claims
to an entity that is acting in its capacity as a Qualified
Marketmaker(2) without the requirement that the Qualified Marketmaker become a
Party; provided, however, that (x) such Qualified Marketmaker must Transfer such
right, title, or interest by the earlier of (A) ten (10) calendar days following
its receipt thereof and (B) if received prior to the Voting Deadline, at least
seven (7) calendar days prior to the Voting Deadline, (y) any subsequent
Transfer by such Qualified Marketmaker of the right, title, or interest in such
Claims is to a transferee that is or becomes a Supporting Creditor at the time
of such transfer, and (z) such Supporting Creditor shall be solely responsible
for the Qualified Marketmaker’s failure to comply with the requirements of this
Section 3.  For the avoidance of doubt, if a Supporting Noteholder, acting in
its capacity as a Qualified Marketmaker, acquires a Claim from a holder of
Claims that is not a Supporting  Noteholder, as applicable, it may Transfer such
Claim without the requirement that the transferee be or become a Supporting
Noteholder.  For the avoidance of doubt, to the extent that a Supporting
Creditor’s 1.5L Notes, Claims, or other securities issued by the Company may be
loaned by such Supporting Creditor (and consequently pledged, hypothecated,
encumbered, or rehypothecated by) as part of customary securities lending
arrangements (each such arrangement, a “Customary Securities Lending
Arrangement”), and such Customary Securities Lending Arrangement does not
adversely affect such Party’s ability to timely satisfy any of its obligations
under this Agreement or the Backstop Agreement, such Customary Securities
Lending Arrangement shall not be deemed a Transfer hereunder.

 

(c)                                  Additional Claims.  This Agreement shall in
no way be construed to preclude the Supporting Creditors from acquiring
additional Claims or transferring Claims in accordance with this Section 3, and
during the Support Period to the extent any Supporting Creditor acquires
additional Claims, then each such Supporting Creditor shall promptly notify Weil
and Supporting Noteholder Counsel.  Each such Supporting Creditor agrees,
severally and not jointly, that such additional Claims shall be subject to this
Agreement and that, for the duration of the Support Period, it shall vote (or
cause to be voted) any such additional Claims entitled to vote on the Plan (to
the extent still held by it or on its behalf at the time of such vote), in a
manner consistent with Section 3(a) hereof, in each case other than with respect
to any Claims acquired by such Supporting Noteholder in its capacity as a
Qualified Marketmaker.

 

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(2)         As used herein, the term “Qualified Marketmaker” means an entity
that (i) holds itself out to the public or the applicable private markets as
standing ready in the ordinary course of business to purchase from customers and
sell to customers Claims against the Company (or enter with customers into long
and short positions in Claims against the Company), in its capacity as a dealer
or marketmaker in Claims against the Company and (ii) is, in fact, regularly in
the business of making a market in claims against issuers or borrowers
(including debt securities or other debt).

 

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(d)                                 Additional Parties.  Any 1.5L Noteholder
may, at any time after the occurrence of the Support Effective Date, become a
party to this Agreement as a Supporting Noteholder (an “Additional Supporting
Noteholder”, or an “Additional Supporting Creditor”), by executing a Joinder
Agreement, pursuant to which such Additional Supporting Creditor shall be bound
by the terms of this Agreement as a Supporting Creditor hereunder, and
delivering such Joinder Agreement to Weil and Supporting Noteholder Counsel.

 

(e)                                  D&O Claims.  Regardless of whether the
Bankruptcy Court approves the releases by the Supporting Creditors that are set
forth in the Term Sheet in favor of the Released Parties (the “Third-Party
Releases”), but subject to the occurrence of the Effective Date, each Supporting
Creditor hereby (i) grants such releases in favor of the current and former
directors and officers of EP Parent and (ii) agrees not to pursue any claims
that such Supporting Creditor may currently have against the current and former
directors and officers of EP Parent and each of its subsidiaries.

 

(f)                                   Stock Transfer Restriction and Tax
Attribute Protection Motions.  Each Supporting Noteholder, severally and not
jointly, agrees not to transfer any Existing Equity Interests for the duration
of the Support Period in any manner that would change the ownership of such
Existing Equity Interests for purposes of section 382 of the Internal Revenue
Code of 1986, as amended (the “Tax Code”) without the prior consent of the
Company not to be unreasonably withheld, conditioned, or delayed.  Each
Supporting Noteholder further agrees to support the final approval of the Stock
Procedures (as defined in the Emergency Motion of Debtors to Establish
Notification Procedures and Approving Restrictions on Certain Transfers of Stock
of, and Claims Against, Debtors (Ch. 11 Case No. 19-35654, Docket No. 6) (the
“NOL Motion”)).  The Debtors shall not seek a hearing on or approval of the
Claims Procedures (as defined in the NOL Motion); provided, that the foregoing
shall not affect the Supporting Noteholders’ right to object to the NOL Motion
following the end of the Support Period.

 

(g)                                  New Corporate Governance Documents.  The
Supporting Noteholders, severally and not jointly, agree to provide drafts of
the New Corporate Governance Documents through the Supporting Noteholder Counsel
to Weil no later than fifteen (15) Business Days before the Voting Deadline.

 

(h)                                 [RESERVED]

 

(i)                                     Rights Unaffected.  Notwithstanding
anything herein to the contrary, nothing contained in this Agreement shall
limit:

 

(i)                                     the rights of the Supporting Creditors
under any applicable bankruptcy, insolvency, foreclosure, or similar proceeding,
including, without limitation, appearing as a party in interest in any matter to
be adjudicated in order to be heard concerning any matter arising in the Chapter
11 Cases, in each case, so long as the exercise of any such right is not in
violation of or inconsistent with such Supporting Creditor’s obligations
hereunder;

 

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(ii)                                  the ability of a Supporting Creditor to
purchase, sell, or enter into any transactions in connection with its Claims or
Interests, including 1.5L Notes, subject to the terms hereof and applicable law;

 

(iii)                               except as expressly provided herein, any
right of a Supporting Noteholder under (A) the 1.5L Notes Indenture, or
constitute a waiver or amendment of any provisions of the 1.5L Notes Indenture
or (B) any other applicable agreement, instrument, or document that gives rise
to a Supporting Noteholder’s Claims or Interests, as applicable, or constitute a
waiver or amendment of any provision of any such agreement, instrument, or
document;

 

(iv)                              the ability of a Supporting Noteholder to
consult with other Supporting Creditors, other holders of Claims against or
equity interests in the Company, or the Company;

 

(v)                                 [RESERVED]; or

 

(vi)                              the ability of a Supporting Creditor to
enforce any right, remedy, condition, consent, or approval requirement under
this Agreement or any Definitive Document.

 

4.                                      Agreements of the Parties.

 

(a)                                 Covenants.  Each Party, severally and not
jointly, agrees that, for the duration of the Support Period, such Party shall
use its commercially reasonable efforts to:

 

(i)                                     take all commercially reasonable actions
necessary to (i) support and consummate the Restructuring contemplated by the
Term Sheet and all of the transactions contemplated herein, (ii) cooperate with
each other in good faith in connection with, and shall exercise commercially
reasonable efforts with respect to the pursuit, approval, negotiation,
execution, delivery, implementation, and consummation of the Plan and the
Restructuring, as well as the negotiation, drafting, execution and delivery of
the Definitive Documents, and (iii) take such action as may be reasonably
necessary or reasonably requested by the other Parties to carry out the purposes
and intent of this Agreement, including making and filing any required
regulatory filings, and refrain from taking any action that would frustrate the
purposes and intent of this Agreement; and

 

(ii)                                  provide reasonably prompt written notice
(in accordance with Section 19 hereof) to the Company and Supporting Noteholder
Counsel between the date hereof and the Effective Date of (A) the occurrence, or
failure to occur, of any event of which any person in a managing capacity of
such Party has actual knowledge, and which occurrence or failure would be likely
to cause any covenant of such Party contained in this Agreement not to be
satisfied in any material respect or (B) any failure of such Party to comply, in
any material respect, with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or the Backstop Agreement.

 

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(b)                                 Hedging.  The Company shall consult with the
Initial Supporting Noteholders on any material changes to its hedging program.

 

5.                                      Agreements of the Company.

 

(a)                                 Covenants.  Each Company Entity (jointly and
severally) agrees that, for the duration of the Support Period, each such
Company Entity shall:

 

(i)                                     use commercially reasonable efforts to
obtain any and all required governmental, regulatory and/or third party
approvals necessary or required for the implementation or consummation of the
Restructuring or the approval by the Bankruptcy Court of the Definitive
Documents;

 

(ii)                                  not take any action, or support, encourage
or direct any other person or entity to take any action, that is inconsistent
with, or is intended or is reasonably likely to interfere with, consummation of
the Restructuring (including to propose, file, seek, solicit, or support any
Alternative Restructuring), in each case, to the extent consistent with, upon
the advice of counsel, the fiduciary duties of the boards of directors,
managers, members, or partners, as applicable, of the Company; provided,
however, that the Company shall not be obligated to agree to any modification of
any document that is inconsistent with this Agreement;

 

(iii)                               provide draft copies of all Definitive
Documents and any other material motions or applications and other material
documents related to the Restructuring (including, but not limited to, any
proposed final orders granting “first day” and “second day” motions (but
excluding retention applications), the Plan, the Disclosure Statement, ballots,
and other Solicitation materials in respect of the Plan and any proposed amended
version of the Plan or the Disclosure Statement, and a proposed Confirmation
Order and any amended versions of any of the foregoing) the Company intends to
file with the Bankruptcy Court to Supporting Noteholder Counsel, if reasonably
practicable, at least two (2) Business Days prior to the date when the Company
intends to file any such pleading or other document (provided that if delivery
of such motions, orders, or materials at least two (2) Business Days in advance
is not reasonably practicable prior to filing, such motion, order, or material
shall be delivered as soon as reasonably practicable prior to filing), and shall
consult in good faith with Supporting Noteholder Counsel regarding the form and
substance of any such proposed filing with the Bankruptcy Court; provided, that
the Company Parties shall not file any pleading or other document unless such
pleading or other document is consistent with this Agreement;

 

(iv)                              subject to professional responsibilities of
counsel, timely file with the Bankruptcy Court a written objection to any motion
filed with the Bankruptcy Court by a third party seeking the entry of an order
or relief (A) directing the appointment of an examiner with expanded powers or a
trustee, (B) converting any of the Chapter 11 Cases to cases under chapter 7 of
the Bankruptcy Code, (C) dismissing any of the Chapter 11 Cases, (D) modifying
or terminating the Company’s exclusive right to file and/or solicit acceptances
of a chapter 11 plan, or (E) that (1) is inconsistent with this Agreement in any

 

10

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material respect or (2) would, or would reasonably be expected to, frustrate the
purposes of this Agreement, including by preventing the consummation of the
Restructuring;

 

(v)                                 not modify the Plan or any other Definitive
Documents, in whole or in part, in a manner that is inconsistent with this
Agreement or not in form and substance acceptable to the Initial Supporting
Noteholders;

 

(vi)                              not seek relief or request any order from the
Bankruptcy Court requiring any Initial Supporting Noteholder to sell, cause to
sell, or otherwise transfer a specified amount of its beneficial ownership of
Claims, for purposes of section 382(l)(5) of the Tax Code or otherwise, without
the affirmative consent of such Initial Supporting Noteholder;

 

(vii)                           consent to the sale or other disposition during
the 2019 calendar year (including by abandonment to a state or governmental
authority) of the Existing Equity Interests in the Company owned by Texas Oil &
Gas Holdings LLC (31,276,726 shares), AI Energy Holdings LLC (3,556,387 shares)
and ALTEP 2014 LP (109,991 shares), and, in the event of any Official Committee
of Unsecured Creditors objects to such disposition, exercise reasonable best
efforts to obtain approval by the Bankruptcy Court of such disposition;
provided, that Access shall reasonably cooperate with the Debtors to provide any
information reasonably requested related to any stock ownership analysis under
section 382 of the Tax Code;

 

(viii)                        execute and deliver any other required agreements
to effectuate and consummate the Restructuring; and

 

(ix)                              support and consummate the Restructuring in
accordance with this Agreement within the time-frames contemplated under this
Agreement.

 

(b)                                 Automatic Stay.  The Company acknowledges
and agrees and shall not dispute that the giving of any notices, including
notices of termination by any Party pursuant to this Agreement, shall not be a
violation of the automatic stay of section 362 of the Bankruptcy Code (and the
Company hereby waives, to the fullest extent permitted by law, the applicability
of the automatic stay to the giving of such notice); provided, however, that
nothing herein shall prejudice any Party’s rights to argue that the giving of
notice of default or termination was not proper under the terms of this
Agreement.

 

(c)                                  Nothing in this Agreement shall require any
director or officer of a Company Entity to take any action or inaction that
would be, based on the advice of counsel, inconsistent with their fiduciary
duties to such Company Entity.  No action or inaction on the part of any
director or officer of any Company Entity that such officer or director believes
is, based on the advice of counsel, consistent, their fiduciary duties shall be
limited or precluded by this Agreement; provided, that no such action or
inaction shall be deemed to prevent the Initial Supporting Noteholders from
taking actions they are permitted to take as a result of such actions or
inactions, including terminating their obligations hereunder, and neither the
Company nor any Supporting Creditor that is affiliated with such officer or
director shall be in violation of this Agreement by virtue of such individual
taking, or refraining from taking, any such action, so long

 

11

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as any such action is consistent with the fiduciary obligations of the Company
under applicable law (as determined by the Company after consultation with
counsel).

 

(d)                                 Notwithstanding anything to the contrary
herein, nothing in this Agreement shall create any additional fiduciary
obligations on the part of the Company, or the Supporting Creditors, or any
members, partners, managers, managing members, officers, directors, employees,
advisors, principals, attorneys, professionals, accountants, investment bankers,
consultants, agents or other representatives of the same or their respective
affiliated entities, in such person’s capacity as a member, partner, manager,
managing member, officer, director, employee, advisor, principal, attorney,
professional, accountant, investment banker, consultant, agent or other
representative of such Party or its affiliated entities, that such entities did
not have prior to the execution of this Agreement.

 

6.                                      Termination of Agreement.

 

(a)                                 This Agreement shall terminate three
(3) Business Days following the delivery of written notice (in accordance with
Section 19 hereof) from (i) the Initial Supporting Noteholders to EP Parent at
any time after and during the continuance of any Supporting Noteholder
Termination Event (as defined below), or (ii) EP Parent to the other Parties at
any time after the occurrence and during the continuance of any Company
Termination Event (as defined below).  Notwithstanding any provision to the
contrary in this Section 6, no Party may exercise any of its respective
termination rights as set forth herein if such Party has failed to perform or
comply in all material respects with the terms and conditions of this Agreement
(unless such failure to perform or comply arises as a result of another Party’s
actions or inactions), with such failure to perform or comply causing, or
resulting in, the occurrence of the applicable Supporting Noteholder Termination
Event or Company Termination Event giving rise to such termination right;
provided, that nothing in this sentence shall limit the termination rights of
any Party pursuant to Section 6(c)(viii) or 6(d)(vii).  This Agreement shall
automatically terminate, without any further required action or notice, unless
the Bankruptcy Court has entered an order or orders, in form and substance
acceptable to the Company, on the one hand, and the Initial Supporting
Noteholders, on the other hand, approving the Backstop Agreement as of
November 18, 2019 (provided, that if the Bankruptcy Court is unable to hear or
fully consider the motion to approve the Backstop Agreement on November 12,
2019, then November 25, 2019), unless otherwise extended in accordance with the
terms of the Backstop Agreement.  If not terminated on an earlier date, then
this Agreement shall automatically terminate, without any further required
action or notice, upon the occurrence of the Effective Date.

 

(b)                                 [RESERVED]

 

(c)                                  A “Supporting Noteholder Termination Event”
shall mean any of the following:

 

(i)                                     if, as of October 25, 2019, the Required
Lenders (as defined in that certain Credit Agreement, dated as of May 24, 2012
(as amended, restated, amended and restated, modified or otherwise supplemented
from time to time) by and among EP Energy LLC, as borrower, EPE Acquisition,
LLC, JPMorgan Chase Bank, N.A., as administrative

 

12

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agent and as collateral agent, have not provided the Company with an executed
Exit Commitment Letter;

 

(ii)                                  if, as of 11:59 p.m. prevailing Eastern
time on October 18, 2019, the Company has not filed a motion seeking approval of
the Backstop Agreement;

 

(iii)                               if, as of November 18, 2019 (provided, that
if the Bankruptcy Court is unable to hear or fully consider the motion to
approve the Backstop Agreement on November 12, 2019, then November 25, 2019),
the Bankruptcy Court has not entered a final order or orders, in form and
substance mutually satisfactory to the Company and the Initial Supporting
Noteholders, approving the Backstop Agreement.

 

(iv)                              if, as of December 2, 2019, the Bankruptcy
Court has not entered a final order, in form and substance mutually satisfactory
to the Company and the Initial Supporting Noteholders, authorizing and approving
the DIP Facility, the Exit Commitment Letter and the Debtors’ use of cash
collateral.

 

(v)                                 if, as of January 8, 2020, the Bankruptcy
Court has not entered a final order, in form and substance mutually satisfactory
to the Company and the Initial Supporting Noteholders, approving the Disclosure
Statement;

 

(vi)                              if, as of January 8, 2020, the Bankruptcy
Court has not entered a final order, in form and substance mutually satisfactory
to the Company and the Initial Supporting Noteholders, approving the Rights
Offering Procedures;

 

(vii)                           if, as of February 28, 2020, the Bankruptcy
Court has not entered a final order, in form and substance mutually satisfactory
to the Company and the Initial Supporting Noteholders, confirming the Plan;
provided that if the Bankruptcy Court has commenced a hearing on confirmation of
the Plan as of February 28, 2020, such date shall automatically extend to
March 16, 2020, provided, further, that each such date shall be automatically
extended one (1) Business Day for each Business Day that the Supporting
Noteholders fail to deliver drafts of the New Corporate Governance Documents to
Weil in accordance with the deadlines set forth in Section 3(g) hereof;

 

(viii)                        if, as of March 19, 2020, the Effective Date has
not occurred;

 

(ix)                              the Backstop Agreement is terminated in
accordance with its terms;

 

(x)                                 the occurrence of any material breach of
this Agreement by the Company that remains uncured for a period of five
(5) Business Days after the receipt of written notice of such breach pursuant to
this Section 6 and in accordance with Section 19 (as applicable);

 

(xi)                              the amendment or modification of this
Agreement, the Rights Offering Procedures, the Plan, the Disclosure Statement or
any documents related to the Plan, notices, exhibits or appendices, or any of
the Definitive Documents without the consent of the Initial Supporting
Noteholders;

 

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(xii)                           any of the orders approving, the Backstop
Agreement, the Rights Offering Procedures, the Disclosure Statement, or the Plan
are reversed, dismissed, stayed, vacated or reconsidered or modified or amended
without the consent of the Initial Supporting Noteholders;

 

(xiii)                        the issuance by any governmental authority,
including any regulatory authority or court of competent jurisdiction, of any
ruling, judgment, or order enjoining the consummation of or rendering illegal
the Plan or the Restructuring, and either (A) such ruling, judgment, or order
has been issued at the request of or with the acquiescence of the Company, or
(B) in all other circumstances, such ruling, judgment, or order has not been
stayed, reversed, or vacated within fifteen (15) Business Days after such
issuance;

 

(xiv)                       the Bankruptcy Court enters an order (A) directing
the appointment of a trustee in any of the Chapter 11 Cases, (B) converting any
of the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code,
(C) dismissing the Chapter 11 Case of any of the Debtors other than the Company,
or (D) directing the appointment of a trustee, receiver, or examiner with
expanded powers beyond those set forth in section 1106(a)(3) and (4) of the
Bankruptcy Code in any of the Chapter 11 Cases;

 

(xv)                          any Company Entity makes any filing in support of,
enters into an agreement with respect to, or announces its support for any
Alternative Restructuring or that it will file any plan of reorganization other
than the Plan, or files any motion or application seeking authority to sell any
material assets (other than as provided for in the Plan), without the prior
written consent of the Initial Supporting Noteholders;

 

(xvi)                       the breach in any material respect by the Company of
any of the undertakings, representations, warranties or covenants of the Company
set forth herein which remains uncured for a period of five (5) business days
after the receipt of written notice of such breach from the Initial Supporting
Noteholders pursuant to this Section 6 and in accordance with Section 19 (as
applicable), which notice period shall run concurrently with the notice of
termination of this Agreement set forth above;

 

(xvii)                    a determination is made with respect to any Company
Entity that its continued support of the Restructuring would be inconsistent
with its fiduciary obligations under applicable law;

 

(xviii)                 entry of an order by the Bankruptcy Court terminating
the Company’s exclusive right to file a plan of reorganization pursuant to
section 1121 of the Bankruptcy Code or if the Company loses such right because
(A) the Company fails to make a timely motion to extend the exclusivity period
and exclusivity lapses or (B) the Bankruptcy Court denies the Company’s motion
to extend the exclusivity period;

 

(xix)                       any court of competent jurisdiction has entered a
judgment or order declaring this Agreement or the Backstop Agreement to be
unenforceable;

 

(xx)                          any of the following shall have occurred: (i) the
Company shall have filed any motion, application, adversary proceeding, or cause
of action (A) challenging the

 

14

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validity, enforceability, perfection, or priority of, or seeking avoidance or
subordination of any of the Claims of the Supporting Noteholders, or any of the
liens securing the Claims of the Supporting Noteholders, or (B) otherwise
seeking to impose liability upon or enjoin the Supporting Noteholders (other
than with respect to a breach of this Agreement); or (ii) the Company shall have
supported any motion, application, adversary proceeding or cause of action
referred to in the immediately preceding clause (i) filed by a third party, or
affirmatively consents (without the consent of the Initial Supporting
Noteholders) to the standing of any such third party to bring such application,
adversary proceeding or cause of action; or

 

(xxi)                       failure to conduct the Rights Offering in accordance
with the Backstop Agreement and the Rights Offering Procedures.

 

(d)                                 A “Company Termination Event” shall mean any
of the following:

 

(i)                                     [RESERVED]

 

(ii)                                  the breach by one or more of the
Supporting Noteholders of any of the undertakings, representations, warranties,
or covenants of the Supporting Noteholders set forth herein in any material
respect that remains uncured for a period of five (5) Business Days after the
receipt of written notice of such breach pursuant to this Section 6 and in
accordance with Section 19 hereof (as applicable), but only if the non-breaching
Supporting Noteholders hold less than 66.67% of the aggregate principal amount
of 1.5L Notes;

 

(iii)                               the board of directors (or any committee
having appropriate authority thereof), managers, members, or partners or general
partner, as applicable, of any Company Entity party hereto reasonably determines
in good faith based upon the advice of counsel that continued performance under
this Agreement would be inconsistent with the exercise of its fiduciary duties
under applicable law; provided, however, that such Company Entity provides
notice of such determination to the Supporting Creditors within five
(5) Business Days after the date thereof;

 

(iv)                              [RESERVED]

 

(v)                                 the issuance by any governmental authority,
including any regulatory authority or court of competent jurisdiction, of any
ruling, judgment, or order enjoining the consummation of or rendering illegal
the Plan or the Restructuring, and such ruling, judgment, or order has not been
stayed, reversed, or vacated within fifteen (15) Business Days after such
issuance;

 

(vi)                              the Bankruptcy Court enters an order
(A) directing the appointment of a trustee in the Chapter 11 Cases,
(B) converting any of the Chapter 11 Cases to cases under chapter 7 of the
Bankruptcy Code, or (C) dismissing the Chapter 11 Case of any of the Debtors
other than the Company; or (D) directing the appointment of a trustee, receiver,
or examiner with expanded powers beyond those set forth in
section 1106(a)(3) and (4) of the Bankruptcy Code in any of the Chapter 11
Cases; or

 

15

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(vii)                           if, as of March 19, 2020, the Effective Date has
not occurred.

 

(e)                                  Certain Extensions of Time. 
Notwithstanding anything to the contrary herein, any of the dates or deadlines
set forth in

 

(i)                                     Sections 6(a) and 6(d) above may be
extended by written agreement (with email from counsel being sufficient) of the
Company and the Initial Supporting Noteholders,

 

(ii)                                  [RESERVED]; and

 

(iii)                               Section 6(c) above may be extended by
written agreement (with email from counsel being sufficient) of the Company and
the Initial Supporting Noteholders.

 

(f)                                   Mutual Termination.  This Agreement may be
terminated by mutual agreement of the Company and the Initial Supporting
Noteholders upon the receipt and acknowledged acceptance (whether oral or by
electronic mail) of written notice delivered in accordance with Section 19
hereof.

 

(g)                                  Effect of Termination.

 

(i)                                     Subject to the provisions contained in
Section 6(a) and Section 13 hereof, upon the termination of this Agreement in
accordance with this Section 6, this Agreement shall forthwith become null and
void and of no further force or effect and each Party shall, except as provided
otherwise in this Agreement, be immediately released from its liabilities,
obligations, commitments, undertakings, and agreements under or related to this
Agreement and shall have all the rights and remedies that it would have had and
shall be entitled to take all actions, whether with respect to the Restructuring
or otherwise, that it would have been entitled to take had it not entered into
this Agreement, including all rights and remedies available to it under
applicable law and, with respect to the Supporting Noteholders, the 1.5L
Indentures; provided, however, that in no event shall any such termination
relieve a Party from liability for its breach or non-performance of its
obligations hereunder prior to the date of such termination.

 

(ii)                                  If this Agreement is terminated at a time
when permission of the Bankruptcy Court is required for the Supporting Creditors
to terminate or cause the termination of, this Agreement, the Company shall not
oppose any attempt by the Supporting Creditors to terminate, or cause the
termination of, this Agreement at such time, provided, however, the Company may
contest whether the Agreement has been validly terminated. Notwithstanding
anything to the contrary herein, (A) the Company acknowledges and agrees that
following the Petition Date, if this Agreement has been validly terminated, then
all votes by the Supporting Creditors to accept the Plan and opt in to or not
opt out of the releases shall, upon written notice to the Company, be revoked,
null and void; and (B) all Parties acknowledge that valid termination of this
Agreement would be an occurrence of the type that constitutes “cause” under
Bankruptcy Rule 3018.  The foregoing sentence shall survive termination of this
Agreement.

 

16

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(h)                                 If the Restructuring is not consummated,
nothing herein shall be construed as a waiver by any Party of any or all of such
Party’s rights, and the Parties expressly reserve any and all of their
respective rights.  Except as expressly provided in this Agreement, nothing
herein is intended to, or does, in any manner waive, limit, impair, or restrict
any right of any Party, or the ability of any Party, to protect and preserve its
rights (including rights under this Agreement), remedies, and interests,
including its claims against any other Party.  Pursuant to Federal Rule of
Evidence 408 and any other applicable rules of evidence, this Agreement and all
negotiations relating hereto shall not be admissible into evidence in any
proceeding other than a proceeding to enforce its terms.

 

7.                                      Representations and Warranties.

 

(a)                                 Each Party, severally (and not jointly),
represents and warrants to the other Parties that the following statements are
true, correct, and complete as of the date hereof (or as of the date a
Supporting Creditor becomes a party hereto):

 

(i)                                     such Party is validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, and has all requisite corporate, partnership, limited liability
company, or similar authority to enter into this Agreement and carry out the
transactions contemplated hereby and perform its obligations contemplated
hereunder; and the execution and delivery of this Agreement and the performance
of such Party’s obligations hereunder have been duly authorized by all necessary
corporate, limited liability company, partnership or other similar action on its
part;

 

(ii)                                  the execution, delivery, and performance
by such Party of this Agreement does not and will not (A) violate its charter or
bylaws (or other similar governing documents) or those of any of its
subsidiaries or any material provision of law, rule, or regulation applicable to
it or any of its subsidiaries or (B) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation to which it or any of its subsidiaries is a
party except, in the case of the Company, for the filing of the Chapter 11
Cases;

 

(iii)                               the execution, delivery, and performance by
such Party of this Agreement does not and will not require any material
registration or filing with, consent or approval of, or notice to, or other
action, with or by, any federal, state or governmental authority or regulatory
body, except such filings as may be necessary and/or required by the SEC or
other securities regulatory authorities under applicable securities laws; and

 

(iv)                              this Agreement is the legally valid and
binding obligation of such Party, enforceable against it in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to or limiting
creditors’ rights generally or by equitable principles relating to
enforceability or a ruling of the Bankruptcy Court.

 

(v)                                 it has no actual knowledge of any event
that, due to any fiduciary or similar duty to any other Person or Entity, would
prevent it from taking any action required of it under this Agreement.

 

17

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(b)                                 Each Supporting Creditor severally (and not
jointly) represents and warrants to the other Parties that, as of the date
hereof (or as of the date such Supporting Creditor becomes a party hereto), such
Supporting Creditor (i) is the beneficial owner of the aggregate principal
amount of (x) the Claims set forth below its name on the signature page hereto
(or below its name on the signature page of a Joinder Agreement for any
Additional Supporting Creditor), or (y) is the nominee, investment manager,
advisor, or subadvisor for one or more beneficial holders thereof, or (ii) has,
with respect to the beneficial owners of such Claims, (A) sole investment or
voting discretion with respect thereto, (B) full power and authority to vote on
and consent to matters concerning such Claims or to exchange, assign, and
Transfer such Claims, and (C) full power and authority to bind or act on the
behalf of, such beneficial owners.

 

(c)                                  Each Supporting Noteholder severally (and
not jointly) makes the representations and warranties set forth in
Section 20(c) hereof, and in each case, to the other Parties.

 

(d)                                 Each Supporting Noteholder severally (and
not jointly) represents and warrants to the other Parties that such Supporting
Noteholder has not taken any action which would result in the occurrence of a
Change of Control (as such term is defined in the Reinstated Indentures),
provided that no Supporting Creditor shall be liable to any Company Entity or
any other Supporting Creditor for a breach of this Section 3(a)(iv) that is
solely the result of another Supporting Creditor’s non-compliance of their
obligations under this Agreement or the Backstop Agreement.

 

8.                                      Disclosure; Publicity.

 

The Company shall submit drafts to Supporting Noteholder Counsel of any press
releases that constitute disclosure of the existence of the terms of this
Agreement or any amendment to the terms of this Agreement at least (1) Business
Day prior to making any such disclosure.  Except as required by applicable law
or otherwise permitted under the terms of any other agreement between the
Company and any Supporting Creditor, no Party or its advisors shall disclose to
any person or entity (including, for the avoidance of doubt, any other Party),
other than advisors to the Company, the principal amount or percentage of any
1.5L Notes held by any Supporting Noteholder without such Supporting
Noteholder’s consent; provided, however, that (i) if such disclosure is required
by law, subpoena, or other legal process or regulation, the disclosing Party
shall afford the relevant Supporting Creditor a reasonable opportunity to review
and comment in advance of such disclosure and shall take all reasonable measures
to limit such disclosure (the expense of which, if any, shall be borne by the
Supporting Creditor) and (ii) the foregoing shall not prohibit the disclosure of
the aggregate percentage or aggregate principal amount of 2024 Notes and 2025
Notes held by all Supporting Noteholders, collectively, on a tranche by tranche
basis.  Notwithstanding the provisions in this Section 8, any Party may
disclose, to the extent consented to in writing by a Supporting Creditor, such
Supporting Creditor’s individual holdings.  The Supporting Noteholders that are
affiliates of Apollo Management Holdings, L.P. (the “Apollo Funds”) consent to
the disclosure of the aggregate percentage and aggregate principal amount of
2024 Notes and 2025 Notes held collectively by the Apollo Funds in any reports
filed or furnished by the Company or any of its subsidiaries with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder or the Securities
Act.

 

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9.                                      Amendments and Waivers.

 

(a)                                 Other than as set forth in Section 9(b),
this Agreement, including any exhibits or schedules hereto, may not be waived,
modified, amended, or supplemented except with the written consent of the
Company and the Initial Supporting Noteholders (such consent not to be
unreasonably withheld, conditioned, or delayed).

 

(b)                                 Notwithstanding Section 9(a):

 

(i)                                     any waiver, modification, amendment, or
supplement to this Section 9 shall require the written consent of all of the
Parties;

 

(ii)                                  any modification, amendment, or change to
the definition of “Initial Supporting Noteholders” shall require the written
consent of each Initial Supporting Noteholder and the Company;

 

(iii)                               any change, modification, or amendment to
this Agreement or the Plan that treats or affects any Supporting Noteholder in a
manner that is materially and adversely disproportionate to the manner in which
any other Supporting Noteholder is treated (after taking into account each of
such Supporting Noteholder’s respective holdings in the Company and the
recoveries contemplated by the Plan) shall require the written consent of such
materially adversely and disproportionately affected Supporting Noteholder.

 

(iv)                              [RESERVED]

 

(v)                                 [RESERVED]

 

(c)                                  In the event that a materially adversely
and disproportionately affected Supporting Noteholder other than Access or
Avenue (such affected Supporting Noteholder, a “Nonconsenting Creditor”) does
not consent to a waiver, change, modification, or amendment to this Agreement
requiring the consent of each Supporting Noteholder, as applicable, but such
waiver, change, modification, or amendment receives the consent of the Initial
Supporting Noteholders, then the Company and such Initial Supporting Noteholders
may elect to terminate this Agreement as to each such Nonconsenting Creditor
(excluding, for the avoidance of doubt, Access and Avenue) and this Agreement
shall continue in full force and effect with respect to all other Supporting
Creditors from time to time.

 

10.                               Effectiveness.

 

This Agreement shall become effective and binding upon each Party upon the date
(the “Support Effective Date”) on which each of the Initial Supporting
Noteholders has executed and delivered to the Company a signature page hereto;
provided, however, that signature pages executed by any Supporting Creditors
shall be delivered to (i) the other Supporting Creditors in a redacted form that
removes such Supporting Creditors’ individual holdings and (ii) the Company,

 

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Weil, and Supporting Noteholder Counsel in an unredacted form (to be held by
Weil and Supporting Noteholder Counsel on a “professionals’ eyes only” basis).

 

11.                               GOVERNING LAW; JURISDICTION; WAIVER OF JURY
TRIAL.

 

(a)                                 This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York without giving effect to the conflict of laws
principles thereof.

 

(b)                                 Each of the Parties irrevocably agrees that
any legal action, suit, or proceeding arising out of or relating to this
Agreement brought by any Party shall be brought and determined in any federal or
state court in the Borough of Manhattan in the City of New York (“NY Courts”)
and each of the Parties hereby irrevocably submits to the exclusive jurisdiction
of the aforesaid courts for itself and with respect to its property, generally
and unconditionally, with regard to any such proceeding arising out of or
relating to this Agreement or the Restructuring.  Each of the Parties agrees not
to commence any proceeding arising out of or relating to this Agreement or the
Restructuring except in the NY Courts, other than proceedings in any court of
competent jurisdiction to enforce any judgment, decree, or award rendered by any
NY Courts.  Each of the Parties further agrees that notice as provided in
Section 19 shall constitute sufficient service of process and the Parties
further waive any argument that such service is insufficient.  Each of the
Parties hereby irrevocably and unconditionally waives, and agrees not to assert,
by way of motion or as a defense, counterclaim or otherwise, in any proceeding
arising out of or relating to this Agreement or the Restructuring, (i) any claim
that it is not personally subject to the jurisdiction of the NY Courts for any
reason, (ii) that it or its property is exempt or immune from jurisdiction of
any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment, or otherwise) and (iii) that
(A) the proceeding in any such court is brought in an inconvenient forum,
(B) the venue of such proceeding is improper, or (C) this Agreement, or the
subject matter hereof, may not be enforced in or by such courts. 
Notwithstanding the foregoing, during the pendency of the Chapter 11 Cases, all
proceedings contemplated by this Section 11(b) shall be brought in the
Bankruptcy Court.

 

(c)                                  EACH PARTY HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT, OR ANY OTHER THEORY).  EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE,
AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.

 

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--------------------------------------------------------------------------------

 

12.                               Specific Performance/Remedies.

 

It is understood and agreed by the Parties that money damages would not be a
sufficient remedy for any breach of this Agreement (but not any agreements
attached as exhibits hereto, the remedies for which shall be set forth in such
applicable exhibits) by any Party and each non-breaching Party shall be entitled
to specific performance and injunctive or other equitable relief (including
attorneys’ fees and costs) as a remedy of any such breach, without the necessity
of proving the inadequacy of money damages as a remedy, including an order of
the Bankruptcy Court requiring any Party to comply promptly with any of its
obligations hereunder.  Each Party also agrees that it will not seek, and will
waive any requirement for, the securing or posting of a bond in connection with
any Party seeking or obtaining such relief.

 

13.                               Survival.

 

Notwithstanding the termination of this Agreement pursuant to Section 6 hereof,
the agreements and obligations of the Parties in this Section 13 and Sections
3(e), 6(g), 8, 11, 12, 14 15, 16, 17, 18, 19, 20, 21 (in the case of fees and
expenses incurred prior to such termination), and 22 through 26 hereof (and any
defined terms used in any such Sections) shall survive such termination and
shall continue in full force and effect in accordance with the terms hereof;
provided, however, that any liability of a Party for failure to comply with the
terms of this Agreement shall survive such termination.

 

14.                               Headings.

 

The headings of the sections, paragraphs, and subsections of this Agreement are
inserted for convenience only and shall not affect the interpretation hereof or,
for any purpose, be deemed a part of this Agreement.  The recitals to this
Agreement are true and correct and incorporated by reference into this
Section 14.

 

15.                               Successors and Assigns; Severability; Several
Obligations.

 

This Agreement is intended to bind and inure to the benefit of the Parties and
their respective successors, permitted assigns, heirs, executors, administrators
and representatives; provided, however, that nothing contained in this
Section 15 shall be deemed to permit Transfers of the Claims arising under the
1.5 Notes or otherwise, other than in accordance with the express terms of this
Agreement.  If any provision of this Agreement or the exhibits attached hereto,
or the application of any such provision to any person or entity or
circumstance, shall be held invalid, unenforceable, void, or violative of
applicable law, in each case in whole or in part, such invalidity,
unenforceability, violability or violation shall attach only to such provision
or part thereof and the remaining part of such provision hereof and this
Agreement shall continue in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any Party; provided, that this provision shall not
operate to waive any condition precedent to any event set forth herein.  Upon
any such determination of invalidity, the Parties shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the Parties as
closely as possible in a reasonably acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.  The agreements, representations, and obligations
of the Supporting Creditors

 

21

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under this Agreement are, in all respects, ratable and several and neither joint
nor joint and several.  Any breach of this Agreement by a Supporting Creditor
shall not result in liability for any other Supporting Creditor.  The Supporting
Creditors are acting in their individual capacities and not as agent or trustee,
or in any other fiduciary capacity, with respect to any other Supporting
Creditor or any other party.

 

16.                               No Third-Party Beneficiaries.

 

Unless expressly stated herein, this Agreement shall be solely for the benefit
of the Parties and no other person or entity shall be a third-party beneficiary
hereof or shall otherwise be entitled to enforce any provision hereof.

 

17.                               Prior Negotiations; Entire Agreement.

 

This Agreement, including the exhibits and schedules hereto, constitutes the
entire agreement of the Parties and supersedes all other prior negotiations,
with respect to the subject matter hereof and thereof, except that the Parties
acknowledge that any confidentiality agreements (if any) heretofore executed
between the Company and each Supporting Creditor shall continue in full force
and effect.

 

18.                               Counterparts.

 

This Agreement may be executed in several counterparts, each of which shall be
deemed to be an original, and all of which together shall be deemed to be one
and the same agreement.  Execution copies of this Agreement may be delivered by
electronic mail, or otherwise, which shall be deemed to be an original for the
purposes of this paragraph.

 

19.                               Notices.

 

All notices hereunder shall be deemed given if in writing and delivered, if
contemporaneously sent by electronic mail, courier, or by registered or
certified mail (return receipt requested) to the following addresses:

 

If to the Company, to:

 

EP Energy Corporation
1001 Louisiana Street
Houston, Texas 77002
Attn:                    Jace D. Locke
jace.locke@epenergy.com

 

With a copy to:

 

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn:                    Matt Barr (matt.barr@weil.com)

 

22

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Alfredo R. Perez (alfredo.perez@weil.com)

Ronit J. Berkovich (ronit.berkovich@weil.com)

 

If to a Supporting Noteholder:

 

To the notice and copy (if any) addresses specified on such Supporting
Noteholder’s signature page to this Agreement.

 

Any notice given by delivery, mail, or courier shall be effective when
received.  Any notice given by e-mail shall be effective upon oral, machine, or
e-mail (as applicable) confirmation of transmission.

 

20.                               No Solicitation; Representation by Counsel;
Adequate Information.

 

(a)                                 Notwithstanding any other provision herein,
this Agreement is not and shall not be deemed to be a solicitation of votes for
the acceptance of a plan of reorganization for purposes of sections 1125 and
1126 of the Bankruptcy Code or otherwise. Any such offer or solicitation will be
made only in compliance with all applicable securities laws and provisions of
the Bankruptcy Code.  The acceptances of the Supporting Creditor with respect to
the Plan will not be solicited until such Supporting Creditor has received the
Disclosure Statement and Solicitation Materials.  In addition, this Agreement is
not and shall not be deemed an offer with respect to the issue or sale of
securities to any person or entity, or the solicitation of an offer to acquire
or buy securities, in any jurisdiction where such offer or solicitation would be
unlawful.

 

(b)                                 Each Party acknowledges that it has had an
opportunity to receive information from the Company and that it has been
represented by counsel in connection with this Agreement and the transactions
contemplated hereby.  Accordingly, any rule of law or any legal decision that
would provide any Party with a defense to the enforcement of the terms of this
Agreement against such Party based upon lack of legal counsel shall have no
application and is expressly waived.

 

(c)                                  Each Supporting Creditor acknowledges,
agrees, and represents to the other Parties that it (i) is a “qualified
institutional buyer” as such term is defined in Rule 144A of the Securities Act,
(ii) is an “accredited investor” as such term is defined in Rule 501 of the
Securities Act, (iii) understands that if it is to acquire any securities, as
defined in the Securities Act, pursuant to the Restructuring, such securities
have not been registered under the Securities Act and that such securities are,
to the extent not acquired pursuant to section 1145 of the Bankruptcy Code,
being offered and sold pursuant to an exemption from registration contained in
the Securities Act, based in part upon such Supporting Creditor’s
representations contained in this Agreement and cannot be sold unless
subsequently registered under the Securities Act or an exemption from
registration is available, (iv) will not acquire any securities pursuant to the
Restructuring as a result of any form of general solicitation or general
advertising, and (v) has such knowledge and experience in financial and business
matters that such Supporting Creditor, is capable of evaluating the merits and
risks of the securities to be acquired by it (if any) pursuant to the
Restructuring and understands and is able to bear any economic risks with such
investment.

 

23

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21.                               [RESERVED]

 

22.                               Severability and Construction.

 

If any provision of this Agreement shall be held by a court of competent
jurisdiction to be illegal, invalid, or unenforceable, the remaining provisions
shall remain in full force and effect if essential terms and conditions of this
Agreement for each Party remain valid, binding, and enforceable.

 

23.                               Reservation of Rights; Settlement Discussions.

 

This Agreement and the Restructuring are part of a proposed settlement of a
dispute among the Parties.  Nothing herein shall be deemed an admission of any
kind.  Pursuant to Federal Rule of Evidence 408, any applicable state rules of
evidence and any other applicable law, foreign or domestic, this Agreement and
the exhibits attached hereto and all negotiations relating thereto shall not be
admissible into evidence in any proceeding other than a proceeding to enforce
the terms of this Agreement or the exhibits attached hereto (as applicable).

 

24.                               No Strict Construction.

 

Each Party acknowledges that it has received adequate information to enter into
this Agreement, and that this Agreement and the exhibits attached hereto have
been prepared through the joint efforts of all of the Parties.  Neither the
provisions of this Agreement or the exhibits attached hereto nor any alleged
ambiguity herein or therein shall be interpreted or resolved against any Party
on the ground that such Party’s counsel drafted this Agreement or the exhibits
attached hereto, or based on any other rule of construction.

 

25.                               Remedies Cumulative; No Waiver.

 

All rights, powers, and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise of any right, power, or remedy thereof by any
Party shall not preclude the simultaneous or later exercise of any other such
right, power, or remedy by such Party.  The failure of any Party hereto to
exercise any right, power, or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon strict
compliance by any other Party hereto with its obligations hereunder, and any
custom or practice of the parties at variance with the terms hereof, shall not
constitute a waiver by such Party of its right to exercise any such or other
right, power, or remedy or to demand such strict compliance.

 

26.                               Relationship Among Parties.

 

(a)                                 Unless expressly stated herein, this
Agreement shall be solely for the benefit of the Parties and no other person or
entity shall be a third-party beneficiary hereof.  No Party shall have any
responsibility for any trading by any other entity by virtue of this Agreement. 
No prior history, pattern or practice of sharing confidences among or between
the Parties shall in any way affect or negate this understanding and agreement. 
The Parties have no agreement, arrangement, or understanding with respect to
acting together for the purpose of acquiring, holding, voting or

 

24

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disposing of any equity securities of the Company and do not constitute a
“group” within the meaning of Rule 13d-5 under the Securities Exchange Act of
1934, as amended.

 

[Signature pages follow.]

 

25

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and
delivered by their respective duly authorized officers, solely in their
respective capacity as officers of the undersigned and not in any other
capacity, as of the date first set forth above.

 

 

EP ENERGY CORPORATION

 

EVEREST ACQUISITION, LLC

 

EP ENERGY, LLC

 

EVEREST ACQUISITION FINANCE INC.

 

EP ENERGY GLOBAL LLC

 

EP ENERGY MANAGEMENT, L.L.C.

 

EP ENERGY RESALE COMPANY, L.L.C.

 

EP ENERGY E&P COMPANY, L.P.

 

 

 

 

 

 

By:

/s/ Jace D. Locke

 

 

Name: Jace D. Locke

 

 

Title: Vice President & General Counsel

 

26

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Supporting 1.5L Noteholder

 

AOP VII (EPE INTERMEDIATE), L.P.

 

 

 

By: Apollo Advisors VII, L.P., its general partner

 

 

 

By: Apollo Capital Management VII, LLC its general partner

 

 

 

 

By:

/s/ Laurie D. Medley

 

Name: Laurie D. Medley

 

Title: Vice President

 

 

 

ANRP (EPE INTERMEDIATE), L.P.

 

 

 

By: Apollo ANRP Advisors, L.P., its general partner

 

 

 

By: Apollo ANRP Capital Management, LLC its general partner

 

 

 

 

By:

/s/ Laurie D. Medley

 

Name: Laurie D. Medley

 

Title: Vice President

 

 

 

ANRP (CORP AIV), L.P.

 

 

 

By: Apollo ANRP Advisors, L.P., its general partner

 

 

 

By: Apollo ANRP Capital Management, LLC its general partner

 

 

 

 

By:

/s/ Laurie D. Medley

 

Name: Laurie D. Medley

 

Title: Vice President

 

 

 

APOLLO INVESTMENT FUND VII, L.P

 

 

 

By: Apollo Advisors VII, L.P., its general partner

 

 

 

By: Apollo Capital Management VII, LLC its general partner

 

 

 

 

By:

/s/ Laurie D. Medley

 

Name: Laurie D. Medley

 

Title: Vice President

 

 

 

APOLLO OVERSEAS PARTNERS (DELAWARE 892) VII, L.P

 

 

 

By: Apollo Advisors VII, L.P., its general partner

 

 

 

By: Apollo Capital Management VII, LLC its general partner

 

 

 

 

By:

/s/ Laurie D. Medley

 

Name: Laurie D. Medley

 

Title: Vice President

 

 

27

--------------------------------------------------------------------------------

 

APOLLO INVESTMENT FUND (PB) VII, L.P

 

 

 

By: Apollo Advisors VII, L.P., its general partner

 

 

 

By: Apollo Capital Management VII, LLC its general partner

 

 

 

 

By:

/s/ Laurie D. Medley

 

Name: Laurie D. Medley

 

Title: Vice President

 

 

Principal Amount of 2024 1.5L Notes: [Omitted]

Principal Amount of 2025 1.5L Notes: [Omitted]

Principal Amount of 2024 1.25L Notes: [Omitted]

All other Claims: [Omitted]

 

Notice Address:

 

Apollo Global Management

9 West 57th Street

New York, NY 10019

Attn: General Counsel

 

With a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison, LLP

1285 A v enue of the Americas

New York, NY 10019

Attn: Jeffrey D. Saferstein

 

28

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Supporting 1.5L Noteholder

 

ELLIOT INTERNATIONAL, L.P.

 

 

 

By: Hambledon, Inc., its general partner

 

 

 

By: Elliot International Capital Advisors Inc., as attorney-in-fact

 

 

 

 

By:

/s/ Elliot Greenberg

 

Name: Elliot Greenberg

 

Title: Vice-President

 

 

Principal Amount of 2024 1.5L Notes: [Omitted]

Principal Amount of 2025 1.5L Notes: [Omitted]

Principal Amount of 2024 1.25L Notes: [Omitted]

All other Claims: [Omitted]

 

Notice Address:

 

c/o Elliot Management Corporation

40 West 57th Street, 4th Floor

New York, NY 10019

Name: Elliot Greenberg and Rajat Bose

Facsimile: 212-478-2371 and 212-478-2366

Email address: egreenberg@elliotmgmt.com and rbose@elliotmgmt.com

 

29

--------------------------------------------------------------------------------

 

Supporting 1.5L Noteholder

 

ELLIOT ASSOCIATES, L.P.

 

 

 

By: Elliot Capital Advisors, L.P., General Partner

 

 

 

By: Braxton Associates, Inc., General Partner

 

 

 

 

By:

/s/ Elliot Greenberg

 

Name: Elliot Greenberg

 

Title: Vice-President

 

 

Principal Amount of 2024 1.5L Notes: [Omitted]

Principal Amount of 2025 1.5L Notes: [Omitted]

Principal Amount of 2024 1.25L Notes: [Omitted]

All other Claims: [Omitted]

 

Notice Address:

 

c/o Elliot Management Corporation

40 West 57th Street, 4th Floor

New York, NY 10019

Name: Elliot Greenberg and Rajat Bose

Facsimile: 212-478-2371 and 212-478-2366

Email address: egreenberg@elliotmgmt.com and rbose@elliotmgmt.com

 

30

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Supporting Creditor

 

AI FQ HOLDINGS LLC

 

 

 

By: Access Industries Management, LLC Its Manager

 

 

 

 

By:

/s/ Lincoln Benet

 

Name: Lincoln Benet

 

Title: President

 

 

 

 

By:

/s/ Alejandro Moreno

 

Name: Alejandro Moreno

 

Title: Executive Vice President

 

 

Principal Amount of 2024 1.5L Notes: Omitted]

Principal Amount of 2025 1.5L Notes: Omitted]

All other Claims: Omitted]

 

Notice Address:

 

AI FQ Holdings LLC

c/o Access Industries, Inc.

40 West 57th Street, 28th Floor

New York, NY 10019

Fax: (212) 977-8112

Name: Donald A. Wagner; Langhorne S. Perrow

Email address: dwagner@accind.com; lperrow@accind.com

 

With a copy to:

Access Industries, INc.

40 West 57th Street, 28th Floor

New York, NY 10019

Fax: (212) 977-8112

Attn: Legal Department

Email address: legalnotices@accind.com

 

31

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AVENUE ENERGY OPPORTUNITIES FUND, L.P.

 

By: AVENUE ENERGY OPPORTUNITIES PARTNERS, LLC, its General Member

 

By: GL Energy Opportunities Partners, LLC, its Managing Member

 

 

By:

/s/ Sonia Gardner

 

Name: Sonia Gardner

Title: Member

 

Principal Amount of 2024 1.5L Notes: Omitted]

Principal Amount of 2025 1.5L Notes: Omitted]

All other Claims: Omitted]

 

AVENUE ENERGY OPPORTUNITIES FUND II, L.P.

 

 

 

By: AVENUE ENERGY OPPORTUNITIES PARTNERS II, LLC, its General Member

 

 

 

By: GL ENERGY OPPORTUNITIES PARTNERS II, LLC, its Sole Member

 

 

 

 

By:

/s/ Sonia Gardner

 

Name: Sonia Gardner

 

Title: Member

 

 

Principal Amount of 2024 1.5L Notes: Omitted]

Principal Amount of 2025 1.5L Notes: Omitted]

All other Claims: Omitted]

 

AVENUE PPF OPPORTUNITIES FUND, L.P.

 

 

 

By: Avenue PPF Opportunities Fund GenPar, LLC, its General Partner

 

 

 

 

By:

/s/ Sonia Gardner

 

Name: Sonia Gardner

 

Title: Member

 

 

Principal Amount of 2024 1.5L Notes: Omitted]

Principal Amount of 2025 1.5L Notes: Omitted]

All other Claims: Omitted]

 

AVENUE SPECIAL OPPORTUNITIES FUND II, L.P.

 

 

 

By: AVENUE SO PARTNERS PARTNERS II, LLC, its General Partner

 

 

 

By: GL SO Partners II, LLC, its Managing Member

 

 

 

 

By:

/s/ Sonia Gardner

 

Name: Sonia Gardner

 

Title: Member

 

 

32

--------------------------------------------------------------------------------

 

Principal Amount of 2024 1.5L Notes: Omitted]

Principal Amount of 2025 1.5L Notes: Omitted]

All other Claims: Omitted]

 

AVENUE STRATEGIC OPPORTUNITIES FUND, L.P.

 

 

 

By: Avenue Strategic Opportunities Fund GenPar, LLC, its General Partner

 

 

 

By: GL Strategic Opportunities Partners, LLC, its sole Member

 

 

 

 

By:

/s/ Sonia Gardner

 

Name: Sonia Gardner

 

Title: Member

 

 

Principal Amount of 2024 1.5L Notes: Omitted]

Principal Amount of 2025 1.5L Notes: Omitted]

All other Claims: Omitted]

 

DESTINATION MULTISTRATEGY ALTERNATIVES FUND, A SERIES OF BRINKER CAPITAL
DESTINATIONS TRUST, As Assignee

 

 

 

 

By:

/s/ Sonia Gardner

 

Name: Sonia Gardner

 

Title: Member

 

 

Principal Amount of 2024 1.5L Notes: Omitted]

Principal Amount of 2025 1.5L Notes: Omitted]

All other Claims: Omitted]

 

AVENUE EUROPE SELECT OPPORTUNITIES FUND, L.P.

 

 

 

By: Avenue Europe Select Opportunities Fund GenPar, LLC, its General Partner

 

 

 

 

By:

/s/ Sonia Gardner

 

Name: Sonia Gardner

 

Title: Member

 

 

Principal Amount of 2024 1.5L Notes: Omitted]

Principal Amount of 2025 1.5L Notes: [Omitted]

All other Claims: Omitted]

 

33

--------------------------------------------------------------------------------

 

Exhibit A

 

Term Sheet

 

34

--------------------------------------------------------------------------------

 

Exhibit A

 

EP ENERGY CORPORATION

 

RESTRUCTURING TERM SHEET

 

October 18, 2019

 

This restructuring term sheet (this “Term Sheet”) presents the principal terms
of a proposed financial restructuring (the “Restructuring”) of the existing
capital structure of EP Energy Corporation (“EP Parent”) and its subsidiaries
identified below (collectively with EP Parent, the “Company” or the “Debtors”),
which Restructuring will be consummated pursuant to a chapter 11 plan containing
the terms set forth herein to be confirmed in the cases commenced on October 3,
2019 (the “Petition Date”) in the United Bankruptcy Court for the Southern
District of Texas (the “Bankruptcy Court”) under chapter 11 of title 11  of the
United States Code (the “Bankruptcy Code”; Ch. 11 Case No. 19-35654 et al.,
the “Chapter 11 Cases”).  This is the Term Sheet referred to in, and appended
to, the Plan Support Agreement dated as of October 18, 2019, by and among the
Company and the other parties signatory thereto (as amended, supplemented, or
otherwise modified from time to time, the “PSA”).  Capitalized terms used but
not otherwise defined herein have the meanings ascribed to such terms in Annex
1.

 

THIS TERM SHEET DOES NOT CONSTITUTE (NOR WILL IT BE CONSTRUED AS) AN OFFER WITH
RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OR REJECTIONS AS TO
ANY PLAN OF REORGANIZATION, IT BEING UNDERSTOOD THAT SUCH AN OFFER, IF ANY, ONLY
WILL BE MADE IN COMPLIANCE WITH APPLICABLE PROVISIONS OF SECURITIES, BANKRUPTCY,
AND/OR OTHER APPLICABLE LAWS.

 

THIS TERM SHEET DOES NOT PURPORT TO SUMMARIZE ALL OF THE TERMS, CONDITIONS,
REPRESENTATIONS, WARRANTIES, AND OTHER PROVISIONS WITH RESPECT TO THE
TRANSACTIONS DESCRIBED HEREIN, WHICH TRANSACTIONS WILL BE SUBJECT TO THE
COMPLETION OF DEFINITIVE DOCUMENTS INCORPORATING THE TERMS SET FORTH HEREIN. 
THE CLOSING OF ANY TRANSACTION WILL BE SUBJECT TO THE TERMS AND CONDITIONS SET
FORTH IN SUCH DEFINITIVE DOCUMENTS.  EXCEPT AS SET FORTH IN THE PSA, NO BINDING
OBLIGATIONS WILL BE CREATED BY THIS TERM SHEET UNLESS AND UNTIL BINDING
DEFINITIVE DOCUMENTS ARE EXECUTED AND DELIVERED BY ALL APPLICABLE PARTIES.

 

35

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OVERVIEW

 

Company:

EP Parent, EPE Acquisition, LLC; EP Energy LLC; Everest Acquisition Finance
Inc.; EP Energy Global LLC; EP Energy Management, L.L.C.; EP Energy Resale
Company, L.L.C.; EP Energy E&P Company, L.P.

 

 

Claims and Interests to be Restructured:

RBL Claims: consisting of approximately $629.4 million in principal amount,
including reimbursement obligations in respect of letters of credit, plus all
other secured obligations, including unpaid interest, fees, and other expenses
arising and payable under that certain Credit Agreement, dated as of May 24,
2012 (as amended, restated, amended and restated, modified, or otherwise
supplemented from time to time, the “RBL Facility”, and the Claims thereunder,
the “RBL Claims”), by and among EP Energy LLC, as borrower, EPE Acquisition,
LLC, JPMorgan Chase Bank, N.A., as administrative agent (the “RBL Agent”) and as
collateral agent, and the lenders (the “RBL Lenders”) party thereto from time to
time.

 

Senior Secured Notes Claims: consisting of:

 

a)             $1 billion in principal amount, plus unpaid interest, fees, and
other expenses arising and payable pursuant to the 7.750% Senior Secured Notes
due 2026 (the “1.125L Notes”) under that certain indenture, dated as of May 23,
2018 (as amended, modified, or otherwise supplemented from time to time,
the “1.125L Notes Indenture,” and the Claims thereunder, the “1.125L Notes
Claims”), by and among EP Energy LLC and Everest Acquisition Finance Inc., as
co-issuers (the “Co-Issuers”), each of the guarantors named therein, and UMB
Bank, National Association, as successor indenture trustee and notes collateral
agent;

 

b)             $500 million in principal amount, plus unpaid interest, fees, and
other expenses arising and payable pursuant to the 8.000% Senior Secured Notes
due 2024 (the “1.25L Notes”) under that certain indenture, dated as of
November 29, 2016 (as amended, modified, or otherwise supplemented from time to
time, the “1.25L Notes Indenture,” and the Claims thereunder, the “1.25L Notes
Claims”), by and among the Co-Issuers, each of the guarantors named therein,
and, BOKF, NA, as successor indenture trustee and notes collateral agent;

 

c)              Approximately $1.092 billion in principal amount, plus unpaid
interest, fees, and other expenses arising and payable pursuant to the 9.375%
Senior Secured Notes due 2024 (the “2024 1.5L Notes,” and the holders thereof,
the “2024 1.5L Noteholders”) under that certain indenture, dated as of
January 3, 2018 (as amended, modified, or otherwise supplemented from time to
time) (the Claims thereunder, the “2024 1.5L Notes Claims”) by and among the
Co-Issuers, each of the guarantors named therein, and Wilmington Trust, National
Association, as indenture trustee and collateral agent; and

 

d)             $1 billion in principal amount, plus unpaid interest, fees, and
other expenses arising and payable pursuant to the 8.000% Senior Secured Notes
due 2025 (the “2025 1.5L Notes,” and collectively with the 2024 1.5L Notes, the
“1.5L Notes,” and the holders of the 2025 1.5L Notes, the “2025 1.5L
Noteholders”, and collectively with the 2024 1.5L Noteholders, the “1.5L
Noteholders”) under that certain indenture, dated as of February 6, 2017 (as
amended, modified, or otherwise supplemented

 

 

36

--------------------------------------------------------------------------------

 

 

from time to time) (the Claims thereunder, the “2025 1.5L Notes Claims”, and
collectively with the 2024 1.5L Notes Claims, the “1.5L Notes Claims” and
together with 1.125L Notes Claims and the 1.25L Notes Claims, the “Senior
Secured Notes Claims”), by and among the Co-Issuers, each of the guarantors
named therein, and Wilmington Trust, National Association, as indenture trustee
and collateral agent.

 

Unsecured Notes Claims: consisting of

 

a)             Approximately $182 million in principal amount, plus unpaid
interest, fees, and other expenses arising and payable pursuant to the 9.375%
Senior Notes due 2020 under that certain indenture, dated as of April 24, 2012
(as amended, modified, or otherwise supplemented from time to time) (the Claims
thereunder, the “2020 Unsecured Notes Claims”), by and among the Co-Issuers,
each of the guarantors named therein, and Wilmington Savings Fund Society, FSB,
as indenture trustee;

 

b)             Approximately $182 million in principal amount, plus unpaid
interest, fees, and other expenses arising and payable pursuant to the 7.750%
Senior Notes due 2022 under that certain indenture, dated as of August 13, 2012
(as amended, modified, or otherwise supplemented from time to time) (the Claims
thereunder, the “2022 Unsecured Notes Claims”), by and among the Co-Issuers,
each of the guarantors named therein, and Wilmington Savings Fund Society, FSB,
as indenture trustee; and

 

c)              Approximately $323 million in principal amount, plus unpaid
interest, fees, and other expenses arising and payable pursuant to the 6.375%
Senior Notes due 2023 under that certain indenture, dated as of May 28, 2015 (as
amended, modified, or otherwise supplemented from time to time) (the Claims
thereunder, the “2023 Unsecured Notes Claims”), by and among the Co-Issuers,
each of the guarantors named therein, and Wilmington Savings Fund Society, FSB,
as indenture trustee.

 

General Unsecured Claims: consisting of any prepetition Claim against the
Company that is not an RBL Claim, a Senior Secured Notes Claim, an Unsecured
Notes Claim (each as defined herein), an Intercompany Claim, or a Claim that is
secured, subordinated, or entitled to priority under the Bankruptcy Code
(the “General Unsecured Claims”).  For the avoidance of doubt, deficiency claims
in respect of the 1.5 Lien Notes Claims (“1.5L Deficiency Claims”) are not
General Unsecured Claims.

 

Existing Equity Interests: consisting of shares of the Class A common stock of
EP Parent that existed immediately prior to the Effective Date, including any
restricted stock of EP Parent that vests prior to the Effective Date.

 

Other Equity Interests: consisting of the Class B common stock of EP Parent that
existed immediately prior to the Effective Date and all other Interests in EP
Parent other than Existing Equity Interests.

 

Subordinated Claims: consisting of any prepetition Claim that is subject to
subordination in accordance with sections 510(b)-(c) of the Bankruptcy Code or
otherwise.

 

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TRANSACTION OVERVIEW

 

 

Overview of Restructuring:

The Restructuring will be implemented through the Chapter 11 Cases commenced by
the Company to pursue confirmation of a prenegotiated chapter 11 plan consistent
with the terms herein.

 

As a component of the Restructuring and consistent with the Rights Offering
Documents, each eligible 1.5L Noteholder will be offered the right to purchase
up to its Pro Rata share of New Common Shares for an aggregate value of up to
$475 million (as described below, the “Rights Offering”).

 

The Company may also, with the consent of the Initial Supporting Noteholders,
consummate a private placement of New Common Shares, subject to dilution by the
Jeter Shares and EIP Shares, for an aggregate purchase price of up to $75
million (the “Private Placement”), in Cash, on terms acceptable to the Company
and the Initial Supporting Noteholders.

 

The proceeds of the Rights Offering and the Private Placement will be used by
the Company to (i) pay down the DIP Facility and the RBL Facility, (ii) pay all
reasonable and documented Restructuring Expenses, and (iii) fund Plan
distributions, case administration expenses, and exit costs.  The terms of the
Rights Offering shall be in accordance with the Backstop Agreement to be
executed concurrently with the PSA and otherwise acceptable to the Initial
Supporting Noteholders.

 

On the Effective Date, Apollo and Access may contribute their equity interests
in Jeter to the Reorganized Debtors in exchange for the Jeter Shares, subject to
the agreement of the Company, Access and the Initial Supporting Noteholders.

 

As of the Effective Date, the DIP Claims, RBL Claims, 1.5L Notes Claims,
Unsecured Notes Claims, General Unsecured Claims, Existing Equity Interests, and
Other Equity Interests will be cancelled, released, and extinguished and will be
of no further force or effect.

 

 

DIP Financing; Use of Cash Collateral

 

The Restructuring will be financed by (i) consensual use of Cash collateral on
final terms to be acceptable to the Initial Supporting Noteholders, and (ii) a
postpetition senior secured superpriority priming revolving loan facility
(the “DIP Facility”) on terms and conditions acceptable to the Initial
Supporting Noteholders, it being acknowledged that the Commitment Letter and
related exhibits attached hereto as Exhibit A-1 (the “Exit Commitment Letter”)
are acceptable to the Initial Supporting Noteholders.  The DIP Facility will
roll-up up to 50.0% of the obligations under the RBL Facility, applied Pro Rata
among the exposures of the RBL Lenders that elect to participate in the Exit
Facility by the Voting Deadline to receive its Pro Rata share of first lien,
first-out revolving loans under the Exit Credit Agreement and letter of credit
participations under the Exit Credit Agreement.  Upon emergence, the DIP
Facility will convert dollar for dollar into first lien, first-out revolving
loans under the Exit Facility.

 

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TREATMENT OF CLAIMS AND INTEREST

 

Administrative Expense Claims and Priority Tax Claims:

Except to the extent that a holder of an Allowed Administrative Expense Claim or
an Allowed Priority Tax Claim agrees to a less favorable treatment, each holder
of an Allowed Administrative Expense Claim or an Allowed Priority Tax Claim will
receive, in full and final satisfaction of such Claim, Cash in an amount equal
to such Allowed Claim on the Effective Date or as soon as practicable thereafter
or such other treatment consistent with the provisions of section 1129(a)(9) of
the Bankruptcy Code.

 

 

DIP Claims:

On the Effective Date, to the extent the DIP Facility is not paid down in full
from the proceeds of the Rights Offering or the Private Placement, each holder
of an Allowed DIP Claim will receive its Pro Rata share (taking into account the
elections made by holders of Allowed RBL Claims as provided below) of first
lien, first-out revolving loans under the Exit Credit Agreement and letter of
credit participations under the Exit Credit Agreement.

 

 

Class 1

Other Secured Claims:

Except to the extent that a holder of an Allowed Other Secured Claim agrees to a
less favorable treatment, in full and final satisfaction of such Allowed Other
Secured Claim, at the option of the Debtors or the Reorganized Debtors, but with
the consent of the Initial Supporting Holders, (i) such holder will receive
payment in full in Cash, payable on the later of the Effective Date and the date
that is ten (10) Business Days after the date on which such Other Secured Claim
becomes an Allowed Other Secured Claim, in each case, or as soon as reasonably
practicable thereafter or (ii) such holder will receive such other treatment so
as to render such holder’s Allowed Other Secured Claim Unimpaired.

 

Unimpaired — Presumed to Accept.

 

 

Class 2

Other Priority Claims:

Except to the extent that a holder of an Allowed Other Priority Claim agrees to
a less favorable treatment, in full and final satisfaction of such Allowed Other
Priority Claim, each holder of an Allowed Other Priority Claim will, at the
option of the Debtors or the Reorganized Debtors, but with the consent of the
Initial Supporting Holders, (i) be paid in full in Cash or (ii) otherwise
receive treatment consistent with the provisions of section 1129(a)(9) of the
Bankruptcy Code, payable on the later of the Effective Date and the date that is
ten (10) Business Days after the date on which such Other Priority Claim becomes
an Allowed Other Priority Claim, in each case, or as soon as reasonably
practicable thereafter.

 

Unimpaired — Presumed to Accept.

 

 

Class 3

RBL Claims:

 

On the Effective Date, each holder of an Allowed RBL Claim will receive its Pro
Rata share of the Exit Facility as a first lien, second-out term loan under the
Exit Credit Agreement; provided, that each holder of an Allowed RBL Claim that
elects to participate in the Exit Facility by the Voting Deadline shall receive
its Pro Rata share (with the holders of Allowed DIP Claims) of first lien,
first-out revolving loans under the Exit Credit Agreement and letter of credit
participations under the Exit Credit Agreement.

 

Impaired — Entitled to Vote.

 

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Class 4

1.125L Notes Claims:

 

On the Effective Date, all Allowed 1.125L Notes Claims will (i) be reinstated in
the principal amount of $1 billion in accordance with section 1124(2) of the
Bankruptcy Code and the 1.125L Notes Indenture and continued after the Effective
Date in accordance with the terms of the 1.125L Notes Indenture; provided, that
on the Effective Date the Debtors may, with the consent of the Initial
Supporting Noteholders, deliver a notice of redemption with respect to or
otherwise voluntarily prepay (including by way of tender offer), in accordance
and in compliance with the terms of the 1.125L Notes Indenture, a portion of the
1.125L Notes Claims, or (ii) receive new notes on terms acceptable to the
Initial Supporting Noteholders and the Company.

 

Unimpaired — Presumed to Accept.

 

 

Class 5

1.25L Notes Claims:

 

On the Effective Date, all Allowed 1.25L Notes Claims will (i) be reinstated in
the principal amount of $500 million in accordance with section 1124(2) of the
Bankruptcy Code and the 1.25L Notes Indenture and continued after the Effective
Date in accordance with the terms of the 1.25L Notes Indenture; provided, that
on the Effective Date the Debtors may, with the consent of the Initial
Supporting Noteholders, deliver a notice of redemption with respect to or
otherwise voluntarily prepay (including by way of tender offer), in accordance
and in compliance with the terms of the 1.25L Notes Indenture, a portion of the
1.25L Notes Claims, or (ii) receive new notes on terms acceptable to the Initial
Supporting Noteholders and the Company.

 

Unimpaired — Presumed to Accept.

 

 

Class 6

1.5L Notes Claims:

 

On the Effective Date, each holder of an Allowed 1.5L Notes Claim will receive
on account of the secured portion of such Allowed 1.5L Notes Claim, in full and
final satisfaction of the secured portion of such Allowed 1.5L Notes Claim, its
Pro Rata share of (i) 99.0% of the New Common Shares, subject to dilution by the
Rights Offering Shares, the Private Placement, the Backstop Commitment Premium,
the Jeter Shares, and the EIP Shares, and (ii) the right to participate in the
Rights Offering.

 

Impaired — Entitled to Vote.

 

 

Class 7

Unsecured Claims:

 

On the Effective Date, each holder of Allowed 2020 Unsecured Notes Claims, 2022
Unsecured Notes Claims, and 2023 Unsecured Notes Claims
(collectively, “Unsecured Notes Claims”, and the holders of such Claims, the
“Unsecured Noteholders”), 1.5L Deficiency Claims, and General Unsecured Claims
(collectively with Unsecured Notes Claims, “Unsecured Claims”) will receive, in
full and final satisfaction of such Unsecured Claim, their Pro Rata share of
1.0% of the New Common Shares, subject to dilution by the Rights Offering
Shares, the Private Placement, the Backstop Commitment Premium, the Jeter
Shares, and the EIP Shares (the “Unsecured Shares”); provided, that a
convenience class may be established under the Plan (with such Plan provisions
being acceptable to the Initial Supporting Noteholders) to provide distributions
up to an aggregate amount in Cash to be specified under the Plan.

 

Impaired — Entitled to Vote.

 

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Class 8

Intercompany Claims:

All Intercompany Claims will be adjusted, reinstated, or discharged in the
Company’s discretion, subject to the reasonable consent of the Initial
Supporting Noteholders.

 

Unimpaired — Presumed to Accept.

 

 

Class 9

Subordinated Claims:

All Subordinated Claims, if any, shall be discharged, cancelled, released, and
extinguished as of the Effective Date, and will be of no further force or
effect, and Holders of Allowed Subordinated Claims will not receive any
distribution on account of such Allowed Subordinated Claims.

 

Impaired — Deemed to Reject.

 

 

Class 10

Existing Equity Interests:

 

On the Effective Date, Existing Equity Interests will be cancelled, released,
and extinguished and will be of no further force or effect, whether surrendered
for cancellation or otherwise. Each holder of Existing Equity Interests will
receive its Pro Rata share of $500,000 in Cash.

 

Impaired — Entitled to Vote.

 

 

Class 11

Other Equity Interests:

On the Effective Date, Other Equity Interests will be cancelled, released, and
extinguished and will be of no further force or effect, whether surrendered for
cancellation or otherwise.  No holder of Other Equity Interests will receive a
distribution.

 

Impaired — Deemed to Reject.

 

 

Class 12

Intercompany Interests:

All Allowed Intercompany Interests shall either be (i) cancelled (or otherwise
eliminated) and receive no distribution under the Plan or (ii) reinstated.

 

Unimpaired — Presumed to Accept.

 

OTHER MATERIAL PROVISIONS

 

Rights Offering:

Pursuant to the Rights Offering, eligible 1.5L Noteholders will be offered the
right to purchase New Common Shares for an aggregate purchase price of up to
$475,000,000 (the “Rights Offering Amount”).  The overall percentage of New
Common Shares being issued in the Rights Offering, in each case subject to
dilution by the Jeter Shares and the EIP Shares, is approximately 76.2%-78.0%,
consisting of (i) approximately 55.6% in the case of Rights Offering Shares
purchased for cash and (ii) approximately 20.6%-22.4% in the case of Rights
Offering Shares purchased for Reinstated 1.25L Notes, depending on the amount of
Reinstated 1.25L Notes being exchanged in the Rights Offering (which amount will
be between $138,000,000 and $150,000,000).

 

The Rights Offering will be backstopped by the Backstop Parties pursuant to the
Backstop Agreement in exchange for (i) the Backstop Commitment Premium, and
(ii) the right to exchange Reinstated 1.25L Notes as described below.  Subject
to the terms of the Backstop Agreement, the Backstop Parties shall backstop the
aggregate purchase price of $463 million, (a) $220.6 million of which shall be
backstopped by Apollo ($20.6 million of which shall be funded through the
exchange of $20.6 million in aggregate principal amount of Reinstated 1.25L
Notes held by Apollo on the terms set forth in the Backstop Agreement, which
amount shall reduce the aggregate amount of Apollo’s purchase rights in the
Rights Offering on a dollar for

 

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dollar basis), (b) $192.4 million of which shall be backstopped by Elliott
($117.4 million of which shall be funded through the exchange of $117.4 million
in aggregate principal amount of Reinstated 1.25L Notes held by Elliott on the
terms set forth in the Backstop Agreement, which amount shall reduce the
aggregate amount of Elliott’s purchase rights in the Rights Offering on a dollar
for dollar basis), (c) $42.5 million shall be backstopped by Avenue, and
(d) $7.5 million shall be backstopped by Access, provided, that an additional
$12 million aggregate purchase price, to be funded through the exchange of
Reinstated 1.25L Notes on the terms set forth in the Backstop Agreement, may be
backstopped by the Backstop Parties with the consent of the Initial Supporting
Noteholders in accordance with the terms of the Backstop Agreement.  The Company
shall pay all accrued but unpaid interest in Cash to the holders of the
Reinstated 1.25L Notes in connection with the foregoing exchanges.

 

Discount: Rights Offering Shares will be issued at an aggregate purchase price
of up to $475,000,000 at a price per share representing: (i) in the case of
Rights Offering Shares purchased for cash, a 35% discount to the Stated Equity
Value, and (ii) in the case of Rights Offering Shares purchased by Backstop
Parties in exchange for Reinstated 1.25L Notes, a 25.7% discount to the Stated
Equity Value.

 

Each eligible 1.5L Noteholder will be entitled to join the Backstop Agreement
within ten (10) Business Days of the date on which the Debtors file the motion
to approve the Backstop Agreement on terms acceptable to the Initial Supporting
Noteholders. 

 

 

Exit Facility:

On the Effective Date, the RBL Facility and the DIP Facility will be replaced
with a $629 million first lien revolving exit credit facility (the “Exit
Facility”) on terms and conditions acceptable to the Initial Supporting
Noteholders and the Company. 

 

 

Jeter Contribution:

On the Effective Date, Apollo and Access may contribute their equity interests
in Jeter to the Reorganized Debtors in exchange for the Jeter Shares, subject to
the agreement of the Company, Access, and the Initial Supporting Noteholders.

 

GENERAL PROVISIONS

 

Executory Contracts and Unexpired Leases:

As of and subject to the occurrence of the Effective Date and the payment of any
applicable cure amount, all executory contracts and unexpired leases to which
any of the Debtors are parties shall be deemed assumed, unless such contract or
lease (i) was previously assumed or rejected by the Debtors, pursuant to a Final
Order of the Bankruptcy Court, (ii) previously expired or terminated pursuant to
its own terms or by agreement of the parties thereto, (iii) is the subject of a
motion to reject filed by the Debtors on or before the Confirmation Date, or
(iv) is specifically designated as a contract or lease to be rejected on the
Schedule of Rejected Contracts, which shall be acceptable to the Initial
Supporting Noteholders.

 

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Board of Directors:

The Board of Directors will consist of (i) the Reorganized Debtors’ chief
executive officer and (ii) the members selected by the Initial Supporting
Noteholders in consultation with the Company (the “New Board”). Provisions
regarding the removal, appointment, and replacement of members of the New Board
to be determined by the Initial Supporting Noteholders in consultation with the
Company.

 

 

Charter, By-Laws and Organizational Documents:

The New Corporate Governance Documents will be acceptable to the Initial
Supporting Noteholders and the Company and will become effective as of the
Effective Date.

 

 

Private Company:

The Reorganized Debtors shall take the steps necessary to be a private company
that is not listed on a national securities exchange and without Exchange Act
reporting obligations upon emergence or as soon as possible thereafter in
accordance with the SEC rules; provided, that from and after the Plan Effective
Date, Reorganized EP Parent shall be required to provide (via separate agreement
or in its organizational documents) to its shareholders such audited annual and
unaudited quarterly financial statements for such periods, with such statements
being prepared in accordance with U.S. GAAP on a private company basis (for the
avoidance of doubt, no SAS 100 review or compliance with any other requirement
of Regulation S-X under the Securities Act is required in connection with the
delivery of the required financial statements).

 

 

Employee Incentive Plan:

The Plan will provide for the establishment of a post-emergence employee
incentive plan on the Effective Date (the “Employee Incentive Plan” or the
“EIP”).  All awards issued under the EIP, including restricted stock units,
options, New Common Shares, or other rights exercisable, exchangeable, or
convertible into New Common Shares (the “EIP Shares”) will be dilutive of all
other equity interests in the Reorganized Debtors.  10% of the New Common
Shares, on a fully diluted basis, shall be reserved for issuance in connection
with the Employee Incentive Plan.  The other terms of the Employee Incentive
Plan shall be consistent with the terms set forth on Exhibit A-2 annexed hereto
and otherwise in form and substance acceptable to the Initial Supporting
Noteholders and the Company.

 

 

Employment Agreements:

All employment agreements and severance plans that exist as of the Petition Date
will be assumed, as may be amended, pursuant to the Plan.  The Debtors will
enter into new employment agreements with their officers, to be effective on the
Effective Date, consistent with the terms set forth on Exhibit A-3 annexed
hereto.

 

 

Cancellation of Notes, Instruments, Certificates and other Documents:

On the Effective Date of the Plan, other than the 1.125L Notes and 1.25L Notes
being reinstated pursuant to the Plan, all notes, instruments, certificates
evidencing debt of the Company and Interests in EP Parent will be cancelled and
obligations of the Company thereunder will be discharged and of no further force
or effect, except for the purpose of allowing the applicable agents and trustees
to receive distributions from the Debtors under the Plan and to make further
distributions to the applicable holders on account of their Claims.

 

 

Vesting of Assets:

On the Effective Date, pursuant to sections 1141(b)-(c) of the Bankruptcy Code,
all assets of the Company will vest in the Reorganized Debtors free and clear of
all liens, Claims, and encumbrances.

 

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Hedging Program:

The Company shall consult with the Initial Supporting Noteholders on any
material changes to its hedging program.

 

 

Survival of Indemnification Obligations and D&O Insurance:

No obligations of the Company pursuant to corporate charters, bylaws, limited
liability company agreements, or other organizational documents to indemnify
current and former officers, directors, agents, or employees with respect to all
present and future actions, suits, and proceedings against the Company or such
directors, officers, agents, or employees, based upon any act or omission for or
on behalf of the Company will be discharged or impaired by confirmation of the
Plan.  All such obligations will be deemed and treated as executory contracts to
be assumed by the Company under the Plan and will continue as obligations of the
Reorganized Debtors.  Any Claim based on such obligations of the Company will be
an Allowed Claim.

 

In addition, after the Effective Date, the Reorganized Debtors will not
terminate or otherwise reduce the coverage under any directors’ and officers’
insurance policies (including any “tail policy”) in effect or purchased as of
the Petition Date, and all members, managers, directors, and officers of the
Company who served in such capacity at any time prior to the Effective Date and
all other individuals covered by such insurance policies will be entitled to the
full benefits of each such policy for the full term of such policy regardless of
whether such members, managers, directors, officers, or other individuals remain
in such positions after the Effective Date.

 

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Conditions to Effectiveness:

Effectiveness of the Plan will be subject to the satisfaction of customary
conditions to confirmation and effectiveness (as applicable), as well as such
other conditions that are satisfactory to the Company and the Initial Supporting
Noteholders, including the following (as applicable):

 

i.         the Backstop Agreement shall remain in full force and effect and
shall not have been terminated, and the parties thereto shall be in compliance
therewith;

 

ii.        the Reinstated Debt shall have been reinstated, or shall have been
given such other treatment (as applicable), in accordance with the terms and
conditions of this Term Sheet;

 

iii.       the Bankruptcy Court shall have entered the Backstop Order, in form
and substance acceptable to the Initial Supporting Noteholders, and such order
shall not have been reserved, stayed, amended, modified, dismissed, vacated or
reconsidered;

 

iv.       the Definitive Documents (as defined in the PSA) will contain terms
and conditions consistent in all material respects with this Term Sheet and the
PSA and otherwise satisfactory or reasonably satisfactory, as applicable, in
form and substance to the Initial Supporting Noteholders;

 

v.        the PSA shall remain in full force and effect and shall not have been
terminated;

 

vi.       all conditions precedent to the effectiveness of the Exit Facility
shall have been satisfied or duly waived, and the Exit Facility, including all
documentation related thereto, is in form and substance satisfactory to the
Initial Supporting Noteholders and the Company and in effect;

 

vii.      the Bankruptcy Court shall have entered the Disclosure Statement
Order, in form and substance acceptable to the Initial Supporting Noteholders,
and such order shall not have been reserved, stayed, amended, modified,
dismissed, vacated or reconsidered;

 

viii.     the Bankruptcy Court shall have entered the Confirmation Order, in
form and substance acceptable to the Initial Supporting Noteholders, and such
order shall not have been reserved, stayed, amended, modified, dismissed,
vacated or reconsidered;

 

ix.       the Rights Offering and if applicable, the Private Placement shall
have been conducted, in all material respects, in accordance with the Backstop
Order, the Rights Offering Procedures, the Backstop Agreement, and any other
relevant transaction documents;

 

x.        the New Corporate Governance Documents shall be in full force and
effect;

 

xi.       all waiting periods imposed by any Governmental Entity or Antitrust
Authority in connection with the transactions contemplated by the Backstop
Agreement shall have terminated or expired and all authorizations, approvals,
consents or clearances under the Antitrust Laws in connection with the
transactions contemplated by the Backstop Agreement shall have been obtained;

 

xii.      the Registration Rights Agreement shall have been executed and
delivered by the Company, shall otherwise have become effective with respect to
the

 

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Supporting Noteholders and the other parties thereto, and shall be in full force
and effect;

 

xiii.     the Debtors shall have obtained all material authorizations, consents,
regulatory approvals, rulings, or documents that are necessary to implement and
effectuate the Plan, including Bankruptcy Court approval, and each of the other
transactions contemplated by the Restructuring, and such material
authorizations, consents, regulatory approvals, rulings, or documents shall not
be subject to unfulfilled conditions and shall be in full force and effect, and
all applicable regulatory waiting periods will have expired;

 

xiv.     the final version of the Plan, Plan Supplement, and all of the
schedules, documents and exhibits contained therein, and all other schedules,
documents, supplements, and exhibits to the Plan shall be consistent with the
PSA, and in form and substance acceptable to the Initial Supporting Noteholders;

 

xv.      the Debtors shall have complied, in all material respects, with the
terms of the Plan that are to be performed by the Debtors on or prior to the
Effective Date and the conditions to the occurrence of the Effective Date (other
than any conditions relating to the occurrence of the Closing) set forth in the
Plan shall have been satisfied or, with the prior consent of the Initial
Supporting Noteholders waived in accordance with the terms of the Plan;

 

xvi.     the Restructuring to be implemented on the Effective Date shall be
consistent with the Plan and the PSA; and

 

xvii.    all Restructuring Expenses to the extent invoiced at least three
(3) Business Days before the Effective Date by the Supporting Noteholder
Advisors shall have been paid in full by the Debtors in accordance with the
Backstop Agreement.

 

The conditions to effectiveness may be waived, in whole or in part, in writing
by the Debtors and the Initial Supporting Noteholders.

 

 

Releases by Debtors:

 

As of the Effective Date, except for the rights and remedies that remain in
effect from and after the Effective Date to enforce the Plan and the obligations
contemplated by the Definitive Documents and the documents in the Plan
Supplement, on and after the Effective Date, the Released Parties will be deemed
conclusively, absolutely, unconditionally, irrevocably, and forever released and
discharged, by the Debtors, the Reorganized Debtors, and the Estates, in each
case on behalf of themselves and their respective successors, assigns, and
representatives and any and all other Persons that may purport to assert any
Cause of Action derivatively, by or through the foregoing Persons, from any and
all Claims and Causes of Action (including any derivative claims, asserted or
assertable on behalf of the Debtors, the Reorganized Debtors, or the Estates),
whether liquidated or unliquidated, fixed or contingent, matured or unmatured,
known or unknown, foreseen or unforeseen, accrued or unaccrued, existing or
hereinafter arising, whether in law or equity, whether sounding in tort or
contract, whether arising under federal or state statutory or common law, or any
other applicable international, foreign, or domestic law, rule, statute,
regulation, treaty, right, duty, requirements or otherwise that the Debtors, the
Reorganized Debtors, the Estates, or their affiliates would have been legally
entitled to assert in their own right (whether individually

 

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or collectively) or on behalf of the holder of any Claim or Interest or other
Person, based on or relating to, or in any manner arising from, in whole or in
part, the Debtors, the Chapter 11 Cases, the Restructuring, the purchase, sale,
or rescission of the purchase or sale of any security of the Debtors or the
Reorganized Debtors, the subject matter of, or the transactions or events giving
rise to, any Claim or Interest that is treated in the Plan, the business or
contractual arrangements between any Debtor and any Released Party, the
restructuring of Claims and Interests before or during the Chapter 11 Cases, the
negotiation, formulation, preparation, or consummation of the Plan, the PSA, the
Definitive Documents and the documents in the Plan Supplement or related
agreements, instruments, or other documents relating thereto, or the
solicitation of votes with respect to the Plan, in all cases based upon any act
or omission, transaction, agreement, event, or other occurrence taking place on
or before the Effective Date.

 

 

Releases by Third- Parties:

As of the Effective Date, except for the rights and remedies that remain in
effect from and after the Effective Date to enforce the Plan and the obligations
contemplated by the Definitive Documents, and the documents in the Plan
Supplement  or as otherwise provided in any order of the Bankruptcy Court, on
and after the Effective Date, the Released Parties will be deemed conclusively,
absolutely, unconditionally, irrevocably, and forever released and discharged by
the Releasing Parties, from any and all Claims and Causes of Action whatsoever
(including any derivative claims, asserted or assertable on behalf of the
Debtors, the Reorganized Debtors, or their Estates), whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or unknown,
foreseen or unforeseen, existing or hereinafter arising, in law, equity,
contract, tort, or otherwise by statute, violations of federal or state
securities laws or otherwise, that such holders or their estates, affiliates,
heirs, executors, administrators, successors, assigns, managers, accountants,
attorneys, representatives, consultants, agents, and any other Persons claiming
under or through them would have been legally entitled to assert in their own
right (whether individually or collectively) or on behalf of the holder of any
Claim or Interest or other Person, based on or relating to, or in any manner
arising from, in whole or in part, the Debtors, the Reorganized Debtors, or
their Estates, the Chapter 11 Cases, the Restructuring, the purchase, sale, or
rescission of the purchase or sale of any security of the Debtors or the
Reorganized Debtors, the subject matter of, or the transactions or events giving
rise to, any Claim or Interest that is treated in the Plan, the business or
contractual arrangements or interactions between any Debtor and any Released
Party, the Restructuring, the restructuring of any Claims or Interests before or
during the Chapter 11 Cases, the negotiation, formulation, preparation, or
consummation of the Plan, the PSA, the Definitive Documents and the documents in
the Plan Supplement, or related agreements, instruments, or other documents,
relating thereto, or the solicitation of votes with respect to the Plan, in all
cases based upon any act or omission, transaction, agreement, event, or other
occurrences taking place on or before the Effective Date.

 

 

Exculpation:

To the fullest extent permitted by applicable law, no Exculpated Party will have
or incur, and each Exculpated Party will be released and exculpated from, any
Claim or Cause of Action in connection with or arising out of the administration
of the Chapter 11 Cases; the negotiation and pursuit of the DIP Facility, Exit
Facility, the Rights Offering, the Private Placement, the Employee Incentive
Plan, the Disclosure Statement, the PSA, the Restructuring, and the Plan
(including the Definitive Documents and the documents in the Plan Supplement),
or the solicitation of votes for, or confirmation of, the Plan; the funding of
the Plan; the occurrence of the

 

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Effective Date; the administration of the Plan or the property to be distributed
under the Plan; the issuance of securities under or in connection with the Plan;
the purchase, sale, or rescission of the purchase or sale of any security of the
Debtors or the Reorganized Debtors; or the transactions in furtherance of any of
the foregoing; other than Claims or Causes of Action arising out of or related
to any act or omission of an Exculpated Party that constitutes intentional fraud
or willful misconduct as determined by a Final Order, but in all respects such
Persons will be entitled to reasonably rely upon the advice of counsel with
respect to their duties and responsibilities pursuant to the Plan.  The
Exculpated Parties have acted in compliance with the applicable provisions of
the Bankruptcy Code with regard to the solicitation and distribution of
securities pursuant to the Plan and, therefore, are not, and on account of such
distributions will not be, liable at any time for the violation of any
applicable law, rule, or regulation governing the solicitation of acceptances or
rejections of the Plan or such distributions made pursuant to the Plan,
including the issuance of securities thereunder.  The exculpation will be in
addition to, and not in limitation of, all other releases, indemnities,
exculpations, and any other applicable law or rules protecting such Exculpated
Parties from liability.

 

 

Discharge and Injunction:

The Plan will contain customary discharge and injunction provisions acceptable
to the Initial Supporting Noteholders.

 

 

Tax Structure:

To the extent practicable, the Restructuring contemplated by this Term Sheet
will be structured so as to obtain the most beneficial structure for the
Company, the Initial Supporting Noteholders and the Company’s equity holders
post-Restructuring, as determined by the Company with the consent of the Initial
Supporting Noteholders and in consultation with Access.

 

 

Retention of Jurisdiction:

The Plan will provide for a broad retention of jurisdiction by the Bankruptcy
Court for (i) resolution of Claims, (ii) allowance of compensation and expenses
for pre-Effective Date services, (iii) resolution of motions, adversary
proceedings, or other contested matters, (iv) entry of such orders as necessary
to implement or consummate the Plan and any related documents or agreements, and
(v) other purposes.

 

 

Restructuring Transactions:

On the Effective Date or as soon as reasonably practicable thereafter, the
Debtors or Reorganized Debtors, as applicable, subject to the reasonable consent
of the Initial Supporting Noteholders, may take all actions consistent with this
Plan as may be necessary or appropriate to effect any transaction described in,
approved by, contemplated by, or necessary to effectuate the Restructuring
Transactions under and in connection with this Plan.

 

 

Consent Rights

All consent rights not otherwise set forth herein shall be set forth in the PSA.

 

48

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ANNEX 1

 

Defined Terms

 

49

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Defined Terms

 

“Access”

 

Access Industries, Inc.

 

 

 

“Administrative Expense Claim”

 

Any right to payment constituting a cost or expense of administration incurred
during the Chapter 11 Cases of a kind specified under section 503(b) of the
Bankruptcy Code and entitled to priority under sections 507(a)(2), 507(b), or
1114(e)(2) of the Bankruptcy Code, including (i) the actual and necessary costs
and expenses incurred after the Petition Date and through the Effective Date of
preserving the Estates and operating the businesses of the Debtors (such as
wages, salaries, or commissions for services and payments for goods and other
services and leased premises), (ii) Fee Claims, and (iii) Restructuring
Expenses.

 

 

 

“Allowed”

 

With reference to any Claim or Interest against a Debtor, (a) (i) that is timely
filed by the Bar Date, or (ii) as to which there exists no requirement for the
holder of a Claim to file such Claim under the Plan, the Bankruptcy Code, the
Bankruptcy Rules or a Final Order, (b) (i) that is listed in the Schedules as
not contingent, not unliquidated, and not disputed, and (ii) for which no
contrary proof of claim has been timely filed, or (c) allowed under the Plan or
by a Final Order. With respect to any Claim described in clause (a) above, such
Claim will be considered allowed only if, and to the extent that, (A) no
objection to the allowance of such Claim has been asserted, or may be asserted,
on or before the time period set forth in the Plan, and no request for
estimation or other challenge, including, without limitation, pursuant to
section 502(d) of the Bankruptcy Code or otherwise, has been interposed and not
withdrawn within the applicable period fixed by the Plan or applicable law,
(B) an objection to such Claim is asserted and such Claim is subsequently
allowed pursuant to a Final Order, (C) such Claim is settled pursuant to an
order of the Bankruptcy Court, or (D) such Claim is allowed pursuant to the Plan
or any agreements related thereto and such allowance is approved and authorized
by the Bankruptcy Court; provided, however, that notwithstanding the foregoing,
the Reorganized Debtors will retain all claims and defenses with respect to
allowed Claims that are reinstated or otherwise unimpaired pursuant to the Plan.

 

 

 

“Antitrust Authorities”

 

The United States Federal Trade Commission, the Antitrust Division of the United
States Department of Justice, the attorneys general of the several states of the
United States and any other Governmental Entity having jurisdiction pursuant to
the Antitrust Laws.

 

 

 

“Apollo”

 

Apollo Global Management, LLC and its affiliates.

 

 

 

“Avenue”

 

Affiliates of Avenue Capital Group that are Supporting Noteholders

 

 

 

“Backstop Agreement”

 

The backstop commitment agreement entered into simultaneously with the PSA, and
attached thereto as Exhibit B.

 

1

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“Backstop Commitment Premium”

 

The amount to be paid as consideration to the Backstop Parties on the Effective
Date, pursuant to the terms and conditions to be set forth in the Plan and the
Backstop Agreement, in the form of Rights Offering Shares, issued at a price per
share equal to a 35% discount to the Stated Equity Value, equal to 8% of the
aggregate Cash commitments of the Backstop Parties pursuant to the Backstop
Agreement (i.e., $325,000,000).

 

 

 

“Backstop Order”

 

The order of the Bankruptcy Court, in form and substance satisfactory to the
Initial Supporting Noteholders, approving the Debtors’ entry into and
performance under the Backstop Agreement and the PSA, which remains in full
force and effect and is not subject to a stay.

 

 

 

“Backstop Parties”

 

The Supporting Noteholders that are signatories to the Backstop Agreement and
each party that executes a joinder thereto.

 

 

 

“Bar Date”

 

The dates by which Proofs of Claim must be filed with respect to Claims against
the Debtors, as ordered by the Bankruptcy Court pursuant to a bar date order or
other applicable order, or pursuant to the Plan.

 

 

 

“Business Day”

 

Any day other than a Saturday, a Sunday, or any other day on which banking
institutions in New York, NY are authorized or required by law or executive
order to close.

 

 

 

“Cash”

 

Legal tender of the United States of America.

 

 

 

“Cause of Action”

 

Any action, claim, cross-claim, third-party claim, cause of action, controversy,
dispute, demand, right, lien, indemnity, contribution, guaranty, suit,
obligation, liability, loss, debt, fee or expense, damage, interest, judgment,
cost, account, defense, remedy, offset, power, privilege, proceeding, license,
and franchise of any kind or character whatsoever, known, unknown, foreseen or
unforeseen, existing or hereafter arising, contingent or non-contingent, matured
or unmatured, suspected or unsuspected, liquidated or unliquidated, disputed or
undisputed, secured or unsecured, assertable directly or derivatively (including
any alter ego theories), whether arising before, on, or after the Petition Date,
in contract or in tort, in law or in equity or pursuant to any other theory of
law (including under any state or federal securities laws). For the avoidance of
doubt, Cause of Action also includes (i) any right of setoff, counterclaim, or
recoupment and any claim for breach of contract or for breach of duties imposed
by law or in equity, (ii) the right to object to Claims or Interests, (iii) any
claim pursuant to section 362 or chapter 5 of the Bankruptcy Code, (iv) any
claim or defense including fraud, mistake, duress, and usury and any other
defenses set forth in section 558 of the Bankruptcy Code, and (v) any state law
fraudulent transfer claim.

 

 

 

“Chapter 11 Cases”

 

The jointly administered cases under chapter 11 of the Bankruptcy Code commenced
by the Debtors on the Petition Date in the Bankruptcy Court.

 

 

 

“Claim”

 

A “claim,” as defined in section 101(5) of the Bankruptcy Code, as against any
Debtor.

 

2

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“Confirmation Date”

 

The date on which the Bankruptcy Court enters the Confirmation Order.

 

 

 

“Confirmation Order”

 

The order of the Bankruptcy Court, in form and substance satisfactory to the
Initial Supporting Noteholders, as evidenced in writing, confirming the Plan in
the Chapter 11 Cases, which remains in full force and effect and is not subject
to a stay.

 

 

 

“DIP Agent”

 

JPMorgan Chase Bank, N.A.

 

 

 

“DIP Claim”

 

All Claims held by the DIP Lenders on account of, arising under, or relating to
the DIP Facility or the DIP Orders, which includes Claims for all principal
amounts outstanding, interest, reasonable and documented fees, expenses, costs
and other charges of the DIP Lenders.

 

 

 

“DIP Credit Agreement”

 

The credit agreement governing the terms of the DIP Facility.

 

 

 

“DIP Lenders”

 

The lenders party to the DIP Credit Agreement.

 

 

 

“DIP Order”

 

The interim or final orders, as applicable, of the Bankruptcy Court authorizing,
among other things, the Debtors to enter into and make borrowings under the DIP
Facility and granting certain rights, protections, and liens to and for the
benefit of the DIP Lenders.

 

 

 

“Disclosure Statement”

 

The disclosure statement in respect of the Plan, including all exhibits and
schedules thereto, as approved or ratified by the Bankruptcy Court pursuant to
section 1125 of the Bankruptcy Code.

 

 

 

“Disclosure Statement Order”

 

The order of the Bankruptcy Court, in form and substance satisfactory to the
Initial Supporting Noteholders, as evidenced in writing, approving the
Disclosure Statement in the Chapter 11 Cases, which remains in full force and
effect and is not subject to a stay.

 

 

 

“Effective Date”

 

The date upon which all conditions to the effectiveness of the Plan have been
satisfied or waived in accordance with the terms thereof and the Plan becomes
effective.

 

 

 

“Elliott”

 

Elliott Associates, L.P., and Elliott International, L.P. and their respective
affiliates.

 

 

 

“Entity”

 

An “entity,” as defined in section 101(15) of the Bankruptcy Code.

 

 

 

“Estate(s)”

 

Individually or collectively, the estate or estates of the Debtors created under
section 541 of the Bankruptcy Code.

 

 

 

“Exchange Act”

 

The Securities Exchange Act of 1934.

 

3

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“Exculpated Parties”

 

Collectively, (i) the Debtors, (ii) the Reorganized Debtors, (iii) any statutory
committee appointed in the Chapter 11 Cases, and (iv) with respect to each of
the foregoing Persons in clauses (i) through (iii), such Persons’ predecessors,
successors, assigns, subsidiaries, affiliates, current and former officers and
directors, principals, equity holders, members, partners, managers, employees,
agents, advisory board members, financial advisors, attorneys, accountants,
investment bankers, consultants, representatives, management companies, fund
advisors, and other professionals, and such Persons’ respective heirs,
executors, estates, and nominees, in each case in their capacity as such.

 

 

 

“Exit Credit Agreement”

 

The RBL Credit Agreement, as amended and restated on the Effective Date.

 

 

 

“Exit Facility Lenders”

 

The lenders from time to time party to the Exit Credit Agreement, including any
applicable permitted assignees thereof.

 

 

 

“Existing Equity Interests”

 

Shares of the Class A common stock of EP Parent that existed immediately prior
to the Effective Date, including any restricted stock of EP Parent that vests
prior to the Effective Date.

 

 

 

“Fee Claim”

 

A Claim for professional services rendered or costs incurred on or after the
Petition Date through the Confirmation Date by professional persons retained by
an order of the Bankruptcy Court pursuant to sections 327, 328, 329, 330, 331,
503(b), or 1103 of the Bankruptcy Code in the Chapter 11 Cases.

 

 

 

“Final Order”

 

An order, ruling, or judgment of the Bankruptcy Court (or other court of
competent jurisdiction) that (i) is in full force and effect, (ii) is not
stayed, and (iii) is no longer subject to review, reversal, vacatur,
modification, or amendment, whether by appeal or by writ of certiorari;
provided, however, that the possibility that a motion under Rules 50 or 60 of
the Federal Rules of Civil Procedure or any analogous Bankruptcy Rule (or any
analogous rules applicable in such other court of competent jurisdiction) may be
filed relating to such order, ruling, or judgment shall not cause such order,
ruling, or judgment not to be a Final Order.

 

 

 

“Governmental Entity”

 

Any U.S. or non-U.S. international, regional, federal, state, municipal or local
governmental, judicial, administrative, legislative or regulatory authority,
entity, instrumentality, agency, department, commission, court or tribunal of
competent jurisdiction (including any branch, department or official thereof).

 

 

 

“Initial Supporting Noteholders”

 

Each of Apollo and Elliott.

 

 

 

“Intercompany Claim”

 

Any Claim against a Debtor held by another Debtor.

 

4

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“Intercompany Interest”

 

An Interest in a Debtor held by another Debtor, other than any Existing Equity
Interests or Other Equity Interests (including any Class B common stock of EP
Parent held by EPE Employee Holdings, II, LLC).

 

 

 

“Interest”

 

Any equity interest (as defined in section 101(16) of the Bankruptcy Code) in
the Company, including all ordinary shares, units, common stock, preferred
stock, membership interest, partnership interest or other instrument, evidencing
any fixed or contingent ownership interest in the Company, whether or not
transferable, including any option, warrant, or other right, contractual or
otherwise, to acquire any such interest in the Company, that existed immediately
before the Effective Date, and including any equity interest issued to the
Company’s current or former employees and non-employee directors various forms
of long-term incentive compensation including stock options, stock appreciation
rights, restricted stock, restricted stock units, performance shares/units,
incentive awards, Cash awards, and other stock-based awards.

 

 

 

“Jeter”

 

Wolfcamp Drillco Operating L.P.

 

 

 

“Jeter Shares”

 

New Common Shares issued in consideration of the contribution of equity
interests in Jeter to the Reorganized Debtors, which shall be subject to
dilution by the EIP Shares.

 

 

 

“New Common Shares”

 

Shares of common stock of Reorganized EP Parent.

 

 

 

“New Corporate Governance Documents”

 

The certificate of incorporation, certificate of formation, bylaws, limited
liability company agreements, shareholder agreement (if any), operating
agreement or other similar organizational or formation documents, as applicable,
of the Reorganized EP Parent, which shall be acceptable to the Initial
Supporting Noteholders.

 

 

 

“Other Equity Interests”

 

Class B common stock of EP Parent that existed immediately prior to the
Effective Date and all other Interests in EP Parent other than Existing Equity
Interests.

 

 

 

“Other Priority Claim”

 

Any Claim other than an Administrative Expense Claim or a Priority Tax Claim
that is entitled to priority of payment as specified in section 507(a) of the
Bankruptcy Code.

 

 

 

“Other Secured Claim”

 

A Secured Claim other than a Priority Tax Claim, a DIP Claim, an RBL Claim, a
1.125L Notes Claim, 1.25L Notes Claim and a 1.5L Notes Claim.

 

 

 

“Person”

 

Any individual, corporation, partnership, joint venture, association, joint
stock company, limited liability company, limited partnership, trust, estate,
unincorporated organization, governmental unit (as defined in section 101(27) of
the Bankruptcy Code), or other Entity.

 

 

 

“Plan”

 

The prearranged chapter 11 plan of reorganization of the Company implementing
the Restructuring, including all appendices, exhibits, schedules, and
supplements thereto, as may be modified from time to time in accordance with its
terms and the PSA.

 

5

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“Plan Supplement”

 

A supplement or supplements to the Plan containing certain documents and forms
of documents, schedules, and exhibits, in each case subject to the terms and
provisions of the PSA (including any consent rights in favor of the Initial
Supporting Noteholders) relevant to the implementation of the Plan, to be filed
with the Bankruptcy Court, as amended, modified or supplemented from time to
time in accordance with the terms hereof and in accordance with the Bankruptcy
Code, the Bankruptcy Rules, and the PSA (including any consent rights in favor
of the Supporting Noteholders), which shall include, but not be limited to
(i) the New Corporate Governance Documents, (ii) the number and slate of
directors to be appointed to the New Board to the extent known and determined,
(iii) with respect to the members of the New Board, information required to be
disclosed in accordance with section 1129(a)(5) of the Bankruptcy Code, (iv) the
Employee Incentive Plan, (v) the Exit Facility documents, (vi) a schedule of
retained Causes of Action, and (vii) the Schedule of Rejected Contracts.

 

 

 

“Priority Tax Claim”

 

Any Secured Claim or unsecured Claim of a governmental unit of the kind entitled
to priority of payment as specified in sections 502(i) and 507(a)(8) of the
Bankruptcy Code.

 

 

 

“Pro Rata”

 

The proportion that an Allowed Claim or Interest in a particular class bears to
the aggregate amount of Allowed Claims or Interests in that class.

 

 

 

“Registration Rights Agreement”

 

The registration rights agreement to be entered into as of the Effective Date,
which shall have terms that are customary for a transaction of this nature and
shall be in form and substance acceptable to the Initial Supporting Noteholders
and the Company.

 

 

 

“Released Parties”

 

Collectively, (i) the Debtors, (ii) the Reorganized Debtors, (iii) the
Supporting Noteholders, (iv) the arrangers, agents and lenders under the Exit
Facility, (v) the DIP Agent and DIP Lenders under the DIP Facility, (vi) the RBL
Agent and the RBL Lenders under the RBL Facility, (vii) the Backstop Parties,
(viii) holders of Existing Equity Interests, on account of their contributions
under the Plan, (ix) with respect to each of the foregoing Persons, in clauses
(i) through (viii), each of their affiliates, predecessors, successors, assigns,
subsidiaries, affiliates, current and former officers and directors, principals,
equity holders, members, partners, managers, employees, agents, advisory board
members, financial advisors, attorneys, accountants, investment bankers,
consultants, representatives, management companies, fund advisors, and other
professionals, and such Persons’ respective heirs, executors, estates, and
nominees, in each case in their capacity as such.

 

 

 

“Reinstated 1.125L Notes”

 

The 1.125L Notes, issued pursuant to the 1.125L Indenture, upon being rendered
unimpaired pursuant to Section 1124(2) of the Bankruptcy Code pursuant to the
Plan to the extent of 1.125L Notes that have not been redeemed or repaid prior
to the Closing.

 

 

 

“Reinstated 1.25L Notes”

 

The 1.25L Notes, issued pursuant to the 1.25L Indenture, upon being rendered
unimpaired pursuant to Section 1124(2) of the Bankruptcy Code pursuant to the
Plan to the extent of 1.25L Notes that have not been redeemed or repaid prior to
the Closing.

 

6

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“Reinstated Debt”

 

The Reinstated 1.125L Notes and the Reinstated 1.25L Notes.

 

 

 

“Releasing Parties”

 

Collectively, (i) the holders of all Claims or Interests that vote to accept the
Plan, (ii) the holders of all Claims or Interests whose vote to accept or reject
the Plan is solicited but that do not vote either to accept or to reject the
Plan, (iii) the holders of all Claims or Interests that vote, or are deemed, to
reject the Plan but do not opt out of granting the releases set forth herein,
(iv) the holders of all Claims and Interests that were given notice of the
opportunity to opt out of granting the releases set forth herein but did not opt
out, (v) all other holders of Claims and Interests, and (vi) the Released
Parties.

 

 

 

“Reorganized Debtors”

 

Each of the Debtors as reorganized on the Effective Date in accordance with the
Plan.

 

 

 

“Reorganized EP Parent”

 

EP Parent as reorganized on the Effective Date in accordance with the Plan.

 

 

 

“Restructuring Expenses”

 

The reasonable and documented fees and out-of-pocket expenses payable to the
Supporting Noteholder Advisors as set forth in the Backstop Agreement (and in
the case of Debevoise & Plimpton LLP, subject to the cap set forth therein)

 

 

 

“Restructuring Transactions”

 

One or more transactions pursuant to section 1123(a)(5)(D) of the Bankruptcy
Code to occur on the Effective Date or as soon as reasonably practicable
thereafter, that may be necessary or appropriate to effect any transaction
described in, approved by, contemplated by, or necessary to effectuate the Plan,
including (i) the consummation of the transactions provided for under or
contemplated by the PSA and this Term Sheet, (ii) the execution and delivery of
appropriate agreements or other documents containing terms that are consistent
with or reasonably necessary to implement the terms of the Plan, the PSA, and
this Term Sheet, and that satisfy the requirements of applicable law, (iii) the
execution and delivery of appropriate instruments of transfer, assignment,
assumption, or delegation of any property, right, liability, duty, or obligation
on terms consistent with the terms of the Plan, the PSA, and this Term Sheet,
and (iv) all other actions that the Debtors or Reorganized Debtors, as
applicable, determine are necessary or appropriate and consistent with the PSA
and this Term Sheet.

 

 

 

“Rights Offering Shares”

 

New Common Shares issued pursuant to the Rights Offering.

 

 

 

“Rights Offering Documents”

 

Collectively, the Backstop Agreement and the Rights Offering Procedures.

 

 

 

“Rights Offering Procedures”

 

The rights offering procedures in form and substance acceptable to the Initial
Supporting Noteholders setting forth the procedures for the 1.5L Noteholders to
participate in the Rights Offering.

 

 

 

“Schedule of Rejected Contracts”

 

The schedule of executory contracts and unexpired leases to be rejected by the
Debtors pursuant to the Plan, if any, as the same may be amended, modified, or
supplemented from time to time.

 

7

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“Schedules”

 

The schedules of assets and liabilities, schedules of executory contracts and
unexpired leases, and statements of financial affairs filed by the Debtors
pursuant to section 521 of the Bankruptcy Code, which shall be reasonably
acceptable to the Initial Supporting Noteholders.

 

 

 

“Secured Claim”

 

A Claim (i) secured by a lien on collateral to the extent of the value of such
collateral as (a) set forth in the Plan, (b) agreed to by the holder of such
Claim and the Debtors, or (c) determined by a Final Order in accordance with
section 506(a) of the Bankruptcy Code, or (ii) secured by the amount of any
right of setoff of the holder thereof in accordance with section 553 of the
Bankruptcy Code.

 

 

 

“Securities Act”

 

Securities Act of 1933, as amended, 15 U.S.C. §§ 77a—77aa, and any rules and
regulations promulgated thereby.

 

 

 

“Solicitation Materials”

 

Collectively, the Disclosure Statement and the related solicitation materials.

 

 

 

“Stated Equity Value”(3)

 

The stated equity value of the Reorganized Debtors of $900 million.

 

 

 

“Subordinated Claim”

 

A Claim that is subject to subordination in accordance with
sections 510(b)-(c) of the Bankruptcy Code or otherwise.

 

 

 

“Supporting Noteholder Advisors”

 

Milbank LLP, Houlihan Lokey Capital, Inc., W.D. Von Gonten & Co., DeGolyer &
MacNaughton Corp., Cole Schotz P.C., Paul, Weiss, Rifkind, Wharton & Garrison
LLP, Porter Hedges LLP, in its capacity as local Texas counsel to certain of the
Supporting Noteholders, Moelis & Company, and Debevoise & Plimpton LLP.

 

 

 

“Supporting Noteholders”

 

The Supporting Noteholders that are signatories to the PSA, and any subsequent
1.5L Noteholder that becomes party thereto in accordance with the terms of the
PSA.

 

 

 

“Unimpaired”

 

With respect to a Claim, Interest, or a class of Claims or Interests, not
“impaired” within the meaning of sections 1123(a)(4) and 1124(2) of the
Bankruptcy Code.

 

 

 

“Voting Deadline”

 

The date and time to be set by the Bankruptcy Court as the deadline for Impaired
holders of Claims to vote to accept or reject the Plan.

 

--------------------------------------------------------------------------------

(3)         Stated Equity Value is for purposes of calculations of Rights
Offering amounts and not for establishing performance goals related to EIP.

 

8

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Exhibit A-1

 

Exit Commitment Letter

Filed as Exhibit 99.1

 

1

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Exhibit A-2

 

Employee Incentive Plan Term Sheet

 

1

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EXHIBIT A-2

 

EP ENERGY CORPORATION

 

EMPLOYEE INCENTIVE PLAN TERM SHEET

 

The following describes the principal terms of the equity-based employee
incentive plan (the “EIP”) to be adopted by the Reorganized EP Parent in
connection with the Restructuring.  This term sheet does not contain all of the
terms and conditions of the EIP. Capitalized terms used but not otherwise
defined herein will have the meanings ascribed to such terms in the Term Sheet
(including Annex 1).

 

Effective Date

 

The EIP will become effective on the Effective Date. The terms of the EIP and
the Emergence Awards (defined below) will be approved as part of the Plan.

 

 

 

Administration

 

The New Board, or a committee thereof, will administer the EIP.

 

The New Board has the authority to prescribe the terms of awards under the EIP
and to make all administrative determinations under the EIP.

 

 

 

Participants

 

Participants of the EIP will include officers and employees of the Company who
are designated by the New Board to receive awards under the EIP.

 

Participants who receive the Emergence Awards are officers of the Reorganized EP
Parent as set forth below.

 

 

 

Award Pool

 

10% of the New Common Shares on the Effective Date, on a fully diluted basis
(including shares issuable under the EIP), will be reserved for issuance under
the EIP (the “Award Pool”).

 

If an outstanding award expires or is forfeited, cancelled or otherwise
terminated, the shares underlying such award shall again be available under the
Award Pool. In addition, shares that are held back or tendered to cover the
exercise price or tax withholding obligations with respect to an award shall not
be available under the Award Pool.

 

Up to 70% of the Award Pool will be allocated to the Emergence Awards.

 

 

 

EIP Awards

 

The EIP will be an “omnibus” incentive plan that provides for the grant of
various types of equity awards, based on the value of the New Common Shares:
stock options (ISOs and NQSOs), stock appreciation rights, restricted stock
(including performance shares), restricted stock units (including performance
units) and other stock-based awards.

 

The terms of vesting, exercise and other terms and conditions of EIP awards will
be determined by the New Board and set forth in award agreements issued under
the EIP, as determined by the New Board.

 

The terms of the Emergence Awards are set forth below.

 

 

 

Corporate Reorganizations/ Change in Control(4)

 

Outstanding awards and the Award Pool will be subject to customary anti-dilution
adjustments for changes in capitalization and other reorganization events.

 

Outstanding time based RSUs will vest on a Change in Control. Double trigger
vesting for PSUs to the extent performance is achieved (as further set forth
below)

 

--------------------------------------------------------------------------------

(4)         “Change in Control” means mean the occurrence of any of the
following after the Effective Date:

 

2

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upon a termination of employment by the Company without Cause or a resignation
for Good Reason within 12 months following a Change in Control.

 

Terms of Emergence Awards

 

Grant of Emergence Awards

 

The CEO and seven (7) other officers of the Reorganized EP Parent (identified on
Schedule 1 attached hereto) will receive the initial grants of awards under the
EIP (the “Emergence Awards”).

 

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(a)         an acquisition immediately after which any “Person” (as the term
“person” is used for purposes of Section 13(d) or 14(d) of the Exchange Act)
possesses direct or indirect “Beneficial Ownership” (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% or more (on a fully
diluted basis) of either (A) the then outstanding shares of common stock (the
“Outstanding Company Common Stock”); or (B) the combined voting power of the
then outstanding voting securities of the Company entitled to vote in the
election of directors (the “Outstanding Company Voting Securities”); but
excluding any acquisition by the Company or any of its subsidiaries, by any
employee benefit plan sponsored or maintained by the Company or any of its
subsidiaries, or any acquisition pursuant to a transaction that complies with
paragraphs (i), (ii) and (iii) of subsection (d) below;

 

(b)         a change in the composition of the Board such that members of the
Board during any consecutive 12-month period (the “Incumbent Directors”) cease
to constitute a majority of the Board of Directors.  Any person becoming a
director through election or nomination for election approved by a valid vote of
at least two-thirds of the Incumbent Directors shall be deemed an Incumbent
Director; provided, however, that no individual becoming a director as a result
of an actual or threatened election contest, as such terms are used in
Rule 14a-12 of Regulation 14A promulgated under the Exchange Act, or as a result
of any other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board shall be deemed to be an Incumbent
Director; or

 

(c)          the approval by the shareholders of the Company of a plan of
complete dissolution or liquidation of the Company; or

 

(d)         consummation of a reorganization, merger, share exchange,
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (“Corporate Transaction”); excluding, however, such a
Corporate Transaction pursuant to which:

 

(i)                  all or substantially all of the individuals and entities
who have Beneficial Ownership, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Corporate Transaction will have Beneficial Ownership, directly or indirectly, of
more than 50% of, respectively, the outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, the
Company or a corporation that as a result of such transaction owns the Company
or all or substantially all of the Company’s assets either directly or through
one or more subsidiaries) (the “Resulting Corporation”) in substantially the
same proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be;

 

(ii)               no Person (other than (1) the Company, (2) an employee
benefit plan (or related trust) sponsored or maintained by the Company or
Resulting Corporation, or (3) any entity controlled by the Company or Resulting
Corporation) will have Beneficial Ownership, directly or indirectly, of 50% or
more of, respectively, the outstanding shares of common stock of the Resulting
Corporation or the combined voting power of the outstanding voting securities of
the Resulting Corporation entitled to vote generally in the election of
directors, except to the extent that such ownership existed prior to the
Corporate Transaction; and

 

(iii)            individuals who were members of the Incumbent Board will
continue to constitute at least a majority of the members of the board of
directors of the Resulting Corporation.

 

(e)          For the avoidance of doubt, notwithstanding anything to the
contrary it shall not be a Change of Control if the Principal Investors (to be
defined to include Apollo, Elliott and their respective affiliates own 50% or
more of the Company’s Voting Securities or control the Board.

 

3

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The Emergence Awards will be granted and become effective on the Effective Date.

 

 

 

Emergence Award Pool

 

Up to 70% of the Award Pool will be granted as the Emergence Awards, as set
forth in the attached Schedule 1.

The remaining 30% of the Award Pool (or such greater amount if not used as
Emergence Awards) is reserved for future grants as determined by the New Board,
in consultation with the CEO.

 

 

 

Form of Emergence Awards

 

Emergence Awards will be granted as follows:

·                  30% in the form of time-vesting restricted stock units
(“RSUs”).

·                  70% in the form of performance-vesting restricted stock units
(“PSUs”).

 

 

 

Vesting Terms

 

RSUs vest 25% per year over 4 years, based on continued employment.

PSUs vest 25% per year over 4 years, based on continued employment and the
achievement of pre-established performance goals.

PSU performance goals will be determined prior to the Effective Date based on
[TBD].

 

 

 

Termination of Employment

 

RSUs granted as Emergence Awards will vest pro-rata upon termination of
employment by the Company without Cause or for Good Reason or upon a
participant’s death or disability, based on the date of termination.

PSUs granted as Emergence Awards will vest pro-rata (based on actual performance
through the end of the performance period) upon termination of employment by the
Company without Cause or for Good Reason or upon a participant’s death or
disability, based on the date of termination.

For the avoidance of doubt, upon a termination for Cause or a voluntary
resignation without Good Reason, all unvested RSUs will be forfeited. For the
avoidance of doubt, upon a termination for Cause all outstanding PSUs will be
forfeited and upon a voluntary resignation without Good Reason all unvested PSUs
shall be forfeited.

Cause and Good Reason shall have the meanings ascribed to such terms in the
participant’s employment agreement.

Upon a Change in Control, outstanding Emergence Awards subject to time based
vesting only (RSUs) will fully vest.

Upon a termination by the Company without Cause or by the participant for Good
Reason occurring within the 12-month period following a Change in Control,
(Emergence Awards subject performance-vesting (the PSUs) shall become vested to
the extent the applicable performance goals have been achieved as of the date of
such termination and if such performance goal are not achieved then the PSUs
shall be forfeited.

 

 

 

Payment of Emergence Awards

 

RSUs and PSUs are payable in New Common Shares within thirty (30) days after
vesting (for purposes of clarity the PSUs will only vest if both the time based
and performance based goals are achieved), subject to net settlement for tax
purposes.

 

 

 

Call Right; Stockholders Agreement

 

As a condition to the grant of any Emergence Awards, each Executive agrees to be
bound by a customary stockholders agreement, which among other things will
include a call right in favor of the Company to repurchase any shares upon
termination of employment.

 

4

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SCHEDULE 1

 

EMERGENCE AWARD ALLOCATION

 

CEO: 25%

 

Individual allocations for other officer roles to be within the ranges below,
but not to exceed 75% in the aggregate, as determined by the CEO in consultation
with the representatives of the New Board prior to Effective Date.

 

Senior Vice President, Engineering and Subsurface (8-11%)

Senior Vice President, Operations (8-11%)

Senior Vice President, Chief Financial Officer and Treasurer (8-11%)

Vice President, Marketing (8-11%)

Vice President, Land and Administration (8-11%)

Vice President, Geological and Geophysical (8-11%)

Vice President, General Counsel and Corporate Secretary (8-11%)

 

5

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Exhibit A-3

 

Management Employment Agreement Terms

 

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EXHIBIT A-3

 

EP ENERGY CORPORATION

 

MANAGEMENT EMPLOYMENT AGREEMENT TERMS

 

The following describes the principal terms of the employment agreements (the
“Employment Agreements”) to be entered into between the Company and certain
officers (the “Executives”) in connection with the Restructuring.  This term
sheet does not contain all of the terms and conditions of the Employment
Agreements.  Capitalized terms used but not otherwise defined herein will have
the meanings ascribed to such terms in the Term Sheet (including Annex 1).

 

Effective Date

 

The date of the Company’s emergence from Chapter 11 pursuant to the Plan.

 

The new Employment Agreements will replace the existing employment agreements
and arrangements with the Executives that will remain in effect through the
Reorganization.

 

 

 

Title

 

Title

President and Chief Executive Officer

Senior Vice President, Engineering and Subsurface

Senior Vice President, Operations

Senior Vice President, Chief Financial Officer and Treasurer

Vice President, Marketing

Vice President, Land and Administration

Vice President, Geological and Geophysical

Vice President, General Counsel and Corporate Secretary

 

 

 

Base Salary and Target Annual Bonus

 

Title

 

Base Salary

 

Target Annual Bonus

 

 

President and CEO

 

$

850,000

 

100% of Base Salary

 

 

 

 

 

 

 

 

 

 

 

SVP, Engineering and Subsurface

 

$

400,000

 

75% of Base Salary

 

 

 

 

 

 

 

 

 

 

 

SVP, Operations

 

$

400,000

 

75% of Base Salary

 

 

 

 

 

 

 

 

 

 

 

SVP, CFO and Treasurer

 

$

350,000

 

75% of Base Salary

 

 

 

 

 

 

 

 

 

 

 

VP, Marketing

 

$

307,000

 

75% of Base Salary

 

 

 

 

 

 

 

 

 

 

 

VP, Land and Administration

 

$

300,000

 

75% of Base Salary

 

 

 

 

 

 

 

 

 

 

 

VP, Geological and Geophysical

 

$

300,000

 

75% of Base Salary

 

 

 

 

 

 

 

 

 

 

 

VP, General Counsel and Corporate Secretary

 

$

300,000

 

75% of Base Salary

 

 

7

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Term

 

Initial term ends on 4th anniversary of Effective Date, with automatic 12 month
renewals unless either party provides 30 days’ prior written notice of
non-renewal.

 

 

 

Severance upon a Termination by Company without Cause, Resignation by Executive
with Good Reason or Non-Renewal by Company

 

 

CEO

 

·                  The sum of (i) 2x Base Salary and (ii) 1x Target Annual
Bonus, of which six months Base Salary is payable in substantially equal
installments over 6 month period post termination and the remainder is paid in a
lump sum on the seventh month.

·                  Annual Bonus for year in which termination occurs, prorated
to reflect actual performance through the date of termination.

·                  18 months of continued coverage for Executive and Executive’s
spouse and dependents under the Company’s health and welfare plans at active
employee rates.

 

Other Officers

 

·                  1x sum of (i) Base Salary and (ii) Target Annual Bonus of
which six months Base Salary is payable in substantially equal installments over
6 month period post termination and the remainder is paid in a lump sum on the
seventh month.

·                  Annual Bonus for year in which termination occurs, prorated
to reflect actual performance through the date of termination.

·                  12 months of continued coverage for Executive and Executive’s
spouse and dependents under the Company’s health and welfare plans at active
employee rates.

 

Severance subject to Executive’s release of claims against the Company and
compliance with post employment restrictive covenants.

 

 

 

Severance upon a Termination by Company without Cause, Resignation by Executive
with Good Reason or upon Non-Renewal by Company, in each case, within 18 months
following a Change in Control

 

 

CEO

 

·                  2x the sum of (i) Base Salary and (ii) Target Annual Bonus,
payable in a lump sum following termination.

·                  Pro-rata Target Annual Bonus for year in which termination
occurs, based on the date of termination.

·                  18 months of continued coverage for Executive and Executive’s
spouse and dependents under the Company’s health and welfare plans at active
employee rates.

 

Other Officers

 

·                  1.5x the sum of (i) Base Salary and (ii) Target Annual Bonus,
payable in a lump sum following termination.

·                  Pro-rata Target Annual Bonus for year in which termination
occurs, based on the date of termination.

·                  18 months of continued coverage for Executive and Executive’s
spouse and dependents under the Company’s health and welfare plans at active
employee rates.

 

Accelerated vesting of Emergence Awards under the EIP (as described in
Exhibit A-2).

 

8

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Severance subject to Executive’s release of claims against the Company and
compliance with post employment restrictive covenants.

 

 

 

Restrictive Covenants

 

·                  Non-competition in the Market Area(5) for the 12 months
post-termination (24 months for the CEO if he is eligible for severance as a
result of termination without Cause, for Good Reason or non-renewal by the
Company).

·                  Non-solicitation of customers, suppliers, employees and
contractors for 12 months post-termination (24 months for the CEO if he is
eligible for severance as a result of termination without Cause, for Good Reason
or non-renewal by the Company).

·                  Perpetual confidentiality and assignment of intellectual
property

·                  Cooperation in defense of claims against Company and its
subsidiaries during employment and for 24 months thereafter.

 

 

 

Benefits

 

Eligible to participate in same benefit plans in which similarly situated senior
executives are eligible to participate.

 

 

 

Miscellaneous

 

Notwithstanding anything to the contrary in that certain retention bonus letter
agreement by and between Executive and the Company dated July   , 2019
Executive’s severance shall not be subject to reduction as set forth in
Section 3 of such letter agreement.

 

Section 280G “best net-of-tax” provision. To the extent any payments and
benefits that Executive has the right to receive in connection with a “change in
control” (within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”)) would constitute “parachute payments” (as defined
in Section 280G of the Code), such payments and benefits shall be (i) reduced by
the minimum amount necessary so that no portion of the payments and benefits are
subject to the excise tax imposed by Section 4999 of the Code or (ii) paid in
full, whichever produces the better net after-tax position to Executive, taking
into account the excise tax under Section 4999 and any other applicable taxes.

 

 

 

Defined Terms

 

“Cause” means: (i) Executive’s material breach of the Employment Agreement or
any other written agreement between Executive and the Company, or Executive’s
material breach of any policy or code of conduct established by the Company in a
writing previously provided to Executive and which is applicable to Executive
that is reasonably likely to have a material adverse effect on the business or
reputation of the Company; (ii) Executive’s willful misconduct, fraud, theft or
embezzlement, or Executive’s breach of fiduciary

 

--------------------------------------------------------------------------------

(5)         “Market Area” means (A) the Eagle Ford Shale; (B) the Altamont Field
within the Uinta Basin (including the Bluebell and Cedar Rim fields); (C) the
Southern Midland Basin; or (D) any other location within 12.5 miles of any area
in which the Company or its direct or indirect subsidiaries (the “Company
Group”): (1) is engaged in the Company’s business or in which any member of the
Company Group otherwise owned property or interests related to the Company’s
business within 12 months prior to Executive’s termination; or (2) has made
material plans to conduct the Company’s business within the 12 months prior to
Executive’s termination of which Executive is aware; provided, however, that the
Market Area shall not include any basin in which no member of the Company Group
is engaged in the Company’s business on the effective date of Executive’s
termination.”

 

9

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duty; (iii) the conviction or indictment of Executive for, or plea of nolo
contendere by Executive to, any felony (or state law equivalent) or crime
involving moral turpitude; or (iv) Executive’s willful failure or refusal, other
than due to disability, to perform Executive’s obligations pursuant to the
Employment Agreement, or to follow any lawful directive of the Board of
Directors of the Company (the “Board”); provided, however, that if the
Executive’s actions or omissions as set forth in clause (i) or (iv) are curable
by Executive, such actions or omissions must remain uncured for 10 days after
the Board has provided Executive written notice of the obligation to cure such
actions or omissions. Notwithstanding the foregoing, the Board may suspend the
Executive while it conducts an investigation if it has a good faith basis to
investigate whether Cause exists and such suspension shall not constitute Good
Reason.

 

“Good Reason” means: (i) a material diminution in Executive’s Base Salary or
Target Annual Bonus; (ii) a material diminution in Executive’s title, authority,
duties or responsibilities; (iii) a material breach by the Company of any of its
covenants or obligations under the Employment Agreement; or (iv) the relocation
of the geographic location of Executive’s principal place of employment which
increases the Executive’s one way commute by more than 50 miles from the
location of Executive’s principal place of employment as of the Effective Date.
Notwithstanding the foregoing or any other provision of the Agreement to the
contrary, any assertion by Executive of a termination for Good Reason shall not
be effective unless the condition described (i), (ii), (iii) or (iv) must have
arisen without Executive’s consent, Executive must provide written notice to the
Board of the existence of such condition within 30 days following the initial
existence of such condition, the condition specified in such notice must remain
uncorrected for 30 days following the Board’s receipt of written notice and
Executive’s termination of employment must occur within 60 days after the
initial existence of the condition specified in such notice.

 

“Change in Control” shall have the meaning ascribed to such term in the EIP.

 

 

 

Emergence Bonus

 

The following Executives will receive a cash bonus in the amounts set forth
below, payable in a lump sum immediately following the Effective Date, subject
to continued employment on the Effective Date.  Such bonuses reflect certain
unpaid amounts in respect of prior incentive bonuses.

 

 

 

 

 

Name

 

Amount

 

 

 

 

SVP, Engineering and Subsurface

 

$

30,000

 

 

 

 

SVP, Operations

 

$

40,000

 

 

 

 

SVP, CFO and Treasurer

 

$

20,000

 

 

 

 

VP, Marketing

 

$

18,420

 

 

 

 

VP, Land and Administration

 

$

22,500

 

 

 

 

VP, Geological and Geophysical

 

$

22,500

 

 

 

 

VP, GC and Corporate Secretary

 

$

27,500

 

 

 

10

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Exhibit B

 

Form of Joinder for Additional Supporting Creditors

 

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JOINDER TO PLAN SUPPORT AGREEMENT

 

This JOINDER, dated as of [·], 2019, to the Plan Support Agreement (as amended,
supplemented, or otherwise modified from time to time, the “PSA”), by and among
the Company and the Supporting Creditors is executed and delivered by [·] (the
“Joining Party”) as of [·], 2019.  Each capitalized term used herein but not
otherwise defined shall have the meaning set forth in the PSA.

 

1.             Agreement to be Bound.  The Joining Party hereby agrees to be
bound by all of the terms of the PSA, a copy of which is attached to this
Joinder Agreement as Annex I (as the same has been or may be hereafter amended,
restated, or otherwise modified from time to time in accordance with the
provisions hereof).  The Joining Party shall hereafter be deemed to be a
“Supporting Noteholder” or “Supporting Creditor” and a “Party” for all purposes
under the PSA and with respect to any and all Claims held by such Joining Party.

 

2.             Representations and Warranties.  The Joining Party hereby makes
the representations and warranties of the Supporting Creditors set forth in
Section 7 and Section 20 of the PSA to each other Party to the PSA.

 

3.             Governing Law.  This Joinder Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York without giving effect to the conflict of laws
principles thereof.

 

[Signature page follows.]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as
of the date first written above.

 

Additional Supporting Creditor

 

 

 

Name:

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

Principal Amount of RBL Loans, as applicable:  $

 

Principal Amount of 2024 1.5L Notes, as applicable:  $

 

Principal Amount of 2025 1.5L Notes, as applicable:  $

 

All other Claims:

 

Notice Address:

 

 

 

Fax:

Attn:

E-mail:

 

With a copy to:

 

 

 

Fax:

Attn:

E-mail:

 

[Signature Page to Joinder to Plan Support Agreement]

 

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